Merry Christmas

From our family to yours.  Wishing you the best.

 

One More Sports Post

Bill Cunningham of WLW interviewed me Monday about the blog post I wrote for The Cincinnati Enquirer on Friday. It was incredibly fun.

Episode is here (my part is towards the end at the 88 minute mark).

Bad Boy

Steve Bing is an American movie producer and “businessman” who is the father of Elizabeth Hurley’s son, Damian. He is also the father of Kira Kerkorian Bing, his daughter with former pro tennis player, Lisa Bonder. Bonder had duped her husband, billionaire Kirk Kekorian into thinking he was the biological father of Kira. Bing reportedly inherited nearly $600 million at the age of 18 from his grandfather’s trust. He dropped out of Stanford shortly thereafter. 

Bing and his out of wedlock children are in the news this week because Bing’s father, Peter Bing, went to court to attempt to exclude them from inheriting from a multi-millionaire dollar trust he created in 1980 for his then unborn grandchildren. The elder Bing and his trustee contend that it was not his intent for out of wedlock grandchildren to inherit from the trust. He claimed that he had never met his grandchildren and that Steve had no relationship with them. The elder Bing was likely prodded into the lawsuit by his daughter who has her own two children who would be the only trust beneficiaries if Steve Bing’s children were excluded. 

Several points, some of them obvious: 

1. Steve Bing is clearly a cad. 

2. Lisa Bonder was duplicitous. 

3. Steve Bing’s sister is duplicitous and manipulative. 

4. I am not a fan of creating trusts for grandchildren when it is uncertain how the children will be when they mature. 

5. The funds in this trust are more important to Steve Bing’s children than they are to his sister’s children because it is unlikely his children will inherit from him while she likely had $600 million of her own funds to leave to her children some day. 

6. Problems of the .o1 percent.

Photo Credit:  Estee Lauder
License:  Fair Use/Education (from linked article)

Chain of Fools

When Aretha Franklin died last week after a long battle with pancreatic cancer, she allegedly did not leave a will.   She is survived by her four sons, one of whom has special needs, who will receive equal shares of her estate.  Her niece asked to be appointed as representative of her $80 million estate.  Aretha’s copyright attorney told reporters that when there is no will, “there will always end up being a fight.”

Some points of relevant interest:

1.  No one wins a long battle with pancreatic cancer.  See Jobs, Steve.  Prepare a will.

2.  When a woman dies without a will, there should not be a dispute because there are no illegitimate children to contest heirship.

3.  The niece’s fee for serving as personal rep. could be $1.6 million.  One of the sons should have first dibs on this role.

4.  Surprisingly, Madonna did not ask to be appointed as personal representative.

Photo Credit:  Jae C. Hong/AP
License:  Fair Use/Education (from linked article)

Mellon's Folly and the Infinite Sadness

Matthew Mellon was descended from the famous banking family. He died last month at the age of 54 after ingesting the hallucinogenic ayahuasca before starting rehab. At one time he had a $100K/month oxycontin habit.
When Mellon turned 21, he received a $25 million allowance from a family trust, one of 14 trusts established for him. He recently became a billionaire by investing in cryptocurrency. TMZ is reporting that his estate is now petitioning the probate court to authorize the sale of the cryptocurrency.
So many intersecting points in current events:
1. Someone should never give their child $25 million at the age of 21. Trusts can be created to defer an inheritance for as long as necessary.
2. In probate, assets can usually not be sold or transferred until the entire list of assets has been compiled which an take many months. With the decline in value of crytopcurrency, the estate wants to sell it before people realize its true value is likely zero.
3. Mellon might be the wealthiest victim of our tragic opioid crisis.
4. Following the lynching last month of a Canadian who moved to a Peruvian jungle to seek clarity through ayahuasca but somehow killed a shaman, Mellon is the second person whose newsworthy death can be attributed to it.
5. Ayahuasca is described as a sludgelike hallucinogenic potion used by indigenous shamans in spiritual exercises. I will take my drink inspired spiritual experiences through a nice fruit forward cabernet.

Photo Credit: Forbes/Ethan Pines

License: Fair Use/Education (article linked)

Following the Eclipse Herd

Would you have either of these guys draft your will? I ran into Chuck Meyer (Santen and Hughes) during the eclipse at the Banks. 

New Sensation

The British press is abuzz with speculation that Tiger Lily Hutchence (full name - Heavenly Hiraani Tiger Lily Hutchence Geldof) will inherit “millions” when she turns 21 next week. She is the daughter of the late INXS frontman, Michael Hutchence, who died in 1997 with a net worth reportedly between “penniless” and $40 million. Tiger Lily’s mom, Paula Yates, died from a heroin overdose four years later. Tiger Lily was later adopted by Yates’ former husband, Bob Geldof, who founded Live Aid and was later knighted.

A few points, only one of them really relevant:

1. I always discourage my clients from allowing their children to inherit any money, much less “millions”, when turning 21. I advise releasing trust funds in increasing amounts over a period of years.

2. Apropos of nothing, I think it is commendable of Bob Geldof to raise the daughter of his ex-wife and the man she left him for after the little girl was orphaned.

3. Whatever she inherits from her dad, nothing can compensate Tiger Lily for the tragedy in her life - the deaths of her parents, the heroin overdose of her half-sister, and the silly name bestowed upon her by her parents.

Photo Credit:  Unknown
License:  Fair Use/Education

Memorial Day Fun(draising)

Seven guys, 38 miles, four squares (Mt. Lookout, Hyde Park, Glendale, and Fountain), 2 states, and $1,750 raised for Juvenile Diabetes Research Foundation.

I hope you enjoyed the holiday.

Dying Pains

Alan Thicke’s sons, who are trustees of his 2016 trust, filed suit this week against his widow, Tanya Callau. They asked a court to enforce the terms of Thicke’s trust. They contend that Callau, who Thicke married in 2005, is trying to void the terms of the pre-nuptial agreement she and Thicke signed.

The pre-nup provided that at Thicke's death Callau would receive 25% of his estate and 5 acres of a ranch Thicke owned. The trust meanwhile provides that Callau will receive a $500K insurance policy, his pension benefits, and 40% of his estate. If Callau wants to live in the house, she may do so if she pays the mortgage and other expenses. Despite these generous terms, Callau’s attorney claims that the trust is “the worst document ever drafted by an attorney” and “the attorneys should still be writing in crayons.”

Trying to piece together several points:

1. The terms of a trust can override the terms of a pre-nuptial agreement if the trust terms are more generous than what is provided in the pre-nup. That seems to be the case here.

2. The claims by Callau’s attorney about the quality of the trust drafting are obnoxious, but a trust typically would not address insurance policies and pension benefits because those are non-probate assets (i.e. they have their own beneficiary designation) and not included in a trust.

3. Perhaps the attorney who drafted the trust is the same attorney who advised Robin Thicke to foolishly sue Marvin Gaye's estate over "Blurred Lines" which resulted in a $7.2 million judgment against the younger Thicke.

                                          Photo Credit: Matt Baron/BEI/REX/Shutterstock
                                                                  License:  Fair Use/Education 

The Nest

Gosh, times are slow in the newsworthy estates and trusts area, except for the conga line of people claiming to be heirs of Prince. Reluctantly resorting to fiction for material, "The Nest" by Cynthia D'Aprix Sweeney is on many best books of summer lists. It has several estate planning lessons which can be gleaned from the following plot facts (all of which are in the first 40 pages so hopefully I not spoiling anything for anyone who wants to read the book). 

A father created a trust for his four children. The trust was to be distributed when the youngest child reached the age of 40. His wife had the power to invade the trust in the event the children needed the funds earlier. One of the children had a power of attorney from his husband which allowed him to mortgage their vacation property without the husband knowing about the mortgage (trust me, I got the pronouns correct). Another child had a legal predicament which resulted in his mother lending him the entire proceeds of the trust to bail him out and hoping that he would re-pay the amount (called "the nest" by his siblings). 

Points to be learned: 

1. One should never give a power of attorney to a non-aged spouse unless it is contingent on disability. The potential for abuse is too great otherwise. 

2. This trust should have divided into separate shares either at the conception or when the children were in their early 20s. Each child could have then borrowed from his or her share only, if necessary, rather than from the entire trust. 

3. The wife/mother of the children should not have had the power to distribute all of the funds without being held to a prudent investor standard. 

4. Of course, if there had been good estate planning there would not have been a novel, nor would I have a blog.

Unduly Influenced Boss (Sumner Redstone Pt. 5)

Viacom and CBS President, Sumner Redstone, is back in the news this week. He removed Phillipe Dauman and George Abrams, who are directors of Viacom, as Trustees of one of his trusts. They are contesting their removal by alleging he is incompetent. In a huge twist of irony/self-preservation/whatever you want to call it, only six months ago they testified he was competent to remove a girlfriend as his health care proxy.

Three brief points:

1. The stakes in the previous battle involved who could make his health care decisions if he could not (while the real plot was whether he could change his will to disinherit his former girlfriend) while these stakes are who gets to control Viacom and CBS after Redstone's death.

2. I think if Redstone is in a wheelchair, being fed by a feeding tube, and able to communicate only through an aide now, and was in the same condition six months ago, he was likely incompetent at both junctures.

3. Dauman and Abrams have reaped what they have sown. Being close to Redstone is like having an alligator as a pet - it might seem cool, but eventually it (i.e. he) will devour you.

Hillary and Hypocrisy Both Start With "H"

Hillary Clinton's recently released financial disclosure statement reveals that she and her husband both created a qualified personal residence trust in 2010 and transferred ownership of their NY home to it. They did not transfer their more expensive Washington DC house to a similar trust.

Several quick educational points:

1. A qualified personal residence trust allows them to transfer the house at a discounted gift tax value based on how long they wish to reside in the house and the current interest rates.

2. For example, if they decided to live in the house for the next 20 years (and not die), they would be able to transfer the entire $1.7 million house to Chelsea while only valuing it at $400K for gift tax purposes.

3. Future appreciation is also excluded from their estate.

4. They would have been wise to transfer the DC property via this technique because that house has doubled in value while the NY property has only increased nominally.

5. While this estate planning technique is available to everyone, I find it hypocritical that a woman campaigning for higher estate taxes and other taxes in the name of the greater good does everything she can to avoid those taxes.

One Disinherited Ex-Girlfriend

The reports of a settlement between Sumner Redstone and Manuela Herzer over her replacement as his health care proxy were premature. There actually was a brief trial over the dispute which ended with the judge dismissing Herzer's suit to remain as his health care decision maker. The judge relied on a 7 minute deposition of Redstone in which the few intelligible sentences he uttered were "Manuela is a ****ing bitch" (twice) and "I want Manuela out of my life. Yeah." Of course Herzer's attorneys have vowed to appeal.

Several points:

1. This case remains about Redstone's will which he changed at the same time as his health care power of attorney. Herzer was reportedly to receive $70 million at his death.

2. Herzer, who smartly declined an offer of marriage from Redstone, has reportedly received $75 million in gifts from him while the woman who did become his second wife only received $10 million because she signed a pre-nup.

3. While Redstone, like the recently deceased Prince, believes he will live forever, at least he has planned for his death by having a will and various trusts.

You Can't Do That On Stage Anymore

Frank Zappa was an eccentric musician who died in 1993. He was survived by his wife and four children - Ahmet, Diva, Dweezil, and Moon. (ed note: he was early in on odd names for celebrity children). For the past decade, Dweezil has played his father's music on a concert tour titled "Zappa Plays Zappa." After Zappa's widow (and Dweezil's mother) died, Ahmet and Diva became trustees of the family trust and have told Dweezil that he no longer has permission to use the title "Zappa Plays Zappa" without paying $150K each time he performed a song owned by the trust. The concert tour will be titled "Dweezil Zappa Plays Frank Zappa" this summer.

Several points:

1. The selection of a trustee is vitally important. A corporate trustee would likely be more onerous than the Zappa siblings and extract as much money as possible from Dweezil for performing his father's music.

2. There is no word on how much his mother made Dweezil pay the trust for the use of the music. Odds are that it was minimal.

3. Dweezil is correct that the new tour name "does not exactly roll off the tongue."

4. Abel and Cain were unavailable to comment on the sibling rivalry.

5. My first rock concert was Frank Zappa at the Armory Fieldhouse in 1978. How my musical tastes have changed.

Guardians, Drugs, and Embezzlement

A Massachusetts man was appointed guardian of his niece and nephew when their parents died in a car crash in 2009. The man was recently indicted for allegedly stealing approximately $250,000 from their trust fund in the 11 months after he was released from rehab. He pleaded not guilty. 

Three very quick points: 

1. I always recommend that clients designate different individuals to serve as guardian and trustee. 

2.  If different people, the guardian should be able to ascertain if the trustee is stealing from the trust. 

3.  Embezzlers are smart enough to not use stolen funds to buy tangible property, but not smart enough to avoid being caught. Such is the lot of gambling and drug addicts.

A Debtor, Not a Son

Slow times in the newsworthy estates area.  Going back a few months, Andrew Getty was the 47 year old grandson of J. Paul Getty who died of a meth overdose last year.  His father, Gordon Getty, filed a claim against his son's estate for repayment of $14 million that he allegedly loaned him.  Gordon Getty is also seeking the return of 55 pieces of art valued at $1 million.  The younger Getty's Hollywood Hills house was listed for sale this week at $8 million.

Several quick points:

1. Creditors of a decedent have to file a claim against the estate if they want to secure payment for a debt.  In Ohio, the claim must be filed within six months of the date of death.
2. Based on the amount of the claim filed by Gordon Getty, it is obvious that he financed his son's life.
3. Andrew is the second Getty grandchild to die a drug related death.  An incentive trust might have helped them manage their finances.
4. It should be no surprise that Gordon Getty is seeking money from his son's estate.  His father charged a son interest on the ransom he paid for the release of a kidnapped grandson.  Apples do not fall far from the tree. 

Ella Mason Was the Reasonable One

When she died in 2003, a Maine woman left almost of all of her $200,000 estate for the care of the unwanted and abandoned cats in her hometown.  Her two page will appointed trustees to administer the funds but did not specify who should actually receive the funds.  Now, two women who run makes shift cat shelters have sued the trustees and the attorney who drafted the will.    The two women spend nearly all of their disposable income to provide for the cats.  One of the women has not visited family for 2 years because she is afraid to burden the other woman with all of the cat care in her absence.

Several points:

1.  Obviously, the trust is lacking in specifics about how the funds should be spent and should have included direct beneficiaries.

2.  Any two page will is lacking in many specifics without even incorporating a trust into it.

3.  The attorney should be dismissed from the lawsuit.  His legal duty was only to his client - he did not owe any legal duty to the people suing the trust.

4.  Need I point out that stories involving multiple cats never include a male?

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.

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?

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)