Texas Estate Planning

What Is Prince Harry’s Inheritance from His Mum, Princess Diana?

“I have what my mum left me and without that we wouldn’t have been able to do this,” he said of his and Meghan Markle’s move to the United States.
The Independent’s recent article entitled “Meghan and Harry: How much did Diana leave in inheritance for Harry?” reports that Harry’s comment in the recent interview with his wife Meghan had many viewers who tuned in wondering how much Harry’s mother had left him, after her tragic death at the age of 36.
“It’s like she saw it coming and she’s been with us through this whole process,” Harry said
Diana left an estate of roughly $30 million, but at least a third of that was paid in inheritance tax, leaving nearly $18 million, according to reports. The sum was split equally between William and younger brother Harry. They were 15 and 12, when Diana died in a Paris car crash in 1997.
It is said that the funds were invested by royal advisers, which saw its value go up to around $28 million by the time her sons reached the age when they were able to access it. Upon reaching 25, William and Harry were entitled to all of the income of their share. However, prior to this, the income could be paid at the trustees’ discretion.
The trustees of Princess Diana’s estate had the authority to pay out the assets to William and Harry at any time, but when they each turned 30, they were able to request their full share of the capital, rather than only receiving the interest on that sum.
Diana’s estate was comprised of stocks and shares, jewelry, her multi-million-pound divorce settlement from the boys’ father, Prince Charles, as well as her clothing and personal items. In addition, William and Harry’s great-grandmother, the Queen Mother, also reportedly left them approximately $20 million to divide between them.
Meghan has been said to enter her marriage with around $5 million in earnings from her acting career, which included starring in the USA Network drama, “Suits.”
In September 2020, news was announced that the couple had signed a reported multi-million-dollar deal with Netflix to produce exclusive content, such as documentaries, docuseries, feature films, scripted shows and children’s programming.
More recently, Harry and Meghan agreed to a deal with Spotify to create podcast content.
Reference: The Independent (March 9, 2021) “Meghan and Harry: How much did Diana leave in inheritance for Harry?”

Who Will Be Your Heir? Don’t Leave Room for Surprises

“Intestate” is the term used to describe the estate of someone who dies without a will. Each state has laws called “intestacy laws” that govern how probate assets are distributed, if someone dies without having a will. These laws establish the inheritance hierarchy based on a person’s family structure. As explained in The Daily News’ article “’Are You My Heir?’-Who Inherits When You Die Without a Will,” all of your assets will pass to your next of kin, also known as your “heirs-at-law” or heirs in accordance to the state’s laws of intestacy. 

Here’s one example: if you are married but have no children and no grandchildren, your estate will be passed to your spouse. If two people die and there are no descendants (children or grandchildren), their parents, if living, will inherit their assets. A child who is legally adopted has the same rights of inheritance as biological children. Children born outside of the marriage may not.

If a child should predecease a parent, the living descendants of the child (if there are any) will inherit their share.

In some states, heirs are limited to family members who share the same grandparents. If your family is not geographically or otherwise close, you may have heirs you have never met.

Intestacy can become extremely complex, when there are children and grandchildren. Descendants inherit from their parents and grandparents in percentages dependent upon the total number of children and the number of children in each generation that follows.

If a grandfather has three adult children who are living and one adult child who has passed, then the estate will be divided by three—a third each to each of the two living children and the final third to the grandchildren of the third (deceased) child. The children of the deceased child are heirs, even if the parent has died.

Add non-marital children—children born outside of a legal marriage or step-children—and things start to get complicated. A court will have to determine the intestate inheritance, based on proof that the child is a descendant and if that relationship is established in a timely manner.

If the father’s name is on the child’s birth certificate, that is generally enough proof of the relationship. It doesn’t matter if they have a close relationship or have never met. The same applies to marital children—whether they have been close and caring or are estranged. 

It’s best to have a will and an estate plan, so you can decide your heirs. You are also sparing your loved ones the emotional rollercoaster of family surprises. Make an appointment with an estate planning attorney to take care of this important matter. 

Reference: The Daily News (Sep. 7, 2018) “’Are You My Heir?’-Who Inherits When You Die Without a Will”

HEAR Act Gets Early Test

While the Nazis were plundering Europe, one of the many things they did was to steal artwork from the owners and keep it for themselves. Under international law, artwork is supposed to be returned to the original owners or their heirs.

Since the Nazis were defeated a long time ago, many people might think that has been done by now. They would be wrong in many cases.

The current holders of many contested works have successfully defended themselves against the heirs for technical reasons, such as the statute of limitations. To address this problem, last year the U.S. Congress passed the Holocaust Expropriated Art Recovery Act, known as the HEAR Act.

It is about to get its first use, according to the New York Times in "A Suit Over Schiele Drawings Invokes New Law on Nazi-Looted Art."

The case is over two drawings by Egon Schiele that were once owned by Fritz Grunbaum. The Nazis took Grunbaum's artwork from his home in Vienna in 1938 and sent him to a concentration camp where he died.

His heirs claim the Nazis stole the artwork.

However, that has been disputed by dealers, current owners and museums, who claim the Nazis only inventoried the works. They also claim that Grunbaum's sister-in-law sold some of the works, including the two drawings in the current dispute, to a dealer in the 1950s.

Grunbaum's heirs have previously lost in court trying to recover this artwork.

They claim they have lost for the very technical reasons the HEAR Act was designed to prevent.

Since this is the first time the Act will be used in court, how the court uses the Act will be closely monitored.

Reference: New York Times (Feb. 27, 2017) "A Suit Over Schiele Drawings Invokes New Law on Nazi-Looted Art."

Preserving Generational Wealth

Some people have earned great wealth through their own efforts and know how hard that is. Their children are often, but not always, also aware of how much hard work went into amassing enough wealth to be able to pass it down for generations.

They will often continue trying to preserve the wealth.

However, the situation gets murkier when it comes to the grandchildren and great-grandchildren of the initial wealth generators, as Private Wealth discusses in "Heirs May Not Guard Wealth, An Advisor Says."

The further removed heirs are from those who created the wealth, the less likely those heirs are to understand the work that went into it and the more likely it is that having wealth will seem like a natural occurrence to them.

This often leads to these later generations spending more of the wealth than they should and not leaving enough for it to continue passing down through the family.

There are ways to help protect against this.

Those who create the wealth can discuss the issue with their estate planning attorneys and devise ways to make it more difficult for later generations to waste what they inherit. Another good idea is to make sure that subsequent generations receive solid financial educations and advice.

Reference: Private Wealth (Dec. 19, 2016) "Heirs May Not Guard Wealth, An Advisor Says."

Another Twist in Prince Estate Case

The list of potential heirs to Prince's estate has been narrowed down considerably as the judge in the case has thrown out many claims. However, that does not mean the issue of who will inherit a share of his fortune is entirely settled.

It was previously believed that DNA testing would provide definitive proof of who his heirs are, but that turns out to not be the case as the Twin Cities Pioneer Press reports in "In Prince estate case, blood relation might be unnecessary."

Due to a unique feature in Minnesota's family law it is possible the descendants of Duane Nelson could be declared to be related to Prince and receive a share of his estate even though Nelson is not a biological relative of Prince.

Under Minnesota law someone who is treated as a child can be legally declared a child even if they are not. Duane Nelson was previously thought to be Prince's half-brother through his father, but it now appears Nelson was not. Interestingly, Nelson’s birth certificate lists Prince's father as his own.

If the judge decides that Nelson is related under the law, then Nelson's three children have a claim to a share in Prince's estate. The law itself gives little guidance for the judge to make a determination, so it is not clear how the court will rule.

Reference: Twin Cities Pioneer Press (Sept. 29, 2016) "In Prince estate case, blood relation might be unnecessary."

Feds File Charges Against Heir Location Service

One of the many problems of passing away without an estate plan is that heirs have to be located for the estate to be distributed. Estates plans and wills list heirs by name and normally include their addresses.

However, without even a will, the estate has to locate potential heirs and notify them. Those potential heirs then have to prove to a probate court their right to inherit the estate of the deceased.

To help with this process heir location services have sprung up. For a contingency fee they locate potential heirs and assist them in proving their claims to the satisfaction of the court.

When an heir location company is successful, it receives a lucrative fee from the heirs. Unfortunately, some of those companies might be more lucrative than they have a legal right to be.

Courthouse News Service reports that heir location service Kemp & Associates and one of its co-owners have been charged by the Justice Department for antitrust violations in “Heir-Location Firm Charged in Antitrust Probe.”

The government contends that the company has been conspiring with an unindicted competitor to allocate customers between themselves.

If the charges are accurate, it means the heir location service has been colluding to avoid competition, which would drive up the costs of the services for customers.

Reference: Courthouse News Service (Aug. 22, 2016) “Heir-Location Firm Charged in Antitrust Probe.”

Judge Cuts Down List of Potential Prince Heirs

The stakes in the Prince estate case are very high. Because he did not have an estate plan, anyone who is determined to be one of his closest living relatives stands to inherit a fortune … even after approximately half of the value of the estate is reduced by state and federal estate taxes.

This has led many people to file claims with the court claiming they are closely related to Prince. Many of those claims were very weak.

For example, one person claimed that someone told him that his mother named him after Prince and thus he filed a claim to be the musician’s son.

In a single decision, the judge overseeing the case has dismissed most of the claims of those claiming to be Prince’s heir as CNN reports in “Prince's possible heirs narrowed down to six.”

A total of 29 claims were dismissed including 18 claims to be the late musician’s child.

The ruling leaves six claims to be related to Prince open. They include a possible sibling, three half-siblings, a niece and a grandniece. The remaining claimants will undergo DNA testing to see if their relation to Prince can be verified.

Determining who Prince’s heirs are is just the first step in settling his estate. After this step is completed, it will still need to be determined exactly how the estate should be divided between the heirs, who will be in control of Prince’s musical legacy and how the estate will pay the estate tax bills.

Most of the decisions that will have to be made could have been avoided if Prince had an estate plan, even a very simple one at that.

Reference: CNN (July 29, 2016) “Prince's possible heirs narrowed down to six.”

Waiting for the Tesla Model 3?

The announcement of the Tesla Model 3 generated enough buzz that more than 300,000 people paid $1,000 dollars each to be on a waiting list for the chance to purchase the vehicle when it becomes available. As the car is not expected to start shipping until late in 2017, that makes it likely some on the waiting list will pass away before getting their hands on the coveted electric vehicle.

Bloomberg reported this development in “What Happens When You Die Waiting for a Tesla?”

The actuarial reality that people on the waiting list will pass away means they should be aware of what might happen to the right to purchase the vehicle in the event of death.

Everyone on the waiting list signed a contract with Tesla that explicitly states that the right to purchase a Tesla Model 3 is not transferable to another person without the prior approval of Tesla. This is included as Tesla was concerned that spots on the waiting list would be hoarded and sold at higher than retail value when the car starts shipping. Even estate permission from the company must be sought to transfer the right to purchase to an heir or beneficiary.

A spokesperson for the company told Bloomberg that should someone on the waiting list pass away, Tesla would be accommodating. They would either refund the $1,000 deposit or allow a transfer of the place on the waiting list to an heir.

Reference: Bloomberg (July 13, 2016) “What Happens When You Die Waiting for a Tesla?”

The End for 'To Kill a Mockingbird' in Schools?

Reading Harper Lee's anti-segregation novel To Kill a Mockingbird has become something of an American rite of passage. It is one of the most commonly assigned books in schools. Many people can probably recall the version of the book that a teacher passed to them. 

As of April 25 that version will no longer be available, as the Tampa Bay Times reports in "Harper Lee's estate wants readers to pay more for 'Mockingbird'." 

Lee's estate has informed the publisher of the paperback edition of the novel that it will no longer have license to print the book. Other, more expensive versions of the book will still be available. 

This news comes shortly after a judge controversially agreed to seal Lee's will from the public so the public does not know who the author's heirs are and who is behind the decision to put an end to the paperback version of the book.

Lee's estate is not necessarily in the wrong. 

It does have a duty to properly manage the author's assets for any heirs or beneficiaries. Selling To Kill a Mockingbird for a few dollars more could potentially lead to more money for those heirs or beneficiaries. 

However, this decision could also backfire. 

Many states have cut school funding in recent years and many schools in other states are feeling a pinch as well. Those schools might assign less expensive books instead of Lee's work.

Reference: Tampa Bay Times (March 12, 2016) "Harper Lee's estate wants readers to pay more for 'Mockingbird'." 

 

Inheriting Polluted Property Can Be Expensive

In "Contaminated Property Makes for Costly Inheritance" the New York Times writes about two heirs to commercial real estate who had to pay a high price many years after their inheritances. 

In one case a woman inherited a portion of the property from her father. When she and the other owners went to sell the property an environmental report revealed that previous tenants had left behind pollution that would cost millions to clean up. 

In the other case a woman inherited property from her father through a trust. Some 25 years after the trust sold the property the woman was named in a lawsuit that claimed pollutants on the property had resulted in illness. The woman won the legal case, but it cost her $500,000 in legal fees.

An important take away from these stories is that neither was responsible for the pollution on the property, but that does not matter. When property is discovered to be polluted previous owners can often be sued and held liable. Plaintiffs usually go after the previous owner who has the most money. 

What this means for heirs is that if inherited property could be contaminated, it is often a good idea to disclaim the inheritance as it could cost more than it is worth. However, disclaiming inherited property must be done quickly so heirs should perform due diligence without hesitation. 

Be on the lookout for any property where the kind of business that is known for facing environmental investigation has been located in the past.

Reference: New York Times (Feb. 19, 2016) "Contaminated Property Makes for Costly Inheritance"