Death and Taxes Blog

Last week my family visited Boston for a little spring break R&R (is it really spring break when the temp barely breaks 50? better than snow, I suppose).

I'd never been to the city before, and we had a nice time visiting friends and seeing the sights along the Freedom Trail. Surprisingly, a couple of estate planning issues impacted the makeup of the city. The following quotes are from the nice walking guide entitled The Complete Guide to Boston's Freedom Trail, by Charles Bahne:

1. "The [Massachusetts] State House stands on land once owned by John Hancock.... Hancock was the first person to sign the Declaration of Independence.... Hancock's elegant mansion stood on what is now the west lawn of the State House. Hancock wished to give his home to the state, for use as a governor's mansion, but he died before he could sign his will. Year later, his heirs offered to sell the old house to the state, but the price was considered too high. Much to the dismay of all Bostonians, the Hancock mansion was demolished in 1863." (page 8) Ah, the irony of one of the world's most famous "signers" failing to sign his Will.

2. Faneuil Hall is "Boston's town meeting-hall [] where the colonists first dared to speak publicly against British rule.... The building was a gift to the town from Peter Faneuil, 'the topmost merchant in all the town'.... Peter Faneuil inherited his fortune from his uncle Andrew, a prosperous merchant whose ships called at ports around the Atlantic. But Andrew's bequest was subject to one unusual provision: like his uncle, Peter had to remain a bachelor. If he ever married, he would forfeit the money!" (pages 30-31) Peter Faneuil was known around Boston as "the jolly bachelor," which is also a name he gave one of his ships. These days, a "no marriage" provision would possibly be declared void as against public policy.

This is more of a cross-update. I have blogged about Ms. Spears and her prenup on a number of occasions (most recently, here and here), and I blogged about Amy Winehouse and her out-of-control behavior here. Ms. Spears has been exhibiting similar behavior, and her family actually did step in -- her father was appointed as conservator of her estate, and his position has been extended to July 31 (per this article). (Conservator is really just another name for guardian.) This article has a bit more information about the scope of the conservatorship.

I blogged about this case previously (here and here). As this article notes, Ms. Smith's daughter Dannielynn has been named her sole heir.

The interesting issue raised here is this: if you specifically disinherit someone (as Ms. Smith did -- her Will excludes descendants born after its execution), but your Will winds up not listing any valid beneficiaries (thereby creating an intestacy, with your heirs inheriting your property), can the person you disinherited take as an heir? One approach might be to consider Ms. Smith's heirs, but exclude as heirs anyone specifically disinherited in the Will. I believe that would leave Ms. Smith's mother as her sole heir. Of course, there is an inherent unfairness involved here -- should an individual be able to disinherit their minor child?

Suspenders-loving serial groom Larry King was in the news recently, in a Wall Street Journal article on life insurance settlements. The article can be found here.

Note that the type of life insurance settlement mentioned in the article is not the same as a viatical settlement, which was a concept that became popular about a decade ago. Viatical settlements were used in cases of terminally ill individuals (such as individuals with AIDS), to free up money for treatment, etc.

By contrast, life insurance settlements are used by individuals who are not terminally ill, individuals who have existing policies on which they no longer want to pay the premiums.

By the way, The Smoking Gun has a copy of Mr. King's complaint here. Slate's Timothy Noah offers commentary in an article entitled "Larry King, Sucker." Can you guess Mr. Noah's position?

Leona Helmsley, the so-called Queen of Mean who died recently, left most of her money to... her dog. The Washington Post has the story here. Some of the other provisions:

She left money to two of her four grandchildren (the children of her deceased son, Jay Panzirer) "so long as they visit their father's grave site once each calendar year. Otherwise, she wrote, neither will get a penny of the $5 million she left for each."

According to the article, "Helmsley left nothing to two of Jay Panzirer's other children - Craig and Meegan Panzirer - for 'reasons that are known to them,' she wrote." Ouch!

I would not have recommended the "grave visiting" requirement -- it strikes me as a ham-handed attempt to control people from beyond the grave. If the grandchildren loved their father and view the visitation of his grave as an important way to show this, then they'll visit the grave regardless of any incentive to do so. If the grandchildren didn't love their father, or think there are better ways to show their love than visiting a grave, they're likely to resent the requirement.

Robert H. Brooks was the chairman of Hooters restaurant when he died on July 15, 2006. Now a dispute has arisen between Mr. Brooks' widow, Tami, and the administrators of his estate (including his son, Coby, from a prior marriage). This article has the details. Among other things, the administrators are fighting Mrs. Brooks' ability to utilize "South Carolina's elective share law, which lets people take one-third of their deceased spouse's estate instead of accepting what, if anything, that spouse left to them in a will." The article is vague on the administrators' argument -- that the elective share law violates the U.S. Constitution? -- but I presume that this case is another in a long line of cases where a married couple was considering/in the process of obtaining a divorce, but one party died before the divorce was completed. The administrators "say Tami Brooks doesn't deserve the Hooters fortune because she and Robert Brooks were not 'living together as husband and wife' at the time of his death - one of the requirements Robert Brooks specified in his will before Tami Brooks could receive any money." Obviously the elective share law contains no such "living together as husband and wife" requirement.

I blogged here about Anna Nicole Smith's Will. I said the Will (drafted by an attorney who doesn't appear to be an estate planner) was "a mess."

The Will has been admitted to probate, as per this article. An important point: the admission of a Will to probate doesn't mean that the Will is valid -- you can still prove that someone made the testator sign it (undue influence), or that the testator didn't know what he or she was doing when the Will was signed (lack of capacity), or that other circumstances make the Will invalid. All the judge is doing in admitting the Will to probate is saying that, on its face, the Will appears to be valid. Probate is somewhat unique in the law in allowing this -- it's like "admit first, ask questions later," and in most cases no notice needs to be given before the initial ruling on a WIll's validity is made.

Note the following passage in the above article, which relates back to the drafting of the Will:

Outside court, [attorney for the estate Bruce] Ross said he would eventually present testimony from the lawyer who drafted Smith's will, saying that Smith did not intend to disinherit Dannielynn.

"There is no provision in the will that names Dannielynn and purports to disinherit her," said the lawyer.

Ross said the attorney who drafted the will would testify that he and Smith discussed the possibility of her having future children.

"She said, `I probably won't have future children, but if I do I would want them to be the beneficiaries of the trust,'" Ross said.

Asked why Smith made a provision to leave everything to her son and to specifically disinherit future children, Ross said, "Anna was concerned that someone would pop up out of the woodwork."

I don't understand Mr. Ross's argument. The Will clearly states that "I have intentionally omitted to provide for... future spouses and children... hereafter born or adopted...." Ms. Smith couldn't specifically name Dannielynn because -- wait for it -- Dannielynn hadn't been born or even conceived when the Will was drafted! Instead, Ms. Smith clearly disinherited "children... hereafter born or adopted," which Mr. Ross seems to acknowledge. Either (1) Ms. Smith intended to disinherit after-born children or (2) Ms. Smith didn't intend to disinherit after-born children, and the drafting attorney better make sure his malpractice insurance is up to date.

Mick Jagger's father, Joe Jagger, died in November of last year. Mr. Jagger left all of his assets not to Mick but to his other son Chris -- here's a short article.

I wish more people with wealthy relatives would take this approach. There's little reason to leave a bunch of your money to a wealthy child, parent, or sibling -- in some cases, it just causes headaches. I assume Mick Jagger understood this, as he's named as his father's executor.

If a client feels funny about disinheriting a family member because of lack of need, I always suggest putting their rationale for doing so in their documents. Of course, the better approach is to talk to family members and explain why you want to leave your money elsewhere.

Yesterday I spent the day at this all-day IICLE seminar on Illinois Estate Administration. I learned a lot from all of the speakers, but I especially enjoyed David A. Handler's presentation on disclaimers. I've blogged about disclaimers in the past, and consider them a great (post-mortem) estate planning tool.

One of the elements needed for a valid disclaimer under § 2518 of the Internal Revenue Code is that "as a result of [the disclaimer], the [disclaimed] interest passes without any direction on the part of the person making the disclaimer."

Mr. Handler addressed this issue by reference to the estate of Jacqueline Kennedy Onassis. Mrs. Onassis's Will (which can be found here) specifically allows her children to disclaim certain property that might pass to them. Disclaimed property then flows to her residuary estate, where (under Article FIFTH) it is held as The J Foundation. The issue is this: Mrs. Onassis's children did not disclaim, but if they had, and were also involved in the administration of The J Foundation, wouldn't their disclaimer be invalid? After all, they would still have been involved in directing how the disclaimed property would pass.

Bread-hating diet guru Dr. Robert Atkins died in 2003, but his trust lives on, and is now the subject of some juicy (greasy?) litigation. Today's Wall Street Journal has the scoop here (registration is required).

After Dr. Atkins' death, his widow (Veronica) became very depressed. She also had a huge amount of money to deal with, and no bank or trust company acting as adviser. Instead, Ms. Atkins turned to three individuals she referred to as "The Three Musketeers" -- a "self-described entrepreneur" (yikes!), an accountant, and a lawyer. Mrs. Atkins had the three appointed as trustees of the marital trust created for her benefit, and officers of her husband's foundation. She also...

-agreed to pay each of the men $1.2 million per year, including some money out of her own pocket (since their salaries "exceeded statutory limits on trustee commissions");

-signed them to 10-year contracts with built-in extensions which the three now claim "made them employees for the rest of her life"; and

-allowed each of them to purchase a $5 million life insurance policy on her life, with themselves as beneficiaries.

Is it just me, or does something smell here? Is that a hamburger fried in bacon grease, hold the bun, or something else? Something rotten smelling?

Anyway, the relationship has now gone downhill, possibly because of the presence of Ms. Atkins' new husband, Alexis Mersentes, "a Palm Beach socialite who opposing lawyers call an 'opportunist skilled in the art of seduction'". The Musketeers say that their positions were terminated improperly. Ms. Atkins says that the three took part in self-dealing and waste with respect to trust assets (a press release, here, details the citation proceeding -- that's a first).

Meanwhile, my sourdough starter survived the Atkins Diet craze, and is resting comfortably in my fridge, subject to my removal of a cup or two every week or so to make some bread.

I've stayed away from blogging about the Anna Nicole Smith situation so far, as I'm not particularly interested in the tabloid aspects of Ms. Smith's life. However, another estate planning attorney e-mailed me a copy of Ms. Smith's Will (here as a pdf), and I had to take a look. I found it fascinating for reasons other than the fact that Ms. Smith lived a very messy life.

My first and biggest observation is that the Will is a mess. And the attorney who drafted it has some serious explaining to do.

Let's start with the strangeness of the disinheritance, in ARTICLE I. Ms. Smith says that "Except as otherwise provided in this Will, I have intentionally omitted to provide for my spouse and other heirs, including future spouses and children and other descendants now living and those hereafter born or adopted, as well as existing and future stepchildren and foster children." It always raises a red flag for me when there are references in a Will to relationships that don't exist. Ms. Smith wasn't married when the Will was signed -- why does this Article refer to her spouse? Ms. Smith didn't have stepchildren or foster children, did she -- why are they mentioned?

Ms. Smith's goal might have been to essentially shut out everyone but her son, but I question whether her estate planner really ran through the various scenarios with her. Did she REALLY mean to disinherit any child of hers born or adopted in the future?

Ms. Smith certainly deserves some of the blame if the above language does not match her intent, since she went through an entire pregnancy without changing her Will. But what really makes this Will a failure in terms of drafting is ARTICLE II, which states in relevant part that...

"All of the property of my estate... shall be distributed to HOWARD STERN, Esq., to hold in trust for my child under such terms as he and a court of competent jurisdiction may declare, such that my children are distributed sufficient sums for the [sic] health, education, and support according to their accustomed manner of living....

(Emphasis added.) Did Ms. Smith mean to benefit only her son Daniel? If so, I understand the reference to "child." But why mention "children" and "their," words that obviously refer to more than one child? Are these references intended to fall within the exception to disinheritance found in Article I? If so, then why was disinheritance of future children included at all in the Will?

If I had to guess, I'd say that the drafting attorney -- who, from this, doesn't appear to be an estate planner -- took a form, started tinkering with it, and produced something that is going to spark a ton of litigation. I'd call that a bad day's work.

Sorry blogging has been light lately. I was just on "vacation" in Florida for a week (vacation is in quotes when it involves 18 hours of driving each way, some of it with a sick kid in the back seat).

What did I miss? James Brown has a messy probate estate? Really? Now THERE is a shocker. If there was a pool regarding which celebrities will have the messiest estates upon death, Mr. Brown would have been high up on my list, maybe between K Fed and Flava Flav. All kidding aside, though, the issues here are interesting -- Mr. Brown's Will apparently doesn't refer to his wife or his son. And there's some question as to whether Mr. Brown's wife WAS his wife, and whether his son WAS his son. This article is a nice summary, although it fails to mention my favorite factoid about the case: that Mr. Brown's probate attorney is Strom Thurmond, Jr.

Illinois law has ways of dealing with sticky probate situations, and presumably so does South Carolina, where Mr. Brown resided.

-In Illinois, a spouse can renounce the Will and ask the court for a spouse's award.

-When I draft Wills, I always include language applying the Will's provisions to children born after the Will is signed. In Illinois, we also have this provision:

Unless provision is made in the will for a child of the testator born after the will is executed or unless it appears by the will that it was the intention of the testator to disinherit the child, the child is entitled to receive the portion of the estate to which he would be entitled if the testator died intestate and all legacies shall abate proportionately therefor.

There's also a potential child's award.

The term "Kafka-esque" tends to be overused, but it's probably an appropriate description for the case of Patrick White.  Mr. White, Australia's only Nobel Prize winner for literature (in 1973), died in 1990.  According to this article,

if White's wishes - as expressed in his will - had been followed, all his unfinished work was to be burnt after his death.

But... the author's literary executor Barbara Mobbs just couldn't do it.

Mr. White's personal papers have now been acquired by The National Library of Australia.

The article goes on to list other similar cases where a writer's work wasn't destroyed even though that was the writer's wish -- a list that includes Hemingway, Orwell, Dickinson, Nabokov, Maugham and, of course, Kafka (whose case I discussed briefly here).

I've written lots of times (most recently, here) regarding the controversy in the estate of Rosa Parks.  According to this article, the parties are talking settlement.  The question involves whether Mrs. Parks' friend and associate Elaine Steele "used undue influence to convince Parks in 1998 to leave the bulk of her estate to the Rosa & Raymond Parks Institute for Self Development."  I can't say that I've ever heard of someone exerting undue influence to get someone to leave their estate to charity, but I suppose there's a first time for everything. 

One interesting issue involves the valuation of Mrs. Parks' personal property:

An auction house is cataloging Parks' estate, chiefly to determine what of value she left when she died.

But [the attorney for Mrs. Parks' nieces and nephews] said placing a value on many items is difficult, however. What, for example, is the value of a plate Parks used when eating with then-President Clinton?

This is an interesting valuation problem.  What's the value of...

one of my dinner plates?
one of Mrs. Parks' dinner plates?
one of Mrs. Parks' dinner plates used when eating with then-President Clinton?

Valuing everyday items that have value only because of the identity of their owner is tricky business.

According to this article, the only existing Technicolor road-show print of Porgy and Bess is being shown at the Los Angeles County Museum of Art on Saturday.  This story has a probate connection because of comments previously made by Ira Gershwin's executor:

The Gershwin family never liked the film because they felt it was too "Hollywood." In a 1993 interview with The Times, Michael Strunksy, trustee and executor of Ira Gershwin's estate, raised eyebrows and the ire of film historians and preservationists when he stated "we [the estate] now acquire any prints we find and destroy them."

This raises an interesting question about an executor's job.  Usually the executor is charged with maximizing the value of an estate's assets.  How do Mr. Strunksy's comments accomplish this?  Is it more important to maximize asset values, or to be "true" to what the decedent wanted?  This reminds me of Franz Kafka as well, since Mr. Kafka asked his literary executor (Max Brod) to destroy all of his manuscripts upon his death.  (Mr. Brod obviously disobeyed this order.)

I previously blogged about litigation in the estate of Buddha-bellied Hall of Famer Kirby Puckett here.  According to this article, Mr. Puckett's ex-wife (Tonya Puckett) is now attempting to have the executor of Mr. Puckett's estate, Brian Woods, removed from his post.  Ms. Puckett claims that Mr. Woods "is no longer qualified to manage the estate because he has a 'significant and irreconcilable conflict of interest' stemming from his role in the money transfer and statements he made about taking care of Puckett's fiancee, Jodi Olson."

She alleged that Woods told her in the hours before Kirby Puckett died that Olson was not named in the will and that she needed to "be taken care of, and that $1 million to $1.5 million needed to be given to her."

...

The petition also alleges that on the day Puckett died, his longtime agent, Ron Shapiro, acting under a power of attorney, transferred money from Puckett's account to Olson's.

The petition said the "gift" was "a clear violation" of Arizona law. Woods "was effectively an accomplice," it said, because he was aware of the transfer and did nothing to stop it or, later, recover the money.

[Mrs. Puckett's attorney] said Tuesday that the transfer was made even though William Brody, a Minneapolis attorney representing Woods, advised Shapiro before the transfer that such a transaction was not authorized by the power of attorney agreement.

The question of whether an agent under a power of attorney can make gifts on behalf of the principal -- either directly or by changing the principal's estate plan -- has always been an important one. 

In Illinois, the statutory form for a power of attorney for property includes a long list of powers granted to the agent, but doesn't include the power to make gifts.  I typically include such a power if my client wants it. 

The above article mentions Arizona law -- I assume that Mr. Puckett executed an Arizona power of attorney for property.  However, it doesn't appear to me that Arizona has a statutory form for this document, so the question of whether the gift was a "clear violation" of Arizona law depends on the specific language of the power of attorney Mr. Puckett executed.   

Marlon Brando lived a messy, complicated life -- should we surprised that his estate has turned into a bit of a mess as well? This article from the BBC discusses the latest charges -- including that Mr. Brando's signature on his latest codicil was forged -- and also discusses some of the other issues relating to the estate.

After I reviewed The Investigation (here and here), I had a few e-mail exchanges with Greg Magnesen (the author's son) and Robert Deiro (the author's key witness).  While my review wasn't the most positive, Mr. Magnesen and Mr. Deiro have always been very cordial.   

After my post on Wednesday about the return of Melvin Dummar, I received another e-mail from Greg Magnesen, who graciously agreed to allow me to post it as a rebuttal:

I noticed a new blog on your site.  I suppose it is not too surprising given the new developments.  Just thought I would comment on the points you brought up in the latest installment. 

As to #1- Mutually exclusive ways to put Hughes on the road--
The outing to the Mizpah and subsequent search was a completely separate occasion of Hughes leaving (with employees and aides- thereby making their assertions in court that Hughes never left his penthouse perjury, and the destroying of the records from that time period evidence tampering).  The event when Melvin picked Hughes up was when Deiro flew Hughes to the Cottontail Ranch- a completely separate event (also proving there were witnesses to him leaving).  Deiro has also said that he took Hughes out flying on other occasions, not only to brothels, but on practice approaches in scouting locations for a supersonic airport Hughes was thinking of building in Southern Nevada.

#2- Deiro's story
Deiro was like most other people in thinking that Dummar's story was comical at best.  It was not until the Las Vegas Review Journal published an article mentioning the connection between the Dummar-Hughes incident and the proximity to the Cottontail Ranch that he started to realize his own role in the events. He was told that Hughes left with someone, so he flew a few circles in his plane, and went home.  Whether or not taking his boss to a brothel is appropriate is beside the point.  When Hughes said jump, his employees lept with all they were worth or would find themselves in a much less lucrative position.  (Just a quick example- Employees found out Baskin Robbins was discontinuing Banana Nut Ice Cream- Hughes favorite at the time- so they bought up as much as they could out of fear of the repercussions, only to have him change his favorite to vanilla shortly thereafter).  You did not question Mr. Hughes if you were in his employ.  He was weird, and did whatever he wanted.  Why did Deiro circle?  Since Hughes did not come with anyone but him, he may have thought they were mistaken and Hughes did not leave with someone else.  He did not see him anywhere nearby in the desert, so headed home- thinking maybe he did leave with someone else.

#3- '67 incident=validity of will
As I stated in a previous email- the '67 incident only adds to the evidence supporting the validity of the will.  In his investigation, my dad spoke with one of the living jurors who did not remember tesitimony from an aide about Hughes actually leaving.  The foreman of the jury had typewritten notes each night and handed them out the next day, and this testimony was left out of the typed notes as far as he could remember.  This juror said the jury's decision was based almost entirely on whether or not Melvin could actually have picked the old man up in the desert.  As the notes from the foreman were what they were working from, and the notes said the aides were all lock-step on the fact that Hughes never left, they found the will to be a forgery. He said that if the jury had heard enough evidence that Hughes was out of the Desert Inn at any time, they would have found in favor of the will.  That is the reason the '67 incident was so crucial to the case.  As far as the will itself being legitimate standing on its own, Stein says they are prepared with evidence to argue that as well.  Stay tuned--

And now- you state that: "The article ends by stating that, if Mr. Dummar is successful with his lawsuit, Mr. Magnesen will collect 10% of the court award.  That fact raises a significant question about Mr. Magnesen's motives in writing his book -- is he uncovering The Truth, or a moneymaking endeavor?"  The original intent of this book was to help a man suffering from cancer and years of vilification as a liar to be able to have his story told after so many years, and before he dies.  My dad was interested in trying out his "sea legs" in the investigative field again, and the story interested him.  He is a born investigator.  We as a family have seen his endeavors and the excitement when he came up with new findings.  Seriously, you should have heard how almost giddy he was when he found out Hughes owned the mines at the end of the road Melvin picked him up on and many others in the area after pouring through tomes of lists of claims.  When he finally did get a publisher to take a chance on a brand new writer, he has never wanted to talk about money.  He did not even want to know from the publisher how many books he has sold.  I still do not know, as he does not want to find out.  He has said on multiple occasions that, and I quote, "I just hope I get back enough in book sales to cover my expenses."  Up until recently, his only thought about the legal ramifications of his findings were that the statute of limitations on the estate ran out long ago.  Then he contacted Stuart Stein after the radio show, and they got to talking.  They contacted Melvin, and he was initially hesitant to get back into the legal course of things, as it did not go well for him the first time.  Finally he decided he had little to lose, and the show got on the road.  It has always been about the justice that Melvin had stolen from him 30 years ago.  Call it karma o