Tuesday, February 25, 2014
Here are 10 tips for those getting started on their estate and succession planning:
- Stop procrastinating.
- Plan for if you don’t die with a power of attorney.
- Communicate your plan with your family.
- Don’t cut the pie in equal servings if one heir is more deserving.
- Coordinate intangible properties with your estate planning documents.
- Know the current tax rules and their implications.
- Check your liquidity levels.
- Maintain good records for the sake of those you leave in charge.
- Build the right team of professionals.
- Review your estate plan regularly.
See Amanda Radke, 10 Estate Planning Tips; PLUS: How One Farmer Gifted His Estate, BEEF Daily, Feb. 20, 2014.
How do you know if that person you’re dating is a financial match? Here are eight steps to find someone financially compatible:
- Understand your own money habits first.
- Observe their money patterns.
- Start including money in conservation.
- Ask direct questions but have an open mind.
- Find out the reason behind a particular money habit.
- If things get serious, make sure you cover spending, saving, and budgeting in general as well as their financial past, future, and philosophy.
- Beware of unacceptable behaviors, such as lying or financial bullying.
- Have fun finding out more about your partner.
See Laura Shin, Want to Know If Your Partner Is a Financial Match? Take These 8 Steps, Forbes, Feb. 20, 2014.
The New Jersey Supreme Court has declined to hear Ronald Perelman’s appeal in his long-running legal battle against the Hudson News family.
In 2008, Perelman filed suit against Hudson News patriarch Robert Cohen, claiming his ex-wife, Claudia Cohen, was orally promised half of the business. Claudia Cohen died in 2007 while her father died in 2012, leaving the business to his son James Cohen.
A state appellate court affirmed a lower court’s ruling that Perelman’s claim was frivolous.
See Kibret Markos, N.J. Supreme Court Won’t Hear Ronald Perelman’s Case, NorthJersey.com, Feb. 25, 2014.
As I have previously discussed, the Michigan Court of Appeals recently upheld a probate judge’s handling of the estate of Rosa Parks. Now, Steven G. Cohen, attorney for Elaine Steele, the major beneficiaries of Rosa Parks’ estate, has stated that he is appealing to the Michigan Supreme Court the Michigan Court of Appeal's decision denying his appeal and assessing him financial penalties. Cohen had received a favorable ruling in 2011, when the case was before Wayne County Probate Judge Freddie Burton, Jr. and has been the source of conflict for the last several years. The Court of Appeals upheld Burton's ruling, but sent the case back “for a determination of actual and punitive damages, including reasonable attorney fees.”
See Paul Egan, More Appeals Planned in Battle Over Rosa Parks Estate, Detroit Free Press, Feb. 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.
According to the California Family Code, married persons owe each other " a duty of the highest good faith and fair dealing." The duty has been compared to that of a trustee. The duty is applied to transfers between the spouses and to the management of community property. The duty arises most frequently when dealing with community property. As a result, a spouse's retirement account, which contains contributions during the marriage, is community property, despite the fact that the account is solely in only one spouse’s name. In order for any changes to the death beneficiary to affect the entire account, written permission is required from the non-participating spouse. Thus, if a spouse withdrawals funds from his retirement for their benefit they are probably violating the duty.
What are the consequences of a violated duty? The other spouse can bring a claim and involve the court. The statute indicates “a court may order an accounting of the property and obligations of the parties to a marriage and may determine the rights of ownership in, the beneficial enjoyment of, or access to, community property, and the classification of all property of the parties to a marriage.” Additionally, even if the breaching spouse files for bankruptcy this claim may not be discharged if the breaching spouse had “a culpable state of mind involving knowledge of, or gross recklessness” regarding the duty.
See Dennis Fordham, Estates Planning: Fair Dealing and Married Persons, Lake County News, Feb. 22, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Amy Ziettlow (Affiliate Scholar at Institute for American Values) recently published an article entitled, Seniors in Casino Land Tough Luck for Older Americans, (2014). Provided below is the introduction to the article:
As with many adventures, I didn’t know I was on one until I was deep in the belly of a south Louisiana casino where thirty-five-cent bets flowed faster than the free Diet Coke. My elbow rested on the walker of a silver-haired gentleman as I craned my neck to hear him over the sounds of the Lucky 7s slot machine. He worried I was going to waste all my money, and I thanked him for his grandfatherly concern. As our attention returned to the screens before us, we sank into silence, enveloped in waves of pulsating sound and light.
As a parish pastor and a hospice chaplain, connecting to the lives of older Americans had led me to kitchen tables, hospital bedsides, and even prisons. I am no stranger to those literally facing death or to those thinking about how deadly their lives have become. In every place, my role is not to give answers but to listen and help those around me find sources of hope in the midst of despair. My work often serves the most vulnerable populations, especially seniors, and has resulted in my fervent belief that everyone deserves to age with dignity and grace on their own terms, connected to places that give their lives meaning: homes, neighborhoods, favorite restaurants, places of worship, local parks, even shopping centers.
Should casinos be added to this list? I had never thought much about casinos, in part because frequenting one never appealed to me personally. As a pastor, I had heard passing mention of bus trips to the casino, but when I started doing some research into the topic, I was shocked to learn that seniors often name gambling as their favorite form of entertainment.1 According to the American Gaming Association’s State of the States annual report, casino gambling has become one of the country’s fastest growing industries: commercial casinos in the twenty-three states that license them earned more than $37 billion in gross gaming revenue in 2012 alone. 2 One-third of the U.S population visited a commercial casino in 2012 and more than half of those people were aged fifty and older.3 Little research was done on trends in geriatric gambling until the late 1990s, when the National Gambling Impact Study Commission reported that the number of older adults who had ever gambled in their lifetime had more than doubled from 35 percent in 1975 to 80 percent in 1998. 4 A flurry of studies soon followed, focused mostly on compulsive and problem gambling.
When I did a search engine query for “seniors and casinos” on the Internet, I found that almost every casino website offers special marketing incentives and identifiers for the over-fifty-five crowd.5 Some promote breakfast and lunch deals for the “golden grays,”6 and dub the niche market of senior women “the blue hairs.”7 The “third of the month club” is a come-on for older adults who head straight to casinos after receiving their social security checks.8 Well-stocked with wheelchairs and scooters, casinos often provide more handicapped spots than are required by law. Casino bathrooms are supplied with disposal boxes for diabetic needles and attendants keep a stash of adult diapers on hand.9 One casino in Nevada even introduced an in-house pharmacy where 8,000 slot club points cover the $25 co-pay.10 Writing about casinos, Gary Rivlin coined the phrase “day care for the elderly,”11 a description that quickly caught on with other journalists.
Could this be true? Is fifty-five considered elderly? If so, are casinos becoming day care for the fifty-five and older set? Both the casino industry’s definition of elderly and the concept of casino-as-day-care offended me. Still, I had to admit, I had never been to a casino, let alone in the middle of a weekday when most seniors visit.12 My IAV colleagues encouraged me to find out—to visit casinos, eat at the buffets, play the slot machines, and talk to as many seniors as I could—so I checked out local casinos in four different communities: on the Gulf Coast of Louisiana, in the farm country of northwest Iowa, and two big city venues in Yonkers and Queens, New York. I met gracious seniors at every turn, most well past their fifty-fifth birthday, many with mobility and health challenges, all looking for a meaningful way to pass the time. They told me about their lives and helped me to understand what drew them to the casino.
Special thanks to Naomi Cahn (John Theodore Fey Research Professor of Law, George Washington University School of Law) for bringing this article to my attention.
As I have previously discussed, Philip Seymour Hoffman’s will, which left his entire estate to the mother of his three children, Marianne O’Donnell, was signed when he only had his eldest son and prior to the birth of his two daughters. The two daughters being left out of the will could cause serious legal complications.
Since Hoffman and O’Donnell were not married the estate is not eligible for the marital deduction. Without the marital deduction the $35 million estate is facing $15.1 million in taxes. However, Hoffman’s will included the option for O’Donnell to disclaim part of her inheritance, which would go into a trust for their son Cooper. Since Hoffman’s two daughters are not mentioned in the will, it creates an “after born child” problem. Under New York law, unintentionally disinherited children are protected, and the three children may be able to inherit the trust in equal shares. However, if the two daughters were provided for outside of the will, then Copper may inherit considerably more than his sisters.
See, Deborah L. Jacobs, Philip Seymour Hoffman’s Will Raises Legal Problems, Forbes, Feb. 20, 2014.
Monday, February 24, 2014
The University of Miami Law Review recently published an article entitled, The Digital Death Conundrum: How Federal and State Laws Prevent Fiduciaries from Managing Digital Property, coauthored by James D. Lamm, Christina L. Kunz, Damien A. Riehl, and Peter John Rademacher. Provided below is a portion of their introduction:
This article discusses four types of fiduciaries, each of which is affected by the vast growth in and the need to manage digital property. The article begins by defining digital property and discussing why it must be managed. The article then discusses how digital property affects powers of attorney, conservatorships, probate administration, and trusts.
After illustrating the problems that digital property creates for each fiduciary, the article shifts to resolving these problems. It begins by debunking purported solutions by both private and governmental entities. It concludes by offering a holistic approach to resolving the conflicts facing account holders, fiduciaries, and service providers and providing the level of security sought in fiduciary property management, as well as a best-practices approach in the interim to a complete solution.
The Michigan Court of Appeals recently upheld a probate judge’s handling of the estate of Rosa Parks.
Since Parks died in 2005, her estate has been embroiled in controversy. The estate’s primary beneficiaries, Elaine Steele and the institute Steele founded with Parks, accused Wayne County Probate Judge Freddie Burton Jr. of conspiring with Detroit probate lawyers to gouge the estate with excessive legal fees. The appellate court found there to be nothing in the record supporting a conflict of interest or inappropriate conduct. The court also said appeals of Burton’s rulings were vexatious and should result in sanctions.
The estate battle began when 13 nieces and nephews challenged the validity of the estate plan and accused Steele of taking advantage of an aging Parks. They eventually settled.
See Paul Egan, Appeals Court Upholds Judge’s Handling of Rosa Parks Estate, Detroit Free Press, Feb. 21, 2014.
The unexpected celebrity deaths of Philip Seymour Hoffman, James Gandolfini, and Heath Ledger impart some important estate planning lessons. Here are some key lessons from these celeb estates:
- Keep it private. Hoffman, Ledger, and Gandolfini all ended up with wills in probate. Avoid probate with a revocable trust, which disposes of assets outside of court.
- Include everyone. Don’t be like Hoffman and Ledger. Update wills and trusts after every birth.
- Consider marriage. Taxes devoured $15 million of Hoffman’s estate. If he had married Marianne O'Donnell, she would have received his whole estate tax-free.
- Taxes aren’t everything. You want to avoid taxes, but you first should want assets to go as you wish. Gandolfini wanted his sister to receive a large share of his estate, a move that made taxes inevitable.
- Make tax efficient transfers. Gandolfini’s teenage son received $7 million in life insurance proceeds. Use irrevocable life insurance trusts and other tax efficient transfers to avoid estate taxes.
- Consider age. Allowing children to receive significant assets when they are young, like Gandolfini’s baby daughter, may not be best for the child.
- Beware of foreign issues. Gandolfini had Italian property and Ledger was an Australian living in New York. Anyone with property or a presence in multiple countries should seek advice.
See Robert W. Wood, 7 Tips from Philip Seymour Hoffman, Gandolfini, & Other Celeb Estates, Forbes, Feb. 23, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.