Celebrity Estates are Like Dynamite

Dividing his estate between 11 different people was quite a task for pop star George Michael’s lawyers. Even more notably, he left out his ex-boyfriends Fadi Fawaz and Kenny Goss, which raised a lot of eyebrows according to The Irish Sun article “Most explosive wills in Hollywood history which left families feuding for decades after George Michael document revealed.” However, he’s far from the only celebrity to cut out loved ones from their estates.

Mickey Rooney—When movie star Mickey Rooney died in April 2014 at the lofty age of 93, most people assumed that this wife and eight children would be his heirs. Rooney had a long career, starring in many movies with many bold face named stars. However, he had a surprise—his estate left behind just $18,000, which went to his stepson Mark Aber rather than to his wife and other children. Several of his biological children objected to the will, which was signed just a few weeks before his death. The case was later dropped, because it was too small an amount to litigate over.

Tony Curtis—This is another movie star who left absolutely nothing to his biological children when he died in 2010. (One of his children is Jamie Lee Curtis, a successful actress and author.) Instead, the star of “Some Like It Hot” and many other movies left approximately $39 million to wife number six, Jill Vandenburg Curtis. Making matters worse, she turned around and auctioned off his personal belongings, adding another million to her pile. One of his daughters, Allegra, said they were “blindsided” by his decision. Another daughter, Kelly started a lawsuit, but later dropped it.

James Brown—This is an estate battle that is just about as legendary as the soul-singer himself. Thirteen years after he died, his last will and testament is still unsettled. Lawsuits, murder accusations and a battle for ownership of his music catalog is still going on. About a dozen lawsuits have been filed by his nine children and grandchildren, who are suing his widow by claiming that she was married to another man when she wed Brown. That estate is estimated to be worth $99 million.

Joan Crawford—Made infamous by her daughter Christina’s tell-all book, “Mommy Dearest,” Crawford left more than $2 million to two of her adopted children, when she died in 1977. However, she made it very clear in her will that her other adopted children, son Christopher and daughter Christina, were not to receive anything. The two contested the will and won about $50,000 each.

Marlon Brando—With 11 children to his name, including some that were adopted, Marlon Brando recognized all in his will but one—adopted daughter Petra. Further, he left out provisions for his teenage grandson, son of his late daughter Cheyenne Brando. With an estate estimated at $20 million, Brando passed away at age 80.

Michael Jackson—The “gloved one” cut his father out of his will before he died from a drug overdose in 2009. His father tried to contest the will but failed. Michael did not include his famous siblings either. It is thought that several of his brothers and sisters are now engaged in an estate battle, which is worth more than $1 billion. Michael did make sure that his will took good care of his mom and his three children, Prince, Paris and Blanket.

Reference: The Irish Sun (June 5, 2019) “Most explosive wills in Hollywood history which left families feuding for decades after George Michael document revealed.”

How Much Money Do I Need to Put into a Special Needs Trust for my Child?

One of the toughest things about planning for a child with special needs is trying to calculate the amount of money it’s going to take to provide both while the parents are alive and after the parents pass away.

Kiplinger’s recent article asks “How Much Should Go into Your Special Needs Trust?” The article explains that it’s not uncommon for folks to have done some estate planning but not necessarily special needs estate planning, even if it’s something they need for their loved ones. More importantly, they haven’t thought about how much money they should earmark to fund that trust someday or any other plan to provide for their family member and which assets would be the best to use.

Special needs estate planning involves creating a special needs trust (SNT) that allows a person with a disability to continue to receive certain public benefits. Typically, ownership of assets more than $2,000 would make the individual ineligible for certain public benefits. Assets held in a special needs trust don’t count toward this amount.

A child with special needs can generate multiple expenses. The precise amount will be based on the needs and lifestyle of the family and the child’s capabilities. Public program benefits can in many cases offset many of the above-mentioned costs. However, these benefits likely will not cover the entire cost of care.

When the parents die, the budget needed to care for the child often must be increased because the things the parents did must be monetized. For instance, the parents likely managed and coordinated the child’s care holistically. After they pass, a care manager may need to be compensated to do the same thing. There are also legal and trust administration expenses to think about.

An SNT usually isn’t funded until the parents’ death. At that time, the trust would need to file a tax return each year and pay taxes on any income made by the trust assets.

It is vital to conduct a complete analysis of the future costs to provide for a child with special needs so that parents can start saving and making adjustments in their planning. If this is something you are concerned about, speak with an elder law or estate planning attorney about creating a special needs trust.

Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”

What Should I Look for in a Trustee?

Selecting a trustee to manage your estate after you pass away is an important decision. Depending on the type of trust you’re creating, the trustee will be in charge of overseeing your assets and the assets of your family. In general, people choose either a friend or family member or alternatively decide to go with a professional trustee or a trust company or corporate trustee for this critical role.

Forbes’s recent article, “How To Choose A Trustee,” helps you identify what you should look for in a trustee.

If you go with a family member or friend, they should be financially savvy and good with money. You want someone who knows something about investing, and preferably someone who has assets of their own that they are investing with an investment advisor.

A good thing about selecting a friend or family member as trustee is that they’re going to be most familiar with you and your family. They will also understand your family’s dynamics.  Family members also usually don’t charge a trustee fee (although they are entitled to do so).

Depending on your family dynamics and personalities, however, your family may be better off with a professional trustee such as a private fiduciary or trust company that has expertise with trust administration. This may eliminate some potentially hard feelings in the family. Because your family member may be too close to the family and may get caught up in the drama, a neutral third party can also act as a barrier to potential fights and arguments. Certain family members may also end up having a power trip and enjoy having total control of your beneficiary’s finances a bit too much.

Trust companies, especially larger ones, will have more structure and oversight to the trust administration, including a trust department that oversees the administration. This will be more expensive, but it may be money well spent. A trust company can make the tough decisions and tell beneficiaries “no” when needed. It’s common to use a trust company when the beneficiaries don’t get along, when there is a problem beneficiary, or when the trustee is responsible for managing a large sum of money. A drawback is that a trust company may be difficult to remove or become inflexible. They also may be stingy about distributions if it will reduce the assets under management that they’re investing. You can solve this by giving a neutral third party, like a trusted family member, the ability to remove and replace the trustee in your trust documents.

Some people may also choose to have an attorney serve as their trustee. The advantage of a trusted attorney serving as a trustee is that they have familiarity with your family if you’ve worked together for some time. There will, however, be a charge for their time spent serving as trustee.

Talk to your estate planning attorney and go through your concerns to find a trustee solution that works for you and your family.

Reference: Forbes (May 31, 2019) “How To Choose A Trustee” 

Do I Need a Spendthrift Trust for a Relative?

Newsday’s recent article, “What to consider when creating a ‘spendthrift’ trust,” explains that a spendthrift trust can protect people from themselves. In particular, it can be great protection for those with an issue with drugs, alcohol, gambling or even a person who’s married to a wild spender.

A spendthrift trust—also called an “asset protection trust”—gives an independent trustee the power to make decisions as on how to spend the funds in the trust. The beneficiary might get trust benefits as regular payments or need to ask permission from the trustee to access funds at certain times.

A spendthrift trust is a kind of property control trust that restricts the beneficiary’s access to the money that a beneficiary might otherwise be able to access at his or her own will. This restriction protects trust property from a beneficiary who might waste the money, and also protects against collections by any of the beneficiary’s creditors.

Remember these other items about asset protection trusts:

  • Be sure that you understand the tax ramifications of a spendthrift trust.
  • If the trust is the beneficiary of retirement accounts, the trust must be designed to have the RMDs (required minimum distributions), at a minimum, flow through the trust down to the beneficiary.
  • If the trust accumulates the income, it could be taxable. In that case, the trust would have to pay the tax at a trust tax rate. That’s substantially higher than an individual rate.

It’s critical that you choose your trustee carefully. You may even think about going with a professional corporate trustee. If the wrong trustee is selected, he or she could keep the money from the beneficiary, even when the beneficiary legitimately needs it. If you have someone that you are thinking of taking care of who also has spending issues, be sure to talk to an estate planning attorney about creating a spendthrift trust.

Reference: Newsday (June 23, 2019) “What to consider when creating a ‘spendthrift’ trust”

Can Liz Hurley’s Son Inherit his Grandfather’s Fortune?

Multi-millionaire Dr. Peter Bing recently tried to stop Damian Hurley, the subject of a previous paternity dispute involving son Steve Bing and Liz Hurley, from inheriting his fortune —because he was born out of wedlock.

However, Wealth Advisor’s recent article, “Liz Hurley’s son Damian wins legal battle against grandfather over inheritance,” says that a Los Angeles judge ruled recently that Damian–fathered by Dr. Bing’s son, Steve–is a rightful beneficiary of the family trust.

Dr. Bing had argued that his son, American businessman Steve Bing, has “never met” Damian and he doesn’t want the child to inherit any of his fortune. Dr. Bing also insisted that, after creating the family trust in 1980, he had stipulated that any grandchild must be “raised by my children as part of their families” to benefit from it.

The elder Bing insisted in recent court papers that the trust “would not benefit any person born out of wedlock unless that person had lived for a substantial period of time as a regular member of the household”. Dr. Bing argued that the definition of the term “grandchild” in the trust was unclear.

However, in court papers, Judge Daniel Juarez wrote: “There is no ambiguity in the trust’s use of the term ‘grandchild’”. Judge Juarez also said, “The trustee’s [Dr. Bing] interpretation of the trusts is unreasonable, and the trustee’s construction of ‘grandchild’ is simply unfounded.”

Damian was born to The Royals actress Elizabeth Hurley in 2002.

Steve Bing is worth roughly $555 million. He initially denied that he was Damian’s father, saying the couple was not in an exclusive relationship at the time. However, a paternity test proved he was the father of the child.

Reference: Wealth Advisor (July 23, 2019) “Liz Hurley’s son Damian wins legal battle against grandfather over inheritance”

How to Complete a Transaction if One Spouse is Incapacitated.

An elderly married couple wished to sell their home, but they had a big problem. The notary public refused to notarize the wife’s signature because she clearly did not understand the document she was being asked to sign and was deemed to be incapacitated. Because there was no power of attorney in place that could have authorized her husband to represent her, the transaction came to a halt.

This situation, as described in Lake Country News’ article “When one spouse becomes incapacitated,” is not an uncommon occurrence. The couple needed to petition the court for an order authorizing the transaction. When community property is concerned and one spouse is competent while the second is not, the competent spouse may ask the court for permission to conduct the transaction. Although this is a possible solution, it can be very costly and tedious.

The request in California requires the following:

First, the incapacitated spouse must have an examination by a physician and a capacity evaluation form must be filed with the court. This is the same form as the one used in a conservator proceeding.

Second, the court must appoint a “guardian ad litem” to represent the incapacitated spouse’s interests. The person might be an adult child or an attorney. That person must then file a written report with their recommendation to the court.

Next, the papers must show that the transaction involves the couple’s community property. The order may affect additional separate property interests in the same transaction. If there is no community property, it is permissible for the well spouse to change some of the well spouse’s private property into community property to meet the requirements for community property.

The transactions must also be for one of several allowed purposes, including the best interests of the spouses or their estates, or for the care or support of either spouse. In the example that starts this article, the purpose was an appropriate one, which was to authorize the sale of their home so they could move out of state to live with their children. Another example could be to transfer property so that an incapacitated spouse may become eligible for government benefits.

Finally, the notice of hearing and a copy of the petition must be served on all the incapacitated spouse’s children and grandchildren. Any of these individuals are permitted to object and could set the proceedings back months or even years.

How much easier would it be to simply meet with an estate planning attorney long before there are any health or mental capacity issues and have a power of attorney document created for each of the spouses? Speak with an experienced estate planning attorney to have your estate plan, which includes the power of attorney document, and have all these important documents created before you need them.

Reference: Lake Country News (July 27, 2019) “When one spouse becomes incapacitated”

Prior Planning for Catasrophes

None of us know what kind of unexpected surprises will occur in our lives. We’d like to believe they will all be happy events, like winning the big Power Ball jackpot. However, unpleasant things like illness or a flood or fire often occur. We never think it will happen to us, says The Dalles Chronicle’s article “Prepare now for emergencies.” Unfortunately, these things do happen, and when they do, being prepared can make all the difference between a stressful situation and a really awful situation that could have been made, well, less awful.

For starters, have you met with an estate planning attorney to create a comprehensive estate plan that includes a will or trust, a financial power of attorney and a health care power of attorney? The will/trust concerns distribution of your possessions and property, the power of attorney gives a trusted person the ability to take financial and legal actions on your behalf in the event that you become incapacitated, and the medical power of attorney allows someone to make health care decisions for you if you become incapacitated. There are also many other tools that an estate planning attorney can help you with, such as a Special Needs Trust, if your family includes a family member with special needs, or other trusts if they are needed.

Next, your emergency preparations should include having important documents assembled in a notebook, on a memory stick and/or a safe location. Imagine there was an emergency evacuation and you had to leave your home immediately. What documents would you need? Here’s a helpful checklist to look at:

  • Contact information for family members, doctors, attorneys, dentist, insurance broker, financial advisor.
  • Cash, so if ATMs are not working, you will have cash on hand.
  • Identification documents, including originals of your birth certificate, marriage license, divorce papers, passport, Social Security card, health insurance cards (or Medicare or Medicaid cards).
  • A video of your home and all of your possessions on your mobile phone. Consider emailing it to a family member or friend who lives in a different location.
  • Insurance policies for home, auto, disability, long-term care, etc. Include contact information for either 800-numbers or your local agent, if you need to file a claim.
  • A copy of recent financial statements for credit cards, banks, brokerage firms, retirement accounts, car loans, mortgage and similar types of accounts.
  • Copies of the last three years of tax returns. If you work with a CPA, they should have them on a secure portal, but a hard copy will be useful to have.
  • Legal documents for your estate plan, including the will, power of attorney and health care power of attorney, as described above.
  • Other legal documents, including car registration, car title and property deed to your home.

These documents should all be organized in a folder that is placed in your home where you and your spouse know where it is and can grab it on your way out the door.

One more item that should be noted in this digital age: if you use a laptop or tablet that contains websites that you use frequently for personal finance, investments, etc., be mindful of its location in the house, so you can grab it (along with a charger cable) quickly. If you have passwords for accounts—and most of us do—you should print them out and include them in your file folder for easy access. You can almost always re-set a password, but how much easier will rebuilding your life be if you have them on hand?

If you do ever face a catastrophic emergency, having these materials will save you hours of time and stress.

Reference: The Dalles Chronicle (July 16, 2019) “Prepare now for emergencies”

How to Locate or Get Copies of Your Aging Relative’s Important Documents

If you are serving as a caregiver for an aging relative, you know the job involves more paperwork than you ever imagined before taking on the responsibility. The task of caregiving is even more challenging when your loved one cannot find their essential documents. You might need a copy of your parents’ wedding license from 1950 so your mom can get her spousal retirement benefits. Your dad might need his military service records to enroll in veterans’ benefits programs.

Before you start pulling out your hair trying to find these papers, it is good to have a plan. For example, the first three places in the house you will check, people you can call who might have useful information about where the documents might be stored, and a list of the banks where your parents might have rented a safe deposit box. It also helps to know how you will go about getting replacement copies of the documents you cannot find. Here are some tips on how to locate or get copies of your aging relative’s important documents.

Let the Scavenger Hunt Begin

Before you rifle through all of their personal belongings, ask your loved one where they keep their important papers. You might be amazed at some of the bizarre places that people put their documents. It would take you a month of Sundays to find the papers if the person had not told you where to look. A hollowed-out book, a cigar box, or a coffee can often hold treasure troves of paperwork. Some people keep valuable documents in the freezer, hidden in a closet, under a floorboard, or under the bed.

Make it easy on yourself and ask your relative where they keep their papers. Explain why you need a particular document, and that you would like to organize the rest of their papers so you can easily find things you need to help take care of them.

If they cannot remember or the papers are no longer where they thought they were, check the desk drawers, the family bible, a file cabinet, the attic, the basement, and shelves. If they put the documents in a safe deposit box, you will have to take them and the key, along with their government-issued photo identification, to the bank. After you inventory the contents of the box, keep the list and have them add you to the safe deposit box so you can access the documents in the event of their death. Never leave funeral instructions or documents in the box.

When You Cannot Find It, Get a Replacement Copy

It can take weeks or longer to get replacement documents, and it is best to start this process well before you need the papers. You can contact the applicable state’s or county’s vital records office to get certified copies of certificates of birth, death, marriage, and divorce. Make sure you have your loved one’s Social Security card, driver’s license or state identification card, Medicare and Medicaid cards, and military records. If any of these are missing, contact the appropriate government agency to get replacement copies.

References:

AARP. “Find or Replace Your Loved One’s Missing Documents.” (accessed July 22, 2019) https://www.aarp.org/caregiving/financial-legal/info-2018/replacing-important-documents.html?intcmp=AE-CAR-LEG-EOA1

The Robocall Epidemic

Some days it seems as if the only calls you get are robocalls. If you think the number of these annoying and usually fraudulent calls has reached ridiculous levels, you are correct. The robocall problem is so outrageous, that the Federal Communications Commission (FCC) changed its rules on blocking unwanted calls.

Before the robocall epidemic, the FFC did not allow your phone service provider to block these calls without getting the customer’s permission beforehand. When robocalls got out of hand, the government created Do Not Call lists, but the con artists ignored these lists. Enforcing violations of the law against calling people on the Do Not Call lists was difficult because many of the illegal callers live outside the United States.

Frustrated people stopped answering their phones unless the caller’s name showed up on caller ID when the Do Not Call lists proved to be useless. The scammers found a detour around this strategy, by “hijacking” caller ID systems. These ingenious crooks can make it look as if a hospital or other business is calling you.

The Statistics About Robocalls

The FCC could not ignore the numbers, so they took action to protect people from being the victims of the scammers who use robocalls to perpetuate their criminal schemes. As of May of 2019, Americans received 4.7 billion robocalls – in that month alone. That many robocalls work out to more than 150 million annoying calls every day, over 6 million an hour, and nearly 1,800 every second. On average, every man, woman, and child in the U.S. gets more than 14 robocalls every month.

At the current rate, Americans will receive around 60 billion illegal calls in 2019. To see how the problem has increased over the last few years, here is a breakdown of the robocalls by year:

  • 60 billion in 2019 (estimated)
  • Nearly 48 billion in 2018
  • More than 30 billion in 2017
  • More than 29 billion in 2016

The New FCC Rules on Blocking Illegal Calls

In the past, you had to opt-in to let your phone company block unwanted calls from reaching you.  The phone service provider can now block these calls automatically. However, you can opt-out and get all the robocalls that come your way. If you are worried about missing an important phone call, you do not have to let the phone company guess which calls are robos and which are legitimate, like calls about flight changes, school closures, and other business calls.

Your phone company will likely start with blocking calls that are clearly illegal. This category can include calls for which the scammer “hacked” the caller ID information to display a fake number. If a call shows an area code or prefix that does not exist or a number the phone companies have not assigned to anyone, the automatic blocking will probably keep the call from reaching you.

Experts in the communications field expect phone companies to move slowly and cautiously. The phone service providers do not want to be the reason that people do not get emergency or important phone calls.

References: AARP. “New, Shocking Statistics About Robocalls.” (accessed June 23, 2019) https://www.aarp.org/money/scams-fraud/info-2019/robocalls-statistics.html