Wills, Trusts & Estates Prof Blog

Elderly Man Steals From Other Elderly Citizens

An elderly man, James Keeton, has been accused of scamming several other elderly citizens out of $73,650. Allegedly, Keeton told his victims that he was in a hard time in his life. Keeton claimed that his wife had just miscarried their twins and that his home was close to being in foreclosure. He did gain the trust of the people and was able to fraudulently receive a number of personal loans from them. He always explained to them that he would be able to pay them back because he was about to come into some money from a large inheritance. He explained to his victims that his inheritance was "tied up in litigation in New York." The prosecutors in this case explained that Keeton took the funds and never repaid the money.

According to The Daily Journal, "Keeton pleaded not guilty to seven counts of fraud and six counts of elder abuse." In an unusual move, Keeton chose to not waive his right to a speedy trial by jury. His bail was set by the court at $750,000. A court scheduled his preliminary hearing for March 29, 2013.

See Alleged Fraudster Charged With Bilking Elderly, The Daily Journal, Mar. 19, 2013.

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

Happy Easter!

Greetings,

To all my Christian readers, please accept my best wishes for a very Happy
Easter.

Gerry

Couple Steals Over $200,000 From Grandparents; Plead Guilty to Theft of an At-risk Adult

A Commerce City couple recently pleaded guilty to theft of an at-risk adult for stealing more than $200,000 from their grandparents. 

In September 2008, William Young's grandmother and her husband moved into an assisted living home. Young had power of attorney for his grandmother between June 2009 and December 2010.  Investigators discovered that Young and his wife drained their grandparents' accounts and used their credit cards for their personal use.  Police report that they used this money to pay their $6,000 monthly mortgage and other bills. 

William Young faces 4-12 years in prison, and Karen faces 1-3 years in prison.  The two will be sentenced May 13 in Jefferson County.

See Couple Steals More Than $200,000 From Grandparents, 9News.com, Mar. 29, 2013.

Preventing Financial Scams That Target the Elderly

The Federal Reserve's Survey of Consumer Finances for 2010 indicated that households of people 65 and older possessed about one-third of the wealth in the U.S. 65-74 year olds control 19.3%, and households age 75+ control 13.9%.  Con men and crooks are aware of these statistics and go where the money is to run their scams.

Assemblywoman Melissa Melendez speaks out against financial scams targeting senior citizens. Recently, she was the head of a panel from the construction, insurance, automobile repair and law enforcement industries. The panel presented at the Murrieta Public Library and the panel's goal was to educate the elderly in that community about ways they can avoid being scammed.

See Tom Sheridan, Experts Aim to Keep Seniors Safe From Scams, UTSanDiego.com, Mar. 29, 2013.

Tax-Free Exchanges Can Curb Long-Term Care Expenses

Many people fear long-term care expenses. The reality is these expenses can add up and put a dent into funds set aside for retirement. According to the Genworth 2012 Cost of Care Survey, the median for a private nursing room is $81,030 annually. One way to ease the long-term care cost concern is to secure a long-term care insurance policy.  

Premiums for long-term care insurance can be costly. However, for people thinking about purchasing long-term care insurance a tax-free exchange can help pay the premiums. A person considering this option should evaluate the different long-term care insurance options. Some other factors a person should reflect on include: costs, benefits, tax effects, and the impact on the policy or annuity. The IRS permits the exchange of a life insurance policy for an annuity contract without acknowledging taxable gain. Recently, legislators made it permissible to make tax-free exchanges of an annuity or life insurance policy for a long-term care insurance policy. A partial tax–free exchange can use part of an annuity or a life insurance policies worth to fund a new annuity or policy. However, the exchange must be a direct transfer of funds from one provider to another to be tax-free. The advantage to the tax-free exchange is it supplies funds for the care policy while simultaneously yielding tax benefits. Additionally, a tax-free exchange can allow a taxable gain to be engrossed by long-term care premiums.

See Alder Pollock and Sheehan P.C., Insight on Estate Planning - April/May 2013: How to Fund Long-Term Care Insurance with a Tax-Free Exchange, JDSupra, Mar. 28, 2013.

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

Article on Drafting Grantor Trusts To Include An Exit Strategy

Brandon A.S. Ross (Associate Attorney, Florida) recently published an article entitled, Drafting Grantor Trust Powers With An Exit Strategy,  27 Prob. & Prop. 35 (March/April 2013). Provided below is the introduction to his article:

Over the last couple of years, many proposals for higher taxes on wealthy Americans have been introduced, the most public of which being the "Buffett Rule," a minimum 30% income tax rate for millionaires. The most alarming proposal for estate planners is the 2013 Greenbook Proposal (the "Greenbook Proposal"), which proposes that the income tax and transfer tax law applicable to grantor trusts be coordinated so that (1) the grantor of the grantor trust would have to include the trust assets in his or her estate on his or her death, (2) the distributions from the grantor trust would be subject to gift tax during the grantor's lifetime, and (3) the trust assets would be subject to gift tax on a conversion from a grantor trust to a nongrantor trust during the grantor's lifetime. See General Explanations of the Administration's Fiscla YEar 2013 Revenue Proposals 77, www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-FY2013.pdf. Although the Greenbook Proposal seems far from becoming law, it does highlight that grantor trusts are on the government's radar for future legislative changes.

These proposals for increasing taxes on wealthy Americans have sounded the alarm for estate planners to ensure that their clients have the flexibility to terminate grantor trust statuts for their irrevocable trusts to allow clients to decrease their tax burden. Alternatively, providing a discretionary tax reimbursement clause in the irrevocable trust agreement or decanting the trust are other options best discussed in a separate article. This article will discuss how to combat potential burdensome taxes by highlighting the most commonly used powers to cause grantor trust status, emphasizing the release of these grantor trust powers, and suggesting sample provisions for the granting and releasing of these powers. 

As We Age, Our Financial Acumen Can Decline

Recent research indicates that our understanding of financial concepts starts to drop once we pass middle-age. These changes in financial "performance" are part of the normal cognitive decline that happens as we age.  

If your aging parents start to show signs of a decline in financial performance, MarketWatch's Elizabeth O'Brien offers advice on how to handle that. AdviserOne author, Olivia Mellan, has also assembled articles on the topic. These articles are aimed at the advisor rather than the consumer, but one of her posts focuses on the use of "brain extenders," software and other tools that can help investors keep track of their financial plans. These tools could potentially compensate for deficits in memory and attention that come with aging. 

See Matthew Heimer, Financial Help for the Aging Brain, MarketWatch, Mar. 29, 2013. 

Happy Passover!

 
To all my readers of the Jewish faith, a very Happy Passover.

  

Article on Companion Animal Trusts and Custody Laws

Paige Dowdakin (Associate Editor 2012-2013, Member 2011-2012, The Elder Law Journal, J.D. 2013, University of Illinois, Urbana-Champaign) recently published her article entitled Revisiting Roxy Russell: How Current Companion Animal Trust and Custody Laws Affect Elderly Pet "Guardians" in the Event of Death or Incapacity, 
20 Elder L.J. 411 (2013).  The introduction to the article is below: 

Animals have these advantages over man: they have no theologians to instruct them, their funerals cost them nothing, and no one starts lawsuits over their wills. - Voltaire. Although probably true in Voltaire's time, this quote does not hold today, especially in the United States, where pet guardians are spending large fortunes on their furry companions. In fact, a recent study by the American Pet Products Manufacturers Association estimates that there are over 150 million pet dogs and cats in U.S. households, and the annual veterinary expense per pet is $ 366. For many, the expenses do not stop with veterinary care. Pet guardians often indulge their animals with expensive toys, treats, and even birthday parties. Moreover, an American Animal Hospital Association survey found that seventy-four percent of pet guardians would go into debt to provide care for their pet.  Why? An increasing number of Americans view their pet as a child or family member. 

It is no wonder, then, that a number of elder pet guardians are going the extra mile to ensure that their animal companions will be taken care of in the event of the guardian's death, emergency, or a change in living situation. The media has picked up some extreme examples of this trend. In 2010, Miami heiress Gail Posner passed away at sixty-seven, leaving a $ 3 million trust fund and an $ 8.3 million estate to her Chihuahua, Conchita, and her two other dogs. Ms. Posner also left her personal assistant $ 5 million and free rent at Ms. Posner's Miami Beach mansion if she agreed to care for the dogs "with the same degree of care" they received while Ms. Posner was alive.  Ms. Posner's son, who was left a lesser sum than the dogs, filed a claim against several of his mother's staff members whom he argues exerted undue influence on Ms. Posner during her last years.

Not all cases are as controversial as Ms. Posner's. Another famous case involving a non-notorious guardian is that of In Re Estate of Russell. In the case, the late Thelma Russell, through a validly drafted holographic will, attempted to leave the entirety of her real and personal property to both her close friend of twenty-five years, Chester H. Quinn, and her dog, Roxy Russell.  The court held that the gift to the dog was invalid because a dog cannot be a beneficiary in a will. When trying to interpret the executrix's intent, the court considered that perhaps Russell intended to create a pet trust for the care of Roxy; however, the court eventually rejected this argument because the language of the will did not express any manifestation of intent to impose such a duty on Mr. Quinn. 

As shown in the above examples, there are several scenarios in which pet trust issues and pet custody disputes may arise. One of the most common scenarios is death. In situations where a pet is left behind after a guardian passes away, two major concerns arise: who will take care of the pet and what funds will be used to care for the pet. Another scenario occurs when a guardian becomes physically or mentally incapacitated.  Pets are often displaced due to an incapacitated guardian; this can be due to age, an unexpected accident, or illness.  For guardian incapacity, the same question arises as to who will take care of the pet and with what funds. Both of these scenarios occur most frequently within the elder community, as the prevalence of displaced pets is greatest when the original guardian has passed away or cannot continue to care for the pet. 

To further complicate the matter, each state's particular view on the allowance of enforceable pet trusts determines how custody issues are resolved and whether or not a pet guardian may create a trust for the animal or arrange certain types of custody agreements. Currently, laws in most jurisdictions treat companion animals "just like other kinds of property [having] no legal rights of [their] own. So a dog can't inherit property or sue in its own name." Therefore, each companion animal's well-being - along with the true intent of the elder guardian who seeks protection for his or her animal - depends on the enforceability of the guardian's will or trust.

This Note seeks to analyze the existing legal protections for displaced companion animals and the safeguards' effect on elderly pet guardians. Part II reviews current societal views of companion animals, the legal status of companion animals today, and the importance of pets in American society - particularly for the elder population. It also introduces the concept of a pet trust and section 408 of the Uniform Trust Code. Part III analyzes the legal issues surrounding pet guardianship, current safeguards available for elder pet guardians to protect their companion animals in the event of death or incapacity, and the strengths and weaknesses of each individual scheme used to plan for the care of companion animals. Finally, Part IV recommends all states adopt a modified version of section 408 of Uniform Trust Code, which is an enforceable statute allowing for the creation of pet trusts.

Former Lakers' Owner Leaves His Girlfriend Several Gifts

Jerry Buss, the former owner of the Los Angeles Lakers, recently lost his battle with cancer. Before he died, he changed his will to leave several gifts to his then current girlfriend, Delia Cortez. What were those gifts? He left her his condo in Honolulu, Hawaii and his 200 Bentley. Aside from these gifts, Delia will likely take nothing under the will. In fact, the estate, which is valued at over $5.5 million, will be poured over into his family's trust. The will appointed his daughter, Jeanie, to be the trustee.

See Jerry Buss Leaves Girlfriend Sweet Condo, Sick Car, TMZ, Mar. 28, 2013.

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