Saturday, July 18, 2015

Look In the Mirror, Sweetheart

A 22 year old rising college senior recently called into a radio advice show because she had exhausted the $90K college fund her grandparents had left her.  She does not have funds to pay for her senior year after using some of the funds for a trip to Europe, college breaks, and clothes. Some of her comments included the following:

1.  “Maybe [my parents] should have taught me to budget or something. They never sat me down and had a real serious talk about it.”

2.  “[My parents] said there was nothing they could do for me. They’re not being honest with me saying they don't have [money] because my dad has worked for like a million years and they have a retirement account.”

3.  “Then my parents suggested I go take out a loan at a credit union and I’m, like, how am I supposed to do that?" coupled with "I have to go inside a bank to get a loan?"

4.  “I know they’re trying to teach me a lesson and blah blah blah and character building but, like, I hope they realize [working part-time] could have such a negative effect on my grades and as a person."

Several quick estate planning points:

1.  The grandparents would have better served their delicate (and irresponsible) granddaughter by funding a 529 plan which would have allowed them to ensure that distributions were only made for tuition and other direct college expenses.

2.  If she received the funds as an inheritance, the grandparents should have left them in trust for her and provided that the funds could only be disbursed for education related expenses.

3.  This young woman is emblematic of many contemporary college students who are supporters of Obamacare, Big Government, and campus speech and sex codes because they are incapable of providing for themselves and need an authority figure to do that for them.

Sunday, July 12, 2015

Pistons, Lightning, Shock, and Fury

William Davidson was the owner of the Detroit Pistons, Tampa Bay Lightning, and Detroit Shock (WNBA). When he died in 2009, he was listed as the 62nd richest man in the U.S. His estate recently settled litigation with the IRS over the amount of estate taxes owed. The IRS claimed that the estate owed an additional $2.8 billion (yes, with a B) in estate taxes. The dispute involved the value of closely held stock transferred to various trusts. The estate settled for $388 million.

Points, if I must:

1. I would call this a victory for the estate given that the IRS was seeking 7X more than the settlement amount.

2. Of course, it is never a victory for the family when they had already presumably paid more than $1 billion in estate taxes and were fighting over the incremental taxes.

3. All of this begs the question about how much estate tax is enough from one individual. If Democratic candidate nee Socialist Bernie Sanders were president, Davidson's tax bill would have been $1 billion more.

4. Last, if one owns a professional sports team, or three, good estate planning advice is essential.

Saturday, July 11, 2015

Possums Are Jealous

During a slow news period for celebrity wills and estates, enjoy this article about a dead raccoon who was memorialized on a Toronto sidewalk. People would not do this for a possum.  

Wednesday, July 8, 2015

The Uncomplicated Line

Paul Daugherty of the Cincinnati Enquirer allowed me to guest write his The Morning Line blog today. I wrote about his book "An Uncomplicated Life" in addition to the usual sports topics. I hope you enjoy it.

Monday, July 6, 2015

Back In Town

Just returned from two weeks in Ireland and Iceland.  Post to follow soon. Meanwhile, here is a picture of Blair and Jack from Kinsale, Ireland.


Sunday, June 21, 2015

Father's Day, Fashion, and Football

On Father's Day, let's briefly recap the will of fashion designer, Oscar De La Renta, who died last Fall.  It was recently reported that he snubbed his adopted son, Moises, in his will because he was upset that his then 20 year old son had tried to compete with him in the fashion design business by producing five or six pieces under his own name 10 years ago.  De La Renta left $18 million of real estate to his second wife of 25 years, then put the rest in trust for her, her children, and his son.  That amount likely was $5.34 million.

Several points:

1.  Funds left to his wife will not be subject to estate taxation until her death while leaving anything in excess of $5.34 million in trust or to his son will be taxed at a rate of 40%.

2.  Context is everything.   I doubt De La Renta was so insecure as to have been threatened or annoyed by his son's attempt to follow him into the business.  Reporting that the son was disinherited for that reason makes for a nice narrative, albeit false.

3.  After 25 years of marriage, it is not unusual to leave a significant portion of an estate to a spouse, even if there are children from a prior marriage.  Leaving a football team worth $1 billion to a third wife of 10 years is questionable, though, Tom Benson.