Articles Posted in Estate Planning

People in second marriages often are placed in the difficult position of balancing the wellbeing of their spouse with the needs of their children. Deciding what estate planning strategies to utilize to care for both spouses from second (or additional) marriages and children can be challenging. In the hopes of guiding you through this situation, this article reviews some important issues to consider about estate planning during a second marriage.

# 1 – Comingling Assets

By the point that many people enter second or subsequent marriages, they’ve acquired some amounts of assets. Consequently, spouses must decide whether to combine these assets or keep them separate. While people who want to make sure a new spouse receives assets might decide to commingle assets, people who want to designate assets for children from a previous marriage or relationship might decide to keep assets separate.

Following his passing on January 23, 2021, Larry King’s widow remains locked in a dispute with the late celebrity’s son concerning the distribution of King’s assets. While estate battles are often challenging, this case is particularly complex for several reasons. One, a divorce was pending between Larry King and his widow. Additionally, King’s widow alleges that she recently discovered the late celebrity had a “secret” bank through which he gave over $266,000 to his son.

On February 10th, Larry King’s son filed an ex parte application to become the special administrator of his father’s estate. In support of his argument, King’s son submitted a holographic will that’s dated two months after King filed for divorce in 2019. King’s more formal will, however, names his widow as executor of his estate. King’s widow also argues that the late celebrity didn’t act like he wanted a divorce and that the couple had gone to counseling.

Much consideration has been given to Larry King’s holographic will. The one-page document is dated October 17, 2019, and states that Larry wants 100 percent of his funds to be divided equally among his five children and that the will should replace all previous writings. King’s widow argues that even if this document is found to be valid, it will change little. King’s widow also argues that during the last few years of his life, King was highly susceptible to outside influences, and at the time he executed the holographic will was of questionable mental capacity. As a result, King’s widow requests the court to reject Larry King’s son’s petition to be appointed special administrator and to deny admission of the holographic will. 

Assisted living facilities provide elderly individuals with a stepping stone between independent living and the more intensive care provided at nursing homes. Elderly individuals can receive assistance with things like cooking, cleaning, and hygiene at assisted living facilities while still maintaining personal independence. 

Deciding whether your loved one would benefit from an assisted living facility, however, is a complex process. As a result, this article reviews just some of the most critical factors that should be reviewed when deciding whether your loved one should be placed in an assisted living facility.

# 1 – Size

With the implementation of the Biden administration in the country, various changes are likely to occur including several related to estate planning. One change involves a reduction in the estate tax exemption while a second revision to estate planning law is an elimination of the basis step-up for inherited property. 

While these changes are likely to occur, it is difficult to both predict what repercussions this change will have as well as when these changes take effect. To better prepare people interested in creating successful estate plans, this article reviews some critical details to understand about these approaching changes.

Preparing for the Elimination of Basis Step-Up

No one likes thinking about what will happen when their health begins to decline or what that person’s loved ones will do following their death. Failure to engage in adequate planning now can leave your loved ones in an undesirable situation and can also greatly increase the chances that these individuals face anger and confusion after you pass away. 

You can help to avoid these undesirable results by taking sufficient actions while you are still able to do so. To hopefully push you towards making the appropriate estate planning decisions, this article reviews some of the most critical estate planning decisions that you should make today.

# 1 – Appoint an Executor

In the 2020 case, In the Estate of Mayberry, a Texas court ruled that the common-law wife of a deceased individual who died interstate lacked standing to remove the deceased’s daughter as an independent administrator. 

The court’s ruling was based on the perspective that the deceased’s daughter was not an “interested” party following a settlement agreement between the daughter and the deceased’s common-law wife to voluntarily release all of the daughter’s rights in the estate.

Under the terms of the agreement, the daughter agreed to accept $2,000 as “consideration” for the settlement and release of all claims to any part of the deceased individual’s estate. The daughter later argued that she did not release her right to receive an inheritance from the estate but had only released “claims” against the estate. The daughter argued that her right to receive an inheritance from the estate was not a claim against the estate. 

The estate planning dispute that occurred following Prince’s death in 2016 has arisen again after the Internal Revenue Service determined that Prince’s estate is worth approximately $163 million or twice what Prince’s estate representatives reported on his estate tax return. This difference resulted in approximately $39 million of penalties and interest being placed against Prince’s estate.

This discrepancy is not the first time that the estate of a deceased celebrity has been undervalued. For example, following Michael Jackson’s death in 2009, representatives claimed that a likeness of Michael Jackson was worth $2,105. The artist’s fortune had dropped substantially in the years before his passing as a result of child molestation claims. Michael Jackson’s estate was also reported to be insolvent with assets estimated to be worth $236 million with debts of approximately $500 million. The Internal Revenue Service, however, later disagreed and valued Michael Jackson’s likeness at approximately $435 million. Michael Jackson’s estate later disputed this valuation and the case is still pending.

What happens next with the valuation of Prince’s estate will be decided on by the United States Tax Court. This article reviews just two critical lessons that everyone should understand about the valuation of estate assets.

One of the biggest changes to estate planning over the last few decades has been the increase in the number of estates that own digital assets. If you fail to create plans for how your digital assets should be handled after your incapacity or death, undesirable consequence could occur involving the asset. In some situations, your family or loved ones might even be blocked from accessing an account.

With a properly written digital asset plan, you can make sure that your digital assets are adequately handled in case something happens to you. This might mean that the assets are deleted or transferred to the ownership of someone else. The best-written estate plans can also make sure that your services are sufficiently closed if something happens to you and that these assets do not continue to train money from your estate. Additionally, a plan guides what you would like done with your digital assets as well as your online presence. 

In the hopes that it will help you gain control over the future of your digital assets, this article reviews some critical things that you should remember about creating an estate plan for your digital assets.

As we enter into 2021, the country remains in a state of flux. Following the United States Presidential election in November 2020, the beginning of January also saw the Georgia run-off which involved two seats in the United States. While the Republican Party had 50 seats in the Senate before the run-off and Democrats now hold 48 seats, this number after the election changed to 50 seats for the Republican party and 50 seats for the Democrats as well as a tie-breaking vote by Vice President-Elect Kamala Harris as the president of the Senate in favor of the Democrat party. This change in political administrations in the country will almost certainly result in some substantial changes not just the federal estate tax but also other critical estate planning issues.

How the Change in Political Administrations Will Impact Estate Tax Planning

Firstly, certain provisions are already slated to disappear from the law. Other provisions are attainable as part of the give and take of the legislative process, while a third group of legislation is unlikely to be introduced out of concern of alienating voters in the 2022 elections. Some of the provisions likely include:

In the November 2020 case of Ochse v. Ochse, a Texas court heard a case that could potentially have a ripple effect on how trusts are interpreted. In this case, a mother established a trust that provided the trustee was authorized to make distributions to both the trustee’s son as well as the son’s spouse. At the time the trust was executed, the son was married to his first wife, but later divorced and married a second wife. The son’s children then initiated legal action against the son for breaching fiduciary duties as trustee and joined with the first wife who is also the mother as necessary parties. The first wife and son then filed competing summary judgment motions addressing whether the first or second wife was the son’s “spouse” as referenced in the trust. The trial court then held that the second wife was the correct beneficiary at the time of the suit. The first wife subsequently appealed.

What the Case Involved

The second wife and son argued that the use of the word, “spouse”, in trust documents did not mean the first spouse’s actual name. Instead, these parties argued that the term referred to the class of whoever was currently married to the son. The court of appeals, however, disagreed. The first wife argued that in the absence of contrary intent, a gift to a “spouse” of a married individual must be construed to mean the spouse at the time of the document’s execution instead of a future spouse. The first wife further argued that the terms “primary beneficiary’s spouse” as well as “son’s spouse” referred to the first wife because she was the son’s spouse at the time that the trust was executed. Both interpretations requested the court to view spouses as either statuses or class gifts. 

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