Wills, Trusts & Estates Prof Blog

ERISA CLE

The ABA Sections of Business Law, Health Law, Labor and Employment Law, Real Property, Probate and Trust Law, Taxation, and Tort Trial and Insurance Practice; and the American College of Employee Benefits Counsel are sponsoring on August 16, 2007 a TeleConference/Live Audio Webcast entitled ERISA Fiduciary Basics: What You Need to Know.

The program will cover the following topics:

• What Does ERISA Fiduciary Responsibility Mean?  Who Is a Fiduciary?
• Fiduciary Rules Governing Plan Investments
• Traps for the Unwary:  Prohibited Transactions
• Employee Communications:  Fiduciary Implications
• Sloppy Drafting of  Plan, Trust, and SPD = Liability for Fiduciaries and Plan Sponsors
• Other Hard Lessons of Litigation
• Structuring Funds and Investments to Allow for Acquisitions by Plans

Gift Tax Consequences of Trusts Employing Distribution Committee

The following is from IR-2007-127, July 9, 2007:

The Internal Revenue Service * * * is reconsidering a series of private letter rulings (PLRs) * * *.

The PLRs address, in part, the gift tax consequences under sections 2511 and 2514 of the Internal Revenue Code of trusts that utilize a distribution committee consisting of trust beneficiaries who direct distributions of trust income and corpus. It has come to the Office of Chief Counsel's attention that the conclusions in the PLRs regarding the application of section 2514 may not be consistent with Rev. Rul. 76-503, 1976-2 C.B. 275, and Rev. Rul. 77-158, 1977-1 C.B. 285. Accordingly, the Office of Chief Counsel is requesting comments as to whether the conclusions in these PLRs regarding section 2514 can be reconciled with the revenue rulings.

These PLRs involve a situation where trust distributions are made at the unanimous consent of a distribution committee that consists of trust beneficiaries, or at the discretion of an individual committee member with the consent of the grantor. If a distribution committee member resigns or dies, the committee member is replaced with another person. The PLRs conclude that the distribution committee members have substantial adverse interests to each other for purposes of section 2514. Therefore, they do not possess general powers of appointment over the trust. Accordingly, distributions from the trust will not be subject to gift tax with respect to the distribution committee members.

However, the holdings in Rev. Rul. 76-503 and Rev. Rul. 77-158 indicate that because the committee members are replaced if they resign or die, they would be treated as possessing general powers of appointment over the trust corpus. It has been suggested that the facts presented in the PLRs are distinguishable from the revenue rulings because in the PLRs, the grantor's gift to the trust is incomplete since the grantor retains a testamentary special power of appointment. See, however, section 25.2514-1(e), Example (1) of the Gift Tax Regulations, and Rev. Rul. 67-370, 1967-2 C.B. 324.

Before the Office of Chief Counsel takes any action with respect to the PLRs, the Office of the Associate Chief Counsel, Passthroughs & Special Industries is requesting comments regarding the question of whether the distribution committee members possess general powers of appointment under section 2514. The comments could also include suggestions for a substantially similar trust structures that would achieve the intended income, gift, and estate tax objectives of the transactions described in the PLRs.

Comments should be provided within ninety (90) days of the date of this news release. Send written comments to: Internal Revenue Service, Attn: CC:PA:LPD:PR (CC:PSI:4), room 5203, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (CC:PSI:4), Courier's Desk, Internal Revenue Service, 1111 Constitution Ave, N.W., Washington, DC, or sent electronically, via Notice.comments@irscounsel.treas.gov (indicate CC:PSI:4)

The Hurricane Katrina-Charitable Deduction Interface

Miranda Perry Fleischer (Associate Professor, University of Illinois College of Law) has recently posted her article on SSRN entitled Why Limit Charity?  Here is the abstract of the article:

In the wake of Hurricane Katrina, Congress temporarily lifted one of the most puzzling limits in the tax Code: the cap that prevents an individual from claiming a charitable deduction greater than 50% of her income, even if she gives more than half her income to charity. Although scholars often criticize the cap in passing for creating unnecessary complexity, few have explored its theoretical underpinnings, and those who have appear hard-pressed to find a satisfactory justification.

This Article fills that void by proposing two complementary explanations for the AGI limits, one grounded in economic theory and one in political philosophy. The economic explanation proceeds directly from the literature conceptualizing the charitable deduction as a way of overcoming market and government failure for various public goods by spurring non-profits to produce them. It suggests that the AGI limits reflect a bargain between individuals whose preferred public goods are fully funded by the government and those whose projects are only partially subsidized. The philosophical explanation is anchored by the idea of reciprocity inherent in liberal democratic theory. It argues that allowing some individuals to pay no taxes, even if supporting a "good" cause, is tantamount to allowing them to opt out of a previously agreed-to scheme of cooperation and undermines the stability of our democratic society.

Transfer Tax CLE

The American Bar Association Section of Real Property, Probate and Trust Law, Young Lawyers Division and the ABA Center for Continuing Legal Education is sponsoring a Teleconference and Live Audio Webcast on August 14, 2007 entitled Review of Estate Tax, Gift Tax and GST Tax -- Part 1.

Here is a description of the program:

The Essential Issues in Trust and Estate Law Series provides attorneys with the opportunity to learn more about the key basics of trust and estate law. Whether you are a new attorney wanting to know more about trust and estate law, or a seasoned attorney looking for a refresher, this series has the information you need.  Click here for more information on the series and series registration options.

This first program in our comprehensive series consists of an overview of the estate tax, gift tax, and generation-skipping transfer tax systems.  In particular, this program focuses on fundamental estate planning concepts such as: planning with your client’s applicable exclusion amount, computing gross and taxable estates, utilizing marital and charitable deductions, implementing annual exclusion gifts, and understanding generation-skipping transfer tax transfers.  In addition, the program will briefly address recent proposals for estate tax reform.  The program will provide both a solid framework for junior practitioners and an excellent review for senior practitioners.

Quinnipiac Probate Law Journal Seeks Articles

The student-edited Quinnipiac Probate Law Journal ("QPLJ") publishes four issues per year featuring articles related to probate topics as well as complete full-text opinions from important probate court cases. The Journal Editors have now begun the process of selecting scholarly articles and probate-related opinions for publication in Volume 21. In addition to traditional full-length Articles, the QPLJ is particularly interested in shorter Essay and Commentary pieces. Submissions are reviewed on a rolling basis through the year.

If any readers have written a piece they wish to have considered for publication, or have come across an interesting probate court opinion, please consider sending it to the QPLJ.

For questions regarding submission of articles or opinions, please contact Rachel Aylor at (203) 582-3223, or by e-mail at projournal@quinnipiac.edu.  Or you may direct any questions or comments to Associate Professor of Law Jeffrey Cooper at jeffrey.cooper@quinnipiac.edu.

Kidney Donation Chain

The following is from John Faherty, Gift of kidney begins string of organ donations, The Arizona Republic, July 22, 2007:

A chain of small miracles started in Phoenix last week.

It began when a Michigan man decided to donate one of his kidneys to a person he had never met.

His decision means a Phoenix woman will be able to watch her grandchildren grow up. But it does not stop there. Now the Phoenix woman's husband will donate one of his kidneys to a perfect stranger. That woman's best friend will then do the same. And so on and so on.

Eventually eight people, and possibly far more, will be saved because of the marriage of good will and medical technology.

This kidney chain - the first of its kind - is possible because of a new type of organ donation called a paired donation.

It happens when someone who needs a kidney has a person who is willing to donate one, but their body chemistry prevents a good match.

In a paired donation, those two people will be connected with two other people in the same situation.

Each healthy person then donates a kidney to someone who needs it.

The only unusual thing is that the donors are helping strangers directly in order to indirectly help the person they love.

According to Dave Undis, Kidney donation chain, LifeSharers, July 26, 2007:

Some people have been concerned that paired donations violate the National Organ Transplant Act's prohibition against donation for "valuable consideration" because they involve donation of a kidney in exchange for another kidney. President Bush is expected to soon sign legislation clarifying that these types of organ donations are legal.

Deduction for investment advisory fees on a fiduciary income tax return

Neil E. Hendershot of the Harrisburg, Pennsylvania law firm of Goldberg Katzman, P.C. (author of the PA Elder, Estate & Fiduciary Law Blog) has posted a comprehensive discussion of proposed federal treasury regulations were just published for comment on the deductibility of a fiduciary's administrative costs.  These regulations were proposed before oral arguments in the appeal to the U.S. Supreme Court of William L. Rudkin Testamentary Trust v. Commissioner, 467 F.3d 149, (2d Cir. 2006), on the issue of the proper application of the 2% floor imposed by I.R.C. § 67(a).

See Neil E. Hendershot, "Rudkin" Regulations Proposed During Appeal, PA Elder, Estate & Fiduciary Law Blog, Aug. 2, 2007.

How Far Would You Go to Gain a Trust Litigation Advantage?

According to prosecutors in Cambridge, Massachusetts, a former MIT professor and wealthy businessman named John J. Donovan Sr. "staged his own shooting to gain an advantage in a legal battle with his own children for control of trusts that he claims are worth at least $180 million. He's accused of trying to get back at his oldest son by falsely accusing him of hiring his would-be killers.  The accusations and the civil case -- and even a daughter's molestation allegation -- are overshadowing the career of a man once dubbed "the Johnny Carson of the training circuit."

Prof. Donovan claimed that "[h]e was shot by two masked men with Russian accents, and saved only because two of the bullets bounced off his belt buckle."

Some additional details from Former MIT professor headed to trial in allegedly staged shooting, CNN.com, Aug. 1, 2007, include:

Donovan's children were beneficiaries of just one trust that is worth far less than the amount claimed by their father, according to a spokeswoman for four of the five children. The two sides have a mediated settlement, but the case ended up back in court after a judge found that the elder Donovan did not comply with the terms of the agreement, according to court documents.

In 2002, one of Donovan's daughters told her siblings that Donovan had sexually abused her when she was a child. Donovan vehemently denies the allegation, and said through his attorneys that his children are using it to gain leverage in the dispute.

People who know Donovan say he is a complex man who inspires both fierce loyalty and animosity.

Grandchildren Born After Son's Death Covered by Father's Trust

Settlor created a trust for his "issue" and "descendants" in 1969.  Three years after Settlor's son died, the son's widow gave birth to a child and after another two years elapsed, she again gave birth to a child.  Both children were the result of the widow's insemination with cryoproserved semen.

In Matter of Martin B., a New York court ruled that these two grandchildren were entitled to share in trust distributions as his descendants.  The court examined the evidence and found that the trusts reflected Settlor's intent "to include all of the grantor's bloodline among his issue."

See Mark Fass, Sons Conceived In Vitro Ruled Covered by Trusts, NY L.J., Aug. 1, 2007.

Special thanks to Dave L. Cornfeld for bringing this case to my attention.

New Edition of Dobris, Sterk, and Leslie's Estates and Trusts Released

The third edition of Estates and Trusts by Joel C. Dobris (Professor of Law, UC Davis School of Law) Stewart E. Sterk (H. Bert and Ruth Mack Professor of Real Estate Law, Benjamin N. Cardozo School of Law), and Melanie B. Leslie (Professor of Law and Codirector of Program for Family Law, Policy, and Bioethics, Benjamin N. Cardozo School of Law) is now available.

Here is the publisher's description of this book:

A functional approach to wills and to trusts, Estates and Trusts provides comprehensive treatment of the subject of estates and trusts. The Third Edition of the casebook provides increased focus on cutting edge issues including asset protection trusts, dynasty trusts, and tortious interference with inheritance. The new edition simplifies treatment of estate tax issues, and includes discussion of the estates of various celebrities – including Anna Nicole Smith (complete with photograph), James Brown, Doris Duke, and Andy Warhol – in order to bring complex legal issues to life.

Repossessing Tombstone

Most people understand that if you buy a car on credit and do not make the payments that the car will be repossessed.  The same thing may occur if tombstone payments are not made as discussed in AP, Crash Victim's Headstone Repossessed, WTOPNews.com, July 31, 2007.

Brady Conger died in a car accident about one year ago.  Brady's mother purchased a tombstone on credit and then stopped making payments so that a $750 balance remained.  Memorial Art Monument (Springville, Utah) repossessed the tombstone.  Friends of Brady have now raised enough money to pay the balance the the headstone will be reinstalled shortly.

Blogging -- Good, Bad, or Ugly?

J. Robert Brown (Professor of Law, University of Denver Sturm College of Law) has recently posted on SSRN his article entitled Blogs, Law School Rankings, and the Race to the Bottom.

Here is the abstract of his article:

Blogs are changing legal scholarship. Although not a substitute for the detailed, often intricately researched analysis contained in law reviews and other scholarly publications, they fill an important gap in the scholarly continuum. Blog posts can generate ideas and discussion that can be transformed into more a systematic and thorough paper or scholarly article. At the same time, blogs provide a forum for testing ideas once they are published in more traditional venues.

While over time, a blog presence will likely become de rigueur for top scholars and law reviews, top tier schools as a group have not yet targeted blogs as a necessary component of scholarly activity. In the short term, therefore, blogs provide unique opportunities for faculty and law schools outside the top tier to enhance their reputational rankings. Blogs can enhance reputation by allowing faculty to route around some of the biases in law review placements and SSRN rankings that favor those at the top tier schools. Blogs also represent a cost effective mechanism for advertising scholarly activity.

The paper discusses the evidence that blogs enhance reputation and surveys the way that scholars at law schools outside the top tier are already harnessing blogs to enhance their reputations. The paper also discusses what it takes to create a successful blog, from the search for content to the benefits of advertising. The paper finishes with a brief history of The Race to the Bottom, a corporate governance blog.

New Edition of "Restatement of the Law Third, Trusts - Volume 3" Published

The following is from the ALI website:

This new volume of Restatement Third of Trusts covers trustee powers and duties. It also includes an updated version of the Prudent Investor Rule volume published by ALI in 1992.

Topics Include:

• general duties
• duty of prudence 
• duty of loyalty 
• duty of impartiality 
• duty with respect to delegation 
• duty to furnish information to beneficiaries 
• extent and exercise of trustees’ powers

In the Restatement tradition, this volume combines clear black-letter provisions with extensive explanatory Comments, clarifying Illustrations, and detailed Reporter’s Notes. The volume is further enhanced by tables of cases and statutes, parallel tables showing corresponding Restatement Third and Restatement Second section numbers, a table of cross-references to the West Digest System and ALR annotations, and an index. The volume will be supplemented by an annual pocket part.

Special thanks to Charles B. Thornton Professor of Law Brian Shannon (Texas Tech University) for bringing the publication of this volume to my attention.

Doctor in Trouble for Allegedly Accelerating Death of Organ Donor

One of the most often expressed reasons for people failing to agree to become organ donors is the fear that death could be hastened to obtain the organs.

In what is claimed to be the first such criminal case in the United States, Dr. Hootan Roozrokh of San Francisco was charged yesterday (July 30, 2007) by prosecutors in San Luis Obispo County for administering a harmful drug, excessive doses of morphine, and a sedative to Ruben Navarro to speed up his death so that his organs would be available for transplant.

After suffering respiratory and cardiac arrest and irreversible brain damage, Ruben's family agreed to donate Ruben's organs.  When Ruben was removed from life support, he continued to live instead of dying.  It is at this point that Ruben's mother claims that he was given the lethal drugs causing Ruben's death a day later.

The doctor's lawyer, however, claims that the charges are "unfounded and ill-advised" and are part of a "witch hunt."  In addition, the coroner's office previously determined Ruben died of natural causes.

See Doctor charged in transplant inquiry, USA Today, July 31, 2007.

Law Prof Blogosphere Census

The following is from the Tax Prof Blog:

Dan Solove (George Washington) has updated his census of law professor bloggers (here and here). He notes that there are now 365 law professor bloggers (up from 309 in October 2006).  The gender breakdown of the 365 law professor bloggers is 74% male and 26% female. 

77 (21%) of the bloggers are part of [the] Law Professor Blogs Network.  [This] network is more diverse than the general law prof blogosphere:  66% male and 34% female.

Prof. Wes Shinn Named Dean and Chief Operating Officer of the Appalachian School of Law

According to an ASL press release:

The Board of Trustees of the Appalachian School of Law has appointed Clinton W. (“Wes”) Shinn as Dean and Chief Operating Officer of the Appalachian School of Law, effective July 1, 2007. Dean Shinn has been serving the School as interim Dean since December 12, 2006, while a search for a permanent dean was conducted.

“I am delighted Wes Shinn has agreed to be our dean,” said Roger Powers, ASL Board Chair. “He will provide steady leadership that will ensure the law school continues its progress. The Board is committed to supporting him in every possible way, and I look forward to working alongside him as we continue to solidify and perpetuate the Appalachian School of Law.”

Professor Shinn practiced law in New Orleans, Louisiana for more than 25 years, concentrating in the areas of probate and estate planning, commercial transactions, oil and gas property interests, and environmental regulation.

Professor Shinn returned to full-time academia in 1999, having previously taught for two years as an assistant professor of law at the Tulane University School of Law. From 1999 until 2001, he was a member of the ASL faculty, and then was an associate professor of law at the Mississippi College School of Law from 2001 until 2006. In August 2006, he returned to Appalachian as tenured Professor of Law.

Wes Shinn is a graduate of the Tulane School of Law, where he graduated with highest honors, was elected to Order of the Coif, and served as Editor-in-Chief of the Tulane Law Review. He earned an LL.M. from the Harvard Law School in 1973. He teaches courses in Property, Secured Transactions, and Estates & Trusts at ASL. Dean Shinn has published in the legal fields of civil law obligations, secured transactions, and environmental law, and has been a frequent speaker in the areas of wills and estates. He is a Fellow of the American College of Trust and Estate Counsel, a Charter Fellow of the Louisiana Bar Foundation, and served a term as an elected delegate to the Louisiana State Bar Association.

Special thanks to Prof. Paul Caron for bringing Prof. Shinn's appointment to my attention.

A Garage Sale Casket

I don't know the source of this picture but I thought it to be most interesting.  Would you buy a casket at a garage sale?

 

 

 

 

Top SSRN Downloads

Here are the top downloads from May 31, 2007 to July 30, 2007 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	151	Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax Lily L. Batchelder, New York University School of Law, Date posted to database: June 18, 2007 Last Revised: July 20, 2007
2	65	Why Limit Charity? Miranda Perry Fleischer, University of Illinois College of Law , Date posted to database: June 14, 2007 Last Revised: June 17, 2007
3	27	Davenport: Res Judicata Applied Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: June 25, 2007 Last Revised: June 25, 2007
4	19	The Tax Regulation of Contractual Intimacy: Transfer Tax Aspects of Powers of Attorney Bridget J. Crawford, Pace University - School of Law, Date posted to database: June 25, 2007 Last Revised: July 17, 2007

Blog Editor Returns

Dear Readers,

I have returned from vacation.  I hope you enjoyed the postings made by my research assistant, Elizabeth Storm, who, in addition to helping out with the Blog, was also in the midst of studying for and taking the Texas bar.

As always, if you have any contributions, suggestions, or comments, please let me know.

Gerry

Some Thoughts on the Estate Planning Profession

Christopher P. Cline (Holland & Knight, Portland, Oregon) has published his article, “The Fault, Dear Brutus, Is Not in Our Stars, But in Ourselves.” Some Thoughts on the Estate Planning Profession, in the Summer 2007 33 ACTEC J. 34 (2007).

Here is the conclusion:

Our professional lives, never easy, seem to have gotten a lot more troublesome lately, leaving us with three options: just deal with it, quit practice, or find a new way to go about our work. The latter course, if taken with the client’s personal, rather than tax planning, needs as a signpost, has the potential to be the most satisfying. By helping the client with the hard question of how to leave a family or philanthropic legacy, the complexities described above, as well as others, become more manageable because they no longer are the primary focus of the lawyer-client relationship. And, paradoxically, we may find that the tax planning is more effective because it is now tied to goals that are important to the client.