San Antonio, TX Estate Planning

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."

Dispute over Ernie Banks’ Will

A dispute between the family of Ernie Banks and the woman who cared for him during his final years intensified Monday with his twin sons asserting that the caretaker coerced the Chicago Cubs baseball great into signing a new will giving her all his assets.

Ernie Banks, a.k.a. “Mr. Cub”, suffered a protracted illness before his death. During that time he was cared for by a friend, Regina Rice. Initially, Banks' family praised Rice and thanked her for looking after the baseball player in his last months. However, it did not take very long after the funeral for the family and Rice to get involved in two disputes.

First, Banks' widow went to court to stop Rice from having Banks' remains cremated. For now that might be a moot point as no one claims to know where Banks' body is currently located.

The second dispute centers on some estate planning documents Rice allegedly had Banks sign last October. As well as making Rice his power of attorney at that time, Banks also signed a new will to leave his entire estate to Rice. His wife and children were specifically cut out of any inheritance with the only reason given that they would know why.

Banks' sons, however, through their attorney claim not to know “why” and claim that Rice coerced Banks into signing the will when he was too sick to do so.

ESPN Chicago reported the story in a recent article titled "Suitability of Banks' caretaker faulted."

This case is still in its early stages. Accordingly, it is too soon to speculate how it might turn out.

Unfortunately, this is not an unusual story. Anytime an elderly, ill person rewrites a will to exclude family, the will is likely to be challenged.

To avoid missteps, especially when it comes to changing your estate plan, be sure to contact us for guidance on how you can avoid the courthouse front door.

Reference: ESPN Chicago (February 16, 2015) "Suitability of Banks' caretaker faulted."

Business Succession Dos & Don’ts from Sports Teams

While some might think family-owned sports teams are more plagued than Boston was by the 86-year “Curse of the Bambino,” I encourage you to look past curses to investigate causes. Identify potential estate and financial planning challenges your business might face, and deal with them. You’ll have better odds your family ends up on the winning side.

What can we learn from sports teams when it comes to passing on the family business? As it turns out, there are several good and bad examples of business succession in the sports world.

Recently, we have seen the forced sale of the Los Angeles Clippers because the owner's racist rant came to light. The Los Angeles Dodgers were recently sold in part because of the bitter and protracted divorce of its owners. Now, the owner of the New Orleans Saints is in a competency dispute with his family that could force the sale of the team.

In recent memory, both the Chicago Cubs and Miami Dolphins have been sold because the owner passed away without properly planning for how estate taxes would be paid.

Forbes has more on these situations in an article titled "Another Family Sports Team Failure, Another Lesson Learned."

The article also includes lessons to be learned from sports teams for other family businesses, which include:

• Poor planning outside of the business can cause the business to fail. This is especially true if the failure to plan for estate taxes causes the sale of the business.
• Family businesses can thrive with good planning. Both the New York Yankees and Pittsburgh Steelers have recently survived as family owned businesses after the owner passed away.
• No matter how much planning you do, bad things can still happen. The key thing is to plan well enough that the damage from any issues is contained.

Without question, one of the wisest moves you can make is to work with an experienced estate planning attorney. He or she has “been there and done that,” when it comes to the successful transfer of the business and preservation of family relationships in the process.

We have the expert knowledge and experience to guide you in formulating a solid plan for protecting your business through diligent planning. Read more about protecting your business here.

Reference: Forbes (February 16, 2015) "Another Family Sports Team Failure, Another Lesson Learned."

Leaving a Legacy through Private Foundations

 
So you’ve got a private foundation. Have you thought about who would run it after your death? Peter Karoff, founder of The Philanthropic Initiative, an advisory arm of the Boston Foundation, has some advice for donors and heirs: start planning.

For those who want to make charitable giving a part of their estate plans, private foundations provide a way to make that giving last. With private foundations wealthy families and individuals can create a fund of money that can be invested with the proceeds going to good causes for generations.

When the founder passes away, however, many private foundations have floundered with the successors unable to maintain them.

Recently, Forbes published some tips on making sure that does not happen to your foundation in an article titled "Do's And Don'ts of Passing Down A Private Foundation."

The list includes:

• Write a mission statement - With a mission statement, successors have a document that tells them what the foundation is supposed to do. Consequently, the statement can be referenced should there ever be any questions about the foundation’s objectives.
• Pay attention to family dynamics - Not every family member will be interested in participating in the foundation.
• Turn to experts - If you need help, seek out someone with expertise.
• Make connections - Network with other philanthropists.
• Plan for successions - Do not just name a board. Also name who will succeed those board members.

Family foundations can be an excellent way to continue your charitable legacy long after you are gone. There are other alternatives, however, that may be more appropriate for your unique circumstances. For example, donor-advised funds are less expensive to create, enjoy reduced scrutiny from the IRS and may provide greater tax deductions for the donors.

In the end, turning to “experts” is probably the best advice from this article. Accordingly, contact us to receive experienced legal advice as we help you navigate the rather complex waters.

Reference: Forbes (February 11, 2015) "Do's And Don'ts of Passing Down A Private Foundation."

Which Trust Is Best for You?

Trusts are a legal entity managed by a trustee for the benefit of others. Beyond that, however, trusts can get murky as there are many different types of trusts that are sometimes confusing to non-experts. Which one is the best option for you?

To help people overcome trust confusion, the Wills, Trusts & Estates Prof Blog recently published a short list of different types of trusts in an article titled "Choosing A Trust."

The list includes:

• Credit Shelter Trust - With this trust a spouse can leave everything to a surviving spouse in a will, but direct that everything be placed into the trust while maintaining the estate tax benefits.
• Clayton QTIP Trust - Similar to the more well-known QTIP trust, but if a QTIP election is not made, it acts like a credit shelter trust.
• Irrevocable Life Insurance Trust - These trusts are created to be the beneficiary of life insurance policies, which keeps the payout from those policies outside of the estate for tax purposes.
• Charitable Remainder Trusts - Directs that assets be paid to the beneficiaries for life with anything left over distributed to charity.

If you have questions about these or other types of trusts, call us today at 210-651-3851 or request a consultation with one of our experienced estate planning attorneys. We can help you select the type of trust that is best for your unique circumstances.

Reference: Wills, Trusts & Estates Prof Blog (February 13, 2015) "Choosing A Trust."

What Widows Need to Know about Estate Planning

The loss of a spouse creates different considerations for women than men as women are more likely to face financial challenges, according to a recent study. Here are some tips for addressing planning issues with recent widows.

Although both widows and widowers face estate planning challenges after a spouse passes away, studies show that single women are more likely to have financial difficulties than single men. This means that a widow's estate plan generally needs to be more flexible than a man's just in case the widow does experience financial issues in the future.

While estate planning for widows is often difficult, it is not impossible.

Recently, the Wills, Trusts & Estates Prof Blog published a list of planning tips for widows in an article titled "Planning Tips For Widows."

The list includes:

• Wait at least six months after a widow's spouse passes away to allow proper time for mourning.
• Financial accounts should be easy to access and flexible.
• Immediate needs should be addressed before any financial or estate planning.
• Do not be afraid to seek professional services such as counseling if needed.

If you are a widow needing help reevaluating your estate plan, contact us to seek experienced counsel for your estate.

Reference: Wills, Trusts & Estates Prof Blog (February 10, 2015) "Planning Tips For Widows."

Late Iowa Attorney Being Sued for Estate Settlement Fraud

The parents of a Hudson boy who died in a 2011 water skiing accident said they were bilked by their former attorney.

Attorneys and estate executors should be trusted to do what is right when they represent your estate or the estate of your loved ones. Unfortunately, this is not always the case.

A young man named Bodee Peterson died from injuries sustained in a water skiing accident in 2011. The family hired attorney David Alan Roth to press claims for the estate against the responsible party. A settlement was eventually reached.

The family is now alleging that Roth misled them about the amount of the settlement. Roth was to have set up annuities for Peterson's siblings, something he allegedly failed to do.

A surprise twist to the story? Roth committed suicide a few months ago.

Consequently, the Peterson family is pursuing its claims against his estate.

The WCF Courier has more of the story in an article titled "Bodee Peterson's parents file claim against Roth estate."

A key takeaway from this story is this: if you are overseeing a loved one's estate, it is very important that you hire the right attorney to pursue any claims that the estate has. In addition, stay on top of things. You should contact the attorney regularly so you know what is happening and make sure that the attorney is on top of things.

If you have questions regarding estate claims please contact us today to find answers and peace of mind.

Reference: WCF Courier (February 8, 2015) "Bodee Peterson's parents file claim against Roth estate."