The author John Steinbeck died in 1968. For the last thirty-six years, his estate has been embroiled in litigation over disposition of his literary estate which is valued in the millions of dollars.
This estate litigation could have been avoided with good estate planning.
Shortly before he died, Steinbeck wrote a will which left most of his estate, valued at over $1 million to his third wife. To his sons, Steinbeck left the sum of $50,000 each.
Steinbeck’s Will failed to provide for disposition of his literary estate. The copyright law provided that an artist’s children and spouses shared in the renewal of the copyrights. The will totally ignored Steinbeck’s copyright interest which comprised the largest asset in the estate. Did Steinbeck intend for his children to share in the copyright royalties or did he want his wife to receive all of the royalties? Failure to manifest his intent as to how this asset should be disposed of has left his family bitterly divided.
The lesson to be learned from the Steinbeck litigation is to make sure that your estate plan properly takes into account all of your assets.
The following are examples of common estate planning mistakes:
Not Taking Advantage of Potential Estate Tax Savings. Your Will may contain a trust for the benefit of your surviving spouse which is intended to take advantage of the Unified Credit Exemption. Assets held in joint names pass to your surviving spouse outside your Will. Jointly held assets cannot be used to fund the Credit Shelter Trust. This could cost your heirs over $600,000 in additional estate tax!
Leave Assets Outright When a Trust is Required to Protect Beneficiaries. Assets which name your children as beneficiaries on your death (such as life insurance, IRA’s and joint bank accounts) pass outright to your children. Your will may contain a trust, but the trust is not named as beneficiary of these assets. The intended protection resulting from using a trust is never realized!
Unintentionally Leave the Bulk of the Estate to One Child. It is common to establish joint accounts with one or more of your children so that they can assist you in handling your economic affairs (pay your bills, deposit interest and dividend checks, etc.). The assets remaining in the joint account will automatically pass to the named child when you die. These assets do not pass under your will.
Unintentionally disinherit grandchildren or other beneficiaries. It is common to make bequests to grandchildren who are named in a will. Grandchildren who are born after the will is made will not be entitled to be treated the same as those who are named in the Will.
You owe it to your loved ones to make sure that your estate plan properly provides for them as you intend. Call my office to arrange an appointment to review your estate plan.
Kenneth R. Cohen, Esq.