Bielski Law Office, Ltd.

No Estate Plan for Many Rich People

Recently a survey was conducted of millionaires, the results of which show that a staggering one-third of them do not have any sort of estate plan.

While it is advisable that everyone have an estate plan of some sort, the truth is that some people can afford not to have one. People who have very few assets and who are comfortable with those assets being passed on to their closest living relatives may also not need to create a detailed estate plan.

Although their estates would be much easier to manage with a plan, and they would be doing their families a big favor by creating an estate plan, their estates can normally be handled successfully without one.

On the other hand, all that changes when people have a lot of assets.

If the wealthy pass away without an estate plan, chaos is often the result. The courts have to decide who gets what. Families are likely to argue when there are a lot of assets involved.

The probate case can drag on for years before it is finally settled.

Despite this, Financial Advisor IQ reports that many millionaires do not have an estate plan in a recent article, "One-Third of Millionaires Have No Estate Plan."

There is no good excuse for a millionaire not to always have an up-to-date estate plan.

If you are one of those who do not have one, you should schedule an appointment with an experienced estate planning attorney as soon as possible.

The time that you take to create the estate plan now is time that you will save your heirs later.

Reference: Financial Advisor IQ (July 2, 2015) "One-Third of Millionaires Have No Estate Plan."

Desmond Tutu Peace Trust Shut Down

One of the trusts created by retired Archbishop Desmond Tutu was quietly dissolved earlier this year in the wake of a family feud.

Desmond Tutu won the Nobel Peace Prize for his efforts to end racism and corruption in South Africa. He is generally regarded as an international moral authority.

Unfortunately, his family life has been anything but peaceful.

Previously, Tutu filed criminal charges against his granddaughter for allegedly smashing up property in his home. Now, one of his trusts has been dissolved.

Some board members claim the trust was dissolved to spare Tutu embarrassment over his daughter Mpho Tutu’s attempt to "hijack" the trust. She claims that the trust was attempting to raise money for a peace center and that proved impossible, so the trust was dissolved amicably.

The Telegraph reported the family squabble in an article titled "Desmond Tutu's daughter 'tried to hijack one of his trusts'."

There are two lessons to be learned from this story. First, no matter the reputation of someone creating a trust or an estate plan, there is no guarantee that heirs will behave in the same way. Second, a trust should be drafted so if there are problems and board members cannot get along, the trust can be dissolved or board members can be replaced. This appears to have been the case with this trust.

It is important to make sure that a trust has contingency options for these types of situations.

An experienced estate planning attorney can help you anticipate such potential issues.

Reference: The Telegraph (May 31, 2015) "Desmond Tutu's daughter 'tried to hijack one of his trusts'."

The Estate of Elliot Ness Is Open Again

Elliot Ness is best known as a Prohibition era lawman who fought the mob. After that, however, he served as the CEO of Diebold. A recent find of a stock certificate in that company has caused Ness' heirs to reopen his estate.

Despite a book and two movies being made about his battles against Al Capone, Elliot Ness passed away with a meager estate. He believed that a book based on his story would be unsuccessful, so he gave away all rights to the story.

His wife inherited very little from him.

A recent discovery in Florida could change all of that. At least for his heirs.

The find was at the residence of the former secretary of the famed lawman.

Contained in a box, along with some of his memorabilia, was a stock certificate in Diebold. Thanks to splits and dividends, that stock is now worth $1.1 million.

The current heirs of Elliot Ness are the cousins of his third wife, and they have reopened his estate and filed a lawsuit against Diebold to force the company to pay up.

For its part, Diebold denies having any record that Ness ever owned stock in the company and is fighting the lawsuit.

The Guardian has more on this story in a recent article titled "Heirs of famed Prohibition agent find lost stock certificate that could net $1m."

The lesson here is that anytime a deceased person's lost property is found, it is necessary to reopen the estate so that the property can be properly distributed.

Whether the heirs will receive the money from the stock, however, is a question that is not likely to be answered for a while. The parties have been ordered to mediation.

If they are unable to settle the dispute, a trial is scheduled for next year.

When it comes to your own estate planning, an experienced attorney will help you identify your assets so your heirs will not have to scramble later on, especially not generations later on.

Reference: The Guardian (July 3, 2015) "Heirs of famed Prohibition agent find lost stock certificate that could net $1m."

The Downside of the Giving Pledge

The Giving Pledge, created by Bill Gates and Warren Buffet, has received a tremendous amount of positive coverage as it encourages the wealthy to donate to charity. However, some argue that it also has a hidden cost that potentially harms the general public.

More and more billionaires are taking the Giving Pledge and thereby promising to give away more than half of their wealth to charitable causes either through their estate plans or by gifts during their own lives. Many of these charitable donations go to worthy causes.

However, it is possible that many of the donations go to closely-controlled family foundations that have more questionable charitable intent.

Either way, the giver or his estate receives a tax deduction. When all of the donations are added up, it amounts to a massive amount of money that the federal treasury is not collecting through the estate tax.

A recent post on the Oxford University Press Blog entitled "The continuing benefits (and costs) of the Giving Pledge" argues that new laws should be created that tax some of this money going to charity.

In the absence of such a law, the author encourages the billionaires taking the pledge to voluntarily give some of the money to the federal treasury. Of course, since many people do not believe that estates should be taxed at all, not everyone will agree with the author's position.

Nevertheless, it is an interesting question to think about.

Should billionaires who are giving their money away to private charities also feel an obligation to give something to the federal government?

Reference: Oxford University Press Blog (July 6, 2015) "The continuing benefits (and costs) of the Giving Pledge"