1 Episode results for "Jackie Dave Bahir"
Ep 24 Albert C. Barnes: Wills of the Rich and Famous With Jacqueline Bevilaqua
"Welcome to the celebrity estates wills of the rich and famous cast in this podcast. We breakdown high profile celebrity estate planning cases for advisors and their clients. Most celebrity estate catastrophes are based on the same issues that everyday people face just with the volume turned up. Our goal is to identify and extract the Individual Estate. Planning issues that lie at the heart of each story. We then discuss what advisers should expect and how to avoid common pitfalls hosted by Wealth Management Dot com senior editor. David Lennox over and welcome to the latest episode of Wealth Management Dot COM CELEBRITY ESTATES. Wills of the rich and famous yet. You're on the right place. If you came for dead celebrity we recently rechristened the show. Since during a global pandemic the previous name was somewhat less than sensitive. Don't worry though. Content and quality of the show will remain the same as before just under a new banner for anyone new to the podcast in each installment myself and guest take on a different celebrity. State attempt to extract. Some key lessons that players can apply to their more traditional clients. The idea being celebrity estate planning catastrophes although often ridiculous in their details generally have at their core very basic issues that can just as easily apply to non famous or fabulously wealthy clients. I'm joined today by Jack Level. Aqua who I believe is now. The first three-time guest of the show is very cool. Honor Jackie's the trust and estates associated law. Firm Kathy Kearns. She's a strong background in state. Planning and estate and trust administration for a diverse clientele and significant experience with complex issues of gift estate entrusted taxation. Jackie also has a strong background in international state planning factor compliance and pre immigration tax. Planning thanks for joining us. Jackie Dave Bahir subjective. Today's episode is Albert C. Barnes Barnes was an American businessman best known for his massively valuable collection that he devoted most of his life to curate the nine hundred piece collection which was worth some twenty five billion dollars featured one hundred eighty-one in-laws sixty nine says on sixty matisses. Forty four Picassos and fourteen Medaglia Ottis to just give a few highlights. Barnes intensely disliked the elite Air quotes of the art world and negated his life to providing education to less fortunate. You defied convention by grouping is our peace based on aesthetics philosophical reasons instead of artists are period Andrea. Matisse said the foundation is the only place to see Harken America Dr Barnes never had children but he took great care to plan for his legacy in one thousand nine hundred eighty two created a title. Trust agreement call the trust indenture. This trust established the Barnes Foundation a charitable organization to manage his art gallery as an educational institution in Lower Merion Pennsylvania. And if that name sounds familiar. That's because it's where Kobe Bryant is cool his lengthen. These documents that was not be sold moved placed on tour or even rearranged within the gallery itself. He wanted used primarily for education but open for the public on a very limited basis. He restricted how it could be viewed when only one day a week usually and how much could be charged to see the restrictions also made it very difficult for the board of to keep the foundation profitable or at least that's what they climbed so little by little a filed corpse-eating asking for permission to change the trust. Provisions Trustees engaged in expensive litigation in court arguing that the terms of Dr Barnes's trust impossible because of the great costs needed to maintain the collection and the final blow. Came in two thousand four when a judge ruled that the Barnes Foundation which now supported by three wealthy and elite Charles Foundations and the Pennsylvania attorney general can move the entire collection to the museum district or Downtime Philadelphia right next door to the Philadelphia Museum of art for context of House offices. Barnes had once said the Philadelphia Museum of art is a house of artistic and intellectual prostitution so safe to say probably not what he wanted. So how could he wishes have been so blatantly disregarded or because of a doctrine of deviation which is a legal principle that allows court effectively rewrite a charitable trust if the purpose becomes impossible to maintain without changes. The trustees argued that there was no financially viable way to keep the art of the building. Dr Bars created for the collection could only be maintained. You'd by permitting the move and I'm sure. The allure of creating a huge tourist attraction by relocating at twenty five billion dollar Philadelphia certainly offered no motivation at all. Now there's more twisters to this story which inspired the excellent documentary the auto steel. And we're not gonNA cover them here. Our focus was just how surprisingly easy. It is to have estate planning documents and wills in particular modified overturned. So Jackie how worried should clients be about how close to the letter? Their estate putting documents will be enforced after they're gone if someone just leaves a will and everything's going outright to their beneficiaries. I think that clients can essentially rest assured as long as they've picked a a trustworthy executor that their wishes are going to be carried out. Same thing with a shorter term trust for beneficiaries. For example. You might leave your child or a younger person Entrust to a certain age. I think that you can probably guarantee who the trustee is going to be or who the trustee and potential successor will be so that you can have pretty good control over these dispositions link where clients do have to worry is especially in this area with long-term charitable dispositions. You have certain people that you're going to put in charge right after your death. Almost a hundred years later you might have an entirely different board running the organization. Different Trustees of a trust and then your vision can start to go awry if you haven't done some really careful planning. What's the difference in this situation between the will and trust and what those different instruments are supposed to do and of what they can do? They can be quite similar documents depending on the type of woman type of trust here we. In the case of Barnes we would have a a well with which essentially disposes of your estate at your death and then we have this trust which established his foundation ultimately to hold this art and carry on this educational mission. This charitable mission rather than necessarily run art museum so that's very different and also obviously Your estate isn't going to last forever. The idea is to administer an estate and have it wrapped up within a year or a few years. This other plan in which the arch foundation was held was mental last. Ideally in perpetuity are as long as possible. And I think that we should talk a little bit more about the doctrine of deviation to and how that's brought us to where we are today in terms of how have you made your wishes known to your fiduciaries how major wishes known your executor if you have a will and how have you made your wishes known to trustees if you have a trust or how we made wishes known to Charitable Corporation. That's going to continue beyond your debt. Obviously some methods making your wishes known or not going to be ultimately legally enforceable when they applied the doctrine of deviation to barnes they essentially were trying to anticipate how could most closely meet. Barnes is desired end. When circumstances changed so I think that something. That's it's important to talk to clients about is what's your ultimate goal and get that in writing. Even if it's not legally enforceable I think if Barnes have been consulted on this and someone had said well it's down to this re they're gonNA move your entire collection right next door to the Philadelphia. Museum are moving out of the suburban setting that you chose change. The way to the artwork is presented from what you designed to something that's perhaps and more accommodating to the General Public. Would you rather have moved? And your vision changed in that way or would you rather sell. Certain pieces certainly arguable. That might have said sell certain pieces or we might have come up with a different way to raise funds to keep the off foundation operating as it was one of the difficulties. When you're dealing with these plans that are intended to last in perpetuity. Right is that that's impossible along the way and you have to anticipate not just through the various scenarios that could occur over the ensuing rest of time but also the legal changes that are and all that stuff is just impossible for an estate plan to like completely for. See it in any way how good you are all. That's kind of why it's best to sort of building at certain points. Some safe spots here where where things can transfer or where where things can change a little bit in some flexibility. Because you know the only fact that you know is that things will change. You have no idea what the changes are going to be necessarily. Yeah in hindsight is twenty twenty but I think that if I were assisting with creating this plan I might ask those questions. If you're endowment runs low in years what changes would you be most okay with if changes had to be made because we never know even if someone gets a hundred million dollar endowment today the market crash could be invested in something that seems really safe at suddenly becomes unsafe or sometimes organizations are even victim of produce aries? Obviously we don't see that very often but it does happen. So how are we going to necessarily plan for all contingencies? That can happen there including running out of money to keep the operation going until depicted the night honestly in this situation despite what I just said. It's kind of the most obvious question right pure album. Barnes's stay planner and he's putting all these rules saying people can come in once a week and it can only be X. People at once and you can only charge this or it's just simple math. Look at and be like well. Rent costs this much to say like a house. It's going to work out. And would Albert Barnes of preferred to allow more people in at a time or preferred to have partnered perhaps with the city of Philadelphia or even with Philadelphia Museum of art to transport people easily from Philadelphia to Marion in that suburb where he was located rather than have the artwork moved. I think people describe Albert Barnes being someone who got what he wanted and who might not have been particularly open to hearing different perspectives. But I think that this is the kind of thing where if someone brought in this concept for an estate plan. You'd have to push back if the individual wasn't willing to sort of look at the different contingencies and plan for them and I think that you know now we have the example of Albert Barnes if someone doesn't WanNa plan for different contingencies. We can say okay but if these unforeseen things happen we want to know. We most like your opinion on what should happen because that can be instructive for how changes should be made. And if you don't provide it you're leaving it up to the court and you're leaving it up to whoever might be in charge of these assets or your plan to one hundred years after death. And that's probably someone who has no personal connection with you concede the Barnes case the smallest possible genuine to the most closely adhering to your wishes can be nowhere near what his wishes clearly would have been right out in. My last possible thing you to do was hurt. His Art to go to this autumn quote elites in the Philadelphia Museum. It's also possible. That was the best way to do it now. You know it's sort of a a weird situation. Where even sometimes the closest possible best solution can be the last thing that person would want if they haven't specified right exactly. I mean he might have wanted everything to be sold and wound down if it got to this point. But we'll never know because obviously it wasn't anticipated the endowment would deplete to the point that they were in grave financial trouble but these are the kind of questions that we need to think of as a state planners. And that's why we why we study things that's why we read case law. People might not have been as aware of these problems back in nineteen twenty two or back. No one this estate plan was initially created but we have the benefit of an extra hundred or so years of history to guide us in making a state clowns. Obviously don't think that most of our listeners have clients with twenty five billion dollars collections. That they're gonNA have to worry about this about unless you do. In which case awesome. Why the Hell you listening to me? You know. I think this concept of what porn was doing this idea of dead hand control and sort of the risks inherent in that and the natural idea that sort of the natural tendency toward of powerful people to want to do that is something that can be instructive for all advisors regardless whether working on estate planning on vacuum. I'm just talking about the dead hand a little bit with that. Mean a good way to phrase it. It's essentially trying to control beyond your death. What happens to your assets as we discussed at the beginning of this podcast? It works best for a shorter amount of time in the longer. It's been since your death the harder it can be. For example sometimes clients will want a particular financial firm or financial advisor to be working on their assets. That usually works fine. If it's just going to be your estate but if you have perhaps a lengthy trust and you might not even think you have a lengthy trust. You mentioned that most listeners probably don't have huge art collections to dispose of. But if you have younger people in your life either. Children Nieces and nephews. Whoever even the children of family friends? Who might be inheriting from you? You have to anticipate that if these kids are three years old today you might be putting something in your estate plan that has assets in them for trust until they're thirty five forty so that's going to be a fairly lengthy amount of time and if you're restricting to certain financial advisers. We don't know what could happen with that. For example people retire financial firms emerge and go under and it might not be clear what to do in those situations so I do try to draft with a certain amount of flexibility to address these issues but aside from the drafting. I try to take really detailed notes on why we're doing something. What the client actually wants in case we do get into this issue? Because you know people. And we've talked about this in our other podcasts when people are disposing of assets other death how whatever amount it is it tends to be their life work their life's work and also even if they're leaving one hundred thousand dollars which might not be much to certain people are leading one hundred thousand dollars to a much younger person who's been a big part of their life and they wanna see it worked for that person in the best way possible. There's a lot that can go into creating an estate plan and especially if someone wants to exercise this sort of post mortem control over the assets that may not be one hundred percent legally enforceable. It might not be in the documents but I think we have the state planners need to not only get this information about what a client is trying to do but also make sure that we retain it in a way that it's GonNa come back to US fifteen years later when we might need to actually implement the plan or even it needs to be available to another attorney who will be implementing the plan Even though we're talking about certain things saying may not be legally enforceable doesn't mean just ignore it right once you've been to these questions about an estate even if it's a seemingly obvious question on its face once the person isn't there to explain it. Everything gets very very vague so at that point even if something's not even have these documents that say do this. That in the trust may not be legally enforceable but second. We're sitting here trying to figure out piece together. What this person would have wanted. What their intent was of this dead person? Who's not there to tell us than all the evidence that we have even if no one piece. You can't slam it on the table and be like this means this. We're GONNA do this. It just all adds up to sort of okay. Well now. This can inform this decision. Even if it's kind of out of our is right it goes to what are the donors ends. What are the goals of the person making an estate plan? You create a plan to implement those ends in those goals but having a detail accounting of what those goals are can be instructive on applying the doctrine of deviation when needed the dog new Jason. Here because for the fairly obvious probably the most common reason that we see this is that there just wasn't enough money to allegedly wasn't enough money to keep foundation going. What are some other reasons baby? Trust may be modified really depends on the circumstances. We talk about putting a certain financial advisor into a trust. Well that person might unexpectedly retire. You might have a case where so recently. California started taxing trusts based on the location of a trustee in California. So you might have a close family friend who you wanted to be the trustee of your testamentary trust and you created your will before this was going to be an issue or you appointed. Let's say a New York resident trustee and then that person moves to California. Suddenly they can be there. And all of a sudden California's trying to impose an income tax obligation a state income tax obligation on the trust. Based on the location of the trustee nutcase. You would probably want to remove the trustee you might also have something in there to the effect of monies to be distributed to so and so at age twenty five while when you made the trust so and so might be doing fine however when someone reaches age twenty five and they might be going through a contentious divorce. They might be having legal trouble. They might simply not be in a position to inherit large amount of money. It's good to create and you can actually do this document Some flexibility for trustees to withhold distributions. That have been mandated in your documents. If certain unforeseen circumstances arise Such as contentious divorce such as this person is has a guardian appointed for them on and you can also say for other unforeseen circumstances. Yes you're giving a certain amount of leeway to your trustees but you're also providing the best possibility for your goals being met because it's really going to be someone's goal that person they care about. Get to certain amount of money so that that person cared about can either have it taken from them right away or can blow it building this flexibility even though sort of cuts directly against maybe with the instinct of the sort of the did hand control. He wants really the most way to to to build in flexibility jurors state right. You can't was the other option. Is that you're going to have a trust. That's fifty thousand pages long and reads like some crazy ginger adventure book or it's like this then this this and this and that's just for something. Sure for the big things that are obviously going to happen. Maybe it's something big dangers or it's like Oh for money. And then that's fine but for anticipating future legal changes or anything like that or what's your four generations that align descendants are going to do with the world even going to be like? This is just really more realistic to pick the correct trustee in an empower them to do things. I think that's why we've seen sort of in a lot of areas the growth in popularity like the trust the protector of this person. Who just kind of like overall watches over everyone involved in the trust. And it's kind of like I wanNA make sure that the intent is followed kind of even if I'm not individually working with anything and I think sometimes people create a state plans thinking whoever will be implementing it will always be someone that Abe known or. It will always be there child. That's not always the case you know. People have different reasons that they want to step out of certain positions and even without person wanting to step down. Sometimes circumstances changed so that someone that you've appointed or that you know can no longer implement your plan. And that's why I think careful. Planning detailing of your wishes is important because if you for example have a fiduciary trust company stepping in. That's not going to be someone you've known. They're more stepping in as an entity or business capacity but at the same time it helps for them to receive letters of wishes or other written documentation on what your actual goals are you. Also you can beat a document. That's been drafted for you. But you know what your goals are so it might make perfect sense to you. What should be done based on the reading of the document but someone taking it over and reading it thirty years later might have a completely different interpretation of the same verbiage. This is the stupid family guy. Joke about the the right to bear arms whereas the it's the two founding fathers being like how much for obviously can we make this? Every family has a right to have a pair of stuffed bear arms. Hang on their wall in the district pans to stuffed bear arms sticking out of the wall. This is this idea like that's very silly version of it but series like Tom. Petty like what does equal million thing that came up in that case it was just like he knew it equal. Antonino what he meant but now having sat seemingly simple thing written down to take him out of the equation what what did he mean by equal. Jackie we're just about running on time here but I think sort of the general theme of this episode has been that you know the longer you want a plan or you intend to plant to effect until last into the future. This more problems arise on the more difficult it can be to sort of make that plan and ensure that plan meets the wishes of of the deceased puts the the one thing we can take away from here. That plan really need to watch out for when they're trying to look so far to the future need to do a lot troubleshooting when you're looking very far into the future. One thing I would do if I had a plan like this with very specific goals in mind is once it's drafted have someone who doesn't know what the clients goals are review it and see what they think. The goals are made how they think that this would be administered. And make sure that they're to tell and whatever they're not able to discern from your documents might need to be revised or you might need to go back to the client with that and see how you can make it more clear and I think just constant communication with clients and getting their wishes down taking really detailed notes. That's that's always helpful. It's helpful today. Drafting DOCUMENTS IN. It's going to be helpful in the future and getting all this down and I think also just planning for contingencies thinking outside the box do not just what could happen the next five years but what could happen in the next fifty years and is it worth the extra time to address it into come up with clans? Abyan see of course in the case of a Barnes Foundation. Yes it would have been worth the extra time fulltime. We have folks. I like to thank you for joining us once again. If it wasn't going to be a great guest thanks a lot Dave and I just want to quickly mentioned Cova. Nineteen in terms of estate. Planning I know that people are a little nervous understandably at this time and I just wanted to remind everyone that recently the ability to witness certain documents such as wills and healthcare proxy has been moved to allow audiovisual contemporaneous. Witnessing without actually having a witnesses present we also have a similar rule. That is in effect through. I believe may seven four notation of documents so I just want to remind everyone that estate planners are opened for business in terms of getting these documents done for you if you need help in this troubling time anything that can give people a little piece of mind always great especially if it's just a good idea in the first place. Oh definitely take that under advisement right. Absolutely thanks so much for having me on Dave pleasure. Thanks for coming on for the audience. I'll see you. You'll hear me on the next episode of Wealth Management Dot Com celebrity estates wills of the rich and famous. Thank you for listening to the celebrity estates wills of the rich and famous podcast flick. The subscribe button below to become notified. New episodes become available information. Covered in posted represents the views and opinions of the gas and does not necessarily represent the views or opinions of INFORMA- wealth management dot com. The content has been made available for informational and educational purposes. Only the content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified financial service PROVIDER WITH ANY QUESTIONS. You may have regarding your investment planning.