Movin' On Up? Not Quite.

The late Sherman Hemsley, who played George Jefferson on "The Jefferson's" remains unburied six weeks after his death while his manager/partner and alleged brother engage in a will contest over his $50,000 estate.  The alleged brother is contesting the validity of a will executed a month before Hemsley's death from cancer.

I am somewhat perplexed about how a will contest affects the burial.  However, this problem could have been avoided if burial instructions were left in writing.  Generally, leaving the funeral instructions in a will is not advisable because the funeral has already occurred by the time the will is read.

The small nature of the estate compared to the legal fees to contest the will is the one factor that could quickly resolve this dispute and allow Mr. Hemsley to start "movin' on down."  My apologies for that, but I could not resist.        

Who Inherits an iTunes Account?

An issue that seems more problematic in theory than practice is who inherits digital assets at death. Technically, the purchaser of digital content has acquired the "non-transferable" right to use the items.  Theoretically, there is no right to leave these assets to heirs and it is very difficult to distribute parts of these assets among various heirs (i.e. R.E.M. collection to daughter, Eminem songs to son).

The simple solution is to share the password so that the collection can continue to be accessed post-death on whatever devices the decedent used (i.e. Kindle, iPod).  Logistically, integrating an iTunes library into another library is very technically challenging and merits a visit to www.ilounge.com.

However, from a practical perspective, do children want their parent's digital media and vice versa?  Growing up, my parents never had an album that interested me.  Looking back, I still see no need for a Ray Coniff Singers or Mitch Miller album in my collection.  Will others be worse off because they can not access a loved one's Lady Gaga, Lil' Wayne, or Black Eyed Peas collection?  Will family members want to watch Cars 2, Transformers, and any Pirates of the Caribbean movie in the future, not to mention episodes of Keeping Up With the Kardashians and Two and a Half Men?  I doubt it.  If I am right, perhaps Apple and Amazon are doing people a favor by not easing access to the digital content of deceased family members.  

Credit Card Debt of a Decedent

What happens to credit card debt at death? The general rule is that when a cardholder dies, the debt is paid from his own assets and a spouse is not liable for the bill. In Ohio, the credit card company has six months to file a claim against the estate. Otherwise the debt is not valid. If there are insufficient non-joint assets, the debt will go unpaid. This applies even if a spouse was an authorized user on the account (but does not use the account after death).

Beware of smooth talking debt collectors who will try to convince surviving family members that they should pay the debt of the deceased for moral reasons or to maintain the good name of the deceased. There is no legal reason to do so. Also, there is little moral in a business with 18% interest rates and punitive late fees.

"Zombie" Bank Accounts

I suspect we will see more of this as banks consolidate further and more transactions become electronic. A bank account was closed after the owner died, but the bank reopened the account as a "zombie account" when scheduled electronic withdrawals were made. Bank of America apparently did not have a procedure for keeping closed accounts closed when electronic transactions were attempted to be made post account closing. Nor did it have a policy for dealing with worthless mortgages, but that is a different subject.

The best bet for the estate executor would be to close the account and open the estate account at a different institution.

Will Formalities (Adam Yauch version)

More on Adam Yauch of the Beastie Boys.  His will is also receiving publicity for having a handwritten clause forbidding the use of his  music or artistic property for advertising purposes.  One legal question is whether he can ban the use of all Beastie Boys songs in ads because he did not own all of the rights to a song or songs.  Not knowing how the group worked and created music, I have no insight on that issue.

What intrigues me is the handwriting.  If it was added after the will was signed and witnessed, the clause is invalid because it was not witnessed by two people.  If it was added at the signing meeting, it should have been initialed by him and the witnesses to clarify that it was intended to be part of the will.  To properly revise a will, a client should execute a new will or a codicil.  To prevent clients from writing on wills, I offer to retain the originals in my vaults.

Also intriguing is the anti-commercial nature of the clause which stems from the pre-digital music era belief that to use music in commercials is "selling out."  Now, of course, bands use commercials as a means of getting their music heard and making money.  You have to fight for your right to make a living. 

Designating a Guardian

The will of Adam Yauch of the Beastie Boys illustrates how not to designate a guardian for minor children.  Apparently, he and his wife could not agree on the guardian for their then 3 year old daughter, Tenzin Losel, when they executed their wills in 2001.  They compromised and designated his parents if he died in an even numbered year and designated her parents if he died in an odd numbered year.

Several points.  Unless the parents of my clients are very young, I do not recommend that the clients designate parents as guardians. Second, clients should re-visit their guardian designation regularly and adjust it accordingly based on life changes, especially if a client has a terminal illness.  Third,  unless the child is a Sherpa, I am not sure that Tenzin is a good name.  

Controlling From the Grave?

The WSJ has an article at the intersection of 2012 gifting opportunities and unique trust provisions.  I will repeat that the $5 million gift tax exemption for 2012 affords some people tremendous planning opportunities.  Whether they want to make those gifts with unique strings attached i.e. attending the donor's alma mater, spelling the family name a certain way, or marrying within the faith, is possible (and too controlling - at least in these examples).  

However, I include a clause in trusts for all of my clients that suspends distributions if a beneficiary has a drinking, drug, or gambling problem.  n.b. fantasy football and a bottle of wine with dinner do not rise to that level.

DIY Wills

Consumer Reports reviewed 3 on-line will preparation services.  Their conclusion?

"Unless your needs are simple—say, you want to leave your entire estate to your spouse—none of the will-writing products is likely to entirely meet your needs. And in some cases, the other documents aren’t specific enough or contain language that could lead to an unintended result."

When a client has an attorney prepare a set of estate planning documents, the client is paying for more than an attorney to correctly insert the names in the document. He is also receiving the attorney's years of wisdom and experience in administering estates, knowledge of state specific laws, and general knowledge of human interactions through the estate process.

My conclusion? The difference between the attorney's fee and the cost of a DIY package is small in comparison to the cost of a mistake or overlooking an issue in a self-prepared will.

The Very Rare Estate

I am back after a few weeks of slow estate planning news and 14+ days in Europe.

The story about the family who found a collection of pristine, old baseball cards valued at $3 million in their aunt's attic is interesting for reasons other than the discovery of unknown  valuable assets.  First, it is very rare that an individual's personal items are worth more than a few cents on the dollar.  Even more rare is the family that is drawn closer together when dividing personal items.

My experience is that distributing personal property, no matter how small the value, can lead to acrimony and hostile feelings between heirs.  To prevent acrimony, individuals should specify which heir is to receive specific items in a memorandum.  Any hostile feelings can then be directed to the deceased and relations among siblings can be preserved. Hopefully.