April 30, 2020

A tale from the grave – Banton Trusts – How to protect your estate from the claws of a financial predator

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A lot has been written about “Henson” Trusts and their usefulness for protecting a beneficiary’s means-tested government disability pension from claw-back upon receipt of an inheritance. Surprisingly little has been written to publicize what I have called, a “Banton” Trust. A Banton Trust was a trust that middleclass senior citizen George Banton created in the mid-90’s that proved to be a pivotal estate planning maneuver. On his death a trust, that he had created two years before, ended up preserving an inheritance for his children while withstanding a savage attack on his estate by his predatory bride.

When George was 88 and living alone, he began to show signs of dementia and his physical health was failing, so with the help of his children he moved to a long-term care home. It was there that he met a woman 55 years his junior. Yes, that’s right, she was 33!

I will fast-forward through their whirlwind relationship, all the way to their secret marriage 4 months after they met. Less than a week after exchanging vows his new bride coerced him to make a new Will leaving her his entire estate and to change his power of attorney to put her in complete control of his money.

Sadly, within a few months George died. George’s widow’s plans came under quick attack by his kids and their lawyer, and the case ended up in a 9-day trial. The legal issues presented to the court were complex and in the end George’s children prevailed with at least part of his estate. The lawyers ended up with most of the estate, leaving the new bride with nothing. My cynical side as a lawyer, suggests that justice prevailed!

Here is what happened. George had moved his home to a trust a few years before he was married so the court ruled that the proceeds from its sale were deemed to fall outside his estate and were therefore insulated from his predator wife’s claim. While marriage revoked George’s Will and locked in some inheritance for his new wife his marriage has no effect on the continued existence of the trust. Admittedly, this trust was set up to save probate tax, but in the end, it saved almost half his estate for his kids. His new bride did get some money but she blew it on lawyers, including both a failed trial and a loss on a subsequent appeal. The rest of the estate (more than half) was completely swallowed up by the lawyers’ fees, which, by the way, the Court directed.

George’s estate planning prowess was the motivation of this article and the birth of what I call, a “Banton Trust”. This is a trust I believe all married couples, and widows and widowers, should give serious consideration as part of their estate plan. Using a family member as protector trustee is a great way to ensure someone other than your surviving spouse is in place to “protect” your spouse from him or herself and from others.

Banton Trusts offer several benefits to an estate plan. These trusts can and should be customized to fit the special circumstances of the client. There is no one size fits all solution here. A lawyer who is a trust professional should be consulted.

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