Houston Estate Planning and Elder Law Attorney Blog

Philip Seymour Hoffman’s Estate Goes to Girlfriend, Not Kids

Published on: August 1, 2014 | By McCulloch & Miller, PLLC

Philip Seymour Hoffman did everything in his power to make sure his children were "normal."

When the Capote actor died of a heroin overdose in February, he left the bulk of his estate to his partner, Mimi O'Donnell, and added the unusual request that their offspring be raised outside of Los Angeles. According to his accountant, David Friedman, these decisions were made to keep his children from becoming trust fund kids.

After the tragic passing of Philip Seymour Hoffman in February, he left behind three minor children and a long-time girlfriend. Since he wasn't married, you may assume he would have left his estate to his kids. We now know from court papers that Hoffman did not leave his estate to his children. Instead, the majority of his estate was left to the girlfriend. A trust was created for one of his children, but money from the trust can only be used to pay for education, support, health, and maintenance.

College Assistance from Grandpa and Grandma

Published on: July 31, 2014 | By McCulloch & Miller, PLLC

Many grandparents want to help their grandchildren pay for college, but don't know the best ways to do that. Financial advisers who can show them how to make those contributions and reap financial advantages for themselves can shine.

Many families struggle enough to meet their current needs that they just do not have enough to pay for their children's college education. And with the costs of college education increasing year after year, it is almost impossible for students to make enough to pay for it with part-time jobs. Consequently, grandparents are starting to look into ways to help pay for their grandchildren's college education. They have already earned their wealth and are in a better position than the parents to pay for school.

A recent Reuters article examined how grandparents can pay for their grandchildren's college education while getting a tax benefit for themselves. The article, titled “YOUR PRACTICE-Selling grandparents on the perks of 529 college savings plans,”suggests a 529 college savings plan. This unique account can be used to contribute more than the yearly gift tax exemption into an account that a grandchild can later use for educational expenses. The accounts are not perfect as they could make a grandchild ineligible for financial aid.

A Qualified Personal Residence Trust: Take a Note from the Clintons!

Published on: July 30, 2014 | By McCulloch & Miller, PLLC

Even with its funny name, a QPRT can save you hundreds of thousands of dollars in estate taxes after your death for your Houston family. Let's take a closer look at what the Clintons did and whether the same strategy could help you.

While QPRTs are complicated trusts, the basics of what they do and why are easy to understand.

If you are considering this trust as part of your plan, take a note from Bill and Hillary Clinton. The Clintons used a qualified personal residence trust as part of their own estate tax planning.

The World Knows All About Lou Reed’s Estate – Do You Want the Same Exposure in Houston?

Published on: July 29, 2014 | By McCulloch & Miller, PLLC

If Lou Reed had used a revocable living trust, and transferred his assets into the trust during his life, then all of this information would have been kept private. No one would know how much he had, whom he left it to, or how much his executors were charging.

When a celebrity passes away, reporters scramble to find out how much money the celebrity had and how it will be distributed. But how exactly are they getting the information? Is it in-depth investigative journalism … or a common estate planning mistake?

Recently, the New York Post has had story after story about the specific details of Lou Reed's estate plan. We know how much he had when he passed away. We know how much money his intellectual property interests have earned for his estate since he passed away. We also know how much money each of Reed's heirs will receive. How do we know so much?

Can Your Houston Heirs Legally Access Your Digital Assets?

Published on: July 28, 2014 | By McCulloch & Miller, PLLC

No matter what steps you take or what laws are eventually passed, managing a digital estate for a loved one will always be a long, arduous, and painful process.

Digital estate planning is popping up in the news more and more as people are trying to figure out how to deal with digital assets of loved ones who have already passed. Gaining access to one's email and social media accounts after they die can be very difficult. It can be even more difficult for heirs to gain access to online financial accounts. For this reason, attorneys always stress that you should plan ahead and make sure you have come up with a good way for someone you trust to access any accounts you have.

Recently on PBS News Hour, another potential problem with access to digital accounts was raised in a segment titled “Dead and Online: What Happens to Your Digital Estate When You Die?” One of the interviewees points out that a family member attempting to gain access to your accounts after you pass away could be in violation of federal privacy laws and computer fraud and abuse laws. It could also be a criminal violation to break the terms of service of the website your family member is trying to gain access to in some circumstances.

Drawbacks of Family Limited Partnerships for Houston Families

Published on: July 25, 2014 | By McCulloch & Miller, PLLC

Family limited partnerships seem like an almost foolproof idea: A client can shield just about any amount of money from creditors while maintaining full control of the assets, and getting tax advantages to boot. But they’re not for everyone, and there can be serious pitfalls to an FLP that is carelessly invoked or improperly constructed.

Family Limited Partnerships, or FLPs, can help protect your assets from personal creditors and allow you to maintain control of the assets during your life. FLPs create a separate entity in which you can place an almost unlimited amount of assets. You can then give your family members limited partnership interests in the entity.

A recent article in Life Health Pro, titled “6 Pitfalls That Clients Eyeing an FLP Need to Consider,” points out the potential drawbacks of an FLP:

Houston College Graduates Need Estate Plans Too

Published on: July 24, 2014 | By McCulloch & Miller, PLLC

After graduating from college, and even law school, the thought of drafting your estate plan probably did not make the top twenty on your "to-do" list, and why should it? The only thing most young professionals have when they first start out is debt. However, after you land your first job, preparing your estate plan needs to move quickly to the top of that elusive "to do" list.

Regardless of your age, you might not think you have very much – but you probably have enough to want to have a say in who gets what.Young people may not view estate planning as a necessity when just starting their careers, but the reality is they should plan how their assets will be distributed in case something were to happen to them.

Estate planning is more than just deciding how your assets will be distributed. That is a large part of it, but there are other documents every good estate plan should include. A recent article in the National Law Review, titled “Five Estate Planning Documents Every Young Professional Should Have,” lists the documents that every recent college graduate will want to include as part of his or her estate plan:

Deathbed Wills Can Be Contested, So Don’t Wait To Change Your Houston Plan!

Published on: July 23, 2014 | By McCulloch & Miller, PLLC

Three years and two trials later, the will remains the subject of a fierce probate fight in Sacramento Superior Court. Lawyers for the stepson and O’Brien’s brother have challenged the will as a fraud. They contend O’Brien didn’t have the mental capacity to amend the original trust.

Waiting until you are on your deathbed to create or change your will can cause a lot of chaos after you pass, so don't wait to make those changes! Take a lesson from the late Joseph Herb O’Brien. O'Brien was dying in a hospital room. For a long time he had an estate plan that left his entire estate in a trust, the sole beneficiary of which was his stepson. The stepson had a long history of legal problems. Shortly before O'Brien passed away, he dictated a new will to two friends. This new will left the vast majority of the estate to one of those friends instead of the stepson.

The Sacramento Bee has the full story of what is alleged to have happened in an article titled “Final wishes of a ‘good man’ or deathbed fraud? Judge to rule in probate case.” It is a good read that explains all of the minute details of the case. Basically, the judge has to decide whether O'Brien was competent to change his will at that time or whether his friends coerced him into changing it for their own gain.

The Power to Adjust the Trust

Published on: July 22, 2014 | By McCulloch & Miller, PLLC

Today’s low interest rates create special problems for those focused on income, including retirees and the income beneficiaries of trusts.

Prolonged periods of low interest rates can result in low trust income, creating conflict among beneficiaries. Many trusts are set up in a way that creates two different groups of beneficiaries. The first group are income beneficiaries who have a right to the current income the trust property generates. Another group are remainder beneficiaries. They get what is left in the trust when the trust ends. Income beneficiaries naturally want the income maximized and remainder beneficiaries want the principal maximized.

As Forbespoints out, in an article titled “With Interest Rates Low, Here's How To Boost Income From A Trust,” low interest rates make it difficult for trustees to keep both groups happy. There simply are not enough good investment vehicles available to keep both groups of beneficiaries happy in low interest rate environments. The solution is known as the power to adjust. This allows trustees to reclassify trust assets. Forbes has an example of how it can work: “By utilizing the power to adjust, trustees are able to invest in the best total return portfolio without regard to the amount of income it generates; so, for example, in the current low-rate climate, this may result in a portfolio that is primarily equity. The power to adjust allows the trustee to take a certain amount of principal, reclassify the assets as income, and distribute the assets to the income beneficiary.”

Keeping Your Houston Estate Plan Up-To-Date

Published on: July 21, 2014 | By McCulloch & Miller, PLLC

"Many have not taken adequate steps to review and update these plans since the moment they were signed. Meanwhile, major life events such as marriage, the birth of a child or the launch of a business may have occurred."

Estate plans are not a one-shot deal. They are like a snapshot of your life at a particular point in time. An old estate plan shows how your property and life circumstances looked at the time it was made. But things change over time, and so should your estate plan.

If you never change your estate plan, it might stop doing what you want. As Forbes points out, in an article titled “Why You Should Update Your Estate Plan,” if you do not update your estate plan when your life circumstances change, then you might be risking costly legal battles for your heirs. Significant property acquisitions that are not accounted for in your estate plan can lead to problems. Having additional children or getting divorced can cause problems, if you do not change your estate plan. Tax law changes could make your old estate plan ineffectual.