October 2012 Archives

Selling Memorabilia Before Estate Tax Changes

October 31, 2012,

As the end of the year gets closer, and possible increases in the federal estate tax become more likely, many are coming up with various ways to take advantage of the current favorable rates. For exampe, a story at the National Review this week suggested that a move by several former sports stars to sell various memorabilia might be motivated, in part, by the possible tax changes to take effect January 1st.

The article explained how New York Yankee great Don Larsen was planning to sell the baseball jersey that he wore in 1956 when he pitched a perfect game in the World Series--the only time that has ever happened. Larsen explained that he was motivated by a desire to help out his grandchildren. He plans to use the proceeds to pay for their college education. He indicated that while the jersey obviously has importance to him, the value of helping his loved one's outweighs the value he places on the 56-year old jersey.

Don Larsen is not the only sports figure selling valuable items. Apparently well-known college basketball coach Bobby Knight is selling NCAA championship rings along with several other valuable sports items. Like Larsen, his motivation is to acquire funds to use on his family member's education. Former world heavyweight champion boxer Evander Holyfield has also sold various items related to his boxing days in recent months.

Of course, possiblle changes in the estate tax are not the only factor at play in the decision to make these transactions. However, it is likely that the potential of losing a larger chunk of the property's value to taxes in the coming years might have factored into the decision to sell these items now instead of later. The basic idea is straightforward. The future of the estate tax is uncertain. Though, if changes are made they will almost undoubtedly be in the form of increased rates and lower exemption levels. Therefore, instead of waiting to see how things shake out, many are deciding to sell certain assets now and collect the value when the rates are known.

This decision-making applies to all local families, not just those with valuable memorabilia. An estate planning attorney can explain how it might make sense to take certain assets to be used for another (i.e. paying for an education) and give them away now. That is because waiting until next year--or waiting to be handed down in an inheritance after death--often means that there will be a significantly larger tax bite on the asset. Of course all of this must be weighed against your overall financial situation, as you should only sell assets or gift them to others when you can afford to lose the property now. A professional can provide experienced advice to explain what might make the most sense in your situation.

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Navigating the Appropriate Inheritance Amount

Less Than 90 Days Left Before "Estate Tax Time Bomb"

Business Finally Reopens After Bitter Estate Dispute

October 29, 2012,

It is an all-too-common problem: A family business is decimated following a patriarch's death because of feuding and fighting between family members over the estate. Preventing family feuds and ensuring seamless transfers of assets is the centerpiece of all estate planning efforts. But that need is paramount when certain issues are at play--such as a family business. It is important to remember that this planning invovles much more than just creating a will. Instead, long-term thinking is needed which looks not just as who should inherit certain pieces of property immediately, but instead considers how the business might look decades into the future. Thinking only about who will receive the assets immediately upon a death can lead to mistakes, particuarly because once those assets are transfered, the new owner can do whatever he or she likes with them.

The dangers of thinking too provincially on these issues are demonstrated in a high-proifile family estate planning feud that raged over the past few years. The Journal-Sentinel reported on the fighting surrouding the assets once own by David Derzon--the founder of a well-known coin and collectibles business. Mr. Derzon died in 2008, leaving all of his assets to his second wife (who he had been married to for 30 years). Mrs. Derzon ultimately died 8 months after her husband. However, within that 8 month time-frame Mrs. Derzon apparently drafted a new will which cut out Mr. Derzon's own two sons and entirely removed the family fortunate from the Derzon name. Instead, the new will provides mostly for Mrs. Derzon's half sister. This is surprising, considering that the half-sister admits to not seeing her sibling for decades at at time before befriending her again only shortly before her death.

As expected, this led to a protracted legal battle with upwards of $3 million at stake--including ownership of the business itself.

The main issue in the legal battle was whether or not the half-sister unduely influenced the ailing woman to change her will. Also, lawyers for the disinherted sons argued that Mrs. Derzon's mental state was a concern at the time that her will was re-written. They point out that she was depressed and frequently intoxicated following her husband's death. However, because Mrs. Derzon received all of her husband's assets without condition, she was free to pass them on however she saw fit. However, in August a judge voided the second will, claiming that the step-sister exercised undue influence on the woman who may not have been in her right mind when signing the second will.

It is only this week--four years after the deaths--that the business was re-opened under the stewardship of the two sons. While it is fortuante that the business in this case was able to survive the prolonged estate fight, many other companies might not have been able to do so. The story is a clear reminder of the need for all families, particuarly those with businesses and unique family dynamics, to think through all possible situations when conducting estate planning.

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Navigating the Appropriate Inheritance Amount

Less Than 90 Days Left Before "Estate Tax Time Bomb"

Navigating the Appropriate Inheritance Amount

October 25, 2012,

Is it possible to receive too large of an inheritance? Of course most community members want their family members and friends to be helped in various way by receiving an inheritance. However, few want that inheritance to fundamentally alter the character-building efforts of the recipient or to come with more baggage than necessary. It is not always easy to determine how to most appropriately split an inhertiance between different indiviuals and outside causes. As with everything related to estate planning, careful thought must be involved. Not all goals are best met by simply saying, "Give everything to my children."

This principle is best illustrated by a story we have touched on frequently, the legal battle over the inheritance of Whitney Houston's daughter. Ms. Houston's daughter inherited the entirelty of her mother's roughly $20 million estate. However, the young woman's grandmother and aunt, the executors of the estate, have serious concerns about the daughter's ability to handle that inheritance at such a young age. The executors basic argument is that Houston's wishes were to provide long-term stability to her daughter (now 19 years old), and those wishes are not kept by the current disbursement schedule. The legal case is on-going, and it remains unclear how much the daughter will challenge the request.

While this sort of situation might seem unique to celebrities and those with unique family situations, the underlying principle exists for many local families. There is such a thing as receiving too much too soon. It is reasonable for parents to have reservations about their children's ability to have an inheritance in a safe, responsible manner. Fortunately, tools exist to take those concerns into account. One need only be clear and comprehensive in estate planning matters to provide an extra layer of protection to guard against an inhertiance damaging one's motivation and self reliance.

Some of those issues were touched upon in a CNBC story late last week. A financial advisor shared a common refrain noting that "ideally one would set aside enough funds to allow our family members to do anything they could do, but not so much that they could do nothing."
How do you do that?

A discretionary trust is the best general tool. The trust holds assets and allows the one who creates it to set various guidelines for how those funds will be given to the beneficiary. Those guidelines mght include protections against third-parties receiving the money (perhaps in divorce) or delineate the specific things on which the funds can be spent (i.e. a home). However, it is critical to keep these documents properly updated--otherwise, they still may not work as desired when the time comes.

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Too Much Inheritance Too Soon

Help with the Financial Stresses of Having a Child with Special Needs

October 24, 2012,

The New York Times published an interesting story last week discussing the "psychic toll" paid by families working to raise a child with special needs. The article attempts to delve into some of the more nuanced issues related to conducting special needs planning to take care of the finances and long-term care issues for these loved ones. The basic tasks--often including things like creating a special needs trust--are not necessarily confusing or complex. However, that doesn't mean the planning is easy. That is because there are a plethora of mental and emotional challenges that go into this work.

The author explains, for example, that simply deciding on the appropriate living situation for a family member with special needs can be emotionally and spiritually taxing, regardless of the financial issues tied into the decision. Should the child live at home for as long as possible? Is it better for him or her to move into a group home? What happens if the child lives at home but is then forced to move out into unfamiliar territory after the parents pass away? These and many similar questions must be discussed thoroughly to ensure long-term financial plans best matcht the family's wishes.

On top of that, the story explains how working through this issues must be done in such as way as to ensure other family dynamics are kept intact. Stress and disagreement associated with these challenges has led to many divorces or other family feuds. It is helpful to be aware of these risks and make decisions in a manner that does not destroy important relationships. One frightening and oft-repeated statistic is that 75% of couples with a special needs child ultimately get divorced. Many have challenged that accuracy of that statistic, but it is accepted that various strains are placed on a relationship when raising a child with these challenges. Couples must undoubtedly be proactive in their planning efforts so that the situation is as controlled as possible. Leaving things up to chance and simply taking every new crisis fresh is a recipe for relationship drama.

The articles shares a few examples of couples who have made different decisions about long-term care and financial plans for their children. Some decide to ease their loved ones into group homes. Others have kept them at home and have detailed long-term plans about how the family will help following the event of a parent's death or disability.

Unfortunately, there are no "quick fixes" in the law to make this planning without stress. However, there is a world of difference between trying to go it alone and having the assistance of professionals who have worked with countless families on similar issues in the past. If you are in New York City, Albany, Fishkill, Middletown, Nyack, Rhinebeck, Saratoga Springs, White Plains, or elsewhere in the state, please take a moment to call one of our offices and see how we can help.

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Special Needs Trusts for New York Families

Disagreement Over Special Needs Trust Leads to Court Battle

Less Than 90 Days Left Before "Estate Tax Time Bomb"

October 22, 2012,

Concerns are rising among many in the financial and estate planning fields as the year winds down without any more clarity on the future of the estate tax. A recent post from Advisor One, for example, explained that the shrinking 2012 calendar means that there are less than three months until the "ticking estate tax time bomb" explodes.

Here's the reality: without Congressional action, on January 1, 2013 the current $5.13 million exemption level will drop to $1 million and the current 35% top tax rate will increase to 55%. In other words, many more families will face an inheritance tax and the bite will be much stronger than in the past. While it may seem like any time is a good time for estate planning (that is true), it is undeniable that taking proactive steps in the next few months to plan for possible estate tax changes may prove incredibly beneficial down the road.

As the Advisor One post explains, that need to plan is critical because changes are undoubtedly coming no matter who wins the elections next month. Each Presidential candidate has very different ideas about the estate tax. On top of that, of course, a President cannot make changes to these laws on their own. The final partisan make-up of both the U.S. House of Representatives and the Senate will play into any ultimate resolution. In addition, it is not just exemption levels and tax rates that are at issue. Different policymakers also have different ideas about what assets are or are not included in the "gross estate" which determines the amount to be taxed. For example, the President has suggested that he supports including certain assets held in grantor trusts in the estates.

The one thing that is certain is, without action, the exemption levels and rates will change at the first of the year. This is a reversion to the 2001 levels. Regardless of one's political ideas about these tax issues, this revision would undoubtedly mean that more and more local families would be impacted by these tax issues.

There is no simple way for any local family to understand how these issues might affect them. But it is a mistake to do nothing under the assumption that the future is uncertain. Real legal steps can be taken to best position the family to save money on taxes and seemlessly transfer assets to others, inlcuding the use of gifts. Community members throughout New York should take a moment to contact the lawyers at our firm for help.

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Will Estate Tax Burdens Affect More Families in 2013

Is "Prepaid" Life Insurance Becoming Popular?

October 19, 2012,

Life insurance is an important piece of long-term financial security for local families. It is entirely reasonable for parents and family breadwinners to wish to provide some security to their loved ones in case the unthinkable happens. However, with money tight and uncertainty about financial security remaining, some are unsure about the benefits of life insurance. Those in the life insurance industry have argued recently that their market is shrinking and returns are dropping. To jump-start the industry, some are now turning to a new product to sell to more community members.

A recent story in "The Motley Fool" provides some context for the product that may or may not be a good fit for some local families. This unique insurance option is actually a prepaid life insurance policy. It has been called the "marvel of simplicity." The product, spearheaded by a unique collaboration between MetLife and retail giant WalMart, is essentially a short-term one year life insurance policy that provides up to $25,000 in coverage. These are not huge sums, but the idea is to open the insurance up to a much larger market. MetLife likely sought out the arrangment so that they could tap into Walmart's large consumer base while saving costs of middlemen broker fees.

Interstingly, this approach is not the first of its kind. In the past Canadian insurer Manulife offered life insurance products through the U.S.-based big retailer Costco. In addition, in the past Walmart has sold customer various financial products, even including things like mortgages.

The article argues that MetLife is engaging in this somewhat unique life insurance marketing tool as a way to bolster sales in a slagging market. This latest move seems targeted at the less affluent and perhaps less financially aware community members. Selling financial products to this base--like prepaid debit cards--has proved lucrative in the past, and so MetLife may see long-term benefit down the road.

But is this sort of very short time prepaid life insurance plan right for you?

It is impossible to make any specific pronouncements about the merit of these financial tools. However, it must be noted that these one-year agreements are far different than long-term plans that provided security well into the future. As always, it is critical to seek out the help of financial experts, estate planning lawyers, and others who can explain what issues to consider and how any financial move might affect long-term plans.

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Deal Reached in Estate vs. Museum Feud

Too Much Inheritance Too Soon

Court Rules Woman Must Give Up Kafka Papers She Inherited

October 18, 2012,

The New York Times published an fascinating story this week on a foreign court ruling that is a testament to the way that estate wishes sometimes have ripples effects for decades and generations into the future. Of course, it is critical to note that the legal rules underlying this case are far different than what a New York court might determine. However, the principles of needing to think about estate plans and personal property distribution for many years into the future still holds.

The Kakfa Papers Inheritance
Franz Kakfka, the well-known and incrediby influential author of the early 20th century, wrote a number of books, short stories, and letters in his shortened life. One of Kakfa's closest friends (and the executor of his estate) was the journalist Max Brod. Kafka died in 1924. When Mr. Brod fled from Europe in 1939 ( to avoid the Nazi invasion) he took with him a suitcase full of Kakfa papers. Mr. Brod died in 1968, leaving behind his own and Mr. Kafka's papers as an inheritance to his secretary, Esther Hoffe. Ms. Hoffe lived in Tel Aviv where she kept the incredibly valuable documents. In 1988 Ms. Hoffe sold the manuscript for a Kafka story, "The Trial" for $2 million. However, scholars have not been able to view the rest of the materials since the 1980s.

Ms. Hoffe herself died in 2007. Her daughter then inherited the papers. However, a legal fight soon ensued between the Israeli government and Ms. Hoffe's reclusive daughter. The daughter claimed that she is destitute and the papers were her only asset. The government contended that Mr. Brod did not actuallyy give the papers to Ms. Hoffe as a gift. Instead, they suggested that the secretary was simply given the papers in trust to be managed per his wishes. Mr. Brod's will did say, according to the latest court judgment, that "his archives" should go to a "public Jewish library or archive in Palestine." The story notes that the man was more specific later, suggesting that his documents should go to Hebrew University, where Israel's national library is located.

Recently, an Israeli judge found in favor of the government, rejecting the claim that the papers were a gift. Instead, the judge accepted with the trust argument and ordered that the materials be sent to Hebrew University. Tangentially there has been much disagreement between literary scholars as to whether the papers should be housed in Israel or Germany (where Kakfa lived most of his life). If the latest ruling is upheld then it is likely that the documents will all go to the Israeli national library.

Local residents might not have documents from well-known writers or thinkers. However, the same battles over personal property are not at all uncommon among family members. Many physical objects have immense value to certain individuals, and it is never prudent to leave out decision-making about where those items should go after one's passing. A full estate plan takes all obects into account so that there is little to no room for disagreement or feuding down the road.

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Deal Reached in Estate vs. Museum Feud

Too Much Inheritance Too Soon

Deal Reached in Museum vs. Estate Feud

October 17, 2012,

Unfortunately, there is a tendancy to assume that so long as end-of-life affairs are reasonably spelled out, then everything will go as planned. The reality is that when making estate plans it is usually best to reiterate Murphy's Law: "Everything that can go wrong, will go wrong." It is only with that comprehensive planning, taking into account all possible scenarios, that true peace of mind is afforded. This need to be clear about taking into account all contingencies is even more prudent when larger estate are invovled. That is because money often brings out that most aggressive side of others. Even wishes that seem straight-forward might be complicated in the heat of a feud involving money or valuable proeprty.

The Kevorkian Example
Take, for example, a recent story on the estate of controversial doctor Jack Kevorkian. Shortly before the assisted-suicide proponent was to serve his stint in federal prison, he loaned at least 17 paintings to a museum. He ended up serving eight years before being paroled in 2007. He died about three years later at age 83. The executor of Kevorkian's estate explained that it was his wish for the paintings to be returned to his estate and used to supplement the inheritance for his neice.

However, following the doctor's passing, a dispute arose between the estate (managed by the executor) and the museum which had received the paintings. The museum argued that they owned the paintings. All of this led to a federal lawsuit being filed by the executor and a countersuit by the museum. Of course, one assumes that it was not the doctor's plan to have this situation delve into a legal mess.

Fortunately, according to a story this week in Detroit News, the two sides have finally reached a settlement which should end the legal cases. The majority of paintings (which in totality are estimated to be worth $2 million) will go back to the neice. However, four of the paintings will remain in the musuem. This resolution may not have been the doctor's exact wishes but, when estate planning is not as iron-clad as possible, the final resolution of these matters is often less than ideal.

The lesson: permanent gifts and temporary use of objects must be clearly spelled out in effecive, strong legal documents. Estate planning efforts must take all contingencies into account so that this sort of feuding it stamped out as early as possible.

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Court Battle Set to Begin in Fight Over Huguette Clark's Estate

Creating a Trust and Funding It Are Different

Court Battle Set to Begin in $300 Million Fight over Huguette Clark Estate

October 10, 2012,

Mystery permanently surrounded the heiress Huguette Clark--a reclusive woman whose $300 million estate is often referred to as the last collection of wealth drawn from the American "Gilded Age." Her father was a copper magnante many decades ago and was also a former senator from Montana. He is well known as the founder of the city of Las Vegas. Huguette inherited the fortune upon his (and her mother's) passing. However, she never sought business or public notoriety like her father. Instead, she was intimately private. In fact, she reportedly spent the last twenty years of her life inside a New York City hospital--even when she was healthy enough to live on her own.

Huguette eventually passed away in May of last year. As often happens in cases of great wealth--particularly when there is much mystery surrounding one's life--various fights ensued over control of the fortune.

A trial in the case is set to begin soon, according to a recent NBC report on the case.

A recent accounting this week in the Surrogate's Court found that the estate is valued at roughly $306.5 million when all of the real estate, cash, bonds, stocks, and personal property are taken into account. The largest piece of that estate is a summer home in California on 23.5 acres that is valued at nearly $85 million. In addition, she owned three New York City apartments collectively worth about $53 million. However, the estate may grow if the executor is successful in getting back more than $44 million in gifts that were allegedly given to Clark's nurses, doctors, and the hospital where she lived in the last years of her life.

Huguette wrote two wills at age 98, several years before her passing. The first will left a few million dollars to her private nurse with the remaining going to the relatives from her father's first marriage. Six weeks later, however, the second will was signed. This will claims that no money was left to family, instead most the inheritance was to be used for a museum or art foundation at her California estate. The second will also left funds to Huguette's attorney, nurse, doctor, accountant, and others. An investigation was launched regarding the handling of Clark's affairs and potential elder abuse in 2010 over suspicions of illegal conduct by her advisors, but no criminal charges were ever filed.

All the parties in the case are now prepping for trial which is slated to take place before the end of the year. However, if delays arise, which they often do in these cases, the matter might not be settled until next year.

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Huguette Clarke's Only Friend Has Her Own New York Estate Plan Settled

New Twist in Huguette Clark Estate Plan Controversy

Creating a Trust & Funding It Are Different

October 9, 2012,

Failing to use a living trust as part of one's estate planning is one of the most common mistakes that local residents make. Relying solely on a will or (even worse) the intestate rules of succession, means that a family is forced to endure complex, stressful, and conflict-inducing hoops to pass on assets and otherwise handle end of life affairs. Trusts are far superior methods of ensuring one's wishes are carried out in as direct a manner as possible.

However, as a Yuma Sun article this week reminded, creating the trust is only half the battle--it must also be funded.

What does it mean to fund a trust?

Essentially, funding simply refers to titling assets in the name of the trust so that the trust itself controls those assets. It might be easiest to think of it (roughly) as the difference between opening up a bank account and actually putting money into that account. Those are two different steps, and both must be taken.

Unfortunately, many familie still find themselves in tough situations--even though they created a trust--because that trust was not funded properly. In those cases, settling matters is quite complex: some assets may pass directly via joint tenancy rules or beneficiary designations while others must still go through probate.

Perhaps the most high-profile example of this involved none other than pop superstar Michael Jackson. Jackson had a mammoth estate, with assets worth hundreds of millions of dollars. A trust was created by Jackson, but it was never properly funded. At the time of his death, therefore, his estate was thrown into disarray as courts tried to sort out his wishes with an incomplete plan. The battle is still raging, as different parties seek to take their share of his estate. Because the trust was not funded, the court was forced to get involved--opening the door for others to come out of the woodwork and seek to complicate matters.

It is critical that local community members be aware of this straightforward, but essential step. Experienced estate planning attorneys will explain all of the details of your situation. In most cases, this involves titling assets (house, car, stocks) in the name of the trust. Yet, there are some exceptions, with things that should not/cannot be moved into the trust. This include retirement accounts (tax consideration should be analyzed) and life insurance (though at times it is helpful to place this in an irrevocable trust for estate tax purposes.

Also, the need to ensure proper funding means that updating of estate planning documents is key. If new assets are purchased or acquired, that needs to be taken into account. Failure to do so may result in problems down the road.

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Fundamentals of Estate Planning: Naming a Trustee

New York Estate Planning Attorney on the Funding of Trusts

Too Much Inheritance, Too Soon

October 5, 2012,

Some parents are understandably concerned about how a large inheritance might affect their children. That concern is heightened the younger the child is. Eighteen years old may be the official "adult" demarcation line. But being a legal adult and having the actual maturity to handle large sums of money are two different things. Considering that many eighteen years olds are just out of high school--or even still in high school--it is clear that many may not be in a position to manage sophisticated financial situations. Unfortunately, without proper planning ahead of time, it may be difficult to prevent young adults from having significant inheritances dropped in their lap before they are ready for it.

Take, for example, the current legal wrangling around the inheritance given to the daughter of Whitney Houston. Houston died suddenly last February. Her mother and sister-in-law/business manager were named executors of the estate. Virtually all of Houston's assets were left to her daughter, Bobbi Kristina.

However, in the months since Houston's passing, the executors have become concerned about Bobbi Kristina's ability to handle the sizable inheritance she is receiving. According to the Hollywood Reporter, late last month the executors filed a petition with the local court seeking to restructure the plan. Presumably, they are seeking to lower the funds available to the young woman who is now 19 years old. The petition argues that Bobbi Kristina "is a highly visible target for those who would exert undue influence over her inheritance and/or seek to benefit from [her] celebrity."

The court documents go on to note that there was a clause in Houston's planning documents noting that the intention was to "provide long-term financial security and protection for her child." The petitioners are therefore arguing that lowering the inheritance payments is needed to fulfill that intention. It will be interesting to see if Bobbi Kristina intends to fight this attempt to alter the current inheritance details--her lawyer is yet to comment on the situation.

The common technique to help manage these situation is inclusion of "spendthrift" clauses in estate planning documents. Some flexibility exists with these clauses, but the general idea is that they structure inheritances, so that a beneficiary does not receive a bulk of assets at one time. These arrangements are not only appropriate for children of celebrities or the super-rich. Instead, these clauses are often worked into the plans for many families, including those who have adult children with significant financial debt, substance abuse issues, or other vulnerabilities.

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Gary Coleman Estate Feud Continues

New York Estate Planning Feud Ends for Astor Family

Will Estate Tax Burdens Affect More Families in 2013?

October 2, 2012,

The occupancy of the White House and party control in the U.S. House and Senate will undoubtedly influence the future tax situation at a federal level That includes the tax that most immediately think of when considering their inheritance--the estate tax.

Last week the Wall Street Journal picked up on a new report that argues that the estate tax burden may affect a large number of households next year. The report--crafted by the well-known consulting group, LIMRA--suggest that without changes from the current trajectory, 15 million U.S. families may have some estate tax liability next year. That would represent 1 in 8 households--a far cry from the assumption that this is a concern only for the super-rich.

The findings were reached by analyzing the Survey of Consumer Finance from the Federal Reserve Board. LIMRA noted that many households might be pulled into the bracket where the estate tax applies because of the wide range of assets included in estate tax calculations--things like real estate, business ownership, and life insurance values.

Right now the exemption level is slightly more than $5 million However, that is due to drop to $1 million (with a 55% maximum rate) in 2013 without federal action. Compromises could be reached, however, which might result in a different arrangement. According to the LIMRA data, the three most likely outcomes are:

1. No congressional action--reverting to $1 million exemption and 55% maximum rate
2. Extension of current plan--$5 million exemption at 35% maximum rate
3. Compromise with $3.5 million exemption and 45% maximum rate.

The bottom line, the report argues, is that many families who never would expect to have concerns about this tax, may be shocked to learn that their cumultive assets will force a tax bill. LIMRA estimates that about 12.5% of households would have some liability without any action. Life insurance can be used to pay the estate tax, but the LIMRA reports estimates that 55% of households would not have enough insurance to cover the tax burden. That may force very difficult choices, like selling a home or business just to pay the liability.

All of this is an important reminder of the need to act prudently to account for these issues ahead of time. In our area, take a moment to reach out to an estate planning lawyer to begin the process.

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Should You Take Advantage of the Tax Situation Now?

Protecting Assets While Facing Uncertainty

Estate Values Grow Beyond the Grave - The Marlon Brando Example

October 1, 2012,

The importance of selecting a trustee to manage a trust or otherwise handle the affairs of an estate is hard to underestimate. There is a misconception that this task is always a "one-time" affair, with the individual (or individuals) taking care of various paperwork details after a death, and then being done. That is often not the case. Depending on the circumstances of one's estate planning, the role of a trustee or others involved in these matters can last for years--or even decades.

One situation where that is vividly displayed is with celebrity estates--or those with extensive intellectual property rights. For example, the Hollywood Reporter discussed a legal fight this week involving Madonna and the estate of Marlon Brando. The disagreement stems from royalties that the estate claims it is owed after Madonna used images of Marlon Brando during her concerts. The images are a staple of Madonna's performance of the song "Vogue" in which the lyrics include Brando's name.

According to the story, Madonna planned to pay $3,750 to the estate every time that the image was used (once per concert). This fee was the same paid to the estate of a few other celebrities mentioned in the act--James Dean, Greta Garbo, and more.

However, shortly before the start of her latest tour, there was a disagreement--the company managing the Brando estate allegedly wanted to increase the fee to $20,000. A lawsuit was filed by the company representing the singer's interests, seeking to clarify the issue. A breach of contract claims was made. In addition, the Brando estate is claiming that the actor's image was exploited in at least 90 previous concert performances without any royalties being paid.

As this one example emphasizes, certain estates will continue to make money even after one's passing. Celebrities are the obvious example, as many are paid for all uses of their image. But it is not just celebrities. Many pieces of intellectual property will continue to rake in income even after the original owner of the asset passes away. Patents, copyrights, and trademarks are not reserved only to famous singers, actors, and athletes. Many community members have the same underlying issues to deal with when conducting their long-planning.

For example, many business owners may own a stake in certain programs or technologies that are used by others. Perhaps they receive a royalty or licensing fee each time that asset is used by another. In those cases, the estate's value will continue to increase even after one's death. In may not be as simple as divvying everything up and moving on. Long-term management may be necessary. These details must be considered when meeting with lawyers and accountants to discuss these issues.

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It May Not Be As Simple As Updating a Will

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