Wills, Trusts & Estates Prof Blog

Death-Centered Startups on the Up and Up

Websites aimed at helping people deal with death are on the rise.  These death-centered companies are mostly seen as a positive step in helping people confront death. 

Some sites like New York-based Everplans are free and function as a “step-by-step guide for everything from financial and medical planning to spiritual and grief counseling.”  Other sites like eFuneral, ShivaConnect.com, and FuneralOne help funeral homes shift their business to the Web.  Sites like Dallas-based MyDirectives allow users to create digital advance directives while sites like the Sympathy Project sell custom-made cards to send to those who are grieving.

See Jaweed Kaleem, End of Life Tech Companies Grow with Changes in Death Traditions, Huffington Post, June 13, 2013.

Living It Up in the Afterlife

There’s been a growing market in the high-end entombment industry for those preferring to be buried above ground rather than below.

Dealers like Forever Legacy cater to high-net-worth individuals looking for “indoor mausoleums, granite walls, private estates, and even air conditioning.”  And it isn’t cheap.  Starting around $40,000 and climbing quickly into the millions, mausoleums help ensure the wealthy can protect their legacy.  However, some wealthy individuals say it’s not about their ego, but more about having a comfortable place for their families to visit.  Although private mausoleums are quite expensive, prices become more manageable for the average people if they don’t mind having neighbors.

See Ben Wolford, Some Seek Luxury, Even After They’re Dead, Sun-Sentinel, May 30, 2013.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

Ohio Court Says Funeral Luncheon is a Reimbursable Expense

Lunch for mourners after a funeral is typical in many traditions. Recently, an Ohio court decided if lunch following a funeral was a reimbursable expense. In 2011, Kathy Campbell died. Her will appointed Joan Torzewski as the executrix of the estate. Campbell’s will indicated that all funeral expenses should be paid out of her estate. Joan’s siblings were reimbursed $1,800 dollars for a funeral luncheon they had paid out of pocket for. Joan claimed that the lunch was a critical part of the funeral ceremony because of Polish tradition. The reimbursement was challenged. 

In re Estate of Kathy M. Campbell, a case of first impression, the Ohio intermediate appellate court held that the cost for a funeral luncheon is a reimbursable funeral expense under the Ohio law. The court reasoned that under the Ohio Revised Code 2117.25  the lunch was not excluded from being considered a funeral expense. Additionally, the lunch was a reasonably incurred expense because people ordinarily include a luncheon following a burial.

In re Estate of Kathy M. Campbell, No. WD-12-028, 2013 WL 1385635 (Ohio Ct. App. Apr. 5, 2013).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

Teleseminar on Health Care Issues in Estate Planning

The Illinois State Bar Association is offering a 1 MCLE hour teleseminar entitled, Health Care Issues in Estate Planning—A National Perspective, on July 16, 2013.  Below is a description and highlights of the event as provided by the Illinois State Bar Association:

Estate planning is filled with many health care issues, including end-of-life caretaking, health care decision-making, property management and more. Tensions flare among trustees, health care providers and family members at the worst possible moment – when critical decisions about the health care of the client need to be made. Choosing the right trustee, guardian or conservator, clearly drafting objective “triggers” in health care documents, and working with all stakeholders is essential to achieve your client’s most important personal goals. This program will provide you with a practical guide to the major health care decisions in estate and trust planning with an emphasis on conflict avoidance at critical stages of the planning process.

Highlights:

• Drafting advance health care directives, health care powers-of-attorney, living wills, and revocable trusts
• Defining objective health care “triggers” in documentation
• Key issues in appointing trustees, guardians and conservators
• Availability and financing of home health care and institutional care
• Tension between health care providers and trustees – areas of competence, conflict, and cooperation

Two Largest Funeral Home Operators Merge

Recently, the two largest funeral home operators, Service Corp. International and Stewart Enterprises Inc. have merged. Because of the baby boomer generation, this merger has been a long time coming. Service Corp. International paid just over a billion dollars for Stewart Enterprises Inc. Serv. Corp reported that the companies merger would have a $9 billion dollar revenue backlog. This backlog is a result from pre- planned bookings. Combined the operators own 1,653 funeral homes across 48 states, eight Canada provinces, and Puerto Rico. Shareholders are pleased with the 11% Increase in stock. 

See Chris Peters, Maju Samuel, and Ted Kerr, Top Two U.S. Funeral Companies Merge As Baby Boomers Boost Demand, Reuters, May 29, 2013.

Berea College in Complex Court Battle Over Professor’s Estate

Berea College has filed a suit concerning the disposition of Lawrence E. Bowling’s estate, estimated to be worth $1.7 million.  In a 2008 will, Bowling granted over $1 million in assets to Berea College, $100,000 each to his two nephews, and $101,000 to friends, Ronnie and Shirley Mason.

After the 2008 will was executed, an elderly Bowling moved in with his nephew and his nephew’s wife, Billie and Hattie Stegall.  Hattie then proceeded to purchase a $1 million life insurance policy naming the Stegalls as beneficiaries.  She also observed Bowling write a note voiding all previous wills.  Berea College is contesting the validity of both the life insurance policy and the handwritten note.

Before writing his 2008 will, Bowling granted Jami D. Stout, his only granddaughter, power of attorney, which he later revoked after she attempted to steal his assets.  Bowling had left his granddaughter only $1 in his 2008 will as a sign of his disappointment in her, but if Bowling’s 2008 will is revoked by the handwritten note, she will solely inherit his entire estate.

The Masons have also complicated the court battle by presenting a handwritten codicil, which grants them his Berea property.

See Sarah Hogsed, Berea College Files Suit in Dispute Over $1.7 Million Estate, The Richmond Register, May 28, 2013.

Hong Kong Billionaire Demonstrates How to Successfully Plan for Succession

Fong Yun Wah, the 88-year-old billionaire ranked No. 21 on the Forbes Hong Kong Rich List, has quietly implemented the succession of his property investment company, Hip Shing Hong, in a place where succession plans don’t always work out.

Yun Wah has handed off much of the management of the Hong Kong family-controlled business to his 55-year-old son, David.  Part of this successful succession was the “incremental additions of responsibility by the father to the son and careful attention to unspoken signals between the son and father.”

When it was time for David to take care of the family business, he noticed that business was good, but the company was outdated.  His father let him implement his own business plans without talking too much about succession strategy.  The father would only correct his son if he sensed he was heading in the wrong direction.

Yun Wah was also willing to discuss what should happen upon his death, an uneasy subject in their culture.  Because of his openness, there is a rough framework for how his wealth will be distributed as well as a framework for the management of Hip Shing Hong going forward. 

See Russell Flannery, One Hong Kong Billionaire’s Succession Approach: Skip the “Blah, Blah, Blah”, Forbes, May 27, 2013.

Insurers Stepping Up Efforts to Find Life Insurance Beneficiaries

Beneficiaries of forgotten life insurance policies are suddenly beginning to receive checks in the mail.  What might seem to many like a scam is actually an increased effort by major life insurers to determine if policyholders have died and to locate their beneficiaries. 

In response to an investigation, Nationwide started this trend by striking a $7.2 million deal with seven states regarding enormous amounts of money in unclaimed benefits.  Other insurers like Metlife, Prudential, and John Hancock have followed suit with similar agreements.

Life insurance policies generally require the beneficiaries to notify the insurer when the policyholder dies, but the new agreements have insurers take more initiative to find beneficiaries.  Nationwide has since paid out about 3,000 of the 4,000 old policies they had identified.  The average benefit is around $2,000.

See Mark Williams, Insurers Finding Beneficiaries of Forgotten Life Insurance Policies, The Columbus Dispatch, May 26, 2013.

The Importance of Talking With Parents About Managing Finances After Death

Children should talk to their parents about the details of handling their financial affairs after death. Not doing so can create many problems for the children trying to manage their parent’s affairs post mortem. Parents willing to talk to their kids and plan a transition after death can save their children from stress and aggravation. Recently, the New York Times has come up with a few tips to help get the conversation started. Before the conversation, children should think about the type of information they want to find out. Some topics to consider are, wills, power of attorney, health care instructions, life insurance. Children should also check to make sure parents have made a list of all their debt and collection accounts. Using “I” statements can help keep the conversation from turning into a “power play.” Having people that your parents trust will also help. However, it is important to note that each person is unique and the rules will likely change. 

See Tara Siegal Bernard,The Talk You Didn't Have With Your Parents Could Cost You, New York Times, May 24, 2013.

Fiduciaries Should Proceed with Caution when Handling Offshore Accounts

Trustees, executors, and other fiduciaries have an absolute obligation to gather the assets of a deceased or disabled taxpayer and provide accountings to creditors and beneficiaries.  If the taxpayer has foreign financial accounts and has failed to file a Report of Foreign Bank or Financial Account (FBAR), the fiduciary’s duty can be much more difficult.  The fiduciary may face “personal liability if he/she finds evidence of an offshore account and does not timely file currently due FBAR and properly report the accounts for income tax purposes.”

If a fiduciary finds delinquent FBARs or unreported income from offshore accounts, the fiduciary should make a voluntary disclosure under the Offshore Voluntary Disclosure Program of 2012 (OVDP) on behalf of the taxpayer’s estate.  Although beneficiaries may have a problem with coming forward under the OVDP due to the range of penalties the estate will be subjected to, the fiduciary should not risk personal liability for consciously deciding not to come forward.

See Sanford Millar, FBAR Penalties and Estate Administration, JD Supra Law News, May 20, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

10 Ways to Avoid Mistakes when Naming Life Insurance Beneficiaries

Designating life insurance beneficiaries can be tricky and mistakes are common.  Here are 10 things you can do to avoid making any mistakes when naming life insurance beneficiaries:

 

1. Instead of naming a minor child, name a trust or a reliable adult for the child’s benefit.
2. Don’t risk making a dependent ineligible for government benefits.
3. Have your spouse sign a waiver if designating someone other than your spouse in a community-property state.
4. Make sure the life insurance death benefits are not counted as a taxable gift.
5. Don’t assume your will trumps the life insurance policy.
6. Don’t forget to change the designated beneficiaries when circumstances change.
7. Choose the distribution method that matches your intentions.
8. Make sure the beneficiaries know they are beneficiaries.
9. Consider having the policy paid out in installments.
10. Name secondary and final beneficiaries to prevent the benefit from going into your estate.

See Naming Life Insurance Beneficiaries: 10 Ways to Screw Up, Fox Business, May 22, 2013.

Articles About Managing Your Digital Assets

Anne Eisenburg (Journalist, New York Times) and Paul Sullivan (Journalist, New York Times) have recently published articles Bequeathing The Keys To Your Digital Afterlife and Leaving Behind the Digital Keys To Financial Lives. Both articles provide information and tips on digital asset management. Recently, I posted a revised version of my article, Estate Planning in the Digital Age that also educates estates planning professionals on the immportance for planning for the disposition of digital assets.

Special thanks to Naomi Cahn (John Theodore Fey Research Professor of Law, George Washington University School of Law) for bringing these articles to my attention.

Tips on Avoiding Family Feuds During Estate Planning

Due to the recent signing of the American Taxpayer Relief Act of 2012, now is the time to review your estate plan in order to mitigate tax exposure, especially if you are a high-net-worth individual or own a family business.  However, estate planning often causes family feuds over inheritance that may end up in litigation.  To avoid family feuds over wealth transfers, here are some helpful tactics:

• Fairness isn’t always the best answer.  Don’t split your assets evenly if the circumstances don’t call for it.
• Transfer assets based on what makes sense for the individual.
• Use trusts to protect both individual and family assets.
• Prevent misunderstandings or resentment by being open and transparent with family members about your estate plans.
• Don’t wait for the individual with the majority of the wealth to die before addressing an issue.
• Evaluate the assets that are best transferred sooner rather than later.
• Update your estate plan after significant life milestones.
• Choose a professional advisor you can trust that understands your family dynamics.

See E. Patricia Chantler & Wonsun Willey, Avoiding Family Conflicts During Estate Planning, WealthManagement.com, May 15, 2013.

Tips on Having a Successful Family Meeting

Family meetings are common after a medical crisis, but they can also be invaluable in resolving complicated financial issues as well as legal planning for elderly family members.  Here are some tips on starting, and getting the most out of, family meetings:

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    • Be inclusive by finding a date where everyone in the family can meet.  And ensure everyone has a chance to get their opinion across, especially any person you’re making decisions for.
    • Have family meetings before any serious health issues arise.
    • Hire a professional with expertise in the area of dispute to help resolve conflicts.  Consider a mediator if disputes get heated.
    • Set an initial agenda and invite any suggestions of other items that need to be discussed

See Kelly Greene, When It’s Time to Huddle, The Wall Street Journal, May 10, 2013.

Life Insurance v. Annuities

Both life insurance and annuities have tax deferral benefits. Annuities offer steady income, while life insurance protects your family in the event of your death. However, many believe the tax benefits are outweighed by administration costs and penalties. If you are planning to take money from your life insurance policy then it might be wise to consider an annuity instead. Moreover, people who live in a high tax state might want to consider an annuity to hold income-generating assets.

See Weighing the Tax Advantages of Life Insurance and Annuities Against Their Real Costs, Wealthstrategiesjournal.com, May 14, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Connecticut Rakes in Inheritance Taxes

Connecticut state officials estimated that they would collect about $150 million in inheritance taxes in 2012, but due to the death of an unprecedented amount of wealthy people, Connecticut will collect a staggering $428 million. 

This unexpected record amount is also due to an increase in gift taxes, a result of wealthy individuals making huge transfers in gifts before the higher federal gift tax rate increased from 35 to 40 percent on January 1, 2013. 

The wealthiest Connecticut residents to die in 2012 include Goldman Sachs investment partner Richard M. Ruzika, Standard Oil heir Lucie Cunningham Warren, and Wall Street investor Barton Biggs.

See Christopher Keating, Inheritance Windfall: Record-Breaking Year for Estate Taxes Helps Fuel Budget Surplus, Hartford Courant, May 11, 2013.

Elderly Woman Could Lose Home in Auction

Marianne Blend, a 78-year-old widow living in Highland Park, Los Angeles, thought she was the rightful owner of her home until she saw two men place an auction sign in her yard. 

Blend’s husband left the tiny house to her in his will before his death in 2011.  However, according to the Public Administrator’s office, the house is being auctioned because of a delinquency on the home’s 2011 property taxes. 

The winning bidder of the auction will have to appear in court for a confirmation hearing, where Blend will have an opportunity to protest the sale. 

Dozens of potential buyers have already toured the home.  Blend recently suffered a stroke as well as serious burns after catching her clothes on fire.  Blend’s neighbors, who help her get around town, have joined in the effort to help save her home of over 27 years.

See Bob Pool, Woman, 78, Could Lose Home in Probate Confusion, Los Angeles Times, Apr. 26, 2013.

Article on Physician Assisted Suicide in Massachusetts

Stephen J. Orlando (J.D. Candidate 2013, Suffolk University Law School) recently published an article entitled, The Doctor Will See You For The Last Time Now: Physician-Assisted Suicide In Massachusetts, 46 Suffolk U.L. Rev. 243 (2013). Provided below is the introduction to his article:

Under early common law, many states punished assisted suicide as murder. In 1994, however, the Supreme Court of Michigan drew a legal distinction between the concepts of murder and assisted suicide. Despite this distinction, forty-seven states still prohibit physicians from assisting in a patient’s death. The justifications for this restriction include avoiding the possibility of abuse, preventing the risk of a slippery slope to involuntary euthanasia, or preserving the integrity of the medical profession. The three states that allow the practice view physician-assisted suicide (P.A.S.) as a means of promoting patient autonomy and providing a merciful end-of-life option for terminally ill patients.

Presently, Massachusetts is in line with the majority of states in prohibiting P.A.S. In September 2011, Attorney General Martha Coakley certified an initiative petition to legalize physician-assisted suicide. The bill, known as the Massachusetts Death with Dignity Act (DWDA), would have allowed terminally ill patients to request and receive lethal dosages of medication to end their own lives. Voters narrowly rejected the bill during the 2012 general election.

This Note will focus on the effects that a bill like the proposed DWDA might have on patient care in Massachusetts. Specifically, this Note focuses on the effect of legalized physician-assisted suicide on patient autonomy, elder care, and the dignity of the medical profession. This Note also discusses the potential future of end-of-life care, including active euthanasia and the availability of physician-assisted suicide to minors.

Digital Asset Protection Post Mortem

As I have previously discussed, many people are realizing the difficulties with digital asset management after death. It is wise to include any on-line presence in the estate planning process. Not doing so may make you vulnerable to identity theft after your death. Additionally, it may cause challenges in settling debts and recovering family photos or momentos. Moreover, some digital assets hold value such as domain names and music libraries. Each on-line provider has terms and restrictions that may challenge executors or heirs who are trying to settle debts. Some providers have a process to give relatives access, but it is usually long and requires a court order. Another obstacle that planners face is the federal law. Using relative's passwords may be against the law depending on the jurisdiction. It might be a good idea to make a list of all your on-line accounts with your login and password information and keep it in a safety deposit box.

See Eleanor Laise, Protect Digital Assets After Your Death, Kiplinger, May 2013.

More on the Interactive Account Manager From Google

As I have previously discussed, Google has taken a large step towards allowing its subscribers to determine what happens to their digital assets following their death. What has not been discussed is the fact that Google has built several safeguards into the program. The most important consideration that a person needs to make with the Interactive Account Manager is that the dashboard is not only for death event planning. The system will come into effect if the account is inactive for a period of time. In fact, the system was designed to only come into effect when a person's account has been inactive for a certain period of time. For Google, inactivity means death. This means that the protocol might go into effect if a person decides to travel for a period of time and does not use Google throughout that period of time. Fortunately, "Google will give you a one-month warning before pronouncing you departed and setting the system into action." Thus, if a person is planning a long journey, it is imperative that the person who is traveling has given Google a way to contact that person.

Furthermore, it is cannot be stressed how important this new feature might be for our posterity. The Internet has almost replaced actual letter writing in the modern age and so this could an excellent way to archive our person history in the modern era. This will also solve a current problem with family members not having access to a loved one's online assets following their loved one's death. 

See Kashmir Hill, Will You Use Google's Death Manager To Let Loved Ones Read Your Email When You Die?, Forbes, Apr. 11, 2013.