Disappointed heirs often speak during the estate administration and probate process. Disinheritance for the wrong reasons, mistakes distributing property or ambiguous wills can all be problems. But for the descendants of the Pepsi formulator, the problem emerged many decades later.
]]> In the suit, his children claim Pepsi is interfering with their ability to market documents about their father's life story, including one document with details about the soda's formula. In some sense, the family could lose part of their inheritance because the company told them any disclosure of the documents would constitute a trade secret violation.Like Coca-Cola, Pepsi keeps a copy of the formula in a bank vault. Around the time of reformulating the Pepsi taste in 1941, the man kept a copy of the recipe among his personal belongings.
It appears that the company was surprised to learn of the copy's existence. The heirs found the documents in boxes in 2008 though the man died in 1985. They contacted a Pepsi historian, and only after a representative visited their home did the company demand the return of the documents.
That the family is fighting to protect their father's assets so many years after his death illustrates just one of many legal issues that can occur during estate administration. The suit says the heirs want the right to share the man's story with the world and are seeking a court declaration that revealing the documents would not violate trade secrets.
Source: The Wall Street Journal, "Pepsi's Recipe Heads to Court," Mike Esterl, May 8, 2012
]]>When a family and probate court appointed the man guardian in 2006 he soon liquidated an account belonging to his grandfather, worth $250,000. He then took the money back to New York. The man used the money to purchase a flat-screen TV, a pickup truck and a semi automatic weapon and never filed a federal income tax return. The Internal Revenue Service's Criminal Investigations Division investigated the activity.
]]> The man pled guilty in January to mail fraud, conspiracy and interstate transportation of stolen property, among other charges. He was also ordered to pay restitution to the Massachusetts insurance program for elderly residents because he lied to it and the probate court about the appropriation of funds. The man must also pay the IRS $85,751 and forfeit the stolen money, amounting to $179,500.Cases of Alzheimer's or dementia can make the elderly vulnerable. Wills and other estate-related matters can be contested in court for undue influence or fraud. However, the IRS was the only party that contested the behavior of the New York man, perhaps because the grandfather was without other family members.
The grandson will now serve two years in federal prison and three years of supervised release. Though justice may have been served, a better guardian may have avoided the problem entirely.
Source: The Republican, "Grandson gets 2-year sentence for plundering dementia-stricken grandfather's Greenfield estate," Jack Flynn, April 26, 2012
]]>The government announced that Social Security will be insolvent by 2033 and Medicare will run dry by 2024 without further changes. The programs are running short because they have been giving out more than they take in. Both are funded through payroll tax. However, the cost of energy has kept incomes low, and Americans are expected to work fewer hours in the future.
]]> Millions of retiring baby boomers also add to the problem. Currently, 56 million people rely on Social Security, and Medicare covers 50 million people. Calls for reform acknowledge concern for future beneficiaries.Many beneficiaries are facing the general challenges of estate planning. In the past, families were able to rely on Social Security benefits and Medicare as a form of retirement benefits. Although most Americans are entitled to these benefits, it's important to save through other avenues as well.
Estate planning may involve creating a will or a trust. Creating a will or a trust involves plenty of planning and the execution of the documents themselves. This is an important process that requires experienced assistance.
An estate planning advocate can even help create family limited partnerships or other legal entities that can lower the tax burden. Either way, all of these tools are useful and will benefit the estate regardless of the condition of the Social Security program.
Most Americans are weary of holding out for Social Security benefits. The eligibility ages may need to be raised and smaller payments made to those who are entitled. Proper estate planning now can avoid the reliance on a system that may not be around when a person is in need.
It's important to take personal responsibility for estate planning needs. Leaving this decision to politicians may be a disastrous mistake for individuals and families.
Source: Associated Press, "Social Security heading for insolvency even faster," Ricardo Alonso-Zalvidar, April 24, 2012
]]>Supplemental needs trusts are often created to ensure special needs children still qualify for public assistance programs. These trusts are highly beneficial because the child will be protected even after the parents' death. Supplemental needs trusts are also advantageous because the parents can designate a trustee to ensure the assets are used to help the child. Sadly, the parents in this case outlived their child, and allegedly misused the funds.
]]> The trust allowed the boy to qualify for Medicaid, but it was supposed to reimburse New York's Human Resources Administration after his death for the medical expenses. The parents were named as joint trustees and received $150,000 immediately after the lawsuit. They would receive any remaining funds after paying HRA back.The grand larceny charges allege that the state made repeated efforts to collect the $1.8 million spent on the boy's medical care. No withdrawals were made during the boy's 15 years, which were spent in an institution. Between the boy's death in 2008 and the parents' arrest, more than $1 million was removed from the account.
Stories like this are an unfortunate occurance because supplemental needs trusts help many good people. While there are the rare cases of misuse, such as in this instance, the reporting of it in the media may skew the perception that people abuse this kind of trust. In fact, it is most often used as intended and highly beneficial.
Source: The Wall Street Journal, "NYC DA: Parents stole from disabled son's trust," April 17, 2012
]]>Almost anyone can be an organ donor. Medical history is generally more important than age. Liver donors have been as old as 92. Furthermore, there are very few diseases that will entirely bar donation. While certain organs may not be appropriate for transfer, it is possible that other organs and tissue are.
]]> Being an organ donor does not require a living will, but it is important to make other decisions like organ donations before it becomes impossible. Desires about life-sustaining treatments like respiration and ventilation must be legally documented. If they are not properly documented, it can be extremely difficult for spouses or children to make end of life decisions for a loved one.It can be hard to talk about death, but a living will with specific instructions about treatment can provide peace of mind. Talking with family members will help them understand the personal decisions being made. Designating a health care proxy for decisions and speaking to them about the decisions you want to have made is very beneficial. Family members will be more comfortable making difficult decisions knowing it is what their loved one would want.
Source: Health News Digest, "Top 10 Things You Should Know about Organ Donation," April 9, 2012
]]>However, even a fearsome interviewer like Wallace eventually couldn't continue at his hectic pace. At the time of his death this month at age 93, Wallace had suffered from medical problems for several years, including dementia. This just goes to show that even those people who seem to defy aging still need to complete comprehensive estate planning to make sure all their wishes are carried out.
]]> In the case of Wallace, who spent decades interviewing the rich, famous and powerful around the world, by the end he remembered virtually none of his career exploits. His son Chris Wallace, a newsman in his own right, said that the elder Wallace still asked about his family with great interest as his illness took a toll. But he had next to no memories of his career in television.People need to plan in advance in case they become incapacitated at some point. Generally a person in that condition is not able to make changes to his or her estate plan, and a court-appointed guardian or conservator might have to be brought in to handle affairs.
While people who are elderly are most likely to have dementia or a similar condition, a debilitating illness or accident could strike someone much younger at an unexpected time. Careful estate planning can cover contingencies that need to be consider should the worst happen.
Source: Forbes, "Mike Wallace Death Underlines Need To Prepare Financially For Risk Of Dementia," Deborah L. Jacobs, April 8, 2012
]]>Had she drafted a will before she died last year at age 27, Winehouse would have been able to direct how her assets would be allocated after her death. She could have directed a certain amount of money to her surviving brother or ex-husband, for example. However, by not creating a will before she died, Winehouse retained no power over the allocation of her assets after she died.
]]> There are other assets not included in probate that Winehouse may have owned, however. Only assets left in her individual name when she died would be included in the probate records. Other assets, such as those held jointly with another person or those that had a beneficiary designation, would not pass through probate. Rather, they would pass directly to the joint owner or beneficiary, respectively. Furthermore, if any of Winehouse's assets were held in trust, they too would avoid probate.When a person with substantial assets fails to create a will before dying, there are many other disadvantages that might surface too. That person is not able to strategically limit estate tax liability on their assets, for example. In addition, they may cause their family members to become involved in a hotly contested battle in probate court. These and other potential issues can be easily avoided when a will directs the disposition of a person's assets.
Source: Forbes, "Amy Winehouse Didn't Have a Will After All, But Did Have Millions," Danielle and Andy Mayoras, March 28, 2012
]]>The first will left Clark's millions to her family, mostly half-nieces and nephews. The second will preserves her most precious assets, fine art, by creating a museum in her house in Santa Barbara.
]]> There is another twist in the story. The painting went missing from Clark's Fifth Avenue apartment in the early '90s and turned up in the Kansas living room of Henry Bloch. In a settlement, Clark signed the painting over to a Kansas museum, where Bloch is a benefactor. Though Clark was 102 by the time of the transaction with Bloch and the museum, her physician testified to her mental capacity.If Clark was competent to sign the painting over to the museum, then she was likely competent to sign her second will. The doctor attesting to her competency, however, was also a benefactor in Clark's second will. Clark passed away in 2011. Her family and ex-benefactors are now contesting the execution of her will.
The public administrator for the city of New York has looked into the case but hasn't challenged the painting's placement. This could mean it was properly executed while other gifts to her nurse, attorney and accountant are under scrutiny.
It remains uncertain what Clark's desires were for her beloved paintings, which will likely be fought out during probate litigation. In this case, like many others, a well-documented will could certainly have made things clearer and could have avoided a legal dispute involving her potential heirs. Clark was plain about at least one request: before her death she received a full-size photograph of the Degas painting.
Source: MSNBC, "The $10 Million Degas ballerina, heiress Huguette Clark and the tax man," March 15, 2012
]]>The will, filed with a court in Manhattan, shows Rooney left behind $8 million in stocks, bonds and cash, and $1 million in property in New York and Connecticut. Rooney's son notes, however, that his dad could have amassed more with better administration, claiming that the famous journalist could have had a $50 million estate with better oversight during his lifetime.
]]> Rooney, according to his son Brian, didn't put much stock in estate planning. Rooney's four children held an estate sale at the family's original home, but it is unclear how much the estate sale made from the houseful of antiques and art.Estate taxes and law can be very complicated, especially because New York doesn't follow current federal regulations. This means an estate tax return is required by New York but not the federal government. And as Rooney's family learned, poor estate administration can be costly. In 2008, the Treasury collected more than $25 billion in estate taxes.
After living through the depression and Second World War, Rooney stashed away money whenever he could and was very frugal. He even refused to spend money on taxi fare until he reached age 90, which is quite an accomplishment for a New Yorker. However, he likely could have benefited from an estate planner for his savings.
Source: New York Daily News, "Andy Rooney's kids to split $9 million estate," Barbara Ross, March 5, 2012
]]>For the heirs of Grammy Award winner Gil Scott-Heron, this was not to be. The family's mourning period was marred by disputes over who would market his poetry and music and administer his estate.
]]> The family has been fighting quietly in New York Surrogate's Court since the musician and poet passed away in May. The deceased's only son was appointed the temporary administrator of the estate, and recently brought publicity to the familial dispute in New York by accusing his family members of pilfering from the estate.The musician's son accused his sisters and his father's first mother-in-law of stealing more than $250,000 from Scott-Heron's account. He also claimed that one of his sisters snatched their father's body at the hospital. As the temporary administrator of his father's estate, he has brought cases against his family and the bank that allowed them to withdraw the money with forged signatures.
Proper estate planning could have precluded these issues and family members would not have been torn apart by financial disputes. Without a will, the distribution of assets can be costly and complex, and divided in a manner contrary to the decedent's wishes. It is also possible that state law would govern the management of assets if the will does not clearly outline how the estate should be handled.
Source: New York Daily News, "Bitter fight over Grammy winner Gil Scott-Heron's estate," Barbara Ross, Feb. 28, 2012
]]>Having immense wealth now, however, hasn't lulled Zuckerberg and other Facebook executives into neglecting the future. The youthful CEO used a strategy with a special kind of trust that will enable him to shift millions of dollars to his trust beneficiaries tax-free.
]]> The maneuver was mentioned, though not highlighted, in the company's recent initial stock offering announcement. With the trust instruments set up, Zuckerberg and some of his fellow executives put pre-IPO stock into the trusts and after the company goes public, the trusts will likely skyrocket in value.After a period of 5 to 15 years, the property remaining in the trust can go to a beneficiary tax-free. Right now, Zuckerberg has no children, but the beneficiary named now might be a successor trust or even nieces, nephews or his parents, for example.
While some people might be skeptical of such a move, it is perfectly legal under tax law, though there have been calls to take it off the books. While most people working on estate planning for themselves won't have stock in a giant company they founded to work with, there are still important lessons to be learned about planning early and decisively for one's financial future, and the future of those who come next -- even if they aren't yet born.
Source: Forbes, "Facebook Billionaires Shifted More Than $200 Million Gift-Tax Free," Deborah L. Jacobs, Mar. 7, 2012
]]>There are many reasons people should have a will on file, but certainly one of the main ones is that without a will, a person's estate can be tied up in probate for long stretches of time. The financial and emotional cost of going through the probate process can be exhausting, experts say.
]]> A person's will is perhaps their most comprehensive estate-planning tool. A will can decree where a person's assets go, either to individuals or to a trust; name an executor, who manages the estate before the distribution of assets; and designate guardians for your children. These should be people who can be reasonably expected to care for the children until the youngest reaches age 18.A durable power of attorney is another useful document. It spells out who can take over financial and legal decisions on your behalf if you are incapacitated. While often this is a spouse, it can be an attorney or another person as well.
A third important document to have is a healthcare proxy, which specifies your intentions about your health care if you are unable to make decisions for yourself. While family members may be able to make some decisions without a healthcare proxy, it will be legally easier if your intentions have been recorded in advance of your condition.
Source: U.S. News & World Report, "What Type of Estate and Tax Planning Do I Need to Do?" Susan Johnston, Feb. 27, 2012
]]>There are some contingencies in place already for when Facebook users pass away: there are so-called memorialized profiles that act as a repository of memories of the departed person. Facebook changes the privacy settings to make the profile available only to existing friends, removes status updates and deletes contact information.
]]> While this might seem like an insignificant part of estate planning, the profiles could have sensitive information that might be of interest to spouses or other family members who might be battling over the deceased person's estate. Now, one state is considering putting into law who would control the Facebook, Twitter, email and other accounts of a person who dies.The bill in the Nebraska legislature would allow an estate administrator specific authority to control a person's social media accounts, either by continuing them or ending them. While the bill's sponsor is not very familiar with the technology -- he admits to having neither a Facebook or a Twitter account -- his is sponsoring the bill at the request of the state bar association, which would like to have some clarification put into law about what is more frequently becoming an issue that requires resolution in the probate process.
Source: Lincoln Journal Star, "Senators deal with what happens when Facebook users die," JoAnne Young, Jan. 18, 2012
]]>Many celebrities continue to generate income long after their deaths thanks to books, recordings or even the use of their likeness to sell products. Michael Jackson, no stranger to creating successful music himself, also had a large stake in a music publishing company that continues to be profitable for his estate. Elizabeth Taylor's fragrance business will live on even though the actress does not.
]]> While most non-celebrities will not have potential income after death from songs or movies, they very well might from a business or other investments they had contributed to during their lifetime. Careful estate planning with an experienced estate planning attorney could make the difference between successfully transitioning that income to successor businesses, trusts or individuals, or risk losing it due to inadequate preparations.As for Houston, her future income potential might be somewhat stunted. While her estate will make money from sales of her recordings, many of her most famous songs were written by others, who will stand to profit as much if not more from increased sales and airplay. A large windfall, in fact, will go to Dolly Parton, who wrote and recorded "I Will Always Love You" decades before Houston ever sang it.
Source: The Washington Post, "Whitney Houston's death sparks outpouring that will benefit estate though questions remain," Feb. 14, 2012
]]>Unlike King, Parks herself lived to old age, eventually settling in Michigan. While in her life she was often regarded a symbol of the civil rights movement, unfortunately since her death she has mostly been the subject of battles among her family and friends over her estate and the execution of her will. While Parks did not make a great deal of money in her lifetime, her possessions are valuable artifacts of a crucial time in American history.
]]> Parks died in 2005, but the bad blood over her estate continued for several years thereafter. Earlier this year, a settlement was filed concerning her estate, which could be worth around $8 million based on the items that she kept for all those years, including the very coat she was wearing on the bus that day in Montgomery, Alabama.The agreement divides her estate among her 15 nieces and nephews, her longtime caregiver and friend, and a charitable institute Parks and her friend had founded. The document also specifies that the parties involved may not publicly criticize one another.
This case goes to show that estate planning is not something to be taken for granted. Parks apparently thought her wishes were clear, but several years of legal wrangling have proved that not to be the case. People in New York who are concerned about how their wills are to be executed after their death owe it to themselves to consult with an estate planning attorney to account for all contingencies.
Source: Detroit Free Press, "The secrets are out on deal to settle suit over Rosa Parks estate," David Ashenfelter, Feb. 5, 2012
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