- Thursday, 11 April 2013 13:28
No snark, today. Just advice.
Nancy Lanza, mother of the Newtown shooter, left her entire estate to her sons under the terms of a 1994 will which was executed 15 years prior to her divorce. The preliminary filings show an estate with $60K liquid funds and presumably the house she resided in.
1. At some point she and her husband should have revised their estate plan to include a trust for the care of their son (and to minimize estate taxes).
2. Post-divorce, she should have revised her estate plan to remove the ex-husband from her documents and to include a trust for her son.
3. After a divorce from a director/VP at GE Energy Financial Services, and receiving $26K/month alimony, there will be substantially more than $59K in assets. All the more reason to leave the assets in a trust for her son rather than giving it to him directly assuming he would have survived her.
4. All parents with children who are unable to manage finances, whether due to young age or a disability, need to have a trust as part of their estate plan.
5. Anyone who is recently divorced should revise their documents to remove the former spouse and to ensure that the documents reflect their current wishes.
- Wednesday, 10 April 2013 14:27
Ryan O’Neal and the University of Texas are engaged in a lawsuit over a painting of Farrah Fawcett created by Andy Warhol which could be worth $30 million. Farrah’s will left her entire art collection, including another portrait of her by Warhol, to the University of Texas. Mr. O’Neal claims that the painting was given to him by Warhol and that he had taken it to Farrah’s house in 1998 after they broke up because his then girlfriend did not like it in the bedroom.
1. It is generally in poor taste to hang a portrait of an ex in the bedroom while involved with someone else. Kudos to Mr. O’Neal for removing it.
2. When taking a piece of art to an ex, one might want to reclaim it in the 11 intervening years instead of waiting until the ex dies.
3. Apparently the University of Texas is not satisfied with a $7.2 billion endowment and is willing to fight for more.
- Friday, 05 April 2013 13:19
The woman at the center of the U.S.’s most expensive probate battle died this week in Poland. Barbara Piasecka Johnson was a maid who worked for J. Seward Johnson, Jr.’s family, of Johnson and Johnson renown. Within 2 years, then 76 year old Mr. Johnson divorced his second wife and married the then 34 year old servant. When Johnson died 12 years later, he omitted 5 of his 6 children from his will and left nearly all of his of $500 million to his wife. The children contested the will alleging undue influence and settled for $40 million.
1. Mr. Johnson could have provided for both his widow and his children by creating a QTIP trust (a new trust back in 1983) which would have provided assets remaining after his wife’s death would be distributed to his children.
2. Contesting a bequest to a maid on grounds of undue influence is easy. Contesting a bequest to a maid who has been married to the deceased for 12 years on similar grounds is nearly impossible.
3. Marrying someone younger than one’s children is rarely a good idea. It might be better to date her and leave her a condo and a Bentley in a will and preserve family relations.
- Wednesday, 03 April 2013 13:10
Los Angeles Lakers owner, Jerry Buss, died in February at the age of 80. He was known for epitomizing California cool and was often seen with one or more young women on his arm. In his will, he left a Honolulu condo and a 2009 Bentley to his 20-something girlfriend, and the rest of his assets to his trust.
For privacy reasons, he could have transferred the condo and car to his trust, and made the bequest from the trust. This also would have avoided the cost of ancillary probate in Hawaii.
Of course, privacy might have defeated the purpose of letting the world know that at the time of his death he was an 80 year old man with a late 20’s girlfriend. Estate planning always has trade-offs.
- Wednesday, 27 March 2013 12:46
Merton Simpson – a NY artist , pre-eminent collector of African art, and gallery owner – died 2 weeks ago. His body remains unburied at the funeral home due to a family dispute.
Prior to his death, a guardian was appointed to manage Mr. Simpson’s affairs. His estate is valued “in the millions” but the assets are illiquid. The guardian does not have enough funds to pay for a funeral and the executor of the estate has not been appointed yet and will likely also have insufficient liquid funds in the near term.
The primary lesson is that Mr. Simpson should have included a trust in his planning and transferred his assets to it prior to his death. The trustee could have sold art pieces as necessary without outside supervision. Mr. Simpson would have avoided avoided the guardianship, the delay caused by waiting for the court to officially appoint an executor, and the Sherman Hemsley-esque burial fiasco.
Even without estate taxes, trusts are still necessary.
- Saturday, 23 March 2013 18:54
Willa Cather, author of “O Pioneers”, died in 1947. She purportedly destroyed much of her private correspondence and left instructions in her will forbidding the post-mortem publication of any remaining letters. For nearly 70 years, her executors adhered to her wishes. However, with the death of her nephew and second executor in 2011, her wishes are no longer being followed and a book containing 566 of the surviving 3,0000 letters will be published next month. There are various reasons given for her request to not publish the correspondence – a desire for privacy, a late life depression, and a desire to conceal her lesbianism about which scholars have speculated for years.
1. 3000 letters survived? She needed a heavy duty shredder.
2. The best way to ensure post-death privacy is to destroy the letters while alive. After a generation or two, those interested in preserving her wishes will have died and successors will be more motivated by money than her wishes.
3. In an electronic age not prone to letter writing, most people will not be confronted with this issue in the future. No one will want to read a series of texts.
4. Who needs to speculate about the sexual orientation of a woman who called herself William in college and who lived with the same woman for 39 years?
5. I did not enjoy reading her work in American Literature classes so I will not be pre-ordering the book of her letters from Amazon.
- Wednesday, 13 March 2013 22:59
Former NYC Mayor Ed Koch was famous for walking the streets and smiling at people while asking them “How am I doing.” His will was admitted to probate court this week. It left $100K to promote government and public service and left most of the remaining balance of $10 million to his sister and her children.
Several quick observations:
1. A bequest of less than 1% of the estate of a public servant to promote public service seems puny.
2. There are few, if any, other charitable bequests. So much for giving back.
3. A $10.5 – $11 million estate after being a mayor? Public service is the start of the path to enormous wealth for many.
4. The large estate reaffirms that it is easier to accumulate significant wealth when one doe not have children.
- Saturday, 09 March 2013 17:31
Viciously cruel mothers exist outside of Disney tales. An NY couple with a net worth of $250 million adopted an infant girl, Emily, from China in 1996. As part of the adoption, they promised to provide for her in their estate planning documents and to create a separate trust for her. Sadly, the adoptive father died soon thereafter, leaving his much younger wife with Emily and their 5 biological children.
The widow, who has gained notoriety by spending $33 million dollars to purchase 10 of the Thimble Islands in Long Island Sound, claimed to have difficulty with Emily’s behavior and enrolled her in a special needs school. This was after allegedly making her sleep in a tent outside for a week for misbehavior and not including her win family dinners with the other children (and after adopting and giving up another son). Eventually, the widow allowed Emily to be adopted by a different family.
Te new adoptive parents eventually learned about the trusts created when Emily was adopted and sought a court order enforcing them. The widow fought the order but an NY court held that the father had intended to include her in his estate.
1. The widow must have taken parenting classes from Cinderella.
2. The Thimble Islands are story book-esque (see the pictures).
3. Emily’s $40+ million future inheritance should buy her a lot of therapy. I suspect she will need it.
- Wednesday, 06 March 2013 14:03
Rapper Tupac Shakur was killed in 1996. His estate has released 6 posthumous albums and authorized a hologram likeness of him to perform at last year’s Coachella Music Festival. Now, his mother has turned over management of his estate to a new group of managers who have worked with the estates of other artists such as Janis Joplin, Otis Redding, and Henry Mancini.
The new managers have thankfully ruled our a hologram tour, but are considering the use of his music in a Pink Floyd-esque laser light show. Yawn. Almost everything Tupac recorded has been released in the past 16 years and only snippets of recordings remain in the vault. Nonetheless, his mother stated of the management change , “I believe it is our responsibility to make sure that Tupac’s entire body of work is made available for his fans.” Translation: it is her desire to make as much money as possible off her son’s music.
- Friday, 01 March 2013 13:32
It has been a busy month for the James Brown estate. First a federal court rejected the attempt of his former manager to insert herself into his estate affairs. Now, the South Carolina Supreme Court has rejected a settlement regarding the division of his estate that was brokered by the SC Attorney General and said that the estate must be distributed per Mr. Brown’s will (i.e. most to the trust for its charitable beneficiaries).
Quick facts. The Godfather of Soul left most of his estate to a trust for the education of needy children. His relatives asked the probate court to remove the trustees of the trust after the trust assets dissipated to almost nothing. I suspect that they also challenged the terms of his will. The SC Attorney General (on behalf of the trust) convinced the parties to settle the dispute with the trust receiving half of the assets, Brown’s widow 1/4, his adult children the final 1/4 and the trustees replaced by other trustees who made lucrative licensing deals for the trust.
1. The SC Supreme Court is correct – the terms of the will should be followed. Estates are not like other business deals or disputes where the intent of the deceased can be negotiated. The intent as expressed in the will must be followed. Otherwise, people would not have confidence in making wills or leaving assets to charity.
2. The settlement does seem to have been beneficial to the estate because the new trustees were able to increase its value from near zero to somewhere between $5 million and $100 million (nice specificity on that).
3. The estate owed $20 million to a bank borrowed for a European tour. Apparently lunacy in the lending markets in 2006 was not confined only to the sub-prime housing market.
- Wednesday, 27 February 2013 14:35
A Rhode Island man was accused of drowning his wife. His conviction in the British Virgin Islands was later overturned. However, his wife’s parents sued him for wrongful death and won a $2.8 million judgment against him. The man was the designated beneficiary of his wife’s will. His children from a prior relationship were the contingent beneficiaries.
After the wrongful death judgment, the estate executor sought to have the man removed as a beneficiary of his wife’s will under the RI Slayer Statute. The executor also sought to have the man’s children removed as beneficiaries under the theory that they should not benefit from the misdeeds of their father.
The RI Supreme Court recently upheld a ruling against the children which prohibits them from inheriting under their step-mother’s will. One of the rationales in the decision is that the children continued to maintain their father’s innocence and said they would use the assets to defend him.
1. I think the court is wrong. The children were specifically listed as beneficiaries if their father were to pre-decease them (or allegedly kill his wife). As such, they are not “inheriting through him” which is prohibited under RI law.
2. Is it me, or does it seem that anytime a female US citizen drowns in a foreign country that a murder allegation arises against the husband? You will not see me swimming outside the US.
3. If your father allegedly murders someone and you will benefit from his misdeed, do not tell people you will spend the inheritance on his defense. Keep your mouth shut and spend the money quietly.
- Sunday, 24 February 2013 17:10
In the aftermath of Mindy McCready’s suicide, a key legal question is who will receive custody of her children – six year old Zander and 10 month old Zayne? The issue is complicated by Zayne’s father pre-deceasing Mindy last month while Zander’s father, Billy McKnight, lost custody of him years ago.
When there is a surviving parent, a court will usually award custody to the surviving biological parent. When there is no surviving parent, a court will generally award custody to the person designated in the deceased’s will. I have not read anything indicating whether Ms. McCready left a will, although I doubt a woman living in a garbage and feces strewn house would provide for her post-death affairs. Here, the commentariat believes that Ms. McCready’s mother and step-father will receive custody of both boys. I wish them all luck, love, and peace moving forward. They all deserve it after the tumult in their lives.
This news should serve as a reminder for everyone to prepare a will so that their wishes for the custody of children post-death are not left to chance.
- Tuesday, 19 February 2013 15:05
Paul Daugherty graciously allowed me to guest write his blog this morning. Link is here.
- Monday, 18 February 2013 15:08
I confess to never having heard of Latin music and Mexican TV personality Jenni Rivera prior to her death in a plane crash in December. I similarly confess to never having heard of her estranged 3rd husband, Esteban Loaiza, who plays for the Detroit Tigers. So why am I blogging about them?
Rivera and Loaiza separated two months prior to her death. After separating, River left a detailed letter to her sister asking her to take care of her children and business enterprise valued at $25 million in the event of her death. It is unknown if she had other estate planning documents or a pre-nuptial agreement.
What lessons can be learned from her estate?
1. When marrying for a 3rd time, one should definitely have a pre-nuptial agreement. If Dennis Hopper can do this, others should, too.
2. When leaving on a trip, consult an estate planning attorney about preparing a will/revised a will. A handwritten note is generally not effective.
3. When separated from a spouse, revise the estate plan immediately and implement a trust to preserve the assets for the children.
4. $25 million net worth? Apparently there is money to be made on Mexican TV and Latin radio for tumultuous personalities.
- Tuesday, 12 February 2013 14:51
An Illinois man who lived alone in a farmhouse with no running water, bathed in a creek, and did not bathe when it was frozen, died last summer of a heart attack. His will left his estate to two actors he had never met – Kevin Brophy and Peter Barton. Brophy’s biggest role was as a man who had been raised by wolves in “Lucan” while Barton had been on the “Young and Restless.” Apparently the deceased had written the actors in the past and they had responded with a thank you and watch me in my upcoming appearance note. The deceased considered them friends.
1. Simple acts of kindness and respect reap dividends.
2. For will purposes, there is a difference between eccentric and mentally incompetent.
3. I am not sure that either Brophy or Barton would qualify for an episode of VH1’s “Where Are They Now?”
4. Lucan? I vaguely remember it from my youth. I certainly did not have a poster from it for years as did the decedent. This was the poster in my teenage room.
- Wednesday, 06 February 2013 13:59
James Brown died in 2006. His estate moved a step closer to settlement this week after a federal lawsuit filed by his former business partner was dismissed. After years of litigation, the estate was to be divided between his wife, his heirs, and his “I Feel Good Trust.”
However, his former pr woman and song writer claimed to have worked with him on the child welfare trust in the 1980s and that his intent was to leave all of his assets to it. She claimed that the South Carolina attorney general had ignored her, that 100 attorneys had refused to take her case because they were politically intimidated, and that she has a right to be heard and to exert control over the distribution of funds.
1. The court was correct to dismiss the case.
2. How a probate related case which is handled at the state level lasted 16 months in a federal court is perplexing.
3. An estate plan can easily change multiple times over 20 years so what James Brown wanted in 1980 could differ greatly from what he wanted in 2006.
4. It is advisable to ensure that estate planning documents reflect current wishes.
5. Sorry, sweetheart, but no one has “a right to be heard” nor do they have the right to exert control over funds unless they are the trustee. You were simply channeling one of James Brown’s hits.
- Wednesday, 30 January 2013 14:31
Leona Helmsley created the most famous pet trust of all time when she left $12 million to her dog (which died earlier this month). One does not have to be a multi-millionaire to leave funds for the care of an animal after death. However, one should be careful in selecting the right person to care for the animal – the caregiver should not be motivated solely by money.
In one instance, a maid and butler were provided free room and board as long as they cared for a cat. The vet initially estimated the cat to be 8 years old. The second time the vet saw the cat, he thought it was 4 years old. The third time he saw it, he estimated the cat to be one year old. As the co-resident of a house with a cat resembling the Purina Cat Chow cat, I can attest to the physical similarity of most cats. A more tightly drawn test pet trust wold have prohibited the maid and butler from replacing the decedent’s cat with younger versions.
With the $5.25 million unified credit negating estate tax planning for most individuals, the use of pet trusts in estate planning is one more example of estate planning going to the dogs (and cats).
- Friday, 25 January 2013 04:28
After the tawdriness of Tuesday’s post, this piece by Joe Posnanski about Stan Musial provides nice balance.
“We all disappointed someone from time to time,” the Hall of Famer Robin Roberts said when we talked about kids and autographs. “Well, all of us but one.”
“Who was that?” I asked.
“Musial,” he said in a voice that indicated I should have already known.
Mr. Musial exuded class. We might never see a professional athlete like him again.
- Tuesday, 22 January 2013 15:17
In 2009, a Florida woman hired a hit man to kill her wealthy husband. Because Florida’s Slayer Statute prohibits murderers from benefiting from their misdeeds, the wife was removed as a beneficiary of her husband’s will. The contingent beneficiaries were her daughter from a previous marriage and a trust for the benefit of the daughter’s now adult sons. The husband’s relatives are still contesting the validity of the will which has previously been upheld. Their theory is that the wife unduly influenced the husband into leaving his estate to her, and then the daughter and her sons, by threatening to expose his “amputee porn fetish.”
From my vantage point 1,000 miles north, I do not see how a will which leaves all of the estate to a wife, or to her children if she pre-deceases him, reflects undue influence. The spouse is typically the beneficiary of the other’s will. If a spouse were to engage in coercion, I think the other spouse would next consult a divorce attorney not an estate planner. It looks like the relatives are desperately trying to negotiate a settlement of a smaller amount.
Also from my Midwestern, suburban, and apparently sheltered vantage point, I was unaware that people could have an amputee porn fetish.
- Monday, 14 January 2013 14:28
In the making lemonade out of lemons department is this story about a woman whose 43 year old husband died after his bicycle was hit by a motorist. The couple had unsigned wills, no emergency savings, financial accounts with passwords the wife did not know, but some life insurance. The widow created a web site to encourage others to avoid her financial calumny and to essentially take steps to become a responsible adult by executing a will and other financial documents and by assisting with passwords and other financial knowledge.
When prioritizing allocation of financial resources to major decisions, I recommend the following:
1. Life insurance. Provide financial security for the spouse and children.
2. Living will and health care power of attorney. Do not bankrupt the family because medical decisions can not be made.
3. Will. Clarify distributions and designate a guardian.
Somewhat related, the article did nothing to dispel my fear of riding my bike on the road rather than a bike trail.