Barnes Lipscomb & Stewart PLLC

Tips on Naming a Trustee

Selecting a trustee should be a thoughtful decision, taking into consideration the person’s ability to manage money and make decisions. Unfortunately, that’s not usually what happens.

A snap decision made so that documents can be prepared on a timely basis is not the way to pick a trustee. This person or persons will be making big decisions on your behalf, so you want to take the time to make the best possible choice.

You have to pick some people to help you out after you’re gone. In your will, you need to pick an executor, a guardian (if you have children), and a trustee. If you have a revocable or irrevocable trust, you need to designate a trustee, because he or she will control everything.

Wealth Advisors’ recent article, “Picking a Trustee – 4 Easy Steps,” explains that a trustee follows the instructions of the trust document. A trust can be created in your Will when you die and/or in a separate trust document while you’re alive. Either way, selecting a trustee is critical. A trustee has considerable authority, including:

• The amount of money and when people receive it from the trust;
• The investments allowed in the trust;
• The ways to insulate the trust assets from bad people; and
• Other complex trust accounting and administration rules.

You have two ways to go as far as choosing a trustee: an individual person or a trust company. Either one could be right for your situation, so there’s no one formula for a perfect trustee.  However, there are a few differences between designating a person and a trust company as trustee, including the following:

• An individual won’t charge a fee as trustee, while a trust company does.
• An individual can abscond with trust assets, while a trust company has checks and balances, along with insurance.
• An individual may let his own personal judgment get in the way of objectivity with beneficiaries, while a trust company legally can’t.
• An individual will get older and may get sloppy with the trust rules; that is far less likely to happen with a trust company.
• Trust rules, taxes and laws change, and a trust company’s focus is on those changes.

An estate planning attorney will be able to provide further recommendations as to what skills the trustees will need for their tasks, and discuss whether your situation would be best served with an individual or a trust company.

Reference: Wealth Advisors (November 19, 2017) “Picking a Trustee – 4 Easy Steps”

When Roles are Reversed: Helping Aging Parents

As parents age, their adult children shift into the role of caretakers, making sure their housing, medical, financial and legal needs are being properly handled.

It’s never a happy scenario when an independent parent becomes unable to live on their own and needs their adult children to become involved with their day-to-day life. There are many legal and financial decisions that need to be made, and it becomes an emotionally difficult time for everyone.

For some, that process begins when an adult child and parent decide that she needs to move in with the adult child and his family. In its recent article, “Helping an elderly parent downsize,” The Best of New Orleans reports that a senior’s active lifestyle can often stop with a serious fall requiring hospitalization.

There are also legal issues associated with becoming a parent's caretaker. It’s important to obtain power of attorney (POA) documents to make an adult child or other trusted person the primary decision maker for a parent's medical and financial matters.

Those in this type of situation would benefit from calling an estate planning attorney.

Estate planning concerns handling people's estates after they pass away. Estate planning attorneys work with executors in dealing with the affairs of the deceased and distributing assets to heirs.

A POA states who will act on the person's behalf, when he or she is incapacitated or simply needs assistance in handling certain affairs. The power of attorney can apply to financial or medical matters (or both). A living will tells your family and the medical staff what your wishes are regarding end-of-life medical issues.

When someone dies, going through their lifetime of belongings is an overwhelming and emotional major task. It's hard to make progress with items of sentimental value and family heirlooms.

Some families find an estate sale a good way to divest themselves of years of furniture and knick-knacks, while others prefer to distribute possessions among children and grandchildren. An estate sale can bring in some money when budgets are tight, but many families enjoy knowing that paintings, furniture or mom’s best serving platters are still being used at holiday dinners and keeping the memory of a beloved parent alive.

Reference: The Best of New Orleans (October 30, 2017) “Helping an elderly parent downsize”

When Should You Start on Your Estate Plan? How About Right Now?

No matter how old (or young!) you are, no matter the size of your estate, or how far away retirement is, you need an estate plan. Life happens, often unexpectedly, and an estate plan protects you and your family.

One of the reasons for an estate plan is to provide detailed instructions to your spouse and/or your family members about what you would like to happen in the event of your death or if you should become incapacitated. According to a recent article in cincinnati.com, “Now is the time to consider the basics of estate planning,” that information will make it easier for a family experiencing a major loss.

A will is a legal document that details instructions for the distribution of your property after you pass away. It also allows you to choose a guardian for minor children or other dependents. Your will should name the executor or personal representative who’ll be responsible for overseeing your estate as it goes through probate.

To be legal, a will must satisfy legal requirements. Therefore, you should work with a qualified estate planning attorney during this process. If you die without a will (“intestate”), the state will appoint an administrator to decide how to distribute your property based on state law. The administrator also will decide who will be the guardian of your minor children. This means your assets may be distributed and your dependents cared for in ways that differ from what you would have intended.

A living trust can help with some aspects of the probate process. A trust is a legal entity to which you, as the grantor, transfer title to your property. During your life, you can be the trustee and keep control over the property in the trust. At your death, the individual or bank/trust company you’ve named as the successor trustee distributes the trust assets to the named beneficiaries. The assets in a living trust generally avoid probate. Nonetheless, a living trust doesn’t eliminate the need for a will.

Don’t forget to have your estate planning attorney prepare powers of attorney documents. Start with a durable power of attorney, which designates a trusted individual to make financial decisions, if you are unable to do so. Another POA is for health care: that person can make medical decisions on your behalf in the event that you are incapacitated. You definitely want a health care agent who can make decisions for you if you cannot, and you want this document to clearly detail your wishes.

Reference: cincinnati.com (November 2, 2017) “Now is the time to consider the basics of estate planning”

Las Vegas Gunman Had No Will and a Sizeable Estate

With no children and family members who want to see his assets go to victims, figuring out how to handle the estate of the man who murdered and maimed concert goers will take some time to figure out.

Stephen Paddock died with no will and an estate worth an estimated $5 million.

Newsweek’s recent story, “Vegas Gunman Died Without A Will. Who Will Get Stephen Paddock's 5 Million?” explains that attorneys for victims of the shooting are asking that a third-party attorney be appointed to control Paddock's assets and freeze them.

At a recent hearing, Paddock's mother said she didn’t want to be the executor, the person who would distribute his properties and assets. His brother, Eric, told reporters that he wanted to control his brother's fortune and give it to victims of the shooting.

Since Paddock died without a will, Nevada law says that everything he owns would’ve gone to his parents, because he wasn't married and didn't have any children. If his parents decline, Paddock's assets would be divided among his siblings. The law also says if no one comes forward to claim his estate, it could go to the state of Nevada.

However, Paddock's case is different than others, because of the size of his fortune and the murders he committed before he killed himself.

Attorneys want a third-party administrator to be set up, which is permitted by state law, to collect everything Paddock owns to find out his net worth.

The court scheduled a hearing to consider excluding Paddock's family from being beneficiaries of his estate.

Victims of the shooting have filed more than 17 lawsuits against MGM Resorts—which owns the Mandalay Bay Resort and Casino where Paddock carried out his attack—the country music concert organizer Live Nation and the makers and sellers of bump stocks, the device that may have allowed Paddock to kill more quickly.

The attorneys representing the victims say that the claims are intended to obtain answers for survivors and the families of those who were killed, along with financial compensation. Requests for more information, documents, photos and videos from the parties being sued are still being denied.

Reference: Newsweek (November 20, 2017) “Vegas Gunman Died Without A Will. Who Will Get Stephen Paddock's 5 Million?”

An Unusual Response to a Billion Dollar Award: It’s Too Much!

A jury ordered JP Morgan Chase to pay $8 billion to the offspring of an American Airlines executive for mismanaging their inheritance, but the kids think it’s excessive. The bank expects the entire matter to be overturned by the Dallas, Texas court system.

The man who created the seat reservation system for American Airlines, Max Hopper, died unexpectedly and without a will in 2010. The bank, JP Morgan Chase, was asked to divide his estate, valued at $19 million. According to an article in The Daily Mail, “Children of dead American Airlines executive want LESS money,” Hopper’s wife Jo brought a lawsuit claiming that the bank took too long to release the assets.

This fall, a jury ordered the bank to pay $8 billion in punitive damages, $2 billion each to Mrs. Hopper, her stepchildren Stephen Hopper and Laura Wassmer, and the Hopper estate. But Hopper's children said they only wanted $74 million in damages.

JP Morgan says Hopper’s heirs want the damages reduced to about $74 million because they think the $8 billion figure is excessive. It would be the ninth largest verdict in US history.

Jo Hopper's lawyers contend that JP Morgan Bank took years to release basic interests in art, home furnishings, jewelry, as well as Mr. Hopper's collection of 6,700 golf putters and 900 bottles of wine.

Some of the assets weren’t released for more than five years.

JP Morgan is adamant that it did nothing wrong and believes the ruling in Dallas, Texas will be overturned.

JP Morgan said: “The law and evidence do not support any claim against JP Morgan, much less the unprecedented multi-billion-dollar punitive damage award, which the heirs have already admitted is unconstitutionally excessive.”

The bank’s position is that the real issue is whether or not heirs have the right to blame an independent administrator that wants the court to intervene on how assets are distributed, when the heirs don’t agree on the distribution.

Reference: Daily Mail (November 20, 2017) “Children of dead American Airlines executive want LESS money”