A Billion Dollar Will Contest Looms in China

One of China's wealthiest men recently passed away at the age of 93. He left behind a will that gave almost all of his assets to charity. His sons are contesting the will.

Hong Kong real estate magnate Yu Pengnian passed away with a fortune believed to be worth US$1.55 billion. Throughout his life, Pengnian gave generously to charity. He created a will that would continue that charitable giving.

All of his assets, except for the contents of two safes given to his grandsons, were directed by will to go to a charitable foundation. His two sons were left nothing in the will. Those sons have filed will caveats with the probate court overseeing the will, which is essentially filing the same thing as a notice of intent to challenge the will.

Ejinsight reported this story in "Heirs gird for court battle over late billionaire's fortune."

It is possible that we will see many similar will contests all over the world in the coming decades as a recent trend has seen the extremely wealthy pledge to leave at least half of their estates to charitable causes. With billions of dollars at stake, it should come as no surprise that the families of these wealthy philanthropists might not always be pleased with giving so much away to charity.

By giving all of his money to charity and leaving nothing for his sons, Yu Pengnian might have made an avoidable mistake. It might have been better to leave something of value to his sons and include a no-contest clause in the will.

Even if there is a no-contest clause in Pengnian's will, which is unknown, it would not have stopped the sons from contesting the will as they receive nothing from it now. On the other hand, if they succeed in challenging the validity of the will, then they will each receive half of the assets of the estate.

If you have questions about Charitable Gift Planning in Orange County, please visit our website at www.OCElderLaw.com or contact one of our attorneys for a private consultation.  We can be reached at 714-525-4600.

Reference: Ejinsight (Dec. 10, 2015) "Heirs gird for court battle over late billionaire's fortune."

Death, There's an App for That Too

When iPhones first came on the market Apple marketed them with the line "There's an app for that." The idea was that there was an app for anything you could possibly want to do. However, there was not, at the time, an app to plan for your own demise. Now there is.

We all know that someday we will pass away. Yet, most people do not plan for that to happen.

Most people do not have funeral plans. They do not have estate plans. They do not even discuss with anyone what they would like to happen after they pass away.

The makers of the new app Cake are betting that if they make planning easy to do from a mobile device that more people will make plans.

The app asks users a series of questions about what they want to happen after they pass away. By paying $99 a year, users' answers to those questions will be given to a personal consultant who will assist friends and family with fulfilling the wishes of app users after those users pass away.

Inverse reported on this new app in "Death Planning App Cake Will Let You Swipe Right on Funeral Decisions."

This app might be a good first step to get people thinking about and planning for what will happen after they pass away. However, that is all that it is: a first step.

Proper planning requires a proper estate plan.

That is not something that can be done by answering a series of standard questions and giving the answers to a personal assistant. It requires the ongoing advice and expertise of an estate planning attorney who can create the necessary legal documents and make sure that changes are made to those documents when appropriate.

If you are interested in the Cake app, make sure that you use it as a first step and not a final one in your planning.  For more information on Estate Planning call OC Elder Law at 714-525-4600, or visit our website at www.OCElderLaw.com for more information

Reference: Inverse (Dec. 3, 2015) "Death Planning App Cake Will Let You Swipe Right on Funeral Decisions."

Another Reason to Avoid Probate

Judges are supposed to be impartial and not allow any personal issues to get in the way with the fair administration of justice. One probate judge in Maine illustrates that is not always what actually happens.

York County Probate Judge Robert M.A. Nadeau wanted a substantial raise. In Maine the salaries of elected probate judges are set by the local county commissioners. Judge Nadeau was working two days a week for an annual salary of $48,499.

He requested that he be given a three-day workweek for a salary of $90,000 or a four-day workweek for a salary of $120,000.

The county commission refused his request but did give him a raise to $54,206 and kept his schedule at two days per week.

This did not please the judge.

He almost immediately changed his schedule from working Wednesdays and Thursdays to working Mondays and Fridays so he could receive more paid holidays off. He also blocked out large portions of his time during those workdays for duties that did not include hearing cases.

The result was that probate cases in his court nearly ground to a halt.

At the same time, Judge Nadeau is facing possible disciplinary action by the state’s supreme court for other possible improper behavior. This is not the first time that Judge Nadeau has been charged with acting improperly.

You can read more about this in the Portland Press Herald’s original story “Judge denied big pay raise retaliated by causing backlog, York County officials say.”

This is obviously an extreme case. Most judges do not engage in this type of petty retaliation for not getting their way. However, it is important to note that all judges are human beings who do bring their own personal issues with them, even though they try to suppress those issues when ruling on a case before them.

Usually, you can avoid this problem for your estate by creating an estate plan that avoids probate entirely. Why take the risk that your estate will get the wrong judge when you can easily avoid it?

For more information on how to avoid probate in California, call OC Elder Law at 714-525-4600, or visit our website at www.OCElderLaw.com.

Reference: Portland Press Herald (Nov. 9, 2015) “Judge denied big pay raise retaliated by causing backlog, York County officials say.”

Attorney Charged With Theft in Louisiana Estate Case

A feud that began with a bitter child custody battle might have led to one of the attorneys in the case being charged with falsifying a will and theft.

Louisiana attorney Michael Cox represented Michael Davisson in a custody battle against Davisson's ex-wife and her new husband Chris Broussard. The case resulted in Davisson losing and the ex-wife receiving sole custody of Davisson's only child, Jordan Davisson.

According to Cox, Michael Davisson despised Broussard so much that he became estranged from his son and cut the son out of his will to make sure that Broussard got nothing from him. When Davisson was terminally ill, he gave power of attorney to Cox's wife. A will was also created that left Davisson's entire estate to Cox and his wife.

Authorities allege, however, that Cox and his wife were actually using the power of attorney to steal from Davisson while he was in the hospital.

Davisson might have grown wise to this scheme before he passed away. Cox and his wife sold Davisson's two homes for cash. After learning of this, Davisson called Chris Broussard, the man Cox claims Davisson hated, for help as Broussard is also an attorney. KTBS reported on this story in ""I truly do hate him." Sole heir speaks out on arrest of attorney, wife in theft case."

The judge in the case threw out the will and nullified the sale of the homes. One reason for doing so was that Cox notarized all the documents and he is not a notary. Cox and his wife have been criminally charged. If convicted, Cox will undoubtedly face discipline from the state Bar.

If you have questions about a durable power of attorney or securing your assets for the future, please call OC Elder Law for an in depth analysis on your estate, and how to protect it. Our Estate Planning Attorneys can be reached at 714-525-4600 Monday through Friday, or visit our website at www.OCElderLaw.com.

Reference: KTBS (Nov. 25, 2015) ""I truly do hate him." Sole heir speaks out on arrest of attorney, wife in theft case."

Estate Planning Options for Your Pets

Increasingly people are making provisions in their estate plans for their pets. If you would like to do the same, then you have a few options for how to do it.

In the past people gave little thought to what might happen to their pets after they passed away. It certainly was not common to provide ways for pets to continue receiving care in estate plans.

Today, however, pets are increasingly being viewed as important family members that need to be provided for in estate plans along with human relatives.

Time recently published an article on this phenomenon entitled "How to Make Sure Your Pet Is Cared for When You Die."

The article mentions three ways to provide for a pet in your estate plan:

·        Will Beneficiary – In your will you can name someone to inherit your pet and leave them money to care for the animal. This can be a little problematic as there is no way to guarantee that the person will use the funds to care for your pet, so only do this if you are certain the person will love your pet as much as you do.

·        Will Trust – You can create a trust in your will and leave funds for the trust to care for your pet. In every state except Minnesota this will create a trust. A probate court will designate a trustee and caretaker for your pet to see that your pet is cared for.

·        Traditional Trust – You can create a trust and fund it with the assets necessary for your pet's care. It is common to appoint as trustee the person who will also be the pet's caregiver, but it is not necessary.

If you would like more information about providing for your pet after you pass away, speak with an estate planning attorney about the above options.

Reference: Time (Nov. 18, 2015) "How to Make Sure Your Pet Is Cared for When You Die."

Preventing Long Term Care Policy Lapses in California

Long term care in a nursing home is extremely expensive. One way to mitigate that expense is to purchase a long term care insurance policy. Unfortunately, many of the people most in need of long term care insurance let their policies lapse before they need them.

Planning for end-of-life medical care often goes hand-in-hand with estate planning. An estate plan is useless if nursing home costs eat up all of your savings as there will be no assets left for your heirs to inherit through the estate plan.

For this reason it is important to decide how you will pay for nursing home care should you ever need it.

Long term care insurance policies are a popular and effective solution. However, more than a third of the people who purchase long term care policies let them lapse before they need them to pay for nursing home expenses.

Most of the time people do not intentionally let the policies lapse. Instead, they simply forget to pay the premiums.

This may not happen out of ordinary forgetfulness but may happen because as we age we often start to suffer from cognitive impairments.

Unfortunately, the people who suffer from the cognitive impairments that would make them forget to pay the insurance premiums are the very same people who are most likely to need long term care in a nursing home.

Next Avenue reported on this problem in "How Long-Term Care Insurance Policies Backfire."

The article does point out a potential solution to this problem. It is possible to have the insurance policy statements sent to a trusted third party who can make sure that the premiums are paid.

However, if this is going to work as an anti-lapse strategy, it needs to be done when the policy is first purchased rather than risking forgetfulness later in life. Call OC Elder Law at 714-525-4600 for any questions about Long Term Care and Long Term Planning in Orange County, CA, or visit our website at www.OCElderLaw.com for more information.

Reference: Next Avenue (Nov. 6, 2015) "How Long-Term Care Insurance Policies Backfire."

What Do The Uber-Wealthy Do with Their Money?

Art makes up 2.5 percent of the biggest estates and just 0.6 percent of those who had between $10 million and $20 million. A Picasso fetched more than $95 million in 2006. The superrich are different from the very, very rich. For one thing, they own more art. Estate tax data recently released by the Internal Revenue Service show what the wealthiest Americans possess when they die—and where the money goes.

In The Wall Street Journal's "When the Superrich Die, Here's What's in Their Wallets," reported that the estate tax returns in the data sample were all filed in 2014, so they came from the estates of people who died in 2013 (the estate tax applied to estates of individuals over $5.25 million and a top rate of 40%). Estates can deduct charitable contributions and bequests to surviving spouses, who then pay when they pass away.

The most important thing to remember about the estate tax is that it really doesn't apply to most folks, just to a few of the very rich. Congress increased the exemption and indexed it to inflation, ensuring that almost all of the 2.6 million people a year who die in the U.S. need not worry about estate tax. That leaves just the very wealthiest in the country.

Fewer than 12,000 estate tax returns were filed in 2014—more than 50% of those didn't yield any tax for the federal government.

The data showed that the uber-wealthy don't provide much information about the ways they shift assets out of their ownership or the planning maneuvers that can decrease the size of estates prior to death. Those who died with more than $50 million (the top tier) were heavily invested in stock and closely held businesses.

Those who were rich enough to file an estate tax return–but not at the very top–relied much more heavily on retirement accounts like 401k's and real estate. The types of assets change as people get wealthier. The merely rich have houses, cash, farms and retirement accounts. The very rich have bonds and real estate. But the very, very rich own art and stocks of businesses which they often want to pass to future generations.

The richest people pass on smaller shares of their estates to their heirs and it's not merely due to the fact that more of their wealth is subject to taxation. They tend to have bigger debts and make bigger charitable contributions. Charities collected $18.4 billion from bequests from the returns filed in 2014, with 58% of that coming from just 1.4% of estate tax returns.

Whether you're "uber-rich" or just getting by, you can truly benefit from a discussion with a qualified tax and estate planning attorney in Orange County.  Call 714-525-4600 for a confidential consultation about your specific tax and estate planning needs.

Reference: Wall Street Journal (October 30, 2015) "When the Superrich Die, Here's What's in Their Wallets"

California Court Upholds Trust that Gives Millions to Lady's Gardener

A Sonoma County bank overseeing the trust of a wealthy Kentfield divorcee who left a large chunk of her $8.5 million estate to her gardener and other non-family members will be allowed to dip into the fund to defend challenges from the woman's daughter. That's the published opinion of the state Court of Appeals in a decision that upholds parental rights to bequeath their money to anyone they choose. In the case, Santa Rosa-based Exchange Bank was sued by Susan Doolittle of San Francisco, who alleges her mother was manipulated into giving a quarter of her estate to the gardener, Juan Ramon Amador of San Rafael. She argued payments to the bank's lawyers must be stopped until she has a chance to prove allegations of elder financial abuse.

The Press Democrat in Santa Rosa, CA says that a three-judge panel rejected a daughter's argument against her mother's leaving a large sum to her gardener, holding that there wasn't a legal basis for halting payments of bank lawyer fees. Without ruling on the merits of her elder abuse claims, the Court of Appeals ordered that the mother's written instructions to defend her trust must be carried out.

"If a parent truly wants to leave something to someone who is not their natural heir, they can provide for the defense of that gift in the event the heirs attack it," Santa Rosa attorney Lewis Warren told the paper in its article, "Big legal fight after Kentfield woman leaves part of $8.5M estate to gardener." Warren represents the bank.

Doolittle is suing the gardener and Exchange Bank, claiming that her mother, Constance Doolittle, was suffering dementia when she hired Amador in 2004 to maintain her landscaping. In the lawsuit, the daughter says that he tricked Constance into thinking he had affections for her and convinced her to add him to her will, as well as to spend tens of thousands of dollars investing in coffee plantations in his home country of Nicaragua. If the trust is carried out, the gardener will get about $3 million.

Constance decreased the inheritances of her two daughters to $500,000 each and made Exchange Bank her trustee. The daughters were estranged from their mother, and Constance envisioned attacks on her competence, so she had herself examined by a psychologist. That doctor determined she had sufficient mental capacity to make financial decisions, and she had signed documents from an estate planning attorney who confirmed her decisions were not the product of fraud.

She died in February 2014, and her daughter sued a few months later.

"Connie obviously anticipated the possibility of a challenge after her death and there is no logical reason why she would have wanted her representatives to be compensated less generously," than before she died, the judge wrote.

That was super smart, and something you should discuss with a qualified estate planning attorney.

Reference: The (Santa Rosa, CA) Press Democrat (October 23, 2015) "Big legal fight after Kentfield woman leaves part of $8.5M estate to gardener"

Don't Let a Perfect Storm Ruin Your Plans for the Family Farm

In February of 1959, rock and roll musicians Buddy Holly, Ritchie Valens and J.P. "The Big Bopper" Richardson were killed when a plane Holly chartered at the last minute crashed near Clear Lake, Iowa. The event later became known as "the day the music died." Richardson had the flu and talked Waylon Jennings into giving up his seat on the plane. Valens won a coin toss with Tommy Allsup for the last seat. The timing of these two fateful actions altered the course of history for these men and their families. My first memory of playing musical chairs was in kindergarten. Our elementary music teacher taught us not only about music but also unknowingly about competition. When the music stopped, the goal of the game was to be in a position to grab the chair and not be left standing, alone and out of the game. We were taught the "Golden Rule" — to be nice to classmates — but at the same time, the game instilled a conflicting desire to grab that last open chair from a fellow 6-year-old who may not have been quite as quick on the draw. There is a perfect storm brewing in agriculture — specifically regarding transition of assets from one generation to the next. The timing of this perfect storm could be catastrophic for a family farm.

Factors included in this perfect storm include the quantity of farms owned by the older age group, as well as the psychological and emotional issues involved with trying to keep a family institution thriving and in the family. Couple these issues with the amount of capital investment required to continue the farm and the uncertainty of when things will happen, and your farm operation could be in trouble. You need a complete plan, says an article in the Iowa Farmer Today, "Discuss farm estate and succession plans now so no heir is 'left standing.'"

The article advises every farm family to create and review an estate plan and a farm succession plan. These two plans may overlap, but they are two different programs. The estate plan includes documents such as a will or trust, powers of attorney, farm continuation language, executors, trustees, distribution plans, and the age of distribution for minor beneficiaries, as well as contingency plans in the event a beneficiary has predeceased or is disabled at the time of your death. The estate plan includes the coordination of beneficiary designations of retirement plans and life insurance. An important point is to maintain liquidity to pay debts, taxes, or administration costs. This may not be accomplished by simply naming your children as beneficiaries, as many do.

A farm succession plan typically includes the business operating agreements, terms of future purchase, the terms for lease if not purchased, and limitations on ownership. Which of the parts of an estate and farm succession plan will be most important to your family will depend on the timing and what stops the music in the estate.

A key part of any estate plan is identifying ownership and an updated fair market value of the estate assets.

Many folks think that an estate plan just deals with the distribution of assets at death. But an estate plan should identify and discuss strategies for the distribution of any assets that could or should be distributed prior to your death, in addition to those distributed when you pass away.

A good estate plan not only identifies assets but sets out a timeline to distribute those assets with a process that is tax efficient, while keeping in mind the general goals of the estate.

Sharing plans for your estate and business succession is critical for the effective and efficient transfer of the operation. You can avoid some hurt feelings and selfishness down the road if you explain your goals and transparently deal with the heirs whose ideas of distributing your estate may not be the same as yours.

A critical aspect of a succession plan is to identify the method of pricing the assets that adequately represents not only the structure of the business but also the goals of the owner. Another important component of a complete plan is a source of funding when the transition occurs, such as a loan or insurance if the buyout would occur at death. Cash flow is essential for any viable business.

Business succession and estate planning is more of an art than a science. Although there are parts of each plan that are consistent, the real value of an estate and a business succession plan is recognizing the unique issues of each individual situation. There's no "boiler-plate" plan that will work and should be automatically used for every family business. You need to find a way to create plans that fit your distinctive goals.

Sometimes being involved in a farm business without a concrete estate and farm succession plan can be a little bit like playing the game of musical chairs: when the music stops in your estate, don't let your farm heir be the one left standing with uncertainty and confusion—and ultimately find themselves out of the game.

Reference: Iowa Farmer Today (October 16, 2015) "Discuss farm estate and succession plans now so no heir is 'left standing'"