Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Thursday, October 23, 2014

Melissa Rivers to Inherit More than $100 Million

Joan and Melissa Rivers

Following the tragic death of iconic comedian Joan Rivers, her daughter will inherit more than $100 million in cash and property.  Melissa Rivers will receive $75 million in cash from her mother and the comedian’s $35 million Upper East Side New York condo. 

On October 16th, the New York City medical examiner released a statement saying that Joan Rivers died from throat surgery complications. 

In light of this report, Melissa Rivers continues to struggle with the loss of her mother and business partner.  “My mother would have been overwhelmed by the scope and depth of the love that people have expressed for her. It is certainly helping to lift our spirits during this time.  We are forever grateful for your kindness and support in continuing to honor my mother’s legacy, and for remembering the joy and laughter that she brought to so many.”

See Clyde Hughes, Melissa Rivers Inheriting $100M in Cash, Property From Mother, News Max, Oct. 23, 2014.

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

October 23, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Impact of Slayer Statutes on ERISA Benefits

Goodyear

A recent opinion by the U.S. District Court for the Northern District of Alabama in Box v. Goodyear Tire & Rubber Co., Case No. 4:11-CV-02829-MHH, discusses the variations among state “slayer statutes”—laws preventing murderers from inheriting from their victims.

On August 5, 2003, Barbara Box shot and killed her husband, Kenneth Box.  He was found dead on the sidewalk in front of their home.  A jury convicted Barbara of murder, and she is currently incarcerated. 

Before his life came to an abrupt end, Kenneth worked for Goodyear and participated in the company’s pension plan—governed by the Employee Retirement Income Security Act of 1974 (ERISA).   The Goodyear plan provides a qualified pre-retirement benefit in the form of a survivor annuity (a QPSA) for the surviving spouse of a vested plan participant if the participant dies before he’s eligible to receive his pension benefits. The plan only provides for surviving spouses.  The plan does not address whether a surviving spouse is eligible to receive QPSA payments if she murdered the plan participant. 

While both federal and state law would prevent Barbara from inheriting the pension, Kenneth and Barbara’s two kids brought a petition in the District Court seeking an order requiring the QPSA benefit to be paid either to the estate or to them as their father’s heirs in light of the fact their mother was ineligible for the benefit.   Goodyear responded to the petition and argued that because the plan doesn’t provide a contingent beneficiary, the pre-retirement spousal benefit was only available to an employee’s spouse under the terms of the plan, and Barbara’s disqualification meant that the QPSA wasn’t payable to anyone.

The District Court ultimately decided with Goodyear.  Applying the legal narrative that Barbara predeceased Kenneth, the court found there was no surviving spouse statute under the terms of the plan and, consequently, no beneficiary to whom Goodyear would be required to pay the spousal benefit. 

See John T. Brooks and Jena L. Levin, The Impact of Slayer Statutes on Surviving Spouse Benefits Under ERISA, Wealth Management, Oct. 21, 2014.

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

October 23, 2014 in Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Essential California Guardianship Clauses

Guardianship

One of the most important things you can do for your children is ensure they will be taken care of after you are gone.  This can be effectuated by a written will.  However, if you do not write your will properly, the binding legal document can be powerless.  For those who live in California, it is essential to take some of the state’s guardianship laws into consideration while creating your will.  Some of the laws are as follows:

  • Name a temporary guardian and an alternate temporary guardian. This is an important consideration especially for those who have chosen permanent guardians who live far away.  Without a temporary guardian, your children may spend their first days without parents with strangers.
  • Name a permanent guardian and an alternate. Including an alternate guardian will ensure that if something happens to your primary choice, your children will still be placed with someone you are comfortable with.
  • Explain why you have chosen your guardians. In California, the court system can determine who gets guardianship of your children.  Thus, the more information you include about why you have made this choice for your kids, the more likely the court will comply with your wishes.
  • Include special instructions. While you cannot watch a guardians every move, you can leave them with general wishes or guidelines, especially regarding your family’s culture, religion, values or ethics.  

See Janet Brewer, 5 Guardianship Clauses You Need in Your California Will, Probate, Trusts, and Estate Law Blog, Oct. 17, 2014. 

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

October 23, 2014 in Estate Administration, Estate Planning - Generally, Guardianship, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 22, 2014

Avoid These Estate Planning Errors

Estate-plan

While many people fail to plan for death, even those who make the effort to plan their estates often neglect to follow through or update their plans as changes occur in their lives.  So that your estate plan may remain a valuable asset for you and your heirs, avoid these common mistakes:

  • Thinking the state will handle everything. It is a common misconception to think that trusts are for the wealthy and you have covered your bases with a will.  However, with a will, your estate may have to go through a public probate process and can be expensive.  If you have a trust, it eliminates the probate process for assets and ensures privacy.
  • Your work is done after a trust is created. Many people forget to fund their revocable trust.  The trust does not exist unless it holds assets. 
  • Settling and forgetting. This means that clients will often set up their estate planning documents and rarely look at them again.  Life changes and your needs, as well as your children’s, may be different.  Thus, updating a will is crucial.
  • Your assets will follow your trust or will. Beneficiary forms govern retirement accounts and insurance policies; the assets do not flow through your trust or will.  Whomever you designated as your beneficiary will get the money when you die.
  • Not considering your children’s needs. Each child can be different, and there may be times to treat them differently when it comes to disbursing their inheritance.

See Barry Glassman, Trust Bust: Steer Clear of the 8 Biggest Estate-Planning Mistakes, CNBC, Oct. 22, 2014.

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

October 22, 2014 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

New Estate Planning Tool: Estate Assist

Digital lock

A new online estate planning tool aims to help users store all of thier online passwords, social media accounts, digital health records, banking information, and other paperwork. 

Estate Assist works as an online safe deposit box that stores your online and offline information in one place.  In addition to helping users choose which accounts to add, Estate Assist uses an API from Intuit to automatically pull linked accounts and prompt users to change updated information in Estate Assist.  Once all of your assets have been uploaded, users can choose to share the accounts with designated trustees such as friends, family, or their lawyer.   

October 22, 2014 in Estate Administration, Estate Planning - Generally, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Article on Probate

Horton-davidDavid Horton (University of California, Davis - School of Law) recently published an article entitled, In Partial Defense of Probate: Evidence from Alameda County, California, Georgetown Law Journal, February 2015, Forthcoming. Provided below is the abstract from SSRN:

For five decades, probate — the court-supervised administration of decedents’ estates — has been condemned as unnecessary, slow, expensive, and intrusive. This backlash has transformed succession in the U.S., as probate avoidance has become a booming industry and contract-like devices such as life insurance, transfer-on-death accounts, and revocable trusts have become the primary engines of intergenerational wealth transmission. Despite this hunger to privatize the inheritance process, we know very little about what happens in contemporary probate court. This Article improves our understanding of this issue by surveying every estate administration stemming from individuals who died in Alameda County, California in 2007. This original dataset of 668 cases challenges some of the most entrenched beliefs about probate. For one, although succession is widely seen as a tranquil process in which beneficiaries settle disputes amicably and pay a decedent’s debts voluntarily, both litigation and creditor’s claims are common. In addition, attorneys’ and personal representatives’ fees are far lower than assumed. The Article then uses these insights to critique the demand for probate avoidance, to contend that probate’s cautious approach to creditors should also govern non-probate transfers, and to suggest reforms to the probate process.

October 22, 2014 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Estate Planning Considerations for Wine Collections

WineCollections create unique estate planning considerations, and collections of alcohol call for even more concentrated estate planning strategies. For the administrator of a deceased wine collector's estate, it is important to consider specific state laws on the sale of an estate's collection of wine. Generally, alcohol sales in the U.S. must go from manufacturers and importers to distributors to retailers. This complicated system of regulation for alcohol sales creates difficulty for estates trying to sell wine collections and other alcohol to a retailer. However, some states have enacted legislation in this area that eases the burden on estates of wine collectors. North Carolina allows for an estate to get a permit to sell the alcohol to an end user, which can be facilitated by an auction house.

See Ian Holzhauer, Wine Collectors Face Unique Estate Planning Challenges, Tailored Estate Planning, Oct. 14, 2014.

October 22, 2014 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 21, 2014

Haunting Life Insurance Mistakes

Halloween

With Halloween right around the corner, parents and grandparents are usually focused on costumes and candy rather than life insurance policies. 

Life insurance can serve multiple purposes, and for most people is a tool for income replacement.  Often a term-life policy, which provides a preset death benefit when the insured person dies, is all that is needed.  Unfortunately, this is not enough to completely forget about the policy.  Below are some of the costly life insurance pitfalls that haunt many of us:

  • Rate Increases. With a level premium, term-life policy, you are guaranteed that the cost of the plan will not go up during the initial coverage period.  After that, be aware.  When the policy is up, you could get an invoice for the latest premium that is many multiples of what you had previously been paying. 
  • Affinity Groups. Some professional associations provide life insurance to their members at group rates. However, the price is not necessarily less than the open market.  There are also hidden costs that could surprise you too.
  • Beneficiary Designations. It is vital you keep beneficiary designation forms up-to-date.  For example, make sure to file an amended form if you get married or divorced or if your spouse dies. 
  • Estate Tax. If you are the insured and the policy owner, the proceeds will be considered part of your taxable estate.  Hence, those funds are added to everything else you leave behind.  If the total is more than the tax-free amount and you leave it to anyone except your spouse or charity, it will be subject to estate tax.  You can avoid estate tax on life insurance proceeds is to designate a family member who will receive the proceeds of the policy the owner. 

See Deborah L. Jacobs, Five Life Insurance Mistakes That Can Haunt You, Forbes, Oct. 20, 2014.

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

October 21, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Lawsuit Over Handling of Holographic Will

Holographic will

An Austin lawyer and her firm have been sued by fifteen family members, alleging she failed to hire a handwriting expert to show their deceased matriarch’s will was forged and they should have received more from the estate. 

The lawyer representing the plaintiffs, William Robertson, commented, “My clients disputed it from day one.  The allegation against the lawyer in this case is that there should have been a careful expert examination of the handwriting.  That was not done.” 

The October 10 original petition and request for disclosure said the plaintiffs hired Holly Gilman and her firm to contest the handwritten will of decedent Carolina Torres.  A woman named Lisa Navarro offered the will for probate.  Gilman contested the will, arguing it “was fabricated and provided that Lisa Navarro was to receive the largest portion of the assets of the estate of Carolina A. Torres.”  At the will contest hearing, no expert testimony was provided, rather writing samples were utilized. 

The court ruled against the plaintiffs and found the will to be valid.  The plaintiffs subsequently hired a new lawyer and continued to probate the case.  The court then made a final ruling and distributed assets in accordance with the will.  However, Robertson noted that the “distribution in the will was real lopsided.”   

After a handwriting expert was hired, the plaintiffs became aware that the holographic will of Carolina A. Torres was forgery and that Lisa Navarro had perpetrated fraud.  The plaintiffs are now suing for negligence, gross negligence and breach of contract.

See Angela Morris, Handling of Handwritten Will Lands Lawyer In Legal-Mal Lawsuit, Texas Lawyer, Oct. 17, 2014.

October 21, 2014 in Estate Administration, Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Probate is the New Planning

Last will and testament

Surveys show that many people decide to engage in estate planning in order to avoid probate.  Despite these efforts, the majority of Americans will end up in probate. 

With the 2.5 million people that die each year in the U.S., combined with the estimated 55 to 70 percent of Americans who do not have an estate plan or simple will, it is clear that there will be no shortage of probate proceedings.  These statistics are expected to increase over the next ten to twenty years due to the aging baby boom population.  Estate attorneys will have a strategic advantage into this new reality.  Although many estate-planning attorneys build their businesses around trust planning, they may need to expand their skill sets to capture a share of the probate market.  Since probate is administratively intensive, attorneys may need to hire additional staff with a probate background and/or litigation experience.  Some firms divide these areas of responsibility based on each attorney’s specialized expertise.

See Mary Merrell Bailey, The Shift from Estate Planning to Estate Probating, Wealth Management, Oct. 20, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

October 21, 2014 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)