How to Protect an Estate from a Rotten Son-in-Law

If you’ve been working for a while, you have an estate. If you’ve been working for a long time, you may even have a sizable estate, and between your home, insurance and growing retirement funds, your estate may reach the million dollar mark. That’s the good news. But the bad news might be an adult child with a drug or drinking problem, or a child who married a person who doesn’t deserve to inherit any part of your estate. Not to mention an ex-spouse or two. What will happen when you aren’t there to protect your estate?

There are steps to protect your estate and your family members, as described in the recent article “Is your son-in-law a jerk? Armor plate your estate” from Federal News Network.

Don’t overlook beneficiary designations. Most employer-sponsored retirement and savings accounts have beneficiary designations to identify the people you wish to receive these assets when you die. Here’s an important fact to know: the beneficiary designation overrides any language in your last will and testament. If your beneficiary designation on an account names a child but your will gives your estate to your spouse, your child will receive assets in the account, and your spouse will not receive any proceeds from the account.

Don’t try to sell a property for below-market value. The same goes for trying to remove assets from your ownership to qualify for Medicaid to cover long-term care costs. Selling your home to an adult child for $1 will not pass unnoticed. Estate taxes, gift taxes, income taxes and eligibility for government benefits can’t be avoided by this tactic.

A common estate planning mistake is to name specific investments in a will. A will becomes part of the public record when it is probated. Providing details in a will is asking for trouble, especially if a nefarious family member is looking for assets. And if the sale or other disposition of the named asset before your death impacts bequests, your estate may be vulnerable to litigation.

How will you leave real estate assets to heirs? Real estate assets can be problematic and need special consideration. Are you leaving shares to a vacation home or the family home? If kids or their spouses don’t get along, or one person wants to live in the home while others want to sell it, this could cause years of family fights.

Making a bequest to a grandchild instead of to a troubled adult child. Minor children may not legally inherit property, so leaving assets to a grandchild does not avoid giving assets to an adult child. The most likely guardian will be their parent, undoing the attempt to keep assets out of the parent’s control.

Include a residuary clause in a will or trust. Residuary clauses are used to dispose of assets not specifically mentioned in a will or trust. Your estate planning attorney will create the residuary clauses most appropriate for your unique situations.

Prepare for the unexpected. Your estate plan can be designed to address the unexpected. If a primary beneficiary like a daughter or son divorces their spouse, a trust could prevent the son-in-law or daughter-in-law from gaining access to your assets.

An effective estate plan, prepared with an experienced estate planning attorney, can plan for all of the “what ifs” to protect loved ones after you have passed.

Reference: Federal News Network (Sep. 1, 2021) “Is your son-in-law a jerk? Armor plate your estate”

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Should I Sign a Prenup before I Get Married again at 60?

A “prenup” can spell out which expenses will belong to each individual and which will be for the couple. In addition, a prenup can state where marital assets will go in case of death or divorce, says FedWeek’s recent article entitled “A Prenup May Be Prudent for Later-Life Marriages.”

In some states, a prenuptial agreement is called an “antenuptial agreement” or a “premarital agreement.”

Sometimes the word “contract” is used rather than “agreement,” as in “prenuptial contract.”

An agreement made during marriage, rather than before, is known as a “postnuptial,” “post-marital,” or “marital” agreement.

For a prenup to be valid, each party should seek the advice of an attorney. These attorneys should be independent of each other, so one attorney shouldn’t represent both parties. The agreement should fully disclose each spouse-to-be assets and liabilities.

Here are some reasons that some people want a prenup:

  • Pass separate property to children from your prior marriages. A marrying couple with children from prior marriages may sign a prenup to state what will occur to their assets when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse may have the right to claim a large piece of the other spouse’s property, resulting in much less for the stepchildren.
  • Clarify financial rights. Couples with or without children may just want to clarify their financial rights and responsibilities during marriage.
  • Avoid disagreements in a divorce. A couple may want to avoid potential arguments if they divorce, by stating in advance the way in which their property will be divided, and whether or not either spouse will receive alimony (some states won’t allow a spouse to give up the right to alimony).
  • Protection from debts. These agreements can also be used to protect spouses from each other’s debts, and they may also speak to a number of other issues.

To implement a prenup, don’t wait until the last minute.

Some prenups have been ruled invalid by the courts, when one spouse appears to have pressured the other to sign the contract right before the wedding.

Reference: FedWeek (Aug. 25, 2021) “A Prenup May Be Prudent for Later-Life Marriages”

 

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Actress Who Played Lieutenant Uhura Is Subject of a Conservatorship Battle

Actress Nichelle Nichols, who played Lieutenant Uhura on “Star Trek,” is in the middle of been a long conservatorship fight. Her son, her former manager and a good friend appear to be waging a fight to oversee the finances of the aging actress.

Nichols is suffering from dementia.

Wealth Advisor’s recent article entitled “Star Trek Actress In Conservatorship Battle” says that the actress’ only child, Kyle Johnson, won a petition for conservatorship in 2018. Johnson alleged that her former manager, Gilbert Bell, had been living in Nichols’ guest home taking advantage of her finances and personal affairs.

A third party is involved in the case, a close friend whom Nichols named as her successor, Angelique Fawcette, says that Nichols doesn’t need the conservatorship and that she can manage her affairs.

The 88-year-old no longer lives in Los Angeles, where the case is being heard and where the actual home in question is located. Nichols moved to New Mexico with her son and his wife during the coronavirus pandemic.

Nichols was one of the first Black women on TV to play a non-stereotypical role. Lt. Uhura was beautiful, well-spoken and a knowledgeable communications officer on “Star Trek.”

Nichols appeared in a number of feature films and voiced an animated show.

Her character, Lieutenant Uhura, was beloved by Star Trek fans. For many years, she attended conventions greeting admirers. She booked these events with the support of Bell, who helped grow her income.

However, in 2013, after a pancreatitis diagnosis due to heavy alcohol use, she was admitted to a hospital.

Nichols subsequently moved to a nursing facility, where she signed an advance health care directive and a general power of attorney naming Bell as her primary agent and Fawcette as her successor.

Fawcette said that Johnson and Nichols’ other family members rarely visit her.

Johnson, Bell and Fawcette may ultimately be in court to determine Nichol’s fate. However, for now, the pioneering actress remains in New Mexico with her family, where her son says she lives in a rental home. He is her primary caregiver.

Reference: Wealth Advisor (Aug. 17, 2021) “Star Trek Actress In Conservatorship Battle”

 

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What are Signs of Identity Theft?

Identity thieves are searching for ways to use your personal information, charge purchases in your name, steal your medical account information and get your tax refunds.

Money Talks News’ recent article entitled “Beware These 8 Signs of Identity Theft” reports that consumers filed more than 1.4 million identity theft reports with the Federal Trade Commission in 2020—twice as many as in 2019. You should watch out by knowing these warning signs identified by the FTC.

  1. You see changes in your credit report. When you check your credit, look through the report for anything out of place, such as charges and accounts that you don’t recognize. This can be proof that an identity thief has accessed your credit accounts or opened new accounts in your name. Check your credit report regularly. It’s easy to do online. You’re entitled by federal law to one free report every 12 months from each of the three major credit-reporting companies (Equifax, Experian, and TransUnion). In the pandemic, you can get a free report every week.
  2. A merchant declines your check. If you balance your checkbook and pay bills on time each month, you may be surprised if a merchant refuses a personal check. However, it may signal that a thief has been using your bank account or opened an associated account in your name.
  3. You see unexplained charges. Look through your bank and credit card account statements for unusual charges for withdrawals you don’t recognize and can’t explain. If you’re a victim of identity theft, file a report with the Federal Trade Commission at IdentityTheft.gov. You can also contact the three major credit bureaus to request a credit freeze. This prevents new accounts from being opened in your name. You can now place and lift a credit freeze for free.
  4. You get no mail. A thief may be intercepting your mail, if your bills or other correspondence don’t come as expected.
  5. You receive calls from debt collectors. If you’re diligent in paying your bills, and you get a call from a debt collector, it could be about debts that were incurred by someone else in your name.
  6. Your health insurer rejects a claim. Your insurer’s records could show that you’ve reached the limit of your benefits. This can occur if thieves target your medical account and take advantage of all the benefits, so you can’t make a legitimate claim. Don’t click on unfamiliar or potentially suspicious links.
  7. You get an unexplained medical bill. You may get a bill from a doctor for services you didn’t use. If so, be suspicious because a thief may have accessed your health insurance information and used it to receive medical care, sticking you with the bill.
  8. You see suspicious changes in your medical records. Another tip-off that you’ve become a victim of fraud is if your medical records include a health condition that you don’t have. This could damage your ability to get the care that you need.

Act quickly if identity theft occurs and report it.

Reference: Money Talks News (Aug. 10, 2021) “Beware These 8 Signs of Identity Theft”

 

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Should I Try Do-It-Yourself (DIY) Estate Planning?

US News & World Report’s recent article entitled “6 Common Myths About Estate Planning explains that the coronavirus pandemic has made many people face decisions about estate planning. Many will use a do-it-yourself solution. Internet DIY websites make it easy to download forms. However, there are mistakes people make when they try do-it-yourself estate planning.

Here are some issues with DIY that estate planning attorneys regularly see:

You need to know what to ask. If you’re trying to complete a specific form, you may be able to do it on your own. However, the challenge is sometimes not knowing what to ask. If you want a more comprehensive end-of-life plan and aren’t sure about what you need in addition to a will, work with an experienced estate planning attorney. If you want to cover everything, and are not sure what everything is, that’s why you see them.

More complex issues require professional help. Take a more holistic look at your estate plan and look at estate planning, tax planning and financial planning together, since they’re all interrelated. If you only look at one of these areas at a time, you may create complications in another. This could unintentionally increase your expenses or taxes. Your situation might also include special issues or circumstances. A DIY website might not be able to tell you how to account for your specific situation in the best possible way. It will just give you a blanket list, and it will all be cookie cutter. You won’t have the individual attention to your goals and priorities you get by sitting down and talking to an experienced estate planning attorney.

Estate laws vary from state to state. Every state may have different rules for estate planning, such as for powers of attorney or a health care proxy. There are also 17 states and the District of Columbia that tax your estate, inheritance, or both. These tax laws can impact your estate planning. Eleven states and DC only have an estate tax (CT, HI, IL, ME, MA, MN, NY, OR, RI, VT and WA). Iowa, Kentucky, Nebraska, New Jersey and Pennsylvania have only an inheritance tax. Maryland has both an inheritance tax and an estate tax.

Setting up health care directives and making end-of-life decisions can be very involved. It’s too important to try to do it yourself. If you make a mistake, it could impact the ability of your family to take care of financial expenses or manage health care issues. Don’t do it yourself.

Reference: US News & World Report (July 5, 2021) “6 Common Myths About Estate Planning”

 

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What Is the Primary Purpose of a Credit Shelter Trust?

Credit shelter trusts are an estate planning tool for protecting assets from creditors, moving assets out of the estate to avoid probate and adding another layer of protection to a deceased spouse’s wishes. Only married couples can use credit shelter trusts, according to a recent article explaining it all: “How Does a Credit Shelter Trust Work?” from Yahoo! Finance.

The main reason to use these trusts is to minimize federal estate taxes on assets in the estate. Also known as “wealth transfer taxes,” the federal estate tax has been around since 1916. Estate tax rates are very high. Wealth more than $1 million over the exemption rate is taxed at 40%. While today’s federal estate tax exemption is very high—$11.7 million for individuals and $23.4 million for couples—it is generally understood that these numbers are not likely to remain at these historic levels. The current estate tax exemption expires in 2025, unless Congress acts to reduce it earlier.

Estate tax law changes often both at the federal and the state level, so estate planning attorneys continually track these changes to protect their clients.

The credit shelter trust, also known as a bypass trust, B trust, exemption trust or a family trust, is an irrevocable trust. As with all trusts, it is a contract between the trustor—the person who creates and funds the trust—and the trustee—the person in charge of the trust. The trust may contain any type of property, from cash, stocks, bonds and real estate to collectibles and artwork.

The credit shelter trust becomes effective upon the death of one of the spouses. Assets in the trust are not included in the estate of the surviving spouse. Depending upon the terms of the trust, these assets may pass to beneficiaries after the first spouse passes without incurring any tax liabilities. Alternatively, as long as the surviving spouse lives, they may receive income from assets in the trust.

The credit shelter trust also protects the wishes of the decedent spouse. The trust document can be used to direct that some or all of the assets of the first spouse to die shall pass to the children of a first marriage or other specific beneficiaries.

Credit shelter trusts are one of many tools that can be used for estate planning. They have the added benefit of protecting assets from creditors and maintaining the family’s privacy, since assets in trust do not go through probate. Your estate planning attorney will know which kind of trust is best for your unique situation.

Reference: Yahoo! Finance (Aug. 16, 2021) “How Does a Credit Shelter Trust Work?”

 

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Do You Need Power of Attorney If You Have a Joint Account ?

Joint Account – A person with Power of Attorney for their parents can’t actually “add” the POA to their bank accounts. However, they may change bank accounts to be jointly owned. There are some pros and cons of doing this, as discussed in the article “POAs vs. joint ownership” from NWI.com.

The POA permits the agent to access their parent’s bank accounts, make deposits and write checks.  However, it doesn’t create any ownership interest in the bank accounts. It allows access and signing authority.

If the person’s parent wants to add them to the account, they become a joint owner of the account. When this happens, the person has the same authority as the parent, accessing the account and making deposits and withdrawals.

However, there are downsides. Once the person is added to the account as a joint owner, their relationship changes. As a POA, they are a fiduciary, which means they have a legally enforceable responsibility to put their parent’s benefits above their own.

As an owner, they can treat the accounts as if they were their own and there’s no requirement to be held to a higher standard of financial care.

Because the POA does not create an ownership interest in the account, when the owner dies, the account passes to the surviving joint owners, Payable on Death (POD) beneficiaries or beneficiaries under the parent’s estate plan.

If the account is owned jointly, when one of the joint owners dies, the other person becomes the sole owner.

Another issue to consider is that becoming a joint owner means the account could be vulnerable to creditors for all owners. If the adult child has any debt issues, the parent’s account could be attached by creditors, before or after their passing.

Most estate planning attorneys recommend the use of a POA rather than adding an owner to a joint account. If the intent of the owners is to give the child the proceeds of the bank account, they can name the child a POD on the account for when they pass and use a POA, so the child can access the account while they are living.

One last point: while the parent is still living, the child should contact the bank and provide them with a copy of the POA. This, allows the bank to enter the POA into the system and add the child as a signatory on the account. If there are any issues, they are best resolved before while the parent is still living.

Reference: NWI.com (Aug. 15, 2021) “POAs vs. joint ownership”

 

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What Is Science Doing About Hearing Loss ?

Hearing Loss – Thanks to advances in technology and medicine like artificial intelligence and gene therapy, hearing research is producing significant innovations. AARP’s recent article entitled “Three Game-Changing Innovations for Those With Hearing Loss” looks at a couple of them, in various stages of development.

  1. Eyeglasses That Turn Speech into Subtitles. With these, you’ll be able to read what people are saying. An app on your smartphone would listen to a conversation and transcribe the speech into sentences in real time. The text would be sent instantaneously to your enhanced eyeglasses, which would create subtitles. Vuzix, a tech company, recently released smart glasses that work with transcription software. Automatic speech-to-text programs have proliferated in recent years, and live computer-generated captions are now available on most videoconferencing platforms. Smartphone apps can also generate real-time transcriptions for in-person conversations. However, the issue is that users have to be in front of a PC or looking at a phone, which detracts from full social engagement. However, companies are making subtitles more natural, by using “smart glasses” technology, which can project text to a user’s field of vision in a comfortable, nonintrusive way. We may see this in a few years.
  2. An App That Lets You Hear Someone in a Crowded Room. This technology can isolate a person’s speech in a noisy environment, which would solve what scientists call the “cocktail party problem.” An app would “listen” to the soundscape surrounding you and separate out different streams of sound, including voices, ambient music and other background noise. It would then isolate the sound you want to hear based on the direction you’re facing — and reduce everything else. The cleaned-up sound would then be delivered straight to your ear through your hearing aid, cochlear implant, or earbuds. Powerful de-noising programs look to be available on hearing technology within five years.
  3. Drug Therapy That Regrows Cells That Help Your Hearing. Your body would repair damage to your inner ear — like when a salamander regrows his tail. A drug delivered into your inner ear would turn on chemical switches to regrow the cells responsible for hearing and most hearing loss. Those born with hearing loss or those who lose hearing later in life would get injections to restore some or all of their hearing. This hair cell regeneration would be ideal for anyone who’s lost hearing because of missing or damaged hair cells. However, this isn’t anticipated to be available very soon. Some hair cell regrowth therapies using different methods are currently in human clinical trials. There are trials being conducted at Novartis, Eli Lilly, Frequency Therapeutics, and Pipeline Therapeutics. However, most of this work is still being tested in the lab.

Reference: AARP (August 2, 2021) “Three Game-Changing Innovations for Those With Hearing Loss”

 

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Who Inherited from the Painter Bob Ross ?

Like many painters before him, Bob Ross ‘s image only took hold after his untimely death. He’s now a pop culture icon, and is featured as bobbleheads, Chia pets and has his own cereal.

However, there’s a reason why we see so much more of the gentle painter than ever before. That’s because of a legal battle for ownership of Ross’s name. That was the only item of value in his estate, which is rare for celebrities of his caliber.

Wealth Advisor’s recent article entitled “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now” reports about what happened to his estate, who controls it and where they are today.

The Daily Beast wrote that Ross is “a smash hit on social media, where he feels more like a Gen-Z influencer than a once semi-obscure PBS celebrity who rose to fame in the 1980s on the back of his bouffant hairdo, hypnotic singsong baritone and a timeless message about the beauty of the world around us.”

However, he wouldn’t have become a household name, if not for Bob Ross Inc. The battle began when the artist met Bill Alexander, a celebrity painter who had a show on PBS, in 1978. Alexander gave him a job as a traveling art instructor. Ross met Annette and Walt Kowalski at a class, who recently lost their son, and who wanted to learn how to paint.

The Kowalskis convinced him to come to Washington, D.C. to teach. They eventually made a deal: they’d give him a stipend and room and board, if he’d teach more classes that they’d arrange in the area. PBS then asked Ross to do a show like Alexander’s, and Dennis Kapp, the owner and CEO of the art-supply company Martin F. Weber, wanted to develop a line of supplies with him too. Soon, The Joy of Painting was born. However, to look after the supply company with Kapp, Ross and his wife Jane, and Annette and Walt signed documents to create Bob Ross Inc., with all four of them being equal partners.

At the end of the 1980s, all four partners were making $85,000, and in the early ’90s, Ross made around $120,000. However, he wanted to branch out, and when he did, the happy days were at an end. When Ross’s health started to decline, Walt “declared war” and sent Ross documents saying the Kowalskis owned everything, but they’d agreed that Ross and his heirs would get 1% of the revenues for the next decade. Ross never signed anything, and in fact, he quickly changed his last will to make it harder for the Kowalskis to steal his name and likeness.

Those changes to his last will included “a clause specifically addressing his name, likeness and the rest of his intellectual property. All of those rights were to go to Steve and one of Bob’s half-brothers.” His third wife replaced Annette as the administrator of his estate. In July 1995, the painter lost his battle to cancer.

When Ross died, Bob Ross Inc. was totally owned by the Kowalskis. However, they wanted it all, including his name and likeness. Then what one of Ross’s good friends calls “Grand Theft Bob” began.

Steve did not know about the final amendment until 20 years later when his uncle Jimmie, the estate’s executor, informed him. When Ross died, he was worth $1.3 million. Half of that was his third part of Bob Ross Inc., and there was also cash, stocks and property to divide.

The Kowalskis went after Ross’s art supplies and artwork and made “claims against the estate for business and personal reimbursements,” charging Ross’s widow with hefty lawsuits and suing PBS and the children’s show Ross guest-starred on. In 1997, Jimmie, Ross’s brother, settled the lawsuit, practically handing over everything to the Kowalskis. In 2012, their daughter Joan took over, opening up the realm of merchandising for the company.

However, there was still a “grey zone” in how Bob Ross Inc. could truly own Ross’s name and likeness. After learning about that amendment in Ross’s will, Steve went after Bob Ross Inc. but didn’t win his case against Bob Ross Inc.

Joan did strike a deal with him: if he surrendered his rights to Ross’s name and likeness, he could print his name on anything he wanted.

The good news was that Steve was able to return as an art instructor, and thanks to Bob Ross Inc., Ross was bigger than ever. That helped class sizes, and students came in masses to learn the iconic style. Steve gets to run his father’s estate, and fans welcomed him back to the painting world. Despite the fact that the Kowalskis got everything, they were the only ones who could have kept Ross’s name from disappearing.

As for all of Ross’s paintings the Kowalskis seized, they ended up in an unprotected warehouse until the Smithsonian took a collection of them.

Reference: Wealth Advisor (June 28, 2021) “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now”

 

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Why Did Texas Siblings Come to Blows Over Inheritance ?

Inheritance – A lawsuit in Texas alleges that Michael Mowrey hit his sister Stacy Alley, shoved her and choked her. He was criminally charged with felony assault and accepted a plea deal.

However, these criminal proceedings do not result in repayment to the victim.

San Angelo Live’s recent article entitled “Sibling Choked Over Inheritance” reports that the reason for the incident wasn’t stated by the plaintiff in the court documents. However, court documents do reveal that their father’s inheritance was an object of contention.

Alley originally brought the lawsuit against her brother for monetary damages for medical bills, legal fees, lost wages and the emotional effects of the life-threatening attack.

Instead of going to trial, the brother and sister agreed to submit to mediation.

The results of the mediation were recently released. The outcome is binding.

They agree to partition or split the 446-acre cotton farm owned by their deceased father Gene Mowrey. In the agreement, Alley gets 306 acres and Mowrey gets 140 acres.

Mowrey must convey his one-half interest in the estate’s Oklahoma minerals to Stacey Hamilton (another sibling), along with his one-half interest in the escrowed mineral production attributable to the Oklahoma minerals.

The two sisters (Hamilton and Alley) are required under the deal to execute a deed that conveys all of their rights, title and interest in their father’s home to Michael. As a result, he will own 100% of that home.

The reason for the violent incident appears to have been a fight over their inheritance.

It was not clear if Michael Mowrey suffered any real losses as a result of the outburst.

While he lost a majority of the rights to the family cotton farm, and his share of the family’s mineral rights, he gained the home.

Reference: San Angelo Live (June 27, 2021) “Sibling Choked Over Inheritance”

 

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