Wills, Trusts & Estates Prof Blog

North Carolina and Anatomical Gifts

The following is from Dave Undis, "Legally binding" organ donation?, LifeSharers, Sept. 8, 2007:

North Carolina will soon become the 45th state to make signing up to be an organ donor legally binding, according to a story in the Charlotte Observer:

"A new law, which takes effect Oct. 1, makes a driver's decision to be an organ donor, designated by a red heart on a driver's license, legally binding. Gov. Mike Easley signed the bill Friday. In the past, the red heart indicated the driver's intention to be a donor, but it could be overturned by the owner's family. Under the new law, a family member's permission will not be needed to carry out wishes conveyed on driver's licenses."

It will be interesting to see if North Carolina enforces its new law. None of the other 44 states with similar laws enforce them. Families are routinely asked for permission to transplant organs from deceased relatives. These families refuse permission about 50% of the time.

State Death Taxes and the Best Way to Pay Them

Daniel B. Evans (Attorney at Law, Consultant to Leimberg & LeClair, Inc.) has recently published his article entitled Paying State Death Taxes from the Marital Share, Prob. & Prop., Sept./Oct. 2007, at 54.

Here is the conclusion to his article:

As a general rule, it would seem to be better to direct that all state death taxes be paid from the marital share of the estate rather than from the credit shelter trust even though it may result in more state death tax.

            The direction will not result in any federal estate tax because the estate will get a deduction regardless of whether the money goes to the surviving spouse or to state death taxes.

            If there is no state death tax, or the state allows a state-specific QTIP (or QTIP-like) election for the credit shelter trust, there will be little or no state death tax, and the direction to pay state death taxes from the marital share will be irrelevant.

            If during estate planning (or during post-mortem planning) the decision is made to create a credit shelter trust to save possible future federal estate tax even though it will result in some state death tax, then paying the state death tax from the marital share also should be the correct decision because the additional state death tax will be relatively small compared to the resulting increase in the credit shelter trust.

            Because most estate plans now direct that state death taxes should be paid from the credit shelter part of the estate, this means that most of us must go back to the old drafting table to rewrite our marital deduction formulas and tax clauses.

Helping Students Find Comment Topics

The following material was originally posted on the Workplace Prof Blog:

The ACH Research Link, developed by the American Constitution Society for Law and Policy,

collects legal research topics submitted by practitioners for law students to explore in faculty-supervised writing projects for academic credit.  Topic authors will receive a copy of the resulting student papers, which ACS will also post in a searchable online library.  By connecting law students and faculty with the research needs of public interest organizations and advocates, ACS ResearchLink will become an increasingly comprehensive and powerful engine for change, while also enhancing the relevance and influence of student academic scholarship.

Allegation of forgery does not trigger forfeiture under in terrorem clause

The testator’s will included a no-contest clause which mandated a forfeiture by the recipient of a bequest to be distributed among two or more persons if the beneficiary disputes the executor’s decision on how to make distribution of specific bequests.

Two beneficiaries applied to contest the will based on an expert determination that the testator’s signature was a forgery.

In Harrison v. Morrow, No. 1060300, 2007 WL 1953896 (Ala. July 6, 2007), the court held that the no-contest clause applies only to challenges to the executor’s decisions about the distribution of specific bequests and not to a contest of the will itself.

Brooke Astor Update

Earlier on this blog, I have discussed various issues regarding Brooke Astor and the disputes with her son and grandson.  On August 13, 2007, Brooke died at her Holly Hill estate in Briarcliff, New York at the age of 105.

Here is some additional information regarding her estate from Lisa W. Foderaro, At Astor Country Home, Will Inheritance Mean Subdivision?, NY Times, Sept. 5, 2007:

[T]he future of the sprawling property Mrs. Astor bought in the mid-1960s, with its 9,000-square-foot stone house, greenhouse and other outbuildings, is uncertain. In the tense legal battle over her will, most expect that Holly Hill will go to her son, Anthony D. Marshall. But whether he will keep it or sell it is anyone’s guess.

In the meantime, a village committee has recommended changing the zoning in the area that includes Holly Hill, to a two-acre from a one-acre zone, potentially halving the number of houses that a builder could propose should the property be sold. That still could mean a storied estate being replaced with a development of perhaps two dozen homes, so the fate of Holly Hill, enveloped by an increasingly suburban landscape, has caught the attention of preservationists in Westchester County. * * *

Holly Hill figured prominently in the bitter dispute over Mrs. Astor’s care that dominated headlines last summer. One of her grandsons, Philip Marshall, accused his father, Mr. Marshall, of neglecting her care while enriching himself with her wealth.

One of the allegations against Mr. Marshall was that he had shut down Holly Hill to save money, thus depriving Mrs. Astor of her beloved home. (Mr. Marshall said he had wanted his mother to be close to her doctors in Manhattan.) But after Mrs. Astor’s close friend Annette de la Renta was appointed her temporary guardian in July 2006, Mrs. Astor was moved to Holly Hill, where she remained until her death.

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

CLAT Solution to Passing on a Family Business and Getting a Charitable Deduction

Douglas W. Stein (Attorney at Law, Barris, Sott, Denn & Driker, P.L.L.C.) has recently published his article entitled The Leveraged Family Business CLAT, Prob. & Prop., Sept./Oct. 2007, at 62.

Here is an introduction to his article:

Although charitable lead trusts have been with us for decades, their use was thrust into the limelight after the death of Jacqueline Kennedy Onassis in 1994. Mrs. Onassis’s will contained a long-term charitable lead annuity trust (CLAT) that was funded by her residuary estate. On the termination of the lead interest, the trust assets were to be distributed to the descendants of her children. Based on the applicable Code § 7520 rate in effect on the date of her death, her estate was entitled to a charitable deduction of approximately 97% of the assets passing to the CLAT. * * * Since Mrs. Onassis’s death, several published articles have discussed the benefits of testamentary charitable lead trusts.

            This article discusses a technique that allows decedents to pass their closely held businesses to their beneficiaries through a testamentary CLAT while simultaneously allowing the beneficiaries to reap some of the benefits of outright ownership. Most important, this technique allows decedents to pass S corporation stock, limited liability company interests, or partnership interests to their children without violating the self-dealing and other private foundation rules applicable to CLATs and simultaneously generate a significant charitable deduction.

More on the Bishop Estate

Earlier on this blog, I discussed a book authored by Samuel P. King (Judge, U.S. District Court for the District of Hawai'i) and Randall W. Roth (professor, University of Hawai'i School of Law) which presents an extremely well-researched and highly interesting (and shocking) account of the problems arising from the Bishop Estate in Broken Trust: Greed, Mismanagement & Political Manipulation of American's Largest Charitable Trust (2006).

In Erosion of Trust, ABA J., Aug. 2007, at 48, these authors update readers on some of the developments that have since occurred.  They note that:

The fact that it took the heavy hand of the IRS to finally break the legal logjam in the Bishop Estate scandal has not been lost on members of Congress and state legislators in their consideration of proposed measures to better protect charities from insider abuse.

The authors then discuss actions taken (or considered) by several states such as California, Massachusetts, and New York.

They conclude that "lawyers must take their duties seriously when representing nonprofits.  The legal profession can and should assist in efforts to make it harder to abuse the trust that the public places in charities and in the people who run them."

The Price of Charitable Deductions

In Big Gifts, Tax Breaks and a Debate on Charity, NY Times, Sept. 6, 2007, Stephanie Storm points out the nagging problem about granting income, gift, and estate tax preferences and deductions for charitable gifts.

For every three dollars they give away, the federal government typically gives up a dollar or more in tax revenue, because of the charitable tax deduction and by not collecting estate taxes.

The debate rages regarding whether it is appropriate to impose greater taxes on the general population to reduce the taxes of individuals who contribute to charity.

Mr. Broad * * * says his gifts provide a greater public benefit than if the money goes to taxes for the government to spend. “I believe the public benefit is significantly greater than the tax benefit an individual receives,” Mr. Broad said. “I think there’s a multiplier effect. What smart, entrepreneurial philanthropists and their foundations do is get greater value for how they invest their money than if the government were doing it.”

It is an argument made by many of the nation’s richest people. But not all of them. Take the investor William H. Gross, also a billionaire. Mr. Gross vigorously dismisses the notion that the wealthy are helping society more effectively and efficiently than government.

“When millions of people are dying of AIDS and malaria in Africa, it is hard to justify the umpteenth society gala held for the benefit of a performing arts center or an art museum,” he wrote in his investment commentary this month. “A $30 million gift to a concert hall is not philanthropy, it is a Napoleonic coronation.”

Elaborating in an interview, Mr. Gross said he did not think the public benefits from philanthropy were commensurate with the tax breaks that givers receive. “I don’t think we’re getting the bang for the buck for gifts to build football stadiums and concert halls * * *,” he said. “I don’t think the public would vote for spending tax dollars on those things.” * * *

What qualifies for that tax deduction has broadened over the 90 years since its creation to include everything from university golf teams to puppet theaters — even an organization established after Hurricane Katrina to help practitioners of sadomasochism obtain gear they had lost in the storm.

Declaration of invalidity of marriage after the testator’s death does not void gifts to purported spouse

The testatrix was survived by her husband of sixteen years who was the primary beneficiary of her will and the trust into which the will poured the residue.

In subsequent litigation, the husband admitted that he was divorced from his first wife two months after marrying the testatrix.  The trial court declared the marriage void ab initio and applied Arizona’s revocation on dissolution statute to revoke the gifts to the purported husband.

In In re Estate of Rodriguez, 160 P.3d 679 (Ariz. Ct. App. 2007), the court reversed, holding that the statute applies only to a dissolution of the marriage before a testator’s death and remanded for further proceedings on allegations of fraud and exploitation of a vulnerable adult by the purported husband.

Comment Reminder

Do you notice that when you post a Comment, it does not appear?  Do you post it again and again?  Then, after a while, do you notice that it suddenly appears?

This is not aberrant behavior. Instead, it is by design because comments on this blog, as well as all other blogs in the Law Professor Blog Network, are moderated.  This means that a comment will not appear until the blog editor approves the comment.  This requirement is imposed because the blog editor may be held liable for the publication of comments under the theory of publisher liability. Because of publisher liability concerns, the Law Professor Blogs Network does not allow automatic comment publishing.

I do not receive an automatic notice that someone has posted a comment.  I do check on a regular basis but if you want to get you comment posted faster, please send me an e-mail simply stating you have posted a comment.

Power of Attorney Abuse

I commend to your reading the extensive posting on Neil Hendershot's PA Elder, Estate & Fiduciary Law Blog entitled "Powers of Attorney" Investigated in Series.  He reviews a four part special investigative report by the Pittsburgh Post-Gazette focusing on powers of attorney -- specifically, the abuse that can occur in this powerful relationship by some agents who exercise their sweeping authority.

Alvin Rosenthal Might Disclaim Trouble

As discussed earlier on this blog, it appears that Leona Helmsley's dog, Trouble, will benefit from $12 million left in trust.

Article One, § F of Leona's will makes a specific bequest of Trouble to Alvin Rosenthal, Leona's brother.

Recent reports reveal that Alvin, now 80 years old, is not interested in assuming the responsibilities of caring for Trouble.  See AP, Trouble for Helmsley pooch, AZCentral.com, Sept. 4, 2007.

What happens next?  Leona did name an alternate taker, her grandson, David Panzirer.  However, the condition on David receiving Trouble is for Alvin to have predeceased Leona.  Leona did not include language such as "or if Alvin is unwilling or unable to care for Trouble."

Thus, Alvin will need to follow the proper procedures to disclaim his interest in Trouble so that for the purposes of this bequest, he will be treated as predeceasing Leona.  Of course, Alvin needs to be very careful that the disclaimer is properly worded so he does not inadvertently disclaim the other gifts to him in the will such as his outright bequest of $5 million and the $10 million in trust.

Another problem is also on the horizon.  When Trouble dies, she is to be interred in Leona's mausoleum at Woodlawn Cemetery in the Bronx.  However, according to the above article, New York law "forbids animal remains to be buried in human graveyards."

Special thanks to Brad Crider (J.D. Candidate, Texas Tech University School of Law) for being the first person to bring this article to my attention.

Legal Scholarship Blog Adds "Elder Law," But Not Other Probate-Related Areas

Earlier on this blog, I reported that the Legal Scholarship Blog, run by University of Pittsburgh School of Law & University of Washington School of Law, omitted the areas of Estates, Wills, Trusts, Probate, Estate Planning, and Elder Law from its list of legal scholarship categories.

I am pleased to report that due to the efforts of Kim Dayton (Professor of Law, William Mitchell College of Law), "Elder Law" has been added as a category.

Unfortunately, the remaining categories are still missing.

Online Swami Stumped by Estate Tax Repeal

Will the estate tax be permanently repealed?  That is the question on our minds as we prepare to teach class or advise clients.

In an attempt to gain insight into this important question, Alyssa A. DiRusso (Assistant Professor, Cumberland School of Law, Samford University) decide to consult with the Online Swami.

In response to the question, "Will the estate tax be permanently repealed?," the Online Swami became perplexed and responded, "Don't look at me.  I really don't know this."

Legal Scholarship Blog Slights Estate Planning and Related Areas

In a very sad commentary on the way some academics hold our area of the law, the Legal Scholarship Blog run by University of Pittsburgh School of Law & University of Washington School of Law has omitted the areas of Estates, Wills, Trusts, Probate, Estate Planning, and Elder Law from its list of legal scholarship categories.  Instead, all of these topics fall within the purview of "Property."

Leona Helmsley Spurs Interest in Pet Trusts -- Part II

As discussed earlier on this blog, Leona Helmsley's $12 million left in trust to benefit her dog, Trouble, as been a boon to raising public awareness about estate planning for pet owners.

In Sandra Block, Pet lovers like Helmsley plan ahead: In dog we trust, USA Today, Sept. 4, 2007, at 4B, the author states that:

If there's an upside to this dysfunctional saga, it's this: Helmsley's excessive bequest has focused attention on the importance of including your pets in your estate plans.

Thousands of pets end up in shelters every year because their owners died without making arrangements for their care, says Kim Bressant-Kibwe, trust and estates counsel for the American Society for the Prevention of Cruelty to Animals.

For detailed information about estate planning for pet owners, see Estate Planning for Non-Human Family Members, revised Sept. 2, 2007.

Abatement: Estate valued at date of distribution rather than date of death

In the case of In re Estate of Goldman, 158 P.3d 892 (Ariz. Ct. App. 2007), the decedent’s will made general bequests of cash to individuals and to charities and directed that the individuals be paid before the charities.

On the date of the decedent’s death, estate assets were insufficient to pay all the general bequests, but the estate assets appreciated greatly during the course of administration.

In an action by one of the charitable beneficiaries to compel payment of its bequest, the court held as a matter of first impression that for purposes of abatement, an estate is to be valued at the time of distribution.

Leona Helmsley Spurs Interest in Pet Trusts

As discussed earlier on this blog, it appears that Leona Helmsley's dog, Trouble, will benefit from $12 million left in trust.

The publicity (including unending jokes by late night comedians) has increased public awareness of pet trusts and has triggered increased interest in estate planning by pet owners as reported to me by many attorneys and as reflected in reports such as AP, Trouble's $12M trust fund part of new legal trend, CNN.com, Aug. 31, 2007 which states:

A growing number of people, not all wealthy, have been setting up trust funds or adjusting their wills to ensure that their pets are well cared for if they die, according to attorneys and animal welfare groups.

Special thanks to Adam J. Hirsch (William and Catherine VanDercreek Professor of Law, Florida State University College of Law) for bringing this article to my attention.

Top SSRN Downloads

Here are the top downloads from July 5, 2007 to September 3, 2007 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	249	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 30, 2007
2	224	Erickson: A Primer on FLPS Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: July 21, 2007 Last Revised: July 21, 2007
3	150	Fiduciaries Kenneth M. Rosen, University of Alabama - School of Law, Date posted to database: July 17, 2007 Last Revised: August 13, 2007
4	80	Outsourcing Intimacy: The Taxation of Powers of Attorney Bridget J. Crawford, Pace University - School of Law, Date posted to database: June 25, 2007 Last Revised: August 24, 2007
5	69	Speak Clearly and Listen Well: Negating the Duty to Diversify Trust Investments Jeffrey A. Cooper, Quinnipiac University School of Law, Date posted to database: August 10, 2007 Last Revised: August 23, 2007
6	34	Anna Nicole Smith and the Right to Control Disposition of the Dead James T.R. Jones, Louis D. Brandeis School of Law, Date posted to database: June 28, 2007 Last Revised: August 2, 2007
7	29	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

Is Trouble a sign that "the end is near"?

John Gapper in The dog takes the biscuit in New York, Financial Times, Sept. 1, 2007, compares Leona Helmsley's desire to provide extravagant care for Trouble to Caligula and his horse, Incitatus.

The most pampered animal in history was Incitatus, Caligula's horse, which slept in a stable of marble and was fed oats mixed with gold flakes, according to Suetonius. This week, however, Incitatus acquired a latter-day rival in the form of Trouble * * *

Perhaps the rich and powerful treating animals as if they were humans is a symptom of the decadent last days of empire. Caligula is said to have wanted to appoint his horse, who was attended by 13 servants, as a consul during the era when imperial Rome was finally consumed by hubris.

David Walker, the comptroller general of the US, drew a parallel between ancient Rome and present-day America in the week before Helmsley died.

He said the US was suffering "declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility".

He might also have mentioned extreme inequality of wealth, with the lot of average citizens stagnating while an elite - financiers and property developers in New York's case - accumulates power. Caligula insisted on being treated as a god but New York's gilded set gains a similar effect simply by throwing big parties.

Or maybe Trouble is simply the beneficiary of two New York phenomena coming together, as it was inevitable they eventually would: the proliferation of trust funds and the veneration of domestic animals.

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

Is Trouble in trouble?

As discussed earlier on this blog, it appears that Leona Helmsley's dog, Trouble, will benefit from $12 million left in trust.

According to Xana O'Neill & Jose Martinez, Frail health dogs Helmsley pooch , NY Daily News, Aug. 31, 2007, Trouble has a history of health issues.  Here are some of the details:

• Trouble is eight years old (the normal lifespan for a Maltese is 14 years).
• Trouble was "fed a diet of pills to treat kidney, nerve and thyroid ailments."
• Helmsley's staff would use cream cheese to camouflaged the pills.
• It is believed that the dog is at Dunellen Hall in Greenwich, Connecticut.