Mortgage Blog

Estate Plan Key Component - Protecting the Family from Money

Estate Plan Key Component - Protecting the Family from Money

November 12th, 2016 | Financial Planning, Retirement Planning, Seniors, HECM Reverse Mortgage, Estate Plan

When we die it is often said that we need an estate plan that encompasses a will or a trust.  There are also other documents like medical directives and power of attorney.  The establishment of a proper plan is important but, in my opinion, a critical component that can easily be overlooked is protecting the family from money and themselves.

Money, whether it’s from an estate or a life insurance death benefit can have catastrophic consequences on the family if the plan is not adequate with clear intent and leadership. A plan should clearly define the intent and the wishes of the deceased and also provide the executor or the trustee full discretion to handle property issues and disbursement.  In other words, if there are several heirs, money matters and control over the disbursement can cause strife within the family and ultimately harm the family contrary to the sole purpose of an estate plan in the first place.

As an example, a recent 85 year old reverse mortgage client has a million dollar plus estate with property, cash and securities, and personal property.  The risk is that they have fourteen beneficiaries of all ages including minor children.  The property is also not in the best shape and there are members of the family who deem themselves as experts with properties etc.  I would also like to point out, as is very common, that there is only one member of the family that has any proven track record of responsibility with money matters.  Irrespective of what documents are signed, the final disposition of this estate and protecting all the family members and children so there is no ill will created throughout the process, will be dependent on the execution of plan.

Addressing this scenario, how do you create a plan to protect the family and the children from division and disputes over the estate?  You certainly don’t want a legal battle to develop that would eat into the family’s inheritance. The best path may be to create a trust with the surviving parent as co- trustee with the assigned trustee.  From here, directives can be placed in the language of the trust stating clearly who has full discretion on how the property and other matters will be dealt with.  This includes how the property will be valued and ultimately marketed for sale.  In other words, the directives may prohibit family from buying the property at less than deemed market value and also prohibit them from involvement in the disposition process.  This keeps the peace so no one feels cheated.  Secondly, a trust will avoid probate and provide more privacy from outsiders over a simple will that must go through probate.  The beneficiaries will be kept informed but they will have the opportunity to receive advances earlier with a trust over a simple will. 

In the end, you want the plan to respect the wishes of the deceased family member and protect the family literally from itself.  You don’t want anyone upset with the perception that someone else’s children may have received more money than another.  You also don’t want any fights over money that could introduce legal battles as a result of intent and leadership not being clearly defined.  It is also important to know that the executor will be personally liable for actions for one year and the trustee for two years with a trust.  This means that they will have to answer for disbursements and how the estate is resolved. 

The executor and/or the trustee will have a lot of work on their hands from the outset.  These chosen individuals may be in charge on paper but the intent of the document and the will of the loved one is what is most important in clarifying who is in charge and should not be questioned.  If you have power struggles over money or power, unnecessary risk and delays enter the equation.  Conversely, if intent and leadership is clear then this can be avoided. As another prime example to put this in better context, if you want to be sure that you protect your family from squabbles, and especially the younger children, you may need to introduce language that will disinherit anyone that starts legal trouble or does not cooperate.  This may sound harsh but it will prevent division in your family after you are gone and it will clearly drive the point that your intentions are to be respected in an orderly and loving fashion.  This is how you protect your family after you are gone.  This is especially true with large families with many beneficiaries.  To me, this is a form of love that will ensure everybody still gets together around the holidays after you are gone. 


George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Located in Fairfax County - Helping seniors with Reverse Mortgages in Virginia, Maryland, DC and Pennsylvania.

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Jefferson Mortgage Group LLC

2536 Leeds Rd.
Oakton, Virginia 22124
FAX: 703-773-6946
NMLS: 935554

Located in Fairfax County, Virginia. Serving all of Virginia, Maryland, DC & Pennsylvania. 


Jefferson Mortgage Group LLC is licensed in Virginia, Maryland, DC & Pennslvania.
Virginia State Corporation Commission License Number MC-5659 and the Pennsylvania Department of Banking & Securities #46259 
The DC Department of Insurance, Securities, and Banking License #MLB935554
Maryland DLLR License #21586

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By refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.

This material is not from HUD or FHA and has not been approved by HUD or any government agency.