Month: February 2016

News of Millionaire Maiden’s Estate Shows Need for Estate Planning

MP900438729A fortune left behind by a millionaire maiden was distributed this week to her long-lost heirs, according to The (Alton IL) Telegraph's article, "Treasurer distributes Granite City millionaire maiden's fortune."

The County Treasurer Kurt Prenzler said he was ordered by the probate court to pay the heirs in Mary Petroff's $1.36 million estate. Four dozen family members from Granite City to Bulgaria will receive the money left behind by the 97-year-old woman who died in 2011.

Mary and her sister didn't marry, and in their 90s, they began to suffer from dementia. Each was appointed a legal guardian. When Anne died in 2009, her estate passed on to Mary. Both sisters lived a modest life. After Mary passed away, the state of Illinois discovered she was a millionaire with no known heirs or will.

Prenzler said following Mary's death, her estate was placed with his office for safekeeping in accordance with Illinois law, which stipulates that unclaimed monies are kept in the county for a period of 10 years before being turned over to the state. However, in Mary's case, there were people who came forward and claimed to be her relatives. The familial relationship was determined last month by a probate judge. Then the County Treasurer's Office cut checks for 48 relatives. Mary's heirs will receive anywhere from about $3,000 to $110,000 from her estate. The largest amount of the estate will be headed to Mary's relatives in Bulgaria.

An attorney who was tasked with distributing the checks for his clients—most of whom are from Bulgaria—commented that the laws regarding estates are different in each state. If Mary had lived in Missouri, mostly likely the distribution would have gone to fewer family members.

Reference: The (Alton IL) Telegraph (January 25, 2016) "Treasurer distributes Granite City millionaire maiden's fortune"

Judge Orders Psychiatric Evaluation of Aging Media Mogul

MP900400665Media mogul Sumner Redstone has been ordered to sit for a one-hour psychiatric evaluation as part of an ongoing court battle with an ex-girlfriend, a Los Angeles judge has ruled. The New York Daily News says the judge's order may not only affect Redstone's estate but his business dealings.

The article, "Sumner Redstone, media mogul, ordered to undergo psychiatric evaluation," describes the battle over the care and assets of the "once-towering tycoon," who at 92 is still the executive chairman of media giants Viacom and CBS, even though he is all but confined to his Beverly Park mansion. A new shareholder lawsuit recently filed claims that corporate executives withheld the level of Redstone's deterioration and failed to implement a succession plan.

Judge David Cowan denied a request by ex-girlfriend Herzer to depose Redstone, but he did grant her application for an exam by a geriatric psychiatrist. This was her third attempt to get the judge's approval for an evaluation. The judge finally agreed to go ahead after learning that one of the doctors chosen by Redstone's handlers to attest to his overall acuity was not a psychiatrist and gave deposition testimony that was "inconsistent" with a prior declaration.

The judge said Dr. Stephen Read should conduct his one-hour interview with Redstone without Herzer or any attorneys. Also, the exam won't be recorded and is to include only those nurses or speech therapists who regularly assist Redstone with his "serious speech impediment," the judge said.

"The court is confident that a more informal conversation between a doctor and patient, with an experienced and well respected physician such as Dr. Read, will be far more productive than an adversarial deposition with attorneys and a court reporter and ultimately provide more useful testimony," Judge Cowan wrote in his ruling.

The judge ruled that Herzer "should be entitled to have at least some access to the person about whom this case is concerned."

Herzer was kicked out of Redstone's mansion last fall. She says the ailing billionaire acted without a full understanding and against his best interests. She also was removed as the lead agent on his Advance Health Care Directive a short time later and replaced with Viacom's President and CEO. Herzer sued in November to return to Redstone's inner circle and resume control of his future medical care.

Herzer's prior two attempts to get a judge's approval for a mental evaluation were denied. She called Redstone a "living ghost" in her lawsuit, who started on a dramatic decline in health when he discovered last summer that his young lover had been unfaithful during their five-year relationship. Herzer alleges that Redstone can't converse, except for brief grunted responses to questions and, even then, is nearly impossible to understand.

Herzer's outside doctor will conduct the evaluation of Redstone, and a hearing on a motion to dismiss the case will take place on February 29, Leap Day.

Reference: New York Daily News (January 22, 2016) "Sumner Redstone, media mogul, ordered to undergo psychiatric evaluation"

What Will Happen if I Don’t Update my Beneficiaries?

Bigstock-Elder-Couple-With-Bills-3557267This is a very important step in estate planning because at your death, certain assets pass to beneficiaries named on your accounts. It doesn't matter if someone else is named as the recipient of your assets in your will!

Let's look at one of the big implications of failing to review your beneficiaries.

The Ex-Spouse

The New Hampshire Union Leader explains in "The law determines your beneficiaries unless you intercede," that even though New Hampshire has a lower divorce rate than the national average, if you're recently divorced, you need to do some fast estate planning. The divorce decree you signed doesn't automatically terminate your ex's beneficiary designation on separate documents like your employer-sponsored retirement accounts, IRAs, and life insurance policies. If your former spouse remains as the beneficiary on an account, he or she will most likely inherit those assets instead of your children or your new spouse.

Let's take that a step further: Even without a divorce, there can be unintended implications for your money after your death. If, in your retirement plans, you named your spouse as the primary beneficiary, he or she has the right to transfer all or part of the retirement assets into his or her own IRA account after your death. The surviving spouse is entitled to then name the children from a previous or future marriage as beneficiaries once it is his or her own money. Something like that could result in the original IRA owner's children being legally cut out of any benefits.

Spousal Waiver

Spousal rights laws say that your spouse must be the primary beneficiary of a 401(k) or profit-sharing account. Your spouse can waive this requirement in writing so that other estate planning strategies can be implemented. A spouse who is financially independent and wants to earmark the account for philanthropic pursuits may want to use the waiver; or where children from a first marriage are more likely to need the money. If you're unmarried, you can name whomever you want as the primary beneficiary.

Tax laws also detail how retirement plan assets must be distributed to your beneficiaries at your passing, but if this is done properly, your beneficiaries may be allowed to continue the tax deferral for some time. Note that these rules are complicated and change frequently, so you should discuss them with an experienced estate planning attorney.

It is important to be certain that your intended beneficiary designations are in sync with your estate documents. To ensure that this is the case, visit your estate planning attorney. Your attorney will help with terms like "per stirpes" and "per capita." A qualified trusts and estates lawyer can also help you deal with planning for minor children and those with special needs.

Reference: The New Hampshire Union Leader (January 24, 2016) "The law determines your beneficiaries unless you intercede"

Meet David Bowie, Estate Planning Guru

Draft_lens6229982module49470302photo_1249598396business-manA recent Forbes article on Bowie's death, entitled "A Peek Into The David Bowie Estate: His Legacy Extends Beyond Music," reports that Bowie, whose real name was David Robert Jones—and who didn't want to be confused with Davy Jones of the Monkees—recently passed away from liver cancer just two days after the release of his final album on his 69th birthday. He was one-of-a-kind, both as a musician and in his finances. In the 1970s and 80s, Bowie struggled financially, even to the verge of bankruptcy. Years later, he took control of his financial legacy through a move now considered to be revolutionary.

Bowie, with investment banker David Pullman's assistance, sold a stake in his catalogue of music, but rather than selling his songwriting, performance, and licensing rights to his hits, he created "Bowie Bonds." These allowed Bowie to sell a 10-year investment in his music, which operated like an annuity, providing a fixed-rate of return of 7.9%. The price was $55 million, and the payouts were secured by all of his royalties and copyrights from the music. Prudential Insurance bought the Bowie Bonds and was paid off in full during the 10-year time frame, even with all the changes in the music industry and internet-based music distribution—which dramatically reduced artists' royalties.

Bowie created this arrangement to protect his family. Bowie was interested in estate planning at a young age and wanted to make sure that his assets passed onto his family. He did the Bowie Bonds for tax savings and so that his estate would benefit from his music catalog. Bowie's wife will likely receive most of Bowie's estate, which is estimated to be worth $200 million—not counting the spike in sales that continues now that Bowie has died. His two children will each also receive substantial bequests.

Although details of Bowie's estate plan haven't been made public, many think that in light of his advanced planning and financial foresight, he likely used one or more revocable or irrevocable trusts. If he did, Bowie would have maximized the value of assets passing onto his heirs in the most tax-efficient way possible. Plus, his assets could pass privately, without the public records in probate court.

Unfortunately, Bowie is the exception in the world of rock ‘n' roll estate planning. Many musicians fail to properly plan. They frequently rely only on a will, which becomes a public document once it is filed with the probate court after death. Even worse, many artists have no estate planning whatsoever. For example, a short list of poor estate planning singers includes John Lennon, Tupac Shakur, Jim Morrison, and Kurt Cobain. Their heirs all went through messy estate battles that could have been prevented if they'd used the same foresight as Ziggy Stardust looks to have done.

Use David Bowie as your rock estate planning example, and plan for your loved ones at a young age. Don't wait until it is too late.

Reference: Forbes (January 14, 2016) "A Peek Into The David Bowie Estate: His Legacy Extends Beyond Music"