Last weekend, my wife and I saw “The Descendants,” the new film by director Alexander Payne (Sideways, About Schmidt and Election). The film has drawn significant Oscar buzz both for the actors’ performances and the film itself. Additionally, it has created a buzz amongst estate planning professionals regarding its two main plotlines.
The movie focuses on Matt King, played by George Clooney, who is in the midst of two major life events. As the film begins, we learn that King is the trustee of one of the largest parcels of land in Hawaii on behalf of himself and his other family members. The family has decided to sell the land, a move that will produce a significant windfall for the family, but ultimately, the decision of who to sell the property to and whether to sell at is left to King alone.
The other major life event involves a speedboat accident involving Matt’s wife, Elizabeth. As the film begins, we find Elizabeth in a coma, leaving Matt with even more on his plate. Each of these life events on their own would be difficult to manage, but both simultaneously occurring (and additional drama which I won’t spoil here) leaves King with the weight of the world on his shoulders.
Fortunately, King, his wife and his ancestors successfully prepared for these events and the results of their planning manifest during the film. The film provides three very important lessons regarding estate planning:
1. A Health Care Proxy can reduce family friction over the care of an incapacitated loved one-When a loved one falls ill and decisions need to be made about their care, underlying conflicts between family members may get in the way of what’s best for the incapacitated person. If a health care proxy has been executed, those conflicts can be prevented. In the film, it becomes clear that Matt and his in-laws do not agree on much. The one thing that they do agree on is the wisdom shown by Matt and Elizabeth by executing health care proxies.
2. Not all trusts are designed to last forever-We learn early on that the land is being sold because the perpetuities period for the trust is set to expire in five years. Hawaii, like many other states, has codified a common law rule called the Rule Against Perpetuities, which requires a disposition of property to eventually vest in an individual. Practically, this prevents a trust from continuing forever. Some states have modified or eliminated this rule and it has become more common for continuous trusts known as dynasty trusts to hold property permanently in trust. Currently, New York has retained the common law rule and trusts and other dispositions must end 21 years after the death of a specified individual who was alive when the disposition was created.
3. It is important to pick a fiduciary who will protect your family’s interests and protect the property you leave behind-Throughout the movie, Matt’s decision regarding the land is a point of interest for not only his family, but for many in the community as well. In the end, his decision is based on what he believes his predecessors would have wanted for his family and not necessarily what the current generation of beneficiaries wants. In choosing Matt, his ancestors believed that he would provide for the rest of his family while preserving and protecting the family property. His personality, intelligence and management capabilities, and not just his status as a relative, made him a good choice to oversee this valuable property.
The estate planning aspect of “The Descendants” helps tie the two life events together and they help to define the character of Matt King. In many ways, the legacies we leave behind through our estate plans help define how our descendants will remember us after we’re gone.
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