No family is perfect, and the Pritchett-Dunphy clan on ABC’s hit TV show Modern Family is an excellent example of this. This close-knit family has their share of dysfunction, but they also have a lot of love for each other. As with any family, the estate planning process is crucial for the Pritchett-Dunphys. In this blog post, we will look at some of the estate planning questions that this fictional family would need to answer. By doing so, we can better understand how these issues might impact our own families.
The Pritchett-Dunphy clan is a close-knit bunch. They all look out for one another, from the oldest to the youngest. Estate planning is crucial for this family, and they face many of the same questions that families today are dealing with, such as:
- What happens if someone becomes disabled or incapacitated?
- Do life insurance policies name the same beneficiaries as the will?
- How does the estate get divided up if there is a death?
- Would one side of the family contest a written will and take others to court?
Complex Planning: Multiple Generations of Blended Families
When determining who will receive money and property, members of blended families must evaluate the bonds within their family. For instance, on several occasions, Jay refers to Manny as his son, and Manny spent many of his formative years living with his mother and Jay.
On the other hand, although Dylan and Haley have two children together, Dylan also has children from his first marriage. Haley may not be that close to Dylan’s other children and may not want them to receive anything she owns individually (or what she may inherit from her parents).
Because a stepchild has no legal right to their stepparent’s money and property, it’s crucial to write a legally enforceable last will and testament if a stepparent decides to leave anything to their stepchild at death.
Estate Planning Documents
Last Will and Testament
A last will and testament is an essential part of a solid estate plan. A valid will is a legal document that outlines your wishes for who will receive your estate assets and other tangible items or possessions after you die. You may also name a guardian for any minor children. You’ll name an executor who settles your estate and carries out your final wishes, including funeral arrangements.
However, if your beneficiary designations for your life insurance policy or retirement account leave assets to one child, but your will leaves them to another, your planning is no good. The designated beneficiaries receive the assets held in those kinds of accounts. If you named different heirs in your will, they will not receive the assets.
When writing a will, it’s crucial to name the correct heirs for retirement accounts so that the property will not face contestations or cause family drama. If property held in a retirement account names one beneficiary but the will names another beneficiary, your heirs will face conflict.
For this reason, it’s essential to have an estate planning meeting with your attorney every 2 to 3 years! Keeping your will and retirement account documents up-to-date is vital. Staying on top of estate planning will ensure that your executor may fulfill your final wishes.
Name Guardians for Children
In the show, this extended modern family has a few minors who need guardians in the event both parents pass away.
Who Will Be Joe’s Guardian?
Manny states that he wants to be Joe’s guardian in the event Gloria and Jay pass away. However, Gloria and Jay need to name the person they want to be Joe’s guardian in their wills.
Naming an individual in a last will and testament or separate document is merely a nomination. This may not stop others from contesting the nomination. It may be wise for Jay and Gloria to have frank conversations with both of their families to avoid the possibility of a fight for guardianship and to prevent Joe from potentially being taken to a foreign country.
Who Will Be a Guardian for Lilly and Rex?
Lily and Rex are also minors who would need a guardian if their parents were to pass away. Without an appropriate estate plan, a fight between Cameron’s and Mitchell’s families is likely to occur. Although Lily spent much of her life around Mitchell’s family, by the end of the show, Lily and Rex are moving with their parents to Missouri and will be living closer to Cameron’s family.
Rex will arguably grow up with a greater bond with Cameron’s family, which could lead to conflict between the Pritchett and Tucker families if a guardian for these two children is needed.
What About Poppy and George?
Lastly, Poppy and George would need guardians if their parents died. Haley and Dylan may not have a lot of money and property to plan for, but their precious children deserve at least basic planning, including naming a guardian and alternates.
At the end of the show, although Haley and Dylan are no longer living with Phil and Claire, they are still living close by. However, Dylan’s mother Farah started appearing once Haley became pregnant. She may want to raise the children should something happen to Haley and Dylan.
What About Your Children?
If you have minor children, you must think about who you want to raise them if you cannot. Although no one will ever care for them as you would, you must nominate someone in your will.
Although the court will still have to decide who will be the guardian, you can rest easier knowing that you have made your wishes clear. Also, by having conversations with your family members ahead of time, you may be able to reduce the possibility of fighting after your death if everyone understands your wishes.
The Estate Planning Tool for Emergencies
It’s also important to discuss what would happen if certain life events came to pass. A power of attorney can help your family determine what you want in an emergency situation. Your “agent” (the person you name as POA) can make decisions using guidelines you lay out with your estate planning attorney.
Whether you’re in a car accident or manage to fall down the stairs, if you’re in a coma, you won’t be making your own decisions. Let your family know what you want for medical care in a situation like this. Don’t get caught unprepared.
Protect the Surviving Spouse
All married couples face the question of what will happen at the first spouse’s death. Some couples, like Phil and Claire, earned and accumulated most of what they own while they were married. It would be understandable for their estate plans to consider everything they own “theirs.” Both of them would likely want everything to go to the surviving spouse.
However, when everything is given to a spouse outright, the hard-earned money and property are susceptible to creditors and predators. If someone you love has personal finance issues, it makes sense to transfer assets into a trust.
A trust is a legal entity much like a business, with a trustee named to care for personal finances. Without a trust, a naive and well-meaning person like Phil could become the victim of a scam artist and give large sums of money away based on a sad story.
Alternatively, a successful and high-net-worth woman like Claire could remarry. Without proper planning, she could accidentally disinherit Haley, Alex, and Luke by leaving everything to her new spouse.
Protect what you leave to your surviving spouse, whether it’s your 1st or 3rd marriage. A trust can help allow your surviving spouse to do the following:
- Receive the income the trust generates at least annually
- Withdraw the principal for specific purposes such as health, education, maintenance, and support
A trust can also let you determine in the trust documents what happens to any remaining money at your spouse’s death. You may name the trustee who will make asset distributions to the intended beneficiaries. Work with your estate planning attorney to find the type of trust that best suits your family’s needs.
Important Benefits of Trusts
Many types of trusts can help meet your planning needs.
Trusts can be either revocable or irrevocable. Revocable trusts can be changed or dissolved by you anytime, while irrevocable trusts are relatively permanent once created.
If you have a revocable living trust, you may alter or dissolve the trust at any time. However, an irrevocable trust is much more permanent. So, if you create an irrevocable trust and later change your mind, you may not be able to dissolve the trust and receive your assets back.
Both of these types of trusts have many benefits. For example, a living trust allows your estate to avoid the legal proceeding of the probate court and pass assets directly to your heirs. And you don’t lose access to a living trust’s assets, since it is revocable. Living trusts can be crucial in avoiding the public and time-consuming nature of the probate courts. To protect their personal matters from becoming public record, individuals in good financial health often create a living trust to guarantee the privacy of their finances.
One example of an irrevocable trust would be a Medicaid trust. In this type of trust, Medicaid does not count the assets in the trust against you when they determine your eligibility for nursing home or assisted living benefits. This way, you can receive Medicaid benefits to pay for long-term care while keeping your hard-earned trust assets to benefit your beneficiaries.
Another option is a testamentary trust that only comes into existence at your death.
A Good Estate Plan Works
Within this blended TV show family, there are many options for who will receive an inheritance from each person.
Jay’s Perspective
When preparing his estate plan, Jay must consider how he wants to divide everything he owns. In his immediate family, he has a spouse, two adult children from a previous marriage, a minor son, and an adult stepson. He also has five grandchildren and two great-grandchildren and must decide who gets what, how much, and when.
He will need to ask himself if it is better to give everything to Gloria (possibly in a trust) for her needs during her life, with the remainder going to Claire, Mitchell, and Joe at her death. —Or if Claire and Mitchell should receive their inheritance while Gloria is still alive. Should he provide for Joe or leave that up to Gloria if she survives him?
While someone might think that their surviving spouse can support themselves without an inheritance, it is essential to have this conversation ahead of time. Without the proper documentation, a surviving spouse can unwind the plan in their deceased spouse’s estate plan.
Phil & Claire’s Perspective
Phil and Claire need to take a look at their own family situation and determine how to divide up their money and property among their children and grandchildren. They have three children who are very different with very different needs.
Haley, the mother of two, may benefit from receiving a more significant share since she has two children to support. Alternatively, Phil and Claire could choose to set aside a sum of money specifically for their grandchildren. Alex may not need an inheritance, given her education and employment opportunities.
Luke, on the other hand, may need more financial assistance. A sum of money could be held in a trust for him, with restrictions to ensure that he is adequately provided for, gets an education, and can invest in good business ideas while protecting his inheritance from lousy business decisions.
Your Perspective
An experienced estate attorney can help you plan for current law so that your family receives more money and avoids capital gain taxes. Working with an attorney who stays up with current state law and knows about estate taxes and other tax laws means paying less estate tax and keeping more of your assets safe and protected for your family’s inheritance!
Using Legal Documents to Plan for the Future of Family Business
Over the course of the series, there are a variety of businesses owned by members of the family. Whether it is a hobby, investment, or a nine-to-five job, these businesses require special consideration when planning for their future.
How Are Businesses Owned?
Depending on the ownership structure (sole proprietorship, partnership, corporation, limited liability company), what happens to the business at the owner’s death may already be dictated by the business’s official documents. If not, there needs to be legally enforceable documentation in place to facilitate the transition.
Who Should Ultimately End Up With The Business?
For business owners, it is easy to get caught up in day-to-day operations. However, it is vital that you look to the future and proactively determine who should run the business. Just like Jay, if you want your child to continue your business, you must have that discussion with them and pave the way for them to take over.
Should the Business Interest Go to the Next Generation?
Depending on the beneficiary’s age, you may need to appoint someone to run the business until your child is sufficiently mature. Instead of relying on the state’s determination of when a child becomes an adult, you can provide specific instructions for when and how your child becomes involved in the business.
An Experienced Estate Planning Attorney Helps You Prepare
For many families across the country, not just the fictitious ones on television, an estate plan is a great way to ensure that you, your loved ones, and your hard-earned money find protection.
At Vail Gardner Law, we are committed to working with families of all shapes and sizes to craft a plan that is as unique and modern as you and your family are. Contact us to learn more about how we can help you and your family plan for the future.