Can you believe May is less than a week away? That means it’s time to share our April review of developments in elder law:
Boomer Trends
Our April review turned up several items related to the aging of the baby boomer generation:
The economy. Conventional wisdom says baby boomers’ aging spells doom and gloom for Social Security and the economy in general. We stumbled on a more optimistic view: The more than 70 million baby boomers could be seen as an asset and help build a “longevity economy” by working, says a professor from the University of North Carolina. “Everything has to change in both the built environment and the social environment to accommodate an aging population. We have baby boomers, turning 65, at the rate of 10,000 per day, every day, seven days a week . . . a lot of them are working much longer past age 65, and they are major consumers in the marketplace. Given the labor market challenges that we’re facing today, post-COVID, ‘encore careers’ are something that we’re going to have to pursue in a major way.”
Complicated divorces. Divorce among older adults, a/k/a “gray divorce,” is surging, mostly due to demographics. It’s increasingly likely that a divorcing partner could have dementia, and their ability to participate in the proceeding could be in question. What happens? They will need someone to legally advocate on their behalf, usually a guardian or conservator.
Trust taxes. Boomers aging also may be behind the increase in 1041 tax returns. The Federal 1041 is filed for estate and trusts, and the number of those filings is increasing. They were up 14.9% in 2021 to 3.24 million, 2.82 million in 2020. It’s not just deaths of baby boomers, one expert says, boomers have “an increased desire to help the next generation manage their inheritance, [but also] a fear they will squander their legacy, causing them to create trusts to pass assets efficiently to the next generation, but with some control being exercised from the grave. . . . As a result, there are more taxpayers with trusts.”
Taxes & Planning
Speaking of trusts, our April review found a piece detailing eight types that come in handy, particularly for high-net-worth individuals, and this one covers one of those plus two more.
As those articles point out, these trusts are often used to avoid estate tax. Republicans (again) are aiming to repeal the tax, and Bernie Sanders and other Democrats aim to boost it. And so it goes.
While politicians wrestle with future taxes, we’ve got the real world to wrestle with. With estate planning, not having a lousy one is something we should all aim for. One of the lousy things to avoid is “making unequal distributions.” Although treating beneficiaries differently can “result in war between your heirs,” there are ways to minimize the damage. This article has one major suggestion: talk.
Also in our estate planning review . . .
- AARP has six tips for single people.
- Do you need a pourover will?
- A brief introduction to the GST tax.
- What per stirpes means.
Two More Things About Trusts
If you are a current beneficiary of a trust, it’s unlikely the trustee could take that from you. That’s because all trustees have a fiduciary duty to act in the best interests of all beneficiaries. It’s possible that the trust grants the trustee or someone else the authority to remove a beneficiary, but it’s rare.
If you are a next-in-line beneficiary, the creator of the trust (a/k/a grantor, trustor, or settlor), if living, might still have the ability to amend the trust and remove you. And it’s not uncommon to grant a power of appointment, explained here, which could grant someone the authority to do just that.
April Review of Celeb Estates
Drama unfolded at the trial over Aretha Franklin’s competing wills. Twenty minutes of voicemails left by the Queen of Soul were played in court. The report says, “Attorneys for Franklin’s four sons gathered at the judge’s bench as audio was streamed from a laptop computer, while three of the sons listened on from the gallery.” On the recordings, Franklin told her attorney about changes she wanted made to a draft of her will. She says she will need an office visit “to finish this,” but she died months later without having done so.
In other celebrity estate suits:
- The estate of Chris Cornell settled a dispute with his Soundgarden bandmates, paving the way for new music releases.
- Lawyers for the Michael Jackson estate are pushing for a secret project to move forward and asked for court approval. But Jackson’s mother, Katherine, 92, has filed an objection. She’s expected to testify next month.
- And the Naomi Judd estate is facing a claim from the singer’s former manager for unpaid commissions going back decades.
And finally for the April review, some welcome celebrity estate news; “Tupac Shakur: The Authorized Biography” is due in October. The book “provides exclusive access to his private notebooks, letters, unpublished lyrics, and uncensored conversations with the rapper’s loved ones.” We expect it’ll be a good read.
