Month: February 2014

Celebrity Cautionary Tale #243: Late Movie Star’s Will Demonstrates the Peril of Poor Estate Planning

The death of acclaimed, Academy award-winning actor Philip Seymour Hoffman at the age of 46 was a great tragedy to his family, friends and fans. Making the circumstance even worse, estate planning experts concluded that Hoffman’s estate plan was a “mess,” falling prey to many common estate planning mistakes. The sad situation highlights that bad estate planning can happen to anyone, and that each person who cares about his/her estate should be vigilant to avoid the types of errors that befell Hoffman and others.

First, Hoffman failed to engage in proper estate plan maintenance. His will was a decade old and had not been updated. Most people will experience some sort of life event with 10 years’ time — a birth, death, marriage, divorce or other — that impacts one’s estate plan. Regularly updating your estate plan helps ensure that the plan carried out after you die matches your objectives as they existed when you died, not as they were years earlier.

Second, the actor’s estate plan was publicly available. Privacy is a high-ranking goal for many people when they consider estate planning, especially someone as famous as an Oscar-winning actor. One way to maximize the privacy of your plan is through the use of proper trust planning. A trust (or trusts) may help you avoid probate and, as a result, help you minimize the extent to which the aspects of estate, including your assets and your distribution instructions, become public records available for viewing by anyone.

Who’s the Beneficiary of Your IRA: More Reasons to Ensure You Review Your Estate Plan Regularly

Today, many people have very diverse assets. Ever-increasing numbers of people have more and more assets that distribute outside a will or trust. One “side effect” of this is the increased complexity involved in estate planning, and the added level of diligence needed to keep that plan updated. You may have kept up with the major reasons for engaging in an estate plan “check up”, but the triggers for an update may be more numerous than you think.

Recently, MarketWatch released an article warning readers to avoid what that author described as “the No. 1 estate planning goof.” What was that “goof”? Failing to update your beneficiary designations on a regular basis. This warning is well worth heeding, as beneficiary-designation accounts may include a wide swath of financial holdings, including your IRA, life insurance, annuities, mutual funds, brokerage accounts, savings accounts and checking accounts. In Wisconsin, this is especially true as additional assets, which could include your house or other real estate, may have a pay-on-death beneficiary designation on them, as well.

Beneficiary designations may be extremely helpful, allowing you to pass assets without worrying about probate. But an outdated beneficiary designation can be a nightmare, handing over huge chunks of your wealth to ex-spouses, estranged or distant family members or perhaps a relative’s spouse whom you barely know.

Who gets the Chippendale and Silver Dollars: Distribution of Collectible or Sentimental Assets

If you are familiar with living trusts, you know that, for a trust to function correctly, you must “fund” your trust, which means you must transfer ownership of assets from your name to the name of your trust. For your home or other real estate, you execute a deed. For your car, truck or boat, you transfer title to your trust. But what about your other assets that have high monetary or sentimental value but do not have deeds or title documents? To optimize the effectiveness and efficiency of your estate plan, you may want to ensure these assets are funded into, and addressed by, your living trust, too.
People may own a wide array of assets that do not have ownership title documents but still hold significant value. Take, for example, one recent auction, where some memorabilia associated with basketball star Michael Jordan sold for more than $50,000. In another auction, a collection of 228 early American half-pennies fetched more than $18 million.

While your collectibles may not be worth $18 million, it is possible that the value of your collection of valuables alone could be high enough to make your estate ineligible for a small estate procedure, and require the completion of a more protracted probate process. An ancestor’s antique fine jewelry or a collection of stamps, coins or art with several rare, prized pieces could easily have value in excess of $50,000.

Your Guardian, Your Estate Plan and End-of-Life Decisions

In neighboring Minnesota, the state Supreme Court is considering whether the law in that state gives court-appointed guardians the authority to withhold medical care for their wards, and allow them to die. Although the outcome of this case would only impact the law in Minnesota, and have no impact on guardians and ward in Wisconsin, the court case and its underlying facts have lessons from which Wisconsinites can benefit.
Jeffers Tschumy was a man with mental disabilities who lived in a group home. In 2008, a court appointed a guardian to make certain decisions, including medical ones, on behalf of the man. In 2012, Tschumy choked on a piece of food and, although caregivers saved his life, he suffered extensive brain damage.

Tschumy had no known relatives and had never completed a health care power of attorney or advance directive. The man’s guardian sought a court ruling stating that the guardian had the sole power to terminate Tschumy’s life support. The trial court ruled against the guardian. An appeals court later reversed that ruling. The Supreme Court, in weighing the opposing sides in the case, was left to consider whether the Minnesota legislature, in creating the statutes governing guardians’ conduct, intended to empower them with such broad control and whether the law should really give guardians the unchecked power to end their wards’ lives.

Will Contest Tip: Outlandish, Unsubstantiated Claims are Not a Substitute for Relevant Facts, Applicable Law

Sadly, not all family interactions are warm ones. Animosities between relatives may fester for years and eventually spill into the courtroom. While much of what fueled the case of In re the Estate of William G. Wenkman appears to have been the strong emotions of one group of children, the Wisconsin Court of Appeals’ ruling in the case nevertheless manages to provide some excellent information about going about, or defending, a will challenge.

William Wenkman and his first wife had four children: Marcia, Mark, Gregory and Anne. The battle between the Wenkman family members first entered the courtroom when Anne filed an elder abuse complaint against William and Marcia, accusing them of “trying to kill” William’s second wife. Shortly after Anne filed her action, William changed his will to make Marcia his primary beneficiary, and removed Anne. A few weeks later, William died in a plane crash.

Anne and her brothers challenged the will, arguing that Marcia exerted undue influence over their father. The trial court rejected this claim, and the appellate court upheld that ruling. The Court of Appeals, bypassing Anne, Mark and Gregory’s irrelevant and often personal invective against opposing counsel and the trial court judge, explained that undue influence requires proving four things: (1) that the testator was susceptible to undue influence; (2) that the influencer had a reasonable opportunity to exert influence over the testator; (3) that the influencer was of a nature that she would exercise such undue influence; and (4) that the will’s terms constituted an outcome that the influencer wanted.

Who Gets Your Small Business?

Small business owners are constantly brainstorming new business plans, new ways to innovate or new ways to make their business even more attractive to the public. Along the way, though, too many overlook one essential aspect of business planning, which is establishing a clear direction for their business after their death, and ensuring that the proper written documents are in place to facilitate that plan. Without a proper plan, the business you’ve spent your lifetime growing and developing may unravel when you are no longer around to guide it.

Establishing the plan for your business after your death involves making several essential determinations. First, you must decide who will become the owner of the business. Transferring ownership of your business can be accomplished through your estate planning documents. You may hand down ownership of your business, whether it is a sole proprietorship or a corporation, either through your will or your living trust. If you do not wish to hand down your business, you may also direct the personal representative of your estate (if you use a will) or your successor trustee (if you use a living trust) to sell or close the business. The proceeds of the business’s sale or closure would then distribute according to the terms of your will or trust.

In the absence of a clear plan, the business may become the subject of complex and prolonged court battles. A New York Times article recently related the story of Bari Jay, a clothing business. When owner Bruce Cohen suffered a massive stroke (and later died as a result,) he had only minimal planning in place for his business. A court battle between his daughters, to whom he intended to leave the business, and their stepmother ensured and the business fell “into the red.” In some cases, a careful and detailed succession plan might avoid such legal battles.

“I Signed What?”: Father’s Execution of Five-Year-Old Will Without Reading Leads Court to Invalidate Document

While the law creates a standard that presumes most wills to be valid, there are a variety of ways in which a will may be declared invalid. One recent ruling by the Wisconsin Court of Appeals clearly demonstrates the care and meticulousness that should go into executing a will, and the problems that can arise when such care is not taken.

For Floyd Heck, his foray into estate planning began in 2000 when his daughter-in-law, Kay Heck, asked him if he wanted to create a will. Floyd dictated the will’s terms to the daughter-in-law, but refused to sign, because he did not believe death was imminent. The will divided the man’s assets between his three sons and two grandchildren.

For five years, Floyd continued in his refusal. In 2005, he executed the document without comment, in the course of signing several items. Floyd did not re-read the will and no one read it to him at that time. In 2010, Floyd died and his son, Sheldon Heck, presented the 2005 will for probate. Another son, Harvey Heck, contested the will, arguing that the document was not valid because Floyd did not read it, or have it read to him, when he signed. The trial court agreed and invalidated the will.

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