Estate Planning

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.

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:

The Digital Afterlife for Houston Estate Planning

Published on: July 18, 2014 | By McCulloch & Miller, PLLC

Planning for control of your personal information after you die used to be as simple as telling someone about the desk drawer or the fireproof box or the safe deposit box at the local bank. But in the era of smartphones and cloud computing services, that same stuff may be stored in digital formats on servers scattered across the globe.

What happens to your digital life after you have passed? Does it just automatically go away? Most people today have numerous online accounts. They have email accounts for work and personal use, accounts on sites like Facebook and Twitter, and some people also have blogs or even their own websites. If you check the privacy policies on the sites where you have accounts, you will notice that most sites will not give out any information about your accounts without your prior permission and some will not give out information without a court order. Your digital life may or may not go on without you, so you must plan ahead of time.

As a recent New York Times article, “How to Digitally Avoid Taking It to the Grave,” points out, if you do not plan ahead regarding how someone else can access your accounts after you pass away, then you risk the loss of those accounts. In other cases, accounts you would want to carry on might disappear. It depends on the policies of the sites where you have accounts. Some states have passed laws granting executors access to digital accounts after the owners pass away, and there is an effort underway to pass a uniform law in every state.

Can Your Houston Estate Grow After Death?

Published on: July 17, 2014 | By McCulloch & Miller, PLLC

Who knew a “Walk on the Wild Side” could pay off so handsomely? Late rock legend Lou Reed left behind a $30 million fortune, The Post has learned. $20 million-plus in “money and other property” doesn’t include the approximately $10 million in gifts Reed left to his wife, sister and mother in his will. It also doesn’t include life insurance or retirement accounts. The funds are likely from Reed’s copyright and publishing interests …

Everyone probably knows some of the late Lou Reed's songs, such as “Walk on the Wild Side” and “Sweet Jane.” Even though Lou Reed was already a rock and roll legend, he had never had a true number one hit. The songs were not even in the top 10 in the United States. This left Reed with approximately $10 million in assets at the time of his death.

Reed's manager recently filed papers in court that he had already garnered another $20 million in assets for Reed's estate. The New York Post recently reported on how the money was likely earned. The article is titled “Lou Reed left behind $30 million fortune.”

Adding Your Collection to Your Houston Estate Plan – Does the Value Hold Up?

Published on: July 14, 2014 | By McCulloch & Miller, PLLC

Over the past few years pieces have not been selling as well as expected or not selling at all. Often the amount they are appraised for, and thus the amount the IRS views them as valuing, is not close to the amount that they garner at auction.

Have you ever watched the TV show Pawn Stars? The same process plays out on the show over and over again. Someone will bring in a rare item, the pawn store owner will call in an expert to appraise the item, the appraiser will give an approximate value, and then the store owner will offer to pay half the appraised value of the item.

Obviously, a pawn shop is not going to pay full price for anything. However, the spiel that the store owner often gives contains lessons. He explains to the customer that the appraisal value is how much the item might get at auction, but that it has to be the right auction with the right buyer and that in this economy nothing is going at auction for the full appraisal value.

Disinheritance is a Sticky Situation

Published on: July 11, 2014 | By McCulloch & Miller, PLLC

Lawyers for Mr. Cohen say that he was entrusted with his father’s business, and that the two men enjoyed a close and caring relationship. But lawyers for Ms. Perelman claimed that it was that closeness that allowed Mr. Cohen, who eventually took over operations of Hudson Media, to manipulate the ailing man into changing his will.

Even when there are good reasons for leaving everything to one child, disinherited children will often choose to fight in court. Most people attempt to leave all of their children an equal proportion of their assets. That is not always easy to do. If the majority of assets are tied up in a business, for example, then it may be prudent to leave the business to the child who is active in the business. Just be ready for a fight if this decision is done late in life.

A recent article in The New York Times, titled “In Inheritance Battle, Judge Sides Against Perelmans,” reported on a legal dispute over the estate of billionaire Robert Cohen.

Financial Tips from a State Treasurer

Published on: July 10, 2014 | By McCulloch & Miller, PLLC

From checking Unclaimed Property to setting up automatic bill payments, here are some simple tips each of us can use to keep our finances organized this year.

Although you may not live in Missouri and it may not be "spring cleaning" season, Missouri State Treasurer Clint Zweifel offered sound financial advice in a column from The South County Mail entitled"Spring cleaning? Don’t forget your finances." Mr. Zweifel has some "simple tips" on estate planning and taking care of money that you can do any time of the year.

For Texans, Susan Combs serves as the Texas Comptroller of Public Accounts. The Comptroller's office features a robust website that outlines the state's financial state and offers resources for residents, along with "Unclaimed Property" listings.