| A Cautionary Tale of A Man Who Knew Better by Guest Blogger Susan Scheide Office Manager and Assistant to Tim Shanahan
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| Susan Scheide, and father Richard |
In February of 2013, following a 13 year battle with Alzheimer’s, my father Richard Scheide passed away. The emotional and financial toll was terrible, and the whole family was relieved when his suffering ended.
My grandfather, Philip Scheide, also died of Alzheimer’s, as did my uncle, Philip Scheide. It’s hard to pin down exactly when we started to see signs of dementia. My first recollection is an event in the year 2000, in Kenya. We were able to brush it off as possibly a little too much “cheer” around the post game drive camp fire. Eventually, it was impossible to ignore that Dad was not himself. He went to see a number of doctors, and after a while he was told that yes, in all likelihood, he too had Alzheimer’s.
Dad was a devoted husband, a good father, a proud American and Marine, and the former head of the trust and private banking departments of a major Boston-based bank. We assumed everything was in order long prior to his death. After all, that was his entire life’s work. Trusts. We knew he had a trust. “Everything” was already in the trust. Or was it?
Married in the early 1950s, my parents had a traditional marriage where my father was the breadwinner, and my mother took care of the kids and the household. It worked well for them. When Dad’s mental status declined, Mom found herself learning to pay bills, file taxes, and make investment choices. She also assumed their estate plans were solid, and nothing needed to be done. They were clients of a private banking department, and Dad’s trust was prepared by a major law firm and professionally managed at the bank. There was a will, power of attorney, health care proxies, and of course the DNR forms.
By the time Dad looked into a long term health care policy, to protect everything he had worked his entire adult life accumulating, there were too many red flags in his medical records, and he was denied coverage. Alzheimer’s patients survived an average of 7 to 10 years when diagnosed before the age of 90 (source: National Institute of Health). It’s easy to see how their life’s savings could be depleted quickly should he require nursing home care.
Mom cared for Dad at home for as long as she could. When his body had all but given out along with his mind, he was moved to a nursing home. Cost: $12,000 per month. Mom sold their home and purchased a unit in an assisted living facility, and also took a small apartment for herself. After two years, Dad was moved to a different nursing home closer to Mom, and fortunately the cost was slightly less. He lived another year in new facility. Cost: $10,000 a month. The math is pretty simple to do. ($12,000 x 24) + ($10,000 x 12) = $408,000. All out of pocket.
After Dad passed away, imagine our surprise when, having submitted all the paperwork we thought was necessary to claim his life insurance, we were informed that the beneficiary of all of his policies was a trust dated 1998. All of Dad’s other assets were held in a newer trust dated 2003. And, oddly, the newer trust did not have language indicating it was a restatement of the older trust. It was its own entity. And when his trust officer had asked him about his life insurance, he told them, “The beneficiary is my trust.” Who can blame them for assuming that someone who used to run their department and would have been their boss if he was still working meant the correct trust?
What does this mean, practically? It means that instead of everything seamlessly passing to my father’s 2003 Trust, with my mother as the beneficiary, Dad’s $60,000 of life insurance is in an estate that now has to be probated. In addition, Dad’s will named a corporate executor (a bank) in addition to my mother. Dad’s trust was moved to a different bank years ago, but he never updated his will to reflect his desire to have the new bank and trust department act as executor. We had to ask the original bank to decline to serve, which they did, and apply to probate court and ask for permission for the new bank to be appointed to settle the estate.
How did this happen? Well, honestly, that money wasn’t being counted on to save the day. It was a collection of small policies purchased for Dad by former employers, and largely forgotten about. They were paid in full, and when Dad wrote a new trust, he just forgot about them. It was an easy mistake to make. He thought he had everything wrapped up tightly, so Mom would not have to worry or really do much of anything. He just forgot. Alzheimer is a cruel, insidious disease that slowly but surely destroys your brain. I know he TRIED to do everything right. But he waited just a little bit too long.
If the former head of the trust department can make a mistake like that, it’s easy to see how those of us who do not live and breathe estate planning can overlook things. Mom’s trust officer estimates it will be a year before she sees that life insurance money. She’s fortunate that she doesn’t actually need it to live on. But Dad would be terribly disappointed that his plan didn’t go quite as expected.
I wanted to write about this because I know many people who have no estate plans at all. They think about it. They intend to get to it. And then one day it’s too late. Or they get married or divorced. Life changes. Your estate plan has to keep up. My own brother has a small life insurance policy, and despite being divorced for many years now, just hasn’t gotten around to changing his beneficiary from his ex-wife to his three sons.
You’re really never too young to have an estate plan, and it need not be a terribly costly thing to have a will and a trust drawn up. There are even “do it yourself” health care proxies and many other such forms. Remember, your estate plan isn’t for YOU, it’s for those you love that you leave behind. Don’t leave them any surprises that make life difficult.
Your Compass Capital Trusted Financial Advisor can help you find and work with the appropriate professionals to get your estate plan started, or get your plan updated if it’s time.
I’ll close this with the two words that embody who my father was, words most of you will recognize— Semper Fidelis.
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| Richard Scheide with the loves of his life |