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Estate Planning Blog

Serving Clients Throughout North Central Missouri

estate planning

What Did the Rolling Stones’ Drummer Say in His Will?

Charlie Watts, the drummer who found fame with The Rolling Stones, died on August 24, 2021, at the age of 80 after having a heart surgery.

Metro’s recent article entitled “Rolling Stones’ Charlie Watts leaves £30,000,000 fortune to his family following his death in August” reports that Watts’s will left the majority of his fortune to his family. His estate, was estimated at roughly $38 million, excluding the value of his estate in France.

Most of the money left by the star will go to his 83-year-old widow, Shirley. His treasured car collection will be given to others, according to the wishes in his will.

These instructions in the 14-page will were not made public, unlike those for his money.

Watts’s will had been drafted in 2017. His estate’s executors were told to use the income from his fortune to support “beneficiaries.”

The will directs the executors that when his wife dies, the inheritance will be passed down to his daughter Seraphina, his sister Linda Rootes, sisters-in-law Jackie Fenwick and Jill Minder and brother-in-law Stephen Shepherd.

Watts had married Shirley in 1964, before the Rolling Stones found international fame and fortune.

The drummer was seen as the shy, quiet and sensible member of the band.

He had battled throat cancer in 2004, after quitting smoking in the late 1980s. He was eventually given the all-clear after intensive radiotherapy.

Shortly before his death, Watts was forced to pull out of the Stones’s No Filter tour in America because of the operation on his heart.

Announcing the news of his death, a spokesperson said at the time: “It is with immense sadness that we announce the death of our beloved Charlie Watts. He passed away peacefully in a London hospital earlier today surrounded by his family.”

Reference: Metro (May 18, 2022) “Rolling Stones’ Charlie Watts leaves £30,000,000 fortune to his family following his death in August”

 

Probate

What Is the Best Way to Leave Money to Children?

Parents and grandparents want what’s best for children and grandchildren. We love generously sharing with them during our lifetimes—family vacations, values and history. If we can, we also want to pass on a financial legacy with little or no complications, explains a recent article titled “4 Tax-Smart Ways to Share the Wealth with Kids” from Kiplinger.

There are many ways to transfer wealth from one person to another. However, there are only a handful of tools to effectively transfer financial gifts for future generations during our lifetimes. UTMA/UGMA accounts, 529 accounts, IRAs, and Irrevocable Gift Trusts are the most widely used.

Which option will be best for you and your family? It depends on how much control you want to have, the goal of your gift and its size.

UTMA/UGMA Accounts, the short version for Uniform Transfers to Minor or Uniform Gift to Minor accounts, allows gifts to be set aside for minors who would otherwise not be allowed to own significant property. These custodial accounts let you designate someone—it could be you—to manage gifted funds, until the child becomes of legal age, depending on where you live, 18 or 21.

It takes very little to set up the account. You can do it with your local bank branch. However, the funds are taxable to the child and if an investment triggers a “kiddie tax,” putting the child into a high tax bracket and in line with income tax brackets for non-grantor trusts, it could become expensive. Your estate planning attorney will help you determine if this makes sense.

What may concern you more: when the minor turns 18 or 21, they own the account and can do whatever they want with the funds.

529 College Savings Accounts are increasingly popular for passing on wealth to the next generation. The main goal of a 529 is for educational purposes. However, there are many qualified expenses that it may be used for. Any income from transfers into the account is free of federal income tax, as long as distributions are used for qualified expenses. Any gains may be nontaxable under local and state laws, depending on which account you open and where you live. Contributions to 529 accounts qualify for the annual gift tax exclusion but can also be used for other gift and estate tax planning methods, including letting you make front-loaded gifts for up to five years without tapping your lifetime estate tax exemption.

You may also change the beneficiary of the account at any time, so if one child doesn’t use all their funds, they can be used by another child.

From the IRS’ perspective, a child’s IRA is the same as an adult IRA. The traditional IRA allows an immediate deduction for income taxes when contributions are made. Neither income nor principal are taxed until funds are withdrawn. By contrast, a Roth IRA has no up-front tax deduction. However, any earned income is tax free, as are withdrawals. There are other considerations and limits.  However, generally speaking the Roth IRA is the preferred approach for children and adults when the income earner expects to be in a higher tax bracket when they retire. It’s safe to say that most younger children with earned income will earn more income in their adult years.

The most versatile way to make gifts to minors is through a trust. There’s no one-size-fits-all trust, and tax rules can be complex. Therefore, trusts should only be created with the help of an experienced estate planning attorney. A trust is a private agreement naming a trustee who will manage the assets in the trust for a beneficiary. The terms can be whatever the grantor (the person creating the trust) wants. Trusts can be designed to be fully asset-protected for a beneficiary’s lifetime, as long as they align with state law. The trust should have a provision for what will occur if the beneficiary or the primary trustee dies before the end of the trust.

Reference: Kiplinger (May 15, 2022) “4 Tax-Smart Ways to Share the Wealth with Kids”

 

estate planning help

How Did Rock Star’s Estate Planning Help Future Musicians?

The Mr. Holland’s Opus Foundation, a nonprofit supporting music education in at-risk public schools, announced it had received a “transformative donation” from the late Eddie Van Halen.

MSN’s recent article on this is entitled “Eddie Van Halen left a huge donation in his will to support music education for kids”

Before his death in October 2020, Van Halen was involved with the foundation and supported the nonprofit over the years.

He made numerous appearances at the organization’s events and took part in various opportunities helping teach music to kids. As part of his will, Van Halen made a considerable donation that will have a profound effect on the foundation for many years.

The Mr. Holland’s Opus Foundation was inspired by the movie titled Mr. Holland’s Opus. It is the story of the profound effect a dedicated music teacher had on generations of students. Michael Kamen, who wrote the score for the film, started the foundation in 1996 as his commitment to the future of music education.

The foundation says that Van Halen’s donation “will enable MHOF to fulfill requests from a greater number of schools, add employees to its staff, improve the foundation’s technology and more.”

“Eddie’s support and friendship over the years meant the world to us and to his fans. His passion for music and our work created a strong bond, which is evident in his extraordinary bequest,” Felice Mancini, President and CEO of MHOF said in a statement.

“To know how much our foundation meant to Eddie is intensely humbling and gratifying to all of us – and we know that Eddie’s family is confident that his powerful legacy and values live on through our efforts.”

Van Halen’s son, Wolfgang Van Halen, will continue the family’s involvement and support of the organization. He has donated proceeds from his single “Distance” to the foundation in support of school music programs across the country and as a dedication to his father.

“Mr. Holland’s Opus Foundation and the work they do for music education was always something that was important to my father,” Van Halen said in a statement. “I am incredibly proud to help facilitate this donation as he wished. Mr. Holland’s Opus are champions for our musicians of the future, and it is my privilege to continue supporting that mission and carrying on my pop’s legacy.”

Reference: MSN (April 21, 2022) “Eddie Van Halen left a huge donation in his will to support music education for kids”

 

Elder Law, Medicaid and VA Benefits

Does a Supplemental Needs Trust have an Impact on Government Benefits?

Supplemental Needs Trusts allow disabled individuals to retain inheritances or gifts without eliminating or reducing government benefits, like Medicaid or Supplemental Security Income (SSI). There are cases where the individual is vulnerable to exploitation or unable to manage their own finances and using an SNT allows them to receive additional funds to pay for things not covered by their benefits.

Having an experienced estate planning attorney properly create the SNT is critical to preserving the individual’s benefits, according to a recent article titled “Protecting Government Benefits using Supplemental Needs Trusts” from Mondaq.

Disabled individuals who receive SSI must be careful, since the rules about assets from SSI are far more restrictive then if the person only received Medicaid or Social Security Disability and Medicaid.

The trustee of an SNT makes distributions to third parties like personal care items, transportation (including buying a car), entertainment, technology purchases, payment of rent and medical or therapeutic equipment. Payment of rent or even ownership of a home may be paid for by the trustee.

The SNT may not make cash distributions to the beneficiary. Payment for any items or services must be made directly to the service provider, retailers, or other entity, for benefit of the individual. Not following this rule could lead to the SNT becoming invalid.

SNTs may be funded using the disabled person’s own funds or by a third party for their benefit. If the SNT is funded using the person’s own funds, it is called a “Self-Settled SNT.” This is a useful tool if the disabled person inherits money, receives a court settlement or owned assets before becoming disabled.

If someone other than the disabled person funds the SNT, it’s known as a “Third-Party SNT.” These are most commonly created as part of an estate plan to protect a family member and ensure they have supplementary funds as needed and to preserve assets for other family members when the disabled individual dies.

The most important distinction between a Self-Settled SNT and a Third-Party SNT is a Self-Settled SNT must contain a provision to direct the trust to pay back the state’s Medicaid agency for any assistance provided. This is known as a “Payback Provision.”

The Third-Party SNT is not required to contain this provision and any assets remaining in the trust at the time of the disabled person’s death may be passed on to residual beneficiaries.

Many estate planning attorneys use a “standby” SNT as part of their planning, so their loved ones may be protected, in case an unexpected event occurs and a family member becomes disabled.

References: Mondaq (May 27, 2022) “Protecting Government Benefits using Supplemental Needs Trusts”

 

401k retirement

How Do IRAs and 401(k)s Fit into Estate Planning?

When investing for retirement, two common types of accounts are part of the planning: 401(k)s and IRAs. J.P. Morgan’s recent article entitled “What are IRAs and 401(k)s?” explains that a 401(k) is an employer-sponsored plan that lets you contribute some of your paycheck to save for retirement.

A potential benefit of a 401(k) is that your employer may match your contributions to your account up to a certain point. If this is available to you, then a good goal is to contribute at least enough to receive the maximum matching contribution your employer offers. An IRA is an account you usually open on your own. As far as these accounts are concerned, the key is knowing the various benefits and limitations of each type. Remember that you may be able to have more than one type of account.

IRAs and 401(k)s can come in two main types – traditional and Roth – with significant differences. However, both let you to delay paying taxes on any investment growth or income, while your money is in the account.

Your contributions to traditional or “pretax” 401(k)s are automatically excluded from your taxable income, while contributions to traditional IRAs may be tax-deductible. For an IRA, it means that you may be able to deduct your contributions from your income for tax purposes. This may decrease your taxes. Even if you aren’t eligible for a tax-deduction, you are still allowed to make a contribution to a traditional IRA, as long as you have earned income. When you withdraw money from traditional IRAs or 401(k)s, distributions are generally taxed as ordinary income.

With Roth IRAs and Roth 401(k)s, you contribute after-tax dollars, and the withdrawals you take are tax-free, provided that they’re a return of contributions or “qualified distributions” as defined by the IRS. For Roth IRAs, your income may limit the amount you can contribute, or whether you can contribute at all.

If a Roth 401(k) is offered by your employer, a big benefit is that your ability to contribute typically isn’t phased out when your income reaches a certain level. 401(k) plans have higher annual IRS contribution limits than traditional and Roth IRAs.

When investing for retirement, you may be able to use both a 401(k) and an IRA with both Roth and traditional account types. Note that there are some exceptions to the rule that withdrawals from IRAs and 401(k)s before age 59½ typically trigger an additional 10% early withdrawal tax.

Reference: J.P. Morgan (May 12, 2021) “What are IRAs and 401(k)s?”

 

estate planning

What Did Beatles’ Pal Do with Her Estate?

The 1960’s singer Cilla Black passed away at her Spanish villa in 2015, after a stroke following a fall, aged just 72.

The Express’ recent article entitled “Cilla Black’s vast riches and incredible generosity explored as she would have turned 79” reports that this past week saw many in Britain celebrate what would have been her 79th birthday on May 27, as well as marking 50 years in front of the camera and behind the microphone.

After her death, there were many reports of her generosity and that she’d left vast riches to both her family and those close to her. Black left a $19 million fortune — amassed over her entire career — to her three sons. Each of them, Robert, Ben and Jack Willis, were given about $3.75 million each, after paying the British inheritance tax.

However, due to her $2.5 million Spanish mansion and $2 million Barbados penthouse, the three boys were expected to get slightly more. That’s because these properties were not included as part of Black’s UK estate, according to the Mirror.

She lived in an eight-bedroom Buckinghamshire mansion for 45 years in the village of Denham, and after her death, her sons put the property on the market for about $5.5 million. The home had a tennis court, leisure complex and indoor pool and spa, as well as lush green surroundings.

Black also left her housekeeper, Penny Walker, roughly $25,000. Walker had worked for Black for more than 30 years and was seen by her as “part of the family”, even living in a detached cottage on the grounds of Black’s Buckinghamshire mansion.

A source told The Sun at the time: “She adored her sons and treated Penny as part of the family.”

Cilla Black was born Priscilla Maria Veronica White on May 27, 1943, in a working-class area of Liverpool. She frequented the city’s now legendary Cavern Club, which helped the careers of a number of stars, including The Beatles, after she took a brief job working as a cloakroom assistant.

The Beatles’ manager, Brian Epstein, signed her to a recording contract after seeing her perform. He also gave her the moniker ‘Cilla Black’ after a local newspaper incorrectly reported her name. Rather that complaining, she adopted the name and would be known by it for the rest of her career.

Her legacy was immortalized in 2016 with a life-size bronze statue outside the Cavern Club, as a reminder of where that young girl from Liverpool first sang and made history.

Reference: The Express (May 31, 2022) “Cilla Black’s vast riches and incredible generosity explored as she would have turned 79”

 

What Sparks the Contesting of a Will?

A last will and testament is the document used to direct your executor to distribute assets and property according to your wishes. However, it’s not uncommon for disgruntled or distant family members or others to dispute the validity of the will. A recent article titled “5 Reasons A Law Will May Be Contested” from Vents Magazine explains the top five factors to keep in mind when preparing your will.

Undue influence is a commonly invoked reason for a challenge. If a potential beneficiary can prove the person making the will (the testator) was influenced by another person to make decisions they would not have otherwise made, a will challenge could be brought to court. Undue influence means the testator’s decision was significantly affected by a person who stood to gain something by the outcome of the will and made a concerted effort to change the testator’s mind.

Even if there was no evidence of fraud, any suspicion of the testator’s being influenced is enough for a court to accept a case. If you think someone unduly influenced a loved one, especially if they suffer from any mental frailties or dementia, you may have cause to bring a case.

Outright fraud or forgery is another reason for the will to be contested. If there have been many erasures or signature styles appear different from one document to another, there may have been fraud. An estate planning attorney should examine documents to evaluate whether there is enough cause for suspicion to challenge the will.

Improper witnesses. The testator is required to sign the will with witnesses present. In some states, only one witness is required. In most states, two witnesses must be present to sign the will in front of the testator. A beneficiary may not be a witness to the signing of the will. Some states have changed laws to allow for remote signings in response to COVID. If the rules have not been followed, the will may be invalid.

Mistaken identity seems farfetched. However, it is a common occurrence, especially when someone has a common name or more than one person in the family has the same name, and the document has not been properly signed or witnessed. This could create confusion and make the document vulnerable to a challenge. An experienced estate planning attorney will know how to prepare documents to withstand any challenges.

Capacity in the law means someone is able to understand the concept of a will and contents of the document they are signing, along with the identities of the people to whom they are leaving their assets. The person doesn’t need to have perfect mental health, so people with mild cognitive impairments, such as depression or anxiety, may make and sign a will. A medical opinion may be needed, if there might be any doubt as to whether a person had testamentary capacity when the will is signed.

A will contest can be time-consuming and expensive, so keep these issues in mind, especially if the family includes some litigious individuals.

Reference: Vents Magazine (May 6, 2022) “5 Reasons A Law Will May Be Contested”

 

estate planning and elder law blog

What Kind of Prenup will Soccer Star David Beckham’s Son have to Sign?

The $480 million fortune of 23-year-old Brooklyn’s parents, David and Victoria, is dwarfed by the estimated $1.65 billion wealth of Miss Peltz’s financier father Nelson.

The Daily Mail’s recent article entitled “Brooklyn Beckham and his bride-to-be sign the mother and father of all prenups!” reports that the news of the prenup comes as preparations are underway for the $3.75 million ceremony and party at the Peltz family mansion in Palm Beach.

The wedding – described by friends as “Miami society meets British celebrity” – is expected to be attended by celebrity chef Gordon Ramsay, actress Eva Longoria and former footballer Phil Neville.

Victoria’s Spice Girls bandmate Melanie Brown – Mel B – has also confirmed that she’s coming to the party.

A prenup is an agreement entered into by two people who get married. It’s signed prior to the marriage.

The prenup lays out the rights and obligations of the parties to each other, in case of death or divorce.

These rights and obligations typically refer to a spouse’s property rights and obligations.

In some instances, a prenup will address custody and child support issues.

It’s wise for each spouse to have a separate lawyer to look at the prenuptial agreement and determine that it will indeed protect the best interests of their client.

The Becker-Peltz wedding will take place at the Peltz family’s $95 million, 44,000 sq. ft. beach house. Nelson and his wife Claudia also have a 27-bedroom mansion near New York which has an ice rink.

Brooklyn and Miss Peltz met in 2017 and started dating two years later. Announcing their engagement on Instagram in July 2020, Brooklyn wrote: “Two weeks ago, I asked my soulmate to marry me and she said yes. I am the luckiest man in the world.”

Her fiancée wrote: “I can’t wait to spend the rest of my life by your side. Your love is the most precious gift.”

Reference: The Daily Mail (April 2, 2022) “Brooklyn Beckham and his bride-to-be sign the mother and father of all prenups!”

 

alzheimer's diagnosis

How to Find a Great Estate Planning Attorney

With so many law firms, it can be challenging to find the right one for your estate planning, says Diving Daily’s recent article entitled “5 Factors to Consider When Choosing an Estate Planning Law Firm.”

The article lists the following factors you should consider when choosing an estate planning law firm.

  1. Your Specific Needs. Before you look for an estate planning lawyer, first determine what it is you need from the lawyer. Consider the intricacies of your estate and whether it has any complexities and special considerations. This will help you narrow down the list of legal professionals who can help you plan your estate.
  2. Experience. Working with an inexperienced law firm or attorney will only work to your detriment. You typically want to look for a lawyer with at least five years of experience in estate planning.
  3. Fees. The expense shouldn’t be your primary consideration when selecting an estate planning attorney, but it’s still worth mentioning. Make certain that you find an attorney that you can afford. However, this doesn’t mean you should hire the cheapest lawyer you can find. In most cases, you’ll end up getting what you pay for. Instead, find a lawyer with reasonable rates.
  4. Reputation. You want an estate planning attorney who has made a name for his or herself in estate planning law. Look at reviews and testimonials online. These are first-hand accounts of previous clients’ experiences with the law firm. They’ll help you decide whether the lawyer is worth your time and money.
  5. Attitude. Make an in-person appointment with the attorney before making your decision and learn about the lawyer’s attitude and demeanor. You’ll want an attorney that’s friendly and easy to talk to. You should note his or her professionalism and knowledge of estate planning.

Make sure you do your due diligence to find the best people to help you plan your estate.

Reference: Diving Daily (April 26, 2022) “5 Factors to Consider When Choosing an Estate Planning Law Firm”

 

IMS-Logo-Sig

How Do I Plan for Taxes after Death?

Let’s get this out of the way: preparing for death doesn’t mean it will come sooner. Quite the opposite is true. Most people find preparing and completing their estate plan leads to a sense of relief. They know if and when any of life’s unexpected events occur, like incapacity or death, they have done what was necessary to prepare, for themselves and their loved ones.

It’s a worthwhile task, says the recent article titled “Preparing for the certainties in life: death and taxes” from Cleveland Jewish News and doesn’t need to be overwhelming. Some attorneys use questionnaires to gather information to be brought into the office for the first meeting, while others use secure online portals to gather information. Then, the estate planning attorney and you will have a friendly, candid discussion of your wishes and what decisions need to be made.

Several roles need to be filled. The executor carries out the instructions in the will. A guardian is in charge of minor children, in the event both parents die. A person named as your attorney in fact (or agent) in your Power of Attorney (POA) will be in charge of the business side of your life. A POA can be as broad or limited as you wish, from managing one bank account to pay household expenses to handling everything. A Health Care Proxy is used to appoint your health care agent to have access to your medical information and speak with your health care providers, if you are unable to.

Your estate plan can be designed to minimize probate. Probate is the process where the court reviews your will to ensure its validity, approves the person you appoint to be executor and allows the administration of your estate to go forward.

Depending on your jurisdiction, probate can be a long, costly and stressful process. In Ohio, the law requires probate to be open for at least six months after the date of death, even if your estate dots every “i” and crosses every “t.”

Part of the estate planning process is reviewing assets to see how and if they might be taken out of your probate estate. This may involve creating trusts, legal entities to own property and allow for easier distribution to heirs. Charitable donations might become part of your plan, using other types of trusts to make donations, while preserving assets or creating an income stream for loved ones.

Minimizing taxes should be a part of your estate plan. While the federal estate tax exemption right now is historically high $12.06 million per person, on January 1, 2025, it drops to $5.49 million adjusted for inflation. While 2025 may seem like a long way off, if your estate plan is being done now, you might not see it again for three or five years. Planning for this lowered number makes sense.

Reviewing an estate plan should take place every three to five years to keep up with changes in the law, including the lowered estate tax. Large events in your family also need to prompt a review—trigger events like marriage, death, birth, divorce and the sale of a business or a home.

Reference: Cleveland Jewish News (May 13, 2022) “Preparing for the certainties in life: death and taxes”