Wednesday, January 28, 2009

US Supreme Court Rules on Beneficiary Forms

The U.S. Supreme Court said in an opinion issued January 26, 2009, (Kari Ellen Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, et al., No. 07-636, U.S. Sup.) that a plan administrator correctly ignored a divorce decree and distributed the assets to the person named on the beneficiary form....the decedant's ex-wife.

The case involved the daughter of the decedent, who sued her mother because the mother was listed as the sole beneficiary of the father's 401k account. Even though he had divorced the mother, the mother's name was never removed from the beneficiary form. The daughter claimed that her mother waived her right to the account balance by the terms of the divorce decree, however, the US Supreme Court disagreed.

As I always tell my clients, a will does not trump a beneficiary form. The best practice is to review those forms regularly, making sure they reflect your wishes and are up to date.

A Good Death - Wisconsin Public Radio

To the Best of our Knowledge featured an hour-long show entitled A Good Death, which features several books that may be of interest to those working on an estate plan. WPR describes the show as follows; links to the books are included on the WPR web site:
The first segment features David Rieff, who wrote an account of his mother's last days. It's called "Swimming in a Sea of Death," and tells how he tried to do the right thing by his mother - Susan Sontag - while also being true to himself. The second segment is described as an interview with David Shields the author of "The Thing about Life is that One Day You'll Be Dead." He talks with Anne Strainchamps about his book, which is a meditation on how our bodies decay and die, and his irrepressible father who is 97 and who doesn't give death the time of day.And the final segment features Pauline Chen, a transplant surgeon and writer. Her book is called "Final Exam: A Surgeon's Reflections on Mortality." She talks with Jim Fleming about her medical training and how ill prepared it left her for dealing with issues like grieving families.

Saturday, January 17, 2009

Wills and Personal Momentos

The following letter appeared in today's edition of Dear Margo. It illustrates several points I try to make to clients and seminar attendees about the dynamics of doing a will:

01/16/2009 – DEAR MARGO: My family is at their wits' end with a major upset, courtesy of my grandparents. They have decided to leave everything (down to the dust on the floor) to their church, where my uncle is the pastor. My family is not upset about the money (there really isn't that much). It is more the personal items that have sentimental value. We cannot be 100 percent certain, but we think that my uncle had this planned all along and was just waiting for the right time to manipulate my grandparents. He will receive it all, and he has power of attorney, as well as being the executer. He has yet to face the family and explain why he felt the need to have it all, and my grandparents are so convinced this is the right thing to do that they can't see how this is tearing everyone up. My mother is a wreck, as her parents have left her nothing to remember them by. She was promised personal trinkets (worth nothing to anyone else, but worth the world to her because of the memories). I am only a granddaughter, but I was promised my grandmother's button collection, which will probably be sold at an estate sale for a few bucks. My grandparents refuse to discuss it. I live out of state and am hearing everything by phone, but I'm trying hard to keep it together for my mom. She is not angry but hurt. Is there a way we can still receive these items? Is it wrong to pursue this? Is it wrong to ask for some small mementos?


DEAR LONG: In some situations, not all the children pay attention to elderly parents, so the attentive one is favored in the will. I don't get the idea this is the case in your family. Whether or not your clergyman uncle made it his project to inherit everything we do not know. In addition, you don't say whether or not your grandparents are of sound mind. Because the old folks are not interested in discussing this, my only suggestion would be to ask your uncle, when there is an actual estate to be divided, if he'd consider letting various family have mementos that were promised. Perhaps he could be reminded of tthe Good Book's dictum that it's better to give than to receive.

After reading this letter and response, I'd like to offer the following:

  • One, many people think they don't need a will because they have little money. However, as I tell clients or people attending a seminar, it is often the little personal items that mean the most to family members....and trigger disputes. I encourage them to think about who should have their wedding bands, family photo albums, or Grandpa's hunting rifle.
  • Two, this article points out that no one has a right to inherit from another person (with the exception of a spouse in states with marital property laws). The letter and response do not mention the fact that the grandparents may be close to their church or son, and somewhat estranged from the other family members.
  • Third, the letter says that the "church gets everything" and that the pastor uncle is the power of attorney and personal representative. It is very common for these two roles to be filled by people who live in the same area, it just makes life easier. And if the church receives everything, that is different from the uncle receiving anything, it is a charitable donation. The idea may be to sell all of their personal items to generate cash for the church.
  • Fourth, the family is free to purchase items they would like to keep. Yes, this may seem cold, but it may be the easiest way for the grandparents to distribute items....there would be no obvious favorites.
  • And fifth, most likely a lawyer was involved in drafting the will. An attorney should take care to make sure that the grandparents were of sound mind and not being influenced by the pastor uncle.
The tension expressed in the letter is not isolated to a few families, but is rather rampant in society. I encourage people who struggle with the emotional side of estate planning (i.e. which daughter should be my power of attorney?) to read the book Creating the Good Will, by Elizabeth Arnold.

Thursday, January 15, 2009

Have a Story to Share?

The following ad came across on one of the blogs I monitor related to estate planning. Apparently CMJ Productions is developing a documentary on wills in America. I emailed the contact, and she promptly sent me her firm's web site. It looks legit, but I always recommend using caution when responding to internet ads. Here is the ad:

I'm a researcher working on a documentary series about people's first-hand experiences with a family will. The project is being produced for a major US broadcaster. The documentary explores various, unexpected family issues surrounding wills. We would like to showcase the powerful, true-life stories of family wills, in an effort to create a deeper awareness of the difficult subjects of legal wrangling, conflict, grief and deep-seeded dynamics that can often arise when the will of a loved one is read. If you're interested in helping others reach closure on their feelings concerning a past will, or want to make sense of your own experience with a will, I would be very interested to hear your personal story. Thank you very much for generously sharing your story with me. You can email me - Katherine - at:

Monday, January 12, 2009

Update on the Federal Estate Tax

According to the Wall Street Journal, President-elect Obama and Congressional leaders plan to introduce legislation freezing the federal estate tax at the 2009 level. Under law passed during the Bush Administration, estates below $3.5 million were exempt from federal estate taxes during 2009. However, in 2010, the law exempted all estates for one year. Then in 2011, the exemption was scheduled to return at $1 million. According to the WSJ, the Senate Finance Committee will act within weeks to repeal the old law, freezing the exemption level at $3.5 million. Next month President-elect Obama is planning to detail his estate-tax preservation proposal in his budget.

The article provides an excellent history of the federal estate tax in the United States. This topic is certain to get continued press coverage, and generate a fierce debate. While only 2 percent of deaths result in the federal estate tax being paid, small business owners, farmers, and wealthy families have an organized effort to eliminate the tax permanently.

And stay tuned for news about whether Wisconsin will bring back its State estate tax. There has been discussion about bringing the State estate tax back as part of the effort to balance Wisconsin's budget.

What does this mean for you? If you have a net worth (and your life insurance may be included in the calculation) over $1 million you should follow developments in Madison and DC. And if you have a net worth over $3.5 million, you may want to review and update your will and or trust.

Thursday, January 8, 2009

The Personal Side of Estate Planning

There is more to completing a will than figuring out who gets your house, retirement, and other savings. Have you thought about who should have your wedding band, family photo albums, your grandfather's hunting rifle? People often overlook the importance of family mementos that mean a lot to younger generations, and can cause disagreements after a loved one is gone. I've found an excellent book, written for non-lawyers, that walks the reader through these important questions -- Creating The Good Will: The Most Comprehensive Guide to Both the Financial and Emotional Sides of Passing on Your Legacy by Elizabeth Arnold. I have a link to the book on my web site.

Monday, January 5, 2009

Silver Alerts -- Legislator Aims to Protect the Elderly

Wisconsin Public Radio ran an interesting story this morning; a Wisconsin Legislator is introducing legislation to create "silver alerts" in the State. Similar to Amber Alerts, these public service announcements would alert the public to a dementia patient who has gone missing. Piggybacking on the current Amber Alert system means that there would be no added expenditure to create this program.

Click here to listen to the broadcast, and you can click here to contact your representative to share your thoughts on this piece of legislation.

I'll post updates as the legislation progresses.