Archive for Estate Planning
WASTED WEALTH: $40 MILLION AND NO WILL
Roman Blum died last year in New York at the age of 97 with $40 million worth of assets. At first glance, that sounds like a wonderful way to leave the world. However, Mr. Blum passed away without a will or any other indication of who he wanted to receive his fortune. He also was a Holocaust survivor, and it appears that his unique history died with him
Mr. Blum left behind enough assets to really make a difference in the world. If he had planned, he would have had many options to improve the lives of others by making charitable contributions or leaving money to specific individuals. Unfortunately, without a plan or any obvious heirs (Mr. Blum died without a spouse or children), the $40 million may end up going to the state of New York rather than to the causes or people Mr. Blum cared about.
Perhaps the most tragic part of Mr. Blum’s failure to plan is that he died without preserving his life wisdom. Mr. Blum’s friends and acquaintances gave the media a rough timeline of his life, but no one seemed to know his exact experience during the Holocaust. He earned his fortune buying and developing property, but it does not appear that he ever shared his secret to success.
If you know anyone who has wealth to share with the world, whether it is assets or life wisdom, encourage them to plan before it is too late. A counseling-oriented estate planning attorney can help to preserve their individual legacy and ensure their wealth passes according to their wishes and not the state’s.
For more on Mr. Blum, see: http://www.nytimes.com/2013/04/28/nyregion/holocaust-survivor-left-an-estate-worth-almost-40-million-but-no-heirs.html?pagewanted=all&_r=0
ESTATE PLANNING ISSUES FOR UNMARRIED AND SAME-SEX COUPLES
New state laws allowing same-sex marriage and two pending Supreme Court rulings on the subject have brought to mind the special estate planning issues faced by same-sex and other unmarried couples. Marriage comes with important legal rights and benefits that are not automatically provided to all romantic partners.
For example, the state of Florida has a default estate plan for every resident who dies without a will or trust. If you get married, this default plan is automatically adjusted; the primary beneficiary of your property changes immediately from your closest blood relatives to your new spouse. If you are unmarried, on the other hand, the default plan does not give your significant other any of your property, no matter how long or serious your relationship.
Another big area of concern is making sure your unmarried partner has access to you if you are hospitalized and that he or she can participate in the decision-making process if you are hurt or disabled. Again, the law does not give any automatic rights to couples unless they are married. This lack of rights can cause significant emotional distress when something happens to one partner and the other is left feeling helpless.
The good news is that the issues described above can be addressed through a comprehensive estate plan. A trust can give your unmarried partner the same benefits as, and potentially more control than, they would get as your spouse under Florida’s default estate plan. Ancillary planning documents such as powers of attorney and designations of health care surrogate will allow you to empower your significant other to make medical and financial decisions on your behalf. If you are interested in learning more about these documents, you are welcome to attend one of our Truth About Estate Planning workshops.
MAY IS ELDER LAW MONTH!!
May has been declared to be National Elder Law Month and Older Americans Month. We think that makes this the perfect time to discuss how we and other elder law attorneys can serve “older Americans” (defined as those who are at least 60 years of age).
What is Elder Law?
Elder law addresses the needs of the elderly, the disabled, and their families. This includes planning for future age- and disability-related issues, such as how to safely remain in the home or placement in a long-term care facility. Specifically, elder law attorneys help clients secure peace of mind through estate planning, disability planning, and planning involving government programs such as Medicaid and Veteran’s Administration benefits. We also handle situations where it either has become too late for planning (due to a disability or death), as is common in guardianship and probate cases, or when a plan is being challenged.
More than Documents and Litigation
Because of the many different government programs and legal options that may be available to clients, elder law attorneys take a comprehensive approach to planning. Every client will have a different situation, usually with multiple issues to be addressed and more than one set of laws and rules to consult.
As a result, elder law attorneys spend a significant amount of time with older individuals and discuss extremely personal preferences and fears. This creates an opportunity for us to be a resource to our clients. By getting to know other people in our community who provide services to older Americans, such as independent and assisted living facilities, home health care providers, hospice care providers, and even other attorneys, we can give our clients practical as well as legal guidance and counsel them every step of the way.
FIRM UPDATE: 2013 ANNUAL CLIENT MEETING
Our first Annual Client Meeting (ACM) in our new location was a huge success! The client families who attended enjoyed hors d’oeuvres, wine, and a tour of our new space. We did discuss business while sampling the food; for example, the major changes in estate tax law brought about by the American Taxpayer Relief Act of 2012. This new law was passed by Congress at the beginning of this year and will affect some of our clients’ estate plans.
The ACM is a key ingredient in our estate planning process. Every year, we meet with our client families as part of our formal estate plan maintenance program. We tell them about changes in the law and they tell us about changes in their lives. Annual Client Meetings help us do a better job and ensure that our clients have plans that work!
GUN TRUSTS: ANOTHER FACET OF ESTATE PLANNING
We have been getting a lot of questions about “gun trusts” lately, especially with Congress and the media focused on potential gun control legislation. Holding firearms within trusts has become necessary and desirable due to the strict rules contained in the National Firearms Act (NFA) regarding certain types of firearms.
Firearms are truly a unique type of property; they can be very valuable, whether monetarily, sentimentally, or both. They are also dangerous, as recognized by the NFA. These characteristics of guns, as well as the strict regulations they may be subject to, mean that it is essential to properly plan for their ownership and transfer.
A “gun trust” can, if done correctly, address the issues of owning firearms during your life and passing them on to your loved ones after you are gone. However, just like other types of trusts, you should beware the inexpensive, “bare bones” version from an attorney who asks you only a few questions and just fills in a form.
The actual language of the trust is very important for compliance with the NFA. Also, proper counseling is necessary so that you can consider and discuss topics such as who should act as successor trustee (he or she will have physical possession of your firearms) and whether you should require your beneficiaries (who will use or receive the firearms) to get training beforehand.
Because we believe in comprehensive estate planning, we are happy to create trusts which hold firearms for our clients. However, we will only do “gun trusts” as part of the Cramer Law Center process to ensure that we are able to provide proper counseling and draft a trust that will work for you and your family.
We have been getting a lot of questions about “gun trusts” lately, especially with Congress and the media focused on potential gun control legislation. Holding firearms within trusts has become necessary and desirable due to the strict rules contained in the National Firearms Act (NFA) regarding certain types of firearms.
Firearms are truly a unique type of property; they can be very valuable, whether monetarily, sentimentally, or both. They are also dangerous, as recognized by the NFA. These characteristics of guns, as well as the strict regulations they may be subject to, mean that it is essential to properly plan for their ownership and transfer.
A “gun trust” can, if done correctly, address the issues of owning firearms during your life and passing them on to your loved ones after you are gone. However, just like other types of trusts, you should beware the inexpensive, “bare bones” version from an attorney who asks you only a few questions and just fills in a form.
The actual language of the trust is very important for compliance with the NFA. Also, proper counseling is necessary so that you can consider and discuss topics such as who should act as successor trustee (he or she will have physical possession of your firearms) and whether you should require your beneficiaries (who will use or receive the firearms) to get training beforehand.
Because we believe in comprehensive estate planning, we are happy to create trusts which hold firearms for our clients. However, we will only do “gun trusts” as part of the Cramer Law Center process to ensure that we are able to provide proper counseling and draft a trust that will work for you and your family.
DPOA DANGER: YOU CAN’T EVEN TRUST YOUR GRANDCHILDREN
A general durable power of attorney (“DPOA”) is a document that gives a person you name (your “agent”) the authority to manage your affairs and do almost anything you could do personally. Your agent is supposed to act for your benefit, doing things such as using your money to pay your bills. Unfortunately, it is easy for an untrustworthy agent to abuse the power you give him under a DPOA.
A recent news story from Colorado is a perfect illustration of a DPOA gone wrong. An elderly couple gave their grandson, a married adult man, a DPOA. They had moved into an assisted living facility and presumably just wanted someone they trusted to help out with their finances. We see this all the time with our aging clients.
Although the couple’s grandson may have been their most trusted relative, he did not deserve their confidence. The grandson and his wife, in just eighteen months, spent all of the couple’s money and ran up bills on their credit cards. They used the stolen funds, not to take care of the couple, but to pay for their own living expenses, travel, and shopping.
Similar abuses of authority are possible in Florida due to the lack of supervision over agents acting under a DPOA. Unlike the trustee of a trust or the guardian of an incapacitated person, an agent under a DPOA does not have to account to anyone. This creates an opportunity for agents to exploit their often elderly and usually unaware victims.
The DPOA is not entirely evil; it can be useful as part of a comprehensive estate and disability plan. However, we at Cramer Law Center do not let our clients sign a DPOA without proper consideration and counseling. We may also recommend safeguards, such as holding the DPOA in escrow until it is needed, to deter potential abuse.
ANOTHER ESTATE PLANNING HORROR STORY FROM THE REAL WORLD – SECOND MARRIAGE MISTAKE
We recently had a client inquire about challenging his stepmother’s will. Our first thought, and perhaps yours, was that the desire to challenge came from a history of animosity between the client and his stepparent, something we see all too frequently. However, in this case, the client was actually fond of his stepmother – that is, until she died with a will that left all of his father’s assets, including the family home, to her children.
Our client’s father (we’ll call him “Bill”) made a classic second marriage planning mistake: his only estate plan was a simple “I Love You” Will that left everything to his second wife, if she survived him, and then to his children. Bill’s intent, according to our client, was to take care of his wife first, and then his kids. His plan may have worked in a first marriage where Bill and his wife only had children with each other (but even then, only if the wife did not remarry before her death and had an identical will).
However, what actually happened is that when Bill died before his second wife, she received his assets with no strings attached. She could have made an estate plan that included Bill’s children as well as her own, but she was under no legal obligation to do so. Therefore, we had to advise our client that a will challenge would be fruitless because he and his siblings had no legal right to their family home or to any of the other property their stepmother received from their father.
We were truly sorry to have to deliver such bad news to our client. But what makes it worse is that Bill easily could have achieved his true objective of taking care of his wife for the rest of her life, and then leaving an inheritance for his children, with proper trust planning. Unfortunately, in second marriage situations, what an “I Love You” Will really says is: “I Don’t Care About My Kids.”
“I LOVE YOU” WILLS – THE PERFECT PLAN FOR COUPLES?
Still looking for that perfect gift for your valentine? If so, you may be thinking an “I Love You” Will – really anything with those three little words in it – might do the trick. But what exactly is an “I Love You” Will?
When wills and trusts lawyers talk about “I Love You” Wills, we are referring to a simple will that leaves everything first to your significant other and then to your children. The name comes from the fact that we usually design these wills in pairs for happy couples who love each other and the responsible adult children that they had together. If you are lucky enough to lead such an idyllic life, an “I Love You” Will might be a suitable estate plan for you.
However, there are many issues common to the rest of us that are not adequately addressed by an “I Love You” Will. For example, such a will does not make any plan for the possibility that your significant other or one of your children will be disabled and/or receiving government benefits at the time of your death. An “I Love You” Will also does not address who will care for your minor children, or how that care will be paid for, should something happen to you. In fact, it doesn’t even address how you would like to be taken care of if you were to become mentally disabled.
Planning your estate can be a wonderful gift to your loved ones – and yourself – but you should consult an attorney to make sure you are getting true peace of mind and not a false sense of security. If you would like more information on “I Love You” Wills or any other type of estate plan, we are here to help.
WHY SHOULD I PLAN NOW THAT I’M NOT WORRIED ABOUT PAYING AN ESTATE TAX?
As discussed in our last newsletter, the New Year brought with it significant changes to the estate tax law. Without these changes, individuals with estates of $1,000,000 or more would have been subjected to estate and gift taxes. Now, only estates over $5,250,000 (or $10,500,000 for married couples) will be taxed.
So, you are asking, why plan? Here are just three of many reasons:
1. Asset Preservation
Estate planning can help to protect both your current assets, and also the assets you leave for your children and grandchildren, keeping them in the family for many years into the future and making sure they are used for good purposes. Failure to take advantage of available protections could mean that your hard earned assets end up being lost or wasted. Asset preservation is a key benefit of estate planning that should not be ignored.
2. Disability Planning
Proper estate planning also makes sure that you and your loved ones are taken care of in the event that you become disabled. An annual review, such as we provide through our annual maintenance and updating program, is key to ensuring that your disability planning documents are up to date when/if you ever need them.
3. Planning to make a difference
Several clients are asking about ways they can use their wealth to make a difference in their community or in the world. Again, estate planning provides opportunities and solutions. A well-drafted estate plan can teach children and grandchildren how to be responsible with significant sums of money. It can also reach farther through philanthropic giving (which can be rewarding personally, as well as financially, through income and/or estate tax reduction.)
Of course, these are just three ideas out of many that could provide benefits to you and your family. We are here to help.
CONTESTED GUARDIANSHIP: NOT EVEN THE RICH AND FAMOUS ARE SAFE
While even the simplest guardianship is an expensive, lengthy, and public undertaking, a contested guardianship can be much worse. A contested guardianship is a case in which there are multiple interested persons (usually family members) with different ideas of what is best for the incapacitated person (the “ward”). As you might imagine, contests like this can drive up the financial and emotional cost of the proceeding, delay results, and air a family’s “dirty laundry” in open court.
A recent celebrity example of a contested guardianship is Fredric von Anhalt’s guardianship (called a “conservatorship” in California) over his wife Zsa Zsa Gabor. Gabor’s daughter asked the court to appoint her as her mother’s guardian instead, accusing her stepfather of sedating and isolating her mother and mishandling her finances. All of this and more has been discussed in court, and is memorialized in the public records and gossip columns. Von Anhalt, who appears to have generally taken good care of his wife, has had to justify all his actions and pay for his defense.
As in the Gabor case, the point most often in dispute in a contested guardianship is who is best suited to take care of the ward as his or her guardian. This issue is usually resolved by the court at the time it determines that the ward needs a guardian. However, a serious debate between family members over who should serve as guardian can extend a hearing that should take fifteen minutes into a trial that spans over several days. Additionally, challenges can continue throughout the guardianship, like they have in the Gabor case.
The good news is that everyone, rich and famous or otherwise, can avoid guardianship altogether with proper planning. A comprehensive estate plan may include documents such as a revocable living trust, a designation of health care surrogate, and a power of attorney that can serve as an alternative to guardianship, when well-drafted. The plan also may include a designation of pre-need guardian, which allows you to name the loved one(s) you would want to be your guardian, if a court should ever decide you need one.
