Palm Springs Estate Planning Lawyer & Attorney : Daryl Binkley Law Firm : Palm Desert, Indian Wells, Southern California

Volatile financial markets have affected us all in one way or another this year. Our stock portfolios, mutual funds, retirement accounts have seen changes and drops. Our homes are not worth what they were a year ago. So, is there anything out there, any purchase at all, that has seen gains—better yet significant gains in value over the last few years? To my surprise the answer was yes—and the gains are pretty significant. 

Highly sought-after art pieces, from artists such as Andy Warhol, Damian Hirst, Jasper Johns and Jeff Koons have seen gains in value of 100% to more than 500% in last few years.

The recent Forbes article online (and see the hard copy Special Issue of the Forbes 400 Richest People in America dated October 6, 2008 detailing the gains of several artists) also highlights a purchase made by Eli Broad of the 41-inch stainless steel "Rabbit" by Jeff Koons. The piece was worth $12 million in 2005 and a similar piece sold for $80 million earlier this year (a whopping 567% gain in 3 years!).

For Eli Broad, his extensive art collection provided an unexpected cushion as his stock portfolio was severely bruised by the AIG stock collapse. The article cites that his 2,000 piece collection was recently appraised at $1.9 billion, up 72% in one year, which helped offset his stock losses. The article states that his personal balance sheet lost $2 billion, but because of the art hedge, “Broad’s net worth fell only $300 million.”

And of course there are some signs that the art market might be slowing down, but art collections still prove to be a very valuable and highly-appreciating asset. Something to consider when looking at any art pieces you might have in your house, pieces you purchased or inherited from your grandparents, aunt, or other distant relative. 

On October 29, 2008 the recently expanded and remodeled J. Willott Gallery on El Paseo hosted an Art Appraisal Seminar to discuss some of the ins and outs of art appraising. The speaker, Ed Okil, a member of the National Institute of Appraisers provided a great overview of what the Appraisers can do to assess the value of your art collection, and when an appraiser might be needed.

For example, an appraisal may be requested for a variety of reasons—insurance, divorces, bankruptcy, estate & probate matters, charitable donations (as required by the IRS), litigation, and pre-sales. Generally, the IRS gets serious about art pieces at the $5,000 price range for needing an appraisal, in the estate and probate valuing contexts. What that really means is that an appraisal becomes necessary at the death of the owner, if the value is $5,000 and over. 

Amazingly, in most cases people just don't think of their art as an asset. For that reason, they might go through the entire estate planning process, by drawing up a living trust and all the ancillary documents, but never once think to include their art pieces as an asset on their inventory documents. 

A good attorney will probe the client to disclose material personal property items (like an expensive painting, antique, or collectible) at the establishment of a trust—so the proper planning strategies are employed and ensure that a client's  collection doesn't end up in probate. The more information and knowledge you have regarding your art pieces, the better.

"Our desire is to continue to provide local residents with valuable programs and free seminars related to the ownership and purchase of fine art" said Joshua Paquette, one of the owners of the J. Willott gallery. Find out more about J. Willott gallery on their website.

(Pictured at the top is Silvercreek Horses by Theodore Waddell--the gallery will have a show for him on February 12, 2009.) 

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Halloween celebrations are in full swing as we approach Friday the 31st, and I am reminded again how much fun kids have picking out their costumes and dressing up. Just this past Sunday, my family along with friends and their kids spent a wonderful couple of hours at the Children's Discovery Museum Halloween party.

My daughter Isabella was Cinderella (yes, she is definitely in the princess stage) and she couldn't wait until she got dressed and look at herself in the mirror.

"Daddy, I am a real princess!" she said

And yes, I agreed. She was and is a princess. She walked in royal fashion and she smiled the entire day. When we got to the museum, my Cinderella was strolling on the beautiful landscaped grounds getting her face painted, eating caramel apples and making her candy bag fill up. While waiting for the candy hunt, I was amazed at the number of teen and adult volunteers that made this event happen. I was thinking that one day, when my Cinderella grows up she will be there as well, making the magic happen for other kids.

The Children's museum is truly one of those amazing places for kids here in the desert. It is a place of playfulness and fun, where kids learn through play and education becomes exciting. So many of the great programs and events, such at the Halloween party, are supported by volunteers and by the donations from local businesses & regular people like you and me. It is another great opportunity to volunteer your time or make charitable donations. And the museum is planning to grow too, for example additional gallery space is planned to provide more fun activities for kids.

We asked Judi Miller, Associate Executive Director, to provide us with some information to be included in this Blog, and here is some of the future plans of the museum and contact information on how to help:

"We are excited about the Museum’s future and its upcoming expansion. Our community has asked for additional quality gallery experiences, more opportunities for classrooms to learn, additional skill-building classes for early learners and more ways for families to learn and enjoy their time together. Our first phase expansion includes:

• additional safe parking 
• additional hands-on exhibit learning experiences
• additional classroom learning space 
• separate early childhood learning program space
• an expanded gift store

Every donation is an important part of the Museum's success. It takes many investors to support these dreams. 

We invite you to be a part of the future of the Children's Discovery Museum through a tax-deductible contribution to our Capital Campaign program or volunteering in our growing programs. Your support will help to support the education of future children by the opening of a child's imagination and dreams while providing parents and caregivers the tools to support their children’s tomorrows.

To explore opportunities to become a supporter of the Capital Campaign call Lee Vanderbeck at (760) 321-0602, ext. #103 or email to lvanderbeck@cdmod.org."

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As I was reading the latest news on yet another feud between the three living children of the Rev. Dr. Martin Luther King, I couldn't help but think: is this feud he and his wife Coretta, could have ever imagined happening to their legacy and estate? 

Giving the historical speeches on peace and togetherness, it is a sad commentary that his family has become so litigious, and as David J. Garrow, "a Pulitzer Price-winning biographer of Dr. King" puts it in the article, "Unfortunately, all of the children seem to regard their father's legacy as first and foremost an income maximization opportunity for themselves."  Also from the article, An attorney for King Inc., L. Lin Wood said essentially that some of the children "are engaged in what can fairly be described as self-destructive behavior.  It's a scorched-earth policy. And unfortunately they've tarnished the legacy of Dr. King."
 
The latest battle involves the estate of Coretta Scott King, Dr. King's wife who passed away in 2006.  Reportedly there is a $1.4 million book deal with the Penguin Group at risk.  Previously the battle between the children was over the control of their father's estate, that of Rev. Dr. Martin Luther King. 
 
And even though issues of these various feuds are a bit different--one is over whether Coretta Scott really wished to include personal letters in a potential upcoming book and another one is over the mismanagement of Dr. Martin Luther King's estate--the real issues here are over various views the children have regarding the wishes of their parents.  Without adequate and specific instructions left by Corretta, the children are now using their own recollections and opinions about what should be done regarding the book deal.  And to make matters worse they disagree.
 
Many times people think they don't need to worry about estate planning because they believe their family can work things out.  The thought is something like this:  "Let them deal with it, they'll do just fine--their all family."  However, if there is no estate plan in place, then distributions can degrade into costly lawsuits, or even worse--physical shoving matches.

The best policy is to be specific with your distributions to loved ones.  And if appropriate, include instructions on how you would want anything else handled after you are gone. 

Also, when it comes to setting up Trustees for a trust, in addition to family members you can include a third party trustee, or a corporate fiduciary trustee.  A trustmaker should be extremely selective in selecting a third-party trustee, but they can be helpful when the situations between loved ones are tense when you are still alive--and they will probably get much worse after you are gone.

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On a typical day, my Yorkie, Boots (pictured at left) forces me out of bed for his pre-dawn walk, he hides my socks before I go to work, and begs me for food every chance he gets. He is a constant source of entertainment as he slides down the hall running after me or when he barks at his own shadow. He is a great snuggle buddy and playmate for my daughter and definitely a member of our family.

Pets add so much excitement and joy to our daily life that it is common to find people on El Paseo walking their dogs and referring to them as their children. As we age, I think, the role of pets becomes even more significant in our lives.

Here in the Desert, many retired residents live far away from their immediate family—so their pets become their daily companions—a source of love, companionship and emotional support on a continuing basis.  In some cases maybe their only companion. However, there are various opportunities for pet owners to socialize and bond with others like them.

Pet owners can bond together, in various pet clubs like the Standard Poodle Club of the Desert to get a sense of community and enjoy their common interest—the love of pets. Meg Doolittle, the founder of the Standard Poodle Club of the Desert even participates in the Palm Desert Golf Cart Parade, and tells other poodle owners to "Come to the parade, bring their Standard Poodle, and join in on the fun."  She can be reached via email at: QueenBaba@aol.com

And still other activities involving pets abound; such as volunteering or working at some of the various non-profit organizations supporting animal related causes. One example is the Animal Samaritans of the Desert, this organization and others like it provide another way for pet lovers to get involved with pet-friendly causes.

Another positive organization is the Humane Society of the Desert (Orphan Pet Oasis).  Malinda Bustos, the organization's President tells me that the Humane Society of the Desert has been serving the Coachella Valley since 1961. That the organization began with a simple concept...help those who cannot help themselves. To hundreds of abandoned, neglected and abused animals, this Sanctuary is their home. They provide medical care, training, shelter and most important offering these animals a second chance in life.  They will be hosting their "The Blessing of the Animals" on October 25, 2008.

With pets playing an important role in the life of their owners, it is not that difficult to understand why some pet owners begin to think of who or how their pet will be taken care of when they are gone (especially elderly owners). 

It is interesting to note that there are various options to ensure a pet will be cared for--such as through a pet trust, or nominating a person or organization to take care of a pet in the event they pass away, or even other ways too.

For people that really want to donate some of their wealth to pet-friendly organizations, there is the potential to provide a charitable gift in their estate planning documents.

Some benefits of doing so include:           

                1) Ensure that your pet is taken care of

                2) Naming short-term and long-term guardians for your pet

                3) Providing clear instructions for any pet beneficiaries

Even though a pet may be a star in our lives—every so often a celebrity pet is in the limelight. Such is the case with a Maltese named TROUBLE.

Leona Helmsley’s famous, or more correctly stated, infamous dog received a distribution in the millions of dollars, creating a lot of hostility in the audaciousness of her distribution. A recent New Yorker article examines the history of providing for pets in estate planning documents and more particulars of Leona Helmsley’s estate planning involving her dog. The article includes several negative comments about Leona Helmsley’s “Trouble-d” planning.

Unlike Leona Helmsley, you don’t have to leave everything to your pet, however, there are several ways to provide for your pet in a reasonable fashion (without breaking the bank or giving away everything you own). This type of planning ensures that even after you are gone your pet (your surrogate family members/friendly companions) will continue to enjoy the rest of their lives.

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Last night I attended the 57th Annual Installation dinner for the Desert Bar Association. The Officers and Board of Trustees were sworn in by the Chief Justice of the California Supreme Court.  The festivities were held at the newly open and rather impressive IW Club in the Indian Wells Golf Resort Clubhouse.

The night was a real treat--because it was attended by not only local attorneys and city government officials--but also included a special reception for the entire California Supreme Court. The state's highest justices are visiting our Coachella Valley to hold a "special outreach session" today and tomorrow for high school and college students at the Palm Desert Campus of Cal. State, San Bernardino.

I wonder if the highly politicized issue related to gay marriage will come up during the two day outreach program.  As I understand it, the justices will be presiding over 8 cases (hearing various oral arguments) and the hope is that students will have a real chance to see first hand the workings of our legal system and what it takes to argue in front of the state's highest court. Maybe some of them will be inspired to enter the legal field as well.

The Desert Bar Association appointed its new president, local attorney Donald B. Griffith--who is also running to keep his seat on the Desert Sands Unified School District Board of Education this November. He was installed last night to a standing ovation and it was a real treat to hear his son speak so highly of his father just before his appointment. Congratulations!
 

UPDATE:  Read the additional coverage by the Desert Sun on the California Supreme Court's visit to the Coachella Valley.

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The recent stories across the Internet about the status of Heath Ledger's estate is an opportunity for the rest of us to rethink our estate plans.  Besides the recently reported news about a lawsuit with an insurance company over a life insurance policy in his name, is the reports that Heath Ledger's daughter stands to inherit all of his wealth (if statements made by his father hold to be true into the future). Similar accounts have been reported in the local Desert Sun.

Previously, I thought the events surrounding Anna Nicole Smith's death made the ultimate fact pattern for law professors to stump law students for generations to come (well at least for a couple of years, right?).  Law school professors love to give a complex hypothetical that allow students to show off their knowledge of various legal issues and how different issues interplay with each other.  The entire saga of the Anna Nicole Smith estate is such a complex matter that its facts may have launched a thousand exams.

Then sadly comes Heath Ledger.  His passing involves a complex fact pattern of legendary proportions. 

Some of the complex issues include:  a foreign born movie star died at a young age (28), in a New York apartment, his will was executed in a foreign jurisdiction (Australia), the will was executed before the birth of his daughter in the United States, and reportedly a multi-million dollar life insurance policy is the issue in a case initially filed in the California Superior court (and has since been moved to a federal court). Whew! This is a loaded fact pattern, but the situation is one in which his family members currently find themselves.

From the Internet sources, it sounds like the family members will attempt to resolve issues with a positive outcome.  Although only time will tell if that remains the situation. 

Ultimately, the issues surrounding how his wealth will be distributed bring three mistakes of estate planning to the limelight:  1) Not updating your estate plan, 2) Inadequate estate planning, and 3) Danger of no estate planning.

Truly, the events surrounding Heath Ledger are very sad, however it provides a catalyst to discuss 1)  the various events that might occur in your own life that requires an update to your estate plan; 2) the pitfalls of an inadequate estate plan; and 3) if you don't have an estate plan, then the reasons why there is no time like the present to plan, even if you think you are too young to have an estate plan, or even not rich enough.

1)  The following life events or external occurrences should prompt a re-examination of your estate plan:  birth or adoption of a child or grandchild (or any person you want to provide for if a direct descendant or not), marriage of a key player in your estate plan (yourself or a beneficiary) death of a  key player in your estate plan (spouse, partner, and/or beneficiary), divorce of a key player in your estate plan (yourself or a beneficiary), change in financial holdings (such as closing financial accounts with one institution and reopening them in another), changes in real estate holdings, changes in tax laws, business transactions (starting a business, acquiring a business, or closing a business), and there are many more minor occurrences that would cause a prudent person to review their plan. Mr. Ledger did not update his estate plan at the happening of probably the most significant event in a person's life (in relation to estate planning)--the birth of a child.

2) The latest reports on the Heath Ledger estate exemplify the problem of an inadequate estate plan.  As stated it appears that discussions surrounding his daughter and other family members are going well, however a complete estate plan would not leave everything to chance.  A complete plan provides specific instructions, as to desired guardians over the financial aspects of his estate, how funds should be distributed to his daughter, in the short-term and long-term.  A complete estate plan would express his intent, and wouldn't keep the courts and loved ones guessing what to do next.  And for a movie star, only having a will would generally qualify as an inadequate estate plan.

3) Heath Ledger's story also dispels some myths about estate planning, such as "I am too young to have an estate plan."  Reportedly, Mr. Ledger was only 28 years-old when he died, and also reportedly his will was executed about 5 years prior to his death; making him about 23 when he first executed his will.  It is to his credit that he had done any estate planning whatsoever, given his young age.  Also, some people think they may not be rich enough to need an estate plan--this is where some other options come into play, such as the option of life insurance. For example, if you are a relatively young parent, that has not accumulated much wealth, then life insurance might be a strong option to help out loved ones if you die unexpectedly, like in an accident. Of course this is not something us parents like to think about, but nonetheless planning needs to be done.  It is far better to do something than to have nothing in place.

In the end, PROCRASTINATION is the killer of estate plans--don't let it happen to you!

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The Community Foundation presented its Coachella Valley edition of The Philanthropic Series at Rancho Las Palmas in Rancho Mirage on September 25.  The event included some great speakers across various topics, including:   "Real Estate Exit Strategies" in relation to charitable giving; a crystal ball look into the future of all types of taxes; and some insight into "What's Ahead for the U.S. & California Economy." 

This was a top-notch event put on by the charitable organization and allows them a chance to strengthen ties with the Coachella Valley.   

Michael McGreevy, from Private Asset Management, and Board Member of the Coachella Valley Fund said, "The Philanthropic Series seminar was full of useful estate planning information.  I was particularly impressed with the segment that addressed the future of the U.S. and California economies."

In setting up an overall estate plan, charitable gifting is an often overlooked option.  For example, some people might have a hard time coming to a decision about which charity to give to, or if they want to give to more than one charity, then they become worried about creating additional complications to their estate plan.   

The Community Foundation has made Cherry Picking your Charity easy.  You just put them as the recipient of your charitable gift, and then they distribute your gift to other non-profits aligned with your charitable interests.

Depending on the type of gift you want to establish with the organization, it can be spread across many charities. As stated on their informational materials:

"In response to the wishes of Coachella Valley leaders, The Community Foundation...has created The Coachella Valley Fund to match donors' philanthropic interests with gifting opportunities to a wide variety of charitable organizations solely within the Coachella Valley.  Funds given to The Coachella Valley Fund shall be used exclusively to benefit causes in the Coachella Valley."

There are many great charitable organizations in the Desert, The Community Foundation is another one worth your consideration.

Further, it is my understanding that they have contributed more to Coachella Valley projects (nonprofits) than they have received from valley donors.  Desert it is time to give back.

In another blog post I will discuss the possible benefits of charitable giving when coordinated with an overall estate plan--but I will state here that the benefits are significant.  Further, the pride one feels knowing that at least part of their estate will truly make a difference in many people's lives can be quite heavenly, I would like to imagine. 

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Yes, the Desert Estate Planning Law Blog has launched.  Here is the full press release regarding the Blog's official launch this week, as reported briefly in local media.

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"'I have an estate plan--I have my will, and that means my loved ones won’t have to go through a probate when I die.” This is a great misconception about wills. Maybe the greatest. 

However, PROBATE essentially means to prove the will (see Etymology on Wikipedia).

Think about it, you might find a "form will" on the Internet for free, or pay an Internet site a low fee.  This seemingly inexpensive price for the handling and organizing of your affairs, comes with its own cost--YOU have to complete the form, completely at your own risk. 

In California, probate generally occurs when an estate has real and personal property with a combined value in excess of $100,000.  For those owning real estate in the Desert, probate is a real threat (THINK ABOUT IT:  when was the last time you bought a home in the Desert or anywhere else in California for less than $100,000).  

So, while you may pay little or nothing now for that "cheap" will you procured, your estate may pay much more later, with overall costs related to the settling of a probate from 2% on up to 5 or 6%.  And in some cases, there might be extraordinary fees raising the costs even higher.  On an estate with a total value around one million dollars, the costs could be in the range between $20,000 to $50,000, depending on the circumstances and involvement of outsiders to administer the estate.  All of a sudden free or cheap, doesn't seem so FREE or CHEAP. 

This reminds me of one of my favorite sayings, “When you try to get something for nothing, you might get NOTHING for something.” 

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