How Do I Choose a Guardian in My Estate Plan?

Selecting a guardian to care for your minor child after you die isn’t a lot of fun. Who wants to think about a situation where their young children are left to mourn their parents and live with friends or relatives? However, choosing a guardian to raise your children and manage their inheritance is crucial. If you don’t do it, you leave the decision to the court.

U.S. News and World Report’s recent article “How to Choose a Guardian for Your Child” says that, at worst, forgetting to name a guardian can mean a long court proceeding. This can be expensive, cause stress in family relationships and put your children in guardianship limbo.

There are two types of guardianship to consider when deciding who will care for your children: guardian of the estate and guardian of the person. The guardian of the estate is a person who’ll manage the minor child’s inheritance on their behalf. It’s a fiduciary responsibility, and this guardian must make sure he or she carefully and appropriately manages accounts, keeps receipts, reports back to the court and doesn’t comingle the child’s assets with his or her own. Another option is for a parent is to set up a trust and have a trustee manage the funds for the child. This can allow the parent more control over how and when money is distributed, especially if you anticipate leaving a substantial inheritance.

The guardian of the person is the daily caretaker who’ll make sure your child gets health care, educational, housing and has all other needs met.

These two guardians can be the same person or different people, depending on the skills and abilities of your family members and friends. A separate person managing the estate can provide a series of checks and balances that can help, if you are concerned about the misuse of your child’s funds.

You may want the guardian of the estate to have good money-management skills. The guardian of the person may be someone who shares your same values, has the energy to raise a child, and is close by so that your child doesn’t have to lose the familiar comforts of their school and neighborhood.

You should also name backup guardians, in the event that the primary guardian is unable or unwilling to take on the responsibility. You should also be sure to speak with your guardians ahead of time and make certain they understand the responsibility and are willing to take on the task of helping care for your children, if you pass away.

In most states, you’ll need to name your guardian or guardians as part of your will or in a stand-alone document.

Talk to an experienced estate planning attorney with any questions and draft a legal will with the terms of guardianship included, along with a power of attorney and health care proxy. If you need to create a trust for your child(ren), don’t forget to fund it.

Reference: U.S. News and World Report (June 4, 2019) “How to Choose a Guardian for Your Child”

What’s the Latest with Tom Petty’s Estate?

The late Tom Petty’s wife, Dana Petty, has asked a Los Angeles judge for permission to fund the LLC Tom Petty Legacy with the singer’s assets. However, his two daughters object causing tension in Tom Petty’s Estate.

Billboard reports in a recent article, “Tom Petty’s Widow Files New Appeals Against Daughters in Escalating Battle Over Late Rocker’s Trust” that Dana asked the court to deny a previous petition filed by daughter Adria demanding that Dana immediately fund Petty Unlimited. This is an LLC created to receive assets (a.k.a. “artistic property”) from Petty’s trust. Instead, Dana wants to fund and execute an operating agreement for Tom Petty Legacy, a separate LLC that she created by herself.

Adria’s petition accused Dana of withholding Petty’s assets from Petty Unlimited to keep her and sister Annakim from “participat[ing] equally” in the management of those assets, as directed in the trust. Adria also said that under the terms of the trust, Dana was required to fund Petty Unlimited within six months of Petty’s death. However, she failed to meet that deadline.

Dana claims that she’s the “sole successor trustee” of Petty’s trust and she’s “exclusively authorized” to form any entity of her choosing to be the beneficiary of her husband’s assets—provided all three women are given equal participation in its management. She claims that the trust doesn’t specify Petty Unlimited as the only entity that can receive the assets. As such, the LLC has no legal rights to them.

Dana claims there’s been “foul behavior” on Adria’s part, stating that the 44-year-old has “caused enormous damage to many of Tom’s professional relationships” via a series of letters (allegedly sent by Adria’s lawyer Alex Weingarten) that “threaten[ed] everyone whom Tom worked with for decades: his record labels, his music lawyer David Altschul…even Tom’s longtime accountant.” Dana says the threats led the attorney, who was then representing her, to resign. She also claims Adria has been “abusive” and “slander[ous]” towards several others, including his longtime business manager Bernie Gudvi, his estate planning attorney Burton Mitchell and members of his band the Heartbreakers.

Dana accused the daughters of interfering in and, in some cases, delaying the release of several posthumous releases of Petty’s music. She says that as trustee of Petty’s trust, she is the sole owner of Petty Unlimited, and that Adria and Annakim (and by extension their lawyers) have been “masquerading” as its rightful representatives. The petition notes that Dana has since signed documents to remove Adria and Annakim as managers of the LLC and “fired” a law firm as its representative.

The petition acknowledged that equal participation in the management of Petty’s assets between the three is required under the terms of the trust, but that Dana has sole power to decide on a governing structure for the entity that’s eventually funded with those assets. Now that negotiations with Adria and Annakim have broken down, Dana is trying to assert her “broad discretion” in deciding that structure without their input.

In response to Dana’s claims, Adria and Annakim’s lawyer Alex Weingarten told Billboard, “Dana and her lawyer are basing their case on smoke and mirrors. Every claim they make is demonstrably false. Adria and Annakim are laser-focused on one thing—honoring and protecting their father’s legacy and enforcing the terms of his trust, as written.”

Petty died of an accidental drug overdose in October 2017, at the age of 66.

Reference: Billboard (May 30, 2019) “Tom Petty’s Widow Files New Appeals Against Daughters in Escalating Battle Over Late Rocker’s Trust”

What Do The Letters Mean After My Financial Advisor’s Name?

Finding a financial advisor can be a confusing process, especially since there are different standards of care that financial professionals provide, Forbes explains in the article “What Designations Should Your Financial Advisor Have?”

To make matters more confusing, in addition to the designations, there’s a wide range of job titles used to show their expertise. Titles are unregulated and can’t be treated as verifiable proof of someone’s credibility or authority to serve your financial needs. Instead, look at the professional designations. These (letters behind the advisor’s name) are a more standardized way for these professionals to convey their expertise. However, not all letter combinations require the same degree of knowledge and training. Most financial professionals have some combination of letters on his or her business card. Here are three of the most meaningful designations (listed alphabetically) for financial advisors offering comprehensive wealth management services.

  1. Certified Financial Planner (CFP®). This designation is the most comprehensive designation for financial planning. This certification requires participants to complete a series of financial planning courses and pass a two-day board exam. The course covers general principles of financial planning, education planning, insurance planning, investment planning, tax planning, retirement savings and income planning and estate planning. The CFP Board also mandates that its participants have three years of professional experience related to the financial planning process or two years of apprenticeship experience that meets additional requirements.
  2. Certified Public Accountant (CPA). These financial professionals have highly-sophisticated backgrounds in taxes and accounting. Before taking the CPA exam, candidates must successfully complete a minimum of 150 semester hours of relevant course work. The CPA exam covers auditing and attestation, financial accounting and reporting, regulation and business environment concepts.
  3. Chartered Financial Analyst (CFA). Many financial professionals think that this designation is the toughest credential to earn. CFA candidates must pass three exams, which requires roughly 900 hours of study. The tests have a passing rate of only 44%. The graduate-level curriculum for CFA candidates concentrates on investment and market topics, such as portfolio management, economics, financial analysis, quantitative methods, and corporate finance. Before being permitted to use the designation, these candidates must complete four years of professional work experience in investment decision-making.

All three of these designations require substantial financial knowledge, continuing education, and adherence to a strict code of ethics.

Reference: Forbes (January 29, 2019) “What Designations Should Your Financial Advisor Have?”

Handwritten Wills Found from the Queen of Soul, Raises More Estate Problems

The three handwritten wills found hidden in Aretha Franklin’s suburban Detroit home in May, may not be easy to figure out, says NBC News in the article “Aretha Franklin’s handwritten wills raise tangled legal questions.” There were a total of 16 pages, filled with scratch-outs, notes in the margins and the occasional digression.

In many states, these documents wouldn’t even qualify as wills, because they were not notarized and there is no evidence of any witnesses to Franklin’s signature. However, the iconic singer died in Michigan, and courts there are more likely than other states to take these documents seriously. Every state has its own laws about wills and estate documents. Michigan allows for “holographic” or handwritten wills, as long as they are dated and signed and as long as the “material portions are in the testator’s handwriting.”

One attorney who reviewed the scanned copies that were posted online, remarked that the wills seem to be dated and each page seems to be signed. One of the wills is dated March 2014, and two are dated 2010. However, legal experts have said it’s not quite clear whether the wills are in Franklin’s handwriting.

In that case, the probate court or Franklin’s family would have to seek out a handwriting expert or a forensic document examiner to study the handwriting. The examiner would need to see a more recent handwriting sample, to see if the characteristics of the handwriting match. However, there’s a lot of room for skepticism of any handwriting analysis. There’s no precise means of measuring and assessing handwriting, so there are doubters.

Another potential problem: the probate court would have to be certain that the documents were intended to be treated as a last will and testament. If there’s any doubt, verifying the pages will become more challenging. How can the court be sure that she meant the documents to be her will, or if she was just gathering her thoughts? The probate court would need to study the content of the documents and consider the circumstances in which they were written.

Franklin was 76 when she died in 2018 of pancreatic cancer. At the time, lawyers and family members said that she did not have a will. Her attorney, David Bennett, who had been her lawyer for four decades, filed the wills in a probate court in Michigan. He told a judge that he was not certain whether they were legal under state law.

The handwritten wills have been shared with Franklin’s four sons or their attorneys, but no decision had been reached regarding whether they were valid. In a statement, the estate said that two of the sons had objected to the wills.

Franklin is not the first celebrity to die without a will, and she certainly won’t be the last. James Brown’s estate has been tied up due to probate, family and copyright issues, since his death in 2006.

These high-profile cases of people who die without wills (or who die with handwritten wills) should encourage the rest of us to make sure that our estate plans are in place. We may not have amassed the wealth or possessions these celebrities have, but even our “normal” estates will create unnecessary headaches, expenses and strife for our families, if we do not prepare in advance for our own passing.

Speak with an experienced estate planning attorney and help your family avoid any additional stress after your passing, with a complete estate plan.

Reference: NBC News (May 23, 2019) “Aretha Franklin’s handwritten wills raise tangled legal questions”

What Does an Elder Law Attorney Really Do?

A knowledgeable elder law attorney will make certain that he represents the best interests of their senior clients in a variety of situations that usually occur in an elderly person’s life.

An elder care attorney will also be very knowledgeable about several different areas of the law.

The Idaho Falls Spokesperson’s recent article, “What is an Elder Law Attorney and What Can They Do for You?” looks at some of the things an elder care attorney can do.

Elder care attorneys address long-term care issues, housing, quality of life, independence and autonomy—which are all critical issues concerning seniors.

Your attorney knows that one of the main issues senior citizens face is sound estate planning. This may include planning for a minor or adult child with special needs, as well as probate proceedings, which is a process where a deceased person’s assets are collected and distributed to the heirs and creditors.

A major responsibility of the probate process is to fully administer the entire estate, including appointing executors and ensuring that all assets are disbursed properly.

An experienced elder law attorney can also assist your family to make sure that your senior receives the best possible care arrangement, which may become more important as his or her medical needs increase.

An elder care law attorney also helps clients find the best nursing home to fully satisfy all their needs. Finally, they often will also work to safeguard assets to prevent spousal impoverishment, when one spouse must go to a nursing home.

A qualified attorney can be a big asset to your family, as you journey through the elder care planning process. Working with an attorney to set up contingency plans can provide peace of mind and relief to you and your loved ones.

Reference: Idaho Falls Spokesperson (May 20, 2019) “What is an Elder Law Attorney and What Can They Do for You?”

Your Most Important Asset Is Not Your Bank Account

It’s hard to think about getting older. When something is challenging, the usual human response is to procrastinate. We can’t slow down the aging process, but we can prepare for it. One of the things that needs to be done to prepare for aging, is discussed in the article from The Mercury titled “REINVENTING RETIREMENT: Your most important asset—it’s not what you think.” Good health is definitely important, but there’s something else to consider: your independence.

We hate to think about becoming dependent upon others, but that is often what occurs with aging. This is an asset that needs to be planned for and managed, like any other. Here are some tips for each decade:

Health Care Directives in Your 50s. You need to have a will and you need to have it updated, as the years go by. However, in mid-life you need to make sure to have an advance healthcare directive and power of attorney. Estate planning is a tool used to protect your independence and your wishes as you grow older. These two documents are a critical part of your estate plan. A health crisis or an accident can happen to anyone, but planning can ensure that your wishes are followed. Put your wishes on paper, with an attorney, so that they are enforceable. Just telling someone what you want, is not going to do it.

Home and Belongings in Your 60s. The kids are out of college and have their own careers and families. Do you still need that big house? Downsizing could bring you tremendous freedom now. Yes, you have to go through all of your belongings which is a lot of work. However, consider how your life would change if you had less stuff, a smaller home, and lower bills? This one move could change how your retirement succeeds—or fails.

Stay Connected in your 70s and 80s. Connecting with your community is critical at this time of life. When you are actively engaged with your community, you’ll be busy with activities that you enjoy. You will hopefully be making contributions that draw on your years of experience and knowledge. Hope and having a purpose in life is not just for the young. The healthiest and most independent lives are lived when people are engaged with other people, with a life that has meaning and purpose.

Planning for your retirement is about much more than your bank account. Speak with an estate planning attorney to make sure that your estate plan protects your independence, conveys your wishes and plans the coming stages of your life to be as rewarding—or maybe more fulfilling—than the past.

Reference: The Mercury (Feb. 10, 2019) “REINVENTING RETIREMENT: Your most important asset—it’s not what you think”

Estate Planning Mistakes to Avoid

Estate planning attorneys see them all the time: the mistakes that people make when they try to create an estate plan or a will by themselves. They learn about it, when families come to their offices trying to correct mistakes that could have been avoided just by seeking legal advice in the first place. That’s the message from the article “Five big estate planning ‘don’ts’” from Dedham Wicked Local.

Here are the five estate planning mistakes that you can easily avoid:

Naming minors as beneficiaries. Beneficiary designations are a simple way to avoid probate and be certain that an asset goes to your beneficiary at death. Most life insurance policies, retirement accounts, investment accounts, and other financial accounts permit you to name a beneficiary. Many well-meaning parents (and grandparents) name a grandchild or a child as a beneficiary. However, a minor is not permitted to own an asset. Therefore, the financial institution will not name the minor child as the new owner. A guardian must be appointed by the court to receive the asset on behalf of the child and they must hold that asset for the minor’s benefit until the minor becomes of legal age. The guardian must file annual accountings with the court reflecting activity in the account and report on how any funds were used for the minor’s benefit until the minor becomes a legal adult. The time, effort, and expense of this are unnecessary. Handing a large amount of money to a child the moment they become of legal age is rarely a good idea. Leaving assets in trust for the benefit of a minor or young adult, without naming them directly as a beneficiary, is one solution.

Drafting a will without the help of an estate planning attorney. The will created at the kitchen table or from an online template is almost always a recipe for disaster. They don’t include administrative provisions required by the state’s laws, provisions are ambiguous or conflicting and the documents are often executed incorrectly, rendering them invalid. Whatever money or time the person thought they were saving is lost. There are court fees, penalties and other costs that add up fast to fix a DIY will.

Adding joint owners to bank accounts. It seems like a good idea. Adding an adult child to a bank account, allows the child to help the parent with paying bills, if hospitalized or lets them pay post-death bills. If the amount of money in the account is not large, that may work out okay. However, the child is considered an owner of any account they are added to. If the child is sued, gets divorced, files for bankruptcy or has trouble with creditors, that bank account is an asset that can be reached and that is a big estate planning mistake.

Joint ownership of accounts after death can be an issue, if your will does not clearly state what your intentions are for that account. Do those funds go to the child, or should they be distributed between heirs? If wishes are unclear, expect the disagreements and bad feelings to be directly proportionate to the size of the account. Thoughtful estate planning, that includes power of attorney and trust planning, will permit access to your assets when needed and division of assets after your death in a manner that is consistent with your intentions.

Failing to fund trusts. Funding a trust means changing the ownership of an asset, so the asset is owned by the trust or designating the trust as a beneficiary. When a trust is properly funded, assets funding the trust avoid probate at your death. If your trust includes estate tax planning provisions, the assets are sheltered from estate tax at death. You have to do this before you die. Once you’re gone, the benefits of funding the trust are gone. Work closely with your estate planning attorney to make sure that you follow the instructions to fund trusts.

Poor choices of co-fiduciaries. If your children have never gotten along, don’t expect that to change when you die. Recognize your children’s strengths and weaknesses and be realistic about their ability to work together, when deciding who will make financial decisions under a power of attorney, health care decisions under a health care proxy and who will best be able to settle your estate. If you choose two people who do not get along or do not trust each other, it will take far longer and cost more to settle your estate. Don’t worry about birth order or egos.

The sixth biggest estate planning mistake people make is failing to review their estate plan every few years. Estate laws change, tax laws change and lives change. If it’s been a while since your estate plan was reviewed, make an appointment to meet with your estate planning attorney for a review.

Reference: Dedham Wicked Local (May 17, 2019) “Five big estate planning dont’s”

How Will Billionaire Robert F. Smith’s Help of Morehouse College Student Loans be Taxed?

Billionaire Robert F. Smith told nearly 400 graduates of the historically black, all-male Morehouse College in Atlanta at their May graduation ceremony that he would pay off those loan obligations, so they were free to pursue their next chapters. The gift is believed to be worth $40 million.

Graduates likely won’t face any tax liabilities on the money. The IRS will consider the money a “gift.” The IRS policy is “no tax on receipt.” This means typically the person who receives the gift doesn’t have to pay tax on it.

Fox Business’ article “Will the IRS tax Robert F. Smith’s gift to Morehouse grads?” explains that the lender didn’t forgive the debt, so there’s no cancellation of indebtedness income. The students also didn’t do anything to “win” the debt repayment, such as winning a lottery or another competition.

However, Smith’s situation might be a little more complicated, depending on how he plans to pay the debts.

A gift is generally not considered deductible, unless it’s given in the form of a charitable contribution. So if Mr. Smith were to pay the checks directly from his personal account, he wouldn’t be able to claim a deduction. However, he could structure the payments in a way such that he’s giving the money to a charitable organization. This could be giving it to the school for the specific purpose of paying the students’ loans. In addition, Smith could create a private foundation and transfer the money that way.

To use a charitable deduction, Smith would have to give the money to an established charitable organization.

Another option is for Smith to claim that he made the decision to advance his business reputation with the thought of raising income for himself or his business. He started the private equity firm Vista Equity Partners and has an estimated net worth of $5 billion, according to Forbes.

The gift tax exclusion amount in 2019 is $15,000 per year. This means that gifts up to that amount are not usually taxable. For gifts above that, the giver may be required to fill out a Form 709, or gift tax form.

Research shows that outstanding student loan debt has doubled over the past decade to more than $1.5 trillion in 2018. This debt is now second only to the amount of mortgage debt held by Americans.

Reference: Fox Business (May 20, 2019) “Will the IRS tax Robert F. Smith’s gift to Morehouse grads?”

Cybercrime Causes Billions of Dollars of Losses

On an average day, the FBI receives nearly 1,000 complaints of internet crimes. The FBI says that cybercrime is up by 91 percent over the last several years, and people over the age of 60 are frequently the targets of these rip-offs. Internet crimes increased by 17 percent in 2018 alone.

During that year, cybercrimes cost Americans over $2.7 billion. Imagine what positive things that money could have done in the pockets of seniors, instead of in the hands of the crooks. You could buy a lot of groceries, pay utility bills and purchase needed medications with that much money. With billions lost to cybercrime, seniors need to understand the magnitude of this growing criminal enterprise.

Types of Cybercrime

There is almost no limit to the ways con artists can take other people’s money online. Here are but a few examples of cybercrime:

  • Goods and services. This category includes when people pay for products or services online but never receive the items, or when people ship things to people who do not pay for them. More than 65,000 people filed complaints with the FBI for this type of theft in 2018.
  • More than 50,000 people were victims of extortion. A common tactic is that a virus gets into your computer. The crook threatens to destroy all the data on your computer, if you do not pay a ransom. Even after some people pay the ransom, their data gets erased.
  • Personal data breaches. More than 50,000 Americans had their personal data stolen. A common way this crime happens is that you enter your name, address, and credit card information into a form on a website to purchase something, only to find out later that the website was not a legitimate business. The crooks now have all the information they need to buy things using your credit card.
  • Compromised business email addresses accounted for nearly half of the total dollar value of cybercrime losses. When a crook hijacks your company’s email address, it can perpetrate frauds and tarnish your business reputation. The con artist sends out fake emails in the name of a high-level executive directing people to wire money to the crook, who is masquerading as the company official.
  • Investment scams cost Americans more than a quarter of a billion dollars.
  • People lost more than $360 million in confidence or romance frauds.

How Internet Crooks Find You

You do not have to use a computer to get ripped off by these crooks. Your cell phone, tablet, notebook, or any other internet-connected device can give thieves an open door to scam you.

What an Internet Crime Victim Should Do

You must act immediately when you suspect that someone has committed cybercrime against you or a loved one. Think of internet crime as an injury that causes massive bleeding. You have to stop the bleeding right away.

Contact your bank and credit cards at once. You should also put a fraud alert on your credit report to prevent the crooks from using your personal information to set up new accounts. Report the crime to the FBI’s Internet Crimes Complaint Center (IC3). The FBI recently created a Domestic Recovery Asset Team as part of the IC3, to get money back for fraud victims. The FBI was able to recover around 75 percent of the money stolen from cybercrime victims in 2018.

References:

AARP. “Cybercrimes cost Americans $2.7 Billion in 2018.” (accessed May 15, 2019)

https://www.aarp.org/money/scams-fraud/info-2019/fbi-cybercrimes-increase.html

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Elder Abuse Charges Brought Against Stan Lee’s Former Manager

District Attorney of Los Angeles County Jackie Lacey has leveled elder abuse charges against Stan Lee’s former business manager, Keya Morgan.

MSN’s recent article, “Stan Lee’s Ex-Manager Hit With Elder Abuse Charges; Arrest Warrant Issued” reports that Morgan is facing one felony count of false imprisonment of an elder adult, three felony counts of theft, embezzlement, and forgery or fraud against an elder adult, as well as the initial elder abuse misdemeanor count.

Morgan took control of Lee’s business affairs and personal life in February 2018. Lee, the creator of Spiderman, the Black Panther, and other comic book heroes, had assets of more than $50 million in the last years of his life. Lee passed away on November 12, 2018. Morgan is said to have isolated his client from family and friends. Morgan also embezzled or misappropriated $5 million of assets, according to documents filed in Los Angeles Superior Court in 2018.

The five counts of elder abuse filed on May 10 could put Morgan in prison for 10 years, if he’s found guilty.

The public first learned of the troublesome relationship between Morgan and Lee last summer, when the then 95-year old Marvel comic book legend sought a restraining order against his ex-aide over elder abuse. The request was made just three days after Lee put out a June 10, 2018 video on social media insisting that he and Morgan were working “together and are conquering the world side-by-side.”

Because of the video and the elder abuse filing, Lee’s financial advisor was arrested by the Los Angeles Police Department on suspicion of filing a false police report, allegedly concerning a supposed break-in incident at Lee’s residence.

A three-year restraining order against Morgan was granted by a county judge last August. He was found guilty of the false police report misdemeanor charge in April 2019 and was ordered to stay away from Lee’s family and residence among other conditions.

After years of making cameos in all the Marvel blockbuster movies, Lee’s last appearance was in the record smashing Avengers: Endgame, which was released last month.

Reference: MSN (May 15, 2019) “Stan Lee’s Ex-Manager Hit With Elder Abuse Charges; Arrest Warrant Issued”