Control Your Money Even After You Die

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.

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