SYK Seminar Series: Protecting Seniors with New Oregon Laws

 

 

Senate Bill 95, House Bill 2622 and FINRA Rules 2165 & 4512

What Oregon Securities Professionals, Financial Institutions and Trust Companies Need to Know

The Oregon Legislature passed Senate Bill 95 and House Bill 2622 to amend and create new law regarding reporting by certain securities professionals of suspected financial exploitation by others. For securities professionals, certain financial institutions and trust companies, the new bills allow discretionary temporary holds on disbursements and certain other account activity. FINRA Rules 2165 and 4512 create complementary requirements and discretionary holds for FINRA-registered brokers.

Fiduciary litigator Victoria Blachly and securities litigator/FINRA arbitrator Darlene Pasieczny explain how these new laws and rules seek to empower financial professionals to help their clients. Victoria and Darlene also will address capacity, red flags of potential financial abuse, and the reporting process for suspected exploitation.

To register, please contact us at events@samuelslaw.com or 503.226.2966.

Space is limited to the first 25 attendees to RSVP (required). Be sure to register soon to reserve your seat!

Lunch will be included with this free & informative presentation

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.

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).

James Gandolfini’s estate: Disaster or well-executed plan?

I recently read an article about the “disasterous” estate tax planning done by the attorneys for late James Gandolfini. The article pointed out that the actor left the majority of his $70 million estate to his children, family and friends; while “only” leaving his wife 20%. The crux of the article was that, by allowing 80% of assets to pass to people other than his spouse, the estate will unnecessarily pay tax on about $50 million. (The $50 million that would have otherwise been passed tax-free if Mr. Gandolfini had left everything to his wife). The tax bill is reportedly going to be in the neighborhood of $30 million.

$30 million is a substantial check to write to the government; but to assess whether the estate plan is a “disaster”, we need to dig a little deeper. James Gandolfini was married twice and he had a child with each wife: Michael, born in 2000, and Liliana, born in 2012. He met his second wife in 2006 and they were married in 2008. Mr. Gandolfini’s mother was a lunch lady and his father a mason and custodian. He did not land his first acting job until he was 26 and his life changed forever when he landed the role of gangster Tony Soprano in 1999 then became a millionaire many times over at the age of 40.

James Gandolfini’s life was far from ordinary, but the issues that his attorneys had to deal with in preparing his estate plan were very common: multiple marriages, children with different spouses and the unique challenges presented by first-generation wealth. It is not uncommon or “disastrous” for people to pass assets to their loved ones knowing there will be an estate tax to pay as a result, due to the unique nature of the beneficiaries and the assets. What is important is that potential taxes are laid out ahead of time to allow the individual to make informed decisions. Sometimes it is worth the tax bill for someone to pass assets outside of the “traditional” family map of everything-to-the-surviving-spouse.

In Mr. Gandolfini’s case, he chose to establish trusts for the benefit of his children at his death so that he could provide for the children’s well-being immediately and so that he could have some control over how (and when) assets are distributed. He also chose to leave substantial amounts to his sisters and friends. These choices cost the estate tens of millions of dollars in taxes, but that may have been a choice Mr. Gandolfini made. Only he and his lawyers know if the result was “disastrous” or exactly as planned.

It is worth noting that Mr. Gandolfini could have left the assets in trust for his wife’s benefit, then provided for the distribution of these assets to his beneficiaries on upon her death. This strategy is fairly common. In this case, however, Mr. Gandolfini’s surviving spouse is only 45 years old and that hypothetical distribution to the kids may not take place for thirty or forty years. Mr. Gandolfini may also have been advised to transfer some of his assets during his lifetime, at this point it is not clear whether any sort of plan was in place.

Properly executed planning documents can help parents protect their children from themselves and from creditors and predators. Our firm will be hosting a seminar to discuss the planning challenges that families face when planning for minor children. We will talk about the red flags that parents should be looking out for and then discuss the legal and financial variables that emerge when we add a child to the mix. The seminar will be held from 7:30-9 AM on July 25, 2013. To register for this seminar, please contact us at events@samuelslaw.com or 503-226-2966. Space is limited, so be sure to contact us soon.

It was Professor Plum, in the library, with the lead pipe.

Many law school professors test their students by presenting long and complicated fact patterns which must be analyzed issue by issue. When the law student graduates, he or she must then pass a state-specific exam consisting of the same sort of questions. These essay questions are designed to cover a broad range of topics in each area. The fact patterns are long and occasionally outrageous. For example, in the criminal law section of my Massachusetts Bar Exam I had to write an essay about the following fact pattern:

Guy 1 hires Guy 2 to kill Guy 1’s Wife. Guy 1 pays Guy 2 with a bag of drugs. Guy 2 goes to Guy 1’s house to kill Wife. Guy 2 breaks the glass in the kitchen door, reaches through, turns the door handle, and lets himself in, only to find Guy 1 and Wife in their kitchen arguing violently. Wife realizes Guy 2 is there to kill her so she stabs herself (thereby killing her unborn child). Wife dies 366 days later. Examine the issues.

Needless to say, real life rarely introduces such issue-packed cases. The administration of the $60 million estate of American painter Thomas Kinkade is an exception to that rule, packing enough legal elements to satisfy any bar examiner. In addition to the handwritten wills that I discussed in an earlier post, Mr. Kinkade’s girlfriend Amy Pinto-Walsh has refused to move out of the home she shared with the decedent. As a result, the estate has been footing the bill for the mortgage each month and sending Pinto-Walsh bills for rent, upkeep and maintenance.

Additionally, Kinkade’s wife Nanette Kinkade has filed court documents contesting the handwritten wills and accusing Pinto-Walsh of taking advantage of Kinkade as he escalated his alcohol and drug use, became estranged from his wife and four daughters, and ultimately died of toxic levels of alcohol and valium. Mrs. Kinkade is accusing Pionto-Walsh of using her influence over Mr. Kinkade to get the artist to change his will on several occasions near the end of his life.

Finally, the Kinkades were residents of California, a community property state. One-half of Mr. Kinkade’s estate therefore belonged to Mrs. Kinkade at her husband’s death – since they were separated, but not divorced. The court battles are all being fought over control of the other half, which is estimated to be worth about $30 million.

Very few of us will ever make millions by selling our paintings, but our estates may run into the same issues Mr. Kinkade’s has: imperfectly executed or updated documents, substance abuse issues, fighting relatives and charges of improper influence over mom or dad. It is also likely that the states in which we live and die will play a significant part in the administration (and taxation!) of our final affairs.

Many problems can be avoided with proper planning. Sometimes the best answer is to appoint a neutral party to play referee or to manage assets, other times the answer is formally documenting your wishes in the appropriate manner. Whatever the issues, the planning starts with communicating concerns over potential problems to your attorneys and advisors.

Jeff Cheyne and I will be discussing some of the common errors in estate planning and administration at an upcoming seminar in our office. If you would like to join us from 7:30-9:00 am on Tuesday August 23, please rsvp by calling our office at (503) 226-2966 or by email at events@samuelslaw.com. We will be discussing a broad spectrum of issues – from well drafted wills that don’t control any assets, to dying with no will at all – and many topics in between. Light refreshments will be provided.
 

“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.