Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Saturday, April 19, 2014

Article on Trust Variation and ERISA


Peter J. Wiedenbeck (Washington University in Saint Louis – School of Law) recently published an article entitled, Trust Variation and ERISA’s ‘Presumption of Prudence’, Tax Notes, Vol. 142, No. 11, 2014.  Provided below is the abstract from SSRN: 

The presumption that an eligible individual account plan (EIAP) is justified in continuing undiversified investments in employer stock, first recognized in Moench v. Robertson, is derived from state trust principles governing judicial authority to modify the terms of a private trust when necessary to respond to an unanticipated emergency. These trust variation doctrines apply in factual circumstances that are loosely analogous to the crashing ESOP situation, but a solid conceptual basis for their application to pension trusts under ERISA is lacking. The importation of traditional trust variation principles into ERISA elides several serious difficulties. The automatic assumption that the employer sponsoring an EIAP is the settlor of the pension trust is one problem. Even if the plan sponsor may be treated as settlor, Moench and its progeny overlook an essential premise of the Restatement (Second) of Trusts' administrative deviation rule: It would not apply to a private trust that is amendable in the way that a pension trust is required to be. Further, the federal courts have overlooked the fact that modern trust variation principles are far more liberal than the black letter rule set forth in the Second Restatement, which was adopted in 1957. In short, the overlooked or misunderstood provenance of the Moench presumption has caused serious confusion, leading federal courts in ERISA stock drop cases to apply outdated private trust doctrines that have little direct bearing on quasi-public (that is, tax-subsidized) pension trusts. 

Proper resolution of fiduciary breach claims founded on failure to diversify EIAP employer stock holdings begins with recognition that the matter involves statutory interpretation, not plan interpretation. Accommodating Congress’s multiple goals (inducing both employee ownership and retirement savings) when they come into conflict requires a critical assessment of legislative priorities, which emerged and evolved over decades, and which are evidenced by complex, technical, and seemingly unrelated provisions of both the tax code and ERISA. Careful comprehensive evaluation reveals that the presumption of prudence as developed to date in the Moench line of cases deranges ERISA’s policy equilibrium.

April 19, 2014 in Articles, Trusts | Permalink | Comments (0) | TrackBack (0)

Article on Teaching Wills and Trusts: The Jurisdictional Problem

SsrnAdam J. Hirsch (University of San Diego) recently published an article entitled, Teaching Wills and Trusts: The Jurisdictional Problem, (February 3, 2014).St. Louis University Law Journal, Vol. 58, No. 3, 2014. Provided below is the abstract from SSRN:

In this essay, written for the teaching issue of the SLU Law Journal, I address the problem of how best to focus a course in Wills and Trusts in light of the fact that the applicable rules vary widely from state to state. This legal heterogeneity makes generalization about the “laws” of inheritance difficult. I argue against confining class presentations either to local state law, which is unacceptably parochial, or to the model laws found in the Uniform Acts and Restatements, whose influence on actual law has been limited. I advocate instead an approach that endeavors to communicate to students the richness of alternative rules that different states have developed, as a vehicle for encouraging students to think creatively about the public policy of those rules, and about the strengths and weaknesses of the alternative approaches that are currently extant.

April 19, 2014 in Articles, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Article on The State of Your Trust

TrusttileDennis Delaney (Hemenway & Barnes) recently published an article entitled, The State of Your Trust: Where Should a Trust Be Sited?(Feb. 18, 2014). Provided below are the trust planning pain points from Reuters:

- Tax law: state income tax on trusts vary from region to region. Some consider the location of the beneficiary and some the trustee, making for a confusing patchwork of statutes.

- Decanting: even if a trust is irrevocable, changes may be made through “decanting,” the process of distributing assets from an old trust into a new one with different provisions.

- Quiet trusts: a relatively new vehicle that lets grantors decide when they will tell beneficiaries about a trust.

See Steven Maimes, Location of Trusts A Critical Factor in Trust and Estate Planning, Reuters, Feb. 18, 2014.

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

April 19, 2014 in Articles, Income Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, April 18, 2014

Article on Taxes and Estate Planning


Barry Cushman (Notre Dame Law School) recently published an article entitled, Tax Recognition, St. Louis University Law Journal, Vol. 58, p. 825, 2014.  Provided below is the abstract from SSRN:

This article was prepared for the St. Louis University Law Journal’s “Teaching Trusts & Estates” issue. Many law students take a course in Trusts & Estates, but comparatively few enroll in a class devoted to the federal wealth transfer taxes. For most law students, the Trusts & Estates course provides the only opportunity for exposure to some of the basic features of the estate tax, the gift tax, the generation-skipping transfer tax, and some related features of the income tax. The coverage demands of the typical Trusts & Estates course do not allow for intensive discussion of these issues, but there are numerous opportunities to introduce relevant tax considerations while teaching the substantive law of wills and trusts. Using the Dukeminier & Sitkoff casebook as an example, this article explores the opportunities for interstitial recognition of the tax issues often lying just beneath the surface of private law disputes. Seizing the opportunities that these cases present to introduce some basic tax concepts and planning strategies can alert students to simple methods of tax savings and help them to avoid costly potential estate planning errors.

April 18, 2014 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Teaching, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, April 17, 2014

Article on Teaching Trusts and Estates with King Lear


Karen E. Boxx (University of Washington School of Law) recently published an article entitled, Teaching Shakespeare in the Classroom: How an Annual Student Production of King Lear Adds Dimension to Teaching Trusts and Estates, St. Louis University Law Journal, Vol. 58, No. 3, pp. 751-65, 2014.  Provided below is the abstract from SSRN:

King Lear is the archetypal story of the tension an difficulties in parent-child and sibling relationships. In a Trusts and Estates class, it reinforces the message that those relationships are the starting point and bedrock of this body of law and the vast system of rules that has been developed to resolve these conflicts.

This Article first summarizes the plot of King Lear and then describes the process I use to get the play produced by student volunteers. It then sets forth some of the estate planning and lawyering lessons King Lear presents and describes some of the skills I think the play production helps develop. Finally, the Article discusses the less traditional benefits from holding an in-class performance of a play.

This Article is part of the St. Louis Law Journal's annual teaching issue, which is devoted to Trusts and Estates in 2014.

April 17, 2014 in Articles, Estate Planning - Generally, Teaching, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 15, 2014

Article on Stealing van Gogh

Van GoghRobert L. Moshman (Attorney, New York and New Jersey) recently published his article entitled, Stealing van Gogh, The Estate Analyst (Mar. 2014). An excerpt from the article is below:

In 1888, Vincent van Gogh stayed up for three nights in a row to paint an all-night café in Arles, France, that was frequented by derelicts who enjoyed drinking and playing billiards (and Paul Gauguin, who painted the same café). In a letter to his brother, Theo, he wrote:

“In my picture of the Night Café I have tried to express the idea that the café is a place where one can ruin oneself, go mad or commit a crime. So I have tried to express, as it were, the powers of darkness in a low public house, by soft Louis XV green and malachite, contrasting with yellow-green and harsh blue-greens, and all this in an atmosphere like a devil's furnace, of pale sulphur.”

April 15, 2014 in Articles, Estate Administration | Permalink | Comments (0) | TrackBack (0)

Sunday, April 13, 2014

Article on Teaching Uniform Estate Law


Thomas P. Gallanis (University of Iowa College of Law) recently published an article entitled, Trusts and Estates: Teaching Uniform Law, 58 St. Louis U. L. J. 761 (2014).  Provided below is the abstract from SSRN:

The law school course in Trusts and Estates provides a valuable opportunity for students to gain a deeper understanding of the processes and products of one of the principal law-reform organizations in the United States: the Uniform Law Commission, also known as the National Conference of Commissioners on Uniform State Laws. Within the law school curriculum, the course in Trusts and Estates is well suited for this purpose because the Uniform Law Commission has been and will continue to be highly active and influential in the field of trust and estate law. This essay, prepared for a symposium issue of the St. Louis University Law Journal on "Teaching Trusts and Estates," proceeds in six main parts. Part I provides background on the Uniform Law Commission. Part II highlights the many uniform acts in the field of trusts and estates. Part III introduces the Joint Editorial Board for Uniform Trust and Estate Acts and its role in the on-going monitoring and updating of uniform acts in this area of the law. Part IV summarizes the process by which uniform laws are drafted, approved, promulgated, and enacted. Part V examines aspects of the structure of uniform laws which are important for purposes of law school teaching. Part VI discusses the procedures for updating and amending uniform laws. A brief conclusion follows.

April 13, 2014 in Articles, Estate Planning - Generally, Teaching, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, April 12, 2014

Article on the Prospects of Estate Tax Reform

Estate tax

Paul L. Caron (Pepperdine University School of Law) and James R. Repetti (Boston College Law School) recently published an article entitled, Revitalizing the Estate Tax: Five Easy Pieces, Tax Notes, v. 142, 2014, p. 1231-1241.  Provided below is the abstract from SSRN: 

In a previous article, we argued that contrary to the state of the law over 35 years ago — when George Cooper wrote his seminal article on the estate tax (A Voluntary Tax? New Perspectives on Sophisticated Estate Tax Avoidance, 77 Colum. L. Rev. 161 (1977)) — taxpayers today generally ‘‘can reduce the value of assets subject to transfer tax in many instances only if they are willing to assume the risk that the reduction may be economically real and reduce the actual value of assets transferred to heirs or, alternatively, in narrow situations if they are willing to incur some tax risk.’’ (The Estate Tax Non-Gap: Why Repeal a Voluntary Tax?, 20 Stan. L. & Pol’y Rev. 153 (2009)) In another article, we documented the dramatic increase in income and wealth inequality over the past 30 years and the accompanying adverse social consequences and long-term negative effect on economic growth. (Occupy the Tax Code: Using the Estate Tax to Reduce Inequality and Spur Economic Growth, 40 Pepp. L. Rev. 1255 (2013)) We argued that tax policy historically has played an important role in reducing inequality and that the estate tax is a particularly apt reform vehicle in light of the role of inherited assets among the very rich and the adverse economic effects of that inherited wealth. In this article, we advance five estate and gift tax reform proposals that would generate needed revenue, reduce inequality, and contribute to economic growth: (1) disallow minority discounts when the transferred asset or business is controlled by family before and after the transfer; (2) maintain parity between the unified credit exemption amounts for the estate and gift taxes; (3) reduce the wealth transfer tax exemptions to $3.5 million, increase the maximum tax rate to 45 percent, and limit the generation-skipping transfer tax (GSST) exemption period to 50 years; (4) restrict the ability for gifts made in trust to qualify for the gift tax annual exclusion; and (5) impose a lifetime cap on the amount that can be contributed to a grantor retained annuity trust (GRAT).

This article was presented on January 17 at a symposium in Malibu, California cosponsored by Pepperdine University School of Law and Tax Analysts. Twenty of the nation’s leading tax academics, practitioners, and journalists gathered to discuss the prospects for tax reform as it is affected by two crises facing Washington: dangerously misaligned spending and tax policies, resulting in a crippling $17.4 trillion national debt; and the IRS’s alleged targeting of conservative political organizations. A video recording of the symposium is available online.

April 12, 2014 in Articles, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Friday, April 11, 2014

Article on New Green Book Proposals

GreenbookRobert L. Moshman (Attorney, New York and New Jersey) recently published an article in The Estate Analyst entitled, New Green Book Proposals, The Estate Analyst (Feb. 2014). An excerpt from the article is below:

The Administration’s budget proposal for 2015, also referred to as the “Green Book,” contains several new provisions relating to estate taxation.

Crummey Trusts: The present interest requirement for gifts qualifying for the annual gift tax exclusion would be abolished, making it unnecessary to provide a trust beneficiary with a Crummey withdrawal power. This proposal resembles one made by the Clinton Administration. The annual exclusion would apply to a gift that is made directly to an individual or to a trust for a single individual. The trust assets would be includible in the beneficiary’s estate if the donee died before the trust assets were distributed. The proposal would allow up to $50,000 of annual exemption for gifts to trusts or of other property that would not currently qualify as a transfer of a present interest.

April 11, 2014 in Articles, New Legislation | Permalink | Comments (0) | TrackBack (0)

Thursday, April 10, 2014

Article on Estate Tax Valuation


Kerry A. Ryan (Saint Louis University School of Law) recently published an article entitled, Tax Court Sends Message on Valuation in Richmond, Tax Notes, Vol. 142, No. 12, March 24, 2014.  Provided below is the abstract from SSRN:

In Estate of Helen P. Richmond, the Tax Court determined the proper value for estate tax purposes of a minority interest in a family-owned corporation holding mostly appreciated securities. The court also sustained an accuracy-related penalty against the estate, finding that it used an unsigned draft report by a noncertified appraiser as the basis for the stock valuation reported on Form 706.

April 10, 2014 in Articles, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)