Author Archives: Rachel Ziegler, Kaiser Law Group

Estate Planning in History: Madam C.J. Walker

I’m a huge proponent and user of bibliotherapy – reading books to relax and heal.  And during these challenging times, I have found myself turning to stories of inspirational women.  I recently read and learned about Madam C.J. Walker, a black businesswoman and philanthropist who is recognized as the first female self-made American millionaire.   Her life story is told in the book “On Her Own Ground” by news journalist A’Lelia Bundles who is Walker’s great-great-granddaughter.  I also recommend the new Netflix mini-series “Self-Made” starring Octavia Spencer which was inspired by Walker’s life.

Madam C.J. Walker’s story was especially interesting to me because it includes an Estate Planning strategy I have yet to see in my practice.  Madam was born Sarah Breedlove in Delta, Louisiana in 1867.  She was the first in her family to be born free, rather than a slave.  Her life was hard.  She was orphaned at age 7, was subsequently abused by a brother-in-law who was her guardian, and then mistreated by three (3) husbands.  For years, she worked as a laundress and a domestic servant to support her daughter and herself.

But that was not the life Madam had hoped for.  So in 1910 she started her own company – the Madam C.J. Walker Manufacturing Company – to make and sell hair care products for black women.  She had very little support initially, but within just a few years the company because wildly successful and grew nationwide.  Madam employed and empowered thousands of other black women as sales agents, stylists and salon franchise owners.  She gave much of her fortune during her lifetime and at her death to charitable causes including the National Negro Business League, the NAACP, and the Tuskegee Institute. 

Her business was valuable, and Madam believed that the continued success of her business after her death would improve the lives of other black women.  She knew she needed a business succession plan but she didn’t have a successor.  Madam’s daughter, Lelia Walker, was involved in the business but not capable enough.  So Madam made an unusual Estate Planning decision – she sought out a child whom she believed could become her heir and continue the business.  That child – Mae Walker – was adopted as a young teenager by Lelia in 1912.  She became an adored granddaughter and Madam sent her to Spelman College. 

After Madam’s death in 1919 and Lelia’s death in 1931, Mae Walker became president of the company and then was succeeded by her own daughter, the fourth in line of Walker women company presidents.  Unfortunately, none of Madam’s heirs had her business acumen.  The company suffered during the Depression and never did as well under other leadership. 

CARES Act suspends 2020 RMDs

Dear Clients, Colleagues and Friends:

We hope you and your family are staying safe and taking care during this difficult time.  As you know, we are working remotely.  We are all still available during regular business hours and eager to help you.

We are sending this newsletter because one of the provisions of the recently enacted CARES Act directly impacts many of our clients.  The CARES Act changed the rules for required minimum distributions (RMDs) from retirement plans for 2020.

  • All RMDs from retirement plans (including IRAs, inherited IRAs, and employer plans, such as 401Ks) for 2020 are suspended.
  • If you are over 70 ½ or you are the beneficiary of an inherited IRA and you have not taken all of your RMDs for 2020 and do not wish to take the remaining RMDs, you do not have to do so. 
  • If you have taken RMDs, you may be able to roll them back into the plan if it is within 60 days of the distribution or, if it is more than 60 days, you may be able to contribute the distribution to an IRA. 
  • If you are under 59 ½ you may be able to take a penalty-free distribution or loan from your retirement plan, up to $100,000.  Generally, there is a 10% penalty for distributions before age 59 ½.  Income taxes on the distribution will still be due.

You should consult your financial advisor about your specific situation.  If your RMDs are distributed automatically, you may wish to reach out to your financial advisor to delay the distributions.

We understand this is a time of great anxiety.  We wish you continued good health and prosperity in the months to come.

Yours truly,

Dale Kaiser

Rachel Ziegler

Davina Lewis

My #SocialDistancing Movie Binge List – with a twist of Estate Planning

Good TV and movies may be the key to survival in the coming weeks. Add these great movies – with Estate Planning themes – to your #SocialDistancing binge list.

Knives Out – This new release ensemble film is an Agatha Christie style murder mystery with an Estate Planning twist.  Novelist Harlan Thrombey is found dead in his Massachusetts mansion.  His extended family members are all suspects.  When the family finds out Harlan recently amended his Estate Plan to leave his mansion and $60 million fortune to his young Lantinx private nurse, the quest for his killer gets even more interesting.   I found the meeting with the exasperated Estate Planning attorney laugh-out-loud funny.  Who doesn’t love those clients that require detailed explanations of testamentary capacity, undue influence, and the Slayer statute? 

Brewster’s Millions – This one is an oldie but goodie!  Monty Brewster (played by Richard Pryor, at the height of his career) is a struggling minor league baseball player who learns his recently deceased uncle left him a $300 million fortune.  But Uncle Rupert was no dope, and like most of us, he worried about Monty’s spending habits.  So the inheritance comes with a contingency.  Monty has a choice – he can forego the fortune in exchange for $1 million outright OR he can spend 30 days spending $30 million of it and, if successful, get the entire remainder of the $300 million.  The hitch, however, is that he can’t own any assets at the end of the 30 days. Uncle Rupert hopes to teach Monty to hate wasteful spending.  Monty accepts the challenge. 

Rain Man – After his father dies, luxury car dealer Charlie Babbitt (played by Tom Cruise) learns that the bulk of dad’s estate has been left to a special needs trust for the benefit of Charlie’s autistic brother, Raymond (played by Dustin Hoffman), who Charlie never knew.  Charlie travels to meet Raymond with the hope of getting his half of the fortune.  An ensuing road trip results in the brothers’ bonding, and Charlie gives up his plan to contest the Will.   

Willy Wonka and the Chocolate Factory – Yes, you read correctly!  Willy Wonka has a wildly successful candy business, but he is nearing the end of his career and has no heirs to carry it on.  His golden ticket scheme is his attempt at a business succession plan.  It’s not a plan I typically recommend to clients, but the legal work to transition the business to Charlie would be interesting.  

image from flickr @wonderlane

Larry David and “Curb” take on Estate Planning

If you need a break from talk of the coronavirus, stock market crash, and politics, I highly recommend Season 10 of Larry David’s Curb Your Enthusiasm.  Once you get past cringing at Larry’s social fumbles, it’s great entertainment.   As he always has, in Season 10, Larry takes on the problems and annoyances of everyday life in a laugh-out-loud way.  In fact, the most recent episode (Season 10, Episode 8) includes an Estate Planning storyline. 

Here is what happens.  Larry and Cheryl meet up at Jeff’s house.  Cheryl tells Larry that her sister, Becky, is selling the house Larry and Cheryl gifted to her fifteen years ago.  Becky is Cheryl’s down-on-her-luck sister – a self-dubbed “Princess Margaret” to Cheryl’s “Queen Elizabeth”.   When Larry finds out Becky is selling the house at a profit, he gets annoyed.  He tells Cheryl the profit should be his.  He then goes directly to Becky and proposes another solution – he’ll recoup his investment from the sale proceeds, and she can keep the profit. 

All three women (Cheryl, Becky and Susie) argue that Larry did not retain the right to keep the profit or recoup his initial investment.  “You gave it to her.  It was a gift,” says Susie, brashly. The women argue with Larry on principle, but they are also right under Estate Planning law.

Presumably, Larry and Cheryl filed a gift tax return when they gifted the house to Becky.  They made a completed taxable gift and deeded the house to her (or perhaps to a trust for her benefit).  Larry can’t take back the gift, or any part of it, including the profit.  Larry can’t have retained an interest in the house.  If he had retained an interest, the gift would be incomplete.  Furthermore, under Section 2036 of the Internal Revenue Code, the full value of the house would be includible in Larry’s estate on his death and subject to federal estate taxes.  (California does not have a state estate tax, although many states, including Massachusetts, still do.)  Because Larry has a very large estate, inclusion of the full value of the house in his estate would be a bad result.  That’s not “pretty, pretty good”.

For those with substantial estates, making gifts to family members is an important estate planning strategy.  We can advise you about the best way to make gifts and minimize estate taxes.

Client Update – The SECURE Act

At the end of December, Congress passed a new law – the SECURE Act – that dramatically changes the post-death income tax treatment of retirement accounts, including IRAs and 401(k) plans.  The new law affects many clients, and may require you to make changes to your estate plan.

Changes to distributions after death

The SECURE Act eliminated the “Stretch IRA” – the opportunity for most retirement account beneficiaries to receive distributions slowly over the remainder of their lifetime.  Now, most beneficiaries who inherit a retirement account in 2020 or later must withdraw all the assets within ten (10) years of the account owner’s death.  In most cases, the 10-year required withdrawal period will increase income taxes.

Some beneficiaries are still eligible for a lifetime payout period.  These “Eligible Designated Beneficiaries” are exceptions to the 10-year required withdrawal rule and include:

  • The surviving spouse of the retirement account owner;
  • A disabled or chronically ill beneficiary;
  • A minor child of the retirement account owner (but not a minor grandchild); and
  • A beneficiary who is less than 10 years younger than the retirement account owner.  

Other changes during account owner’s lifetime

The SECURE Act also amended the laws governing retirement accounts in other important ways.  It increased the age at which the account owner must begin required minimum distributions from 70 ½ to 72 for those who did not reach 70 ½ by the end of 2019.  It also eliminated the age limit for deductible IRA contributions. 

Under the new law, if you are over 70 ½, you may still make qualified charitable distributions up to $100,000 per year from your IRA.  However, that amount is reduced by deductible IRA contributions you made in the same year. 

Do these changes impact you?

The SECURE Act has broad impact.  Many clients will need to make changes to their beneficiary designations or their estate plans.   If you have a retirement account, you may need to make changes to your estate plan if:

  • Your retirement accounts are large (valued at several million dollars and more).  The impact of the increased income tax will be significant.
  • You named as beneficiary a minor or young adult, or a trust for his or her benefit. 
  • You named as beneficiary a disabled or chronically ill person, or a trust for his or her benefit.
  • You want your retirement account to provide long term support to a beneficiary who is disabled, ill, or unable to manage money.

Please reach out to us so we can provide specific, expert advice to benefit your family.

How can we help you?

The SECURE Act also offers some new estate planning opportunities to consider.

  • You may wish to do a Roth conversion of all or part of an existing IRA to save your beneficiaries income taxes.  Although income taxes will be due at conversion and the 10-year rule will still apply, the beneficiaries will not pay income taxes on the accelerated distributions.
  • If you are charitably inclined, you may wish to leave all or part of your retirement account to charity or to a charitable remainder trust, which do not pay income taxes, and leave other assets to individual beneficiaries.
  • You may want to reconsider the division of assets among your beneficiaries.  For instance, you may want to leave your retirement account to a disabled child (who is an Eligible Designated Beneficiary and qualifies for a lifetime payout period) and leave other assets to other beneficiaries.
  • You may consider purchasing additional life insurance to replenish retirement assets lost to income taxes.

What about your trust?

Most clients will not have to revise their trust to accommodate the new law, even if retirement benefits will pass to the trust at death.  The trust provisions will still work.  Nonetheless, an amendment to the trust may be required if a trust beneficiary is disabled or chronically ill. 

Make Your 2020 Estate Planning Resolutions

It’s early January which means it’s time to make your New Year’s resolutions.  Consider adding these Estate Planning resolutions to your 2020 list. 

Resolution #1 – Confirm and/or Change your Beneficiary Designations 

If you have been advised to make changes to the beneficiary designations of your retirement accounts and life insurance policies (as we often do) and you haven’t yet done so, make the changes in 2020.   If you have not yet received good advice, seek it out.   Proper beneficiary designations are essential to ensure your Estate Plan works as intended. 

Resolution #2 – Understand how the SECURE Act will affect you 

The SECURE Act – a federal law signed on December 20, 2019 – dramatically impacts the post-death treatment of IRAs and other retirement accounts.  The most significant change is the elimination of the “stretch” life-expectancy payout for most beneficiaries.  The new 10-year payout rule will mean higher income taxes for many IRA beneficiaries.  You should understand how your family is affected. 

(One of my own resolutions is to understand the new law, how it will impact our estate planning clients, and new planning opportunities.  More advice from us to come soon!)

Resolution #3 – Plan for State Estate Taxes

Although the federal exemption is now very high, the Massachusetts exemption remains $1 million.  Many Massachusetts residents must plan for state estate taxes.  Make sure you have an estate plan that includes state estate tax planning.  

Resolution #4 – Make Lifetime Taxable Gifts

Lifetime taxable gifts (gifts in excess of the annual exclusion) can substantially reduce both federal and Massachusetts estate taxes.  If you have significant assets, consider making taxable gifts to (or for the benefit of) your children or grandchildren in 2020.  It is important to seek out good advice before you do!

Resolution #5 – Name a Guardian for your Minor Children

If you have minor children and have not yet named a guardian in the event of your death, prepare an estate plan in 2020 that names one.  This can be a difficult and emotional decision for some parents.   Remember, an imperfect choice is better than no choice at all.  If you do not choose, a court may choose for you. 

The Extraordinarily Odd Estate Plan of Ventriloquist Edgar Bergen

I’ve had the opportunity to read many unusual estate plans.   And I’ve certainly heard of highly unusual (and problematic!) celebrity estate plans.  But the story of vaudeville performer Edgar Bergen’s Will may “take the cake” as the most unusual. 

Edgar Bergen was a vaudeville actor, comedian, and performer who was most well known as a ventriloquist.   He performed with his dummy, Charlie McCarthy, for over forty years, beginning in the 1930s, first in theatre, then radio, and later in television and films.   Bergen was also the father of actress Candice Bergen, most famous for her role as Murphy Brown in the television series Murphy Brown which first aired in 1988. 

Edgar Bergen died in 1978 and his Will included a very unusual provision. Bergen left $10,000 for the benefit of his dummy, Charlie McCarthy.   He directed his Executor to pay the gift to the Actors Fund of America, a charity still in existence today, to establish a fund to be known as the “Charlie McCarthy Fund”, so that Charlie could continue to perform.  Bergen expressed his wish that the money be managed and invested so that Charlie could give charitable performances for those in need, especially destitute and disabled children.  Bergen explained in the Will that the gift was intended for “sentimental reasons” because of the companionship he had received from Charlie throughout his life.  Notably, Bergen failed to leave anything to his daughter whose career had not yet taken off. 

A trust for a dummy!  That’s a new, and certainly strange, one for me!  You may be wondering… would this even be legal now?  Sort of.  Massachusetts law does not allow trusts to be established for the benefit of tangible personal property (which a dummy is).  It does however allow charitable purpose trusts – trusts without specified (human) beneficiaries that are established for certain charitable purposes.  This law became effective in Massachusetts in 2012 when the Uniform Trust Code was enacted.  I believe the Charlie McCarthy Fund is a charitable purpose trust that would be legal in Massachusetts. 

I am not sure if Charlie ever actually performed after Bergen’s death.  Charlie was later gifted to the Smithsonian Museum by the Bergen Family Foundation.  If you want to learn more about Bergen’s Will and the impact of this unusual gift on his family, check out Candice Bergen’s 2015 autobiography, A Fine Romance. 

Ever wondered how an Estate Planning attorney advises her own parents?

Stamped: “June 29, 1912”

I’m sharing a real email I sent my Dad recently.  He sought my advice about how best to prepare a list of his financial information so I would have it if he died or became disabled.  This is right up my alley, so I happily complied and now want to share.

First, some background on my family.  Dad is a retired physician.  He is in his early 70s, healthy, responsible, and fully capable.  Mom died many years ago and Dad is unmarried but in a long-term relationship.  I have one brother.  He and I are responsible, close, and similarly situated.    

Like most dads, mine does not like to take advice from his children.   (The fear of dying on an extended European cruise seems to have led him to go against his better judgment!)   Listing financial information, and keeping the list up-to-date, is not an easy task for any of us.  Discussing the process with family members can be difficult too.  Hopefully, my email outline will help your family.

Dad –

I suggest you make a list of your financial information and try to keep it current.  It can be in an Excel spreadsheet, Word document, or even just handwritten.  Since keeping track of information can be burdensome over time, keep it simple.  I would maintain an electronic AND a hard copy of the list somewhere where we would look if you died or lost capacity.  It shouldn’t be locked in a safe or safe deposit box.  I encourage you to continue to get paper statements for all accounts, including all credit cards and bills. 

Here is what you should put on the list.  I am making some assumptions about what you own, so please add to this if I am missing any unusual assets.


List all Bank, Brokerage, Non-Retirement Investment, Pensions and Retirement accounts.  For each account list the following 4 things: (1) The name of the Institution/Bank; (2) The account number; (3) How the account is titled.  Is it in your individual name?  Is it in the name of a Trust?  Is it owned jointly with someone else? (4) If the account has a beneficiary, who is it?

Be sure to include on the list any accounts titled in the name of Mom’s Trust.

List all Life Insurance Policies.  For each policy list the following 5 things: (1) The name of the life insurance company; (2) The policy number; (3) Who owns the policy.  Is it owned by you or by a Trust? (4) Who is the beneficiary? (5) The location of the policy, if you have it.

List any important additional information about your assets, including a safe deposit box, tangible items or stock certificates stored elsewhere, and the title to your car.  Please list the item, location and information needed to access it.


List all Mortgages, HELOCs, and Car loans.  For each account list the following 2 things: (1) The name of the Lender; and (2) The account number

List all Credit cards.  For each card list the following 3 things: (1) Name of the credit card company; (2) The account number; (3) Is the amount due paid automatically? 


List your Medicare Number.  List your Supplemental (Medigap) Health Plan and Member Number.  List your Long Term Care Insurance carrier and Account Number.  Where is the LTC insurance policy located? List name and contact info of Primary Care Physician. 


List name and contact info of Estate Planning Attorney and location of original Estate Plan documents.  List name and contact info of Accountant.  List name and contact info of Financial Advisor.


Try your best to keep a list of usernames and passwords for your online accounts.  This should include bank/investment accounts you manage online, credit cards, email accounts, photo accounts, service/shopping accounts (like Amazon, Netflix, etc.), and social media accounts (like Facebook).  Do your best on this!  It is hard to keep up to date.  I struggle with this too.  I don’t think it is essential (or even possible) for it to be perfect.  If you have a Master Password for Phone or Computers, be sure to put that on the List.   


Estate Planning on the Streets of Philadelphia

I discovered a hidden historical gem on the streets of Philadelphia this week.  13th Street, right in downtown Philadelphia, has been re-named in honor of Philly native and local hero Edith “Edie” Windsor.  Edie Windsor was a LGBT civil rights activist.  After her wife Thea died in 2009, Windsor, as Executor and beneficiary of Thea’s estate, was required to pay $363,000 in federal estate taxes on the assets she inherited.  Had Windsor been married to a man, the assets would have passed to Windsor completely estate tax free because they would have qualified for the unlimited Federal estate tax marital deduction.   Windsor could not benefit from the unlimited marital deduction even though she and Thea were legally married under state law because the Defense of Marriage Act (DOMA) limited marriage to a union between a man and a woman.  DOMA prevented same-sex married couples from receiving federal benefits available to heterosexual married couples.

Windsor sued the federal government alleging that DOMA was unconstitutional.  She asked the court to order the IRS to extend the estate tax marital deduction to same-sex married couples and refund her the estate taxes.

In 2013, the Supreme Court agreed with Windsor.  The court found that DOMA was unconstitutional.  It held that assets left after death to a same-sex spouse are eligible for the federal marital deduction and should not be subject to estate tax.  Windsor was entitled to an estate tax refund in full.  

In 2017, the IRS issued a Notice that provided some retroactive relief for same-sex taxpayers.  A taxpayer who had used estate tax exemption or allocated generation skipping transfer tax exemption to gifts to a same-sex spouse can now apply to the IRS to restore his or her exemptions.  Same-sex marriage became legal in Massachusetts in 2004.  Massachusetts same-sex married couples can obtain this relief retroactive to the Windsor decision.

Edie Windsor advocated for same-sex marriage for the rest of her life.  She died in 2017 at the age of 88.

Summertime Estate Planning … with Low Interest Rates

When interest rates are low – as they are this summer – some estate tax planning strategies become particularly advantageous.  In my last post I wrote about the benefits of intra-family loans with a low applicable federal rate (AFR).  It is also a good time to consider the following other estate tax planning strategies – Grantor Retained Annuity Trusts (GRATs) and Charitable Lead Annuity Trusts (CLATs).

Grantor Retained Annuity Trusts (GRATs)

A GRAT is an irrevocable trust funded by a grantor for the ultimate benefit of children, grandchildren, or other beneficiaries.  During the trust term, the grantor retains the right to an annual annuity.  In a “zeroed-out” GRAT, the value of the annuity is equal to the value of the original gift to the trust plus interest at the Section 7520 rate set by the IRS each month.  Any appreciation above the annuity amount passes to the beneficiaries gift tax-free.  It is a tax-advantaged way to pass assets to children or grandchildren. 

GRATs work especially well when interest rates are low.  The 7520 rate has been falling since the beginning of 2019.  The August 2019 rate is 2.2%, which is low.  For that reason, it may be a good time for you to established and fund a GRAT.  You will retain the right to an annuity for the GRAT term and your children or grandchildren will benefit from a tax-free gift at the end of the term. 

Charitable Lead Annuity Trusts (CLATs)

A CLAT is another type of irrevocable trust that is effective when interest rates are low.  During the CLAT term, an annuity of a set amount is paid to a charity.  At the end of the term, whatever is left in the trust passes to the trust beneficiaries – typically children and grandchildren – gift and estate tax-free. 

The present value of the charitable annuity must be equal to the initial gift to the trust, but the present value is discounted by the 7520 rate.  A low 7520 rate means that more will pass to children and grandchildren.  CLATs are a great tax-advantaged way to support a charity as well as benefit your family.  A low 7520 rate makes CLATs an even more appealing estate tax planning strategy.