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HOUSTON ESTATE PLANNING LAW BLOG
PETER FALK’S ESTATE GIVES $3 MILLION TO UCLA
Do you know where you want your assets to go after you pass? Some Texas residents have very specific plans. If you do, you should make sure to formulate legal preparations for the distribution of your estate. This way, you can ensure that your loved ones receive their appropriate share without any problems. In a recent story, a former well-known actor decided to bequeath some of his life earnings to a university for education purposes.
Sources explain that the estate of former “Columbo” star Peter Falk has willed $3 million to the University of California, Los Angeles (UCLA), for student scholarships. The money will be used to create the Shera and Peter Falk Lt. Columbo Memorial Scholarship Fund. The first award will go to five students entering UCLA next fall. It will cover the students’ tuition for four years. The scholarship will focus on aiding undergraduates studying music, military veterans and those with disabilities.
After a long acting career on Broadway, in television and in the movies, Falk passed away last June at the age of 83. Specifically, the actor was best known for his role as a Los Angeles police detective on “Columbo,” which earned him four Primetime Emmy Awards.
Based on his probate arrangements, one might assume that education was extremely important to the former actor. If you are making estate plans, you should consider what is important to you. Do you have a preferred charity that you would like to support? Do you want your children to receive most of your assets? If you have particular plans for your estate, you may want to speak to an experienced lawyer. An attorney will guarantee that the people you care about are taken care of after you pass away.
Source: Washington Post, “Former ‘Columbo’ star Peter Falk bequeaths $3 million to UCLA to provide student scholarships,” Feb. 21, 2012
Continue reading: PETER FALK’S ESTATE GIVES $3 MILLION TO UCLA
Tags: estate planning, Wills
TEXAS CONGRESSMAN’S LEGISLATION TARGETING ESTATE TAX GAINS STEAM
The federal estate tax, often referred to colloquially as the “death tax,” takes a cut out of the assets left behind by individuals at the time of their death. Currently, only estates valued over a certain amount are subject to the death tax.
However, while the estate tax is primarily aimed at wealthy individuals, many argue that it does not accomplish its goals and that it has a disparate effect on farmers and small business owners. Through careful estate planning, high net worth individuals can often circumvent the death tax entirely, while those with most of their worth tied up in land or business equipment may take huge hits. When a farmer or operator of a small business dies, their heirs may have to sell off land or other critical assets just to pay estate taxes, potentially resulting in the ruination of a profitable enterprise.
One Texas Congressman, Kevin Brady, is seeking to eliminate the federal estate tax entirely in 2012. Congressman Brady’s bill, the Death Tax Permanency Repeal Act, has garnered bipartisan support from over 190 members of Congress, as well as advocacy groups like the National Cattlemen’s Beef Association.
If full repeal of the estate tax proves impossible, supporters are still looking to make the 2010 estate tax relief package permanent. Under that legislation, still currently in effect, estates worth less than $5 million for individuals or $10 million for couples are exempt from taxation; an estate’s net worth over the exemption limits is taxed at 35 percent (under the former default law, there was only a $1 million exemption, with the excess taxed at a 55 percent rate).
Only time will tell if 2012 will mark the death of the death tax. In the meantime, prudent estate planning will remain the best tool to ensure generational continuity in important family assets.
Source: Iowa Farmer Today, “Time for permanent relief from the federal ‘death tax,’” Kent Bacus, Feb. 10, 2012
Continue reading: TEXAS CONGRESSMAN’S LEGISLATION TARGETING ESTATE TAX GAINS STEAM
Tags: estate planning, estate tax
ESTATE PLANS FOR OUR CATS AND DOGS
As Texas residents know, estate plans guarantee that our loved ones are cared for. However, what are your plans for your pet? In a recent national story, a 76-year-old woman has decided to protect her cats after death. Her plan, a pet trust, surfaced after she found one of her late friend’s pets in a dire situation.
An article explains that the woman’s friend, who passed after an illness, made arrangements for one of her cats. The friend understood that her son would take her other cat. After her death, the caretaker backed out, and the son decided that he could not take more animals. Ultimately, one cat found a new home; however, the other was taken to a shelter.
Now, one lady does not want this same story to happen to her cats. To ensure that her pets are cared for, the woman has created a pet trust, which specifies that if the woman’s cats survive beyond her death, they will be taken to a local retirement community. The cats will be supported by money that she has set aside for them. According to the woman, “This way I know that they will not end up at a shelter, where they would be killed because they’re too old to be adopted.”
This type of trust elects a “guardian” who will carry out specific pet-related wishes. This ensures that the animal is cared for after the owner passes. The document includes instructions for care, and property is usually set aside for the new caretaker.
Pet trusts are not allowed in every state. However, sources note that including a pet in a will is not a good idea. Wills provide for how property should be distributed. Typically, they do not include details about caring for the animals, and pet care instructions in a will are not enforceable.
Pet owners tend to overestimate the likelihood that a relative will care for an animal. For this reason, the woman in this story has encouraged many of her friends to draw up these pet trusts.
Source: The New York Times, “The Pet Problem,” Alyson Martin and Nushin Rashidian, Feb. 3, 2012
Continue reading: ESTATE PLANS FOR OUR CATS AND DOGS
Tags: estate planning, trust
DOES MAN’S ADOPTION OF ADULT GIRLFRIEND REPRESENT AN ABUSE OF TRUST LAW?
The laws governing the creation and administration of wills, estates and trusts can be a bit tricky. In a lot of ways, they are fairly straightforward, but as in other areas of law, there are always those quirky little loopholes that, in some cases, can lead to surprising outcomes.
Such a loophole is behind the recent story out of Florida. It’s a story that some Houston readers might think reflects a clever and creative move and others might think shows a disregard for the intent of our laws and constitutes an abuse of the system: a 48-year-old man recently adopted his 42-year-old girlfriend so that he could move assets into a trust for his “children” and thus shield them from a pending wrongful death lawsuit against him.
The man is being sued by the parents of a college student whom he killed in February 2012 when he ran a stop sign when he was drunk. Their wrongful death suit is set to begin next month. Evidently worried that he might lose, the man apparently moved hundreds of millions of dollars into a trust set up to benefit his children. Since the assets now belong to the trust and not to the man himself, they are no longer considered “his” by a court.
By adopting his girlfriend, however, the man created a beneficiary who could access the trust, since she is now his “child.”
Naturally, the family of the deceased child has objected, and a judge called the move “surreal,” but at this point, there does not seem to be anything illegal about what the man did.
What do you think? Was the man just very savvy, or did he do something that, to you, seems underhanded and devious?
Source: ABC News, “Polo Club Found Adopts Girlfriend Amid Civil Suit Over DUI Death,” Christina Ng, Feb. 2, 2012
Continue reading: DOES MAN’S ADOPTION OF ADULT GIRLFRIEND REPRESENT AN ABUSE OF TRUST LAW?
Tags: estate planning, trust
AUCTION OF SUICIDAL MAN’S ESTATE FINALLY SET IN MOTION
The last two years have been a difficult one for the widow of an elderly Ohio man who killed himself in 2011. Some people here in Texas may remember hearing the story about the man on the news. Just prior to killing himself, he cut the locks to cages on his property, freeing the exotic animals inside. It took two days for local law enforcement to round up the animals, many of which needed to be killed because of the danger they posed to the community.
Much like the police, the man’s widow also had some rounding-up to do when it came to his estate. He had left behind an enormous collection of vehicles–everything from motorcycles to a hovercraft–horse-back riding equipment, and other animals. Though still grieving, she had the enormous task of figuring out what to do with his remaining belongings. According to reports from around the time of his death, the two had become estranged, and she may have been left with little direction as to how he wanted his estate distributed. In the end, she felt that an auction would be best.
It’s taken nearly a year to gather and identify the items going up for bid; but with the help of an auction house owner, the estate is finally ready to be sold. “She’s spent day and night assembling these things. It’s all a part of settling the estate,” explains the auction owner in a recent interview. It’s being seen as another step now to moving on–something many of our readers can relate to having had to go through similar processes with their own deceased love one’s estate.
While some people may specify in their estate plans that their belongings be auctioned, others may want these items to stay in the family or be donated to charitable organizations. It’s no surprise that having clear instructions in your will can make sure that your this happens and that your final wishes are carried out exactly as you wanted.
Source: The Columbus Dispatch, “Zanesville’s exotic animal owners’ estate going on block,” Eric Lyttle, Aug. 4, 2013
Continue reading: AUCTION OF SUICIDAL MAN’S ESTATE FINALLY SET IN MOTION
Tags: death, estate plan
HOW ESTATE TAXES MAY HARM GANDOLFINI’S WILL INTENTIONS
When 51-year-old actor James Gandolfini died suddenly in Italy in June, a nation mourned. Best known for his role as the ruthless mobster on “The Sopranos,” in real life, he was quite the opposite.
But despite leaving a detailed will, second looks at how he divided his estate has some people here in Texas, as well as others across the nation, cringing. That’s because, as some experts have pointed out, Gandolfini’s will does not take advantage of current estate tax laws. In the end, the deceased actor may pay out more to the IRS than his beneficiaries–something he may not have intended when he first drafted the will.
Gandolfini’s major mistake was that he only left 20 percent of his estate to his wife. Federal law currently allows unlimited tax-free transfers to spouses; but because Gandolfini left a majority of his estate to his infant daughter and a son from a previous marriage, almost 80 percent of the assets covered by the will may be subject to both state and federal tax laws. As our readers can imagine, this may not have been foreseen by the actor prior to his death.
While most of our Texas readers will want to make their wills as tax efficient as possible before they pass on, this may not have been Gandolfini’s thoughts. He may have wanted to ensure that his children were properly taken care of by their inheritance. But as we’ve mentioned to our readers on several occasions, this can be done through trusts as well, which will not only provide financial security for beneficiaries but avoid estate taxes as well.
Just this story alone is a great example of why speaking with an attorney is a good idea when preparing your end-of-life documents. While mistakes can be made by even the most well-informed of people, having the right help at your side can sometimes mitigate these mistakes so that they don’t get passed on to your beneficiaries in the end.
Source: CNBC News, “Gandolfini’s will a case study on what not to do,” Kelley Holland, July 26, 2013
Continue reading: HOW ESTATE TAXES MAY HARM GANDOLFINI’S WILL INTENTIONS
Tags: estate tax, IRS, Wills
SO YOU WANT TO DISINHERIT SOMEONE FROM YOUR WILL…
When it comes to drafting your final will and testament, your current situation can have a significant impact on who you put in your will and what they receive after you pass away. A bitter argument between a sibling could turn into a spiteful disinheritance, which can leave a lasting impression on the entire family. But what does it mean to be disinherited and how will this effect the distribution of your estate after you die?
To disinherit someone means to specifically write or make changes to a will that prevent a person from inheriting something from said will. It’s important to remember though, that while you may be doing this out of spite, the wording used in your will can make a huge difference in the end. As many estate planning experts will tell you, even purposefully leaving someone’s name out of a will can be viewed as a mistake by a judge, allowing the person to inherit what you may not have wanted them to have.
While most people here in Texas, as well as across the country, think of disinheriting someone as a negative thing, in some cases, it may be done for other reasons. In one such case, an elderly woman disinherited her 44-year-old daughter because she felt she was well off enough to not receive an inheritance like her other siblings. While this may have been the case at the time of drafting the will, it’s important to point out that situations can change for the worse and it’s in these circumstances that an inheritance would be a nice safety net.
Estate planning laws change from state to state, so speaking with an experience attorney can be incredibly helpful, especially when it comes to who you can and can’t disinherit from your will. It’s also important to consider whether hurt feelings could create legal drama for other family members down the road. The more you consider these difficulties now, the better you can prevent them in the future.
Source: CNBC News, “How to Disinherit Loved Ones—And Which You Can’t,” Reuters News, Feb. 1, 2013
Continue reading: SO YOU WANT TO DISINHERIT SOMEONE FROM YOUR WILL…
Tags: testament
LAW OFFERS LITTLE END-OF-LIFE GUIDANCE FOR MANDELA’S KIN
Millions of people across the nation, including many right here in the state of Texas, have been anxious watching the failing health condition of the former South Africa President Nelson Mandela. This may partially be because, like so many families here in the United States, the complexities of estate planning laws have left Mandela’s kin with little end-of-life guidance.
For those who have not been following the story, Mandela has been reportedly lying on the edge of death for the last few months. While doctors insist that he is in “critical but stable condition,” this confronts his family with the difficult decision of when to take the ailing 94-year-old off of machines. Friends who recently visited him in the hospital say he is awake and smiling but family members know that they will need to come up with an end-of-life plan soon.
In the United States, living wills make situations such as this quite easy and often relinquish the burden of making the difficult pull-the-plug decision to the person who is dying. As we’ve mentioned in past posts, this is part of your estate plan where you dictate your medical wishes and end-of-life instructions to your family. But according to reports, this may be less clear under South African law.
Current laws are vague and unclear about who gets to make the decisions for Mandela if and when he is unable to. This can get especially complicated if he has not designated a proxy in his stead. Situations such as this are not uncommon here in Texas though our state laws do offer more guidance than what the Mandelas may be getting.
Source: The New York Times, “Mandela’s Kin Face Gray Area on End of Life,” Rick Lyman, July 11, 2013
Continue reading: LAW OFFERS LITTLE END-OF-LIFE GUIDANCE FOR MANDELA’S KIN
Tags: death, estate plan, estate planning
WHAT TO KNOW ABOUT A SPECIAL NEEDS TRUST FOR A DISABLED DEPENDANT
When it comes to the well-being of their children, parents will do just about anything. That includes venturing into the very scary subject of planning for their own deaths. And no, not in a morbid sort of way. The sort of estate plans that readers of our blog hear so frequently about such as naming a guardian, adding beneficiaries to a will, or instructing family members about medical wishes.
But one thing we haven’t covered much on is about how parents with disabled children should plan for the future. While in some cases Social Security Disability benefits and Supplemental Security Income can provide a source of income, in most cases, children with special needs often rely on their parents to provide them with financial support. So what happens when those parents pass away?
If you’re a parent with a special needs child, one important way to make sure that they have financial stability is to establish a special needs trust. It’s worth noting that these types of trusts are not easily done without help from a skilled attorney. That’s because these types of trusts, while flexible in nature, can interfere with benefits received through government assistance programs. If not worded properly, a trust can quickly disqualify a disabled child’s benefits, leaving them in the exact financial crisis you tried to prevent.
Speaking to a lawyer is the first step to establishing the trust. But what about funding? How much money should you set aside? How much of those funds will be distributed at each time? These are all important things to speak to your attorney about because the answer will differ depending on your particular situation.
To someone unfamiliar with estate planning, establishing a special needs trust can seem like an overwhelming process. But this is where your attorney comes in. They can help you understand the complexities of the law and help you prepare financial stability for your special needs child after you’ve passed away.
Source: The Fiscal Times, “Estate Planning Guide for a Special Needs Child,” Sonya Stinson, July 10, 2013
Continue reading: WHAT TO KNOW ABOUT A SPECIAL NEEDS TRUST FOR A DISABLED DEPENDANT
Tags: estate planning, trust
HOW THE DOMA DECISION WILL AFFECT ESTATE PLANNING IN TEXAS
During an end-of-March post, we brought to the attention of our readers the very real possibility that changes could be made to estate taxes barring the decision of the Supreme Court of two very important cases. The most import of those was that of United States v. Windsor. As many of our readers may remember, this court case asked whether the federal government had the right to define marriage and whether it could prohibit same-sex couples from receiving federal benefits.
Now, in what Time Magazine is hailing as “one of the fastest civil rights shifts in the nation’s history,” the Supreme Court has not only provided same-sex couples with more civil rights than were previously allowed, but may very well have changed tax and estate laws as we know them.
As many people here in Texas know, the court struck down the Clinton-era Defense of Marriage Act, which defined marriage (for the federal government) as a heterosexual union. Once DOMA was effectively abolished, the court then ruled in favor of Windsor, which ultimately changed estate planning for same-sex couples in regards to estate taxes. Even though our state does not recognize gay marriages, the federal government must now recognize the legitimacy of a homosexual marriage in the other states that do.
Aside from the lasting changes this will have on tax law, the impact this will have on estate planning will be far-reaching. It’s important to point out that while our state does not recognize gay marriage, federal estate taxes will still apply to same-sex couples provided their marriage occurred in a state that does recognize their union as being legal. What this means is that same-sex couples married in another state that have moved to Texas may file for the same “death tax” break that is awarded to heterosexual couples across the nation.
But while this will have an effect on federal tax laws, this may not an effect on other estate planning laws that are state specific. It’s because of this that same-sex couples are urged to speak with a qualified attorney to discuss how their assets will be affected down the road.
Source: Forbes, “Tax Implications Of The Supreme Court’s DOMA Decision: Same-Sex Couples To Be Subject To Marriage Penalty,” Tony Nitti, June 26, 2013
Continue reading: HOW THE DOMA DECISION WILL AFFECT ESTATE PLANNING IN TEXAS
Tags: estate tax, federal estate tax, Wills