Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, October 2, 2015

Article On Statutory Elective Shares

ArticlePictureMartin D. Begleiter (Drake University - Law School) recently published an article entitled, Grim Fairy Tales: Studies of Wicked Stepmothers, Poisoned Apples and the Elective Share, 78 Alb. L. Rev. 521-551 (2014/2015). Provided below is an excerpt from the article:

Ever since the statutory elective share replaced dower and curtesy, courts have been trying to expand the property subject to the spouse’s elective share. The courts have used a number of justifications for their attempts to accomplish this. In a previous article, the author offered an interpretation of the proper use of public policy by courts when a statute on the subject has been enacted by the Legislature. This article applies that test to attempts by courts to expand the elective share to will substitutes, and finds such attempts to be an impermissible use of public policy by courts.

October 2, 2015 in Articles, Wills | Permalink | Comments (0)

Thursday, October 1, 2015

Article On The Mutual Wills Doctrine

WillsYing Khai Liew (University College London - Faculty of Laws) recently published an article entitled, Explaining the Mutual Wills Doctrine, Current Issues in Succession Law (April 2016, Forthcoming). Provided below is an abstract of the article:

Although the mutual wills doctrine has been part of English law since the 18th century, it remains difficult precisely to define its operation, the legal principles involved, and its underlying rationale(s). These difficulties have caused many to doubt the usefulness and coherency of the doctrine. Recently, the Law Commission announced its plan commence a review of the law concerning wills in late 2015, with one of the four key areas to be reviewed being mutual wills. The review is said to ‘aim to reduce the likelihood of wills being challenged after death, and the incidence of litigation. Such litigation is expensive, can divide families and is a cause of great stress for the bereaved.’ This is reminiscent of Mummery LJ’s comments in Olins v Walters that the doctrine ‘continues to be a source of contention for the families of those who have invoked it. The likelihood is that in future even fewer people will opt for such an arrangement and even more will be warned against the risks involved.’ It is therefore a real possibility that the Law Commission might suggest abolishing the mutual wills doctrine completely.

This chapter proposes a new way of understanding the mutual wills doctrine which is consistent with orthodox principles. It distinguishes between what will be labelled ‘qualified interest’ and ‘absolute interest’ situations, each applying to a different type of mutual wills agreement. From this renewed understanding, it will be seen that the doctrine is underpinned by two distinct rationales which also form the basis of equity’s intervention in other areas. This indicates that the appropriate way of understanding the mutual wills doctrine is not to treat it in isolation, but in view of its relationship with other doctrines which give rise to constructive trusts such as the doctrine in Rochefoucauld v Boustead, secret trusts, and proprietary estoppel.

October 1, 2015 in Articles, Wills | Permalink | Comments (0)

Wednesday, September 30, 2015

Article On Material Participation Of Trusts

TrustRyan Pulver & Alan Joseph Wilson recently published an article entitled, In Agents We Trust - A Proposal for Material Participation of Trusts, 15 Wyoming L. Rev. 71-105 (2015). Provided below is an abstract of the article:

In the business succession planning context, estate planners frequently employ the use of trusts to pass ownership of a business from one generation to another. Often, the beneficiaries of such a trust include the children of the grantor. The trust mechanism provides trustee oversight and a controlled process for transition. In many cases, the child/trust beneficiary works in the business and perhaps earns his or her sole income from participation in the business with the promise of direct ownership in the future. This transition requires thorough planning to properly pass ownership in the most tax-efficient manner. In 2010, Congress amended the Internal Revenue Code (the “Code”) as part of the Affordable Care Act (“ACA”). This amendment introduced a new tax on “net investment income” applicable to individuals, estates, and trusts. Net investment income includes income from a trade or business in which the taxpayer does not “materially participate.” This raises a question regarding how a trust as a taxpaying entity materially participates under the tax code. With Section 1411 of the Code, Congress codified a requirement to look to Section 469 (passive activity losses) for guidance on determining material participation. Since the 1986 amendments to the Code, however, the Treasury has yet to pass regulations defining material participation in an estate and trust context.

In an attempt to provide guidance to trustees and estate planners, this article explores the meaning of “material participation” in the context of estates and trusts with respect to the Net Investment Income Tax (“NIIT”). In deriving this article’s topic from Treasury comments accompanying a final rule regarding the NIIT, this discussion primarily responds to the Treasury’s call for comments and guidance on “material participation” of estates and trusts and the proposed coordination with regulations under Section 469. Current guidance on this issue remains relatively limited, consisting of two court opinions and administrative decisions. The trending position of the Commissioner of the Internal Revenue Service (“Commissioner”) focuses solely upon the actions by the trustee or other person with discretionary powers and the ability to bind the trust. Such a position excludes trust beneficiaries that actively participate in the business but that lack a formal “trustee” obligation. The Commissioner’s position provides a clearly identifiable person who happens to hold legal title to the trust interest. By focusing on the trustee, however, the Commissioner overlooks the equitable interest of trust beneficiaries. The involvement of beneficiaries may equal or exceed that of the trustee and may more realistically represent the underlying economic interest of the trust. With the passage of Section 1411, another tax is added to the debate involving the activities of estates and trusts, and this area merits clear guidance.

September 30, 2015 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, September 28, 2015

Article On Patient’s End Of Life Treatment Preferences

MedicalRobert B. Wolf, Marilyn J. Maag, & Keith Bradoc Gallant recently published an article entitled, The Physician Orders for Life-Sustaining Treatment (POLST) Coming Soon to a Health Care Community Near You40 Am. Coll. of Trust and Estates L. J. 57-150 (2015). Provided below is an abstract of the article:

Advance health care directives, including durable health care powers of attorney and living wills, are part of the standard bill of fare for estate planners, along with durable financial powers of attorney, wills and trusts.  This article discusses an end-of-life planning tool that is less well known in the estate-planning community – a physician order designed to elicit and record a patient’s end of life treatment preferences, referred to in some jurisdictions (and in this article) as POLST. The wide acceptance and spread of the POLST has gone largely unnoticed by estate and trust and elder law practitioners, despite its purpose to implement their clients’ care wishes when the client is dying or near death, traditionally a focal point of their professional efforts.  This article is intended to remedy that lack of awareness.

September 28, 2015 in Articles, Death Event Planning, Estate Administration | Permalink | Comments (0)

Sunday, September 27, 2015

Article On Grantor Retained Annuity Trusts

ArticleSteven Arsenault (Professor, Charlotte School of Law) recently published an article entitled, Grantor retained annuity trusts: after $100 billion, it's time to solve the great GRAT caper,63 Drake L. Rev. 373-399 (2015). Provided below is an excerpt from the article:

The Author proposes that the Treasury Department adopt an administrative exception under which the traditional valuation rules using the statutory assumed rate of return would not apply if, taking into account all facts and circumstances known to the grantor at the time of the creation of the trust, there is at least a 50 percent probability that, over the 36-month period following the transfer to the trust, the real rate of return on the assets transferred to the trust would exceed the assumed rate of return by 200 percent or more. This exception draws by analogy on an existing administrative mortality exception providing that the traditional valuation rules do not apply where the individual who is the measuring life for valuation purposes dies or is terminally ill at the time the gift is completed. The Author’s proposal does not seek to remove the traditional valuation method entirely. Rather, it is aimed at those situations in which the disparity between the statutory assumed rate of return and the real expected rate of return is so great that the use of the assumed rate is likely to be viewed as abusive.

September 27, 2015 in Articles, Trusts | Permalink | Comments (0)

Saturday, September 26, 2015

Article On The Law of Human Remains

ArticleTanya D. Marsh (Professor of Law, Wake Forest Law School) recently published an article entitled, The Law of Human Remains, The Law of Human Remains (Lawyers and Judges Publishing Company, 2015). Provided below is an abstract of the article:

A human cadaver is no longer a person, but neither is it an object to be easily discarded. As a result of this tenuous legal status, human remains occupy an uneasy position in U.S. law. Perhaps because of what anthropologist Ernest Becker called our “universal fear of death,” the law of human remains occupies a remarkably unexamined niche of U.S. law.

The Law of Human Remains is an ambitious effort to collect, organize and state the legal rules and principles regarding the status, treatment and disposition of human remains in the United States. The most recent comprehensive overview of the law was published in 1950 (Percival Jackson's The Law of Cadavers). The Law of Human Remains builds on that work by creating detailed summaries of each individual state’s laws and regulations. This unprecedented resource allows readers to quickly identify the often fascinating differences that exist between states.

By defining and describing this neglected area of law, The Law of Human Remains simultaneously establishes the theoretical and doctrinal basis for the law of human remains and provides a framework so that attorneys and courts can more easily discover, understand, and use the law.

The first part of the book establishes the foundational principles of the common law of human remains in the United States and outlines major federal statutes on the subject. It then restates and explains legal doctrines in five categories. The second part of the book includes detailed summaries of each state’s laws on each of the doctrines explained in Part I. Statutes and leading cases are cited and explained, providing a valuable resource for attorneys and courts.

September 26, 2015 in Articles | Permalink | Comments (0)

Thursday, September 24, 2015

Article On Approaches To Selecting Legal Surrogates

ArticlePictureNina A. Kohn (Professor, Syracuse University - College of Law) recently published an article entitled, Matched Preferences and Values: A New Approach to Selecting Legal Surrogates, 52 San Diego L. Rev. 399 (2015). Provided below is an excerpt from the article:

Every day, hospitals are filled with incapacitated patients whose healthcare decisions are made by other people. The law recognizes such decisions as the patients’ own and, accordingly, the primary purpose of surrogate decisionmakers is to make the decisions that patients would make if able. Unfortunately, surrogate decisionmakers frequently make choices for patients that are inconsistent with patient wishes. Indeed, social psychology literature on surrogate decisionmaking finds a stronger correlation between surrogates’ decisions for patients and what surrogates would want for themselves than between surrogates’ decisions and what patients actually would want. Although others have treated surrogates’ tendency to project their own preferences and values on patients as a barrier to appropriate decisionmaking, this Article shows how savvy patients, advocates, and policymakers can capitalize on this tendency to improve healthcare decisionmaking. Specifically, it proposes that surrogate decisionmakers for health care be selected based, at least in part, on the extent to which they share patients’ treatment preferences. Where it is not possible to compare treatment preferences, or where an individual cares less about particular treatment decisions than about consistency with a set of values, surrogates should be selected based on shared values. Incorporating this approach into advance planning processes and the statutory law governing the selection of guardians and default surrogate decisionmakers could both increase the likelihood that decisions made are those patients would want made, and facilitate more flexible, context-appropriate treatment decisions.

Special thanks to Jim Hillhouse for bringing this article to my attention.

September 24, 2015 in Articles, Guardianship | Permalink | Comments (0)

Wednesday, September 23, 2015

Article On The Anniversary Of The Federal Estate Tax

ArticlePicturePaul L. Caron (Professor, Pepperdine University - School of Law) recently published an article entitled, The One Hundredth Anniversary of the Federal Estate Tax: It's Time to Renew Our Vows, 57 Boston College L. Rev. 3 (2016). Provided below is an excerpt from the article:

September 8, 2016 will mark the one hundredth anniversary of the federal estate tax. As with many longstanding marriages, America’s commitment to the estate tax has waxed and waned through the years. Our ardor built slowly, growing from the honeymoon years (impacting less than 1% of decedents with an inflation-adjusted exemption of around $1 million and a 10% top rate on estates over $100 million, raising less than 1% of all federal tax revenues) to a mid-marriage peak (impacting more than 7% of decedents with a $350,000 exemption and a 77% top rate on estates over $160 million, raising nearly 10% of federal tax revenues). But our passion has steadily cooled since then, culminating in a one year trial separation in 2010 and today’s withered estate tax (impacting less than 0.2% of decedents with a $5.4 million exemption and a 40% top rate on estates over $6.4 million, raising less than 0.6% of federal tax revenues).

Yet the initial reasons for our commitment to the estate tax – to raise revenue during a time of war, enhance the progressivity of the tax system, and curb concentrations of wealth – are even more compelling today than they were in 1916. This Article argues that we should rededicate ourselves to the vibrant estate tax of our youth.

September 23, 2015 in Articles, Estate Tax | Permalink | Comments (0)

Tuesday, September 22, 2015

Article On Donative Trusts And The Federal Arbitration Act

Horton-davidDavid Horton (Professor, University of California, Davis School of Law) recently published an article entitled, Donative Trusts and the Federal Arbitration Act, (Oxford University Press, 2016, Forthcoming). Provided below is an excerpt from the article:

In the United States, every reported case grappling with the validity of an arbitration clause in a donative trust shares the assumption that state law governs. The same is true of the vast majority of scholarship on the topic. Conversely, this chapter in Arbitration of Internal Trust Disputes: Issues in National and International Law (Oxford University Press, forthcoming 2016) argues that the Federal Arbitration Act (FAA) applies to some trust arbitration provisions. It then explores the consequences that flow from this conclusion.

Special thanks to Jim Hillhouse for bringing this article to my attention.

September 22, 2015 in Articles, Current Affairs | Permalink | Comments (0)

Article On Irresolute Testators, Clear And Convincing Wills Law

ArticlePictureJane B. Baron (Professor, Temple University - James E. Beasley School of Law) recently published an article entitled, Irresolute Testators, Clear and Convincing Wills Law, 73 Washington and Lee L. Rev. 1 (2016). Provided below is an excerpt from the article:

Controversial recent wills law reforms, embodied in new provisions of both the Uniform Probate Code and the Restatement of Property, excuse so-called “harmless errors” in will execution and permit judicial correction of erroneous terms in a will or trust. Both reforms pose evidentiary dangers, as proof of the error must come from outside the attested instrument and will be offered after the testator’s death. To respond to this concern, both the error and the testator’s true intent must be established by “clear and convincing” evidence.

This article is the first to examine how courts have applied the clear and convincing evidence standard to these important reforms of wills law. In practice, the clear and convincing evidence standard provides less evidentiary protection than its proponents expected. More importantly, judicial struggles with the clear and convincing evidence standard expose a deep fissure in the very concept of testamentary freedom.

The reforms assume — as does the Wills Act itself — a fully-formed, fixed set of choices that the testator has sought to express in his will, choices made by a conventionally rational choosing testamentary self for whom wills rules are a means for furthering self-determined ends. This conventionally-rational testator makes only innocent, inconsequential errors. Many of the testators in the actual cases, however, display only bounded rationality. Their errors are not simple accidental snafus. While the reforms contemplate correction only of the technical, innocuous expression or execution errors made by self-reliant, choosing testamentary selves, at least some courts care also about the more complicated errors made by vulnerable, irresolute testamentary selves. These courts push against the reforms’ boundaries. The clear and convincing evidence standard has not and will not function as a serious limit on mistake correction because it fails to reckon with both visions of testamentary freedom.

September 22, 2015 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)