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Famed Summer Estate of Washington Post Publisher on the Market

186 sprawling acres of Martha’s Vineyard, previously owned by the late Katharine Graham, is coming on the market. She purchased it to prevent the beachfront property from being developed.

Located in one of America’s playgrounds of the rich and powerful, a trust tied to the family of Katherine Graham, publisher of the Washington Post, is selling a large portion of her summer home for $39.5 million.

The Wall Street Journal reports in the recent article, “On the Market: Katharine Graham’s Summer Estate for $39.5 Million,” that the expansive 186-acre beachfront property overlooks James Pond, Buzzards Bay and the Elizabeth Islands. There are meadows, stone walls and a brook that runs through the land, according to listing agents Gerret C. Conover and Thomas E. LeClair of LandVest, an affiliate of Christie’s International Real Estate.

Graham led the Washington Post through its ground-breaking reporting of the Watergate scandal and the 1971 publishing of the Pentagon Papers. The period was depicted in the 2017 movie “The Post.”

Graham purchased the property in the early 1970s, in an effort to keep it from developers, according to LandVest.

In her memoir, “To the New Owners,” journalist and author Madeleine Blais said the property “felt like the set of a Katharine Hepburn movie, one in which the heroine shows verbal spunk and athletic grace in equal measure.”

Katharine Graham died in 2001. In her will, she bequeathed a large part of the original property to her son William, a lawyer and philanthropist, according to the listing agents. He passed away last year. The property is now owned by several limited companies, linked to trustees and executors for William Graham’s estate. The proceeds of the sale reportedly will be donated to charity, according to the listing agents.

The house on the property is about 5,000 square feet with eight bedrooms. It has a large covered deck for dining with views of the Atlantic Ocean and a large kitchen for entertaining.

Graham’s property also includes a three-car garage with an apartment, a two-story caretaker’s home, and barn and a one-bedroom private beach house.

The actual home where Katherine Graham lived, which was named “Mohu,” is not included in the sale of the rest of the property. It sits on a separate parcel of land.

Reference: The Wall Street Journal (August 1, 2018) “On the Market: Katharine Graham’s Summer Estate for $39.5 Million”

New Scams for Seniors: Be Warned!

People think they are doing the right thing by planning for the future, and they are—but you have to be careful who you let handle assets. Many new scams are focused on estate planning for seniors.

Scammers prey on the elderly, giving them deliberately bad legal advice, pressuring them into unnecessary and inappropriate investments and trying to separate vulnerable people from a lifetime of savings.

Wealth Advisor reports in the article “Beware Of These New Estate Planning Scams” that new estate planning scams focus on taking advantage of an elderly person who may have reduced capacity. Scammers want to get seniors to sign over their property or sign a power of attorney to control the elderly person's estate. The most vulnerable senior citizens are those who have no close relatives.

Talk to an experienced estate planning attorney who can raise issues with you, make suggestions and pinpoint potential issues.

Work with a trusted estate planning attorney and tell your family what to expect when you pass away. If you don’t, you could lose a lot of money to a predatory third-party.

Another one of the new estate planning scams is the trust mills. The National Consumer Law Center says that these scammers are dishonest salespeople who prey on seniors’ fears that after their deaths, their life savings and assets will be stolen. In addition, both the Federal Trade Commission and AARP have issued warnings about these hard-sell living trust promoters.

The con artists who promote living trusts to seniors don’t want to help anyone plan for the future. Instead, they're trying to get their “clients” to hand over lots of money for their extra-special living trust kit. That’s one signal that a so-called estate planner is up to no good—they're offering a one-size-fits-all estate plan solution.

Experts also say you should beware of terms such as "Pure," "Pure Equity" or "Constitutional" Trust. These can be even worse than the living trust scams.

If you are being pressured to do anything quickly or someone you don’t know is telling you that you can make a lot of money fast, steer clear. An estate planning attorney who is a member of your local or state bar association will work with you to create a plan that works for your situation and will welcome your family’s involvement.

Reference: Wealth Advisor (August 6, 2018) “Beware Of These New Estate Planning Scams”

Judge Says Country Singer Campbell’s Kids Have the Right to Challenge his Will

Three of Glen Campbell’s children have been given the right to contest two wills left by the singer, that completely cut them out of his estate. A Nashville judge says they have legal standing.

In two wills, dated September 1, 2006 and January 7, 2001, Glen Campbell disinherited three of his children. Tennessee Probate Judge David Randy Kennedy has now said they may contest the singer’s capacity to agree to the wills.

The Tennessean reported it its recent article, “Glen Campbell's children have right to contest wills that cut them off inheritance,” that Travis, Kelli and Wesley Campbell petitioned the court to certify that a will contest existed. The three were the only children of Campbell who were left out of both wills.

Anyone who may have a potential interest from the will, can challenge a will. The most successful challengers are usually spouses. The most successful grounds for a will contest are that the decedent lacked testamentary capacity or that the person was unduly influenced to draft the will to benefit a certain person.

Judge Kennedy noted in his decision that, in this case, the three Campbell children intended to contest their father's capacity to agree to the wills and also that he was subject to undue influence. Campbell suffered from Alzheimer's disease for a few years, before he died on August 7, 2017.

The 2006 will was filed by Kimberly Campbell, Glen’s widow, who was also named executor of his estate. She recently filed notice that she wouldn’t challenge the right of the three children to contest the will. Judge Kennedy said in his decision, that there was no opposition to the certification request.

The 2006 will names Kimberly and Glen’s five other children as beneficiaries. A fourth Campbell child, Debbie Campbell-Cloyd, has raised questions about the actions of a former publicist and manager for the singer, Stanley B. Schneider, who has been acting as a temporary administrator of the estate.

Campbell-Cloyd asked the probate judge to order the temporary administrator to provide a complete accounting of any payments made from the Campbell estate and of a bank account that had been controlled solely by Kimberly and Glen Campbell. Schneider had power of attorney over this account. The royalties, said Campbell-Cloyd, were to have been deposited into an estate account, instead of this previously unknown bank account.

Reference: The Tennessean (July 25, 2018) “Glen Campbell's children have right to contest wills that cut them off inheritance”

Make A Choice, Even If You Stay Put: Your Retirement Residence

Free from workplace obligations, where you live in retirement starts as a wide-open choice.  However, once you define your family’s needs, the answers will become clearer.

There’s no one right answer, when it comes to the question posed in Forbes’ recent article, “Where Will You Live In Retirement?” You’ll need to speak with your spouse, and your kids and grandchildren will also appreciate being part of the discussion.

There are several important considerations in deciding where to live. One of the most critical is your finances. Try to understand how much you should be allocating to housing. If you have some equity in your current home, that could play a part in your future financial viability. If you live in a market where real estate values are high, you might be able to benefit from that and have a wider selection of options.

You should also consider how you want to spend your time in the next few decades of your life, such as traveling or continuing to work and staying active in your present community. This will affect where you may want to stay geographically, or whether you downsize in the same town.

Where you family is located, is also a factor. Many seniors like to be close to their grandkids.  However, if a job opportunity arises, your grandchildren may be moving away. Be prepared to move again, if you are moving for that reason.

Some people like the active 55+ communities in warm weather climates.  However, if you choose this option, be sure do a thorough check before you make a commitment.

Speaking of warm weather, if you move somewhere for the climate, check out the destination in all seasons for an extended length of time. If the weather is lovely during the winter but unbearable during the summer, how will it impact your lifestyle?

Another important factor in making a move is friendship. The relationships you have and those you choose to develop, will be helpful in any change of residences.

If you are considering moving in retirement, start planning early and move when you are well enough to withstand all the stresses that come with a move. You’ll want to be able to enjoy your new home, build new friendships, expand your activities and live your best life. Transitions get harder, as we get older, so don’t wait.

Reference: Forbes (July 30, 2018) “Where Will You Live In Retirement?”

Cash Value Grows in Certain Life Insurance Policies: Here’s How It Works

How the cash value of a life insurance policy grows, depends upon what policy you own, its provisions and the life insurance company itself.

Known as permanent life insurance, also called cash-value life insurance, has a cash value that grows over time, as well as a death benefit. Other insurance policies that have a built-in cash value include variable, whole and universal life insurance. Term life has no cash value.

When the cash value in permanent life insurance has accumulated to some size, you can use the funds to:

• Pay your policy premium;
• Take out a loan at a lower rate than banks offer;
• Create an investment portfolio that maintains and accumulates wealth; or
• Supplement your retirement income.

Investopedia’s recent article, “How Cash Value Builds in a Life Insurance Policy,” explains how the process typically works.

When you pay the premium on a cash-value life insurance policy, part of the payment goes to the policy’s death benefit (based on your age, health and other underwriting factors). Another portion covers the insurance company’s operating costs and profits. The remainder of the payment is attributed toward your policy’s cash value. The life insurance company will invest this money in a conservative-yield investment. As you continue to pay premiums on the policy and earn more interest, the cash value increases.

With a cash-value life insurance, you generally pay a level premium. In the early years of the policy, a higher percentage of the premium goes toward the cash value.  However, with time, the amount earmarked to cash value decreases.

Each year as you get older, the cost of insuring your life gets more expensive for the life insurance company. That’s why the older you are, the more it costs to purchase a term life policy. When it comes to cash-value insurance, the insurance company will add in these increasing costs.

The cash value accumulation will vary, based on the type of policy you have. Whole life policies provide “guaranteed” cash value accounts that grow according to a formula determined by the insurance company. Universal life policies accumulate cash value based on current interest rates. Variable life policies invest funds in subaccounts, which operate like mutual funds. The cash value grows or falls, based on the performance of these subaccounts.

Here's something to dig into: depending on the policy, the cash value of your policy may return to the insurance company and not your heirs. Have a conversation with your insurance advisor and your estate planning attorney to calculate the policy’s potential cash value and provisions and maximize the return to your estate.

Reference: Investopedia (April 30, 2018) “How Cash Value Builds in a Life Insurance Policy”

Is There a Good Way to Make a Minor Child the Beneficiary of an IRA?

Creating an estate plan when heirs are minors, requires a special touch. You can leave your asset to whomever you want, of course, but some properties cannot legally be owned by minors. There are special structures and rules to convey assets to minors, but they have to be carefully followed.

If you have an eccentric and wealthy brother who tells your nine-year-old son that he is going to inherit a Ferrari, and then does, chances are you won’t allow your son to drive the car, until he is skilled enough to handle that much horsepower. What if you wanted to leave your son a large IRA and you die while he is a minor?

Investopedia’s article, “Designating A Minor As An IRA Beneficiary,” explains that there are ramifications of leaving one or more of your IRAs to a minor. Let’s look at some of the advantages and disadvantages of this strategy.

There are a few reasons why someone might want to leave an IRA to a beneficiary, who’s not yet reached the age of majority.  It is obvious that with a minor child, IRAs can allow much greater flexibility and potential for long-term growth than something like a savings bond. IRAs don’t have to be used for higher education or any other specific purpose to avoid taxation. Young beneficiaries also receive the benefit of a lower required minimum distribution (RMD) over their lives, because the life expectancy of the beneficiary is used when calculating their RMDs.

However, minors can’t own legal property of any kind in their name. Instead, a guardian must be appointed to manage the property for the child until they reach the age of majority. If the owner of the IRA doesn’t appoint one, a judge will do it. That guardian may have very different ideas about how the account should be handled.

There are some other options you can have your guardian implement, once your beneficiary receives the IRA. He can place the distributions in a custodial account pursuant to the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). However, this could have adverse tax consequences for whoever claims the minor as a dependent on their tax return. If the minor's income is above a certain level, then the parent or guardian must pay tax on the excess at their top marginal tax rate. This option also gives the minor sole custody of the property at the age of majority, when she may not be ready to handle a large sum of money.

A second option is to put the money into a 529 plan. This account lets the assets grow tax-free until they’re used to pay for higher education expenses.  However, if the beneficiary doesn’t pursue a college education, the plan can also backfire.

Another answer may be to substitute a carefully drafted revocable living trust as the “designated beneficiary” for the IRA and make the minor child the beneficiary of the trust. The guardian would be appointed as the trustee. A trust allows the creator to provide specific directions on how you want the guardian to handle the IRA distributions for the minor.

These are all alternatives that you need to consider. Talk with an experienced estate planning attorney to determine how this will work with the rest of your estate plan. You’ll also need to speak to your IRA custodians about each institution’s requirements for beneficiary designations. Remember that the beneficiary designation supersedes your will.

Reference: Investopedia (2018) “Designating A Minor As An IRA Beneficiary”

Siblings Say Celebrity Chef DiSpirito’s Draining their Grandmother’s Estate

He might be great in the kitchen, but Rocco DeSpirito’s own brother and sister say he’s draining their grandmother’s estate and pocketing the cash.

Grandmother Nicolina DiSpirito may have become famous making hundreds of meatballs on her son Rocco’s television show “The Restaurant,” but that doesn’t mean he’s doing right by his siblings or her estate, according to The New York Post’s recent article, “Siblings of celebrity chef want him out of late mother’s estate.”

Michael and Maria, siblings of celebrity chef Rocco DiSpirito, have filed a lawsuit to get Rocco removed as executor of the estate. They accuse him of failing to pay property taxes and taking the rent payments from an apartment building she owned in Brooklyn.

Nicolina passed away in 2013. She named Rocco as her executor and left half her estate to him.  She split the other half between her other son Michael and daughter Maria.

Rocco has delayed the probate process and has accumulated needless expenses that are draining the estimated $1.5 million estate, his siblings charge. The unpaid taxes and water bills for his mother’s Pacific Street building, which has six units and a storefront, have reached more than $23,000, according to court papers. Rocco won’t sell the building, even though the family could get about $800,000 for it, Michael and Maria claim. Rather than dividing up their mom’s personal belongings, as she instructed in her will, Rocco’s incurred tens of thousands in unpaid bills to store what his siblings estimate is less than $20,000 worth of personal property.

“Rocco DiSpirito’s neglect, waste, inaction and misconduct accomplishes nothing other than increased expenses and legal fees for the estate,” the siblings wrote in court papers seeking Rocco’s removal as executor.

There is a specific procedure to remove an executor from a will, after the death of the testator: an interested person must file for a court proceeding. An “interested person” is defined as an individual or business that has a stake in the estate assets.

In most cases, a judge will only remove an executor, if it is proven that she or he is not capable of performing the duties required, is unsuited for the position or has become disqualified since the decedent appointed her or him. The executor is required to act in good faith and with the best interest of the beneficiaries in mind. Grounds for removing an executor include doing a bad or negligent job of managing the estate and its assets.

Reference: New York Post (July 7, 2018) “Siblings of celebrity chef want him out of late mother’s estate”

Just in Case Happily Ever After Isn’t, You Need a Prenup

Most people go into marriages thinking they will be forever.  However, the hard truth is, about half of American marriages end in divorce. With those odds, your best bet is to have a pre-nuptial agreement.

A prenuptial agreement may be the first legal document an engaged couple signs, even before they apply for a marriage license. Think of a prenup as a complement to the marriage license and estate planning documents: it’s another document to protect the couple’s future.

A prenuptial agreement, as described in Forbes’ recent article, “Pre-Nuptial Agreements: A Hedge For Happily Ever After,” protects both members of the couple with a legal agreement that designates certain current and future assets as owned by an individual and those owned by the couple together—marital property.

Although there are two types of laws dealing with the ownership of marital property (common law and community property), typically if one spouse enters a marriage with significant assets and would like to keep these assets separate, a prenuptial agreement can provide him or her with protection, if the marriage ends in divorce.

For example, although inherited assets have traditionally been considered separate assets, these assets can easily become marital property. It’s possible for these inherited assets to remain as separate property through careful segregation. It’s also common for a couple to unintentionally comingle these assets, making them marital assets.

Depositing inherited assets into a joint account or using separate assets to purchase a jointly owned residence that benefits both spouses are frequently seen examples of comingling that can create marital property. Even when a couple attempts to keep assets separate, depending on state law, an inheritance (or the appreciation) may still become marital property.

In some instances, a trust with a prenuptial agreement may give a person the best protection against the inadvertent conversion of separate property into marital property.

Prenuptial agreements can be quite important to protect children in high-net worth families. These agreements create a clear structure that will help to avoid uncertainty of a divorce settlement and make certain that the intended beneficiaries receive the appropriate family assets.

No, discussing a prenuptial is not romantic.  However, don’t think of it as planning for divorce, but as a means of putting the couple’s financial house in order. When there are children from prior marriages or if one spouse has significantly more wealth than the other, the conversation will be necessary at some point in time. Take care of this business now, so you can move on to enjoying building a new life together.

Reference: Forbes (July 30, 2018) “Pre-Nuptial Agreements: A Hedge For Happily Ever After”

Timing Inheritance for Their Own Good

Having an estate plan forces you to ask many important questions, and one of them is when the right time is for your children to have access to their inheritance. The answer is different for every family.

You know your kids best—the one who turns a dollar into ten bucks with seemingly no effort and one who burns through cash like an ATM machine. Some children never learn to manage money well, and others seem to be born with good financial skills. There are ways to control when your children inherit wealth, and how much they inherit.

Wealth Advisor’s article asks, “When Should Children Have Access To Their Inheritances?” The article looks primarily at distributions from trusts created by a will (testamentary trusts). However, these considerations also apply to trusts created during your lifetime, which are called inter-vivos trusts.

One big difference between your will and lifetime irrevocable trusts, is that during your lifetime your will can be updated and changed.  However, amending or changing, a lifetime irrevocable trust is much more difficult. Usually it requires a statutory solution (decanting) or permission from the courts.

Distributions can be discretionary, mandatory or event-driven. A common distribution structure includes mandatory distributions at specified ages, such as 25, 30, and 35. A third of the principle is distributed at age 25, with half of the balance doled out at age 30, and the remaining balance distributed at age 35.

In addition to mandatory distributions, a trust can provide that the trustee has the authority to make either fully discretionary distributions or distributions under some “ascertainable standard,” such as for the beneficiary’s health, education, maintenance and support.  However, detailing only mandatory distributions or event-based distributions significantly reduces the fiduciary’s flexibility.

A trust should be created with the help of an experienced estate planning attorney. He or she will help guide your decisions about trust distributions, that include both the principal and the income generated by that principal.

In many situations, when an estate plan is designed, you may not be sure of the ultimate size of your children’s inheritance. In that case, your attorney can help you plan for an income stream in today’s dollars, as well as a cost of living adjustment to account for inflation. This will eliminate any mandatory income distributions that may mean large distributions to children at relatively young ages.

Alternatively, you could give the trustee the power to make these decisions, and let your children have access to whatever amounts the trustee thinks is appropriate. There’s also a hybrid approach, giving the trustee certain mandatory distributions combined with discretionary distributions. Some estate planning attorneys believe that this provides the most asset protection and flexibility.

Reference: Wealth Advisor (July 30, 2018) “When Should Children Have Access To Their Inheritances?”

Understanding the Difference Between Alzheimer’s and Dementia

While Alzheimer’s is the most common form of dementia, accounting for an estimated 60-70% of all cases, there are other types of dementia. High blood pressure causes the second most common form, vascular dementia.

The words “dementia” and “Alzheimer’s disease” are often used interchangeably, but they are different types of dementia. There’s alcohol-related dementia, Parkinson’s dementia and frontotemporal dementia. Each has different causes, according to AARP in a recent article, ““Dementia vs. Alzheimer’s: Which Is It?” It is extremely important to be sure that the correct type of dementia is diagnosed, so that the correct treatment, medicines and support for the individual and the family is given.

Correctly identifying Alzheimer’s instead of another type of dementia, may result in a prescription for a cognition-enhancing drug rather than an antidepressant. A patient may also be eligible to participate in a clinical trial for Alzheimer’s, if he or she has been specifically diagnosed with the disease.

One important clarification comes from Constantine George Lyketsos, M.D., director of the Johns Hopkins Memory and Alzheimer’s Treatment Center in Baltimore, who said “To be called dementia, the disorder must be severe enough to interfere with your daily life.”

Dementia is a nonreversible decline in mental function. It’s a catchall phrase that encompasses several disorders that cause chronic memory loss, personality changes or impaired reasoning. Alzheimer’s disease is just one of them.

Alzheimer's is a specific disease that slowly and irreversibly destroys memory and thinking skills. There’s no cure.  However, researchers have identified biological evidence of the disease: amyloid plaques and tangles in the brain. They can be seen microscopically, or more recently, using a PET scan that employs a newly discovered tracer that binds to the proteins. The presence of these proteins can also be detected in cerebral spinal fluid, but this method isn’t used often in the U.S.

Dementia is diagnosed by a doctor who must find that you have two or three cognitive areas in decline. These areas include disorientation, disorganization, language impairment and memory loss. To make that diagnosis, a doctor or neurologist will administer several mental-skill challenges.

Despite many advances in research, there is still no definitive objective test for Alzheimer’s disease. Doctors rely on observation and ruling out any other possibilities for their diagnosis. The use of the new PET scan is said to be 95% accurate, but it’s usually recommended only for patients with unusual symptoms.

If a family member gets a diagnosis of Alzheimer’s or dementia, make sure that their estate plan is in place and up to date. There are likely to be many issues that need to be addressed.

Reference: AARP (June 25, 2018) “Dementia vs. Alzheimer’s: Which Is It?”