King & Wood, P.A.

Record Charitable Donation for North Dakota State University

 

“An alumnus has given North Dakota State University a record donation of $13.5 million earmarked for scholarships in the fields of science, technology, engineering and mathematics.”

The Bismarck Tribune reported in “NDSU receives record $13.5 million gift for STEM scholarships” that the gift was given by Harry D. McGovern, a 1966 civil engineering graduate who grew up in Erie and is a bridge and highway contractor. His donation was matched by $1.2 million from the state’s challenge grant program, for a total of $14.7 million.

NDSU’s President Dean Bresciani was grateful, remarking that the donation will improve many lives and benefit North Dakota.

“Harry’s commitment to NDSU and enthusiasm about what is happening here is demonstrated in this generous gift,” Bresciani said in a statement. “Just as his experience as an NDSU student was transformative, his gift will change the lives of students who receive his scholarship.”

McGovern’s gift combines current donations with estate planning, and once it’s fully implemented, the fund will give 50 students full-tuition scholarships each year for the 2017-18 academic year.

McGovern said when Bresciani and he began discussing ways to make a difference for students, the president impressed him with the need to have a scholarship program to attract young people to NDSU. “I wanted to make an impact on as many students as possible, particularly for students pursuing STEM degrees, and he said full-tuition scholarships could accomplish that,” McGovern said.

The scholarships are to be awarded based on academic achievement and the pursuit of degrees in STEM fields. The NDSU Foundation and Alumni Association said McGovern is not only making an impact now, but leaving a permanent legacy.

McGovern previously donated $1 million to the foundation for the alumni center that opened in 2012 and is named for him. McGovern at the time credited the NDSU for teaching him the skills that allowed him to give back to his school.

Reference: Bismarck Tribune (November 3, 2016) “NDSU receives record $13.5 million gift for STEM scholarships”

Small Business Owners Need a Retirement Plan in Place

“A recent survey by TD Bank shows that 47% of small business owners do not have a retirement plan in place.”

The number of entrepreneurs who don’t have a retirement plan in place is astonishing. This may be due to a lack of planning, says the USA Today in its article “Business owners need extra planning for retirement.”

Compared to employees, small business owners have a different set of challenges. Plus, they need to address the question of what to do with their businesses.

It would be great if it's worth enough to fund their retirement, but there are two main steps that any small business owner needs to think about when planning for retirement.

First, he or she needs to create a retirement plan. It’s critical to get into the habit of saving for retirement. There are many types of retirement plans that a small business owner can use. For instance, a Keogh Retirement Plan lets the self-employed and sole proprietors contribute large sums every year to a tax-free account. They can deduct contributions from gross income, defer the taxes and the earned interest.

For anyone doing some late retirement planning, a solo 401(k) plan is a good choice. It offers high contribution limits—right now a solo 401(k) lets you to contribute up to $53,000 a year into your retirement account ($59,000 if you are 50 or older). There are different Individual Retirement Accounts (IRAs) that entrepreneurs may also want to consider. Talk with a retirement planning professional about what is a good fit for you.

The second challenge for the entrepreneur is the business itself. It can be sold, given to children, or closed. Regardless of the decision, business owners should work to make their companies as profitable as possible as they approach retirement, since it will be worth more if it's going to be sold. Get your finances in order, get any dead weight off of the books, and liquidate old assets. Another important action is to have an independent business valuation from a business broker who can give you an unbiased appraisal and help you sell it.

Finally, speak to an experienced estate-planning attorney to help you tie all the loose ends together.

Reference: USA Today (October 24, 2016) “Business owners need extra planning for retirement”

The Late Prince’s Estate Expected to Release Music from his “Vault”

 

“It’s uncertain how much music is contained within the vault, but those close to Prince believe the number of unreleased tracks to be in the thousands.”

The value of the late rock star’s vault, which allegedly is teaming with thousands of unreleased songs, has finally been approximated. This is according to a recent story in Twin Cities Business titled “Prince Estate Looks to Sell Vault of Unreleased Music for $35M.” According to Billboard, the Prince estate advisors Charles Koppelman and L. Londell McMilan are contemplating the sale of the vault for as much as $35 million.

A source with knowledge of the situation said the “Big Three” record labels—Universal Music Group, Sony Music Entertainment and Warner Music Group—are all in talks to acquire the musical contents of Prince’s music vault. The magazine’s July feature, “A Princely Sum,” spoke of the difficulty involved with properly appraising so many hidden recordings.

There’s some guesswork involved in deciding the value of the estate, as it’s hard to know how much the estate can profit from his future royalty streams, the unreleased music, and Prince’s name and likeness.

Although an issue remains, what still isn’t clear is the extent of the vault’s contents.

According to Susan Rogers, a long-time recording engineer for Prince, when she left in 1989, there were already more than 2,000 recorded songs in the vault. In addition, Prince’s former tour manager Alan Leeds commented that Prince also recorded every concert he ever played. This means there are potentially hundreds, if not thousands, of live show recordings that could be produced and put on the market.

Billboard’s source said there is at least one Prince recording to be released in the near future. This is part of a 2014 deal Prince made with Warner Bros. The record company is purported to be releasing a deluxe edition of Purple Rain. That record release, as well as a new greatest hits collection, is anticipated to hit stores in the coming months.

Reference:  Twin Cities Business (October 13, 2016) “Prince Estate Looks to Sell Vault of Unreleased Music for $35M”

Saints Owner Will Call Another Play in Fight Over Trusts

 

“Years ago, as part of his estate planning, Benson moved 60 percent of the Saints into his heirs' trusts, all of which is non-voting stock that gave the trusts and his heirs no power over the team.”

The National Football League said “no” to New Orleans Saints owner Tom Benson's original proposal to remove team ownership from his estranged family's trust funds. This means he’ll have to try again with new financial terms.

The NFL won't let Benson personally guarantee promissory notes he offered in exchange for Saints shares held in trust funds created for his daughter and grandchildren. This was recently reported in The Times-Picayune article, “NFL rejects Tom Benson's ownership deal with estranged family's trusts.”

The 89-year-old Benson disowned his daughter and two grandchildren after a bitter fallout a few years ago. According to Benson, he intends to leave full ownership of the Saints to his wife Gayle and has been trying to revoke the trust funds' shares.

Benson sued in federal court after the trustees guarding the funds blocked his attempt to remove assets in exchange for 30-year promissory notes, including about $375 million for the team’s shares. The offer also includes an attempt to remove shares in the Pelicans, the NBA franchise he also owns. The trust funds allow for assets to be removed, but only in exchange for other assets of equal value.

Court filings show the NFL's finance rules won't allow Benson to use his personal wealth, which includes his controlling, voting stock in the Saints, to back the proposed promissory notes. With that arrangement, the trusts could try to seize Benson's personal assets—including the controlling stock—if he were to default on the notes.

The trustees, attorneys Robert Rosenthal and Mary Rowe, and Benson announced this summer that a tentative settlement was reached. The promissory notes in the exchange were contingent on NFL approval. In August, a U.S. District Judge scheduled a trial after settlement talks didn’t result in a final agreement.

Benson recently filed an amended lawsuit with a new offer of promissory notes based on a January 2015 value of the team. Rowe's attorneys responded, claiming that because the NFL rejected Benson's first offer, any new deal must be based on the current value of the teams, which would be higher.

Rowe has asked a judge for a hearing on the issue. Benson's attorney says his client has a right to change the notes offered in January 2015. A trial is scheduled for February 6.

Reference: The Times-Picayune (September 30, 2016) “NFL rejects Tom Benson's ownership deal with estranged family's trusts”

Life Insurance for a Professional Racecar Driver? You Bet!

 

“There are things that happen in the car that you can’t plan for and that are out of your control, like a tire blowing on you or an engine blowing up or a crash that happens in front of you or someone hits you.”

Since she was in her early 20s, Danica Patrick has driven a racecar—speeding 200 miles per hour around an oval track bordered by concrete walls. It’s dangerous.

Patrick said, “So no matter what your skillset is, those things just happen. Absolutely it is a risk.”

Forbes’ article, “Danica Patrick: You May Not Drive a Racecar, But You Still Need Life Insurance,” says that it’s a risk that she’s chosen to manage in part with life insurance. She’s owned life insurance since she started racing, and she now advocates on behalf of Life Happens, a nonprofit founded to help consumers make smart insurance decisions.

It’s a rite of passage to buy life insurance before your first race. However, Patrick has more personal reasons. Her parents were in favor, as each lost their fathers during childhood and witnessed the financial stress placed on their families. They managed the risk with life insurance and saving six months’ worth of expenses for an emergency.

As far as Patrick is concerned “she didn’t want to leave people with bills they can’t pay, and not only dealing with the sadness of a loss, but trying to figure out how you’re going to manage the rest of…life.”

Life insurance allows us to deal with personal loss without compounding it with financial stress. The suggested policy for most families is a term life insurance policy with a death benefit that is approximately 15 times their annual income.

With term life insurance, many life insurance needs will expire, assuming that a family is on track to reach financial independence around retirement age. The specific term of your policy should last at least through the children’s college years—and at most through the age at which you can reasonably expect to be financially independent.

If you want to create an estate, fund charitable bequests, replace an estate lost to taxes or build cash value, you will need some type of permanent life insurance—whole life, universal life, or variable life. Note that permanent life insurance creates additional financial complexity and can be expensive.

If you have a spouse or minor children, you have loved ones relying on you financially. Term life insurance can be pretty inexpensive. And even if you’re not a racecar driver, you face one of life’s most common risks—riding in or driving a motor vehicle.

As Patrick remarked, “It’s probably pretty uncommon to come across someone that hasn’t been in some kind of a car accident. Now, there are surely varying degrees, but you’re not wearing a six-point harness with a helmet on and an ambulance sitting nearby. So, it’s a risk no matter what you do if you’re driving anything.”

Reference: Forbes (Sept. 23, 2016) “Danica Patrick: You May Not Drive a Racecar, But You Still Need Life Insurance”

How Not to Do It: Spending the Inheritance on Royal Souvenirs and Strippers

 

“What would you do with $100 million?”

For the Scripps family, who were heirs to a media fortune, they simply spent their millions. According to an article on CNBC.com, “The Greed Report: Not a billionaire? You still need an estate plan,” they took luxury cruises around the world and family outings to strip clubs.

Melissa Scripps bought Queen Elizabeth II's coronation chair and Queen Victoria's nightgown. Like his mom, son Michael liked to buy war memorabilia and guns. Oh, and he married a stripper.

When the well ran dry, the family started to fight. Mother and son turned on each other, one family member went to prison and tarnished a name once associated with entrepreneurship and philanthropy. This tragedy provides some lessons for the rest of us.

Everybody needs estate planning in some form or another—it doesn't need to be complex in many situations but everyone needs a plan, even those with social problems, financial problems and marital problems.

A good estate plan will consider all of those problems and keep your assets in the family and away from the government and taxes.

Estate planning doesn’t have to be complex or expensive. Estate planning is sometimes 95% social work and 5% legal, some attorneys say. The legal part they know—it's the social part that takes time. The Scripps family probably should have spent more time on the social part as well: Melissa Scripps' attorney said that at the time she inherited the family fortune, she had never held a real job and only had a high school education.

Maybe some more estate planning might have prevented the Scripps’ century-old legacy from turning into a gigantic family feud.

Reference:  CNBC.com (Sept. 22, 2016) “The Greed Report: Not a billionaire? You still need an estate plan”

Celebrity Estate Panning Leaves a Lot to Be Desired

“Celebrities, they're just like us. At least, they are when it comes to estate-planning mistakes.”

One would think that big stars like Prince would have a team of high-powered advisors, compared to the average Joe and Jane. But that isn’t so, says CNBC in the recent article “Don't make these celebrities' estate-planning blunders.”

Celebrities make the same mistakes. Here are a few:

Mistake #1: No Will. Nearly two-thirds of Americans don't have a will. This has included the likes of Abraham Lincoln, Prince, Sonny Bono, Jimi Hendrix and Pablo Picasso. Dying without a will can mean numerous potentially disastrous consequences, like your assets not being distributed to those you intended or family in-fighting. The state intestacy laws apply and they are rigid regarding who gets what share of the estate. And without specific instructions from the deceased, an estate may be fought over in court by family members who think they deserve their fair share.

Mistake #2: No Current Will. Signing a will is just the beginning: you need to regularly update your estate planning documents and beneficiaries when your financial and personal situation changes. Look at singer Barry White. He was separated but not divorced from his second wife at the time of his death. As a result, his wife got everything. White's live-in girlfriend of several years got zero.

Mistake #3: No Tax Plan. Even if you’re not ultra-rich and your wealth is well below the federal estate tax threshold of $5.45 million per person this year, there may be state estate taxes. Poor planning could force your heirs to sell valuable or sentimental items because there are insufficient liquid assets to pay the tax. Joe Robbie's family sold its stake in the Miami Dolphins and Joe Robbie Stadium to pay estate taxes.

Mistake #4: No Reference to Personal Property. Comedian Robin Williams's family has battled over his film memorabilia. And Martin Luther King Jr.'s kids fought over his Bible and Nobel medal. People forget about personal property in their estate planning, which can trigger lots of fights over who gets family heirlooms, collectibles and Dad’s Barry Manilow record collection. Be specific with descriptions.

Reference: CNBC (Sept. 17, 2016) “Don't make these celebrities' estate-planning blunders”

Alzheimer’s Patient Spoon-Fed Because Directive Wasn’t Specific

 

"She doesn't recognize me. She doesn't know who I am.”

In 40 years, Bill Harris built up a lifetime of memories with his wife, Nora, but since she was diagnosed with early onset of Alzheimer’s seven years ago, things have changed.

“She doesn't really make words sometimes,” said Harris in an article on KGW.com entitled “Man says state ignoring wife's wishes in advance directive.”

For Harris, this tough situation got even more difficult with the decision of a southern Oregon judge this summer. The judge, in effect, “condemned her to ride out Alzheimer’s to the bitter end,” said Harris. He says it’s exactly what she didn’t want.

When Nora was told of her diagnosis, she completed an advance directive to be certain that her illness wouldn’t be prolonged. She believed when it wasn’t mechanically possible to eat by herself then she wanted to let nature take its course. However, now she’s stopped eating by herself and is being spoon-fed at a nursing home because, according to the judge’s ruling, her advance directive wasn't specific enough.

Still, the advance directive forms usually only cover getting fed through a tube, creating a conflict between two laws. An advance directive allows you to elect what happens if you become incapacitated, but the state law is there to make sure that care facilities do their job.

Advanced directives should be as specific as possible.

“What they did was basically sentence her to have to experience the full gamut of Alzheimer's,” said Harris. He said he also wishes the judge would have ruled in the spirit of the law and not the letter.

The advance directive law has limitations, but the legislature could amend the law so someone can make decisions on a loved one's behalf. However, now the best option is to be as specific as possible when filling out an advance directive.

Reference: KGW.com (Sept. 19, 2016) “Man says state ignoring wife's wishes in advance directive”

Former Vanity Fair Contributing Editor Makes Headlines with Estate Dispute

 

“Former Vanity Fair contributing editor Michael Wolff and his estranged wife of 35 years are engaged in a $6 million fight with her family.”

The 63-year-old Wolff, who is married, is also the father of a baby with a much younger TV personality. He now is also a defendant in the new Manhattan civil suit with his estranged spouse, attorney Alison Anthoine. Wolff was under the impression that he’d settled a suit with his 93-year-old mother-in-law and his wife’s three siblings in 2011 over family real estate, as reported in The New York Post article, “Ex-Vanity Fair editor tangled in $6M legal battle with in-laws.”

The settlement allows matriarch Edith Anthoine to live in the one-bedroom apartment until she dies, with access for Alison permitted two times a year. The settlement was reached after a judge found there was evidence supporting Edith’s claims that she’d swapped a four-bedroom on Lexington Avenue and 77th Street with Michael and Alison in exchange for her one-bedroom apartment. Edith claims the two later attempted to evict her, which resulted in her suffering a heart attack.

Nina, Robert, Nelson and mother Edith Anthoine are suing Wolff and Alison. They claim the two stole artwork from her home, took a box of antique jewelry and refused to share proceeds from the sale of a $1.85 million Manhattan apartment.

Alison, who lives apart from Wolff, visited her mother’s home in June 2015 to photograph artwork. This escalated to violence with Alison grabbing her sister’s arm and hitting her mother’s hand, according to court papers.

The lawsuit says the two “have stolen millions to support their lavish lifestyles.” The papers petition the court to disbar Alison—in addition to the $6 million in damages.

The family has been fighting over the multimillion dollar estate of Alison’s father, the late Columbia Law School Professor Robert Anthoine. The thrice-married attorney passed away in 2015 at 94. A will contest is still pending in Florida.

“These defendants have been the ultimate recipients of their parents’ bounty, in every way, and they represent an unchecked greed that has swept the society,” the New York suit says.

Wolff said he didn’t know about the lawsuit.

Reference: New York Post (September 12, 2016) “Ex-Vanity Fair editor tangled in $6M legal battle with in-laws”

Retirees Help Us Learn from Mistakes

 

“Plan ahead carefully to ensure you have enough money to do the things you want after you retire.”

As you get nearer to retirement, there is more pressure to plan ahead. Kiplinger’s article, “4 Big Retirement Regrets That You Should Avoid,” says that sometimes failure is the most effective teacher.

Retirees often consider their regrets and the things they'd do differently if they could. The following are a few of the more common mistakes retirees make:

1. Quitting too soon. After all those years of working, it's hard not to dream of retirement. This decision, however, can be more emotional than logical. If you retire too early, you cut down on the time you have to save money, and you also lengthen the time you'll need that money.
2. Depending too much on hope. When you retire, your amount of financial risk needs to change. Don’t keep the same investment strategy and look for big returns. In retirement, it's not as much about how much money you can grow, but rather it's about taking distributions. It’s not a gamble with the future. No, you’re risking money you need to live on right now. If there's a serious downturn, you could lose much of your lifetime saving, which may not be easy to recover.
3. Cashing in too early. Many retirees regret drawing Social Security at age 62 rather than waiting until they reached their full retirement age (or even longer)—when they would have received bigger monthly checks. Without a strategy to address taxes and other expenses, they fail to address the potential issues when it comes to sustaining the lifestyle they want on the money that remains.
4. Spending too much, planning too little and enjoying too late. Retirees frequently overspend in the first few years when they have their good health and freedom. Unfortunately, they don't have a plan to address their income needs, so they withdraw too much too fast to pay for that new life without considering the future.

There are also some who regret not doing enough in retirement, saving every penny but afraid to do anything. Others give no thought to what they'll do with their leisure time, and when health issues arise, they're sorry they didn't enjoy things more when they could.

It’s a balancing act—getting out and enjoying life and making certain you have the money to pay for it. This requires planning ahead, which is far better than living with regrets.

Reference: Kiplinger’s (August 2016) “4 Big Retirement Regrets That You Should Avoid”