TV Lessons in Estate Planning: Family Ties

by David A. Kubikian

Season 2, Episode 2

Background: Family Ties is a sitcom that first aired on NBC on September 22, 1982. The series, which ended in 1989, revolves around the Keaton family living in Columbus, Ohio in basically real time (during the Reagan Administration).

The Family Tree: Steven and Elyse are parents to Alex P., Mallory, Jennifer and later, Andrew. Steven and Elyse are children of the 60s and the hippie generation. Alex P. Keaton is the polar opposite, a young conservative Reagan-ite.

Fun Facts: Michael J. Fox won three consecutive Emmys for lead comedic actor for his role as Alex P. Keaton. The show was an acting launching pad and led to his famous roles in Back to the Future, Teen Wolf and many other movies. The role of Alex was first offered to Matthew Broderick and Fox was picked only after that offer was refused.

Estate Planning Angles:

1. Minor Issues – As we all know, if you die in NY without a Last Will & Testament, there is a statutory scheme for how your estate is to be divided. No, the government is not going to get your assets unless you have a very, very bare family tree. If you die with a spouse and kids, $50,000 + 1/2 of the probate assets go to your surviving spouse with your children splitting the remaining non-probate assets. For the Keatons, the bottom line is that if something happened to Steven or Steven and Elyse, the children would be entitled to some percentage of the estate. If something happened to Mom and Dad and they did not have a will, 1/4 of the assets would go to each child.

The problem is threefold. First, the kids are, well… kids. Specifically, they are minors and their inheritance will need to be held in trust for them. Who would serve as their ‘trustee’? Good question. Without a will, it can end up being anyone and likely a family member of some sort. Parents need to think about these things and have someone in mind to take care of their kids’ finances.

Second, kids tend to get older over time and all the financial protection a court appointed fiduciary can provide for the kids ends at age 18, “the year of majority” in New York. You were 18 once. What would you do with a ton of money and no parents? Exactly. Typically, I advise clients to have provisions in their will that name trustees to hold assets for kids in trust in graduated steps with 100% of the inheritance received by the child outright when they reach 30 or 35 years old.

Third, as I mentioned, the kids are minors and, besides the financial issues, we need someone to be a legal guardian. If you want to have a say in who will be your child’s guardian if the unthinkable happened, you need to state your preferences in your will.

2. Have Your Cake and Eat It Too – In real life, Michael J. Fox is living with Parkinson’s Disease. What if Alex P. Keaton was dealing with an illness or condition which made him eligible for Social Security Income or Disability, or made him Medicaid eligible due to his condition? Getting these benefits means that in addition to having the need mentally or physically, one has a financial need. In other words, there are income and resource caps to get these benefits and too many assets can disqualify you. Makes sense. If you are Bill Gates, you probably should not have the government pay for anything. The problem arises when someone receiving these benefits receives an inheritance.

Believe it or not, receiving an inheritance can be a bad thing. If you are Alex P. Keaton and you are receiving benefits which are, in part, needs-based, getting $100,000 will make you ineligible for those benefits. You will be over-resourced. As a result, you will need to use those excess assets to pay for the care you receive and to make up for the income you receive until you are no longer over-resourced.

What’s the alternative? I’m glad you asked. A supplemental needs trust created for Alex by Steven and Elyse would be a great idea. The trust would be created to supplement the benefits that Alex is already receiving, and the powers and rights that Alex has in trust would be limited in order to ensure that he still qualifies for all of those government benefits. In other words, the assets in the trust would not be considered Alex’s resources. Still, the trust assets would and could be used to supplement Alex’s life and pay for things like vacations, movies, concerts, etc. In addition, once the trust is created, there is now an entity that family and friends can name as a beneficiary for wills, retirement assets, or life insurance so that Alex gets the inheritance they want him to get without affecting his eligibility for the benefits he needs.

Stay tuned for next week’s episode: Beverly Hills, 90210

The TV lessons in Estate Planning blog provides general information for educational (and entertainment) purposes only.  Due to the particulars of each person’s circumstances, this blog should not be considered legal advice applicable to your specific fact pattern.

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