Did Actress Anne Heche have a Will?

Homer Laffoon, actress Anne Heche’s 20-year-old son, is asking that he be awarded control of his mother’s assets. His mother died last month after a car crash at age 53 and did not have a will, according to a copy of the petition obtained by CNN.

“Filed concurrently with this petition is a Petition for Appointment of Guardian ad Litem for the minor,” the docs read, “which specifically requests that the guardian ad litem be granted the authority to waive bond on behalf of the minor.”

The petition names Laffoon and Heche’s 13-year-old son, Atlas Tupper as heirs.

“The Estate consists of two (2) intestate heirs—Homer Heche Laffoon and Atlas Heche Tupper,” the petition states “Homer Heche Laffoon is an adult and the proposed Administrator. Atlas Heche Tupper is a minor.”

CNN’s recent article entitled “Anne Heche’s son petitions to assume control of her estate” reports that an October 11 hearing is scheduled to evaluate this request. Also, it’s been noted that the estimated worth of Anne Heche’s estate will need to undergo forensic accounting. That’s because it’s not known how much the star was worth upon her death.

While there’s no official will documenting Heche’s wishes for her estate, Homer’s stated that his mom’s final resting place will be at the Hollywood Forever cemetery. She also designated her organs for donation at her passing before her remains were cremated.

In the aftermath of the grief, these unexpected events will provide some legal hurdles.

Heche’s car crashed into a Los Angeles home and erupted into flames on August 5. She experienced a “severe anoxic brain injury,” depriving her brain of oxygen, among other critical injuries, her family and friends said in a statement. Anne passed away a few days later after being taken off life support.

“My brother Atlas and I lost our Mom. After six days of almost unbelievable emotional swings, I am left with a deep, wordless sadness,” Lafoon said in statement to CNN on Aug. 14. “Hopefully my mom is free from pain and beginning to explore what I like to imagine as her eternal freedom.”

Reference: CNN (Sep. 1, 2022) “Anne Heche’s son petitions to assume control of her estate”

Why Is a Will So Important?

A 2020 Gallup poll found that less than half of Americans have a will or have made plans regarding how they would like their money and estate handled in the case of their death. The poll also showed that Americans ages 65 and up are the most likely to have one.

Yahoo News’ recent article entitled “How To Write A Will: The Importance Of A Will And Living Will” says that no matter your age, it’s important to have a will to be in control of what happens with your own assets. A will is a legal document that establishes a person’s wishes regarding the distribution of their assets — money, real estate, etc. — and the care of any minor children.

Without this type of legal document, the state law may control who gets your “probate” assets and when. Having one can save an enormous amount of time and money in estate administration and the process of having a guardian appointed for your minor children, if needed.

There’s a big difference between a will and a living will. A living will is a document that lets you state in advance how you want to be treated under certain medical situations, if you’re unable to make those decisions for yourself at a later time.

These differ by state law. However, they generally cover end-of-life decision-making and treatment options. General medical decisions unrelated to end of life care are typically covered in a health care power of attorney. Some states combine these two documents into one directive.

Unlike a living will, which specifically provides instructions for medical care during your lifetime, it lets you to decide in advance who you want to receive your assets upon your death, and who you want to be in charge of handling the administration of your estate. If you have minor children, it also allows you to nominate a guardian for them.

When creating a will, think about the “what,” the “who” and the “how.” To do so, ask yourself the following questions:

  • What assets do you have?
  • To whom do you want to leave them?
  • Who do you want to be in charge of making sure that happens?
  • Who do you want to be responsible for your minor children?
  • How do you want the assets transferred?

Reference: Yahoo News (Aug. 17, 2022) “How To Write A Will: The Importance Of A Will And Living Will”

What’s the Most Important Step in Farm Succession?

There are countless horror stories about grandchildren in tears, as they watch the family farmland auctioned off because their grandparents had to liquidate assets to satisfy the taxes.  Farm Succession planning is crucial.

Another tale is siblings who were once in business together and now don’t talk to each other after one felt slighted because they didn’t receive the family’s antique tractor.

Ag Web’s recent article entitled “Who Gets What? Take This Important Estate Planning Step” says that no matter where you are in the process, you can always take another step.

First, decide what you’re going to do with your assets. Each farmer operating today needs to be considering what happens, if he or she passes away tonight. Think about what would happen to your spouse or your children, and who will manage the operation.

The asset part is important because you can assign heirs to each or a plan to sell them. From a management perspective, farmers should then reflect on the wishes of your potential heirs.

Children who grew up on the farm will no longer have an interest in it. That’s because they’re successful in business in the city or they just don’t have an interest or the management ability to continue the operation.

After a farmer takes an honest assessment, he or she can look at several options, such as renting out the farmland or enlisting the service of a farmland management company.

Just remember to work out that first decision: What happens to the farm if I’m dead?

Once you work with an experienced estate planning attorney to create this basic framework for your Farm Succession planning, make a habit of reviewing it regularly.

You should, at a minimum, review the plan every two to three years and make changes based on tax or circumstance changes.

Reference: Ag Web (August 1, 2022) “Who Gets What? Take This Important Estate Planning Step”

When Should I Hire an Estate Planning Attorney?

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It’s stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you’ll also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

What Is a Marital Trust?

Marital trusts have multiple benefits for beneficiaries, including asset allocation and tax benefits.  They are worth looking at in your estate plan.

Forbes’ recent article entitled “Guide To Marital Trusts” says that a marital trust is an irrevocable trust that allows you to transfer a deceased spouse’s assets to the surviving spouse without paying any taxes. The trust also protects assets from creditors and future spouses that the surviving spouse may encounter.

When the surviving spouse dies, the assets in the trust aren’t included as part of their estate. That will keep the taxes on their estate lower.

There are three parties involved in setting up, maintaining and ultimately passing along the trust, including a grantor, who is the person who establishes the trust; the trustee, who’s the person or organization that manages the trust and its assets; and the beneficiary. That’s the person who will eventually receive the assets in the trust, once the grantor dies.

A marital trust also involves the principal, which are assets initially put into the trust.

A marital trust doubles the couple’s estate tax exemption limit, especially when almost all assets are owned by one spouse. Estate tax refers to the federal tax that must be paid on someone’s estate after they die. The estate tax limit is how much of an estate will be tax-free. In 2022, the estate tax limit is $12.06 million, which means utilizing a marital trust would essentially double that amount to $24.12 million. Therefore, about $24 million of a couple’s net worth would be shielded from estate taxes by taking advantage of a marital trust.

A marital trust is also beneficial because it can provide income to the surviving spouse, tax-free.

Only a surviving spouse can be a beneficiary of a marital trust. When the surviving spouse dies, the trust will then be passed on to whomever the first spouse’s will or trust governs.

If keeping wealth within your family after you die is important, then a marital trust is an estate planning tool that will make certain that individuals outside of your family don’t have access to the wealth. You can put a variety of assets into a marital trust, including property, retirement accounts and investment accounts.

A marital trust is one legal tool to consider using when planning for a blended family.

Reference: Forbes (June 30, 2022) “Guide To Marital Trusts”

What’s Involved with Being a Trustee?

There’s an old saying that the two best days in a boat owner’s life are the day they buy their boat and the day they sell it.

Forbes’ recent article entitled “How To Be An Effective Trustee” says that a similar notion applies to being a trustee – it’s an honor to be named and then a huge relief when it’s over. That’s because being a trustee is difficult.

Remember that a trust is a fiduciary relationship in which one party (the trustor) gives another party (the trustee) the right to hold title to property or assets for the benefit of a third party (the beneficiary). Trusts are created to provide legal protection for the trustor’s assets, to make certain those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

Being a trustee requires knowledge about a wide range of topics, including:

  • The trustee’s fiduciary duties, which include loyalty, impartiality, duty of care, protection of trust property, enforcement of claims and the duty to inform and account to beneficiaries, among others (violation of these duties exposes the trustee to liability).
  • Understanding the details of the trust, like the specifics of the distribution instructions.
  • Investments and the ability to engage and monitor investment managers.
  • Administrative matters, such as record keeping and principal and income accounting.
  • Estate planning, trusts and the basics of the estate, gift and generation skipping taxes.
  • Income tax, including how trusts are taxed both by the federal government and the state.

A trustee must also be able to productively communicate and work with the beneficiaries on their financial wellness and distribution needs, which is an area that can be full of conflict.

It’s a daunting list. Talk with an experienced estate planning attorney to discussion your situation in detail.

Reference: Forbes (May 31, 2022) “How To Be An Effective Trustee”

What Is a TOD Beneficiary?

You can name anyone as a TOD beneficiary. However, if you’re married, your spouse may have special rights over your assets that take precedence over your named TOD beneficiaries. These laws vary by state, though, so ask an experienced estate planning attorney.

Investopedia’s recent article entitled “Who Can Be a Transfer on Death (TOD) Beneficiary?” explains that, if you name TOD beneficiaries, it’s very clear who you want to receive your assets when you pass away.

A TOD instruction allows your heirs to avoid probate for these assets. This will take precedence over anything in your will. This can make the legal process of distributing assets much faster than it otherwise would be.

It’s important to know that naming TOD beneficiaries may not achieve everything you would like to achieve in your inheritance settlement. Passing on assets to a TOD beneficiary won’t provide much creditor protection. In that case, a trust may be a better option.

Your TOD beneficiaries will also be responsible for paying taxes on the money they receive. This will complicate their tax situation and may also mean a large tax bill for them.

Remember that a transfer on death (TOD) beneficiary can be a person, charity, business, or trust. If the beneficiary is a person, they can be a relative, child, spouse, friend, or anyone else you happen to know. But again, if you’re married, your spouse may have special rights over your assets that take precedence over your named TOD beneficiaries, according to state law.

Contact your account provider to see if you can add a TOD beneficiary. It’s available for many account types—not only retirement accounts but also certificates of deposit (CDs), savings accounts and brokerage accounts.

Naming a TOD beneficiary (or several) can have advantages during the inheritance process, since this makes it very clear who you would like to inherit your assets. These funds can then be distributed without passing through the potentially costly process of probate. It can make the inheritance process much simpler because your named beneficiary will automatically receive the assets in the account—bypassing probate as a result.

Reference: Investopedia (May 19, 2022) “Who Can Be a Transfer on Death (TOD) Beneficiary?”

What Exactly Is a Prenup?

There are some important financial decisions that need to be made before you get hitched. One of them is whether you should get a prenuptial agreement (“prenup”). This isn’t the most romantic issue to discuss, especially because these agreements usually focus on what will happen in the event of the marriage ending. However, in many cases, having tough conversations about the practical side of marriage can actually bring you and your spouse closer together.

JP Morgan’s recent article entitled “What to know about prenups before getting married” explains that being prepared with a prenup that makes both people in a marriage feel comfortable can be a great foundation for building a financially healthy and emotionally healthy marriage.

A prenup is a contract that two people enter before getting married. The terms outlined in a prenup supersede default marital laws, which would otherwise determine what happens if a couple gets divorced or one person dies. Prenups can cover:

  • How property, retirement benefits and savings will be divided if a marriage ends;
  • If and how one person in the couple is allowed to seek alimony (financial support from a spouse); and
  • If one person in a couple goes bankrupt.

Prenups can be useful for people in many different income brackets. If you or your future spouse has a significant amount of debt or assets, it’s probably wise to have a prenup. They can also be useful if you (or your spouse) have a stake in a business, have children from another marriage, or have financial agreements with an ex-spouse.

First, have an open and honest conversation with your spouse-to-be. Next, talk to an attorney, and make sure he or she understands you and your fiancé’s unique goals for your prenup. You and your partner will then compile your financial information, your attorney will negotiate and draft your prenup, you’ll review it and sign it.

Remember that a prenup can be a useful resource for couples in many different circumstances.

It might feel overwhelming to discuss a prenup with your fiancé, but doing this in a non-emotional, organized way can save a lot of strife in the future and could help bring you closer together ahead of your big day.

Reference: JP Morgan (April 4, 2022) “What to know about prenups before getting married”

How Does My Inherited IRA Fit into Estate Planning?

The Secure Act (Setting Every Community Up for Retirement Enhancement Act) was signed into law on Dec. 20, 2019 and includes many reforms that could make saving for retirement easier and more accessible for many Americans, says CNBC’s recent article entitled “Did you know inherited qualified retirement accounts must be liquidated in 10 years? If you didn’t, you are not alone.” However, the Secure Act made a major change for beneficiaries of individual retirement accounts, inherited IRAs and 401(k) plans.

The Act requires that inherited qualified retirement accounts must be liquidated within 10 years. Therefore, if you inherit an IRA or a 401(k) plan from someone other than your spouse, it could affect your retirement savings plans or strategies to transfer wealth to future generations.

Before this, if you inherited an IRA or 401(k), you could “stretch” your taxable distributions and tax payments out over your life expectancy. However, for IRAs inherited from original owners that passed away on or after January 1, 2020, the new law now requires most beneficiaries to withdraw assets from an inherited IRA or 401(k) plan within 10 years following the death of the account holder.

Retirees whose taxable income is less than their heirs’ – which is the case for most retirees – should at least consider whether it makes sense to take a different approach if they were to draw down their qualified assets more aggressively and keep larger non-qualified account balances, their tax obligation could be far less than what their higher-earning heirs may pay in the future.

They also could make strategic withdrawals from non-qualified accounts to ensure that their rate doesn’t go up significantly. That means reaching the limits of one bracket without going into the next one.

Moreover, because their non-qualified accounts receive a step-up in basis, this would reduce their heirs’ tax burden even further. That is because the gains on these accounts are taxed based on the value when the benefactor dies.

However, it’s true that not everyone will embrace a new plan like this. You may feel like you’ve saved and invested for decades and, therefore, shouldn’t have to worry about whether your adult child must pay a bit more in taxes each year.

However, to reiterate, we’re not talking about pennies on the dollar. The stakes for some could be well over $100,000. Just as many put in place estate-planning strategies to protect more of their wealth, it’s at least worth sitting down with an estate planning attorney to consider whether it makes sense to do the same when it comes to the implications of the Secure Act.

Reference: CNBC (Feb. 8, 2022) “Did you know inherited qualified retirement accounts must be liquidated in 10 years? If you didn’t, you are not alone”

Should I have Revocable Living Trust in Estate Plan?

Kiplinger’s recent article entitled “What Assets Should Be Included in Your Trust?” says that a revocable living trust is a document that’s created to protect your assets during your lifetime. It also creates a way to seamlessly pass your assets at your death. The biggest benefit of creating a trust is avoiding probate. Placing your important assets in a trust can give you peace of mind knowing assets will be passed onto the beneficiary you designate, under the conditions you choose and without first undergoing a drawn-out probate process.

Many people think that once they sign the trust documents at their attorney’s office, they’re good to go. Setting up a trust is just half of the job. For a revocable living trust to take effect, it should be funded by transferring assets into the trust. You can fund a living trust with real estate, financial accounts, life insurance, annuity certificates, personal property, business interests and other assets.

People often ask if it’s wise to place their house in a trust. Considering that your home is potentially one of your largest assets, living trusts can be especially beneficial. A trust can transfer real estate quickly. They also help avoid the hassle of separate probate proceedings for land, commercial properties and homes that are owned out of state or held in different counties. However, property with a mortgage must be retitled in the name of the trust. Some lenders may be reluctant to do this.

There are several types of financial assets that can be owned by a trust, here are some examples:

  • Bonds
  • Stock certificates
  • Shareholders’ stock from closely-held corporations
  • Non-retirement brokerage and mutual fund accounts
  • Money market accounts
  • Cash
  • Checking and savings accounts
  • Annuities
  • Certificates of deposit (CD); and
  • Safe deposit boxes.

While creating a trust can seem to be costly and complex, it can make the inheritance process much easier on your beneficiaries. To ensure your trust performs as it is intended, work with an experienced estate planning attorney.

Reference: Kiplinger (Jan. 16, 2022) “What Assets Should Be Included in Your Trust?”