Wills, Trusts & Estates Prof Blog

LifeSharers opens New Zealand Chapter

"LifeSharers is a non-profit national network of organ donors.  LifeSharers members promise to donate upon their death, and they give fellow members first access to their organs."

Recently, LifeSharers has formed a chapter in New Zealand.  Here is an excerpt from Innovative New Service to Increase Organ Donors, Scoop Health, May 1 2008:

An ‘innovative’ new healthcare solution to help increase the number of organ donors in New Zealand was launched from Parliament today.

Andy Tookey of Givelife NZ, a campaign for reform to the organ donation system, held a press conference in Parliament’s West Wing Foyer this morning to launch ‘LifeSharers.’

LifeSharers is New Zealand’s ONLY organ donor register and it gives a POWERFUL incentive to join the register.

LifeSharers members direct that their organs should be offered first to other registered organ donors. * * *

Membership is Free and everyone is welcome to join. There are no medical constraints to joining.

Only 42% of drivers have ‘donor’ on their licence, and around half of potential donors in Intensive Care Units do not become donors due to objection by themselves or their families.

“I would anticipate that 99% of the population would say ‘yes’ to receiving an organ if it were to save theirs, or their children’s life, yet only 42% have put donor on their driving licence.

Remember, without organ donors there are no recipients either.” Says Tookey.

Is Steve Fossett's Estate Liable for Search Costs?

The governor of Nevada, Jim Gibbons, intends to ask Steve Fossett's widow to help Nevada pay the $687,000 is spent searching for her husband, although the search was unsuccessful.

According to AP, Nevada wants Fossett widow to pay search cost, MSNBC, May 2, 2008:

Ben Kieckhefer, press secretary for [the governor], said any assistance from the Fossett family would be voluntary.

"We are going to request that they help offset some of these expenses, considering the scope of the search, the overall cost as well as our ongoing budget difficulties," Kieckhefer told The Associated Press.

It is an interesting question whether Nevada could file a successful claim as a creditor of the estate.

Medicaid and LTC Coverage

Gene Coffey (staff attorney at the National Senior Citizens Law Center in Washington, D.C.) has recently published his article entitled Narrowing Medicaid's LTC Coverage? The Implications of the DRA's Home and Community-based Care Benefit, 9 Marq. Elder's Advisor 131-153 (2007).

Here is an excerpt from this article:

The purpose of this article is to examine the new HCBS option and its potential to narrow NF care entitlement, to consider the new option in the context of state efforts to modify clinical eligibility standards, and to identify how far states may go in making standards more stringent. Ultimately, it is entirely up to states to decide whether they will use the new option to expand or contract coverage. Fortunately, the first state to implement the HCBS option has chosen to use it to expand coverage. Still, because of recent efforts by other states to reduce enrollment by narrowing the NF clinical standard, and because of pressure states may feel to identify ways to reduce their LTC obligations, do not lightly dismiss the possibility that a state may attempt to restrict coverage by using the HCBS option. It is therefore important to identify the limitations of the states' ability to do so.

Should Trusts Remain Off the Public Record?

Frances H. Foster (Edward T. Foote II Professor of Law, Washington University School of Law) continues her study of trust privacy with the recent publication of her article entitled Trust Privacy, 93 Cornell L. Rev. 555 (2008).

Here is an excerpt from her article:

This Article reconsiders the very notion of trust privacy. It does so through a humanistic approach that essentially looks beyond abstractions to consider the actual effect of laws on people. Part I sets out the conventional rationale for treating wills as public record but allowing will-like revocable trusts to remain private. The remainder of the Article addresses the basic question reformers have failed to discuss: Should trusts be private? It sets out possible arguments for and against trust privacy. Parts II and III show that although privacy confers important human benefits, it also imposes significant human costs that reformers have largely ignored. In presenting the human impact of trust privacy, the Article hopes to inspire a more nuanced and balanced approach to reform. Part IV attempts to begin that process by considering four possible future directions for reform and their responses to the human costs of trust privacy.

The Probate Process -- Good or Bad?

Is probate an evil to be avoided at all costs, a quick and easy transfer mechanism with built-in protections, or something in-between?  The answer depends on a variety of factors, primarily the law of the state which will govern the estate.

For an interesting discussion, see Steven Seidenberg, Plotting Against Probate, ABA J., May 2008.  Here is an excerpt from this article:

More than ever before, clients want to do whatever they can to avoid the possibility that their estates will be probated, says Christopher Gagic, an estate planning attorney at Buckingham, Doolittle & Burroughs in Boca Raton, Fla. “I see clients insisting on a revocable living trust just because they want to avoid probate,” he says. “They all want to avoid probate, which seems to be a dirty word.”

Many state legislatures, too, seem to take a dim view of probate. They have enacted laws that authorize new techniques for avoiding probate, make more estates exempt from probate and streamline the probate process.

But the efforts of attorneys, clients and legislatures to limit probate may not always produce the desired results. The volume of trust and estate litigation is growing rapidly, with no end in sight. Moreover, avoiding probate means there is less outside supervision of asset transfers, making it easier for fraudulent schemes or family disputes to keep assets away from beneficiaries and creditors who are entitled to them.

“Avoiding probate is a legitimate goal, but people don’t know about the risks,” says Brian D. Bixby, who chairs the probate and trust litigation group at Burns & Levinson in Boston. “They don’t think [problems] can happen in their family, and they are often embarrassed when it happens to them.”

Split-Dollar Life Insurance

Joshua E. Husbands (Partner, Holland & Knight, Portland, Oregon) and J. Alan Jensen (Partner, Holland & Knight, Portland, Oregon) have recently published their article entitled Split-dollar Life Insurance Funding: You Mean People Still Do That?, Prob. & Prop., May/June 2008, at 40.

Here is an excerpt from their article:

After several torturous years of notices, reflection, meetings, and debate, the IRS issued final regulations for the taxation of split-dollar financed life insurance effective for agreements entered into after September 17, 2003. * * *

Despite the gloom and doom forecasted by many in the insurance industry and the legal profession, the final regulations did not sound the death knell for split-dollar planning.  Granted, some of the luster was gone from the heady days of collateral equity split-dollar arrangements using economic benefit measured by artificially low terms rates that had never actually seen the light of day in connection with the actual issuance of a real life insurance policy.  Nonetheless, in many instances the use of split-dollar arrangements still makes great sense and ca provide a very nice tax result for clients. * * *

This article analyzes the issues that should be raised with both older arrangements and those being put in place currently.

California Community Property Student Aid

Charlotte K. Goldberg (Professor of Law, Loyola Law School, Los Angeles) has recently published the second edition of her book entitled California Community Property -- Examples and Explanations.

Here is the publisher's description of the book:

Using the Examples & Explanations pedagogy and FITS (Funds, Intentions, and Title)—an original tool for understanding the complexities of California Community Property—Charlotte Goldberg presents an effective and timely overview of California’s community property system.

• FITS (Funds, Intentions, and Title)—a class-tested, unique tool for determining, under California law, whether marital property is to be considered community or separate property
  • The FITS acronym helps students to understand the roles that funds, intentions, and titles play in characterizing property as either separate or community
• the proven-effective Examples & Explanations pedagogy combines straightforward introductions with well-written examples and explanations that apply concepts, reinforce learning, and test understanding of material covered
• meticulous treatment of joint titles and reimbursement, featuring examples thoroughly illustrating all possible scenarios, including retroactivity
• coverage of tangible and intangible property, such as businesses, educational degrees, goodwill, and pensions
• premarital agreements and recent amendments to the Premarital Agreement Act

Updated throughout and with many new examples, the Second Edition features:

• major developments regarding retroactivity of the Family Code—affecting premarital agreements, fiduciary duty, and domestic partnerships
• several new cases clarifying premarital agreements and fiduciary duty
• new case decision regarding celebrity goodwill
• coverage of Family Code §4 and §2640(c)

Attorneys Help Plan Emergency Workers' Estates

The following kudos to estate planning attorneys is found in David Unze, Attorneys lend a hand to heroes, USA Today, April 22, 2008:

In the days after the Sept. 11, 2001, terrorist attacks, Anthony Hayes was like many Americans: He had a desire to do something to help.

Hayes, a South Carolina attorney who worked at 4 World Trade Center before attending Tulane University Law School, acted on that desire.

He called the fire chief in Columbia, S.C., to ask what he might do for emergency first responders. A brainstorming session followed with a group of 15 firefighters, during which Hayes asked whether they regularly updated their wills and powers of attorney.

Only one raised a hand.

"I was dumbstruck, and then I became agitated," Hayes said. "How is it possible that a community does not provide basic trust and estate planning when your job is to risk your life to save me? That was counterintuitive."

Two months later, Hayes started the "Wills for Heroes" program. He returned to the Columbia Fire Department in November 2001 to offer free wills, powers of attorney and health care declarations for first responders.

Hayes says the program has expanded to 11 states: Georgia, Minnesota, California, Arizona, Texas, Illinois, Alabama, South Carolina, North Carolina, Virginia and Utah, where lawyers prepared 41 estate plans at the state's first Wills for Heroes event in March.

Several other states, including Louisiana, Kansas, Oklahoma, Mississippi, Tennessee, Ohio, Connecticut and Michigan, are planning to come on board later this year, Hayes says. He estimates the program has helped 10,000 first responders since it began.

The services provided would otherwise cost $800-$1,500 depending on the law firm you choose, said Susan Link, a Twin Cities attorney who volunteers for the Minneapolis-St. Paul metro area Wills for Heroes program.

Eco-Exits

Happy Belated Earth Day!

Although Earth Day was last week (April 22, 2008), I thought I would remind readers that they can "die green" as well as "live green."

Here are a few excerpts from Regan McTarsney, Green funerals make for eco-exits, Breitbard.com, April 20, 2008:

Cardboard coffins, clothes sewn from natural fibers, a burial plot in a natural setting. Green funerals attempt to be eco-friendly at every stage.  * * *

Britain has been a world leader in eco-friendly funerals for years and a source of green burial products and ideas for countries like the United States, where the trend is just starting to catch on. * * *

Special thanks to Andrew D. Vaughn (J.D. 2008, Texas Tech University School of Law) for bringing this article to my attention.

Happy Law Day!

Today, May 1, is Law Day.  Not only that, this is also the 50th Anniversary of the first Law Day.

Here is a description of Law Day from the ABA:

Fifty years ago President Eisenhower proclaimed the first Law Day a "day of national dedication to the principle of government under law." The ABA invites you to celebrate this enduring principle during the 50th anniversary of Law Day.

Law Day 2008 will explore the meaning of the rule of law, fostering public understanding of the rule of law through discussion of its role in a free society

What will your body do when "you" are gone?

Maggie Koerth-Baker has compiled a list of things you (or, more accurately, your corpse) may do after you die.

Here is the list -- for the details, see Things your body can do after you die, CNN.com, April 30, 2008:

1. Get married
2. Unwind with a few friends (mummy unwrapping parties)
3. Tour the globe as a scandalous work of art
4. Fuel a city
5. Get sold, chop shop style
6. Become a Soviet tourist attraction
7. Snuggle up with your stalker
8. Don't spread an epidemic
9. Stand trial
10. Stave off freezer burn

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

The Estate Planning--Art Interface

Lance S. Hall (ASA, cofounder and President of FMV Opinions) has recently authored a article entitled The New Frontier: Non-Charitable Estate Planning Transfers with Fractional Interests in Art (and Other Personal Property).

Here is the conclusion of his article:

With the art market reaching new highs and investor interest in art exceeding previous norms, increased scrutiny to the estate planning needs of art collectors and investors is required.  With the changes in the rules for charitable gifting under the 2006 Pension Protection Act, charitable gifts of art are no longer as attractive.  Alternatively, fractional interest gifting to the junior generation may result in significant estate tax reduction.  Even if a gift is not made, art investors/collectors in community property states may be able to avail themselves of undivided interest discounts at death.

Clearly, undivided interest discounts for art and other personal property are likely to incur close scrutiny and outright rejection by the IRS. However, under the principles of "fair market value" an undivided interest discount is applicable. The challenge will be convincing the court that an analysis with no empirical data involving actual undivided interest sales in art will meet the taxpayer's burden of proof. The courts have overcome identical difficulties associated with the lack of empirical data when discounting undivided interests in real estate. The issues are no different with art, collectibles and other personal property. An objective measure of the hierarchy of discounts applicable to different asset classes is to examine the relative volatility of the individual art or personal property with other classes of investments where empirical data is available (real estate is generally less volatile than stock and art, stock is generally less volatile than art, art is generally less volatile than gold and commodities). Then, the specific attributes of the art (or other personal property) could be used to more subjectively adjust the discount up or down, accordingly.

To focus the court's attention to the lack of control and lack of marketability of the interest, and away from the right to partition, a transfer made subject to an agreement to waive the right to partition is advisable.

With the charitable gifting no longer as advantageous, the estate planning professional can expect to see a significant rise in fractional interest discount planning for art (and other personal property).

Israel Acts to Increase Organ Donation

The Knesset has recently approved two laws aimed at increasing the number of organ donations made by the citizens of Israel.

The following is from Amnon Meranda, Knesset approves organ donation law, Ynetnews.com, March 25, 2008:

The first law on brain and respiratory death states that brain death would be defined as death with all its implications. * * *

The issue of defining the time of death was raised in an attempt to encourage the religious public to donate organs. Members of the Knesset's Labor, Welfare and Health Committee sought to reach an agreement with the Chief Rabbinate and rabbinical religious authorities on a definition of the donor's death.

MK Otniel Schneller * * * the bill's initiator, held negotiations over the past few months with different elements in the haredi world and among the religious public before reaching the historic agreement that led to the formation of a law defining brain death.

According to the law, the time of brain-respiratory death will be in a situation when the person is proclaimed dead by two certified doctors, according to fixed parameters (no blood pressure, failure to breathe without need for life support, no response from the pupils and an absence of other reflexes). * * *

The [second] new law states that a living person who donated his organs will receive the status of a chronic patient after the donation is made, and will not have to pay the self-participation fee for any medical service resulting from the donation, in addition to NIS 18,000 (about $5,100) in compensation from the State.

In addition, the donor will be entitled to a recovery of expenses for psychological treatment and a recovery leave, and will receive a merit certificate from the State. The donor will also be exempted from paying the entrance fee to nature reserves and national parks. * * *

The law includes an innovative clause giving preference to people who sign the donor card should they be in need of an organ transplant in the future.

Note that this latter provision matches the philosophy behind the LifeSharers organization in the United States.

Uniform Trust and Estate Statutes, 2008-2009 Edition

Uniform Trust and Estate Statutes (2008-2009 edition) prepared by John H. Langbein and Lawrence W. Waggoner is now available from Foundation Press.

Here is a description of this new edition:

Designed to be used with any casebook or textbook, this statutory collection provides law students with a single-volume source containing all the uniform acts needed in a trusts and estates course (as well as the United Kingdom family provision legislation, included for comparative purposes). The 2008-2009 Edition contains the full statutory texts of the principal Uniform Acts pertaining to trusts and estates, including the Uniform Probate Code, the Uniform Trust Code, and the various special-purpose acts. The book supplies full texts of the three recently-promulgated acts: the Revised Uniform Anatomical Gift Act, the Uniform Power of Attorney Act, and the Uniform Prudent Management of Institutional Funds Act. As in past editions, the 2008-2009 Edition reproduces the official comments for the substantive articles (II and VI) of the Uniform Probate Code; for the Uniform Trust Code; and for most of the other Uniform Acts.

The book groups the trust and estates statutes in three parts.

• Part One, Probate Statutes, primarily contains the Uniform Probate Code (1990 text, incorporating all subsequent amendments). The Uniform Probate Code incorporates several freestanding Acts, including the Uniform Disclaimer of Property Interests Act (1999) and the Uniform Estate Tax Apportionment Act (2003).
• Part Two of the book, devoted to Trust Statutes, begins with the Uniform Trust Code (2000), incorporating all subsequent amendments. Part Two also contains the Uniform Principal and Income Act (1997), the Uniform Prudent Investor Act (1994), and the Uniform Custodial Trust Act (1987).
• Part Three, containing other Uniform Acts, includes the Uniform Parentage Act (2000, with 2002 amendments); the Uniform Health-Care Decisions Act (1993); the Uniform Simultaneous Death Act (1993); the Uniform Fraudulent Transfer Act (1984); the Uniform Transfers to Minors Act (1983, with 1986 amendments); the Model Marital Property Act (1983); and the Uniform Premarital Agreement Act (1983).

The 2008-2009 edition incorporates recent amendments to the UPC, adopted as technical amendments in 2008. The principal change is to the elective share, which has been revised to simplify the measure. The main substantive revision increases the surviving spouse's minimum share to 50 percent of the marital-property portion of the augmented estate.

A unique feature of the book is that juxtaposes with the current Uniform Acts certain carefully selected extracts of important provisions from former versions of various Uniform Acts, especially the pre-1990 version of UPC Article II; and selected provisions from the Restatement (Third) of Trusts (2003) and the Restatement (Third) of Property: Wills and Other Donative Transfers (1999-2003).

Trusts CLE -- Domestic and International

On May 22-23, 2008, Financial Events International is sponsoring a seminar entitled Advanced Planning: Domestic and International Trusts in New York.

Here is a description of the program:

Our conference will deal with trusts and estate planning for both U.S. clients with foreign connections and foreign clients with U.S. connections and discuss thoroughly Tax and reporting rules relating to foreign trusts, their regulation and their implementing. This event will also facilitate networking among international and U.S. delegates

This is an ideal event for lawyers, private bankers, wealth managers and trust company representatives from across the U.S., Canada, Latin America, the Caribbean and other international jurisdictions worldwide.

Speakers and presenters will include a broad mix of international experts that will guide you through the key legal, regulatory and taxation issues of getting up and managing domestic and international trusts.

Specific topics for this discussion include:

• Cross Border Estate Planning (with a sample case)
• Asset Protection
• Trust Administration- Jurisdiction Comparisons
• Trust Protector Issues: The Use of Trust Protectors in International and U.S. Trusts
• Private Trust Companies- Their Proliferation and Uses
• 2005 Bankruptcy Code Analysis- Impact on U.S. Assets and U.S. Trusts
• Integration of Trusts and Family Offices
• Life Insurance, Including Domestic and International PPVUL, An Increasingly common Trust Asset
• Foreign and Domestic Foundations- Uses, Integration, Application
• Case Study: Family Office Caliber Planning for Multi-National Families
  Dealing with Institutional Trustees
• OECD/FATF Updates and Impact on Trust Planning
• Swiss Trusts- Taxation
• Delaware Trusts – the latest
• Outsourcing Your Private Trust Companies- A New Kind of Trustee

Cohabiting Siblings Denied Same Rights as Married and Same-Sex Couples

Two sisters in England (Joyce and Sybil Burden) have lived together for most of their lives.  They never married and took care of their parents and other relatives.

Since 1976, they have attempted to be recognized as cohabiting couple for tax purposes.  Their requests have always been denied.

Recently, the Burden sisters appealed to the the European Court to obtain the same tax rights as married and same-sex couples.  By a 15-2 vote, the Human Rights judges denied their claim holding that they were not unfairly discriminated against.

Because of the ruling, when the first sister dies, the surviving sister will have to sell their home to raise the money to pay the estate tax which will be due on the home.

See Sisters lose European tax battle, BBC News, April 29, 2008.

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

Exculpatory clause in power of attorney deemed invalid

The principal executed a power of attorney which granted the agent broad powers to make gifts to himself, exonerated the agent from any liability to the principal or anyone else, and purported to relieve the agent from any duty to account.

The agent used his authority to transfer the principal’s property to himself and members of his family.

In a proceeding brought by the administrator of the principal’s intestate estate, the court held that the agent had violated his fiduciary duties to the principal, that the exoneration clause was void as contrary to public policy and the duties of an agent, and that the attempt to relieve the agent from the duty to account was void as against public policy.  In re Mueller, 853 N.Y.S.2d 245 (N.Y. Sur. Ct. 2008).

Prior will admitted to probate through application of dependent relative revocation

The testator’s will gave his estate to his spouse if she survived and, if she did not survive, to two of his three children by a prior marriage.

The testator executed a new will making all three children contingent beneficiaries.

On returning home from his lawyer’s office where he executed the second will, he destroyed the prior will stating that he did not want the third child to know he had been omitted from the prior will.

After the testator’s death, the three children challenged the second will alleging it had not been property executed.

In In re Estate of Oliva, 880 N.E.2d 1223 (Ind. Ct. App. 2008), the court affirmed the dismissal of the children’s action, holding that if the second will were invalid, the prior will would be admitted to probate under the doctrine of dependent relative revocation because the destruction of the prior will was “clearly conditional” on the validity of the new will and intestacy would be contrary to the testator’s intent as shown in both wills.

The settlor must have testamentary capacity to create and amend a revocable trust

In the course of affirming summary judgment against charities challenging the validity of the amendments made by the settlor of a revocable trust shortly before his death, the court in Maimonides School v. Coles, 881 N.E.2d 778 (Mass. App. Ct. 2008), held that because a pour-over will and a “contemporaneously executed revocable inter vivos trust” are related parts of single testamentary scheme, execution of an amendment to the trust requires the level of capacity necessary to make a valid will.

Intestate Succession Under Hindu Law

Taru Jain (Advocate, Supreme Court of India) has recently posed an article on SSRN entitled General Principles of Intestate Succession Under Hindu Law.

Here is the abstract of this article:

Succession implies the act of succeeding or following, as of events, objects, places in a series. In the eyes of law however, it holds a different and particular meaning. It implies the transmission or passing of rights from one to another. In every system of law provision has to be made for a readjustment of things or goods on the death of the human beings who owned and enjoyed them.

In the present paper I discuss and analyze the rules of inheritance that the Hindu Succession Act, 1956 prescribes for matters of succession when an individual (a Hindu male or female) dies without prescribing for how his/her property shall devolve upon his/her death i.e. rules of intestate succession.

Need an Organ? Don't Smoke Weed!!

Timothy Garon is suffering from hepatitis C and is in urgent need of a liver transplant.

Timothy was recently refused a spot on the transplant list because of his use of marijuana.  In fact, he was even arrested for growing marijuana in December 2007.

Here are some additional details from Gene Johnson, Medical marijuana patients denied a spot on transplant list, Seattle Times, April 26, 2008:

Because of the scarcity of donated organs, transplant committees such as the one at the University of Washington Medical Center have tough standards for deciding who should get them. Does a candidate have other serious health problems? Will he religiously take anti-rejection medicines? Is there good family support? Is the candidate likely to drink or do drugs? * * *

His case poses a new ethical consideration for those allocating organs, one that could become more common as a dozen states now have medical marijuana laws: When dying patients need a transplant, should it be held against them if they've used dope with a doctor's blessing?

Garon, who has been hospitalized or in hospice care for two months straight, said he turned to the university hospital after Seattle's Harborview Medical Center told him he needed six months of abstinence. The university also denied him, but said it would reconsider if he enrolled in a 60-day drug-treatment program.

This week, at the urging of Garon's lawyer, Douglas Hiatt, the university's transplant team reconsidered anyway, but it stuck to its decision.

Dr. Brad Roter, the Seattle physician who authorized Garon's pot use for nausea, abdominal pain and to stimulate his appetite, said he did not know it would be such a hurdle if Garon were to need a transplant.

Insurance Beneficiary Murders Insured

Primary Beneficiary was convicted of Insured’s murder in the case of In re Estate of Stafford, 244 S.W.3d 368 (Tex. App.—Beaumont 2008, no pet. h.).

Accordingly, the proceeds of the policy were paid to Contingent Beneficiary under Texas Probate Code § 41(d) and Texas Insurance Code § 1103.151.

Primary Beneficiary appealed claiming that his conviction was not final because an appeal was pending.

The appellate court affirmed.  The court explained that the Code provisions do not require that the conviction be final before forfeiture occurs.

Moral:  A beneficiary accused of murdering the insured should put forth the best case possible at the trial level because forfeiture will occur even if the conviction is subsequently reversed on appeal.

The sale of an asset by a successor trustee does not cause ademption

A father created a self-trusteed revocable trust which made specific gifts of stock in a closely held corporation to his two sons.

After the father was adjudged to be incapacitated, the court appointed a professional conservator who was then appointed as the successor trustee.  The successor trustee sold the assets of the corporation.

The court in Brown v. Labow, 69 Cal. Rptr. 3d 417 (Cal. Ct. App. 2007), held that the gift of the stock was not adeemed by the sale because there was no evidence that the settlor intended an ademption in these circumstances and that the conservator had no authority to revoke the gift of stock without court approval.

Structuring Trusts in Estate Planning

According to Len Costa, Trust is the word for inheritance riches, FT.com, April 26, 2008:

I recently heard from a private investor that inherited wealth is like driving a car and not having to pay for petrol. The benefactor provides a valuable boost but cannot determine how well the beneficiary steers or what his or her final destination will be.

This metaphor, extended slightly, underscores the value for many families of bequeathing large fortunes in trust: using a legal structure to transfer wealth may help shape outcomes by imposing guardrails and laying down some rules of the road.***

In many jurisdictions, fiduciary duties can be shared among, delegated to, or divided up among multiple trustees, including family members, a non-family adviser such as a lawyer, or a trust company (known in industry parlance as a corporate trustee).***

An increasingly popular strategy for encouraging meaningful engagement with trustees is to appoint beneficiaries as co-trustees, a role that can also help prepare inheritors for the responsibilities of wealth.***

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

Nuncupative will invalid because not made in extremis

The decedent allegedly made an oral will while hospitalized for treatment of complications arising from a chronic condition.  Death came eighteen days after release from the hospital.

The court affirmed a summary judgment for the intestate heirs, holding that the statutory requirement that a nuncupative will be made “in the time of the last sickness of the decedent” had been construed to require the testator be “in extremis.”

The court explained that a testator suffering from a chronic condition is in extremis only in the final stages of the illness.  In re Estate of Alexander, No. 10-06-00360-CV, 2008 WL 256837 (Tex. App. 2008 Jan. 30, 2008).

(Note:  The 2007 Texas Legislature abolished the right of Texans to make oral wills.)