Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Monday, July 28, 2014

Planning For Your Kids

Children2It is important to have a plan in place for your children in the event of your death.  Who will be your child’s guardian and who will be the guardian of your estate?  While these difficult decisions may not have one right answer, there are several important considerations to take into account when you are making your will and planning your child’s future.

Although you are allowed to designate someone as the guardian of your child, in most states the court has the final decision as to who will be the most appropriate caregiver.  “It’s at the discretion of the court as to what’s in the best interest of the child.”   When drafting your will, it is important to take into consideration that your money and your child can go in opposite directions.  Two types of guardians can be specified in your will—the guardian of the child, and the guardian of the property of the estate.  Though they can be the same person, that is not a requirement.  “Naturally, the answer is different for everyone and depends on what you want for your child as well as his or her caregiver . . . The person who looks after and cares for your child may not be the same person you’d want handling his or her financial life, as they may require a different skill set.  To control risk, some people decide to keep the roles separate.” 

The best way to do this is by creating a trust.  In establishing a trust, you can be explicit about how those funds are to be used for the care and education of the child.  When thinking about the appropriate dollar amount to leave for your child’s care, remember that children are expensive.

See Kathryn Tuggle, How to Give Away Your Kids, The Street, July 28, 2014.

July 28, 2014 in Estate Planning - Generally, Guardianship, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Top 5 Myths About Trusts

Seymour hoffmanRecently, Philip Seymour Hoffman declined to take the advice of his attorney who advised him to create a trust.  Hoffman said he did not want his three children to be “trust fund kids.”  Because of Hoffman’s aversion to proper estate planning, his 34 million dollar estate faces a huge tax bill and other problems that could have been avoided if he listened to the legal and financial advice he was given.  Similarly, Sting expressed a similar sentiment and did not want his children to have a trust fund. 

While Sting and Hoffman may have good intentions, their beliefs highlight the myths surrounding trusts, especially revocable living trusts.  Provided below are the most common myths:

  1. Trust Funds = Spoiled Children. While a large trust fund can lead to spoiled children, it doesn’t have to.  Trusts can help the creator do the opposite.  A person who sets up a trust with an attorney can craft language to tie the distributions to conditions or events, based on that person’s values and goals, this way money can be passed based on how grantor’s see fit. 
  2. Trusts are for the Rich. Trusts are for anyone who wants their heirs to avoid the expense, hassle and stress of probate court.  A living trust also helps by setting up one or more people to manage their assets during their life if they become incapable.
  3. Losing Control. In the case of a revocable trust, it can be changed, amended, or canceled altogether.  Trusts also foster control even after someone passes away.
  4. I Have a Will. Wills, unlike trusts, have to pass through probate court to work.  This means they are public record, more expensive, and difficult to administer.  They can also lead to family fighting.  With trusts, there are tax benefits with which wills and joint bank accounts cannot achieve.
  5. I Must Leave All My Money to My Kids. Anyone can set up a trust and name whomever they want to receive their money, including charities, other family members, close friends, trusted employees, etc.

See Danielle and Andy Mayoras, Philip Seymour Hoffman and Sting Highlight Five Myths About Trusts, Forbes, July 28, 2014.

July 28, 2014 in Estate Planning - Generally, Income Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, July 26, 2014

Digital Wills Valid in Court

Computer 2

Courts are accepting wills composed on computers, smartphones and even webcams as valid legal documents.  Yet an increasing number of disputes are headed to court involving wills left on digital devices.

Celebrity restaurant owner, Daniel Yazbek, initiated the trend for accepting informal digital wills.  Yazbek, who ran the $3 million Toko and Tokonoma Japanese restaurant empire wrote will.doc before his holdiay travels.  On his way to the airport, he told his business partner that there was a will on his computer incase anything went wrong.  Mr. Yazbek committed suicide, and following his death, his brother took their parents to court, arguing will.doc should be upheld despite the fact that it did not possess all necessary legal requirements.  In 2012, Justice Michael Slattery of the NSW Supreme Court deemed the will to be valid because there was a strong showing that Daniel created it and intended it to be his final wishes. 

Since then, a Queensland court upheld a will typed in the “notes” app of an iPhone before he took his own life.  In Victoria, recordings on a webcam were accepted as well.

In all of the aforementioned cases, it was deemed the authors had prepared the documents and they showed clear testamentary intentions.  “These cases are setting a precedent that a will doesn’t have to be a traditional written document on a piece of paper.” 

See Rachel Olding, Being of Sound Mind and Pixels: Wills In the Digital Age, The Sydney Morning Herald, July 26, 2014.

July 26, 2014 in Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Article Review: Memento Mori: Death and Wills

RIPAvi Z. Kestenbaum has written a review on Karen J. Sneddon’s article entitled, Memento Mori: Death and Wills. Provided below is an introduction to the review:

While the process of estate planning should, by its very nature, include the contemplation of our mortality and personal legacy, it often doesn’t. In fact, despite modern society’s general fascination with death and affinity for all things macabre—like zombies and vampires—the personal estate-planning process and documents, such as wills, often are designed to avoid the direct mention of death. This fascinating article delves deeply into society’s changing feelings throughout history regarding the topic of death and our personal reflections when facing it. Moreover, the article advocates a greater emphasis on properly contemplating, reflecting on and embracing the concepts of death and our personal legacies during the estate-planning process, while using candid language regarding death, which will, in turn, make the estate-planning process more of a transformative and genuine experience.

For the rest of the review, see Avi Z. Kestenbaum, Review of Reviews: “Memento Mori: Death and Wills,” 14 Wyoming L. Rev. 211 (2014), Wealth Management, July 24, 2014. 

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

July 26, 2014 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, July 25, 2014

Samsung Heirs Faced with a $6 Billion Inheritance Tax

Samsung heirs

As I have previously discussed, heirs of Samsung Electronics Group’s founder face a $6 billion inheritance tax bill.  Samsung Group chairman Lee Kun Hee, 72, is a legendary figure who turned Samsung Electronics into a powerful conglomerate.  Yet for the last three months, Lee has been in the hospital since suffering a serious heart attack. 

Under Korean inheritance law, an heir must pay fifty percent in tax when inheriting such wealth.  Tax attorney Kim Hyeon Jin says avoiding the bill may be possible if the money is placed in a foundation, however, that will cause the Lee family to lose control of some of their assets. 

Reports claim that in order to pay for the hefty bill, the Lees plan to open two additional Samsung businesses: Cheil Industries Inc. and Samsung SDS Co.

See Ren Benavidez, Samsung Heirs Could Pay a Massive US $6 Billion Inheritance Tax, China Topix, July 32, 2014.

July 25, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, Wills | Permalink | Comments (0) | TrackBack (0)

Estate Planning Lessons From Three Famous Estates

Movie Star2Many famous estates are full of drama, family feuds, and numerous opportunities to learn from others’ estate planning mistakes. Here are three that provide helpful lessons:

  1. Walt Disney: The trust created by Walt Disney teaches the importance of choosing trustees wisely. The trustees for the trust have allegedly used their discretion to withhold principal distributions from some of Disney’s grandchildren, because they would not keep the funds with the financial firm of one of the trustees.
  2.  Johnny Unitas: Unitas’ story teaches how important it is to choose the right executor. Unitas’ son had to endure a lengthy court battle to be able to buy a company he shared with his father, due to his father’s second wife refusing to sell to him.
  3. Casey Kasem: Kasem’s tale of his wife moving him away from his children and now both sides feuding over the will, highlights the importance making smart choices with who gets powers of attorney.

See Bob Carlson, Key Estate Planning Mistakes You Need to Avoid, Investing Daily, July 24, 2014.

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

July 25, 2014 in Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (1) | TrackBack (0)

Thursday, July 24, 2014

Leaving a Death File Behind

BundleNot having the necessary paperwork in order when you die can cost your family time, court fees, and delays in receiving inheritance. The first step is making a list of all the documents and information your family will need to settle your affairs, and either putting it in an electronic file or in one physical location. The location needs to be easily accessible, labeled, and well organized. Items that need to be included in the document bundle include:

  • Your will, trust documents, and contact information for the drafting attorney and listed executor
  • A list of and the account information for all financial accounts and reoccurring bills
  • Policy information for all insurance and benefits plans

See Beth Pinsker, What Should be in Your ‘Death’ File, Reuters, July 15, 2014.

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

July 24, 2014 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 23, 2014

Dying Man's Will Rejected

Will On Tuesday, a Sacramento Superior Court judge refused to validate a will that a lawyer claimed to be the last wishes of a dying friend.  The will would have given all but a small portion of Joseph Herb O’Brien’s estate to a mutual friend. 

Judge Christopher Krueger said the will filed on behalf of local veterinarian Kenneth Pawlowski did not meet the standard of “clear and convincing evidence” that O’Brien was of a sound mental state when he signed his testament.  “Indeed, the evidence points to the conclusion that Mr. O’Brien was extremely weak and actually in the process of dying,” Krueger wrote.  The judge said there was significant evidence that O’Brien wanted to modify the will that he had left in a trust that provided for a stepson with drug problems.  However, the judge expressed there was a “very significant doubt on Mr. O’Brien’s capacity at the time of execution.”

Although no one exercised undue influence upon Mr. O’Brien, the proponent of the will was unable to show that the will in this case was intended by the decedent to be his will at the time he put his mark on it. 

See Andy Furillo, Sacramento Judge Rejects Dying Man’s Last-Minute Will, The Sacramento Bee, July 23, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

July 23, 2014 in Elder Law, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Hoffman Refused to Leave Money for Children

Seymour hoffman

According to court documents, Phillip Seymour Hoffman rejected his accountant’s suggestion that he set aside money for his three children because he did not want them to be “trust fund kids.”

In a Manhattan Surrogate Court, Hoffman desired that his $35 million fortune to go to his longtime partner and the children’s mother, Mimi O’Donnell.  According to the filing, Hoffman’s accountant says O’Donnell was treated “in the same manner as if she were a spouse.”  A court-appointed attorney believes the actor’s will should be approved by the court.

See Associated Press, Hoffman Didn’t Want ‘Trust Fund’ Kids, USA Today, July 21, 2014.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.  

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

Lessons Learned From James Gandolfini’s Will

James GandolfiniJames Gandolfini’s  will made headlines for the tax implications that his estate planning decisions created. The Soprano’s star left gifts to his sister and daughter totaling 80% of his estate, which was then taxed at 55% in “death taxes.” Here are six lessons learned from Gandolfini’s will:

  1. Without the public nature of probate, the media craze could not have happened.
  2. A revocable trust would have been an inexpensive way to keep the process private
  3. It is not the end of the world if Gandolfini did pay the reportedly high amount of taxes, if his estate went to who he wanted it to.
  4. There are ways to limit the tax bill, including how Gandolfini left his son $7 million through a life insurance trust.
  5. It is important to adjust provisions for the age that children will recieve inherited funds based on how responsible and mature they are over time.
  6. It is important to remember that foreign property may be subject to foreign laws, such as Gandolfini’s Italian property.

See Robert Wood, 6 Estate Planning Lessons from James Gandolfini’s Will, Forbes, July 20, 2014.

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

July 23, 2014 in Estate Planning - Generally, Estate Tax, Non-Probate Assets, Television, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)