Texas Estate Planning

Blunders in Estate Planning May Lead to Breach of Family Harmony

The Financial Post’s recent article entitled “Avoid these five mistakes when estate planning to preserve family peace” provides us with some of the biggest mistakes:

1. Treating family members differently. People do this frequently. They may have valid reasons for doing so. However, it’s still not a great idea. Instead, comfortably tell your children in advance why you’re doing this. This will avoid anger and jealousy between the children when they discover this. Try to leave assets equally, even if you don’t think it is fair.
2. Pass the family vacation home to multiple children. It's best to either sell the home in your later years or, if you keep it, make sure it is openly discussed. You might set up life insurance to specifically pay taxes and perhaps one or two children, so the remaining children can afford to keep the cottage. Even so, a sale is the cleanest approach.
3. Don’t tell the children anything about your money. Not a good idea. This approach often eliminates any ability to understand what might be most meaningful to your children or beneficiaries. Maybe less so in terms of cash, but in terms of family heirlooms or property. Perhaps a favorite piece of furniture was really important to two children, but there was never any discussion about it. As a result, it’s now completely left to them to fight over. This may sound like a small issue. However, many families have split up forever over just this type of scenario.
4. Purposely or inadvertently leaving most or all assets to a new spouse. It can occur by accident due to poor planning around ownership titles, lack of pre-nuptial agreements or the unintended naming of beneficiaries on investment accounts or life insurance. However, sometimes, it’s meant to hurt the children. The hurt can certainly go both ways and is frequently a major issue when a spouse isn’t treated fairly. Ask an experienced estate planning attorney to walk through this with you.
5. Significant charitable giving. If your gifts to charity aren’t discussed with your so-called traditional beneficiaries, there can be conflicts with the charity that can be drawn out.

Communicate what you’re doing and why to your family.

Reference: Financial Post (Nov. 9, 2022) “Avoid these five mistakes when estate planning to preserve family peace”

 

Exactly Why Do I Need a Will?

Some people mistakenly think not having a will allows their assets to bypass the time and expense of probate. That’s not true–if you die without a will, your property still must go through probate, says Fed Week’s recent article entitled “The Importance of Having a Will.”

If probate avoidance is an issue, you can create a revocable trust to keep control over the trust assets while you’re alive.

Assets placed in trust during your lifetime can be distributed at your death, under the terms of the trust, without going through probate.

There are many types of trusts, and they all establish a financial arrangement between three parties:

• The Trustor
• The Trustee; and
• The Beneficiaries.

The person creating the trust is known as the trustor or grantor. The trustee manages the trust and disperses income or principal from the trust according to specific terms.

When you draft a will, you shouldn’t forget about it. Any births, deaths, marriages or divorces all may create a need to revisit your so-called “last wishes.”

After each change, make sure your current will is both safe and accessible. You can leave your will with your executor. If you decide to keep your will somewhere else, your executor and other family members should know its location. The estate planning attorney who prepared your will should have a copy, as well as a memo revealing the location of the original.

Regardless of where you put your will, have another document for your funeral and burial instructions. Wills generally aren’t read until days or weeks after death, so that won’t help your family make prompt decisions about a funeral or a memorial service.

As a result, a separate letter should be used to specify your final wishes and your executor should know where these instructions can be found.

Ask an experienced estate planning attorney to help you write your will.

Reference: Fed Week (Nov. 2, 2022) “The Importance of Having a Will”

Why Is Estate Planning So Important?

“Estate planning” will be your family’s guidebook once you have passed away. The Big Easy Magazine’s recent article entitled “Estate Planning Is Essential and Here’s Why” explains that estate planning is similar to writing a last will. HOwever, writing one is not limited to what happens to your house, car, possessions, or other assets after you pass away. It also entails the question of who will take care of your minor children, if they are left without a parent, as well as your instructions for burial and other items.
If you fail to leave specific instructions, the state’s intestacy laws will apply at your death, meaning that the court will decide who gets what. There is no guarantee this will be in your best interest. Let’s look at the consequences of not writing your will:
If you prefer cremation or a traditional burial, your family may not know and decide based on their preferences or convenience.
Your properties will be managed by someone you do not necessarily trust, if you do not name an executor to your will.
Some of your loved ones may not get an inheritance if there is no will. State law may not carry out your intentions, and some people may be left out.
Your favorite charity may not receive donations. For those committed to leaving a legacy, your organization of choice should be listed in the will.
The court will assign guardians for your minor children, and social services will appoint a guardian. You can avoid this, by naming a trusted person in your will.
Aside from avoiding these consequences, estate planning can also save your family a lot of headaches and expense. A detailed will with your instructions will alleviate the stress and provide them with comfort, while they recover emotionally from their loss. Here are the top reasons why you need to plan these things:
You can avoid inheritance taxes and federal estate taxes with proper estate planning.
You can name who will care for you, if you are unable to make your own decisions because of illnesses, infirmity, or old age. With a power of attorney, you can name someone you trust to manage your finances.
If your minor children are orphaned, you can name someone you trust to be their guardian in your will.
Some family members are greedy, so you can exclude them from your will. With an estate plan created by an experienced estate planning attorney, you can ensure that the people you love will receive what you intend.
Estate planning is essential to securing a comfortable life for your loved ones. Work with an experienced estate planning attorney to set things up correctly.
Reference: The Big Easy Magazine (May 17, 2021) “Estate Planning Is Essential and Here’s Why”

Settlement Reached in Mack Estate

Sheila von-Wiese Mack created a relatively simple estate plan. She created a trust, whose sole beneficiary was her daughter Heather Mack. Heather was to receive small annual payments, until she reached the age of 30, at which time she was to receive the remainder of $1.6 million. However, Heather could not wait for the inheritance. While on vacation in Indonesia, she and her boyfriend killed Sheila. 

The case became famous, as Sheila's body was stuffed into a suitcase. Heather was convicted and sentenced to 10 years in prison in Indonesia. She continued to garner attention, however, as she was pregnant when she went to prison. 

The child, Stella, was born in prison. Heather insisted that the child remain in prison with her, which she was allowed to do, until Stella reached the age of two. Heather's fame continued, since apparently in Indonesia, prisoners have access to social media, where Heather posted pictures of herself partying in prison and even going out to restaurants. The Daily Mail reported on this in "Heather Mack settles claims for mother's estate four years after killing her with her boyfriend - and all the money left will go to her daughter Stella, 3."

The story does not end there. Heather Mack still wanted her inheritance.  However, the executor of the estate in Illinois refused to give it to her, since Illinois has a slayer statute. According to the statute, a person cannot receive an inheritance from someone they murdered. Nonetheless, Heather continued to pursue her claim and the resulting lawyer's fees have taken half of the estate's assets to defend. Heather Mack has now finally settled and agreed that all of the estate assets will go to the benefit of Stella. She should have settled for that initially.

Reference: Daily Mail (June 22, 2018) "Heather Mack settles claims for mother's estate four years after killing her with her boyfriend - and all the money left will go to her daughter Stella, 3."

More Trouble for Alan Thicke's Estate

Alan Thicke's sons had previously filed a motion in court, requesting that their step-mother Tanya Thicke be legally barred from challenging the pre-nuptial agreement she signed with their father. The sons lost that case and Tanya Thicke has not filed any legal challenges to the pre-nuptial. However, there are still other conflicts between the family members. 

The widow is now accusing the sons, who act as co-trustees of the trust created by their father, of squandering the money, refusing to give her any information about the accounts and not giving her what she is owed. 

She is upset that the sons refused to reimburse her for a monument she purchased for Alan Thicke's burial site, while reimbursing one of the sons for a $100,000 post-funeral party. TMZ reported on this development in "Alan Thicke's Widow His Sons are Being Shady With $$$ ... Where's My Inheritance!?"

Part of the tragedy here, is that Alan Thicke likely thought he was doing the right thing in creating a trust to make sure his widow and both of his sons from a previous relationship were adequately taken care of. However, a trust is only as good as its trustees. 

If the trustees do not get along with one of the beneficiaries, problems can arise. Part of the reason for using a trust may be to avoid conflicts in blended families. It is also normally not a good idea to designate a family member as trustee, when that family member is also a beneficiary with potential conflicts of interest.

Reference: TMZ (May 9, 2018) "Alan Thicke's Widow His Sons are Being Shady With $$$ ... Where's My Inheritance!?"

When a Family Member Passes Away

Death can be overwhelming for the family of the deceased. On top of the grieving process itself, there are many other things which families have to deal with. There are obvious things that need to be done, such as planning a memorial and burial or cremation. 

There are also legal issues with the estate that also need to be resolved and the sooner the better. Getting a handle on those legal things can be difficult. 

Taking a few steps can make things much easier, as Kiplinger discussed in "5 Things to Do the Moment a Loved One Passes Away" 

These steps include:

• Making sure that someone in the family has access to the home of the deceased. A walk through of the home should be done to make sure that anything of value is secure and to look for all financial and legal documents.
• Closing all financial accounts. Make sure that banks and credit card companies know someone has passed away. Provide them with any documentation they need to put holds on the accounts. If no one will be living in the home, make sure unnecessary services such as cable and phone are stopped.
• If you are going to be the executor of the estate, get a general idea of the estate's finances by looking at any tax documents and financial statements.
• Meeting with an accountant and an estate attorney to learn what you need to do and consider whether you need to hire them to assist you.
• Talking to other family members to try and reach agreements about how the estate should be handled and by whom. This will help avoid fights later.

Reference: Kiplinger (April 17, 2018) "5 Things to Do the Moment a Loved One Passes Away"

Large Damage Award in Estate Verdict Likely to Be Reduced

Sometimes in the American judicial system, juries can become overzealous when it comes to the amount damages they order a losing company to pay. The verdict amounts these juries award makes headlines.  However, later in the legal process, the damages are reduced by judges or by agreement of the parties. 

A recent example was the case of the Hopper estate versus JPMorgan tried before a Texas jury last year. JPMorgan had been hired to administer the estate, but disputes developed between the heirs and the firm. The heirs sued and a jury in probate court came down with an $8 billion verdict against JPMorgan.

Private Wealth discusses the case in "JPMorgan's $8 Billion Jury Loss To Widow Faces Massive Reduction."

Despite that large number, which was the 9th largest jury award in U.S. history, JPMorgan is likely to pay no more than $90 million. All the plaintiffs in the case have filed motions with the court to severely reduce the amount the jury awarded them.  

It is not clear from the reporting, but these motions likely followed negotiations with JPMorgan and were agreed upon to avoid further litigation. As a result of protracted litigation, the heirs to the Hopper estate would necessarily be required to wait much longer to receive their awards.

Reductions to eye-popping jury awards like this are very common. This is something to keep in mind, the next time you read a headline about a jury awarding a massive amount of damages.

What to Do If You Are a Will Beneficiary

When a will is filed in probate court, one of the first things normally required is to notify everyone who is named in the will or who may potentially benefit from the will. Sometimes, that can be many people, as is the case of the recently deceased actor John Mahoney.

His estate is worth approximately $5 million and there are 38 people who could be beneficiaries. Most of the time, the number of people notified is likely to be far less. If you are notified that you could potentially benefit from a will, you need to know what to expect from the probate process. This is especially true, if it is a large estate. 

 This was the subject of a recent Market Watch article titled "What to do if you're like one of 'Frasier' dad John Mahoney's 38 beneficiaries."

The answer to what to expect of the probate process? It depends. 

State laws vary greatly about how the probate process is conducted. Your first question might be what you can expect to receive from the estate.  However, that can take a long time to sort out. In some states, you can ask the probate court for a copy of the will that was filed. This might at least give you a general idea. 

However, in other states, it is left to the discretion of the appointed executor whether to let people see the will. However, what the will says you should inherit, might not be what you actually receive. Other people and creditors might file claims against the estate.

What is the best thing to do, if you are a potential beneficiary of a wealthy estate? Hire an estate attorney who can help you with the process in the state where the probate court is located.

Reference: Market Watch (March 29, 2018) "What to do if you're like one of 'Fraiser' dad John Mahoney's 38 beneficiaries.

John Mahoney's Estate

Actor John Mahoney had a long and distinguished career as an actor in a variety of roles. He was best known for his award-winning work on the TV show Frasier, in which he played the main character's elderly father. 

He passed away recently at a hospice, while suffering from a variety of illnesses. Friends, former co-workers and fans have shown an immense amount of grief over the loss. 

One friend recently petitioned a court to open a probate case to settle Mahoney's estate, as TMZ reported in "'Frasier' Star John Mahoney Leaves Behind $5 Mil Estate."

The full details about Mahoney's estate are not yet known. The estate is believed to be worth $5 million, including real estate worth approximately $300,000. It is not clear from the initial reporting whether Mahoney had a will or trust. 

It is also not clear how Mahoney might have directed the distribution of his estate between various people. Court documents do list 38 potential beneficiaries of the estate, who were friends and relatives of Mahoney.

An estate as large as Mahoney's with many potential inheritors is often a perfect recipe for conflict. Those potential inheritors may lawyer up and choose to fight over their respective share of the estate. 

However, it is too soon to know whether that will happen in this case and what Mahoney might have done to make conflicts over his estate less likely to occur.

Reference: TMZ (March 24, 2018) "'Frasier' Star John Mahoney Leaves Behind $5 Mil Estate."

Lost Jackie Kennedy Portrait Resurfaces

When Jackie Bouvier was 19 years old, she fell off a horse. It was not certain whether she would survive, since she was unconscious for a few days.

Shortly thereafter, her father commissioned an oil painting of her to make sure that a lasting memory of his daughter was preserved. The young woman did survive and went on to became one of the most recognizable and iconic women in the country, when she later became Jackie Kennedy, the First Lady of the United States.

The painting was forgotten and lost or possibly stolen decades ago, as the Daily Mail reports in "Estate of Grey Gardens socialite sues for the return of a long-lost portrait of 19-year-old Jackie Kennedy that was found hidden away in a Hamptons art gallery."

The painting is known to have eventually been inherited by Kennedy's aunt and cousin who lived at an estate called "Grey Gardens." It has recently resurfaced in the hands of a New York art collector.

The heirs of Kennedy's relatives claim the painting was stolen decades ago, while no one was at the estate. The estate of the last known owner of the painting is now suing the collector for the portrait's return. However, the collector says he purchased the painting 30 years ago from a dealer who had a valid provenance for it.

Estates do have a duty to attempt to regain valuable stolen property, even after 30 years. However, proving what happened in this case could be difficult.

Reference: Daily Mail (Feb. 10, 2018) "Estate of Grey Gardens socialite sues for the return of a long-lost portrait of 19-year-old Jackie Kennedy that was found hidden away in a Hamptons art gallery."