Friday, December 21, 2012

Thomas Kinkade - Painter of Light, Writer of Illegible Will

My horrible prognostication abilities continue.  If my prediction of a Romney landslide and a 9 game losing streak to end the fantasy football season were not enough, my earlier prediction of years of litigation to settle the dispute over Thomas Kinkades's estate was also wrong.  His estranged wife and his girlfriend of 6 months (although she preferred the term "soul mate"), settled their differences this week.  No details were revealed.  

The primary issue was the validity of 2 illegible handwritten wills made by Kinkade.  Far be it from me to cast stones about one's handwriting, but if someone is going to leave a handwritten will, it should at least be legible.

Wednesday, December 19, 2012

There Is Gold in the Walls! Part II

Following up on an earlier post.  A woman will officially inherit her reclusive first cousin's $7.4 million estate after a court ruled that she is his only heir.  After the man died, the estate auctioneer found $7.4 million of gold coins in his house.

Several points:

1.   When someone dies without a will, the estate does not escheat to the state.  Statutes set forth how the estate will be distributed which is generally along the lines of closest living relative.

2.  Only one first cousin?  That is a narrow family tree.

3.  Gold was a great investment for him (his cousin, really).  Apple stock would have been better. 

Monday, December 17, 2012

Delayed Parenthood and Estate Planning

With no fiscal cliff resolution imminent, it has been slow in the estate planning news world (but slammed in the estate planning practice).  The New Republic had a great article on delayed parenting and the possibility of developmental issues for the children.

Viewing the article through the estate planning prism, I noted the following potential issues:

1.  Parents need wills and trusts immediately.  The risk of sudden death or terminal illness is greater for a 40+ year old than someone in their late 20s.
2.  The trusts might need special needs provisions to protect the children's governmental benefits.
2.  Selection of a guardian to handle a child with even minor developmental disabilities is tremendously important.
4.  Because the children are younger when the parents are older, parents need to rely on siblings and friends to handle their affairs until their children become old enough to assist the parents with their affairs.  

Of course, estate planning assumes a certain level of personal responsibility and rational thought.  I am not sure than anyone desiring children in their 60s and 70s is being responsible or acting rationally with respect to their children.   

Friday, December 7, 2012

All About Domicile

This is complicated.  Marilyn Monroe died in 1962 in California after she was fired from the film 'Something's Got To Give."  For then estate tax reasons, her executors claimed she was a NY resident.  The rights to make money from her estate and likeness have been passed down to her estate heirs (and their heirs) over the past 50 years.  

Several years ago, her estate sued a photographer for using her likeness for commercial purposes.  A court ruled in favor of the photographer and said that there was no right to publicity at the time of her death.  The State of California quickly passed a law authorizing a right of publicity and deeming it retroactive and transferable to heirs.  The estate returned to court to have the previous verdict overturned.  The court acknowledged the new law, but said that it was available only to residents of California.  Because the estate had said that Ms. Monroe was a NY resident at the time of her death, the law did not benefit her estate.  

In summary,the estate could  not have it both ways - taxed as a NY estate, but utilize California laws for protection.   Something had to give. 

Wednesday, December 5, 2012

Illegal Eagles

Now for something complicated and fun (at least within the parameters of estate planning).  An art collector died owning an art work which contained a stuffed eagle.  The art was on display at the MoMA under an agreement after the federal wildlife service tried to confiscate it in the 80s.  

Because the sale of dead eagles is prohibited by federal law, the estate appraisers valued the art at $0 because there is no market for it.  The IRS said it was worth $15 million.  When the estate rejected that valuation, the IRS  played hardball and said it was worth $60 million and levied penalties for undervaluing it plus interest.   The estate tax alone on this art would have been $27 million.  The estate and IRS finally settled the matter when the estate donated the piece to MoMA and the IRS dropped the estate tax issue.  

Couple of points:

1.  The family had not benefited from this art for 20 years due to the previous agreement to keep it on display.

2.  I do not agree with the assessment that art with no market is worth $15 million.   Assets are worth what a willing buyer and willing seller agree upon.  If there are no buyers, there is no value.  

3.  The collector's estate had paid $470 million in estate taxes already and had sold $600 million of art to do so.

4.  The author is wrong about the charitable deduction.  The estate did receive a charitable deduction for the value of the art work which is why ultimately there was no tax on it.

5.  Never pick up an eagle feather.  It is illegal to do so and subject to a $25,000 fine.  Unless you are a Native American or a member of the Screaming Eagle division of the US Army.