Articles Posted in Wills

If you are granted a durable power of attorney over another person, it means that you have the right to make financial and legal decisions on their behalf. However, the power of attorney does have its limits, and a recent case that went to the Supreme Court in South Dakota illustrates the importance of clarifying what the capabilities of the power of attorney entail.

Facts of the Case

In the case of Studt v. Black Hills Fed. Credit Union, Dorothy McLean invested a certificate of deposit (CD) with the credit union in 2008. Then in 2012, she moved in with her son, Ronald Studt, and also named him as her attorney-in-fact with a durable power of attorney form. In his role, Mr. Studt would be allowed to transfer and gift property to persons or organizations as long as Ms. McLean’s financial needs could still be met and that the transfers were for estate planning purposes.

Mr. Studt then informed the credit union that they should close all of Ms. McLean’s accounts and transfer them to a bank in their hometown. In addition, the credit union should forward the funds of the CD when it matured. The credit union accepted the power of attorney and did as was asked, but left the CD until it matured.

Ms. McLean became terminally ill in May 2013, and at that time Mr. Studt asked about who was the beneficiary on the CD. The beneficiary was David Sholes, and Mr. Studt requested that the beneficiary be changed to him. He was told that only the CD’s owner could change the beneficiary, so when Ms. McLean passed away later that month the funds were to go to Mr. Sholes.

Mr. Studt submitted a declaratory motion to the court to determine the rightful beneficiary to the CD. The credit union and Mr. Sholes argued that Mr. Studt does not have the right to self-deal as well as the fact that he did not have the right to change the beneficiary on the CD. The circuit court agreed that the language in the power of attorney was too broad and did not specifically authorize self-dealing, and Mr. Studt appealed.

Ruling of the Court

The case was appealed up to the South Dakota Supreme Court, where it agreed with the ruling by the circuit court. Under the law, a power of attorney agreement must be strictly construed and pursued and only the powers that are explicitly stated in the agreement are allowed. In order to allow someone named as the power of attorney to self-deal, the document must provide “clear and unmistakable language” to that effect.

Mr. Studt argued that the agreement allowed him to make transfers to “any person,” which should include himself. The court disagreed and stated that the language was too broad and did not state with specificity that he was allowed to self-deal. Because a power of attorney document must be strictly construed and Mr. Studt’s lacked the specific language, his argument was struck down by the court and the justices ruled in favor of the opposing parties.

Bobbi Kristina Brown is the only heir to the estate of her mother, renowned singer and actress Whitney Houston, but since being placed in a medically induced coma questions have arisen about who is next in line to inherit her fortune. Whitney Houston’s estate was estimated to be around $20 million at the time of her death three years ago. Bobbi Kristina was found on January 31 unresponsive in her bathtub and has remained unresponsive in a coma.

Whitney Houston’s Estate

Since being discovered on January 31, Bobbi Kristina has yet to regain consciousness, and there are rumors that her organs have started to fail. With reports that Bobbi Kristina’s family is considering taking her off of life support, people are now looking to the terms of Whitney Houston’s will and estate planning documents. According to the terms in her will, if Bobbi Kristina dies, Whitney Houston’s mother, Cissy, and her two sons are next in line to inherit Ms. Houston’s estate. The estate includes full royalties from the singer’s music, likeness, and image that will continue to distribute revenue over time.

Bobbi Kristina was the beneficiary of a trust for Whitney Houston’s estate. She received ten percent of the estate, around $2 million, when she turned 21 years old. She is scheduled to get another fifteen percent when she turned 25 years old and the remainder of the estate when she turned thirty years old. The will stated that Cissy Houston and her two sons would inherit Whitney Houston’s estate if Bobbi Kristina dies before coming into the majority of the estate.

Other Potential Claimants

Bobbi Kristina’s father and Whitney Houston’s former spouse, Bobby Brown, does not stand to inherit anything from Ms. Houston’s estate, even if his daughter passes away. Bobby Brown was married to Whitney Houston for fourteen years and the couple divorced in 2007. According to experts, Bobby Brown’s opportunity to contest anything in the estate would have been when Whitney passed away. He has no claim purely by virtue of once being married to her.

It also seems unlikely that Bobbi Kristina’s partner, Nick Gordon, would inherit anything, as well. Mr. Gordon was taken in by Whitney Houston when he was twelve but never formally adopted, and he and Bobbi Kristina announced their engagement and marriage publicly. However, a representative of the family has stated that a formal ceremony of marriage never took place. Therefore, Mr. Gordon does not have a valid claim to the estate.

It was Mr. Gordon and a family friend that found Bobbi Kristina in the bathtub in their home in Roswell, Georgia where the couple lived. Authorities are also looking at possible foul play in the incident involving Bobbi Kristina because of injuries found on her face and mouth. Mr. Gordon is currently a target of the investigation, and the couple has a history of domestic abuse. In addition, one of the co-executors of Ms. Houston’s estate, Pat Houston, obtained a restraining order against Mr. Gordon for, among other things, making threatening comments towards her.

In a time where social media accounts are part of your estate plan, figuring out what should happen to your accounts when you die is something that must be considered. The developers at Facebook have been dealing with this issue for years. Previously, they allowed for a basic memorialized account that people could view but not manage. Now, Facebook has launched a new feature that allows you to choose a legacy contact, a trusted person who can manage the account after you die.

Purpose of a Legacy Contact

The purpose of a legacy contact is to allow someone to manage your social media account after you pass away. While technically you can just give your password to another person, it is a violation of Facebook’s terms of service. In addition, there is no guarantee that the something might happen with your password that would lock your account manager out of your page.

When Facebook is notified of your death, the company will memorialize the account. The legacy contact is then notified and given access to the page. The legacy contact will be able to add a post to the top of the timeline, respond to new friend requests, update the profile picture and cover photo. You can also give the legacy contact the ability to download an archive of your Facebook activity which includes posts, pictures, and any updated profile information. However, the legacy contact cannot log in to your personal page or read any private messages.

How to Set Up a Legacy Contact

The first thing to consider when creating a legacy contact is determining who that person will be. Many people choose their spouse or partner, but for an older generation that person may not be technologically savvy. Other people have chosen their child or a grandchild as the legacy contact, or they have named the executor of their estate to also manage their social media websites.

In order to actually set up a legacy contact on Facebook, the process is the same on a mobile device or on a desktop computer. First, go to your settings and scroll down to the “Legacy Contact” option at the bottom. Then, select Edit and follow the prompts to select which of your Facebook friends will be your legacy contact.

It is important to note that Facebook will not notify the person that you have set as your legacy contact that they have been selected. The legacy contact is only notified by the company once your account has been memorialized. It might be in your best interest to give your legacy contact the heads-up that you have selected them so that they will be expecting the responsibility later on.

If having a legacy contact for your Facebook account does not interest you, there is one other option. The company does allow for you to select an option that permanently deletes your account from Facebook when it is notified of your death.

When a person dies, someone else must step up and close the estate. If that responsibility falls to you, as an executor you must identify all of the estate’s assets, pay off creditors, and distribute what is left to the heirs. However, an added responsibility as the executor is that you must also file all of the tax paperwork for the estate, as well. There are four major tax considerations that you must complete as the executor of an estate.

Filing the Final 1040

The first thing that you must do as an executor is file the deceased’s personal tax return for the year that the person died. The standard 1040 form covers from January 1 of that year until the date of death. If there is a surviving spouse, you can fill out the 1040 as a joint return and is filed as though the deceased lived until the year’s end. A final joint 1040 includes the decedent’s income and deductions up until the time of death in addition to the surviving spouse’s income and deductions for the entire year.

Filing the Estate’s Income Tax Return

In addition to filing the individual income tax return, as the executor you must also file an income tax return for the estate. Once the person has died, any income generated by any holdings is income of the estate. The estate’s first year of income tax starts immediately after death and the end date can be the end of any month, so long as the time period for the return is twelve or less months. You must file a 1041 form with the federal government by the fifteenth day of the fourth month after the year-end date.

However, if the estate is less than $600, you do not have to file a 1041 on behalf of the estate. In addition, you do not need to file this form if all the decedent’s income-producing assets bypass probate and go straight to the surviving spouse or other heirs by contract or operation of law. Examples of this include joint tenancy in property, retirement accounts, IRAs, and other beneficiary designated income.

Filing the Estate’s Estate Tax Return

You must also file the estate’s estate tax return, otherwise known as Form 706. This form is only applicable if the deceased’s estate is worth over the federal exemption level, which is $5.43 million for 2015. However, the form is required if that person gave a sizable gift over the annual gift amount of $14,000 sometime within 2013-2015. If a sizable gift was made, it is added back to the estate for tax purposes to see if the estate would be over the federal exemption limit. If it is, there is a 40% tax on the excess amount.

The deadline for Form 706 is nine months after death, but a six month extension is allowed. It is also important to note that while life insurance proceeds are given income tax free, they are usually included in the decedent’s estate for estate tax purposes. An exception to this is if the beneficiary is the surviving spouse.

Miscellaneous Tax Details

There are smaller other details that are necessary for filling out an estate’s tax responsibilities. If you need to fill out a 1041 or Form 706, you must get the estate a federal employer identification number (EIN). This requires filling out another document, Form SS-4. You should also file a Form 56 that notifies the IRS that you will be handling the tax issues for the estate. Finally, these forms apply to the federal government, but do not forget to check and see if the state requires tax returns, as well.

Just like you would not attempt a do-it-yourself project around the house without the proper hardware tools, you should not go into retirement without the proper estate planning tools. This means that you need to have the right planning vehicles and strategies in place that will ensure that you are receiving a paycheck or funds for decades into retirement. Thankfully, there is a basic estate planning toolkit that can help you get started on your retirement planning.

Realistic Budget

The foundation of every retirement plan is a realistic budget that plans for all incoming money from things like Social Security, pensions, and savings as well as plans for all outgoing expenses like basic necessities, medical care, and miscellaneous costs. This is not a tool that is created and forgotten; you should revisit your budget frequently to make sure that your finances are still on track.

If possible, try to think of all expenses to add to your retirement budget like annual insurance premiums and other infrequent costs. You should also have a slush fund to account for any expenses that may occur without warning, such as a medical emergency, housing repairs, or a new car in addition to any money that you plan on using to help family members.

Asset Allocation

Even before reaching retirement, you should start to reallocate assets within your portfolio to match your lifestyle. This typically means taking more assets out of risky ventures and investing them in assets that can give you sustained, long-term growth. This helps prevent against inevitable market declines, especially when you do not have an employer’s paycheck to rely upon.

An Experienced Attorney

While many people are uncomfortable discussing their personal lives with a lawyer, retirement age is not the time to shy away from asking for help from an experienced attorney. An estate planning attorney can go over what you have already done to prepare for retirement as well as draft the necessary documents that ensure that all of your affairs are in place. An attorney can also give you advice about the proper time to take care of things like Social Security withdrawals and structure your estate in a way that minimizes taxes.

Up to Date Documents

Updating all estate planning documents is also a must. Like the budget, your estate plans should not be something that is created and then ignored. As life events occur, you should be reviewing and updating your estate plans accordingly. This includes all actual documents regarding your estate that could pass through probate in addition to any and all accounts that include a beneficiary designation.

A Non-Financial Plan

Finally, you should also draft a non-financial plan to keep you and your loved ones physically and mentally engaged in retirement. Many retirees do not contemplate how such a drastic shift in living can affect them, body and mind. A lot of people who reach retirement find themselves depressed or becoming coach potatoes when they do not have a non-financial plan in place for their retirement years.

It has been said that life is a journey, not a destination. So it makes sense that in our last days, on our final journey, we should strive to have a good one–a bon voyage.

While talking about end of life issues–particularly our own–can sometimes be uncomfortable, the best way to make sure that your end of life wishes are honored is to lay them out in writing and make sure that your loved ones are aware of them. Don’t miss the opportunity to have a bon voyage–take the opportunity to set out your end of life wishes and take control of your journey.

Unfinished Life Matters
Sometimes so much focus is placed on the medical and legal aspect of dying that the personal aspects get brushed aside. However, the reality is that it is much easier to have a bon voyage if you are happy or at least satisfied when you depart. This involves taking care of loose ends and putting things right where necessary. Personal matters to consider include–

**Saying things you need to say to loved ones, friends, and others, such as “I’m sorry.” “I forgive you.” “Thank you.” “I love you.” “Goodbye.”

**Determining whether you may need psychological, emotional, spiritual care, counseling, or other support.

**Writing a personal legacy or story, telling any life lessons or outlining your hopes and dream, as well as leaving any helpful advice, for loved ones.

**Creating a “bucket list,” outlining any things you would still like to accomplish or setting out any goals of for your remaining medical care.

Funeral Wishes
Funeral arrangements are very personal and options vary widely–from in-ground burial, mausoleum burial, cremation, as well as other possibilities. Some planning and logistical questions include–

**Do I want to donate my organs for transplant or donate my body to science?

**Which funeral home/mortuary do I want used?

**What are my feelings regarding embalming, burial, cremation, casket, burial location?

**Who should be notified of my passing?

**Who will write my obituary and what should it say if you are not writing it yourself?

**What do you envision for a funeral–a church service, a party or dinner, a memorial service?

**Will you pre-pay your funeral expenses or where will funds be held?

**Do you want to specify a charity or other cause “in lieu of flowers”?

Medical And Legal End Of Life Paperwork
A complete estate plan typically involves the documents identified above as well as a pour-over will, a revocable living trust (RLT) or an irrevocable Medicaid asset protection trust (MAPT), power of attorney for finance, and deeds and memoranda regarding personal property. In particular, questions related to medical and/or legal arrangements include–

**Do you have a will and possibly a trust? When is the last time you looked at these documents and thought about their provisions? Do the provisions reflect your current wishes and desires for distribution of your personal and real property, as well as your other assets?

**Do you have a Living Will? Does it state your wishes regarding the type and extent of medical treatment you want in the event that you can no longer speak for yourself?

**Have you made your feelings known about matters such as “Do Not Resuscitate (DNR)” orders or your feelings on CPR? What are your feelings on palliative care and natural death? What are your feelings regarding breathing tubes (intubation) and feeding tubes? A Living Will allows you to record your wishes regarding organ donation, pain relief, funeral, and other advance planning matters. It is an important source of guidance for your health care agent.

**Have you executed a Durable Power of Attorney For Healthcare? Have you also selected a Health Care Proxy? Have you specified an alternative proxy in case your first choice is unable or later unwilling to act as proxy? A health care proxy is a designated decision-maker who will make medical decisions for you if you become incapacitated and cannot make decisions for yourself. Your health care proxy should be someone with a strong personality; someone who will fight for you and your wishes.

Thinking of end of life matters can be uncomfortable and challenging, but most things are easier when we have some control over them. Expressing your wishes and making affirmative decisions regarding end of life matters will hopefully allow you to have a peaceful departure and a bon voyage.

Many people know that having a will is necessary in order to properly ensure the deceased’s wishes are followed and desired transfers are carried out once they are gone. However, the importance of having the proper documentation in place does not end there. Careful estate planning is crucial to a will being upheld as valid in the event it is contested. If estate planning documents are not properly executed, the document is in danger of being challenged and may be ultimately revoked.

Common Challenges to a Will

An estate planning document such as a will may be contested for a number of different reasons. Perhaps heirs are not satisfied with their inheritance, or maybe family members fear their loved one made a bequest against their will. No matter the reason, the fact remains that wills do get challenged. Some of the more common challenges involve the following:

***A will that was previously revoked is presented as valid: If an executor is trying to pass an outdated will, a newer will that was created will likely invalidate it. Both destroying an old will and dating both documents accurately can help to avoid a situation such as this.

***The testator’s mental capacity at the time they executed the will is in question: The testator generally must be at least 18 years old to have capacity to create a will. Beyond that, in order to prove an adult lacked mental capacity to form a will, the challenger must prove the testator did not understand the consequences of making a will at the time of its execution. Certain requirements must be met to prove capacity, including understanding the extent and value of one’s property, who the person’s expected beneficiaries are, the disposition they are making and what their will means, and how these elements relate to distribute their property.

***The document was not properly executed according to legal requirements: This can include lacking sufficient or appropriate witnesses, or failing to contain provisions that are required to be part of the will by law. Although certain things, like having a will notarized, may not be a formal legal requirement, there are steps a testator can take to further authenticate the will as valid and assure a challenge to it will not be successful.

***There is evidence of fraud, forgery, coercion, or deception in drafting and executing the estate planning document: This can involve a scenario in which a third person influenced a vulnerable testator into leaving all of their property to them. Undue influence is usually a factor to be considered, which involves the testator lacking the free will to bargain because of the person influencing them.

***There is evidence of unauthorized changes or additions to the document: Usually, this involves things like handwriting over a will provision or providing a handwritten addition to a will. The will itself may provide for ways in which it can be changed properly.

Estate Planning Attorney
Whether you are considering challenging a will or are seeking help in defending a challenge to a will, an experienced estate planning attorney can assist .

While many New York residents familiar with and have an existing will in place in the event of their death, most people do not realize that estate planning documents extend far beyond a last will and testament. The world of estate planning documents includes not only living wills and advanced medical directives, but also trusts. Trusts offer several benefits associated with them, and come in two forms: revocable and irrevocable.

Benefits of Having a Trust
Trusts can not only provide for loved ones upon death, but they can provide for the person who created the trust during their lifetime. This is important in cases where the creator has a health issue, a mental disability or incapacitation, and other scenarios. Trusts can be administered without the need to involve a probate court, and can therefore protect privacy as to the contents of the trust. Trusts also serve as protection of assets for trust beneficiaries, and offer a wide variety of options in creating them to suit different needs.

Revocable Trusts
Revocable trusts are a type of trust that can be changed at any time. The creator of the trust could simply modify the terms of the trust through an amendment. Or, if they want to revoke the trust in its entirety, they can do that as well. In revocable trusts, the assets contained within the trust are considered the creator’s assets and will be treated as such for tax purposes and if creditors exist.

Irrevocable Trusts
As one may expect from its name, an irrevocable trust is not able to be changed once it is signed by the creator of the trust. These trusts are often complex and require a special degree of care in drafting them in order to meet the creator’s needs and desires for his or her estate. It is imperative to consult with an experienced estate planning attorney when setting up an irrevocable trust in order to ensure your estate is properly protected, and any concerns you have about being unable to change the terms of such a trust are addressed and handled appropriately.

That being said, irrevocable trusts have a number of specific benefits associated with them. Often times, estate taxes are significantly lessened or even eliminated through the creation of an irrevocable trust. Irrevocable trusts also offer a high degree of asset protection for the creator of the trust and the trust’s beneficiaries. Both of these advantages are possible with irrevocable trusts because once the assets are placed into an irrevocable trust, the creator gives up his or her control and ownership of the trust assets.

NY Estate Planning Attorney
If you are interested in securing estate planning documents or are interested in further discussing the benefits of trusts and how they apply to you, the experienced estate planning attorneys can help you.

Delineating funeral and burial wishes is a common part of estate planning. Everyone has unique desires about their final resting places, incorporating personal, spiritual and religious preferences. In addition, the perspectives of surviving family members are also taken into account. That is because spouses and children may wish to remember their loved one in various ways. For example, it may be important for family to have a specific place, such as a memorial or cemetery plot where they can go to honor one’s memory.

Unfortunately, when few plans are in place ahead of time, families may be forced to rush these decisions. Mistakes can be made, which lead to disappointment, regret, and sometimes even more conflict.

Memorial Feud
Consider the legal struggle one man is facing after disagreement erupted about his practices at a cemetery. As discussed in a recent story, a father was devastated when his 23-year old son died in a tragic rafting accident in 2011. The young man died without a will, and so all funeral and burial plans were left to his family to be made in a hurry. The father purchased 15 different plots at a local cemetery and is currently using only five of them. However, on those five plots he has erected a growing shrine with a small fence,flags, flowers, and large posters of his deceased son on 8-foot high poles.

The shrine caught the eye of the cemetery superintendent who asked the man to alter the memorial due to complaints received. Specifically, the father was told to remove the posters on poles for violating cemetery rules. The father refused, arguing that when the posters were added there were no rules prohibiting them.

This has set off a legal battle. The father filed a lawsuit in a local court. The judge issued a temporary restraining order in the father’s favor, allowing the memorial to remain while noting that the state Cemetery Dispute Resolution Committee was the proper venue for the matter. As it now stands the father is preparing his complaint to be filed with that body in a month.

Plan Ahead
This unfortunate situation is a reminder of the need to think about many different detail when making long-term plans of this nature. Cemeteries have many different rules that may affect your decision. It is common to have limits on decorating plots, use of flowers, requirements for vases/stands, and more. Cemeteries also may have vastly different rules regarding visiting hours, parking, plot size, and more.

For help crafting an estate plan in New York, contact the experienced legal professionals at our firm today.

Family feuding is all too common, and finances are often at the root. One argument often made in legal cases involves these matters is that an adult child or other close relative is abusing a position of trust and confidence with a parent to take advantage of them financially. Proving such an abuse is the challenge of an undue influence lawsuit.

Undue influence is usually defined the use of confidence for the purpose of taking unfair advantage of one with a weakness of mind (or other vulnerability). In other words, undue influence is about pressure. The question is when does pressure become excessive, and thereby amount to undue influence. In a legal case where undue influence is an issue, a court may consider a number of factors:

1. Unusual or inappropriate time of discussion of the transaction;
2. Unusual location of the completion of the transaction;
3. Insistence that the transaction be finished at once;
4. Repeated warning of the adverse consequences of delay;
5. Involving multiple individuals to apply persuasive pressure;
6. Absence of third-party advisors.

To illustrate, it is useful to consider a few real world examples:

In 2011, the children of actor Tony Curtis claimed that their father was the victim of undue influence. Curtis, redid his Will and changed other aspects of his estate plan a few months before he died from heart failure. As a result, Curtis’s five children, including actress Jamie Lee Curtis, were left with nothing. The Will stated that Curtis intentionally disinherited his children, yet no reason was given. Shocked and deeply suspicious, daughter Kelly Lee Curtis sued, accusing Tony’s widow Jill or others of convincing Tony to change his Trust through undue influence, fraud, or duress.

In 2009, comedian Pauly Shore filed a lawsuit against his brother, Peter, alleging the use of undue influence against their 79-year old mother, Mitzi. Mitzi suffers from neurological problems, including Parkinson’s disease. Prior to her decline in health, Pauly, Peter, and their mother were joint directors of The Comedy Store, a famous Hollywood comedy club. When Peter subsequently took to managing the club’s finances, Pauly requested that Peter turn over about three years worth of tax returns and financial documents. After Peter refused Pauly’s request and instead fired Pauly from the club’s Board of Directors. Pauly brought an undue influence lawsuit, claiming that Peter orchestrated firing Pauly from the Board by taking advantage of their mother’s frail health.

Undue influence doesn’t just disturb the families of the rich and famous. Too often it surfaces in the financial matters of everyday people, whether in wills and trusts, or the operation of a family-owned business. When it does, it’s time to speak with an experienced attorney about your legal rights so you can protect the vulnerable from the unscrupulous.

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