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Your Money Is Ours

dem-2016-clintonHillary Clinton announced an updated estate tax proposal today. After previously supporting an increase in the estate tax rate from 40% to 45% and decreasing the amount of tax free assets to $3.5 million, she now wants to tax estates exceeding $10 million at 50%, estates exceeding $50 million at 55%, and estates exceeding $500 million at 65%. She also wants to remove the stepped up basis provision for estates so appreciated assets would also be subject to capital gains tax at death.

Two quick points without being too political because the proposal speaks for itself:

1. Apparently Hillary believes the Senator Warren adage that “you did not build this” so we are going to tax it mantra.
 
2. No word from her billionaire buddies Soros, Zuckerberg, Gates, and Buffet on how they feel about the government possibly taking 65% of their wealth and, frankly, I don’t give a damn about them.
 

Old Adult Fiction

new hampshire A former University of New Hampshire librarian who lived frugally, left his entire $4 million estate to the university. The UNH promptly fulfilled his mostly unrestricted bequest by allocating $100K to the library where he worked (some might say toiled) for 50 years, $1 million for a video scoreboard for the football stadium, and $2.5 million for the career center to presumably assist students with worthless majors like women’s studies, anthropology, and fine arts find jobs other than as baristas.

Several points only marginally associated with estate planning: 

  1. By leaving his entire estate to charity, the former librarian will not incur state or federal estate tax. 
  2. Even though he spent the last year of his life in an assisted living facility watching (and finally learning about) football, I highly doubt that he would approve of UNH spending $1 million in his name on a video scoreboard for their minor league football team (avg attendance 6,000 last year). I doubt the absence of a video scoreboard is keeping people away. 
  3. Although assisting students with job placement after they selected useless majors is a questionable use of one’s savings, it is no less worthy than leaving money to a library in the 21st Century when most functions of a library are available on on-line (except for providing a physical warm or cool space for the homeless during the Winter or Summer).

TML Again

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I wrote Paul Daugherty’s The Morning Line blog again yesterday. I covered UC’s Big 12 candidacy, Notre Dame’s quarterback situation, and myriad other topics including Bruce Springsteen’s forthcoming autobiography. I hope you enjoy it.

 

Meanest Man Begets Mean Daughter

sam huffSam Huff is an NFL Hall of Fame linebacker who played for the NY Giants and Washington Redskins. He was known as the Meanest Man in the NFL during the 1960’s. He is long divorced,has lived with Carol Holden for nearly 30 years, and now suffers from dementia. His daughter picked him up one morning in late March to take him to a dentist appointment and has not returned him to his home. Some might call this kidnapping. The daughter then took him to an attorney to have herself appointed as his health care decision maker (she was already his financial decision maker) and her mother, Huff’s ex–wife, as the alternate. She also asked a court to appoint her as his guardian.
 
Several points:
 
1. The prior structure of Huff’s health care and financial powers of attorneys was what I usually recommend in a second marriage situation – the spouse/partner can make the medical decisions but the child can make the financial decisions.
 
2. The validity of Huff’s new health care power of attorney is certainly questionable given his dementia diagnosis which is further evidenced by him naming his elderly, ex-wife as his alternate decision maker.
 
3. I am always disappointed at the vitriol that children have towards the second spouse/partner of their parents no matter how long they have been together.
 
4. It is no surprise that the Meanest Man in the NFL would would have an incredibly mean daughter.

What Happens In Vegas, Stays in Vegas?

kirkorianLas Vegas billionaire Kirk Kirkorian died last June a the age of 98. His $2 billion estate has been subject to litigation since his death. A young woman who claimed to be his daughter, but was proven long ago to be the child of the notorious lothario Steve Bing, recently settled her challenge to Kirkorian’s will. Non-paternity notwithstanding, Kirkorian paid $50,000 per month in child support to Kira Bonder until she was 10. As part of her mother’s divorce settlement with Kirkorian after their 30 day marriage, Bonder was supposed to receive $7 million in trust upon Kirkorian’s death. Nonetheless, she challenged that provision and settled for $8.5 million.
 
Several obvious points:
 
1. As the daughter of another man, Kira Bonder was not entitled to any of Kirkorian’s estate so challenging a bequest seems to be without legal merit.
 
2. For Bonder’s sake, I hope that the attorney who handled the will contest charged her based on time spent or on contingency for the increase from $7 million. It would not be fair to her to have to pay him a percentage of the $7 million she was promised and provided.
 
3. The first dollar Bonder receives from Kirkorkian will likely be more than she ever receives from her biological father who also contentiously fathered a child with Elizabeth Hurley.
 
4. What happens in Vegas is not necessarily applicable to the rest of the U.S.

This Never Works, So Why Try – Redux

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A Penn State professor was allegedly murdered last week by the woman to whom he offered shelter and her friend. The professor was allegedly pushed off a cliff because he had recently revised his will and they thought they would benefit from his death. The woman was also miffed because he had criticized the parenting of her child. One of the reasons cited by the police in their arrest of the couple was they were “known drug users.”

 One legal point and two “I can’t believe this” points”:

1. Most states, including Ohio and Pennsylvania, have “slayer statutes” which preclude murderers from benefiting from the will of someone they murdered.

 2. It is incredibly presumptuous of the woman and her friend to assume that they were named as beneficiaries of the professor’s new will.

 3. If “known drug user” is a marker for a criminal, then half of the adult population of Colorado are suspects for crimes there.

Two Words, George. Pre-Nup.

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Johnny Depp and Amber Heard settled their divorce case this week for $7 million which Heard has pledged to charity. She had reportedly been seeking spousal support and half of his net worth as a result of their 15 month marriage. During the proceedings, Heard alleged that Depp had abused her. The couple did not have a pre-nuptial agreement.
 
Several brief points:
 
1. Depp should have insisted on a pre-nuptial agreement which could have provided that he owed Heard nothing in the event of a divorce.
 
2. The absence of a pre-nup does not entitle Heard to half of Depp’s net worth, but only to what he earned during their 15 month marriage.
 
3. Anyone making bets on the length of a marriage between a hard partying heterosexual male and a declared bi-sexual woman 20 years younger than him should always take the under.
 
4. I have long told Janice that her crush on Depp was misplaced. I might finally be vindicated for that opinion.

Purple Reign?

prince son
The Santa Monica Observer, a weekly newspaper, is reporting that a DNA test shows that a Washington man in his 30’s is the illegitimate son of Prince. The man’s mother reportedly played in the same clubs as Prince in the 1980’s. He and his mother are reportedly estranged due to her contacting him after Prince’s death by a Facebook message imploring him to call her by saying “Prince might be your, father call me.”
 
Several pithy points:
 
1. If the story is true, the man would be Prince’s closest living relative and in position to inherit his entire estate.
 
2. However, if the man had been adopted by another man, his right to inherit from Prince would be closed off because Prince would not be considered his father.
 
3. Odd that this story is reported only by the Santa Monica equivalent of City Beat which is known for concert listings, hating all Republicans and the local and state government, and for classified ads of men seeking men and women seeking women.
 
4. Perhaps the national media is too busy asking about Hillary’s missing e-mails, her health, and her refusal to hold a press conference in 2016 to bother themselves with updating the search for Prince’s heirs

Two Halves Do Not Make a Whole?

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Stepping away from celebrities for a minute and focusing on estate laws, yesterday the IRS issued proposed regulations to minimize valuation discounts in estate planning. In a nutshell, the regulations prohibit taxpayers from dividing property between family members and then claiming their proportionate shares are not worth the exact proportion because that small proportion does not have control of the property. Wonky? Yes.

 
Three small points:
1. These regulations have been bandied about for 25 years.
2. From a practice viewpoint, I have never completely bought into the idea of valuation discounts for marketable securities transferred to an LLC or partnership solely for the purpose of obtaining a reduced value for estate tax purposes.
3. Nonetheless, this issue seems to be one for Congress to address through legislation rather than one more edict from a lame duck (re: imperial) administration to issue in its waning days.
 

Simon Says This Is Not a Gift

simonMel Simon owned the Indiana Pacers with his brother, Herb, for 16 years. After the Malice in the Palace in 2004, the Pacers started losing money and Simon became disenchanted with his ownership of the team. He sold his interest to his brother in a very quiet deal that was two years in the making. The terms included being released from various personal guarantees. Simon died shortly thereafter of pancreatic cancer. The IRS determined that the deal was so favorable to his brother that his estate owes a gift tax of $21 million. His widow has sued the IRS for a refund of the gift tax paid.

Several quick points:

1. An individual may give away $5.45 million during his life before he has to start paying gift tax.

2. The gift tax rate is 40%.

3. The donor is the person responsible for paying the gift tax.

4. This deal between brothers sounds complicated. It is doubtful that one brother would intentionally give the other $83 million.

5. The widow can afford the tax bill – Simon’s estate was valued at $2 billion because of his pioneering development of shopping malls. 

6. Ironic that Simon’s loss of interest in basketball ownership is tied to the Malice in the Palace. Ron Artest – the gift that keeps on giving.

 

Back At It

jack soccer gameIn addition to a dearth of worthy estate planning news, it has been a busy and awesome two weeks. Two concerts, a soccer game in Columbus, business trip to Cleveland, and usual bike rides. With all of that, Jack’s smile is the highlight of the past two weeks. Post to follow.

 

Attacking Camelot

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Socialite Alicia Clark died in February. Her will left her $17.5 million estate to the Humane Society. Her estate is in the news because the administrator of her estate has filed a Freedom of Information request to open a file which might shed light on whether Clark was the mother of a JFK love child even though she had long denied having a child with the late President. 
 
She had reportedly planned to blackmail President Kennedy’s father in the early 60’s related to such rumors. The blackmail attempt only became public after her then attorney went public after she did not pay his $1.2 million bill (in 1961 dollars) for negotiating a will with her soon to die husband which gave her $10 million for 13 days of marriage. Meanwhile, a man in the Bahamas claims the will is fake and that her valid will is a handwritten will she made in the Bahamas in 2001. That alleged will left one million to each of the doormen at her NYC apartment and the caretaker of that apartment, and the rest to the guy in the Bahamas. Got it? 
 
So many possibilities, so let’s try to stay focused on the salient points: 
 
1. The JFK love child angle seems to be irrelevant. If Clark had a child and raised him, she would have provided for him in her will and would have been seen with him in the past 55 years. If she gave him up for adoption, that child has no rights under law because his rights to her estate would be terminated due to the adoption.  
 
2. Some (re: me) might think that the estate administrator is grandstanding (successfully because he made the news) or is running up a larger bill than necessary in looking for a love child who likely has nothing to do with the estate, even if he exists. 
 
3. Clark’s former attorney’s $1.2 million bill for what is essentially a pre-nuptial agreement seems excessively large by any standards much less those of 1961. Those agreements are not typically handled on a contingent fee basis which must have been the basis on which he billed. 
 
4. That said, $10 million for 13 days of marriage to a dying man might be worth a $1.2 million fee. 
 
5. Lastly, the Bahamas guy must be suffering from sunstroke or island fever. Everyone besides the writers of Harold and Maude knows that Manhattan socialites do not create handwritten wills on vacation to leave their estates to their staff and random guys in the islands.
 

Not Friends

 
anistonJennifer Aniston’s recently deceased mother allegedly left Aniston out of her will. Even though Aniston reportedly supported her mother in recent years, her mother left her personal belongings and condo to another unidentified relative. Aniston and her mother had been estranged for years and had only somewhat reconciled two weeks before the mother’s death.
 
Several very brief points:
 
1. Aniston’s mother was not required to leave any assets to Aniston by law. She may leave them to whomever she chooses.
 
2. Aniston certainly does not need any of her mother’s money.
 
3. Like any 40-something year old, it is doubtful that Aniston would want/need any of her mom’s tsochktes.
 
4. It is refreshing to read an article about Aniston that does not involve pregnancy speculation although it does mention Brad Pitt.
 

The Nest

The Nest hc cGosh, times are slow in the newsworthy estates and trusts area, except for the conga line of people claiming to be heirs of Prince. Reluctantly resorting to fiction for material, “The Nest” by Cynthia D’Aprix Sweeney is on many best books of summer lists. It has several estate planning lessons which can be gleaned from the following plot facts (all of which are in the first 40 pages so hopefully I not spoiling anything for anyone who wants to read the book).

A father created a trust for his four children. The trust was to be distributed when the youngest child reached the age of 40. His wife had the power to invade the trust in the event the children needed the funds earlier. One of the children had a power of attorney from his husband which allowed him to mortgage their vacation property without the husband knowing about the mortgage (trust me, I got the pronouns correct). Another child had a legal predicament which resulted in his mother lending him the entire proceeds of the trust to bail him out and hoping that he would re-pay the amount (called “the nest” by his siblings).

Points to be learned:

1. One should never give a power of attorney to a non-aged spouse unless it is contingent on disability. The potential for abuse is too great otherwise.

2. This trust should have divided into separate shares either at the conception or when the children were in their early 20s. Each child could have then borrowed from his or her share only, if necessary, rather than from the entire trust.

3. The wife/mother of the children should not have had the power to distribute all of the funds without being held to a prudent investor standard.

4. Of course, if there had been good estate planning there would not have been a novel, nor would I have a blog.

Back From California

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Just returned from a four days in California Wine Country with Janice. Post to follow soon.

 

 

The Morning Line

fc cincinnatiI subbed for Paul Daugherty on his The Morning Line blog yesterday for the Cincinnati Enquirer. I reviewed the best and worst of the first half year in sports. I hope you enjoy it.

 

Broken Refrigerator

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Scraping a bit for probate and will related news this week. William “Refrigerator” Perry shot to stardom as the large defensive lineman who sometimes played running back for the awesome 1985 Chicago Bears. He allegedly could dunk a basketball even though he weighed 300 pounds. He now lives in South Carolina under a legal guardianship created by his brother when he was near death 7 years ago. Fridge’s son wants to remove the brother as guardian while a court has stated that the guardianship can be removed if Fridge files the appropriate paperwork. Fridge, meanwhile, spends his days drinking with various friends, walking assisted by a walker, and generally not taking care of his health.

Several points:

1. Any interested party can apply to be the guardian of another with the supporting medical documentation. The son could have applied to serve as guardian in 2009 but did not.

2. Guardians are compensated for their services. Despite the son’s allegations, the $1,250 annual compensation received by the brother is not the reason he continues to serve as guardian of Fridge.

3. A guy who starts drinking first thing in the morning and is unmotivated to file paperwork to remove a guardianship likely still needs the protection of the guardianship.

4. This has bothered me for 30 years. It has always been reported that Fridge could dunk a basketball. How hard would it have been to ask him to do it? It is not as if basketball courts are as scarce in this country as bobsled courses.

Who Is Philthy?

motorheadPhil Taylor, also known as Philthy Animal, was the drummer for Motorhead. He died of liver failure last November. Prior to his death, he divorced his wife of 15 years who he had not seen since several weeks after their wedding.  He also omitted her from his will. His estate was rumored to be worth $10 million.
 
Stretching to make several points:
 
1. In Ohio, a spouse can elect to receive 1/3 of the assets passing through the probate estate even if omitted from the will.
 
2. A former spouse has no statutory rights so Taylor was wise to finalize the divorce prior to his death.
 
3. I am surprised that someone with Taylor’s reputation for wild behavior was able to organize his affairs to divorce his long missing spouse and prepare a will omitting her, just in case, prior to his death.
 
4. $10 million is a lot of money for the drummer of the ‘worst band in the world”. Of course, the Kardashians are Exhibit A that talent and net worth are not correlated.
 

Props to Jetblue Passengers

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A woman was on a Jetblue flight to Orlando to attend the funeral of her grandson who was murdered last weekend by the Islamic terrorist. A Jetblue flight attendant whispered to each passenger about signing a sheet of paper to show their support for her. She wound up needing many pieces of paper because people were writing paragraphs of compassion for the grandmother. When the woman left the plane, every single passenger hugged her.

Read the whole article. Have your Kleenex at hand.

Shake Down the Thunder

aubrey mclendonAubrey McLendon was an Oklahoma City businessman who made his fortune in the energy business. He died in a March auto accident the day after he was indicted for allegedly rigging the price of oil and gas leases. He also owned 20% of the Oklahoma City Thunder. Attorneys for one of the lenders to his business have already filed motions in the probate court asking for input into the sale price of his interest in the NBA team. They fear the estate will sell it to his widow for less than the maximum price even though it is not currently for sale. They stated that the primary purpose of the probate court is to protect the interest of creditors.
 
Several quick points:
 
1. Under Ohio law, creditors have six months from the date of death to file a claim to protect their interest.
 
2. Once the claim is filed, they sit back and wait for the estate to be settled. Distributions may not be made until the creditor’s claim has been paid.
 
3. I love it when high priced corporate lawyers bring their white shoes, prestigious degrees, high billable rates, and commensurate bluster to the serene probate area where the purpose, contrary to their belief about protecting creditors, is to ensure the orderly transfer of assets pursuant to a decedent’s wishes in due time. Actually, I do not love it – I find it annoying.
 

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All Posts By Jay Brinker

I am an attorney located in Cincinnati, Ohio who practices in the areas of estate planning, probate, asset protection, and small business advice. I make a difficult and bewildering process as simple as possible. Most importantly, I provide "more for less" for my clients.