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Can My Attorney Tell Me My Estate Planning Idea is Bad?

by | Jan 23, 2025 | Firm News

Short answer, yes.  And your attorney has a duty to tell you that it is a bad idea.  This can be an uncomfortable conversation with my clients when they want to place certain requirements on a distribution to a beneficiary that I know is going to be impossible to administer.  For example, I had a client a few years ago that wanted to limit distribution to the grandchildren so long as those grandchildren were not part of a certain political group.  I had to walk my client through what that would entail to ensure compliance – What proof is required to show that the grandchild is not part of that group?  Is the trustee someone who could make a claim that the grandchild is part of that group wrongly and refuse to distribute to the grandchild?  What if the grandchild was at an event that the political group was also attending – would that trigger them not receiving their distribution?  And the big question – is that really the right thing to do in your estate plan?

Sometimes the client’s idea is obviously a bad one, but other times the idea may sound good, but practically speaking, it can cause complications or unnecessary court involvement in the administration of the trust or estate.  This is where the experience of an attorney that has drafted many estate plans as well as administered many estate plans comes in handy because we see the backend of a plan when it must be implemented.  You do not get that type of advice or experience using a computer program to draft your estate plan or using fill-in-the-blanks statutory forms.  There is an increase in court filings based on bad drafting when a person does not use an attorney to draft their estate plan.

A recent case illustrates the importance of having an attorney available to tell you that the distribution idea is a bad one.  The California Court of Appeals found in Godoy v. Linzner ((2024) __ Cal.App.5th ____, cite as B330725) that a handwritten amendment to a trust was void as an unreasonable restraint on alienation under Civil Code Section 711.  The settlor, the person who created the trust, used an attorney to draft her trust.  The original trust included a provision that the settlor’s residence be retained in trust for the settlor’s three children for a minimum of five years following her death and that if or when the property was sold, that the trustee consider selling it to a family member.  The key to this provision in the original trust was that these requirements were not mandatory and compliance was in the trustee’s discretion.

One year later, the settlor executed a handwritten amendment to her trust requiring that a child keep their interest in the real property for the remainder of their lives or if they wanted to sell it, they HAD to sell it to their other siblings for no more than $100,000.  When the settlor died, the real property was worth more than a million dollars.  If you were one of the three children, would you sell your $330,000 plus interest in the property for only $100,000 to a sibling?  Maybe not, so then you were stuck co-owning the property with your two siblings because the trust required that you retain it for the rest of your life.

As mentioned above, the Court of Appeals determined that the settlor could not control the ownership or the sales price of her residence from the grave and found that the terms in the handwritten amendment were a restraint on alienation.  You can imagine that for this issue to get to the Court of Appeals, it took many years of litigation to conclude that the handwritten amendment was not valid.

The takeaway from this case for attorneys is that you have a duty to tell your client that their idea is bad.  And the takeaway for a client drafting their estate plan is to listen to their attorney when they tell you that your idea is bad.