What Recourse Is Available if Inheritance Is Stolen?

State inheritance theft laws typically cover four distinct aspects, says Yahoo’s recent article entitled “Someone Stole My Inheritance. What Are My Options?”

The four are:

Who committed the inheritance theft,
When the theft happened,
What was taken, and
How the theft happened.

As far as the “how” goes, note that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse where someone takes advantage of an elderly person’s weakened physical or mental state to steal from them.

If you think someone’s stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:

What constitutes inheritance theft,
Who has the standing to bring a civil claim or file a criminal complaint concerning a stolen inheritance,
The legal grounds for successfully pursuing an inheritance theft claim, and
Penalties and remedies for inheritance theft.

Speaking with an experienced estate planning attorney can help you see if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:

Taking an inventory of the estate’s assets,
Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery, and
Verifying the validity of will or trust documents.

With a larger estate, you may need to hire a forensic accountant. They specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail to support a claim of inheritance theft.

Inheritance theft laws can help to protect your rights to an estate if you think your inheritance was stolen. You can also take actions to preserve your own estate for your heirs by drafting a valid will, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.

Reference: Yahoo (Jan. 18, 2023) “Someone Stole My Inheritance. What Are My Options?”

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

This is the situation facing the estate of Lisa Marie Presley, whose estate is being challenged by her mother, Priscilla Presley, as described in a recent article, “Presley beneficiary battle sets example of poor estate planning practices” from Insurance NewsNet. These situations are not uncommon, especially when there’s a lot of money involved. They serve as a teachable moment of things to avoid and things to absolutely insist upon in estate planning.

Lisa Marie’s estate is being challenged because of an amendment to the trust, which surfaced after she died. The amendment cut out two trustees and named Lisa Marie’s children as executors and trustees.

At stake is as much as $35 million from three life insurance policies, with at least $4 million needed to settle Lisa Marie’s debts, including $2.5 million owed to the IRS.

When this type of wealth is involved, it makes sense to have professional trustees hired, rather than appointing family members who may not have the skills needed to navigate family dynamics or manage significant assets.

A request to change a will by codicil or a trust by amendment happens fairly often. However, some estate planning attorneys reject their use and insist clients sign a new will or restate a trust to make sure their interests are protected. In the case of Lisa Marie, the amendment might be the result of someone trying to make changes without benefit of an estate planning attorney to make the change correctly.

The origins of the estate issues here may go back to Elvis’ estate plan. His estate was worth $5 million at the time of this death, $20 million if adjusted for inflation. His father was appointed as the executor and a trustee of the estate. His grandmother, father and Lisa Marie were beneficiaries of the trust. Lisa Marie was just nine when her famous father died, and her inheritance was held until she turned 25.

When his father died, Priscilla was named as one of three trustees. When his grandmother died, Lisa Marie was the only surviving beneficiary. She inherited the entire amount on her 25^th birthday—worth about $100 million largely at the time because of Priscilla’s skilled management.

Terminating such a large trust and handing $100 million to a 25 year old is seen by many estate planning attorneys as a big mistake. Distribution at an older age or over the course of the beneficiary’s lifetime could have been a smarter move. Lisa Marie reportedly blew through $100 million as an adult and was millions of dollars in debt, despite the estate having plenty of cash because of two large life insurance policies.

In 1993, Lisa Marie established a trust naming her mother and former business manager as trustees. The amendment in question seems to have been written in 2016, removing Priscilla and business manager Siegel as trustees, appointing Lisa Marie’s daughter and son as trustees, and naming her son and her fourteen year old twin sons as beneficiaries.

Priscilla’s attorneys say they had no prior knowledge of the change. Certain changes in estate plans require written notification of people with interest in the estate, which did not occur. They are also challenging the amendment’s authenticity, saying it was neither witnessed nor notarized. Priscilla’s name is misspelled and Lisa Marie’s signature is not consistent with other signatures of hers.

The estate is being contested, with a preliminary hearing on the matter scheduled for April 13.

Any changes to an estate plan, particularly those involving changes to the will, trusts or beneficiaries, should be done with the help of an experienced estate planning attorney. When large changes are made, or large assets are involved, a simple codicil or amendment could lead to complicated problems.

Reference: Insurance NewsNet (Feb. 17, 2023) “Presley beneficiary battle sets example of poor estate planning practices”

What You Need to Know About Inheritance

Receiving an inheritance is a mixed blessing. It usually comes after a loved one has passed, while you are grieving and trying to figure out how to navigate finances. If you have received or anticipate receiving an inheritance, a recent article titled “Getting an Inheritance? Here are 4 Things to Consider” from Kiplinger, has some helpful information.

It takes time to settle an estate and distribute assets. When a decedent’s affairs weren’t prepared properly in advance, it takes even longer. A recent Gallup poll found less than half of all Americans have a will.

The probate process can be avoided if assets are held in trust. However, even trust distributions may have time-consuming complexities. It can take several months to a year or more to settle an estate.

Being aware of this will help manage heirs’ expectations. Plans for a big purchase should never be keyed to an inheritance, until after the assets are received.

The executor, the person named to administer the estate, must notify beneficiaries and interested parties, pay outstanding bills, close accounts, make an inventory of assets and discern how many of the assets must pass through probate.

They also have to file tax returns with the IRS for the estate and for the decedent’s last year of life. Only after all of this is completed can assets be distributed.

Getting an inheritance often leads to spending the money, not always wisely. Factors such as where the money came from and its intended use influence how it’s spent. However, every dollar inherited should be valued as much as every dollar you earn. Many people treat their inheritances like “fun money” and spend it without careful consideration. Consider using it to bolster your emergency fund, pay off high-interest debt and put some towards long-term savings goals. If there’s still money left over after you’ve covered the basics, then it may be time to spend it on a family trip or support a cause you believe in.

Seek professional advice. Inheritances often come with complications. For instance, there are times when an heir may have a step-up-in-basis provision for taxes. This allows heirs to have the valuation of their inheritance property be equal to its fair market value at the date of death, instead of the lower price at which it was first purchased. This helps minimize capital gains taxes on inherited assets that have appreciated over time. An estate planning attorney will be able to confirm whether this potential benefit applies to you, and what you’ll need to do to navigate any tax issues.

Take time to review your own estate plan. As an heir, or as an executor, you’re likely to be learning a lot about the estate planning process. This should motivate you to address your own estate planning and make it as easy as possible for your own heirs.

This includes keeping clear records of all accounts, along with creating any necessary estate planning documents, including wills, trusts, powers of attorney and advance health care directives. Keeping documents in a place accessible to those administering your estate will help your heirs, as will talking with your family while you are living about your finances, your estate plan and your wishes. The best inheritance of all is one that results from proper planning with an experienced estate planning attorney.

Reference: Kiplinger (Jan. 3, 2023) “Getting an Inheritance? Here are 4 Things to Consider”

What Happens When Property Is Owned Jointly and an Owner Dies?

When property is owned jointly, the property may pass automatically to the other owner, passing without going through probate, according to a recent article titled “Everything you need to know about jointly owned property and wills” from TBR News Media

Your will only concerns assets in your name alone without a designated beneficiary. Let’s say you have a joint checking account with another person. On your death, the account automatically becomes the property of the surviving owner. This is outside of probate, and any directions in your will won’t apply.

Real estate is most commonly owned jointly, in several different ways and each with its own set of laws.

Joint Tenancy or Joint Tenancy with Rights of Survivorship. On the death of a joint owner, the owner’s share goes to the surviving joint owner. Simple. The main advantage is the avoidance of probate, which can be costly and take months to complete.

Tenancy by the Entirety. This type of joint ownership is only available between spouses and is not used in all states. A local estate planning attorney will be able to tell you if you have this option. As with Joint Tenancy, when the first spouse passes, their interest automatically passes to the surviving spouse outside of probate.

There are additional protections in Tenancy by the Entirety making it an attractive means of ownership. One spouse may not mortgage or sell the property without the consent of the other spouse, and the creditor of one spouse can’t place a lien or enforce a judgment against property held as tenants by the entirety.

Tenancy in Common. This form of ownership has no right of survivorship and each owner’s share of the property passes to their chosen beneficiary upon the owner’s death. Tenants in Common may have unequal interests in the property, and when one owner dies, their beneficiaries will inherit their share and become co-owners with other Tenants.

The Tenant in Common share passes the persons designated according to their will, assuming they have one. This means the decedent’s executor must “probate” the will and file a petition with the court. However, a Tenant in Common may be able to avoid probate if their share of the property is held in trust, in which case the terms of the trust and not their will controls how the property passes at death. In this case, there’s no need for any court involvement.

There may be capital gains consequences when transferring ownership interests during and after life. Such gifts should never be made without speaking with an estate planning attorney. One of the more common errors occurs when the testator fails to account for the different types of ownership and how assets pass through the will. A comprehensive estate plan, created by an experienced estate planning attorney, ensures that both probate and non-probate assets work together.

Reference: TBR News Media (Dec. 27, 2022) “Everything you need to know about jointly owned property and wills”

Should Each Child Get Equal Inheritance?

Every estate planning attorney has conversations with their clients about how adult children should inherit. While most people assume siblings should all inherit equally, in many situations, equal is not always appropriate. There are many situations where an equal inheritance might be unfair, says a recent article, “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate,” from Kiplinger.

The Caretaker Child Lives With the Parent. When one of the children lives with the parent and has taken on most, if not all, of the responsibilities, it may be fair to treat the child differently than siblings who are not involved with the parent’s care. Taking care of paying bills, coordinating health care appointments, driving the parent to appointments and being involved with end-of-life care is a lot of responsibility. It may be fair to leave this child the family home or leave the home to a trust for the child for their lifetime. The parent may wish to leave the caretaking child a larger portion of the inheritance to recognize the additional help they provided.

A Special Needs Child. If the parent has been the primary caregiver for a special needs child, the estate plan must take this into consideration to ensure the child will be properly cared for after the parents die or are unable to care for the child. Depending on what government benefits the child receives, this usually means the parents need to have a Special Needs Trust or Supplemental Needs Trust created. Most government benefits are means-tested. To remain eligible, recipients may not have more than a certain amount of personal assets. The Special Needs or Supplemental Needs trust could receive more or less than an equal amount of the estate the child would have inherited.

In this scenario, siblings are generally understanding. The siblings often know they will be the ones caring for the family member with special needs when the parents can no longer provide care and welcome the help of an elder law estate planning attorney to plan for their sibling’s future.

An Adult Child With Problems. It’s usually not a good idea to leave an equal portion of an inheritance to an adult child who suffers from mental illness, substance abuse, is going through a divorce or has a life-long history of making bad choices. Putting the money into a trust with a non-family member serving as a trustee and strict directions for when and how much money may be distributed may be a better option. In some cases, disinheriting a child is the unpleasant but only realistic alternative.

Wealth Disparities Among the Siblings. When one child has been financially successful and another struggles, it’s fair to bequeath different amounts. However, wealth can change over a lifetime, so review the estate plan and the wealth distribution on a regular basis.

How To Decide What Will Work For Your Family? Every family is different, and every family has different dynamics. Have open and honest discussions with your estate planning attorney, so they can help you plan for your family’s situation. If possible, the same frank discussion should take place with adult children, so no one is taken by surprise at a time when they will be grieving a loss.

Reference: Kiplinger (Dec. 18, 2022) “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate”

Should You Agree to Being a Guardian?

Yes, it is an honor to be asked to be the guardian of someone’s children. However, you’ll want to understand the full responsibilities involved before agreeing to this life-changing role. A recent article from Kiplinger, “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust,” explains.

For parents, this is one of the most emotional decisions they have to make. Assuming a family member will step in is not a plan for your children. Naming a guardian in your will needs to be carefully and realistically thought out.

For instance, people often first think of their own parents. However, grandparents may not be able to care for a child for one or two decades. If the grandparent’s own future plan includes downsizing to a smaller home or moving to a 55+ community, they may not have the room for children. In a 55+ community, they may also not be permitted to have minor children as permanent residents.

What about siblings? A trusted aunt or uncle might be able to be a guardian. However, do they have children of their own, and will they be able to manage caring for your children as well as their own? You’ll also have to be comfortable with their parenting styles and values.

Other candidates may be a close friend of the family, who does not have children of their own. An “honorary” aunt or uncle who is willing to embark on raising your children might be a good choice. However, it requires careful thought and discussion.

Financial Considerations. What resources will be available to raise the children to adulthood? Do the parents have life insurance to pay for their needs, and if so, how much? Are there other assets available for the children? Will you be in charge of managing assets and children, or will someone else be in charge of finances? You’ll need to be very clear about the money.

Legal Arrangements. Is there a family trust? If so, who is the successor trustee of the trust? What are the terms of the trust? Most revocable trusts include language stating they must be used for the “health, education, maintenance, and support of beneficiaries.” However, sometimes there are conditions for use of the funds, or some funds are only available for milestones, like graduating college or getting married.

Lifestyle Choices. You’ll want to have a complete understanding of how the parents want their children to be raised. Do they want the children to remain in their current house, and has an estate plan been made to allow this to happen? Will the children stay in their current schools, religious institutions or stay in the neighborhood?

In frank terms, simply loving someone else’s children is not enough to take on the responsibility of being their guardian. Financial resources need to be discussed and lifestyle choices must be clarified. At the end of the discussion, all parties need to be completely satisfied and comfortable. This kind of preparedness provides tremendous peace of mind.

Reference: Kiplinger (Nov. 17, 2022) “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust”

Could Your Estate Plan Be a Disaster?

You may think your estate plan is all set.However, it might not be. If you met with your attorney when your children were small, and your children are now grown and have children of their own, your estate could be a disaster waiting to happen, says a recent article “Today’s Business: Your estate plan—what could go wrong?” from the New Haven Register.

Most estate planning attorneys encourage their clients to revisit their estate plan every three to five years, with good reason. The size of your estate may have changed, you may have experienced a health issue, or you may have a new child or a grandchild. There may be tax law changes, statutes may have been updated and the plan you had three to five years ago may not accomplish what you want it to.

Many people say they “have nothing” and their estate is “simple.” They might also think “my spouse will get everything anyway.” This is wrong 99% of the time. There are unintended consequences of not having a will—accounts long forgotten, an untimely death of a joint owner, or a 40-year-old car with a higher value than anyone ever expected.

Your last will and testament designates who receives your assets and provides for any minors. A will can also help protect your wishes from a challenge by unwanted heirs after your passing.

The federal estate tax exemption today is $12.6 million, but if your will was created to minimize estate taxes when the exemption was $675,000, there may be unnecessary provisions in your plan. Heirs may be forced to set up inherited trusts or even sub-trusts. With today’s current exemption level, your plan may include trusts that no longer serve any purpose.

When was the last time you reviewed your will to see whether you still want the same people listed to serve as guardians for minor children, executors, or trustees? If those people are no longer in your family, or if the named person is now your ex, or if they’ve died, you have an ineffective estate plan.

Many adults believe they are too young to need an estate plan, or they’ve set up all of their assets to be owned jointly and, therefore, don’t need an estate plan. If one of the joint owners suffers a disability and is receiving government benefits, an inheritance could put all of their benefits at risk. Minor children might inherit your estate. However, the law does not permit minors to inherit assets, so someone needs to be named to serve as their conservator. If you don’t name someone, the court will, and it may not be the person you would choose.

What about using a template from an online website? Estate planning attorneys are called in to set things right from online wills with increasing frequency. The terms of a will are governed by state law and often these websites don’t explain how the document must be aligned with the statutes of the state where it is signed. Estate plans are not one-size-fits-all documents and a will deemed invalid by the court is the same as if there were no will at all.

If you don’t have an estate plan, if your estate plan is outdated, or if your estate plan was created using an online solution, your heirs may inherit a legal quagmire, in addition to your coin collection. Give yourself and them the peace of mind of knowing you’ve done the right thing and have your will updated or created with an experienced estate planning attorney.

Reference: New Haven Register (Oct. 29, 2022) “Today’s Business: Your estate plan—what could go wrong?”

What Is Upstream Planning?

Estate planning with an eye to a future inheritance, known as “upstream planning,” can be especially important where families pass significant wealth from generation to generation. Knowing these details in advance can have a big impact on deciding on how to manage the heir’s own assets, as explained in the article “Expecting an Inheritance? Consider Coordinating Your Estate Plan with Your Parents’” from Kiplinger.

What happens when information is kept private? In one example, a patriarch refused to share any details, despite having children who had succeeded on their own and didn’t really need their inheritances. The family was left with an eight figure estate tax bill.

Clear and open discussions make sense. If a person has an estate large enough to need to pay federal estate taxes, inheriting more will add to their heir’s tax burdens. Parents may choose to leave assets to heirs through a trust. Money in a trust belongs to the trust, so in addition to tax benefits, the trust is a good way to protect assets from creditors, litigation, or divorce.

Trusts are also used to take advantage of the GST—generation skipping tax exemption. The executor of the parents’ estates can apply their GST exemption to the trust, which will not be taxed when they are distributed or passed to grandchildren, even if the grandchild is a beneficiary of the trust.

Business considerations also come into play. If a couple built and grew a business now being run by their granddaughter, and the grandsons have had little or no involvement, their wishes should be clarified: do they want their granddaughter to be the sole heir? Or do they want the grandsons to receive cash or other assets or any shares of the business?

Talking about multigenerational wealth early and often provides benefits to all concerned. The more money a family has, the more it makes sense to have those conversations and not only from an estate tax perspective. Those who created the wealth can use upstream planning as a way to start conversations about their success, family values and hopes for how heirs and future generations will benefit.

In some families, these conversations won’t happen because they think it’s too private or don’t want their children and grandchildren to feel they don’t need to work hard to become responsible citizens.

Communicating and coordinating are vital to success. Your estate planning attorney will be able to provide guidance, having seen what happens when upstream planning occurs and when it does not.

Reference: Kiplinger (Oct. 4, 2022) “Expecting an Inheritance? Consider Coordinating Your Estate Plan with Your Parents’”

What Is a QTIP Trust?

A Qualified Terminable Interest Property Trust, or QTIP, is a trust allowing the person who makes the trust (the grantor) to provide for a surviving spouse while maintaining control of how the trust’s assets are distributed once the surviving spouse passes, as explained in the article “QTIP Trusts” from Investopedia.

QTIPs are irrevocable trusts, commonly used by people who have children from prior marriages. The QTIP allows the grantor to take care of their spouse and ensure assets in the trust are eventually passed to beneficiaries of their own choosing. Beneficiaries could be the grantor’s offspring from a prior marriage, grandchildren, other family members or friends.

In addition to providing the surviving spouse with income, the QTIP also limits applicable estate and gift taxes. The property within the QTIP trust provides income to the surviving spouse and qualifies as a marital deduction, meaning the value of the trust is not taxable after the death of the first spouse. Rather, the property in the QTIP trust will be included in the estate of the surviving spouse and subject to estate taxes depending on the value of their own assets and the estate tax exemption in effect at the time of death.

The QTIP can also assert control over how assets are handled when the surviving spouse dies, as the spouse never assumes the power of appointment over the principal. This is especially important when there is more than one marriage and children from more than one family. This prevents those assets from being transferred to the living spouse’s new spouse if they should re-marry.

A minimum of one trustee must be appointed to manage the trust, although there may be multiple trustees named. The trustee is responsible for controlling the trust and has full authority over assets under management. The surviving spouse, a financial institution, an estate planning attorney or other family member or friend may serve as a trustee.

The surviving spouse named in a QTIP trust usually receives income from the trust based on the trust’s income, similar to stock dividends. Payments may only be made from the principal if the grantor allows it when the trust was created, so it must be created to suit the couple’s needs.

Payments are made to the spouse as long as they live. Upon their death, the payments end, and they are not transferable to another person. The assets in the trust then become the property of the listed beneficiaries.

The marital trust is similar to the QTIP, but the is a difference in how the assets are controlled. A QTIP allows the grantor to dictate how assets within the trust are distributed and requires at least annual distributions. A marital trust allows the surviving spouse to dictate how assets are distributed, regular distributions are not required, and new beneficiaries can be added. The marital trust is more flexible and, accordingly, more common in first marriages and not in blended families.

Your estate planning attorney will explain further how else these two trusts are different and which one is best for your situation. There are other ways to create trusts to control how assets are distributed, how taxes are minimized and to set conditions on benefits. Each person’s situation is different, and there are trusts and strategies to meet almost every need imaginable.

Reference: Investopedia (Aug. 14, 2022) “QTIP Trusts”

Can We Prevent the Elderly from Being Scammed?

Just as parents guide their children through adulthood and teach them about finances and how to manage their money, adult children of aging parents need to be alert for their parents before they fall victim to those preying on the elderly. It’s become all too common, according to the article “The Best Way to Protect a Parent from Scammers” from Kiplinger.

There are a few common scams seen across the country. One is to call an elderly person and tell them their beloved grandchild has been arrested and cash needs to be sent immediately to get them out of jail. The grandparents are told the child has told the police not to call the parents, so the call is secret. No police department calls grandparents with a demand for cash, but in the stress of the moment, flustered people often comply.

Another is a thief posing as an IRS agent and telling a surviving spouse that their deceased spouse owed thousands in back taxes and penalties. The senior is told to make a payment or risk being arrested. There is also the scammer claiming to be from the DEA and warning the person their Social Security number and credit card were used to rent a car found abandoned near the Mexican border with suitcases stuffed with drugs. The person is told they need to verify their information to clear their record, or they’ll be arrested for drug trafficking. The voice is always very convincing.

Elderly victims are vulnerable for several reasons. One, the generation preceding the boomers was taught to trust others, especially people in positions of authority. As people age, their ability to think clearly when a dramatic and unexpected piece of bad news is easily shaken. Someone who would otherwise never have given out their personal information or sent cash or purchased gift cards becomes overwhelmed and complies with the scammer.

Taking control of a parent’s financial life is a hard step for both the aging parents and the adult children. No one wants to lose their independence and freedom, nor do adult children want to see their parents becoming vulnerable to thieves. However, at a certain point, adult children need to become involved to protect their parents.

A General Durable Power of Attorney (POA) is a legal document giving another person, typically an adult child, the power to act on behalf of another person immediately, once the document has been signed. It may not be effective in stopping a parent from giving money to a scammer, since the parents still have control of their money. fI transactions are done online, the bank may not have an alert set up for questionable transactions.

That said, having a POA in place and alerting the bank to its use will give the financial institution more freedom to be in touch with an adult child about their parent’s accounts, if fraud is suspected.

Guardianship or conservator is another way to address this issue, although it is far more invasive and brings the court system into the life of the person who becomes a “ward” and requires regular reporting. Guardianship is usually sought when the aging parent is incapacitated.

While we often think of trusts as a means of passing wealth to the next generation, they are also useful for protecting people in general and seniors in particular from scammers. When an adult child or other trusted person becomes the trustee, they gain complete control of the assets in the trust. If the aging parent is a trustee, they have control but someone else can step in if necessary. The co-trustee can see any changes in spending habits or unusual activity and take immediate action, without the delay that applying for guardianship would create.

Speak with your estate planning attorney about your unique situation to learn which of these solutions would be appropriate for your loved ones.

Reference: Kiplinger (July 25, 2022) “The Best Way to Protect a Parent from Scammers”

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What Recourse Is Available if Inheritance Is Stolen?