Category: Estates and Trusts
Clear ResultsEstates and Trusts
Estate Planning Essentials for Maryland’s Unmarried Couples
A shared home, shared finances, and years of mutual commitment may look indistinguishable from a legal marriage. In the eyes of the law, however, the differences can become apparent at exactly the moment when legal protections matter most. For more than a decade, marriage equality has been the law nationwide. Many couples, including those in the LGBTQ+ community, have taken advantage of the legal and financial benefits that marriage provides. Still, a significant number of couples, both gay and straight, remain happily partnered but legally unmarried. Some feel their relationships are too new; others prefer to avoid the legal and financial entanglements of marriage. For some, family dynamics, prior marriages, or personal beliefs play a role. Whatever the reason, unmarried couples do not receive the automatic legal, financial, and estate-planning protections granted to married spouses. But thoughtful planning can close much of that gap. While a set of legal documents cannot fully replicate the benefits of marriage, it can provide essential safeguards, especially in times of crisis. This planning is especially important for blended families, where one or both partners may wish to provide for both a surviving partner and children from a prior relationship. Six Key Steps to Consider Register as Domestic Partners Maryland law now allows unmarried couples to register as domestic partners with the Register of Wills. Registration can provide important legal protections that were previously unavailable to couples who chose not to tie the knot. One of the most significant benefits arises at death. If a registered domestic partner dies without a will, the surviving partner is entitled to inherit a share of the decedent’s estate under Maryland’s intestacy laws, similar to the rights of a surviving spouse. A registered domestic partner also has priority to serve as personal representative (executor) of the deceased partner’s estate. Registration provides substantial tax savings. Property left to a surviving domestic partner is exempt from Maryland’s 10% inheritance tax. This is true whether the transfer occurs under a will or trust, or through a beneficiary designation on a retirement account or “transfer on death” provision on a bank account. For couples with significant assets, this exemption alone can save thousands of dollars in taxes. Registration is available to both same-sex and opposite-sex couples and is a relatively simple process. By registering, unmarried couples can obtain many of the protections traditionally associated with marriage, including inheritance rights, exemption from Maryland inheritance tax, and greater legal recognition of their family relationships. Registration is not, however, a substitute for estate planning. Couples who register should still have wills, powers of attorney, and advance medical directives in place. Prepare Wills for Both Partners Having wills is essential for unmarried couples. Without them, state intestacy laws will apply, and those laws do not recognize unmarried partners unless they have registered under Maryland law. This means your partner could receive nothing from your estate and would have no priority to serve as your personal representative. Beyond providing for a surviving partner, a will is especially important for couples with children. A will can nominate guardians for minor children, create trusts to protect a child's inheritance, and name trustees to manage assets until children are mature enough to handle them responsibly. Without these provisions, important decisions about the care of your children and management of their inheritance may be left to the courts. A properly drafted will ensures that your partner inherits according to your wishes, can serve as your personal representative if you choose, and can administer your estate efficiently. A professionally drafted and executed will is one of the most important protections you and your partner can put in place. Consider How Assets Are Titled For unmarried couples, the way assets are titled can be just as important as having a will. Certain forms of joint ownership allow property to pass automatically to the surviving partner without probate. For example, a home owned as joint tenants with right of survivorship will generally pass directly to the surviving owner upon the death of the first partner. Likewise, joint bank accounts may allow the surviving partner immediate access to funds needed to pay household expenses and other bills. Proper asset titling can simplify estate administration, reduce delays, and provide financial security for the surviving partner during a difficult time. However, adding a partner as a joint owner is not always the right solution. In some cases, joint ownership may expose assets to a partner's creditors, create unintended tax consequences, or conflict with other estate-planning goals. Before changing title to real estate, financial accounts, or other assets, couples should consult an estate-planning attorney to ensure that ownership arrangements are consistent with their overall estate plan and financial objectives. Review and Update Beneficiary Designations Certain assets, such as life insurance policies, retirement accounts, and pay-on-death bank accounts, pass outside of your will. Instead, they transfer directly to the beneficiary designated on the account or policy, regardless of what your will may say. It is critical to review these designations periodically to ensure that they reflect your current intentions. Outdated beneficiary forms are one of the most common estate-planning mistakes and can easily undermine even a well-drafted will. Execute Durable Powers of Attorney If one partner becomes incapacitated, the other has no automatic authority to manage financial affairs. A durable power of attorney allows you to grant your partner legal authority to access financial accounts, pay bills, manage investments, handle real estate transactions, and communicate with tax authorities or government agencies. Without this document, your partner may be forced to pursue guardianship, a costly and time-consuming court process. Prepare Advance Medical Directives An advance directive enables you to appoint your partner as your health care agent in case you are ever unable to make medical decisions for yourself. This document authorizes your partner to speak with your doctors, review your medical records, and make decisions on your behalf. It also enables you to name backup decision-makers and to express your wishes regarding end-of-life care. A properly executed advance directive may be recognized in other states, making it especially important for couples who travel or relocate. Protect the Life You’ve Built Together In most cases, unmarried couples should have six key protections in place: domestic partnership registration (when appropriate), wills, proper asset titling, updated beneficiary designations, durable powers of attorney, and advance medical directives. Even couples who plan to marry in the future should consider putting these protections in place now. Legal uncertainty can arise at any time, and having these documents prepared helps ensure that both partners are protected in the interim. After marriage, the documents can be reviewed and updated to reflect the couple's new legal status and expanded rights. Whether you choose marriage or a lifelong partnership, protecting the life you have built together requires intentional planning. Consult with an experienced estate-planning attorney to help protect your relationship and your assets for the future.
July 9, 2026
Estates and Trusts
Using Charitable Remainder Trusts to Reduce Income Tax Inefficiency in Retirement Accounts and Give More
The Federal estate and gift tax exemption is at a historically high level. In 2026, only individuals who make taxable gifts during their lifetime, combined with assets that pass through their estate, in excess of $15 million, will be liable for any tax. As such, much of the focus of estate planning has shifted from reducing estate tax liability towards creditor protection and succession planning. However, many individuals with significantly less than $15 million in assets may still leave their beneficiaries with significant tax liability if their assets are held in qualified accounts, such as individual retirement accounts (IRAs) and 401(k) plans. Trillions of dollars are currently accumulated within these tax-advantaged qualified retirement accounts. For many families, their IRA or 401(k) represents their most significant appreciated assets. Retirement Accounts do not receive a “Step-Up” in Basis Most appreciated assets receive a "step-up” in capital tax basis at the owner’s death. The “step-up” means that the decedent’s heirs inherit these assets with a capital gains tax basis reset to the fair market value as of the date of the decedent’s death. For example, if an individual acquires a stock at $100 and later sells it for $1,000, the individual is liable for capital gains tax on the appreciation in the stock. However, if the individual dies owning the stock and his heirs sell it immediately, there will be zero capital gains tax liability. This step-up can effectively wipe out thousands of dollars in capital gains tax liability. Unfortunately, IRAs and 401(k)s are an exception to this rule. They do not receive a “step-up” basis. Instead, every single dollar of appreciation in these assets, once distributed from an inherited IRA to an individual beneficiary, is taxed as ordinary income at the beneficiary’s income tax bracket. Before the enactment of the SECURE Act, beneficiaries of inherited IRAs were permitted to "stretch” these taxable distributions over their lifetime by taking required minimum distributions (RMDs) based on their life expectancy. A beneficiary younger than the original account owner would have much smaller RMDs, allowing inherited IRA assets to appreciate over a long period of time, income tax-deferred. This strategy reduced or eliminated the “income tax bracket creep” that may occur when significant distributions are made from the inherited IRA that would push the beneficiary into a higher income tax bracket and increase the amount of the income taxes that were ultimately paid. The SECURE Act largely eliminated this strategy. Under current law, most non-spousal beneficiaries must liquidate their inherited IRA within ten years of the death of the original account holder. This is commonly referred to as the “ten-year rule.” The compressed time frame reduces the time that the assets within the inherited IRA can continue to grow without the tax drag. It makes it much more likely that the distributions will push the beneficiary into a higher tax bracket. To make matters worse, most beneficiaries of qualified accounts will be in their peak earning years. Distributions from a modest one-million-dollar inherited IRA will be reduced by hundreds of thousands of dollars after the payment of federal and state income taxes. Using a Charitable Remainder Trust to Restore Tax Efficiency Fortunately, there is a solution to replicate the “stretch” and reduce this income tax inefficiency. The account holder can name a charitable remainder trust (CRT) as the designated beneficiary of the IRA. The CRT can be established during the account holder’s lifetime or may be designated under the account holder’s will or revocable trust (a “testamentary CRT”). A CRT is a split-interest, tax-exempt vehicle. One or more income beneficiaries receive an annual payment for a set term of years (a “CRAT”), or an amount based on a percentage of the trust at the end of the year (a “CRUT”). At the end of the term, which could be as long as the income beneficiary's lifetime, the remaining trust assets are distributed to one or more qualified charities. In this way, the original account owner can support their philanthropic goals and ensure their families are provided for. When a CRT is designated as the beneficiary of an IRA, the entire IRA balance is transferred directly to the trust upon the account holder’s death. Because a CRT is a tax-exempt entity, no income tax is recognized or paid upon the liquidation of the IRA. The full, undiminished account remains intact within the trust. The income beneficiary is guaranteed to receive a predictable flow of income. Because the distributions are made slowly over time, it reduces the likelihood that the distributions will push the income beneficiary into a higher tax bracket. As such, the beneficiary is likely to pay less overall income tax liability than if they had been named the outright beneficiary of the IRA. In addition, because the CRT is a tax-exempt trust, the assets in the CRT will continue to appreciate tax-deferred. If the CRT is structured to last for the duration of the income beneficiary’s life, the time horizon from which the distributions must be made from the account has effectively been increased from ten years to as much as several decades or longer. This creates significant potential that the total distributions to the income beneficiary will exceed what they would have received had they been named the outright beneficiary of the account. Finally, the estate of the original account holder benefits from an estate tax deduction equal to the actuarial value of the interest that passes to charity. In states such as New York, Washington, or Oregon, where the state estate tax exemption amount is much less than the federal estate tax exemption amount, this may be a valuable deduction. Key Considerations and Conclusion It is important to note that pursuant to Section 664 of the Internal Revenue Code, a CRT must distribute at least 5% (but no more than 50%) of its value annually to the income beneficiary. In addition, at least 10% of the actuarial value of the account must ultimately pass to the charitable remainder beneficiary. This can mean that naming very young income beneficiaries, such as grandchildren, may not satisfy the actuarial test. Although estate tax concerns have diminished for many individuals, the income tax exposure their heirs will face, with even modestly valued inherited IRAs, remains a significant challenge for wealth transfer. The SECURE Act forces beneficiaries to recognize substantial taxable income in a compressed time frame. For the right client, a charitable remainder trust offers a compelling solution, providing tax-efficient income deferral and reducing overall tax drag while supporting philanthropic goals. A CRT transforms a tax-inefficient asset into a powerful tool for preserving wealth and legacy. In today’s environment, proactive income tax planning is not optional; it is essential.
July 2, 2026
Estates and Trusts
Top Five Probate Litigation Trends: What Estate Planners and Trust Practitioners Need to Know
The United States is in the midst of a historic generational transition. The so-called “Great Wealth Transfer” is estimated to exceed $84 trillion in assets passing from Baby Boomers and the Silent Generation to their heirs over the coming decades. This wealth transference is reshaping the landscape of estate administration and trust practice. Against this backdrop, an aging population, the rising complexity of blended family structures, and the rapid proliferation of digital assets are combining to produce unprecedented levels of estate probate and trust litigation. Courts across the country are contending with both more numerous and meaningfully more complex disputes than those of prior generations. Much like the Midwest’s flat dustbowl lends itself to more frequent tornadic activity than elsewhere in the country, here in the “DMV” (D.C./Maryland/Virginia), home to a dense concentration of federal employees, government contractors, military families, and high-net-worth households, conditions are particularly ripe for contested estate and trust dispute activity. It shouldn’t be a surprise, therefore, that Virginia's and Maryland’s Circuit Courts, and D.C.'s Probate Division are all experiencing a meaningful uptick in contested proceedings. The five trends identified below reflect the most consequential litigation developments that estate planners and trust practitioners in this region should be tracking in 2026. UNDUE INFLUENCE CLAIMS ARE SURGING Caregiver-beneficiary relationships, late-in-life marriages, and deathbed changes to estate plans are generating a wave of undue influence claims across the DMV region consistent with the nationwide trend. And with statutory changes favoring the challengers, such claims are only likely to continue to increase. Virginia's multi-part undue influence test and shifting evidentiary burdens, nominally at least, favor challengers of wills, see § 64.2-454.1. and, with a newly-enacted equivalent governing the trusts context, effective as of July 1, 2026, of trusts as well, see § 64.2-724.1. In situations where undue influence may be presumed from basic circumstances, often easily established by the challenging plaintiff, cases of late have become more about an accused’s needing to disprove wrongdoing than about the skeptical plaintiff’s duty to prove the contrary. Alleged influencers who occupied a position of trust or physical dependency should presume a legal challenge when changes to testamentary planning result in a plan favoring the one in that position for the decedent. In Maryland, the Court of Appeals (FKA the Court of Special Appeals) has affirmed that undue influence may be proven through cumulative inference, permitting plaintiffs to build their cases through patterns of conduct rather than direct evidence. In D.C., the Probate Division has demonstrated a notable willingness to allow contested matters to reach trial based on affidavit evidence alone, lowering the practical threshold for advancing such claims. For the devoted family member who has done only right by their deceased parent(s) while asking or expecting nothing in return, a parent’s reward of a greater than equal distributive share may result in little more than authorized judicial scrutiny and second-guessing of actions taken when t-crossing and i-dotting were not the primary (or even secondary) priority. These shifted burdens may operate unfairly to the detriment of the selfless doting loved ones their dying parents saw fit to reward, but we have decided societally to err in favor of protecting against overriding our elders’ testamentary intentions over the perceived substantially more limited likelihood that the decedent independently intended and resolved to recognize and reward their loved one’s selfless kindness. We have effectively shifted the presumption in this context to one of expected wrongdoing by anyone rewarded by a dying loved one. Practice Tip: Document the testator's independent judgment at every planning stage, especially for any amendment in contemplation of more imminent death. Consider independent counsel for vulnerable clients and retain contemporaneous notes of all meetings. LACK OF TESTAMENTARY CAPACITY CHALLENGES Dementia diagnoses are rising in lockstep with an aging client base, and contests premised on lack of testamentary capacity are becoming more common and considerably more sophisticated. The classical four-pronged capacity standard, i.e., requiring that a testator understand the nature of the testamentary act, the character and extent of their property, the natural objects of their bounty, and the nature of the will itself, remains the legal benchmark across the DMV jurisdictions, but the evidentiary battles to establish or defeat capacity have grown considerably more technical. Plaintiffs now routinely retain geriatric psychiatrists and forensic neurologists as expert witnesses, and the battle of the experts has become a defining feature of capacity litigation. Virginia Code §§ 64.2-403 and -404 govern will execution formalities (and/or the excusability of noncompliance therewith), and courts scrutinize compliance with these requirements closely when capacity is disputed, particularly regarding the role of attesting witnesses and notaries. Practice Tip: Consider recommending a contemporaneous medical assessment for clients with any documented cognitive impairment; consider a "golden period" video execution for “high-risk” matters, but recognize the “red flag” signal such a step may suggest and/or the potentially disproportionate impact of even the most minor lapses or misstatements. Likewise, a capacity assessment memorandum prepared by the drafting attorney at the time of execution might be invaluable in future litigation but is not without its own caveats. DIGITAL ASSETS AND CRYPTOCURRENCY DISPUTES The valuation, access, and proper distribution of digital assets, including, as relevant examples, cryptocurrency wallets, non-fungible tokens (NFTs), online brokerage accounts, and internet-based business interests, are creating novel litigation flashpoints that earlier probate frameworks were not designed to address. Virginia has enacted the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”) (Va. Code §§ 64.2-116 et seq.) to provide fiduciaries with clearer statutory access rights, but significant disputes persist around the possession of private cryptographic keys, the policies of third-party exchange platforms, and the correct estate-date valuation methodology for inherently volatile assets. Maryland and D.C. have enacted comparable RUFADAA statutes, yet litigation in all three jurisdictions reveals that statutory authorization and practical access remain separated by a significant gap, particularly where a decedent leaves no organized record of digital holdings or credentials. Practice Tip: Ensure all estate plans include a digital asset inventory and an explicit fiduciary authorization clause; counsel clients to use platform legacy contact and beneficiary designation tools where available. A securely stored credentials memorandum, separate from the will, can prevent years of unnecessary litigation. ELDER FINANCIAL EXPLOITATION AND CONSERVATORSHIP LITIGATION Adult protective services referrals, emergency guardianship petitions, and civil claims for financial exploitation of vulnerable adults are rising sharply across all three DMV jurisdictions. Virginia's Adult Protective Services statutes (Va. Code §§ 63.2-1600, et seq.) and the Commonwealth's criminal elder abuse statutes are being deployed with increasing frequency in tandem with civil probate remedies, including claims for constructive trust, disgorgement, and punitive damages. Contested guardianship and conservatorship matters in Virginia Circuit Courts seem to have grown substantially in both volume and procedural complexity, with courts appointing guardians ad litem (“GALs”) with greater frequency to safeguard the interests of alleged incapacitated persons. In Maryland, the intersection of the Health Care Decisions Act with surrogate decision-making disputes has generated a distinct body of contested proceedings, particularly where family members disagree about the scope of an agent's authority under a durable power of attorney. Practice Tip: Counsel aging clients to establish durable powers of attorney, advance medical directives, and revocable trusts proactively BEFORE capacity becomes an issue. Encourage regular monitoring of financial accounts for irregularities and consider the use of trusted contact designations with financial institutions. TRUST MODIFICATION, DECANTING, AND NO-CONTEST CLAUSE DISPUTES Irrevocable trusts formed decades ago are being challenged, modified, or decanted with growing frequency as family circumstances evolve and tax laws change. Virginia's Trust Decanting Act (Va. Code §§ 64.2-779.1, et seq.) provides a statutory mechanism for trustees to distribute assets from one irrevocable trust to a second trust with more favorable terms (a process that is itself a growing trend), but this power is increasingly being contested by remainder beneficiaries who argue that decanting impermissibly alters their vested interests. No-contest (or in terrorem) clauses, long regarded as effective deterrents to meritless litigation, are being strategically challenged as beneficiaries weigh the financial calculus of contesting large estates and assess the likelihood of clause enforcement. Maryland courts have historically enforced in terrorem clauses with relative strictness, while D.C. courts have applied them more flexibly, creating meaningful jurisdictional variation within the same metropolitan region. Practice Tip: When drafting no-contest clauses, consider including explicit carve-outs for good-faith challenges based on capacity or undue influence and/or gross mismanagement or self-dealing. Blanket clauses discourage otherwise meritorious litigation. Review irrevocable trusts periodically for decanting candidacy, particularly those with outdated distribution standards or unfavorable trustee succession provisions. Conclusion The litigation trends documented here share a common thread: each is, at its core, a failure of planning, whether a failure to document, communicate, update, or anticipate. Proactive, well-documented estate planning remains the most reliable and cost-effective litigation prevention tool available to practitioners and their clients. Comprehensive planning that accounts for cognitive vulnerability, digital asset complexity, blended family dynamics, and evolving trust structures will materially reduce the risk of costly, protracted disputes. Practitioners serving clients in the DMV region are well-served by engaging colleagues who bring broad, multidisciplinary expertise to complex estate matters. If you do not believe you are equipped to navigate the generational, jurisdictional, and asset-class complexity that defines modern estate and trust practice, seek help. Remember, it is not failure to admit you don’t know it all, rather consider it more of a professional imperative.
June 30, 2026
Estates and Trusts
Where There’s a Will — or a Trust — There’s a Way: A Practical Guide to Choosing the Right Estate Plan
Should you have a revocable trust or a simple will? As an Estates & Trusts attorney, this is one of the most common estate-planning questions I hear. For most Maryland residents, a simple will is perfectly adequate. A will directs how your assets will be distributed, names the person responsible for administering your estate, and allows you to designate guardians for minor children. Although a will does not avoid probate, Maryland’s probate process is generally efficient and straightforward, and it provides a clear forum for resolving disputes if they arise. But some of us have more complicated assets or circumstances. For example, you may be older and want someone to manage your finances in case you lose capacity. Or you might own a vacation home outside Maryland. In situations like these, a revocable trust can make it easier for someone you trust to take charge of your finances if the need arises, while streamlining the transfer of assets upon your death. Sometimes called a “living trust,” a revocable trust is established during your lifetime. Once the trust agreement has been signed, you should then follow your attorney’s instructions for transferring your assets into the trust. Real Estate. This typically involves recording a new deed — something your attorney or title company can handle. Bank Accounts. Checking and savings accounts can be retitled by taking a copy of the trust (or a shortened form, called a “Trust Certification”) to the bank. This is typically done by renaming the account from you individually, to you as the trustee of your revocable trust. Retirement Accounts & Life Insurance. These can be set up to transfer to the trust upon your death by completing a beneficiary-designation form naming the trustee as the beneficiary. Alternatively, it may be more advisable to name one or more family members as direct beneficiaries. Because either approach can have significant tax implications, be sure to consult your attorney before making changes. The benefit of all this legwork comes upon your death. The trust assets, called the “trust estate,” will transfer to your beneficiaries without unnecessary delay. If you do own property outside Maryland, it will transfer without the need for “ancillary probate,” essentially a second estate to be administered in the state where the other property is located. Key Advantages of a Revocable Trust Beyond avoiding ancillary probate, a revocable trust offers several additional advantages that may make it the better choice in the right circumstances. Incapacity Planning A will takes effect only upon death. By contrast, a revocable trust can provide for the management of your assets if you become incapacitated during your lifetime. If this happens, your chosen successor trustee can step in and manage trust assets without the need for court-appointed guardianship, which can be time-consuming, stressful, and costly. Privacy Unlike a will, which becomes part of the public record once it is filed with the Orphans’ Court, a revocable trust generally remains private. For individuals who value confidentiality, particularly those with strained family dynamics or complex financial holdings, this can be an important consideration. Continuity and Efficiency Because the trust holds title to the assets, there is no interruption in ownership at death. This continuity can simplify administration for your beneficiaries and reduce delays in distributing property, particularly when compared to even a streamlined probate process. Myths About Revocable Trusts Despite their advantages, revocable trusts are sometimes misunderstood. It is worth addressing a few common misconceptions: “A trust avoids all probate.” Not necessarily. Only assets that are properly titled in the name of the trust — or that pass by beneficiary designation or joint ownership — will avoid probate. Any assets left outside the trust may still require probate administration, which is why proper funding of the trust is essential. “A trust replaces a will.” Not entirely. Even if you have a revocable trust, you will still need a will, often called a “pour-over will.” This document serves as a failsafe and ensures that any assets inadvertently left out of the trust are directed into it upon your death. A pour-over will can also name guardians for any minor children and address other important matters not normally included in a trust. “A trust avoids taxes.” For most individuals, a revocable trust does not provide income- or estate-tax savings during your lifetime because you retain control over the assets. Tax planning typically requires additional strategies beyond a basic revocable trust. When a Will May Be the Better Choice While revocable trusts are powerful tools, they are not always necessary. Here is when a simple will may be all you need: Your assets are relatively straightforward You own property in only one state You have designated beneficiaries on retirement accounts, life insurance, and payable-on-death accounts You are comfortable with Maryland’s probate process A will is generally less expensive to set up and maintain than a trust, and it requires less administrative effort during your lifetime. For many families, it strikes the right balance between simplicity and effectiveness. The Importance of Proper Planning Whether you choose a will or revocable trust, it’s essential that you have an estate plan in place and keep it up to date. Changes in family circumstances, financial holdings, or the law may require updates over time. It is also essential that you coordinate your estate planning documents with your beneficiary designations and asset ownership. Missing or out-of-date beneficiary designations on retirement accounts or life insurance policies may derail an otherwise well-thought-out estate plan. Will vs. Trust: Which Is Right for You? There is no one-size-fits-all answer. The right approach depends on your assets, family dynamics, and personal preferences. For some Maryland residents, a will provides all the structure they need. For others, particularly those with multi-state property, concerns about incapacity, or a desire for privacy, a revocable trust offers significant advantages. Final Thoughts Estate planning is ultimately about making things easier for the people you care about most. Whether through a will or a revocable trust, the goal remains the same: to provide clarity, reduce stress, and ensure that your wishes are carried out efficiently. By understanding the differences between these planning tools, and by working with an experienced estates & trusts attorney, you can create a plan tailored to your needs and mindful of your legacy.
June 23, 2026
Estates and Trusts
Why Membership in the Sandwich Generation Hits Professional Athletes Especially Hard
My trust and estate practice services multi-generational families and those in the “public” space, which includes actors, musicians, and professional athletes. In recent years, I have delved deeper into “sandwich generation” issues (a shorthand term for those of us in midlife balancing the competing demands of caring for aging loved ones while still supporting and launching our young-adult children). Three years ago, “The Sandwich Generation Survival Guide” podcast was launched to provide resources to those of us in the “middle.” It has been enlightening to see how deeply these sandwich generation issues are being felt by professional athlete clients. This demanding and dynamic phase of life for professional athletes is seemingly intensified, accelerated, and often financially magnified in ways that traditional planning frameworks fail to address for other clients. The core challenge for the athlete in the “sandwich” begins with timing. A professional athlete’s earning window is compressed, with peak income often arriving in their 20s or early 30s and career longevity uncertain at best. At precisely the moment when many athletes are earning the most, it appears they are prematurely finding themselves in the “sandwich generation,” certainly earlier than non-professional athlete clients, which typically begins in their late 30s and early 40s, as they are also expected (implicitly or explicitly) to provide for parents, siblings, extended family members, and, like many clients, their own children. This expectation creates a fundamental mismatch between short-term income spikes and long-term, multigenerational obligations. Unlike most clients who accumulate wealth over decades, athletes are frequently required to make high-stakes financial decisions quickly, without the benefit of time, experience, or perspective. Compounding this issue is the expansive definition of family that often surrounds professional athletes. Financial responsibility often extends far beyond the nuclear household to include parents who sacrificed to support the athlete’s career, siblings, and extended relatives who rely on the athlete’s success, and even broader community expectations to give back in meaningful and visible ways. When layered with the needs of a spouse, partner, or young children, the athlete becomes the financial center of a wide, and often informal network. This is the sandwich generation in its most amplified form. These pressures are not purely financial; they are deeply emotional. Many professional athletes grapple with how to set boundaries without damaging relationships, how to distinguish between one-time gifts and ongoing obligations, and how to manage expectations of others when their own income fluctuates, injuries occur, or careers end. Feelings of loyalty, gratitude, and identity are often intertwined with financial decision-making, making it even more difficult to approach these issues objectively. The result is a heightened risk of overextension, where generosity and obligation can easily outpace sustainability. Too often, these dynamics are managed informally, through direct payments, unstructured allowances, or verbal commitments that lack documentation or long-term planning. While well-intentioned, this approach creates significant legal and financial exposure, including tax inefficiencies, unequal distributions (leading to family conflict), and a lack of thoughtful asset protection. It also leaves athletes vulnerable in the event of incapacity, injury, or premature death, where there is no clear structure governing how support should continue or how assets should be preserved. Traditional estate planning models are not well-suited to a professional athlete’s reality. Estate plans are generally designed for clients with longer earning horizons, more predictable income streams, and narrower, more foreseeable definitions of financial responsibility and obligation. Professional athletes, by contrast, require planning that accounts for income volatility, public visibility, name and image value, complex family systems, and of course, the psychological weight of being the primary provider for multiple generations. A more effective estate planning approach reframes these obligations through structure and intentionality. Formal planning tools can transform informal support into sustainable systems, creating clarity, consistency, and accountability while alleviating some of the emotional burden. Thoughtful multigenerational planning allows athletes to support both parents and children without compromising their own long-term financial security, while sophisticated asset protection and tax strategies help preserve wealth in a high-risk, high-visibility environment. Just as importantly, introducing governance and financial education into the family dynamic can help manage expectations and foster a shared understanding of how resources are allocated. Professional athletes are not simply part of the sandwich generation; they often represent its most extreme expression. The convergence of high earnings, short careers, expansive obligations, and emotional complexity creates a unique set of challenges that cannot be addressed with conventional planning alone. When approached strategically, however, this period of financial intensity can become an opportunity to build a lasting, multigenerational legacy. The key lies in shifting from reactive, informal support to deliberate, well-structured planning that reflects both the realities of an athlete’s career and the broader family system they support.
June 22, 2026
Estates and Trusts
Mind the Gap: Naming an “In-Between” Guardian for Your Minor Children
Even the best estate plans can leave an unintended gap. For parents of minor children, that gap may arise between a parent’s death or incapacity and the court’s formal appointment of a guardian. During that in-between period, it may be unclear who is authorized to care for the children, make medical decisions, or handle day-to-day responsibilities. While many parents focus on creating a will, naming beneficiaries, and appointing fiduciaries, they should also consider a temporary guardianship designation. In Maryland, this separate document enables parents to name a trusted person who can step in immediately to care for their children until a permanent guardian is appointed. For any parent, the thought of leaving children behind is understandably difficult. But estate planning is ultimately about making sure your children are cared for if the unexpected happens. A temporary guardianship designation is one of the most practical ways to provide guidance and reassurance during a crisis. The Gap a Will May Not Cover In Maryland, a will can nominate a guardian for minor children, but a will alone may not address the immediate realities after a parent’s death. Before a court formally recognizes the guardian nomination, there may be a period of uncertainty about who is authorized to care for the children and make important decisions on their behalf. A temporary guardianship designation helps fill that gap by providing clear directions as to who should step in immediately. This can minimize confusion among family members, reduce the likelihood of disputes, and help avoid emergency court intervention. It can also help avoid the need for an emergency custody proceeding if a friend or family member must step in unexpectedly without written authority to care for the children. By documenting the parents’ wishes in advance, the temporary designation can provide written authority and practical guidance during an already stressful situation. What Happens Without a Plan Ignoring this issue can create significant practical and emotional challenges. Imagine both parents are unexpectedly killed in an accident. Without temporary guardianship documentation, relatives may disagree about who should care for the children. In some cases, children may even be placed temporarily with social services until the court appoints a guardian. Even a brief period of uncertainty can be deeply unsettling for children already coping with grief and upheaval. By contrast, when parents have signed temporary guardianship documents, the transition is often far smoother. The designated individual—often someone nearby—can step in right away to provide housing, routine, emotional support, and day-to-day care until longer-term arrangements are finalized. Children are more likely to remain in familiar surroundings, continue attending the same school, and maintain important relationships during an extraordinarily difficult time. Choosing the Right Person Selecting a temporary guardian requires careful thought. Parents should choose someone they trust deeply and who shares similar values regarding parenting, education, and discipline. Practical considerations matter as well. The individual should be willing and able to take on the responsibility emotionally, physically, and logistically. Location may also be a factor. While naming someone nearby may reduce disruption, many parents choose out-of-state relatives based on strong relationships or shared values. The best choice is the person best able to provide a stable, supportive environment. Parents should also discuss the role with the proposed guardian in advance. Open communication helps prevent surprises and gives that person an opportunity to ask questions and understand expectations. It is also wise to name one or more alternates in case the primary choice is unavailable. Parents should review these designations periodically as family circumstances and relationships evolve. The temporary and permanent guardians may be the same person, or they may be different individuals. When the same person serves in both roles, the temporary guardianship enables him or her to step in immediately and helps prevent children from remaining in legal limbo until the court formalizes the longer-term appointment. Part of a Bigger Plan A temporary guardianship designation works best as part of a comprehensive estate plan that may also include wills with trust provisions, powers of attorney, and advance medical directives. While a temporary guardian handles a child’s immediate care, a trustee may manage financial resources for the child’s benefit. Coordinating these roles helps ensure that children are both emotionally supported and financially protected. Parents should also understand that Maryland courts ultimately retain authority over guardianship decisions. A temporary designation does not eliminate court involvement, but it does provide strong evidence of the parents’ wishes during a difficult transition. A Simple Step That Makes a Real Difference Too often, parents postpone estate planning because they feel too young, too healthy, or too busy. But emergencies can happen without warning. Naming an “in-between” guardian is one way parents can help ensure that someone they trust is ready to step in when it matters most.
June 3, 2026
Estates and Trusts
New York Trust & Estate Disputes: When a Loved One’s Death Becomes a Battlefield
When Jane Doe died, her family assumed everything was in order. She had always been organized. She talked openly about “having her papers done.” Her three children gathered a few days after the funeral, expecting a straightforward process. Instead, two different estate documents surfaced. One was an older will naming all three children equally as beneficiaries to her estate. Another, signed shortly before her death, left most of the estate to one child and excluded the others. Accusations followed, and what should have been a period of mourning quickly turned into conflict that led to years of litigation. This is how estate litigation often begins. Estate litigation is not just about money. It is about family dynamics, legal rights, fiduciary responsibilities, and the emotional weight of unresolved issues that come to light after someone dies. In New York, these disputes are common, and when they arise, the consequences can be significant, if they are not handled promptly and appropriately. Will Contests In New York, a will can be challenged by filing objections in Surrogate’s Court during the probate process, a court-supervised proceeding in which a will is submitted for approval and an executor is authorized to administer the estate. The most common grounds for objecting to the probate of a will are: Lack of Capacity The testator must be at least 18 years old and of “sound mind” at the time the will is signed. This means they must understand the nature of making a will, the extent of their assets, and who their natural heirs are. A diagnosis of dementia or other cognitive impairment does not automatically invalidate a will, but it can be used as evidence that capacity was lacking at the time of execution. Undue Influence This occurs when someone in a position of trust or power over the testator pressures or manipulates them into changing their will in a way that does not reflect their true wishes. Courts look for evidence of isolation, dependency, and a beneficiary who was heavily involved in the will’s preparation or execution. Improper Execution New York law has strict and formal requirements for the execution of a valid will. Among other requirements, it must be signed by the testator at the end of the document, in the presence of at least two witnesses, who must also sign and understand they are witnessing a will. A failure to follow these steps, even a technical one, can be grounds to void the document entirely. Fraud or Forgery Fraud occurs when the testator was deceived into signing a will, such as being told they were signing a different document altogether. Forgery involves a signature or document that was fabricated without the testator’s knowledge or consent. Had Jane’s family had proper planning and legal guidance, they might have acted sooner and avoided litigation. Fiduciary Disputes Will contests are not the only source of conflict. Equally common and damaging are disputes involving fiduciaries. A fiduciary is a person or organization with a legal obligation to act in someone else’s best interest. In the context of estates and trusts, this means managing estate funds, real property, and other assets on behalf of the people entitled to benefit. Executors, estate administrators, and trustees all serve in this role, and all carry the same fundamental duty: to put the interests of the beneficiaries first. Consider what happened to Jane’s estate after the will dispute settled. Her son John was appointed executor. Months passed. Then several years. Distributions were delayed. Phone calls went unreturned. When his sisters finally demanded a formal accounting of his actions as executor, they learned that John had been using estate property without paying rent, had sold the property for less than market value, and had made fund transfers that could not be explained. Disputes arise when there are allegations that a fiduciary is not acting in the best interest of the beneficiaries or trustees, or is breaching their fiduciary duty. Some common disputes include claims that the fiduciary is: Self-dealing or has a conflict of interest Misusing or mishandling assets Not exercising the appropriate care, skill, and caution when managing the assets Treating beneficiaries unfairly or unequally Not acting transparently or failing to provide beneficiaries or trustees with timely, accurate information, or not complying with formal or informal accountings In addition to seeking an accounting, a beneficiary or trustee can request the removal of a fiduciary when they can demonstrate that the fiduciary breached their fiduciary duty and acted in a way that was detrimental to the beneficiaries. They can also request that an executor, administrator, or trustee be surcharged, meaning the fiduciary is personally liable for the harm caused and can be required to pay money back to the estate or trust to compensate for financial losses caused by their actions. When to Speak to an Attorney Jane’s children might never have avoided the conflict entirely, but had they consulted an attorney when the second will surfaced, before accusations hardened into positions and positions hardened into litigation, they would have understood their options. They might have learned whether there were grounds to challenge the document, what evidence would matter, and whether an early demand for information could have clarified the picture before it became a lengthy legal battle. If you are facing uncertainty about a will, concerned about how an estate or trust is being managed, or simply unsure whether something feels wrong, the right time to speak with an attorney is now.
May 4, 2026
Estates and Trusts
LGBTQ+ Estate Planning —A Tale of Two Couples
Chris and Jason would never leave anything to chance. They ordered their movie tickets online in case the show sold out before they got to the theater. They always bought travel insurance, on the off chance their vacation plans didn’t pan out. They flossed daily, replaced smoke-detector batteries annually, and changed their furnace filters every six months. Their friends Bill and Trevor often teased them about being so conscientious. But then Bill and Trevor took a different approach to life. When Bill got a flat tire and needed to use the spare, he discovered that it was flat, too. They once ran out of heating oil because Trevor forgot to order more. And they still laugh about the time they missed their cruise ship departure after enjoying one too many rum swizzles at a pub in Bermuda. These differences extended to the way they approached estate planning, too. Chris and Jason went to an estates and trusts attorney who was a fellow member of the LGBTQ+ community. After getting to know them, the attorney prepared wills that left everything to the survivor in case Chris or Jason died. He also drafted a power of attorney and advance healthcare directive for each of them. These documents would be essential, the lawyer explained, if Chris or Jason became incompetent and needed the other spouse to manage his finances or health care. Chris and Jason knew this paperwork was important and were glad to have it prepared by a professional. What they didn’t know was that there was more to estate planning than that. The lawyer included language in their documents to cover their digital assets—things like frequent-flyer miles, social media accounts, and online shopping. The lawyer had them make an inventory of these assets, including their usernames and passwords, so the other spouse could access them if necessary. The inventory even included passwords for things like their laptops, smartphones, and iPads. They were also told to make sure the beneficiaries on their life insurance and retirement accounts were up to date to replicate the provisions in their wills. Once the documents had been signed, Chris and Jason slept better. They knew they were as ready as they could be for whatever lay ahead. Bill and Trevor, by contrast, did none of these things. They hadn’t gotten married or registered as domestic partners, thinking that having “a piece of paper” wouldn’t improve their relationship. They had been meaning to get wills but thought the process would be difficult and expensive. They also didn’t want to think about the worst-case scenarios an estate plan was meant to cover. Then the unexpected happened. On a rainy Sunday afternoon, Bill’s car skidded off a slippery road and into a tree. His death was instant, and Trevor was suddenly faced with the very scenario he had been so reluctant to confront. Because he had no will, Bill’s estate passed through “intestacy.” This meant that as an unmarried partner, Trevor inherited none of Bill’s assets, except the house they owned jointly. Surprisingly, his car and bank accounts went to Bill’s mother. Bill had failed to name a beneficiary on his IRA, and because he and Trevor had never married, the money went to Bill’s estate. This meant that Bill’s mother also received this substantial asset. Bill had life insurance through his job, but he had set it up before he and Trevor met. The beneficiary was Bill’s ex-boyfriend, so Trevor was entitled to none of the payout. To add insult to injury, Trevor had no way to access Bill’s laptop or iPad, which were both password-protected, or to listen to the messages that friends had left on Bill’s phone when they heard about the accident. It has been said that hindsight is always 20/20. If Bill and Trevor could start over, what would they do differently? They still might have stayed for that extra rum swizzle at the pub in Bermuda—that made for a good story. But they would definitely have called their friends’ lawyer and had him prepare an estate plan for the two of them, rather than leave anything to chance.
April 15, 2026
Estates and Trusts
Choosing the Right Fiduciary: Why It Can Make or Break an Estate Plan
Even the most carefully crafted estate plan can unravel if the wrong individuals are appointed to serve as executor or trustee. Executors and trustees are fiduciaries vested with broad authority to administer assets under their custody. They are responsible for asset management, tax compliance, recordkeeping, and the distribution of assets to beneficiaries. Sometimes the fiduciary only serves a matter of months; other times, their appointment can last for years or even decades. Oftentimes, a client will reflexively appoint their spouse as primary fiduciary, followed by one or more of their children as successor fiduciaries. It is certainly understandable that a client would want their closest relatives involved in administering their assets. When the fiduciary is also the primary beneficiary, and there is no need for ongoing administration, even a fiduciary who lacks sophistication may not cause significant issues, as the fiduciary is essentially tasked with administering their own assets. However, when the fiduciary is not the primary beneficiary, or when the administration will be ongoing, the complexity of the role means that appointing the wrong fiduciary may have significant consequences. This is because the fiduciary may be tasked with satisfying claims, paying estate taxes, or even winding down a business. A fiduciary who lacks sophistication or knowledge exposes the assets under their control to significant risk of mismanagement and waste. A fiduciary who lacks the knowledge and experience to navigate their responsibilities may fall into traps that a more seasoned fiduciary would avoid. A fiduciary’s contentious relationship with a beneficiary may make it difficult to maintain neutrality and avoid conflict. Even well-intentioned fiduciaries may have poor communication skills or fail to engage competent professionals to assist them in their duties. The client can take proactive steps to mitigate the risk of appointing the wrong fiduciary and prepare their nominated fiduciaries for success in their roles. Setting the Nominated Fiduciary up for Success While these conversations are often considered taboo, the client should have a candid conversation with their nominated fiduciaries to ensure that they understand the scope of their responsibilities. The fiduciary should be provided with the names and contact information of the client’s accountant, financial advisors, and attorney. The fiduciary should also know where the client’s important documents and records are located. While clients are often (and understandably) uncomfortable revealing the nature and extent of their assets, they should maintain records of their assets, liabilities, and obligations, as well as the passwords to their e-mails and other electronic accounts, along with their other important documents. The client may also wish to discuss with their nominated fiduciary any specific wishes or priorities that they want honored, family dynamics, gifting history, and any other particular issues or concerns the client may have. Taking these proactive steps will ensure that when the time comes for the nominated fiduciary to assume their role, the transition will be smooth. Consider Appointing Co-Fiduciaries with Defined Roles Appointing more than one fiduciary is also a way to balance family involvement with ensuring that a competent fiduciary is appointed to guide the family member in their duties and responsibilities. This may be particularly advantageous when the family fiduciary is young or inexperienced, as having an experienced fiduciary to serve together with them ensures that assets are properly invested, tax returns are timely prepared and filed, and records of their administration are maintained. For states that permit directed trusts, consideration should be given to clearly defining the roles of each co-fiduciary. For example, a client could designate a family member as the fiduciary responsible for making distribution decisions, while an independent trustee is tasked with making decisions concerning investment strategies. A mechanism should also be incorporated to anticipate and resolve deadlocks, avoiding delays or even total inaction. It is important to note that having more than one fiduciary can increase administrative costs or create the potential for conflict between the co-fiduciaries. Therefore, appointing co-fiduciaries may not be the right decision in every circumstance. Drafting for Flexibility and Ongoing Administration Sometimes the client’s nominated fiduciary may be unable or unwilling to serve for justifiable reasons, or after assuming office, can no longer continue to serve as fiduciary. While the client should evaluate the qualifications of any successor fiduciary that may need to serve, mechanisms should also be incorporated to anticipate and resolve fiduciary succession issues. For example, a trust agreement may provide that the last remaining trustee in office can appoint successor trustees or co-trustees. This provides the primary fiduciary with the opportunity to assess the current administrative landscape, what family members may be willing or available to serve, as well as the costs and benefits of appointing a professional or corporate fiduciary as successor fiduciary. Similarly, the trust agreement can provide that a majority of the beneficiaries may nominate successor fiduciaries if the office becomes vacant. These mechanisms help to avoid a contentious or difficult relationship forming between the fiduciary and the beneficiaries. Fiduciary Removal Taking appropriate steps and precautions during the client’s lifetime to ensure proper administration may still not be enough to avoid conflict or difficulties once the fiduciary is appointed. Therefore, it is just as critical to provide a mechanism to remove an unqualified or recalcitrant fiduciary. Sometimes it is appropriate for the beneficiaries to hold this power. Other times, a trust protector may be appointed to serve in this role. A “trust protector” is a non-fiduciary who is provided with defined, limited powers. Having a trust protector to monitor the activities of a trustee and, if need be, remove a trustee ensures impartiality and neutrality in the decision. Conclusion Nominating an executor or trustee is among the most consequential decisions that a client will make in their estate plan, yet many clients reflexively appoint their spouse or other close relatives. The wrong choice can cause conflict, erode family relationships, increase the cost of administration, and (in the worst of circumstances) invite litigation. By thoughtfully evaluating fiduciary candidates, ensuring fiduciaries are prepared and willing to serve, and incorporating flexibility into the estate planning documents to anticipate changed circumstances, advisors can help clients preserve family harmony and ensure their wealth is preserved for their beneficiaries.
April 2, 2026
Estates and Trusts
Will‑Challenge Litigation: Forensic Expert Cross‑Examination
Estate litigation rarely turns on a single moment, but an effective cross‑examination of the other side’s forensic document examiner may be one’s best shot at that “Perry Mason moment.” When a will’s authenticity is in dispute, the expert’s testimony is counted on to provide the foundation upon which one’s entire case rests. Successfully reducing their document authenticity evidence to a mere guess based on conjecture can provide that Jenga-like moment of removing that pivotal piece and watching the tower of blocks come crashing to the floor. And while jurists routinely remind us that experts are “advisory,” anyone who has tried one of these cases knows that a confident expert with a clean narrative can carry enormous weight. The inverse is equally true: a shaky expert can unravel a proponent’s case in minutes. The Real Work Begins Before the First Question Effective cross‑examination starts long before the expert takes the stand. Forensic document analysis is a discipline built on methodology, not mystique. Every document authenticity opinion, whether about signatures, ink, paper, toner, or page substitution, rests on a chain of decisions made by, or in some situations, forced upon the expert: what they examined, what they ignored, what they assumed, and what they concluded. Mapping that chain is the key to exposing weak or even missing links. Several pre‑trial “to dos” can be expected to pay consistent dividends: Pin down the expert’s universe of materials. What known samples of the author’s handwriting, known as “exemplars,” were used? Who selected them? Were they contemporaneous with the questioned handwriting? Were they originals or scans? Identify methodological “shortcuts.” Did the expert deviate from published standards? Did they rely on subjective impressions or conduct objective testing? Trace the chronology. When did the expert receive the documents? Were they sealed? Was the chain of custody documented? Did the expert know the litigation posture before forming opinions? By the time cross‑examination begins, one’s goal should not be to surprise the document examiner. If properly prepared, there won’t be one of those “gotcha moments” as there was on every single episode of Perry Mason. The goal rather, should be to walk the court through the expert’s own process and let the weaknesses reveal themselves. Where Forensic Opinions Tend to Break Down Most will‑challenge cases involve one or more of the following: (i) handwriting analysis; (ii) ink and/or paper dating; (iii) indentation analysis; (iv) spectral imaging; and/or (v) digital or toner evaluation. Each offers its own pressure points, which if sufficiently exploited, can be expected to reveal a lack of reliability. Handwriting and signature analysis often falters on the quality and quantity of exemplars. An expert’s reliance on a narrow or non‑representative sample, exposes vulnerabilities which any good forensic expert already knows. The smaller the sample size and the less representative of the decedent’s handwriting at the time of the document being challenged, the less reliable the opinion regarding authenticity. Ink and paper dating can be powerful, but only when the expert can articulate the limits of the testing. Many methods can rule out a date but cannot confirm one. Indentation and page‑sequence analysis is only as strong as the expert’s documentation. Missing photographs, incomplete notes, or ambiguous impressions create fertile ground for doubt when appropriately exposed. Spectral imaging can detect alterations, but courts expect the expert to explain what the imaging cannot show. Overstatements are often more damaging than gaps. Digital forensics requires a clear explanation of how the expert distinguished between original signatures and those that have been scanned or mechanically reproduced. Ambiguity here tolls the death knell. Cross‑examination succeeds when it forces the expert to concede the limits of their discipline without appearing combative. Most judges will tend to appreciate clarity over theatrical “A-ha!’s.” The Most Persuasive Cross‑Examinations Share a Common Structure The strongest cross‑examinations in will‑challenge litigation tend to follow a predictable arc: Establish the expert’s own standards. Let the expert define what “reliable methodology” means. Demonstrate where the expert departed from those standards. Even small deviations can undermine confidence. Highlight what the expert did not do. Courts understand that omissions matter as much as findings. Expose assumptions. Many forensic conclusions rest on untested premises, e.g., about timing, custody, or exemplar authenticity. Return to the ultimate opinion. By the time the expert restates it, the court should already see its fragility. The goal is not to “win” a battle of experts. It is to give the court a principled reason to discount the soundness of the other party’s process underpinning the conclusion the expert ultimately reached. Why This Matters in Today’s Estate Litigation Landscape Modern will contests increasingly involve blended families, high‑value estates, and digital documents. Consequently, powerful forensic testimony is often the centerpiece of probate-related document authenticity disputes. Courts expect practitioners to understand not only the legal standards, but also the scientific ones. A well‑executed cross does more than weaken an opposing expert. It reinforces the broader narrative, i.e., that the proponent of an alleged will or other testamentary document bears the burden of establishing authenticity, and that doubts grounded in methodical, fact‑driven questioning are legally significant. Weighing Conflicting Forensic Reports in Will Contests Conflicting forensic reports are no longer the exception in will‑challenge litigation; they are the norm. As estates grow more complex and documents increasingly blend handwritten, printed, and digital elements, courts are routinely asked to choose between dueling experts who appear equally credentialed and equally confident. Navigating the conflict is far more structured than many litigants appreciate. Understanding that structure is essential to presenting (or defending against) a challenge to a will’s authenticity. What Judges Look for First: Methodology, Not Conclusions When two experts disagree, courts do not start with the bottom‑line opinion. The starting point, appropriately, ought to be the methodologies relied upon to get there. Harken back to grade school math class with me for a moment. It wasn’t enough to tell the teacher the answer was “12.” You had to show your work if you expected the credit. How you got to 12 was more important than the correct answer, in fact, objectively, “12.” The difference, of course, is that forensic document examination still relies on expert opinion, even if the discipline is built principally on SWGDOC and ANSI/ASB standards, OSAC-reviewed standards under NIST, relevant ASTM standards, and generally accepted forensic document examination methodology, including validated testing techniques and reproducible procedures. For a trier-of-fact, judge or jury, to trust an expert’s subjective opinion in this context, the extent of one’s gray-haired “eminence grise” and years of relevant experience will likely count for something, sure, but scrutinizing the objective path taken to reach the subjective conclusions may prove to be the only differentiator upon which the fact-finder may be forced to rely. If two seemingly equally credentialed experts have reached opposing conclusions, strict adherence to process is necessarily relevant and ought, therefore, to be critically scrutinized so as to appreciate the full extent to which the expert or experts: Consistently applied recognized standards Documented each step of the examination Used appropriate exemplars and controlled conditions Avoided assumptions about timing, authorship, or custody An expert who followed a disciplined, transparent process will almost always be favored over one who relied on subjective impressions or incomplete testing, even if the latter’s conclusion appears more definitive. So be critical of your own expert, seeming to fall too easily into the trap of giving you precisely the answer you want to hear. Assess the foregoing factors in his or her work prior to finalizing the expert’s disclosure and/or report. Imagining the ease with which you, yourself, would elicit such weaknesses on cross-examination should provide more than sufficient fodder for “rehabilitating” your own witness well before they ever need it. The Weight of “Negative” Findings Courts often give greater weight to findings that rule out authenticity than to those that merely support it. For example: Ink that post‑dates the decedent’s death Paper inconsistent with the claimed execution period (or inconsistent pages within the document itself) Toner or printer characteristics that did not exist at the time Indentation patterns showing pages were added or substituted Evidence of any one of these findings may prove dispositive. As difficult as they are to explain away, a single disqualifying inconsistency can undermine an entire document. How Courts Evaluate Competing Signature Opinions Handwriting analysis remains the most commonly contested component of will‑challenge litigation. I’m not aware of any statistical analyses, but my own limited research efforts confirm that it is much easier to find published cases challenging signature authenticity above all other factors. Perhaps this is more a factor of which types of cases are more likely to settle when expertly identified. With that in mind, it is fair to anticipate a high probability that cases coming before the court for resolution involve experts on both sides reaching different conclusions about signature authenticity. With conflicting opinions regarding the signature itself, key potentially distinguishing factors include the following: The number and quality of exemplars each expert used Whether the expert relied on originals or degraded copies The expert’s ability to articulate and exemplify specific stroke‑level comparisons Whether the expert acknowledged natural variation in the decedent’s writing Judges are going to be wary of conclusory statements like “the signature is consistent with the writer’s hand” unless supported by detailed, observable features. In other words, simply saying it, does not make it so no matter how many gray hairs on the expert’s head or letters after their name. When presenting one’s case, one must assure that the expert provides articulable evidence of both consistencies and inconsistencies. The Role of Chain of Custody and Document History Even the strongest forensic opinion can be weakened if the document’s history is murky and/or if the document reflects a significant change of course from the decedent’s previously documented planning for the benefit of a beneficiary who is also the source and proponent of the document. Courts scrutinize the following: Who possessed the will and when Whether the document was sealed or stored securely Whether any party had the opportunity to alter or replace pages Whether the expert knew the litigation posture before forming an opinion A clean chain of custody enhances credibility; a compromised one amplifies doubt. When Experts Cancel Each Other Out In some cases, the court finds both experts credible but inconclusive. When that happens, judges must shift their focus to the surrounding circumstances: The decedent’s prior estate‑planning patterns The relationship between the decedent and the beneficiaries Evidence of undue influence, isolation, or last‑minute changes Testimony from witnesses to the execution The presence (or absence) of earlier, consistent wills Forensic science informs the ultimate decision, but the broader factual landscape often decides it. The Practical Reality: Courts Want a Reason to Trust One Expert Judges are not expecting perfection or 100% certainty. They are looking for credibility, consistency, and restraint. An expert who acknowledges limitations, explains uncertainties, and grounds every conclusion in documented observations is typically far more persuasive and effective than one who overreaches and speaks only in terms of “all or nothings” (e.g., refuses to acknowledge anomalies and/or steadfastly claims to a high degree of certainty). In will‑challenge litigation, the most effective strategy is not to “win the science,” but to “trust the process” and give the court a principled, fact‑driven basis to trust your expert’s path to the conclusion. To that end, cross-examination should be directed at establishing grounds to distrust the other side’s process, the totality of which will include more than just their expert. One would do well to prepare for expert cross-examination in this context, as exposing not only the weaknesses in the expert’s process but recognizing, as well, that the expert’s ultimate conclusions are only as strong and trustworthy as the weakest link in their opinion chain.
March 26, 2026
Estates and Trusts
The Hidden Estate Planning Crisis Facing the Sandwich Generation
Why millions of families caring for two generations are legally unprepared for either. Across the country, millions of adults are quietly living in what has come to be known as the sandwich generation. Statistics show that one in six Americans is in the sandwich generation, supporting aging parents while also raising children or helping launch young adults. Much of the public conversation around this group focuses on the emotional and financial strain of caregiving and those receiving the care. What receives far less attention, however, is the legal vulnerability many of these families face. Many estates and trusts attorneys see a growing and largely invisible problem: a hidden estate planning crisis affecting the very people holding multiple generations together. Many people still consider estate planning something to address later in life. Yet the sandwich generation sits at the exact intersection where planning becomes essential for two generations at once. It is not uncommon for estate and trust attorneys to encounter families whose aging parents have not established even the basic vital legal documents, such as powers of attorney and health care directives. At the same time, and as a result, the adult children who are helping manage their parents’ lives have no legal authority to make decisions on their behalf. Even more striking, those same caregivers—busy raising children and supporting parents—often have not completed estate planning for their own families. In other words, the individuals coordinating care, finances, and medical decisions for everyone else are often doing so without a legal framework protecting anyone involved. A common situation involves adult children informally stepping in to help aging parents. They begin by paying bills, organizing, advocating at medical appointments, and helping manage finances. Over time, those responsibilities expand. Without the proper legal documents in place, the adult child may technically have no legal authority to act. What these adult children find, often too late, is that financial institutions refuse to discuss accounts and medical providers limit the information they can share. Important decisions become delayed and complicated, even when everyone in the family agrees on what should happen. If an aging family member or parent experiences cognitive decline before these documents are in place, the situation becomes even more difficult. Families may suddenly find themselves navigating court proceedings to obtain guardianship or simply to manage basic financial and medical matters. What could have been handled through proactive planning becomes a crisis-driven, stressful, and expensive legal process at precisely the moment families are already under inordinate emotional and often financial strain. Another dynamic frequently emerges within sandwich generation families when one sibling becomes the primary caregiver for the aging parent. Often referred to as the “caretaker child,” this person may take on the bulk of responsibility for coordinating care, managing finances, or in some cases, even housing a parent. While these arrangements are often made with the best intentions, they can create fractures within the sibling relationship as the parent grows more dependent. The opportunity for discord grows with certainty when estate plans are unclear or nonexistent. Questions about whether the caregiving child should be compensated or how caregiving contributions should be recognized, often surface only after a parent becomes incapacitated and can no longer take part in those discussions, or worse, after the parent dies. Without clear planning and communication, these issues can quickly evolve into family conflict or worse, family estrangement. Making matters worse, the caregiver’s own legal planning is frequently neglected. Many members of the sandwich generation are simply too busy managing daily responsibilities to focus on their own estate planning, creating another significant vulnerability. If something were to happen to the caregiver such as an illness, accident, or an unexpected death, there may be no legal structure in place to protect their children or guide decisions about their assets. The people responsible for stabilizing two generations of family life often overlook the fact that they remain central to their own household’s future security. There are varying studies that indicate that a caregiver can be 18-40% more likely to die before the care recipient, a testament to the necessity that the caregiver, too, must consider their own planning. The encouraging news is that this crisis is entirely preventable: addressing it does not necessarily require complex legal strategies. What it requires most is starting the conversation early and recognizing that estate planning is no longer a single-generation exercise. Families navigating the sandwich generation need planning that considers the needs of aging parents while also protecting the caregiver’s own family. When parents have clear legal authority in place for trusted decision-makers, when siblings communicate openly about caregiving roles, and when caregivers ensure their own families are protected, the most difficult and painful conflicts can be avoided. Demographic trends suggest the sandwich generation will continue to grow as people live longer and families remain financially interconnected for longer periods. What once happened sequentially, raising children first and caring for parents later, is now happening simultaneously for millions of households. Yet the way many families approach estate planning has simply not adapted to this reality. Planning today is no longer simply about preparing for the end of life. It is about creating stability for families managing the complex responsibilities of supporting multiple generations at once. The individuals carrying that responsibility deserve a legal framework that reflects the critical role they already play in their families’ lives. The question facing many families is not whether they will encounter these issues, it is whether they will confront them prepared or in crisis.
March 19, 2026
Estates and Trusts
Protecting the Modern Family with Mindful Estate Planning
Early in the show Modern Family, we meet a family formed through remarriage, cultural differences, and a significant age gap. When Jay Pritchett marries Gloria Delgado, he becomes stepfather to her sensitive teenage son, Manny. Gloria, in turn, joins a family that already includes Jay’s adult children, Claire and Mitchell. Blended Families, Real-Life Challenges The show has a field day as Jay grapples with Manny’s love of espresso, poetry, and candlelit dinners, while Gloria adjusts to having stepchildren old enough to be her high school classmates. Later, Jay and Gloria welcome a son they have together, Joe, adding another layer to the family structure. While these moments provide plenty of laughs on screen, similar situations in real life raise serious legal questions. Their household reflects many of the realities of today’s blended families—the complexities of prior relationships, stepparenting, and children with different legal ties to each parent. Manny has a biological father, Javier, who remains part of his life. If Gloria were to die unexpectedly, what arrangements would protect Manny’s financial future? If Jay were to die first, how would his estate be divided among Gloria, Claire, Mitchell, Manny, and Joe? Would Manny inherit in the same way as Jay’s biological children? Would Gloria have full access to Jay’s assets, and if so, how might that setup affect what ultimately passes to Claire and Mitchell? Questions like this call for thoughtful estate planning. Prenups and Marital Trusts: Planning for Every Scenario Before tying the knot, Jay and Gloria could have met with an estate-planning attorney to clarify their intentions and protect everyone involved. One possible tool would be a prenuptial agreement. Second marriages, especially those involving children from prior relationships, often benefit from a written agreement that defines property rights and financial expectations. A prenup outlines how assets will be divided in the event of divorce and can also address inheritance rights upon death. For Jay, who built a successful business before marrying Gloria, this document could ensure that certain assets are preserved for Claire and Mitchell while still providing generously for Gloria. Another strategy would be to create a marital trust under Jay’s will. If Jay died first, his assets could be placed in trust for Gloria’s lifetime benefit. She would receive income and, if needed, principal for her health and support. After Gloria’s death, the remaining trust property could pass according to Jay’s wishes—perhaps divided among Claire, Mitchell, and Joe, or allocated in a way that also provides for Manny. This structure enables a surviving spouse to remain financially secure while preserving the first spouse’s intentions regarding his children. Gloria would need similar planning. Because Manny has another living parent, Javier, questions of guardianship and inheritance require thoughtful consideration. Having a current will, clear beneficiary designations on assets like life insurance and retirement accounts, and possibly a trust could ensure that Manny and Joe are protected without unnecessary complications. Adoption presents another consideration in some blended families. If Jay adopted Manny (and Manny’s biological father consented), that would strengthen Manny’s inheritance rights and formalize his legal relationship with Jay. Adoption would also affect how assets are passed under intestacy laws if either Jay or Manny died without a will. Blended families often bring love and complexity in equal measure. With a clear estate plan in place, Jay and Gloria could focus on raising Joe, supporting Manny, and staying connected to Claire and Mitchell—confident that their legal foundation supports the family they built together. Putting Your Plan Into Action If you are part of a blended family—or considering creating one—taking time to address the legal and financial details can be just as important as building emotional bonds. Speaking with an experienced Estates & Trusts attorney can help you protect your spouse, your children, and your intentions. With mindful planning, you can ensure a more secure future for the family you build today.
March 6, 2026
Estates and Trusts
Using a Private Foundation to Preserve an Artist’s Legacy
Thoughtful estate planning is essential for artists seeking to ensure the long‑term preservation, management, and presentation of their lifelong work. Although executors and trustees can competently administer the legal and financial aspects of an estate, they may lack the specialized knowledge required to oversee a significant body of artistic work. Establishing a private foundation—whether in the form of an operating foundation that directly manages, displays, and loans artwork, or a non-operating foundation that supports public charities—can provide a structured and durable mechanism for stewardship. By appointing directors who are artists or professionals familiar with the creator’s oeuvre, these entities can administer, conserve, and promote the artwork in a manner consistent with the artist’s intent. As a result, private foundations can serve as an effective vehicle for extending an artist’s legacy and ensuring that their work remains accessible and properly managed for many years beyond the administration of the estate. Structure of a Private Foundation: Corporate vs. Trust A private foundation can be established in either trust format or as a nonprofit corporate entity. Choosing the format of the entity depends on desired flexibility, liability, and administrative burdens. Nonprofit corporations are generally preferred for their flexibility, greater liability protection for their directors, and ease of modification. Trusts are simpler to form but are more rigid, often requiring court approval to amend, and are best for straightforward non-operating or grant-making foundations. Nonprofit Corporations Flexibility: Allows for amending bylaws, changing the charitable purpose, or moving the location — all without court intervention. Liability: Offers better protection for its officers and directors. Structure: Requires a board of directors, regularly scheduled meetings held at least annually, minutes, and formal state filings. Best for: Foundations with complex activities, multiple individuals in charge, or that may evolve over time. Trusts Simplicity: Easier and less expensive to set up, with fewer administrative requirements such as regular meetings and minutes. Control: Usually in the hands of one or more trustees who are appointed by the donor, who provides rigid guidelines in the governing instrument that are difficult to change. Modification: Amending a trust often requires court approval, making it less flexible and adaptable to change. Best for: Simple, grant-making foundations with a specific, unchanging purpose. What is the difference between operating foundations and non-operating foundations? An operating foundation is a private foundation that focuses on direct service by running its own programs in support of its charitable purposes, while a non-operating foundation is a charitable entity that distributes funds to public charities rather than operating its own programs. An operating foundation actively conducts its own programs, such as operating a museum, library, or research facility. An operating foundation may also provide grants to individuals, provided that those grants are within the foundation’s purposes. It must meet IRS "income" and "asset/service" tests to prove it is actively running programs rather than just holding assets. Generally, an operating foundation offers higher tax deductions for donors (up to 50%-60% of adjusted gross income) than a non-operating foundation. However, an operating foundation must spend at least 85% of its annual income on direct, active charitable activities. A non-operating foundation exists to support one or more specific public charities. It is typically funded by one or more individuals and focuses on grant-making to other qualified non-profits. Deductions to a non-operating foundation are limited to 30% of an individual’s adjusted gross income, and the foundation is required to pay out at least 5% of its assets annually to public charities. Since most artists’ foundations are formed to support and promote an artist’s legacy, they are usually formed as operating foundations unless the foundation is formed to sell the artist’s works and donate the proceeds to public charities. What are the duties and responsibilities of the board of directors of a private foundation? The board of directors of a private foundation leads the organization by defining its strategic vision, managing operations, and ensuring financial, legal, and ethical compliance. They are responsible for overseeing the officers of the foundation, who are the face of the organization with respect to fundraising, stewarding donors, cultivating relationships, and overseeing grantmaking programs that align with the foundation's mission. The board of directors is usually composed of at least three individuals. Some of the key responsibilities of the board of directors include: Mission & Strategy: Developing long-term goals, policies, and strategic plans for the foundation. Financial Oversight: Managing the foundation’s investment portfolio, approving budgets, reviewing audits, and ensuring tax compliance. Grantmaking and Programs: Developing grant guidelines and monitoring the distribution of funds. Leadership Oversight: Hiring, supporting, and evaluating the officers of the foundation, actively identifying and managing potential conflicts of interest, and ensuring transparency and accountability. Governance: Recruiting new board members, planning for succession, and maintaining foundation records. How do the foundation directors and officers interact with an artist’s works and intellectual property? The directors and officers are responsible for overseeing the management, preservation, and use of both the foundation’s physical artworks and its related intellectual property rights. Their authority and responsibilities are defined by the foundation’s governing documents, applicable state nonprofit law, and federal tax‑exempt organization rules. Some examples include ensuring the proper care, conservation, storage, and security of the foundation’s art collection; overseeing how copyright or other intellectual property rights to the artist’s work are licensed, enforced, or shared; ensuring that all interactions with the artwork and intellectual property comply with the IRS’s private foundation rules. Are the foundation directors and officers permitted to donate the artist’s artwork, organize exhibits, or sell the artwork? In general, the directors and officers of a private art foundation may donate, exhibit, or sell artwork only to the extent that those activities are consistent with the foundation’s governing documents, tax‑exempt purposes, and fiduciary duties. A private foundation’s charter, bylaws, and mission statement typically define how the artwork may be used and the scope of the directors’ and officers’ authority. Directors and officers may donate artwork if the donation furthers the foundation’s exempt purposes, for example, advancing the arts or supporting educational or cultural institutions. However, directors must avoid self‑dealing, meaning the artwork cannot be donated in a way that benefits disqualified persons, including directors, officers, substantial contributors, or related parties. Directors and officers are generally permitted to organize exhibitions, loan artworks, or otherwise make the collection accessible to the public. These activities are typically well aligned with a private operating foundation’s mission to directly manage and display the artist’s work, or a non-operating foundation’s mission to benefit public charities that further the foundation’s purposes. Directors and officers must ensure that exhibition or loan arrangements are documented at fair market terms and are consistent with the foundation’s charitable objectives. Directors and officers may sell artwork when doing so is allowed by the governing documents, consistent with the foundation’s purpose, and conducted at arm’s length and for fair market value. Sales to insiders or related parties can raise significant self‑dealing concerns under IRS rules applicable to private foundations. When permitted, sales may be used to fund operations, conservation efforts, or long‑term endowment needs. Finally, directors and officers must always act in the foundation’s best interests, preserve charitable assets, and comply with the Internal Revenue Code rules governing private foundations, including those related to self‑dealing, excess benefit transactions, and prudent investment of assets. How often do foundation directors meet? How are the meetings, held and what is discussed in those meetings? Board meetings are necessary because directors have legal fiduciary duties, which include the duties of care, loyalty, and obedience, all of which require active oversight and informed decision‑making. Regular meetings ensure that the foundation complies with nonprofit and tax‑exempt requirements, documents major decisions, manages charitable assets responsibly, and carries out its mission. Written and recorded minutes of all board meetings are essential to provide a clear governance record should the foundation ever face audit, regulatory review, or future questions about its stewardship of the artist’s legacy. The frequency and format of board meetings for a private foundation are determined primarily by the foundation’s governing documents, its bylaws, and organizational policies. Most private foundations hold board meetings at least annually, while many choose to meet quarterly or semi‑annually to fulfill fiduciary oversight responsibilities. Additional special meetings may be convened as needed, particularly when significant decisions arise concerning the foundation’s assets, including the management or disposition of artwork. Meetings may be held in person, virtually, or through hybrid formats, provided the bylaws and applicable state nonprofit law permit remote participation. Virtual meetings have become increasingly common due to their practicality and flexibility. Regardless of format, directors must receive proper notice, and the foundation must maintain accurate minutes documenting the actions taken. At each meeting, directors review matters related to governance, finances, and program activities. For an art-focused private foundation, discussions often include the following: Collection Management: Conservation needs, storage conditions, insurance coverage, cataloguing updates, and loan requests. Exhibitions and Programming: Potential exhibitions, partnerships with museums or cultural institutions, and educational initiatives. Intellectual Property Management: Licensing requests, reproduction permissions, and protection of the artist’s moral rights. Financial Oversight: Review of operating budgets, endowment performance, fundraising (if applicable), and compliance with expenditure responsibility rules. Legal and Compliance Matters: IRS private‑foundation compliance, conflict‑of‑interest reviews, self‑dealing safeguards, and approval of significant transactions. Strategic Planning: Long‑term preservation of the artist’s legacy, mission alignment, and governance succession planning. Are foundation directors compensated? The directors of a private foundation may be compensated with a "reasonable" salary or fees. Compensation should be outlined in the foundation's bylaws or governing documents, must not be excessive, and is typically based on industry standards. However, most directors of private foundations serve without compensation; only about 25% of private foundations compensate its board members, often using methods like annual retainers or per-meeting fees. Directors’ compensation is considered reasonable if it is what similarly situated individuals are paid for similar work at comparable organizations. Directors can be paid for professional and administrative services, including managing investments, legal work, accounting, overseeing foundation operations, and any work that is necessary to conduct the foundation’s exempt purposes. Directors are prohibited from receiving compensation for routine clerical work, physical labor, or services not related to the charitable purpose. Since directors are "disqualified persons," improper or excessive compensation can trigger IRS penalties (excise taxes) for self-dealing. Common methods of compensation include monthly or annual retainers, per-meeting fees (often $2,000+), or salaries. It is essential to document board approval and justify the salary amount to ensure it is not excessive, particularly for founder salaries, which are often 10%–25% of revenue. How are private foundations exempted under Section 501(c)(3) of the Internal Revenue Code? Private foundations qualify for tax‑exempt status under Section 501(c)(3) of the Internal Revenue Code by being organized and operated exclusively for charitable purposes, such as educational or cultural activities. To obtain this status, the foundation must (i) have organizing documents that limit its purposes to those permitted under §501(c)(3), (ii) refrain from activities that provide private benefit to insiders, and (iii) file Form 1023 or Form 1023‑EZ with the IRS to request recognition of exempt status. Once approved, the foundation must comply with the private‑foundation rules, such as restrictions on self‑dealing and minimum distribution requirements, to maintain its exempt status. If the application for a charitable exemption under Section 501(c)(3) of the Internal Revenue Code is submitted within 25 months of the formation of the private foundation, gifts to the foundation will be eligible for a charitable exemption under Section 170(c) and Section 2522 of the Internal Revenue Code dating back to the date of formation of the entity. Filing Form 1023 within 25 months (which is within the 27-month deadline) allows a non-profit to be recognized as tax-exempt retroactively from its date of formation. If the application is filed after the deadline (27 months from the end of the month of formation), the exemption is only effective from the date of the submission, meaning previous years may require amended tax filings by both the entity and its donors. Filing before the 25-month deadline ensures that all income earned since formation is exempt, and donations made to the organization are tax-deductible from the inception, provided it met 501(c)(3) requirements during that period. If done properly, the organization avoids having to pay corporate income tax for the period between its formation and the approval of the exemption, avoiding potential "gap" issues where tax might be owed. What are other team members in a private foundation? A private foundation typically relies on a broader team beyond its board of directors to ensure proper governance, financial management, and strategic oversight. While the board of directors is ultimately responsible for fulfilling fiduciary duties and guiding the foundation’s mission, several key roles support the foundation’s operations and compliance. Officers are the public face of a foundation. There are four types of officers that help the directors manage a private foundation, and they include the president, vice president, secretary, and treasurer. Each role serves a different purpose, but it is common for one person to hold one or more roles. President/CEO The president or chief executive officer provides overall leadership, reports to the board, sets agendas, and ensures that the foundation operates in accordance with its mission and governing documents. The president often serves as the primary liaison between the board and the public, including donors, museums, advisors, and service providers. Vice President The vice president supports the president and may assume leadership responsibilities in the president’s absence. Depending on the bylaws, the vice president may oversee specific committees or initiatives, such as exhibition planning or legacy programs. Secretary The secretary maintains the foundation’s official records, including meeting minutes, board resolutions, and governance documents. This role is critical for ensuring transparency, regulatory compliance, and properly documented decision‑making, particularly important for a private foundation managing valuable artwork. Treasurer The treasurer oversees financial matters, including budgeting, accounting practices, investment oversight, and compliance with IRS rules governing private foundations. The treasurer works closely with financial advisors and accountants to ensure proper stewardship of assets and adherence to annual reporting requirements. In addition to the directors and officers, the foundation may engage other professionals to serve as part of its advisory team. Although not required, these individuals can help ensure that the foundation operates smoothly and effectively. Legal Counsel Attorneys experienced in nonprofit and tax‑exempt organizations help interpret IRS rules, draft governance documents, review contracts (e.g., loan agreements or licensing deals), and advise on self‑dealing and conflict‑of‑interest safeguards. Accountant / CPA A certified public accountant plays a central role in maintaining the foundation’s financial books, preparing the annual federal tax Form 990‑PF, ensuring compliance with private‑foundation excise tax rules, and advising on issues such as valuation of artwork, endowment management, and expenditure responsibility. Art Advisors, Curators, or Conservators For foundations centered on an artist’s legacy, professionals with expertise in art handling, conservation, exhibition planning, and market knowledge may assist the directors and officers in making informed decisions about the artwork. Executive Director or Administrative Staff (if applicable) Some foundations appoint an executive director or administrative team to manage day‑to‑day operations, coordinate programs, and support the board in implementing strategic initiatives. Together, these individuals form a governance and advisory structure that ensures the private foundation operates responsibly, fulfills legal obligations, and effectively advances its charitable mission, particularly important for foundations entrusted with preserving and promoting an artist’s work. For artists, the process of estate planning involves more than transferring assets; it requires establishing a structure capable of preserving, interpreting, and managing a lifetime of creative work. A private foundation can serve as a legally durable vehicle to steward an artist’s collection, intellectual property, and reputation in a manner consistent with the artist’s intentions. Whether organized as an operating foundation dedicated to managing and exhibiting the artwork directly, or as a non-operating foundation whose purpose is to support public charities, this approach provides a clear governance framework and ensures that qualified directors are entrusted with long‑term oversight. Given the legal, tax, and fiduciary complexities associated with forming and administering a private foundation, artists should seek guidance from competent legal counsel. An attorney experienced in nonprofit, tax‑exempt, and estate planning matters for artists can help determine whether a foundation is the appropriate vehicle and ensure compliance with applicable state and federal laws.
March 5, 2026
Estates and Trusts
Don’t Let Your Plan Fail: Why Reviewing Your Trust is Critical
Revocable trusts are often the centerpiece of a client’s estate plan for the many benefits that they provide. Revocable trusts are private agreements that are easily amendable, and avoid the costs and delays associated with probate. They ensure the management of assets in the event of a client’s incapacity and, at death, a seamless transition of assets to the client’s intended beneficiaries. However, even the most carefully drafted and intricate trust agreement will be ineffective if it is not implemented correctly. A revocable trust is essentially an empty shell until it is funded with assets. Advisors and legal counsel will likely take steps to ensure that all of a client’s non-retirement assets are transferred or retitled into their revocable trust at its inception. When assets are later acquired, they must be transferred into the trust to be effective. In the best circumstances, assets that remain outside the trust will necessitate probate, incurring administrative costs and delays that the client sought to avoid by establishing the revocable trust. At worst, failing to properly title or convey assets into the trust may result in the imposition of avoidable taxes and the wrong beneficiaries receiving assets. Why Proper Trust Funding Matters Many clients presume that listing an asset on a schedule included with their trust is all that is required to transfer assets into their trust. In reality, assets must be formally transferred to the trust, or the trust must be listed as the beneficiary of any assets that remain outside the trust, for it to be effective. Some assets, such as bank or brokerage accounts, can be easily retitled and transferred into a trust. Other assets require the preparation of formal legal documents to effect the transfer. For example, real property can only be transferred to a trust by executing a deed. Corporate interests, such as stocks or shares in a small business, may only be transferred with an assignment and the issuance of a new stock certificate from the corporation. If the client owns shares in a co-op, they must go through a formal approval process before their shares can be retitled into their trust. Because transferring certain assets into the trust can be a hassle or incur additional fees and costs, sometimes clients intentionally keep certain assets outside their trust. A client may opt to forgo the expense and hassle of retitling their residence, presuming that they will one day sell it prior to their death. The client might reasonably conclude that incurring fees and costs to convey an asset into their trust which they intend to sell during their lifetime is unnecessary and wasteful. This is a risky proposition as death or incapacity can occur in an instant, making it difficult or impossible to transfer the property later, undoing the benefits of establishing the trust. Risks of Leaving Assets Outside the Trust Some types of assets, such as retirement accounts, must be left outside a trust, but this can also be a trap for the unwary. The client must always consider the assets that the beneficiary will receive outside their trust as part of their overall estate plan. If a client wishes to change the terms of their trust to provide more or less for their intended beneficiaries, they must be mindful to also update their beneficiary designations accordingly. Changed circumstances may also require a change in beneficiary designation. The client may have divorced their spouse since naming him or her as the primary beneficiary of their life insurance or retirement assets. Perhaps the intended beneficiary has died, become incapacitated, or is now a spendthrift; failing to update beneficiary designations may expose these assets to creditor claims or disqualify the beneficiary from receiving government benefits. Safeguards to Prevent Funding Failures While ideally all assets will be transferred into the revocable trust before death, there are many ways where even well-intentioned individuals will inadvertently fail to transfer assets into their revocable trust. Several safeguards that can be easily implemented to mitigate these risks and ensure that the client’s beneficiaries inherit their assets as intended. When implementing a revocable trust in a client’s estate plan, a “pour-over” will should always be executed. A “pour-over” will directs that any assets left outside the trust at the time of death be distributed or “poured over” into the revocable trust. Without a will in place, assets left outside the trust will pass by intestacy. In addition, clients should consider whether it is appropriate to provide their agents broad powers under a power of attorney to gift their assets, change beneficiary designations, and amend the client’s trust, to conform with the client’s wishes. These powers help to ensure that additional estate planning can be done at any time during the client’s life, even if they become incapacitated. Lastly, the client should consider naming their trust as the primary or contingent beneficiary of any assets left outside their trust. By doing so, it not only ensures that these assets will ultimately pass to the trust, but it also enables the client to change their estate plan by simply amending the terms of their trust. Conclusion: Regular Review Ensures an Effective Plan The reality is that while establishing an estate plan may take as little as a few months, it is not a discrete process; estate planning requires continuous monitoring and occasional updates. Clients should be encouraged to review their estate planning documents at least every four to five years, or at major milestones such as the birth of a new family member, moving to another state, or when there is a significant change in the law, to ensure that their estate plan will function as intended.
January 28, 2026
Estates and Trusts
Five Big Estate Planning Mistakes — and Why You Should Act Now
Each year, I revisit the most common estate planning missteps I see in my practice. These mistakes cost families time, money, and peace of mind. If you’ve been putting off your plan, consider this your annual nudge to take action. Tomorrow is never guaranteed; start today. #5 - Inequity Trying to treat everyone ‘equally’ can be just as problematic as treating loved ones differently because you think they don’t need (or, perhaps, don’t deserve?) anything. Maybe you’ve given more to one child already and plan to ‘balance things’ later. Unless you’re prepared to include a detailed accounting (and even then), think twice. The same goes for naming fiduciaries (executor, trustee, attorney-in-fact) based on perceived fairness. Choose the right person for the job, not the one who ‘should’ do it (for instance, because they’re the oldest.) And please, resist naming your only two kids as co-fiduciaries without a clear tie-breaker. Two decision-makers with no way to resolve a deadlock means one thing: court intervention. If you insist on co-equals, at least give them a mechanism to break ties (best two out of three coin flips, anyone? Rock, paper, scissors, perhaps?). #4 - Sentimentality Assuming you know what your loved ones will want, or won’t want, is a recipe for conflict. People rarely talk openly about what matters to them, and even if they say, ‘I don’t want anything,’ that may not be the whole truth. Style, space, and timing all play a role. Over-communicate rather than under-communicate. Force the conversation, even if it’s uncomfortable. It beats leaving behind a family feud over misperceived intentions. #3 - Communication Failing to involve all beneficiaries (even minimally) is a major mistake. You don’t need to give everyone a vote, but you should let them know a plan exists and where to find it. You might even consider a couple options to help arm against an undue influence claim later. Tell everyone if/when you change the plan (not just the person caring for you who you come to believe now deserves something more). Here’s one I’ve not yet seen tried: give everyone a copy and include a provision that says you conditionally give up the right to change your will and that no future changes shall be effective unless you communicate them yourself to all of your beneficiaries along with a copy of the new document(s). Confirm with those who will have roles: executor, trustee, guardian. They may not want or be able to serve. And always name backups (and backups to backups). A little foresight here prevents a lot of chaos later. #2 - Indecision Changing your plan isn’t wrong, but timing matters. Last-minute changes—especially near death or after cognitive decline—invite litigation and resentment. If you revise, communicate clearly and broadly. Unexplained changes breed hostility, even among those who benefit. Transparency is your best defense against family discord. #1 - Inertia The biggest mistake? Doing nothing. As Harvey Mackay famously said: “Failing to plan is planning to fail.” Not creating a will or other directives means you’ve chosen the default: a costly, time-consuming mess for your loved ones. Don’t let intestacy dictate your legacy. Make a plan and execute. Do it now.
December 30, 2025
Estates and Trusts
Holiday Harmony for the Sandwich Generation: Boundaries, Delegation, and Self-Care
The holidays arrive each year with that familiar blend of anticipation, nostalgia, and — if we are being honest — a fair amount of anxiety. For members of the Sandwich Generation, that pressure can feel magnified. You are balancing end-of-year school events, office deadlines, holiday parties, travel plans, gift lists, and meal planning while simultaneously managing the medical appointments, emotional needs, and household logistics of aging parents. The season that promises joy often demands more than anyone can give. In the middle of it all, I, like most people, find myself longing for the simpler holidays of childhood, when someone else did the worrying. Yet here we are, stuck in the middle, holding together the needs of multiple generations. If this is your role, you are not failing when it feels overwhelming. You are doing complex emotional and logistical work, and the holidays simply spotlight that reality. This is precisely why remembering three core principles — boundaries, delegation, and self-care — is not just helpful, but essential. These are not indulgences or luxuries, they are survival skills. Boundary-Setting: A Gift to Yourself and Everyone Else The holidays tend to activate our instinct to say “yes”: yes to hosting, yes to attending, yes to keeping every tradition alive. Sandwich Generation members feel even more pressure during the holiday season, as they often operate with already limited bandwidth. Without firm and healthy boundaries, the season can shift quickly from meaningful to unmanageable. Setting boundaries does not make you less generous or less committed to your family; it can mean the difference between sustainable and not. When you clearly identify what you can realistically handle — whether that means declining to host this year, catering instead of cooking, limiting travel, or being upfront about needing to leave an event early — you are honoring your own humanity and limitations. Boundaries also spare your loved ones the silent resentment, not-so-silent commentary, or exhaustion that builds when you push beyond your limits. If set up properly, boundaries can actually improve relationships: they create predictability, reduce friction, and allow you to remain emotionally present. Saying “no” or “not this year” is not a rejection of a person or tradition; it is an act of respect for your energy, your time, and your wellbeing. Delegation: Letting Others Step Into Their Roles Many Sandwich Generation caregivers take pride in being the one who manages everything. This “can do” attitude is essential on many days and certainly comes from a good place. Trying to do all things generally reflects a desire to protect, shepherd, and smooth the path for those who rely on you. But during the holidays, the instinct to take on everything can often become unsustainable. Delegation becomes not merely practical, but vital. And despite what many fear, delegation is not a sign that you are incapable or weak. It is a sign that you recognize the importance of shared responsibility. Whether it means asking siblings to manage a parent’s appointment, inviting older children to take over part of the holiday meal, hiring someone to help with errands, or letting a friend wrap gifts, delegation strengthens your support system. Almost equally important, delegation also allows others to feel invested and helpful: family members and friends often want to contribute but simply do not know how. When you provide concrete tasks, you offer them a pathway to meaningful participation. You are also creating space for your own rest, which ultimately benefits everyone around you. Self-Care: The Foundation That Holds It All Together Pop culture often portrays self-care during the holidays as lighting a candle as you sink into a beautifully drawn bath larger than a bedroom or escaping to a snowy holiday getaway in a picturesque New England village. And while these images reflect the perfect picture, true self-care for the Sandwich Generation often runs deeper and less ideal. Images of self-care instead should be reframed to reclaim the internal resources the season tends to drain. Self-care can be simple: scheduling a quiet hour early in the morning before anyone else wakes up, maintaining your own medical appointments rather than postponing them to accommodate others, stepping outside for a walk, closing your office door for an hour, and giving yourself permission not to attend every gathering. Most importantly, self-care is not something you earn only when everything else is done. It is a non-negotiable part of ensuring you can keep caring for the people who depend on you. Neglecting yourself does not make you more devoted; it makes you depleted. When you protect your own emotional and physical well-being, you are building the resilience the holidays demand and ensuring that you can keep going when the holiday chaos is over. Finding Your Own Pace in a Season of Expectations Being a member of the Sandwich Generation during the holidays means carrying the weight of competing needs — your desire to ensure a magical holiday season for your children and your parents’ needs for care and stability, all while trying to maintain your own sense of center. It is no small task. And yet, with boundaries, delegation, and self-care, you can consciously shape a season that honors both your family and yourself. This year, allow yourself to rewrite some of the holiday scripts. Create new traditions that fit the realities of your life now. Let go of unnecessary pressure and focus on presence instead of perfection. It is possible to protect your energy, share the load, and still create a meaningful season for multiple generations — without losing yourself in the process. The holidays will always be full, but they do not have to deplete you physically and emotionally. By embracing these three principles, permit yourself to experience the season with the steadiness, clarity, and compassion you deserve.
December 15, 2025
Estates and Trusts
A Future Worth Celebrating: Estate Planning for the New Year
As the holiday season approaches, families gather to reconnect, reflect, and prepare for the year ahead. For many households, it is one of the few times when adult children, aging parents, and extended family members are all in the same place. While the focus is rightfully on celebration, this period also presents a crucial opportunity to ensure one’s estate planning is current, coordinated, and capable of carrying out one’s wishes. It is not uncommon for many families to be experiencing events which are integral to estate planning, whether it is a sick family member, a loved one looking at long-term care options, or a new baby being welcomed into the family. In my practice, I routinely see how proper planning can prevent confusion, conflict, and unintended tax consequences down the line. The holidays offer a natural opportunity for clients to revisit these issues with clarity and intention. Why the Holiday Season Matters for Estate Planning Key Decision-Makers Are Under One Roof Modern families often live across multiple states or even countries. When everyone gathers during the holidays, clients have a rare chance to discuss practical considerations such as: Who is best suited to serve as executor or trustee Preferences regarding healthcare decisions and end-of-life care Expectations surrounding real estate, family businesses, or sentimental personal property These conversations can be sensitive, but addressing them proactively almost always leads to better outcomes and ensures that wishes are being fulfilled. Life Changes Frequently Go Unaddressed Over the course of a year, significant life events occur — marriages, divorces, births, deaths, home purchases, new accounts, or changes in financial circumstances. Outdated estate plans are one of the most common, and most avoidable, problems that families face. A holiday-season review helps ensure that: Wills and trusts reflect current intentions Powers of attorney and healthcare directives remain accurate Beneficiary designations on retirement accounts and insurance policies align with the overall plan Real estate titling is consistent with estate-planning goals Potential Pennsylvania inheritance-tax exposure is properly managed A Preventative Step Before the New Year Without fail, the beginning of the year brings emergencies that reveal the absence of planning: an unexpected death, a sudden medical event or accident, a property issue, or a dispute among family members. When documents are outdated — or nonexistent — families can find themselves navigating the court system without clarity or guidance. Encouraging clients to update their planning before year-end provides stability during periods of uncertainty. Key Documents Worth Reviewing Now A comprehensive year-end estate review should include: Last Will & Testament Revocable Living Trust (if applicable) Financial Power of Attorney Healthcare Power of Attorney and Living Will HIPAA Authorization Beneficiary designations Real estate deeds and titling Gifting strategies or year-end tax considerations For Pennsylvania and New Jersey residents, this is also a valuable time to confirm inheritance-tax implications and evaluate whether certain planning steps may reduce the overall tax burden for beneficiaries. Planning as an Act of Care Estate planning is ultimately a gift to one’s family. It reduces stress, minimizes uncertainty, and ensures that a lifetime of work is preserved and transferred in accordance with the client’s wishes. The holiday season when family, gratitude, and reflection are already front of mind offers a meaningful opportunity for clients to take this important step. A Thoughtful Reminder for Clients As clients focus on wrapping up the year, now is an ideal time to encourage them to: Review and update their estate-planning documents Consider whether their planning reflects current circumstances Schedule a consultation if their documents are outdated or incomplete An hour spent reviewing a plan today can prevent months (or years!) of confusion tomorrow.
December 8, 2025
Family Law
Trust Structures Under Fire: What High-Net-Worth Divorce Means for Advisers
What began as a high-asset marital dissolution between John and Laura Overdeck has transformed into a wide-ranging challenge to modern trust planning and the professionals who support it. The litigation now reaches beyond the parties’ marriage and calls into question long-held assumptions about the durability of “irrevocable” trusts—particularly when they are funded during the marriage with assistance from lawyers, trustees, or corporate personnel. Regardless of where the facts ultimately fall, the case is already functioning as a bellwether. It forces practitioners, wealth managers, and corporate stakeholders to confront a reality that has been developing quietly for years: in today’s financial landscape, trust structures and corporate entities are no longer insulated from matrimonial disputes merely because they were designed to be. Background According to the pleadings, Laura Overdeck alleges that billions in marital assets were transferred into a series of Wyoming trusts with assistance from Seward & Kissel and, allegedly, certain Two Sigma employees. Her proposed amended complaint adds claims for fraudulent conveyance, aiding and abetting breach of fiduciary duty, civil conspiracy, and professional negligence tied to what she asserts was a deliberate effort to “divorce-proof” assets. If the amendment is granted, the litigation expands dramatically. It becomes not just a battle over distribution, but a test of how far courts may go in scrutinizing complex trust structures created during the marriage. Why High-Net-Worth Divorce Has Escaped the Bounds of Matrimonial Court For decades, matrimonial courts were the default arena for resolving marital property issues. That model worked when most marital estates consisted of real estate, traditional investments, and business interests that were relatively easy to value. That world is gone. Modern high-net-worth estates are built from layered LLCs, private-equity, and hedge-fund interests, carried interest, offshore vehicles, and sophisticated donor-advised and trust networks. Matrimonial courts simply do not have the jurisdictional tools to penetrate these frameworks. The Limits of the Matrimonial Forum Matrimonial courts cannot: compel discovery from non-party trustees, law firms, or corporate insiders adjudicate claims for professional negligence or fraud award damages against third parties unwind complex asset-protection strategies Their jurisdiction is confined to the spouses and the property they can see. The Turn to Parallel Civil and Trust Litigation Ultra-wealthy spouses increasingly turn to civil courts because they offer: extensive document discovery depositions of advisers and corporate personnel forensic transfer analysis fraud-based claims are unavailable in matrimonial court access to internal corporate records and communications Civil litigation becomes the pressure point — often the only means to learn where assets went and who helped move them. The Unique Sensitivity of Business Interests Hedge-fund stakes, founder shares, carried interest, and private-equity interests are typically: illiquid difficult to value highly confidential nested within multiple tiers of entities When a spouse alleges that such interests were transferred into trusts during the marriage with help from insiders or advisers, courts have shown increasing willingness to probe deeply. In the Overdeck matter, even limited survival of Laura’s claims could trigger unprecedented discovery into Two Sigma’s valuations, communications, and internal planning. That level of inquiry into a prominent financial institution — emanating from of a divorce — is extraordinary. Does This Case “Upend” Trust Law? Not Exactly — But It Does Move the Needle John Overdeck argues that permitting these claims would “turn the trust and estate world on its head.” The core architecture of trust law is not in danger. Trusts funded with separate property and managed by independent fiduciaries remain secure. What is threatened is a set of assumptions that practitioners have leaned on for decades: that an irrevocable trust funded during marriage, even with marital assets, is structurally insulated from later attack. Courts have always possessed the authority to scrutinize transfers made to diminish a spouse’s property rights. They have simply exercised that authority sparingly — until now. What Could Now Be Fair Game If the proposed claims proceed, the litigation may reach: communications among trustees, counsel, and corporate personnel the timing and purpose of trust creation the source of funds used to capitalize the trusts any marital discord surrounding the transfers the role of advisers in facilitating asset migration This is precisely the scrutiny many asset-protection strategies have been designed to avoid. Likely Litigation Path if Amendment Is Allowed Significant Discovery Directed at Two Sigma Even as a non-party, Two Sigma could be compelled to produce: valuation materials communications with trust counsel documentation relating to trust funding internal compliance or governance communications For any major financial institution, that type of probing discovery is disruptive and potentially reputationally damaging. Potential Recharacterization of the Trusts A court could determine that the trusts: were funded with marital property were established to reduce the marital estate constitute fraudulent conveyances That does not rewrite trust law; it applies longstanding equitable doctrine to new financial realities. The Practical Outcome: Settlement The combination of business risk, broad discovery, and corporate exposure makes settlement the most probable resolution. But even a confidential settlement will influence future trust planning by high-net-worth families and their advisers. Why This Trend Is Accelerating in Modern High-Net-Worth Divorce Complex Assets Have Outpaced the Traditional System Marital estates today include: private-equity and hedge-fund interests multi-tiered partnerships offshore entities donor-advised funds family-office holdings extensive trust structures These assets are built for opacity. Matrimonial courts were not. Civil Courts Provide the Necessary Tools Civil litigation allows: subpoenas to third parties depositions of advisers and insiders damages theories forensic tracing document production far beyond matrimonial limits Courts Are Less Willing to Accept Trust Structures at Face Value Judges increasingly ask: Who really controls the trust Was marital money used to fund it Were professionals involved in insulating assets Was the structure created in anticipation of marital discord These questions now shape litigation strategy. The Broader Impact: A New Paradigm in High-Net-Worth Divorce The Overdeck litigation signals a systemic shift. More Aggressive Challenges to Marital-Period Trusts Courts will scrutinize: funding sources timing retained control professional involvement Heightened Exposure for Advisers Law firms, trustees, and family-office personnel may face liability for their roles in asset movement — something historically rare. More Conservative Trust Planning Expect: explicit spousal consents prenups and postnups addressing trusts avoidance of marital-funded transfers earlier and cleaner planning Greater Corporate Entanglement Corporations employing wealthy principals should anticipate subpoenas, discovery burdens, and reputational exposure. Parallel Litigation as the New Normal Matrimonial actions will increasingly run alongside: trust litigation fraudulent-transfer suits professional-negligence claims valuation disputes Conclusion This case is far larger than a single marital dispute. It sits at the crossroads of modern wealth planning, trust law, corporate governance, and matrimonial litigation. Whether Laura Overdeck’s claims ultimately prevail, her legal strategy reflects a new reality: spouses are no longer confined to matrimonial court, and courts are increasingly willing to look behind trust structures when significant marital assets may have been moved out of reach. The message for planners, trustees, and corporate advisers is unmistakable: trusts funded during a marriage with marital assets — and the professionals who touched those transfers—are not beyond judicial reach.
December 4, 2025
Estates and Trusts
Maximizing Wealth Preservation with a South Dakota Special Spousal Trust
If you are married, regardless of where you live, you should consider adding a valuable tool to your estate plan: a South Dakota Special Spousal Trust, also known as a Community Property Trust (CPT). A CPT can help couples maximize tax benefits and plan for the future. Moreover, these trusts offer excellent flexibility: they can be irrevocable or revocable and neither you nor your property need to be located in South Dakota! The Big Advantage: Step-Up in Basis One of the most compelling reasons couples use a CPT is the step-up in basis. When assets—such as stocks, real estate, or business interests—are held in this type of trust, the surviving spouse typically receives a 100% step-up in basis at the first spouse’s death. In non-community property states, the surviving spouse often receives only a 50% step-up in basis, resulting in a higher capital gains tax burden if the asset is sold during the surviving spouse’s lifetime. In most common law states, like Pennsylvania and New Jersey, property acquired during marriage is either separate or jointly owned, depending on title. If an asset is jointly owned, spouses typically receive only a partial step-up in basis at death. By contrast, under the South Dakota regime, property transferred to a CPT is treated as community property for purposes of basis step-up—leading to a 100% step-up at the first spouse’s death. Couples from common law states can opt into a community property-type system for particular assets and access the step-up benefit. Ownership and rights are defined by the trust agreement and South Dakota law rather than the law of the state in which the couple resides or where the property is located. Who Benefits Most from a South Dakota CPT? While any married couple can take advantage of a South Dakota CPT, this trust is particularly suited for couples who: Are in a long-term, stable relationship so that the trust assets will truly get the step-up at deathBecause CPTs can significantly affect how assets are handled during a divorce — and the 100% basis step-up only applies if you remain married — avoiding divorce is essential. Own property that could benefit from a 100% step-up in basis. Such property includes:Substantially appreciated assets—owned either by one or both spouses. Assets that the surviving spouse does not want to manage and may immediately want to sell. Property that is highly depreciated, has a negative basis, or is collectible. The Role of a South Dakota Trustee One or both spouses may serve as trustees of the South Dakota CPT, but the trust agreement must designate at least one qualified South Dakota trustee — either a resident individual or a trust company/bank. Bottom Line A South Dakota Special Spousal/Community Property Trust gives married couples a powerful way to reduce taxes and strengthen their estate plan. By leveraging the full step-up in basis, this trust can help minimize capital gains and create long-term certainty for your family. Working with an experienced attorney and a South Dakota trustee ensures you maximize these benefits while safeguarding your legacy.
December 1, 2025
Estates and Trusts
The Dreaded After-Discovered Will
The Estate Administration Curveball that can Change Everything The case of Zappos owner Tony Hsieh, the late billionaire who was initially believed to have died intestate, without a valid will, took an unexpected turn when an apparent original will surfaced years later, halfway around the world, under highly unusual circumstances. This development highlights the complexities that can arise when a previously unknown will appears after a period of presumed intestacy. While many of the legal and factual issues in Hsieh’s case are unique, the story provides a valuable lens for understanding what can happen when an unexpected will emerges and the broader implications for estate planning and estate administration. To understand the impact of an after-discovered will coming to light only after a probate has already begun, or even concluded, taking a quick step back may be in order. This can be equally problematic whether the case had been proceeding under the assumption of intestacy as in the Hsieh (aka Zappos) case, or under a commonly held misperception that the will was the decedent’s “last will.” Probate is the legal process of administering a deceased person’s estate. When someone dies without a will, the state steps in with its own rules — called intestacy statutes — to determine who inherits what. But if a valid will is found after the fact, things can get complicated. Similarly, the discovery of a more recent will after probate has proceeded based on a prior will (believed and understood at the time to be the latest such testamentary document of the decedent disposing of the decedent’s estate assets), raises obvious questions about the voidability of past proceedings and decision making relating thereto. Several key issues that might arise when a will surfaces after the fact include the following. Impact on ongoing probate proceedings. How, if at all, does an after-discovered will impact an ongoing probate process? If an estate is still open and being administered when a will is discovered, Virginia law allows for a significant course correction. Assuming the newly-found will is offered, and, if recognized and accepted by the court as a valid will of the deceased, admitted for probate, the terms of the new will supersede the intestacy-based administration. Because the circuit court has jurisdiction over probate matters, the will should be submitted to the circuit court in the locality where the decedent resided or held property, i.e., the same jurisdiction where an intestate administration ought to have been properly initiated in the first instance. (See Virginia Code § 64.2-443). If the estate has already been closed, reopening the probate may be necessary. Interested parties — such as heirs, beneficiaries, or the original executor — can petition the court to reopen the estate to administer the will properly. While Virginia doesn’t have a specific statute conveniently titled “reopening probate” or the like, courts generally allow it under their inherent authority when new evidence (like a valid will) emerges. Impact on a closed probate estate. How, if at all, does an after-discovered will impact any already-administered or distributed assets? If assets have already been distributed under a presumed intestacy, the discovery of a valid will could trigger efforts to try to recover and redistribute assets to the extent the will calls for an outcome other than the default intestate division. This right to a “redo” is not without limitations, however. Recognizing that it might be appropriate but difficult to near impossible to simply reverse any transactions, the general assembly saw fit to afford an aggrieved would-be beneficiary a window in which to be able to make good. For instance, in Virginia, Section 64.2-457 of the Code of Virginia provides that assets distributed under a presumed intestacy may be subject to recovery if a will is later discovered and admitted to probate. However, this recovery is limited both in scope and time. The statute generally allows for asset recovery only if the will is discovered and probated within one year of the original probate or administration. After that, asset distributions are typically deemed final, and the recipients may not be required to return the assets. In other words, whether property already transferred might be subject to being clawed back into the estate for the benefit of a devisee under a later-discovered will, will be determined by whether the after-discovered will is filed within that one-year period. See also Virginia Code Sections 64.2-456 for further details. Such a limitation is most commonly referred to as a “statute of repose.” Who’s in charge now? What happens, if anything, to prior probate procedural decisions (e.g., executor qualifications; administrator appointments; related fee awards) made based on a previously presumed or later-occurring intestacy? Some prior decisions — such as the appointment of a personal representative or the approval of accountings — may be revisited, especially if they conflict with the terms of a newly discovered will (or the impeachment of a will previously relied upon). However, Virginia courts may uphold actions taken in good faith under the original probate, particularly if the will’s existence was unknown (as opposed to known but undiscovered) and could not reasonably have been discovered. The court has discretion to issue protective orders or modify prior probate orders of the clerk, or deputy, to reflect the actual or new reality, as outlined in Section 64.2-445, which allows appeals and adjustments to probate orders by the circuit court within six months of entry by the clerk. More generally, however, the circuit court is vested with equitable authority to do what is right and just to the circumstances. If a court approved the appointment of an administrator on the presumed non-existence of a will, even after hotly-contested proceedings, only to learn later to the contrary, the court will not be compelled to abide by its prior order and shall, instead, be empowered to make whatever changes the court determines are appropriate to the newly understood situation. Just as the timely discovery of new evidence might justify vacating a prior final judgment in either civil or criminal proceedings, so too would we expect that a circuit court judge to be empowered to do what’s right, regardless of any stated rationale for the prior decision. The Bottom Line When it comes to discovery of a loved one’s estate planning documents, “better late than never” does not always hold true. Certain rights are preserved or upheld by appealing a clerk’s order admitting a will to probate within six months from entry of such an order. When it comes to reversing actions taken prior to the discovery of a valid and/or more recent will of the decedent, the one-year anniversary of a decedent’s date of death is the key differentiator. A will discovered late in the probate process can up-end the entire legal and financial structure of an estate and its administration and completely change the probate narrative. If discovered too late, it may, for all intents and purposes, not have any effect at all – insofar as the probate narrative may, by that time, have been completely and irrevocably rewritten in a manner contrary to the decedent’s intentions. After the one-year anniversary, the decedent’s testamentary intentions may very well have been rendered moot as having been “OBE,” or “overtaken by events,” to the extent that the probate proceeded in the absence of the unknown or missing will. A would-be financer or purchaser from a legal heir, devisee, or personal representative with power to sell, mortgage, or otherwise dispose of an interest in real property, should be mindful of the one-year anniversary and very wary of taking action in advance of that deadline or else risk potential divestment of whatever interest in the property they believed they were acquiring. The Hsieh (aka Zappos) case serves as a stark reminder that document safekeeping and communication about the whereabouts of important testamentary documents matter as much or more as proper planning in the first instance.
November 21, 2025
Estates and Trusts
Protecting Aging Loved Ones from Predatory Partners
As individuals age, they often face unique emotional and financial vulnerabilities that can make them susceptible to exploitation. In recent years, I have noticed a troubling uptick in cases related to one of the more concerning forms of elder abuse, which is at the hands of a predatory spouse or romantic partner. This type of elder abuse often results in a gain of undue influence over an aging individual, leading to manipulation, financial exploitation, coerced changes to estate planning documents, and, in one case, the administration of medication to compromise my elderly client. This type of exploitation is often subtle, masked by the appearance of affection or companionship, and it can have devastating legal and financial consequences for the older adult and their family. Elder exploitation by a spouse or intimate partner typically begins with efforts to isolate the older adult from family members, long-time friends, or trusted advisors. Warning signs may include sudden changes in behavior and secrecy surrounding financial matters, and can result in unexplained transfers of money or property, or the execution of new estate planning documents, beneficiary designations, or a deed transferred to favor the new partner. In many cases, the older adult may not recognize the manipulation taking place or may be reluctant to acknowledge it out of fear, embarrassment, or emotional dependency. Legal Protections and Preventive Measures Proactive legal planning remains the most effective method to protect aging loved ones from predatory relationships. Establishing a comprehensive estate plan is essential. A plan should include a durable power of attorney that appoints a trusted and financially responsible individual — other than the romantic partner — to manage financial affairs upon incapacity. A health care proxy and related HIPAA release ensure that medical decisions reflect the aging loved one’s wishes, rather than the influence of a manipulative partner. In my practice, I encourage the use of revocable living trusts, which further safeguard the individual by centralizing the management and creating a layer of oversight for those assets. Trusts can be drafted so that a trusted individual or an adult child can serve as a co-trustee with the aging loved one, ensuring that they maintain their autonomy while not being subjected to undue influence or decisions that do not benefit them. In some instances, irrevocable trusts can offer additional protection by restricting direct access to funds and preventing third parties from exerting control over assets intended for the elder’s or their family’s benefit. When marriage is contemplated, a prenuptial agreement is vital to protect an individual’s assets and family inheritances. Such agreements can define the financial boundaries of the relationship and prevent disputes or exploitation later. If marriage has already occurred, in some cases, a postnuptial agreement may still provide meaningful protection and clarify financial rights and obligations. Families should also remain vigilant regarding changes to financial advisors, brokerage houses, deeds, joint accounts, and beneficiary designations. If sudden or unexplained modifications occur, or if there is evidence of undue influence or incapacity, immediate legal action may be necessary. In severe cases, guardianship proceedings can be initiated to protect the older adult from further exploitation and to restore financial control to a court-appointed fiduciary. While the risks of exploitation can be significant, it is still critical to approach these matters with kindness and sensitivity to the elder’s autonomy and dignity. The goal of legal intervention should not be to limit the independence of your aging loved one, but to preserve it by preventing exploitation. Thoughtful legal planning involving the aging loved one will provide a structure that allows aging individuals to maintain control over their affairs while minimizing the risk of coercion or manipulation. Timing is Everything Once exploitation has occurred, legal remedies are often complex, time-sensitive, and emotionally fraught: early intervention is key. Families who notice signs of isolation, undue influence or financial abuse should consult with an experienced elder law or estate planning attorney promptly. A knowledgeable attorney can review existing documents, recommend protective legal mechanisms, and, where appropriate, initiate proceedings to safeguard the elder’s assets and welfare. Protecting aging loved ones from predatory spouses or partners requires vigilance, communication, and sound legal planning. By taking proactive steps — establishing comprehensive estate documents, creating appropriate trusts, and, when necessary, pursuing legal recourse — families can ensure that their loved ones’ financial security and personal dignity are preserved. In the end, these legal safeguards not only protect assets but also uphold the fundamental right of every individual to age with safety, with respect, and in peace of mind.
November 21, 2025
Estates and Trusts
Spotlight on Intestacy: Liam Payne and the Importance of Planning Ahead
When One Direction's 31-year-old band member, Liam Payne, fell from an Argentinian hotel balcony to his tragic death in October 2024, he left his then 8-year-old son, Bear, fatherless. However, as the sole heir to his father's fortune, the young grade-schooler had instantly and unwittingly become the playground's "most eligible bachelor." Fortunately, it seems, Bear's "mum," Girls Aloud singer/actress Cheryl Tweedy, has, together with Payne's former music lawyer, successfully secured court-appointed co-administrative control over Payne's estate and with it, Bear’s inheritance. For her part, although Tweedy has remained out of the public spotlight for most of the past year since Payne's untimely death, Tweedy has publicly been quoted as intending to block her son's access to the money until he turns 25 and possibly doling out portions of it in the years thereafter. These are commonly used provisions in trusts intended to protect minors and young adults from themselves. Tweedy is credited with recognizing that unfettered access to Bear’s inherited wealth any earlier would likely be problematic for him in numerous ways, including making him a target for unscrupulous sycophants or blowing it all on any combination of vices (the whole "male frontal lobe not fully closing 'til age 25" reality). While Bear is not expected to want for anything, Tweedy is generally credited with wanting Bear to grow up appreciating the "value of a dollar" (or an English pound, in this case). Commendable, if only due to its apparent rarity these days, for a celebrity to espouse such a grounded outlook. Brava, Ms. Tweedy. Brava. But, if it were truly this easy, why do any estate planning at all? Even assuming the best of intentions of a surviving parent, how could lack of planning, and particularly lack of a trust over one's assets, go completely sideways? Using young Bear Payne’s situation as a guide, let us begin to count the ways: Probate and Taxes. Intestacy necessitates probate, which can be a costly, time-sucking hassle, and delay. Also, depending on the amounts involved and the jurisdiction, the resulting tax consequences could be substantial, especially compared to a potentially tax-free disposition had a simple trust transfer been documented while Payne was alive. Court-appointed estate administrator(s). You cannot presume the person or people you would want or expect to be in charge will actually be appointed by the court. It is not a foregone conclusion that anyone, in particular, will be appointed. In any event, unscrupulous relatives, "friends," and/or advisors may tie things up in costly legal proceedings, vying for access and control (and the enticement of a not-insignificant paycheck for their services)! No creditor protection. Without the typical spendthrift protections of a trust, creditors of Bear will be able to reach the inheritance assets even if Bear’s mum has withheld the funds from Bear to try to protect Bear from himself. Bear the heir. Bear, himself, is empowered to insist on distributions as soon as he comes of age. As if a teenager needed any other excuse to seek early emancipation! Unless a formal guardianship or conservatorship is imposed (for reasons unrelated to his inheritance rights), Bear will be entitled to insist on receiving all of it, regardless of what his mum thinks is best for him at that point. Lest one jump too quickly to buy into the guardianship/conservatorship option, I caution one to look no further than the Brittany Spears saga to appreciate why this is not necessarily the way to go. Co-fiduciary deadlock. For now, at least, there have been no public reports of any disagreement between the co-fiduciaries. As the ongoing litigation between Jimmy Buffett’s co-fiduciaries reflects, even hand-picked equals can find themselves deadlocked. The single-most important takeaway from Liam Payne’s situation is that it is never too early to plan. My first boss, a former Army flag officer, counseled me to always have a back-up plan in case one under our “command” was “hit by a bus” and didn’t make it into work (I had just been promoted, and the bookkeeper and payroll manager reported to me). In the estate planning context, lack of planning means leaving matters to chance and risking both your loved ones and the wealth you hope to leave behind for them. Refusing to address end-of-life decisions can be a very costly choice. And make no mistake, not deciding is still deciding. As the classic rock line goes: “If you choose not to decide, you still have made a choice.” (Rush, Freewill, 1980). Cheryl 'will block Bear from Liam Payne's inheritance' until he reaches major milestone, Metro.co.uk
October 30, 2025
Estates and Trusts
The Legal Playbook for Athletes Crossing Borders
The 2025-2026 NBA season started with a bang last Tuesday night. It is reported that 135 international players from 43 countries are on the court this season. When an athlete leaves their home country to pursue a professional or collegiate career in the United States, the transition involves far more than training schedules, new teammates, and different coaching styles. It is also a major legal and financial shift. Immigration status, contract terms, taxes, and estate planning all come into play — often at once. Without the proper legal documents in place, even the most talented athlete can find their career and income at risk. The first and most fundamental step is securing the right visa and immigration documentation. Most international athletes arrive under a P-1 visa, for those internationally recognized athletes competing professionally, or an O-1 visa for athletes who demonstrate extraordinary ability in their sport. Collegiate athletes often enter the U.S. on an F-1 student visa. It’s critical that the visa category matches the athlete’s intended activities, whether training, competition, or endorsement work and that both the athlete and the sponsoring organization (professional team or university) comply with the visa’s terms. Working outside the scope of a visa, such as signing sponsorships or promotional deals without proper authorization, can lead to serious tax consequences and even more dire immigration consequences, which could jeopardize the athlete’s future entry into the country. According to Michael Freestone, Immigration Attorney and Principal at Offit Kurman, “For student athletes, the evolving rules around NIL compensation add another layer of complexity. International students on F-1 visas are generally prohibited from earning income outside authorized employment, meaning many cannot legally profit from NIL activities while in the U.S. Although F-1 students can earn “passive” income, the legal grey area with NIL activities makes such income problematic and could jeopardize the student’s status. Some athletes are exploring creative solutions, such as establishing businesses in their home countries or deferring income until after graduation, but these strategies should always be reviewed by an attorney experienced in both immigration, tax and contract law to avoid inadvertent violations.” Tax compliance often catches international athletes off guard. The U.S. tax system is complex, even for citizens, and foreign athletes are often surprised to learn they may owe taxes in both the U.S. and their home country. To avoid double taxation and other pitfalls, every athlete earning income in the U.S. should consult a tax professional familiar with cross-border income and endorsement deals. Proper withholding and filing documentation are essential to prevent crushing surprises at the end of the season. Beyond taxes, every international athlete must consider basic estate and incapacity planning. A durable power of attorney allows a trusted person to manage financial or legal affairs if the athlete is abroad or incapacitated. A health care proxy ensures that someone can make medical decisions in an emergency. These documents are often overlooked until a crisis strikes, but they help prevent confusion and protect the athlete’s interests during critical and unexpected moments. Estate planning itself is another critical piece of the puzzle. Even young athletes, particularly those signing lucrative contracts or endorsement deals based on their Name Image and Likeness (NIL) rights, can accumulate substantial assets quickly. A trust can make sure those assets are managed and distributed according to their wishes. For athletes with family members abroad, these documents also help avoid international probate complications and unnecessary tax burdens. Insurance coverage deserves equal attention. Health insurance is essential, but athletes should also explore disability insurance to protect against career-ending injuries and liability insurance to cover potential risks from public appearances or endorsement deals. Life insurance can also provide long-term planning options when the athlete’s professional sports career is long over. For student athletes, the evolving rules around NIL compensation add another layer of complexity. International students on F-1 visas are generally prohibited from earning income outside authorized employment, meaning many cannot legally profit from NIL activities while in the U.S. Crossing borders to compete in the U.S. can be a career-defining opportunity, but it also requires a careful understanding of the legal landscape. From visas to trusts, international athletes benefit from assembling a strong team off the field — an immigration lawyer, a tax advisor, an insurance professional, and an estate planning attorney who understands the unique intersection of sports, law, and global mobility. A little preparation now can safeguard a lifetime of achievement later.
October 27, 2025
Estates and Trusts
Is Your Will Valid After You Move? How Relocation Affects Your Estate Plan
According to a recent study conducted by Consumer Affairs, the average American moves 11.7 times in their lifetime. While the majority of these moves occur within the same county, or city, millions of Americans move every year from one state to another. When a client executes a will and subsequently moves to another state, an obvious concern arises: Will their will, drafted in one state, be admissible to probate in their new state of residence? The short answer is that most states will admit a will to probate that was validly executed under the laws of another state based on the Full Faith and Credit Clause of the U.S. Constitution and basic principles of comity. New York, in fact, has a statute directly on point; EPTL § 3-5.1 provides that a will executed outside the state is valid within the state if it is in writing, signed by the testator, and otherwise executed in compliance with the laws of New York, the jurisdiction in which the will was executed, or the jurisdiction in which the testator was domiciled, either at the time of execution or at the time of death. New Jersey similarly provides, pursuant to N.J.S.A. § 3B:3-9, that a will executed in compliance with New Jersey law is valid within the state regardless of where it was executed. N.J.S.A. § 3B:3-9 further provides that a will that is not executed in compliance with New Jersey law is nevertheless valid if it is executed in compliance with the state or country where the will was executed, or the state or country where the decedent was residing at the time of the will’s execution or at the time of the decedent’s death. However, there are significant differences in the probate laws of each state that can make executing a new will a prudent decision. Choice of Executor Many states only have minimal requirements for who may serve as executor of an estate. For example, New Jersey law provides that so long as an individual is 18 years old and competent, they may serve as executor of a decedent’s estate. In contrast, New York law provides, pursuant to SCPA § 707, that, a non-citizen, non-domiciliary may not serve solely as executor of an estate; a domiciliary co-executor must be appointed. Further, a person who does not possess the qualifications required of a fiduciary by reason of substance abuse, dishonesty, improvidence, want of understanding, or who is otherwise unfit, is also disqualified from serving as executor. The court may, in its discretion, also disqualify an executor who is illiterate or who has been convicted of a felony. Inheritance Tax An inheritance tax is levied on the assets received by the beneficiary of an estate. This is in contrast to an estate tax, which taxes the entire corpus of the decedent’s estate regardless of the ultimate beneficiaries. While the vast majority of states do not have a state inheritance tax, several states still maintain an inheritance tax, including New Jersey. The inheritance tax applies to bequests to relatives, including brothers, sisters, aunts, uncles, nieces, nephews, and distant relatives, as well as non-related individuals. Suppose a domiciliary of Florida (which does not have an inheritance tax) wishes to provide a bequest to their longtime romantic partner. If the bequest is made under the client’s will and they later move to a state with an inheritance tax, the client may inadvertently subject their romantic partner to a hefty inheritance tax. Thoughtful planning could be employed to avoid this result. For example, rather than leave the bequest under their will, the client may make the same gift during their lifetime. State-Level Estate Tax Another potential concern when changing domiciles is state-level estate taxes. In 2025, the federal estate tax threshold for individuals is $13.99 million. As such, very few individuals have federal estate tax issues. While the majority of states do not impose a state estate tax, a significant number of states still maintain an estate tax. Overwhelmingly, the state estate tax threshold is significantly lower than the federal estate tax threshold. For example, a will drafted in Oregon will likely have been drafted with the $1 million estate tax exemption threshold in mind. As such, married clients with relatively modest assets may employ an estate planning technique called a “credit shelter trust,” a trust designed to fully use the decedent’s remaining estate tax exemption amount at the time of their death. If the client later moves to New York, where the state estate tax threshold is currently $7,160,000, funding a credit shelter trust may no longer be necessary or even advisable. The trustees of the credit shelter trust, typically the surviving spouse and one or more independent trustees, will likely be obligated to administer a trust that may not serve a functional purpose, all the while incurring unnecessary administrative expenses. Statutory Right of Election Another potential concern is that a will drafted based on the spousal rights of one state may lead to unintended consequences if the client later changes their domicile. For example, many states permit the surviving spouse to “elect” against a decedent’s will, taking an inheritance based on a statutory formula as opposed to what is provided to them under the will. The laws of each state vary significantly in how the elective share of the surviving spouse is determined. A client may prefer to transfer the maximum amount of their assets possible to their children or other beneficiaries at their death, especially if their spouse has significant personal assets or if they are in a second marriage and have different beneficiaries than their spouse. As such, they may provide directions that their spouse is only to receive their elective share. If the client later changes their domicile, they may inadvertently provide significantly more (or less) to their surviving spouse than they may have intended, inviting conflict, ambiguity, and potentially subverting the client’s testamentary intent. Conclusion If a client moves from one state to another, they should strongly consider consulting with local counsel. This ensures that their will is valid under the new jurisdiction and continues to align with their estate planning goals. Even if the client’s will is valid and does not need to be re-executed, it is nevertheless essential that advanced directives such as health care proxies, powers of attorney, and appointments of standby guardianship are updated when moving to a different jurisdiction, as many states have statutory forms, and out-of-state forms may be rejected by health care providers and financial agencies.
October 21, 2025
Estates and Trusts
More Than a Game:Why Young Athletes Need Estate Planning for Their NIL Assets
When college athletes gained the right to profit from their name, image, and likeness (“NIL”), a new era of opportunity began. Take, for example, the University of Texas’s quarterback, Arch Manning, with a deal estimated to be worth $5M; Miami’s Carson Beck, and Ohio’s Jeremiah Smith’s deals are reported to be north of $4M. Endorsement deals, social media sponsorships, appearances, and personal brands have turned student-athletes into entrepreneurs before they have even stepped onto a professional court or field. With these new opportunities come adult-sized responsibilities, and one of the most overlooked is estate planning. Estate planning usually conjures images of elderly retirees or high-net-worth professionals meeting with their equally elderly lawyers. For young athletes making real money from NIL deals, estate planning has become a critical part of protecting what they have built, planning for what comes next, and hopefully, building generational wealth. NIL Rights Are Real Assets A young athlete’s NIL is an intangible but very real property right. The value of your name, image, and likeness can outlast your playing career and even your lifetime. A player’s legacy lives on through merchandise, video games, brand partnerships – to name a few. Without an estate plan, those rights and the income they generate may not be handled according to your wishes if something unexpected happens. Engaging an estate planning lawyer to create a corporate entity like an LLC and then transferring that corporate entity into a trust ensures your NIL assets are managed and protected during your life and transferred to the people or causes you care about when you die - not left to be sorted out in court. Protecting Family and Future Generations Many athletes sign their first contracts by age 18. Despite their young age, it is not uncommon for athletes earning a salary from NIL to already serve as a financial resource to other family members, consider a life after their playing days by investing in businesses, and look for opportunities to give back to the communities that helped them achieve their success in the first place. Each of these reasons amplifies the need for a proper estate plan and the legal infrastructure to ensure that those commitments are carried forward and honored upon injury and death. By establishing an LLC and a trust, you can manage and protect your NIL earnings during your life, manage how those funds are used after your death, and, in some circumstances, minimize taxes. The infrastructure of a trust that holds your LLC that owns your NIL rights allows the you to appoint a trusted adult or a professional fiduciary to help manage the assets responsibly while you focus on your education and athletic career. Building a Foundation for Long-Term Wealth Estate planning not only plans for what happens after you are gone, it also maximizes the growth and preserves wealth while you are here. By thinking strategically, setting up an LLC and a trust to hold your NIL assets, you may also gain tax advantages, protect yourself from lawsuits, and prepare for life after sports. Proper planning can mean the difference between athletes who simply make money and those athletes who build a legacy. Estate planning plays an integral part in ensuring that your brand is a business, and your future is an investment. Modeling Financial Maturity, Responsibility, and Control For young athletes, especially those in the public eye, planning ahead sets an example. It shows future sponsors, teammates, and fans that you are serious about your career, your money, and your name and your legacy. In the same way you train your body and mind, you can also train your financial and legal muscles. Estate planning is part of that discipline — it is another way to take control of your story. Your NIL is more than a paycheck — it is part of your personal legacy. Whether you are signing your first deal or building a brand that will last for decades, estate planning ensures that your hard work benefits you and the people and causes you care about most. Young athletes are learning that financial power comes with legal responsibility. Getting an estate plan in place now is not just smart—it is part of playing the long game.
October 17, 2025
Estates and Trusts
Protect Your Loved Ones With a Spendthrift Trust
Providing for someone you care about can be one of life’s great challenges. You may have a spouse or partner who depends on you financially. Or a relative with money problems who sometimes turns to you for help. Perhaps you are fortunate enough to have children and want to give them every possible advantage in life. Whoever you care for, your life’s work may well focus on supporting them. If someone does rely on you, one of the hardest questions to consider is what they would do without you. You might be able to provide for the person financially by leaving them an inheritance under your will or making them the beneficiary of your life insurance. But money can be squandered, and it may need to be protected from bill collectors, unscrupulous “friends,” and possibly even the loved one himself. One of the most effective ways to avoid these hazards is to create a “spendthrift trust.” Whether you are leaving cash, securities, real estate, or the proceeds of an insurance policy, the assets will be managed by one person, called the “trustee,” for the benefit of your loved one, the “beneficiary.” The trust can be set up to disburse money in a controlled manner, ensuring that your loved one is well provided for. The “spendthrift” provisions protect the trust by preventing a creditor from “attaching” the assets — essentially, placing a lien on the trust to satisfy an unpaid debt. Once a distribution is made to the beneficiary, however, the money does become vulnerable to the claims of creditors. The best approach, then, is often to give the trustee the discretion to make or withhold payments as appropriate to help the beneficiary while protecting the trust principal. For a child, you might allow expenses related to health care, education, and general support to be payable in the trustee’s discretion. These could include the cost of health insurance, braces, a private tutor, tuition, the down payment on a house, or the cost of a wedding. You could also include mandatory distributions, such as regular disbursements of any income the trust generates, as well as payments of principal when the beneficiary reaches certain life milestones, such as completing college or reaching a particular age. Under a trust you establish for an irresponsible relative, the trustee might need broader discretion. In this case, perhaps only those expenses the trustee considered to be in the relative’s best interest could be paid for from the trust assets. The trustee could also be required to take into account other resources that might be available to the beneficiary. For example, if the beneficiary makes a reasonable income, the trustee could withhold any distributions, preserving the trust’s assets for things like a financial emergency or eventual retirement. The assets that continued to be held in trust would then lie beyond the reach of most creditors. Another benefit of a spendthrift trust is that it can protect the beneficiary from himself. Most spendthrift clauses prevent the beneficiary from using the trust as collateral for a loan or assigning his interest in the trust to another person. In addition, the trustee can make distributions by paying the beneficiary’s tuition, medical bills, or other expenses directly to the provider, rather than having the money deposited into the beneficiary’s personal bank account. By circumventing the beneficiary himself, these distributions will also generally not be susceptible to creditor claims. The commitment to take care of someone you love doesn’t end when you’re gone. Talk to an experienced estates and trusts attorney to find out whether a spendthrift trust should be part of your estate plan.
October 17, 2025
Estates and Trusts
Who Gets the Sofa? Dividing Up Your Stuff Without Drama
Benjamin Franklin famously said that the only two certainties in life are death and taxes. A close third would be family squabbles over who gets the personal property when someone dies. Even a well-thought-out estate plan may leave room for disagreements. For example, if Mom leaves everything to her children “in equal shares,” assets like investment accounts and real estate can simply be liquidated and divided up. But when it comes to household items like photos and family heirlooms, each item is unique — and sometimes holds deep sentimental value. What’s the value of the old sofa where Dad used to read to the kids versus the cake plate Mom used to pull out for each child’s birthday? These can be difficult questions to grapple with, especially in the emotionally fraught time after a profound loss. With a little extra planning, however, you can help head off a family row over who gets what. The first step is to choose a personal representative (“executor”) with experience in settling estates and distributing personal property. In many cases, a lawyer or other third party who is not a family member can be the best choice. This person has no personal stake in the matter and can remain above the fray of family politics. Regardless of whom you appoint, your personal representative can choose from several methods of administering your tangible property. The beneficiaries can draw numbers and then, in the order of the numbers they chose, take turns picking one item each from the estate until everything has been selected. A similar approach is to have the children take turns choosing an item, starting with the oldest child and working down to the youngest. If the beneficiaries get along well, each can simply be given a pad of Post-its in a different color to place on the items he or she wants. If more than one sticker appears on an item, the beneficiaries who placed them can negotiate who should get the piece, perhaps in exchange for allowing the other person to receive another item that is in dispute. Having all the beneficiaries agree to the process beforehand is the best first step. There may still be grumblings among those who don’t get something they wanted, but at least they can agree that the process was fair. An even better approach is to say who gets what before anyone dies. Specific bequests of tangible personal property can be included in your will. Naming the individual who is to receive an item, whether it’s a laptop, a ginger jar, or an Ikea sofa, will help keep disputes to a minimum. A “catchall” clause can state that any property not specifically named is to be sold, with the proceeds of the sale to become part of the remainder of your estate. Alternatively, many wills allow the testator to write a memo that says that certain items go to certain people. It’s important to verify first that the will allows for such a memo, and the memo should reference the section of the will that does this. The benefit of writing a memo is that it doesn’t need to involve a lawyer or notary. If you decide to sell an item on eBay, or if the relative who was supposed to receive it has fallen out of favor, you can simply tear up the memo and write a new one. A well-drafted will should also allow for the estate to pay for the cost of insuring and shipping any items that go to beneficiaries who live out of the area. “A cynic,” said Oscar Wilde, is someone who knows “the price of everything, and the value of nothing.” Accounting for the sentimental value of your personal property can help prevent an outbreak of cynicism after you are gone. If you’re not sure where to start, call an estates and trusts attorney for help.
September 29, 2025
Estates and Trusts
Planning for Responsible Inheritance: What "Brewster’s Millions" Can Teach Us About Estate Planning
The plot of the 1985 comedy “Brewster’s Millions,” starring Richard Pryor and John Candy, centers around Montgomery Brewster, a minor league baseball player who stands to inherit $300 million from a previously unknown great-uncle. The catch? To receive his inheritance, he must spend $30 million[1] within 30 days without receiving any assets in return, and without merely giving away all the money. If Brewster does not spend the entire $30 million in 30 days, he will inherit nothing. Hijinks ensue. At its core, the movie is a satire on capitalism and consumerism, playing on the common fantasy of inheriting a life-changing fortune from a wealthy relative. However, the film also explores a common concern that many clients have when making their estate plans. They are worried that their beneficiaries will squander their life’s savings and exhaust their inheritance on luxury items or speculative investments. These clients consider how they can ensure that their beneficiaries will responsibly manage a significant inheritance. Brewster’s great-uncle explains that his contest is not an arbitrary one. He wishes to teach Brewster a lesson, to hate spending money so much that he will learn to manage his inheritance wisely. By forcing Brewster to exhaust a fortune, he teaches Brewster to think very carefully about how he spends his money, making strategic and methodical decisions in pursuit of a singular goal. While the movie’s plot is exaggerated for comedic effect, in reality, there are several well-established estate planning techniques a client may consider to instill fiscal responsibility in a beneficiary without going to such extremes. Staggered Distributions and Trustee Discretion It is common sense that a client would not wish for a minor beneficiary to receive an outright inheritance, and virtually all wills and trusts will provide that a minor’s share will be held in trust until a milestone birthday. This ensures that a beneficiary will not receive their inheritance outright until they attain a mature age. To further mitigate the risk of a beneficiary squandering their inheritance, a client may stagger distributions over a significant period of time. For example, the client may direct that the beneficiary’s inheritance be held in trust until the beneficiary turns 25, at which time one-third of the trust assets will be distributed outright. A second distribution of one-half of the assets may be made at 30, with the assets becoming fully distributable upon the beneficiary's attainment of age 35. This approach enables beneficiaries to mature into their inheritance gradually. While the assets remain in trust, distributions may still be made by an independent trustee pursuant to an ascertainable standard, such as for the beneficiary’s health, education, maintenance and support (the “HEMS” standard). The trustee is empowered to decide if, when, and how much to distribute to the beneficiary. If, like Monty Brewster, the beneficiary appears to be recklessly spending their inheritance, the trustee can act as a stopgap and cease making distributions. Incentives Another common strategy is to incentivize the beneficiary to achieve specific goals to receive distributions. By dangling a “carrot” in front of the beneficiary, the client can guide and influence their beneficiary’s personal development and early career path. For example, the client may direct that the beneficiary will only receive a distribution upon obtaining a bachelor’s degree; if the beneficiary does not obtain a bachelor’s degree, their inheritance could be withheld for a longer period or even redirected to a charity. A client might further direct that distributions be made to the beneficiary for every year that they maintain full-time employment. A client could also include directions requiring a trustee to make distributions provided that they are used toward some productive goal, such as the purchase of a home. The client may encourage a beneficiary to keep a family home or vacation house in the family by providing an annual stipend for every year that the premises are maintained in good order. If the client is uncomfortable with such rigid, dead-hand influence over their beneficiary’s actions, they may still consider imparting some non-binding guidance or wisdom. For example, a client may express a preference for their beneficiary to use a portion of their inheritance for charitable purposes or to support a worthy cause. A client might also suggest, but not require, that their beneficiary employs a trusted family financial manager or accountant to assist them with managing their inheritance. Designating the Beneficiary as a Co-Trustee Another great strategy to foster fiscal responsibility is to name the beneficiary as the co-trustee of their trust fund until it is fully distributable. The client will then name a trusted individual or financial institution to serve as co-trustee together with the beneficiary. The beneficiary may be permitted to make distributions pursuant to the HEMS standard, but would not be permitted to participate in making discretionary distributions. This strategy provides greater flexibility and management over the beneficiary’s inheritance and the timing of distributions, while allowing the beneficiary the opportunity to manage their funds under the guidance and mentorship of a more experienced party. This may be especially valuable when the beneficiary has had little to no financial education or experience managing large sums of money. Conclusion Estate planning is much more than merely transferring assets; it is about preserving the client’s values and ensuring appropriate stewardship of the assets they leave upon their death. Estate planners have a variety of techniques and tools that can be employed to protect beneficiaries from themselves, oftentimes used in conjunction to maximize their effectiveness. The key is thoughtful and deliberate planning, exploring with the client the myriad of methods that can be used to achieve their goals and ensure preservation of their legacy. [1] Adjusted for inflation, this $30 million bequest would be approximately $90 million in today’s dollars.
September 18, 2025
Estates and Trusts
Trust Issues: Did the Clippers’ Leonard's Aspiration Deal Skirt the NBA Salary Cap?
As a trust and estates attorney for professional athletes, I was shocked when news broke that fintech start-up Aspiration owed the LA Clippers small forward, Kawhi Leonard’s personal LLC millions of dollars heading into its bankruptcy. At first glance, it sounded like a straightforward endorsement dispute. However, buried in the otherwise mundane bankruptcy filings was a “companion trust,” another name for an LLC, one that I have drafted for clients, but which has certainly raised some questions. The biggest question of all was whether the LLC was just a conduit for the Clippers’ clumsy attempt to boost Leonard’s income outside the NBA’s salary cap? The Players and the Paperwork Aspiration was founded as a banking platform invested heavily in by Clippers owner, Steve Ballmer. Leonard, a talented 10-year veteran, was already paid well by the Clippers on a max contract with the team. Then in 2022, he signed a four-year, $28 million “endorsement” deal through his personal limited liability company called KL2 Aspire. According to bankruptcy records, a “companion trust,” namely Leonard’s personal LLC, was set up to receive payments from Aspiration. That trust reportedly included a clause voiding the deal made with Leonard and any future payments if Leonard left [1]the Clippers. It should be noted that I draft LLCs and trusts for players all of the time; both can be an integral part of a properly drafted estate plan. Athletes, like all my clients, use trusts and LLCs for probate avoidance, creditor protection, privacy, and tax efficiency. In Leonard’s case, it seems that the LLC was instead drafted to function as a private channel to funnel money received from a company partly funded by the Clippers’ owner into a vehicle controlled by Leonard. The contract then tied the payments specifically to Leonard’s role with the Clippers[2]. Why It Matters Under NBA Rules The NBA’s collective bargaining agreement forbids “salary-cap circumvention”: a team is prohibited from channeling extra compensation to a player under the guise of a third-party deal. The use of a trust or an LLC to marshal assets or income does not change that rule. If the pay by a third party is well above market value for actual promotional work expected of the athlete, or contingent upon staying with the team, it still fits the bill as “compensation” and therefore a violation. It seems there is no evidence that Leonard performed any promotional duties that one would expect of a professional athlete paid millions of dollars. According to podcast host and journalist Pablo Torre, former Aspiration employees have said the marketing component was minimal. Despite the lack of service provided by Leonard, so far, the Clippers and Ballmer have denied any involvement with the generous arrangement. However, the combination of Ballmer’s hefty investment, reportedly in the tens of millions, the team-service clause, and the LLC’s transfers, provides the NBA with plenty to investigate. To be clear, the question is not whether the use of LLCs and trusts to hold players’ assets, or even income, is legal—they are—but whether this one was used as a poorly drafted device to mask Leonard’s compensation as an end-run around the cap rules. If investigators find that the LLC collected “endorsement” distributions meant to keep Leonard in Los Angeles playing for the Clippers, the repercussions will be steep, resulting in hefty fines, loss of draft picks, or perhaps even voided contracts. Until the league finishes its review, the Aspiration deal and Leonard’s LLC remain a cautionary tale to all in the professional sports world and their lawyers. Estate-planning tools like LLCs and trusts are perfectly legitimate and appropriate, but when the use of these documents intersects with team ownership and conditional contracts, these documents may look less like tools in a properly drafted estate plan and more like an end-run around the salary cap. [1] Report - Kawhi Leonard paid after Clippers partner's investment - ESPN [2] Kawhi Leonard situation explained as NBA investigates Clippers
September 18, 2025
Estates and Trusts
More Than Money: Planning for Jewelry, China, and Sentimental Belongings
When most people think about estate planning, their minds often go straight to the big-ticket items: the family home, retirement accounts, life insurance, and investments. In reality, it is almost always the personal belongings—jewelry, family heirlooms, artwork, collections, and sentimental items—that cause the most conflict among loved ones after someone passes away. If anyone followed the news surrounding the highly contested estates of Robin Williams, Aretha Franklin, or Casey Kasem, most of the strife related to the decedent’s personal property and how it should be distributed. The days of itemizing every item that you own in your Will are gone; nonetheless, it is still vital to thoughtfully address personal property in your estate plan. A well-drafted plan ensures that your wishes are clear, disputes are prevented, and your loved ones are provided guidance during a time when tensions often run high. Why Personal Belongings Matter in Estate Planning Personal belongings often symbolize a connection to the person who died or even to an entire family legacy. While these items may not always have a significant monetary value, they often carry deep sentimental significance. Who inherits your grandmother’s wedding ring, your father’s guitar, or the family photo albums may matter more than who receives a brokerage account. Unfortunately, without clear instructions, these items can spark tension, disagreements, and litigation. How New York Law Treats Personal Property Under New York law, your personal belongings (referred to as “tangible personal property”) are part of your estate, just like your financial accounts and real estate. Unless you provide specific instructions in your Last Will and Testament, tangible personal property will be distributed under the general terms of your Will. If you do not have a Will or another estate planning document, those items are then distributed pursuant to New York’s intestacy rules. That means: If you simply leave “all of my tangible personal property” to a beneficiary, the beneficiary is entitled to keep all of it or decide how to divide or distribute those items to others If you leave the distribution to the discretion of the executor, then the executor can distribute it as equitably as possible to your beneficiaries – no easy feat If there’s no Will, New York’s intestacy laws determine distribution, which may not reflect your wishes and can lead to further discord Using a Separate Personal Property Memorandum One estate planning tool used in many states is a personal property memorandum (sometimes called a “memorandum of personal property”). This is a separate list where you detail who should receive specific items, such as a watch, artwork, or family china. In some states, these memorandums are legally binding if referenced in the Will. In New York, however, the law does not automatically recognize a memorandum as enforceable unless strict requirements are met. That means: It is recommended that you instead list items directly in your Will, which can make updating the list more cumbersome since it requires executing a new Will or codicil in New York Alternatively, you can create a revocable trust, which permits a “pour-over” bequest in your Will to a trust. The trust must be executed and acknowledged by the parties, prior to or contemporaneously with the execution of the Will, and the trust must be identified in the Will. Practical Tips for New Yorkers Be specific in your Will. If you know who should inherit a particular item, name the person and the item directly in your Will. Work with your attorney on a memorandum. Ask your estate planning attorney if incorporating a personal property memorandum into your Will makes sense for you. Keep the list updated. Life changes and so do dispositions of your belongings. Review your instructions periodically. Communicate with your loved ones. Talking about sentimental items in advance can help avoid surprises or conflicts later. Don’t overlook digital property. Photos, social media accounts, and digital collections are increasingly valuable and should be addressed in your estate plan as well. Thoughtfully considering your personal belongings in your estate plan is not just about protecting financial value, it is about protecting relationships and honoring memories. By thoughtfully planning for your tangible personal property, you will prevent disputes, provide clarity, and ensure that the items that matter most are passed on with intention. If you live in New York and are updating or creating your estate plan, be sure to discuss with your attorney the best way to handle your personal belongings. A little foresight can bring a lot of peace of mind.
September 15, 2025
Estates and Trusts
Marriage in the Balance: Safeguarding Rights for Same-Sex Couples
The U.S. Supreme Court has been asked to overturn Obergefell v. Hodges, the landmark 2015 decision that legalized same-sex marriage nationwide. Whether the Court revisits the case now or in the future, the right to same-sex marriage appears less secure than it has in years. For same-sex couples, especially those in states where legal protections are weaker, this development is a call to action. Although several legal safeguards would remain in place, a reversal of Obergefell could create serious legal and personal complications for many families. What If Obergefell Is Overturned? If the Supreme Court strikes down Obergefell, the constitutional right to same-sex marriage would no longer apply. Same-sex marriage would not immediately become illegal, but the right to marry someone of the same sex would hinge on individual state laws — much as it did before 2015. This about-face would likely lead to a patchwork of marriage laws, under which same-sex couples could marry in some states but not in others. States that had bans against same-sex marriage before Obergefell could begin enforcing them once again or could reimplement bans that were repealed in the decade after the Court had declared same-sex marriage a constitutional right. Some Protections Would Remain Even without Obergefell, several important legal protections would continue to offer support for same-sex couples, though none is as comprehensive or stable as a constitutional right. Respect for Marriage Act Passed by Congress in 2022, the Respect for Marriage Act is a federal law that requires all states to recognize same-sex marriages lawfully performed in other states. In other words, if a couple gets married in a state where same-sex marriage remains legal, their home state would still have to recognize that marriage, even if the state stopped issuing licenses itself. But the Respect for Marriage Act does not require any state to allow same-sex couples to marry within its borders. It provides important recognition but not universal access. State Laws That Support Marriage Equality Some states took independent action to legalize same-sex marriage through legislation, constitutional amendments, or ballot referendums. In these states, marriage equality would remain intact even if Obergefell were overturned. Many other states still have pre-2015 bans on same-sex marriage written into law. Those bans are currently unenforceable under Obergefell, but they could be revived if the precedent is reversed. Existing Marriages Likely to Be Upheld Most legal experts agree that existing same-sex marriages would remain valid, under the legal principle that the government generally cannot invalidate a lawful marriage. Still, uncertainty could arise in areas like adoption, parental rights, inheritance, and medical decision-making, especially in states that chose to restrict marriage rights in a post-Obergefell era. What Same-Sex Couples Can Do Now Regardless of what the Court ultimately decides, couples can take proactive steps to protect their rights and relationships. Consider Getting Married If you’re in a committed same-sex relationship, consider marrying before the law changes. Tying the knot now could help preserve important legal protections, especially if the right to get married is eventually rescinded. Marriage provides many important benefits, including joint-ownership and survivorship rights, tax advantages, healthcare decision-making authority, inheritance protections, and parental presumptions. These rights could be lost in states that move to restrict marriage equality. Put Legal Safeguards in Place Whether they are married or not, all couples should have the following legal documents in place to protect themselves and their families: Wills ensure that your partner inherits your assets and that your final wishes are clearly stated. Durable Powers of Attorney allow your partner to manage your finances if you become incapacitated. Advance Medical Directives authorize your partner to make healthcare decisions on your behalf and outline your medical preferences. These documents can provide peace of mind and legal clarity in the event of illness, incapacity, or death, especially if your marital status is ever questioned or unrecognized. Looking Ahead Even if marriage equality remains intact for now, the issue could return to the Supreme Court in the future. Under Court procedures, only four justices are needed to accept a case for review, and challenges to Obergefell are likely to persist. Whatever the future holds, same-sex couples can take commonsense steps today to protect themselves and their families. Being prepared helps to ensure that your rights and relationships are as secure as possible in uncertain times.
September 11, 2025
Estates and Trusts
Trust Protectors – Should You Have One?
When creating a trust, determining who you want to serve as trustee(s) and benefit from the trust as beneficiaries are decisions that need to be made for every trust. The role of “trust protector” may not be as commonly known or understood, but the decisions whether to have one and, if so, who might best serve in the role, can be key to a smooth administration. A “trust protector” can provide valuable trustee oversight, flexibility, and inexpensive revisability — especially in long-term or complex trust arrangements. Deciding whether to have one and, if so, who might best serve in the role, can be key to a smooth trust administration. What is a Trust Protector? A “trust protector” is a person or entity appointed to monitor and, if necessary, intervene in the administration of a trust. Unlike a trustee, the trust protector does not manage trust assets or distributions. Instead, they are granted specific powers, defined in the trust document, to ensure the trust continues to operate in line with the grantor’s intent. Typical powers of a trust protector may include some combination of the following: Removing or replacing a trustee Amending trust provisions to comply with changes in law Resolving disputes between trustees and beneficiaries Approving or vetoing certain trustee actions This role is especially useful in irrevocable trusts, where flexibility is generally pretty limited. Does My Trust Need a Trust Protector? Not every trust requires a trust protector, but there are several scenarios where appointing one may make more sense: Long-Term Trusts: Trusts designed to last decades or generations benefit from a mechanism to adapt to changing laws and circumstances. Irrevocable Trusts: Since these trusts are difficult to modify, a trust protector can provide limited flexibility without court involvement. Complex Family or Business Dynamics: If there’s potential for conflict or concern about trustee performance, a trust protector can serve as a neutral safeguard. Asset Protection or Offshore Trusts: These often include a trust protector as a standard feature to enhance oversight and control. How Do I Choose the Right Trust Protector? If you’ve chosen to include a trust protector, how do you how do you decide which person is the right fit for your particular trust? Electing the appropriate trust protector is critical to ensuring the role adds value rather than complexity, and every situation should be evaluated on its own merits. That said, you might want to consider some or all of the following when making your choice: Independence: Ideally, the trust protector should not be either a beneficiary or a trustee to minimize or avoid altogether potential conflicts of interest. Expertise: Legal, financial, or fiduciary experience is beneficial, especially if the trust is complex or long-term. Trustworthiness: As the name implies, this role requires someone who can be relied upon to act in good faith and consistently with and in furtherance of the grantor’s intent. Availability: The trust protector should be willing and able to serve for the duration of the trust or have a succession plan in place. Often, clients choose a trusted advisor, attorney, or corporate fiduciary to serve in this role. Common Misconceptions About Trust Protectors Despite their growing use, the purpose and/or responsibilities of trust protectors can be misunderstood. Here are a few common misconceptions: “Trust protectors replace trustees.” It depends on what is meant by “replace” in this context. They generally oversee and intervene with the authority to replace one or more trustees with another only when necessary (such as when a trustee is perceived to be abusing his or her position or failing to carry out the terms or intentions of the trust). Trust protectors do not, however, manage assets or make routine decisions by substituting or “replacing” their own judgment for that of the appointed trustee(s). “Only large or offshore trusts need a trust protector.” While the use of trust protectors is common for large or offshore trusts, trust protectors can be helpful in domestic estate plans, especially where flexibility or oversight is desired. Reasons why a particular trustee may have been named at the time of drafting may no longer apply when the time comes. Successor trustees may not be in a position to step in as established in the trust (due to age or health issues, for instance). With a trust protector in place, it can be like having an added layer of defense against life’s unexpected twists. “Appointing a trust protector complicates the trust.” If “complicates” means the addition of more words, then yes, the addition of a trust protector does complicate things. Nevertheless, when properly drafted, a trust with a built-in protector can simplify administration of the trust and reduce, or even eliminate altogether, the need for court involvement. Take the situation faced by Jimmy Buffett’s widow. With Jimmy’s former legal counselor/advisor and his wife on equal footing as trustees, they quickly deadlocked over what can, should, or must be done with the assets and distributions. A well-chosen trust protector in Jimmy Buffett’s case could have served as the needed tie-breaking vote and/or insisted upon a “change in attitude” or occasioned a “change in latitude” by ousting whichever of the trustees, in the judgment of the trust protector, seemed to be missing the settlor’s intention, or as Jimmy might have said, acting as the “people our parents warned us about.” Final Thoughts A trust protector is not an essential requirement but, in the right circumstances, can be a valuable addition to a trust. The presence of a trust protector can serve as a “check and balance” feature to help ensure your trust remains effective, adaptable, and aligned with your goals over time by providing oversight after you passed on. If you're wondering whether a trust protector is right for a new trust you are considering, simply be sure to mention it to your estate planner/drafting attorney. If considering revising an existing trust to add a trust protector, seek a second opinion, separate from the initial drafting attorney, to evaluate your specific needs and objectives and whether these are more likely to be met with or without a trust protector.
August 25, 2025
Estates and Trusts
Planning and Parting Wisdom to Consider for Your College-Bound Children
Sending a child off to college is a major milestone — one filled with pride, excitement, and, in my case, a little anxiety. Two years ago, I sent my eldest to Europe for her university experience and, while my second is staying in the U.S., she is headed south this fall. I am sorry to report to the parents sending their child off for the first time that it does not get any easier. As parents, we spend years preparing them emotionally for this next chapter. But there’s another critical aspect of preparing them to fly the nest that often gets overlooked: legal documents and related planning. Once your child turns 18, you no longer have automatic access to their medical records, financial accounts, academic records, and in some states, you do not even have the right to make decisions on their behalf in an emergency. Without certain legal documents in place, you may be powerless in a situation where your guidance, input, and authority are most needed. Healthcare Proxy (sometimes referred to as a Medical Power of Attorney) A Healthcare Proxy allows your eighteen-year-old child to appoint someone (usually a parent) to make medical decisions on their behalf, in the event that they cannot articulate their wishes to care providers. This is crucial in emergency situations. Without this document, and pursuant to the Health Insurance Portability and Accountability Act (HIPAA), medical professionals are prevented from sharing any information, even with you, about your child’s condition. HIPAA Authorization Form HIPPA protects your eighteen-year-old child’s privacy once they are legally an adult. A HIPAA Authorization form specifically allows healthcare providers to release medical information to you, giving you the ability to communicate with doctors, access medical records, and be informed in case of an emergency. Durable Power of Attorney (POA) A POA empowers you, or whomever your child names, the authority to handle their financial matters. This can include managing bank accounts, signing tax returns, handling financial aid or tuition payments, and more, either on a temporary or ongoing basis. A POA is invaluable if your child is studying abroad, facing a logistical emergency, or simply needs help managing administrative tasks while adjusting to college life. FERPA Release Form The Family Educational Rights and Privacy Act (FERPA) limits a parent’s access to their child’s educational records (grades, disciplinary actions, tuition bills, etc.) once the child turns 18 or attends a postsecondary institution. If your child signs a FERPA release form, it authorizes the college to communicate with you directly about their academic records. Many universities provide this form during orientation, but it’s important to ask proactively. Digital Assets and Passwords University students, like all their peers, live much of their lives online. From email accounts to social media to online banking and cloud storage, ensuring a trusted individual has access to these digital assets in case of emergency is often overlooked. Encourage your child to create a secure list of important passwords or use a password manager that can grant emergency access to trusted individuals. Lists of passwords should never be stored on a phone or similar device that can be accessed by those who are not the appointed trusted individuals. Health Insurance Considerations When my child attended university in Europe, we discovered that her health care would be covered by university while in Europe. Still, we had to review her existing coverage here in the U.S., to ensure she still had coverage when she was home. It is imperative to verify whether your child will remain on your health insurance plan or if the university requires participation in a student health plan managed by the university. Sometimes the options provided by the university are more economical or make more sense if the university is far away and the plan has local coverage. If your child remains on your health care insurance, they should have at least a copy of their health insurance card. They should also understand how to locate in-network providers near campus and know the process for seeking care away from home, so that you are not stuck with a large medical bill from an out-of-network provider. Emergency Contacts and Local Resources Ensure your child’s phone has updated emergency contacts. It is recommended that named emergency contacts should be designated as such in their phone so others can assist in contacting you, if needed. In addition, make sure that your child has the names and locations of local, reputable urgent care centers, hospitals, dentists, mental health providers off campus, and pharmacies near their university. Emergencies are, by nature, unpredictable. In a crisis, the last thing you want is to be delayed by red tape. Having these documents in place not only gives you peace of mind but also empowers your child to step into adulthood with a well-prepared safety net. This is also a great opportunity to introduce your child to the concept of planning, in general, which is a personal responsibility and something to consider as they join the ranks of legal adulthood. By having these conversations now, you are not just preparing for emergencies, you are equipping them with the mindset of proactive life planning. Providing the tools to handle their newfound independence is one of the best send-off gifts you can give.
August 19, 2025
Estates and Trusts
Obergefell in Question: Estate Planning Risks for Same-Sex Spouses
On August 11, 2025, the United States Supreme Court was asked to reconsider Obergefell v. Hodges, the 2015 decision that federally guaranteed marriage equality for all couples. This new case involves the four-times married former Kentucky county clerk who famously denied marriage licenses to same-sex couples in 2015. She argues that her religious freedom should have allowed her to refuse to recognize same-sex marriage and asked the Supreme Court to take up her cause. While many remain cautiously optimistic that marriage equality will not be undone, the fact that the Court may even consider this petition is deeply unsettling for the LGBTQ+ population and their allies. (Axios, Forbes, The New Republic) Why This Matters for Estate Planning A Return to Patchwork State Laws If Obergefell were overturned, the U.S. would revert to a pre-2015 tapestry of laws in which individual states would have the opportunity to determine marriage rights for their own domiciliaries. For those residing in more conservative states, it could mean disaster for same sex spouses. Legal and Emotional Chaos for Families Suddenly, all the rights, protections, and privileges that come automatically with marriage, such as hospital visitation, medical decision-making authority, inheritance, and tax breaks, would once again require lawyers to draft elaborate, and admittedly brittle workarounds. In some states, lawmakers are bound to make those workarounds incredibly difficult to accomplish. Estate Planning Problems MagnifiedTax implications: Without a legally recognized spouse, couples will lose spousal estate tax exemptions at the federal and possibly state levels. Probate exposure: Without the automatic transfer rules of marriage, such as tenancy by the entirety designations on deeds, estates could be forced to go through a full probate proceeding or worse, pass to next-of-kin heirs, and not the spouse. Healthcare proxies and decision-making: Health care directives, such as Health Care Proxies, would need constant updates as cross-state enforcement could become uncertain when an individual’s status is demoted from “spouse” to simply “agent” under a health care directive. It should be noted that the rights of an agent are certainly less secure than spousal rights. Children and parentage issues: The parental presumptions, adoptions, and guardianships may also be under fire and could become contested in ways they have not been observed for a decade. As with documented workarounds for estate planning, it is concerning that parentage could hinge on an estate planning document that is enforceable in one state and not another. In summary, this possibility bears a real human cost if the federal government no longer sees a marriage as valid, and all the financial ease, parental securities, medical protections, and end-of-life comfort assumed to be guaranteed are no longer. Same-sex couples do not just lose a symbolic right to marry — they face disruptions to fundamental life, health, and legacy decisions. This is not just another court case: the ramifications will fundamentally reshape how families, especially those with trans and LGBTQ+ members, plan their lives, protect each other, and preserve their legacies. It is vital we pay attention, share the facts, and act with allyship.
August 14, 2025
Estates and Trusts
Settling an Estate with Efficiency and Care — Guidance for the Personal Representative
When someone dies, the task of settling the person’s estate descends upon the personal representative. Being appointed a personal representative, or “executor,” is an honor that includes a broad range of responsibilities. This person must be part administrator, part accountant, and part diplomat! Depending on the complexity of the estate, the process can drag on for years, or the estate can be opened and closed the same day. A typical estate takes nine months to a year to close. Regardless of how complex the estate is, the personal representative may want to begin with a phone call to an estates and trusts attorney for guidance. The attorney can simply point the personal representative in the right direction during a single consultation. Or the attorney can assume some or all of the duties of the personal representative, making the process considerably less burdensome. The challenge for most people settling an estate is that they do this only once in their lives, and therefore have to learn on the job. Here is an overview of the steps involved. Secure the Home If a house is sitting vacant as a result of the death, it is important to protect the property and its contents. Any valuables should be removed and kept in a safe place. Windows and doors should be locked and the alarm set, if there is one. If other people have keys to the house, consider having the locks changed. Mail should be forwarded to the personal representative, and a trusted neighbor should be asked to keep an eye out for any packages or fliers left at the door. It is also important to pay any mortgage installments, condominium fees, utilities, or property taxes as they become due. If funds for these expenses are not immediately available, the personal representative can advance these costs and seek reimbursement from the estate when possible. Locate the Will To open the estate, you will need the original will—not a photocopy. Once located, the will should be filed with the Register of Wills, even if the decedent had no assets. (If there is no will, the person has died “intestate” and the assets will be distributed according to Maryland’s rules of intestacy.) Upon opening the estate, the personal representative will receive “Letters of Administration,” putting him or her in charge of the estate and its assets. A tax ID number can then be obtained, and an estate checking account opened. Notify Agencies of the Death Banks and brokerage houses should be notified of the death, as well as insurance, credit card, and utility companies, and credit-reporting agencies. If the person received Social Security or other government benefits, notify the agencies that provided them. Marshal the Assets It may be advisable to liquidate any securities and other investments to lock in the value as close to the date of death as possible. The proceeds from any liquidated accounts should be deposited in the estate checking account. Prepare an inventory of the estate assets, including cars and household items, as well as real estate (whether in Maryland or elsewhere), bank accounts, CDs, investment portfolios, and life insurance policies. The inventory must include the date-of-death value of each item and be filed with the Register of Wills. Determine whether any of the assets name a beneficiary or have a co-owner. Those that do may be “non-probate” assets, which will transfer to the beneficiary or co-owner directly and are not part of the probate estate. Run the Numbers Creditors of the deceased have six months to make claims against the estate, and if there are sufficient funds, these will need to be paid from the estate account. Estimate the amount of cash needed to pay the claims and any taxes, and, as necessary, arrange for any assets to be sold for distribution. Deal with Taxes A Form 1040 individual income tax return must be filed for the portion of the year the decedent was living. This return is due by April 15 of the following year, just like a standard personal tax return. If the estate includes bequests to individuals who are not close family members, Maryland's 10% inheritance tax will apply. Unless the will specifically states otherwise, this tax is generally payable by the beneficiary who receives the bequest. Estate taxes may also apply, depending on the total value of the estate. In Maryland, estates valued at more than $5 million may be subject to state estate tax of up to 16%. At the federal level, estates exceeding $13.99 million in value (as of 2025) may trigger federal estate tax obligations of up to 40%. In addition, during the course of estate administration, if the estate generates more than $600.00 in income—perhaps from interest or dividends—fiduciary income tax returns must be filed. This includes IRS Form 1041 for the federal return and Maryland Form 504 for the state return. Because estate and tax matters can be complex, enlisting the help of an accountant experienced in estate administration is often a wise decision. Make Distributions Once an accounting showing all estate activity has been filed and approved by the Register of Will, a 20-day waiting begins. If no objects are made to the accounting as filed, it will then be time to distribute the remaining assets to the beneficiaries. The personal representative might first ask each beneficiary to sign a document releasing the personal representative from any future liability in connection with the estate. Settling an estate is more than a legal obligation—it is a final act of care and respect for the person who has died. By carrying out their wishes with diligence, fairness, and thoughtfulness, the personal representative helps bring closure not just to the estate, but to the life it represents. Though the work can be complex and at times overwhelming, it is also a meaningful way to honor the departed and ensure that their final wishes are handled with integrity and grace.
August 11, 2025
Estates and Trusts
Major Estate Tax Changes Under the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is a sweeping piece of legislation spanning nearly 1,000 pages. It includes significant changes to federal estate and income tax laws that will affect estate planning. Here’s an overview of a few key provisions in OBBBA and some strategic estate planning opportunities that it provides. Estate and Gift Tax Exclusion Increased Effective January 1, 2026, the federal estate and gift tax exclusion increases to $15 million per individual (or $30 million per married couple), with future adjustments for inflation. Although the increased exclusion was made “permanent” under the Act, it may still be changed or repealed by a future Congress or administration. High-net-worth clients should take full advantage of what may be a limited window for significant planning options. Spousal Lifetime Access Trusts (SLATs) and Grantor Retained Annuity Trusts (GRATs) are excellent options for front-loading an estate plan while still allowing the client or spouse access to assets. Individuals who have already utilized all or a portion of their current exclusions should consider “topping off” their current estate plans with additional gifts. While the increase in the federal exclusion amount provides substantial federal tax relief, state-level estate and inheritance taxes still apply, in many jurisdictions: 12 states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia continue to impose an estate tax Six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania) impose an inheritance tax Connecticut is the only state that also imposes a gift tax New York does not have a gift tax, but adds back gifts made within three years of death to the taxable estate With proper planning, assets can still be transferred free of both federal and state-level transfer taxes, but state-specific rules must be carefully navigated. Spousal Lifetime Access Trusts (SLATs), Dynasty Trusts, and sales to intentionally defective grantor trusts offer excellent opportunities to both leverage and utilize the $15 million federal gift tax exclusion while removing those assets from a state estate tax regime. New York’s Estate Tax “Cliff” New York’s estate tax has a particularly harsh feature known as the “estate tax cliff.” This means that estates just slightly over the exclusion amount may lose the exclusion entirely and owe significant tax. For example, in 2025: A New York taxable estate of $7,160,000 will owe no estate tax A New York estate of $7,161,000 will owe $2,863 in tax A New York estate of $7,518,000 will owe $707,648 This makes planning for residents of New York and similarly situated states especially important. New York State residents, and even non-resident individuals with substantial New York situs property, should consider making immediate and significant gifts designed to lower their New York taxable estates below the cliff. If they survive three years after the gift, the gifted property will be excluded from their New York taxable estate. Generation-Skipping Transfer (GST) Tax Exemption The federal GST tax exemption also increases to $15 million per individual beginning January 1, 2026. This is particularly relevant for gifts or bequests made to “skip persons” (such as grandchildren) or to trusts subject to GST tax. Despite the increase, careful planning is still needed to make full use of this exemption. Unlike the federal estate and gift tax exclusion, the increased GST tax exemption is not “portable” – meaning that unless both spouses’ GST exemptions are used during life, they may be forfeited at the first death. And like the federal estate and gift tax exclusion, the increased GST tax exemption is also subject to a potential repeal if the political winds change. For clients and their families focused on multi-generational planning, now is the time to “use it or lose it” by fully sheltering appreciating assets from the generation skipping tax in an irrevocable trust. Careful allocation of exemption is the key to maximizing tax efficiency and wealth for future generations. SALT Deduction Cap Raised — But with Limits Starting in 2025, the cap on deductions for state and local taxes (SALT) increases from $10,000 to $40,000. This is especially beneficial for residents in high-tax states. However, the increased cap phases out for high-income earners: For those with modified adjusted gross income (MAGI) between $500,000 and $600,000, the cap is reduced by 30% of the excess MAGI The deduction is completely phased out for taxpayers with MAGI of $600,000 or more Unless extended, the cap will revert to $10,000 in 2030. Clients living in high-tax states should consider “stacking” multiple non-grantor trusts. Since each trust is treated as a separate taxpayer under the Internal Revenue Code, carefully drafted multiple trusts can potentially reallocate MAGI and shelter thousands of dollars in SALT deductions that could not otherwise be taken on an individual’s income tax return. Changes to Charitable Giving Rules OBBBA introduces new benefits and limitations for charitable giving: The 60% limitation for cash contributions to qualified charities is not “permanent” Standard deduction filers can now take an additional $1,000 charitable deduction ($2,000 for joint filers) Itemizers are subject to a new 0.5% floor, meaning charitable deductions are only allowed to the extent that total contributions exceed 0.5% of adjusted gross income (AGI) before losses To maximize deductibility, the new 0.5% floor encourages consolidating charitable giving in a single tax year. For high-net-worth individuals, this is the perfect opportunity to fund or expand a private foundation. Donor-advised funds may also provide an option for maximizing charitable giving in a single year while providing flexibility in the choice of charities and the timing of distributions. Final Thoughts The OBBBA marks a significant shift in the tax landscape for estate planning. While some changes provide enhanced opportunities for wealth transfer and charitable giving, others introduce complexity and planning pitfalls — especially at the state level.
August 7, 2025
Estates and Trusts
Estate Planning for Musicians and Protecting Your Legacy Off the Stage
For musicians, estate planning is not just about deciding who inherits guitar collections or song royalties. It is about protecting your artistic legacy, ensuring your intellectual property is handled according to your wishes, and providing clarity for loved ones who may be unfamiliar with the nuances of the music industry. Unlike a typical estate plan, musicians face unique considerations, especially when it comes to rights management, royalties, and long-term protection of their creative works. Whether you are a seasoned performer or an up-and-coming artist, here are essential estate planning steps every musician should take. Catalog and Protect Your Intellectual Property Your songs, recordings, compositions, and even unreleased material are valuable assets. The first step is creating a comprehensive inventory of your published works, unreleased recordings or demos, copyright registrations, licensing agreements, and publishing contracts. Ensure these assets are clearly documented in your estate plan, which means if you have a revocable trust in place, these assets must be “assigned” to that trust to avoid probate. You should also provide instructions to your trustee or executor on how these assets should be managed, distributed, and monetized after your death. Establish Ownership Structures for Royalties Royalties can continue to generate income long after a musician’s passing. To ensure proper management, it is most efficient to set up a trust to collect and distribute these royalties to your beneficiaries. A trust can provide the mechanism to provide ongoing support to your loved ones to ensure they receive the funds in a way that makes sense, particularly if your beneficiaries are minors. Having a trust in place can also make it easier to manage the various income streams to ensure they flow centrally during your life in the way that you intend. Certain trusts can even provide creditor protection, protection from estate disputes, and mismanagement if you become incapacitated. When a trust is created, it is important to think about who will serve as your trustee if you can no longer act, or upon your death. The trustee chosen by you should have familiarity with your intellectual property, royalties, licensing, and the value of your catalogue. Assign Control Over Your Artistic Legacy Do you want your unreleased recordings shared with the world? Should certain songs be licensed for commercials or films? It is essential that you appoint the right person with this level of discretion to answer these questions because they can determine how your music is used after your death. It is, therefore, vital to ensure that the person you assign the control has an understanding of your legacy. This person is often referred to as a “creative executor” or a “creative trustee” who understands your artistic vision and can carry out your wishes regarding issues like posthumous releases, licensing decisions, and the preservation of your work. Digital Assets and Social Media A musician’s online presence can be as valuable as their physical recordings. A properly drafted estate plan will include instructions regarding your social media profiles, your official website, your digital music platforms (Spotify, Apple Music, YouTube channels), and access to each of those platforms. You may direct whether these platforms should remain active as they were during your life, or if you would prefer that they remain active as a memorial or taken down altogether. Business Succession Planning for Bands or Labels If you own a record label, music publishing company, or are part of a band with business agreements, succession planning is critical. Ensure that your partnership agreements address what happens in the event of your death or incapacity and how ownership interests will be transferred or managed. Your operating agreements and shareholder agreements should be reflective of your wishes and must address your particular circumstance; failure to do so allows your state to determine how those interests can be transferred or managed. Plan for Personal Assets and Family Needs Beyond your musical career, you must ensure that you have a traditional estate plan in place that also addresses bequests to your family members and friends, guardianship of your children, and designations of health agents and powers of attorney. If your musical career is successful, you should consider the issue of estate tax and consult with an insurance professional for life insurance policies that could provide economic support for your family or liquidity to pay estate tax. If your music catalog has significant value, proactive estate tax planning is essential. Strategies might include gifting portions of your catalog during your lifetime, setting up irrevocable trusts to shield assets, and working with a valuation expert to determine accurate appraisals for estate tax purposes. Musicians, like most artists, often experience fluctuating incomes, so proper planning is crucial for providing long-term security to loved ones. Final Thoughts Proper planning is the ultimate backstage pass to your legacy. It empowers musicians to control not just the financial aspects of their legacy, but also the integrity and future of their creative works. Without a solid plan, disputes over rights, royalties, and artistic decisions can tarnish the legacy you have worked so hard to build.
August 5, 2025
Estates and Trusts
When a Corporate Trustee May Be a Disadvantage for Your Trust
Last month I explored the potential advantages of naming a corporate trustee, acknowledging that the decision is ultimately a matter of personal preference. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. Should you name a financial institution as corporate trustee to manage your trust when you are no longer able to do so for yourself? Whether you name a financial institution to manage your trust assets when you are no longer able to do so for yourself is ultimately a matter of personal preference and choice. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. $$$ - Higher Costs Relying on a financial institution to manage your trust when you are no longer able to do so for yourself generally requires a more substantial commitment to administrative costs. While friends and family might be willing to serve when you’re gone – and frequently agree to do so with no thoughts of compensation (or the time commitment potentially involved!) – no corporate trustee is going to undertake or continue the effort without being adequately compensated. Corporate trustees charge annual fees that typically range from 0.5% to 2% of the trust’s “assets under management,” depending on the size and complexity of the trust. These fees are intended to compensate reasonably for professional services required to manage the assets and administrative responsibilities. In my experience, family members and friends serving as trustees typically charge little or nothing for their trust/asset management efforts, regardless of the discretion afforded to them under the governing trust document(s). The decision whether to exercise this discretion in favor of taking a fee is typically driven on the one hand by a sense of entitlement and, on the other, by an inherent sense of fairness (including an assessment of the likelihood of heartburn and frustration) to be generated by beneficiaries’ uninformed and often unwarranted perception of impropriety occasioned by the resulting imbalance as violative of “equality for all” expectations. To be sure, individual circumstances vary widely, and a family/friend trustee should have no reservations about being reasonably compensated for work that money managers and financial advisors would otherwise be charging a significant sum. Most trusts expressly afford trustees discretionary authority to be compensated for their efforts. And, unless expressly stated in the trust document, Virginia, like most jurisdictions, allows such discretionary compensation by default. Consequently, one can generally expect trust administration costs under a corporate trustee to exceed what an individual trustee might be expected to charge (if anything) for his or her trust management services. It is typical to allow an individual trustee the discretion to take a fee for one’s services. The more substantial the trust, the more time and effort can be expected to monitor and manage – especially if one or more family members have their own expectations (however misguided or unrealistic they may be!) regarding the timing and extent of their inheritance. In my experience, there’s almost always at least one troublemaker beneficiary making things miserable for everyone else – especially the trustee. Lack of Personal Touch Corporate trustees are in the business of managing trusts and, therefore, manage many trusts at once. Consequently, a corporate trustee may not be able to provide the personalized attention that a close family member could. In all fairness, a corporate trustee cannot be expected to understand or appreciate the unique family dynamics or emotional aspects of the trust as well as a family member or close friend could. Perhaps you are in the 1% of those fortunate to have developed a close long-term relationship with a trusted advisor at a corporate trustee and have convinced yourself that no other friend or family member could possibly be trusted to do as good a job carrying out your wishes. I’m not here to talk you out of your blissful naivety, but you owe it to yourself to give due consideration to the probabilities of your trusted advisor dying and how familiar the likely successor(s) is/are with your situation. Less Flexibility Institutional trustees often operate under strict guidelines and may be less flexible or slower to respond than an individual who can make quick, informal decisions. This relative inflexibility stems, at least in part, from a higher likelihood of being held to task in hindsight for decisions which, at the time, may have seemed eminently reasonable. A beneficiary is more likely to attempt to create a legal issue about holding a corporate trustee liable for decisions that, in retrospect, turn out sub-optimally. Consequently, a corporate trustee can be expected to apply a more rigorously conservative approach to investing and discretionary distributions, for instance. Of course, this may be precisely what you’re looking for in a trustee. Alternative Asset Limitations Along with less flexibility in the manner in which they might be expected to make decisions regarding the assets under their management, corporate trustees are oftentimes limited in the asset classes they manage. Precluded from keeping particular types of assets in their portfolio, a chosen corporate trustee may become the tail wagging the proverbial dog when they prove incapable of serving 100% of your trustee needs. For instance, real estate is quite frequently beyond the purview of a corporate trustee. Therefore, if you have substantial “alternative asset” holdings (i.e., beyond the traditional “stocks and bonds,” annuities, and typical financial market holdings such as derivatives), a corporate trustee may not be the right choice for you. On the other hand, the more specialized or unique the holdings, the more likely you will want to try to find a trustee with the needed specialized expertise to manage these alternative assets appropriately. Special circumstances demand special consideration. Just recognize, as well that a corporate trustee with the relevant specialized skill set may not be the best choice to serve as your fiduciary for your other trust assets. And even if they are a potential fit across all of your asset classes, their relative expertise and/or comfort level may require some drafting cooperation to develop and settle on an arrangement with which the corporate trustee can get comfortable. For instance, we recently assisted a blended family in avoiding a potentially very costly legal fight by identifying and working with an independent corporate trustee to develop a settlement trust arrangement, the terms, procedures, and potential liability protections of which the trustee could accept. The new trust arrangement overcame the mutual distrust factors, avoided significant legal fees, and uncertain outcomes. Cooperatively addressing and overcoming the specific corporate fiduciary’s reservations ultimately afforded all of the trust beneficiaries the independent management/oversight they each needed. Final Thoughts I would be dishonoring the legal profession if I did not acknowledge, quite lawyerly, that “it depends!” If you haven’t figured it out yet, there is no one-size-fits-all “right” answer. Everyone’s situation is in some respects unique and people’s risk preferences fall across a full spectrum (from a nihilistic “what do I care? I’ll be dead!” to “I couldn’t possibly do that to my loved ones!”). Choosing a trustee is a deeply personal decision that depends on the size and complexity of your trust, your family situation, and your priorities for administration and oversight. For many, a hybrid approach—naming both a family member and a corporate trustee as co-trustees—offers the best of both worlds: professional management and personal insight. While I can’t possibly speak to my readers’ individual risk preferences, there are clearly certain factors that might lend themselves more favorably to a corporate trustee selection in a given situation. All other things being equal, you may want to consider appointing a corporate trustee in the following circumstances: Your trust is large or complex. There is potential for conflict among beneficiaries. You lack a trustworthy or capable family member to serve. You want to ensure long-term, professional management. The trust includes specialized assets such as real estate, business interests, or significant investments. Before making a final decision, I would encourage you to consult with your estate planning attorney or financial advisor to weigh the pros and cons in your specific situation. After the fact, if you find yourself trying to manage or extricate yourself from inheritance-related entanglements (with or without a trust), you should seriously consider engaging an experienced trust and estates litigator to assist in crafting and implementing an outside-the-box arrangement which might very well result in a third-party, corporate fiduciary as the answer . . . or then again, it might not. I would be glad to offer personal recommendations for an estate planning attorney, financial advisor, or trust and estates litigator, should you be interested. I would also welcome the opportunity to review your situation, provide thoughtful recommendations, and assist with implementation as appropriate. The potential significance and impact of a well-chosen trustee cannot be overstated. In short, there is no “one size fits all” solution, and, simply stated, a corporate trustee may not be right for your situation. A well-chosen trustee (corporate, professional individual, family member, or friend) can provide peace of mind. The wrong trustee choice could mean the dismantling of everything you’ve worked your entire life to accumulate and damn your loved ones to costly and frustrating litigation. Too dark? I wish. Trust management legal issues might account for only a small fraction of trust cases, but the actual percentage is of little or no consequence when 100% of the cases I’ve seen on a continuous basis for over 25 years involve some form of dispute with or over the trustee. “What about a ‘trust protector’ arrangement?” you ask. “Should I be insisting on one of those for my trust?” Next time!
July 24, 2025
Elder Law and Advocacy
Why Caregiving Matters More Than Ever in America
When Bradley Cooper released his new PBS documentary “Caregiving,” he didn’t just share a deeply personal narrative, he opened the door to a long-overdue national reckoning. His story of bathing his father, of holding his hand through cancer, of navigating a healthcare labyrinth with little support resonates because it is all of our stories. Whether we realize it yet or not. Caregiving is the invisible thread that holds my clients — the wealthy and not so wealthy — their families, and their communities together. This essential labor, both paid and unpaid, is finally stepping into the spotlight, demanding recognition, reform, and real support. The Growing Crisis The statistics are irrefutable: for the first time ever, Americans aged 65 and older are set to outnumber their children by 2034. Currently, 23 million care for older adults exceeding the 21 million caring for kids. It is important to note, however, that caregiving occurs at all ages and contributions. No one is immune from caregiving. Financial caregiving responsibilities can begin much earlier for a younger demographic if they are in a better financial position than their aging family members. Added to that, those who are having children later in life now care for their aging parents whom they presumed could help them raise their own young children. Unpaid family caregivers contribute nearly $600 billion worth of labor to the US economy annually, which is larger than the United States Department of Defense budget and a figure soon to hit $900 billion the next decade. Families, who represent the unpaid caregivers, absorb this enormous emotional, financial, and physical burden. As this author has written about in the past, caregivers generally must reduce work hours, give up career opportunities, or quit jobs entirely. These sacrifices lead to lost income, strained mental health, and mounting caregiving debt. Beyond the individual cost, caregiving faces much broader challenges, including the underfunding of resources, a fragmented health care system, policy neglect, and a lack of labor protections for professional caregivers. Millions of Americans, especially women, people of color, and low-income individuals are making impossible choices: career or care. Income or loved one. Sleep or safety. And while the dialogue surrounding caregiving has traditionally been viewed as a women’s or senior issue, it is clear that caregiving now touches every demographic and tax bracket. In fact, the recognition of today’s “Sandwich Generation,” adults caring for aging parents while raising kids, has been a topic of conversation, mostly because of the extreme pressure this generation feels with its caregiving responsibilities: even Gen Z is stepping in as caregivers, often for grandparents and disabled siblings. Most fall into caregiving during a crisis — an accident, a diagnosis, or a fall. Without a plan, the emotional, legal, and financial toll compounds quickly and sometimes in ways that cannot be controlled. Planning in advance provides options that planning during or after a crisis simply does not. The culmination of these issues leaves us all without robust systemic support, defining caregiving as a personal crisis rather than a shared responsibility. However, there is hope, and the way to hold onto that hope is through planning. Take Action Clarify wishes. Encourage your aging loved ones to clarify their wishes. Advance healthcare directives provide caregivers guidance and reduce stress of healthcare and end of life decision making. Ensure your Will or Trust is in place and up-to-date reflecting the beneficiaries chosen by the aging loved one, not by the state. Consider creating an ethical will to share with your family describing your hopes and wishes for their future and lessons you wish to impart long after you are gone. Protect assets. If your loved one’s assets are not infinite, it’s imperative to meet with an elder law attorney who can assess whether or not your loved one will qualify for Medicaid or Veterans benefits in the future to pay for long-term care. Determine if asset protection trusts can help your loved one qualify for benefits or resources in their area. If you still have time, speak with an insurance professional about qualifying for long-term care insurance. Organize roles. Nothing is more important than setting a plan in place. This means determining now who can help your aging loved one and contribute to their caregiving. Dividing and conquering roles like organizing medication, cooking meals, providing transportation to appointments, and managing finances can help caregivers avoid burnout and ensure that talents among all caregivers are utilized. Technology is even being developed to address the need such as software like Hero Generation which can make organization for the caregiver easier. Preserve dignity. Talk to your aging loved one about where they want to live as they age and, perhaps more importantly, where they do not want to live as they age. If your loved one is faced with a life-limiting condition, start the dialogue about what their idea of a “good death” looks like by consulting with organizations like Befriending Death or your local hospice agency. Thoughtful planning keeps care centered around the person’s needs, values, religious, and spiritual beliefs, not just the logistics of the end of their life. As caregivers, there is so much we can do beyond providing the care. We must acknowledge the heavy lift of caregiving: talking about it with family, co-workers, and friends to create community around the experience. We must offer respite to our friends who are caregivers and vote for public policies that support and expand care. And of course, elevate the conversation and share resources to make sure that it is easier for those who come after us. Roslyn Carter wisely said that “...there are only four kinds of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers." Caregiving is love in action and planning for it is essential. Wherever you are in your own caregiving or care receiving journey, ensuring a plan is in place is essential.
July 23, 2025
Estates and Trusts
Ashes to Ashes: Making Your Final Arrangements
William Wordsworth said that the best part of a good man's life is “his little nameless unremembered acts of kindness and of love." In this spirit, many of us work to fill each page of our life’s story with small deeds of compassion and helpfulness. One such deed we might not have considered is planning our final farewell. Anyone who has arranged a funeral knows what a challenge it can be. A funeral is the one event where the guest of honor has no say in what it should look like, where it should take place, or who should have a role to play—unless he or she plans ahead. Providing even a brief outline of your wishes is an enormous act of kindness to the people you leave behind. And this is one aspect of estate planning that doesn’t require a lawyer. There are documents a lawyer should draft. These include a will, Durable Power of Attorney, and Advance Medical Directive. But a statement of your funeral and burial preferences is one you can prepare on your own. When kept with your other important papers, these final instructions will ensure that your sendoff reflects your preferences and beliefs. Gone are the days when a funeral was almost always in a house of worship and the burial was invariably at a cemetery. In an increasingly secular society, many funerals and memorial services no longer include a religious component. And as cremation has become more popular, the person’s remains can be disposed of in any number of meaningful ways. What should your funeral look like? The decisions to be made are many and include: what funeral home to use, what kind of service you want, and whether you prefer a traditional burial or cremation. The service could include your favorite readings—whether sacred or secular—hymns, songs, or other music, and the names of loved ones who should play a part in the service. If your remains are to be present, the service is a funeral; if not, it’s a memorial service. Either way, you can name the people who are closest to you to act as actual or honorary pallbearers. If your remains are to be cremated, what should be done with the ashes? Those who desire a permanent resting place can purchase a columbarium niche to house the urn. But scattering the ashes at a meaningful location is another, less costly, option. Ashes can be scattered on the grounds of a private home that belongs to you or your next of kin, on the graves of beloved ancestors, or in a favorite body of water. Some cemeteries even have gardens specifically for scattering ashes. Ashes are not considered to be environmentally harmful, but check to make sure that your plans for disposing of them are legal. If the location is on land belonging to the government or a private party, you may need to get their written permission. Under the Clean Water Act, cremated remains must be scattered at least three nautical miles from land. The Maryland Department of Natural Resources prohibits disposing of ashes in the Chesapeake Bay within seven miles of shore. For inland waterways, you may need to obtain a permit from a state agency. Biodegradable urns are available for burials at sea; otherwise, the urn must be emptied into the water and disposed of separately (or saved as a keepsake). Whatever your wishes, get them down on paper, sign and date the document, and keep it with your important papers. As much as any bequest, this simple act of kindness will be a gift to those you leave behind.
July 10, 2025
Estates and Trusts
Corporate Trustees: Smart Choice or Risky Move?
Whether you name a financial institution to manage your trust assets when you are no longer able to do so for yourself, is ultimately a matter of personal preference and choice. In the first part of a two-part “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I examine the potential advantages and reasons to do so. I’ll share the other side of the conversation—the potential drawbacks of naming a corporate trustee next month. What Is a Corporate Trustee? A corporate trustee is a bank, trust company, or professional fiduciary institution that manages trust assets for a fee. Such entities specialize in administering trusts and are regulated by state and federal laws to ensure ethical and competent asset management and protect against fraud and abuse. So, what are the advantages of utilizing a corporate trustee? Why should you name a financial institution to manage your trust? Is it the best choice in your situation? Consider the following top five advantages of a corporate trustee: Professional Expertise Most corporate trustees bring extensive knowledge in investment management, tax planning, fiduciary law, and trust administration. Managing others’ assets is what they do; it’s (typically at least) all they do. This can be especially valuable for complex trusts or large estates, where mistakes could be quite costly and have a substantial impact on the trust assets and both current and future, vested and/or contingent beneficiaries. Clearly, the level and extent of such expertise matters. When evaluating the potential advantages of a particular corporate trustee, consideration should be given to years of experience and the depth of knowledge of the team expected to manage one’s trust assets. Impartiality Face it, family dynamics can be, well, complicated. Appointing a family member or friend as trustee can sometimes lead to unintended and unforeseeable conflicts or strained relationships, especially when it comes to issues such as how to invest and whether and when to make distributions. For example, we only narrowly avoided litigation recently when one of several sibling beneficiaries determined herself to be on the wrong side of preferential treatment by their deceased parent’s hand-picked trustee, a long-time close family friend. For the trustee’s part, it was difficult not to play favorites when certain of the sibling beneficiaries considered and treated the trustee like family, while the lone sibling saw the trustee as nothing more than a favorites-playing impediment to her inheritance. In principle, at least, a corporate trustee affords objective decision-making, free from personal bias, or emotional involvement. Continuity and Reliability Unlike individuals who may become ill or infirm, die, or relocate, corporate trustees typically afford long-term stability and continuity. This can be particularly useful for trusts designed to last for decades or span multiple generations. Here too, however, one would be well-advised to recognize that not all trust companies are created equal. It is important to inquire about those trust company employees who will oversee and provide day-to-day management decisions regarding your trust and what, if any, checks and balances there might be if and when staffing changes occur. Fiduciary Duty Corporate trustees are legally bound to act in the best interests of the beneficiaries and are held to high fiduciary standards. Most also carry insurance and are subject to regulatory oversight, which adds extra layers of protection for beneficiaries who might not even be born at the time of making the trust. I note here, as well, that a generally conservative approach (erring on the side of caution – for the benefit of future/contingent beneficiaries) when it comes to investment/distribution decisions not only serves to provide an added layer of protection for the intended future beneficiaries but, thinking cynically, also happens to align with a corporate trustee’s own pecuniary self-interest, i.e. concomitantly serves to generate higher income for the institution. Administrative Efficiency Trust administration requires ongoing tasks, including record-keeping, periodic tax filing obligations, asset (re-)valuation responsibilities, timely periodic noticing, and asset distribution requirements (discretionary and mandatory). Corporate trustees generally maintain systems and staff to manage these responsibilities efficiently and accurately. At a minimum, one should evaluate a potential corporate trustee’s abilities and track record in this regard.* *As a pertinent aside here, I note that certain individual professionals offering “trustee services” (accountants, for instance) might afford a similar level of administrative efficiency, along with the types of fiduciary protections, professional expertise, and one or more of the additional benefits described above.
June 27, 2025
Estates and Trusts
Married? Consider Upgrading the Deed to Your House
In 1604, Sir Edward Coke said, “Your house is your safest refuge.” Or words to that effect. He was writing in Latin, but the venerable English judge got his point across well enough. The expression has come down to us in the 21st century as “A man’s house is his castle.” The family home should be a safe haven where we can take refuge from the perils and dangers of the outside world. Within its walls, relationships are nurtured, friendships are enjoyed, and children are loved and encouraged. In addition to the locks and security lights that attempt to keep burglars at bay, a married couple’s home can be protected from certain types of creditors simply by how the property is titled. Owning a house as “tenants by the entirety” is reserved for married couples and can provide significant benefits to those who take advantage of it. First, this form of ownership will transfer the house to the survivor if either spouse should die. This transfer will be automatic and efficient, even if the deceased spouse dies without a will. Second, it will protect the house from creditors with a claim against either spouse individually. Titled this way, the family home is less likely to be in jeopardy if one spouse becomes the target of a lawsuit, defaults on a loan, or needs to declare bankruptcy. This can be especially important to individuals in a profession that carry a high risk of personal liability, such as doctors, lawyers, and contractors, as well as teachers, realtors, and therapists. In this way, it serves as a form of free insurance. Ownership of a home as tenants by the entirety is available in many states, including Maryland. And thanks to recent changes in state law, married couples in Maryland can enjoy these creditor protections even if they place their residence in one or more revocable living trusts. The protection against creditors does have its exceptions. One is liens placed on the property by the IRS. Another is creditors who have obtained a judgment against both spouses jointly. The right to title your home this way is one of the unsung benefits of marriage. It is the state’s way of protecting marriages by ensuring that one spouse’s creditor problems don’t put the other spouse and any children out on the street. And, of course, with same-sex marriage legal nationwide, it’s a benefit that applies to gay and straight couples alike. If you and your spouse owned a house before getting married, it’s probably titled as “joint tenants with right of survivorship.” This form of ownership also transfers the property to the survivor if one spouse should die, but it does not protect against creditor liens. Fortunately, you can upgrade your ownership of the house simply by having a new deed prepared. Contact an attorney who practices in this area to get started. The executed deed will need to be filed with the county Land Records office, and you might need to obtain a lien certificate and pay any taxes or other obligations before the deed can be recorded. There should be no transfer or recordation taxes to pay, but there is a nominal recordation fee. If you have a mortgage, a conversation with the provider is advisable beforehand. Once the deed is recorded, you can take comfort in knowing that your castle now has an extra measure of protection from the perils and dangers of the outside world.
June 23, 2025
Estates and Trusts
Unintended Inheritance Happens More Than You Think: Ensuring Your Loved Ones Inherit as Intended
Roughly two-thirds of Americans are estimated to die without executing a valid will. As a result, assets in their name will pass under the laws of intestacy of their home state. The laws of intestacy are essentially default rules that typically transfer a decedent’s assets to their closest living relatives, such as a spouse, children, parents, or siblings. Intestacy laws would likely transfer the assets of many decedents to their intended beneficiaries. It would be uncommon for someone to wish to disinherit their spouse or one or more of their children. However, intestacy laws do not operate on “non-probate assets,” such as joint bank accounts with rights of survivorship, life insurance policies, or retirement accounts. As a result, it is likely that a portion of a decedent’s assets will not pass to their intended beneficiaries. Sometimes, this means that one beneficiary receives a larger share of a decedent’s assets than the others. Other times, virtually all of a decedent’s assets pass to someone they had no intention of ever receiving their assets, while their intended heirs are left without any recourse. Thankfully, some states have laws that will override a beneficiary designation of a non-probate asset if it is likely that the decedent, under the circumstances, would not have intended to provide for that person. One such common circumstance is when a decedent fails to update their beneficiary designations after divorce. For New Jersey residents, N.J.S.A. 3B:3-14 automatically revokes non-probate transfers of assets to a divorced individual, returning the assets to the decedent’s estate to be distributed pursuant to the terms of their will or the laws of intestacy. Similarly, for New York residents, EPTL 5-1.4 automatically revokes non-probate transfers of assets to a divorced individual. However, this automatic revocation will not apply in all cases and to all assets. For example, there is no automatic revocation where the assets are specifically disposed of under the terms of a “governing instrument.” A governing instrument includes a will, trust, deed, or securities, such as stocks and bonds. In the Matter of the Estate of Michael D. Jones, a case recently decided by the Supreme Court of New Jersey (the highest state court), the decedent married his ex-spouse in 1990 and named her as the pay-on-death beneficiary of his U.S. savings bonds. The decedent and his ex-spouse divorced in 2016. Their divorce settlement agreement (DSA) allocated certain assets to each individual and provided that all assets not specifically referred to in the DSA would be owned by the person whose name was on the title to the given asset. The DSA did not specifically mention the savings bonds. The ex-spouse also specifically waived her right to inherit from the decedent’s estate. The decedent passed away in 2019, intestate, without having updated the pay-on-death beneficiary of his U.S. savings bonds. His ex-spouse later redeemed the U.S. savings bonds. The decedent’s daughter was appointed the administrator of the decedent’s estate and promptly sought to recapture the proceeds from the U.S. savings bonds. The court ultimately concluded that the ex-spouse was entitled to the proceeds of the U.S. savings bonds, reasoning that the bonds were regulated by the IRS Federal Treasury regulations, the “governing instrument.” Specifically, these regulations provided that when the owner of a bond dies and is survived by the named beneficiary, the named beneficiary is recognized as the sole and absolute owner of the bond. There are a number of takeaways from this case. First, even if the facts of this case were different and the administrator of the decedent’s estate had won, it would have been a pyrrhic victory at best. The decedent’s beneficiaries would face delays in receiving their inheritance, and the estate would incur significant legal fees and costs in reclaiming these assets. Second, while this case only dealt with U.S. savings bonds, there are many types of assets that have “governing instruments” with specific provisions concerning the death of the account owner. For example, in LeBoeuf v. Entergy Corp., the plan participant of a 401(k), who was a widower at the time, named his children as his designated beneficiaries. He later remarried. When the plan participant died, his 401(k) account had a balance of approximately $3,000,000. His children discovered that the plan sponsor had paid the death benefits exclusively to his second wife. It was revealed that under the terms of the plan documents, a subsequent marriage automatically revoked the beneficiary designations in favor of the new spouse. One could argue that the benefit of this provision is that a plan participant would avoid inadvertently disinheriting their spouse. However, in LeBoeuf, it is almost certain that the death benefits were distributed contrary to the plan participant’s intentions. Lastly, it highlights the critical importance of regularly reviewing existing estate planning documents, the titling of assets, and designated beneficiaries, to ensure that they pass to your intended loved ones at the time of death.
June 23, 2025
Estates and Trusts
New York Advances Medical Aid in Dying Act Amid Ongoing Right-to-Die Debate
The New York State Senate passed the Medical Aid in Dying Act this week, taking a significant step forward towards legalizing physician and medically assisted death for terminally ill patients in New York. The Bill, which had previously been approved by the state assembly after an emotionally charged five-hour session, awaits Governor Kathy Hochul's action. If the Governor signs it into law, New York will become the 11th U.S. state, along with the District of Columbia, to codify an individual’s right to die with assistance from the medical community. What is the Medical Aid in Dying Act (MAID)? The latest incarnation of the signed legislation allows mentally competent, terminally ill adults with a prognosis of six months or less to be prescribed life-ending medication. In order to qualify, there are stringent requirements. First, the patient must request assistance in writing and verbally to their physician; a measure that might be a stumbling block for those whose affliction, disease, or condition may prevent one or the other. Once the request is made in writing and verbally, two doctors then must confirm the patient’s terminal diagnosis, prognosis of six months or less, and the patient’s capacity as it relates to being of sound mind. A terminal diagnosis and prognosis are more calculable standards than capacity, which, in New York State has always been a fiercely contested subject and, in some cases, subjective and specific to the matter at hand. The additional requirement mandates that there be two witnesses to the request to prevent any coercion. Certain individuals are explicitly prohibited from serving as witnesses: relatives by blood, marriage (even domestic partners,) adoption, any beneficiary entitled to a portion of the patient's estate, individuals affiliated with the healthcare facility where the patient is receiving treatment, as well as the patient’s care providers such as the attending physician and the consulting physician. The patient’s nominated health care proxy and agent under the Power of Attorney are also prohibited from serving as a witness. Many advocacy groups have been pushing for this legislation for the better part of a decade and argue that it finally offers terminally ill patients a compassionate option to end their life and, presumably, their suffering. However, there are groups on the other side that have been vocal in their opposition, including certain religious and disability rights organizations, which have expressed concerns that such a law could disproportionately impact the disabled community. Compassion & Choices, one such advocacy group in favor of the legislation, has repeatedly pointed out that a staggering 72% of New Yorkers support medical aid in dying and have urged lawmakers to advance the legislation that has long languished in committee in Albany. While it is unclear what Governor Hochul will do, the fact that the state assembly and senate have reached a consensus marks a significant milestone for those who advocate for such relief. The legislation hangs in the balance until Governor Hochul's decision is made but this author suspects that regardless of her decision, the controversy will continue about end-of-life care, patient autonomy, and the role government may or may not have in a person’s life and death.
June 17, 2025
Estates and Trusts
Insulate Your Marriage From Problems Online
The Greek philosopher Socrates once said, “When the debate is lost, slander becomes the tool of the loser.” He was lucky he didn’t live in the age of Facebook. Thanks to the vast social network, it has never been easier to express an opinion about someone—however unflattering the sentiment may be. In addition to posting written words, it can also be hurtful to upload photographs and videos that were meant for a private audience. And when the object of online derision is an ex-spouse, the pain inflicted can be especially acute. After choosing a companion of good character, it can be hard to image that he or she would so publicly betray the confidences of life’s most important partnership. But the adversity of marital problems can change people, and it sometimes brings out the worst in them. How then can an engaged couple ensure that their relationship won’t end with cutting remarks and embarrassing images on social media? Drawing up a prenuptial agreement is actually a good place to start. A prenup can include a “social media clause,” which explains how spouses, and former spouses, should behave online. Regardless of how long two people may have been together, they will likely have accumulated a vast trove of private information about each other. If this information found its way onto Facebook, Instagram, Twitter, or the like, the result could be worse than hurt feelings. A career could be ruined, business prospects harmed, and social circles decimated. By including a social media clause in their prenuptial agreement, a couple can make their expectations for themselves clear when it comes to online postings. Some couples go so far as to say they won’t change their Facebook relationship status from “Married” until they agree the time is right. This is an important detail in protecting each other’s ability to control news of their transition to single status. A prenuptial agreement has never been the stuff of storybook romance, and many people think of it as a recipe for divorce. Heavy with legal language, the document outlines how assets and debts will be divided if the marriage breaks down. But the reality is that by clarifying matters like these before the wedding even takes place, both partners can help protect their legal rights and establish what will be required of them. Many even say that preparing their agreement was a surprisingly comforting experience. Think of it this way: A prenuptial agreement is like an airbag for your marriage. When you drive a car, you aren’t planning to have an accident, and having an airbag won’t make it any more likely that you will. But if an accident does occur, you will be grateful that you had this important piece of safety equipment and that it was working properly. In the same way, by having a prenup prepared, you aren’t inviting a divorce, and you certainly aren’t making it any more likely that your marriage ends in one. But if things don’t work out, you will thank yourself for having had the presence of mind to protect your legal rights—and your online privacy—when you had the chance. With marriage now legal for same-sex couples nationwide, there are many benefits to enjoy. One of them is having a piece of paper in the drawer that says what happens if things don’t go as expected. The first step is to call a lawyer with experience preparing prenuptial agreements. Once the agreement has been signed, you can enjoy the peace of mind that comes from knowing that you’re prepared for whatever lies ahead.
June 12, 2025
Estates and Trusts
Choosing Mediation to Protect Families and Legacies
Why Mediation? Blood and money make for a tough mix. As an attorney with a decades-long trusts and estates practice, I’ve seen it all: siblings clinging to childhood grievances, children from a first marriage resenting a stepparent, new spouses competing with adult children, and half-siblings emerging after a parent’s death. Estate litigation is not only lengthy and emotionally exhausting, it’s also extremely expensive. By the time the legal dust settles, the parties have often spent more on attorney fees than they’ll receive from the estate. Worse yet, already strained family relationships are often left permanently fractured. Seeing the damage these disputes inflict on families is what led me to seek certification as a mediator. What Is Mediation? Mediation is a voluntary form of alternative dispute resolution where parties work together to resolve conflict with the help of a neutral third party—the mediator. The mediator doesn’t make decisions like a judge or jury. Instead, their role is to guide the parties toward a mutually acceptable agreement crafted on their own terms. Because the outcome is collaboratively reached, mediation often leads to less bitterness, fewer hard feelings, and more durable resolutions. How Does Mediation Work? The process begins with an initial meeting between the mediator and the parties. If attorneys are involved, the mediator may speak with them beforehand to gather background information. During the joint session, the mediator explains the process and invites each party to share a brief summary of the situation from their perspective. An agenda is then established. Each party is encouraged to listen respectfully to the other’s point of view. Following this, the mediator typically meets privately with each side to delve deeper into the issues, explore underlying tensions, and identify opportunities for resolution. This approach allows for creative settlements that courts may not be able to impose. Importantly, mediation is fully confidential. Nothing disclosed during the process is admissible in court should the mediation not result in a settlement. Why Choose Mediation? Cost-Effective: Mediation is significantly less expensive than litigation. While parties may still retain legal counsel, the process usually requires fewer billable hours and avoids extensive court procedures. Mediator fees are typically shared equally by the parties. Efficient: Court cases can drag on for months or even years. Mediation often resolves disputes in a matter of hours or days. Private: Unlike court proceedings, which generate public records, mediation is confidential and discreet. Flexible: The parties—not a judge or jury—control the outcome. This allows for creative, personalized solutions that reflect the unique dynamics of the family. Relationship-Preserving: By encouraging open communication and cooperation, mediation can help mend strained relationships and preserve family ties. Mediation offers a path forward that is more cost-effective, efficient, and humane than litigation. In the emotionally charged arena of estate disputes, it provides families with an opportunity not only to resolve their legal issues but also to do so in a way that promotes healing, dignity, and when possible, reconciliation.
June 5, 2025
Estates and Trusts
Protecting Legacy: Privacy and Estate Planning Tips for Athletes
Professional athletes face unique challenges when it comes to managing their personal, professional, and financial affairs. With significant public visibility, substantial income, a grueling training schedule, and a fast-paced lifestyle, athletes need to protect both their privacy and their legacy. Whether the athlete is just beginning their professional career or, like many of my clients, has already cemented their place into athletic history, effective estate planning and privacy protection can shield the new or long-established professional athlete from risk and exposure, providing long-term peace of mind. Why Privacy and Estate Planning Matter for Athletes There are many reasons why privacy is more of a priority for professional athletes than those in the general public. First and foremost, athletes experience intense media scrutiny. Interviews following each event, reporters covering their personal and family lives, bloggers commenting on their lifestyle, and their family members’ every move. This scrutiny often occurs “overnight” without providing the athlete and their family the opportunity to adjust and ease into this new level of inquisition. Added to the sudden celebrity, the athlete’s career span is generally shorter than the rest of us, which means that the bulk of their earnings is realized in a very short window of time. The lifestyle change happens swiftly, and the duration is generally limited. Because of this compressed time schedule, the athlete has a short runway to transition into their new life, leaving them particularly vulnerable to lawsuits, predatory actors and financial scams. In addition to the sudden shift in assets and scrutiny, an athlete’s family dynamics can also suffer the consequences. Whether it is because the newfound wealth and fame represents a departure from their former life, which they shared with friends and family members, or because those friends and family members feel entitled to share in the of the athlete’s earnings, there is immense pressure. Therefore, creating a thoughtful, discreet plan that safeguards the athlete’s earnings is essential. Establish a Comprehensive Estate Plan As this author has covered in other articles, an estate plan goes beyond a simple Last Will and Testament. It includes a structure that provides the opportunity to manage wealth and guard privacy during the athlete’s lifetime, through the end of their career, and thereafter protects their families upon the death of the athlete. A Last Will and Testament directs how assets will be distributed upon death and names guardians for minor children, but it is not private. Wills are “published” in the court and can be viewed by anyone. A Trust can take the place of a Will because it also directs the distribution of assets upon the athlete’s death, but it is not published in court. Instead, it is a private instrument that is managed by the athlete’s designated trustee upon their death. During the athlete’s life, the trust can also manage the athlete’s assets. Trusts can hold real estate, stocks, bonds, and even NIL rights, which hold value long after an athlete’s career is over. For many athletes, we take it a step further and establish certain trusts in states that provide an extra layer of privacy and creditor protection. Proactive Privacy Protection Privacy for athletes is not just about dodging the paparazzi; it is about controlling the narrative surrounding their professional and personal reputation, in addition to safeguarding their financial information. Establishing Corporate Structures. The use of Limited Liability Companies and other corporate structures can hold real estate interests, vehicles, and investments instead of holding those assets in the athlete’s personal name. Those corporate interests can then be “funded” into a trust instrument, as explained above. Securing their Digital Footprint. The digital footprint is a new facet of an athlete’s legacy and must be considered. There are cyber companies (www.360privacy.io) that monitor on-line mentions, prevent hacking, and help remove destructive and false claims to protect the athlete’s reputation and legacy. Companies like Regal Credit (www.regalcredit.com) take protective measures to safeguard an athlete’s credit and financial assets, as well. Minimize public records – For real estate purchases, athletes can use tools like trusts and corporate structures to ensure that their names are not disclosed via public records. Planning for the Unexpected. The average career of a professional athlete is, by any definition, short: the NFL athlete’s career hovers just over three years, and the NBA athlete’s career lasts about five years. Athletes have the added risk of an even shorter career in the event of an injury or any number of other unforeseen events. Planning now helps avoid chaos later. Insurance. Connecting with a reputable insurance advisor can be game-changing to cover injuries and disabilities if the athlete is unable to play, even temporarily. Life insurance not only covers the athlete’s family upon death but can also be an opportunity for investment strategy, particularly when income is earned quickly but for a shorter duration. Some athletes even invest in liability insurance to protect themselves from extortion attempts. In fact, Ernst and Young report that professional athletes sustained almost $600 million in fraud and extortion-related losses from 2004 to 2019, a number that has continued to climb. Pre-nuptial agreements. We all know the statistics: one in two marriages ends in divorce. Athletes are no different, and the added stressors of constant travel, a grueling training schedule, and fame can make marriages particularly vulnerable and challenging to maintain. Prenuptial agreements are a must for athletes to ensure that their hard-earned savings are protected, even in the event of a divorce. Update Your Plan Regularly An athlete’s life and financial situation will evolve over time; income levels, contracts, relationships, and even states of residence change with great frequency. An athlete should revisit their plan immediately after signing a new contract, upon injury, following a major purchase, upon marriage, the birth of children, upon retirement or when starting a new business venture. A properly created plan should be nimble and easy to update. Work with a Trusted Team As with any team sport, you should not go it alone. An athlete’s privacy and estate strategy should be guided by an experienced estate planning attorney, a licensed financial professional, a tax advisor, a security and privacy consultant, and an insurance professional. Athletes work hard to build a legacy on and off the field. By taking a proactive approach to privacy and estate planning, athletes can protect their assets, support their loved ones, and maintain control of their personal legacy.
May 30, 2025
Estates and Trusts
Estate Planning: Peace of Mind for Uncertain Times
In the late 19th century, death was almost fashionable. Funerals were well attended and even rivaled weddings in their splendor and expense. Department stores offered an array of luxury clothing for grieving mothers and widows. Black fabrics were reserved for those in deep mourning. Then shades of gray and mauve were mixed in as one felt able to rejoin society. If death wasn’t celebrated, it was at least taken very seriously. But then, our Victorian cousins were closer to death than we are today. The average person didn’t live to see his 50th birthday, and more than three-quarters of all deaths occurred in children under the age of five. Today, people are living longer than ever, and as a consequence, death is considerably less in vogue. Improvements in medical care, diet, and occupational safety have prolonged life. Still, they have done little to combat the new threats to our existence. The terrors of shootings and random acts of violence, the perils of hurricanes and other natural disasters, and the specter of civil unrest and even all-out war are reason enough to worry about what might lie ahead. In times like these, peace of mind comes controlling the things you can and being prepared for the unexpected, which means setting aside money for an emergency, having health and life insurance, and even safeguarding against your own disability or death. This last item can be the most challenging to consider. It includes thinking about what would happen if you couldn’t manage your own finances or health care. Someone should be put in charge of these essential responsibilities under a durable power of attorney and an advance medical directive. Armed with these documents, your spouse, partner, or someone else you trust can look out for your best interests if you ever become incapacitated. Without a power of attorney, it could be necessary for a loved one to become your legal guardian through a court proceeding. Guardianships usually require letters of certification from two healthcare professionals who have examined you, as well as an attorney to represent both you and the person seeking to become your guardian. The process is expensive and time-consuming, but it can be avoided altogether with a durable power of attorney. Failing to prepare an Advance Health Care Directive can also lead to unfortunate results. Responsibility for medical decision-making would probably fall to your next of kin, regardless of who that might be. It could be a spouse, but for a single person, an estranged family member could suddenly be responsible for making life-and-death decisions on your behalf. Without an advance medical directive, it’s not uncommon for multiple people to have this authority. For example, if your next of kin were a group of siblings, they might argue among themselves as to what sort of medical care you should receive. Some could remember you as a fighter who would want to try every possible treatment before giving up, while others might feel that you should be kept comfortable and not be allowed to suffer. An even worse outcome can occur when someone fails to prepare a will. It’s tempting to think that the “right people” will inherit when someone dies without a will. However, the rules of inheritance may provide only a portion of the estate to a surviving spouse and nothing at all to an unregistered domestic partner. In these times of uncertainty, take control of the things you can. Speak with an Estates & Trusts attorney about preparing a will and other planning documents to protect yourself and the people you care about. Then, enjoy the peace of mind that comes from knowing that you are prepared for some of life’s uncertainties.
April 16, 2025
Estates and Trusts
Building Adaptive Trusts: Ensuring Tax Efficiency in an Evolving Tax Landscape
The lifetime estate tax exemption amount is as high as ever. The estate tax exemption amount rose from $1,000,000 in 2002 to $5,000,000 in 2011. Then, Congress doubled the amount of the estate tax exemption in 2018. As of this writing, the current lifetime exemption amount is nearly $14,000,000 per individual. With such high exemption amounts, there are few estates subject to federal estate tax. The focus of estate planning has, therefore, shifted from removing assets from a decedent’s estate to minimize or eliminate estate taxes, to ensuring that assets remain in the estate for estate tax purposes so that the assets receive a step-up in capital tax basis at the time of death. The “step-up” in the capital tax basis of assets means that for capital gains tax purposes, assets in a decedent’s estate will reset to the fair market value of these assets at the time of their death. By way of illustration, if a stock were bought for $100 and appreciated to $1,000 at the time of the account holder’s death, the beneficiary would only pay capital taxes on any further appreciation above $1,000. If the beneficiary sold the stock for exactly $1,000, no taxes would be owed. On the other hand, assets gifted during lifetime or held in an irrevocable trust do not receive a step up in capital tax basis. With the ever-shifting tax landscape, the estate planner must carefully balance the likelihood that their client will have a taxable estate at the time of their death with the desire to include appreciated assets (especially assets with a low capital tax basis) in the Decedent’s estate so that they will enjoy the step-up. But what happens if that calculation seems imprudent or unwise based on facts and circumstances in the future? For example, suppose Peter wishes to provide all his assets to his wife, Mary. Peter’s assets, when combined with Mary’s assets, will be close to or exceed the lifetime estate tax exclusion amount. When Peter passes away, assets received by Mary will not generate any estate tax liability because spouses enjoy an unlimited marital tax deduction. However, it is possible that Mary may now have a taxable estate upon her death, especially if her assets continue to appreciate over her lifetime. Thus, the beneficiaries of Mary’s estate will pay estate taxes on the assets they receive in excess of the lifetime exemption amount in effect at the time of Mary’s death. There are several ways to address these concerns and minimize or eliminate any estate taxes that may be owed in the future. Peter could remove some of his assets from his estate by establishing an irrevocable trust. This trust could be established either during his lifetime or via the use of testamentary trusts (i.e., a trust established at the time of Peter’s death). However, Peter may want to avoid the costs and inconvenience of trust administration if it is possible that he and Mary will never have estate tax issues. Another option is the “wait and see” approach using a “disclaimer trust” that may or may not be funded after Peter’s death. Peter could direct in his will or revocable trust that his assets will pass outright to Mary. Mary may then make a qualified disclaimer, effectively refusing to accept some or all of Peter’s assets. Any disclaimed assets will bypass Mary’s estate and go into the disclaimer trust, which can be used to support Mary for the remainder of her lifetime. The assets that pass to the disclaimer trust, and any subsequent appreciation in these assets, will remain outside of Mary’s estate and will pass estate tax-free to her future beneficiaries. Suppose after funding the disclaimer trust that Mary’s assets are significantly spent down and exhausted during her lifetime. Perhaps a future Congress will increase the estate tax exclusion amount further or completely eliminate the estate tax. In any of these scenarios, the disclaimer trust will serve no tax purpose for Mary. Worse, the assets in the disclaimer trust will not receive the “step-up” in the capital tax basis at the time of Mary’s death. Is there a way to unwind the disclaimer trust and ensure that these assets are includable in Mary’s estate at the time of her death? With careful planning, the answer is “yes”. One powerful technique to resolve this issue is by appointing a trust protector for the disclaimer trust. A “trust protector” is a disinterested party with specific enumerated powers. The trust protector could be given the power to confer upon Mary a general power of appointment to choose any beneficiary she wishes to receive her estate assets, even her own estate. Pursuant to IRC § 2041, assets subject to a general power of appointment are includable in the power holder’s estate for estate tax purposes. Now, whether Mary exercises her general power of appointment or not, the assets will be included in her taxable estate and receive a step-up in capital tax basis. While this planning technique can provide significant tax benefits, it is not always the right choice in every situation. For instance, if Mary were to face creditor issues, granting her a general power of appointment would subject the entire disclaimer trust’s assets to creditor claims. However, when implemented thoughtfully, incorporating a trust protector with the ability to grant a general power of appointment adds valuable flexibility, allowing the estate plan to adapt to the ever-evolving tax laws and optimize tax outcomes.
April 3, 2025
Estates and Trusts
Trustee's Standing in Estate Distribution: A Legal Analysis of Estate of Barry Tarlow
In a groundbreaking decision that could reshape the landscape of California estate law, the Court of Appeal in the Second District Division Four has ruled in favor of trustee David Henry Simon, affirming his right to seek a judicial determination of trust assets under Probate Code section 11700. The court's ruling clarifies the legal framework under which trustees can seek judicial determination of their rights to trust assets, emphasizing the application of Probate Code section 11700. This pivotal ruling is a must-read for estate law practitioners, trustees, and beneficiaries as it navigates the complexities of estate administration with unprecedented clarity and precision. Factual Background Barry Tarlow, a prominent criminal law attorney, executed a will in 2005, with minor modifications in 2006, which held terms for a testamentary trust. The will divided his estate between his siblings, Barbara and Gerald. Gerald was to receive his share outright, while Barbara's share was to be placed in the "Barbara Tarlow Trust," with David Henry Simon named as trustee. Following Barry's death in April 2021, Barbara and Gerald became executors of the estate, and Simon retained his role as trustee. The Barbara Tarlow Trust was a spendthrift trust, which provided that upon Barbara’s passing, the residue would go entirely to Gerald, if living, or otherwise, to a donor-advised fund at Fidelity Charitable Gift Fund. The estate administration process revealed that Barbara's share, intended for the trust, was valued at over $20 million. Barbara disagreed with the use of the spendthrift trust and purchased from the contingent remaining beneficiary, donor-advised fund at Fidelity Charitable Gift Fund, the interest that might go to them to have a power of appointment. Further, to gain control over the trust assets, Barbara and Gerald filed an ex parte petition to replace Simon as trustee and modify the trust terms. After a denial of the ex parte petition, Barbara then disclaimed her entire interest in testamentary trust and Gerlad disclaimed his interest in the estate's personal property. As the joint executors, Barbara and Gerald filed a petition for final distribution, which would remove any distribution to the testamentary trust based on the disclaimers. This led to a series of legal disputes over the final distribution of the estate, including Simon filing a petition to determine beneficiaries of the estate under Probate Code section 11700. Legal Issues and Court's Analysis The central legal issue was whether Simon, as the named trustee, had standing to file a petition under Probate Code section 11700. This section allows any person claiming to be entitled to a share of the estate to seek a court determination of their rights. Simon argued that his role as trustee entitled him to such standing, while Barbara held that her disclaimer prevented such an interest to Simon as there was, therefore, no testamentary trust for him to administer. The court first analyzed the language of the code section as far as standing, providing that "any person claiming to be a beneficiary or otherwise entitled to distribution." In rendering their ruling, the court stated that this phrase, as included by the legislature, was broad and inclusive, allowing a wide range of individuals to file a petition for court determination. As such, it encompasses not only direct beneficiaries but also trustees and others who may have a claim to the estate assets. The Court of Appeals held that trustees are indeed "persons claiming to be entitled to distribution of a share of the estate" under Probate Code section 11700, reasoning that trustees are "persons entitled to distribution" because they are responsible for managing and distributing trust assets according to the terms of the will. This decision underscores the trustee's legal title to trust property, which vests as of the decedent's death, giving them a legitimate claim to the estate's distribution. The court's interpretation of section 11700 provides a clear precedent for future cases involving trustee standing in probate matters. Although Barbara argued that her disclaimer presumptive prevented Simon’s standing, the court highlighted that the presumption of the validity of disclaimers is not conclusive and can be challenged, which was contrary to the trial court’s assumption in these proceedings. This aspect of the ruling emphasized the need for a thorough judicial review of disclaimers and other estate-related documents. Ultimately, the Court of Appeals remanded the case for further proceedings to determine the validity of Simon's claims and Barbara's disclaimer, indicating that factual disputes should be resolved through evidentiary hearings. Conclusion and Implications The Estate of Barry Tarlow marks a pivotal moment in estate law, reinforcing the vital role of trustees and the necessity of procedural rigor in probate proceedings. By affirming the trustee's standing and emphasizing the importance of judicial review, this ruling ensures that the administration of estates is conducted with fairness and transparency. Legal practitioners, trustees, and beneficiaries can look to this case as a guiding beacon, illuminating the path to equitable and just estate distribution. This ruling has significant implications for drafting attorneys, trustees and beneficiaries alike. For drafting attorneys, the decision underscores the need for precise and detailed trust provisions to account for potential court involvement, which could complicate the estate planning process and necessitate more extensive legal advice. Trustees gain enhanced authority to manage and distribute trust assets, but they must be vigilant against potential misuse of their standing and be prepared for increased litigation risks. Beneficiaries benefit from greater protection, as trustees can now more confidently seek court intervention to safeguard their interests. However, this ruling may also lead to more frequent challenges to trustee actions, potentially straining relationships and increasing disputes. Overall, while the ruling strengthens the legal framework for trustees, it introduces complexities that all parties must navigate carefully. As the legal community absorbs the implications of this landmark decision, it is clear that the principles established here will resonate through future probate and trust law cases, shaping the landscape of estate administration for years to come.
April 2, 2025
Estates and Trusts
Cultural Perspectives on End-of-Life Planning: Traditions, Taboos, and Practical Considerations
The United States is an ever-changing cultural landscape. As a nation of immigrants, we are a complex patchwork of individuals from diverse backgrounds, each bringing distinct ethnic, cultural and religious beliefs. Estate planning attorneys must recognize and respect these differences, as they are deeply embedded in our social structure. To be culturally competent attorneys, we must view each client as a unique individual whose background may influence decisions regarding estate distribution, end-of-life planning and burial arrangements. Cultural Influences on End-of-Life Planning End-of-life planning involves some of the most intimate decisions a person may make, often shaped by religious and cultural beliefs. Attorneys cannot assume a client’s preferences regarding burial, cremation or body donation. Additionally, alternative burial practices such as green burials or organic reduction are gaining popularity, though they may be restricted in certain states or prohibited by specific cultural or religious traditions. Despite the discomfort these discussions may bring, engaging in frank and honest conversations with clients is essential to ensure their final wishes are honored. Religious and Cultural Funeral Practices Islam Islamic law emphasizes minimizing harm. When making end-of-life medical decisions, Muslims are encouraged to pursue treatments that preserve life while avoiding those that may cause unnecessary suffering. As death approaches, a Muslim may lie on their right side, facing Mecca. Upon passing, the deceased’s eyes and mouth are closed, and family members recite a final prayer. Islamic funeral customs require that the body be washed, shrouded, and buried as soon as possible. Embalming is generally prohibited, and cremation is strictly forbidden. The deceased is placed on their right side in the grave, facing Mecca, often with a layer of rocks covering the gravesite to prevent direct contact with the soil. Judaism Judaism also emphasizes the sanctity of life and minimizing suffering. Aggressive medical intervention is encouraged only when it does not prolong suffering. After death, mourners traditionally tear their clothing as a sign of grief. The body is cleansed, groomed, and wrapped in a simple white shroud. A designated “shomer” (guardian) remains with the body until burial, which should occur within 24 hours. Traditional Jewish burials use plain wooden caskets with no metal fastenings. Embalming and cremation are discouraged, and mourners may take part in filling the grave with soil as a final act of respect. Buddhism Buddhist traditions focus on facilitating a peaceful transition to the next life. Burning incense during a person’s final moments may be customary. After death, the body is often left undisturbed for a period, typically up to a week, to allow the soul to transition peacefully. Buddhist funeral customs vary by region, but cremation is the preferred method of disposition, as it is believed to free the soul. In Tibetan Buddhist tradition, a high-altitude burial, where the body is offered to vultures, is customary, though this practice is not permitted in the United States. Catholicism Catholics receive three sacraments at the end of life: anointing of the sick, confession, and Holy Communion. These sacraments provide spiritual comfort, forgiveness, and preparation for the afterlife. The anointing of the sick involves a priest blessing the individual with sacred oil, confession allows for absolution, and Holy Communion serves as spiritual nourishment. A Catholic funeral typically includes a vigil, a Funeral Mass and a Rite of Committal. While cremation is allowed, traditional burial is preferred, and cremated remains must be buried rather than scattered or kept at home. Eastern Orthodox Christianity Eastern Orthodox Christians emphasize sacraments at the end of life. A priest administers the final confession and Holy Communion, and individuals are encouraged to avoid medications that may cloud their consciousness during these sacred moments. After death, the family washes and clothes the body in the presence of a priest. Embalming is optional. A wake is held before the funeral, and hymns, such as the Trisagion, are sung during the procession from the funeral home to the church and then to the cemetery. Cremation is not permitted, as the body is considered sacred even after the soul has departed. Chinese Funeral Customs Chinese funerals are deeply rooted in tradition, with customs varying based on geography and religious beliefs. However, certain elements remain consistent across different communities. Before the funeral, families often consult a feng shui master to determine an auspicious date and time for the funeral and burial. In some cases, the master may also select the grave’s location, which is traditionally on a hillside but never beneath a tree. The deceased is typically dressed in white, though individuals who lived to be 80 or older may be clothed in colorful garments to celebrate the long life. Family members customarily hold a three-day visitation period, during which they spend time with their loved ones before the funeral. When the casket is sealed, all family members turn their backs to avoid the belief that their souls could be trapped inside. Similarly, they avert their gaze when the casket is lowered into the grave. Incense is often burned throughout the funeral service and at the gravesite as a sign of respect. Families may also burn spirit money, known as “joss paper,” to ensure their loved one’s comfort in the afterlife. While cremation is permitted, it is customary for family members to witness their loved one being placed in the cremation chamber. Hindu Funeral Customs Hindu funeral rites are deeply intertwined with the belief in reincarnation. Since the physical body is no longer needed after death, cremation is considered the most effective way to release the soul and facilitate its journey toward rebirth. Before cremation, the body undergoes a sacred cleansing ritual, during which it is washed with ghee, honey, milk, and yogurt. The head is anointed with oil, the hands are placed in a prayer position, and the big toes are tied together. The deceased is traditionally wrapped in a white sheet, adorned with a garland of flowers and rice balls. A lamp is placed near the head as part of the ritual. Hindu tradition emphasizes a swift cremation, usually within 24 hours of death. Until then, the body remains at home, allowing family members to pay their respects and participate in final rites. Unique Cultural Funeral Practices South Korea: Burial Beads In 2000, South Korea enacted a law requiring the removal of remains from burial sites after 60 years due to limited space. As an alternative, many South Koreans now transform their loved ones cremated remains into colorful beads, which are displayed in homes. This practice has also gained popularity among South Koreans who live in the United States. Ghana: Fantasy Coffins In Ghana, elaborate, custom-made coffins celebrate the deceased’s personality, profession or passions. These artistic coffins, crafted in shapes such as animals, airplanes, or everyday objects, serve as tributes and works of art, ensuring a vibrant and meaningful send-off for loved ones. Conclusion These are only a short list of the different cultural and religious traditions influencing end-of-life planning. Estate planning professionals must be sensitive to these diverse perspectives to ensure that the clients’ wishes are properly honored. By fostering open discussions and respecting cultural practices, attorneys can provide thoughtful, personalized guidance that aligns with their clients’ values, beliefs and traditions.
March 21, 2025
Estates and Trusts
How to Have "The Talk" About Estate Planning with Your Parents
Estate planning is one of the most important conversations you’ll ever have with your parents. Discussing wills, trusts, and end-of-life wishes can feel uncomfortable, but having a clear plan in place can save your family from confusion, conflict, and stress down the road. If you’ve been putting off the conversation, you’re not alone. Many adult children hesitate to bring up estate planning for fear of upsetting their parents or appearing greedy. But the truth is, approaching the topic with care and respect can actually strengthen family bonds and ensure that everyone’s wishes are honored. Moreover, learning about your parents’ plan may lead to additional productive conversations—if you are independently wealthy or have creditor concerns, you may not want your parents to leave you assets outright—you can encourage your parents to optimize their planning through the use of trusts or other alternatives. Here’s a step-by-step guide to having "the talk" about estate planning with your parents — without awkwardness or tension. Find the Right Time and Setting Timing and environment matter when discussing sensitive topics. Choose a time when everyone is relaxed and not rushed. A calm and private setting will help everyone feel more comfortable and open. Tip: If you’ve done your own estate plan, then an easy way to start the conversation naturally could be: “I’ve been working on my own estate plan and realized how important it is. Have you thought about yours?” Approach It with Care and Empathy This isn’t about money — it’s about protecting your parents’ wishes and avoiding family disputes later. Make it clear that your goal is to understand and respect their choices, not to control or influence them. Instead of saying, “We need to talk about your will,” try: “I want to make sure we’re prepared as a family if anything happens.” “It’s important to me that your wishes are honored — can we talk about how you’d like things handled?” By framing it as a conversation about their legacy and peace of mind, you’ll help them feel more at ease. Ask Open-Ended Questions Rather than diving straight into the details of their will or assets, ease into the conversation by asking thoughtful, open-ended questions like: “Have you thought about how you’d like your estate handled?” “What matters most to you when it comes to your legacy?” “If something were to happen, how would you want us to handle things?” Give them time to process and respond without pressure. If they hesitate or seem uncomfortable, reassure them that you’re there to listen, not to push. If they don’t feel comfortable discussing the details with you, offer to help them find an experienced estate planning attorney. Discuss the Essentials Once the conversation is flowing, gently introduce key estate planning elements. If they permit you to do so, include an estate planning attorney in the dialogue: Will: Do they have a will? Is it up-to-date and legally sound? A will ensures that their assets are distributed according to their wishes and can prevent costly legal battles. Trusts: Trusts can offer more control over how and when assets are distributed while helping avoid probate and potentially reducing estate taxes. Ask questions like: “Have you considered setting up a trust to protect certain assets?” “Would you want to make sure certain funds are distributed over time rather than all at once?” “Would a revocable or irrevocable trust make sense for you?” Many people don’t realize how flexible and powerful trusts can be for protecting assets and reducing tax burdens. Estate Taxes: Depending on your parents' estate size, estate taxes could significantly reduce the amount passed on to heirs. Questions to consider: “Have you spoken with an advisor about strategies to minimize estate taxes?” “Would you like to explore options like gifting or charitable donations to reduce tax liability?” “Should we look at how setting up a trust could reduce taxes?” Understanding how estate taxes work can help you and your parents make more informed decisions about structuring their estate. Power of Attorney: Have they appointed someone to make financial or healthcare decisions if they’re unable to? A durable power of attorney can give someone authority to manage their financial affairs, while a healthcare power of attorney ensures their medical wishes are respected. Healthcare Directives: Do they have a living will or healthcare proxy to outline their medical wishes? These documents help guide medical decisions if they’re unable to communicate. Beneficiaries: Are their assets (e.g., life insurance, retirement accounts) designated correctly? Beneficiary designations can override what’s written in a will, so they need to be up to date. Executor/Trustee: Have they named someone to carry out their wishes? This person will handle closing accounts, distributing assets, and working with the courts if needed. This isn’t about getting into the nitty-gritty details; it’s about ensuring the basics are covered, and that someone knows where to find important documents. Offer to Help (But Respect Their Decisions) Your parents might not have all the answers. Offer to help them get organized by suggesting they meet with an estate planning attorney. You could say: “Would you like me to help you find an attorney?” “If you want to put together a list of accounts and documents, I’m happy to help.” Of course, their estate plan is ultimately their decision. Your role is to support, not control. Keep the Conversation Going Estate planning isn’t a one-and-done conversation. Circumstances change — marriages, divorces, births, deaths, and financial shifts all impact an estate plan. Check-in periodically with your parents to see if they need to make updates or have questions. Keeping an open line of communication will help avoid misunderstandings later. Thank Them for Their Trust Talking about estate planning requires vulnerability — from both sides. Thank your parents for opening up and trusting you with such personal matters. Let them know how much it means to you that they’re taking steps to protect their legacy and make things easier for the family. Follow Up with Next Steps Once the conversation is underway, help your parents take action: Encourage them to meet with an estate planning attorney. Suggest setting up a trust if it makes sense for their situation. Help them gather financial records, account details, and important documents. Work with them to create a list of assets and liabilities. Following up shows that you’re invested in helping them protect their legacy — without pushing them to make uncomfortable decisions. Final Thoughts Discussing estate planning with your parents isn’t easy — but it’s one of the most loving things you can do as a family. By approaching the conversation with empathy, patience, and respect, you’ll help ensure that your parents’ wishes are honored and that your family is prepared for whatever the future holds.
March 20, 2025
Estates and Trusts
Not Considering the Importance of Charitable Giving
This is Part 10 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. When a client’s family does not wish to inherit a collection or if its inclusion in the estate would create a significant tax burden, it is crucial to explore charitable giving options. Proper planning can help maximize the benefits of a donation while avoiding unintended legal and tax complications. Ensuring the Charity Will Accept the Gift While many clients may assume that institutions will welcome their generous donation, not every organization is willing or able to accept a collection. Before naming a charity as a beneficiary in estate planning documents or making a present gift, it is essential to confirm the charity’s willingness to accept the donation and any conditions the client wishes to impose on its use. Establishing this agreement in advance can prevent post-mortem disputes and ensure the estate qualifies for the intended tax deductions. Tax Benefits of Lifetime Charitable Giving Beyond philanthropy, charitable gifting can provide substantial tax benefits. Clients should be advised on the income tax advantages of donating all or part of their collection during their lifetime. A charitable income tax deduction is available for contributions of art and collectibles to a public charity, provided the property qualifies as capital gain property and meets the related-use rule (discussed below). If these conditions are met, the donor can deduct the full fair market value of the collection in the year of transfer, subject to a limit of 30% of their adjusted gross income (AGI). Any excess deduction may be carried forward for five years. Since the property must qualify as capital gain property, a lifetime charitable deduction for the donation of art or collectibles is only available to clients who qualify as collectors. As noted in Mistake #1 of this series, creators and dealers recognize ordinary income upon the sale of art and collectibles. Moreover, creators have little incentive to donate their work during their lifetime, as any charitable deduction would be limited to the cost of materials rather than the item’s fair market value. Under the related-use rule, the donee charity must use the donated property in a manner that aligns with its exempt purpose under Internal Revenue Code Section 501. If the charity’s use is unrelated to its mission, the donor’s deduction is limited to the property’s cost basis rather than its appreciated value. Additional limitations apply under the Pension Protection Act of 2006 if the charity sells the donated property within three years of receipt unless the organization certifies that the donation was used for its exempt purpose. For the creator and dealer, it usually makes more sense to consider selling the item and donating the proceeds to charity. Doing so avoids the related-use rule and the requirement that the item be capital gain property. In such a case, the charitable deduction may offset, most if not all of, the ordinary income realized on the sale. Public Charities vs. Private Foundations Clients should also understand the key differences between donating to a public charity versus a private foundation. Donations to public charities allow a deduction based on the collection's fair market value, provided the collection is capital gain property and the related-use rule is met. Donations to private foundations, however, only permit a deduction based on the donor’s cost basis, and the deduction is limited to 20% of AGI. Excess amounts may still be carried forward for five years. Fractional Gifts and Changes Under the Pension Protection Act One of the biggest challenges in lifetime charitable gifting is persuading clients to part with their collection while they are still alive to enjoy it. Before August 17, 2006, clients could donate a fractional interest in tangible personal property, allowing them to share ownership with a charity while retaining partial possession. However, the Pension Protection Act introduced stricter valuation, time, and use limitations that impact the deductibility of fractional gifts. Under IRC Section 170(o), the deduction for a fractional gift is now limited to the lesser of: The value used to determine the deduction for the initial fractional donation, or The fair market value at the time of subsequent contributions. Additionally, the donor must fully transfer their interest in the property within 10 years of the initial fractional gift or before their death—whichever comes first. The recipient charity must also take substantial physical possession of the item within one year of the initial gift (and within one year of any additional gifts) and satisfy the related-use rule. Failure to meet these conditions may result in the recapture of previous deductions, plus interest and an additional 10% penalty. Charitable Bequests and Estate Tax Benefits An outright donation of a collection upon death—whether to a public charity or a private foundation—qualifies for an estate tax charitable deduction based on the fair market value at the time of death. Importantly, bequests of tangible personal property generally do not trigger the related-use rule, making this a valuable option for clients seeking to preserve their collection’s full value for charitable purposes. However, clients planning to donate a collection upon their death should always consult with the intended recipient during life to confirm the organization’s willingness to accept the gift. A public charity’s acceptance of art and collectibles typically depends on whether the donation aligns with its mission and whether it has the necessary facilities and financial resources to store or display the collection.
March 12, 2025
Estates and Trusts
Not Discussing Collections with Heirs
This is Part 9 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A collection may hold deep personal significance for a client but may not carry the same sentimental or financial value for their heirs. It is essential to encourage clients to have open conversations with their heirs, as appropriate, to understand their intentions and expectations. In many cases, heirs may see a collection primarily as a financial asset rather than a legacy to preserve. Clients should consider alternative disposition strategies beyond an outright bequest if they intend to sell the collection. For instance, donating the collection to a museum, establishing a trust, or selling select pieces during their lifetime may better align with their goals. Even if heirs wish to keep the collection, clients should clarify whether they intend to retain it in its entirety or only select pieces. This distinction is crucial, as valuation discrepancies can arise when certain items are allocated to specific individuals, potentially impacting the overall fairness of asset distribution. Many clients express a desire to donate their collections to museums. However, before proceeding with such a gift, it is essential to confirm that the museum is willing to accept the items. Many museums already have extensive collections in storage and may not be interested in acquiring additional pieces. Additionally, if a museum does agree to accept a collection, it often requires a financial contribution to cover ongoing maintenance and preservation costs. Contacting the museum or other recipient organization before making the gift – especially if the donation is planned through a will or other testamentary document – is essential to ensure its acceptance. Most importantly, clients should consult with an expert in art succession planning. A knowledgeable advisor can help structure a well-organized, tax-efficient plan during life or at death and ensures a smooth transfer of the collection while honoring the client’s wishes.
March 7, 2025
Estates and Trusts
Essential Legal Documents Transpeople Must Update for Protection
Navigating life as a transgender individual involves critical steps toward ensuring that your identity is recognized legally and accurately, particularly in the current political climate. Updating your legal documents is an essential part of the process, especially in a world where current systems are not designed with gender diversity in mind. Updating these documents not only reflects your true identity but can also help you avoid potential challenges, whether it is at the doctor's office, in the workplace or when traveling. Below is a comprehensive list of essential legal documents that every trans person should consider immediately to ensure their identity is represented accurately: Legal Name Change One of the most important steps in affirming your gender identity is ensuring your government-issued identification reflects your gender and name. The process of a name change is different in every state. In New York, your local county Supreme Court provides an administrative form to request a name and gender marker change, which is the first step to ensure that all other government IDs can then be changed to align with your true identity. Once approved in New York, you will receive a court order to reflect your name and gender marker. A court order is not required in all states; many states have an administrative process to effectuate the change. Name Change: In New York, unless you are changing your name via marriage, adoption, divorce or citizenship, a court order is required. Once your name and gender marker are legally changed via court order, you may then update your driver’s license and begin the process of updating all other government IDs, including the reissuance of your birth certificate as discussed below. Gender Marker: In some states like New York, you can update the gender marker on your identification to reflect your gender identity. While the process and requirements vary by state, as discussed below, some states require proof of medical transition or a letter from your healthcare provider. Birth Certificate The birth certificate is a foundational legal document. The process of changing a birth certificate varies from state to state and will involve an administrative process or filing a court petition to obtain a court order or directive reflecting the change in name and gender marker. Name Change: Some states allow you to amend your name on the birth certificate without any additional steps or documentation, while others may require a court order. Gender Marker: New York allows you to amend the gender marker on your birth certificate. As of February 2025, Florida, Kansas, Montana, Oklahoma, Tennessee, and Texas are the only states that prohibit the changing of gender marker. Alabama, Arizona, Arkansas, Georgia, Guam, Kentucky, Louisiana, Michigan, Missouri, Nebraska, North Carolina, and Wisconsin all require medical proof of gender change. Certainly, many states make it challenging to amend the gender marker, but it is absolutely worth pursuing to ensure that your birth record aligns with your gender identity. Social Security Upon your legal name change you should update your records with the Social Security Administration (“SSA”). Updating your Social Security records ensures that your name aligns with your legal identity, especially for the purposes of employment, Social Security Disability or Retirement benefits, and taxes. In some states, failing to update your identity with the SSA could even result in the suspension or revocation of your state driver’s license. Name Change: You may update your name by submitting a legal name change document to the Social Security Administration, which is available online at www.ssa.gov. Gender Marker: As of the date of this publication, the Trump Administration has issued a directive to exclude the use of gender marker “X” and prevent the update of gender markers to reflect a transition. Passport Updating your United States Passport information is important for those who wish to travel outside of the country. Your passport must reflect your name and should reflect your gender to ensure ease of travel. A passport reflecting your true identity is necessary not only to leave the US but also to deal with border officials, obtain visas, and participate in immigration processes in other countries. It should be noted that an inconsistent gender marker does not automatically prohibit your travel, but it may cause complications within the United States when leaving or upon arrival in a different country. Name Change: To update your United States Passport, you will need to provide the court order or administrative ruling from your state reflecting your name and a copy of your newly issued birth certificate. Gender Change: The Trump administration has suspended issuing passports with X markers and passport renewals with differing gender markers. This directive is currently pending litigation and there has been no final determination of its legality. As of the date of the publication of this article, it is being widely recommended by trans-rights groups that until there is a legal determination and the policy is released, trans people who have a current, valid passport should refrain from attempting to renew or change it. Health Insurance and Medical Records Your health insurance and medical records should reflect your correct name and gender to prevent confusion and ensure that you are receiving the appropriate medical care. It goes without saying that doctors entrusted to provide medical care and treatment for their patients should be informed of your proper name and gender in the furtherance of health care. HIPAA requires that healthcare providers update a person’s gender identity or transition care and are prevented from sharing this information without your express consent. However, there are several legal battles brewing in states regarding the release of this information for minors and gender-affirming care. Health Insurance: You should contact your insurance provider to update your name and gender on all of your insurance records. In general, proof of a name change and gender markers are requested. Medical Records: Update your doctor, therapist, and other healthcare providers on your name and gender marker so that your medical records accurately reflect your identity. This will also help you avoid issues when seeking medical care, such as incorrect gender-specific treatments or tests. Employment Records Updating your name and gender with your employer ensures that your employer recognizes your identity at your company. Providing this updated information to your employer will avoid unnecessary confusion in official communication from your company, payroll, retirement benefits and health care benefit administration. Name Change: Once you have legally changed your name in your state, you must notify your employer so that your employer may update their records, including the name on your paychecks, your tax documents and your benefits enrollment. Gender Marker: Some employers offer the ability to update gender markers in their records, which can be important for workplace respect and to avoid misgendering. Many employers provide the opportunity for its employees to indicate their gender within office systems, such as email and signature blocks, to promote a culture of respect and affirmation. Estate Planning Transgender individuals should make sure their estate planning documents reflect their identity and desires. They should also ensure that their loved one’s estate planning documents naming them also reflect their name and gender marker changes. These documents may include: Executor, Trustee and Beneficiary Updates: Ensure that your name is properly reflected in your own estate planning documents such as your Last Will and Testament and Trust instruments. For others, ensure that the names of your chosen executors and beneficiaries in your documents are accurate and that their gender is respected in all related documents so that they can be easily identified in the probate or estate administration process. While many states, such as New York, have done away with gender terminology within official legal documents, it is important to note that others’ estate planning documents must also be changed if you were referred to in your parents’ documents as a daughter or a son and said identification no longer applies to you. Health Care Proxies and Powers of Attorney: Make sure that your health care proxies and health care appointment documentation have been updated with both your proper name and gender markers, as well as your agents’ proper names and gender markers. The same is true for Powers of Attorney, which are presented to financial institutions to gain access to your financial accounts. If an identity cannot be verified, often financial institutions will restrict access to prevent fraud and financial misdealing. Bank Accounts and Financial Documents Financial institutions require legal documentation to update your name on accounts, checks, and credit cards affiliated with the institutions. Name Change: You should provide your legal name change court order or administrative determination to your bank and financial institution to update the name on your accounts, credit cards, and other financial documents. You should also ensure that named beneficiaries on your financial accounts are updated when your loved ones have name changes. Gender Marker: While gender markers do not always need to be updated for financial documents, you may request that your gender be reflected accurately in your account details to avoid confusion. Academic Records Educational records held with universities and educational institutions must properly reflect one’s identity. Diplomas and other credentials should be updated to reflect your name and gender marker. Most private educational institutions allow you to change your records to match your name and gender identity; however state institutions will likely follow state law as it relates to name and gender markers. Name Change: You should contact the registrar at your educational institution or university to request that your name be updated on your academic records and diploma to reflect your identity. Gender Marker: Depending on the institution’s policies, you may be able to update your gender marker in school records. Updating official legal documents is a process that requires legal and administrative processes and often patience. However, it is an important step toward living authentically and without continued administrative hassle. Whether you are transitioning or you simply wish to align your documents with your identity, updating your legal records ensures that you are recognized for who you are.
February 26, 2025
Estates and Trusts
Death Tax Repeal Act
On February 13, 2025, Republican lawmakers in Congress introduced the Death Tax Repeal Act, which aims to permanently eliminate the federal estate tax. Since 2015, various legislative efforts to repeal the estate, gift, and generation-skipping transfer (GST) taxes have been introduced in Congress but have failed to pass. Current Federal Transfer Tax Framework The Internal Revenue Code imposes a tax on an individual’s right to transfer property during life and at death. The federal gift tax applies to lifetime transfers at a rate of 40%, though individuals benefit from a "unified credit" that allows a certain value of transfers to be made tax-free during life and at death. In 2025, the unified credit stands at $13,990,000. Any combined transfers exceeding this amount are subject to the 40% tax rate. Additionally, the GST tax applies to transfers made to individuals who are two or more generations below the transferor or to certain trusts benefiting such individuals. The GST tax is also levied at 40%, with an exemption matching the unified credit amount of $13,990,000. Impact of the 2017 Tax Cuts and Jobs Act (TCJA) Under the 2017 Tax Cuts and Jobs Act (TCJA), enacted during the first Trump administration, the unified credit and GST exemption were temporarily doubled. However, since the TCJA was passed as a reconciliation measure, it is set to expire on December 31, 2025. Unless Congress takes further action, the unified credit and GST exemption will revert to their 2016 levels, adjusted for inflation, or approximately $7,000,000 each. Key Provisions of the Death Tax Repeal Act The Death Tax Repeal Act seeks to go beyond simply extending the TCJA provisions beyond December 31, 2025. If enacted, it would: Permanently repeal the federal estate and GST taxes, allowing individuals to transfer unlimited amounts of property at death free of transfer tax. Establish a permanent $10,000,000 lifetime exemption against the gift tax (indexed for inflation to $13,990,000 in 2025). Transfers exceeding this exemption would be subject to a 35% tax rate. Retain the current "step-up" in basis for capital assets at death, minimizing capital gains taxes for beneficiaries upon the sale of inherited assets. Implications for Estate Planning The passage of the Death Tax Repeal Act would significantly impact estate and wealth transfer planning. Estate planning documents that currently reference the federal unified credit or GST exemption amount would need to be reviewed to ensure they align with the proposed law and the client's intentions. Additionally, several states impose a separate estate or inheritance tax — Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska (County inheritance tax only), New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin — or have decoupled from federal estate tax provisions. If the Death Tax Repeal Act becomes law, many of these states will continue to impose their own estate and/or inheritance taxes. Clients residing in or owning property within these states may require substantial revisions to their estate planning documents to optimize state transfer tax savings. Next Steps Our team of estate and trust attorneys is closely monitoring the progression of the Death Tax Repeal Act in Congress. We are available to answer any questions and review your estate planning documents to ensure they accurately reflect your wishes under the proposed law.
February 25, 2025
Estates and Trusts
Not Properly Insuring a Collection
This is Part 8 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. Accidents happen—whether a piece of artwork or a collectible is damaged in shipping, affected by fire or water or even knocked over by Steve Wynn’s elbow. Having the right insurance in place can help mitigate financial losses and protect a client’s investment. Without proper coverage, even a minor incident could result in significant economic consequences. When insuring a collection, there are three primary options: Including it as part of a homeowner’s policy, Scheduling individual items separately, or Obtaining blanket coverage. For clients with valuable or extensive collections, we often recommend the additional effort and cost of scheduling items separately. This approach typically requires obtaining a qualified appraisal to establish fair market value at the time of coverage. To ensure continued protection, these appraisals should be updated regularly so that coverage reflects the collection’s current worth, rather than its purchase value. Total loss claims are rare. More often, insurers assess the damage to determine if an item is salvageable and provide funds for repairs or restoration. Unfortunately, this can lead to a loss in value that remains unquantifiable until the item is sold. To best protect collectible assets, clients should seek insurance from companies specializing in the relevant categories of items, even if it comes at a higher upfront cost. Additionally, different policies may be necessary if parts of a collection are housed in multiple locations. Are the items in a private residence, a storage facility or on loan to an institution? Are they owned directly by the collector or held within an entity or trust? Understanding these nuances ensures that each piece remains properly protected.
February 25, 2025
Estates and Trusts
Not Keeping Records of Your Purchases and Sales, Location, and Authentication Documents – Implications of Restrictions and Patrimony
This is Part 7 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. The provenance of any item is essential to determining its value. Proper documentation of an item’s history and proof of chain of title help establish authenticity, ensuring the highest fair market value at the time of sale. It also prevents clients from wasting money on items later found to be inauthentic. A complete record of an item’s history and chain of title should include the item’s current location and any restrictions on selling or moving the item. This is particularly important when the asset holds historical significance, and the client plans to transfer items between jurisdictions with high taxes on the sale or use of art and collectibles. Understanding the limitations of an item’s sale or transfer can be crucial. Limitations on the use of artwork, as well as patrimony claims often affect the value of an item. For example, in the Estate of Ileana Sonnabend case, Ms. Sonnabend, an art dealer, owned Robert Rauschenberg’s Canyon, a collage featuring a stuffed bald eagle. Federal laws prohibit the possession or trafficking of bald eagles, dead or alive, making the artwork unsellable – although Ms. Sonnabend’s gallery had received a permit allowing the work to be loaned and exhibited during her lifetime. On the federal estate tax return filed for the estate, Canyon’s value was reported as zero. The IRS Art Advisory Panel challenged the valuation, asserting a $65 million fair market value under the assumption that it could be sold on the illicit market to "a recluse billionaire in China." After litigation, the estate resolved the issue by making a long-term loan of Canyon to MoMA in New York City, receiving a full charitable deduction for its full value. Many nations and communities advocate for the return of artworks that hold historical, spiritual, or national significance, arguing that these pieces were taken under coercive or unethical conditions. Patrimony claims often center on the rightful ownership and cultural heritage of works that have been displaced, looted, or unlawfully acquired. Museums and private collectors frequently face both legal and ethical dilemmas when addressing repatriation demands. The most high-profile case involves the Elgin Marbles—renowned Greek sculptures removed from the Parthenon in Athens and currently housed in the British Museum. A UK parliamentary inquiry in 1816 concluded that Britain had legally acquired the Marbles. However, in 2000, the Greek government, in anticipation of the opening of the new Acropolis Museum in Athens, formally requested their return. In 2013, Greece sought UNESCO’s mediation between the Greek and UK authorities regarding the Marbles’ return, but both the UK government and the British Museum rejected UNESCO's offer to intervene. In 2021, UNESCO asserted that the UK had an obligation to return the Marbles and called on the UK government to begin negotiations with Greece. Despite these developments, the controversy remains unresolved. At the Parthenon Museum in Athens, a portion of the original Marbles are on display with white casts held in place of the Marbles, which are still currently on display at the British Museum. While not every client owns artwork as unique as Canyon or the Elgin Marbles, understanding the nuances of a client’s collection is essential for proper representation and estate planning. Every client should keep clear and accurate records that include the acquisition date of each item, its location, and any restrictions on its use.
February 18, 2025
Estates and Trusts
Protecting Your Family and Future: Essential Estate Planning for the LGBTQ+ Family
Estate planning is a critical part of securing the future for any family, and for LGBTQ+ individuals, it is particularly important given the legal complexities and challenges that may arise in the current political climate. There have been several legal shifts that affect LGBTQ+ families’ rights and protections, which makes it even more essential for LGBTQ+ families to ensure their estates are properly considered, planned, and protected. Below is a simple checklist of estate planning documents that LGBTQ+ families must consider to safeguard their interests, particularly during a time of legal uncertainty and inequitable policies: Last Will and Testament When one thinks of an estate plan, a will is what likely comes to mind: it is considered a fundamental estate planning document. A will directs how a person's property, whether real or personal, should be distributed after death. For LGBTQ+ individuals, a will is especially important because, without one, state laws dictate who inherits your estate and in what proportion. With only limited exceptions, state laws do not recognize non-biological family members, such as a partner or even a registered domestic partner: close friends who are more like family are not recognized in any state. A will provides clarity to ensure that your relationships and wishes are honored, regardless of your family makeup. Why a will matters for LGBTQ+ individuals: If you have a partner but are not legally married, or if you want to leave property or assets to a close friend or chosen family member, a will ensures that these individuals are recognized as your beneficiaries. It also allows you to name the person you choose to oversee the distribution of your assets. While many states require that your biological family is informed of your death and provided a copy of your will, most courts are fiercely protective of directives in a will. As a result, documenting those wishes is imperative to ensure your wishes are carried out in the way that you desire. Without a properly executed will, most states simply distribute assets to your biological family members. Healthcare Directives Advanced healthcare directives such as a healthcare proxy and living will specify both the person you wish to speak for you in a healthcare setting and the type of care you would want (or refuse) in the event you cannot articulate those wishes. The health care proxy appoints an agent who knows you, understands your wishes, will communicate those wishes, and advocate for your rights in a health care setting. The living will outlines the type of care you want including memorializing your preferences for medical treatment or discontinuance of treatment. A living will sets forth whether you want life-sustaining treatment and how you would like to be treated in end-of-life scenarios. Why healthcare directives matter for LGBTQ+ families and individuals: In the event of incapacitation, biological family members may not always know or respect your wishes, particularly if your biological family does not support your identity, lifestyle, or relationships. Naming a healthcare proxy and having a living will in place ensures that your healthcare decisions are in line with your desires, even if your family disagrees or is uninvolved in your life. Without a healthcare proxy, a family member (who may not understand or accept your relationships) may gain control over your medical decisions. Without documentation, most states allow your next of kin to make these decisions, potentially preventing your partner from being involved in your care. Nominating your partner or chosen friend provides them with the legal authority to make decisions consistent with your wishes. Durable Power of Attorney A durable power of attorney (POA) allows you to designate someone, referred to as an agent, to manage your financial matters upon your incapacity. A POA can be tailored to the specific powers you wish to bestow upon your agent. For example, your agent can access your bank accounts, pay your bills, apply for public benefits, and manage investments on your behalf. Why a durable power of attorney matters for LGBTQ+ individuals: LGBTQ+ couples are not recognized as legal next of kin unless they are legally married and, therefore, will face complications if their relationship is not legally formalized, as most financial institutions are unable to speak with others without authority. This is especially essential if partners financially depend on one another but have separate financial accounts; without a POA in place, your partner cannot access your finances in the event of your incapacity. Having a POA ensures that your partner, rather than a biological family member who may not be involved in your life or support your relationship, has the authority to handle your finances, if necessary. Trust A trust is a key estate planning tool that allows you to manage your assets efficiently during your life and distribute your assets after your death without the necessity of probate (which is required with a Last Will and Testament). A trust also allows you to appoint a successor trustee, a person in charge of your trust assets if you can no longer manage your own trust assets. There are different types of trusts that can accomplish many goals within an estate plan, but the common theme is that assets funded in a trust avoid probate, a lengthy and expensive court process. In addition to avoiding probate, trusts do not have to be authenticated by a court or shared with your biological family members, as is the case with a Last Will and Testament. Why a trust matters for LGBTQ+ individuals: A trust can ensure that assets are passed on according to your wishes, even in cases where state inheritance laws might not recognize your partner or chosen family. Trusts can also be structured to provide for specific needs, such as the care of a dependent partner or a loved one, long after you die. Importantly, trusts are much more difficult to contest than wills, thus ensuring that estranged biological family members will not be able to easily upend your carefully constructed estate plan if they do not agree with your choices or your relationships. A trust is also a private document that others cannot access in the same way as a Last Will and Testament, which is a public document that is published in court. Beneficiary Designations Beneficiary designations ensure that your assets pass directly to your loved ones without going through probate. A beneficiary designation can be made on bank accounts, brokerage accounts, insurance policies, and retirement accounts. Relationships can change over time, and therefore, beneficiary designations should be reviewed and updated regularly to reflect your current wishes. Why beneficiary designations matter for LGBTQ+ individuals: If you have a domestic partner or chosen family members, it is crucial to ensure that your beneficiary designations align with your intentions. In most cases, financial institutions will not recognize a domestic partner or non-biological family members unless you have explicitly named them as beneficiaries on your financial accounts and policies. Beneficiary designations are also private and financial institutions are not at liberty to disclose those named as beneficiaries on your accounts after your death. Letter of Intent While not legally binding, a letter of intent can provide your loved ones with important details and intentions regarding why you constructed your estate plan the way that you did. For example, if you decide to disinherit a biological family member from an estate distribution, the reason for the exclusion can be articulated in the letter in a way that cannot be explained in the estate planning document itself. Why a letter of intent matters for LGBTQ+ individuals: If your estate plan is one that leaves out next of kin or biological family members, a letter of intent can provide further proof of your wishes related to your estate distribution. Letters of intent can also ensure that your funeral or memorial service reflects the way you wish to be remembered, celebrating your identity and your values. Letters of intent can also be entered into a court proceeding as evidence in an estate contest to further outline your rationale for the disinheritance of estranged family members. Guardianship Documents for Children It is vital for any parent to document guardianship of their minor child in the event of the parent’s death. Documenting a guardianship designation ensures that upon your passing, your children will be cared for by the person or the people you designate, not the person that a court may choose. Why guardianship documents for children matter for LGBTQ+ individuals: If you are an LGBTQ+ parent, establishing guardianship is incredibly important, especially if you are not biologically related to your child. In some cases, your biological family members may challenge your partner's ability to care for your children upon your death, particularly if you are in a non-married partnership. Establishing guardianship and memorializing your choice of guardian for your minor children provides clarity, protects your partner’s rights to care for your children, and safeguards the sanctity of your family structure. Estate planning is a crucial step for every individual, but it takes on an added level of importance for LGBTQ+ individuals, especially during times of legal uncertainty and political turmoil. With the right documents in place, you can be confident that your wishes will be respected and that your loved ones are protected, regardless of legal challenges or changes in administration. Estate planning empowers you to take control and secure the rights of your partner, your children, and your chosen family.
February 11, 2025
Estates and Trusts
Not Realizing the True Value of “Stuff”
This is Part 6 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. For federal estate and gift tax purposes, transfers are valued at the “fair market value” of the asset on the date of transfer. One of the more common estate tax audit issues is the failure to properly report the value of items of tangible personal property on a decedent’s Form 706. Similarly, failing to properly account for the value of tangible personal property transferred by inter vivos gift may result in the audit of a client’s Form 709. Despite their upfront cost, in order to identify the true value of art and collectible assets, clients should obtain professional periodic appraisals. Appraisals serve many functions, including estate and gift tax reporting, such as establishing value for insurance purposes, establishing bidding parameters for assets at auction, obtaining loans with tangible personal property serving as collateral, and planning for future gifts. For tax purposes, fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.” Although the most persuasive indication of fair market value is an actual contemporaneous sale of the property in question, in the absence of such a sale, an appraisal is typically required to establish the taxable value of the asset subject to transfer. Under current regulations, a reported gift of tangible personal property that exceeds $5000 in value must be substantiated by a qualified appraisal conducted by a qualified appraiser. The Pension Protection Act of 2006 (the “Pension Act”) established new requirements for what it means to have a “qualified appraisal” for tax reporting purposes. A qualified appraisal must contain a declaration that the appraiser (i) understands that a substantial or gross valuation misstatement resulting from an appraisal of the value of the property that the appraiser knows, or reasonably should have known, would be used in connection with a return or claim for refund, may subject the appraiser to a civil penalty, and (ii) understands that an intentionally false or fraudulent overstatement of the value of the appraised property may subject the appraiser to civil penalty for aiding and abetting an understatement of tax liability. A qualified appraisal of tangible personal property must contain the following: a detailed description of the property; the physical condition of the property; the date or expected date of the contribution; the terms of any agreement or understanding entered into or expected to be , entered into by or on behalf of the client that relates to the use, sale or other disposition of the property, including any restrictions on the use or disposition or reservations of rights conferred on anyone other than the donee and any earmarks for particular use; the name, address and taxpayer id number of the appraiser; a detailed description of the appraiser’s educational background and qualifications; the date on which the property was valued; the appraised fair market value of the property; the method of valuation used to determine the fair market value; the specific basis for the valuation; and a description of the fee arrangement between the client and the appraiser. A qualified appraisal is prepared by a qualified appraiser defined as an individual who: has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in the regulations; regularly performs appraisals for pay; and meets other requirements that the IRS has prescribed in the regulations. An individual cannot be a qualified appraiser with respect to any specific appraisal unless she: demonstrates verifiable and passing professional or college level education and experience or earned a recognized appraiser designation from a generally recognized professional trade or appraiser organization or as part of an employee apprenticeship program or educational program; and the education and experience is in valuing the property type being appraised. In addition, the appraiser must make the following declaration: “I understand that my appraisal will be used in connection with a return or claim for a refund. I also understand that, if there is a substantial or gross valuation misstatement of the value of the property claimed on the return or claim for refund that is based on my appraisal, I may be subject to a penalty under section 6695A of the Internal Revenue Code, as well as other applicable penalties. I affirm that I have not been at any time in the three-year period ending on the date of the appraisal barred from presenting evidence or testimony before the Department of the Treasury or the Internal Revenue Service pursuant to 31 U.S.C. 330(c).” If the appraisal or the appraiser does not meet all of the above requirements, the resulting valuation report will not be considered as any evidence of value, and the IRS will conduct its own appraisal to determine the fair market value of the asset subject to transfer. In certain instances, providing the IRS with an appraisal that adheres to all of the requirements of the Pension Act may not help with avoiding an estate or gift tax audit, but provides a powerful bargaining tool. For example, regardless of the asset composition of the remainder of the estate, if a decedent dies owning artwork that has a claimed value of $50,000 or more, the appraisal will be subjected to consideration by the IRS Art Advisory Panel, comprised of a body of art industry experts who review and evaluate the acceptability of artwork appraisals submitted by taxpayers in support of claimed fair market value. When a qualified appraisal is submitted, you and your client may find that the IRS is more willing to compromise on valuation issues.
February 11, 2025
Estates and Trusts
Not Hiring a Qualified Appraiser and Realizing the True Value of Art and Collectibles
This is Part 5 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. For federal estate and gift tax purposes, transfers are valued at the “fair market value” of the asset on the date of transfer. One of the more common estate tax audit issues is the failure to properly report the value of items of tangible personal property on a decedent’s federal estate tax return. Similarly, failing to properly account for the value of tangible personal property transferred by inter vivos gift may result in the audit of a federal gift tax return. Despite the upfront cost, professional periodic appraisals should be obtained to identify the true value of art and collectible assets. Appraisals serve many functions, in addition to those relating to estate and gift tax reporting, such as establishing value for insurance purposes, establishing bidding parameters for assets at auction, obtaining loans with tangible personal property serving as collateral, and planning for future gifts. For tax purposes, fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.” Although the most persuasive indication of fair market value is an actual contemporaneous sale of the property in question, in the absence of such a sale, an appraisal is typically required to establish the taxable value of the asset subject to transfer. Under current regulations, a reported gift of tangible personal property that exceeds $5000 in value must be substantiated by a qualified appraisal conducted by a qualified appraiser. The Pension Protection Act of 2006 (the “Pension Act”) established new requirements for what it means to have a “qualified appraisal” for tax reporting purposes. A qualified appraisal must contain a declaration that the appraiser understands that a substantial or gross valuation misstatement resulting from an appraisal of the value of the property that the appraiser knows, or reasonably should have known, would be used in connection with a return or claim for refund, may subject the appraiser to a civil penalty, and understands that an intentionally false or fraudulent overstatement of the value of the appraised property may subject the appraiser to civil penalty for aiding and abetting an understatement of tax liability. A qualified appraisal of tangible personal property must contain the following: A detailed description of the property. The physical condition of the property; The date or expected date of the contribution. The terms of any agreement or understanding entered into or expected to be, entered into by or on behalf of the client that relates to the use, sale or other disposition of the property, including any restrictions on the use or disposition or reservations of rights conferred on anyone other than the donee and any earmarks for particular use. The name, address and taxpayer identification number of the appraiser. A detailed description of the appraiser’s educational background and qualifications The date on which the property was valued. The appraised fair market value of the property. The method of valuation used to determine the fair market value. The specific basis for the valuation. A description of the fee arrangement between the client and the appraiser. A qualified appraisal is prepared by a qualified appraiser defined as an individual who: Has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in the regulations Regularly performs appraisals for pay. Meets other requirements that the IRS has prescribed in the regulations. An individual cannot be a qualified appraiser with respect to any specific appraisal unless she demonstrates verifiable and passing professional or college-level education and experience or earned a recognized appraiser designation from a generally recognized professional trade or appraiser organization as part of an employee apprenticeship program or educational program as well as the education and experience in valuing the property type being appraised. If the appraisal or the appraiser does not meet all the above requirements, the resulting valuation report will not be considered as any evidence of value, and the IRS will conduct its own appraisal to determine the fair market value of the asset subject to transfer. In certain instances, providing the IRS with an appraisal that adheres to all the requirements of the Pension Protection Act may not help with avoiding an estate or gift tax audit, but provides a powerful bargaining tool. For example, regardless of the asset composition of the remainder of the estate, if a decedent dies owning artwork that has a claimed value of $50,000 or more, the appraisal will be subjected to consideration by the IRS Art Advisory Panel, comprised of a body of art industry experts who review and evaluate the acceptability of artwork appraisals submitted by taxpayers in support of claimed fair market value. When a qualified appraisal is submitted, you and your client may find that the IRS is more willing to compromise on valuation issues.
February 4, 2025
Estates and Trusts
The Impact of Transgender Executive Order on New York Residents
On January 20th, President Trump issued an executive order entitled “Defending Women from Gender Ideology Extremism and Restoring Biological Trust to the Federal Government.” The executive order included provisions for the limitation of two gender markers – male and female -- on United States passports. The passport gender marker limitation is not retroactive but will only apply to issuing new passports and renewing existing passports. The order would force changes to federal documents, including new and renewed passports, visas, and Global Entry cards, and would require trans inmates to be removed from areas in federal prisons that align with their gender identity. It also rescinds the Biden-era executive order that allowed trans individuals to serve in the military. Almost immediately after the announcement, transgender advocacy organizations began receiving frantic calls from members of the transgender community, fearing that the executive order could lead to the inability to change identification documents to conform to one’s gender identity, as well as fears of physical harm. New York is one of several states that have enshrined the protection of gender identity in its constitution. Substantial pushback on the executive order is anticipated at the federal and state levels. If you are a member of the trans community and were born in New York City and/or the State of New York, you should still be able to change your name and state-issued identity documents to properly align with your gender identity. If you have not already done so, you should start the process of changing your legal name and state-issued identification documents. Various organizations, including A4TE and Lambda Legal, offer assistance with these processes. Along with your state-issued identification documents, you should make sure that your estate planning documents, including wills, trusts, powers of attorney, health care proxies, and designations of agents for the disposition of your remains, are in order and properly reflect your gender identification. Selecting the proper agents who will fulfill your wishes with respect to your health care and bodily remains is equally important.
January 30, 2025
Estates and Trusts
Not Maintaining an Up-to-Date Inventory of Art and Collectibles for Estate Planning
This is Part 4 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A well-organized inventory is essential for effectively managing and planning the distribution of collectibles, including art. Clients may struggle to track their assets without an inventory, making future distribution and estate planning significantly more challenging. Maintaining an inventory can be as simple as using a basic spreadsheet or, for larger collections, leveraging specialized inventory management software. Regardless of the method, a comprehensive inventory should include: Size, materials, and description of items, as well as photographs of each individual item. A system for recording purchases and sales, including transaction dates and parties involved. Documentation of loans and gifts, specifying recipients and terms, as well as the location of items. Records of appraisals and insurance coverage. Logs of damages and losses. Keeping an up-to-date inventory also helps track each item's provenance, which is critical for authentication and valuation, particularly in the event of a sale. Maintaining an inventory of copyrights is just as important for clients who are also artists or creators. These intellectual property rights may have been licensed for specific periods or may require a distinct distribution plan separate from the original works upon the artist’s passing. Ensuring these details are well-documented can prevent legal complications and preserve the creator’s legacy.
January 28, 2025
Estates and Trusts
Equal Shares, Unequal Outcomes: Estate Planning Strategies for Parents and their Qualified Retirement Accounts
Typically, a parent wishes to treat their children equally in their estate plan and presumes they will achieve this goal by dividing all their assets into equal shares upon their death. Accordingly, they will designate their children as equal beneficiaries of their qualified retirement accounts, such as traditional IRAs and Roth IRAs. However, doing so without considering the individual circumstances of their children may be less tax efficient and may ultimately result in one child receiving more assets after the payment of taxes than their siblings. Traditional IRAs vs. Roth IRAs: Key Differences A traditional IRA is funded on a pre-tax basis, with the income taxes on any appreciation deferred until assets are withdrawn from the account. Traditional IRAs are subject to requirement minimum distributions (RMDs) when the account holder attains the age of 73. A RMD is the minimum amount that must be withdrawn from the IRA each year. Contributions to a Roth IRA, on the other hand, are made with after-tax dollars, and the distributions are withdrawn tax-free. In addition, there is no RMD requirement for a Roth IRA during the lifetime of the account holder. The Ten-Year Rule When the account holder dies, most beneficiaries must take distributions pursuant to the “ten-year rule,” which requires that the beneficiary withdraw the account assets in full within ten years from the date of death of the original account holder. During this withdrawal period, the beneficiary must take RMDs in each year that the inherited account is open. As these withdrawals are made, the beneficiary must pay the deferred taxes based on their individual income tax bracket. Notably, withdrawals from a Roth IRA account remain income-tax free to the beneficiary, and are not subject to the RMD requirement. Tax Benefits for Eligible Designated Beneficiaries (EDBs) A beneficiary that is deemed an “eligible designated beneficiary” (“EDB”) is not subject to the ten-year rule and may take distributions from the inherited account over their lifetime. Thus, the account assets may continue to appreciate tax deferred over a significantly longer period of time. EDBs include beneficiaries that are not more than ten years younger than the original account holder, surviving spouses, beneficiaries that are deemed disabled or chronically ill, and minor beneficiaries.[1]. It will be inherently more tax efficient for a parent to name an EDB as a beneficiary of their qualified account because of the extended withdrawal period the beneficiary will have to take distributions from the account. Therefore, if a parent has two or more children, one of whom is deemed an EDB, and names each of them as an equal beneficiary of their IRA account, the child who is an EDB will ultimately receive significantly more assets than their siblings because the assets in the account will have significantly more time to appreciate tax-deferred. In addition, because of the extended withdrawal period, the beneficiary has more flexibility in choosing when to take distributions from the account to avoid getting bumped into a higher marginal income tax bracket. Accordingly, if the parent wishes that each of their children receive as nearly equal shares of their assets as possible, and one or more of their children are deemed EDBs, it may be better to provide a greater share of their qualified accounts to the EDB beneficiaries, and the non-EDB beneficiaries with a greater share of their other estate assets. Case Study: Tax Efficiency and Equalizing Shares What if the account holder does not have any beneficiaries who will be deemed an EDB? Even then, the account holder should still consider their children's individual income tax circumstances. Suppose the account holder is single with a Roth IRA with $1,000,000 in assets and a traditional IRA with $2,000,000 in assets. The account holder has two children: Alex, who is a stockbroker, and Jamie, who is a public school teacher. We can presume that Alex has more taxable income than Jamie and that Alex has a higher earning potential in their career. If Alex and Jamie were named equal beneficiaries of the traditional IRA, it is likely that the distributions from the account would bump Jamie into a higher income tax bracket in the years that they are received, thus generating more income tax liability. Alex’s distributions are almost certain to be taxed at a higher marginal rate than Jamie's. If Alex and Jamie are named equal designated beneficiaries of the Roth IRA, the distributions would be tax-free in the year that they are received, leaving their respective income tax brackets unaffected. Therefore, naming Jamie as a primary beneficiary of the traditional IRA, where distributions will be taxed at a lower tax bracket, and designating Alex as the primary beneficiary of the Roth IRA is likely more tax efficient and most likely to ultimately result in each child receiving equal shares of the assets after payment of income taxes. As this example illustrates, naming each child as an equal beneficiary of a qualified account may not result in equal distributions after the payment of taxes, frustrating the intentions of a well-meaning parent. Therefore, careful consideration must always be given to the individual circumstances of an account holder’s intended beneficiaries. [1] Minor beneficiaries become subject to the ten-year rule once they attain the age of 18.
January 23, 2025
Estates and Trusts
Ethical Wills: The Heart of Your Estate Plan
When most people think of estate planning, Trusts and Last Wills and Testaments usually come to mind. I have spent my career espousing the essential tools for ensuring an efficient transfer of assets from one generation to the next, planning for taxes and incapacity, and outlining health care desires. However, the standard estate plan does not capture something equally valuable: the values, lessons, and hopes that many wish to document for their loved ones. That is where an ethical will comes in. Ethical wills, also known as “Letters of Intent, or “Legacy Letters” are non-legal documents that convey the intangibles like morals, beliefs, and reflections on your life - both the highs and the lows. What is an Ethical Will? A traditional Last Will and Testament or a trust directs how your tangible assets will be distributed upon your death. An ethical will instead can serve as heartfelt advice and guidance to your loved ones and future generations. While it is not legally binding, an ethical will can be deeply personal and meaningful. Ethical wills are not new. In fact, there is mention of an ethical will in the Book of Genesis in the Bible and they were traditionally recited orally to family members. It was not until the Middle Ages when they were recorded in writing with the hope that the message would be preserved and shared with future generations. Do you need an Ethical Will? The short answer is no. But considering the fact that in creating a traditional estate plan, most put significant time, thought, and energy into who should inherit and in what proportion, it likely would be appreciated and helpful to share your reasoning behind how you came to those decisions, or what you hope the beneficiary might consider when living their lives and using what you left to them. Content of an Ethical Will: Values: Leaving your worldly goods, your home, and other financial assets to the next generation is certainly important, but your ethical will might explain to your beneficiaries the values that you lived by that enabled you to acquire those assets. It can provide a platform for you to share with your beneficiaries your principles, your beliefs, and the lessons learned in doing so. Strengthening Family Connections: The event or ceremony of sharing your ethical will together can be a truly powerful experience for a family. A document containing stories, anecdotes, and your successes and failures can help family members feel connected to your story and to each other during your life or long after your death. Clarifying Intentions: Sadly, the decisions and bequests made in a traditional will or trust can be misunderstood and lead to conflict within a family – having the opposite effect that you intended. An ethical will provides you with the opportunity to explain your reasoning behind the content of your legal estate planning documents, reducing the likelihood of misunderstandings or hurt feelings. Providing Comfort and Guidance: An ethical will should be a sort of love letter to your family in which you provide words of encouragement, share the joy you felt with your loved ones, and impart wisdom and advice for their future reference. For those with religious beliefs, many choose to share how faith served as a touchstone if a parent or loved one is no longer here. Ethical wills can also provide a great source of comfort and strength during times of grief. Get started: The best part of an ethical will is that you don’t need to hire a lawyer to start. Reflect on Your Life. Consider the experiences that shaped you over the course of your life. What life lessons do you think are worth sharing with your loved ones for years to come? Tell them to “take that risk” because it served you well. Do you have hopes for your loved ones for their lives? Now is the time to share those hopes for their higher education, or creating a family in the future. Is there something specific that you want to be remembered for? If so, convey what that is and why it’s important to you. Be Honest and Authentic. This is not a formal legal document; you should write in your own voice. The whole point of an ethical will is to be heartfelt and a reflection of you. Get personal and write it as though you are having the most heartfelt conversation with your loved ones. Do not be concerned with form, grammar, or the legality of it all. It’s ok to be vulnerable and share your failures and your regrets. Nothing is Forever. Let’s face it, things change and because of that, you can always revise and update your ethical will. Just as I tell clients that legal wills and estate plans should be updated, your ethical will should also be updated. Relationships, net worth, health, values, and perspective are not permanent. Do not be afraid to reconsider and revise. Sharing is Caring. In most cases the ‘reading of a will’ is only something made for TV. With an ethical will, the choice is yours: you may decide that you want your ethical will read prior to revealing the contents of your legal will to set the stage for how your assets are to be distributed, or choose to share your ethical will during your life. Whether it is something left behind to be read after your death, or if you prefer gathering your family together to foster a discussion about legacy and lessons, there are no rules how you share. Combining an Ethical Will with Traditional Estate Planning. While an ethical will is not a substitute for a legal will or trust, it certainly can complement your estate plan by adding an emotional, encouraging, loving, and sometimes spiritual dimension. Work with your estate planning attorney to ensure your proper legal documents are updated and in place and consider crafting an ethical will to share with your lawyer so that they can better understand what is important to you and how to help you accomplish your goals. Creating an estate planning does not just have to be about the legality of moving assets from one generation to the next, it can be much more. Including an ethical will in your plan may ensure that your lessons, love, and legacy are preserved for future generations.
January 21, 2025
Estates and Trusts
The Hidden Cost of Failing to Plan
The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #3: The Hidden Cost of Failing to Plan Art and collectibles, while beautiful and culturally significant, can pose significant estate planning challenges. At the time of death, these assets are subject to estate taxes based on their fair market value. Without proper planning, federal and state estate taxes—combined with the costs of selling the assets—could erode over 50% of a collection’s value. Art, as an alternative investment, began emerging in the 1970’s and has only boomed as a result of digitalization. Art as a profitable investment now consistently outperforms other asset classes such as the FTSE 100 and S&P 100. According to 12 Wall Street Journal article, "The Art of Passing Along Art," highlights an unexpected problem faced by many collectors, particularly those who acquired their art in the 1950s and 1960s. These octogenarian collectors are discovering that their art collections have appreciated significantly more than their liquid assets. As a result, their estates often lack sufficient liquidity to cover estate tax obligations. For example, consider a New York estate with $40 million in liquid assets and $100 million in art. That New York estate will potentially incur a $63.5 million tax bill, forcing the executor to sell some or all of the art within nine months to satisfy the obligation. Such rushed sales often lead to undervalued transactions, significantly reducing the collection's realized value. In extreme cases, the entire collection might be sold for a fraction of its worth simply to meet the estate's federal and state tax liabilities. Strategic Solutions for Collectors Fortunately, there are various strategies to reduce the estate tax burden on art and collectibles. These include: Charitable Contributions: Using art to fulfill philanthropic goals can provide both estate tax relief and personal fulfillment. Lifetime Gifting: Strategic gifting of art during the collector's lifetime can shift value outside the taxable estate. Estate-Freezing Techniques: These methods help move highly appreciated (or soon-to-appreciate) assets out of the taxable estate. Moving the Collection out of state: Using limited liability companies and other entities can eliminate the potential for state estate taxes by changing the location of the assets. When considering these options, it’s essential to evaluate whether the collection holds more value as a cohesive whole or as individual pieces. Each strategy should be tailored to the collector's goals, ensuring that both financial and sentimental value are preserved for future generations. Make sure you speak with a trusted estate planner who specializes in planning for large collections of art and other intangible assets.
January 21, 2025
Estates and Trusts
Maryland’s 2025 Budget Proposal: Changes to Estate Taxes and What They Mean for Estate Planning
Recent Maryland proposed budget cause for close estate planning review before the sunset of the federal Tax Cuts and Jobs Act. This week, Maryland Governor Wes Moore released his proposed 2025 budget to the public and submitted House Bill 352 to the Maryland Assembly for review and approval. The proposed changes in the budget have a significant impact on estate planning, especially as it relates to Maryland’s death taxes. Maryland is the sole state in the union that assesses both an estate and inheritance tax against the estates of resident decedents. The governor’s budget proposed abolishing Maryland’s Collateral Inheritance Tax on probate and non-probate transfers and inter vivos gifts made within two years of the date of death. The proposed budget does not abolish Maryland’s Estate Tax, but significantly reduces the exemption amount. Maryland’s current estate tax exemption is $5,000,000 per individual and $10,000,000 per married couple. The newly proposed budget would reduce the estate tax exemption by more than half to $2,000,000 per individual and $4,000,000 per married couple. Under the terms of the budget, the changes to Maryland’s Estate Tax exemption will go into effect in July 2025. Should the proposed budget and changes go into effect, many Marylanders will need to take a renewed look at their estate planning to mitigate the impacts of the changes to the new state estate tax threshold.
January 17, 2025
Estates and Trusts
Prudent Investing in Uncertain Economic Conditions
The Prudent Investor Rule is a legal principal that requires fiduciaries to act in the best interests of a beneficiary and exercise reasonable care, skill, and caution when making investment decisions, which was codified in Maryland in 1994 by Md. Estates & Trusts §15-114. The Rule applies to fiduciaries, including trust companies, investment managers or advisors, and individual trustees who make a valid §15-114(g) election to be governed by the statutory standards for investing and includes fiduciary assets under management, including trusts, guardianships, and custodians. Under the Rule, a fiduciary must consider the best interests of the beneficiary in diversifying investments and investing and managing assets as part of an overall investment strategy. In doing so, the fiduciary may take into consideration the general economic conditions at the time. Any regime change in government brings a degree of economic uncertainty to market conditions. Currently, the market is experiencing uncertainty due to the US presidential election, a number of rising geopolitical tensions, natural disasters, and uncertainty surrounding economic policy and regulatory framework that could impact investment and spending decisions. Under the Prudent Investor Rule, a fiduciary is authorized to invest and manage assets to incorporate both risk and return objectives and to pursue an investment strategy that considers both the production of income and the safety of capital, utilizing a portfolio theory of investing. The directive to fiduciaries to diversify investments is intended to mitigate risk to the beneficiary of investment decisions made by the fiduciary. For Trustees and other fiduciaries, reliance on the advice and guidance of knowledgeable, experienced, and informed advisors is never more important than in the face of uncertain economic conditions.
January 13, 2025
Estates and Trusts
Not Knowing the Tax Implications of How Your Client is Classified
The Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients Mistake #1: Not knowing the tax implications of how your client is classified Navigating the tax landscape for art dealers, investors, and collectors can be a complex endeavor, but proper classification is key to maximizing tax savings and avoiding pitfalls. Professionals working with clients in the art world must understand how classifications affect income tax treatment, as well as practical steps to ensure clients benefit from the most favorable outcomes. This guide outlines the critical distinctions, tax implications, and actionable strategies to support clients. Understanding the Classifications The IRS recognizes three primary classifications for individuals engaged in art-related activities: dealers, investors, and collectors. Each carries distinct tax implications: Dealers: These individuals are in the trade or business of buying and selling art for profit. To be classified as a dealer under Internal Revenue Code Section 1221(a)(1), a client must demonstrate continuity and regularity in their activities and a primary purpose of generating income or profit. For example, an artist selling their own creations may qualify as a dealer. Investors: Clients who buy and sell art primarily for investment purposes fall under this category. Unlike dealers, investors do not actively market art as part of a trade or business but instead hold it as a capital asset Collectors: This classification applies to those who acquire art for personal enjoyment or aesthetic purposes. Collectors are not considered engaged in a business or investment activity and face the most restrictive tax treatment. Tax Implications The tax treatment of gains, losses, and deductions varies significantly depending on classification: Dealers: Gains are treated as ordinary income, taxed at rates up to 37%. Losses are ordinary losses, fully deductible against other income. Expenses incurred in the trade or business, such as storage or marketing, are deductible as ordinary and necessary business expenses on Form 1040. Note: For artists classified as dealers, the basis of their artwork is typically limited to the costs of their materials, often resulting in significant gains upon sale. Investors:Gains on the sale of collectibles are taxed as capital gains, subject to a maximum rate of 28%. Losses are capital losses, deductible against capital gains, with a $3,000 annual limit for net losses against ordinary income. Ordinary and necessary expenses for holding the art for income production are deductible. Collectors:Gains are taxed at the same 28% capital gains rate as investors. Losses are considered personal and cannot offset other income. Expenses related to collecting activities are generally nondeductible unless the client can demonstrate an investment intent. Practical Steps for Professionals Helping clients achieve the most advantageous classification involves careful analysis and documentation. Here are actionable strategies: Identify the Appropriate Classification: Evaluate the client’s level of activity, intent, and historical practices. Consider whether the client’s actions align with IRS criteria for a trade or business (e.g., continuity, regularity, and profit motive). Document Investment Intent:For collectors seeking reclassification as investors, gather evidence such as:Businesslike records of transactions. Consultation with art experts or advisors. Efforts to publicly display the collection. A history of profitable investments in similar areas. Educate Clients on Tax Treatment:Explain the impact of classification on their tax liabilities, including applicable rates and deduction limits. Highlight the importance of meeting the profit presumption test (three profitable years out of five) for activities presumed to be for profit. Leverage Deductible Expenses:For dealers and investors, ensure all ordinary and necessary expenses, such as insurance, storage, and advisory fees, are properly documented and claimed. For collectors, explore opportunities to demonstrate investment intent for potential reclassification. Monitor Changes in Activity:Reassess clients’ classifications periodically as their circumstances and activities evolve. A client who begins as a collector may transition to an investor or dealer over time with proper adjustments to their approach. Conclusion Proper classification of collectible and art-related activities can have a significant impact on a client’s tax liabilities, deductions, and overall financial outcomes. Professionals who understand these distinctions and proactively guide clients can unlock substantial tax savings and help avoid costly errors. By identifying the appropriate classification, documenting intent, and leveraging allowable deductions, you can ensure your clients are well-positioned to navigate the complex intersection of art and taxation. For tailored advice and support, consult a tax professional experienced in the unique considerations of art-related activities.
January 7, 2025
Estates and Trusts
The Impact of California Assembly Bill 2016 (AB2016) on the Probate Process
In April 2025, California bill AB2016 will take effect, significantly impacting the state’s probate process. Currently, probate is required if a decedent’s property exceeds a certain value, and AB2016 will raise this threshold considerably. AB2016 amends six sections of California’s Probate Code and repeals one. Starting on April 1, 2025, and lasting through March 31, 2028, the threshold for a real property to qualify for disposition without a full probate administration will increase to $750,000. As a result, more estates will be subject to probate, and the obligation to notify all heirs and devisees could lead to a rise in estate disputes. In the wake of AB 2016, it's crucial to understand the California probate process and consider planning strategies to avoid it. All too often the reasons provided to clients are probate avoidance or circumventing the Medi-CAL recovery. With the imposition of the new law set to take effect on April 1, 2025, the value for probate avoidance for real properties per Probate Code section 13151 will rise to $750,000 for a primary residence and then the additional small estate of personal property at $166,250. Of note, the law provides that the “primary residence” is not limited to the decedent’s residence at the time of their death. This provides a total exclusion anticipated for April 1, 2025, to be $916,250. However, Probate Code section 13100 is set to be adjusted for inflation every three years and based on the date of the enactment of this law, it is likely that the value will need to be adjusted upward with planners estimating a value of one million ($1,000,000.00) can be excluded aside from jointly held assets or payable on death accounts. This is a significant change in the basis previously required court involvement. Now, if not otherwise designated in an estate planning instrument, the assets below the threshold in the Probate Code can go through a shorter form procedure with the Probate Court in the determination of a real property of small value. Although this will still expose family assets to the public, it prevents many of the expensive aspects of probate. For starters, the statutory fees associated with probate will no longer apply. This means that neither a personal representative nor any counsel would receive compensation based on the values of the statutory estate. Instead, the work performed could be calculated at an hourly rate or other agreed upon compensation. While the law is meant to extend the notice to all potential heirs and beneficiaries, it does not address the notice requirements to governmental agencies such as the Department of Victims Compensation Board, the Franchise Tax Board, and the Department of Healthcare Services. or instance, under the Welfare and Institutions Code section 14009.5, the Department of Healthcare Services is only notified for a Medi-CAL recovery claim when there is a decedent’s estate as set forth in Title 42 of the United States Code. Pursuant to Section 1396p(b)(4)(A) of Title 42 of the United States Code, estate “shall include all real and personal property and other assets included within the individual’s estate, as defined for purposes of State probate law[.]” These techniques, as set forth in the Probate Code, provide an exclusion for the formal Probate Estate Administration procedures in California. This will eliminate a large sector from the reporting requirements for Medi-CAL recovery claims. While AB 2016 brings about significant changes to estate planning and probate law that could affect how estates are managed in California, the fundamental reasons for estate planning remain unchanged. Instead, it is a stark reminder of why practitioners advise in planning early. While AB 2016 provides a partial fix for transference of wealth after passing, it does not eliminate the concerns during a client’s lifetime. A properly executed estate plan can mitigate the need for court involvement during any period of incapacity. Further, it can provide for a mitigation of risk for abuse by others taking advantage of you as an elder with a truster contact named as a successor representative.
December 13, 2024
Estates and Trusts
The Ultimate Gift: Estate Planning for Your Loved Ones
When we think of holiday gift-giving, we are dazzled with images of homes adorned with holiday decor, beautifully wrapped packages tied with ribbons under an equally beautiful tree, and even cars draped with giant bows waiting in the driveway for the most appreciative recipients. Yet one of the most profound gifts you can give your loved ones is not parked in your driveway nor does it fit under a tree; it is the gift of estate planning. Ensuring your estate planning is complete, I would argue, is the most thoughtful, intentional, and responsible act that provides clarity, security, and peace of mind for those you care about most. Why Estate Planning is a True Gift: 1. Eases Emotional Burdens Losing a loved one is one of the most difficult experiences of one of life. Without a clear plan in place, grieving family members are left to navigate complicated legal and financial decisions while coping with their heartache. Estate planning removes the undue stress of figuring out your wishes, allowing your beloveds to focus on healing and celebrating your life. 2. Prevents Family Conflict Unclear or contested estates are among the leading causes of family disputes. Clearly outlining your wishes in a carefully constructed estate plan, minimizes the potential for misunderstandings, disagreements, and legal battles. This proactive step can preserve family harmony during an emotionally challenging time. 3. Protects Your Legacy You have worked hard to build your life and accumulate assets. Estate planning ensures that your legacy reflects your values—whether that means leaving an inheritance, supporting a favorite charity, or safeguarding family traditions, your wishes must be documented. More importantly, the documents must comply with your state’s requirements that govern last wills and testaments, and trusts. 4. Provides Financial Security For families with young children, estate planning provides financial stability by appointing guardians and setting up trusts for those minor children. If you do not properly document who should step in to care for your minor children in the event of a tragedy, a court proceeding is sure to follow. Additionally, it is essential you decide who the best person is to manage your minor children’s inheritance until they are old enough to handle it themselves. For adult children, a properly constructed plan ensures that your assets are distributed according to your wishes. You should also consider how, exactly, those funds should be left to your adult child to ensure that such an inheritance matches the ability of the recipient to manage those funds. 5. Empowers Your Voice Through advance healthcare directives and powers of attorney, you maintain control over medical and financial decisions, even if you are unable to articulate your wishes. Having proper documentation in place that nominates a person to speak for you and outlines the type of care you want spares your loved ones from guessing or making agonizing medical decisions on your behalf. The Five Easy Steps to Provide Your Estate Planning Gift 1. Take Stock of Your Assets Make a comprehensive list of your assets, including property, investments, savings, insurance policies, and sentimental items. 2. Choose Trusted Representatives Identify the people in your life who will carry out your wishes. It is imperative that you choose those in your life whom you trust most to make informed financial decisions in your best interest and health care decisions that are reflective of your wishes. 3. Consult Professionals An estate planning attorney can you help draft documents and navigate complex legal requirements. Financial advisors can assist you with maximizing the value of your estate to assist you in planning for your legacy. Accountants can assist you in determining the most tax efficient strategies that should be employed. 4. Communicate with Your Loved Ones Discuss your plans with family members or those closest to you to ensure they understand your wishes. Opening a dialogue about such important issues can often bring clarity to your wishes and communication is an integral part of ensuring your plan is effectuated. A carefully drawn plan that is communicated in advance can reduce confusion and set expectations for those around you. 5. Revisit Your Estate Plan Estate plans should be reviewed annually, especially when there are law changes, new presidential administrations, and updated tax policies. As I have shared before, in addition to those issues, the 5Ds apply, as well so in the event of Death (of a loved one or beneficiary), Distance when a loved one or trusted person moves away, the Divorce of a loved one (or your own divorce,) the Disability of a loved one (or your own disability), and upon the arrival of new Descendants such as the birth of a child or grandchild. The 5Ds can really impact your estate plan. A Lasting Gift for Generations Estate planning is not just about the practicalities of distributing assets; it’s a profound act of love. By taking the time to plan, you give your family and loved ones the ultimate gift: peace of mind, financial security, and a clear roadmap for navigating a difficult time. This holiday season, or any time of year, consider sitting down to create or update your estate plan. It’s a gift that will resonate far beyond the moment, ensuring that your love and care continue to guide your family and loved ones for generations to come.
December 11, 2024
Estates and Trusts
Race to the Sunset: Critical Insights for Clients on Estate Tax Exemptions ending in 2025
As we approach 2025, it is important to stay informed about the upcoming changes to federal estate and gift tax exemptions. Under the Tax Cuts and Jobs Act (TCJA) of 2017, the estate and gift tax exemptions were temporarily increased and are currently $13.61 million per individual in 2024 (adjusted annually for inflation) and will go up to $13.9 million in 2025. However, this law will expire at the end of 2025, potentially reverting the exemption to pre-TCJA levels. Understanding the impact of these changes and seeking guidance on tax mitigation and estate planning is crucial. What is the Sunset Provision? The TCJA's temporary increase in the federal estate tax exemption allows individuals to pass on up to $13.61 million (adjusted for inflation) at death without incurring federal estate taxes and make up to $13.61 million in lifetime gifts. Without further intervention from Congress, after December 31, 2025, this exemption is expected to revert to approximately $5.49 million per individual, adjusted for inflation. Projections adjusted for inflation indicate this will amount to around $6.5 million at the beginning of 2026. This will be a significant decrease from the $13.9 million exemption amount allowed in 2025. Implications for Estate Tax Liability The reduced estate tax exemption could significantly impact estates valued above the lowered threshold. Estates exceeding the new exemption will be subject to higher federal estate taxes at a rate of up to 40%, reducing the inheritance that beneficiaries receive. This underscores the need for proactive estate planning to minimize future tax liabilities. Strategic Estate Planning Ahead of 2025 With the sunset provision approaching, it's crucial for individuals to review and adjust their estate planning strategies. Key steps to consider include: Gifting Strategies: Clients may want to take advantage of the higher exemption by making significant gifts to heirs or charitable organizations before 2025. This can reduce the size of their taxable estate and help avoid higher taxes later. Utilizing Irrevocable Trusts: Establishing trusts is a powerful way to manage and protect assets while reducing estate taxes. Trusts offer flexibility in ensuring that assets are passed on in accordance with the wishes of a client and can help mitigate estate taxes. Updating Estate Plans: Regularly reviewing and updating wills, trusts, and other estate planning documents is essential as tax laws evolve. Ensuring your estate plan is up to date with current laws and well-positioned to address the upcoming changes in 2025 is critical. Consulting Professionals: Working with estate planning professionals, including attorneys and financial advisors, provides valuable guidance on navigating these complex changes and strategies. Their expertise in tailoring estate plans to individual circumstances is key to successful tax and planning management. Action Steps for Estate Planning in 2025 To prepare for the upcoming changes, consider taking these steps: Schedule a Consultation: Meet with your estate planning attorney, financial advisor, and accountants to discuss how the 2025 changes could impact your estate plan and assets. Review and Update Estate Documents: Ensure your will, trusts, and other documents align with current goals, and consult with your trusted advisors to ensure that your plan is compliant and efficient. Explore Gifting Options: Consider making substantial gifts before the estate and gift tax exemptions decrease to maximize tax benefits and minimize future liabilities. As the 2025 sunset of estate and gift tax exemptions approaches, understanding the potential impact on your estate plan is crucial. By taking proactive steps to review your plan, explore gifting opportunities, and consult professionals, you can better navigate the complexities of estate tax planning and safeguard your assets for future generations. The sooner you consult with your estate planning attorney and financial advisors, the sooner you will be able to determine whether the sunset will impact you and get guidance on how to navigate the correct planning necessary for you to timely and adequately address the TCJA. Post-2024 Election Considerations During Donald Trump’s initial term as president, the TJCA was introduced and passed. In light of the recent election results, we can expect that there will be a push to renew and extend the TCJA. If the TCJA is extended, it could allow the estate and gifting annual and lifetime exemptions to remain in place and to further increase annually by adjustment for inflation provisions. This would continue the greatest transfer of wealth in history, allowing individuals to pass larger gifts to their loved ones or establish more complex plans to take advantage of gifting techniques as part of the transfer of wealth. Clients should continue to speak with their financial advisors and estate planning attorneys to remain updated on the TCJA and the potential sunset.
November 13, 2024
Estates and Trusts
Inheritance Rights of Domestic Partners: A Comparison Between New York and New Jersey Laws
Domestic partnerships are legal arrangements between two individuals that grant some of the same rights and benefits as marriage. While domestic partnerships are recognized in many states, inheritance rights can differ greatly depending on the jurisdiction. This article explores the critical differences in inheritance rights for domestic partners under the laws of New York and New Jersey. Qualifying for Domestic Partnerships The qualifications for entering into a domestic partnership in New York and New Jersey are largely similar. Generally, both partners must: Be residents of the county or city where they are applying. Be at least 18 years old. Be unmarried and unrelated by blood. Be in a close, committed personal relationship for at least six months. Not have been in another domestic partnership within the six months prior to applying. Inheritance Rights in New Jersey In New Jersey, domestic partners are granted specific inheritance rights if their partner dies intestate (without a valid will). The surviving partner’s share of the estate depends on several factors: If the deceased partner has no children or parents, the surviving partner inherits 100% of the estate. If the deceased partner is survived by children who are also the children of the surviving partner, the surviving partner inherits 100% of the estate. If the deceased partner has a surviving parent, the surviving partner is entitled to the first 25% of the estate (with a minimum of $50,000 and a maximum of $200,000) plus 75% of the remaining estate. If either the deceased partner or the surviving partner has a child from another relationship, the surviving partner is entitled to the first 25% of the estate (with the same minimum and maximum) plus 50% of the remaining estate. Additionally, New Jersey law grants the surviving domestic partner priority to serve as the legal representative (administrator) of the deceased partner’s estate. Inheritance Rights in New York In contrast, New York does not grant inheritance rights to surviving domestic partners if their partner dies intestate. Without a will, the deceased partner’s assets will be distributed as follows: The deceased partner’s assets will go to their children, not their partner. If there are no children, the assets go to the deceased’s partner’s surviving parents. If they are not survived by children or parents, the assets pass to the deceased partner’s siblings. In the absence of children, parents, or siblings, the deceased partner’s assets may pass to distant relatives, such as nephews or cousins, leaving the surviving partner no share of the estate. Moreover, a surviving partner in New York does not have the right to serve as the legal representative (administrator) of the deceased partner’s estate. For couples in domestic partnerships in New York, comprehensive estate planning is essential. Without a will or other legal instruments, the surviving partner has no legal claim to the deceased partner’s assets and no right to act on behalf of the estate. The Federal Landscape: Domestic Partnerships and Estate Taxes It is also important to note that the federal government does not recognize domestic partnerships. Unlike married couples, domestic partners do not benefit from the federal estate tax exemption for spouses. As a result, a surviving partner may face estate taxes on any assets they inherit from their deceased partner. Additionally, if a partner inherits a qualified retirement account (such as a 401(k) or IRA), they cannot roll over the account into their own retirement account. This limitation can result in significant additional income tax liabilities on inherited retirement funds. Conclusion The inheritance rights and legal benefits for domestic partners vary significantly from state to state. In New Jersey, domestic partners are granted certain inheritance rights and legal privileges, including the ability to serve as the estate representative. In contrast, New York provides no automatic inheritance rights or authority over a deceased partner’s estate for surviving domestic partners. Due to these significant differences, domestic partners—especially those in states like New York—should prioritize estate planning. Careful planning ensures that a domestic partner’s wishes are clearly outlined, and their surviving partner is appropriately protected. Consulting with an attorney experienced in estate planning and domestic partnerships is essential for navigating these complex legal issues.
November 13, 2024
Estates and Trusts
Defensive Estate Planning For the LGBTQ+ Community
The political landscape has shifted, and those of us in the LGBTQ+ community are worried about what the future may hold. There is a lot to lose, and the new administration promises to be decidedly anti-gay. The rights of same-sex couples, adoptive parents, transgender individuals, and queer youth could well be in jeopardy. Among these is the simple right to get married. In Dobbs v. Jackson, the Supreme Court decision that overturned Roe v. Wade, one justice suggested revisiting Obergefell v. Hodges, the landmark ruling that legalized same-sex marriage nationwide. The right to marry was a milestone victory for the LGBTQ+ community. With the arrival of a new administration and conservative majorities in both houses of Congress, an emboldened Supreme Court could strike down marriage equality. With so much at stake, it is more important than ever to harness the protections the law currently provides. The Benefits of Marriage For couples in committed relationships, the best protection may well be marriage itself. Marriage not only provides a wide range of federal and state legal benefits; it also ensures that in a crisis, your spouse has essential rights regarding inheritance, health care decisions, and other critical matters. Taking advantage of the right to marry now—while it is still secure—could be a prudent move. Before tying the knot, talk to a lawyer to ensure that you understand the state and federal benefits, as well as the tax obligations. For example, being married means having to file your annual tax returns as a married couple, and some couples will pay more in income taxes under the “marriage penalty.” But most couples pay less in taxes, and they enjoy a sense of security that simply being partners may not provide. If the Supreme Court decided to overturn Obergefell, it would mean that marriage equality would no longer be federally protected, leaving it up to individual states to determine whether to allow same-sex marriages. This could lead to a patchwork of state laws, some continuing to permit same-sex marriage and others outlawing it. Already having a marriage license will help guard against such uncertainty. The Importance of Estate Planning Marriage confers significant legal benefits, but a marriage license alone isn’t enough. No matter what the future holds for same-sex unions, an estate plan will help protect your relationship from some of life’s most significant uncertainties. 1. Will The backbone of most estate plans, a will specifies how your assets should be distributed upon your death, who will care for any minor children, and who will be responsible for settling your estate. For same-sex couples, wills are particularly important to ensure that each partner is legally recognized as an heir. Without a valid will, your partner may not inherit your property automatically, and your assets could go to family members who do not have your best interests at heart. 2. Powers of Attorney If you should ever become incapacitated, someone would need to pay your bills, file your taxes, and possibly even sell your home if the incapacity appears to be permanent. A power of attorney will authorize a partner, spouse, or other trusted individual to take on this role. If you have no power of attorney, it could be necessary for someone to become your legal guardian. This is an expensive and time-consuming process, and it involves a court hearing. At just a few pages, a power of attorney can prevent the need for a guardianship and save your loved ones a lot of stress. In Maryland, it’s helpful to have the state’s statutory power of attorney, which banks and other entities are obligated to accept. You can even include special instructions in the document, such as authorizing your attorney in fact to make gifts on your behalf. 3. Advance Medical Directives An advance directive enables you to name a “health care agent”—someone you trust who will manage your health care if you ever become incapacitated. It also says what kind of care you want to receive in an end-of-life situation, like a terminal illness. If you have a partner, naming them as your agent helps ensure that they have the legal right to make critical medical decisions on your behalf. Without such a document, hospitals or medical staff may default to family members who may not recognize or support your relationship. Being married means your spouse automatically has the legal right to make medical decisions for you. But an advance directive is an important backup. It ensures that your spouse is in charge even if your marriage is not recognized, and it names a backup agent in case your spouse is not available. For trans individuals, an advance medical directive can also help make their care as dignified as possible. For example, the document can instruct your healthcare providers to address you by your preferred name and pronouns, regardless of your legal name or the gender marker on your driver’s license. This simple provision can prevent the distress of being called by the wrong name at an especially vulnerable time. To help prevent being misgendered, you can also request that your appearance be maintained to align as much as possible with your stated gender. Including this instruction in an advance directive will alert your healthcare providers as to your wishes and also help your healthcare agent ensure that they are followed. 4. Trusts In addition to a will, many people choose to set up a trust to manage their assets during their lifetime and distribute them efficiently upon their death. A trust allows you to specify how your assets will be used for the benefit of your loved ones, and it can enable them to bypass the lengthy probate process. A trust is also more private than a will. In a hostile political environment, having a trust can protect your privacy as a member of the LGBTQ+ community. Second-Parent Adoptions Less certain than the right to marry is the future of adoptions by same-sex couples. If one parent has a legal connection to a child, such as through birth, it’s smart to have the other parent file for a “second-parent adoption” to create a clear legal relationship. (This will require the consent of the child’s other biological parent.) A court order giving the second parent full legal rights will prevent problems when enrolling the child in school or accessing their medical records. Trans Individuals The incoming administration has directed some of its harshest rhetoric at the transgender community. Because the laws may shift in ways that limit protections for trans individuals, it’s a good idea to take steps now to safeguard your rights. For someone who is transgender or in transition, these might involve legally changing their name to reflect their gender identity or choosing a gender-neutral name that aligns with their preferences. It’s also important to update the gender marker on their birth certificate. In many states, a new birth certificate will be issued—rather than an amended version—showing the updated name and gender marker. A legal name change can occur at any time, regardless of the stage of the person’s transition. Once the change is final, they should notify Social Security and the Motor Vehicles Administration of the new name. Having a driver’s license and Social Security card bearing the new name will make it easier for other agencies and businesses to update their records as well. And, of course, your will, power of attorney, and advance directive should be updated to reflect your new name as well. Conclusion These are challenging times. The good news is that the legal rights of the LGBTQ+ community are still largely intact, even with the future uncertain. By acting now, you can enjoy some peace of mind, knowing that you have taken important steps to protect yourself and those you care about. This article appeared in the May 2025 edition of Maryland OUTLoud.
November 8, 2024
Estates and Trusts
The Key to Succession Planning: A Revocable Trust
How can you ensure your legacy endures and your loved ones are spared unnecessary heartache during a challenging time? Succession planning is one of the most crucial aspects for securing financial stability and ensuring a smooth transition of wealth across generations upon the death of a business owner. Proactive planning today can save loved ones future confusion, stress, and financial strain. Among the many tools available for succession planning, a revocable trust stands out as one of the most versatile and effective methods for securing one's legacy and preserving the value of a business. What is a Revocable Trust: A revocable trust, also known as an “inter vivos” or "living” trust, is a legal document that allows an individual, known as the grantor, to transfer ownership of their assets, including a business, into a trust for their own benefit during their lifetime. Simply put, a trust can be the proverbial bucket in which you “hold” your assets. The grantor can revise the document at any time, adding or removing assets or even revoking it entirely if circumstances change. Upon the grantor’s death, the trust becomes irrevocable, and the designated successor trustee—the person named by the grantor to manage the trust after their death—distributes the trust's assets according to the terms outlined in the trust document. Unlike a Last Will and Testament, which becomes effective only after death, a revocable trust functions during the grantor’s lifetime. It provides control over assets while simplifying asset distribution after death by avoiding the probate process required with a Last Will and Testament. Key Benefits of Using a Revocable Trust in Succession Planning: Avoiding Probate: One of the primary advantages of a revocable trust for a business owner is that assets held within the trust bypass the probate process. Probate is a public, court-supervised process that can be lengthy, costly, and stressful for heirs. During probate, the deceased’s assets, including business assets, can be frozen during the pendency of a probate proceeding. When a business is one that needs daily attention, services customers, runs a payroll, and has employees, even a short delay could mean financial ruin. With a revocable trust, the appropriate party can step in immediately to manage the business, allowing for uninterrupted operations and quick, private inheritance for beneficiaries. Maintaining Privacy: Probate is a public process, meaning the estate details—including the business assets owned by the decedent and their beneficiaries— become a matter of public record (as illustrated by the widely reported Last Will and Testament of actor James Gandolfini, published on the first page of the New York Post). A revocable trust, however, remains private, ensuring a discreet transfer of assets and protecting family members from unwanted attention, potential disputes, and estate contests. Flexibility and Control: The grantor of a revocable trust retains control over the assets placed in the trust, allowing for the addition or removal of assets as needed. Business interests, investments, and real property owned in different states can all be titled in the same trust, creating an organized structure for asset management. This flexibility allows for updates as family dynamics or financial situations evolve (consider the 5D’s), ensuring the trust remains adaptable and effective throughout changing circumstances. Protection for Beneficiaries: If you have young or financially inexperienced beneficiaries, a revocable trust can also protect their inheritance by establishing “sub-trusts” specifically for them. Simply put, the grantor’s trust can contain additional trusts to benefit the beneficiaries. These sub-trusts provide guidelines and stipulations for how and when distributions to the beneficiaries are made, providing structure and oversight. When business assets are left to inexperienced beneficiaries, these guidelines and stipulations are particularly helpful, and a trustee can be appointed who has familiarity and understanding of the business to ensure that those interests are protected. Sub-trusts are particularly useful for parents or grandparents looking to ensure that minors or financially vulnerable beneficiaries are cared for responsibly, preventing unrestricted access to valuable business assets. Incapacity Planning: In the event that the grantor becomes incapacitated, even temporarily, a revocable trust allows for seamless management of their affairs by a designated successor trustee. This trustee, selected by the grantor, can be someone well-versed in both the business operations and the grantor's family dynamics. Appointing a competent successor trustee in advance can effectively manage potential financial and administrative crises, helping to avoid the need for a court-appointed guardianship, which can be a lengthy and an emotionally taxing process. Avoidance of Disputes: A revocable trust clearly defines named beneficiaries, ensuring they receive their inheritance without being involved in the probate court process. In New York and many other states, next of kin, who may not even be beneficiaries named in the Last Will and Testament, are notified of their family member’s death and provided the opportunity to appear in court and dispute the terms of the Last Will and Testament. However, with a revocable trust, there is no probate court proceeding, eliminating the notification requirement for disinherited individuals. This absence of a court process makes it significantly more challenging to dispute the terms of a revocable trust. Securing Your Legacy Succession planning with a revocable trust provides control, flexibility, and protection for both the business owner and their beneficiaries. By securing financial stability and continuity in business operations, even after the death of the owner, a revocable trust can be a valuable component of a comprehensive estate plan. Whether you are in the process of building your business or preparing for sale or succession, or planning your legacy, consider the use of a revocable trust to protect your family’s future with confidence.
November 4, 2024
Estates and Trusts
Why Your Estate Plan Might Need a Tune-up
An estate plan is a set of papers that usually includes a will, durable power of attorney, and advance medical directive. These essential documents can help you manage financial and health-related matters if you ever become incapacitated, and they should provide for the efficient transfer of your assets upon your death. In other words, an estate plan is a hedge against uncertainty, a defense against the curveballs life may toss your way. An up-to-date plan can help you minimize death taxes, protect your assets from creditors, provide for your loved ones, establish trusts for your children, and appoint guardians to care for them. Although estate-planning documents don’t “expire,” they can become out of date and ineffective if your life circumstances have changed. This is when a “tune-up” may be in order. A phone call with an Estates & Trusts attorney is advisable if any of the following apply to you — You have had children or gotten married or divorced. Someone named in your documents has died. You have bought or sold real estate (in Maryland or elsewhere). Your assets have changed significantly. Even if your circumstances are largely unchanged, it is still recommended that you review your plan every three to five years. Tax laws change, new planning techniques become available, and updated documents can offer important new benefits. It’s also possible that your wishes have changed since your documents were drafted. For example, do you want to update the list of people who will inherit from you? Is it time to change the individuals who will settle your estate, act as your trustees, or serve as guardians to your children? Do your financial power of attorney and advance medical directive still name the right people to manage your affairs if you no longer can? An attorney who specializes in this area can help you think through your planning goals and suggest your best options for achieving them. Even if no changes to your documents are necessary, receiving the assurance that you are ready for the unexpected is reason enough to speak with a planning professional today. Of course, if you don’t already have a current estate plan, there is no better time than the start of a new year to put your affairs in order. Making decisions today about your will, power of attorney, and advance medical directive can bring you peace of mind and a new confidence about what lies ahead. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Estates and Trusts
The Gift of Planning Your Estate
As 2024 draws to a close, the season of giving that rounds out the year will once again be upon us. As you fill your shopping list with festive sweaters, cool electronics, and other treasures, consider planning for the unexpected as a gift to the people you care about. Estate planning is a good place to start. Consider the consequences if something were to happen to you. Would someone you trust be allowed to take care of you and manage your health care? With an advance medical directive, you can put the right person in charge in case you ever become unable to speak for yourself. This person could then work with your doctors to help ensure that your care is appropriate and in keeping with your wishes. As part of a complete estate plan, an advance directive also enables you to make choices for serious, end-of-life situations such as a terminal illness. Would you simply want to be kept comfortable, or would you prefer to have more aggressive measures taken? These are tough questions to consider. But wresting with them in advance, before the need arises, will make life easier for the people who care about you. What about your finances? If you should ever become incapacitated, someone would need to pay your bills, file your taxes, and possibly even sell your home. A power of attorney will authorize a trusted friend or family member to take on this role. If you have no power of attorney, it could be necessary for someone to become your legal guardian. This is an expensive and time-consuming process, and it involves a court hearing. At just a few pages, a power of attorney can prevent the need for guardianship and save your loved ones a lot of stress. It is also important to plan for what happens if the worst comes to worst. Upon your death, who would settle your estate? Who would inherit your assets? If you have minor children, who would their guardians be? Should they receive their inheritance through a trust or outright? The best way to sort through these questions is to speak with an attorney who can guide you through the planning process. In addition to helping you explore your options; the attorney can draft a will and other essential documents. A complete estate plan will also address things like updating the beneficiaries on retirement accounts and life insurance policies. It will help ensure that your “digital assets,” like online accounts, frequent flyer miles, and credit card award points, are included in your estate. It will also give you an opportunity to plan a meaningful memorial service that reflects your wishes and beliefs. The effort that goes into creating an estate plan can be considered a gift. It is, first of all, a gift to yourself. With your plan complete, you can enjoy the peace of mind that comes from knowing that, as much as possible, you are ready for what lies ahead. An estate plan is also a gift to the people you love. A minimum amount of stress will enable them to care for you if you can’t care for yourself. It will also save them time, money, and worry when you are no longer in the picture. Whether you have a spouse or partner, children, or just dear friends, consider preparing an estate plan as a gift to them. As Booker T. Washington said, “Those who are happiest are those who do the most for others.” Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Estates and Trusts
The Easy Way to Leave Your Car to a Loved One
When someone dies, their car is often the first thing the heirs will ask about. Who gets it, they wonder, and how long will it take to transfer the title? Whether the vehicle in question is a gleaming new SUV or a humble and aging hatchback, getting it to the new owner can be a priority. A car can sit for only so long before maintenance problems develop, and the deceased owner’s estate will be responsible for paying insurance premiums in the meantime. When the vehicle is part of the deceased owner’s estate, the estate must generally be opened before the title can be transferred. Although the process is relatively efficient, it can take time. A death certificate must be obtained, a bond purchased, and the whereabouts of any Last Will and Testament determined. These documents are submitted to the Register of Wills in the county where the decedent lived. Once everything is in order, the personal representative (executor) will receive “Letters of Administration,” which give him or her the legal authority to deal with the car and other assets of the estate. All told the car may have to sit for days or weeks before its new owner can take possession of it. To streamline the transfer, the Maryland MVA allows you to designate a beneficiary for your vehicle right on the title. For a nominal fee, you can have a new title prepared that names the person or business that will receive the vehicle upon your death. Under this arrangement, the car will no longer be part of your probate estate but will instead transfer to the named beneficiary regardless of what your will might say or whether your estate has even been opened. When the time comes, the person you have named can simply visit an MVA office to transfer the title to your car. There will be no need to wait until the estate has been opened, and if the Department of Health and Mental Hygiene has been notified of your death, there won’t even be the need to show a death certificate. The MVA requires that the vehicle have only one owner and be titled in Maryland. A beneficiary can be added even if there is a lien on the vehicle. Before the car is transferred to the beneficiary, any liens must first be satisfied, or the lien holder can give the beneficiary a letter of permission to transfer ownership. Adding a beneficiary won’t affect your ownership of the vehicle during your lifetime, and you can still sell the car whenever you want. If you change your mind about who should receive the car, you can delete or change the beneficiary designation anytime. There is, however, a fee to add, delete, or change a beneficiary to a vehicle’s title. When the time comes, it won’t be necessary to have the vehicle inspected if the beneficiary is your spouse, child, or parent. Even the vehicle registration can be transferred if the new owner is a member of your immediate family. A transfer to an unmarried partner, a niece or nephew, or a friend will require the purchase of new registration plates. Naming a beneficiary for your car is like adding a “transfer on death” provision to a bank account or designating a beneficiary on a life insurance policy or retirement account. These provisions can help streamline the administration of your estate, but it’s advisable to speak with an estates and trusts attorney before you get started. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 30, 2024
Estates and Trusts
Protecting a Loved One’s Benefits With a Special-Needs Trust
Caring for someone with special needs is both a burden and a privilege. Although the challenges can be all-consuming, the rewards are often deeply gratifying. Few of us who don’t bear this burden can fully understand the level of commitment required. For many caregivers, this commitment extends to remembering the individual with disabilities in their wills. This is a commendable impulse, but it is important to proceed cautiously. Without proper planning, an inheritance left to someone on government assistance can lead to nothing short of disaster. The difficulty stems from the nature of public assistance. Some benefits, such as Medicaid and Supplemental Security Income (SSI), are “means-tested.” This means they are available only to individuals with disabilities whose assets are below a certain level. Leaving any kind of inheritance to someone who receives means-tested assistance can cause these benefits to be taken away. And for the person with disabilities, government benefits can be critical. SSI is a federal program administered by the Social Security Administration that pays monthly stipends to people who are elderly or disabled. Medicaid provides health care benefits and many other programs that can enhance the quality of life of people with disabilities. Importantly, Medicaid coverage is automatically granted to individuals receiving SSI in Maryland and many other states. Under Social Security rules, a person with disabilities with more than $2,000.00 in assets cannot receive SSI and, therefore, will not qualify for Medicaid. As a result, leaving a bequest to an individual with disabilities can do more harm than good. This problem can be circumvented by setting up a special-needs trust. This type of trust includes language that requires the trustee to pay only for items the government isn’t paying for. In this way, the trust supplements the person’s public benefits without jeopardizing them. Because the beneficiary cannot compel the trustee to make a distribution, the government does not take the trust assets into account when determining whether the beneficiary qualifies for public assistance. In other words, a special-needs trust creates the illusion of poverty, which allows someone with special needs to receive an inheritance while leaving their government benefits intact. Choosing the right trustee is essential. In addition to having the beneficiary’s needs at heart, this person must understand special-needs trusts and their rather arcane rules. For example, the trustee may not pay for the beneficiary’s food or shelter unless they are enjoyed while the beneficiary is away from home—say, on a vacation. Sending the beneficiary a gift card is also not allowed unless it’s for an establishment like a gas station that sells only things that are allowable expenses under the trust rules. The trustee should consult with an attorney to avoid any missteps. As a practical matter, a special-needs trust is typically set up through the caregiver’s will. Called a testamentary trust, it can be funded with the caregiver’s ordinary assets like bank accounts and real estate. In addition, the trust can be named as the beneficiary of the caregiver’s life insurance policy or retirement account. Another approach is to establish the trust in the caregiver’s lifetime. This type of trust, called an inter vivos trust, can be funded directly by contributions from the caregiver or from the friends and family of the beneficiary. These individuals can also name the trust as a beneficiary of their wills and other assets. Whether a testamentary or inter vivos trust is to be established, the assistance of an attorney is essential. The tax implications of setting up a special-needs trust are numerous and complex, and the laws affecting trusts in Maryland have recently changed. Properly done, however, the trust can be an essential legacy to help someone with special needs. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
October 29, 2024
Estates and Trusts
Estate Planning for the Newly Divorced Woman: A Critical Step Toward Your Future
Divorce is an emotional and often life-changing experience, regardless of whether it is amicable or contentious. For many women, especially those who have been married for years, it can feel like stepping into the unknown. As a newly divorced person, you may find yourself grappling with a whirlwind of financial, emotional, and logistical challenges. One crucial aspect that often gets overlooked during this transitional period is estate planning. After a divorce, the financial landscape shifts dramatically, necessitating an urgent need to review and potentially restructure your estate plan. Whether you had an estate plan in place during your marriage or are considering one for the first time, having a proper plan is essential to safeguard your assets, protect your children, and secure your future. Suffice it to say estate planning should be a top priority for newly divorced women. Update Your Will and Trust: Control Over Your Legacy During your marriage, your Last Will and Testament or Revocable Trust likely reflected decisions made with your former spouse in mind. After a divorce, these documents require a comprehensive overhaul. One immediate change to consider is removing your former spouse as a beneficiary unless there are specific legal obligations, such as alimony or child support, that necessitate their inclusion. Additionally, if you have children, your prior will may have named guardians for them. In light of your changed family structure, consider appointing different trustees for the funds you intend to leave to your children. While your former spouse retains certain rights as a biological parent, your estate plan allows you to designate who will manage your children's inheritance if something were to happen to you. Change Beneficiaries on Life Insurance and Retirement Accounts It is imperative to change the beneficiaries on life insurance policies, retirement accounts (such as IRAs and 401(k)s), and any other accounts where your former spouse is named. Accounts with designated beneficiaries pass directly to the listed beneficiary, bypassing the terms of your Will or Trust. Failing to update this information may result in your former spouse receiving these funds, regardless of your divorce. Many mistakenly assume that their divorce automatically revokes outdated beneficiary designations; however, this is not always the case. To ensure your assets are allocated to the correct beneficiaries, update these designations immediately. Consult your matrimonial attorney before making changes if your divorce is not yet final, as restrictions may apply. Revisit Powers of Attorney and Health Care Proxies An often-overlooked aspect of estate planning post-divorce is updating your powers of attorney (POA) and health care proxies. If your former spouse was named to make financial or medical decisions on your behalf, this designation should be revisited. While some states automatically revoke these fiduciary appointments upon divorce, others do not. Depending on your state, failing to update these documents could allow your former spouse to control your medical decisions and finances during a vulnerable time. Taking charge of this now is one of the most empowering steps you can take toward your newfound independence. Even if your state automatically revokes a former spouse’s right to act as a fiduciary under a POA or a health care proxy, it is imperative that you have a successor to act in your former spouse’s stead. As with any fiduciary role, you must appoint someone you trust: whether it is a family member, a close friend, or an adult child, someone should be appointed to handle these responsibilities should you become incapacitated. Planning for Your Children’s Future Divorce significantly impacts your minor children’s future—emotionally, financially, and legally. Although your former spouse retains certain financial and custodial rights, you can use your estate plan to specify your wishes regarding their upbringing and financial care. Consider establishing a trust for your children to ensure their inheritance is managed responsibly by someone you trust, particularly if you have concerns about your former spouse’s financial management. Appoint a trustee who will oversee the disbursements to your children over time, even if your former spouse is their guardian. Post-divorce is also a good time to reassess your life insurance needs. You may need additional coverage to ensure that your children are well provided for in the event of your passing, especially if you are the primary caregiver or breadwinner post-divorce. Protect Your Assets and Build a New Financial Legacy It is well-known that divorce has a disparate financial impact on women versus their spouses. Divorce often leaves the divorced woman in a starkly different financial position than what she had during her marriage. You may now own a home solely in your name, with the bills to match. Proper estate planning and consultation with a trusted financial planner provide you with knowledge and control over how these assets are distributed when the time comes. Proper planning provides a platform for you to rebuild and protect your financial legacy for the future. If your spouse previously managed the family finances, it is not uncommon to feel uncertain about your financial independence. Even if you were the primary financial manager, your current financial landscape may differ significantly from what it was during your marriage. Working with an estate planning attorney and a trusted financial advisor will help you get organize your finances, understand your current standing, and plan for long-term security. Moving Forward with Confidence Divorce marks the end of one chapter while opening the door to new beginnings. Though the process can be overwhelming, estate planning is an essential tool that offers clarity and control. By taking proactive steps now, you can ensure that your assets, loved ones, and legacy are protected as you embark on this new phase of your life. Partnering with a trusted estate planning attorney will guide you through this process, allowing you to focus on rebuilding your life with confidence. You have the power to shape your future, and estate planning is one of the most empowering steps you can take.
October 28, 2024
Elder Law and Advocacy
Elder Abuse Exposed: Understanding the Crisis and Lessons from Stan Lee’s Story
Elder abuse is a widespread issue that impacts millions of elderly individuals worldwide. It often manifests in different forms, including physical abuse, emotional or psychological mistreatment, neglect, and, most commonly, financial exploitation. Vulnerable older adults—particularly those experiencing cognitive decline, frailty, or social isolation—are particularly at risk. Among the most high-profile cases of elder abuse in recent years involves Stan Lee, the legendary creator of Marvel Comics. Understanding Elder Abuse Elder abuse can happen anywhere, including in homes, nursing facilities, or even public spaces. A common factor among these cases is that the abuser is generally someone trusted by the elder, such as caregivers, significant others, or family members. In fact, statistics reflect that nearly 60% of financial abuse is committed by a spouse, significant other, or family member. According to the World Health Organization (WHO), one in six people aged 60 and older has experienced some form of abuse in community settings within the past year. The actual numbers are likely much higher, as many cases of elder abuse go unreported due to fear or shame. Stan Lee: A Victim of Elder Abuse Stan Lee, the co-creator of iconic superheroes like Spider-Man, the X-Men, the Avengers, and many other beloved superheroes, passed away in 2018 at the age of 95. His final years were overshadowed by a deeply troubling elder abuse scandal. After losing his wife and advocate of 70 years, Lee's physical and mental health deteriorated significantly, leaving him increasingly dependent on others to manage his personal, financial, and creative affairs. Allegations emerged that Lee fell victim to financial and emotional abuse at the hands of his former business manager, who had become a trusted confidant. As with most elder abuse cases, the manager allegedly isolated Lee from his family and longtime associates, seized control of his finances, misappropriated millions in assets, coerced him into public appearances, and restricted access to family members and those who had supported Lee for decades. Furthermore, this manager even relocated Lee into a new home without informing his only child. The Financial Exploitation of Elders Lee's case is not an isolated incident; financial exploitation is the most common form of elder abuse. While Lee's situation is noteworthy due to the unusual occurrence of financial exploitation among wealthy individuals with significant assets, elders of all economic backgrounds—especially those with diminished mental capacity—are at risk of manipulation and exploitation. In Lee's case, the exploitation was particularly egregious, given his status as a global pop culture icon with a multimillion-dollar estate. Although Lee experienced rapid exploitation within a year following his wife's death, most financial abuse unfolds slowly and subtly. It is important to keep in mind that this financial abuse can manifest as forgery, coercion in managing finances under the guise of assistance, or through more sophisticated and deceptive schemes involving multiple perpetrators. Sadly, statistics indicate that abuse and exploitation disproportionately affect elders with more modest means—those least equipped to handle economic setbacks in their later years. Alarmingly, nonwhite elders are particularly vulnerable, with reports showing they are 200% more likely to suffer from elder abuse compared to their white counterparts. Legal Protections and Reporting Cases like Lee's illustrate the urgent need for improved legal protections and reporting mechanisms for elder abuse. Although laws aimed at combating elder abuse exist, enforcement is frequently lacking. Most elderly individuals lack the capacity to seek help, which is often what makes them vulnerable in the first place. Alarmingly, those who might normally report such abuse are often perpetrators themselves. These factors, combined with the shame and fear associated with reporting, severely hinder the prosecution of these crimes. While many elder abuse units exist within law enforcement, significant gaps remain in the system due to a lack of resources and, from my perspective, a lack of empathy for senior victims. What We Can Learn from Stan Lee's Story The tragic story of Stan Lee's elder abuse serves as a powerful reminder that even the most celebrated individuals can fall victim to exploitation in their later years. It underscores the critical need for planning ahead and vigilance from both loved ones and legal authorities to protect vulnerable elders from abuse. For those caring for elderly loved ones, staying engaged, monitoring financial activities, and advocating for their well-being is essential. Preparation for potential incapacity can also help prevent victimization. Aging loved ones should have the proper legal documentation in place, such as a Power of Attorney and Trust instruments, which empower them to designate trusted individuals prior to their incapacity. Proper legal authority and the appointment of reliable individuals in positions of trust reduce the risk of exploitation by bad actors. Preparing for potential incapacity can also help prevent victimization. Aging loved ones should have essential legal documentation in place, such as a Power of Attorney and Trust instruments, which empower them to designate trusted individuals before they become incapacitated. Proper legal authority and the selection of reliable individuals in positions of trust reduce the risk of exploitation by bad actors. Despite the flashy headlines of Mr. Lee's case, elder abuse remains a largely hidden crisis. Greater societal acknowledgment of its existence, coupled with stronger legal protections, will better ensure that our elderly population can live with dignity and security. Protecting elders from exploitation is a moral imperative that requires collective awareness, legal guidance, and action. Whether famous or not, senior adults deserve respect, care, and protection in the twilight of their lives, allowing them to age with dignity.
October 2, 2024
Estates and Trusts
The Estate Planning Benefits of Marriage: What Unmarried Couples Need to Know
It is becoming increasingly commonplace for people to enter long-term romantic relationships without legally marrying. While there are no exact statistics on how many Americans fall into this growing category, a 2019 Pew Research Center study estimated that 12% of Millennials were living with an unmarried partner, compared to 8% of Gen Xers—an increase of 50% from one generation to the next. While this trend is influenced by various social and political factors, many of these couples may not fully appreciate the extensive economic and legal benefits they forgo by remaining unmarried to their partner. In fact, over 1,000 federal laws provide legal benefits and privileges to married couples. It is beyond this article's scope to discuss every way in which the law favors married couples. Rather, this article will highlight just a few of the many estate planning benefits and opportunities that are conferred on married couples that are not shared by unmarried couples. As I will illustrate, often with little planning, married couples can defer, reduce, or completely eliminate taxes. Unlimited Marital Deduction - Lifetime Gifting Any gift exceeding the annual gift tax exclusion amount, which in 2024 is $18,000 per donor per recipient, is a taxable gift that must be reported by filing a gift tax return (IRS Form 709). However, there is a very significant exception to this rule. One spouse may convey to the other spouse an unlimited amount of assets at any time and as often as desired without incurring any gift tax liability. This creates many estate planning opportunities. As just one example, married couples can strategically retitle assets between each other to maximize the “step-up” in the capital tax basis that these assets receive at death. The “step-up” means that any appreciation in an asset from when the decedent first acquired it gets wiped away at death, and the recipient receives the asset with an adjusted capital tax basis as of the decedent’s date of death. Thus, married couples can convey assets to each other so that upon the death of the first spouse, the surviving spouse receives highly appreciated assets with a one-half or even full step-up, saving significant capital gains taxes when the asset is later sold. Unlimited Marital Deduction – Inheritance The unlimited marital deduction also applies to transfers between spouses at death, shielding the surviving spouse’s inheritance from any estate taxes. This powerful tool allows the surviving spouse to defer the payment of any estate taxes resulting from the first spouse's death for their entire lifetime. This gives the surviving spouse time to spend down or gift these assets to minimize or eliminate estate tax liability for their future heirs at the time of their death. The unlimited marital deduction is also key to “by-pass” trust planning, a technique that ensures that no estate taxes are owed at the death of the first spouse while maximizing the use of their estate tax exemption. By-pass trust planning works as follows: upon the first spouse’s death, two trusts are established for the surviving spouse’s benefit. One trust is funded with assets up to the estate tax exemption amount, allowing these assets to continue to appreciate outside the surviving spouse’s estate. When the surviving spouse passes away, this trust terminates, and the assets are distributed to the ultimate beneficiaries free of estate tax. The second trust is funded with the remaining estate assets and is structured to take advantage of the unlimited marital deduction. Portability A spouse may claim the deceased spouse’s unused exemption (DSUE) for their later use via a concept known as portability. To claim the DSUE of the deceased spouse, the surviving spouse must timely file a federal estate tax return (IRS Form 706). Unlike a “bypass” trust plan, portability requires no advanced estate planning and incurs no administrative costs or inconvenience. Regardless of any subsequent changes in the law, the DSUE will be available for the surviving spouse to benefit from in their estate. With the current estate tax exemption amount at a historical high, it is a particularly advantageous time to file an estate tax return solely for portability purposes. Those intending to rely on portability planning should be cautious, as the surviving spouse cannot claim any unused state estate tax exemption amount. Therefore, portability planning may be sufficient for residents of New Jersey, which abolished its estate tax in 2018, but it may not be adequate for residents of New York, which has an estate tax. Unused generation-skipping transfer tax exemption amounts are also not portable between spouses. Inheritance Tax For New Jersey residents, an inheritance tax is imposed on certain classes of recipients of a decedent’s estate assets. The surviving spouse, a Class “A” beneficiary, is wholly exempt from inheritance tax liability. For those married clients who wish to provide an inheritance for beneficiaries in a class that would be subject to the inheritance tax, making lifetime gifts outright or in an irrevocable trust remains a valid strategy for avoiding the inheritance tax. Inherited IRAs Before the enactment of the SECURE Act, beneficiaries of inherited IRAs were permitted to take required minimum distributions (RMDs) based on their life expectancy. A beneficiary younger than the original account owner would have much smaller RMDs, allowing the IRA assets to appreciate over a long period of time income tax deferred. The SECURE Act largely eliminated this strategy. Under current law, most beneficiaries must liquidate their inherited IRA within ten (10) years of the death of the original account holder. The SECURE Act carved out an exception to this rule; it allowed those deemed an “eligible designated beneficiary” (“EDB”) to take RMDs based on their life expectancy. Among the limited categories of EDBs, you guessed it, the surviving spouse is deemed an EDB. A husband or wife who outlives their spouse for many years could see these assets significantly appreciate over their lifetime. Moreover, the surviving spouse has significantly more flexibility in taking withdrawals above the RMD in years when the assets will be taxed at lower marginal income tax rates. Challenges for Unmarried Couples The flip side to all the planning opportunities available to the married couple is that the unmarried couple cannot benefit from any of them. Any gifts between the unmarried couple above the annual exclusion amount would be taxable. Unmarried couples who receive the inheritance of their deceased partner’s estate may be subject to estate taxes, significantly reducing the assets that the surviving partner would otherwise have available for their support. In New Jersey, in addition to any estate tax liability, a non-married surviving partner may be subject to inheritance tax liability. Lastly, the surviving partner may not be an EDB; thus, they will need to withdraw the entire amount of the IRA within ten years, potentially losing out on years of further appreciation. Of course, the unmarried couple still needs estate planning. Indeed, if an unmarried person were to die without preparing a will or trust, the intestacy laws of most states would direct their assets automatically to children, parents, or siblings. There are also tax planning techniques available for the unmarried couple to reduce estate taxes, such as the establishment of one or more lifetime irrevocable trusts. This kind of planning, however, is more expensive, and the administration is costly and burdensome. State legislatures have taken some meaningful steps to protect the rights of unmarried couples in recent years. For example, both New York and New Jersey recognize domestic partnerships, a legal arrangement that confers some of the benefits afforded to married couples on unmarried couples. For example, a domestic partner in New Jersey is a Class “A” beneficiary, exempt from inheritance tax. However, most tax planning opportunities available to married couples remain unavailable to domestic partners. I am hopeful that future legislatures will address some of these disparities, particularly as the unmarried share of the population continues to grow. However, until that legislative fix occurs, sometimes the best planning advice for an unmarried couple in a long-term relationship is to change their marital status.
September 24, 2024
Estates and Trusts
Protecting Your Legacy: Trust and Estate Planning for Musicians
Understanding how to protect and transfer these invaluable assets can ensure that a musician's creative legacy endures and continues to benefit future generations. Embarking on the journey of music copyrights and estate planning is like composing a symphony of legal and financial strategies for musicians and their heirs. Unlike many professions, a music career brings a distinct set of legal and financial challenges, making it crucial for artists to manage their legacies with care. Given the unpredictable nature of the music industry and the substantial value of intellectual property (IP) assets, having a solid plan is not just advisable—it’s essential. Understanding how to protect and transfer these invaluable assets can ensure that a musician’s creative legacy endures and continues to benefit future generations. One of the most important things musicians must pay attention to is their IP rights. It’s important to recognize that with music copyrights there can be multiple copyrights involved in a single song, including the copyright of the composition and the lyrics if they were composed with a partner and separately from the score. So, there are a lot of moving parts to track with a musical piece. Understanding the basics of music copyright is essential before delving into estate planning. A copyright is a collection of legal rights initially owned by the author, including the right to perform the work publicly. These rights are treated like other intangible assets and can be owned jointly, held in trust, or transferred by gift or at death. Properly inventorying and valuing your music copyrights is a critical first step in estate planning. A qualified appraiser can help determine the worth of these assets by examining their income history or market value, which aids in evaluating estate planning options and predicting potential gifts or estate taxes. Ensuring that copyrights for compositions and recordings are registered correctly and that proper powers are provided to trusted successors is key to a portfolio, inheritance, and a comprehensive estate plan. For example, assigning these rights to a trust is an excellent way to provide ongoing income to beneficiaries. Musicians must also account for how royalties should be managed and distributed. This can involve setting up trusts specifically for royalty income. One idea is for musicians to set up management companies to handle their IP assets that can provide continuity and professional management of the musician’s works after death. Let’s take a lesson from Taylor Swift. The key lesson is to protect yourself early. Swift owned the composition of her music; however, she didn’t own the master recordings, and they were purchased without her blessing. To remedy that, Swift famously and with fanfare re-recorded her songs to secure rights to master recordings for most of her catalog. Musicians must also carefully consider who will oversee monetizing their music and brand after they die. Who do they want to decide how their image is used, whether their songs can be used in movies or TV shows, or whether they want to be a hologram? Musicians often have dependents, such as children or elderly parents, who rely on their income. Like many who pass without advance planning or an estate plan, a musician’s assets may go through probate, a time-consuming and public process. Estate planning tools like trusts can help avoid probate, ensuring a smoother transition for heirs and provide for these dependents long-term. Estate planning for musicians also involves navigating complex tax issues, especially when significant estates that may be subject to federal and state estate taxes are involved. Proper planning, including using trusts and charitable donations, can help mitigate these taxes. Beneficiaries may have to pay taxes on royalties and other income from the musician’s IP. Structuring the estate to minimize these taxes is crucial. Musicians making substantial gifts during their lifetime should be aware of potential gift tax implications. Key Legal Instruments in Estate Planning Several legal instruments are crucial in the estate planning process for musicians: Wills: A will is a foundational document in estate planning that outlines how a musician’s assets should be distributed upon death. A will provides for the distribution of property you own at the time of your death. This can include your instruments, gear, and assets related to your music career. You can also designate who will be responsible for managing your music and other intellectual property after your passing. Generally, you may gift your property in any manner you choose. However, wills must go through probate, which can be avoided with other tools. Trusts: A trust is a legal arrangement that allows you to transfer ownership of your assets to a trustee, who can manage those assets for the benefit of your beneficiaries. This can be a useful for musicians to ensure that their loved ones are taken care of after their passing. Trusts are flexible tools that can manage and distribute a musician’s assets according to specific instructions. They can be beneficial for managing ongoing royalty streams and providing for dependents. Of importance for artists is how the handling of the intangible assets known as digital assets are managed post-mortem. These are issues properly handled in an estate plan. In a comprehensive estate plan, there can be multiple trust structures for planning and gifting. Revocable Trusts: A trust created during one’s lifetime may be revocable. Like it suggests, this means it may be revoked or changed by the settlor (“Introduction to Wills—American Bar Association”). These trusts allow musicians to retain control over their assets during one’s lifetime and provide instructions for distribution after death. Irrevocable Trusts: An irrevocable trust means it cannot be revoked or changed by the settlor. This is useful in gifting strategies for artists considering their taxable estate. Health Care Power of Attorney: You have the right to decide who can make decisions about your health care. These documents allow musicians to designate someone to make healthcare decisions on their behalf and outline their instruction for medical treatment if they become unable to communicate. It is not only important to create an estate plan for musicians, but also critical that the estate plan is kept up to date. Things change, mangers change, people get divorced, and children get added, as do grandchildren. Perhaps the person who was first designated as the manager of the estate is out of the picture. It is essential to keep the estate plan up to date as circumstances change, and to make sure that family is aware of updates. In the world of music, where creativity and complexity blend, trust and estate planning strike the right chords for crafting a lasting legacy. By partnering with legal experts who understand the intricacies of intellectual property and the unique needs of entertainers, musicians can craft a plan that not only safeguards their legacy but also ensures their artistic vision endures. This thoughtful approach transforms a vibrant career into a timeless legacy, preserving the essence of their contributions for future generations. Reprinted with permission from the September 10, 2024, issue of The Recorder. © 2024 ALM Media Properties, LLC.
September 18, 2024
Estates and Trusts
Navigating NIL Deals: Why Estate Planning is Essential for College Athletes
As September brings students back to school across the country, college athletes are encountering new opportunities and challenges, particularly with the recent developments in Name, Image, and Likeness (NIL) rights. Now able to leverage their personal brand as a valuable commodity while competing at the collegiate level, athletes face a paradigm shift that requires financial literacy and strategic planning. This transformation has turned student-athletes into potential entrepreneurs, with their talents and popularity becoming marketable assets. One crucial element of a strategic plan that is often overlooked is estate planning, which can protect a student-athlete’s newly acquired assets and ensure long-term financial security. The NIL “Revolution” The National Collegiate Athletics Association’s (NCAA) decision to allow athletes to profit from their NIL rights has opened a significant and long-overdue financial door for college athletes. Now, they can capitalize on endorsement deals, social media partnerships, and even personal business ventures during their college careers rather than waiting for professional opportunities to unlock financial rewards. However, with these new earnings come added complexity. For young athletes, rapidly growing income and brand recognition introduce significant financial and legal considerations. Estate planning—often thought of as something for older individuals—becomes crucial for these athletes to manage their wealth, mitigate taxes, and ensure long-term security. Estate planning involves organizing how assets will be managed and distributed in the event of incapacitation or death. It typically includes creating wills, trusts, powers of attorney, healthcare directives, and implementing tax strategies. For college athletes, however, estate planning is not just about planning for life after death—it is about protecting assets, managing new income, and ensuring their families and loved ones are cared for in case of the unexpected. Why Should the College Athletes Plan Ahead? Asset Protection: NIL deals can yield substantial income, with earnings likely to increase as an athlete’s career progresses. A comprehensive estate plan helps protect this wealth from creditors, lawsuits, and other risks. Trusts, for instance, can provide a layer of legal protection, ensuring that the newfound fame and exposure do not lead to financial vulnerability. Trusts can also facilitate smooth transfers in the event of incapacity. Tax Efficiency: Significant earnings from NIL deals can result in hefty tax liabilities. An estate plan can implement strategies to reduce tax exposure during an athlete’s career, into retirement, and beyond. Since tax laws vary by state, working with an expert can help athletes navigate complex tax requirements and avoid overpaying. Disability Planning: In high-contact sports like football, soccer, or basketball, the risk of injury is always present. Estate planning can include provisions for medical or financial decision-making in case of incapacitation due to injury. This ensures that a trusted individual is in place to manage the athlete’s financial affairs and act in their best interests, even if they are unable to make decisions themselves. Brand Management: For student-athletes whose personal brand significantly contributes to their earnings, estate planning can safeguard their image, likeness, and business ventures, even after their retirement. A well-structured trust or corporate entity can hold and manage these rights, ensuring that the athlete’s brand remains protected and managed according to their wishes. The Foundational Elements of an Athlete’s Plan Last Will and Testament: The cornerstone of any estate plan. It outlines how assets should be distributed and designates guardians for any dependents, ensuring that loved ones and interests are cared for according to the athlete’s wishes. Trusts: Offer flexible tools for asset protection, tax planning, and managing income over time. They help avoid probate, reduce tax burdens, protect trust assets from potential lawsuits, and provide tailored terms for beneficiaries. Power of Attorney: This document grants a trusted individual the authority to make financial and legal decisions on behalf of the athlete if they become incapacitated or even if the athlete is unavailable due to in-season travel, ensuring that important matters are handled effectively in their absence. Healthcare Directives: These directives detail medical care and treatment preferences and designate someone to make healthcare preferences and appoint someone to make healthcare decisions if the athlete is unable to do so due to injury or illness. This ensures that their medical treatment aligns with their wishes. Business and Brand Succession Planning: For athletes with substantial earnings from NIL deals, succession planning is crucial. This includes strategies for protecting intellectual property, trademarks, or businesses tied to their name and image. Proper planning ensures their brand and business ventures are preserved and managed in alignment with their long-term goals, even after death, to ensure that their loved ones reap the benefit of their brand well into the future. The Importance of Estate Planning in the NIL Era In the fast-paced and often unpredictable world of college sports, estate planning provides student-athletes and their families with a crucial safety net. As NIL deals continue to grow in both value and complexity, so too does the need for thoughtful estate management. Estate planning equips athletes with the tools to protect their assets, preserve their brand, and ensure their legacy both on and off the field. For any college athlete navigating the new NIL landscape, estate planning is not just a financial strategy but a pathway to long-term security and peace of mind for themselves and their loved ones. If you or your family are navigating the opportunities and challenges of NIL agreements, it’s worth considering a conversation with someone who understands both the legal and financial landscape. Candace Dellacona is available to discuss how estate planning can fit into your broader financial strategy, ensuring you’re prepared for the future.
September 17, 2024
Estates and Trusts
Writing Your Own Epilogue: How Estate Planning Can Shape Your Legacy
William Shakespeare said, “A good play needs no epilogue.” When a story is compellingly told, in other words, there is no need for commentary after the curtain falls. Like a play that is well written, a life that is well lived speaks for itself. But living well includes knowing that you have planned for what happens after you are gone. This foresight includes how easily your estate will be passed down to the people you care about. Have you written a will that names someone to settle your estate? If something were to happen to you, do you know who would receive your assets? If you have children, have you appointed a guardian to look after them and a trustee to manage their inheritance? If not, the commentary on your life could well include tales of confused intentions and mismanaged assets, of hurt feelings and squandered wealth. Fortunately, all it takes is a phone call to an estates and trusts attorney to make your epilogue your own. With your guidance, the attorney can prepare your will, durable power of attorney, and advance medical directive. These essential documents name a cast of characters who can take charge if you should die or become incapacitated. Your Last Will and Testament names a “personal representative,” or executor, who will administer your estate. Dying without a will, or “intestate,” would require someone to step into this role. The person they select could be an estranged sibling or disapproving parent, who will then have the legal authority to go through your home and distribute your possessions and other assets to your heirs. By preparing a will, you ensure that the right person is in charge of settling your affairs. Writing a will also enables you to leave your assets to the people you select. Shakespeare himself did this when he bequeathed his “second-best bed” to his wife. In addition to your spouse or partner and any children, you might consider including a charitable organization, such as an alma mater or house of worship, among your beneficiaries. Working with an attorney is an opportunity to coordinate assets like life insurance and retirement accounts with the provisions in your will. These “non-probate” assets are not controlled by your will and instead transfer directly to the named beneficiary upon your death. It’s essential, then, that these beneficiary designations work in tandem your will and are not at odds with it. Even a well-lived life can include periods of struggle. If you ever become incapacitated, a durable power of attorney can name someone you trust to manage your finances. The duties of your “attorney in fact,” as the person is called, could include paying your bills, filing your taxes, or even selling your house in order to move you into assisted living. An advance medical directive is like a power of attorney but relates to your health care. It enables you to state your wishes for managing an end-of-life illness and to name a trusted individual who will ensure that your wishes are carried out. If you lose capacity and don’t have an advance directive, the authority to make medical decisions on your behalf will fall to your next of kin. Surprisingly, this could be several people, like a group of siblings, who could have very different ideas about how to manage your care. By preparing an advance directive, you can instead name someone with your best interests at heart to take on this essential role. Of all the benefits of having an estate plan, perhaps the greatest is the reassurance of knowing that the actors you have chosen are prepared to step into their roles when the need arises. With that in mind, when is the best time to have your estate-planning documents drawn up? As Shakespeare said in the Merry Wives of Windsor, “Better three hours too soon than a minute too late.” Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
September 3, 2024
Estates and Trusts
Corporate Transparency Act Reporting for Covered Entities Owned by Trusts
We are now six months into the new compliance regime instituted by the Corporate Transparency Act (CTA) and practitioners should be aware of the reporting obligations to assist clients with required disclosures. This article limits its focus to trusts. Specifically, estate planners should be able to advise their clients as to which parties to a trust need to report under the CTA when a trust owns business interests. Reporting Requirements Effective January 1, 2024, the CTA requires that “reporting companies”[1] disclose to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) certain information about the company including, but not limited to, its beneficial owners. Trusts themselves generally are not considered reporting companies because the CTA only applies to entities created by filing an organizational document with a state authority such as a secretary of state; however, when a trust owns interests in a reporting company, all parties associated with the trust may be considered beneficial owners of the reporting company. The CTA defines a beneficial owner as any individual who either: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests.[2] Individuals can substantially control or own a reporting company through trust arrangements. Substantial control is broadly defined[3], and there is no limit to the number of individuals associated with a trust who may need to be reported for exercising substantial control, and thus considered a “beneficial owner.” Given the far-reaching meaning of substantial control, any number of individuals that may constitute a beneficial owner with respect to a trust, including the trustee, beneficiary, grantor, or other individuals such as trust protectors, distribution trustees or advisors, investment trustees or advisors, members of the trust protector committee, holders of a power of appointment, or other power holders, whether directly or indirectly through contracts, arrangements, understandings, relationships, or otherwise. If a trust owns or controls at least 25 percent of a reporting company’s ownership interests or exercises substantial control over a reporting company, then the parties to the trust that meet the following conditions are considered beneficial owners and must provide beneficial ownership information to FinCEN: Any party to the trust who: Has authority to vote 25 percent or more of the interests of the reporting company. Has authority to dispose of trust assets. Has authority to remove and replace trustees or direct investments. Is the sole permissible recipient of trust income and principal. Has the right to demand a distribution. Has the right to withdraw substantially all of the trust assets. Has the right to otherwise control the trust’s activities. Has the right to revoke the trust or withdraw trust assets. Has the right to swap assets with the trust and reacquire assets from the trust. Once it is determined who is a beneficial owner, such parties must furnish to the reporting company their full legal name, date of birth, residential address, and an identification number from a driver’s license, passport, or other state-issued identification along with a copy of the identification document. Any time this information changes, the reporting must be updated. Corporate Trustees If the beneficial owner is a legal entity such as a corporate trustee, the reporting company should determine whether any of the corporate trustee’s individual beneficial owners indirectly own or control at least 25 percent of the ownership interests of the reporting company through their ownership interests in the corporate trustee. The following examples are provided by FinCEN: If an individual owns 60 percent of the corporate trustee of a trust, and that trust holds 50 percent of a reporting company’s ownership interests, then the individual owns or controls 30 percent (60 percent × 50 percent = 30 percent) of the reporting company’s ownership interests and is, therefore, a beneficial owner of the reporting company. If the same trust only holds 30 percent of the reporting company’s ownership interests, the same individual corporate trustee owner only owns or controls 18 percent (60 percent × 30 percent = 18 percent) of the reporting company, and thus is not a beneficial owner of the reporting company by virtue of ownership or control of ownership interests. The reporting company may, but is not required to, report the name of the corporate trustee in lieu of information about an individual beneficial owner only if all of the following three conditions are met: The corporate trustee is an entity that is exempt from the reporting requirements; The individual beneficial owner owns or controls at least 25 percent of ownership interests in the reporting company only by virtue of ownership interests in the corporate trustee; and The individual beneficial owner does not exercise substantial control over the reporting company. It may also be necessary to consider whether any owners of, or individuals employed or engaged by, the corporate trustee exercise substantial control over a reporting company. The factors for determining substantial control by an individual connected with a corporate trustee are the same as for any beneficial owner. Exemptions from the Definition of Beneficial Owner When any of the following individuals qualifies for an exception, the reporting company does not have to report that individual in its beneficial ownership information report to FinCEN. Minors (Parent or legal guardian of the minor must report instead) Nominees, intermediaries, custodians, or agents Remainder beneficiaries (Once the individual inherits the interest, this exception no longer applies, and the individual may qualify as a beneficial owner) Creditors Penalties for Noncompliance While attorneys and beneficial owners are not directly responsible for filing reports with FinCEN—the onus falls on the reporting company itself—attorneys should be prepared to advise their clients whether a trust falls within the purview of the CTA and which parties associated with a trust must provide beneficial ownership information. Penalties for failing to comply with the CTA may be steep. Parties to a trust who are considered beneficial owners must provide the reporting company with complete and accurate beneficial ownership information. If an individual willfully fails to do so, an enforcement action may be brought against such party because someone who willfully causes a reporting company’s failure to submit complete or updated beneficial ownership information to FinCEN is in violation of the CTA. Violations can result in fines of $500 per day, up to $10,000 (both adjusted for inflation), and imprisonment for up to two years. Civil and criminal liability may be avoided if an individual who submitted an original, erroneous report did not knowingly submit inaccurate information and submits an updated report correcting the inaccurate information within ninety days. Conclusion The beneficial owner information reporting analysis is complex and must be done on a case-by-case basis. A practitioner must review the extensive CTA information published on FinCEN’s website. There is no doubt that clients with trusts and trust-owned businesses will have questions about CTA compliance. Reprinted with permission from the Summer 2024 edition of The Pennsylvania Bar Association's Real Property, Probate & Trust Law Section newsletter. All rights reserved. Further duplication without permission is prohibited. [1] Reporting companies—defined as any company with twenty or fewer employees formed by filing with the Secretary of State or equivalent official—created or registered prior to January 1, 2024, have until January 1, 2025 to file an initial report; reporting companies created or registered after January 1, 2024 and before January 1, 2025, will have ninety days after creation or registration to file a report. Entities created on or after January 1, 2025 will have 30 days to submit the reports to FinCEN. The CTA exempts around two dozen categories of entities, including companies that are publicly-traded; have more than twenty full-time US employees; filed a previous year’s tax return showing more than $5 million in gross receipts or sales; have an operating presence at a physical US office location; operate in a regulated industry, such as banking, utilities, or insurance, that already imposes similar reporting requirements; or are subsidiaries of exempt organizations. The exemptions, which generally include larger companies already subject to regulation, underline the primary purpose of the CTA: to combat money laundering and other illicit activities conducted via small, private, and anonymous shell companies. [2] There are other nuances to this rule if no single owner owns more than 25%. [3] An individual or trust exercises substantial control over a reporting company if the individual or trust meets any of four general criteria: (1) the individual is a senior officer; (2) the individual or trust has authority to appoint or remove certain officers or a majority of directors of the reporting company; (3) the individual or trust is an important decision-maker; or (4) the individual or trust has any other form of substantial control over the reporting company.
August 12, 2024
Estates and Trusts
Estate Planning for Young Professional Athletes: A Comprehensive Guide
The Barclay’s Center in Brooklyn recently buzzed with the first round of the NBA draft — a gathering of young, exceptionally talented players hoping to be drafted to a professional team, the pinnacle and the reward for years of hard work and dedication. As young athletes, their focus rightly revolves around training, competition, and achieving a peak performance. However, it's also important for them to consider their financial future, particularly given the short average duration of an athletic career —only 3.5 to 5.6 years, according to The Bleacher Report. As a result, it is imperative that young athletes start off on the right foot immediately to protect their hard-earned assets, their potentially brief career, and their loved ones. While so many assume that the topic of estate planning is for an older demographic, beginning early can provide peace of mind and secure the athlete’s hard-earned wealth for the future. Why Should Young Athletes Consider an Estate Plan? Financial Security: While athletes can earn significant income early in their careers, the average professional athlete only earns between $362,000 - $680,000 per season, according to the Motley Fool. Proper estate planning is key to ensuring that the young athlete’s assets, whether substantial or not, are managed and protected, providing a stable and secure financial future beyond their career. Uncertainty of Career Length: The length of a professional athlete’s career is highly unpredictable. Injuries, even minor ones, can abruptly end a career or lead to being sidelined, benched, traded, or marginalized. Additionally, the physical demands of professional athlete’s training schedules and physical demands can diminish athletic abilities over time. An estate plan serves as a safety net in case of unexpected events. Family Protection: Many athletes come from families that have collectively pooled their resources to provide the support that propelled the young athlete to the professional arena. When athletes succeed, they often want to protect those who have supported them. The athlete is often relied upon to ensure financial security for themselves and their larger family of origin. An estate plan ensures that the athlete and their family are protected, especially if their career ends earlier than expected. The “Plays” of an Athlete’s Estate Plan Last Will and Testament: A Will is a legal document that outlines how assets will be distributed after death. It names beneficiaries, designates guardians for minor children, and appoints an executor to carry out the athlete’s wishes. Trusts: Often referred to as a Will “substitute,” Trusts offer more privacy, control, and flexibility over the athlete’s asset distribution than a Will. Trusts also help minimize estate taxes, protect assets from creditors and other predatory actors, and provide for loved ones in a structured manner. Power of Attorney: This document grants the athlete’s trusted advisor the authority to make financial decisions on the athlete’s behalf, especially during busy times like pre-season training. If the athlete becomes incapacitated, even temporarily, the Power of Attorney allows another trusted person to make financial decisions on their behalf. It's crucial for the athlete to choose someone who understands their unique financial situation and has their best interests at heart. Healthcare Proxy: Similar to a Power of Attorney, a Healthcare Proxy appoints a person to make medical decisions on behalf of the athlete if the athlete is unable to do so themselves. This ensures that the athlete’s healthcare wishes are respected when they are unable to make decisions themselves. Beneficiary Designations: Often overlooked, beneficiary designations on accounts direct who inherits the asset upon the athlete’s death. It is imperative that the athlete review and update beneficiary designations on life insurance policies, retirement accounts from their respective league, and other financial instruments regularly to ensure they align with the athlete’s Will, Trust, and overall estate plan. The Young Athlete’s Next Move: Assess Your Assets: The young athlete should start simple: list all their assets, including property, investments, intellectual property, and personal items. Set Goals: Determine the goals for the estate plan. What is most important? There is no one right answer: every athlete has different priorities, whether it be financial security for the family, a charitable cause, or minimizing taxes. Regardless of the goal, it can be achieved with the right plan. Consult Professionals: Avoid cautionary tales of athletes who engaged unqualified “professionals” (here’s looking at you, Tim Duncan.) Working with an experienced estate planning attorney, a competent financial advisor, and a skilled accountant will ensure a comprehensive estate plan structured and tailored to the young athlete’s needs. Regular Reviews: The life circumstances of young athletes change frequently. Being traded to a team in a new state with different estate planning rules, experiencing drastic income fluctuations, and evolving interpersonal relationships mean the estate plan must pivot to remain relevant. Regular reviews ensure the plan continues to reflect current circumstances. Estate planning can seem daunting, especially for young athletes just starting their careers. However, taking the time to plan now can provide significant benefits in the future. By securing their financial future, protecting their assets, and ensuring their loved ones are cared for, young athletes can focus on what they do best on the field, the court, or the ice.
July 12, 2024
Commercial Litigation
A Divorce Checklist – Death and Bankruptcy Considerations
A substantial portion of estate and trust litigation and post-divorce enforcement litigation (“contempt proceedings”) is rooted in failures or shortcomings in negotiations or drafting during the divorce process itself. Here is a recommended “best practices” checklist of questions developed based on my nearly three decades of bankruptcy, creditors’ rights, collection and enforcement, and estate and trust litigation. This “best practices” checklist for family law (aka matrimonial law) attorneys, divorce lawyers, those contemplating divorce, and those, perhaps, already in the throes of post-divorce contempt proceedings tracks with my recently published List of “Top 5 Divorce-related Financial Protection Failures”. It incorporates lessons learned “the hard way” from potentially avoidable situations occasioned or worsened when the questions compiled here had not been considered or, if asked, ineffectively taken into account by the drafting attorneys involved in the first instance. This checklist is a practical, check-the-box application of the “Top 5 List” broken down into specific questions to be asked and answered by all involved in the divorce process. The checklist can and should be relied upon and applied (in whole or in part, depending on the circumstances) during multiple phases of a divorce proceeding. The checklist should help guide drafting considerations during negotiations of a Property Settlement Agreement when trying to avoid or limit costly equitable distribution litigation to determine how much each spouse is equitably to receive; otherwise to be measured by what portion of which assets the judge determines most appropriate after costly hearings. The checklist similarly serves to guide drafting considerations of the final divorce decree itself. Furthermore, although the checklist is intended to reduce costs and delays associated with post-divorce litigation used to hold a non-compliant spouse accountable when not adhering to one or more financial terms of the divorce, it can be equally effective during these contempt proceedings at aiding decision-making and providing both cost-saving guidance and time-saving benefits for the user. If routinely followed and effectively applied, the checklist should serve to help avoid unintended negative financial consequences while reducing future litigation and related legal fees, costs, and delays. THE CHECKLIST Insurance Notice to Provider - Has the insurance company (and/or benefits provider) been notified and / or asked about relevant policies and procedures for irrevocably assigning policy proceeds (and precluding unilateral re-designation of beneficiaries by the insured)? Beneficiary Re-designation - Have policy beneficiaries been irrevocably re-designated to identify ex-spouse (and/or child, children, or trust) expressly by name? Account Access – Has perpetual real-time account access to policy information (including, most importantly, payment status and continuing coverage) been irrevocably established? Employment Coverage - If relying upon employer-provided insurance coverage, have conditions or contingencies been established for the continuance of coverage upon termination, or if work-related coverage benefits ceases to be provided for any reason? Premium Payments - What specific protections (e.g., Irrevocable Life Insurance Trust (ILIT) or escrow) have been established to assure continuity of premium payments if the debtor-spouse refuses or is unable to pay for any reason? Real Estate Clean Title - Have you verified that there are no mechanics liens, judgment liens, or other title impediments? Premature Death - Have you analyzed and provided sufficiently for the possibility and potential impact of the premature death of either spouse? HELOC - Have you protected against additional credit extensions in addition to making appropriate arrangements for payoff or paydown? “Robbing Peter” - If an asset is to be liquidated and paid over in whole or in part, have you established consequences, contingencies, and otherwise protected against proceeds of the asset(s) being improperly disposed of, including in satisfaction of a separate financial obligation? Retitling/Disposition – Have you documented that “time is of the essence” and maximized protection of “reciprocal rights” against bankruptcy and/or failed pre-condition(s) to relinquishing, re-titling, or otherwise disposing of assets, especially real property assets? Retirement Accounts/Benefits Notice to Providers - Have all benefits managers/providers of relevant retirement accounts and benefits been given sufficient notice of all changes? Beneficiary Re-Designations - As with insurance coverages, have all beneficiaries been appropriately and irrevocably re-designated? Claim Deadlines – If in a jurisdiction with time limits on claims against a decedent’s estate (e.g., MD – 6 months), have adequate disclosures been made to assure timely action after death? Spousal Payout Elections – If applicable, have appropriate elections been irrevocably made to assure manner and means of payout after death (e.g., continuing spousal payments v. payments terminating at death)? Borrowing Restrictions – Have any outstanding loans against any retirement assets been factored in for valuation purposes and future borrowing against such assets been appropriately and irrevocably restricted? Bankruptcy Jurisdiction - Do you know what, if any, continuing jurisdiction the “divorce court” has if a bankruptcy is filed? Different Chapters - What difference, if any, would the filing of a Chapter 7, 11, 13, or “Subchapter V” bankruptcy have on your situation? “DSO’s” - Have you negotiated financial obligations regarding future PSA payments concerning whether they are subject to characterization under bankruptcy law as “domestic support obligations?” “The Automatic Stay” - Are you prepared to seek relief from the automatic stay and or pursue enforcement in bankruptcy court if a filing is forthcoming? Corporate Assets - If division and/or control of corporate assets by or between one or both of the spouses is/are to be factored, has a potential bankruptcy filing been accounted for with relevant valuation and enforcement considerations? Collectability Limitations Contempt Jurisdiction - Have you sufficiently familiarized yourself with binding local precedent regarding the scope of continuing contempt jurisdiction of the “divorce court” in the event of a bankruptcy filing? Bankruptcy Clawback/Discharge - Have you evaluated whether, and/or the likelihood of, future financial obligations might be subject to clawback or discharge in bankruptcy (and/or how the outcome/impact might differ depending on which bankruptcy chapter or sub-chapter is pursued)? Third-Party Requirements - For known assets held or controlled by third parties, has/have any specifically needed language been incorporated into the PSA, divorce decree, or contempt order to avoid later having to seek additional judicial relief as a pre-condition to third-party cooperation? Escrows/POA’s - Presuming future ex-spouse noncompliance, what, if any, limited power of attorney language and/or separate writings might be included, created, and/or escrowed to avoid, potentially altogether, future ex-spouse involvement? “Double-Duty” PSA - As a potential failsafe, have you incorporated language of present intent and otherwise satisfied necessary elements for the PSA itself to serve if/as needed as a deed, written assignment, or other ownership conveyance? (See [TWR’s “PSA as Deed”] and [TWR’s “PSA as Equitable Assignment”]
July 11, 2024
Estates and Trusts
Top 5 Divorce-Related Financial Protection Failures
Inadequate Insurance Assurances Uncorrectable Real Estate Refinancing/Retitling Shortcomings Unclaimed Retirement Benefits Unconsidered Bankruptcy Impacts Unconsidered Collectability Limitations Death and Insolvency Considerations as Divorce-related “Best Practices” Divorce lawyers routinely fail to protect clients against an ex-spouse’s failure and/or outright refusal to comply with the terms of the documents governing the termination of the marriage relationship between their client and their client’s soon-to-be ex-spouse. As an estates and trusts litigator, with nearly thirty (30) years of relevant creditors’ rights and bankruptcy experience, I have seen innumerable cases involving avoidable–if not always easily foreseeable!–situations occasioned at least partly by shortcomings in the language of the documents generated and relied upon in a client’s divorce proceedings. In short, many, if not most, of the more costly post-divorce, death-related and non-compliance enforcement/collection matters can be substantially mitigated, if not completely avoided, by additional considerations at the drafting stage. With a backward-looking inquiry addressing “how could this ‘new’ costly litigation have been avoided?” assuring that these death and collection-related matters make the “best practices” checklist in any divorce-related legal planning only makes sense. Top Five Divorce-related Financial Protection Failures The top five divorce-related financial protection failures are as follows: Inadequate Insurance Assurances – Failure to assure irrevocable designation of proper policy beneficiaries and unlimited access to policy-related information are primary among divorce “to do” list items not done. Similarly, divorce lawyers do their clients a disservice by failing to take sufficient steps to assure that insurance coverage remains in place, typically by neglecting to include a plan or structure assuring the payment of, and means to make, policy premium payments. A written assignment of policy proceeds is a necessary consideration, as is job-loss protection against either potentially willful or involuntary loss of employment where the insurance coverage relied upon is a benefit provided by a spouse’s employer and, therefore, only an option so long as the employment continues. Providing for a client anticipating death benefits to have perpetual, real-time access to policy information is an easy way to afford a client the means to protect themselves against the future indifference and/or neglect of a willfully non-compliant ex-spouse who fails to keep up premium payments. In circumstances justifying the added expense, the imposition of and well-considered funding of an irrevocable life insurance trust, or “ILIT,” may provide the highest level of protection short of pre-paying policy premiums for the entire life of the policy (which is itself, a non-option in more than 99% of cases). Uncorrectable Real Estate Refinancing/Retitling Shortcomings – Failure to provide properly or sufficiently for failed refinancing/retitling of marital assets converts a hypothetical remedial benefit into a potentially cost-prohibitive non-option. Many divorces include commitments to sever ties between spouses both as to title and financing commitments related to the marital residence or other jointly held real property. It is not enough to provide for a simple “what if” scenario involving the failure to refinance, retitle, or otherwise dispose of a real property asset by one spouse for the benefit of the other, or, for that matter, to include some form of reciprocal rights of the other spouse in the event the first fails to achieve the contemplated refinancing, retitling, etc. Best practices in this regard ought to consider unanticipated, untimely death-related scenarios. For instance, what if the hypothetical “what if” scenario arises because of suicide? What if the titular owner of the real property dies unexpectedly before carrying out the contemplated transfer of title? Thorough planning in this regard would necessarily consider the existence and potential interaction of an existing will or trust, or of the intestacy hypothetically arising due to the lack thereof. Unclaimed Retirement Benefits – Much like the unfortunate situations involving life insurance policies with unchanged beneficiary designations, failure to provide for proper notice and/or re-designation of retirement plan beneficiaries can mean the difference between a divorce client’s future perpetual financial security and potential ruin. First and foremost, it is not enough to include a provision in a divorce-related agreement that one simply agrees that a particular someone shall receive the proceeds of one’s work-related pension, 401k, or other ERISA-qualified retirement account. In fact, it is not enough to include such a commitment generally in one’s will, trust, or other testamentary document. One must communicate one’s change in beneficiary designations directly to and with the account broker/provider (or, in many cases, through official means managed by one’s employer acting as the provider’s agent). Such a change is most typically accomplished by submitting a signed beneficiary designation change form or via an electronic equivalent. Again, it is not enough to request such a form, or even to complete such a form without “delivery” of such a form to the provider or its agent. Here, best practices should include confirmation requirements and not merely a commitment to timely effect the change. Query whether pre-compliance, untimely death considerations ought not also be taken into consideration in this instance as a best practice, as well. The better question is why one wouldn’t at least include this on the checklist of considerations when deciding whether to expend any additional resources in protecting against such a risk. Unconsidered Bankruptcy Impacts – Failure to contemplate “what if” scenarios of possible bankruptcy filings by either or both divorcing parties or a related business entity (e.g. individually to try to delay or avoid support obligations or of a business the value, cashflow, and/or operational continuity of which as a critical marital asset served to leverage negotiated concessions). There is no “one size fits all” bankruptcy provision to plug into divorce-related property settlement agreements, just as every divorce gives rise to a necessarily factually unique set of circumstances. What is most important is that when negotiating asset transfers and contemplating spouse #1 v. #2, one factors the potential impact of bankruptcy scenarios into asset values and negotiates accordingly. Client risk tolerances and, possibly, actual threats or perceived intentions regarding post-divorce bankruptcy filings comprise the most important considerations. One does not necessarily need to incorporate potential bankruptcy language in every divorce agreement but failing to make or seek a bankruptcy risk/impact evaluation only invites subsequent client dissatisfaction, potential Bar complaints, and perhaps even potential malpractice considerations. Unconsidered Limitations on Collectability – Failure to consider requirements of financial institutions and other third-party asset holders likely comes at a future cost and with potentially significant unwarranted delays. It should be no surprise that divorcees do not always live up to their financial commitments in divorce-related agreements and/or divorce decrees. Contempt proceedings and related remedies are not unto themselves the only mechanism to be employed when it comes to securing payment and satisfaction of divorce-related financial obligations. In fact, contempt proceedings themselves generally give rise to additional financial obligations, the collection of which is not a foregone conclusion and rarely, if ever, immediate. Contempt awards are frequently not satisfied immediately. Consequently, the financial relief a successful contempt proceeding is intended to provide often comes, if at all, only after imposing additional financial burdens on the “creditor spouse.” When a “debtor spouse” refuses to make divorce-obligated payments, a creditor-spouse can employ the contempt process to quantify and formally liquidate the amount(s) owed in an enforceable court order (sometimes coming only after the threat of or actual jail time). Having secured entry of a liquidated contempt order amount, one still needs to enforce the order to satisfy the newly liquidated debt. Such enforcement actions (such as garnishments, attachments, asset seizures, turnover actions, etc.) again mean additional legal fees and costs, but here’s where some pre-planning can potentially reduce or avoid even more fees, costs, and delays. Applying some “creditor’s rights” know-how during the contempt process, including considering known third-party asset holder’s risks and requirements, can be a substantial difference maker. It might very well avoid altogether the need for a secondary enforcement proceeding.
June 20, 2024
Family Law
Should Your Wedding Checklist Include a Prenup?
Fans of The Golden Girls may remember the episode in which Dorothy decides to remarry her ex-husband, Stan. He’s the selfish, cheating, novelty salesman Dorothy had married as a teenager in a shotgun wedding. Although they are now divorced, Stan remains the bane of Dorothy’s existence. She calls him, without irony, a “yellow-bellied sleaze ball,” among other epithets. Dorothy’s decision to remarry Stan has Rose, Blanche, and Sophia all rolling their eyes. It is only on the day of the wedding, when Stan unexpectedly asks Dorothy to sign a prenuptial agreement, that she comes to her senses and calls it off. “I don’t want to make the same mistake twice,” she tells her disbelieving guests. A prenuptial agreement may be the least romantic thing an engaged couple can talk about. Simply bringing up the topic may arouse suspicion, suggesting a lack of good faith or an expectation of divorce. But rather than any want of sincerity, preparing a prenup can reflect a couple’s maturity and respect for each other. The process of sorting through the terms of the agreement may even bring them closer together. Under Maryland law, the separate assets each partner brings to a marriage belong to that person, even if the marriage ends in divorce. The assets they acquire during the marriage, however, would be divided equitably between them in the event of a breakup. A prenup is a contingency plan that enables the couple to say what that division should look like. For example, each partner could simply take what they separately contributed to the union and be on their way. Or the partner with greater assets could agree to support the other long enough for them to get back on their feet. The agreement can also say what happens to the family home. Should one partner be allowed to buy out the other’s interest in the house? Or should the property be sold and the proceeds divided according to the percentages each of them contributed to the down payment and mortgage installments? Children are another consideration. If one partner has children from a prior relationship, the agreement could allow him to bequeath his entire estate to them, rather than his new spouse. This provision would trump the surviving spouse’s legal right to take a third or more of the estate as her “spousal share.” If the couple already has children together, one or both spouses could agree to maintain life insurance for the children’s benefit while they are still minors. The one thing a prenup cannot dictate is custody of the parties’ own children in the event of divorce. Regardless of what provisions it includes, a prenuptial agreement can be a reassuring document to have in the fire safe. It’s a lot like the airbag in your car—you hope you’ll never have to use it, but you’ll be grateful to have it if the need arises. As a practical matter, that need may be more likely to arise for some couples than for others. With the arrival of same-sex marriage, many couples are tying the knot after having been together for years or even decades. These relationships have already withstood the test of time and are unlikely to end in divorce. But two people in a newer relationship may like the idea of a prenup so they can enter into marriage prepared for the unexpected. In the same way, couples who are significantly different in age, wealth, or level of education should give a prenuptial agreement serious consideration. Having children from a prior marriage is another circumstance in which a prenup may be advisable. If Dorothy Zbornak, already in her wedding dress, had gone ahead and signed Stan’s prenup, it probably wouldn’t have held up in court. Stan, ever the yutz, had neglected to follow some important formalities. First, the document should include full financial disclosures from both partners. Any omission could invalidate the agreement. Second, two attorneys should be involved, one to represent the separate interests of each partner. And third, sufficient time should be allowed between executing the agreement and exchanging vows to avoid the suggestion that either partner was pressured into signing. A valid prenuptial agreement can save a couple time, money, and heartache if things don’t go as expected. If there are wedding bells in your future, contact an attorney who practices in this area to determine whether a prenuptial agreement is right for you.
May 15, 2024
Estates and Trusts
When Athletes Stumble: The Perilous Pitfalls of Financial Scams and the Simple Legal Mechanisms to Stop Them
In a world where reputation is paramount, athletes often stand as symbols of hard work, determination, wealth, and success. Despite their celebrity, they are not immune to the snares of financial scams. Take, for example, the LA Dodger’s own Shohei Ohtani’s former interpreter, who pled guilty just last week to bank and tax fraud after admitting to stealing more than $16M from the Dodger’s phenom. It drew to mind the NBA’s own Tim Duncan, who lost more than $20M to an unscrupulous financial advisor, leading Duncan down a seven-year path of bad investment after bad investment. From musicians (here’s looking at you, Billy Joel) to politicians and athletes to actors like Kevin Bacon, a victim of Bernie Madoff, the list of those who have fallen victim to fraudulent schemes is as diverse as it is alarming. In this article, we delve into the web of financial scams and explore why even the most prominent athletes at the top of their game can become ensnared. We will also offer insight into simple ways that others in their position can avoid the quandary in which Shohei, Tim, Billy, and Kevin found themselves. The Allure of the Scheme Scams come in various guises, each designed to exploit vulnerabilities and capitalize on trust. Whether it's a Ponzi scheme promising unrealistic returns, a phishing scam targeting personal information, or old-fashioned fraud, perpetrators often employ sophisticated tactics to ensnare their victims. The allure of these schemes can be particularly potent for athletes and public figures. With wealth and often hectic training and game schedules, many athletes entrust their financial affairs to advisors or hangers-on, unwittingly exposing themselves to exploitation. Moreover, the desire for greater returns or the fear of missing out on lucrative opportunities can cloud judgment, making them susceptible to manipulation. Trust Betrayed One of the most devastating aspects of financial scams is the betrayal of trust. In Shohei’s case, his translator, the person he relied upon to bridge language barriers, engage with the press, and provide the in-game interpretation that Shohei needed to perform, was the culprit, gambling away what many believe is more than $20M in total, $16M of which came from Shohei. For Tim Duncan, his financial advisor, whom he had trusted for nearly a decade, unwittingly involved Duncan in speculative investments and risky loans and took Duncan down with him. Busy athletes rightly place their faith in advisors, managers, and associates to safeguard their assets and guide their financial decisions. When that trust is violated, the repercussions can be profound, both financially and emotionally. The Power of Due Diligence While no one is immune to the threat of financial scams, athletes can take steps to mitigate their risk. Chief among these steps is the power of due diligence and having proper legal mechanisms plan in place to reduce exposure. By thoroughly vetting financial advisors and lawyers, conducting independent research, scrutinizing investment opportunities, and then creating the proper legal infrastructure of checks and balances, athletes can better protect themselves from potential scams. Financial advisors, as licensed professionals, undergo scrutiny to ensure their integrity. Their licenses are subject to review for any prior acts of misconduct. At large institutions, advisors face additional scrutiny from their compliance departments. Ensuring that client assets are invested properly, aligning with the standards of a prudent investor based on the asset amount, age, and relationship to risk. Licensing and infrastructure can go a long way to ensure that one bad actor cannot misuse funds. Like financial advisors, lawyers also hold licenses and have their own areas of concentration. If an athlete requires legal assistance for estate and financial documents, most likely, they should consult a lawyer other than the one that drew up his playing contract. Instead, the athlete should turn to a lawyer who has expertise in properly drafting estate planning and financial documents that will insulate and thwart predators from penetrating the athlete’s financial assets. Trust the Process The level of protection that a properly drafted legal infrastructure to manage an athlete’s assets cannot be understated. Most estate plans for athletes and other public figures include one or more Trust instruments to accomplish this protection. Trust instruments, whether revocable or irrevocable, can own all types of assets; from the earnings of a lucrative contract to real estate to business ventures to life insurance, a Trust is the vehicle that manages most assets for athletes. First and foremost, when a Trust is created, it is private. There is no disclosure to the public or in the public record to disclose the identity of the Trust creator. A Last Will and Testament, for example, is a public record that can be viewed and reviewed by any member of the public. Trust assets are held and distributed without notice to anyone other than those authorized in the Trust instrument. Upon the athlete’s death, their estate is likewise distributed without an action of the court or notice to the public. The bequests that the athlete makes in his Trust can also be made in further Trust to protect the athlete’s family members from the same financial vulnerability they may have faced during their lives. It Takes Two When a Trust is created, the role of the Trustee is vitally important to protect the athlete from wrongdoing. As the name implies, the Trustee must be trusted. The Trustee’s job is to manage Trust assets, make investments, and distribute income and principal among countless other financial transactions related to Trust assets. Many of my public figure clients are inclined to appoint their closest friend or a family member in this role for their rightful fear of exploitation. While often these relationships are the most trusted, these individuals may lack the necessary skill set to effectively manage such significant assets and stave off financial scams and opportunistic predators. For those with significant assets like athletes and other public figures, having more than one Trustee appointed in this capacity may make sense, requiring that they act jointly. For practical purposes, appointing two Trustees requires two signatures, two sets of eyes, and two individuals reviewing transactions. Simply put, an act of fraud is much harder to commit when two Trustees are involved. When two individuals are appointed, the most trusted person together, with someone with the financial acuity, can work as a team to ensure that the athlete does not fall victim like so many who came before them. Leave it to the Professional Choosing the right Trustee to execute the athlete’s wishes and oversee their Trust assets typically requires a professional with the expertise to navigate the complexity of significant net worth. Given the complexities involved, including tax considerations, intricate investment vehicles, and corporate structures, an independent corporate Trustee is often necessary. A corporate Trustee is not an individual but rather a financial institution, such as a bank or investment firm, that assumes the fiduciary responsibility of managing a Trust. Athletes often hire corporate Trustees for their professional experience, financial acumen, and legal knowledge in trust matters, qualities that a trusted family member or friend may not possess. Hiring a corporate Trustee to collaborate with the athlete’s trusted family member or friend provides an additional layer of protection against financial misconduct. This partnership ensures that the athlete’s assets are safeguarded and minimizes the risk of unchecked financial mismanagement that could occur with the sole reliance on one individual. The Road to Recovery For those who have fallen victim to financial scams, the road to recovery can be long and arduous. Beyond the immediate financial losses, there may be legal battles, reputational damage, and emotional trauma to contend with. The prevalence of financial scams is a stark reminder that no one is immune to deception, regardless of their stats on the court or stature in pop culture. Shining a spotlight on financial scams and sharing personal experiences like those of Tim and Shohei can help raise awareness, potentially preventing others from suffering a similar fate. Thoroughly vetting professionals and ensuring that athletes or public figures have the proper legal documents in place can help to avoid a similar fate.
May 15, 2024
Estates and Trusts
Four Reasons Your Power of Attorney May be Out of Date
A financial Power of Attorney is an essential document in any estate plan. It enables you to appoint someone you trust to manage your finances and other legal matters in case you become unable to do so yourself. The person you name, called your “attorney in fact,” generally has broad powers to handle things like paying your bills, filing your taxes, accessing your safe deposit box, managing your investments, and even selling or mortgaging your house. A “Durable” Power of Attorney remains in effect even if you become incompetent, which is when the document is most likely to be needed. Because it may be years before your Power of Attorney is used, you should review it periodically to make sure it remains current. Here are four reasons to consider having your Power of Attorney revised: It is more than five years old. Unless the document states otherwise, a Power of Attorney technically remains valid indefinitely. Still, banks and other financial institutions may be skeptical if the document is more than five years old. Their skepticism may stem from a legitimate concern that the Power of Attorney has been revoked or perhaps superseded by a newer version of the document. It names the wrong people. Longtime partners and married couples often name each other as their attorneys, in fact, and another individual to act as a backup in case the partner or spouse isn’t able to do the job. If your marital status has changed since you had your Power of Attorney prepared, or if your backup attorney, in fact, has fallen out of favor, it’s time to rethink who should be in charge of your finances if you can’t be. It’s Not the Maryland Statutory Form. In October 2023, the Maryland Legislature adopted a new Statutory Power of Attorney. Under state law, Maryland’s banks, insurance companies, and brokerage firms are legally obligated to accept this statutory form. Anyone who refuses to honor the Statutory Power of Attorney can be forced to pay the attorney’s fees spent getting a court to require that they accept the document. Although other Power of Attorney forms are still valid in Maryland, having the statutory form will help to ensure that the document is honored without delay. It doesn’t include provisions for your digital assets. Digital assets include things like the electronic data stored on your computer or smartphone, your Internet accounts like LinkedIn and Gmail, and your online pictures and documents. Without explicit authorization, called “lawful consent,” no one can legally manage these assets for you if you become incapacitated. Some of these assets, like your PayPal or Amazon accounts, may have monetary value. Others, like your email account or personal blog page, could be of great sentimental importance. Even your voicemail account may be valuable if it includes messages from potential clients or expressions of support from loved ones during an illness. Only a newer Power of Attorney will include provisions for your digital assets, and it may be wise to have yours updated for this reason alone. It is also important to make a list of your passwords and login information. This should be kept in a safe place so your attorney, in fact, can find it when the need arises. Do you really need a Power of Attorney? Without one, it could be necessary for the court to appoint someone to become your legal guardian. A guardianship proceeding is an arduous and expensive process. In addition, the guardian would need to file annual accountings with the court to verify how your assets had been spent. Taking the time to have a Power of Attorney prepared—and to keep it current—is well worth the small effort required. Lee Carpenter is a Principal at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or lee.carpenter@offitkurman.com. This article is intended to provide general information and should not be construed as legal advice.
March 4, 2024
Estates and Trusts
Five Biggest Mistakes of Estate Planning
#5 - Inequity The fifth biggest mistake of estate planning is presuming to treat everyone equally, equaled only by the error of presuming to treat your loved ones differently because you don’t think they need anything or, in the other extreme, that they don’t deserve anything. Perhaps you’ve given more to one in life and intend to balance things in death. Unless you intend to include a detailed accounting (and even then?), I urge you to reconsider in this regard. Similarly, choosing who is to serve in what role (attorney-in-fact under a power of attorney, executor, or trustee, for instance) based on perceived fairness or not wanting to seem inequitable is a mistake. Have a reason, trust your judgment, and choose someone based on your sound judgment (for instance, she’s the oldest; he’s a lawyer; she’s the only one who hasn’t done time… these are all good reasons). Worse, appointing two co-fiduciaries (i.e., co-attorneys-in-fact, co-executors, or co-trustees, might be the biggest mistake of all - especially if you refuse to provide the two co-equals with a means of breaking a deadlock. If there are two empowered to make decisions and they don’t agree on something, if you’ve not authorized a coin flip or other means to break the tie (rock, paper, scissors, perhaps?!), their only recourse is to the courts. Don’t do it…don’t name two co-equal decision-makers to manage your affairs when you die. If you simply can’t help yourself, at least give them a fighting chance and tell them what to do when they disagree (if considering a coin flip, I suggest making it at least two out of three!). #4 – Sentimentality The fourth biggest mistake of estate planning is presuming one or more of your loved ones “wouldn’t want” something of yours, or alternatively, planning based on presumed values ascribed to the “objects of your bounty.” It is difficult to nearly impossible to know accurately what one of your kids might value over another, and you should take no offense by loved ones’ avoiding the subject altogether or making statements to the effect that they don’t want anything of yours. Everyone deals with death and the loss or thoughts of loss of a loved one in one’s own way. That said, it may, of course, be true that they don’t want your stuff; your style and tastes may be embarrassingly outdated. It may also be true that they don’t need anything, have the space for things they might want, or might not want to be perceived as thoughtless or greedy by asking for something of yours, for instance, before you are even in the ground! Rather than take offense or think, “How dare they!” consider over-sharing and discussing more with them, not less. Force them to face truths none of us generally care to acknowledge — first and foremost of which, you are going to die! Hate to be the one to burst that bubble for you, but it happens to all of us eventually. Too often, I see families left squabbling over misperceived intentions and failing/refusing to face these avoidable issues head-on, which brings us to the third biggest estate planning mistake. #3 – Communication The third biggest mistake of estate planning is failing to involve your beneficiaries in the planning. You need not give them a say in your plans necessarily or even seek their input per se, at least not everyone’s!, but that doesn’t mean you shouldn’t involve them at all, even if only to communicate that you’ve made a plan and where/how it can be found. Those who intend to play a role later should be consulted. The executor (or “personal representative”), who will oversee the administration of your probate estate; the trustee, who you will count on to manage assets you’ve opted to have held/protected from creditors and managed for the benefit of those you may not completely trust to manage them effectively for themselves (either because of their immaturity, addictions, or other special needs); and especially guardians of any minor children you might leave behind…these should all be consulted and confirmed before being named and saddled with such responsibilities. After all, they may not want or be able to handle the responsibility and/or their own life circumstances may not be fully known to you and may not make them the best choice. To minimize the risk of mistaken choices in this regard, don’t compound the mistake by failing to name a backup and a backup to the backup and also setting forth a means of picking the person you would want to be next in line should all else fail. #2 – Indecision The second biggest mistake of estate planning is changing your plans. This one comprises a whole series of mistakes. Changing one’s mind is ok, of course. The timing of a revised estate plan is one of the primary factors when litigation is later considered. Doing so after declining mental health, shortly before or after major life events, just prior to death (on one’s deathbed!), and/or with the involvement or input of less than all of one’s beneficiaries virtually assures legal wrangling after you’re gone, or, at the very least, likely breeds ill will among your loved ones in ways you can’t possibly fully anticipate. Compounding this mistake with less than full and open communication about your planning efforts (refer back to #3!) frequently sparks resentment and even hostility when you yourself have set different and differing expectations among those to whom you intend to benefit. If you opt to share your planning documents, do so with all of your beneficiaries. If you opt to make a change, be sure to communicate any changes to everyone, preferably with very specifically communicated reasons why. Oftentimes, in addition to breeding resentment for each other, change, especially uncommunicated changes to one’s estate plan, leaves your loved ones resenting you, even when they are the ones benefiting from the change! #1 – Inertia The number one biggest mistake of estate planning is not to plan. A favorite lyric from a group I’ve enjoyed since the 80s goes as follows: “If you choose not to decide, you still have made a choice.” Not planning, i.e., not creating a will or other document directing the disposition of assets upon your death, is the equivalent of deciding you want your loved ones to experience the costly, time-consuming, living hell that can often be the result of doing nothing. Don’t let inertia be your guide. Have a plan… execute the plan. Do it now; tomorrow may never come. Carpe diem!
January 29, 2024
Estates and Trusts
2024 Update – Federal Exemption and Exclusion Amounts
Beginning January 1, 2024, the IRS has increased the federal estate tax exemption to $13.61 million per person and $27.22 million for married couples. This increase also applies to the lifetime gifting exemption and means that individuals can transfer up to $13.61 million tax-free during their lifetime or at death. Married couples can double the exemption amount through portability and gift-splitting. As a result of the increased exemption amount, individuals who have previously used all of their lifetime gifting exemption now have an additional $690,000 that they may use to make gifts in 2024. Additionally, the 2024 annual gift tax exclusion amount has increased from $17,000 to $18,000 per donee in 2024. The increased exclusion also means that a married couple may gift up to $36,000 in gifts to individuals this year. Although the exemption amounts have increased for 2024, it is important to note that the 2017 Tax Cuts and Jobs Act, the federal legislation that increased these estate and gifting exemptions, is set to end on December 31, 2025. Unless Congress acts in the interim, the federal exemption amounts will revert to $5 million per individual (adjusted for inflation) on January 1, 2026. As a result, it is best to consider gifting now while the exemption amounts are higher and perhaps earlier in the year before the 2024 election in the event of further congressional action. An experienced planning attorney can advise you on estate and gift tax avoidance strategies that may be of benefit to you and/or your family.
January 4, 2024
Estates and Trusts
Wealth with Wisdom: Leaving Educational Legacies in Your Estate Plan
As estate planning attorneys, we guide our clients in distributing their wealth to the next generation efficiently. However, Guy Fieri and Shaquille O’Neal recently made headlines by stating that their children need to earn two degrees to inherit from them. There is a trend articulated in the headlines, namely that tying inheritances to education goals, especially the size of inheritances from celebrities like Shaq, should contribute to the personal and intellectual growth of your children. Conditions requiring certain educational milestones or that an inheritance may only be used toward this goal in order to inherit from a loved one can be a powerful way to leave a lasting impact. The following are a few tips to consider when exploring the idea of leaving assets in your estate plan with educational conditions for your children, emphasizing the importance of combining financial legacy with a commitment to lifelong learning. The Purpose of Leaving Educational Legacies: Empowering Future Generations: When a condition of education is articulated in an estate plan, a message is received. That message, stating that education is a prerequisite to receiving an inheritance, not only encourages your child to pursue additional education but also sends a message that you believe life is more than just financial security, that education is a prerequisite to obtaining that financial security. It is the hope of many of my clients who choose to have educational prerequisites in their estate plan that they not only instill the importance of learning but perhaps demonstrate that education can empower them to also accumulate wealth for future generations. Fostering a Growth Mindset: A requirement that a child meets an educational condition can also encourage a “growth mindset.” Many clients see this condition as a conduit to inspire their children to embrace the challenge of higher learning. So many of our clients who worked hard to accumulate their own wealth have concerns that simply handing over an inheritance will mean that their own child will never face the challenges that the client has faced nor understand the value of “hard work” or the “struggle” to succeed and accumulate wealth. Placing a “two degrees” condition on an inheritance might be a way for your child to not only prove to themselves that they are up to the challenge, but the hope is that further education will also better equip the child to not only manage the inheritance more efficiently but also have a greater appreciation for that inheritance. How to Create Educational Conditions: How the Funds Can be Spent? Your Will or Trust is your “universe,” and therefore, it can define the educational conditions and expenditures as you see fit. For example, an inheritance can be left in trust, and distributions might only be made for tuition and educational expenses related to pursuing a college or an advanced degree. You may even specify what portion of the inheritance can be allocated to cover the costs associated with pursuing a degree and further define those expenses (i.e., books and transportation but not living expenses). The requirements can be even more granular to state that an inheritance can only be used to pay for graduate school in a particular field of study that a parent deems worthwhile. Educational Attainment Milestones: Like Shaq and Guy, many clients determine that their child’s entire inheritance is conditional upon earning a degree. As Shaq said so eloquently, “No cheese without two degrees.” Guy has made public statements following Shaq’s lead. Unless the O’Neal and Fieri children earn two college degrees each, they will not inherit at all from their fathers. Milestones like these are easy to add to an estate plan and are easily enforceable. As already mentioned, the spirit behind the milestones is to foster that growth mindset and empower their family’s future generation to ensure a more educated family tree. The hope is that the more educated the child, the more responsible they will be in managing those assets and preserving the wealth for generations to come. Important Details to Consider: Flexibility: Life is unpredictable, so it’s important that your estate planning documents are drafted in such a way that it is possible to adapt to life’s changing circumstances, particularly for your children. It is essential to design your educational conditions with flexibility to accommodate unforeseen challenges or opportunities for your children. Perhaps this means that you should extend the scope beyond traditional education to include opportunities for professional development, ensuring your children are equipped for success in their chosen fields. What happens if your child, while responsible and hardworking, is not college-bound? Conditions can also be tied to earning a vocational degree or being gainfully employed. Additionally, conditions can be tailored to encourage entrepreneurial ventures to foster their creativity or business acumen. Communication: Communication is key! If you want to empower your children and foster a growth mindset, you need to share this with your children. Therefore, it is so important when these types of estate planning conditions are imposed that they are communicated transparently to your children so that they have the opportunity to meet and exceed the conditions. It would be best to discuss your intentions with your children so they fully understand the conditions, how the funds can and cannot be used, and your rationale for imposing these conditions. Trusteeship. It cannot be understated how important it is to appoint a Trustee who will not only enforce the terms of your educational conditions but also understand and respect them. A trustee will enforce the terms of the conditions to ensure that all of the terms are met by your children. Most importantly, the trustee will be your voice long after you’re gone and can help communicate those educational conditions to your children so that they can successfully manage their inheritance and their future security. In conclusion, leaving assets in your estate plan with educational conditions for your children is a profound way to extend your influence beyond your lifetime. By intertwining financial legacies with a commitment to education, you not only provide for their immediate needs but also empower them with the tools to thrive intellectually and professionally. As you plan for the future, consider the legacy of wisdom and knowledge you can pass on to future generations, leaving a lasting impact on their lives.
December 22, 2023
Estates and Trusts
When to Review your Estate Plan: The 5 Ds
Originally posted 12/17/2020, no content changes. You finally sat down with an estate planning attorney after years of procrastination and created an estate plan that reflects your wishes: can you file it away with the rest of your important documents and never think about it again? Not exactly. As a rule of thumb, you should review your estate plan every three years or when there are significant tax changes at the state or federal level - much like the changes (likely) on the horizon this January. However, if your life has been touched by the 5 D's - Death, Disability, Divorce, Distance, and/or Descendants you should speak with your estate planner right away. Death When a family member or close friend dies, there are a few reasons to trigger a review of your own estate plan. First, the deceased loved one may have left you a significant inheritance that changes the schematic of your own estate plan from a tax perspective. Receiving a large inheritance will necessitate a review of your plan to ensure that you have considered the tax ramifications of the same. Second, the deceased loved one may have been named as a fiduciary in your estate plan. If you named the deceased loved one as your agent under a Power of Attorney, or Health Care Proxy, it is important to review those documents to make sure that you have an alternate agent and if you do not, you should update those documents right away. In your own Will, if the deceased loved one is a beneficiary of your estate, are you satisfied with who will inherit from you instead of the deceased loved one? It is often necessary to revise the plan of distribution considering a loved one's death. Disability Receiving a diagnosis of an illness or life altering condition for you or a loved one can be overwhelming. In addition to grappling with the realities of a diagnosis, it is imperative to review your estate plan from the lens of that disability. For example, if your spouse is diagnosed with a memory impairment condition such as dementia or Parkinson’s Disease, your estate plan should be reviewed by an elder law attorney to make sure that your assets are held in a trust that will allow for Medicaid eligibility in the future to pay for care one day. If a beneficiary in your Will is now disabled and relies on public benefits to pay for his care, you may wish to revise your own Will to direct that your disabled loved one's bequest is left in trust for him, so that his future inheritance will not disqualify him from the benefits upon which he relies for his disability. If you received a diagnosis, you should make sure that those you nominated as your agents under your Power of Attorney and Health Care directives are the people you still entrust with these particularly important and vital roles. Divorce If your marital status changes - a divorce, or a new marriage, your estate plan will certainly change. In the case of a divorce, each of your estate planning documents should be reviewed. If your estate plan was created during your marriage, it is likely that you chose your former spouse to act as your agent under a Power of Attorney and Health Care Proxy and as Executor or Trustee under your Will or Trust. In many states, a divorce will automatically end such an appointment without changing your documents - but not in every state. In addition to reviewing your documents, you should also consider the assets that have beneficiaries to ensure that your former spouse is not named as a beneficiary on your retirement savings plan, life insurance, and other financial accounts. In the case of a new marriage, it is important you have a discussion with your new spouse about your assets entering into the marriage and your wishes as related to the distribution of those assets in the event of your death. In many cases, spouses enter into pre- or post-nuptial agreements to address estate inheritance issues and estate planning documents should reflect those agreements. Distance If you relocate from the state where your estate plan was created, it is important to have your estate planning documents reviewed by an attorney licensed in your new home state. Laws vary greatly from state to state with respect to rules of inheritance, asset protection, and estate taxes. While states do honor other states' documents under the Full Faith and Credit Clause of the US Constitution, each state has its own forms and provisions that may make a revision of your estate plan in the new state more practical and cost-effective in the future. In addition to your own move, if a fiduciary that you have named in your Health Care Proxy or Power of Attorney moves across the country it should be considered whether it is practical for that person, who now lives in a different time-zone, to continue in that role. It becomes even more complicated in the case of a fiduciary moving out of the United States. In New York for example, if you name a person as your executor who resides in a foreign country, it is unlikely the Court will honor your choice and instead appoint someone else as an executor. Descendants It is imperative to create an estate plan when you have children. In 2020, I generally do not have to remind clients that bad things happen. In the unfortunate event that you and your spouse or partner die with minor children, it is imperative that you make an election with respect to your children's care. A Will should provide a guardianship provision for your minor children in the event of your death. Leaving this information out of your Will or relying on a Will that was created before you became a parent could be catastrophic for your minor children. If you are a single parent, the importance of a Will with a guardianship clause is exponential. If you die without a guardianship provision, anyone in your child's life could petition the court for her guardianship. The court will decide guardianship based on your children's "best interests" - which might not match what you would believe to be in your children's best interests. In the case of a grandparent who excitedly amended her Will to include her first grandchild as a beneficiary, it is important that her estate plan is updated for each new grandchild. With all of this in mind, it is important to think of your estate plan as fluid. Whether it is a new presidential administration or one of the 5 D’s, it is so important to stay in touch with your estate planning attorney and review your estate plan to make sure it is reflective of your current life circumstances.
December 18, 2023
Estates and Trusts
Caught Between Generations: A Roadmap for the Challenges and Strategies of the Sandwich Generation
In the ever-changing landscape of family dynamics and related demographics, a term has emerged in the last few years to describe a group of people who find themselves literally squeezed between the demands of caring for and planning for aging parents and supporting their own children: “The Sandwich Generation.” Personally, finding myself in this unique group, alongside many of my friends, we face numerous challenges and responsibilities, requiring us to balance our caregiving roles for our aging parents and our children while maintaining our own well-being. In this article, we will delve into what the Sandwich Generation entails and offer insight into strategies for effectively managing these often-overwhelming responsibilities that characterize this unique phase of life. What is the Sandwich Generation?: The term “Sandwich Generation” refers to individuals who find themselves entwined in the middle of a generational “sandwich,” positioned between aging parents on one side and dependent (or semi-independent adult) children on the other. Those of us in the sandwich are literally stuck in between, managing both sides. Typically, the individuals who make up the Sandwich Generation are in their 40s to 60s, grappling with the dual responsibility of managing both ends of the generational spectrum. Still, with expanded life expectancy, varied family make-ups, and childbearing years stretching into the 5th decade, age alone does not define membership. The crux of what characterizes the Sandwich Generation is the simultaneous responsibility of providing care and support to both older and younger family members. Challenges The Sandwich Generation Faces: Financial: Navigating the dual responsibilities of supporting both aging parents and children can impose a significant financial burden. From medical expenses and long-term care costs for aging parents to education and upbringing expenses for children, the financial strain can be overwhelming. The strain is exacerbated by the fact that many aging parents do not have the resources or the aforethought to plan for the cost of care properly. Consequently, the onus falls to their adult children, the Sandwich Generation, to solve via their own financial means or provide the required care for their aging parents personally. Time: Members of the Sandwich Generation often find themselves juggling multiple roles and responsibilities. The delicate balance between the demands of caregiving, coupled with professional commitments and personal obligations, can lead to an intense time crunch, resulting in stress and guaranteed burnout. There are simply not enough hours in the day to help everyone in the way they need help. Emotional: Navigating the simultaneous care of aging parents and raising children can be emotionally taxing. Witnessing the decline of one’s parents while safeguarding the well-being of one’s children can lead to a cascade of feelings, including guilt, anxiety, depression, and emotional exhaustion. Throw in the addition of complicated relationships with those aging parents and siblings who have differing opinions on how one’s aging parents should be cared for, and it can be a recipe for emotional disaster. Lack of Support: Individuals grappling with Sandwich Generation challenges often experience a lack of support and resources tailored to their unique circumstances. Family members do not always live geographically near others, which can lead to feelings of resentment for those who can’t be there physically to offer support. Even worse is when family members are within close geographical proximity and still do not offer support, burdening one family member with the overwhelming responsibility of “doing it all.” Strategies for the Sandwich Generation: Foster Open Communication: Talk about it! It is crucial that you foster open and honest communication with your family members. Discuss your caregiving responsibilities and the areas where you need assistance with your spouse or partner, your children, and your parents. Ensuring everyone is aware of the challenges you face in providing care can help set realistic expectations and build a support network within your family. Seek External Support: The time to reach out for help is now! Whether the support is found in your community resources, support groups, or organizations that cater to the needs of the Sandwich Generation, external support is vital. It might be helpful to keep in mind that the community and support groups are free. Connecting with others facing similar challenges in the Sandwich Generation can provide insight, solutions, advice, practical assistance, exchange of information, or just an old-fashioned vent session. Prioritize Self-Care: We all know the anecdote that plane passengers hear at the start of every flight: put on your own oxygen mask first, and only then can you help others. This old adage is something easier said than done. The bottom line is that caring for others begins with caring for yourself. As a member of the Sandwich Generation, make it a priority to engage in self-care activities such as exercise, pursuing your favorite hobbies, and even practicing relaxation techniques. Maintaining your physical and mental well-being is essential to effectively providing care to those around you. Remember, you cannot effectively care for others if you are running on empty. Holistic Financial and Elder Care Planning: Work with a financial advisor, an elder law attorney, and a geriatric care manager to develop a comprehensive plan that considers the financial, legal, and emotional needs of both your parents and children. Explore potential benefits, government programs, legal documents, and long-term care options to alleviate the financial and legal strain. The time to plan is now. Delegation is Key: You simply cannot do it all. Do your best to identify tasks that can be delegated or shared among family members, friends, or hired professionals like those mentioned in number 4 above. You can even involve your children in age-appropriate caregiving responsibilities to assist their grandparents or take away some of your burdens so that your attention can turn to your aging parents. Do not hesitate to seek assistance from your siblings or other relatives to distribute the workload more evenly. Embracing delegation is crucial for maintaining balance and effectiveness in your caregiving role. Embrace the Power of Technology: Utilize technology to streamline caregiving tasks. Explore online scheduling tools, medication reminders, and telehealth services. Embracing technology can help save time, reduce stress, and improve efficiency in managing both your aging parents’ and your child’s care. Leverage technology to empower those far-away family members to contribute to caregiving by paying bills remotely, scheduling doctor appointments, or even ordering groceries online. Embracing technology ensures a more streamlined and collaborative approach to managing the care of both your aging parents and your children. For those of us who know, being a member of the Sandwich Generation can present numerous challenges. Still, navigating these responsibilities successfully with the right strategies and support is possible. The key is finding a balance between caregiving roles and your own well-being. While the role remains challenging, no matter how many solutions are identified, it is possible to thrive while supporting both the older and younger generations in your family. Click here to listen to my podcast, The Sandwich Generation Survival Guide.
December 5, 2023
Estates and Trusts
23 and Me (and who?) and your Estate Plan
Originally posted on 12/10/2022, content updated on 11/27/2023 With the holidays just around the corner, the advertisements for the home DNA test kits are everywhere: For only $99, give the gift of your family tree! In fact, a local restaurateur told me recently that one night he had two separate tables of families “meeting” both for the first time, after receiving their DNA results from one of these kits. Suffice it to say, the direct-to-consumer DNA test kits are adding an element of surprise to many family gatherings. Finding out about a long-lost half-sibling can be great news (or startling news,) but it can also throw an estate plan into chaos. In New York, as in many jurisdictions, estate planning attorneys like myself draft estate planning documents such as Wills and Trusts with language referring to one’s “issue”. In the legal world, a person’s issue is defined as children, grandchildren, and their lineal descendants – in short, the genetic line. Using a term like “issue” is common in estate planning documents so that a person’s lineal heirs are covered in one’s estate plan, even in the event of an untimely death of a younger-generation family member. For example, I might draft a Will that states: “I leave my entire estate to my surviving issue” – which in laymen’s terms means: I leave everything to my children and lineal descendants. Now, suppose your father, who was married to your mother for his adult life, fathered a child unbeknownst to him with someone other than your mother. You are contacted by this child via one of these genetic testing sites and told that you have been identified as their sibling through your father’s bloodline. In the meantime, your father dies with a Will that leaves his estate to his “issue”. Does this newly discovered sibling factor into your father’s estate plan? You bet he might. The path to prove heirship to a decedent in New York is often complicated and rarely direct. If Dad knew about the child and openly acknowledged his relationship, then it would be much easier. In these cases, the New York Courts have accepted an “openly acknowledged” child outside of a marriage as an heir, even without genetic testing. In the example of an “unknown” heir or a child that was never acknowledged, the court most often requires DNA testing to prove heirship, along with other evidence to prove the relationship. So far in New York, the courts have not accepted a self-administered DNA test as independently sufficient to prove heirship. Further DNA testing is required by an approved DNA testing lab to meet the New York standard. However, what is important to note is that an unknown heir obtaining information from a DNA home test kit, might be enough to convince a court to take a harder look at who are the children of the decedent. Preliminarily the results from a home DNA test kit could provide that child enough standing to halt any distribution of the estate until the matter can be further investigated and the child is provided an opportunity to prove his relation. As sophisticated science becomes more available to the general public, the law will inevitably change to accommodate the accessibility of this information, particularly as it relates to estate planning. So, if you find a DNA testing kit under the tree this year resulting in a surprise branch of your family tree, it might be important for you to meet with an estate planning attorney.
November 27, 2023
Estates and Trusts
Holiday Harmony (or Hubbub): Disinheriting with Finesse
Whether it is the result of a discussion about politics, a few too many after-dinner drinks, or a shift in a family relationship, after every major holiday, calls from clients increase requesting a change in their estate plan. Regardless if you wish to reconsider who shall serve as guardian for your minor children in the event of your death or to disinherit a family member, things change. The good news is that an estate plan is fluid, and if drafted properly, removing someone from your estate plan is not as complicated as one might assume. Where to start? First things first, you should not make this change to your Last Will and Testament on your own. In New York, defacing a Last Will and Testament, writing notes in the margin, or crossing out someone’s name is generally insufficient to change a Will. In the worst-case scenario, markings on a Will, or defacing it, could even revoke the entire Last Will and Testament, not just the portion you wish to change. Can you make a change? In a word, yes. Wills are revocable and amendable at any time before you die, as long as you have the requisite mental capacity to make this change. In fact, a Will is not an enforceable legal document until your death. And generally speaking, you can leave your assets to anyone you choose, whether they are related or not. Likewise, aside from certain protections for your spouse, you can disinherit almost any family member from your Will. In fact, other than the State of Louisiana, no state even requires that you leave assets to your adult children (minor children are entitled to support from your estate). The protections in place that will not allow you to disinherit your spouse entirely due to public policy reasons will be addressed in a future article. Similarly, with a change to a named guardian for your minor children, you may remove the named guardian from your Will at any time and replace them with someone you believe is more suited for the job. For single parents, it is important to note that naming someone other than the child’s surviving parent as guardian of the minor child is generally insufficient unless there are extenuating circumstances that would render the surviving parent an inappropriate guardian for your minor child. Why make a change? The most obvious reason people make changes to the beneficiaries of their Will is due to family conflict or estrangement. However, there are many other reasons that one may wish to consider making a change. It may be that your beneficiary was recently diagnosed with an illness and, due to that illness, may need to apply for means-tested government benefits. If that is the case, assets that you may leave to that person may be attached by his creditors, like Medicaid, or worse, the inheritance could disqualify him from a much-needed public benefit. One of your beneficiaries, who may have had a greater financial need when you created your Will, may no longer be in a dire financial situation and simply may not need the financial support. Alternatively, one of your beneficiaries may have shown themselves to be financially irresponsible with her own assets, and you may wish to reconsider leaving funds to someone who does not have the ability to properly manage those assets or set up a trust instead to direct how those funds can be used. Suppose one of your beneficiaries is going through a protracted divorce proceeding or is in a marriage that is likely to dissolve. In that case, you may want to reconsider leaving assets directly to that loved one, as the inheritance could end up with your beneficiary’s former spouse. In the case of making a change to your minor child’s guardian, there are all sorts of reasons to replace a guardian. The named guardian may not be as connected to your family or your child as she once was when the Will was first established. Perhaps the named guardian does not live geographically close to your family any longer, and you wish to consider a more local choice for your child to remain in the event of your death. Similarly, if the guardians you chose were married at the time you signed your Will but are married no longer or have had a significant change to their own lifestyle, they may not be the right choice as guardians of your minor children now. There may be a change in the guardian’s religious or political beliefs that are now quite different from your own and could influence how you would otherwise wish your children to be raised. Regardless of the reason for the change of heart, it is important that a change in guardianship be articulated in a properly executed Will; otherwise, such an appointment could be unenforceable, and a court would determine the best guardian for your child. How to make the change? It is important for you to contact an estate planning lawyer to make the above changes to ensure that they are effective. In addition, when making a change that could alter your entire estate plan, it is important that you communicate to the attorney drafting the change your reasons why the change is being made. In the event that one of the disinherited beneficiaries challenges your Will upon your death, the more information the lawyer has to support this change, the less likely a challenge by a disgruntled beneficiary would be successful in his challenge. For practical purposes, it is best practice to mention the related beneficiary who would otherwise inherit specifically in your Will. For example, when disinheriting an adult child or sibling, it is recommended that you include their name and state that “for reasons known to them” or “not for lack of love and affection,” they are not a beneficiary of the Will. This mention does two things. First, if the disinheritance is not for conflict or any other reason, it is a kind gesture to say so to ensure there are no misunderstandings about why you chose to disinherit them. The second reason why a mention of this person is important is so that the disinherited beneficiary cannot make a case to challenge the Will by saying there was a drafting error or they were unintentionally omitted. By the same token, if a person would not be otherwise entitled to inherit from you, in the example of a more distant family member, an in-law, or a friend, there is no reason to mention that they have been excluded from your Will. In conclusion. If your Thanksgiving holiday was full of more conflict than stuffing, contact our office, and we can provide you with the proper guidance to make a change. Similarly, if you are concerned that your current Will that already disinherits a family member could be challenged by him, you may wish to consider a trust that is harder for a disinherited family member to challenge. Either way, your estate plan is your own, and you have a right to ensure that those who inherit from you and those who serve as guardians for your minor children are the individuals that you choose.
November 17, 2023
Estates and Trusts
Discretionary Trust Distributions – When “Because I said so!” May Be Legally Sufficient
Not too long prior to Senator Diane Feinstein’s recent passing, her daughter, exercising a durable power of attorney (POA) for the ailing Senator, filed suit seeking to force payments by the trustee of what is described as a very generously endowed trust fund (by the Senator’s late billionaire husband) reported to include provisions to cover expenses related to the Senator’s health and welfare. So many directions to take this one! This single-sentence summary presents so many potentially valuable legal nuggets to mine! . . . from “What’s a durable POA?” to “What possible good-faith basis could the trustee have for refusing to pay/reimburse for medical/healthcare expenses with funds entrusted to his/her oversight for this very purpose?” I’ll leave the durability question to Siri and Google, noting that with the adoption in states such as Virginia of what is known as the Uniform Power of Attorney Act (or “UPOAA”), powers of attorney are now presumptively durable unless expressly indicated otherwise in the document itself. Before moving on, I’ll also add that a POA need not require the incapacity of its principal/maker to empower the agent/attorney-in-fact to act on the principal’s behalf. Many people mistakenly presume that a POA is intended only to take effect upon the incapacity or incapability of the principal to act on one’s own behalf. POAs can be immediately effective or “spring” into effect if and only when specifically defined events occur, which define the circumstances when the agent’s authority springs to life on behalf of the principal. Without conducting any sort of formal study on the subject, I am confident when I say that springing POAs are by far the exception to the norm. For now, at least, I address myself to the meatier issues stemming from the late Senator’s trustee’s alleged breach of fiduciary duties and general malfeasance. Asked for my opinion about this “obviously-in-the-wrong” trustee after news of the legal action broke (because no one would go to the trouble of filing suit if the allegations weren’t true, right!), I instinctively provided my standard go-to, why-everyone-hates-lawyers response: “It depends!” With little more than the headline as fodder for a good cocktail party debate, any substantial opinion must necessarily depend on so many variables that any other conclusion about the merits of such a case should be presumed fiction (with similar presumptions regarding anyone who would be willing to draw any definitive conclusions about the impropriety of the trustee’s actions, motives, etc. on such scant information). For starters, the outcome of any such case and claim(s) totally depends on the precise language of the trust document governing the specific situation and the scope and extent of the authority such language extends to the trustee. Because the “correct answer” is so driven by the fact-specific trust language, it is truly pointless to speculate on whether the trustee should or should not have paid the particular expenses in the Feinstein situation. It is also precisely why two or more seemingly identical cases can produce seemingly equally contrary results. It is not necessarily true that one judge or jury gets it exactly right while another gets it completely wrong. Nearly identical facts can produce widely disparate legally correct results for a myriad of reasons. [For a separate case study on this issue, check out my co-authored piece on two seemingly identical cases resolving disputed beneficiary designations in the context of divorce-related life insurance obligations: “Same facts . . . opposite results!”] All that having been said, it is not uncommon for such trusts to build in not only a certain level of discretion for the trustee to decide when it might be appropriate to pay and when a particular expense might be unreasonably “over the top” or simply unnecessary. With such built-in discretion, the trustee has effectively been entrusted by the maker of the trust to act in a manner as to reach the closest equivalent to what the maker himself or herself might have decided. Under these circumstances, the trustee is essentially in the right simply because they said so. A court will generally not seek to impose its discretion over that of the individual the now deceased trust maker trusted in the first instance to make what the trustee determines to be the best decision. With this outcome in mind, I commonly encounter provisions bestowing on trustees the ability, or even the requirement, that before releasing any funds from the trust for expenses seemingly word-for-word covered by the trust, the trustee consider and/or “take into account” other resources available to the beneficiary. In this way, the trustee is forced to exercise fiduciary responsibility not only to the current trust beneficiary but also to those who would stand to benefit from the trust after the current beneficiary has passed. Then again, it might very well be that the scope of such authority is less than clearly defined in the trust document or that a trustee with an axe to grind and/or a personal agenda contrary to that of the beneficiary (perhaps favoring future beneficiaries over the current beneficiary, for instance) is, indeed, acting in a manner inconsistent with the trustor’s original intent. In either case, a court order might be needed to provide appropriate “aid and direction” to the trustee or forcing the trustee to act in a manner not otherwise abusing the discretion afforded to the trustee. One simply cannot presume to conclude as much from a news report, nor should one draw conclusions regarding either the trustee or the one bringing such an action against a trustee without knowing all the relevant facts – or at least substantially more of them than might be reportable in a 60-second, news soundbite. In one rather extreme example, I encountered an example recently where a trustee was empowered to provide for the health and welfare of the beneficiary, but only out of trust income (no principal) and if and only if the beneficiary passed a monthly drug test, the cost of which could be paid out of the trust income, but consequently serve to reduce the amount to be paid to the beneficiary. Whether to bring and/or how to defend such an action requires appropriate legal experience, understanding, and, consequently, investigation and analysis of as much relevant information as can be gleaned both from what might be readily available and that which might take some digging to uncover. In my experience, whether one or more valid claims exist in such situations requires significant investigative and analytical time and should not be presumed either a simple or inexpensive process nor one which is likely to lead to an unimpeachable, singular conclusion. I have observed, advised, and/or been involved to varying degrees in numerous such disputes representing various perspectives with differing agendas (consider, for instance, how a second or third-generation, non-profit charitable organization set up as a contingent beneficiary might view as a wasteful fiduciary breach of duty any payouts by a trustee to current beneficiaries with substantial independent wealth and the means to pay their own expenses). I would welcome the opportunity to evaluate the possibility of assisting should you find yourself on one or the other side of such a situation (or perhaps as a drafting attorney seeking to minimize the chances of such a dispute down the road).
November 13, 2023
Estates and Trusts
A Gift from the IRS? A Holiday Miracle
The holidays are nearly upon us, and for many, this means holiday cheer, baking, and our endless gift lists. What should also come to mind is the “gift” that the IRS bestows upon all of us, which is the ability to make many gifts to our loved ones free of taxes, together with the benefits that accompany making those gifts. Below is a handy list of gifts that should be considered as we close out 2023. Annual exclusion gifts: In 2023, an individual can make annual gifts of up to $17,000 per recipient to an unlimited number of individuals free from any gift tax. Married couples can double this gift to $34,000 per recipient to an unlimited number of individuals. This benefit is called the “annual exclusion amount” because the gift is excluded from gift tax for the calendar year in which the gift is made. The annual exclusion is a “use it or lose it” benefit, meaning that your ability to gift for that year ends after the year has passed. Not only are annual exclusion gifts an effective way to pass wealth to family members and others, free from estate or gift taxes, but these gifts also have the added benefit of reducing the gift-giver’s taxable estate that would otherwise be subject to an estate tax upon his death. These annual exclusion gifts can be made “outright” and paid directly to the recipient to qualify for the annual exclusion. Certain gifts can even be made to the recipient in a trust if it is properly structured. Lifetime gifts: Gifts exceeding the annual exclusion amount are sometimes referred to as “lifetime gifts.” When “lifetime gifts” exceed the $17,000 or $34,000 annual exclusion amount in the case of a married couple, it reduces the federal estate tax exemption of the gift-giver. For example, the current federal estate tax exclusion is $12.9M for each person. This means that at the federal level, the gift-giver can either gift during their life or die with $12.9M. Therefore, if the gift-giver gifts $117,000 to a recipient in 2023, $17,000 of the gift will qualify for the annual exclusion amount for 2023. The remaining $100,000 gift will reduce the gift-giver’s lifetime estate tax exclusion by $100,000, thus reducing his available estate tax exclusion credit from $12.92M to $12.82M at death. The other benefit of making more significant lifetime gifts that exceed the annual exclusion amount is that it removes the value of the gifted assets from the gift-giver’s estate. Removing assets from the gift giver’s estate can be particularly useful when the gifted asset is expected to appreciate in the future. By gifting those highly appreciable assets out of the gift-giver’s estate now, the gift-giver’s estate will pay a reduced estate tax at their death. Lifetime gifts should be strongly considered at the present time as the federal estate tax exclusion of $12.92M is set to “sunset” at the end of 2025. This means the amount of assets you can die with that will not be subject to an estate tax will plummet from $12.92M free of estate tax to only approximately $6.8M free of estate tax. Therefore, making gifts now to take advantage of the current $12.92M estate tax exemption is something to consider. Charitable Giving: Most appreciate the many benefits of gift-giving to a favorite charity: it feels good to make a positive impact while simultaneously supporting a cause that is meaningful to the gift-giver. Many are unaware, however, that there are trusts that can be established to provide the gift-giver with an income stream, a tax break during the gift-giver’s life, and a gift to one’s favorite charity at death. A charitable remainder trust does just that: it allows the gift-giver to make a contribution to the trust for the charity while simultaneously providing a partial tax deduction for the gift and an income stream to the gift-giver or her loved ones. The tax deduction the gift-giver receives from funding a charitable remainder trust is based on the type of charitable remainder trust created. The deductions, depending on the type of charitable remainder trust, are then calculated by several factors, including the present value of the charity’s interest, the assets “donated” to the trust, how long the trust will likely remain and/or the annual “payout” rate to the income beneficiary. In addition to the present tax benefit enjoyed by the gift-giver, the gift-giver can also name herself or a loved one as the beneficiary of the present income stream from the assets donated to the trust. Based on how the trust is set up, the gift-giver (or nominated income beneficiary) can receive income annually, semi-annually, quarterly, or monthly. The IRS requires that the annual income stream must be at least 5% but no more than 50% of the trust’s assets. After the specified term of the trust or upon the death of the last income beneficiary, the remaining trust assets are then distributed to the designated charitable beneficiaries. The charitable beneficiary (or beneficiaries) can be public charities or private foundations. Moreover, the trustee can be provided the power to change the trust’s charitable beneficiary (or beneficiaries) during the lifetime of the trust, if necessary. Gifting can be an integral part of one’s estate plan. Gift planning, especially involving trusts, can be complex and highly individualized. It is crucial to consult a knowledgeable estate planning attorney to ensure that the gifts made are properly structured and comply with tax laws at the state and federal levels, especially as the tax laws change over time. Please get in touch with me directly to discuss these or other gift-giving options before the end of 2023.
October 30, 2023
Estates and Trusts
Every Woman For Herself
Originally posted on 1/6/2021, content updated on 10/18/2023 I read a statistic that stopped me in my tracks: women are four times as likely to be a widow than men are to be widowers. Anecdotally, most of us know that women tend to outlive their partners but the fact that it is four times as likely should give us all pause. It should also prompt us as women to make sure that we have our proverbial houses in order, especially as we begin a new and brighter year ahead. How does one ensure her house is in order? Start with a list. The list should identify the assets that she owns, what the value of those assets are, and how she owns those assets. What are your assets? For practical purposes and for this exercise, your assets should be considered anything that you own that has value. Most people understand that their real estate, bank, brokerage, and retirement accounts are considered assets, but there are other items that might not immediately come to mind when you consider assets. Collectibles, artwork, expensive jewelry, interests in business, intellectual property, digital assets, inheritances, and insurance policies are also assets and often have significant value. It is important that these not-so-obvious assets are identified. How do you own those assets? Assets can be owned in various ways: jointly with or without rights of survivorship, assigned percentages, in a trust, and solely are just a few examples. If you are married, you may own your primary residence together as “joint tenants with rights of survivorship” with your spouse. This means that if your spouse predeceases you, your home will pass to you by operation of law. If instead you own vacation property as tenants-in-common with your brother and he dies first, his share will pass to his own heirs – which might not be you. This is an important distinction because if you own property with your brother and his children are the heirs to his estate, his 50% ownership of the property will pass to them. If that is the case, his children may want to sell the property. Do you have the finances available to buy them out? Or do you want to own property with your brother’s children? Maybe. But maybe not. What is the value of your assets? Asset valuation is a moving target. The market value of real estate and equities fluctuate daily so asset valuation should be updated at minimum, on a yearly basis. Even more complicated is determining the value of business interests, intangible assets, and specific tangible personal property that may be unique in nature. Take for example an art collection: oftentimes it is necessary to engage an art expert qualified in that particular genre to determine the market value of a piece or an entire collection. Or, even more complicated, the valuation of a closely held business in which you are the sole proprietor: what the value is during your life may not be the same after you die. It may be necessary to engage an expert to evaluate the value of your role in a business with or without you. Why is it important to understand the value of your assets? In a word, taxes. Depending on the value of your assets and who you plan to leave your assets to when you die could mean the difference in hundreds of thousands of dollars in taxes owed to the state or federal government upon your death, if not more. Knowing what your assets are worth will enable you to plan properly for who should inherit those assets and in what proportion. Beginning with a simple list is a good start in getting your own house in order; the list will better enable you to take the next step in planning. Knowing what you have will allow you to consult the appropriate professionals to create a functional estate plan that will serve your long-term goals and, in the end, protect you and your loved ones. After all, in the end, it is (four times as likely to be) every woman for herself.
October 18, 2023
Estates and Trusts
Have You Got the Power (of Attorney)?
Originally posted on 11/19/2020, content updated on 10/04/2023 The New York Durable Power of Attorney is an integral part of every estate plan, but it is also the one document that clients are most trepidatious about signing. Their concern is not unfounded. The Power of Attorney quite literally grants someone else the power to make decisions about another’s finances, property, business matters, taxes, gifts, investments and all things related. Why Do I need a Power of Attorney? Anyone over the age of 18 who has a bank account should have a Power of Attorney. If you own assets in your name, no one else can assist you in managing those assets if you cannot manage the assets yourself due to a short-term illness or incapacity, without a Power of Attorney. Many incorrectly presume that a spouse or family member can simply step-in and make any necessary financial transaction for another without a Power of Attorney in place; this is not the case. In fact, retirement assets, real property (even if owned jointly,) and solely-owned assets may not be accessed by anyone, including a spouse, unless she has a Power of Attorney signed by you, giving her permission to access those assets – even for simple tasks like paying bills. How Does the Power of Attorney Work? The Durable Power of Attorney allows you, the principal, to appoint another person, an agent, to make financial decisions for you. The decisions that you allow your agent to make can be tailored to your specific situation. Sounds easy, right? Not exactly. There is a tension that exists between giving your agents all the powers available under the law to act for you and very narrowly tailoring those powers to specific situations. Make the Power of Attorney too broad and your agent could step into your shoes and make any and all financial decisions on your behalf – decisions that you might not want another person to make for you. An overly restrictive Power of Attorney could very well leave your agent in a position where she cannot assist you in managing your assets in the way that you intended or in your best interest, rendering the Power of Attorney useless. Another important point is that Powers of Attorney are effective the moment you sign them, even prior to your incapacity. Practically speaking, your agent has the ability to use the Power of Attorney right away, which can be a worrying prospect. As such, it is vital that you choose someone who will act in your interest and not outside of the scope of what you intended. It should be noted that Powers of Attorney can be revoked at any time if the principal has the mental capacity to do so, and it is no longer effective upon the death of the principal. Who Should be your Power of Attorney? The who is the most important part of the Power of Attorney. Because your agent can be granted sweeping powers under your Power of Attorney if you allow it. She must be someone that you trust implicitly to make decisions based on the guidance you provided to the agent, and if you never gave direction, then the agent must act with your best interest in mind. Your agent should be responsible, honest and detail-oriented. The good news is that when New York State amended the law relating to the Power of Attorney in 2009 (and again in 2010,) it included the provision that the agent you appoint must also sign the Power of Attorney accepting your appointment of her and recognizing that she has a fiduciary obligation to the principal. The form explicitly advises the agent that in accepting the role, any transaction that she makes must be done in the best interest of the principal, not of the agent. The agent also has a fiduciary duty to keep receipts and documentation for transactions made under your Power of Attorney, never to co-mingle funds with theirs, and to avoid conflicts of interest. If your agent does not follow your wishes, or acts against your best interest, your agent could be held liable for violating the law. What Happens Without a Power of Attorney in Place? If you become incapacitated and you never got around to signing a Power of Attorney, or because you were too fearful of trusting someone as your agent, the only option is guardianship. A guardianship proceeding is a very serious legal process in which another party is required to appear in court and prove to a judge with medical evidence that you are not able to manage your own finances. The judge may appoint a family member, a friend, or a lawyer (whom you never met before) to take control of your finances. The court proceeding itself, while not only emotionally difficult for those involved, is quite expensive and should be avoided if at all possible. It is crucial that the option of a Power of Attorney be discussed with your estate planning lawyer. You should take great care in considering not only who should fill the role as agent, but also which powers you may wish to grant the agent.
October 4, 2023
Estates and Trusts
Handwritten Wills and the Couch Cushions that Hide Them
No doubt, the basic scenario plays out every day across America. An elder loved one passes, and an adult child or children are left to deal with an estate and no plan in place — or at least no apparent plan. What to do with mom’s comfy chair? How much is that old couch worth? Should we just donate everything to charity? Who decides? The oldest? The one living closest? Do we all get a vote? Before anything gets decided about the couch (or any other furniture, for that matter), I suggest everyone take a breath and consider the recent case of Aretha Franklin‘s four kids… and definitely don’t rush to divvy up everything and especially do not just get rid of the old couch! Nearly five years after the Queen of Soul passed and, no doubt, many tens (more likely hundreds) of thousands in legal fees later, the fate of Aretha Franklin’s estate was decided by a Michigan jury, which determined that a four-page “holographic“ (i.e., handwritten) document in a notebook found stuffed under Aretha‘s couch cushion was her intended last Will. No matter that the four kids had already long since mutually consented and arranged to have an agreeable cousin serve as a third-party neutral to administer the estate. No matter that the lack of a will had meant all four would share everything equally and that they’d come to terms with that. No matter that one of the four separate potential final will documents was several times longer, more detailed, found in a locked cabinet, and notarized! The jury’s findings result in Clarence Franklin getting cut out completely and brother Kecalf, alone, receiving Ms. Franklin’s $1.1 million home and most of her “personality” (i.e., her physical stuff-including jewelry, furs, and numerous luxury cars). Impossible to know for sure what Aretha had intended. In fact, according to a New York Times report, the trial judge overseeing the trial has ruled that portions of one or more of the earlier signed documents might still end up being incorporated into what the jury determined to be the final document. (Note: This can happen in certain circumstances when one deals more completely / thoroughly with the disposition of all that one owns in one document before creating another, which inexplicably makes no specific reference to replacing or substituting for the former document). So, despite having endured nearly five years of legal wrangling and a jury trial publicly airing the family’s “dirty laundry” along with matters preferably kept private, the Franklin kids may yet be forced to endure additional delays as the lawyers face-off on potentially unresolved issues, and Clarence and the other siblings now receiving substantially less than the presumed 25%, are now forced to consider their potential appellate options, as well. Why leave such unnecessary heartache to your loved ones after you’re gone? Consult a legal professional, and have it done correctly—and the way you want it—the first time. And if you have recently lost a loved one – especially if you’ve been led to believe they had an estate plan in place (and doubly especially if the “plan” they told you about appears to differ substantially from the plan the decedent actually left behind (or the lack of a plan altogether), I would urge you again to consider the plight of the Franklins and rethink that couch donation . . . at least until someone’s had a chance to lift the cushions and run their hands through the frame. (Epilogue: True, not-totally-unrelated, anecdote . . . I discovered a $20 bill and a pair of Ray-Ban® sunglasses (sold on the spot for $75) in the back of an abandoned couch acquired during a brief stint co-owning/operating a used furniture/carpet going concern more than 30 years ago. I didn’t have to become an estate and trust litigator to appreciate the potential treasure trove those old cushions might unlock! “What’s a ‘treasure trove?’” you ask . . . and “How does one determine ownership of a treasure trove when discovered?” That’s a whole other topic for another day. For now, happy couch-surfing!)
September 14, 2023
Estates and Trusts
What’s a Healthcare Proxy and Why Should You Have One?
Originally posted on 12/10/2020, content updated on 09/13/2023 It is vital to have a proper health care directive in place in the event you become sick and cannot independently advise your health care providers of your wishes. In 1991, the New York Health Care Proxy Law established the right for an adult to nominate another person to make medical decisions for her in the event she is unable to effectively communicate her wishes independently. The goals of establishing this standard in New York was to avoid confusion when a medical decision needed to be made for someone who could not do it herself, to identify the person who could communicate those wishes, to ensure the wishes would be carried out, and most importantly, to withdraw treatment when the proxy decides that it would not be something that the patient would want or that continued care is not in the patient’s best interests. How the Health Care Proxy Works The Health Care Proxy document only goes into effect when you are unable to effectively communicate your wishes to your health care providers. The proxy allows for the appointment of two people, referred to in the document as “agents”, in the order in which they are named. The order of the proxies in the document determines the order in which medical personnel will consult with them about decisions that need to be made about your health. Agents are not permitted to act together in New York because joint action could lead to disagreement, which of course undermines the purpose of the document. The medical decisions that an agent might make on your behalf can range from the most basic like the dispensing of antibiotics to the suspension of artificial ventilation which might end your life. The Health Care Proxy also provides instruction regarding organ and tissue donation in the event of your brain death. How to Choose Your Agents Your agent must be 18 years of age and does not have to be someone related to you. While it is true that many choose a family member like a spouse or an adult child for the agent role, there is no requirement that your agent be related to you. In fact, some choose a close friend or trusted advisor to fill the role of an agent so that a family member’s emotion does not factor into a health decision, particularly a decision that could end your life. Others nominate their religious advisor so that treatment is based on their faith’s doctrine to guide the medical decision. Regardless of the individual you choose, it is imperative when considering someone for the role that you nominate a person who will speak for you regarding the type of care that you would choose for yourself, if you could articulate your own wishes: this person should not substitute thier wishes for your wishes. Instead, you should choose an agent who understands your wishes as they relate to any and all health care decisions, including life-saving measures, and who will articulate those wishes to your health care providers. This person should be someone who understands and respects your feelings about living and about dying, and fully comprehends the quality of life that you wish to live. In addition, the person should be comfortable advocating for you with health care providers and dissenting family members alike. How to Communicate Your Wishes The discussions that you have with your agent are so important because this is the information she will rely on to make decisions for you if the need arises in the future. These discussions with your agent often evolve over time. Your feelings about living and dying and the type of care that you may want are oftentimes influenced by age, a life-limiting diagnosis or even someone else’s health crisis that you have witnessed. Verbal discussions had with a proxy are legally sufficient for the agent to make a decision regarding any and all of your medical care, but many individuals take it a step further and also put a Living Will in place to illustrate certain wishes in writing. In short, Living Wills are documents that explain your thoughts about medical care and heroic measures. Often Living Wills go into detail about “heroic measures” to sustain your life including artificial nutrition, hydration, and ventilation. It is important to note that Living Wills are not substitutes for Health Care Proxies in New York and should only be used to supplement information provided to the agent. Who Should Have a Copy It is necessary that your agent not only know that she was appointed by you, but that she also has a copy of the document itself. With the prevalent use of cellphones, it is commonly recommended that your agent take a photo of the Health Care Proxy under which she is nominated so that it is readily accessible in any emergent medical situation. You should also provide copies of your Health Care Proxy to any of your treating physicians for their records, in addition. Finally, it should be noted that, even if after reading this article, you never get around to completing a Health Care Proxy, all is not lost. New York State passed the Family Health Care Decisions Act (“FHCDA”) in 2010 that gives guidance on what to do if someone does not have a Health Care Proxy in place. The FHCDA allows for family members to act as your “surrogate” and make health care decisions for you, including decisions to withdraw life-sustaining treatment. However, you are not able to choose which family member will speak for you, so it is not a sufficient substitute for a Health Care Proxy.
September 13, 2023
Estates and Trusts
Estate Planning for Professional Athletes: The Playbook for Success on and off the Field
Professional athletes are no strangers to the limelight, but beyond the enthusiastic cheers of the fans lies the need for careful planning that extends far beyond their playing days. Estate planning can easily be forgotten amid the hustle and bustle of a rigorous training schedule and a busy sports season. In this article, we will delve into the unique considerations that professional athletes should consider when crafting a comprehensive estate plan. The Play: Understand the Game of Estate Planning Estate planning involves more than just the drafting of a Last Will and Testament. A proper estate plan creates an overall strategy to manage the professional athlete’s hard-won assets during their lifetime. A well-drafted plan also ensures a smooth transition of assets to the athlete’s loved ones in the event of an injury or following one’s death. As a professional athlete, income streams, investments, intellectual property, and property ownership are customarily quite complex. Over the course of one’s career, an athlete may move frequently, acquiring assets in different jurisdictions with different laws along the way. They may also experience significant and volatile swings in their financial outlook that necessitate a review of an estate plan more often than most. In addition, due to the dynamic lifestyle of the professional athlete, close relationships may also change rapidly. It is vital that the professional athlete collaborates with tax professionals, financial advisors, and estate planners who have experience in handling the ever-changing and unique planning needs of athletes. The Starting Lineup: Wills and Trusts A Last Will and Testament is certainly one of the cornerstones of an estate plan. Most understand that Wills can assist in outlining how assets are distributed upon death. What many do not know is that Wills can also designate guardians for minor children and appoint a trusted advisor as the executor to carry the terms of a Will. Trusts are an even more powerful tool for athletes. Trusts provide much-needed privacy, minimize taxes, and allow for tailored distribution of assets to beneficiaries over time. The benefits of a Trust are often critical for an athlete, particularly if they have young children or heirs who require financial guidance. The MVPs: Powers of Attorney and Healthcare Directives One of the most challenging hurdles that athletes must face is injuries. More than any client, creating advanced directives is of the utmost importance for professional athletes who may face injury more regularly than others. Designating an agent under a power of attorney ensures that a trusted person nominated by the professional athlete can manage the likely complicated financial affairs in the event of injury or incapacity. Likewise, healthcare directives outline medical preferences and can empower a chosen individual to make medical decisions on behalf of the injured athlete if they cannot do so Game Strategy: Tax The substantial earnings of professional athletes are often subject to high tax rates. Those tax rates vary from state to state and from year to year. Implementing a tax-efficient estate plan can help minimize the tax burden on the professional athlete and their heirs. A properly created estate plan must include strategies like lifetime gifting, charitable giving, and utilizing trusts to preserve a professional athlete’s wealth and legacy. Protecting A Legacy: Intellectual Property Considerations An athlete’s brand, image rights, and related intellectual property assets continue to generate income long after the playing days are over. Including provisions in an athlete’s estate plan that address how these assets are managed and protected is essential. Harnessing this intellectual property involves setting up corporate structures to handle licensing and endorsement deals and ensuring a stream of income for the athlete’s beneficiaries – all of which must be appropriately allocated in an athlete’s estate plan. Team Collaboration: The Agent, the Manager, The Accountant, and the Lawyer Just as winning championships requires teamwork, a successful estate plan relies on effective and regular communication and collaboration between various trusted professionals. A professional athlete’s manager, agent, financial advisor, accountant, and estate planning attorney should work in tandem to ensure that all aspects of a professional athlete’s overall plan align with their goals and protect their interests and their family’s interests for years to come. Revise the Playbook: The Moving Target of an Estate Plan The life of an athlete is dynamic on nearly every level, and their estate plan is no different. Major life events, such as marriages, divorces, birth of children, disability, or even the death of a loved one, require the professional athlete to constantly assess their estate plan playbook. Changes in an athlete’s home state or playing career can immediately impact their financial circumstances, which will accordingly warrant adjustments to their estate plan. Professional athletes must regularly review and update their estate plans to reflect their current situation, location, and aspirations. Professional athletes spend their careers preparing for the “big game” — an estate plan is no different, but it requires a different kind of strategy. It is not just about preserving wealth, fame, and fortune; it’s about securing a legacy, providing for an athlete’s loved ones, and ensuring their hard-earned assets are properly managed. By assembling a winning team of experts and crafting a comprehensive estate plan, professional athletes can confidently stride into the future, both on and off the field. If you are a professional athlete, a loved one, or a sports agent, please contact me so that together, we can ensure that the professional athlete’s legacy and loved ones are secure for years to come.
September 8, 2023
Estates and Trusts
Estate Planning
Are you one of the many Americans putting off preparing an estate plan? Do you have an estate plan that you have not updated in several years? The following are just three reasons that you should get your estate plan prepared or updated. CONTROL. By developing your own estate planning documents, including, but not limited to, a last will and testament, a power of attorney, and an advanced medical directive, you are the one deciding how things will be done, rather than the state. Absent estate planning documents, an individual cannot influence what happens after their death and must rely on a combination of the state and their family. Entities and/or individuals that may not know your wishes. INHERITANCE. Estate planning documents direct the disposition of an individual’s personal and real property, but when an individual dies without these documents in place, the state will make that determination for the individual. Real and personal property is divided up and given to individuals based upon the given state’s methodology of intestate succession—something that may look completely different to what an individual would have desired. An estate plan allows you to ensure that you are the one to direct who inherits what after you pass, rather than allowing the state to decide for you. BURIAL. The topic of death and burial can oftentimes be a difficult subject to discuss with our loved ones, but as a result, our loved ones may not always know how exactly we would like our burial to take place. Whether an individual wishes for their burial to be religious, a-religious, simple, elaborate, austere, celebrative, or something entirely different, these are important decisions that should be denoted in an individual’s estate plan to ensure that they are followed. Seek legal counsel to ensure that your interests are protected. If you have any questions about this or Estate Planning/Estate Litigation topics, please contact me at austin.hinel@offitkurman.com or (703) 745-1899.
August 15, 2023
Estates and Trusts
What’s New in Estate Planning? Notable Local Law Changes
D.C. Adopts the Uniform Electronic Wills Act: Electronic Wills in D.C. – it’s the law! . . but should it be? As of March 10, 2023, the “Uniform Electronic Wills Amendment Act of 2022” (Law 24-296) became effective in the District of Columbia. With it, D.C.’s pandemic-inspired, emergency legislation allowing virtual will signings was formally replaced with a new Chapter 9 of Title 18, known officially as the “Uniform Electronic Wills Act” (D.C. Code § 18-901, et seq.). With its adoption of the Act and making permanent the previously interim measure, D.C. joins only six other states and the U.S. Virgin Islands[1] to have adopted the Act and made the leap legalizing will signing without ever putting pen to paper, or for that matter, without ever involving a pen or paper.[2]. In the District, to be legally enforceable, one’s will no longer needs to have been physically signed or reduced to paper. With the appropriate software and/or application, one can now finalize a will with a few keystrokes. Of course, there are some parameters, and one should not presume to have met all the criteria merely by tapping out a document on one’s laptop without consulting the Act . . . and a good lawyer! Nevertheless, the new law certainly makes it easier to make a testamentary disposition of one’s assets, i.e., direct who gets what when you die. I am left questioning the tradeoff; however, with the Pandora’s box of fraud schemes, this development undoubtedly unleashes. You can now create and sign your Will electronically in the District of Columbia . . . but should you? There has been no shortage of debate over the years as to steps minimally appropriate to make a legally enforceable will. While varying across jurisdictions and with only limited exceptions, certain minimum requirements regarding one’s “soundness of mind,” witnesses, notarization, signatures and related representations, for instance (see, e.g., DC Code § 18-102, et seq. and Va. Code § 64.2-403, et seq.), have universally been intended to assure both genuineness of a document and accuracy of one’s testamentary intentions on a document which only becomes legally operative after the testator is dead. With the advent and development of electronic communications (email, facsimile, text messaging, and the like) and, in recent years, the ever-improving ability to sign (or affix an equally individualized electronic mark), send, and store one’s electronically signed documents increasingly securely, the legal acceptability and enforceability of electronic signatures have become unexceptionally commonplace. Moreover, with the recent lessons of a global pandemic, including a new-found appreciation for conducting one’s affairs from a distance, the ability to “get one’s affairs in order” remotely became, for many, a life-preserving necessity. Time may reveal better the extent to which the inability to e-sign estate planning documents “forced” COVID-19 victims and countless others to die intestate, an argument I’ve heard posited in favor of easing and expediting signature requirements to this extent. In the District, emergency legislation made it possible, on a limited temporary basis, to execute wills without all of the “whistles and bells” otherwise required under the law. The primary argument for maintaining the physical signature requirement for wills, along with the physical presence of witnesses, generally centers on the significance of the finality of making testamentary disposition of one’s assets and not being around to assure that one’s intentions are carried out as we had intended. But with the general acceptance nowadays of e-signing in the context of so many acceptable alternatives to disposing of one’s assets without either invoking a will (trusts and contractual-based, third-party provider agreements such as life insurance and ERISA-qualified retirement plans, for instance) and/or the probate process pursuant to which one’s Will’s directions are administered and overseen, why should will-signing retain such an exceptionally high bar?. . or so the argument goes! With the advent of AI-generated, at times seemingly indifferentiable virtual “reality,” do we really need to ask “why?” Perhaps there will come a time when one’s “John Hancock” indelibly inscribed, notarially certified, and appropriately witnessed will no longer have any value at all. Perhaps. We’re not there yet, however, . . . at least not everywhere. Neither Virginia nor Maryland has yet to succumb to this latest modern trend towards allowing and trusting electronically signed will documents . . . although, it seems only fair to acknowledge in this regard that Virginia, for instance, has allowed exceptions to its strict signing/witnessing requirements in certain limited circumstances. [For more on “de facto wills” and the “Harmless Error Rule” in the Commonwealth, see my prior discussion regarding Virginia’s modified version of Section 2-503 of the Uniform Probate Code, Va. Code § 64.2-404.] Mind you, I am not suggesting that electronic evidence of a Will (including, for instance, a PDF copy of the purported Will itself) would not, per se, be devoid of probative value. By way of example, not too long ago, I found myself challenging whether an emailed copy of a document purporting to be a Will might itself be deemed a “de facto will” under Section 64.2-404 and the extent to which, if admitted into evidence, the electronic version of the document and the email transmitting it ought to be given weight by the judge when considering the decedent’s intended finality of the document at the time. Perhaps someday Virginia will fall lockstep into line in the march towards what may be an inevitably paperless, impersonal future. Maybe someday, sure, but I would take the “over” if anyone proposes a near-term adoption of such a risky proposition here in the Old Dominion. As of this writing, at least, D.C. stands alone in the “DMV” and with only a handful of other jurisdictions (in the mid- to Pacific West) formally allowing this dangerous practice. Over the years, I have counseled countless clients who have found themselves questioning the bona fides of a suspicious Will document or the circumstances and timing of the document’s creation. With what I perceive as the floodgates now opening, I suspect the next wave of litigation will involve many new variations on the theme requiring us to (dis)prove testamentary intent and whether certain 0’s and 1’s amount to an electronic signature of an improperly formatted, electronic document very loosely resembling what only some might consider a Will. You know where to find me! ___________________________________________________________________ [1] North Dakota and Washington enacted versions of the Act in 2021, and the U.S. Virgin Islands followed suit in 2022. D.C. joins Minnesota, Idaho, and Utah in enacting the Act in 2023, while Texas, Missouri, and New Jersey have introduced, but, as of this writing, have not enacted the Act. (Source: Uniform Law Commission, https://www.uniformlaws.org/committees/community-home?CommunityKey=a0a16f19-97a8-4f86-afc1-b1c0e051fc71, site visited on 8/8/2023) [2] Maryland has not adopted the Act but has adopted its own version of electronic will signing/witnessing. See Estates & Trusts §4-101, et seq. (Source: Maryland General Assembly, https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=get§ion=4-101, site visited on 8/29/2023.) There may be other states that have gone this route as well.
August 14, 2023
Estates and Trusts
Unmarried Couples Win New Inheritance Rights
For more than a decade, the freedom to marry has been available to Maryland’s same-sex couples. Those who have approached the altar, the chuppah, or the courthouse and tied the knot enjoy legal benefits that were denied them as domestic partners. These include the right to receive an inheritance if one partner dies without a will, and to avoid Maryland’s hefty inheritance tax. Under the new legislation, these rights are now available to Maryland’s unmarried couples as well. By registering as domestic partners, unmarried couples can ensure that if one partner dies without a will, the survivor will be entitled to an inheritance equivalent to what a surviving spouse would receive. This could be as much as the entire estate or a lesser amount for couples who have children from a prior relationship. The surviving partner also has the right to serve as personal representative, or executor, of the deceased partner’s estate. Whether a partner dies with or without a will, this new law exempts the surviving partner from Maryland’s 10% inheritance tax on any property received from the deceased partner. The tax normally applies to any bequest left to someone who is not a spouse or close family member. By way of example, a registered couple would save some $30,000.00 in inheritance taxes if one partner died with $300,000.00 in assets, compared with an unmarried couple who had not registered. The law will also recognize children born to registered domestic partners as the legal descendants of both parents. Registration Requirements Beginning October 1, 2023, a couple can register as domestic partners by completing an affidavit with their names and address. Each partner must be at least 18 years old, unmarried, and in no other domestic partnership. The signed and notarized form must then be submitted to the Register of Wills in their county of residence with a $25.00 payment either in person or by mail. A registry is available to same-sex and opposite-sex couples alike. Once their application is approved, the couple will receive a certificate of domestic partnership. The Registers will all be able to access the records of the other registers, so a couple will be able to move to a different Maryland county without having to re-register. An unmarried couple who have registered with the state can terminate their partnership in four ways—by the mutual agreement of the partners, by one partner who has been abandoned by the other partner for at least six months, or upon the death or marriage of either partner. Not a Substitute for Estate Planning Couples who register should consider taking additional steps to ensure that they are prepared for the unexpected, including the death or disability of a partner. Have an attorney draw up your estate-planning documents, including a will, financial power of attorney, and advance medical directive. Your partner may be your primary beneficiary under your will, but you might want to include gifts to your children, nieces and nephews, or charitable organizations as well. A well-thought-out will also says who inherits and who settles the estate if you and your partner are both deceased. If your beneficiaries include children, your will could include a trust for their benefit. Placing a child’s inheritance into a trust will help ensure that the assets go toward worthwhile purposes, such as college, medical care, or maybe the down payment on a house. A will can also name guardians to look after any children who may be under the age of 18 when both parents are gone. If you or your partner becomes unable to manage your own finances or medical care, having a power of attorney and advance directive will help ensure that someone you trust is authorized to make these decisions on your behalf. At a time when fewer people than ever are getting married, and even fewer prepare a will before they die, having the right to register as domestic partners is a huge win for Maryland’s unmarried couples. If you and your partner decide to register, be sure to finish the job by having an estate plan prepared to help you navigate some of life’s biggest uncertainties. Lee Carpenter is an Estates & Trusts attorney at the law firm of Offit Kurman, P.A., and can be reached at (410) 209-6426 or Lee.Carpenter@OffitKurman.com. This article is intended to provide general information about legal topics and should not be construed as legal advice.
August 3, 2023
Estates and Trusts
Trusts and Estate Planning Tips for the LGBTQ+ Community
Pride Month is an important time for celebrating the LGBTQIA+ community and promoting equality, acceptance, and visibility. Estate planning is a crucial aspect of personal financial planning for individuals and families, regardless of their sexual orientation or gender identity. Here are six trusts and estate planning tips for the LGBTQ+ community that may be particularly relevant during Pride Month: Wills and Trusts: Creating a will or a trust is essential for ensuring that your assets are distributed according to your wishes after your passing. Without a valid will or trust, your estate will be subject to intestacy laws, meaning New York State will determine who will inherit from you and in what proportion. The rules of intestacy may not align with your intentions or benefit your chosen beneficiaries. By creating an estate plan, you have the opportunity to specify how you want your assets to be distributed, including to your chosen family, friends, or organizations. Beneficiary Designations: Review and update your beneficiary designations on all of your financial accounts, including retirement accounts, life insurance policies, and other financial accounts. Ensure that the named beneficiaries reflect your current wishes. If you are in a relationship that is not legally recognized, it’s imperative that your loved one is designated as a beneficiary. Healthcare Directives: Consider creating advance healthcare directives such as a healthcare proxy and a living will. These documents allow you to appoint someone to make medical decisions on your behalf and outline your preferences regarding medical treatments and end-of-life care. Selecting a trusted person who will respect your wishes, including your chosen family or partner, is crucial to ensure your healthcare wishes are honored. If you do not have these documents in place, many states, like New York, allow your next of kin to make end-of-life decisions for you. Guardianship for Your Children: If you have children or dependents, it is vital to establish guardianship arrangements in case something happens to you. Ensure that your estate plan specifies who you want to care for your children and provide for their well-being. This is especially important for couples who are not legally married or who may face additional legal complexities in some jurisdictions due to the lack of protection or recognition of LGBTQ relationships. Your Local LGBTQ+ Laws: Understanding the laws and regulations regarding LGBTQ+ estate planning in your jurisdiction is so important. Laws can vary by country, state, or even local jurisdiction, and they may impact your ability to protect your chosen family, distribute assets, or claim inheritance rights. Consulting with an estate planning attorney who has experience in LGBT estate planning is imperative. Nondiscrimination Language: When drafting estate planning documents, you should consider including non-discriminatory language to ensure that your wishes are carried out without prejudice or discrimination based on sexual orientation or gender identity. This will help protect your loved ones from potential challenges to your estate plan based on discriminatory interpretations or actions. Please feel free to contact me to navigate the legal complexities of LGBTQ+ estate planning and to ensure that your estate plan aligns with your goals and values.
June 27, 2023
Estates and Trusts
Special Care with Special Needs Trusts (SNTs)
Providing Security and Care for our Disabled Loved Ones I was inspired to write about Special Needs Trusts (SNTs), a legal tool that can provide security and care for our disabled loved ones, as I was waiting to cross Madison Avenue. I stood beside a woman in a wheelchair as the traffic whizzed by, impatient pedestrians hovered and huffed to move around her chair and I thought of how vulnerable she must have felt at that moment – or maybe more accurately, how vulnerable I felt on her behalf. It made me think of so many of us when planning for our loved ones with special needs: financial security and long-term care can be especially triggering. Years ago, family members had to disinherit their disabled loved ones to ensure that their public benefits were not disturbed by an inheritance. Funds meant to support the disabled loved ones were left to someone else to manage, which often led to disaster. As a result, the concept of Special Needs Trusts (SNTs) was born. SNTs became a powerful tool to address these concerns and ensure that individuals with disabilities could maintain their eligibility for government benefits while maintaining access to the necessary financial resources. What is a Special Needs Trust (SNT)? A Special Needs Trust, also known as a Supplemental Needs Trust, is a legal document that holds funds for the benefit of a disabled person; the funds in an SNT are not “counted” by the government. The primary purpose of an SNT is to enhance the disabled person’s quality of life by supplementing government benefits without jeopardizing their eligibility for essential programs such as Medicaid and Supplemental Security Income (SSI). Three Types of Special Needs Trusts First-Party Special Needs Trust: A First-Party SNT is funded with the disabled individual’s own assets, such as an inheritance, personal injury settlement, or accumulated savings. The trust allows the individual to maintain eligibility for means-tested benefits. Upon the disabled person’s death, any remaining funds must reimburse the government for benefits received during the disabled person’s life. Third-Party Special Needs Trust: A Third-Party SNT is created and funded by someone other than the disabled individual. Parents, grandparents, siblings, or any other loved one can establish a Third Party SNT. Unlike a First Party SNT, there is no requirement to reimburse the government for benefits received upon the beneficiary’s passing – known as a “pay-back provision.” All remaining funds can be designated for the disabled beneficiary’s heirs, the third party’s heirs, or charitable organizations. Pooled Special Needs Trust: Pooled SNTs are administered by nonprofit organizations. Pooled SNTs allow multiple individuals with special needs to “pool” their resources into one SNT. Each beneficiary then has a separate account within the SNT, and a professional trustee from the charity manages the investment and disbursement of funds. This option is particularly beneficial for those without substantial assets or when family members cannot assume the responsibilities of managing a trust. Benefits of Special Needs Trusts Preserving Government Benefits: One of the primary advantages of an SNT is that it enables individuals with disabilities to continue receiving crucial government benefits. The assets held in a properly drafted SNT allow the disabled individual to maintain eligibility for these programs, thus ensuring access to vital healthcare services, income support, and other assistance like housing allowances. Supplementing Basic Needs: SNTs provide a supplemental source of funds that can be used to enhance the beneficiary’s quality of life. These funds may cover expenses not typically covered by government benefits, such as education, therapy, specialized equipment, home modifications, transportation, and recreational activities. Professional Management: Trusts require careful management to ensure compliance with legal and financial regulations. Professional trustees handle investment decisions, disbursements, and record-keeping responsibilities, alleviating the burden of family members and ensuring the trust is managed effectively and in the beneficiary’s best interest. Peace of Mind: By establishing an SNT, families gain peace of mind knowing that their disabled loved one will have the necessary financial resources and care even after they are no longer around. Establishing an SNT can provide a sense of security for both the beneficiary and their family. SNTs play a vital role in securing the future of individuals with disabilities by providing them with financial resources, care, and an enhanced quality of life. SNTs provide families a means to protect their disabled loved ones' eligibility for government benefits while supplementing those needs. If you would like more information on Special Needs Trusts (SNTs) and how these and other legal tools can provide security and care for your disabled loved ones, please feel free to contact me. If you want to learn more about how you can benefit your favorite charity while creating an income stream for you or your beneficiaries, check out my post on Charitable Remainder Trusts by clicking here.
May 23, 2023
Estates and Trusts
“de facto” Wills and the Harmless Error Rule - Part 2
Virginia maintains a signature requirement even for “de facto” wills With its added signature requirement, Virginia’s version of the Harmless Error Rule differs materially from the proposed uniform version of the Rule. The first part of the Virginia statute, Section 64.2-404(A), expressly permits writings not executed in compliance with the statutory attestation requirements [i.e., without all the whistles and bells] to be admitted to probate under the relevant circumstances. It was and remains the primary purpose of the Harmless Error Rule’s adoption and continued application. Virginia’s version of the Rule adds the language of Section 64.2-404(B), which (except in two very discreet situations) refuses to protect as harmless error “compliance with any requirement for a testator’s signature” and, in this respect, differs materially from the uniform code provision. The uniform code’s version of the Harmless Error Rule would overlook as “harmless” in appropriate circumstances not only the attestation requirements but also the signature requirement itself. Virginia legislators were collectively unwilling to be nearly as forgiving in this regard. With the addition of Section 64.2-404(B) and its signature requirement, the General Assembly clearly circumscribed the list of potentially “harmless errors” capable of being overlooked to allow an otherwise non-compliant will document to be accepted for probate. In one of several litigated matters relating to the Estate of Marvin Sacks, an Arlington circuit judge had occasion to address multiple facets of the statute, including not only alterations to an existing will but also to the Section 64.2-404(B) signature requirement itself. At the threshold, the respondent in Sacks sought to prevent the probate of a “de facto will” by challenging the testator’s failure to execute the document in compliance with all the attestation whistles and bells. As the Arlington court recognized, however, although Section 64.2-404 specifically references a “testator’s signature” requirement, it would be self-defeating for the statute to require “execution” of the writing in question by the testator as would otherwise be mandated by Section 64.2-403 (i.e., the whistles and bells section). Had the General Assembly intended the “testator’s signature” reference in Section 64.2-404(B) to mean a document “executed in compliance with § 64.2-403,” they would have thereby negated the purpose of the Harmless Error Rule itself. Failure to satisfy the attestation whistles and bells can only be corrected if a judicial ruling is sought within one year from the testator’s death. The right afforded under the Harmless Error Rule statute to have a court intervene to deem a non-compliant will legally enforceable has a limited lifespan. The protections otherwise afforded under Section 64.2-404(B) only survive the testator by one year. There is no exception. With the addition of subpart B to the Harmless Error Rule statute, the General Assembly saw fit to impose a time limit, what is known as a statute of limitation, by which time a proponent of a non-compliant will could otherwise seek the help of the court in having such a will declared legally enforceable is limited to the first anniversary of the testator’s death. In other words, an attestation error, otherwise deemed harmless and correctable under the Rule, ceases to be harmless one year after death. What constitutes clear and convincing evidence in this context? Prior to the 2007 adoption of the Harmless Error Rule in Virginia, all wills and changes to wills had to meet all the statutory attestation whistles and bells to be legally enforceable. Section 64.2-404 opens the door to allowing potentially harmless errors from preventing enforceability but affords such allowances only if the proponent of a will without all the requisite whistles and bells meets an elevated burden of proof regarding the testator’s intentions reflected therein and the signature appearing thereon. So what evidence is needed to meet the elevated clear and convincing standard? I include here a non-exhaustive list of factors to consider when evaluating whether a document without all the attestation whistles and bells might nevertheless be upheld as a “de facto” will. One should consider evidence of the following factors along with any other evidence tending to support or refute whether the document in question truly reflects the decedent’s testamentary intentions (and not merely draft considerations) at the time the document was made: (i) the preparation and signing of the document itself (how, where, and under what circumstances did the document come into being and/or come to be signed); (ii) witnesses to the de facto will (did they formally “witness” (i.e., sign) or were they mere coincidental observers); (iii) the temporal proximity of the de facto will to the onset of testator’s terminal condition or death; (iv) questions or concerns regarding capacity of the testator (including age of the testator and possible undue influence); (v) motivation(s) and/or (dis-)incentive(s) for the de facto will proponent to lie; (vi) the level of independence of the source of information to be considered; and (vii) the status of the documentation of testator’s most recent prior known testamentary disposition(s). Additionally, evidence of consistencies and/or inconsistencies with the following are all potentially relevant considerations as well: (i) the de facto will provision(s) compared to the testator’s previously articulated intentions; (ii) the manner of document creation compared to prior testamentary dispositions (e.g., typed or holographic; physical or mental impairments impacting writing); (iii) the manner of document creation compared to current changed circumstances (e.g., typed or holographic; physical or mental impairments impacting writing); and/or (iv) the manner of maintaining/storing the de facto will be compared to prior known testamentary disposition documentation (e.g., nightstand v. bank safe deposit box). 10 “clear and convincing” evidentiary factors: Testator Capacity/Undue Influence Testator Age/Health Signature Circumstances Witnessing Formalities Temporal Proximity – Will/Death Proponent’s Self-interestedness Source(s)’ Independence Prior Will(s) (In)consistencies – time, place, manner, and intent Finality When setting forth one’s intentions regarding the disposition of one’s property when one dies, certain formalities are expected to be followed, and with good reason. At least two witnesses together in the same place at the same time to observe the signing of a will is not an unreasonable expectation when the resulting document is intended to affect the disposition of property only upon the death of the person willing it to be so. It is, after all, for the testator’s own protection that we generally require all the whistles and bells, all the pomp and circumstance, associated with a formal will signing because the testator will not be around to answer questions about their intentions after they are dead – the only time the language of the will actually has any legal impact. When such formalities have all been adhered to, we can be sufficiently certain that the resulting document validly reflects with sufficient certainty the final wishes of the testator. The Harmless Error Rule, as set forth in Virginia Code Section 64.2-404, is there as a safety net for when things don’t always go exactly as planned or for circumstances when, despite the best of intentions, people make changes to a will without understanding or appreciating that any such edits might serve to nullify the formalities they had previously paid to achieve. This work is intended for the non-lawyer wondering whether to involve a lawyer in the preparation of one’s will or a change to one previously made (you absolutely should!) and for family members or friends of departed loved ones who discover a document which you think might or could have been an attempt by the dearly departed to express their testamentary wishes in a form and manner that may or may not be legally sufficient to be accepted as the final will of the decedent. If you happened upon this article while conducting online legal research on the subject, I commend you to the prior publication. The earlier piece was intended for legal practitioners, complete with case and statutory citations and cross-references to scholarly sources upon which I relied at the time. Since publishing the original work, I have continued to be involved in cases with ever-evolving fact patterns of situations where proponents and opponents legally battle over the legal enforceability of documents which may or may not have been intended as testamentary dispositions, i.e., will documents seeking to dispose of one’s property at death.
May 22, 2023
Estates and Trusts
LGBTQ+ Home Care Law Set to Go Into Effect in New York Next Month
It is no surprise to LGBTQ+ individuals and their allies that nine out of ten of those who identify as LGBTQ+ fear discrimination in medical settings. According to Services and Advocacy for Gay, Lesbian, Bisexual, and Transgender Elders (SAGE), LGBTQ+ people are two times as likely to age alone and four times less likely to have children who might otherwise serve as caregivers and advocates. This means the LGBTQ+ population is even more vulnerable as they age. As a result, and at long last, Governor Hochul signed a law that is intended to address this discrimination related to the medical care received by the LGBTQ+ community in the home care and nursing home setting. Beginning next month, New York State will require that all home health aides, certified nurses’ aides, and personal care aides – essentially the backbone of a senior’s long-term care team– will receive training focused on providing care to patients of diverse sexual orientations, expressions, and gender identities. This ambitious and much-needed law includes several components that will be incorporated into the training program. Much of the training relates to the education of the caregivers to provide comprehensive explanations of various terms related to the LGBTQ+ community. It provides an understanding of why patients with diverse sexual orientations and gender identities or expressions may conceal their identities. The goal of the training is, of course, to incorporate the concerns of these patients and ensure that they receive “person” directed care and to address the unique healthcare needs of LGBTQ+ patients. In light of the nearly 400 anti-LGBTQ+ legislative actions pending in the states across the country, it’s heartening that New York is taking the lead to combat this discrimination, especially for the most vulnerable in the LGBTQ+ population.
May 15, 2023
Estates and Trusts
Charitable Remainder Trusts: A Way of Giving Back by Paying it Forward
Many of our clients look to explore the ways in which they can give back to their favorite charities. One of the avenues worth considering is using a charitable remainder trust (CRT). CRTs are an excellent way to support your favorite charities in the future while providing an income stream now for yourself and your heirs and reducing the estate tax burden to your heirs in the future. How Charitable Remainder Trusts Work A CRT is an estate planning document, similar to a trust, that you might create to manage your assets and avoid probate. To set up a CRT, you transfer the chosen asset(s) to the trust, which a trustee then manages. You can serve as the trustee of a CRT; you could also appoint your spouse, your child, or even the charity. The trustee is responsible for investing or managing the donated assets and distributing income to you and your other income beneficiaries for your lifetime or a specified period. At the end of the trust term, the remaining assets are transferred to the charitable organizations of your choice as a charitable contribution. Types of Charitable Remainder Trusts There are two primary types of CRTs: charitable remainder annuity trusts (CRATs) and charitable remainder unitrusts (CRUTs). A CRAT pays a fixed income stream based on the initial value of the trust assets, while a CRUT pays a variable income stream based on the value of the assets determined each year. Which type of trust you choose will depend upon your personal financial goals and circumstances. A CRAT may be a better option if you want a fixed income stream and are more concerned about the stability of that income. In comparison, a CRUT may be a better option if you wish to add assets over time, are more comfortable with fluctuations in income, and wish to potentially benefit from increases in the value of the trust assets over the trust term. Benefits of Charitable Remainder Trusts Clearly, one of the primary benefits of a CRT is that you can receive income from the trust while also benefiting your favorite charity. The reason why CRTs are particularly useful is because many of our clients have highly appreciated assets with a low-cost basis, such as stocks or real estate. Instead of selling those assets, paying capital gains taxes, and then donating what is left of the proceeds to the charity, a CRT allows you to donate the highly appreciated assets to the CRT and have the CRT sell the asset, thus avoiding the capital gains tax entirely. Moreover, you are entitled to take federal and possibly a state income tax deduction for making the charitable donation to a CRT. Additionally, CRTs can provide significant estate planning benefits. Because the assets in the trust are ultimately transferred to a charitable organization, they are removed from your estate, reducing estate taxes for your heirs. CRTs can be an excellent way to support a charity while also receiving financial benefits. If you are interested in setting up a CRT, it is important to work with a qualified estate planning attorney who can help you determine the best course of action for your individual circumstances.
May 12, 2023
Estates and Trusts
“de facto” Wills and the Harmless Error Rule – Part One
This is the first of a two-part article on “de facto” wills based in substantial part on a piece I previously published several years ago in the Virginia State Bar’s Trusts and Estates Section Newsletter, Vol. 22 No. 13. In part one, I explain the basics of the statutory Harmless Error Rule and how when timely seeking a court’s application of the Rule, an otherwise non-compliant, legally deficient will might nevertheless be deemed to be legally enforceable in certain circumstances. Is a document that is not valid will capable of being deemed a will – a “de facto” will, if you will? Yes, a document intended to be a will, but failing to satisfy all the statutory requirements for being automatically accepted as such, might nevertheless be capable of being deemed a will in appropriate circumstances. To understand what I mean by a “de facto” will, it is first necessary to appreciate what it takes to be a valid will. Not every state applies the same test for recognizing a valid or “self-proving” will, i.e., a document that is legally accepted as a will without the need for any additional evidence. If all the necessary signature attestation requirements have been followed (for instance, notarized signatures, witnesses’ signatures, etc.) -- what I like to refer to simply as all of the attestation “whistles and bells,” a document will be accepted officially without the need for anyone to testify or otherwise establish the specifics as to how it was prepared, who was present at the time, etc. The will, in effect, proves itself! Not every document intended as a will meets all the statutory requirements, however. Formerly, a document intended as a will without all the whistles and bells was simply rejected as if it had never been written. Nowadays, with the adoption of the so-called “Harmless Error Rule,” or, simply, “the Rule,” an otherwise legally deficient document determined to have been intended as a will (or an improperly carried out change to an otherwise proper will) may be upheld as a valid testamentary disposition in certain circumstances. In other words, even if you screw it up, legally speaking, the law now allows for certain screw-ups to be overlooked or overcome with sufficient evidence as to what you really meant to do. Section 64.2-404 calls upon a will proponent to establish by clear and convincing evidence that the decedent intended the document or writing as or to accomplish one of several possible outcomes: adding to, altering, or revoking an existing will; making a new will; or reviving a previously revoked will in whole or in part. Virginia Code Section 64.2-404, derived from Section 2-503 of the Uniform Probate Code (UPC), is Virginia’s enactment of the Harmless Error Rule. In effect, the Rule states that certain defects may be forgiven if sufficient proof can be shown at trial that the testator intended the faulty document to be the testator’s will. One seeking to have such a document upheld as a will, known as the “proponent” of the will, must present clear and convincing evidence to establish that the testator intended the document (or alteration) to effect a final testamentary disposition, that is to say, a transfer at death. A key word here is “final.” The actual statutory language allows a writing not executed with all the proper attestation whistles and bells to be admitted to probate as a will if it is supported by clear and convincing evidence of intentionality and finality. The purpose of the Rule is to allow a judge to excuse certain otherwise harmless errors in creating a will in much the same manner as has long been allowed for similar mistakes made with other important end-of-life documents such as with life insurance beneficiary designations, for example. Case studies and evidence considered during the development of the statutory Rule suggested that the remedial impact of the Rule would primarily apply in situations either where witness signatures were lacking or instances where the testator marks up an otherwise valid will (for example, inserting/adding a provision or crossing out one term or name and replacing or substituting another in its place). Let it be said here for emphasis -- one should not make such changes to a properly executed final will document. Don’t do it! As should be plain from context, doing so potentially invalidates the entire document. Minimally, it calls into question the finality of the document as a whole and raises questions as to the timing of the change, the capacity of the person at the time of making the change, and, absent proper witnessing, whether the change was made by the testator him- or herself (or perhaps with some form of “gun to the head” when doing so!). One of the key factors to be considered if a court is to be convinced that any missing whistle or bell is, in fact, harmless error is the extent to which the proponent can establish convincingly the circumstances at the time the testator created the less than perfect document or made any changes to an existing document. What about handwritten (or holographic) wills -- the exception to the exception? It is true that, at least in Virginia, a signed will prepared entirely in the handwriting of the testator is legally sufficient as a will, even without all the attestation whistles and bells. A fully handwritten will does not need to be witnessed or notarized to be valid and enforceable. Such an exception is still subject to burdens of proof imposed on the will’s proponent. For instance, a proponent of such a will faces the burden of establishing sufficiently that the handwriting and signature are that of the testator. In part 2, I will address Virginia’s non-uniform additions to the Harmless Error Rule (the signature requirement and one-year limitations period); what one might look for when trying to meet the heightened “clear and convincing” evidentiary burden. This work is intended for the non-lawyer wondering whether to involve a lawyer in the preparation of one’s will or a change to one previously made (you absolutely should!) and for family members or friends of departed loved ones who discover a document which you think might or could have been an attempt by the dearly departed to express their testamentary wishes in a form and manner that may or may not be legally sufficient to be accepted as the final will of the decedent. If you happened upon this article while conducting on-line legal research on the subject, I commend you to the prior publication. The earlier piece was intended for legal practitioners, complete with case and statutory citations and cross-references to scholarly sources upon which I relied at the time. Since publishing the original work, I have continued to be involved in cases with ever-evolving fact patterns of situations where proponents and opponents legally battle over the legal enforceability of documents which may or may not have been intended as testamentary dispositions, i.e., will documents seeking to dispose of one’s property at death.
April 27, 2023
Estates and Trusts
Can Your Spouse Disinherit You? How Marriage Protects the Family
It’s the stuff of low-budget movies. The grieving widow, dressed in black with her face veiled, sits in the attorney’s oak-paneled conference room for the reading of the will. Mystery surrounds the proceedings. Who among the family members present will inherit the patriarch’s vast estate? The gray-headed attorney breaks the will’s wax seal and begins to read. Dramatic music swells as he utters phrases like “being of sound mind,” “heirs of the body,” and “give, bequeath, and devise.” The widow’s gaze intensifies as the attorney comes to the words she has been waiting for: “And to my wife of many years, I leave . . . nothing.” Audible gasps are heard as the widow faints in despair and is carried to a nearby sofa. Had her years of dutiful service meant nothing to the man she loved? So much fiction. In the real world, there is no reading of the will (the beneficiaries will likely receive a copy by email). Women seldom wear veils. And a would-be disinherited spouse has options. One of the benefits of marriage is protection from disinheritance. In fact, one of the benefits of marriage is protection from disinheritance. In Maryland, a surviving spouse can “elect against the will” by taking a “spousal share.” This usually amounts to one-half or one-third of the estate, depending on whether there are children. But conniving spouses were known to game the system. Some would transfer their property into a trust or name someone other than their spouse as the beneficiary on assets like retirement accounts and life insurance, which transfer outside the will. Maneuvers such as these placed the assets beyond the reach of the spousal share, and surprisingly enough, they were perfectly legal. To protect the surviving spouse from such attempts at disinheritance, Maryland has expanded the pool of assets that are subject to the elective share. A surviving spouse can now take a share of the “augmented estate.” This includes both the “probate” assets of the estate and any “non-probate” assets, which transfer outside the will. Probate and Non-probate Assets Probate assets include any property a deceased person owned in his or her name alone, such as a bank account, house, or investment portfolio. This property is controlled by the person’s will and generally goes to the beneficiaries named in the document. Non-probate assets, on the other hand, include things like retirement accounts and life insurance policies, which generally name a beneficiary directly on the asset. The beneficiary will receive the account or death benefit regardless of what the will might say. Non-probate assets also include most jointly owned property—whether real estate or bank accounts—which passes outside the will to the surviving owner. Assets the late spouse put into a trust are non-probate as well, as are any accounts that name a “transfer on death” or “pay on death” beneficiary. Before Maryland changed its laws protecting the surviving spouse from disinheritance, he or she was generally limited to a portion of the probate assets when taking an elective share. By adding the non-probate assets to the mix under the augmented estate, the law allows for a larger distribution to the surviving spouse when he or she would otherwise receive little or nothing under the will. This change to the augmented estate would seem to be a vast improvement over the older setup. There can be times, however, when disinheriting a spouse is completely appropriate. For example, someone who has children from a prior marriage might want them to inherit their entire estate, rather than their new spouse. In this circumstance, a prenuptial agreement can help ensure that the prior children receive their intended inheritance. The rules surrounding the augmented estate are complex and include many exceptions. Whether you want to leave your entire estate to your spouse or not, consulting with an Estates & Trusts attorney is an essential first step.
April 24, 2023
Estates and Trusts
Estate Planning for the College-bound Kiddo
It is college decision time for so many families and their soon-to-be adult children. Most are fretting over the cost of college, what their child will study, and how far from home they will be in six short months. Between those worries, the endless Amazon orders, and trips to Bed Bath and Beyond, is that their college-age kids need a few simple estate-planning documents in place before they leave. Estate planning documents for an 18-year-old? Yes! The two most important documents that your now-adult child needs are a Health Directive and a Financial Power of Attorney, particularly when they are away from home. A health care directive in New York is referred to as a Health Care Proxy. A Health Care Proxy is an “advanced directive” that allows someone else to make health care decisions on your behalf. Most assume that this document is only needed for an older person, but that could not be further from the truth. A Health Care Proxy authorizes you to make decisions for your adult child in the case of a medical emergency when they are away. Most importantly, a Proxy can provide you access to your adult child’s health records and information. Access to your adult child’s health information can be vital to ensure that they are receiving proper care, particularly in light of the collective mental health issues that befall so many of our college-bound children. Every Health Care Proxy should contain a privacy waiver, referred to as a HIPPA waiver, that permits your adult child’s healthcare providers to share your adult child’s private health information with you; without this waiver, doctors and nurses cannot provide you with any information regarding your child’s health including, diagnoses, blood test results, treatment plans, etc. In addition to managing your adult child’s health care concerns, a second advanced directive, commonly referred to as a Financial Power of Attorney, will allow you to assist your child with his finances. Once your child turns 18, they are an adult, and you no longer have access to their child’s bank accounts, their school records, school loans, nor the ability to sign on their behalf. Many parents assume that because they are paying the tuition bill for their child’s college, for example, that they would automatically have access to all of their school information, including transcripts, and that is simply not the case. The power of attorney appoints you as your adult child’s agent to be able to access this information at any time, sign documents on their behalf, open and close bank accounts and renegotiate school loans. While 18 may be the legal age of adulthood, often the financial responsibilities associated with adulthood are best managed with a parent’s assistance, and the Power of Attorney document will provide you the authorization you will need to help your adult child. Certainly, we all wish that there was a guidebook available to help us send our children off safely to their dorms and embark on their new life of independence. In the meantime, having these two simple documents in place, you will be able to provide the assistance and the guidance that your adult child may need when they first leave home.
April 4, 2023
Estates and Trusts
Three Reasons a Lawyer Should Settle Your Estate
When a loved one has died, the shock and sorrow of their loss may quickly lead to another emotional jolt—the prospect of having to settle their estate. Being named personal representative (executor) under someone’s will is both an honor and a burden. The process usually takes several months. There will likely be financial accounts to marshal, real estate to deal with, bills and taxes to pay, and probate filings to prepare—all at an emotionally difficult time. For many personal representatives, their first question is “How can I get out of this?” The good news is that a probate attorney can provide the necessary support and expertise to ensure that the estate is managed efficiently. In fact, an experienced lawyer can handle most of the tasks the personal representative would otherwise be responsible for. After passing these administrative duties over a member of the bar, the personal representative may well feel that a great burden has been lifted from their shoulders. When it comes time to have your own will prepared, you can name a probate attorney as your personal representative and spare your loved ones the burden of settling your estate. Especially for those of us in the LGBTQ community, this can be an attractive option for three important reasons. A lawyer can help ensure that your wishes are respected. First, in addition to providing legal expertise, a lawyer can help ensure that your wishes are respected. Settling an estate often triggers disputes among family members. This can be especially true in families with strained relations. Animosity might stem from a parent or other relative’s homophobia, or from simple family dysfunction. Either way, a lawyer can help prevent disputes by acting as a buffer between members of your family and other beneficiaries. And as a point of contact for the estate, the attorney can explain the administration process and how the assets will be distributed—all without the emotional baggage that frequently exists between blood relations. The result is often a smoother and less contentious administration process than when a family member serves as personal representative. Second, naming a probate lawyer as your personal representative can also save time and reduce stress for your loved ones. Estate administration can be a long and burdensome process, and a non-lawyer will likely find it physically and emotionally draining. A lawyer can help streamline the process and handle the difficult legal aspects of the job, allowing your loved ones to focus on grieving and self-care. Most people who settle an estate do so only once in their life. While learning on the job, they may naturally make mistakes and missteps along the way. By contrast, a probate lawyer will be intimately familiar with every aspect of serving as personal representative. With the help of a team of legal assistants and paralegals, they can streamline the process and handle any challenges that may arise. Third, a lawyer can help avoid costly mistakes. Estate administration involves many important decisions, such as deciding what assets to liquidate, whether to improve a house before selling it, and choosing a fiscal tax year. At each step along the way, making the wrong choice can have significant financial consequences. By drawing on years of experience, a lawyer can help prevent expensive misjudgments and ensure that your estate is settled in the most economical manner possible. Settling an estate can be a complicated and emotionally challenging process. Fortunately, there is a way out. Put an experienced probate lawyer in charge and make life easier for the people you care about most. Contact an Estates & Trusts attorney today to get started.
March 2, 2023
Estates and Trusts
Case Study on Estate Tax Reduction Strategies: Business and Investment
In the following case study for business owners, Offit Kurman attorneys Herbert Fineburg and Charles “Max” McCauley illustrate an estate and gift planning strategy for removing your business from your taxable federal estate. This tax planning also works for your stock portfolio. The presentation was delivered at the Philadelphia chapter of The Exit Planning Exchange’s monthly conference.
October 14, 2022
Estates and Trusts
Empower Your Loved Ones with a ‘Power of Appointment’
Preparing an estate plan means having a say in what happens to your wealth after you are gone. Through a Last Will and Testament, you can name the important people in your life who will inherit your assets. You can also specify whether they should receive these assets immediately upon your death or over time through a trust. Looking even farther ahead, you can give your loved ones a “power of appointment,” enabling them to say where any remaining trust assets should go when they themselves are out of the picture. With a power of appointment at their disposal, your loved ones can direct their inheritance to subsequent generations wisely and effectively. Trusts — A Primer First, a little explanation. A trust is an arrangement under which money or other property is managed by one person, called the “trustee,” for the benefit of another person, called the “beneficiary.” Trusts can be especially useful if your loved ones include a young person, someone with special needs, or anyone who has trouble managing money. In placing their inheritance into a trust, you create a gatekeeper—the trustee. This person is a fiduciary who manages the trust assets and makes distributions only in your beneficiary’s best interests. With a power of appointment at their disposal, your loved ones can direct their inheritance to subsequent generations wisely and effectively. Some distributions could be discretionary. For example, the trustee could be authorized to cover expenses related to your loved one’s health, education, and support as the trustee deems advisable. This authority could be broadly defined to include things like paying for a wedding, buying a house, purchasing a business, or entering a trade or profession. Other distributions from the trust could be mandatory. A trust for a young person might say the beneficiary is entitled to withdraw half of the principal upon reaching the age of 25 and the balance when he or she turns 30. Some people like to include provisions that encourage the beneficiary to achieve certain life goals. The trust could state, for example, that the beneficiary is to receive a large distribution upon graduating from college. Trusts can also discourage harmful behavior by pausing distributions if the beneficiary falls prey to addiction or alcoholism—apart from payments for rehabilitative treatment. By including a “spendthrift clause” in the trust, you can prevent a creditor from placing on lien on the principal to satisfy your child’s unpaid debts. If your children are adopted, placing their inheritance into a trust can ward off possible intrusions from their birth family. Unscrupulous “friends” seeking a loan can also be kept at bay. Powers of Appointment In addition to protecting a loved one’s inheritance, a trust can say what happens upon the death of the beneficiary. Many trusts simply state that any remaining trust property goes to the beneficiary’s children in equal shares. With a power of appointment, however, you can give the beneficiary greater flexibility and control. A power of appointment is the legal right to designate the new owner of property. How can this be useful? Consider a beneficiary who has two children, one with special needs. The beneficiary could exercise the power by appointing half of the trust property in a special-needs trust for the disabled child and half to the other child, outright and free of any trust. In different circumstances, the beneficiary could effectively disinherit an estranged child. Or multiple children could be left different amounts of the trust property, based on their financial needs or how close they have been to the beneficiary. Under a “special power of appointment,” the potential appointees could be limited to a select group of people, such as the beneficiary’s spouse and children. Or the power could be “general,” meaning there are no restrictions on the beneficiary’s power to appoint (think unmarried partners, friends, or charities). Either way, the power could be exercised under the beneficiary’s own Will, which should specifically reference the power of appointment and name the new owners. A power of appointment has been called estate planning’s secret weapon. Consider including one in a trust for your loved ones. It will help them adjust your estate plan to their circumstances long after you are gone. To get started, call an Estates & Trusts lawyer for help.
October 11, 2022
Estates and Trusts
Historic Increase to Your Lifetime Exclusion from Federal Estate Taxes for 2023
Ironically, there is good news for some families due to rising inflation for gift and estate planning purposes. As a result of inflation adjustments built into federal estate tax laws, your lifetime exclusion from federal estate taxes is set to rise from $12.06 million per person in 2022 to almost $13 million in 2023. This is a total exclusion amount of almost $26 million per married couple [The inheritance tax rules, if any, for the state where you reside vary from state to state and are not discussed in this article]. Specifically, according to recent reports, in 2023 the estimated inflation adjustment will be $860,000, resulting in an aggregate exclusion amount of almost $13 million per person ($12,060,000 plus $860,000 = $12,920,000). This is a remarkable increase when compared to the 2022 inflation adjustment increase of $360,000, at that time the largest on record. By comparison, the inflation adjustment for 2016 was a mere $20,000. Additionally, the annual gift tax exclusion is set to rise from $16,000 per donee in 2022 to $17,000 per donee in 2023. This means you can gift up to $17,000 to an unlimited number of individual recipients without incurring gift tax consequences or reducing your estate tax lifetime exclusion. High-net-worth individuals will benefit from the inflation adjustments because they can move significant assets out of their taxable estates before the scheduled reduction of the exclusion amount on January 1, 2026, when the exclusion amount will drop by a staggering 50%. For example, in 2026, a married couple will go from being able to gift nearly $26 million free of federal estate tax to only being able to gift $12 million (adjusted for inflation) free of federal estate tax. Acting now to take advantage of the historically high exemption could save your family millions in federal estate taxes. Note: If you die before 2026, under the portability rules, your surviving spouse can carry over your unused exclusion to the surviving spouse’s federal estate tax return; otherwise, your exclusion is permanently lost. An individual who wants to take advantage of the current tax laws before they expire may loan their stock portfolio to an intentionally defective grantor trust for the benefit of the individual’s spouse or children in exchange for a promissory note that can be forgiven in 2025 — the eve of the tax law changes — using the exclusion amount before it disappears. Couples will typically consider a trust for a spouse to preserve access to the trust portfolio during the spouse’s lifetime as the trust beneficiary. In conclusion, if you expect that your taxable federal estate will be more than $6 million (adjusted for inflation) for a single individual or $12 million (adjusted for inflation) for a married couple, you should consider the federal estate tax benefits to your heirs by engaging in estate and gift tax planning. Please get in touch with Danielle Friedman or Herb Fineburg with any questions or additional estate planning techniques to reduce your taxable estate and preserve your lifetime exclusion.
October 10, 2022
Estates and Trusts
Is Same-Sex Marriage in Jeopardy?
This article has been updated. The Supreme Court’s decision overturning Roe v. Wade has sent abortion-rights advocates reeling. In a 6–3 opinion, the Court ended a constitutional right that was the law of the land for nearly half a century. The ruling could put other constitutional rights in jeopardy as well. Many in the LGBTQ community are asking, “Is same-sex marriage next?” Like the right to abortion, the right to same-sex marriage hinges on the Due Process clause of the Constitution’s 14th Amendment. This amendment was adopted after the Civil War as part of Reconstruction. Over the years, the Supreme Court has interpreted the amendment to guarantee the right to use birth control (Griswold v. Connecticut, 1965), to be intimate with someone of the same sex (Lawrence v. Texas, 2003), and to marry a person of one’s choosing (Obergefell v. Hodges, 2015). Writing for the majority in Dobbs v. Jackson, Justice Samuel Alito doesn’t mince words. He argues that Roe v. Wade was wrongly decided because the Constitution doesn’t explicitly mention abortion, and because a woman’s right to end a pregnancy isn’t “deeply rooted in this nation’s history.” This argument is misguided, if only because it runs afoul of stare decisis, the legal doctrine that obliges a court of law to follow prior court decisions when making a ruling on a similar case. The reasoning behind Justice Alito’s opinion may nevertheless form a road map for overturning same-sex marriage and other 14th Amendment rights. For those of us in the LGBTQ community, the question is what we can do to protect ourselves and our hard-won right to marriage. Those of us in same-sex relationships should prepare for the unexpected by drawing up estate plans. It is important to remember that a Supreme Court decision overturning Obergefell would not make same-sex marriage illegal. It would simply leave it to states legislatures to determine whether to allow gay marriages in their state. The Maryland Legislature has already done this. In 2012, it passed a bill legalizing same-sex marriage in the Free State. The law took effect on January 1, 2013, after winning approval from a majority of Marylanders in a statewide ballot referendum. Maryland’s same-sex couples who are already married can therefore take comfort. In the wake of a Supreme Court decision overturning Obergefell, our unions should survive, at least at the state level. But continued federal recognition of gay marriage would be less certain, and a national patchwork of laws and policies might necessarily develop. A marriage recognized in Maryland could suddenly be considered invalid in other states, and by the federal government. That could mean the end of important federal benefits, such increased Social Security payments to a surviving spouse. With that in mind, many same-sex couples are rushing to tie the knot. This is especially true of couples whose marriage plans were delayed by the Covid-19 pandemic. Whether we are disposed toward marriage or not, those of us in same-sex relationships should prepare for the unexpected by drawing up estate plans. Most plans include a will, financial power of attorney, and advance medical directive for each partner. These essential documents will authorize your partner or someone else you trust to manage your finances and health care if you ever become incapacitated. They will also help to ensure the efficient transfer of your assets upon your death. Marriage confers significant legal benefits, but a marriage license alone isn’t enough. No matter what the future holds for same-sex unions, an estate plan will help protect your relationship from some of life’s most significant uncertainties.
June 21, 2022
Estates and Trusts
Leaving Little to Chance — A Trust for Your Financial Legacy
Receiving an inheritance can seem like winning the lottery. A financial windfall lands on your doorstep and promises to change your life for the better. But an inheritance and lottery winnings differ in many important ways, starting with the likelihood of receiving one. You are much more likely to receive an inheritance than win the lottery, especially if you are already well off. About 20 percent of Americans inherit money at some point in their lives, but that number jumps to almost 40 percent for people in more affluent households. Lottery winners, on the other hand, tend to be less well off, and they often have trouble managing their newfound wealth. They may also view their windfall differently. Someone who wins the lottery feels like a “winner” and may show little restraint in spending the prize money. When a sprawling house, luxury cars, and European vacations are all within easy reach, there may seem to be little reason to hold back. Someone who receives an inheritance is a different kind of winner—a person who has earned enough love and devotion to be remembered in someone’s will. Instead of being called a winner, the recipient is a “legatee.” (The word comes from the legal term for an inheritance, a “legacy.”) Whether the benefactor is a parent or grandparent, a partner or spouse, the recipient may well view the gift as that person’s personal legacy. It’s not a prize from government coffers but wealth passed down in love after a lifetime of hard work and careful investing. Viewed in this light, an inheritance is not a license to become a spendthrift. It’s a legacy that carries the implicit obligation to husband the assets in a way that honors the donor and perhaps considers the next generation. An inheritance carries the implicit obligation to honor the donor and consider the next generation. The government has recognized this difference by making lottery winnings taxable to the recipient while inherited assets generally are not. (In Maryland, one exception is the 10% inheritance tax, which applies to a bequest left to anyone who is not a close family member, such as an unmarried partner, niece or nephew, or friend.) One way in which lottery winnings and inherited wealth are the same is that they are both easy to squander. A disproportionate number of lottery winners declare bankruptcy within five years. For those who inherit, the money that had been earned through hard work may be lost through fast living. This is especially true of legacies left to a young person or someone with money-management problems. You can’t guarantee that someone will win the lottery, but you can leave them a legacy designed to last. Speak with an estates and trusts attorney about preparing a will that provides for the people you care about. If they include a young person or someone who struggles with being responsible, ask about including a “spendthrift trust” in your will. This kind of trust can protect your bequest by putting someone responsible, called the “trustee,” in charge of administering the assets. As the gatekeeper, the trustee can ensure that the money held in trust is spent for worthwhile purposes. The principal may also be shielded from your loved one’s creditors. Take care of the people you care about by having your will prepared by an estates and trusts lawyer who understands your needs on a personal level.
April 26, 2022
