Jarvis Law Office

Could Presidential Election Determine Future of Estate Tax?

Donald Trump and Hillary Clinton have vastly different views on many if not most issues in this year’s Presidential election but one key difference is their opinions on the future of the estate tax as New York Times columnist Paul Krugman explains in “Hair Meets Heirs” where he details the possible impact.

Donald Trump has proposed to abolish the estate tax entirely while Clinton is proposing to expand it. Krugman is a well-known liberal economist so it should not be surprising that he favors Clinton’s proposal and dismisses Trump’s.

The interesting thing about his opinion is not which side he favors. Instead, it is that he believes a large margin of victory for Hillary Clinton could open the door to Democrats being much more aggressive about the estate tax in the future.

America is very divided over the estate tax and that probably is not going to change anytime soon.

Whichever side you take in the debate, it is worthwhile to understand the differences between the presidential candidates and what the election could mean for the future of the estate tax.

Reference: New York Times (Aug. 10, 2016) “Hair Meets Heirs”

Value of Rights Vary When Celebrity Passes Away

The selling of the musical works of a deceased musician often brings little money while publicity rights have considerably more value which creates unique planning issues, according to IP Watchdog in “How do Estates Monetize Images and Intellectual Property of Dead Celebrities?”

Unlike copyrights which are the subject of federal laws and the same everywhere in the U.S., publicity rights are a matter of state law. Their scope changes from jurisdiction to jurisdiction. A deceased celebrity who lived in Florida may leave an estate with very different publicity rights than a deceased celebrity who resided in New York.

Virtually every jurisdiction in the U.S. does recognize publicity rights, but the details vary. Some foreign jurisdictions, such as the United Kingdom, do not recognize the rights at all.

Estate planning is important but it is also important to choose the right estate planning attorney who is familiar with the laws of your state.

Reference: IP Watchdog (Aug. 10, 2016) “How do Estates Monetize Images and Intellectual Property of Dead Celebrities?”

Redstone Court Battle Becomes Even More Complicated

The Daily Mail has reported a new development in the ongoing court fight over the competency of Sumner Redstone in its article “Sumner Redstone's granddaughter sues for $6million and seat on family trust after saying her aunt Shari was abusive and even threatened to kill her.”

At the bottom of the case is the issue of undue influence and whether Redstone’s daughter is manipulating him. His granddaughter believes that is what happened and she has joined the case asking that she be reinstated to the family trust.

The granddaughter has previously accused her aunt of threatening to kill her and declaring that Redstone should not be taken to a hospital if he gets ill. She claims that Redstone did not trust his daughter’s business judgment and wanted her to have nothing to do with running his businesses.

Redstone and his daughter were estranged for several years and the current legal battles began when the daughter reentered the mogul’s life and he began changing his estate plan to favor her.

While that does not mean there was undue influence and that Redstone is not competent, it does lead to the possibility of it.

Reference: Daily Mail (Aug. 3, 2016) “Sumner Redstone's granddaughter sues for $6million and seat on family trust after saying her aunt Shari was abusive and even threatened to kill her.”

Medicare Requires Patients Be Notified of Upcoming Costs

Congress has moved to help alleviate problems caused by a quirk in the Medicare admittance law, according to a report in The New York Times “New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage.”

If a patient is formally admitted to a hospital and Medicare rules it was not done properly, there is no reimbursement for the bill. Because of this, many doctors may keep the patients in the hospital under observation and there is no distinction to the patients at the time. They will receive the same treatments. However, it makes a big difference if a Medicare patient is later admitted to a nursing home for treatment and rehabilitation.

Under such circumstances, Medicare will not cover the nursing home stay unless the patient was formally admitted into a hospital for at least three days. This leaves many patients without insurance coverage for their nursing home care and they are required to pay for their stays.

Under the new law Medicare patients who have been in a hospital under observation for 24 hours must be given notification about their status and what that can mean for subsequent Medicare reimbursement. This should give patients the opportunity to speak with their doctors and request that they be formally admitted to the hospital.

Some members of Congress are also seeking to fix the problem completely and allow time spent in a hospital under observation to count the same as time spent formally admitted to a hospital as the same for reimbursement purposes.

Reference: New York Times (Aug. 6, 2016) “New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage.”

An Estate Plan May Include Possibilities Such as Alzheimer’s

The cost of Alzheimer’s should be taken into consideration in an estate plan, according to Market Watch in “What to know about Alzheimer’s and retirement planning,” because receiving care for Alzheimer’s is more expensive than getting care for other common end of life conditions.

In reality, however, it is extremely important that estate planning does not stop at determining the distribution of your assets because a big part of estate planning is also making sure that your needs will be met at the end of your life. Ideally, this is done so you will still have an inheritance left for your heirs. As there is a good possibility that at the very end of your life you will be sick and in need of care, estate planning is thus also about planning for that sickness.

The cost of Alzheimer’s should be taken into consideration in an estate plan as Market Watch discusses in “What to know about Alzheimer’s and retirement planning,” because receiving care for Alzheimer’s is more expensive than getting care for other common end of life conditions. Therefore, the cost of Alzheimer’s is a good benchmark for planning.

Estate planning for Alzheimer’s is not just about money. It is also about making sure you have already planned ahead and legally appointed a capable person or persons who can look after your affairs. That means getting a general durable power of attorney and a health care power of attorney.

An estate planning attorney can guide you through the process.

Reference: Market Watch (July 7, 2016) “What to know about Alzheimer’s and retirement planning”

Lump Sum Payments Can Cost Heirs of Retirement Accounts

Market Watch recently discussed some typical options that are important to spouses that inherit retirement accounts in “Inheriting a retirement account? Lump sum payouts can be costly.”

They include:

• Lump Sum Cash Payment – The surviving spouse has the option of cashing out the account with a single lump sum payment. This is the most costly option in terms of taxation.
• Monthly Benefits – Most plans allow a surviving spouse to receive a monthly benefit for life. Whether this is a better option than taking a lump sum depends on the life expectancy of the surviving spouse. It is also a good choice if the surviving spouse does not want to invest the money.
• IRA – A surviving spouse can normally transfer the account assets into an IRA. The assets will then be treated as if they were always the property of the surviving spouse.
• Inherited IRA – Transferring into an inherited IRA is another option available to a surviving spouse. This is can be very beneficial if the surviving spouse is much younger than the pensioner.

An estate planning attorney can guide you in your options.

Reference: Market Watch (July 25, 2016) “Inheriting a retirement account? Lump sum payouts can be costly.”

Remarriage Should Cause Second Look at Estate Plan

Remarriage should spark a renewed interest in your estate plan, according to a CNBC article “Getting remarried? Protect your assets and your interests.”

Most of the difficulty in an estate plan caused by divorce and remarriage can be avoid if the estate plan is updated properly to reflect the circumstances.

The CNBC article lists some common estate planning mistakes that people make when getting remarried, including:

• Not deciding whether beneficiary designations on financial accounts should be changed.
• Not having a plan for which assets can be comingled with the new spouse’s assets and which should not be.
• Not having an estate plan at all.
• Not considering a prenuptial agreement.
• Failing to give proper verbal instructions to family members.
• Not deciding whether a house needs to be re-titled.
• Not purchasing long term care insurance or otherwise planning for nursing home care.

An estate planning attorney can guide you in avoiding the problems.

Reference: CNBC (July 28, 2016) “Getting remarried? Protect your assets and your interests.”

Retirement Is Not the Time for Regrets

Some people make the decision to focus on work and wait for retirement to enjoy life. But sometimes regrets set in as the Washington Post reported recently in “How to retire without regrets.”

Some of those regrets include:

• Not starting to save for retirement soon enough causes many people to not be able to afford the lifestyle they want in retirement.
• People often regret not retiring earlier than they do and find that their health no longer allows them to do everything they wanted to do during retirement.
• Another common regret is not seeking professional financial help earlier in life.
• People who have pension plans often regret not setting up those plans to give a benefit to a surviving spouse.
• People who do not know all of the tax implications of withdrawing from retirement accounts tend to regret making decisions that require them to pay more taxes than necessary.
• Many people come to regret not knowing when to change from saving as much money as they can to being able to spend more of it.

Some people are always going to have regrets.

An estate planning attorney can help guide you and avoid those regrets.

Reference: Washington Post (July 30, 2016) “How to retire without regrets.”

Treating Your Children Fairly through Your Estate

Sometimes parents treat children differently because one child may have more needs than another but adult children may not think the same way as discussed in The New York Times in “How a Will Treating Children Differently Can Still Be Fair.”

Children often view their parents’ final bequests as a proxy for favor and love. Their initial reaction to a parent leaving more for one child than another is that the parents love one child more than the other.

For parents, however, that is not normally the case.

Instead, the parents view it as an extension of what they have always done and just giving more to the child who needs it more. This difference of opinion about the meaning of unequal inheritances can lead to sibling fights over their parents’ estates.

There is often a very simple way such fights can be avoided.

Before passing away the parents can talk to their children about what they are thinking of doing in their estate plans and why.

An estate planning attorney can guide you in taking care of the needs of your children as well as treating them fairly.

Reference: New York Times (July 29, 2016) “How a Will Treating Children Differently Can Still Be Fair.”

Most of claims by Prince’s ‘Heirs’ are Rejected

Most of the claims to be heirs of Prince have been dismissed by a judge, according to a CNN report “Prince's possible heirs narrowed down to six.”

Prince did not have an estate plan which has led many people to file claims with the court claiming they are closely related to Prince. Many of those claims were very weak.

For example, one person claimed that someone told him that his mother named him after Prince and thus he filed a claim to be the musician’s son.

In a single decision, the judge overseeing the case has dismissed most of the claims of those claiming to be Prince’s heir as CNN reports in “Prince's possible heirs narrowed down to six.”

A total of 29 claims were dismissed including 18 claims to be the late musician’s child.

The ruling leaves six claims to be related to Prince open. They include a possible sibling, three half-siblings, a niece and a grandniece. The remaining claimants will undergo DNA testing to see if their relation to Prince can be verified.

Determining who Prince’s heirs are is just the first step in settling his estate. After this step is completed, it will still need to be determined exactly how the estate should be divided between the heirs, who will be in control of Prince’s musical legacy and how the estate will pay the estate tax bills.

Even a simple estate plan could have avoided much of the controversy and confusion following the death of Prince.

Reference: CNN (July 29, 2016) “Prince's possible heirs narrowed down to six.”