Hollywood Legend Lauren Bacall Leaves Large Estate (and Potentially Large Headaches) for Heirs

, ,

lauren-bacallLegendary Hollywood actress Lauren Bacall died on August 12, 2014, leaving behind an estate worth an estimated $26.6 million. Her three children now face a couple of potentially serious problems that could have been avoided through effective estate planning.

Bacall, who was married to Humphrey Bogart and Sam Robards, passed away in her New York City apartment, which at a $10 million valuation constitutes a sizeable part of her estate. Because Bacall used a will as the governing document of her estate plan instead of a revocable living trust, the division of her estate is a matter of public record.

In fact, her will was made public a mere 10 days following her death because her children plan to auction off her artwork this fall. As a resident of New York, Bacall’s estate will be subject to both state and federal estate taxes. A trust left to her by Bogart will also be subject to tax based on its valuation.

Unfortunately, her estate only included about $100,000 in liquid assets at the time of her death, so her heirs face a potentially serious liquidity problem when it comes to paying these taxes. This is probably the reason behind the rush to auction her artwork. Her family has only nine months from the date of her death to pay estate taxes.

Although Bacall directed in her will that her apartment be sold, there is no guarantee that it could sell in time to pay the estate taxes. Life insurance is one of the most common ways to ensure there is sufficient liquidity to pay taxes and other expenses.

Besides the financial assets, Bacall left her children the rights to her likeness and other intellectual property associated with her illustrious career. (She did request that her children not sell her personal effects, letters and memorabilia in her will.) This could be of significant value in future years, and the IRS could come after the heirs for taxes based on that value.

There could also be issues that arise regarding the management of this intellectual property in the coming years, which could lead to litigation as it has in the cases of many other famous entertainers, like Michael Jackson. To help avoid this, the family should consider establishing a trust or other legal entity to manage these assets and make decisions on how they will be used in the future.

Even though most of us don’t have a $26.6 million dollar estate to worry about, we can still learn valuable and pertinent lessons from Bacall’s mistakes. With a little advanced planning our loved ones can be spared from a public court process, the high costs of probate and estate taxes, and the liquidity problems that can spring up and force them to sell family heirlooms and even the family home. And I promise you there’s nothing like the feeling that comes from knowing you’ve done right by your family and taken care of all that for them.

To you family’s health, wealth, and happiness,
Signature - Marc

/0 Comments/by

7 Things To Think About Before Making Gifts to Grandchildren

, ,

Estate Planning 91024I love being a parent… well, most of the time. But my parents – and my wife’s parents – tell me there is nothing better than being a grandparent, and the joy they feel about their grandchildren comes with no interruption. And I get it. After all, they get to spoil my kids and focus on connecting with them while leaving all the heavy lifting to my wife and me.

The fact is, many grandparents who enjoy financial freedom are often more than generous to their grandchildren. And some even want to see their grandchildren enjoy an inheritance now instead of waiting to pass along assets after they are gone. If that’s you, consider these 7 points before you make gifts to your grandchildren.

Clarify the gift. Most grandparents make outright gifts with no strings attached. But if you intend to provide a loan or an advance on an inheritance, you should always clarify that in writing.

Equal treatment. It is not unusual for a grandparent to be closer to some grandchildren than others, but when gifting assets, unequal treatment among grandchildren will almost certainly lead to family resentments. Even if you give more to some than others during your life, consider treating all grandchildren equally in your estate plan.

Taxes. With the federal gift tax threshold at $5.34 million (double that for married couples), most people won’t have to worry about paying federal gift taxes. However, any gift to an individual that exceeds $14,000 each year ($28,000 for married couples) must be reported on a gift tax return.

Education. You can help with a grandchild’s college tuition by making payments directly to their educational institution. That doesn’t have to be reported. And there is no limit on these contributions. Investing in a 529 plan for each of your grandchildren is also a great way to help them (and their parents!) save for college, building a tax-deferred account that will never be taxed as long as it is used for educational purposes.

Your own needs. It’s tempting to be overly generous in making gifts to grandchildren, but you should not give to the detriment of your own needs. Finding the right balance will help ensure your children and grandchildren don’t have to support you because you gave too much to them.

Long-term care. Chances are that you will need some kind of long-term care at the end of your life, research shows that most of us will. If you can’t afford long-term care and need help, any gift of assets you have given could make you ineligible for Medicaid benefits for five years.

Consider a trust. There are many reasons why you should not give gifts of cash or assets to grandchildren, some that you may not even be aware of. Lots of cash could be fuel on the fire of bad behavior or undermine your own children’s goals for their children. To make a lasting gift, consider using a trust that will pass assets along to grandchildren safely and protect those assets for their entire lifetimes from bad behavior, bad credit, and even bad marriages.

I see how much my kids love their grandparents. And there’s no doubt, the relationship between grandchildren and grandparents is something special. If you are a grandparent, with just a little planning you can deepen that relationship and have an even greater impact on the lives of your grandchildren.

To your family’s health, wealth, and happiness,
Signature - Marc

/0 Comments/by

The 4 Key Life Skills Your Children Need to Have Before They Inherit

,

inheritance 91024Inherited wealth need not be “an albatross around the neck of the children” as Sting so succinctly put it recently when asked if he was leaving his wealth to his children.

I – and many other parents – share Sting’s concerns. But proper preparation for inheritance can ensure the assets you leave for your children benefit, rather than impede, the upward trajectory of their lives.

Part of that preparation comes from how you and your attorney actually set up your estate plan. Part of it comes from helping your children develop the critical skills needed before receiving and productively managing an inheritance. There are four main skills nearly all successful inheritors possess:

The ability to earn their own money and live off what they make. Children raised with wealth feel they are the most successful when they earn enough on their own to support themselves without the family money. Children without this skill often develop feelings of entitlement or personal inadequacy which negatively impact their ability to lead productive, meaningful lives.

The ability to set and pursue their own work goals. Children of wealth who are encouraged to find work they enjoy are much more likely to find satisfaction in that work if they are taught that it takes time and perseverance to reach this goal and that they should focus on learning from every job and give it their best.

The ability to develop self-worth that is separate from family wealth. Children who develop a core identity based on their own accomplishments and the choices they make in life are much happier and more successful.

The ability to be resilient and bounce back from adversity. Family wealth can cushion many blows, but the most successful inheritors are those who were allowed to experience and navigate failure on their own instead of being bailed out of every tough spot.

Comprehensive planning, taking all of this into account, can help your children avoid the many dangers and pitfalls inherited wealth can create. And if you’re anything like me, protecting your children from those inherent dangers is just as important as protecting the assets you’ll eventually pass to them. The great news is that proper planning can accomplish both objectives.

As always, I wish all the best to you and your family,

Signature - Marc

 

/0 Comments/by

Prepare Your Heirs to Receive, Protect, and Grow Their Inheritance

, , ,

family estate plan 91024There are many iconic American families that come to mind when we think of vast family wealth. The Vanderbilts, for example, were one of the riches families in America in the 19th century. Cornelius Vanderbilt, the family patriarch, built his railroad and shipping fortune to $100 million before he died in 1877 – which was more than the U.S. Treasury held at the time.

That massive family fortune — which would be more than $200 billion in today’s dollars — has been gone for more than 40 years now. It did not even survive past three generations, primarily due to mismanagement by successive generations of heirs.

A recent Forbes article (it’s a great read, check it out) looked at ways to prepare heirs for an inheritance, with an emphasis on protecting and growing that inheritance. Here are some tips:

Share your vision. Conduct a family roundtable where the heads of the family come together with everyone and share their hopes and dreams for the family, as well as how they plan to reach their goals for the future. The idea is to start an open multi-generational dialogue.

Tell your story. To help younger generations understand the importance of protecting and growing inherited wealth, it helps if they first understand the values and visions of their predecessors. Sharing family memories, experiences and life lessons from older generations is one key component to ensuring the family story continues on well into the future.

Record your story. Your lasting legacy should be much more than just money; it should also be about those valuable intangibles that make your family unique, told through your insights, values and experience. We do this through our legacy planning process, helping you capture and pass on your own story and your aspirations for your loved ones through a special video we produce for each of our clients.

Gather together. Annual family retreats, gatherings, or reunions also help solidify family values and nurture common ground and goals. Consider holding an annual retreat where multiple generations can gather to bond, make plans for the future, and renew family harmony.

Family is one of the great human institutions. Yours can, and should, be the foundation for building real wealth – both financial and personal – for your children and for generations yet to come. With a little foresight and effort it can be done. You can do it. We can help.

As always, I wish all the best to you and your family,
Signature - Marc

/0 Comments/by

Inheritance Through a Trust: a Must

, ,

estate planning 91024You bring your children into the world with love. You raise them with love. If you’re going all the way as a parent, you also create an estate plan to safely pass on your legacy of love as well as your assets. But does your plan simply leave your assets outright, so they pass directly to your children all at once? Or are they protected via a trust?

A trust is a must if you’re looking for true protection when passing on assets. Just as you protect your children from harm while you raise them, you can also protect them from any threat that could come from irresponsible behavior or external risk. The safest choice is to place the inheritance in a trust.

Trusts can be designed to protect assets from things like bankruptcy, creditors, lawsuits and even divorce. No one is immune from making a few mistakes during their lifetime, but that shouldn’t have to cost them their inheritance. If your child has a marriage that dissolves, for example, their future inheritance can be safely tucked into a trust, separating those assets from marital property and rendering them untouchable by an ex-spouse.

You can also set up a trust to distribute an inheritance according to your own wishes and for specific purposes, such as education, starting a business, maintaining a family vacation home, or whatever will benefit your children the most.

Gifting a large sum of cash to a 21-year-old is not usually considered the best practice. Many parents leaving assets in trust choose to stagger distributions at certain age milestones, which helps children learn to manage their assets over time with the help of a trustee. Then, at a later age, the child can become the trustee with full control when they have the knowledge to make better financial decisions.

If your child is still a minor or has special needs, a trust is even more critical. Under the law, minors cannot inherit outright, so a trust is necessary to safeguard the assets for their benefit until they reach the age of maturity. The trust preserves assets for their benefit, names a trustee to oversee distributions, and does not disqualify them from receiving special government benefits like an outright inheritance would.

Inheriting in trust provides substantial benefits that an outright inheritance does not. Look into the benefits of setting up a trust for your children. It can be one of the best things you do for them as a parent.

All the best to you and your family,
Signature - Marc

/0 Comments/by

The Last Important Gift to Give Your Family

, ,

Legacy Planning 91024As hard as it is for all of us to “plan” for our deaths, doing so is actually one of the best things you can do for your family. Adding to their grief and pain by giving them no clue as to where to find your personal and business paperwork should not be a memory you leave behind.

Gather the following information in a folder and let your family know where they can find it in case you die unexpectedly or have a health crisis:

Advisors – Provide the name and contact information of any financial advisors, including attorneys, estate planners, CPAs, accountants, etc.

Bank Accounts and Safety Deposit Boxes – Bank name and account numbers for each bank where you have an account. Include PIN numbers for online banking. If you have a personal banker, include his or her name as well, with contact information. If you have a safety deposit box, record the name of the bank, the box number as well as contents of the box and location of the key.

Investment And Retirement Accounts – For investment accounts, provide the name of the brokerage, your personal broker, the location of your statement file, account and PIN numbers. For retirement accounts, provide contact information for plan administrators as well as account and PIN numbers.

Insurance – For all your policies – health, home, car, life, long-term care – provide the name and contact information for the agents as well as account numbers.

Health care – For your health care providers, give contact information for physicians, Medicare information and any other gap coverage you may have.

House – If you still have a mortgage on your home, provide information on your lender and payment due dates. Also provide the location of deeds and property titles. Include contact information for any home service providers – cleaning help, lawn care, etc.

Credit Cards – Make a photocopy of both sides of each credit card and provide balance and payment information.

Vehicles – Provide information on where titles and registration information are kept. Make a photocopy of your driver’s license as well.

Personal – Include a list of your friends and neighbors with email and phone contact information as well as all your email account log-ins and passwords.

This last “gift” on your part will go a long way toward helping your family cope in the immediate aftermath of your death or incapacitation, and ensuring you leave a lasting legacy of love and financial security.

All the best to you and your family,
Signature - Marc

/0 Comments/by

Robin Williams: A Lesson in Deeds, Not Words + One Error in Planning

, ,

williams estate planning 91024One of the most eloquent responses to Robin Williams’ death came from his best friend Billy Crystal, who posted on Twitter simply: “No words.”

When someone close to us dies — especially in a sudden and tragic way — the grief is so deep that we truly don’t have words to describe it. And while Robin Williams may have lost the battle to take care of himself, it appears that he did take care of his family through various estate planning strategies that will at least spare them the pain and cost of a public probate court proceeding.

According to a Forbes article following Williams’ death, Williams had significant real estate holdings including a 653-acre Napa Valley estate and a waterfront home in Tiburon, California. The Napa Valley estate has been for sale since April with a price tag of $29.9 million; the Tiburon home has been valued at $6 million.

Both properties are held in the name of a real estate holding trust, which can remove the value of the properties from Williams’ estate and result in significant estate tax savings for his family.

Williams also set up a trust for his three children that splits the assets into equal distributions for each child once they reach the ages of 21, 25 and 30. This trust was established during his 2009 divorce from his second wife.

This is the one place Williams could have done better. Leaving assets to children outright when they reach specific ages is a common strategy of many estate planning attorneys, but it isn’t always the best strategy. Instead, Williams could have left the distributions in lifetime asset protection trusts that his children would have controlled as co-trustees, and then as they got older, sole trustees. This would have protected the trust assets from lawsuits, divorce, bankruptcy or any other type of creditor and future estate taxes, for generations to come.

While most of us do not have the wealth that Robin Williams enjoyed during his lifetime, we can all protect what we do have and ensure it passes to our loved ones using many of the same estate planning devices Williams did. For example, a trust allows our assets to pass outside of probate so our families will not have to endure a court proceeding or have assets frozen during the probate process. This can be a lifeline for grieving families in trying times.

One of the main goals of my law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generations. If you’d like to give your family the gift of a lasting legacy of love and financial security, call my office today so we can schedule a time to sit down and talk about your specific situation, needs, and goals.

All the best to you and your family,
Signature - Marc

/0 Comments/by

How to Protect Your Real Estate Assets

,

Protecting Real Estate 91024If you own real estate, chances are you have purchased insurance to protect the property against damage or loss. But have you taken the necessary steps to protect your assets against lawsuits or probate?

If you own rental properties, there is likely a nagging fear in the back of your mind about being sued by one of your tenants. And if there isn’t, there should be. It’s a major risk.

And while it may be heartbreaking to think about, there is always a chance your death could trigger a family feud over your home, vacation home, or other real estate investments.

Two common estate planning tools for real estate asset protection include limited liability companies (LLCs) and trusts:

The LLC. If you have income-producing property, then an LLC probably makes sense for you, since it shields your personal assets from lawsuits or claims that result from your ownership of the real estate. LLCs may also offer owners privacy since the property can be listed in a company name, not in your name directly. However, you must be sure you maintain the LLC properly so the planned for protections remain intact. It’s not too difficult to accomplish that though, especially with the help of counsel.

The Trust. If you own property that you do not rent out on a regular basis, then a trust may be a better choice for you. There are several options: a Qualified Personal Residence Trust (QRPT) is an irrevocable trust (meaning it cannot be changed without the consent of the beneficiaries) that allows an owner to use the property for a fixed term, and then pass the property on to heirs. This is a commonly used structure to reduce the size of your estate for estate tax purposes.

A revocable trust (which can be changed without consent of the beneficiaries) is more flexible and, if you choose a dynasty trust, can last for multiple generations. The major benefit of the revocable trust, besides control of what happens to the assets after the death of the grantors, is that it keeps your assets out of the hands of the Court after your death, and totally within the control of your family.

You can also use a combination of LLCs and trusts to protect real estate assets if you have a combination of primary residence and rental properties. We can help you determine the best course of action for your individual circumstances.

Call my office today to schedule a time for us to sit down and talk about your situation, where we can identify the best strategies for you and your family to ensure you leave a legacy of love and financial security, no matter what.

/0 Comments/by

If You Don’t Trust Your Kids with Money, You Need a Trust

,

estate planning 91024While most parents have the best intentions when it comes to teaching their children about handling finances wisely, sometimes the lessons don’t take. In addition to concerns about spendthrift behavior, some children experience substance abuse or have mental issues that make giving them access to wealth a problem. This is where a trust can be a parent’s best friend.

Trusts allow you to put controls on the distribution of your wealth. For example, you could elect to make partial distributions at predetermined ages throughout a child’s life, or select a trustee who will make the decisions on regular intervals of asset distribution. A trustee may also be a good choice to manage the assets and make investment decisions that are better suited for those with the professional capacity to do so.

Trusts can also protect your heirs from a future divorce or creditors. In the case of a special needs child, a trust can be set up to provide supplemental financial support that doesn’t disqualify them for important government benefits.

One of the most commonly used trusts is a revocable living trust, where you transfer assets into a trust that you control while you are still living.

After your death, those assets pass to your heirs outside of probate (an unnecessary, expensive and totally public court process). This helps your heirs avoid the hassle and cost of going to Court and doesn’t tie up the assets, which are generally frozen during the probate process unless protected by a trust.

Setting up a trust happens in three, equally important phases. First, the trust must be drafted to meet your family’s unique needs and achieve your specific goals. Then, your assets MUST be retitled in the name of the trust. And finally, since trust laws are changing all the time (not to mention your assets, financial holdings, and family situation) it is necessary to review your trust regularly to ensure it remains up to date, continuing to protect your assets and your family for the rest of your life.

And just like the proverbial stool, unless all three phases of a trust are handled correctly, it will fail. Unlike many estate attorneys who only focus on the first phase of trust planning, I lead my clients through all three phases so they can ensure a legacy of love and financial security for their families, no matter what.

If you would like help planning for the safe, successful transfer of wealth to your family’s next generation, call me.

All the best to you and your family,
Signature - Marc

/0 Comments/by

Casey Kasem’s Estate Planning Not in Anyone’s Top 40

, , ,

Casey Kasem 91024Casey Kasem, the celebrity radio host who counted down America’s Top 40 popular songs for decades, died on June 15 at the age of 82 and left behind an estimated $80 million fortune. He also left a family feud of biblical proportions between his surviving spouse and his three children from a prior marriage. And this is exactly why I do what I do — to help keep your family connected in love, not conflict.

Kasem married his second wife, Jean, who is 22 years his junior, in 1980. Together, they had one child, Liberty Kasem. Casey also had three children from a prior marriage: Kerri, Mike and Julie. The family was apparently in discord prior to Casey’s death; in mid-May, Mike and Julie filed a missing persons case with the Santa Monica police department saying they could not locate their father. At that time, Kerri was fighting with Jean over control of his care.

After Kasem died, news broke that his body had been taken from the Washington state funeral home and a judge awarded Kerri a temporary restraining order preventing Jean from removing his remains or having him cremated before an autopsy had been performed. Kerri hired a private investigator who says the body has been moved to Montreal, the hometown of a man that Jean has allegedly been involved with for the past two years.

A mess, right? And they haven’t even gotten to the money yet!

A little advance estate planning could have helped prevent this scenario, which is not uncommon when an older man with children from a prior marriage takes a second, significantly younger wife.

A recent WSJ Marketwatch.com article outlined four estate planning tools that could have helped head off this disaster:

Revocable trust. Placing assets in a revocable trust can help protect the trust owner’s wealth transfer wishes, and provides the flexibility to make changes as long as the trust owner has the legal capacity to make those decisions. Upon the owner’s death, the assets are dispersed as outlined in the trust without having to go through probate. A trust is also more difficult to contest than a will.

Life insurance. A life insurance policy can be a good way to provide for a surviving spouse while leaving the rest of the estate to children from a previous marriage, or vice versa.

QTIP trust. A qualified terminal interest property (QTIP) trust is used to set aside assets for a surviving spouse’s benefit while that spouse is alive. After the surviving spouse passes, the remaining assets in the trust are passed on according to the trust terms.

Family meeting. Having a family meeting so that everyone knows their beneficiary status and what will happen to the estate after the estate owner dies is a good way to head off conflict. An estate planning attorney can mediate these meetings, which is usually advisable when there is a potential for conflict.

One of the main goals of my law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation without conflict or court involvement. Call my offices today to schedule a time for us to sit down and talk about your family estate planning needs so we can identify the best strategies for you and your family to ensure you provide a legacy of love and financial security.

/0 Comments/by

Our Office

Phone

(626) 355-4000

Address

100 West Lemon Avenue, Suite 202
Monrovia, California 91016

Cali Law Office California

Schedule a Complimentary Consultation

Simply Fill Out This Form

1 + 2 = ?