That Plan Is Too Complicated, I Just Want To Keep It Simple . . .

I heard the statement once: “For every difficult problem, there is an easy solution, and it is usually wrong.”  I think about that statement often when I am meeting with people who have put in place “simple” solutions to problems and are then facing the very complex reality of trying to untangle the consequences of that approach.  The following are all real stories:

  • A parent puts a minor child on a parcel of property for “asset protection” in the event he is sued. A simple solution that avoids the more complex and sometimes expensive tools used in asset protection planning. Fortunately, he is not sued, but when he decides to sell the property he learns an expensive guardianship/conservatorship proceeding will be necessary to complete the sale and that the monies from the sale must be held for the benefit of the minor child who will receive them all when she turns 18.

  • A parent wants to avoid probate, but feels like a trust is just to complex, so she puts her son on the title to her home. The son hits hard financial times and ends up with a judgement against him. Now the creditors are seeking to foreclose his portion of the home. She is faced with an expensive legal battle to try and protect the home.

  • A father wants to qualify for a government welfare program such as Medicaid to pay the cost of his nursing home care, but he feels the plan proposed by his attorney is just too complicated. Instead he decides to “give” his farm to one child with oral instructions to sell it after he is gone and share the proceeds with the siblings. The child decides that dad really just wanted him to have the whole thing. 50 years after the gift and 20 years after a lawsuit is filed over the matter, the property is finally sold by court order. Who knows how much was saved in nursing home costs, but it likely doesn’t hold a candle to what was spent on legal fees over twenty years of litigation.

The planners toolbox has a wide array of tools that have been tested and proven successful. Some of those tools may feel complicated and some actually are complicated.  But those complexities and costs pale in comparison to undoing “simple” solutions gone wrong.  This reminds me of the John Wooden quote: “If you don’t have time to do it right, when will you have time to do it over.”  Use qualified advisors. Use tried and true methods.  Don’t assume that simple is really all that simple.