Orlando Estate & Elder Law

Intended Heir Or Unintended Surprise?

“However, as with most things, a will’s value is relative; it largely depends on your unique circumstances.”

“Intestate” is the term used to describe the estate of someone who dies without a will. Each state has laws called “intestacy laws” that govern how probate assets are distributed, if someone dies without having a will. These laws establish the inheritance hierarchy based on a person’s family structure. As explained in The Daily News’ article “’Are You My Heir?’-Who Inherits When You Die Without a Will,” all of your assets will pass to your next of kin, also known as your “heirs-at-law” or heirs in accordance to the state’s laws of intestacy.

Here’s one example: if you are married but have no children and no grandchildren, your estate will be passed to your spouse. If two people die and there are no descendants (children or grandchildren), their parents, if living, will inherit their assets. A child who is legally adopted has the same rights of inheritance as biological children. Children born outside of the marriage may not.

If a child should predecease a parent, the living descendants of the child (if there are any) will inherit their share.

In some states, heirs are limited to family members who share the same grandparents. If your family is not geographically or otherwise close, you may have heirs you have never met.

Intestacy can become extremely complex when there are children and grandchildren. Descendants inherit from their parents and grandparents in percentages dependent upon the total number of children and the number of children in each generation that follows.

If a grandfather has two adult children who are living and one adult child who has passed, then the estate will be divided by three—a third each to each of the two living children and the final third to the grandchildren of the third (deceased) child. The children of the deceased child are heirs, even if the parent has died.

Add non-marital children—children born outside of a legal marriage or step-children—and things start to get complicated. A court will have to determine the intestate inheritance, based on proof that the child is a descendant and if that relationship is established in a timely manner.

If the father’s name is on the child’s birth certificate, that is generally enough proof of the relationship. It doesn’t matter if they have a close relationship or have never met. The same applies to marital children—whether they have been close and caring or are estranged.

It’s best to have a will and an estate plan, so you can decide your heirs. You are also sparing your loved ones the emotional rollercoaster of family surprises. Make an appointment with an estate planning attorney to take care of this important matter.

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: The Daily News (Sep. 7, 2018) “’Are You My Heir?’-Who Inherits When You Die Without a Will”

Will The Kids Want Your Stuff?

People accumulate a lot of stuff throughout their lives that is useless for other people. There is a process in Sweden, known as death cleaning, that people use to get rid of possessions before they pass away.

Most people have many random things in their homes that they have accumulated over the years. While many possessions have some sort of value or use, there are other things that just accumulate and create clutter.

 These items can be old newspapers and magazines that were just never thrown out for some reason.  They can be old clothes that are decades out of fashion that remain in closets and drawers. It can be documents from old seminars.

Some people even still have their college books and assignments stored away in boxes somewhere.

It is not a big problem for most people to have this stuff around the house, but someone is going to have to clean it out eventually. It often falls on family members, after the person who accumulated the stuff passes away.

The New York Post reports on a Swedish tradition on how the clutter can be handled in "Swedish death cleaning is the morbid new way to de-clutter your life."

As people grow older in Sweden, they begin an intentional process of thinking about whether they still need the things they have accumulated. If they do not and they do not want to leave the items for their heirs to deal with, then they gradually begin to get rid of the items.

This is called dostadning, or death cleaning in English. It is not a one-time deal. It is something that people do over the course of their lives, often beginning when they are as young as 50.

You do not necessarily need to start death cleaning.  However, you should think about what will happen to your possessions after you pass away. Doing that at a minimum should lead you to get an estate plan, so what you want to happen will actually happen.

For more information about all aspects of estate planning in Orlando and all of Central Florida, please check out my website.  While you are there, be sure to sign up for our monthly informational newsletter.

Reference: New York Post (Oct. 5, 2017) "Swedish death cleaning is the morbid new way to de-clutter your life."

Will HEAR Act Restore Looted Art?

A federal law passed late last year, designed to make it easier for families to recover art stolen by the Nazis, is getting its first test in a New York court.

While the Nazis were plundering Europe, one of the many things they did was to steal artwork from the owners and keep it for themselves. Under international law, artwork is supposed to be returned to the original owners or their heirs.

Since the Nazis were defeated a long time ago, many people might think that has been done by now. They would be wrong in many cases.

The current holders of many contested works have successfully defended themselves against the heirs for technical reasons, such as the statute of limitations. To address this problem, last year the U.S. Congress passed the Holocaust Expropriated Art Recovery Act, known as the HEAR Act.

It is about to get its first use, according to the New York Times in "A Suit Over Schiele Drawings Invokes New Law on Nazi-Looted Art."

The case is over two drawings by Egon Schiele that were once owned by Fritz Grunbaum. The Nazis took Grunbaum's artwork from his home in Vienna in 1938 and sent him to a concentration camp where he died.

His heirs claim the Nazis stole the artwork.

However, that has been disputed by dealers, current owners and museums, who claim the Nazis only inventoried the works. They also claim that Grunbaum's sister-in-law sold some of the works, including the two drawings in the current dispute, to a dealer in the 1950s.

Grunbaum's heirs have previously lost in court trying to recover this artwork.

They claim they have lost for the very technical reasons the HEAR Act was designed to prevent.

Since this is the first time the Act will be used in court, how the court uses the Act will be closely monitored.

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 (Feb. 27, 2017) "A Suit Over Schiele Drawings Invokes New Law on Nazi-Looted Art."

Heirs Down the Line Preserve Less

The further removed heirs are from the generation that initially earned generational, family wealth, the less likely they will be to preserve that wealth.

Some people have earned great wealth through their own efforts and know how hard that is. Their children are often, but not always, also aware of how much hard work went into amassing enough wealth to be able to pass it down for generations.

They will often continue trying to preserve the wealth.

However, the situation gets murkier when it comes to the grandchildren and great-grandchildren of the initial wealth generators, as Private Wealth discusses in "Heirs May Not Guard Wealth, An Advisor Says."

The further removed heirs are from those who created the wealth, the less likely those heirs are to understand the work that went into it and the more likely it is that having wealth will seem like a natural occurrence to them.

This often leads to these later generations spending more of the wealth than they should and not leaving enough for it to continue passing down through the family.

There are ways to help protect against this.

Those who create the wealth can discuss the issue with their estate planning attorneys and devise ways to make it more difficult for later generations to waste what they inherit. Another good idea is to make sure that subsequent generations receive solid financial educations and advice.

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: Private Wealth (Dec. 19, 2016) "Heirs May Not Guard Wealth, An Advisor Says."

Results Still Hazy in Prince Estate

Due to a unique quirk in Minnesota law it might not be required to have a blood relationship to him for some people to be declared his heirs.

The list of potential heirs to Prince's estate has been narrowed down considerably as the judge in the case has thrown out many claims. However, that does not mean the issue of who will inherit a share of his fortune is entirely settled.

It was previously believed that DNA testing would provide definitive proof of who his heirs are, but that turns out to not be the case as the Twin Cities Pioneer Press reports in "In Prince estate case, blood relation might be unnecessary."

Due to a unique feature in Minnesota's family law it is possible the descendants of Duane Nelson could be declared to be related to Prince and receive a share of his estate even though Nelson is not a biological relative of Prince.

Under Minnesota law someone who is treated as a child can be legally declared a child even if they are not. Duane Nelson was previously thought to be Prince's half-brother through his father, but it now appears Nelson was not. Interestingly, Nelson’s birth certificate lists Prince's father as his own.

If the judge decides that Nelson is related under the law, then Nelson's three children have a claim to a share in Prince's estate. The law itself gives little guidance for the judge to make a determination, so it is not clear how the court will rule.

For more information about estate planning and avoiding planning pitfalls 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: Twin Cities Pioneer Press (Sept. 29, 2016) "In Prince estate case, blood relation might be unnecessary."

Family Issues Keep MLK Artifacts Out of New Museum

A new national museum dedicated to the history of African Americans will not feature any Martin Luther King Jr. artifacts. The likely reason is because his heirs have not gotten along well.

The newly opened National Museum of African American History and Culture in Washington D.C. would seem to be an ideal place to honor the legacy of Martin Luther King Jr., as he is the most well-known civil rights leader of the 20th century. However, as the Washington Post reports in "Why no major Martin Luther King Jr. artifacts will be at the new African American museum," the museum will not have any of King's personal artifacts.

The reason for that has nothing to do with the museum not wanting to honor King. Instead it appears to be the result of his estate's problems.

King's children met with the curator and offered to loan the museum King's Bible and Noble Peace Prize to display. The curator turned them down.

The official reason for declining is that the museum prefers to display gifted items and not those that are loaned and can be taken back. That is of particular concern here because King's children have a long history of feuding with each other over their father's estate.

The Bible and the Noble Peace Prize have often been a source of contention between the children.

This is another example of the consequences when the heirs of an estate cannot peaceably settle their differences. Unfortunately, in this case the entire nation has to face those consequences as visitors to the museum will not be able to see King's artifacts.

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: Washington Post (Sept. 11, 2016) "Why no major Martin Luther King Jr. artifacts will be at the new African American museum."

Heir Location Services In Trouble

Heir location companies provide a valuable service to courts and heirs. When a person passes away without a will, the heir location service seeks to find heirs and help them through the process of proving their claims. One such company, however, is now accused of breaking antitrust law.

One of the many problems of passing away without an estate plan is that heirs have to be located for the estate to be distributed. Estates plans and wills list heirs by name and normally include their addresses.

However, without even a will, the estate has to locate potential heirs and notify them. Those potential heirs then have to prove to a probate court their right to inherit the estate of the deceased.

To help with this process heir location services have sprung up. For a contingency fee they locate potential heirs and assist them in proving their claims to the satisfaction of the court.

When an heir location company is successful, it receives a lucrative fee from the heirs. Unfortunately, some of those companies might be more lucrative than they have a legal right to be.

Courthouse News Service reports that heir location service Kemp & Associates and one of its co-owners have been charged by the Justice Department for antitrust violations in “Heir-Location Firm Charged in Antitrust Probe.”

The government contends that the company has been conspiring with an unindicted competitor to allocate customers between themselves.

If the charges are accurate, it means the heir location service has been colluding to avoid competition, which would drive up the costs of the services for customers.

For more information on heirs, probate and estates in Orlando and Central Florida, please visit my Probate website and sign up for my informative newsletter.

Reference: Courthouse News Service (Aug. 22, 2016) “Heir-Location Firm Charged in Antitrust Probe.”

Waiting for the Tesla Model 3?

If you are currently on the waiting list for the Tesla Model 3, what happens if you pass away before getting the vehicle?

The announcement of the Tesla Model 3 generated enough buzz that more than 300,000 people paid $1,000 dollars each to be on a waiting list for the chance to purchase the vehicle when it becomes available. As the car is not expected to start shipping until late in 2017, that makes it likely some on the waiting list will pass away before getting their hands on the coveted electric vehicle.

Bloomberg reported this development in “What Happens When You Die Waiting for a Tesla?”

The actuarial reality that people on the waiting list will pass away means they should be aware of what might happen to the right to purchase the vehicle in the event of death.

Everyone on the waiting list signed a contract with Tesla that explicitly states that the right to purchase a Tesla Model 3 is not transferable to another person without the prior approval of Tesla. This is included as Tesla was concerned that spots on the waiting list would be hoarded and sold at higher than retail value when the car starts shipping. Even estates must sekk permission from the company to transfer the right to purchase to an heir or beneficiary.

A spokesperson for the company told Bloomberg that should someone on the waiting list pass away, Tesla would be accommodating. They would either refund the $1,000 deposit or allow a transfer of the place on the waiting list to an heir.

If you have other questions or concerns about passing assets of any kind to your heirs, please get in touch.

Reference: Bloomberg (July 13, 2016) “What Happens When You Die Waiting for a Tesla?”

The End for 'To Kill a Mockingbird' in Schools?

A controversial decision by author Harper Lee's estate has many people wondering if 'To Kill a Mockingbird' will continue to be assigned reading in school.

Reading Harper Lee's anti-segregation novel To Kill a Mockingbird has become something of an American rite of passage. It is one of the most commonly assigned books in schools. Many people can probably recall the version of the book that a teacher passed to them.

As of April 25 that version will no longer be available, as the Tampa Bay Times reports in "Harper Lee's estate wants readers to pay more for 'Mockingbird'."

Lee's estate has informed the publisher of the paperback edition of the novel that it will no longer have license to print the book. Other, more expensive versions of the book will still be available.

This news comes shortly after a judge controversially agreed to seal Lee's will from the public so the public does not know who the author's heirs are and who is behind the decision to put an end to the paperback version of the book.

Lee's estate is not necessarily in the wrong.

It does have a duty to properly manage the author's assets for any heirs or beneficiaries. Selling To Kill a Mockingbird for a few dollars more could potentially lead to more money for those heirs or beneficiaries.

However, this decision could also backfire.

Many states have cut school funding in recent years and many schools in other states are feeling a pinch as well. Those schools might assign less expensive books instead of Lee's work.

I'll be happy to discuss plans to maximize your estate, no matter the size or contents.

Reference: Tampa Bay Times (March 12, 2016) "Harper Lee's estate wants readers to pay more for 'Mockingbird'."

Inheriting an Annuity Can Be Taxing

If you inherit a non-qualified annuity, then before you decide what to do it is important to understand the different options and tax implications.

Annuities have become an extremely popular tool in people's retirement plans. Like any other asset, these contracts can be the subject of an inheritance.

If they are inherited then the beneficiary needs to know what the options are for handling the annuity and what the tax consequences are. First, if a spouse inherits the annuity, then he or she can almost always continue the annuity contract as it is and thus face no immediate tax issues.

As the Motley Fool discussed in an article entitled "Tax Rules for an Inherited Non-Qualified Annuity," non-spouse heirs typically have three options, including:

• Take a Lump Sum – If an heir chooses a one-time payment, then the heir will need to pay income tax on any appreciated amount over the original premium payments the deceased made.
• Arrange for Smaller Payments Over Time – By accepting smaller period payments, the heir can avoid a large one-time income tax payment. However, income tax will still be owed on any appreciation of the annuity.
• Switch to a Different Annuity – The person who purchases an annuity can switch to a different provider without paying income tax. However, it is unclear if someone who inherits the annuity can do the same. In a private letter ruling the IRS allowed one heir to do so, but many annuity providers do not wish to rely on the ruling as it technically only applies to the person who asked for it. Some providers will work with heirs on switching providers though.

If you inherit a non-qualified annuity and have questions about what to do with it,consider setting an appointment with me to talk about these options and which is the best choice for you.

Reference: Motley Fool (Dec. 19, 2015) "Tax Rules for an Inherited Non-Qualified Annuity"