RJG Legal

The Sumner Redstone Saga Inspires HBO Series

“Many of us have read the titillating and tragic story of Sumner Redstone, the former executive chairman of Viacom, and the litigious financial power struggle that has embroiled his family.”

HBO says that the Sumner Redstone saga was a key influence on its series Succession. That show involves money, a media mogul, a conniving lover and children trying to get control of the family fortune. This is a scenario that plays out in real life all too often. A proper Life-Plan for your estate planning is essential to combat these potentially devastating situations.

Forbes’s recent article, “What 'Succession' And Sumner Redstone Can Teach Us About Planning Ahead For Senior Care,” says that many of us won’t need to concern ourselves with a multi-billion-dollar empire, so our family struggles may look fairly mundane in comparison. However, disagreements over money can and frequently do keep families from making the right decisions about elder care.

A family’s financial resources—or lack thereof—may determine the options available and the type of long-term care a senior will ultimately receive. The big surprise for many retirees is that Medicare doesn’t usually pay for long-term care services. This means that nursing home expenses, which run more than $80,000 a year on average, must be paid in some other way. With most people preferring to age in place, in-home care may be the best option.

The tough news for many who aren’t rich enough to afford the skyrocketing cost of long-term care, is that they don’t qualify for Medicaid either. If you’re one of the “in-betweeners,” you’ll need to be resourceful and there’s a lot to learn.

Baby Boomers are turning 65 at a rate of 10,000 people a day, so it might be time to plan for what comes next. Roughly 70% of Americans over age 65 will need some form of long-term care during their lifetime. If you don’t make plans, you and your family will have to prepare on the fly, when a crisis happens. Let’s discuss some of the things you’ll want to learn about:

Medicare vs. Medicaid. You’re not the only one to get these two programs mixed up. Medicare is a federally-funded insurance program for people aged 65 and over (as well as for those under 65 with certain disabilities, regardless of income). Medicaid is funded jointly by states and the federal government. It is also the largest funding source for long-term care in nursing homes. Medicaid is for people with low incomes, who typically don’t have more than $2,000 in assets. There are specific eligibility rules for each state, so plan ahead with an elder law attorney.

Long-Term Care Insurance. Long-term care insurance is a type of private insurance that gives you limited coverage (often after an initial waiting period) for long-term care. The cost varies, based on the type of plan, the senior’s age, and his or her health status.

Veteran’s Benefits. The Department of Veteran’s Affairs has long-term care benefits for eligible veterans, who’re either homebound or need assistance with their activities of daily living. Although there’s a lot of bureaucratic red tape to apply for veteran’s benefits, it can really be worth it.

Take the time now to get a feel for what’s covered by insurance, how much money—if any—your parents have saved and if they have long-term care insurance or veteran’s benefits.

Reference: Forbes (September 27, 2018) “What 'Succession' And Sumner Redstone Can Teach Us About Planning Ahead For Senior Care”

Estate Planning Involves Organization

“One of the greatest “gifts” someone can forward to their loved ones is an estate plan and detailed insurance record keeping.”

A necessary component of estate planning is organizing your records. This is because when you die, your family will have to locate vital information and companies to take actions on your holdings. The New-Enterprise’s recent article, “Relieve your loved ones of a huge burden by being proactive, and organized,” helps us learn how to get a person’s life in order for a spouse or family to act, when the time comes.

Keep your insurance policies (and a record of them) in at least two places, where they’re safe and easily accessible. That will reduce any delays in processing the life insurance. However, you shouldn’t keep life insurance policies in a safe deposit box because it’s required to be sealed temporarily upon the death of the owner. That will create a delay in the settlement of the proceeds. Here’s a list of the information to keep. For every policy, list:

• The name of the issuing insurance company;
• The address of the issuing company;
• The name and U.S. headquarters of the group, if the issuing company is part of a group of companies;
• The policy number;
• The date the policy was issued;
• The amount of the death benefit;
• The contact info of the agent/broker who sold you the policy;
• The type of life insurance policy issued; and
• Where the original life insurance policy is located.

In addition, set out these directions on how to file a claim, when the time comes:

• Obtain multiple copies of the death certificate;
• Contact the insurance agent or the company to complete the necessary forms; and
• Submit the policy claim along with a certified copy of the death certificate.

It doesn’t usually take very long for the settlement to be issued, once you’ve submitted the claim. You’ll normally be able to take the insurance proceed distributions in one of the following options:

• A lump sum;
• A specific income provision, which is payments of both principal and interest made on a predetermined schedule;
• A life income option, which is a guaranteed income for life (the amount depends on the death benefit, beneficiary’s gender and age at the time of the insured’s death); and
• An interest income option, where the insurance company holds the proceeds and only pays interest on them, with the death benefit going to a secondary beneficiary at your death.

By undertaking the organizational side of your insurance policies now, you’ll make it much easier for your loved ones, when it’s time for them to file claims.

As a reminder, if you own large life insurance policies in your own name they will a taxable part of your estate, contact an estate planning attorney to show you the benefits of an irrevocable Life Insurance Trust.

Reference: The (Elizabethtown, KY) New-Enterprise (September 22, 2018) “Relieve your loved ones of a huge burden by being proactive, and organized”

Planning for the Death of a Spouse

“Of all the risks couples face in retirement, the death of a spouse is a certainty.”

According to a Merrill Lynch and Age Wave study on widowhood, people aren’t really planning for this certainty. USA Today’s recent article, “Before the death of a spouse, here's how to prepare a financial plan for living alone,” reported that 53% of widows say they and their spouse didn’t have a plan for what would happen, if one of them passed away, and 76% of married retirees say they wouldn’t be financially prepared for retirement, if their spouse died. After the death of a spouse, half of all widows experience a household income decline of 50% or more.

Here’s what couples should do to better prepare for the loss of a spouse.

There are about 20 million widows in the U.S., and 1.4 million new widows annually, according to the study. Nevertheless, most married couples don’t like discussing or planning for death. Nonetheless, it’s best to address this difficult subject head-on, because of the potentially dire consequences.

If you need assistance, speak with a qualified estate planning or elder law attorney. A new widow also should put together a comprehensive financial evaluation and plan with an analysis of potential cash flow issues that emerge after the death of a spouse.

An experienced and knowledgeable estate or elder law attorney can conduct a thorough inventory of the available financial resources and help integrate Social Security, Medicare, Medicaid, veteran’s benefits, and other programs to maximize the benefits you will receive. An experienced estate planning attorney can also then determine, if any asset protection/wealth preservation strategies are necessary to qualify for and preserve government benefits. For instance, an income-only trust to make sure an individual qualifies for Medicaid may be needed to qualify for Medicaid.

Ask yourself if you have enough life insurance because it’s important to get the necessary amount of insurance, in case of an unexpected or premature death. Calculate how much to purchase using any number of methods—human life, financial needs, and capital retention.

A widow needs planning, not products. This is where estate planning attorneys and elder law attorneys can maintain the focus on planning and help protect widows financially.

The key to planning properly for the death of a spouse, is to determine exactly what the available financial resources are and figure out the financial needs. The use of reverse mortgages and long-term care insurance are also vital to review to determine if applicable in your estate plan. You should consult with your estate r elder law attorney before engaging in any product sale.

The next step is to plan on the best way to maximize those resources, while getting additional funds through government benefit programs.

Reference: USA Today (September 26, 2018) “Before the death of a spouse, here's how to prepare a financial plan for living alone”

Recently Deceased Rapper Reportedly Had a Trust and Will Similar to Michael Jackson’s

“Mac Miller, a 26-year-old American rapper and music producer who died Sept. 7 in California, had a will, and its contents are similar to those of musical phenom Michael Jackson.”

The fact that the rapper Mac Miller even had a will may surprise some, since he was only 26 when he died. This planning was in sharp contrast to other famous, much older musicians like Aretha Franklin and Prince, who died without wills (intestate). This ties up their sizable fortunes in a complex legal process, says Investment News’ recent article, “Deceased rapper Mac Miller was 26 and had a will — similar to that of Michael Jackson.”

Miller, whose real name was Malcolm McCormick, is said to have had a net worth of $9 million at the time of his death. The cause of his death is still not known, officials say.

What is interesting about Miller is that he was single, young and had no kids. Nevertheless, he still took the time and effort to do this. It’s rarity for anybody, let alone someone who's an artist in the music industry, to have a will like this.  What a bright idea!

According to his will, the rapper left his entire estate to a trust, and he named himself as trustee of the trust.

Michael Jackson did the same thing in his will, giving his estate to the Michael Jackson Family Trust, of which he was trustee. The use of revocable trusts is a common strategy in estate planning.

A revocable trust takes the proceedings out of probate court, plus they’re private. In contrast, a will is a matter of public record.

It’s critical to be sure that an estate stays out of probate, by funding a trust during one's lifetime.

In Miller's case, that would have meant retitling assets, like a house and investment accounts, so they weren't owned in his name as Malcolm McCormick the individual. Instead, they were named as trustee of the Malcolm McCormick Revocable Trust.

A trust is like buying a new car—it won't run right if you don't put gas in it. “Gassing up” the revocable trust means the creator must retitle his assets during his lifetime to avoid probate.

Miller's will was a "pour-over" will. This is a catch-all in the event Miller failed to retitle an asset, which would then "pour over" into his trust and remain out of probate. That's the only purpose his will serves.

Reference: Investment News (September 21, 2018) “Deceased rapper Mac Miller was 26 and had a will — similar to that of Michael Jackson”

What is the Difference Between a Revocable and an Irrevocable Trust?

“While estate planning is important, most people ignore it and, therefore, there is not much that they know about it either. Revocable and irrevocable trust deeds are an important element in estate planning.”

Estate planning isn’t only challenging, it’s essential. Your assets have a great potential to be treated without consideration—especially after the death of the rightful owner. Estate planning makes certain that these issues are dealt with, while the owner is still alive. Creating a trust, either revocable or irrevocable is a highly technical area of law, you should consult with an experienced estate planning attorney regarding the use of trusts in your estate plan. Trust have numerous benefits in your planning for asset protection and preservation, tax efficiencies, special needs planning, and more.

Catch News’ recent article, “The Differences between a Revocable and Irrevocable Trust,” says that people will use different terms that refer to the same thing. Revocable trusts are also called intervivos trusts, revocable living trusts, or living trusts. The word “intervivos” is a Latin word meaning “between the living.” All three terms mean the same thing.

What are these trusts and how are they different? Let’s look at the important aspects and details of revocable and irrevocable trusts. It is a document created by an individual to help manage her assets. The trust can apply both during the lifetime or after death. The basic idea behind a trust is to define a trustee and beneficiaries for the assets owned by a certain individual.

A revocable trust is a trust that can be changed as long as it is in effect. The creator of the trust can also decide to cancel it. This trust lets the asset owner amend the beneficiaries, assets and distribution of these assets. The trustees can also be amended throughout the life of the owner. Once the owner dies, the assets are given to the beneficiaries. However, they’re managed by a succeeding trustee.

Irrevocable trusts cannot be amended, even by the owner. An irrevocable trust can’t be changed into a revocable one, but the reverse can happen. Revocable trusts can have specific terms that render it irrevocable. This can include specific dates or events in the life of the owner. After the death of the trust owner, a revocable trust is also automatically converted into an irrevocable trust. Irrevocable trusts are usually only considered by people who are looking for increased asset protection and are willing to give up the control over their assets.

Each type of trust has pluses and minuses. Although it might not seem like there are many advantages to an irrevocable trust, there are certain circumstances where the benefits are derived by the owner. These includes greater asset protection, exemption from taxes and charitable giving. With an irrevocable trust, the assets are protected from creditors and lawsuits. In addition, there are estate, capital gain and income taxes (for charitable giving) that can be avoided when assets are placed in an irrevocable trust.

By contrast, a revocable trust gives total control of the assets to the creator of the trust. He can amend or even cancel the trust at any time. Any additions or omissions can be made through a trust amendment document that is done by the owner.

If you’re thinking about creating a revocable or irrevocable trust, talk with an experienced estate planning attorney for help in deciding on the right one, and even whether a trust is the best decision for your situation.

Reference: Catch News (September 19, 2018) “The Differences between a Revocable and Irrevocable Trust”

Your Legacy is About More Than Assets

“People often put off creating a will or estate plan because they want to avoid making difficult decisions or having stressful conversations with loved ones. The idea of death, money, and splitting possessions can create conflict. However, it doesn't have to be that way.”

With a few exceptions, most people find planning for their legacy, creating an estate plan and thinking about their own mortality to be unpleasant. In response, they procrastinate, often leaving their families with financial and legal disasters. However, according to a recent article from The Street, “Planning Your Legacy: More Than Just Finances,” there are four concepts you can use to shift how you think about planning your legacy, and make it a productive and meaningful task.

Values and Life Lessons. Because so much of estate planning focuses on financial aspects, people often forget that some of the most valuable gifts for them to pass on to the next generation are experiences and memories. Your years of life have given you lessons and stories that your children or their children will want to know. To pass this valuable asset along, you can use something as simple as pen and paper or make movies of yourself. Remember that no detail is too small and things you might not think are important, may be instructive and memorable for generations to come.

Instructions and Wishes. An estate planning attorney can work with you to make sure the necessary documents are created to carry out your instructions or wishes. First, do you have the correct insurance in place? Have you named a health care power of attorney? Do you have a living will? Give thought to what you want to happen in the event of a life-threatening event. Do you want extraordinary measures taken to prolong your life? Be as specific as possible, so your wishes will be followed. You don’t want any grey areas or challenges to your desires.

You should also consider what kind of living arrangement you’d like as you age. Would you want to live in an assisted care facility or could a loved one make room for you in their home? The more thought you can give to these topics in advance, the better you can plan for life’s eventualities.

Be sure that your estate planning attorney creates clearly written instructions for your executor and any trustees. If you can bear it, also give instructions for your wishes regarding your funeral, including burial, cremation, services, etc.

Personal Possessions with Emotional Value. The jade ring your father left you may not have any value in the jewelry marketplace, but if you want to pass it along to a certain son, then you’ll want to put that into a letter that specifies who should receive what. Family squabbles often arise over possessions that have more sentimental than market value, so have some conversations with family members in advance to try to avoid any kind of infighting.

Financial Assets and Real Estate. Your estate planning attorney will be able to help you get your assets in order. Inventory any high-value objects, like art, antiques or jewelry and decide what should happen to them. Have them appraised and make sure you have the correct insurance coverage in place. Next, what will happen to your primary residence upon your death? Do you own rental properties or other pieces of real estate that need to be conveyed at your death? If your family has a vacation home, consider whether or not it will be sold, or converted to a corporation with shares held by your adult children.

Finally, do an asset audit and list all of your accounts, including savings, retirement and investments. How do you want these assets to be distributed? Does charitable giving play a role in your estate plan?

For business owners, the creation of a succession plan or plans to sell the business could take years to complete. Start as soon as you can, so you have time to work out all of the kinks.

Planning a personal legacy is a complex business, with significant emotions. However, once you get started, and if you follow these four pillars, you’ll achieve peace of mind for yourself and for your family. That is a terrific legacy to leave behind to those you love.

Resource: The Street (September 19, 2018) “Planning Your Legacy: More Than Just Finances”

Not too Much, and Not Too Soon

“It’s one of the biggest challenges faced by wealthy families: How to avoid the “silver spoon” syndrome with their children.”

The same advantages that family wealth can provide to children, can also become a major impediment to maturation and productivity. To raise children that are able to understand that they enjoy certain benefits and with those benefits come certain responsibilities, takes a blend of planning, flexibility and continuous communication of values, says the article “How to avoid giving your kids too much money, too soon” from the Dallas Business Journal.

Start by listening to comments from your children that will give you a true picture of how they view money and their relationship to it. Use these comments to ask questions. You know your kids best; what will be an age-appropriate question that could lead to a productive conversation? The theme and message for a 12-year old may be the same as for an 8-year-old, but how the question is framed and what kind of answers you can expect, will be dependent upon their own maturity level.

Many families find that regular meetings with family members, especially when wealth was created by an older or extended family member, will help them to better understand the source of their family’s resources. A look at the hard work, persistence and stewardship of the wealth, along with the civic or social responsibilities that go with it, will help them understand how they fit into the larger family picture.

Those meetings are also a good time to let them understand what your expectations are for them. Do you expect them to go from college directly into the family business, or are they expected to go out into the world on their own, before joining the family business? If they don’t need to work, what role do you expect them to play in the community?

Teaching about stewardship and philanthropy are important lessons for families, where wealth spans generations. Discuss the family’s values and how it approaches philanthropy. One family holds a yearly meeting that focuses on giving. Each member is expected to select a worthwhile charity and present it as a candidate for the family’s generosity. They vote, and the winning group is the recipient of a family gift of the year.

Trusts are often a useful tool in distributing funds in a way that is tailored to specific children’s needs. They can be used to establish a payout schedule to distribute assets at certain ages, or if the child reaches certain milestones, like graduating from college, starting a new job, getting married, etc. This can provide financial security to heirs, while fostering self-reliance and personal growth. They can be used as incentives to accomplish other goals, like passing a drug test or a certain time span of sobriety.

Wealth can be a blessing, but it can also become a negative force. An estate planning attorney who works with high net worth families will be able to design an estate plan that will foster the values and goals of the family, across generations.

Reference: Dallas Business Journal (September 24, 2018) “How to avoid giving your kids too much money, too soon”

Burt Reynolds Set Up a Trust for His Son, Reports Say

“Burt Reynolds' will excludes his only son, Quinton Reynolds, and names his niece Nancy Lee Brown Hess the trustee for his estate.”

According to TMZ, Burt Reynolds' sole child, son Quinton, 30, was left out of his will because Burt created a trust for him several years ago. The money from that trust goes to Quinton Reynolds.

This is usually done to avoid estate taxes, and it appears that all of Reynolds’ assets were put in the trust, according to Wealth Advisor’s recent article entitled “Burt Reynolds' Will Says Niece Will Manage His Estate.”

The actor’s will was described as a "hollow document" because it says all assets not already in the trust will be directed to it.

Reynolds probably didn’t designate his son as the trustee, to avoid a conflict of interest because he’s the beneficiary of the trust.

Reynolds died of a heart attack in September in his Jupiter, Florida home at age 86. His death certificate noted that the actor’s remains were cremated.

The Hollywood star was known for his long list of hit films from the 1970s and early 1980s, including Deliverance, Smokey and the Bandit, The Cannonball Run, Stroker Ace, Best Friends, City Heat, The Best Little Whorehouse in Texas, and Hooper. Burt was nominated for an Oscar for Boogie Nights, which also won him a Golden Globe award.

Reynolds’ will designates his niece, Nancy Lee Brown Hess, as the trustee for his estate.

"My uncle was not just a movie icon; he was a generous, passionate and sensitive man who was dedicated to his family, friends, fans and acting students," she said after Reynolds' death.

Reynolds was cast in Quentin Tarantino's Once Upon A Time in Hollywood, but the star died before he could film his role.

"He has had health issues. However, this was totally unexpected. He was tough. Anyone who breaks their tailbone on a river and finishes the movie is tough. And that’s who he was. My uncle was looking forward to working with Quentin Tarantino [in Once Upon a Time in Hollywood] and the amazing cast that was assembled."

Burt Reynolds was married to Judy Crane from 1963 to 1965 and Loni Anderson from 1988 to 1994. Anderson and Reynolds adopted Quinton.

Reference: Wealth Advisor (September 18, 2018) “Burt Reynolds' Will Says Niece Will Manage His Estate”

How Cheap is it to Live in a Foreign Capital?

“An increasing number of Americans are retiring overseas to capital cities that offer a culture-rich lifestyle, excellent infrastructure and top-class dining and entertainment—and an affordable price tag, according to Internationalliving.com.”

A new report from International Living finds five international capitals, where a couple can retire on less than $37,000 a year. Think Advisor’s recent article, “5 Foreign Cities to Retire on $37K a Year or Less,” reports that by International Living’s calculations, that equates to $63,568 a year, or $5,297 per month, for a couple to retire comfortably in Washington, D.C.

“An urban retirement holds an increasing appeal for baby boomers keen on the idea of staying active and aging in place. In big cities like Washington, D.C., retirees can easily access theater, dance, museums, restaurants, doctors and grocery stores without getting in a car,” Jennifer Stevens, executive editor of International Living, said in a statement.

“However, all that comes with a high price tag — especially for living and housing costs. The median household income in D.C. is $72,935, but experts say you need more like $90,811 to live there comfortably as a working person.”

However, retirees can gain all the same benefits of a cosmopolitan, urban lifestyle in the best-value capital cities overseas—for much less. The International Living report gives us five capital cities in Europe, Latin America, and Southeast Asia, where a retired couple can live very nicely on less than $37,000 a year:

1. Hanoi, Vietnam: Hanoi has one of the lowest costs of living of any major city in Southeast Asia. A couple can live a comfortable lifestyle there on a budget of $905 per month or less, or $10,860 a year.
2. Lisbon, Portugal: Home to half a million people, Lisbon is a spot where retirees can “enjoy a European lifestyle at Latin American prices,” according to the report. A couple can live well here for $3,065 a month, or $36,780 a year. The report claims that Lisbon is one of the most affordable capitals in Western Europe.
3. Panama City, Panama: A couple can rent a two-bedroom apartment in the central city for $1,765 a month, or $21,180 a year. For American expats, Panama is also convenient because the currency is the U.S. dollar.
4. Phnom Penh, Cambodia: This city has plenty to offer expats, like a stunningly low cost of living, bustling markets and a thriving food scene. All this comes with colonial French architecture and temples. According to International Living, a retired couple can enjoy a good life here on $1,837 a month, or $22,044 a year.
5. Quito, Ecuador: Quito is one of the highest capital cities in the world, located in the Andes mountains at 9,350 feet. The report says that it has everything expats would expect to find in any big city, like museums, architecture, art and theater for much less than what it costs in North America. A monthly budget for a couple in Quito would cost $1,650 to $1,825, or a yearly total of $19,800 to $21,900.

Reference: Think Advisor (September 13, 2018) “5 Foreign Cities to Retire on $37K a Year or Less”

Can Beneficiary Designations Create Problems for My Estate Plan?

“How you name beneficiaries can complicate an estate plan.”

A senior with a $2.5 million estate, 85% of which is in brokerage accounts, has designated his two children as beneficiaries with per stirpes on all his accounts. His will does the same thing, so he can avoid the probate process. Does this create any issues?

A recent nj.com article asks “Will my estate plan avoid probate?” According to the article, this current plan could have complications.

Even though our senior has his beneficiary designations lined up on his investment accounts, having a will is critical because we all have assets that don’t pass by beneficiary designation. These are usually personal assets like jewelry, household goods or automobiles. These items will pass by the state laws of intestacy, if there’s no will to instruct how they should pass.

A beneficiary designation, like a "payable on death" account, will supersede the terms of a will as far as that specific account. Naming both (or all) children on all your accounts is preferable to naming one on one account and another on another account, because a senior can spend down the accounts at different times and in different amounts. That could result in unintentionally benefiting the beneficiaries unequally.

With this type of issue, it’s wise to speak to an estate planning attorney about whether to designate beneficiaries on financial accounts or life insurance policies, or instead, have the assets payable to the estate or trusts under the will. Depending on the overall estate plan, naming beneficiaries could disrupt and undermine the estate plan strategy that is designed by your attorney. The reason is trusts established in a will may not be able to be funded, and taxes or administration expenses may not be able to be paid as planned.

Banks often encourage people to name beneficiaries on various accounts because of the FDIC insurance limitations but moving some funds to another bank may be a better idea. Another issue with beneficiary designations is that as banks merge, and the accounts change, or as you move your accounts from one bank to another, the beneficiary designations that you once had set may be inadvertently left off.

Therefore, if our senior is relying on beneficiary designations, after any change in his financial institution, whether a branch change, name change, or institution change, he would be smart to reconfirm the beneficiary designations. This is especially true for insurance policies and retirement accounts, which generally pass by beneficiary designation forms and not by a will.

Talk to an estate planning attorney to be certain your current plan still meets your goal for your assets and heirs.

Reference: nj.com (September 24, 2018) “Will my estate plan avoid probate?”