Wills, Trusts & Estates Prof Blog

CLE on LGBT Estate Planning

On Wednesday, April 17, 2013, the ABA is hosting a CLE entitled Advance Directives and Estate Planning for LGBT Adults.  The CLE is from 1:00 p.m. to 2:30 p.m. Eastern.  A description of the CLE is below: 

• The unique issues that arise when doing advance care and estate planning for same-sex couples
• Estate planning best practices, Medicaid spousal impoverishment protections, transfer tax concerns, and employer sponsored retirement plans
• Possible changes in the legal landscape as a result of the pending DOMA case in the Supreme Court and attempts to extend spousal impoverishment protections to same-sex couples  

Please click here for more information and to register.  

CLE on Getting Family Business Owners To Start Succession Planning

The ALI-CLE is sponsoring a telephone seminar and audio webcast entitled, Getting Family Business Owners off the Dime: How To Get Them Started on Succession Planning on Wednesday March 27, 2013 from 1:00 - 2:00 pm EST. Provided below is description of the event:

Estate planners are constantly frustrated by clients who fail to engage in thoughtful succession planning. this program will help even the most seasoned practitioner motivate his/her client to begin the process.

This course will examine several issues facing clients today, including:

• Drafting suggestions to accommodate a trustee who must follow the direction of another on a family business matter
• Cash flow for a surviving spouse
• Children who do no work in the business
• Business real estate which is not owned by the business
• Common mistakes in buy-sell agreements (e.g., pricing formulae, valuation discounts, transfer incident to divorce, prohibited transfers)
• Recommended language to use for the trustee with a conflict of interest

First Five-Organ Transplant Patient Gives Birth

Fatema Al Ansari became the mother of a healthy baby girl this past February, which is usually all of the joyous news that you will ever need for a new parent. That is not the end of the good news for Al Ansari because she also became the first patient to give birth after receiving five different organ transplants, which include "a new liver, pancreas, stomach and small and large intestine." She gave birth by cesarean section on February 26, 2013 at the same hospital in Miami, Florida where she received her transplant surgery. Al Ansari is originally from Qatar and, if everything goes well, hopes to return to home after a few weeks. She was living in her home country when her medical problems emerged. At the age of 19, "she was diagnosed with a blood clot in a major vein to the intestine." It was the blood clot that required her to get transplant surgery.

Al Ansari is truly one of a kind. While there have been women that have given birth after receiving two organs, she is the first to give birth after receiving five organs. A number that's even more remarkable when you consider that there are only about 600 recorded people who have received five organs. Her doctor, Shalih Y. Yasin remarked that "an adult with five transplanted organs who is sufficiently healthy to even consider having a child 'is a miracle by itself.'" The reason for this is because there could be a number of possible complications with the pregnancy, including infection, bleeding, and a good amount of physical discomfort as the baby grows. While Al Ansari had the latter two, she was lucky to not get an infection. Other doctors noted the unusual characteristics of the birth. Many claimed that while many patients go on to lead full lives after an organ transplant, almost none of them go on to give birth.

See Suzette Laboy, Fatema Al Ansari, First 5-Organ Transplant Patient To Give Birth, Has A Baby Girl, The Huffington Post, Mar. 13, 2013.

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

The Effect of Rescission Still Unclear

Currently, the following inquiry is unanswered in the tax code and in regulations to the tax code: whether a transaction purporting to unwind or rescind an earlier transaction will be given effect as if neither transaction occurred for federal income tax purposes? 

Recently, the IRS announced that it planned to release guidance in this area.  Currently, Rev. Rul. 80-85 provides the bulk of guidance on the topic.  For the original sale to be disregarded, these two conditions have to be met: 1) the parties to the transaction must be returned to the "status quo ante," and 2) the restoration must be accomplished within the same taxable year as the original transaction. "Status quo ante" is the term used to express the requirement that the rescission places the seller and the buyer at the end of the taxable year of sale in the same positions as they were prior to the sale. 

As the IRS applied Rev. Rul. 80-85 in a series of private letter rulings, these rulings clarified that hindsight as to the tax consequences of the original transaction is not a bar to successful rescission relief. Furthermore, it still remains unclear how the status quo ante requirement applies in various situations.  Practitioners are hopeful that the IRS will clear up this area soon with new guidance. 

See Thomas J. Gallagher, United States: The Income Tax Rescission Doctrine--The Code's "Etch-A-Sketch" Tax Planning Tool, Mondaq, Mar. 12, 2013. 

Warner Bros Fights Back In Tolkien Breach of Contract Lawsuit

As I have previously discussed, the estate of J.R.R. Tolkien brought a copyright infringement case against Warner Bros. alleging that they had overstepped their contractual rights by creating online slot machines and games designed to advertise the new Tolkien movie, "The Hobbit." A counterclaim was filed against Tolkien's estate by rightsholder, Saul Zaentz Co., who alleged that the estate "has breached an implied covenant of good faith and fair dealing."

Now, Warner Bros. has struck back at the estate of late-author. The studio hired Daniel Petrocelli and has amended the original counterclaim. The studio claims that the action filed by Tolkien's estate has damaged the studio by causing them "to miss out millions of dollars of licensing opportunities." Therefore, the studio is seeking damages from the estate for the breach of contract. The studio based its claim on the fact that it believes that it is the successor-in-interest based on an United Artist agreement from 1969. It further contends that it and Zaentz has had the right to use online video games for the past 16 years. The studio claims that this dispute over these rights erupted after a "regrant agreement" was executed in 2010. Warners claims that it suffered losses because it was unable to use "The Hobbit" like it was able to use "The Lord of the Rings" in online video games. Tolkien's estate responded to the counterclaim by claiming that it was entirely unfounded and that the studio is only using intimidation tactics designed to scare the estate. 

See Eriq Gardner, Warner Bros. Claims Tolkien Estate Breached 'Hobbit' Contract, The Hollywood Reporter, Mar. 13, 2013.

Estate Dispute Between Widow and Her Mother-In-Law

The High Court of Kenya “has ordered the widow of late Internal Security Assistant Minister Orwa Ojode to deposit Sh20 million death benefits she was awarded by the National Assembly.” Justice Luka Kimaru directed Mary Ojode to deposit the money into an account within a day’s time. The reason that the judge gave for this order was because Ms. Ojode is in an estate dispute with her mother-in-law over late-husband’s assets. The judge stated that the failure to do so could result in her being held in contempt of court. This came after a court noted that Ms. Ojode had failed to comply with an earlier court order to receive a full list of her late-husband’s assets. 

Justice Kimaru has also declared Orwa Ojode’s mother, Ulda Aloo Ojode, as a dependent of his estate and ordered that the letters of administration be delivered to Mary. The court also issued an order that would require the attorneys of both his widow and his mother to figure out how much Mary should be entitled to maintenance. Mary rejected his mother’s allegations and claimed that only her and her son are beneficiaries of Orwa’s estate.

See Lucianne Limo, Ojode Widow Told To Deposit Sh20m Benefits, Standard Digital, Mar. 13, 2013.

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

Book on Inherited IRAs

Seymour Goldberg (Partner, Goldberg & Goldberg, P.C.) recently published a book entitled, Inherited IRAs: What Every Practioner Must Know, American Bar Association, (Feb. 2013). Provided below is a description of the book from the ABA Store's website:

The rules and regulations surrounding estate planning and retirement asset distributions can be very confusing. One seemingly tiny mistake or oversight could result in a morass of legal issues and penalties, about which a less-informed practitioner may be completely unaware. It is your responsibility as a practitioner to be familiar with these retirement distribution rules and know how to implement an estate plan that includes retirement-type assets, such as IRAs.

Inherited IRA's: What Every Practitioner Must Know is your complete guide to effectively implementing an estate plan that includes retirement-type assets, written especially for the practitioner. This important book serves as a guide to alert you, as a practitioner, to many of the retirement distribution rules that you must know in order to effectively safeguard your client and their retirement assets.

Within this concise guide, you'll find more than 100 scenarios, questions, and answers that you will most likely encounter as a practitioner dealing with often complex retirement asset distribution. In addition, checklists, sample forms, and summaries of court rulings on inherited IRA cases will provide you with additional tools and resources that will help you serve your clients through what is often a very difficult time in their lives.

This essential resource can help any retirement and estate practitioner be more responsive to questions about retirement distribution planning, and be more successful at their craft.

CLE on the Fundamentals of SNT Administration

Professor Rebecca C. Morgan and the Center for Excellence in Elder Law will sponsor a webinar entitled, Fundamentals of Special Needs Trusts Administration Webinar on Friday, April 19, 2013 from 1:00 to 5:00 pm EDT. Provided below is a description of the webinar from the Stetson Law Registration Page:

This webinar will address challenging SNT administrative issues faced by trustees, attorneys and others involved in SNTs. The faculty of nationally known leaders will discuss:

• Changes to the POMS
• Taxation of SNTs
• Impact of the ACAs
• Medicaid expansion for trustees, beneficiaries and families
• What attorneys want trustees not to do

The webinar will also feature a Q&A session. Questions can be submitted ahead of time on any topic dealing with SNT administration. The cost to participate in the webinar is $125....

In order to participate in this webinar, please note our technology guidelines below. We recommend that participants perform the following procedures:

To view the webcast on PC/Mac Desktop computer:

• Install/Update the latest Flash Player

Users of mobile devices will need to download a free Ustream app.  

To view webcast on iPad/iPhone:

• Download free Ustream app from iTunes Store

To view webcast on Android phone/tablet:

• Download free Ustream app from Google Play Store

You can register here. For registered parties, the login information for the event will be sent before the event. 

Attorney Pays for Stealing Almost $900,000 From Clients

Maureen F. Pomeroy, 46, has been disbarred, will pay $277,292 in restitution to her victims, serve one year in a house of correction, and spend another year-and-a-half under house arrest.  Pomeroy faces all of these consequences for taking advantage of clients who trusted her with access to their money, hoping she would assist them with their best interests at heart.  Instead, she stole almost $900,000 from several people.  On March 4, Pomeroy pleaded guilty to two counts of larceny from a person over 60, one count of larceny, and one count of embezzlement by fiduciary.  

See Todd Feathers, Disbarred Attorney Will Serve One Year in Prison for Stealing Nearly $900,000, Metrodesk, Mar. 12, 2013. 

Jersey Trust Law Amended To Offer More Protection to Jersey Trusts

"Amendment No 5" is the latest amendment to Jersey's Trust Law 1984, which was originally designed to maintain Jersey's position as a leading trusts jurisdiction.  The recent amendment no 5 amended Article 9, enhancing the level of protection provided to Jersey trusts.  Article 9 now states that any question relating to the powers to vary a Jersey law trust must be determined according to Jersey law.  The intent of the amendment was to immunize Jersey trusts against future attempts by foreign courts to alter their terms and to prevent use of conflict of law principles to circumvent the protection.

See Sarah Aughwane, Jersey: Jersey Introduces New Legislation to Protect Trusts, Mondaq, Mar. 11, 2013. 

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

New Edition of Cases and Materials on Gratuitous Transfers

Mark L. Ascher, Elias Clark, Grayson M.P. McCouch and Arthur W. Murphy recently published the sixth edition of Cases and Materials on Gratuitous Transfers. A description of the book is below: 

The new edition of Gratuitous Transfers incorporates developments in the law of wills, trusts and estates since 2007, including new principal cases involving insane delusions, formalities of will execution, charitable restrictions and trust modification. The text also includes references to case law and literature relating to same-sex marriage, posthumously-conceived children, transfer-on-death deeds, asset protection and perpetual trusts, as well as statutory references to amended Uniform Probate Code provisions concerning parent-child status, spousal elective share and notarized wills. The coverage has been thoroughly updated while maintaining continuity of organization and general approach with previous editions.

Please click here for more information or to buy the book. 

The Intra-Family Loan, A Tax & Estate Planning Tool Many Don't Know About

The Intra-Family Loan is a tax and estate-planning tool that many estate planners do not know about. As a result, it is not used often. The idea of an Intra - Family Loan is an older generation serving as a lender of cash or other assets to a younger generation serving as the borrower. Typically, the loan is cash and the understanding is summarized in a promissory note. The Intra - Family Loan is less complicated than many other advanced estate planning tools. This type of loan could allow a borrower to pay the interest and principal after death by using life insurance as payment.

The interest rate for the loan should be equal to or greater than the minimum Applicable Federal Rates (AFR) to avoid tax regulations. According to JDSupra.com, a long-term loan, classified as a nine year period or more, cannot have an interest rate lower than 2.63%. JDSupra.com continues to explain the advantage of an Intra- Family Loan "the idea that if you can borrow money at the long-term AFR and earn an investment rate of return on a tax-advantaged bas in excess of the long-term AFR, outside of the taxpayer's estate, the taxpayer wins by a landslide." Currently, interest rates are low which makes the Intra-Family Loan a tool that can come in handy for tax and estate planners. Additionally, the Intra-family loan may be a more manageable tool than other related options because of its simplicity.

See Gerald Nowotny, The Family Loan Shark-Leveraging The AFR In The Taxpayer's Favor Intra-Family Loans And Private Placement Insurance Products- Part 1, JDSupra.com, Mar. 13, 2013.

Mogul's Son Under Scrutiny

A year before the death of business mogul, Abe Hirschfeld, allegations arose that his son managed to evade the investigation “into a mysterious fall that landed the [his father] in the hospital.” The lawyer, Simon Rosen, alleges that the Mr. Hirschfeld told him that he believed that this son, Elie, had pushed him down a flight of stairs to gain control of his business. Rosen also claimed that Elie prevented him from seeing Mr. Hirschfeld when he was in the hospital.

Now, Elie and his sister Rachel are at odds over their father’s estate. Rachel, an estate planning attorney who specializes in pet trusts, has brought claims that accuse Elie of coercing their father into giving him $300 million of real estate property. Elie, of course, denied the claims. While Mr. Hirschfeld’s estate was once valued at $1 billion, at the time of his estate it was only worth about $7 million. As for his children, the sad truth of the matter is that both children were estranged from their father at some point in their lives.

See Julia Marsh, Mogul’s Son Under Fire, New York Post, Mar. 11, 2013.

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

CLE on the Differences Between Estate Planning and Family Law

The ABA Section of Real Property, Trust and Estate Law will sponsor a teleconference entitled, The Clash Between Estate Planning and Family Law: When 'Til Death Do Us Part' Becoming 'Til Divorce Do Us Part', on Tuesday March 19, 2013. Provided below is the description the event:

This panel will focus on the dangerous cross-over between probate and family law. The panelists will examine important issues for the planner who wants to avoid trouble and the litigator who wants to remedy it.

Our panelists will discuss:

• Potential litigation traps that arise in estate planning for a husband and wife, including conflicting marital settlement agreements, estate plans, and beneficiary designations;
• What estate administrators and drafting attorneys need to consider with marital agreements and rights of spouses upon the death of a spouse;
• Important probate matters that family law attorneys should consider in preparing marital agreements, when a divorcing or divorced spouse dies;
• The effect of divorce on estate planning;
• Automatic restraining orders on existing estate plans;
• Revocation of joint trusts; and
• Breaches of fiduciary duty that spouses are apt to commit.

Article on Decanting Pre-ATRA Trusts

Robert L. Moshman (Attorney, New York and New Jersey) recently published his article entitled, Decanting Pre-ATRA Trusts: An Interview with Meryl G. Finkelstein Esq.,The Estate Analyst (Mar. 2013). As its title suggests, the aritcle focuses the use of decanting assets within a trust following the passage of ATRA. An excerpt from the article is below:

Decanting a fine wine can enhance its flavor when done properly. Awaken the grapes and celebrate life! However, a wine decanting miscue can leave you with woe and sorrow, not to mention a sour taste, an expensive bottle that no one wants, the scorn of aficionados, and a decanter that needs to be washed out and put away.

Decanting assets from a trust can be equally tempting and rewarding, especially in the wake of the American Taxpayer Relief Act of 2012 (ATRA). However, there are many more considerations and variables than one might think. States have different statutory and common law parameters, and the IRS may also have something to say about decanting from a trust.

Good Ratings for the ACTEC Wealth Advisor App

Donald Kelley gives the ACTEC Wealth Advisor App five out of five stars. The ACTEC Wealth Advisor is an ipad app that allows professionals to search for ACTEC fellows, frequently cited statutes, and reference the Applicable Federal Interest and 7520 rates. In addition, the application allows its users to calculate GRATs. Finally, the application acts as a news source and provides up to date information on estate planning legislation from United States Congress and the states. 

Please click here to download the app. 

See Donald Kelley, The ACTEC Wealth Advisor App, WealthManagement.com, Mar. 13, 2013. 

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

Astor Heir Tries to Sell Timepiece, Claiming it Belonged to John Jacob Astor IV

Anthony Marshall has been caught trying to sell off a century-old Astor family heirloom that may just be a phony.  

This isn't the first time he has engaged in less than honest dealing. In 2009, Marshall was convicted of conspiring to steal $60 million from his mother, Brooke Astor.

Now he is trying to sell a gold pocket watch, claiming that his grandfather, John Jacob Astor IV, wore it when he died on the Titanic.  Such an heirloom does exist, but a West Coast developer named John Miottel claims he bought that watch in 1997 and he has papers to prove it. Miottel claims the watch Marshall is trying to pawn off as John Jacob Astor's is in fact a different watch. Marshall's wife, Charlene, maintains that Miottel's story is not true.  She also says that Marshall insists the watch he is attempting to sell is the real deal.

See Astor Heir Marshall in Titanic Watch 'Scam,' Estate of Denial, Mar. 13, 2013. 

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

Bankruptcy vs. Safeguarding Donor Intent?

It is common for tension to arise between donors and institutions with regard to preserving donor's intent. Recently, this issue has gained notoriety. The economy has reduced institution resources leaving institutions, like museums, in financial distress. Institutions in financial need often consider selling donated items, which can be against the donor's intent. Experts are claiming donors of the complete political spectrum are concerned about preserving their intent. President of the Philanthropy Roundtable, Adam Meyerson asserts that "'A respect for donor intent is essential for philanthropic integrity.'" Since donations are usually what keeps an institution like a museum going, administrators typically fulfill a donor's wishes loyally. In most states, the attorney general is in charge of donations to charitable organizations.

However, many courts are attempting to find the delicate balance between philanthropic integrity and the financial crisis that many institutions face. Consequently, some courts have allowed museum administrators to break conditional gift provisions. As a result, consultants and nonprofit organizations have worked hard to help donors draft wills and donation documents that improve the chance the recipient of the donation carries out the donor's intent. In fact, founder of a philanthropic consulting firm, Jeffery Cain has written a free guidebook to assist people giving gifts and alleviate some of the concerns about gift management over time.

See Patricia Cohen, Museums Grapple With The Strings Attached To Gifts, New York Times Art & Design, Feb. 4, 2013.

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

The Importance of Medical Directives In Light of the Glenwood Gardens Incident

As I have previously discussed, Lorraine Bayless died after she collapsed at the Glenwood Gardens Retirement Home and the facility refused to perform CPR on her. According to the Trust Advisor, “she died before the ambulance could arrive.” Some experts believe that not only was this event shocking but also that the facility should consider itself lucky that it is not the subject of a lawsuit from the family of Ms. Bayless.

If anything, this incident has provided a much needed wake-up call for those who have family members in these facilities. A person who has a family member in one of these facilities might want to take the time to learn about the policy that their loved one’s home has adopted. Do not think that the recent Glenwood Gardens incident is the only one of its kind. In fact, Glenwood Gardens had to pay a $100,000 fine because it refused to help another resident with Alzheimer’s disease when he started choking on a ketchup packet. The resident died 12 hours later. At the time, the facility had a clear duty to help the man and chose not to intervene.

Bayless’ family says that their mom knew of the policy at Glenwood Gardens and that she is at peace. Whether their mom truly understood the limitations at the facility is unclear, especially with the change in Florida law. Most think that a DNR only applies to people in with a terminal illness or those in a vegetative state. In Florida, this is no longer the case. Therefore, family members might want to consider discussing all of the medical directives with their elderly family member before that person goes into a home.

See Scott Martin, Glenwood Gardens Death Opens Up Estate Planning Nightmare, The Trust Advisor, Mar. 10, 2013.

CLE on Charitable Giving Techniques

The ALI-CLE and the ABA Section of Taxation is co-sponsoring a live course and video webcast entitled, Charitable Giving Techniques, on Thursday-Friday, May 2-3, 2013 at the Washington Plaza Hotel in Washington D.C. Provided below is description of the event:

Acquire the knowledge to advise your clients not just on compliance with past and proposed new regulations, but also on how they can incorporate a range of incentives into their ongoing financial planning.

Taught by a distinguished national faculty of experts in the field, this annual course, comprising at least 12 full hours of instruction including one hour of ethics, is a comprehensive review of lifetime and testamentary charitable giving techniques, including a full discussion of recent statutory provisions. It addresses the technical, mechanical, and legal sides of the issues, with practical applications and “tips from the trenches.”

The first half of the first day offers two tracks at different levels of complexity, allowing you to attend the track that is right for you. One track serves as a crash course or refresher in the basic aspects of charitable giving techniques. The alternative morning track is for those looking for more advanced analysis. Following the Thursday lunch break, all registrants come together for the remainder of the course, which focuses on more challenging issues and is taught at an advanced level, thereby allowing the faculty and registrants to delve more deeply into important topics, such as:

• Use of private foundations, donor-advised funds, and supporting organizations
• Post mortem charitable planning
• Charitable giving tax pitfalls
• Life insurance
• Hot topics and case studies in planned giving
• Best practices in development – lessons learned

The faculty also spends a full hour discussing ethics problems that routinely challenge charitable giving practitioners. This course includes CLE ethics credits.