Tag Archives: intestate

Can celebrities teach us about estate planning?

be83d9254a85f218c3e112c005779b85We came across this post by John J. Scroggin, AEP, J.D., LL.M. and thought it was worth reposting.  Too many people think that things will take care of themselves…but they won’t.

“It is interesting how the common estate planning mistakes of average clients are so often replicated and exaggerated in celebrity situations. This column will discuss some of the things we can learn from high-profile celebrity estates, recognizing that our typical clients receive much less media attention and, often enough, have a few less zeros on their estate values. It is not that celebrity estates are more confounding than your average client’s estate. It’s that most celebrities have been allotted more than 15 minutes of media time, with much of it collected after they die.

Dying Without a Will

Dying without a will doesn’t damage the deceased, but it sure makes it hard on the survivors. Abraham Lincoln was shot on April 14, 1865. He died the next morning without a will despite being a skilled and successful attorney. He left an estate of $110,296.80 (the equivalent of several million dollars today).1

Prince died without a will on April 21, 2016. His estate has been estimated to be worth $300 million.2 His sister and five half-siblings initially appeared to be his only intestate heirs, until Carlin Q. Williams, a 39-year-old convicted felon being held in a maximum security prison, claimed to be the love child of Prince from a one-night-stand when Prince was a teenager.3If DNA tests had proven his relationship to Prince, Williams could have inherited 100 percent of Prince’s intestate estate.

Unfortunately, a significant number of Americans seem to be following Paul Simon’s perspective from his 1965 song Flowers Never Bend with the Rainfall: “So I’ll continue to continue to pretend that my life will never end.” The 2014 Rocket Lawyer Make-A-Will Month survey showed that 64 percent of Americans do not have a will.

Estate planning sounds as if it is for the wealthy when, in fact, it applies to everyone at every adult age (Georgia is the only state that allows a person as young as age 14 to sign a will).

In many states, each child and the surviving spouse will inherit an equal percentage (with the surviving spouse inheriting some minimum amount). If a trust is not established by a will, a minor child may be entitled to receive inherited assets by age 18, before they may be mature enough to handle the money. Ex-spouses may have control of the inheritance until the children reach adulthood.

In 1994, Kurt Cobain committed suicide at the age of 27. He left behind a detailed suicide note, but had not signed a will. Cobain’s wife and daughter were his only intestate heirs. In 2010, control of Cobain’s Right of Publicity passed to his daughter on the day she turned 18, and the next year the daughter reportedly purchased a $1.8 million home in Hollywood.

Intestacy can create messy dispositions based upon the order of death. For example, in most states, if a married couple with no descendants and no wills were injured in the same accident and one spouse survived the other by a few seconds and then died, the surviving spouse’s relatives could inherit all of the couple’s joint estate with the other spouse’s family receiving no assets.4

Professional wrestler Chris Benoit murdered his wife and son before taking his own life in 2007. In the probate hearings, the order of death became the pivotal issue for the disposition of assets. Under Georgia law, Benoit was considered to have predeceased both his wife and son.5 If the wife died first, then for the short time his son was alive, he would have inherited his mother’s and father’s assets, which would pass by intestacy at his death to Benoit’s two children from a prior marriage (as the closest living relatives of the deceased son). But if the son died first, then the wife’s closest relatives (her mother, in this case) would have inherited all the assets. Apparently the two families reached an out-of-court settlement in 2008.

Without a will, the courts will have to decide on the person(s) to manage assets for any minor children (and potentially during adulthood). Martin Luther King Jr. was assassinated in 1968 and died without a will. Particularly since the passing of his widow, Coretta Scott King, their children have fought over the control and benefits of his legacy and assets.

In the event of an intestate estate or the failure of all named personal representatives, state statutes generally set an order of appointment, with the surviving spouse normally being the first person to be appointed, followed by the closest blood family members. Note that the statutory appointment is by relationship, not competence. Do you really want that brother who has been bankrupt twice running the estate for your minor children?

Prince’s death without a will created an environment in which the six equal intestate heirs will control his vast music empire and the release of previously unreleased songs. None of the siblings have experience handling either his business interests or his significant estate. Recent reports indicate that conflicts are emerging among the six intestate heirs over the management of the estate.6

Many clients provide some level of support for their parents and other family members. When the client dies intestate, the surviving spouse and/or children of the deceased generally have first-priority rights to the assets. Thus, other family members who may have expected to receive continued support lose it. NFL player Steve McNair purchased a million dollar home for his mother to live in, but retained title to the residence and failed to create a will passing the house to his mother. When he died, his wife demanded that his mother pay $3,000 per month in rent. The mother moved out because she could not afford the rent. After she moved out, the estate billed her $53,363 for appliances and other items she took out of the house.7

Failing to Plan for Incapacity

Every adult of every age should plan for their incapacity.

According to the American Bar Association, only 33 percent of adult Americans have executed a medical directive. In 2000, AARP reported that only 45 percent of Americans over the age of 50 had executed a durable general power of attorney. And a 2009 Lawyers.com study reported that only 29 percent of Americans had either a medical directive or a general power of attorney.

Media mogul Sumner Redstone is one of the wealthiest people in America with an estate estimated to be over $42 billion. In 2015, a series of conflicts began over his competence and control of his estate. As the fights continued, Redstone’s granddaughter said her aunt and other family members had “succeeded in reversing decades of my grandfather’s careful estate planning and are poised to seize control of Viacom and CBS.”8

Clients may revise their dispositional documents when they are of marginal competence, and therefore, inappropriately influenced. A person who lacks the capacity to enter into a valid contract may still have the ability to sign an enforceable will.9

With a low standard for determining competence, it is generally hard to succeed in such a challenge to a testator’s competence, even when their behavior is odd or erratic. For example, the Michigan Supreme Court ruled in 1879 that “[a] man may believe himself to be the supreme ruler of the universe and nevertheless make a perfectly sensible disposition of his property, and the courts will sustain it when it appears that his mania did not dictate its provisions.”10 And the California Court of Appeals ruled: “Appellant produced evidence of forgetfulness, erratic, unstable and emotional behavior, and of suspicion, probably delusional at times, on the part of the testatrix. This is of no avail unless it were shown, as it was not, that it had direct influence on the testamentary act.”11

When a client dies, the first priority may be to change the locks to the house. Conflicts over dispositions of personal property appear to be endemic to all levels of wealth. In February 2015, The New York Times reported that Robin Williams’ widow and his three children from his two prior marriages were in conflict over the issue of how his “cherished belongings that include his clothing, collections, and personal photographs” should be passed.

Disposing of tangible personal property seems to be the most forgotten part of the average client’s estate plan. It is the author’s experience that this is single-greatest source of conflict among surviving family members.”

For more information about estate planning, check out our website www.diesmart.com.

 

Why didn’t Prince have a will?

PrinceThat’s a question that we’ll never know the answer to.  If he was like more than half of the people in this country, he just hadn’t gotten around to writing one, didn’t think he needed a will or didn’t care what happened to his estate once he was gone.  Regardless of his reason, the fact remains that he didn’t have a will and the probate court will decide what happens to all of his assets.

Minnesota law is quite clear.  If a person dies intestate (without a will), the estate goes to his children, grandchildren, spouse or parents.  Since Prince had no children, grandchildren or spouse and his parents are deceased, his entire estate will go to his brothers and sisters.  Prince had six half-brothers and half-sisters as well as a full sister, Tyka Nelson.  In Minnesota, half siblings are considered to have the same inheritance rights as those who are full siblings.

To muddy the waters, hundreds of people have come forward and said they were relatives of Prince.  In addition, a Minnesota man in his 30’s has said that he’s Prince’s son as a result of a relationship between the deceased and his mother in the 1980’s.

Prince’s estate has been estimated at between $150 and $300 million.  In addition to real estate and money, there are several unpublished works and a lot of unreleased music that can be worth millions.

Something that hasn’t been discussed in any of the articles we’ve read is Prince’s digital estate.  He kept many unpublished works in a vault bank but what if he kept others in an electronic account?  What if there is a will but it is stored in Drop Box or some other online storage facility?  Unless he left instructions or provided someone with a list of his digital accounts and their passwords, we may never know the full extent of his assets and their value.

Whatever the final disposition of Prince’s estate – who receives what based on Minnesota probate law – and its final value, there are two lessons we should all learn from this.

  1.  See an attorney and get a will prepared.  Even if you don’t have the kind of assets Prince had, it’s still a very important thing to do.  Don’t let state statutes determine what happens to your estate.  You decide.
  2. Document your wishes related to your digital assets.  Do you want anyone to see what’s in your private emails or do you want them destroyed?  Do you want your Facebook account shut down or do you want it to be memorialized and continue?  What do you want to happen to your Bitcoin account?  What are your logons and passwords for accounts that have financial implications?

Don’t wait.  You don’t know what will happen tomorrow or how long you’ll be on this earth.  Get your legal paperwork in order now.

To find out more information about estate planning, go to our website www.diesmart.com.  To find out more about digital estates, check out our book, Access Denied: Why your passwords are now just as important as your will.

10 Tips A Funeral Home Won’t Tell You

adjectivesIn the past, we have written a lot about planning a funeral, the prepayment option and hints to save money. We recently came across a blog from urnsonline.com that we want to share with you. Click here to see what it says. The ideas are excellent ones and convey suggestions that you probably aren’t familiar with. Take a few minutes to read the blog, even if you’re not planning a funeral right now.   The tips will come in handy when you do.

For further information about funeral planning, go to www.diesmart.com.

Dying Intestate Illinois

Married with no children
The entire estate goes to the surviving spouse.
Married with child or children
One half of the entire estate goes to the spouse and the other half to the decedent’s descendants.
No spouse survives but there are other relatives
The estate will be distributed in this order of priority:1) decedent’s descendants2) parent, brother, sister or descendant of the decedent or of brother or sister

3) grandparent or descendant of a grandparent – one half of the estate to the decedent’s maternal grandparents or their descendants and the other half to the decedent’s paternal grandparents or their descendants

4) great grandparents or their descendants – one half of the estate to the decedent’s paternal side and the other half to the decedent’s maternal side

5) the nearest kin of the decedent

Single person/ widow or widower
The estate will be distributed in the order shown below:
Order of estate distribution if decedent not married
The estate will be distributed in this order of priority:1) decedent’s descendants2) parent, brother, sister or descendant of the decedent or of brother or sister

3) grandparent or descendant of a grandparent – one half of the estate to the decedent’s maternal grandparents or their descendants and the other half to the decedent’s paternal grandparents or their descendants

4) great grandparents or their descendants – one half of the estate to the decedent’s paternal side and the other half to the decedent’s maternal side

5) the nearest kin of the decedent

No surviving relatives
The real estate reverts to the county in which it is located; all other personal property becomes the property of the county in which the decedent was a resident or becomes the property of the state of Illinois and should be delivered to the State Treasurer.
State link
http://tinyurl.com/cy8cjy

Dying Intestate Ohio

Married with no children
If there are no children or lineal descendants, the entire estate goes to the spouse.
Married with child or children
If there is a spouse and one child or its lineal descendants surviving, the spouse get the first $60,000 if he or she is the natural or adoptive parent of the child, or the first $20,000 if he or she is not the natural or adoptive parent. In addition, the spouse gets one half of the balance of the estate. The remainder goes to the child or lineal descendants. If there is more than one child or their lineal descendants surviving, and if the spouse is the natural or adoptive parent of at least one of the children, he or she receives the first $60,000 plus one third of the balance of the estate. If the spouse is not the natural or adoptive parent of any of the children, the amount is $20,000 plus one third of the balance of the estate. In both cases, the remainder of the estate goes to the children or the lineal descendants of any deceased child.
Order of estate distribution if no spouse survives or person is single:
1) children or their lineal descendants
2) parents of the deceased
3) siblings or their lineal descendants
4) grandparents
5) lineal descendants of the deceased grandparents (i.e. aunts, uncles, cousins)
6) other next of kin
7) stepchildren or their lineal descendants
No surviving relatives
The estate goes to the state of Ohio
State link
http://tinyurl.com/cmduzm