Estate Planning Blog

This Time Is Different: You Really Do Need to Update Your Will and Durable Power of Attorney

Davis Wright Tremaine LLPP: “With the advent of higher exemptions with respect to the Federal Gift, Estate, and Generation-Skipping Transfer Tax passed last December (referred to as the 2017 Tax Act), it really is necessary to review your estate tax planning and it would also be a good time to review your durable power of attorney in light of the recent adoption of the Washington Uniform Power of Attorney Act, effective January 1, 2017.”

By | 2018-01-31T08:08:19+00:00 January 31st, 2018|

Estate Planning Opportunities and Considerations Beginning in 2018

Schulte Roth & Zabel LLP:  “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (“Act”) was enacted in December 2017 and implements a wide range of changes to existing tax laws. The Act temporarily increases (from Jan. 1, 2018 until Dec. 31, 2025) the federal estate, gift and GST tax exemption amounts from $5.6 million to approximately $11.2 million.”

By | 2018-01-16T15:13:39+00:00 January 16th, 2018|

Should Doctors Honor a DNR Tattoo?

American Academy of Estate Planning Attorneys:  “A 70-year old man arrived at a Miami hospital. He was alone and unconscious, with no ID, a high blood-alcohol level and multiple chronic conditions. He also had a tattoo on his chest that read Do Not Resuscitate,” along with his (assumed) signature. Despite treatment by hospital staff, the man continued to be incapable of making his own medical decisions. Should the doctors honor the man’s Do Not Resuscitate (DNR) tattoo when it became clear that he would die without treatment?”

By | 2017-12-28T15:25:01+00:00 December 29th, 2017|

Hugh Hefner Estate Planning Role Model

Trial & Heirs:  “When most people think of Hugh Hefner, they picture the famous Playboy bunny logo, young and buxom blonde women by his side, and his ever-present robe and captain’s hat.  But people should also think of his smart business and planning sense.  After all, Hefner started a unique business with $8,000 in 1953 and grew it into a massive global enterprise.  How Hefner used the resulting wealth to plan for his golden years and beyond was as unique and innovative as the way he lived his life.  It certainly isn’t a road-map for everyone, but it worked out well for him.”

By | 2017-12-28T10:26:12+00:00 December 28th, 2017|

Woman Leaves $50,000 to Her Nail Technician, Hairstylist & Doorman

Daily Mail:  “A wealthy heiress from New York City bequeathed thousands of dollars to her hairdresser, housekeeper, doorman and nail technician after she died of natural causes. Kaaren Parker Gray, 72, died of a heart attack on August 24 in her Upper East Side home, less three weeks after she wrote ten-page handwritten will without a witness. Since then, the people who she employed to help her get through her daily life have received handwritten letters explaining the funds she has bestowed upon them.”

By | 2015-09-26T17:02:30+00:00 September 26th, 2015|

Millionaire Leaves $100,000 to Pets

Daily Mail:  “A deceased New York City entrepreneur with a $4 million East Hamptons property left behind a $100,000 pet fund for her 32 cockatiels and detailed instructions in her will about how the birds should be treated.  Leslie Ann Mandel, 69, wrote in her will that she wanted the 32 birds to ‘continue to live in the aviary’ in the Hamptons or be taken to ‘a protected place of similar size’ for ‘the rest of their natural lives’.”

By | 2015-09-06T07:58:32+00:00 September 6th, 2015|

The Aaron Spelling Estate

Aaron Spelling died leaving an estate valued at over $500 million dollars.  Spelling left the vast majority of his fortune to his wife and left a little less than a million dollars to each of his children.  Despite the fortune he left behind and the small value left to each child, there was no contest over the value of Spelling’s estate between his family.  This illustrates the value that can be found in having an estate plan prepared by an estate planning lawyer.

By | 2016-12-13T20:33:22+00:00 July 22nd, 2015|

Whitney Houston’s Sad Estate Legacy

Billboard:  “Since Jan. 31, the day that Bobbi Kristina Brown was found face-down in the bathtub of her Roswell, Ga., townhouse, the world has focused on what led up to the tragedy, which eerily paralleled her mother Whitney Houston’s drowning in 2012. Less attention has been focused on what becomes of the singer’s estate.  Unconfirmed reports point to a battle between the Houston family and Whitney’s ex-husband, Bobby Brown, over whether to remove Bobbi Kristina, 22, from life ­support — framed as a clash over religious values and the sanctity of life. Beyond moral ­considerations, ­however, there are tens of millions of dollars playing a behind-the-scenes role in the conflict.”

By | 2015-06-20T08:45:44+00:00 June 20th, 2015|

Personal Record Retention Top Ten

National Law Review:  “If you were to become incapacitated or die, would your agents, trustees or personal representatives know where to find the key to your safe deposit box? The title to your car? Or, your account numbers and passwords? If not, it is time to start compiling your personal records. By compiling this information in a central, secure location, you can better ensure that your estate plan will be carried out efficiently. For some people, this will mean compiling mostly paper files. For others, it will mean keeping a detailed list of digital assets and passwords. Below is a list of the top ten types of records you should print out or save in digital format. These items should be kept in a secure location separate from your computer, but in a place that can be accessed by your representative upon your death or incapacity.

By | 2016-12-13T20:33:22+00:00 March 26th, 2015|

AICPA Asks IRS for Portability Relief for Surviving Spouses

Journal of Accountancy:  “In a letter to IRS Commissioner John Koskinen and other IRS officials on March 19, Troy Lewis, chair of the AICPA Tax Executive Committee, requested that the IRS provide relief to surviving spouses who want to elect portability of the deceased spouse’s unused estate tax exemption (DSUE) amount.  Sec. 2010(c) allows the surviving spouse of a decedent who dies after Dec. 31, 2010, to elect to use any amount of the deceased spouse’s estate tax exemption that was unused by the deceased spouse. This is commonly referred to as the portability election. The election must be made on a timely filed Form 706,  United States Estate (and Generation-Skipping Transfer) Tax Return, and must be made by the executor of the deceased spouse’s estate.”

By | 2016-12-13T20:33:26+00:00 March 25th, 2015|

Can Robert Durst Lose His $100 Million Inheritance?

Trust Advisor:  “NYC real estate heir may go straight from easy street to death row after surprise arrest for long-unsolved murder. The case raises tough questions about what happens to the funds when trust fund babies go far astray.  Robert Durst just moved into a world where the interest on his share of a billion-dollar Manhattan commercial real estate empire no longer amounts to much.  He’s in a Louisiana prison now waiting to be sent back to California to face charges he killed a friend who might have figured out why his first wife vanished 30 years ago. . . . And he’s going to turn 72 in a few weeks, so whether he rates the death penalty or not, the question now is really where all that money’s going to go.

By | 2015-03-26T07:48:53+00:00 March 23rd, 2015|

The New Grave Robbers: Identity Thieves

Huffington Post:  “Take your driver’s license out of your wallet. Flip it over. Now look carefully at the back of it. There’s no box to check for “Identity Donor.” Yet when it comes to identity-related crimes, one of the greatest times of vulnerability is immediately after you die.  You can do everything right. You can use long and strong passwords and account-unique user names. You can check your financial accounts and monitor your credit on a regular basis, you can set up transaction alerts on your credit cards — even order a credit freeze — and then you die. Well, not entirely.  Include Identity in Your Estate Planning.

By | 2016-12-13T20:33:26+00:00 March 19th, 2015|

NFL Saints Owner’s Family Fighting to Prevent Being Disinherited

Daily Mail:  “Tom Benson, the self-made billionaire who owns two of the NFL and NBA’s wealthiest franchises, has broken his silence over the vicious row that has torn his family – and potentially his fortune – apart.  The 87-year-old owns the New Orleans Saints football team and the New Orleans Pelicans basketball team and is considered the richest man in Louisiana, worth an estimated $1.9 million.  However in January he announced plans to cut his children and grandchildren out of their ownership of the teams once he dies, and transfer everything into the name of his third wife, Gayle Benson, causing the family to immediately file lawsuits against him.”

By | 2015-03-07T06:52:26+00:00 March 7th, 2015|

The Basics of Charitable Remainder Trusts

National Law Review:  “Planning on making a large gift to charity? Rather than making a gift outright, it might beneficial to consult an attorney and set up a charitable remainder trust, an instrument that allows you to donate to charity while still receiving income from the property, as well as providing tax breaks to the settlor and settlor’s heirs. These types of trusts can be a crucial element of an estate or financial plan, especially if you are considering making large charitable gifts.”

By | 2016-12-13T20:33:26+00:00 March 6th, 2015|

How to Prepare for Your Digital Afterlife  “You post about your kids and pets. You tweet about your travels and work. You upload videos of your dog playing in the latest snowpocalypse.  Your social sites chronicle the ups and downs, the loves and losses, the adventures and even the boredoms of your life. So what happens to all those digital tidbits when you die?  On Thursday, Facebook announced that it’s allowing users to set up a ‘legacy contact’ — a family member or friend who can manage a person’s social account when they die.”

By | 2016-12-13T20:33:26+00:00 February 17th, 2015|

Five Good Reasons to Decant a Trust

Today many estate plans contain irrevocable trusts that will continue for the benefit of a spouse’s lifetime and then for the benefit of several generations.  Since these trusts are designed to span multiple decades, it is important that they include trust decanting provisions to address changes in circumstances, beneficiaries, and governing laws.

What is Trust Decanting?

When a bottle of wine is decanted, it is poured from one container into another.  When a trust is “decanted,” the funds from an existing trust are removed and distributed into a new trust that has different and more favorable terms.

When Should a Trust Be Decanted?

Provisions for trust decanting should be included in trusts that are intended to last decades into the future. Decanting allows the following to be addressed:

  1. Clarifying ambiguities or drafting errors in the trust agreement.  As trust beneficiaries die and younger generations become the new heirs, vague provisions or outright mistakes in the original trust agreement may become apparent.  Decanting can be used to correct these problems.
  2. Providing for a special needs beneficiary.  A trust that is not tailored to provide for a special needs beneficiary will cause the beneficiary to lose government benefits.  Decanting can be used to turn a support trust into a full supplementary needs trust.
  3. Protecting the trust assets from the beneficiary’s creditors.  A trust that is not designed to protect the trust assets from being snatched by the beneficiary’s creditors can be rapidly depleted if the beneficiary is sued.  Decanting can be used to convert a support trust into a full discretionary trust that the beneficiary’s creditors will not be able to reach.
  4. Merging similar trusts into a single trust or creating separate trusts from a single trust.  An individual may be the beneficiary of multiple […]
By | 2015-01-24T09:29:54+00:00 January 23rd, 2015|

Who’s Going to Get It: Do You Really Know the Beneficiaries of Your Dynasty Trust?

Today many estate plans contain irrevocable dynasty trusts that will continue for the benefit of a spouse’s lifetime and then for the benefit of several generations.  Since these trusts are designed to span multiple decades, it is important that they clearly define who will be included as trust beneficiaries at each generation.

Who Are Your Descendants?

In the past the definition of “descendant” was straightforward:  A person who can be traced back to a specific ancestor through the same blood lines.  But the modern family now encompasses much more than just blood heirs:

  • Adopted beneficiaries.  In your trust, should the definition of “descendant” include a minor child who is legally adopted by your child, grandchild, or great grandchild?  What about an adult who is legally adopted by your child, grandchild, or great grandchild?  What happens if your child, grandchild or great grandchild gives up their naturally born child for adoption, should your blood heir who has been adopted away from your family be included as your descendant?  You should consider specifically including or excluding adopted minor and adult beneficiaries in the definition of “descendant” used in your trust agreement.
  • Stepchildren.  In your trust, should the definition of “descendant” include a stepchild of your child, grandchild, or great grandchild who is never legally adopted by your heir but otherwise treated like one of their own?  While you may have the opportunity to get to know your stepchildren (and even your step grandchildren) and choose to specifically include them or exclude them in the definition of your descendants (in fact, you may want to include some and exclude others), it will be important to decide and communicate whether stepchildren in later generations should […]
By | 2016-12-13T20:33:27+00:00 January 16th, 2015|

The Wrong Successor Trustee Can Derail Your Final Wishes

Today many estate plans contain irrevocable trusts that will continue for the benefit of a surviving spouse’s lifetime and then for the benefit of several generations.  Since these trusts are designed to span multiple decades, it is crucial to choose the right succession of trustees.

Should You Name Family Members as Your Successor Trustees?

Choosing the right succession of trustees for your irrevocable trust that is intended to continue for years is critical to its longevity and ultimate success.

Initially you may think that a family member, such as your spouse, a sibling, or an adult child, will be the best person to serve as your successor trustee. You may think family members will better understand the varying needs of your beneficiaries and keep the costs of administering the trust down.

But in reality family members will not be able to fulfill all of their fiduciary obligations without hiring legal, investment, and tax advisors.  The expense of all these outside advisors will add up and can ultimately cost more than a corporate trustee, such as a bank or trust company. One advantage of a bank or trust company is that they can often meet all fiduciary obligations under one roof for one fee.  In addition, a corporate trustee will act in an unbiased manner in making distributions and investments which will benefit both the current and remainder beneficiaries, and a corporate trustee will not get sick or too busy to oversee the day-to-day administration of the trust.

Should You Give Your Beneficiaries the Power to Remove and Replace Trustees?

Forcing your trust beneficiaries to be stuck with the wrong trustee without a reasonable means for removing and replacing the trustees may cause an expensive visit to the courthouse.

It is necessary to […]

By | 2016-12-13T20:33:27+00:00 January 16th, 2015|

How Powers of Appointment Can Improve Your Trust

Today many estate plans contain trusts that will continue for the benefit of a spouse’s lifetime and then for the benefit of several generations.  Since these trusts are designed to span multiple decades, it is important for the trust creator to consider including powers of appointment in the trust agreement to allow trust beneficiaries to be added or excluded at each generation.

What is a Power of Appointment?

In broad terms a power of appointment is the right granted to an individual under the terms of a trust to change the provisions of that trust.

Powers of appointment can be given to the current beneficiaries or trustees of a trust or to an outside third party such as a trust protector.  They also come in many different forms and include powers that can be exercised while the individual is living (a “lifetime” power of appointment), or after the individual dies (such as a power of appointment exercised in the individual’s own will or trust, which is a “testamentary” power of appointment).

Powers of appointment can be as broad or limited as the trust creator desires.  In other words, the trust creator can give the power holder the ability to make broad changes to the trust or to make very limited changes under limited circumstances.

Examples of Powers of Appointment in Action

Below are some examples of how a power of appointment can be used to change the beneficiaries of a trust:

  • The trust creator’s spouse can be given the power to include or exclude children, grandchildren, and other heirs as trust beneficiaries after the spouse dies.
  • The trust creator’s child can be given the power to include or exclude the child’s own heirs or the child’s spouse, siblings (brothers and sisters), or heirs […]
By | 2015-01-24T09:42:48+00:00 January 16th, 2015|

Make an Achievable 2015 New Year’s Resolution – Get an Estate Plan Checkup

 With 2015 right around the corner, it’s time to start thinking about your new year’s resolutions.

It doesn’t matter whether you have an estate plan or don’t, one important item to add to your list is getting an estate plan checkup.

Don’t Have an Estate Plan? 

If you don’t already have an estate plan, then getting one in place should be at the top of your 2015 new year’s resolutions.

Why?  Because without an estate plan, you and your property may end up in a court-supervised guardianship if you become incapacitated, and your property and your loved ones may end up in probate court after you die.

Worse yet, if you don’t take the time to make your own will, then the state where you live at the time of your death will essentially write one for you, and it most likely won’t divvy up your property the way you would have.

A common misconception is that estate planning is only necessary for wealthy people. But this simply isn’t true – anyone with a bank or a retirement account, a home, or a family needs to make a plan for what happens if they become incapacitated or when they die. Of course the complexity of a plan will vary depending on your circumstances, but all estate plans should be put together with the help of an attorney who is experienced with the legal formalities required to create a valid will, trust, health care directive, and power of attorney in your state.

How Old is Your Estate Plan and Do You Already Have an Estate Plan?

If you do, then please pull your documents out of […]

By | 2016-12-13T20:33:27+00:00 December 14th, 2014|

Four Tips for Avoiding a Will or Trust Contest

A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart.  But with proper planning, you can help your family avoid a potentially disastrous will or trust contest.

If you are concerned about challenges to your estate plan, consider the following:

  1. Do not attempt “do it yourself” solutions.  If you are concerned about an heir contesting your estate plan, the last thing you want to do is attempt to write or update your will or trust on your own.  Only an experienced estate planning attorney can help you put together and maintain an estate plan that will discourage lawsuits.
  2. Let family members know about your estate plan.  When it comes to estate planning, secrecy breeds contempt.  While it is not necessary to let your family members know all of the intimate details of your estate plan, you should let them know that you have taken the time to create a plan that spells out your final wishes and who they should contact if you become incapacitated or die.
  3. Use discretionary trusts for problem beneficiaries.  You may feel that you have to completely disinherit a beneficiary because of concerns that a potential beneficiary will squander their inheritance or use it in a manner that is against your beliefs.  However, there are other options than completely disinheriting someone. For example, you can require that the problem beneficiary’s share be held in a lifetime discretionary trust and name a third party, such as a bank or trust company, as trustee.  This will insure that the beneficiary will only be entitled to receive trust distributions under terms and conditions you have dictated.  You will also be able to […]
By | 2016-12-13T20:33:27+00:00 December 14th, 2014|

Time is Running Out for Certain Estates to Make the Federal Portability Election

As a result of a 2010 tax law, a surviving spouse can receive his or her deceased spouse’s unused estate tax exemption. This is called a “portability” election. You may have seen it called the “deceased spousal exclusion amount” or “DSUE amount.”

In essence, a portability election allows a surviving spouse to apply the DSUE amount to his or her own taxable transfers during life and after death. Using the portability election can save a significant amount of estate tax and income tax, depending on your circumstances and assets.

Portability under the 2010 law was originally only a temporary option, available for estates of people dying during 2011 and 2012. But as a result of a 2012 tax law, the portability election became “permanent.” But, as you’ll see below, this change and other legal developments have created a great deal of confusion about portability.

In summary, a portability election is available for estates of people who died after January 1, 2011, and who left surviving spouses. Making a portability election can save you a significant amount of estate tax and income tax, depending on your circumstances and assets.

When and How is the Portability Election Made?

In order to make an effective portability election, the executor of the estate of the deceased spouse must timely file an estate tax return (Form 706) and include a computation of the DSUE amount.  The due date for Form 706 is the later of (i) 9 months after the deceased person’s date of death, or (ii) the last day of the period covered by an extension if an extension of time for filing has been obtained. Extensions are typically six months. So […]

By | 2016-12-13T20:33:27+00:00 December 4th, 2014|

An Estate Planning Checklist to Facilitate Wealth Transfer

Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.

Help your loved ones avoid becoming one of these statistics. You need to educate and update your heirs about your wealth transfer goals and the plan you have put in place to achieve these goals.

What Must You Communicate to Future Generations to Facilitate Transfer of Your Wealth?

You must communicate the following information to your family to ensure that they will have the information they need during a difficult time:

  • Net worth statement, or at the very minimum a broad overview of your wealth
  • Final wishes – burial or cremation, memorial services
  • Estate planning documents that have been created and what purpose they serve:
    • Durable Power of Attorney, Health Care Directive, Living Will – property management; avoiding guardianship; clarifying wishes regarding life-sustaining procedures
    • Revocable Living Trust – avoiding guardianship; keeping final wishes private; avoiding probate; minimizing delays, costs and bureaucracy
    • Last Will and Testament – a catch-all for assets not transferred into your Revocable Living Trust prior to death, or the primary means to transfer your wealth if you are not using a Revocable Living Trust
    • Irrevocable Life Insurance Trust – removing life insurance from your taxable estate; providing immediate access to cash
    • Advanced Estate Planning – protecting assets from creditors, predators, outside influences, and ex-spouses; charitable giving; minimizing taxes; creating dynasty trusts
  • Who will be in charge if you become incapacitated or die – agent named in your Durable Power of Attorney and Health Care Directive; successor trustee of your Revocable Living Trust and other trusts you’ve created; personal representative named in your will
By | 2016-12-13T20:33:27+00:00 November 18th, 2014|

Do I Need a Living Trust?

A recent article on contains the following lists of misconceptions about a Living Trust:

  1. A living trust is expensive
  2. Trusts are for wealthy people
  3. Most people go through probate anyway so a living trust is a waste of money
  4. Giving up control over assets
  5. High Trustee Fees
  6. Separate Tax Identification Number and Tax Return to file

However, most of these misconceptions are not true.  First, a living trust can save money even though the cost to setup the living trust is higher than the cost to setup a will.  A properly funded living trust can avoid a costly conservatorship during the life of the Trustmaker and avoid the need for a probate at the death of the Trustmaker.  Further, asset protection benefits may exist for the Trustmaker’s beneficiaries.

Second, living trusts are not only for wealthy people.  Living trusts can help all sorts of people.  As mentioned above, a living trust can avoid conservatorships, probate, and possible asset protection benefits for the Trustmaker’s beneficiaries.  Especially for those adults with minor children, a living trust can avoid having a conservator appointed in charge of all the assets the minor will inherit without the living trust.

Third, a well drafted Trust that is completely funded by the Trustmaker avoids probate.  This saves the time, effort and money involved with the probate process.  Why not be one of those few people that actually avoid probate and the expense of it for your loved ones?

Fourth, a person does not give up control over their assets as long as they are the trustee of their living trust.  A trustee of a living trust has complete power to do whatever they want with the assets of […]

By | 2016-12-13T20:33:27+00:00 July 3rd, 2014|

Why Dahl Doesn’t Support The Viability Of Domestic Asset Protection Trusts

Jay Adkinson:  “If you don’t want to read this whole article, and then just take this quick summary and go on to something else: The 2011 decision in Dahl v. Dahl does not, absolutely not, nope, nada, nein, nyet, nuh-uh, support an argument that DAPTs provide protection to settlor/beneficiaries against third-party creditors who are not a party to the trust document. If you want to know why it doesn’t support this, or why somebody might suggest that it would, then read on.  On May 17, 2013, the U.S. Bankruptcy Court for the Western District of Washington issued an Order in the case of In re Huber, which was the subject of my article, Domestic Asset Protection Trust Blows Up Bigger Than Alaska In Huber Case. The Huber decision, which applied Washington state law to a Domestic Asset Protection Trust (DAPT) formed in Alaska, where the settlor/beneficiary was resident in Washington state, called into very serious question the viability of DAPTs both in bankruptcy and for settlor-beneficiaries who are resident outside a DAPT state.”

By | 2013-09-07T10:03:28+00:00 September 7th, 2013|

Michael Jackson’s Estate To IRS: Beat It  “It’s possible that the legacy of Michael Jackson could turn out to be a string of court cases. He has kept lawyers and business managers happily employed since he died – and his tax lawyers are no exception. The estate for the King of Pop is planning to go to the mattress in the fight against the Internal Revenue Service over taxes and penalties assessed as a result of values reported on his federal estate tax return. . . . the estate is suing the IRS. The case has been captioned (after an August 14, 2013 amendment) Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor, Petitioner(s) v. Commissioner of Internal Revenue, Respondent (017152-13 U.S. Tax Court) and was filed in U.S. Tax Court. So why all the fighting? Jackson’s estate was said to have been valued between $80 million and $500 million.”

By | 2013-08-23T08:17:18+00:00 August 23rd, 2013|

New Arizona Law Increases Small Estate Exemptions from Probate

Arizona Senate bill SB 1232 will become effective September 13, 2013.  This new law modifies Arizona Revised Statutes Section 14-3971 to provide that the small estate probate exemption amount for personal property will increase from $50,000 to $75,000 and the exemption for real property will increase from $75,000 to $100,000.  To learn more about Arizona probate and small estate exemptions go to Arizona Probate Law.

By | 2016-12-13T20:33:27+00:00 August 20th, 2013|