Estate planning experts say that many small-business owners just assume that their next of kin or business partner will take over the operation. Without careful planning, though, the business could end up in probate litigation, virtually guaranteeing that the business will be torn apart by parties with varying interests.
]]> Small-business owners should carefully consider their vision for the future of the business. If it is the type of business that can easily be passed to a family member, actions will be different than if you intend to leave it to your partner. Also, the business might shut down entirely if the proprietor dies.Even during well-planned estate execution, hiccups can cause a small business to lose money. That's why it's critical for owners to ensure that the organization is properly handed down, both to guarantee continuity of business and to appropriately distribute assets to family members.
Many small-business owners also worry about their employees, and so they create a business transition plan to help those people keep their jobs.
Remember when you are creating your estate plan to include term-life insurance provisions and a living trust to determine what will happen to business assets when you die. Nothing will end up in probate if a living trust is created, according to the National Federation of Independent Business.
Source: Fox Small Business Center, "Will your small business live if you die?" Donna Fuscaldo, May 4, 2012
]]>The IRS claims that Smith's estate owes more than $300,000 in back taxes that have been pending for nearly 10 years. The debt has been prioritized over all others that may still be pending against the estate, according to recently released documents. Smith had a series of tax liens placed on her residences as early as 2000, according to court records.
]]> Smith had been a part of a protracted lawsuit regarding her former husband's estate distribution. She claimed that she deserved a cut of the $474 million inheritance doled out by her wealthy and elderly husband. Instead, all of that money was awarded to the man's children after his death, leaving Smith to fend for herself.Smith earned a substantial sum by modeling and acting, even after her husband's demise. Smith's estate was valued at about $1.8 million after her death in Florida in 2007. She died of an accidental drug overdose, shortly after the birth of her daughter and heir. Her son had died from a drug overdose shortly before her own passing. The entirety of the estate was left to Smith's daughter, who is currently under the care of her father.
The money led to a custody battle after Smith's death, with her attorney contending that he was the child's father. The matter was finally settled with a paternity test.
It remains unclear how much money is left of the child's inheritance. For that reason, experts say they cannot speculate about how the IRS's decision could affect the little girl's financial future. The fiasco shows the value in responsible estate planning no matter how young an adult is. If you have assets you want protected, it's to your advantage to begin planning as soon as possible.
Source: She Knows Entertainment, "IRS wants a piece of Anna Nicole," Caroline Goddard, April 26, 2012
]]>Banks have begun to host wealth management seminars for special populations, including women and other target groups. These events allow the firm to get to know the clients better, but they also provide networking opportunities for wealthy clients. The advice can be useful for the estate planning process.
]]> If you're not sure what wealth management means, you're not alone. It's defined as financial services that are provided to wealthy clients, primarily individuals and their families that require a minimum level of investable assets. The mass-market wealth management level requires liquid assets of about $250,000.Estate planning services offered include savings and investment advice, among other topics. If one is trying to maximize their investments as much as possible to leave for future generations, then seeking the advice of a wealth management professional may be beneficial.
Banks that have not traditionally been a part of the financial planning movement are also suddenly jumping on board, according to local experts.
Clients say that the most important component of a planner-investor relationship is trust and good communication. Investors care a great deal about their financial futures and they want to make sure their money is in good hands. A firm that is transparent and honest about their financial dealings is most likely to gain business, say investors, though individual comfort level plays a huge role in selecting a service.
Source: Miami Herald, "Wealth management a top priority for banks," Ina Pavina Cordle, April 23, 2012
]]>The two had been fighting over guardianship for about two years, according to reports. The suspect and his brother had filed an injunction to get rid of the current estate manager, a woman who was appointed by the courts as the father's guardian. The injunction contends that the woman is spending hundreds of thousands on unnecessary legal fees. The elderly man lives on about $40,000 per year and the woman spent $200,000, the sons argue. They also say that the woman is not sufficiently bonded to handle the expensive real estate transactions currently associated with the estate.
]]> Furthermore, the woman does not visit the elderly man or provide the funds for his daily care, according to the filing. The sons have also accused the woman of misrepresenting the purpose of a recent real estate sale. She had acted as though the sale was intended to clear the elderly man's debts, rather than to pay the associated legal fees.The younger man is accused of punching and kicking his older uncle, according to the victim's statement. The older man was transported to a local hospital where he was treated for abrasions, lacerations and difficulty breathing. The suspect has been charged with second-degree assault and posted $5,000 bail.
If the alleged assault stemmed from the probate battle, then it will only serve to complicate matters.
Source: Union Leader, "Man allegedly assaults uncle while leaving probate hearing," Julie Hanson, April 12, 2012
]]>A living trust is a legal arrangement created to transfer individual assets into the care of a trustee. The trustee is usually the original owner of the asset or property, and successive trustees are designated to take over if the original person is disabled or dead. Living trusts are sometimes established with the intent to avoid probate, though legal experts say it's just a way of paying death benefit fees up front. Clients still must pay to have the legal documents drawn up to transfer property.
]]> Living trusts essentially allow people to be the executors of their own wills, transferring assets and property before they die. This is can help for people with complicated investments and many assets.In addition to the initial costs, living trusts require periodic updating. For example, if someone buys a home and fails to add it to the living trust before death, the probate fees could still apply to that property. Some people automatically transfer their assets into a living trust at the end of each year, specifically to avoid such a problem.
Although some states do have complicated probate laws with significant fees and penalties, other states' processes are easier to navigate. Many states have decided to forego probate fees altogether, which may make a living trust entirely unnecessary.
Living trusts are useful in specific circumstances, but they are certainly not beneficial for everyone. Legal and financial experts encourage their clients to fully examine their asset portfolio and individual needs before creating a living trust.
Source: HeraldNet, "Living trusts don't save taxes, but can be helpful," Steve Tytler, April 8, 2012
]]>The certificate, which the man bought in 2008, assigns 1,625 shares of the Palmer Union Oil Co. to the document's holder. The shares had been signed and endorsed, but the space for the transferee's name was left blank. After purchasing the document, the man wrote his own name in the blank and began to pursue the massive sum.
]]> This issue clearly goes beyond the normal estate planning stories, but it's important nonetheless. People should be able to fight to find out how much an asset is worth.The man, who had originally purchased the stock certificate, died in 2010, but he had already traced the roots of the document through a series of defunct companies to Coca-Cola. The certificate was also linked to Petrocarbon Chemicals Inc. and Taylor Wine Co. The family is essentially claiming that the shares of Coca-Cola stock are tied to the canceled stock certificate of an oil company that went out of business long ago.
Coca-Cola legal representatives submitted a countersuit in 2009 in the case, claiming that the family's assertions are completely unfounded. Canceled stock certificates have no merit, say the attorneys. The family's attorneys, however, argue that the claim is valid, citing examples of past legal precedent that would allow the stocks' value to transfer even after the parent company went under.
If the man's estate is successful in the suit, the family would become one of the largest non-institutional investors in Coca-Cola, according to official reports.
Source: First Coast News, "Family claims $130 million in Coke stock found at garage sale," Kara Van Hoose, April 7, 2012
]]>The judge's decision to seal the records is extremely unusual in a state that has such liberal document access laws, according to local legal experts. Jones' family members may have wanted to maintain the items' confidentiality, because disclosing information contained in the will could affect the estate's future earning potential. The family members argued that by allowing the documents to become public record, the estate might suffer from devalued copyrights and royalties. Jones' public reputation would be subjected to higher scrutiny, which could also damage future profits.
]]> The judge in the case utilized an oft-overlooked statute that allows the judiciary to declare document off-limits to avoid financial injuries to innocent third parties. The will can only be accessed by his four daughters, his widow and a trustee. Jones' most recent draft of the will was created in 2004, after the birth of his fourth daughter. Experts are uncertain whether the man's wife of five years, a Telemundo actress, will be included in the distribution.The file will be held in Martin County, where Jones owned a horse farm.
This case underscores the need for all estate plans to be solidified before an unfortunate or tragic event occurs. Not only was Jones fully prepared to distribute his possessions, his family members also advocated to protect their rights and the integrity of the estate. By using a fully qualified probate attorney to pursue appropriate legal recourse, Jones' family will likely benefit for generations to come.
Source: Jose Lambiet's Gossip Extra, "Martin County Mystery: What is Davy Jones' family hiding?" Jose Lambiet, March 22, 2012
]]>Credit cards, loans, mortgages and other debts disappear if they were solely in the borrower's name. Complications arise, however, when a co-signer or guarantor is involved in the borrowing process. Children or spouses who choose to co-sign for housing or medical bills will be held financially responsible for the remaining debt. When you co-sign a loan, you promise that the loan will be paid if the primary borrower cannot do so. That provision includes the borrower's death.
]]> In community property states (Florida is not one), spouses are automatically responsible for all debt acquired by their husbands or wives. That means that a spouse could be stuck paying off debts they didn't know existed, according to legal experts.In many cases, debt after death is not a problem. Even people with co-signed loans who die with more assets than liabilities should be able to cover their debts with the money from an estate. The funds that remain are then distributed according to the probate agreement. If liquid assets do not cover debts, then the will's executor will generally sell off cars, homes and other assets to meet the debts. It is important to remember that creditors are seen as more important than heirs.
Some funds may be exempt from creditor's reach, however, including life insurance, retirement benefits and some special land holdings. It is best for Florida residents to consult a probate attorney to determine which assets can be shielded from creditors.
Source: CNBC, "Who Inherits Your Debt?" Shelly K. Schwartz, March 16, 2012.
]]>Attorneys say they are faced with an ever-increasing number of people who want to make changes to estate plans. Revocable documents, such as wills and revocable trusts, are generally easy to modify.
]]> There are four ways for clients to change their irrevocable legal documents: construction, reformation, amendment and decanting. Construction court actions are generally taken to remedy ambiguities in a document or to provide for a contingency not yet considered. This may occur if two different heirs are listed in different sections of a will as the recipient of the same benefit.Reformation proceedings are designed to change language that is erroneous. These actions are generally taken to remedy such problems as misspellings, although sometimes more severe errors are addressed. These problems may arise when an attorney is drafting the document. Reformations can retroactively change documents.
Amendments are additions to the document. These relatively straightforward proceedings allow for administrative changes that will not affect the distribution of trust assets. For example, if the trust needed to be moved to a state with more favorable estate laws, an amendment could be drafted to allow this action.
It's important for Florida retirees worried about changes needing to be made to an estate plan to begin addressing these concerns sooner rather than later.
Source: Forbes, "'Fixing' the Broken Estate Plan," Rob Clarfield, March 9, 2012.
]]>Police found the older woman at her daughter's friend's home after a three-week search. The woman was charged with custodial interference after her mother was found and returned to Connecticut.
]]> The accelerated rehabilitation stipulates that the woman may not violate any more probate restrictions regarding her mother's custody, and she may not get arrested in the next 18 months. The woman will be able to visit her mother again because of the ruling.The elderly woman, who has been returned to the care of her son, is famous for owning and operating a local Nature's Way store. She suffers from both Alzheimer's disease and dementia, and a conservator oversees her estate.
The woman's daughter alleges that the older woman is being held against her will in the son's home, saying that the woman expressed her desire to live in Florida some time ago. The siblings reportedly agreed that their mother needed a conservator for her estate when the dementia was diagnosed, but they have been locked in a disagreement about who should be her caretaker.
Both children had filed for the conservator position, but the daughter was found to be unsatisfactory. A third party was ultimately appointed. Court documents indicate that the daughter was personally motivated by her own finances. Her attorneys argue that she has rightful claim to her mother's care, citing documentation that outlines the woman's wishes.
Attorneys for the current caretaking team fear that the woman may attempt to make off with her mother again. The tragic case is a painful reminder to make plans early to avoid situations such as these.
Source: Milford Mirror, "Woman gets accelerated rehabilitation for taking mom to Florida," Jill Dion, Feb. 28, 2012
]]>The federal government currently taxes estates at 35 percent. At the beginning of 2013, that percentage may increase to 55-60. The federal estate and gift tax rates fluctuate according to Congress' decisions.
]]> A discouraging scenario when planning an estate is when a family has a modest estate, such as a farm, which is slowly but surely sucked dry by taxes. In some cases, generation-skipping trusts, dynasty trusts or family banks may be used to circumvent estate taxes.Without trusts, when a generation dies and the children receive the assets, they may be subject to taxes. This happens with each generation at the time of passing. To take advantage of a generation-skipping trust, a parent must will their estate into trusts for their children's entire lives. To avoid the taxation of future generations, the trust can be passed from generation to generation, avoiding estate taxation with each passing generation.
However, the IRS knows about generation-skipping trusts and has a special tax for that. The generation-skipping tax is levied at the passing of each generation. If the trust is under $5.12 million, then it is currently exempt. Some states do not have generation-skipping taxes and therefore those types of trusts are safe.
Similarly, parents can set up irrevocable life insurance trusts that benefit the surviving parent and then later generations. The generation-skipping tax applies to premiums, not the benefit, so a $5 million life insurance policy obtained by a trust is only taxable if the amount in premiums paid exceeds the minimum.
It can be tricky to understand the intimate details of estate planning, but careful planning can benefit future generations.
Source: Moorestown Patch, "Ask the Lawyer: Planning Your Will," Frank R. Demmerly, Jr., Feb. 22, 2012
]]>The death of Whitney Houston is still fresh in the hearts and minds of the American public. Houston was famous not only for her impressive voice, which led to seven straight number-one hits, but also for her movie roles. Her most famous song, "I Will Always Love You," exploded on iTunes the day after her recent death and was the most downloaded single. The song represented not only her status as the "Queen of Pop," but also perfectly encapsulated her at the peak of stardom, both in music and film.
]]> The demand for that single alone illustrates the connection that fans reach for when a celebrity passes. A professor of strategic management at York University said that demand for Houston's music "will continue to soar in the days and weeks ahead."Those who stand to gain the most from the estate are the people who own the rights to her work: record producers, movie studios and beneficiaries.
In 2011, Elvis Presley's estate made $55 million from licensing and merchandise, as well as admissions to Graceland. He died in 1977. Michael Jackson's estate made $170 million in 2011, largely from sales of his music. People whose estates stand to increase in value upon death should make sure they have a plan in place for beneficiaries.
Source: Huffington Post, "Whitney Houston Estate Value Set To Soar," Feb. 13, 2012
]]>To avoid such stressful and difficult situations, adults should have a trio of documents to dictate their affairs: a health care proxy, a power of attorney and a living will. They should not be confused with or substituted for a will. A will handles affairs after death; the three former documents handle affairs while a person is living but unable to make decisions.
]]> A health care proxy, living will and power of attorney will assure that a person's wishes will be followed. Without those documents, care givers follow state laws and hospital rules that may not be what the patient wishes.The power of attorney enables a person of your choosing to make financial decisions on your behalf. For example, they could make your mortgage payments if you are in a coma, or pay other bills for you when you are unable.
A health care proxy names someone who can make medical decisions for you. Health care usually requires informed consent, but when the patient is unconscious or otherwise unable to give consent, the medical proxy can do so for them. They only take over when the patient is unable to provide directions for their own care.
The living will lays out the circumstances under which a person no longer wishes to receive medical care. It also details what treatments the patient wishes in the case of catastrophic medical treatment and whether or not they wish to be resuscitated.
Source: Investor's Business Daily, "Planning Tips For Avoiding A Court-Appointed Guardian," Paul Katzeff, Feb. 10, 2012
]]>The document that every person should have is a will. A will can be written on a piece of paper or drafted by a lawyer. For peace of mind, having a professional look over a will is a good idea. Wills also need to be witnessed to have legal standing.
]]> Deciding on an agent to handle legal and financial matters can be solidified in a general power of attorney. This gives an agent the authority to pay bills on your behalf. Otherwise, legal guardianship must be applied for in court.A more specialized kind of power of attorney is health care power of attorney. That gives the agent of your choosing the power to make medical decisions on your behalf. A copy of the health care power of attorney should be given to the agent ahead of time.
A living will is not legally necessary, but many choose to create one. It allows you to be clear that you do not want to be placed on medical life support. It takes the burden off relatives and relies on a medical assessment. Two physicians decide if you are in a permanently unconscious state and make the decision to take you off life support accordingly.
By having your affairs in order, you can save family members the heartache and headache of an unprepared estate.
Source: Akron Beacon Journal Online, "Betty Lin-Fisher: Wills and other legal documents still important," Betty Lin-Fisher, Feb. 5, 2012
]]>One estate attorney, the author of "Probate Wars of the Rich and Famous: An Insider's Guide to Estate Planning and Probate Litigation," said that the most common problem in notorious estate battles is multiple marriages. If the will does not provide adequately for the second or third spouse and any children from the first marriage, then there can quickly be heated litigation.
]]> An example would be the Jerry Garcia, the lead singer for the Grateful Dead, who had just married his third wife when he passed. He also had many children with different mothers. The estate battle that followed ranged from his custom guitars to the flavor of Ben and Jerry's ice cream that was named after him.When families are involved with business, it often opens up other problems when a parent dies. Often, some children are involved with the business while others are not. Even so, they may feel an emotional entitlement to the family business. The Koch brothers, whose family had the largest family-owned business in the country, feuded for decades over the family business.
One thing that a parent can do is make sure the titles to their assets are in line with their will. If an adult child is a joint owner of an asset, that asset will automatically pass to the co-owner, regardless of what the will says.
Regardless of the value of an estate, probate litigation is on the rise. The issue is often not money, it is family heirlooms and property. When planning an estate, terms need to be clear and any perceived unfairness explained.
Source: Reuters, "The big lessons from celebrity estate wars," Amy Feldman, Jan. 26, 2012
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