Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, December 16, 2017

Article on Attacking Trusts upon Divorce and in Maintenance Matters: Guidelines for the Road Ahead

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-16/7434ef68-13f9-4c76-a1f6-c622492aba35.pngMadelene de Jong, J Le Roux-Bouwer, & Tshepo Manthwa recently posted an Article entitled, Attacking Trusts upon Divorce and in Maintenance Matters: Guidelines for the Road Ahead, Wills, Trusts, & Estates Law eJournal (2017). Provided below is an abstract of the Article:

In this article the different theoretical bases for attacking trusts upon divorce and in maintenance matters are set out. Firstly, the field of application and the consequences of the remedy of declaring a trust a sham are investigated, and secondly, the field of application and the consequences of the remedy of piercing the trust veil are looked at. Next, the South African matrimonial property law and maintenance cases in which attacks were launched on trusts are discussed chronologically. The decision in each case is compared with the theoretical bases of the two relevant remedies so as to indicate where the courts erred and where they made commendable decisions. In the conclusion the possibility of attacking trusts is viewed from the perspective of gender equality and the best interests of the child. Reference is also made to alternative methods which might be applicable, but the conclusion is made that the court’s powers to either declare a trust a sham or go behind the trust form, if applied correctly, would suffice as appropriate remedies for attacking trusts in maintenance matters and upon divorce. Courts should, however, not shy away from their duty to give due consideration to any alter ego allegations and use their power to pierce the trust veil upon divorce and in maintenance matters to curb the abuse of the trust form. Similarly, courts should be vigilant about finding that a trust in question is a sham where it is clear that the founder had no intention of creating a trust but acted solely with the purpose of placing all assets out of the reach of a spouse or maintenance creditor. Where no abuse of the trust form has been proved and the true intention to create a trust is evident, trusts should, however, be free from attack upon divorce and in maintenance matters.

December 16, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Surrogate’s Court Sets Aside Fraudulent Conveyance Violative of Contract to Make a Testamentary Disposition

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-16/4496b8cb-aa20-4ce9-be5a-73431b10c5ad.pngAn individual who successfully executes a valid agreement relating to a piece of property within a testamentary disposition cannot alternatively dispose of the same property during life or at death. Schwartz v. Bourque involves three generations of women and a disposition of property that seemed to violate the prohibition against an alternative disposition after a valid agreement. Surrogate Reilly, in vacating a deed relating to the disputed property, was required to engage in a comprehensive analysis of agreements to make testamentary dispositions, contract construction, case and statutory law dealing with fraudulent conveyances, and the termination of joint tenancies.

See Brian Corrigan, Surrogate’s Court Sets Aside Fraudulent Conveyance Violative of Contract to Make a Testamentary Disposition, FarrellFritz, December 12, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.

December 16, 2017 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Friday, December 15, 2017

‘We Love You Carrie’: Todd Fisher Honors Late Sister at Star Wars Celebration Along with R2-D2 and C-3PO as Costumed Fans Flock To Screening at TCL Chinese Theater in Hollywood

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-15/8f9092b8-e2f7-447d-bd1d-5f69dad93b63.pngTodd Fisher honored his late sister, Carrie Fisher, on Thursday at the TCL Chinese Theater in  Los Angeles before the premier of the latest Star Wars film: Star Wars: The Last Jedi. Fans dressed in costume joined Fisher, Darth Vader, C-3PO, and R2-D2 in a ceremony dedicated to the actress’s memory. A newly unveiled plaque in remembrance of Fisher read: “Dedicated to Carrie by the TCL Chinese Theatre, her Star Wars home since 1977; ‘We love you Carrie’.”

See Paul Chavez, We Love You Carrie’: Todd Fisher Honors Late Sister at Star Wars Celebration Along with R2-D2 and C-3PO as Costumed Fans Flock To Screening at TCL Chinese Theater in Hollywood, DailyMail.com, December 14, 2017.

December 15, 2017 in Current Events, Death Event Planning, Estate Planning - Generally | Permalink | Comments (0)

Forget "Must Love Dogs"—Go with "Must Love DSUE” or The Portability Election: Simplified Late Election Relief

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-15/df93d918-7c51-4321-867f-8041adc14e2e.pngThe portability election for the Deceased Spousal Unused Exclusion (DSUE) allows a surviving spouse to use a deceased spouse’s unused estate exclusion against subsequent gratuitous transfers. The presence of the DSUE has become so enticing in a potential spouse that some online suitors have included it in their dating profiles. The IRS released Rev. Proc. 2017-34 in June in order to offer a simplified method to remedy a failure to make the election. There are number of specific steps that must be taken in order to qualify. But, as with all good things, this chance is fleeting and will end either on the later of the second anniversary of the decedent’s death or January 2, 2018.

See Susan P. Rounds, Forget "Must Love Dogs"—Go with "Must Love DSUE” or The Portability Election: Simplified Late Election Relief, NAEPC Journal of Estate & Tax Planning, October 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.

December 15, 2017 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Article on Enhancing Conservation Options: An Argument for Statutory Recognition of Options to Purchase Conservation Easements (OPCEs)

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-15/a24370d3-356a-49a2-a485-69526d66c84b.pngFederico Cheever & Jessica Owley recently published an Article entitled, Enhancing Conservation Options: An Argument for Statutory Recognition of Options to Purchase Conservation Easements (OPCEs), 47 Envtl. L. Rep. News & Analysis 10655 (2017). Provided below is an abstract of the Article:

Land conservation transactions have been the most active component of the conservation movement in the United States for the past three decades.Practitioners use traditional real estate tools to preserve habitat, scenery, and historically significant places. Sometimes these tools are used by government entities, but they often involve nonprofit land conservation organizations known as land trusts, which buy and accept donations of land and conservation easements encumbering land. According to the Land Trust Alliance 2010 National Census, more than 1,700 land trusts (local, state, and national) are active in the United States. These organizations are staffed and supported by almost 5 million people. A conservation easement, the primary private land conservation tool, is a non-possessory property right restricting a landowner's use of a parcel of land to yield a conservation benefit. The National Conservation Easement Database estimates that approximately 40,000,000 acres of land have been protected by conservation easement in the United States.
The prospect of climate change diminishes the value of most real estate tools currently used by proponents of land conservation transactions. A conservation easement binds only the parcel of land described. What scientists know of climate change suggests a natural world in motion; there is no guarantee that the things people value on specific parcels will continue to be there in future decades. This Article outlines one potential response to the challenge of private land conservation under climate change: a reinvigorated use of real estate options to purchase conservation easements (OPCEs).
In the world climate change is creating, with its substantial uncertainties and shifting windows of opportunity, OPCEs can serve strategic purposes. For example, if a potential conservation easement holder knows that a particularly valuable species habitat will migrate over time, but does not know exactly where or when it will migrate, the prospective conservation easement holder could choose to purchase options to preserve habitat along a number of potential migration pathways intending, eventually, only to purchase conservation easements along one pathway as the actual migration pattern emerges. Similarly, potential conservation easement holders--committed to preserving coastal habitats and aware that sea level will rise, but unable to determine how far sea level will rise and how sea level rise and storm surge will affect coastal configuration and usage--might purchase options across a broad zone of potential future shoreline habitat with the intent to  eventually purchase conservation easements to create new shoreline habitat preserves and storm buffers once they have learned enough to know where that shoreline will be.
The ability of OPCEs to protect land in the context of uncertainty would be significantly increased if state legislatures amended current conservation easement enabling statutes8 to: (1) specifically recognize OPCEs, (2) immunize OPCEs from a range of potential common law challenges, and (3) integrate OPCEs into the burgeoning body of conservation easement law.
Part II describes the current relationship between the land trust community and climate change, then introduces OPCEs and discusses how they could fit into a conservation strategy. Part III examines the advantages OPCEs could provide in the shifting world climate change is creating, and addresses some potential objections. Part IV describes problems under the common law and the corresponding virtues of statutory recognition of OPCEs.

December 15, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Republicans Have a Final Deal on Their Tax Bill — Here’s What’s in It

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-15/f81e14f6-a23d-4136-aa78-21f5be5a2c69.pngRepublicans in the House and Senate have come to a preliminary agreement representing a compromise on tax reform. The quick turnaround time on the bill may be partially due to the recent victory of Democrat Doug Jones in Alabama’s special election on Tuesday. Sen. John Cornyn said, "We're very close. I don't want to get out in front of the chairmen, but we're very close.” The most recent version of the bill makes a number of changes, including a less generous corporate tax cut, a continuation of the estate tax, and an allowance for deductions for state and local taxes. The hope is that these changes will mollify Republicans in both the House and Senate, as the voting margin is extremely narrow.

See Bob Bryan, Republicans Have a Final Deal on Their Tax Bill — Here’s What’s in It, Business Insider, December 14, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.

December 15, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Thursday, December 14, 2017

The GOP Tax Plan’s Effect on Estate Planning

Age-of-UncertaintyThe GOP definitely wants to get rid of the estate tax. House Speaker Paul D. Ryan commented, “We just think it’s unfair. Death should be not a taxable event, and we should not be stopping people from being able to pass their life’s work on to their kids.” Whether you agree or disagree, individuals previously subject to the estate tax stand to gain some impressive advantages under the new tax plan. Besides passing their wealth free from tax, high-net-worth individuals will also be able to transfer wealth to heirs with a step-up in basis. So, if someone were to pass away with $1 million in stocks that they purchased for $100,000, the beneficiary of the stock would be able to immediately sell the asset with no ensuing capital gains tax. Along with these changes, passage of tax reform will likely have a substantial impact in many areas, estate planning not excluded. But, even with these dramatic alterations, the overall planning process remains the same. What is most important is that individuals seek out professional guidance to help them with their estate, regardless of what the upcoming tax future may be.

See Inna Fershteyn, The GOP Tax Plan’s Effect on Estate Planning, Brooklyn Trust and Will.com, December 9, 2017.

Special thanks to Alexander Evelson for bringing this article to my attention.

December 14, 2017 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

An Estate Planning Nightmare: Hopper v. JP Morgan

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-14/dd0be8a3-1732-4d0e-a082-2e97617bd68d.pngMax Hopper served as Senior Vice President of American Airlines, Chief Information Officer of Bank of America, and was chairman of the Sabre Group. The Texas native accumulated an extensive and impressive resume over the course of his working career. His unexpected death due to a stroke in 2010 left his family devastated. To make matters worse, Hopper passed with a $19 million estate and no will. The family, seeking professional help to distribute to the heirs, hired JP Morgan Chase to administer the fortune. Though the bank is usually associated with professionalism and responsibility, this was not quite the experience had by the Hopper family.

The administrators at JP Morgan took incredible amounts of time to release assets, refused to listen to the wishes of Hopper’s heirs, and consistently missed financial deadlines. Hopper’s family eventually took the case to court and succeeded on their claims of breach of fiduciary duty and breach of contract. The jury awarded them $4.7 million in compensatory damages along with $5 million in attorney’s fees. More spectacular though was the $4 billion in punitive damages. Prior to the verdict, Mrs. Hopper asked the jury to “send a message loud enough for JPMorgan to hear it all the way to Park Avenue in Manhattan.” They were apparently more than willing to accommodate the request.

Despite this resounding victory for the Hopper family, it is important to note that this process was extremely difficult for all involved. Mrs. Hopper claimed that “surviving stage 4 lymphoma cancer was easier than dealing with this bank and its estate administration.” Though this may be a bit of hyperbole, it highlights the additional stress created when a decedent passes without a will, and the great benefit of properly planning the distribution of an estate prior to death.

See Inna Fershteyn, An Estate Planning Nightmare: Hopper v. JP Morgan, Brooklyn Trust and Will.com, December 2, 2017.

Special thanks to Alexander Evelson for bringing this article to my attention.

December 14, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Intestate Succession, Professional Responsibility | Permalink | Comments (0)

Disgraced Las Vegas Lawyer Sentenced To the Maximum

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-14/bf632507-6fd2-465c-8bf7-cbd0f748c852.pngRobert Graham, accused of stealing millions of dollars from his clients, will now be spending between sixteen and forty years in prison for his crimes. He was charged with three counts of exploitation of an older/vulnerable person and two counts of theft. He was given the maximum possible sentence on each of the individual counts. Judge Kerry Earley, Clark County District Court, was unabashedly frank in her opinion of Graham: "Just tell me Mr. Graham, how can you sleep at night and account for that kind of money?"

See Karen Castro, Disgraced Las Vegas Lawyer Sentenced To the Maximum, Las Vegas Now.com, December 8, 2017.

December 14, 2017 in Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

The Finance 202: Senate to Draw Red Line on Estate Levy as Part of Tax Negotiations

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-14/92dd7887-6a01-4b17-b7b1-3f779bba837d.pngThe tumultuous travels of the tax reform bill are not quite yet at an end. House Republicans have drawn the proverbial line in the sand regarding the estate tax. They are pushing for full repeal while the Senate is only willing to double the exemption limits. Republican leaders may note this split as a nonstarter, as the margin for error in the Senate is extremely thin. As it stands, the Senate can only lose two votes and still manage to pass the bill. Sen. Susan Collins (R-Maine) highlighted this issue in a statement while on CBS’s “Face the Nation”: “I always wait until the final version of the bill is brought before us, before I make a final decision on whether or not to support it. There are major differences between the House and Senate bills. And I don't know where the bill is going to come out.”

See Tory Newmyer, The Finance 202: Senate to Draw Red Line on Estate Levy as Part of Tax Negotiations, The Washington Post, December 11, 2017.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

December 14, 2017 in Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)