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Houston Estate Planning Law Blog

PETER FALK’S ESTATE GIVES $3 MILLION TO UCLA

Do you know where you want your assets to go after you pass? Some Texas residents have very specific plans. If you do, you should make sure to formulate legal preparations for the distribution of your estate. This way, you can ensure that your loved ones receive their appropriate share without any problems. In a recent story, a former well-known actor decided to bequeath some of his life earnings to a university for education purposes.

Sources explain that the estate of former “Columbo” star Peter Falk has willed $3 million to the University of California, Los Angeles (UCLA), for student scholarships. The money will be used to create the Shera and Peter Falk Lt. Columbo Memorial Scholarship Fund. The first award will go to five students entering UCLA next fall. It will cover the students’ tuition for four years. The scholarship will focus on aiding undergraduates studying music, military veterans and those with disabilities.

After a long acting career on Broadway, in television and in the movies, Falk passed away last June at the age of 83. Specifically, the actor was best known for his role as a Los Angeles police detective on “Columbo,” which earned him four Primetime Emmy Awards.

Based on his probate arrangements, one might assume that education was extremely important to the former actor. If you are making estate plans, you should consider what is important to you. Do you have a preferred charity that you would like to support? Do you want your children to receive most of your assets? If you have particular plans for your estate, you may want to speak to an experienced lawyer. An attorney will guarantee that the people you care about are taken care of after you pass away.

Source: Washington Post, “Former ‘Columbo’ star Peter Falk bequeaths $3 million to UCLA to provide student scholarships,” Feb. 21, 2012

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HOW ESTATE TAXES MAY HARM GANDOLFINI’S WILL INTENTIONS

When 51-year-old actor James Gandolfini died suddenly in Italy in June, a nation mourned. Best known for his role as the ruthless mobster on “The Sopranos,” in real life, he was quite the opposite.

But despite leaving a detailed will, second looks at how he divided his estate has some people here in Texas, as well as others across the nation, cringing. That’s because, as some experts have pointed out, Gandolfini’s will does not take advantage of current estate tax laws. In the end, the deceased actor may pay out more to the IRS than his beneficiaries–something he may not have intended when he first drafted the will.

Gandolfini’s major mistake was that he only left 20 percent of his estate to his wife. Federal law currently allows unlimited tax-free transfers to spouses; but because Gandolfini left a majority of his estate to his infant daughter and a son from a previous marriage, almost 80 percent of the assets covered by the will may be subject to both state and federal tax laws.  As our readers can imagine, this may not have been foreseen by the actor prior to his death.

While most of our Texas readers will want to make their wills as tax efficient as possible before they pass on, this may not have been Gandolfini’s thoughts. He may have wanted to ensure that his children were properly taken care of by their inheritance. But as we’ve mentioned to our readers on several occasions, this can be done through trusts as well, which will not only provide financial security for beneficiaries but avoid estate taxes as well.

Just this story alone is a great example of why speaking with an attorney is a good idea when preparing your end-of-life documents. While mistakes can be made by even the most well-informed of people, having the right help at your side can sometimes mitigate these mistakes so that they don’t get passed on to your beneficiaries in the end.

Source: CNBC News, “Gandolfini’s will a case study on what not to do,” Kelley Holland, July 26, 2013

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HOW THE DOMA DECISION WILL AFFECT ESTATE PLANNING IN TEXAS

During an end-of-March post, we brought to the attention of our readers the very real possibility that changes could be made to estate taxes barring the decision of the Supreme Court of two very important cases.  The most import of those was that of United States v. Windsor.  As many of our readers may remember, this court case asked whether the federal government had the right to define marriage and whether it could prohibit same-sex couples from receiving federal benefits.

Now, in what Time Magazine is hailing as “one of the fastest civil rights shifts in the nation’s history,” the Supreme Court has not only provided same-sex couples with more civil rights than were previously allowed, but may very well have changed tax and estate laws as we know them.

As many people here in Texas know, the court struck down the Clinton-era Defense of Marriage Act, which defined marriage (for the federal government) as a heterosexual union. Once DOMA was effectively abolished, the court then ruled in favor of Windsor, which ultimately changed estate planning for same-sex couples in regards to estate taxes. Even though our state does not recognize gay marriages, the federal government must now recognize the legitimacy of a homosexual marriage in the other states that do.

Aside from the lasting changes this will have on tax law, the impact this will have on estate planning will be far-reaching. It’s important to point out that while our state does not recognize gay marriage, federal estate taxes will still apply to same-sex couples provided their marriage occurred in a state that does recognize their union as being legal. What this means is that same-sex couples married in another state that have moved to Texas may file for the same “death tax” break that is awarded to heterosexual couples across the nation.

But while this will have an effect on federal tax laws, this may not an effect on other estate planning laws that are state specific. It’s because of this that same-sex couples are urged to speak with a qualified attorney to discuss how their assets will be affected down the road.

Source: Forbes, “Tax Implications Of The Supreme Court’s DOMA Decision: Same-Sex Couples To Be Subject To Marriage Penalty,” Tony Nitti, June 26, 2013

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TRAGEDIES AND THE IMPORTANCE OF DESIGNATING GUARDIANS IN WILLS

It’s 2012 and somewhere in Kansas City, a man and a woman are fighting over the paternity of their 9-month-old daughter. The mother claims the child is not his. The man becomes enraged, killing the mother then later turning the gun on himself. With both parents gone, estate attorneys turn to the couple’s wills to determine which family member will get custody of the daughter. But because nothing was stipulated in the documents, family members on both sides begin fighting for custody of the girl.

Many of our readers may recognize this as the story of young Zoey Perkins, daughter of Kansas City Chiefs linebacker Jovan Belcher. Hers is a cautionary tale that teaches us that while we may not think that the worst will ever happen to us, having the a safety net in a will is always a good idea.

In Zoey’s case, two family members wanted custody of the girl: her paternal grandmother and an aunt on her mother’s side. But because no guardianship had been established prior to the parent’s untimely deaths, child custody would be in limbo until a family law judge could determine who was better suited. While both women said that they would be comfortable sharing custody of the girl–in an effort to keep her connected with both sides of her family–but the nearly 1,400 mile difference between each woman’s residence presented a problem for a judge.

Ultimately, it was decided that the girl’s aunt, who lives here in Texas, would be a better guardian for the girl after attorneys pointed out that the grandmother had a smoking habit and had had a number of police calls to her home over the years.

An important part of any estate plan for new parents would be to designate custody of your children in the event that they suddenly die or become incapacitated. Because as this story demonstrated, the ensuing custody battle can often times take a considerable amount of time to work out in the end.

Source: The Daily Mail Online, “Judge grants custody of Jovan Belcher’s $3million baby to a cousin six months after NFL player shot dead his daughter’s mother and then himself,” Rachel Quigley et al, June 20, 2013

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LETTER FROM GEORGE WASHINGTON DONATED TO UNIVERSITY OF TEXAS

Donations are possibly one of the best ways to avoid pesky estate taxes when you pass away. But what if what your donation has no price tag or could be viewed as priceless in nature? Dallas’ very own oil and gas businessman Barron U. Kidd now knows the answer to that question after his surprising donation to the University of Texas at Austin this month.

So what was Kidd’s donation? A one-of-a-kind, handwritten letter by George Washington himself. There’s no telling what the letter could have fetched at auction nor will anyone ever know since Kidd handed the letter over to the university’s Dolph Briscoe Center for American History. It’s a priceless memento that is giving academics a rare look into the past.

As Briscoe Center Executive Director Don Carleton explains, the letter “sheds light on Washington’s views on Indian relations” from that time. In the letter, the future president writes about his outrage at the murder of three members of the Mingo tribe by white settlers, calling their actions “villainy” in nature. According to some scholars, this letter could change many of the perceptions people had about the first president and how he felt about hot-button topics of the day.

As for how Kidd came to possess the letter before his donation, sources do not say, but it’s likely that the businessman will continue his streak of being one of the university’s major donors. Some would reguard his move as an effective form of estate planning because it equally protects his assets for the future while preserving knowledge and history today.

Source: The Dallas Morning News, “Dallas businessman donates 1769 George Washington letter to UT-Austin,” The Associated Press, June 5, 2013

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WHAT IS YOUR PLAN FOR YOUR FAMILY’S HEIRLOOMS?

Everyone in Texas knows that you can’t take it with you when you die. But what might have been important to one generation quickly turns into a dust-gathering memento for the inheritor. It’s a trend the nation has been seeing more frequently lately, especially when it comes to family heirlooms.

The question we pose to our readers this week is whether they themselves have a plan for their family heirlooms. While some families are meticulous about handing things down through the generations, a growing majority of younger generations fail to see the sentimental value or importance these treasures once held to previous generations. As a result, things that were once valued are being sold to second-hand stores, away from family members they may have been intended for.

While you can’t take these things with you, a person can ensure that a treasured memento, such as a hand-carved hope chest or a set of formal china, stays in the family. This can be done through estate planning documents such as wills. A person can specify not only an inheritor of an object but can leave instructions to that person about what should be done with that object down the road.

It’s also a good idea to talk to your family members about your belongs as well. Divvying them up before your passing can not only save you time when preparing your will but you can have those serious conversations with your loved ones about why certain objects are important to you. By conveying your sentimental attachment to something, your loved ones may be more inclined to keep it in their possession down the road.

One of the major problems inheritors say they run into is having the room to put the belongings they inherit. One way to remedy this problem is to discuss estate sales. This way, the person passing on items can decide which ones they would like to see sold instead of later inheritors trying to figure out if selling something is “really what they would have wanted.”

Having these discussions and making these decisions are all part of a solid estate plan. Because in the end, if you can’t take it with you, make sure you determine its future before it’s too late.

Source: Wicked Local, “No longer save for generations, family heirlooms are being shed,” Kim Palmer, June 4, 2013

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HOW ONE FAMILY TURNED 5 CENTS INTO $3.1 MILLION

When it comes to our belongings, it’s often times hard to put a price tag on the things that hold sentimental value to us. Sometimes, when it comes time to sell those possessions, it’s amazing how much someone else will pay for something you may have thought to be worthless.

Such was the case for one family who wanted to see how much one particular family heirloom could fetch them. What started as the simple inheritance of a 1913 nickel that had been in their mother’s possession since 1962, soon turned into $3.1 million, providing the family with more financial security than they could ever imagine.

The heirlooms story began in 1912 when the coin was minted, along with four others, with the year 1913. Shortly after the coins were broken up in 1942, a man purchased one of the coins for a reported $3,750. When the man died in a fatal car accident in 1962, the nickel passed to his sister who was told that it was a fake.

Deciding to keep it as a family heirloom, the coin was placed in a box with other family items and stuck in a closet. Upon her death in 1992, the coin was inherited by her children. Despite being told that it was a fake, the children wanted to know if their family heirloom carried any value to someone else. Surprisingly, it did and the coin sold at auction for $3.1 million. After taxes, the children will split $2.7 million amongst themselves.

Although it was bittersweet to part with the coin, the family now has the means to invest their newfound inheritance for future generations.  Proof that even the smallest of assets in a will can turn into something big in the end.

Source: The Twin Falls times-News, “1913 nickel fetches more than $3.1M at auction,” The Associated Press, April 26, 2013

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ESTATE PLANNING WHILE MAKING RETIREMENT PLANS

When it comes to estate planning, many people in Texas want to leave a legacy for future generations by passing down any assets they may have accrued during life. But what some people don’t realize is that there is a lot of other planning that needs to be made before you pass away.

We’re talking of course about retirement planning and it may be surprising for some people to hear that estate planning and retirement planning tend to coincide more often than people think.

Let’s take for example your financial assets. People who want to leave behind a large sum of money to their inhabitants may have to realize that when they retire, their income may not be as large as they are used to. Keeping this in mind could greatly change when you retire and how much you end of leaving to your beneficiaries in the end.

It’s also important to think about any medical expenses that you may accrue. In a majority of cases, people don’t want to leave their loved ones with a mountain of bills. This not only lessen the amount they will receive from your inheritance but could cause considerable headache to the person in charge of your estate after your passing.

Making your intentions clear and in writing is probably the single most important piece of information that a person can hold onto when going into estate and retirement planning processes. If you don’t make your wishes known, the state could make many of the decisions for you which may make things harder on your loved ones in the process.

Whether you’re just beginning your career or a few years from retirement, it’s always a good idea to think about how your estate plans will affect your retirement, not to mention how your plans could be changed the other way around.

Source: CBS Money Watch, “Retirement planning: Get non-financial help,” Steve Vernon, March 6, 2013

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HOW GOING PAPERLESS IS CHANGING ESTATE PLANNING FOR THE FUTURE

We’re moving away from a paper driven society. Now, this may not be a new statement, but it’s surprising to find out how many people take this information for granted and an increasingly digital society would raise a few concerns than it is. Case in point: what happens to your digital assets after you pass?

Estate planning has seen this question come up time and time again in the past few years as more and more people are beginning to realize that a majority of their information and assets could be lost to cyber space if they were suddenly to kick the proverbial bucket tomorrow.

So what are experts suggesting people do as far as planning when it comes to their digital assets?

Although a majority of your digital assets may only hold personal or sentimental value-like family photos or the recording of your daughter’s first ballet recital-some of your more valuable assets, such as bank account and other financial assets, may be stored digitally. Automatic bill pay, though convenient now, could pose a problem down the road when it comes to dividing your assets to beneficiaries.

To avoid a lot of problems in the future, many experts suggest writing down any usernames and passwords and including them in your will; that way, in the event of your passing, your loved ones can have access to the same information that you were privy to in life. Be sure to also discuss with your estate planning attorney what can and cannot be included in your will when it comes to your digital assets. Though some states may have small laws that cover digital assets, others may not.

As our society pushes further away from the use of paper, we open ourselves up to a plethora of issues. And without the legal system on par with our advances, this can often times leave us wondering what we’re able to pass on to future generations or not.

Source: Investing Daily, “Securing Your Digital Assets,” Bob Carlson, Jan. 15, 2013

Questions about estate planning and wills? Check out our firm site for answers to these questions and more.

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MAKING SURE ALL YOUR DUCKS ARE IN A ROW BEFORE YOU CROAK

The title may sound insensitive, but the sentiment is something real estate planners can’t emphasize enough: make sure everything is prepared before you die.

But it’s not just property division and wills they’re talking about either, it’s the little things that people tend not to forget about like, who have I named as the beneficiary on my insurance policies and my retirement accounts?

Few people know that the named beneficiaries supersede those designated in wills. That’s why many lawyers point out that it’s a good idea to make sure that the names matchup between both sets of documents. By making the necessary changes now to your personal insurance plans, annuities and other financial accounts, you can make sure that assets are distributed according to your wishes. This is especially true in cases of sudden death; making the changes now will ensure that there is little to no confusion down the road.

It’s a good thing to keep in mind that you may place primary and secondary beneficiaries on estates, trusts, retirement accounts, life insurance policies, and transfer of death accounts. Beneficiaries, as we have mentioned previously to the readers of our blog, can be individuals or organizations. They also do not have to specifically be family members either; they can be friends, trusts, charities or even institutions.

One good way of making sure that your assets are being distributed to the right beneficiaries before you die is to keep copies of your beneficiary designation forms. Don’t have any copies of your forms? Simply request copies from your account providers or complete a new beneficiary designation form. By ensuring that everything is in order before you pass away, you’re saving a lot of headaches for your beneficiaries down the road.

Source: Fox Business, “Protecting Your Assets Even After You’re Gone,” Rick Parmanand, Oct. 26, 2012

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