Estate Planning Lessons from Howard Stern: The Slayer Rule

Howard-Stern

Thank you for reading the August edition of BMC’s End of the Month Newsletter. I heard an interesting story on the Howard Stern Show (for research, of course) this week, and it actually related to estate planning! The story answers the age-old question: What happens when your beneficiaries kill you?

According to many news outlets, including the New York Daily News and Howard Stern’s partner, Robin Quivers, Penn State Professor Ronald Bettig was murdered in mid-August by Danelle Geier and George Ishler because they thought they were beneficiaries in Bettig’s will. Apparently they thought if they murdered Bettig they would receive their inheritance a little faster.

Bettig might have been an astute estate planner, but his killers were clearly not very good at planning. Ishler and Geier had actually planned to kill Bettig on a Delaware Beach before deciding there was an easier way to hasten Bettig’s demise.

Ishler told Bettig that he had marijuana plants in a nearby quarry that Bettig could harvest. When they reached the quarry, Ishler pushed Bettig over an 80-foot cliff to his death. According to various sources, Bettig was in a relationship with the younger Geier at some point as well, which probably contributed to the murderers’ decision to kill Bettig.

All of this leads to the question: What happens when your beneficiaries are the ones to kill you?

Enter the Slayer Statue, which wins the prize for the best statute name ever. In New Jersey, under Statute NJSA 3B:7-1.1:

An individual who is responsible for the intentional killing of the decedent forfeits all benefits under this title with respect to the decedents estate, including an intestate share, an elective share, an omitted spouses, domestic partners or childs share, exempt property and a family allowance. If the decedent died intestate, the decedents intestate estate passes as if the killer disclaimed his share.

The New Jersey Supreme Court said the Slayer Rule is “so essential to the observance of morality and justice [that it] has been universally recognized in the laws of civilized communities for centuries and is as old as equity.” Neiman v. Hurff, 11 N.J. 55, 60-62 (1952).

Thus, if you are murdered by your beneficiaries they will not inherit you.

It’s too late for Mr. Bettig, but be sure that when you tell your beneficiaries they will be inheriting your assets, they know that it’s not worth it to make your wishes come true earlier than intended!

If you have any estate planning questions, please feel free to call us at (908) 236-6457, or email me at alec@bmcestateplanning.com.

N.Y. Estate Tax

N.Y.-Estate-Tax

The estate tax rate in the state of New York is between 5 and 16 percent depending on the value of your estate. If you are the administrator of an estate in New York, you should be aware that you must file your estate tax within nine months of the decedent’s death. You must file a New York State estate tax if the amount of the federal gross estate, combined with any includible gifts, exceeds the basic exclusion amount applicable at the date of death.

Currently, the exemption limit in New York for the estate tax is $3,125,000. Recent legislature signed by Gov. Cuomo on April 1, 2014, however, will increase the exemption amount each year until it reaches the federal limit.

The exemption schedule is as follows:

  • Deaths as of April 1, 2014 and before April 1, 2015 = $2,062,500.
  • Deaths as of April 1, 2015 and before April 1, 2016 = $3,125,000.
  • Deaths as of April 1, 2016 and before April 1, 2017 = $4,187,500.
  • Deaths as of April 1, 2017 and before January 1, 2019 = $5,250,000.

By January 1, 2019, the state exemption limit is expected to reach the federal limit, which is projected to be $5.9 million.

NY taxes the entire estate!

You read that right. While most states tax the amount over the exemption limit, New York taxes the entire value of the estate. In New York, if the estate is valued at $3.75 million, the entire $3.75 million is taxed — not the $650,000, which is the amount over the exemption limit. Even the federal government only taxes the amount over the exemption limit.

Marital deductions

Any property you bequeath to your spouse is exempt from both federal and state taxes, regardless of the amount. Depending on the total value of your assets, you can gift property to your spouse to reduce the value of your estate to below the exemption limit. However, there are various legal and financial reasons you should never leave all your assets to your spouse.

When it comes to estate planning, the larger the estate, the more complicated the issues. An experienced attorney can help you navigate the legal system. Whether you would like to set up your own estate plan or need help with the NY probate process, a skilled lawyer can help. To discuss your estate planning matter today, contact Alec Borenstein, Esq., at alec@bmcestateplanning.com, or call 908-236-6457.

David Bowie — Estate Planning Genius!

David-Bowie-Estate-Planning-Wills-Trusts-New-Jersey

On January 10, 2016, the world lost a music icon. David Robert Jones, also known as David Bowie, passed away from liver cancer just two days after his newest album, “Blackstar“, was released. Bowie’s legacy will always be remembered through his music, but what most people do not know, is that Bowie was also an estate planning genius.

In the 1970s & 80s, Bowie suffered hard financial times. It was even reported that Bowie was on the verge of Bankruptcy. In 1997, As Bowie was contemplating his financial options, he met with investment banker David Pullman who turned him on to an amazing idea.

Pullman convinced Bowie to sell a stake in his music, but only for a short time. Pullman helped Bowie create “Bowie Bonds,” whereby Bowie sold rights to his music for a 10-year period for $55 million, and Bowie promised a fixed-rate of return of 7.9%. The Bowie Bonds were secured though Bowie’s royalties and copyrights of his own music. Prudential Insurance Company purchased the bonds and was paid in full during the 10-year time frame. In 2007, Bowie retained the rights to all of his own music.

The amazing thing about Bowie’s revolutionary estate planning move related to Bowie’s motives. In a recent interview, Mr. Pullman emphasized the fact that Bowie created these bonds, not for his own benefit, but to ensure that his wife, Iman, and his two children would be set for the rest of their lives.

Bowie’s current estate is thought to be worth more than $200 million (although a recent estimate put it closer to $100 million), with almost half of his estate going to his wife Iman, almost half to his children, and a few specific bequests to friends. It appears Bowie used a Will and not a Revocable Living Trust in his estate plan, but this could change as we learn more about Bowie’s plan. Either way, Bowie used powerful planning strategies to save his family from the verge of financial ruin.

We should all follow Bowie’s lead and protect our own families with a thoughtful estate plan.
If you have any estate planning questions, please feel free to call us at (908) 236-6457, or email me at alec@bmcestateplanning.com.
Thanks for reading!

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