Wills, Trusts & Estates Prof Blog

Epstein estate reaches deal with US Virgin Islands attorney general on victims compensation fund

After months of negotiations, Jeffrey Epstein's estate and the attorney general of the U.S. Virgin Islands have reached a deal regarding a fund to compensate the dozens of alleged sex-trafficking victims of Jeffrey Epstein. The negotiations and agreement followed legal action by U.S. Virgin Islands Attorney General Denise George to block the executors of Epstein's $600 million estate from setting up their own compensation fund with provisions she had objected to. According to George, the new fund has safeguards to protect the victims. 

George opposed demands from the estate that would have required victims to sign a release that would prevent them form suing others who may have participated in Epstein's alleged abuse scheme. The agreement includes funding to ensure that victims who have not yet come forward or are not satisfied with the monetary award can opt out without jeopardizing the chance of a court judgment. The agreement also includes a provision that prevents the estate from using information provided by the women to defend itself against other claims or lawsuits. 

Attorney Gloria Allred, who represents some of Epstein's alleged victims, said that her clients will consider using the compensation fund if it appears fair. 

Epstein was accused of sexually abusing sizes of underage girls at his various homes as well as his private island. Authorities claimed that Epstein lured his girls onto his properties and trafficked them into sexual servitude. Epstein was facing multiple sex-trafficking charges when he was found dead in his jail cell at Metropolitan Correctional Center in New York City. The death was ruled a suicide. 

Daniel Wiener, one of the lawyers representing the estate said the fund will help the victims resolve their claims in a process that "is sensitive to the experiences and concerns of claimants and treats them with compassion, dignity, and respect."

See Louis Casiano & Bryan Llenas Epstein estate reaches deal with US Virgin Islands attorney general on victims compensation fund, Fox News, May 29, 2020. 

New Florida Legislative Provisions Of Interest To The Estate Planning Community [Florida]

Charles (Chuck) Rubin recently posted an article entitled, New Florida Legislative Provisions Of Interest To The Estate Planning Community [Florida],Rubin on Tax, May 26, 2020.

The article discusses some proposed legislation that will likely be signed into law by the Florida Governor. These proposed changes could and likely will have an impact on the Estate Planning Community. 

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

The Covid-19 Essential Estate Planning "Go Package"

As people have become suddenly ill or incapacitated due to the pandemic, it has become apparent that estate plans do not do much good when the key people do not know about them or have access to the documents and information. In many situations after someone becomes sick or passes away, family members are sent into a search for estate planning documents or at least the contact information of an attorney who might know about them. 

If you fall ill and your loved ones do not know about your documents or are missing information, medical and financial decisions could be delayed or possibly not be made by the people you wanted. Putting together a "go package" of essential estate plan items and having it readily available is a great way to avoid these problems and be prepared for this pandemic. Make sure your family members know about the go package and know where to find it. 

This package should have the major estate planning documents: medical power of attorney/advance medical directive, financial power of attorney, will, and living trust agreement. The medical documents are most important for this package, as they will inform doctors of your wishes for medical treatment and who should make decisions. This should also include key medical information such as insurance, prescriptions, and known allergies.

You could also make this package in digital format and place it onto a thumb drive or similar device in order to make to more readily accessible. 

The main key for the package is, stay prepared and keep your family informed!

See Bob Carlson, The Covid-19 Essential Estate Planning "Go Package" , Forbes, May 27, 2020. 

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

Pennsylvania women allegedly kept grandma's corpse in freezer for 15 years, collected Social Security checks: reports

A Pennsylvania woman was arrested Wednesday for allegedly keeping her dead grandmother in a freezer for 15 years while the family continued collecting her Social Security checks. The grandmother, Glenora Reckord Delahay, died in March 2004 at the age of 97. Delahay's granddaughter, 61-year-old Cynthia Carolyn Black, allegedly told police that she kept her grandmother's corpse because the family needed the money form her Social Security checks. 

Black claimed that she had even moved the the freezer to Dillsburg, more than 100 miles west of Ardmore. 

Police discovered the body in February 2019 while responding to a report regarding human remains inside a Warrington Township home. 

Black was arrested and taken into custody facing charges of abuse of corpse, theft by unlawful taking and receiving stolen property.

See Bradford Bets, Pennsylvania women allegedly kept grandma's corpse in freezer for 15 years, collected Social Security checks: reports, Fox News, May 28, 2020. 

Kentucky enacts Revised Uniform Fiduciary Access to Digital Assets Act

Kentucky recently became the 44th state to enact the Revised Uniform Fiduciary Access to Digital Assets Act. The Act will take effect on July 15, 2020. Ky. Rev. Stat. Ch. 395A.

Florida Appeals Court: Renting Out Rooms Does Not Destroy Florida's Constitutional Homestead Protections

In the May 2020 opinion of Anderson v. Pets, the Florida Second District Court of Appeals held that a decedent's constitutionally protects homestead protections were not lost by renting out rooms in his Florida homestead property. The creditors of decedent's estate could not satisfy their leans from decedent's homestead property.

Richard Anderson II (Anderson) filed a petition seeking a determination from the Florida probate court that his deceased father's residence was constitutionally protected homestead. The petition asked the probate court to an order "determining that the Property constituted the exempt homestead of the decedent, title to which, upon decedent's death, descended and the constitutional exemption from claims inured" pursuant to the Florida Constitution. 

Creditor's of the decedent estate filed a statement of claim in the probate case for judgment liens totaling almost $40,000. 

The probate court entered an order finding that the home was occupied as decedent's homestead and that the decedent rented out three rooms of the home. The probate court found that the rented portion of the home lost its constitutional homestead protection, ruling that 75% of the decedent's property was not homestead at the time of his death and thus was subject to lien. The remaining 25% passed to decedent's heirs and was protected homestead beyond the reach of creditor's. 

Contrary to the probate court, The Court of Appeals reasoned that when rooms of a Florida homestead single family resident are rented out, the property maintains its homestead status. The court also stated that a single-family residence that constitutes Florida homestead is not subject to dividing. Therefore, the rented rooms could not be severed from the residence by an imaginary line. The court noted public policy of the Florida homestead exemption to promote stability and welfare of the state by securing the home from an owner's financial misfortune and demands of creditors. 

See Florida Appeals Court: Renting Out Rooms Does Not Destroy Florida's Constitutional Homestead Protections, Probate Stars, May 28, 2020.

Advising Pro Athletes With Their Seasons, Careers On Hold

The cancellation of live sporting events has been a tough pill to swallow for those who have been stuck in their homes due to the pandemic. While many of us have been complaining about the lack of sports to distract us, we have failed to think about the pro athletes that have been put out of work. 

Over the past 10 years, sports telecasts have made up over half of the 199 most-watched primetime programs. NFL games alone accounted for 67 of these telecasts. 

With all of their assets and time on their hands, athletes are an attractive target for financial scammers. They too are able to see the market volatility and are possibly worried about the economy and may feel that their assets are threatened. The status of athletes and entertainers makes them an easy target for scammers to make new pitches and with the economy and future in limbo, it may be hard for them to say "no."

There are a few practices to keep in mind while advising clients that may find themselves in this situation. First, sometimes doing nothing is the best method of action. It sounds crazy, but sitting still and having self-control is can be the best method of staying in control. Second, run the numbers and rely on experienced due diligence. Any deals that make unrealistic assumptions about the pace of the economy should receive a high level of scrutiny. 

See Noel LaMontagne Advising Pro Athletes With Their Seasons, Careers On Hold, Financial Advisor, May 27, 2020. 

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

Costa Rica latest country to legalize same-sex marriage

Costa Rica's supreme court ruling went into effect early Tuesday morning, removing the ban on same-sex marriage. Some couples broadcasted their ceremonies, while others were held privately, but either way there was reason to celebrate in Costa Rica. 

Yaritza Araya and Alexandra Quiros were married just after midnight in an outdoor service and became the first legal gay marriage in Costa Rica. Also, gay equality activist Marco Castillo married his longtime partner before a judge on Tuesday morning. 

Castillo had fought for same-sex marriage for years and was recently sanctioned as a notary for conducting the marriage of two women, which was later annulled. 

President Carlos Alvarado broadcast the message, "Today we celebrate freedom, equality, and democratic institutions." In August 2018, Costa Rica's supreme court said the country's ban on same-sex marriage was unconstitutional and gave the congress 18 months to act, but the Legislative Assembly never acted, so at midnight, the law banning same-sex marriage was nullified. 

 

See Javier Cordoba, Costa Rica latest country to legalize same-sex marriage, AP News, May 26, 2020. 

Stop In The Name of Lien: The IRS Loses Against Partnership of Motown Songwriter Edmond Holland, Jr.

Edmond Holland Jr., is a songwriter whose Motown hits included "Stop In The Name of Love" and "Baby Love." Holland sold the rights to his songs to two music companies in exchange for royalty payments. In the 1970s, Holland "fudged" his tax returns and got caught by the IRS and by 1990 the IRS had taken almost 1.5 million in Holland's assets. 

Holland created a partnership in 1997, where he transferred his royalty rights (around $23.3 million at the time). Then the partnership borrowed money from third-party lenders, against the royalty rights. Around this same time the IRS was investigating him, but had not recorded an assessment yet. 

The transaction was completed in 1998, with Bankers Trust paying $8.4 million directly to Holland. Holland was assessed again in 2003 and his royalties were taken as collateral in 2005. By February 2012, the IRS recorded a $20 million lien against partnership, treating the partnerships assets as if they were Holland's assets. The U.S. District Court ordered the partnership's royalty assets to be liquidated and named the Royal Bank of Scotland (RBS) as a party.

The District Court ultimately agreed with RBS and the IRS appealed. In essence, Holland and RBS were the same person throughout the suit. Since Holland had paid of the IRS, there was no reason to believe he tried to cheat the IRS out of its rights. 

The Sixth Circuit affirmed the district court's judgment finding that the Holland's sloppiness in failing formalities in dealing with his partnership and had the IRS acted more quickly it could have satisfied the liability. 

Holland and RBS defeated the IRS!

See Jay Adkisson, Stop In The Name of Lien: The IRS Loses Against Partnership of Motown Songwriter Edmond Holland, Jr., Forbes, May 24, 2020. 

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

Tactics for Stretching Retirement Assets Under the SECURE Act

On December 20, 2019, President Trump signed into law The Setting Every Community Up for Retirement Enhancement (SECURE) Act. The Act has many provisions related to financial planning, with a focus on retirement planning with IRAs and employer-sponsored plans. One of the more attractive provisions under the Act is the curtailing of "stretched" inherited retirement assets. 

Generally in a stretch arrangement, one spouse will retire with a retirement account, which would be tapped during their lifetime and the balance would then be left to a surviving spouse. The surviving spouse would then draw down the account and eventually leave what is left to their children or other beneficiaries. The ultimate heirs or beneficiaries would then have the opportunity to spread required minimum distributions (RMD) over their life expectancies, which could possibly lead to years of untaxed compounding and substantial wealth accumulation. 

The SECURE Act eliminates the stretch for most beneficiaries, but keeps the opportunity intact for the plan participant's surviving spouse. Also, disabled and chronically ill beneficiaries can still take advantage of the stretch in regard to RMDs. 

The IRS has just recently released new life expectancy tables for distributions beginning in 2021, which designated beneficiaries will be able to use. Compared to 2019, the life expectancy is longer, which means fewer RMDs each year, a potentially smaller tax on those RMDs, and more funds left in the IRA for continued compounding. 

The SECURE Act applies to the retirement accounts of individuals who die in 2020 or later. The accounts of people who have died before 2020 will fall under the old rules until the beneficiary dies.

Under the SECURE Act, those planning for retirement have the opportunity to choose from a number of tactics to find what fits their financial scheme.

See Sidney Kess & Julie Welch Tactics for Stretching Retirement Assets under the SECURE Act, The CPA Journal, April, 2020. 

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