Sir Jeff

While we wait for the impending China crackdown in Hong Kong, the Jeffrey Epstein death remains the other big news topic. Epstein was not married nor did he have any alleged children. It is not known if he left a will or other estate planning documents.

Epstein was survived by his younger brother, Mark, who has two children. Epstein owned houses in NYC, Palm Beach, and the U.S. Virgin Islands. His net worth is reported to be $500 million although no one knows for certain nor the source of the wealth.

A few brief points:

1. Epstein supposedly made his money by assisting his clients with the minutiae of tax planning and other life details so it is hard to believe he did not leave a will and trust.

2. It is way too early to know his actual net worth and what claims will be brought against his estate.

3. For the sake of his heirs, they should hope that he was legally a resident of Florida or the U.S. Virgin Islands, neither of which has an estate tax, rather than New York which would tax his estate at a rate of 16%.

4. These complex estate issues will likely be determined sooner than the circumstances surrounding his death.

5. There might be some truth to the line “the person most surprised by the suicide of Jeffrey Epstein was Jeffrey Epstein.”

Photo Credit:  Unknown (from slideshow in linked article?)
License:  Fair Use/Education (from linked article)

21st Century King Lear

Herbert Neumann is the trustee of trust which owns 60 works of art worth an estimated $50 million. The most valuable piece is “Untitled (Tyranny)” by Jean-Michel Basquiat. The trust was created by Neumann’s brother for the benefit of Neumann’s 3 daughters. Now, one of the daughters, Belinda Neumann-Donnelly, is suing her father in his capacity as trustee to sell all of the artworks. She claims that the art will be impossible to divide equitably and that she needs funds for her family’s “significant housing, litigation, and education expenses.”

The same daughter has another lawsuit, presumably the source of the significant litigation expenses, against her father involving the sale of another Basquiat painting, “Flesh and Spirit,” formerly owned by her mother who died in 2016 that sold for $30.7 million last year. She claims that her father’s threat to contest the sale of the painting depressed the sales price. Oddly, she lives in the same two family building in NY as her father.

Several points:

1. The lawsuit to sell the paintings owned by the trust is likely premature because the trust likely provides that it will distribute its assets upon the death of Neumann.

2. Neumann’s wife, who owned the painting sold for $30.7 million, disinherited him from her will alleging he abused her. I am surprised that he did not elect against the will which would entitle him to 1/3 of his wife’s estate including part of the painting sales proceeds.

3. If Neumann’s wife gave the painting to the daughter before she died, as some articles insinuate, the wife would have been required to file a gift tax return and pay gift tax on nearly $25 million and the daughter would have to pay capital gain tax on almost the entire sales amount (Mrs. Neumann only paid $15K for the painting).

4. The emperor truly has no clothes because Basquiat paintings look like the drawings of a bored high school student on the back of his spiral notebook.

Photo Credit - Owen Hoffmann, ©Patrick McMullan
License:  Fair Use/Education (from linked article)

Between a Rock and Hard Place

Bill Cornwell lived in a Greenwich Village brownstone with his same sex partner for 50 years. When he died two years ago, his will left the building and all of his possessions to his partner. However, the will was only witnessed by one individual while NY law requires two witnesses. Without a valid will, his estate will pass to his closest living relatives who are his nieces and nephews who recently sold the building for $7 million. The partner has since filed suit trying to prove that he and Mr. Cornwell were actually married, although they were not, so he can be considered the closest heir.

So many points and such short attention spans:

1. All wills require two witnesses not related to the individual and who will not receive any assets under the will.

2. Using a DIY will kit could lead to problems with properly executing wills (among other issues)

3. The legal arguments made by the partner verge on stupid. One of them is that even though they lived in NY, which does not recognize common law marriage, they bought a dog in Pennsylvania in 1991 as a symbol of their commitment to each other and because Pennsylvania used to recognize common law marriage they should be considered as married.

4. The 85 year old partner would be better off dropping the law suit and accepting the offer of the nieces and nephews to live in the apartment for 5 years at a monthly rental of $10 and receive $250,000 upon the sale of the building.

5. The entire problem could have been avoided if they had simply married each other once gay marriage became legal.

6. One niece claimed, apparently with a straight face, that her uncle did not want his partner to inherit or he would have properly executed the will. She also suggested that perhaps the men were just friends or great companions. The address of the rock under which she lives is unknown.

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.

Who Controls End of Life Decisions?

Sad case that I intended to link last week.  A young woman was diagnosed with terminal brain cancer and eventually received a breathing tube. When she requested that the tube be removed so she could die, her parents sought guardianship of her.  A court found her competent to make her own decision and denied her parents' request. In an odd turn of events, she changed her mind and kept the tube in place to preserve peace with her parents.

A few points:

1.  The case was correctly decided.  The parents had no right to interfere in the decisions of their adult child.

2.  If she had not been found competent, she would have been best served by having a health care power of attorney which designated someone who shared her beliefs to make her decisions. 

3.  We all should have conversations with our family members so they know our wishes and how we wish they would respond to specific medical situations.  As tempting as it might be to get all potentially controversial topics on the table at once, save the conversation about differing views on religion, political candidates, and gay marriage for a different time