Orlando Florida Estate Planning Attorney Linda Solash-Reed P.L writes about issues related to Estate Planning, Elder Law, Florida Medicaid, Special Needs Planning, Long-term Care Planning, Estate Taxes and Inheritance, Guardianship, and Probate Administration.
Lawsuits from the Minnesota Attorney General should serve as an important reminder to anyone who has a life insurance policy as part of their estate plan.
Life insurance policies play a pivotal role in many estate plans. They are often used to provide needed cash to family members to bridge the gap between when the policy holder passes away and when the estate is settled. They can also be used to help equalize estate distributions between heirs when other assets are difficult to divide.
What if the life insurance company does not pay beneficiaries? In that case the goals of the estate plan are not met. It happens more than most people think.
The biggest source of the problem? Beneficiaries of the life insurance policies do not know that they are life insurance beneficiaries. As a result, they do not file a claim.
Even if the companies know that the policy holder has passed away, they do not seek out the beneficiary and pay on the policy. In most cases they are not legally required to do so. They can keep the money and use it for their own purposes until a claim is filed.
The lesson to be learned from this is that when life insurance is a part of your estate plan, then you need to ensure that the beneficiaries are aware of the policy and know to file a claim when you pass away. You do not have to tell them before you pass away, but someone reliable should know at least where to find your policy documents at the appropriate time.
The recently deceased former Motorhead drummer, Phil Taylor, had a long-lost wife. He left nothing for her in his will.
Phil Taylor, known to fans as Filthy Animal, was a long-time drummer for the legendary hard rock band Motorhead. Although Taylor had not performed with the band in over a decade, he is mourned by fans. There is one person, however, who might not be mourning his passing - ex-wife Thera Ann Johnson.
The public first learned about this wife in Taylor's will in which he acknowledged her and claimed to not to have had contact with her since shortly after their marriage. Taylor had actually divorced Johnson about two weeks before his death. Although he was unable to find her to have divorce papers served upon her, the divorce was granted because the two had been separated for such a long time. Taylor's two sisters will receive most of his estate.
Taylor passed away in the United Kingdom and that country's laws will apply to his will. It is still useful, however, to understand what would happen in the U.S. in a similar situation.
Ordinarily, it is not possible to exclude a spouse from a will completely. A spouse who is excluded can accept that decision or he or she can choose to take a portion of the estate that is called a "spousal elective share." The portion varies from state to state and often by the length of the marriage, but it is on average 50%. Here in Florida it is 30%.
An exception can often be made in cases where the surviving spouse has abandoned the deceased. The court can decide to not allow the spousal elective share because of abandonment. However, that is only if the couple was married at the time of death. In this case they had been previously divorced. As long as the divorce is valid, then the spousal elective share law does not apply.
The continuing battles over Sumner Redstone's competency in court and the media is not profiting shareholders in the companies that he owns, but someone is profiting from the situation.
The current fight over Sumner Redstone's competency and his decision to oust Viacom's CEO, Philippe Dauman, from his family's trust and holding company is something of a media circus and a three-way battle between Redstone, Dauman, and Redstone's daughter, Shari Redstone. The battle is not only being waged in court, but also in the media, both in the mainstream press and in the tabloids.
To the surprise of the judge in the case at a recent hearing 22 lawyers stood up to make an appearance. As costly as it is to have a lawyer appear in court, it is almost certain there is an even greater cost in paying all of the lawyers who did not appear in court but who are likely working on the case in the large law firms that represent the parties.
Public relations firms are also profiting from the situation as they have been hired to help control the narrative in the media.
A lesson to be learned from this situation is that it is extremely costly anytime an elderly person's competency has to be litigated in court. While it is unclear what could have been done differently to prevent the Redstone situation, many other competency battles can be prevented by making sure you have powers of attorney in place long before you might need them.
You might think that you are only hurting yourself by not saving for retirement, but you are also hurting your children in two important ways.
It is common knowledge that a large percentage of Americans do not have any retirement savings. Some people legitimately cannot afford to put much of anything aside as they live paycheck to paycheck. However, many Americans who can afford to save for retirement have not done so, or they have not saved enough.
The people who often end up being hurt by those who do not save for retirement are their children as those children end up supporting their elderly parents. This can be a huge burden for the children because those who support their parents often have debts of their own they have not paid off. It makes it less likely those children will be able to save for their own retirements, which will have later repercussions for their children.
Another way your children can be harmed by you not saving money for retirement is they will not receive an inheritance from you. Inheriting from parents can be a way for adult children to pay off their debts and save for themselves. Even a small inheritance is helpful.
Intestate – People who pass away without having a will are called "intestate," which means the court has to appoint someone to oversee the estate and then all assets will be divided according to a statutory scheme.
Public – Not having an estate plan means the estate will be open to the public and details about the deceased's assets will also be public.
Costs – Normally, not having a will leads to extra costs and fees as experts need to be hired to shepherd the estate through the probate process.
No Choice – If a person has an estate plan, he or she can determine how the assets of the estate are divided and distributed to loved ones. However, in the absence of a will the court has no choice but to divide the assets according to what the statute books mandate.
Plan Now – Prince most likely did not expect to pass away when he did. Perhaps he thought he had plenty of time to get an estate plan at a later date. However, as his death illustrates, you never know when you will pass away. For that reason it is important to plan for your estate now even if you do not think you need to.
Some business owners prefer to retain control over their businesses until they pass away. Others would rather retire and let younger family members assume ownership. There are a couple of different options to do that.
Business succession planning is sometimes considered merely part of the general planning for the owner's estate. However, many people who have family businesses prefer to have younger family members run the business long before the current owner passes away. Those owners seek options for other family members to gain ownership of the business in a cost-friendly way.
Gifting – A business owner can take advantage of the gift tax exemption and give stock in the company to other family members. This would need to be done with a careful plan over many years as the individual gift tax exemption in a single year is only $14,000. Owners must also be aware of the lifetime gift tax exemption of $5.45 million (double for married couples), which makes gifting an entire business away only an option for smaller companies.
Grantor Retained Annuity Trusts – These are fairly complicated trusts that should only be considered with the advice of an attorney. They allow a business owner to transfer ownership to the trust and receive an annuity for a set period of time. After that time runs out, the assets in the trust transfer to the trust beneficiaries.
Whatever you do, this kind of planning should only be undertaken with the advice and assistance of a qualified estate planning attorney.
The basketball season for the Oklahoma City Thunder is over after the team lost in the Western Conference Finals to the Golden State Warriors, but the team is still part of an ongoing estate battle.
Aubrey McClendon was at one point one of the most important men in the oil and natural gas industry in the U.S. However, by the time he passed away in a car crash in March of 2016, like many other people in the industry, he had fallen on hard times as commodities prices fell dramatically in the past few years.
At the time of his death McClendon owned a 20% stake in the Oklahoma City Thunder NBA franchise. Because of the decrease in value of McClendon's business interests some of his creditors believe that basketball team ownership stake might be the estate's most valuable asset. This has caused them to intervene in the estate case.
The creditors fear that the estate will sell the ownership stake to McClendon's widow at less than market value and they are asking the court to make sure that does not happen. Attorneys for the estate suggest that the creditors are jumping the gun as the stake has not been sold yet and any sale would have to meet with the approval of the NBA.
Many state legislators share the common concern that if they increase taxes on their wealthiest residents, those residents will move to lower tax jurisdictions. However, data suggests that there is little basis for that concern.
No one likes paying taxes. Most people given the option to pay fewer taxes would choose to do so. This creates a dilemma for state governments in the U.S. where people can freely move to other states. Legislators often fear that if they raise taxes on their wealthiest residents, those residents have the means and ability to move to other states that have lower taxes.
The possibility of this happening is guaranteed to be mentioned in any legislative debate about the appropriate amount to tax the wealthy.
A new study looked at 13 years of data and concluded that very few wealthy people move to pay lower taxes. The study found that rich people move because of taxes only 2.2% of the time. In fact, millionaires move to different states at a lower annual rate than the general population.
People who only make $10,000 a year are more likely to move to another state than are millionaires. The reason for this is that wealthy people are not normally idle. They are employed or own their own businesses. They cannot simply pick up and move.
This study looked at income tax rates. It will most likely be cited in estate tax debates as well. That could be a mistake as once the wealthy retire it stands to reason that it is easier for them to move.
For some people picking someone to be the administrator of their estates is an easy process of choosing a reliable family member or friend. However, people who do not have reliable family or friends need to know where to look to find an executor.
Picking someone to be the executor ("personal representative" in Florida) of your estate is an important decision. You need someone who can reliably handle the financial details in a timely manner. You also need someone who can be trusted to faithfully carry out your wishes to make sure everything goes where it is supposed to go.
The majority of people choose a close relative or a friend as an executor. But, what if you do not know anyone who you trust enough with the task?
If you do not personally know someone who would make an appropriate executor, then you can seek the services of a professional. For example, some estate lawyers serve as advisors to executors and they are also capable of acting as executors themselves. Some banks and trust companies are also willing to administer estates.
Even though you might not know an estate attorney well, there is little reason to worry that the attorney will mishandle your estate. The attorney acting as executor is required to document everything and make an accounting for the court. Additionally, the attorney has a professional reputation to protect and maintain.
If you do not know someone who can serve as the executor of your estate, then start by asking if your estate planning attorney is willing to act in that capacity. Even if the answer is no, the attorney is likely to know another professional who offers the service.
A recent ruling by a New Jersey tax court illustrates that the legality of same-sex marriage does not solve all estate difficulties for same-sex couples who were not able to get married previously.
In 2004 New Jersey passed a domestic partnership law giving same-sex couples who registered as domestic partners some of the legal protections married couples enjoy. For example, the law exempted a surviving partner from paying the state's inheritance tax, but not the estate tax.
New Jersey is one of the few states with both taxes and requires that the higher of the two be paid. Long time partners Rucksapol Jiwungkul and Maurice R. Connolly Jr. registered as domestic partners in that same year.
In 2007 New Jersey passed a civil union law exempting same-sex couples from both the estate tax and the inheritance tax. Jiwungkul and Connolly did not enter into a civil union as a matter of principle.
Six days before the planned wedding Connolly passed away unexpectedly. Jiwungkul was the executor of the estate. In that capacity he paid approximately $100,000 to the state for the estate tax.
Later he filed an amended tax return and asked to have the amount refunded, claiming that he should be exempt from it. The state refused and the case went to tax court.
The law in the case was clear. As Jiwungkul was a domestic partner he was not entitled to the estate tax exemption. The court could have granted him an exemption by citing extraordinary circumstances, but the judge declined to do so.
The case illustrates that same-sex couples still need to be mindful about what different legal statuses mean for their estates.