Law professor Bridget J. Crawford has a message for us, though it’s not one we’re likely to want to hear: “We’re all going to die.” And, oddly enough, that means we have to plan for the future.
“Regardless of your level of wealth, you should have an estate plan,” says Crawford, who teaches federal income taxation; estate and gift taxation; and wills, trusts and estates at Pace University in White Plains, where she is the university distinguished professor of law at the Elisabeth Haub School of Law. If you own a business, or are thinking of starting one, she adds, that includes a plan of succession.
A lawyer and an accountant/financial adviser will, of course, be part of any start-up/business team. But having an estate plan in place is an important step in ensuring that your enterprise outlasts you.
This doesn’t mean, however, that your plan will necessarily go unchallenged. Generally, though, Crawford says, it’s difficult to contest a will successfully. Those who do so must prove either that there was fraud involved or that the subject was unduly influenced, under duress or mentally incapacitated. One infamous example of a successful challenge, she says, was the case of Leona Helmsley, the haughty hotelier of Helmsley Palace Hotel (now Lotte New York Palace Hotel) fame and so-called “Queen of Mean.” When she died at her summer home in Greenwich of congestive heart failure in 2007 at age 87, Helmsley left $12 million of her $4 billion estate to her Maltese Trouble, who bit everyone but his mistress, and nothing to two of her four grandchildren. In 2008, Manhattan Surrogate Court Judge Renee Roth decreed that Helmsley was mentally incapacitated when she executed her will, reducing Trouble’s inheritance to $2 million — still a lot of kibble — and awarding $6 million to the disinherited grandchildren. (The remaining $4 million went to the Leona M. and Harry B. Helmsley Charitable Trust. When Trouble died in 2010, the money unused for his care reverted to the trust.)
At least Helmsley, who famously said “only the little people pay taxes,” had a will. Those who die without one die “intestate,” resulting in the state stepping in. Under Connecticut and New York state law, the spouse in such circumstances is entitled to half of the deceased’s estate, with the children “by representation” sharing the other half. “By representation” means that if one child should predecease you, that child’s children would inherit the share.
“The very rich,” to borrow a line from F. Scott Fitzgerald, “are different from you and me.” They not only have estate plans. They’re increasingly leaving the bulk of their wealth to charity. Many are familiar with the Giving Pledge created in 2010 by Warren Buffet, Melinda French Gates and Bill Gates, in which they and more than 40 of their fellow billionaires have committed the bulk of their wealth — either in their lifetimes or in their wills — to society’s most pressing needs. More recently, actor Daniel “Bond, James Bond” Craig and CNN’s Anderson Cooper — the son of artist-actress-enterpreneur Gloria Vanderbilt, who transcended her socialite status as the creator of Gloria Vanderbilt jeans for women in the 1970s — have been among the celebrities who’ve announced that they won’t be leaving their heirs great wealth. Other like-minded celebrities include Simon Cowell, Elton John, Ashton Kutcher, Marie Osmond, Gene Simmons and Sting. Of course, charitable giving is one way to avoid taxes if your estate is worth at least $12.06 million (federal); $9.1 million (Connecticut) or $5.93 million (New York), Crawford says. (The others are spend all the money or leave it to your spouse.)
In the new charitable giving, Crawford says, celebrities may be echoing John D. Rockefeller Jr., who worried that an inherited fortune is a disincentive to the independence and fulfilling lives and careers of future generations.
The Rockefellers, of course, have had a multigenerational tradition of philanthropy. Yet we remember that when Nelson A. Rockefeller — the former vice president of the United States (under President Gerald Ford) and New York state governor — left Kykuit, the family estate in Pocantico Hills, in part to the National Trust for Historic Preservation at his death in 1979, there was a certain wistfulness among some of his relatives. It had, after all, been their grandparents’ home.
Wisftulness in some turns to anger and resentment in others at the “loss” of a potential inheritance that wasn’t theirs to begin with.
Others don’t wait until their parents die to claim what they believe to be theirs. In 2006, New York and the rest of the world was stunned to learn that beloved philanthropist and centenarian Brooke Astor was a victim of elder abuse at the hands of her son and guardian, Tony Marshall, who raided her estate to enrich himself and fund his Broadway shows. He was convicted of grand larceny and scheming to defraud her and sentenced to three years in prison, which he began serving in 2013. (A few months later, he was granted a medical parole and died in 2014.)
That’s why it’s important, Crawford says, particularly for seniors, to have a conversation with their trusted advisers and heirs about their wills so that grief is not compounded by the shock of getting less than they imagined.
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