Barnes Lipscomb & Stewart PLLC

Relocating for Retirement, Family … or Taxes?

“Does your ability to pass on your wealth to your heirs depend on where you live ... and die? Indeed, it does.”

When the current health crisis finally passes, many people will have spent time considering what they want to do with their remaining years. That may include relocating. For some people, taxes are a real reason to move to a new state, but some states are more tax-friendly than others, says the article “Best States to Die In…For Taxes” from Tucson.com.

No matter where you live, you have to pay federal estate taxes. However, there are eighteen states in the U.S. that require citizens to pay either estate taxes or inheritance taxes or both. The estate taxes are subtracted from an estate before its assets are distributed to heirs. Inheritance taxes are paid by heirs of the deceased, and it doesn’t matter if the heirs live in another state.

Here are the six states with inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The good news is that spouses are exempted from having to pay any inheritance taxes, and in New Jersey, it also applies to domestic partners. In some states, children and grandchildren are exempted, but not in Nebraska or Pennsylvania.

For people who live in Nebraska, immediate relatives must pay a 1% tax on inheritance amounts that are more than $40,000. In Pennsylvania, tax rates start at 4.5% for children and lineal heirs. Nebraska has the highest top inheritance tax rate of all the estates, at 18%. The others range from 10% to 16%.

Each state has certain exemptions, based on the amount of the inheritance and the heir’s relationship to the deceased. If you receive an inheritance from someone who lives in one of the inheritance tax states, speak with an estate planning attorney, so that you know what tax is due. State law categorizes heirs into types for the purposes of assigning exemptions and tax rates, and these vary by state.

The worst state to die in from an inheritance tax and estate tax perspective is Maryland, which imposes a 16% tax on inheritances above $5 million for persons who died in calendar year 2019. Until recently, New Jersey had a scaled estate tax that ranged from 0.8% to 16.0% on estates over $675,000, but the state no longer imposes any estate tax on the estate of decedents, who die on or after January 1, 2018.

Many inheritances pass through to spouses and children. The exemptions are generally fairly generous, so many people may not run into this issue with estate or inheritance taxes. However, if your estate includes a home within an expensive real estate market, your family may be in for some surprise taxes.

Meet with an estate planning attorney to learn what your state’s estate and inheritance tax rates are, and plan for the future. If you are in a high tax state, relocating may not be a bad idea. Your heirs will appreciate your planning.

Reference: Tucson.com (March 27, 2020) “Best States to Die In…For Taxes”

Handing Kids Keys to Your Home Is Never Good Estate Planning

“Adding an adult child to your house deed, or giving them the home outright, might seem like a smart thing to do. It usually isn’t.”

Transferring ownership of the family home to an adult child may seem like a simple approach for avoiding having the house go through probate, or even qualifying easily for Medicaid. However, this seemingly simple solution comes with many problems, including taxes and the potential for years of delay for qualifying for Medicaid. That’s the advice from the article “Don’t Give Your Adult Kids Your House” from Nerd Wallet.

There are many other ways to transfer a house to family members. Estate planning lawyers will be able to help you accomplish this, without creating extra problems for your family.

First, if you leave the house to your children in your will, which means they don’t get it until you die, they receive something called a “step-up in basis.” This means that all of the appreciation of the house that occurred during the time that you owned the house until your death is not taxed.

Here’s an example. A financial planner advises his client not to let his mother gift him the family home. She paid $16,000 for it back in 1976, and the current market value of the house was close to $200,000. None of that increase in value would be taxable if the son inherited the house. However, she signed a quitclaim to give her son the house while she was living and died shortly afterwards. The estimated tax bill was about $32,000.

Some families who realize the impact of this when it’s almost too late, scramble to give the house back to the parents. They do a last-minute deed change, before it’s too late. There isn’t always time for this.

When it comes to transferring the house, so a parent can qualify for Medicaid, there’s a five-year look back that prohibits any transfer of assets, especially of a house. That can lead to a penalty period, so the senior who needs long-term care will not be eligible for Medicaid.

Transferring a home to an adult child with financial or marital problems is asking for trouble. If the house becomes the child’s asset, then it can be attached by creditors. If a divorce occurs, the home will be an asset to be divided by the couple—or lost completely.

As for the family in the example above, the man was almost stuck paying taxes on a $184,000 gain. A tax research firm he engaged learned of a workaround, Section 2036 of the Internal Revenue Code. If the mother retained a life interest in the property, which includes the right to continue living there, then the home would remain in her estate, rather than be treated as a completed gift. The son, as executor of the estate, filed a gift tax return on her behalf to show that he was given a “remainder interest” or the right to inherit, when his mother’s life interest expired at her death.

There are less stressful and less costly ways to avoid the family home being part of the probated estate. Let an experienced estate planning attorney help your family before costly, time-consuming and stressful mistakes are made.

Reference: Nerd Wallet (April 3, 2020) “Don’t Give Your Adult Kids Your House”

This Social Security Pit Could Be Costly and Stressful

A cautionary report about a man who simply wanted to apply for Social Security appears in a recent article from Forbes, “A Social Security Application Mistake or A Malicious Policy with Frightening Consequences?”

Last September, a man who turned 70 in November called the local Social Security office to request that his benefits be initiated when he turned 70. The Social Security employee explained to him that if he took his benefit early, he would receive a six-month retroactive payment. The problem with taking this retroactive payment, is that it establishes an earlier start date for monthly benefits. It, therefore, reduces the monthly benefit that is received for a lifetime, and eliminates the entire reason for delaying taking benefits until age 70.

The gentleman said no. He knew that this would give him more money in the short run, but less over the long haul. The article reports that Social Security seems to have a policy of contacting people close to age 70 and offering to start their benefits retroactively. This may save Social Security some money but creates a world of problems for recipients.

The man stuck to his guns, insisting that he did not want the early benefits and wanted his retirement benefit to begin on November 2019,.This meant that his first check would arrive in December 2019. Social Security benefits are always one month behind.

For whatever reason, he maintains that the Social Security employee did the exact opposite of what he wanted. She specified that his retirement benefit should begin nine months before he called, dating back to January 2019. Ever since then, the man has been trying to undo this mistake. Here’s what happened as a result:

A lump-sum payment was directly deposited into his bank account in October 2019.

He went to the Social Security office and filed a form to withdraw his initial benefit application, requesting to start his new retirement benefit as of November 2019. He was told to repay the lump sum, but to wait until he received a letter from the Mid-Atlantic Program Service Center in Philadelphia. The letter arrived December 3, and he sent a check for the exact amount and included a copy of the letter.

In October, Social Security stopped automatically deducting his Medicare Part B premium from his checking account. He realized this and began sending Medicare the premium directly. Had he not done this, he could have lost his coverage entirely.

On Jan. 10, 2020, Richard’s check was cashed.

On Feb. 20, he received a letter from Social Security stating that he could be paid the correct amount.

He immediately sent a letter requesting Social Security to immediately initiate the correct payment and to send him a corrected 1099, since he had received a 1099 from Social Security, indicating that he needed to pay federal and state taxes on the lump sum that he had wrongly been sent.

It hasn’t gotten much better for the man. Incorrect amounts have been reported to the IRS, Social Security has not sent corrected 1099s, his past benefits have not been corrected and a series of directly related issues have been created with Medicare. Meanwhile, his wife is seriously ill, and this has led to more stress than either of them needed.

Be careful when applying for Social Security benefits, and document every step of the way, just to be sure.

Reference: Forbes (April 1, 2020) “A Social Security Application Mistake or A Malicious Policy with Frightening Consequences?”

Retirement Planning and Declining Abilities

“When a loved one is experiencing cognitive decline, emotional and medical considerations often overshadow the financial planning that needs to happen. This is a potentially costly mistake.”

Whether the reason is Alzheimer’s, Parkinson’s or any of a number of illnesses that lead to dementia, it’s hard for families to think about legal or financial concerns, when a diagnosis is first made. This can lead to serious problems in the near future, warns the article “Cognitive Decline Shouldn’t Derail Retirement Planning. Here are Some Tips to Prepare Your Finances” from Barron’s. The time to act is as soon as the family realizes their loved one is having a problem—even before the diagnosis is official.

Here are some useful tips for navigating cognitive decline:

Take an inventory. Families should create a detailed list of assets and liabilities, including information on who has access to each of the accounts. Don’t leave out assets that have gone paperless, like online checking, savings, credit card and investment accounts. Without a paper trail, it may be impossible to identify assets. Try to do this while the person still has some ability to be actively involved. This can be difficult, especially when adult children have not been involved with their parent’s finances. Ask about insurance policies, veterans’ benefits, retirement accounts and other assets. One person in the family should be the point person.

Get an idea of what future costs will be. This is the one that everyone wants to avoid but knowing what care costs will be is critical. Will the person need adult day care or in-home care at first, then full-time medical care or admission to a nursing facility? Costs vary widely, and many families are completely in the dark about the numbers. Out-of-pocket medications or uncovered expenses are often a surprise. The family needs to review any insurance policy documents and find out if there are options to add or amend coverage to suit the person’s current and future needs.

Consider bringing in a professional to help. An elder law estate planning attorney, financial planner, or both, may be needed to help put the person’s legal and financial affairs in order. There are many details that must be considered, from how assets are titled, trusts, financial powers of attorney, advance health care directives and more. If Medicaid planning was not done previously, there may be some tools available to protect the spouse, but this must be done with an experienced attorney.

Automate any finances if possible. Even if the person might be able to stay in their own home, advancing decline may make tasks, like bill paying, increasingly difficult. If the person can sign up for online banking, with an adult child granted permission to access the account, it may be easier as time goes by. Some monthly bills, such as insurance premiums, can be set up for automatic payment to minimize the chances of their being unpaid and coverage being lost. Social Security or Supplemental Security Income benefits are now required to be sent via direct deposit or prepaid debit card. If a family member is still receiving a paper check, then now is the time to sign up for direct deposit, so that checks are not lost. Pension checks, if any, should also be made direct deposit.

Have the correct estate planning documents been prepared? A health care representative and a general durable power of attorney should be created, if they don’t already exist. The durable power of attorney needs to include the ability to take action in “what if” cases, such as the need to enroll in Medicaid, access digital assets and set up any trusts. A durable power of attorney should be prepared before the person loses cognitive capacity. Once that occurs, they are not legally able to sign any documents, and the family will have to go through the guardianship process to become a legal guardian of the family member.

Reference: Barron’s (Jan. 11, 2020) “Cognitive Decline Shouldn’t Derail Retirement Planning. Here are Some Tips to Prepare Your Finances”

Massive Changes to RMDs from Stimulus Plan

“Here are the highlights of the most recent tax changes found in the $2 trillion coronavirus relief bill, which the Senate has approved, and the House passed recently.”

Several of the provisions that were signed into law in the relief bill can taken advantage of immediately, reports Financial Planning in the article “Major changes in RMDs and retirement contributions in $2T stimulus plan.” Here are some highlights.

Extended deadline for 2019 IRA contributions. With the tax return filing date extended to July 15, 2020 from April 16, the date for making 2019 contributions to IRA and Roth IRA contributions has also been extended to the same date. Those contributions normally must be made by April 15 of the following year, but this is no normal year. There have never been extensions to the April 15 deadline, even when taxpayers filed for extensions.

When this tax return deadline was extended, most financial professionals doubted the extension would only apply to IRA contributions, but the IRS responded in a timely manner, issuing guidance titled “Filing and Payment Deadlines Questions and Answers.” These changes give taxpayers more time to decide if they still want to contribute, and how much. Job losses and market downturns that accompanied the COVID-19 outbreak have changed the retirement savings priorities for many Americans. Just be sure when you do make a contribution to your account, note that it is for 2019 because financial custodians may just automatically consider it for 2020. A phone call to confirm will likely be in order.

RMDs are waived for 2020. As a result of the Coronavirus Aid, Relief and Economic Security Act (CARE Act), Required Minimum Distributions from IRAs are waived. Prior to the law’s passage, 2020 RMDs would be very high, as they would be based on the substantially higher account values of December 31, 2019. If not for this relief, IRA owners would have to withdraw and pay tax on a much larger percentage of their IRA balances. By eliminating the RMD for 2020, tax bills will be lower for those who don’t need to take the money from their accounts. For 2019 RMDs not yet taken, the waiver still applies. It also applies to IRA owners who turned 70 ½ in 2019. This was a surprise, as the SECURE Act just increased the RMD age to 72 for those who turn 70 ½ in 2020 or later.

IRA beneficiaries subject to the five- year rule. Another group benefitting from these the rules are beneficiaries who inherited in 2015 or later and are subject to the 5-year payout rule. Those beneficiaries may have inherited through a will or were beneficiaries of a trust that didn’t qualify as a designated beneficiary. They now have one more year—until December 31, 2021—to withdraw the entire amount in the account. Beneficiaries who inherited from 2015-2020 now have six years, instead of five.

Additional relief for retirement accounts. The new act also waives the early 10% early distribution penalty on up to $100,000 of 2020 distributions from IRAs and company plans for ‘affected individuals.’ The tax will still be due, but it can be spread over three years and the funds may be repaid over the three-year period.

Many changes have been implemented from the new legislation. Speak with your estate planning attorney to be sure that you are taking full advantage of the changes and not running afoul of any new or old laws regarding retirement accounts.

Reference: Financial Planning (March 27, 2020) “Major changes in RMDs and retirement contributions in $2T stimulus plan”

Scammers Beef Up Efforts in a Crisis

“The Inspector General of Social Security, Gail S. Ennis, is warning the public about fraudulent letters threatening suspension of Social Security benefits due to COVID-19 or coronavirus-related office closures.”

As if the elderly didn’t have enough to endure, now comes word that scammers who typically prey on seniors are upping their game. Stating that Social Security offices around the country are closed, which is true, scammers are targeting seniors with letters threatening the suspension of their Social Security payments due to pandemic-related office closures.

It’s true that the offices across the country are closed, but Social Security employees are continuing to work, says the My Prime Time News article “Inspector General Warns Public About New Social Security Benefit Suspension Scam.”

What’s more, the Inspector General notes that the Social Security Administration (SSA) will not suspend or discontinue benefits because their offices are closed. The Inspector General has received reports that beneficiaries are receiving letters that advise them to call a phone number referenced in the letter.

Scammers then talk the callers into providing them with personal information or make arrangements for the seniors to send them retail gift cards, wire transfers, internet currency or even sending cash by mail. Otherwise, they tell the seniors that their benefits will be cut off until the office reopens.

Any communication that is received with that message, by mail, phone or email, is fraudulent and should be dismissed. Social Security will never:

• Threaten with benefit suspension, arrest or legal action, if a fine or fee is not paid,
• Promise a benefit increase or other help in return for direct payment,
• Request or even accept payment by retail gift card, wire transfer, internet currency or prepaid debt card,
• Demand secrecy about payments, or
• Send letters or reports with personally identifiable information through the U.S. Mail.

Anyone who receives a letter, text, call or email that concerns an alleged problem with a Social Security number should not respond. The challenge is that the communications sometimes include a person’s Social Security number, or contains names, addresses or other information that is accurate. This is because scammers have purchased information illegally, not because the information is legitimate. Anyone receiving any communication from Social Security that demands immediate attention or threatens the end of benefits, should not respond directly to that communication.

Instead, report the scam to the Social Security Administration through its website. If you have any doubt about the validity of the letter or email, speak with a trusted friend, family member, or estate planning attorney. Don’t fall for it—especially during these tense times.

Reference: My Prime Time News (March 28, 2020) “Inspector General Warns Public About New Social Security Benefit Suspension Scam”

Finalizing Estate Planning Documents while Social Distancing

“Besides seeking to draft or alter wills and trusts, many clients were changing trustees, executors and the agents they assigned to oversee their finances and health care, if they were unable to make decisions themselves.”

After the initial shock of the pandemic, people are realizing not just that they need to update their wills, but the people who have been named in important roles. In a recent article from The New York Times, “What to Know About Making a Will in the Age of Coronavirus,” one person said, “I think I still have my jerk brother as the trustee. I need to change that.”

However, with social distancing now being the new norm, some necessary processes for finalizing estate plans are calling for extra creativity. While lawyers can draft any necessary documents from their home offices, the documents need to be signed by clients and, depending upon the document and the state, by witnesses and notaries. These parties usually need to be in the same room for the documents to be considered legally valid.

New York’s Governor Andrew M. Cuomo issued an executive order on March 7 that declared a disaster emergency in the state and temporarily gave notaries the authority to authenticate documents by videoconference. Other governors have also issued executive orders to allow video notarizations, including Connecticut, Iowa, New Hampshire and Washington. It’s safe to say that more states will probably permit this as time goes on.

However, besides needing notarizations, wills in New York State and other documents require two unrelated witnesses in the room when the document is signed. That also goes for the health care proxy, which gives a person the ability to name someone to make medical decisions on their behalf, if they become incapacitated.

One New York attorney used a video conference to watch two clients and their witnesses, located more than 100 miles away from his home office, sign new financial powers of attorney and health care proxies. He used his laptop to record a video of the proceedings, while clients used their phones. The client couple sat on the enclosed porch of a friend’s house in a distant county and signed the documents, while their friends stood six feet away. When the couple finished signing, they stepped away and their friends moved in to sign the documents, all in view of the attorney and all, of course, wearing vinyl gloves.

The documents were then scanned and sent to the attorney by email and he notarized them. They will also be mailed to him at his home, and then he will authenticate the documents.

In New Jersey, notaries need to be physically present at the signing of documents. One attorney took extra steps for two ER nurses, both single mothers and on the front lines of the coronavirus outbreak. He met them in the front yard of one of their houses, where a table had been set up and rocks were used to hold down the documents from blowing away in the wind. Everyone wore gloves and brought their own pens. One nurse served as witness for each other, and another friend was a witness for both. After each person signed, they stepped away, while another stepped up to the table.

Not every state is making changes to permit these documents to be witnessed and notarized, so there may be many outdoor signings taking place in the weeks and months to come. Speak with your estate planning attorney, who will know the laws that apply to your state.

Reference: The New York Times (March 26, 2020) “What to Know About Making a Will in the Age of Coronavirus”

Estate Plan Updates in the Age of Coronavirus

“Financial advisors and estate attorneys say they are seeing a flurry of inquiries from people seeking to update or draft wills and take other estate-planning measures amid the coronavirus crisis.”

With the ever-increasing number of deaths in Europe and the U.S., many people are now doing what estate planning attorneys have advised them to do for years—get their estate plans in order. Many are having phone meetings or videoconferences with estate planning attorneys, says Barron’s in the article “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know.” People are worried, and they are in a hurry too.

However, estate planning can be complex, even when there is plenty of time to prepare. Here are a few tips:

Everyone should have three basic documents: a last will and testament, a durable power of attorney and an advance health care directive. These documents will allow assets to be distributed, give another person the ability to make financial decisions, if you are too sick to do so and also allow another person to talk to medical professionals on your behalf on treatment and care. These same documents are also a good idea for any young adults in the family, anyone older than 18 in most states.

With the proper documents prepared in accordance with the laws of your state, you may be able to avoid having a court appoint a guardian for minor children or having a probate court determine asset distribution.

However, there’s more. In addition to these basic documents, everyone needs to review their beneficiary designations on assets that include bank accounts, IRAs, annuities, insurance policies and any other assets. If family situations have changed, these may be out of date.

It’s also a good idea to have an attorney create a medical power of attorney for a minor child, in case another family member needs to take a child to the doctor, discuss their care and make decisions.

While young adults may be more worried about the financial impact of the pandemic, seniors and the elderly are concerned about having documents in order. Wealthy people are concerned about the impact that the pandemic may have on estate planning law, and some are engaged in planning to make substantial gifts, in case the current estate and give tax exemptions are lowered.

Other issues to be discussed with an estate planning attorney:

• Irrevocable living trusts, which provide an opportunity to direct how assets in a trust will be held, invested and distributed before and after death.
• Durable powers of attorney, which appoint an agent to make financial decisions.
• Health-care surrogates, which let people designate a surrogate to make health decisions on their behalf and receive health care information from physicians.
• Living wills, which allow people to designate whether to provide life-prolonging treatment, if in a terminal state.

Reference: Barron’s (March 22, 2020) “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know”

Update Your Estate Plan to Protect Spouse and Children

“Imagine you get married and within a year or two, your new spouse passes away. Now, imagine that your grief is compounded with financial stress.”

Without an updated estate plan, a surviving spouse is left with a world of trouble, as described in the article “Protect Your Spouse and Children by Updating Your Estate Plan” from The National Law Review.

The documents that need to be updated beginning with the will. In one example, a will from a prior marriage left all of a person’s assets to their prior spouse and siblings. Under New York and New Jersey state law, gifts to prior spouses are automatically revoked by law. What does that mean? All assets pass to the alternate beneficiary, who is named in the first will. For this particular spouse, that means that all the deceased spouse’s assets went to the siblings and not the new spouse.

In New Jersey and New York, spouses can elect against a will to claim a share of the deceased spouse’s assets, but this only applies to a third of their assets. That’s far short of what a spouse usually wants for their surviving spouse and children.

The only thing worse than an out-of-date will is no will at all. In another case, a spouse died without having a will. The law in New Jersey provides that in this situation, most assets will go to the surviving spouse, but almost a quarter will go to the deceased’s parents, if they are still living. If there are children from a prior marriage, then a little more than half of the estate will go to the surviving spouse.

The other bad part of having an out-of-date will almost always means that beneficiaries have not been updated. Here’s where things can get even worse.

Assets that have designated beneficiaries do not pass through probate and go directly to the beneficiaries. How bad this can be, depends upon what assets are owned with a designated beneficiary, and how long ago the beneficiaries were named. In some states, prior spouses are removed as beneficiaries by the operation of law, but that is not always the case. An estate planning attorney will be able to explain your state’s laws.

Here’s one more case where a failure to update estate plans caused real hardship for a family. A niece, and not the new spouse, was named as the beneficiary of the deceased’s IRA, which was a large asset. Several hundred thousand dollars went to the niece, instead of going to the man’s new wife and child. He simply never updated his beneficiary designation.

While 401(k)s are always left to the spouse under ERISA, unless spousal consent is given for another beneficiary to receive the 401(k), IRAs are given to whoever is named as a beneficiary. The same goes for life insurance policies, investment accounts, bank accounts and any asset with a named beneficiary.

Speak with your estate planning attorney now to be sure that your current will still reflects your estate planning goals. If you have remarried, welcomed a new child to the family, or had any other major life events, your estate plan needs to be updated. Don’t wait until it’s too late.

Reference: The National Law Review (March 16, 2020) “Protect Your Spouse and Children by Updating Your Estate Plan”

Grandson of Walt Disney’s Longstanding Inheritance Battle

“Bradford Lund tries to prove he is mentally capable of managing his affairs but is trapped in a probate system susceptible to predators.”

Even visionary Walt Disney could not have imagined the struggle his grandson Bradford Lund has endured trying to claim his share of the Disney family fortune, reports the Daily Bulletin in a recent article titled “Walt Disney’s grandson locked in legal battle for personal freedom, millions in inheritance.”

It’s been fifteen years since the start of Lund’s estate battle with estranged family members, probate and courts to prove that he is mentally able to manage an inheritance of hundreds of millions of dollars. He’s had to repeatedly prove that he does not have Down syndrome and can manage this kind of money.

He is now fighting for his freedom. A Superior Court judge from Los Angeles County has appointed a temporary guardian ad litem to make legal decisions on his behalf.

Judge David Cowan said he was not going to give $200 million to someone who may suffer, on some level, from Down syndrome. Even after he was given evidence that Lund does not have Down syndrome, the judge refused to retract his statement.

Lund is fighting against a probate system with high profile attorneys–the former White House counsel Lanny Davis is one of three on his legal team. They have filed a federal civil rights lawsuit accusing Judge Cowan of appointing the guardian ad litem without due process. Suing a judge is almost never done, but the complaint alleges that a judgment was rendered that left them no choice but to take action.

One of Lund’s main opponents is his twin sister, Michelle Lund. The twins attended special-needs schools as children, reportedly for learning impairments. When Lund was 19, his mother created a trust fund now valued at $400 million for him, his sister and another sister, Victoria. She appointed four trustees. The grandchildren were to receive part of their shares at ages 35, 40 and 45, with the remainder kept in trust and then given to them gradually over time.

Lund’s mother died, as did his sister Victoria. Some of the trustees resigned, with others who did not know the family taking their places.

When Brad turned 35, the trustees voted against paying him part of his inheritance, saying they did not believe he was financially or mentally competent. Four years later, sister Michelle suffered a brain aneurysm, but she received her share as scheduled. In 2009, Michelle and her two half-sisters sought an order in an Arizona court that would place Brad under a guardianship for his legal decisions. They claimed that he had chronic deficits and mental disorders. The case went on for seven years and ended with a judge declaring Brad able to make his own decisions.

While the Arizona case was still underway, Lund filed a court petition in Los Angeles County to remove his trustees for various violations. That is when Judge Cowan entered the picture. The judge was presented with a settlement agreement between Lund and his trustees, in which he would pay them $14.5 million, in exchange for their removal and replacement.

The monetary exchange was approved, but Cowan would not agree to letting Lund replace the trustees. That’s when the temporary guardian ad litem was appointed.

While the size of the assets involved is larger than life, estate battles among siblings and half siblings are not unusual. When the family includes an individual whose capacity may be challenged, extra steps are needed in estate planning to protect their interests.

Reference: Daily Bulletin (March 22, 2020) “Walt Disney’s grandson locked in legal battle for personal freedom, millions in inheritance”