Bob’s Journal for 3/20

Gene Hackman Mystery: Who Will Inherit His Estate?

The deaths of renowned actor Gene Hackman and his wife Betsy Arakawa present some interesting estate planning questions and lessons that apply to many people.

They were found in their New Mexico home on Feb. 26.

This analysis is based on the media reports I’ve seen to date and could change as more information is revealed.

Hackman was 95 and his wife was 65. Hackman’s estate is estimated in media reports to be around $80 million. Hackman has three children from a previous marriage. Arakawa had no children.

The latest information is that Arakawa died first from an infectious disease. Hackman, who had advanced dementia and other medical conditions, died a week or so later.

Each spouse had a will written and executed in June 2005.

Hackman’s will names Arakawa as his personal representative (executor). Fortunately, he named two successor personal representatives in case Arakawa was unable to serve. The first successor, attorney Michael G. Sutin, died in 2019.

The second successor is Julia L. Peters, an attorney who now is chief counsel for an investment firm and previously was managing partner at Sutin’s law firm. Peters submitted the will to a court and was informally appointed as the personal representative.

The media reports are a little confusing, but Hackman’s will apparently gives his entire estate to a trust he created in 1995, of which Arakawa is the primary beneficiary.

We don’t know the details of the trust agreement since it wasn’t filed with the will. Presumably, Hackman also named Peters as successor trustee.

Arakawa’s will named Hackman as her initial personal representative with Sutin as first successor and Peters as second successor. Peters submitted the will to the court.

The Arakawa will leaves her entire estate to Hackman. But the will contains a “simultaneous death clause,” which I’ve recommended most people consider for their wills.

The clause states that if Hackman and Arakawa both die within 90 days of each other, then most of Arakawa’s estate goes to a charitable trust to be administered by her personal representative instead of going to Hackman.

The advantages of the simultaneous death clause are that it avoids two successive probate proceedings for the same assets and a debate over which spouse died first. It also can reduce estate taxes for an estate that’s subject to them.

It’s unclear the extent to which Arakawa owned assets in her own name. Since she apparently predeceased Hackman, her estate is unlikely to receive any assets Hackman owned or that the couple owned jointly.

It was a good move for both Hackman and Arakawa to name multiple successor personal representatives who are younger than they were and are not family members who might be eligible to inherit. That ensures someone preferred by each testator becomes personal representative, and it makes family conflicts less likely.

Too many people struggle to name a personal representative and don’t name successors. Naming successors also avoided the urgency to update the wills after someone appointed personal representative died, as happened in this case.

Though I generally recommend that wills be reviewed every few years, leaving the wills unchanged since 2005 isn’t likely to be a problem. They’re apparently legally valid and reflect the continuing goals of each spouse.

The age of the wills could make challenging them harder. A recent will is easier to challenge based on lack of legal capacity or undue influence. The age of the wills makes Hackman’s dementia irrelevant and makes undue influence harder to prove.

It’s unclear from media reports if Hackman’s will had a simultaneous death clause. But it’s less important in his case since his estate goes to a trust instead of directly to Arakawa.

More than likely, Hackman’s trust provides that Arakawa would benefit from the trust for life, and then Hackman’s children and perhaps grandchildren would be beneficiaries. It’s also possible one or more charities will receive some or all of the trust property.

It’s not clear how much of Hackman’s property already was owned by the trust, making it exempt from probate and the terms of the will. That could become clearer when the personal representative submits an estate inventory to the court.

By naming a trust as his estate’s beneficiary, Hackman was able to keep details of the final distribution private unless there’s a reason for the trust agreement to be submitted to the court.

Some Cautions About Retirement Condos

Many retirement plans include buying a condominium in a retirement community as either the primary or second home.

Condos are supposed to make many aspects of home ownership easier. But recent developments raise the risks and complications of retirement condos.

It might be difficult to sell a condo when you want because of changes over the years in the federal mortgage programs. These changes make it difficult for buyers to qualify for guaranteed mortgages, limiting the market to buyers who pay cash or don’t want government-guaranteed mortgages.

One rule put in place after the financial crisis says a buyer can’t qualify for a guaranteed mortgage if more than 50% of the owners in a condominium development are investors or non-resident owners. That disqualifies a lot of condo communities.

A recent change for Florida condos resulted from the collapse of the aging Surfside condominium tower in 2021.

Florida law now requires older high rise condo developments to have engineers inspect their facilities. Condo owner associations are required to repair any structural weaknesses identified.

That has resulted in significant special assessments of condo owners with more probably on the way. Some owners are unable or unwilling to pay the assessments. Because of the assessments, they aren’t able to sell for prices approaching previous market value.

Another obstacle is a blacklist of condo associations maintained by mortgage insurer Fannie Mae, according to a recent report in The Wall Street Journal.

Fannie Mae apparently maintains a list of condo complexes at which buyers of units are ineligible for its mortgages because either the condo association doesn’t have adequate property insurance or it needs to make critical repairs to its property.

The article says the list recently had 5,175 condo associations nationwide. Florida and California have the most complexes on the list, but many other states each have 100 or more on the list.

Further complicating the situation is that property insurance is more difficult to obtain and expensive than it used to be for condo associations.

Buying a retirement condo requires more analysis than it used to and carries more risks.

Expect More Medicare Advantage Upheavals in 2026

The Trump administration doesn’t look to be more friendly to Medicare Advantage plans than the Biden administration was.

Over the last couple of years, I reported on policy changes that quietly made significant changes in Advantage plans. The changes resulted in considerable modifications to plans for 2025. Fewer plans were available. The available plans generally had higher costs and fewer benefits than in 2024.

An executive at United Health, a major insurer of Medicare Advantage plans, recently said the firm expects more adverse changes from the government.

He pointed to the confirmation hearing of Mehmet Oz, the nominee for administrator of the Centers for Medicare and Medicaid Services (CMS).

Oz stated that the government pays more for Medicare Advantage plans than original Medicare. He said some Advantage plans engage in upcoding, categorizing patients as sicker or needing more services, which generates higher payments from the government.

He said that the CMS would “go after it.”

Oz also said CMS would make changes to the policies of Advantage plans that require prior authorization of many medical services.

Once again, in the open enrollment period this fall Medicare beneficiaries should closely review changes in their existing plans and the alternatives available to them.

The Data

The Producer Price Index (PPI) was unchanged in February following a 0.6% increase in January. The 12-month increase in the PPI was 3.2% through February and 3.7% through January.

The core PPI (which excludes food and energy prices) declined 0.1% in February after rising 0.5% in January. The 12-month change in the core PPI was a 3.4% increase through February and a 3.8% rise through January.

The Consumer Sentiment Index from the University of Michigan plunged to 57.9 in mid-March from 64.7 at the end of February. Consumer Expectations fell much more than assessments of Current Conditions.

Retail sales increased 0.2% in February after dropping 1.2% in January.

Retail sales, excluding vehicles and gasoline, rose 0.5% in February, following a 0.8% decline in January.

The Empire State Manufacturing Index fell to negative 20 in March from positive 5.7 in February.

Industrial production advanced 0.7% in February after increasing 0.3% in January. The 12-month increase in production was 1.4% through February and 1.9% through January.

Manufacturing production, which is considered a proxy for business investment, was 0.9% higher in February after rising only 0.1% in January.

Manufacturing production was 0.7% higher for the 12 months ending in February compared to 1.2% higher for the 12 months ending in January.

The National Association of Home Builders (NAHB) Housing Market Index fell to 39 in March, the lowest level in seven months, from 42 in February, indicating a decline in confidence among home builders.

Housing starts jumped 11.2% in February after falling 11.5% in January. Single-family home starts increased 11.4% in February, and multi-family home starts rose 12.1%.

Severe weather around the nation is believed to have kept the number of starts low in January.

New unemployment claims fell by 2,000 to 220,000 in the latest week.

Continuing claims, which lag a week behind new claims, decreased to 1.870 million from 1.897 million.

The Markets

The S&P 500 rose 0.92% for the week ended with Tuesday’s close. The Dow Jones Industrial Average gained 0.43%. The Russell 2000 increased 1.45%. The All-Country World Index (excluding U.S. stocks) added 3.02%. Emerging market equities advanced 3.18%.

Long-term treasuries rose 0.34% for the week. Investment-grade bonds increased 0.42%. Treasury Inflation-Protected Securities (TIPS) dropped 0.07%. High-yield bonds gained 0.08%.

In the currency arena, the U.S. dollar rose 0.04%.

Energy-based commodities increased 0.68%. Broader-based commodities rose 0.78%. Gold advanced 3.99%.

Bob’s News & Updates

A recent review on amazon.com of my latest book said, “Carlson is a unique national Asset while alive! Get the book, dude!” Look for “Retirement Watch: The Essential Guide to Retiring in the 2020s” (Regnery Capital: 2023) at amazon.com, barnesandnoble.com, booksamillion.com and regnery.com.

My previous book, “Where’s My Money: Secrets to Getting the Most out of Your Social Security,” is receiving mostly five-star reviews on Amazon for telling you clearly what your benefit options are in different situations and how to determine the best choice for you. You can find it on amazon.com or Regnery.com.

The number of regular viewers for my Retirement Watch Spotlight Series continues to increase. You should sign up because I make indepth presentations of key retirement finance topics. You can watch these online seminars from the comfort of your home or office at times you choose. To learn more about my new Spotlight Series, click here.

A recent five-star review of my book, “The New Rules of Retirement” on amazon.com said, “A complete retirement guide! One of the best books on this topic!” Click for more details about the revised edition of “The New Rules of Retirement.”

If you’re interested in my books, check my amazon.com author’s page.

I’m a senior contributor to the Forbes.com blog. You can view my contributor page here.