Estate Planning Blog Articles

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

When Should I Hire an Estate Planning Attorney?

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It’s stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you’ll also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

How Did Rock Star’s Estate Planning Help Future Musicians?

The Mr. Holland’s Opus Foundation, a nonprofit supporting music education in at-risk public schools, announced it had received a “transformative donation” from the late Eddie Van Halen.

MSN’s recent article on this is entitled “Eddie Van Halen left a huge donation in his will to support music education for kids”

Before his death in October 2020, Van Halen was involved with the foundation and supported the nonprofit over the years.

He made numerous appearances at the organization’s events and took part in various opportunities helping teach music to kids. As part of his will, Van Halen made a considerable donation that will have a profound effect on the foundation for many years.

The Mr. Holland’s Opus Foundation was inspired by the movie titled Mr. Holland’s Opus. It is the story of the profound effect a dedicated music teacher had on generations of students. Michael Kamen, who wrote the score for the film, started the foundation in 1996 as his commitment to the future of music education.

The foundation says that Van Halen’s donation “will enable MHOF to fulfill requests from a greater number of schools, add employees to its staff, improve the foundation’s technology and more.”

“Eddie’s support and friendship over the years meant the world to us and to his fans. His passion for music and our work created a strong bond, which is evident in his extraordinary bequest,” Felice Mancini, President and CEO of MHOF said in a statement.

“To know how much our foundation meant to Eddie is intensely humbling and gratifying to all of us – and we know that Eddie’s family is confident that his powerful legacy and values live on through our efforts.”

Van Halen’s son, Wolfgang Van Halen, will continue the family’s involvement and support of the organization. He has donated proceeds from his single “Distance” to the foundation in support of school music programs across the country and as a dedication to his father.

“Mr. Holland’s Opus Foundation and the work they do for music education was always something that was important to my father,” Van Halen said in a statement. “I am incredibly proud to help facilitate this donation as he wished. Mr. Holland’s Opus are champions for our musicians of the future, and it is my privilege to continue supporting that mission and carrying on my pop’s legacy.”

Reference: MSN (April 21, 2022) “Eddie Van Halen left a huge donation in his will to support music education for kids”

My Children Really Don’t Want My Stuff?

Next Avenue’s recent article entitled “Your Top 10 Objects Your Kids Don’t Want” gives us a list of these items and what to do with them.

Books. Unless your grown children are professors, they don’t want your books. If you think the book is rare, call a book antiquarian.

Paper Ephemera. Snapshots, old greeting cards and postcards are called paper ephemera. Did you know that? Me neither. Old photos are not worth anything, unless the subject is a celebrity or linked with an important historical event. Old greeting cards are not valuable, unless handmade by a famous artist or sent by a celebrity. Postcards are valued mainly for the stamps. Take all your family snapshots and have them made into digital files. The other option is to sell those old snapshots to greeting card publishers who use them on funny cards or give family photos to image archive businesses, like Getty. If the archive is a not-for-profit, take the donation write-off.

Steamer Trunks, Sewing Machines and Film Projectors. Thrift stores are full of these items. Therefore, unless your family member was a professional and the item is top-notch, yours can go there as well.

Porcelain Figurine Collections and Bradford Exchange Pieces. Your collections of frogs, shoes, flowers, and trolls, as well your Hummel’s, and Precious Moments won’t be wanted by the children. See if you can find a retirement home that does a gift exchange at Christmas and donate the figurines. If you want to hold on to a memory of your mom’s collection, have a professional photographer take a photo for your wall. Collector’s plates won’t sell. Donate these as well.

Silver-Plated Stuff. Your children won’t polish silverplate, so if you give them platters, serving bowls, tea services and candelabra, you won’t enhance your standing. The exception may be silver-plated items from Tiffany or Cartier but give these away to any place or person who will take it.

Heavy, Dark, Antique Furniture. There’s still a market for this sort of furniture at secondhand shops. However, you’ll get less than a quarter of purchase price, if you sell on consignment. Unless your furniture is mid-century modern, there’s a good chance you will have to pay someone to take it off your hands. Instead, donate it and take a non-cash charitable contribution using fair market valuation.

Persian Rugs. No, these aren’t really in vogue for younger adults. However, the high-end market is still collecting in certain parts of the country, like Martha’s Vineyard. However, unless the rug is rare, it’s one of the hardest things to sell these days. If you think the value of the rug is below $2,000, it will be a hard sell. Like antique furniture, it may be best to donate these.

Linens. No, they don’t want them. They might not even own an iron or ironing board, and they definitely don’t set that kind of table. Give these to needlewomen who make handmade Christening clothes, wedding dresses and quinceañera gowns. You may also donate linens to costume shops of theaters and deduct the donation. A site like P4a.com has auction results to establish the fair market value of such objects.

Sterling Silver Flatware and Crystal Wine Services. Matching sets of sterling flatware are tough to sell because they rarely go for “antique” value. Do the children do a lot of formal entertaining? The same is true for crystal. These sets are too precious, and the wine they hold is too small a portion. Sites like Replacements.com offer matching services for people who do enjoy silver flatware and have recognized patterns. Because they sell per piece, and therefore buy per piece, sellers get a rather good price.

Fine Porcelain Dinnerware. Your grown children may not want to store four sets of fancy porcelain dinnerware and won’t see the benefit of unpacking it once a year for a holiday or event. China is something to consider selling. Know your pattern to get a quote. Some replacement companies buy per piece, so the aggregate of the selling price is always more than a bulk sale at a consignment store, which might be the only other option.

Reference: Next Avenue (March 1, 2018) “Your Top 10 Objects Your Kids Don’t Want”

Couple’s Charitable Remainder Trust Helps University Students

Florida resident Robert Larson of Leesburg recently donated $1.4 million to the Minnesota State University, Mankato in honor of his late wife, Virginia, the Minnesota State University, Mankato recently announced.

A story entitled “Minnesota State Mankato Receives $1.4 Million Gift to Support Education, Music, ROTC Scholarships” said that Larson’s gift will support scholarships for students studying elementary education (75%) and music (20%), and the remaining 5% is earmarked to establish Minnesota State Mankato’s first Reserve Officer Training Corps endowment. At least 14 students annually will receive scholarships as a result of the gift.

“This gift is especially meaningful because of the many years that Robert and Virginia Larson spent planning for it,” said Minnesota State University, Mankato President Edward Inch.“ Students will benefit from this gift for many generations to come.”

The Larson’s originally planned their gift by creating the university’s first-ever charitable remainder trust in 1987. The trust was set up to benefit University students after both Robert and Virginia died.

A charitable remainder trust (CRT) is a gift of cash or other property to an irrevocable trust. The donor gets to keep an income stream from the trust for a term of years or for life. The charity then gets the remaining trust assets at the conclusion of the trust term. The donor receives an immediate income tax charitable deduction when the CRT is funded, based on the present value of the assets that will eventually go to the named charity.

Mr. Larson later decided he wanted to give a larger sum to the university to be able to have an effect on students while he was still living. Therefore, he decided to forego the annual payments he received and terminated the charitable remainder trust early.

His wife Virginia graduated from Minnesota State Mankato in 1961 with a bachelor’s degree in elementary education. She began teaching fourth grade in Lakeville, Minnesota. She then taught third grade in Poway, California, and finally taught fourth grade and English as a second language in Chula Vista, California. She died in 2020.

“Virginia really enjoyed her time as a student at Minnesota State Mankato, and we started planning for this gift out of a desire to help students,” said Robert Larson.

Reference: Minnesota State University, Mankato (August 12, 2021) “Minnesota State Mankato Receives $1.4 Million Gift to Support Education, Music, ROTC Scholarships”

Wills

Do I Really Need a Will?

No one enjoys pondering their own mortality, but we can all help unburden our loved ones after we’ve gone, by creating a will.

Bankrate’s recent article entitled “Why it’s important for every adult to get a will” explains why you need a will and how to protect what you most cherish after you pass away.

Many people think that a will must be a complicated document full of confusing legal jargon. However, the purpose of a will is really very simple despite its importance. A will is a legal document that disposes of your property at your death. In addition, wills address several issues required to be resolved after death, such as who will care for your children, who will make decisions about your estate and who will receive your assets? Every adult should have a will that speaks to these issues.

There are several types of wills which are customized based on your property and assets. Some people have specific instructions regarding special bequests at their death, and others pass everything to a surviving spouse and children.

Testamentary will. This will is prepared in advance and is signed in front of witnesses. This is the most common type of will.

Holographic will. This is a will that is written by hand and is frequently a last resort in emergency situations. It is not valid in all states.

Oral will. This is a verbal will that’s spoken in front of witnesses. However, most courts prefer instructions in writing. As a result, an oral will isn’t a form that is widely recognized or recommended.

Mutual will. A couple can create a joint will, so that when one spouse dies, the other remains bound by the existing will’s terms.

Pour-over will. This type of will is used when you plan to “pour” your assets into a previously established trust at your death.

There are many reasons why you should have a will. A will can:

  • Clearly identify ownership of your property
  • Name a legal guardian for your children
  • Shorten the legal process of assigning your assets
  • Make donations of assets to charitable organizations
  • Make specific gifts; and
  • Save on estate tax.

Speak to an experienced estate planning attorney about the right will for your situation.

Reference: Bankrate (Nov. 6, 2020) “Why it’s important for every adult to get a will”

estate planning

Cornelius Vanderbilt Created an Estate Plan, but Should I?

AJC’s recent article entitled “Why Vanderbilts should inspire you to create an estate plan” explains that when Cornelius Vanderbilt died, his son, William, inherited most of the fortune and nearly doubled it within a decade. However, after that came a drop in the cash, and after just a few decades, the fortune had been spent. Therefore, none of Vanderbilt’s descendants stayed among the wealthiest people in the country.

When 120 Vanderbilt family members recently gathered for a reunion at Vanderbilt University, not one was a millionaire. In a century, the largest estate America has ever known had dwindled to next to nothing.

Let’s look at why this happens and how you can prevent this from happening to your estate.

America is currently in the midst of the greatest transfer of wealth ever. An estimated $59 trillion will be transferred to heirs, charities and taxes between 2007 and 2061. However, roughly 70% of wealth transfers aren’t successful. This means that sometimes heirs get practically nothing. There are three reasons for this failure:

  1. No trust and communication among heirs because they’re all concerned about their share.
  2. Heirs are unprepared to inherit an estate, which may include managing investments or a business. In many cases, other family members don’t know how it works.
  3. Heirs have no clue where the money should go and what purpose it should serve because no one is thinking long term about what is best for the family assets.

It’s common for business owners to believe that an estate plan is enough to keep everything in order, but they don’t consider their business. This is the reason why succession planning is vital. This planning determines what happens to the business itself and lays out the strategy, so it continues to operate smoothly after it’s passed to the heirs.

Let’s look at some tips for dealing with estate planning that should make for a smooth transition:

Create a plan. If you die without a will, state probate law will determine who gets your assets. This may not be what you want. Talk to an experienced estate planning attorney to be certain that everything is drawn up correctly.

Discuss the issues with your heirs. Talk to your family about the financial details. Make sure that your heirs know the details of your estate, so they can start to manage and oversee it once you die.

Get heirs involved in the process. Likewise, heirs can help plan based on their knowledge, future availability and expectations. By planning now, no one will be caught unaware about what to do with the estate.

Ready your heirs. Educate your heirs on how to manage and oversee your assets, especially if you have a succession plan for a business. Discuss the company’s mission and vision, and what you want the company to achieve.

Organize your financial documents. Get all financial documents in a single location and label everything clearly to help out your heirs. Keep this in a safe location, and let your heirs know where it’s located. Your attorney should also have a copy of your will, estate plan and succession plan (if applicable).

Get help from experts. Help forge a relationship between your heirs and your financial team, which may include a financial adviser, an estate planning attorney and an accountant. This will allow your heirs to know who to call, if things get complicated. It’ll also help to prepare them for what they’re supposed to be doing, once they get their inheritance.

Communication is the key. Talking with your experts and your heirs will make certain that everyone understands each other’s roles, regardless of whether it’s a small business or a multimillion-dollar empire.

Reference: AJC (Sep. 25, 2020) “Why Vanderbilts should inspire you to create an estate plan”

estate plan audit

Does My Estate Plan Need an Audit?

You should have an estate plan because every state has statutes that describe how your assets are managed, and who benefits if you don’t have a will. Most people want to have more say about who and how their assets are managed, so they draft estate planning documents that match their objectives.

Forbes’ recent article entitled “Auditing Your Estate Plan” says the first question is what are your estate planning objectives? Almost everyone wants to have financial security and the satisfaction of knowing how their assets will be properly managed. Therefore, these are often the most common objectives. However, some people also want to also promote the financial and personal growth of their families, provide for social and cultural objectives by giving to charity and other goals. To help you with deciding on your objectives and priorities, here are some of the most common objectives:

  • Making sure a surviving spouse or family is financially OK
  • Providing for others
  • Providing now for your children and later
  • Saving now on income taxes
  • Saving on estate and gift taxes in the future
  • Donating to charity
  • Having a trusted agency manage my assets, if I am incapacitated
  • Having money for my children’s education
  • Having retirement income; and
  • Shielding my assets from creditors.

Speak with an experienced estate planning attorney about the way in which you should handle your assets. If your plan doesn’t meet your objectives, your estate plan should be revised. This will include a review of your will, trusts, powers of attorney, healthcare proxies, beneficiary designation forms and real property titles.

Note that joint accounts, pay on death (POD) accounts, retirement accounts, life insurance policies, annuities and other assets will transfer to your heirs by the way you designate your beneficiaries on those accounts. Any assets in a trust won’t go through probate. “Irrevocable” trusts may protect assets from the claims of creditors and possibly long-term care costs, if properly drafted and funded.

Another question is what happens in the event you become mentally or physically incapacitated and who will see to your financial and medical affairs. Use a power of attorney to name a person to act as your agent in these situations.

If, after your audit, you find that your plans need to be revised, follow these steps:

  1. Work with an experienced estate planning attorney to create a plan based on your objectives
  2. Draft and execute a will and other estate planning documents customized to your plan
  3. Correctly title your assets and complete your beneficiary designations
  4. Create and fund trusts
  5. Draft and sign powers of attorney, in the event of your incapacity
  6. Draft and sign documents for ownership interest in businesses, intellectual property, artwork and real estate
  7. Discuss the consequences of implementing your plan with an experienced estate planning attorney; and
  8. Review your plan regularly.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

estate planning mistakes

Which Stars Made the Biggest Estate Planning Blunders?

Mistakes in the estate planning of high-profile celebrities are one very good way to learn the lessons of what not to do.

Forbes’ recent article entitled “Eight Lessons From Celebrity Estates” discussed some late celebrities who made some serious experienced estate planning blunders. Hopefully, we can learn from their errors.

James Gandolfini. The “Sopranos” actor left just 20% of his estate to his wife. If he’d left more of his estate to her, the estate tax on that gift would have been avoided in his estate. But the result of not maximizing the tax savings in his estate was that 55% of his total estate went to pay estate taxes.

James Brown. One of the hardest working men in show business left the copyrights to his music to an educational foundation, his tangible assets to his children and $2 million to educate his grandchildren. Because of ambiguous language in his estate planning documents, his girlfriend and her children sued and, years later and after the payment of millions in estate taxes, his estate was finally settled.

Michael Jackson.  Jackson created a trust but never funded the trust during his lifetime. This has led to a long and costly battle in the California Probate Court over control of his estate.

Howard Hughes. Although he wanted to give his $2.5 billion fortune to medical research, there was no valid written will found at his death. His fortune was instead divided among 22 cousins. The Hughes Aircraft Co. was bequeathed to the Hughes Medical Institute before his death and wasn’t included in his estate.

Michael Crichton. The author was survived by his pregnant second wife, so his son was born after his death. However, because his will and trust didn’t address a child being born after his death, his daughter from a previous marriage tried to cut out the baby boy from his estate.

Doris Duke. The heir to a tobacco fortune left her $1.2 billion fortune to her foundation at her death. Her butler was designated as the one in charge of the foundation. This led to a number of lawsuits claiming mismanagement over the next four years, and millions in legal fees.

Casey Kasem. The famous DJ’s wife and the children of his prior marriage fought over his end-of-life care and even the disposition of his body. It was an embarrassing scene that included the kidnapping and theft of his corpse.

Prince and Aretha Franklin. Both music legends died without a will or intestate. This has led to a very public, and in the case of Prince, a very contentious and protracted settlement of their estates.

So, what did we learn? Even the most famous (and the richest) people fail to carefully plan and draft a complete estate plan. They make mistakes with tax savings (Gandolfini), charities (Brown and Hughes), providing for family (Crichton), whom to name as the manager of the estate (Duke) and failing to prevent family disputes, especially in mixed marriages (Kasem).

If you have an estate plan, be sure to review your existing documents to make certain that they still accomplish your wishes. Get the help of an experienced estate planning attorney.

Reference: Forbes (July 16, 2020) “Eight Lessons From Celebrity Estates”

james brown's estate

Will James Brown’s Estate Finally Be Settled after 15 Years?

The South Carolina Supreme Court in June finally began sorting out the litigation that has been part of Brown’s estate since his death. The court held that Brown was never legally married to his fourth wife, Tomi Rae Hynie, because she had not annulled a previous marriage.

Wealth Advisor’s recent article entitled “Might The Battle Over James Brown’s Estate Finally Be Coming To A Close After Nearly 15 Years” explains that the court’s decision weakens her claim to the estate. The estate has been valued to be worth between $5 million and $100 million. It’s the first real move forward in years. According to The New York Times, “the Supreme Court instructed the lower court to “promptly proceed with the probate of Brown’s estate in accordance with his estate plan,” which called for the creation of a charitable trust to help educate poor children.”

South Carolina law stipulates that Hynie, as Brown’s widow, would have had the right to a third of his estate’s value, no matter what his will instructed.

Hynie was married in 2001 to Javed Ahmed, a Pakistani man who already had three wives in his native country. Her lawyers argued that since Ahmed was a bigamist, their marriage was void. South Carolina’s lower courts agreed, holding that her marriage to Brown was valid.

However, the South Carolina Supreme Court disagreed. “All marriages contracted while a party has a living spouse are invalid, unless the party’s first marriage has been ‘declared void’ by an order of a competent court,” the Court explained.

Hynie’s counsel will be filing “a petition to reconsider and rehear the decision.”

Hynie is entitled as spouse to a share of Brown’s valuable music copyrights under federal law. She has already settled part of her dispute with the estate, agreeing to give 65% of any proceeds from her so-called termination rights—copyrights that, though once sold, can return to the songwriter or his heirs after several decades—to charity.

Brown’s will had bequeathed $2 million for scholarships for his grandchildren. The will said that his costumes and other household effects were to go to six of his children, and the remainder of the estate was to go to the charitable trust for the poor, called the “I Feel Good Trust.”

The South Carolina Supreme Court ruling is significant, because Brown’s 2000 will said, “Any heirs who challenged it would be disinherited. However, several of his children and grandchildren sued after his death,” notes The New York Times.

Reference: Wealth Advisor (July 20, 2020) “Might The Battle Over James Brown’s Estate Finally Be Coming To A Close After Nearly 15 Years”