Planning for Art Collectors

Detail of Uffizi Gallery by Johann Zoffany

Detail of Uffizi Gallery by Johann Zoffany

I could happily get lost in a museum. Vermeer and Van Gogh, Durer and David are favorite painters. Greek sculpture and Gothic architecture fascinate me. I love art. I can understand the desire to own a masterpiece.

But valuable art creates unique estate planning problems. Fortunately, the ABA has just come out with the Handbook of Practical Planning for Art Collectors and Their Advisors, by Ramsay Slugg.

After a brief discussion of the art market generally, the author introduces and explains a client-focused process that can be used when advising art collectors. This includes explaining both the income, estate and gift tax consequences of various options, as well as the important and often emotional non-tax considerations of collecting and disposing of art.

You can find the ABA site to order a copy here.

Posted in Estate Planning, Federal Estate Taxes, Gifting | Tagged , , , | Comments Off on Planning for Art Collectors

Is the Industry to Blame for Americans’ Obsessive Worrying About Finances?


Should we be worrying? Chuck Jaffe of Market Watch reports on two recent surveys of Americans that show obsessive levels of worrying about finances.

The 2015 “Life + Money Survey” from, released this month, showed that Americans think more about money on a daily basis than about anything else, including their health and fitness or their love lives.

. . . .

Part of the “I’ll never get there” worry problem comes from a financial-planning industry that talks about ideal levels of saving and investment without recognizing that falling short of those high levels of saving doesn’t leave that individual destitute.

For example, the standard planning advice is that an investor needs to amass a portfolio that is big enough so that they can live off a 4% return on their nest egg. In other words, someone who needs a $50,000 annual income in retirement needs to amass $1.25 million.

Not surprisingly, that kind of savings feels impossible for workers who have raised a family, helped to pay for college and simply haven’t saved sufficiently over their working life.

The financial professionals respond that the real problem may be worrying without doing anything about it:

“You can worry all the time, but you actually have to do something if you really want to change it,” said Cameron Huddleston, a personal finance expert for “You will still have worries — you start out afraid that you’re not saving, and then you move to worrying about not saving enough, and then to whether you can actually make your goals and so on — but the more action you take, the better you should feel.”

The entire Market Watch article can be found here.

Posted in Estate Planning, Retirement | Tagged , , , | Comments Off on Is the Industry to Blame for Americans’ Obsessive Worrying About Finances?

Inside Look at Frank Gifford’s Probate Estate

On the celebrity estate front, the New York Daily News recently published details about Frank Gifford’s Last Will and Testament. Kathie Lee Gifford is to receive the bulk of the $10 million estate, but his children from a prior marriage were also included. A son and daughter are to receive $500,000 each, and another son who is disabled from an auto accident is to receive $1 million in trust.

The article can be found here.

Posted in Celebrity Probates, Probate | Tagged , , | Comments Off on Inside Look at Frank Gifford’s Probate Estate

Options for Funding Long Term Care


Where there is a potential that nursing home care will use up life savings, an Elder Law professional should be consulted to determine the best course of action. The following quotes from Brad Reid of the Huffington Post Blog are a good starting point:

Estate planning frequently addresses property transfers in contemplation of death while elder law considers retirement income issues. While it is easy to consider the two issues in isolation, this is frequently a mistake.

. . . .

A significant ethical and legal issue is whether or not to dispose of assets through pre-need planning in order to qualify for means-tested government programs such as Medicaid that might pay, for example, the cost of long term nursing home care.

. . . .

Assuming that one wishes to maximize eligibility for means-tested governmental benefits, a common income reduction technique in a number of states is to create a Qualified Income Trust (QIT), often called a Miller Trust due to a 1990 decision, Miller v. Ibarra.

The entire article can be found here. It should be pointed out that not only is this article merely a starting point for answers to these questions, but California law currently provides unique options that may be useful in dealing with the problem of covering long term care costs. Qualified Elder Law professionals should be consulted.


Posted in Elder Law, Long Term Care | Tagged , , | Comments Off on Options for Funding Long Term Care

What is a Pour-Over Will? – Estate Planning Basics



It is time to get back to basics.

A Living Trust takes the place of a Will. The Trust specifies how the estate is going to be disposed and who has the responsibility for carrying out its instructions. See our previous post on Living Trusts for more info. But an estate plan with a Living Trust should also include a Will. If a Trust takes the place of a Will, why have both a Trust and a Will?

The short answer is belt and suspenders. If one fails, the other one comes through.

In California, a Living Trust is a great estate planning vehicle for all of those assets that are included in the Trust, but what about assets that are left out of the Trust? If you have a Will, then it can direct that any assets left out should be transferred into the Trust, thus preserving the wishes of the testator. The alternative is that the asset would go into the Estate and be distributed according to the laws of intestacy. The Will that would prevent this is called a Pour-Over Will because it pours the assets over into the Trust.

Why would assets be left out of the Trust? When a Trust is created, assets have to be transferred into the Trust by changing the title of the assets. Thus for real estate a new deed is executed. If that is not done or if an asset is inadvertently transferred out of the Trust, the estate plan is still effective because of the Pour-Over Will. More information on funding Trusts can be found in previous posts here and here.

If it is necessary to rely on a Will to fund the Trust, will we have to go through the probate process? Since Wills, unlike Trusts, must be probated, there is a risk of going through the probate process in order to transfer the asset from the estate to the Trust. Therefore it is important to exercise best efforts to put all assets in the Trust. However, there are exceptions to the necessity for probate. In California, if the asset or assets left out of the Trust are worth less than $150,000, then the assets can be transferred to a Trust without going to court. Even if the asset is worth more than $150,000, it still may be possible to transfer the asset to the Trust by court order rather than going through a full probate. This is called a Heggstad petition and will be the subject of an upcoming post.

A Pour-Over Will, if drafted correctly, can serve another important function that is often overlooked. Sometimes Trusts are found to be defective. A standard provision of a Pour-Over Will is to incorporate the terms of the Trust into the Will if it turns out that the Trust is defective. Again, the wishes of the testator are preserved, rather than subjecting the estate to the whims of intestacy law.

A Pour-Over Will is like a backstop in baseball. It catches things that the Trust misses, just in case. Thus anytime you have a Living Trust, you should also have a Pour-Over Will.

Be informed. Knowing the basics of estate planning is essential to creating a plan that actually carries out your wishes. It’s your life and your legacy. It should be your plan.

Photo: Wikimedia Commons

Posted in Estate Planning, Estate Planning Basics, Living Trusts, Probate, Trust Funding, Wills | Tagged , , , , , , | Comments Off on What is a Pour-Over Will? – Estate Planning Basics

A Vacation Home for the Next Generation

Feeling nostalgic about summer vacations? Me, too.

One of the most tangible forms of inheritance is a vacation home. Parents often express the wish that their children not sell the cabin in the woods. This is particularly so when it has been the scene of cherished family memories. Whether in the mountains, at the beach, by a lake or in the woods, such memories sustain us during the more ordinary or trying times. But those memories, which still exist for the next generation, can quickly become overshadowed by the complications of owning and sharing a home with siblings and their families. Anger and frustration can replace more bucolic feelings.

Such controversies could be avoided by putting the cabin in an LLC. What if, for example, one sibling cannot keep up with his or her share of common expenses? If the property is in an LLC, it would be a simple step for the LLC manager to rent the cabin for a part of the year, generating income to cover those expenses.

Jayne Sykora of Epilawg has written of the benefits and basic requirements of what she calls a “cabin LLC.”

[A]n LLC can be created to own and manage a family cabin. The LLC and its owners (the LLC members) can create a Member Control Agreement for the LLC that clearly sets out the rules and responsibilities for managing the LLC and the cabin property over time. The main issues to consider with a cabin LLC are 1) management, 2) transfers of interest & valuation, 3) use of the cabin and 4) costs associated with the LLC.

See the entire article at Epilawg.

Oh, and setting up a family LLC is a great way to make annual gifting easier, but that is a topic for another day.

Meanwhile, let’s starting planning for the Christmas holiday!

Photos by: John Nuttall and Our Home At

Posted in Estate Planning, Family Limited Partnerships, Gifting, LLCs, Real Estate | Tagged , , , , | Comments Off on A Vacation Home for the Next Generation

The Bottom Line for Estate Plans

Lynn Balou, a financial planner in the San Francisco Bay area, published an update of important points to consider in estate planning. Her final exhortation summarizes well the purpose and effect of a good estate plan:

Bottom line: Each of us has an estate plan even if we do nothing. But that estate plan will not be one of our choosing – it will be handled by the government. If you want a say in what happens if you become incapacitated and at your death, hire a great attorney who specializes in estate planning so that you can create an estate plan of your design. And then, revisit your plan from time to time, but mostly just get on with your life and enjoy!

For the entire article, go to the Lamorinda Weekly.

Posted in Estate Planning, Living Trusts, Wills | Tagged , | Comments Off on The Bottom Line for Estate Plans