Category Archives: Heirs & Beneficiaries

What comes first on the ranch, business or family?

A family business does not need a lower Manhattan address but it frequently has to make some complicated decisions as to what comes first, business or family. One consultant, after working with contractual family transactions explains the common pitfalls ranch families make and how to translate these into success.

Since most ranching businesses live by ‘family first’ philosophies, there may not be a will or specifications on how the business operates. If the priority is to build an empire and lasting legacy, advisors stress putting some more casual family attitudes aside and focusing on the business at hand.

Behavior that is typically regarded as detrimental to the family business should be dealt with as any other non-family-based endeavor. A worker should not be entitled to a job in spite of poor work ethic, emotional instability, or addictions.

Experts advise that the operational plan of the family business should establish clear and evolving roles based on sound judgment, trust and training.

Senior members must be comfortable in their financial security as well as ensure the business will grow as a family operation. At the time of retirement, most advisors say about half the income should come from outside the business. Otherwise, micro management could become your scourge, especially if they are not meeting with your approval. Your business figures significantly in your retirement so financial precautions should be taken.

Youth can bring tremendous life to a family operation and senior members appreciate and utilize that energy through the cycle from labor to leadership, but this must preclude arrogance. Avoid pitfalls and plan an exit strategy, how this is to be carried out, who has the option to buy, how the business will be appraised along with a precise payout plan.

Transition of assets is critical and a process that takes time. Parents bequeathing a business to children should have conditional contingencies. Estate plans must include clear parameters for business ownership and transfer of management as well as when to buy and sell. The next in line should be privy to all your final wishes including documents, your final resting place, account access and what’s in your will.

Personal relationships make business a challenge, whether it’s on the ranch or in the family corner office. Honoring your heirs by honoring your business is a cycle through which the legacy is passed and production continues.

Source:Beef Magazine, “Is Your Ranching Operation Business First Or Family First?” Heather Hamilton-Maude, Dec. 30, 2013

Big mistakes you might be making in estate planning

Many people are diligent when thinking about what will happen to their assets and real estate after they are no longer with us. While it can be an indelicate topic, some of us are conscientious about doing estate planning that covers all the bases. Sometimes, we have more than we realize, including bank accounts, retirement plans from our jobs, brokerage annuities and college savings plans. All of these should have designated beneficiaries that are current, because if not, our money and things could go to the wrong people.

As time passes, our wishes change. Relationships come and go, we get married, divorced and even have falling-outs with friends and family. There are some common pitfalls it would be worthwhile to specifically outline in order to avoid headaches later.

First, it is beneficial to get advice on what your state of residence laws say regarding one’s spouses. In some states, the spouse automatically is the beneficiary; in others, assets sometimes go to the ex-spouse, which is not what you might want.

Job changes can also affect your pension plans. When you roll over your retirement funds, your beneficiary will no longer have access to them unless you name them on the new account. Perhaps our beneficiary passes before we do. Another caveat is that our financial institution may have changed ownership. In the merging of banks, brokerage firms and mutual funds groups, some institutions get rid of older accounts. This cleans house for them but is very bad for you.

It is advisable not to appoint a minor as a beneficiary, as this could get messy with appointing conservators until the minor comes of age. Another complication could be if your beneficiary becomes disabled, which could affect that person’s �countable resources’ from Social Security or other benefits. In both of these cases, the solution might be to form a trust. A financial planner can advise you on how to do this.

Lastly, think of February 14 as a time to review your beneficiaries and estate planning. You will have received your 1099, so you will be clear as to what your contact information and assets are at your financial institution. There is no better way to show your heirs that you will be giving them a precious gift in your memory for years to come.

Source:Forbes, “The Big Estate-Planning Goof You May Be Making” Harper Willis, Dec. 16, 2013

Furry feline beneficiary of home plus large inheritance

When the retired president of a local labor union passed away at age 79, he left his entire legacy to his best friend. The recipient of his $250,000 estate, and a house of over 4,000 square feet, will be well-provided for until the end of his life. The aging heir is almost blind, deaf and crippled. He is also a cat.

Along with his adopted brother, the kitty will be cared for by one of the deceased’s daughters, who has moved into the spacious residence to fulfill her father’s wishes. Both house cats, according to the last will and testament of the woman’s father, will stay in the home located in a gated community.

Reportedly, the woman’s brother who took his father’s place as the union’s president, claimed his late father had made up the will several weeks prior to being admitted to the hospital, after being diagnosed with cancer. The lucky cat will stay in his familiar surroundings, the only home he has ever known. The man says his father and the feline spent hours sitting on the sofa, a unique bond forming between them. Family members took the will’s terms in stride and promised to respect the father’s wishes. They speak fondly of their father, calling him an extraordinary individual who had put the well-being of others before his own. He was an exemplary labor leader and had marched for civil rights with Dr. Martin Luther King.

People work a lifetime to acquire wealth. An individual’s final wishes may designate some surprising beneficiaries, but one’s final wishes need to be respected and carried out, regardless of any eccentricities inherent in those decisions. The critical nature of making sure we have our affairs in order cannot be overestimated. The late labor president is not the first to prefer his pet over people when designating the heir of his choice. One Italian heiress left $13 million to her cat, and in 2007, Leona Helmsley left her Maltese $12 million. It is, after all, a right we have strived for our entire lives. Attorneys can help with the creation of such wills and ensure these important estate documents are carried out to the letter.

Source: commercialappeal.com, “Man’s bequest of home, $250,000 ensures cushy life for feline beneficiaries” No author given, Nov. 23, 2013

Dispute filed over assets left to local police officer

Concerns have been raised regarding disputes surrounding a late, elderly woman’s decision to leave almost $2 million to a local police officer. The woman’s last will and trust has been called into question, based on beliefs that she was not of sound mind when she initiated last minute changes in her estate.

Opposing legal advisors claim the elderly woman was befriended by a local police sergeant after he answered calls she made regarding an intruder in 2012. She had been diagnosed with dementia in 2010, but allegations suggest the law enforcement official had helped her to draft a new version of her last will, which included changes to her estate plan that benefited him.

Attorneys representing two leading cancer research facilities claimed they had previously been beneficiaries and were slated to receive a half a million dollars upon her death. Now, under the disputed changes, the facilities will receive only $80,000.

A hearing has been scheduled in probate court to discuss the dispute. The police officer has denied any charges of malfeasance on his part, stating he had only assumed the role of a friend with the old woman. He said that any changes to her estate planning were done by her acting alone. Although he claimed that she considered him closer than family, she excluded her own disabled grandson from her will. The grandson later testified that he believed his grandmother was mentally incompetent.

Additional named beneficiaries include local fire and police departments, as well as the school district. Several individuals and entities have come forward contesting the late changes to the will which resulted in their diminished roles as beneficiaries. The situation has been cited as an example of official public corruption.

Our society frequently isolates our elderly. We put them away into nursing homes or assisted living. Some elderly are not thought of until the time of their death when the will comes to light naming beneficiaries in the distribution of assets. At the end of the day, each person is responsible in naming those to benefit upon his or her demise, and ultimately up to the same individual to determine what should be done with his or her own assets and property.

Source: seacoastonline.com, “Legal arguments filed in cop’s inheritance dispute” Elizabeth Dinan, Nov. 16, 2013

Renewed hope for beneficiaries to claim lost or owed benefits

The Texas Department of Insurance is offering a new resource, called the Life Policy Locator Service, which can be immensely critical in helping those named as beneficiaries to claim what is rightly owed to them.

It has been common for confusion to result when a relative passes on and the designated beneficiary might not know the name of the insurance company issuing the policy or other binding agreement. This can result in unclaimed benefits for those entitled to claims. Now the executor can search for a lost annuity contract or insurance policy on the insurance website.

The department has stated it will take each request and forward it to the insurance companies who are licensed and participating in the program. They forward the requests up to thirty days from when the request is initiated. Companies will search their databases records to see if there is a policy in the name of the deceased. They then attempt to determine if the policy the person named is the beneficiary.

There are currently almost 30 insurance companies in the state of Texas who are voluntarily participating in the locator service. They have provided some tips to help locate a lost policy or contract for a beneficiary, including examining bank statements that track payments to life insurance companies. Checking other records is facilitated with the use of records and notes in smart phones.

According to law, if a policy’s beneficiaries are not located within three years, the insurance company must send the death benefit to the state as part of an unclaimed property fund. This, unfortunately, happens quite a bit so it is a good idea to stay current with records. In order to receive more information about this, it would be wise to go to the web page of the comptroller to study the area in which they list unclaimed property or benefits.

The death of a loved one can be heart-rending. Being able to carry out the final wishes of a family member or close friend who has designated a heir or beneficiary can be greatly facilitated by availing oneself of this new Texas insurance department law.

Source: timesrecordnews.com, “Think you’re an heir? Ask the state” No author given, Oct. 24, 2013

Revocable living trusts create protections for beneficiaries

Though old Hollywood likes to tell stories of individuals surprised to learn that they have inherited a fortune from a far-removed relative, the days of being in the dark about family finances and estate plans is slowly coming to an end. It is increasingly common for family matriarchs and patriarchs to involve their children and grandchildren into their estate planning. Though there are certainly benefits to being transparent about estate planning goals, it is important to remember that there may be some difficult and unpopular decisions ahead.

It is important to remember that estate planning is not a singular task, but a process. Perhaps a husband and wife first meet with their estate planning attorney alone to discuss their goals. In subsequent meetings, they may bring their children, or they may choose to have a financial planning meeting with their children before returning to their attorney. It is often too difficult to go into an attorney’s office for the first time and walk out with a viable and compelte estate plan.

One of the things that a family may need to discuss is just who will receive some kind of inheritance, or, as some people may see it, who is actually part of the family. There may not be many parents who are willing to deny their children an inheritance, but what about their spouses? Some matriarchs and patriarchs will include spouses, especially if there are grandchildren involved. Others won’t, possibly fearful of a divorce.

Ultimately, families may have a lot to discuss when it comes to estate planning, and it may make more sense to include all relevant parties, not just the heads of the family.

Source:Reuters, “YOUR PRACTICE-Who is family when it comes to estate planning?” Beth Pinsker, Oct. 29, 2013

Texas Department of Insurance can clear up beneficiary questions

If someone in Texas has wisely worked with an attorney to plan for what happens in the event of death, his or her heirs will have clear guidance about what they will receive, as well as to what the individual’s estate includes. Sometimes, however, it is not entirely clear who is supposed to get what or even what comprises the loved one’s estate. When someone has failed to create an estate plan, individuals who think they may be beneficiaries of a life insurance plan may wish to consult the Texas Department of Insurance.

The department has recently launched a new program called the Life Policy Locator Service, which helps individuals determine whether they are beneficiaries of someone’s life insurance policy or annuity. The program is currently only working with Texas insurance companies, but it could spread to other states if it is successful.

If someone believes he or she should have gotten some or all of the benefits from a life insurance policy when a friend or family member died, he or she can fill out a search request form off of the Texas Department of Insurance’s website. Within 30 days, the department will respond with any relevant information. Currently, there are 28 insurance companies participating.

One sign that there may be a life insurance policy to look into are regular payments to life insurance companies. Moreover, many people purchase life insurance through their work, so contacting an individuals’ employer after his or her death may uncover some information.

Granted, the best way to avoid this hassle is to encourage all family members to carefully create an estate plan that clearly lays out who is to receive what in the event of death.

Source:Times Record News, “Think you’re an heir? Ask the state,” Oct. 24, 2013

Hudson News family in court over patriarch’s final will

Anyone in El Paso who has done much traveling has probably come across a Hudson News stand on his or her journeys. With stands across the country, the man behind Hudson News was worth over $805 million when he died five years ago. It was after his death, however, that things started to unravel for the family members of the late Robert Cohen.

According to Cohen’s final will, his son was to inherit $600 million, the bulk of the estate. Cohen’s granddaughter, however, the only child of his only daughter, received only a small inheritance. She is now accusing her uncle of using undue influence on her grandfather to get a larger slice of the estate.

There is more to making a will than just spelling out who will get what. Whenever someone in Texas wishes to make a will, he or she must have the capacity to do so. This means that the individual is of sound mind and that no one has been pressuring him or her into making certain bequests. If an estate litigation can prove that the will was created without the necessary capacity or that there was undue influence, the court may throw the will out, greatly changing some inheritances.

While Cohen’s granddaughter is arguing that her uncle was using undue influence to increase his inheritance, the uncle has argued that there was nothing improper about Cohen’s changes to his will. In fact, a judge had previously determined that Cohen was indeed competent when his will and, thus, the will should stand as it is.

This estate litigation has already lasted five years and it is expected that the trial could go through next month.

Source:The Bergen Record, “Pretrial motions heard in billionaire Perelman-Cohen family feud,” Kibret Markos, Sept. 18, 2013

Update wills after major life events to keep estate plan current

Earlier in the week we talked about how estate planning is a continuous process and that it is important to reexamine the various vehicles that make up your estate plan. In the same vein, making a will once may not be sufficient to clearly communicate your wishes. Say, for example, you made a will right after you graduated from college, leaving half of your estate to a sibling and half to a girl- or boyfriend. If you don’t touch that will again it will be the controlling will at the time of your death. Imagine if half of your estate went to a man or woman you haven’t dated since you were in your 20s while your spouse and children were left with little to nothing.

After major life events, like entering a long-term relationship, marriage or having children, it is important that people in Odessa take a look at estate planning documents. Since no one knows when he or she will die, it is crucial that updating a will doesn’t get put off until it is too late.

Unfortunately for one man, he never took the time to update his will, which means that when he died earlier this year, his will from 1990 controlled how his estate was divided. This would have been fine, except it disinherited his partner with whom he had been living since 1995. While this happened in Washington, D.C., there are many same-sex couples in Texas who could be in similar situations if they don’t update their wills.

The man’s siblings received his $819,000 estate while it appears that his partner has received nothing.

Source:ABA Journal. “Gay man asks DC court to declare him common-law husband of deceased partner,” Mark Hansen, Aug. 20, 2013

Same-sex spouse inherits after Defense of Marriage Act falls

There are likely mixed emotions in El Paso about the Supreme Court of the United States’s decision earlier this summer to strike down a clause in the federal Defense of Marriage Act that denied federal recognition of same-sex marriage. Regardless of how you feel about it, it has had a serious impact in the field of estate planning and estate litigation. Today’s story is just one such example of the changes that may be coming to Texas.

After a same-sex couple married in Canada in 2006, they returned to the United States, but one of the spouses learned that she had cancer. Four years later in 2010, the woman died, starting a long battle for her law firm’s profit-sharing plan. The woman’s wife and her parents both claimed the $49,000, but a judge eventually ruled that the money belonged to the woman’s wife after part of the Defense of Marriage Act was struck down.

While this story did not happen in Texas, employee benefits that fall under the Employee Retirement Income Security Act (as this woman’s did) are governed by federal law. This means that same-sex spouses in Texas that were married in a jurisdiction that recognizes same-sex marriage will be the automatic beneficiaries of these kinds of benefits. Granted, any benefits controlled by state law will continue to operate under the premise that same-sex spouses are not married.

The judge deciding the case cited the Supreme Court case that ultimately brought down the Defense of Marriage Act, saying that it was clear the women were married in the eyes of the federal government.

Source:Philadelphia Post-Inquirer, “Judge awards late lawyer’s benefits to lesbian spouse,” Joseph A. Slobodzian, July 31, 2013