Writing Your Tulsa Estate Planning Blog

Some experts believe that equities and bonds are about to undergo a dramatic shift in their relationship. That could have an important impact on how trustees invest trust assets.

For approximately 30 years, many types of investors have enjoyed a luxury that many of them did not know was unusual. The equity and bond markets had a negative correlation. That made maintaining a diversified portfolio relatively easy.

Prior to the last 30 years, the two markets had been positively related. Some experts believe the change was brought about because of the relatively low inflation rates in recent decades. They believe that inflation rates will rise in the near future and cause a return to the more historical positive correlation between equities and bonds.

This is reported by Financial Advisor in “Forget 30 Years Of Stock And Bond Divergence, Bernstein Says.”

If this shift does occur, trustees will need to pay attention. Trustees are required to invest trust assets by following the prudent investor rule. For the last 30 years, that has meant following modern portfolio theory and diversifying assets between different classes of investment. However, a return to bonds and equities having a positive relationship will make diversification of investments more difficult.
Trustees’ jobs will become much more difficult.

Of course, this shift has not happened yet and might never happen. Most market predictions never come to fruition. However, trustees should pay attention and make sure that they are following the best advice about investing trust assets.

Reference: Wealth Management (Jan. 10, 2017) “Forget 30 Years Of Stock And Bond Divergence, Bernstein Says.”

When people are approaching death, they could choose to talk about anything that they wanted. Most talk about their friends, families and other loved ones.

You might think that when people are dying and they are visited by a chaplain that they would want to speak to the chaplain about religion and seek reassurances about what will happen to them after they pass away. However, CNN recently published an article by a long time hospice chaplain “What people talk about before they die.”

According to the chaplain, people never talk about God or any formal religion. That is not what is on their minds. Instead they talk about the people and things that they loved in life, mostly the people. That, of course, is not the people they worked with usually. It is their friends and especially their families.

This is actually an important insight.

For most people, their families are not just the most important thing to them when they pass away but the most important throughout their lives.

We might not always act like it when we have work to do, but most of us would miss our families more than we would miss our jobs. Knowing that when we pass away it is likely that our families will be on our minds, we can also presume that we would be a lot more comfortable at the time if we can rest at ease knowing our families will be taken care of.

The best way to make sure that your family will be taken care of is to get a professionally crafted estate plan.

Reference: CNN (Dec. 20, 2016) “What people talk about before they die.”

Estate executors and personal representatives have a duty to the estate to pursue any causes of action that the estate might have, but what if that means they have to sue themselves? A case in Utah answers that question.

If a deceased person or the estate of that person has reasonable legal recourse against some other person or entity, then it is ordinarily the duty of the estate’s representative to pursue that action in court. However, a recent case in Utah shows how that can lead to interesting results.

A man died in a one-vehicle accident when his common law wife was driving. The wife was the man’s sole heir and was named the personal representative of his estate. In that capacity, on behalf of the estate, she filed a lawsuit against herself for wrongful death. Then, in her capacity as an individual and the defendant in the wrongful death case, she moved to dismiss the case on the grounds she could not sue herself.

The trial court dismissed the lawsuit.

The grounds?

Public policy prevents someone from suing themselves.

However, the Utah Supreme Court reversed that and allowed the wrongful death lawsuit to continue.
The Wills, Trusts & Estates Prof Blog discussed this case in “Case Summary on Suing Yourself as Personal Representative for Wrongful Death.”

At first glance, this might seem ridiculous and pointless, since the woman is the sole heir. Even if the estate collects money from the lawsuit, it would just go to her. However, there are a couple of things that could be going on here.

Before any heirs receive their inheritances from the estate, any debts of the deceased have to be paid. It could be that the estate cannot cover the man’s debts, unless judgment is obtained against the woman.

Another possibility is that the woman had insurance at the time of the accident. In that case, the insurance company might be required to indemnify her if she is held liable for wrongful death.
Thus, the estate would not really be collecting from her. It would be collecting from the insurance company.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 22, 2016) “Case Summary on Suing Yourself as Personal Representative for Wrongful Death”

Therapy animals have been used effectively for all kinds of patients, including those with Alzheimer’s disease. However, it is not always practical or safe to use real animals with people suffering from dementia. Some care centers are substituting robotic pets.

Alzheimer’s disease and other forms of dementia can give patients a deep sense of loneliness. Patients often cannot remember where they are and who the people are around them. This can lead to feelings of being alone.

One way to combat this is with companionship. However, elder caregivers and elder law advocates all know how difficult it can be to get the necessary companionship on a consistent basis.

Therapy animals have sometimes been used. However, even with specially trained dogs and cats, there is still a safety risk for many patients and the animals themselves.

Of course, real animals have to be cared for and fed as well, which takes up caregiving time.
The New York Times in “Therapy Cats for Dementia Patients, Batteries Included” discusses a new trend to use robotic cats.

Robotics have gotten good enough and cheap enough that some commercially available robotic pets could have benefits for patients with dementia.

The article discusses their use in one nursing home where the residents really enjoy the robots. They give a sense of joy and empowerment, even when the patients realize that the robots are not real animals.

There has been no conclusive research proving any long term benefits of robotic pets for people with Alzheimer’s. However, the short term benefits are easy to see for those who work with the patients.

Reference: New York Times (Dec. 15, 2016) “Therapy Cats for Dementia Patients, Batteries Included.”

A new study in the United Kingdom provides an ominous warning about the wealth prospects of younger people.

It seems we’ve been hearing the terms “income inequality” or “wealth inequality” frequently used in recent years to describe a growing economic trend of wealth concentration among a shrinking segment of the population.

These terms are now commonly used: from the work of economist Thomas Pikkety, to the Occupy Wall Street Movement, to every speech given by Senator Bernie Sanders, and even to the pages of The Economist. While we like to believe that everyone has a fair shot and that hard work is rewarded, a new study out of the United Kingdom raises some doubts.

Recently reported in The Independent article titled “Inherited wealth will decide how rich young people will become, a study warns,” the study suggests that due to rising home prices, stagnant wages and diminishing pensions, the wealth of young people will not come from their own hard work. Instead, it will be primarily determined by the inheritances they receive from their parents.

Although this study was conducted in the United Kingdom, many of the same sentiments and perceptions also exist in the U.S.. In the U.K., this is prompting many young people to oppose estate tax cuts or repeal. As one liberal Democrat was quoted as saying, “It cannot be right that the wealthiest families amass vast fortunes, while millions of young people see their incomes fall and home ownership slip out of reach.”

As the new Congress and President Trump undertake discussions about the future of the estate tax here in the U.S., the debate may turn at some point to discussions of income inequality, wealth concentration and the potential social role of estate taxation.

Reference: The Independent (January 5, 2017) “Inherited wealth will decide how rich young people will become, a study warns.”

Boxer Muhammad Ali’s family is set to have a massive fight over his estate.

It never took much prompting to get Muhammad Ali to claim that he was the greatest fighter of all time. He was a legend for not only the power of his fists and the quickness of his feet, but also for his sharp wit and talking up himself and talking down his opponents.

The controversial and beloved figure passed away last year, after a long struggle with Parkinson’s disease.

While Ali can no longer fight, his family still can and it appears they are going to, according to the Daily Mail in “Revealed: Muhammad Ali’s widow will receive DOUBLE the $6M inheritance awarded to each of his nine children sparking ‘World War Three’ between warring relatives.”

The heart of the dispute appears to be longstanding animosity between Ali’s children and his widow.

The children are upset, even though all nine of them will receive $6 million from their father’s estate. They are not happy that the widow will receive twice the amount they will get.

Although the children have often feuded with each other, they have apparently agreed to set those disputes aside for now, until they have their say about their father’s widow.

It is not clear exactly what the children plan to do and if they have any grounds to dispute the amount their stepmother was left in Muhammad Ali’s will.

Reference: Daily Mail (January 3, 2017) “Revealed: Muhammad Ali’s widow will receive DOUBLE the $6M inheritance awarded to each of his nine children sparking ‘World War Three’ between warring relatives.”

Whenever you have significant changes in your life, you should change your estate plan. But, what counts as a significant change?

Estate planning attorneys always tell their clients that anytime the client undergoes a significant change in life circumstances, the client should come back to the attorney so the estate plans can be changed to reflect the new circumstances. However, that leaves open the question of what changes are considered significant enough to require immediate change to an estate plan.

While it is impossible to list all of the possible significant changes, Forbes recently listed some common ones in “6 Reasons To Revise Your Estate Plan As Soon As Possible,” including:

•If you get divorced, you should change your estate plan to exclude your ex-spouse.

•If you get re-married, then changes need to be made to include your new spouse in your estate plan, especially if you have children from a prior relationship that need to be provided for.

•If you have another child, it is important to change your plan to make sure that the new child is included.

•If you have a serious illness or injury, then your estate plan should be reviewed to make sure you can meet your needs.

•If the tax laws change, consider reviewing your estate plan to determine how the changes could affect your planning.

•If you receive a large inheritance, then you will want to change your estate plan to reflect your new financial circumstances.

Reference: Forbes (January 2, 2017) “6 Reasons To Revise Your Estate Plan As Soon As Possible”

After facing his own mortality, B.J. Miller has made it his life’s goal to change the way that people pass away.

When he was a sophomore in college, B.J. Miller went out drinking with friends. On the way to a convenience store at 4 a.m., he decided to climb to the top of a commuter rail car. When he got to the top, he received a massive electrical shock and fell.

He woke up in a hospital a few days later, severely burned and in great pain. Doctors had to amputate both of his legs below the knees and his left arm. Rather than retreating into a permanent shell, Miller went back to school and eventually became a doctor.

Learning from his own near-death experience, Dr. Miller decided to devote his medical career to end-of-life, or palliative care, focusing on the quality of life for the terminally ill and their families.

Dr. Miller eventually became executive director of a small hospice in San Francisco known as the Zen Hospice Project. Once a pioneer, the Zen Hospice is now a role model for a growing effort nationwide to “reclaim death as a human experience instead of primarily a medical one.”

Dr. Miller talks about his experience and his mission in the New York Times Magazine article, “One Man’s Quest to Change the Way We Die.” The article chronicles the story of one young man’s journey to accept a terminal diagnosis of mesothelioma and how Dr. Miller’s approach helped him, and his family, to achieve some peace with the loss of such a young, promising life. The piece is fairly long, but well worth a read, especially if you or someone you love is dealing with a terminal illness.

Reference: New York Times Magazine (January 3, 2017) “One Man’s Quest to Change the Way We Die.”

One of the biggest questions concerning estate planning right now, is whether Donald Trump will carry out his campaign promise to eliminate the estate tax and whether or not he should.

The estate tax is a one of those hot button issues over which political parties are sharply divided. While campaigning for the presidency, Donald Trump repeatedly said he would eliminate the tax. His is a position that most Republicans in Congress share. Now that Donald Trump and congressional Republicans have the power to do away with the estate tax, the question becomes whether they will actually do so.

Financial Advisor addressed that question in “Death to the Death Tax?”

“I think there’s a chance he [Trump] will repeal the whole thing,” said tax attorney Martin Shenkman, whose namesake firm in Jersey City, N.J., and New York City focuses on estate and tax planning for high-net-worth individuals, closely held businesses and real estate professionals.

Shenkman also said there’s speculation about abolishing the gift and generation-skipping taxes. He pointed out that, while these taxes do not raise a lot of revenue, they were at one time intended to minimize the wealth-concentration in our country. Whether or not they still serve this social purpose, or should, is up for debate.

With all of this uncertainty, no one can predict the final outcome, but, as Shenkman said, “There’s no reason to stop planning because of this uncertainty, if the end result of the planning is to get assets in a better place than they are now regardless of the tax.”

Reference: Financial Advisor (January 3, 2017) “Death to the Death Tax?”

If you think that you do not need to have a will or other estate plan, then you might want to pay attention to an ongoing crisis in China.

Not too long ago, the Communist Party in China had strict rules about the accumulation of wealth and passing it on to heirs. During the Cultural Revolution, things were very simple. A person could not accumulate wealth at all, so there was nothing to pass on.

This led to most Chinese people not bothering to create wills or estate plans.

However, the Communist Party has since loosened its rules and many Chinese people are now extremely wealthy. Unfortunately, most of them have stuck with the habit of not getting estate plans and that is causing problems.

This was reported recently by USA Today in “Chinese don’t have wills — and now it’s a big problem.”

The Chinese courts have seen a flood of inheritance disputes that are clogging up their system and slowing down affected business. Families are fighting over this new wealth in the country and even the Communist Party is growing concerned.

It is estimated that only 1% of the country’s senior citizens have wills. Even those who do have wills of some sort, cannot avoid issues.

Some 60% of wills challenged in the country are found to be invalid. The Communist Party is now actively encouraging people to get proper wills.

While the problem is not as severe in the U.S., too many people here also do not have wills.
That causes the same issues as the Chinese have.

Make 2017 the year to get your estate plan completed or reviewed!

Reference: USA Today (Jan. 2, 2016) “Chinese don’t have wills — and now it’s a big problem.”