Estate Planning Blog

Lessons from the Hilton Trust Contest: Navigating Estate Planning with Foresight

Even famous families like the Hiltons aren’t above estate planning problems. As Kiplinger reports, businessman and philanthropist Barron Hilton did many things right. Nevertheless, his family felt underserved by his will and challenged it, which shows the depth of preparation necessary to carry out your wishes.

What Happened with the Hilton Family Trust?

Barron Hilton made significant changes to his estate plan after his wife Marilyn died. He left 97% of his estate to charity, with only 3% to his children and family. Despite taking steps to avoid disputes, his family contested the trust. This delayed the IRS’ issuance of the charitable donation dedication for his estate and illustrates that even a well-planned estate can face challenges.

Lessons from the Hilton Trust Contest

Can You Prevent Family Disputes over Your Estate?

One key lesson from the Hilton case is the importance of clear communication. Open communication about your estate plan and discussing your wishes openly with your heirs can reduce misunderstandings and prevent future disputes. Not only did Barron Hilton inform his family of his intentions well in advance, but he also issued a public statement explaining his charitable intentions. Including a statement of purpose within your estate documents can further clarify your intentions and create a stronger case against estate challenges.

Should You Consider a Nonqualified Disclaimer?

Barron Hilton used a nonqualified disclaimer to provide for his children and his charitable goals during his lifetime. The California Probate Court approved this move, which allowed his children to receive assets earlier than the trust stipulated. This isn’t without tradeoffs; however, these withdrawals were open to gift tax liabilities.

Is a Post-Marital Agreement Necessary?

Barron and Marilyn Hilton had a post-marital agreement that clarified the division of their assets. This agreement ensured that certain assets remained Barron’s sole property, which he later directed towards charity. Such agreements can provide clarity and prevent disputes over asset ownership.

Why Obtain Written Consents from Heirs?

Barron Hilton obtained written waivers from his children, agreeing not to contest his disclaimer of the marital trust. Done correctly, such consents can prevent legal battles. But if you’re not careful, inheritors can contest them as being conditional or coerced agreements.

Should You Consider Your Heirs’ Attitudes and Relationships?

Understanding your heirs’ relationships and attitudes towards money is crucial. Not everyone is ready to receive a large inheritance all at once. Likewise, receiving a large sum might impact their relationships in a way you don’t intend. Trusts are valuable tools to exercise more control over how exactly you leave money to loved ones.

How to Choose Successor Trustees?

Choosing the right successor trustees is vital. Sometimes, appointing a family member can lead to conflicts, especially if there are restrictions on their share. An independent trustee or a co-trustee with a tiebreaker can help manage disputes.

Why Include Personal Property in Your Estate Plan?

Personal items can hold significant sentimental value and may become points of contention. Address the division of personal property clearly in your estate plan to avoid disputes over items with emotional significance.

Can Charitable Planning Benefit Your Estate?

Incorporating charitable giving into your estate plan can provide tax benefits, and support causes that are important to you. Barron Hilton’s significant charitable contribution reflects his desire to make a positive impact, a goal many people share.

The Hilton family trust contest underscores the importance of thorough and thoughtful estate planning. Clear communication, legal agreements, and consideration of family dynamics can help ensure your wishes are honored and prevent disputes.

Start Your Estate Planning Today

If you want to learn more about effectively planning your estate and creating a trust that reflects your wishes, contact us today. Schedule a consultation to secure your legacy and peace of mind.

Key Takeaways

• Clear Communication: Ensure your wishes are clearly communicated to all involved parties to avoid misunderstandings.
• Regular Updates: Regularly update your estate plan to reflect any changes in your life circumstances.
• Professional Guidance: Seek advice from a knowledgeable estate planning attorney to ensure your plans are legally sound and comprehensive.
• Consider Trusts: Trusts can help manage and protect your assets. However, setting them up properly is crucial to avoid disputes.

Reference: Kiplinger (April 2024) “Nine Lessons to Be Learned From the Hilton Family Trust Contest”

Elvis Presley’s Estate Planning Mistakes: Lessons for Us All

Even the King of Rock ‘n’ Roll wasn’t immune to estate planning mistakes. Elvis Presley passed away in 1977 with a net worth of around $5 million. Nevertheless, poor estate planning resulted in significant financial challenges for his daughter, Lisa Marie Presley, who inherited the estate at age 25. Unfortunately, the saga of estate mismanagement continued with Lisa Marie’s untimely death in January 2023. This article examines the lessons we can learn from these oversights.

Why Did Elvis’s Estate Plan Fail?

Over-Reliance on a Will

Elvis relied on a basic will instead of a more comprehensive estate plan, such as a trust. While wills provide instructions for asset distribution, they don’t protect beneficiaries from probate. This led to significant legal costs and delays, reducing the estate’s value. Furthermore, only a fraction of his estate remained after creditors, unscrupulous business partners and the IRS took their share. Kiplinger details how these mistakes haunted his daughter, Lisa Marie Presley.

Excessive Spending

Elvis was generous and free spending. However, his estate planning didn’t account for this. As a result, much of his inheritance went to creditors rather than his daughter. However, creditors weren’t the only ones claiming what Elvis left behind. The most significant loss was to the IRS, which claimed that the estate tax was worth double the value of Elvis’ estate.

Trusting the Wrong People

Elvis trusted Thomas Parker, better known as Colonel Parker, with business management.  However, Parker was a Dutch illegal immigrant with a history of mental instability. The Army discharged him following a “psychotic breakdown,” and he had only served as a private. Parker’s business deal entitled him to 50% of Elvis’ profits and enabled him to sell Elvis’ song catalog. He kept most of the profits, depriving the family of any royalties.

Lack of Estate Planning

Between the IRS, creditors and Parker, the woes Elvis left his loved ones have one thing in common: They were avoidable estate planning mistakes. While few people trust their will to Colonel Parker, many leave behind a will that doesn’t protect their loved ones. Advanced estate planning strategies, such as the creation of trusts, are much more reliable than a simple will.

Can You Avoid Similar Estate Planning Mistakes?

A will is better than nothing, but it’s only the start. Develop a comprehensive estate plan that includes a trust and a power of attorney, and follow these steps:

• Plan for Estate Taxes: Many ways exist to reduce estate taxes. Consider strategies like gifting assets and establishing trusts.
• Maintain Liquidity: Set aside liquid assets to cover immediate family needs and creditor expenses.
• Regularly Review and Update Plans: Life changes, and your estate plan should too. Ensure that your estate is set up to provide your loved ones with what you wish for them.
• Consult with a Reputable Estate Advisor: Estate law is complex. Consulting with an estate planning professional can help you avoid Elvis’ mistakes.

Take Action to Avoid Estate Planning Mistakes

Don’t let your loved ones face unnecessary financial difficulties. Develop a comprehensive estate plan with the help of our estate planning attorneys.

Key Takeaways

• Elvis Presley’s Estate Planning Mistakes: Elvis relied on a basic will and trusted people he shouldn’t. Consequently, his wife Priscilla and his daughter Lisa Marie Presley only received a fraction of his estate. If the King of Rock ‘N Roll needed a thorough estate plan, we all do.
• Avoid Estate Planning Pitfalls: A comprehensive plan centered on trusts to protect your loved ones avoids many common mistakes.
• Contact a Trustworthy Professional: Elvis’ business partners sold many of his assets for personal benefit. Rely on a reputable estate planning attorney to give your family the best opportunities.

Reference: Kiplinger (May 17, 2023) “Five Estate Planning Lessons We Can Learn From Elvis’ Mistakes”

What Will Happen to O.J. Simpson’s Assets?

A wrongful death lawsuit in 1997 found O.J. Simpson liable for the deaths of ex-wife Nicole Brown-Simpson and her friend Ron Goldman. Yet, their families have received little of the $33.5 million judgment levied by a California civil jury. According to an article from The Washington Post, “If O.J. Simpson’s assets go to court, Goldman, Brown families could be first in line,” we may find out soon whether or not Simpson had done any estate planning.

If Simpson had only a will, the estate would go through the probate process in court. Probate laws vary from state to state, but generally, the estate is filed in the person’s state of residence. Simpson resided in Nevada but might have owned assets in California or Florida, where he resided at different times. If that’s the case, separate probate cases will also be opened in those states.

The Nevada probate rule requires an estate to go through probate if its assets exceed $20,000 or the decedent owns any real estate. Probate must take place within 30 days, so things may happen quickly.

If no documents are filed, creditors can file claims to recover assets. The Goldman and Brown families may not be alone in filing for assets, but they’ll undoubtedly have a higher visibility than a credit card company or bank.

In California, the law holds that creditors with a judgment are considered to have “secured debt” and take priority over other creditors. In one instance, a family was awarded $9 million by a jury, but the debtor subjected them to a prolonged series of appeals and delays. When the debtor died, the estate paid the $9 million plus accrued interest of $3 million.

Did Simpson leave an estate big enough to cover his debts? At the time of the civil lawsuit, the court seized many of Simpson’s possessions. He was forced to auction his Heisman Trophy, which brought $230,000. He claimed to only have income from pensions, one from the NFL and the other a private pension.

Whether Simpson had a structured estate plan with trusts could affect how his creditors will be compensated. The creation and funding of the trusts will also affect their accessibility. Irrevocable trusts are robust legal entities but may not always be 100% impenetrable.

A transfer of assets made to avoid paying creditors is considered fraud, so any trust could be deemed invalid. If this occurs, the Goldman and Brown families may file separate lawsuits to attach assets in the trust.

You don’t have to be famous to have creditors trying to get assets from your estate. Seeking advice from an estate planning attorney about structuring your estate to shield inheritances from creditors is always advisable.

Trust Protectors: Safeguarding the Future of Special Needs Trusts

Serving as the trustee of a special needs trust (SNT) can be particularly challenging because it often requires long-term financial management of the trust, while maintaining a good relationship with the beneficiary. Furthermore, because trustees wield great financial power over the trust assets, oversight of their investment and distribution decisions is helpful. Trust protectors can add an additional layer of protection to oversee the management of a trust, supervise the trustee’s actions and remove and replace the trustee when needed. This article delves into why appointing a trust protector is a vital decision that can significantly impact the management of a SNT and guard the beneficiary’s rights.

The Case of Senator Feinstein: A Cautionary Tale

U.S. Sen. Dianne Feinstein’s lawsuit against the trustees of her late husband Richard Blum’s trust, as related in The Hill’s article, “Feinstein accuses trustees of husband’s estate of financial abuse”, highlights one reason why a trust protector may be helpful. Before her death in September 2023, Feinstein accused the trustees of withholding funds and breaching their fiduciary duties.

Through three separate lawsuits, Feinstein claimed that the trustees breached their fiduciary duties to honor the terms of the trust by not making the anticipated distributions of $5 million that were supposed to be placed into her trust in quarterly installments. She argued that the trustees’ inaction in their administration of the trust was intended to benefit Blum’s daughters at her expense, who were slated to receive $22 million each from the trust without Feinstein’s distribution.

For the late Sen. Feinstein, a trust protector may have provided the needed control over the trust assets to leverage the distribution intended by her late husband, who was the settlor. In the context of a special needs trust, where disabled beneficiaries may not be able to supervise their trustees, the role of a trust protector becomes even more critical in managing the trust.

What is a Trust Protector?

Special Needs Alliance explains in the article “Trust Protectors for Special Needs Trusts” that a trust protector is a person appointed to oversee the actions of the trustee and ensure that a trust is administered in line with the settlor’s intentions. Suppose a trustee performs in a manner that is unsatisfactory or even mismanages the trust assets. In that case, the trust protector can be empowered by the trust document to replace that person with a successor trustee. This role is particularly important in special needs trusts, where beneficiaries might not fully understand or be able to manage their financial affairs due to the nature of their disabilities.

How Does a Trust Protector Oversee the Trustee?

A trust protector works alongside the trustee, providing an extra layer of oversight in managing the trust assets according to the instructions in the trust document. They can resolve disputes, guide trustees and ensure that the trust’s administration aligns with the settlor’s intent. Trust protectors are granted various powers, including the ability to review trustee actions, including distribution decisions, replace the trustee and amend trust terms to adapt to changing laws and beneficiary needs. Their primary responsibility is to act in the best interests of the beneficiaries.

How Do Grantors Choose the Right Trust Protector?

Naming a trust protector involves considering their expertise, impartiality and understanding of the beneficiary’s needs. A third party, such as an attorney, accountant, or other professional, can often serve in this role. Family members who may be too challenged by the role of trustee also make a good choice for the trust protector. Selecting a family member who has a good relationship with the beneficiary, understands the nature of their disability and can serve as a good mediator between the trustee and beneficiary is a wise choice.

What Role Do Trust Protectors Play in Special Needs Trusts?

In special needs trusts, trust protectors play a vital role in ensuring that the trust caters to the unique needs of the beneficiary, considering their disability and inability to manage financial affairs. Their role can vary based on the trust agreement terms and state laws. The trust protector can review financial decisions or investments and sometimes force large distributions for purchases, like a house or car, based on the impact on the beneficiary. They can also help the beneficiary understand financial statements and tax documents provided by the trustee.

Is a Trust Protector Also Important to Consider for General Estate Planning?

Incorporating a trust protector into any trust adds an extra layer of protection and adaptability, ensuring that the trust remains effective and relevant over time. Only a few states have specific laws authorizing and regulating trust protectors. Therefore, it’s essential to work with an experienced estate planning attorney to carefully draft the trust to define the role and anticipate potential issues in exercising the power of the trustee or trust protector.

The Future of Trust Protectors in Estate Planning

As laws and family dynamics evolve, the role of trust protectors is becoming increasingly important in estate planning, offering flexibility and protection for beneficiaries.

Conclusion

Trust protectors offer an essential safeguard in trust administration, especially for special needs trusts. Their oversight ensures that the trust remains effective, adaptable and true to the settlor’s intentions, providing peace of mind for both settlors and beneficiaries.

• Trust protectors provide essential oversight and adaptability.
• They ensure that the trust’s administration aligns with the settlor’s intent.
• Their role is crucial in special needs trusts for beneficiaries who cannot manage their affairs.
• Trust protectors are becoming increasingly important in modern estate planning.

What Is Happening with Barbara Walters’ Estate?

New York Post’s recent article entitled, “Barbara Walters’ belongings auction-bound — own a piece of the broadcaster’s beloved NYC home,” reports that later this month and into early November, more than 300 items from Barbara Walters’ Upper East Side apartment of more than 30 years will be up for auction.

The famous news anchor — who passed away late last year, aged 93 — spent more than 30 years at her posh dwelling, “surrounded by treasured American Art, jewelry, fashion, furniture, decorative items and cherished personal mementos — all of which will be going under the hammer” in a live and online auction, reads a description by auctioneer Bonhams.

“In line with Walters’ commitment to philanthropy, the net proceeds of the sale will benefit charities dear to Walters.”

More than 120 pieces of jewelry will be on offer, including many of the bold earrings and brooches Walters became known for wearing during her legendary interviews.

One of these is the 13.84-carat engagement ring Merv Adelson gave Walters during their brief marriage (estimated to be worth anywhere from $600,000 to $900,000), a ruby and diamond floral brooch Walters wore to the Waldorf Astoria in 1991 for the eighth annual Night of Stars fashion festival, as well as gifts from celebrity friends, including a silver-plated cigarette box she received from Michael Douglas and Catherine Zeta-Jones.

Her extensive dinnerware collection is also up for auction. These are fine China teacups and dishes likely used by the star-studded guests of her soirees, from Dr. Henry and Nancy Kissinger, Oscar and Annette de la Renta and Andrew Lloyd Webber to Hugh Jackman.

For anyone with $19.75 million to spare, Ms. Walters’ silverware and art pair wonderfully with the apartment itself, which hit the market in April.

Located at the white-glove cooperative 944 Fifth Avenue, the unit (currently configured as a two-bedroom) boasts a wood-burning fireplace, 10-foot-high ceilings, views of Central Park, and, of course, the priceless association with a woman who was once the world’s highest-paid news anchor.

Reference: New York Post (Oct. 5, 2023) “Barbara Walters’ belongings auction-bound — own a piece of the broadcaster’s beloved NYC home”

What Is in Senator Dianne Feinstein’s Estate?

The properties demonstrate Feinstein and her husband’s expansive wealth and success in their respective fields, according to BNN’s recent article, “Feinstein’s Billionaire Legacy: Children to Inherit Prominent Properties Amid Disputes.”

Feinstein, who was raised with money, has been one of the wealthiest members of Congress for years. She was independently wealthy when she married Richard Blum in 1980. After her election to the Senate, she placed her securities into a blind trust valued between $5 million and $25 million.

The couple’s combined fortunes have thrived, surpassing even the senator’s previous standard of living. Her primary residence is a 9,500-square-foot mansion in the posh Pacific Heights neighborhood of San Francisco. Until recently, their vacation homes included the 36-acre Bear Paw Ranch in Aspen, Colorado, and a seven-bedroom Lake Tahoe compound. Current holdings include a property on the Hawaii island of Kauai and a home in Washington, D.C.

However, the battle over Blum’s estate raises questions about the extent of his wealth and the out-of-pocket cost of home health care that Senator Feinstein has received since her bout with shingles earlier this year. During his lifetime, Blum, a private equity magnate, was often publicly referred to as a billionaire. However, the pandemic reportedly significantly impacted his investments, particularly his extensive hotel holdings.

An ugly dispute has arisen among the couple’s children, casting a new light on their fortune, and hinting at a potential court battle over the estate. Feinstein’s daughter, Katherine, and Blum’s three daughters, Annette Blum, Heidi Blum Riley, and Eileen Blum Bourgarde, will split the estate equally.  However, a dispute has come up concerning a waterfront house in Marin County, California, valued at $7.5 million, which was at the center of a dispute between Katherine and Blum’s daughters this year.

The couple’s wealth is largely attributed to his success as an investor. Feinstein’s daughter and three stepdaughters are set to inherit the late senator’s $102 million property portfolio and her $62 million private jet.

The distribution of the portfolio, estimated to be worth over $160 million, is now a big issue among the couple’s children.

Reference: BNN (Oct. 3, 2023) “Feinstein’s Billionaire Legacy: Children to Inherit Prominent Properties Amid Disputes”

What was in Singer Sinéad O’Connor’s Estate Plan?

The late “Nothing Compares 2 U” singer told People in 2021 that she wanted to protect her art and finances at all costs if she dropped “dead tomorrow.”

Sinéad O’Connor revealed in 2021 that she gave her children instructions for her death, reports Page Six’s recent article entitled, “Sinéad O’Connor gave kids instructions for what to do if she dropped ‘dead tomorrow.’”

“See, when the artists are dead, they’re much more valuable than when they’re alive,” she told the magazine at the time.

The controversial Irish singer told her children from when “they were very small” that if their “‘mother drops dead tomorrow, before you called 911, call my accountant and make sure the record companies don’t start releasing my records and not telling you where the money is.’”

O’Connor was found dead at her London home on July 26^th. She was 56.

While no cause of death has been given, authorities announced that the late performer would undergo an autopsy. The test results are expected to be returned in “several weeks.” Police also said that O’Connor was “pronounced dead at the scene.” However, her “death is not being treated as suspicious” as no foul play was suspected.

“It is with great sadness that we announce the passing of our beloved Sinéad,” her family confirmed in a statement. “Her family and friends are devastated and have requested privacy at this very difficult time.”

O’Connor never quite recovered from her 17-year-old son Shane’s suicide in January 2022, tweeting that she had been “living as an undead night creature” ever since he took his own life.

“He was the love of my life, the lamp of my soul. We were one soul in two halves. He was the only person who ever loved me unconditionally,” she continued.

“I am lost in the bardo without him.”

O’Connor is survived by her three other children: Jake, 36, daughter Roisin, 27 and son Yeshua, 16.

Reference: Page Six (July 28, 2023) “Sinéad O’Connor gave kids instructions for what to do if she dropped ‘dead tomorrow’”

Did Media Mogul Pat Robertson Have a Large Estate?

Conservative Christian Pat Robertson died in June at the age of 93. He left behind a massive estate that almost certainly entails some special circumstances from a tax and legal standpoint. Robertson founded The Christian Broadcasting Network, Regent University, the American Center for Law and Justice, Operation Blessing, and International Family Entertainment. He was a political force who helped shape modern-day conservatism in the U.S. As longtime televangelist host of “The 700 Club,” he helped expand the influence of religion in today’s Republican Party, and he was known for speaking his mind on numerous social issues.

Robertson was also extremely wealthy, says Investment News’ recent article entitled, “‘700 Club’ founder Pat Robertson’s death raises estate planning questions.” In addition to an estimated hundreds of millions of dollars generated by the initial public offering of Robertson-owned International Family Entertainment in the early ’90s, the televangelist had a sprawling, 11,000-square-foot luxury retreat on 27 acres in rural Virginia, as well as other potential assets that could be part of his estate.

Robertson also may have intellectual property rights, including religious recordings, ancillary interests in the network and maybe even rights of publicity, as his name and image carry value in the evangelical community. Publishing under his name may be profitable, which means it could be an asset of the estate.

If he didn’t have a trust, his estate would be subject to distribution according to Virginia intestacy statutes. This potentially could differ from his intentions as a religious leader. With his dedication to charitable efforts, it’s easy to think that he wanted to perpetuate the work of The 700 Club.

If Robertson did create a trust and included provisions to allocate a considerable portion to The 700 Club or other nonprofit organizations, he would have alleviated concerns regarding estate tax implications.

These types of bequests to nonprofit organizations are deductible against the estate’s value, which reduces the burden of estate taxes. Current tax laws allow an unrestricted number of charitable bequests against an estate, making this a potent strategy for mitigating estate tax liabilities.

Charitable trusts prepared beforehand are a way for religious leaders to extend control of their donated assets beyond their lifetimes.

Reference: Investment News (June 9, 2023) “‘700 Club’ founder Pat Robertson’s death raises estate planning questions”

Did Jerry Springer Really Leave His Fortune to Two Teens?

Twitter was buzzing recently as a clip made the rounds showing the late television personality – buried in a ‘small’ private ceremony – reading a last will.

However, it was quickly discovered that it was actually from a 2020 virtual play called Blood Money, where the talk show host had a cameo role.

The Daily Mail’s recent article, “Jerry Springer viral for will giving large portion to two Black kids,” reports that in the clip, Jerry could be seen addressing five people, including two who happened to be Black.

Springer looks at a document and says: “Joan kept me away from you with the threat of exposure. She did not keep me from providing for you. You see I told her that if I had to accept the life without you she would not get a red cent of my fortune and that you would be named equally on my will in the event of my passing.”

“But with everything going on in the world right now, I realize that I have to go a step further. Jordan, Megan, I leave our home here in New Orleans to you to do whatever you want. The rest of the estate, my properties in Mississippi, Georgia, South Carolina, my bank accounts, investment portfolios, all liquid and intangible assets everything all of it will go to my children John and Misha.”

Springer goes on to say, “Girls all of your life I’ve been telling you to make your millions and I hope you have. If not, you could always sell the house and split the profit but my entire estate.”

Many who believed the clip was legit took to Twitter to react.

One person wrote, “The best Jerry Springer episode ever is Jerry reading his own will [two red exclamation point emojis] He had two black children out of wedlock, wife threatens to expose, so he keeps it under wraps until he dies, then leaves all his money to the children he never met. What a legend [two red exclamation point and mind blown emojis]”

Another posted, “Wow, Jerry Springer really went out with a bang. This is his will and final testament on this earth.”

Meanwhile, weeks ago, Springer got emotional as he talked about his family perishing in the Holocaust. He also revealed that his daughter seeing him perform The Waltz on Dancing with The Stars was his ‘single happiest moment in television’ in a wide-ranging final interview before dying at 79.

Reference: Daily Mail (May 16, 2023) “Jerry Springer viral for will giving large portion to two Black kids”