Boston Massachusetts Estate Planning Attorney William J. Brisk writes about issues relating to Estate Planning, Elder Law, Medicaid, MassHealth, Estate Litigation, Business Succession, and planning for Nursing Home Care.
An elderly New Hampshire woman met an on-duty police officer and decided to rewrite her will to include him, creating rising costs for expert testimony as well as challenges from the community.
Geraldine Webber's case, which has been followed closely by estate planning blogs, was initiated when she decided to rewrite her will and leave police officer Aaron Goodwin, a much younger man with a wife and children, a $2 million inheritance.
The will was challenged by a group of Webber's friends, two hospitals, a city and a school on the basis that Goodwin had unduly influenced and taken advantage of her. The challengers won the case.
A doctor, who was hired by the estate to serve as an expert witness, concluded that Webber was competent and not suffering from dementia at the time she signed the will.
The doctor, who reached his conclusion by reviewing medical records and visiting Webber's home, had never met her. For his services to the losing case he is asking to be paid $70,120 by the estate. A judge will have to approve the amount.
That is how probate can get so expensive.
The testimony of one expert witness for the losing side can cost $70,000. Imagine if there had been other expert witnesses and not just the one.
The entire bill may not be approved by the court but the doctor giving the expert testimony will most definitely result in a fee being paid out from the estate.
Richard Mellon Scaife received a multi-million trust from his mother that was intended to be passed on to his children. When he died it was learned the trust was empty and the children would receive nothing.
Scaife had apparently drained the trust of all its assets to prop up his failing newspaper. His children are suing the trustees on the basis that they should not have allowed Scaife to drain the trust for that unintended purpose.
It further appears that, in conversations with its legal advisors, PNC was wondering if Scaife's requests were proper and, if not proper, how the bank could protect itself from potential liability for accommodating them. The children claim that they were never informed.
As the case winds its way forward, the trustees could face problems if it is learned they were aware the trust was not supposed to be emptied but did not deny his requests. They could be held liable if they failed in their duty.
A recent email I received prompts these reflections about brief encounters I’ve had with two of my heroes. Although I’ve attended one of his lectures and read virtually all of his books and articles in the New Yorker, the only time I met Atul Gawande (who lives in Newton, MA) was at a local book store; I was one of 15 or so customers attending a discussion Atul led on Leo Tolstoy’s THE DEATH OF IVAN ILYICH. Atul, an outstanding surgeon at Brigham and Women’s hospital, in his spare time, writes compellingly about both good and bad practices in medicine that explore lessons that can be useful in other fields. I refer frequently to an article he wrote on “Coaching,” and we’ve based some of our “systems” on his CHECK LIST MANIFESTO. I recently reviewed, most favorably, his latest book, BEING MORTAL, a best seller for more than a year, which incidentally refers to Tolstoy’s novella as the only preparation he received in medical school on dealing with dying patients.
A few years ago I was invited to an annual American Society on Aging meeting in Chicago to participate in a fascinating panel on financial competence. (We all referred to our separate articles written for a symposium on the subject published by the ASA’s journal, Generations.) Ken Dychtwald delivered the meeting’s keynote address on how “aging” has changed in the last century. He illustrated his point by showing, side-by-side Whistler’s famous portrait of his mother (“a study in Grey” is its formal title) and a vibrant photograph of Sophia Loren – at exactly the same age. The contrast is amazing. When he finished his speech, I was part of a small group of admirers who clambered for his attention. That encounter earned me the privilege (among thousands of other admirers) of receiving emails and blogs from Ken on his and his wife’s latest work.
While they focus on distinct issues, Gawande and Dychtwald are passionate and articulate about issues I care about deeply. Many of you probably share my admiration for them. Their articulate visions about the benefits and costs of increasing longevity involve thoughtful speculation about major social forces in the twenty first century and compel us to consider new perceptions of how “aging” has taken on new meaning. That was Ken’s original purpose when he published AGE WAVE in 1988 by, first, documenting the unprecedented lengthening of human life since 1899 and further increases since 1945. To understand how significant his findings are, you must understand that for millennia of recorded history, average life expectancies had hovered around 20 years. Dramatic changes occurred at the beginning of the Twentieth Century by eradicating what had been as much as 20% of deaths afflicting new borns. After the Second World War, improved nutrition and medical science postponed both death and morbidity as never before. As recently as 1899, Americans lived on average only 47 years while Americans today expect to live at least 80 years.
Dychtwald helps us understand the dramatic (unprecedented, incredible, whatever adjective you choose) changes when “aging” is redefined. Institution such as child bearing and child rearing, marriage, family, education, retirement, even deaths have to be reconsidered.
A recent interview with Ken, conducted by Daniel D. Williams, is an appropriate introduction to why aging longer is not an unmixed blessing. He points out that, although we’re well past the 65 year old benchmark that our parents and grandparents thought of as old age, it was the “time that people largely felt done. It was a time of winding things up, winding things down. It was surely not a time of new beginnings or going back to college or reinventing one’s self.” Reaching 65 is still a good time to assess your goals for the next 15 years of your likely life, but for most of us, that’s just the beginning of what can be fruitful existence.
Email me at email@example.com if you’d like a copy of Williams’ interview with Dytchtwald, Atul Gawande’s article on “Coaching,” or my review of BEING MORTAL or all three of them.
A nanny employed by the 7th Earl of Lucan was found murdered at the Lord's home in 1974. The Lord's wife was found severely beaten and his car was found bloodstained and abandoned. The Lord was convicted of the murder and has been a fugitive ever since.
Over the years there have been numerous reported sightings. In 1999 the High Court declared Lord Lucan officially dead.
The court's declaration allowed property to go to heirs and let his family get on with their lives.
However, it did not allow for Lord Lucan's son to inherit the title and become the 8th Earl of Lucan.
As the headline suggests the nanny's son is asking that Lord Lucan not be declared presumed dead.
In the United States, we do not have to deal with titles of inheritance and the estate headaches that they can bring. On the other hand, we do sometimes have to deal with missing persons and when they can be declared deceased for other estate purposes.
Perhaps an attorney should be consulted if you have a relative who has been missing for a long time and you are considering an effort to declare them deceased.
Some wealthy families continue to amass wealth generation after generation. The article points out how this occurs: the families that continue to thrive leave an "intellectual inheritance" for heirs.
Consequently, they educate their heirs about the family's legacy and values. They have conversations with their heirs about how the wealth was generated and why it is so important that it be maintained through continued hard work.
Think about this when you are creating your own estate plan.
While an expert estate plan prepared by a professional goes a long way, it is also important for future generations to have intellectual inheritance as well as wealth.
Guardian systems across the country are increasingly overwhelmed by charges of abuse and financial fraud, described by an in-depth report by TheWall Street Journal's,"Abuses Plague Guardianship Systems Across the Country." The stories of elderly people with substantial assets who are being fleeced by those appointed by courts to protect them are infuriating. The system seems to only serve those who are profiting from it, at a tremendous cost to the victims.
"These laws which were designed to protect the vulnerable are being used against them to exploit them," Dr. Sam Sugar is quoted as saying. Sugar is the founder of Americans Against Abusive Probate Guardianship, an advocacy group.
Because guardianship systems vary by state and county and record-keeping systems are inconsistent, exact national data is unavailable. Nevertheless, the report notes that the roughly 1.5 million adult guardianships in the U.S. deal with about $273 billion in assets.
These issues are getting more urgent as aging baby boomers will cause the population of seniors to just about double by 2050, according to Census estimates. For example, in New Jersey, the number of adult guardianships added annually increased 21% from 2009 to 2014, to 2,689 cases.
Guardians who have proper judicial oversight generally do a good job protecting elderly people from exploitation by acquaintances and others. But the worst cases are those where there is no guardian.
The expenses that are part of a guardianship—including legal representation for both guardians and wards—typically get paid from the ward's assets. Some jurisdictions have a public guardian's office that handles cases for indigent clients. But this financial arrangement, critics say, encourages lawyers and guardians to perpetuate guardianships indefinitely.
Talk with an experienced elder law attorney about guardianships and make sure that your loved one is being cared for in the best possible way.
When you change the beneficiary on a retirement account, the update can be as easy as filling out a form. But it's the communication with your heirs that's key, especially since estate planning isn't the most enjoyable topic to discuss.
Surprises are what cause hurt feelings and even litigation. As a result, you need to figure out a way to explain the estate planning changes to your children or heirs. The starting point to any successful estate plan is a will, which is a legal document that details which heirs are to receive which assets or properties you own.
Online programs can be helpful, but user error is typically how things go wrong when drafting wills without the help of an attorney.
Another factor is taxes. A person who has a total estate of less than $5.45 million in 2016 won't pay any federal estate tax, but above that, it's a 40% flat rate (the threshold for the federal estate tax was raised a bit for 2016 from $5.43 million in 2015.).
All the same, federal estate taxes generally won't be a concern for most Americans because one would need an estate worth over $5.45 million in order for the federal estate tax to apply.
Each of us has a lifetime exemption up to that threshold. However, you should keep in mind that individual states have different thresholds. For example, some states have thresholds that are only in the six figures, which may affect more people.
Talk to a qualified estate planning attorney to draft your comprehensive estate plan. Don't be tempted to go to the Internet and try it yourself.
Someone with a disability or who has received a major settlement due to an accident that has left them unable to care for themselves is not the person who needs an incentive trust, according toThe Greater Wilmington Business Journal article, "Trusts Can Include Incentives For Heirs To Act Responsibly." For individuals in those situations, a regular trust needs to be set up to ensure that they have the care and comfort that they need. But for situations that involve what we today call "bad choices," there is the incentive trust.
You must use great care when creating an incentive trust.
Attempting to control too many aspects of an heir's life can be counterproductive: it's called trying to "rule from the grave," or making an inheritance conditional. Examples of "incentives" include completing a certain degree or entering a certain line of work that may not be in line with an adult's actual talents or aspirations.
Nonetheless, where a clear pattern of negative actions exists, the right incentives can encourage an heir to make better life choices.
It's important to be realistic. The promise of inherited money may not be enough to overcome a pattern of severe substance abuse, so the threat of giving the inheritance to charity if specified incentives aren't met might be needed.
It may be a good idea to attach age restrictions.
If you have a kid who is irresponsible with money, a trust might be structured so that s/he will not have access to the estate's principal until a certain age. Some trusts set up staggered distributions, at specified ages, to keep them from burning through their inheritance right away. Another way to encourage a responsible lifestyle is to distribute trust funds on a matching basis. That might be dollar for dollar, based on what the beneficiary earns on his or her own. This is known as a "work ethic" clause.
Another sort of incentive clause could specify that the trustee wouldn't distribute any money until the heir showed an ability to handle the funds. For someone with an abuse problem, this could be enforced by requiring the beneficiary submit to random drug testing. Failure to comply could result in the assets being distributed to alternate beneficiaries, like charities.
Instead of just disinheriting a child or grandchild, an incentive trust can work as an escape clause. It might just help to get someone who's struggling to turn his or her life around.
Contact a qualified estate planning attorney to help you create the appropriate incentives for your unique circumstances.
Before we get to the fascinating details reported in The Wall Street Journal's "When the Superrich Die, Here's What's in Their Wallets," we need to cover a few basics. The information reported in the data sample comes from returns filed in 2014; in other words, from estates of people who died in 2013. And it should be noted that the estate tax applied to estates of individuals over $5.25 million and a top rate of 40%.
The most important thing to remember about the estate tax is that it really doesn't apply to most folks, just to a few of the very rich. Congress increased the exemption and indexed it to inflation, ensuring that almost all of the 2.6 million people a year who die in the U.S. need not worry about estate tax. That leaves just the very wealthiest in the country.
Fewer than 12,000 estate tax returns were filed in 2014—more than 50% of those didn't yield any tax for the federal government.
The data showed that the uber-wealthy don't provide much information about the ways they shift assets out of their ownership or the planning maneuvers that can decrease the size of estates prior to death. Those who died with more than $50 million (the top tier) were heavily invested in stock and closely held businesses.
Those who were rich enough to file an estate tax return–but not at the very top–relied much more heavily on retirement accounts like 401k's and real estate. The types of assets change as people get wealthier. The merely rich have houses, cash, farms and retirement accounts. The very rich have bonds and real estate. But the very, very rich own art and stocks of businesses which they often want to pass to future generations.
The richest people pass on smaller shares of their estates to their heirs and it's not merely due to the fact that more of their wealth is subject to taxation. They tend to have bigger debts and make bigger charitable contributions. Charities collected $18.4 billion from bequests from the returns filed in 2014, with 58% of that coming from just 1.4% of estate tax returns.
Whether you're "uber-rich" or just getting by, you can truly benefit from a discussion with a qualified estate planning attorney.