Estate Planning Blog Articles

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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”

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”

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”

tax planning

Is a Tax Change a Good Time to Check My Will?

A last will and testament can make certain that your goals for legacy and asset disposition are satisfied and carried out. However, what most people fail to grasp is that a will needs regular review—especially if the document was written or involved the creation of a trust prior to passage of tax reform, the Tax Cuts and Jobs Act (TCJA), in 2017, says Financial Advisor’s recent article entitled “Tax Changes Make This A Good Time To Revise A Will.”

Wills can pass on assets, but taxes have come to greatly impact how much money is passed on. People usually understand the primary components, including the tax implications, of their wills.

These include:

  • The unlimited marital deduction
  • Applying current rules to make non-taxable gifts of up to $15,000 per person
  • The current estate tax exemption of $11.58 million
  • Health care directives
  • Naming trustees and executors; and
  • Creating long-term trusts with non-taxable asset transfers.

Wills and trusts were created prior to the passage of the TCJA may not consider that reform changed the amount which can be exempted from estate taxes.

The law more than doubled the amount that can be exempted from estate taxes. The potential tax changes could cause many more Americans to have a taxable estate, and it’s important to have a full understanding of your assets and carefully decide who you want to receive them. You must also decide if you want them passed outright or through a trust.

Privacy is a good reason why some people often prefer trusts. They also like the quick processing and avoiding probate.

Estate plans should be reviewed every few years, and wills should be reviewed more frequently because life changes are the biggest reason for trouble in revising wills.

Divorce, separation or marriage; the birth or adoption of children, as well as a child reaching adulthood; and changes to finances, location and health all can play important roles.

Reference: Financial Advisor (Nov. 9, 2020) “Tax Changes Make This A Good Time To Revise A Will”

estate plan

Did Samsung’s Chairman Have an Estate Plan for his $20.7 Billion Fortune?

Samsung Electronics Co. Chairman Lee Kun-hee, South Korea’s richest man, had an estimated fortune of $20.7 billion. Most of this was his stakes in four Samsung units, according to the Bloomberg Billionaires Index. The country’s inheritance tax is as high as 60% on inherited shares for large shareholders and 50% on real estate and other assets. That could mean a tax bill of about $10 billion for Lee’s family.

Fortune’s recent article entitled “After Samsung chairman’s death, his heirs are facing a $10 billion tax bill” says that Lee’s heirs are unlikely to sell stock to finance the taxes.

Share sales can cause issues because they would reduce the family’s control over the company. Many choose to make the cash payment over five years. Cash can be prepared through means, such as dividends or salaries. That’s how Chairman Koo Kwang-mo, who took over the reins of LG Group in 2018 after his father’s death, is doing it. He and his family are paying their $817 million inheritance tax over five years.

Lee Kun-hee’s ownership included a 4% holding in the world’s largest producer of smartphones, televisions, and memory chips, as well as 21% of Samsung Life Insurance Co., which owns the second-biggest chunk of Samsung Electronics.

Lee’s only son, Jay, has been leading the company after a heart attack incapacitated his father in 2014. If he inherits all of his father’s shares in Samsung Electronics and Samsung Life Insurance, he may use dividends and financing from family members for the taxes. It’s also possible that the family will use personal financing.

The younger Lee has legal troubles from the controversial merger of two Samsung affiliates in 2015 that led to his control of the group. Although he holds less than 1% in Samsung Electronics, through the merger, he secured a 17% control in Samsung C&T Corp., which in turn directly owns 5% of the tech company.

He’s awaiting a final ruling on a bribery case that sent him to prison in 2017. He is facing a separate trial on financial-fraud charges, including stock-price manipulation to facilitate his succession.

Jay denied any wrongdoing. He has made a personal apology for the recurring corruption scandals at Samsung and pledged not to hand down leadership to his children.

Reference: Fortune (Oct. 26, 2020) “After Samsung chairman’s death, his heirs are facing a $10 billion tax bill”

contesting a will

Why Is an Art Dealer’s Family Contesting His Will?

Zarre didn’t have a wife or children. He is believed to have amassed a valuable art collection in the years since he opened the Andre Zarre Gallery on New York’s Upper East Side in 1974.

The gallery closed several years ago, because of Zarre’s health problems.

ArtNews’ recent article entitled “A New York Art Dealer Just Left His Multimillion-Dollar Estate to the Owner of a Deli in Queens—But His Family Is Crying Foul” explains that Yeje met Zarre in 2016. He  reportedly cared for Zarre over the last eight months of his life, including when the dealer contracted the coronavirus.

Zarre recovered but fell in his Park Avenue apartment in July. Yeje drove him to the hospital, where he reportedly died of a heart attack.

“I washed him, I bought his groceries and fed him. He trusted me and I took care of him,” Yeje, who is 50, told the New York Post. “He was an awesome person.”

Friends of the dealer say they questioned his actions, when he reportedly began investing in the Palermo Delicatessen in Glendale, Queens last fall.

“[Zarre] was really going blind and could barely put one foot in front of the other,” Nick Wolfson, a friend of Zarre and one his gallery’s artists, told the New York Post, wondering if failing health had made the elderly dealer vulnerable to a swindle.

Zarre’s first cousin Arkadiusz Tomasik, who lives in the United Kingdom, claims that Zarre always told him that he’d inherit the estate. He questions the validity of the will leaving everything to Yeje, especially since Zarre was legally blind.

Yeje has offered Zarre’s family $45,000 and land that the art dealer owned in his native Poland, in exchange for not challenging the will. Tomasik is reportedly thinking about legal action.

If Tomasik disputes the will, he will file a lawsuit that seeks to invalidate the art dealer’s will. He will have to show that the will was signed under undue influence, by fraud, that Zarre didn’t have the capacity to sign the will or that the will wasn’t signed in accordance with New York law.

Reference: ArtNews (Oct. 19, 2020) “A New York Art Dealer Just Left His Multimillion-Dollar Estate to the Owner of a Deli in Queens—But His Family Is Crying Foul”

leave estate to pet

Can I Leave My Pet Some of My Estate?

The Minneapolis Star Tribune’s article entitled “Who will take care of Fido when you’re gone? Minnesotans put trust in trusts reports that Minnesotans are setting up trusts to care for their pets in the event they survive them.

This is a fairly new law in Minnesota. Since it was enacted in 2016, Minnesotans have been setting aside money to guarantee the care of their animals after they die or are incapacitated. With a pet trust, there’s a guarantee that the money earmarked to care for the animal will be there for the animal as intended. A trust can designate a separate caretaker, trustee and a trust enforcer to care for the animal, manage the money. and make certain the care is being provided as instructed in the trust.

A pet trust can contain instructions on the type of food, medical care, exercise and housing the pet will get, as well as the pet’s end of life and burial or cremation directions.

When the pet trust law was being debated in the Minnesota Legislature, there was the idea that pet trusts are frivolous, an option only for wealthy eccentrics like New York real estate and hotel tycoon Leona Helmsley. She died in 2007 leaving $12 million for the care of her dog, Trouble. The courts later reduced that amount to $2 million.

In the North Star State, the amount of money put into a trust to care for a pet can’t be excessive, or a judge might decrease the amount.

A pet trust can be used to care for an animal before the owner dies but is disabled or incapacitated. When the pet dies, depending on how the trust was created, the money left in the trust would be distributed to heirs or could go to another designated person or charity.

In states where pet trusts are not available, a person could write in their will that a relative will inherit a pet, and the pet owner could also leave the person money to pay for the animal’s care. However, because pets are legally considered personal property, they cannot own property or inherit assets themselves. As a result, there’s nothing that would prevent the relative designated to care for the animal to take it to the pound after you die and spend the cash on themselves.

A pet trust can provide a plan for animal lovers who want to own pets late in life but may be concerned the pet might outlive them. Talk to an experienced estate planning attorney about pet trusts in your state.

Reference: StarTribune (Sep. 23, 2020) “Who will take care of Fido when you’re gone? Minnesotans put trust in trusts”

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 documents

What Estate Planning Documents Do I Need for a Happy Retirement?

Estate planning documents are made to help you and your family, in the event of your untimely demise or incapacitation.

These documents will give your family specific instructions on how to proceed.

The Winston-Salem Journal’s recent article entitled “4 Must-Have Documents for a Peaceful Retirement” looks at these critical documents in constructing an effective estate plan.

  1. Power of Attorney (POA). If you become incapacitated or become unable to make your own financial decisions, a POA will permit a trusted agent to manage your affairs. Have an estate planning attorney review your POA before it’s executed. You can give someone a limited POA that restricts their authority to specific transactions. You can also create a springing POA, which takes effect only at the time of your incapacitation.
  2. Will. About 40% of Americans actually have a will. Creating a valid will prevents you from leaving a mess for your heirs to address after you die. A will appoints an executor who will manage your affairs in a fiduciary manner. The will also details your plan for the distribution of your property. Make certain that your will is also in agreement with other documents you’ve set up, so it doesn’t create any questions.
  3. TOD/POD Designation Forms. A Transfer-on-Death (TOD) or Payable-on-Death (POD) designation lets you to assign your investment accounts to a named beneficiary. The big benefit here is that accounts with a named TOD/POD beneficiary pass directly to that person when you die. Any accounts without a TOD/POD beneficiary will be subject to the terms of your will and will be required to go through the probate process.
  4. Healthcare POA/Advance Directives. These are significant health-related documents. A healthcare POA allows your named agent to communicate your wishes to medical professionals, if you are unable. They also include instructions as to whether you want to have life-saving measures performed, if you have a cardiac or respiratory arrest. These healthcare documents also remove the need for your family to make difficult decisions for you.

Reference: Winston-Salem Journal (Sep. 20, 2020) “4 Must-Have Documents for a Peaceful Retirement”