Estate Planning

October 31, 2012

Selling Memorabilia Before Estate Tax Changes

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.

October 29, 2012

Business Finally Reopens After Bitter Estate Dispute

by Ettinger Law Firm

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.

October 25, 2012

Navigating the Appropriate Inheritance Amount

by Ettinger Law Firm

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.

October 24, 2012

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

by Ettinger Law Firm

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.

October 19, 2012

Is “Prepaid” Life Insurance Becoming Popular?

by Ettinger Law Firm

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.

October 18, 2012

Court Rules Woman Must Give Up Kafka Papers She Inherited

by Ettinger Law Firm

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.

October 17, 2012

Deal Reached in Museum vs. Estate Feud

by Ettinger Law Firm

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.

October 10, 2012

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

by Ettinger Law Firm

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.

October 9, 2012

Creating a Trust & Funding It Are Different

by Ettinger Law Firm

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?

October 5, 2012

Too Much Inheritance, Too Soon

by Ettinger Law Firm

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.”