Tag Archives: Inheritance

Knives Out

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My husband and I went to see Knives Out in the theater, before the theaters were closed. The movie is glorious—stunningly beautiful cinematography and wonderful performances by an all-star cast, old favorites and newcomers alike.

Harlan Thrombey, celebrated mystery writer, is dead. His housekeeper finds him in his upstairs study the morning after his 85th birthday party, throat slit with a knife—a death worthy of any of his wildly popular novels. The police have concluded it was a suicide, but they come back to the house to interview Harlan’s family members, just to make sure they aren’t missing anything. Each family member sits in the interview chair with a giant piece of artwork behind them, a thousand knives and daggers arranged in circles around a sort of empty donut hole in the middle—an objet d’art that is wonderfully expressive of the movie’s “who dunnit and why?” theme. While the police ask their questions, a gentleman lounges behind them, listening to the testimony and occasionally playing a single note on the piano. He tries to remain in the background and let the cops do their job, but he cannot stay quiet and eventually jumps up and begins questioning the witnesses.

The gentleman sleuth is Benoit Blanc, who was hired to look into the matter by—we don’t know whom. He received an envelope with cash and a newspaper article about Harlan’s death. After the unsatisfying testimony of Harlan’s children and their spouses (dissemblers, all), Blanc enlists the help of Harlan’s nurse, Marta Cabrera, to help him look into the facts and events surrounding Harlan’s death.

I will not spoil the plot for you. (Well, not much, anyway). There are two things I want to talk about. The first is the setting. In the vein of Midsomer Murders, Harlan’s mansion is every bit one of the characters. The film was shot in Massachusetts in the fall, partly at the Ames mansion and partly at an undisclosed private home. The mansion is all mahogany and stained-glass windows and filled with marvelous period pieces like a carved wood sea captain on the stair case landing, a bronze sculpture of two German shepherds, vintage magic posters, a “stash clock” on the mantlepiece, and so on. I seriously need the set decorators from this movie to give our house a makeover.

The second is, of course, Harlan’s will. Harlan’s attorney arrives at the mansion for the reading of the will, something which I guess used to be a “thing” in estate law practice but has gone the way of all flesh, as far as I can tell. Blanc tells Marta to forget the drama of the reading, to think of it instead as being like a “community theater production of a tax return.” Ha ha—wills are a lot more exciting than tax returns, I dare say. And indeed, the reading of the will is pretty exciting. Before they even get that far, Harlan’s children, their spouses and children literally get into a fist fight.

The lawyer “sets up” and summons the family in. He produces and reads aloud two documents: the first is a short statement written by Harlan and addressed to his family members, encouraging them to accept his will—“It’s for the best.” The second is the will itself, which appears to be a one-page document with no witness signatures evident and which the lawyer says Harlan drafted himself and delivered to the lawyer’s office the previous week. (Wow—really? Exactly what did he hire the lawyer for? Document storage?) Harlan needed a good estate planner: No witnesses, no trust, no named executor; just a big load of estate taxes and probate fees.

But the film, as you may imagine, centers on the big surprise Harlan had up his sleeve, one that does not please his progeny: they have all been disinherited. His children press the lawyer for help—how can this be set aside? The lawyer—who (ethics alert!) was Harlan’s lawyer even if he did not draft the will—gives them advice: if he was of sound mind, you not liking it doesn’t make it invalid. But what about undue influence, one of them asks. “Did you just Google that?” shoots back the lawyer. But there is no basis for this either—Harlan left everything to a person who impressed him by having a good heart and working hard. All they have left is the Slayer Rule: which (in Nevada, anyway) provides that one who intentionally and feloniously kills another cannot benefit from the killing by inheriting from the deceased victim. But Harlan committed suicide, the lawyer points out. No good either. Or…is it?

Go see the movie. It’s really good. Ebert gives it the thumbs up: https://www.rogerebert.com/reviews/knives-out-2019. I bet you Siskel would have liked it too.

What Does a Surviving Spouse Receive if Omitted from the Will?

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In my previous blog regarding lost wills, I discussed a client whose husband’s original will was lost. One discerning reader asked what happened to the client—wouldn’t she inherit everything from her husband anyway? In that case, I wish it had been so. Unfortunately for the client, that was not the case, even though it had been her husband’s intention.

Since the later will could not be offered for probate, we had to go back to his previous will, which was made before his marriage and left everything to his siblings. All was not lost, however. Where a person marries after making a will and his spouse survives him, Nevada law provides that the will is “revoked as to the spouse,” provided that the deceased spouse did not make provision for the surviving spouse by marriage contract or otherwise make it clear in the will that he intentionally omitted her.  The technical term for the inadvertently omitted spouse is a “pretermitted spouse”, from the verb “pretermit” which means to leave undone or to neglect. The law also provides for pretermitted children, i.e., children born after the deceased makes his or her last will.

The term “revoked as to the spouse” does not mean that the wife received all of the deceased’s property. The rule about a pretermitted spouse has to be read together with Nevada’s laws regarding persons who die without wills. In my client’s case, her husband owned the property in question before their marriage; it was his separate property. Since he died without surviving parents or children, one half of his separate property was allocated to her as his pretermitted spouse, and the other one half was allocated as provided in the will he made before their marriage.

That was not the end of the story. We contacted the relatives, explained the situation to them and requested that they disclaim their interest to our client, since that was her husband’s intent per his later, lost will. One of the deceased’s siblings was willing to do so. The rest refused; they thought they were going to get a big windfall. Since our client had maintained the property for twenty years, paid all taxes and maintenance, and born all losses, we obtained court approval to shift their share of the proceeds of the sale of the property to her in compensation for her labor and out of pocket costs. All’s well that ends well, I suppose; but the loss of the husband’s true last will and testament caused a huge legal mess that could have been avoided if the original had been maintained.

If you have a question about your rights under a will as a pretermitted spouse or child, contact a qualified probate attorney.

Separate Assets, Joint Problems

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Some married couples enjoy living together while keeping their financial assets separate. Separate ownership of assets can be advantageous in some instances, but oftentimes loving couples misunderstand the results of holding separate assets.  The Wall Street Journal recently highlighted four potential pitfalls for couples maintaining separate accounts:

  1. The assets are not necessarily separate under Nevada law.

Simply having your name on an account does not mean the account is yours alone.  Under Nevada law, pursuant to community property principles, all of your earnings and wages after marriage are the property of both parties.   This is true even if you have your paycheck deposited into a separate account.

Nevada inheritance laws can surprise couples. If you die without a will and leave a surviving spouse, no children and surviving parents, your parents are entitled to a portion of your estate.  Many spouses intend for their entire estate to go to a surviving spouse.  However, unless that desire is set forth in a will or trust, the state may direct otherwise.

  1. Separate accounts most often mean lack of communication.

Communication between spouses is critical.  Many spouses have separate retirement accounts and manage those accounts in isolation.  This isolated planning can undermine the couple’s financial objectives and their combined risk tolerance.  Regularly, I meet with clients where both spouses are unaware of accounts or policies that one spouse possesses.  These omissions could cause the account proceeds to go missing or remain unclaimed for long periods of time.

In addition, holding similar investments in two separate accounts can be more costly.  Combining the separate holdings may result in lower advisory fees.

  1. Separately-owned property may be at greater risk in bankruptcy or a lawsuit.

Nevada has very liberal exemptions for bankruptcy purposes.  These protections can be utilized best by conferring with an attorney who focuses on asset protection planning.

Joint ownership can make your assets less appealing to creditors.  Creditors loathe joint assets in which they will hold only a one-half interest.  Separately-owned property is less-protected from creditors.  The home is the primary asset to hold jointly or through a trust.

  1. Separate accounts are more difficult to administer.

The death of a loved one causes plenty of heartache.  Maintaining separate account causes needless headaches too.  The time delay in accessing separately-owned accounts can lead to draining financial stress.  Many financial institutions demand formal court orders before allowing access to financial accounts, even when such orders are not necessary.  At a minimum, couples should maintain a joint checking or savings account to make sure the day-to-day expenses can be satisfied.

Talking to Heirs About Their Inheritance

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Do your heirs know how much they stand to inherit from you?  Have you ever received an unexpected inheritance?  Many clients debate how they should notify their heirs of the amount and extent of the expected inheritance.  On April 22, 2013, the Wall Street Journal published an aptly-titled article “The Inheritance Conversation. Ugh.”  Many fear the inheritance topic and avoid the subject just as they avoid adequate estate planning.  However, there are practical steps you can take to assure that your heirs are prepared for the receipt of assets and property.

Most recognize the importance of preparing and disclosing information about inheritance to their heirs, yet few take the time properly prepare their heirs.  Children should not receive much financial information until they reach their 20s.  While certain teenagers may be precocious and able to comprehend the value of a dollar, clients must be cautious to avoid undermining their work ethic. Simply telling children how much they stand to inherit can weaken the determination of even the most capable individuals.

Importantly, children of wealthy parents will not learn financial management by osmosis.  Parents must take an active role in educating and informing their children about financial planning and management.  Several advisors recommend a mentorship whereby the heirs are given an opportunity to manage a smaller portion of the assets.  As the heirs gain in knowledge and ability the children or others can be given more knowledge of the family’s wealth.

One crucial element is requiring heirs to secure and maintain jobs.  With their earnings, the heirs can be instructed on the importance of saving and sharing their assets. Most successful wealth transfers occur where children have learned the value of work and wages earned.

I continually remind clients that their best laid plans can be undone by unexpected health concerns or other financial catastrophes (see the most recent recession).  For those who have a revocable living trust, I urge them to remind their children that the children’s shares are not fixed and can be altered.  No one should expect or rely upon a set amount of money or assets passing to them.

Simply start with a basic conversation with family members and other heirs.  Avoiding this topic can cause confusion, mistrust and leave heirs unprepared to manage the family’s wealth.  For those who need assistance in this process, our office is experienced in wealth transfer planning.