It’s amazing to me how the written word is often misconstrued. I believe this happens exceedingly frequently in email communications. Too many people fire off emails believing that their thoughts and words will be correctly interpreted when, in fact, it would be better to phone the recipient and actually speak to him. Emails often don’t properly convey nuance and inflection.
Cameron Herold, an entrepreneur, business developer and consultant succinctly points this out in his book, Meetings Suck. He asks his reader to consider the different meanings of the written sentence “I didn’t say you were beautiful.”
“You can interpret that [sentence] six different ways depending upon which word you emphasize,” Herold rightfully states. To see what he means, read that sentence aloud six times, emphasizing a different word each time.
This brings me to discuss a well-written estate plan. I sometimes encounter wills and trusts obviously drafted by a layman who didn’t understand the different legal meanings that certain words and phrases can have. State statutes, court cases and even IRS rulings can result in unintended consequences.
Take, for example, a phrase I recently read in someone’s self-drafted trust: “Upon my death I direct my personal representative to sell my home and to divide the proceeds among my children.” It seems like a straight-forward direction doesn’t it?
Consider that Florida homestead is protected from the deceased’s creditors under our laws. If John dies with hundreds of thousands of dollars of unsecured credit card debt and all that he owns at his death is his Florida homestead, which happens to be unencumbered by a mortgage, then that homestead can be distributed to his heirs at law free and clear of his creditors, unless the homestead is directed to be sold, in which case the creditors are first in line to the sales proceeds.
John, not knowing this, caused an adverse consequence to his beneficiaries. Had he simply bequeathed the home to his children, they could have inherited the home free of his creditors, then sold the home and divided the proceeds without incident.
What about a sentence in a trust that says, “I direct my trustee to distribute such income and assets necessary to take care of my wife for the rest of her life. What remains at her death shall be distributed to my children.” This seems clear doesn’t it? From what source is this income and are the assets derived? Would your opinion of this sentence change if you knew that the wife is not the mother of the deceased’s children, and that she has more than $5 million of her own assets at her disposal? Should the trustee first consider her assets and income in determining what is “necessary to take care of my wife for the rest of her life?”
How about a trust provision that states, “I give $10,000 to the Southwest Florida Church of Christ for mission development, unless Joe Smith is no longer a missionary with that church.” Assume that at the time of the decedent’s death Joe Smith is a missionary and the trust makes the distribution. You may be surprised to learn that the trust does not receive a charitable tax deduction because preconditions imposed on charitable bequests disqualify the deduction under our tax laws.
Take that same bequest and now assume that achieving the tax deduction is not important but that Joe Smith is no longer a field missionary. Assume further that Smith has taken a year off of field work to direct other missionaries from Fort Myers. Should the trust make the distribution?
Here’s another one I recently read – “My trustee shall distribute the income to my son, Doug, so long as he is not on drugs.” Assume that Doug is on prescription medication, but not illegal drugs. Should the trustee make the distribution? Would your opinion change if the parent who created the trust doesn’t believe in modern medicine but instead used holistic methods her entire life? Forget that scenario, but what if under a physician’s care Doug is taking the prescription drug methadone which is frequently used to treat heroin addiction?
I’m sure you now realize the importance not only of clear drafting, but also how a simple phrase could result in serious consequences if the drafter is unaware of legal precedent associated with that phrase or how an ambiguous direction could cause problems. These errors aren’t limited to laymen. Some attorneys who draft wills and trusts, but who aren’t entirely familiar with all of the state, federal and tax laws could also easily make mistakes.
Once you die, you are no longer around to offer further interpretation of your legal documents. Therefore, choose your legal counsel wisely. As for emails, pick up the phone every now and then too.
The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.
© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.