Estate Planning and Documents

Challenging Estate Plans: Modification of Sumner Redstone’s Estate Plan Prompts Allegation of Mental Incapacity

March 7, 2016 | by Chepenik Trushin LLP

Sumner Redstone, the controlling shareholder of Viacom Inc. and CBS Corp., is going to trial over claims that he is mentally incompetent. Redstone stepped down as executive chairman of both companies in early February.

The claims of incompetency come from Manuela Herzer, Redstone’s alleged ex-girlfriend, who was recently removed as Redstone’s health-care representative. In her suit, Herzer argues that Redstone lacked the mental capacity to remove her as his health-care representative and evict her from his mansion last October. Additionally, Herzer claims that Redstone has been “the victim of undue influence, fraud, manipulation, and chicanery” by those around him.

A Life Estate Explained

February 22, 2016 | by Chepenik Trushin LLP

Most people are familiar with the term life estate, but may not understand the exact details of how a life estate operates. First, “life estate” refers to a real property arrangement. A life estate is essentially just a method of splitting ownership of real property between two classes of people. In every valid life estate, there is at least one “life tenant” and at least one “remainderman.”

The life tenants and the remaindermen hold different property interests. The life tenants are the owners of the property during life. Each life tenant has the right to live in the property (rent-free) until his or her death. Following the death of the last life tenant, the property automatically transfers to the remaindermen. Following the transfer, the remaindermen become the full owners of the property, not subject to any life estate. One of the fundamental benefits of using a life estate to transfer property is that the transfer happens outside the probate process. A non-probate transfer allows the remaindermen to become full owners of the property without the cost, delay, and inconvenience associated with the probate process. Continue Reading

Are You Widowed? You Need To Plan Your Estate Too!

February 15, 2016 | by Chepenik Trushin LLP

Losing a spouse can involve some of the most painful experiences, difficult hardships, and distressing emotions. Often times, the remaining spouse feels bombarded with overwhelming and newfound decisions, ranging from heartfelt personal dilemmas all the way to crucial financial planning matters. Despite the emotional difficulty in handling personal finances after the passing of a loved one, engaging in estate planning is not only important, but rather a necessity.

Preferably, before death, spouses should seek professional assistance from an attorney to help draft wills that clearly express how the estate would be expected to pass. In order to protect the survivor, spouses must be extremely clear with their wishes long before illness or death. For example, spouses should ensure that all wills and life insurance policies are up-to-date with the names of the proper beneficiaries. This will prevent unnecessary, yet costly court costs or perhaps even money passing to an individual that was never intended. Continue Reading

What All Realtors Should Know When Representing a Foreign Buyer

February 8, 2016 | by Chepenik Trushin LLP

Recently, the Financial Crimes Enforcement Network (“FinCEN”) promulgated new rules which require certain U.S. title insurance companies to identify the natural persons behind companies used to pay “all cash” for high-end residential real estate in Miami-Dade County, Florida.

According to the 2015 Profile of International Home Buyers in the Miami Association of Realtor Business Areas, foreign real estate buyers account for 36% or $6.1 billion of total sales volume in the South Florida real estate market. Florida remains the top state for international buyers accounting for 21% of all foreign purchases in the United States. Miami in particular continues to have the most foreign buyers accounting for 74%, which is more than double than the national figure of 35%.

As a result, it is more important than ever for realtors with foreign buyer clients to have their clients engage an international tax attorney to ensure that the ownership of the property is structured with tax efficiency. Foreign persons purchasing U.S. real estate without consulting an international tax attorney may be putting themselves in precarious tax positions if the tax implications are not considered. Below is a high level discussion of some of the key issues.

David Bowie’s Estate Planning Guarantees Empire is Left to His Family

January 21, 2016 | by Chepenik Trushin LLP

Legendary rocker David Bowie was as brilliant in his estate planning as he was talented in his artistic ventures. Bowie’s colorful 50-year career encompassed both, a successful musical career and an acting career, which ultimately ended when Bowie succumbed to cancer in early January. Bowie’s empire, valued at an estimated net worth of $230 million, is primarily the result of several successful world tours and the sale of an estimated 140 million records. However, despite living a lavish lifestyle, with real estate in New York City, Switzerland, Los Angeles, London, and the Caribbean island Mustique, Bowie was said to have been “very much into estate planning issues at a relatively young age.”

Bowie’s financial astuteness was further evidenced by his creative invention of “Bowie Bonds”, created by Bowie and financial adviser, David Pullman. Bowie Bonds were asset-backed securities which awarded investors a share in Bowie’s future royalties for ten years. Bowie was able to retain ownership of his work rather than selling the copyright, and he was then granted complete ownership of the rights after the ten-year period. The scheme was created in the mid-1990’s and was bought by American insurance company Prudential Financial for $55 million. Pullman noted that even then, Bowie’s intent was always that “at the time of his death his assets would all transfer to his family and beneficiaries.” Bowie’s beneficiaries, model-wife, Iman, and his two children, can now financially benefit from Bowie’s strategic and forward planning.

New Year, New Estate Planning Tips

January 4, 2016 | by Chepenik Trushin LLP

The New Year is here, but some things may never change. The gym membership is already beginning to look old and your other resolutions have fallen by the wayside. However, one resolution that should be kept is the resolution to keep your estate plan up to date. Don’t have an estate plan? Then it is time to create one.

Updating Your Estate Plan

You may already have an estate plan that has been in place for years now. That’s great news! But there are a few important considerations to take into account. Have you acquired any new assets, such as a new property or a new life insurance plan? Then your estate plan warrants an update. Or you may have already disposed of assets, and the inclusion of those assets in your estate plan is no longer relevant. Including the change in assets will help keep your intentions protected.

Have there been any changes in your personal life that would entail a need for an update? Have you recently been divorced? You may want to remove your former spouse as a beneficiary of your estate. Or maybe you have recently wed. Including your spouse in your estate plan will help avoid some headache (and heartache) in the future. Continue Reading

Planning for Incapacity: Planning for When You Can No Longer Plan

December 9, 2015 | by Chepenik Trushin LLP

Let’s face it—no one wants to contemplate the possibility of a time when she or he is unable to take care of herself or himself. However, the truth of the matter is that it could happen to anyone at any time. In general, a person becomes incapacitated when that person no longer has the ability to make or enter into certain types of medical or legal decisions and agreements. Florida law specifically defines incapacity as “the inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, benefits, and income.” Wouldn’t you rather plan ahead for this “inability” so that you still have significant input into what will happen if or when you are unable to manage your own financial and medical affairs?

Various documents exist for a person to plan for incapacity. The type of document to execute depends on the type of care being considered. If dealing with property, a person might elect to execute a Power of Attorney. If dealing with the care of a person, various options include a Durable Power of Attorney, a Living Will, and a Health Care Surrogate.

Ensuring the Validity of Your Last Will and Testament

October 22, 2015 | by Chepenik Trushin LLP

There are a number of reasons why people choose to execute a Last Will and Testament. Some individuals create a will to ensure that their loved ones are provided for upon their passing. On the other hand, other people create a will to ensure that certain family members are specifically excluded from the distribution of their estate. Often times, however, life circumstances and/or the desires of the testator change between the execution of a will and the testator’s passing. In such instances, a modification or revocation of the previously executed will is necessary to reflect the changed testamentary intent.

Many people assume that they can modify or revoke their will simply by drawing a line through existing provisions, handwriting in new provisions, and initialing next to the changes. While this may be considered a valid modification in other states, this type of alteration is not valid under Florida law. Florida law requires strict adherence to what are known as “will formalities” in both the execution and the modification of a will. Any deviation from these strict formalities may result in a will being deemed invalid by a court, further resulting in the will not being admitted to probate and thereby frustrating the testamentary intent of the testator.

New Digital Estate Planning Application Demonstrates the Importance of Estate Planning

October 8, 2015 | by Chepenik Trushin LLP

Planning for one’s death is never easy, but that does not mean it has to be difficult. In an effort to encourage individuals to establish plans for their eventual passing, Everplans Professional recently launched a digital estate planning application to begin the process.The consumer application, geared primarily toward estate lawyers, financial advisors, and insurance agents, allows consumers to gather their estate plans, health care proxies, and financial account information and hold all of these documents in a single location. The application contains customized to-do lists, setting the framework for what needs to be done when an individual passes away. The plans are then shared with “deputies,” who will be able to have access to some or all of the stored information and documents.

Companies who sign up for Everplans Professional can co-brand the tool and offer it to their clients for the price of $2,500 a year. The application comes with a personalized dashboard that helps track a client’s progress, as well as an advisor who can reach out to the client and help the client finalize their plans. As with all technology, one legitimate concern is security. To tackle this problem, Everplans uses a two-step verification process during login and all personal information is encrypted and protected using banking-level security.

Tom Benson’s Family Feud Highlights Avoidable Estate Planning Issues

September 20, 2015 | by Chepenik Trushin LLP

New Orleans Saints and New Orleans Pelicans owner, Tom Benson, is currently involved in a family dispute and a series of judicial proceedings emerging from changes in his estate planning documents. After becoming displeased with the way his daughter—Renee Benson—and her two kids, Rita and Ryan, began acting upon his remarriage, Mr. Benson decided to strip his descendants of ownership shares of the Saints and Pelicans. These ownership shares were provided for in trusts that Benson had created to benefit Renee, Rita, and Ryan.

However, under the terms of the trusts, removal of the shares requires that Mr. Benson replace them with other assets of equal value. Benson has tried to fulfill this obligation, but his attempts have proven futile as the trustees have refused to accept promissory notes Benson has attempted to deliver in exchange for the ownership interest in the sports teams. The trustees believe that Benson has not offered assets equal to the value of the ownership interests, as questions still exist as to the dollar value of the assets.

Under Florida law, if the terms of the trust dictate that a third party has the authority to control the actions of a trustee, that third-party authority may be owed deference over the trustee’s discretionary power. See In re Celotex Corp., 487 F.3d 1320 (11th Cir. 2007). If this case was being litigated in Florida and Benson had reserved the authority to control the actions of the funds’ trustees, litigation may have been avoided. Needless to say, a well-written and comprehensive estate plan can make all the difference when flexibility is necessary to handle previously unforeseen circumstances.