- Wednesday, 19 December 2012 13:48
Following up on an earlier post. A woman will officially inherit her reclusive first cousin’s $7.4 million estate after a court ruled that she is his only heir. After the man died, the estate auctioneer found $7.4 million of gold coins in his house.
1. When someone dies without a will, the estate does not escheat to the state. Statutes set forth how the estate will be distributed which is generally along the lines of closest living relative.
2. Only one first cousin? That is a narrow family tree.
3. Gold was a great investment for him (actually for his cousin). Apple stock would have been better.
- Monday, 17 December 2012 14:48
With no fiscal cliff resolution imminent, it has been slow in the estate planning news world (but slammed in the estate planning practice). The New Republic had a great article on delayed parenting and the possibility of developmental issues for the children.
Viewing the article through the estate planning prism, I noted the following potential issues:
1. Parents need wills and trusts immediately. The risk of sudden death or terminal illness is greater for a 40+ year old than someone in their late 20s.
2. The trusts might need special needs provisions to protect the children’s governmental benefits.
2. Selection of a guardian to handle a child with even minor developmental disabilities is tremendously important.
4. Because the children are younger when the parents are older, parents need to rely on siblings and friends to handle their affairs until their children become old enough to assist the parents with their affairs.
Of course, estate planning assumes a certain level of personal responsibility and rational thought. I am not sure than anyone desiring children in their 60s and 70s is being responsible or acting rationally with respect to their children.
- Wednesday, 05 December 2012 16:30
Now for something complicated and fun (at least within the parameters of estate planning). An art collector died owning an art work which contained a stuffed eagle. The art was on display at the MoMA under an agreement after the federal wildlife service tried to confiscate it in the 80s.
Because the sale of dead eagles is prohibited by federal law, the estate appraisers valued the art at $0 because there is no market for it. The IRS said it was worth $15 million. When the estate rejected that valuation, the IRS played hardball and said it was worth $60 million and levied penalties for undervaluing it plus interest. The estate tax alone on this art would have been $27 million. The estate and IRS finally settled the matter when the estate donated the piece to MoMA and the IRS dropped the estate tax issue.
Couple of points:
1. The family had not benefited from this art for 20 years due to the previous agreement to keep it on display.
2. I do not agree with the assessment that art with no market is worth $15 million. Assets are worth what a willing buyer and willing seller agree upon. If there are no buyers, there is no value.
3. The collector’s estate had paid $470 million in estate taxes already and had sold $600 million of art to do so.
4. The author is wrong about the charitable deduction. The estate did receive a charitable deduction for the value of the art work which is why ultimately there was no tax on it.
5. Never pick up an eagle feather. It is illegal to do so and subject to a $25,000 fine. Unless you are a Native American or a member of the Screaming Eagle division of the US Army.
- Friday, 30 November 2012 17:32
Forgive the self-promotion. I will be on Chris Desimio’s “On the Money” program on WVXU tomorrow morning discussing changes to estate tax laws. The segment will be here soon thereafter.
Thank you to Chris for having me on the show. It is always fun.
- Thursday, 29 November 2012 01:48
Rapper Nate Dogg’s $200,000 estate moved one step closer to being settled after his wife (step-mother to his children) and his mother ceded control of the estate to a neutral 3rd party at the request of his children. Mr. Dogg died in March 2011 without a will at the age of 41, leaving a wife and 6 children whose ages are unascertainable in a cursory web search. His wife and mother had sought to be appointed co-executors, but his children believed they were only motivated by financial gain and did not have the best interest of the children at heart.
Lessons to be learned:
1. Everyone, even rappers, need a will. The issue of executors would not have arisen because the will would have appointed someone to serve in that role.
2. A funded trust would have been better because this entire dispute, or at least the financial end of it, might have remained shielded from the public.
3. $200K estate for a rapper? The music business is tough for everyone this century. However, 6 children, a socially appropriate level of bling, and no solo releases for 9 years could drain assets quickly.