It would be easy for me to post about "Lessons from Michael Jackson's Estate Plan" or something to that effect right now. However, what interests me more about that case the procedural aspects within the Probate Court. I will keep blog readers updated about the Probate Case as new developments arise.
Another famous case going on right now involves Anthony D. Marshall, the son of the deceased Brooke Astor (of the Astor Family fortune) and her estate planning attorney, Francis X. Morrissey Jr., being criminally charged with (among other things) fraud and forgery. The two are suspected of a conspiracy to fraudulently induce Mrs. Astor into changing her will to leave her fortune to Mr. Marshall. See this article for a background on the latest developments:
NY Times Article
On the face, if Mr. Marshall is indeed guilty, he would be foolishly greedy. He was already, according to court documents, in line to receive a great deal of her fortune. This would have been millions, upon millions, of dollars. It boggles the mind to contemplate what might lead someone to commit a crime to receive even more.
With regards to Mr. Morrissey, it will be interesting to see what his involvement was in this alleged fraud. Apparently Mr. Morrissey has a history of writing wills (and presumably trusts) leaving himself substantial portions of wealthy clients estates. See this NY Post article.
This shows the problematic nature of lawyers being the beneficiaries of their clients estates. Since this apparently has happened quite often with Mr. Morrissey, may one assume that the smoke is accompanied by fire? We'll leave that one up to the jury.
Wednesday, July 8, 2009
Tuesday, July 7, 2009
Katherine Jackson "Loses Control Over Estate"
Breaking news...you have the ability to control who manages your estate after your death...even against the wishes of your own mother!!!
It is amazing to me the press accounts of this probate, which have transformed a mundane process into a three ring circus of intrigue. See for example, this article.
In a shocking application of the plain language of the California Probate Code, the judge handling Michael Jackson's probate case gave control of Mr. Jackson's estate to the executors plainly nominated in Mr. Jackson's will, John Branca, a long-time Jackson attorney, and John McClain, a music executive.
California Probate Code Section 8420 clearly states:
The person named as executor in the decedent's will has the right to appointment as personal representative.
Mr. Branca and Mr. McClain, being nominated in the will are absolutely entitled to appointment by the court, absent a showing they are somehow unfit to serve, which I doubt is the case. There is no basis for Katherine Jackson to serve as executor, given the introduction of the will. It's interesting that she was appointed at all, but I assume this was done prior to the court having knowledge that a will existed.
Reviewing the probate examiner notes, it is my assumption that this appointment is a "Special Appointment", meaning that it is being done until Mr. Branca and Mr. McClain are permanently named as executors. There is a hearing scheduled for August 3rd to determine whether Mr. Branca and Mr. McClain will be appointed as permanent executors over Mr. Jackson's estate.
Stay tuned as I will continue to provide an accounting of this case through the eyes of a California Probate Attorney.
It is amazing to me the press accounts of this probate, which have transformed a mundane process into a three ring circus of intrigue. See for example, this article.
In a shocking application of the plain language of the California Probate Code, the judge handling Michael Jackson's probate case gave control of Mr. Jackson's estate to the executors plainly nominated in Mr. Jackson's will, John Branca, a long-time Jackson attorney, and John McClain, a music executive.
California Probate Code Section 8420 clearly states:
The person named as executor in the decedent's will has the right to appointment as personal representative.
Mr. Branca and Mr. McClain, being nominated in the will are absolutely entitled to appointment by the court, absent a showing they are somehow unfit to serve, which I doubt is the case. There is no basis for Katherine Jackson to serve as executor, given the introduction of the will. It's interesting that she was appointed at all, but I assume this was done prior to the court having knowledge that a will existed.
Reviewing the probate examiner notes, it is my assumption that this appointment is a "Special Appointment", meaning that it is being done until Mr. Branca and Mr. McClain are permanently named as executors. There is a hearing scheduled for August 3rd to determine whether Mr. Branca and Mr. McClain will be appointed as permanent executors over Mr. Jackson's estate.
Stay tuned as I will continue to provide an accounting of this case through the eyes of a California Probate Attorney.
Monday, July 6, 2009
Let's Watch Out for Aggressive IRA Ploys
This is just a reminder to everyone out there to watch out for some of these IRA "strategies" that can blow up in your face. Here's an article written by the great Ed Slott regarding such a strategy: Article
A husband and wife were trying to move money out of their business in the form of dividends by selling 50% of the business to each of their Roth IRAs.
Basically, this allowed them the ability to make dividend distributions to the owner of the business, which was now the Roth IRA. Obviously, Husband and Wife would then have been able to:
1. Invest these dividends within the Roth IRA on a tax free basis; and
2. Take tax free distributions from the IRA.
The IRS ruled that this transaction amounted to a ploy to put more than the $5,000 maximum contribution into the couples Roth IRAs. Penalties and interest have not been determined yet, but they're going to be substantial. There's also a possibility of a $100,000 for failing to disclose a "listed transaction".
A husband and wife were trying to move money out of their business in the form of dividends by selling 50% of the business to each of their Roth IRAs.
Basically, this allowed them the ability to make dividend distributions to the owner of the business, which was now the Roth IRA. Obviously, Husband and Wife would then have been able to:
1. Invest these dividends within the Roth IRA on a tax free basis; and
2. Take tax free distributions from the IRA.
The IRS ruled that this transaction amounted to a ploy to put more than the $5,000 maximum contribution into the couples Roth IRAs. Penalties and interest have not been determined yet, but they're going to be substantial. There's also a possibility of a $100,000 for failing to disclose a "listed transaction".
Thursday, July 2, 2009
Michael Jackson's Will, Caution Urged
It's quite a commotion concerning the death of Michael Jackson. As is usually the case with celebrity death's, a dispute has already arisen regarding Mr. Jackson's will. Here's a copy of the will.
As we learned recently with Anna Nicole Smith, the estate plans of celebrities often come to the forefront of controversy surrounding their deaths.
However, given that most Hollywood celebrities are California residents, I think that a lack of understanding surrounding a common estate planning technique causes a great deal of confusion.
In the case of Mr. Jackson, reports are already surfacing concerning Mr. Jackson's "will". There are statements discussing who receives assets from the will, with suggestions that Mr. Jackson's mother, or other parties will receive assets from the trust.
However, my review of the will shows that it just an ordinary "Pour-Over" will that basically leaves everything in Michael Jackson's estate to the "Michael Jackson Family Trust".
This basically means that any assets not transferred to the trust during Mr. Jackson's lifetime will be transferred to the trust. My suspicion is that the dispositive provisions of the trust (meaning who gets what from the estate) will not be revealed, although the trust will likely be submitted to a court of law at some point for review, due to Mr. Jackson's numerous reported debts. It remains to be seen whether a judge in such a case (whether probate or otherwise) will allow such trust to be seen.
One thing the will does do is offer Michael Jackson's suggestions for guardian of his three children. He suggests that him Mother, Katherine, be the first guardian, followed by Diana Ross. This is very interesting, but must be approved by a court of law.
This "Pour-Over" will seems to have caused a great deal of controversy, despite really offering no information. This misconception over the role of a "will" in California estate planning continues to offer a great deal of fodder for the Hollywood media. It will be interested to see if the actual distribution of Mr. Jackson's estate ever becomes know, however, for the privacy of his family, I actually hope it does not.
As we learned recently with Anna Nicole Smith, the estate plans of celebrities often come to the forefront of controversy surrounding their deaths.
However, given that most Hollywood celebrities are California residents, I think that a lack of understanding surrounding a common estate planning technique causes a great deal of confusion.
In the case of Mr. Jackson, reports are already surfacing concerning Mr. Jackson's "will". There are statements discussing who receives assets from the will, with suggestions that Mr. Jackson's mother, or other parties will receive assets from the trust.
However, my review of the will shows that it just an ordinary "Pour-Over" will that basically leaves everything in Michael Jackson's estate to the "Michael Jackson Family Trust".
This basically means that any assets not transferred to the trust during Mr. Jackson's lifetime will be transferred to the trust. My suspicion is that the dispositive provisions of the trust (meaning who gets what from the estate) will not be revealed, although the trust will likely be submitted to a court of law at some point for review, due to Mr. Jackson's numerous reported debts. It remains to be seen whether a judge in such a case (whether probate or otherwise) will allow such trust to be seen.
One thing the will does do is offer Michael Jackson's suggestions for guardian of his three children. He suggests that him Mother, Katherine, be the first guardian, followed by Diana Ross. This is very interesting, but must be approved by a court of law.
This "Pour-Over" will seems to have caused a great deal of controversy, despite really offering no information. This misconception over the role of a "will" in California estate planning continues to offer a great deal of fodder for the Hollywood media. It will be interested to see if the actual distribution of Mr. Jackson's estate ever becomes know, however, for the privacy of his family, I actually hope it does not.
Roth IRA Conversions
I recently did a presentation on Roth IRA Conversions that I think you might find interesting. Please take a look when you get a chance.
Roth Ira Conversions
View more documents from wardwilsey.
Wednesday, March 18, 2009
Madoff's Wife and Asset Protection
The Bernard Madoff fraud is one of the most devious plots ever developed and is heartbreaking when one considers the victims. Justice is not served by a mere lengthy prison sentence, and one wonders why drawing and quartering was done away with. Damn that pesky Eighth Amendment!
With Bernard spending the rest of his life tucked away in a penitentiary, public focus and outrage now turns to his wife, Ruth, who still has millions of dollars in assets.
From a legal perspective, what interests me is the ability of the government to go after Ms. Madoff's assets to satisfy her husbands creditors. Lost in the media hoopla is the ultimate issue. Namely, are Ruth Madoff's assets hers, or the result of a "Fraudulent Conveyance" from her husband.
Let's assume for a moment that the assets were indeed not legitimately earned by Ms. Madoff. The remaining issue would then be whether their receipt was a "fraudulent conveyance".
A Fraudulent Conveyance is a transfer designed to hinder, delay, or defraud a creditor. If a fraudulent conveyance has occurred, a judge can take back the assets that were subject to the fraudulent conveyance. In most states, this is true even if the liability actually occurred after transfer.
Basically, if Mr. Madoff transferred assets to his wife in an effort to hinder, delay, and defraud creditors, the a judge should be able to take those assets back from Ms. Madoff. PROVING that the transfer was done in an effort to hinder, delay, or defraud creditors seems to be the difficult task. My suspicion is that some, and not all, of the assets transferred to Ms. Madoff will be reclaimed.
Stay tuned.
With Bernard spending the rest of his life tucked away in a penitentiary, public focus and outrage now turns to his wife, Ruth, who still has millions of dollars in assets.
From a legal perspective, what interests me is the ability of the government to go after Ms. Madoff's assets to satisfy her husbands creditors. Lost in the media hoopla is the ultimate issue. Namely, are Ruth Madoff's assets hers, or the result of a "Fraudulent Conveyance" from her husband.
Let's assume for a moment that the assets were indeed not legitimately earned by Ms. Madoff. The remaining issue would then be whether their receipt was a "fraudulent conveyance".
A Fraudulent Conveyance is a transfer designed to hinder, delay, or defraud a creditor. If a fraudulent conveyance has occurred, a judge can take back the assets that were subject to the fraudulent conveyance. In most states, this is true even if the liability actually occurred after transfer.
Basically, if Mr. Madoff transferred assets to his wife in an effort to hinder, delay, and defraud creditors, the a judge should be able to take those assets back from Ms. Madoff. PROVING that the transfer was done in an effort to hinder, delay, or defraud creditors seems to be the difficult task. My suspicion is that some, and not all, of the assets transferred to Ms. Madoff will be reclaimed.
Stay tuned.
Thursday, March 5, 2009
Here's a presentation I recently gave on how to protect inheritances from creditors:
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