- Thursday, 26 May 2016 21:24
Viacom and CBS President, Sumner Redstone, is back in the news this week. He removed Phillipe Dauman and George Abrams, who are directors of Viacom, as Trustees of one of his trusts. They are contesting their removal by alleging he is incompetent. In a huge twist of irony/self-preservation/whatever you want to call it, only six months ago they testified he was competent to remove a girlfriend as his health care proxy.
Three brief points:
1. The stakes in the previous battle involved who could make his health care decisions if he could not (while the real plot was whether he could change his will to disinherit his former girlfriend) while these stakes are who gets to control Viacom and CBS after Redstone’s death.
2. I think if Redstone is in a wheelchair, being fed by a feeding tube, and able to communicate only through an aide now, and was in the same condition six months ago, he was likely incompetent at both junctures.
3. Dauman and Abrams have reaped what they have sown. Being close to Redstone is like having an alligator as a pet – it might seem cool, but eventually it (i.e. he) will devour you.
- Monday, 23 May 2016 21:55
Hillary Clinton’s recently released financial disclosure statement reveals that she and her husband both created a qualified personal residence trust in 2010 and transferred ownership of their NY home to it. They did not transfer their more expensive Washington DC house to a similar trust.
Several quick educational points:
1. A qualified personal residence trust allows them to transfer the house at a discounted gift tax value based on how long they wish to reside in the house and the current interest rates.
2. For example, if they decided to live in the house for the next 20 years (and not die), they would be able to transfer the entire $1.7 million house to Chelsea while only valuing it at $400K for gift tax purposes.
3. Future appreciation is also excluded from their estate.
4. They would have been wise to transfer the DC property via this technique because that house has doubled in value while the NY property has only increased nominally.
5. While this estate planning technique is available to everyone, I find it hypocritical that a woman campaigning for higher estate taxes and other taxes in the name of the greater good does everything she can to avoid those taxes.
- Tuesday, 03 May 2016 21:47
Frank Zappa was an eccentric musician who died in 1993. He was survived by his wife and four children – Ahmet, Diva, Dweezil, and Moon. (ed note: he was early in on odd names for celebrity children). For the past decade, Dweezil has played his father’s music on a concert tour titled “Zappa Plays Zappa.” After Zappa’s widow (and Dweezil’s mother) died, Ahmet and Diva became trustees of the family trust and have told Dweezil that he no longer has permission to use the title “Zappa Plays Zappa
” without paying $150K each time he performed a song owned by the trust. The concert tour will be titled “Dweezil Zappa Plays Frank Zappa” this summer.
1. The selection of a trustee is vitally important. A corporate trustee would likely be more onerous than the Zappa siblings and extract as much money as possible from Dweezil for performing his father’s music.
2. There is no word on how much his mother made Dweezil pay the trust for the use of the music. Odds are that it was minimal.
3. Dweezil is correct that the new tour name “does not exactly roll off the tongue.”
4. Abel and Cain were unavailable to comment on the sibling rivalry.
5. My first rock concert was Frank Zappa at the Armory Fieldhouse in 1978. How my musical tastes have changed.
- Monday, 04 April 2016 21:50
A Massachusetts man was appointed guardian of his niece and nephew when their parents died in a car crash in 2009. The man was recently indicted for allegedly stealing approximately $250,000 from their trust fund in the 11 months after he was released from rehab. He pleaded not guilty.
Three very quick points:
- I always recommend that clients designate different individuals to serve as guardian and trustee.
- If different people, the guardian should be able to ascertain if the trustee is stealing from the trust.
- Embezzlers are smart enough to not use stolen funds to buy tangible property, but not smart enough to avoid being caught. Such is the lot of gambling and drug addicts.
- Sunday, 07 February 2016 14:39
When she died in 2003, a Maine woman left almost of all of her $200,000 estate for the care of the unwanted and abandoned cats in her hometown. Her two page will appointed trustees to administer the funds but did not specify who should actually receive the funds. Now, two women who run makes shift cat shelters have sued the trustees and the attorney who drafted the will.
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