Estate Planning: Mistakes or Misunderstandings

Top Estate Planning Mistakes or Misunderstandings – And How to Avoid Them

We have all heard the phrase: nothing in this world can be certain in life, except death and taxes. As an estate planner, I address these two issues every day. I counsel clients on the best strategies to pass their estates to their loved ones, how to efficiently manage their affairs if they can’t make decisions for themselves, and advise them on the most financially efficient ways to accomplish their goals. With nearly 20 years of estate planning experience, I have collected a list of common mistakes or misunderstandings.

#1. DIY Documents.

Estate plans should not be considered a “Do It Yourself” endeavor. With the guidance of an experienced estate planning attorney, you ensure that you’re considering all the issues, your planning goals are met, and your legacy will be easily passed on to others. Wills completed through automated computer programs or purchased at stationary stores may result in negative financial and substantive impacts to your loved ones.

#2. “I Don’t Need an Estate Plan.”

Everyone can benefit from an estate plan. Even if you think you don’t own anything, everyone should have a financial power of attorney and a medical power of attorney. Did you know that if you don’t create your own individualized estate plan, then the state of Oregon has a “One Size Fits All” plan for you? Unfortunately, Oregon’s “One Size Fits All” plan doesn’t meet the customized needs of many people, and it can lead to unintended consequences.

#3. Choosing the Wrong Decision Maker.

Many times, a parent will want their adult children to work together to make financial and medical decisions when the parent can no longer do so. Unfortunately, in my experiences, many times these types of plans don’t work well. Instead, when siblings disagree, an impasse may occur. In the worst-case scenario, litigation may be the only solution to resolve the conflict. Other times, people choose a friend for help, and then for a variety of reasons, the friend is no longer able to help. And on occasion a trusted person turns and becomes a financial abuser. Picking the right decision maker, aka fiduciary, is very important and should be a well-informed and thoughtful process.

#4. Thinking a Will Avoids Probate.

Probate is a court supervised administration of a decedent’s estate. Now don’t get me wrong, I don’t think probate is the 9th level of Dante’s Inferno; and as an attorney, I am very familiar with the rules of court procedure. For certain situations, probate is a beneficial process. But time and time again, clients have the misunderstanding that their wills are not subject to probate. They are shocked when they learn that a will almost always ensures that an estate will be probated. To avoid probate, consider creating a revocable trust.

#5. Letting Your Plan Collect Dust.

Having a plan, but not looking at it again is a mistake. Estate planning is a dynamic process. The plan should not be chiseled in stone and then set on a shelf, never to be thought of again. In general, I recommend that clients review their estate plans every five years. And sooner if there have been significant life changes, such as marriages, divorces, births, substantial changes in assets, medical diagnoses, etc.

#6. “I’m Not Rich, So I Don’t Care About Estate Taxes.”

Thinking you don’t have enough to be concerned about estate taxes (also known as “The Death Tax”) may be a mistake. Even if you own less than $11.58 million which is the 2020 amount when the federal estate tax hits, your estate may still be subject to state estate tax. Both Oregon and Washington have state level estate tax. Without specific tax planning, an Oregonian who dies with a net worth more than $1 million has exposure to Oregon estate tax. The same is true for Washingtonians. However, Washington’s amount is more generous at $2.193 million in 2020.

It is never too late to prepare an estate plan. If you have more questions or want to talk about your estate planning goals and needs, contact one of our estate planning attorneys. Our combined years of estate planning experience is over 130 years.

Be sure to check out SYK’s newest video – featuring Anastasia and focusing on Estate Planning.

Anastasia (Stacie) Yu Meisner is a member of the SYK Estate Planners practice. Her practice focuses on estate planning, mediation, probate, trust and estate administration. In addition, she also works with guardianships and conservatorships, as well as business transactions and formation.

Oregon WINGS Posts “Get a Life Plan”  

Oregon’s Working Interdisciplinary Networks of Guardianship Stakeholders (WINGS) posted a solid plan for what we should all consider, as part of planning for your life – and death.

Their web page covers four plans:

  • Plan for your assets during your lifetime
  • Plan for your medical decisions
  • Plan for your assets at your death
  • Plan for your body after your death

They also have good pointers on a variety of helpful topics:

  • How should I start a conversation with my loved ones about my plan?
  • What if my loved ones disagree with my wishes?
  • Where should I store my documents?
  • Should I give copies of my documents to my loved ones?

These are a good place to start, but for most of us, to obtain a comprehensive Life (and Death) Plan, it is best to talk to an estate, trust and tax planning attorney to set you and your legacy up for success. Fortunately, we have a whole wing of such talent here at SYK.

Victoria Blachly: SYK AttorneyVictoria Blachly is a partner at SYK, and an experienced fiduciary litigator that works with many elderly clients, cases and causes.

POLST & COVID-19: Are Your Legal Documents Current & Do They Reflect Your Wishes?

Dr. Susan Tolle, Chair of the Oregon POLST Coalition, created a 5-minute video that guides viewers through a POLST form (Portable Orders for Life-Sustaining Treatment). This standardized, single page, brightly colored form can be vital for healthcare providers in managing fragile or seriously ill patients towards the end of life, and particularly helpful for managing one’s wishes for intensive care treatment and assisted breathing with ventilators.

It is important to note that not everyone needs a POLST – it is for the seriously ill. An Advance Directive is another standardized, but more complex, legal document that also sets forth your wishes for medical care and life-sustaining treatments and/or designates a Health Care Representative to express those wishes to healthcare providers, should you be unable to speak for yourself. Everyone should have a properly executed Advance Directive, for the unforeseen, but not everyone, necessarily needs a POLST; it depends on your medical condition.

Victoria Blachly: SYK Attorney

Victoria Blachly is a partner at SYK, and an experienced fiduciary litigator that works with many elderly clients, cases and causes. She is also a proud Board Member for the Oregon Alzheimer’s Association Chapter.

The Pandemic Makes the Power of Attorney More Important Than Ever

“Have a financial Power of Attorney. And a health care Power of Attorney, also known as an Advance Directive. These legal documents are terrific tools to help navigate the typical administrative run around that we all face”.

Do you have a loved one living in a care facility and due to Covid-19 they are not able to leave? Or are you self-isolating in your home and unable to run your typical errands? Are any of your or your loved one’s financial or medical needs being unmet due to the Coronavirus? If so, you’re not alone.

I recently received a call from a daughter whose elderly mother was stuck in a care facility.  Both the daughter and her mother were befuddled because all of the mother’s financial affairs were on hold.

As a general practice the daughter would organize her mother’s monthly bills and go through them with her. She would help her mother write checks to pay her doctor co-pays, her cable bill, etc. Also the daughter would join her mother on calls to manage her mother’s banking and investments needs.

Now the daughter can’t visit her mother. And both women wanted to know if they would be in trouble with bill collectors or at the very least pay a lot of late fees if they were not able to timely address mom’s financial affairs.

My advice in these types of situations is to have a financial Power of Attorney. And a health care Power of Attorney, also known as an Advance Directive. These legal documents are terrific tools to help navigate the typical administrative run around that we all face with banks, doctor’s offices, investment companies, etc.

With a financial Power of Attorney the mother could officially grant her daughter with the legal authority to manage and help with her financial affairs.  And the daughter would be able to write the checks and make calls for her mother.  With an Advance Directive it would be much easier for the daughter to talk with her mother’s doctor and other health care providers.

Even though we may never have another Covid-19 pandemic that impacts everyone, life happens and you never know when you may not be able to address your affairs because of an illness or injury.  We never know when we may find ourselves or our loved ones in one of these situations. So it is incredibly important for all adults to have both a financial and medical Power of Attorney naming someone to speak on their behalf and manage their affairs.

These are documents that are not just important for older adults. They are important for young adults too. I have seen a number of young adults injured in accidents and unable to manage their own affairs. Many headaches and delays could be avoided with a little advance planning.

If you have more questions or want to talk about a Power of Attorney or other estate planning issues, contact one of our estate planning attorneys.

Anastasia (Stacie) Yu Meisner is a member of the SYK Estate Planners practice. Her practice focuses on estate planning, mediation, probate, trust and estate administration. In addition, she also works with guardianships and conservatorships, as well as business transactions and formation. 

Carrie Fisher: Some Early Thoughts on Her Estate

Carrie Fisher

May the Force be with you Carrie – you were one of the brightest stars.

The entertainment world lost an iconic legend today. Carrie Fisher, best known for her role as Princess Leia Organa in the Star Wars films, passed away this morning after suffering a heart attack on December 23, 2016, while on a flight from London to Los Angeles. In addition to her Star Wars role, Ms. Fisher starred in many other films, and also authored several books, plays, and screen plays. She recently published her autobiography, The Princess Diarist.

From a legal perspective, it is far too early to analyze Ms. Fisher’s estate to any degree. However, one can make a number of observations:

  • Fisher was not married at the time of her death, but was survived by one child, her daughter, actress Billie Lourd, age 24. Ms. Lourd therefore would be Ms. Fisher’s sole natural heir.
  • Fisher was married for a short time to singer, Paul Simon. Ms. Lourd’s father is talent agent Bryan Lourd. However, Ms. Fisher and Mr. Lourd were never legally married. Therefore, neither Paul Simon nor Bryan Lourd would be an heir to Ms. Fisher’s estate, absent an express bequest in her will or trust.
  • Fisher was the child of two entertainers, the late Eddie Fisher and Debbie Reynolds. Eddie Fisher died in 2010, and was survived by four children, including Carrie Fisher. Presumably, Ms. Fisher was a partial heir to Eddie Fisher’s estate, although few details of that estate appear to be public. However, Ms. Reynolds is still living and will likely leave her estate to her surviving son and Ms. Lourd.
  • Fisher was a California resident, so her name and likeness will be protected by the California Celebrity Rights Act for another 70 years. However, her depiction of Princess Leia was apparently transferred by contract to Lucasfilm Ltd. when she starred in the first Star Wars film at the age of 19.
  • Along with her other principal Star Wars actors, Harrison Ford and Mark Hamill, Ms. Fisher agreed to take a percentage of the movie’s profits, plus a take of TV screenings, re-releases and more. Therefore, these residual profit rights will presumably be inherited by Billie Lourd.
  • Carrie Fisher was involved with a number of charitable causes during her lifetime. Her will or trust may therefore include bequests for charitable causes.
  • While Congress and the new administration are considering a repeal of the federal estate tax, any such legislation will likely be effective no earlier than January 1, 2017. Therefore, the portion of Ms. Fisher’s estate that exceeds the 2016 estate tax exemption amount of $5.45 million will be subject to a federal estate tax at the rate of 40%.

Because of their notoriety, the estates of well-known celebrities are often illustrative of many issues that many people face in their estate planning. Only time will tell if important lessons will emerge from the Estate of Carrie Fisher.

Win Olympic Gold – And Pay for It

Olympic Gold

Olympic gold metals are assessed for income tax, but the real cost could be the estate taxes.

Every time the Olympics come around, there’s dozens of articles and posts about how Olympic medals are subject to income tax. The IRS considers all prize winnings, such as gambling or game show prizes, to be income and thus taxable. Olympic medals get lumped into this group (as do the cash bonuses they come with). Luckily for the athletes, their medals are valued at the time they are earned, essentially the value of the materials. A gold medal from Rio is estimated to be worth $564, a silver medal is estimated at $305, and a bronze medal has little intrinsic value. Since Olympic medalists generally treat their sport as a profession the value of the medal and related bonuses are likely to be offset with a deduction for the significant expenses that most athletes incur.

What people may fail to consider is the effect the medals will have on the Olympian’s estate taxes. Property in an estate is valued at the date of death, not the original value. And though Olympic medals have little intrinsic value, their sentimental value makes them worth far more. In 2013, one of Jesse Owens’ medals from the 1936 Olympics in Berlin sold for $1.47 million, the highest price ever paid for a piece of Olympic memorabilia. A boxer from Ukraine, Wladimir Klitschko, sold his medal for $1 million. Even a medal from an athlete who isn’t as well known may be valued upwards of $30,000. These values are included in a deceased Olympian’s estate and are potentially taxable.

Michael Phelps broke a 2100 year old Olympic record by winning 13 individual gold medals over the course of four Olympics (not to mention his 28 medals total.) The medals are worth quite a lot on the open market, even if Phelps is only initially taxed on their intrinsic value. When he dies, his estate will likely need to hire a specialized appraiser to determine the value and even then, it will only be an educated guess. Of course, since Michael Phelps is superhuman, he may never die, which would make this whole process simpler.

Competency Can be Tricky: Don’t Rule Out the Nonagenarian

The brain is a challenging maze and competency blends medicine and law in a complicated fashion.

Sumner Redstone, at 92 years-old and the controlling shareholder of his $40 billion media empire, Viacom Inc. and CBS Corp. has accomplished a lot. And a court recently ruled he can continue to make his own decisions, including deciding who should be his health-care agent.

This ruling disappointed (to say the least) his former girlfriend and longtime companion, whom he had evicted last fall and removed as his health-care agent, before also removing her from his Will, in which she was to inherit $70 million in cash and real estate.

Although a speech therapist had to interpret Mr. Redstone’s impaired speech, the judge was swayed by the video deposition in which Mr. Redstone made it clear that he wanted his ex-girlfriend out of his life and preferred his daughter to be his health-care agent. The judge remained unconvinced by an expert witness who failed to overcome the presumption of capacity.

The brain is a challenging maze and competency blends medicine and law in a complicated fashion. Our country’s ageism tends to count out anyone over 65, but the judge in this hearing found otherwise.

The Estate of Prince – Let’s Go Crazy!

Early reports tell us that the late musician Prince died without a will.

Therefore, Minnesota “intestacy” statutes (i.e. statutes govern estates of decedents dying without a will) are going to control the administration of Prince’s estate. In a legal petition filed on April 26, 2016, by Prince’s sister, Tyka Nelson, Ms. Nelson stated that she did not know of the existence of a will signed by Prince. Because of this, no person currently has the legal right to act on behalf of his estate (such as a personal representative, executor, or trustee). In the petition, Prince’s sister asked a Minnesota probate court to appoint Bremer Trust as the “special administrator” of Prince’s estate. Under the applicable statutes in Minnesota, a special administrator has the legal authority to act on behalf of an estate in much the same fashion as a personal representative or executor.

In the coming months, it is likely that more information will emerge about Prince’s estate and the assets compiled by this intriguing artist. The special administrator will likely face of number of challenging questions, including:

  • Who is entitled to inherit Prince’s estate? While Tyka Nelson is Prince’s only full sibling, her petition names five “half siblings” as well. Under Minnesota statutes, half siblings are entitled to the same share of an intestate. If other half siblings are discovered, they will also be considered equal heirs of Prince’s estate.
  • How will Prince’s estate and ongoing business interests be managed? Prince’s estate includes extensive holdings of the rights to the songs he wrote, many of which have never been published or released. As we have seen with celebrity estates of Elvis Presley and Michael Jackson, the artist’s ongoing music sales and other intellectual property continues to have considerable value. Reports indicate that 1 million of Prince’s songs and 231,000 of his albums were sold on the single day in which Prince passed away.
  • How will Prince’s estate be valued for estate tax purposes? While the executors of Michael Jackson’s estate reported an initial value of $7 million for Mr. Jackson’s estate, the Internal Revenue Service has valued Mr. Jackson’s estate and lifetime taxable gifts of approximately $1.178 billion (yes, that is billion with a “b”). The matter is currently in a disputed case before the United States Tax Court. For iconic celebrities such as Prince, the artist’s mere “name and likeness” will likely be a separate and independent asset of the estate having significant value. Like the intangible goodwill of an ongoing business, an artist’s name and likeness has the potential to produce significant income in the future.

“Electric word life. It means forever and that’s a mighty long time. But I’m here to tell you, there’s something else. The after world (and taxes).”

~Prince. Let’s Go Crazy (as respectfully modified by a humble lawyer).

Oregon First to Pass RUFADAA – Allowing Legal Access to Your Digital Assets

Oregon becomes the first state to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act.

SYK has been advising our clients, friends and colleagues about managing Digital Assets (your online accounts) for many years, lamenting the fact that the Internet was outrunning the law. We’ve been writing about it, testifying before legislators, speaking at seminars and encouraging everyone to prepare a VAIL – or Virtual Asset Instruction Letter. 

We are happy to report that there is new light on the issue. Oregon has just become the first state in the nation to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act. Oregon Senate Bill 1554 was signed by the Governor yesterday and will become effective January 1, 2017.

This law is important in that while it allows for personal representatives, powers of attorney and trustees to have access to online accounts to perform their fiduciary duties, it also requires everyone to be proactive in affirmatively stating in your trust or estate plan that you grant such authority; otherwise, the online providers’ terms of service agreements will control. And those agreements often give the online provider all of the power, including the power to hit “delete” when they know someone has passed, which could destroy vital financial information or precious memories you had intended to share with those you leave behind.

So dust off that will or trust you prepared so long ago and call your estate planner; it’s time that your estate plan caught up with the Internet.

Attorney Victoria Blachly is a fiduciary litigator who has been working on digital asset legislation for six years, testifying before legislators and presenting at seminars throughout the U.S. The issue became very personal to her when she lost a young niece and saw how invaluable her social media was to the grieving family and friends she left behind. Victoria worked closely with one of SYK’s estate planners, Jeff Cheyne, and one of SYK’s business attorneys, Michael Walker, to pursue legislation that was initially hard fought by very large and well-funded online providers.

Changing Your Estate Plan: Don’t Cut Up Your Money For The Last Laugh

Thinking about changing your estate plan? Have you ever thought about disinheriting your children? It’s one thing to think about it, but to actually attempt it is another thing entirely. An Australian granny presumably attempted to disinherit her children, but with no avail. Before passing away, the 85-year old cut up nearly a million euros ($1.1 million). Her family discovered the money on her bed. At first, the state prosecutor believed that they money would not able to be recovered by her heirs. Unfortunately for her, this attempt at disinheriting her heirs, by destroying her property did not work. If the fragments are present, and banks are able to validate the origins of the money as legitimate, the monetary value can be collected. The money was secured by the bank and all of it replaced. You may not be thinking about disinheriting your children but changing your estate plan without first talking to your attorney is risky business. In this case, the woman could have just as easily gifted her property to a charity or given it to someone else instead of cutting it up. If you are considering making any changes to your estate plan, contact the attorneys at SYK so you don’t make the same mistake the Australian granny did.

Our estate planning services include traditional wills and revocable living trusts. In appropriate situations our firm also provides more tax sensitive and sophisticated planning services, necessary in effectively transfer special assets, such as interests in businesses and real property. Our firm has a long tradition of assisting clients in optimizing gifts to charities, whether it be through the use of direct gifts, charitable trusts or other planning opportunities.

Contact Samuels Yoelin Kantor LLP to learn more about your options when you consider making revisions to your estate.