Wills, Trusts & Estates Prof Blog

Book Guiding Trustees

Christopher P. Cline (Wells Fargo Regional Wealth Management Director for Oregon and SW Washington) recently published his book entitled The Law of Trustee Investments (ABA 2009). 

A description of the book is below:

This book takes a very practical approach to the question that should be asked by every trustee, especially non-professional trustees: How do I fulfill my fiduciary duties to the trust beneficiaries (and thereby avoid liability for failure to do so) in determining how to invest the trust assets? The book begins with an in-depth introduction to investment basics, examines such issues as the law of diversification and the prudent investor act standard, explores how to determine breach and damages, and explains the effects of principal and income acts on investing. It concludes by addressing the drafting of an investment plan by the trustee, a key topic because under the UPIA a fiduciary is judged not on his or her actual investment performance, but rather on the appropriateness of the investment plan. This chapter provides practical guidelines for newly-appointed trustees on how to develop such a plan, including specific comments directed to life insurance trusts, where a life insurance policy is usually the primary investment. Appendices offer sample trust investment language and an investment plan flow chart.

Competent Children Don't Need an Inheritance

Chinese real estate tycoon Yu Pengnian announced that he is giving away his last $500 million to his charitable foundation. When asked whether his children were opposed to the donations, Yu stated, “If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm.” This idea is even more remarkable coming from a Chinese tycoon because wealth in Asia is dynastic by nature.

The idea is that by giving your children everything, you take away their joys in self-made success while telling them that you don’t think they can make it on their own.

See Robert Frank, If Your Children are Competent, They Don’t Need an Inheritance, W.S.J., July 26, 2010.

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

Bronx Wife-Killer Gets Liver Ahead of Thousands of New Yorkers

Johnny Concepcion confessed to stabbing his wife to death on July 5. He then took rat poison in an attempt to commit suicide, which damaged his liver.

This week, Concepcion was chosen over 1,805 New York City residents in need of a liver for a liver transplant. Fifty New York City residents have died this year waiting on a liver.

See David Goodhue, Confessed Killer Gets Liver Transplant Over Thousands of Candidates, All Headline News, July 27, 2010.

Palumbo Family Feud Over Money

Lord Palumbo of Walbrook has been arguing with his children about money for a quarter of a century. In the last courtroom brawl fifteen years ago, Palumbo’s three children from his first marriage claimed that Palumbo had improperly spent money from a £70m family trust set up by his own father.

Palumbo’s children’s latest claim alleges that Palumbo has been lying about missing trust property which he actually sold and used the proceeds for himself. His children claim the original trust agreement does not give Palumbo the right to dispose of the items. They want him removed as trustee and to conduct an accounting of the trust assets.

See Mark Hollingsworth and Caroline Davies, Palumbo Children Accuse Father of Extravagance as Family Feud Resumes, guardian.co.uk, July 27, 2010.

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

CLE on Minimizing Estate Tax

The National Business Institute is sponsoring a 90-minute national teleconference on September 10 entitled Minimize Your Clients' Estate Tax Burdens.  The program description is below:

Do you have reliable fundamental tax knowledge to effectively build your clients' estate plans in today's uncertain regulatory environment? Gain the skills you need to help your clients ensure their rightful heirs receive as much of the estate as possible. Don't miss this opportunity for a condensed estate tax update - register today!

• Learn what impact gift and estate taxes will have on beneficiaries and how estate plans can address how these taxes are handled.
• Explore the impact of generation-skipping transfer taxes.
• Ensure your marital deduction planning follows all legalities.

Lady Claims to be Michael Jackson's Daughter

Mocienne Petit Jackson has asked the L.A. County Superior Court to order a DNA test proving that she is the illegitimate daughter of Michael Jackson and Barbara Ross, Diana Ross’ sister. She claims that Michael secretly impregnated Barbara when he was 17, and that when Mocienne was 9, Katherine Jackson hatched a plan to protect Michael’s reputation by abducting her. Mocienne claims that all seven of her abductors were later murdered.

Mocienne wants her share of Michael’s estate as well as custody of his children to give them a “more normal life.”

Alleged MJ Love Child Surfaces -- Wants Money, TMZ, July 27, 2010. 

Special thanks to David Luber (attorney, Hollywood, FL) for bringing this to my attention. 

Tax and Trust & Estate Sections of the ABA Joint CLE

The ABA Section of Taxation and the Section of Real Property, Trust & Estate Law are sponsoring the 2010 Joint Fall CLE Meeting in Toronto, Ontario on September 23-25. Some information is below:

Toronto, ON welcomes the ABA Section of Taxation and the Trust and Estate Law Division of the ABA Section of Real Property, Trust and Estate Law to the 2010 Joint Fall CLE Meeting, September 23-25, 2010. Join us and take advantage of the opportunity to meet with the country’s leading attorneys and government officials to discuss the latest federal tax policies, initiatives, regulations, legislative forecasts and planning ideas. In addition, you will have the opportunity to earn valuable CLE and ethics credits and network with Tax Section and Trust and Estate Division members and government guests. The Sheraton Toronto will serve as the host hotel.

Take advantage of the opportunity to:

• Attend joint Section programs on the latest developments in tax, trust and estate law, which highlight the synergy of these two practice areas
• Learn more about updates on tax policies, regulations and procedures, including discussion of future proposals
• Network with government officials and practitioners in two specialty areas of the law
• Receive the latest IRS news from the Commissioner of the IRS, Douglas H. Shulman, at the Plenary Breakfast on Friday

Death Tax Affects Death Rates

I previously blogged about the lack of an estate tax in 2010 giving wealthy elderly individuals an incentive to die before the end of the year.

Australian academics conducted a study entitled Did the Death of Australian Inheritance Taxes Affect Deaths?, 6 Topics in Economic Analysis & Policy 23 (2006).  This study investigated whether or not the elimination of their death tax in 1979 actually affected death rates. They found that approximately 50 deaths were bumped from the week before the tax was eliminated to the week after. The academics concluded “that over the very short run, the death rate may be highly elastic with respect to the inheritance tax rate.” The question is whether or not the same thing will happen in the United States, but in the opposite direction.

See Daniel J. Mitchell, The Deadly Impact of the Death Tax, Forbes, July 14, 2010.

Planning for Your Funeral

Although one of the best gifts you can give your family is properly preparing them for your death, less than 30% of Americans have some form of estate plan. Properly planning for your funeral can allow your family time to grieve and recover rather than rushing through important and expensive decisions.

In addition to pre-planning your funeral, it is also helpful to pre-pay for it. Methods of doing this include saving, life insurance, funeral insurance, and pre-need trust agreements.

For more information on each of these prepayment methods as well as ideas regarding what to consider when planning your funeral, see Christopher P. Hill, How to Create a Smart End-of-Life Plan for Your Loved Ones, FuneralResources.com, June 14, 2010.

Tax Increases in 2011

Nancy Pelosi is making history by preventing discussion on the floor of Congress about a 2011 budget. Perhaps she fears that the public will retaliate in November elections if it finds out just how onerous the 2011 tax hikes are going to be. Some of the tax increases include:

• Each income tax bracket’s percentage will be increased
• Itemized deductions and personal exemptions will be phased out
• The estate tax exemption will only be $1 million along with a higher percentage taxed 
• Capital gains tax will rise
• Obamacare will add over 20 new taxes
• Business expense deductions will be less helpful to businesses

For more details, see Karlan Tucker, The Largest Tax Hike in American History, Producersweb.com, July 20, 2010.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

Concord Places First Among Overlay Providers

Independent trust companies are now relying on overlay management software more than ever for enhanced performance and fewer mistakes in their investment process. With overlay systems, assets are not delegated to outside managers to invest but are instead managed in-house. However, finding the best overlay provider can be difficult for independent trust companies. When considering flexibility, cost, and other factors, Alaska Trust found that Concord was the best option.

For a chart comparing different overlay providers, see Scott Martin, Concord Wins Top Honor as Most Trust-Friendly Overlay Provider, The Trust Advisor Blog, July 10, 2010.

Protecting Elders in Alaska

Kim Vu-Dinh recently published her article entitled Reforming the Power of Attorney Law to Protect Alaskan Elders from Financial Exploitation, 27 Alaska L. Rev. 1 (2010). The abstract for her article is below:

In this Article, the Author discusses the issues arising under the current power of attorney law in Alaska and the impact the law has on Alaskan elders. The Author surveys and summarizes preventative measures set out in the 2006 Uniform Power of Attorney Act (UPOAA), in addition to non- UPOAA reforms adopted in other jurisdictions or suggested by scholars. The Author analyzes the relevance and practicality of the various provisions as applied to Alaska and highlights the major themes that should be considered when reforming the current statute.

More on Bobby Fischer's Estate

I previously blogged about the exhumation of Bobby Fischer’s body to determine whether or not he is the father of Jinky Young. While we still don’t know the results of the paternity test, we do know the possible distributions of Fischer’s estate.

If Jinky is Fischer’s daughter, and Ms. Watai (a Japanese woman who claims to be Fischer's wife) is found to be his widow, then Jinky would receive 2/3 of his estate and Ms. Watai would receive the remainder. If Jinky is not Fischer’s daughter, Ms. Watai would receive everything. If the Icelandic court rejects Ms. Watai as Fischer’s widow, Fischer’s two nephews would receive his entire estate.

Fischer’s estate is estimated to be worth $1-2 million. Uncertainty exists because the United States government has claims against his estate for taxes and penalties (for playing a chess game in Yugoslavia while it was under a United States trade embargo).

See Dylan Loeb McClain, For Bobby Fischer, the Drama Won’t Die, N.Y. Times, July 23, 2010.

Special thanks to Margaret Elizabeth Perry (Texas Tech School of Law graduate, May 2010) for bringing this to my attention.

Increase in Taxes May Increase Charitable Donations

I previously blogged about the increasing popularity of gift-giving this year. Charitable contributions are also expected to increase as peoples’ taxes rise over the next 18 months. Eighty-seven percent of advisors think that their clients will see a tax spike in the next 12-18 months, and twenty-six percent of advisors believe that their clients will increase charitable giving to dull the pain. This is good news for charities, who saw a 3.6% decline in charitable giving in 2009 due to the recession.

See Eric Rasmussen, Higher Taxes May Prompt More Giving, Financial Advisor, July 22, 2010. 

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention. 

Trinity Law School is Looking for a Wills and Trusts Professor

Trinity Law School in Santa Ana, California is looking for an Adjunct Professor to teach Wills and Trusts.  For inquiries, please contact Arthur J. Pauly, Jr. at artpauly@paulylaw.com.

Counties are Burdened by Those Who Die Intestate

Henry was one of seven horses that fell under the care of Marin County when their owner died intestate. Although Marin County found homes for these horses, the bigger issue of adults dying intestate is an expensive problem for the county. Although the county can use assets in an estate to cover the administration expenses, most people leave behind more debts than assets. This year, managing estates has cost taxpayers in Marin County $52,581.

In an effort to combat the intestacy problem, Marilyn Geary and Jacqueline Janssen have begun holding meetings called “LeaveLight Circles.” These gatherings are based on the book “LeaveLight: A Motivational Guide to Holistic End-of-Life Planning” and are meant to help people make decisions regarding funeral arrangements, directives, and other end-of-life considerations.

See Scott James, Dying Alone Intestate Places Burden on the County, N.Y. Times, July 22, 2010. 

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

Kafka's Writings Tied Up In Court

Ten safety deposit boxes full of never-published Franz Kafka writings are trapped in an Israeli court. These papers could potentially shed light on the mysterious author. Here’s how the papers ended up where they are today:

• Kafka bequeathed his writings to Max Brod, instructing him to burn everything unread.
• When Kafka passed away in 1924 from tuberculosis, Brod ignored Kafka’s wishes and published most of what he had. He took what he didn’t publish to pre-state Israel where he passed away in 1968.
• Brod instructed Esther Hoffe to transfer the Kafka papers to an academic institution upon his death. Instead, Esther kept the papers in Tel Aviv and Zurich, selling some for large amounts of money.
• Esther died three years ago, leaving her collection to her two daughters, Eva Hoffe and Ruth Wiesler.

The two daughters are currently battling the Israeli National Library which has filed an injunction against the execution of their mother’s will. The Tel Aviv Family Court opened the collection a year ago, saying that it wants to know its contents before deciding the owner. Until experts are done inspecting the papers, the papers, as well as their rightful owner, will remain a mystery.

See Aron Heller, Lost Kafka Writings Resurface, Trapped in Trial, AP, July 21, 2010.

Special thanks to Kimberly Sias (Texas Tech School of Law graduate, May 2010) for bringing this article to my attention.

Ruling Regarding QTIPs

Wendy C. Gerzog (Professor of Law, University of Baltimore School of Law) recently published her article entitled Morgens: More QTIP Mischief, Tax Notes, Vol. 128, No. 3, 2010. The abstract available on SSRN is below:

In Morgens, the court ruled in favor of the government that section 2035(b) applied to the gift taxes paid by the qualified terminable interest property (QTIP) trust beneficiaries to gross up the widow’s estate by that amount. Because the surviving (or donee) spouse must be taxed on the underlying property over which she has no ownership rights, Congress enacted section 2207A to allow the second spouse to recover from the beneficiaries of the property the transfer taxes relating to her gift or estate inclusion. However, the court held that section 2207A did not shift the gift tax liability to those beneficiaries to exempt the widow’s estate from the application of section 2035(b).

Elder Law Call for Papers

Information about a call for papers issued by Emory University School of Law is below:

Aging is a feminist issue. The elderly, especially the oldest of the old, are disproportionately female. Among the elderly, women are more likely than their male peers to face a number of challenges, including poverty, disability and isolation. Yet, the legal academy, including feminist legal theorists, is only just beginning to pay attention to old age and its implications. This workshop will advance this agenda by bringing together a diverse group of scholars to explore the relationship between feminist theory, law and policy, and the concerns of the aging. We will focus on understanding how the relationship between age and gender can be theorized, as well as exploring how feminist legal theory can inform policy and law in the U.S. and abroad.

Feminist legal theorists are in an excellent position to advance progressive and transformative theories about aging. The form and content of the negative stereotypes older adults are frequently subjected to parallel negative stereotypes about women. Like women, the elderly (both men and women) have traditionally been cast as mentally inadequate, frail, and in need of protection by outsiders. Both age and gender – and out-dated conceptions of each – have historically been cavalierly used as convenient proxies for other, more germane, characteristics. In addition, older women face many of the same gendered inequalities of younger women in contexts ranging from domestic violence to employment discrimination. Further, the growing population of older women raises distinct issues of caretaking whether the older woman is serving as caretaker or as the care recipient.

PAPER TOPICS: Potential contributors are encouraged to think creatively about the relationship between aging and gender, and how feminist legal theory can be brought to bear on understanding old-age policies. To this end, possible paper topics include:

• What characterizes a feminist approach to aging and how does this differ from other approaches?
• How do current discourses and practices of domestic violence, family law, employment/labor law, sexuality, masculinity, and political theory engage or fail to engage with the elder population?
• How does the law reinforce or enhance the vulnerability and marginalization of the elderly?
• What arguments can be made for and against the proposition that the government must support caretaking and caretakers of the elderly?
• How do these arguments differ from those made on behalf of the caretakers of children or the disabled?
• How should government "protect" older adults, what are the implications of such protection, and how might feminist legal theory inform and guide our understanding of protective policies?
• How should family responsibility be structured in old-age policy?
• What are the implications of health care reform for older adults aging?

Please email a paper proposal of several paragraphs length by October 1, 2010 to: mfineman@law.emory.edu, ncahn@law.gwu.edu, nakohn@law.syr.edu, and cdomozi@emory.edu. Decisions will be made by October 15, 2010.

Workshop Details.  The Workshop begins Friday at 4PM in room 575 of Emory Law School, followed by dinner in the Hunter Atrium. The Law School is located at 1301 Clifton Road, Atlanta, GA. Presentations and panels continue on Saturday from 10AM to approximately 5PM. Lunch will be provided.

Billionaires Lobby for Reinstatement of Estate Tax

While many wealthy people lobby for the permanent repeal of the estate and gift taxes, other wealthy individuals lobby for the exact opposite. Hedge fund billionaire Julian Robertson, Disney heiress Abigail Disney, and former Treasury Secretary Robert Rubin joined in a teleconference recently to insist that Congress restore a hefty estate tax before it breaks for recess in August. These individuals feel that an inheritance tax is a way to help America raise money and prevent undeserving individuals from receiving windfalls.

“So there’s broad agreement--outside Congress at least--that something should be done on the estate tax before the elected officials go home to play, or politic, or fund raise. But even among billionaires, there’s little consensus on what should be done.”

Ashlea Ebeling and Janet Novack, Billionaires Battle on Estate Tax, Forbes, July 21, 2010.