San Antonio, TX Estate Planning

6 Motives for an Ethical Will

Unlike regular wills or trusts, which define how assets are conveyed to heirs, an ethical will conveys intangible values and guidance to one’s family. Consider writing an ethical will — also known as a legacy letter — for six reasons.

As we age we do not just accumulate property that needs to be passed on to future generations. We also accumulate life lessons and wisdom that would be helpful to pass on too.

Ethical wills are not a new concept. They have their roots in ancient Jewish tradition. They also resemble the time honored tradition of writing words of wisdom for future generations.

Recently, Life Health Pro published a list of reasons that people should consider ethical wills titled, "6 reasons every advisor needs an ethical will."

The list includes:

1. To provide a vehicle by which you can leave something behind and be remembered.
2. Document history and stories from which others can learn.
3. To help clarify your values before you pass them on.
4. Increase your own self-awareness and understanding.
5. Allows you to accept past mistakes and come to terms with your own mortality.
6. Gives you a sense of completion and accomplishment.

If those sound like goals that you are interested in, then you should consider making an ethical will a part of your estate plan. However, do not make the mistake of thinking that an ethical will can replace the rest of your estate plan.

Contact us to determine if an ethical will would accomplish your goals and align with your values.

Reference: Life Health Pro (February 9, 2015) "6 reasons every advisor needs an ethical will."

A $300 Million Estate Planning Lesson

In the last decades of Huguette Clark’s life, much of her $300 million fortune was spent and her valuable belongings sold. The best-selling book Empty Mansions is full of intrigue, deception and, ultimately, tragedy — when she finally died at 104 years old, Clark’s end-of-life wishes were challenged by relatives, and many of Clark’s millions went to lawyers instead funding a charity.

Fox Business recently published an interview with the book's author, Bill Dedman, titled "How an Elderly Heiress Lost Her $300 Million Fortune."

Huguette Clark was the heiress to a copper mining fortune worth $300 million. However, by the time she passed away, much of the money was gone and the rest of it was lost in the battle over Clark's estate. Despite Clark expressly not wanting to leave her fortune to her distant relatives, they got some of it anyway by challenging her will in court.

The full story is detailed in the book Empty Mansions.

Nevertheless, the Fox Business article contains a list of estate planning lessons for those who do not want to repeat Clark's mistakes.

The list of “mistakes” to avoid includes:

• Signing a will or trust is not a substitute for a full estate plan. Estate plans need to be comprehensive and flexible.
• Do not leave a fortune to a new charitable foundation. Clark wanted to leave her fortune to charity. However, because the charitable foundation was created in her will, that foundation was not represented in challenges to her will.
• If you plan to cut out your relatives, take the proper steps to make your estate plan more bulletproof. Clark left her will open to challenges from the very people she was trying to disinherit.
• Do not leave assets to your attorney or accountant. You should always have your estate plan prepared by people who do not have a stake in it.

This list contains very practical advice everyone planning his or her estate should heed, even if you do not have a copper mining fortune to pass along.

Contact the Voeller Law Firm to have your personal objectives accomplished by trusted attorneys.

Reference: Fox Business (February 19, 2015) "How an Elderly Heiress Lost Her $300 Million Fortune."

Failed Attempt to Avoid New York Estate Tax of Infant Inheritance

A Brooklyn Surrogate judge rejected a petition of an heir who sought to disclaim her infant daughter’s interest in a deceased grandparent’s estate for the purpose of avoiding a large estate tax liability.

The infant’s grandmother, Sharon Lindsay, passed away with approximately $6M in assets to be divided among her heirs – but no will. Under New York Law, with no will in place her assets were to be divided between her husband, son and daughter. However, the children's portion was liable for $200,000 in New York estate taxes.

In an effort to avoid those taxes, the son and daughter disclaimed the inheritance. That would have given their share of the inheritance to their father. It would not be subject to the estate tax because of New York's spousal inheritance.

However, the flaw in their plan was that the daughter, Kimberly Friedman, had an infant child who stood to inherit her mother's share under New York law. Friedman attempted to disclaim the infant's share. Nevertheless, a Brooklyn judge disallowed the disclaimer.

The infant will inherit a share of Lindsay's estate and will have to pay state estate taxes.

The Brooklyn Daily Eagle has more on the story in "Brooklyn judge blocks heir's attempt to avoid N.Y. tax on $6M estate."

The judge reasoned that it was not in the infant's best interests to allow the disclaimer. According to the judge, the infant was better off receiving the inheritance subject to the estate tax than possibly never receiving it at all. The problem: there was no agreement between the children and their father that they would someday inherit the estate through him.

This case highlights the importance of estate planning. Lindsay had not done any estate planning and it is possible the entire issue could have been avoided if she had an estate plan.

For complex family situations do not delay with your own personal responsibility, instead begin today by calling us up to set up a consultation appointment because we know what to do in complex situations.

Reference: Brooklyn Daily Eagle (February 20, 2015) "Brooklyn judge blocks heir's attempt to avoid N.Y. tax on $6M estate."

Sheide Collection is Princeton's Largest Bequest to Date

Beethoven's autograph, the 1455 Gutenberg Bible and an original printing of the Declaration of Independence are among the incredible haul that Princeton University has revealed as its largest-ever bequest.

Philanthropist William Scheide passed away a few months ago and left an astounding collection to Princeton University. Scheide’s collection was actually started by his grandfather and has been maintained at the university since 1959. It is worth approximately $300 million.

Recently, Princeton released to the public the contents of the collection, as reported by The Telegraph in "Emily Dickinson's chocolate pudding recipe and nine other highlights from Princeton's $300m book haul."

Other highlights from the Scheide collection include:

• A copy of the original Gutenberg Bible
• One of Beethoven's musical sketchbooks
• Three original Shakespeare folios
• Handwritten sheet music from Bach, Mozart, Wagner and others
• An autographed speech by President Lincoln
• General Grant's copybooks from the last weeks of the Civil War
• A copy of the Koran from 1700

Even if you do not have an amazing collection to leave to your favorite charity, consult an experienced estate planning attorney for ideas on how to leverage what you do have for good.

We have the knowledge and experience to guide you when it comes to charitable giving within your estate plan. Contact us today to set up a free consultation!

Reference: The Telegraph (February 18, 2015) "Emily Dickinson's chocolate pudding recipe and nine other highlights from Princeton's $300m book haul."

Estate Administration 101: Pay Applicable Taxes

When a loved one dies, the resulting tax issues must be handled.  The person to handle these issues is typically identified in the decedent’s will as executor of the estate.  However, if there is not a will, the probate court will appoint someone to be the administrator.

Nothing is certain but death and taxes, right? Which is why an estate executor has an important role.

An executor has two basic functions. The first is to marshal the assets of the estate. That is the executor must locate and document the assets. The executor must also then distribute the assets. This is actually three functions in one.

The executor must pay the debts of the deceased out of the estate assets, pay the taxes and then distribute the remainder to any heirs. Many new executors get tripped up on the taxes as they do not know what taxes need to be paid. Problem: the executors may be held liable for any tax deficiencies owed by the estate.

The Wills, Trusts & Estates Prof Blog recently published a helpful list of taxes for estate administrators titled "Tax Issues When Closing an Estate."

Here are some of the practical pointers included in this list:

• Filing a final 1040 - An income tax return needs to be filed for the last tax year the deceased was alive. This should cover the period from January 1 until the date of death.
• Filing the estate's income tax returns - If the estate earns money after the deceased passes away, the estate is responsible for paying income taxes on that money.
• Filing an estate tax return - If any estate tax is due, then an estate tax return must be filed.
• Miscellaneous - Many estates have several other tax issues to deal with that executors should consult with experts about.

If you are administering an estate and have any questions about taxes, contact us to see an experienced attorney about what you need to do. The fees for the attorney are a legitimate estate expense and can protect you from liabilities flowing from your role as executor.

Reference: Wills, Trusts & Estates Prof Blog (February 17, 2015) "Tax Issues When Closing an Estate."