- 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.
- Wednesday, 09 January 2013 15:37
You might have seen this piece of news. A 46 year Chicagoland man won $1 million in the lottery, but died of cyanide poisoning before he could claim the winnings. The police just started investigating the poisoning. As everyone who watches police/crime TV knows, to solve this crime look for the person with a motive. His widow claims he did not have any enemies. I have not read whether he had a will. If he did not, the winnings would pass via the statue of intestate succession.
In Ohio, if a person dies without a will, his assets will be distributed as follows:
1. If survived by a spouse, all to spouse.
2. If not survived by a spouse, all to children.
3. If survived by a spouse, but children from a previous relationship, $20K and 1/3 to spouse (1/2 if only one child from previous relationship).
Because I do not want to defame anyone, I will keep my probably wrong theory to myself. Instead, I will just say that I wonder how someone not in an Agatha Christie novel can quickly procure cyanide.
- Thursday, 03 January 2013 03:58
Happy New Year. Moving into 2013, my previously mentioned horrible prognostication abilities did not end when 2012 ended. I did not foresee Congress making the $5 million unified credit permanent. The unified credit is the amount of money one can give away tax free during life or at death. Although in some fairness, I am not sure anyone in the estate planning community foresaw it either.
Quick estate planning facts from the fiscal cliff legislation:
1. Unified credit is $5 million and will be indexed for inflation.
2. The estate tax rate will be 40%.
3. The unified credit is portable which means that the first spouse to die does not need a trust to utilize the credit.
For the rest of 2013, I will be out of the prediction game save for Alabama defeating Notre Dame next week (with fingers crossed that I am wrong and ND wins the National Championship).
- Friday, 21 December 2012 17:24
My horrible prognostication abilities continue. If my prediction of a Romney landslide and a 9 game losing streak to end the fantasy football season were not enough, my earlier prediction of years of litigation to settle the dispute over Thomas Kinkades’s estate was also wrong. His estranged wife and his girlfriend of 6 months (although she preferred the term “soul mate”), settled their differences this week. No details were revealed.
The primary issue was the validity of 2 illegible handwritten wills made by Kinkade. Far be it from me to cast stones about one’s handwriting, but if someone is going to leave a handwritten will, it should at least be legible.
- 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.
- Friday, 07 December 2012 13:47
This is complicated. Marilyn Monroe died in 1962 in California after she was fired from the film ‘Something’s Got To Give.” For then estate tax reasons, her executors claimed she was a NY resident. The rights to make money from her estate and likeness have been passed down to her estate heirs (and their heirs) over the past 50 years.
Several years ago, her estate sued a photographer for using her likeness for commercial purposes. A court ruled in favor of the photographer and said that there was no right to publicity at the time of her death. The State of California quickly passed a law authorizing a right of publicity and deeming it retroactive and transferable to heirs. The estate returned to court to have the previous verdict overturned. The court acknowledged the new law, but said that it was available only to residents of California. Because the estate had said that Ms. Monroe was a NY resident at the time of her death, the law did not benefit her estate.
In summary,the estate could not have it both ways – taxed as a NY estate, but utilize California laws for protection. Something had to give.
- 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.
- Wednesday, 28 November 2012 02:20
My revamped web page is up and running (but then you probably know that if you are reading this). Content will change once we have some Congressional direction on estate tax laws.
Thanks to Justin at Kesil Consulting for the clean look, quick work, and the web feedback. www.kesilconsulting.com.
- Monday, 26 November 2012 17:45
Schmuck of the year finalist.
An NY man and woman were married for 30 years. 8 years prior to his death, man obtained an uncontested divorce on grounds that his wife abandoned him. Man continued to live with woman for duration of his life. Wife did not discover divorce documents until cleaning up his finances post-death. Wife claimed that they had been happy. She was aware that he had tried to sell a house previously without informing her.
As a widow, she was entitled to his pension and perhaps other benefits. As an ex-wife, she was not entitled to those and he could leave them to his children (or mistress). She was able to successfully overturn the divorce and fend off the claims of his children from a prior marriage.
Lessons to be learned:
1. If a spouse is ill, it behooves the other spouse to stay married because a widow is generally better positioned financially than an ex-wife of the husband/ex-husband.
2. If a spouse tries to sell a house without telling the other spouse, the trust level in the marriage should become zero.
3. One woman’s apparently happy marriage can be another man’s misery.
- Monday, 19 November 2012 17:43
To avoid the rigors of a guardianship and probate court supervision, an individual should have a financial power of attorney and health care power of attorney. However, selecting the person to manage those responsibilities is important.
What we can learn from Zsa Zsa’s situation is that a husband is not always the best choice to serve as fiduciary especially if he if he wants the 94 year old to have a baby, has adopted several adult men, and has claimed to father Anna Nicole Smith’s daughter.
- Sunday, 18 November 2012 17:43
With all estate planning stories focused on the looming fiscal cliff, and President Obama wanting to gouge the wealthy for the sake of gouging the wealthy, this Will Rogers quote seems appropriate:
“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”
- Wednesday, 14 November 2012 17:42
Among fun facts about wills (yes, there are some) are that the longest will ever probated was over 1,000 pages long, the shortest wills were 3 words, and among famous Americans who died without a will were Sonny Bono, John Denver, and Chris Farley. I find the last fact interesting because all sexagenarians should have a will (much less sexagenarians who ski alone in trees) as should anyone engaged in high risk activities like flying experimental aircraft or heavy cocaine usage while being overweight. Perhaps lapses of judgments with respect to mortality cross over into lapses of judgment about tending to personal affairs.
- Wednesday, 14 November 2012 17:41
Some good and some silly advice for dealing with pets after death. The good is to think about a pet trust to provide financially for a pet after death. The silly is to name the pet in a will, which I have never done in 25 years of drafting wills. The sillier is to carry a “pet card” in a wallet so if one is struck by a car or has a heart attack, authorities will know that there is a pet at home that needs care. No word on whether one should leave the Best Buy Rewards Zone card, Staples Rewards card, or airline frequent flyer card out of the wallet to make room for the “pet card.”
- Thursday, 08 November 2012 17:40
For those who did not jump off a cliff after Tuesday’s election results, they have an opportunity over the next six weeks to take advantage of the current estate and gift tax laws before the U.S. is pushed over the fiscal cliff. I am afraid that I agree with the following:
” “The estate tax environment is going to change dramatically. You have six weeks to get this done. The estate taxes will not be this favorable for the rest of our natural lives. So for clients in that bracket, this is a pretty critical six weeks.”
For wealthy individuals, gifting assets to children or a trust for children is a great strategy. Also, for individuals with older parents, whether wealthy or not, this is the time to gift.
- Thursday, 08 November 2012 17:40
A quick Sherman Hemsley update. If you remember, the body of the Jefferson’s star has been in an El Paso funeral home while his girlfriend and a man alleging to be his brother argue over the disposition of it. A DNA test revealed the man to be his brother, but that fact does not give the man control of the body and has been excluded from evidence. A trial to determine who has the authority to bury the body is set for tomorrow. It is a toss up on whether this case or the Florida election results will be resolved first.
- Thursday, 01 November 2012 23:37
George Lucas’ sale of Lucasfilms to Disney is being touted as an estate planning move because his heirs no longer have to be concerned about running the company after his death. It can also be considered an income tax move because he is taking advantage of the 15% capital gains tax rate before it is increased to 20% on January 1. I think it is a creative move because the Star Wars franchise has to rebound from the nadir of Jar Jar Binks and the 3 most recent episodes.