Where There's an Inheritance: Stories from Inside the World of Two Wills Lawyers

I have not personally read the book Where There's an Inheritance: Stories from Inside the World of Two Wills Lawyers by Barry Fish and Les Kotzer, but it looks worthwhile. I located a review in Deseret News. Here is one of the funny stories outlined in the review:

He was a widower with no children, but he was blessed with money, many nieces and nephews — and a unique plan for deciding who should benefit from his generosity.

By the time he was in his mid-80s, his nieces and nephews believed the impression he gave that he had trouble hearing. They gathered often for holidays and family events, and they talked about how much they liked — or disliked — their uncle.

At his 90th birthday party, he stood to say a few words of thanks. "I've been waiting to say these words for the last few years: I can hear perfectly. I have always had perfect hearing, and I have heard everything you have ever said to me and about me."

As a stunned silence swept the room, he proceeded to tell them what he had heard — and later used that information as he prepared his will.

And also a touching story – something in the hustle and bustle of life, I can certainly learn from:

Les says one that touched him personally was the story of a woman named Rachel. She called Les and asked him to help her write a will, but said she had not been out of the hospital for more than a year and likely would die soon. Rachel agreed to find someone to drive her to his office for the appointment — and probably her last trip outside.

The day of the appointment was windy, cold and rainy. Les was swamped with work, got caught in an accident over his lunch hour and was not having a good day. When Rachel arrived, he went out to the van she traveled in and saw her looking out the window, beaming, as she watched the rain.

"Then she turns to me and says to me, 'Mr. Kotzer, isn't it a beautiful day?' Here I was hating that day, and here's a woman who's dying telling me, 'Isn't it a beautiful day?' I thought, if people hear a story like that, it may change their lives, and help them appreciate the days that they have," Les says.

Pet Trusts for the Non-Rich

It’s true that my Depression-era grandparents would not have thought much of a pet trust (“Such a waste,” they would almost certainly have said). Yet, pets have become important to the well-being of young and old. As such, it is only natural that owners want to ensure that their furry loved ones are cared for once they pass away.

There has been a lot of media attention over Leona Helmsley’s $12 million pet trust for her dog, Trouble. In a circular argument, one legal writer recently suggested that the $12 million gift was worth “the Trouble” (sorry…I couldn’t resist) because all of the press attention has created a bevy of death and dog-napping threats. Frances Carlisle wrote:

After the publicity, it was reported that more than 40 death and dognapping threats were received, and that the dog was in such danger that she was taken out of her Connecticut home and flown under an assumed name to a secret location. Round-the-clock security is needed for the dog, which costs between $100,000 and $200,000 a year, and that amount is much more than any other expense for the care of the dog. Since security costs are so high, $2 million is a reasonable amount to fund the trust for Trouble.

Maybe I am overthinking this, but he seems to be arguing in a circle: That a pet trust for $2 million is justified, because Leona Helmsley made a $12 million trust?

Well, there are pet trusts for Trouble – and there are pet trusts for the rest of us. Most of us don’t have $2 million (let alone $12 million) to put into a pet trust. Still, we worry about our little friends when we are gone. Here are some things to think about if you are considering such a trust:

Make it worth the “Trouble” for the trustee (sorry again): If you go to the expense of a pet trust, don’t “go cheap” on your trustee. You obviously want the trustee to take care of your pet, so give the trustee enough of a trustee fee – but not too much or too little. If you give your trustee too little, he or she would have an incentive to get rid of the pet; too much, and the pet might be kept alive longer is good for the pet’s comfort and well being.

Consider a trust protector. Pets are obviously very helpless. Generally, they will not have the wherewithal to file a petition in court to replace the trustee in case of abuse. Have a family member oversee the trustee. Under the new pet trust statute in California, (under Probate Code Section 15212) any person having an interest in the animal, or a charitable organization having as its principal activity the care of animals may enforce the trust.

Don’t give the trustee a large remainder interest in the trust. Again, you don’t want the trustee to have an incentive to “off” your pet to collect what is left in the trust. Giving a small gift after your pet dies is fine, but give the rest to the local ASPCA, or someone else not associated with your trustee.

Actually place the pet in the trust as a part of trust property. Animals are considered property. By placing the pet in the trust as part of the trust's property, you are requiring the trustee to use his or her fiduciary obligation of care, in caring for your pet. Of course, there are no guarantees. However, you should line up your legal "ducks in order."

These are just a few rules to consider. If you have an interest in a pet trust, you should contact your local estate planning attorney for assistance.

"No Contest" Trends in California

There are two interrelated concepts flowing in Trusts and Estates law in California. First, there is an interesting article in Smart Money discussing the new trend toward litigation in the estates and trusts area, and how the cooperative, family approach is going "by the wayside" in favor of litigation. Here is the first paragraph:

It's rare that an inheritance passes from one generation to the next without leaving some scars. But smooth transitions are becoming even rarer thanks to the growing influence of a new player: the second spouse. As Americans live longer, they're more likely to move into second marriages, and legal experts and financial planners say the resulting friction with the kids is steadily mounting. In more cases grown children are going to court against their parents even while they're still alive, only to run up against a legal framework that leaves them with surprisingly few rights compared with their parents' new spouses. The once-sleepy field of trust and estates law is now brimming with hardened litigators. In Texas, personal-injury lawyers in search of big paydays have begun taking on will contests. And just as court squabbles are on the rise, so are prenups and sophisticated trusts that are designed to forestall them.

The second trend? With the advent of passage of Senate Bill 1264, California's "no contest" law has been significantly weakened. This weakening affects wills and trusts executed 2001 and later. "No contest" clauses traditionally penalize parties who attempt to attack a will or a trust. Now, it will be significantly easier to attack a will or a trust.

Welcome the lawyers...

The Stress of Not Having an Estate Plan

The Arizona Daily Star published an article on March 23, 2009 entitled, You'll Want To Read this Before You Die, discussing the stress inherent in not having an estate plan in place. The article focuses upon the experience of businesswoman Belinda Mossor, whose father died in 1998, with no estate plan. The article goes on:

It took three years for Mossor and her mother to sort out Harry Mossor's finances, insurance and other assets. Eleven years later, Marjorie Mossor is still learning new things about her late husband's finances. Recently, she received a letter from an insurance company informing her of dividends from a policy that belonged to him.

The article also has a sidebar with a number of interesting statistics, none of which are surprising:

A 2007 survey of adult residents of the United States found:

55% don't have a will

52% of Anglos have wills, compared with 32 percent of blacks and 26 percent of Hispanics

41% of people have living wills — 10 percent more than in 2004

38% have designated someone as their health-care power of attorney, compared with 27 percent in 2004

10% say they haven't created an estate plan because they don't want to think about dying or becoming incapacitated, while 9 percent say it's because they don't know whom to talk to about estate planning, and 24 percent say they don't have the assets to warrant it.

Professor Pamela Champine

I did not know her, but the tax/estate planning blogs I track the closest both report the recent death of Professor Pamela Champine of New York Law School, at the age of 44. Those reports are on the TaxProf Blog and the Wills, Trusts and Estates Prof Blog.

New York Law School has published a press release regarding this sad event:

Pamela R. Champine, Professor of Law, died on March 8, 2009 at her home in Greenwich Village. She was 44 years old. A member of the New York Law School faculty since 2000, Professor Champine taught Property; Wills, Trusts, & Future Interests; Federal Income Taxation of Trusts and Estates; and Problems of Timing, and was Director of the Core Curriculum in the Law School’s Graduate Tax Program. Before joining New York Law School, she was an associate in the trusts and estates department of Hughes Hubbard, was law secretary to New York County Surrogate Eve Preminger, and also served as Principal Court Attorney in the New York County Surrogate’s Court. Active in both the New York City Bar and the New York State Bar Association, Professor Champine was elected an Academic Fellow of the American College of Trust and Estate Counsel in 2007.

Although Professor Champine’s first scholarly contributions dealt with taxation and trusts and estates, her focus soon shifted to the highly important and surprisingly understudied questions surrounding capacity and donative transfers. Her final publication as a co-author of Competence in the Law: From Legal Theory to Clinical Application is an outstanding summary of the state of the law and a sad reminder of how much has been lost through her death.

In a moving tribute announcing the news of Professor Champine’s death to the faculty, Professor William P. LaPiana, her close friend and colleague, talked about the great joy she found in teaching. “Pam saw every day of her life as a law professor as a gift,” he said. “She counted it a privilege to teach, read, think, and write, and next to her family, it was what gave her life meaning.” Professor LaPiana added that Professor Champine was “as inspiring as she was effective as she led her students to a thorough understanding of the subjects to which she devoted her efforts. She brought innovative techniques to the classroom and showed her students that what they might have once thought was dry and uninteresting was full of life.”

“I know the entire New York Law School community joins me in our shared grief over Pam's passing,” said Dean and President Richard A. Matasar. “She was one of the most courageous people I have ever known. Through her illness, she showed a continuous love for her profession, her students, and the law. We all have missed her, and the void she leaves will never be filled.”

Professor Champine is survived by her husband David Simonetti and their daughter Isabella.

I note from my own research that Professor Champine recently co-authored Competence in the Law (March 2008).

Blessings to her family and co-workers.

R.I.P.

A High Rent Murder

It's hard to believe, but even in death murder victim Alice Ortiz is being held to her lease contract by her landlord...to the tune of $2,821.23.

I recall reading this sad news story late last year: Alice Ortiz and her family were massacred on Christmas Eve last year in their Covina, California apartment. Covina is a suburb in the Los Angeles area.

While Alice is well beyond the worries of this world, her landlord still "wants the green." An article in the Daily Bulletin goes on:

Now the landlord, Broadstone Foothill Apartment Homes, wants its money, $2,821.23 in all, according to documents obtained Wednesday.

A Jan. 29, itemized invoice to Ortiz's survivors claims the dead woman's estate owes $1,655 to the apartment complex on North Central Avenue for "insufficient notice to vacate."

The company also billed Ortiz for 12 days' rent and other fees accrued in January, weeks after she died.

The family's attorney, Scott Nord, said, "this is just low."

I agree.

Thank you for Prof. Beyer bringing this to my attention, through the Wills, Trusts and Estates Prof. Blog

Unintended Consequences 101: The effect of the waiver of RMD in 2009 upon so-called "conduit trusts"

Previously I mentioned the fact that Congress has waived the Required Minimum Distribution (RMD) requirement for IRAs for this 2009 tax year, However, there are always unintended consequences. Here, certain trusts may not be sufficiently flexible to take this tax law change into account. According to a recent article in the Redland Daily Facts:

The new tax law could present problems for trusts that are set up to control post-death distributions to beneficiaries. Many trusts did not take suspension of the RMD into account. If the trust was set up as a conduit trust (or a "trusteed IRA"), where all RMDs (and only RMDs) would be paid out from the inherited IRA to the trust, and then from the trust to the trust beneficiaries, then the trust beneficiaries will receive nothing in 2009, since there are no RMDs for 2009. Chances are this is not at all what the IRA owner would have wanted. I would guess there are going to be some very unhappy trust beneficiaries that will not like this kind of tax relief. IRA expert Natalie Choate suggests if you are considering such a trust for your beneficiaries, consider giving the trustee more flexibility - for example, directing the trustee to distribute to the trust beneficiary each year the minimum required distribution "and such additional amounts, if any, as the trustee deems advisable for the beneficiary's health, education, and support," or to distribute "the greater of the RMD or the income of the IRA each year".