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!

Kobe Bryant Family

Can Kobe Bryant’s Widow Amend Trust?

Can Kobe Bryant’s Widow Amend Trust?

A report from TMZ Sports says that the late NBA legend Kobe Bryant created a trust to provide for his wife Vanessa and family in 2003.

The trust was amended a number of times, most recently in 2017. It looks like every time one of their four children was born, Kobe and his wife amended the trust to include them.

Wealth Advisor’s recent article entitled “Vanessa Asks Judge To Include Capri In Kobe’s Trust” notes that the issue now is that daughter Capri was born nine months ago.

However, Kobe and Venessa weren’t in a huge rush to see their estate planning attorney and change the trust once again. Who thought that there’d be a problem? Kobe had recently retired from pro basketball and was in good health.

However, no one could have predicted the horrible tragedy that the family sustained, when both Kobe and his daughter Gigi were killed in a helicopter crash last January.

Vanessa, along with co-trustee Robert Pelinka, Jr. (the general manager of the Los Angeles Lakers and Kobe’s old boss) petitioned a probate judge to allow her to include Capri. She contends that it was clearly Kobe’s intent to provide for his children.

When Kobe’s died on January 26, 2020, the Kobe Bryant Trust was divided into two separate trusts for tax reasons. However, both are for the benefit of Vanessa and the three oldest Bryant daughters—but not Capri.

She notes that Kobe even said this generally in one of the documents.

California Probate Code states that the court is not permitted to modify a trust, where the continuation of the trust is required to carry out a material purpose of the trust, unless the court believes that the reason for modification outweighs the interest in accomplishing a material purpose of the trust.

Most observers believe that the probate court will likely permit the amendment, if it finds allowing the addition of Capri as a beneficiary is consistent with the material purposes of the trust, or if the interest in modification to add Kobe’s youngest as a beneficiary outweighs the interest in accomplishing the material purposes of the trust.

According to the trust agreement, Vanessa, Natalia, and Bianka can use the principal and income in the trust during Vanessa’s lifetime. After she passes away, the children will receive the remainder. Vanessa wants to include Capri in that distribution.

Reference: Wealth Advisor (March 24, 2020) “Vanessa Asks Judge To Include Capri In Kobe’s Trust”

Read more related articles at: KOBE’S LEGACY 

Kobe Bryant’s widow Vanessa asks judge to change his multimillion trust fund to include nine-month-old daughter Capri

 

eSTATE pLANNING wORKSHEET

Prevent Estate Administration Problems Before They Occur

Prevent Estate Administration Problems Before They Occur

Estate administration, that is, when the executor gets busy with paying debts, taxes and distributing assets, is often the time when any missing steps in an estate plan are revealed. The best legal problems are the ones that don’t happen, advises the article “Practical tips for estate administration, pre-planning advice, and a Coronavirus update” from the Winston-Salem Journal. Here are tips to avoid problems:

Do you need a trust to avoid probate fees and simplify estate administration?

Think of a trust as a secret box or bank account. If you own property in another state, want adult heirs to receive their inheritance over a period of time, have a beneficiary with special needs, or simply don’t want the public to learn about your assets, then a stand-alone trust that works in conjunction with your will is something to consider. However, you may be able to achieve some of these goals through beneficiary designations. A big advantage of a trust is that it is not subject to probate; assets in a probate estate become public record. If privacy is an issue, you’ll want a trust.

Is your estate plan out of date?

If your estate plan has not been updated in the last three or four years, it is likely that you have extra expenses that are no longer necessary. It’s also likely that you are missing out on tax savings opportunities. There have recently been a huge number of changes to estate and tax laws. If your will was signed before 2013, it is time to simplify your will.

Did you inherit real estate with your siblings?

If the sale of the property is still pending, get it wrapped up as soon as possible. If one of your siblings dies, or moves away, managing the disposition of real estate can become complicated and expensive.

When was the last time you reviewed Power of Attorney documents?

If you are not competent and critical steps need to be taken for your care, your agents may find themselves unable to act on your behalf, if your POA and related documents are “outdated.” They may need court intervention to make even simple decisions.

How has coronavirus impacted choices in long-term planning documents?

If your will, POA, medical power of attorney and HIPAA release forms have not been updated recently, decisions may be made without any discussion with the people you trust most.

Speak with an estate planning attorney now to get your legal and financial affairs in order. Many states have granted attorneys the ability to have documents executed and witnessed remotely, so there is no reason not to go forward now.

Reference: Winston-Salem Journal (May 3, 2020) “Practical tips for estate administration, pre-planning advice, and a Coronavirus update”

Read more related articles at:

The biggest mistakes executors make

Guidelines for Individual Executors & Trustees

Also, read one of our previous Blogs at:

Fixing an Estate Plan Mistake

 

 

covid estate planning

How Can Estate Planning Protect Me from COVID-19?

There are several things you need to consider, when it comes to estate planning,

There are several things you need to consider, when it comes to estate planning, explains WFMY.com in the recent article “A different kind of coronavirus protection: Wills & Power of Attorney documents.”

A financial power of attorney is first on the list of things to consider. This essential legal document gives a trusted agent the authority to make financial decisions on your behalf, if you become incapacitated. A financial power of attorney can go into effect whenever you want. However, most people have their estate planning attorney draft the POA to go into effect, once the principal or the person who’s giving the authority can no longer make decisions for themselves.

In addition, if you become ill and fall into a coma, you need someone to be able to also make medical decisions. A health care power of attorney permits your agent to make medical decisions on your behalf. You can also sign a living will, which can state your wishes about healthcare decisions, especially end of life decisions.

A will can state your decisions for the distribution of your assets when you die. However, your property will stay in your name until that occurs. Another option is a living trust, which places your property in a trust for the benefit of a charity, your loved ones, or both. A trust may distribute the property more efficiently.

While the terms in your will and trust are important, you should also have a discussion with your family and let them know what you’re thinking. This will help avoid hard feelings after you’re gone.

It’s important to speak with an experienced estate planning attorney and talk to the people you want to be your POA attorney-in-fact, executor of your will and your trustee. Talk to your attorney about what happens when one of these key persons included in your planning dies.

You should also think about your parents and if they have an estate plan. You should know what will happen, if they become ill and need care. What happens if they get Alzheimer’s or another type of dementia?

You should make certain that you and those you love, have legal estate planning documents in place prepared by an experienced estate planning attorney.

From there, review your plan every few years with your attorney, because things change.

Reference: WFMY.com (April 22, 2020) “A different kind of coronavirus protection: Wills & Power of Attorney document

Read more related Articles at :

Impact of COVID-19 on Estate Planning

Estate Planning and COVID-19: Four Must-Have Documents for Protection During a Crisis

Also, read one of our previous Blogs at :

Requests for Estate Plans Reflect Fears about Coronavirus

 

 

What Is a ‘Survivorship’ Period?

What Is a ‘Survivorship’ Period?

A survivorship clause in a will or a trust says that beneficiaries can inherit, only if they live a certain number of days after the person who made the will or trust dies. The goal is to avoid situations where assets pass under your beneficiary’s estate plan, and not yours, if they outlive you only by a short period of time. While these situations are rare, they do occur, according to the article “How Survivorship Periods Work” from kake.com.

Many wills and trusts contain a survivorship period. Most estates won’t rise to the level of today’s very high federal estate tax exemption ($11.58 million for an individual), so a long survivorship period is not necessary. However, if the surviving spouse must wait too long to receive property under the will—six months or more—it might harm their eligibility for the marital deduction, even if they are made in a qualifying trust or an outright gift.

Even if a will does not contain a survivorship clause, many states require one. Some states require at least a five-day or 120-hour survivorship period. That law might apply to beneficiaries who inherit property under a will, trust or, if there is no will, under state law. This usually does not apply to those who are beneficiaries of an insurance policy, a POD bank account (Payable on Death), or a surviving co-owner of property held in joint tenancy. To learn what states have a set of laws, known as the Uniform Probate Code or the revised version of the Uniform Simultaneous Death Act, speak with a local estate planning lawyer.

Survivorship requirements are put into place in case of simultaneous or close to simultaneous deaths of the estate owners and the estate beneficiaries. This is to avoid having the distribution of assets from an estate owner’s estate distributed according to the beneficiary’s estate plan, and not the estate owner’s plan.

For an example, let’s say Jeff dies and leaves his estate to his sister Judy. Jeff has named his favorite charity as an alternative beneficiary. Jeff’s assets would normally go to his sister Judy. They would only go to his favorite charity, if Judy were not alive at the time of his death. However, if Jeff dies and then Judy dies 14 days later, Jeff’s assets could go to Judy’s beneficiaries under the terms of her will. The charity, Jeff’s intended beneficiary, would receive nothing.

The family would also have the burden of dealing with not one but two probate proceedings at the same time.

However, if a 30-day survivorship clause was in place, the assets would pass to his favorite charity, as originally intended. Jeff’s estate plan would be carried out, according to his wishes.

These are the types of details that make estate planning succeed as the estate owner wishes. Having a complete and secure—and properly prepared—estate plan in place is worth the effort.

Reference: kake.com (March 31, 2020) “How Survivorship Periods Work”

Read more related articles at :

How Survivorship Periods Work

How Survivorship Periods Work

Also read one of our previous Blogs at:

Am I Making One of the Five Common Estate Planning Mistakes?

 

 

Coroanvirus dollar bill

Why Gifting during Volatile Markets Makes Sense

Why Gifting during Volatile Markets Makes Sense

Gifting assets to a trust for children or grandchildren is often an important part of an estate plan. The recent article “Is Now a Good Time to Make a Gift?” from The National Law Review takes a close look into the strategy of placing non-cash assets into a trust, without exceeding the annual gift tax exclusion amount or the Federal Gift Tax Exemption. If those assets increase in value later, the increases will further enhance the gift for beneficiaries.

Taxes on gifts made to a trust to benefit children and grandchildren are based primarily on the value of the gift. Annual exclusion gifts, that is, transfers of assets or cash that do not exceed the annual gift tax exclusion, are currently set at $15,000 per recipient per year. A married couple may give up to $30,000 per person in any calendar year. Many annual exclusion gifts do not require a Federal Gift Tax Return (Form 709), although it would be wise to speak with an estate planning attorney to make sure that this applies to you, since every situation is different.

Annual exclusion gifts are one way to reduce the overall value of the estate, but they do not reduce the Federal Estate Tax Exemption of the person making the gift.

Gifts in excess of the annual exclusion amount may still avoid gift taxes, if the person making the gift applies their gift tax exemption by filing IRS Form 709. The gift tax exemption is unified with the estate tax exemption, at $11.58 million per person in 2020. Gifts that are bigger than the annual exclusion of $15,000 per year, reduce the $11.58 million exemption for purposes of both the gift tax and the estate tax.

For example, if a person were to make taxable gifts of $1.0 million to a child in 2020, their lifetime gift tax and estate tax exemption will be reduced to $10.58 million. If that person were to die in 2020 when the applicable estate tax exemption is $10.58 million, then only estate assets in excess of the exemption will be subject to estate tax.

Given the uncertainly of the gift and estate tax exemptions, management and timing of these gifts is particularly important. If no legislative action occurs, these generous estate and gift tax exemptions will sunset at the end of 2025. They will return to the 2010 level of $5.0 million, indexed for inflation.

The exemptions need to be carefully used and budgeted, because federal estate tax starts at 18% and rises to 40% on all amounts over the exemption. Like the exemption, these rate rates may be changed by future elections and/or tax law changes.

If you are concerned about an estate becoming taxable, the current decline in asset values makes this a good opportunity to transfer more of the estate into trust for beneficiaries. The transfers can decrease the impact of a reduction in the exemption amount, as well as any changes to the tax rates. The currently reduced value of stocks and many other investments may also present an opportunity to reduce future taxes.

The best way forward would be to have a conversation with an estate planning attorney to review your overall estate plan and how moving assets into trusts during a time of lowered value could benefit the estate and its beneficiaries.

Reference: The National Law Review (April 10, 2020) “Is Now a Good Time to Make a Gift?”

Read more related articles at:

Estate Planning in a Volatile Market

Inheritance tax planning during the coronavirus crisis

Also read one of our previous Blogs at :

How Does the IRS Know if I Make Gifts To My Grandchildren?

 

 

Keep Inheritance Safe

Can I Keep a Loved One’s Inheritance From Their Spouse?

Can I Keep a Loved One’s Inheritance From Their Spouse?

A recent nj.com article asks, “How do I protect my niece’s inheritance from her husband?” The article says that in a scenario where someone plans to leave most of her estate to her niece but doesn’t want her estranged husband to get his hands on the money, she must be proactive to make sure the funds go where she intends them to go.

If this happens in New Jersey, the niece’s inheritance will be subject to the New Jersey inheritance tax. The tax is levied based on the relationship of the deceased to the beneficiary. In this case, the niece’s inheritance would be subject to an inheritance tax of 15 to 16%.

This inheritance tax is assessed, because the aunt is a New Jersey resident. It doesn’t matter where the beneficiary resides.

One option is for the aunt to leave the assets to the niece outright or in trust.

The laws in many states, like Missouri, South Carolina, and New Jersey, say that unless the parties otherwise agree, upon divorce there will be equitable distribution of their marital property. Marital property generally doesn’t include the property received by gift or inheritance, as long as that person didn’t co-mingle it with the marital property.

Therefore, the most economical way to transfer property to the niece, is to leave it to her in the testator’s will, with instructions for her to keep it separate and apart from her marital property.

An outright bequest may not be the best way to leave property to the niece, even though it’s probably the most economical method for the aunt.

However, if the aunt leaves the inheritance in trust, she’ll make certain the property isn’t commingled with marital assets.

Further, if the trust is properly prepared by an experienced estate planning attorney, the income from the trust will likely not be used to decrease any support to which the niece may otherwise be entitled from her spouse, in the event that they divorce down the road. The trust can also protect against other events, by instructing to whom funds should be paid upon the premature death of the niece. That would further prevent her estranged husband from ever being able to make a claim against the funds. hopefully this answers the question: Can I Keep a Loved One’s Inheritance From Their Spouse?

Reference: nj.com (August 21, 2019) “How do I protect my niece’s inheritance from her husband?”

Read more related articles at:

How to Protect Your Child’s Inheritance From Their Spouse

What Can I Do to Protect my Children’s Inheritance from Potential Divorce?

Also read one of our previous Blogs at:

Can I Protect an Inheritance During Marriage?

 

Avoiding-Probate

Avoiding Probate with a Trust

Avoiding Probate with a Trust. Privacy is just one of the benefits of having a trust created as part of an estate plan. That’s because assets that are placed in a trust are no longer in the person’s name, and as a result do not need to go through probate when the person dies. An article from The Daily Sentinel asks, “When is a trust worth the cost and effort?” The article explains why a trust can be so advantageous, even when the assets are not necessarily large.

Let’s say a person owns a piece of property. They can put the property in a trust, by signing a deed that will transfer the title to the trust. That property is now owned by the trust and can only be transferred when the trustee signs a deed. Because the trust is the owner of the property, there’s no need to involve probate or the court when the original owner dies.

Establishing a trust is even more useful for those who own property in more than one state. If you own property in a state, the property must go through probate to be distributed from your estate to another person’s ownership. Therefore, if you own property in three states, your executor will need to manage three probate processes.

Privacy is often a problem when estates pass from one generation to the next. In most states, heirs and family members must be notified that you have died and that your estate is being probated. The probate process often requires the executor, or personal representative, to create a list of assets that are shared with certain family members. When the will is probated, that information is available to the public through the courts.

Family members who were not included in the will but were close enough kin to be notified of your death and your assets, may not respond well to being left out. This can create problems for the executor and heirs.

Having greater control over how and when assets are distributed is another benefit of using a trust rather than a will. Not all young adults are prepared or capable of managing large inheritances. With a trust, the inheritance can be distributed in portions: a third at age 28, a third at age 38, and a fourth at age 45, for instance. This kind of control is not always necessary, but when it is, a trust can provide the comfort of knowing that your children are less likely to be irresponsible about an inheritance.

There are other circumstances when a trust is necessary. If the family includes a member who has special needs and is receiving government benefits, an inheritance could make them ineligible for those benefits. In this circumstance, a special needs trust is created to serve their needs.

Another type of trust growing in popularity is the pet trust. Check with a local estate planning lawyer to learn if your state allows this type of trust. A pet trust allows you to set aside a certain amount of money that is only to be used for your pet’s care, by a person you name to be their caretaker. In many instances, any money left in the trust after the pet passes can be donated to a charitable organization, usually one that cares for animals.

Finally, trusts can be drafted that are permanent, or “irrevocable,” or that can be changed by the person who wants to create it, a “revocable” trust. Once an irrevocable trust is created, it cannot be changed. Trusts should be created with the help of an experienced trusts and estate planning attorney, who will know how to create the trust and what type of trust will best suit your needs. this will help avoiding probate without a trust.

Reference: The Daily Sentinel (Jan. 23, 2020) “When is a trust worth the cost and effort?”

For more information, go to:  Probate in Florida

  Probate- Florida Courts

And read one of our previous blogs at:  How does a Probate Proceeding Work?

 

Elder Law

When Do I Need an Elder Law Attorney?

Elder law is different from estate law, but they frequently address many of the same issues. Estate planning contemplates your finances and property to best provide for you and your family while you’re still alive but incapacitated. It also concerns itself with the estate you leave to your loved ones when you die, minimizing probate complications and potential estate tax bills. Elder law contemplates these same issues but also the scenario when you may need some form of long-term care, even your eligibility for Medicaid should you need it.

A recent article from The Balance’s asks “Do You or a Family Member Need to Hire an Elder Law Attorney?” According to the article there are a variety of options to adjust as economically and efficiently as possible to plan for all eventualities. An elder law attorney can discuss these options with you.

Medicaid is a complicated subject, and really requires the assistance of an expert. The program has rigid eligibility guidelines in the event you require long-term care. The program’s benefits are income- and asset-based. However, you can’t simply give everything away to qualify, if you think you might need this type of care in the near future. There are strategies that should be implemented because the “spend down” rules and five-year “look back” period reverts assets or money to your ownership for qualifying purposes, if you try to transfer them to others. An elder law attorney will know these rules well and can guide you.

You’ll need the help and advice of an experienced elder law attorney to assist with your future plans, if one or more of these situations apply to you:

  • You’re in a second (or later) marriage;
  • You’re recently divorced;
  • You’ve recently lost a spouse or another family member;
  • Your spouse is incapacitated and requires long-term care;
  • You own one or more businesses;
  • You have real estate in more than one state;
  • You have a disabled family member;
  • You’re disabled;
  • You have minor children or an adult “problem” child;
  • You don’t have children;
  • You’d like to give a portion of your estate to charity;
  • You have significant assets in 401(k)s and/or IRAs; or
  • You have a taxable estate for estate tax purposes.

If you have any of these situations, you should seek the help of an elder law attorney.

If you fail to do so, you’ll most likely give a sizeable percentage of your estate to the state, an ex-spouse, or the IRS.

State probate laws are very detailed as to what can and can’t be included in a will, trust, advance medical directive, or financial power of attorney. These laws control who can and can’t serve as a personal representative, trustee, health care surrogate, or attorney-in-fact under a power of attorney.

Hiring an experienced elder law attorney can help you and your family avoid simple but expensive mistakes, if you or your family attempt this on your own.

Reference: The Balance (Jan. 21, 2020) “Do You or a Family Member Need to Hire an Elder Law Attorney?”

Read more at:

What Does An Elder Law Attorney Do?

What is Elder Law and How Can an Elder Law Attorney Help Me?

Also read one of our previous blogs at :

Elder Law Attorney Can Help Plan for Long-Term Care Costs

Successor Trustee

What Does a Successor Trustee Do?

This is a common concern of people when they learn they have been named as a successor trustee, says nwi.com in the article “Estate Planning: The role of a successor trustee.” The first thing to do? Verify that you are a successor trustee and what authority and powers you have. If the settler is disabled, rather than deceased, you’ll need to be sure that you have complied with any requirements to take the position.

The trust that names you as such is likely where you will find details of what you must obtain to assume the authority. For example, you may need to have a letter from a physician stating that the settler is incapacitated and can no longer manage his own affairs.

If the settlor is deceased, establishing your authority as successor trustee is easier. Usually, all you’ll need is a death certificate.

Once this has been established, you’ll need to be able to prove that you have this role. Usually this is done through the use of an Affidavit of Trust and Acceptance and Oath. An estate planning attorney will be able to help you with these documents. Some affidavits affirm until the “pain and penalty of perjury that the affiant is the successor trustee” and that you are accepting the designation and agree to serve under the terms of the trust and the laws of your state.

Different estate planning attorneys may approach this differently. Some may use a “certificate of trust,” while others will simply rely on the trust agreement. The important thing is that their  authority is demonstrable.

Once the successor trustee has established that he is appointed properly, he can start administering the trust.

What about selling the family home? Real estate transfers are handled through the local government. To sell a home, you’ll need to transfer the deed, so you will need the deed to the home.

When a successor trustee transfers real estate, a copy of the affidavit of his appointment as the successor trustee and relevant documents could be recorded with the transfer documents. The transfer needs to be approved by a title examiner, and the examiner will want proof that the person in charge of the transaction has the legal authority to do so.

Other assets are transferred in a similar fashion. The asset holder is contacted, a copy of the affidavit and proof of designation as a successor trustee will be needed.

Some estate planning attorneys will add a letter of instruction to the successor trustee providing them with helpful information and tips about estate administration.

Reference: nwi.com (Jan. 12, 2020) “Estate Planning: The role of a successor trustee”

You can also get more information here:   Successor Trustee: Duties, Powers and More

THE NEW FLORIDA TRUST CODE, PART 1

And read one of our previous Blogs here:  What You Need to Know If Asked to Serve as a Trustee

 

Do Name Changes Need to Be Made in Estate Planning Documents?

When names change, executing documents with the person’s prior name can become problematic. For example, what about a daughter who was named as a health care representative by her parents several years ago, who marries and changes her name? Then, to make matters more complicated, add the fact that the couple’s daughter-in-law has the same first name, but a different middle name. That’s the situation presented in the article “Estate Planning: Name changes and the estate plan” from nwi.com.

When a person’s name changes, many documents need to be changed, including items like driver’s licenses, passports, insurance policies, etc. So do your estate planning documents. The change of a name isn’t just about the person who created the estate plan but also to their executors, heirs, beneficiaries and those who have been named with certain legal powers through power of attorney (POA) and health care power of attorney.

It’s not an unusual situation, but it does have to be addressed. It’s pretty common to include additional identifiers in the estate planning documents. For example, let’s say the will says I leave my house to my daughter Samantha Roberts. If Samantha gets married and changes her last name, it can be reasonably assumed that she can be identified. In some cases, the document may be able to stay the same.

In other instances, the difference will be incorporated through the use of the acronym AKA—Also Known As. That is used when a person’s name is different for some reason. If the deed to a home says Mary Green, but the person’s real name is Mary G. Jones, the term used will be Mary Green A/K/A Mary G. Jones.

Sometimes when a person’s name has changed completely, another acronym is use: N/K/A, or Now Known As. For example, if Jessica A. Gordon marries or divorces and changes her name to Jessica A. Jones, the phrase Jessica A. Gordon N/K/A Jessica A. Jones would be used.

However, in the situation noted above, most attorneys to want to have the estate planning documents changed to reflect the name change. First, there are two people in the family with similar names. It is possible that someone could claim that the person wished to name the other person. It may not be a strong case, but challenges have been made over smaller matters.

Second is that the estate planning document being discussed is a healthcare designation. Usually when a health care power of attorney form is being used, it’s in an emergency. Would a doctor make a daughter prove that she is who she says she is? It seems unlikely, but the risk of something like that happening is too great. It is much easier to simply have the document updated.

In most matters, when there is a name change, it’s not a big deal. However, in estate planning documents, where there are risks about being able to make decisions in a timely manner or to mitigate the possibility of an estate challenge, a name change to update documents is an ounce of prevention worth a pound of trouble in the future.

Making changes to your estate plan is easy.

Reference: nwi.com (October 20, 2019) “Estate Planning: Name changes and the estate plan”

Join Our eNews

WATCH OUR MASTERCLASS