Wills, Trusts & Estates Prof Blog

Factors Bearing on Trust Situs Selection Analyzed

The Program on Corporate Governance has recently released a new discussion paper entitled Perpetuities, Taxes, and Asset Protection: An Empirical Assessment of the Jurisdictional Competition for Trust Funds, authored by Robert Sitkoff (John L. Gray Professor of Law, Harvard Law School) and Max Schanzenbach (Benjamin Mazur Professor of Law, Northwestern University School of Law).

Here are excerpts from the abstract of this paper as posted by Robert Sitkoff on March 5, 2008:

This chapter provides an accessible overview of our previous work on the impact of the abolition of the Rule Against Perpetuities (RAP) on trust fund situs. The implementation of the Generation Skipping Transfer (GST) Tax by the Tax Reform Act of 1986 sparked a movement to repeal the RAP.***

Our findings imply that roughly $100 billion in trust funds have moved to take advantage of the abolition of the RAP. ***

We conclude that the jurisdictional competition for trust funds is real and intense, with the primary margin of competition being the rules that bear on trust duration, and that the enactment of the GST tax sparked the rise of the perpetual trust.***

Wealth Does Not Necessarily Equal Happiness

The Le Van Company has recently posted on its website an article entitled Notes on Social Intelligence, Part VI: Finding the Social “Sweet Spot”, discussing among other things the interplay of happiness and wealth.

According to this article:

In some respects, social intelligence is confirming (or borrowing from) positive psychology. The wealthiest people are not necessarily the happiest. As the wealthy get more money, they adjust their expectations upward. “The rich may experience more pleasure than the poor, but they also require more pleasure to be equally satisfied” – a kind of hedonic treadmill.***

Social responsibility begins when we act in ways that help create optimal states in others.

Nourish your social connections.

Life-Saving Donors May Come Forward When Least Expected

The following is from William Yardley, A Donor Match Over Small Talk and Coffee, NYTimes.com, March 4, 2008:

Annamarie Ausnes is known for holding up the line at her favorite Starbucks here, carefully counting out her coins to pay for her “short drip, double-cupped” daily jolt. Over the years, Sandie Andersen, a friendly barista behind the counter, might have rolled her eyes once or twice but she has also taken these morning moments to make conversation, to make friends.***

On March 11, the two women are scheduled to go into surgery at Virginia Mason Medical Center in Seattle. If all goes well, when they come out Ms. Ausnes, 55, who has polycystic kidney disease, will be the new owner of Ms. Andersen’s left kidney.***

In November*** Ms. Ausnes stopped into Starbucks as usual, but this time Ms. Andersen noticed that her customer was glum. Ms. Ausnes finally told her the news, and the response was instantaneous.

“I’m going to get tested,” Ms. Andersen said.***

Both women expect to be in the hospital for about a week then to be out of work for up to six weeks. Howard D. Schultz, the chief executive of Starbucks, called both women and told Ms. Andersen “how proud I am to have someone like you working for our company.”***

Restrictive language creates life estate

The testatrix’s will gave a farm to her two daughters with the restriction that it not be sold during their lives and for 21 years thereafter and on their deaths, title is to vest in “the heirs of their bodies per stirpes.”

The court reversed the trial court judgment that the daughters owned the land in fee simple, holding that the language giving the land to the daughters’ heirs indicated that the testatrix did not intend to give a fee simple but rather a life estate with a remainder in the heirs.  The court remanded the case for consideration of what effect, if any, the restriction on sale has on the remainder interest.  Barnett v. Estate of Anderson, 966 So. 2d 915 (Ala. 2007).

Understanding Retirement Assets CLE

The American Bar Association Section of Real Property, Trust and Estate Law, Young Lawyers Division and the ABA Center for Continuing Legal Education are sponsoring a teleconference and live audio webcast on March 19, 2008 entitled Understanding Retirement Assets.

Here is a description of this 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.

The program will:

• Provide a basic overview of IRAs, including the minimum distribution rules
• Review basic planning concepts with IRAs such as appropriate beneficiaries and naming a trust as a beneficiary
• Discuss the Pension Protection Act in connection with IRAs

2008 Heckerling Institute Proceedings Summarized

Steve R. Akers (Bessemer Trust, Dallas, Texas) has recently published his article entitled Heckerling Musings 2008, RPPT eREPORT (Feb. 2008).

Here is a summary of his article as posted on RPPT eREPORT:

Steve Akers condenses the latest Heckerling Institute proceedings into one easy-to-read and well organized article. A must read for all estate planners!

Estate Planning Dilemma

The following was posted on the Dear Prudence: Advice on manners and morals page of the online Slate magazine. See I'm Not Saying She's a Gravedigger … slate.com, Feb. 28, 2008.

I recently proposed marriage to my significant other of two years. She accepted my proposal[.] Earlier in our relationship, I told her that if we got married I would want a prenuptial agreement, and she agreed. However, now that the time has come for us to sign, she is refusing. I have offered to write a will that protects her in the event of my death. But she says that if I die first, she would have limited rights to contest my will and is worried my family would attempt to claim my investments. She also stated that in the event of both of our deaths, her two adult children from a previous marriage would not have rights to my investments.***

Here is what was posted in response:

Since you are well-off, a potential spouse has a right to expect that you would provide for her in your estate planning, as you have said you will.*** Since she's been showing such an ugly side of herself during these discussions, her threat must seem more and more like a reprieve.

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

Assisted Suicide -- An Australian Adventure

Don Flounders (78 years old) who is a resident of the state of Victoria in Australia suffers from mesothelioma.  He is very interested in assisted suicide but such is illegal here.  Thus, Don traveled to Mexico in early February to purchase Nebutal, a lethal drug which is considered a Class I drug just like heroin.  He also intended to purchase a dose for his dying friend, Angie Belecciu.  See Andrea Petrie, Dying man risks jail to by euthanasia drug, The Age, March 4, 2008, at 7.

Yesterday (March 5, 2008), Angie was in bed when the Australian Federal Police arrived to raid her house to located the Nebutal dose which Don had allegedly purchased for her.  Angie, however, is not upset at the police officers.  As four officers "opened draws, squeezed teddy bears and looked in her washing machine," another officer made her coffee and visited with her.  The officers did not locate the illegal drug.  See Dan Oakes, A different sort of death knock, The Age, March 6, 2008, at 11.

Rector and Gore Opinions from the Tax Court

Wendy C. Gerzog (Professor of Law, University of Baltimore School of Law) has recently posted on SSRN her article entitled Rector and Gore: Two Recent Flp Cases.

Here is an abstract of her article:

Rector and Gore are two recent family limited partnership (FLP) memorandum opinions from the Tax Court. In both cases, the coveted FLP marketability and minority discounts eluded the estates.

New Jersey Supreme Court Holds Estate Tax Constitutional but Unjust

The following is from Tom Hester, Supreme Court rules estate tax was unjust, NJ.com, Feb. 28, 2008, discussing a New Jersey case Oberhand v. Director, Div. of Taxation, A-106-06 (N.J. Feb. 27, 2008).

The state Supreme Court ruled yesterday an attempt by the state to collect taxes on portions of the estates of two people who died was legal, but unjust.

At a time when the Corzine administration is scraping for every dollar for the state budget, the decision is expected to force the Division of Taxation to refund more than $2 million in taxes and interest in 40 estate tax cases in which the executors have gone to state Tax Court to regain the money.***

In a 5-2 decision, the Supreme Court upheld a state Tax Court decision that the amendment applied to the estates is constitutional. But the justices found the amendment should not be applied to the Ober hand and Seider estates because it would be "manifest injustice" -- a legal doctrine designed to prevent unfair results that do not necessarily violate the Constitution.***

"When the decedents executed their wills and at the time that each died, the trust formulae were framed in such a fashion that no federal or state taxes would be due[.]"***

This case is also discussed by Michael Rispoli, Court partially overturns estate tax law, courierpostonline.com, Feb. 28, 2008.

Special thanks to Neil E. Hendershot, Esq. (Attorney at law, Goldberg Katzman, P.C., Adjunct Professor, Widener University School of Law) for bringing these articles to my attention.

Court declares Dannielynn as Anna Nicole Smith's sole heir

Earlier on this blog, I provided an analysis of Anna Nicole Smith's will.

On Tuesday (March 4, 2008) a Los Angeles judge declared that Dannielynn is the sole heir to Anna's estate and set up a trust in the girl's name.  Her father, Larry Birkhead, and Anna's executor, Howard K. Stern, will serve as the co-trustees.

It is debatable whether this result is in accordance with the terms of her will.  It is reported that Stern's lawyer, Bruce S. Ross, said "We and Mr. Stern always believed that Anna Nicole never intended to disinherit her daughter. * * * I'm pleased to say this chapter in the saga is closed."

See AP, Judge: Baby is Anna Nicole Smith's sole heir, CNN.com, March 4, 2008.

Special thanks to Sara Hudman and Neda Jahansouz (both J.D. Candidates, Texas Tech University School of Law) for being the first individuals to bring this development to my attention.

Understanding the Interplay of Bankruptcy and Probate

David B. Young (Attorney at Law, McGinnis, Lochridge & Kilgore, L.L.P.) has recently published his article entitled The Intersection of Bankruptcy and Probate, 49 S. Tex. L. Rev. 351 (2007).

Here is the conclusion to his article:

This essay has only been able to touch a few of the high points of the interplay between probate and bankruptcy. The two specialized areas of practice, so similar in many respects, have much to learn from one another. The limits on the respective jurisdiction of probate and bankruptcy courts, what property each sort of court administers, when bankruptcy law depends upon and even incorporates state law and when it overrides state law, all afford opportunities for misunderstanding but also for cooperation. As with the state law insurance receivership systems, state law probate schemes may function in harmony with the federal bankruptcy system or they may clash with it. At least one key to ensuring that the former occurs more frequently than the latter is an effort by practitioners in each field to understand the other. One may hope that dialogue will increase.

Reverse Mortgages Can Be a Snare for the Elderly

According to Charles Duhigg, Tapping Into Homes Can Be Pitfall for the Elderly, NYTimes.com, March 2, 2008:

As the United States has become an older nation, reverse mortgages have grown into a $20-billion-a-year industry, with elderly homeowners taking out more than 132,000 such loans in 2007, an increase of more than 270 percent from two years earlier. In surveys, many borrowers say reverse mortgages have improved their lives and provided money they needed for retirement.

But hundreds of people who have sought reverse mortgages — in lawsuits, surveys and conversations with elder-care advocates — have complained about high-pressure or unethical sales tactics they say steered them toward loans with very high fees. Some say they were tricked into putting proceeds of their loans into unprofitable investments, while sales agents pocketed rich commissions.***

New laws governing reverse mortgages are under consideration in Congress, though lobbyists for some lenders are mounting strong opposition, Congressional staff members say.***

Wills, Trusts & Estates Prof Blog Ranked Number 26 in "Most Influential Law Blog" Study

I am pleased and humbled to report that according to Jay Brown (Denver) who has ranked the 50 Most Influential Law Faculty Blogs, the Wills, Trusts, & Estates Prof Blog came in tied for 26th place.

To all my readers, I greatly appreciate your support and contributions.

The court may reject both the taxpayer’s and the government’s values

In Estate of Thompson, 499 F.3d 129 (2nd Cir. 2007), the court upheld the Tax Court’s rejection of both the taxpayer’s and the government’s valuation of stock in a closely held corporation. 

The court rejected the taxpayer’s argument that the Tax Court was bound to accept the taxpayer’s value once the court rejected the government’s value.  The Tax Court was thus permitted to conduct its own valuation of the stock.  Nonetheless, the appellate court remanded the case to correct a calculation error.

Catholic Church Reiterates Its Position on End of Life Issues

The following is from Pope reaffirms Church’s stance against euthanasia, catholicnewsagency.com, Feb. 25, 2008:

Pope Benedict received participants in an international congress entitled: "Close by the Incurable Sick Person and the Dying: Scientific and Ethical Aspects" today and reiterated that the Church is against all forms of euthanasia.***

"In more concrete terms", he added, "this means ensuring that every person in need finds the necessary support through appropriate treatments and medical procedures - identified and administered using criteria of therapeutic proportionality - while bearing in mind the moral duty to administer (on the part of doctors) and to accept (on the part of patients) those means for preserving life which, in a particular situation, may be considered as 'ordinary'".***

After raising the issue of how it is becoming more common for elderly people in large cities to be alone "even in moments of serious illness and when approaching death", the Holy Father noted that such situations increase pressures towards euthanasia, "especially when a utilitarian view of people has become established". ***

Special thanks to Neil E. Hendershot, Esq. (Attorney at law, Goldberg Katzman, P.C., Adjunct Professor, Widener University School of Law) for bringing this article to my attention. You can read more on Neil's blog at PA Elder, Estate & Fiduciary Law Blog.

Top SSRN Downloads

Here are the top downloads from January 2, 2008 to March 2, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	106	Back to School: The New Parameters of Funding a Grandchild's College Education Richard L. Kaplan, University of Illinois College of Law, Date posted to database: February 13, 2008 Last Revised: February 23, 2008
2	69	The Strict Rules of Charitable Split Interest Gifts Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: January 29, 2008 Last Revised: January 29, 2008
3	62	GST Qualified Severance Regulations: Final and Proposed Marc Chorney, Author - Affiliation Unknown, Date posted to database: December 9, 2007 Last Revised: December 9, 2007
4	55	Bigelow: The Ninth Circuit on FLPs Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: December 17, 2007 Last Revised: December 17, 2007
5	53	In Their Own Hand: An Analysis of Holographic Wills and Homemade Willmaking Stephen Clowney, U.S. Court of Appeals for the Third Circuit, Date posted to database: January 15, 2008 Last Revised: February 6, 2008
6	51	The Human and Economic Dimensions of Altruism: The Case of Organ Transplantation Richard A. Epstein, University of Chicago - Law School, Date posted to database: February 3, 2008 Last Revised: February 14, 2008
7	37	Child Labour: The Partial Fiduciary Accountability of Parents Robert Flannigan, University of Saskatchewan, Date posted to database: January 6, 2008 Last Revised: January 6, 2008
8	26	Charitable Trusts: A Comparative Study of India, United Kingdom and the United States Tarun Jain, London School of Economics & Political Science (LSE) - London School of Economics, Date posted to database: January 26, 2008 Last Revised: January 26, 2008
9	24	How Do I Love Thee, Let Me Count the Days: Deathbed Marriages in America Terry L. Turnipseed, Syracuse University College of Law, Date posted to database: January 29, 2008 Last Revised: January 29, 2008
10	20	'Living Will' and the Nigerian Law: The Need for Legislative Intervention Ademola Oladimeji Okeowo, Matrix Solicitors, Date posted to database: December 4, 2007 Last Revised: January 14, 2008

The Central Provident Fund (Amendment) Act 2006 and Intestate Succession in Singapore

Barry C. Crown  (Associate Professor, Faculty of Law, National University of Singapore) has recently posted on SSRN an article entitled Death and the Central Provident Fund: Legislative Intervention. 

Here is an abstract of this article:

The Central Provident Fund (Amendment) Act 2006 is essentially a technical piece of legislation, fine-tuning various aspects of the operation of the Central Provident Fund ('CPF') scheme. Needless to say, legislation of this nature rarely calls for comment in an academic law review. However, section 12 of the Central Provident Fund (Amendment) Act 2006 is of importance in the Singapore law of succession. It amends section 25 of the principal Act, the Central Provident Fund Act, which provides for the disposition of CPF moneys on the death of a member who has not made a nomination under the CPF scheme. The new section 25 resolves a longstanding problem in the law of succession, but unfortunately it does so in a way which is likely to give rise to difficulties for CPF members in the future. To appreciate fully the change that has taken place, it is necessary to devote a few words to the state of the law as it stood prior to the recent amendment

A Parent's Guide to Wills & Trusts (For Grandparents, Too)

Don Silver has recently published 2nd edition of his book entitled A Parent's Guide to Wills & Trusts (For Grandparents, Too).

Here is the description of this book from Adams-Hall Publishing:

In an easy-to-read and easy-to understand question-and-answer format, A Parent’s Guide to Wills & Trusts spells out concisely and compassionately what all parents and grandparents need to know about wills, trusts and estate planning.

Here’s the one book you need before and during the times you consult with a lawyer, financial planner, CPA, banker and life insurance agent.

Here are some of the topics covered in this book:

• Leave money the right way to your minor children, adult children and your grandchildren
• Meet your children’s special needs
• Make sure you don’t accidentally shortchange a child
• Leave enough to raise and educate your children
• Select a guardian to raise your children
• Minimize or eliminate death and income taxes
• Avoid probate, use living trusts and reduce legal fees
• Avoid family disputes
• Do special planning as a divorced parent
• Do special planning if you have children from a prior marriage
• Choose the right asset management people including an executor, a trustee, a guardian and an attorney-in-fact