Indiana Estate Planning & Elder Law

When Wills are Not Finalized, Final Wishes Do Not Always Get Carried Out

According to a homeless man in New York City, the executor of his long-standing friend and host is refusing to give him his rightful inheritance of $100,000. The three year battle is not yet over.

Raphael Lebron lived with his friend Winfield Huppuch, a publishing executive, for twelve years. When Huppuch died, Lebron was locked out of the apartment. Huppuch’s brother, the executor of the estate, refused to let Lebron in, even to collect his belongings.

Lebron unsuccessfully sued to be allowed back in the apartment and became homeless. Now, a new dispute over the estate between Lebron and the executor has made its way to court.

Huppuch’s will left Lebron an inheritance of $100,000, money which Lebron says he needs to find a new home. However, in the three years since Huppuch passed away, the executor has refused to give the money to Lebron.

The executor’s attorney claims that Huppuch had second thoughts about his will and shortly before his death, went to the attorney and asked for a new will to be drafted. To provide guidance, Huppuch marked up his then current will with the changes that he wanted to make.

One of the changes was removing the bequest to Lebron. But before the new will could be drafted and executed, Huppuch passed away.

DNAinfo reported this story in “Homeless Man Says He's Been Waiting Three Years to Get $100,000 Inheritance.”

This is one of those cases that presents courts with problems. Even though it might be clear that Huppuch intended to not leave anything to Lebron, ordinarily the will that was in effect when a person passes away is the ultimate say about who gets what. Consequently, the will legally in play would leave an inheritance for Lebron.

While exceptions can be made, it is not yet clear whether that is appropriate in this case.

Reference: DNAinfo (September 25, 2015) “Homeless Man Says He's Been Waiting Three Years to Get $100,000 Inheritance.”

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Long Lost Sibling Sends Brothers on a Million Dollar Scavenger Hunt

For most families, the idea of being out of touch with a sibling for decades is unusual. Even more unusual would be learning that an estranged sibling had passed away six years ago and no one in the family knew. Stranger still – learning that your brother had left you two bank accounts worth $81,000. One family’s experience holds a lesson for all:  if they are not included in a will or discussed with family members, many accounts go unclaimed. For this family, a scavenger hunt proved worth the effort.

When an 84 year old resident of a New York boarding home passed away in 1994, no one in the family was notified. It had been 27 years since any family members had heard from Louis Passerini, an eccentric who had deliberately isolated himself from his family.

Passerini left behind no contact information for anyone to get in touch with his family to even let them know that he had passed away.

Six years later a search firm contacted Passerini's two brothers.

The firm had been hired to find his heirs.

Why?

Passerini had two bank accounts in New York that needed to be distributed.

All his brothers knew was that Passerini was a career military man and a miser. As a result, the brothers thought there might be more bank accounts out there.

Indeed, after a long scavenger hunt, they discovered that their hunch was right on the money.

In fact, there were many bank accounts totaling nearly $1 million.

DNAinfo reported this story in an article titled "Long-Lost Brother's Death Leads Man on $1M Scavenger Hunt."

Not everyone has a long lost sibling with bank accounts all over the country that need to be tracked down.

On the other hand, even the family members with whom we do remain in contact might have accounts they have forgotten or they neglect to mention in an estate plan.

Consequently, when someone passes away it is important that the executor perform due diligence in tracking down any accounts that might have been forgotten.

Reference: DNAinfo (July 20, 2015) "Long-Lost Brother's Death Leads Man on $1M Scavenger Hunt."

Even the Deceased Can Be Victims of Identity Theft

Database breaches and hacking attacks haven't just affected millions of living Americans. The identities of more than 2 million dead people are stolen each year, potentially creating havoc for their heirs.

Every year 800,000 deceased people are targeted for identity theft and 1.6 million credit applications are made on the behalf of the deceased, as reported by 13WMAZ in a recent article titled "Protecting the dead against ID theft.

While this does not create any problems for the deceased, it can cause their families grief.

Survivors will not have to pay any money, however, they are often the victims of harassing collections calls. The problem is that the deceased cannot monitor their credit reports and thieves gamble that no one else is.

If no one checks the credit reports, then the credit bureaus do not learn that the person has passed away and they cannot pass that information on to potential creditors.

Fortunately, there is a relatively easy solution to this problem.

The executor of the estate can and should send an original copy of a death certificate to all three major credit bureaus. It is also a good idea to send an original death certificate to the deceased's known creditors and any financial institutions with which he or she had business.

When that is all done, the credit bureaus will mark credit reports appropriately and creditors that thieves try to apply to will be on notice that the application is a scam.

Reference: 13WMAZ (June 25, 2015) "Protecting the dead against ID theft."

Long Lost Life Insurance Policy? Tips for Tracking It Down

If you can’t find the life insurance policy of a deceased relative, here’s your biggest problem: There’s no central, national database of life insurance policies. So if you’re hunting for a policy — and have had no luck finding the policy itself in any drawer or pile of papers — here are ways to find it.

 What good is life insurance if the beneficiaries don’t know about it or aren’t able to find the policy after the policy holder passes? When the beneficiaries do not know the company that wrote the policy, they need to track down the necessary information so they can contact the company and have the policy paid out.

Often, this is a task that falls to the executor of the estate.

Recently, Nerd Wallet published a list of helpful tips to conduct this task in an article titled "How to Find a Lost Life Insurance Policy."

The list includes:

• Check if your state has a central database - 10 states have life insurance policies registered in a central database that can be searched.
• Check the deceased's mail - Look for correspondence from insurance companies.
• Look for payments - Check the deceased's bank account statements and credit card statements for payments to insurance companies.
• Contact Employers - Ask employers if a life insurance policy was provided through work.
• Check with banks - An executor can inquire if the deceased had safety deposit boxes. If so, check the boxes for life insurance policies.
• Check the MIB Group - Since 1995, the MIB group has maintained a registry of people who have applied for life insurance policies. While that does not mean that any policies were purchased, it is a good place to start looking.

Reference: Nerd Wallet (March 31, 2015) "How to Find a Lost Life Insurance Policy."

Andrew Madoff's Estate Could Face Clawback

The court-appointed trustee seeking to recover money for bilked investors began taking aim at Andrew Madoff's money even before his Sept. 3 death from mantle cell lymphoma. Two federal officials also said Madoff would have likely faced tax evasion charges if he had not died.

 Have you ever heard of a clawback?

When investors are defrauded in financial schemes, courts will often appoint trustees. These trustees have the responsibility of going after people who profited from the schemes and returning money to the defrauded investors. In a Ponzi scheme, this often means that those investors who paid in first and who received payouts from the funds that later investors paid into the scheme have to return the money they received. This is what has happened in the case of Bernie Madoff's Ponzi scheme. It's called a clawback.

With Andrew Madoff's death, however, there is a new twist. The trustee has long tried to recover money from Andrew with little success. Now that he has passed away, his estate will have to defend itself against the trustee's attempts. The issue is not one that goes away upon death. Interestingly, The New York Daily News, in a recent article titled "Bernie Madoff's last surviving son was under scrutiny until he died - and questions still surround $16 million estate," reports that federal investigators were considering charging Andrew with tax evasion. This move would have pressured him to repay the money, even though investigators could not prove Andrew was involved in the scheme.

The Madoff situation is obviously unusual. One thing to keep in mind as it develops, however, is that any legal issues you might have at the time you pass away may continue. When that is the case, then your estate still has to deal with them. If you are someone who might be sued because of business dealings, you will want to consider this when choosing an executor or trustee.

Better yet, consult an experienced estate planning attorney to help guide you through these potentially dangerous waters.

Reference: The New York Daily News (September 28, 2014) "Bernie Madoff's last surviving son was under scrutiny until he died - and questions still surround the $16 million estate"

Deceased's Tax Liabilities Fall on Executor or Executrix

The decedent Robert Reitano owned stock in two closely held corporations, each of which owned a fishing boat.  His assets consisted of little else besides the shares of stock.  Marci McNicol, who owned stock in one of the corporations, was appointed the executrix of the decedent’s estate.  In her role as executrix, McNicol was given notice of the decedent’s “significant” federal tax liabilities.  McNicol did not pay these liabilities, but instead distributed the decedent’s stock in the two corporations to herself.

If you are the executor or executrix of an estate, can you be held liable for the deceased's tax bills?

A recent article in JD Supra, titled "T & E Litigation Newsletter - September 2014 #1," tells the story of a federal tax case involving an executrix who was held personally liable for the deceased's tax liabilities. In this case, the deceased had few assets besides stock in two corporations, each of which owned a fishing boat. The executrix, who also had stock in the corporations, was informed that the deceased had significant federal tax liabilities. Instead of using the deceased's stock to pay the tax liabilities, the executrix transferred the stock to herself.

In this case, the executrix was held personally liable for some of the tax liabilities of the deceased under the Federal Priority Statute. Just as it sounds, that statute provides that a deceased person's debts to the federal government take priority over other debts.

The statute also states that if an executor or personal representative knows about the debt to the government and chooses to pay other debts before paying the government debt, that person can be held personally liable.

This can be something of a trap for executors who are not aware of the law. The executor cannot choose which debts to pay and then ignore other debts. Instead, an experienced estate attorney should be consulted about any debts in the estate and how they should be paid.

Reference: JD Supra (September 12, 2014) "T & E Litigation Newsletter - September 2014 #1"