Wills, Trusts & Estates Prof Blog

Prof. Chester Publishes "Dead Hand" Critique

Ronald Chester (Professor of Law, New England School of Law) has recently published his book entitled From Here to Eternity? Property and the Dead Hand (Vandeplas Publishing 2007).

Here is a description of this book:

In this groundbreaking book,  Professor Chester examines dead hand control of property by decedents and how this phenomenon has changed form over the centuries, with particular emphasis on the  period beginning with the 1980’s.   Although there is something essentially human about the desire to control the use of one’s property after death, modern American dead hand control is both less personal and more far reaching than in the past; in addition, it tells us much about the society we inhabit.  While aristocracies were perpetuated in England by restrictions on land that often hindered freedom of bequest, in the modern United States the unleashing of this freedom by law has allowed estate planners to create elaborate plans for the wealthy that themselves may create and perpetuate aristocracy.

   

Since dead hand control of property will always be with us in some form, Professor Chester concludes that exercising it through a charity of one’s choosing best satisfies both this human need and the needs of society in general. Thus, the use of great fortunes primarily for charitable endeavors may provide a compelling antidote to the early 21st century American emphasis on dynasty and greed.

Top SSRN Downloads

Here are the top downloads from December 25, 2007 to February 23, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	52	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
2	48	GST Qualified Severance Regulations: Final and Proposed Marc Chorney, Author - Affiliation Unknown, Date posted to database: December 9, 2007 Last Revised: December 9, 2007
3	46	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
4	45	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	43	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
6	32	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
7	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
8	18	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	15	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

Senior Citizen Benefits Costs Soar

According to Dennis Cauchon, Senior benefit costs rise 24% since 2000, usatoday.com, Feb. 14, 2008:

The cost of government benefits for seniors soared to a record $27,289 per senior in 2007, according to a USA TODAY analysis.

That's a 24% increase above the inflation rate since 2000. Medical costs are the biggest reason.***

USA TODAY used a variety of government data to calculate the cost of providing Social Security, medical benefits and long-term care to an aging population.***

Findings include:

• Medicare experienced the most explosive growth from 2000 to 2007. The Medicare prescription drug benefit, started in 2006, accounts for about one-fourth of the increase in Medicare, which provides health benefits for people 65 and older.
• Long-term care costs per senior have declined slightly in the last three years because of a move away from nursing homes to less-expensive home care.
• The cost of senior benefits is equal to $10,673 for every non-senior household.
• About 35% of the federal budget is spent on senior benefits, up from 32% in 2004.

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.

Asset Protection Trusts in Iowa

David M. Repp (Attorney at Law, Dickinson Mackaman Tyler & Hagen P.C.) has recently published his article entitled Asset Protection (For the Rich and Not) In Iowa, 56 Drake L. Rev. 105 (2007).

Here is the conclusion to his article:

With careful planning, significant assets can be shielded from creditors despite the recent amendments to the bankruptcy code. Within reason, a debtor is entitled to convert non-exempt assets such as cash, into exempt assets such as IRAs or a homestead.

Trusts are useful mechanisms to protect assets from the claims of a beneficiary's creditors. Until recently, however, even trusts could not shield assets from the claims of a grantor's creditors if the grantor retains an interest in the trust. Today, several states have passed legislation allowing a debtor to create a trust exempt from claims of creditors while retaining an interest in the trust. Iowa is not one of those states, but an Iowa debtor may be able to create a trust under the law of one of the other states. However, the creation of such an asset protection trust in Iowa using another state's laws is not without risk.

Asset protection trusts can be created under Iowa's existing laws, but the trust must be irrevocable and the grantor cannot retain an interest in the trust. The grantor should also avoid making a contribution to such a trust if it would cause the grantor to be insolvent or otherwise run afoul of Iowa's fraudulent transfer laws. The grantor could later access the trust assets by terminating the trust, if all the beneficiaries consent, or by the action of a special power of appointment holder designated in the trust instrument.

Language giving the beneficiaries present interests does not invalidate trust amendment

A mother created a revocable trust which is to terminate on her death and be distributed equally among her three children.  The trust stated that the interest of the beneficiaries “is a present interest” which continues until the trust is revoked or terminated other than by the settlor’s death.  Similar language has been held to require that changing the beneficiary’s interest requires revocation of the entire trust.  Shortly before her death, the mother amended the trust to change one son’s interest to forgiveness of any debt owed to her at the time of her death. 

The court first disapproved a prior case holding that a trust is invalid unless the beneficiary’s interest vests during the settlor’s lifetime and disavowed the use of the term “vested subject to divestment” to refer to a beneficiary’s interest in a revocable trust.  The court adopted the view of Restatement (Third) of Trusts § 25 that a trust may exist where the beneficiaries’ interests are contingent on surviving the settlor or other events.  The court then held that the amendment was valid because it only amended and did not divest the son’s interest.  Hoggan v. Hoggan, 169 P.3d 750 (Utah 2007).

‘Checklist for Life’ – A Useful Tool in Estate Planning

The following is from Tim Grant, Bank puts estate planning checklist onto the Internet, post-gazette.com, Feb. 14, 2008:

[T]alking to family members about death and dying can be among the toughest conversations to have. But managers at Huntington Bank have created a Checklist For Life to get the conversation started. The checklist is available on the bank's Web site at www.huntington.com. Such checklists are commonly used by lawyers and financial planners, but are not commonly placed on the Internet.***

People who will be transferring their wealth need to understand where they are right now in terms of their net worth, what they own, how they own it and what they want to happen to it at the end of their lives.***

Dying without an estate plan means you are not making final decisions on distribution of your assets, including amounts and percentages. Without a will, the state makes those determinations for you.***

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.

Tax Consequences of Financing Grandchild’s Education

Richard L. Kaplan  (Peer and Sarah Pedersen Professor of Law, University of Illinois College of Law) has recently posted on SSRN his article entitled Back to School: The New Parameters of Funding a Grandchild’s College Education. This article also appears in the Jan.- Feb. 2008 issue of the Journal of Retirement Planning.

Here is the abstract of his article:

This article examines several different mechanisms for funding college expenses from the perspective of a grandparent. The mechanisms considered include direct gifts to the grandchild or the educational institution, college savings bonds (both state and federal), prepaid tuition contracts, college savings plans created under tax code section 529, and Coverdell Education Savings Accounts.

Although these college funding mechanisms are not new, legislation enacted within the past two years has radically altered many of the rules of thumb that have applied in the past. Specifically, the Tax Increase Prevention and Reconciliation Act of 2005 (actually enacted in May 2006) and the Small Business and Work Opportunity Tax Act of 2007 that accompanied that year's increase in the federal minimum wage have basically eliminated any tax advantage of custodial accounts as college funding vehicles. On the other hand, the Pension Protection Act of 2006 has enhanced the tax appeal of 529 plans at the same time that the Deficit Reduction Act of 2005 (actually enacted in February 2006) improved the financial aid status of such plans. Finally, that Deficit Reduction Act also created significant hurdles for grandparents who anticipate accessing the Medicaid program to pay their long-term care costs.

To determine the approach that best serves all family members, this article begins by considering several factors that are relevant to the financing of a grandchild's college expenses. These factors include: (1) the grandparents' and the grandchildren's income tax situation, (2) the grandparents' possible exposure to gift taxes, (3) the grandparents' desire to ensure that the funds they provide are actually used to pay for college costs, (4) the Medicaid implications for the grandparents, and (5) the impact on a grandchild's eligibility for needs-based financial aid. The article then examines the various mechanisms that are available to fund a grandchild's college costs and analyzes each mechanism in terms of these factors.

“Any” supports construction of special power of appointment as exclusive

A mother’s will created trusts for her daughters and gave each daughter a testamentary special power of appointment, directing the trustee to distribute “any amount” of the principal and undistributed income to any of the testatrix’s descendants “and” any charitable organization.  The first daughter to die exercised her power of appointment entirely in favor of charity. 

The surviving sister filed a claim for one-half of the trust property alleging that her sister violated the terms of the power of appointment by appointing all the trust property to charity.  The court affirmed the dismissal of the claim, holding that the testatrix’s use of the word “any” indicated her intent to create an exclusive power of appointment.  In re Estate of Hope, No. 06CA2003, 2007 WL 4336228 (Colo. Ct. App. Dec. 13, 2007).

Policymakers’ Use of Blind Trusts Questioned

Megan J. Ballard (Associate Professor, Gonzaga University School of Law) has recently published her article entitled The Shortsightedness of Blind Trusts, 56 U. Kan. L. Rev. 43 (2007).

Here is the conclusion to her article:

Policymakers began to use blind trusts as a means of avoiding full disclosure, in some instances, of assets that a policymaker was unwilling to divest. The lack of uniform standards governing blind trusts compelled Congress to debate the device's merit and conclude that it was valuable if properly regulated. Thirty years of regulation under the Ethics in Government Act is sufficient to determine whether blind trusts adequately insulate governmental decisions from decision-makers' financial interests. While blind trusts may allow some individuals with wealth and privacy concerns to engage in public service when they might otherwise have been discouraged from doing so by financial disclosure rules, the potential loss of integrity in decision-making does not counterbalance this advantage. Perhaps it is time to place more value on the sanctity of the decision-making process and determine if full disclosure unacceptably sacrifices a broad pool of talented public servants. In the interim, while this alternative approach is debated, Congress must strengthen the qualified blind trust rules so that the device can deter financial conflicts of interest and enhance public confidence in the integrity of decision-making.

A child conceived during marriage by in vitro fertilization and implanted in the mother’s womb after the father’s death is not the father’s heir

Ten embryos were produced through IVF using the husband’s sperm and his wife’s ova.  Two embryos were implanted in the wife’s uterus but the pregnancy terminated in a miscarriage.  Approximately one month later, the husband died intestate.  Eleven months after his death, two embryos were implanted in his wife’s uterus resulting in the birth of a child twenty months after the husband’s death.  The mother appealed a denial of her claim for Social Security benefits for herself and for the child to the Federal District Court which certified to the Arkansas Supreme Court the question of whether the child is the father’s heir. 

In Finley v. Astrue, No. 07-627, 2008 WL 95775 (Ark. Jan. 10, 2008), the court said no.  The Arkansas intestacy statute requires that a person be conceived before an intestate’s death to inherit.  Because the statute was enacted in 1969 long before the development of IVF technology, the legislature could not have intended a child created through IVF and implanted after a gamete donor’s death be an heir of the genetic parent.  The court expressly declined to define the term “conceive.”

Being Declared Dead When Alive Can Be Problematic

According to Nancy Amons, Woman Says Being Declared Dead Ruins Life, wsmv.com, Feb. 15, 2008:

Laura Todd said an 8-year-old typo is affecting everything from her credit to her tax return. "I don't think people realize how difficult it is to be dead when you're not,” she said.

She said her problems started when someone in Florida died and her Social Security number was accidentally typed in.***

She said being dead off and on has made everyday life a hassle. She said her bank closed her credit card account and attached a note of sympathy: “Please accept our condolences on the death of Laura Todd.” ***

The IRS said it would research the problem and try to get it straightened out. Social Security said it has updated its computers and that the fix should also fix the problems with her credit reports.***

Leona Helmsley Estate Update

Here are some recent developments on Leona Helmsley’s estate from Christina S.N. Lewis, 'Queen of Mean' Lair To List for $125 Million, online.wsj.com, Feb. 1, 2008:

Representatives of the estate of Leona Helmsley have decided to list her Greenwich, Conn., mansion for $125 million, people close to the negotiations said.***

Known as Dunnellen Hall, the estate of more than 40 acres was at the center of Mrs. Helmsley's 1989 federal tax-evasion trial, when she was accused of illegally billing her company for more than $3 million of property renovations. The former model, dubbed the "queen of mean," served 18 months in federal prison. She died in August at age 87.***

The estate must be sold, according to terms of Mrs. Helmsley's will, which left the bulk of her billionaire real-estate holdings and property to a trust, $12 million to her dog and comparatively little to her closest relatives. The real estate includes a majority interest in the Empire State Building.***

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

Parent may inherit from a child whom the parent did not support

A child received a large settlement of a medical malpractice action which was eventually placed in a special needs trust which on the child’s death is to be distributed to her heirs under the law in effect at the time of her death.  After the child’s death, the mother opposed the father’s claim to one-half the trust property on the grounds that he failed to support the child during her lifetime. 

In In re Rogiers, 933 A.2d 971 (N.J. Super. Ct. App. Div. 2007), the court affirmed the trial court’s grant of a summary judgment to the father on his claim to the estate, holding that the New Jersey intestacy statute does not condition the right of a parent to inherit from a child on the provision of support for the child.

Law School Professor Says State Tax Policies Violate Biblical Principles

According to David Cay Johnston, Professor Cites Bible in Faulting Tax Policies, NYTimes.com, Dec. 25, 2007:

At a time when some voters are asking how the religious views of candidates will shape their policies, a professor’s discovery of how little tax the biggest landowners in her state paid to finance the government has prompted some other legal scholars to scour religious texts to explore the moral basis of tax and spending policies.***

The professor, Susan Pace Hamill, is an expert at tax avoidance for small businesses and teaches at the University of Alabama Law School.***

Her latest effort is a book, “As Certain as Death” (Carolina Academic Press, 2007), that seeks to document how the 50 states, in contravention of her view of biblical injunctions, do more to burden the poor and relieve the rich than vice versa.***

Some of Professor Hamill’s critics, in letters and e-mail to her and others, argue that she just wants to soak the rich, wrapping what they called her socialistic views in biblical cloth.***

James Beasley’s Children Fight Over His $55 Million Estate

The following is from Shannon P. Duffy, Battle Erupts Over Handling of Trial Lawyer's $55 Million Estate, Law.com, Feb. 15, 2008:

An ugly dispute has erupted among the five children of the late, legendary trial attorney James E. Beasley Sr., pitting the two daughters from his first marriage against the son and two daughters from his second marriage in a battle over the handling of his $55 million estate.***

The petition seeks the removal of James Beasley Jr. and Pamela Beasley from their positions as co-executors alleging that they have "conspired" to reduce the value of their father's estate by transferring assets to their mother, Helen Beasley, "so that at the time of her death those assets will pass through her estate" and be divided only among her three children instead of giving a 20 percent share to all five children.

James Beasley Jr. said that there is no merit to any of his sisters' claims[.]***

Under the terms of his father's will, he said, the five children will receive their inheritances only after the death of his second wife, Helen Beasley. Until then, he said, most of the funds remain in trust to provide an income for her.***

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) and Paul L. Caron (Associate Dean of Faculty, Charles Hartsock Professor of Law, University of Cincinnati College of Law) for bringing this article to my attention.

Last-minute change in a will is not fraudulent transfer

The testator’s ex-daughter-in-law sued her ex-husband and his sister, alleging that their mother changed her will shortly before her death at her daughter’s insistence to give to her daughter the share of the estate given to her son in a prior will so that he could avoid paying arrears of child and spousal support and that the daughter promised to make sure that her brother ultimately received the funds. 

The court affirmed dismissal of the complaint on the grounds that the mother’s changing her will could not be a fraudulent transfer because the son had no right to his mother’s estate.  However, the court also held that the ex-wife could amend her pleadings to allege a constructive trust based on the daughter’s alleged promise to convey the property to her brother.  Cabral v. Soares, 69 Cal. Rptr. 3d 242 (Cal. Ct. App. 2007).

Organ Donations Increase in Texas

According to Michelle Segovia, Organ Donations Up in 2007, kwtx.com:

119 Central and South Texans gave the Gift of Life in 2007 when their family members so generously agreed to donate their loved ones’ organs.

Sixty-six percent of people living in Central and South Texas consented to donation, resulting in life-saving transplants for nearly 400 people.

Texas Organ Sharing Alliance (TOSA) is the Organ Procurement Organization for the 56 counties in Central and South Texas[.]***

Even with increasing consent rates, the number of people on the waiting list continues to grow. Nationally, more than 98,900 people are awaiting a life-saving transplant. 7,400 of them live right here in Texas. If you’d like to be an organ donor, talk to your family today and indicate your wishes at www.donatelifetexas.org.

More on the Kemper Pet Trust

Earlier on this blog, I reported on three dogs, Buckshot, Katie, and Obu-Jet, that are benefiting from the estate of their deceased owner, Ken Kemper, worth approximately $800,000 ($400,000 in cash and a house in Hagerstown, Maryland).

I recently learned that this was a Virginia trust, not a Maryland trust, although the dogs are now actually living with Roy Grady in Maryland.  Virginia does have statutory provisions for trusts for pets.

"Lethal Choice" -- Intellectually stimulating and emotionally charged novel

Lethal Choice by Dr. Stanley A. Terman, PhD, MD is an intellectually stimulating and emotionally charged drama that keeps you reading into the night and continues to haunt you into the daylight hours.  Lethal Choice should be at the top of your must-read list of books.  Dr. Stanley Terman not only expertly weaves a plot of intrigue and suspense but delves into the moral dilemmas facing individuals as they approach death.

Lethal Choice is a book for everyone...a thriller for readers seeking "a tale of terror" and an educational thought-provoking story for readers who desire "a tale of substance."  Lethal Choice is a powerful novel that embraces timely issues relevant to the medical, legal, and religious communities but more importantly to the average person who is at the mercy of the controversies surrounding end-of-life decisions.

Britney Spears's Family Oversees Her Well-Being and Takes Charge of Her Estate

The following is from Howard Breuer, Britney's Family Gets More Power Over Her Estate, people.com, Feb. 14, 2008:

Britney Spears's family members tightened their grip on her finances Thursday as the court extended her father's co-conservator role and granted her brother influence over her day-to-day expenses.***

Her father Jamie Spears has been overseeing his 26-year-old daughter's well-being and her estimated $100-million fortune since Feb. 1, when Goetz named him and Andrew Wallet temporary co-conservators – giving them the right to employ bodyguards who control Britney's actions and restrict her visitors.***

Britney's father and Wallet were also granted the power to handle the singer's taxes, and Britney's brother Bryan, 30, was named as a trustee of her trust. According to court papers, trust funds are used "to pay for Britney's continued security, and to pay for her medicine, food, other day-to-day expenses and for psychiatric and other medical services."***

Special thanks to Alfred L. Brophy (Professor of Law, University of Alabama School of Law) for bringing this article to my attention.

Top SSRN Downloads

Here are the top downloads from December 19, 2007 to February 17, 2008 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days:

Rank	Downloads	Paper Title
1	97	Conservation Easements: Perpetuity and Beyond Nancy A. McLaughlin, University of Utah - S.J. Quinney College of Law, Date posted to database: December 12, 2007 Last Revised: January 11, 2008
2	43	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
3	42	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	29	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
5	21	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
6	19	'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
7	12	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