Texas Estate Planning

I am Concerned That My Son-in-Law will get My Estate

A frequently question people have when updating their wills with an experienced estate planning attorney, is whether they still need a trust for an adult child. The child has graduated college, is on her second well-paying job, is married and has children of her own. The child is a responsible young adult. However, an issue may arise with the adult child’s spouse and the potential for divorce.
Kiplinger’s recent article entitled “Worried about Your Child’s Inheritance If They Divorce? A Trust Can Be Your Answer” says that people do not want money they have worked hard for to be directed to their son’s or daughter’s ex-spouse, if a divorce occurs.
The current federal estate tax exemption in 2021 is $11.7 million per person or $23.4 million for married couples, so creating a trust to save taxes upon death isn’t as big a factor as it used to be. The larger question is how well we think our children will handle receiving a large sum of money. Some parents want a trust because they worry about their adult child losing thousands of dollars of their inheritance as a result of a failed marriage. By creating a trust as part of their estate plan, these parents can help protect their child’s assets in a divorce settlement.
In many situations, if a child receives an inheritance and combines it with assets they own jointly with their spouse, like a bank account, car or house, depending on where they live, the inheritance may become subject to marital property division, if the adult child and spouse later divorce. However, if the child’s inheritance is in a trust account, or they use trust funds to pay for assets only in their name, the inherited wealth can further be protected from a divorce.
Trusts can be complicated and require more administrative work and costs, which may cost more than just leaving assets outright to your children. This is worth it for those who want to protect their child’s wealth. If your child is under 18, you’re not thinking about divorce, but because of their youth, leaving assets in trust for them is often a good idea. A trustee will oversee the child’s assets and will be able to guide them to make sound decisions with any inherited funds. If your child is newly married, rather than creating a trust right after your child’s marriage, see how the marriage goes over the next five to 10 years. Then ask yourself how comfortable you are with your child’s relationship and how you feel about your son-in-law or daughter-in-law.
Consider your estate plan as a five-year plan. Review your will, trust and other estate planning documents every five years. This can help you carefully evaluate relationships, finances and the emotional dynamics of your family. An experienced estate planning attorney can also adjust or cancel the trust during your life, as your family situation changes.
Reference: Kiplinger (April 16, 2021) “Worried about Your Child’s Inheritance If They Divorce? A Trust Can Be Your Answer”

How do I Settle an Estate if I’m Named Executor?

If you are asked to be an executor, you should learn some of the basics of the job before agreeing to the task. An executor is the individual named to distribute a decedent’s property that passes under his or her will. The executor also arranges for the payment of debts and expenses.
WMUR’s recent article entitled “Settling an estate” explains that if the executor is not willing or able to do the job, there’s usually an alternate executor named in the will. If there’s no alternate, the court will designate an executor for the estate.
Depending on the estate, it can be a consuming and stressful task to address all of the issues. Sometimes, a decedent will leave a letter of instruction which can make the process easier. This letter may address things like the decedent’s important documents, contact info, a list of creditors, login information for important web sites and final burial wishes.
One of the key documents is a will. The executor must get a hold of a copy and review it. You can work with an estate planning attorney to determine the type of probating (a process that begins with getting a court to approve the validity of the will) is needed.
The executor should conduct an inventory of the decedent’s assets, some of which may need to be appraised. If the decedent had a safe deposit box, the contents must be secured. Once the probate process is finished, assets then may be sold or distributed according to the will.
Asset protection is critical and may mean changing the locks on property. The executor may be required to pay mortgages, utility bills and maintenance costs on any property. He or she must change the name of the insurance on home and auto policies. Any brokerage accounts will need to be re-titled. The final expenses also need to be paid.
The funeral home or coroner will provide death certificates that will be needed in the probate process, and for filing life insurance claims.
If the decedent was collecting benefits, such as Social Security, the agency will need to know of the decedent’s death to stop benefits. Checks received after death must be returned. The executor will file a final federal and state tax return for the decedent, if necessary. There also may be an estate and gift tax return to be filed.
There’s a lot for an executor to do. It can be made easier with the help an estate planning attorney.
Reference: WMUR (Dec. 23, 2020) “Settling an estate”

Estate Planning Lawyer, Wills, Intestacy, Probate Court, Inheritance, Asset Protection, Capacity, Guardianship, Executor, Personal Representative, Trusts, Trustee, Power of Attorney, Healthcare Directive, Living Will, Probate Attorney, Beneficiary Designa

First, a fiduciary duty is the requirement that certain professionals, like attorneys or financial advisors, work in the best financial interest of their clients. By law, members of some professions with clients are bound by fiduciary duty.
Forbes’ recent article entitled “What Is Fiduciary Duty?” explains that in a fiduciary relationship, the person who must prioritize their clients’ interests over their own is called the fiduciary. The person getting the services or assistance is called the beneficiary or principal.
You will frequently see a fiduciary relationship with certain types of professionals, like attorneys and financial advisors. A fiduciary duty is a serious obligation, and if a fiduciary doesn’t fulfill his or her duties, it’s known as a breach of fiduciary duty. Fiduciaries must act in a beneficiary’s best interest. They have two main duties: duty of care and duty of loyalty. Fiduciaries may have different or additional requirements, depending on their industry.
With the duty of care, fiduciaries must make informed business decisions after reviewing available information with a critical eye. Lawyers must act carefully in performing work for clients. Care is determined by the prevailing standards of professional competence in the relevant field of law and geographic region. To abide by the duty of loyalty, fiduciaries must not have any undisclosed economic or personal conflict of interest. They can’t use their positions to further their own private interests. For example, fiduciary financial advisors might adhere to the duty of loyalty by disclosing recommendations from which they’ll receive a commission.
Other common professions or positions that require fiduciary duties include directors of corporations and real estate agents, as well as those discussed below:
Trustee of a Trust. When you want your assets to transfer to someone after you die, you can put them into a trust. The trustee who’s in charge of the trust has a fiduciary duty to manage the trust and its assets in the best interests of the beneficiary who will one day inherit them.
Estate Executor. The person who manages your estate and handles your affairs is your estate executor. He or she has a fiduciary responsibility to your heirs and next of kin to distribute the estate according to your wishes.
Lawyer. Your attorney must disclose any conflicts of interest and must work with your best interests in mind.
Financial Advisors. Financial advisors who are fiduciaries must act in the best interest of their clients and offer the lowest cost financial solutions to fit their clients’ needs. However, it important to note that not all financial advisors are fiduciaries.
Reference: Forbes (July 28, 2020) “What Is Fiduciary Duty?”

Why Is Walt Disney’s Grandson Unable to Claim his $200 Million Inheritance?

Los Angeles County Superior Court Judge David J. Cowan recently claimed that Walt Disney’s grandson Bradford D. Lund had Down Syndrome—despite being presented with DNA evidence proving the opposite. The judge also ruled Lund to be “unfit” to receive his $200 million inheritance from Walt Disney and appointed him a temporary guardian to make all his legal decisions. This was all ordered without a hearing. Lund’s legal team is now trying to contest the rulings.

Inside the Magic’srecent article entitled “Walt Disney’s Grandson Sues Judge Claiming He Has Down Syndrome Without Evidence, Blocking $200 Million Inheritance”says that in the complaint, Lund’s attorney Lanny Davis alleges that the probate court’s action is “all too reminiscent of a perspective where facts do not matter but alternative facts do, where the constitution does not matter…”

The alternative facts Davis spoke of are from a 2016 court decision by Superior Court Judge Robert Oberbillig from a 10-day trial brought on by “disgruntled relatives” against Lund. The trial came after seven years of litigation questioning whether Lund was required to have a limited guardianship. In that trial, Lund was examined by two court-appointed physicians, one court-appointed expert and by Judge Oberbillig himself in open court.

From the investigation, Judge Oberbillig rejected the family’s claims that Lund needed guardianship and ruled that Lund was “not incapacitated.” However, Judge Cowan ignored Oberbillig’s ruling and the DNA evidence that showed Lund doesn’t have Down Syndrome. Instead, Cowan stated from the bench: “Do I want to give 200 million dollars, effectively, to someone who may suffer, on some level, from Down syndrome? The answer is no.”

From this statement, Lund’s legal team brought an additional cause of action that claims Judge Cowan and the Los Angeles Court violated an anti-discrimination law, when Judge Cowan made this “indisputably false” statement and “perception.” They claim this resulted in discrimination against Lund and his loss of freedom regarding the right to counsel and property rights without due process of law.

On Feb. 27, 2020, Lund’s counsel also filed a federal civil rights case in the U.S. District Court for the Central District of California against Judge Cowan for alleged violation of Lund's constitutional due process rights in the appointment of a limited guardian ad lit em.

Lund was supposed to have received his portion of his mother’s trust fund when he was 35, which was 15 years ago. He is now 50 years old.

Reference:  Inside the Magic(March 25, 2020) “Walt Disney’s Grandson Sues Judge Claiming He Has Down Syndrome Without Evidence, Blocking $200 Million Inheritance”

The Latest on Kirk Douglas’ Estate

Wealth Advisor’s recent article entitled “Kirk Douglas Lived Well, Died Rich And May Trigger $200M Los Angeles Range War” explains that Douglas worked steadily in a four-decade period but slowed down after the early 1980s. Since that’s almost 40 years ago, one might think that what would be considered a modest legacy by modern standards would be whittled down considerably. However, Kirk Douglas died extremely rich, despite a long life and decades of semi-retirement. 

Douglas was one of the first to ask to participate in the profit of his movies and was one of the first stars to form his own production company. For example, Spartacus was big enough to gross $30 million on its $12 million budget. When he started his company, he refused to pay himself for that film. Instead he took 60% of the profit and wound up about $3 million ahead. His company owned the films and sold off distribution rights.  

His widow Anne is now the only shareholder of record. She’s rolled the money into a family trust that over the decades created numerous tiers of holding companies and joint ventures. One of those joint ventures ended up owning half the land under Marina Del Rey’s high-rise Shores apartment complex, a property that cost a reported $165 million to build. The land is nearly priceless. 

Now that it’s only Anne, the successor trustees will one day need to decide what to do with the land. She called the shots on the accounting side. Kirk remarked that he didn’t even know where the money was. However, when he found out, he got eager to give it all away. Tens of millions have already been committed to hospitals, schools and theaters. 

Estate tax won’t be an issue because Kirk and Anne conducted thorough estate planning so that any wealth that goes to the family will transfer via a trust. That way, they’ll get a portion of the income without triggering estate tax concerns.  

Thanks to all of Kirk’s films—many of which he owned like Spartacus—he compiled tens of millions of dollars in cash and stock during his lifetime. In almost 70 years of marital bliss, his planning added up to a lot of marital property. It was good life with good things yet to come. 

It’s a testament to the power of long-term thinking. Kirk Douglas’ fortune has remained intact for generations and will undoubtedly keep helping the world for many years to come. 

Reference:  Wealth Advisor (Feb. 4, 2020) “Kirk Douglas Lived Well, Died Rich And May Trigger $200M Los Angeles Range War” 

How Long Do You Have to Settle an Estate?

The beneficiaries of an estate are recently eager to receive their inheritance. In a common scenario, a trust was left instead of an actual will. All the parties received their respective shares, except for the two brothers and a sister who is the executor. The trust instructed the brothers to divide the estate property in half for each of them. The sister was to get $15,000. 

However, one of the brothers lives in the home. 

As you may know, the administrator or executor of an estate has the job of collecting the decedent’s assets, paying debts, making distributions to the beneficiaries and finally closing the estate in an expeditious manner. 

nj.com’s recent article entitled “How long does it take to pay out a family trust?” tries to sort out what the siblings need to do to settle the estate. The key factor in this scenario is the wording of the trust. 

There are situations in which a trust is used as a substitute for a will. In that case, a person’s assets are placed in trust. The trustee pays all the liabilities and administers the assets in the trust in accordance with the instructions of the trust during the individual’s life and after her death. 

Even when trusts are used as will substitutes, they aren’t always designed to be closed with distribution to happen immediately after the debts are paid, as in the case of the estate. The terms of the trust dictate the trustee’s duties as to the distribution of trust assets. 

If you’re a beneficiary of a trust and think that the trustee is breaching his fiduciary duties, you should inform the trustee of the nature of the suspected breach. If nothing is done to remedy this, you may ask the court for help. 

One option is that you can request the court to order the trustee to take actions, which you state in your complaint filed with the probate court. Another option is to request that the court direct the trustee to stop taking specific actions that you detail in your complaint. 

A third choice is to ask the court to remove the trustee due to breach of fiduciary duties that you set forth in your complaint filed with the court. 

However, such court intervention can be expensive. Another thing to consider is that the trustee may petition the court to have his legal fees paid from the trust funds—which will deplete the money in the trust. Because of this, it is usually best to attempt and resolve these issues before getting the court involved. 

Reference: nj.com (Feb. 12, 2020) “How long does it take to pay out a family trust?” 

How Long Do You Have to Settle an Estate?

The beneficiaries of an estate are recently eager to receive their inheritance. In a common scenario, a trust was left instead of an actual will. All the parties received their respective shares, except for the two brothers and a sister who is the executor. The trust instructed the brothers to divide the estate property in half for each of them. The sister was to get $15,000. 

However, one of the brothers lives in the home. 

As you may know, the administrator or executor of an estate has the job of collecting the decedent’s assets, paying debts, making distributions to the beneficiaries and finally closing the estate in an expeditious manner. 

nj.com’s recent article entitled “How long does it take to pay out a family trust?” tries to sort out what the siblings need to do to settle the estate. The key factor in this scenario is the wording of the trust. 

There are situations in which a trust is used as a substitute for a will. In that case, a person’s assets are placed in trust. The trustee pays all the liabilities and administers the assets in the trust in accordance with the instructions of the trust during the individual’s life and after her death. 

Even when trusts are used as will substitutes, they aren’t always designed to be closed with distribution to happen immediately after the debts are paid, as in the case of the estate. The terms of the trust dictate the trustee’s duties as to the distribution of trust assets. 

If you’re a beneficiary of a trust and think that the trustee is breaching his fiduciary duties, you should inform the trustee of the nature of the suspected breach. If nothing is done to remedy this, you may ask the court for help. 

One option is that you can request the court to order the trustee to take actions, which you state in your complaint filed with the probate court. Another option is to request that the court direct the trustee to stop taking specific actions that you detail in your complaint. 

A third choice is to ask the court to remove the trustee due to breach of fiduciary duties that you set forth in your complaint filed with the court. 

However, such court intervention can be expensive. Another thing to consider is that the trustee may petition the court to have his legal fees paid from the trust funds—which will deplete the money in the trust. Because of this, it is usually best to attempt and resolve these issues before getting the court involved. 

Reference: nj.com (Feb. 12, 2020) “How long does it take to pay out a family trust?” 

What are Walt Disney’s Heirs Worth?

It's not known just how much the Disney family is worth. GOBankingRates estimated the company's net worth to be roughly $130 billion. Roy O.'s grandson, Roy P., said at one point that the family owns less than 3% of the company. Even so, that would put their fortune around $3.9 billion (not counting any investments in addition to Disney holdings). 

Wealth Advisor’s recent article entitled “Disney Family Feud As Heirs Battle For $400 Million Trust Fund” says that in 1925, Walt married Lillian Bounds, a studio inker. Eight years later, she gave birth to Diane, and the couple later adopted their daughter Sharon as a baby. 

Walt is said to have adored his 10 grandchildren. When he died in 1966 of lung cancer, he left numerous trusts and family foundations for his family. 

Walt's younger daughter, Sharon, adopted one child, Victoria, with her first husband, Robert Brown. She then had twins, Brad and Michelle, with her second husband, Bill Lund. She died from breast cancer in 1993 at age 56. Michelle has never had a job and owns three homes, spending a lot of time in Newport Beach, CA according to Gardner. 

Victoria reportedly lived an extravagant lifestyle that included $5,000-a-night suites at the Royal Palms in Las Vegas. One report notes that she once went on a Disney cruise ship and destroyed her suite to such a degree that Michael Eisner, then-CEO of the company, had to ask the trustees to pay for the damages. Her share of the family fortune was added to Brad's and Michelle's after she died in 2002 from health complications. However, Sharon's twins later became embattled in a years-long feud over their $400 million trust fund. That inheritance was supposed to be distributed in annual payments and lump sums at five-year intervals at ages 35, 40, and 45. However, the trustees dispersed the payments to Michelle and withheld Brad's. 

Michelle and the trustees argued that Brad wasn't able to take care of his share because of a "chronic cognitive disability" and that Bill, their father, was taking advantage of this to gain money, according to NBC News. 

Bill said that the trustees were manipulating his daughter Michelle. Bill was previously a trustee but resigned after an allegation that he used trust money to gain more than $3 million in kickbacks from a real-estate deal. He reportedly agreed to an annual settlement of $500,000. 

Reference: Wealth Advisor (Feb. 11, 2020) “Disney Family Feud As Heirs Battle For $400 Million Trust Fund”  

Mark Twain’s Estate Plan Went South, Despite His Efforts

Mark Twain was right. He passed away one day after the comet’s closest approach to earth. A month later, his last will and testament was admitted by a Connecticut probate court appointing three friends as executor trustees to administer his estate. According to the article “Who will advocate for your estate?” appearing in 83 degrees, his choices turned out to be a terrible mistake.

Twain thought long and hard about his estate. He selected a railroad executive, a businessman and a banker to be his executors. He had two concerns: to protect his only child and sole heir, Clara Clemens, and to keep his money in the family.

He understood the complexity of his estate, which included manuscripts, stocks, bonds, copyrights, real estate, book deals and the management of The Mark Twain Company. He also knew that his daughter was a spendthrift. The three executors, he thought, would advocate for him and protect his daughter.

His trust specifically directed quarterly income payments to Clara, “free from any control or interference from any husband she may have” because of her tendency to marry, divorce and remarry.

However, three executors were not enough. One died, another quit under duress and the third was forced to resign. Without having named perpetual successor trustees to implement Twain’s wishes, the estate was up for grabs. Clara remarried and her next husband borrowed $350,000 against the estate. Clara then disinherited her own daughter before dying. This promoted Nina to file an undue influence lawsuit against her stepfather. A probate judge eventually awarded Clara’s second husband 65% of Twain’s estate for life.

How was it possible that this happened? Who was looking out for Mark Twain’s wishes? Sadly, no one.

Whether estates pass via a last will and testament or revocable trust, selecting the right executors and trustees—and naming successor executors and trustees–is a key step to a successful estate plan. Our heirs today include minor children, grandchildren, stepchildren, half-siblings, dysfunctional relatives and ex-spouses. The challenges they present to executors and trustees have only become more complex, since Twain’s time.

Twain had one heir, and he was aware of her weaknesses. He planned right, but selected the wrong individuals to be his executors. They were not up to the task of managing his complex estate and his daughter’s life decisions. This is a case where a professional executor and trustees would have likely been a better option.

Speak candidly with your estate planning attorney about your potential executors and trustees. Will they be able to manage the necessary decision making and personalities in your family? Consider whether an impartial and trustworthy professional might be a better option.

Reference: 83 degrees (August 27, 2019) “Who will advocate for your estate?”

What You Need to Know If Asked to Be a Trustee

Being asked to be a trustee is a question that deserves serious consideration. First, because there are so many different types of trustees, the answers to the questions posed above will vary greatly, says The Mercury in a recent article that asks “Should you be a trustee?”

At the very simplest level, a trustee is appointed when a trust is established, often for a person and their spouse. The person’s assets are retitled to be owned by the trust. The couple continues to file the same tax returns, using the same Social Security number and the income from the trust assets are treated as the couples’ income.

When one of the couple dies, if the couple lives in a state with an inheritance tax, they are taxed as if they were inherited directly by the person. The rate of taxes depends on the relationship to the person who died. Therefore, trustee duties are pretty easy in this instance. Instead of wearing your “Mrs. Jones” hat, you are wearing your “Mrs. Jones, Trustee of the Joan Jones Trust” hat.

In most cases, the trust document names one successor trustee. That person is typically one of the couple’s adult children, although it could also be a bank or a financial institution. The successor trustee is responsible for managing the trust assets, dealing with banks, financial institutions and others on behalf of the person, if they became disabled or incapacitated.

After the person dies, the successor trustee would continue in their role, and details of their responsibilities should be outlined clearly in the trust document.

Another type of trust is a simple trust that is part of a will, called a testamentary trust. It is often created to provide support for a minor beneficiary who might inherit assets. Usually parents or the surviving parent of a minor beneficiary or an executor is named as a trustee for the child’s funds, until the child reaches a certain age.

Regardless of what kind of trustee a person is, they have a fiduciary responsibility, meaning that they are held to a high standard of accountability and must always put the needs of the trust before their own. The trustee is required to maintain accurate documents and cannot take funds for their own use. A trustee can be paid a reasonable fee, unless the trust documents have other directions.

In most cases, the trust document gives the trustee the right to retain others, such as attorneys, accountants, or financial advisors to help fulfill their responsibilities. Sometimes that’s as simple as setting up a bank account, but other times it is more complicated.

When do you stop being a trustee? It is usually when the trust says the trust is to end, which is sometimes at a certain date, when the beneficiaries reach a certain age, or when the trust fund is empty. A court order can be made to the Court to either terminate or modify the trust.

For more complicated trusts, the help of an estate planning attorney, also known as a trust and estate attorney, will be needed to protect the trust and the beneficiaries. There are Special Needs Trusts (SNTs), created for an individual with special needs, who often receives help from government programs like Social Security Disability Insurance (SSDI) or Medicaid. There are also different kinds of SNTs, depending on the needs of the individual and their family.

There are also: irrevocable income only trusts, intentionally defective grantor trusts, non-grantor trusts, qualified personal residence trusts and many, many others.

Your estate planning attorney will be able to explain what kind of a trust would be optimal for your family, while you are living and after you have passed.

Reference: The Mercury (July 17, 2019) “Should you be a trustee?”