Legacy Planning Law Group
Weekly Blog

Estate & Elder Law

Protect Your Family. Preserve Your Legacy

If you’re interested in learning more about our process and the solution for you and your family, please book your free 15-minute call with us today!

Willy Wonka

Who Makes Money from Charlie and the Chocolate Factory?

Who Makes Money from Charlie and the Chocolate Factory? The heartwarming drama is fictional, even though the two writers did once meet, says The Express in its recent article entitled “Roald Dahl inheritance: Who is raking in fortunes made from Dahl books & films?”

Roald was a mere lad and Beatrix was in her 60s, when the two authors briefly met one another. Dahl’s books and films are classics and are constantly being revamped and reimagined 30 years after his death.

But with Roald no longer around, Who Makes Money from Charlie and the Chocolate Factory? Roald died in 1990 at age 74 and was believed to have a net worth of $10 million.

The lion’s share of his income from films, books and merchandise is managed by his estate.

The latest data from Roald Dahl’s estate shows annual pre-tax profits of about $17 million in 2018.

This income is from television and film deals, royalties, fancy-dress costumes and a line of baby toiletries.

After Roald’s death, his widow Felicity inherited the majority of the $3.75 million he left in his will. This is worth nearly $6.75 million in today’s dollars.

Every year, fans commemorate Roald Dahl Day to celebrate his stories and their characters. Held on the anniversary of his birth—September 13—his books, films and characters are celebrated.

The author spent four hours every day writing stories from his garden shed. In all, Roald wrote at least 36 books, including James and the Giant Peach, Matilda, The Twits and Fantastic Mr Fox. His works continue to be popular for film and stage adaptations.

A new version of The Witches, starring Anne Hathaway, was released earlier this year, while Hollywood stars including Johnny Depp, Mark Rylance and Danny DeVito have all appeared in film versions of his stories.

Reference: The Express (UK) (Dec. 12, 2020) “Roald Dahl inheritance: Who is raking in fortunes made from Dahl books & films?”

Read more related articles at:

Estate seeks to bring Roald Dahl’s work to new generations

Celebrated author made a fortune off of writing for Hollywood — which is the only reason he did it.

Also, read one of our previous Blogs at:

Celebrity Estates: Battle Over Inheritances

Click here to check out our On Demand Video about Estate Planning.

EP Planning Pandemic

What Kind of Estate Planning Do I Need During the Pandemic?

What Kind of Estate Planning Do I Need During the Pandemic?

Having a valid will and a complete estate plan is important for everyone, but it’s crucial as you approach retirement.

Richmond Times-Dispatch’s recent article entitled “Estate planning during the pandemic” says that it’s because you’ll probably have more assets at this stage of your life, and it’s important to consider whom you’d like to inherit.

It is critical that you plan to be sure your spouse and family will be cared for financially, in the event that something happens to you. This can be accomplished with proper estate planning with the help of an experienced estate planning attorney.

If you die without a will or estate plan, state probate laws of succession may direct the way in which your assets are distributed. This can be an expensive process, but it can also be a significant burden on your family during a time of grieving and sadness.

Even with a will, going through the court-supervised probate process of passing assets through a will can be time consuming and expensive.

One way to avoid probate is to ask an experienced estate planning attorney to help you set up a trust. A frequently used trust is a revocable living trust, which lets you modify the terms if you like.

Individuals with children or real estate can particularly benefit from setting up a trust. A trust allows you to avoid probate and makes certain that your assets are transferred to the intended people. It also lets you control exactly how the money can be used. You can also name someone to take control when you’re not available, known as a secondary trustee.

The executor of a will is really an administrator who transfers assets from one person to another. In contrast, a trustee is more of a decision-maker who will take your place and make decisions you would want to make, if you were still around to make them.

After you set up your estate plan, you should review it every few years.

Reference: Richmond Times-Dispatch (Nov. 19, 2020) “Estate planning during the pandemic”

Read more related articles at:

Estate Planning During the Pandemic

How To Make Your Estate Plan Amid The Coronavirus Pandemic

Also, read one of our previous Blogs at:

How Can Estate Planning Protect Me from COVID-19?

Click here to check out our On Demand Video about Estate Planning.

Blended Families

How Can Blended Families Use Estate Planning to Protect All of the Siblings?

If two adult children in a blended family receive a lot more financial help from their parent and stepparents than other children, there may be expectations that the parent’s estate plan will be structured to address any unequal distributions. This unique circumstance requires a unique solution, as explained in the article “Estate Planning: A Trust Can Be Used to Protect Blended Families” from The Daily Sentinel. Blended families in which adult children and stepchildren have grandchildren also require unique estate planning.

Blended families face the question of what happens if one parent dies and the surviving step parent remarries. If the deceased spouse’s estate was given to the surviving step parent, will those assets be used to benefit the deceased spouse’s children, or will the new spouse and their children be the sole beneficiaries?

In a perfect world, all children would be treated equally, and assets would flow to the right heirs.  However, that does not always happen. There are many cases where the best of intentions is clear to all, but the death of the first spouse in a blended marriage change everything.

Other events occur that change how the deceased’s estate is distributed. If the surviving step-spouse suffers from Alzheimer’s or experiences another serious disease, their judgement may become impaired.

All of these are risks that can be avoided, if proper estate planning is done by both parents while they are still well and living. Chief among these is a trust,  a simple will does not provide the level of control of assets needed in this situation. Don’t leave this to chance—there’s no way to know how things will work out.

A trust can be created, so the spouse will have access to assets while they are living. When they pass, the remainder of the trust can be distributed to the children.

If a family that has helped out two children more than others, as mentioned above, the relationships between the siblings that took time to establish need to be addressed, while the parents are still living. This can be done with a gifting strategy, where children who felt their needs were being overlooked may receive gifts of any size that might be appropriate, to stem any feelings of resentment.

That is not to say that parents need to use their estate to satisfy their children’s expectations. However, in the case of the family above, it is a reasonable solution for that particular family and their dynamics.

A good estate plan addresses the parent’s needs and takes the children’s needs into consideration. Every parent needs to address their children’s unique needs and be able to distinguish their needs from wants. A gifting strategy, trusts and other estate planning tools can be explored in a consultation with an experienced estate planning attorney, who creates estate plans specific to the unique needs of each family.

Reference: The Daily Sentinel (Dec. 16, 2020) “Estate Planning: A Trust Can Be Used to Protect Blended Families”

Read more related articles at:

3 Ways to Estate Plan with Blended Families

Alternative inheritance strategies for blended families

Also, read one of our previous blogs at:

How Blended Families Can Address Finances and Inheritance Issues

Click here to check out our On Demand Video about Estate Planning.

 

Robert Redford

Did Robert Redford Have a Business Exit Plan?

Did Robert Redford Have a Business Exit Plan?

Motley Fool’s recent article titled “What Robert Redford’s Sale of Sundance Can Teach Investors About Exit Planning” says that, in announcing the sale, Redford told the Salt Lake Tribune that he’s been thinking of selling for several years. However, he wanted to find the right partners. Broadreach and Cedar plan to upgrade the resort, add hotel rooms and build a new inn. The companies have also said that they will keep the resort sustainable and practicing measured growth, as well as also continuing to host the Sundance Film Festival.

The 2,600-acre resort has 1,845 acres of land saved from future development through a conservation easement and protective covenants. The 84-year-old actor has had a lifelong interest in the environment and in land stewardship. Redford and his family have also arranged with Utah Open Lands to create the Redford Family Elk Meadows Preserve at the base of Mt. Timpanogos. The gift will reduce Redford’s tax liability on his estate.

Both Broadreach and Cedar have extensive hospitality experience, but neither looks to have much ski resort experience. However, they’re working with Bill Jensen, an industry legend, who recently left his role as CEO of Telluride Ski and Golf Resort in Colorado.

Business exit and succession planning can be difficult—in part, because people don’t like to address such unwelcome topics. Most investors don’t have the luxury of waiting years to find the right buyer, but the Redford deal does show that planning ahead may be critical to creating a mechanism that supports the vision for the property.

When selling a large investment property, you must first understand why you’re selling, and your desired end result. Of course, a return on investment is nice, but there may be other considerations, like in Redford’s case. Another key is ascertaining the updated worth of what you’re selling. Get a valuation, especially with an irreplaceable asset.

The structure of the sale is important. You will likely be liable for tax on your capital gains, so ask an attorney. If you’re also structuring your estate plans at the same time, you’ll need to know what amount you can give and what your heirs may have to pay. Talk to an experienced estate planning attorney to be certain that you’re covering all the bases.

Reference: Motley Fool (Dec. 12, 2020) “What Robert Redford’s Sale of Sundance Can Teach Investors About Exit Planning”

Read more related articles at:

How Can I Easily Pass My Home to My Only Child?

How Can I Easily Pass My Home to My Only Child?

This estate planning issue concerns a single retired parent of an only adult daughter and how to transfer the home to the daughter. Should the daughter simply sell the house when her mother dies, or should the daughter be added to the deed now while her mother is alive?

Also, is there a court hearing?

In many states, there is no reason or requirement to go before a judge to probate your estate, says nj.com in its recent article “Should I add my daughter’s name to my home’s deed?”

In estate planning, there are two primary questions to answer about the transfer of the home. First, there would possibly be some significant capital gains if the mom adds her daughter to the deed prior to death.

Also, if the mother winds up requiring Medicaid, Medicaid might put a lien against the home after she dies for the value of the services it provided.

Generally, when a home has been owned for a long time, the mother should try to preserve the step-up in basis for tax purposes that happens, if the real estate is still in the mom’s name at her passing.

Whether that step up is preserved, depends on how the daughter is added to the deed.

Adding the daughter as a joint tenant or tenant in common won’t preserve the step-up basis for taxes. Ask an elder law attorney what this means in your specific situation.

A better option may be to transfer the remainder interest in the property to the daughter in this scenario and withhold a life estate for the mom.

That will preserve the step-up in basis at death.

This can also get complicated when there’s an outstanding mortgage, so speak to an experienced elder law or estate planning attorney.

Reference: nj.com (Dec. 15, 2020) “Should I add my daughter’s name to my home’s deed?”

Read more related articles here:

Four ways to pass down your family home to your children

How to Pass Your Home to Your Children Tax-Free

Also, read one of our previous blogs at:

Is Transferring House to Children a Good Idea?

Click here to check out our On Demand Video about Estate Planning.

 

Vietnam Vets

Will Vietnam Vets with Serious Illnesses Get Presumptive Benefit Status in the Defense Budget Bill?

Will Vietnam Vets with Serious Illnesses Get Presumptive Benefit Status in the Defense Budget Bill?

 

Will Vietnam Vets with Serious Illnesses Get Presumptive Benefit Status in the Defense Budget Bill? If passed into law, the requirement would have the VA start granting fast-track disability status for roughly 34,000 veterans suffering from the three conditions. It would also be a major victory for veterans advocates, who have pushed for the change for many years.

Military Times’ recent article entitled “Vietnam veterans with bladder cancer, other serious illnesses would get presumptive benefit status in final defense budget bill” reports that the policy bill still faces a veto threat from President Trump on some unrelated issues.

VA officials have resisted the action to grant presumptive benefits status in recent years, while they conduct additional scientific research into the connection between the illnesses and exposure to chemical defoliants during the Vietnam War. Internal documents also show disagreements within the Trump administration over adding new Agent Orange-connected diseases.

Earlier research from the National Academies of Sciences, Engineering and Medicine linked the medical problems to Agent Orange exposure. However, Office of Management and Budget officials have questioned the validity of those findings, in light of the potential expense of new disability payouts.

House Armed Services Committee Chairman Adam Smith said the new veterans’ benefit was a win on “an extremely important issue.”

“The VA, I think, has been unfairly treating this issue for years and denying people coverage that they ought to have, saying things that can clearly be linked to Agent Orange exposure were not,” he said in an interview Wednesday.

“This will give people the coverage that they deserve, for what happened with Agent Orange exposure, and I think that’s huge.”

The issue of presumptive benefits status has been controversial in the veteran community for a long time. In most instances, veterans must prove (usually with a medical exams and service records) that their injuries and illnesses are associated with their service to receive disability benefits. However, in conflicts like Vietnam, where the chemical defoliant Agent Orange was used across the country with little clear record of when U.S. troops were exposed, the federal government has made exceptions to the standards of proof.

Now, those vets who served in the country and later suffered a series of 14 illnesses known to be connected to the chemical exposure receive presumptive exposure status and need not provide additional documentation to apply for benefits.

The new legislation will help roughly 34,000 vets who aren’t currently receiving full disability payouts. That will cost about $8 billion over the next 10 years.

President Trump has threatened to veto the bill because of provisions to rename bases honoring Confederate leaders, calling it an attack on U.S. military history. Nonetheless, lawmakers included the provision in their final draft. He also insisted on language in the authorization bill repealing legal protections for social media companies, since their conduct has become a national security issue. However, legislators rejected that notion. They said it was not relevant to the military budget measure and because it was not included in the separate drafts adopted in the House and Senate earlier this year.

Reference: Military Times (Dec. 2, 2020) “Vietnam veterans with bladder cancer, other serious illnesses would get presumptive benefit status in final defense budget bill”

Read More related articles at:

Vietnam veterans with bladder cancer, other serious illnesses would get presumptive benefit status in final defense budget bill

Defense Bill Would Add 3 New Diseases to Agent Orange Presumptive Conditions List

Also, read one of our previous Blogs at:

What Are the New Rules for Veterans’ Benefits?

Click here to check out our On Demand Video about Estate Planning.

COVID vaccine

What are Most Common Side Effects of COVID-19 Vaccines?

What are Most Common Side Effects of COVID-19 Vaccines?

AARP’s recent article entitled “What Are the Side Effects of COVID-19 Vaccines?” reports that the FDA says the most common side effects among participants in both the Pfizer-BioNTech and Moderna Phase 3 clinical trials were the following:

  • Injection site pain
  • Fatigue
  • Headache
  • Muscle pain
  • Chills
  • Joint pain; and
  • Fever.

These reactions are temporary and will “self-resolve” within a few days.

Side effects from vaccines aren’t uncommon. For example, the seasonal flu shot can cause fever and fatigue, or reactions.

Doctors say that a mild to moderate reaction is a good thing because it shows that the immune system is responding to the vaccine. However, the key, experts say, is temporary discomfort versus the long-term benefits of a potentially high level of protection from COVID-19, a disease that’s responsible for the deaths of more than 1.6 million people globally.

Federal analyses of both vaccine trials show that few adverse events, which the CDC defines as any health problem that happens after a shot (separate from the less serious side effects), were reported. There have been a few people who’ve reported severe allergic reactions — known as anaphylaxis —after receiving the Pfizer-BioNTech vaccine. As a result, the CDC is recommending that anyone who has ever had a severe allergic reaction to any ingredient in a COVID-19 vaccine not get it. The ingredients of authorized vaccines are on the FDA’s website. Talk to your doctor, if you have questions and keep in mind that serious reactions are relatively rare.

People must continue their prevention efforts to help slow the spread of the disease: mask wearing, social distancing and frequent handwashing. Note that it typically takes a few weeks for the body to build immunity to a disease after vaccination, so it’s possible you can get sick with COVID-19 even after you’ve been vaccinated. Experts also aren’t certain if the vaccines also block transmission of the virus.

Remember that it takes time to build up herd immunity, where enough of the population is protected from the virus that transmission slows significantly. Scientists aren’t sure what the magic number is to obtain herd immunity for COVID-19, but they think it’s around 70% of the population, which could take months to achieve through vaccination.

Reference: AARP (Dec. 21, 2020) “What Are the Side Effects of COVID-19 Vaccines?”

Read more related articles at:

What to Expect after Getting a COVID-19 Vaccine

Not Sure About the COVID-19 Vaccine? Get the Facts, Then Decide

Also, read one of our previous Blogs at:

The Most Common Myths about COVID Vaccine

Click here to check out our On Demand Video about Estate Planning.

 

Special Needs and the Secure Act

SECURE Act has Changed Special Needs Planning

SECURE Act has Changed Special Needs Planning

The SECURE Act eliminated the life expectancy payout for inherited IRAs for most people, but it also preserved the life expectancy option for five classes of eligible beneficiaries, referred to as “EDBs” in a recent article from Morningstar.com titled “Providing for Disabled Beneficiaries After the SECURE Act.” Two categories that are considered EDBs are disabled individuals and chronically ill individuals. Estate planning needs to be structured to take advantage of this option.

The first step is to determine if the individual would be considered disabled or chronically ill within the specific definition of the SECURE Act, which uses almost the same definition as that used by the Social Security Administration to determine eligibility for SS disability benefits.

A person is deemed to be “chronically ill” if they are unable to perform at least two activities of daily living or if they require substantial supervision because of cognitive impairment. A licensed healthcare practitioner certifies this status, typically used when a person enters a nursing home and files a long-term health insurance claim.

However, if the disabled or ill person receives any kind of medical care, subsidized housing or benefits under Medicaid or any government programs that are means-tested, an inheritance will disqualify them from receiving these benefits. They will typically need to spend down the inheritance (or have a court authorized trust created to hold the inheritance), which is likely not what the IRA owner had in mind.

Typically, a family member wishing to leave an inheritance to a disabled person leaves the inheritance to a Supplemental Needs Trust or SNT. This allows the individual to continue to receive benefits but can pay for things not covered by the programs, like eyeglasses, dental care, or vacations. However, does the SNT receive the same life expectancy payout treatment as an IRA?

Thanks to a special provision in the SECURE Act that applies only to the disabled and the chronically ill, a SNT that pays nothing to anyone other than the EDB can use the life expectancy payout. The SECURE Act calls this trust an “Applicable Multi-Beneficiary Trust,” or AMBT.

For other types of EDB, like a surviving spouse, the individual must be named either as the sole beneficiary or, if a trust is used, must be the sole beneficiary of a conduit trust to qualify for the life expectancy payout. Under a conduit trust, all distributions from the inherited IRA or other retirement plan must be paid out to the individual more or less as received during their lifetime. However, the SECURE Act removes that requirement for trusts created for the disabled or chronically ill.

However, not all of the SECURE Act’s impact on special needs planning is smooth sailing. The AMBT must provide that nothing may be paid from the trust to anyone but the disabled individual while they are living. What if the required minimum distribution from the inheritance is higher than what the beneficiary needs for any given year? Let’s say the trustee must withdraw an RMD of $60,000, but the disabled person’s needs are only $20,000? The trust is left with $40,000 of gross income, and there is nowhere for the balance of the gross income to go.

In the past, SNTs included a provision that allowed the trustee to pass excess income to other family members and deduct the amount as distributable net income, shifting the tax liability to family members who might be in a lower tax bracket than the trust.

Special Needs Planning under the SECURE Act has raised this and other issues, which can be addressed by an experienced estate planning attorney.

Reference: Morningstar.com (Dec. 9, 2020) “Providing for Disabled Beneficiaries After the SECURE Act”

Read more related articles at:

New Retirement Law Changes Special Needs Planning

Can a special needs trust avoid SECURE Act rules?

Also, read one of our previous Blogs at:

What is a Special Needs Trust?

Click here to check out our On Demand Video about Estate Planning.

Family Estate Planning

How Can Estate Planning Address the Troubled Child?

How Can Estate Planning Address the Troubled Child?

Every family has unique challenges when planning for the future, and every family needs to consider its individual beneficiaries in an honest light, even when the view isn’t pretty. Concerns may range from adults with substance abuse problems, an inability to make good decisions, or siblings with worrisome marriages. These situations can be addressed through estate planning documents, says the article “Estate Planning for ‘Black Sheep’ Beneficiaries” from Kiplinger.

How can you prepare your estate, when a problem child has grown into an adult with problems?

You have the option of not dividing your estate equally to beneficiaries.

Disinheriting a beneficiary occurs for a variety of reasons and is more common than you might think. If you have already given one child a down payment on a home, while another has gone through two divorces, you may want to make plans for one child to receive their share of the inheritance through a trust to protect them.

A family member who is disabled may benefit from a more generous inheritance than a successful sibling—although that inheritance must be structured properly, if the disabled person is to continue receiving support from government programs.

No matter the reason for unequal distributions, discuss the reasons for the difference in your estate plan with your family, or if your estate planning attorney advises it, include a discussion of your reasons in a document. This buttresses your plan against any claims against the estate and may prevent hard feelings between siblings.

You can change your mind about your estate plan if your ‘wild child’ gets his life together.

A regular evaluation of your estate plan—every three or four years, or whenever big life events occur—is always recommended. If your wayward child finds his footing and you want to change how he is treated in your estate plan, you can do that.

Your estate plan can include incentives, even after you are gone.

Specific provisions in a trust can be used to reward behavior. An incentive trust sets certain goals that must be met before funds are distributed, from completing college to maintaining employment or even to going through rehabilitation. Many estate plans stagger the distribution of funds, so heirs receive distributions over time, rather than all at once. An example: 1/3 at age 25, 1/2 at age 30 and the balance at age 40. This prevents the beneficiary from squandering all of his inheritance at once. Ideally, his financial skills grow, so he is better equipped to preserve a large sum at age 40.

Trusts are not that complicated, and their administration is not overly difficult.

People think trusts are for the wealthy only or are complicated and expensive. None of that is true. Trusts are excellent tools, considered the “Swiss Army Knife” of estate planning. Your estate planning attorney can craft trusts that will help you control how money flows to heirs, protect a special needs individual, minimize taxes and create a legacy. For families who have one or more “black sheep,” the trust is a perfect tool to protect your loved ones from themselves and their life choices.

Reference: Kiplinger (Dec. 8, 2020) “Estate Planning for ‘Black Sheep’ Beneficiaries”

Read more related articles at:

The Dilemma of Troubled Adult Child Beneficiaries

Estate planning for an Irresponsible Child & Why it is important?

Also, read one of our previous Blogs at:

5 Strategies to Keep Your Heirs From Blowing Their Inheritance

Click here to check out our On Demand Video about Estate Planning.

 

My Will

What Do I Need to Know about Creating a Will?

What Do I Need to Know about Creating a Will?

A simple or basic will allows you to specifically say the way in which you want your assets to be distributed among your beneficiaries after your death. This can be a good starting point for creating a comprehensive estate plan because you may need more than just a basic will.

KAKE’s recent article entitled “What Is a Simple Will and How Do You Make One?” explains that a last will and testament is a legal document that states what you want to happen to your property and “worldly goods” when you die. A simple will can be used to designate an executor for the will and a legal guardian for minor children and specify who (or which organizations) should inherit your assets when you die.

A will must be approved in the probate process when you pass away. After the probate court reviews the will to make sure it’s valid, your executor will take care of the collection and distribution of assets listed in the will. Your executor would also be responsible for paying any debts owed by your estate.

Whether you need a basic will or something more complex, usually depends on a few factors, including your age, the size of your estate and if you have children (and their ages).

Having a will in place can be a good starting point for estate planning. However, deciding if it should be simple or complex can depend on a number of factors, such as:

  • The size of your estate
  • The amount of estate tax you expect to owe
  • The type of assets and property you own
  • Whether you own a business
  • The number of beneficiaries you want to name
  • Whether the beneficiaries are individuals or organizations (like charities)
  • Any significant life changes you anticipate, like marriages, divorces, or having more children; and
  • Whether any of your children or beneficiaries have special needs.

With these situations, you may need a more detailed will to plan how you want your assets to be distributed. In any event, work with an experienced estate planning attorney. With life or financial changes, you may need to create a more complex will or consider a trust. It is smart to speak with an estate planning attorney, who can help you determine which components to include in your plan and help you keep it updated.

Reference: KAKE (Nov. 23, 2020) “What Is a Simple Will and How Do You Make One?”

Read more related articles here:

Here’s what you need to know about creating a will

All You Need To Know About Creating A Will

Also, read one of our previous Blog’s here:

Do You Have a Will?

Click here to check out our On Demand Video about Estate Planning.