Why Is Family of a Texas Governor Fighting over His Estate?

Dolph Briscoe Jr. was a Texas rancher and businessman and was the 41st Governor of Texas between 1973 and 1979. His oldest child, Janey Briscoe Marmion, established the foundation with her father to honor her only child, Kate, who died in 2008 at the age of 20.

The Uvalde Leader-News’ recent article entitled “Briscoe family lawsuit targets Marmion’s will” reports that Marmion’s original will filed in 2011 directed her assets to be placed in a revocable trust.

The foundation was to have received income from half of her wealth for 22 years. The rest was directed to the children of her brother Chip Briscoe and those of her sister Cele Carpenter of Dallas.

However, a second will executed by Marmion in 2014 and admitted to probate in the County Court in December 2018— a month and a day after her death—calls for three trusts, including two child’s trusts created by her father and a generation-skipping trust (GST). A GST is a type of trust agreement in which the contributed assets are transferred to the grantor’s grandchildren, “skipping” the next generation (the grantor’s children).

Marmion created the Janey Marmion Briscoe GST Trust, dated November 1, 2012, in which she gave a third of her assets to the foundation and the other two-thirds to be divided equally between Chip Briscoe’s sons.

Carpenter’s three children filed suit in Dallas and in Uvalde County last year challenging the validity of the 2014 will and contesting the probate.

Their complaint alleges that Marmion intended to include the three as beneficiaries, in addition to Chip’s two sons, and that the situation creates a disproportionate inheritance in favor of the Briscoe men.

The amount in question is more than $500 million, since the former Texas governor’s estate was estimated by Forbes to be worth as much as $1.3 billion in 2015. Governor Briscoe died in Uvalde in 2010 at the age of 87.

Reference: Uvalde (TX) Leader-News (March 11, 2021) “Briscoe family lawsuit targets Marmion’s will”

Remind Me Why I Need a Will

There are a number of reasons to draft a will as soon as possible. If you die without a will (intestate), you leave decisions up to your state of residence according to its probate and intestacy laws. Without a will, you have no say as to who receives your assets or properties. Not having a will could also make it difficult for your family.

Legal Reader’s recent article entitled “Top 7 Reasons to Fill Out a Will” reminds us that, before it is too late, consider these reasons why a will is essential.

Avoid Family Disputes. This process occasionally will lead to disagreements among family members, if there’s no will or your wishes aren’t clear. A contested will can be damaging to relationships within your family and can be costly.

Avoid Costly and Lengthy Probate. A will expedites the probate process and tells the court the way in which you want your estate to be divided. Without a will, the court will decide how your estate will be divided, which can lead to unnecessary delays.

Deciding What Happens to Your Assets. A will is the only way you can state exactly to whom you want your assets to be given. Without a will, the court will decide.

Designating a Guardian for Your Children. Without a will, the court will determine who will take care of your minor children.

Eliminate Stress for Your Family. Most estates must go to probate court to start the process. However, if you have no will, the process can be complicated. The court must name personal representatives to administer your estate.

Protect Your Business. A will allows you to pass your business to your co-owners or heirs.

Provide A Home For Your Pets. If you have a will, you can make certain that someone will care for your pets if you die. The law considers pets as properties, so you are prohibited from leaving assets to your pets in your will. However, you can name beneficiaries for your pets, leaving them to a trusted person, and you can name people to serve as guardians of your pets and leave them funds to meet their needs.

Drafting a will with the help of an experienced estate planning attorney can give you and your family peace of mind and convenience in the future.

Reference: Legal Reader (Jan. 28, 2021) “Top 7 Reasons to Fill Out a Will”

The Latest on the Denver Broncos and Late Owner Pat Bowlen’s Trust

The Denver Post’s recent article entitled “Broncos ask Denver County District Court to confirm right-of-first-refusal is terminated” says that the battle over the Denver Broncos football team is far from over, and what Pat Bowlen intended in his trust may not come to pass.

After Pat Bowlen died in 2019 at age 75 after a long battle with Alzheimer’s, his two oldest daughters placed themselves at risk of being disinherited by challenging their father’s trust. The trust is tasked with choosing the next controlling owner of the Denver Broncos, a pro football franchise valued at more than $2.5 billion.

“This lawsuit is a proactive, necessary step to ensure an efficient transition of ownership, whether the team remains in the Bowlen family or is sold,” long-time Bowlen attorney Dan Reilly said in a statement. “We are confident that the court will find the right of first refusal is no longer enforceable, consistent with Colorado law and the intentions of Pat Bowlen and Edgar Kaiser in their written agreement more than 36 years ago.”

So, if the Broncos’ next controlling owner is Pat’s daughter Brittany, the preferred choice of the trustees, or if the team is sold to an outside buyer, they should be able to move forward without interference from Kaiser’s camp. Kaiser died in January 2012.

Even if this lawsuit drags on, it will not cause a delay in the Arapahoe County District Court battle between Bowlen’s daughters Beth Bowlen Wallace and Amie Klemmer and the trustees who want to invalidate the 2009 trust on the grounds that Pat did not have the capacity to sign his estate-planning documents.

This part of the Broncos ownership soap opera began in May 2020, when an attorney sent the Broncos counsel a letter stating that his client be sent “notice,” if the team named a new controlling owner or was sold. When Kaiser sold 60.8% of the Broncos to Bowlen in 1984, a right of first refusal was included in the agreement. A year later, Bowlen bought the other 39.2% from John Adams and Tim Borden for $20 million.

In 1998, Bowlen offered retired quarterback John Elway the chance to buy 10% of the team for $15 million. However, Kaiser opposed, saying Bowlen had to offer any piece of the Broncos to him before he offered it to another party. The courts ruled in Bowlen’s favor, even though Elway didn’t take him up on the offer. The court said the right of first refusal only applied to the 60.8% ownership interest that Pat purchased from Kaiser. However, Pat’s win didn’t totally eliminate the right of first refusal, which gave Kaiser 14 days to decide whether to buy the team if Bowlen found a buyer.

Reference: Denver Post (Jan. 26, 2021) “Broncos ask Denver County District Court to confirm right-of-first-refusal is terminated”

Sound Like a Broken Record in Estate Planning?

After a year like the last, estate planning attorneys may sound like a broken record, repeating their message over and over again: No matter your age, wealth, or familial structure, you should have a last will and testament, powers of attorney and a health care proxy.

Everyone needs these documents, to protect wealth, children, spouses, family and yourself.

Wealth Advisor’s recent article entitled “2020 Concludes With Intestate Celebrity Estates” says that the execution of legal documents does have a financial cost. This can keep some people from talking to an experienced estate planning attorney. Others say they are simply too busy to take care of the matter, so they delay. There are other people don’t want to talk about issues of sickness and mortality because they just can’t bring themselves to think about these important estate planning documents.

It doesn’t matter who you are, these types of issues are seen with all kinds of people. Recently, we’ve learned that several celebrities died intestate or without a last will and testament. For example, Argentinian soccer great Diego Armando Maradona died in November at the age of 60. He had a fortune including real estate, financial assets and jewelry, but his life was filled with drama. Diego fathered eight children from six different partners but signed no last will and testament. Fighting among his many heirs is expected, especially with his large estate. Diego said publicly that he wanted to donate his entire estate and not leave his children anything. However, he died of a heart attack before putting this plan in place. Therefore his next-of-kin, not the charities, received his assets.

Another notable person who died intestate recently is former Zappos CEO Tony Hsieh, who died at age 46. His estate is valued at $840 million. Hsieh was survived by his two brothers and his parents. He recently purchased eight houses in Park City, Utah, so this purchase of real estate across state lines will make the administration of his estate even more complicated without a last will and testament or a trust.

Finally, actor Chadwick Boseman died intestate at age 43, after a long battle with colon cancer. His wife, Simone Ledward, petitioned the California courts to be named the administrator of his estate. The couple married in early 2020. As a result, she was qualified to administer and receive from his estate. He had no children, so under California probate law, she gets the entire estate.

These recent deaths of three celebrities, none of whom were elderly, show the need for individuals of all ages, backgrounds and wealth to address their estate plans and not put it off.

Reference: Wealth Advisor (Jan. 19, 2020) “2020 Concludes With Intestate Celebrity Estates”

Should Inherited Money Be Equally Split Between Family Members

Leaving an equal amount to adult children works for many families, but equal is not always equitable. In those cases, leaving different amounts to heirs can lead to irreparable breaks within the family. A recent article titled “The Unequal Inheritance: It Can Work, or It Can ‘Destroy Relationships’” from The New York Times examines the problem and some of the solutions. There are times, however, when even the fairest of decisions doesn’t heal the “Mom always liked you best” hurt, imagined or otherwise.

Unequal inheritances can trigger sibling fighting after a parent dies, some of which end up in court, especially if one child thinks that a parent was being overly influenced by the sibling who ended up with the bigger inheritance.

Parents need to explain their decision to each child, individually and as a group, or even seek mediation. Many estate planning attorneys encourage a family meeting, where everyone is in a neutral location, to discuss the parent’s wishes and estate plan. In some cases, the children understand when one of the siblings is disabled or has a lower earning potential.

Another reason for unequal inheritances is to balance things out when one child received significant support that others did not need. Equalization of gifts can be documented in an estate plan, as heirs may need to be reminded of the parent’s generosity at an earlier date. If this isn’t addressed, the siblings who received less help during the parent’s lifetime may resent their decision to give equally.

What about the caregiving child? Some parents decide to give extra to the adult child who became their primary caregiver. That usually takes the shape of the family home, a larger cash distribution or life insurance proceeds. However, siblings don’t always agree on how this is handled. Some will see the child’s decision to care for their parents as manipulative.

Blended families with stepchildren run into complications often. The growth in stepfamilies is a big part of why Americans 50 and older left their children unequal bequests, which more than doubled from 16 percent in 1995 to 35 percent in 2010, as reported in a study from the National Bureau of Economic Research.

At the same time, the study also found that the longer the relationship, the more likely the parent would leave stepchildren inheritances equal to that of a biological or adopted child.

Even when parents intend to split the estate equally, failing to plan for taxes can leave children with different inheritances. This happens when parents leave different types of assets to different heirs.

If a parent left a $500,000 IRA to one child and a $500,000 taxable brokerage account to another, the child who received the IRA will pay federal income taxes up to 37 percent on every withdrawal, which now must be done within ten years of the death of the parent. The child with the brokerage account would have to pay a long-term capital gains tax of up to 20 percent, when an appreciated asset was sold.

Generally speaking, IRA and other tax deferred accounts should have all children as equal beneficiaries. These accounts are usually outside of the probate estate. A house may be left in a trust or the will, with directions for the house to be sold and all assets divided equally.

There is no way around it—inheritances are seen as a proxy for love, and any unequal distribution will be felt as such, even by the most rational of people. Speak with your estate planning attorney to learn how to avoid these scenarios and consider holding a family meeting to make sure your intentions and the reasons behind your intentions are made clear to all concerned.

Reference: The New York Times (Feb. 19, 2021) “The Unequal Inheritance: It Can Work, or It Can ‘Destroy Relationships’”

How to Avoid Medicaid Estate Recovery

Medicaid is a government program that helps seniors and others pay for long term care. However, it’s not always free, explains the article “What Is Medicaid Estate Recovery?” from AOL.com. The Medicaid Estate Recovery Program (MERP) is used by states to recover costs from estates with funds. The goal of Medicaid estate recovery is to make the program affordable for the government, but it can have a severe impact on the beneficiaries of Medicaid recipients. An estate planning elder law attorney should be contacted, if you believe you or a loved one may need Medicaid.

Seniors are eligible for Medicare when they turn 65. This program pays for many healthcare expenses, but not for long-term care in a nursing home. Medicaid is used when someone does not have long term care insurance or enough money to pay for long-term care out of pocket. Medicaid can also be used for long-term or nursing home care, if steps have been taken to protect assets. This usually includes strategies, like trusts and Medicaid Asset Protection Trusts (MAPT).

A federal law passed in 1993 (the Omnibus Budget Reconciliation Act) requires states to attempt to seek reimbursement from a Medicaid beneficiary’s estate after they have died. Some of the costs that the state will try to recover include:

Nursing home costs
Home and community-based services
Medical services received through a hospital where the recipient is a long-term care patient
Prescription drug services for long-term care recipient

The recovery program lets Medicaid pursue any eligible assets owned by the estate. While this depends upon where you live, any assets that are part of the probate estate could be attached, including:

Bank accounts
Your home or other real estate
Vehicles or other real property

In addition, some states allow Medicaid to recover assets that are not subject to probate, including jointly held accounts, Payable-On-Death (POD) bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any other assets that the Medicaid recipient had a legal interest in.

An estate planning elder care attorney in your state will know what types of assets your state tends to pursue and will help you understand what can and cannot be used for Medicaid benefit recovery.

Note that while Medicaid cannot take the primary residence while the recipient is still living, they can place a lien on the home. If the recipient passes away and a beneficiary inherits the home, they will not be able to sell the property until the lien has been satisfied.

For beneficiaries, Medicaid recovery means a smaller inheritance. However, that’s not the only thing to be mindful of. There are laws known as “filial responsibility laws” that allow healthcare providers to sue the children of long-term care recipients to recover nursing care costs. This is not commonly done as of this writing, but the costs of COVID may change this in the near future.

Strategic planning can help you or loved ones avoid the financial impact of Medicaid estate recovery. If you are eligible and can afford to buy a long-term care policy, that may help to cover most of the cost of care. Another option is to remove as many assets from the probate process as possible. An estate planning attorney will be able to help you create a plan to protect your assets.

Reference: AOL.com (February 5, 2021) “What Is Medicaid Estate Recovery?”

How Do You Handle Probate?

While you are living, you have the right to give anyone any property of your choosing. If you give your power to gift your property to another person, typically through a Power of Attorney, then that person is your agent and may give away your property, according to an article “Explaining the basic aspects probate” from The News-Enterprise. When you die, the Power of Attorney you gave to an agent ends, and they are no longer in control of your estate. Your “estate” is not a big fancy house, but a legal term used to define the total of everything you own.

Property that you owned while living, unless it was owned jointly with another person, or had a beneficiary designation giving the property to another person upon your death, is distributed through a court order. However, the court order requires a series of steps.

First, you need to have had created a will while you were living. Unlike most legal documents (including the Power of Attorney mentioned above), a will is valid when it is properly signed. However, it can’t be used until a probate case is opened at the local District Court. If the Court deems the will to be valid, the probate proceeding is called “testate” and the executor named in the will may go forward with settling the estate (paying legitimate debts, taxes and expenses), before distributing assets upon court permission.

If you did not have a will, or if the will was not prepared correctly and is deemed invalid by the court, the probate is called “intestate” and the court appoints an administrator to follow the state’s laws concerning how property is to be distributed. You may not agree with how the state law directs property distribution. Your spouse or your family may not like it either, but the law itself decides who gets what.

After opening a probate case, the court will appoint a fiduciary (executor or administrator) and may have a legal notice published in the local newspaper, so any creditors can file a claim against the estate.

The executor or administrator will create a list of all of the property and the claims submitted by any creditors. It is their job to ensure that claims are valid and have been submitted within the correct timeframe. They will also be in charge of cleaning out your home, securing your home and other possessions, then selling the house and distributing your personal furnishings.

Depending on the size of the estate, the executor or administrator’s job may be time consuming and complex. If you left good documentation and lists of assets, a clean file system or, best of all, an estate binder with all your documents and information in one place, it can alleviate a lot of stress for your executor. Estate fiduciaries who are left with little information or a disorganized mess must undertake an expensive and burdensome scavenger hunt.

The executor or administrator is entitled to a fiduciary fee for their work, which is usually a percentage of the estate.

Probate ends when all of the property has been gathered, creditors have been paid and beneficiaries have received their distributions.

With a properly prepared estate plan, your property will be distributed according to your wishes, versus hoping the state’s laws will serve your family. You can also use the estate planning process to create the necessary documents to protect you during life, including a Power of Attorney, Advance Medical Directive and Healthcare proxy.

Reference: The News-Enterprise (Feb. 2, 2021) “Explaining the basic aspects probate”

Does Living Trust Help with Probate and Inheritance Taxes?

A living trust is a trust that’s created during a person’s lifetime, explains nj.com’s recent article entitled “Will a living trust help with probate and inheritance taxes?”

For example, New Jersey’s Uniform Trust Code governs the creation and validity of trusts. A real benefit of a trust is that its assets aren’t subject to the probate process. However, the New Jersey probate process is simple, so most people in the Garden State don’t have a need for a living trust.

In Kansas, a living trust can be created if the “settlor” or creator of the trust:

Resides in Kansas
The trustee lives or works in Kansas; or
The trust property is located in the state.

Under Florida law, a revocable living trust is governed by Florida Statute § 736.0402. To create a valid revocable trust in Florida, these elements are required:

The settlor must have capacity to create the trust
The settlor must indicate an intent to create a trust
The trust must have a definite beneficiary
The trustee must have duties to perform; and
The same person can’t be the sole trustee and sole beneficiary.

Ask an experienced estate planning attorney and he or she will tell you that no matter where you’re residing, the element that most estate planning attorneys concentrate on is the first—the capacity to create the trust. In most states, the capacity to create a revocable trust is the same capacity required to create a last will and testament.

Ask an experienced estate planning attorney about the mental capacity required to make a will in your state. Some state laws say that it’s a significantly lower threshold than the legal standards for other capacity requirements, like making a contract.

However, if a person lacks capacity when making a will, then the validity of the will can be questioned. The person contesting the will has the burden to prove that the testator’s mental capacity impacted the creation of the will.

Note that the assets in a trust may be subject to income tax and may be includable in the grantor’s estate for purposes of determining whether estate or inheritance taxes are owed. State laws differ on this. There are many different types of living trusts that have different tax consequences, so you should talk to an experienced estate planning attorney to see if a living trust is right for your specific situation.

Reference: nj.com (Jan. 11, 2021) “Will a living trust help with probate and inheritance taxes?”

What are My Taxes on a House I Inherited?

Say your mom transferred the deed of the house over to you in November 2014 with a life estate for her. She dies in 2016. Mom paid about $18,000 for the home in 1960. This is the son’s primary and only residence. He wants to put the house on the market for $375,000. Will he have to pay capital gains tax?

The son probably won’t owe any tax on the sale of the house. Nj.com’s recent article entitled “Will sale of inherited home cause a tax liability?” explains that the profit can be calculated, by subtracting the cost basis from the sales price. That cost basis is the original purchase price plus any capital improvements.

As far as the son’s repairs, he should look at capital improvements, which is somewhat nebulous. The IRS definition is “add to the value of your home, prolong its useful life, or adapt it to new uses.” Any improvements must be evident when you sell. If you replace a few shingles on your roof, it is a repair. However, if you replace the whole roof, that’s a capital improvement. If you don’t have receipts for the capital improvements, you can use reasonable estimates. However, the IRS may not accept them, if you’re audited.

Inherited property receives a “step up” in cost basis to the fair market value as of the date of death. This means that the original purchase price of the property and any capital improvements prior to the date of death are no longer relevant.

If a property is sold after it is inherited, the profit is calculated by deducting the date of death value from the sales price with an adjustment for any capital improvements made to the property after the date of death.

As far as the mom’s life estate in the home, this is a special type of real estate ownership, where the owner retains the exclusive right to live in the property for as long as she’s alive. However, a remainder interest is given to someone else, like a child. This “remainderman” automatically becomes the owner of the property upon the death of the life tenant.

Even with the life estate, the home receives a full step-up in cost basis upon the death of the life estate owner. The first $250,000 of profit on the sale of a primary residence is also exempt from tax, as long as the seller owned the home and lived in the home for two out of the last five years.

As such, the basis of the home will be the fair market value of the home in 2016, when the son inherited it as the remainderman of the life estate deed, plus any capital improvements he made since then.

In this situation, because the son has owned and lived in the house for two out of the last five years, he can exclude up to $250,000 of profit. With estimated sale price of $375,000, he shouldn’t owe any capital gains tax.

Reference: nj.com (Dec. 31, 2020) “Will sale of inherited home cause a tax liability?”

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?”

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