Wednesday, April 2, 2014

Michigan Legislature Addresses Digital Estates

It's a start.  The Michigan legislature now has a raft of bills assigned to the all-encompassing Judiciary Committee that would amend our current probate code to provide for handling of a deceased person's so-called digital assets.

Digital assets would include electronically stored photos, Facebook, iTunes, eTrade, data collections of any type, even including a person's email accounts.  If the bills pass, a personal representative could petition a county probate court for assess to these accounts.

Some legal experts, however, see problems with a conflict of laws.  Even if our state probate code, the Estates and Protected Individuals Code, is amended to provide for a personal representative's access to digital assets, federal laws prohibit such access by anyone other than the account holder.

In addition to complications from the federal Stored Communications Act, many of the specific terms-of-service for accounts prohibit access to a particular account by anyone other than the original account holder. There are also concerns arising from user consent to such disclosures in the privacy law context.  So the experts smell complicated litigation arising from the effects of these digital asset bills.

The proposed legislation also contains a provision that allows an interested party to file a petition seeking to limit or eliminate the power of the personal representative over the digital assets.  If the decedent has implicated family members in some of the electronically stored data, the situation is certainly ripe for some digital probate litigation.

So we will site back and see just where this legislation goes.  Stay tuned for future developments.

Sunday, March 2, 2014

Recently Deceased Celebrities Demonstrate Importance of Estate Planning

Paul Walker: Died too young, but with a trust.
Over the past few months, Paul Walker and Philip Seymour Hoffman both died in sudden and unexpected ways.  The latter, from an apparent overdose of heroine in January after decades of straight living; the former, ironically, in a flaming high-speed car crash last November.

At the time of his death, Walker had just turned 40; Hoffman was 46.  The untimeliness of the men's deaths left their respective movie projects incomplete.  Walker will appear posthumously in a futuristic thriller, Brick Mansions, set in Detroit, but his Fast and Furious sequel #7 scenes had not been completed at the time of his death. Hoffman will have to be written-out of the Hunger Games trilogy.

The untimeliness of the stars' deaths also highlights the importance of proper estate planning.  A comparison of the actors' estates -each worth well over $30 million- is instructive with regard to basic estate planning principles.

Last Will versus a Revocable Living Trust.
A proper estate plan, even for persons with a modest estate should include both a trust and what is known as a "pour over" will.  A trust is a private instrument while a will is a public instrument.  A trust, if funded properly, avoids a public probate process.

Walker had the foresight to execute a trust way back in 2001, when he was starting to hit it big in Hollywood in his break out role in the Fast and Furious series.  Hoffman, on the other hand, did not have a trust; merely a simple will.  Therefore, his entire estate will need to be probated because he died with a will and not a trust.  Hoffman's assets cannot be disbursed until they are probated; this process will cost money through probate and attorney fees, and will take time.

Funding the Trust.
When a trust is executed, it is simply a piece of paper unless properly funded.  Think of your trust as an empty bucket.  To fill that bucket with the assets from your estate, each asset must be re-titled in the name of your trust; otherwise, they will be probated in accord with your "pour-over" will; a document designed to catch any asset in your estate that may have been inadvertently left outside the trust.

An estate planning lawyer can help with timely funding your trust.  To be most effective, a trust should be fully funded during your life.

A warranty deed can be executed to transfer the ownership of your home, for example, from you as an individual, to you as the trustee of your revocable living trust.  Your financial advisor can assist you with re-titling your brokerage accounts into the trust with a medallion certificate.

Updating Your Estate Plan.
After important life-events, it is critical to update your estate plan.  For example, when you have additional children that were not born at the time you initially executed your estate plan, you should update.  Or when you become married, and your estate plan was executed when you were single.  The death of a spouse is another crucial time when an estate plan should be re-examined.

In Hoffman's case, his will was nearly a decade old and only referenced the oldest of his three children.  Similarly, in Walker's case, his trust was over a decade old.  Hoffman's oversight will now cause his oldest son to be treated differently than his two younger children to the extent that the oldest inherits his share through his mother, while the younger children will receive a direct inheritance.

Probably not what the actor intended; his younger children, still minors, take a direct inheritance while his oldest, also a minor, gets his money through his mother.

These are just some of the basics.  In order to properly plan your estate, you should make an appointment with an estate planning attorney.

Sunday, February 2, 2014

Guardians Can Now Execute DNR Orders

As a Public Administrator, a professional fiduciary serving Oakland County, the issue of executing a DNR order [Do Not Resuscitate] continually arises in my law practice.  The issue has been politically charged for years.

DNRs have been governed until this week by the "Do-Not-Resuscitate" Procedure Act.  The DNR Act is now supplemented by Public Act 155; passed last November and taking effect tomorrow.

Here is the crux of problem faced by court-appointed fiduciaries and care facilities:

On the one hand, the Estates and Protected Individuals Code [EPIC], Michigan's probate code, in the chapter on Guardianships, indicates that the guardian must take necessary steps to respect the protected individual's wishes, and to provide them with proper medical care.  Guardians have been guided by an ethics opinion issued by the Attorney General in 2003 that proscribed fiduciaries from executing a DNR order relative to their wards, unless such an order was issued by the probate court.

On the other hand, in many cases, licensed care facilities that receive incapacitated individuals require that the protected individual have an executed DNR before they will accept the  person into their facility.  Meanwhile, the hospital wants the recuperating individual discharged to the care facility asap given the exorbitant per diem costs of care.

The care facility, especially in terminal cases, does not want to incur the cost to administer the inevitable ER run back to the hospital in a few days, or even hours, of a ward's return to the facility.

Procedural Problem: getting before a probate judge on a petition for authority to execute a DNR order takes 14-days, unless you can convince the court that your specific circumstances constitute an "emergency".  Often, the hospital's fiscal pain does not equate to an emergency in the court's eyes.

In one recent case that this Public Administrator experienced, I visited my ward in an area hospital who was in the throes of terminal kidney failure and was non-communicative; there was no advanced directive [living will].  The hospital wanted her gone; her former care facility would not take her back without an executed DNR.

My staff immediately petitioned the court but we were unsuccessful in obtaining an emergency hearing date thus, we began a 14-day wait period during which the ward died.    Our objective was to provide our ward with the most comfortable and dignified setting possible.  Anyone would agree that was not on the floor of a hospital.

The new law allows a guardian to execute a DNR order outside a hospital setting, provided the protected individual's treating physician also signs the order.  In our recent case, the ward's former care facility would have taken her back if I would have had the authority to execute DNR without first seeking court approval.  Now, guardians have that power, provided the decision is endorsed by the treating physician.

The legislative analysis summarizes the new law as follows:
  • Expands the power and authority of a Guardian to execute or revoke a DNR order; 
  • Revises the definition of a DNR order to make such an order applicable to all places outside a hospital; 
  • Provides for the voiding of a revoked DNR order, not for the destruction of such an order [i.e. the word "VOID" is to be stamped on each page of the DNR order];
  • Revises the information that is required to be on the DNR order; and 
  • Requires a Guardian Ad Litem to advise the allegedly protected individual that is the subject of a guardianship proceeding that an appointed Guardian will now have the power to execute a DNR order on behalf of that individual.
Prior to becoming law back in November, the bill received broad support from probate judges, the probate bar, Michigan Right to Life, and a broad mix of lobby groups.  For non-related court-appointed fiduciaries, this new law is a welcome improvement to how things were done in the past.

Monday, September 23, 2013

Guardianship Bills Seek to Prevent Elder Abuse

By:  Timothy P. Flynn

An adult guardianship is a probate court proceeding that protects an individual that cannot take care of his own affairs by appointing a fiduciary -a guardian or conservator- to care for the incapacitated individual.  In our free-society founded on individual liberties, guardianships although disfavored as a legal status, are sometimes necessary to protect individuals made vulnerable through age or mental illness.

As a Public Administrator, I have served the Oakland County Probate Court by accepting appointments as the guardian and conservator for individuals deemed by a judge to be incapacitated, but who do not have suitable family members to serve as their fiduciary.  Currently serving as guardian for just over 75 protected individuals, and for hundreds over the past decade, I have acquired vast experience in dealing with all aspects of adult guardianships and conservatorships.

Two weeks ago, companion bills were introduced in the Michigan Senate to amend the guardianship provisions of the Estates and Protected Individuals Code -Michigan's probate code- to adopt the Uniform Guardianship Jurisdiction Act.  The companion bills seek to restrict the subject matter jurisdiction of the county probate courts by adopting a complicated three-tier test to ascertain the allegedly incapacitated individual's contacts with the forum state prior to granting a guardianship.

Under the present probate code, a guardianship can be granted for any incapacitated individual physically present in Michigan.   One benefit touted by supporters of the Senate bills is prevention of conduct known as "grannysnatching" whereby a person takes a vulnerable individual into Michigan from another state and immediately files for guardianship in order to control the person's income and assets, and to prevent contact by other family members.

If adopted, the Senate bills would revise our guardianship act, making the initial establishment of a guardianship much more difficult, and complicated.  Under the present guardianship procedures there are effective safeguards already in place.  For example, prior to the establishment of a guardianship, a Guardian Ad Litem is appointed by the probate court to function as the "eyes and ears" of the court; to investigate the guardianship petition and make a recommendation to the judge.

Also, under the present law, all "interested persons" -other family members- must be served with a copy of the petition and can appear at the hearing on the petition and object to the guardianship or to the appointment of the nominated individual.  Such notice provisions, along with the GAL's report to the probate judge, operate as an effective set of safeguards against cases of reprehensible "grannysnatching".

We here at the Law Blogger see these companion bills, SB 465 and SB 466, as more trouble than they are worth.  If adopted, probate court staffs across the state will need to absorb and digest the complex provisions of the Uniform Guardianship Jurisdiction Act and the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act; this will require staff training and increase the administrative costs associated with the delivery of these public services.

Such cost and complication will come just as the Oakland County Probate Court has managed to trim staff and control expenses to stay on-track with Oakland County's perennially-balanced budget; a rarity in this day and age, especially considering that the services provided by the probate administrative staff have remained first-rate.

For these reasons, we say "no" to the companion bills and urge the Michigan Senate to leave well enough alone.  The present guardianship system in Michigan is not broken thus, it does not need to be "fixed" by a uniform act.

Related Note:  A documentary on elder abuse titled, Last Will and Embezzlement, was profiled in today's Freep.  The film, which takes a look at the ways criminals take advantage of the elderly, is playing in Clinton Township and West Bloomfield.

Monday, September 16, 2013

The Problem With Executing Two Successive Wills

Ms. Haguette Clark that your family will fight over the money in your estate.  This appears to be happening right now in New York to the deceased multimillionairess Huguette Clark.

The problem with this estate arose, as is so often the case, toward the end of the decedent's life.  Ms. Clark, the daughter of copper magnate and Montana Senator, William Andrews Clark, and a private person to begin with, lived the last decades of her life in a New York hospital surrounded by her care-providers but largely estranged from her distant relatives.

In 2005, Clark executed two successive wills within six weeks.  The first will was garden-variety, leaving the bulk of her estimated $300 million dollar estate to her surviving albeit distant family members; a collection of grandnieces, grandnephews, great-grandnieces and great-grandnephews, all of whom apparently have standing as heirs-at-law in New York to challenge the probated will.

In the suspicious second will, hastily executed just 6-weeks after the first, Ms. Clark apparently had a sudden and massive change of heart, leaving the bulk of her estate to her lawyer, her accountant, and her care provider, and establishing a foundation for the arts with generous funding.  The second will contains the following language of disinheritance:
I intentionally make no provision in this may Last Will Testament for any members of my family, whether on my paternal or maternal side, having had minimal contacts with them over the years. The persons and institution named herein as beneficiaries of my Estate are the true objects of my bounty.
The collection of 20 distant relatives are not taking this second will sitting down; they have lawyered-up, Manhattan style.  Discovery in the case, largely consisting of desperate attempts by the family member litigants to prove their paper thin contacts with the wealthy decedent, has been completed and a jury is scheduled to be selected tomorrow.

Greed abounds on both sides of the caption in this case.  Did Ms. Clark really intend to disinherit her family members in favor of her lawyer and accountant?  What was the nature of the contact between Ms. Clark and her distant relatives?  Did she even know who they were?

The moral of this tale is to make a viable well-thought-out estate plan early in life.  As things in your life change, and perhaps you acquire a larger estate, amendments to your estate plan can be executed.

All too often, we see professionals take advantage of their elderly clients, putting themselves in a position of financial gain through undue influence.

Contact our law firm for a free estate planning consult and you can avoid the type of litigation that now threatens to define Ms. Clark's once proud legacy.

Friday, July 12, 2013

Tony Soprano's Estate Plan

James Gandolfini
Actor James Gandolfini played New Jersey mob boss Tony Soprano on the long-running HBO series The Sopranos.  I was a fan and thus, very disappointed at the news of his early demise.

In the stream of media obituaries that followed his death, it was no surprise to me that Gandolfini was considered an actor's actor; he studied his craft and brought great skill to his roles.

One piece that I encountered about the late actor, from the New York Daily News, drilled into his estate plan.  Apparently, Gandolfini's estate plan was a train wreck, disaster, and a nightmare on tax street, all rolled into one.

Apparently, the problem arises where he left 80% of his sizable estate [over $70 million dollars] to his sister and infant daughter, subjecting this portion of his estate to New York's 55% estate tax rate.  His widow was covered by a trust, but she is only slated to receive 20% of his estate; but she only taxes her twenty percent net of all estate taxes.

Perhaps the actor wanted it this way, but the estate could have been planned in such a way to avoid such steep estate taxes.  Tax and estate planning lawyers sometimes have clients that simply do not want their assets tied-up in complicated trusts or tax-avoidance schemes.

Really, it is the legislators and their penchant to create an endless supply of loopholes that is the real culprit in these cases, not the estate planning attorney.

Friday, May 3, 2013

Google Rolls-Out Social Media & Digital Estate Plan

Truly, Google is everywhere.  Now, the Big Data company is looking to get into your [digital] estate plan; and with some good reason.

Right around tax-time last month, Google rolled out its "digital afterlife" feature -technically and officially known as the inactive account manager.  This tool allows Google users to provide Google with specific instructions about what to do with their Google data when they die.

Google has billed this feature as something to make it easier for a user or a user's personal representative to manage a person's personal data -one's "digital estate"- after death.  The inactive account manager was initially touted in the Google Public Policy Blog.

Nearly everyone has a Google account.  Many of us have developed complex electronic profiles over the past decade; some of those profiles even have value.

The law has not caught-up with our electronic profiles.  To date, only five states -Connecticut, Idaho, Rhode Island, Indiana, and Oklahoma have estate laws addressing digital assets.  Not to worry, however, as the Uniform Law Commission has set about drafting a proposed uniform digital estate law that will make it much easier for other states, including Michigan, to adopt the appropriate legislation.

As time marches on, Google's inactive account manager is banking on the specter that a majority of their user's will want to preserve, protect or direct their data profiles.  The inactive account manager is designed to aid in this task.

It is a very 21st Century concept.  We here at the electronic  probate attorney wonder what this account manager will look like in, say, 100-years from now.