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Estate Planning Blog

Serving Clients Throughout North Central Missouri

Probate

How Can I Relieve My Family’s Stress when I Die?

After losing a family member, people experience pain and grief. The situation gets worse if legal issues are involved, resulting in family conflicts. Such challenges are typically the result of a lack of planning when they could have been much easier if a good plan had been in place, says Scubby’s recent article entitled “7 Ways To Ease Your Loved Ones’ Suffering After You Die.” Let’s look at some ways to avoid problems after you pass away.

  1. Create an Estate Plan. This is the first step you can take in making your family’s life easier. Your heirs will inherit your estate after you die. If you don’t have a written estate plan, it can be more difficult.
  2. Maintain a Binder for Documents. Store all of your important documents and information in a master document binder or some other system. Include important documents and information about your bank accounts, credit cards, investment accounts and information about your digital assets, such as emails, online banking, social media accounts and any other digital assets that you own. You should also give information that your family will need to access these documents and information.
  3. Buy Life Insurance. It’s smart to purchase life insurance as part of your basic estate plan. The loss of a family member can result in confusion, worry and anxiety regarding finances. Those left behind can sometimes wonder how to pay for necessities after a family member dies, so an insurance policy can solve that problem. This will give your family a financial cushion that will provide them with some breathing room.
  4. Write An Instruction Letter. A last letter of instructions for your family is smart, in addition to your estate plan. This gives you the chance to express your love and affection to each of your family members. You can also state where you want to be buried or if you’d like to be cremated, and what kind of memorial service you would like. Your testament doesn’t appear in this document. It only lets you state your final wishes about each of these matters. It has no real legal significance.
  5. Prepare Them Emotionally. It’s hard to comprehend the truth of death for you and your family. They’ll go through the grieving period without you, and to help them emotionally, you can honor the people in your life who matter most; offer an apology to those you have hurt; and/or forgive your loved ones, if they have hurt you.
  6. Pre-plan Your Funeral. To ease the burden on your family at your death, pre-plan your funeral. This means you’ve made your funeral arrangements and chosen what you want as part of your funeral services.
  7. Collect Important Documents and Contact Information. Organize important documents in a folder. This should include info on bank accounts, mortgages, insurance policies, employer contact information, estate planning, safe combinations and Social Security information. Make a list of close friends and family members, including their contact info, for your loved ones to contact in the event of your death.

This list of things you can do to ease the burden on your family isn’t exhaustive. However, it’s certainly helpful.

Reference: Scubby “7 Ways To Ease Your Loved Ones’ Suffering After You Die”

 

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Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

This is the situation facing the estate of Lisa Marie Presley, whose estate is being challenged by her mother, Priscilla Presley, as described in a recent article, “Presley beneficiary battle sets example of poor estate planning practices” from Insurance NewsNet. These situations are not uncommon, especially when there’s a lot of money involved. They serve as a teachable moment of things to avoid and things to absolutely insist upon in estate planning.

Lisa Marie’s estate is being challenged because of an amendment to the trust, which surfaced after she died. The amendment cut out two trustees and named Lisa Marie’s children as executors and trustees.

At stake is as much as $35 million from three life insurance policies, with at least $4 million needed to settle Lisa Marie’s debts, including $2.5 million owed to the IRS.

When this type of wealth is involved, it makes sense to have professional trustees hired, rather than appointing family members who may not have the skills needed to navigate family dynamics or manage significant assets.

A request to change a will by codicil or a trust by amendment happens fairly often. However, some estate planning attorneys reject their use and insist clients sign a new will or restate a trust to make sure their interests are protected. In the case of Lisa Marie, the amendment might be the result of someone trying to make changes without benefit of an estate planning attorney to make the change correctly.

The origins of the estate issues here may go back to Elvis’ estate plan. His estate was worth $5 million at the time of this death, $20 million if adjusted for inflation. His father was appointed as the executor and a trustee of the estate. His grandmother, father and Lisa Marie were beneficiaries of the trust. Lisa Marie was just nine when her famous father died, and her inheritance was held until she turned 25.

When his father died, Priscilla was named as one of three trustees. When his grandmother died, Lisa Marie was the only surviving beneficiary. She inherited the entire amount on her 25th birthday—worth about $100 million largely at the time because of Priscilla’s skilled management.

Terminating such a large trust and handing $100 million to a 25 year old is seen by many estate planning attorneys as a big mistake. Distribution at an older age or over the course of the beneficiary’s lifetime could have been a smarter move. Lisa Marie reportedly blew through $100 million as an adult and was millions of dollars in debt, despite the estate having plenty of cash because of two large life insurance policies.

In 1993, Lisa Marie established a trust naming her mother and former business manager as trustees. The amendment in question seems to have been written in 2016, removing Priscilla and business manager Siegel as trustees, appointing Lisa Marie’s daughter and son as trustees, and naming her son and her fourteen year old twin sons as beneficiaries.

Priscilla’s attorneys say they had no prior knowledge of the change. Certain changes in estate plans require written notification of people with interest in the estate, which did not occur. They are also challenging the amendment’s authenticity, saying it was neither witnessed nor notarized. Priscilla’s name is misspelled and Lisa Marie’s signature is not consistent with other signatures of hers.

The estate is being contested, with a preliminary hearing on the matter scheduled for April 13.

Any changes to an estate plan, particularly those involving changes to the will, trusts or beneficiaries, should be done with the help of an experienced estate planning attorney. When large changes are made, or large assets are involved, a simple codicil or amendment could lead to complicated problems.

Reference: Insurance NewsNet (Feb. 17, 2023) “Presley beneficiary battle sets example of poor estate planning practices”

 

Family Farm

What Strategies Minimize Estate Taxes?

The gift and estate tax benefits from the Tax Cuts and Jobs Act (TCJA) are still in effect. However, many provisions will sunset at the end of 2025, according to a recent article “Trust and estate planning strategies” from Crain’s New York Business.

The most important aspect for estate planning was the doubling of the estate, gift and generation-skipping transfer tax exemptions. Adjusted for inflation, the current federal estate, gift and GST exclusion is $12.92 million in 2023. This is more than double the pre-TCJA amount, which will return in 2026, unless Congress makes any changes.

While these levels are in effect, there are strategies to consider.

  • Maximize gifting up to the 2023 annual exclusion of $17,000 per taxpayer, or $34,000 for married couples.
  • Depending on the value of the entire estate, consider strategies to keep it below the current exemption among of $12.92 million or $25.84 (married). If the estate is less than the exemption amount, no federal estate tax will need to be paid.
  • Plan charitable giving, including charitable IRA rollovers to make the most of the deduction on 2023 income tax returns. Qualified charitable distributions made directly from an IRA could be used to satisfy Required Minimum Distributions (RMDs) and exclude them from taxable income.
  • Set up 529 Plan accounts for children and/or grandchildren and consider making five years of annual exclusion gifts. Take into account any gifts made during the year to children and/or grandchildren when doing this.
  • Submit tuition or any non-reimbursable medical expenses directly to the school or medical provider to avoid having these amounts count towards the annual or lifetime gift tax exemption.
  • Explore intrafamily lending, which is used to transfer partial earnings to family members without lowering the lifetime estate tax exemption or triggering gift taxes.
  • Re-evaluate insurance coverage, which can provide opportunities to defer or avoid income taxes, or both, and provide assets to pay estate taxes or replace assets used to pay estate taxes.

Not all of these steps will be appropriate for everyone. There are also additional planning steps available that are not listed above.  However, understanding the options and discussing with your estate planning attorney will ensure that you are using the most effective strategies to achieve wealth preservation.

Reference: Crain’s New York Business (Feb. 13, 2023) “Trust and estate planning strategies”

 

Is Estate Planning for Everyone?

What Should Seniors Know before Remarrying?

Seniors in particular think about remarrying with an understandable degree of concern. Maybe you are a widow or a widower after a long marriage, or your last relationship ended in a divorce, or you’ve heard of too many remarriage disasters occurring with unintended consequences. However, according to a recent article from MSN, “Planning to remarry after a divorce? 6 tips to protect your financial future,” there are some steps to take to make relationships easier to navigate and protect your financial future.

Not all of them are easy, but all are worthwhile.

No marrying without a prenup. Who wants to think about divorce when they’re head-over-heels in love and planning a wedding? No one. However, think of a prenup as about the start, not the end. It clarifies many issues: full financial clarity, financial expectations and clear details on what would happen in the worst case scenario. Getting all this out in the open before you say “I do” makes it much easier to go forward.

Trust…but verify. Estate planning ensures that assets pass as you want. A revocable living trust set up during your lifetime can be used to ensure your assets pass to your offspring. Unlike a will, the provisions of a revocable trust are effective not just when you die but in the event of incapacity. A living trust can provide for the trust creator and their children during any period of incapacity prior to death. At death, the trust ensures that beneficiaries receive assets without going through probate.

Consider life insurance. Life insurance, possibly held in an irrevocable life insurance trust (ILIT), which allows proceeds to pass tax-free, can be used to provide funds for a surviving spouse or children from a prior marriage. Make sure to review all insurance policies, including life, property and casualty and umbrella insurance to be sure you have the correct coverage in place, insurance policies are titled correctly and premiums continue to be paid.

Estate planning. While you are planning to remarry is a good time to check on account titles, beneficiary designations and powers of attorney. Couples should review their estate plans to be sure planning reflects current wishes. Married couples have the benefit of the unlimited marital deduction, meaning they can gift during their lifetime or bequeath at death an unlimited amount of assets to their U.S. citizen surviving spouse without any gift or estate tax. For unmarried couples, different estate planning techniques need to be used to pass the maximum amount to partners tax free.

Check beneficiaries. After divorce and before a remarriage, check beneficiaries on 401(k)s, pensions, retirement accounts and life insurance policies, Power of Attorney and Health Care Power of Attorney documents. If you remarry, a prenup agreement or state law may require you to give some portion of your estate to your spouse, so have an estate planning attorney guide you through any changes. You should also check beneficiaries of life insurance and retirement plans.

Choose trustees wisely. Consider the advantages of a corporate trustee, who will be neutral and may prevent tensions with a newly blended family. If an outsider is named as an executor, or to act as a trustee, they may be able to minimize conflict. They’ll also have the professional knowledge and expertise with legal, tax and administrative complexities of administering estates and trusts.

Reference: MSN (Feb. 11, 2023) “Planning to remarry after a divorce? 6 tips to protect your financial future”

 

estate planning law firm

Why Is Lisa Marie Presley’s Mom Fighting Her Daughter’s Estate Plan?

A recent filing in Los Angeles Superior Court questions the validity of a 2016 amendment to Lisa Marie Presley’s living trust that ousted her mother Priscilla and a former business manager as trustees and replaced them with Lisa Marie Presley’s two oldest children, Riley Keough and Benjamin Keough, if she died or became incapacitated. Benjamin died in 2020.

The National News’ recent article entitled “Priscilla Presley in dispute over late daughter Lisa Marie’s estate” explains that a living trust is a form of estate planning that lets an individual control his or her assets while they’re alive—but have them distributed without probate when they pass away. A living trust serves the function of a will if a separate one isn’t filed. This looks to be the case with Lisa Marie.

Lisa Marie, who was the only child of Elvis Presley, died at a California hospital at age 54 on January 12, after paramedics answered a 911 call reporting a woman in cardiac arrest. The LA County coroner is investigating and has not yet revealed a cause of death. She was laid to rest at her family home in Graceland on Jan 22.

The court filing from Lisa Marie’s mom says there are a number of issues that cause the living trust amendment’s authenticity to be questioned. This includes a failure to notify Priscilla of the change as required, a misspelling of Priscilla’s name in a document supposedly signed by her daughter, an atypical signature from Lisa Marie and a lack of a witness or notarization. It asks a judge to declare the amendment invalid. Another claim in the filing states that the business manager, Barry Siegel, intended to resign, which according to the prior terms of the trust would leave Priscilla and Riley Keough as co-trustees.

Lisa Marie left three surviving children. In addition to Riley Keough, her daughter with first husband Danny Keough, she had 14-year-old twin daughters with her fourth husband, Michael Lockwood. Lisa Marie divorced Lockwood in 2021, but the two were still disputing finances in family court when she passed away.

Priscilla’s filing is one of the first of what are likely to be numerous legal claims concerning the estate of Lisa Marie, the only heir to Elvis Presley.

The estate’s worth is unclear

A lawsuit Lisa Marie filed in 2018, alleging Siegel had mismanaged the trust, said it had been worth in excess of $100 million, but most of that had been depleted.

Reference: The National News (Jan. 30, 2023) “Priscilla Presley in dispute over late daughter Lisa Marie’s estate”

 

Michael OLoughlin

What are Some Best Practices for a Trustee?

Forbes’ recent article entitled “How To Be An Effective Trustee” provides some great best practices for those asked to be a trustee.

  1. Make a team. No one person can have all the necessary skills and experience to be an effective trustee. Work with an experienced estate planning attorney, an investment advisor and a tax accountant knowledgeable about the taxation of trusts. It’s a good practice for the trustee to have regular meetings with the team of advisors, both as a team and individually.
  2. Understand the key trust terms. Understand what the trust document says and what the key terms mean. When you are named as trustee, a best practice is to read the entire trust document and go through the document with an attorney and have them explain the key terms. Some of these key terms may involve the following:
  • Distribution standards
  • Special provisions for investing, particularly direction to sell or not to sell certain assets
  • Provisions the trustee should act upon, like the power to appoint a successor; and
  • Knowing whether the beneficiary’s age will trigger distributions or any other actions.
  1. Work productively with beneficiaries. Dealing with beneficiaries is frequently the most challenging part of being a trustee. There can be differences of opinion over distribution amounts, investment strategy, or other matters relating to the management of the trust which can lead to disagreement. To avoid potential issues with beneficiaries and facilitate a productive relationship, trustees should try to practice following:
  • Communication
  • Transparency
  • Education
  • Clear Distributions; and
  • Providing Required Information.
  1. Documentation is Crucial. Although trustees can’t guarantee perfect results, they must act with care, skill and impartiality. They must have rational reasons for their decisions and documenting them is critical because it substantiates the trustee’s decision-making. Some examples of decisions that should be thoroughly documented include:
  • Distribution Decisions
  • Decisions That Set Investment Policy
  • Initiation or Termination of Investments and Hiring and Firing Investment Managers/Funds
  • Principal and Income Allocations;
  • Verbal Communications with Beneficiaries; And
  • Decisions to Hire Experts or Agents, like an attorney or an accountant.

Reference: Forbes (May 31, 2022) “How To Be An Effective Trustee”

 

family farm planning

What Is Portability and When Should I Make a Portability Election?

Portability is a process in which any unused estate tax exemption can be transferred from the deceased spouse to the surviving spouse, according to a recent article from Ag Web, “Use Portability to Avoid a Potential Multi-Million Dollar Estate Mistake.”

What portability helps the surviving spouse to achieve is to put their assets in the best position to be transferred upon their death, to the next generation, with little or no estate taxes being owed.

In 2023, each spouse has a $12.92 million exemption from federal gift and estate taxes, but this high amount is set to drop about $6.6 million per person in 2026. Electing portability now will lock in the high exemption if a spouse dies before December 31, 2025, when the high exemption level ends.

The portability election does not happen automatically, and its critical to take this action, even if all assets were jointly owned and no taxes are owed when the first spouse dies. To elect portability, the surviving spouse must file form 706 Federal Estate Tax Return with the IRS.

Many financial advisors may not believe electing portability is necessary. However, it is. One estate planning attorney advises financial advisors and CPAs to obtain a written document affirming their decision from surviving spouses, if they decline to elect portability.

Portability is relatively recent to married farming couples. This is why many people in the agricultural sector may not be aware of it. An estate planning attorney can help the surviving spouse to file a Form 706. The value of assets may be estimated to the nearest quarter million dollars of value at the first spouse’s death.

Form 706 must be submitted to the IRS within nine months of the first spouses’ death. The deadline can be extended with the use of Form 4768 for an additional six months. However, if the surviving spouse misses the initial deadlines for filing, they can still elect portability up to five years from the date of their spouse’s death, by invoking “Relief under Revenue Procedure 2022-32.”

There were so many applications for extensions made to the IRS that in 2022, the change was made to give surviving spouses more flexibility in applying for portability.

This is a detail to be discussed with your estate planning attorney when preparing or reviewing your estate plan.

Reference: Ag Web (Jan. 30, 2023) “Use Portability to Avoid a Potential Multi-Million Dollar Estate Mistake.”

 

Approaching Retirement

Does Healthy Lifestyle Have an Impact on Memory Decline?

People 60+ who had at least four of six favorable lifestyle factors — healthy diet, exercise, social contact, cognitive activity and no smoking or drinking — had slower memory decline than those who had no more than one healthy factor, according to Jianping Jia, MD, PhD, of Xuanwu Hospital of Capital Medical University in Beijing, and co-authors.

MedPage Today’s recent article entitled “Memory Decline Tied to Lifestyle Factors” reports that over 10 years, memory decline was 0.28 points less on the Auditory Verbal Learning Test (AVLT) in the favorable lifestyle group compared with the unfavorable group, Jia and co-authors reported in The BM.

People who carried the apolipoprotein E ε4 (APOE4) allele also had slower memory decline with a favorable lifestyle or an average lifestyle with two or three healthy factors compared with an unfavorable one. Similar results were seen for non-APOE4 carriers.

“APOE4 is the strongest known risk factor for Alzheimer’s disease and related dementias, and within the context of ongoing and future targeted prevention trials, this outcome is particularly important,” noted Séverine Sabia, PhD, of Université de Paris, and Archana Singh-Manoux, PhD, of University College London, in an accompanying editorial.

“These results support the notion that lifestyle change might counteract the deleterious effect of APOE4 on cognitive decline and dementia,” Sabia and Singh-Manoux added.

Prior studies showed that APOE4 affects cognitive decline. However, it doesn’t negate all the benefits of a healthy lifestyle. In the U.S., healthy lifestyle scores in midlife have been associated with better cognition in later years, even among APOE4 carriers. In the FINGER trial, APOE4 carriers who participated in an intervention comprising diet, exercise, cognitive training and vascular risk management performed better than controls on annual cognitive tests.

Jia and co-authors analyzed data for about 29,000 adults who initially tested normal for cognitive function. Mean age was about 72; 48.5% in the study were women, and 20.4% were APOE4 carriers.

They measured immediate recall, short-delay and long-delay recall, and long-delay recognition. Of the six healthy lifestyle components, diet had the strongest association with memory, then cognitive activity, physical exercise and social contact.

“Although each lifestyle factor contributed differentially to slowing memory decline, our results showed that participants who maintained more healthy lifestyle factors had a significantly slower memory decline than those with fewer healthy lifestyle factors,” Jia and co-authors wrote. “This information could be useful in making personal choices that can help to protect against memory decline, and our results provide further evidence that memory loss is potentially modifiable.”

Cognitive decline is likely affected by several variables, Sabia and Singh-Manoux observed.

“The multifactorial risk paradigm introduced by the Framingham study has led to a substantial reduction in cardiovascular disease,” they pointed out. “A similar approach should be taken with dementia prevention, identifying not only the factors that matter most but also the threshold at which they matter, and the age when intervention is likely to be most effective, as the World Health Organization underlined in its recent report on brain health.”

Reference: MedPage Today (Jan. 25, 2023) “Memory Decline Tied to Lifestyle Factors”

 

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What Should I Know About Probate Costs?

The cost of probate depends on several factors. One of the most important is the state where the decedent lived. The cost of probate varies from state to state, depending on the general cost of living in the state and state probate laws. Other factors also impact the cost of probate.

Nasdaq.com’s recent article entitled “How Much Does Probate Cost?” provides a breakdown of fees associated with probate. The process of probating an estate will settle the estate after the decedent’s death and following their last will and testament. It’s also used for those who die without a will or intestate. Assets owned only by the decedent are usually addressed in the will and are distributed according to the decedent’s wishes. An executor is usually named in the will, and an administrator of the estate is appointed in the case of a decedent dying intestate. The executor takes an inventory of the decedent’s assets, pays the decedent’s outstanding debts and presents the inventoried estate to the court for settlement. If there are no objections to the will, the estate is closed. If there are objections, the probate judge is responsible for settling them. The longer the probate process drags on, the more expensive it will be.

Probate can be a time-consuming process. A modest estate may take six to 24 months to settle. Larger estates can take even longer, if they’re complex.  It also necessary to add in more time if the will’s contested or beneficiaries can’t be found. The longer the process, the more expensive it becomes. Probate costs in 2021 run about 3% to 8% of the value of the estate. Let’s look at the key costs of probate:

Court Costs. This includes filing fees. Some states require the same filing fee for all estates, while others have a graduated scale depending on the size and complexity of the estate. The more complex the estate, the higher the court costs.

Executor Costs. The executor of a will is typically paid at least a nominal fee. Fees are mandated by state law, unless the decedent specifies in his or her will what the executor should be paid. Some states permit a flat and “reasonable” fee which may be determined by the court. Other states require a graduated fee, such as a certain percent of the estate for the first $100,000 and so on. If the will doesn’t state the executor’s fee or if the decedent dies intestate, the court determines the executor’s fee.

Accounting Fees. Accounting costs can be high with more complex estates. If the decedent has complicated business affairs to sort out or owns many stocks and other securities, the complexity will require higher accounting fees. The accountant will also have to file federal and state taxes in the form of a final return.

Attorney Fees. When the executor believes an attorney is needed, the attorney is paid out of the estate. Attorney’s fees can be state-mandated, determined by the court, or set by the attorney depending on the anticipated workload.

Estate Administration Fees. The executor will often incur significant costs of administering the estate, such as property appraisals, and a real estate agent may have to be hired and paid to dispose of property or businesses. A property may also have to be managed until it’s sold or the estate is closed.

Reference: Nasdaq.com (Feb. 2, 2023) “How Much Does Probate Cost?”

 

mountains

Who Inherits TV Broadcaster Barbara Walters’ Estate?

Vim Buzz’s recent article entitled titled “Who Will Inherit Barbara Walters’ Estate?” says American broadcast journalist and television personality Barbara Walters also rose to fame and received praise for speaking with people like Hugo Chavez, Fidel Castro, Anwar Sadat, Menachem Begin, Katharine Hepburn, Sean Connery, Monica Lewinsky and Vladimir Putin.

She hosted a number of television shows, including Today, the ABC Evening News, 20/20 and The View.

Walters was well known for her interviewing skills and popularity with viewers.

Her “coming out of retirement” for a special 20/20 interview with Peter Rodger, the father of the murderer of the 2014 Isla Vista shootings, Elliot Rodger, was announced on June 10, 2014.

She spoke in-depth with presidents and their wives, like Richard and Pat Nixon and Barack and Michelle Obama. In fact, she spoke with every sitting president and first lady of the United States during her tenure.

She also spoke with Joe Biden and Donald Trump, but not when they were president.

The newscaster’s estate will be inherited by her family. Chief among her assets was a Florida retreat she purchased in 2014. That was the same year she announced her retirement.

However, the property was placed on the market shortly after her dementia diagnosis took a turn for the worse.

She purchased the three-bedroom, four-bath waterfront condo in Naples for $3.4 million.

Just two years later, in April 2016, she transferred the unit to her daughter, Jaqueline Dena Guber.

The 54-year-old Guber subsequently listed the home three months later for $6.78 million. The home spent time on and off the market until September 2018, when it sold for $5.35 million.

The complex is called Moraya Bay. This luxury building has a concierge service, a private beach club, a large state-of-the-art fitness center and full security.

However, in New York City, Walters had lived in the same Upper East Side apartment overlooking Central Park since 1989.

An ABC program titled “Our Barbara” aired on January 1, 2023, and a 20/20 senior producer remarked, “For a lot of years, we maintained a close eye on Barbara.

Her final public appearance was in 2016, and her final on-air interview was with Donald Trump for ABC News in December 2015.

Reference:  Vim Buzz (Jan. 3, 2022) “Who Will Inherit Barbara Walters’ Estate?”