I had coffee with Armond Budish this morning, who’s plugging
his new
book on estate planning. It’s called "Why Wills Won’t Work (If You
Want to Protect Your Assets): Safeguard Your Estate for the Ones You Really
Love," and, yes, it does italicize the "Really". That’s one of
Budish’s points: it turns out that people love to play favorites when they decide
who they’re giving their money to, and they’re often particularly keen to give
their money to their their own direct descendants rather than to people who
simply married into the family.
Budish has been an estates lawyer for many years, and has had a lot of clients,
so he knows how people really think. "The biggest concern people have is
that they don’t want their money to go to the spouse," he says. "I
hear that all the time." In his book, he even talks about ways of setting
up a trust so that not only does your son-in-law or daughter-in-law not benefit
from it, but in some circumstances that person doesn’t even find out about the
trust’s existence, even during a divorce proceeding.
The book goes into a lot of detail about all the different types of trust that
people can set up to perform all manner of functions. These trusts all avoid
the hassle of probate, but they also can’t be seized in those divorce proceedings;
they can’t be attached by creditors; they can be structured so that they don’t
count towards one’s wealth for purposes of Medicaid eligibility; etcetera. There’s
a lot of talk about how best to avoid paying taxes in general, and estate taxes
in particular.
So it came as a surprise to me that Budish is not only a Democrat, but is actually
the State
Representative for District 8 in Cleveland, Ohio. He sounds quite Republican
in his book – he refers to the "death tax" rather than the estate
tax, for instance – but it turns out he’s all in favor of the estate tax,
calling it "probably the most fair tax". He spends a lot of the book
talking about how to protect assets from frivolous lawsuits, but he’s also opposed
to tort reform, and will admit, if pushed, that protecting assets from frivolous
lawsuits also protects assets from entirely justified and proper lawsuits which
he thinks people should be able to bring.
Of course, there’s no real contradiction here. Budish is a good lawyer, and
like any good lawyer he puts his clients’ interests first when he’s representing
his clients; on the other hand, when he serves politically, he puts the greater
good first. But it’s still very interesting to me that a Democrat wrote this
book. The main theme of the book is that people can and should target their
estates very carefully, making sure that their assets trickle directly down,
vertically, if you will, to their direct descendants. The book is full of the
nasty things that can cause money to be distributed horizontally, away from
direct descnedants: lawyers’ fees, litigation, divorce, taxes, and so forth.
But a large part of the difference between Republicans and Democrats is that
Republicans like to keep wealth where it is, while Democrats are more inclined
to favor horizontal redistribution.
We did talk a bit about one of my favorite examples of horizontal redistribution
of wealth: the multi-millionaire John Kerry. Kerry became so rich by marrying
Teresa Heinz, who became dynastically wealthy by marrying the late senator and
ketchup heir John Heinz. Did Budish really want to prevent this kind of redistribution?
That’s certainly the impression one gets from reading his book, although really
all Budish does is enact the desires of his clients. If they’re happy for their
money to be able to flow first to their wife and then to their wife’s second
husband, that’s fine. And if they’re not happy about that possibility, they
can prevent it.
And it turns out that rich people – people in general, most likely –
have a desire to control things even from beyond the grave. They can’t spend
money at that point, but they can try to ensure that their money benefits certain
individuals and not others. The trusts in the book are all essentially ways
in which people can live, or at least enact their wishes, after their death.
No one, it seems, is ever happy just letting go.