Bielski Law Office, Ltd.

Estate Tax On The Way Out in Delaware?

Delaware has become the latest state to entertain the idea of eliminating its estate tax. The reason for doing so is interesting.

Republican legislators in Delaware have introduced a proposal to end the state's estate tax effective July 1 of this year.

In doing so they are acting on the recommendation of a review panel created by the Democratic Governor. It turns out that the estate tax might actually be costing the state money.

Last year, the state took in $1.3 million in estate taxes. It is believed that the existence of the estate tax actually encourages wealthy, older residents to move to states without an estate tax.

This might cost Delaware more in income taxes than it receives from the estate tax!

Therefore, it makes financial and policy sense to eliminate the estate tax.

The Washington Times reported this development in a recent article titled "Republican lawmakers introduce bill to eliminate estate tax."

Many other states are currently debating eliminating their own estate taxes.

It is becoming clear that, at least at the state level, the estate tax does little to help the finances of the government. However, because the estate tax is always a hot button political issue for reasons other than government revenue, proposals to eliminate it often face uphill battles.

Thus, if your state has an estate tax that you would like to see eliminated, it would be a good idea to contact your state representative to let him or her know your opinion.

Reference: Washington Times (May 29, 2015) "Republican lawmakers introduce bill to eliminate estate tax."

Emotions and Estate Planning

Mental health professionals normally counsel that people should listen to their emotions. However, when it comes to estate planning, it is often a bad idea to be too emotional about the process.

Forbes recently published an interesting article titled "Don't Let Emotions Sabotage Your Estate Plan." The main gist of the article is that people often get emotional about issues surrounding death and end of life planning.

This, in turn, then causes them to put off estate planning, often until it is too late.

As the title of the article counsels this response is best avoided.

It is necessary to set aside any emotions or unease surrounding death so that you can adequately plan for your estate. As the article suggests, it often takes six months to two years to formulate a complete estate plan, depending on the size of the anticipated estate.

Accordingly, if you have a large estate, you cannot wait until you are near death to make plans.

Another piece of solid advice in the article is that you should revisit your estate plan every three years.

That does not mean that you have to go through the entire process again. It just means that you should sit down with your estate planning attorney and go over everything.

Make sure that no laws have changed that might affect your estate. Make sure that beneficiaries, trustees and executors are still appropriate.

In other words, every three years you should make sure that the estate plan still does what you want it to do. Doing that periodically will possibly save a lot of trouble for your estate.

Why not contact your estate planning attorney and schedule a full review if you are due?

Reference: Forbes (May 15, 2015) "Don't Let Emotions Sabotage Your Estate Plan."

Oscar de la Renta Snubs Son in Will

Oscar de la Renta was well-known for his charitable causes, especially in the Dominican where he was an unofficial ambassador and held a diplomatic passport. However, a decade old falling out was enough for the designer to snub his son.

Shortly after his first wife passed away, iconic fashion designer Oscar de la Renta adopted a son from the Dominican Republic, Moises de la Renta. Moises grew up to be a fashion designer as well and went to work for his father.

However, a decade ago, Moises decided to strike out on his own and start his own fashion line for women. The line never took off and Oscar de la Renta publicly criticized his son for the move.

The younger de la Renta eventually went back to work for his father's studio. It appears that the wounds were never completely healed over, as Oscar de la Renta, who passed away in October 2014, has given the son only a very small portion of his $26 million estate.

The majority of the estate will instead go to his second wife.

Language in the will also created a no contest clause that states the son is to get nothing if he ever challenges the will.

The Daily Mail reported the story in a recent article titled "Fashion designer Oscar de la Renta snubs adopted son from $26M will 'after high-profile falling out over son's clothes label'."

It should be noted that, even though the will contains a no contest clause, this is not necessarily the end of the story. Courts have been loath to uphold the clauses if a good reason exists for challenging a will and the challenge is made in good faith.

Whether or not Moises de la Renta does want to challenge his father's will remains to be seen.

An experienced estate planning attorney can help you protect your estate plan from potential beneficiary challenges, but great care must be taken.

Reference: Daily Mail (June 1, 2015) "Fashion designer Oscar de la Renta snubs adopted son from $26M will 'after high-profile falling out over son's clothes label'."

Robin Williams' Estate Still Disputed

The battle between Robin Williams' widow and his children has been resolved on some issues. However, one issue remains that must be decided by a court.

In the days after Robin Williams' suicide, it appeared that he had appropriately planned for how his estate was to be divided between his family members. However, it soon became apparent that a few ambiguities in his estate plan created conflict between his widow and his children.

As you may recall, his children were to receive the bulk of the estate, but his widow was left a house and money to maintain the home during her lifetime. That left the parties free to argue over whether certain personal effects of Williams' that were left in the home given to the widow should go to the widow or the children.

The two sides were able to resolve that dispute in mediation.

Unfortunately, as reported by the Telegraph in a recent article titled "Robin Williams family divided over his estate," the parties were unable to resolve how much cash should be given to the widow to maintain the home.

That is an issue that will need to be resolved by a court.

This is a battle that probably could have been avoided if Williams had been more precise in his estate plan. For example, he could have left money in a trust that his widow could use for necessary expenses for the home, such as maintenance and property taxes, with the remainder of the trust going to the children.

When planning your estate, details matter. Consult with an experienced estate planning attorney to help you cover all of the bases.

Reference: Telegraph (June 1, 2015) "Robin Williams family divided over his estate."

Australia's Richest Woman Loses Control of Family Trust

Gina Rinehart is the wealthiest person in Australia. However, it appears that greed might have cost her control of a family trust worth billions.

Gina Rinehart controls one of the largest iron ore mining companies in the world. She was also in control of a family trust created by her grandfather worth approximately $3.1 billion U.S. dollars.

The mother of four children was sued over the trust by two of those children in 2011.

The controversy started when Rinehart changed a vesting option on the trust from 2011 to 2068.

Now, a judge in New South Wales has ruled that Rinehart cannot be trusted to operate the trust reasonably and has appointed a daughter, Bianca Rinehart, to oversee the trust.

The BBC reported on the story in a recent article titled "Australia's Gina Rinehart loses control of family trust to daughter."

What this case shows is that it does not matter how wealthy you are. If you have control of a trust in which other people have an interest, you cannot operate the trust solely out of your own self-interest.

Trusts must be operated in the interests of all beneficiaries.

If you serve as a trustee, it would be a good idea to seek the advice of an estate planning attorney to make certain that you are managing the trust appropriately.

As Gina Rinehart learned, being wealthy does not give you license to mismanage a trust.

Reference: BBC (May 28, 2015) "Australia's Gina Rinehart loses control of family trust to daughter."