Trustees

Grandson of Walt Disney in Longstanding Inheritance Battle

Even visionary Walt Disney could not have imagined the struggle his grandson Bradford Lund has endured trying to claim his share of the Disney family fortune, reports the Daily Bulletin in a recent article titled “Walt Disney’s grandson locked in legal battle for personal freedom, millions in inheritance.”  

It’s been fifteen years since the start of Lund’s estate battle with estranged family members, probate and courts to prove that he is mentally able to manage an inheritance of hundreds of millions of dollars. He’s had to repeatedly prove that he does not have Down syndrome and can manage this kind of money.

He is now fighting for his freedom. A Superior Court judge from Los Angeles County has appointed a temporary guardian ad litem to make legal decisions on his behalf.

Judge David Cowan said he was not going to give $200 million to someone who may suffer, on some level, from Down syndrome. Even after he was given evidence that Lund does not have Down syndrome, the judge refused to retract his statement.

Lund is fighting against a probate system with high profile attorneys–the former White House counsel Lanny Davis is one of three on his legal team. They have filed a federal civil rights lawsuit accusing Judge Cowan of appointing the guardian ad litem without due process. Suing a judge is almost never done, but the complaint alleges that a judgment was rendered that left them no choice but to take action.

One of Lund’s main opponents is his twin sister, Michelle Lund. The twins attended special-needs schools as children, reportedly for learning impairments. When Lund was 19, his mother created a trust fund now valued at $400 million for him, his sister and another sister, Victoria. She appointed four trustees. The grandchildren were to receive part of their shares at ages 35, 40 and 45, with the remainder kept in trust and then given to them gradually over time.

Lund’s mother died, as did his sister Victoria. Some of the trustees resigned, with others who did not know the family taking their places.

When Brad turned 35, the trustees voted against paying him part of his inheritance, saying they did not believe he was financially or mentally competent. Four years later, sister Michelle suffered a brain aneurysm, but she received her share as scheduled. In 2009, Michelle and her two half-sisters sought an order in an Arizona court that would place Brad under a guardianship for his legal decisions. They claimed that he had chronic deficits and mental disorders. The case went on for seven years and ended with a judge declaring Brad able to make his own decisions.

While the Arizona case was still underway, Lund filed a court petition in Los Angeles County to remove his trustees for various violations. That is when Judge Cowan entered the picture. The judge was presented with a settlement agreement between Lund and his trustees, in which he would pay them $14.5 million, in exchange for their removal and replacement.

The monetary exchange was approved, but Cowan would not agree to letting Lund replace the trustees. That’s when the temporary guardian ad litem was appointed.

While the size of the assets involved is larger than life, estate battles among siblings and half siblings are not unusual. When the family includes an individual whose capacity may be challenged, extra steps are needed in estate planning to protect their interests.

Reference: Daily Bulletin (March 22, 2020) “Walt Disney’s grandson locked in legal battle for personal freedom, millions in inheritance”

Will the State Decide Who Gets Your Assets?

It’s something that everyone needs, but often gets overlooked. Estate planning makes some people downright uncomfortable. There’s no law that says you must have an estate plan—just laws that will determine how your property is distributed and who will raise your children if you don’t have a will.  So, will the state decide who gets your assets?

Will the state decide who gets your assets?
If you don’t have a will when you pass away, state laws will determine who gets your assets.

If you don’t at least have a last will and testament, state statutes will decide who gets your assets after you pass away.  Thats one of the biggest reasons planning is important, says WMUR 9 in a recent article “Money Matters: Estate planning,” if you want to be the one making those decisions.

An estate plan can be simple if you only own a few assets, or complicated if you have significant assets, more than one home or multiple investments. Some strategies are easier to implement, like a last will and testament. Others can be more complex, like trusts. Whatever your needs, an estate planning attorney will be able to give you the guidance that your unique situation requires. Your estate planning attorney may work with your financial advisor and accountant to be sure that your financial and legal plans work together to benefit you and your family.

The first step for any estate plan is to review your family finances, dynamics and assets.

  • Who are your family members?
  • How do you want to help them?
  • What do they need?
  • What is your tax picture like?
  • How old are you, and how good is your health?
  • Do you have minor children?  If so, who will care for them?

These are just a few of the things an estate planning attorney will discuss with you. Once you are clear on your situation, you’ll discuss overall goals and objectives. The attorney will be able to outline your options, whether you are concerned with passing wealth to the next generation, avoiding family disputes, preparing for a disability or transferring ownership of a business.

A last will and testament will provide clear, legal direction as to how your assets should be distributed and who will care for your minor children.

A trust is used to address more complex planning concerns. A trust is a legal entity that holds assets to be used for the benefit of one or more individuals. It is overseen by a trustee or trustees, who can be individuals you name or professionals.

If you create trusts, it is important that assets be retitled so the trust owns the assets and not you personally. If the assets are not retitled, the trust will not achieve your goals.

Some property typically has its own beneficiary designations, like IRAs, retirement accounts and life insurance. These assets pass directly to heirs according to the designation, but only if you make the designations on the appropriate forms.

Once you’re done with your estate plan, make a note on your calendar. Estate plans and beneficiary designations need to be reviewed every three to five years. Lives change, laws change and your estate plan needs to keep pace.

Don’t be left asking yourself whether the state will decide who gets your assets.  Take charge and work with an experienced estate planning attorney to make sure you are the one deciding who gets your assets and who will raise your children.

Reference: WMUR 9 (Aug. 1, 2019) “Money Matters: Estate planning”

Should My Estate Plan Include a Trust?

There are as many types of trusts, as there are reasons to have trusts. They all have benefits and drawbacks. What type of trust is best for you? The answer is best discussed in person with an estate planning attorney. However, an article from U.S. News & World Report titled “8 Things to Know About Trusts,” gives a good overview.

Estate Plan
Determining whether your estate plan should include a trust is best done by consulting with an estate planning attorney.

Revocable or Irrevocable? Revocable trusts are usually established for a person (the grantor) during their lifetime, and then pass assets to the named beneficiaries, when the grantor dies. The revocable trust allows for a fair amount of flexibility during the grantor’s lifetime. An irrevocable trust is harder to change, and in some cases cannot be changed or amended. Some states do allow the option of “decanting” trusts, that is, pouring over assets from one trust to another. You’ll want to work with an experienced estate planning attorney to be sure trusts are set up correctly and achieve the goals you want.

Trusts can protect assets. Irrevocable trusts are often used, when a grantor must go into a nursing home and the goal is to protect assets. However, this means that the grantor no longer has access to the money and has fundamentally given it away to the trust. Putting assets into an irrevocable trust is commonly done to preserve assets, when a person will need to become eligible for Medicaid.  The trust must be created and funded five years before applying for benefits. Irrevocable trusts can also be used to obtain veteran’s benefits, if they are asset-based. VA benefits have a three-year look-back period, as compared to Medicaid’s five-year look-back period.

Trusts can’t own retirement accounts. Trusts can own non-retirement bank accounts, life insurance policies, property and securities. However, retirement accounts become taxable immediately, if they are owned by a trust.

Trusts help avoid probate after the grantor’s death. Most people think of trusts for this purpose. Assets in a trust do not pass through probate, which is the process of settling an estate through the courts. Having someone named as a trustee, a trusted family member, friend or a financial institution, means that the assets can be managed for the beneficiaries, if they are not deemed able to manage the assets. Another good part about trusts: you can direct how and when the funds are to be distributed.

Trusts offer privacy. When a will is filed in the courthouse, it becomes part of the public record. Trusts are not, and that keeps assets and distribution plans private. A grantor could put real estate and other personal property into a trust and title of ownership would remain private.

Tax savings. Before the federal estate tax exemptions became so high, people would put assets into trusts to avoid taxation. However, state taxes may still be avoided, if the assets don’t reach state tax levels. You can also transfer funds into an irrevocable trust to transfer it to others, without making it become part of a taxable estate. This is something to discuss in detail with an estate planning attorney.

Irrevocable Trusts can be expensive. If you are considering an irrevocable trust as a means of controlling the cost of an estate, this is not the solution you are looking for. Trusts require careful administration, annual tax filings and other fees. You may also lose the advantage of long-term capital gains by putting assets into trusts, since they are taxed upon withdrawal, and usually based upon current market value. The marginal rates for trust income of all kinds apply at much lower levels, so that the highest marginal taxes will be paid on very low levels of income.

Work with an experienced trusts and estates lawyer. Trusts and their administration can be complex. Seek the help of a trusts and estates attorney, who will be able to factor in tax liability and the impact of the trusts on the rest of your estate plan. Remember that every state has its own laws about trusts. Finally, an estate plan needs to be updated every few years. For example, trusts that were set up for a far lower federal estate tax exemption several years ago are now out of date, and may not work to achieve their intended goal. The laws changes, and the role of trusts also changes.

Reference: U.S. News & World Report (March 29, 2019) “8 Things to Know About Trusts”

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