Humorous Wills: David Brenner

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One of the greatest aspects of creating your estate plan is the ability to write anything you want in your documents. Most of the time, estate planning documents are very cut and dry. They outline who is to administer the estate, the distribution of the estate, and list the intended beneficiaries.

Sometimes, individuals include statements or requests that have wandered away from the path of convention.

One such individual was Comedian, David Brenner. I stumbled upon an article written by Richard Johnson on Page Six, entitled “Comedian David’s Brenner’s Hilarious Last Will” that detailed the Comedian’s will.

According to Johnson’s article, Brenner’s will instructed he be buried in jeans and a nice shirt, in plain box, with a small stone on the grave site that read “Here Lies David Brenner. He lived, he died, but MAN DID HE LIVE!” on one side and “If this is supposed to be a joke- I don’t get it” on the other.

Brenner also reportedly requested to have one hundred dollars, in small bills, placed inside his left sock “just in case tipping is recommended where I’m going”.

And as any true comedian, his farewell statement read: “To those who have been kind to me and loved me, thank you. To those who were not kind and didn’t love me, I hope you’re next!”

Does having these jokes in his document invalidate it? No. It most certainly does not. You have the right to include anything you wish in your documents. Now, your attorney will probably caution you in regards to validity of certain requests you might make, but for the most part, statements and requests like Brenner’s, are usually fine.

It is nice to think that even from beyond the grave, you might be able to bring a smile to your loved ones faces one last time.

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“Thieves in the Temple”: Prince dies Intestate

Music icon Prince died on April 21, 2016. Reports indicate his estate is worth between $100-$300 million dollars, and growing. A little more than a month has passed since Prince’s death and the hot topic is that Prince  had no estate plan.

No Trust, No Will, Nada. Therefore, his entire estate is going to be probated by the Minnesota probate court. And it could take years and possible millions to probate.

As mentioned several times, over in previous posts, when a person dies with no estate plan, they are considered to have died intestate. Each state has intestacy laws that allow the state’s probate court to probate and administer the estate. Intestacy laws are basically a state’s way of speculating who a person would have selected to inherit their estate.

Prince had no spouse nor children. Both of his parents are deceased. So, his heirs are his six (6) siblings. One (1) full sibling and five (5) half siblings. In Minnesota, half siblings are entitled an equal share of an estate, just like full siblings. Therefore, Prince’s estate could be split in six (6) equal parts.

Now, on the surface this does not seem like a major issue. Prince had six (6) siblings, surely he would have left them something in his will, right? Well, maybe. I have yet to see a report indicating he had intentions to disinherit any of this siblings. BUT, if he did intend to disinherit any of them, with no estate planning documents, those intentions are lost. Similarly, any intention to leave money to charities, churches, friends, etc. are also lost.

Recent articles have surfaced detailing that Prince was devout in his religion and would have wanted to leave something to his church. Others speculated there were several charities he would have wanted to share in his estate.

Moreover, Prince’s entire “musical catalog” is now under the control of the named estate administrator, including several unreleased songs. The lack of an estate plan means no one knows if those unreleased songs are supposed to stay private or be released. Furthermore, the fate of the rest of his music now rests with the estate administrator.

What is known is the Minnesota probate court is going to have a long and probably complicated road ahead trying to administer this estate.

What many fail to understand is estate planning is vital for anyone with assets. Only you know where you wish your estate to be distributed. Do you want to disinherit a child? You need to have it in writing. Do you want to leave money to a charity? You need to have it in writing. Do you want to have money set aside for a niece, nephew, grandchild, etc. in a trust? You need to have it in writing.

A lack of an estate plan means your estate is open to the public, anyone who believes they should inherit can make a claim, and it will cost your heirs time and money in court battles and attorneys fees.

Keep the “thieves out of the temple” by creating an estate plan.

 

An Unfunded Trust is a Useless Trust: The Michael Jackson Predicament

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A Revocable Living Trust (RLT) is a developed with the intent to avoid Probate. When the Grantor dies, the named trustees simply follow the trust instructions and distribute the trust assets accordingly. No judge or court hearing is needed. Unlike a will, a trust is completely private and the public never knows how the assets pass.

A trust is a great tool to have in anyone’s estate planning toolbox. However, one of the most common mistakes people make is never actually funding their trust.

Music legend Michael Jackson made this exact mistake.

Michael Jackson had a revocable living trust created in order to protect his massive estate for his three children and his mother. Reports state the trust was designed so that his children would inherit 50% of his estate and the other 50% would go to his mother. The trust detailed that the children would be receive specific amounts at ages 21, 30, 35, and 40.

Since his death, reports estimate Jackson’s estate is worth about $600 million dollars. Upon review of Jackson’s estate planning documents, it was discovered the trust was never funded.

So, what happens when a trust is not funded?

When a person creates a trust they also create what is called a “pour over will”. This type of will ensure that any asset not placed in the trust will end up in the trust and distributed according to the trust. Since a “pour over will” is a will, the asset must be probated before being placed in the trust.

In Jackson’s case, his entire estate was left out of his trust. Therefore, his entire estate has to go through the probate process before the trust can be funded. This caused several issues.

First and foremost, the estate is essentially “frozen” and cannot be distributed to Jackson’s named heirs. The children and his mother are living off an allowance that is managed by the estate executor’s and overseen by a judge.

Second, the estate being probated means the estate is now open to litigation. Jackson’s siblings are contesting the distributions of his estate to only his mother and his children, alleging fraud, at being omitted from the distribution plan.

Third, the trust would have protected Jackson’s estate from creditors. Since the estate has to be probated, creditors can now take advantage of the statutory period allowing them to make claims against the estate. Reports indicate the amount of creditors making claims against the estate could take several years to sort out and address.

In sum, all of these impediments serve to prolong the probate process, which will cost the estate money. Once the process is over, and the creditors, courts, and attorneys are paid, then whatever remains will be placed in the trust.

Lesson of this story? FUND YOUR TRUST. A RLT is designed to avoid probate and all of the possible issues associated with the process. When you fail to fund your trust, you essentially invalidate the entire point of creating one.

An unfunded trust is a useless trust.

 

The After Born Child Problem: Phillip Seymour Hoffman & Heath Ledger Blunders

One common estate planning mistake that could have disastrous consequences is not updating your documents to include additional children. Continuing with the “celebrity blunders” theme, let’s examine two celebrity cases dealing with this mistake: Phillip Seymour Hoffman and Heath Ledger.

Phillip Seymour Hoffman

Hoffman died from a drug overdose in 2014, leaving behind three children with his common law wife. His estate was valued at about $35 million dollars. Thankfully, Hoffman left behind a valid will. The issue is the will was executed in 2004 when he only had one child, his son. The will was never updated to include his two young daughters.

Now, ideally, that should not matter because the will left everything to the three children’s mother, Hoffman’s common law wife. Which should have meant she would inherit and use the inheritance to take care of the couple’s three children, then pass it on after she dies.

In reality, it caused some major setbacks.

The first setback was the issue of the common law marriage. Since Hoffman and his spouse were only common law married, anything she inherited is subject to federal and estate tax laws. Common law spouses are not afforded the ability to leave an unlimited amount to their surviving spouse. Any inheritance will be taxed according the particular state’s estate tax laws and if the estate meets the federal limit, possibly federal estate taxes.

Meaning that out of the $35 million dollar estate, Hoffman’s estate would have to pay estate taxes of over $15 million dollars, according to an article written by FORBES.

Now, to avoid the estate tax issue, Hoffman’s wife could have disclaimed her share, and had the estate follow the contingency plan in Hoffman’s will. This is where the second setback comes into play.

If she disclaimed her portion of the estate, Hoffman’s will instructed the estate assets be placed in a trust for his son and it outlined at what age he could receive distributions from the trust. Since the will does not mention his daughter or reference any language like “to my son, and any other children born hereafter,” his son technically inherits it all.

Thankfully, most states address the “after born child” problem and have provisions in place to handle these situation so a child born after a will can inherit. The provisions do not mean the estate is automatically going to the split estate three ways, however. Each state’s provisions are different and usually require the appointment of a guardian ad litem for the excluded child or children to handle the estate process on their behalf.

The lesson here: (1) Know what your estate planning documents say and how they work in regard to estate taxes and how heirs inherit. (2) Ensure the documents have language in them that deal with the “what ifs” like “what if I have more children”, “what if my primary beneficiaries pre-decease me”, etc. (3) Updated your estate plan regularly. A good rule of thumb is at every big event (births, deaths, weddings, divorces, etc.) update your estate plan to reflect your wishes.

Heath Ledger

Heath Ledger passed in 2008 and his heirs were left in a similar situation as Hoffman’s. His will was outdated did not include his young daughter. Instead, the will left his approximately $20 million dollar estate to his parents and siblings.

Now, in this situation, the issue of if his daughter could petition to be included as an “after born child” would depend on where Ledger was deemed to be domiciled. A person’s estate is probated in the state they are a resident. Ledger was an Australia native with an Australian will, but died in his New York apartment. Thus, there could have been some debate as to which place had jurisdiction to probate his estate.

Thankfully, in this situation, Ledger’s family did not dispute or fight about the estate, but simply agreed to allow his daughter to inherit.

The lesson here: (1) Again, update your estate plan after big life events. (2) Do not rely on family members to be willing to equally share your estate if issues arise.

Having an estate plan is just the first step in ensuring your wishes after death are met. The second step is to be aware that as life goes on, your estate plan should be amended to reflect those changes.

Most estate planning attorneys are willing to review existing estate planning documents and discuss how the documents work in regards to your stated wishes. If you have an existing estate plan that could be out of date, talk to a licensed estate planning attorney and see if it is time to update your plan.

 

What Happens When You Fail to Plan?: The Steve McNair Situation

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The underlying theme of the majority of my posts are why an estate plan is important for everyone, regardless of age. As I was pondering what topic I would write about next, I decided to go for a “celebrity” angle. So, I googled “celebrity estate planning fails” and found that quite a lot of celebs have made estate planning blunders that cost their estates and loved ones dearly.

Case and point: Steve McNair.

Steve McNair was a professional football player in the NFL. He played for Tennessee and the Ravens during his career and amassed a sizable estate. On July 4, 2009, at the age of 36 years old, he was shot and killed by his mistress.

To add to the tragedy of his murder, McNair had no estate planning documents. Not even a basic will. Therefore, every asset he owned at the time of his death, titled in his own name, had to be probated according to Tennessee’s intestacy laws.

According to reports, McNair’s estate was worth about $19 million. His wife had to hire a probate attorney to handle the probate process. She was named the executor of the estate.

The most notable issues surrounding the estate, according to reports are as follows:

First, his wife failed to list McNair’s two children from a prior relationship, and only listed herself and her two children with McNair has heirs. Illegitimacy does not negate a child’s claim to a share of an estate. The omission of the children meant they could contest the estate and fight to be included. Thus, dragging the probate process out longer than expected.

Second, McNair had purchased a home on a 45 acre tract of land for his mother. She lived in the home for several years with no problems, until McNair’s death. The house was only titled in McNair’s name, not his and his mother’s. Therefore, once McNair passed, the house became a part of the estate. McNair’s wife requested his mother pay rent in the amount of about $3,000.00 per month or move out. When his mother moved out, reports indicate his wife sued her for $50,000.00 worth of property she claimed his mother took from the home.

Third, McNair’s estate had several claims by creditors against it. Including, but not limited to an artist seeking payment for a family portrait, closing of his Nashville Restaurant, and expenses surrounding his farm in Mississippi. Legitimate debts against an estate have to be paid first before any distributions can be made to heirs.

These three are just a few of the issues surrounding the estate. All brought on because McNair died without any estate planning documents. If McNair had at least a basic will, the court would have known what his wishes were for his estate.

Now, a basic will would not have eliminated all of the issues, but it would have eliminated some of them. For example, if McNair intended to provide for his two children from a prior relationship, he could have included them in the will as being entitled to receive a percentage of the estate. Similarly, if he intended for his mother to keep the house she was living in, he could have specified that in his will.

Leaving behind a basic will would still mean the estate would have to be probated. Probate is a public forum, so any issue that did arise would still be public knowledge.

If McNair had created and funded a revocable living trust, however, there would be no probate process. Trusts are private documents that allow a decedent’s estate to pass outside of probate. Meaning, there would be no frozen estate assets in an account waiting for the court to okay the distribution plan. There also would probably not have been any issues at all because the beauty of trusts are they do not lend themselves too much litigation. Sure, someone could challenge a trust, but it is not has easy to do as with a will.

Bottom Line: Planning would have avoided years of heartache, headache, and family disputes.

Now, some of you are probably thinking “well that’s all well and good for a celebrity because they have a lot of money. I don’t have a lot of money, so it doesn’t apply to me.” Wrong.

Think about your estate. Think about the assets you own in just your name. What are they? A car? A House? A bank account?

Do you have a spouse? Do you have children? Do you take care of an elderly parent or support a family member? Do you have specific items you wish to pas to specific individuals? Are there specific people you wish to leave nothing?

I could go on and on with those types of questions. The point behind is, if you were to pass right now without a single document, do you know what is going to happen to your things?

I do. The state you are a resident in is going to choose who gets to administer your estate and dictate who gets what percentage of your estate. Regardless of your wishes and what your family member “knew” you wanted. Unless you expressly spell it out in a document, it is does not matter.

Sure, it might not play out on a grand of a scale as Steve McNair’s did. But, that does not guarantee it will go over smoothly.