Wednesday, January 30, 2013

Planning for Pets

Leona Helmsley created the most famous pet trust of all time when she left $12 million to her dog (which died earlier this month).   One does not have to be a multi-millionaire to leave funds for the care of an animal after death.  However, one should be careful in selecting the right person to care for the animal - the caregiver should not be motivated solely by money.  

In one instance, a maid and butler were provided free room and board as long as they cared for a cat.   The vet initially estimated the cat to be 8 years old.  The second time the vet saw the cat, he thought it was 4 years old. The third time he saw it, he estimated the cat to be one year old.  As the co-resident of a house with a cat resembling the Purina Cat Chow cat, I can attest to the physical similarity of most cats.  A more tightly drawn test pet trust wold have prohibited the maid and butler from replacing the decedent's cat with younger versions.  

With the $5.25 million unified credit negating estate tax planning for most individuals, the use of pet trusts in estate planning is one more example of estate planning going to the dogs (and cats).  

Thursday, January 24, 2013

RIP Stan the Man

After the tawdriness of Tuesday's post, this piece by Joe Posnanski about Stan Musial provides nice balance. 
"We all disappointed someone from time to time," the Hall of Famer Robin Roberts said when we talked about kids and autographs. "Well, all of us but one."

"Who was that?" I asked.

"Musial," he said in a voice that indicated I should have already known.
Mr. Musial exuded class. We might never see a professional athlete like him again.

Tuesday, January 22, 2013

Grandma Murders, Grandkids Inherit Millions

In 2009, a Florida woman hired a hit man to kill her wealthy husband.  Because Florida's Slayer Statute prohibits murderers from benefiting from their misdeeds, the wife was removed as a beneficiary of her husband's will.  The contingent beneficiaries were her daughter from a previous marriage and a trust for the benefit of the daughter's now adult sons.  The husband's relatives are still contesting the validity of the will which has previously been upheld.  Their theory is that the wife unduly influenced the husband into leaving his estate to her, and then the daughter and her sons, by threatening to expose his "amputee porn fetish."

From my vantage point 1,000 miles north, I do not see how a will which leaves all of the estate to a wife, or to her children if she pre-deceases him, reflects undue influence.  The spouse is typically the beneficiary of  the other's will.  If a spouse were to engage in coercion, I think the other spouse would next consult a divorce attorney not an estate planner.  It looks like the relatives are desperately trying to negotiate a settlement of a smaller amount.

Also from my Midwestern, suburban, and apparently sheltered vantage point, I was unaware that people could have an amputee porn fetish.

Monday, January 14, 2013

Getting One's Act Together

In the making lemonade out of lemons department is this story about a woman whose 43 year old husband died after his bicycle was hit by a motorist.  The couple had unsigned wills, no emergency savings, financial accounts with passwords the wife did not know, but some life insurance.  The widow created a web site to encourage others to avoid her financial calumny and to essentially take steps to become a responsible adult by executing a will and other financial documents and by assisting with passwords and other financial knowledge.    

When prioritizing allocation of financial resources to major decisions, I recommend the following:

1.  Life insurance.  Provide financial security for the spouse and children.

2. Living will and health care power of attorney.  Do not bankrupt the family because medical decisions can not be made.

3.  Will.  Clarify distributions and designate a guardian.  

Somewhat related, the article did nothing to dispel my fear of riding my bike on the road rather than a bike trail.    

Wednesday, January 9, 2013

Real Life Agatha Christie

You might have seen this piece of news.  A 46 year Chicagoland man won $1 million in the lottery, but died of cyanide poisoning before he could claim the winnings.  The police just started investigating the poisoning.  As everyone who watches police/crime TV knows, to solve this crime look for the person with a motive.  His widow claims he did not have any enemies.  I have not read whether he had a will.  If he did not, the winnings would pass via the statue of intestate succession.

In Ohio, if a person dies without a will, his assets will be distributed as follows:   

1. If survived by a spouse, all to spouse.
2. If not survived by a spouse, all to children.  
3. If survived by a spouse, but children from a previous relationship, $20K and 1/3 to spouse (1/2 if only one child from previous relationship). 

Because I do not want to defame anyone, I will keep my probably wrong theory to myself.  Instead,  I will just say that I wonder how someone not in an Agatha Christie novel can quickly procure cyanide.       

Wednesday, January 2, 2013

Estate Planning and Fiscal Cliff Diving

Happy New Year.  Moving into 2013, my previously mentioned horrible prognostication abilities did not end when 2012 ended.  I did not foresee Congress making the $5 million unified credit permanent.  The unified credit is the amount of money one can give away tax free during life or at death.  Although in some fairness, I am not sure anyone in the estate planning community foresaw it either. 

Quick estate planning facts from the fiscal cliff legislation:

1.  Unified credit is $5 million and will be indexed for inflation.
2.  The estate tax rate will be 40%.
3.  The unified credit is portable which means that the first spouse to die does not need a trust to utilize the credit.  

For the rest of 2013, I will be out of the prediction game save for Alabama defeating Notre Dame next week (with fingers crossed that I am wrong and ND wins the National Championship).