Month: July 2009

The Wall Street Journal online had a great article here about providing a means of passing your electronic assets through your estate plan.  This consideration is becoming more important as our information is increasingly stored online or in other digital formats.  The article provides some great food for thought and I, for one, am continually looking for new ways to help my clients address the concerns the article raises – something my background in Information Technology makes me uniquely suited to do.

It appears from this ESPN online article that Steve McNair had no will and likely had done no estate planning.  Rather than go in-depth to explain the potential disastrous implications, I will direct you to this post by David Shulman, a Florida estate planning attorney.  Mr. Shulman provides an excellent analysis of the situation.  I encourage you to share your thoughts, comments, and suggestions on the situation and Mr. Shulman’s analysis.

I had a recent visit that reminded me of the uncertainty surrounding family behavior and the effect it can have on a person’s estate.  This gentleman’s father passed away a year ago.  He knew that his father had a will (he and his mother saw it), had a general idea of what it said, and also knew that his father had several bank accounts and some life insurance.  The stickler is that he cannot provide any supporting documentation (bank statements, life insurance policies, the will, etc.), which makes it very difficult to make an assessment of any potential claims he may have against his father’s estate.

Then the family “fun” started.  Allegedly, his brother “lost” the will and this gentleman does not know who the attorney is who drafted the will.  Although that can put a wrench in the process, there are lost will procedures that can be followed to effectively probate the lost will.  The “fun” continues.  Allegedly, the brother also has been cashing checks made out to the father and recently has been carrying a lot of cash – arguably from his father’s accounts.  I have my doubts about the veracity of some of those statements as I know bank procedures and am fairly certain those transactions could not have occured without some level of authorizing document.

Still, do you think the father had any idea something like this could happen after his passing?  Arguably, there was a will, and that was good planning by the father.  As shown by this example, however, there are still contingencies that can occur that will keep your wishes from being carried out according to your plan.  I encourage anyone doing estate planning to make sure they seek out an attorney who will help you address these contingencies by providing practical advice for protecting your estate planning documents and making sure they are followed after your passing.

A silver lining to asset values decreasing?  I must be crazy!  I may be crazy, but I promise you it has nothing to do with this topic.  The silver lining is this – with assets (property, business interests, etc.) at their current depressed values, there is the opportunity to transfer those assets and reduce the tax-related consequences.  Fair Market Value (FMV) largely determines the tax liability incurred by gift or estate transfers.  Typically, the lower the FMV of an asset, the lower the gift or estate tax liability associated with the asset.  Because many assets have lost considerable value over the past 12-24 months, you may be able to transfer the asset with a much lower (or possibly no) tax liability.

For instance, let’s say you have a vacant piece of property you have been planning on giving to an adult child who wants to build his or her first house.  The value of the land 2 years ago was $20,000.  It currently appraises at $12,500.  It may be advantageous to transfer it to the child now to take advantage of the $13,000 annual gift tax exclusion.  Many businesses have lost value in these turbulent times as well.  There are planning methods that can lock in the current value for purposes of transferring ownership interests in the business.  This may be particularly appealing to closely held businesses.

These are just a couple of examples of the benefits of the current depressed asset values.  The list of estate and gift planning benefits provided is too numerous to give them all here.  Please feel free to contact me if you would like to discuss the potential benefit to your family or your business.

For the sake of not jumping on the news bandwagon surrounding Michael Jackson’s death, I will keep this post short.  I am always curious to see how the “super lawyers” handle the estate plans of the wealthy.  I am often surprise to find that, despite being drafted by VERY highly paid attorneys, they are not much different (if at all) than the estate plans I provide my clients.

If you haven’t already read the will, you can read it here.  It is a relatively straightforward pour-over will – that is it “pours” into his trust any assets that are not already in the trust.  It further appoints executors of his will – called “Personal Representatives” in Michigan.  In this case there are three.  Finally it provides for the guardian of his children (his mother) and a successor . . . surprisingly it is Diana Ross!

There are 2 key points I want to make:

(1) We are able to access his will because probate is public.  You can go to the probate court and ask for the file for any decedent estate and review it.  This is why, I’m sure, most of the important asset information and administration is stated in his trust(s) (I’m assuming).  A will does NOT keep your estate out of probate – it simply gives direction on how you want your assets to be distributed, to whom, and provides some guidance as to your desires for your estate’s administration.

(2) I typically recommend that my clients re-visit their estate plans every 3-6 years, and more often if there are major changes in family or assets.  With all that Michael Jackson had going on in his life, both good and bad, I can only hope that his trust was updated more often than his will (written 7 years ago)