New York Attorney General Seeks Reduction of Leona Helmsley Estate Executors’ Fees

Bill for $100 million called ‘astronomical’

Leona Helmsley, shown in 1990, left most of her billions to charity when she died in 2007.

Leona Helmsley, estate planning

Leona Helmsley, shown in 1990, left most of her billions to charity when she died in 2007. Photo: Associated Press

By Peter Grant

Updated Jan. 21, 2016 5:32 p.m. ET

NEW YORK-Nine years after Leona Helmsley died, a battle over her estate erupted Thursday in a New York court. The state attorney general said a $100 million fee sought by the estate’s executors, including two of Mrs. Helmsley’s grandchildren, is “astronomical” and should be cut, potentially by about 90%.

Mrs. Helmsley, a onetime owner of a sprawling property portfolio that included the Empire State Building, left most of her $4.78 billion fortune to charity when she died in 2007. The four executors of her will in 2014 petitioned the estate for the fee to cover their work thus far.

The office of New York Attorney General Eric Schneiderman on Thursday challenged the executors’ petition, calling the more-than-$6,000 hourly rate it amounts to “exorbitant,” according to a filing in New York Surrogate’s
Court.

The attorney general’s charities bureau has the power to contest the executor fees to ensure the amount the charity receives isn’t diminished by “excessive and unreasonable expenses,” the filing states.

The filing asks that a more reasonable amount be set. It suggests one method of calculating under which the fees would be less than $10 million.

The battle marks the latest twist in the unwinding of a real-estate fortune built by Harry Helmsley over a half century. Other issues have included a challenge to Mrs. Helmsley’s will by two of her grandchildren who were cut out of it and the inclusion in the will of $12 million for her dog, Trouble, which eventually was reduced to $2 million.

Mrs. Helmsley served 19 months in jail on tax-evasion charges and garnered a reputation for mistreating her staff.

The four executors of her will include two of her grandchildren from her first marriage, David Panzirer and Walter Panzirer as well as one of her lawyers, Sandor Frankel, and John Codey, a business adviser. Mr. Codey figured in a 2001 page one article in The Wall Street Journal about Mrs. Helmsley and one of her suitors after her husband’s death in 1997.

In a statement released Thursday, a representative of the executors defended their $100 million request, noting that they “administered an extraordinarily complex estate.in the face of enormous risks.” The statement also said that the executors enhanced the estate’s value “by hundreds of millions of dollars” despite the economic downturn that caused real-estate values to plummet after Mrs. Helmsley’s death.

The attorney general’s Thursday filing points out that time records show that the executors spent 15,535 hours on estate matters, making their request for $100 million equivalent to a rate of $6,437 an hour. “By any definition, this hourly rate is exorbitant, unreasonable and improper,” the filing said.

The court earlier awarded the executors $7.2 million in fees as an advance payment. Nothing has been paid since because the attorney general’s office in late 2014 asked the court to hold off paying the full $100 million until it could review the request.

Mrs. Helmsley, who died at the age of 87, left most of her fortune to a charity, Leona M. and Harry B. Helmsley Charitable Trust. Her will included $15 million for her brother, the late Alvin Rosenthal; $10 million each for David Panzirer and Walter Panzirer, and $12 million for Trouble.

Two other grandchildren, Craig Panzirer and Meegan Panzirer Wesolko, received nothing. They contested the will and ended up getting $3 million each, according to people familiar with the matter. The two couldn’t be reached for comment.

The fight over executor fees stems in part from the will’s lack of clarity. The document expressly rules out the executors getting the statutory commission based on the estate’s assets, according to the attorney general’s filing.

The filing describes that provision of the will as a “prudent decision” because the statutory commission would have come to about $200 million, an amount that “would far exceed the reasonable value of the executors’ services.”

But the will doesn’t specify how the executor fees should be calculated, according to the attorney general’s filing. That means the executors “are entitled only to reasonable compensation for the services they actually rendered to the estate and nothing more,” the filing said.

Any resolution will center on the question of what is reasonable. The 2014 affidavit filed by the executors points to out how challenging it was for them to handle more than 80 stakes in real estate in 17 states and the District of Columbia, hundreds of individual bond issues, and hundreds of other pieces of personal property. The real estate included such trophies as the Empire State Building and Park Lane Hotel, garden apartments in White Plains, N.Y., and Wal-Mart Stores Inc. WMT 1.71 % properties throughout the country.

Complicating the executors’ task was the financial downturn and Mrs. Helmsley’s “personal notoriety,” the affidavit said. The executors contended that under these “unprecedented, extraordinary and exceptionally difficult” conditions they achieved enormous savings for the estate by doing such things as keeping taxes to a minimum and waiting for opportune times to sell such assets as the Park Lane.

“The executors confronted innumerable challenges and problems which were addressed successfully, all to the enormous benefit of the Charitable Trust,” the affidavit states.

The attorney general’s filing calls the affidavit “misleading” because it creates the impression that the executors were at the center of the real estate deal-making. In fact, they were “primarily reviewing information, analyses and recommendations prepared by their consultants and counsel,” the filing says.

The attorney general’s filing asks the court to appoint a neutral expert to advise on the “reasonable value” of the executors work.

As an alternative, the papers provide an analysis of what reasonable compensation should be based on the amount of hours the executors worked. That analysis concludes the four executors worked a total of about 15,535 hours and that a fair rate of payment would be $628 an hour based in part on what senior executives at the company were being paid at the time of Mrs. Helmsley’s death.

Mrs. Helmsley left instructions in her will that the fortune be spent on “purposes related to the provision of care for dogs” but a judge ruled that the trustees could give the money away as they saw fit. The trust had made $1.42 billion in grants as of March 2015 to charities including nonprofit organizations involved in health care and education. The four executors of
the Helmsley estate also are the trust’s four trustees, according to its 2014 annual filing.

Write to Peter Grant at peter.grant@wsj.com

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Specific Philanthropic Tools for Life, Death and Perpetuity

Depending on when donors envision giving, there are several types of donations to consider as part of the traditional financial and estate plan:

Direct transfers:

Gold Bars ImageDirect transfers are gifts given during a donor’s lifetime and consist of checks, cash, gold, etc. Donors give directly to the organization/institution and work directly with fundraisers at the institution. Direct transfers involve fewer legal issues and tax problems or knowledge regarding tax codes. ( Source: Ann Kaplan. 2010.”Philantropic Planning” Smith College, October 20, presentation)
 

CRUT (Charitable Remainder UniTrusts)

CRUT are donations which combine lifetime income with charitable donations, i.e., they combine annuity payments to the donor with a charitable contribution. These gifts are one of the most tax efficient ways of donating money to an institution. The grantor makes a contribution to the Trust and receives a tax deduction (based on a Treasury calculation regarding the amount to be left to charity).

The trust is usually funded with low basis assets because the sale of the stock within the Trust does not trigger capital gains taxes. The beneficiary of the trust receives an annuity. Taxes are paid by the beneficiary only when funds are withdrawn from the CRUT. Assets remaining after the life of the Trust go to charity. [Source: Ann Kaplan. 2010.”Philantropic Planning” Smith College, October 20, presentation]

CLAT (Charitable Lead Annuity Trusts)

CLAT combine wealth transfer to heirs with charitable giving and are another tax efficient way of donating money to an institution. They are comprised of the remainder of the estate after the heirs receive a specified amount and allow the donor to make a contribution to a trust and receive an immediate tax deduction.

An annual amount, established using the treasury rate in effect at the time the CLAT is established, would be paid to the institution. The difference between the charitable annuity payments and the investment results will transfer to heirs at the termination of the CLAT. During life of CLAT, annuity payments are distributed to charitable vehicles or institutions as scheduled when CLAT is established. (Source: Ann Kaplan. 2010, “Philanthropic Planning,” Smith College, October 20, presentation.)

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Donor Education – Why Effective Donor Education Programs Are Important

Give sign image, estate planning

Image by Jello Fishy

One of the most effective ways to educate donors and help them achieve financial literacy is through sustained and focused donor education programs. The process of understanding the power of philanthropy and how it works best for a donor’s goals and objectives takes time. When donors learn together, share their ideas and understand what other donors have done and are doing, they become more comfortable with the process.

Donor education programs which focus on philanthropy and related topics, such as financial issues for women, can teach both men and women how to achieve the joy of giving while living. Your institution can incorporate into the donor education event faculty and student presentations which integrate messages into the mission of your institution. These programs can help differentiate/distinguish your institution and create deeper relationships with donors, alumnae, and alumni spouse (Women’s Philanthropy Institute 2009, 15). (8)

Effective donor education, combined with financial literacy, can also provide networking opportunities. Associating with women of similar financial standing increases their willingness to use their money to leave a legacy. This is especially relevant for women who are learning to be comfortable with their wealth. Many baby boomer women in this country will inherit twice—once from their parents and once from their spouse. Nevertheless, donors will not give until they know that they can take care of themselves first. As an estate planning attorney, the most common question I hear from a new widow is, “Do I have enough money to live on?” (Of course that question should be asked many years before that moment in time.) Taking the time to systematically educate your women donors, to help them achieve financial literacy, to teach them that by gifting they can reap both current and future rewards will help empower them to act when they receive their “double inheritance.”

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Estate Planning Conundrum: What to do when a beneficiary has a substance abuse problem

Will ImageIn my 28 years of working with families on their estate plans, many parents have raised the issue of what to do when a child or grandchild struggles with substance abuse. With the recent death of Whitney Houston and her connection to substance abuse, it reminds me of what this means during the estate planning process. These parents are heartbroken and need guidance on how to address this difficult situation in their estate planning documents. Substance abuse – whether it’s alcohol, prescription drugs, or illegal narcotics – affects many of the families we advise. As a result, we developed a list of questions for families to consider when designing their estate plan:

  1. Has the beneficiary ever been diagnosed with a mental illness?
  2. Is the beneficiary having a particularly hard time – is divorce on the horizon? Has he lost his business? Does he gamble?
  3. What is his relationship with other family members?
  4. Who does he trust?
  5. Who is giving him money?
  6. Is he eligible for government assistance?
  7. Who is paying his health insurance?
  8. Is he employed? For how long? What types of jobs?
  9. Has he ever been treated for his addiction?
  10. Is he a member of Alcoholics Anonymous or a similar organization?
  11. Do these issues run in the family?
  12. Has there been a family intervention?
  13. Is he open to counseling? Has this topic been addressed?
  14. Where is he living? Can he live alone?

I have noticed that substance abuse often masks other underlying mental health issues, including undiagnosed or untreated schizophrenia, bipolar disorder, and depression. That these issues are often part of a larger family pattern makes having the discussion much more difficult, but much more essential.

Families in Conflict

An addicted child may have already taken a significant emotional, physical, and financial toll on the entire family. Parents who find it difficult to handle this child become increasingly disturbed when they consider who would step in if they are unable or unavailable. This helplessness often leads to anger, frustration, and conflict.

One parent may want to cut off the beneficiary while the other parent cannot consider doing so. One parent may want to kick the child out of the home, while the other parent believes that doing so would make matters worse. These conflicts add stress to their marriage and the family at large.

Grandparents may have different opinions than the parents. Siblings may already be resentful of their addicted sister or brother. In many families, the troubled child has already received significant emotional and financial assistance. His troubles have already taken center stage at the dinner table. His presence in the home and attitude toward the family may have already created constant disruption.

Estate Planning Tools and Options

As complex and emotional as these issues are, families must address them. And they will welcome having an impartial, yet compassionate advisor to provide guidance, suggestions, and choices.

One planning tool for parents to immediately consider is for that child to designate them as the agent under his health care proxy and his attorney in fact under the durable power of attorney. Without these documents, HIPPA will prohibit the parents from being involved with his treatment. Also, these documents give parents legal access to his health and financial records, which could be extremely important if it becomes necessary to apply for government benefits.

Inevitably, an estate planning discussion will include disinheritance. In my experience, this is a subject frequently discussed and rarely implemented. No matter how angry and frustrated they are, parents still want to provide some sort of safety net for their child.

This pressure to disinherit the troubled child may come from the sense that he has already taken more than his fair share of the family’s resources, possibly at the expense of the other, more responsible children. As the family’s advisor, however, you should ask the parents:

  • If you are not here, how will the child be cared for with no existing financial resources?
  • Who will be responsible?
  • Who will he call?
  • Will disinheriting him place a financial burden on your other children, or will they be able to walk away?

Establishing a Trust

Rather than disinheriting him, a common solution is to establish a trust that includes him as a permissible beneficiary – or is only for his benefit during his lifetime. The hard decision, however, is who will serve as trustee after both parents die. Parents are understandably reluctant to place that burden on their other children or on other relatives.

If there are significant assets, then choosing a corporate trustee is the simple choice. The other children or trusted friends or advisors can then have the right to remove or replace that trustee during the trust duration. If there are not sufficient assets to warrant a corporate trustee, then the parents must identify friends or trusted advisors – who should be paid for their services. The trustee should review the trust document to ensure that he has the right to resign from his office, and understand the mechanism for subsequent trustee appointments. The document should provide the trustee with the authority to expend funds for purposes such as counseling, detectives, drug testing, and private security.

Trust Terms and Provisions

After deciding on the line of succession and identifying who will operate the trust, parents need to focus on the various purposes for which the trustee may or may not distribute income and/or principal from the trust to the beneficiary.

If the beneficiary is likely to require government assistance, then the terms of the trust must contemplate that. The trust document may also give the trustee authority to withhold payments if deemed advisable. This is often preferable to asking that trustee to determine whether a beneficiary is drug-free. Those suffering from substance abuse can be clever, and making such a determination is tricky.

Rather than withholding payments, another approach is to provide the beneficiary with incentives for staying clean. The trustee could provide additional distributions if the child holds a full-time job or regularly attends counseling sessions. Making the distribution provisions restrictive and under the trustee’s sole control can help protect those assets from the troubled child’s creditors, or from any of the many “friends” and acquaintances who might take advantage of him if they believe there is money in his pocket.

Many parents have a sense of shame or denial, and may rightly choose not to make these troubles public, or put them in a trust document that others can access. I encourage parents to write an annual side letter to the trustee that describes their observations and offers details that they are reluctant to share while living. This letter could be placed in a sealed envelope, kept with the original estate planning documents, and updated/revised as circumstances change. It can be comforting to the trustee to understand more about the parents’ goals and objectives from their own voice.

Planning for the beneficiary with a substance abuse issue is complex and can have consequences that affect the entire family. Remind parents that life is a movie, not a snapshot. A plan created now should be good enough to handle today’s circumstances, yet flexible enough to contemplate the unknown. Encourage parents who are dealing with this difficult situation to revisit their plan every few years as circumstances change and evolve.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Don’t let clients overlook these key estate planning issues

estate planning, estate planning tipsClients tend not to want to deal with estate planning until they absolutely have to. In my 30 years of practice, I’ve found that the two most common times clients revise an estate plan are when a vacation is coming up and when a friend or family member has just died or received a bad diagnosis, leading the client to contemplate his or her own mortality. But both of those events are the wrong time to do proper estate planning. It is very difficult to plan when facing a medical emergency, sudden illness, or recent death in the family, and it’s equally difficult to do proper planning when the client just wants a quick fix before he or she gets on a plane.

For these reasons, it may be helpful for you to bring up certain key issues with clients who are on the fence about estate planning, so that they can visualize the consequences of not having an up-to-date plan. One way to do so would be to hand them this column before you begin working with them.

  1. Health care proxies. All members of your family who have attained the age of majority should have signed and updated health care proxies or health care durable powers of attorney. It is also a good idea to list the cellphone numbers of all relevant people on these documents and to give copies of them to your health care agent (the person designated by the health care proxy to make health care decisions) as well as one or two and backup people so that they can be easily accessed.Having a health care proxy is especially important if you have children going off to college. Under Health Insurance Portability and Accountability Act (HIPAA) privacy rules, once a child attains the age of majority, his or her parents cannot access the grown child’s medical information without permission.

    Without a signed health care proxy, you will not able to make medical decisions for your child in the event he or she is unable to make them.
  2. Guardians or conservators. As you age, you need to decide who will be in charge should you lose the ability to handle financial affairs. A durable power of attorney can be used to handle financial affairs should you become disabled or incapacitated.However, even if you have a valid durable power of attorney in place, there are certain situations where protective proceedings must commence for someone to be appointed your guardian or conservator. The durable power of attorney can include a provision that nominates this person.

    Note that the nomination is just that: a nomination, not an appointment. But, should protective proceedings commence in court, the court is obligated to notify the person or persons you named as guardian or conservator that the proceeding is underway and that they have been nominated. In my experience that gives you a fighting chance that the person you nominated will be the person who serves in that capacity. (This is especially important if you’re worried that your family members may dispute your guardianship or if you’re in a nontraditional relationship or a second marriage.)
  3. Durable powers of attorney. Retirement planning assets (such as IRAs, Keogh, etc.) are owned by the plan holder. Without a durable power of attorney, no one automatically has the power to make investment decisions, take a hardship withdrawal, or roll the asset over for you should you become disabled or incapacitated. This is true even if you’re married. However, if you’ve established a durable power of attorney and given the attorney-in-fact (the agent) the authority to deal with the retirement planning asset, then the attorney-in-fact will be able to take those actions.Likewise, while you’re alive, you are the only person who can transact any real estate you own (including any jointly owned real estate). No one else automatically has the right to handle your assets. This is true even if you’re married and own real estate jointly with your spouse. If you and your spouse jointly own a piece of real estate and you become disabled, that asset is frozen unless you have given someone the legal authority through the durable power of attorney to deal with it.
  4. Updating the entire estate plan along with a will or a trust. If changes are made to a will or a trust— such as a change in beneficiary—it is important to make sure you coordinate your entire financial picture alongside those documents so that the plan remains integrated.
  5. Periodic revisions of the estate plan. In general, you should revise your estate plan at least every five years. Other times to do so include death, disability, divorce, marriage, the birth or adoption of children, the serious illness of a beneficiary or named fiduciary, a substantial increase or decrease in the size of your estate, the purchase or sale of a business, significant gifting or lending of money to a child, change of residence, or the purchase of real estate in another jurisdiction. Changes in the tax laws may also necessitate that you revisit your estate plan.It is a challenge for all of us to think about estate planning when there is no immediate reason to do so. It is very easy to put it off planning for one more day—then one more day. But life can be unpredictable. You don’t want to have to deal with a death, serious illness, or other unforeseen event without a proper estate plan in place. The time to secure that plan is now.

 

Source: http://www.journalofaccountancy.com/newsletters/2015/oct/key-estate-planning-issues.html

 

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Ten Steps to Great Philanthropy in Your Estate Plan

  1. Understanding your basics- you can’t give until you know you are taken care of yourself. Take inventory – what is donation imageyour net worth? Income, debts, cash flow? Emergency reserve? If you become disabled what happens? If someone you are entwined with becomes disabled or dies how does that impact you? Are you protected financially in the way you should be? Are those who depend on you protected in the way they should be if you become disabled or die?
  2. Assemble the right team of advisors to help you in the process.
  3. Own the responsibility to educate yourself- read books, take online classes, join groups.
  4. Correct any weaknesses that turned up in the review above- put in adequate insurance (long term care insurance, disability, life insurance), make any adjustments to investment portfolio, retirement projections that are highlighted because of review.
  5. Put any legal documents in place to make your financial plan congruent- health care proxy, durable power of attorney, will and trust.
  6. Review your plan and determine what your philanthropic spending should be – this year and for the future.
  7. Spend some time and write a one page philanthropy mission statement (by yourself or with spouse/family) on philanthropic goals –what do you believe in? What do you want to achieve? What organizations are congruent with that? Evaluate your statement –is it consistent with what you have been doing in the past? Is it bold enough for the future? Do you know organizations that are in line with your mission? Are you involved with them? Do you wish to contribute to one cause/organization or many?
  8. Educate yourself on the choices- read books, attend workshops given by community foundations, take online classes.
  9. Give this year’s donation and commit to a more integrated plan.
  10. Annually review where you have been and where you are going by repeating steps 1-7. If there is a life change – divorce, disability, illness, unexpected expense, business failure, lottery winning, significant increase in salary, no more tuition payments take that into account and make appropriate adjustments.

Do I have a giving plan? How did I create it? How do I assure myself that I make a difference?

Yes, my core financial contribution is geared towards education because I believe that it is the most important root cause of change and empowerment. It began when my aunt who was my best friend died of cancer and I was thinking of how to remember her so we started a scholarship fund in her name at the law school she and I went to- it is for women who are working and attending law school (which is what she did). Each year I add to it annually and my goal is to build it up to real significance by the time I die- and if by chance I die before my time I have a life insurance policy made payable to it to insure its continued success.

Thoughts on anonymous gifting, being prepared to inherit from parents and spouses, passing values about philanthropy to the next generation.

Some people chose to make gifts anonymously – this can be to be private, so their names as donors are not revealed, so they are not deluged with requests. If privacy is important then that should be made clear and understood at the beginning – it is easy to start off anonymous and become more public and much more difficult to start off public and become anonymous.

Women need to directly enter the conversation with their parents, spouses and children about financial/estate planning and philanthropy.

It is hard to think about that vital conversation and women have to remember that they are pros at taking care of everyone else. They need to remember what the flight attendant says every time you get on the plane- if the barometric pressure in the cabin changes and the oxygen mask falls from the sky and you are traveling with a small child put it over your own face first- it is only when you protect yourself that you will have the strength to protect that child.

Anyone taking the time to read this is the most responsible person in their family and they are going to get that call if something happens to anyone else in the family – they must have protected themselves first so that they can instinctively do what needs to be done to protect the others.

If it is difficult to begin a conversation about these topics with your parents or spouse then begin by asking questions that will prompt thought and discussions- have you thought about what would happen if? Hand them articles, newspaper columns, and ask questions.

Life is a movie not a snapshot and as we travel through the phases of life there are certain things that we should be paying more attention to than others- single, married, divorced, widowed, remarried all have different challenges and focal points.

Find and hire the right advisors to help you with those phases. Understand that it is a process- understand what your money beliefs and habits are and why they exist, develop a series of questions to evaluate them and then think about a strategic plan to address them.

Passing values of financial literacy and education and how it is and will become a value in your family is important – especially if it took you years and major events to get to that place yourself. Once you are educated, empowered and act it is essential you build what you have learned into your family discussions and values. This can be informal dinner conversations, discussions of the nuts and bolts of economics- how are you going to pay for your expenses while you are at college? What stocks would you invest in if you had money today? Why? What are the influences at work? Site visits to financial institutions. A trip to the bank, opening and monitoring bank accounts at an early age, on site visits to charities selected by family members, development of family mission statement, a discussion the week before Thanksgiving about what philanthropy means and how time treasure and talent will be used. A family book club. There are many creative ways to introduce these topics and values into the fabric of everyday life and develop “family rituals” that will become incorporated for generations to come.

 

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Educating the Donor to Make the Most of Charitable Giving

It is also important that donor education courses lead donors to ask the right questions, and that fundraisers are prepared to answer them. “It almost comes with the territory that ‘If I have the money, then I have the knowledge’,” says Cole Wilbur, former president of the Packard Foundation. “Most of the questions in the philanthropic field are questions that people don’t know to ask. They are not obvious.” (http://www.hewlett.org/uploads/files/PhilanthropysForgottenResource.pdf) (9)

Wilbur goes on to say, “It should also be noted that in some cases donor education can be harmful if it makePerson holding a hoop in front of a mans so-called ‘strategic giving’ seem too complicated, time consuming and overwhelming. It can make a would-be donor jump through too many hoops to master the craft of giving. Donor educators need to acknowledge up front the vital role that personal passion, deep values, and gut-level instincts play in any good giving. The notion and role of craft should not trump good intentions and natural inspiration. Donors do have the option to add varying degrees of planning, strategy and focus to their giving, but the presentation of those options should not create barriers to taking the initial steps forward.” (http://www.hewlett.org/uploads/files/PhilanthropysForgottenResource.pdf) (10-ibid.)

Donors who are passionate and well informed about the organization’s mission are valuable ambassadors in the community. It’s important to determine what donors know and don’t know about an organization by conducting focus groups with donors to find out what they want to know. As Michele Minter points out in CASECURRENTS, April, 2011: “Even when they feel empowered and know how to give efficiently, donors can still find themselves stymied by their lack of subject-specific knowledge. Once donors have identified their philanthropic focus, they face the challenge of sifting through large amounts of information to choose how best to give. With so many nonprofits and media outlets competing for attention, where will a passionate donor find relevant, trustworthy information? “

Here, then, are some key questions for donors to consider when considering making a charitable gift:

Which charities do they want to benefit?

Donors should know the goals, objectives and mission of an organization and if they match their values and giving goals. They should explore the “why” questions of philanthropy based upon their personal history, values, passions, relationship with money, and planned legacy. http://www.hewlett.org/uploads/files/PhilanthropysForgottenResource.pdf

What kind of property do they wish to donate?

Do they want to donate money, items, property, stocks, etc? This will affect the type of gift set up and giving process as well as who is involved.

Gifts of significance come in many forms. They may be substantial cash contributions, gifts of appreciated securities, or in-kind gifts such as contributions of valuable art or tangible personal property. Often major gifts are in the form of multiyear pledges given outright or through planned giving vehicles such as bequests, charitable trusts, or gift annuities. Regardless of the form they take, gifts of significance usually come from donors who have contributed several smaller “gifts” over a period of time. (http://www.philanthropy.iupui.edu/TheFundRaisingSchool/PrecourseReadings/precourse_giftsofsignificancehodge.aspx)

How important are the income tax effects of the gift?

Depending on the size, the donation will be effected by tax policy which will be applied accordingly.

How important are the gift/estate tax effects of the gift?

This will again depend on the size/type of gift. If a donor makes a planned gift, (CRT, CRUT etc.) it will be affected differently by tax policy and how much the donor gets back from the school regarding their CRT/planned gift policies. For example, a CRUT is the most versatile of planned giving instruments, but it must meet strict IRS code requirements in order to be tax exempt and receive a charitable deduction. (Sargeant, Adrian and Jen Shang, 2010.)

Does the donor want the gift to be in effect during his/her lifetime or at death?

Depending on the type of gift the donor wishes to make, it will kick in either after or before death. For instance, if the donor puts an institution/organization in his/her will (a charitable bequest), it will only be available to the institution/organization after death. But if the donor gives through a CRT or CRUT, he/she will be giving the money upfront and it will be active during his/her lifetime and after death.

Does the donor wish to retain interest in the property gifted and to be involved with where the gift is used?

It is important for donors to be clear about how much money, time, and influence they are prepared to commit to a project, and that they have considered the strategic and personal commitments it will require. http://philanthropy.com/article/Questions-Big-Donors-Should/126789/

Are the values of this organization aligned with the donor’s?

It is important to give to an organization with which the donor has a connection regarding values. That connection will make the donor willing to give more and participate in the organization if necessary. The donor can also represent the organization to the community to possibly recruit more donors.

Does the organization have an operating strategic plan and is it regularly revisited? Does it have an evaluation plan and methodology that captures real outcomes?

What determine the importance of strategic planning are the small number and the long term, organization-wide impact of the decisions in the strategic plan. It is important that the donors have a clear understanding of the goals and long term strategy of the organization so that they are aware of where their money is going and how it will achieve its objective.

Does the organization possess the financial health and managerial capacity to achieve its objectives?

It is important to be sure that the organization/institution to which donors are giving is able to perform the activities and objectives that it promises to. If the managerial capacity is lacking, or if the organization does not have the proper financial capacity to perform the necessary actions and execute its strategy, then it is a bad investment. It is important to ask for the future strategy and to meet other donors involved with various levels of leadership within the organization.

Does the organization readily make its financial and operating information available?

This information should be available on the organization’s website. Its tax forms should be readily available online to ensure that its practices are transparent and that it is financially reliable and accountable.

Donors need to know the tax status of the organization/institution to which they are giving: In order to be deductible, charitable contributions must be made to qualified organizations. Donors can ask any organization whether it is a qualified organization, or they can check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov. (http://www.irs.gov/newsroom/article/0,,id=172936,00.html)

It is important that all levels of donors ask these type of questions, and that such questions are addressed at a financial literacy program. “The principles that apply to the wealthy apply also to the less-wealthy because they still have limited resources and limited time,” Tierney says. “The moral of the story is: Don’t wait too long to ask life’s most important questions.” (http://fundraisingwins.wordpress.com/2011/03/28/questions-donors-need-to-ask-themselves/)

 

Receipts

Starting in 2007, donors need a receipt for any donation. The old limit of $250 has been eliminated, so even a $10 bill in the collection plate requires a receipt if they want to deduct it. Here are some specific guidelines:

Donors may deduct up to 50% of their adjusted gross income in one year for charitable donations. (Certain contributions, though, may have lower limits.)

If they give more than 50%, they can carry the excess forward for up to five years.

If they donate goods to an organization, it must be in good condition or better in order to be deductible; and if it’s worth more than $500, they have to get a professional appraisal to prove its value.

If they receive something in return for their donation, they can only deduct the excess of their donation over what they received, i.e., if they paid $100 for a charity dinner with a value of $30, they can only deduct $70.

Source: http://www.consumerismcommentary.com/3-things-you-need-to-know-before-giving-to-charity/

 


Patricia Annino
is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Planning For an Unpredictable Future: Key Organizational and Operational Components of a Trust

estate planningAs professional advisors, we help clients plan for the future – yet none of us knows what the future holds. We must therefore do our best to help create a solid, yet flexible, foundation that will accommodate changes to the family, the business, and the tax and regulatory environments. When we work with a client to help create an estate plan, we make sure that plan is implemented and executed. We might then feel that our job is done. But in reality, our job is done only if the client happens to die the very next day.

At the initial client meeting, it is our responsibility to explain that creating an estate plan is an ongoing process. The planning documents are but one frame in a long movie – the script of which has not been finalized, the participants not cast in concrete, and the provisions not intended to be permanent. In other words, estate planning, like life, is a movie, not a snapshot. Once that concept is clearly explained, the client should understand that the plan needs to be continually reviewed and revised.

For many families, the most important estate planning document is the Trust. It is the document that may continue past the client’s lifetime, past the spouse’s death, and past the death of the children. Over the last 20 years, many advisors and clients established a trust for tax purposes – to reduce the estate taxes that the family will pay when both spouses die. But for the past 20 years, there hasn’t been nearly enough focus on the non-tax components of the trust arrangement.

As advisors, we must be aware of the dual components of using trusts in estate planning – organizational and operational. The organizational structure is established when the trust is signed. The operational structure starts from that point and continues on. The family, the laws, and the investments will all change – and the fiduciaries will need to make decisions.

Organizational Components of the Trust. For many clients, the foundation of estate planning is the trust and its provisions. This fundamental organizational document lays the groundwork for later implementation, so it is important to pay careful attention to the wording. Some key organizational components include:

  • Who is the donor (person establishing the trust)? Who are the initial players? Who are the beneficiaries? Who are the trustees?
  • Does the trust contain a stated purpose?
  • Is it revocable or irrevocable?
  • What are the provisions that pertain to the trustee powers? How many trustees are required? Must the trustees act unanimously or by majority? What is the standard for trustee removal? What is the standard for appointing new trustees? Are there specific powers authorized in the document, e.g. retaining a family business or selling real estate?
  • What are the provisions that pertain to the beneficiaries? Who are the permissible beneficiaries? Spouse only? Spouse for life then children? Spouse and children concurrently? Spouse and descendants? In-laws? Charities?
  • Powers of appointment. Does the trust include provisions that give beneficiaries the power in their Will to change who will receive the assets or the terms of the trust? Is it a special power of appointment, limited to a certain class, such as the donor’s descendants? Is it a general power of appointment – meaning the power to expand the group to charities, to creditors, to anyone?
  • Does the trust include a spendthrift clause that will protect the trustee assets (as long as they are not distributed from the trust) from the creditors of any beneficiary?
  • Jurisdictional issues. What state law governs how the trust will be administered? Can that jurisdiction be changed? If so, who can change it?
  • Termination of the Trust. When does it end? After the death of the donor and his/her spouse? When the children reach a certain age? Does it run for the Rule against Perpetuities period? Does it end only when the trustees decide to end it?

Operational Components of Trust Administration. The organizational components of the trust document outlined above are the guide to how the trust will be operated – from the date the trust is signed until the date the trust ends. Key operational components of trust administration include how the clauses in the trust are interpreted and implemented. To understand the scope of the administration it is important to contemplate issues such as:

  • Investments. After reviewing the powers in the trust documents, the trustees must then review the law in effect at the time of administration and decide how they will operate the trust. Will the trust be operated for growth? For income? For balance? Will certain assets, even if nonproductive, (such as residential real estate) be maintained? Should rent be charged? Should the trustees provide loans of trust assets to beneficiaries? On what terms? With formal notes? What should be the terms of repayment?
  • Distributions of Income and Principal to Trust Beneficiaries. The trustee will review the document and determine who the class of permissible beneficiaries is at any given time. With that in mind, the trustee (guided by the documents and the law) must make decisions regarding distributions. Should they be equal? Income only? Income and principal? Principal only for limited reasons? Should the trustee require an annual budget from the beneficiary before making a decision? Should the trustee authorize regular payments? Should any beneficiary requests be denied?

When making these decisions, the trustee should be aware that the pattern of distribution can have consequences to the creditors of the beneficiary. There may also be considerations in a divorce – what, if anything, is the soon-to-be-ex-spouse of the beneficiary entitled to? The trustee will also have to decide the process for evaluating bequests from the beneficiary. A face-to-face meeting? Communicating by phone or email? Who is to be consulted? Are there provisions in the trust that require monitoring – such as no distributions if it is believed that a beneficiary suffers from substance abuse? If so, how should that be monitored? Is there a withdrawal right? In other words, does the beneficiary have the right to withdraw funds no matter what the trustee says?

  • Powers of Appointment. If there are powers of appointment in the document, have they been exercised? To whom and for what duration?

Once the trust is signed, you and the client should discuss when the plan will be reviewed next. Many advisors encourage their clients to write an annual letter to the trustee, which might contain provisions that are read only when the trustee is administering the trust. As life changes, the client could send this letter to help guide the trustee on issues relevant to administering the trust – such as a troublesome marriages, creditor issues, special needs, mental illness, and substance abuse.

Since the primary decision for establishing a trust may no longer be to reduce estate taxes, it is important for advisors and clients keep the organizational and operational components in mind, paying careful attention to meeting the trust’s goals and objectives.

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Tom Clancy’s Widow Wins Legal Battle Over Taxes on $86 Million Estate

Judge rules trust for grown children must shoulder the bill

By Scott Calvert

Tom Clancy image, estate planning taxes

Tom Clancy’s widow has scored a legal victory in a long-running dispute over who should foot the hefty taxes on the author’s estate, which includes a rare World War II tank. Photo: Carlos Osorio/Associated Press

BALTIMORE—Tom Clancy’s widow has scored a legal victory in a long-running dispute over who should foot the hefty taxes on the best-selling author’s $86 million estate, which largely comes from a minority share of the Baltimore Orioles and includes a rare World War II tank.

Siding with Alexandra Clancy, a Baltimore judge ruled Friday that no taxes will come from the two-thirds share of the estate of which she is sole or main beneficiary. Instead, he ruled the entire $11.8 million tax bill is to be borne by the roughly $28.5 million trust that Mr. Clancy, who died in 2013, left his four adult children from his first marriage—a 41% tax hit.

The four children wanted the tax bill split evenly between their trust and a family trust of which Ms. Clancy is the main beneficiary. That would have raised the overall estate taxes to $15.7 million and divided it between the two sides at $7.85 million apiece.

If the judge’s ruling survives a potential appeal, Ms. Clancy would avoid paying the $7.85 million, while the adult children would owe nearly $4 million more than if they had prevailed in the case.

Although “some evidence” indicated Mr. Clancy wanted the family trust to help shoulder the tax burden, probate Judge Lewyn Scott Garrett wrote in his ruling that much of the evidence supported Ms. Clancy’s claim that her inheritance should be tax-free.

The judge pointed to language in the will that he said offers “the clearest and the predominant evidence” of Mr. Clancy’s intent, and he said that can only be achieved if his widow’s portion pays no tax. Her roughly $57.5 million share of the estate consists of the family trust and a tax-exempt marital trust. She and Mr. Clancy had a daughter, who is a minor.

Jeffrey Nusinov, Ms. Clancy’s lawyer, said in a statement, “We are pleased with the court’s thorough, well-reasoned opinion on this important issue.” Mr. Nusinov, managing attorney of the Baltimore law firm Nusinov Smith LLP, declined to comment further.

Sheila Sachs, attorney for the adult children, said she would review the decision with her clients before considering an appeal.

Mr. Clancy, who died at the age of 66, made his fortune writing techno-thrillers featuring the exploits of fictional Central Intelligence Agency analyst Jack Ryan.

Much of his estate consists of a 12% stake in the Orioles, valued at $65 million, according to court papers filed last year.

Mr. Clancy’s fascination with military equipment was on display in such best-sellers-turned-blockbusters as “The Hunt for Red October” and “Patriot Games.” Court filings detailed some unusual assets, such as a 1943 M4A1 Sherman tank known as a Grizzly. He kept it at a 535-acre Chesapeake Bay estate valued at $6.9 million.

An inventory filed with the court said Mr. Clancy had 26 “handguns and long guns of various makes and models” worth about $35,000.

Tom and Alexandra Clancy’s joint assets included six penthouse condominiums spread over 17,000 square feet at the Ritz-Carlton Residences on Baltimore’s Inner Harbor.

Judge Garrett’s ruling also restores J.W. “Topper” Webb to his role as the Clancy estate’s executor, called a “personal representative” in Maryland. Mr. Webb drafted a 2013 amendment, known as a codicil, to Mr. Clancy’s will, and his law firm advised Mr. Clancy on estate planning.

The judge said his ruling rendered “moot” the dispute between Mr. Webb and Ms. Clancy over his interpretation that the family trust was required to share in the estate taxes. Mr. Webb didn’t immediately respond to a request for comment on Monday.

Source: http://www.wsj.com/articles/tom-clancys-widow-wins-legal-battle-over-taxes-on-86-million-estate-1440438903

Write to Scott Calvert at scott.calvert@wsj.com

Complications Cloud Possibility of a Movie Based on ‘Watchman’

By MICHAEL CIEPLY and BROOKS BARNES

Town Revisits Its ‘Mockingbird’ Past

As Harper Lee’s new novel, “Go Set a Watchman,” debuts, her hometown of Monroeville, Ala., takes stock of its Harper Leerelationship to the writer and her work.

LOS ANGELES — Typically, the outsize attention given a novel like “Go Set a Watchman” would set off an immediate scramble in Hollywood for the film rights.

But, as with seemingly everything surrounding the recently rediscovered book by Harper Lee, which was published on Tuesday by HarperCollins, the situation is not that simple.

Those who represent Ms. Lee say they are not entertaining any offers at the moment, to comply with her request that the film rights be sold only after international publication of the book is complete. Beyond that, there is a question of what role Universal Pictures, which released the film version of Ms. Lee’s “To Kill a Mockingbird” in 1962, would play in a film of “Watchman,” which has several of the same characters.

Other concerns may include an uncertain audience for ’50s-era period film, and how moviegoers would respond to a new portrayal of the lawyer Atticus Finch, who is depicted as a racist in “Watchman,” but is so identified with Gregory Peck’s Oscar-winning portrayal of him as a colorblind champion of justice in “Mockingbird.”

Ms. Lee “is quite particular about film rights in general and would want to have a say in how it is produced,” Andrew Nurnberg, the British agent who represents Ms. Lee, said in an email about any prospective movie version of “Watchman.”

Mr. Nurnberg gave no specific time table for when the rights might be sold, but said the book had generated “heaps of interest” among film companies. He added that some inquirers have also expressed interest in remaking “To Kill a Mockingbird,” which Ms. Lee opposes.

In any case, Universal’s role in any film based on “Watchman” still needs to be clarified. A spokeswoman for Universal declined to comment.

But two people briefed on the studio’s position, who spoke on the condition of anonymity, said Universal executives thought that no film could be made from “Go Set a Watchman” without their consent or participation. One of those people said the studio — which has become more focused on blockbuster fare like “50 Shades of Grey” and “Jurassic World” — had not yet decided whether it would welcome or participate in any screen version of the new book.

Deals and disputes over the control of characters have led to situations as complicated as one that found MGM, Universal and Dino De Laurentiis sharing credits on “Hannibal,” which folded the cannibal Hannibal Lecter and the F.B.I. agent Clarice Starling into a film that had to reconcile rights related to Thomas Harris novels, a De Laurentiis film called “Manhunter” and “Silence of the Lambs,” which had been released by Orion Pictures before its acquisition by MGM.

Robert Mulligan, who directed “To Kill a Mockingbird,” joined Alan J. Pakula, its producer, in making it through their Pakula-Mulligan company. They introduced the book to Mr. Peck, whose own Brentwood Productions joined in the project.

Sandy Mulligan, Mr. Mulligan’s widow, and Hannah Pakula, Mr. Pakula’s widow, declined to discuss whether the Mulligan or Pakula estates held sequel or character rights.

Shot on Universal’s back lot, “To Kill a Mockingbird” became what one former Universal executive this week referred to as a “sacred” property. It has not been mined for remakes or sequels and its principal relic on the lot — the character Boo Radley’s house — has been kept off the studio’s regular tram tour, though it is occasionally opened to V.I.P. tours.

Mr. Peck died in 2003 at 87. Until the end of his life, he answered letters and spoke to groups about Atticus, who came to stand for opposition to racial bias.

(In 1999, Mr. Peck became the second recipient, after Harry Belafonte, of the Marian Anderson Award, which recognizes artists who effect social change.)

“I never had a part that came close to being the real me until Atticus Finch,” he once said, according to Lynn Haney Trowbridge’s 2003 biography, “Gregory Peck: A Charmed Life.”

Carey Paul Peck, one of Mr. Peck’s children, said he did not know whether the Peck estate held rights that might complicate any attempt to film “Go Set a Watchman.”

Asked whether he had concerns about the characterization of Finch in “Watchman,” in which it is revealed that he once attended a Klan meeting, Mr. Peck said he did not.

“Have at it. It’s a free society,” Mr. Peck said in a phone interview.

At the same time, he said he did not expect that any film of “Watchman” would approach the achievement of “Mockingbird.”

“That’s kind of the gold, the rest is dross,” he said. “It’s not going to be the same caliber.”

Netflix, which has rights to show “To Kill a Mockingbird” on its service, has not yet considered “Go Set a Watchman” as the basis for a new film or show, a person briefed on the matter said. HBO similarly has no plans for a film project. One executive with a company that has helped to finance prominent films in the United States and Britain questioned whether any studio would invest in the period drama, unless a star of, say, Leonardo DiCaprio’s stature were to agree to play the role of Atticus. (In the book, the character is 72.)

Ms. Trowbridge said she believed that Gregory Peck would have applauded a new film, even one that presented a more complicated view of Atticus Finch.

“He was a sophisticated, educated reader,” Ms. Trowbridge said. “I think he would have said, go ahead.”

Ms. Trowbridge’s biography portrayed Mr. Peck as having viewed both Atticus Finch and Ms. Lee’s father, A. C. Lee, on whom Finch was based, as almost uniquely without flaw: “Asked if any human being could be as noble and idealistic as Atticus, Greg said, ‘I’ve met two in my lifetime — my own father and Harper Lee’s.’ ”

Mr. Peck wore A. C. Lee’s gold watch to the 1963 Oscar ceremony as a good-luck charm, and came away with the best actor award.

Mary Badham, nominated as best supporting actress that year for her portrayal of Finch’s young daughter, Scout, said she saw the makings of a fine film in “Go Set a Watchman.”

But that, she said, would require close attention to an aspect of the book and of Atticus that she thinks some have overlooked. Some early readers have focused on the unseemly opposition Atticus has to the National Association for the Advancement of Colored People, for instance, without catching the extent to which, Ms. Badham said, Finch may be engaging in dialectics meant to challenge his now-grown daughter.

“In the right hands, it could do very well,” Ms. Badham said. “But it needs very sensitive handling.”

Alexandra Alter contributed reporting from New York.

Source: www.nytimes.com A version of this article appears in print on July 17, 2015, on page B1 of the New York edition with the headline: Film Version of ‘Watchman’? First, Untangling the Rights . Order Reprints| Today’s Paper|Subscribe

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

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