How Can Celebrities’ Estate Planning Be Impacted by Alzheimer’s?
Gene Wilder's Estate Planning Affected by Alzheimer's

How Can Celebrities’ Estate Planning Be Impacted by Alzheimer’s?

Forbes’ recent article, “Top 7 Celebrity Estates Impacted By Alzheimer’s Disease” looks at seven celebrity estates that were affected by Alzheimer’s disease and how the estate planning was done too late.

  1. Rosa Parks. The civil rights icon died at 92 in 2005. She was suffering from Alzheimer’s disease. Legal battles over her estate continue to this day. Her estate plan left her assets to a charitable institution she created. However, her nieces and nephews challenged the validity of her will and trust, due to her mental deficiencies and allegations of undue influence. That claim was settled, but there have been fights over broken deals and leaked secrets, claimed mismanagement of her estate and assets, allegations of bribery and corruption and a battle over Rosa’s missing coat that she wore at the time of her famous arrest at the Alabama bus stop in 1955.
  2. Gene Wilder. Wilder’s widow–his fourth wife, Karen–and his adopted daughter didn’t fight over Gene’s estate after he died, which shows good estate planning. Wilder makes the list because of how his widow used her husband’s struggle—which she kept private while he was alive—to bring attention to the terrible disease, including permitting his Willy Wonka character to be used in a campaign to raise awareness.
  3. Aaron Spelling. The Hollywood producer left behind a reported fortune worth $500 million. His death certificate listed Alzheimer’s disease as a contributing factor. Spelling changed his estate plan just two months before he died, reducing the share to his daughter, actress Tori, and his son, Randy, to $800,000 each.
  4. Etta James. Legendary blues singer Etta James passed away in 2012, at 73. Her family said she had been struggling with Alzheimer’s disease for several years, and her illness ignited an ugly court battle between her husband of more than 40 years and her son from a prior relationship, over the right to make her medical and financial decisions, including control of her $1 million account. Her husband, Artis Mills, alleged that the power of attorney she signed appointing her son as decision-maker was invalid, because she was incompetent when she signed it. Mills sued for control of the money to pay for Etta’s care. After some litigation, Etta’s leukemia was determined to be fatal, which led to a settlement. Mills was granted conservatorship and permitted to control sums up to $350,000 to pay for Etta’s care for the last few months of her life.
  5. Peter Falk. The Lieutenant Columbo actor died at 83 in 2011, after living with Alzheimer’s disease for years. His wife Shera and his adopted daughter Catherine fought in court for conservatorship to make his decisions. Shera argued that she had power of attorney and could already legally make Peter’s decisions for him, which included banning daughter Catherine from visits. The judge granted Shera conservatorship, but ordered a visitation schedule for Catherine. However, a doctor, who testified at the hearing, said that Falk’s memory was so bad that he probably wouldn’t even remember the visits.
  6. Tom Benson. The billionaire owner of the New Orleans Saints and Pelicans was the subject of a lengthy and bitter court battle over control of his professional sports franchises, and hundreds of millions of dollars of other assets. Prior trusts, that he and his late wife established, left the sports franchises and other business interests to his daughter and two grandchildren. One of granddaughters operated the Saints as lead owner, until she was fired by her grandfather. Tom decided to take the controlling stock of the teams out of the trust and substitute other assets in their place, taking over control of the teams. However, his daughter and grandchildren fought the move. A 2015 court ruling declared Benson to be competent, despite allegations he suffered from Alzheimer’s disease. Benson then changed his will and trust and left everything to his third wife, Gayle. They all settled the dispute in 2017, leaving other assets to the daughter and grandchildren—but ultimately leaving Gayle in control of the Saints and Pelicans, after Benson’s death in 2018 at age 90.
  7. Glen Campbell. Campbell’s 2007 estate plan left out three of his adult children. They sued to challenge their disinheritance after he died. They dropped the case in 2018, without receiving a settlement. The fact that Campbell’s final will was drafted several years prior to his Alzheimer’s diagnosis was a critical factor in the outcome of the lawsuit.

The estate planning of these celebrities show the importance of proper estate planning, before it is too late. Wills and trusts that are created or changed after someone is diagnosed with Alzheimer’s disease, dementia, or similar conditions are more apt to be challenged in court.

Can you tackle elder law on your own?

Reference: Forbes (November 25, 2019) “Top 7 Celebrity Estates Impacted By Alzheimer’s Disease”

Can I Place My IRA in a Trust?
Planning with IRAs and Trusts Requires Good Advice and Counsel

Can I Place My IRA in a Trust?

Unfortunately, you can’t place an individual retirement account (IRA) in a trust while you’re alive. This rule applies to all types of IRAs including traditional, Roth, SEP, and SIMPLE IRAs says Investopedia’s article, “How Can I Put My IRA In a Trust?”

However, if you establish a trust as part of your estate plan and want to include your IRA assets, you need to look at the characteristics of an IRA and tax consequences concerning certain transactions.

IRA accounts were designed to achieve two goals. First, they provided tax-deferred retirement savings for individuals not covered under an employer-sponsored plan. For those who were covered, IRAs provided a spot for retirement-plan assets to continue to grow, when and if the account holder changed jobs via an IRA rollover.

IRA accounts can only be owned by an individual. They can’t be held in joint name and can’t be titled to an entity, like a trust or small business. Contributions can also only be made, if certain criteria are met, such as the owner must have taxable earned income to support the contributions. A non-working spouse can own an IRA but must receive contributions from the working spouse and the working spouse’s income must satisfy the criteria.

No matter the source of the contributions, the IRA owner must remain constant. Only certain ownership transfers are permitted to avoid being categorized as a taxable distribution. If transferred to a trust, IRA assets become taxable, because this transfer is seen as a distribution by the IRS. In addition, if the owner is under age 59½ at the time of distribution, there’s an early withdrawal penalty. The trust can accept IRA assets of a deceased owner, however, and establish an inherited IRA.

Naming a trust as the beneficiary to an IRA can be a good idea, because owners can instruct the beneficiaries on how to use their savings. A trust can be created, so that special provisions for inheritance apply to specific beneficiaries. This can be a helpful option, if the beneficiaries vary greatly in age, or if some of them have special needs to be addressed.

Planning should consider how beneficiaries will take possession of IRA assets and over what time period. Get professional advice from a trust and estate lawyer. Ask the attorney about getting the maximum stretch option for the distribution of the account. The trust will need to have specific terms, such as “pass-through” and “designated beneficiary.” If it doesn’t have terms for inheriting an IRA, it should be rewritten, or specific people should instead be named as beneficiaries.

While moving all assets into the name of a trust and designating it as the beneficiary on retirement accounts is common, it is not always a good decision. Trusts, like other non-individuals that inherit IRA assets, are subject to accelerated withdrawal requirements. Most of the time, these must take place within five years from the original IRA owner’s death. Without the proper “pass-through” terms, stretching the withdrawals over a lifetime isn’t an option. Depending on the size of the account, this could place a major burden on the beneficiaries. It’s especially detrimental to eliminate the spousal inheritance provisions by designating a trust, instead of a spouse as the beneficiary.

Planning for IRAs requires good advice and counsel.

Reference: Investopedia (November 26, 2019) “How Can I Put My IRA In a Trust?”

Which Stars Won’t Leave Their Estates to Their Children?
ome Celebrities Don't Leave Their Estates to Their Children

Which Stars Won’t Leave Their Estates to Their Children?

Although there have been celebrity children who have benefitted by inheriting a large estate from their parents, or were set up with trust funds, there are others, like Mila Kunis and Ashton Kutcher, who feel that their money is better spent on charity. They do not intend to set their kids up with trusts—although if their kids have a good business plan, that’s another thing. Musician Sting feels a trust fund would be to his children’s detriment.

Wealth Advisor’s recent article, “10 Celebs Who Set Their Children Up With A Trust Fund (And 10 Who Refuse),” list some stars who want to leave their children with trusts, and a some who do not want to leave an estate and want their children to work hard for what they achieve in life.

When Carrie Fisher died, she named her only child Billie Lourd as the sole beneficiary of her estate. This left her with personal and household objects, a life insurance policy, her mother’s intellectual property rights, a Tesla S and more.

Michael Jackson’s three children, Prince, Paris, and Blanket are already millionaires, who benefited from his success and fortune. Each child is reported to get millions of dollars a year but are expected to receive their father’s full fortune when they turn 40.

When David Bowie died, he left half of his $100 million estate to his widow Iman and split the other half evenly between his two children. His son Duncan is believed to have received his inheritance straight away, but Alexandria will have to wait until she turns 25 to inherit her money.

On the flip side, George Lucas doesn’t intend to turn his four children into trust fund babies. He’s signed The Giving Pledge, stating that he’ll donate his estate and his wealth to those in need, to do some good in the world.

Ashton Kutcher and Mila Kunis are parents to two children, but they won’t to set them up with trust funds. Instead, they’ll have to work for what they want. Jackie Chan wants his son, Jaycee, to make his own way in the world. Jackie has been quoted as saying that when it comes to money, his son must be capable of earning it for himself. “If he is capable, he can make his own money. If he is not, then he will just be wasting my money,” he said.

Learn how trust attorneys can help with your estate plan.

Reference: Wealth Advisor (December 3, 2019) “10 Celebs Who Set Their Children Up With A Trust Fund (And 10 Who Refuse)”