Family Security Law Group, APC

How to Plan After a Divorce

“To avoid post-divorce financial trouble, I recommend that you and your ex, through your attorneys, create an action plan setting forth what steps you will each take, and by when, to enact your settlement agreement.”

Negotiating a divorce settlement can be a real chore. In addition, with a contentious, financially-complex divorce, the process can take months or even years.

Forbes recently published an article, “A Checklist To Help You Manage Post-Divorce Finances.” According to the article, many women are disappointed to learn that all their divorce-related financial troubles aren’t neatly resolved, when their ex signs the settlement documents.

 It is true that your agreement will say exactly what must be divided and how much goes to whom.  However, you’ll need to work through the practical details of how the agreement is implemented.

Some of the post-divorce financial matters you’ll face, like changing your name, address, and emergency contact, are simple enough. You only need a copy of your divorce decree.  However, two key issues can be more complex and serious (and often overlooked causing unintended results).

Should you disinherit your ex? See an estate planning attorney to make revisions to legal documents or create new ones.  If you don’t want your ex to inherit your assets, it is up to you to do the proper legal planning to accomplish your objectives.

Should changes be made to beneficiary designations on your insurance policies, retirement accounts, pensions, trusts, and annuities?  Often, a spouse is named as the primary beneficiary on such accounts.  If you no longer desire for your ex to be the beneficiary you need to properly change the beneficiary.

If these issues are not addressed, assets may end up in the hands of unintended people.

We are here to assist you.  Contact a Thousand Oaks estate planning attorney at Family Security Law Group, APC for a complimentary consultation.   

Reference: Forbes (February 12, 2018) “A Checklist To Help You Manage Post-Divorce Finances”

IKEA Founder Leaves Little to His Family

“Ingvar Kamprad was one of the richest men on the planet. But his heirs will only get a fraction of his billions.”

IKEA founder Ingvar Kamprad died late last month at age 91. He was one of the richest people on earth, thanks to the great success of his retail furniture empire. The notoriously frugal entrepreneur was ranked number eight on the Bloomberg Billionaires Index. His fortune was estimated to be about $73.8 billion.

However, Australian News reports in its article, “IKEA founder Ingvar Kamprad’s family won’t inherit much of his staggering fortune” that just a fraction of IKEA founder Ingvar Kamprad’s fortune will go to his heirs.

Most of the IKEA furniture stores are owned by the Stichting Ingka Foundation. The Dutch entity’s objective is to donate to charity and “supporting innovation” in design. The company was started by Kamprad in the ‘80s and is outside his family’s control.

The company is controlled by Liechtenstein-based Interogo Foundation, and its subsidiary, Inter IKEA, is the global IKEA franchisor.

In addition to philanthropy, the Foundation also allows for profits to be reinvested into the company. The foundation in effect owns itself. As such, Kamprad’s family can’t own any shares.

The reason for doing this was to ensure IKEA’s long-term survival. It’s now impossible for any individual person to take control of the company after Kamprad’s death — even a direct heir. Therefore, Kamprad’s family won’t have control over the IKEA company. But they will get modest sums from Ikano Group, a company that is worth billions of dollars in its own right.

That company is owned by the family and runs several businesses in the finance, real estate, manufacturing, and retail industries.

Per Heggenes, CEO of the IKEA Foundation said in 2012 that Kamprad was “not interested in money.”

Reference: Australian News (February 2, 2018) “IKEA founder Ingvar Kamprad’s family won’t inherit much of his staggering fortune”

Estate Planning: Not Just for the Wealthy

“When people hear the phrase “estate planning,” most think, “That’s for wealthy people.” While wealthy people, at least the prudent ones, take the steps to plan for their estate, this type of planning is about more than wealth. It’s actually about eliminating bad outcomes and confusion for those you may leave behind.”

A recent article in The Martha’s Vineyard Times, appropriately titled “Estate planning,” explains that estate planning for your family may simply be the important task of protecting them and other loved ones.

Work with an experienced estate planning attorney. If you’re a couple, you each need to have your own will and possibly a trust joint to say who gets your property following your death. In many instances, the spouses select each other.

In addition, a durable power of attorney allows someone to act on your behalf for financial matters. People typically choose their spouse, if he or she is alive. Be careful if you select someone other than your spouse, because he or she can control your money. A significant level of trust is required.

Next, a durable power of attorney for healthcare is needed, in the event that you become incapacitated. Your designated agent can make healthcare decisions for you, which helps avoid arguments between family members concerning what treatment you should receive.

A living will provides details on your wishes about what kind of treatments you do or don’t want at the end of your life (it’s the “pull the plug” document). Make that decision yourself, when you’re healthy and able.

Although it’s not the most fun exercise, doing all this work eliminates many potential problems, and provides several benefits:

• You’ll provide reasonable financial stability to your family when they can most use it, and can responsibly handle it;
• You’ll control the timing and method of distributing assets to beneficiaries;
• You can be certain that your wishes are honored, if you’re no longer able to act for yourself;
• You may provide some tax benefits, so your assets last longer for your beneficiaries; and
• You can have conversations with your family about what to expect in your estate plan.

Consider estate planning as an investment, and the future return in your peace of mind will be invaluable.  Contact an estate planning attorney at Family Security Law Group, APC for a complimentary consultation at 805-409-0108. 

Reference: Martha’s Vineyard Times (December 5, 2017) “Estate planning”

What Are the Taxes on a Gift From Mom and Dad?

“Understanding what taxes are–and aren't—owed on money gifts.”

It’s not unusual for parents and in-laws to help a young couple buy a house. The parent can gift money to them, but must the young couple pay taxes on the money?

The tax laws on gifts can be pretty confusing, says nj.com in an article, “Are taxes owed on gift from in-laws?”

The article first looks at income taxes and notes that the recipients of gifts, especially large cash amounts, often wonder if they’ll owe income taxes on the gift. However, a gift isn’t income. Consequently, there’s no taxable income to the recipient.

Likewise, some donors ask if gifts to the children, grandchildren, or others are deductible. Same answer: no. Gifts to other people are never deductible. The question probably stems from the fact that a charitable donation (a gift) is often deductible. Nonetheless, donations are only deductible if you itemize your deductions.

Next, let’s look at the gift tax, which applies to lifetime transfers. The recipient of a lifetime gift won’t owe gift tax. It’s just the donor who’s subject to the gift tax. Even so, most folks never have to file a gift tax return because there are exceptions for gifts to a spouse and gifts under the annual exclusion amount. The annual gift exclusion is $15,000 in 2018. This covers most other routine gifts. Every taxpayer can gift up to the annual exclusion amount to an unlimited number of individual recipients with no gift tax consequences.

Therefore, a parent could gift a child $15,000 with no reporting requirements. If the child is married, the parent can make the same gift to the spouse.

If the parent plans to gift more than the annual exclusion amount, then he’ll need to file a gift tax return. Even so, it’s unlikely that he’ll pay any gift tax.

A parent must claim any gift, in excess of the annual exclusion amount, as a reduction against his future estate tax exemption amount as reported on a Form 709 Gift Tax Return. The estate tax is a transfer tax at death and amounts more than the exemption amount are subject to the tax. That noted, such taxable gifts are less of a concern now that the estate tax exemption amount is $11,220,000 per person in 2018.

Speak with an experienced estate planning attorney at Family Security Law Group, APC to review any gifting plans, before making any decisions.

Reference: nj.com (December 6, 2017) “Are taxes owed on gift from in-laws?”

Questions Abound with Audrey Hepburn’s Will

“Audrey Hepburn's will has been revealed for the first time in her son's battle against her children's charity over the Hollywood star's name and likeness.”

Sean Hepburn Ferrer sued the Audrey Hepburn Children's Fund last fall for infringing trademark and other rights belonging to him and Luca Dotti, his half-brother, according to The Daily Mail’s recent article, “Audrey Hepburn's Will Revealed!”

Court documents show that Ferrer has responded to the charity's attempt to have the suit dismissed and has provided excerpts of his mother's will in which both sons were named as principal heirs to her estate and intellectual property after she died in 1993. The will shows that the star left her most precious jewels to her closest family and friends, including the daughter of actor Yul Brynner. Hepburn's will lists French fashion designer Hubert de Givenchy as an executor of her estate.

Hepburn died of cancer at 63 years old and had been in a long-term relationship with Dutch actor Robert Wolders at the time of her death. She left him two silver candlesticks which were worth about $500 at the time. Brynner's daughter Victoria received $1,500 worth of tangible personal property, specifically a “Tiffany (Schlumberger) small flower, diamonds and platinum, brooch.”

Hepburn owned three properties in Switzerland. The home was later sold in 2000 for an undisclosed amount. In addition to her estate, the Hollywood icon left her son Sean, Bulgari gold and diamond earrings—a gift she received from his father, Mel Ferrer, on his birth. The brothers also inherited the film rights and royalties pursuant to Hepburn's film contracts, as well as her name and likeness rights and any other similar rights.

Ferrer and Dotti founded the children's charity in their mother's name the year she died and agreed to jointly own and manage her registered trademarks and moniker.  However, the charity experienced legal troubles after Ferrer stepped down as chairman in 2012. Ferrer said he resigned after becoming 'disillusioned' with the fund, but he and Dotti continued to approve of certain uses of Hepburn's likeness on a case-by-case basis. Issues arose when Ferrer ended the charity's license, which allowed them to use Hepburn's name. He claimed it has continued to use his mother's intellectual property for years without permission.

Ferrer's lawsuit, filed in October 2017, came some months after the charity sued him for “intentional interference with contractual relationships.” It claimed he’d become increasingly “hostile” to its use of Hepburn's IP that interfered with their fundraising.

Ferrer had also accused the fund of improperly retaining possession of his property, such as legal and financial records, contracts, samples of merchandise bearing Hepburn's name, image, and trademarks, scripts, and other documents.

Reference: Daily Mail (December 15, 204) “Audrey Hepburn's Will Revealed!”

Tips in Digital Estate Planning

"The new reality is that our lives are largely digital, and the artifacts of our digital lives have value, from both sentimental and financial standpoints.”

A recent Morningstar article asks, “Do You Have a Plan for Your Digital 'Estate'?”

The article reminds us that not every aspect of an estate will be addressed quickly, even six months later. This includes questions about how to handle the files on the decedent’s computer or the stuff on his smartphone. His social media accounts may also still be up and running.

Many people who think they've X’ed all of the right boxes on their estate-planning to-do lists, may have overlooked the proper management and orderly transfer of their digital assets after they die or become disabled. Digital estate planning includes all of your digital possessions, such as computers and smartphones, stored data (on your devices or in the cloud), and online accounts like Facebook and LinkedIn. You should include your digital assets in your estate plan. You should state who should get the data and if there are things you don't want others to have. Here are some first steps:

First, conduct a digital fire drill. This will jog your memory about which digital assets you deem important. Consider the following questions:

• What valuable items would you lose, if your PC or other device was lost or stolen?
• If you’re in an accident, would your family be able to access your significant digital information?
• If you died today, to what digital property would you like your loved ones to have access?

Next, make an inventory of the digital assets you named during the fire drill and include usernames and passwords. Your digital inventory may include digital devices, data-storage devices or media, electronically stored data, social media accounts, domain names and intellectual property in electronic format. Keep this document safe.

You may want to keep an electronic list of digital property and passwords, protected with strong encryption and a strong password and backed up in the cloud (not on your computer and smartphone). Create a master password for the electronic list, store the password in a safe deposit box or home safe and give your fiduciary instructions on accessing it.

Remember to back up all your data.

Finally, formalize your digital estate plan. You should designate a digital executor—someone who can ensure that your digital assets are managed or disposed of in accordance with your wishes after you pass away. Depending on the type of property, the fiduciary may also need special powers and authorizations to deal with specific assets.  You should also mention specific digital assets in your will.

Reference: Morningstar (December 15, 2017) “Do You Have a Plan for Your Digital 'Estate'?”

The Will of Legendary Comedian Jerry Lewis Shows That He Disinherited His Kids

“A will is a public document. Once the probate process begins—which is what happens when you use a will as an estate planning device—anyone can view it.”

Comedian Jerry Lewis died last month of heart failure at the age of 91. He left behind a wife, six children from a previous marriage, one adopted daughter and an estate worth about $50 million. His daughter Danielle, who was the comedian’s manager, confirmed that “he passed peacefully at home of natural causes with his loving family at his side.”

However, not everyone in that loving family will see money from his estate. Forbes’ recent article, “Jerry Lewis Disinherited 5 of His Kids, And Here's Why We Know,” explains that because a will is a public document, we know exactly what Jerry left and to whom.

Specifically, we know that one of the provisions in Lewis' will states:

“I have intentionally excluded GARY LEWIS, RONALD LEWIS, ANTHONY JOSEPH LEWIS, CHRISTOPHER JOSEPH LEWIS, SCOTT ANTHONY LEWIS and JOSEPH CHRISTOPHER LEWIS and their descendants as beneficiaries of my estate, it being my intention that they shall receive no benefits hereunder.”

Jerry used the word "intentionally" intentionally. It’s clear what he was doing. If a will is vague or hard to interpret, ascertaining the testator’s intent can be a challenge. However, Lewis was crystal clear that he wanted to disinherit the six children he named in the will. To top it off, he made certain that his intentions are clear by adding "and their descendants."

The couple’s sixth child, Joseph, died of a drug overdose in 2009. Lewis and his first wife were married for 36 years. Gary, one of their children, went on to become a successful musician.

Lewis makes no mention of why he decided to disinherit all the children from his first marriage. Legally, it doesn't matter. He had the right to distribute his assets the way he wanted.

Lewis’s estate will be passed to his widow, SanDee Pitnick. Next in line to inherit his fortune, should something happen to his wife, is his 25-year-old adopted daughter Danielle. He named his wife as his personal representative.

Lewis is believed to have left behind some real money in the form of his intellectual property. Jerry owned almost all of his most famous films outright, including 'Cinderfella,' 'The Nutty Professor' and 'Hardly Working.'

If he would have created a trust, we’d never have known the details. This is because trusts aren’t public documents. In addition, a trust could have helped reduce or eliminate estate taxes, provided protection from creditors and spared his family the time and expense of the probate process.

Reference: Forbes (September 27, 2017) “Jerry Lewis Disinherited 5 of His Kids, And Here's Why We Know”

How to Avoid a Will Challenge

“If you have concerns about a will challenge, the first thing that you should do is talk to the attorney.”

The Northwest Indiana Times says in its recent article, “Choosing an executor,” that will challenges are pretty rare. A successful contest can stem from an issue with the will making process.

That’s all the more reason to use an experienced estate planning attorney to help you create your estate plan. It’s the common mistakes that cause the most trouble, especially when a person tries to save money and do it themselves. If you work with an attorney who focuses on wills and estates in your state, he or she will know when a law changes—and how it can impact your plans and objectives for your legacy.

The time to think about a possible will contest or challenge is in the initial planning process. If you and your attorney discuss your concerns from the start, he or she can plan around them and design tactics that can avoid or reduce the chances of a will contest.

It’s much simpler to tackle a problem now, than to try to solve it later after you’re not around. When working with your lawyer, the more information you offer, the more likely the problem can be addressed and avoided.

For example, if you are considering favoring a daughter who has taken care of you for many years but worry that the other children will be upset, discuss this with your estate planning attorney.

Your attorney may ask you to get a letter from your physician. That letter should confirm that, that in his or her medical opinion, you’re of sound mind and have the capacity to make your own decisions. Capacity is a common challenge to a will. A begrudged heir may claim you were not mentally capable of signing a will.

Your attorney may also record the will signing, so there’s evidence that you weren't under another person’s influence or pressured into signing the will. Don’t be surprised if your attorney asks that the care-giving child isn’t at the signing, to lessen the concern of undue influence.

Some folks will leave a person they intend to disinherit a dollar. That won't do anything, except cost your estate a dollar. Just because you left them a dollar, doesn't mean they can't challenge the will.

Some people also want to have a term in the will stating that anyone who challenges the will is disinherited.  However, that is not a 100% lock. This provision, known as an in terrorem clause, is unenforceable in many states.

Speak with an experienced estate planning attorney at Family Security Law Group, APC and plan for the challenge. Odds are it will never arise. However, if it does, by taking these steps, your family will be ready and your wishes will be honored. Give us a call.

Reference: The Northwest Indiana Times (September 3, 2017) “Choosing an executor”

Selecting the Right Trustee for Your Living Trust

“Choosing a trustee for your living trust, seems like it wouldn’t be that difficult. Most living trusts (also called revocable trusts and sometimes called grantor trusts) will name the person or people who set them up as the initial trustees.”

The (Riverside CA) Press-Enterprise explains in its recent article, “Women on Money and Mindset: Estate planning: choosing a trustee,” that in a living trust, when the first spouse passes away, the other spouse usually becomes the sole trustee. When the second spouse dies, the trust should designate a successor trustee or trustees. You should take some time in considering who that successor trustee or trustees will be. Many people pick children, friends, other family members, professional fiduciaries and banks.

Children: Married couples often will name their oldest child as the successor trustee or they name all their children to act as co-trustees. This can work if there’s never been a divorce; there is only one child; she lives close; she doesn’t work and all the assets are investment accounts. However, most adult children will have full-time jobs. Adding the job of trustee can be a strain, because it’s time-consuming and technical. The administrative burden of taking care of your final business can be overwhelming.

Friends: Acting as trustee is a big large favor to ask.  Therefore, if you’re going to ask a non-family member, set up a provision in your trust to pay them reasonable trustee fees.

Professional fiduciary: A professional acts as a trustee, which they do on a regular basis. They know what to do and are required by law to have the best interests of the beneficiaries of the trust as their top priority.

Banks: Banks like to act as trustees, especially if a big part of your trust is held in financial assets managed by that bank. They will charge higher fees than professional fiduciaries, and they’ll have some rigid internal rules to follow. If your beneficiaries may fight, or if they’re all out of state, a financial institution or a professional fiduciary is a wise choice.

The successor trustees named in your document should be notified and given a copy of your trust document. These successor trustees can always say no, so carefully consider naming the next in line.

A bank is a good backup. If you fail to name more than one person, and he or she can’t or won’t serve, your trust may have a court-appointed trustee.

 You should also be sure to include your children in these trustee conversations and considerations. If you decide to name a child as your trustee, let them know what will be expected of them. Connect him or her with your estate planning attorney. Requesting your children’s help now to get these matters settled, will be helpful to everyone when the time comes to act as trustee.

Reference: The (Riverside CA) Press-Enterprise (September 2, 2017) “Women on Money and Mindset: Estate planning: choosing a trustee”

The Perils of Do-It-Yourself Estate Planning

“Your family and friends are important, and the transfer of wealth after you pass can be greatly simplified with an expert on your side.”

Are you a tax law expert?

Tax law is one of the most complicated legal fields in the discipline. It really should be left to the professionals, especially when it involves significant amounts of your money.

That’s why it’s very important to take the time and spend the money to receive experienced and skillful legal advice, before you attempt to do estate and tax planning on your own.

Axcess News recently published an article, “The Very Real Dangers Of Doing Your Own Estate Planning.” The article gives us some of the major issues that people experience when they try to do this type of thing on their own.

Those with simple estates don’t need a great deal of estate planning, but they still need some. This may include a will, healthcare directive and a power of attorney. People try to create these documents on their own, searching online for a free template or a paid program. Many people who elect to go online to save money, wind up spending more than they anticipated, or they end up with a defective estate plan that only creates more issues for their family, once they’ve passed away. The web will might work out just perfectly for some, but others risk much more than they save.

A common issue is trying to determine if a simple estate plan will be enough for a person’s specific situation. Your situation can be complicated if your spouse has already passed, if you have children, if you own real estate or if you’ve been divorced and remarried. If any of these apply, the best bet is to sit down with an experienced estate planning attorney. The free web solution just won’t cut it.

You may be in need of a trust. That’s a sophisticated task that definitely requires legal expertise because a simple mistake can make the trust null and void. A qualified local estate planning attorney will understand the details of the law and your situation. He or she will guide you into making the right choices for you and your loved ones. If your do-it-yourself estate plan has an error or flaw, the legacy you wanted to leave to your family may be challenged in court.

If you do have an estate worth millions of dollars, with your do-it-yourself estate plan, you risk losing a lot of money because of unnecessary taxation or simple mistakes. An established estate planning lawyer who practices in this area of law will know the tax laws and will suggest strategies that will save as much as possible. How much risk do you want to take?

Reference: Axcess News (August 2017) “The Very Real Dangers of Doing Your Own Estate Planning”