Lights… Cameras… Estate Plans? When Wills Hit the Big Screen

From Philip Seymour Hoffman and Heath Ledger to Frank Sinatra and Elizabeth Taylor, Hollywood’s dearly departed have taught us a lot about estate planning over the years.

Forbes put together a list of those lessons last year, demonstrating how creative and chaotic estate planning can be in the spotlight of fortune and fame. That had me thinking — it isn’t only the stars themselves who impart insight on the prudence of planning. Sometimes their movies do too.

Here’s a look back at a few of the greatest movies to put estate planning front and center (or at least in the middle of a juicy plot twist):

Cover of "The Aristocats (Special Edition...

Cover of The Aristocats (Special Edition)

  • The Aristocats (1970) — When you think about complex legal concepts, Disney animated features aren’t the first things that spring to mind. Nevertheless, The Aristocats offers a textbook illustration of the classic “life estate with remainder in fee simple absolute” — in other words, an elderly widow who leaves her entire estate to her cats, with the remainder to pass to her butler after the cats die. Unfortunately, the criminally inclined butler isn’t eager to wait that long…
  • The Descendants (2011) — George Clooney plays an attorney and the sole trustee for a massive family trust containing 25,000 acres of beautiful Hawaiian land. A series of accidents and unfortunate timing force his enormous family to wade through the murky waters of wills & trusts. Most interestingly, the whole plot revolves around “The Rule Against Perpetuities” (a pesky legal rule that limits some people’s future interest in property if too much time passes before the interest vests). Notably, both Hawaii and Massachusetts have adopted the same uniform version of “The Rule Against Perpetuities.”
  • The Grand Budapest Hotel (2014) — Nominated for Best Picture at this year’s Academy Awards, Hotel’s haywire plot is anchored in a controversial bequest. When an older woman dies, she leaves a very valuable painting to her much, much younger lover. Naturally, her ne’er-do-well children are less than thrilled. They challenge the validity of her will, and while that proceeding plays out with a little more madcap action than most of the real-life cases I’ve seen, it’s a great showcase for how easily miscommunication and strife can muddle an estate plan.

In Hollywood as in real life, estate planning is a potential breeding ground for epic drama — no wonder it’s a favorite topic in the screenwriting world! Of course, most of the movies’ great estate capers could have been avoided with careful planning.

What did I miss? If you have any favorite films with a focus on estate planning, please feel free to share them. And should any of these cinematic classics spark a question about your own estate plan, don’t hesitate to give me a call.

Preparing to Die: Why the Will Is Just the Beginning

“Prepare to die” sounds like something a super-villain says to a caped hero in a Hollywood blockbuster. Certainly, it’s not a phrase any of us want to hear today.

But all of us will pass away someday, and when we do, we’ll leave people we love behind. They’ll have a lot to take care of when that happens. Attending to an estate is a difficult thing to ask of a family when they’re grieving, but it’s something that must be done.

http://gty.im/104302943

“Preparing for death” in the legal sense, then, isn’t nearly as sinister as it sounds. In fact — contrary to the inflection with which The Joker might say it to Batman, for example — it really is an act of compassion and care for those who’ll inherit a substantial burden after we leave.

The New York Times recently ran an article about the surprising number of tasks that must be dealt with in today’s estate plans. It’s so much more than just a will these days. Trusts, health care directives, burial instructions, powers of attorney, lists of online account passwords… the list goes on and on.

As a Winchester estate planning attorney, I think one of the ways I can be most helpful to my clients is staying up to date on all the changes and trends in end-of-life preparations.

The law in this area changes all the time, and as technology and society evolve, our estate documents must also change to reflect those developments. Otherwise, we risk ineffective or unintended results.

“Preparing to die” is an understandably uncomfortable thing. I’m here to take care of those things for my clients so they can focus on living their lives instead. If you need help or advice with your will or any other estate documents, please feel free to call my office today. We can talk about what you might need to bring your future plans up to date.

Inheriting A Collection Is Not Always Easy

When parents die, their adult children inherit many things: money, property, family heirlooms and collectables.

Sometimes, it is hard to figure out what to do with the collectables.

Photos (Photo credits: PB Teen)

Photos (Photo credits: PB Teen)

A story I came across in the New York Times told of a woman who inherited a collection of photographs from her mother who had been a photography editor at a magazine. She gave one of the photos to a friend who noticed it was taken by a renowned photographer. It was worth $14,000.

So she looked through all the photos in the box and found many more by the same photographer. In all, there were about 1,400 photos and she had no idea what they were worth or what to do with them.

While you are not likely to inherit a box of valuable photographs, you never know what you are going to wind up with.

Whatever you end up with, you may want to take steps to preserve the items, organize them and archive them. Then you may want to have them appraised.

The key is finding the right appraiser for the kinds of things you want appraised. And make sure the appraiser is reputable. Take your time doing it.

Williams Took Care Of His Kids

5043690881It seems nobody can resist reading the juicy details of the life and death of a beloved celebrity and I am no different.

But some of the stories are simply salacious, while others are instructive. This one I found on Yahoo Finance fits into the latter category.

According to the story, the actor and comedian Robin Williams apparently didn’t leave a note prior to taking his own life last week, but details that have come out showed his estate was left in good shape, even if he might have been having financial problems, which some stories say was the case while others deny it.

What we do know from documents unearthed is that Williams in 2009 set up a trust for his three children who ranged in age from 22 to 35.

According to the story, the trust documents say that when each child turned 21 he or she would get one-third of the cash set aside for them. When they turned 30, they each would get their full share. The payout was not dependent on Williams’ death. That means he felt it was better for them to have the money while he was still alive. As it turned out, that was only partly true. But the idea is that by making lifetime distributions he could guide them and watch them build their lives responsibly.

The story did not say how much was in the trusts but said he had a significant amount of money outside of the trust and that his wife, Susan Schneider, would certainly get a healthy amount.

His net worth was once estimated at $130 million, the story said, but in 2013 he said he was nearly bankrupt. He reportedly paid his first two wives $30 million combined. Another report said he was worth about $50 million at the time of his death. He had put his $35 million ranch in Napa up for sale because he couldn’t afford it any more, the story said.

In 2013, he took a part on a TV sitcom because he needed the money. The show, “The Crazy Ones,” was cancelled after one season.

Actor Hoffman Made Mistakes With His Will

Regrets wrong doing. Closeup portrait silly young man, slapping hand on head having a duh moment isolated on gray background. Negative human emotion facial expression feeling, body language, reactionI came across an interesting article recently about the actor Phillip Seymour Hoffman and how he made numerous mistakes in his estate planning that are going to impact his partner and kids.

I thought his story could serve as a cautionary tale.

Hoffman, who died of a drug overdose earlier this year, supposedly did not want to make “trust fund kids” out of his three children. That may be admirable, but the way he went about it will actually do harm to his long-time partner and kids.

According to the story on marketwatch.com, probate court documents reveal that Hoffman’s wishes were that his kids get no part of his $35 million estate and that all of it go to his long-time partner Mimi O’Donnell, the mother of his kids but to whom he was not married.

When a wealthy person dies, he or she can do one of three things: leave the money to their family; leave it to charity; or leave it to the IRS in the form of estate taxes.

Hoffman’s lack of planning maximized the IRS’s take with no benefit to his family or to charities.

While I understand the desire not to create “trust fund kids,” there are ways to do it so they do not become spoiled layabouts.

Now, about 40 percent of Hoffman’s estate over the first $5.4 million will go to the IRS because he and O’Donnell were not married. That’s $12 million.

Much of that could have gone to charities he cared about.

And the matter of no trusts for his kids? What about their education? He could have set up trusts to fund just that. Or trusts to fund medical costs if ever necessary. Or he could have set up trusts that kick in only if the kids accomplish certain goals or earn a certain amount of money on their own. Apparently, he did include his first child in his will, but not the second and third since they had not yet been born when he made out the will.

Another reason why updating wills periodically is important.

How Reverse Mortgages Can Lead To Problems For Your Children

According to a recent New York Times article, children of parents who took out reverse mortgages to cover the cost of long-term care are increasingly faced with a difficult choice—watching helplessly as the family home goes into foreclosure, or losing their inheritances to pay back the loan and protect the home.

Housing

(Photo credit: james.thompson)

While there is no specific data on the number of heirs facing foreclosure as a result of reverse mortgages, interviews with elder law advocates, housing counselors, and heirs suggest that the problem may already be impacting tens of thousands of people. And the problem could become worse. The combined debt of seniors between the ages of ages of 65 and 74 is rising faster than the debt of any other age group. Some will turn to reverse mortgages to pay their debts. Meanwhile, 13 percent of outstanding reverse mortgages are underwater, and create a financial crisis for the heirs forced to deal with the mortgages.

The problem for heirs of parents who have passed away with reverse mortgages seems to be twofold. The law requires that lenders offer heirs 30 days from when the loan is due to decide what they wish to do with the property. Furthermore, heirs are supposed to be given six months to arrange for financing if they want to keep the home. It would appear that many lenders are not informing the heirs of these options, and instead initiating foreclosure within a matter of weeks.

The other problem centers on what is known in the industry as the 95 percent rule. Heirs are permitted to pay 95 percent of the current fair market value of the property to buy out the reverse mortgage. But the housing crises from a few years ago has rendered today’s market value significantly below what the heirs’ parents paid for their reverse mortgage. The disparity between the current value of the home and the mortgage often forces heirs to opt for foreclosure rather than trying to keep the family home, or at least keep it long enough to sell it on their own.

If you are considering a reverse mortgage to pay for long-term care costs, I invite you to contact me for a consultation. I can show you other ways to pay for the care you need, and preserve your hard-earned assets for the enjoyment of your well spouse and your loved ones.

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The Dangers Of Using Cookie-Cutter, Downloadable Legal Forms

When people learn that I am an estate planning and elder law attorney, some of them ask what I think about “do it yourself” wills, trusts, and other estate planning forms that can be found online. Of course, when I tell them that it is advisable to hire an attorney, it sounds rather self-serving.

Last Will And Testament

Last Will And Testament (Photo credit: Ken_Mayer)

A recent article in the ABA Journal speaks to my concerns about the potential pitfalls and unwanted consequences of using downloadable forms. It discusses the case of a Florida woman, Ann Aldrich, who used an “E-Z Legal Form” to create her will in 2004. In the will, she left all of her assets to her sister, with the caveat that if Aldrich’s sister predeceased her, the assets would go to her brother.

Sounds simple enough, right? So why, then, did the Florida Supreme Court rule that Aldrich’s two nieces were entitled to part of her estate? Because the E-Z Legal Form failed to include what is known as a residuary clause providing for property not listed in the will. That is, assets acquired by Aldrich after 2004, when she made her will, were distributed according to the laws if intestacy. With regard to these assets, it was as if the will had never been created in the first place! Florida intestacy laws mandated that the nieces inherit these assets, not Aldrich’s brother.

One of the concurring justices in the case, Barbara Pariente, said: “While I appreciate that there are many individuals in this state who might have difficulty affording a lawyer, this case does remind me of the old adage ‘penny-wise and pound-foolish.’ 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 the payment of extensive attorney’s fees—the precise results the testator sought to avoid in the first place.”

Thank you, Justice Pariente. I couldn’t have said it better myself.

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Family Heirlooms—How Much Are They Worth?

When a loved one dies, he or she leaves behind much more than assets in a will or trust. There are treasured memories, of course. And what about all the “stuff” that Mom or Dad accumulated over the years? Many of these items have sentimental value at the very least, and others might have monetary value as well. Is the brooch that Mom’s mother gave her when she was a girl actually worth a lot of money?

Brooch in Red and Yellow

Brooch in Red and Yellow (Photo credit: merlinprincesse)

Forbes recently ran an article exploring this topic. It referenced the television show Antiques Roadshow and discussed how the show’s popularity has given birth to a cottage industry of low-cost or even free appraisal events throughout the United States, often hosted by non-profits, banks, auction houses, and others.

If you’ve ever watched Antiques Roadshow, you might be under the impression that practically every heirloom passed on to children by their parents is worth a considerable amount of money. No doubt this makes for a better show, but the Forbes article points out that the vast majority of items people bring in for appraisal have little if any dollar value. And even when they do, these appraisals are known in the industry as “verbal approximations of value.” To determine how much an heirloom is actually worth for the purposes of dividing assets equitably among surviving family members or purchasing insurance to protect the item, it is necessary to obtain a written, formal appraisal.

So is that painting your parents picked up on their trip to Paris, or that armoire passed down from one generation to the next, actually worth something? Absolutely! Even if an appraiser tells you that it has no monetary value, if the heirloom reminds you of your father or mother, it can be conservatively valued as “priceless.”

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Who Should Get What: Factors To Consider When Leaving Unequal Inheritances To Your Children

When many parents create an estate plan, they simply divide their assets equally among all their children. While there is certainly nothing wrong with this, in some situations it might not be the best, or even the fairest, approach.

Family discussion

(Photo credit: Muffet)

For example, one of your children may earn significantly more money than your other children. One might have several children, another one child, and another no children at all. Perhaps one of your children has served as a caregiver for you or your spouse while the others have not. Or maybe one of your children has disappointed you so often that you would prefer to leave him or her nothing at all.

These are difficult decisions in and of themselves. Worse, when one child is favored over another in a will or other estate planning document, the decisions may be open to legal challenge by the child who believes he or she has been treated unfairly.

Here are a couple ways to help ensure your wishes will be carried out in the event you decide to leave unequal inheritances to your children.

  • Include a no-contest clause. This typically stipulates that if a beneficiary contests the will’s validity or its provisions, his or interest in the will is forfeited. Of course, you have to leave the heir in question enough of an inheritance to motivate him or her not to challenge the will.
  • One strategy that I have used is to have the client write a letter with a simple explanation for what they have done. This is not a legal document, but can be shown to the unhappy heir if necessary. Only if the child or other heir contests the legal document is this letter unsealed.

For additional strategies, or to discuss any aspects of your plan, feel free to contact me. I am here to help you make these and other difficult decisions, and guide you through the entire process.

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