The Will In the Cupboard

Melissa Mathison, who died last month at the age of 65, was renowned for being the screenwriter of E.T. and The Black Stallion.  She had also been married to Harrison Ford from 1983  until 2004.  She left an estate worth $22 million, most of which is in trust.  However, her original will cannot be located.

Several very quick points because this is the holiday season after all:

1.  A copy of a lost will can be admitted to probate in Ohio if there is proof it was validly executed and that it was not revoked.

2.  I offer to retain original wills for my clients so they cannot be accidentally misplaced.

3.  Mathison's family might wish to search for the will among the presumably multitude of rejected drafts of The Indian in the Cupboard while she tried to make it into an enjoyable movie.

Merry Christmas From My Family To Yours

Are Not All Former Spouses Bums?

After divorcing her husband of 10 years in 2014, Diane Wagner agreed to pay him $186/week in spousal support. When writing the checks to him, she has used the memo section to write “alimony/adult child support,” “bum,” “loser,” and “FOAD.” Her 61 year old ex-husband recently sued her on the grounds that her notations are causing him emotional distress and caused him to suffer a heart attack.

Several quick points:

1. Whenever a couple marries later in life, they should have a pre-nuptial agreement which would allow them to waive spousal support/alimony upon divorce.

2. I suspect that despite most media coverage about the notations on the check, the real source of the lawsuit is the $5,000 the husband’s bank accidentally deposited into a joint account which she quickly withdrew and refused to return.

3. I sheepishly admit I had to use Urban Dictionary to look up FOAD.

4. One person’s spunky fighter for freedom of speech is another man’s crazy ex-wife.

Jihad Estate Planning

The six month old baby orphaned when her terrorist parents killed 14 people in San Bernardino is at the center of a custody dispute.  Saira Khan, the sister of the slain terrorist, has asked for custody of the girl. Experts are predicting that family members will not get custody of the baby because county officials will not recommend custody for family members if they are shown to have have had knowledge of the attacks. The mother of Syed Rizwan Farook lived with him, but claims to have no knowledge of the attacks despite the numerous bombs and large amounts of ammunition in the shared house.  She also received $15,000 in bank deposits from her son just prior to his death.  Terrorists are known to drain their bank accounts prior to suicide attacks.  The funds she received were from a loan her son received from a peer to peer lender several weeks before he murdered his co-workers.

So many issues, but let's focus on the main ones:

1.  Sharia Law requires that the baby be raised by a Muslim.  Thankfully, Sharia Law does not govern matters in the United States. 

2.  An individual designated as guardian in the will would receive consideration from the Family Court to have custody of the daughter barring intervening circumstance such as knowledge, of or complicity with, mass murder.

3.  The $28,500 debt taken out prior to the attacks will die with the attackers if there are no other assets from which to re-pay the loan.  

4.  It is somewhat ironic that the murderers transferred their financial assets prior to their suicide mission but did not prepare a will.  I guess that the Terrorist Handbook does not contemplate a young couple with a baby working together to kill innocent people.

TML Again

Paul Daugherty has once again allowed me to guest write his The Morning Line blog for the Cincinnati Enquirer again.

2 Broke Girls? Pt. 2

At the risk of turning this into People Magazine, a quick corollary post to the most recent post on nonagenarian Sumner Redstone and his mental capacity and estate planning.  Sydney Holland is Redstone's 44 year old former live in girl friend who was mentioned in the Vanity Fair article about him.  She is a composite of LA stereotypes - movie producer, real estate flipper, founder of an eco-conscious line of yoga clothing, and president of her own small foundation.  While living with Redstone, she was also involved with a man her own age, George Pilgrim, who had served two years in prison for income invasion.  He lived with his parents in Sedona after being released from prison.  He and Holland would fly between LA and Sedona on private jets.  Pilgrim had been unaware of Holland's relationship with Redstone prior to the Vanity Fair article. When Redstone became aware of Holland's relationship with Pilgrim, he immediately excommunicated her from his house and life.  She and her bodyguards now hang out at the Montage Hotel in Beverly Hills.  Pilgrim was the subject of a Vanity Fair update in which his emotions ranged from anger and perplexed road kill to wistfulness.

Points?  Between billionaires, private jets, prison time, Beverly Hills hotels, and body guards, there is little here that applies to most people except "don't act like people in LA."

2 Broke Girls?

Sumner Redstone is the divorced, 92 year old billionaire who owns a controlling interest in both CBS and Viacom. His relationships with two much younger women were profiled in Vanity Fair earlier this year.  Since the publication of the article, and likely because of it, he has severed his contacts with both women.  One of the women, Manuela Herzner, filed suit this week claiming that he lacked mental capacity to remove her as the attorney in fact under his health care power of attorney.   His attorneys have naturally responded that the litigation is a farce, meritless, and a despicable invasion of his privacy.

Three points of some relevance:

1.  The battle is not really about Ms. Herzner controlling the medical decisions for Mr. Redstone - it is about throwing down a marker about his mental capacity in case he revises his will to leave her out of it.

2.  Far be it from me to call a man with two (!) girlfriends who are 40 an 50 years younger than him mentally unfit especially when he questions their motives after they gloat about their relationship in Vanity Fair.

3.  A simple test of his mental faculties could be whether he somehow finds Stephen Colbert funny and a worthy successor to David Letterman as host of CBS's "Late Night."

Boxing For Dollars

Samuel Dubose was the Cincinnatian who was shot and killed by a University of Cincinnati police officer after being stopped off campus for not having a front license plate (a "chicken shit" stop in the words of the county prosecutor).  He is survived by his mother, father, and 11 children from various mothers.  The only asset of his intestate estate is the potential wrongful death claim against the University of Cincinnati and its police officer.  A local personal injury attorney, known for his ads shown with him wearing boxing gloves, applied to be the administrator of his estate so he could represent the estate in the forthcoming wrongful death lawsuit.  After legal wrangling, the 18 year old daughter of the decedent, Raegan Brooks, was appointed as administrator of the estate today.

Several pithy points:

1.  Ohio law provides that if an individual dies without a will, his spouse or his children will be appointed the administrator of the estate.

2.   Nowhere in the Ohio statute is a personal injury attorney, no matter how pugilistic, listed as a possible administrator of an estate.

3.  I am somewhat surprised that that the decedent had a daughter named after a Republican president.  I am not surprised the name was misspelled.

Maraschino Marijuana

Arthur Mondella was the high living, third generation owner of a Brooklyn maraschino cherry family business.  When his business was being investigated for illegally dumping cherry juice onto the streets, investigators found a large marijuana grow room.  He then locked himself in his private bathroom and shot himself.

His will left 80% of his reported $8.5 million estate to his three daughters and the remaining 20% to his sister.  The will designated one of his daughters to serve as executrix.  The attorney who prepared the will lost it and offered a copy of it for probate.  While the will is being validated by the probate court, his ex-wife, a Russian mail order bride by her attorney's description, is opposing the appointment of his daughter as executrix on the grounds that she is not qualified to fill that role.

So many points that it is hard to focus only on the following:

1.  The individual designated as executor in a will is almost always appointed as executor by the court.  If a temporary executor is needed to operate a business, the individual designated as the executor would seem to be the best person to fill the role.

2.  I am not sure that a Russian mail order bride is the best person to challenge another's qualifications to serve as executor unless the position involves marketing.

3.  As profitable as marijuana growing might have been, Mr. Mondella might have missed his true calling.  The cherry juice in the street was causing neighborhood bees to turn red and produce cherry tainted honey.  The Whole Foods/Fresh Market base would have paid a premium for the legal production of  cherry flavored honey.  Heck, even Walmart customers would like the product if sufficiently discounted.

Money Play

Roderick Covlin was arrested yesterday on charges he murdered his wife on New Year's Eve in 2009.  The estranged couple was in the midst of divorce when Shele Covlin was found dead in a bathtub.  An autopsy revealed she had been strangled.  Ms. Covlin reportedly feared for her safety and had an appointment with an attorney to change her will the next day according to court filings.  Since her death, her husband, an unemployed backgammon expert, has been blocked from receiving any of her $1.0 million estate.  She changed the beneficiaries of her $1.6 million insurance policy to her children the month before she died.

There are a litany of estate planning issues, but let's focus on the major ones:

1.  Changing a will and other documents during a divorce proceeding is always advisable if not prohibited by agreements between the parties or the domestic relations court.

2.  Simply changing a will can allow the other spouse to inherit up to one third of the probate estate if the spouse elects to take the elective share provided by statute.  Transferring the assets to a trust would be a more effective means of disinheriting a divorcing spouse.

3.  If convicted of murder, the husband will lose all benefits to his deceased wife's estate under NY's Slayer Statute.

4.  Am I the only one who doubts that Shele Covlin had an appointment on New Year's Day to change her estate plan? The day after perhaps, but not on New Year's Day.

Grandma Murders, Grandkids Inherit Millions (Pt. 2)

Ben Novack was the son of the builder of Miami's Fountainebleu Hotel.  Both he and his 86 year old mother were murdered at the behest of his wife of 18 years, a former stripper, within 3 weeks of each other in 2009 to collect his $10 million estate.  His wife was convicted of his murder in 2012 and is now serving life in prison.  His wife was designated as the primary beneficiary of his 2006 will, but is prohibited from inheriting due to Florida's Slayer Statute.  An appeals court recently held, though, that her daughter and grandsons may inherit his $4 million estate as his contingent will beneficiaries because the Slayer Statute does not apply to them.  Novack's cousins and other distant relatives (including Steve Wynn's wife, Andrea Wynn) are still claiming that his wife unduly influenced his will and that it should be thrown out.

Several quick points:

1.  The undue influence argument should be a non-starter because after a marriage of 15 years, a husband will always leave his assets to his wife and then her children if they do not have their own children.

2.  Novack violated one of my tenets - never marry a stripper.   Another tenet is never marry someone you met in rehab.

3.  Attorney fees are the only thing that outpaces  appreciation of South Florida real estate if Novack's estate declined in value by $6 million over 6 years.

4.  Andrea Wynn must have a punitive pre-nup with her hotel magnate husband, billionaire Steve Wynn, if she feels compelled to chase the few remaining millions of her murdered cousin.

Khloe and Lamar (Update)

At the risk of turning this blog into TMZ-lite or another gossip site, Khloe Kardashian and Lamar Odom have called off their pending divorce. Lamar has recovered enough from his cocaine and Viagra induced coma that he is now in physical therapy.

Two brief points:

1.  Despite my advice to the contrary, good for Lamar that he did not revise his estate planning and health care documents to remove Khloe from them as beneficiary and health care decision maker.  He saved some drafting fees while also saving his life.  I suspect other disabled individuals did not have such good fortune when their estranged spouse was calling the shots.

2.  James Harden apparently does not share my sentiments about Lamar's reconciliation with Khloe.

Coma and Lamar

Lamar Odom remains in a coma in Las Vegas after being found unconscious in a Nevada brothel after going on a weekend bender with cocaine and herbal viagra. His estranged wife, Khloe Kardashian, is reportedly making his medical decisions for him even though they separated two years ago and signed their divorce papers in July.  Los Angeles divorce courts have a four month backlog of divorce cases.

Several quick points:

1.  When individuals separate, they should implement new estate planning documents including health care powers of attorney.  During a divorce, the estranged spouse will be better off financially if the other spouse dies prior to the divorce finalization so it is best not to have the spouse in charge of one's medical decisions.

2.  That said, new estate planning documents are usually not a priority for a guy who was allegedly recently found on skid row.

3.  Odom's mom died when he was a teenager, his father was a heroin addict, and he had an infant die of SIDS.  When the Kardashian family was his oasis of normalcy, the man never had a chance.

Thanks to Kathy Chabot for the post topic suggestion.

The Wind Cries Stolen

A Tucson guitar shop is being sued by the estate of Jimi Hendrix over the ownership of a guitar previously owned by Hendrix.  The shop owner claims to have bought the guitar, valued at between $750K and $1 million, from an individual who obtained it from Sheldon Reynolds, the former husband of Hendrix's sister.  The estate claims that the shop does not have title to the guitar because the guitar was stolen by Reynolds. The estate also claims that the guitar is priceless to the Hendrix family.

Three points:

1.  Under Ohio law, a thief can obtain "voidable title" which means that he owns the property until the legitimate owner claims it.  However, once the thief transfers the property to a purchaser who is unaware that the property is stolen, the purchaser becomes the lawful owner.

2.  If this were an Ohio case, the guitar shop owner would have valid title to the guitar no matter how Sheldon Reynolds obtained it before selling it - whether through gift from his wife (doubtful) or from his 14 year old step-son giving it to him by mistake (less doubtful) or simply taking it  - because the shop obtained it from a third party who was unaware it was stolen.

3.  In spite of the family's claim that the guitar is priceless to them, I suspect it is really worth $750K to $1 million to them.

The Final Cut (Robin Williams Pt. 3)

The widow of Robin Williams and his children from his prior marriages settled their dispute over his estate this week.  His third wife was seeking some of his personal belongings, which he left to his children in his will, and funds to continue to reside in their home for the rest of her life.  Williams had left her the home in trust, but apparently did not set aside a specific sum to provide for the upkeep of the house for her lifetime.  The undisclosed settlement provides that she will have sufficient funds to live in the house the rest of her life, plus she will be able to keep their wedding gifts, a bike they purchased on their honeymoon, a watch, and the tuxedo he wore to their wedding.  They also disputed the ownership of various photographs.

Three brief points:

1.  This dispute was really about the funds to keep her in their Tiburon house.  The rest of the items are inconsequential.

2.  I am glad his children were able to allow his widow to have one watch and one bike from his watch and 50 bike collection.

3.  In the era of digital photography, does anyone really fight over the ownership of pictures when they are readily reproduced?

This Is Not Springfield, It Is L.A.

Sam Simon was renowned as the co-creator of "The Simpsons."  When he died earlier this year, he left an estate worth at least $100 million, most of which he left to charity.  He left the care of his rescue dog, a Cane Corso (think a pit bull on steroids, dating from Roman times) to the dog's trainer.  Alas, he did not leave any funds to the trainer for the care of the dog which requires twice a week acupuncture at $3,600 per month, gluten free regionally sourced food for $185 month, and $150 grooming every three weeks.  The trainer also requested his $7,500 monthly fee to work with the dog to keep it from "changing your life in an instant (i.e. mauling)"  even though the trainer now owned the dog.  The trainer is upset that the trustee will not provide him the funds he has requested to care for the dog.

Several points:

1.   Trusts to provide for the care of pets after the death of an owner are permissible under Ohio law.

2.  If Mr. Simon's trust did not specifically provide for the care of the dog after his death, the Trustee is not permitted to distribute funds to the new owner of the dog.

3.  When leaving someone one's pet, one should also leave a sum of money to care for the animal. I always address this issue with my clients, lest they impose a financial burden on their friends.

4.  Mr. Simon could have made a huge difference in many human lives with the $140K he was spending annually on a dog prone to attacking anyone who walked onto his property, although attacking Howard Stern is understandable.

5.  Gluten free, regionally sourced food for dogs?  L.A. deserves our scorn and mockery.

Dad's Weekend

Just returned from Dad's Weekend at Blair's sorority at Indiana University.  It is always great to spend time with her.  Post to follow soon.

Pistons, Lightning, Shock, and Litigation

As I previously wrote, William Davidson was the owner of the Detroit Pistons, Detroit Shock, and the Tampa Bay Lightning.  He was also the 62nd richest man in the U.S. at the time of his death with a reported net worth of $4.5 billion in 2008 (and perhaps $3 billion at the time of his death in early 2009).  His estate recently settled a dispute with the IRS over the amount of transfer taxes owed for $388 million after the IRS claimed a $2.7 billion deficiency after his estate had previously paid $245 million in transfer taxes.  His estate has now sued Deloitte and Touche for $500 million on the grounds that the estate planning advice was bad and that the firm had wanted to land Mr. Davidson as a client for marketing purposes. Allegedly, Deloitte had promised that "he would win if lived and would he would win if he died" with their strategies.

Several points:

1.   I understand the frustration, but I do not see the damages (which are key for a lawsuit).  The effective tax rate for deaths in 2009 was 45% which means that Mr. Davidson's total tax bill conservatively could have been $1.35 billion.  Instead, with tax planning he paid $583 million in taxes with only $133K in penalties.  I do not see how his estate was harmed by the planning advice.

2.  According to the figures, his estate declined in value by 1/3 in one year.  The financial crisis was hard on everyone.

3.  If he had died in 2010 like George Steinbrenner, his estate would not have owed any estate taxes because there was no estate tax that year  (although there would have been a deficiency for his unpaid gift and generation skipping taxes).

4.  I remain unconvinced that anyone truly "wins when they die."

She Doesn't Get It - Redux

A young writer recently wrote a web piece titled "If You Have Savings in Your 20's, You're Doing Something Wrong." The article contained the following gems:

• People who are saving in their 20s are people who don’t set their sights high. They’ve already dropped out of the game and settled for the minor leagues.
• Your 20s are not the time to save; they’re the time to gamble. $200 a month isn’t going to make the dent that a $60,000 pay raise will after spending all those nights out networking.
• We don’t have kids. We’ll be renting for the foreseeable future, and we have no problem eating McDonald’s when we’re skint.

Several quick points:

1.  If this advice was from a 40 year old looking back on life, it would be less laughable that it is coming from a 20 something trying to justify her lifestyle.

2.  I am not sure I know anyone who received a $60K annual raise but she seems to think they are plentiful.

3.  The value of the monthly $200 expenditure she mocks is $1 million after 45 years.

4.  If she continues to spend what she makes, she will rent forever, not just the foreseeable future.

5.  The writer and the 2 million plus people who liked her article on Facebook are likely constituents of Bernie Sanders because they are counting on others to provide for their retirement.

D List Actress, A List Will Contest

Meadow Williams is an actress of whom you have never heard and who appeared in movies you never saw.  She was married to Gerald Kessler, founder of Natural Organics natural supplements company, for four years prior to his death earlier this year.  He was 31 years older than her.  In 2013, he changed his will to leave all of his $800 million estate to her while excluding his 2 children and 5 grandchildren.  His children and grandchildren have contested the will on various grounds, including fraud, undue influence, lack of mental capacity, and the fact that Ms. Williams' divorce from a prior husband was never finalized even though it was filed in 1994.

Several points:

1.  The fact that Ms. Williams might not have been officially divorced should not be a factor in whether Kessler's will was valid - he could leave her money whether they were married or not.  The estate tax implications vary, but the bequest remains the same.

2.  Still, 20 years to finalize a divorce?

3.  If Ms. Williams did convince her husband to leave her all of his estate, she might have over-reached.  She could have lived comfortably on any single digit fraction of his estate while still leaving money for his children.

4.  Ironic that that the children of a fortune based on natural supplements allege fraud in a will contest.

Staying A Head

In a slow week in celebrity estate news, the only newsworthy item is an NYT article about cryonics and a young woman who had her brain preserved upon her death from cancer 2 years ago.  To raise the $80K needed to pay for the freezing of her brain until her brain can be brought back to life in the future, she and her boyfriend posted a plea on Reddit.   A post-death brain scan has shown that the chemo-preservatives needed to protect her brain from ice damage only reached the outer level of her brain.

Several points, mostly dorm room existential:

1.  If you could be brought back to life, but everyone you knew had died, would you still want to be brought back?

2.  If you are the boyfriend and your long dead girlfriend was brought back to life, would you leave your current spouse and family to be with her?

3.  If 80% of your dead girlfriend's brain is damaged by the freezing, would she still be the person you would want to be with?

4.  Would Bill Clinton preserve Hillary's brain?  Or vice versa?  I think we all know this answer.

5.  If the young woman ever wanted Ted Williams' autograph, or to meet Walt Disney, cryopreservation was her only hop

Cuckoo Estate Planning

A Manhattan millionaire left $100K to a pet trust for her 32 cockatiels.  She requested that the birds continue to live in the aviary in her $4 million East Hampton property; that they be fed Avi-Cakes (which cost $115 for a 20 lb bag), carrots, water, and popcorn; and that the building be cleaned each Monday and Thursday.  She was far less meticulous with the rest of $5.3 million estate which she initially left to her step-son in a 2006 will.  She later tried to revise that will by crossing out his name and writing in the name of her sister who is now claiming the remaining $5.2 million.  

Several points, some of them previously made:

1.  Certainly this woman missed the forest for the trees - she focused on a picayune aspect of her estate while ignoring the proper disposition of the bulk of her estate.

2.  Handwritten changes on a validly executed will are ineffective and will likely lead to her step-son inheriting the $5.2 million (at least under Ohio law)

3.  As mentioned previously, I retain the original documents for my clients to preempt this type of attempted change/spoliation of wills.

4.  This type of myopic focus on pets while ignoring one's relatives is more commonly seen in cat owners rather than bird owners.   

TML - Football Is Back

Paul Daugherty of the Cincinnati Enquirer allowed me to write his The Morning Line Blog again today.

Limited Inheritance

A Columbus widow is suing L Brands, the parent company of Victoria's Secret and Bath and Body Works (and originally known as The Limited, Inc.), claiming that she inherited $1.5 million of stock that L Brands refuses to acknowledge.  Her late husband,a bricklayer, allegedly purchased 50 shares of The Limited Stores in 1976 after receiving a stock tip from a client.  His widow claims his stock certificate for 50 shares is an original certificate and is now worth $1.5 million after 7 stock splits and 40 years of unpaid dividends.  The company has not yet responded in court.

Several practical points:

1. I detest stock certificates - they are easily lost during the client's life and difficult to transfer after the client's death. I always advise my clients to own stock in a brokerage account rather than in certificated form.

2.  I also always advise my clients to list all of their financial accounts/assets and place the list with their estate planning documents.  This assists their children with settling their estates by providing them knowledge of which assets they own and must locate.

3.  If the stock market continues on its current trajectory, this battle might be moot because the shares will be worthless.

DIY = Disaster Is Yours

A Minnesota woman signed a will in 2006 naming her grandson and a former employee as equal beneficiaries of her estate.   She tried to revoke the will in 2008 and leave her entire estate to her grandson by writing and initialing several changes on a photocopy of the will.  In 2010, she downloaded a DIY will from a website and hand wrote her intent to leave her entire estate to her grandson, but she did not have it properly witnessed.  She died in 2013 and all 3 wills were presented for probate.  The local probate court held that the 2006 will was still in effect because the 2008 notes on a photocopy did not validly revoke the prior will and that the 2010 downloaded form was not validly executed.

Several quick points:

1.  In Ohio, a will can be revoked with a statement of revocation or physical destruction (i.e. shredding or tearing) of the prior will.

2.  I generally retain the original wills of my clients to prevent them from trying to alter their wills by writing on them.

3.  I will once again quote the mechanic from the '70's Fram oil filter commercial (because I am from Greenville, Ohio and we had  a Fram oil filter plant in my long ago youth):  "You can pay me now or pay me later."  I would have billed her $600 to implement her wishes. Instead, her estate spent thousands and her wishes were not followed because she did not follow the simple formalities for signing a will.  The now long ago former employee is forever grateful for her short sighted thriftiness.

Clear and Present Estate Taxation

When Tom Clancy died two years ago, he distributed his real estate to his 2nd wife, then left the remainder of his $83 million estate in equal thirds as follows:

1.  In trust for his wife,

2.  In trust for his wife and adult children from his first marriage, and

3.  In trust for his adult children from his first marriage.

The  primary asset was his 12% interest in the Baltimore Orioles which was valued at $65 million.  The last codicil signed by Clancy directed that his wife should receive her inheritance "estate tax free."  His wife and adult children then proceeded to fight over whether the trust for her and them (Trust No. 2) should pay any estate taxes.  A Maryland court recently decided that the trust for the children (Trust No. 3) should pay the entire estate tax bill.

Several points:

1.  Poor drafting leads to expensive disputes.  I have never used the vague term "estate tax free" in any document I have drafted.

2.  If a trust for a surviving spouse is carefully drafted, it can postpone the taxation of its assets until the death of the surviving spouse which is what seems to have occurred here at least with respect to the trust for the spouse only (Trust No. 1).

3.  Shed no tears for anyone in this dispute.  Clancy's adult children will presumably also inherit the substantial assets his first wife received upon their divorce while his 2nd wife is reportedly an heiress to a Pepsi bottling fortune.  Even the IRS receives nearly $12 million with significantly more millions coming when the 2nd wife dies.

4.  The second wife aka Evil Step-Mom likely cannot die soon enough for his adult children.

(Thanks to Chip Workman for bringing this to my attention)