George Washington’s Estate Planning Mistake
February 25, 2010
I recently described the marvelous manner in which George Washington used a simple bequest of his swords to express his devotion to freedom and liberty and to instill those values in those who followed.
His Last Will and Testament also stands as a shining beacon of how failure to think through consequences and the personalities of your loved ones can undermine a well meaning estate plan.
Washington’s Will provided that all his slaves were to be freed upon the death of his beloved wife Martha. On the surface this appears to be a reasonable and well conceived expression consistent with his desire to look after the comfort of Martha, but to ultimately underscore his love of freedom and liberty for all men, his own faithful servants included. It was a powerful political statement.
When Martha became aware of this provision she was afraid that she would suffer a fatal event at the hands of her slaves who could wait no longer for the promised freedom. The history books usually make a dramatic statement about Martha’s devotion to the ideals upon which our country was founded when describing her generous action of freeing her slaves soon after her husband’s death. Few realize that her reluctant action was in part motivated by fear of the consequences of not freeing them.
This is a dramatic example of a logical exit strategy gone awry. Today such mistakes remain all too common because of the mistaken beliefs that good estate planning is only for the wealthy.
One crucial fact often overlooked is the importance of making arrangements for minor children.
In today’s world where 1 out 2 marriages end in divorce, young children are often the natural objects of their parents affections and bounty. If any thought is given to changing beneficiary designations after a divorce, many people remove the spouse and name their minor children or their “estate” as the beneficiary of their retirement accounts and life insurance until a more formal plan can be established. That formal plan is often never implemented prior to a premature and unexpected death due to an accident or suddenly terminal illness. The importance of these details often becomes enmeshed with concerns about the cost or the need for a formal estate plan when there are often no other valuable assets other than the untouchable insurance proceeds or retirement plan accounts.
If a decedent’s beneficiary is a minor, often the only choice is to have a conservator appointed and the money placed in a restricted account until the minor is 18.
There is no money available to raise the minor because the money is under the strict supervision of the court. The other parent, however ill equipped financially to provide for the minor, quickly learns that a parent’s obligation of support means not using the minor’s own nest egg for the necessities of life.
And then the minor turns 18. Whamo! all of the proceeds plus the accrued earnings spill out into the minor’s hands subject to all the hopes, dreams, and aspirations of a youth to often raised in an environment of scarcity and often with scorn for the restriction learned from the surviving parent.
If ever there was a case for a protective trust or careful legal work in the planning for one’s demise, this is it. Don’t let this unhappy result become your child’s reality.
What George Washington Taught Us About Estate Planning
February 17, 2010
President George Washington painted by G. Stuart, engraving by H.S. Sadd
At a recent symposium, the presenter described the almost magical way the father of our country turned his bequests of personal property into a legacy that lasted generations.
He described the portion of Washington’s Will that bequeathed his swords to his nephews. Instead of a simple listing of the items and the recipients, he wrote the following words:
“To each of my Nephews, William Augustine Washington, George Lewis, George Steptoe Washington, Bushrod Washington, & Samuel Washington, I give one of the Swords or Cutteaux of which I may die possessed; and they are to chuse in the order they are named. These swords are accompanied with an injunction not to unsheath them for the purpose of shedding blood, except it be for self defence, or in defence of their Country & its rights; and in the latter case, to keep them unsheathed, and prefer falling with them in their hands, to the relinquishment thereof.” [Emphasis Added]
With those simple words he created a lasting legacy far more important than the value of the property bequeathed. In a single sentence he defined his character and his hopes, dreams, and aspirations not only for his nephews, but for future generations yet unborn. Imagine the honored place those swords must have taken in the lives and homes of the recipients and the lessons of freedom taught future generations.
I recently sat with a long time client who was grieving over the loss of his friend of over 50 years as we discussed what to do with his friend’s personal property which consisted of a lifetime of collecting crystal and works of art. I explained his mundane choices as the executor of the estate of distributing the property to friends or relatives who treasured something from the decedent, keeping it for himself as a remembrance, or selling it. We began discussing the value and the potential liquidation value. Suddenly, the conversation turned very somber and my client slowly began telling me a story. “Mark,” he said quietly, “I don’t want any of that stuff, I have my own stuff.” He paused, lost in thought, and then continued. “He loved that stuff. I had no interest in it. But he studied the prices at retail stores and then shopped at second hand stores. He would find a piece he liked and he would carefully examine it.” My client slowly demonstrated a shopper holding up a piece with his hands and he slowly turned the imaginary piece over and around as he examined it. “He would often buy it for 20% of what it would have cost new.” Between the words and the hand gestures, by the time he finished telling the story and composed himself, I knew what he intended to do with the collection that only a few moments before he had described as “just stuff.”
Our lives make a difference. Many of us have an under developed appreciation for what we bring to the lives of those around us. Your Last Will and Testament can be written in your own voice so that the value of what you leave reflects the value of who you are. Contact me for more information about how to put your own voice into your estate plan and emulate George Washington in posterity.