Estate Planning

2018 Estate and Gift Tax Credits (Do Not Confuse the Tax Rules with Medicaid Rules)

The Unified Estate Tax Credit will increase to an amount that equates to $5,600,000 for 2018 per individual. So basically, if you are married, as a couple, you can leave $11,200,000 estate tax free.  (Speak with an attorney to know the nuances of effectively obtaining the benefits for both spouses; ask about portability.)

Relatedly, you can give away $15,000 per year per donee in 2018. For gift tax purposes, you can gift-split as well, so you and your spouse can give $30,000 per year per donee after January 1. These annual exclusions are over and above the lifetime unified credits.

Forbes has a good explainer for further detail.

However, do not confuse or conflate these estate and gift tax exemptions with Medicaid rules. Medicaid counts all gifts; there are no amount of transfers of assets for less than fair market value which are exempt. These federal estate and gift tax exclusions do not apply when calculating Medicaid eligibility.


Does an Alzheimer’s diagnosis void Glen Campbell’s Last Will and Testament?


The surviving spouse of Glen Cambell is fighting with his children from a previous marriage over his $50 million dollar fortune. Per reports:

The will was written in September 2006, more than five years before he announced his Alzheimer’s diagnosis. It stipulates that all three of his kids from his second marriage to Billie Jean Nunley, which ended in 1976, were not to benefit from his estate or any resulting trust.

(Campbell had five other children from other relationships who apparently will benefit from the Last Will and Trusts.) He only announced his Alzheimer’s condition in 2011 but could have been diagnosed with the disease at the time of the signing of the Last Will.

So how does a diagnosis of dementia or Alzheimer’s affect the execution of a Last Will in Alabama.

The law presumes that every person of legal age has sufficient mental capacity to make a valid will. A person may be feeble, weakminded or capricious and still have capacity to make a will if he is able to have a decided and communicate a desire as to the disposition of his property. However, the person signing the Last Will must have at the time of the signing memory of mind sufficient to recall and understand: his property, the persons he is leaving the property to, where he desires the property to go, and the nature and consequences of the business to be performed. “Simply stated, if the testator knows his estate and to whom he wishes to give his property and understands that he is executing a will, he has testamentary capacity. A person may execute a valid will, even if he or she is not competent to transact ordinary, everyday affairs.”Still v. BankTrust, 88 So. 3d 845, 852 (Ala. Civ. App. 2011)

Accordingly, a dementia diagnosis does not automatically invalidate a Last Will; however, the weakened condition may bolster undue influence claims. “To establish a prima facie case of undue influence, the contestant must show that a confidential relationship existed between a favored beneficiary and the testator; that the beneficiary’s influence was dominant and controlling in the relationship; and that there was undue activity on the part of the dominant party in procuring the execution of the will.” Ex Parte Helms, 873 So. 2d 1139, 1148 (Ala. June 13, 2003). That these three elements must be met in order to create a presumption of undue influence, and shift the burden to the proponents of a will to show a lack thereof, has been consistently held by Alabama courts for over a century. Wilson v. Wehunt, 631 So. 2d 991 (Ala. 1994)

In 2006, the Court addressed a case where the proponent of a will tried to argue that the contestants did not have “equal claim” to the testator’s bounty because the contestants had minimal contacts with their grandfather, the decedent, and had not been involved in his daily life, but had left him to the proponent’s care. Pirtle v. Tucker, 960 So. 2d 620 (Ala. 2006). The court, however, rejected this argument, holding that the contestants were blood relatives who would have inherited the estate under intestacy laws. Id. at 630. The decedent’s will devised the entire estate, not just one part, to the defendant, therefore the will favored the Defendant over the plaintiffs. Id. Moreover, the plaintiffs had presented testimony that the decedent wanted them to have his entire estate. Id. “Finally, although it is clear that Tucker helped Miler in the latter stages of Miller’s life, the evidence does not show that he helped Miller so much that ‘the testamentary disposition [of Miller’s entire estate to Tucker] is proper as a matter of law.” Id. citing Armstrong at 1314.

The next element to examine is that of domination by the favored beneficiary over the testator. Alabama courts have held, in fact, that domination in the relationship is key to undue influence. Furrow v. Helton, 13 So. 2d 350, 357 (Ala. 2008). In Helms, the proponents placed their names on CD’s and bank accounts held by the decedent, were her sole means of transportation, visited the home of the testator every day from the time she started taking
Lortab until the disputed will was written, and denied others access to the decedent. Helms, at 1145-1146. The Court wrote that this evidence “constitutes substantial evidence of dominance and control.” Id. at 1148.

The final element of undue influence is “undue activity in the procurement of the will”. In Helms, undue activity was found where the proponent suggested the lawyer who drafted the will, one of the proponents drove the decedent to the office to execute the will and the proponents lied about having any knowledge of the will was enough to establish undue activity, when coupled with the evidence for other elements. Helms, at 1148. Merely driving the decedent to the attorney’s office to execute the will was not, however, sufficient when not coupled with additional evidence. Furrow, at 358.

Look for Campbell’s disinherited heirs claim the new wife exercised undue influence over a man in a weakened condition.

21st Century Assets need Consideration in Estate Planning

A new article from The Greater Lansing Business Monthly highlights a new “asset” which needs to be considered for Estate Planning:

If you already have an estate plan in place, have you provided your beneficiaries access to your online accounts to cancel, save or change them? Without such provisions, you could achieve an unwanted Internet immortality because sites such as Facebook or Yahoo! don’t acknowledge your personal representative or trustee as having access rights to your accounts. According to Patricia Kefalas Dudek, of Dudek & Associates in Farmington Hills, and Howard H. Collens of Galloway & Collens PLLC in Huntington Woods, modern estate plans need to designate a “digital personal representative.” 2

“Decide who is in charge of those assets if you become disabled or when you die, and name that person as your digital personal representative with power to protect your assets,” Dudek explains. She and Collens suggest preparing a list of all e-mail accounts, social websites in which you participate, and online financial and commercial accounts.

However, if you do not want to share your passwords with another person while you are still alive, there are Internet applications that allow you to store not only your passwords but also your digital estate plan (for example, or Dudek and Collens also suggest giving the personal representative access to a account to find all of your personal websites without having to search all over the Internet. “Make sure you indicate whether you want your digital personal representative to archive your content, share your content with others, or delete it,” adds Collens.

Dudek and Collens recommend putting digital estate planning language in wills, trusts and powers of attorney. They specifically mentioned powers of attorney so, if you are temporarily disabled, someone is handling your online accounts, especially if you make bill payments online.

Got Kids? Get an Estate Plan

From Gene Kaine’s Estate Planning Law Blog wrote this:

For many couples with young children, the expense of actually sitting down with an attorney may be the leading factor in delaying planning their estate.  When you’re trying to pay a mortgage, an estate plan may seem like a luxury you can put off until a later time.  But consider the possibility that something does happen to you and/or your spouse.  What would happen to your children? If you don’t decide who will take care of your children and put that decision into an estate plan, a court will make the decision for you should something happen.  And that may very well not be the best choice for your kids. . .

Once you’ve examined your feelings surrounding the issues involved in estate planning, it’s time for a little dose of reality.  Be very realistic about your resources and how they’ll be used.  If you want your estate to be used for sending your children to college, you need to also think about how they will be supported until they actually reach the age to go to college.  The first thing you need to think about is supporting your children.  They need food, clothing and shelter first.  College is a secondary consideration. . .

To get the ball rolling, sit down and make a list of the property you own, how it is titled, the fair market value and how much you owe on it (if anything).  List all your life insurance and retirement plans, how much they’re worth and who the beneficiaries or owners are.  Now is the time to think ahead.  Don’t just think about your current situation but think about what your family will need in the future.

In many estate planning consultations, the hardest decision for most of my clients is not how to divide the property if something happens; my clients struggle most with naming a guardian for the kids. Who will get the kids if both mom and dad die or become incapacitated? The paternal grandparents? The maternal grandparents? Or will the maternal aunt be best? Or the paternal uncle? More often than you think, none of the above. (To make it more difficult, I usually recommend nominating at least three persons in succession, not co-guardians.)

Another aspect that is infrequently considered is who will manage the assets for your kids. For example, check your life insurance policies. You likely named your spouse as initial beneficiary and your children as contingent beneficiaries. Great, right?  First, if your children are under 18, you have built-in court proceedings because children cannot receive property or benefits outright. A conservator would need be appointed which means attorney fees, Guardian ad Litem fees, court costs, and bond expenses. Second, even if your child has reached 18, would you trust your 18 or 19 year old to wisely manage $100,000 in insurance proceeds? (When I was 19, I would not have spent it on Georgia Tech but probably bought me a new truck (or two).)

So I agree, if you have minor children, you need an estate plan regardless of the size of your bank account.