Wills, Trusts & Estates Prof Blog

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

Wednesday, September 28, 2016

Article on Alternative Methods for Monitoring Agents Under Durable Powers of Attorney

Power of attorneyDanica J. Brustkern recently published an Article entitled, With Great Power Comes Great Culpability: Addressing Agency Costs in Durable Powers of Attorney, 50 Real Prop. Tr. & Est. L.J. 463 (2016). Provided below is an abstract of the Article:

This Article discusses alternative methods for monitoring those who become agents under durable powers of attorney. A durable power of attorney presents an easily abused principal/agent relationship because the principal is unable to monitor the agent once the principal has lost capacity. Because durable powers of attorney involve agency costs that are similar to those seen in the context of trusts and guardianships, this Article looks to the methods of monitoring the “agents” in each of those relationships and discusses whether these methods could--or should--be adopted for use in the context of durable powers of attorney. Ultimately, this Article finds that adapting the concept of a “trust protector” to durable powers of attorney could address the agency costs in these relationships with minimal sacrifice of the aspects of durable powers that made them so popular and useful to begin with.

 

September 28, 2016 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Tuesday, September 27, 2016

Article on New Regulations Affecting the Deductibility of Investment Advisory Expenses

DeductibilityDomingo P. Such, III & Tina D. Milligan recently published an Article entitled, Understanding the Regulations Affecting the Deductibility of Investment Advisory Expenses by Individuals, Estates and Non-grantor Trusts, 50 Real Prop. Tr. & Est. L.J. 439 (2016). Provided below is an abstract of the Article:

This Article addresses the new 2015 federal income tax rules governing the deductibility of investment advisory expenses and the confusion surrounding them. Specifically, the Article provides the context and impact of these new regulations, clarifies the current classification of investment advisory expenses, outlines methodologies for fiduciaries in unbundling fiduciary and investment advisory fees, and explains the limitations under current law. The Article also addresses the confusion surrounding the new rules for corporate fiduciaries, which require the “unbundling” of investment advisory fees when comingled with fiduciary fees using “any reasonable method.” The Article concludes that taxpayers should consult with their financial advisors and tax professionals to minimize the impact of deductibility limitations.

 

September 27, 2016 in Articles, Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Beneficiaries Modifying Irrevocable Trusts

Irrevocable trustBradley E.S. Fogel recently published an Article entitled, Terminating or Modifying Irrevocable Trusts by Consent of the Beneficiaries – A Proposal to Respect the Primacy of the Settlor’s Intent, 50 Real Prop. Tr. & Est. L.J. 337 (2016). Provided below is an abstract of the Article:

In most states, an otherwise irrevocable trust may be terminated or modified by all of the beneficiaries as long as the trust does not have an unfulfilled material purpose. With few exceptions, however, a settlor of a trust is allowed to put whatever conditions she likes on her largesse. The beneficiaries might dislike the trust terms or wish they were different, but they are merely looking a gift horse in the mouth. After all, it was the settlor's choice to make the gift in the first place. The wants of the beneficiaries are only relevant to the extent that the settlor decided to make them relevant. Thus, trust termination by consent of the beneficiaries is inapposite in American trust law.

Trust modification or termination by consent of the beneficiaries should be abandoned in favor of the doctrine of equitable deviation. Equitable deviation allows trust modification (or even termination) based on circumstances not anticipated by the settlor. Such changes are made to better effect the settlor's intent. Equitable deviation respects the primacy of the settlor's intent and recognizes that, due to unanticipated circumstances, trust modification or termination may improve the trust's efficacy in effecting that intent.

 

September 27, 2016 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, September 26, 2016

Article on How to Deal with Will Contests Over Testamentary Capacity

Diminishing capacityRichard B. Keeton recently published an Article entitled, Balancing Testamentary Incapacity and Undue Influence: How to Handle Will Contests of Testators with Diminishing Capacity, 57 S. Tex. L. Rev. 53 (2015). Provided below is a summary of the Article:

Lack of mental capacity is “the second most commonly alleged ground for setting aside a will.” This Article will explore these ever-increasingly common, yet intricate and complex scenarios. First, Part II of this Article will give the reader a broad overview of the requisite mental capacity to execute a will. Additionally, because each state has its own unique-- but similar--common law tests, sample case studies are provided for the jurisdictions of Missouri, New York, and Texas. Next, Part III will discuss the generally recognized presumption of requisite testamentary capacity--presumed across all jurisdictions--unless evidence is presented to show otherwise. Part IV of this Article will delve into various case law and common law tests used to prove the existence of undue influence in the execution of testamentary documents. Following, Part V attempts to answer the circular question challenging attorneys and courts of whether a testator can actually be unduly influenced if he or she lacked testamentary capacity. Upon conclusion, this Article will provide practical recommendations to consider when assisting persons with Alzheimer's disease and other forms of dementia execute testamentary instruments.

 

September 26, 2016 in Articles, Elder Law, Estate Planning - Generally, Wills | Permalink | Comments (0)

Article on Irrevocable Wills

Irrevocable willAlex M. Johnson, Jr. recently published an Article entitled, Is It Time for Irrevocable Wills?, 53 U. Louisville L. Rev. 393 (2016). Provided below is a summary of the Article:

Almost everyone knows that inter vivos trusts can be made revocable or irrevocable. And the reference to “inter vivos” as opposed to “testamentary” trusts is intentional. Testamentary trusts become effective only upon the death of the settlor by establishing a valid trust in his or her will and, as a result, are by definition irrevocable upon creation (the testator cannot die again nor can he or she undo his or her death to somehow later repudiate the creation of the trust). Hence, it is more precise to say that inter vivos and testamentary trusts may be made irrevocable, but only inter vivos trusts may be made revocable.

Although at one time the default rule in most states was that an inter vivos trust was irrevocable unless the settlor expressly retained the right to later revoke the trust, the modern and current majority view is the opposite: That is, trusts are revocable unless explicitly made irrevocable. Whatever the default rule, it is important to emphasize that inter vivos trusts come in two flavors or varieties: revocable and irrevocable.

Compare, however, wills that become effective only upon the death ofthe testator. By definition and in every jurisdiction, wills are ambulatory documents and can always be revoked prior to death. Indeed, there is no way for a putative testator to make an irrevocable will, meaning that there is no legal method by which an individual can commit to execute a will that is going to be effective upon that individual's death. In a legal regime that has as one of its primary goals the validation of the will maker's freedom of testation or disposition, it is somewhat surprising that individuals have no option to commit their future selves to a will executed by their present self.

 

September 26, 2016 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Saturday, September 24, 2016

Article on Generation-Inflation Index for Taxation

Generation skipping transfer taxAlyssa A. DiRusso recently published an Article entitled, The Generation-Skipping Transfer Tax and Sociological Shifts in Generational Length: Proposing a Generation-Inflation Index for Taxation, 41 Am. C. Tr. & Est. Couns. L.J. 307 (Fall 2015/Winter 2016). Provided below is a summary of the Article:

Having begun with an introduction, Part II of the article gives an overview of the GST tax and its history. Part III notes sociological changes relevant to generational length such as childbearing age and life expectancy. Part IV notes the effective use of inflation indices throughout the Code to use as a model for generation inflation. Part V formally proposes an inflation index for generational length for GST tax purposes. Part VI concludes the article. 

 

September 24, 2016 in Articles, Estate Planning - Generally, Generation-Skipping Transfer Tax | Permalink | Comments (0)

Friday, September 23, 2016

Article on the Limits of the Federal Arbitration Act

Arbitration1David Horton recently published an Article entitled, The Limits of Testamentary Arbitration, 58 Fla. L. Rev. Forum (2016). Provided below is an abstract of the Article:

This is an invited reply to Professor E. Gary Spitko's provocative and creative article, The Will as an Implied Unilateral Arbitration Contract. Professor Spitko argues that arbitration clauses in wills are enforceable because there is a "donative freedom contract" between the state and property owners. As a result, Professor Spitko concludes that all parties -- including omitted heirs who allege that a will is invalid -- are compelled to arbitrate any claim relating to the estate. 

Conversely, I explain why the Federal Arbitration Act and its state analogues are narrower. In my view, they exclude lawsuits filed by individuals who have not accepted money or property under the terms of the instrument. In addition, I contend that this carve out is necessary to prevent opportunists from using testamentary arbitration to insulate their conduct from judicial review.

 

September 23, 2016 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Article on Blowing Inheritance in the Great Wealth Transfer

Wealth transfer2Darren T. Case recently published an Article entitled, Blown Inheritance: An Alarming Issue During the Great Wealth Transfer, Arizona Attorney 38 (July/August 2016). Provided below is a summary of the Article:

It’s been estimated that $30+ trillion in wealth will transfer to the next generation over the next few decades. Some forecast that just under 20 percent of that wealth is already in motion, as it is being held by families with life expectancies of seven years or less. While practicing law in the estate planning, probate, and trust areas during the “greatest wealth transfer in human history” certainly will be intriguing, it will arguably be one of the most challenging times, as well. Of the trillions of dollars set to transfer to the next generation, recent studies show that 50 percent of the inheritances will be blown—and most will be blown quickly. 

Many families may cringe when learning such a staggering statistic, but the question is what, if anything, can attorneys do to combat the loss or dissipation of estates? 

 

September 23, 2016 in Articles, Current Events, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, September 21, 2016

Article on Nonprobate Transfers Subject to Spousal Elective Share

Spousal elective shareLucy L. Holifield recently published an Article entitled, Property Law—Upending the Familiar Tools of Estate Planning: Equity Renders Revocable Trusts Subject to the Arkansas Spousal Election. In re Estate of Thompson, 2014 Ark. 237, 434 S.W.3d 877, 38 U. Ark. Little Rock L. Rev. 75 (2015). Provided below is a summary of the Article:

Thompson has launched Arkansas probate law into a gray zone of uncertainty. Before, nonprobate transfers were simply not subject to the elective share. Now, nonprobate transfers may be subject to the elective share if the court thinks it reasonable to do so under the totality of the circumstances. Although the Thompson court articulates an intent-based test and applies the holding narrowly to revocable trusts, the decision was actually made on the equities of the case. In these cases, “fraudulent intent” is simply a post-hoc label assigned to an equitable outcome. The factors used are primarily objective, and a synthesis of case law from the jurisdictions cited in Thompson sheds significant light on what sorts of circumstances may lead the court to a finding of fraudulent intent.

Part II of this note will begin by discussing nonprobate transfers, the history of the spousal elective share, and efforts to protect against spousal disinheritance that occurs as a result of nonprobate transfers; it will end with a discussion of Arkansas's approach to the problem debuted in Thompson. Part III will provide an in-depth analysis of factors used in other jurisdictions to determine whether a nonprobate transfer is subject to the spousal elective share. Although this section will provide some guidance, it will also demonstrate just how malleable the Thompson court's intent-based analysis is and how unpredictable Arkansas's estate planning realm is left as a result. Part III will end by offering a practical solution in the form of nuptial agreements, and Part IV will conclude the note.

September 21, 2016 in Articles, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 20, 2016

Article on Writing a Definitive Pet Trust

Pet trust beyerRachel Hirschfeld recently published an Article entitled, The Perfect Pet Trust: Saving Your Dog from the Unexpected, 9 Alb. Gov’t L. Rev. 107 (2016). Provided below is a summary of the Article:

This article is about pet trusts, the legal documents that secure an animal's uninterrupted care. The goal is to guide the reader through the process of writing a definitive pet trust, and to highlight the potential mistakes and pitfalls that could invalidate these documents.

What is a pet trust? A pet trust allows an individual, the Pet Owner, to name a Pet Guardian and, if they wish, to leave funds providing for the continued maintenance of animals, in the event that the Pet Owner is unable to.

The American Pet Products Association (“APPA”) estimates that about sixty-two percent of U.S. households have pets, and an astounding $60.59 million dollars will be spent on pets in the United States in 2015. This is three times the amount of money that was spent on pets approximately twenty years ago.

Clearly, times have changed and attitudes are evolving. An ever growing number of Americans consider their pets as more than just animals. According to The Harris Poll, there is a tendency for people to elevate their pets to the status equivalent to that of a family member. Just look at any Pet Owner's smartphone and you will see photos of their pets, along with other family members.

Because people are passionate about their pets, providing uninterrupted care for them is often a concern. When something happens to a Pet Owner, such as an accident, illness, or death, a pet trust becomes especially critical.

Sadly, if there is no legal document or binding plan in place, the court may make decisions for what it terms the abandoned animal.

September 20, 2016 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)