“You Better Think” – Aretha Franklin Dies Without a Will

Documentation filed earlier this week in Oakland County probate court in Michigan by Aretha Franklin’s children indicates that she died without a will or a trust.  On the forms, a box was checked signaling that “the decedent died intestate”.  What does this all mean?

Dying without a Last Will and Testament or a revocable living trust means that a person is intestate and the laws of the state in which they resided at death will spell out who is to receive the assets of the estate.  Under Michigan law, Ms. Franklin’s estate will pass equally to her children as she was unmarried at the time of her death.  Ms. Franklin’s niece has also requested that she be appointed as the personal representative or executor of the estate.  Thus, it appears that the law of unintended consequences may now apply as Ms. Franklin may not have wanted her children to become the beneficiaries.  She may have wanted to include charity or friends perhaps even other relatives in her estate plan.  She may not have wanted to have her niece serve as the personal representative, a role that presumably will be compensated.  But, without a Last Will and Testament or revocable living trust, we will never know what her true wishes were. 

It will also be interesting to see how the administration of Ms. Franklin’s estate unfolds now that the process will be a public one.  A number of questions will have to be asked and answered, including, but not limited to: What debts does the singer have?  Michigan may not have a state level estate tax or inheritance tax, but how will the Federal estate tax be paid?  Exemptions from Federal estate tax are high ($11.18 million per person in 2018), and valuations of Ms. Franklin’s will have to be done to determine the total value of her estate.  What assets will each beneficiary ultimately receive?  Presumably some of the assets are not standard such as royalties from Ms. Franklin’s records.  Will an agreement be reached amongst the beneficiaries regarding the management and distribution of the assets?  Unfortunately, the process that has begun will be lengthy, likely expensive and could result in the dismantling of a legacy if the process devolves into an ugly court battle similar to what has happened with Prince’s estate when he died without a will.  And in the end, all of this uncertainty could have been avoided or at least minimized had Ms. Franklin simply planned, which means “you better think” before you decide you do not need a plan. #QueenofSoulDiesWithoutWill #QueenofSoul #estateplanning #intestacy

Learn More About the Virginia Academy of Elder Law Attorneys (VAELA)

Check out the brief interview I did regarding my new role as President of the Virginia Academy of Elder Law Attorneys. 

The Virginia Academy of Elder Law Attorneys, or VAELA, is a non-profit professional organization. Its mission is to educate and empower legal representation of elderly and/or disabled clients and their families. OFP Shareholder Catherine F. Schott Murray currently serves as VAELA’s President.

How does VAELA help protect/advocate the interests of seniors or the disabled?

Catherine F. Schott Murray: VAELA Is leading the way in special needs and elder law in Virginia by educating, inspiring and empowering legal representation of elderly and disabled clients and their families, and by advocating their issues before courts and legislatures.  In representing a diverse set of individuals and families with unique issues by providing practical and common-sense advice, VAELA members help their clients to protect family members with disabilities and to age with dignity.

What are the biggest challenges to protecting the legal interests of older Virginians and those with special needs, and how can VAELA help to drive change?

CSM: Each year members of VAELA tackle changes to the rules and regulations relating to guardianship, financial exploitation, Medicaid, estate planning, and estate and trust administration.  Given that VAELA members are very often the first responders to incidents involving these issues, these same members are among the most knowledgeable in providing advice and guidance to navigate those changes.  Furthermore, members of VAELA can provide invaluable input into proposed legislation that may impact an individual’s life.

What are your key priorities this year as you take the helm of VAELA?

CSM: One of the key priorities this year is for VAELA to help cultivate the next generation of elder law attorneys through its mentorship program and annual conferences such as its Fall Conference and annual UnProgram.  Through these programs, VAELA can ensure that the elderly and people with disabilities receive the specialized service and advice they need by educating this next generation.

How can elder law attorneys learn more and get involved with VAELA?

CSM: Anyone interested in learning more about VAELA should visit our website: www.vaela.org.

Aging in Three Simple Questions

At a recent Moms at Work event hosted by Claire M. S. Meade, discussion was held about those who are part of the “sandwich generation”, that is those who have young children, but also older parents.  In particular, the conversation centered on questions to ask retired or retiring parents to help facilitate a discussion about aging.  Many earlier articles have addressed estate planning, including planning for incapacity and planning for death.  But this discussion highlighted three basic questions that MIT AgeLab identified as key when considering what it means to be retired.  The simple questions are: (1) Who will change my light bulbs?  (2) How will I get an ice cream cone?  (3) With whom will I have lunch?  These seem like very basic questions, but when you start to think beyond the initial concept to the considerations that each question raises, you realize that there are a lot of details to address in each question as it relates to retirement and aging.   Check out the MIT AgeLab article for more details and think about beginning the conversation with your retired or retiring family member to avoid finding yourself in a situation where it is too late to plan.  @bgnthebgn @josephcoughlin #incapacityplanning #estateplanning #aginginplace #retirementplanning #sandwichgeneration

New Virginia Legislation Addresses Thorsen Case

The Virginia General Assembly has passed SB 1140 and HB 1617 both of which address the issues raised in Thorsen v. Richmond Society for the Prevention of Cruelty to Animals (786 S.E.2d 453 (Va. 2016).  As may be recalled, the Thorsen case involved an error in the drafting of a Last Will and Testament that resulted in the intended beneficiaries receiving a smaller amount than was originally expected.  In connection with a lawsuit for legal malpractice, the Virginia Supreme Court found that a third-party beneficiary may sue to enforce its rights even though those parties are not known for many years, which is very often the case in estate planning matters. 

Now under the aforementioned legislation, the statute of limitations for legal malpractice relating to estate planning is five years if the representation was based on a written contract and three years if the representation was based on an unwritten contract.  The statute of limitations begins to run on the date representation is complete.  Furthermore, a third-party has standing to sue “only if there is a written agreement between the individual who is the subject of the estate and the defendant that expressly grants standing…”  This legislation is effective July 1, 2017.  Fortunately once in force, the potential chilling impact the Thorsen case had on the estate planning process will hopefully be overcome, and attorneys and clients will be able return to having an attorney-client relationship without having to watch out for disgruntled beneficiaries who may appear decades later.  #estateplanning #estateadministration #Thorsen @bgnthebgn

2017 Estate and Gift Tax Exemptions

money-2The IRS recently announced the estate and gift exemption levels for 2017 and they continue to increase as per legislation passed in January 2013.  The applicable exclusion amount from Federal estate tax will increase to $5.49 million per person allowing a married couple to shelter $10.98 million from Federal estate tax, the rate for which is currently set at 40%.  The lifetime exemption from gift tax remains coupled with the exemption from Federal estate tax, and therefore, this exemption will also increase to $5.49 million per person.  The annual gift exclusion amount will remain at $14,000 per person.  Virginia continues to not impose a state level estate tax.  Maryland’s exemption from estate tax will increase to $3 million while the District of Columbia’s exemption will remain at $1 million until certain revenue surplus targets are met, which may not be until 2018, at which point the exemption will increase to $2 million.  As a reminder, proposed regulations issued in August will significantly reduce the availability of valuation discounting on certain transfers of interests held in closely held or family owned businesses, and therefore, taking advantage of 2016 exemption levels is critical for some individuals, business owners and families.

For seniors and those with disabilities, a cost-of-living adjustment (COLA) for Social Security and Social Security Income (“SSI”) will increase monthly benefits by 0.3%.  In addition, the cap on the amount of earnings subject to payroll tax will increase to $127,200.  Finally, the tax brackets, standard deductions, Pease and PEP limitations, kiddie tax and other credit and deduction levels for 2017 were announced. #estateplanning #estatetax #gifttax #annualgift #exemptionlimits #COLA2017 @bgnthebgn  

District of Columbia Considers Death with Dignity Act

flowers-3The District of Columbia is considering enacting the Death with Dignity Act (the “Act”) that would allow terminally ill individuals with six months or less to live the ability to receive a lethal dose of medication and end their life.  Several procedural steps lie ahead for the Act now that the D.C. Council has voted to place the Act on the legislative agenda for an upcoming meeting.  However, it is unclear whether there is sufficient support for the Act to be made into law.  Arguments in favor of the Act revolve around giving an individual control over how and when they choose to die, but advocates against the Act are concerned that individuals’ lives will be prematurely terminated. 

The issue once again raises the importance of planning.  Planning for incapacity and planning for death.   Both sides of the death with dignity argument seem to have a common thread involving control, which is exactly what planning gives you.  Planning gives you control over who is in charge of your medical decisions when you are not able to make those decisions. Planning gives you control of whether you want life-prolonging procedures when doctors have certified that nothing more can be done except provide comfort care.  Planning gives you control of how you want to be remembered in those final moments.  Planning gives your family members peace of mind to know that they are truly abiding by your wishes, which in turn may make them feel as if they are in control of the situation.  Planning gives your family time to prepare for a life without you in it and to try to control the emotional turmoil that realization creates.  Ultimately, planning is a gift to yourself to know that that particular item on a lengthy checklist can be crossed off so that you can enjoy life knowing that your end of life is in the best order you can create.  So, regardless of which side of the death with dignity argument you fall, think of the planning that can be done to control your death with dignity. #endoflife #estateplanning #advancedirective #livingwill @deathwdignity @NHDD @bgnthebgn

Proposed Legislation Addresses Thorsen Case

booksAn earlier article talked about the Virginia Supreme Court case of Thorsen, et al. vs. Richmond Society for the Prevention of Cruelty to Animals (RSPCA) that was decided in June of this year.  Thorsen involved an error in the drafting of a Last Will and Testament that resulted in the intended beneficiaries receiving a fraction of what they would have otherwise received.  Those intended beneficiaries sued for legal malpractice.  The Virginia Supreme Court found that a third-party beneficiary who is ‘clearly and definitely’ the intended beneficiary of a contract (even one where no written agreement exists) may sue to enforce its rights derived from the contract even though the third-party beneficiary may not know it is a beneficiary for many years (as is the case in most estate planning documents).  The impact of Thorsen on individual clients and estate planning attorneys was wide spread, although clients may not have directly been aware that they were being impacted.   

Now, as was suggested would be the case, proposed legislation will be presented to the Virginia General Assembly in the 2017 Session that will look to address the concerns raised as of a result of the Thorsen case.  In particular, a proposed amendment to Section 64.2-520 of the Virginia Code would clarify that an action for damages based on legal malpractice involving an estate plan “shall accrue upon completion of the representation in which the malpractice occurred.”  Furthermore, only the individual client, his or her legal representative (in the case of incapacity) or the personal representative or trustee (in the case of death) can bring the action.  The action for damages must be brought “within five years after the cause of action accrues”.  The proposed legislation, if passed, would not take effect until July 1, 2017.

Furthermore, a new statute (Section 64.2-404.1) is being proposed that would allow for the court to reform a Last Will and Testament to reflect the individual client’s intentions, provided clear and convincing evidence of intent are presented and the terms were impacted by a mistake of fact or law.  This new statute would also permit reformation of a Last Will and Testament to achieve an individual client’s tax objectives.  The reformation action must be filed within one year of date of death and notice must be provided to all interested parties.  The proposed legislation, if passed, would take effect on July 1, 2017.

Ultimately, the proposed legislation is meant to apply similar rules to wills that are currently applied to trusts under the Uniform Trust Code.  The expectation is that by passing these statutes, the overall chilling impact the Thorsen case had on the estate planning process is overcome, and attorneys and clients can return to having an attorney-client relationship without having to watch out for disgruntled beneficiaries.  The estate planning process can be difficult enough for individuals to begin without having both the attorney and the client leery of unintended consequences.  However, at this juncture, only time will tell whether the General Assembly passes the legislation.  #estateplanning #estateadministration #Thorsen @bgnthebgn

Changes to Maryland Laws Impacting Estate Planning and Elder Law

courthouseOn October 1st (unless otherwise noted) a number of new laws will take effect in Maryland that may have an impact on you or those with whom you work.  Below is a summary of a few key pieces of legislation of which you should be aware.

HB 507 – Maryland Fiduciary Access to Digital Assets Act:  This Act authorizes a person with digital assets to direct the disclosure of information relating to those assets in certain circumstances.  A previous Article provides the details.

HB 541 – Upon divorce or annulment, certain provisions of a revocable trust  that relate to the spouse will be revoked.  This new statute is comparable to what has been established for wills under Section 4-105(4) of the Estates and Trust Article of the Annotated Code of Maryland.

HB 887 – Section 14.5-303 of the Estates and Trusts Article of the Annotated Code of Maryland is amended to add a new subsection (7) allowing for virtual representation of a minor, incapacitated, unborn or unknown individual, by a grandparent or more remote ancestor, provided there is no conflict of interest.  In addition, Section 14.5-304 is added to the Estates and Trusts Article permitting anyone to represent a minor, incapacitated, unborn or unknown individual, provided there is a ‘substantially identical interest’ and no conflict of interest exists.  The purpose is to avoid having to appoint a guardian ad litem in a court proceeding involving trusts.

HB 888 – The new statute will allow trustees and beneficiaries to enter into a binding settlement agreement relating to the administration of a trust without having to involve the court.  The actions that can be agreed upon within a non-judicial settlement agreement by the trustees and beneficiaries must be those that a court could have approved.  For example, a non-judicial settlement agreement could address interpretation or construction of terms of the trust, approval of an accounting or trustee succession.

HB 431 – Requires the establishment of the Maryland ABLE Program to allow for savings accounts similar to 529 Plan accounts to be created for a person under a disability.  This was effective as of July 1, 2016.  Two previous articles discussed the ABLE Program. 

HB 718 – Asset Recovery for Exploited Seniors Act: Allows for a civil action to be brought for damages against a person who knowingly and willfully takes from another, who is at least 68 years old, his or her assets.  A criminal conviction is not necessary before bringing the civil action.

HB 1385 – If an individual does not have a health care directive, ‘any authentic expression’ made by such person, who is deemed to be competent, regarding his or her wishes and desires about their health care ‘shall be considered.’

#elderlaw #estateplanning #healthcare #Marylandlaw #incapacityplanning #specialneeds #digitalassets @bgnthebgn

Facing a Tough Diagnosis – Four Lessons of Gene Wilder

flowers-2With Gene Wilder’s death, the family released a statement that revealed to the world that Gene Wilder had died due to complications from Alzheimer’s disease.  The family also stated that Wilder had not wanted to reveal his diagnosis earlier and risk “one less smile in the world.”  In releasing the statement as they did, the family has provided us with a few valuable lessons about planning. 

  1. What should ‘the public’ know?  From the statement, it seems clear that in receiving an irreversible diagnosis, Wilder’s family talked about how to handle the news both publicly and privately.  Families that have received terrible news of a terminal or debilitating illness are aware of the difficulties surrounding such information.  Questions about who should be notified are common as well as discussion regarding how much information should be disclosed.  In addition, the ‘public’ for each person is different.  This means for some only immediate family members while friends, neighbors and colleagues have a less detailed picture.  Immediate family may include certain close friends and may very specifically exclude others.  What about professional advisors?  How much information should they have?  Each of us has various circles and those circles have to be evaluated to determine who should know and what should be known, which is important to clarify to avoid confusion in the dissemination of information.
  2. What is the care plan?   Certainly from a medical perspective there is a prognosis and then treatment plans that are outlined with various degrees of outcomes and complications.  But what about the plan to care for minor children, if necessary?  Or a caregiver spouse or partner?  Who are or will be the caregivers?  Has respite care been discussed for those caregivers?  Are there modifications to a residence that are needed?  What about access to financial information? Should such access be limited or restricted?  Has there been discussion about involving a care manager?  These are just a few of the questions to consider to determining the plan of action.
  3. Your final moments.  Are friends and family present?  Is music played?  Is a spiritual leader, such as a priest, rabbi or pastor present?  Will the final moments be at home, wherever that may be at the time?  The final moments are not only for the person dying, but the family and friends who are part of that passing.  Discussions such as these are key in determining end of life care
  4. How to be remembered?  An earlier article outlined six questions to ask surrounding the details of how you want to be remembered.  Providing some information about wishes and desires regarding a funeral or service is a relief for family members because decision-making at this difficult is clouded by emotions and shouldn’t be overshadowed with the thought of “Is this really what was wanted?”

Thus, as many of us remember Gene Wilder and the various roles he played in the movies, we can also pause to reflect on how we would face such tough diagnosis with our family, and when the time comes, be prepared to have the important conversations. #GeneWilder #incapacityplanning #estateplanning #advancemedicaldirective #livingwill @bgnthebgn

The Increase of Crowdfunding in Estate Planning

Crowdfunding seems to be everywhere, but does it have a place in estate planning?  Wikipedia defines crowdfunding as “the practice of funding a project or venture by raising monetary contributions from a large number of people…”  Thus, it seems that in the beginning crowdfunding was a form of venture capitalism with the public at large.  Websites like Kickstarter and GoFundMe allowed for individuals to present an idea and raise capital to get the project off the ground.  However, in relatively recent history, crowdfunding has taken on a prominent role in response to any tragedy.  Now it seems that if there is a sudden illness or death, crowdfunding appears to help defray costs.  But for those both using or donating through a crowdfunding website, there are a few questions to consider.

Are there any tax consequences to a donation? – In general, giving to a fund that benefits an individual is not a taxable gift so long as you stay below certain thresholds.  An individual can give up to $14,000.00 per year to each of any number of different people under current law without incurring any gift tax consequences.  Typically in crowdfunding, the fund is set up and smaller contributions are requested or simply contributions of any amount, big or small, are accepted, so hitting that threshold is not an issue.  Also, keep in mind that your contribution to such a fund is typically not tax deductible.  If the contribution is not to a public charity or other qualified tax-exempt organization, then you are not otherwise allowed to deduct your contribution from your personal income taxes.

Are there fees associated with crowdfunding? –  The answer is it depends on the site being used to support the fund.  Kickstarter applies a 5% fee and then there are processing fees of approximately 3-5% if the campaign is successful.  GoFundMe charges a 5% fee and then approximately an additional 3% processing fee.  The fees are charged against each contribution.  The donor or person contributing is not charged the fees, but the person receiving the funds does not receive 100% of the monies contributed.  Thus, if I give $100 to a GoFundMe fund to help pay for costs associated with the illness of a friend’s child, my friend will only see $92 of my gift.   This reality then begs the question as to whether it is simply better to write a check directly to my friend.  That way my friend receives $100.  Of course the theory behind crowdfunding is that if everyone else is contributing then you will want to do so as well, and therefore, perhaps the fees are worth it if in the end more monies are raised.

How do you determine that the request is legitimate? – You need to be careful that you are going to the actual fund page.  Spoof pages can pop up or emails that look legitimate can arrive in your inbox. You may click through and donate not realizing that you are not donating to the actual cause or person that you intended.  Thus, you should take care to ensure that the URL for the fund that you are using is from a source you know and trust.

Overall, it appears that recently during times of hardship and tragedy, crowdfunding has become a way that people can express their sympathy and/or support for others.  I would expect that any monies received are welcomed and appreciated, but may not be enough.  Furthermore, crowdfunding is not a substitute for financial and estate planning where questions relating to life insurance, disability insurance, retirement assets, fiduciaries, guardianship and the like are discussed and analyzed to ensure that in the event of the unexpected, covering expenses does not create additional stress.  So the question to ask yourself is, what preparations have you made for the unexpected?  #crowdfunding #estateplanning @gofundme @kickstarter @bgnthebgn