San Antonio, TX Estate Planning

Estate Planning Full-Court Press - Donald Sterling vs. Shelly Sterling

It's not every day that financial advisers and accountants are called in to referee billion-dollar disputes over the ownership of a basketball team, but nevertheless there are plenty of valuable takeaways from the Sterlings' duel in probate court.

When Shelly Sterling removed her husband, Donald Sterling, as co-trustee of the family trust that owns the Clippers, a heated court battle ensued to determine if Ms. Sterling was in the right or the wrong to do so. Shelly assumed control of the trust when doctors allegedly found Donald Sterling to be suffering from early stages of Alzheimer's disease, according to an Associated Press report.

In the ruling, the judge said the doctors who diagnosed Donald's mental incapacity acted appropriately, dismissing the billionaire's claim that this was part of a conspiracy by Shelly and her attorney to gain control of the professional basketball team.

This was the subject of a recent Investment News article titled "Donald Sterling's battle holds a harsh lesson for advisers." The article noted that "[I]t's not every day that financial advisers and accountants are called in to referee billion-dollar disputes over the ownership of a basketball team…" Nonetheless, the article points to several valuable lessons from the jump ball in probate court.

While many create estate plans to guard assets in the event of their death, seldom do people contemplate the consequences and plan for incapacity. The article counsels you to add an incapacity clause in your trust documents, and to ensure there is a true measured trigger that will set it in motion. An estate planning attorney will know how to draft that language so that it is a clear and precise standard to determine whether you are unfit to oversee the trust. This language will also describe the terms for a transfer of power.

Contact an estate planning attorney at The Voeller Law Firm and take care of this issue now, before it turns into a bigger problem down the road, like it has for the Sterlings.

Reference: Investment News (July 30, 2014) "Donald Sterling's battle holds a harsh lesson for advisers"

Are Your Assets Protected?

Asset protection does involve an estate planning process that uses a variety of different types of vehicles to accomplish protection. Estate planning involves far more than just asset protection, yet often estate planning strategies can accomplish both estate and asset protection goals at the same time.

Estate planning should entail asset protection, as well as long-term planning strategies that can realize the objectives of both estate planning and asset protection simultaneously. And to be clear, one should not hide their assets. But—if you are wise—you'll use comprehensive estate planning that leverages several kinds of tools to protect your assets. You want to make sure that you have the protections in place while you are alive to safeguard your assets from creditors and also grow your estate so that your loved ones are cared for after you pass.

A recent Fort Meyers Florida Weekly article, titled "Take measures to protect your assets into the future," reminds us that while federal law applies to protection of some assets, such as IRAs and retirement plans, state law also plays a part in choosing the ideal products and strategies for the protection of your assets. For instance, the article reminds us that not every state treats homesteads or life insurance in exactly the same manner.

The more assets you have, the more extensive your estate plan should be. However, even a regular middle class person can be subject to litigation or the seizure of personal assets to satisfy corporate debt. So if you are a millionaire or even if you are not, you should seek the assistance of your estate planning attorney. He or she can examine all of your current and potential assets and liabilities, and create a plan that makes the most sense for you and your circumstances.

Do not wait to meet with your estate planning attorney until the creditor calls or you are served with a civil complaint. At that point you cannot simply move assets from a creditor's reach prior to a judgment. That will be viewed as fraudulent conveyance—remember, it is against the law to hide assets.

There are several exceptions to what a creditor can get at, and it takes a skilled attorney who specializes in this area to create effective vehicles to protect your assets within the confines of state and federal law. Call today to speak with an estate planning attorney sooner rather than later.

Reference: Fort Meyers Florida Weekly (July 23, 2014) "Take measures to protect your assets into the future"

US Supreme Court Ruling Says Inherited IRAs are Not Exempt from Bankruptcy

“This decision points to a significant chunk of American wealth that is now, quite clearly, no longer as ‘bulletproof’ from creditors as most thought,” Eleanor Blayney, the Board of Certified Financial Planners’ consumer advocate, wrote in a recent blog posting.

Creditors and bankruptcy attorneys will have an easier time going after inherited retirement assets, thanks to a recent US Supreme Court ruling.

In Clark v. Rameker, the Supreme Court unanimously affirmed a lower court ruling in favor of bankruptcy trustee William J. Rameker. The Rameker decision impacts a sizeable segment of the nation's wealth. Quite clearly, inherited retirement assets are no longer as "bulletproof" from creditors as they were before the decision.

A recent InsuranceNewsNet article, titled "Court Decision Has Implications For Estate Planning," explained that the Supreme Court was asked if federal bankruptcy law exempted an inherited IRA from a debtor’s estate in bankruptcy. Justice Sonia Sotomayor wrote in her decision that an inherited IRA account did not qualify as a retirement fund, so it would not be exempt. Inherited IRAs do not fall under the definition of a retirement fund, the Justices held, because the heir to the fund, other than a spouse, is not permitted to put money into the account. The accountholder (or heir) must also withdraw all of the funds from the account or set up annual distributions. It does not matter how close this inherited IRA accountholder is to retirement, and he or she must pay taxes on those distributions. Permitting an inherited IRA to be exempt from creditor claims would ultimately undermine the purpose of the Bankruptcy Code, Sotomayor explained.

What does this mean for your IRA? How will you handle it in your estate planning strategy?

Speak with one of our estate planning attorneys, get a thorough explanation, and put a sound plan in place. Request a Consultation

Reference:  InsuranceNewsNet (July 24, 2014) "Court Decision Has Implications For Estate Planning"

Stand Up for Seniors! Take Action Against Elder Abuse

I’m always saddened by the stories of people who have been swindled. But there’s something even more despicable when scammers go after senior citizens, who don’t have as much time as younger victims to make up for lost money.

It's a sad reality that crooks seek out vulnerable older individuals who might be more easily influenced by "get rich quick" offers and other financial scams. As discussed in a column in The Washington Post, titled "Targeting scams against the elderly," a recent survey found that 34% of attorneys who took part said they are dealing with or will have to help senior clients who have been exploited.

With proper training, many experts believe that many of these scammers can be caught before they prey on innocent senior citizens. The three groups that conducted the survey—the Investor Protection Trust, the Investor Protection Institute, and the American Bar Association—have joined forces to create an ongoing campaign called the “Elder Investment Fraud and Financial Exploitation Prevention Program.” This initiative will help attorneys recognize investment fraud schemes and hopefully keep elderly clients from being taken. It is a national program that trains professionals to detect and report elder fraud.

Another survey cited in the article revealed that more than 7.3 million Americans over age 65 were already victims of some sort of fraud. As a result, the Investor Protection Trust worked with health care professionals to educate them on how to detect senior fraud.

You do not have to be an attorney or health care professional to take action—if you suspect an elderly person is being targeted by a scam, you should contact the adult protective services agency in your area. This information can be found at www.eldercare.gov or call 800-677-1116. Another source is the National Center on Elder Abuse, which is part of the Administration on Aging (www.ncea.aoa.gov).

Our seniors have paid their dues—they have served in our Armed Forces, made contributions to our communities, reared the next generation, and paved the way for our happiness. Help them now that they are in need. Report elder abuse to your local agency. If you are a victim of fraud or elder abuse, contact our qualified estate planning and elder law attorneys.

Reference: The Washington Post (July 29, 2014) "Targeting scams against the elderly"

Don't "Walk On the Wild Side" When It Comes to Your Estate

Maybe we shouldn’t be surprised.  After all, Lou Reed was the man who famously crooned, “Hey babe, take a walk on the wild side.”  The late lead singer and guitarist of The Velvet Underground — and of course, a musician and songwriter with a successful, decades-long solo career — may have been a bit wild at times.  But that doesn’t explain why he would be so careless with his estate plan.

Lou Reed, the vanguard artist who sang “Take a walk on the wild side,” did just that when it came to his estate plan. With an estate worth more than $30 million, Reed could have spent a little less time walkin' and more time with his estate planning attorney.

The recent Forbes article, titled "Lou Reed Walked On The Wild Side With His Estate Planning," reports that the singer left assets of approximately $10 million for his wife and sister, along with $500,000 left to his sister to use in her discretion for their 93-year old mother's care. Experimental performance artist Laurie Anderson, who was Reed's wife, will receive 75% of the residual of his estate. Reed's sister will get the remaining 25%. This could be more than $9 million worth of real estate in New York passing to Anderson alone.

Sounds pretty straightforward, doesn't it?

According to Forbes, in April 2012, Lou signed a 34-page will. That is the extent of his estate planning … no trusts or other asset protection devices.

Reports are that Reed was fully aware of the fact that he was suffering from liver disease, as he signed the will 18 months before he passed. The articlesuggests that he should have updated his plan to include a revocable living trust, which would have allowed his family to keep this matter private, rather than having all of the financial details revealed in probate court and thereafter in the press. With a revocable living trust, you can move assets into the trust while you are living, and this information will remain private after your passing. Wills are required to be probated in court, a very public process. On the other hand, trusts, when set up by an estate planning attorney and “funded,” will sidestep probate court completely.

Another important aspect of a will versus a trust is that it is much easier to challenge a will in probate court than it is to object to the provisions of a trust which is administered privately. In addition, it is simple to leave detailed instructions, including conditions, limitations, and suggestions, in a comprehensive trust document instead of a will, no matter how long it is!

Trusts can be a benefit to you while you are alive and have the opportunity to determine how your assets are managed if you are no longer able to do so. That is not the case with wills. Do not be a music or estate planning rebel like Lou Reed—contact us today to see if a revocable living trust is a wise choice for your situation.

Reference: Forbes (July 10, 2014) "Lou Reed Walked On The Wild Side With His Estate Planning"