Recently a survey, developed by Wealth Council, estimated that 35% of people have drafted estate management plans in order to safeguard against the mismanagement of their estates after they have been inherited. One of the simplest and most effective ways to keep your kids from blowing their inheritance is to talk to them. By discussing options with them, and allowing them to meet with a financial advisor, children inheriting large sums of money will be much more prepared to manage it. Another facet of this same idea is to allow for practice by passing down sums of money, so you can deal with the aftermath (good or bad).
The use of a trustee as a third party regulator, and the implementation of certain provisions, ranging anywhere from clean drug tests to getting a college degree, can also assist in the management of inheritance. Despite the benefits of using some of these practices, countless celebrities have still opted to leave their children with nothing, or incredibly small inheritances (in comparison to the value of their estate). A recent article in the Money section of Time online outlined some of these celebs, below are a few highlights.
The recently publicized debate over the mental competency of Clippers owner Donald Sterling has come to a turning point as details of his trust are revealed. The terms of the trust clearly outlined that Sterling would be ruled mentally incapacitated if two qualified doctors came to the same conclusion. Sterling’s attorneys are now faced with two possible routes of action; to prove that the trusts provision was unclear, or discredit the two doctors who deemed Sterling incapacitated. Upon gaining control over the estate, Sterling’s wife (Shelly), sold the Clipper’s team to Ballmer.
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.
Estate Planning and Probate Attorney, Manhattan Beach Local, Sports Enthusiast