Wills, Trusts & Estates Prof Blog: “Estate law experts expressed surprise but not shock that a wealthy person like Aretha Franklin would put off making a will until it was too late. Laura Zwicker, an attorney who specializes in estate planning but is not affiliated with the Franklin estate, says she sees it happen far too often. “People don’t like to face their own mortality.“
Daily Mail: “A Los Angeles judge has eliminated two purported sons of Charles Manson from the battle over his estate. Matthew Lentz, a musician who claims Manson conceived him at an orgy in 1967, and Michael Brunner, whose mother was a member of the family, were two of four people fighting over the cult leader’s estate. On Friday, Judge Clifford Klein eliminated them on lack of proof that they were the rightful heirs to all memorabilia or, crucially, his image and publishing rights.”
JDSupra: “Once couples have children, they are eager to get a plan in place for who will take guardianship of their children. Having children and not having a will or a selected guardian means parents are left to worry about what would happen in the event of their untimely death. For example, if both parents die, leaving no will, and minor children, any money the parents had will pass to the children. For children under the age of 18, the court would then need to supervise any money the children inherit in a conservatorship. This involves an attorney filing to have someone be appointed a conservator, and the conservator having to work with the court to manage the money, including the court having to approve any expenditures for the child.“
WealthManagement.com: “Life is more complicated for families who have a loved one with a disability. From finding the right medical professionals and the right schools or other programs, to obtaining necessary therapies and services, individuals with disabilities face additional steps, extra time and a need for specialized knowledge at every stage of life. In addition to facing these stresses, families may receive misinformation, which makes decision making more difficult.
Planning for Beneficiaries with Special Needs
While the development of an estate plan can be difficult for any family, for a family of an individual with a disability, the planning, as with all things, has added complexity. Primary caretakers of a loved one with a disability routinely wonder who’ll care for, love and financially support their family member when they’re gone.”
Tom Wolfe’s will reveals he left the bulk of fortune to his wife of 40 years and asked to be cremated
Daily Mail: “Late author Tom Wolfe left his estate to his wife and two children, it has been revealed. Wolfe’s will was filed in Manhattan Surrogate’s Court on Thursday.The ‘new journalism’ pioneer left his wife, Sheila, ‘all of the tangible personal property’ and ‘all my right, title and interest to any real property and any cooperative apartment used by me or my family as a residence…,’ according to court paper.”
Forbes: “Mom or dad has passed away and despite your requests over the last few years for them to see a lawyer and do a will, they never did. What do you do now. Make a diligent search for a will. Look through your parent’s records and file cabinets, talk to their close friends and other relatives, ask their accountant and any lawyer they worked with in the past. Look around the house for business cards of lawyers, accountants or financial advisors.”
Bloomberg: “At first glance, it may look like brazen entitlement: Sixty-three percent of affluent children between the ages of 18 and 22 say financial stability in retirement will depend on inheriting money. As in, the money their parents spent a lifetime accumulating—or, given increasing income inequality, inherited themselves. Before you start growling, consider that this may be a signal of desperation, not greed. The rise in student debt, increased life expectancy and the many competing priorities for money that are considered the “new normal” for younger generations have them wondering how they will pay for it all.”
Kiplinger: “The ABLE Act of 2014—the acronym stands for Achieving a Better Life Experience—allowed people of any age who developed a qualifying disability before age 26 (or their parents, relatives or friends) to invest up to $15,000 per year in an account that they can tap tax-free. Now, four years later, 36 states and the District of Columbia offer ABLE plans, and more states are joining their ranks. Texas introduced its ABLE program in May, and plans in California and several other states are on the way soon.”
TrustBuilders.com: “If you have a child who is addicted to drugs or alcohol, or who is financially irresponsible, you already know the heartbreak associated with trying to help that child make healthy decisions. Perhaps your other adult children are living independent lives, but this child still turns to you to bail him out – either figuratively or literally – of trouble. If these are your circumstances, you are probably already worrying about how to continue to help your child once you are gone. You predict that your child will misuse any lump sum of money left to him or her via your will.“
Washington Post: “Artist Carey Maxon was living in Brooklyn in 2015 when she received an email informing her that she had been named sole heir in a will in Italy. It was not a scam. Maxon recognized the name of the executor who sent the message — and of the architect whose farm she had lived on after college. Ermanno Gardani had died, leaving her a Tuscan estate, complete with 1,000 olive trees, forests, farmland and two homes, as well as an apartment in Milan.”
TMZ: “The people who manage Michael Jackson’s estate say The Walt Disney Co. has some nerve for profiting off the tears of MJ’s kids and stealing a bunch of its property … all to make a shoddy TV special they claim never came close to documenting Michael’s ‘Last Days.’ The estate just sued The Walt Disney Co. claiming copyright infringement and saying it never had permission to use a bunch of its footage for its “The Last Days of Michael Jackson” TV special … which premiered last week to more than 5.5 million viewers.”
The Sacramento Bee: A Sacramento woman is accused of cheating beneficiaries of a trust and using some of the money to gamble in Las Vegas, authorities said Wednesday. A federal grand jury returned an eight-count indictment against Loretta Darlene Stewart-Cabrera on April 26 charging her with mail fraud, wire fraud and money laundering, U.S. Attorney McGregor W. Scott announced.
Forbes: “At the Forbes 400 Summit on Philanthropy in San Francisco on Wednesday, billionaire investor and philanthropist Warren Buffett took to the stage to discuss his lifetime of giving. The Oracle of Omaha, who will turn 88 in August, pointed out his own longevity–“I have lived for more than a third of the life of this country”–and discussed how his three children may carry on his philanthropic legacy. “Every single share of Berkshire I own will be diverted into philanthropy 10 years after my estate is executed for future philanthropists who can see future needs,” Buffett told conference attendees. “I might be able to think outside the box, but when the box is 6 feet under, I’m not so sure.” His remarks contained some valuable advice–wisdom picked up in the course of his nearly nine decades.”
Schiff Hardin: “Life is more complicated for families who have a loved one with a disability. From finding the right medical professionals and the right schools or other programs, to obtaining necessary therapies and services, people with disabilities face additional steps, extra time, and a need for specialized knowledge at every stage of life. In addition to facing these stresses, families may receive misinformation, which makes decision-making more difficult. While the development of an estate plan can be difficult for any family, for a family of a person with a disability, the planning, as with all things, has added complexity. Primary caretakers of a loved one with a disability routinely wonder who will care for, love, and financially support their family member when they are gone.”
TMZ: “John Mahoney, the beloved dad on “Frasier,” left behind millions of dollars … and TMZ’s learned there’s a long list of potential benefactors.”
Student, 21, Flushed Her ‘Emotional Support’ HAMSTER Pebbles Down the Toilet and Drowned It After Spirit Airlines Banned It from Traveling with Her (and Now She’s Suing)
DailyMail: “A student who flushed her hamster down the toilet when Spirit told her she couldn’t fly home with it, is now attempting to sue the airline for causing emotional distress. Belen Aldecosea claims she didn’t have any other options but to kill her pet Pebbles rather than miss her flight back to Fort Lauderdale, Florida, in November after staff informed her that rodents were not allowed aboard.”
Bloomberg: “When Ikea’s Ingvar Kamprad died Saturday at age 91, he was ranked No. 8 on the Bloomberg Billionaires Index thanks to his control of a global retail fortune valued at $58.7 billion. His wealth will now be dissipated because of a unique structure put in place by Kamprad to secure the long-term independence and survival of the Ikea concept. Kamprad disputed his status as one of the richest men on the planet, having decades earlier placed control of the world’s largest furniture seller into a network of foundations and holding companies.”
Schulte Roth & Zabel LLP: “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (“Act”) was enacted in December 2017 and implements a wide range of changes to existing tax laws. The Act temporarily increases (from Jan. 1, 2018 until Dec. 31, 2025) the federal estate, gift and GST tax exemption amounts from $5.6 million to approximately $11.2 million.”
Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.
Help your loved ones avoid becoming one of these statistics. You need to educate and update your heirs about your wealth transfer goals and the plan you have put in place to achieve these goals.
What Must You Communicate to Future Generations to Facilitate Transfer of Your Wealth?
You must communicate the following information to your family to ensure that they will have the information they need during a difficult time:
- Net worth statement, or at the very minimum a broad overview of your wealth
- Final wishes – burial or cremation, memorial services
- Estate planning documents that have been created and what purpose they serve:
- Durable Power of Attorney, Health Care Directive, Living Will – property management; avoiding guardianship; clarifying wishes regarding life-sustaining procedures
- Revocable Living Trust – avoiding guardianship; keeping final wishes private; avoiding probate; minimizing delays, costs and bureaucracy
- Last Will and Testament – a catch-all for assets not transferred into your Revocable Living Trust prior to death, or the primary means to transfer your wealth if you are not using a Revocable Living Trust
- Irrevocable Life Insurance Trust – removing life insurance from your taxable estate; providing immediate access to cash
- Advanced Estate Planning – protecting assets from creditors, predators, outside influences, and ex-spouses; charitable giving; minimizing taxes; creating dynasty trusts
- Who will be in charge if you become incapacitated or die – agent named in your Durable Power of Attorney and Health Care Directive; successor trustee of your Revocable Living Trust and other trusts you’ve created; personal representative named in your will
- Benefits of lifetime discretionary trusts created for your heirs:
- Fosters educational opportunities
- Provides asset, divorce, and remarriage protection
- Protects special needs beneficiaries (if properly drafted)
- Allows for professional asset management
- Minimizes estate taxes at each generation
- Creates a lasting legacy for future generations
- Overall goals and intentions for inheritance – what the money is, and is not, to be used for (in other words, education vs. charitable work vs. vacations vs. Ferraris vs. business opportunities vs. retirement), and who will be trustee of lifetime discretionary trusts created for your heirs and why you’ve selected them
- Where important documents are located – this should include how to access your “digital” assets
- Who your key advisors are and how to contact them
How Can Your Professional Advisors Help You Communicate Your Wealth Transfer Goals?
Your professional advisors are well-positioned to help you discover your wealth priorities, goals, and objectives and then communicate this information to your heirs. This, in turn, will prepare your heirs to receive your wealth instead of being left to figure it out on their own and, as statistics have shown, lose it all.
We are available to assist you with figuring out your wealth transfer goals, putting a plan in place to achieve these goals, and effectively communicating this information to your loved ones.
Forbes: “When I would tell people that I was working on a book about estate planning, many of them looked at me quizzically because they weren’t sure what I meant. Others said, “Oh, that’s not something I need, because I don’t have an estate.”
Contrary to popular misconception, you don’t have to own a big house to have an estate. Your estate consists of everything you own when you die, including your home, personal property, investments, bank accounts, retirement plans and any interests in a family business or partnership. Beneficiary designation forms control who gets retirement accounts, along with life insurance proceeds. For most other assets, you need a will or living trust that says who gets your stuff.”
Question: I was recently divorced, but my estate plan names my former spouse in a few places. What should I do?
Answer: Revise your estate plan! You should always think about updating your estate plan when a major life event happens. Divorce or legal separation from your spouse is one of these events. There are probably a number of places in your current estate plan that name your former spouse. These are the areas that you should consider updating:
- Incapacity planning. Who did you name as your agent under your healthcare power of attorney or financial power of attorney? If you were to become incapacitated, your current estate plan probably says that your spouse should make all of your healthcare decisions and should have the ability to access your finances and make financial decisions. Since you probably do not want your former spouse to make these decisions for you, consider changing your healthcare agent and financial agent to someone like a trusted friend or family member.
- Inheritance planning. Your current estate plan probably states that if something were to happen to you, all of your assets should go to your former spouse. After a divorce, you probably don’t want your former spouse to inherit everything. As such, you should change the primary beneficiary of your will or trust.
- Life insurance. Your current life insurance policy might name your former spouse as the beneficiary of that policy. Talk to your life insurance company about updating the beneficiary designations on the policy. Another life insurance issue could arise if your divorce settlement requires you to maintain life insurance for your children. If so, you should consider creating an irrevocable life insurance trust which will ensure that the life insurance benefits are properly transferred after the divorce, and protect the benefits from future events and estate tax issues.
- IRA and other accounts. When you set up your IRA, you had to designate one or more persons to be the beneficiaries of that account should something happen to you. If you set up the account while you were married, you might have listed your former spouse as the beneficiary. Contact your IRA company to update the beneficiary designations on your account. Also, if you set up your bank accounts with a “pay on death” designation, be sure to update these designations as well.
California has finally joined the majority of states and recognized the tort of intentional interference with expected inheritance (“IIEI”). This adoption was done by the California Court of Appeals based on the fact that the IIEI claim is consistent with other California laws, the fact that of the 42 states that have considered adopting an IIEI claim, 25 states have adopted the claim, that the US Supreme Court has called IIEI as “widely recognized” tort, and other public policy considerations.
The ruling came out of the California Court of Appeals for the Fourth Appellate District, after the deceased’s longtime partner was denied any inheritance by the California probate court. Brent Beckwith was in a committed relationship for nearly 10 years with partner Marc Christian MacGinnis. MacGinnis had no living family members other than his sister, Susan Dahl. But MacGinnis was estranged from his sister.
At one point, MacGinnis showed Beckwith a will on his computer that divided his $1 million plus estate between Beckwith and Dahl. MacGinnis never signed the will. MacGinnis wanted to print and sign the will, but was never able to do so. MacGinnis later fell ill. He asked Beckwith to print the will. When Beckwith couldn’t locate the will, MacGinnis asked Beckwith to prepare a new will, based on the distribution plan MacGinnis had already discussed with Beckwith. When Beckwith called Dahl to discuss the will, Dahl claimed that she had friends who were attorneys and she would have them draft a trust for MacGinnis, which she claimed was more appropriate for her brother. She told Beckwith not to give the new will to MacGinnis for signing. A few days later, MacGinnis went in for surgery. The doctors told Dahl that MacGinnis may not recover from the surgery. However, because Beckwith “was not family”, the doctors did not tell him about the potential risks of the surgery. Dahl did not share this information with Beckwith nor did she ever give MacGinnis any trust documents to sign. MacGinnis later died without signing any estate planning documents.
Since he did not have an estate plan, Dahl was able to successfully claim that she was the sole heir to MacGinnis’ sizable estate. Beckwith disputed Dahl’s claims, but since California’s rules of intestate succession do not recognize MacGinnis’ partner of nearly 10 years, Beckwith got nothing. Beckwith later sued, claiming that Dahl had improperly interfered with his expected inheritance. The result was the court recognizing a new claim for IIEI.
In California, a plaintiff may plead an IIEI claim only if a probate remedy is not available. The California Court identified the five specific elements that a plaintiff must allege to state a claim for IIEI:
1. Expectation of inheritance. The plaintiff must plead that he or she had an expectancy of receiving an inheritance.
2. Causation. “[T]here must be proof amounting to a reasonable degree of certainty that he bequest or devise would have been in effect at the time of the death . . . if there had been no such interference.”
3. Intent. “[T]he defendant had knowledge of the plaintiff’s expectancy of inheritance and took deliberate action to interfere with it.”
4. Tortious interference. “[T]he interference was conducted by independently tortious means, i.e., the underlying conduct must be wrong for some reason other than the fact of the interference.”
5. Damage. “[T]he plaintiff must plead that he was damaged by the defendant’s interference.”
To read the entire story, visit Estate of Denial.
JD Supra: “Beneficiary designations are forms that are routinely completed for life insurance policies, retirement accounts and even some bank and investment accounts. The forms say who will receive the asset upon the asset owner’s death. When a beneficiary designation is in place, it generally controls the disposition of the asset it is associated with, regardless of what one’s will or other estate planning document says. As part of a periodic review of your estate plan, it is vitally important to review all of your beneficiary designations. This is particularly important when facing major life events such as divorce, the death of a beneficiary, birth of a child, or the marriage of a beneficiary to a less-than-desirable spouse. While Pennsylvania law does provide some protection in this area, as a practical matter insurance companies and retirement plan administrators are extremely reluctant to pay benefits to anyone other than the individual or individuals named on the beneficiary designation.”
LD News: “A frequently overlooked aspect of estate planning is giving full consideration to beneficiary designations on life-insurance policies you possess.
It is important to keep in mind that if you prepare a will, the will does not usually control the distribution of your life-insurance proceeds. Therefore, when you are making or revising your will, equal attention should be given to your life-insurance beneficiary designations.
Frequently, an individual will change his will but entirely overlook his life-insurance beneficiary designations. This problem is made worse by the fact that life-insurance proceeds occasionally have a greater value than the estate assets that are being distributed by the person’s will.”
Vitals on MSNBC: “Some do it with malice. Others, through a misguided notion that money or family heirlooms don’t really matter to the person. Whatever the reason, the plight of the disinherited — or those who may be cut out of the family wealth in the future –has been highlighted by a bitter legal battle between Australia’s “richest mom,” Gina Rinehart, and her three children.
The billionaire says it would be in the “best interests of the beneficiaries to force them to go to work” rather than let them inherit her mining empire.
Then there’s Mary Beth Caschetta, whose father cut her out of his will in dramatic movie star style.
“There was a line in my father’s will similar to what Joan Crawford used when she disinherited her daughter,” says the 45-year-old medical writer and author from Massachusetts. “‘I leave no bequest to my daughter for reasons known to her.'”
Times-Herald Record: In elder law estate planning, we often think of trusts, wills, powers of attorney, health-care proxies and living wills as documents and tools to express our wishes in the event of disability or death.
One other very important facet of planning is the “beneficiary designation,” a contractual document that directs where an asset goes when you pass away. Most commonly, we see beneficiary designations for life insurance policies, annuities and IRAs and other qualified plans. A proper plan includes careful decision-making regarding the beneficiary, with broad-ranging effects on keeping assets in the bloodline and protecting assets from creditors and nursing home costs.
Inheritance trusts are an increasingly popular way to keeps assets in the bloodline and protect your inheritance to your children from the children’s creditors, including divorcing spouses. However, if your assets are held substantially in qualified plans, the contingent beneficiary designation on those accounts should be changed to the children’s inheritance trusts, rather than to the children as individuals.
When the first spouse dies, the asset passes to the surviving spouse, and when the second spouse passes away, the assets go to the inheritance trusts. In this way, the children can only leave the qualified plan to your grandchildren or your other children. On the other hand, if you name your children as individuals as the contingent beneficiaries, your children can pass your hard-earned money to a spouse or other non-blood beneficiary.
Read the rest of this article here.
Forbers: Applying Murphy’s Law, “If anything can go wrong, it will,” to estate planning is crucial because in this case when something does go wrong, it goes very wrong and you aren’t around to fix it. Murphy’s Law at first glance appears to be overly pessimistic but the original intention of Capt. Edward A. Murphy wasn’t to depress anyone; it was to have a successful outcome. Edward Murphy was an engineer who was involved in the U.S. Army Air Force Aero Medical Laboratory’s project MX-981. Project MX-981 was designed to test the effects of deceleration forces of high magnitude on the human body. When a technician wired all of the strain gauges backwards, Capt. Murphy was heard muttering his famous phrase and the rest is history. Since they assumed mistakes were being made and things would go wrong, the attention to detail was heightened and the inevitable errors were caught. When asked during a press conference how it was that nobody had been severely injured during the tests, Dr. John Stapp credited Murphy’s Law, indicating that it was important to consider all the possible things that could go wrong before conducting a test, and then counteracting them.
A few years ago, I was going to give a financial education workshop to a group of petroleum engineers near Bakersfield, California and I happened to meet someone on the airplane who regularly presented to engineers. He gave me some advice to challenge them to find something wrong in the workshop—a statistic or a calculation with an incorrect formula, something like that. First of all, my flight companion mentioned, they are doing that anyways, but when they don’t find something, credibility instantly increases, and if they do find something, you certainly want to know. We have a lot to learn from the inquiring mind of an engineer and how he approaches his task constantly looking for mistakes, possible problems, and worst-case scenarios. Most people take the approach that “everything is fine.”
Everything is not fine. My experience with estate planning is that there are mistakes, oversights, and omissions all over the place. Over my 25-year career, I have seen countless horror stories. One of the worst cases I encountered was a young woman in her thirties whose mother sadly passed away from breast cancer in her early 50’s. The mother had listed her own mother (the grandmother) instead of her children as the beneficiary on her IRA plan (presumably when the children were minors). Unfortunately, the grandmother was on Medicaid so any funds inherited were to go to the state. I am sure the mother never dreamed that she had the wrong beneficiary.
Having the wrong beneficiary is a very common mistake and when it goes unnoticed, there can be dire consequences to your loved ones. Here are five estate-planning mistakes that you should assume you are making and take immediate steps to fix:
You have the wrong guardian listed for your children: A will is a hand from the grave to give instructions to your state as to who you choose as guardians to care for your children. If you don’t have a will, the state decides who will care for them at a hearing. If you do have a will, review it assuming Murphy’s Law that something will go terribly wrong. Check to see if your original guardian is still valid. The guardian listed for my god-daughter is being asked to transfer with his job from Davis, California to Singapore. If that happens, the parents may want to amend the will and choose another guardian.
Assume your choice will be challenged. A judge is required to act in the best interest of the child so consider also writing out a letter of explanation as to why you chose this guardian. According to this article by Nolo Press, the judge will consider the child’s preference (to the extent it can be ascertained), who will provide the greatest stability and continuity of care, who will best meet the child’s needs, the relationships between the child and the adults being considered for guardianship, and the moral fitness and conduct of the proposed guardians. If you write a letter of explanation, the judge has more information to base his or her decision on.
You have the wrong beneficiary for your IRA or 401(k) from a former employer: As mentioned above, this is a very common mistake. Single parents list the grandparents as beneficiaries when children are minors and never change it when the children reach the age of majority. Couples who divorce never change the beneficiary on their plans even after the divorce is settled. Since the beneficiary information doesn’t show up on statements and the original paperwork isn’t easily accessible, it comes down to “out of sight, out of mind.” The problem is beneficiary accounts like 401(k)s and IRAs bypass probate. Usually that is an advantage, but when there is a mistake, it might not be able to be corrected, and if it can be, it might involve expensive litigation. The parties involved would have to determine your intention and, of course, you aren’t around to speak up for yourself. Assume you have the wrong people in place, and set about putting the right ones in place.
Read the rest of this article here.
Online Athens: I want to highlight some of the most common estate planning mistakes I think people routinely make (knowing that I can’t possibly cover them all in one column). You will notice that I’m not going to discuss the estate tax beyond saying that very few people are subject to it and that it can be effectively managed by an attorney and financial planner with expertise.
In my experience, No. 1 and No. 3 are the root causes of the other issues.
1. Failure to plan: I am constantly surprised to see how many people do not have basic estate planning documents in place. The statistics consistently say more than 50 percent of Americans do not have a will, so if you happen to have one, the odds are that one of your neighbors does not.
Estate planning is another one of those areas in financial planning that plays to our desire to procrastinate. The only immediate payoff we have to getting the core documents in place is to quiet that inner voice that constantly says, “I need to take care of this.”
With proper planning, many negative consequences such as not passing your assets as you wish, strained family relationships and even a lawsuit can be avoided.
Simply stated, dying without a will is easy, but picking up the pieces afterward is not. On the other hand, getting a basic will in place should not be complicated.
US News & World Report: Preparing your finances for your death is a topic many don’t want to talk about. Death is inevitable, however, and if you don’t take the time to plan, your wishes (and your family’s financial security) could be at risk.
Everyone should make a few preparations to ensure that decisions are made with the right frame of mind and not out of emotion or grief. Creating a will, naming an executor, and considering your estate are all extremely important. In addition, talk to your family about the following four topics:
Examiner.com: Deciding whom to designate as a beneficiary for your IRA might seem like an easy decision—you probably want your money to go to someone near and dear to you. But is the person (or people) you’re thinking of actually named as the beneficiary on the particular IRA you opened all those years ago?
To be certain, it’s wise to review your beneficiary designation form every few years, or whenever you’ve had a change in circumstances, such as a birth of a child or grandchild or change in marital status. Changing your beneficiary is easy—you simply complete a new beneficiary designation form. Keep in mind that a will or trust does not override this form, or the IRA document itself (which may have “default” beneficiary designations that control even if no beneficiary designation is on file), unless you name your estate or trust as your beneficiary. Because beneficiary designations are important estate-planning documents, you may want to review them with your attorney.