Wills, Trusts & Estates Prof Blog

Kris Jenner Asks Kanye West to Take $10 Million Life Insurance Policy

Kris Jenner insists that Kanye West takes out a $10 million life insurance policy to secure the life of his child with Kim Kardashian.  Kris wants the rapper to name the couple's baby as the primary beneficiary and Kim as secondary beneficiary.  

Kanye agrees to get the policy and says he actually already looked into it before Kris even brough it up.  While Kanye is in perfect health, he travels a lot and not all of his tour spots are the safest locales.  

See Kris Jenner Wants Kanye West to Take $10 Million Life Policy, The Indian Express, Jan. 12, 2013. 

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

Tax Filing Season Starts on January 30 Now

Since the American Taxpayer Relief Act passed on January 1, the IRS is delaying tax filing dates so they have time to implement the numerous substantial tax changes.  The IRS stated that tax filing for 120 million expected returns will commence on January 30.  IRS acting commissioner Steven Miller expects all of the computer changes will be made and tested by January 30 so they can process all those returns without major computer problems.  

See Patrick Temple-West, IRS Delays Start of Tax Filing Season to January 30, Reuters, Jan. 8, 2012

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

Estate Battle Over Poisoned Lottery Winner's Estate

As I have previously discussed, the wife of Urooj Khan, Shabana Ansari, supported that his body be exhumed after it was determined Khan was poisoned with cyanide. Apparently, Khan was already in an estate battle "with several of his siblings over control of his estate, including his lottery winnings." Khan died suddenly shortly after he tried to collect his lottery winnings. Now, his brother, Imtiaz, and his sister, Meraj Khan, have won an order from a probate judge to place a freeze on the lottery check so that Khan's widow cannot cash the check. The brother and sister's concern was that Khan's daughter from a previous marriage would not receive a portion of the estate. Ansari denied the accusation that she had removed assets from the estate.

See Jason Keyser, Document Show Battle Over Poinsoned Lottery Winner's Estate, NorthJersey.com, Jan. 9, 2013.

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

Belgian Monarchy Tarnished by Allegations Against Queen Fabiola

Queen Fabiola of Belgium "has been accused of avoiding death duties of 70 per cent by using a foundation to channel funds to her relatives." The country of Belgium has paid Queen Fabiola an annual public stipend since 1993, the year that her husband Kind Baudouin passed away. Unfortunately, this incident came at a difficult time considering the current financial state of most European countries. Like most European countries, Belgium has started to cut public spending and royalty within those European nations have been criticized for their lavish public spending. The Queen insisted that she was not placing publicly funded stipend within the foundation. She argued that fund "would only include her private money." She claimed that the only expenses that were covered by the stipend were housekeeping expenses, including salaries. 

See Bruno Waterfield, Belgian Monarchy Rocked By Queen Fabiola Tax Row, The Telegraph, Jan. 11, 2013.

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

Article about the Attorney Client Privilege in Arkansas

Molly S. Magee recently published her comment entitled Who is the Client? Who Has the Privilege?: The Attorney Client Privilege in Trust Relationships in Arkansas, 65 Ark. L. Rev. 637 (2012).  The introduction to the comment is available below: 

A trustee often encounters complex issues administering a trust. The trustee is presumably retained because of expertise in a particular area or because of confidence the settlor has in the trustee. The role of an attorney for a trust is to assist the trustee in making decisions regarding the trust. The attorney discusses his professional opinions and various options for trust administration with the trustee. The trustee then makes decisions based on that information, coupled with personal experience. Fees are generally paid from the funds of the trust, which exist for the sole benefit of the beneficiaries.

Suppose that subsequent to actions taken by the trustee, the beneficiaries sue the trustee for decisions made relating to the trust. Then, in litigation, the beneficiaries seek to discover communications between the attorney and trustee. Can the attorney-client privilege in Arkansas protect those communications?

Jurisdictions are split on whether a trustee, when selecting and corresponding with an attorney for the trust, is representing himself or the beneficiaries, and therefore, whether the communications between an attorney and trustee are protected by the attorney-client privilege. The Uniform Trust Code has not declared whether a trustee may claim attorney-client privilege in these situations. As a result, when litigation ensues, it is difficult in many jurisdictions to determine if the attorney-client privilege protects the communications, and, if so, which communications will be protected.

Although courts in a majority of jurisdictions have adopted a “fiduciary exception” to the rule of attorney-client privilege, Arkansas courts have yet to rule on this issue. Over thirty years ago, the Arkansas Supreme Court held that, in some cases, the trustee and the beneficiaries fall under a “joint-clients” exception to the attorney-client privilege. However, since then, legislation in Arkansas has applied the principle of privity to define the relationship between the attorney, trustee, and beneficiaries, altering the analysis. Moreover, in jurisdictions around the country, there has been a trend toward moving away from the fiduciary exception to the minority rule, under which the attorney-client privilege protects communications between the attorney and trustee.

It is important that there is clear law in Arkansas on this issue because without predictability, the attorney-client privilege is ineffective. The attorney-client privilege is ineffective if the parties do not know in advance who is subject to its protection. Part II of this comment examines the three different approaches courts take concerning the application of the attorney-client privilege in litigation between trustees and beneficiaries. Part III discusses Arkansas law governing trust relationships and the attorney-client privilege. Part IV analyzes the various approaches as compared to current Arkansas law. Part V recommends that Arkansas follow the minority approach and protect communications between trustees and attorneys. Finally, this comment proposes a rule to create predictability and certainty for attorneys and their clients in these situations.

Planning for Clients Who Own Horses

Clients who own a horse present special issues for attorneys, and it helps attorneys to connect with horse-owning clients to be aware of these issues.  Since a horse represents a major financial investment for clients who own one, maybe even their primary investment, planning for the horse is essential.  

The animal trust statutes for wills does not adequately provide for a horse's total care because it is only valid at the owner's death.  A traditional revocable living trust might be the best option to provide for the uninterrupted care of a horse.  Caring for a horse can be more complicated than caring for a dog or a cat and an equine trust allows the owner to create a detailed set of instructions to outline the aspects of the horse's care. 

One final unique aspect of an equine trust is that it is signed by the horse's guardian, so it creates a binding contract with the guardian.  The guardian must then follow the trust document and can only use his or her discretion when the trust authorizes it.   

See AJ Fudge, Planning for Horse-Owning Clients, Wealth Counsel Quarterly, January 2013.

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

Wife of Lottery Winner Asks For His Body To Be Exhumed

Urooj Khan is both the luckiest and the unluckiest man in the world. One day he was cashing his lottery prize worth more than $400,000 and the next day he died of cyanide poisoning. Now, his wife has come forward supporting the exhuming of Khan's body to be examined by forensic analysis. His wife, speaking through her attorney, claimed that she had nothing to do with the death. She said that they all had the same meal together the night before he died and has no idea how he was poisoned. Among the people at Khan's last meal was his wife's father, who apparently owes $124,603 in tax liens to the IRS. The court will hold a hearing on whether they will exhume the body on January 11, 2013.

See Wife Supports Exhuming Lottery Winner's Body, Video, abc7chicago, Jan. 10, 2013.

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

Warner Bros. Emerges Victorious In The Fight For Superman

As I have previously discussed, a federal district court granted Jerome Siegel, Superman co-creator, the right to recapture his Superman rights. Now, the Ninth Circuit Court of Appeals reversed the decision of the lower district court, on Warner Bros.' "contention that it had a deal in 2001 with the estate of Superman co-creator Jermone Seigel." The Laura Siegel Larson v. Warner Bros. Entertainment, Inc. case came after a federal judge ruled that Joseph Shuster did not have the right to recapture his portion of the Superman copyright. This comes as great news for Warner Bros., who basically has the license to exploit the Superman franchise, the heirs of the estate cannot prevent Warner Bros. from doing so. 

See Eric Gardner, Warner Bros. Win Blockbuster Victory in Legal Battle For Superman, The Hollywood Reporter, Jan. 10, 2013.

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

No Recourse For Man Whose Ex-Wife Stole From his Retirement Account

Michael Foster of Tulsa, Oklahoma learned the hard way that it is important to maintain your retirement documents even amidst your own personal struggles. After 11 years of marriage, Foster and his wife divorced. Foster moved out of his house at some point in time and forgot to change his address. Afterwards, his former employer mailed him a letter with the printed type: "To be opened by addressee only." His ex-wife found the letter, which contained information that the owner of the retirement policy could now access funds online. Foster's ex-wife followed the procedure in the letter and drained Foster's entire account in about four months. According to Bankrate.com, "He lost $42,126.38 altogether - and didn't even find out about it until January of the following year, when he received a tax form from the plan provider reporting a distribution of that amount." 

When Foster tried to recover the money from his former company claiming potential fraud, the district court and the Tenth Circuit Court of Appeals agreed that the plan was not a fault and that the company did not have to insure against the wrongful actions of third parties. The court of appeals also stated that his employer did not have to compensate for his negligence and failure to update his address.

See Barbara Whelehan, Woman Drains Ex's Retirement Account, Retirement Blog, Dec. 7, 2012.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.  

Married Couple's Estate Planning Guide

For married couples, the passage of the fiscal cliff bill, also known as the American Taxpayer Relief Tax Act of 2012 (ATRA), brought good news. For one, both the portability provision and the marital deduction were made permanent by ATRA. Unfortunately for some, the provision only helps taxpayers that passed away after December 31, 2010 and does not apply to same-sex married couples or if the surviving spouse is not an United States citizen. What is important to remember about portability is that the process is not automatic. The executor that is managing the estate must transfer the unused portion of the decedent's lifetime gift and estate tax exemption to the surviving spouse. The executor must file "an estate tax return when the first spouse dies." A taxpayer must take into account several different aspects of the portability provision. First, the portable amount is not adjusted for inflation. Second, it does not apply to the exemption for GST taxes. Finally, the usefulness of the portability exemption does not replace the usefulness of a bypass trust.

An additional important aspect of portability occurs when the surviving spouse remarries. If a surviving spouse takes the exemption of their first spouse and remarries, they are not allowed to hold on to their first spouse's exemption if their second spouse passes away before them. The surviving spouse is only allowed to take the unused exemption of their second spouse.

See Deborah L. Jacobs, A Married Couple's Guide To Estate Planning, Forbes, Jan. 9, 2013.

Faulkner Estate Settles Lawsuit

William Faulkner's estate recently settled a copyright lawsuit against Northrop Grumman Corp. and The Washington Post Co.  See here for a prior posting on this case.

The estate sued those parties over the following quote in an independence day ad: "We must be free; not because we claim freedom, but because we practice it."  Faulkner's estate claimed that this same quote, with different punctuation, was the conclusion to Faulkner's essay that criticized the South's response to school integration.

District Judge Henry T. Wingate dismissed the lawsuit in December and terms of the settlement are sealed. 

See Faulkner Estate Settles Lawsuit Over Newspaper Ad, 10TV.com, Jan. 10, 2013. 

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 Arbitration of Trust Disputes

S.I. Strong (Associate Professor of Law, University of Missouri School) recently published her article entitled Arbitration of Trust Disputes: Two Bodies of Law Collide, 45 Vand. J. Transnat'l L. 1157 (2012).  The abstract of the article is available below: 

Once considered nothing more than “mere” estate-planning devices, trusts play a large and growing role in the international economy, holding trillions of dollars of assets and generating billions of dollars of income each year. However, the rising popularity of both commercial and noncommercial trusts has led to an explosion in hostile trust litigation, leading settlors and trustees to search for new and less expensive ways to resolve trust-related disputes.

One possible solution involves use of a mandatory arbitration provision in the trust itself. However, the unique, multiparty nature of trust disputes often makes this sort of arbitration highly controversial.

This Article considers the various issues that arise when two separate bodies of law--trust law and arbitration law--collide, using recent developments in the field of international commercial arbitration to address some of the more intransigent problems facing trust arbitration. In so doing, this Article introduces a number of new judicial decisions not previously considered in the scholarly literature and brings a uniquely comparative and international perspective to the debate regarding the jurisprudential propriety of mandatory trust arbitration.

Unique Opportunity for Charitable Giving in January 2013

The American Taxpayer Relief Act of 2012 creates a unique opportunity for charitable giving.  If they act during January 2013, individuals who have attained age 70 1/2 may make a tax-free rollover from their IRA to charity of up to $200,000. 

The new law restores the ability of a 70 1/2 year old individual to make a tax-free IRA distribution or rollover to a charity of up to $100,000 in 2013, and during January 2013, that individual can rollover an additional $100,000 and have it treated as though it were rolled over in 2012.

This allowance is, of course, subject to limitations.  For example, the donee organization cannot be a supporting organization or a donor-advised fund, and the individual cannot receive any consideration for the distribution.  

See United States: Charitable Giving Under The New Tax Law: A Unique (But Brief) Opportunity for IRA Rollovers And Other Highlights, Patterson, Belknap, Webb & Tyler, LLP, January 2013. 

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

1st Bi-Annual Estate Planning and Community Property Law Journal Newsletter

The Estate Planning and Community Property Law Journal has published the first issue of its new bi-annual newsletter. The newsletter lists the journal's accomplishments and activities from the preceding semester, its upcoming CLE, and most importantly a list of the articles the journal expects to publish in Book 1, Volume V. If you are interested in the articles that the journal publishes, the journal's past articles can be found in full through Volume IV on Westlaw or you can subscribe to receive paperback copies of the journal. If you are interested and enjoy the articles that the journal publishes, make sure to also visit The Codicil, the journal's online addendum.

Applicable Exclusion Amount $5.25 Million for 2013 Deaths

The applicable exclusion amount will be $5.25 million for deaths in 2013.  This is derived from the 2011 base amount of $5 million plus the adjustmentfor inflation.  (The amount was $5.12 million for deaths in 2012.)

See Joint Committee on Taxation,Overview of the Federal Tax System as in Effect for 2013, at 14.

Trust Companies Saw an Increase in Business at the end of December

The fiscal cliff has a number of effects on people. Apparently, the wealthiest citizens in the United States took to seeking the help of trust companies to make last minute gifts. There was so much business this past December "that some firms booked a whole year's worth of business -- sometimes more -- in December alone." 

See Trust Companies Saw Last-Minute Rush of Customers in December, The Wall Street Journal, Jan. 8, 2013.

JJ Abrams and Producers on the New Star Trek Movie Grant Dying Man's Wish

Daniel Craft, a movie buff and the director of the New York Asian Film Festival, was diagnosed with terminal cancer. A friend of his posted on the popular news and image sharing website Reddit about his condition and his wish to view the unreleased Star Trek movie, "Star Trek Into Darkness." When JJ Abrams, director of the film, heard about Craft's wish he sent a movie producer with a rough cut of the movie to Craft's apartment. A second post from his friend with a update stated that Craft had tons of fun watching the movie. Craft passed away the next day, his wish fulfilled. 

See Dying Man Granted Wish to See Unreleased Star Trek Movie, AOL.com, Jan. 2013. 

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 Closing Down A Firm After A Lawyer Dies

Susan A. Berson (Partner, Banking & Tax Group of Leawood, Kansas) has recently published an article entitled, Death of a Practice: After Lawyer Dies, Her Friend Is Faced With Closing Down Her Firm, ABAJournal, Jan. 1, 2013. Provided below is the introduction to the article from ABAJournal:

Sole practitioner Diane Denniston lived her last days in the dining room of fellow Missouri attorney Alicia Beeler Villines this past summer.

A Kansas City-area lawyer of more than 20 years, Denniston had expected to return to her home, as well as to her clients, when she was diagnosed with cancer for a second time in 2011.

“Diane was a warm and caring person,” says Villines, whose practice is in Kearney, about 25 miles north of Kansas City. “I had met her at a bankruptcy CLE, and she became a close personal friend over the past few years.

“Diane had realized her cancer had returned, but her doctors were perhaps not as forthright as they might have been. ... Since late last year, she had been operating under the assumption that her health problems were more temporary and she would be able to return to the practice of law as she did after her first battle with the disease in 2005.”

From a hospital bed, Denniston requested that Villines close down her practice. “When Diane realized that the recurrence of her cancer was going to result in her death in the near future, she turned over her cases to me, signing an agreement to allow me to close her cases and transferring her practice over to me,” Villines says.

Jenni Rivera's Estate Problems

Jenni Rivera is a famous television star and a singer-songwriter from Mexico. She probably would have become famous in the United States if it were not for her untimely death this past December. The star was in a plane crash in Mexico and tragically lost her life. Rivera lived a difficult life, which included three marriages, two that ended in divorce and a third that was in the process of ending. Her third husband, Esteban Loaiza, and she did not finalize their divorce because of her death. The only estate planning documents that we know Rivera's owns is a letter that she wrote, detailing that her sister Rosie would take over her businesses. The letter also stated that Rosie would also manage her "music interests, her assets, and even care of her two minor children (their father, Rivera's second husband, died in 2009)." This is surprising because her estate was apparently valued at $25 million.

So, at best, Rivera only has a holographic will but it is still unclear as to whether the letter is a holographic will. In California where Rivera lived, there must be "clear and convincing evidence that the person intended the document to be a will when it was signed." Only then will Rivera's letter be accepted as a valid will. There are other issues with dividing her estate. The main issue is the fact that she was technically married to Loaiza in California when she died, so some of her estate might be subject to community property laws. Of course, Loaiza might not inherit anything if there is a prenuptial agreement in place. Finally, we are still a little unclear on whether Rivera had any other estate planning documents in place, such as a living trust. All of these considerations and conflicts are likely to lead to conflict. We will see as more information becomes available.

See Danielle and Andy Mayoras, Jenni Rivera's Estate Heading For Turmoil, Forbes, Jan. 7, 2013.

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

Two Changes in the Budget Agreement that Affect Long-Term Care

The budget agreement to avoid the fiscal cliff included two key measures that could matter to people who receive long-term supports and services.  The first repeals the Community Living Assistance Services and Supports Act and the second creates a new national commission to develop a plan to better finance and deliver long-term care services. 

The Obama administration had already abandoned the CLASS Act so the repeal of the act was not surprising.  And unfortunately, the commission seems like it will end up being more like a classic congessional study that does not actually make any changes. The commission is on a very tight time frame and the commission "would live in the bureaucratic ether," meaning that the commission has no natural supporters inside any Administration.  Additionally, there is no actual requirement that Congress ever actually vote on the panel's recommendations, which does not seem promising for any real results.

Howard Gleckman, Fiscal Cliff Repeals CLASS Act, Creates Long-Term Care Commission, Forbes, Jan. 1, 2013.  

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