The Slayer Statute in the News Again
Teen allegedly murders mom; mom was affluent; teen charged with murder; teen is poor but retains defense team; asks trustee, who is teen\’s brother for legal expense funds; brother says no; through lawyers teen sues estate to pay legal defense fees. Question: Will teen prevail in lawsuit? According to Illinois\’s slayer statute, it depends. The plain language of the statute provides that one cannot profit from causing another person\’s death: A person who intentionally and unjustifiably causes the death of another shall not receive any property, benefit, or other interest by reason of the death, whether as heir, legatee, beneficiary, joint tenant, survivor, appointee or in any other capacity and whether the property, benefit, or other interest passes pursuant to any form of title registration, testamentary or nontestamentary instrument, intestacy, renunciation, or any other circumstance. The property, benefit, or other interest shall pass as if the person causing the death died before the decedent, provided that with respect to joint tenancy property the interest possessed prior to the death by the person causing the death shall not be However, the operative word in the statute is \”causes.\” This means that the person must be first convicted of knowingly, without legal justification, killing another human being. Ms. Mack hasn\’t been convicted yet. So what may happen? The court may tell defense to bill but don\’t even think about collecting until the jury is in. The next issue is then whether Ms. Mack be able to keep this same defense team.
Jennifer\’s Story – A Fiduciary\’s Tale, Part 1
Fiduciaries are individuals who are held to a higher standard of legal accountability than others with whom folks may enter into agreements. The high standard is attributed to fiduciaries because usually they\’re responsible for making very important decisions or taking critical actions on behalf of others. In Estate Planning and Estate Administration, professional fiduciaries help families and individuals create and implement plans that will protect their interests. Professional fiduciaries include bankers, lawyers, financial advisors, doctors, and accountants. So, the interests these important folks protect involve money, one’s life, or confidential information about the same. The information you share with professional fiduciaries should be considered and treated as trusted confidential information, to be shared with only those individuals you expressly authorize to receive the information. If that trust is not respected, i.e., breached, because fiduciaries are held to a higher standard of accountability, the professional usually can be hauled into court. The down n dirty scoop on fiduciaries can start with Jennifer\’s story*: Jennifer was visiting her grandmother when she learned that her parents were involved in a horrible car accident. Jennifer flew back home immediately, heading to the hospital directly from the airport. At the hospital, she was informed by one doctor that both parents were placed in a medically-induced coma. Additionally, her brother, Alex, who had been estranged from the family for 10 years was standing in the ER speaking with another doctor. It was clear to Jennifer that the doctor had presumed Alex had authority to make decisions for her parents and was providing Alex with information about her parents health. When Jen asked the doctor why he was sharing information with her brother, the doctor informed her that the nature of the situation required the medical staff to engage with the next of kin to determine and obtain permission for urgent care and treatment. Yet, was that legally the case? Jennifer’s parents had healthcare powers of attorney on file with their preferred hospital. However… Stay tuned… Jennifer\’s Story – A Fiduciary\’s Tale, Part 1 | 2 | 3
Logging Out of Your Digital Estate Plan
By now, you’ve undoubtedly heard about the wisdom of incorporating a “digital asset plan” in your estate plan. If you haven’t, feel free to visit my introductory article on the topic. However, if you are familiar with the concept, then this article will shed more light on the subject. Below you’ll find what can happen to a loved one’s digital account (email, Facebook, Twitter, etc.) when he or she passes away. Facebook Facebook has a “family-and-friend-friendly” policy. Surviving loved ones have 2 choices: memorialize the account or have it deleted. If a Facebook account is memorialized, which can be requested by anyone, then the account is somewhat frozen. Confirmed friends can post to the account and view it on their news feeds, but no one can access or change the account. Proven immediate family members or the executor are the only persons who can request the account’s deletion and must provide proof of the relationship through certified vital records or court documents. LinkedIn Ironically, LinkedIn, a professional social media network, has a somewhat more relaxed approach than Facebook. If LinkedIn is notified that a person has died, LinkedIn will close the account and remove the profile. Notification must provide, the member’s name, company where the member worked at most recently, the relationship between the person notifying LinkedIn and the member, a link to the member’s profile, and the member’s email address. Odd is the fact that LinkedIn doesn’t require proof of a relationship or death certificate. It seems that an unresponsive email is sufficient evidence. But to the poor individual who is only on vacation and friends decided to pull a prank, it might not be so sufficient. Hmmm…. Twitter Despite its brevity and awesomeness, Twitter is even more strict than Facebook. The only request observed is one to delete the account. If a loved one’s account is to be deleted, Twitter requires the following information from an immediate family member or executor: username and of the deceased user’s Twitter account, copy of the deceased’s death certificate, copy of the family member or executor’s government-issued identification, AND a signed statement providing the requester’s first and last name, email address, current contact information, relationship to the deceased or their estate, action requested, and brief description detailing how this account belongs to the deceased. Twitter denies access to everyone, regardless of relationship or fiduciary capacity; there is no tweeting after death. Instagram It looks like Instagram does its own investigation into a decedent\’s death. The platform simply asks requesters to email its staff about deceased users and then the folks at Instagram will let the requester know if any further information is available. Does anyone besides me thinks this is a little creepy? Gmail This is Google, so while access may be granted, a process will be required. First, the requester must provide Google with his or her full name, physical mailing address, email address, photocopy of a government-issued ID, the Gmail address of the deceased, and the death certificate of the deceased. Now, going through step 1 doesn’t guarantee access to the deceased’s email. Google may require the requester to take a second step 2: providing a court order or other materials. Hotmail Hotmail considers you dead if your account is inactive for 12 months. It will delete contents after 9 months of inactivity and delete the account after 12 months of inactivity. Plus, it’s unlikely that if you’re alive and want your contents back, that you’ll be able to retrieve them. Hotmail is a Microsoft platform, so it follows Microsoft’s “next of kin” process. To prove that you are the legal next of kin and that the account holder is deceased – or incapacitated – Microsoft requires: an official death certificate of the user; if the user is incapacitated, a certified document signed by a medical professional in charge of caring for the user (oops! HIPAA violation warning for doctors) or a signed court document providing that the requester is an agent with power of attorney or a conservator. Documents for decedents from a court must show that the requester is a trustee or an executor. And still further proof is needed to prove kinship: marriage certificate showing requester is surviving spouse (Query: What if spouse divorced and hates surviving family members?); signed power of attorney documents; copy of a will or trust (read privacy issues); a birth certificate for the user showing parentage of the requester; or guardianship documents; and a photocopy of the requester’s government-issued identification. Once all information is provided, the requester still does not gain access to the account but will instead receive a DVD of all the account\’s contents, including emails, attachments, address book, and Messenger contact list. The requester can ask for the account then to be closed. Lesson: Logging on to the digital world may be easy but permanently logging out isn’t. Hat tip: My intern, Lesley Gwam.
Charitable Trustees Beware
Cycling to the office this morning, I passed a woman jogging while pushing a 3-wheeler stroller jogger with twins in it. My mind meandered as to how challenging it must be to care for twins and let’s not even talk about triplets! But I couldn’t help it… Hope and Bill had triplets: Gray, Jay, and Faye. Bill couldn’t handle the stress of 3 terrible twosies, 3 tumbling toddlers, 3 precocious pre-teeners, and 3 hormonally tangled teenagers, so he divorced Hope when the triplets were 15 and went on a permanent excursion to chant in the Himalayas. Hope, not one to be deterred, called on her siblings, Charity and Joy. All was going well until Hope suddenly became ill and, at the young age of 44, passed away, leaving 3 teenagers with no parent. Bill had never been heard from since he left with snowshoes in hand. However, Hope left a will and a trust, naming Charity as trustee and Joy as guardian. When Hope passed on, though she didn’t have a taxable estate at $4 million, she left a considerable amount to her children and her sisters: $1 million to each child and $500,000 to each sister. After the trauma of losing their sole parent had waned to a manageable, moving forward, level, May, Faye, and Jay continued planning for college. Faye was especially excited because she had been accepted at her first choice for engineering. Well, 3 years into her engineering program, Faye and a few other classmates decided to start a small technology company. Each classmate pledged $100,000.00 as seed money and each had the means to fulfill the pledge. So Faye phoned Charity, who was vacationing in the Cayman’s, told Charity about the new venture and asked for her pledge money. She knew that her mom had left enough for her in the trust at this stage – Hope had staggered mentoring provisions in each child’s trust – to more than meet the pledge and that Charity was to invest for the purpose of conservation and then growth. What Faye didn’t know, however, was that Charity was very charitable to herself, using not only Faye’s trust, but May’s and Jay’s as a source of charitable giving. Charity told Faye that it would be a little difficult to come up with the $100,000.00 straight from Faye’s trust, but that she would borrow from May and Jay and help Faye meet the pledge. Faye, the oldest by 10 seconds, didn’t like what she heard and a heated argument ensued. It ended with Aunt Charity telling Faye to calm down or else she wouldn’t get anything because she had discretion over the distribution and there was nothing Faye could do. In fact, Charity decided to make the Cayman’s her home and wasn’t sure when she’d be returning to the states to give Faye the distribution. But Charity was wrong; Faye had the law on her side and Charity was eventually extradited to the U.S., where she faced counts of fraud and breach of fiduciary duty. Faye and her classmates’ business boomed; she eventually coupled with a partner and had a child aptly named, Prudence. The Prudent Investor Rule: A trustee administering a trust has a duty to invest and manage the trust as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust.
Debunking Estate Planning Myths & Developing Weath, pt 5
Finally finishing the “Debunking Estate Planning Myths” series, as discussed in part 4, revocable living trusts let individuals place more than land into a trust. Doing so typically prevents beneficiaries from going through probate, allows other vehicles to grow tax free, and keeps the terms of the estate distribution private. Also, not only do trusts save beneficiaries the time and expense of opening a probate estate, but trusts also minimize estate tax exposure for beneficiaries. Tax minimization relates directly to another intermediate but classic estate planning tool and technique – an irrevocable life insurance trust (ILIT). ILITs are a combination of 2 estate planning tools, a trust and life insurance, used to minimize estate tax burdens for beneficiaries. Life insurance proceeds that would be considered part of the estate are used to fund a trust and deemed removed from the estate altogether. A number of criteria have to be met, such as using a policy that the insured has no interest in the policy, e.g., does not withdraw the cash from a cash value policy. However, if we think about it, typically we don’t buy life insurance for investment purposes but only for income replacement purposes. So if we’re not planning to use the life insurance, then why not let it benefit our loved ones in more than one way and place it in an ILIT? Using particular language in children’s trust provisions is another way to provide beneficiaries with the time needed to mature before having substantial means placed into their hands. Provisions with this language are called “staggered mentoring” provisions, which instruct the trustee to distribute certain percentages of the total trust funds to the children at ages 25, 30, and 35 years, for example. Parents also can place conditions on distributions so that a child doesn’t receive a distribution unless he or she performs on at least an average academic level in college and becomes a productive member of society. Mentioning this tends to result in a few “likes” by parents on my Facebook page. Trusts are also used to provide enhanced tax minimization for the surviving spouse. By using the federal marital deduction and other available elections, families can defer the payment of estate tax payments of the first spouse until the second spouse’s death. Another way that trusts are used is to provide for surviving spouses, partners, and children using retirement proceeds. Typically, beneficiaries should be named directly on retirement accounts. Under certain situations, the retirement account should be maintained as an “inherited” account, and occasionally a trust should be named beneficiary where the individual beneficiary is dependent on a trustee. The trustee then pays out the proceeds over the lifespan of the beneficiary as opposed to the original account owner. Because trustees are the actual legal owners of the trust property, beneficiaries may be protected from creditors because trustees can be given sole discretion to distribute funds, and may pay institutions, such as colleges and hospitals directly. Part 1 | 2 | 3 | 4 | 5
2 Lessons from a Single Mom Held Hostage
One of the most important steps a single parent can take to protect his or her child is to plan for the unexpected. I don’t point it out often, but the fact is that one of the primary services offered by the Law Offices of Max Elliott is helping people plan for the day they die. Nobody likes to think about this, let alone talk about it, especially parents – moms and dads. Given that challenge, consider the following true story (with identifying characteristics changed): Molly and Sheldon had been dating for a couple of years but weren’t ready to get married. Sheldon was a struggling actor and Molly was fresh out of college. However, circumstance resulted in Molly having Sheldon’s little girl, Amy. Sheldon and Molly decided against marriage or entering into a Civil Union but both loved Amy dearly. One day while returning from work, Molly was killed in a car crash. Fortunately, she had life insurance. BUT… 1. She listed Amy as the primary beneficiary with no further instruction. 2. She listed Sheldon as the contingent beneficiary with no further instruction. 3. She didn’t tell her only other remaining “next of kin” about her “final wishes.” So… Molly’s body was sent to a funeral home selected by her only remaining next of kin, who could not afford to pay for the funeral services but, when meeting with the funeral home director and Sheldon, mentioned the life insurance policy. The funeral home agreed to perform the services that week only if they could be guaranteed payment through the insurance proceeds. For this to occur to the satisfaction of the funeral home, Sheldon, who was on Amy’s birth certificate, would still have to go to court and agree to open an estate for Amy and a lawyer, referred to Sheldon by the funeral home, would have to be named trustee. The bottom line: If Sheldon didn’t want to take the funeral home up on its offer, during one of the most challenging times of a person’s life, I might add, he had to find the money elsewhere within 24 hours. Taking the funeral home’s offer meant: Retaining an attorney that neither he nor Molly knew to represent their little girl. Designating an attorney neither he nor Molly knew to be trustee for their little girl’s sizable estate at least temporarily; and here’s the other burn… Paying thousands of dollars of little Amy’s money to an attorney and a funeral home in order to hold Molly’s services within a reasonable time. This is a grim, real life story but I implore you to take and pay forward the critical lessons: DO NOT designate minors as primary beneficiaries of life insurance policies, retirement accounts, and the like. DO communicate to your loved ones your final wishes, so you and your loved ones won’t be held hostage.
Estate Planning Tools to Keep Lex-the-Ex Away
Outside of food and clothing, 2 of the most critical matters parents manage for their children are education and housing. Single parents are typically even more concerned with managing these issues because ultimately the responsibility falls on the primary custodial parent. Divorcees may breathe a little easier because of settlement and child custody agreements, but not necessarily. Family courts around the country are filled with defendants and plaintiffs arguing over alleged breaches of such agreements. Consequently, as a single parent, the burden is heavier. Managing housing and educational issues can be made easier with proper estate planning tools. An earlier blog post addresses basic estate planning instruments parents should have in place. This post discusses some of those instruments in more detail. Property Power of Attorney. As mentioned here, this authority, which you to give to another person, allows that person to make and carry out financial decisions for you when you are physically incapacitated. Thus, if you’re ill for a long time and need someone to pay the rent, mortgage or any other expenses associated with your family’s home, you should designate a trusted agent under a property power of attorney. Guardian of the Estate. A will allows parents to designate who should care for their children in the event of a parent’s death – a guardian. This is critical to single parents. However, in Illinois, there are 2 types of guardians: a “guardian of the estate” and a “guardian of the person.” A guardian of the estate status allows the guardian to manage the financial affairs of the minor, e.g., gifts received under a will or trust. This makes sense because sometimes the person you would trust to raise your children may not be as financially well informed as needed to manage large sums of money. So I typically advise clients to consider guardianship from both “personal values” and “financial expertise” perspectives. Trustee. In a vein similar to a guardian of the estate, a trustee is the person, or entity, you authorize to administer, preserve, protect, and grow trust assets. Note: Many people think they’re not personally wealthy enough to require a trust; many are mistaken in this thinking. Example: Sharon is the single mom of a 14 year-old daughter and has a home valued at $150,000 with a mortgage balance of $30,000. She has about $100,000 in a retirement account, and $500,000 in life insurance. Additionally, Sharon keeps approximately $1,000 in her checking account and $2,000 in her savings. She doesn’t feel like she’s wealthy, but if Sharon were to pass away today, her estate would be valued at $723,000. She would have died almost a millionaire! An important and related consideration is that unless other designations are made, life insurance and retirement account proceeds may be paid out to a very young adult, e.g., an 18 year old. How many 18 year olds do you know who are mature enough to manage receiving a lump sum of $600,000? Returning to Sharon’s scenario, where her daughter is a minor: If Sharon didn’t designate a guardian or trustee, but Sharon’s ex-husband, Lex, is lurking around, guess who would likely obtain control over the $600,000 – yep, Lex the ex. Life Insurance. Typically, life insurance is a death benefit and can be used to pay off mortgages and for other housing expenses. An Irrevocable Life Insurance Trust (“ILIT”) is a time-honored estate planning tool and excellent for providing for education and housing costs, especially if one does not intend to benefit from a policy otherwise. Transfer the policy in a trust where someone other than yourself is trustee and your child’s education is relatively secure. Securing the hearth and educational future of children is critical, so review your policies and plans today and get a good night’s sleep going into the New Year. Well…after midnight anyway. Your comments are welcomed as always!
Why There\’s a \”Trust\” in Trustee, Part 2
In Part 1 of this series, I discussed why one should be careful in selecting a trustee. Family members are often considered the most trustworthy with respect to family matters, so people typically select them as trustees. However, this endearing gesture can cause serious problems later: Trust assets could be inadvertently wiped out. A trustee is usually responsible for managing the trust assets. If the trust is significant, the trustee should either have the required financial investment background or the ability to wisely choose someone with the needed background to act as the trust investment advisor. If the trustee is not well informed about investment matters relevant to the trust assets and does not employ someone who is, then the trust funds could dissipate leaving the terms of the trust unfulfilled, and probably one or more displeased beneficiaries. This last point is particularly important if the trust isn’t large, but the beneficiaries depend on its income for health and educational support, for example. Valid claims could go unanswered; or a trust claim could be ignored. The trustee is responsible for responding to or initiating litigation on behalf of the trust. So if a long lost family member who would have been provided for had their whereabouts been known, emerges claiming they should receive under the trust, the trustee should properly address that claim. If the trustee is a family member, however, the problem becomes one of bias against that claim because a valid claim could dilute the current beneficiaries’ shares, possibly including the trustee’s share. Another problem is that it takes time to respond to these claims, time that a family member may not have. Equally important is a trust may have a claim that needs to be litigated. But, if the trustee does not recognize the claim issue, a potential financial award for the beneficiaries may go unnoticed. Co-trustees don’t always agree. While the grantor may have gotten along well with both individuals, when it comes time to make a distribution decision or another decision involving the trust, the co-trustees may not see eye-to-eye and both could have valid perspectives. This type of disagreement starts many long-term family arguments resulting in costly court battles. If nothing else, by choosing a corporate fiduciary, the family will be at peace with each other and at war with someone else. Trust administration responsibilities are time consuming and numerous. The following is an incomplete list of trustee duties: Distributing beneficiary shares Providing a regular accounting to beneficiaries Paying debts, taxes, fees and expenses associated with the trust administration Giving notice to guardians or legal representatives of beneficiaries who are minors or incapacitated Executing documents required for trust administration Settling claims against the trust, not just from possible beneficiaries but from estate creditors Buying insurance for trust assets Perhaps now you’re thinking that a Last Will and Testament may circumvent this “trustee” matter, but that\’s not necessarily true. A Will’s executor or “personal representative” often has the same responsibilities as a trustee. So, establishing a Will not only requires delegation to the executor some of the responsibilities above, but in Illinois, it also entails more costs and more time because of probate. Therefore, it is critical to resist the urge to select a family member as a trustee – or executor – without first giving the decision the thought and discussion it deserves.
5 Reasons Why a Will Might Be for You
Generally, I advise clients that trusts are more appropriate, especially if the client wants his or her heirs or beneficiaries to avoid probate. Preventing an estate from going through probate is beneficial if the estate is sizable, i.e., consists of a house, life insurance, a retirement plan or securities, one or more automobiles, and furnishings. However, there are circumstances when a will may be more appropriate: If there is no will, then the property might be distributed to, or in proportions, someone unintended by the decedent. For example, your spouse might only receive 1/3 of the estate’s personal and real property and the remaining 2/3 will go to a child or relative who kicked your dog. Equally egregious is that the property could be distributed to the state, which may have already benefited from receiving several years of income and sales taxes from you. If the estate is modest, for example $100,000 – $200,000, avoiding probate is even more reasonable and it may be possible to waive a probate hearing, so a trust under these circumstances is probably unwarranted. A grantor may not want to designate a trustee and may not want to be a trustee during his or her lifetime.* So, by using a will, a sizable estate will go through probate but each legatee will ultimately be responsible for the preservation and enrichment – or diminution – of his or her own gift. If the testator has minor children and doesn’t want the court to determine guardianship in the event of death or incapacity, then a will can nominate who should be the guardian. A grantor with no desire to continually update a trust document may use a pour-over will, a simple mechanism by which all of the estate is designated to a trust. Okay, so this one is a compromise betwixt the 2 but \”4 1/2 Reasons…\” just didn\’t flow. * A settlor, also referred to as a “grantor,” is the individual who creates the trust.