If you or someone you know has an older estate plan that doesn’t carefully take into consideration the role of stepchildren, it’s a good idea to have it reviewed. If you have stepchildren – or if your children have stepchildren – it’s critical to make clear whether they’re included in your plans.
Take the case of Bill and Pat Clairmont. This North Dakota couple had a daughter, Cindy; a son-in-law, Greg; and several grandchildren including a grandson named Matthew. In 1996, they decided to set up a trust to benefit Matthew. Greg, their son-in-law, wrote the trust document.
Under the trust, Matthew would start receiving the trust funds when he turned 40. If he died before then, the trust funds would go to his brothers and sisters.
That all sounds fine … but sometimes things don’t go exactly as planned.
Five years after the trust was created, in 2001, Greg and Cindy divorced. In 2004, Greg remarried, and he had two more children with his new wife.
In 2011, Matthew died unexpectedly at age 25.
When it came time to divvy up the trust funds, Greg insisted that his two children with his new wife were among Matthew’s “brothers and sisters,” and they should therefore get an equal share of the money.
Naturally, Bill and Pat objected, and the case went all the way to the North Dakota Supreme Court.
Greg pointed to a North Dakota law that says that “brothers and sisters” in a will or trust includes stepbrothers and stepsisters, unless the document specifically says otherwise.
The court said that was true, but it took pity on Bill and Pat and said they clearly didn’t expect this result and shouldn’t be held to it where it was very much the opposite of what they had intended. The court allowed the trust to be rewritten in such a way as to exclude Greg’s children with his new wife.
So it all worked out for Bill and Pat, but not without a major court battle that could have been avoided if they had been clearer about the role of stepchildren.
The bottom line is, make sure you review your estate plan periodically and especially when there is a major change in your life or the life of a family member.
Attorney Robert A. Scalise, Jr.