Why Are the Daughters of the Late Broncos Owner Contesting His Trust?

Beth Wallace and Amie Klemmer, the two oldest daughters of the late owner of the Denver Broncos, Pat Bowlen, filed a lawsuit in a Denver area court challenging the validity of their father’s trust. Specifically, they are arguing that their father didn’t have the mental capacity to properly execute documents and was under undue influence when he signed his estate planning documents in 2009, according to Colorado Public Radio’s recent article “Pat Bowlen’s Kids Are Still Fighting Over Inheritance As 2 Daughters File Lawsuit.”

Dan Reilly, a lawyer for the Patrick Bowlen Trust, said in a statement that it is “sad and unfortunate that Beth Bowlen Wallace and Amie Bowlen Klemmer have elected to contest their father’s plan and attack his personal health,” adding the lawsuit was the “latest effort in their public campaign to circumvent Pat Bowlen’s wishes.”

Bowlen died in June at age 75 after a long battle with Alzheimer’s. He put the trust in place hoping that one of his seven children would succeed him in running the Broncos, a team he purchased in 1984. In addition to the two daughters, he had with his first wife, Sally Parker, Pat Bowlen had five children (Patrick, Johnny, Brittany, Annabel, and Christianna) with his widow, Annabel.

Wallace said in 2018 that she wanted to succeed her father, but the trustees said she was “not capable or qualified.” Likewise, Brittany Bowlen said last fall that she wanted to become the next controlling owner of the Broncos team. She will become part of the team in November in a management position to begin that process.

Reilly said that Wallace and Klemmer never raised the issue of mental capacity until after 2014 “when Ms. Wallace was privately told by the trustees that she was not capable or qualified to serve as controlling owner.”

Last month, Arapahoe County Court Judge John E. Scipione dismissed a lawsuit filed by Bowlen’s brother, Bill. That suit that sought to oust team president and CEO Joe Ellis, team counsel Rich Slivka, and Denver lawyer Mary Kelley as trustees. Bill argued that they weren’t acting in good faith or in Pat’s best interests.

The judge ruled in a separate case over the trust that the court and not the NFL would decide the question of Pat’s mental capacity at the time he updated his estate planning documents 10 years ago.

The trust also has a no-contest clause. In electing to challenge the validity of the trust in court, Wallace and Klemmer are putting themselves at risk of being disinherited, if they’re found in violation of the no-contest clause, and the 2009 trust is upheld in court. Their rights as beneficiaries would bypass them and go to their children.

Reference: Colorado Public Radio (September 14, 2019) “Pat Bowlen’s Kids Are Still Fighting Over Inheritance As 2 Daughters File Lawsuit”

Don’t Forget to Update Your Estate Plan

There are some people who sign their will once in their life and never change it. They may have executed their estate plan late in life, or after they were diagnosed with a serious disease. However, even if your family life and finances are pretty basic, there are still changes in the law that you may need to incorporate into your estate plan.  Some of the people that you named in your will could also have died or moved away.

Forbes’ recent article, “Why You Should Change Your Will Now,” warns us that if you’ve taken the “one and done” approach to your estate plan, think again. In addition to the reasons already mentioned, your assets may have changed dramatically since you signed your will and other estate plan documents. The plan you put in place years ago may not have considered new federal and state estate taxes. Now that you’ve accumulated significant wealth that will be passed on to your children, you might need to review your plans for that wealth for your children.

You may want to include grandchildren to help pay for their college education. It is also not uncommon for parents to want to protect their children from themselves. This can be because of addiction issues or a lack of financial literacy. If that’s an issue, some parents elect to hold monies in trust for adult children, as a way to ensure that the funds will be there throughout the child’s lifetime.

A person’s estate plan should grow with them over time. An estate plan for a twenty-something may be very basic, but a newly-married couple will want to include provisions for their spouse. Parents need to think about providing for and protecting their children. Adult children have another set of concerns and you need to prepare for the possibility of divorcing spouses, poor life choices, addiction issues, and just poor money management. There are many stages in life when you may need to readjust the provisions for your children in your estate planning documents.

If you haven’t looked at your estate plan in a while, do it now.

Reference: Forbes (August 27, 2019) “Why You Should Change Your Will Now”

How Do I Discuss My Parents’ Long-Term Financial Goals With Them?

A recent study by Ameriprise Financial found that more than one-third of adult children say they haven’t had a conversation about their parents’ long-term financial goals. Even though discussing this delicate topic may seem uncomfortable, addressing it now can help avoid challenges and uncertainty in the future. To that end, the Ameriprise Family Wealth Checkup study found that individuals who talk about money matters feel more confident about their financial future.

The Enterprise’s recent article, “Four financial questions to ask your parents,” provides some questions that can help you start the dialogue.

“What do you want to achieve in the next five or 10 years?” Understand your parents’ aspirations for the next few years. This includes their personal and financial goals and when they plan to retire (if they haven’t already). Do they want to move closer to their grandchildren or to warmer weather? Getting an idea of how they want to spend their time will help you know what to expect in the years ahead.

“Where is your financial information located in case of an emergency?” An incident can happen at any time, so it’s essential that you know how to access key personal, financial and estate planning documents. You should have the contact info for their financial adviser, tax professional, and estate planning attorney, and be sure your parents have the right permissions set, so you can step in when the need arises. You should also ask your parents to share the passwords for their primary accounts or let you know where you can find a password list.

“How do you see your legacy?” Talk to your parents about how they want to be remembered and their plans for making that happen. These components can be essential to the discussion:

  • Ask them if they have an updated will or trust, and if there’s anything they’d like to disclose about how the assets will be distributed.
  • Health care choices and expenses are often a big source of stress for retirees. Talk to your parents about their current health priorities and the future and have them formalize their wishes in a health-care directive, which lets them name a loved one to make medical decisions, if they’re unable to do so.

“How can I help?” Proactively offering to help may get rid of some of the frustrations or relieve stress for even the most independent and well-prepared parents. The assistance may be non-financial, like doing house projects or giving them more time with their grandchildren. You should also look into including an attorney in the discussion, in case your parents have estate planning questions.

Retirement and legacy planning can be complex. However, taking the time to have frequent conversations with your parents can help you all prepare for the future.

Reference: The Enterprise (August 19, 2019) “Four financial questions to ask your parents”

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” 

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”

Why Is a Revocable Trust So Valuable in Estate Planning?

A revocable trust is sometimes an investment that people are hesitant to make, but they are worth the time and money. There’s quite a bit that a trust can do to solve big estate planning and tax problems for many families.

As Forbes explains in its recent article, “Revocable Trusts: The Swiss Army Knife Of Financial Planning,” trusts are a critical component of a proper estate plan. There are three parties to a trust: the owner of some property (settlor or grantor), who turns it over to a trusted person or organization (trustee) under a trust arrangement to hold and manage for the benefit of someone (the beneficiary). A written trust document will spell out the terms of the arrangement.

One of the most useful trusts is a revocable trust (also known as an inter vivos trust) where the grantor creates a trust, funds it, manages it by themselves, and has unrestricted rights to the trust assets (corpus). The grantor has the right at any point to revoke the trust, by simply tearing up the document and reclaiming the assets, or perhaps modifying the trust to accomplish other estate planning goals.

After discussing trusts with your attorney, they will draft the trust document and re-title property to the trust. The assets transferred to a revocable trust can be reclaimed at any time. The grantor has unrestricted rights to the property. During the life of the grantor, the trust provides protection and management, if and when it’s needed.

Let’s examine the potential lifetime and estate planning benefits that can be incorporated into the trust:

  • Lifetime Benefits. If the grantor is unable or uninterested in managing the trust, the grantor can hire an investment advisor to manage the account in one of the major discount brokerages, or they can appoint a trust company to act for them.
  • Incapacity. A trusted spouse, child, or friend can be named as trustee to care for and represent the needs of the grantor/beneficiary. The trustee will manage the assets during incapacity, without having to declare the grantor incompetent and petitioning for a guardianship or conservatorship. This can be a stressful legal proceeding that makes the grantor a ward of the state. This proceeding can be expensive, public, humiliating, restrictive and burdensome. However, a well-drafted trust (along with powers of attorney) avoids this. If and when the grantor has recovered, they can resume the duties as trustee.
  • Estate Planning. A revocable trust is a great tool for estate planning because it bypasses probate, which can mean considerably less expense, stress and time. When creating your estate plan, make sure to think of more than just the trust. Ask your attorney about how the trust fits in with the rest of your estate plan: a will, powers of attorney, medical directives and other considerations.

Even though a trust is something that most people should consider, not anyone can create one. Your trust should be created by a very competent trust attorney, after a discussion about what you want to accomplish.

Reference: Forbes (February 20, 2019) “Revocable Trusts: The Swiss Army Knife Of Financial Planning”

What Happens When the Family Fights over Personal Items or Artwork?

A few years after her death in 2014, Joan Rivers’ family put hundreds of her personal items up for auction at Christie’s in New York.

As The Financial Times reported in “Why an art collector’s estate needs tight planning,” a silver Tiffany bowl, engraved with her dog’s name, Spike, made headlines when it sold for thirty times its estimated price. This shows how an auction house can generate a buzz around the estate of a late collector, creating demand for items that, had they been sold separately, might have failed to attract as much attention.

A problem for some art and collectible owners is that their heirs may feel much less passionately about the works than the person who collected them. Art collectors should think intentionally about what they want to happen to their collection after they die. A collector can either gift, donate or sell in their lifetime. He or she can also wait until they pass away and then gift, donate, or sell posthumously.

One way a collector can make certain his or her wishes are carried out or eliminate family conflicts after their death is to take the decision out of the hands of the family by placing an art collection in trust. The trust will have the collector’s wishes added into the agreement, and the trustees are appointed from the family and from independent advisers with no interest in a transaction taking place.

Many collectors like to seal their legacy, by making a permanent loan or gift of artworks to a museum. However, their children can renege on these agreements if they’re not adequately protected by trusts or other legal safeguards after a collector’s death.

Even with a trust or other legal structure put in place to preserve a legacy, the key to avoiding a fight over a valuable collection after the death of the collector is to have frank discussions about estate planning with the family well before the reading of the will. This can ensure that their wishes are respected.

Reference: Financial Times (June 20, 2019) “Why an art collector’s estate needs tight planning”

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”

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”

Medicaid Planning and Estate Planning Documents

The conversation that you have with an estate planning attorney, when you are in your thirties with a new house, young children, and many years ahead of you is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life, when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle. Many conversations with clients include a conversation about Medicaid planning and estate planning documents.

It should be noted that everyone needs an estate plan at any time of life, so they may state their wishes for how assets are distributed and name a person who will speak in their behalf, in the event of incapacity because of an illness or injury.

An estate plan also includes a power of attorney, so someone you chose can serve as your agent to transact business and handle your financial matters if you are incapacitated. There should also be a declaration of conservator, in the event of later incapacity and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney at this time. As we get older, the need to address long term care becomes more important. Making the right decisions now, could have a big impact on the quality of your retirement and your later in life medical care. It is important to have a conversation about Medicaid planning before it is too late to plan.

If you have not updated your will or your powers of attorney, specifically a durable power of attorney for property, it would be wise to do so now. You will need a document to clearly authorize your agent to deal with assets. Any documents that are out of date, or in which named agents have predeceased you, won’t be effective, leading to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, the agent may not be able to protect your assets.

This is the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to eliminate assets to be eligible for Medicaid coverage, this planning needs to be done well in advance. In numerous states, there are state administered programs that pursue recovery of assets when a person has received Medicaid benefits. In California this program is called Medi-cal.

Your attorney will be able to work with you and your family to address your specific situation. It may be that your estate plan will include trusts, or that certain assets need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws and make sure to ask about Medicaid planning. And don’t procrastinate.

Reference: The Houston Chronicle (April 19, 2019) “Learn about legal documents and Medicaid”