Wills, Trusts & Estates Prof Blog

Loneliness Is Linked To Dementia

A study that was published by the Journal of Neurology Neurosurgery & Psychiatry has revealed that patients that felt lonely were more likely to experience dementia. This study concluded that loneliness is not based upon whether the individual lives alone or with other family members or friends. What matters, according to the study, is whether the elderly person has a good social support system that can lend support when its needed. Other studies seem to suggest that this is the case too. Some studies have found that loneliness alone can lead to a host of medical problem, including high blood pressure, heart disease, and stroke. On a side note, "[h]igh blood pressure is also a risk factor for dementia." 

The Dutch study concluded that after all other factors, such as age, were eliminated, loneliness increased the risk for dementia by 64%. The study did not take into count about whether loneliness increased the risk to get a particular type of memory-deteriorating disease, such as Alzheimer's. However, the author's of study cautioned that people should conclude that loneliness causes Alzheimer's. In fact, the author argued that the opposite could be true. The degenerate effects of Alzheimer's Disease could cause people to withdraw from society, which could lead to loneliness in part because the sufferers of Alzheimer's Disease might feel withdrawn or embarassed by the effects of their disease. It is also possible that loneliness leads "'to a lack of sensory and cognitive stimulation,' which can be harmful because it reduces levels of nerve growth factors that are necessary for brain health." It is also possible that both things could be occurring at the same time creating a vicious cycle.

See Maia Szalavitz, Loneliness, Not Living Alone, Linked To Dementia, Time, Dec. 11, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

What To Do When A Person Finds A Lost Stock Certificate

If a person discovers a stock certificate after the owner died, then that person might want to know whether the stock is still good. The first thing that a person might want to do is determine whether the stock certificate has any value. A person could start by researching the company. A person should look to see if the company still exists or whether ownership of the company has changed hands. Once a person determines the ownership of the company, a person can then locate the transfer agent of the company.

Once a person determines the value of the stock, that person needs to take the necessary steps to transfer ownership of the stock. If the person jointly owned the stock with the descendant, then the person needs to take the necessary steps to transfer ownership to the joint owner where he or she can keep or sell the stock. However, if the stock belongs to the the descendant it is considered to be a probate asset. If it is a probate asset, then the estate might need to pay an inheritance tax on the asset. A person might want to consider engaging an attorney if the the asset has a significant amount of value. Additionally, a person might want to find the descendant's old tax returns, particularly their old 1099, to see if dividends were paid on the old stock. A person might want to see if the property is considered abandoned.

See Christopher W. Yugo, ESTATE PLANNING: Finding A Long Lost Stock Certificate, nwi.com, Dec. 9, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Astor Heir Fight

Anthony D. Marshall, the son of the late-actress Brooke Astor, is set to be in court tomorrow appealing his 2009 conviction. In 2009, he was found guilty of fraud and of stealing $60 million from his mother. His co-defendant, Attorney Francis X. Morrissey Jr., is also appealing his case. His attorney was convicted because he helped Marshall with all of the estate planning aspects of his plan. He was convicted of fraud and conspiracy. On one of those counts, Morrissey was accused of forging Astor's signature.

Since his conviction, friends close to Marshall have reported that he and his wife were devastated by the whole ordeal. In particular, one of his friends since boarding school, Sam Peabody, told the New York Post that they were not doing well. Marshall believes that he was wrongfully convicted by the jury, and that the other members of the jury pressured the last hold out on the jury to convict him. Marshall also claims that this mother was in her right mind when she bequeathed him additional millions, claiming that he did nothing wrong when he asked his mother for his inheritance a few years early.

See Brooke Astor Heir Fights Jail Rap (NY), New York Post, Estate of Denial, Dec. 14, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Descendants of Hemingway's Cat Are Regulated by Federal Law

The descendants of Ernest Hemingway's late cat Snowball still live at his museum home. Recently, the Eleventh Circuit Court of Appeals ruled in Whitehead Street, Inc. v. Gipson that the cats that currently live in the museum are subject to federal regulations set forth by the United States Department of Agriculture. The court based its ruling on the interstate commerce clause arguing that the cats were in interstate commerce because they constituted an "integral to the museum's commercial purpose."

This suit was brought forward after a visitor complained about how the museum care for Hemingway's cats. According to the ABA Journal, "[t]he agency wanted the museum to obtain an animal exhibitor's license; either cage the cats at night, construct a higher fence to contain them, or hire a night watchman to keep an eye on them; tag each cat; and construct 'elevated resting surfaces' for animals." With the adverse ruling, it looks as if the museum will now have to implement these regulations.

See Debra Cassens Weiss, Hemingway Cat Descendants Are Regulated By Federal Law, Appeals Court Says, ABAJournal, Dec. 11, 2012.

Doomsday Estate Planning

As of this day, we are only one week away from winter solstice, and that means that time is running out to get a person's affairs in order should the world end in 2012. If you are one of the people who are preparing for the global apocalypse, then you might take a moment to stop stockpiling water, food, and other items to take a closer look at your finances as we head into the final week of civilization. First, it is important to remember that any global catastrophe is likely to damage the banking system and might render it inaccessible. This could prevent a person from accessing their funds should they need the money. A person might want to consider doing the following to adequately prepare themselves financially:

1. A person might want to consider keeping a small sum of cash on hand. Some people recommend keeping at least $1,000 on their person in $20 bills.
2. As part of a longer term solution, a person might want to consider eliminating their debts and increasing the amount of money that they are saving. The reason that this is imperative is because long-term debts, such as mortgages, car payments, credit cards, and medical bills, can impair a person's ability to set aside money that could be useful in an emergency.
3. A person might want to consider converting some of his or her cash money to gold and silver coins. While paper money could depreciate in value, gold and silver usually never lose their value. Note, it is important that a person receive gold and silver that could be actually used in bartering.
4. The previous point is based on the idea that our paper currency could completely lose its value, requiring us to look to alternatives currencies to make purchases. On a similar note, a person might want to set aside items that could be used to barter for goods.
5. A person should strongly consider preparing in advance for a disaster by stockpiling necessities, such as water, food, and gas. 
6. Finally, keep everything in perspective. The odds that the world will end on December, 21, 2012 is going at 300 million to 1 on MyTopSportsbooks.com, a gambling website. While is highly likely that the world is not going to end in a week, the reality that each of us could face a natural or a man-made disaster in our lifetimes is a reality. Many people go through personal disasters when they lose a job. In an incident like that, a person can prepare themselves for disaster if they were to follow these simple steps. 

See Alex Veiga, How To Survive The Mayan Apocalypse: 6 Financial Tips, The Huffington Post, Dec. 13, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Article on Trust Regulation in Romania

Alexandra Safta (Independent) and Mirela Violeta Buliga (Doctor, Universitatea de Vest Timisoara) have recently published an article entitled, Considerations on the Legal and Tax Regime of the Trust, 4 Romanian Private L. Rev. (2012). Provided below is the abstract from SSRN:

The regulation of the trust was placed from the very beginning under the sign of the legislator’s concern of not creating an instrument which could be used for tax evasion or money laundering purposes. This concern is described in the explanatory memorandum of the new Civil Code, but also in its contents, by enacting a series of interdictions and a formalist regime. The heterogeneous nature of the grounds laying at the basis of the instauration of the present regime determined us to attempt an analysis both from the civil side and from the tax side of the trust institution.

Fourth Edition of Prof. Beyer's "Teaching Materials on Estate Planning" Published

West, a Thomson Reuters business, has just released the Fourth Edition of Teaching Materials on Estate Planning authored by Gerry W. Beyer (Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law) as part of the publisher’s “American Casebook Series.”

Here is the publisher’s description of this book:

This law school casebook provides a comprehensive review of the estate planning process. It is easily adaptable to two- and three-credit courses and seminars. The new edition retains the basic structure of the prior edition with significant updates to reflect recent developments in law and practice. Part One focuses on the substantive law applicable to estate planning, while Part Two concentrates on estate planning practice itself. Extensive researching and drafting exercises are included to hone the student's practical skills.

Most of the material is self-explanatory and thus the professor may reserve class time for more difficult topics, areas that merit special attention, and concerns raised by local law.

Millionaires Speak On Raising the Estate Tax

More than 30 of the wealthiest Americans wrote a letter to Congress and the Obama administration arguing that the estate tax should be raised.  Several of those millionaires, members of the Responsible Wealth Coalition, were featured at a news conference yesterday. They propose setting the estate tax threshold at $2 million for individuals and $4 million for couples.  The millionaires spoke about how they believe that there should be a significant tax on large estates when they are passed onto the next generation. They echoed Abigail Disney’s sentiment of not wanting to compound their already significant advantages on the backs of the middle class.  A high estate tax like this ensures that the wealth is not perpetually concentrated in the hands of a small aristocracy and also encourages charitable contributions.

See Isaiah J. Poole, Millionaires Defend the Estate Tax, Truthout, Dec. 12, 2012. 

Recent Case About Intestacy

Agreement donating sperm to widow of depositor was not sufficient to show consent to being the father of a posthumously conceived child.  Under Utah law, a deceased spouse is not the parent of a child conceived through use of the decedent’s sperm unless the decedent “consented in a record” to be the parent of the posthumously conceived child.  In Burns v. Astrue, No. 20100435, 2012 WL 4841461 (Utah Oct. 12, 2012), the Utah Supreme court held that the sperm storage agreement executed by husband which required that after his death his stored sperm be donated to his wife does not show his consent to be the parent of a child conceived by the wife using the deposited sperm.  The mere act of preserving sperm does not show such consent.  In addition, the court held that the agreement at issue was unambiguous and therefore extrinsic evidence of the decedent’s intent was inadmissible.

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

Donor-Advised Funds

Even though we are coming to the end of gifting in the year 2012, some investors are still struggling on when they should make charitable donations. They are still struggling with this because tax changes might limit the amount of charitable deductions that a person can make. Based upon this possibility, many argue that investors should make more gifts this year. On the other hand, it might be better to make more charitable gifts next year because the income tax rates are expected to rise. With this uncertainty, many investors are looking to donor-advised funds. A donor-advised fund is an individual account that is "administered by tax organizations, such as community foundations and national charities." A donor has the option of taking a deduction at the moment they make a large donation, but they can choose to distribute the amount that they donated to their chosen charity over time. If a donor wants to use a donor-advised fund, there are three things that donor should consider.

1. This process will allow a person to take advantage of a particular benefits in a favorable year, like this one, and then make donations over the course of a few years.
2. A person might want to donate appreciated securities because the tax code allows a taxpayer to fully deduct the fair market value of the securities but only up to 30% of a taxpayer's adjusted gross income.
3. An investor could also "convert their deductible individual retirement accounts to Roth IRAs this year in anticipation of higher income tax rates down the road."

See Carolyn T. Geer, Givers Turn to Donor-Advised Funds, The Wall Street Journal, Dec. 9, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Tax Deduction Denied to Pre-deceased Spouse For Debt Owed

Marion and Willard Derken owned and maintained two investment accounts, one separate account and one joint account with Merrill Lynch. One of the spouses, Marion, earned a vast sum of money playing the stock market and had $435,000 in the account by 1994. In contrast, her husband Willard only had about $27,000 in his account. The joint account that they owned had about $260,000. In that same year, both spouses decided to transfer the money in the joint account to Willard's account. In April of 1997, Marion signed a promissory note to Willard in the amount of $200,000. Willard passed away shortly after this, making the promissory note receivable to his estate. Marion signed a check for the amount to her late-husband's estate in 1998. She passed away in 2001. After she died, her estate tried to take a deduction on the debt that she owed to her late-husband's estate. The IRS denied the deduction on the grounds that the debt that created that the deduction was made by an agreement that lacked consideration. In contrast, Marion's daughter Lyn Bailey, the executrix of her mother's estate, testified of her parent's intent to equalize their estates. She testified that transfer was evidence of a formal agreement and consideration. 

The court in the Estate of Marion Derksen v. United States agreed with the IRS and disallowed the deduction. The court reasoned while Lyn consistently reported that the $200,000 first as an asset and then as a debt, this only showed that Lyn believed that this was her parent's intent. When the court considered the evidence, it noted that there was no evidence of that she "received any value, rights or privileges in return, nor is there evidence that she considered this transfer to be a loan and intended to seek repayment." The court decided that this was not sufficient to overcome the evidence that there was no agreement, especially when the court realized that the funds were actually never transferred. 

See David H. Lenok, Court Denies Estate Tax Deduction for Debt Owed to Pre-Deceased Spouse, WealthManagement.com, Dec. 10, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Blog Rankings Continue to Increase

The Wills, Trusts, & Estates Prof Blog ranked #20 in number of visitors and page views for the 12-month period  (October 1, 2011 - September 30, 2012 among blogs edited by law professors.

The number of visitors is up 24.2% and the number of page views reflects a 23.4% increase.

Overall as of December 13, 2012, this blog is the Number 1 most popular Estate Planning blawg in the nation (out of 213) and the Number 23 most popular blawg in the nation out of (5,041).

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

Ojukwu's Will Read Aloud

The will of Biafan Leader, Dim Emeka Odumegwu-Ojukwu, was read in the preceding weeks. The will and testament was suppose to bring the family together; instead, it tore them asunder. Some family members were so upset that they disowned the lawyer that read the will. In the will, Ojukwu reportedly gave most of his property to his widow, Bianca, who is also the Nigerian Ambassador to Spain. She was also authorized to take Ojukwu's position as the trustee of the family business and was named as one of the executors of his will, Ojukwu Transport Ltd. She felt that the will was fair because the property that she inherited was l owned collectively with Ojukwu. 

However, the same could not be said for his children. Emeka Jr. thinks that not only was the will unfair, he believes that the will is fake. He further claims that he is in possession of Ojukwu's true will. The will did not even mention his first son, Sylvester. Sylvester also believes that the will is a fake and claimed that the will was unreliable. In fact, Emeka Jr. believes that the reason that Sylvester was left out of the will proves that the will that was read was not his father's will. Now, it appears that both are ready to enter into a legal battle with the leader's widow. The will also revealed something that no one in the family was ready to hear. It appears from the will that Ojukwu has a son named Tenny Haman.

See PM News, Is Ikemba's Will Fake?, PM News Nigeria, Dec. 10, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Article on Rights and Responsibilities in Virginia's Continuing Care Communities

Katherine C. Pearson (Professor of Law, Penn State University School of Law) recently published an article entitled, Resident Rights and Responsiblities in Virginia's Continuing Care Retirement Communities: Building Trust and Stronger Communities, (Nov. 30, 2012). Provided below is the abstract from SSRN:

At the invitation of Virginia Senator George Barker, Professor Pearson testified before the Commonwealth of Virginia, Division of Legislative Service, Virginia Housing Commission for a working group on continuing care retirement communities (CCRCs). In her oral and written testimony, she identified seven core concerns of CCRC residents about financial transparency and governance, including the right to affordable stability in their communities and the right to voting membership on boards of governance. The author presented precedent for voting membership and responded to concerns raised by facilities for "conflict of interest." Her testimony in the Commonwealth in November 2012 builds upon earlier testimony she provided before the Senate Select Committee on Aging in July 2010.

The Next Battle in the Fiscal Cliff Talks Involves the Estate Tax

As I have previously discussed, President Obama and his Democrats in Congress are in conflict with each other and the Republicans in Congress over the future of the estate tax. As of this writing, members of Congress still have not made any progress on a compromise. This situation is made worse by the fact that the Democrats are divided over this issue.

The Tax Policy Center provided the following statistics. If the current tax scheme, a $5.12 Million estate tax exemption with a 35% tax rate on income that exceeds the amount, is extended the government is likely to receive about $161 Billion from the tax by the year 2021. If President Obama succeeds in getting his proposal, a $3.5 Million estate tax exemption with a 45% tax rate on income that exceeds the amount, the government will likely receive $258 Billion from the tax by the same year. Now, if nothing happens and the $1 Million estate tax exemption with a 55% tax rate on income that exceeds the amount is re-implemented, the government stands to earn $531 Billion by 2021.

The Tax Policy Center also accessed the situations of several actors, including the farmers and ranchers. The center argued that farmers only account a little over 1% of the individual who actually pay the estate tax. In contrast, 80% of the estate tax is paid by the Top 1% of earners in the United States, the Top .01% pay nearly half of the estate tax.

See Robert Frank, Next Battle on the 'Cliff's' Edge: Estate Taxes, CNBC, Dec. 10, 2012. 

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

Article on Posthumous Conception

Benjamin C. Carpenter (Assistant Professor of Law, University of St. Thomas School of Law) recently published an article entitled, Sex Post Facto: Advising Clients Regarding Posthumous Conception, ACTEC Journal (2013) (forthcoming). Provided below is the abstract from SSRN:

Apart from tax considerations, trust and estate law is often viewed by outsiders as a somewhat dusty area of the law. However, few examples better illustrate the intersection of law and technology than posthumous conception and estate law. While judges, legislators, and commentators have tackled some of the issues created by posthumous conception, few estate planning lawyers discuss the issue with their clients. Such hesitance has been understandable, given the moral sensitivities involved with posthumous conception and the relatively small likelihood that it will affect any one particular client. However, that likelihood is becoming greater with each passing year, and, in the context of grandchildren, the possibility of posthumously conceived children is out of the clients' control. Rather than ignoring this possibility and leaving the result to chance (or litigation), lawyers have the opportunity - if not the responsibility - to raise the issue with their clients and provide them the opportunity to express their intentions. Ultimately, whether to address the issue in an instrument is the client's choice, but she cannot make this choice if she is not made aware of the issue. With this Article, estate planning attorneys will have the background necessary to introduce the topic to clients, to educate clients about the technology itself, the legal responses to date, and their various options, and then to draft language to carry out the clients' intent - whatever it may be.

Michigan Woman Charged With Embezzling Money From Her Father

Michigan Attorney General Bill Schuette has charged Renee Bullock, a resident of Redford, Michigan, will one count of embezzling money from her elderly father. In 2010, after Bullock's father was admitted to a nursing home, she was appointed as the guardian of her father and was given a power of attorney over his finances. From this time to the present, Attorney General Schuette alleged that Bullock embezzled more than $140,000 of her father's money for her own personal expenses. In course of this time, Bullock failed to pay the nursing home. Instead, she chose to lease "a Cadillac CTS and a Chevrolet Tahoe" with her father's funds. After further investigation, it was discovered that Bullock used her father's funds at "casinos, nail and tanning salons, numerous restaurant and retail establishments." 

In response to this discovery, a court has removed Bullock from her role as the guardian of her father. Bullock met her $10,000 bond and is expected to be in court on December 6, 2012 for her preliminary exam.

See Redford Township Woman Charged With Embezzling Money From Elderly Father In Nursing Home, ClickOnDetriot, Dec. 5, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Inheritance Rights In Ireland

If a person dies intestate with a spouse and children, there are three different scenarios that might occur. First, the spouse will inherit the entire estate if the person does not have any children. However, if the person does have children, then the spouse will only inherit two-thirds of the estate. The children will divide the remaining one-third amongst themselves. Naturally, if there is no surviving spouse, the children are set to inherit the entire estate. If a person has a will, the will controls unless certain circumstances are met. A surviving spouse always has right in a share of the testator's estate. If the will chooses to disinherit the surviving spouse, then the spouse can take a legal right share in half of the estate if there are no children or one-third if there are children. All of this equally applies to civil partners. 

If the spouses have a Deed of Separation, their entitlement to a share of the former spouse's estate is forfeited. The court that grants a couple a legal divorce grants an order that removes the rights of the former spouse. The rights of a former spouse are only revoked through these particular methods. The rights of spouses that are not legally separated are completely unaffected. It is also important to note that if a person gets married that revokes a prior will. This also applies to civil partners when they participate in a formal ceremony.

There are also inheritance rights for qualified cohabitants. Under Ireland law, a couple is considered a qualifying cohabitant if the couple has lived together "in an intimate and committed relationship for two years or more if they have children together and five years in all other cases." If a person is a qualifying cohabitant, they can apply with a court for a portion of the estate of their partner.

See John Lynch, Spouses, Civil Partners, Cohabitants and Children - Know Your Inheritance Rights, South Tipp Today, Dec. 11, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Estate Tax Proposal From the Wealthy

Some want to repeal the estate tax, but a group of wealthy individuals proposed setting the estate tax at $2 million per person, with a 45% teaser rate that would "rise on the largest fortunes." Backers of this proposal include Warren Buffett, Jimmy Carter, George Soros, Bill Gates Sr., John C. Bogle, and Robert Rubin.  Mike Lapham, director of Responsible Wealth, believes that a substantial estate tax can help to raise revenue.  

If Congress does nothing by year's end, the exemption level reverts to $1 million per person and the top rate will be 55%.  President Obama's proposal is a $3.5 million per person exemption with a flat 45% tax rate.  Lapham notes that the $2 million/45% tax rate strikes a balance between these two solutions.  

See Ashlea Ebeling, Buffett, Carter, Gates Sr. and Friends Call For Estate Tax With 45% Teaser Rate Amid Fiscal Cliff Negotiations, Forbes, Dec. 11, 2012.  

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Recent Case on Elective Shares

The statutory list of nonprobate assets subject to the elective share cannot be expanded by judicial decision.  In Sieh v. Sieh, 713 N.W.2d 194 (Iowa 2006), the Iowa Supreme Court held that the property in a revocable trust created by a deceased spouse was subject to the surviving spouse’s right of election.  Subsequently the legislature amended that section to codify the result in Sieh.  In In re Estate of Myers, No. 11-1378, 2012 WL 5373711 (Iowa Nov. 2, 2012), the Iowa Supreme Court reversed the trial court’s holding that under the rationale of Sieh, various POD accounts created by the deceased spouse are subject to the survivor’s elective share rights.  The court held that the text and the legislative history of the amendment do not allow extension of the rationale of Sieh to other forms of nonprobate property and therefore Sieh is overruled.

Special thanks to William LaPiana Professor of Law, New York Law School) for bringing this case to my attention.