Court orders Thomas Kinkade’s former girlfriend to pay $11,000 a month in rent to Kinkade’s estate

The probate process continues to unfold in the administration of the estate of American painter Thomas Kinkade. This week, lawyers from both sides argued in court about the amount of rent that Amy Pinto-Walsh (Mr. Kinkade’s girlfriend at the time of his death on April 6, 2012) must pay to Mr. Kinkade’s estate. The judge set the amount at $11,000 per month, without utilities, dated retroactively to July 1, 2012. The property is under 24 hour surveillance. The judge added the security costs to the rental estimate to arrive at the $11,000 figure.

I wrote earlier blog posts about the issues surrounding Mr. Kinkade’s Last Will(s) and the other issues that have come up in the administration of his estate. These issues will be decided in future hearings.

Most estates will never own mansions that require 24-hour security details; however most estates will own interests in real property of some sort. These property interests can lead to all sorts of disputes, including fights like the one that is playing out in the administration of Mr. Kinkade’s estate.

One reason that real estate can be a cause of confusion is that it can be owned in a number of different ways – individually, jointly (with or without survivorship rights), in trust, or by an entity like an LLC. The picture has been further complicated in Oregon by the adoption of the transfer-on-death deed (“TOD Deed”) in early 2012. The TOD Deed allows a property owner to record testamentary transfer instructions on the deed itself. At the owner’s death, the property transfers subject to the instructions on the deed, not as directed under the owner’s Last Will or trust. With all of the different ways real property can transfer, confusion is common.

Revocable living trusts and Last Wills usually include provisions to deal with the distribution of real estate that an individual owns at death, and some of these documents allow for tenants to continue then-existing rental agreements. If a person dies without a Last Will, the property will likely pass to the decedent’s heirs at his or her death. Estates occasionally have to act as landlords and sometimes even evict tenants after a property owner has died. The best way to avoid problems with the administration of real estate is to plan properly by discussing all of your property interests (and their ownership) with your financial and legal advisors.

There are many lessons to be learned from the administration of Mr. Kinkade’s estate. Like many celebrities, Mr. Kinkade had complicated family relationships and a lot of money. Mr. Kinkade did not leave clear instructions for the handling of his affairs, and now the dirty laundry is being aired in public. History is littered with examples of celebrities who planned properly, those who planned poorly, and those who did not plan at all. Michael Walker and I will be discussing the lessons that can be learned by analyzing some of these examples at an upcoming seminar in our office. We will review the estates of Jacqueline Kennedy Onassis, Michael Jackson, Marilyn Monroe, "MCA" and others

If you would like to join us for a discussion about "Famous and Infamous Estates" from 7:30-9:00 am, on October 11, please rsvp by calling our office at (503) 226-2966 or by email at events@samuelslaw.com. Light refreshments will be provided
 

The Administration of the Estate of Darth Vader

A long time ago, in a galaxy far, far away, Darth Vader (“Vader”) died at the end of the movie ‘Return of the Jedi’. Movie-goers around the world flocked to the cinema to see the story of Vader’s redemption and to learn about the twisted Skywalker family tree. I was 9 when ‘Jedi’ was released, and it was awesome.

When I see the Star Wars movies now, I know I am getting old because I start asking questions like, “Did someone have to administer Vader’s estate?”, “How much did Vader get paid”, and “what sort of property would a guy like that have in his estate?” In this blog post, I’ll take a look at what administering Vader’s estate may have looked like. In my next post I will analyze some of the property interests he may have owned at his death and see if there are some lessons to be learned from Vader’s estate. First, a few assumptions:

1. If Vader lived in the United States in 2012, he would probably choose to live in Vader, WA for obvious reasons. Let’s instead assume that Vader was based out of the Empire’s Portland, OR office and maintained a sweet penthouse condo in Portland’s Pearl District as his home.

2. Let’s also assume that Vader died in 2012 and that he had no estate planning documents. If there was important property that was going to pass via Vader’s Last Will or that was stored in a safe deposit box, Vader probably would have mentioned it to Luke as Vader was dying in Episode 6. He did not.

3. Luke’s Aunt Beru and Uncle Owen were killed by stormtroopers on Tatooine during the early part of the first Star Wars movie (Episode 4). For our analysis, let’s assume that Beru and Owen had no living parents, siblings, or children when they died. Let’s also assume that Owen and Beru never legally adopted Luke (in order to stay off of the Empire’s radar).

4. In Episode 1, we learn that Anakin Skywalker (the little kid who would become Darth Vader) had no father. His mother claims that his birth was the result of some sort of immaculate conception. According to Google, Anakin may have been conceived by Darth Sidious’ master using the Dark Side of the Force. We do not have a statute for immaculate conception via Sith Lords in Oregon, so let’s assume that Vader’s father (whomever it is) died before Vader did.

5. We will treat Vader as a member of the armed forces, rather than a high-ranking government employee, independent contractor, or owner of a partnership interest. We will further assume that the families of all of Vader’s victims have no valid claims for the wrongful death, murder, torture, etc of their loved ones.

6. Finally, let’s assume that the commentators on Fox News are correct when they allege that the current federal government is analogous to the Empire in Star Wars. For our example, that means the same tax code, same forms and the same procedures (and the same relaxed gun control policies).

Note: For our not-so-geeky readers, there are 6 Star Wars movies: Episodes 4-6 were released from 1977 – 1985 and Episodes 1-3 were released from 1999 – 2005.

Here is how the estate administration would probably shake out here in Oregon:

At the time of Vader’s death in ‘Return of the Jedi (Episode 6), he had two living children (Princess Leia and Luke Skywalker). Vader’s wife (Padme Admidala) predeceased Vader, as she died at the end of Episode 3 in one of the more foolish deaths in cinematic history when she “lost the will to live”. Vader’s mother died during Episode 2 and we are assuming Vader’s father predeceased him. Vader’s step-brother Owen was killed early in Episode 4. No reference was ever made to Vader having any other siblings. In summary, Vader’s parents, step-brother, and spouse predeceased him, he had no other siblings, he left two surviving children, and he had no grandchildren.

ORS § 112 includes provisions for the distribution of assets of Oregon residents who die intestate (without a will). Vader’s estate would be administered under Oregon’s intestacy statutes in our example. Because Vader did not have a surviving spouse, the administrators of Vader’s estate would look to ORS § 112.045 to determine the distributions passing to people other than a surviving spouse. Under ORS §112.045(1), property would pass, “To the issue of the decedent. If the issue are all of the same degree of kinship to the decedent, they shall take equally, but if of unequal degree, then those of more remote degrees take by representation.”

In our example, since Luke Skywalker and Princess Leia were Vader’s children, they are of the same degree of kinship. Vader had no other children (alive or dead), so Luke and Leia would each inherit 50% of Vader’s assets. Vader did not name a Personal Representative to handle his affiars (since he left no will). The court would appoint a Personal Representative in this case. While most of our clients are not Jedi Masters or Sith Lords, many of them do die without valid Last Wills in place. This is the sort of analysis we have to go through when that happens.

One remaining issue to be discussed in our analysis of Vader’s estate distribution is as follows: Luke was arguably responsible for Vader’s death. If a court found that Vader died as a result of Luke striking Vader during their final lightsaber battle in Episode 6, then Leia would likely inherit 100% of Vader’s estate. ORS 112.465 provides that, “property that would have passed by reason of the death of a decedent to a person who was a slayer or an abuser of the decedent, whether by intestate succession, by will, by transfer on death deed or by trust, passes and vests as if the slayer or abuser had predeceased the decedent.” My collegue Steve Kantor was quick to point out that Luke could likely argue self defense. I countered by arguing that Luke started the fight. Steve countered by calling me a nerd. There is also the possibility that it was an assisted suicide ("Luke, help me take this mask off…"). These (and other) arguments about the slayer statute are beyond the scope of this article.

The distribution of Vader’s assets is fairly straightforward, since he left two surviving children and no one else. The composition of Vader’s assets is more complex and will be the subject of a future post.
 

Which Will is the right Will, Willis?

As a child growing up in the late ‘70’s and early 80’s, my earliest sitcom memories are of classics like ‘Silver Spoons’, ‘Eight is Enough” and, of course, “Diff’rent Strokes”. Arnold Jackson’s famous phrase, “Whatchu talking about Willis?” made actor Gary Coleman a sensation during the show’s six-year run, and it is not surprising that his career could go nowhere but downhill after becoming a superstar at age 10. Few could have predicted the sad trail his career (and his life) would take. No one could have predicted the bizarre ending that is taking place in a courtroom in Provo, Utah this week.

The bizarre ending I refer to is an ongoing argument over the administration of Mr. Coleman’s estate. First, a little background: Mr. Coleman got married to Shannon Price in 2007 and they were divorced in 2008. The couple lived together until Mr. Coleman died in 2010, two days after a fall in his home that resulted in a brain hemorrhage. Ms. Price made the decision to take Mr. Coleman off of life support.

Two documents have been presented to the court as the valid Last Will of Gary Coleman: a Will written in 2005 and a hand-written amendment written in 2007. The 2005 Will leaves Mr. Coleman’s assets to Anna Gray, his longtime friend and business associate. The 2007 amendment names Ms. Price as his sole heir.

Ms. Price is arguing that she and Mr. Coleman changed their minds about getting divorced and that their post-divorce relationship constituted a common-law marriage. The court has examined evidence of Ms. Price and Mr. Coleman’s joint bills and tax returns and has heard the testimony of conflicting witnesses about how close Mr. Coleman and Ms. Price were after their divorce. The court must now decide whether a common law marriage existed. If the court finds that such a relationship did exist, then Ms. Price will get everything. If not, Mr. Coleman’s assets will go to Anna Gray.

The case presents enough legal issues to excite a law professor. It also presents a life lesson that each of us should take to heart: The only way an estate plan works is if it is properly updated. If you get married, have a child, move, inherit assets, or if your life changes in any other material way, check with your attorney to see if your estate planning documents need to be updated to reflect the change. The alternative is often an expensive court battle where the only winners are the lawyers and the losers are your loved ones.

 

“Send lawyers, guns and money, they’d get me out of this…”

The first cassette I ever owned was Michael Jackson’s ‘Thriller’, purchased in 1982. Ten years later, my mom bought the soundtrack to the movie “The Body Guard”, which featured Whitney Houston’s rendition of “I will always love you”. ‘Thriller’ has now sold over 65 million copies and ‘The Body Guard’ has sold over 40 million, making these two albums the number one and number four best selling albums of all time, respectively. Between the two of them, Whitney Houston and Michael Jackson sold well over 250 million records during their lifetimes.

Unfortunately, selling millions of albums is not the only thing Whitney and Michael had in common. Both stars died over the last three years, both had well-documented battles with substance abuse (that may have lead to their deaths), and both were deeply in debt when they died. Whitney Houston borrowed tens of millions of dollars against the sales of records she had not yet made and Michael Jackson owed millions to a long line of creditors, including promoters, banks, and the second son of the king of Bahrain, among others.

Substance abuse and personal debt issues come up regularly in the estate planning process. Where appropriate, many parents condition receipt of trust funds on the passing of drug tests or attending counseling. A properly drafted trust may also protect your assets from the creditors of one of your beneficiaries. If you have relatives who struggle with debt or substance abuse issues, you may want to consider a trust as part of your estate plan.

If you have personal loans, documenting them properly may save your family attorney fees. The federal and state estate tax returns include schedules of the assets and liabilities of the decedent. These schedules are essentially a snapshot of everything a person owned (and owed) when he or she died. Tracking the debts of a decedent is often one of the more challenging parts of compiling the estate tax schedules, because many personal debts are informally documented, if they are documented at all. If you have personal loans, you should discuss these loans with your estate planning attorney, as properly drafted loan documents, combined with accurate amortization schedules, can save your attorney time (and therefore save your family money) during the administration of your estate.

One more note – there are provisions of the tax code which penalize parties for loans made at below market interest rates. If you have a substantial loan – whether personal or business – you may want to discuss the loan terms with your attorney.

The estates of Michael Jackson and Whitney Houston have benefited from increased record sales following the stars’ deaths. A large part of the estate income from these sales will be going to the satisfaction of personal debts. Most estates do not have this sort of income to offset debts and the debts are instead paid from the residue of the estate. For this reason, debts (including your home mortgage) should be considered when planning the distribution of your assets under a will or trust.

Most families will (hopefully) never have to deal with the sort of  substance abuse and debt problems that followed Michael Jackson and Whitney Houston through the later years of their lives. When the issues do arise, however, properly drafted documents may be the family’s best protection agaist creditors and predators who are looking to get access to the assets of the estate. The key, as always, is to communicate the specifics of your situation to an attorney who specializes in estate and business planning.  

Recent Ruling: State Opens Probate 15 Years Later

  From time to time we will publish local cases and legislative bills:

State v. Boyle, — P.3d –, 2009 WL 1313755 (Or App)

Background: Fifteen years after the decedent’s death, the state of Oregon opened probate in order to attempt to collect approximately $80,000 worth of medical assistant payments the state made on the decedent’s behalf before his death. The personal representative disallowed the claim as untimely. The state filed a separate action based on the denial of their claim.

 

Holding: The only statute of limitation that applies to claims by the state against an estate for medical expense reimbursement is ORS 115.005(2)(a). This statutory provision only requires that claims be filed within 4 months of probate opening. Since the state did this, their claim was allowable.

Comment: 15 years? The state sure has a long memory. But if the claim had also been subject to some other statute of limitation (like 6 years for a contract claim), then the claim could be disallowed.
 

Recent Ruling: Personal Representative Compensation

From time to time, we will publish blurbs on recent local court opinions and state legislation:

Brown v. Hackney, — P.3d –, 2009 WL 1394832 (Or App 2009)

Background: Brother of the decedent, a beneficiary through intestate (without a will) succession, challenged the payment of the personal representative from funds acquired through the settlement of a wrongful death action initiated by the personal representative.

 

Holding: The personal representative may be compensated based on the proceeds of a wrongful death settlement. ORS 116.173 bases personal representative compensation on the “whole estate” which is greater than the intestacy “estate.” The decedent’s “whole estate” is “comprised of all property both within the jurisdiction of the probate court as well as property outside the jurisdiction of the probate court.”

 

Comment:  This fight was over an amount of $5,200.  $5,200!  Really!?!  Can’t we negotiate matters like grownups, instead of taking them up to the court of appeals? 

Recent Ruling: Will Contest

From time to time, we will publish blurbs on recent local court opinions and state legislation: 

Harris v. Jourdan, 218 Or App 470, 180 P.3d 119 (2008)

Background: Will contest involving a decedent that executed multiple wills. Each will was a drastic departure from the previous will. One beneficiary of a previous will challenged the probate of the most recent will based on undue influence. Will proponent claimed that beneficiary of prior will did not have standing to challenge the will because she, in fact, had procured the previous will through undue influence.

 

Holding: Beneficiary of prior will is not required to demonstrate that prior will could survive a will contest in order to have standing to contest the will that is currently in probate.