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Update: The Estate of Prince, Two Years Later…

Update: The Estate of Prince, Two Years Later…

 

UPDATE:  THE ESTATE OF PRINCE, TWO YEARS LATER

The world mourned the death of Prince on April 21, 2016.  After the initial shock of his death, apparently from a drug overdose, passed, his estate became a central issue with his surviving relatives.

Right after his death, I wrote that his probate estate would be a mess:

https://www.legacylawmissouri.com/prince-died-what-about-estate/

Unfortunately, I was right.

First, none of his heirs have received a dime from the probate estate.  That’s in part because Prince had not even created a will, which complicated things initially because hundreds of people came out of the woodwork claiming to be related to the singer.

Since then, it has been determined that his six surviving siblings will share equally in his estate.  However, there’s an ongoing issue:  The executor of his estate and the IRS cannot agree on what the estate is worth.  Until they do, nothing can be distributed to the siblings.

So who is getting paid from the estate?  The executor and their lawyers have collected $5.9 million in fees and expenses.  They’ve requested additional fees already and more are obviously expected after that.

A rich celebrity like Prince should have had a will at the very least.  That was either a failure of him to follow advice from what you can only imagine was a team of managers, lawyers and accountants or, less likely, the advice was never given to him by his team which would be incredible incompetence.

Had Prince created a will, the beneficiaries of that will would have been determined right away.   The process would definitely be further along and likely the will would have contained terms regarding the assets of his estate and directions to the executor.

Had Prince created a properly funded living trust St. Peters (or series of trusts more likely) he could have avoided probate all together and his estate would be resolved in private.  It would be a quicker process and a much cheaper one.

And likely his heirs would already be spending their inheritance.

Oscar Nominated Film Highlights Guardianship Issue…

Oscar Nominated Film Highlights Guardianship Issue…

OSCAR NOMINATED FILM HIGHLIGHTS ISSUES FOR GUARDIANS AND TRUSTEES

            The movie “Manchester By the Sea” recently garnered an Oscar award for Casey Affleck, who won “Best Actor”.  In the movie, he plays a man dealing with the loss of his older brother who soon discovers he is the backup guardian and trustee for his nephew.  The guardianship in the issue mainly plays in the background but it highlights what I consider to be a common issue for people who’ve lost a loved one and are suddenly thrust into the role of taking care of legal affairs for the deceased.

The struggles of Affleck in the movie are familiar ones for people who’ve been in that position.  His character is shocked to be in charge, never actually expecting to serve as guardian and trustee.  He struggles immediately to straddle the line between the unfamiliar role of assertive father to his nephew while also trying to find middle ground between the needs of the nephew and his own life.  In particular, Affleck struggles with the prospect of relocating his life back to a place that he left for good reason, all in service of his brother’s wishes.

He struggles with the emotional details of arranging the funeral of his departed brother, including having to delay the burial because it’s the middle of winter.  He has to delay his own grieving process to assist the nephew with his.

It’s actually these struggles that make the movie so moving and well done.

I rarely find myself impressed with how Hollywood portrays legal issues on screen.  From the imaginary fiction that the death of every person require a dramatic reading of their will at a cramped law office to the ridiculously dingy and dim lighting of New York city courts in “Law and Order”, Hollywood mostly fails to find a middle ground between reality and fantasy in its portrayal of legal matters.

This movie is different in that respect.  It captures the essence of the pain of dealing with death, from the obvious standpoint of emotion but also with the pesky details that have to be covered when it happens.

In my own practice, the reality of how my clients choose people to be in charge of their estate plan often takes quite a bit of time with clients.  Part of that reality is a suggestion from me that my clients actually talk to the people that they name as guardians, powers of attorney, trustees and executors.  Seems like common sense but it’s surprising that often people don’t discuss these matters.

Is that a role the chosen person will actually fill if necessary?  Do they have a life now that would allow for time to be effective if they were suddenly the legal guardians of your children?  Are they being chosen just because they’re a relative and nearby?  Are they too old already to serve if the time to serve was a decade away?  Do your children have a close relationship with the person you chose or is it just you that is close to that person?

I will give away one secret about the movie:  Casey is a better actor than his brother.

 

 

Keep Your Original Will In A Safe Place…

Keep Your Original Will In A Safe Place…

Keep Your Original Will In A Safe Place…

I recently had a case where the aunt of a client had passed away but we could only find a copy of her will.  With some research, we were able to discover that the original will, drafted in 1985, was kept by the Nevada attorney after it was drafted and signed by the aunt.  That was apparently his office policy and some attorneys do have this policy (my firm does not).  When the Nevada attorney retired a few years ago, he apparently sent the original will to the decedent aunt by mail, with a note explaining he was retiring and to keep the original will in a safe place.

However, the original will was either never received by the aunt, or, more likely, at some point, got thrown out.   In the copy of the will, my client was listed as the alternate beneficiary and alternate executor after her uncle and her mother, who had both predeceased the aunt.  Accordingly, when aunt died my client was to be the executor and to receive everything in the estate.  Luckily, most everything in the estate had been placed into a trust and my client was named the alternate trustee of that trust.

The only asset left out of the trust, and thus part of the probate estate was a pesky bank account, having a value of just under $15,000.

Since the probate court requires an original will and we could not locate it, we had to file an affidavit from the client explaining the circumstances of when and how the original will was lost, what steps were taken to try to locate the original, who else assisted in this process and the circumstances of the Nevada attorney sending the will and it never being found.

We also filed a Petition to Admit a Copy of a Will in St. Charles County Probate Division and had to set the matter for hearing.  It’s a somewhat uncommon issue, so there was a little confusion between the court staff about what needed to be filed.  We ultimately filed everything that was needed and were able to secure a hearing date after a few months.

There was a bit of pressure on both my client and myself.  If the will was not admitted, then the aunt would have been deemed to have died intestate (without a will).  Under Missouri law, my client and each of her many cousins would be entitled to an equal share of the bank account.

At the hearing, my client was put on the stand and had to give testimony related to the lost will, including the facts related to the last few months of her aunt’s life, when she had moved to and lived in St. Charles County.  My client was very close to her aunt and this was upsetting for her having to recite these things in open court, including the care she took of her aunt around the time of her passing.

Happily, based on our filings and my client’s testimony, the court correctly found there was sufficient evidence to admit the copy of the will as the original and the proceeds of the account were, pursuant to the terms of the will, distributed solely to my client.

Now that this matter is behind us, I figured this story would make for a good example of the importance of keeping your original will, and all of your original estate planning documents, in a safe place.

Where Do I Keep My Estate Plan?

Where Do I Keep My Estate Plan?

Where Do I Keep My Estate Plan?

New clients of Legacy Law Center often arrive for our first conference with their existing estate plan documents. More often than not, these documents are out of order and have the look of paper that has never been read. They are sometimes still in envelopes that have never been opened. So we spend the first five minutes of the office unbundling all of these documents to see what these documents say.

A policy at our office is that finished estate plans are always put in binders and every document is tabbed in the binder so that it can be easily found. Part of our final instructions also informs the client where to keep their documents.

Those instructions are always the same. The originals in the binder should always be kept in a safe place, and either locked up or not locked up depending on the client’s preference and circumstances. Some clients want them locked away and that works fine as long as the person named in the document as power of attorney / executor / trustee has a copy and knows how to get the locked up originals.

I am not a huge fan of safe deposit boxes at banks. For one thing, if you need to get those documents in a pinch and it’s after business hours or a Sunday, you’re out of luck. Another issue is the cost. I just don’t think the utility of a safe deposit box is worth the cost. Clients can use safe deposit boxes, however, if they want to. The better bet is to have them tucked away in a safe at home. That will likely be cheaper, still provide security and resolve the issue of obtaining the documents at any time.

At our office, we also give the clients a set of copies and a PDF scan of the signed estate plan. The latter version makes it very easy to get a copy to the people they have chosen to be in charge in the future. All our clients have to do is forward the PDF to them via email or if they prefer, on a thumb drive or CD. Whatever works for them.

We also always advise our clients that they should immediately provide a copy of their signed healthcare power of attorney and healthcare directive to their primary care physician (their “PCP”) and any specialists they see (cardiologist or neurologist for example). A copy of the documents should always be out in a place where it can be grabbed quickly, such as a kitchen drawer or a file in a home office. Finally, we advise clients to put a copy in their car. If you get a call that your spouse has been taken to the hospital and you are at work, all you have to do is drive to the hospital. Bring a copy when you travel as well. Let’s face it, accidents are more likely to happen when you are trying out scuba diving in Aruba than when you are sitting at home reading the paper. So bring powers of attorney documents with you on your trip.

Your documents can be changed at any time as long as you have capacity, so keep in mind if you have a falling out with your executor or your power of attorney that you can put someone else in charge if you change the documents. It’s a very easy process and more affordable than most people assume.

The bottomline is that you should protect your estate plan from prying eyes and being lost by putting them in the place you think is best. If that’s the bank or a drawer at your house, it doesn’t matter. Just make sure you know where they are and that the people in charge of your life if you can’t be have a copy as well. If you do that, you’ll ensure that your estate plan can be followed as you originally intended.

Avoiding Probate: It’s Not Just About Money…

Avoiding Probate: It’s Not Just About Money…

 

AVOIDING PROBATE:  IT’S NOT JUST ABOUT MONEY

               As an estate planning attorney, a central goal that I preach is for my clients to avoid probate.  Most of my clients associate probate with something akin to the plague and people like bankers, insurance agents, financial advisors, TV hosts and society at large have done a good job educating clients on the simple premise that they should avoid probate at all costs.

But why?

Most people would guess the expense.  That is certainly a legitimate reason.  In Missouri, a probate administration can lead to costs to the court, big expenses being paid to your personal representative (also known as the executor) and, if you want the easy version of probate in Missouri, independent administration, the services of a knowledgeable and experienced probate attorney.  In a recent probate, an approximately $450,000 estate ended up costing about $1,000 in costs to the court for filing fees, inventory fees and various other expenses and approximately $31,000 in fees split equally between  the personal representative and attorney .

Think about that for a second…that represents almost a 7% loss in the value of your probate estate due to costs and fees, or one more percent than you pay to sell a home!  But here’s a big difference…real estate commissions are unavoidable.  Probates costs and fees are not.

But forget about money and costs for a second, because there are three other huge reasons to avoid probate, that are largely overlooked.

Those are:

  1.   Time: In Missouri, you have to wait 10 days after death before you can file in most cases and then the estate cannot be closed for at least six months.  Best case, therefore, you are looking at a 190 day process.  In most cases, you can add at least a couple of months.  In some cases, the estate won’t be closed for at least a year, sometimes longer.  So, not only have you lost a loved one, but now as a beneficiary or heir of an estate you have to wait a long time to get your inheritance!
  1.  Complexity:  I work on probates every day and while I do a great job for my clients I have to say….I don’t like doing them.   Absolutely cannot stand them.   St. Charles County has a terrific probate division but many of my probates are in St. Louis County and they are a nightmare to deal with.  If you can get through to someone, you will get two different answers from two different people.  Every county has a different set of procedural details that must constantly be adhered to, which is tough because those details seem to change by the month.   Probates are comparable to getting your teeth pulled.  The smallest details can delay them for days and even weeks.
  1. Family Issues / Strife:  Imagine with your family who would be more than a little bit anxious / conspiratorial about an inheritance owed to them.  If someone makes out a will and then dies, unlike on TV, there is generally not a reading of the will.  That is largely a Hollywood created fiction.  In larger estates with a variety of distant relation family members or different beneficiaries (like people that don’t know each other), it might make sense to have a will reading.  So people think that something is being hidden from them when the personal representative and the attorney for the estate don’t just cut them a check.  Probates cause family tensions and in families where there is already tension, it can only aggravate things.  As I noted above, you have to wait at least 190 days in most probates before the estate can be distributed and closed and that’s because creditors have a right to make a claim against the estate.  I very rarely authorize early disbursement of an estate for this reason.  Who knows who is out there claiming they are owed money.  If the money in the estate is immediately distributed, how are you going to get it back if a creditor shows up out of the blue in the last month making a huge claim against the estate?

Half of my estate planning clients are meeting with me because they know they need to.  The other half are meeting with me because they just had some terrible disaster happen in there family or watch it affect someone they know, so now they want to avoid it.

Here’s the silver lining:  It is easier than ever to avoid probate with a living trust or even without a living trust under some circumstances.  In less than an hour Legacy Law Center can sit down with you, figure out what your particular circumstances are, what you need based on those circumstances, tell you what it costs and give you a accurate timeline of when it will be completed, signed and in your hands protecting you and your family.