Probate Court

For Better or Worse, Why You Need to Update Your Estate Plan

These are the top four reasons to update your estate plan:

Major life events are reasons to update your estate plan, whether they are celebrations or sad events.

MP900422990These are the top four reasons to update your estate plan: birth, death, marriage and divorce. However, there are other reasons, including bankruptcy or receiving a surprise windfall.

The FDL Reporter recently published an article, “Best reasons to update estate plans include marriage, divorce, move, birth”that discusses life events that can impact your estate planning.

Marital Status. A change in your marital status definitely requires significant changes to your estate plan. If you've recently married, state law on marital property will now apply to the division and distribution of your estate upon your death.  If you've recently divorced, your estate plan should be updated to see that your ex is removed as a beneficiary and fiduciary, as well as any of his or her relatives.

Financial Status. If you're fortunate enough to have won the lottery or received an inheritance, you need to look at your existing estate plan to see that it still satisfies the needs of your now larger estate. If the opposite has occurred and your estate has declined in value, you also need an estate plan review.

Birth or Death of a Beneficiary or Fiduciary. You need to remove the individual's name.  However, if a spouse has died, your plan may need a complete overhaul. If you or a beneficiary have adopted or had a child, you need to add that child.

A Move to a New State.This is one of the most overlooked reasons to update your estate plan. Every state has different probate, tax, and estate laws.

You Don’t Remember the Last Time You Updated Your Estate Plan. The passage of time brings change to others, even if your life has not changed. Are the people you had named as fiduciaries still able to carry out those duties? Is the person you selected to be your executor, still the best candidate? Review your estate plan with your attorney to make sure that it still reflects your wishes and your life.

Reference: FDL Reporter (April 24, 2018) “Best reasons to update estate plans include marriage, divorce, move, birth”

What If I Don’t Want to Give My Spouse Everything in my Estate?

There is no legal requirement that spouses must leave all of their assets to each other when they die

This is question often goes unasked, but the harsh truth is, not everyone wants to leave their spouse with all of their worldly goods.

Irish-handsThere is no legal requirement that spouses must leave all of their assets to each other when they die, as discussed in a recent article from nj.com, “Do I have to leave any money to my spouse? Or can I give it all away?” However, there are laws in some states, including Florida, about what the surviving spouse is entitled to.

Depending on state law, the surviving spouse may be entitled to an "elective share" of the deceased spouse's estate, even if the surviving spouse is disinherited under the deceased spouse's will.  In Florida, the elective share is 50%.

The surviving spouse usually can’t claim an elective share, if the spouses were living separate and apart in different residences, or had stopped living together as a married couple, or had a valid prenuptial or post-nuptial agreement that waived the elective share. In Florida, the elective share is equal to one-half of the "augmented estate.”

The augmented estate is the deceased spouse's estate, less funeral and estate administration expenses and enforceable claims. Certain transfers of property for less than fair market value made by the deceased spouse are added back to this amount. The surviving spouse's assets are then deducted from the elective share.

A notice of elective share must be filed within six months of the appointment of an executor in the county where the appointment was made. That’s a pretty short time.

Because of the relatively short time in which to file the elective share notice, an experienced estate planning attorney should be engaged immediately after the deceased spouse's death, to see if the surviving spouse is entitled to an elective share.

In this situation, the responsibility is on the surviving spouse to file an elective share notice. In some states, like Florida, if the surviving spouse fails to file an elective share action within six months from the time of probate, they lose the right to that share.

Reference: nj.com(April 25, 2018)“Do I have to leave any money to my spouse? Or can I give it all away?”

Selecting an Executor: Not Always Easy

If there are no family members or friends with the necessary skills, your best option may be…

Don’t delay finalizing your estate plan, because determining who to name as you executor is difficult. Here’s some help to figure out how to make this important decision.

Th (2)If there are no family members or friends with the necessary skills, your best option may be to name your attorney as the third-party executor of your will. A useful article from nj.com, “Who should be executor of your will?”explains how this works.

An executor is a person you name in your will or who is appointed by the court and is given the legal responsibility to address a deceased person's remaining financial obligations. An executor is responsible for paying debts and creditors, filing tax returns, paying taxes, and distributing the estate's assets, pursuant to the deceased person's wishes as stated in the will.

The individual named as an executor in a will can refuse to accept this task. A person who originally accepted the role as executor may resign at any point in time. Therefore, it’s a good idea to name alternative executors. If you don’t, a judge will appoint a replacement executor, if your original selection says no for any reason.

Most executors typically perform their duties without payment, but they are entitled to some renumeration. The reason that most executors don't ask for compensation, is because most executors are close family members and perform their duties out of respect for their deceased loved one. The amount an executor gets paid, is usually set by state law and what a probate court decides is reasonable under the circumstances.

For larger estates, it may be wise to select a professional, such as an attorney, who is familiar with the duties and obligations of serving as an executor. This can be extremely useful, when the deceased was the owner of a business and the estate may be complicated.

Executors will frequently engage attorneys to assist them. For example, in New Jersey, an attorney may serve and get paid as an executor and may be paid an additional fee for legal work performed by that attorney.

New Jersey law says that executors can receive 5% on the first $200,000 of the trust principal, 3.5% on the excess over $200,000 up to $1 million, and 2% on the excess over $1 million.

The executor is also entitled to receive six percent on all income received by the executor. While family members often waive their rights to take statutory commissions, they are within their rights to do so.

Reference: nj.com(April 16, 2018) “Who should be executor of your will?”

Conspiracy Claims by Estate Dismissed by Forsyth County Judge

The suit claimed that Thompson, along with County clerks and others, formed a criminal conspiracy designed to

A lawsuit claiming that there was a conspiracy between Forsyth County clerks, an attorney and others to steal more than $1 million from an elderly woman has been dismissed by Judge Craig.

Forsyth-county-courthouseAccording to theWealth Advisor’sarticle, “Judge Denies $1.4M County Clerk Estate 'Conspiracy'," the lawsuit alleged that Bryan Thompson, a public administrator in Forsyth County, was illegally appointed guardian of Mary’s estate. The suit claimed that Thompson, along with County clerks and others, formed a criminal conspiracy designed to gain control of Mary’s estate and steal $1.4 million in assets from her.

The lawsuit also named as defendants William Speaks, an attorney who represented Thompson’s niece, and Fred Flynt, an attorney appointed as Thompson’s guardian ad litem.

Everyone except the Clerk of Court had been previously dismissed as defendants in the lawsuit.

Attorneys for Bryan Thompson sought sanctions against Alston and Doris Tucker, the current administrator for Mary Thompson’s estate. The judge didn’t decide on that request and took it under advisement, until either one of two things happened—Alston declined to appeal Craig’s decision after a period of 30 days or Alston files an appeal and the N.C. Court of Appeals issues a decision, which could take a year.

This long battle started in 2007, when Mary’s family first challenged Bryan Thompson’s appointment as guardian of the estate. The family didn’t like how Bryan was appointed. Leslie Pope, Mary Thompson’s niece, filed a petition to have her aunt declared mentally incompetent and to have a guardian appointed to oversee the estate. At a hearing, Mary was found to be mentally incompetent and another order appointed Bryan Thompson as guardian of the estate.

Alston argued that those orders were invalid because they weren’t time stamped with the clerk’s office. If the orders are invalid, then Bryan was never officially the guardian of Mary’s estate, Alston argued. If he wasn’t the guardian of the estate, then anything he did on behalf of the estate was illegal, the lawsuit says. In fact, in 2014, the state Court of Appeals ruled that the appointment of Bryan was “without legal authority”, precisely because Hinshaw’s order on mental incompetency was never entered into the clerk’s office.

The Clerk of Court has said this was a mistake and it had been standard practice for years for clerks not to stamp orders that had been prepared and executed by representatives in the clerk’s office. The issue, she said, has since been fixed.  However, Alston contends this wasn’t a mere error. He claims that Bryan Thompson, several Forsyth County clerks, Speaks and Flynt conspired together in a criminal enterprise to illegally take over the estates of Mary Thompson and other people and steal their assets.

Alston said that Bryan stole monthly retirement checks, social-security checks, commissions, and all of her real and personal property. He estimated the value of her estate at $1.4 to $1.6 million. However, according to a motion that Thompson’s attorneys filed, Mary had 48 properties. At one point, they were valued at about $1 million, but a 2012 bankruptcy report indicated a net value of $66,120, the motion said.

Bryan sold seven of them, and then, after he filed for bankruptcy on behalf of the estate in 2011, the bankruptcy trustee sold 12 other properties. Another 29 properties were legally abandoned, Thompson’s attorneys said in court documents.

When asked if there was any proof that Bryan had bought a car, a house or anything else with money from the estate, his attorney said there was no evidence that any such purchases had taken place.

Reference: The Wealth Advisor (March 19, 2018) “Judge Denies $1.4M County Clerk Estate "Conspiracy"”

Tom Benson Excludes Daughter and Grandchildren from his Will

The last will of multi-millionaire Tom Benson, who owned several professional sports teams and other businesses, did not include his daughter and her children

Before he died, the owner of the New Orleans Saints and Pelicans gave millions of dollars of property to his daughter and her children, but they were not included in his last will and testament.

Tom-BensonThe last will of multi-millionaire Tom Benson, who owned several professional sports teams and other businesses, did not include his daughter and her children, according to an article from KPVI,“Though excluded from his will, Tom Benson's daughter and grandchildren received much from family patriarch.”

Following Benson's death, court records indicate that his third wife Gayle became the sole beneficiary of an estate controlling New Orleans' NFL and NBA franchises, as well as the Dixie Brewing Co. There were other valuable businesses or properties in the estate: three car dealerships, the site of Benson Tower and Champions Square, a $3.6 million Uptown mansion, a racing stable and a parking lot used by fans attending Saints or Pelicans games.

As the will reads, daughter Renee Benson, granddaughter Rita LeBlanc, and grandson Ryan LeBlanc received nothing further. They were parties in a complex, two-year court battle that began in 2015 after a falling out with Benson. The three were left with control of three car dealerships, bank branches and a hunting ranch in and around San Antonio.

Louisiana law allows relatives up to five years to decide whether they want to challenge the validity of a will. The allegations are typically that the deceased was either mentally incapacitated or subject to undue influence in making the will.

 However, the estate planning attorney who helped Benson prepare his will, Paul Cordes Jr., said he’s confident the document would survive a challenge. Benson’s will was drafted only a few weeks after a New Orleans judge found Benson was mentally fit enough to handle his own affairs, which Renee and her children had denied in a lawsuit filed in 2015.

Although Gayle is the sole beneficiary of her late husband's estate, Saints and Pelicans President Dennis Lauscha is the administrator. All of Benson's property was placed in a trust, the governing terms of which haven't been made public.

When Gayle passes away—she’s now 71—it is likely that there will be trust rules that will direct the line of succession. Gayle has no children of her own. But we won’t know what those rules are unless very specific circumstances occur. Sounds like Benson did some good estate planning.

Reference: KPVI (March 19, 2018) “Though excluded from his will, Tom Benson's daughter and grandchildren received much from family patriarch”

Undue Influence Found by Appellate Court in Case of Elderly Man and Neighbor

If undue influence can be proven, it is established that a will can be set aside.

If undue influence can be proven, it is established that a will can be set aside.

Wills-trusts-and-estates-coveredA 2013 probate judgment ordering Frank and Angelina Picciolo to return all funds that Mrs. Picciolo received was appealed. The funds were from an annuitiy transfer that her husband completed, while acting as attorney-in-fact for their neighbor William C. Mallas

The Superior Court of New Jersey, Appellate Division recently decided this in the case captioned “In re Estate of Mallas.” Apparently, before his death, Mallas executed a power of attorney (POA) naming Frank as attorney-in-fact, a new will naming Angelina as a beneficiary and later, a codicil appointing Frank as executor.

Frank used the POA to transfer funds contained in a long-standing Bristol Myers Squibb IRA into two annuities, with the estate as beneficiary. Sometime later, Frank used his POA to transfer the annuities into one annuity with another company and designated Angelina as sole beneficiary.

The sales agent for the annuity transaction testified that Frank directed him to make Angelina, instead of himself, the primary beneficiary, because Frank had an IRS lien against him. The sales agent also testified that he met with Frank and Angelina on several occasions, but he never met with Mallas. When the agent requested to meet Mallas, Frank told the agent it "wouldn't be feasible to go meet him."

At his deposition, Frank testified that the annuity sales agent met with Mallas in his home. At trial, Frank changed his testimony and said he confused the sales agent with a bank employee who handled the elderly man’s accounts. At trial, Angelina admitted she "had very little contact with Mr. Mallas," and "never set foot in his house."

After Mallas died in 2010, Frank filed to probate the will and codicil. Two of Mallas’s nieces challenged the decedent's will, codicil, POA and the annuity transaction. The Chancery Division found that Mallas had the required capacity to execute each document and the benefit of independent counsel. The court upheld the POA, will, and codicil, but found that Frank "failed to prove . . . that no undue influence was exerted" upon Mallas regarding the purchase of an annuity, which designated Angelina as sole beneficiary. As a result, the court ordered Angelina to disgorge all related benefits and ordered the beneficiary changed to "the Estate of William Mallas."

The court also concluded that Frank "failed to properly account" for his actions using the POA. The court also removed him as executor because, "[a]s a result of this [c]ourt's decision, the Estate of William Mallas has substantial claims against him."

On appeal, in a per curiam opinion, Judges Reisner, Hoffman, and Mayer of the Superior Court of New Jersey, Appellate Division wrote that the concept of undue influence connotes "mental, moral, or physical exertion of a kind and quality that destroys the free will of the testator by preventing that person from following the dictates of his or her own mind as it relates to the disposition of assets . . ." This is generally accomplished "by means of a will or inter vivos transfer in lieu thereof."

The challenger of a will typically maintains the burden of proof in showing undue influence, but the Court explained that the burden shifts when a beneficiary "stood in a confidential relationship to the testator and if there are additional 'suspicious' circumstances" present. A confidential relationship exists when "the testator, 'by reason of . . . weakness or dependence,' reposes trust in the particular beneficiary, or if the parties occupied a 'relation[ship] in which reliance [was] naturally inspired or in fact exist[ed].'"

The Appellate Division judges said that similar principles apply for setting aside inter vivos gifts and property transfers on the grounds of undue influence. To establish a presumption of undue influence and shift the burden of proof, a challenger must show either that "the donee dominated the will of the donor or . . . a confidential relationship exist[ed] between [the] donor and donee.”  However, here there’s no requirement that the challengers show suspicious circumstances to set them aside.

To rebut the presumption after the burden switches, the beneficiary must prove "not only that 'no deception was practiced therein, no undue influence used, and that all was fair, open and voluntary, but that it was well understood.'"

In this case, the Appellate Division found that the trial judge reasonably determined that a confidential relationship existed between Mallas and Frank and that as to the suspicious circumstances surrounding the execution of each of the challenged documents in the case, the judge concluded that Frank met his burden of proving there was no undue influence exerted by him in connection with the estate planning documents and beneficiary designations.

 However, with the annuity, the trial judge said that Frank and Angelina failed to carry their burden of proving the absence of undue influence. The appellate court said there was sufficient evidence in the record of the confidential relationship between Mallas and Frank and the highly suspicious circumstances surrounding the annuity transaction.  However, the record contained no credible evidence to rebut the presumption of undue influence, they said.

The trial judge crafted an equitable remedy that accounted for the lack of credible evidence that the annuity transaction had been authorized by Mallas, stated the Appellate Division. It also found that there was no credible evidence that Mallas intended to have that transaction nullify his will and codicil, which was done with the benefit of counsel.

Reference: Superior Court of New Jersey, Appellate Division (March 6, 2018) “In re Estate of Mallas”

Insurance Agent Ordered to Give Back $1 Million from Client Policies

An administrative law judge said that Blanche Berenzweig should return the $1 million she collected from a deceased client’s estate.

An administrative law judge said that Blanche Berenzweig should return the $1 million she collected from a deceased client’s estate. The heirs of a reclusive man have objected to the will, claiming that she pressured their uncle.

Claire-anderson-60670This fall, a trial will be held to determine who LeRoy Ern’s real heirs are, as ordered by Milwaukee County Circuit Judge Marshall Murray. With an estate worth $1.6 million, the reclusive man, who died at 92 of advanced dementia, left his entire estate to a retired insurance agent. His will was drafted by an attorney that shared an office with the insurance agent.

The Milwaukee Journal Sentinel article, “Insurance agent should give up $1 million received from client's policies, judge recommends,” reports that 11 of Ern's 12 nieces and nephews objected to the will that was drafted in 2009. They said Berenzweig improperly pressured their reclusive uncle.

Ern also gave her power of attorney over his financial and health affairs, if he became incapacitated.

Rachel Pings, an administrative law judge, wrote a proposed order that was filed in the Circuit Court probate case. She says Berenzweig put herself in a position to entirely manage his money and exploited Ern's trust and isolation by knowingly being named as the beneficiary of his annuities, when she had no insurable interest in his life.

"She profited illegally by more than $1 million," Pings wrote.

The order now goes to state Insurance Commissioner who will decide whether to uphold the recommendations that Berenzweig return the annuity proceeds, permanently revoke her insurance license and fine her $3,000. The annuity proceeds are frozen.

Pings' decision says the fact that Berenzweig served as Ern's agent, beneficiary, and power of attorney posed obvious conflicts.

Ern was never close to his nieces and nephews. The relationships grew more distant as his siblings died. He met Berenzweig in 1993, when she helped him purchase an annuity. They became reacquainted in 2008, when Ern was having a problem with that policy.

A friendship developed, and Berenzweig said she vehemently objected to Ern making her the beneficiary of the annuities and the estate but that her client was insistent.

Pings noted in her opinion that insurance regulators consider Berenzweig "an unethical insurance agent who took advantage of her position of trust with a lonely old man, so she could benefit from his sizable estate when he died."

Berenzweig’s attorney argues that she did not violate any laws or rules, but that some of the problems she is facing could have been avoided. The entire will, which named Berenzweig the sole beneficiary, is being challenged.

Reference: The Milwaukee Journal Sentinel (March 12, 2018) “Insurance agent should give up $1 million received from client's policies, judge recommends”

Does Your Estate Plan Match Your Life Right Now?

If you love your family, you’ll keep them in mind when considering whether to make an appointment to update your estate

Remember to update your estate plan, especially if your life includes events like new kids, a new marriage or the death of a loved one.

Bigstock-Extended-Family-Outside-Modern-13915094If you love your family, you’ll keep them in mind when considering whether to make an appointment to update your estate, as you go through the inevitable changes of life. Not doing so can create financial and emotional burdens. That’s probably not how you want to be remembered.

According to a recent Newsday article, “Make sure your estate plan keeps up with life changes, experts say,” estate planning may seem overwhelming and depressing because it deals with issues of aging.  Some people believe that estate planning is just for the very rich.

That’s not right. Estate planning is for everybody. Make a plan to do it now, in order to avoid consequential fumbles.

Let’s look at what you need to do.

Estate planning is a set of legal documents that state who will receive your assets and property when you pass away.  It also specifies who you want to make medical decisions, and who should make financial decisions, if you are unable to do so yourself.

This should make everything easier for your heirs at this stressful time, when they most need it.

Remember that estate planning isn’t a one-and-done proposition. It’s wonderful that you finally got your will finished and signed, and you have your medical directives in place along with a designated individual to have your authority via power of attorney.

However, that’s not the end of it. Your estate planning documents must keep pace with change.

It’s critical that you update the contingent (secondary) beneficiaries on life insurance policies after the first spouse dies.

The birth or adoption of a child and divorce are similarly important life events that will require you to review and update your estate planning documents.

Don’t assume that establishing joint tenancy (sharing ownership in personal property, like your family home) or joint ownership over financial accounts is enough to protect your assets.

Finally, be certain to work with an experienced estate planning attorney who has the insights and legal knowledge to create a plan that aligns with your goals. An online will has the potential to create more problems than it solves. You might save some money, only to cost your heirs thousands of dollars to undo the damage.

Reference: Newsday (March 4, 2018) “Make sure your estate plan keeps up with life changes, experts say”

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