Prince was a welcomed and permanent musical fixture on the landscape of my adolescence, and I was as shocked as everyone else when he passed away on April 21. In the immediate aftermath of his death, it was reported by Prince’s longtime attorney that Prince likely died without a will. Unfortunately, this initial report has proved true, and the news, to my ears, is almost as shocking, and almost as sad, as Prince's death itself. It is estimated that Prince was worth about $300 million at the time of his death, and this amount is only likely to grow as sales of his music, etc., soar in the coming months and years. He also had many business interests, wide-ranging intellectual property interests, and other complexities that will need to be addressed.
Adding to this is the fact that, to my understanding, Prince had no legal spouse and no children at the time he died (although I've read reports, unsubstantiated at the time I write this, that Prince has a "love child" from many years ago, and if this proves true, it will probably throw the entire estate into even more disarray). Assuming there is no spouse or children, this means that Prince’s estate will go, in its entirety, to Prince’s closest living blood relations, which appear to be one full-blood sister and a number of half-blood siblings (under Minnesota law, as well as New York law and the laws of most if not all other states, half siblings are treated the same for inheritance purposes as full-blood siblings).
Who knows who Prince would have wanted to administer or benefit from his estate, or how he would have wanted it to happen, but since he died without a will or other estate planning instrument like a revocable living trust, the state of Minnesota essentially wrote Prince's will for him in the form of its intestacy laws, which rigidly dictate who, and in what order, surviving family or others can administer a person's estate and benefit from it. All states have their own intestacy laws.
What struck me most about the first article I read about Prince's estate was a comment by Prince’s long-time attorney that Prince thought he would live forever, and could not face the fact of his own mortality, which is likely why he never set up a will or trust. This really hit home for me, because while I understand that basic--and totally understandable--human nature prevents many of us from facing the inevitable, I always try to impress upon people that setting up a will is more about protecting your assets and your loved ones than it is about “planning your own death.” I think that’s the greatest takeaway for me (and hopefully for you) from this sad tale. Perhaps no one and no argument could have persuaded Prince to set up estate planning documents, but had someone tried, and succeeded, in convincing him that even “basic” planning could protect his assets and his loved ones far better doing nothing could, I’m sure those now left behind to tend to the mess would have been spared a great deal of expense, time, and heartache.
My friends at Integrity Financial Partners posted the following item on their blog about some of the key financial benefits to getting married. I hope you find it useful, and should always feel free to contact the folks at Integrity Financial Partners if you have any questions or want more information.
Long Term Financial Benefits of Gay Marriage
The financial cost/benefit analysis of gay marriage needs to not just include the current year tax return, but also the long term financial planning benefits of gay marriage.
Many people around the time of Valentine’s Day consider getting married. From a financial perspective, many people are very familiar with the potential “marriage penalty” that can lead to paying more income taxes for many high earning couples. So from a financial perspective, why get married? In fact, there are many long-term benefits to getting married that you may not be familiar with.
Benefits of an IRA While Married
An IRA, or individual retirement account, allows you to safe pre-tax income without paying any taxes while you are investing. This is a primary mechanism for millions of American’s to save for retirement, and it has even greater benefits for married couples. For example, if one works and the other does not, the non-working person can use their spouses income to qualify for IRA contributions. This is known as a “spousal IRA”. There are also advantages to inheriting an IRA while married. If you inherit an IRA from someone who is not your spouse, you must start taking minimum withdrawals from the account owner one year after their death. However, if you are married and you inherit and IRA, you may wait to start taking contributions until the age of 70 ½, as well as draw down smaller amounts each year.
Marriage Social Security Benefits
There can also be financial gains when it comes to claiming Social Security benefits. If there are large difference in the income within the couple, the lower earning spouse can claim benefits based on the other spouse’s earnings, which can be worth a large sum of money if the higher earning spouse works to full retirement age. Furthermore, if the higher earning spouse passes away first, his or her benefit will be able to go to the lower-earning spouse as what is called a “survivor benefit”.
Mortgage and Capital Gains
Having two incomes to put on a mortgage application, and having a legal obligation to one another, can be appealing to mortgage brokers. You can also avoid more tax obligations when selling profit for a gain. More specifically, individuals can only write off 250,000 in profit from selling their home, while married couples can write off half a million dollars. This can be a huge benefit for couples living in cities with very expensive and appreciating homes, such as Brooklyn or Manhattan.
A final benefit you should be aware of when getting married is the unlimited spousal inheritance law. If one’s spouse dies, their estate passes to the surviving one without having to pay any taxes. For domestic partners, the federal exemption is over 5 million, but in certain states the estate tax exemption is much lower.
In short, there are many benefits to getting married that might outweigh the effects of the “marriage penalty”. This should be considered when making such an important decision.
Several of my previous posts revolved around issues related to the Michael Jackson estate. But one issue I didn't really get into is the internal strife among certain Jackson family members over how the estate is being administered and settled. Now, I don't think many people would argue that the Jackson's are the most tight-knit, functional family in the world, but even in families without all the drama that surrounds the Jacksons, settling the estate of a deceased loved one can cause in-fighting, lasting rifts, and even litigation. That's not to say the family members aren't good and decent and loving people; but death and money can bring conflict to even the closest of families, and this post will hopefully provide some tips and strategies to avoid such conflict.
I'll be the first to admit that we estate planning attorneys don't usually focus on the disposition of a client's tangible personal property--"TPP" or "stuff"--when preparing a will. Usually we focus more on assets like real property, financial accounts, and things like that. We also focus on minimizing or eliminating estate tax and on making sure as much gets to the client's named beneficiaries as efficiently as possible when the time comes. There are a few reasons why TPP is often neglected:
First, the monetary value of such property is usually not terribly significant.
Second, clients often don't have particularly strong feelings one way or the other about their TPP, and so to force them to focus on deciding who gets all of it could derail the estate planning process, which is perilous for the client.
Third, to provide an itemized list of TPP dispositions in a will means that if the clients changes his or her mind at any time, either a new will needs to be created or, at a minimum, a codicil (amendment) to the will needs to be made--both of which cost the client time and money.
Finally, we lawyers are able to address the issue by including a provision in the will that essentially states that the client may leave behind a list of items of TPP and to whom the items should be given, and that the client wishes for the executor to honor any such list. As for any TPP not disposed of by such a list, the TPP should be divided among, for example, the client's children as they may agree, and if there are any disagreements then the executor has sole authority to resolve the issue however he or she sees fit. In some states, such as NJ, any such list--as long as it's referred to in the will--is legally binding. In other states, like NY, such a list, even if mentioned in the will, is not legally binding. However, most people pick executors that they trust, and so they trust that the executor will honor any such list the client leaves behind.
What I usually do is advise my clients that they may spell out and dispose of as much or as little TPP in their wills as they wish, but that any changes can only be effectively made by redoing the will. I usually suggest that they list in the will any items that they definitely want to go to a certain person, and about which they are very unlikely to change their mind. For example, perhaps a mother wants to make sure her daughter inherits the mother's wedding dress. Something like that I suggest stating explicitly in the will. The pots and pans from Target, probably not. But hey, you never know.
The problem is that taking this approach to the distribution of TPP presumes that, for example, the deceased person's children will truly agree on how the TPP should be divided up. Often, they do not. It also presumes the client will get around to composing such a list (again, often they do not). And so are planted the seeds of family conflict. What I hope to do below is offer some tips for avoiding or minimizing such conflict.
Let's use the following scenario to illustrate the tips that will follow: Mom dies, leaving Dad as a surviving spouse, and A, B, and C as the surviving adult children. A, B, and C are all married. A and B have grown children of their own, and C has no children. Mom's will had a provision like the one mentioned above, leaving TPP to be divided as her children agree, and the executor (in this case, Dad) has the sole authority to resolve any conflict.
Tip #1: A, B, and C's spouses and children should stay in the background. Someone once said "If she wasn't your mama, stay out of the drama." The period after a family member dies is often a highly emotional time for the surviving family, and intrusion by spouses and less-closely-related relatives can lead to hard feelings. Also, in the absence of instruction from Mom to the contrary, A and B should not feel entitled to more TPP just because they have children.
Tip #2: If items of potentially high monetary value are involved, the executor can hire an appraiser to assign a value to the items, which can help the executor distribute the TPP as fairly as possible.
Tip #3: The executor can ask each child to write a "wish list" of which items of TPP they want most. Such lists don't mean the children will get everything they wish for, but it can guide the executor in deciding who gets what.
Tip #4: When conflicts over TPP remain, the executor can choose a method--preferably with the children's consent, but it's not required--by which to resolve the conflicts, such as a coin toss, drawing straws, or even having an auction where each sibling is given a certain amount of real or imaginary money to use to bid on the items he or she wants. Better yet, an estate planning attorney should discuss with the client what method they prefer be used, and that method should be mentioned in the will.
Tip #5: None of the children should appeal to the executor privately, trying to campaign or "angle" for the items of TPP that they want. All discussions about TPP should be had with everyone present, or via email with everyone cc'd. It is important that each sibling commit to this, so as to avoid suspicions that conversations are taking place behind anyone's back.
Tip #6: Everyone should keep in mind that stuff is just stuff. An item of priceless sentimental value to sibling B now, for example, might end up his or her child's yard sale at some point down the road. In the meantime, is that item of stuff really worth the possibility of permanently damaging family relationships?
Tip #7: No items of TPP should be removed from the deceased person's home before it is officially decided who will get the item. Further, to the extent anyone removed items from the house either prior to or after the deceased person's death, those items should be returned.
Tip #8: The estate planning attorney should discuss with the client, and include in the will, what the client's feelings are if, as is likely, the distributions of TPP are disproportionate in monetary value. Should a child who receives less valuable TPP get additional cash from the estate, or should the disparity be ignored?
Tip #9: When it comes to items of sentimental value--which is where most conflict is borne--the executor, when possible, can reproduce the items so that each child gets a copy. This can be a very useful approach for handling correspondence, photographs, film reels or videotapes, etc.
Tip #10: Even if the client doesn't want to leave a list of TPP, or discuss his or her wishes regarding TPP with their named executor and/or their family, an estate planning attorney should encourage the client to at least write a letter sharing his or her thoughts about the distribution of TPP. It should be addressed to the relevant surviving family members, and can even be retained by the attorney until such time as it is needed if the client doesn't want to distribute the letter during his or her lifetime.
There's no fool-proof way to avoid conflict during the settling of a person's estate. Many estates are settled without a hitch, but some of the time there is going to be at least minor conflict, even if only over items of purely sentimental value. Hopefully the above tips will help you if and when you find yourself in the situation of settling the estate of a loved one.
Until next time, be well.
With a new college school year soon to begin, I thought this topic might be, well, topical.
Now, I'll be the first person to concede that not a lot of college-aged young people need a will. That said, the other two traditional "core" estate planning documents are potentially just as important to people in their late teens as they are to people in their late eighties. Those documents are a health care proxy/living will and a durable power of attorney.
Once a child turns 18, a whole assortment of privacy laws and rights kick in (including HIPAA), making it potentially difficult if not impossible for even a parent to get access to medical records/information at times when having such information might be vitally important to the treatment of an adult child in an emergency medical situation.
Many parents of college-bound children assume that since they're paying the tuition, or that the child is living under their roof, that they have the right to make legal/medical decisions for that child, but the reality is that at 18 that child became a legal adult with the legal right to privacy and to govern their own lives.
There are many examples of parents wishing to speak to doctors about the treatment of their adult child after a car accident or other medical situation that rendered the child unable to give consent for the parents to access their medical records or speak with the doctor about the child's treatment. Not until such children regain consciousness and can give consent is a medical professional allowed to involve the parents in the child's care. For children who do not regain consciousness quickly, parents need to go to court to seek to become a temporary legal guardian, which costs thousands in legal fees and leads to delay that could be tragic to the child's prognosis.
This is not to scare parents, but to bring an important but rarely considered issue to light.
Having a health care proxy/living will set up--perhaps as part of the process of preparing to leave for college--allows the child to name his or her parents as health care agents allowed to have access to medical records and to make medical decisions on the child's behalf if the child is ever unable to. The document--at least the document I provide my clients--also expresses end of life wishes such as life support, etc. Once signed and executed, this document should be shared with the child's primary care physician. It can also be uploaded via an affordable service called Docubank (www.docubank.com), which will store the health care document and other vital health information about the child in a cloud service that can be accessed from anywhere with an internet connection via a PIN number on a wallet card provided to the child by Docubank--a wallet card that also includes other types of information needed quickly in a medical emergency, such as known allergies. I offer my clients a Docubank enrollment form, which I can use to enroll them in the service if they wish for me to. The cost is less than $30 per year.
A durable power of attorney for a college-aged child might be less important than the health care document, but executing a durable power of attorney in favor of the parents allows the parents to pay a child's bills, speak to the child's landlord, and numerous other financial and personal transactions if the child is either incapacitated or simply away at college or traveling abroad or any other reason. Otherwise, the parent must seek court permission to do so, at significant time and expense.
As a side benefit, going through this process with a college-aged child may also open the child's eyes and pave the way for thinking responsibly about undertaking other important legal tasks down the road in life, such as setting up a will and other documents that can protect the now-older-and-wiser child's assets, relationships, and loved ones.
If you would like to discuss any of this with me further, you can contact me in a variety of ways by clicking here.
In the weeks before the death of the legendary Casey Kasem on June 15 (I remember listening to him religiously as a kid, and can hear his distinctive voice clearly in my head as if it was yesterday), there was much discussion in the media about the conflicts within Kasem's family over how Kasem should live out his final days. No doubt, those same questions were battled over countless times for years by Kasem's family members behind closed doors.
This sad story is just another example of the strife that can arise when a person doesn't have a health care proxy/advance directive set up. Simply put, a health care proxy/advance directive document allows you to name the person who will be able to make health care/end of life decisions for you should you ever become unable to, and it also allows you to express your own wishes about end of life medical treatment.
As Baby Boomers turn 65 at the rate of 10,000 per day, they enjoy the prospect of two or more decades of active living still ahead. However, increased and healthier lifespans should not be an excuse for Boomers (or anyone else) to ignore the ultimate reality of life and to put off critical decisions until it's too late.
I've never had a client tell me they wished to end their lives hooked up to feeding tubes and breathing machines, but that is precisely what can and does happen when a person fails to set up a health care proxy/advance directive, especially in situations where family members disagree on the course of treatment (or lack thereof). The default setting given the laws and ethics of medicine is that you will be kept alive as long as machines will allow, unless you express and direct otherwise.
Setting up a healthcare proxy/advance directive also allows you to give some thought--while you're healthy--to other decisions related to end of life, such as whether you would like hospice care or to be moved back home in your final days, as opposed to spending them in a hospital. It also allows your wishes to be plain for your family and loved ones to see, in black and white, so that they can be confident that your wishes are being carried out, even if they differ from their own, personal wishes.
Perhaps there is some comfort to be taken from the fact that Casey Kasem, given the dementia he was suffering, was probably mostly if not entirely unaware of the conflicts raging among his wife and kids, but it is still very sad to hear of yet another family torn apart over differing opinions and wishes related to the final days of a loved one who did not express those wishes himself when he had the ability to do so.
A former estate planning client of mine died a few weeks ago, unexpectedly. He was only in his mid-30's. I'd never lost a client that young before, and the news came as a profound and sad shock.
If people don’t have small children, they often don’t get around to estate planning until they’re older than 40. However, it’s important to do it sooner, for the reasons discussed below, and so I always have a little bit of extra admiration for my under-40 estate planning clients who recognize that it’s important even at a young age.
One of the reasons many younger people don't think about estate planning is because they feel they don't have many assets, and oftentimes do have a lot of debt. But financial considerations are far from the only considerations when thinking about estate planning. For any assets that a young person does have, it's important that those assets be directed to the people or charities that person wants their assets to go to. For single people without children, the entire estate goes to the surviving parents if the young person dies. This may be what the deceased person wanted, but I find that most of the time my younger single clients prefer to leave whatever estate they have to younger family members, such as nieces and nephews, since many of my younger clients' parents are well situated in life and do not need more than they already have.
Estate planning also involves planning for someone to make medical decisions for you should you become unable to--and to also express your end-of-life wishes such as being kept alive artificially by life support systems. Although in a perfect world everyone would live out a full life, we all know that tragedy can strike at any age. As I described in my post on estate planning for college-aged children, once a person turns 18, they are considered legally independent, and it is nearly if not absolutely impossible for family members such as parents to step in and play an active role in their adult child's medical care without consent by the child (who is often incapacitated and cannot give consent). Thinking about this sooner rather than later can prevent a lot of pain, stress, and expense should tragedy strike.
For under-40's who are married, the purchase of life insurance can also be a valuable component to a sound estate plan. Granted, million dollar policies may not be needed, but life insurance can ensure a continued quality of life for a surviving spouse, at least until the surviving spouse can re-calibrate to life as a single person again, by replacing lost earnings that the deceased person otherwise would have earned. The same holds true--if not more true--for unmarried couples, whether same-sex or opposite-sex. For unmarried couples, having a will is of vital importance, since an unmarried partner has no standing to inherit from the deceased partner's estate if not provided for in a will.
Plus, it's important to know that estate planning documents can be tweaked or overhauled throughout life as a person's circumstances change. A person should never feel "locked in" to documents they create at a younger age. For my under-40 clients, we consider estate planning an evolving process, and especially in today's world of word processing programs it is not a big deal to make modifications to existing documents and re-executing them. Personally, I charge very little if anything for such alterations.
I know first-hand that a sense of mortality doesn't really kick in until a person is 40 or older, absent major health issues. But that doesn't mean a person is immortal, and I hate to see what can happen when tragedy strikes a young person without core estate planning documents in place. If you ever want to discuss these issues further, free of charge, please contact me anytime.
Polls show that 86% of Baby Boomers and 74% of Americans over 72 years of age said that family stories and keeping their family history alive is the most important part of their legacy. Additionally, 64% of Boomers (compared to 58% of elders) said that family mementos and heirlooms are a key inheritance. Only 9% of Boomers said they're eager to inherit money.
This is all very heartening, but the problem is that lawsuits and other family conflicts in the wake of a family member's death are almost always about tangible personal property--the deceased person's "stuff". Money is rarely the source of deep conflicts. Money can be divided up. That pipe that grandpa always smoked on the front porch in the summer? Not as much.
It's the emotions and sentimental value that cause the serious intra-family conflicts.
Here are some things that can be done to avoid such conflicts:
1) Talk with your family members about specific keepsakes they may want to have, and reflect those wishes specifically in your will. You might even gift certain items to certain people while you are living, to avoid problems after you're gone. You might also want to discuss the final disposition of something like a family summer home. Many a lawsuit has involved siblings arguing over whether to sell such a property or keep it in the family. Parents might consider discussing the issue with their children individually and as a group, and then telling all the children, in one place at the same time, what the parents are going to do about the property and why.
2) Create a memorandum that disposes of your tangible personal property outside of your will. Through a legal doctrine called "incorporation by reference", if a will refers to a list that the testator may leave behind disposing of certain items to certain people, then that list will be honored, even though the specific gifts aren't made in a will. It's important to note that such a memorandum is not legally binding in New York, although it is in New Jersey. However, hopefully you will have picked someone as executor who you trust to carry out all of your wishes. People may be unhappy with your choices, but they'll be more likely to accept them. Such lists or memorandums should be specific. For example, don't say you leave your diamond necklace to your niece, Jody, if you have three diamond necklaces. Take steps to make it easy to identify what objects you are referring to. Also, keep this memorandum or list with your will and other important papers so your executor can find it.
3) If you have a favorite grandchild or nephew, plan to provide them with a little (or a lot) extra during your lifetime, but treat the members of the same level of family (i.e., all grandchildren) equally in your will.
4) In some cases, especially if family conflict is expected, or if there are, for example, children from a first marriage and children from a second marriage who may not see eye-to-eye on estate-related matters, you might want to consider hiring a professional executor. Talk to your bank or investment/trust institutions about what services they offer in this area.
Thanks for reading! If you would like to discuss any of this further, please feel free to contact me anytime.
For client confidentiality reasons I have to be vague, but I was recently in a situation where an unmarried person--who was with an opposite-sex domestic partner for 50 years--died suddenly without a will, leaving behind a very substantial estate.
Because the domestic partners never married--and they are not considered common law spouses because New York does not recognize common law marriages unless they were created in a state that does recognize them--the surviving partner was not eligible to inherit a penny from his deceased partner's estate, built during a lifetime together. The only silver-lining is that the surviving partner also had a sizable estate and did not rely on or need the deceased partner's assets to survive. Let's at least be thankful for that.
Thing is, the deceased person also had no surviving blood relations other than distant cousins overseas, some of whom are known, others of whom are not known. The deceased person did enjoy something of a relationship with some of these cousins throughout her life, but if asked she never would have left her estate to any of them--she would have left it all to her partner. However, these distant cousins are the only people who now stand in line to inherit the deceased person's estate. They're what the law calls "laughing heirs" or "laughing cousins"--people who stumble into large and unexpected inheritances solely because of poor or no planning on the part of a deceased blood relative and the mere fact that there's a blood relation in the first place.
And when there is no one left to laugh? All that the deceased person built and acquired through their life's work goes to the state's coffers.
For anyone who is interested, here is what happens to a person's estate if they die without a will:
If you would like to discuss any of this, and/or have questions you'd like answered, please contact me anytime.
Thanks for reading.
These posts have been provided by the Law Office of Michael Bond for general educational purposes and do not constitute legal advice or create an attorney-client relationship. For more information about the contents of these posts, or if you have any other estate planning questions, please contact Michael Bond at