An Estate Conflict Straight Out of Hollywood

Here’s an intriguing, somewhat salacious estate planning story straight out of Tinsel Town. It even sounds like a Hollywood movie. Not surprisingly, it involves two marriages, children from both, and of course, big money. Read on and take a break from the 24/7 pandemic information overload.

Malibu resident Joe Kaplan started out in his family's Missouri meat-packing business after college graduation. He left that business, and went on to make a fortune in financial services, creating two highly successful firms that were eventually acquired by others. The second, Innovative Merchant Solutions, was bought by Intuit.

Kaplan's first marriage lasted 20 years and produced two children, Brandon and Danielle. The marriage ended in 2006. Two years later Kaplan married Elizabeth McAdams and had a son with her, Parker, born in 2009. Rumor has it that the Kaplans' relationship was not all smooth sailing. Then, while on vacation with Elizabeth in Bermuda in July 2018, Kaplan died suddenly in his sleep. He was 55.

Elizabeth's prenuptial agreement guaranteed her $5 million. Everything else, including their Malibu residence, is in a Living Trust Joe established for her benefit and the benefit of all three of his children. According to the Joe Kaplan Living Trust, Elizabeth is entitled to live in the house, rent-free, until she remarries or begins cohabiting with someone who is not a blood relative. Joe named his brother, Aaron Kaplan, as trustee. Aaron is a well-known producer of many television shows, including American Housewife, The Chi, and the Santa Clarita Diet. Joe is not a beneficiary of the trust.

Aaron knew his brother liked to stash large quantities of cash in his home. Not long after Joe's death, Aaron began to suspect that his sister-in-law might try to pocket those monies and other valuables, which rightfully belong to the trust, not her. He was also concerned about the solvency of the trust, as his brother reportedly left behind $15 million in gambling debts. Of particular concern to him were the contents of a wall safe in Joe's personal closet.

Aaron took his concerns to his lawyers. They sent Elizabeth a letter reminding her that everything in the house is trust property and advising her not to touch the safe. But there's more: They installed a secret monitoring system in Joe's closet. Two motion-activated cameras were placed there, ready to record any attempt to access the safe.

As it turns out, there was an attempt. Footage revealed Elizabeth and a locksmith trying to get the safe open. Other footage recorded Elizabeth searching through her late husband’s clothing, discovering $10,000 in cash, and pocketing it. While going through his clothing, she was allegedly on the phone with her father and uncle, making disparaging remarks to them about her late husband.

But the secret cameras didn't remain secret. Elizabeth discovered them, disabled them, and recording ceased. In February 2020, Aaron filed a petition for instruction with the court documenting what had transpired. His attorneys stated: "Based on consultations with his attorney, the Trustee understood that he could – and should – have motion-activated cameras installed in Joe’s personal closet to monitor and protect those assets for the beneficiaries of Joe’s Trust." Additionally, Aaron accused his sister-in-law of extortion, saying she threatened to go public with the camera story in order to ruin his reputation - unless he stepped down as trustee.

Aaron refused to step down. And Elizabeth has not backed down, either. Recently she filed a lawsuit against Aaron, accusing him of invasion of privacy. Although Aaron claims both cameras were focused solely inside Joe's closet - one trained on the safe and the other toward the back of the closet - Elizabeth says one camera was pointed in the direction of her personal closet, where she regularly dressed and undressed. Her lawsuit also claims that Aaron failed to fulfill his duties as trustee by providing her with the $5 million she’s entitled to from her late husband's estate. 

"Protecting trust assets is not a defense to his violations of Elizabeth’s right of privacy or of criminal statutes," her attorneys state. "Not only were his actions criminal, they were in poor judgment, repulsive and perverted, since Aaron, as a male trustee, effectively placed his ‘eyes and ears’ in a woman’s master bedroom suite, regardless of whether he actually saw Elizabeth scantily dressed or nude."

Aaron's attorneys' reply: Elizabeth is sensationalizing her husband's death and Aaron has simply done what is required of a fiduciary: "As trustee, Aaron is focused only on protecting the Trust for the benefit of all of its beneficiaries as his brother wished, and he will not succumb to extortionist tactics."

Fortunately, if you are a trustee, performing your fiduciary duty is likely to be fairly straightforward, and hidden cameras won't be necessary. The Kaplan case will no doubt present more moments of suspense as the parties battle it out. As they say on TV -  a business that trustee Aaron Kaplan knows well -  Stay tuned.

Post-it® Note Not A Valid Signature - Not On Your Estate Plan, Anyway

A recent case from California demonstrates two important guidelines to make sure that your assets go to the people you want after you're gone. They are:

1. Everything you do must conform precisely to the required legal formalities. 
2. Don't procrastinate!

Here's the case: California resident James Robert Anderson, an artist and teacher, created his living trust in 2004. The trust included a provision stating that among other requirements, amendments must be done via signed writing.

Anderson was diagnosed with cancer in 2010. His friend Grey Dey moved into his home in 2011 to care for him. With his health in decline, in 2014 Anderson decided to name Dey as a beneficiary of his trust. Anderson contacted a lawyer who directed him to send him the trust, including the portion related to beneficiaries, with his requested changes. Anderson did so. He included with this material a post-it® note requesting that the lawyer turn his revisions into a formal trust amendment.  But before he could sign the amendment, Anderson passed away.

His successor trustee, Margaret Pena, turned to the court for clarification. Were the written changes and the post-it® note sufficient? Was the amendment valid, and was Dey a beneficiary?  According to the Sacramento County Superior Court court, the answer was no. Despite the evidence that Anderson had intended to change his trust, the court found that the revisions were not signed as required, and the post-it® note did not substitute for a signature. The amendment failed to modify the trust. Dey was not a beneficiary. The court's ruling was subsequently upheld by the Third District Court of Appeal. You can read the Appeals Court ruling here.

Moral of the story? Don't wait to do your estate planning. And when you do, make sure every "i" is dotted and "t" is crossed.

Is Probate Really A Problem?

Floridians are continuously warned about probate. Make sure your family never has to deal with probate court! It's expensive!  It's inconvenient!  

Is all this just hype? Or is probate really a problem? Should you build probate avoidance into your estate plan? 

As with most things, there is no one right answer for everyone. Determining whether to build probate avoidance into your estate plan will rest on your specific family and financial circumstances. That said, there are real downsides to probate. But before discussing them, let's step back and define probate, a process often misunderstood. 

Put most simply, probate is the court-supervised process by which your assets are transferred to your beneficiaries, and your creditors are paid, after you pass away. Many people think probate is only for estates that are large enough to be taxable, but that's not so. Taxation and probate are separate issues. Another myth is that having a will keeps an estate out of probate. That too is false.

Now to those downsides: 

Time: Some estates sail through probate in months. Others take far longer because of complications related to selling real estate, taxes, creditor claims, etc. We have handled probate cases that could not be closed for well over a year because of such circumstances, leaving beneficiaries waiting on their inheritances. When the subject comes up during the public seminars our firm conducts, attendees often share their own experiences with long, nightmarish probates. 

Lack of privacy: Probate is a public process. You may be uncomfortable knowing that anyone who is so inclined can examine your will and your dispositions to beneficiaries. Also, the public nature of the process makes it easier for any disgruntled heir to gather ammunition to launch a lawsuit against your estate. Lastly, the lack of privacy can provide a rich source of information for scam artists. 

Expense: Most probate proceedings require hiring a lawyer, so probate will incur legal fees. (This undercuts the cynics who claim lawyers promote living trusts as an alternative to wills because they are a “moneymaker.” The initial fees to set up a living trust are indeed greater than setting up a will, but the truth is, many lawyers make more money probating an estate than planning for probate avoidance with a living trust.) Your estate will also incur court filing and other administrative costs - all money that will be siphoned away from your loved ones. And while it's true that there are usually legal fees associated with administering a trust post-mortem, those fees tend to be significantly less because probate court requirements are not a factor. 

But In Some Cases, An Upside:
Some people may have logical reasons to want their estate to go through probate. For example, a client may not want to do the work of switching assets into a living trust. If a client lacks complete confidence in the individual(s) being considered as successor trustee, the client may actually prefer court supervision. Also, the nature and extent of the client's assets may simply not justify the initial expense of establishing a trust.  



Bottom line, probate avoidance makes good sense for most people – but it is by no means a hard and fast rule. There can be mitigating issues. Talk to your estate planning attorney to select the estate plan that’s right for you and your family. There is only one set rule to follow: What is best for you and your loved ones.

Free Seminar: Medicaid & VA Benefits For Nursing Home Costs, Florida Estate Planning

FREE SEMINAR

Tuesday, April 30
1:30 pm to 4:00 pm
Palm Beach Gardens
Marriott Hotel, 4000 RCA Blvd.

Wednesday, May 1
1:30 pm to 4:00 pm
Boynton Beach
Courtyard by Marriott, 1600 N. Congress Ave.

***

•  Hear about how you or a loved one may qualify for Florida Medicaid and veterans "aid and attendance" benefits before losing everything to long-term care costs - even if your loved one is already in a nursing home. 

• Find out how good estate planning can protect you, your family and your assets from the many other threats we face as we age.

***

No reservations are necessary
 

Attendees are eligible to receive a free, one-hour consultation from one of our attorneys (assuming we can assist you)

Light refreshments

No obligation

  More information at The Karp Law Firm website, or call us at  (561) 625-1100

Estate of Star Wars' Carrie Fisher goes to probate

Carrie Fisher, daughter of late actress Debbie Reynolds and crooner Eddie Fisher, died from a heart attack on December 27 at age 60. When her mother died the following day, many were not surprised: Fisher and Reynolds had an exceptionally close, albeit conflicted, relationship.

Fisher shot to stardom as Princess Leia in the original Star Wars film, going on to continued success as an actress and writer. She amassed considerable wealth along the way, and leaves an estate estimated at $25 million to her only child, daughter Billie Lourd, 25.

Fisher's estate plan includes a living trust naming Lourd as sole beneficiary. However, not all of Fisher's assets were in the trust at the time of her death. The current trustee, attorney Dennis King, said Fisher was under the impression that her prior attorney, now deceased, had taken care of all the funding. Apparently, he did not. On February 28 King petitioned the court to have Fisher's non-trust assets placed in the trust. He later withdrew the request and last week, he filed Fisher's will with the Los Angeles Superior Court to begin probate of the non-trust assets.

The non-trust assets will also pass to Lourd. Those assets are said to be worth about  $7 million and include jewelry; a life insurance policy with Transamerica Occidental; a 2016 Tesla S car that currently sells for around $100,000; bank accounts; ownership in Carrie Fisher Properties and Carrie Fisher Online, both limited liability corporations; and all the proceeds from her mother's books, trademarks, copyrights, etc. Lourd will also get the proceeds from the sale of the house Fisher shared with Reynolds, now on the market and said to be worth about $18 million.

TMZ reports that Fisher also owned a large amount of Star Wars memorabilia. Much of it, along with some other personal items, will be auctioned in September 2017. Proceeds will go to Debbie Reynolds' pet charities: The Jed Foundation and The Thalians. Both organizations provide support to those with mental illness.

Unlike a trust, a will must be filed with the Probate Court, and is public record. Below, unfortunately somewhat fuzzy, is Fisher's last will and testament, as published on the Daily Mail website.

Living Trust Basics

The living trust, also known as the intervivos trust or revocable trust, is a useful and popular estate planning tool in Florida, and rightly so. In this post I tell you about key advantages of this versatile legal instrument. I'll also tell you about some common misconceptions.

The Advantages

Advantage: Avoid probate

In Florida, probate can be a long, drawn-out process, incurring both legal fees and court fees. If your personal representative (executor) is not local, it becomes an even bigger hassle. Some probates can take months, but others can literally take years. A living trust can streamline the process, allowing your heirs to receive their distributions more quickly.

Advantage: Avoid 2nd probate for out-of-state property

If you own real estate in another state, titling that property in the name of your living trust will eliminate the need for a secondary probate in that state.

Advantage: Privacy 

If you pass away and have a will, the will must be filed with the probate court. If you have left no valid death instrument - no will or no trust - a probate will still have to be opened up for your estate. As soon as your estate is in probate, it becomes public record, meaning anyone can examine the details of your estate plan. And that makes it easier for anyone unhappy with your plan -  a disgruntled, estranged child, for example - to launch a legal challenge. Fighting that challenge will cost your estate, leaving less money for your heirs.

Advantage: Greater control over distributions

You may not want certain heirs to get their inheritances in one lump sum. With a living trust, you can place certain controls and conditions on your heirs' inheritance. For example, you may want a younger beneficiary to get his/her distribution upon attaining a certain age, or a spendthrift beneficiary to receive only a limited amount of money in staggered distributions. Another way to exert this control is to have your estate pass under your will, go through probate, and leave the inheritance in a trust known as a testamentary trust under your last will and testament. Obviously, using a living trust is a more straightforward method to accomplish your goal. 

Advantage: Financial institutions more likely to honor your trust than your power of attorney

Your durable power of attorney authorizes someone to manage your financial affairs. In Florida, there is no one statutory power of attorney form. The document is only required to meet certain basic legal requirements, and financial institutions can be extremely picky about the document. It is not uncommon for an attorney-in-fact trying to do business for an incapacitated loved one to be turned away by a bank or brokerage because the power of attorney doesn't meet that institution's specific, unique requirements. If you have a living trust, the equation changes. Financial institutions are unlikely to reject the successor trustee your trust authorizes to handle your finances. 

Advantage: Retain full control until incapacity

In Florida, you may not create a "springing" power of attorney. That means that the person you designate as your agent under your power of attorney has immediate authority to act on your behalf, even if you are not incapacitated. This does not prevent you from acting, but it gives your agent legal authority equal to yours. 

Usually, with a married couple, that is not a problem. But many people are uncomfortable giving someone other than the spouse the authority to handle their affairs while they are still competent. With a living trust, you can be the sole trustee, and your successor trustee can take over for you only after documenting your incapacity. (Spouses usually designate one another as co-trustees, so both have equal authority to act. A third party, usually a child, is designated to take over when neither husband or wife can handle the finances.) 

The Misconceptions

Misconception: Creditor protection

As noted above, a living trust has many virtues. However, putting assets into your living trust does not protect them from creditors. 

Misconception: Living trust assets are not considered when applying for Medicaid benefits for long-term care

An asset in your living trust is available to you, and therefore is considered a countable asset if you apply for Medicaid for long-term care. Only an irrevocable trust can remove assets from consideration by Medicaid.

Misconception: Trustees have to be paid 

Successor trustees can be paid a fee, but if you are like most people, you will probably name a family member to serve as your successor trustee. Most family members decline to receive fees. If you do name a professional, third-party to serve as successor trustee, naturally there will be a fee for services. If you have a good reason to want a third-party successor trustee - for example, you have children who can't get along - those fees are money well spent for your peace of mind.

Misconception: You lose control over your assets

No! You can buy assets, sell assets, and do anything you would normally do.

Misconception: It's costly to set up and a hassle to maintain

You will have to re-title your assets in the name of your trust, but for most people this is not a big deal. (Note: some assets, such as IRAs, should not be placed in your trust. Your estate planning attorney will advise you about this.) You don't have to get any special tax numbers; you will file your taxes as you always have. And although the initial cost to set up a living trust exceeds the cost of setting up a will, it saves money at the back end in legal and administrative fees.

Misconception: Any lawyer can set up a living trust

Wrong. This is a complex instrument, and the devil is in the details. Since your trust will speak for you after you are gone, there can be no ambiguity. Every "t" must be crossed and "i" dotted! Beware trust mills, non-lawyers doing estate planning, online or preprinted forms, and attorneys not experienced in estate planning. Relying on an experienced estate planning attorney can give you the assurance that you and your family will get the protections you seek.

Check out my website for more on living trusts.

Alan Thicke's family goes to war over late actor's estate

You don't need to be rich and famous, or have children from prior marriages, for your estate plan to run into trouble. But it sure does help. Now, the late Alan Thicke joins the roster of deceased celebrities whose families have gone to the trenches over money and control. 


Best known for his role on the sitcom Growing Pains, Thicke died suddenly in December 2016 from a ruptured aorta. He was 69. He left behind two grown sons from a prior marriage, Robin and Brennan; another son from a different marriage, Carter; and his wife of twelve years, Tanya Callau, with whom he lived on his Carpinteria, California ranch. 


To his credit, Thicke did prepare an estate plan. He had a revocable trust, written in 1988 and modified several times prior to his death, most recently in 2016. According to the trust, his three sons were to inherit the ranch, most of his personal effects, and over half of the rest of his estate. Callau would get the furnishings from the ranch, Thicke’s pensions and union death benefits, half a million dollars in life insurance, and anything else in the estate not specifically earmarked for the children. Sons Brennan and Robin were named co-trustees of the trust. 


In addition, there was a prenuptial agreement, signed by Callau prior to her 2005 marriage to Thicke. It gave her the right to continue residing on the ranch, so long as she maintained the property and paid all of its expenses. It is the apparent disconnect between the terms of the prenuptial and the trust that is fueling the family's competing claims.


Last month, Brennan and Robin filed a petition in Los Angeles County Superior Court, alleging that Callau is demanding a larger inheritance than their father's estate plan provides. Specifically, Callau is contesting the legal validity of the prenuptial agreement, which she says does not clearly distinguish between Thicke's personal property and community property (California is a community property state). If the prenuptial does not stand up to legal scrutiny, it could give Callau significant community property rights to the assets in the trust, and would therefore entitle her to far more than she is currently inheriting. 

Callau's attorney has called the prenuptial a "mess" and claims Brennan and Robin have turned down Callau's offer to take the matter to mediation. The sons' attorney refutes those points and has said: “The fact of the matter is that Alan had a career, wealth and children well before he ever met her. It was important to him to make sure that was protected and that his children were taken care of after his passing. She agreed to that. She signed it, understood it and now she’s refusing to honor it." According to some reports, the sons' petition is simply retaliation against their stepmother because she will not permit them to convert the ranch to a marijuana farm. 


You may not be a celebrity, but if you have a family, your planning must begin with an examination of your family dynamics. Our job as your "counselors at law" is to help you identify your family's strengths and weakness. Who is best suited to make certain decisions? Who is likely to create issues in the wake of your death or disability? Who gets along? Who doesn't? Who gets along well now, but might not if you are out of the picture? Only after answering these questions can we build a solid estate plan for you that will ensure your wishes are honored, and your family protected.