Paul O. Dillon, Attorney at Law

Not Everyone is Happy in Margaritaville as Estate Battle Brews

Last week, Jimmy Buffett’s widow, Jane Buffett, filed a petition in a Los Angeles court to remove the co-trustee from a marital trust created for her benefit. She alleges that the co-trustee was openly hostile, adversarial and refused to give her details on the trust, according to CNBC in the article “Battle over Jimmy Buffett’s $275 million estate highlights risk of family trusts.”

The co-trustee, Richard Mozenter, has filed a lawsuit of his own in Palm Beach County. He alleges that Jane Buffett has been uncooperative in his efforts to manage the trust, interfered with business decisions, refused to meet with him and breached her own fiduciary duties.

While Jimmy Buffett’s brand is all fun and sun, he was no stranger to estate planning. His last will and testament was first written more than 30 years ago, amended in 2017, and again in 2023. It directed most of his assets to be placed in a marital trust for Jane, with the remainder beneficiaries being the couple’s three children. This means they will receive any remaining assets from the trust after their mother’s death.

Buffett also named a co-trustee to manage the trust, appointing Mozenter, who had been his business manager and financial advisor for three decades.

The Buffett estate is considerable. He was a very successful entrepreneur, building an empire and merchandising business exceeding the value of his song catalog. The court documents state that assets in the estate include $34.5 million in real property, $15 million in a company that owns his many airplanes and $12 million in investments. One of his largest assets is his share in Margaritaville, the popular chain of bars, restaurants, hotels and merchandise, estimated to be worth $85 million.

The relationship between the two co-trustees went south after Jimmy Buffett’s death. Jane says her co-trustee refused to provide her with basic information, set enormous fees to manage the trust, and, after a delay, told her she’d be receiving $2 million a year after Margaritaville had paid distributions of $14 million over the previous 18 months.

Appointing a co-trustee is considered standard practice. However, tensions between the beneficiary and the co-trustee often rise to litigation. Two lessons emerge: communicating estate planning decisions to beneficiaries and those in key roles should occur in advance. If Buffett had explained the co-trustee roles to Jane and Mozenter, clarified what would occur after his death, and set expectations, they might have done better together after his passing.

The second lesson: when trusts are established with co-trustees, a provision permitting a removal right is a wise move. This would have allowed Jane to remove Mozenter and replace him with a professional trustee. Friends and business associates may not always make suitable trustees, as the beneficiary may have a different relationship with the trustee.

Establishing an estate plan is the first step. Sharing your decisions and seeing if co-trustees can work together is best done while you’re still living to prevent dueling trustees from embroiling your estate in litigation.

Reference: CNBC (June 13, 2025) “Battle over Jimmy Buffett’s $275 million estate highlights risk of family trusts”

Estate Planning Strategies During Volatile Markets

If timed correctly, a short-term Grantor Retained Annuity Trust (GRAT) is something to be considered when markets are bumpy, says a recent article from mondaq, “Estate Planning Amid Market Volatility: Leveraging GRATs.”

If investments have dropped in value, they can be transferred to a GRAT. If the investment returns to its original value, the difference between the value at the time of transfer and the long-term value could pass to the next generation without incurring any gift tax. This is not a guaranteed event, requiring steel nerves and patience. However, it could reap significant benefits.

Short-term GRATs can be used to transfer income appreciation in investments to offspring at a low gift tax cost. What characterizes a short-term GRAT? It has a stated term of two to four years, and during that time has an obligation to pay the funder the retained annuity. When it ends, any property remaining in the trust is distributed to the children with no gift or estate tax. If you die before the end of the trust, the remaining property reverts to your estate.

The goal of this strategy is to let children receive investment returns on property more than a stated IRS interest rate. Since the beginning of 2023, this has fluctuated between 4% and 6%. If the funds in the trust generate a total return higher than the IRS rate, the children could receive the excess return. If the property doesn’t return at least the IRS rate, all the trust assets are repaid to you. The children may not have received anything from the trust. However, there’s no loss to them.

If you made a gift of the property and then the property lost value, you’d have paid gift tax at a value higher than what was received by your heirs. The same would be true if you made a loan to your children and they either had losses or didn’t achieve a return equal to the minimum IRA rate, as they would owe the principal amount of the debt.

Here’s an example let’s say you transfer $1 million in assets to a two-year GRAT, and the children invest the funds, earning a 6% annual return. At the end of two years, they’d get a tax-free gift of about $50,000 to $80,000.

You’d transfer $1 million to the trust, and the trust would promise to pay $510,000—$530,000 at the end of the first year (depending on the IRS interest rate), and an additional $510,000—$530,000 at the end of the second year. The annual payments are your “retained annuity.”

There is a small taxable gift at the time the trust is established. If the trust had promised a smaller amount, there would have been a bigger gift when it was established. If the trust earns 6% during the first year, the net value is $1,060,000. The trust would pay you $520,000. The remaining $540,000 would be invested for the second year, earning a 6% return of $32,400. At the end of the second year, the trust would have $572,400, and you would be owed the second annuity payment of $53,000.

The GRAT is deliberately limited to two years to avoid offsetting gains against losses. If the trust had a six-year life span and experienced 12% gains in the first two years, then a loss in years three and four, and then gains again in years five and six, with the bad years offsetting the good years, the amount payable to your children would be reduced.

By establishing a new trust every two years, it’s more likely you’ll capture the gains in good years. The short term also increases the chances of your not dying during the term of the trust, which would undermine any gains.

This strategy is not suitable for every investor, since it involves risks. Talk with your estate planning attorney to see if it might be something to benefit you and your family.

Reference: mondaq (June 12, 2025) “Estate Planning Amid Market Volatility: Leveraging GRATs”

Why Everyone Should Have an Estate Plan

When prepared with an experienced estate planning attorney, estate planning ensures that loved ones are taken care of and your estate is ready to be distributed after you’ve died with as little stress or confusion as possible. Consider estate planning as a tool for peace of mind, says a recent article, “Essential steps for effective estate planning” from MSN.

Clarify your personal and family situation. You’ll want to define your heirs—spouse, partner, children, stepchildren, extended family and others who are important to you. Your marital status matters too—married, single, in a long-term relationship? Do you live in a community property state? Do you have dependents, including children, disabled individuals, or elderly parents? All these facts determine how assets are divided.

Create an inventory of what you own and any debts. This list begins with major assets, such as a home, cars, business shares, retirement funds, and insurance policies. Don’t forget digital assets, including social media sites, cryptocurrency, websites and any e-commerce businesses. Also list your debts, including home mortgage, car loan, credit cards, home equity loans and any other debts. Do you have any complex holdings, like offshore accounts or private companies?

What are your goals for your family and your wealth? Who do you want to receive your property, and what if those people aren’t living when you die? Do you have a plan to pay for college for children or grandchildren? Are you prepared for the costs of long-term care for yourself or a loved one? If there is an organization or a cause important to you, it might also be part of your estate plan. These decisions may feel like they don’t need to be made until sometime in the future. However, the future has a way of showing up way before we’re ready.

Put the plan into action. Make an appointment with an experienced estate planning attorney to put your wishes into an actual estate plan. Name an executor to manage your will, and a guardian if you have minor children. Check on beneficiary designations on all bank and investment accounts and life insurance policies. Discuss the use of a trust with the attorney to see if it would be useful. Review potential tax impact and plan for any estate taxes on the state or federal level. Be sure there’s enough liquidity so your executor will be able to settle the costs of your estate and help loved ones while the estate is being settled.

Get good professional advice. Estate planning is the creation of living documents, and they need to be updated as your life and laws change. An experienced estate planning attorney will be able to help you realize goals in the face of change and protect your family now and for future generations.

Reference: MSN (June 11, 2025) “Essential steps for essential estate planning”

How to Pass Land Using a Disclaimer Trust

A husband dies, with an estate plan presenting two options to his surviving spouse: she can either inherit family farmland outright or disclaim it to a separate trust for her benefit. If she chooses the trust, she will receive income for life, and upon her death, the disclaimer trust will be divided equally among her three children. How to manage this situation is explored in an article from Successful Farming, “Should Land Go Into a Disclaimer Trust or Pass to the Spouse?”

Her concern is valid, as only one of the children is farming the land, and he’s concerned about how his siblings will accept the decision. She was told that the trust would be a good option due to its tax advantages. What are her options? There are five key elements to consider:

Estate taxes. In 2025, the federal estate tax exemption is $13.99 million per person. If she disclaims her husband’s portion of the land to the trust, the value won’t count towards her own personal estate. If she keeps the land, she can take advantage of portability for her husband’s exemption under IRS Form 706. Her own estate tax limit will increase to almost $28 million. The ported tax credit will remain flat as the estate’s value grows.

Asset protection. If the land goes into the disclaimer trust, it’s in there for good, and income and principal distribution rules can’t be changed. This is beneficial for protecting assets from creditors, as well as any complications arising from a second marriage or incapacity. However, is it beneficial for the family? If they need protection, the disclaimer trust is the place for the land. However, if they need it to be accessible, it should remain outside of the trust.

Asset control. The trustee is the fiduciary responsible for assets in the disclaimer trust. They can set a rent price and make decisions on capital improvements. Questions need to be clarified regarding requirements in the trust documents. Do these rules work for the family’s best interest, or is it better to have rules as defined in the surviving spouse’s will?

Distribution. Assuming the disclaimer trust ultimately divides the land between the three siblings, it lacks a means of keeping the land together. How will the son continue farming, knowing the land will be divided? Retrofitting a farm succession plan is like trying to move crops from one field to another. They won’t look pretty and may or may not grow.

This scenario is not unlike the situation many small business owners find themselves in when the spouse who has created a business dies and no succession planning has been done. An appointment with an estate planning attorney is crucial for creating a comprehensive plan that encompasses the farm, business and family for both the near and distant future.

Reference: Successful Farming (June 9, 2025) “Should Land Go Into a Disclaimer Trust or Pass to the Spouse?”

How to Craft an Estate Plan to Foster Family Closeness

One of the many reasons for having a will and an estate plan is to have your wishes carried out after you pass away. However, suppose that your will, trust, or other estate planning tools lead to family conflict. In that case, you’ve missed the opportunity to solidify family ties, says a recent article from Kiplinger, “Is Your Will Fair? Estate Planning Is About More Than Money.”

Can you avoid conflict following your passing?

If your estate plan is for siblings, an equal division of assets is the most obvious solution. This doesn’t mean someone won’t fight over mom’s favorite porcelain bowl. However, it’s a good starting point. A common refrain in estate planning is “what’s equal isn’t always fair, and what’s fair isn’t always equal.”

If one child is a successful professional married to another successful professional with an annual income of more than $500,000, and the other is a stay-at-home mother to three children married to a teacher, an equal split may not be.

Asset distribution isn’t just about money. Consciously or not, children equate their inheritance with how much they are loved. When distributions aren’t equal, resentment can be sparked, even when the financial disparities are as dramatic as the example above.

If the family includes an individual with disabilities, equal division could put any means-tested benefits at risk. An additional level of planning is necessary, including the establishment of a Special Needs Trust to hold assets and the appointment of a trustee to oversee the distribution of funds.

Don’t ignore the impact of sentiment on a family, especially when grief is fresh. Suppose your family spent endless hours learning to play the piano on a beautiful and valuable instrument in the living room. In that case, they may all want to bring the piano to their own families. However, you can’t divide a piano into three. One strategy would be to gift the piano to one child, leaving the remaining children with other assets equal in value to the piano. This may be financially fair, but there may still be some emotional pangs.

Fairness in a will or estate plan requires looking at the big picture and addressing not just the money, but the emotional responses to your loved ones. Open and honest conversations with heirs, and, if possible, allowing them to be part of the estate planning process, may be the best approach. Addressing concerns while you are living, versus having grieving family members try to figure out your intentions after you’ve passed, will be a gift to you all.

Another consideration: your heirs may not feel the same way about specific assets as you think. You might think your youngest son would want the family piano, but a frank discussion may reveal he hates the piano and the lessons and wants no part of it.

If your family doesn’t have a good track record with candid conversations, your estate planning attorney may recommend family meetings with a social worker. It may take more time and effort. However, keeping the family intact after you have passed could be more important than any financial inheritance.

Reference: Kiplinger (June 11, 2025) “Is Your Will Fair? Estate Planning Is About More Than Money”

Why are Beneficiary Designations Important?

Before she died in 2023, a retired chemistry teacher had a trust established to hold her assets and distribute her estate, ensuring that her assets, valued at approximately $1 million, would be divided among her nephew and three other nieces and nephews. She also had a will created, says the article “What Your Estate Plan May Be Missing,” from The New York Times. It seemed she had thought of everything, until the nephew and a cousin, who were co-executors, discovered she had missed something.

Her individual retirement accounts (IRAs), which had been properly placed within the trust, didn’t have any beneficiary designations. She thought it was taken care of through the trust, which had been funded with her IRAs. Unfortunately for her heirs, this mistake led to extensive paperwork, stress and considerable delays.

Major brokerage firms like Vanguard and Fidelity ask their account owners to name designated beneficiaries when they open IRAs or 401(k)s. Sometimes, even having those in place doesn’t cover the assets the same way as a will can. To ensure a smooth distribution of assets, an estate plan should include both a last will and testament and designated beneficiaries on all financial accounts.

The will contains instructions for dividing assets, like real estate, investments and cash, upon the death of the testator. If you die without a will, the state will take over how those assets are distributed, based on its laws.

Every state has its own inheritance laws. It is often the person’s closest living relative, but not always. Without a will, a probate court will make the decisions, regardless of what they might have thought would happen.

Many people think that if they don’t have a will, the state will do what they would have wanted, but that’s not always the case. While a surviving spouse may get the house, financial accounts and cars first, the assets may also be divided between the spouse and the children. Minors may not receive inheritances directly, so the court will need to appoint a guardian. The guardian will oversee the assets, not the surviving spouse, and the court will need to be involved throughout the children’s lives until they reach adulthood.

Passing down real estate also becomes complicated without proper planning. One example: until a deed is transferred to the new owner, the property can’t be sold. If there’s a fire or flood before ownership is transferred, an insurance company is likely to deny a claim because the deceased homeowner owned the policy, not the heirs.

In addition, state laws about inheritance don’t consider how modern families have evolved. A couple who never married or a parent who didn’t adopt a stepchild may be surprised to learn a distant cousin has more claim on the estate than the partner or the stepchild.

A court must administer wills. However, designated beneficiaries have an easier time obtaining their inheritance. They need to show their own personal identification and the account owner’s original death certificate.

Naming beneficiaries helps your heirs bypass probate, allowing them to receive assets with no court involvement. However, you still need a will to name a guardian for minor children, an executor to manage your estate and detail who you want to receive personal possessions, like jewelry or collectibles.

Having a will and a trust is the best way to ensure that assets are distributed according to your wishes, making life easier for those you love. Speak with an experienced estate planning attorney to discuss your estate plan and check your documents for beneficiary designations—do this today.

Reference: The New York Times (May 3, 2025) “What Your Estate Plan May Be Missing”

Creating Wealth Across Generations with Estate Planning

Estate planning is something everyone needs to do, regardless of the total value of their estate. Having a clear plan in place is the only way to ensure that property, personal possessions and investments are inherited by the people you love. If your goal is to help your family build wealth, this is especially important, according to an article from Forbes, “Building Generational Wealth: How to Ensure Your Assets Last.”

Without a last will and testament, the state decides who should receive property based on the intestacy laws, which are not likely to reflect your wishes. When Prince died without a will, it took many years to untangle his estate, not to mention the millions paid in federal and state taxes.

For parents, the most important decision in crafting a will is deciding who will be their children’s guardian and naming someone to take care of their finances in case of incapacity.

The myth that trusts are only for ultra-wealthy individuals is starting to fade, as more people understand how trusts work. Trusts provide a way to control distribution over time, building a legacy and protecting assets from creditors as well as spendthrifts. With a trust, you can create long-term strategies to distribute assets over multiple generations.

Family conflict is recognized as one of the most significant challenges to creating a successful estate plan. Open and honest conversations about the parents’ vision for their inheritance and understanding the reasons behind their decisions can help avoid conflict after they pass away. For some families, this is an ongoing discussion, while for others, it may be helpful to have the entire family meet with an estate planning attorney in an office setting.

Wealthy parents often worry about children squandering their inheritance. Using trusts can set restrictions on how inheritances are spent and control their distribution. Another reason to consider trusts for an estate plan: money kept in a trust cannot be attached in case of a divorce or debt. Assets can be directed to be spent only on health, education and maintenance.

Estate planning isn’t just about death. It’s also about protecting you while you’re living. An estate planning attorney will help create Power of Attorney documents so you can decide who you want to take over your finances if you become incapacitated. Healthcare documents allow you to name a person to be involved with your medical care, making decisions and talking with doctors. Without healthcare documents like a Healthcare Proxy, HIPAA Release Form and Living Will, your family won’t be able to talk with doctors, make crucial medical decisions, or know what you would have wanted if you weren’t able to speak to convey your wishes.

A consultation with an experienced estate planning attorney is the first step in creating a plan to establish a legacy. It takes some time, so start by making an appointment. Your future self and your family will be grateful.

Reference: Forbes (June 3, 2025) “Building Generational Wealth: How To Ensure Your Assets Last”

When Should You Update Your Estate Plan?

Almost everyone who completes an estate plan says they feel a great peace of mind knowing they have accomplished this. However, estate plans need to be periodically reviewed to reflect the changes and events of life. According to a recent article from Florida Today, “Life can change on a dime. Here’s how to tell if it’s time to change your estate plan,” certain major life events are the most common reasons to update an estate plan.

Known as “trigger events,” these include marriage, divorce, birth or adoption, death of a loved one, moving to a new state and retirement. If someone named in an estate plan to act as executor, trustee, or guardian dies, those roles must be filled promptly, and the documents must be updated accordingly.

Updating beneficiary designations is all too often overlooked. Beneficiary designations on life insurance policies, retirement accounts and Payable On Death (POD) accounts override any provisions in a will or trust. If you don’t update beneficiary designations, someone you love may end up with nothing, while someone you once loved could receive an unexpected and generous gift. Review these designations to be sure that they reflect your current wishes, not your past loves.

Laws change, both on a state and federal level. While you may be following the headlines to learn what changes are coming to the estate tax from Washington, your own state might make changes to how property is transferred. A change to the law could undo your estate plan’s intentions. Your estate planning attorney monitors local, state and federal changes to laws impacting tax and inheritance. Contact them with your concerns and understand that you may need to make adjustments to ensure that your wishes are followed.

Financial situations change, for good or bad. If you’ve bought real estate, invested in a business, or purchased cryptocurrency, all these need to be addressed by your estate plan. If you’ve declared bankruptcy or have been hit with large medical debts, your estate plan may need to be adjusted. The same goes for charitable giving goals. If you have a change of heart about a charity you used to support and want another charity to benefit from your generosity, you’ll need to put this change on paper.

Children grow up, even though it may not seem like this will ever happen when they are young. When they reach adulthood and the necessary level of maturity, you may want to name them as executors, trustees, or healthcare surrogates in place of other family members. This is also a good time to review trusts that contain provisions regarding specific milestones.

An estate plan includes protecting your health and well-being. It’s advisable to make sure that your estate planning documents are ready for any eventuality, especially if you haven’t reviewed them in a long time. This includes Power of Attorney, healthcare directives, living wills, HIPAA release forms and other relevant documents. Medicaid planning is something to discuss with your attorney as part of planning for long-term care.

If it’s been more than three years since your estate plan was reviewed, even if nothing in your life has changed, it’s a good idea to review your estate plan. Even minor discrepancies or changes can have significant impacts. Regular reviews help to identify any gaps, ensure that the estate plan works with current law and reflect changes to financial status and relationships.

Reference: Florida Today (May 31, 2025) “Life can change on a dime. Here’s how to tell if it’s time to change your estate plan”

How to Protect Elderly Parents from Scammers

Thieves and scammers are increasingly skilled at devising ways to swindle seniors out of their life’s fortunes, according to a recent article from the Hendersonville Standard, titled “Protect yourself and your loved ones from scammers and opportunists.” Sadly, we must worry about lonely grandparents being targeted by online romance scams. However, this is a real threat today. Fortunately, an estate plan created by an experienced estate planning attorney can provide strong guardrails against fraud and theft.

A living trust is one of the most effective ways to protect assets. Unlike a will, which doesn’t become effective until after a person dies, the living trust becomes active immediately upon its execution. A trustee or co-trustee can manage and protect assets in the trust while the original owner is still living. This is especially important in the case of incapacity.

Trusts help in multiple ways:

• The trustee or successor trustee can take over if necessary.
• A professional fiduciary may be named if no family members are willing or able to serve.
• A trust protector or trust committee can be created with the authority to replace or remove a trustee without needing to bring the matter to court.
• Amendments may be made if needed to qualify for Medicaid or gain tax advantages.

There are many different types of trusts. Therefore, you should speak with a qualified estate planning attorney to determine which is the right one for your situation.

There are other ways to protect vulnerable people from scammers. Their bank and financial advisors should have the ability to add a trusted contact—usually an adult child—to their accounts and ensure that they are alerted in case of large or frequent withdrawals.

Have a Power of Attorney and Medical Power of Attorney created while the parent is still competent. These documents allow a trusted person or people to step in and handle your legal, financial and health matters if the parent is unable to.

A smart step to take: Use the Social Security Advanced Designation tool to name a trusted person as a representative payee and do this before it’s needed.

If you suspect foul play, have your Social Security numbers frozen with all three credit bureaus, including Equifax, TransUnion and Experian. This can be done to prevent further identity theft.

A scam is always one click away in today’s world. However, having the right legal tools in place before they are needed will protect you and your loved ones. Talk with your estate planning attorney today to protect your tomorrow.

Reference: Hendersonville Standard (May 29, 2025) “Protect yourself and your loved ones from scammers and opportunists”

What Is Gifting in Estate Planning

There are several ways to decrease the size of a taxable estate, all while minimizing taxes to your estate and heirs. A recent article from Investopedia, “Tax-Smart Giving: How to Gift $1M Without the IRS Calling,” says the federal gift tax is applied when one individual transfers property to another and doesn’t receive anything in return.

A gift can be any transfer of funds, property, or assets, including cash gifts, loan forgiveness, or the sale of real estate for less than its market value. You may also be able to make an interest-free loan as a gift. An important note: check with your estate planning attorney to be sure any gifts align with your overall estate plan.

Who pays taxes on a gift? The federal gift tax is paid by the person giving the gift, aka the donor, and not the recipient. A portion of the value of all gifts is tax-free. In 2025, the exclusion is generous—$19,000 per person per year. A gift can be made to as many people as you want to give a gift to. Married couples may make a gift of up to $38,000 tax-free.

Unless your estate is worth more than $13.99 million in 2025, chances are you don’t have to worry about gift taxes. Annual gifts made during your lifetime are worth more than the exclusion for the applicable year, allowing for even more generosity. The gifts can be carried over to the value of your estate, making your entire lifetime gift and estate tax exclusion $13.99 million.

One caveat: the IRS should be advised annually of any non-exempt portion being carried forward, using IRS Form 709. File the form even if you don’t owe any gift taxes. This includes making gifts with a spouse, making a gift to a non-U.S. citizen spouse, or making a gift of future interests. Some people prefer to file a Form 709 to help them track their gifting, while others consider the form a minor detail to prevent unanticipated issues.

For tax planning, you may want to give as much as possible before December 2025 ends. Some spouses give the same individual $19,000 on December 31 for one year, then make the same amount almost immediately after New Year’s Day. This is a per-year limit, making it possible for a married couple to gift $76,000 without carrying any portion over to the following year.

There’s another reason to use the lifetime exclusion.  A portability provision allows married couples to transfer any unused portions of the $13.99 million lifetime gift and estate tax exclusion to a surviving spouse.

Keep in mind that some gifts are not considered gifts. If you are writing checks for tuition or medical care, those are not considered gifts. The only way around this would be to write checks to the family members and have them use the money for tuition or medical care.

The current federal tax rate on gifts and estates is 40% in 2025. If you neglect to fill out a Form 709 and exceed the limit, you’ll have to make a sizable gift to the IRS.

Speak with your estate planning attorney and CPA about how to use these various limits to minimize your tax liability and enhance a legacy for loved ones.

Reference: Investopedia (June 1, 2025) “Tax-Smart Giving: How to Gift $1M Without the IRS Calling”