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”

 

Can I Get My Co-Executor Sister to Abide by Father’s Will?

When both children are beneficiaries and both are executors, it should be a simple result. Sell the house and split the proceeds as the father instructed. However, if one child feels this to be unfair, it can cause issues, especially when no one lives in the house, no one wants to and it just costs the heirs money each month.

Nj.com’s recent article entitled “I’m fighting with my sibling about an inheritance. What can I do?” says that this is an example of the estate planning issue of treating heirs equally rather than equitably.

An executor cannot to act in his or her own personal interest. Instead, the executor must act in the best interest of the estate. They have what’s called a “fiduciary duty.” Thus, as joint executors, the two children in this example owe a fiduciary duty to implement the terms laid out in their father’s will, unless the will is successfully contested.

When real estate is left to named heirs, the executor can either sell the property and divide the proceeds as specified in the will, or distribute the house “in kind,” which means that the beneficiaries would become co-owners. If the beneficiaries don’t want to be co-owners, the best solution is to sell the property.

While neither child wants to keep the home, it’s also possible for one of them to buy out the other’s share based on a fair market value of the house. If they can’t resolve the dispute amicably, the courts will need to be involved.

The dissatisfied child could file a lawsuit contesting the will. If deadline to do this has passed, the will should stand. Even if the child does contest the will within the required time period, it will be hard for her to succeed. The two most common grounds to contest a will are to show that the testator wasn’t competent to sign it, or to show that somebody exerted undue influence over the testator.

If dissatisfied child doesn’t contest the will — or if she does contest it but fails — she’s legally obligated to put aside her personal desires and comply with her fiduciary duty to implement the will.

If she refuses to do so, the other child can ask the court for help resolving the matter. This would involve filing a complaint seeking to remove the dissatisfied child as co-executor and name the other as the sole executor.

He would ask the court to enter an order, called an “order to show cause.” This order states deadlines for the dissatisfied child to defend her conduct and oppose the relief requested.

While you’re not required to have an attorney for this process, it will be difficult to navigate the process without one. Work with an experienced estate planning attorney.

Reference: nj.com (Aug. 9, 2022) “I’m fighting with my sibling about an inheritance. What can I do?”

What Did the Rolling Stones’ Drummer Say in His Will?

Charlie Watts, the drummer who found fame with The Rolling Stones, died on August 24, 2021, at the age of 80 after having a heart surgery.

Metro’s recent article entitled “Rolling Stones’ Charlie Watts leaves £30,000,000 fortune to his family following his death in August” reports that Watts’s will left the majority of his fortune to his family. His estate, was estimated at roughly $38 million, excluding the value of his estate in France.

Most of the money left by the star will go to his 83-year-old widow, Shirley. His treasured car collection will be given to others, according to the wishes in his will.

These instructions in the 14-page will were not made public, unlike those for his money.

Watts’s will had been drafted in 2017. His estate’s executors were told to use the income from his fortune to support “beneficiaries.”

The will directs the executors that when his wife dies, the inheritance will be passed down to his daughter Seraphina, his sister Linda Rootes, sisters-in-law Jackie Fenwick and Jill Minder and brother-in-law Stephen Shepherd.

Watts had married Shirley in 1964, before the Rolling Stones found international fame and fortune.

The drummer was seen as the shy, quiet and sensible member of the band.

He had battled throat cancer in 2004, after quitting smoking in the late 1980s. He was eventually given the all-clear after intensive radiotherapy.

Shortly before his death, Watts was forced to pull out of the Stones’s No Filter tour in America because of the operation on his heart.

Announcing the news of his death, a spokesperson said at the time: “It is with immense sadness that we announce the death of our beloved Charlie Watts. He passed away peacefully in a London hospital earlier today surrounded by his family.”

Reference: Metro (May 18, 2022) “Rolling Stones’ Charlie Watts leaves £30,000,000 fortune to his family following his death in August”

What are My Responsibilities if I’m Named an Executor?

An executor is the person who helps finalize the finances and assets for a deceased person. As executor of an estate, you will need to get copies of the death certificate, notify authorities, such as Social Security, to stop benefits and may be involved in arranging the funeral.

You will also need to follow the instructions in the will to administer the estate.

You will organize the assets, pay off any debts, close accounts like utilities and cable or phone plans and distribute money and possessions to beneficiaries.

US News’ recent article entitled “How to Prepare to Be an Executor of an Estate” takes a look at the responsibilities of an executor.

If are asked and accept the position, start by finding the important documents, like the will. As executor, you are acting in a fiduciary capacity, and your efforts are directed toward the interests of the beneficiaries of the decedent’s the estate.

The time required to be an executor can be extensive. If you are asked to be the executor before the person passes away, ask to locate the original will. Read it and make certain that you understand it.

There are also requirements that must be met to be an executor of an estate. Anyone convicted of a felony is not allowed to be an executor, even if they are named in the decedent’s will. The exact rules vary, depending on the state, so ask an estate planning attorney.

After the death, it typically takes at least six months or more to carry out all the administrative work related to the estate. Therefore, if you do not have the time, do not agree to serve as executor.

Finally, executors may be compensated for their work. Some states have commission schedules listed in their statutes that the executor can collect, while other states require that you keep track of your time and the judge will authorize “reasonable” compensation for your actual efforts.

Ask for help if tasks seem overwhelming or you do not understand certain instructions on accounts or the will. An experienced estate planning attorney can assist.

Reference: US News (Dec. 22, 2021) “How to Prepare to Be an Executor of an Estate”

Why are Siblings Battling over Mom’s Estate?

Sisters Jean Mamakos and Irene Savadian — both retired nurses in their 70s —have been locked in a bitter fight with their three other siblings over their mother’s $2.7 million estate.

The New York Post’s recent article entitled “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home” explains that Frances Perrenod, who died in 2006, named Mamakos and Savadian as the executors of her estate. All five of her children were named as beneficiaries. Perrenod was a homemaker and her husband, Charles, who died in 1988, manufactured specialized miniature light bulbs.

Since the siblings started their legal challenges in 2008, their objections have included the payment of legal fees to settle the estate with money from it; the cost to pursue mineral rights owned by their mother; and allegations that the executors delayed the sale of their mom’s Forest Hills home. They sold the Tudor home, which the family moved into in 1957, in 2014 for $1.8 million.

Anette Klingman, the oldest sibling who is an attorney, told The Post that her sisters were mismanaging the estate and taking money out of it to which they weren’t entitled. She was joined in her opposition to them with sister, Yvette Ravina, and her brother Charles Perrenod Jr., who died in 2020.

One of the disgruntled siblings also started a proceeding in South Carolina to take Irene Savadian’s house.

However, it really got ugly in April 2016, during a lunch break in a proceeding in Surrogate’s Court in Queens, Mamakos and Savadian said. Queens Surrogate Judge Peter Kelly said that the sisters were in contempt of court. At issue was a $100,000 distribution made to each beneficiary, a check the three disgruntled siblings refused to cash, Mamakos said. The judge ordered the two sisters to return their checks, but Savadian refused. Because Kelly said the sisters’ actions were “entwined,” both were sent to Rikers Island, where they were strip-searched and spent 21 days behind bars.

The two retained a lawyer for $50,000 to get them released from the lockup. However, when they were released, the discovered that Judge Kelly had replaced them as executors, naming their sister, Ravina.

In 2018, a final judgment in the estate was entered against Mamakos and Savadian for $1.8 million. It included the return of money they used for legal and other expenses to settle the estate. Judge Kelly ruled against a motion to vacate the judgment in October 2021, which the sisters are now trying to appeal.

Ravina started a lawsuit in South Carolina to take Savadian’s $400,000 house.

“We didn’t steal any money from my mother. We tried to get a good settlement for our siblings,” Savadian said. “It backfired against us.”

Reference: New York Post (Jan. 22, 2022) “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home”

Why are Siblings Battling over Mom’s Estate?

Sisters Jean Mamakos and Irene Savadian — both retired nurses in their 70s —have been locked in a bitter fight with their three other siblings over their mother’s $2.7 million estate.

The New York Post’s recent article entitled “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home” explains that Frances Perrenod, who died in 2006, named Mamakos and Savadian as the executors of her estate. All five of her children were named as beneficiaries. Perrenod was a homemaker and her husband, Charles, who died in 1988, manufactured specialized miniature light bulbs.

Since the siblings started their legal challenges in 2008, their objections have included the payment of legal fees to settle the estate with money from it; the cost to pursue mineral rights owned by their mother; and allegations that the executors delayed the sale of their mom’s Forest Hills home. They sold the Tudor home, which the family moved into in 1957, in 2014 for $1.8 million.

Anette Klingman, the oldest sibling who is an attorney, told The Post that her sisters were mismanaging the estate and taking money out of it to which they weren’t entitled. She was joined in her opposition to them with sister, Yvette Ravina, and her brother Charles Perrenod Jr., who died in 2020.

One of the disgruntled siblings also started a proceeding in South Carolina to take Irene Savadian’s house.

However, it really got ugly in April 2016, during a lunch break in a proceeding in Surrogate’s Court in Queens, Mamakos and Savadian said. Queens Surrogate Judge Peter Kelly said that the sisters were in contempt of court. At issue was a $100,000 distribution made to each beneficiary, a check the three disgruntled siblings refused to cash, Mamakos said. The judge ordered the two sisters to return their checks, but Savadian refused. Because Kelly said the sisters’ actions were “entwined,” both were sent to Rikers Island, where they were strip-searched and spent 21 days behind bars.

The two retained a lawyer for $50,000 to get them released from the lockup. However, when they were released, the discovered that Judge Kelly had replaced them as executors, naming their sister, Ravina.

In 2018, a final judgment in the estate was entered against Mamakos and Savadian for $1.8 million. It included the return of money they used for legal and other expenses to settle the estate. Judge Kelly ruled against a motion to vacate the judgment in October 2021, which the sisters are now trying to appeal.

Ravina started a lawsuit in South Carolina to take Savadian’s $400,000 house.

“We didn’t steal any money from my mother. We tried to get a good settlement for our siblings,” Savadian said. “It backfired against us.”

Reference: New York Post (Jan. 22, 2022) “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home”

What Can’t I Forget in My Will Now that I’m 50?

Yahoo News’ recent article entitled “If You're Over 50, Don't Leave This Out of Your Will, Expert Says” fills us in on what we can’t forget in a will after the big 5-0.

Incapacity. A 2021 survey from Caring.com says that almost two-thirds of adults do not have a will. Even those thinking about estate planning do not consider a plan for addressing the possibility of incapacity.

Ask an experienced estate planning attorney to create a power of attorney, so in the event you are incapable of making decisions because of your mental state or disability, you have someone you trust doing it for you.

More than a will. A will should be one component of a comprehensive estate plan that addresses who gets what when you die, but also who can take care of business, if you are not able to care for yourself. Naming a person in advance lets you to avoid having court involvement and lets you take control of your future.

The law has many ways for you to select who will have authority and care for you, if you become incapacitated. This is something that you can and should discuss with an experienced estate planning attorney.

Will backups. Designating loved ones you trust should be the rule in all facets of estate planning. However, it is critical to be certain that you have backups (“successors” or “alternates”), in the event that a person you’ve selected can't fulfill their role.

Many people around age 50 who see their thriving, productive children making their way in the world fail to consider the thought that their children may not be available or able to serve a role. Designating more than one backup might not seem like it is a big deal, but you should consider the possibility that a loved one might be incapacitated, predecease you, or be unavailable.

Keep your will current. As your life changes, so do your needs. Therefore, it is vital to be sure that your will is up-to-date. You should review your will regularly (at least every few years) to make sure that it still reflects your current thinking.

You should also be sure you know where an original copy of the will is located. It is important to keep track of it. You can leave it locked away with your attorney or some other secure place, but you need to know where it is.

Reference: Yahoo News (Feb. 6, 2022) “If You're Over 50, Don't Leave This Out of Your Will, Expert Says”

What Does the Role of Estate Executor Entail?

Being named as the executor of a will is an honor and an obligation. However, depending on the size of the estate and your relationship to the deceased, performing the duties of an executor can feel like a second job, says Kiplinger’s recent article entitled “What to Do When You’re the Executor.”
This can be a real challenge for adult children who are responsible for executing the estate of the last surviving parent. These executors are often required to distribute assets among several beneficiaries, sell the family home and look over all the family belongings. If the family is a bit dysfunctional, if it’s a big estate, or if their parents’ estate planning was poor (or nonexistent), it’s even more time-consuming. Let’s look at some basic steps most executors should follow:
Get a dozen copies of the death certificate and file the will. Copies of the death certificate are usually available from the funeral home. You must then file the will and death certificate with the county probate court. If probate is required, you must get a letter from the court, known as a letter of testamentary. This gives you legal authority over the estate.
Assemble your pro team. In most instances, you’ll need an experienced estate planning attorney to help you navigate the probate court. The attorney who helped the decedent draw up his or her will is a good choice, as he or she is most likely familiar with the estate.
Create an inventory of assets. If the deceased didn’t keep good records of bank and brokerage accounts, insurance policies, tax returns, and other documents, you may need to track down some of these accounts.
Protect personal property. If the estate includes a home, the executor is responsible for maintaining the property and paying the mortgage, taxes and insurance until it’s sold.
Set up a separate bank account. An executor will need to pay bills and make deposits on behalf of the estate, so set up a bank account in the name of the decedent’s estate. This will also provide you a record of transactions that will prove useful if anyone challenges your administration of the estate.
Pay the decedent’s debts. This is a crucial action. If the decedent’s unpaid bills and other debts aren’t paid before the estate is distributed to heirs, creditors could sue. The executor is also responsible for filing a state and federal tax return to pay any taxes owed (or claim a refund).
Communicate with the beneficiaries on a regular basis. Don’t leave the heirs in the dark.
Distribute the assets. Finally, you can distribute the assets after all debts are paid, which may first require court approval.
If this sounds like more than you can handle, you can decline to act as an executor. Sometimes that’s the right choice.
Reference: Kiplinger (Oct. 29, 2021) “What to Do When You’re the Executor”

Don’t Follow Queen of Soul: Think about Estate Planning

The Albuquerque Journal’s recent article entitled “Learn from Aretha’s estate mess and ‘Think’” talks about the new bio pic called “Respect” that traces 20 years of the life of Aretha Franklin, the Queen of Soul and the number one singer of all time in a Rolling Stone ranking from 2010.
Aretha died in 2018. She had four sons from either three or four fathers. Their ages spanned 15 years. The oldest, born when Aretha was 12, has special needs and lives in a group home. When she passed, all evidence pointed to the fact that she had no will. The sons – in birth order, Clarence, Edward, Ted, and Kecalf – agreed to a friendly and equal split of the estate. Michigan law supported this. They designated a cousin, Sabrina, as the executor.
This was good, until Sabrina started finding wills. There were two from 2010 and one from 2014. They were all in Aretha’s handwriting, the last one in a spiral notebook found under cushions of a sofa.
Michigan law permits an entirely handwritten will and even allows a will to be unsigned, if it clearly shows the decedent’s wishes. Her 2014 will first named the three younger sons as co-executors. Aretha then crossed out all names but Kecalf. Ted and an attorney appointed to represent Clarence challenged Kecalf’s competence to serve as Aretha’s executor.
But wait! A fourth will was found. That one was actually typed and established a trust for Clarence. Aretha initialed some pages, but she didn’t sign it.
At that point, Sabrina gave up and resigned as Aretha’s executor.
The probating of Aretha’s estate went from a friendly division of assets to a hot mess.
The sons were now “playing games that they can score,” and wondering if Aretha stopped to think what she was trying to do to them.
The Probate Court judge appointed Aretha’s friend Reginald Turner, who recently was named President of the American Bar Association, as temporary estate representative.
The sons’ fighting is ongoing.
Aretha’s estate has a lot of issues. Don’t be like the Queen. Get your estate plan set and revise it, as needed, with the help of an experienced estate planning attorney.
Reference: Albuquerque Journal (Sep. 12, 2021) “Learn from Aretha’s estate mess and ‘Think’“

Who Inherited from the Painter Bob Ross?

Like many painters before him, Bob Ross's image only took hold after his untimely death. He's now a pop culture icon, and is featured as bobbleheads, Chia pets and has his own cereal.
However, there's a reason why we see so much more of the gentle painter than ever before. That’s because of a legal battle for ownership of Ross's name. That was the only item of value in his estate, which is rare for celebrities of his caliber.
Wealth Advisor’s recent article entitled “Here's Who Inherited Bob Ross' Estate, And Where They Are Now” reports about what happened to his estate, who controls it and where they are today.
The Daily Beast wrote that Ross is "a smash hit on social media, where he feels more like a Gen-Z influencer than a once semi-obscure PBS celebrity who rose to fame in the 1980s on the back of his bouffant hairdo, hypnotic singsong baritone and a timeless message about the beauty of the world around us."
However, he wouldn't have become a household name, if not for Bob Ross Inc. The battle began when the artist met Bill Alexander, a celebrity painter who had a show on PBS, in 1978. Alexander gave him a job as a traveling art instructor. Ross met Annette and Walt Kowalski at a class, who recently lost their son, and who wanted to learn how to paint.
The Kowalskis convinced him to come to Washington, D.C. to teach. They eventually made a deal: they'd give him a stipend and room and board, if he'd teach more classes that they'd arrange in the area. PBS then asked Ross to do a show like Alexander's, and Dennis Kapp, the owner and CEO of the art-supply company Martin F. Weber, wanted to develop a line of supplies with him too. Soon, The Joy of Painting was born. However, to look after the supply company with Kapp, Ross and his wife Jane, and Annette and Walt signed documents to create Bob Ross Inc., with all four of them being equal partners.
At the end of the 1980s, all four partners were making $85,000, and in the early '90s, Ross made around $120,000. However, he wanted to branch out, and when he did, the happy days were at an end. When Ross's health started to decline, Walt "declared war" and sent Ross documents saying the Kowalskis owned everything, but they'd agreed that Ross and his heirs would get 1% of the revenues for the next decade. Ross never signed anything, and in fact, he quickly changed his last will to make it harder for the Kowalskis to steal his name and likeness.
Those changes to his last will included "a clause specifically addressing his name, likeness and the rest of his intellectual property. All of those rights were to go to Steve and one of Bob’s half-brothers." His third wife replaced Annette as the administrator of his estate. In July 1995, the painter lost his battle to cancer.
When Ross died, Bob Ross Inc. was totally owned by the Kowalskis. However, they wanted it all, including his name and likeness. Then what one of Ross's good friends calls "Grand Theft Bob" began.
Steve did not know about the final amendment until 20 years later when his uncle Jimmie, the estate's executor, informed him. When Ross died, he was worth $1.3 million. Half of that was his third part of Bob Ross Inc., and there was also cash, stocks and property to divide.
The Kowalskis went after Ross's art supplies and artwork and made "claims against the estate for business and personal reimbursements," charging Ross's widow with hefty lawsuits and suing PBS and the children's show Ross guest-starred on. In 1997, Jimmie, Ross's brother, settled the lawsuit, practically handing over everything to the Kowalskis. In 2012, their daughter Joan took over, opening up the realm of merchandising for the company.
However, there was still a "grey zone" in how Bob Ross Inc. could truly own Ross's name and likeness. After learning about that amendment in Ross's will, Steve went after Bob Ross Inc. but didn't win his case against Bob Ross Inc.
Joan did strike a deal with him: if he surrendered his rights to Ross's name and likeness, he could print his name on anything he wanted.
The good news was that Steve was able to return as an art instructor, and thanks to Bob Ross Inc., Ross was bigger than ever. That helped class sizes, and students came in masses to learn the iconic style. Steve gets to run his father's estate, and fans welcomed him back to the painting world. Despite the fact that the Kowalskis got everything, they were the only ones who could have kept Ross's name from disappearing.
As for all of Ross's paintings the Kowalskis seized, they ended up in an unprotected warehouse until the Smithsonian took a collection of them.