San Antonio, TX Estate Planning

Will Changes on Deathbed Can Spark Suspicion

The woman convinced party-boy Proskauer partner Harry Goldsmith to marry her as he lay dying of pancreatic cancer — then brought a team of lawyers to his deathbed to rewrite his will, spurned spouse Debra Karlstein claims in a Manhattan Surrogate’s Court lawsuit.

If there ever was a real-life tale of a wicked stepmother, this could be it.

As I have noted before, whenever someone gets remarried and changes his estate plan to favor his new wife, there can be bitter feelings between the new wife, the old wife and the children. This is especially true if the new marriage took place while the deceased had cancer and the estate plan was changed in the hospital.

Such is the allegation regarding the estate of Harry Goldsmith, as recounted in a New York Post article titled "New gal 'stole' kids $1.5M inheritance: ex."

Goldsmith was a prominent trial attorney in New York. In 2010, he divorced his wife with whom he had three children. He started dating another woman in 2012.

Goldsmith was then diagnosed with pancreatic cancer and married the woman he was dating. Three months later, while Goldsmith was in the hospital, his ex-wife alleges that the new wife brought lawyers to the hospital to rewrite Goldsmith's estate plan in a way that favored herself and effectively deprived his own children of their rightful inheritance.

Whether or not the allegations turn out to be true, this case highlights that even attorneys can make legal mistakes.

If Goldsmith wanted to rewrite his estate plan, he should have done so immediately after getting remarried. This was especially true as he was diagnosed with a potentially terminal disease and did not have time to wait.

Reference: New York Post (November 10, 2014) "New gal 'stole' kids $1.5M inheritance: ex"

Sorry, You Can't Disinherit Your Spouse!

In general, the concept of testamentary freedom makes a person free to dispose of their property as they see fit when they die. However some decisions may be held to be against public policy and that freedom may be limited. Here are some of the key controversial estate planning decisions that may garner limitations and ignite an expensive legal battle.

With each person's will being unique to their own wishes, there are some pretty interesting requests that end up in writing. But some of these requests are a little too controversial to hold up in court.

Some people attempt to control the behavior of others through the provisions in their wills and others seek to punish people for slights or out of spite. Most of the time, however, courts will enforce these provisions.

On the other hand, some things are so controversial that a court might not enforce them.

Recently, the Wills, Trusts & Estates Prof Blog published a list of things courts generally do not allow in an article titled "Controversial Will Provisions."

The list includes:

• Disinheriting a Spouse - The law does not allow you to disinherit a current spouse. Instead it provides for a spousal elective share. That means that a spouse can elect to either take what was left to him or her in the will or they can take a fixed percentage of the assets in the estate.
• Encouraging Divorce - Inheritances cannot be conditioned on someone getting a divorce. Courts view any such provisions as anti-marriage and against public policy.
• Limiting Marriage Choice - Although some courts have allowed it, generally you cannot attempt to force another person to only marry other people of a particular religion.

If you have questions about anything that you can or cannot do with your will, be sure to talk to an experienced estate planning attorney about them.

Reference: Wills, Trusts & Estates Prof Blog (November 13, 2014) "Controversial Will Provisions"

Protect Your Estate Plan through Document Storage

How important [is it] to preserve one’s original estate planning documents? Where should one keep these documents?

If you've gone to all the hard work of preparing your will and establishing an estate plan, the last thing you want to do is lose the documents.

Before a will can be submitted to probate, the original will must be located. If the original will cannot be found, it is assumed to have been revoked if the deceased was the last person known to have been in control of it.

Why?

This is because a will can easily be voided by tearing it up or throwing it in the fire. The law assumes that the deceased did something like that. This makes the safe storage of wills extremely important. The question then becomes where to store your will?

In an article titled "Estate Planning: Importance of original estate planning documents," Lake County News suggests that a bank safety deposit box is a good place to store your original will and other estate planning documents.

While that is true, it comes with a caveat.

Someone else needs to be on record at the bank having lawful access to the box. Otherwise, the bank will require a court order to grant access.

Ask your estate planning attorney where he or she suggests you store your important estate planning documents. Some attorneys are happy to keep the originals for their clients, while other attorneys are reluctant to assume that liability.

If your attorney does not provide that service, then he or she likely will know a safe place in your area.

Reference: Lake County News (November 15, 2014) "Estate Planning: Importance of Estate Planning Documents"

Blended Family? Ways to Avoid Conflict

In unions of those who marry twice, about 65 percent include children from prior marriages, according to the National Stepfamily Resource Center. That can complicate the transfer of brokerage accounts, real estate and personal possessions. Throw in resentments over divorces and rifts between stepchildren and step-parents, and the situation is ripe for legal battles.

If you have a blended family, you'll need to tread carefully when it comes to your estate planning.

When a parent with adult children remarries, it is often difficult to devise an estate plan that pleases both the new spouse and the children. Both the new spouse and the children can easily feel slighted. This is particularly true if there is other tension between them such as bitterness over the marriage itself.

This has led to a lot of fighting over estates.

Recently, Bloomberg published a list of ways to help minimize the chances of these fights in an article titled "Ways That Blended Families Can Avoid Bitterness."

The Bloomberg list includes:

• Focus on Fairness - An estate plan needs to be fair to both the new spouse and the children from the previous marriage. Neither should feel they have been cheated out of a rightful inheritance. Look for ways to provide for the spouse while at the same time ensuring that the children receive a timely inheritance.
• Trust in Trusts - Trusts can be an excellent way to ensure a steady stream of income for the spouse, while leaving the remainder to the children after the spouse passes away. However, if the children and the spouse are close together in age, it might be necessary to ensure that the children receive some of the income from the trust more quickly.
• Keep Documents Updated - When you get remarried make sure the beneficiaries on retirement accounts and life insurance accounts are up to date.

If you have any questions about minimizing conflicts over your estate in your blended family, schedule an appointment to speak with an experienced estate planning attorney.

Reference: Bloomberg (November 10, 2014) "Ways That Blended Families Can Avoid a Wealth of Bitterness"

Can I Really Lose Control of My Estate?

Every decision you make, whether personal, financial, or legal, should be designed to maximize your control over your decisions – and your assets. Don’t give up control; you will never be glad you did.

One part of estate planning is determining who will control your assets when you are gone. But what about when you are still alive?

If you have earned your own wealth, then the last thing you want to do is turn that wealth over to someone else while you are still living and competent to handle the wealth. However, sometimes people do exactly that with their estate planning choices.

For example, people will often give a family home to a child or name the child as the joint owner in an effort to avoid probate.

Bad idea.

As Forbespoints out in a recent article titled "Never Give Up Control When You Create Your Estate Plan," when someone does that, they lose control of the home. If they want to do anything with it, they will need permission and can be denied.

The article also points out that many people are afraid to get a trust and name someone besides themselves as the trustees. Why? Because they think they will lose control of the assets in the trust.

This might be the case if the trust is some form downloaded from the Internet, but such is not the case with a properly drafted trust. If the trustee is not doing what you want, you can fire the trustee and appoint someone else.

When creating your estate plan, talk to your estate planning attorney about control. Ask who will be in control of each estate planning vehicle.

If control is important to you, make sure that you are the one who keeps it! Contact us to learn how to properly draft your trust in order to maintain control of your assets within your estate plan.

Reference: Forbes (November 13, 2014) "Never Give Up Control When You Create Your Estate Plan"

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"