Am I Named in a Will? How Would I Know?

Imagine a scenario where three brothers’ biological father passed away a decade ago. The father wasn’t married to the brothers’ mother, plus, he had another family with three children, grandchildren, and great grandchildren. The father never publicly acknowledged that the three boys were his children. They’ve now heard rumors that he left them something in his will—which may or may not exist. The father’s wife has also passed away.

Nj.com’s recent article entitled “How can we find out if our father left us something in his will?” explains that a parent isn’t required to leave his or her adult children an inheritance.

If a person doesn’t leave a will when they die, the intestacy laws of the state in which he or she dies will dictate how the decedent’s property is divided.

For example, if you die without a will in Kansas, your assets will go to your closest relatives. If there were children but no spouse, the children inherit everything. If there is a spouse and descendants, the spouse inherits one-half of your intestate property, and your descendants inherit the other one-half of your intestate property.

In Illinois, if you’re married and you pass away without a will, the portion given to your spouse is based upon whether you have living descendants, such as children and grandchildren.

In New Jersey, if the decedent is survived by a spouse and children—this includes any children who are not children of the surviving spouse—the surviving spouse gets the first 25% of the intestate estate, but not less than $50,000 nor more than $200,000, plus one-half of the balance of the intestate estate. In that state, the descendants of the decedent would receive the remainder.

Note that an intestate estate doesn’t include property that’s in the joint name of the decedent and another person with rights of survivorship or payable upon death to another beneficiary. In our problem above, the issue would be whether the three boys would’ve been entitled to a percentage of the property permitted under the state intestacy statute, or under a will if you could prove there was one.

However, the time for the three boys to make a claim against their father’s estate would have been at his death. A 10-year delay is a problem. It may prevent a recovery because there are time limitations for bringing legal actions. However, they may have other claims, and there may be reasons you are not too late.

Litigation is very fact-specific, and the rules are state-specific. The boys should talk to an estate litigation attorney, if they think there are enough assets to make at it worth their while.

Reference: nj.com (Dec. 29, 2020) “How can we find out if our father left us something in his will?”

Some States Have No Estate or Inheritance Taxes

The District of Columbia already moved to reduce its exemption from $5.67 million in 2020 to $4 million for individuals who die on or after Jan. 1, 2021. A resident with a taxable estate of $10 million living in the District of Columbia will owe nearly $1 million in state estate tax, says the article “State Death Tax Hikes Loom: Where Not To Die In 2021” from Forbes. It won’t be the last change in state death taxes.

Seventeen states and D.C. levy their own inheritance or estate taxes in addition to the federal estate tax, which as of this writing is so high that it effects very few Americans. In 2021, the federal estate tax exemption is $11.7 million per person. In 2026, it will drop back to $5 million per person, with adjustments for inflation. However, that is only if nothing changes.

President Joseph Biden has already called for the federal estate tax to return to the 2009 level of $3.5 million per person. The increased tax revenue purportedly would be used to pay for the costs of fighting the “pandemic” and the “infrastructure improvements” he plans, but many believe such a move would potentially destroy family businesses, farms and ranches that drive and feed the economy in the first place. If that were not troubling enough, President Biden has threatened to eliminate the step up in basis on appreciated assets at death.

This change at the federal level is likely to push changes at the state level. States that don’t have a death tax may look at adding one as a means of increasing revenue, meaning that tax planning as a part of estate planning will become important in the near future.

States with high estate tax exemptions could reduce their state exemptions to the federal exemption, adding to the state’s income and making things simpler. Right now, there is a disconnect between the federal and the state tax exemptions, which leads to considerable confusion.

Five states have made changes in 2021, in a variety of forms. Vermont has increased the estate tax exemption from $4.25 million in 2020 to $5 million in 2021, after sitting at $2.75 million from 2011 to 2019.

Connecticut’s estate tax exemption had been $2 million for more than ten years, but in 2021 it will be $7.1 million. Connecticut has many millionaires that the state does not wish to scare away, so the Nutmeg state is keeping a $15 million cap, which would be the tax due on an estate of about $129 million.

Three states increased their exemptions because of inflation. Maine has slightly increased its exemption because of inflation to $5.9 million, up from $5.8 million in 2020. Rhode Island is at $1,595.156 in 2021, up from $1,579,922 in 2020. In New York, the exemption amount increased to $5.93 million in 2021, from $5.85 million in 2020.

The overall trend in the recent past had been towards reducing or eliminating state estate taxes. In 2018, New Jersey dropped the estate tax, but kept an inheritance tax. In 2019, Maryland added a portability provision to its estate tax, so a surviving spouse may carry over the unused predeceased spouse’s exemption amount. Most states do not have a portability provision.

Another way to grab revenue is targeting the richest estate with rate hikes, which is what Hawaii did. As of January 1, 2020, Hawaii boosted its state estate tax on estates valued at more than $10 million to 20%.

If you live in or plan to move to a state where there are state death taxes, talk with your estate planner to create a flexible estate plan that will address the current and future changes in the federal or state exemptions. Some strategies could include the use of disclaimer trusts or other estate planning techniques. While you’re at it, keep an eye on the state’s legislature for what they’re planning.

Reference: Forbes (Jan. 15, 2021) “State Death Tax Hikes Loom: Where Not To Die In 2021”

Do I Assume My Parents’ Timeshare when They Die?

Ridding yourself of a timeshare can be difficult. Frequently, heirs of a timeshare owner don’t want to take on the liability and the responsibility.

Nj.com’s recent article entitled “Can I leave a timeshare to the timeshare company in my will?” explains that as a general rule, unless it’s in an attempt to defraud creditors, a beneficiary may always renounce or disclaim a bequest made to him or her in a will.

However, if you write a provision in your will, it doesn’t mean that it’s legal, needs to be followed, or can be carried out.

As an example, a beneficiary designation on a bank account or certificate of deposit (CD) to your brother Dirk would take precedence over a specific bequest in your will that the same account or CD goes to your brother Chris. In that instant, the bank will pay the bank account or CD to your brother Dirk—no matter what your will says.

Likewise, with shares in a closely held business. If there is a contract between the shareholders dictating what happens to shares of the business if someone dies, that agreement will also override a provision in your will.

A timeshare is a contract. That means the terms of that contract control what happens. Your will doesn’t.

If the will doesn’t contradict the contract, like bequeathing the timeshare to a third-party who will continue to pay the contract obligations, both documents can co-exist.

A timeshare owner can’t avoid contractual obligations by just giving back the unit back to the corporation, unless that’s permitted in the contract.

The timeshare corporation isn’t required to take back a timeshare unit whether it is returned by the terms of the will or by the executor in administrating the estate, unless the signed timeshare agreement provides for this, or terms of the return are negotiated.

Reference: nj.com (Dec. 24, 2020) “Can I leave a timeshare to the timeshare company in my will?”

Estate of Charles Schulz Still Making Money

Charles Schulz’s estate made $32.5 million in the past year. That placed third on the list of the highest-paid dead celebrities. Michael Jackson is number one and fellow cartoonist Theodor Geisel aka Dr. Seuss is number two.

Some of Schulz’s income is from the new Apple TV+ show “Snoopy in Space,” as well as classics like “A Charlie Brown Christmas.”

Wealth Advisor’s recent article “Decades After His Death The Estate Of Charles Schulz Is Still Making A TON Of Money” reports the Peanuts creator is consistently one of the highest-earning dead celebrities. Schulz himself is thought to have earned more than $1 billion during the comic strip’s unprecedented 50-year run.

Schulz was born in 1922 in Minneapolis. He knew he wanted to be a cartoonist in kindergarten when he started drawing Popeye. By high school, he was submitting his original cartoons to his school paper, as well as local magazines. After his service in Europe during World War II, Schulz created a cartoon called “Li’l Folks” for the St. Paul Pioneer Press. His cartoons were noticed by United Feature Syndicate, a newspaper syndication company. They offered to syndicate Schulz’s cartoons to their national network of newspapers with one condition: they wanted him to change the name of his comic strip to Peanuts. Schulz hated that, but United Feature Syndicate was already running a comic with a very similar name, and this wasn’t an opportunity he could pass up.

The first Peanuts cartoon ran in 1950, when Schulz was 28 years old. That first year, just seven newspapers ran Peanuts. However, by 1953, Peanuts was a hit, and Schulz was earning $30,000 a year (about $292,000 today). At its zenith, Peanuts was syndicated to more than 2,600 newspapers in 71 countries and 21 languages every day. The comic strip characters also made a fortune with merchandise and endorsements. In the 1980s, Schulz was the highest-paid celebrity in the world by a wide margin. He made $30 million in royalties (about $65 million today). From 1990 until his death in 2000, he earned $40 million a year.

Over nearly 50 years, Schulz drew 17,897 published Peanuts strips. The last of his cartoons was published on Feb. 12, 2000, one day after he died. Remarkably, Schulz wrote and drew every single comic himself. When he died, his will said that no new Peanuts comic strips could be drawn by another cartoonist. So far, his wishes have been honored.

Reference: Wealth Advisor (Dec. 8, 2020) “Decades After His Death The Estate Of Charles Schulz Is Still Making A TON Of Money”

How Does a Trust Work for a Farm Family?

There are four elements to a trust, as described in this recent article “Trust as an Estate Planning Tool,” from Ag Decision Maker: trustee, trust property, trust document and beneficiaries. The trust is created by the trust document, also known as a trust agreement. The person who creates the trust is called the trustmaker, grantor, settlor, or trustor. The document contains instructions for management of the trust assets, including distribution of assets and what should happen to the trust, if the trustmaker dies or becomes incapacitated.

Beneficiaries of the trust are also named in the trust document, and may include the trustmaker, spouse, relatives, friends and charitable organizations.

The individual who creates the trust is responsible for funding the trust. This is done by changing the title of ownership for each asset that is placed in the trust from an individual’s name to that of the trust. Failing to fund the trust is an all too frequent mistake made by trustmakers.

The assets of the trust are managed by the trustee, named in the trust document. The trustee is a fiduciary, meaning they must place the interest of the trust above their own personal interest. Any management of trust assets, including collecting income, conducting accounting or tax reporting, investments, etc., must be done in accordance with the instructions in the trust.

The process of estate planning includes an evaluation of whether a trust is useful, given each family’s unique circumstances. For farm families, gifting an asset like farmland while retaining lifetime use can be done through a retained life estate, but a trust can be used as well. If the family is planning for future generations, wishing to transfer farm income to children and the farmland to grandchildren, for example, a granted life estate or a trust document will work.

Other situations where a trust is needed include families where there is a spendthrift heir, concerns about litigious in-laws or a second marriage with children from prior marriages.

Two main types of trust are living or inter-vivos trusts and testamentary trusts. The living trust is established and funded by a living person, while the testamentary trust is created in a will and is funded upon the death of the willmaker.

There are two main types of living trusts: revocable and irrevocable. The revocable trust transfers assets into a trust, but the grantor maintains control over the assets. Keeping control means giving up any tax benefits, as the assets are included as part of the estate at the time of death. When the trust is irrevocable, it cannot be altered, amended, or terminated by the trustmaker. The assets are not counted for estate tax purposes in most cases.

When farm families include multiple generations and significant assets, it’s important to work with an experienced estate planning attorney to ensure that the farm’s property and assets are protected and successfully passed from generation to generation.

Reference: Ag Decision Maker (Dec. 2020) “Trust as an Estate Planning Tool”

Who Makes Money from Charlie and the Chocolate Factory?

The heartwarming drama is fictional, even though the two writers did once meet, says The Express in its recent article entitled “Roald Dahl inheritance: Who is raking in fortunes made from Dahl books & films?”

Roald was a mere lad and Beatrix was in her 60s, when the two authors briefly met one another. Dahl’s books and films are classics and are constantly being revamped and reimagined 30 years after his death.

But with Roald no longer around, who gets the money from his books and films? Roald died in 1990 at age 74 and was believed to have a net worth of $10 million.

The lion’s share of his income from films, books and merchandise is managed by his estate.

The latest data from Roald Dahl’s estate shows annual pre-tax profits of about $17 million in 2018.

This income is from television and film deals, royalties, fancy-dress costumes and a line of baby toiletries.

After Roald’s death, his widow Felicity inherited the majority of the $3.75 million he left in his will. This is worth nearly $6.75 million in today’s dollars.

Every year, fans commemorate Roald Dahl Day to celebrate his stories and their characters. Held on the anniversary of his birth—September 13—his books, films and characters are celebrated.

The author spent four hours every day writing stories from his garden shed. In all, Roald wrote at least 36 books, including James and the Giant Peach, Matilda, The Twits and Fantastic Mr Fox. His works continue to be popular for film and stage adaptations.

A new version of The Witches, starring Anne Hathaway, was released earlier this year, while Hollywood stars including Johnny Depp, Mark Rylance and Danny DeVito have all appeared in film versions of his stories.

Reference: The Express (UK) (Dec. 12, 2020) “Roald Dahl inheritance: Who is raking in fortunes made from Dahl books & films?”

How Do You Keep Inheritance Money Separate?

Families with concerns about the durability of a child’s marriage are right to be concerned about protecting their children’s assets. For one family, where a mother wishes to give away all of her assets in the next year or two to her children and grandchildren, giving money directly to a son with an unstable marriage can be solved with the use of estate planning strategies, according to the article “Husband should keep inheritance in separate account” from The Reporter.

Everything a spouse earns while married is considered community property in most states. However, a gift or inheritance is usually considered separate property. If the gift or inheritance is not kept totally separate, that protection can be easily lost.

An inheritance or gift should not only be kept in a separate account from the spouse, but it should be kept at an entirely different financial institution. Since accounts within financial institutions are usually accessed online, it would be very easy for a spouse to gain access to an account, since they have likely already arranged for access to all accounts.

No other assets should be placed into this separate account, or the separation of the account will be lost and some or all of the inheritance or gift will be considered belonging to both spouses.

The legal burden of proof will be on the son in this case, if funds are commingled. He will have to prove what portion of the account should be his and his alone.

Here is another issue: if the son does not believe that his spouse is a problem and that there is no reason to keep the inheritance or gift separate, or if he is being pressured by the spouse to put the money into a joint account, he may need some help from a family member.

This “help” comes in the form of the mother putting his gift in an irrevocable trust.

If the mother decides to give away more than $15,000 to any one person in any one calendar year, she needs to file a gift tax return with her income tax returns the following year. However, her unified credit protects the first $11.7 million of her assets from any gift and estate taxes, so she does not have to pay any gift tax.

The mother should consider whether she expects to apply for Medicaid. If she is giving her money away before a serious illness occurs because she is concerned about needing to spend down her life savings for long term care, she should work with an elder law attorney. Giving money away in a lump sum would make her ineligible for Medicaid for at least five years in most states.

The best solution is for the mother to meet with an estate planning attorney who can work with her to determine the best way to protect her gift to her son and protect her assets if she expects to need long term care.

People often attempt to find simple workarounds to complex estate planning issues, and these DIY solutions usually backfire. It is smarter to speak with an experienced elder law attorney, who can help the mother and protect the son from making an expensive and stressful mistake.

Reference: The Reporter (Dec. 20, 2020) “Husband should keep inheritance in separate account”

Taking a look at Estate of Late Soccer Star Diego Maradona

Similar to soccer star Diego Maradona’s life, the inheritance process is likely to be a mess with his big family that includes eight children from six different partners as heirs to his assets, plus his intangible heritage.

Reuters’ recent article entitled “Image rights, fast cars and a ‘tank’: Maradona’s death triggers complex inheritance” explains that Maradona, who died recently at 60 from cardiac arrest, had four children in Argentina, one in Italy, and three in Cuba, when he went there for treatment to recover from his addictions, his lawyer Matías Morla said.

“In the specific case of Maradona, he is divorced and has eight children, so the estate is divided by eight in an inheritance trial,” Buenos Aires-based soccer lawyer Martín Apolo told Reuters. “It will be a complex process.”

The probate process can last 90 days in a normal case. However, Apolo said it could be much longer with the prospect of “internal disputes” and opportunists seeking a payout from Maradona’s estate. The estate of the World Cup champion, who at the time of his death was coach of the Argentine club Gimnasia y Esgrima, includes properties, cars, investments and jewels that he was given throughout his career. He played and coached in Argentina, Spain, Italy, the United Arab Emirates, Belarus and Mexico.

There is no established value of Diego Maradona’s fortune. Celebrity Net Worth estimates his net worth at the time of his death at $500,000 but said he had earned millions during his career from contracts with the different teams and sponsorship with brands, such as Coca-Cola.

Called “Dios” for his godlike skills on the soccer pitch and “Pelusa” for his prominent mane of hair. Maradona will be valuable for his image, even after death.

“The most important patrimony here could be the image rights, and also all his shirts,” said Apolo. “How much is the one he used in the World Cup final worth? How much could you pay at auction?”

The soccer star’s family has been through several legal battles in recent years, including a trial with his ex-partner Claudia Villafañe for tax evasion, procedural fraud and misappropriation of 458 objects from his past as a soccer player. However, Maradona’s family has asked for unity in the recent weeks before his death, after he underwent brain surgery to remove a blood clot, from which he was recovering when he died.

Reference: Reuters (Nov. 27, 2020) “Image rights, fast cars and a ‘tank’: Maradona’s death triggers complex inheritance”

What You Should Never, Ever, Include in Your Will

A last will and testament is a straightforward estate planning tool, used to determine the beneficiaries of your assets when you die, and, if you have minor children, nominating a guardian who will raise your children. Wills can be very specific but can’t enforce all of your wishes. For example, if you want to leave your niece your car, but only if she uses it to attend college classes, there won’t be a way to enforce those terms in a will, says the article “Things you should never put in your will” from MSN Money.

If you have certain terms you want met by beneficiaries, your best bet is to use a trust, where you can state the terms under which your beneficiaries will receive distributions or assets.

Leaving things out of your will can actually benefit your heirs, because in most cases, they will get their inheritance faster. Here’s why: when you die, your will must be validated in a court of law before any property is distributed. The process, called probate, takes a certain amount of time, and if there are issues, it might be delayed. If someone challenges the will, it can take even longer.

However, property that is in a trust or in payable-on-death (POD) titled accounts pass directly to your beneficiaries outside of a will.

Don’t put any property or assets in a will that you don’t own outright. If you own any property jointly, upon your death the other owner will become the sole owner. This is usually done by married couples in community property states.

A trust may be the solution for more control. When you put assets in a trust, title is held by the trust. Property that is titled as owned by the trust becomes subject to the rules of the trust and is completely separate from the will. Since the trust operates independently, it is very important to make sure the property you want to be held by the trust is titled properly and to not include anything in your will that is owned by the trust.

Certain assets are paid out to beneficiaries because they feature a beneficiary designation. They also should not be mentioned in the will. You should check to ensure that your beneficiary designations are up to date every few years, so the right people will own these assets upon your death.

Here are a few accounts that are typically passed through beneficiary designations:

Bank accounts
Investments and brokerage accounts
Life insurance polices
Retirement accounts and pension plans.

Another way to pass property outside of the will, is to own it jointly. If you and a sibling co-own stocks in a jointly owned brokerage account and you die, your sibling will continue to own the account and its investments. This is known as joint tenancy with rights of survivorship.

Business interests can pass through a will, but that is not your best option. An estate planning attorney can help you create a succession plan that will take the business out of your personal estate and create a far more efficient way to pass the business along to family members, if that is your intent. If a partner or other owners will be taking on your share of the business after death, an estate planning attorney can be instrumental in creating that plan.

Funeral instructions don’t belong in a will. Family members may not get to see that information until long after the funeral. You may want to create a letter of instruction, a less formal document that can be used to relay these details.

Your account numbers, including passwords and usernames for online accounts, do not belong in a will. Remember a will becomes a public document, so anything you don’t want the general public to know after you have passed should not be in your will.

Reference: MSN Money (Dec. 8, 2020) “Things you should never put in your will”

Is the Pandemic Motivating People to Do Estate Planning?

A survey from Policygenius, an online insurance marketplace, found that most people (60.4%) didn’t have a will, but that may be about to change. Nearly 40% of survey respondents (39.7%) said they feel it’s more important to get a will because of the pandemic.

PR Newswire’s recent article entitled “Policygenius survey finds Americans with misconceptions about estate planning” reports that many respondents also held misconceptions about the estate planning process, which may a reason they avoid it.

The survey found that more than one in five respondents (22.8%) who think getting a will is too expensive overestimated the cost by hundreds or even thousands of dollars.

A total of 48.2% incorrectly thought that their possessions would automatically pass to their spouse, if they died without a will. That may suggest that people may not be creating wills because they think they don’t need them.

There were 24.1% respondents who said that they don’t have a will because they haven’t had time to put one together, and more than half of those respondents (62%) were parents.

The survey also found that respondents prioritized family, with more than a third of them (35.9%) saying that having a child is the most important life event for someone, if they want to create a will. About two-thirds (65.5%) said that making the process of inheritance as easy as possible is one of their top three important issues, when getting a will.

Just 39.3% knew that if someone passes away without a will, a court will determine who gets their assets.

The Policygenius survey is based on responses from a nationally representative sample of 2,689 Americans ages 25 and over. It was conducted by SurveyMonkey from July 16 through July 17, 2020.

Ask an experienced estate planning attorney about a will and a comprehensive estate plan.

Reference: PR Newswire (Dec. 2, 2020) “Policygenius survey finds Americans with misconceptions about estate planning”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

Am I Named in a Will? How Would I Know?

Some States Have No Estate or Inheritance Taxes

Do I Assume My Parents’ Timeshare when They Die?

Estate of Charles Schulz Still Making Money

How Does a Trust Work for a Farm Family?

Who Makes Money from Charlie and the Chocolate Factory?

How Do You Keep Inheritance Money Separate?

Taking a look at Estate of Late Soccer Star Diego Maradona

What You Should Never, Ever, Include in Your Will

Is the Pandemic Motivating People to Do Estate Planning?

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Am I Named in a Will? How Would I Know?

Some States Have No Estate or Inheritance Taxes

Do I Assume My Parents’ Timeshare when They Die?

Estate of Charles Schulz Still Making Money

How Does a Trust Work for a Farm Family?

Who Makes Money from Charlie and the Chocolate Factory?

How Do You Keep Inheritance Money Separate?

Taking a look at Estate of Late Soccer Star Diego Maradona

What You Should Never, Ever, Include in Your Will

Is the Pandemic Motivating People to Do Estate Planning?

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