Heir-or #2:  Everything Goes To Your Spouse

Unfortunately, that is not always the case.  State laws do very, but if you die without a will (intestate), the inheritance from your estate will be divided among your spouse and children.

In Arkansas, if you have a spouse but no children, all of your assets pass to your spouse if you have been married for more than three years.  If you have a spouse but no children, only one-half of your assets pass to your spouse if you have been married less than three years.  If you have a spouse and children, your spouse will receive one-third of your assets and the remaining two-thirds will pass to your children.  If you do not have a spouse or children, then your assets will pass to your parents, then brothers and sisters then other relatives such as nieces, nephews, aunts and uncles.

Regarding land, if you have a spouse and children, your spouse will only receive a life estate in one-third of your land.  A life estate means that your husband or wife owns their share of the land only for their lifetime.  They do not have the right to say who gets the property at their death.

This is not what most people want to happen with their assets.  However, in reality, is it exactly what will happen with no planning or poor planning.

Allen J. Margulis collaborated with Forbes.com to present an article about the proper way to transfer title of guns after one’s death.  Leaving guns can present a number of problems.  Is a minor responsible enough to handle and take care of a certain firearm?  How do you transfer title for firearms that are restricted by the National Firearms Act?  Do you have to get approval from your Chief Law Enforcement Officer?

A Gun Trust is a special purpose revocable living trust. A Gun Trust is written
to hold only firearms.

http://www.forbes.com/sites/peterjreilly/2011/09/22/gun-collections-pose-special-estate-problems/

I am big sports fan.  Check that.  I am a HUGE sports fan.  I root for three teams.  1.  The Arkansas Razorbacks.  I am from Arkansas and The University of Arkansas is my Alma Mater.  2.  The St. Louis Cardinals.  I grew up in Northeast Arkansas where everyone has a story of their grandfather sitting on the front porch listening to the Cardinals on KMOX if the night sky was just perfect.  3.  The Oakland Raiders.  I have no ties to the Bay Area or the Raiders other than the first professional football game I can remember watching was the 1984 Super Bowl.  Never mind the fact that my father was a Raiders’ fan and my step-father is also a Raiders’ fan.

I made my first trip to the West Coast in 2001.  It was a family vacation.  I am so much of a Raider fan that I located the office building headquarters of the Oakland Raiders and drove the entire family out there just so I could take a picture of the front of the building.  To make a long (and great) story short, we ended up seeing Al Davis getting into his car in the back parking lot.  I told him we were from Arkansas and he got out and talked with us for about twenty minutes.  It was fascinating.  He and ex-Arkansas Athletic Director Frank Broyles were pretty good friends and had even played golf together a few times.  Mr. Davis ended the conversation by thanking us for coming out and being Raider fans.  He slowly got into his car and the last thing he said to us was, “Don’t ever get old.” 

I am an estate planning attorney.  This blog is my only avenue to discuss my interests.  Since Al Davis passed away with a lot of wealth and a football franchise with an estimated worth of $761 million I decided I would combine the two.  Al Davis assumed the controlling interest of the Oakland Raiders in the early 1970′s.  He is more known for his controversial decisions in the 2000′s managing the Raiders than for changing professional football and creating the giant we all know today.  Al was the first coach to institute a true vertical attack passing game while he was in the AFL.  As commissioner of the AFL, he played the integral role in the AFL-NFL merger.  It was his idea for the best “old” AFL (now called the AFC) team to play the best NFL (NFC) team at the end of each year in a “Super Bowl”.  Mr. Davis sued the NFL for violating anti-trust laws when he wanted to move the Raiders from Oakland to Los Angeles and won.  Al Davis hired the first black coach, Art Shell, in the NFL.  He is widely known in the National Football League for going above and beyond the take care of former Raiders in dire straights coining the phrase, “Once a Raider, always a Raider.”  His other catchphrases are pretty much used on an everyday basis in the sports reporting world, “Just win, baby!”, “Commitment to Excellence” and ”The other team’s quarterback must go down and he must go down hard.”

The NFL bans outside corporations from owning franchises, requiring instead that the teams have a single principal owner.  Al Davis owned 47% of the Raiders when he passed.  Al battled the NFL, other NFL owners and other teams on a weekly basis.  His estate’s toughest battle will be dealing with estate taxes all the while keeping the Oakland Raiders intact and within the family.  The current estate tax exemption is $5 million.  That means anything over and above $5 million gets taxed at 35%.  It also appears that, on the outside looking in, Al Davis’s estate would owe $123 million to Uncle Sam for his ownership.  Carol Davis, wife of Al Davis, and their son, Mark Davis, will now own Al’s interest in the Oakland Raiders.  The real question then lies:  For how long?

It appears that Mr. Davis left some thorough and detailed estate and succession planning which ensure that the team will be owned by Carol Mark.  They can’t be forced to sell by their partners, by the league, or by operation of law.  As it relates to the other partners, the team operates as a limited partnership, with the Davis family being the sole and complete owner of the sole general partner.  Under the law of limited partnerships, that gives the Davis family full control over the business.  Mrs. Davis was married to Al for well over 50 years, and Mark is in his 50s.  They are a close family, and it’s believed that they have no desire to sell the team.  Mark grew up in and around the organization, and he has a passion for the franchise.

The other question of the estate tax still remains, however.  The large tax owed has caused many to speculate that the Davis heirs will
have no choice but to sell the team, like other NFL heirs have done.  But, in reality, Davis could have easily escaped estate taxes, at least for now.  The federal estate tax law includes an unlimited marital exemption.  This means that Davis could have passed as much as he wanted  onto his wife — both before he passed away through gifting, and after through his estate plan — and none of it would be subject to the 35% estate tax.  The fact that Al Davis has only one child removes one of the other potential catalysts for a sale.  If multiple children inherit a team and one or more want to cash out, the others may have no alternative to selling the team in order to raise the money to buy out a sibling or two.  The estate of Carol Davis may have to deal with this tax issue when she passes, but there are other ways that Al Davis may have planned for this as well.  He could have purchased life insurance to handle some of that brunt, he could have gifted some of the ownership away to his son or used other planning methods such as charitable giving.

Raider fans, myself included, can rest assured that the team will probably remain in the Davis family for quite some time due to Al’s planning.  The team is young and playing well.  It is still great to be a Raider fan.  Just keep winning, baby.

I want to thank and credit Andy and Danielle Mayoras and Kay Bell for supplying a lot of the information that I used.

There are a few changes that have recently gone into affect or will be going into affect that can affect an estate plan.  These are all good changes and will make the job of estate planner, whether it is the individual or their attorney, easier.

An owner of any vehicle or boat can now transfer it upon his or her death to a designated beneficiary through the Department of Motor Vehicles (DMV).  What does this mean?  This means the vehicle or boat will avoid probate if you apply for a certificate of title/number and fill out the beneficiary designation form.  It is contractual, so it cannot be revoked by a will.  It can be only be revoked, or changed, by completing a revocation form with the DMV.

Also new to the DMV is the ability for an individual to declare on their driver’s license that he or she has a controlling living will.  This is a great way for medical providers to know that a living will is in place for that individual they are providing care for.  A living will is document that controls end of life decisions of whether or not one would like life-sustaining treatment that only prolongs the process of dying and is not necessary for comfort or to alleviate pain.

There are widespread changes to the durable power of attorney Acts.  A new Act was created and many amendments were made to the existing statutory language.  The Uniform Power of Attorney Act applies to durable powers of attorney (better known as durable financial powers of attorney or durable powers of attorney for business or financial needs) which allows powers of attorney created in Arkansas to be more specific and to fall under uniform application.  I am currently conforming all my existing clients’ durable powers of attorneys to the Uniform Act at no charge.

These changes will allow much more ease and flexibility in estate plans.  Please do not hesitate to contact me if you need help implementing any of these changes or if you would like to speak with me about creating an estate plan for you and your family.