Archive for December, 2012
AN ESTATE PLAN FOR SANTA CLAUS
What if Santa and Mrs. Claus decided to do an estate plan? Although they would doubtless be great clients, the actual plan could be challenging.
What is the size of the Claus estate? It is extremely hard to calculate, even for Mr. and Mrs. Claus. Their accountant merely shrugs when asked. Unless estate taxes are totally repealed forever, Santa has a tax problem. Santa’s toy making business is prospering. He has enough inventory to supply every child on earth with at least one toy each year. There are now over 6 billion people on earth, and if just half of those are children, and if Santa spends just $20 on each child, he is spending 60 billion dollars per year on Christmas gifts alone. Apparently this formal gifting program is not reducing the size of his estate nor his tax liabilities sufficiently since he’s continued to do this since the 4th century.
Another consideration for Santa’s estate plan will be caring for the hundreds of elves that work in his shops and are apparently totally dependent on his largess for survival. There are no known relatives to serve as guardians in the event of Santa and Mrs. Claus’s joint demise. And even if relatives can be tracked down, it is doubtful that they will have the wherewithal to care for so many dependents. We might want to consider starting a charitable organization that establishes homes, jobs, and caretakers for these magical little people.
Santa has also invested a lot of time, money, and love in his wild animal preserve. Besides the normal elk, caribou, and polar bears, Santa has successfully bred a unique species of flying reindeer and at least one with a light-emitting snout. It’s likely that several world zoos will be clamoring to add these animals to their collection, but it would be advisable for Santa and Mrs. Claus to make some of these decisions ahead of time, and use these charitable opportunities for further estate tax planning.
Obviously, death isn’t the only concern for the Clauses. If Santa were to be disabled by a collision with an aircraft, a fall from his sleigh on a fast take-off, or a gunshot wound from someone who mistakes him as a burglar, the business could be in trouble. Mrs. Claus has had her hands full taking care of the elves, and hasn’t had a lot of direct involvement with the toy making. It might be wise to pick some key elf employees from executive management who can be trained to take over. Perhaps an ESOP is appropriate, or a pre-negotiated buy-sell agreement. Due to his advanced age (approximately 1600), and the fact that he is overweight and smokes, life insurance is also unlikely – but should not be ruled out because of his overall good health and vitality.
One other issue to be considered is citizenship. Although we think of Santa as an American icon, he was actually born as Nicholas of Myra in Anatolia – which is now southwestern Turkey. Rumor has it that he met Mrs. Claus while watching the annual tree lighting at Rockefeller Center in New York. If Mrs. Claus is a U.S. Citizen, proper tax planning will require her to at least prepare a Qualified Domestic Trust.
Obviously, planning for Santa and Mrs. Claus will be a daunting task requiring our best efforts. Like Santa, our firm wishes you a “Merry Christmas to All”, Happy Holidays, and a Happy and Prosperous New Year.
Happy holidays from all of us at Cramer Law Center! We truly appreciate your support which has helped make this another year of steady growth for our practice.
We hope that everyone will be able to spend time with family and friends this holiday season. For parents with adult children, we encourage you to consider telling them about your estate plan. Most people avoid this discussion because it involves two sensitive topics: money and death. However, explaining your will or trust and your desires for final arrangements is one of the greatest gifts you can give your children. Making clear what you want, and why, will provide peace of mind all around.
Adult children may also wish to initiate this talk with their parents. We are happy to facilitate family discussions at our office for our clients. Anyone else needing a little help may find this article useful: http://www.forbes.com/sites/ashleaebeling/2012/11/21/generations-apart-talking-turkey-over-turkey/
We wish everyone a healthy and prosperous New Year! Please note: our office will be closed on December 24, 25, and 31, 2012 and January 1, 2013. We will be holding our year-end planning retreat on December 26, 27, and 28 and therefore will be unavailable except for emergencies.
DEFINITIONS OF FAMILY: YOURS VS. THE STATE’S
With the holiday season in full swing, you are likely thinking about and spending time with your loved ones, your “family.” Chances are, they are not all related to you by blood. Most of us have spouses, in-laws, stepchildren, stepparents, or even friends that we consider to be part of our family. Sometimes we are more tightly bonded with these people than with our actual blood relations.
Unfortunately, the state of Florida defines “family” much more narrowly for the purposes of intestate succession (who gets your stuff if you die without a will). Your current spouse is your closest family member under Florida law and will get everything if you have a “traditional” family. However, as soon as you get into a blended family situation – i.e. either you or your spouse had a child with someone else – things get messy. Your spouse will have to split your assets with your kids in the proportions dictated by the state, regardless of what you would have wanted. Stepchildren are left out altogether because they are not considered “family” unless you have legally adopted them.
Florida law’s preference for blood relatives can produce even less desirable results if you die without a spouse, children, or a will. We recently had a case where a man’s assets, primarily his home, were split between more than a dozen blood relatives (siblings, nieces and nephews), many of whom did not even speak to the decedent, rather than going to the few people, including his girlfriend of many years, who actually took care of him.
The state’s intestate definition of “family” is one size fits all, meaning that it often fits no one. If you don’t agree with the people that definition includes and, especially, excludes, you need to make your definition of family clear with a will or trust.