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Your Children Could End Up Paying for Your Retirement

Most of those people who are not saving might think it will only be a problem for them as they might have to work longer than they expected, but that is not the case as Motley Fool explains in "If You Don't Save for Retirement, Your Kids Might Suffer."

The people who often end up being hurt by those who do not save for retirement are their children as those children end up supporting their elderly parents. This can be a huge burden for the children because those who support their parents often have debts of their own they have not paid off. It makes it less likely those children will be able to save for their own retirements, which will have later repercussions for their children.

Another way your children can be harmed by you not saving money for retirement is they will not receive an inheritance from you. Inheriting from parents can be a beneficial way for adult children to pay off their debts and save for themselves. Even a small inheritance is helpful.

An estate planning attorney can guide you in planning for the future.

Reference: Motley Fool (May 15, 2016) "If You Don't Save for Retirement, Your Kids Might Suffer."

Sumner Redstone's Legal Problems Benefit Someone

The legal actions over Sumner Redstone's competency may be the cause of Viacom's stock prices taking a severe hit but someone is profiting as the New York Post reports in "Sumner Redstone's legal saga has lawyers rolling in cash."

The current fight over Sumner Redstone's competency and his decision to oust Viacom's CEO, Philippe Dauman, from his family's trust and holding company is something of a media circus and a three-way battle between Redstone, Dauman, and Redstone's daughter, Shari Redstone. The battle is not only being waged in court, but also in the media, both in the mainstream press and in the tabloids.

To the surprise of the judge in the case at a recent hearing 22 lawyers stood up to make an appearance. As costly as it is to have a lawyer appear in court, it is almost certain there is an even greater cost in paying all of the lawyers who did not appear in court but who are likely working on the case in the large law firms that represent the parties.

Public relations firms are also profiting from the situation as they have been hired to help control the narrative in the media.

Many of the difficulties presented by this case can be avoided by guidance from an estate planning attorney.

Reference: New York Post (June 11, 2016) "Sumner Redstone's legal saga has lawyers rolling in cash."

Drummer's Long-Lost Wife Gets Nothing from Estate

Phil Taylor, drummer for the rock band Motorhead, died recently and left his long-lost wife nothing in his estate, according to the Daily Mail in in "Motorhead drummer Phil Taylor snubs his 'lost' wife in his £1 million will."

The public first learned about this wife in Taylor's will in which he acknowledged her and claimed to not to have had contact with her since shortly after their marriage. Taylor had actually divorced Thera Ann Johnson about two weeks before his death. Although he was unable to find her to have divorce papers served upon her, the divorce was granted because the two had been separated for such a long time. Taylor's two sisters will receive most of his estate.

Taylor passed away in the United Kingdom and that country's laws will apply to his will. It is still useful, however, to understand what would happen in the U.S. in a similar situation.

Ordinarily, it is not possible to exclude a spouse from a will completely. A spouse who is excluded can accept that decision or he or she can choose to take a portion of the estate that is called a "spousal elective share." The portion varies from state to state and often by the length of the marriage, but it is normally 50%.

An exception can often be made in cases where the surviving spouse has abandoned the deceased. The court can decide to not allow the spousal elective share because of abandonment. However, that is only if the couple was married at the time of death. In this case they had been previously divorced. As long as the divorce is valid, then the spousal elective share law does not apply.

Reference: Daily Mail (June 11, 2016) "Motorhead drummer Phil Taylor snubs his 'lost' wife in his £1 million will."

Unusual Circumstances Focus of B.B. King's Estate

Despite the fact he had been told he could not father children, B.B. King did not dispute any claims by women who said he was the father of their children and he acknowledged 15 children born from 15 different women, according to the Hollywood Reporter in "B.B. King's Estate War: 15 Kids, 15 Moms and a "Totally Haywire" Fight."

At present, 11 of those children are still alive and three more people have claimed that they are also King's children since he passed away.

This unusual family situation has sparked an intense fight over King's estate. The trustee of the estate who was King's former business manager claims the estate is worth approximately $5 million. The children, however, believe it is worth much more than that.

There is also a dispute over which trust created by King is valid.

The children claim that a will and trust created in 2007 should be used as it gives the children quite a lot of money. The trustee, however, is using a trust created in 2014, which does name the children, but does not leave any of them anything specific.

The one thing that is almost certain is that this fight will go on for a long time due to the number of parties involved and the bizarre nature of their involvement.

Reference: Hollywood Reporter (May 26, 2016) "B.B. King's Estate War: 15 Kids, 15 Moms and a "Totally Haywire" Fight."

Estate Planning Should Be Considered If You're in the Military

If you have a dangerous profession such as the military then estate planning can give you piece of mind as explained in Kiplinger's article about some of the estate planning tools available for members of the military in "Estate Planning for Military Families."

The advice includes:

• Low Cost Life Insurance – Active duty military members are able to purchase low cost term life insurance through the Servicemembers' Group Life Insurance plan.
• Legal Documents – Most on-base legal assistance offices are able to draft basic wills and powers of attorney for members of the military. For some younger people these documents might be enough, but others might consider hiring a civilian estate planning attorney.
• Beneficiary Designations – Military members need to be certain that the beneficiary designations on their IRAs, life insurance and thrift accounts are always up to date.
• Military Pensions – Those who qualify for a military pension can decide to have it continue for a beneficiary after they pass away. This does come at a cost and reduces the amount of retirement pay received for those who choose the option.
• Other Benefits – Surviving spouses can roll payments received from the Servicemembers' Group Life Insurance plan into an IRA. This is a great option for people who do not have an immediate need for the life insurance payment.

Reference: Kiplinger's (May 27, 2016) "Estate Planning for Military Families."

Boxing Legend's Estate May Prove Complicated

Boxing icon Muhammad Ali has passed away leaving a sizeable estate and the Daily Mail recently reported on what is currently known about his estate in "Ali's family to spar over his $50million fortune: Fourth wife Lonnie will act as executor as his NINE children, exes and brother prepare to enter the ring for a slice of inheritance."

The known details include:

• It is believed that Ali's fourth wife, Lonnie, will act as the executor of his estate.
• His known potential heirs include nine children, a brother and his ex-wives. However, it is not currently known which if any of them will inherit a portion of Ali's estate or how much. For that reason, it is not currently possible to know whether a challenge to his estate plan is likely.
• It is estimated that Ali's net worth at the time of his passing was approximately $50 million.
• Up until the time of his death Ali continued to earn money through the company he founded, GOAT LLC. However, he sold the majority of the company a few years ago and retained only a 20% interest in it.
• His estate also includes property in Arizona and Kentucky. It is also possible that his estate will include memorabilia from his fighting days that could potentially be worth millions.

Reference: Daily Mail (June 2, 2016) "Ali's family to spar over his $50million fortune: Fourth wife Lonnie will act as executor as his NINE children, exes and brother prepare to enter the ring for a slice of inheritance."

The IRS and Whitney Houston Estate Square Off

Family battles have played a big part in the estates of Whitney Houston and her daughter Bobbi Kristina. However, one last battle remains in Whitney Houston's estate and it is currently in tax court in a dispute with the Internal Revenue Service over the value of the estate, according to the Hollywood Reporter in "Whitney Houston Estate Challenges $11 Million Tax Bill."

The IRS claims the estate underreported the value of Houston's estate by $22.6 million and that $11 million is owed to the government, which includes a $3 million penalty fee. The bulk of the discrepancy is over the value of song and performance royalties as well as the value of the late singer's albums.

However, the two sides also disagree over the value of the publicity rights.

Even though the IRS and the estate only differ by $200,000 over the value of the publicity rights that is the dispute legal observers will watch the most closely.

Why?

The outcome has potential implications for similar disputes in other celebrity estate tax battles, including Michael Jackson and Prince.

This case has only recently gone to court so it is likely to be a while before an outcome is reached.

Reference: Hollywood Reporter (May 27, 2016) "Whitney Houston Estate Challenges $11 Million Tax Bill."

Entertainer's Estate Holds Sale

Joan Rivers was a collector of fine items and, according to Bloomberg in "The Surprising, Precious Antiques in Joan Rivers's Estate Sale," collectors will get their chance to bid on some of her collection as Christies is holding an estate sale for her estate. The total value of the items to be sold is estimated at $1.5 million.

Of most interest to collectors are some of the Faberge items Rivers had purchased over the years.

Estate sales are becoming more popular with the estates of people from all walks of life, not just the rich and famous. They are a relatively easy way for estates to dispense of items that heirs either do not want, have no place for or need to sell for money. Rather than selling items themselves piece by piece, heirs can allow an auction company to handle everything for a percentage of the proceeds.

In fact, the estate sale industry is becoming so popular that people are not waiting for their estates to sell off their possessions. Many older people are contacting estate agents as they seek to transition to simpler living conditions or just get a lifetime's worth of clutter out of their homes.

Reference: Bloomberg (June 3, 2016) "The Surprising, Precious Antiques in Joan Rivers's Estate Sale"

Do the Wealthy Relocate to States with Lower Taxes?

Legislative fears that wealthy residents will leave a state if taxes are raised are unfounded according to a study discussed in "Higher Taxes Don't Scare Millionaires Into Fleeing Their Homes After All" published recently by Private Wealth.

State governments across the U.S. face a dilemma because legislators often fear that if they raise taxes on their wealthiest residents, those residents have the means and ability to move to other states that have lower taxes.

The possibility of this happening is guaranteed to be mentioned in any legislative debate about the appropriate amount to tax the wealthy.

The new study looked at 13 years of data and concluded that very few wealthy people move to pay lower taxes. The study found that rich people move because of taxes only 2.2% of the time. In fact, millionaires move to different states at a lower annual rate than the general population.

People who only make $10,000 a year are more likely to move to another state than are millionaires. The reason for this is that wealthy people are not normally idle. They are employed or own their own businesses. They cannot simply pick up and move.

This study looked at income tax rates. It will most likely be cited in estate tax debates as well. That could be a mistake as once the wealthy retire it stands to reason that it is easier for them to move.

Reference: Private Wealth (May 26, 2016) "Higher Taxes Don't Scare Millionaires Into Fleeing Their Homes After All"

Settling Estate Can Still Be Problem for Same-Sex Partners

Different laws enacted by New Jersey over the years in an attempt to grant same-sex partners rights has proven to be a problem as revealed in Bloomberg BNA in "Same-Sex Partner Not Spouse for New Jersey Estate Tax Break."

In 2004 New Jersey passed a domestic partnership law giving same-sex couples who registered as domestic partners some of the legal protections married couples enjoy. For example, the law exempted a surviving partner from paying the state's inheritance tax, but not the estate tax.

New Jersey is one of the few states with both taxes and requires that the higher of the two be paid. Long time partners Rucksapol Jiwungkul and Maurice R. Connolly Jr. registered as domestic partners in that same year.

In 2007 New Jersey passed a civil union law exempting same-sex couples from both the estate tax and the inheritance tax. Jiwungkul and Connolly did not enter into a civil union as a matter of principle.

Same-sex marriage became legal in the state in 2013 and the two made plans to wed but six days before the planned wedding Connolly passed away unexpectedly. Jiwungkul was the executor of the estate. In that capacity he paid approximately $100,000 to the state for the estate tax.

Later he filed an amended tax return and asked to have the amount refunded, claiming that he should be exempt from it. The state refused and the case went to tax court.

The law in the case was clear. As Jiwungkul was a domestic partner he was not entitled to the estate tax exemption. The court could have granted him an exemption by citing extraordinary circumstances, but the judge declined to do so.

The case illustrates that same-sex couples still need to be mindful about what different legal statuses mean for their estates.

An estate planning attorney can advise you on rights within your state of residence.

Reference: Bloomberg BNA (May 17, 2016) "Same-Sex Partner Not Spouse for New Jersey Estate Tax Break."