Earnings don't necessarily end when we do

For most of us the ability to create wealth ends at pretty much the same time our life does. That's not true for everyone, however. Consider the case of Michael Jackson. Although MJ died in 2009, his name, face, and voice continue to reap financial rewards that would stagger the average wage earner. He's not alone either. Forbes is running a story on their online edition that ranks their “Top-Earning Dead Celebrities,” in a listing that is curious to say the least.

Jackson is in the lead with estimated earnings of $170 million this year. Admittedly, that number is down roughly $100 million from last year, but it's still enough to get the attention of anyone who was wondering how they might provide for their family's financial stability after they're gone.

Elvis is still doing well, with a reported $55 million earned in 2011, more than three decades after his death. Even Marilyn Monroe makes the Forbes list with an impressive $27 million nearly fifty years after she departed the scene. And lest you think it is just the beautiful people who have long term earning potential, let's keep in mind that Albert Einstein is still pulling down a very respectable $10 million through licensing agreements that touch everything from children's educational products to eye glasses, and even video games.

The big story for the rest of us, the folks who are never invited to Hollywood parties and have so far managed to avoid a single embarrassing episode with paparazzi or TMZ reporters, our income doesn't necessarily have to stop when our heart does. Many of us own property, intellectual or otherwise, that may well have value after our time on earth is up.

Whether you're in that group or not is anyone's guess. Remember, Emily Dickinson only became a successful poet posthumously, and Vincent van Gogh sold only one painting in his entire life. Even Edgar Allan Poe was only a very modest success in life, although his work has become a staple of high school and college literature classes in our time.

None of them were voted, “Most Likely to Succeed,” in high school.

So don't despair if you haven't yet realized your dream of creating the world's hottest dance album, or writing the great American novel, crafting a classic statue that will last for centuries, or creating an indispensable computer program. Your day may come, and your big payday may follow by enough time that you never personally see the financial benefits of your efforts – but your heirs may.

In the big scheme of things that might not be such a bad thing. It's an interesting idea, in any case.

Good luck to you. You can read the full Forbes piece here:http://www.forbes.com/sites/dorothypomerantz/2011/10/25/the-top-earning-dead-celebrities/

Estate Planning For Women (And the Men Who Love Them) Question #2

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her recent Forbes article titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is a question every financially savvy woman should be able to answer. 

 

Question #2

Is there money in the bank?

In the process of dividing assets into "yours," "mine" and "ours," couples should make sure there is enough money to cover immediate expenses if one of them suddenly passes away. These reserve funds can be held in each of your separate accounts or in a joint one. Just be aware that when you die, your spouse or partner will probably not have access to your individual account right away, and you will each need the discipline to keep the fund flush. A better approach is to maintain a joint account designated for emergencies that can also be available for this purpose.

With bank and brokerage accounts, the most frequent form of joint ownership is joint tenancy with rights of survivorship. It is available to any two people who want to own assets together. Both owners have access to the assets during life, and when one joint tenant dies, the survivor immediately becomes the sole owner of the whole property, regardless of what the will says, or whether there is a will. These features make this type of ownership appealing both to spouses and other couples.

Despite these advantages, joint tenancy has a serious drawback: it exposes each owner to the other's potential liabilities. Unmarried couples also need to be aware that state laws on joint tenancy for non-spouses may vary. Consult a lawyer who is familiar with the rules of the state where you live.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.

The Mills Brothers standard comes true - unfortunately

In 1944 The Mills Brothers had a hit with, “You Always Hurt the One You Love.” Written by Allan Roberts and Doris Fisher, the standard has been covered by everyone from Connie Francis, to one of today's major heartthrobs, Ryan Gosling.

It turns out that the sentiment of that song is true. Mickey Rooney knows it first hand.

While the Mills Brothers were singing, Mickey Rooney was acting. As a top movie star of the WWII era, Mickey was known for his work as Andy Hardy in a series of films, as well as in critically acclaimed movies like, “Boys Town.”

Ultimately celebrities are more or less the same as everyone else, however. A fact that Rooney came to find was all too real in his elder years. At 90 years of age the Hollywood institution found himself testifying in front of the Senate Special Committee on Aging. It seems that like so many elderly men and women who had worked hard and saved for their golden years, Mickey Rooney was victimized financially by a relative whom he had trusted.

Rooney didn't name the relative in his testimony. He made it clear that his money was taken, however. His financial affairs were kept from him, and his funds were misused. Mickey Rooney, a man who had once been on top of the world as a celebrated star of the silver screen, was now feeling the painful reality that can occur when we find ourselves being vulnerable to the whims of others. The hurt is deeper when we know that the people causing us harm a members of our own family.

Life presents us with risk, but it presents us with controls for those risks, too. It's important that we have an understanding of our finances and our options throughout our lives. As we move into our elder years, it is increasingly critical that we make arrangements for our care and comfort that we can count on.

The Government Accountability Office issued a report recently that claimed as many as 14 percent of non-institutionalized older adults had experienced some form of elder abuse in 2009. That statistic is alarming today, and of great concern for tomorrow, considering that the population of older American's is expected to grow substantially over the coming years.

Value is a moving target in a down economy

For many of us the American dream included growing up, finding a stable job, and buying a home of our own. Generations of men and women put their faith and their savings into home ownership with the unshakable belief that real estate goes up in value over time – no matter what.

That belief system has been shaken badly in recent years. Many of us find ourselves paying mortgages that have a greater value than the buildings they're financing. Most of us muddle through and hope for the best. Others move on, leaving the buildings without tenants, inhabitants, or regular maintenance.

When that happens the bank will eventually foreclose on the building, assuming a mortgage is owed. Foreclosure can be devastating to a family, but it's no picnic for the bank either. Now saddled with the costs of maintenance, property taxes, insurance, commissions to real estate brokers and even local code violations as the property sits empty and idle – the bank's are looking for a way out from under the burden of supporting properties they never intended to own.

Brady Dennis has a story running in The Washington Post this morning, that details this exact situation. He focuses on Cleveland, Ohio because they are not only hard-hit by abandoned properties and a plunging real estate market – they're doing something about it.

Bank of America, Wells Fargo, and J.P. Morgan Chase are literally giving away abandoned properties in Cuyahoga County so they can get the properties off their books. Ownership is being transferred to the Cuyahoga County Land Reutilization Corp, which has set up land banks with the specific aim of acquiring these properties so they can be put to a better use.

That raises the question, of course, “What exactly is a better use?”

That fair question deserves a fair answer, although it would seem likely that the discussion will be long and fraught with twists and turns and differences of opinion that could go on for years. It's an interesting development in any case. It brings a new perspective to the old sales adage, “Our loss is your gain.”

It seems sometimes as if we are all losing in this deal, at least to some degree. Let's hope that the light at the end of the tunnel gets brighter soon, and while we're at it let's hope that the tunnel gets shorter, too.

You can read Brady Dennis' story here. It's worth a peek.

Potential Portability Problems

Portability has become a popular topic among the estate planning set, and I found this recent post to be valuable.  The author of the commentary is Lizette Sundvick, who practices in the sate of Nevada.  And her comments are based on the article  “Wealthy Take Estate-Tax Exemptions Beyond Grave Until 2013”  Bloomberg (8-6-11)

The Bloomberg article notes that:  Wealthy individuals in the U.S. will find it easier to cut their estate-tax bill as a result of a provision for using their deceased spouses’ exemption credit.

Much ado has been made about this new power in estate planning known as “portability,” and for good reason. Nevertheless, it’s also prudent never to put all your eggs in one basket. So it is with the matter of estate tax exemption portability.

As you may know, “portability” is the new ability for a deceased spouse to transfer their unused gift and estate tax exemption amount to their surviving spouse. Provided all the required paperwork is timely filed with the IRS, that effectively allows a married couple to exempt an astounding $10 million from federal taxes for their loved ones without the use of trusts or legal devices.

Bloomberg suggests that it is better to think of portability as a “safety valve” for married couples, especially those whose assets would be entirely covered by the doubled exemption, but not something to be relied upon. The biggest limitation, for one, is that portability exists at the whim of lawmakers. After the budget showdown last December, existence of portability is only guaranteed until the end of 2012 (if that, Congress being the politically fickle animal that it is).

But there is another important caveat Bloomberg touches upon that is worth mentioning. Portability is a power that exists between spouses, but in a world of shifting marriages, divorces, and remarriages that also creates strange limitations. Portability only applies to the last deceased spouse. Accordingly, if a widow remarries, then they could potentially lose that massive exemption (even after their own estate has doubled, creating an estate tax liability). Indeed, if portability isn’t lost and if the widow’s new spouse predeceases after using their own exemption by gifting, then the widow’s estate is in the same tricky situation.

We all know (or should know) that relying on fickle politics is addressing the temporary.  On the other hand, we encourage you to investigate every opportunity that arises for your use here and now.

Portability can be a worthwhile tool to consider.  On the other hand it can be a daunting issue to incorporate into your long-term estate tax plans.  As these new planning tools surface, it is advisable to make sure your estate plan is up-to-date and fully addresses your desires regardless of what "portability "may or may not offer.  Please call to schedule a meeting. 

 

The beat really does go on

In the 1960s Sonny Bono made a name for himself as a songwriter before going on to make up half of the duo known as Sonny and Cher. One of the hits Sonny wrote was titled, The Beat Goes On. That sentiment is proving to be true in so many ways.

Sonny left the music business in the 1980s to run for and win the mayoral race in Palm Springs, California. His next step up the political ladder was to the US Congress where he represented California's 44th congressional district. To this day Bono remains the only member of Congress to have charted a number 1 hit song.

He may be the only high ranking political name to have a storied musical past, but Bono wasn't the only one to have a love of music in his heart. The kids who flocked to Woodstock are all grown now, in their 60s, and in many cases they are captains of industry and pillars of their communities, yet they still remember the songs that made an impression on them as young men and women.

Consider the example of former chief justice William Rehnquist, who in a 1980 case cited one of his favorite songwriting teams, Gilbert and Sullivan. The next chief justice, and Rehnquist's replacement, John Roberts has cited Bob Dylan and Jimi Hendrix in cases involving AT&T and recopyright law, respectively.

Dylan and Hendrix aren't alone in the history of judicial citations, however. Paul Simon is also included, as are others from the hey day of rock music's not-so-distant past.

Judges are people, too.

If we were able to hit the rewind button on time and revisit our youth we might be surprised to find that at least some of the young people singing and dancing in the crowd around us at those concerts we attended would go on to be the lawyers, judges, and justices of our future. That includes current supreme court justice Samuel Alito, who is on record as being not only a fan of Bruce Springsteen, but he also attended a ska music festival at one time. Ska, for those who are uninitiated, is an adaptation of Jamaican music that ultimately led to the reggae sounds of the 1980s.

They may be grey and balding and sitting on the bench today, but under those flowing robes and dignified demeanors there is still the glowing ember of a younger individual who is not the least bit afraid to stand up tall and shout out, “Play Freebird,” at the top of their lungs. Let's hope that never happens in a courtroom, however. That sort of an outburst would not lend itself to the level of decorum that judges and court staffers generally aspire to.