In Divorce, Who Gets Custody of the Debt?

divorce and debt, marriage paperwork imageA recent Wall Street Journal article outlines some surprising information about marital debt! Enjoy.

With more young spouses carrying student loans, misconceptions abound about who is responsible.

By Charlie Wells

For many young couples today, marriage means more than loving, honoring and cherishing each other—it also means taking on a spouse’s student loans. And not only does educational debt make life together tougher for some, it can lead to surprises for those who end up divorcing.

While no generation is immune to the complications surrounding debt and divorce, the current one may be especially vulnerable: College students who took out loans and earned bachelor’s degrees in 2012 graduated with an average $29,400 in educational debt, according to the Institute for College Access and Success, and those earning advanced degrees were typically on the hook for even more. Multiply that by two, and student loans could outlast many a marriage.

Forever Yours

Legal experts say one of the most common misconceptions about dividing debt in a divorce is the belief that educational debt incurred before a marriage always becomes shared, marital debt once a couple gets hitched.

New York divorce attorney Cari Rincker says her mother once quipped that she couldn’t wait for Ms. Rincker to “get married because half of [her] student debt will be his.”

Ms. Rincker, who is single, had to correct her mother: Generally, educational debt incurred before a marriage is considered separate property and barring some predetermined contractual agreement, it stays that way after a divorce. “My law-school-loan debt is forever mine,” Ms. Rincker says. “No spouse will ever be liable” for it.

That can come as a rude awakening for those used to getting help with loan payments.

Such was the case when Devon Montgomery, a program manager for the Bryn Mawr College Alumnae Association in Pennsylvania, split from her husband of two years. The 29-year-old says she had racked up big student loans from various schools, and it was a challenge dealing with all of that debt by herself after her divorce.

Ms. Montgomery says she had to “reallocate all of the debt and change the repayment terms to make it more affordable.”

Couples who took out student loans while they were single but living together should expect a similar outcome.

“It’s generally like roommates,” says June Carbone, an expert in family law at the University of Minnesota Law School. “The roommate doesn’t pick up student debt.…It doesn’t matter if you’re sleeping together.”

It’s Complicated

Debt division can get a little trickier when the student loans are taken out during the marriage. The person responsible for paying the loans isn’t necessarily the person whose name is on them. Indeed, how educational debt is divided may depend on where you live and who benefited from the borrowed money.

In many states, divorce courts have the discretion to divide marital property in a holistic way. That means that if the educational debt is considered marital property, they have the option of taking into account contextual issues, such as each spouse’s ability to pay it off, Ms. Carbone says.

So while student loans generally will go to the person who incurred them, there may be exceptions, she says.

For example, if it seems like one spouse will have high income after a divorce and another will struggle to make debt payments, the higher earner may end up having to fork over some temporary spousal support to cover the ex’s debt payments.

But debt division is complicated and can vary, depending on whether the state applies equitable-distribution, community-property or marital-property rules, Ms. Carbone says. As such, student loans in some circumstances could be split down the middle, even if one spouse has a much different financial situation than the other after divorce.

In a related issue, in a few jurisdictions such as New York, a professional degree earned during the marriage can be considered marital property, says Rachel Rebouché, an associate professor who teaches family law at Temple University Beasley School of Law.

That can lead to situations where the degree earner has to compensate a spouse for supporting his or her educational pursuits. Support for a spouse could mean time spent cooking meals, driving the degree earner to campus or even the supporter delaying his or her own educational pursuits, Ms. Rebouché says. In some cases, courts have awarded more property to the supporter to offset the value of a partner’s degree, she says.

Two Steps

divorce and debt, marriage paperwork imageThose in the field say couples can take two basic steps to avoid surprises related to college debt.
First: Get a prenuptial agreement and make sure it clearly specifies how you and your partner want to allocate any student debt accrued during a marriage in a divorce, says Naomi Cahn, a professor who researches family law at George Washington University.
Second: Ask a partner about the extent of his or her debt and be honest about yours. When discussing finances, couples tend to “focus so much on the assets, but they forget that there’s often a lot of debt,” Ms. Cahn says.

Source: – Mr. Wells is a Wall Street Journal editor in New York. Email him at

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 To download Annino’s FREE eBook, Estate Planning 101 visit,

Mistakes to Avoid When Shopping for Long-Term-Care Insurance

How to Pick the Best Policy for Your Needs and What to Avoid

By Anne Tergesen

It’s a decision many baby boomers are grappling with: Should I buy long-term-care insurance?
The decision has never been more difficult. According to researchers at Georgetown University and Pennsylvania State University, about 70% of individuals 65 and older will need long-term care—whether at home or in an assisted-living facility or nursing home.

At the same time, however, the price of long-term-care insurance keeps going up. A 55-year-old couple, for example, can expect to spend about $3,275 in annual premiums for $164,000 of coverage for each that grows by 3% a year, according to the American Association for Long-Term Care Insurance, a trade group for insurance agents.

For some people, of course, long-term-care policies make no sense. Medicaid is there to help people who have little money. (Medicare doesn’t typically cover continuing care.) People with assets of $2 million or more, meanwhile, can probably afford to pay for long-term care out of pocket, although a policy may still make sense to ensure they have money to leave to their heirs.

But for people who fall between those two extremes, the decision whether to buy long-term-care insurance is a tricky one, especially since the policies are complicated and the business is in a state of flux, with carriers raising prices and exiting the business. “The industry is changing so rapidly,” says Howard Gleckman, a resident fellow at the Urban Institute, “it’s hard to keep up.”
Here are six mistakes consumers commonly make when purchasing long-term-care insurance, and advice on how to avoid these pitfalls.


Many people don’t even start thinking about long-term-care insurance until they reach 60. And by that time, it may be too late—either because the insurance is too costly or they simply can’t qualify for health reasons.

As a result, for most people, the 50s are the best time to buy a policy. That’s typically when premiums are most affordable and coverage is easiest to obtain, says Mr. Gleckman.

long-term care insurance, statistical data report

For each year applicants in their 50s delay buying coverage, carriers typically raise premiums by 3% to 4%, simply because they are a year older, says Dawn Helwig, a principal and consulting actuary at Seattle-based Milliman Inc. In contrast, for every year someone in their 60s waits, they can expect to pay an additional 6% or more, she adds.

Those who wait may pay higher premiums for other reasons, too. Over the past decade, carriers struggling with losses on existing policies have raised the premiums on new policies an average of 4% to 8% a year, depending on the features, according to Milliman.

Consider a 65-year-old man who purchases $110,000 of coverage with benefits that grow 5% a year. To secure the same coverage 10 years earlier, at age 55, he would have paid approximately $1,032 in annual premiums, says Ms. Helwig. But because he waited, his annual premium is now about $2,770. Assuming he lives to age 85, he will pay a total of about $55,400 in premiums—or some $24,400 more than he would have spent had he bought at age 55 and lived 30 years.

Those who wait also run the risk that their health may deteriorate. Carriers, which have become stricter about how they underwrite policies, reject about 25% of applicants between ages 60 and 69, according to the American Association for Long-Term Care Insurance. They also charge those in relatively poor health as much as 40% more, says Ms. Helwig.


The gap between the least- and most-expensive policies can be wide. According to the American Association for Long-Term Care Insurance, a 60-year-old couple can expect to pay an annual premium that ranges from $3,025 to $6,500 for $164,000 of coverage that grows 3% a year.

But while price is important, so is reliability, says Michael Kitces, director of planning research at long-term care insurance, data on insurance costsPinnacle Advisory Group Inc. in Columbia, Md. Mr. Kitces says consumers should buy from a large, stable carrier with the resources to still be around when the coverage is needed. He recommends people limit their shopping to big diversified carriers with claims-paying-ability ratings of single-A or better.

Mr. Kitces suggests that prospective buyers work with agents who specialize in long-term-care insurance. (Some carriers, including Northwestern Mutual Life Insurance Co. and New York Life Insurance Co., generally work only with their own agents, so consumers may need to consult with more than one agent.) Consumers also should check the agent’s license status and disciplinary history with their state’s insurance department.


Fewer than half of couples purchase a rider that allows them to share benefits. But doing so is an inexpensive way to “double the benefits available to one spouse,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

Consider a couple with two policies that each covers up to three years of benefits. If the policies are linked and the husband needs four years of coverage, he can use his policy plus a year of his wife’s coverage. The downside, of course, is that this would typically leave the wife with only two years of benefits.

While a shared-care rider on a contract that provides five years of benefits typically boosts premiums 10% to 15%, it is far cheaper than buying an additional five years of coverage for both spouses, says Claude Thau, an insurance broker who helps financial advisers with long-term-care planning for their clients and is also a consultant to insurers.

Some couples also overlook the fact that they can get discounts of as much as 30% when they purchase policies together, says Mr. Slome.


Inflation protection is key. After all, if you buy in your mid-50s and don’t need coverage until your mid-80s, Mr. Gleckman says, “30 years of inflation is going to eat into the benefit.”

Buying inflation protection can add 50% or more to the cost of a premium. Perhaps for that reason, 94% of people who buy hybrid policies, which package long-term-care coverage with a life-insurance policy or an annuity, and nearly one-third with conventional policies forego the protection or opt for skimpy coverage.

In the past, 5% compound inflation protection was the default for many policyholders. These days, with the rate of inflation for home care at 1% and for nursing homes at 4% to 4.5%, carriers and agents are pushing new and less-expensive options—including coverage that keeps pace with the consumer-price index or that grows 1%, 2%, 3% or 4% a year.

Many agents recommend that most applicants stick with compound inflation protection. To see why, consider a policy with $100,000 of benefits that grows at a 5% compound rate. The $100,000 benefit rises to $162,889 by the end of year 10, to $265,330 after year 20, and to $432,194 after year 30. With simple inflation protection, the $100,000 initial benefit grows by a flat $5,000 a year, to $150,000 in year 10, $200,000 in year 20 and $250,000 in year 30, according to Mr. Thau.

How much inflation protection is ideal? Consider the following comparison between policies with 3% and 5% inflation protection. To run the numbers, Mr. Thau recommends the following approach: Take the amount of coverage you want—for example, $360,000 over five years—and price a policy with 5% compound inflation protection. For a 55-year-old couple, Mr. Thau says he obtained a price quote of $7,238 for the annual premium.

Then, take that $7,238 and shop instead for a policy with benefits that grow by 3% compounded a year. With such a policy, a 55-year-old couple willing to spend $7,238 a year can secure $619,560 in benefits over five years—or 72% more than the 5% policy’s initial $360,000 benefit.

Still, the 5% policy’s benefit will grow at a higher rate than the 3% policy’s benefit. By the time the couple is 84, the 5% policy’s benefit will be higher, Mr. Thau says. As a result, if the couple think they are likely to incur most of their claims after age 84, they’ll be better off with the 5% policy, says Mr. Thau. But if they think they will submit most of their claims before reaching 84, the 3% policy is the better solution.

Another type of inflation protection that is becoming more popular is a so-called guaranteed-purchase, or future-purchase, option. These allow the insured to buy inflation protection in installments over time.

Bonnie Burns, training and policy specialist for California Health Advocates, a nonprofit education and advocacy organization, warns against this approach. While initially much cheaper than policies that lock in inflation protection at the outset, the premiums become significantly more expensive as inflation coverage is bought at older ages, says Ms. Burns.


Some families with long-term-care insurance policies encounter claims denials that can prevent or delay the collection of benefits. But there are ways to avoid future problems. The key: Before buying, be familiar with the definitions and terms of the contract so you will know when and how you can use the benefits, says David Wolf, who owns a long-term-care insurance planning firm in Spokane, Wash.

The vast majority of long-term-care contracts pay benefits under one of two conditions: The policyholder must be unable to perform two out of six basic “activities of daily living,” such as dressing or bathing, or have a cognitive impairment requiring “substantial supervision,” says Betty Doll, an independent agent in Asheville, N.C. These conditions are found in all tax-qualified policies, meaning the benefits won’t be taxed as income and the premiums have the potential to be deducted as medical expenses. For tax-qualified policies, which are virtually all policies sold today, a health-care professional, such as a doctor, nurse or social worker, must certify that the disability is expected to last at least 90 days.

Still, just because you qualify for benefits doesn’t mean your insurer will pay your claims right away.
To reduce premiums, policyholders typically choose a waiting, or “elimination,” period of up to 90 days before benefits kick in. (Some newer policies sell waivers of this elimination period for home-based care.)

Moreover, some policies calculate the elimination period using a “calendar-day” method. This requires someone with, say, a 90-day elimination period to wait 90 days before receiving benefits. But others use a “service day” approach in which the insurer counts only the days the policyholder foots the bill for his or her care, using licensed caregivers.

All things being equal, Mr. Wolf says he would go with the calendar-day approach. But most carriers sell inexpensive riders that either convert policies to the calendar-day method or give policyholders who pay for one day of care credit for the entire week, he says. So, if a policy with the service-day approach were to fit a client’s needs best, he recommends simply buying one of these riders.

Some contracts mandate the use of home-care agencies with specific licenses. Mr. Wolf favors policies that give beneficiaries the flexibility to hire “home-care” agencies, which provide help with dressing, bathing and other forms of personal care. These agencies generally charge less and are more abundant than “home-health-care” agencies, which dispense skilled medical care, he says.

Mr. Wolf also recommends a rider that lets policyholders choose a monthly, rather than a daily, benefit. That way, someone with a $150 daily benefit can spend more than $150 some days, and less on other days. Because home care can be just as expensive as facility care, Mr. Wolf says it is important to purchase the same daily coverage amount for both.


These days, affluent buyers are flocking to hybrid or combo policies, which package long-term-care coverage with a life-insurance policy or an annuity. While sales of traditional policies fell 23% to 233,000 in 2012 from 303,000 in 2007, sales of hybrids have risen sharply, to 86,000 from 15,000, according to Limra, a nonprofit insurance and financial-services research organization.

One attraction to hybrid policies: Customers can pay for the entire premium up front, and so effectively lock in a price for the benefits. With conventional policies, buyers theoretically lock in a steady, stable premium, but in reality, carriers have raised premiums on these policies in recent years. In addition, when hybrid policyholders die without using their long-term-care coverage, their heirs receive a death benefit.

But there are downsides to hybrid policies. For one thing, they levy an added layer of fees—in the form of the mortality and administrative expenses carriers generally assess on life-insurance policies—on top of the morbidity charges in traditional long-term-care insurance policies, says Mr. Wolf.
Also, when policyholders start to receive long-term-care benefits, they must deplete the death benefit before they can access any of the additional long-term-care coverage they purchased. Thus, there is no guarantee that their heirs will receive any life insurance, he says.

While the benefits on both types of policies are tax-free, only individuals with traditional policies can deduct their premiums, says Mr. Kitces. And only traditional policies can qualify for the government-endorsed Long Term Care Partnership Program, which allows those who outlive their coverage to protect some of their assets and still qualify for Medicaid, says Mr. Wolf.

If interest rates rise, Mr. Kitces says, consumers considering a hybrid are likely to come out ahead by keeping their money—and using the investment returns to purchase a traditional policy.

Consider a 60-year-old man who puts $150,000 into a hybrid policy with a maximum death benefit of $159,500. If he eventually needs long-term-care, the policy will pay $5,200 a month for up to four years, a benefit that compounds at 5% a year, says Mr. Wolf.

But if he instead puts his $150,000 into an investment with a 4% return, he will earn $6,000 a year—or enough to buy a four-year policy with a monthly benefit of about $11,000 that compounds at 5% a year, says Mr. Wolf. That’s more than double the hybrid’s monthly benefit and the man can always leave the $150,000 in principal to his heirs. The risk, of course, is that the investment returns might not cover his premiums.

Source: Ms. Tergesen is a reporter for The Wall Street Journal in New York. She can be reached at

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 To download Annino’s FREE eBook, Estate Planning 101 visit,

Buyers Find Tax Break on Art: Let It Hang Awhile in Oregon


Francis Bacon’s “Three Studies of Lucian Freud,” one of the most expensive works ever sold at tax break, portland museum, schnitzer museum, hspace=auction, was lent to the Portland Art Museum. Credit Leah Nash for The New York Times

EUGENE, Ore. — The Jordan Schnitzer Museum of Art, tucked into a quiet corner of a college campus here in the hills of the Pacific Northwest, is hardly the epicenter of the art world. Yet major collectors, fresh from buying a Warhol or a Basquiat or another masterpiece in New York, routinely choose this small, elegant redbrick building at the University of Oregon to first exhibit their latest trophy.

The museum’s intimacy and scholarship are likely to play some role in their choice. But a primary lure for the collectors is often something more prosaic: a tax break.

Collectors who buy art in one state but live in another can owe thousands, tens of thousands, even millions of dollars in state “use taxes”: taxes often incurred when someone ships an out-of-state purchase home. But if they lend the recently purchased work first to museums like the Schnitzer, located in a handful of tax-friendly states, the transaction is often tax-free.

Beyond the benefit to museums, this lucrative, little-known tax maneuver has produced a startling pipeline of art moving across the United States as collectors cleverly — and legally — exploit the tax codes.

Dozens of important works have come to the Schnitzer in recent years, largely because of the tax break, museum officials believe — so many that the museum has a program called “Masterworks on Loan”; the featured works are housed in a second-floor gallery.

Similar loans — which rarely extend beyond a few months — also flow into other museums in Oregon, and occasionally New Hampshire and Delaware, all states that have neither a sales nor a use tax.
The Portland Art Museum, for example, has a long history of receiving art loans from collectors, including, most recently, Francis Bacon’s triptych “Three Studies of Lucian Freud,” one of the most expensive paintings ever sold at auction.

Portland officials say collectors lend art for a variety of reasons, not just for the tax break. But only a few weeks after the painting sold for a stunning $142 million last fall at Christie’s in New York, it landed, to the surprise of many, in the Portland museum, where it drew large crowds for 15 weeks.

By shipping the painting first to Oregon, instead of her home in Las Vegas, the new owner, Elaine Wynn, may be eligible to avoid as much as $11 million in Nevada use taxes, though it is not clear whether she intends to take advantage of the break.

Collectors typically learn of this strategy only through savvy lawyers, dealers and auction specialists. But within the circle of people who know of the practice, it generates debate between those who appreciate how it fosters public access to art and those who suggest that such access comes at too high a price to unwitting taxpayers.

For example, do taxpayers in, say, California even understand that they have given up millions of dollars in tax revenue over the years to, in effect, underwrite the display of paintings in other states?

“Some states are going to become aware of this and realize what potential revenue they are missing under the current laws,” said Steven Thomas, a lawyer in Los Angeles who advises art collectors on tax matters.

Supporters defend the practice as an important way to ensure public access to significant art before it disappears into private collections. Robert Storr, the dean of the Yale School of Art, described it as a “great resource” for museums. At the Schnitzer, a teaching museum, curators and members of the faculty use the loans in their programs.

“The two museums, the Portland Art Museum and the Jordan Schnitzer Museum of Art, are the beneficiaries of getting amazing works of art that they would not get,” said Jordan Schnitzer, a businessman and collector who donated millions of dollars to the Eugene museum that bears his name and served on the board of the Portland museum.

But critics of the practice also question whether museums curry favor with possible donors by accepting loans, and they complain that works are sometimes exhibited without the context or curatorial judgment that museums traditionally provide. A recent visit to the Portland museum found some lent works exhibited haphazardly: a Cubist work from the 1950s, for example, placed amid American art from the 1980s.

“It is an amazing opportunity for these smaller cities to show these works,” said Mack McFarland, a curator at the Pacific Northwest College of Art, in Portland. “But one does have to wonder, doing a cost-benefit analysis on a more global scale, whether or not the tax break for these wealthy collectors is worth it.”

States employ use taxes to compensate for residents who avoid sales taxes by shopping in another state. The tax rate is generally the same as the sales tax, and people are supposed to calculate what they owe on items bought out of state, then pay that amount as part of their tax filings.

Art collectors who seek to avoid the tax typically offer a recently purchased work to a museum in one of five states — New Hampshire, Oregon, Alaska, Montana and Delaware — that do not have a use tax so that the loan does not incur a tax.

As long as the painting stays at the museum for an extended period, typically more than three months, before being shipped home, the practice in several states where collectors live, like California, is to regard the exhibition as a first “use” of the item and waive any tax. The result is a tax-free transaction.

The Hallie Ford Museum of Art at Willamette University in Salem, Ore.; the Delaware Art Museum in Wilmington; and the Hood Museum of Art at Dartmouth College in Hanover, N.H., are among other institutions where collectors have lent art because of tax considerations.

The tax strategy is 100 percent legal, experts say, as long as all stages of the museum transfer are handled correctly.

Schnitzer officials said that many California collectors had taken advantage of the tax provision. “We are on their way home,” said Jill Hartz, the executive director of the museum.

California explicitly outlines a “first use” exemption in its tax code. It says that property, whether a couch or a Caravaggio, that is first “used” out of state for more than 90 days does not incur the tax.

Jill Hartz of the Jordan Schnitzer Museum of Art in Eugene, Ore., said art loans have aided its educational mission. (It is unclear if the owners of the works shown lent them for the tax considerations.) Credit Leah Nash for The New York Times

Experts said that for many years it was known in art circles as the “Norton Simon rule,” because Mr. Simon, an industrialist who died in 1993, was one of the first art collectors to make ample use of it with loans to several museums like the Portland Art Museum.

States have no reliable calculus to measure what sort of tax revenue is being lost. But in a recent example, a California collector is eligible to save at least $390,000 by employing the tactic.

The collector bought a painting, “Ribs Ribs,” by Jean-Michel Basquiat, at auction in New York last year for $5.2 million. Since the painting was being shipped out of state, the new owner was not liable for the New York sales tax.

But the buyer would still have owed use taxes in California (which range from 7.5 percent to 10 percent of a sale price), had the work been sent directly there. Instead, the Basquiat went to the Schnitzer, a detour that meant that the collector was eligible for the first-use exemption, according to the dealer involved in the transaction.

“It is one thing if you are buying a pair of shoes or pots and pans,” said Anne-Marie Rhodes, a Loyola University Chicago law professor, “but in these times, when regular taxpayers have it so difficult, to have such an easy way to avoid the use tax is hard to justify.”

Collectors who live in states that don’t recognize a first-use exemption are out of luck. New York, for example, typically imposes a use tax — 8.875 percent in Manhattan — on art brought into the state by a resident, even if it is first publicly displayed elsewhere.

Collectors, of course, routinely lend to museums for reasons that have nothing to do with a tax break. They want to educate the public, perhaps, or seek advice on conserving a work.

Andrew Teufel, a San Francisco private investor and collector who has lent many works without any tax consideration, said he lent one work, a Kay Sage painting now at the Schnitzer, that will qualify for the tax break. But he said he primarily lends art to enrich others, as well as to bolster its provenance and value.

“The tax preference is the icing on the cake,” he said.

Jerry Kohl, a California businessman, took the tax break when he lent a Warhol to the Schnitzer two years ago. But he said he would have made the loan even without any tax consideration. Still, he said, he thinks the tax code should be tightened.

“The provision should require owners to lend a work out at least every five years instead of just once,” he said.

In Portland, the use of the tax break took off in the 1990s, when the museum’s executive director was John E. Buchanan Jr., according to his widow, Lucy Buchanan. She said he built relationships with West Coast collectors whose loans helped the museum raise its profile.

In those years, questions arose about the sudden arrivals of unannounced loans, which were disruptive to the museum, said Kristy Edmunds, a former curator there who is now the executive and artistic director of the Center for the Art of Performance at the University of California, Los Angeles.
“Crates would land on the loading deck,” she said, “and everyone would be calling up, ‘What is in this shipment?’ ”

Current Portland museum officials said they did not promote the tax break. But they acknowledged that they had had to initiate a policy to deal with unsolicited offers for short-term loans that says that they must be approved by the director, and others, to ensure that the art meets the museum’s standards.

Ms. Wynn, the ex-wife of the casino magnate Steve Wynn, declined to respond to requests to detail her tax plans for the Bacon triptych, which was on display in Portland until last week. Museum officials said that they knew nothing about them.

They said the triptych came to the museum because the museum’s chief curator, Bruce Guenther, reached out to the owner shortly after the sale. (Museum officials have not identified the owner of the triptych, but art world sources have named Ms. Wynn.)

The museum said that tax considerations were not part of the discussions and that the owner had been impressed by the museum’s commitment to display the work prominently.

Brian Ferriso, the Portland Art Museum’s director, said his institution insisted in most cases that a work of art be lent for at least 120 days, not 90, to give it greater public exposure but also to avoid any appearance that its program exists purely to fit the prerequisites of the California tax provision.

“We want to be seen as an institution that is putting art on the wall in a transparent fashion,” he said.

Robin Pogrebin and Carol Vogel contributed reporting from New York.
A version of this article appears in print on April 13, 2014, on page A1 of the New York edition with the headline: Buyers Find Tax Break on Art: Let It Hang Awhile in Oregon. 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 To download Annino’s FREE eBook, Estate Planning 101 visit,

Patricia Annino Quoted in Forbes – Is Affluenza Real?

Affluenza,  Forth Worth Texas TeenPatricia Annino was recently quoted in Forbes when considering an interesting situation.

A 16 year old who killed four people while driving drunk after stealing alcohol from WalMart was sentenced to probation after his defense team argued he suffered from “affluenza” a malady that affects people who come from affluent families.

Is affluenza real? To answer that question Forbes Contributor, Greg McNeal decided to research the term, and found quite a few references to it in legal literature. The consistent theme in the literature is that affluenza is not a disorder per se, but rather a term used to describe rampant consumerism or materialism (although some authors referred to it as a “disease” or “malady” with quotes to indicate skepticism about the technical nature of the term).  It’s also fascinating to note that most references to the term come from tax lawyers and estate planners.

The most prominent author citing the concept of “affluenza” was none other than U.S. Senator Elizabeth Warren. In a 2004 article in the Washington University Law Review, then Professor Warren noted (internal citations omitted):

Economist Robert Frank claims that America’s newfound “luxury fever” forces middle-class families “to finance their consumption increases largely by reduced savings and increased debt.” Documentary filmmaker John de Graaf and Duke Economics Professor Thomas Naylor explain in Affluenza: The All-Consuming Epidemic, “It’s as if we Americans, despite our intentions, suffer from some kind of Willpower Deficiency Syndrome, a breakdown in affluenza immunity.” They assert that Americans have a new character flaw–“the urge to splurge.” Economist Juliet Schor echoes the theme, explaining that American families are buying “designer clothes, a microwave, restaurant meals, home and automobile air conditioning, and, of course, Michael Jordan’s ubiquitous athletic shoes, about which children and adults both display near-obsession.”

Warren seems skeptical about the concept of affluenza, and consistent with her other writings, believes that “affluenza” and rampant spending myths are barriers to regulation of the financial industry. She concludes, “So long as Americans can be persuaded that families in financial trouble have only themselves to blame, there will be no demand to change anything. In order to get on with the difficult business of making America once again safe for middle class families, the Over-Consumption Myth must be laid to rest for good.”

Warren isn’t the only author writing about affluenza. In a tax planning guide, author Patricia M. Annino writes:

Paul Comstock, a noted author in the field of private foundations, coined the phrase: “Affluenza” for a malady common to children of affluent families. This Affluenza is characterized by one or more of the following symptoms: distorted view of money; lack of connection between work and reward; lack of self-discipline; lack of motivation; guilt; low self esteem; and feelings of incompetence.

To read the entire article visit:



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,

Protecting Donor Intent in a New Economy

This past weekend I read two examples of how donor intent may not have been protected in the wake of our new economy.  One involves philanthropythe bankruptcy of a major US city and the other involves the philanthropic legacy of one of Warren Buffet’s originals investors.

The New York Times highlighted an entire new area to be concerned about when thinking about donor intent.  The article highlights that as Detroit files for bankruptcy the collection of the Detroit Institute of Arts (which is owned by the City of Detroit) is a political bargaining chip between Detroit and its creditors. The creditors are taking the stance that the $2 billion art collection must be considered a salable asset.

Detroit’s debt exceeds $18 billion. The Detroit institute is not owned by a nonprofit corporation or trust for citizens but rather by the City itself. The Museum with an estimated 600,000 visitors a year is taking the position that a sale of even part of its collection will render the Museum defunct.

The bankruptcy judge will have his/her hands full as the article points out the issue of the value of the cultural assets goes beyond philosophical or moral arguments and the judge will have to weigh whether the sale of a city’s artworks would have long term economic implications such as, depressing tourism, harming real estate values and the value of other cultural institutions in Detroit.

A former director of the Museum, Samuel Sachs is quoted in the articles as adding if you could sell off Detroit’s hospitals and its universities would you do that to? If you do things like this you are basically spelling the end of the city as an ongoing entity.

For me this is also an interesting commentary on nonprofit law, looking into the future, understanding donor intent and not taking anything for granted. In Detroit’s golden days, no one obviously thought about an entity other than the city owning the art. Detroit was yesterday’s Silicon Valley and there was no thought that the economy was going anywhere but up.

The donors who made the art gifts jumped on that train too and no one contemplated the harsh reality of today. An ounce of prevention is worth a pound of cure, protecting the institution would not have been difficult or novel- the City of Detroit, the Museum and the Donors were blindsided by the present.

The Wall Street Journal highlighted the story of Donald and Mildred Othmer whose original $25,000 (each) investments with Warren Buffett was worth $780 million when Mildred Othmer died in 1998. The Othmers created a $135 million endowment for Long Island College Hospital in Brooklyn NY in the 1990s, to be held in perpetuity and in less than 20 years their gift is virtually gone.

The NY regulators have also authorized the closing of the hospital –which in its heyday was one of Brooklyn’s biggest employers. The endowment was hit over the years to serve as collateral for loans and cover malpractice cases- all in the opinion of the trustees to keep the hospital going.

Warren Buffet is quoted as saying that if the Othmers were alive they would feel betrayed. The legal mechanism the Othmers set up in their will was clear- the funds were to be endowed “to be held in perpetuity and the income to be used only for its general purposes” After the Othmers died, the trustees of the hospital went to court to use the principal, arguing the donors would have wanted the hospital to stay in existence and these funds were needed to do that.

Originally the court allowed $85 million to be used as collateral for loans and the trustees went back several more times for principal invasion.  Warren Buffet is quoted in the article, “The Othmers did not spend huge sums on themselves but instead wanted the money to go back to society. At least one institution could not wait to change the terms under which it received the money”.

As these articles point out, the question of protecting and upholding donor intent as the economy and trustees change continue to be a key challenge. Make sure your intent is clearly stated and that all possible angles of upholding your intent are included.  Make sure to consult an estate planning attorney to make sure your donation is protected.


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,

New Plans Needed to Provide Financial Security for Special Needs Adults

Shouspecial needs resourcesld there be 529 like plans for adult special needs children? Should UTMA accounts be extended past age 21 for special need adult children?

Special needs children are on the rise and the angst their parents have for making sure that when they grow up the adult children are taken care of long after the parent dies, is very familiar to most estate planners.

Wondering if it is time for out of box solutions such as 529 like plans for those children where family members and others could plan in advance for the care that will be needed long after death.

The plans could be funded with investable assets and/or life insurance and would be much simpler to fund and administer than irrevocable trusts. The trick would be how to obtain a tax deduction for this and the compliance aspects- how to make sure the fund is administered for individuals with special needs.

Or should UTMA accounts be able to be extended past age 21 for those adult children with special needs? It may be time to start exploring innovative options to incentivize families and individuals (not the government) to provide the financial safety net and make sure that these adult children receive the care they need for the duration of their lifetime.

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,

No Bah! Hambug: Looking Back At Year End Reasons to Gift To Charity

Give money imageAs we ring out 2012 with an uncertain fiscal and tax climate ahead, we are mindful that many clients are frozen about their future plans and concerned for their own financial future. They are uncertain whether or not to make a significant gift to family members and concerned about the impact of the pending tax increases on their earnings and small businesses. This is the time many of us decide whether or not to donate additional funds to our favorite charities.

Now is the time to make our final gifting decisions. In doing so it is inspirational to remember that many significant philanthropic gifts that have made this country what it is happened before the concept of taxation became a driving force.

In 1913 the 16th Amendment to the United States Constitution was ratified. This established the federal income tax. Following this Amendment the Revenue Act of 1913 was adopted and exempts organizations “organized and operated exclusively for religious, charitable, scientific, or educational purposes”; subsequent acts added “prevention of cruelty to children or animals” (1918), “literary” (1921), “community chest, fund or foundation” (1921), and testing for public safety” (1954) to the list of exempt organizations. The 1916 Revenue Act established the estate tax.

Prior to these Acts significant philanthropy occurred.

The website of the National Philanthropic Trust contains many inspirational reminders as to why giving to philanthropy is an important part of our history, and the site reminds us that no matter what the tax consequences may be, charitable giving is an essential part of what makes America strong. The following is a highlight of some of the philanthropic milestones this website highlights. It is clear that the time, treasure, and talent of American gifting pre-dates taxation and is a fundamental root of American greatness. (The following edited timeline presented here represents a portion of an ongoing research project at The National Philanthropic Trust. For more information on this project, please call 215-277-3041 and for more information visit their website at

1644 – Four of the New England colonies recommended that each family contribute a peck of wheat or a shilling in cash to Harvard for the support of students. For a decade or so, the revenues of the “College Corne” were sufficient to support the entire teaching staff of the college, as well as a dozen scholars.

1702 – Cotton Mather published Magnalia Christi Americana, one of the earliest celebrations of American philanthropy. He later published Essays to do Good, stating that charity should be voluntary actions of the community and not government.

1731 – Benjamin Franklin and 50 friends started The Library Company of Philadelphia, the country’s first successful circulation library, so that people of moderate means could better themselves through reading.

1790 – Five free African-Americans founded the Brown Fellowship Society, the oldest funeral society in Charleston. The Brown Fellowship Society provided services for its members, including education, medical care, and support for widows and orphans of the deceased.

1826 – James Smithson, a British scientist, drew up his last will and testament, naming his nephew as beneficiary. Smithson stipulated that, should the nephew die without heirs (as he would in 1835), the estate should go “to the United States of America, to found at Washington, under the name of the Smithsonian Institution, an establishment for the increase and diffusion of knowledge among men.” The motives behind Smithson’s bequest remain mysterious – he never traveled to the United States and seemed to have had no correspondence with anyone here. Smithson died in 1829. On July 1, 1836, Congress accepted the legacy and, in September 1838, Smithson’s gift of more than 100,000 gold sovereigns (or $500,000 U.S.), was delivered to the mint at Philadelphia. An Act of Congress, signed by President James K. Polk on Aug. 10, 1846, established the Smithsonian Institution as a trust to be administered by a Board of Regents and a Secretary of the Smithsonian.

1842 – The New York Philharmonic, the oldest symphony orchestra in the United States, and one of the oldest in the world, was founded by a group of local musicians led by Ureli Corelli Hill. On December 18, 2004, the Philharmonic gave its 14,000th concert — a milestone unmatched by any other orchestra in the world. The Orchestra currently plays some 180 concerts a year.

1860 – Boys & Girls Clubs of America was organized by several women in Hartford, CT who believed that boys should have a positive alternative to roaming the streets.

1874 – Philadelphia Zoo, the nation’s first zoo, opened.

1891 – A Salvation Army captain in San Francisco, determined to provide the poor with a free Christmas dinner, began what has become the oldest continuously-run fundraising campaigns in America. To pay for the food, he put a large pot at a ferry landing where those using the ferry boats could easily see it. This launched the tradition of the Christmas kettle which has spread throughout the United States.

1902 – Goodwill was founded in Boston by Rev. Edgar J. Helms, a Methodist minister and early social innovator. Helms collected used household goods and clothing in wealthier areas of the city, then trained and hired those who were poor to mend and repair the used goods. The goods were then resold or were given to the people who repaired them. The system worked and the Goodwill philosophy of “a hand up, not a hand out” was born.

1904 – In writing his will, which made provision for the establishment of the Pulitzer Prizes as an incentive to excellence, Joseph Pulitzer specified solely four awards in journalism, four in letters and drama, one for education, and four traveling scholarships. In letters, prizes were to go to an American novel, an original American play performed in New York, a book on the history of the United States, an American biography, and a history of public service by the press. But, sensitive to the dynamic progression of his society, Pulitzer made provision for broad changes in the system of awards.

1909 – In a small apartment in New York City, Ida Wells-Barnett, W.E.B. DuBois, Henry Moscowitz, Mary White Ovington, Oswald Garrison Villiard, and William English Walling formed the National Association for the Advancement of Colored People (NAACP). As the nation’s oldest civil rights organization, it has changed America’s history in countless ways, including school desegregation, extending voting rights and preventing employment discrimination.

Of course, many significant philanthopic acts of time, treasure, and talent followed the establishment of the tax code and its deductions. However in this turbulent economic and financial time, it is important to remember that in years past when Americans faced adversity and stress, philanthropy was, as it is now, important regardless of any tax consequence.


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,

Deep Conversation With Patricia Annino

How do certain factors prevent women leveraging and enjoying the art of giving? How do you counsel women who have a lack of understanding about money?

Donation Image

Women in a general way do not want to stand out – they want to get along. The Wellesley College Stone center has done a great deal of work on relational/cultural theory-in essence that women want to belong, to be accepted and be part of the pack- they are concerned about how they are viewed and how they get along with others and they want everyone to get along with each other- to stand out from the pack in any way- and I think that includes how the dollars they want to donate means they have to risk individuating themselves and deal with philanthropy in a way that is different from their friends. That can lead to a status quo level of giving – they give to the extent that their peers do, their friends do, their community does – a safe, acceptable level of gifting. Men are more likely to risk individuation and in fact go farther than that and strive for it. Women have to understand why they are doing what they are doing and be comfortable taking risks and be strategic leaders.

In my practice I have seen countless women – regardless of how wealthy they are – give a multitude of charities small amounts of money rather than harnessing their money and thinking about if that annual donative amount – whatever it is in their budget this year- was focused toward one project/cause/charity the more bang for the buck it could give. That is not intuitive to most women.

Most women in this country will inherit money twice –once from the parents and once from their spouse –it is important that women educate themselves to understand wealth and money and as Barbara says “Prince Charming Is not Coming” and take the steps they need to take to educate themselves, then empower then act.

The keys to the kingdom are on the table and I have found that it is not men that are stopping women from picking those keys up- it is women who choose not to pick them up. Many husbands have told me in front of their wives – I wish my wife would pay more attention to this, I wish my wife would participate in investment decisions.

An example is a significant client I met with last year- he is in his early 60’s, happily married with four daughters and a very significant business. We met to discuss estate planning and he and all his male advisors were in the room with me. I asked him who he wanted to serve as his executor and trustee and he asked me what the difference was –I explained that the person who was in the fiduciary capacity had the authority to make all decisions, hire and fire whoever they wanted to, decide if the business could be sold, make investment decisions etc. Without hesitation he said- my wife and then my daughters. I looked around the room of men and asked him – why isn’t she here? It would be unfair to hang that rap on him though because she knew where he was going that day- to meet me and discuss these issues and she did not say- why don’t I go with you? She left it totally up to him to make decisions that will impact her- not him. They should have both been in the room and both of them should have thought that –these are smart motivated, successful people in a good marriage –estate planning in particular is what happens if the person you are entwined with – financially and emotionally, dies or becomes disabled- what is that consequence to you?

The question women have to ask themselves is – if not now when am I going to pick up the keys to the kingdom and claim my seat at this table- there is no time like the present and the Scarlett O’Hara I will worry about it tomorrow attitude only leads to problems.

A challenge facing men and women today with philanthropy is that as taxes are longer the major reason to enter into a discussion of how much to give- income tax brackets are low, capital gains brackets are low, the gift and estate tax bracket of 35% has not been this low in 8 decades, there is federally a $5 million per person lifetime exclusion for gifting and estate tax purposes- the challenge is to think about gifting when there are not motivating reasons except for the right ones to gift- and I think women are better suited than men to come to the table and have that discussion. The challenge is for them to be aware that this is an issue and educate them on the ways to begin to deal with it. Many of the great institutions in this country- Girl Scouts, Smith College were started by women with a vision.

And a plan. And challenge themselves to date their dreams and accomplish their philanthropic goals.

Women must be educated. When educated women are empowered and they act. The conversation has to start to raise the topics and programs like this one are foundational building blocks that will put philanthropic programs in motion.

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,

A Candid Interview with Patricia Annino!

Patricia was recently interviewed to get her insights on women, money, and philanthropy  Here are some of Patricia’s responses.  We hope you find them helpful when considering the way you look at, manage, and gift your money.

What does money mean to me? Freedom, control, independence

What does money help me to do? Make my own choices about the way I live my life- how hard I work, what I choosework-life scale image to do with my time and what I choose to give money to.

Is money a means to an end or and end in itself? A means to an end- money is a medium- it can be used in whatever way the person who has it decides- by itself it is neutral. You can use to buy items, support a lifestyle, invest in businesses or assets and give to philanthropy you choose- what you do with money is under your power and control. It is part of the journey – not a destination

How do you think about money in connection with philanthropy?

Time, treasure and talent are all important when it comes to philanthropy. They are three legs to the stool.

The treasure, or money component is one that is typically based on the way that you have grown up with philanthropy – if you go to church every Sunday and always put a few dollars in the collection plate that started the way you think about money and philanthropy.

As life goes on in most families there is not a strategic discussion about philanthropy- it is part of the community effort or business effort of the family- and frequently an essential part of “giving back” but not an independent thought- for most families around the dinner table what to do with the treasure component of philanthropy is not a core discussion

Most of us learn the way that we view money –what is good to spend money on, what not to spend money on and how much to spend at that kitchen table. As we grow older we need to understand why we have money habits – vacations are okay, going out to dinner is not okay, going out to dinner once a week is okay, giving money to the church each Sunday is expected, giving beyond that is not etc and step back from those habits and think about why your spending patterns including your philanthropy spending pattern exists and independently evaluate it.

To me thinking about money and philanthropy is an evolutionary process- first you have to step back from your habits and then think about the extent you wish to be philanthropic with your time treasure and talent and then design a plan – as life goes on (and you understand and think about life as a movie not a snapshot) your philanthropy program should change and evolve as you do.

How often does the word “money” come into conversation when you talk with other women about philanthropy?  Because of what I do for a living – fairly frequently and because I am in my 50s fairly frequently –when I look back to earlier times of my life it was not a topic that was frequently used with my friends and that is because there were other “more pressing” topics of conversation- children, building career, husbands, relationships. As you mature and life evens out I have found that there is the mental space to think about the connection to the bigger pictures in life, what matters and broader contributions.

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,

Donor Education – Educating Major Gift/Large Scale donors

Donate ImageWith large scale donors, the focus can be more on the actual output of gifts since they typically have more specific long term goals of giving compared to the low level donors.

Due to the size of their gifts, large scale donors will be interested in knowing more about tax policies and the benefits of giving large scale gifts outright compared to giving through planned giving methods.

It may be wise to incorporate into the program financial advisors who can help make donors feel secure and realize how much wealth they do have. Once donors feel more secure and are more aware of the extent of their wealth, they may donate a larger gift.

The education method must be tailored to the individual donor and what his/her goals/purposes of giving are. For example, if donors want to sponsor a fellowship, it would be good to have them meet other fellows currently in the position. In that way, they could get an idea of what type of fellowship they would be supporting and the positive contribution their gift can have.

It would also be wise to educate, cultivate, and motivate your potential major donor contacts by getting them better acquainted with your CEO and the mission and vision of your organization.  You can organize meetings with leadership or invite donors to special VIP events.

Education is a process and can have a long lead time. It can take an amazingly long time to motivate the larger scale donor sufficiently  so that he/she is giving at the target level.  The more that the donor becomes comfortable with understanding the advantages (tax, financial and social) to gifting, sees the effect of the gift and receives acknowledgement for having made the gift, the more likely it is that he/she will be comfortable with increasing his/her level of gifting.

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,