Your family member went through a meticulous estate planning process to organize and distribute money and property for the benefit of their loved ones, including you. But you may suspect that some of the high-value items in their estate originated as stolen property. The possibility of discovering stolen items within an estate is often overlooked, but it can have legal, financial, and emotional complications. How does it happen?

Example: Stolen Artwork

A New York Times article published in 2023 reported that the New York Metropolitan Museum is carefully combing through its art collections after the government seized dozens of art pieces that were suspected of having been stolen or looted in the past. It is widely known that art collections have mysteriously disappeared over the centuries, especially during wartime, and that ownership should be researched to avoid purchasing an item that belongs to someone else. The Art Loss Register alone lists 700,000 stolen items. Many items find their way into legitimate markets through underground dealers where criminals can exploit innocent buyers. 

When putting together your estate plan, any significant collections you own should be taken into consideration. If your loved one receives stolen items from you at your death, they may not receive legal title to the item, exposing the estate to financial and tax implications. If artwork or other high-value property is removed from the estate, it can affect the liquidity necessary to meet potential estate tax and administrative costs as well as the inheritance of beneficiaries. An estate planning attorney can prepare for different scenarios to protect you and your family.

Private Letter Rulings and Seized Assets 

According to a private letter ruling, if your family discovers stolen items after a loved one’s death, the Internal Revenue Service could include the fair market value of the property in the deceased’s estate for estate tax purposes, even after it has been seized and returned to the owner. This could leave the family owing an estate tax but unable to sell the item in order to pay the estate tax.

The government can seize property it believes has been involved in illicit or criminal activity. Even if your family member purchased an item from a reputable dealer or inherited the item decades ago, it can still be taken. 

How People Come into Possession of Stolen Items

Understanding how individuals unknowingly acquire stolen items is crucial for recognizing potential risks. Innocent parties often purchase items through estate sales or auctions or receive gifts from friends or family members. A lack of transparent ownership or a historical record can make it challenging for the unsuspecting owner to identify stolen items.

Every year, over one million homes are burglarized and almost one hundred billion in store merchandise is stolen. Billions in stolen property is circulating, leaving innocent buyers liable. Those possessing stolen items can serve time in jail or be forced to pay a fine.

Common places to come across stolen goods are online marketplaces such as Craigslist, eBay, or Facebook Marketplace that have lax regulations for selling items. Pawn shops can often be unsure of the origins of their inventory, but they are required to research ownership or face prosecution.

Can You Be Held Accountable?

Not everyone is held accountable for being in possession of stolen goods. There is no statute of limitations for prior owners to claim their stolen property, but there are legal defenses used for possessing it. The defense of laches asserts that prior owners who unreasonably delayed asserting their rights may not be entitled to bring a claim against the person or estate in possession of their property. After all, the property may have already been sold and the proceeds divided among heirs, making it very difficult to recover. 

Whether you can be prosecuted or convicted of possessing stolen property depends on several factors:

• Knowledge that the item was stolen. Suspected stolen items should be reported to law enforcement, or you could be held accountable. However, if it was nearly impossible to know it was stolen, you will likely not be held accountable.
• Knowledge that the item was in your possession. You can unknowingly be in possession of a stolen item. If you are honest, open, and prompt, you should not be held accountable.

What Should You Do If You Suspect Ownership of Stolen Property?

You can take steps during your family member’s lifetime to address your suspicions. Be proactive. If there is a hint of uncertainty about the legitimacy of an item, your estate planning attorney can take the following steps:

• Research the item’s history and provenance to trace its ownership back to its origin to see whether it has ever been reported as stolen.
• Seek guidance from professionals such as art historians, appraisers, or legal experts who specialize in stolen art and property. They can validate legitimate ownership.
• Report the situation to law enforcement in a timely manner to contribute to the recovery of stolen property and prevent legal complications down the line.

There is a risk of discovering stolen items within a loved one’s estate, especially with high-value collections. Do not overlook this when doing your estate planning. By being vigilant, understanding the legal implications, and taking proactive steps, you can mitigate the risks of inheriting or owning stolen property and ensure a smoother estate settlement process for you or your loved ones. Contact our estate planning attorney today.

A Proper Estate Plan Can Protect You and Your Family

Proper estate planning can protect you from the risks of owning stolen property through due diligence and research, ensuring that the prior owner’s rights are extinguished. Unfortunately, research into the origins of property can be expensive, often costing more than the item’s value. However, where there is one suspicious item, there may be more. 

If you are the beneficiary of gifts with suspicious origins, you can disclaim them. If you have questions about something in your collection or your recent inheritance, you can contact our office.

You have several different options when it comes to creating the right estate plan. Some people believe that a revocable living trust is the best way to go, while others think that a last will and testament (commonly known as a will) is best under certain circumstances. Others may find that a combination of both—through the use of a testamentary trust—provides the right amount of control and protection for themselves and their loved ones.

A Testamentary Trust Can Provide a Solution

A testamentary trust will own accounts and property owned by you in your sole name without beneficiary designations, upon your death and enables you to instruct how your money and property will be handled in advance. Unlike a revocable living trust, the testamentary trust is created at your death, and ownership of your accounts and property are transferred to the trust through the probate process. 

You Can Protect Your Loved Ones

Depending on your circumstances, your loved ones may need the extra protection that a testamentary trust can provide. 

• Surviving spouse. Some couples are hesitant to leave everything to their surviving spouse out of fear that the surviving spouse could be taken advantage of, remarry, or otherwise lose the money and property that was left to them. A testamentary trust can allow a surviving spouse to access the money and property while including extra protections to safeguard it.
• Minor child. In most states, minor children cannot legally own anything. If money and property are left to a minor, the court may need to appoint someone to manage the inheritance and make sure that it is used appropriately. A testamentary trust allows you to select the person to manage the inheritance and provide specific instructions about how the money and property should be used.
• Special needs individual. If you have a loved one who is currently receiving or may need to avail themselves of certain government benefits due to a disability, a poorly structured inheritance can jeopardize their ability to qualify or keep those government benefits that they need to survive. A properly structured testamentary trust can provide funds to your loved one to supplement what they are receiving from the government without disqualifying them from government assistance.

Your Loved Ones Will Still Have to Go Through Probate

Although you are using a trust to manage and distribute money and property to your loved ones, the probate court will still have to be involved. As opposed to a revocable living trust that is created during your lifetime, a testamentary trust comes into existence at your death during the probate process. The person you name as the executor or personal representative will oversee changing the ownership of your accounts and property from you as an individual to the trustee of the testamentary trust. Once ownership of accounts and property has been changed, the trustee will manage the trust according to the instructions in the will for the trust’s duration. When all of the accounts and property have been given to the intended beneficiaries, the trust terminates. During the administration, the trustee may be required to provide annual reports to the court and other important parties and may have to periodically appear before the judge.

Although the probate process can be time-consuming, expensive, and public, it may be the right option in some circumstances. Some people find that it provides stability and harmony by allowing a third party (the probate court) to oversee the process. This can help families who may otherwise argue over the details to remain cordial and on their best behavior.

Do Not Forget Other Important Documents

Even if you choose to include a testamentary trust as part of your will, there are other important estate planning tools you must have to properly protect yourself and your loved ones. Because a will only covers what happens to your money and property when you pass away, we must also plan for a situation in which you are alive but unable to make your own decisions, which is known as incapacity.

Financial Power of Attorney

A financial power of attorney allows you to choose a trusted person (the agent) to handle your personal financial matters without court involvement. The amount of authority your agent has is determined by the type of financial power of attorney you have prepared. It can be as limited or as broad as you would like. Another important consideration when preparing a financial power of attorney is choosing when the agent can act. One option is to enable the agent to act immediately once you have signed the document. A second option is to have a springing financial power of attorney that only becomes effective once it has been determined that you cannot manage your affairs. It is important to note that some states do not allow springing powers of attorney. 

Medical Power of Attorney

A medical power of attorney allows you to appoint a trusted person as a decision-maker to communicate on your behalf or make healthcare decisions for you without court involvement. 

Advance Directive or Living Will

An advance directive or living will allows you to convey your wishes regarding end-of-life decisions, such as how long to continue artificial hydration and nutrition or how long to continue artificial respiration when you are in a persistent vegetative state or have a terminal condition and with no chance of recovery. This document will help the decision-maker under your medical power of attorney make informed choices for your care. 

HIPAA Authorization

A Health Insurance Portability and Accountability Act of 1996 (HIPAA) authorization form allows you to grant specific individuals access to your confidential and protected information (e.g., to get a status update on your condition or receive your test results) without giving those individuals the authority to make decisions on your behalf. Providing this information to your loved ones can help all parties stay on the same page even if only one person is authorized to make medical decisions on your behalf.

Nomination of Guardian

Some states have a separate document that allows you to nominate a guardian for your minor child. Some people prefer the separate document because they can change guardians with ease and without having to update their entire will or pour-over will. This document can be referenced in your will so that your nomination will be known during the probate process.

Temporary Guardianship

Some states allow for a separate document in which to name a person to make decisions for your minor child when you are unable, such as if you are incapacitated or traveling without your child and need to give someone authority to make decisions for your child in your absence. It is important to note that this document is only effective for a short period (typically six months to a year), and a temporary guardian cannot agree to certain actions, such as the child’s adoption or marriage. 

Let’s Choose the Right Option for You and Your Loved Ones

There are many different options when it comes to crafting a plan that is right for you. We are committed to developing a plan that protects you, your loved ones, and your legacy. If you are interested in learning more about testamentary trusts or reviewing your existing estate plan, please give us a call.

When you decide to create a comprehensive estate plan, there are many things to consider. One is whether to tell your loved ones about your plan and how much information to share with them. Estate planning can be a complex and sensitive matter, so your choice may depend on your unique relationships with loved ones and your family dynamics. 

Sharing your estate plan with your loved ones can compromise the privacy of your financial and personal information. Some people therefore prefer to keep these matters private, especially when it comes to distributions of significant amounts of money or property. There are both advantages and disadvantages to revealing private information related to your estate plan. You can choose to communicate details relevant to specific individuals or offer a broader explanation to everyone involved.

Advantages of Sharing Your Estate Planning Details

Everyone Knows What to Expect

Estate planning deals with personal, family-specific situations. By discussing estate planning with your family, you can ensure that your loved ones are aware of how you have structured the money and property that may be transferred to them. Discussing matters up front will also give notice regarding who will be in charge if you cannot handle your affairs or when you die. This transparency can reduce confusion and conflict that can lead to disputes, disagreements, and even legal challenges later. Your loved ones will have the advantage of being prepared for what is to come.

Loved Ones Understand Your Wishes

Your estate planning documents, including your will, trust, and other directives, can sometimes be complex and subject to interpretation. When your loved ones know your wishes, there is less room for misinterpretation of your intentions. This is critical, especially in medical emergencies when decisions must be made quickly.

By sharing your intentions, you can explain your perspective and the reasoning behind your decisions, such as why you have chosen certain beneficiaries, trustees, or executors. This personal touch can help your loved ones appreciate the thought you have put into your estate plan.

When communicating your rationale for distributing money and property in a particular way, you can reduce resentment and promote understanding while you still have the opportunity. This can be particularly important if your plan includes provisions that may seem unequal at first glance. If a problem arises, you may be able to find resolutions and compromises in advance.

If you happen to have beneficiaries with special needs or specific financial requirements, sharing your estate plan ensures that your loved ones are aware of their responsibilities in caring for these beneficiaries and following your instructions to provide for them after you pass away.

You also have the chance to convey your values, beliefs, and objectives regarding your estate. This can be particularly important if your estate plan includes charitable contributions, specific bequests, or arrangements that reflect deeply held principles.

Administration Goes Smoothly

When your loved ones are informed about your estate plan in advance, those involved may be more likely to accept your wishes and cooperate during the administration, making the entire process more efficient. They will know who to contact and what to do. Being aware of the details reduces delays related to identifying your property and beneficiaries and allocating responsibilities. Your chosen decision-makers will already know their roles, which will minimize uncertainty and allow them to step in without hesitation when needed.

Your loved ones will also have contact information for professionals, such as estate attorneys, financial advisors, and accountants, who may need to be involved.

Loved Ones Can Ask Questions

When your loved ones know that you are willing to discuss your estate plan, it can create an environment of openness and trust, which extends beyond estate planning matters. Your loved ones may have questions or concerns, and this is the best time to address them. Together, you can work to find solutions or compromises that align with your wishes and address their needs and expectations for the best possible outcome.

You also have an opportunity to educate your family members about your financial and other estate matters. This knowledge can empower them to be better-prepared for their own financial futures and estate planning decisions. This can offer an additional layer of protection, knowing that your loved ones are proactively protecting themselves and their loved ones as well.

It is also possible that during your conversation with your loved ones, you might realize that important details or beneficiaries were inadvertently left out of your estate plan. Sharing your plan allows you to address any oversights and make necessary adjustments now.

Disadvantages to Sharing Your Estate Planning Goals 

Estate Plans Are Not Set in Stone 

In most circumstances, you have the legal right to change or update estate planning documents such as your will, trust, or beneficiary designations whenever you like, so long as you are mentally capable of doing so. Over time, your financial situation, family structure, or personal goals may change, prompting adjustments to your estate plan. Sharing your plan with loved ones today might create expectations, leading to confusion if you make changes later that affect their inheritance or role in handling your affairs. When loved ones anticipate different outcomes, it can result in temporary disputes or permanently strained relationships.

If you choose to discuss your current estate plan and make changes in the future, ensure the appropriate people are updated of the changes. Loved ones who are unaware can be caught off guard, creating conflicts during the administration phase.

Emotions and Disappointments

Sharing your estate plan may lead to disappointment among your loved ones. When a loved one is upset about the way you have structured your plan, their unhappiness can create emotional strain between you.

In some cases, sharing an estate plan can bring unresolved issues to the surface. When family dynamics are complex or strained, it can exacerbate the situation. Loved ones may have differing opinions about your choices, and these conflicts require difficult conversations to understand their concerns and work toward resolutions. This can be emotionally draining and time-consuming.

Knowing that your loved ones are upset can also disrupt healthy communication. They may be hesitant to express their concerns or objections, fearing that it could lead to further problems. This can also hinder your estate planning decisions. If this happens, you can work with a qualified estate planning attorney or mediator to help guide productive discussions among your loved ones.

Manipulation Tactics 

Your loved ones may express their opinions or desires regarding your estate plan and try to pressure you to make changes that you may not necessarily agree with. While it might be important to you that you consider their input, it can be tough to balance their wishes with your own, especially if you have specific reasons for your chosen plan.

They may use guilt, emotional appeals, or even threaten to cut ties with you if you do not modify your estate plan for them. You may feel significant pressure, particularly if you have a close or dependent relationship with the person trying to influence your decisions.

Attempts to manipulate your estate planning decisions can challenge your autonomy and the principles behind your estate planning goals. Your estate plan should reflect your own values and wishes, and you should make decisions based on what you believe is fair. Stand firm in your decisions and maintain the integrity of your estate plan.

Boundaries must be set with your loved ones to protect your own wishes and well-being. If you are influenced by emotional manipulation, it can lead to regrets and raise complex legal and ethical issues with the validity of your legal documents. It may be necessary to consult with an attorney or mediator to determine the best course of action.

Doing What Is Best for You and Your Loved Ones

Sharing your estate planning details with loved ones can offer several advantages, such as transparency and a smoother transition when you die or are unable to manage your own affairs. However, there are potential downsides, including possible disagreements between family members and pressure to change your plan. The decision to share your estate plan should be made carefully, taking into account your specific objectives and family dynamics. 

We can help ensure that your plan aligns with your goals and discuss with you the potential consequences of sharing your plan details with loved ones. Contact our estate planning attorneys today.

Dianne Feinstein, the longest-serving female United States senator in history, passed away in September at the age of 90. First elected to the Senate in 1992, Feinstein leaves behind a political legacy that spanned nearly 31 years. She also leaves behind an estate that is thought to be worth tens of millions of dollars. 

Although a large amount of her wealth came from her marriage to the late billionaire financier Richard C. Blum, Senator Feinstein was also successful in her own right. During their marriage, Feinstein and Blum established a marital trust that is now the subject of a fierce legal battle between Feinstein’s daughter and Blum’s three daughters. 

A judge has ordered the dispute to be resolved in private mediation. While this could keep the final resolution outside public view, the legal drama offers lessons illustrating the need for careful estate planning in blended families. 

Feinstein’s Assets and Estimated Worth

One of the Senate’s wealthiest members, Feinstein had a personal net worth that is estimated at around $70 million. A financial disclosure form filed in May showed that she owned millions in a blind trust, several large bank accounts, and a multimillion-dollar condo in Hawaii. She also owned a mansion in Washington, DC, worth more than $7 million and a private jet that averages more than $61 million if purchased used.^. 

Marital Trust and Legal Dispute

Feinstein and Blum married in 1980 and lived together in California, a community property state, until Richard’s death in 2022. Feinstein had one daughter, Katherine, with a previous husband. Blum had three daughters from a prior marriage. 

As the only daughter of Senator Feinstein, Katherine is set to inherit all of her mother’s personal wealth. She also stands to benefit from one-quarter of the estate left by Feinstein and Blum. But how much of that Katherine receives may depend on the outcome of a messy estate dispute. 

Upon Blum’s death, the trustees were required to fund assets into a marital trust to provide for Feinstein during her lifetime. The marital trust would be for the benefit of Dianne until her death, at which point Blum’s daughters would receive the remaining money and property. 

Three lawsuits were filed prior to Dianne’s death, with Katherine serving as agent under a power of attorney. Even after Dianne’s death, the lawsuits continue. They contain allegations of elder abuse, failure to properly fund the marital trust, and failure to reimburse Senator Feinstein for her medical expenses. One of the specific allegations is that the Stinson Beach home should have been sold but was instead used by Blum’s daughters at Feinstein’s expense. 

The lawsuits could be put on hold temporarily while Feinstein’s estate is probated. Katherine, however, should be able to continue her claims, possibly in a new role as executor of Feinstein’s estate. Shortly before the Senator’s death, a California judge ordered the lawsuits to be settled through mediation. 

Estate Planning Takeaways from the Feinstein-Blum Family Feud

Blended families, or stepfamilies, are increasingly becoming the norm. Around half of US families are now remarried or recoupled. 

While any family can succumb to infighting over inheritances, blended families may be more prone to disputes, especially when one spouse dies and the surviving spouse and children have differences of opinion. Significant assets, like those in the Feinstein-Blum estates, can further raise the stakes among heirs. 

The Feinstein-Blum estate plan is what estate planning attorneys characterize as a “yours, mine, and ours” plan, which deals with respective children differently and is common in blended families. However, careful planning is needed to prevent conflicts of interest in this type of arrangement. 

The trust at the center of the Feinstein legal dispute, for example, was set up so that, after Blum’s death, Feinstein received trust income during her lifetime, and remaining assets went to Blum’s daughters after her death. This created competing interests between Dianne, who needed money from the trust to pay for current expenses, and the Blum daughters, who had a motivation to preserve more trust assets for themselves. Leaving assets outright to Dianne, or to a trust where the remainder went to Katherine, while leaving other assets to Blum’s children, could have prevented this situation. 

In every family, blended or not, it is important to be as clear as possible about the terms of distributions. Here are a few other estate planning lessons from the Feinstein lawsuits: 

• Be careful about naming trustees. If even some of the lawsuit allegations are true, it would mean that the trustees breached their fiduciary duties and that Blum may have made poor trustee choices. Trustees have a lot of power and should be chosen accordingly. Naming former business associates as trustees when Blum had a wife and stepdaughter might have raised questions about objectivity. 
• The importance of communication. If heirs have no idea what to expect from an estate plan, they could be taken by surprise and be more likely to challenge the administration in court. Consider informing children, spouses, and parents about the structure of your estate plan to prevent any unexpected outcomes that might increase the chances of litigation. People could have strong feelings about certain assets. It is better that they voice them up front and make appropriate arrangements. 
• Distribute trust assets promptly. Perceived delays in distributing trust assets appear to have deepened beneficiary suspicions about trustee management in this case. The trustee should administer the trust as expeditiously as possible after the death of the trustmaker. Legitimate delays can happen, and if they do, transparency and communication with beneficiaries may stave off a lawsuit. 

Protect Your Legacy and Loved Ones

Trust and estate litigation only makes things worse for grieving families. It can make a private family situation public—which undermines a major benefit of placing assets in trusts—drain away estate assets in legal costs, and irreparably damage relationships. 

Whether you have a blended family or a traditional family, careful estate planning can help prevent issues similar to those raised in the Feinstein-Blum matter. A thorough estate plan that includes provisions such as a statement of intent that explicitly describes goals for trust assets can reduce the chance of tensions between beneficiaries and ensure that your legacy is honored in the way you intend. 

For trust planning, administration, and litigation assistance, please contact our office. 

Michael Oher has had a remarkable life so far. Born to a single mother struggling with addiction and growing up in and out of foster care, Oher went on to star as a University of Mississippi football player and was selected in the first round of the 2009 NFL draft. He played eight seasons in the NFL, won a Super Bowl in 2016, and is the subject of a book that inspired an Oscar-winning movie, The Blind Side. 

Sean and Leigh Anne Tuohy, the Tennessee couple that took Oher into their home when he was in high school and were appointed as conservators of his estate, are featured prominently in The Blind Side. But Oher has recently alleged that, contrary to the movie’s portrayal of events, the Tuohys never actually adopted him. Oher alleges that the Tuohy’s instead tricked him into agreeing to the conservatorship and unjustly profited from his trust in them.

While the accusations will play out in court, they raise questions about conservatorships, when they are necessary, and how they affect estate planning. 

What Is a Conservatorship? 

A conservatorship is a court-ordered arrangement that gives one person (or multiple people), called a conservator, legal authority to manage the affairs of another person, known as a conservatee or ward. 

Most jurisdictions—including Tennessee, where the Michael Oher conservatorship was created—recognize two types of conservatorships: 

• A conservatorship of the person authorizes a conservator to manage the personal affairs of the conservatee, including their healthcare and living arrangements. 
• A conservatorship of the estate grants the conservator the authority necessary to supervise the conservatee’s financial affairs, such as managing their money, paying their bills, and in some instances, setting up an estate plan for them. 

Conservatees are often children, but they can also be adults who are incapacitated, have developmental or age-related disabilities, or are otherwise deemed by the court to be unable to handle their own financial or personal affairs. A famous example of this is the Britney Spears conservatorship that was set up following her pattern of erratic behavior and placement in a psychiatric hospital for observation. In Spears’s case, her conservatorship was split into two parts—one for her estate and finances and one for her as a person.¹ 

A conservatorship may be established following a court petition by a friend or relative asking for the appointment of a conservator. The petition must explain the basis for establishing the proposed conservatorship. In many cases involving adult conservatorship, the petition must indicate that the conservatee is at risk of either injury to their person due to their inability to manage their daily needs or make medical decisions, or that they are at risk of financial exploitation or involuntary depletion of their assets. Following an investigation and a hearing, the court decides whether a conservatorship is warranted.

If a conservatorship is granted, a conservator is named, and their specific powers are set out in a court order. Typically, the court requires that conservators file annual financial accountings or plans for the care of the person, depending on the type of conservatorship.

Michael Oher’s Conservatorship

In 2004, shortly after Oher turned 18 and about two months before he signed on to play football at Ole Miss, a Tennessee judge entered an order establishing a conservatorship over Oher with the Tuohys as conservators. At the time, the conservatorship was established with the permission of Oher as well as his biological mother. According to the conservatorship filing, a judge declared that the Tuohys “should have all powers of attorney to act on his behalf and further that Oher shall not be allowed to enter into any contracts or bind himself without the direct approval of his conservators.”²  

Legal experts say the 2004 filing for a conservatorship of the person is unusual because Oher had “no known physical or psychological disabilities.” The petition notes that he was a good student and made the dean’s list his sophomore year. 

In an August 14 petition to terminate the conservatorship, which was allegedly scheduled to end when Oher was 25 years old, Oher claimed that the Tuohys deceived him and did not act in his best interest as conservators.³ His petition stated that he did not understand that he was giving up his right to contract for himself, the Tuohys misrepresented the conservatorship as an adoption, and that “the lie of adoption” enabled the Tuohys to enrich themselves at the expense of Oher, including from film royalties. 

In addition to seeking to sever the conservatorship, the lawsuit filed by Oher sought a full accounting of assets; an injunction prohibiting the Tuohys from using his name, image and likeness; compensatory and punitive damages; and costs and attorney’s fees. 

Adoption versus Conservatorship

Adopting Oher would have made him a member of the Tuohy family, no different in the eyes of the law than the Tuohys’ two birth children. Adoption would also have allowed Oher to retain power over his own financial affairs—a power that he surrendered under the conservatorship. 

The Tuohys say they are blindsided by Oher’s accusations that they profited from the conservatorship. Their version of events portrays the conservatorship as necessary to help Oher with a driver’s license, health insurance, and the college admissions process.⁴ Sean Tuohy said he was advised by lawyers at the time that adoption was not an option because Oher was 18 and a legal adult. 

Many states, including Tennessee, however, allow adult adoption. Adoption laws in Tennessee permit a person to be adopted at any age. When the adoptee is over the age of 18, consent from birth parents is not needed—only the consent of the adopted adult. This law is apparently not new. As part of a fact check about adult adoptions in the state, a Tennessee adoption attorney told Fox 13 Memphis that they have been doing them for decades.⁵ 

Conservatorships and Estate Planning

The Tennessee judge overseeing the case has signed an order ending the conservatorship.⁶ However, Oher’s accusations against the Tuohys will still have to play out in court. Among the legal questions to be answered are whether the Tuohys filed an annual report with an accounting of Oher’s finances with the probate court and if they have received money on Oher’s behalf and properly disbursed it to him. 

Conservatorships, illustrated by the Michael Oher and Britney Spears cases, can sometimes lead to family feuds about the intentions of a conservator toward a ward. Taking away somebody’s legal rights to make decisions—and giving those rights to somebody else—is often reserved only for extreme situations, such as when somebody is brain injured, suffers a stroke, is in a coma, or develops dementia. 

In such cases where the court declares that a person is unable to manage their own affairs, a conservator may be appointed. One of the rights the court may give to the conservator is the right to make an estate plan for the conservatee. Depending on the situation and specific authority granted to the conservator, however, a person subject to a conservatorship may still have the capacity to set up their own estate plan. The ward may also later revoke or amend a conservator-drafted estate plan if they can show that they possess testamentary capacity or their rights delegated by the court are restored. 

Given the restrictive nature of a conservatorship and the lengthy court process to establish it, families may want to avoid conservatorship except when there is an imminent need that cannot be addressed through less restrictive means. If estate planning documents like powers of attorney for finances and healthcare are already in place, the family can avoid conservatorship and step in to manage finances or make important decisions the second it becomes necessary. 

Plan Early and Often to Avoid Difficult Choices Later

Failure to plan for all possibilities—even those we would rather not think about—can have unintended consequences. If you neglect estate planning considerations now, you could limit your future options around issues like conservatorships, probate, and inheritance. 

Maybe there is an adult member of the family whom you never legally adopted but would like to adopt now for estate planning purposes. There might be lingering questions about what would happen to you, your spouse, your adult children, or your aging parents if disability or incapacity suddenly struck. Alternatively, it could be the case that a loved one is already showing signs of dementia and may not have the capacity to execute estate planning documents. 

Our estate planning attorneys are in the business of addressing these sensitive questions in a professional and legal manner and creating a plan that leaves nothing to chance. To start planning today, contact our office and schedule a meeting.

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Footnotes

1. Britney Spears: Singer’s Conservatorship Case Explained, BBC (Nov. 12, 2021), https://www.bbc.com/news/world-us-canada-53494405.
2. Sean Neumann, Attorneys Explain What’s “Puzzling” about Michael Oher’s Conservatorship Filing—and What’s Next, People (Aug. 21, 2023), https://people.com/attorneys-explain-what-is-puzzling-about-michael-oher-s-conservatorship-filing-and-what-is-next-7706819.
3. In re Michael Jerome Williams, Jr. a/k/a Michael Jerome Oher, No. C-010333 (Prob. Ct. of Shelby Cnty. Tenn. Aug. 14, 2023), https://www.wkrn.com/wp-content/uploads/sites/73/2023/08/Michael-Oher-Lawsuit.pdf.
4. Adrian Sainz & Teresa M. Walker, Devastated Tuohys Ready to End Conservatorship for Michael Oher, Lawyers Say, AP (Aug. 16, 2023), https://apnews.com/article/nfl-michael-oher-tuohys-blind-side-movie-1bebe2ba9ee2ba60ac806dabab4f6d4c.
5. Katrina Morgan, Yes, It Is Legal to Adopt Someone Over the Age of 18 in Tennessee, 13NewsNow (Aug. 17, 2023), https://www.13newsnow.com/article/news/verify/national-verify/yes-it-is-legal-to-adopt-someone-over-the-age-of-18-in-tennessee/536-2b3ffb4f-c80d-4ea4-9d46-e0db4d914d71.
6. Brynn Gingras & Emma Tucker, Judge Terminates Tuohy Family Conservatorship over Former NFL Player Michael Oher, Depicted in The Blind Side, CNN (Sept. 30, 2023), https://www.cnn.com/2023/09/29/us/michael-oher-tuohy-conservatorship-termination/index.html.

Lifetime gifts are a popular way to reduce estate and inheritance taxes. Currently, only estates worth $12.92 million or more are subject to the federal estate tax. Twelve states and the District of Columbia levy an additional estate or inheritance tax. 

To lower their taxable estate at death, an individual may consider giving gifts to friends and family members. The timing and form of gifts have important estate planning implications, however, as a recent opinion from the United States Court of Appeals for the Third Circuit demonstrates. In that case, the failure to complete gifts in the form of checks prior to the donor’s death cost his estate—and ultimately, his heirs—a significant sum of money. 

Today’s historically high lifetime estate and gift tax provisions are set to expire at the end of 2025, making now a good time to consider gifts. 

Case Summary

William DeMuth, Jr. of Pennsylvania executed a power of attorney (POA) in January 2007, appointing his son Donald DeMuth as his agent. In this capacity, Donald made annual monetary gifts to family members from 2007 to 2014. 

On September 6, 2015, shortly after William was diagnosed with an end-stage medical condition, Donald signed and delivered seven checks to family members worth $464,000. William passed away on September 11, 2015. At the time of his death, just one of the eleven checks had been paid from his account. Ten of the eleven checks, totaling $436,000, had not been paid before William’s death, although three of them were deposited on the day of his death. 

Donald, the executor of William’s estate, excluded the value of all eleven checks from William’s account when reporting the gross estate. The Internal Revenue Service (IRS), however, concluded that the value of the account had been underreported by the $436,000 value of the ten checks and issued a notice of estate tax deficiency in the amount of $179,130. 

Donald filed an appeal with the Tax Court, where the IRS agreed to exclude the three checks deposited on the day William died. This reduced the tax deficiency to $131,774; but the Tax Court held that the funds from the remaining seven checks were part of William’s estate because, under Pennsylvania law, they were not completed gifts prior to his death. 

The estate appealed to the Third Circuit, arguing that the gifts were completed gifts in contemplation of William’s death, and as a result were completed gifts in “causa mortis.” In Pennsylvania, gifts causa mortis differ from gifts inter vivos (i.e., a gift or transfer made during someone’s lifetime). A gift by check deemed to be a gift causa mortis is complete when the check is delivered to the recipient—not when the recipient deposits the check. 

Donald lost the appeal, with the court ruling that the estate did not show William wrote the checks as gifts in causa mortis. “Thus, the value of the seven remaining checks was improperly excluded from the gross estate,” the court concluded.¹ 

Estate Planning Takeaways

The outcome of the seven checks being included in William’s estate is that the estate tax increased by more than $130,000. Then, there were the estate’s legal and court fees paid to litigate the case in a losing effort, on top of nearly eight years of dealing with the courts and the IRS. 

With better planning, the money paid in taxes and court costs could have been passed on to Donald and other heirs. The federal estate tax amount was also likely in addition to taxes owed in Pennsylvania, which imposes an inheritance tax that ranges from 4.5 to 15 percent on eligible transfers.²

Other estate planning takeaways from DeMuth v. Commissioner include the following: 

• If the deathbed gifts made by Donald DeMuth on behalf of his father had been made by a bank check or wire—rather than a personal check—they could have been excluded from the taxable estate because a bank check or wire represents funds already withdrawn from the payer’s account. 
• US Code and Treasury Regulations were relevant to DeMuth v. Commissioner, but state law dictates that property law rules. Relevant to this case, the distinction in Pennsylvania law between gifts inter vivos and gifts causa mortis was critical. 
• Knowing that his father was in poor health, Donald should have ensured that the gift checks were received and deposited before William died. 
• A similar mistake is made when checks are written at the end of the year for the purpose of taking advantage of the annual gift exclusion amount ($17,000 per person in 2023). If the check is not cashed or deposited by the year’s end, it is not considered complete until the following year and therefore is not a gift made in the year the check is written. This could result in a doubling up on gifts, the required filing of a gift tax return, and a reduction in the lifetime exemption amount. 
• State tax laws should also be accounted for in the timing of gifts. Pennsylvania, for example, does not have a gift tax, but all gifts greater than $3,000 made within 12 months of the decedent’s date of death are pulled back into the estate and subject to Pennsylvania inheritance taxes.³ 

Putting Off Estate Planning Can Have Unintended Consequences

DeMuth v. Commissioners is a lesson in what can happen when estate planning is put off to the last minute. Gifting can be an effective strategy for reducing estate and inheritance taxes and leaving more money for heirs—but to maximize the unified estate and gift tax exclusions, gifting should be a long-term strategy. 

Today’s all-time high exclusion levels are set to be cut in half in 2026. With this drastic change on the horizon, families may want to revisit their estate plan now and consider actions such as creating a family trust. An estate plan should also account for expected asset appreciation that could put an estate over the exemption amount come 2026. 

Even if you do not think upcoming changes in the tax law will affect your estate plan, it is still important to review your plan every few years. Changes in your life and the lives of loved ones can make it necessary to modify your will or trust terms or reconsider trustees and executors. Like William DeMuth, you could also face a terminal medical condition that forces you to accelerate certain aspects of your plan. 

Whatever your plan is, do not delay taking the necessary steps to make it official. Putting off estate planning can affect your estate, your heirs, and your legacy. When your plans change, our attorneys are here to help. Call or contact us to schedule an appointment. 

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Footnotes

1. DeMuth v. Comm’r, No. 22-3032 (3d Cir. Jul 10. 2023), https://law.justia.com/cases/federal/appellate-courts/ca3/22-3032/22-3032-2023-07-12.html.
2. Pa. Dep’t of Revenue, Inheritance Tax, https://www.revenue.pa.gov/TaxTypes/InheritanceTax/Pages/default.aspx (last visited Oct. 27, 2023).
3. Inheritance Tax, Art. XXI § 2107(c)(3), https://www.legis.state.pa.us/cfdocs/legis/LI/uconsCheck.cfm?txtType=HTM&yr=1971&sessInd=0&smthLwInd=0&act=002&chpt=21.

Starting on January 1, 2024, under a new law called the Corporate Transparency Act (CTA), owners of certain business entities must file a report with the federal government including details regarding the ownership of their entity. The CTA was enacted to help combat money laundering, financing of terrorism, tax fraud, and other illegal acts. If you have an entity (corporation, limited liability company, family limited partnership, etc.) as part of your existing estate plan, this is important information you will need to know to ensure that you comply with the new law.

What is the Corporate Transparency Act?

The CTA is a law that requires business entities it identifies as reporting companies to disclose certain information about the company and its owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Under the CTA, a reporting company is defined as a corporation, limited liability company (LLC), or other similar entity (i) created by filing a document with the secretary of state or a similar office under the laws of a state or Indian tribe or (ii) formed under the laws of a foreign country and registered to do business in the United States.¹ The following information about the reporting company must be included in the report²:

• company’s legal name and any trade names or doing business as (d/b/a) name
• street address of the principal place of business
• jurisdiction where the business was formed
• tax identification number

Additionally, the reporting company must provide the following information to FinCEN about its beneficial owners, defined as persons who hold significant equity (25 percent or more ownership interest) in the reporting company or who exercise substantial control over the reporting company³:

• full legal name 
• date of birth
• current address
• unique identification number from an acceptable identification document 

For reporting companies created on or after January 1, 2024, the same information must be provided about the company’s applicant, who is the person that files the creation documents for the reporting entity. 

Note: Although a trust is not considered to be a reporting company under the CTA, if your trust owns an interest in a reporting company, such as an LLC, certain information about your trust may also have to be disclosed under the CTA because it may be deemed to be a beneficial owner.

Does the CTA impact you?

Many business regulations apply only to large businesses, but the CTA specifically targets smaller entities. If you own a small business, you may be subject to this act unless your business falls under one of the stated exemptions, which primarily apply to industries that are already heavily regulated and have their own reporting requirements. Your business may also be exempt from the reporting requirements if it employs more than 20 full-time employees, filed a return showing more than $5 million in gross receipts or sales, and has a physical office located within the United States.⁴

Complying with the requirements of the CTA is of the utmost importance if you own a business entity or have one as part of your estate plan. You may own a business that might qualify as reporting companies. These include LLCs and family limited partnerships.

Limited Liability Companies

An LLC is a business structure that can own many types of accounts and property. These entities can be used to provide asset protection and probate avoidance.

Asset Protection

Because an LLC is a separate legal entity from its members, the LLC’s creditors can typically recover only business debts from the LLC’s money and property, not the member’s personal accounts or property. Also, if the proper formalities are in place, the member’s personal creditors may not be able to reach the LLC’s accounts and property to satisfy the member’s personal debts. 

Note: In some states, a single-member LLC does not enjoy the same protection from the member’s personal creditors. The rationale of these laws is that your creditors should be able to recover your personal debts through your LLC interests to satisfy their claims because there are no other members that will be negatively impacted by the seizure of money and property owned by the LLC.

Probate Avoidance

Anything that is owned by the LLC—retitled into the name of the LLC during your lifetime, bought by the LLC, or transferred by operation of law at your death—will not go through the

public, costly, and time-consuming probate process. The probate process only transfers

accounts and property that you owned at your death. By using an LLC to own accounts and property, the LLC—not you—owns them. However, if you own the membership interest in your own name, the transfer of the membership interest at your death may still need to go through the probate process.

Family Limited Partnerships

A family limited partnership (FLP) is an entity owned by two or more family members, created to hold the accounts, properties, or businesses that were contributed by one or more of the family members. An FLP has at least one general partner who is responsible for the management of the partnership, has unlimited liability, and is compensated by the partnership for their work according to the partnership agreement. An FLP also has one or more limited partners who are permitted to vote on the partnership agreement but are not authorized to manage the partnership. The limited partners receive the income and profits of the partnership but have no personal liability for the partnership’s debts or obligations. 

Asset Protection

This estate planning strategy is useful because an FLP can help protect accounts, properties, and businesses held by the entity from your and your family’s creditors, because those items are not owned by you and your family as individuals but instead are owned by the entity. If a creditor obtains a judgment against you or your family for a claim not related to the FLP, it is more difficult for the creditor to access anything that the FLP owns to satisfy that claim. 

Tax Planning

Also, because of its lack of control and restrictions on selling a partnership interest, the value

of a limited partnership interest that you give to a family member can be discounted, allowing you to maximize your annual gift tax exclusion and lifetime estate and gift tax exemptions.

What do you have to do to comply with the CTA?

In order to comply with the act, you should gather the required information for all reporting companies you own and all other beneficial owners. For entities created before January 1, 2024, submit the initial reports for each reporting company by January 1, 2025. The current requirement for reporting companies that are created after January 1, 2024, is that the initial report is due within 30 days of the entity’s creation. Please note, however, that a new rule has recently been proposed that would temporarily extend this deadline from 30 to 90 days for business entities formed during 2024. If implemented, this rule would allow additional time to understand and comply with the new requirements.

Having a business entity as part of your estate plan can be an excellent tool depending on your unique situation. If you currently have one of these entities or are considering forming one, you will need to understand if this new law applies to you. Please reach out to us if you have questions.

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Footnotes

1. 31 U.S.C. § 5336(a)(11).
2. 31 C.F.R. § 1010.380(b)(1)(i).
3. 31 U.S.C. § 5336(b)(2)(A).
4. Id. § 5336(a)(11)(B)(xxi).

With the increased coverage of artificial intelligence (AI) and all of the applications it can have in our everyday lives, some people may wonder whether an AI program can create an estate plan for them. While AI may be able to generate basic estate planning documents, including wills and trusts, there is no guarantee that they will be valid and enforceable. Providing accurate information and executing the documents in compliance with your state’s laws is critical. Otherwise, your documents will not work as intended. Most people do not have the legal knowledge necessary to determine what clauses and language should be included in a will or trust to accomplish estate planning goals. They also are not familiar with state laws or how to comply with them. This is why people rely on experienced attorneys to prepare the necessary documents to carry out their wishes.

Some state laws are complex and hard to understand, and you may not know enough specifics to offer the correct information about your situation or verify that AI has properly generated or created your will or trust. Additionally, your final documents may contain wording, formatting, and grammatical errors that make them unenforceable. To review them carefully, you have to know what to look for, which often requires that you possess a certain level of legal education and knowledge. The AI program does not understand your situation and will not help you solve a complex legal issue unless you can provide additional information. Even then, you should be cautious and ask yourself the following questions:

• How well do I understand my options for protecting my money, property, family, or business if I have a medical emergency and after death?
• Do I have a complex financial situation with large amounts of property, income, or debt?
• Is my family structure complicated (family dynamics leading to questions about property or disinheritance)?
• Am I undecided about my wishes (how to divide my money and property or what to include in an advance directive)?

Ease and Convenience versus Legal Expertise

Online estate planning programs that use artificial intelligence are designed to streamline or automate the process, making it more accessible and cost-effective for those on a tight budget. While they may provide convenience and accessibility, they provide limited guidance, and they do not offer the same level of customization, legal expertise, and personalization that an experienced estate planning attorney can provide.

You must carefully consider your needs and circumstances before choosing a reputable online estate planning program, such as one of the following:

• Quicken WillMaker & Trust
• Trust & Will
• LegalZoom
• Rocket Lawyer
• U.S. Legal Wills

Each program requires you to answer a series of questions in an attempt to tailor various legal documents, such as wills, trusts, advance directives, powers of attorney, and other estate planning documents, based on the information you provide. You may have trouble providing accurate and specific answers for several reasons: 

• Legal knowledge. Crafting precise answers to estate planning questions requires familiarity with legal terms, their context, and how they should be structured in a legal document.
• Clear intentions. Vague or ambiguous answers can lead to inaccurate, incorrect, or inadequate documents for your situation.
• Complex legal requirements. Legal documents must adhere to specific formatting, contain specific language, and comply with legal requirements that vary by state and are not always straightforward.
• Legal consequences. Certain instructions or clauses within a document require predicting and avoiding potential legal issues; being unaware of the risks has adverse legal consequences.
• Omission and oversight. You may overlook critical details or legal considerations necessary to achieve your estate planning goals, resulting in incomplete or ineffective documents. 

If you do not understand which estate planning strategies should be implemented to address your unique situation, how can you ensure that the software is creating the appropriate documents for your needs? Legal professionals have the necessary expertise and training to ensure that your concerns are addressed and can implement an adequate estate plan so that your wishes can be legally carried out.

Situations Requiring More Than a Basic Will

While a basic online will may be a viable option for some, an experienced attorney will be invaluable in the following circumstances.

Blended Families

If you have remarried and have children from a previous relationship, you must create a will or trust that ensures that your money and property are distributed in a way that considers both your new spouse and children from the prior relationship. You may have to make some complex decisions, which may be difficult to evaluate without legal advice.

Special Needs Planning

If you are a family with a dependent child or an adult with special needs, you may want to establish a special needs trust to provide for the ongoing care and financial support of your loved one while still maintaining their eligibility for government assistance programs. This requires a custom strategy to consider your options and ensure that your trust is legally compliant in your state to accomplish your goals.

Estate Tax Planning

If you are an individual with a large estate potentially subject to estate taxes, you will want to understand the latest tax-saving strategies, such as gifting, trusts, or other legal tools to minimize estate tax liabilities and preserve a greater legacy for heirs.

Business Succession

If you are a business owner looking to pass your business on to the next generation or sell it upon retirement, you will need a comprehensive plan that effectively addresses the shift in ownership, management, and business property for a smooth and successful transition.

Multistate or International Property and Heirs

If you have real property in different states, heirs may be subject to estate administration processes across multiple jurisdictions, which will require consideration of different state laws and potential tax implications. Having property and heirs in other countries creates even more complexity.

Asset Protection

If you have concerns about potential creditors coming after your hard-earned money while you are alive or creditors or ex-spouses taking the inheritance of your beneficiaries (spouse, children, loved ones, etc.) after your death, you will need an estate plan that has been specifically crafted to protect your life savings from potential creditor claims and legal challenges. This plan will need to contain specialized provisions and must be created in a manner that complies with the law to ensure that it is legally valid and not a fraudulent transfer. A well versed lawyer can also guide you on how to set up lifetime asset protected trusts for your loved ones that will protect their inheritance from creditors and divorce, while still allowing use and access to the inherited assets.

Charitable Planning

If you want to include charitable giving as part of your estate plan, it may require establishing charitable trusts, foundations, or other organizations to support specific philanthropic causes while maximizing tax benefits. Each organization will have rules regarding gifts that you must follow to avoid negative consequences.

An estate planning attorney can address the unique needs and goals of you and your family. They will educate you about your situation and allow you to make informed decisions.

Errors That Make Online Documents Unenforceable 

Estate planning attorneys help you avoid the following common mistakes in online documents that could make them unenforceable, require a court to interpret them, or lead to fighting among your loved ones:

• Ambiguity in wording. Ambiguity can lead to disputes and legal battles among potential heirs. Example: a will stating “I leave my property to my children” without specifying which children by name
• Improper use of legal terms. Misusing legal terms like property, beneficiary, or per stirpes can lead to confusion or incorrect interpretation of your intent.
• Incorrect names or identities. Misspelling the full name of a beneficiary or heir or using a previous name after a legal name change makes it challenging to identify the intended recipient.
• Inconsistent terminology. Using different terms to refer to the same asset (e.g., house, residence, property) may create confusion about what is being inherited.
• Improper witnessing and notarization. Failing to properly witness or notarize a will and other legal documents according to state laws can render them invalid and unenforceable.
• Lack of clarity in distribution. Vague instructions regarding who will receive your accounts and property or how they will receive them, such as “divide my estate fairly among my children,” may cause disputes if there is no clear definition of terms like fairly.
• Failure to address contingencies. Not accounting for contingencies, such as what to do if a beneficiary predeceases you, can leave money and property without designated recipients, subjecting it to your state law.
• Inadequate powers of attorney. Failing to grant adequate powers of attorney, such as financial or medical decision-making authority, creates complications in managing affairs during incapacity and with advance directives at the end of your life. This could require your loved ones to get a court involved, which is what the powers of attorney were meant to avoid. Also, most basic powers of attorney fail to cover the ability of your agent to engage in Medicaid asset protection planning if you need long-term care in a nursing facility.
• Conflicting instructions. Providing contradictory instructions within a single document or across several documents leads to uncertainty about your intentions.

A Cheap Insta-Will May Defeat the Point of Having a Will

Preparing a Will and other estate planning documents is a complicated, emotional, and time-consuming process. The ultimate point of a proper Will and estate plan is to protect you, your loved ones, and your assets, and reduce stress. If an AI generated Will is deemed unenforceable it will cause stress, unneeded expenses, and almost guarantee your wishes will NOT be carried out. Relying on a shortcut like AI may make things easier and cheaper for you, but if you (or the AI) make a mistake it is your loved ones who may pay the price.

There are many considerations and potential scenarios that should be included in your estate plan. Online legal programs cannot adequately address unique situations or additional estate planning details, exposing you to unnecessary risks.

Experienced estate planning attorneys play a vital role in designing and reviewing state-specific forms that address your family’s needs as well as ensuring that your wishes are met while preventing disputes in the estate administration process.

If you wish to use artificial intelligence estate planning programs, they can be used as an outline to begin the process. Take this information to an estate planning attorney to review and address the many situations you may not have considered regarding your unique family dynamics and financial circumstances. Legal experience and expertise offer valuable guidance and education. If you are ready to create a legally enforceable, customized estate plan, give our office a call to schedule an appointment.

Jimmy Buffett died on September 1, 2023, at age 76 after a diagnosis of Merkel cell carcinoma (skin cancer) four years earlier. He was a renowned singer-songwriter, film producer, businessman, novelist, and philanthropist.

Buffett released his first album, Down to Earth, in 1970. By 2023, his net worth was officially $1 billion,¹ including a $180 million stake in his company, Margaritaville Holdings LLC, which opened in 1985 and now brings in $1 to $2 billion annually. 

Who Stands to Inherit Buffett’s Estate?

Buffett had an early, three-year marriage to Margie Washichek before divorcing in 1972 and marrying Jane Slagsvol in 1977. He and Jane had three children: Savannah, Sarah, and Cameron. The children have all pursued careers in the music, film, and entertainment industries. 

According to the New York Times, most of Buffett’s money and property, including intellectual property and music rights, are held in a trust.² His wife, Jane, is the personal representative distributing the estate according to his will, with help from his business partner and Margaritaville Holdings LLC CEO, John L. Cohlan, if necessary. Because the trust provides the family with privacy, there are no specifics regarding which belongings will be passed to his wife, three children, two grandchildren, and two siblings. His estate is estimated to include the following³:

• Music royalties of $20 million annually 
• A collection of houses and cars 
• 150 Margaritaville restaurants, casinos, cruises, and related business holdings
• A yacht and several planes
• Stock market investments, including shares in Berkshire Hathaway 
• Watches and memorabilia 

Buffett was still receiving close to $200 million annually for his shares in Margaritaville Holdings LLC, and it seems that issues with his health and medical expenses did not affect his business or family legacy. He was still growing his wealth when he died. 

Other Estate Planning Strategies Buffett Could Have Included Beyond His Will 

Buffett co-founded the Save the Manatee Club in 1981 with former Florida governor Bob Graham, supporting rescue, rehabilitation, research, and education efforts in the Caribbean, South America, and West Africa. During his lifetime, Buffett gave away and helped raise millions of dollars for charities. For every concert ticket he sold, one dollar went to a charitable cause he believed in.⁴

Charitable Remainder Trusts

Given his charitable actions during his lifetime, Jimmy Buffett may have had a charitable remainder trust (CRT) to incorporate charitable giving into his estate. This type of trust could serve to secure his family’s future by providing a consistent income source to his beneficiaries while ultimately honoring his charitable nature by leaving the remainder to the charity of his choice.

Family Limited Partnerships or Family Limited Liability Company

Buffett likely considered his restaurants to be much more than commercial enterprises—and business continuity may have been preserved by creating a family limited partnership (FLP) or family limited liability company (LLC). Utilizing one of these types of entities could have allowed him to use different strategies to retain control over his business shares while gradually transferring ownership to his wife and children. He could have also potentially taken advantage of the annual gift tax exclusion by making tax-free gifts of the limited partnership and mitigating potential future estate tax implications.

Grantor Retained Annuity Trusts

A grantor retained annuity trust (GRAT) may have been another trust structure that Buffett considered to pass down his business interests while retaining certain financial benefits during his lifetime. A GRAT is an irrevocable trust that would have allowed him to transfer his business interests or other assets with the potential for significant appreciation in value to the trust while still retaining an income stream for himself via annuity payments for a specified term. At the expiration of the term, his beneficiaries would receive any assets from the trust, with any excess appreciation above the § 7520 rate transferred free of estate and gift taxes. 

Family Trusts

After years of ongoing use and enjoyment of the property he owned, Buffett could have also taken steps to ensure the smooth transfer of assets such as his airplanes to future generations for their own use and enjoyment by establishing a family trust. A family trust would have allowed him to designate how the planes should be used, maintained, and cared for after his death.

In a well-designed estate plan, the things that someone owns, such as Buffett’s planes, money, and other significant property, would avoid probate, thereby maintaining the family’s privacy. Additionally, the beneficiaries would not have to wait to wrap up lengthy or costly court proceedings before inheriting the things Buffett intended them to receive.

Long-Term Care Planning and Advance Directives

Buffett had plenty of funds to pay for his long-term care needs privately, but he may have set aside specific financial resources intended to pay for care in advance if he consulted with a professional advisor or estate planning attorney earlier in his life. Based on comments made by his family in his final days, he may have also prepared advance directives so everyone understood his wishes for care and treatment at the end of his life. Consequently, he appears to have made a peaceful exit from a terminal illness on his own terms.

While Buffett’s life may be over, he leaves behind a substantial legacy. Keep an eye out for the posthumous release⁵ on November 3, 2023, of the album Equal Strain on All Parts, featuring guest contributions from Paul McCartney, Emmylou Harris, Angelique Kidjo, and the Preservation Hall Jazz Band.

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Footnotes

1. Jessica Tucker, Here’s How Much Jimmy Buffett’s Estate Is Worth (and Who Stands to Inherit It), TheThings (Sept. 8, 2023), https://www.thethings.com/how-much-was-jimmy-buffett-worth/#.
2. Julia Jacobs, Jimmy Buffett’s Will Appoints His Wife as Executor of His Estate, N.Y. Times (Oct. 13, 2023), https://www.nytimes.com/2023/10/13/arts/music/jimmy-buffett-will.html.
3. Gabbi Shaw & Jordan Parker Erb, Jimmy Buffet Became a Millionaire after 5 Decades in the Music Industry. Here’s How the Late Singer Made and Spent His Fortune, Insider (Sept. 2, 2023), https://www.insider.com/jimmy-buffett-billionaire-makes-and-spends-his-money-2023-4.
4. Id.
5. Megan LaPierre, Jimmy Buffett’s Estate Announces Posthumous Album Equal Strain on All Parts, Shares Three Songs, Exclaim (Sept. 8, 2023), https://exclaim.ca/music/article/jimmy_buffetts_estate_announces_posthumous_album_equal_strain_on_all_parts_shares_three_songs.

The United States hosts the highest number of immigrants in the world, but increasingly, Americans say they are looking to relocate permanently to another country. A large percentage of wealthy Americans are also interested in buying real estate overseas and living there at least part-time. 

While moving overseas is often a lifestyle decision, the practical implications of living abroad, including taxation and estate planning issues, cannot be ignored. Escaping Uncle Sam is not as easy as hopping on a plane to a far-flung location. Americans living overseas retain financial obligations to the US government. And if not physically present in this country, they should have somebody who is legally authorized to make financial decisions for them. 

Expatriates who live and own assets (accounts and property) in more than one country need an estate plan that reflects their international life. This may require working with estate planning attorneys in each country where they have assets. 

Living Abroad and Double Taxation 

Only two countries have citizenship-based taxation (also called double taxation): the United States and Eritrea. 

Double taxation means that US citizens living abroad could end up paying income tax twice on the same income—once to their home country and once to their host country. Double taxation may apply to estate taxes as well. 

Although estate taxes affect only the wealthiest Americans, 92 percent of wealthy Americans were actively looking to relocate abroad in 2022, according to a Coldwell Banker report. Foreign assets are subject to US estate taxes, so any property an American citizen owns overseas could be subject to this tax if their estate is worth more than the exemption amount ($12.92 million in 2023). 

In addition to federal estate tax, some states also impose an estate tax or inheritance tax (Maryland imposes both). Estate assets held in another country might additionally be taxed under that country’s laws. Not all countries impose estate taxes, however. 

There are a few ways expatriates can avoid US double estate taxation. The most extreme way is to renounce US citizenship, a move that nearly one in four expats say they would consider. Another option is to take advantage of the foreign death tax credit, which allows expats with property located in a foreign country to claim a credit on estate, inheritance, legacy, or inheritance tax paid to a foreign government. 

Trusts can also reduce estate tax liabilities. Different types of trusts can be used for this purpose, including irrevocable life insurance trusts, charitable remainder trusts, and qualified personal residence trusts. But because some countries do not recognize trusts, a trust set up in the United States may not be valid in those countries. 

US Expats and International Wills

An estate plan written with US laws in mind may not be legally valid for American citizens living abroad. 

Someone who owns property only in the United States can likely get by with just a US will. But depending on the country where the expat resides, if they own property and other assets in that country, it may be necessary to have multiple wills or an international will. 

An international will is designed for use in more than one country. Two international conventions on wills authorize a foreign country to recognize a US will:

• The Hague Convention on Form of Testamentary Disposition. For expats living in one of the Hague Convention signatory countries, their US will could be valid in their country of residence, even though the United States is not a signatory. The adopting countries include most of Europe. 
• The International Will Statute (the Washington Convention). This convention creates a uniform law on the validity of an international will. Participating nations generally recognize a US will if it conforms to the International Will Statute, which requires that wills include special language and follow specific execution requirements. Around a dozen countries, including the United States, have adopted the Washington Convention. However, unless an expat’s state of residence has signed on to the convention, their international will may not be considered valid in their host country. 

Situs Wills

American Citizens Abroad, an expat resource site, notes that even if a single will controls the disposition of assets in more than one country, this may not be practical for the estate executor, who will have to coordinate estate administration across multiple jurisdictions. It may be particularly difficult to administer assets located in non-English speaking countries. In such cases, a primary will, either a US will or international will, could be combined with a separate situs will (a will used in a certain country) to control asset distribution.

Forced Heirship

A separate will might also be advisable for Americans who acquire property in a forced heirship regime. Residents of jurisdictions that have forced heirship provisions may have restrictions on whom they give their assets to and how much each person may receive. Forced heirship rules vary by jurisdiction but typically force a portion of estate assets to be passed to reserved heirs (i.e., descendants or spouses). Foreign and US courts may apply forced heirship laws to portions of an estate subject to these laws. 

Guardianship and Power of Attorney for Expats

Living overseas can create legal complications that are best addressed in an estate plan. 

For example, the parents of minor children living overseas may have a guardianship provision in their will that names a US resident as guardian in the event that both parents pass away. This will require more in-depth planning and an understanding of which laws will apply to the guardianship of your children. If the guardian is not a resident of the country where the children live, though, the children might have to be moved back to the United States. Additionally, without a legally recognized guardian accompanying them, minor children cannot typically leave the country in which they reside. Alternatively, a person in the host country could be named as a guardian in the will. Estate plans should name backup guardians to supplement the first-choice guardian. 

Regardless of whom the parents nominate, the local court and laws determine who will take care of the children. For families living abroad, a local court, not a US court, could have authority over the matter. Expat parents should understand which laws apply to guardianship issues and ensure that, if there are multiple wills effective in different countries, guardianship provisions are clear and do not conflict. 

Other estate planning considerations for expats include financial and medical powers of attorney. 

• Financial power of attorney. Expats who retain US assets need somebody who can perform financial transactions for them while they are out of the country. Actions like selling property, opening and closing accounts, and registering vehicles cannot always be done remotely. Giving a trusted person a power of attorney lets them transact on an expat’s behalf. A power of attorney can be open-ended or limited and revoked at any time. 
• Medical powers of attorney. A financial power of attorney can be set up to take effect at the time a person becomes incapacitated. But incapacitation raises healthcare questions that can only be addressed through a medical power of attorney, which authorizes a proxy to make medical decisions on another’s behalf. It is advisable to name a medical power of attorney in each country where an expat resides. A US-based power of attorney may not have the authority to make medical decisions in a foreign country. 

Does Your Estate Plan Match Your International Lifestyle? 

Whether you are living overseas currently, have plans to relocate to a foreign country, or just want to invest in property outside the United States, you will have to adapt to a new culture and new laws, including laws that affect taxation and estate planning. Your US estate plan documents may be inadequate to deal with legal questions raised by expat life, putting your wealth and legacy at risk. 

Careful international estate planning can help address the challenges of calling more than one country home. Due to differences in laws, it may be necessary to work with experienced attorneys in each country. 

If you are an American abroad, we recommend meeting with our attorneys to see if your estate plan reflects your current circumstances. We can also advise whether you should meet with an attorney in your new country of residence.