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.

Figure Out What You Want In Your Health Care Power of Attorney

power of attorney image, estate planning, Figuring out what you want: The following questions are designed to help you know yourself and to form a basis for discussion with the person you choose to execute your health care power of attorney.

  1. The pleasures of health: How essential are these capabilities to your happiness? (i.e. are they, vital, important, mildly important, not important)
    • Walking
    • Enjoying the outdoors
    • Eating, tasting
    • Drinking
    • Reading
    • Attending religious services
    • Listening to music
    • Watching television
    • Avoiding pain and discomfort
    • Being with loved ones
    • Touching
    • Being self-sufficient
  2. Fear factors: What are your biggest concerns about the end of your life?
  3.  

  4. Spirituality: How much of your comfort and support comes from religion? From personal prayer? From interaction with clergy?
  5.  

  6. End of life: If you had the power to decide, what would the last day of your life be like? Where would you be? With whom? What would you be doing? What would your final words be?
  7.  

  8. Assistance preferences worksheet: It is useful to discuss with your health care agent (and family members as well) the types of assistance you might want, should you need help, and to revisit this issue from time to time, because your preferences could very well change. Looking at each of the different scenarios spelled out below, think through what your preferences would be by asking yourself the following questions:
     

    1. Would I still want to live at home?
    2. Would I want caregivers hired to help me out in my home?
    3. Would I want to be taken to a rehab or assisted living center?
    4. Would I want family members to care for me?
    5. Would I want to live with one of my children?
    6. Would I want one of my children or a relative to live with me?
    7. Would I want my health care agent to make these decisions for me?
    8. Would my answers differ if my spouse were still living at home?
  9.  

    • If you were unable to drive a car
    • If you were unable to climb stairs
    • If physical problems prevented you from being able to dress yourself
    • If you had to use a wheelchair because you were no longer able to walk
    • If you were unable to leave your home
    • If your vision were seriously impaired
    • If your hearing were seriously impaired
    • If you needed kidney dialysis
    • If you needed chemotherapy
    • If you were in physical discomfort most of the time
    • If you could no longer control you bladder
    • If you could no longer control your bowels
    • If you could not think clearly

    The more you take the time now not only to think through whom you wish to choose as a Health Care Proxy, but also how that person would address these future scenarios, the more likely your wishes will be honored in the future.

    Make sure (especially if you are in a second marriage) that you have coordinated the person chosen as your Health Care Agent with the person named as your Trustee and/or your Attorney in fact under a Durable Power of Attorney so that the decisions about your medical care and how to pay for it are coordinated.

     

     

    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.

Women & Money: Charitable Giving Tax

Charitable giving

estate planningDo you want to participate in involuntary philanthropy – that is, pay estate taxes and let the government decide what to do with your donations? Or would you rather play an active role yourself in where that money goes? Making a gift to a charitable organization will enable you to help those causes you deem worthy, while at the same time reducing your taxable estate. (See Women & Money, Chapter 14: Protect Your Charity” for information on how to make a charitable gift that qualifies for estate tax deduction).

Gifts to Individuals and Income Tax Issues

You are not entitled to an income tax deduc­tion for a gift to a person, and, in the same way, your gift is not considered “income” to the person you give it to.

When giving property rather than cash, however, each asset has what is known as an “income tax basis” – that is what the asset originally cost (plus, if the asset is real estate, any improvements that have been made to it). When an asset is sold, the owner of the asset will pay a capital gains tax based on the difference between the original cost of the asset and the current sale price.

If an asset is given to someone during the donor’s lifetime, then the recipient of the gift inherits the donor’s income tax basis in the property, and when the recipient sells that property, his gain would be the same as the original owner’s. In other words, if this year your mother gave you $20,000 in stock in Gillette that she had owned for a long time, your mother would not pay any gift taxes on the transfer of stock and you would not be responsible for paying any income taxes. However when, at a later point, you sell that stock, you will incur a capital gain that is equal to the difference between the price your mother bought it for, if she paid for it, or the value of the stock when she received it by inheri­tance or, if she received it by gift, then the income tax basis that was handed over to her and the price you have sold it for.

The rules are different when the gift is made at death. If, instead of gifting you the stock during her lifetime your mother had left it to you in her Will at her death, then the $20,000 would be included in her taxable estate (even if there is no tax then due). When that happens the income tax basis in the stock steps up to the fair market value at the time of your mother’s death. When you later sell that stock, any gain will be based on the differ­ence between its value at the time of your mother’s death and the price you get for it.

In most cases this will significantly reduce the gain. For that reason, many people take care to select for gift-giving during their lives property with lower capital gain and save the property with the greatest capital gain for gifts upon their deaths. That is also why, for fed­eral estate tax purposes gifting is not always tax-wise if the federal estate is under or close to the federal applicable exclusion amount (which at least for 2011 and 2012 is $5,000,000 per person).

 

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.

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.

Is it Reasonable to Expect Alimony for Your Eggs?

human eggsA previous New York Times article had an op-ed piece by Sarah Elizabeth Richards, author of “Motherhood Rescheduled: The New Frontier of Egg Freezing and the Women Who Tried It”.

In that op-ed piece Ms. Richards discusses the case of a 38 year old woman who is asking her soon to be ex-husband of 8 years to pay $20,000 to cover the cost of her egg freezing procedure, medication costs and several years of egg storage on the grounds that when they got married they started with the expectation they would start a family and now she may not have that chance much longer.

The couple had been unsuccessful in fertility treatments and as part of her legal case she is arguing that since fertility treatments were part of the marriage, they should be considered part of the marital lifestyle, which should be maintained as long as possible post-divorce.

The lawyer representing the woman is quoted in the article as saying that he hopes the case settles out of court. Should this go to court it would be a case of first impression in the country and we will all be watching what happens.

Source: http://www.nytimes.com/2013/09/07/opinion/alimony-for-your-eggs.html?_r=0

 

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.

css.php