Choose Carefully When Choosing Your Successor Trustee

Bigstock-Financial-consultant-presents--14508974It’s smart to work with an estate planning attorney to set up a will or a trust. But it’s not so wise to put these documents away with your high school varsity jacket in moth balls. These important legal documents must be reviewed with some regularity.
For example, you may be surprised to learn that the individual you chose to be a successor trustee is no longer willing to serve in that capacity when the time comes.
The Ashland Daily Tidings recent article, “Aging Happens: Four tips to help select your successor trustee,” encourages you to review estate planning documents more closely and more frequently.
If you have a revocable living trust, you may have designated yourself as trustee to manage your own financial affairs. However, at some point, someone will need to step in when you’re unable to act because of your own incapacity or death. The successor trustee will be given a lot of responsibility. You may choose an adult child, another relative, a trusted friend, a bank trust department, a trust company or a professional trustee—and it should be someone you know and trust. In addition, this person or corporate entity should be someone with sound judgment who will abide by your wishes. The successor trustee doesn’t need to know all of the particulars now because your estate planning attorney can assist them later.
So how does this work?
In the event that you become incapacitated, your successor will assume control of your finances. He or she will pay the bills and make decisions on financial issues. After you pass away, your successor will act much like an executor under a will—taking inventory of your assets, paying your final bills, selling assets if necessary, having your final tax returns prepared and distributing your assets according to the instructions in your trust. It can be a large amount of work. It may take a year or more to complete the process.
When you think about selecting a successor trustee, consider these factors:
· The type and amount of assets in your trust;
· The complexity of your trust documents;
• The personalities of your potential trustees, their financial or business experience and their availability; and
• Your potential trustees’ willingness to serve.
Remember that trustees should be compensated for serving, so your trust document should detail fair and reasonable compensation. Follow these steps and increase the odds of everything working out.
Reference: Ashland Daily Tidings (July 5, 2016) “Aging Happens: Four tips to help select your successor trustee”


An Unusual Clause in Robin Williams’ Trust

Bigstock-Robin-Williams-arriving-at-The-58299377Even though Robin Williams has passed away, it might still be possible to see his name, likeness or voice in movies or advertisements. However, do not expect to see that happen for at least 25 years.

Dead celebrities can make a lot of money. Technology is advanced enough to make it so the celebrities' image and likeness can be made to appear alive on film. Holograms can even be used to make it appear that a deceased person is performing on stage at a theater.

For the estates that hold the rights to the likenesses of celebrities this can earn millions of dollars a year. Such is the case with the likenesses of Michael Jackson, James Dean, Betty Page and many others.

Not every celebrity, however, is comfortable with the idea of their name and likeness being used after they pass away to make money.

That appears to have been the case for Robin Williams.

Forbes reports that a trust agreement bars Williams' name or likeness from being used for 25 years in an article entitled "Why Robin Williams Won't Be Making Millions Beyond The Grave."

As the article points out, many celebrities might consider doing the same thing as Williams to avoid complicated tax issues.

However, in Williams' case there was no need to limit the use of his name and likeness for tax purposes as the rights to use his name and likeness are held by a charitable foundation.

Apparently, Williams was uncomfortable with the idea of someone else deciding how his name and likeness could be used in the years shortly after his death. For example, he may not have wanted someone else deciding that he should endorse a product that he himself would not have.

For more information about estate planning, please visit my estate planning website.

Reference: Forbes (October 27, 2015) "Why Robin Williams Won't Be Making Millions Beyond The Grave."


Important Victory for Salinger Heirs

Bigstock-Copyright-Laws-Symbol-Concept-95137622A Tennessee court's decision to transfer a lawsuit filed against the Salinger Literary Trust to New Hampshire could be a major victory for the heirs of J.D. Salinger.

Earlier this year, the Devault-Graves Agency, a publisher, filed a lawsuit against the Salinger Literary Trust in Tennessee, claiming that the trust was interfering with the publisher's ability to license its edition of J.D. Salinger: Three Early Stories for publication in foreign countries. The court in Tennessee has determined that it lacks jurisdiction to hear the case and has ordered that it be transferred to the late author's home state of New Hampshire.

Publisher's Weekly reported on this development in "Court Punts Salinger Copyright Case to New Hampshire."

The details of this lawsuit are complex. The stories in the book are part of the public domain in the United States, which means they do not have copyright protection and anyone can publish them.

The publishing agency contends that, according to an international treaty called the "Berne Convention," if a work does not have copyright protection in its country of origin, it does not have protection in other countries. Thus, under this theory, the Salinger Literary Trust has no right to try to block the book's publication outside the United States.

On the other hand, the trust claims that the Berne Convention is more complicated and the copyright laws of foreign countries must be taken into account when determining if a work has protection in those countries. A recent decision by a German court lends credence to this position.

The publisher's lawsuit is expected to have a difficult battle in New Hampshire courts.

Other estates that hold copyrights will want to watch this case closely to determine whether or not they have the right to protect works in foreign countries even after those works fall into the public domain in the United States.

Contact a qualified estate planning attorney if you own any intellectual property rights.

For more information about estate planning, please visit my estate planning website.

Reference: Publisher's Weekly (October 22, 2015) "Court Punts Salinger Copyright Case to New Hampshire."


Why the Value of James Brown’s Estate Matters

Bigstock-NEW-YORK-CITY-USA--SEPTEMBER-99713237 (1)Litigation over the estate of James Brown has been ongoing for nearly a decade. The issue of whether Brown was married at the time of his death has been decided, but the very important issue over how much his estate is worth has yet to be determined.

Have you been following the strange tale that is the James Brown estate?

As you may recall, his estate plan called for his music empire to be put into a charitable trust and used to help needy students. Nevertheless, despite the fact that his will contained a no-contest clause that stated that anyone who contested the will could receive nothing, the will has been the source of ongoing challenges since the musician passed away in 2006.

At one point a settlement was brokered by none other than South Carolina’s Attorney General Henry McMaster. However, that settlement was ultimately rejected by the South Carolina Supreme Court.

One of the largest questions remaining is how much is the music empire worth? Documents filed by the current trustee with the IRS valued the estate at $4.7 million, while earlier trustees valued the estate at $100 million. The full details of the dispute were reported by the Herald Independent in “The $95 million question: What's at stake in Brown estate battle?

The dispute matters greatly because charitable foundations are required to distribute at least 5% of their value to charity every year per IRS rules. Thus, there is a very large discrepancy in the total number of students that would be helped each year by the trust depending upon which valuation of the music empire is ultimately accepted by the courts.

For more information about estate planning, please visit my estate planning website.

Reference: Herald Independent (September 4, 2015) “The $95 million question: What's at stake in Brown estate battle?


Interest Rates Have Your Trust Down? / York, PA

Wills-trust-estates-bank-beneficiary-trust-trusteesWhen interest rates are low, it can be difficult to maximize trust income while adequately growing the trust's principle. This can cause conflicts between different groups of beneficiaries. The conflict has a resolution for savvy trustees.

Many trusts are set up in a way that creates two different groups of beneficiaries. The first group are income beneficiaries. They have a right to the current income the trust property generates. Another group are remainder beneficiaries who 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.”

The power to adjust is legal in all but three states. However, most states do have a limit as to what a trustee can do. Non-expert trustees should consult with attorneys and financial advisors about how they can use the power to adjust to keep competing groups of beneficiaries happy.

For more information about estate planning, please visit my estate planning website.

Reference: Forbes (July 2, 2014) “With Interest Rates Low, Here's How To Boost Income From A Trust

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