Real Life Lessons

$500,000 Found in House Walls Belongs to Estate, Not Homeowners

wealth-cash-juYou buy a dilapidated house and in the course of renovations you find a huge amount of money hidden in the walls. The cash is yours, right? Not according to an Arizona appeals court, which ruled that $500,000 found in the walls of a house belongs to the heirs of the man who put it there, not to the house’s current owners.

Robert A. Spann had a habit of hiding cash and other valuables in unusual places in the homes he lived in. His two daughters knew of his pattern, and for seven years after he died in 2001 they found stocks and bonds, as well as hundreds of military-style green ammunition cans, some of which contained gold or cash, hidden throughout his Paradise Valley, Arizona, home.

In 2008, the daughters sold the rundown house “as is” to a couple. The couple did some remodeling, in the course of which a worker for the contracting company found two ammunition cans full of cash in the kitchen wall and another two inside the framing of an upstairs bathroom. The cash totaled $500,000. After the worker reported the find to his boss, the boss took the cans but did not tell the couple who owned the house about them. The worker, however, eventually informed the couple of the discovery and the police ultimately took control of the $500,000.

The couple and the contractor sued each other for the money. In the meantime, Robert Spann’s daughter Karen Grande, who was the personal representative of his estate, filed a petition in probate court on behalf of the estate to recover the money. The two cases were consolidated in June 2009.

The trial court ruled that the money belonged to the estate and the couple appealed, claiming that Mr. Spann’s family had abandoned the cash by leaving it in the house when it was sold “as is.”

In a May 31, 2012, ruling, the Court of Appeals of Arizona agreed with the trial court. The court ruled that while “finders keepers” may work on the schoolyard, in Arizona in order to abandon personal property, “one must voluntarily and intentionally give up a known right.” The court finds that because there is no evidence that Mr. Spann’s estate intended to relinquish any valuable items in the house, the money is more properly characterized as “mislaid” and still belongs to the estate.

Interestingly, an Oregon appeals court came to a different conclusion in a very similar case in 2008. Well….. I’m off now to tear up the walls to my home!!!

Estate Planning, Living Trusts, Real Life Lessons

Someone Finally Did Things Right! Lessons from Robin Williams’s Estate Plan

downloadLast week we tragically lost an entertainer who played a major role in the lives of many. Usually when a celebrity dies I read about how their estate plans went awry and how they did everything wrong, but today I am pleased to report that I am able to discuss one celebrity who may have done things right. Early reports, citing TMZ (seriously, where do they dig this stuff up and how ridiculous is it that I am citing it?), indicate that Robin Williams may have used a revocable trust as his primary vehicle to transfer his assets at death.

There are a number of reasons a revocable trust may be the perfect estate planning tool, but primary among them is privacy: a revocable trust is a private document that normally will be unavailable to the public, an important consideration for a public figure. In contrast, consider the cases of Phillip Seymour Hoffman and James Gandolfini, among others, whose wills and dispositions from their large estates were on public display. A will is a public document, filed with the court in a probate proceeding, and as such is available to the public; a trust is not automatically subject to probate or court jurisdiction. If a client-say a celebrity, an athlete, or even a resident of a small town full of nosy neighbors—ever has a need for privacy, the revocable trust is the preferred instrument.

A revocable trust can also reduce (but not eliminate) the possibility of intra-family drama surrounding the estate plan. A revocable trust avoids a probate proceeding, without which no notice to family members and heirs is necessary. Only the named beneficiaries need to get notice of the distribution from a trust, unlike in probate where all defined heirs, along with named beneficiaries, are required to receive notice. This means that a child or someone else who intentionally may have been excluded as a beneficiary will receive notice and will be an interested party in a court-supervised probate proceeding. It is still possible to bring action to determine the validity of a trust, or to contest distributions from a trust, but a party who might wish to press such claims may never even receive notice that the trust exists.

Just because Robin Williams appeared to have used a revocable trust instead of a will as his primary estate planning vehicle doesn’t mean his estate plan was perfect, but it does mean he was able to ensure that the division of his assets will remain private. One caveat: revocable trusts are only helpful if you have actually transferred your assets to the trust. Funding the trust is crucial and you should always work with a qualified estate planning attorney to coordinate the details.



Real Life Lessons

Video on the Drawbacks of D-I-Y Estate Planning

Do you have estate-planning documents that were drafted using an online service? In a 2013 Northwestern Mutual webcast, 30% of those watching reported they have—or know someone who has—estate planning documents that were hand written or created using an online service.

Dozens of web sites now offer estate-planning document services for a fraction of what a lawyer might charge to develop a will, trust or power of attorney. While affordable, the trend toward do-it-yourself estate planning is fraught with risk, according to Ruthann Driscoll, director of advanced planning at Northwestern Mutual. “Estate planning documents are filled with legalese; terms that mean very specific things under the law,” says Driscoll. “A friend of mine mistakenly disinherited her sons because she didn’t understand one legal phrase that appeared in her will. That’s why do-it-yourself estate planning scares me.”

Hear more about D-I-Y estate planning from Driscoll and Northwestern Mutual’s Mark McLennon, vice president, investment advisory services, in this brief video excerpt from “Estate Planning: It’s Not Just for the Rich and Famous.”

Real Life Lessons

Wealth Secret: How to Leave Behind a Legacy—Not Regrets

CA Mom DiesAnother story of failed legal planning hit the news the other day, as a single mother from California died during the birth of her fourth child leaving behind four little ones and no guardianship directives. To complicate things further, the father of these children is not (and has never been) in the picture to claim responsibility. So fearing the kids would end up separated in the state welfare system, a neighbor (who also has six children of her own), stepped up to the plate. And, thankfully, the Los Angeles community has stepped up to the plate by donating diapers, clothing, food, etc. for the now mother of 10.

But in most cases, stories like this one don’t have such a happy ending. The sad reality is that children are placed in situations their parents would’ve never have dreamed possible because they didn’t take the time to plan ahead in the case of their unexpected death or incapacity.

Let this be a wakeup call for you.
There are three simple things that could have been done differently to ensure these kids were taken care of upon their mother’s passing. And if you have little ones at home counting on you, I urge you take these steps now to ensure a legacy–and not regrets–are what you leave behind:

1. Get a Term Life Insurance Policy– For a small amount of money each month, this mother of three with a fourth on the way could have been paying for a life insurance policy so that her children were provided for financially should something happen to her (especially knowing that their father was not in the picture and would not contribute to their care financially). Because she did not have life insurance in place, her children are now forced to rely on handouts and charitable donations from neighbors until they are old enough to support themselves.

2. Name Short-Term and Long-Term Guardians– While this story “seems” to have a happy ending with the neighbor stepping in to raise the four children and keep them all together, will she really be able to manage raising ten children? Maybe there was another friend or a family member who would have raised these kids EXACTLY as their mom would have wanted, but we’ll never know because she didn’t document her choices for her kids’ care.

3. Create a Legacy of Non-Tangible Assets– This mother unexpectedly died during childbirth. Because of this, her newborn baby will never hear the sound of her voice or know firsthand what her mother’s values were or how she would have guided her about things like religion, money, discipline, education, sex, or health care. As parents, even if you don’t have any money to leave behind, you can leave your children a gift of your values – who you are and what’s important to you. You can do that for free by writing letters or recording a CD for your children–this becomes a gift that is far greater than all the money in the world.

Regardless of how you choose to go about it, take the time to get your affairs in order while there’s still time-ESPECIALLY if you have young kids depending on you at home. It’s the only way to leave behind a real legacy-instead of regrets-at the end of your life.