Capital District - NY Estate & Elder Law

Just What Is a Power of Attorney?

 

While most people are familiar with a will in an estate plan, a power of attorney draws a lot of misconceptions, according to the article in A Place For Mom “5 Misconceptions About a Power of Attorney.”

Misconception #1–You can sign a power of attorney, even if you are legally incompetent.

Not true. This is one of the most common misconceptions. In fact, if you have a document from a medical doctor that says a person is not competent, that person is no longer able to sign any legal documents. Many people generally think about what they need to do, i.e., accessing a bank account when an elderly parent can no longer do so.  However, if Dad lost his legal capacity just before a power of attorney or living trust was signed, that’s no longer an option. You’ll have to go through a guardianship or conservatorship proceeding through the court to have any control over Dad’s assets.

Misconception #2—You can find a power of attorney document online.

You might find such a document online but it most likely will not be suited to your circumstances. You need to have a power of attorney custom drafted, so it is legal in your state and addresses your family’s needs. Many online documents end up being useless. It’s a big risk to take.

Misconception #3—A power of attorney lets the agent do whatever they want.

The agent under a power of attorney has a legal and fiduciary duty to make decisions in the best interests of the person who named them as power of attorney. They have not been handed a free pass; on the contrary, they have a big responsibility to do the right thing.

Misconception #4—There is one power of attorney.

This is why an estate planning attorney is needed for the power of attorney. There are two main types: a general power of attorney and a limited or special power of attorney. They are named correctly: a general power of attorney allows for buying or selling property or managing assets. A limited or special power of attorney refers to a specific transaction or task. Which one you need, depends on the laws of your state and the circumstances.

Misconception #5—A power of attorney survives death.

All powers of attorney terminate on death. Once a person has passed, so has the authority for their agent to act on their behalf. A durable power of attorney allows the agent to act, in the event of incapacity but not death.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include a POA.

Resource: A Place For Mom (July 11, 2018) “5 Misconceptions About a Power of Attorney”

 

Children Can Contest Glen Campbell’s Will

 

Three of Glen Campbell’s children, who were intentionally left out of his will, have been given the right to contest the will by a judge, according to Wealth Management.com in “Glen Campbell’s Kids Come After the Rhinestone Cowboy’s Estate.”

Campbell, who recently passed away, left two wills from 2001 and 2006. The 2006 will names Campbell’s fourth wife Kimberly, who is the executor of the estate, and five of Campbell’s other children as his beneficiaries. Campbell went public with his Alzheimer’s diagnosis in 2011.  However, it’s not known how far back his illness began. The legal burden facing his children: prove that he lacked the needed capacity to execute both wills.

If the will is deemed invalid because of lack of capacity or undue influence, the immediately preceding will is resurrected, said one estate planning attorney who is not affiliated with the case. The previous will probably disinherited them also, which is why they must prove the invalidity of both wills.

Kimberly has told a local newspaper that she would not challenge the kid’s right to contest the wills and the judge’s decision noted the lack of opposition. She has also filed a claim seeking reimbursement from the estate for more than $500,000 to cover the cost of his medical care.

It was also reported that one of his daughters, Debbie Campbell-Cloyd, has filed for a complete accounting of all payments made by the estate, as well as payments to and from a previously undisclosed bank account. She alleges that royalties that should have been deposited into an account controlled by Campbell’s estate, were instead deposited into this account, which is now controlled by Kimberly. The singer’s former manager has power of attorney over the account.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include a blended family.

Resource: Wealth Management.com (Aug. 2, 2018) “Glen Campbell’s Kids Come After the Rhinestone Cowboy’s Estate”

 

 

Anthony Bourdain’s Estate Plan Goes Public

 

There is considerable interest in the estate of celebrity Anthony Bourdain and it is getting even more interesting, according to Forbes in “How Anthony Bourdain’s Estate Plan Reflected the Two Most Important Parts of His Life.”

The reports that his net worth was only $1.2 million grabbed a lot of attention. It shouldn’t have surprised anyone, because Bourdain regularly said that until his 40s, he lived paycheck-to-paycheck. What’s really interesting from the estate planning perspective, is how he expressed his wishes in his will. The details became public, because it was probated.

Bourdain made provisions for his only child, who will inherit the bulk of his wealth. He also seemed to have been influenced by the enormous amount of travel his career required. What is interesting is that he passed his frequent flyer miles to his estranged wife “to dispose of, in accordance to what she believes to be his wishes.”

Those who travel often and have large frequent flier miles, award points and perks, often overlook them as part of their estate plan. They are often valuable and should be addressed in estate planning.

However, passing along airline points is not as easy as filling out a beneficiary form. Each airline has their own policies so you may have to fill out a form for each one. Loyalty programs are basically contracts with a company and you’ll need to read the fine print, since not all airlines allow their points to be assigned. The selection of beneficiaries also may be limited by the airline.

Bourdain’s very public profile makes it unlikely any airline would refuse to honor his request to transfer those points. Because he carefully documented his desire to leave his frequent flier miles to a specific beneficiary, it’s even more likely his points will transfer without too much fuss.

Reference: Forbes (July 6, 2018) , “How Anthony Bourdain’s Estate Plan Reflected The Two Most Important Parts of His Life.”

 

Buzz Aldrin Fights Family over Charges of Dementia

 

Buzz Aldrin, the 88-year-old astronaut, who was second to walk on the moon, has filed a lawsuit accusing two of his own children and his former manager of taking advantage of their roles in managing his assets, according to MarketWatch in “Buzz Aldrin is fighting his family’s claim of dementia—revocable trusts can be flawed.”

Aldrin says the Buzz Aldrin Space Foundation is using its resources against his wishes, by funding “future educational endeavors,” instead of current ones.

The lawsuit claims that the family and former manager have forbidden him to marry someone.  It also contends that they are moving money from his accounts without his consent or knowledge, in some cases moving money to his company, Buzz Aldrin Enterprises. His children said in a statement that the allegations are a result of the increased confusion and memory loss he has experienced in recent years. They say this can be refuted by witnesses and bank or business records. They asked a Florida judge to appoint them as co-guardians because of his reported decline, so they can make decisions on his behalf.

Aldrin has a revocable trust with his son Andrew named as a trustee, which states that Andrew must give written permission before any changes can be made. Aldrin was scheduled to take a competency test in June, although the results have not been released yet.

Revocable trusts are great tools to avoid probate and allow the owner to remain in control, while they are alive. They can also be used to state who will take care of your children.  They provide flexibility for your wishes after death.  However, they are not always the best protection.

It works well, if a family sits down and has a conversation, while the person is still fully functioning. This allows them to be part of the decision-making process.

Reference: MarketWatch (July 2, 2018), “Buzz Aldrin is fighting his family’s claim of dementia—revocable trusts can be flawed.”

 

Estate Planning? Consider Family Dynamics

 

A group of professionals including estate planning attorneys, trust officers, accountants, charitable giving professionals, insurance advisors, elder law attorneys and nonprofit advisors recently attended a conference on estate planning and a survey by TD Wealth revealed that the major professional concern that kept them awake at night was family conflict, according to WealthManagement.com, in “Family Conflict Tops the List of Estate Planning Challenges in 2018.”

The article says that 44% of all planning professions consider family conflict more of a threat to estate planning than tax reform (25%) and market volatility (12%). That’s no small number and one that should be considered, while creating or revising an estate plan.

One reason for these results is that the response to the Tax Cuts and Jobs Act has received mixed reactions from estate planning attorneys and financial professionals. Some believe it may help their clients, while about a third of those queried in the TD Wealth survey aren’t sure. Only 16% feel the tax reform will have a negative impact on their clients.

Almost 75% of those taking part in the survey felt that clients who do benefit, will do so because of wealth transfer tax changes. About a third expect that clients will see the biggest benefits from new estate tax laws, followed closely by generation-skipping tax and gift tax updates.

What is the biggest challenge that people face when addressing their estate plan, according to this survey? It is naming guardians for minor children and beneficiary designations.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include dealing with potential family conflicts.

Reference: WealthManagement.com (March 28, 2018) “Family Conflict Tops the List of Estate Planning Challenges in 2018”

 

 

Revisiting Estate Plan a Good Idea … Especially Now

 

If you have not already reviewed your estate plan and taken the new tax laws into consideration, now is the time to do so, according to Reuter’s article “Your estate plan needs an update even if it is new.” Many of the provisions end in 2026. Unless you can predict with great accuracy when you will pass, you need to update your estate plan.

Even though the exemption for the federal estate tax has doubled to $22 million for couples, one of the important parts of estate planning has to do with your financial well-being, while you are alive: power of attorney forms and healthcare proxies, in case you are unable to make decisions on your own.

You also should make sure that your beneficiary designations are up-to-date, especially on life insurance policies and 401(k)s from previous employers.

The central focus of estate planning is keeping control over your assets, even after you die. You might want your responsible younger daughter to be in charge of your estate and not your older son. You may also want to skip a generation and ensure that your wealth passes to grandchildren and not your children at all.

If your family includes a special needs individual, you’ll want to make sure you have made provisions for their future with a Special Needs Trust (SNT).

Many families who find themselves dealing with Alzheimer’s disease, drug or alcohol addiction or troubled marriages, use trusts in their estate planning to protect their loved ones and control the distribution of assets.

Trusts are also used for families who wish to keep their assets private and out of probate, where information about the family’s assets are public documents. Property that is not jointly owned or set to transfer directly to a beneficiary, can end up being part of the probate process.

Finally, even with the doubling of the estate tax limit, charitable giving still has a role to play in estate planning. By leaving a substantial IRA to charity through a trust, you can avoid the taxes heirs would pay when they liquidate the account. You can also give appreciated stock to a charity through a donor advised fund and bypass capital gains taxes.

An estate planning attorney can advise you in taking a fresh look at your estate plan and making any adjustments necessary to deal with the new tax laws.

Reference: Reuters (Jan. 18, 2018) “Your estate plan needs an update, even if it is new”

 

Money Manager Sued over Presley Trust

 

When Elvis Presley passed away, his assets were left in trust for the benefit of his daughter, Lisa Marie Presley. She is claiming in a lawsuit that the trust fund is depleted and she blames her former money manager, according to the Daily Mail in "Lisa Marie Presley claims her ex-money manager lost $100 million trust fund left to her by Elvis with 'reckless and negligent' investments while paying himself a salary of $700,000."

According to the lawsuit, the money manager decided to sell 85% of the stock of Elvis Presley Enterprises in 2005, in exchange for $40 million in cash and $25 million in holding company stock that owned American Idol. When the trust did not generate enough money to fund her normal lifestyle, Presley claims the money manager did not tell her.

In 2014, the American Idol Company declared bankruptcy and the stock became worthless as well. Presley now claims the trust fund has only $14,000 and that she has debts totaling $16 million. On top of that, she is currently undergoing a divorce from her fourth husband and he is asking for $263,000 in annual alimony.

The money manager has filed a countersuit and claims he is owed money.

Reference: Daily Mail (June 19, 2018) "Lisa Marie Presley claims her ex-money manager lost $100 million trust fund left to her by Elvis with 'reckless and negligent' investments while paying himself a salary of $700,000."

 

Michael Jackson Estate Files Another Lawsuit

 

The Walt Disney Company is being sued by the Michael Jackson estate, over a documentary that includes footage of his two children, plus short clips of two of his songs. Disney claims it did not need permission because it is a documentary, according to TMZ in "Michael Jackson Estate Sues The Walt Disney Co. You've Got Balls For Exploiting MJ's Kids!!"

The estate does have a duty to protect any copyrights entrusted to it but is has filed many lawsuits over the years and remains in litigation. As a general rule, if someone were to make a movie and use an entire Michael Jackson song in it, then the estate would need to file a lawsuit, if the song had been used without permission. However, in this case the estate might be a little overzealous.

Copyright does allow for the use of material without permission, if that use falls under the fair use doctrine. Doctrine normally does allow for short clips of material to be used and more material can be used, if it is done for educational purposes.

Reference: TMZ (May 30, 2018) "Michael Jackson Estate Sues The Walt Disney Co. You've Got Balls For Exploiting MJ's Kids!!"

 

Scammers Can Focus on ‘Inheritance’

 

If you should inherit money from a long, lost relative, someone administering the estate will contact heirs and let you know. This always comes as a very welcome surprise for the heirs. However, this rare occurrence is also the subject of a very common scam that might be increasing, according to the Gazette Extra in "Police warn of IRS, inheritance scams."

The scam is not a sophisticated one. It usually consists of someone receiving a letter in the mail informing them of an inheritance, but with a catch. To make sure the person receiving the letter is the appropriate heir, the “heir” is required to provide some personal details and send cash back to help facilitate the process.

This should raise alarm bells, but people want the inheritance so badly to be legitimate, that they are often taken in by the scam. They not only lose the cash they sent, but they are often then the victims of identity theft. How? It is because they have given the scammers too many personal details.

A real estate attorney might someday contact you about an inheritance. That attorney will never ask you for money up front to tell you about any inheritance that you might receive. If you receive word you have an inheritance coming, don’t send the messenger any money. Contact the court and find out for sure.

Reference: Gazette Extra (April 19, 2018) "Police warn of IRS, inheritance scams."

 

Fight over James Brown's Estate Fight Goes On

 

Soul singer James Brown passed away in 2006, leaving millions to poor children in Georgia and South Carolina. However, none of the money has been given to the children because the estate is bogged down in numerous lawsuits, according to The New York Times in "Why Is James Brown's Estate Still Unsettled? Ask the Lawyers."

The main source of the dispute appears to be a family feud with Brown's children and grandchildren on one side and his widow, who is the estate administrator, on the other side. Numerous lawsuits have been filed.

In perhaps the biggest lawsuit, the children and grandchildren allege that the widow has cut inappropriate side deals for the copyrights to Brown's music. These copyrights are where the bulk of the estate's value likely is found. They also allege in another lawsuit that the widow was not even married to Brown, because she was allegedly also married to another man.

The children remain without the money. It is unlikely that the dispute will be settled soon.

Reference: New York Times (Feb. 4, 2018) "Why Is James Brown's Estate Still Unsettled? Ask the Lawyers."