Pets have become an increasingly important part of many peoples' lives. Accordingly, many owners want to make sure that their pet is not sent to a shelter for lack of care for whatever reason. Although most states consider pets to be a form of property, and thus unable to inherit, there are estate planning strategies that allow assets to be devoted to the care of a surviving pet.
]]> One of the simpler strategies is for the owner to leave the pet to someone else. This of course requires finding a person who will agree to look after the animal after the death of the owner. It may also be a good idea to leave some money to that person to help pay for the expenses of caring for the pet.Another possibility is to create a trust that is overseen by a trustee designated by the court. The assets in the trust can be dedicated to caring for the pet. If the pet's new guardian fails to care for the pet, the trustee can find a replacement.
One of the best reasons for having a well thought out estate plan is to minimize the stress on your surviving loved ones. This can be especially welcome to individuals who have loved ones who become unable to care for themselves.
Source: Akron Beacon Journal, "Who cares for Fido after owner is gone?," Kathy Antoniotti, May 2, 2012
]]>While this kind of estate planning may provide some peace of mind, strict provisions that disinherit heirs who marry outside the faith or leave the church can lead to bitter family disputes. They may also do nothing but spark negative reactions to the faith one seeks to pass on.
]]> Some strict will provisions, like those making inheritance contingent on getting a divorce, are not enforceable. But many provisions, like those that force a potential beneficiary to choose between marrying within a religion and being disinherited have been upheld. However, as in a prominent 2009 case from Illinois, such provisions can lead to heated legal battles and animosity between heirs.As important as religious values are to many people, they are best imparted during one's life, not through one's will. Attempting to dictate the lifestyle of your loved ones after death often leads to resentment and hostility among family members. Instead of filling one's will with strict religious requirements, it's generally more effective to lead by example during life.
However, for those concerned about the lifestyles their heirs may lead after they're gone, setting up a trust can provide incentives for beneficiaries to behave themselves. A trustee with discretion to make, or not make, disbursements from the trust can replace restrictive will provisions. It is important to provide the trustee with guidelines upon which to base administration decisions as disputes are likely to arise if beneficiaries feel they have been mistreated.
So again, instilling important values in your children is something best done by example. While provisions that potentially disinherit heirs may convince someone to follow directions, they may also create a good deal of family feuding. Communicating with your loved ones about the importance of your faith and a clear estate plan will help ensure that your legacy reflects your values.
Source: Wall Street Journal, "Joining Church and Estate," Rachel Emma Silverman, April 30, 2012
]]>Although there are many different ways to provide for loved ones after death, a life insurance policy may be an option for people to explore.
]]> For many policyholders, a spouse or child is the beneficiary. However, if the beneficiary is a more distant relative, or if the beneficiary is unaware of the policy, they may never know they are entitled to proceeds that have been paid for over the lifetime of the policyholder.Recently, well-known insurance company MetLife reached a settlement to pay $478 million in unpaid benefits and penalties for failing to make sufficient efforts to locate and pay beneficiaries. Some of the unpaid benefits at issue are tied to policies written over 50 years ago.
Although MetLife did not admit to any particular wrongdoing, it has agreed to change some business practices. Among those practices is the use of the Social Security Administration's "Death Master File". While MetLife used the list to stop payments to annuity holders after they died, it did not utilize the list to discover deceased policyholders and locate their beneficiaries.
In Connecticut, if a beneficiary is not found within three years, that money must be handed over to the state treasurer's office.
Fourteen states have agreed to the settlement. Connecticut, however, is not one of them. A spokesperson for the Connecticut Insurance Department said they will review the settlement. However, by not joining the settlement, regulators in Connecticut could conduct an investigation and seek a settlement on their own.
A life insurance policy can be a valuable part of any estate plan. However, if the beneficiary does not know that he or she is entitled to the proceeds of that policy, it may never fulfill its purpose of providing for the policyholder's loved ones. Deciding on beneficiaries and contingent beneficiaries is an important part of making sure that a person's assets are distributed according to their wishes. An estate planning attorney can help make sure that assets go to whom they were intended when an estate is distributed.
Source: Hartford Courant, "MetLife To Pay $478 In Unpaid Policies, Penalties," Matthew Sturdevant, April 23, 2012
]]>A beneficiary's first impulse may be to cash out the individual retirement account inherited and use it to pay off their mortgage. However, it is possible they are not aware that the increase in income pushes them up to a different income tax bracket and will lead to increased taxes. Financial professionals suggest looking into options that could allow the beneficiary to withdraw money from the account and defer it from taxes, depending on the heir's life expectancy.
]]> Focusing on financial needs like college loans and credit card debt are crucial. One of the most important steps could include setting money aside to make sure the beneficiary doesn't have to worry about finances again. This could also be a good time to update wills and insurance policies.It is important to not make any rash decisions immediately, like quitting jobs and buying yachts. In fact, supplementing an inheritance with a monthly income from a job allows a beneficiary the opportunity to invest their finances and increase total savings. By continuing on a career path, beneficiaries can ensure financial security.
The heir to an inheritance may consider consulting with an experienced estate planning attorney to discuss what options are available to both secure their estate and work through tax and probate issues.
Source: USA Today, "How to get the most from an unexpected inheritance," Sandra Block, April 9, 2012
]]>The current rules allow a person who has inherited an IRA to make withdrawals over the remainder of their life. This potentially allows the assets in the IRA to increase in value, tax deferred, over several decades. However, many beneficiaries simply cash out the account once they inherit it because they are unaware of these tax advantages.
]]> Additionally, if the estate was large enough to be subject to the federal estate tax, the IRA beneficiary is permitted to deduct the amount of federal estate tax paid. The Wall Street Journal provides an example of this. Assume a mother leaves behind a $1 million IRA for her son. However, the other portion of the estate is left to her daughter. The daughter would then be responsible to pay the federal estate tax on the entire estate, including the IRA, the taxes on which would be $350,000. The son could cash out the $1 million IRA, giving him $1 million in gross income and a $350,000 deduction for the estate tax.Adult children who are financially secure also have the option to disclaim an inherited IRA and can then pass it on to their own children. This allows investments to grow for an even longer period of time, allowing for tax-deferred growth over two generations.
IRAs present a number of benefits and advantages both for those passing them down and those inheriting them. However, considerations such as proper titling and completing the correct forms are important to ensure that beneficiaries receive all the potential advantages IRAs have to offer. Connecticut residents would be wise to discuss their options with an experienced estate planning attorney.
Source: The Wall Street Journal, "Inherited IRAs: a Sweet Deal," Kelly Greene, April 14, 2012
]]>Although Winehouse's estate was administered in her home country of England, the result would have been similar if it had been administered in Connecticut or anywhere else in the United States. When a person dies without a will, legal issues can arise. It is for that reason why most legal professionals recommend that every individual have a will.
]]> In this case, it's likely Winehouse would have wanted her parents to inherit her estate, but that isn't always the case. In the absence of a will, the likely intent of the deceased is not considered when distributing the estate. For example, even if Winehouse had a poor relationship with her parents, the law would still require that her parents receive the estate absent a valid will directing otherwise.Many young people, especially those who are unmarried or have no children, do not have a valid will. Although it is unusual for a person to die at a young age, Amy Winehouse proves that tragedies can occur. Estate planning is the only way to effectively ensure that our wishes are carried out after we die.
Connecticut residents planning to create a will would be wise to work with an experienced attorney. An attorney can help an individual throughout the entire process to be sure the will is completed properly.
Source: The Washington Post, "Amy Winehouse's parents to receive $4.66 million estate," Sarah Anne Hughes, March 29, 2012
]]>According to the Wall Street Journal, notable recipients of the settlement include the Metropolitan Museum of Art, which will receive $20 million from Mrs. Astor's estate, and the New York Public Library, which stands to receive $15 million. Additionally, a fund of $30 million will be devoted to improving education in New York.
]]> The announcement comes as welcome news to those who were involved in settling the sizeable estate of Mrs. Astor, who died in 2007. The administration of her estate was thrown for a loop when Astor's son was convicted in 2009 on 14 charges related to his attempts to pilfer his mother's estate in the last years of her life. As a result, his share of the estate was reduced by more than half.Estate planning often presents difficult challenges in balancing the need for an efficient administration of the estate with the sensitive matters and emotions associated with the death of a loved one. Good estate planning can go a long way in preventing tension and conflict among family members and other beneficiaries.
While some cases prove more challenging than others, a good estate plan embodies the wishes and intentions of a lost loved one, and a successful resolution of the estate represents an opportunity for family and friends to move forward.
Source: The Wall Street Journal, "Astor's Estate Benefits Many," Jennifer Maloney and Melanie Grayce West, March 28, 2012
]]>Max Levchin, co-founder of Paypal and current chairman of Internet review site Yelp, recently avoided paying taxes on over $10 million in profit he earned by selling 3.1 million shares of Yelp stock. How? The stock was held in a Roth IRA, which means Levchin will never have to pay taxes on his earnings if he waits until age 59 ½ to pull them out.
]]> Facebook founder, Mark Zuckerberg, provides another example of using estate planning to minimize or avoid tax liability on investments. Although he is only 27 and currently has no children, he set up a grantor retained annuity trust in 2008 that will allow him to transfer millions of dollars to heirs and beneficiaries tax free. Such a transfer would otherwise be subject to a gift tax exemption that is currently set at $5.12 million, but could soon be reduced to $1 million.While these high-profile entrepreneurs provide dramatic examples of the importance of wise estate planning, anyone who will eventually be transferring assets to children or other beneficiaries would be wise to have a plan that minimizes tax liability. A well-conceived succession plan is especially important for those who plan to transfer or stand to inherit a family business. For business owners, getting an up-to-date valuation of the business is crucial to a succession plan that maximizes tax benefits.
While tax issues should certainly play a significant part in any estate plan, they aren't the only considerations. For example, how assets will be divided among beneficiaries and the timing of distributions are also questions to answer. Additionally, if a family business is being transferred, determining how quickly and to whom control of the business will be transferred is a critical part of any succession plan.
A local estate planning attorney can help create a plan that minimizes tax liability and maximizes the benefits to one's heirs and beneficiaries.
Source: Forbes, "Social Media Tax Dodge," Deborah L. Jacobs, Mar. 21, 2012
]]>The 95-year-old actress suffered multiple setbacks in recent years that have left her confined to her bed. She broke her hip and was forced to have one of her legs amputated. Her 68-year-old husband has been caring for her, but Gabor's daughter is concerned that he is mishandling her finances. She filed a petition for a conservatorship on Mar. 20.
]]> The daughter became especially concerned when she learned that her mother's husband borrowed $700,000 on her mother's mansion despite the home being in foreclosure. Gabor's husband had apparently missed a number of mortgage payments.Gabor's daughter also says her mother's husband is trying to keep her away from her mother. She says he is also keeping her heavily sedated. Gabor's daughter says that she spoke to her mother multiple times each day, but after she broke her hip, Gabor's husband removed the phone from her bedroom.
Gabor's daughter would like a conservator to be appointed to be sure her mother's medical needs and finances are being properly managed.
Gabor's husband denies any wrongdoing. He says that his wife is in good condition and that he took out the $700,000 loan to pay his wife's medical bills and to make up for missed mortgage payments. He also denies that the mansion is in foreclosure.
A conservatorship can be helpful when a person is no longer competent to manage their medical needs and finances. People in Connecticut interested in learning more about a conservatorship would do well to consult with an experienced attorney.
Source: CNN, "Judge asked to intervene in Zsa Zsa Gabor's care," Alan Duke, Mar. 20, 2012
]]>Britney Spears' father was granted conservatorship in 2008. Since then, Britney has relied on him to make all of her legal decisions for her. Although she cannot decide where to live or what she spends her money on, she has credited her father with saving her life. In addition, the conservatorship has been beneficial in the wake of numerous lawsuits.
]]> A company called Brand Sense sued Britney Spears for breach of contract. However, because the conservatorship was in place, she was not allowed to be questioned under oath. That case was recently settled.Britney's former manager has also filed a lawsuit against her and her parents for breach of contract, libel and defamation. Her former manager's attorney would like to question Britney, but the conservatorship protects from answering questions in a deposition.
Although the conservatorship seems to be working in her favor, it may be interfering with some of her future plans. She is engaged, but the wedding has been postponed. The wedding will likely have to be put off until any pending lawsuits against her have been settled and the conservatorship has been lifted.
Additionally, Britney is hoping to be one of the judges on the popular television show, "The X Factor." However, if she is unable to answer questions under oath because of her mental state, she would likely not be able to take a job where she must put concrete thoughts together in front of millions of viewers.
It is unclear how Britney Spears' situation will end up, but it does illustrate the need for proper planning. If an individual has appointed a power of attorney and documented their wishes, the courts likely will not need to get involved in the event that a person is deemed incompetent.
Source: Forbes, "Oops!...Britney Spears' Conservator Did It Again," Danielle Mayoras and Andy Mayoras, Mar. 12, 2012
]]>As written about in a previous post, a dispute over Clark's vast fortune remains unsettled. At the center of the dispute are two wills that were drafted just six weeks apart.
]]> One of the wills leaves most of her money to her relatives. The other leaves most of her money behind to establish an art museum at her California mansion. Her private nurse, as well as her accountant and lawyer were named as beneficiaries in the second will. Her accountant and lawyer were also named as the executors of her will.However, Clark's relatives have accused her lawyer and accountant of exerting undue influence and say they prevented her from seeing them.
In addition, the accountant and attorney have been accused of fraud by the New York County public administrator for failing to pay $90 million in gift taxes. They have since been suspended as the executors of her will.
Clark was the daughter of William Andrews Clark. He made his fortune in the copper business and became one of the richest men in the country. She grew up along Fifth Avenue in a mansion with more than 100 rooms.
Although few have as much money as Clark did, this case illustrates how complicated things can become without proper estate planning. When an individual makes plans for what will happen to their valuable assets after they die, they can rest assured that their wishes will be carried out.
Source: The New York Times, "Selling the Hideaways of a Reclusive Heiress," Vivian S. Toy, Mar. 8, 2012
]]>Only about 20 percent of the general public has a living will. Surprisingly, many more doctors have laid out plans about what not to do in the event that they become incapacitated and cannot explain their wishes.
]]> A study in 2003 of 765 doctors found that about 64 percent had a living will. Even more shocking, many doctors have left instructions to let them go peacefully, asking their doctors to do little to prolong their life.For example, a former orthopedist was diagnosed with pancreatic cancer after finding a lump in his stomach. The 68-year-old man could have received some of the best care, but chose to do nothing. Instead, he spent time with his family before dying a few months after his diagnosis.
Doctors know the pain their patients go through, which is likely why many of them choose to refrain from procedures and treatments that would prolong their life. For instance, when performed properly on a patient, cardiopulmonary resuscitation, also known as CPR, usually results in broken ribs.
Despite what many doctors may choose for their end-of-life wishes, anyone with a living will can set out clear instructions for their doctors to follow in the event that they are no longer able to make their wishes clear. They can also identify who should make health care decisions, as well as who should make financial decisions.
Source: The Wall Street Journal, "Why Doctors Die Differently," Ken Murray, Feb. 25, 2012
]]>Actor Peter Falk, best known for his role as a police detective in "Columbo," died last summer at the age of 83. However, his legacy lives on. The man's estate recently donated $3 million to the University of California, Los Angeles to be used for scholarships for worthy students.
]]> According to officials at UCLA, the money will go towards the Shera and Peter Falk Lt. Columbo Memorial Scholarship Fund. The first scholarships will be handed out to five incoming freshman in the fall of 2012. It will cover their entire tuition throughout their four years at the school. Students studying music, those with disabilities and military veterans will be considered for the scholarship.Peter Falk performed on Broadway, in television shows and in movies. He earned four Emmy Awards for his role in "Columbo."
Whether an individual is a famous actor or a normal American, estate planning can be very valuable. Although few people like to think about their death, with proper planning families can avoid lengthy litigation.
Through estate planning, an individual can determine what will happen to valuable assets. People may choose to do what Peter Falk did by leaving behind money for a school or organization. In other cases, people can determine who will be granted ownership of valuable real estate.
Whatever the case may be, an individual beginning to plan their estate would likely benefit from working with an experienced attorney.
Source: The Washington Post, "Former 'Columbo'star Peter Falk bequeaths $3 million to UCLA to provide student scholarships," Feb. 21, 2012
]]>Her estate is not likely to be as valuable as Michael Jackson's. After all, she was most known for her singing talent, not her songwriting. Her most notable hits were written by other people. "I Will Always Love You" was originally written and recorded in 1974 by Dolly Parton. "I Wanna Dance With Somebody" was written by George Merrill and Shannon Rubicam in 1987, and "Didn't We Almost Have It All" was written by Michael Masser and Will Jennings. Since she did not have writing credits, she is not entitled to the royalties.
]]> Houston also had to fulfill a $100 million recording deal she signed in 2001. At the time, she was reported to have owed Arista, now part of Sony Music Entertainment, six new albums and two greatest hits compilations. Since then, only four have come out with the last being released in 2009. Another greatest hits collection was not released in the United States.However, she did have a number of acting credits. Most notably, "The Bodyguard" with Kevin Costner and "Waiting to Exhale," the film adaptation of the best-selling book by Terry McMillan. She had also completed filming a remake of the movie "Sparkle" where she plays a mother concerned about how her daughters, who form a singing group, handle fame and fortune.
Reports have not surfaced about her debts, but she was rumored to have lost homes in New Jersey and Georgia to foreclosure. It is also unclear whether she had a will or an estate succession plan, but it is likely that future revenues would be received by her only daughter, Bobbi Kristina.
Whatever news emerges about her estate, it is bound to reveal some tax and estate planning lessons for all of us.
Source: The Washington Post, "Whitney Houston's death sparks outpouring that will benefit estate though questins remain," Feb. 14, 2012
]]>One man recently discovered this after he spent thousands of dollars to go through the probate process after his wife passed away. Once the proceedings were complete, however, he discovered that a simple document could have prevented the whole process.
]]> The man in this case was trying to pass ownership of his home and other property to be solely in his name. He spent nine months in probate that cost him $2,800 before the ownership was resolved. Had he and his wife filed a joint and survivorship deed with their county, however, he could have avoided probate altogether.A joint and survivorship deed allows property, like a home, to be transferred from one spouse's name to the other's upon death. In total, it would have cost $200, and probate would not have been necessary.
Unfortunately, this man discovered the benefits of a joint and survivorship deed too late. However, Connecticut residents may find it useful to learn from his situation.
The death of a loved one is extremely difficult emotionally. When survivors have to go through months of probate just to settle affairs, it can make the situation much more stressful. To help ensure that your loved ones do not have face similar challenges, creating a well-rounded and comprehensive estate plan is one of the best things you can do. Speaking to an experienced estate planning attorney may be helpful in making sure you have covered all aspects of your estate.
Source: Beacon Journal, "Probate judge launches project to help some avoid probate," Betty Lin-Fisher, Feb. 5, 2012
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