Wednesday, June 26, 2013

Priorities When Expecting a Child

Zoey Perkins is the 1 year old daughter of former Kansas City Chief Jovan Belcher and Kasandra Perkins.  Belcher killed Kasandra last December before killing himself.  As the daughter of a former football player, Zoey will receive $1 million in structured payments over the next 22 years.  A Missouri probate court recently awarded custody to Kasandra's first cousin instead of Belcher's mother after a 3 day hearing.

Three points:

1.  When a couple is expecting a child, they should prepare wills to designate a guardian for their children so their wishes are followed instead of  giving the  decision to a stranger.

2.  When a couple dies without designating a guardian, sometimes the potential guardians are motivated by the financial status of the child.

3.  It is easy to overlook a will in the excitement of having a child, but the impact of designating a guardian is far more important than decorating a baby's room.

Monday, June 24, 2013

This Was a Good Idea?

Claudia Cohen was an NYC gossip columnist whose family owned Hudson News outlets.  She was married to Ron Perelman, an NYC business tycoon, from 1985-1994.   Their daughter was born in 1990.  Claudia died of cancer in 2007.   Shortly before her death, she changed her will to name her ex-husband as executor of her estate which was estimated to be worth $68 million.

As executor of her estate, Claudia's ex-husband has been locked in battles with her brother and now deceased father for the past five years.   The battles range from the valuation of Claudia's interest in the family business which was set by a partnership agreement, an alleged broken oral promise to leave Claudia half of her dad's estate, and whether Claudia's dad needed a guardian.  The estate has lost all of these battles and incurred at least $5 million in legal fees, if not more, plus had to repay a $10 million loan to Claudia's father.

Several points:

1.   A value set in a partnership agreement or buy sell agreement will be enforced, even it is not the true value of the interest.

2.  It is nearly impossible to win a law suit to enforce a promise to leave someone an inheritance.

3.  It is never a good idea to name a former spouse as executor or trustee, much less one embroiled in litigation with 2 ex-wives at the time of the designation and known for being disputatious.

4.  Claudia's daughter will be fine financially even if her inheritance from her mother is entirely consumed by legal fees.  Her father is reportedly worth $1.8 billion.

Monday, June 17, 2013

Even Rappers Need Wills (and Life Insurance, Trusts, and Condoms) Pt. 3

previously blogged about rapper Nate Dogg who died in 2011 survived by 6 children of unascertainable ages and different mothers.  His estate is back in the news again because the mother of one of his children filed a claim against his estate for unpaid child support from the date of the child's 2006 birth, plus support since Dogg's death in 2011.   Two other women, one of whom also has  a child Dogg fathered in 2006, are arguing in court over the amount of support they are supposed to receive from his estate.

Several points:

1.  In Ohio, claims against an estate must be filed within six months of the date of death.  The claim for Dogg's unpaid back support would be invalid due to untimely filing.

2.  In Ohio, child support obligations terminate at death.  Adding money for post-death support to an already late claim just makes the claim doubly improper.

3.  Dogg's children are entitled to social security payments until they turn 18.

4.  For divorced couples, a life insurance policy is recommended to cover any future child support payments.

5.  Dogg could have established a trust to provide for his children upon his death.   However, that would have required foresight and planning.  For a guy who did not make child support payments nor who wore a condom, such planning would be inconceivable.

Monday, June 10, 2013

Double Indemnity Fail

A SC woman murdered both of her 20 something sons, her ex-husband who lived next door, and her step-mother.  She tried to blame the crime on her oldest, murdered son.   She was the beneficiary of insurance policies on the victims in the amount of $680K.  She had previously killed an alleged intruder and kept 3 guns in the house.  She recently plead guilty but mentally ill and was sentenced to life in prison.

What are the estate planning and other issues in this crime?

1.  The killer is precluded from inheriting under the state slayer statute which prevents a murderer from benefiting financially from her crime.

2.  Without valid wills, the sons' policies will benefit their grandparents, or aunts and uncles if the grandparents are deceased.

3.   If a mother takes out a large life insurance policy on a child, the child should sleep with one eye open.

4.  It is never a good idea to live next door to a mentally ill ex-wife, much less one who has already killed a man and who has a life insurance policy on one's life.

Wednesday, June 5, 2013

Beneficiary Designation and Pyrrhic Victory

A Virginia man died of a rare leukemia survived by his 3rd wife.  One of his assets was a $125K insurance policy he received while employed by the federal government.  The policy listed his second wife as the beneficiary.  The surviving spouse contested the former wife's right to the policy proceeds.

Virginia has a statute which precludes divorced spouses from inheriting from a   deceased former spouse.  Nonetheless, the US Supreme Court unanimously ruled that the former spouse was entitled to the proceeds because the 1954 federal law establishing the insurance program and providing that beneficiary designations must be followed trumped the Virginia statute which omits former spouses.   

Several points:

1.  Ohio has a similar statute to Virginia. 

2.  After a divorce, individuals MUST revise all of their estate planning documents and update their insurance and retirement plan beneficiary designations.

3.  After a leukemia or cancer diagnosis, no matter how positive the treatment options, individuals need to review their estate planning documents and their beneficiary designations.    

4.  I suspect this was a Pyrrhic  victory for the former wife with most of the policy proceeds being consumed by legal fees during the 5 year dispute.  But then, most disputes between former spouses are Pyrrhic.