Wednesday June 19, 2013
Tuesday June 18, 2013
Last week a Jackson County probate judge heard testimony in the battle over legal custody of Zoey Belcher, the now nine-month old daughter of Kansas City Chiefs linebacker Jovan Belcher, who killed the baby's mother, Kasandra Perkins, and then committed suicide on December 1, 2012. As is expected in situations where parents fail to leave any written instructions should their minor children end up without a mother and a father, maternal and paternal factions have stepped in to seek custody, with each side claiming to have the most suitable guardian for the infant.
The good news is that the financial aspect of the battle was resolved a few months ago, when the two factions agreed to have a third party, Commerce Bank, act as conservator ad litem to manage and invest Zoey's inheritance. For more about the millions of dollars the child is expected to inherit, refer to Custody and Estate Battle Brewing Over Daughter of NFL Linebacker Jovan Belcher.
On the paternal side of the custody battle is Jovan Belcher's mother, Cheryl Shepherd of West Babylon, NY, and on the maternal side is Kasandra Perkins' cousin, Sophie Perkins of Pflugerville, TX, who Zoey has been living with since the fatal shootings. The attorney appointed by the probate court to represent the orphaned infant's best interests, Kansas City attorney Mark Styles, as well as a parenting coach called to testify as an expert during the three days of hearings ended up offering little guidance since each conceded that they believe both Shepherd and Perkins will make suitable guardians for the child. However, the expert stated that she believes it will not be in the child's best interest to split custody between each side of her family and instead the court should either appoint Ms. Shepherd or Ms. Perkins to serve as the sole guardian.
In the end, commissioner David Wheeler, who presided over the hearings, urged the two factions to come to a mutual agreement on who should serve as guardian by the end of the day on Wednesday, June 19. Otherwise, Wheeler said that he will be forced to decide what is in Zoey's best interest in order to bring the matter to a close.
Monday June 17, 2013
Just before midnight on Thursday, June 13, Washington Governor Jay Inslee signed EHB 2075 into law, heading off the payment of the first $13 million in estate tax refunds that were due to be sent the following morning. The refunds were owed to the estates of married couples who had used AB Trust planning to reduce their estate tax bill when the first spouse died before May 17, 2005 (the date Washington's current estate tax laws went into effect) and the second spouse died after this date. The bill overturns a 2012 state Supreme Court decision which held that the Department of Revenue should not have been collecting taxes in these situations. Since this part of the new law applies retroactively to the estates of decedents who died on or after May 17, 2005, many expect this provision to be challenged in the state courts.
Aside from staving off the payment of estate tax refunds estimated to total $160 million over the next two years, EHB 2075 makes the following changes to Washington's estate tax laws which will take effect on January 1, 2014:
- Indexes Washington's current $2 million estate tax exemption for inflation on an annual basis.
- Offers an estate tax deduction of up to $2.5 million for certain family-owned business interests the values of which do not exceed $6 million.
- Increases the estate tax rates on the top four estate tax brackets as follows:
- Washington taxable estates of at least $4 million but less than $6 million: rate increases from 17% to 18%
- Washington taxable estates of at least $6 million but less than $7 million: rate increases from 18% to 19%
- Washington taxable estates of at least $7 million but less than $9 million: rate increases from 18.5% to 19.5%
- Washington taxable estates of at least $9 million: rate increases from 19% to 20%
EHB 2075 anticipates the possible state court challenge to the AB Trust provisions of the new law, stating in Sec. 12: "If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."
Wednesday June 12, 2013
Earlier this week I wrote about shock jock Howard Stern's new $52 million ocean front digs located in Palm Beach, Florida: Is Howard Stern Moving to Palm Beach to Avoid New York Income Taxes and Estate Taxes? The first estate planning lesson we learned from Howard's purchase is all of the tax benefits he and his wife will receive by becoming Florida residents versus remaining New York residents. It turns out that Howard's purchase also teaches another valuable estate planning lesson about trusts - while deeds to real estate list the owner in the local public records for all the world to see, if done correctly, a "secret trust" can be established to keep the person who created the trust that owns the real estate a private family matter.
In Howard Stern's case, the home was purchased by the "601 North County Road Revocable Trust u/a/d April 15, 2013." The trustee of the trust listed in the deed is Ronald S. Kochman, a West Palm Beach attorney who has a reputation for working with the rich and famous. Thus, while the media can speculate that Howard Stern purchased the property described in the deed, no one can really know for sure, can they?
My firm often works with clients who for one reason or another don't like the fact that their names are plastered all over the public records as the owner of a particular piece of real estate. In these cases, a separate revocable living trust can be established with an outside third party as the trustee for the sole purpose of owning the property. Ideally a new property would be purchased in the name of the anonymous trust, à la Howard Stern, which will totally keep the identity of the buyer a secret. But existing properties can also be transferred into a secret trust. While the current owners would sign the deed transferring the property into the trust, once the new deed is recorded and the property appraiser's information is updated, only someone who knows how to research deeds would potentially be able to figure out who actually owns the property.
