Tuesday, October 14, 2014
Action brought with probable cause and in good faith did not violate no contest clause. In a case of first impression, the Mississippi Supreme Court held that a no contest clause in a will requiring forfeiture by a beneficiary who contests the admission of the will to probate cannot be enforced against a beneficiary who brings a contest in good faith and with probable cause, even though the clause itself includes language purporting to make it applicable whether or not the beneficiary acts in good faith with probable cause. Parker v. Benoist, No. 2012–CA–02010–SCT, 2014 WL 4243763 (Miss. Aug. 28, 2014).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.
Monday, October 13, 2014
With thirty being the new twenty, the last thing this generation wants to do is plan for their demise. Yet, financial experts suggest that his could be the best time to protect your family and your assets in case the unexpected occurs. “It is imperative that those in their 30s have their estate plans in order, because they have as much to lose as their elders—in fact, sometimes more.” To get started, experts recommend meeting with an attorney to get the following in place:
1. Last Will and Testament. A will establishes who will inherit your assets when you die, along with other vital aspects including information such as who you want to place in charge of administering your estate and who you want to be the guardians of your minor children.
2. Living Will. This outlines your wishes if you are incapacitated or death is imminent.
3. Power of Attorney. This will identify someone who can make financial decisions for you if you are incapacitated.
4. Health Care Proxy. You will specify a person to make medical decisions on your behalf. “It even may make sense to have a conversation with the person you identify so that they clearly understand what your wishes are—God forbid these circumstances arise.”
5. Life Insurance. Term insurance is an effective way to cover current debts that you do not want to burden your significant other with should something happen to you.
6. Retirement Fund. It is vital that 30-somethings start saving for retirement, especially if their employers offer incentives such as profit-sharing or matching contributions to a 401(k).
See Michael Lerner, 6 Estate Planning Moves You Should Make in Your 30s, Daily Finance, Oct. 10, 2014.
Friday, October 10, 2014
A family feud has erupted after the death of wealthy 64-year-old Alamo Heights, Texas resident Gail Weir. Weir died Tuesday of brain cancer and a court order Wednesday has postponed cremation of her body so that an autopsy may be performed. The autopsy was requested by Weir's children due to what they describe as suspicious circumstances surrounding her death. Weir was cared for by her brothers leading up to her death. Under the will filed in probate, her estate valued at up to $3 million will be split between her children and brothers with her brothers left the majority of her large estate. However, earlier wills left larger portions to her children. Weirs brothers did not object to the autopsy of Weir's body.
See John MacCormack, Court Battle Begins Over Estate of Wealthy Alamo Heights Woman, My San Antonio, Oct. 8, 2014.
Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.
Thursday, October 9, 2014
Robert L. Moshman recently published an article entitled, The Art and Science of Disinheriting Heirs—Part II: Benign Neglect, Noble Ambitions, The Estate Analyst, September/October 2014. Provided below is the introduction to the article:
There are people who choose to give most or all of their fortune to charity and not to their own family. These are not disinheritances in the classic scenarios of cutting off a family member due to a hostile relationship or a feeble-minded patriarch being unduly influenced by his young nurse/wife.
These disinheritances are based on personal philosophies, ranging from an aversion to creating spoiled “trust fund kids” to a commitment to recycling wealth back to society.
How much money should wealthy parents leave to their children? Are considerations different for the super rich, i.e., when billions of dollars are involved? Here, we consider the examples of recent celebrities, historic estates, and how incentive trusts can be utilized to encourage productivity.
Friday, October 3, 2014
Unlike wills, trusts eliminate probate, a court proceeding that can be costly and time consuming. Because many people want to steer clear of probate, they try to avoid wills altogether. Below are some key questions to consider in determining whether a trust is right for you.
- How much of your estate will go through probate? While trust assets do not go through probate, there are other ways to title assets to avoid probate. Assets owned jointly with a right of survivorship and assets with designated beneficiaries do not go through the probate process.
- How expensive is probate? A lawyer can charge three percent or more of the value of the assets going through probate as legal fees. Additionally, the law allows executors to be paid around three percent of the estate. Contrastingly, legal fees for trusts are about one percent.
- Do you own out of state property? If you own property in multiple states, avoid the probate problem by transferring out-of-state property into a trust.
- Will anyone contest your wishes? If you divide your estate unequally or disinherit anyone, a trust reduces the chance of a family fight in court. If you use a will, certain family members must receive notice of the probate, and if they are left out, it is easier to challenge your wishes.
See Bonnie Kraham, Bonnie Kraham: When is a Trust a Better Option? Times Herald Record, Oct. 2, 2014.
Thursday, October 2, 2014
Courts are often asked to determine whether or not a plaintiff was a “spouse” of the deceased in estate litigation. This may be referred to as the “threshold question,” since being recognized as a “spouse” generally enables the plaintiff a greater claim to the estate.
The courts have made clear that there is no set criteria, however, there are many possible indicators. Each couple’s spousal status must be reviewed in the context of their own unique facts.
A recent decision from the British Columbia Supreme Court is illustrative. Here, Ms. McFarlane and Mr. Goodburn had been family friends for years. Following the deaths of their spouses, Mr. Goodburn moved into Ms. McFarlane’s home and they began an 11-year intimate relationship. The couple regarded themselves as husband and wife despite maintaining separate finances. When Mr. Goodburn became ill, he relied on Ms. McFarlane for care and assistance until his death. In his will, he left nothing to Ms. McFarlane and she subsequently argued that the will ought to be varied in her favor as it failed to make a provision for her maintenance.
To determine whether the will should be varied, the court had to consider whether she was Mr. Goodburn’s spouse. The court answered this in the affirmative based on factors including: the couple shared a home and a bed, Ms. McFarlane provided care and support, the couple functioned as a unit, and each was committed to life-long financial and moral support of the other. The court found Ms. McFarlane was in fact a spouse, and ordered the will be varied to provide for her.
See Amy Mortimore, When are Couples Considered “Spouses”? Your Estate Matters Blog, Sept. 22, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
Life, like personal finance, is unpredictable, and we must be prepared for the unexpected twists and turns. Being prepared financially takes a number of steps and tools outlined below:
- Well-Funded Checking Account. This is the first line of defense against financial disaster. Our goal is to never run out of funds in our checking account and to grow this cushion, we avoid spending money on some frivolities.
- Emergency Fund. This is a small pile of money sitting in a separate savings account away from our main checking account. Emergency fund is the second line of defense meant to catch heavier blows to our finances that our checking account would not be able to sustain.
- Monthly Budget. Monthly budgeting is an essential tool to plan expenses in accordance with needs. While a budget will not save you from financial disaster, completing one will only benefit you in the long run.
- Life Insurance. A life insurance policy that would provide for a comfortable living to the surviving party by paying out a large sum of money to be invested to create monthly cash flow is a good investment vehicle.
- Last Will and Testament. You cannot always predict life, but at least you can prepare for it with a will.
See Prepare for Financial Disaster: You Need a Swiss Army Knife of Personal Finance, Money Ramblings of a Financial Underdog, Sept. 29, 2014.
Wednesday, October 1, 2014
Rumor has it that in addition to pulling off a private wedding in France this past August, Brad Pitt and Angelina Jolie also put some estate and financial planning in place prior to their nuptials. The International Business Times in Australia has reported that in addition to executing wills, the couple signed a prenuptial agreement that gives Jolie full custody of their children if Pitt is unfaithful to their marriage, and in case of divorce, keeps their individual assets separate and puts marital property in a trust with their children as beneficiaries.
See, Brad Pitt and Angelina Jolie Prenuptial Agreement Makes Estate Planning Headlines Opines UltraTrust.com, PRWeb, Sept. 29, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Tuesday, September 30, 2014
Today, the freezing of ova and a sperm for later usage is almost a common practice and is quickly developing. However, laws have not caught up with these advances. State law in this realm varies from one jurisdiction to another. Some states treat genetic material that has been fertilized differently than genetic material that is not fertilized. A few states mandate that there must be an indication that you intend to have children with the person providing the other half of the genetic material. “Many areas of the law intersect in this area. In addition, there are religious and moral issues. It’s a political hot potato.”
Genetic advances generate issues for estate planning. Most states recognize children born within nine months of a parents’ death as lawful heirs and few states recognize posthumously conceived children. This raises questions concerning whether such a child will have inheritance rights and what will be done with the genetic material you left behind?
While these answers may not be clear, it is important to be explicit about your wishes when drafting your estate plan. When defining beneficiaries who are eligible to inherit, include language such as, “all my children, including those born within X years of my death.”
It may be better to use a trust for this purpose rather than a will. “With a trust, you don’t have to close it out in 18-24 months. You can have things sitting around waiting.” For example, the trust can hold assets until a child reaches a certain age.
See Gail Buckner, Some Estate Planning is Really Complicated, Fox Business, Sept. 29, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
Monday, September 29, 2014
Until he passed away earlier this month, Bernard Madoff’s last surviving son was under investigation for possible involvement in his father’s multibillion-dollar Ponzi scheme. Despite his passing, scrutiny over his $16 million estate continues.
The court appointed trustee seeking to recover money for conned investors began to dissect Andrew Madoff’s wealth far before his death, filing an updated lawsuit this summer accusing him and his brother of having full knowledge of their father’s scheme and using it as their “personal cookie jar” that they tapped through bogus loans, fabricated trades and overdue compensation.
Although Andrew maintained he and his brother Mark knew nothing of the massive fraud, as they were the ones who went to the authorities after their father confessed to them, investigators said they believed the brothers were never unaware.
Officials said it was likely Andrew Madoff would have faced tax evasion charges if he had not died. The ultimate goal was using federal charges as leverage to get him to return money to investors. After Andrew Madoff’s death, his will was publicized, revealing an estate worth $16 million. The trustee is seeking to recover money from the estates of both brothers and has the power to pursue money and assets wherever they are disbursed.
See The Associated Press, Bernie Madoff’s Last Surviving Son was Under Scrutiny Until he Died—and Questions Still Surround $16 Million Estate, NY Daily News, Sept. 28, 2014.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.