Estate Planning Blog

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”

Do We Know What Was in Jerry Springer’s Will?

Legendary talk show host Jerry Springer died at age 79 last month. According to a statement from his family, he died peacefully in his home in suburban Chicago.

Talk show host Jerry Springer had been diagnosed with cancer several months ago and lost his battle. He’s survived by his daughter, Katie Springer, 47, whom he had with his ex-wife Micki Velton. Springer was married to Velton between 1973 and 1994.

The New York Post’s recent article, “Jerry Springer’s net worth: The fortune the legendary host left behind,” says that he leaves behind a fortune –estimated to be from $60 million to $75 million.

His fortune was amassed over a long and storied career. Before becoming a colorful and controversial talk show host, Springer was a politician who served on Cincinnati’s City Council in 1971. He was elected as the city’s mayor in 1977, serving just one term.

After politics, he went into television and became a news anchor and commentator at WLWT in Ohio City before taking on his most iconic role as a TV host when he launched his famous “Jerry Springer” show, which ran from 1991 to 2018.

He was also known for the “Judge Jerry” show, which aired three seasons, the Springer on the Radio Show, Baggage, and the Jerry Springer Podcast, and he even had a ‘60s folk music radio show in Cincinnati.

During a podcast interview in November of 2022, Springer said, “I’m just a schlub who got lucky.”

“Jerry’s ability to connect with people was at the heart of his success in everything he tried whether that was politics, broadcasting, or just joking with people on the street who wanted a photo or a word,” family spokesperson Jene Galvin said in a statement.

“He’s irreplaceable, and his loss hurts immensely, but memories of his intellect, heart and humor will live on.”

Reference: New York Post (April 27, 2023) “Jerry Springer’s net worth: The fortune the legendary host left behind”

Estate Planning Lessons from Elvis’ Mistakes

So far, part of the Presley legacy appears to be the failure to create effective estate plans, says a recent article from Kiplinger, “Five Estate Planning Lessons We Can Learn From Elvis’ Mistakes.” An effective estate plan transfers assets and legacy to the right people at the right time, while keeping the wrong people out.

In this case, the right people would be the people whom Elvis and Lisa Marie wanted to benefit, and a good estate plan would have ensured that their desired beneficiaries or heirs received their inheritance. The right time would be to give control of assets to loved ones when they are mature enough to benefit for a lifetime. Keeping the wrong people out would mean minimizing tax and administrative costs and protecting heirs from lawsuits, divorce, creditors and a second level of estate taxes upon their own death.

Most recently, Priscilla Presley challenged a 2016 amendment to Lisa Marie’s trust which would have removed Pricilla as co-trustee from serving alongside Lisa Marie’s former business manager, Barry Siegel. This may have been her intent. However, the amendment didn’t include basic legal formalities. A confidential settlement was recently reached on this issue.

Priscilla had grown Elvis’ estate after his death. Despite his fame, he left an illiquid estate worth $5 million in 1977—adjusted for inflation, roughly $20 million in today’s dollars. The IRS successfully asserted that the estate was worth far more and asserted $10 million in estate taxes.

The estate didn’t include as much royalty income as expected because Elvis’ business manager, Colonel Tom Parker, sold the music catalog to RCA for $5.4 million, of which only $1.35 million went to the estate. Priscilla then assumed control of the estate. From her wise use of Graceland profits, merchandising and royalties for music recorded after the RCA deal, Priscilla grew the estate to $100 million.

In 1993, Lisa Marie turned 25 and was eligible to receive and control her inheritance. She established a revocable trust to hold her inheritance, then appointed a businessman as her co-trustee with primary control over her assets. In two years, he sold 85% of her interests in Elvis Presley Enterprises, an entity The Elvis Presley Trust created to conduct business, including Graceland and worldwide licensing of Elvis Presley Products.

The deal was worth $100 million but brought the estate only $40 million after taxes, plus $25 million in stock in a future holding company of American Idol, later made worthless due to bankruptcy by its parent company.

Careful planning could have avoided substantial income tax on the sale and provided the family a much better financial return. Siegal was removed as trustee in 2015 when lawsuits between Siegel and Lisa Marie began, which were pending when she died unexpectedly in 2023.

The lessons from the Elvis estate:

Use a trust, not a will. The trust removes delays, and higher costs and keeps private details private.

Make sure that your estate plan addresses estate tax issues. The goal is to reduce the value of the taxable estate and increase the value of your legacy to family and loved ones. The estate tax must be paid in cash within nine months from the date of death. This often requires a sale of estate or trust assets to pay the tax and can lead to heirs getting less than the full value of assets because of the need to come up with the cash. A simple testamentary charitable lead annuity trust (TCLAT) could have prevented the estate tax assessed after Elvis’ death and provided substantial benefits to Lisa Marie.

Plan for a lifetime legacy. Lisa Marie gained complete control over her inheritance at age 25. First, however, she needed to prepare for the complexity of the business and other assets she inherited and learn how to maintain a lifetime of living within her means.

Plan for estate taxes on the sale of the family business. Careful planning can almost always reduce the tax triggered by the sale of appreciated property. Unfortunately, no tax mitigation planning was taken before the $100 million sale of Elvis Presley Enterprises. As a result, the maximum capital gains tax, federal and estate combined, can be more than 40%.

Carefully choose the successor trustee or executor and provide at least two alternatives. Elvis appointed his father Vernon as the executor. Elvis died tragically in 1977 when Vernon was elderly and not well. Appointing a business manager as a trustee creates an inherent conflict of interest due to the business manager’s ability to profit from decisions made. A professional trustee would have been a better choice due to the complexity of the estate and Lisa Marie’s age.

Reference: Kiplinger (May 18, 2023) “Five Estate Planning Lessons We Can Learn From Elvis’ Mistakes”

Is Jimmy Carter Spending a Long Time in Hospice?

The news that former President Jimmy Carter entered hospice care came in late February. The Carter Center announced that he’d “decided to spend his remaining time at home with his family and receive hospice care, instead of additional medical intervention.”

Now more than two months later, experts say that spending months at a time in hospice — while not always the case — is not at all uncommon, reports MSN’s recent article entitled, “Jimmy Carter’s Hospice Care Is Not Unusually Long, Expert Says: ‘Average Is 60-70 Days.’”

“A misconception is that the average length of stay in hospice is for the last several days of someone’s life,” explains Jonathan Fleece, president and CEO of Empath Health, one of the largest not-for-profit hospice organizations in the country. “The average length of stay nationally is in the 60- to 70-day range.”

While many consider hospice 24/7 care, it depends on a patient’s situation.

“A lot of hospice care is not 24/7. It’s in and out of the home and working with the family and caregiver to be able to support their loved one,” he says. “So we teach them a lot of different ways to help, whether it’s helping with bathing or administering medication or keeping them comfortable.”

It’s interesting to note that hospice was made eligible for Medicare reimbursement under the Tax Equity and Fiscal Responsibility Act of 1982 — which was passed into law under Carter himself.

“I truly believe that the former president wanted to make this part of the American conversation,” Fleece said.

Hospice care isn’t only meant for those at the end of life but for their family members, as well. It also provides caregivers and families with the resources they need.

This includes guiding family members through the grief and bereavement process, including the period of “anticipatory grief,” in which the family and patient know that death is coming.

Hospice care can also include things like veterans programs (Carter, being a veteran, would likely be provided with a pinning ceremony, in which a decorated soldier administers a flag with military honors). It also provides full medical care, as well as spiritual support.

“We hear all the time from families and patients, ‘I wish someone had explained the scale and depth and breadth of what hospice can bring sooner.'”

Reference: MSN (April 20, 2023) “Jimmy Carter’s Hospice Care Is Not Unusually Long, Expert Says: ‘Average Is 60-70 Days’”

Is Aretha Franklin’s ‘Voice-from-the-Grave’ Having an Impact on Litigation Over Estate?

In some voicemail messages from May 2018, Aretha Franklin mentions her desired adjustments to a will recently drafted by an attorney she’d hired. While Franklin is heard saying she’d like to arrange an office visit “to finish this,” those voicemails turned out to be her last communication with the attorney, and the eight-page document remained unsigned when she died a few months later.

The Detroit Free Press’ recent article, “Aretha Franklin voicemails revealed in court as estate battle takes latest twist,” reports that these voicemails made for a chilling “voice-from-the-grave” scene in the courtroom of Oakland County Probate Judge Jennifer Callaghan. The counsel for Franklin’s four sons gathered at the judge’s bench as audio was streamed from a laptop computer while three of the sons listened on from the gallery.

In the recordings left on the voicemail of the Troy estate attorney, the Queen of Soul sounds polite but firm as she states her requested changes to the drafted will.

The hearing was the latest twist in the long estate battle complicated by the discovery of multiple conflicting documents that indicate her final wishes. The 2018 draft is one of three wills as the judge considers how the estate will be distributed among the four sons and other heirs.

The document was filed to the court in 2021 by Ted White II, the second youngest of Franklin’s sons. It followed the appearance of two handwritten wills, penned by the singer in 2010 and 2014 and found tucked away in her home after her death. The wills have varying instructions, which has made for a contentious impasse among her sons. The 2018 draft is the only one that calls for assets to be split equally among the three youngest, with eldest son Clarence Franklin, who has special needs and is under guardianship, to be supported by a trust.

A jury trial is scheduled for July to determine which — if any — of the documents should be upheld. The recent hearing was scheduled to determine if the unsigned 2018 draft is admissible under Michigan statutes. The judge is expected to rule later this month.

Reference: Detroit Free Press (April 21, 2023) “Aretha Franklin voicemails revealed in court as estate battle takes latest twist”