IRA and 401(k) plans and beneficiaries.

If you have beneficiaries listed on your IRA and 401(k) plans the money in those accounts will go directly to the beneficiaries and not into probate after you die. If your spouse is a beneficiary, then the money goes directly to them as an inheritance. If the person is not a relation, the assets get put into an inherited IRA account.

Now, if you remarry and don’t change the beneficiary on your accounts, your ex will get the money whether you want them to or not. That is why it is important you keep up with your accounts.

Let’s say you get divorced. Years later, you remarry. You hopefully updated your will so that your new spouse would inherit your assets upon your death.. But you don’t change your retirement account beneficiaries.  Then you die.

Your home will pass to your new spouse. Life insurance proceeds  go to your new spouse too. But what about your 401(k)?  That’s going to your ex because you never updated the 401k designation form. Your 401(k) account does not follow the terms of the will like other assets. The beneficiary designation form is the guiding document, which is a disadvantage in this case. In order to avoid similar scenarios, make sure that you periodically review an update those 401(K) and IRA beneficiary designation forms, especially if you’ve had any major family changes since you set up the plan.


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Royal Hawaiian Heiress in trust dispute

92 year old Princess Abigail Kawananakoa, known to her friends as Kekau, is Hawaiian royalty. She is a direct descendant to the throne of the Kingdom of Hawaii. She has a $200 million trust and now that trust is at the center of a legal dispute.

The case pits her former attorney against her long-time domestic partner, Veronica Gail Worth  The attorney, James Wright, petitioned the probate court to remove Kawananakoa from controlling her trust.The petition was initially granted by the probate court judge, but now is being challenged.  Wright alleges that Kawananakoa suffered an acute stroke leaving her unable to manage her affairs. He based his claim on the determination of two physicians.

Kawananakoa disputed the allegations and says she is fine. She sent a handwritten letter to Hawaiian News Now saying that she suffered only a “minor attack” and is completely capable of managing her own affairs. “I am alive and well after suffering a minor attack.”

She said had decided to fire Wright “because I felt he was not following my personal wishes and he was mismanaging my affairs.”

Her former lawyer defended his actions

A Queen’s neurologist and Miss Kawananakoa’s personal physician of 15 years have both concluded she is unable to manage her financial affairs.  In light of that, I acted exactly in accordance with her written instructions in her Trust document to prevent her money from being misused.  Miss Kawananakoa is being exploited by opportunists and interlopers.  More than ever she needs the protection of the probate court.

Hawaii News Now – KGMB and KHNL


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To Give or Not To Give

There are 3 basic options for estate planning. Two require the assistance of an attorney. One only requires a checkbook and a pen

  1. Prepare a Last Will and Testament and leave your property outright to your heirs in a will.
  1. Prepare an Irrevocable Trust: your funds go into the Trust and are distributed over time by your duly appointed Trustee in accordance with the terms of the Trust.
  1. Gift all your money away during your lifetime.

Charles Feeney was a billionaire philanthropist. He chose Option 3. Feeney made his money operating duty-free shops in airports all over the world and had a knack for investing in successful tech start ups like Facebook in which he was an early investor.

By 1982 he was worth over $8 billion and during that year he started giving that money away through a foundation he started called Atlantic Philanthropies, a collection of private foundations located around the world.

You’ve probably never heard of Mr. Feeney because he deliberately remained under the radar.  In January of this year, a profile of him in the New York Times, James Bond of Philanthropy’ Gives Away the Last of His Fortune said this about him:

“His name does not appear in gilded letters, chiseled marble or other forms of writing anywhere on the 1,000 buildings across five continents that $2.7 billion of his money paid for. For years, Atlantic’s support came with a requirement that the beneficiaries not publicize its involvement.

None of the major American philanthropists have given away a greater proportion of their wealth, and starting in 1982, Mr. Feeney did most of this in complete secrecy, leading Forbes magazine to call him the “James Bond of philanthropy.”

Five years ago at the age of 85, his foundation still had $1.7 billion left and the way he had it figured, time was running out. The Times article noted that Feeney achieved his goal by giving the last of the money, $7 million grant to Cornell University, to support students doing community service work.

For those of you who choose to give all your money away, God bless you. For the rest of you who choose to leave your good fortune to your heirs, we can assist you in your estate planning.  Please give us a call at 212-693-3737.

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