Building Legacies that Last Estate Planning and Elder Law

The Great Harry Houdini’s Estate Plan

 

Harry Houdini, an escape artist, was most known magician of the 20th century. He amazed his crowds with tricks such as The Overboard Box Escape and the East Indian Needle Trick. After Houdini died from complications due to a ruptured appendix on October 31, 1926, his estate plan was and still remains one of the best. In 1924, Harry had created a 23 clause long will that was detailed to the max and updated just one year after. In his great will, Houdini gave $500 dollars to his three assistants, $1000 to the Society of American Magicians, and the rest of his estate portions would be liquidated and distributed to each member of his family over periods of time. Two unique aspects of his estate included that: 1/6th of the estate should go to his wife, and whoever received a portion of his estate must have been confirmed according to the Jewish law and traditions. Along with the liquidation and separating his money, he also gave his theatrical effects and tricks to his younger brother, and up and coming magician, Theodore, relying on the fact that he should not share it to the world. For his most valuable books, Houdini gave them all away to the Library of Congress for safekeeping. Even though Harry’s estate plan stated that each member of his family should receive a portion, Sadie Weiss, Houdini’s sister-in-law, received none due to the fact that he disliked her for marrying his one brother, Nathan, and then his younger brother Leopold. For his wife Beth, she was told to perform a séance until she could finally contact him. Along with being the Best Magician around, Harry Houdini had tricks up his sleeve especially in his estate plan.

Harry Houdini, an escape artist, was most known magician of the 20th century. He amazed his crowds with tricks such as The Overboard Box Escape and the East Indian Needle Trick. After Houdini died from complications due to a ruptured appendix on October 31, 1926, his estate plan was and still remains one of the best. In 1924, Harry had created a 23 clause long will that was detailed to the max and updated just one year after. In his great will, Houdini gave $500 dollars to his three assistants, $1000 to the Society of American Magicians, and the rest of his estate portions would be liquidated and distributed to each member of his family over periods of time. Two unique aspects of his estate included that: 1/6th of the estate should go to his wife, and whoever received a portion of his estate must have been confirmed according to the Jewish law and traditions. Along with the liquidation and separating his money, he also gave his theatrical effects and tricks to his younger brother, and up and coming magician, Theodore, relying on the fact that he should not share it to the world. For his most valuable books, Houdini gave them all away to the Library of Congress for safekeeping. Even though Harry’s estate plan stated that each member of his family should receive a portion, Sadie Weiss, Houdini’s sister-in-law, received none due to the fact that he disliked her for marrying his one brother, Nathan, and then his younger brother Leopold. For his wife Beth, she was told to perform a séance until she could finally contact him. Along with being the Best Magician around, Harry Houdini had tricks up his sleeve especially in his estate plan.

Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients,

Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.

Prince Estate Must Sell Property To Pay Estate Tax

Some of the mystery about what will happen to Prince’s property has begun to clear up as his estate has asked for permission to sell some of his real estate holdings.

It has been estimated that the total estate tax bill that Prince’s estate will have to pay will be in the neighborhood of $150 million. The bill is that high because Prince did not have an estate plan that accounted for either the federal estate tax or the Minnesota estate tax.  Like Minnesota, Maryland estate tax is lower than the federal at $2 million.  This estate tax threshold includes the entire value of your house, without regard to the  the size of your mortage. With the high property values for housing in Maryland, life insurance and retirement accounts, many middle class Maryland families, who do not do Maryland estate planning, may force heirs to sell assets, just to make Maryland estate tax payments.

Since Prince died without an estate, there was alot  of speculation that some of the musician’s estate would need to be liquidated to pay the tax, but what portions of his estate would be sold has not been known.

It now appears that some of what will be sold includes the musician’s real estate holdings, as TMZ reports in “Prince Everything Must Go…Estate Ready to Dump Properties.”

The special administrator for the estate has filed a motion with the court seeking permission to sell some of the real estate and says it will not accept an offer that is less than 90% of fair market value. The musician is known to have had real estate holdings in several different states, but which properties might be sold has been sealed.

Ultimately, the judge will have to approve of the plan to sell before the properties are listed.

If the judge approves the plan, it will likely not be the last things of the musician’s that will be sold. The estate tax bill is high enough that much more will likely need to be liquidated in the next few months so the estate can pay the taxes on time and avoid fines and penalties.

Reference: TMZ (Aug. 1, 2016) “Prince Everything Must Go…Estate Ready to Dump Properties.”

Mistakes That Aretha Franklin Made In Her Estate Plan

Aretha Franklin, just like her fellow performer Prince, was undoubtedly talented beyond her years. Unfortunately, she did not have a will set up that would enable her loved ones to get what they deserved, including her child Clarence, who is 63 years old, that has special needs that require attention. If you follow in this path just like Franklin, the disbursements of money could be delayed, very detrimental family disputes may arouse, your estate as a whole may require extra taxes, and ultimately, your financial life could become a public record! If you have a child that requires special attention and you don’t have a will, your child will not receive any government benefits. If you don’t have a will or a trust, get one written up before it is too late! If you don’t follow through like Aretha did, your estate and probate deal will become public, not private.

Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients,

Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.

How Michael Jackson’s Estate Plan Was A Success

Michael Jackson, the King of Pop culture, not only left behind such a legacy but also left behind a great estate plan. He made the sensible choice unlike Prince, Aretha Franklin, and Whitney Houston. With the help of his chief executor of his estate both his entertainment attorney John Branca and his music executive John McClain, he left an estimated over $500 million value of assets to his heirs. By having this money, his heirs, under Jackson’s will, his legacy be protected. In order for him to create this smart and sensible estate plan, he had to follow the steps which include: Writing A Will, Considering A Living Trust, Naming A Guardian, and Assembling A Good Team.

By Writing A Will, without confrontation between siblings, he ensured that his instruction for dividing his property were followed after he died. By Considering A Living Trust, it spared his heirs the hastle of going through probate court- an expensive and prolonged legal process.

By Naming A Guardian, for his kids, he ensured the right people would protect them.

By Assembling A Good Team, he was able to make sure his heirs got what he wanted them to have instead of setting a prolonged, expensive family fight in court. According to a close correspondent to the King of Pop, “He put two people in charge of the will and trust who he felt were sage, mature, and had a great deal of expertise in how to handle what are probably considerable assets. He couldn’t have put his estate in a better position.”

If you follow these steps, you will be able to achieve what Michael Jackson did, which is a “Good Estate Plan.” Overall, the bottom line is that Estate Planning is important and you should have one in place, just like Michael Jackson did. It will serve you well in the future and protect your family, future heirs and your business.

Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients, Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.

Does Your Estate Plan Have All the Right Stuff?

Man holding glasses sitting at computer

“Many people think estate planning means deciding what happens to your things when you die. For that reason, many young families do not consider estate planning to be a priority. However, it may be one of the most important things young parents can do!”

A last will and testament is the document which parents need, to legally nominate guardians to rear their children if orphaned. It clearly delineates who should take care of the children and who should manage the money available to care for the children, as noted in The Daily Sentinel’s article titled What is missing from your estate plan?”

While some people name one person to rear the children and handle the money, it’s a good idea to separate the two roles.

Without these instructions in a will, those left behind can have very different ideas about where the children should live and who should care for them. If the two parent’s families have very strong opinions, suddenly both families have hard choices to make about what will happen to the children.

No parent wants to leave a legacy of court battles and family division.  However, that’s what is likely to happen without a will.

There are other issues that estate plans address while you are alive.  It is also necessary to plan for incapacity. A living will, also known as an “advance directive,” is important because it helps pre-answer questions, regarding what treatment and care you would want if unable to speak for yourself. Do you want to be kept alive by artificial means? You do not want your loved ones making this decision during a time of great emotional stress, so this is an important document to have in your estate plan.

Finally, your estate plan should include a medical durable power of attorney to deal with all other medical decisions other than end of life. Without it, if you are not near death but not able to share your opinions about your care, your family and your medical providers are placed in a difficult position. In contrast, those who care enough about their family designate an agent and ensure that their wishes are made legally binding.

The big question everyone must face is “When should I start working on my estate plan?” If the answer is “Later,” then the real answer is “No time soon.” For young parents, that puts your minor children in a bad position, where a court may make the decision about who will rear them and how their lives will go on after you are gone.

Don’t make your family have to go through more than they would have to anyway. Speak with an estate planning attorney to create your estate plan, including these very important documents.

Resource: The Daily Sentinel (Aug. 12, 2018) What is missing from your estate plan?”

 

You Never Know When You’ll Need an Advanced Directive

Woman sitting looking out a window

“Advance care planning is making preparations and decisions about the medical care you want to receive, if you become unable to speak for yourself.”

Talking with your family and your physician ahead of time about what you would want if you should become incapacitated, is a difficult but necessary conversation, reports The Herald News in the article “Being Prepared: Advanced Directives.” An Advanced Directive is a key part of your estate plan. If you have reached the age of majority (age 18 in most states), then you need to have this document.

An estate planning attorney can help you ensure that you have an Advanced Directive in place which conveys your wishes to your loved ones. Discuss this ahead of time and let your family members know what you would want to happen in advance.

Select a person you know and trust to be your healthcare agent. Tell them you have selected them to serve in that role. Don’t let this be a surprise to them at the last minute. They will need to fully understand your wishes and be willing to carry them out.

Be as specific as you can about what kind of treatment you would want and which you would not. That includes medical ventilation, a feeding tube, kidney dialysis and other treatments.

Do you want to be resuscitated if you stop breathing, or have CPR performed if your heart stops working? You’ll want to have a DNR—Do Not Resuscitate—if you don’t want extreme measures to be taken to keep you alive.

Once you have made your decisions, meet with an estate planning attorney to complete a written advanced directive.

States have different sets of rules regarding advanced care directives, so an estate planning attorney in your state of residence is necessary.

 You should keep your advanced directive and DNR document, where someone can get them if an emergency occurs. Do not give it to a relative who lives two states away—they will not get to you in time. Be sure that everyone involved with your healthcare has a copy. This includes your primary care physician. Ask that your directive be maintained in your official medical file.

If you are wondering how or when to have this conversation about a loved one’s end-of-life preferences, the answer is now. Start by sharing your own wishes and then ask them to share theirs. Ask if they have made the proper preparations for their wishes to be carried out and discuss what must happen to have their wishes followed.

It’s not the happiest conversation you’ll ever have.  However, if an emergency occurs, your loved ones will have peace of mind knowing they did what you wanted. You’ll also have peace of mind.

Resource: The Herald News (Aug. 10, 2018) “Being Prepared: Advanced Directives”

 

So, You Think You Can Retire?

Group of people clapping and smiling with one another


“The most common need of those preparing to step into retirement isn't what you think: it's confirmation that all the hard work, discipline and saving was enough.”

People getting ready to retire really want to be reassured that they did a good job and were good stewards of their money, according to Investopedia’s article “Determining If You’re Prepared for Retirement.” They also want confirmation that the retirement assets they’ve built over a lifetime will last for the rest of their lives and that they’ll be able to live in comfort.

Commonly asked questions are:

  • Am I saving enough, or did I save enough?
  • Can I retire, or did I make a mistake and retire too early?
  • Were my investment decisions the right ones?
  • How am I doing, compared to my peers?

The answers to these questions are important, but like so many things in life, there is no “one-size-fits-all” answer. Just because you’ve accumulated six, seven or even eight figure retirement savings, doesn’t mean you’ve “won” the retirement game. In this case, size doesn’t always matter.

One of the key factors to a successful retirement is your income to expense ratio. Can you generate enough income from all sources, without drawing down too much from your portfolio?

If you have a small to non-existent portfolio, but you have a good-sized pension, maybe you don’t need such a big portfolio. If you live very simply, it’s possible that Social Security benefits and modest withdrawals from your investments might take care of your needs.

Remember that just because you have a large portfolio, does not mean you don’t risk running out of money during retirement. If you spend lavishly on first-class vacations, drive luxury cars and live in a house that costs a fortune to run, you can easily get yourself into a tight spot.

Take a long hard look at all sources of income to determine how long your portfolio will last. You should include Social Security, pensions, retirement accounts and any other sources of income. It is important to figure out how much income you’ll need on annual and monthly basis. You’ll then have a better sense of whether you are prepared for retirement.

Don’t forget to prepare an estate plan, unless you have already done so. A will, power of attorney, healthcare directive and other documents will help protect you and your loved ones. You need an estate plan, regardless of the size of your portfolio. A qualified estate planning attorney can help you prepare this part of your retirement.

Resource: Investopedia (July 19, 2018) Determining If You’re Prepared for Retirement”

 

Why Is a Power of Attorney So Important?

Elderly couple looking concerned

“……we often receive community questions surrounding powers of attorney (POA), so we decided to take a look at some of the most common misconceptions surrounding a POA.”

Most people understand the basic concept of a last will and testament: a document that directs how assets are to be distributed after someone dies. However, according to an article from A Place For Mom, “5 Misconceptions About a Power of Attorney,” there’s a lot of confusion over this legal document.

Misconception #1–You can sign a power of attorney, even if you are legally incompetent.

Not true. This is one of the most common misconceptions. In fact, if you have a document from a medical doctor that says a person is not competent, that person is no longer able to sign any legal documents. Many people generally think about what they need to do, i.e., accessing a bank account, when an elderly parent can no longer do so.  However, if Dad lost his legal capacity just before a power of attorney or living trust was signed, that’s no longer an option. You’ll have to go through a guardianship or conservatorship proceeding through the court to have any control over Dad’s assets.

Misconception #2—You can find a power of attorney document online.

You might find such a document online but it most likely will not be suited to your circumstances. You need to have a power of attorney custom drafted, so it is legal in your state and addresses your family’s needs. Many online documents end up being useless. It’s a big risk to take.

Misconception #3—A power of attorney lets the agent do whatever they want.

The agent under a power of attorney has a legal and fiduciary duty to make decisions in the best interests of the person who named them as power of attorney. They have not been handed a free pass; on the contrary, they have a big responsibility to do the right thing.

Misconception #4—There is one power of attorney.

This is why an estate planning attorney is needed for the power of attorney. There are two main types: a general power of attorney and a limited or special power of attorney. They are named correctly: a general power of attorney allows for buying or selling property or managing assets. A limited or special power of attorney refers to a specific transaction or task. Which one you need, depends on the laws of your state and the circumstances.

Misconception #5—A power of attorney survives death.

All powers of attorney terminate on death. Once a person has passed, so has the authority for their agent to act on their behalf. A durable power of attorney allows the agent to act, in the event of incapacity but not death.

Power of attorney is an important part of an estate plan and requires the specific knowledge of an estate planning or elder law attorney. Don’t wait until it is too late for a family member (or yourself) to have this document prepared and signed.

Resource: A Place For Mom (July 11, 2018) “5 Misconceptions About a Power of Attorney”

 

Estate Planning Fundamentals You Need to Know

Fortune cookie broken open

“It's easy to put off because it can be morbid and often doesn't kick in until late in our lives, but it's an important piece to be thinking about for those of us who want to make sure our families are provided for.”

A well-prepared estate plan can help you and your family reach many different goals. You may know that your estate plan provides for your spouse and children, including what should happen to them, if they are minors and need someone other than you and your spouse to rear them. In addition, says the Brainerd Dispatch in its article “Wealth Column: Estate Planning Basics,” an estate plan can also be used to dispose of the family business, minimize tax liability and empower an executor and trustees to act on your behalf.

First, you’ll need a will, which is the basic tool for estate planning. It prevents two very expensive and stressful issues: managing your wishes for your estate and possibly losing hefty sums through unnecessary taxes. However, that’s just the start.

You may also need trusts, depending on your family’s situation. You’ll want to have life insurance policies with beneficiaries. Life insurance proceeds are not governed by the will, so your heirs will receive any funds directly. Benefits from retirement funds fall into this same category. That’s why making sure that your beneficiary designations are up-to-date, is so important.

Working with a team of trusted advisors, is productive for most people. Remember that your estate plan touches on taxes and investments as well as your will, power of attorney and medical directive. Consider these steps to get your entire estate plan in order:

  • Gather personal data about yourself and your family,
  • Create a balance sheet of your assets and liabilities,
  • Review your will and any existing trusts,
  • Evaluate all estate tax options, such as the best method of disposing of your share of community property—considering the unlimited marital deduction and the use of tax-sheltered trusts,
  • Consider the optimal way to distribute your retirement plan benefits,
  • Calculate potential estate, gift and income tax liabilities,
  • Determine the availability of liquid assets to meet potential estate expenses and taxes.

Once you have all this information together, you and your estate planning attorney can begin to put together a plan that will serve you and your family. Remember that an estate plan is not a one-and-done document. Over time, as your life and tax laws change, you’ll need to review the estate plan,  which includes beneficiary designations.

Resource: Brainerd Dispatch (Aug. 3, 2018) “Wealth Column: Estate Planning Basics”

Will SAFE Act Really Make Seniors Safe?

Elderly woman looking serious

“In an attempt to take a step toward countering some of the negative impact of elder financial abuse, the government recently passed the Senior Safe Act in May 2018, as part of a bipartisan banking reform set of laws. “

Elder abuse costs millions of Americans an estimated $2.9 billion annually. The expectation is that these numbers are only going to increase, as the scams targeting the elderly become more and more sophisticated. This is according to Forbes in ““After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over.”

The aim of the Senior Safe Act is to encourage financial institutions of all kinds to play a larger role in fighting against elder financial abuse. The law, which was modeled after the Senior$afe program created in Maine, requires financial institutions to train employees on detecting activities that may indicate elder abuse is occurring. If the employees are trained, the Senior Safe Act also provides a reporting process and liability protection for those who report the possible abuse.  It is thought that the liability protection would make those individuals reporting the possible abuse more proactive.  However, there are still some problems with this.

Some advisors report being reluctant to report any client who seems to be suffering from mental deficiencies or elder abuse. The problem, advisors say, is that they are not trained and won’t feel confident in making a judgement about competency. Some court cases have put the onus on the advisor, when selling certain products or strategies but advisors lack both the training and the ability to make a medical diagnosis of senior clients. Without the ability to identify competency, it is very likely that any reporting will only take place well after the elder financial abuse has taken place.

Another issue is that family members or friends are typically the ones who commit elder financial abuse. The victim usually does not want to press charges, fearing that the person will become angry with them and withdraw their emotional support. Being dependent upon the same person who may have perpetrated financial abuse, puts the elderly person in a no-win situation.

Elder abuse prevention, financial and otherwise, should start years in advance, at the first signs of declining physical and mental health. It should begin with a plan for managing financial assets and having the proper legal documents in place, including a will, power of attorney, general durable power of attorney, healthcare directive and other estate planning documents.

By being proactive while the individual is still relatively well and healthy, it may be possible to create protections that will be crucial later in life. Speak with your estate planning attorney now, to make sure that your estate plan is in place, so you and your family are protected.

Reference: Forbes (July 23, 2018) “After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over”