Late-life planning
will grow more important for advisers as clients increasingly live into their
90s and 100s
Jun
15, 2018 @ 4:47 pm
By Greg
Iacurci
Financial advisers can draw some key
estate-planning lessons from the controversy surrounding Stan Lee, the
95-year-old Marvel Comics legend whose vast fortune is allegedly under attack
from financial predators.
Mr. Lee, who co-created such iconic characters
as Spider Man, the X-Men, Black Panther, the Hulk and the Fantastic Four, has
an estate reportedly valued at more than $50 million. Hearing, vision and
memory impairments mean he's unable to "resist undue influence,"
according to reports.
Business associates, caregivers and family
members are supposedly trying to manipulate Mr. Lee to gain control of his
assets — something that experts believe will happen more often as increasing
numbers of people live into their 90s and 100s but may not have the faculties
to manage their financial affairs.
"The Stan Lees will happen more and
more," said Charlie Douglas, an estate planner based in Atlanta, Ga.
Estate planning often focuses on the
distribution of wealth upon one's death, but not the vital issue of aging and
later-life planning, said Martin Shenkman, the founder of an eponymous law
firm.
Consolidation
With these estate-planning goals in mind, one
"very powerful" thing advisers can facilitate for older clients is
consolidation of their financial accounts, Mr. Shenkman said. Shifting assets
to one or two accounts affords a simpler balance sheet that's easier to
oversee, he explained.
"So many clients I've seen have accounts
in six, eight, 10, 12, 15 different institutions. Who can keep track of that?"
Mr. Shenkman said.
Revocable trusts
Clients who put their assets in a type of
trust called a "revocable trust" have better protection against the
sort of elder financial abuse allegedly being perpetuated by Mr. Lee's
confidantes, said Beth Shapiro Kaufman, president of the law firm Caplin &
Drysdale.
A type of revocable trust — a "standby
revocable disability trust" — allows a successor trustee to take over
management of the trust assets in the case of incompetence or incapacity, Mr.
Douglas said. That usually requires two doctors licensed in the state
(California, in Mr. Lee's case) to write a letter expressing that the owner
isn't able to manage his/her financial affairs, Mr. Douglas said.
Mr. Shenkman encourages clients to use
revocable trusts — which can include any assets aside from retirement accounts
— when they are 60 and older.
If an asset owner becomes incapacitated and a
successor trustee takes over, it's easier to get a bank or financial
institution to respect the wishes of the successor trustee's position with a
revocable trust than it is with a designated financial power of attorney, Mr.
Shenkman said. Further, wills only protect individuals after they're dead — not
while they're alive, he added.
"Most people use revocable trusts to
avoid probate [court]," Mr. Shenkman said. "That may be a benefit,
but the focus is on managing assets as you age."
Picking trustees
Many of Stan Lee's problems — and indeed those
of elder-financial-abuse victims generally — revolve around the characters in
his inner circle.
For example, Mr. Lee's 67-year-old daughter
J.C. is a financially irresponsible individual who spends anywhere from $20,000
to $40,000 a month on credit cards, and who's demanded alterations to a trust
set up for her, according to an exposé in
The Hollywood Reporter.
Mr. Lee, along with an attorney, also recently
filed a declaration saying three men with "bad intentions" were
trying to "gain control over [his] assets, property and money." A Los
Angeles court issued a temporary restraining order on June 13 against one of
those men, Keya Morgan, a memorabilia collector who allegedly became a
caregiver after Mr. Lee's wife died last year.
Which all goes to say — clients need to pick
their trustees carefully.
"I can't prevent incapacity. But I can
make sure someone is competent to make the right decision," said Hyman
Darling, chair of the estate planning and elder law department at law firm
Bacon Wilson.
Advisers should ask questions such as: Why are
you picking this person? Will they be influenced by someone else?
"If it's because he's the oldest or
because he lives closest, those are the wrong reasons," Mr. Darling said.
Mr. Shenkman recommends using a professional,
independent trustee or a group of co-trustees to serve as a protective measure.
Clients can also appoint a "trust protector" — someone who has the
right to change trustees if there's impropriety or who can demand an accounting
from the trustee.
"[Mr. Lee] may be somewhat of an ideal
candidate for an independent corporate trustee," Mr. Douglas said.
"He doesn't set up well for family and friends because he had his one
daughter and they have a difficult relationship."
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