New York Trusts & Estates

Judge Dismisses Sons’ Case against Alan Thicke’s Widow In Yorktown Heights, NY

 

The court saw no validity to the case, which alleged that Alan Thicke’s widow was preparing to contest a prenup she signed. The court said there was no evidence to support that claim.

In May, Alan Thicke’s sons Brennan and Robin Thicke filed a lawsuit against their father’s widow, Tanya Callau. They thought that Callau was going to contest a prenup that she signed in 2005, but according to her probate attorney, that simply wasn’t the case. The judge agreed.

In its article, “Robin Thicke & His Father Alan's Widow Celebrate Their Love For Late Actor After Judge Throws Out Singer's Lawsuit,” People quoted Callau’s attorney, saying “I am thrilled that I was able to get this bogus lawsuit thrown out of court for Tanya, whose only sin was that she loved her husband and has suffered grievously since losing him.”

Callau said she won’t contest the prenuptial agreement she signed and the judge agreed, saying there was no evidence that she had planned that action.

At the same time, four-time Grammy nominee Robin said he was happy to hear his stepmother wouldn’t be contesting the prenup: “We are thrilled to hear that Tanya will no longer be contesting the validity of her pre-nuptial agreement with Alan, and has agreed to honor his last will and testament. Our father was a wonderful man, who all of us loved very much.”

Los Angeles Superior Court Judge Clifford Klein said a new petition could be filed “if he has information supporting the sons’ assertions.”

Five months after Alan died in December, after suffering a heart attack while playing hockey, Brennan and Robin filed the petition against Callau. Before he died, the two boys were named co-trustees of their father’s living trust if Alan’s brother, Todd, declined to take on the responsibility (which he did).

In February 2016, the most recent version of Alan’s trust was signed, and the two brothers alleged that Callau didn’t complain about the estate or prenup then. Alan left each of his sons “(in equal shares): ownership of the Carpinteria, California ranch that he bought in 1989 and desired to keep in his family forever (the “Ranch”), 75 percent of his personal effects, and 60 percent of his remaining estate.”

Callau was left “all of the Ranch’s furnishings, 25% of his personal effects, a $500,000 life insurance policy, all of his death benefits from pensions and union memberships and 40 percent share of his remaining estate. Alan also provided that Tanya may live in the Ranch after his death, so long as she maintains the property and expenses.”

But in the time since Alan died, Callau allegedly claimed the prenuptial agreement she signed over ten years ago is invalid. She claimed there is no chance the prenup could withstand a legal challenge and that she has very significant community rights in the trust’s assets and rights of reimbursement to improvements to the Ranch. She also claimed “Marvin rights,” arguing that she had to forego opportunities to pursue and advance her own career to support Alan and be his companion, including raising Carter.

According to the attorney representing Thicke’s sons, Callau had said she was going to go public with the controversy, making it the topic of tabloid media, unless the Co-Trustees agreed to mediation and to give her what she wanted.

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No Surprise: Big Gap in IRS and Whitney Houston Estate Value on Tax Bill in New City, NY

 

Negotiations are still going on between the IRS and the Whitney Houston Estate. The government agency wants an $11 million payment, but the late singer’s estate is pushing back.

If Whitney Houston was a legend before her death in 2012, today her music continues to sell and generates big profits for her estate. When recording sales are measured in the millions, the IRS wants to be sure not to miss out on what it deems to be its share, before and after death.

WealthAdvisor’s recent article, “IRS Squeezing Whitney Houston’s Estate for $11 Million In Back Taxes,” says the number is $11 million (and counting…). However, both the estate and the IRS are fighting over the heavy tax bill. At this point, they’re in discussions—with few details on any settlement.

Much of the paperwork in this case has been designated as confidential, but it looks like the IRS first issued its demand in May 2016. Since then, the talks have centered on how the IRS is calculating Houston’s unpaid royalty amount.

The IRS has calculated more than $22 million in untaxed royalties. On the other hand, Houston estate attorneys say the number is closer to $2 million. This wide gap in numbers is similar to what attorneys are going through in the estate of Michael Jackson.

Some of the heft in the IRS’s calculation is based on Whitney’s “image and likeness.” This is a relatively intangible asset that can generate a massive amount of revenue after a star has passed away. There’s no justification for exactly how the IRS arrived at an $11.7 million “image and likeness” figure. It’s really anyone’s guess.

The IRS says that, of the $22 million-plus demand, the Whitney Houston Estate has been hit with $11 million in taxes, which will apparently include some substantial late fees when everything is said and done and all the issues are resolved.

Depending on the source, some say the negotiations are getting close to a resolution, while others question how it will even be possible for the estate to succeed in lowering the payments.

Either way, December 7 is the date the next status filing is due, as stipulated by the U.S. Tax Court.

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How an Elder Lawyer Views the Use of Reverse Mortgages In Yorktown Heights, NY

 

There are certain situations when a reverse mortgage is a suitable financial tool for a senior. An elder lawyer will be able to look at the big picture and provide useful guidance.

Among the many concerns addressed by elder law attorneys are: planning for long-term care, how to manage the assets of the couple or individual and addressing current and future housing needs.

Reverse Mortgage Daily’s recent article, “How Elder Law Attorneys Can Become Key Reverse Mortgage Partners,” explains that the National Association of Elder Law Attorneys (NAELA) has 4,500 members nationwide. Although the organization says it doesn’t have an official position on reverse mortgages, many of its members take advantage of exclusive access to webinars and other online resources about the product.

An elder law attorney’s work requires him to find solutions to a client’s problem, and a reverse mortgage can be part of the answer.

Sometimes a reverse mortgage is the only way that a senior can maintain his or her independence, live at home and cover home care or other services. Part of the elder law attorney’s job, is helping the client see if a reverse mortgage is a good choice.

Just like any other investment, there are right cases and wrong cases for a reverse mortgage. An elder law attorney’s job is to explain the pros and cons of the reverse mortgage in the broader scheme of the planning process. The senior would meet with his or her financial advisor—independent from a mortgage consultant—to discuss whether that specific type of investment vehicle is a good fit for them.

Some elderly people, particularly those who grew up during the Depression, are reluctant to add a new mortgage when they worked so hard to pay off the original mortgage years ago. They may be resistant to the idea of taking on any kind of mortgage at this stage in their lives.

Setting up a meeting with an elder law attorney to consider all of the options that are available, including a reverse mortgage, if it is appropriate, will be helpful in allaying concerns and allowing the family to create an optimal plan.

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Texas Financial Institutions Given More Authority to Battle Fraud in New City, NY

 

With the passing of a new state law, Texas banks are among the financial institutions that can now shut down transactions, if they suspect a scammer has targeted a vulnerable client.

This is a sad story and a hard lesson for an elderly Texas woman who was fleeced by a man who claimed to be from Nigeria. Based on his representation of love and a promise to marry, she sold her home and sent $200,000 to his bank account. She is now homeless, and he has vanished.

As The Texas Tribune explains, in “New law aims to help elderly Texans fooled by scammers,” cases like this happen all the time.

To thwart these types of scams, a new law signed by Governor Greg Abbott gives financial institutions greater power to stop transactions like the one described above. Under previous Texas law, some banks, credit unions, and securities firms would routinely stop transactions on behalf of elderly or disabled clients, who they suspected were the victims of fraud. But this new law provides financial firms even more freedom to do so. In fact, it gives them immunity from litigation when halted transactions turn out to be legitimate or when fraudulent transactions get by undetected.

The bill passed both the Texas House and Senate easily.  However, the immunity provision was not pleasing to one conservative lawmaker.

“I do not believe that banks should be held harmless when they unreasonably, or without a sound basis, deny access to a person's money,” said state Rep. Matt Rinaldi, R-Irving, who was one of ten “nay” votes in the Texas House.

 However, the Texas Bankers Association said it was important for workers in the financial industry to have protection, so they could report perceived fraud to the correct authorities.

The new law also directs financial institutions to set policies that spell out reporting procedures for employees, when they suspect an elderly customer may be the victim of fraud.

Despite the new law, advocates say challenges remain. They note that the law doesn’t address the greatest issue concerning the state's role in combating such scammers. The Texas Department of Family and Protective Services only has the authority to investigate financial predation, if a relative of the victim attempts to commit the fraud. When strangers try to con the elderly, the cases are usually referred to the Texas Attorney General’s office or local law enforcement. Victims are less apt to get help there, because law enforcement is under no obligation to investigate these crimes.

Another part of the new law gives banks the right to be in touch with a “third party” who is “reasonably” known to an adult who has been deemed to be vulnerable, if a transaction appears to be fraudulent. The law is very new, so it remains to be seen whether or not advocacy groups will be included in the “third party” category.

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Pitfalls of D-I-Y Estate Planning in Yorktown Heights, New York

The intention of doing an estate plan on your own, is rarely to create a massive headache for family members. However, that is very often exactly what happens.

Certain areas of the law are more complicated than others. The tax law is one of the more complex ones. That’s one of the many reasons why estate planning requires the help of a professional, especially when it comes to transferring wealth to the next generation.

The experienced and skillful legal counsel of a knowledgeable estate planning and tax attorney can make the difference between an estate that is smoothly managed and a disaster that takes years and significant costs to untangle.

Axcess News recently published an article, “The Very Real Dangers Of Doing Your Own Estate Planning” that details the major issues that people experience when they try to do this type of thing on their own.

Those with simple estates don’t need a great deal of estate planning, but they still need some. This may include a will, healthcare directive and a power of attorney. People try to create these documents on their own, searching online for a free template or a paid program. Many people who elect to go online to save money, wind up spending more than they anticipated, or they end up with a defective estate plan that only creates more issues for their family, once they’ve passed away. The web will might work out just perfectly for some, but others risk much more than they save.

A common issue is trying to determine if a simple estate plan will be enough for a person’s specific situation. Your situation can be complicated if your spouse has already passed, if you have children, if you own real estate or if you’ve been divorced and remarried. If any of these apply, the best bet is to sit down with an experienced estate planning attorney. The free web solution just won’t cut it.

You may need a trust. That’s a sophisticated task that definitely requires legal expertise because a simple mistake can make the trust null and void. A qualified local estate planning attorney will understand the details of the law and your situation. He or she will guide you into making the right choices for you and your loved ones. If your do-it-yourself estate plan has an error or flaw, the legacy you wanted to leave to your family may be challenged in court.

For those whose estates are worth millions, the possibility of giving a large portion over to the government in taxes should be enough motivation to contact an experienced estate planning attorney. He or she will know the tax laws, the strategies and how to manage the process.

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Stepdaughter of Famed Author Steinbeck Wins $13 Million in Estate Lawsuit in New City, New York

There will likely be an appeal, but for now John Steinbeck’s stepdaughter has won a lawsuit claiming that obstacles created by the author’s son and daughter, made it impossible for her to develop Hollywood movies based on his novels.

When Stephen Spielberg and Jennifer Lawrence want to make a movie from an author’s work, it seems like there would be little reason for it not to go forward. But a jury in Los Angeles (where else?) found that Steinbeck’s stepdaughter, Waverly Kaffaga, was prevented from using materials she owned by Steinbeck’s son and daughter.

The Daily Business Review reports, in “Steinbeck Stepdaughter Wins $13M in Suit Over Movie Rights,” that Steinbeck's stepdaughter claimed remakes of "The Grapes of Wrath" and "East of Eden" have fallen apart over the years.

Kaffaga, who is the daughter of Steinbeck's third wife, Elaine, sued the estate of her stepbrother Thomas Steinbeck, who died last year, along with his widow, Gail, and their company. The lawsuit followed a decades-long battle between Thomas Steinbeck and Kaffaga's mother over control of the author's works.

After the verdict, Kaffaga made a statement in her capacity as executor for the estate of Elaine Steinbeck, "We are pleased with the jury's verdict that recognizes the estate's full control of the rights to John Steinbeck's works. The outcome upholds the estate's mission of sharing his legacy with the world."

Gail said she was disappointed in the verdict, but was confident she’d prevail on appeal.

A judge had already ruled that the couple breached a contract with Kaffaga. The jury in Los Angeles was asked to decide if Thomas and Gail Steinbeck interfered with deals and should pay damages. The jury decided the couple had done so and awarded Kaffaga $5.25 million in compensatory damages and $7.9 million in punitive damages.

Kaffaga’s attorney said Gail found out about film projects and threatened movie makers. Gail told them she and her husband had the legal rights to the work and they would also try to make secret side deals, without telling Kaffaga.

The attorney representing Steinbeck’s widow stated that Kaffaga was not one of Steinbeck’s heirs and had never been adopted by him. According to Berger, the lead defense attorney, Thomas was a co-owner of the copyrights to Steinbeck’s works and received royalties. Berger also said that Kaffaga’s claim lacked merit, since many movies that are optioned never see the light of day and assessing a value to an unmade movie is speculation at best.

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Some are Saving, Others are not: Millennials in Yorktown Heights, New York

With lower average income than their Boomer counterparts, it’s important that millennials begin saving regularly, if they are to be able to retire at what only feels like the far distant future.

According to a research report from the Wells Fargo Investment Institute, forty one percent of millennials—those between 17 and 35—have not yet started saving for retirement. That doesn’t sound so bad, but if you dig a little deeper, a generational problem becomes evident.

CNBC recently posted an article, “Nearly half of millennials haven't starting saving for retirement.” The article explains that the median household income for millennials in our country is about $48,000. That number is about 20% less than Baby Boomers earned at the same stage in life, according to the report. It’s important to note that this lack of savings will have a significant impact on their futures.

One consequence is that people may be forced to delay retirement. The Wells Fargo researchers found that 50% of today's workers anticipate they’ll need to work until at least 70, because they won’t have enough saved for retirement.

The Wells Fargo Investment Institute report cites the Bureau of Labor Statistics, which indicates that wages are starting to rise. That is driving consumer discretionary spending. For example, millennials spend about $2,200 annually on travel. That amount is expected to go up, as the generation enters its higher-earning years. However, about 34% of millennials have student debt of at least $20,000. The report says that 75% of those who have debt, consider it to be unmanageable.

Millennials are bringing other changes to the markets. The research shows that the evolution of social media and the ease of global communication means that younger generations will be more likely to invest overseas, especially to pursue social goals.

Baby boomers (ages 53 to 71) may also have to make some changes to their investments. Roughly 73% of baby boomers are investing for retirement, but many now think they may have to work a few extra years to have enough to retire comfortably. One consequence is that boomers may stay more involved in the stock market longer than in past generations.

According to the report, boomers may also be changing how people traditional behave when it comes to their investments during their later working years. The combination of a low interest rate economy and longer working lives, means that boomers will are more likely to stay invested in equities, rather than switching investments to bonds.

A dramatic uptick in health care spending is expected to hit the baby boom generation, who control more than 50% of the nation’s wealth.

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Planning for Assisted Living’s High Cost in New City, New York

There are steps you can take now to prepare for the cost of assisted living, which is only likely to increase in years to come.

The sad truth is, for most people, savings and Social Security checks simply won’t be enough to cover the cost of assisted living. Many people find themselves needing to combine several different sources, including the generosity of family members, the proceeds of the sale of the family home and, if it was purchased well in advance, a long-term care insurance policy.

Consumer Reports provides some helpful advice to help you afford assisted living in its recent article, “11 Ways to Afford the Assisted Living Care You Need.”

Life insurance. If you or your parent have been paying premiums on a whole or universal life policy for a decade or more and are comfortable leaving less to heirs, an option is to access the policy’s built-up cash value. If you borrow from the policy or withdraw your cost basis (the amount paid in premiums), there’s no tax owed. If you cash in the policy entirely, you’ll pay ordinary income tax on everything but the cost basis. You can withdraw up to your cost basis and borrow the rest.

Veterans Benefits. Veterans and veterans’ survivors eligible for a Veterans Affairs pension, could be eligible for an increase in monthly pension benefits (an enhanced or special monthly pension). There are specific requirements, as well as income and net worth limits, but the asset test is a somewhat subjective decision made by the person processing the application.

HELOC. Homeowners who want or need to keep a home in the family can apply for home equity loans or home equity lines of credit. Be aware of all the setup costs, fees for loan processing, origination, and underwriting, appraisals and document preparation.

Reverse Mortgage. Homeowners 62 and older may use this when only one spouse is entering assisted living. A reverse mortgage allows you to tap into your home equity for cash.

Assisted Living with Flexible Pricing. There are very expensive, all-inclusive pricing models that include all services—three meals a day, 24-hour on-call aides, and transportation in one price. There are also less costly “levels of care” or “tiered pricing” models.

Sidestep the Sizzle. Consider a residence housed in an older building or one with fewer beds. Remember that the shiny new facilities operated by big chains will offer more amenities—but at a cost.

Coverage Gaps. Did you know that you or your parent could be waiting six months for the payments from a long-term-care insurer to start? Therefore, you could be forced to cash in a CD early and your bank might waive the early withdrawal penalty for an urgent need, like assisted living care.  However, if they don’t help you, the penalty is minimal.

Writing Off the Cost of Care. There are tax benefits to high medical expenses. Deductible medical expenses include long-term care insurance premiums, as well as the cost of the medical services provided in the facility. Once the total medical expenses are more than 10% of your AGI, the remainder can be deducted from federal income taxes.

An experienced elder law attorney can help guide you or a loved one, to plan for what will occur, if and when assisted living care is needed.

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Does the Estate Tax Have a Future? in Yorktown Heights, New York

There’s no way to know how far Republicans will get with tax reform, but one thing is clear: no one likes the federal estate tax.
However, despite all of the fuss over the “death tax,” relatively few people actually end up paying the tax. Most people avoid it through savvy estate planning.
CNN Money’s recent article simply asks, “Will Republicans kill the estate tax?” The article reports that House Ways and Means Committee Chairman Kevin Brady calls it "un-American."
"You work your whole life to build up a nest egg or a family-owned business or family farm. Then you pass away ... Uncle Sam can swoop in and take over 40% of everything you've earned over a certain amount. It's just wrong," said Brady at an event promoting tax reform.
However, there are a few important details about the estate tax that should not be overlooked, specifically that the Congressional Budget Office projects the tax will raise between $25 billion and $34 billion a year over the next decade.
The tax currently affects only 0.2% of all estates. Only those estates worth more than $5.49 million this year ($10.98 million for married couples) are required to file estate tax returns and only half of those will be taxable after deductions and credits. The Tax Policy Center estimates that just over 11,000 estates will have to file a return in 2017, and only half will owe any federal tax.
In addition, very few family farms and businesses are affected. The Tax Policy Center estimates about 80 family-owned businesses and farms will need to pay any estate tax in 2017. The Congressional Research Service projects a higher number for any given year (about 159) but notes they represent fewer than 3% of taxable estates. In addition, there are estate tax law options that allow owners to significantly lower the value of a family business or farm for estate tax purposes.
No one can argue that there’s unfairness to a tax that is levied on money that you have already paid income or investment tax on, and then your family get taxed again.
A skilled estate planning attorney can help you use the available strategies to structure your estate so that more of it goes to your family or charitable organizations.
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