NEWS AND COMMENTARY

Published on: June 30, 2010

Why You Need a Lawyer to Create Your Estate Plan

In past blogs we have discussed the need to have an experienced estate planning lawyer draft your trust. In California, a case has recently been filed against Legal Zoom, an online site that markets wills and trusts without the need to meet with an attorney. The case involves a man with a terminal condition who used Legal Zoom to draft a trust and pour over will. The documents were signed but the trust was never funded because financial institutions that held the man’s money refused to recognize the validity of the documents. The man died without getting the trust funded.

It remains to be seen what the outcome of the case will be but it does highlight the importance of getting a lawyer to draft your revocable trust and companion documents. In most cases, a face to face meeting will elicit important facts so that your trust and other documents accurately reflect what you want to happen after your death.

Some circumstances that dictate hiring an attorney to create an estate plan are the following:

Published on: June 11, 2010

Actor Gary Coleman’s Estate Will be Disputed

by Scott C. Soady

Celebrities are always providing estate planning lessons for the rest of us. Gary Coleman who died in Utah in May at age 42 is the latest celebrity whose estate planning was a disaster. There are at least 3 wills, maybe more, that have been found and the fight has already begun between his ex-wife Shannon Price, his estranged parents, and a woman who formerly lived with the actor and was the CEO of his corporation, Anna Gray.

Supposedly there is a will executed in 1999 leaving everything to his manager Dion Mial, a will executed in 2005 leaving everything to Anna Gray ,and a document purporting to be an addendum to a will executed in 2007, one week after he and Shannon Price were married, leaving everything to Price. The document is not witness or notarized. Price and Coleman divorced in 2008 although according to Price, continued to live together in a common law marriage. (Utah is one of a dozen states that recognize common law marriage.)

Friend and co-star Todd Bridges also has said he has a secret will expressing Coleman’s true wishes about his estate and his final wishes. The actor’s estranged parents also claim that since Coleman and Price were divorced, they have the legal rights to his remains. The court in Utah has already scheduled a hearing for July 2 to sort things out and appoint a personal representative of the estate.

Published on: May 3, 2010

“Feng Shui” Will of Asia’s Richest Woman Declared Invalid

by Scott C. Soady

Will and trust contests continue to produce interesting stories, whether among the rich or the ordinary. This past February, a judge in Hong Kong ruled that the estate of billionaire Nina Wang will not go to her feng shui consultant but to the charitable foundation she and her husband Teddy created in 1988.

Nina’s life and death reads like a soap opera. Nina was born in Shanghai and married her childhood friend Teddy Wang who grew rich owning and operating the Chinachem Group, one of Hong Kong’s largest and most powerful companies. Teddy Wang was kidnapped in 1983 and his wife paid a $33 million ransom for his return. He was kidnapped again in 1990 and never found. He was declared dead in 1991 and Nina took over the company. There were numerous court battles over his wills but eventually it was Nina who inherited his estate.

Nina drew up a will in 2002 leaving her multi-billion dollar estate to the Chinachem Foundation she and her husband founded. After her death, another will surfaced, dated 2006 and leaving her estimated $4 – $13 billion estate to her fung shui consultant, reported also to be her lover. “Feng shui” is the ancient Chinese system of aesthetics using laws of Heaven (astronomy) and Earth (geography) to help improve life and create peace and harmony. The court ruled however that the will presented by Tony Chan, the feng shui consultant, had been forged. He was later arrested and charged with forgery.

Published on: April 30, 2010

No Estate Tax in 2010 Could Cost the IRS Billions

by Scott C. Soady

Previous blog posts have discussed the fact that in 2010 there is no federal estate tax imposed on a person’s estate, no matter how large the estate. In 2009, the federal estate tax was levied on estates over $3.5 million. In 2010 there is no estate tax because Congress failed to approve the bill to keep the estate tax at the 2009 level with a maximum 45% tax rate.

No one expected that the 74th richest man in the world would die in 2010. Texas gas pipeline tycoon Dan Duncan suddenly died in March at the age of 77 with an estimated $9 billion estate. No one knows the details of his estate plan but his death has caused many to wonder if Congress would now reinstate the 2009 estate tax and make it retroactive to the begining of the year so that the government could receive much needed revenue from his estate, maybe in the billions. Mr. Duncan was a noted philanthropist, so he may have provided for a number of charitable gifts which pass to the beneficiaries free of estate tax.

If Congress fails to act before the end of the year, the estate tax exemption is set to return to $1 million with a maximum tax rate of 50%. Such inaction by Congress will potentially affect many peope who are not billionaires. In California especially, where real property values are high, many upper middle class individuals would be subject to estate tax with estates over $1 million.

Published on: February 12, 2010

Marriage over the Internet?

by Scott C. Soady

Recently we had a post on our estate planning blog about electronic wills, now only recognized by the state of Utah. What about electronic marriage?

Two law professors at Michigan State University are advocating e-marriage. Their suggestion arose out of a situation where a Marine Sgt. met a Japanese woman in Japan. She became pregnant and he was sent to Iraq. The two wanted to find a way to get married so they had a proxy marriage (recognized in some states where the couple are not in the same location). Then unfortunately, the Marine was killed in Iraq, causing estate planning issues and immigration problems for his widow and son.

The two law professors propose e-marriage as a convenient and flexible way for couples to marry that are separated by distance. With the help of the Internet couples could get married without being physically present together. There would have to be safeguards against identity fraud and the law professors acknowledge that an e-marriage, depending on state law, may not carry with it the same legal rights as the usual marriage. Obviously many groups see this as an erosion of traditional marriage and would oppose such a plan.

Published on: January 12, 2010

Trial Begins on Constitutionality of Proposition 8

by Scott C. Soady

The first federal trial to determine if the Constitution allows states to ban same sex marriage began this week in the U.S. District court in San Francisco. The trial, which is supposed to last 2-3 weeks, involves a challenge to Proposition 8 which was passed by 52% of the voters in 2008. Prop 8 reinstated the ban on same sex marriages after the California Leglislature had voted to permit them. For a discussion on Prop 8 and same sex marriage, read our article on our family law website.

The plaintiffs, two gay couples, contend that there is no rational basis for limiting marriage to a man and a woman. Opponents, the supporters of Prop 8, are arguing that the voters were within their rights to establish that marriages should be limited to heterosexual couples. Testimony in the first few days has centered around historians who are testifying as to how Prop 8 is part of a long tradition of discriminating against gay couples.

Regardless of the outcome, the case will probably find its way to the United States Supreme Court. The ruling will lay the groundwork for the highest court to tackle the issue of same sex marriage. The Supreme Court has already gotten involved to the extent of ruling that the trial could not be broadcast on U-Tube.

Published on: January 3, 2010

Florida Man Requests No Autopsy or Embalming to Aid Freezing His Body

by Scott C. Soady

You may remember that when famous baseball player Ted Williams died, his body was sent to the Alcor Life Extension cryonics company to be kept frozen until such time as medical advances could bring him back to life. Reportedly Williams’ head is being kept frozen separate from the rest of his body.

Alcor Life Extension Foundation and other cryonics companies store a body in liquid nitrogen at a temperature of minus 196 degrees Celcius in order to preserve the cells and DNA until science enables people to reverse their death. Such a procedure costs upwards of $150,000.

In Tampa Florida recently there was a case of first impression dealing with a similar situation. A 48 year old man who was found dead in his apartment had a medical bracelet on with instructions not to embalm him or to perform an autopsy. Since his death was suspicious, the county medical examiner wanted to perform an autopsy but the autopsy was suspended when a call came from a cryonics company, the same company that houses Ted Williams remains, and requested that the body not be autopsied as that would affect the man’s hopes of someday being brought back to life. Both sides went to court and the judge ruled that the autopsy would be performed and then the body would be released for whatever disposition the family chose. The medical examiner did agree however to try to minimize the dissection of the body to aid in the probability that the body could at some point be restored to life.

Published on: December 28, 2009

Brooke Astor’s Son Sentenced

by Scott C. Soady

Back in October, we reported on the case of Brooke Astor’s estate where prosecutors alleged that Brooke Astor’s son Anthony Marshall and his lawyer cheated Brooke Astor out of an estimated $60 million by convincing her to change her will when she was suffering from Alzheimer’s disease. The two were convicted and have now been sentenced to jail sentences of 1 – 3 years.

The sentences did not answer the question of where the $60 million in assets will ultimately go. The judge in sentencing Marshall commented that he wished he had the power to order a different sentence, that the money all go to charity. It will be the probate court in new York that will answer the question of how much Marshall will receive from his mother’s estate.

What the case has done is heighten people’s awareness of elder abuse. It is estimated that between one and five million elderly people in the United States are the victims of financial elder abuse. Many cases go unrecognized and unprosecuted. We all need to be on the alert to recognize elder abuse in our aging population and protect against what seems to be a growing trend.

Published on: December 18, 2009

Longer Life Expectancy Will Present Challenges

by Scott C. Soady

Recently several reports have come out predicting that life expectancy is on the increase. Males born in the 1900’s could expect to live into their 60’s. A male born in 2005 can expect to live into his late 70’s. Mac Arthur Research Network on an Aging Society estimates in a recent report that Americans will live longer in the next 40 years. They estimate that women will live to be 89 – 93 on an average by the year 2050 and men 83 – 86 years. Another study which was published in the medical journal Lancet estimates that more than half of babies born since 2000 can expect to live to be over 100 years old.

What implications will these extra few years mean to our society? Longer lives (and presumably healthier) lives will change the traditional cycle of education, employment, and retirement. There will be more older persons living longer which surely will affect health care, health insurance, and medical providers that specialize in elder care. Older workers may need to stay in the work force longer and plan for retirement a little differently. The outlays which will be necessary for Medicare and Social Security could rise by $3.2 million to $8.3 million by 2050. Maybe people won’t want to retire at age 60 – 65 if they still have another 40 years to live. A postponed retirement may affect the types of investments that should be included in your portfolio. It also could affect rules about distributions from retirement accounts, pension plans, and IRA’s.

For estate plans, a longer life expectancy may lengthen the length of the relationship you have with your estate planning attorney and alter the way estate planning is done to address these challenges. The next few decades will be interesting.

Published on: December 1, 2009

House of Representatives to Vote on Death Tax

by Scott C. Soady

The U.S. House of Representatives will vote perhaps as early as this week on legislation to extend the current estate tax rates permanently. Currently the tax rate is 45% of any estates in excess of $3,500,000. As previously discussed in past blogs, $3,500,000 was the tax exemption for 2009. In 2010 there will be no estate tax at all which means that no one will have to pay estate taxes no matter how large their estate is. In 2011, however, without some new legislation, the estate tax will go back to a rate of 55% on assets in excess of $1,000,000. This makes people a little nervous, especially in San Diego where home prices and values are much higher than elsewhere in the country.

All of this stems from the major tax overhaul enacted by President George W. Bush in 2001. Prior to 2001, the top tax rate on inheritances was 55% on estates in excess of $675,000. The law gradually decreased the tax rate and increased the tax exemption amount to the 2009 figures of 45% on estates over $3,500,000.

The bill in the House was introduced by Representative Earl Pomeroy from North Dakota. The bill would make permanent a 45% tax rate on inherited assets in excess of $3,500,000. It is predicted that the bill will pass in the House but whether it has enough support to pass the Senate is debatable. Many people favor a full and permanent repeal of the death tax. If the Senate does not pass the bill by the end of the year, the federal estate tax is scheduled to die for one year only to reappear on estates in excess of $1,000,000 in 2010.