San Antonio, TX Estate Planning

Will Changes May Lead to Hurt Feelings

I have four sisters and brothers, and three have taken out loans against their share of any inheritance — significant loans, like in the $75,000 range. Dad has been tracking these loans and has provided in his will a formula for adjusting the split accordingly. However, he recently decided that these loans are to be forgiven and the estate split five equal ways.Dad hasn’t asked me for any input on this decision, so I’ve not offered any. But I’m a little upset by it.

Although you have every right to change your will as you see fit, be sure to consider the impact those changes can have on your heirs — both financially and emotionally.

Estate planning attorneys normally advise their clients to communicate with their children about what kind of inheritance to expect and to even explain the reasons certain arrangements are being made. This approach can help eliminate the possibility that siblings will later fight with each other in court over their inheritances.

On the other hand, if the parents later decide to change their estate plans, then that can cause issues as well.

A recent column in the Washington Post, titled "Carolyn Hax: A late change to dad's will is causing resentment," is an example of just such a case.

It seems a father had planned to distribute his assets between his five children. However, three of those children had taken out loans against their inheritances. Now, the father changed his will to forgive those loans and to distribute whatever is left equally between all children. As you might expect, the siblings who did not take out a loan from the father are feeling some resentment.

A simple solution to this situation does not exist.

If you do decide to change your estate plan, it is very important that you tell your children about the changes. If they were expecting one thing and are surprised by something else after you pass away, family fights are almost guaranteed.

An experienced estate planning attorney can help you communicate your intentions, as well as provide ideas to avoid resentment over an inheritance among your children.

Contact The Voeller Law Firm to receive legal advice and counsel for designing a will that will fulfill your specific desires. 

Reference:  Washington Post (November 6, 2014) "Carolyn Hax: A late change to dad's will is causing resentment"

Passing on a Family Business? Plan Wisely to Avoid Family Drama

It's a high-stakes multi-million-dollar sibling rivalry that reads like a Hollywood movie script and is playing out in a federal courtroom in Covington. And an end to the nearly 20-year drama may be just six months away, as a judge set a trial date for early May 2015 in the case that pits brothers against sisters, who allege they were cheated out of their family's fortune.

Sibling rivalries aren't just for school-aged children. Estates can stir up fights among family members if handled the wrong way.

In recent news, four sisters allege that their three brothers improperly cut them out of their proper inheritance.

John Griffin founded his family business, Griffin Industries, in 1943. The meat-processing company eventually grew into one of the largest privately held corporations in Kentucky. However, when Griffin passed away, his children started fighting over the company.

Recently a judge stated that the brothers breached their fiduciary duty to the sisters. Now, after nearly 20 years, a trial date is expected to be set for next January as reported by WCPO in "Family feud: Griffin Industries inheritance fight still going strong after 19 years; could end soon."

Most of the documents in this case have been filed under seal, so we do not know exactly how to asses this particular battle. Nevertheless, these types of family feuds over the business are not unusual.

Passing on a business to the next generation requires proper planning.

What is intended after the founder passes away needs to be made very clear in the founder's estate plan. Ideally, the next generation should be informed of these intentions and the estate plan to implement them.

That gives the surviving family members time to prepare to run the company and lessens the likelihood of future fights. An experienced estate planning attorney can help ensure that everything runs smoothly, preserving both the business and the family.

Are you a business owner who wants to protect your business and avoid family conflict in the process? Click here for more information.

Reference: WCPO (November 13, 2014) "Family Feud: Griffin Industries inheritance fight still going strong after 19 years; could end soon"

Suspected Misuse of Trust Lands Executor in Court

The children of late billionaire Richard Mellon Scaife are accusing their father of misspending a family trust fund–one worth $210 million–to keep his newspaper printing. The executor of their father’s state vowed to fight the children in court and called their allegations “outrageous, frivolous and contrary to the terms of the trust.”

Trusts can be powerful estate planning tools, but even the most powerful tools will be challenged from time to time.

When billionaire Richard Mellon Scaife passed way last July his children expected to find at least $90 million in a family trust fund that had once been worth $210 million. Instead, they found that the trust had been depleted and there was no money left.

Now, the children, Jennie and David Scaife, allege that their father improperly used the funds in the trust to keep his newspaper running.

As Forbes reports in "Late Mellon Billionaire's Kids Say Dad Misused $210M Trust Fund," the children are suing their father's estate. The estate's executor denies the allegations and has vowed to fight the suit.

This is a family that was recently ranked as the 19th richest family in the United States. However, you do not have to be that wealthy to face similar issues in your own family.

When there are disagreements over how the funds in a family trust should be used, it is very normal for families to fight in court. For this reason, trusts should be as specific as possible about how the money is used and trustees need to follow the guidelines set forth in the trusts.

Trustees can be held personally liable if a court finds they have acted improperly. These issues can best be avoided by working with an experienced estate planning attorney to help design and administer a family trust. For more information about estate planning in San Antonio, Texas and the surrounding areas click here to contact us.

Reference: Forbes (November 10, 2014) "Late Mellon Billionaire's Kids Say Dad Misused $210M Trust Fund"

Tax Considerations of Inherited Real Estate

My father-in-law left land to my mother-in-law, stating that it goes to the kids. A conflict has erupted. Now she wants to sell it so the kids will quit fighting. My mother-in-law is saying she wants the checks made to the kids separately. Would it be better tax-wise for her to just sell it and split the money, and if there are any federal or state taxes to be paid, just let the kids give her the money?

Inherited real estate and land can be tricky. Should the recipient sell?

Quite often when people inherit land, they do wish to sell it afterwards. For example, if you leave your home to your children and they already have homes of their own or live in different parts of the country, they will normally want to sell that home.

Whether or not you mention that possibility in your will has important tax consequences for your children as mentioned by FOX Businessin a recent article titled "How to Deal with Disputes Over Inherited Land."

As the article notes, if the sale of the land is directed in the will with the proceeds to be split between any heirs, then the land is still treated as property of the estate and any taxes are paid by the estate. There is also a step up in basis benefit for capital gains tax purposes.

However, if the sale is not directed in a will, then the heirs have to pay the taxes out of their respective shares of the proceeds.

Finally, if one person is left the property and decides to sell it to give the proceeds to the others, there are gift tax issues that need to be considered.

When leaving any type of land to your heirs, you need the assistance of an experienced estate planning attorney to make sure it is done in a manner that will minimize potential taxes.

Reference: FOX Business (November 4, 2014) "How to Deal With Disputes Over Inherited Land"

Disinheritance: What to Do and What Not to Do

Disinheriting a child can be a difficult choice for parents.  However, if this is the intended choice, there are do’s and don’ts when disinheriting.

Are you thinking about disinheriting an heir from your estate? Make sure you know what you are doing before tackling this sensitive subject.

Although it is always a painful decision, some parents feel like they have no other choice but to disinherit a child. If that is the choice you want to make, then know that there are good ways to go about doing so and there are bad ways to do it.

Recently, the Wills, Trusts & Estates Prof Blog, published a list of things to consider when disinheriting in a post titled "Do's and Don'ts When Disinheriting."

Here is the list from that post:

• Do Consider a Skip Bequest - If the child you wish to disinherit has children, you might want to leave an inheritance for those children (i.e., your grandchildren) directly. If the grandchildren are still minors, you can leave the inheritance in a trust.
• Do Consider an Incentive Trust - If the reason for wanting to disinherit a child is behavioral, you can use a trust that only gives money to the child for the appropriate behavior.
• Do Document Your Decision - Leave some type of recording of your decision and why. This will make it more difficult to challenge later on.
• Don't Neglect to Name the Child in Your Will - If you leave the child's name out of your will completely, the court will assume that you simply made a mistake and redivide your estate to include the child.
• Don't Rely on a No Contest Clause - Someone who does not stand to inherit under your will is not stopped by a no contest clause from challenging your will.

See an experienced estate planning attorney if you have questions about disinheriting a child. This is not a do-it-yourself project.

Reference: Wills, Trusts & Estates Prof Blog (November 9, 2014) "Do's and Don'ts of Disinheriting"

Alzheimer's Is a Potential Future Problem - Are You Ready for It?

Waiting to create an estate plan could result in significant out-of-pocket costs at the end of life. Or even worse, it could result in a person with Alzheimer’s disease being subject to the will of the courts. With the number of individuals suffering from Alzheimer’s skyrocketing, there is no time to wait to get your affairs in order.

What will you do if you develop Alzheimer's? This unfortunate disease gets to the core of who we think we are. People with the disease often forget their friends and family members.

Anyone who has ever known someone with Alzheimer's knows how frustrating this disease can be for the patients and their loved ones. A recent article in UT San Diego, titled "Legal, financial planning for Alzheimer's patients," details some steps people can take to be prepared should they or their loved ones ever get the disease.

The key thing to know is that you need to prepare ahead of time.

People with dementia normally lack the capacity to sign legal documents. That means you cannot make plans after you get Alzheimer's. If you wait, then a court might be required to make plans for you.

The basic documents you need to prepare in advance (i.e., right now) include a general durable power of attorney and a health care power of attorney. These two documents allow someone of your own choosing to handle your financial and health care matters when you are no longer able to do so.

While you are at it, make sure you have an up-to-date estate plan (i.e., a last will and testament, or revocable living trust), to provide for the efficient transfer of your assets upon your death. Your beneficiary designations should be reviewed, too.

If you or your loved ones have not yet planned for the possibility of Alzheimer's and the costs associated with long-term care, click here to read more about preparing for long-term care.

Reference: UT San Diego (October 23, 2014) "Legal, financial planning for Alzheimer's patients"