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.

This case centered on a dispute over the administration of a family trust as well as the interpretation of trust documents. Despite appealing the ruling, the defendant in the case violated court orders and, and the plaintiff moved to dismiss the appeal based on the rules within the disentitlement doctrine.

Facts of the Case

In the case of Adam J. Blumberg v. Gloria M. Minthorne, Gloria and Ralph Minthorne created the Minthorne Family Living Trust in 2008, with Gloria named as the sole trustee. Both parties had children and assets from previous marriages. In regards to the division and distribution of the trust property, one clause stated that the trustee was allowed to transfer the entire estate to a survivor’s trust after the death of one spouse. Another clause left “all the rest, residue, and remainder of the trust estate, including the remainder one-half interest” in an apartment building to Ralph’s children and grandchildren.

Ralph Minthorne died in November 2008, and Gloria’s attorney informed Ralph’s grandchildren, including Adam Blumberg, that the apartment building was to be sold and distributed to the family members. The building went in escrow at $925,000 but Gloria’s attorney refused to give the grandchildren an accounting of the estate. Finally, in May 2009 Mr. Blumberg was informed that the price dropped to $800,000 and that the net proceeds were $313.000. Adam filed a petition in October 2010 to remove Gloria as trustee, recover trust property, compel an accounting, and appoint a successor trustee.

Ruling of the Court

The trial court found Gloria liable to Ralph’s children and grandchildren. She was replaced as trustee by Adam Blumberg and was ordered to hand over property to the trust. She was also ordered to file an accounting with the court. Gloria appealed the ruling in December, 2012. The day before a status hearing on the appeal, Gloria quitclaimed the property in question to her daughter, and after months of promising to do so she never filed an accounting with the court.

Her and her attorney failed to appear for multiple court hearings, and she never disclosed the quitclaim deed to Mr. Blumberg. When he finally learned of the quitclaim, Adam filed a motion to dismiss Gloria’s appeal. The appellate court agreed and based its decision on the disentitlement doctrine. This doctrine gives the court the right to dismiss an appeal if a party refuses to comply with a lower court’s order.

Under this doctrine, a party cannot “ask the aid and assistance of a court in hearing his demands while he stands in an attitude of contempt.” It is not seen as a punishment, but as a means to induce compliance with a valid order. In this case, Gloria disobeyed two court orders. First, she failed to submit an accounting of the trust and estate to the court. Second, she failed to quitclaim her property to Mr. Blumberg and in blatant disrespect of the court quitclaim the deed to her daughter. As a result, the disentitlement doctrine was properly applied, and Gloria’s appeal was dismissed.

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.

Known and beloved as “Mr. Cub,” Ernie Banks began his career in baseball earning only seven dollars per day in the Negro Leagues, before coming to the Chicago Cubs and becoming one of the team’s all-time favorite players. After baseball, Ernie Banks continued a career in business and philanthropy, Mr. Banks earned the Congressional Medal of Honor in 2013. He passed away on January 23, 2015 from a heart condition, but the death certificate also listed dementia as a “significant condition contributing” to his death. This statement has become incredibly important because his caretaker is now claiming to be his sole heir.

Ernie Banks’ Estate Plan

Three months before he passed away, Mr. Banks signed a new will and estate planning documents that included a power of attorney, healthcare directive, will, and trust. The new estate plan gave control of his entire estate to his caretaker and talent agent, Regina Rice. The will and trust also excluded his family members and named her as the sole beneficiary. In fact, the new documents expressly stated that nothing should go to his estranged wife or three children from a prior marriage. The new plan gives Ms. Rice all assets from Mr. Banks’ estate, and it also allows her to profit off of his name, image, and likeness.

Banks’ Family Contesting Estate

The Banks children have already stated that they plan to contest the new estate plan. They claim that Ms. Rice used Mr. Banks’ dementia as a way to manipulate him into signing the new will. They also claim that in the months leading up to his death, Ms. Rice refused to let them speak to their father over the phone. Ms. Rice has refuted the allegations and has stated that “the record and those closest to Ernie will dispel any iota of concern regarding my relationship with Ernie and his trust in me to [carry] out his wishes.”

Illinois Undue Influence Law

A new law was passed on January 1, 2015 in Illinois that makes it easier for families to challenge wills that favor a caregiver. However, it does not apply in this case because Mr. Banks signed his new documents a couple of months before the new law went into effect. That being said, the burden of proof to prove that there was no undue influence with Mr. Banks will lie with Ms. Rice.

The concept of undue influence means that a person was of sound mind and free from pressure or manipulation of another person when the estate planning documents were signed. The fact that Mr. Banks had dementia and completed the changes to his estate only three months before he died is questionable. And because Ms. Rice was in a position of trust over Mr. Banks at the time of the changes, as caregiver and talent agent, the law will automatically assume that she did use some level of undue influence when the documents were signed.

On January 17, President Obama proposed a new plan for the tax code that could have implications on estate planning. He proposed a revamp of the tax code that would include bumping up capital gains and dividend rates to 28%, treating bequests like realization events such as making beneficiaries pay tax on assets that have appreciated in value, and blocking contributions and accruals in qualified plans and IRAs once the account reaches $3.4 million. These ideas are forcing people to rethink their current estate plan and look ahead to the future.

Response to the Plan

The response from advisors, Republicans, and tax experts was not favorable to this new plan. It has also been noted that the chances of this proposal going through a Republican-dominated Congress are low However, legislators are telling people to pay attention because it gives an insight to where legislation may go in the future. Experts have noted that this type of legislation has been proposed before, and can give people planning their estates now a potential look into the future.

Contingency Planning the Estate

Experts are looking to charitable giving, donor-advised funds and charitable remainder trusts as the tools that estate planners can use to help contend with the potentially higher tax rates. Life insurance policies can also be a way to shield assets from higher taxes, especially if there is a cap placed on qualified account balances. What would typically go to a qualified plan or IRA could instead be invested in a life insurance policy. A cash value life insurance policy would combine the benefits of a tax-advantaged accumulation of funds along with tax-free withdrawals from the policy.

Another option for avoiding negative tax consequences in an IRA would be to cut the balance of an IRA reaching the maximum contribution limit and using the funds cut to make a Roth IRA conversion. Alternatively, you could use outside funds to pay the income tax on the Roth IRA conversion, which would allow you to preserve the value of the account and still receive tax-free withdrawals.

Current Trends in Estate Planning

If the tax reform is a success, many estate planners would be undoing years of work based on the current trends in estate planning. Most of the change would be tied to the proposed change in stepped up basis for appreciated assets. This is because currently, if a beneficiary inherits an appreciated asset, such as stock, the asset will pass to the heir at the value it was at the time of death. The heir receives the asset without having to pay capital gains tax on the appreciated value. Under the proposed tax reform, the stepped up basis will still be allowed, but the appreciation will be recognized and the heir will have to pay.

Another issue is that with the federal estate tax exemption now at $5.43 million, many estate planners are focused on taking advantage of stepped up basis to mitigate income taxes. One expert noted that “the planning has moved from getting assets out of the estate to keeping appreciated assets in the estate . . . Maybe they’d have to go back to getting property out of the estate and shifting the burden to beneficiaries in lower brackets. People would really have to revisit their estate plan from the ground up if any of this found its way into law.

An attorney claims that he has evidence that a panel of judge in the Panama Supreme Court were bribed into stripping him of control over a $150 million estate. The lawyer, Richard Lehman, says that he has an affidavit that proves that the foreign court illegally removed him from his position as executor of the estate of his client, Wilson Lucom. According to Mr. Lehman, Mr. Lucom’s final wishes for his estate were that the estate be overseen by Mr. Lehman and that a portion of the estate be donated to “needy Panamanian children.” However, Mr. Lucom’s took over the estate after her legal team bribed several judges.

Facts of the Case

This lawsuit stretches back to 2006, when Mr. Lucom passed away. A wealthy American expatriate living in Panama, he appointed both his widow Hilda Lucom and Mr. Lehman as the executors of his estate in his original will. However, he made modifications to the estate plan prior to his death that contributed to the legal battle over his estate as well as over its real estate holdings on the Pacific coast of Panama.

Over the years, Mr. Lehman has battles Ms. Lucom in Panamanian court claiming that the widow was ignoring her late husband’s wishes to donate a portion of the estate to the needy children of the country. Ms. Lucom retaliated by filing criminal complaints against Mr. Lehman for “aggravated swindle” and the theft of family funds. As a result, Mr. Lehman was briefly on the International Criminal Police Organization’s list of wanted men and was jailed in Panama for a short while before being cleared of the criminal charges.

As to the affidavit at issue, Mr. Lehman’s lawsuit claims that “it’s drawn from the statements of a ‘prominent real estate developer’ who heard a post-factum discussion about the briber . . . The corruption of the Panamanian judicial system is not mere speculation. The actual meeting where [the widow’s] lawyer offered and negotiated a $1 million bribe to one of the Justices of the Panel, was reported … to the prominent real estate developer.”

Fallout of the Case

Back in the United States, a Florida Circuit Court judge issued a multi-million dollar judgment against Mr. Lehman for improperly removing funds from Mr. Lucom’s estate to fund his courtroom drama with Ms. Lucom. The judge called Lehman’s actions those of an “intermeddling volunteer” and stated that “Although Lehman attempted to portray himself at trial as a protector of the assets of the overall estate, the credible evidence showed him to be a covetous opportunist.”

Mr. Lehman’s latest lawsuit wants this judgment set aside and claims that the American judges have been misled by a corrupt Panamanian judge, Juan Molina and claims that three judges higher up on the Panamanian Supreme Court were all bribed, as well. Mr. Lehman claims that in 2010 when the Panama court gave Ms. Lucom control over the estate, they did so “in consideration of a several million dollar bribe paid to the three Panamanian Supreme Court Justices.” Mr. Lucom is now suing the estate of Ms. Lucom, who passed away in 2011m as well as her attorneys and heirs for fraud and injunctive relief against the handling of the estate.

In 1974, the Individual Retirement Account (IRA) was born, and since its inception more than 43 million Americans have created at least one IRA account for their retirement savings. Over the years the IRA has transformed greatly and has the potential to continue to evolve over the coming years. In fact, the IRA today bears almost no resemblance to the retirement vehicle that was created forty years ago.

Brief History of the IRA

When the IRA was first introduced in 1974, it was only available to employees who were not already sponsored by employer plans. The maximum contribution per year was only $1,500, and 401(k) plans did not yet exist. In 1981, the IRA saw a massive increase in the number of accounts when a new tax law let anyone under the age of 70.5 years old contribute as well as increased the annual maximum amount of contribution to $2,000.

However, the Tax Reform Act of 1986 phased out the deduction for IRA contributions among the wealthy employees that were already covered by employer-sponsored plans. Since then, there has not been much significant change to the IRA outside of the creation of the nondeductible Roth IRA, the retirement withdrawals of which are typically tax-free. In addition, the maximum amount that a person can contribute per year has increased to $5,500 in 2015 and $6,500 for people over the age of fifty years.

Transformation of the IRA

IRAs today are mostly IRA rollover accounts, a place where an employee can move their employer-sponsored accounts when they leave their job and keep the money until they make withdrawals in retirement. Now, only eighteen percent of workers who are not offered a 401(k) plan save their money for retirement in an IRA.

Because most IRAs are rollover plans, they typically hold much more money than a defined benefit pension plan or a 401(k). In fact, the Federal Reserve reported in 2014 that there were $3.1 trillion in pensions, $5.3 trillion in 401(k)-type plans and $7.2 trillion invested into IRAs. Compare that to the numbers in 1981, when there was only $4 billion in IRA accounts.

The Future of IRAs

Legislators and employers are starting to look at IRAs once again as a source of retirement savings, instead of simply a bridge for employer-sponsored plans. In the coming years, experts expect to see an enormous growth in the number and value of IRA rollover accounts as an increasing number of Baby Boomers transfer their 401(k) money into an IRA when they prepare to retire. To put that in perspective, nearly 10,000 people from the Baby Boomer generation turn 65 years old every single day.

In addition, the Obama administration instituted the MyRA plan, which will begin in earnest this year. The MyRA has a lot of similarities to the original IRA of 1974 – this vehicle is a nondeductible Roth IRA for employees whose employers do not offer retirement plans and will be limited to people that make under $129,000 per year (or couples that make under $151,000). Some states are also developing their own automatic IRA accounts for citizens that do not have access to employer-sponsored retirement plans. For example, Illinois is rolling out its “Secure Choice Savings Program” starting in 2017.

The sales of firearms in the United States is rising, and for people who want to pass on their collection of guns to the next generation, estate planning has been particularly difficult. However, with the advent of the “gun trust” there is now a way to ensure that your collection is passed safely and to the correct beneficiaries. The gun trust has become the go-to vehicle for bequeathing firearms in an estate for owners who do not wish to have their collections sold after their death.

Increased Demand for Gun Trusts

The FBI’s National Instant Criminal Background Check System ran 21.1 million background checks for firearm purchases in 2013, a significant increase from the 19.6 million checks performed in 2012. The number of background checks also jumped in December of last year, with the FBI’s system running more than 2.3 million checks in that month alone, compared to only two million checks the December prior. This system runs a background check every time that a person walks into a licensed gun dealer and wishes to purchase a firearm.

For clients that have now amassing a collection of guns, many are now considering who will inherit them in their estate plan. This is where the gun trust comes into play. “You want a mechanism where, if the person [owning the guns] loses capacity, someone can secure the assets, make sure they’re safe and make sure they go where people would want them to go.”

Benefits of the Gun Trust

There are two primary uses for a gun trust: easing the process of obtaining federally regulated firearms and easing the burden of possessing and transferring firearms between people in an estate plan. In regards to obtaining federally regulated guns, these are known mostly as Title II weapons. Title II weapons include such things as machine guns, silencers, and other firearms listed in the Gun Control Act of 1968.

The typical process to acquire a Title II weapon is to go through a fingerprinting and photo ID process, paying a tax stamp fee to the ATF, and getting the signature of a chief law enforcement officer that states that you should be allowed to possess such a firearm. With a gun trust, the trust itself can act as the purchasing agent for Title II firearms, easing the process for people who wish to make more than one purchase of these weapons.

Gun trusts also help with the transfer and possession of single firearms or weapons within an estate plan. A gun trust is particularly helpful when a gun-enthusiast passes away and the spouse has no knowledge about how to properly transfer the firearms to another person. If done incorrectly, you can be charged with a felony for improper transfer, even if you are passing it along to the person that it was intended for.

Legal Ramifications of Gun Trusts

The main benefit of a gun trust within an estate plan is that the trustee has knowledge of the proper state and federal procedures for transferring firearms from the estate to the intended beneficiaries. This includes notifying the proper authorities if Title II guns are crossing state lines as well as filing the proper forms with the ATF when possession of a gun transfers to an heir.

In addition, beneficiaries can also use a gun trust for income made off of the sale of the guns. The gun owner can control, through the details of the trust, where and how the profits of the sale of the gun collection should be used. The proceeds of the sale can go directly to the beneficiaries of the trust, or it can be set up as a charitable remainder trust to pass some of the proceeds to a worthwhile organization.

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.

Contact Information