October 29, 2017

Little Things That Cause Estate Problems

When families fight over estates, it is not always over things of great importance. They often fight over the little things.

Much of the discussion about how to avoid family feuds over estates focuses on major items. The focus is on making sure that everyone gets his or her fair share of the estate's wealth, so they will be satisfied and not challenge the estate.

That is an important discussion, but little items of personal property can also be a problem, as CNBC discusses in "7 Ways that cheap Tweety Bird figurine can screw up your estate."

Potential problems include:

• Items that do not have great monetary value can still have great sentimental value to family members. If two people want the same item, it can be difficult to resolve that dispute.

• Do not tell anyone verbally they can have a piece of personal property without putting that in writing in your estate plan. If other people want the same item, the person you want to have it will have no way of proving that you said they could have it.

• Do not just let your family divide all your assets between themselves when you pass away. It is most likely that they will fight over who gets what.

• Even if you have given someone access to a safety deposit box and told them they can have the contents after you pass away, you still need to make that official in your estate plan.

• Make sure that any unusual items have been planned for, such as digital media accounts and frequent flyer rewards.

• Items regulated by the government can be complicated. You should plan accordingly.

• Your executor will need to have the authority to change the locks on your door. You would be surprised how often people simply walk in and help themselves to items that they want.

Reference: CNBC (Oct. 10, 2017) "7 Ways that cheap Tweety Bird figurine can screw up your estate."

October 27, 2017March 7, 2023

There Is Not Time to Do It Later

Most people do not think something bad is going to happen to them any time in the near future.

Healthy people have this belief that they will be able to continue with their lives without any problems.

They do not think they will have an accident. They do not think they will get seriously ill. They know these things could happen, but believing that they are imminent is paranoia.

The problem with this thinking is that it leads people to put off estate planning. People put off their initial estate planning, but they also put off making necessary changes to the estate plans they already have.

The latter can be as big of a problem, as the former the Sunshine Daily Coast reports in “Fix your will before it’s too late.”

What is the problem with putting off making necessary changes to an estate plan? Once you have a plan that is the one a court will follow, until you change it.

If you have stated in your will that someone should inherit your property and you change your mind for whatever reason, the change has no legal effect until you actually create a new will.

If something happens to you before you create that new will, then the person you do not want to inherit the property actually will.

It is never a good idea to procrastinate in any area of estate planning.

Instead of putting things off, see an estate planning attorney as soon as the needs arises.

Reference: Sunshine Coast Daily (Oct. 2, 2017) “Fix your will before it’s too late.”

October 26, 2017February 27, 2023

Everyone Can Get a Trust

Most people probably first learned about trusts in a history class.

The idea of trusts is often introduced when we study the presidency of Teddy Roosevelt. He is famous for speaking out against the trusts of his day and beginning to break them up.

The trusts being talked about in history, were the vehicles of extremely wealthy people that were used to hold their assets. The biggest trusts had immense economic power and near full control over some industries.

Because of this history, people often still think of trusts as things that very wealthy people get and use.

However, trusts are now for everyone, as the Times Herald-Record discusses in “Trusts are no longer just for the wealthy.”

There are all kinds of trusts available today. They can be created for many different purposes.

Trusts can be used to make inheritances in blended families less contentious. They can also be used to hold inheritances for minor children. Trusts can be as simple as being nothing more than a convenient way to avoid the potentially costly and time-consuming probate process.

Because trusts are so versatile, almost anyone can benefit from a trust.

If you would like to know how you might personally benefit from getting one, talk to an estate planning attorney about your needs and what types of trusts can help meet those needs.

Reference: Times Herald-Record (Sep. 28, 2017) “Trusts are no longer just for the wealthy.”

October 25, 2017February 27, 2023

Changing a Special Needs Trustee

Special needs trusts offer substantial benefits for those people who have them.

They allow a beneficiary to have access to income, while remaining eligible for government benefits.

However, in exchange for that benefit, the trusts are very restricted. They must be created in hyper-specific ways and the beneficiary’s ability to control the assets in the trust is limited.

Technically, the beneficiary cannot distribute or manage the trust assets.

That means a third-party trustee is needed.

If the trustee is not up to the job or intentionally mishandles the trust, it can be difficult for the beneficiary to change the trustee, as the Wills, Trusts & Estates Prof Blog discusses in “Can the Beneficiary of a Special Needs Trust Change the Trustee?”

A beneficiary of a special needs trust can petition a court to have the trustee removed and another appointed. However, this can be a difficult process and many people with special needs are not able to handle the complex legal issues of filing a petition with the court, let alone arguing for a trustee change.

This could potentially stick a beneficiary with a bad trustee and no recourse.

It is, therefore, important that special needs trusts be drafted with this problem in mind.

Trustees must be chosen carefully and, in cases where the beneficiary is of diminished capacity, it should be clear on who else can petition to change the trustee.

Reference: Wills, Trusts & Estates Prof Blog (Sep. 27, 2017) “Can the Beneficiary of a Special Needs Trust Change the Trustee?”

October 24, 2017February 27, 2023

Bank Hit with $4 Billion in Punitive Damages

Max Hopper is not a well-known figure. However, he became a wealthy man during his time as an executive at American Airlines.
He was best known for creating an innovative reservation system.

At the time of his death, his estate was valued at $19 million.

Unfortunately, he did not have an estate plan.

The bank JPMorgan was chosen to administer his complex estate. However, Hopper’s widow and her stepchildren grew angry at the way the bank was handling the estate and accused it of delaying distributions for its own benefit.

They sued in a Dallas court.

A jury recently came down with a verdict.

JPMorgan was ordered to pay the plaintiffs $5 million in actual damages and $4 billion in punitive damages, as Bloomberg reports in “JPMorgan Ordered to Pay More Than $4 Billion to Widow and Family.”

It is very likely courts will greatly reduce this punitive damage award, since the Supreme Court has previously ruled that punitive damages must be proportional to actual damages.

Nevertheless, this case highlights an important point.

Estate administrators can be held liable, if they do not faithfully carry out their duties.

The jury in this case believed that the bank was guilty of fraud, breach of fiduciary duty and breaking a fee agreement.

JPMorgan is a sophisticated entity that should have known better.

Estate administrators with less experience would be wise to seek the assistance of an attorney to help them make sure they do not run afoul of the law.

Reference: Bloomberg (Sep. 26, 2017) “JPMorgan Ordered to Pay More Than $4 Billion to Widow and Family.”

October 23, 2017March 7, 2023

GOP Tax Plan Includes Estate Tax Repeal

The Trump administration and Congressional Republicans are very slowly inching toward tax reform. It
has not always been clear what type of reforms they might be considering.

Many different possibilities have been discussed.

However, they have now released a joint framework that gives an idea of their main priorities.

Advocates for a repeal of the estate tax will be pleased to know that a complete repeal of the tax is
included in the framework, as Forbes reports in “Trump GOP Tax Reform Framework Calls For Estate Tax
Repeal.”

Despite including a repeal of the estate tax the framework is curiously silent on the gift tax, which
normally goes hand in hand with the estate tax.

If the ideas in the framework were eventually to become law, that would mean pre-death transfers
could still be taxed, while post-death transfers to the exact same people would not be.

Of course, releasing a framework for reform is not the same as passing legislation.

There is a long way to go before the estate tax is repealed and the issue is likely to be contentious in
Congress.

Reference: Forbes (Sep. 27, 2017) “Trump GOP Tax Reform Framework Calls For Estate Tax Repeal.”

October 19, 2017March 7, 2023

Wills Need Probate

How wills actually work, is not understood by everyone.

Many people think that if something is written down in a will, then everything is settled. They think all that is required is for the beneficiary to show the will to whoever is holding the property the beneficiary is to inherit.

That is not the way it works at all.

Unfortunately, the misperception is common.

In fact, estate attorneys are used to hearing this from people named in wills, who think it all works that way and are upset when they discover that it does not.

The Times Herald recently discussed this in “Wills won’t work without probate.”

A will is only a bunch of words on paper that have no real legal authority, until the will is filed with a
probate court.

The court must then agree to accept the will as representing the valid wishes of the deceased.

Once that is done, the probate court appoints a personal representative for the estate.

That personal representative is then charged with carrying out the directives in the will, under the
supervision of the court.

This can result in a long and often expensive process.

It depends on the size of the estate, the ability of the personal representative and whether there are any
challenges to the estate.

Of course, this can all usually be avoided by speaking to an estate planning attorney about getting a
trust instead of a will.

Reference: The Times Herald (Sep. 22, 2017) “Wills won’t work without probate.”

October 13, 2017

Cutting a Child Out

Wealthy parents often have extremely high expectations for their children. They want their children to go to school, get a good job, raise a family and do all of the things that made the parents so successful.

However, sometimes a child just does not live up to those expectations.

Sometimes there is a black sheep who does everything the parents would not want him or her to do.

If the problems are severe enough, then the parents might even stop contact with the child and seek to cut him or her out of their estates.

The latter is often a bad idea, as the Globe and Mail discusses in "Think twice, wealthy family, before cutting the black sheep out of your will."
One big thing to consider is that a child who receives nothing has no incentive to not cause problems.

A no-contest clause can prevent someone who does receive an inheritance from challenging an estate plan that they do not like, but it cannot prevent someone from doing so who is set to receive nothing or very little from an estate.

This can make cutting a child out of an estate plan a very expensive proposition. This is because the child has no reason to not launch legal fights.

A black sheep child can also be more easily controlled by using an estate plan to incentivize that child into desired behaviors.

An estate planning attorney can help you create a trust, for example, that only distributes money to the child when certain actions are taken by the child.

Reference: Globe and Mail (Sep. 19, 2017) "Think twice, wealthy family, before cutting the black sheep out of your will."

August 28, 2017

The Wrong Ashes

A pet cemetery and crematory in Illinois is accused of giving pet owners the ashes of animals that are not their own.

While a local animal rescue volunteer was searching for a missing dog at an Illinois pet cemetery and crematorium that also had an attached animal shelter, he noticed a smell coming from a refrigerator on the property. The closer the volunteer got to the refrigerator, the more overpowering that the smell became.

Upon opening the door, the volunteer discovered the bodies of three dead animals.

One of the animals was a cat that had been implanted with a microchip.

The data on the microchip was read by local authorities and it was discovered that the cat belonged to a family, whose pet had died three years previously.

That family had been given the ashes of a different animal already, according to the Daily Mail in "Pet cemetery is accused of giving the ashes of random animals to grieving owners after dozens of decomposing carcasses were found in a freezer."

It is not clear why the family was given the incorrect ashes or why the cat was never cremated at all.

Unfortunately, the owner of the cemetery committed suicide shortly after the police started their investigation. Therefore, the answers as to why may never be known.

If the owner thought he could avoid any problems by taking his own life, then he was wrong.

It is still possible that his estate could be sued and his family will have to be the ones to face legal consequences, instead of him.

Reference: Daily Mail (July 30, 2017) "Pet cemetery is accused of giving the ashes of random animals to grieving owners after dozens of decomposing carcasses were found in a freezer."

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