Paul O. Dillon, Attorney at Law

Tasks to Be Done After a Loved One Passes

If you haven’t dealt with losing a loved one, the days and weeks after a death can be overwhelming. Pain and grief are paired with important tasks that must be done, or unnecessary stress will result, explains a recent article, “11 Financial Steps to Follow After the Loss of a Loved One,” from U.S. News & World Report.

An official declaration of death. If the death occurs in a hospital, the hospital will issue it. If the death occurred at home, a medical professional or first responder would make the declaration.

Obtain a death certificate. This usually comes from the funeral home. You’ll want to get five to ten original certificates, which will be used for various legal and financial matters.

Gather financial documents. This includes estate planning documents, a will, a trust, bank and investment account information, utilities and bills, insurance policies and tax returns.

Reach out to advisors. This includes the estate planning attorney, financial advisor, CPA and other professionals working with the deceased. They will be able to offer guidance as you go through the process of managing the estate.

Contact any government agencies. If your loved one was receiving benefits from Social Security, the Veterans Administration, Medicare, Medicaid, or any other government agency, you must notify them of the death. The funeral home may have already sent the SSA a notification. You may still want to confirm if it has been sent, as the ultimate responsibility for notification is the surviving spouse or adult child.

Contact financial institutions. The financial institutions, including commercial banks, brokerage accounts and insurance companies, will all need to receive an original death certificate. If there is a POD (Payment on Death) order, the balance on accounts will be transferred to the designated beneficiary. If there are life insurance policies, you’ll need to find the policy and identify the designated beneficiary.

Avoid identity theft. Contact credit agencies, including Experian, Equifax and TransUnion, to notify them of the death. You may need to contact one for the others to become aware. You should also close the social media accounts of the deceased. Depending on the platform, you may only be able to memorialize the account instead of deleting it.

Other important institutions to contact. The post office will need to be notified, although you may first want to have the person’s mail sent to your home directly. The motor vehicle department needs a notification of death to stop renewing licenses. Unions and professional, service, or fraternal organizations should be notified. There may be survivor’s benefits.

Voter registration. You’ll want to notify the deceased’s voter registration agency, so they can remove their name from voting rolls.

Prepare the final tax return. There are two tax returns to be aware of—the final income tax returns and the estate tax returns. Your estate planning attorney will know the deadlines for both.

Filing the will with the probate court. Once the will goes through probate and is approved by the court, the executor will be able to distribute the deceased’s assets in accordance with the will. If there is no will, the distribution will be overseen by the court and follow the state’s intestacy laws.

Settle any remaining debts. In most cases, the remaining liability on a mortgage or car loan will be payable by the person inheriting them. All other forms of debt, like student loans, credit cards and medical loans, will be charged against the decedent’s estate.

Carrying out these tasks during a difficult time is not easy. An experienced estate planning attorney can help make the process easier for all concerned.

Reference: U.S. News & World Report (Sep. 1, 2023) “11 Financial Steps to Follow After the Loss of a Loved One”

Beneficiary Mistakes to Avoid

Planning for one’s eventual death can be a somber task. However, consider what would occur if you failed to plan: loved ones trying to figure out your intentions, a long and expensive legal battle with unintended heirs and instead of grieving your loss, wondering why you didn’t take care of business while you were living. Planning suddenly becomes far more appealing, doesn’t it?

A recent article from yahoo! finance, “5 Retirement Plan Beneficiary Mistakes to Avoid,” explains how to avoid some of the issues regarding beneficiaries.

You haven’t named a beneficiary for your retirement accounts. This is a common estate planning mistake, even though it seems so obvious. A beneficiary can be a person, a charity, a trust, or your estate. Your estate planning attorney will be able to help you identify likely beneficiaries and ensure they are eligible.

You forgot to review your beneficiary designations for many years. Most people have changes in relationships as they move through the stages of life. The same person who was your best friend in your twenties might not even be in your life in your sixties. However, if you don’t check on beneficiary designations on a regular basis, you may be leaving your retirement accounts to people who haven’t heard from you in decades and disinheriting loved ones. Every time you update your estate plan, which should be every three to five years, check your beneficiary designations.

You didn’t name your spouse as a primary beneficiary for a retirement account. When Congress passed the 2019 SECURE Act, the bill removed a provision allowing non-spousal beneficiaries to stretch out disbursements from IRAs over their lifetimes, also known as the “Stretch IRA.” A non-spouse beneficiary must empty any inherited IRA within ten years from the death of the account holder. If a minor child is the beneficiary, once they reach the age of legal majority, they are required to follow the rules of a Required Minimum Distribution. Having a spouse named as beneficiary allows them to move the inherited IRA funds into their own IRA and take out assets as they wish.

You named an estate as a beneficiary. You can name your estate as a beneficiary. However, it creates a significant tangle for the family who has to set things right. For instance, if you have any debt, your estate could be attached by creditors. Your estate may also go through probate court, a court-supervised process to validate your will, have your final assets identified and have debts paid before any remaining assets are distributed to heirs.

You didn’t create a retirement plan until late in your career. Retirement seems very far away during your twenties, thirties and even forties. However, the years pass and suddenly you’re looking at retirement without enough money set aside. Creating an estate plan early in your working life shifts your focus, so you understand how important it is to have a retirement plan.

An experienced estate planning attorney can help square away your beneficiary designations as part of your overall estate plan. The best time to start? How about today?

Reference: yahoo! finance (Dec. 19, 2022) “5 Retirement Plan Beneficiary Mistakes to Avoid”

After 34 Years, Nursing Home Receives $1 Million Donation

Both the timing and the amount of Oscar Geckler’s gift to St. Luke Lutheran Community was unusual, to say the least. His last will and testament, 27 pages long, had very specific instructions concerning a donation only available 34 years after his death. The $1 million donation, as described by a recent article, “Stark County nursing home gets $1M donation after 34-year wait” from The Repository, is a great example of just how much control can be exerted through estate planning.

When Geckler died, Ronald Regan was president, and now-President Biden was a young senator from Delaware. Oscar and his wife Bernadine lived on a farm at the northwest corner in Nimishillen Township, outside Canton, Ohio. The property wasn’t at all neat and tidy. Those who knew him said the farm was littered with broken-down tractors and Oscar was a bit of a tightwad. The couple had financed a few projects at their church, but what neighbors didn’t know was that the same man who raised sheep and pigs and milked his own cows was also an avid reader of The Wall Street Journal.

He invested wisely and was worth $2 million when he died.

The couple had no children of their own, although he had two from a prior marriage. His estate was meticulously planned out. He had created four separate trusts to ensure his wife and other family members would be financially secure after his death.

Funds in one of the trusts were dedicated to care for the cemetery gravesites of Oscar and his wife, along with seven other family members.

However, the will had more details. Grave upkeep was to continue for exactly 19 years and 1 day after the death of the last Geckler family member. Bernadine died on October 3, 2002, and the clause expired in early October 2021.

The $ one million gift will help support St. Luke’s retirement communities, which have struggled during the COVID-19 pandemic. The church operates many facilities throughout the area, ranging from independent living to skilled nursing care. Most of the money will be spent in North Canton, where Geckler lived.

In 2004, an attorney representing St. Luke went to probate court in an effort to reform the trust. The thinking was to obtain some part of the donation before its expiration date, since so much money was in the trust—far more than was needed to maintain the gravesites. The request was to take $750,000 from the trust and leave the rest for gravesite maintenance.

The judge denied the request. “Pure economic expedience simply is not a basis for reforming or accelerating distribution of trust assets….” was the explanation. Otherwise, the clear direction and expressed intent of Oscar Geckler would be violated. St. Luke’s would have to wait, but the wait is now over.

Trusts are used in an estate plan to achieve your wishes, whatever they may be, including unusual requests, like Oscar Geckler’s. Your estate planning attorney can create a plan to suit your individual and unique wishes.

Reference: The Repository (Oct. 4, 2021) “Stark County nursing home gets $1M donation after 34-year wait”

Can You Make Heirs Behave from the Grave?

Imposing strange or amusing conditions upon heirs may make for good novels. However, in the real world, terms and conditions are limited by the law. A last will or trust contains language specifying how you want assets to be distributed after your death. There are some conditions and terms included, but others should be left for fiction authors, according to a recent article titled “What Can You Force Your Heirs to Do To Get Your Wealth” from Forbes.

If something is illegal or against public policy, it is not acceptable in a last will. Defining public policy is not as easy as whether something is illegal, but it can be described effectively enough, or clarified by your estate planning lawyer. For example, making a gift of land to the town on the condition that an offensive statue be placed in the middle of the land would be against public policy. Requiring an individual to not marry a specific person or type of person before they can inherit is considered illegal in a last will. Beneficiaries are not to be prevented to live their lives freely through the force of a last will.

Whether a condition is valid also depends upon whether it is a precedent that existed at the date of your death or a condition that occurs after your death. For instance, a requirement for a beneficiary to live in a specific location at the time of your death might be considered valid by a court. However, a condition requiring a spouse to never remarry would not be valid.

Blatantly illegal terms of an inheritance are easy terminated. Leaving money to a known terrorist organization or requiring an heir to commit a crime is an easy no-go. However, sometimes things get murky. Restraints on getting married or selling or transferring property are two of the biggest problems, and often the stories behind the last wills are sad ones.

A condition of not marrying, divorcing, or remarrying is not legal. However, a condition that the beneficiary does not marry outside of the faith has been enforced as a valid last will condition. A complete prohibition of a second marriage by a surviving spouse has been deemed void. It should be noted that certain requests have been permitted, like having a surviving spouse lose payments from a trust when they remarry. As antiquated as it may sound, courts have affirmed the concept of the specific limitation to provide financial support only until the surviving spouse remarries and is, therefore, not void.

A probate court will not void a condition on a bequest automatically, even if it is clearly illegal. The beneficiary, or another interested party, must file with the probate court to have the condition voided. If you fail to do so, when the last will or trust is allowed, it is possible to lose your right to void the condition.

A better way to go: don’t try to control your heir’s behavior from the grave. It creates terrible ill will and may cloud a lifetime of happy memories. If you don’t want to give something to someone, your estate planning attorney will help you create an estate plan, and possibly a trust, to control how your assets are distributed.

Reference: Forbes July 21, 2021 “What Can You Force Your Heirs to Do To Get Your Wealth”

Disney Grandson Loses Appeal of Probate Court’s Decision

Bradford Lund, Walt Disney’s adult grandson, lost an appeal in a battle with a Los Angeles probate judge who appointed a guardian ad litem without a hearing and rejected a proposed settlement that would have given Lund a $200 million inheritance, says this recent article “Walt Disney’s Grandson Loses Appeal in Fight for $200M Inheritance” from The Hollywood Reporter. Despite its decision, the appellate court described the probate court’s behavior as “troubling.”

In 2020, Lund filed a lawsuit in California federal court arguing that his due process was violated when a County Superior Court judge rejected a settlement reached by family members and trustees. The judge appointed a guardian ad litem, even though an Arizona judge had determined that Lund was not incapacitated and another judge in California stated that Lund had the capacity to choose new trustees.

The lawsuit was later amended to include a claim under the Americans With Disabilities Act because in the 2019 settlement, Judge Cowan had stated that he would not give 200 million dollars to someone who may suffer, at some level, from Down syndrome.

Six months later, a U.S. District judge dismissed the matter. During the appeals process, the Superior Court discharged the guardian ad litem and granted Lund’s request for a new judge.

The 9^th Circuit Court of Appeals affirmed the dismissal, finding that most of Lund’s claims had become moot, as a result of the judge recusing himself and removing the guardian ad litem. The panel also held that, while the judge’s statements were inappropriate and without factual basis, they were protected by judicial immunity.

It may be small comfort to Lund, but the 9^th Circuit judge criticized the probate court and acknowledged his frustration with the system. The district judge no longer serves in probate court, although no connection between his departure and the Lund matter was recognized by the 9^th District.

Regarding the ADA claim, the panel of 9^th Circuit judges says that judges must remain completely independent, and subjecting judges to liability for grievances of litigants would compromise that.

Reference: The Hollywood Reporter (July 16, 2021) “Walt Disney’s Grandson Loses Appeal in Fight for $200M Inheritance”

Celebrity Estate Planning Mistakes

The size and scope of the mistakes made by celebrities may be enormous, but many of the mistakes are common for, well, us common people. Learning estate planning lessons from the mistakes made by celebrities and very wealthy people is a good way to prevent yourself from making those same mistakes, says the recent article “Lessons to be Learned From Failed Celebrity Estates” from Forbes.

Let’s start with James Gandolfini, famed for his role in The Sopranos and many movies and television shows. Strangely, he left only 20% of his estate to his wife. Had he left the entire estate to his wife, the family would not have gotten stuck with a huge tax bill. Instead, 55% of his total estate, including a significant art collection, had to be sold to pay estate taxes.

James Brown, the godfather of soul, left copyrights to his music to an educational foundation, tangible assets to his children and $2 million for his children’s education. That sounds like smart thinking, but his estate planning documents contained a great deal of ambiguous language. His girlfriend and her children challenged the estate. Six years and millions in estate taxes later, his estate was settled.

Michael Jackson’s estate fail is a classic error. He had a trust created but failed to fund it. The battle in the California Probate Court over control of his sizable estate could have been avoided.

Howard Hughes, famed entrepreneur, aviator and engineer wanted his $2.5 billion fortune to go towards medical research, but no valid will was found. Instead, his assets were divided among 22 cousins. Before he died, he did take the step of gifting Hughes Aircraft Co. to the Hughes Medical Institute. The company was not included in his estate, but everything else was.

Author Michael Crichton was survived by his pregnant fifth wife, and a son was born after his death. Crichton failed to update his will to include the future offspring. His daughter from a previous marriage fought to exclude his son from the estate. His will included language that specifically overrode a California statute that would have included his son in the estate. All heirs not otherwise mentioned in his will were to be excluded.

Doris Duke inherited a tobacco fortune. When she died, she left a $1.2 billion estate to her foundation, with her butler in charge of the foundation. The result was a series of lawsuits claiming that the foundation was being mismanaged, and cost millions in legal fees. Foundations of that size need a strong management team to avoid legal challenges.

Few estate failures are as graphic as that of Casey Kasem. The famed radio personality’s estate battle after his death included kidnapping and the theft of his corpse. His wife and children from a prior marriage fought over his care, his end-of-life care and the disposition of his remains.

Iconic artist Prince died without a will. The Queen of Soul, Aretha Franklin, died without a will, then handwritten wills were found in her home weeks after she died. For both families, lawsuits, court proceedings and huge estate tax bills could have been avoided.

If you don’t have an estate plan, get it started. If you haven’t looked at your estate plan in a while, have it reviewed. Make provisions for your family, take a close look at potential tax liabilities and if you have been married more than once, make sure to have a rock-solid estate plan that will withstand challenges.

Reference: Forbes (June 18, 2021) “Lessons to be Learned From Failed Celebrity Estates”

Prince’s Estate Troubles Back in the Headlines

The Internal Revenue Service has said the executors of Prince’s estate made a serious mistake in their calculations, reducing its value by about $80 million, as reported in the article “IRS says Prince’s estate undervalued by 50%, triggering another dispute in settlement” from the Star Tribune.

The discrepancy comes from the value of music publishing and recording interests, according to court documents. The IRS claims Prince’s estate owes $32.4 million in federal taxes, about double the tax bill as valued by Comerica, a financial services giant. That is a pricey difference, but it is not the only bad news for heirs.

The IRS has slapped the estate with a $6.4 million accuracy related penalty, to be paid by Prince’s estate, because of the sheer size of the undervaluation.

Estimates of Prince’s estate’s net worth have varied from $100 to $300 million, since the time of his death. There was no will and no estate plan when Prince died in 2016, creating one of the largest and most complicated probate court proceedings in Minnesota’s history.

Comerica and the law firm representing the financial institution maintain that the estate valuations are accurate. This past summer, Comerica sued the U.S. Tax Court in Washington, D.C., charging the agency with having many mistakes in its calculations.

The IRS believes the fair market value of Prince’s ownership of NPG Music Publishing should be $36.9 million, and not $21 million as calculated by the estate. The estate placed the value of his ownership of NPG Records at $19.5 million, and the IRS says it is actually worth $46.5 million.

With a case dragging on for more than four years, Prince’s six sibling heirs are increasingly unhappy. Prince’s heirs range in age from 50 to 80 and one brother has already died of heart disease in 2019. They have seen the estate shrink, as tens of millions of dollars are being paid to consultants and lawyers.

In the meantime, Primary Wave, a company that invests in music copyrights, has been very interested in the estate, and two of the siblings have already agreed to sell large portions of their rights to Primary Wave. The company recently spent a reported $100 million to purchase an 80% interest in Fleetwood Mac star Stevie Nick’s publishing rights, and Bob Dylan sold his song catalog to a different company for around $400 million.

Eventually, when the case does settle, the siblings will enact their own “transition plan” to the Carver County Probate court, according to recent court filings.

Reference: Star Tribune (Jan. 2, 2021)  “IRS says Prince’s estate undervalued by 50%, triggering another dispute in settlement”

Estate Planning Is Best When Personalized

Just as a custom-tailored suit fits better than one off the rack, a custom-tailored estate plan works better for families. Making sure assets pass to the right person is more likely to occur when documents are created just for you, advises the article “Tailoring estate to specific needs leads to better plans” from the Cleveland Jewish News.

The most obvious example is a family with a special needs member. Generic estate planning documents typically will not suit that family’s estate planning.

Every state has its own laws about distributing property and money owned by a person at their death, in cases where people don’t have a will. Relying on state law instead of a will is a risky move that can lead to people you may not even know inheriting your entire estate.

In the absence of an estate plan, the probate court makes decisions about who will administer the estate and the distribution of property. Without a named executor, the court will appoint a local attorney to take on this responsibility. An appointed attorney who has never met the decedent and doesn’t know the family won’t have the insights to follow the decedent’s wishes.

The same risks can occur with online will templates. Their use often results in families needing to retain an estate planning attorney to fix the mistakes caused by their use. Online wills may not be valid in your state or may lead to unintended consequences. Saving a few dollars now could end up costing your family thousands to clean up the mess.

Estate plans are different for each person because every person and every family are different. Estate plan templates may not account for any of your wishes.

Generic plans are very limited. An estate plan custom created for you takes into consideration your family dynamics, how your individual beneficiaries will be treated and expresses your wishes for your family after you have passed.

Generic estate plans also don’t reflect the complicated families of today. Some people have family members they do not want to inherit anything. Disinheriting someone successfully is not as easy as leaving them out of the will or leaving them a small token amount.

Ensuring that your wishes are followed and that your will is not easily challenged takes the special skills of an experienced estate planning attorney.

Reference: Cleveland Jewish News (Dec. 9, 2020) “Tailoring estate to specific needs leads to better plans”

How Does Guardianship Work?

For the most part, we are free to make our own decisions regarding how we live, where we live, how we spend our money and even with whom we socialize. However, when we are no longer capable of caring for ourselves, most commonly due to advancing age or dementia, or if an accident or illness occurs and we can’t manage our affairs, it may be necessary to seek a guardianship, as explained in the recent article “Legal Corner: A guardian can be a helpful tool in cases of incapacity” from The Westerly Sun. A guardianship is also necessary for the care of a child or adult with special needs.

If no proper estate planning has been done and no one has been given power of attorney or health care power of attorney, a guardianship may be necessary. This is a legal relationship where one person, ideally a responsible, capable and caring person known as a guardian, is given the legal power to manage the needs of a ward, the person who cannot manage their own affairs. This is usually supported through a court process, requires a medical assessment and comes before the probate court for a hearing.

Once the guardian is qualified and appointed by the court, they have the authority to oversee everything about the ward’s life. They have power over the ward’s money and how it is spent, health care decisions, residential issues and even with whom the ward spends time. At its essence, a guardianship is akin to a parent-child relationship.

Guardianships can be tailored by the court to meet the specific needs of the ward in each case, with the guardian’s powers either limited or expanded, as needed and as appropriate.

The guardian must report to the court on a yearly basis about the ward’s health and health care and file an annual accounting of what has been done with the ward’s money and how much money remains. The court supervision is intended to protect the ward from mismanagement of their finances and ensure that the guardianship is still needed and maintained on an annual basis.

The relationship between the ward and the guardian is often a close one and can continue for many years. The guardianship ends upon the death of the ward, the resignation or removal of the guardian, or in cases of temporary illness or incapacity, when the ward recovers and is once again able to handle their own affairs and make health care decisions on their own.

If and when an elderly family member can no longer manage their own lives, guardianship is a way to step in and care for them, if no prior estate planning has been done. It is preferable for an estate plan to be created and for powers of attorney be created, but in its absence, this is an option.

Reference: The Westerly Sun (Sep. 19, 2020) “Legal Corner: A guardian can be a helpful tool in cases of incapacity”

Do Unmarried Couples Need Estate Planning?

A couple that has no intention of ever getting married should know that they won’t get the automatic rights and protections that legally wed spouses get, particularly when it comes to death. Therefore, unmarried couples must make a concerted effort to cover all the bases, says CNBC’s recent article entitled “Here’s what happens to your partner if you’re not married and you die.”

The number of unmarried couples who live together reached 18 million in 2016, a 29% increase from 14 million in 2007, according to the Pew Research Center. Among adults age 50 and older, the increase was 75% with roughly 4 million cohabiting in 2016, compared to 2.3 million in 2007.

These couples still face some key differences from their married counterparts. For example, there’s no filing federal taxes as a couple, and if an employer allows health insurance for a partner, the amount the company contributes is taxable to the employee, rather than being tax-free for a spouse.

End-of-life considerations also need attention. Unmarried couples can sign some legal documents that will dictate what happens, if one of them either becomes incapacitated or passes away, which is a type of estate plan.

If you die without a will or intestate, the state probate court will decide how your assets are distributed. A will by itself also won’t address everything. If you want to make sure your tax-advantaged retirement accounts — like your Roth IRA and 401(k) plans — go to your partner, make sure that individual is the designated beneficiary on those accounts. Even if your will says otherwise, whoever’s listed as the beneficiaries on those accounts will get the money. It’s the same for insurance policies and annuities.

If both partner’s names are on checking, savings or investment accounts, the account will pass directly to the surviving partner. However, for an account with only one partner’s name on it, ask the bank about the appropriate form to be completed, so the money is left directly to the surviving partner. This is what’s called a transfer-on-death or payable-on-death designation. Without this designation, the assets will end up in probate and distributed either in accordance with the will or intestacy state laws.

Regardless of how the mortgage is paid or whose name is on the loan, the person named on the deed is the owner. If the house in one partner’s name, it won’t automatically pass to the partner, as it would with a married couple (via joint tenancy with rights of survivorship). It would become part of the probate estate. To remedy this, you can retitle the home, so that both partners are listed as joint owners on the deed, “with rights of survivorship.” Each partner then equally owns the house and is entitled to assume full ownership upon the death of the other. Note that there could be other factors to consider before adding a partner’s name to an existing deed, such as expenses, tax implications and protection from potential creditors. Ask your estate planning or probate attorney before you make a change. A partner owning the house, could leave it to the surviving partner in the will. Remember, though, any asset passing via the will is subject to probate, which may lead to unforeseen issues.

In addition, a partner has no legal say in his or her partner’s medical treatment, if he or she is in a situation where they can’t make decisions for themselves. To give the partner that right, partners can grant each other a durable power of attorney over health care. This allows the partner to make important health-care decisions, if the one in the hospital is unable to do so. This is different from a living will, which states a person’s wishes if they are on life support or suffer from a terminal condition. This document helps guide the agent’s decision-making. If no one is named, medical personnel must follow the instructions in that document.

Likewise, partners may want to give each other durable power of attorney for finances. This would let them handle one another’s money, including accessing accounts as necessary, if the incapacitated partner could not do so.  If the partners have dependents, name a guardian for them in the will. Otherwise, that decision will be left to the courts.

Reference: CNBC (Dec. 16, 2019) “Here’s what happens to your partner if you’re not married and you die”