Category Archives: Estate Administration

Virtual divorce in Texas: Who gets the farm?

When Ben Franklin left over 400 diamonds to his daughter in his will over two hundred years ago, no one could imagine it might be setting a precedent for probate and estate planning in Texas in 2014. The Age of Technology is upon us, and it has affected every aspect of our lives, including the laws pertaining to inheritances, will planning and probate.

Today, divorce agreements often include digital and virtual assets. A digital asset might be an electronic book or piece of music, a movie, blog, Web site, domain name or other intangible wealth. Domain names belonging to Facebook or real estate may come with million dollar price tags. was purchased for $4 million under two years ago.

A virtual asset is different from a digital asset. Like digital assets, these are intangibles and have no physical form. Avatars, online possessions or even land on a virtual farm are considered virtual assets. They are a massive financial endeavor, enhanced by widely-popular online computer games with virtual players from all over the globe.

A recent study in Forbes magazine reports that virtual assets have limitless movement in the online world, which has translated into business transactions in the physical world. In the U.S. alone, virtual buying and selling is in the billions and growing. Purchases can be traded or converted to real dollars in the physical world.

Digital and virtual assets must be considered in a divorce, whether they are categorized as separate or community property. A court decision can determine community property, but separate property gets more complicated. An individual must be able to prove virtual or digital property is a separate item with an assigned value. Will planning in the 21st century has to include the distribution of digital or virtual assets to heirs and beneficiaries.

Ben Franklin could never have imagined how the times would change as he pondered passing on his diamonds to his next of kin. Now, more than ever, here in Texas or in other states, we must integrate sound estate planning in leaving assets to our beneficiaries. As the world changes around us, so do the laws surrounding the value we leave behind. It is in our best interests to keep up with these changes.

Source:Allen Publications, “WHAT!? My Spouse Can Get my iTunes and My Virtual Farm?” No author given, Mar. 21, 2014

Death of family member offers financial lessons for Texans

Until death of a loved one occurs, the average American family just doesn’t want to think about it. When it inevitably darkens our door, we seek help from an estate planner.

In one family, the mother passed away after a long illness. The father had been diligently taking care of the financial matters accumulated in their twilight years. It took the gentleman about six months to finish the financial tasks and paper work settling his wife’s estate. He discovered the funeral home sends out a death notice to the Social Security Administration. This stops all social security checks. The SSA will send a death benefit check of $225, but you have to request it.

Filing for a lump sum benefit is fairly simple if one follows the steps. In this case, the husband went to his local SSA office and saw the lines extending twice around the building. Instead, he opted to call and was informed him it would be a 40-minute wait to speak to a live person. He waited and learned that he could file for the death benefit by mailing a copy of the death certificate, marriage license and his birth certificate to SSA. He could also set up an appointment and bring the documents into the office. He was in and out of the place in less than 30 minutes.

Another obstacle was with the car insurance. When the gentleman called to remove his wife’s name from the policy, the company tried to charge him $200. So, he got three new auto quotes and chose the lowest one. Don’t accept rate increases as a penalty for a death.

The third problem that arose was a credit card in the wife’s name. The husband had been an add-on account holder. Although the gentleman called the company to request having his wife’s name removed, the company canceled the card and turned it over to collection without providing the opportunity for payment.

The ensuing nightmare included recurring monthly charges and numerous collection agencies. According to one spokesperson for the American Collectors Association International, this is nothing new. The man asked for the bill, confirmed the charges and paid them.

There are some very simple procedures to follow if you plan accordingly for your distribution of assets, so your heirs won’t have to. The death of a loved one is never easy but there are ways to make the end of one’s financial path an easier one.

Source: Star-Telegram, “Mother’s death offers lessons for managing affairs after a loved one passes” Teresa McUsic, Jan. 10, 2014

Estate planning and administration: this is a team sport

When someone in El Paso wants to create a will or trust, he or she will likely turn to a lawyer for help. It makes sense, lawyers know how to protect estates and to pass them along to the correct heirs and beneficiaries. Estate planning lawyers also know about the taxes, fees and other costs associated with estate planning and administration, yet many of them need to work with appraisers to select the proper estate tools.

An appraiser’s job is to estimate the worth of an estate, but since appraisers may be called in long before a person dies, they can only make a reasonable estimate as to what the estate will be at the person’s death. For some people in Texas, however, the value of an individual’s estate may also increase after death, which a skilled appraiser should be able to recognize.

One case of the value of an estate increasing over time is that of Michael Jackson’s. At the time of his death, he was just getting over allegations of child molestation and he hadn’t had a successful record in a while. After he died, however, his music started selling again and any mistakes he may have made were forgotten. Jackson’s estate continues to earn money, over four years after his death.

The biggest reason behind having an accurate appraisal of an estate is that an estate administrator can provide an accurate estimate of how much an heir or beneficiary must pay in taxes and fees following a loved one’s death.

Source:The New York Times, “Putting an Estate Value on the Assets Unique to You,” Paul Sullivan, Sept. 27, 2013

Jim Thorpe’s burial remains at issue 60 years after his death

When many of us in Odessa think about what dying without a will might mean, we often don’t think about possible litigation over our remains, yet this is exactly what is happening to Jim Thorpe 60 years after his death. Thorpe, one of the most famous Native American athletes in our country’s history, died in 1953, but he died without a will. Although it appears that his surviving family members are not fighting about his estate or his money, they are fighting about the best possible place for his remains.

Thorpe was going to be buried in Oklahoma, where he was originally from, yet his widow had his body sent to Pennsylvania in the middle of his funeral service. The town she chose agreed to rename itself after Thorpe, as well as build a memorial for the famed athlete.

Had Thorpe died with a valid will, however, he could have clearly indicated what he wanted after his death. He could have listed where he wanted to be buried and what sort of memorial, if any, should be built. Without a will, his funeral service, burial and memorial were all dependent on what others claimed he wanted. For Texans looking to have some control over where they are buried, including that information in a will is quite important.

Yet, because Thorpe did not record his wishes in a will, his family is continuing to fight about where he should be buried. His sons are fighting to have his body moved back to Native American land in Oklahoma and a federal judge has recently ruled in favor of the sons.

The town in which Thorpe is currently interred has filed an appeal.

Source:The Pike County Courier, “Pa. town appeals to keep body of Jim Thorpe,” Michael Rubinkam, Sept. 24, 2013

Michael Jackson’s estate faces long battle in tax court

It has been several years since Michael Jakson’s death, yet his estate continues to have trouble. Anyone in El Paso who has been following the story knows that the Jackson estate has been battling with the Internal Revenue Service over just how much the estate owes in estate taxes. An important part of estate administration is determining how much the estate is worth and then paying the relevant estate taxes. Jackson’s estate is arguing that it did that, but the IRS has accused it of undervaluing the estate and, thus, failing to pay the correct amount of estate taxes.

The IRS has just filed an answer to the estate’s petition, saying the estate should have paid $700 million more in estate taxes than it already has.

So where does this gap come from? Apparently the Jackson estate claimed that his estate was only worth $9 million after all debts had been settled and the estate tax exemption was subtracted from his gross estate, but the IRS believed his taxable estate to be well over $400 million. At a tax rate of 45 percent, that would create quite a substantial estate tax burden.

While not many people in El Paso are having to deal with $700 million in estate taxes, there is an important lesson here: estate administration does not end within a few months after death. For some estates the problem may be heirs questioning a will, for others it will be a matter of settling debts and paying estate taxes. Regardless, having a lawyer in charge of estate administration will likely help to simplify some of the problems awaiting an estate after its owner’s death.

Source:Forbes, “IRS to Michael Jackson’s Estate: Who’s Bad?” Kelly Phillips Erb, Aug. 26, 2013

Proper estate planning includes discussion of taxes

This blog has frequently mentioned estate taxes, but we cannot stress enough how important it is to talk to an estate planning lawyer about these taxes when making important end-of-life decisions. Although any estate planning attorney in Culberson County can help you make a will, only an experienced one will fully brief you on estate taxes and how they may effect your loved ones. As one individual in the will and estate field says, “There’s nothing worse than being in your worst grieving moments and having to deal with financial chaos.”

One of the problems that many Texans don’t consider is that different vehicles are taxed differently. Imagine someone leaving roughly the same amount to his or her two children, but in vastly different forms. One may be subject to various taxes, while the other is not, leaving one child with far less than his or her sibling. Though the intent was to leave both children the same amount, a shoddy will or an inattentive estate planning attorney may not catch what will surely be a disappointing result.

Another big problem is the fact that many people die after having failed to pay their taxes for a few years. When you are older, ill, hospitalized or living in a nursing home, you may not think about taxes or even filing for an extension. While the Internal Revenue Service may not catch you right away, when your estate is distributed to your beneficaries, it certainly will take unpaid taxes out. To have to deal with the IRS and taxes while coming to terms with the loss of a loved one can be too much to bear.

Wise estate planning, however, will do a better job of addressing these tax issues up front and incorporating them into the will and estate plan.

Source:Chicago Tribune, “Plan now to avoid inheriting a tax mess,” Amy Feldman, Aug. 8, 2013

Can charitable giving help avoid conflict for your heirs?

As we’ve discussed in the past, one of the important parts of estate planning is helping family to avoid conflict after you pass away. It is a difficult time for any family, and a good estate plan can offer guidance and make the process of settling unresolved affairs much easier.

If avoiding conflict and finding a meaningful way to create a legacy is the goal, then Texas residents may want to consider a plan that involves giving assets to charity. This is one way to establish realistic expectations about the future and set a good example for future generations.

Focusing on philanthropy is the approach of many notable individuals from Bill Gates to Warren Buffet. The two businessmen have repeatedly publicised their plans to give away a majority of their wealth to charity while encouraging their family to work hard and make their own contributions. In fact, many help give younger generations a sense of purpose and importance by establishing a family foundation where everyone works together to help the community.

There is certainly no one-size fits all approach to estate planning, but making a proactive plan to avoid conflict is advisable in many situations. Setting up trusts during life and allocating funds to different causes using a will is one way to make sure that everyone in the family understands what they are getting without concern about dividing it up themselves. The important thing, as always, is to have a detailed plan and properly executed documents to avoid confusion or a prolonged probate process.

Source:CNBC, “Smartest Decision Ever Made by Bill Gates, Warren Buffett,” Constance Gustke, June 3, 2013

Including important details in your estate plan

At the most basic level, estate planning is about having the power to decide what happens to assets after you pass away. There are many people for whom this is not a major concern, perhaps because they have a small family with good relationships or perhaps because they don’t believe that they have enough wealth to justify creating an estate plan. However, when you take a closer look it is easy to see that even people in these types of situations have reasons to create an estate plan, one of which is to make life easier for friends and family.

Beyond worrying about whether children will be happy with what they are given by a will or a trust, when these documents are properly executed they create certainty. Estate planning documents also provide helpful information that friends and family may not know about finances, such as what sorts of debts you hold and whether or not there is still a mortgage on your home.

Leaving behind information about debts and obligations is equally as important as leaving behind firm plans for how to deal with assets. For example, family members who are not aware of a second mortgage or a car loan may not be able to find the correct information in time to stop a repossession or foreclosure, therefore unnecessarily forfeiting an asset or at least losing time and money to the legal process to retain it. Creating a detailed plan so that necessary information is available is relevant for people in many different financial situations.

Source:New York Times, “The Talk You Didn’t Have With Your Parents Could Cost You,” Tara Seigel Bernard, May 24, 2013.