Erroneous Promises Threaten to Foil Estate Plan
Hartford E. Bealer was a wealthy man who died at the age of 93 with an estate worth more than $22 million. One of his assets was a nearly 300-acre farm that he wanted preserved for future generations.
Hartford had worked with his son-in-law, an attorney, on a way to preserve the farm indefinitely. They decided to establish a charitable foundation. Unfortunately, the son-in-law made erroneous promises about how the foundation could hold the land forever. Under the way he structured the foundation, however, the land would have to be sold. When Hartford discovered the son-in-law's error, he moved the farm out of his foundation to protect it from a sale.
After Hartford's death, the foundation sued to have the land returned to the foundation, which would result in the land being sold.
The court found that Hartford created his foundation based on a mistake, and, according to the applicable state law, when this happens, a charitable foundation can be voided from the beginning. This means the foundation never existed; therefore, the land could not be put back into the nonexistent foundation, allowing his heirs to preserve the land.
The moral of the story? Just because things worked out for Hartford's estate doesn't mean you will be so lucky. Whether your estate is modest or substantial, reliable and expert help is vital to protecting your wishes.
Many people mistakenly believe that their will dictates where all their assets will go. Assets like homes and rental properties, however, may be owned jointly with a spouse or adult child. Don't overlook the impact that joint accounts or beneficiary designations on retirement accounts can have on your overall plans.
When a financial or estate plan isn't what you envisioned, see an attorney in your state to determine whether your plan can be changed. Also, make sure you understand the full impact of your decisions, to save your family from unnecessary turmoil. Parker v. Estate of Bealer, 656 S.E.2d 129 (W. Va., 2007)
To make sure your goals are met, speak with an attorney when making a gift to the American Medical Association Foundation. We would also be happy to answer questions or help you in your planning. Please contact Jane Erb at (312) 464-5852 or firstname.lastname@example.org.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.