Legal Skirmishes Over Heiress Huguette Clark's $400-Million Estate Comes Down To A Battle of Wills — Two of Them.

Estate and probate lawyers a battle taking place in New York regarding the Estate of Huguette Clark. Huguette Clark, who had significant California property, died at the age of 104 in May 2011 in the New York City hospital where she had lived for at least 20 years. An MSNBC investigation also plays a role in this case. Her estate is estimated to be worth over $400 million.

In her 2005 will, she left large sums to a few people — including about $34 million to her nurse caretaker of 20 years — and asked that her Santa Barbara mansion be turned into an art museum. On Monday, however, a second will surfaced in court documents. It was signed just six weeks before the will that was previously made public and didn't mention anything about a museum. Instead, it left everything to 21 distant relatives who are now accusing Clark's longtime attorney and accountant of "plundering" her holdings.

That's a marked contrast from the later will, which specified that no money go to her family members, with whom she had "minimum contacts" over the years. What caused such a dramatic change of heart in such a short period is unknown. But in a filing with New York Surrogate's Court, the relatives' attorney, John R. Morken, wrote of "alleged deceit, undue influence and exploitation of a very elderly and extraordinarily wealthy woman at the hands of two professionals who, with the help of certain others, took control of her life, isolated her from family, and ultimately stripped her of her free will, as well as millions of dollars."

A group of family members made the same charges last year but failed to convince a New York judge that attorney Wallace Bock and accountant Irving H. Kamsler were helping themselves to Clark's fortune. However, after a series of reports on msnbc.com, New York prosecutors opened an investigation that is ongoing, according to Morken. Attorneys for both men have said they did nothing wrong and always acted in Clark's best interest.

But relatives, who said Bock kept them from visiting their great-aunt, were skeptical — and not just for financial reasons, according to Morken. "Even of greater concern to them is the family's heritage," he wrote. Huguette Clark's father was copper baron and former Montana Sen. William Andrews Clark. She grew up in privilege and at her death still owned apartments in one of Fifth Avenue's most elegant buildings, a large home in Connecticut, artworks that included a painting from Monet's "Water Lilies" series, a collection of French dolls, and a 23-acre bluff-top estate in Santa Barbara called Bellosguardo —Italian for "beautiful view."

By all accounts, it had been at least 50 years since she last set foot in Bellosguardo, a home with formal gardens that was maintained by a live-in manager. In her more recent will, she directed that a foundation be set up to run the new museum, with Bock and Kamsler operating it. That arrangement, the relatives said Monday, would allow the pair unfettered access to much of Clark's fortune. Even as Clark's executors, the men would make more than $20 million in commissions, according to Morken. Clark outlived her six brothers and sisters. She was divorced in 1930 and had no children.

Settlement of the conflict over her estate is expected to take several years. Although most estates are not worth this amount, once family disputes occur and litigation begins, it can take anywhere from months to years to settle all the claims. The trust will have its own attorney, the beneficiaries will have their attorneys, and the relatives presenting the second will and challenging the first will also have a set of attorneys. And what happens if the beneficiaries do not agree? More delays. Probate litigation is a very sensitive type of litigation and the emotions tend to run high.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person) regarding your own situation, you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

ABLE Bill Creating Tax-free Savings Accounts to Supplement Special Needs Trusts Is Expected To Pass This Year

Parents raising children with disabilities, including autism and Down's Syndrome, could soon save for their futures with tax-free “529″ savings accounts without jeopardizing their eligibility for other benefits.

The new accounts would be authorized under the Achieving a Better Life Experience (ABLE) Act of 2011 (H.R. 3423), which was introduced on November 15, 2011 in Congress with the support of Autism Speaks, The Arc, the National Down Syndrome Society and a host of other disability rights groups. The bill appears to have bipartisan support.

The ABLE Act, sponsored with bi-partisan support in the House by Congressman Ander Crenshaw (R-FL) and Congresswoman Cathy McMorris Rodgers (R-WA), and in the Senate by Senators Robert Casey, Jr. (D-PA) and Richard Burr (R-NC), would amend Section 529 of the Internal Revenue Service Code to allow individuals with disabilities and their families to deposit earnings to tax-exempt savings accounts.

The funds could be used to pay for qualified expenses, including education, housing and transportation, and would supplement, not replace, benefits provided through private insurance, employment or public programs.

Qualified disability expenses would include: school tuition and related educational materials; expenses for securing and maintaining a primary residence; transportation; employment supports; health prevention and wellness costs; assistive technology and personal support; and various miscellaneous expenses associated with independent living.

Currently, there are few options for families to save money for those with disabilities who often cannot have more than $2,000 to their name without forfeiting many government benefits. One existing option that our office specializes in is the "Special Needs Trust," which allows families to set money aside for the benefit of a person with a disability under the care of a trustee. An ABLE account would operate more like a bank account and would be less involved than a Special Needs Trust.

Special Needs Trusts will remain important tools in planning for the disabled especially since ABLE will have significant limitations once those accounts reach $100,000 (for example, disqualifying a disabled person from receiving SSI).

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to tax and estate law issues, Hank Moravec has over 20 years' experience as one of the best Los Angeles estate and trust tax attorneys and Los Angeles Special Needs Trust attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office. We can also arrange to have consultations at your home or office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office. Call (626) 793-3210.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878. Call

IRS Offers Filing & Penalty Relief for 2010 Estates; Basis Form Now Due Jan. 17, 20; Extension to March Available For Estate Tax Returns

Since we help our clients prepare and file estate tax returns, it is important to note that the IRS announced on September 13, 2011 that the due dates for filing Forms 8939 and 706, as well as paying the estate tax for those estates that do not elect out of the estate tax, will be extended.

The IRS announced that large estates of people who died in 2010 will have until early next year to file various required returns and pay any estate taxes due. In addition, the IRS is providing penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns.

This relief is designed to give large estates, normally those over $5 million, more time to comply with key tax law changes enacted late last year.

• The IRS is providing the following relief:
• 1) Large estates, opting out of the estate tax, now will have until Tuesday, Jan. 17, 2012, to file Form 8939. This special carryover basis form, required of estates making this choice, was previously due on Nov. 15, 2011. Because this is a change in the specified due date rather than an extension, no statement or form needs to be filed with the IRS to have this new due date apply.
• 2) 2010 estates that request an extension on Form 4768 will have until March 2012 to file their estate tax returns and pay any estate tax due. Normally, a six-month filing extension is automatically granted to estates filing this form, but extensions of time to pay are granted only for good cause. As a result, most 2010 estates that timely file Form 4768 will have until Monday, March 19, 2012 to file Forms 706 or 706-NA. For estates of those dying late in 2010 (after Dec. 16, 2010 and before Jan. 1, 2011), the due date is 15 months after the date of death. No late-filing or late-payment penalties will be due, though interest still will be charged on any estate tax paid after the original due date.
• 3) Special penalty relief is provided to many individuals, estates and trusts that already filed a 2010 federal income tax return, or obtained an extension and plan to file by the Oct. 17, 2011 extended due date. Late-payment and negligence penalty relief applies to persons inheriting property from a decedent dying in 2010, who then sells the property in 2010 but improperly reports gain or loss because they did not know whether the estate made the carryover basis election. Details are in Notice 2011-76 posted on the IRS website.

• Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.
  
  With respect to tax and estate law issues, Hank Moravec has over 20 years' experience as one of the best Los Angeles estate and trust tax attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him to request a consultation.
  
  The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office. We can also arrange to have consultations at your home or office.
  
  The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office. Call (626) 793-3210.
  
  The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878. Call (818) 769-4221.

IRS May Seek Gift Tax Returns from Donors to GOP Leaning 501(c)(4)s

The IRS confirmed May 13 that it is examining donations to one or more Section 501(c)(4) organizations to determine whether the donors should have paid the federal gift tax on the donations.

The development has shocked some tax lawyers, who have been advising clients for decades that donations to 501(c)(4) "social welfare" groups—including those that get involved in political and issue-advocacy campaigns—routinely are not subject to the gift tax.

Stay tuned. If the IRS takes the position that the donations are taxable gifts, there will surely be a battle that will spill into the Federal courts. Donations to 501(c)(4)s are not characterized by the "disinterested generosity" that is required of a gift for transfer tax (estate and gift tax) purposes.

Internal Revenue Code Section 501(c)(4) exempts from tax "civic leagues...operated exclusively for the promotion of social welfare...."

It will probably be high profile Section 501(c)(4) groups that will be targeted for audit. High profile Section 501(c)(4)s include Crossroads GPS, an organization that opposes President Obama's agenda and became a force as a fundraising juggernaut in the 2010 elections. Others include Priorities USA; Americans For Tax Reform; and Americans For Prosperity, a group fronting special interests started by oil billionaire David Koch. People For The American Way is a prominent left wing 501(c)(4).

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to tax and estate law issues, Hank Moravec has over 20 years' experience as one of the best Los Angeles estate and trust tax attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

FAQ: How Do I Reduce The Potential For Probate Litigation While I Am Planning My Estate And Trust?

We have seen an increase in probate litigation in our practice. Perhaps this is due to the economy and shrinking real estate values in California. Even when litigation is necessary, and we have had to aggressively defend our clients or trustees -- we know that litigation can be costly, time-consuming and destructive to family relationships.

Accordingly, I wrote a post a couple of years ago addressing the question of how to reduce the risk of litigation in the estate and trust context during the planning stage. Although these methods are not guaranteed ways of avoiding litigation and every estate plan is different -- the ideas here are useful starting points to consider in the estate planning stage.

Here are six methods to reduce the potential for litigation:

1. Advise Inheritors of Inheritance Plans. Especially when children of the decedent are treated unequally, will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. One could enter into a contract (for consideration or something of value) with such a person that he or she will not object to the validity of the document. Be careful however, that advising a child that he or she will not receive an equal share may have adverse effects even if it prevents litigation after death. Thus, informing inheritors of the plans could cause family problems in the present. This will vary from family to family.

2. Use a Revocable Trust in Lieu of a Will. Since a revocable trust can be funded and operate during lifetime, it is difficult to contest on the grounds that the individual was unaware of its terms. When the Settlor of the trust dies, there is no need to begin a court proceeding to "prove" the validity of the trust, such as there is for a will.

3. Use an Irrevocable Trust in Lieu of a Will or Revocable Trust. An irrevocable trust is even less likely, in my experience, to be challenged than a revocable trust. Irrevocable trusts can be drafted in such a way so that transfers of property to them are not completed gifts. However, there are other risks and issues with irrevocable trusts that must be considered.

Alternatively, making a transfer that is a completed gift, paying gift tax, and filing a gift tax return disclosing details may be additional evidence that the transfer was truly intended. Again, I believe that a lifetime trust that is significantly funded is less likely to be challenged.

4. Use a Disinheritance Or No Contest Clause. If the testator lives in a state such as California that will enforce it under certain circumstances, a disinheritance clause (also called an in terrorem clause for the Latin word "in fear") could be used. The goal here is to prevent beneficiaries from causing a legal ruckus after the testator is gone. A lot of trust and estate litigation is not about the validity of the document, it is about its interpretation or about actions taken by the fiduciary. In order to reduce this type of litigation, a disinheritance clause can cause a forfeiture of a beneficiary's interest if such a challenge is made. The entire estate plan must be consistent with this clause.

With the advent of passage of Senate Bill 1264 which enacts Probate Code Sections 21310-21315 effective January 1, 2010, California's "no contest" law has been significantly weakened. This weakening affects wills and trusts that became irrevocable after January 1, 2001 and later. "No contest" clauses traditionally penalize parties who attempt to attack a will or a trust. Now, it will be significantly easier to attack a will or a trust in California.

To review Senate Bill 1264, go to: http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1251-1300/sb_1264_bill_20080707_enrolled.pdf

5. Use Mediation or Arbitration Provisions. Arbitration or mediation cannot be used with respect to the challenge of a document's validity unless the parties agree to it. Using a disinheritance clause to cause forfeiture if the parties will not participate can be used. This could stop claims that are filed only to harass other beneficiaries or to delay distributions to others. Another approach would be having the parties enter into a contract agreeing to arbitration before the transfer.

6. Use a Condition Precedent to a Bequest as an Alternative Method of Causing Participation in Mediation or Arbitration. Since a person cannot be forced to participate in arbitration or mediation unless the law provides for enforcement, consideration must be given to how to get parties to use these methods. One can use the carrot instead of the stick. Parties can be given a benefit if they consent to use arbitration or mediation instead of resorting to court.

When creating estate plans or trust documents it is important to consider the potential for litigation and whether it should be addressed prior to the death or after the death of the people creating it. While much can be done prior to death to resolve potential disputes and keep communications open, often issues only arise after the death of the trustees. During the estate planning stage, this is the time for you to consider what can be done to reduce the likelihood of estate and trust litigation.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

Probate Litigation: Family Law And Probate Law Collide Where Widow Must Pay Support to Her Husband’s Previous Wife

In estate planning and probate, one sees the intersection of family law on a frequent basis. Late last year, the California Court of Appeal (Div. Three) held that a San Francisco-area widow must continue making support payments to her deceased husband’s previous wife. This case is now pending before the California Supreme Court. Kircher v. Kircher, 10 S.O.S. 6238.

This case shows the importance of consulting with an estate planning attorney at the time a marital or dissolution agreement is made. It is apparent that no one representing the husband or the new wife considered what would happen if the husband passed away. Perhaps the husband would have purchased separate insurance to provide for this continuing obligation or made some other changes to his trust. If the agreement or judgment is already entered into, it is still important to consult an estate planning attorney to provide for obligations under prior marital settlement agreements.

Div. Three said that the form of title in real property that passed to the widow (Wife 2) upon her husband’s death—joint tenancy—did not shield it from consideration when determining the extent of her personal liability for his obligation to pay Wife 1 support till she died. That ruling followed the panel’s conclusion, in an unpublished portion of its opinion, that the man’s written agreement to support Wife 1 until she died was sufficient to waive state law providing that such an obligation would normally terminate upon his death.

Wife 1 Bonnie Kircher, the former wife of San Francisco hotel and apartment house operator Vincent Kircher, sued Wife 2 Adelaide Kircher, his widow, when the latter stopped making monthly support payments in 2008, three years after her husband’s death.

Vincent and Wife 1 separated in 1970 following almost 10 years of marriage and entered into a settlement agreement in which he agreed to pay monthly support until either of the two died or she remarried. The two modified the agreement in 1987, agreeing to increase support and for payment of Wife 1's health insurance. The modified agreement provided that the obligation continued until Wife 1 died, remarried, or lived with another person “in a marital-like relationship” for 30 days, but omitted any language cutting off the obligation at Vincent Kircher’s death.

In 1998, Vincent Kircher married Wife 2 Adelaide Kircher and revised his will to leave his property to her upon his death. He also transferred title to three real properties to himself and his new wife as joint tenants, and continued to meet his support obligations while living. These properties had been separate properties.

Interestingly, if he had not transmuted them to community property, all of the value of the properties could have been used to pay Wife 1 instead of just his community share. Probate Code §13551 limits the liability of a surviving spouse for the deceased spouse’s debts to the fair market value of the deceased spouse’s separate property or his share of community property.

Upon his death in 2005, Wife 1 filed a creditor’s claim against his estate asserting a claim for past and future obligations under the modified agreement. Wife 1 filed a complaint against Wife 2 Adelaide Kircher three years later when Wife 2 terminated the ongoing monthly support payments while continuing to pay for the health insurance. Wife 1 claimed that Wife 2 was personally liable for husband's debts under Probate Code §13550-13552 and seeking damages and attorney fees for Wife 2’s breach of the modified marital settlement agreement’s terms.

Wife 1 sought a declaration that Wife 2 was obligated to continue to comply with the terms of the settlement agreement. Wife 2 argued that the support obligations could not be enforced against the real properties she held in joint tenancy with her late husband because a surviving joint tenant takes the property free of creditors’ claims.

In response, Wife 1 asserted that she did not seek a lien on the properties, only to impose liability for continuing payments up to the amount of the properties’ value, and Marin Superior Court Judge Verna A. Adams ruled in Wife 1's favor. The trial court judge Adams determined that calculation of Wife 2’s personal liability for her husband’s debts encompassed property held in joint tenancy, and that the support obligation to Wife 1 survived his passing, and the Court of Appeal agreed in an opinion by Justice Martin J. Jenkins.

Jenkins pointed out that the Probate Code provides that a surviving spouse is personally liable for the debts of a deceased spouse, and that liability is chargeable against property described in Sec. 13551. He said that the properties Vincent and Wife 2 held in joint tenancy fell within that section because the Legislature clearly intended for it to reach all property, including joint tenancies, so long as it could be characterized as community property or the decedent’s separate property.

Noting California’s presumption that property acquired by a married couple is community property, and explaining that characterization of property is not dependent on the form of title, Jenkins wrote: “At the time of decedent’s death, the property held in joint tenancy by Vincent and was presumed to be community property subject to rebuttal by Vincent that it remained his separate property. Either way, the property at issue falls within the ambit of section 13551."

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

Cyberspace When You're Dead - Interesting New York Times Article Addresses Our Digital Afterlives

There is an interesting article in the New York Times entitled "Cyberspace When You're Dead" that addresses the fact that estate law has only begun to consider the topic of what happens to our digital afterlives.

Considering that only about a third of Americans even have a will, how many people write down all the passwords and screen names for digital photograph servers like Flickr, email, social networks and leave them in a place where their family or heirs could find them? Facebook now has an option that allows a profile to be switched to "Memorial" mode when an individual dies.

For some family-owned businesses that rely on the Internet for sales and marketing, the digital rights and passwords may be very important for running a business. For many of our older clients, this has not been much of an issue but this is something for each person to consider.

Years ago, you could find a person's address book and contact their friends and family to tell them of their passing. Now much of that information is kept in Outlook Contacts or on an iPhone. Another thought is that some people are creating online memorials with photographs or video and allow friends and family to share memories. This is obviously a personal preference but is something that can be addressed at the planning stage.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney. For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.