Friday, October 22, 2010

Hey, what about a Living Will?

Recently, I watched the season premiere of “Brothers and Sisters”. You know the show, the strong matriarch, Sally Fields, at the head of the whiny family known as the Walkers.

It takes place one year after the horrible automobile accident that occurred at the cliffhanger last May.

It was packed with legal issues, pertinent to the type law I practice.

Last season left us with a multiple car pileup, on the expressway, in California. Brother Justin, who conveniently has paramedic training from the military, is crawling to brother in law, Senator Robert McCallister(played by Rob Lowe), to render aid, but Robert, with blood trickling down his beautiful face, tells Justin to move on to Holly and he will wait for the ambulance. Justin then leaves Robert and goes to his mother in law, Holly, to give her first aid. It doesn’t look good for Robert.


As the show starts, we learn that one year has passed, and Robert has been lying in a coma for this last year, since the accident, being kept alive by medical machines, that are probably breathing for him. It is quite tragic and his wife, Kitty, played by Calista Flockhart, has been by his bedside, hoping for a miracle that he will awaken. The physicians have given her little hope, and she is grounding her hope on case studies she has read, where similar coma patients have woken up and resumed a somewhat normal life. Apparently, no family member is able to speak to Kitty about Robert’s situation and her decision to “pull the plug.” During this episode, she rages at her brother, screaming, “It is a hard decision what you are asking me to do!”. Well, the family has agonized for one year about Robert lying in limbo, and not really “living”.


These end of life decisions should not have to be Kitty’s decisions, it can be Robert’s. It comes as a surprise to me that he does not have his estate planning completed, and does not have a living will. A living will is a document that specifies whether life sustaining measures should be undertaken to preserve life when one is not expected to recover. Sometimes it is called “pull the plug” document. It is a document that you sign, prior to the end of your life, that signifies your wishes, taking the pressure off of spouses, children or other family members. The majority of my clients want this document for several reasons, to avoid the large medical expense of keeping them alive and to keep their loved ones from going through the emotional agony. We discuss these very issues with clients in my Central Florida law firm and encourage them to execute this advance directive, along with the other documents such as a trust, will, durable power of attorney, and health care surrogate. I am wondering if Robert did not have a will either? Well, it is television land and it makes for much better viewing for him to be without legal documents.


By the end of the episode, Kitty realized that it was not her husband lying in the hospital bed, but a body and she made the decision to disconnect the life support. The episode ends, as usual, with the Walker clan drinking and raising their wine glasses for a toast to Robert. I would rather toast to advance planning he did to save his family the turmoil of the last year.


Hallie Zobel

Probate, Wills, Trusts, Planning


Tuesday, June 29, 2010

Poor Man’s Probate is Usually Poorly Planned

On more than one occasion a friend of mine in my neighborhood or at church has come up to me and asked a question something like this, “David, do I really need a will? I don’t actually have very much and it seems like a lot of money to spend just to get some papers written up.” After I ask a few questions about their circumstances, in about half of these situations I discover that they have already done something, usually on advice from a non-attorney, and the individual is really wondering whether or not they have done the right thing. They’ve engaged in a course of action designed to lead to what some call a “Poor Man’s Probate” and the results, which they will probably never witness, are usually not at all what they would want for their survivors.


Here are some of the things I’ve seen:


A deed, usually a quit claim, has been recorded adding a child or children as owners.


A child or children have been added as co-owners of bank or investment accounts.


A life insurance policy has been purchased naming a minor child as a contingent beneficiary.


A life insurance policy has been purchased naming a grandparent as a contingent beneficiary. because the grandparent will look after the minor children.


Can you see the problems presented above? Here are just a few I spotted, and I’m not saying this list is exhaustive.


Quit claim deeds wipe out title insurance policy guarantees. If a boundary dispute pops up the title insurance company will look at the current ownership and will be excused from liability because the current owners aren’t the ones they promised to protect.


Florida’s strong homestead protection laws will protect you from various creditor claims, but if a judgment is entered against your child who has an interest in your homestead, a cloud will be created on title to the property which could make it difficult to sell.


Your bank or investment account could be garnished in order to meet obligations created by a judgment against your child.


If you and your spouse both die in an accident, life insurance death benefits will need to be put into a guardianship for your minor child. Who will be the guardian? Will they be a good steward of those funds? Will your child be emotionally ready to receive a large sum of money at the age of 18 when unfettered access to the funds will be given?


What if you forget to change the insurance policy beneficiary when your parent, the grandparent of your children, has a stroke, then you and your spouse both die in an accident. The death benefit is paid to your parent whose guardian has a statutory duty to use those funds for your parent’s benefit, not the benefit of your children. Worse still, if your parent has remarried and the proceeds go into a joint account with the new spouse, then the new spouse will have a claim on those funds.


All of these results are bad. Some are truly disastrous. All of them would cost far more to unravel than it would cost to make proper plans.


The basic documents we recommend are a will (or better yet a trust with a pourover will), a durable power of attorney, health care surrogate designation, and living will. If your funds are extremely limited just get the durable power of attorney, health care surrogate designation, and living will. One solution does not fit all needs and so we carefully interview people to find out what their particular needs are and what solution best fits them, but don’t make the very costly mistake of thinking that no planning or ad hoc planning are the solutions to your estate planning needs.



David Pilcher

Probate, Wills, Trusts, Planning

Thursday, January 14, 2010

Citizen wants reimbursement from Michael Jackson's estate

Even after death, as in life, everyone and his brother wants a piece of Michael Jackson's money.

Sources to TMZ report that upwards of $20million in creditor claims are being filed in his estate. The claims come from a doctor, various law firms and a lady named Shellie Doreen Smith, who claims to have been married to Michael Jackson in the seventies.

My personal favorite is the taxpayer who sued on behalf of the City of Los Angeles taxpayers. Apparently the taxpayers picked up $3.3 million of the memorial tab and he believes the estate should pay back the City. The article claims him as a "do gooder". I suspect a "do gooder" lawyer is behind this claim. But then again, why shouldn't the estate pay for the memorial service? Is only one Los Angeles taxpayer outraged? Seems like all should be; I certainly would be.

Hallie Zobel
Bailey Zobel Pilcher

Monday, January 4, 2010

Death Arbitrage -- Should I Pull the Plug Today? There's No Estate Tax.

I'm angry. I'm disheartened, dismayed, and disgusted. But mostly, I'm angry.

One of my peers today asked me if I am advising clients to remove life support from their loved ones -- their RICH loved ones -- quick, right now, before Congress acts to bring back the estate tax.

Because, depending on the nature of the assets, you can do the tax math and decide whether it is more lucrative to allow someone you love to die today, or keep the person alive, betting that Congress will change the estate tax laws in a manner more favorable to a delayed death.

I was horror-stricken. Not because I was surprised; we estate tax professionals have been discussing this potential situation for a decade. I was appalled because I believed that Congress would never allow its citizenry to be in this position. And here we are -- four days into the new year, and now my clients want to know their options.

What are the death-tax-lottery alternatives?

1. For the critically-ill person of any amount of wealth, if the differential between fair market value and basis is less than $1.3 million, it makes tax sense to pull the plug.

2. For clients with unrealized capital gains of more than $3 million above the $1.3 million in basis that we may allocate now, (so, for example, someone with $4.25 million or more in wealth that has zero basis), for tax reasons, you should pay the electric bill and keep that machine going until Congress acts.

3. For critically-ill people worth between $4 and $4.5 million, the 15% long-term capital gains tax on the amount above the $1.3 million in basis that we may allocate today may be more than the 45% estate tax on assets above $3.5 million that would be due if Congress extended the estate tax rules from 2009. Your tax professional, if s/he has the stomach for it, can calculate this number for you.

Gallows humor for clients with a lot of life insurance, but not a lot of other assets, used to be that they were worth more dead than alive. Now it isn't funny. Congress has opened the door for tax implications to be one more piece of the puzzle that people consider when dealing with an impending death. And I'm one of the tax professionals who will be asked to provide the information. How caring is that?

I read quotes about members of Congress piously discussing the sanctity of life. Yet here I sit, in a position that is untenable, but that was wholly avoidable by even a modicum of responsible action from my elected representatives. For that, Congress, I will not forgive you. I have a vote, and I have a voice, and I will use both.

Merrell Bailey
Bailey Zobel Pilcher