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Julie Garber

Julie's Wills & Estate Planning Blog


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Julie's Wills & Estate Planning Blog Becomes Common Sense Estate Planning Blog

Saturday May 31, 2014

Listen up Wills & Estate Planning Blog readers - my blog has moved to a new location with a new name: Common Sense Estate Planning Blog. My About.com blogs aren't going away, they're just being transitioned into articles that will still be available on my Wills & Estate Planning website. So, if you want to keep up with what's going on in the estate planning world, like the recent changes that were made to Maryland estate tax laws, then hop on over to my new blog by following the link above.

Why Does it Take So Long to Receive an Inheritance?

Wednesday May 28, 2014

For certain beneficiaries of an estate or trust (you know who you are), the first question they want answered is when they can expect to receive their inheritance - cash is preferred, but a check will do just fine, thank you. What these beneficiaries don't realize is that handing out the inheritance checks is the very last thing on the to-do list of their Personal Representative or Successor Trustee. Why? Because there are multiple steps that a Personal Representative or Successor Trustee must take - including settling the final bills of the decedent, getting appraisals, filing all required tax returns (both income tax returns and death tax returns, if applicable), paying any taxes that are due, and all the while keeping up with the ongoing expenses of settling the estate or trust (utilities and maintenance for real estate, appraisal fees, accounting fees, and legal fees) - before the Personal Representative or Successor Trustee can even consider handing out the inheritance checks to the beneficiaries.

I know that's not what you want to hear, but that's the reality of settling an estate or trust - there are multiple steps involved that take a lot of time. And while modern technology has helped to speed up some of the process, in the end it is a tedious and time-consuming job that the Personal Representative or Successor Trustee must oversee from start to finish. And if the Personal Representative or Successor Trustee tries to cut corners or skip a step, then they can be held personally liable for not doing their job.

So when can you expect to receive your inheritance? Not for at least several months to a year, or, in some cases, a few years.

Photo: New Anti-Counterfeit 100 Dollar Bills, Mark Wilson/Getty Images News/Getty Images

Does Your Child Need a Discretionary Lifetime Trust?

Wednesday May 21, 2014

One of my roles as a former estate planning attorney and current trust officer for a private bank is to insure that my clients' estate plans meet their ever-changing estate planning goals. One question that private bank clients bring up on a frequent basis is how they can protect the inheritance that their child will receive from the child's spouse. Often times after discussing the client's concerns this goal is the desired regardless of the client's relationship with their son-in-law or daughter-in-law - in other words, the client may have a great relationship with their child's spouse, but in the end the client wants to insure that their hard earned money stays in their blood lines and doesn't get in the hands of another family.

So how can this goal of keeping family money in the family be accomplished? There are several different options, but the one that has the most success is establishing a discretionary lifetime trust for the benefit of the child with an independent third party, such as an attorney, accountant or bank, serving as the Trustee. This insures that the child will have access to their inheritance if they truly need it, but if they don't then the client can insure that what's left will pass to the child's children (the client's grandchildren) instead of to the child's spouse.

If you're interested in learning more about how your children and grandchildren can benefit from a discretionary lifetime trust, which can be designed as a dynasty trust, then talk to your estate planning attorney.

Photo: Divorced wife shredding wedding photo, Peter Dazeley/Stone/Getty Images

Where Should You Retire? You Just May Be Surprised at the Results of a New Survey

Wednesday May 14, 2014

In a recent survey conducted by Bankrate, Florida didn't rank among the top ten best U.S. states in which to retire. In fact, Florida didn't make the top twenty and barely made it into the top thirty - Florida ranked a lowly #39. Yes, according to Bankrate, there are only eleven states where its worse to live as a retiree than Florida, here they are ranked from #40 down to #50: Connecticut, Kentucky, Maryland, Oklahoma, Louisiana, Alabama, Hawaii, Arkansas, Alaska, West Virginia, and, the worst state for retirees is: New York.

So what criteria did Bankrate use to compile its list that would cause Florida to fall so low? All 50 U.S. states were ranked according to cost of living, crime rate (violence and property crimes), health care quality, state and local tax burden, personal well-being, and weather. Using these factors, here are the top ten states in which to retire according to Bankrate's survey:

  1. South Dakota
  2. Colorado
  3. Utah
  4. North Dakota
  5. Wyoming
  6. Nebraska
  7. Montana
  8. Idaho
  9. Iowa
  10. Virginia

South Dakota? Yes, despite its annual biker rally in Sturgis, South Dakota ranked #1 on the Bankrate list due to its low crime, access to good health care, and absence of a state income tax - and, although this factor wasn't considered, South Dakota doesn't collect a state death tax either. This list may very well prompt some to reconsider their retirement plans.

Photo: Sturgis Rally draws bikers to South Dakota, by Scott Olson/Getty Images News/Getty Images

New York Estate Taxes, Where to Store Your Will, Do it Yourself Wills Top Most Read Wills & Estate Planning Blogs in April 2014

Tuesday May 13, 2014

Changes made to New York estate taxes, finding a good place to store your will, and a do it yourself will disaster in Florida topped the most read Wills & Estate Planning Blogs in April 2014:

Top 5 Blogs Posted in April 2014

  1. New York Estate Tax Exemption Increases More Than Two Fold And Won't Stop There
  2. How Will Your Family Find Your Will?
  3. Another Do it Yourself Will Disaster Makes It All the Way to Florida Supreme Court
  4. Obama's 2015 Budget, Florida Personal Representatives, Financial Transaction Tax Top Most Read Wills & Estate Planning Blogs in March 2014
  5. Say Goodbye to Minnesota's Gift Tax, Hello to Higher Estate Tax Exemption

Meanwhile, the most read Wills & Estate Planning Blogs in April 2014 that were posted at any time were a lot different from those that were the most read in March 2014:

Top 5 Blogs Posted at Any Time

  1. 2013 Estate and Trust Income Tax Brackets
  2. Estate Planning Mistakes Revisited - Do it Yourself Wills Don't Work!
  3. 2014 Estate and Trust Income Tax Brackets
  4. Contents of Farrah Fawcett's Revocable Living Trust Revealed
  5. Does Mississippi Have an Estate Tax?

Photo: New York State Capitol, Albany, by VisionsofAmerica/Joe Sohm/Photodisc/Getty Images

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Michael Jackson's Estate Set to Release New Album

Tuesday May 6, 2014

Five years ago in May 2009, Michael Jackson was getting ready for rehearsals in preparation for an upcoming world tour. Since the singer/songwriter/choreographer/dancer was millions in debt at the time, the tour was critical to solving his financial woes. But after the 50 year old died unexpectedly on June 25, 2009, the handlers of his estate, attorney John Branca and music executive John McClain, have not only managed to wipe out all of the debt, but they have proceeded to generate millions of dollars in revenues.

And now the estate's latest venture will undoubtedly add to the ever increasing bank accounts of the beneficiaries of Michael Jackson's estate - his mother and three children. This new venture involves a long-awaited posthumous album that will feature eight brand new songs that were retrieved from four decades of recordings on which Michael Jackson had already completed the vocals. The album is called "Xscape" and will be released next Tuesday. A deluxe edition will feature some of the new songs in their original form. You can listen to the first single released from the album, called "Love Never Felt So Good," which features Michael Jackson with Justin Timberlake, by following this link: Michael Jackson ft. Justin Timberlake - "Love Never Felt So Good" [NEW MUSIC]. Early results from the poll posted in the linked-to article indicate that nearly five years after his death, Michael Jackson is indeed still the King of Pop.

Judge Intervenes in Determining Guardian for Actor Paul Walker's Daughter, Estate Puts Exotic Car Collection Up for Sale

Monday May 5, 2014

When Fast & Furious star Paul Walker died in a fiery car crash back in November 2013, he left behind a 15 year old daughter named Meadow and a fortune estimated to be worth between $16 million and $25 million that will need to be managed on his young daughter's behalf. Mr. Walker never married Meadow's mother, Rebecca Soteros (also known as Rebecca McBrain), and in fact in his estate plan that the actor wisely created a little less than three years after his daughter's birth, Mr. Walker did not name Ms. Soteros as guardian of their daughter. Instead, Mr. Walker chose his mother, Cheryl Walker, to be Meadow's guardian. So since Mr. Walker took the time to make an estate plan and he intentionally did not choose the mother of his daughter to serve as her guardian, his choice for guardian should be honored, right? Well, not so fast (or furious). The surviving natural parent of a child is always the first in line to act as the child's guardian if the other natural parent dies while the child is still a minor. This result can be altered by legal proceedings such as adoption or termination of parental rights, but in Mr. Walker's case Ms. Soteros still stands first in line to act as Meadow's guardian regardless of what he stated in his estate plan.

But now, in an interesting twist, while Cheryl Walker had initially filed a petition seeking to become Meadow's guardian - just like her son wanted - it was reported that she and Ms. Soteros had reached an agreement which would allow Ms. Soteros to act as Meadow's guardian, and so Cheryl Walker then moved to dismiss her guardianship petition. But last week Santa Barbara County Superior Court Commissioner David Cowan refused to dismiss Meadow's guardianship case, apparently due to a confidential report in which an investigator questioned Ms. Soteros' ability to serve as her daughter's guardian (in her petition for guardianship, Cheryl Walker alleged that Ms. Soteros has an alcohol problem). So now Commissioner Cowan has appointed an attorney for Meadow who will do another investigation and prepare a report for the Commissioner's review. The next hearing in the guardianship matter is scheduled for May 28 at which it is anticipated that Commissioner Cowan will make his final decision. Meanwhile, if you're wondering who has been taking care of Meadow during this period of turmoil, it's not her mother or her grandmother; instead, it's been reported that Meadow is staying with a family friend until the guardianship matter is sorted out.

Meanwhile, it looks like the estate is moving forward with the sale of some of the cars from the actor's personal collection. Sources have told TMZ that Mr. Walker's exotic car shop, Always Evolving, is working with the actor's estate to organize the sale of about 30 cars, including BMWs, Audis, Mustangs and Porsches. But apparently the buyers won't know that the cars belonged to Mr. Walker because his family doesn't believe the actor would want his name used to "jack up" the prices. And yet that decision could lead to another court battle, this time with the IRS, which could claim that the estate failed to obtain the highest prices for the cars, thereby shorting the value of the actor's estate for federal estate tax purposes and causing a deficiency.

Photo: Fast & Furious 6 World Premiere - Paul Walker red carpet arrival, by Tim P. Whitby/Getty Images Entertainment/Getty Images

Investigation of Attorney and Accountant Who Assisted Heiress Huguette Clark With Her Estate Plan Ends With No Charges

Monday April 28, 2014

The New York District Attorney's office has cleared attorney Wallace Bock and accountant Irving Kamsler, who advised copper heiress Huguette Clark during her final years, of any wrongdoing. After Ms. Clark died in 2011 at the age of 104, it was discovered that while she left an estate estimated to be worth $300 million, she had made millions in gifts to her staff during her lifetime. In addition, in 2005 she had made two wills that were signed only six weeks apart. The first will left Ms. Clark's estate to her closest living relatives while the second will cut out her family and left her estate to staff, friends and charity, including $500,000 each to Bock and Kamsler.

In the end the two detectives and forensic accountant assigned to the investigation concluded that Ms. Clark made the extravagant gifts during her lifetime of her own free will. The controversy surrounding the two conflicting wills had already been resolved in September 2013 when an agreement was reached between the beneficiaries of the first will and the beneficiaries of the second will. As part of the agreement, Bock and Kamsler didn't receive a penny but any legal claims that could have been brought against them for failing to advise Ms. Clark to file gift tax returns were dropped.

Which Countries Have the Worst Estate Taxes?

Tuesday April 22, 2014

In a study of 23 major economies across the globe, the UK-based accounting firm network UHY International found that "Old World" economies collect higher inheritance and estate taxes than "New World" economies. The greediest culprit - Ireland - charges 26% from an estate worth the equivalent of $3 million USD, while the second greediest - the United Kingdom - is not far behind at 25.8%. In addition, the UK inheritance tax threshold is fixed at 325,000 (about $545,000 USD) at least until April 2018, which is about $141,000 USD less than the average cost of a house in London and only about $126,500 USD above the average cost of house in all of the UK. Contrast this with the United States, which has a $5,340,000 estate tax exemption in 2014 that will be increased for inflation in 2015 and later years and is expected to reach $9,000,000 per person by 2034. Aside from this, a handful of "major developed and emerging economies," including Australia, India, Israel, New Zealand and Russia, have eliminated inheritance taxes altogether, apparently in an attempt "to encourage more wealth creation and transmission."

Of course, while the U.S. federal estate tax exemption is currently $5,340,000, there are a handful of U.S. states that collect their own separate state estate taxes or inheritance taxes with exemptions as low as $675,000 (that culprit is the state of New Jersey, which also collects a state inheritance tax depending on who inherits the estate). This U.S. state death tax grab can be minimized or even eliminated by moving to one of the 31 states that do not collect a state estate tax or inheritance tax.

Photo: Woman Looks at Map of World, by Martin Barraud/The Image Bank/Getty Images

Another Do it Yourself Will Disaster Makes It All the Way to Florida Supreme Court

Monday April 21, 2014

If the recent decision handed down by the Florida Supreme Court in Aldrich vs. Basile isn't enough to dissuade you from making your own Last Will and Testament, then I don't know what will convince you not to do it. Here are the facts of the case:

  1. In April 2004, Ann Dunn Aldrich used an "E-Z Legal Form" to make her Last Will and Testament. In Article III of the form entitled "Bequests," just after the form's pre-printed language directing payment of debts, Ms. Aldrich hand wrote instructions stating that all of her "possessions listed" go to her sister, Mary Jane Eaton - this included Ms. Aldrich's house, contents, and lot; a Fidelity Rollover IRA; a United Defense Life Insurance policy; an automobile; and bank accounts.

  2. Ms. Aldrich also wrote that if her sister died before she did, then she left all listed property to her brother, James Michael Aldrich.

  3. The will contained no other provisions.

  4. Ms. Aldrich signed the will in front of two witnesses on April 5, 2004.

  5. Mary Jane Eaton died on November 10, 2007. As a result, Ms. Aldrich inherited her sister's real estate located in Putnam County, Florida, along with some cash which Ms. Aldrich deposited into a new Fidelity account that she opened in July 2008.

  6. In November 2008, on a sheet of paper with the pre-printed title "Just a Note," Ms. Aldrich hand wrote the following: "This is an addendum to my will dated April 5, 2004. Since my sister Mary jean Eaton has passed away, I reiterate that all my worldly possessions pass to my brother James Michael Aldrich, 2250 S. Palmetto, S. Dayton FL 32119. With her agreement I name Sheila Aldrich Schuh, my niece, as my personal representative, and have assigned certain bank accounts to her to be transferred on my death for use as she seems [sic] fit." The "addendum" was dated November 18, 2008 and contained the signatures of Ms. Aldrich and Ms. Schuh, who is the daughter of James Michael Aldrich.

  7. Ms. Aldrich died on October 9, 2009.

So, from these facts it appears that James Michael Aldrich should have inherited Ms. Aldrich's entire estate, right? Wrong, because, in attempting to write her own will and then a codicil, Ms. Aldrich's do it yourself documents failed miserably. Why? For two reasons:

  1. First and foremost, the will failed to dispose of all of Ms. Aldrich's property since it didn't include a "residuary clause" which would have addressed what should happen to any property Ms. Aldrich owned which was not included in her "possessions listed" as well as property Ms. Aldrich acquired after the date she signed the document.

  2. And, just as problematic, Ms. Aldrich's attempted codicil to address the property she inherited from her sister after she signed the will failed because she didn't sign it with the proper formalities required by the Florida Probate Code - under Florida law, wills and codicils must be signed in the presence of two witnesses; the "addendum" only included the signature of one witness.

So who inherited the real estate located in Putnam County and the Fidelity account, in other words, the property that Ms. Aldrich inherited from her sister which was not listed in Ms. Aldrich's will? Enter Laurie Basile and Leanne Krajewski, two nieces of Ms. Aldrich who were the children of a predeceased brother. They intervened in the probate administration, claiming that since Ms. Aldrich's will didn't contain a "residuary clause" and the November 2008 "addendum" didn't legally qualify as a codicil under Florida law, then they should share in the distribution of the Putnam County real estate and the new Fidelity account as intestate heirs. While the lower court sided with Mr. Aldrich, who thought that he should inherit Ms. Aldrich's entire estate (which appeared to her intent, didn't it?), this case made it all the way up to the Florida Supreme Court, which sided with Ms. Basile and Ms. Krajewski.

Now as I said at the beginning, if this case isn't enough to convince you not to write your own Last Will and Testament, then I don't know what will. And by the way, E-Z Legal Forms has a website where you can apparently purchase a pre-printed Last Will and Testament Form for only $2.95 - what a bargain!

The lessons learned from the Aldrich case have been summed up nicely by Justice Pariente, who wrote in his concurring opinion, "I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance. As this case illustrates, that decision can ultimately result in the frustration of the testator's intent, in addition to payment of extensive attorney's fees - the precise results the testator sought to avoid in the first place." Amen.

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