Mind that DSUE (Deceased Spouse Unused Exclusion)

The estate tax exclusion for this year is $13.99 million and will rise to $15 million next year. If an individual's estate is worth less than that amount, his estate tax is zero; if more, then the tax is 40% on the amount over the exclusion.

Married couples can bequeath estates worth double the exclusion on a tax-free basis, but they must be careful to file an estate-tax return for the first spouse that dies. [bold added]

The U.S. tax code is generous when it comes to passing down money to heirs tax-free, and it has only become more so under the new tax law. But for married couples to obtain the full benefit, there is a strict set of rules. Messing up can be disastrous.

In the case of Billy Rowland, it cost his heirs $1.5 million in extra estate taxes.

Rowland expanded his many small businesses in Lorain, Ohio, over decades, with his hand in trucking, used cars, commercial real estate and banking. He served on local charity boards and wore a “World’s Greatest Grandpa” cap.

After he died, his executor filed an estate-tax return, and the Internal Revenue Service came calling in 2021, asking about the estate return of his late wife, Fay, filed years earlier. The tax agency said it believed her return was incomplete, and that disqualified his estate from getting a share of her exclusion.

The Rowland case has lawyers and accountants who prepare estate-tax returns on edge. The Tax Court sided with the IRS last month, disallowing the estate from using the common planning technique known as portability.

That lets a surviving spouse use any leftover exclusion amount from the first spouse to die—as long as the estate filed a return and filled it out properly. The trouble is, often no one checks the work until the second spouse dies. At that point, it can be too late to fix any mistakes.

The Tax Court said Rowland’s estate couldn’t take Fay’s unused exclusion amount of $3.7 million because of the error. Hence the extra taxes. The message to wealthy families is that obtaining the doubled estate tax shelter for married couples isn’t automatic...

For most surviving spouses, a $15 million exclusion is enough to shelter their estates from taxes. They don’t need the combined $30 million available to a married couple. Yet nearly 500,000 Americans have a net worth of $15 million or more, according to the global wealth tracker Altrata.

For those with estates worth $15 million to $30 million, it generally makes sense to file an estate-tax return when the first spouse dies to elect portability. “It would be a disaster if they fouled up,” said Ed Zollars, a Phoenix-based CPA.

Even those with less than $15 million today might need the first spouse’s extra exclusion amount later on. Their investments could grow, or they could get an unexpected inheritance or win the lottery...

IRS rules allow nontaxable estates to leave off specific values on the estate-tax return if the assets are left to a spouse or charity. Fay named children, grandchildren and friends among her heirs, so her estate wasn’t allowed to use those rules, the Tax Court said.

The rules may seem convoluted to people who are not tax accountants or lawyers, but the solution is relatively straightforward after 2025:

If there's a chance the combined estate will be worth more than $15 million after the death of the surviving spouse, file an estate-tax return upon the death of the first spouse--though there may be no tax due at the time. Be sure that the return assigns values to specific assets--I personally would use $10,000 as a threshold--and that the "DSUE amount portable to surviving spouse" (Form 706, Section 6, Part C, Line 10) is filled out.

Simplicity and Certainty

(Image from berkshiremm)

Last year we engaged a lawyer to update our estate documents, which had been executed in 2002. The most confounding obstacle was the uncertainty surrounding the estate-tax exemption:

Under the current rules laid out in the 2017 tax law, today’s nearly $14 million exemption would expire at year-end and drop by about half.

To get ahead of that cliff, Americans have been making lifetime gifts to use up the higher exemption amount before it sunsets.

If Congress does not act to extend the $13.99 million-per-person exemption, it will fall to about $7 million next year.

Bay Area homes that originally cost several hundreds of thousands of dollars now sell for $2 million or even double that amount. The switch from employer defined-benefit plans to 401(K) and IRA investment accounts makes visible the present value of pension benefits and inflates estates. While $7 million has always been a princely sum to most Americans, that threshold is now attainable by many homeowners who live in the Bay Area.

The new tax bill wending its way through Congress not only will increase the current exemption slightly but makes it more likely to be "permanent" in that it will require the Democrats to control both Congress and the Presidency to change.

Under the bill, an individual could die in 2026 with $15 million, and a married couple with $30 million, without owing estate tax. These amounts rise annually alongside inflation. The proposed changes have no expiration date...

The certainty of a new, higher exemption is a game changer for estate planning, estate lawyers said. “The permanence is a big deal for our family businesses, so they can do more long-term succession planning,” said Palmer Schoening, chair of the Family Business Coalition, which lobbies for estate tax repeal.

If the new, higher exemption amount is permanent, most individuals with estates under $15 million probably don’t have to worry much about estate taxes or do estate tax planning.

I do appreciate the certainty, which allows us to simplify our new estate documents. Don't under-estimate the virtue of financial simplicity in allowing one to sleep more easily at night.

Paper is Still the Gold Standard

(Image from tvtropes)

You're on your deathbed and still of sound mind. Your estate is to be evenly split between your son and daughter, but Jack has never come around to see you while Jill has not only visited you daily but handled all the day-to-day minutiae of your finances and running your household.

You now want to leave everything to Jill, but there may not be time to get a lawyer to change your will. Surely it must be better to record a selfie on your smartphone rather than scrawl a note on a piece of paper. But that would be wrong.[bold added]

While most of the business of life has gone digital, estate law remains rooted to ink on paper. Americans who try to phone in or record their estate plans don’t realize that video and audio recordings don’t qualify...

Aside from audio and video, some states will allow an electronic will. But a paper will, drafted by a lawyer, and signed by you with a “wet signature,” witnessed and notarized, is still the gold standard.

If you insist on putting your final wishes on video, it behooves you to have a printer nearby. You can transcribe your speech using any number of programs and print the text. Make corrections by hand, and sign and date the final product. Et voilà! A piece of paper that should hold up in court with the bonus of having made a video that will add authenticity to the change in the will.

Estate law will undoubtedly catch up to technology in a decade or so, but many of us boomers won't be able to wait that long...

The Laughing Heir

(For sale on Amazon): But will your cat take care of you?

We are personally acquainted with Bay Area millionaires who are over-60, never been married, and never had children. (They are millionaires primarily because of the houses they bought over 25 years ago.)

The recent growth in this demographic has resulted in the phenomenon of the laughing heir: [bold added]

Charities, distant relatives and even pets are benefiting from surprise inheritances. They can thank people without children.

Not having children is becoming more common, both among millennials and older people. A July Pew Research Center analysis found that 20% of U.S. adults age 50 and older hadn’t had children.

And many of these people don’t have wills. An AARP survey found half of childless people age 50-plus who live alone have a will, compared with 57% of others that age. Those without wills have less control over what happens to their money, which often ends up in the hands of people who don’t expect it.

This phenomenon of a surprise inheritance is common enough that it has a name: the laughing heir.

“All they do is get the money and go, ‘Ah ha ha, look at that,’ ” said Michael Ettinger, an estate lawyer in New York.

Having a significant estate when a childless person dies may be the result of rational decision-making:

Financial advisers say a far bigger concern than who gets what is making sure there is enough money and support for a comfortable old age, because clients without children can’t call on them for help...

Choosing an estate executor and who would handle money and health decisions on your behalf can be difficult when you don’t have children, financial advisers say. Using a promised inheritance as a reward for taking care of you when you are older isn’t a good solution, said Jay Zigmont, an investment adviser focused on childless people.

“Unfortunately, it is relatively common to see family members who are in the will decide to opt for cheaper medical care (or similar decisions) in order to protect what they will be inheriting,” he said in an email.

The old-age safety net, which many still subscribe to, is to have children who will have your best interests at heart. (I've seen enough murder mysteries to know that this is not always the case!)

The second-best option appears to be letting your distant relatives know they will be remembered in the will for some assistance today. The risk, as mentioned above, is that the aforementioned relatives may prioritize keeping the size of the estate as large as possible at the expense of the elderly person's care. And, as they collect their inheritance, they'll be laughing all the way to the bank.

A Thankless Task

(Image from Carby & Carby)

We have close friends and relatives who have been executors of estates (and we ourselves are co-executors of our parents'). The job goes smoothly if the estates are relatively small--say an owned home plus less than $1 million in liquid assets--, the heirs (typically siblings) get along, and the decedent leaves a will. In the absence of those conditions, the job is time-consuming and stressful. Many people turn it down.

In many cases, estate lawyers said, people named as executors don’t want the job, or decline it. “It happens all the time,” said Roy Kiecke, an estate lawyer in Austin, Texas. “Mom and Dad come in and don’t want to name one of the kids, so they appoint brother Bob, and he goes, ‘Huh?’ ” He recommends that people writing their wills ensure their named executors are up to the job—and revisit the choice every few years.

Naming a family member feels natural, but a grief-stricken relative might not be able to cope with the task. Picking one child can lead to resentment from siblings, while having co-executors can result in stalemates.

“If you’re hesitant, then that probably means that’s not the right person,” said Chasity Sharp Grice, an estate lawyer in Memphis, Tenn.

Especially in situations where conflict between heirs is likely, it is better to choose an impartial third party, such as a friend, lawyer or accountant, estate lawyers said.

One of our California friends has spent over a year handling his mother's estate on the East Coast. There are complications because one of his siblngs passed away years ago and his kids want the parent's share, but it wasn't specified in the will. Our friend will try to do something for them, but the surviving siblings have objected.

Yes, being an executor is an often thankless task where, despite best efforts, one will end up being the bad guy.

A Last Gift to the Kids

(WSJ drawing)

We are lucky that our mothers--both over 90--are still with us.

That fortunate circumstance also means that we haven't gone through the stress and emotion of having to sort through our parents' material things. It's still possible for us to go over their possessions with them; we've had halting, piecemeal conversations but it's unlikely we will make much progress.

While that day looms, we have our own houses to de-clutter. We need to do it not only for ourselves but to relieve that burden from our children. Some from the next generation are pleading for us to get rid of our stuff. [bold added]

By now, it is common knowledge that millennials like me don’t want the old furniture, china or trinkets that we could inherit when our relatives die, or are offered to us as our parents downsize. In general, we want to experience the world, but not have physical items signifying it. As I’ve watched my parents navigate their own parents’ deaths, and have observed the sheer number of physical items to sort through, I wondered: “How do we millennials know what to throw away and what to save?”

Home organizers, financial planners and consignment shops tell me it’s a conversation they have with clients every day. They say, though awkward, it is better to have open and honest conversations about estate planning when you can, rather than trying to navigate doing so in the anguish or time crunch after a family member dies.

Here's where technology can help in cutting the cord. We can and probably should take pictures of objects that are precious to us, attach notes or even audio-video files that explain why they are meaningful, and send them off to Goodwill or even the landfill.

We'd be cleaning house as a last gift to the kids, and, really, it's just a fraction of the effort we spent in raising them.

A Smart Move

(Illustration from estateexec.com)

Most middle-class Americans have a simple estate profile.

Assets may include a house, retirement accounts, stocks, cash, and personal effects. Beneficiaries of the estate are typically family and charities.

Even with such straightforwardness, there is still a smart move to make on income and estate taxes. Where possible, charitable bequests should be made from 401Ks and IRAs, while assets that have gone up in value ("appreciated assets") should go to the heirs.

This is because IRA and 401K distributions (unless they're from Roth plans) will be taxable to the heirs, while on the sale of the house or stocks they will only have to pay income taxes on the appreciation after the death of their thoughtful relative. (The charities don't pay taxes in either case.)

There are also the advantages of efficiency and flexibility.

there are two big benefits to making gifts at death using traditional IRA assets.

The first advantage is tax efficiency. Donors of traditional IRA assets at death can win an income-tax trifecta—no tax on contributions going in, no tax on annual growth, and no tax on assets at death...

The second advantage of leaving traditional IRA assets to charities is flexibility. Wills are often drawn up years before someone dies, and circumstances change. As a result, the donor may want to name different charities or donation amounts.

Making these changes is often easier with traditional IRAs than a will.

Let's say that you have a $100,000 IRA and that you wanted to leave $20,000 to your alma mater. You could create a new IRA, name its beneficiary as Old Blue College, and fund it with $20,000 from your existing IRA, leaving the remaining $80,000 for existing IRA's beneficiary. And you could do that without hiring a lawyer to rewrite your will.

You spent a lifetime earning, saving, and building an estate. Spend a few hours seing that thousands of dollars from that estate go to who you prefer, not the government.

Death Makes Life Complicated

(From USA Today)

In almost every year for the past ten years, there has been a death of a relative or a friend or a friend's close relative, and I've helped sort out the finances. It's not easy, even for those who have some accounting, financial, and/or tax training like myself.

For the spouse of the deceased, the tax decisions can be complicated and must be made at the worst possible time. The broad checklist of issues is:

Filing an estate-tax return [to claim the $11.7 million exemption]
Tax-bracket shifts [from joint status to single or head of household]
The step-up [of tax basis in inherited assets]
The home-sellers’ exemption [drops from $500K to $250K two years after spouse's death]
Retirement accounts [change beneficiaries, accelerate or defer withdrawals because of tax-bracket shifts]
Withholding and estimated taxes [may need to be increased by survivor, if deceased paid most of them]

The obvious recommendation is to get professional help, which is preferably lined up long before death. But there's still the problem of finding people who are both knowledgable and honest.

In Hawaii we have a big ohana, which includes a lawyer, CPA, and others who are familiar with elder-care issues. When my father passed away, all of us looked after Mom's best interest though even in our case there were some disagreements.

In the absence of having family who can help, there are other groups, such as churches, Kiwanis, Elks, Freemasons, alumni organizations, etc. where one might find trustworthy advisers.

Still there are no absolute guarantees, even with families, so it's best to be kind to everyone throughout your life so that some of the thoughtful and honest ones will help you and your spouse after one of you is gone.

Dying is Easy, Keeping Track of Passwords is Hard

Facebook image: they can track you everywhere

Death is getting more complicated. Not only do we have to make arrangements for our physical and financial assets; now we have to worry about the remnants of our digital lives.

WSJ tech editor Joanna Stern takes us through the steps of organizing our electronic estate:

1. Take inventory of your digital assets
2. Add a digital executor to your will
3. Add digital heirs to your accounts
4. Plan to pass on your passwords
5. Record your stories

After step 2, adding a "digital executor" (can be the same as the regular executor), the will should contain instructions to the executor to distribute the accounts to the digital heirs.

Some of the big tech companies provide specific tools. On Facebook, assign and add a legacy contact. When you die, Facebook will allow this person to take some actions on your account, including downloading a copy of what you’ve shared on Facebook, memorializing your profile so others know you’ve passed or, if you prefer, removing your account. On Google, assign an Inactive Account Manager, who can similarly download the data, including any pictures you may have on Google Photos.

Unfortunately, other tech giants don’t offer such features. Make sure your digital executor will receive access to your passwords and also has a way to get to your phone to receive those number and letter codes that some companies send when you log in. Without that, a company could require the executor to gain a court order. Here are links to the specific policies for companies you might have digital accounts with:

•Apple
•Microsoft
•Twitter
•Instagram
•Dropbox
•Yahoo
•LinkedIn
•Amazon (U.K. customers; U.S. link not working)

What to Do Before You Die: A Tech Checklist is humbling because I've done nothing except print out a list of all my accounts and passwords. Meanwhile the hard-core are making sure that their avatars are not interred with their bones: [bold added]

James Vlahos, co-founder of HereAfter.AI.... creates voicebots so loved ones can, via an Amazon Echo or Alexa phone app, actually talk to friends or family members after they die.

The company records interviews with people, then turns the audio into an interactive experience. Loved ones can ask the bot questions about your childhood, and it will play relevant chapters of the recording.

To me, the best part of this service—which starts at $95 for an hour of interviews—is that customers get, in addition to the voicebot, the original high-quality audio files. Of course, you and your family can record some yourselves with a good microphone and computer. The key for any interview is asking the right questions to capture the best stories.

“Use targeted questions that guide your loved ones to share the most specific, visceral and emotional things they can remember,” Mr. Vlahos said. “Don’t ask, ‘Tell me about your marriage.’ Ask, ‘Describe the very first time you saw the woman who would become your wife.’”

In the Superman movies Kal-el speaks to a ghostly image of his long-dead father Jor-el. The image responds intelligently to Kal'el's questions and often gives useful advice.

Here's a 21st century question: does anyone want to listen to posthumous advice from someone who presumed that his descendants wanted to take his advice seriously after he was gone?

To-Do List for Your Worst Day

It's income tax season, but we're at an age where estate taxes, wills, and legacies are weighing on our minds. (Maybe these topics don't apply to you, dear reader, but perhaps they preoccupy older generations in your family.)

The WSJ published a to-do list for surviving spouses, and we've found through recent experience that much of it applies to surviving children as well.

A SURVIVING SPOUSE SHOULD...

Take key steps

☑️ Order at least 15 copies of the death certificate to use to retitle financial accounts and settle the estate.

☑️ Contact the estate attorney, accountant and financial adviser.

☑️ Gather household bills and bank, brokerage, insurance, and credit-card statements.

☑️ Retrieve electronic statements from the deceased spouse’s email account or petition the email provider for access.

☑️ Start the probate process by having the executor submit the death certificate and any will that exists to the court.

☑️ File with Social Security for a $255 death benefit.

☑️ Consult someone who knows the rules for claiming monthly Social Security survivor benefits, based on the amount your spouse would have received. A survivor can claim as early as age 60 (or 50 if disabled).

☑️ Retitle household bills in your name.

☑️ Change the beneficiaries on your retirement or other accounts or insurance policies if necessary.

☑️ Update your will.

☑️ Create a new financial plan once you understand what you own and owe and are able to make long-term decisions.

Locate accounts and assets

☑️ Call the deceased spouse’s employer, if he or she was working, to ask about a 401(k), traditional pension, stock options, and life insurance and the cost to continue health coverage under the company plan.

☑️ Check the most recently filed tax return for the names of the financial firms that house the household’s accounts. Financial firms provide 1099s when bank, retirement and taxable accounts generate income, capital gains, dividends or interest.

☑️ Present the death certificate and proof of identity to get their share of a spouse’s IRAs, 401(k)s, and life insurance. (Be aware of the rules surrounding penalties before transferring money from a spouse’s 401(k) or IRA to your own.)

☑️ Look for statements in the mail for accounts that don’t show up on the tax returns, including pensions, IRAs, annuities, and 401(k)s no one is contributing to or taking withdrawals from. Because companies can lose track of former employees, call your spouse’s previous employers, too.

☑️ Ask for free help if you believe your spouse was entitled to a pension from a company you cannot locate. Sources include the Labor Department and the Pension Benefit Guaranty Corp.

☑️ Search for missing life insurance and annuity contracts in the “Life Insurance Policy Locator Service” sponsored by the National Association of Insurance Commissioners or in your state’s unclaimed property fund.

Don't Hold It Up for Me

Because both House and Senate versions of the new tax law eliminate the deduction for state and local taxes (SALT), the tax on long-term capital gains will go up for individuals in high-tax states:[bold added]

New York City residents, for instance, pay a top income-tax rate of 12.7%—8.8% to the state and 3.9% to the city. In California the top rate is 13.3%. Absent the deduction, then, New York City and California investors in the top bracket would pay a total—federal, state and local taxes—of 36.5% and 37.1%, respectively, on their capital gains.

The top federal rate on ordinary income is 39.6%, so deducting state and local taxes reduces their burden by that proportion for high earners. In theory that should lower the total capital-gains tax to 31.5% in New York City and 31.8% in California. In practice the figures are somewhat higher, since other provisions of the federal tax code—the alternative minimum tax and the Pease phase-outs of deductions—reduce the value of the SALT deduction for high-income taxpayers. But every investor who itemizes and lives in a state that taxes capital gains would face some increase under the GOP plans.

Higher taxes on capital gains cause taxpayers to be hesitant to take gains at the margin---from personal experience and that of acquaintances I believe this effect on behavior for certain individuals to be noticeable----and result in capital being being "locked in", i.e., appreciated assets are held onto longer.

The lock-in of capital gains reduces the mobility of private capital—and, more important, its flow to the new, small and rapidly growing companies that create the most jobs.

(Business Insider graph)

Two comments:

1) Despite the authors' claims, the lock-in effect on capital markets cannot be large. Two-thirds of equity investors (see chart) don't pay taxes; mutual funds, hedge funds, international, and other institutional investors are legally exempt or can afford the expertise to structure around taxes. Of the remaining third, i.e., households, only a small percentage reside in high-tax states. Only a subset of this subset are in such a high bracket that State taxes are the deciding factor against a capital asset sale.

2) Possible estate-tax repeal, and even high estate-tax exemptions, are a much more powerful inducement to hold onto appreciated assets than the lack of a SALT deduction. If a well-off taxpayer can afford to live the rest of her life without selling her home or her Alphabet stock, those assets will be "stepped up" to Fair Market Value at her death. There won't be much, if any estate tax because of changes to the law, and her heirs will pay much less income tax because the stepped-up basis will have shrunk the gains dramatically when it comes time for them to sell the assets.

BTW, your humble blogger lives in high-tax California and is sitting on some assets (hey, I mean that figuratively) that have grown fatter in recent years; I won't sell them unless it's an unexpected emergency, so go ahead and pass the d*** law already, Republicans, don't hold it up for me.

Protecting the Golden Years

Not uncommon, unfortunately (Mirror)

Scam artists find the elderly to be inviting targets: paraphrasing Willie Sutton, they're where the money is, and can't protect their finances because of cognitive decline. [bold added]

Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in....But even “normal” ageing can cause cognitive change. Financial-management skills are often early casualties, because they demand both knowledge and judgment.

Older people are more likely to struggle with day-to-day banking and are more susceptible to poor investment decisions. They are also more vulnerable to fraud or to financial exploitation, often by relatives. In 2010 the over-65s in America made up 13% of the population but had over a third of the wealth.

After I turned 60, memory and alertness declined so much that even I could notice. The consequence is that I might well purchase investments, such as annuities, that I would not have previously considered---annuities lock up one's cash and are difficult to steal.

But the best defense is to have children who are financially secure (so they won't be conflicted when handling your money) and who have your interests at heart. No matter what else may have happened to you, if you have such children your life has been a success.

A Good Problem to Have

The tax returns are filed, or soon will be, and most people want to take a break from matters financial. After gathering the information for the returns, however, it's probably the best time of the year to give a thought to estate planning.

Individual estates under $5.45 million are exempt from Federal Estate tax in 2016, and through some well-known legal maneuvers married couples can exempt double that amount--$10.9 million. In the Bay Area there are many estates with assets above the exemption, and Merrill Lynch Wealth Management has published a useful list of some Advanced Wealth Transfer Strategies:

Grantor retained annuity trusts.

Life insurance, especially combined with other structures.

Qualified personal residence trusts.

Charitable lead annuity trusts.

Intra-family loans.

Private annuities.

In most structures there's some or complete loss of control over the assets---loss of control is a major criterion for not being included in an estate--but often the income from those assets can remain with the donor during his or her lifetime.

None of these strategies is relevant to your humble observer/taxpayer (yet), but I can dream, can't I?

Charity Begins At Home

As parents approach the winter of their lives, their children have become adults whose trajectories are fairly clear. Of course, extremely positive and negative surprises can still occur, but most parents can tell which of of their children will be financially successful and which will likely have problems throughout their lives.

The question: how do you help the struggling ones now without being "unfair"? [Your humble observer has seen first hand how siblings have been riven by parents trying to help the poorer ones through unequal division of the estate.)

One answer: the long-term promissory note.

One creative solution is for the parents to make a loan that serves as an advance on the child’s inheritance. Even though it’s a loan, the chances are the client is never going to see that money again.

The child signs a promissory note with a low rate of interest*, and the note is due to the parents in 30 years or upon the death of the second parent, when the estate settles. Parents like this arrangement because it’s a way to give one child some money while treating all children equally in the estate. The estate split can still be equal, and the loan for the needy child gets repaid back to the parents’ estate from the child’s inheritance. The children like this approach because the money is a loan, not a handout.

*In order for the loan not to be treated as a gift and triggering a possible gift tax, the IRS publishes minimum interest rates that should be charged on the intra-family loan.

As many of us sort through the pile of pleas from charitable organizations, make sure we give a thought about how to help those closest to home.

Presence of Mind

Severely depressed individuals often neglect themselves and those who are close to them. Though he was depressed enough to take his own life, Robin Williams had the presence of mind (and love for his children) to tend to his complicated finances before the final act:

Williams took steps to protect his children with the creation of trusts. Williams left behind three children, Zach, Cody and Zelda from two different marriages. The terms of the trusts, while private, have been reported in the press as paying out to his children in three lump sums. The trusts are structured so the children each received 1/3 of the value of his or her trust at 21, half of the remaining assets at 25 and the balance at age 30.

Trust funds are favored as an estate planning tool because they give you control over your assets, but unlike assets that pass through a last will, they are not subject to estate taxes.

In addition to creating trusts to secure his children’s financial futures, Williams also is known to have created a real estate trust, which he named the Domus Dulcis Domus Holding Trust (which translates to Home Sweet Home in Latin). Giving the trust a name with no link to him offered a layer of privacy protection. Both his home in Tiburon and his ranch were placed in the trust and will protect the family from estate taxes on the properties and provide them with important equity in the properties. If these properties were not held in trust, a large portion of the value could be due as estate tax, drastically reducing the family’s holdings.

Most celebrities' reputations diminish substantially after they die, but I suspect Robin Williams' star will shine brightly for a long time.

S.O.S.

I like to think that age confers not only wisdom but morality--as the appointment with one’s maker nears, morality starts winning (e.g., the Picower settlement) in the conflict between God and Mammon. It’s logical to believe that old people care less about the world and think more about eternity. But that would be wrong.

Another of my cherished myths has been exploded, and not just by elderly Ponzi schemer Bernard Madoff.

A grim category of crime is on the rise: senior-on-senior financial fraud [bold added]. According to regulators and prosecutors, there has been a significant increase recently in the number of cases in which older investors have been taken advantage of by elderly scam artists.

Seniors are easy prey.

Elderly investors are natural targets in part because they may be more susceptible to fraud. A 2008 study by researchers at the Georgia Institute of Technology found that older adults are significantly worse than younger people at detecting whether someone who may have stolen money is telling the truth.

What's more, according to research by Harvard University economist David Laibson and his colleagues, the typical person's ability to make astute financial decisions peaks at about age 53, then wanes with each passing year; another study found that investing ability takes a steep drop after age 70.

Adding to elders’ vulnerability are the declining size and geographic dispersion of their families.

It’s in everyone’s interest (but the crooks’) to get not only their estates in order but also make arrangements such as powers of attorney and conservatorships to help wall off the thieves. But that involves money, time, planning, and perhaps, most difficult of all, frank communication between people who may not have been talking much.

It’s too easy to put this stuff off until the appointment day, when it’s too late. There may not be much stuff left. © 2010 Stephen Yuen