Most of the clients that I represent have children.  The majority have more than one child.  While in some families, it is “obvious” who is going to be the successor trustee/executor, that is not always the case.

There are some families wherein it is especially difficult for the parents to select one child because they feel that they will be hurting the feelings of the other child.  It seems to happen most when there are two children (as opposed to three or more) that clients will want to make both children co-trustees/co-executors.

The heading to this blog post is plagiarized from the Los Angeles Times who in an article by Lisa Zamosky on Sunday, September 21, 2014 discussed what people can do to make sure that their final days are the way they want them to be.

The article begins with identifying the problem – namely that there are many people who die in the intensive care units of hospitals – who would rather die at home. Medical doctors are trained and programmed to do everything possible to keep their patients alive. That is a good thing! On the other hand, there are undoubtedly some situations where providers have an incentive to provide more services even though everyone knows that the services are not going to heal the patient.

While divorce was once considered taboo, today, as we all know, it is beyond common. If the marriage generated kids, more often than not, it should make estate planning more complicated because there are additional issues to consider. Whether it is husband’s/dad’s new girlfriend who might become his wife; or wife/mom’s fiancé or new husband, the potential for new children and the addition of step-children has added a whole new dimension to estate planning.

Many of us avoid the topic of our own demise. The ever present question mark that looms over this topic leads to an inevitable avoidance. In recognition of this, I try my best to make each and every one of my clients as comfortable as possible during the process of creating an estate plan. Despite this, many individuals will never even make it into my office. In order to eliminate some of the fear that goes hand in hand with discussing these matters I decided to outline a few issues that are helpful to consider before meeting with a Wills and Trusts attorney. To fear the unknown is also human, and my hopes is that providing the basic background to your first meeting will give you the confidence to address your estate planning needs and take that first step.

While many people are intimidated by the literal and emotional process of creating a will or managing their estate, even fewer long to tackle the task of maintaining these legal documents. Unfortunately this can result in very costly mistakes, and few realize that the terms of their IRA supersedes what they have outlined within their will. So if your will designates a certain individual as your beneficiary and the terms of your IRA designate a different individual, the IRA will outrank your will despite which was written or adjusted last. It is vital for the account holder to be aware of life changes that consequently require adjustments to be made to their will or IRA terms.

An example of the losses that can be associated with making such a mistake is management of Leonard Smith’s IRA inheritance before and after his death. Smith worked up until his time of death (in 2008) with financial advisors and attorneys in order to insure that his children would receive the balance of his retirement fund. A year after his passing, family members discovered that Smith’s IRA beneficiary form had one mistake on it, making the document invalid. This in turn made his surviving spouse the sole beneficiary by default. Although his children fought to maintain their inheritance in court, the judge ruled that the $400,000 IRA would be awarded to Smith’s wife.

Broadcast legend and the voice of American Top 40, 20, and 10, Casey Kasem (82) passed away in the early morning hours of Sunday June 15th due to health complications in association with Parkinson’s disease. Working in the industry for thirty-nine years, Kasem became a household name through radio work, cartoon voiceovers, and commercial work with companies such as Oscar Myers, Ford, Sears, Dairy Queen, and many others. He was won countless awards throughout his career including spots in; The National Association of Broadcasters Hall of Fame, The National Radio Hall of Fame, and a coveted star on The Hollywood Walk of Fame.

Kasem’s achievements were recently overshadowed by a family feud that went public in the wake of his worsening and ongoing health issues. He is survived through his first wife, their three children, and wife (Jean Kasem) and their daughter. Kasem’s children claimed that his second wife was not allowing them to see their father in his final days; they began a public protest after three months of being denied the right to see Kasem. In response, Jean claimed that Kasem did not want his family members to see him in his deteriorated state, which had also led him to lose his ability to speak. Eldest daughter Kerri was granted full control over her father’s medical decisions on June 6th, and after much consideration she decided to withhold food and fluids, which doctors claimed were resulting in additional pain for Kasem. Despite the public disagreements between family members, Kerri maintained that the importance of family meant having all members present, including Jean and her daughter.

A June 2014 United States Supreme Court ruling (Clark v Rameker) has addressed and more clearly defined the differences and rights associated with Regular (or Roth) and inherited Independent Retirement Accounts. The debate begin in October of 2010 when Heidi and husband Brandon filed for bankruptcy and claimed the inherited IRA which came from Heidi’s mother, worth 300,000 dollars, as exempt from collections. Refuted by bankruptcy trustees and creditors, the case quickly made its way through the court system and soon reached the Supreme Court.

An inherited IRA is innately different than a Traditional or Roth IRA in the sense that it is received all at once (and in the case of the Clarks, can be withdrawn all at once as well- having no limitations set in place upon receiving the inheritance) while the latter are built and contributed to over a lifetime. The Supreme Court unanimously ruled that because of this very matter, an inherited IRA is no longer protected and is “an opportunity for current consumption, not a fund of retirement savings.” Meaning that these IRAs are now considered an asset when bankruptcy is filed, making it even more important to know you legal rights, and safeguard existing IRAs through stand alone IRA beneficiary trusts.

Interesting issues in Probate Law are often brought to light in the wake of celebrity cases. The recent outrage over Donald Sterling’s racially inappropriate audio recording has quickly led to a battle over control of the trust that owns the Los Angeles Clippers. Donald’s wife of 58 years, Shelly contends that due to Donald’s mental state, he no longer has the capacity to serve as trustee of their living trust. She is contending that three doctors who have recently examined her husband find him unable to perform his duties as trustee.  Most trusts provide that upon the finding of incapacity of one spouse, the “healthy” spouse then takes over management of the trust, leaving Shelly with control of the Clippers.   

Mrs. Sterling has entered into a deal with Steve Balmer, the man who ran Microsoft for over a decade, concerning the sale of the team which essentially was ordered by the National Basketball Association.  The debate over Donald’s mental state partially hinges on his performance in several psychological tests, as well as a brain scan that displayed signs of early stages of Alzheimer’s disease.  Mr. Sterling contends that he is still competent and, that, therefore his wife does not have the authority to sell the team.

As an estate planning attorney, I am always interested in the stories of the rich and famous.  Recently, I came across an article dealing with the richest woman in Australia, Gina Rinehart.  In fact, Ms. Rinehart might be one of the five richest people, if not the richest, in the world!

While she has money in many industries, her primary source of wealth is mining.  Her net worth is well over 20 billion dollars and some believe that her worth is close to 100 billion dollars which would put her ahead of Carlos Slim and Bill Gates and make her the richest person in the world.

Two things are inevitable, or so the saying goes, death and taxes.  Elizabeth Taylor passed on March 23, 2011 at Cedar-Sinai Hospital in Los Angeles.  She was probably the first actress that I ever knew the name of as my parents spoke about her frequently while I was growing up.  I could not have told you that she won two Oscars (“Butterfield 8” and Who's Afraid of Virginia Woolf”), but I did know that she had more than her share of husbands!

Ms. Taylor had a trust known as The Elizabeth Taylor Trust which she signed on June 23, 1998.  The reason that I know this is that two days after her death, on March 25, the attorney for her trustees filed a notice to creditors in the probate department of the Los Angeles Superior Court.  It is a court with which I am very familiar. One of the purposes of filing the notice to creditors is to begin the running of the statute of limitations.

As of now, it appears that the distribution of Ms. Taylor's estate is not going to be as “public” as that of many of our other celebrities.  She appears to have planned and to have utilized a living trust correctly.