Texas Estate Planning

What Does Autism Awareness Month Have to Do With Inheritance?

April is Autism Awareness Month (also called Autism Acceptance Month) and we want to make sure that you’re aware of what can happen if you neglect to consider your autistic or disabled descendants and heirs when creating your estate plan. You might have heard of a Supplemental Needs Trust (SNT). Formerly called “Special Needs Trust,” SNT’s are helpful tools in the Estate Planning process if you have a loved one currently receiving (or in the future could receive) means-tested government benefits like SSDI. 

Many folks are familiar with Autism Awareness Month, but in recent years, the autistic community has urged for people to focus on “acceptance,” more than just simply “awareness.” It is important that we accept the needs and perspectives of autistic people especially in regards to the issues that directly affect them and their experience of the world. 

Not every person with autism or other disabilities will qualify for SSDI. And similarly, not every able bodied person will remain that way throughout the entirety of their lives. Our needs and capabilities can change for many different reasons, most of which are difficult to predict, but if you have anyone in your life with a family history of chronic medical conditions (physical, developmental, or mental) you might want to look into setting up a Supplemental Needs Trust as part of a comprehensive estate plan that addresses all of the likeliest outcomes, and then some.

 

Here’s how an SNT works: 

If someone is receiving means-tested benefits, such as Social Security Disability Insurance (SSDI), their income must remain under a certain limit set by the government in order to qualify for those benefits. This income is checked every month and even one month in which a person receives a large sum of money (like an inheritance after someone passes away) could kick them off of their benefits program, forcing them to re-apply next month. The application process for SSDI is generally lengthy, difficult, and something that folks don’t want to go through multiple times. 

Even an inheritance of $1,000 could be enough to put your loved one over the SSDI income limit. Since a trust keeps assets outside of someone’s ownership, your loved one receiving benefits can access those funds in very limited, but incredibly helpful ways. The laws surrounding SNTs are very exacting and specific; unless you take time to work with an attorney experienced in this field, your efforts may end up putting your loved one in jeopardy of losing their benefits.

Trusts are legal documents dictating how, when, and where you’d like your assets to be distributed and/or used. A Supplemental Needs Trust can be set up at any time and can be designed to only go into effect under the specific circumstances you name in the trust. To make sure your trust documents work in your intended way, please seek the counsel of a licensed attorney in your area with experience in Supplemental/Special Needs Trusts. Supplemental Needs Trusts are often drafted alongside Wills, and other estate planning documents, to make sure they are designed to work together.

 

Types of SNTs 

There are two main types of SNTs. First Party SNTs are established with money that originally belonged to the person receiving benefits, while Third Party SNTs are established with money from someone else, often parents or siblings.

Both types of SNT are limited in the kind of expenses that they are allowed to pay for, but First Party SNTs have an extra limitation that Third Party SNTs do not. First Party SNTs are required to include a clause that causes the assets in a First Party SNT to go to the state where the beneficiary is living, and the State will use those funds to add to their benefits program. Third Party SNTs can name a beneficiary to receive the assets held by the trust after the first beneficiary passes away.

Although SNTs have limitations placed on them regarding what the assets inside the Trust can be used to pay for,  they can improve the services and equipment accessible to your loved ones. Ask about state-specific ABLE accounts too, these are new tools that are designed to be used with SNTs to increase your loved ones quality of life across the board!  

It is important to correctly identify the type of SNT that fits your situation, otherwise you run the risk of having the SNT invalidated, which could cause many other problems down the line. Meet with an experienced attorney in your area. 

 

April is Autism Awareness Month

Autism Acceptance/Awareness Month, also celebrated as “World Autism Awareness Day” (April 2) is observed worldwide as a time to learn more about Autism Spectrum Disorder (ASD) and ways in which you can support autistic people. According to an article on Healthline, “Autism is considered a disability from a medical and legal standpoint. But according to mental health professionals, not everyone with autism identifies as being disabled.” 

Just like with any other disability, the autistic community is not a monolith. Each person receiving SSDI has their own specific needs, goals, interests, and desires. It is important to consult your disabled loved one and/or the caregiver(s) most knowledgeable about their daily care needs before making the financial decision to set up a Supplemental Needs Trust for them. 

In most cases, it is harmless to create an SNT for someone who might not end up receiving means-tested government benefits, but it is even better to respect the autonomy of the disabled people in your life and discuss the pros and cons of setting up a Supplemental Needs Trust for them to use if/when the time comes. 

By placing money and assets into a trust, you protect yourself, your trustees, beneficiaries, and your assets themselves. It is better to have a plan and not need it than to need a plan but not have one.

Is Estate Planning Affected by Property in Two States?

Cleveland Jewish News’ recent article titled “Use attorney when considering multi-state estate plan” says that if a person owns real estate or other tangible property (like a boat) in another state, they should think about creating a trust that can hold all their real estate. You don’t need one for each state. You can assign or deed their property to the trust, no matter where the property is located.

Some inherited assets require taxes be paid by the inheritors. Those taxes are determined by the laws of the state in which the asset is located.

A big mistake that people frequently make is not creating a trust. When a person fails to do this, their assets will go to probate. Some other common errors include improperly titling the property in their trust or failing to fund the trust. When those things occur, ancillary probate is required.  This means a probate estate needs to be opened in the other state. As a result, there may be two probate estates going on in two different states, which can mean twice the work and expense, as well as twice the stress.

Having two estates going through probate simultaneously in two different states can delay the time it takes to close the probate estate.

There are some other options besides using a trust to avoid filing an ancillary estate. Most states let an estate holder file a “transfer on death affidavit,” also known as a “transfer on death deed” or “beneficiary deed” when the asset is real estate. This permits property to go directly to a beneficiary without needing to go through probate.

A real estate owner may also avoid probate by appointing a co-owner with survivorship rights on the deed. Do not attempt this without consulting an attorney.

If you have real estate, like a second home, in another state (and) you die owning that individually, you’re going to have to probate that in the state where it’s located. It is usually best to avoid probate in multiple jurisdictions, and also to avoid probate altogether.

A co-owner with survivorship is an option for avoiding probate. If there’s no surviving spouse, or after the first one dies, you could transfer the estate to their revocable trust.

Each state has different requirements. If you’re going to move to another state or have property in another state, you should consult with a local estate planning attorney.

Reference: Cleveland Jewish News (March 21, 2022) “Use attorney when considering multi-state estate plan”

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”