The Bongo Bongo Burger Story
George Goodparent and Gladys Goodparent feel that the sun rises and sets over the head of their only child, Easygoing Billy. Their attorney, Mr. Wise Counselor, strongly recommended to them that they set up a Revocable Living Trust wherein Easygoing Billy would have the right to withdraw one-third of his inheritance at the age of 25, a second one-third at the age of thirty, and a final one-third at the age of 35. In the interim, the Trustee could take care of all of Easygoing Billy’s reasonable needs and education. Both Goodparents would hear none of this; they felt the sun, moon and stars rose and set upon Easygoing Billy’s head and they were sure he would not misuse his inheritance. Their family attorney, Mr. Wise Counselor, gave them many examples and the fact that 95% of all large wealth is dissipated within one year of the parents’ death, if given in one lump sum amount. They still would not listen. Upon the parents’ deaths, Easygoing Billy was contacted by his good friend, Take-A-Risk Tom. Tom explained to Easygoing Billy that it would only take approximately half of his inheritance to buy into this new restaurant franchise called “Bongo Bongo Burgers”, where the waitresses come out, on roller skates, dressed in gorilla costumes and serve jungle shakes. The other half of his inheritance would be used to outfit the restaurant franchise and pay the rents for approximately a year. Take-A-Risk Tom assures Easygoing Billy that it would be a home run within the year and he would triple his money. We don’t have to tell you the rest of the story, you have already guessed it. Within one year of his parents’ deaths, Easygoing Billy had lost all of his inheritance and regretted it for the rest of his life. If Goodparents had listened to Wise Counselor, they would have given the money to Easygoing Billy in three increments. Inevitably, the first third is pure monopoly money and is spent on a risky venture. Hopefully the second third is not used in such a manner, but is occasionally still used in less than solid sober investments, namely, .com stock, commodities trading or options trading. Hopefully the last third is put into solid investments and used for the child’s future needs.
Another major advantage of the program suggested by Attorney Wise Counselor is that Easygoing Billy could be protected from other future mistakes. The language of the Trust would state that Easygoing Billy, at the various ages suggested by Attorney Wise Counselor, “may withdraw” at each of the various ages stated in the Trust, but he would not have to withdraw, if he were in the midst of some sort of a problem. This is because Wise Counselor has put into Goodparents’ Trust a provision which is referred to as a “spendthrift clause”. That provision says that as long as Easygoing Billy does not withdraw the money from the Trust, it cannot be attached for bad debts, alimony, child support, etc., etc., etc. Thus, Easygoing Billy could let the money sit in Trust for his children or until such time as he has gotten past his divorce, bad business venture or any other claim of creditors. Hopefully when Easygoing Billy sets up his Trust for his children, he will be a better Goodparent than his parents.
The Pink Flamingo Story
One of the major advantages of a Revocable Living Trust is the ability to replace the Grantor/Trustee, should they become incapacitated, without the necessity of going to court.
The pink flamingo story goes as follows:
One day Suzy Spouse comes home to find her husband, Sam Spouse, has just planted 200 pink plastic flamingos on the front lawn of their home. He has a watering can in his hand and is watering the 200 pink plastic flamingos in hopes that they will sprout little flamingos. Needless to say, Suzy Spouse is beside herself. Sam Spouse is spending thousands of dollars from their checking account in order to buy more and more plastics flamingos. Suzy Spouse immediately contacts both her family physician and family attorney. She is then informed that since her assets are not in a Living Trust with an “incapacity provision” built in, she will need to take her husband to court with the assistance of the family physician, and most likely, a psychiatrist to have him declared “incompetent”. When Suzy Spouse, Sam Spouse, the family physician, the family attorney and the psychiatrist arrive in front of the judge, the judge looks at them and says, “I live in Berwyn and I like pink flamingos on my front lawn.” Needless to say, the trial goes on for a very lengthy period of time, until they have convinced the judge that Sam Spouse is not acting in a normal fashion and is “incapacitated”. Besides the hardship to the family, several thousand dollars in doctors’ and legal fees will be spent.
All of this could have been avoided, if there was a Revocable Living Trust, which in effect had a statement saying, “If a physician familiar with my condition and my spouse, certify in writing that I am no longer able to manage my affairs due to my incapacity, the next Trustee may take over.” Also, a safety measure is included, which in effect states that, “If a physician of equal competency, certifies in writing, that I am no longer incapacitated, control of the Trust shall be immediately returned to me.”
Thus, a major problem for a family has been overcome, with the use of an appropriately worded Revocable Living Trust. We like to remind our clients to think about the plastic flamingo, as a reminder that they need to complete their estate plan as soon as possible for the good of themselves and their family.