Recently in Estate Planning Category

Millions of UK Wills Available to Search Online

January 24, 2015,

The United Kingdom recently announced that it had digitized its archives of over 41 million wills registered in England and Wales, dating back to 1858, that will allow people to explore the wills of some of the most influential figures of the last century and a half in addition to researching their own family history. At the click of a mouse, people will be able to find out more about their own relatives as well as the last wishes of some of the most famous figures in English history.

Will Database Project

The HM Courts and Tribunals Service (HMCTS) teamed up with the storage and information management company Iron Mountain to digitize the 41 million wills and last testaments stored in the nation's archives. The purpose of the project was to open up more public services to the common people. It also allows requests to be dealt with quickly and without people needing to visit the probate registry in person to search the archives.

The Court Minister stated that "This fascinating project provides us with insights into the ordinary and extraordinary people who helped shape this country, and the rest of the world. It is a fantastic resource not only for family historians but also for anyone with an interest in social history or famous figures. I am delighted that HMCTS are leading the way in innovation and are helping deliver a more modern and efficient public service."

The availability of this database followed the first stage of opening the archives in a digital format when soldiers' wills dated from 1850 to 1986 were made available online for the first time in 2013. Since then, there have been over two million searches of the website, which shows people's interest in researching their family history. This latest phase allows people to request a specific will online and receive an electronic copy within ten business days.

The Commercial Director of Iron Mountain has gone on record as stating that this project "marks a significant milestone in a project to help deliver services online. The size of the archive is both humbling and impressive. The online availability of the wills is a welcome opportunity for anyone wishing to add detail to their family history."

Influential People of Note

Besides being allowed to request wills from ancestors and other extended family members, people can now also request the last will and testaments of famous figures in UK history. Influential members of note who's wills can be accessed online include:

· Prime Minister Sir Winston Churchill
· Economist John Maynard Keynes (who wanted his unpublished manuscripts and personal papers destroyed)
· Code breaker Alan Turing (sharing his possessions equally among friends, colleagues, and his mother)
· Author Charles Dickens (requesting no personal monuments put up in his name)
· Author AA Milne (leaving shares of his royalties and copyrights to a popular London club and his alma mater)
· Author Beatrix Potter (left most of her estate to natural science and conservation efforts)
· Author George Orwell (insisted that all notes, manuscripts, pamphlets, press cuttings, and other documents be preserved)

Trustee Found Liable for Arbitration Costs

January 21, 2015,

In a recent opinion released by the Seventh Circuit court of Appeals, the court found that the attorney in charge of a trust was liable for all of the costs of arbitration when the arbitration committee sees fit to assess expenses against specific parties. This case is important because the costs applied after the trustee had settled all claims with the other party and applied even though the trustee had applied for bankruptcy. It also highlights the importance of knowing the level of fiduciary duty and responsibility taken when agreeing to become the trustee for a trust.

Facts of the Case

In 2008, Ms. Lauralee Bell sued Mr. Philip Ruben, a lawyer, for negligently and fraudulently mismanaging her trust, inflicting a loss of $34 million. Mr. Ruben asked to arbitrate the claims and she agreed, but before Ms. Bell could initiate arbitration Mr. Ruben filed for Chapter 7 bankruptcy. Ms. Bell filed an adversary complaint opposing discharge of Ruben's fraud-based debt to her, and the bankruptcy judge granted Ruben a discharge of his other debts, but not of that fraud debt to Ms. Bell.

The parties went to arbitration where Ms. Bell settled her fraud and negligence claims against Mr. Ruben, even though his liability insurance did not cover fraud. The arbitration panel ruled that in respect to the fraud claim Mr. Ruben must pay the administrative fees and expenses of the American Arbitration Association (AAA), which totaled $21,200, and that the compensation and expenses of the arbitrators that had been advanced by Ms. Bell, totaling $150,304,54, must be the responsibility of Mr. Ruben, as well.

The rules of the AAA state that the expenses of arbitration shall be borne equally unless the parties agree otherwise or if the arbitrator assesses expenses against specific parties. Mr. Ruben refused to pay, and a bankruptcy judge ruled in favor of him. On appeal, the district court reversed and ruled in favor of Ms. Bell. Mr. Ruben then appealed to the Seventh Circuit Court of Appeals.

Ruling of the Court

The court ruled that Mr. Ruben was responsible for paying for the entirety of the arbitrator's assessment against him, $171,504.54. The court reasoned that Mr. Ruben willingly chose to participate in the arbitration, thereby voluntarily exposing himself to the assessments of the AAA. In addition, the appeals court found that the total sum was meant as a sanction against Mr. Ruben for his fraudulent activity regarding Ms. Bell's trust. If the amount was discharged in bankruptcy, the sanction would disappear.

The court also found that its belief that the assessment was meant as a punishment was reinforced by the findings in an Illinois Attorney Registration and Disciplinary Commission hearing against Mr. Ruben for his fraudulent conduct. Not only did the hearing find him guilty of fraud, it also noted additional aggravating factors like Mr. Ruben hiring additional counsel, incurring significant expense, and dragging the litigation with Ms. Bell out over the course of years.

Court Finds Estate Has Standing to Sue in Workers' Compensation Lawsuit

January 16, 2015,

The Supreme Court of Montana recently ruled on a case that decided whether the Workers' Compensation Court properly held that it lacked jurisdiction to consider an estate's petition because the personal representative of the estate lacked standing. The court reversed and remanded the lower court's decision to dismiss the representative's petition.

Facts of the Case

Cristita Moreau's husband Erwin worked at the W.R. Grace mine from 1963 until 1992. He passed away in 2009 from asbestos-related lung cancer, and in 2010 Ms. Moreau filed a claim for occupational disease benefits with her husband's workers' compensation insurance carrier as a personal representative of his estate. The insurance company, Transportation Insurance, denied the claim.

In 2012, Ms. Moreau filed a petition in Workers' Compensation Court to seek a determination of Transportation's liability for the costs of her husband's medical care. The next year, Transportation accepted liability and entered into a settlement agreement. The insurance company reimbursed Medicaid, other providers, and Mr. Moreau's estate individually for medical expenses that they had paid for his care.

The Libby Medical Plan paid over $95,000 of Mr. Moreau's medical expenses, which is an entity established and funded by the W.R. Grace mine to pay for the medical care of employees who were injured by asbestos exposure. The Libby Medical Plan refused reimbursement from Transportation for the medical expenses paid on Mr. Moreau's behalf. Cristita Moreau then demanded that the amount of reimbursement declined be paid either to her husband's estate or to a charity selected by the estate. Transportation refused and Ms. Moreau filed a second petition in Workers' Compensation Court.

Court Ruling

The Workers' Compensation Court denied the second petition, claiming that it lacked jurisdiction to hear the matter. It concluded that since Mr. Moreau received medical care that was paid by the plan, any further recovery would be seen as double payment. It also stated that as a personal representative of the estate Ms. Moreau lacked standing.

Mr. Moreau appealed to the Montana Supreme Court on the issue. The Court held that the Worker's Compensation Court has the jurisdiction to hear disputes concerning workers' compensation benefits. In regards to the question of standing, the determining factor is whether a party is entitled to have the court decide the merits of the dispute. A party's lack of standing does not deprive a court of underlying subject matter jurisdiction.

In this case, Mr. Moreau was appearing in court through his personal representative Ms. Moreau. The Workers' Compensation Act is binding on employers and employees, as well as their representative. Mr. Moreau was already established as an employee when Transportation and Ms. Moreau litigated her first claim in Workers' Compensation Court.

The plain language of the act entitles Ms. Moreau, as a personal representative of the estate of an employee, to bring the matter before the Workers' Compensation Court in that state. Therefore, the Supreme Court of Montana reversed the lower court's ruling and remanded the case back to the Workers' Compensation Court.

Saving an Estate Charitable Deduction through Qualified Reformation

January 14, 2015,

On Dec. 12, 2014 the Internal Revenue Service issued Private Letter Ruling 201450003, in which it considered whether an estate is entitled to a charitable deduction under the federal tax code Section 2055(a) if a portion of a defective charitable remainder trust (CRT) was reformed to satisfy the statutory requirements for a charitable remainder unitrust (CRUT).

IRS Determination

The IRS concluded in its Private Letter Ruling that the proposed reformation would be a "qualified reformation" within the meaning of Section 2055(e)(3) as long as the reformation is effective under local law and the CRUT, as reformed, meets the requirements under Section 664 of the code. The definitions of the CRUT are detailed in that section of the code in addition to in relevant regulations. As a result, as long as the reformation is a qualified one, an estate is entitled to a federal estate tax charitable deduction under Section 2055(a) equal to the present value of the charitable remainder interest and charitable income interest of the CRUT.

An estate is entitled to claim a charitable deduction pursuant to Section 2055(a) when the decedent transfers property to a CRT, as long as the remainder is in the form of a CRUT, an annuity trust, or a pooled income fund. Section 2055(e)(3) provides a mechanism where a fiduciary can make a qualified reformation, including an after-death reformation for an estate, of an otherwise defective CRT. If a qualified reformation of a defective CRT occurs, an estate is entitled to a charitable deduction under Section 2055(a).

Requirements for Qualified Reformation

The reformation of the portion of the CRT into the CRUT must be considered qualified within Section 2055(e)(3) in order to claim a charitable deduction under Section 2055(a) for any portion of the CRT. In order to be qualified, the following must be true:

· The CRT is a reformable interest within the meaning of Section 2055(e)(3)(C)
· The CRUT is a qualified interest within the meaning of Section 2055(e)(3)(D)
· The actuarial value of the remainder interest of the CRUT as of the date of death of the estate doesn't deviate by more than five percent from the actuarial value of the remainder interest of the CRT as of the date of death
· The non-charitable interests in the CRT and CRUT both terminate at the same time
· The reformation of the CRT into the CRUT was retroactive to the date of the decedent's death

IRS Tests

The IRS ran their ruling through a series of tests to check the viability of the Private Letter ruling. The four tests include the following:

Actuarial Test
The IRS determined that the actuarial test was satisfied because the actuarial value of the remainder interest of the CRUT as of the date of death of the decedent for the estate didn't deviate by more than five percent from the actuarial value of the remainder interest of the CRT as of the date of death.

Equal Duration Test
The IRS determined that the equal duration test was satisfied because the non-charitable interests in the CRT and the CRUT both terminate upon the date of the decedent's death of the estate.

Effective Date Test
The IRS concluded that the effective date test was satisfied because the reformation of the CRT was retroactive to the date of the decedent's death.

Six Important Money Matters After a Divorce

January 12, 2015,

Many experts in estate planning focus on the financial planning that must be done while going through a divorce. However, there are separate money matters to consider once the divorce is finalized. You will need to close the loop on any outstanding financial matters that result from the separation. The following are areas that should be looked at to minimize any problems that could arise in the future.

Beneficiary Designations

Some accounts do not automatically pass to heirs in an estate. Retirement accounts, life insurance, and other assets that require a beneficiary designation pass along everything into the account to the person that is named. If your former spouse is named as the beneficiary to these accounts, that spouse will take those assets even though you are no longer married.

While some states do have laws that revoke a will upon a divorce, failure to make the changes to beneficiary designations in the states that do not will mean that the assets will pass to the former spouse. Changing a beneficiary designation is an easy process that can be accomplished by completing a simple form with the institution that controls the asset.

Other Estate Documents

You should also review and amend any other estate planning documents, including any living trusts, wills, and durable power of attorney if your former spouse is named in any of those documents. In addition, if you have named your former spouse as a healthcare proxy in case you become medically unable to make your own decisions you should have that document updated, as well.

In order to change a durable power of attorney or healthcare proxy, you must revoke and amend it in writing. Sign the revoking document and send it to your former spouse in addition to any institutions that have a copy of the paperwork. You should request that your former spouse also send the old copy of the power of attorney, too, before executing the new documents.

Check Your Credit Report

Once you are divorced, all joint bank accounts should be closed. This includes credit cards, bank and brokerage accounts, mortgages, car loans, and home equity lines. Review your credit report to see if there are any "open" credit cards, mortgages, or debts in both of your names. If there are, close them. If there is an outstanding balance on any joint accounts, instruct the lender to suspend the account to prevent future charges and confirm that the account cannot be reopened or unsuspended.

In addition, you should review your credit report annually to be sure that no other credit cards or other liabilities have been established in your name without your knowledge. If you spot any errors or potential liabilities you should contact the credit bureau immediately.

Compare Earlier Financial Projections with Reality

During your divorce, you most likely came to the realization that your financial outlook would be different. Once the divorce is complete, it is important to check the assumptions that you made with the realities of your financial outlook. Be sure to check on your financial targets every three to six months to ensure that they are still on target.

Biggest Estate Planning Celebrity Lessons from 2014, Pt. 2

January 8, 2015,

The first part of this article listed some of this year's most notable celebrity deaths and the estate planning issues that arose as a result. This next part of the article is a continuation of lessons that can be learned by the estate planning problems of celebrities who passed away this year.

Paul Walker

Mr. Walker tragically died at the young age of forty this year in a car accident. He did take the steps to plan for his estate at a young age, but at the time of his death he had not updated his documents in over twelve years. His estate had a will, trust, and over $25 million in assets when he died.

The lesson learned from his estate is that it is commendable to do your estate planning early, but the entire process should be updated every couple of years. This is especially important to do after major life events like a marriage, divorce, birth, or death in the family.

Mickey Rooney

Before Mr. Rooney's death, his plight shined a light on the growing problem of elder financial abuse. At the time of his death, Mr. Rooney was almost penniless because of his family's exploitation. Even after the money was gone, his family still battled in court over where he should be buried.

Mr. Rooney's estate not only highlights the tragedy of elder abuse, but it also shows that wealthy families are not the only type of people to fight over an estate. Drawn out court battles are costly and time-consuming. Often, they lead to the heirs losing their inheritance to court fees.

Philip Seymour Hoffman

This Oscar winner disregarded his estate planning attorney's advice to set up a trust for his children. Instead, he left his entire estate to his longtime girlfriend and mother of his children and trusted that she will use the money to take care of the kids. Unfortunately, this also trapped her with a massive tax bill that could have been avoided altogether with the proper estate planning tools.

The lesson learned from his estate is to trust your estate planning attorney and consider the advice given regarding your estate. Creative attorneys can properly plan an estate to meet the needs and wishes of the testator if you let them.

Robin Williams

After Robin Williams' tragic suicide, it was discovered that he had created multiple trusts to take care of his estate. It was also revealed that he did the proper estate planning before he was diagnosed with Parkinson's and Lewy Body Dementia. Because he planned the right way, Mr. Williams' estate is shielded from the public's eyes.

Robin Williams' estate is a great example of how important and beneficial it is to plan your estate before becoming sick or disabled. When estate planning documents are created and signed after the testator has become ill, especially when any kind of dementia is involved, family members can fight over the validity of the estate plan.

Joan Rivers

Joan Rivers' early death was complicated by her being placed on life support after a medical accident. However, Ms. Rivers' had done some smart estate planning, and she had the proper healthcare documents in place to allow her daughter to terminate life support as per her final wishes.

The lesson from her estate is that not all estate planning documents revolve around who gets what. It is also important to have other documents in place such as a durable power of attorney, healthcare proxy, and a living will.

Five Retirement Changes for 2015

January 4, 2015,

Factoring in retirement to an estate plan can be confusing, tiresome, and complex. In fact, this aspect is arguably the most difficult part of estate planning because you can never be positive about exactly how much money you will need in retirement. With the influx of new estate planning tools this year also came some changes in the way retirement planning should be approached. Here are five changes that could affect the way that you plan for retirement next year.

Decreased Creditor Protection in Inherited IRAs

This year, the United States Supreme Court ruled that creditors can gain access to the funds in an inherited IRA. As discussed in a previous post, the justices in Clark v. Rameker found that inherited IRAs are not considered retirement funds for the heir, and therefore they do not get the same protections as the original IRA holder under federal law.

This ruling could change how some people decide to give their assets to their heirs because of the lack of creditor protections in an inherited IRA. An alternative to an IRA could be certain types of trusts or instruments allowing for a spendthrift provision.

Qualified Longevity Annuities in 401(k)s

Annuities have always been part of retirement plans, and often they serve as the primary form of payment offered to married participants in a defined benefit plan is a qualified and joint survivor annuity. This year, the Treasury Department changed its rules to allow longevity annuities, which can be used to help pay for long-term care expenses and protect against outliving assets. You can now have a qualified longevity annuity contract (QLAC) inside of an IRA or 401(k), and it can be worth up to either 25% of the account balance or $125,000, whichever is less.

Reduction of IRA Rollovers

If you have an IRA you are allowed to either take a distribution, or roll the funds within sixty days to avoid taxation issues. Before this year, each IRA was individualized in this regard - if you had five IRAs, you had to make the decision five times. However, a tax court ruling this year held in Bobrow v. Commissioner that the twelve month, one rollover limitation now applies to all IRAs. This means that only one sixty-day rollover is allowed per twelve months regardless of how many IRAs you own.

Increased Access to Annuities in Target Date Funds

In addition to allowing QLACs, the Treasury Department also allowed expanded access to annuities within 401(k) plans. The new rules allow 401(k)s to offer "target date funds." The target date fund can include annuities that begin payments at a certain date. This can be as early as retirement or at a much later age. In this way, it gives you another way to have guaranteed retirement income and protect from running out of money later in retirement.

Introduction of myRA

A new type of Roth IRA, the "myRA," was also introduced this year. This new IRA will give individuals earning under $129,000 annually and married couples who are filing jointly earning less than $191,000 annually that have no access to an employer-sponsored retirement plan the ability to save for retirement.

The maximum contribution to the myRA every year will be the same as the annual Roth IRA contribution limits: $5,500 per year and $6,500 per year for people aged fifty and older. The myRA will be free for employers to make available for employees, and the employee's contributions will be taken directly out of their payroll through direct deposit.

Are Wealthy Families More Cautious Leaving Money to Kids?

January 2, 2015,

According to a report released by U.S. Trust, in the United States there are nearly 1.8 million households that have assets totaling $3 million or more. Many of these families will struggle with how to give their children an inheritance that provides for their needs while not giving them so much that they lose their sense of work ethic and independence. The question being asked is simply, how much is enough?

Trust Fund Babies

The advent of reality television and social media has given the public an eye into the world of some so-called "trust fund kids." The media attention on Paris Hilton, the Kardashians, and "Rich Kids of Beverly Hills" show us the very worst that can happen when children inherit an abundance of wealth from their families with little to no guidance.

However, there have also been good examples of high profile wealthy people who are determined not to handicap their kids with too much of a good thing. For example, Warren Buffet has gone on record stating that he wants his children to have enough money to feel like they could do anything, but not so much that they could do nothing. Bill Gates has also gone public about his children's inheritance, bequeathing only a single percent of his assets to each child and giving the rest to charity.

Estate Planning Options

There are a number of ways to structure a wealth transfer to children in an estate plan that sets boundaries in addition to allowing the values of work ethic and giving back to the community to grow. The first step is considering your values, your relationship with your children, and their relationship with each other. Every family is different, and what may work for one family might not work for others.

One option is to set limits on the amount of inheritance for each child. It can be structured as a set amount per child or be done as a percentage of the estate. Another option is to structure the inheritance through a trust that promotes that values that the parent wants.

Some trust funds distribute wealth at certain ages on a set schedule. For example, a child might receive a third of their inheritance at ages 21, then 25, and the final third at 30. Other wealthy families structure a trust to last for generations and empower the trustee to make distributions as necessary according to their guidelines.

Another option for wealthy parents is to establish an incentive trust for their children. In order to claim their part of the trust, a beneficiary must hit certain benchmarks or goals set by the parents. Typical goals for a recipient in an incentive trust include graduating from college, getting a full-time job, committing a certain number of hours to community service, etc.

However, there can be drawbacks to the incentive trust. Backlash against the parents or children finding loopholes in the requirements are common issues seen in incentive trust planning. For these reasons, it is important to discuss with your estate planning attorney about what the best option is for you and your children when it comes to distributing your wealth.

Estate Disputes Continue in Estate of James Brown

December 31, 2014,

James Brown's life was full of life, music, and manic energy. It was also full of broken marriages, estranged children, tax liens, and legal problems related to drugs, guns, and domestic violence. However, James Brown's estate was meant to be a mea culpa for his transgressions in life and to help others after his death. Yet, almost eight years after his passing the charity that was supposed to receive a significant portion of James Brown's estate has not seen a dime, his family is entangled in lawsuits, and even the state has attempted to intervene.

Estate Problems

James Brown signed his most recent will in 2000, and he explained on audio tape that he wanted a portion of his estate set aside for the use of a scholarship fund to benefit black and white children in his home state of Georgia as well as South Carolina. In addition, the will provided $2 million in scholarships for his seven grandchildren and divided his other personal property worth another $2 million between the six children that he recognized. Any heir who challenged the estate would be disinherited.

That statement, however, did nothing to keep multiple children, grandchildren, and purported common law wife from suing the estate to overturn the will. The lawsuits also sought to remove the three people appointed as executors to the estate: James Brown's accountant, personal lawyer, and a former judge. Several children claimed that because of rampant drug use, James Brown had been influenced by his named executors due to his diminished mental capacity.

Then in 2008, the South Carolina attorney general stepped in and claimed that James Brown's charitable goals had been endangered by the court challenges of his family. In a settlement, the attorney general redirected one quarter of the estate to the children and grandchildren, one quarter to his supposed common law wife Tommie Rae Hynie, and the remaining half to the charity. The executors of the estate were also replaced.

Last year, the South Carolina Supreme Court rejected the attorney general's settlement, calling it "an unprecedented misdirection" of the attorney general's authority that inevitably led to "the total dismemberment of Brown's carefully crafted estate plan and its resurrection in a form that grossly distorts his intent." In addition, the court found that there was no evidence of James Brown being unduly influenced or that the 2000 will was anything except his true intent.

State of Affairs Today

As of today, nothing is settled in James Brown's estate. The estate remains embroiled in multiple lawsuits, two of his three executors have been replaced, and a lower court has yet to follow some of the state Supreme Court's ruling. In addition, millions of dollars have been paid out of the estate to his creditors, but no money has been released to the scholarship fund, school children, or other intended beneficiaries. Saddest of all, James Brown's body remains in a temporary resting place and not the memorial that was planned for him at his home.

The battle over James Brown's estate was the basis for a recent documentary and major motion film. A biopic on his life, "Get On Up," was released in August and considered an Oscar contender, and the documentary "Mr. Dynamite: The Rise of James Brown" was shown on HBO in October.

In addition, his music continues to make money for the estate. Each year it has generated millions of dollars in royalties through its use in commercials or as samplings in other music hits. Even his trademark noises, grunts, and squeals that he would make during his performances are available for purchase as ringtones.

Joan Rivers' Estate Lesson: Choosing Place of Residence

December 24, 2014,

Joan Rivers' estate continues to be a topic of interest as it has been recently discovered that she reduced her estate tax burden by claiming residence in one state while actually living in another. Ms. Rivers' died in September at the age of 81, and she had a will on file at the Surrogate's Court in New York that was dated November 16, 2011. The will is of interest to estate planning attorneys and experts because of some of the wording regarding her place of residence.

Joan Rivers' Will

The will on file states that Joan Rivers was a resident of New York state, but it also states that her state of domicile where she intended to stay "indefinitely and on a permanent basis" was California. Furthermore, her estate document contends that New York estate law will apply to the validity, interpretation, and administration of the will unless she died in California. If that was the case, California law would apply.

Generally speaking, a person can reside in multiple states but only be domiciled in one for estate planning purposes. The domiciled state is the one where the primary home is located, where there is intent to return, and where the main contacts of a person's life can be found. The domiciled state remains constant even though a person may reside in many different places.

While it is not unusual for celebrities to be bi-coastal or have homes in multiple locations around the country, the distinction between Joan Rivers' state of domicile and state of residence could make a big difference in terms of state estate taxes. It is also an estate planning strategy that is rarely seen in high-profile estate plans.

Estate Planning Considerations

New York increased its state estate tax exemption from $1 million to $2.062 million in April of this year. It will continue to increase every year until 2019 when it will be equal with the inflation-adjusted federal exemption level for estate taxes. The state estate tax level in New York is currently at 16%. However, in California where Ms. Rivers claimed to be domiciled, there has been no state estate tax since 2005. As a result, for people with homes in both states, there is an estate tax advantage to being in California.

However, there are benefits to considering residency in New York over California for the purposes of probating an estate. The biggest benefit is the respective states' probate process. In New York, the process is simple and the court only gets involved when a person objects to the will. In California, the process can be much lengthier, complex, and have higher legal fees.

Choosing Your Domicile

Estate planning attorneys routinely run into the issue of choosing a domicile over a residence with clients who own properties in multiple states. Many clients choose to make their domicile Florida later in life because it is where they spend their winters and where there is no state estate tax or individual income taxes. However, this issue is unlike the issue of Ms. Rivers', whose will is trying to claim two states instead of one.

How Freezing Eggs Can Affect an Estate Plan

December 22, 2014,

Recently, Apple and Facebook made the headlines when both companies announced that it is paying the expenses for its female employees to freeze their eggs. Most people do not assume that an announcement like this will affect their estate plan, but if you have a daughter or granddaughter you may want to reconsider that opinion. If either decides to use assisted reproductive techniques and freeze their eggs, you must consider whether you would like to include these potential descendants in your estate plan.

Defining Descendants and Heirs

For estate planning purposes, descendants and heirs are people who are genetically, biologically, or legally related to you. However, with the advent of egg freezing there is a chance that you will have a descendant that is not biologically or genetically related to you, and you must decide whether to include them in your estate.

Regardless of which decision you make about descendants from frozen eggs, if the situation arises in your family it is important to define within your estate documents whether or not you wish to include descendants born using assisted reproductive technology. By defining who you consider to be a descendant and heir you can clearly determine who you wish to inherit your estate.

Tips for Planning with Frozen Eggs

In order to ensure that those you wish to be included or excluded because of assisted reproductive technology are planned for within your estate, consider the following tips to determine how best to plan for the future:

Find out if your daughter or granddaughter is planning or intends to freeze eggs.
This conversation can be awkward, but it is an important talk that needs to be had. Try bringing it up with your female descendants privately, and explain why this talk is important to you.

If freezing may or has occurred, decide how you want to handle the estate plan.
Keep in mind that children and descendants are not entitled to inherit from you, and it is up to you (and your spouse) who will inherit from your estate. If you wish to include a potential heir from a frozen egg you can, and if you do not wish for that heir to inherit they do not have to.

Be specific in your estate planning documents.
It is important in these types of decisions, regardless of your choice, to be specific in the estate planning documents. You do not want someone included or excluded because of a technicality in your estate plan.

Do not settle for boilerplate or generic documents.
Generally speaking, online estate planning forms do not let you change the definitions of children, grandchildren, or heirs. This can make it difficult to make it clear about your intentions for your estate regarding the offspring of frozen eggs. Using an estate planning attorney can ensure that you get the results that you desire.

Be sure to discuss the matter with your estate planning attorney.
Do not expect that your attorney automatically assumes that assisted reproductive technology will or will not play a role in your family and estate planning needs. Make sure that you specifically make your intentions regarding this known to your attorney so that any drafting or revisions can be made accordingly.

The Fundamental Elements of a Stress-Free Estate Plan, Pt. 2

December 21, 2014,

Planning ahead and drafting an estate plan can reduce a lot of stress and worry in your life once you know that you family and loved ones are protected in your estate. The first part of this article began to list specific aspects besides determining the inheritance of your heirs that you should also decide upon when creating an estate plan to make it as stress-free as possible for you and your family's future. This part of the article continues with more tips to create a stress-free estate plan.

More Elements of a Stress-Free Plan

Create a financial framework for heirs too young to manage an inheritance
Children and grandchildren may be too young to manage the inheritance that they receive when you die. It is important to set up a financial framework and place a person of knowledge and trust in a managerial position to ensure that their inheritance is used wisely. The most common way to do this is to set up a trust with a knowledgeable trustee who understands the family dynamics and your wishes for their inheritance.

Provide for loved ones with special needs
A special needs trust allows for a loved one with a disability to still qualify for government benefits while providing money to supplement their needs. There are multiple kinds of special needs trusts that can help depending on the specific needs, and an attorney can help you decide which is best for your loved one's situation.

Protect a portion of your estate in case your current spouse remarries
If there is a chance that your spouse will remarry after your death, it can be smart to protect a portion of your estate for your remaining heirs. It can prevent issues arising between the new spouse and the heirs of your estate regarding what your remarried spouse should receive.

Address the needs of each child
If possible, try to address the specific needs of each of your children. If one child is doing better financially in life than another, if one has multiple children while another has no kids, or if one of your children has other special circumstances it can be helpful to address each specifically in the estate plan. At the very least, try to sit down with your children and address why you are apportioning your estate according to these needs. It can prevent bitterness and resentment among your children later, which in turn can prevent a nasty legal battle over your estate.

Prevent or discourage challenges to the estate
The best way to prevent or discourage challenges to your estate is to communicate your wishes clearly to everyone involved. This can be done in a group setting or privately, one on one, with each person that has been included or specifically excluded from the estate. By explaining your wishes and the reasons behind your estate planning, there is much less ambiguity after you are gone. This prevents misinterpretation, angst, and jealousy amongst your heirs that often leads to challenges over the terms of the estate.

The Fundamental Elements of a Stress-Free Estate Plan, Pt. 1

December 18, 2014,

Estate plans are designed to take care of future issues and concerns, such as planning for retirement, long-term health issues, avoiding estate taxes, planning inheritance, and preparing for Medicare and Medicaid eligibility. However, creating an estate plan now can also help eliminate a present-day issue: stress and worry that comes with the unknown. Most planners admit that they feel a certain level of relief once an estate plan has been put into place because they know that their loved ones are protected and provided for should anything happen.

Elements of a Stress-Free Plan

Every person's needs and wants are different when it comes to an effective, stress-free estate plan. However, there are some basic elements that should be covered in every plan besides deciding who should get what from the estate. This includes issues surrounding the creator of the estate as well as any family issues that can be protected or prevented by the estate.

Determine who will manage your affairs
This applies first to who will be the executor of the estate and will make sure that it is distributed according to your wishes. However, it also means that you should determine who should be appointed as your durable power of attorney in case you become disabled, incapacitated, or otherwise unable to handle your own affairs. In that scenario, the power of attorney makes all of the financial and legal decisions for the estate.

Plan for long-term medical care
This includes planning for Medicaid eligibility and protecting assets for your spouse if you need to spend down to apply. It also means appointing a healthcare proxy and creating a living will so that your medical wishes will be adhered to even if you become incapacitated and cannot make those wishes clear for yourself. An advance directive binds the healthcare proxy to the wishes that you have made clear beforehand.

Avoid probate
Try to keep as much, or all, of your estate out of probate. There are a variety of planning tools, such as certain types of trusts, which keep your estate out of probate. Staying out of probate keeps your affairs private and out of the public record. It also saves time, money, and potential conflict for the rest of your family members.

Protect children from a prior marriage
In case you pass away before your present spouse, be sure that your children from a previous marriage are protected. This may include creating a trust or other estate planning vehicle to set aside money specifically for the children to ensure that they receive the full value of their inheritance.

Protect assets meant for your heirs
You should try and protect assets from any lawsuits, divorces, and other creditor claims against them after you have passed. This can include placing the assets in a specific trust or retirement planning vehicle. However, recent Supreme Court rulings have made some accounts, like an inherited Roth IRA, accessible to creditors.

Biggest Estate Planning Celebrity Lessons from 2014, Pt. 1

December 16, 2014,

This year saw a number of tragic celebrity deaths, and some were complicated further with estate planning issues. Using these stories can be a good way to transition into discussing issues of estate planning with your own family. A look back on the celebrity deaths and estate battles of the rich and famous shows just how many things can go wrong when an estate is not properly planned.

Patrick Swayze

Although Patrick Swayze died over five years ago, reports are coming out now that members of his family believe that his will was forged only a couple of months before his death while Mr. Swayze was hospitalized. His entire estate was left to his widow, and nothing was left to his mother or siblings. Because of the length of time that the estate has been closed, chances are that the estate documents will remain valid despite allegations of forgery.

The lesson learned: estates are administered according to state rules and regulations where the person died. Anyone who feels wronged by the terms of an estate must act quickly before the statute of limitations on the will runs out.

L'Wren Scott

Mick Jagger's girlfriend and fashion designer L'Wren Scott committed suicide earlier this year, and Mr. Jagger was so distraught that he postponed part of The Rolling Stones' world tour. The delay caused a multi-million dollar insurance claim that led to further legal proceedings between Mr. Jagger and insurance companies. The dispute was settled quickly after the insurance companies requested personal information regarding Ms. Scott's death from her family members, medical records, and social media accounts.

The lesson learned is that insurance disputes regarding a deceased loved one are not uncommon, especially when there is a dispute about who should be the rightful beneficiary to part of the estate. Good estate planning can help avoid these types of issues between family members or from becoming public.

Tom Clancy

The late author's estate is currently embroiled in a fight over eight million dollars because Mr. Clancy was never clear about who should be responsible for the taxes resulting from his $82 million estate. The dispute is whether his wife's share of a trust should pay for half of the IRS bill or if his children from a prior marriage should be forced to pay it all.

The lesson learned from his estate is that it is important to be clear and unambiguous in the drafting of a will and other estate planning documents. This is especially important in families with subsequent marriages, children from multiple families, or if the bonds of family are strained in any way.

Lou Reed

Musician Lou Reed only relied on a will to distribute the entirety of his $30 million estate. Because the contents of a will are public record through the probate court system, newspapers and other media outlets could publish the details of Mr. Reed's assets, income, and distributions.

The lesson learned from Mr. Reed is that probate is public, time consuming, and expensive. The use of other estate planning tools instead of or in conjunction with a will can help keep a family's affairs private and out of probate.

Getting the Most from Your High Asset Divorce

December 13, 2014,

Divorce is almost always an emotionally and financially draining experience, and high asset divorces come with an increased level of tension and drama. It is because of that emotion that some spouses in high asset divorce settlements make irrational decisions or financial errors that can cost them thousands or millions of dollars in the end. However, there are some areas in a high asset divorce that can be analyzed to ensure that you are getting the most out of the settlement proceedings.

Hiring a Valuation Expert

One way to minimize potential mistakes in a high asset divorce is to hire a valuation expert. This person is an objective professional who is hired to make accurate valuations of all assets for the couple based on specific metrics and methodologies. Many valuation experts are associated with accounting firms and carry special designations for their profession. However, more help may be necessary for the expert if highly specialized assets like a privately held company, holdings in a family business, or other technical investment interests are at stake.

When assets like stock or equity portions of a business are at play all of the contingencies surrounding distributions, transfer of ownership, and sale must also be considered by the valuation expert. A divorce valuation expert with investment management experience who deals regularly with high-value, complex portfolios can help navigate these types of situations.

Review Life Insurance Policies

This is another area where misjudgments are often made in high asset divorces. Many people do not think of life insurance as an asset, but as any other form of insurance like auto or home. It is possible to accumulate a large amount of wealth within a life insurance policy without the other spouse ever knowing.

Even when an insurance review is conducted, life insurance policies can be difficult to valuate. Different policies are structured in different ways depending on the needs of the client, and oftentimes the money in a life insurance policy is held in trust for estate planning purposes. It is important to have someone on your team with knowledge of trusts and insurance that can properly determine the current value of the policy in addition to the best way to equitably divide it.

Looking at Lifestyle

The cost of maintaining a certain lifestyle often comes up in high asset divorce cases, but it is not often treated with the seriousness or financial scrutiny that it deserves. Looking at the lifestyle is especially important when one of the divorcing spouses is a high earner and the other one is not. By thoroughly reviewing the accounting and financials of the couple, knowing how and where the money was spent can help determine a fair split of assets for lifestyle accommodation.

By taking a holistic approach to looking at all potential items of value in a high asset divorce, it ensures that nothing is left on the table for either party. It also safeguards one spouse from making an emotional or irrational decision during the divorce proceedings that could cost one of them or their family dearly.