Bielski Law Office, Ltd.

Anna Nicole Smith Saga Finally Over?

After almost 20 years, the long legal battle between Anna Nicole Smith's estate and her late husband's estate might finally be over after a recent court ruling.

Two decades ago watchers of celebrity estate news were focused on the estates of Anna Nicole Smith and her late husband, J. Howard Marshall II. It was a story that was destined to make headlines.

Smith was a young woman and a former Playboy model. Her husband was a wealthy investor in Koch Industries.

Marshall passed away approximately a year before Smith, and the tabloids could not get enough of the story.

When Smith passed away, her estate began seeking to get a larger share of his estate.

In the end, the case was litigated in three different states and made its way to the United States Supreme Court twice.

According to Forbes, in an article titled "Court Ruling Likely Ends Anna Nicole Smith Estate's Fight For Marshall Family Millions," all that was left to litigate in the case was a $500,000 fine Smith was ordered to pay.

For what?

A judge had ruled her suit to be “frivolous” against Howard's estate.

Nevertheless, that matter was taken up before a Texas appellate court. It recently determined that the fine was improperly made.

Many think this will be the end of the fight.

However, it is possible that the language of the court's ruling left open the door for Smith's estate to continue its challenge of Marshall's estate.

Smith’s estate has not yet announced any plans one way or another.

Reference: Forbes (July 14, 2015) "Court Ruling Likely Ends Anna Nicole Smith Estate's Fight For Marshall Family Millions."

Preserving Your Estate Planning Documents

Once you have an estate plan that you are satisfied with, you need to preserve the documents. They should be stored in a place that protects them from harm and where they can be readily accessed after you pass away. We discuss some tips on how to do that.

Your estate plan is worth nothing if it is destroyed or if no one can find it after you pass away. In order for your directives to be followed, people have to be able to read what those directives are.

All too often, important estate planning documents are lost or accidentally destroyed.

Recently, LifeHealth Pro offered some suggestions regarding how to make sure your estate plan documents are safe in "5 Tips for keeping original paperwork of key estate planning documents."

The LifeHealth Pro tips include:

• Make sure the original documents are easy to find. This means that, at a minimum, someone else knows where you have them stored.
• Make copies. If for some reason the originals cannot be found, the copies will alert people that the originals exist so they can look for them. However, be sure to destroy the copies if you change your estate plan. Otherwise, this can lead to needless confusion.
• Use a safety deposit box to store the originals and make sure that the box can be easily accessed after you pass away. If you have a trusted executor, you might want to consider putting the executor's name on the safety deposit box.
• If you have a living will, it is a good idea to indicate in that document that you have a will, and who the executor is, so he or she can be notified.

These tips are just the starting point. Your estate planning attorney will have other recommendations for your unique circumstances.

Reference: LifeHealthPro (July 14, 2015) "5 Tips for keeping original paperwork of key estate planning documents."

What Goes Into an Estate Plan?

You might know that an estate plan contains more than just a will, but do you know what other documents it contains?

Every estate plan is different. And different people and families have different needs. Thus, what is in one person's estate plan will not necessarily be in another person's estate plan.

However, there are some basic documents that can be found in almost any estate plan worthy of the name. These documents are the backbone upon which any other estate planning documents are attached.

Recently, The Motley Fool explored this issue in "Estate Planning Checklist: How to Protect Your Future, Your Family and Your Property."

According to The Motley Fool these basic documents include:

• A Living Will - Also known as an Advanced Healthcare Directive, this document allows you to direct what methods doctors will use to preserve your life if you are incapacitated and cannot tell them yourself.
• General Durable Power of Attorney - This allows you to designate someone else to handle your financial affairs if you become unable to do so yourself.
• Will - Even if a will is not the primary means by which your estate is to be distributed, you still need one for any leftover assets.
• Beneficiary forms - If you have life insurance or retirement accounts, the forms designating beneficiaries are considered part of your estate plan.

These are the basic documents in almost every estate plan.

You should consult with an experienced estate planning attorney about getting these fundamental legal documents in place and discuss other documents you might need in your own estate plan.

Reference: The Motley Fool (July 15, 2015) "Estate Planning Checklist: How to Protect Your Future, Your Family and Your Property."

Planning Mistakes of the Wealthy

Many wealthy people think they are immune from making estate planning mistakes. That thought is their first mistake. They often commit many more.

When it comes to estate planning most wealthy people have heard about mistakes that other wealthy people have made. They all tend to think they would never make the same mistakes.

However, the wealthy make the same mistakes over and over again, so the most common mistakes are worth repeating in the hopes they will sink in through repetition.

Recently, the Wills, Trusts & Estates Prof Blog published an article titled "Five Estate Planning Mistakes Made By the Wealthy."

The list includes:

• Not Making an Estate Plan at all - All too often people think they have plenty of time to make an estate plan and wait until it is too late to make one.
• Lifestyle Inflation - Wealthy people often think they need to spend a lot of money to project their success and often spend too much in the process.
• Not Paying Taxes on Time - When wealthy people fall behind on their taxes, the fines and penalties can make the wealth disappear quickly.
• Not Having a Prenuptial Agreement - It is great for wealthy people to assume that a marriage will work out, but they should plan for what will happen if it does not to protect their wealth.
• Delegating too Many Financial Matters - Using professionals to assist with finances is important, but it is also important to stay involved and know what is happening with their assets.

Don’t fall prey to these otherwise avoidable mistakes.

Contact an experienced estate planning attorney to help you navigate these shoals.

Reference: Wills, Trusts & Estates Prof Blog (July 18, 2015) "Five Estate Planning Mistakes Made By the Wealthy."

An Epic Scavenger Hunt

Imagine having a sibling whom no one in your family has spoken to in nearly three decades. What if you were contacted one day and told that your sibling passed away six years ago and left behind two bank accounts worth $81,000? That's what happened to one family and it led them on a nationwide scavenger hunt.

When Louis Passerini passed away in New York in 1994, he had not spoken to anyone in his family in 27 years. He did not have a phone and never told his family where he lived, so they had no way of contacting him.

Passerini left behind no contact information for anyone to get in touch with his family to even let them know that he had passed away.

Six years later a search firm contacted Passerini's two brothers.

The firm had been hired to find his heirs.

Why?

Passerini had two bank accounts in New York that needed to be distributed.

All his brothers knew was that Passerini was a career military man and a miser. As a result, the brothers thought there might be more bank accounts out there.

Indeed, after a long scavenger hunt, they discovered that their hunch was right on the money.

In fact, there were many bank accounts totaling nearly $1 million.

DNAinfo reported this story in an article titled "Long-Lost Brother's Death Leads Man on $1M Scavenger Hunt."

Not everyone has a long lost sibling with bank accounts all over the country that need to be tracked down.

On the other hand, even the family members with whom we do remain in contact might have accounts they have forgotten or they neglect to mention in an estate plan.

Consequently, when someone passes away it is important that the executor perform due diligence in tracking down any accounts that might have been forgotten.

Reference: DNAinfo (July 20, 2015) "Long-Lost Brother's Death Leads Man on $1M Scavenger Hunt."

The Wisdom of Solomon?

The story goes that two women who both claimed to be the mother of a baby asked King Solomon to resolve the dispute. The King ordered that the baby be cut in half and by doing so could determine who the real mother was by watching the women's reactions. An unusual inheritance case in Turkey had village elders suggesting that a home be cut in half, not to see who should receive but to leave it that way.

Brothers Ali and Ahmet Kangel inherited a home in a remote Turkish village from their father. They decided to demolish the house and renovate it. However, they could not reach an agreement about living arrangements in the proposed new home so they sought the wisdom of the village elders to determine what to do.

The final result was that a chainsaw was used to cut the house in half and each brother got half of it. One of the brothers renovated his half the other has not done so. The result is a house the looks dilapidated on one side and modern on the other. Daily Sabah reported this story in "Brothers cut house in half over inheritance dispute."

It is not unusual for siblings to have disputes over an inheritance. It is also not unusual for the best solution to resolve the dispute is to cut it in half. However, it is an unusual solution when the dispute involves a house. Perhaps, this case will turn out just like King Solomon and the baby. It might turn out that the unusual decision was the wisest.

Reference: Daily Sabah (July 6, 2015) "Brothers cut house in half over inheritance dispute."

Who Is Pushing for Estate Tax Repeal?

Opponents of the estate tax normally emphasize the effect it can have on small business owners and family farmers. A new report, however, suggests that those are not the groups behind the push to repeal the tax.

Earlier this year, the House of Representatives voted to repeal the federal estate tax. The bill has little chance of becoming law anytime soon as the Senate has declined to take the matter up and President Obama has stated that he will veto any estate tax repeal.

This, of course, has not stopped some politicians from continuing to call for repeal. They suggest that the tax has adverse effects on family farms and small businesses. The truth of those claims depends on how you define "family farm" and "small business," of course, which are not things politicians on either side of the aisle often do define when speaking about the issues.

Interestingly, however, is a new report from Public Citizen that suggests the drive to repeal the estate tax is actually coming from a few extremely wealthy families who spend millions of dollars a year lobbying to repeal the estate tax. One reason that they do so is because they collectively would gain nearly $25 billion if the estate tax goes away. The Hill reported on this story in "Who is behind the push to repeal the estate tax?"

A report that it is actually billionaires who wish to have the estate tax repealed, however, does not necessarily mean that it should not be repealed. Depending on your point of view, these wealthy families are either acting out of despicable self-interest or they are performing an admirable public service.

Reference: The Hill (July 8, 2015) "Who is behind the push to repeal the estate tax?"

Wells Fargo Ordered to Pay for Committing Trustee Fraud

When creating a large trust, especially one for a minor child, it is often a good idea to use the services of a professional trustee. Many banks, both large and small, offer the service. However, there is no guarantee that professional trustees will behave appropriately.

When she was 7-years-old, Angela Militello's parents passed away in Midland, Texas. They were not without means and left behind a sizeable trust for her. The trust was under the management of Wells Fargo bank. For many years all was well. However, when Militello obtained a divorce in 2006, she needed money for a house she and her children could live in. She asked the trustee how she could obtain $200,000. Wells Fargo delivered the money and asked Militello to sign some paperwork approving the sale of one-third of the trust's assets. The remainder of the trust assets were sold over the next few weeks.

In and of itself, this is not an unusual story. A beneficiary of a trust needs cash for a particular purpose and to obtain the cash, trust assets need to be sold.

The unusual aspect here is that Militello later sued Wells Fargo for fraud. She claimed that the bank conspired with a third-party to sell the trust assets at below market value. After a trial a Texas judge agreed with Militello and ordered Wells Fargo to pay $8 million in damages. The Dallas Morning News reported this story in "Judge: Wells Fargo to pay $8M for fraud tied to trust set up when Dallas woman was orphan."

The lesson here is that even when using the services of a professional trustee, such as a bank, trust beneficiaries should always pay attention and make sure the trustee is not acting for its own benefit.

Reference: Dallas Morning News (July 10, 2015) "Judge: Wells Fargo to pay $8M for fraud tied to trust set up when Dallas woman was orphan."

Andreas Lubitz's Estate Declares Bankruptcy

No one has claimed to be the heir to the estate of the German co-pilot who is alleged to have intentionally crashed a plane into the Alps. Now, the estate has filed for bankruptcy.

If you have watched the news the past few months, then you undoubtedly know the story of Andreas Lubitz. The German co-pilot is alleged to have suffered from severe mental illness. On March 24, while the fellow pilot of a passenger plan was using the restroom, Lubitz is believed to have intentionally crashed the plane into the Alps, killing 150 people.

His estate will undoubtedly be ordered to pay millions of dollars in compensation to the families of the people who died in the crash. These would be considered debts of his estate. Under German law anyone who claimed the assets of the estate would also be liable to pay any debts of the estate. Thus, understandably no one has made a claim for Lubitz's estate. The executor of the estate, under the belief that the assets of the estate will be less than the debts, has as a consequence filed for bankruptcy. The Associated Press reported this story in "Germanwings co-pilot Lubitz's estate is declared bankrupt."

While this case is unusual both for its circumstances and the media attention it has received, it highlights a somewhat common occurrence. It is not all that unusual for an estate to have more debts than assets, especially when the deceased faces civil lawsuits. Unfortunately, what that normally means is that estate creditors do not receive full compensation as it is not the responsibility of anyone else to pay the deceased's debts.

Reference: Associated Press (July 10, 2015) "German wings co-pilot Lubitz's estate is declared bankrupt."

Saving Estate Tax Filing Fees Not Always the Best Idea

The overwhelming majority of estates are not large enough to require payment of the federal estate tax and are therefore not required to file the estate tax forms. For most of them, it is wise not to waste money on any professional preparation fees for filing the forms. However, there is an important exception.

When a spouse passes away, the entire estate can be passed to the surviving spouse tax-free. If the deceased spouse's estate is worth more than $5.43 million, then an estate tax form must be filed, even though no tax will have to be paid. However, if the estate is worth less than that amount, then no estate tax form is required to be filed. Most people will therefore decline to file the form, because they do not wish to pay any fees associated with doing so. As the Albuquerque Journal points out in "Relaxed estate tax law requires warning," some surviving spouses should file the estate tax form even when the estate is less than $5.43 million.

The issue is that a surviving spouse can elect to take the deceased spouse's estate tax exemption as well as their own. Thus, the surviving spouse's estate will be able to protect twice the amount of assets. This is only possible if the estate tax form is filed and the election made on the form. What this means is that if there is a reasonable chance that the surviving spouse's eventual estate will be worth more than $5.43 million, the estate tax forms should be filed for the deceased spouse's estate. If they are not, then the surviving spouse's estate may have to pay unnecessary taxes.

Reference: Albuquerque Journal (July 13, 2015) "Relaxed estate tax law requires warning."