Orlando Estate & Elder Law

Trump's Tax Changes and Wealthy Estates

It is not yet certain which of his tax proposals President-Elect Donald Trump will seek to make law. However, many of them would make it easier for wealthy people to keep money in their families and discourage charitable giving.

While campaigning for the Presidency, Donald Trump made many different proposals to change the tax code. Although he has not yet indicated which of those proposals he will ask Congress to pass after he is inaugurated, reporters have begun looking at his proposals in more detail and tried to ascertain what they might mean if implemented.

Recently, The New York Times looked at how they might help keep dynastic wealth in "Trump's Changes to the Tax Codes May Encourage Dynastic Wealth."

The biggest change Trump has proposed is to eliminate the estate tax, which would obviously make it easier to keep money in the family. He has also proposed changes to how inherited capital gains would be taxed. It appears that no capital gains would ever be taxed as part of the estate until the asset was sold.

This includes interests in family businesses. That would also make it easier to keep inherited wealth in the family. Trump has also indicated that he would limit charitable deductions, which has some worried that less money will go to charity. Taxes such as the gift tax and the generation-skipping tax could also be repealed.

Of course, until Trump proposes legislative action we cannot be certain what he will do and whether it is likely Congress will agree with the plans.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there

Reference: New York Times (Nov. 11, 2016) "Trump's Changes to the Tax Codes May Encourage Dynastic Wealth."

8 Mile Director Curtis Hanson's Will Revealed

The details of director Curtis Hanson's will have been revealed. He left plenty of assets for his family.

Film director Curtis Hanson passed away from an apparent heart attack in September. He left behind a long-time partner, Rebecca Yeldham, and their 12-year-old son. Some of the details of his estate are now becoming public. He left behind a trust that names Yeldham, their son and several other family members as beneficiaries.

The assets in the trust are unknown, but his estate contains approximately $5 million in assets that were not part of the trust. Those assets will have to be distributed according to his will.

Yeldham has requested to be named his executor, as TMZ reported in "'8 Mile Director Generous Will Covers His Kid and Many, Many More."

As of now there are no known disputes over Hanson's estate. However, it is important to note that despite having an estate plan, he may have left the estate vulnerable to disputes. Approximately $5 million in assets that have to be distributed is potentially enough for someone to consider mounting a challenge to his will.

For this reason, estate planning attorneys generally advise that valuable assets be transferred to a trust. It is not clear why Hanson did not have all of his assets in trust

Of course, as Hanson appears to have been generous with his family it is possible that everyone is satisfied. However, it is not known at this time whether anyone was left out of the will or trust.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: TMZ (Nov. 13, 2016) "'8 Mile Director Generous Will Covers His Kid and Many, Many More."

Prince Estate Rejects Jay Z's Offer for Music Rights

The estate of Prince has reportedly rejected an offer from rapper Jay Z to purchase the rights to Prince's unreleased recordings. It also hinted at a possible lawsuit against Jay Z.

That the recently departed musician Prince did not have an estate plan has left his estate in a bind. It may need to pay up to half the total value of the estate to the federal government and the state of Minnesota to cover estate taxes.

Unfortunately, to make matters worse, the bulk of the estate is not in liquid assets. That means the estate may need to sell off some assets to cover the estate tax bill.

One way of raising money quickly would be to sell the rights to Prince's hundreds of hours of unreleased recordings. Rapper Jay Z reportedly offered the estate $40 million for the rights to the recordings. That offer has been rejected according to TMZ in "Prince Estate to Jay Z No Deal For His Recordings ... Issues with Tidal Deal Too."

While it is not clear why the estate rejected this offer, there appears to be an upset with Jay Z over issues with his music streaming service Tidal. The estate is accusing Jay Z of releasing 15 Prince albums on the service after Prince's death without permission. It also accuses Tidal of not paying $750,000 that was owed for a deal that Prince and Jay Z negotiated to have Prince's last album released on the streaming service.

This could be an indication that the estate is preparing a lawsuit against Jay Z.

With the rejection of the deal to purchase the music rights, it remains uncertain how the estate plans to come up with the funds to pay the estate taxes it owes.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: TMZ (Nov. 13, 2016) "Prince Estate to Jay Z No Deal For His Recordings ... Issues with Tidal Deal Too."

End of Life DIY Can End Badly

A new crop of technology companies is attempting to capture a slice of the end-of-life care and estate planning industries. Users should proceed with caution.

People are more comfortable using the latest technology than ever before. Older generations are now mostly aware of how the Internet works and how to use apps on their phones. The Millennial generation can barely remember, if they can remember at all, a time when technology was not used for almost everything.

However, apps and online services for end-of-life and estate planning have been relatively slow to catch on. Some new start-ups are hoping to change that as the New York Times reported in "Start-Ups for the End of Life."

One app that is discussed allows people to get a customized estate plan supposedly tailored to their state laws. A user reported that she compared the will the app gave her to one her parents had an attorney draft and it looked the same.

Looks can be deceiving.

As with downloadable will forms available from some websites, an estate plan created by an app might not be the best estate plan for everyone's needs and it is only valid if it is properly executed. If things are not done precisely right, any money saved by using the app will be much less than money spent trying to fix any problems in probate or otherwise.

The best way to get an estate plan is to hire an experienced estate planning attorney.

It might not be as convenient and it might cost more upfront. However, only an attorney can create an estate plan that is truly customized for an individual's needs and ensure that the plan is legally valid.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: New York Times (Nov. 2, 2016) "Start-Ups for the End of Life."

What You Can Do With a QPRT

Qualified personal residence trusts are not as popular of an estate planning tool as they used to be but in some circumstances they can still be used beneficially.

Due to relatively high estate tax exemptions and relatively low interest rates, qualified personal residence trusts have dropped out of favor in estate planning. They just are not as useful for as many people as they used to be.

However, people who expect to have estates with values over the estate tax exemption or who have homes that could rapidly rise in value can still benefit from a QPRT as long as everyone in the family is on the same page about what should happen to the home.

Recently, Barron's discussed some of the benefits and drawbacks of QPRTs in "Holding Vacation Homes in Trust."

A QPRT is an irrevocable term-limited trust that can help to stretch your gift tax exemption. When a residence is put into the trust the value of the residence is locked in for tax purposes.

The owner can still live in the home and is responsible for it. The residence can even be sold as long as another residence is then put in the trust.

When the term of the trust ends the trust beneficiaries become the new owners of the residence. However, if the current owner passes away before the term of the trust is over, the purpose of the trust is defeated and the home becomes part of the estate.

Major drawbacks of a QPRT?

Once the trust is ended the current owners can only continue to live in the home if they pay fair market rent and the trust beneficiaries who are the new owners are responsible for upkeep. Thus, if the beneficiaries are not financially independent and able to pay for upkeep, a QPRT is normally not a good option.

If the beneficiaries wish to sell the residence, they might have to pay more in taxes than if they had inherited the home through other means.

Consequently, a QPRT is only a good idea when the beneficiaries would like to keep the home.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Barron's (Nov. 4, 2016) "Holding Vacation Homes in Trust."

Musical Wishes And Other Special Plans

More than ever before people are planning for their end-of-life circumstances. Some even plan for what music they want played while on their death beds.

Many people today make plans for their end-of-life care. Some of those plans have legal effect, such as living wills, general durable powers of attorney and health care powers of attorney. Other plans are more aspirational.

While some people might prefer to pass away at home instead of in a hospital or hospice, those “plans” can be thwarted by medical necessity. Another somewhat aspirational plan is a “singing will,” as described by New York Times columnist Mark Vanhoenacker in "My Deathbed Playlist (and Yours)."

The idea is to create a list of the music you want to be played when you are at the end of life. It is a playlist of songs that meant something to you during your life – the hearing of which will make the experience of passing away more meaningful.

At least, that is what the people who create them believe.

Of course, a singing will has no legal effect and the circumstances of someone passing away might preclude the playing of specific music.

Regardless, you should plan for your own end-of-life care.

Everyone should have the basic legal documents of a living will, a general durable power of attorney and a health care power of attorney created long before they anticipate needing them.

Creating a singing will might not be for everyone, but for those interested creating one cannot hurt anything.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: New York Times (Nov. 5, 2016) "My Deathbed Playlist (and Yours)."

Redstone Questions His Own Competency

After successfully defending multiple cases that questioned his mental competency, Sumner Redstone has filed a lawsuit claiming he is mentally incapacitated.

Within the last year 93-year-old media mogul Sumner Redstone has faced lawsuits brought by an ex-girlfriend, a granddaughter and the former CEO of his company Viacom. The lawsuits share one claim in common: due to his advanced age Redstone was too mentally incapacitated to handle his own affairs and was being manipulated by his daughter.

In each of these cases Redstone claimed he was competent. In fact, he won the case brought by the ex-girlfriend and settled the other two favorably.

Investors in his companies were hoping that was the end of the saga.

However, now there is a new case that centers on Redstone's mental capacity. This time the case was filed by Redstone himself. He has sued two of his ex-girlfriends claiming they took advantage of his diminished mental capacity to enrich themselves in what amounts to elder abuse. Redstone is asking that $150 million be returned to him.

Bloomberg reported this story in "Sumner Redstone Sues Two Ex-Girlfriends on Elder Abuse Claims."

It is not clear how Redstone's attorneys plan to explain his testimony in one of the other cases. After all, he previously established that he was at full mental capacity.

It is clear this case will make his investors nervous again.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Bloomberg (Oct. 25, 2016) "Sumner Redstone Sues Two Ex-Girlfriends on Elder Abuse Claims."

Wild Things Are In Probate Court

A probate court in Connecticut has reached a ruling determining whether some of Maurice Sendak's book collection will remain in a Philadelphia museum or be returned to his estate.

The Rosenbach Museum and Library in Philadelphia had housed many original drawings and books owned by Maurice Sendak the author of Where the Wild Things Are. Most people believed the collection would stay at the museum. However, his will contained provisions that his estate should create a foundation and a museum in Connecticut to make the items available for public viewing.

In 2014, Sendak's estate took the items back from the museum. The museum filed a lawsuit in Connecticut probate court because Sendak's will also included a provision that "rare edition" books should be given to the Rosenbach.

In short, the court had to determine whether 340 books could be considered rare editions, including illuminated volumes of William Blake's poetry that could be worth millions.

The court recently ruled that 88 of the books should remain with the Philadelphia museum but the rest should go to the estate.

This legal intrigue was reported by the New York Times in "Maurice Sendak's Estate Is Awarded Most of a Book Collection."

The lesson to be learned here?

It is important to be as precise as possible when creating an estate plan. While to some experts it might seem obvious whether or not a particular book edition is rare, the term leaves room for disagreement as this lawsuit illustrates.

Sendak could have been specific about exactly which titles he wished to remain at the museum in Philadelphia and which he wanted to belong in a new museum in Connecticut.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: New York Times (Nov. 1, 2016) "Maurice Sendak's Estate Is Awarded Most of a Book Collection."

Robin Williams' Bicycles Rolling for Good

The late comedian Robin Williams' children donated some of his favorite bicycles to raise money for charities that he supported.

When Robin Williams passed away most experts expected that his estate would go smoothly. It appeared the comedian had done all of his estate planning correctly. He provided for both his wife and his children from a different marriage.

However, things did not turn out so well.

Ambiguities in some of his plans led to a dispute between the children and their stepmother about who was to receive some of Williams' personal property. That dispute was eventually resolved and it appears his children were not acting for purely selfish reasons. They recently donated some of Williams' bicycles to a charity auction that raised $600,000 for two of his favorite charities.

The story was picked up by TMZ in "Robin Williams Fave Bicycles Are Gold... Haul in over $600K For Charity."

It is always good to see a difficult estate end well, especially if one of the results is that well-deserving charities receive funding. However, there is still a lesson to be learned from Robin Williams' estate, which is that it is extremely important to be as clear as possible in an estate plan.

Any possible dispute should be anticipated, especially for people in blended families.

To find out how to avoid disputes over your estate contact an estate planning attorney and discuss your options. An attorney can help craft an estate plan that takes your unique family situation into account.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: TMZ (Oct. 27, 2016) "Robin Williams Fave Bicycles Are Gold... Haul in over $600K For Charity."

Wealthy Leave Incentives or More to Children?

The extremely wealthy often struggle over whether or not they should leave their entire fortunes to their children. Bill Gates says that he will not be doing so.

Extremely wealthy people who earned all of their assets for themselves face a dilemma. They started out with little and were motivated to earn their own fortunes. They wonder if it would be better to leave that money to their children or to leave their children little, which would hopefully motivate the children to work hard and earn their own fortunes.

The dilemma has been around ever since people started becoming extremely wealthy and it has not changed very much. There is not a simple solution that will make everyone comfortable.

Recently, Bill Gates said he will not be leaving his fortune to his three children according to SF Gate in "Bill Gates explains why he's not leaving his fortune to his children."

Gates' reasoning is the common one that he does not think it would be good for his children to receive such large inheritances and that they should earn their own money. He did also say, however, that he will provide his kids with money for college and a safety net.

According to Gates, his children agree with his wishes and reasoning.

Beyond the two extremes of leaving children everything and leaving them nothing, there is plenty of room in between. Estate plans can be created that give the children some funds and plans can be crafted in such a way to incentivize children to do good things and work hard in exchange for larger inheritances.

A qualified estate planning attorney can help you meet your unique goals for your children.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: SF Gate (Oct. 27, 2016) "Bill Gates explains why he's not leaving his fortune to his children."