Wills, Trusts & Estates Prof Blog

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

Wednesday, October 18, 2017

4 Ways You Can Start Planning for Possible Tax Law Changes Now

6a00d8345157c669e201b8d23bb74c970c-800wiJean-Luc Bourdon, principal and wealth advisor at BrightPath Wealth Planning, was critical of President Trump’s sparse tax plan: “In the tax world, a nine-page tax framework is equivalent to a tweet. It leaves many questions unanswered.” With so many unknowns regarding tax reform, most advisors are recommending waiting out the proposed legislation. For a few of the less ambiguous provisions though, pre-planning may be beneficial. The elimination of many currently allowable itemized deductions may end up costing retirees. It may be beneficial for these individuals to pack up and ship out to a more tax-friendly state if tax reform legislation is passed.

See Robert Powell, Retirees, 4 Ways You Can Start Planning for Possible Tax Law Changes Now, USA Today, October 13, 2017.

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

October 18, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Article on The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts

Bulk-cash-smuggling-photoAdam Hofri-Winogradow recently published an Article entitled, The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts, 68 Hastings L.J. 931 (2017). Provided below is an abstract of the Article:

Recent revelations on the use of fiduciary services raise concerns regarding their use for tax and creditor avoidance. Yet given the secrecy shrouding much of the fiduciary industry, we do not know which fiduciary services are used for such purposes, and to what extent. Shining a light on a particularly obscure part of the industry, this Article presents and analyzes the results of the first-ever global survey of professional service providers to private donative trusts, having obtained 409 usable responses from professionals in 82 jurisdictions, amplified by twenty-five interviews conducted with professional trust service providers in five jurisdictions. I report new data on four controversial features of current trust practice: (1) perpetual and extreme long-term trusts; (2) trust terms exonerating trustees from liability to beneficiaries; (3) tools rendering beneficiaries' entitlements inaccessible to their creditors; and (4) the control of trusts by their creators.

I find that trusts drafted to subsist for more than a century are fairly common, especially offshore, but many such trusts are not in fact likely to survive that long. Trustee exculpatory terms are now standard in donative trusts serviced by professionals, with most settlors neither demanding nor receiving any quid pro quo for their inclusion. Anti-creditor techniques protecting beneficiaries' entitlements are even more ubiquitous than trustee exculpatory terms, particularly in trusts serviced by U.S.-resident providers. Many protected beneficiaries are not less able than the average person to take care of their financial affairs. Finally, express reservation of powers by trust settlors is a majority phenomenon in the United States, but a minority one elsewhere. The actual control of trusts by their settlors is likewise far more common in the United States than elsewhere. I conclude the Article with recommendations for law reform that makes trusts likelier to benefit their beneficiaries and less likely to avoid duties owed to creditors and the state.

October 18, 2017 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, October 17, 2017

Conversion of Non-grantor Trust To Grantor Trust Not Taxable

Convert-buttonIn a private letter ruling, the IRS decided a number of issues relating to the conversion of a non-grantor trust to a grantor trust. The taxpayer proffered a number of questions: 1) whether such a transfer was taxable, 2) if the transfer would be considered self-dealing, and 3) if the transfer would result in a charitable deduction. The IRS ruled that the conversion was not a taxable property transfer, was not self-dealing, and that it would not result in a charitable deduction for the grantor.

See Mary Ellen Meara, Conversion of Non-grantor Trust To Grantor Trust Not Taxable, Withum, 2017.

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

October 17, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Trust Decanting: a Critical Perspective

How-to-decant-wine-01-950x633Stewart E. Sterk recently published an Article entitled, Trust Decanting: a Critical Perspective, 38 Cardozo L. Rev. 1993 (2017). Provided below is an abstract of the Article:

Trust decanting has some clear benefits. When the drafting lawyer has made a mess of the trust, decanting will sometimes enable the trustee to correct mistakes and to clarify ambiguities without the need for costly judicial proceedings. Decanting also enables trustees of some older trusts to avoid investment inefficiencies that were not well-understood when their trusts were drafted. In emphasizing these benefits, the proponents of decanting have largely ignored two significant issues raised by the decanting movement.

The first issue is whether a statutory grant of decanting power, when the trust instrument does not authorize decanting, conflicts with basic principles of testamentary freedom. Although the justification for decanting rests on its potential to effectuate the settlor's purposes, it is not always easy for a trustee to determine the intent of a now-dead trust settlor when the settlor did not memorialize that intent in the trust instrument. The trustee, who may have been selected for reasons other than intimate knowledge of the settlor's wishes, will not always be in an optimal position to assess that intent. Moreover, the trustee's own interests may cloud its judgment about whether to decant.

The second issue, which is in some tension with the first, is whether decanting enables trustees to effectuate the settlor's intent when, as a matter of policy, there is no good reason for exalting the settlor's presumed intent. The legal system has long tolerated the distributional inequities generated by trusts in large measure because of the incentives the trust device provides to potential settlors: people with wealth and talent may engage in more productive activity, and may partake in less frivolous consumption, if they know they can provide for future generations without worrying about the debt collector or the tax collector. But even if we assume that these efficiency considerations outweigh distributional inequities, is there any reason to enable trust beneficiaries to extract newly available benefits that could not possibly have influenced the trust settlor?

This Article: addresses these questions. After Part I's survey of trust law reforms that provided the impetus for the decanting movement, Part II explores the origins, justifications, and mechanics of trust decanting. Parts III and IV, the heart of the Article: , establish that the extraordinary breadth of decanting statutes risks frustrating the intent of settlors and enables trustees to impose external costs without generating commensurate social benefits. Part V concludes with a discussion of the potential obstacles to reform.

October 17, 2017 in Articles, Estate Planning - Generally, Estate Tax, Professional Responsibility, Trusts | Permalink | Comments (0)

Unholy Row As Court Decides on Religious Woman’s Will

Photodune-13634516-senior-woman-signing-last-will-and-testament-at-home-xsSandra Marie Hatton died in 2015 of ovarian cancer at the Warwick Hospital in Queensland, Australia. In an effort to save money in the final disposition of her estate, Hatton decided to use a do-it-yourself will kit. The four-page will form had numerous handwritten attachments along with multiple changes. Hatton had changed her mind about possible charitable beneficiaries a few times toward the end of her life. Multiple errors and befuddled beneficiaries will likely end up costing her estate tens of thousands of dollars in legal fees and probate costs.

See Kay Dibben, Unholy Row As Court Decides on Religious Woman’s Will, news.com.au, October 15, 2017.

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

October 17, 2017 in Estate Planning - Generally, Wills | Permalink | Comments (0)

Missouri Funeral Home Will Be Converted To Haunted House

1507915184031An abandoned funeral home is slated to serve as a haunted house prior to its demolition in Rogersville, MO. The owner of the Preston-Marsh funeral home gave a local high school permission to use the building for a fundraising event. This seemingly kind gesture has divided the community as some residents find the scheduled use of the building an offense to their more sensitive sensibilities. Despite bitter allegations of sacrilege and profanation, the haunted house event has not been cancelled.

See Missouri Funeral Home Will Be Converted To Haunted House, Prompting Uproar, Fox News, October 13, 2017.

October 17, 2017 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

State Law on After-born Children Leads to Revocation of a Will

Download (1)A number of states have enacted statutes that serve to revoke a decedent’s will, in whole or in part, if the decedent’s life-circumstances later change in specific ways. Hobbs v. Winfield, a recent case out of Georgia, highlights such a scenario. Alphonzo Hobbs executed a valid will in 1989 and died in 2007. In the interim, Hobbs had three children outside of marriage. The Supreme Court of Georgia held that because Hobbs did not draft the will with a consideration of future children, it was not valid under Georgia law. Hobbs’s assets passed under Georgia’s  intestacy scheme. Because laws may vary drastically from state to state, it is important to seek out professional advice to make sure a previously valid will remains intact after death.

See Michelle Soto, State Law on After-born Children Leads to Revocation of a Will, The National Law Review, October 12, 2017.

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

October 17, 2017 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

SEALS Trusts and Estates Proposed Programming

The following is posted at the request of Profs. Naomi Cahn and Deborah S. Gordon:

We are hoping to encourage more trusts and estates programming at the Southeastern Association of Law Schools conference, which will be held from August 6-12 in Ft. Lauderdale.  We will be proposing two discussion groups, described below, one which focuses on pedagogy and one on scholarship; please let us know if you would like to participate. In addition, please feel free to propose a panel or discussion group yourself; here is the submission information, http://www.sealslawschools.org/submissions/.

Thank you!  If you have any questions and would like to participate, then please contact Naomi Cahn, ncahn@law.gwu.edu/, and Deborah Gordon, dsg45@drexel.edu


Both pedagogy and scholarship within trusts and estates are moving beyond traditional core topics.  We are proposing two plenary discussion groups that explore how pedagogy and scholarship are expanding the ways of teaching and studying trusts and estates and related doctrines. One group will address innovations in teaching, including both skills and doctrine, and teaching about topics that overlap with other areas of the  law, such as Elder Law, Family Law, Property, and Professional Responsibility; the second group will explore new scholarship.

October 17, 2017 in Conferences & CLE, Scholarship | Permalink | Comments (0)

Monday, October 16, 2017

Unsent Text Message OK As Valid Will

1507586132688A 55-year-old Australian man drafted a text for his brother just before taking his life. The text message included a terse disposition of real property, but it was never sent. The Supreme Court in Brisbane held the draft to be enough for consideration as a valid will. Justice Susan Brown reasoned: “The reference to his house and superannuation and his specification that the applicant was to take her own things indicates he was aware of the nature and extent of his estate, which was relatively small.”

See Unsent Text Message OK As Valid Will, Says Australian Court, Fox News, October 10, 2017.

October 16, 2017 in Current Events, Death Event Planning, Estate Planning - Generally, New Legislation, Technology, Wills | Permalink | Comments (0)

CLE on Tax Exempt Organizations Boot Camp

0000000 CLEThe National Business Institute is holding a conference entitled, Tax Exempt Organizations Boot Camp, which will take place on Tuesday, October 17, 2017, at the Indiana Wesleyan University - Merrillville Education & Conference Center in Merrillville, IN. Provided below is a description of the event:

Program Description

Enhance Your Knowledge of This Unique Area of Law

Do you know the best practices and pitfalls for drafting bylaws, articles of incorporation, corporate policies and establishing tax exempt status? Can you confidently advise clients on governance, executive compensation, transparency, UBIT and other hot-button issues? This program will walk you through key steps of the nonprofit lifecycle and give you the knowledge and tools you need to establish tax exempt organizations and help clients preserve tax-exempt status. Don't miss this opportunity for practical instruction and sample forms - register today!

  • Get up to date with the latest legislation, enforcement activities and hot-button legal issues impacting exempt organizations.
  • Understand current best practices for drafting bylaws, articles of incorporation and corporate policies.
  • Find out how to successfully apply for tax-exempt status.
  • Review governance liability issues and gain best practices for minimizing them.
  • Catch Form 990 and UBIT reporting mistakes before the IRS does.
  • Get answers to your clients' everyday and unique operational questions.

Who Should Attend

This basic-to-intermediate level program is designed for attorneys. In-house counsel, CPAs and accountants, nonprofit organization directors and officers, nonprofit organization bookkeepers and controllers, tax managers, registered tax return preparers, and paralegals may also benefit.

Course Content

  1. Bylaws, Articles of Incorporation and Policies: Pitfalls to Avoid
  2. State Tax Exemption Strategies
  3. IRS Form 1023 and 1024 Procedures (and Problems)
  4. Board Governance, Compensation and Liability - Legal Landmines
  5. Top IRS Form 990 and UBIT/UBTI Reporting Mistakes
  6. Handling Operational Issues and Challenges
  7. Contributions, Fundraising/Charitable Solicitations and Planned Giving
  8. Ethical Considerations

Continuing Education Credit

Continuing Legal Education – CLE: 6.00 *

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 7.00 *

* denotes specialty credits

October 16, 2017 in Estate Planning - Generally | Permalink | Comments (0)