Wills, Trusts & Estates Prof Blog

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

Thursday, March 23, 2017

Article on a Blueprint for FLPing

FlpPhyllis Taite recently published an Article entitled, Estate of Purdue: A Blueprint for FLPing, 154 Tax Notes (2017). Provided below is an abstract of the Article:

In this article, Taite examines Estate of Purdue, in which the Tax Court held that assets of the decedent that were transferred to the family limited liability company were not includable in the gross estate, that transfers to the family trust qualified for an annual exclusion, and that the estate could deduct interest on loans from the estate’s beneficiaries.

March 23, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Non-Recognition Provisions in the Income Tax

Income taxJames R. Repetti recently published an Article entitled, Taft v. Bowers: The Foundation for Non-Recognition Provisions in the Income Tax, 42 ACTEC L.J. (2017). Provided below is an abstract of the Article:

Taft v. Bowers is a Supreme Court decision that is rarely studied in law schools or discussed by scholars. Yet, it is a case of vast significance. In the Taft decision, the Supreme Court confirmed that Congress may create non-recognition exceptions to the income tax that merely defer the recognition of income, rather than permanently exclude it. If the Taft case had been decided differently, it is likely that the number of non-recognition provisions in the Internal Revenue Code ("Code") would be significantly reduced.

March 23, 2017 in Articles, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Wednesday, March 22, 2017

Article on Shifting Revenue to State & Local Governments

State and local govAlyssa A. DiRusso recently published an Article entitled, Wealth Management Planning to Shift Revenue to State and Local Governments, 31 Probate & Property 46 (2017). Provided below is an abstract of the Article:

With Donald Trump elected president, a new group of clients may have more allegiance to their state and more belief that the state will manage its budget wisely or in accordance with their political preferences than they have with respect to their federal government. Election aside, for a variety of reasons, individuals may believe in funding state and local government bodies over allocating funds to the federal government. Some Americans have become disillusioned with national government leaders or bureaucracy. Some view state or local government as a preferable situs of power and a more accurate representation of the views harbored by its electorate. Certain individuals may even prefer that their state secede and form an independent nation, such as those behind the Calexit movement. Whatever their reasons, a fair number of clients may prefer funding their state or local government over remitting funds to Washington.

Lawyers, however, have not commonly counseled their wealth management clients on the tax-efficient methods permitted by the Internal Revenue Code that allow for the reallocation of funds from the federal government to the state or local level. Clients with estates subject to the estate tax may zero-out their federal estate tax bill entirely by allocating funds to the state or local government of the client’s choice. Furthermore, transfers made to state or local government during life are eligible for an individual income tax deduction, meaning any such transfers are offset and effectively subsidized by the federal government.

March 22, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Article on New IRS Estate Tax Lien Requirements

Estate tax lien1Shaina S. Kamen & Michael S. Schwartz recently published an Article entitled, New IRS Release of Estate Tax Lien Requirements: The Sale of Homes or Apartments by an Estate Just Became a Little More Complicated, 31 Probate & Property 21 (2017). Provided below is an abstract of the Article:

The sale of a house or apartment can be very stressful for any prospective seller. Even with the help of a good broker or real estate attorney, the time and expense associated with a potential sale can seem daunting. This is especially true in the context of a sale of residential real estate by an estate, in which additional legal requirements may need to be satisfied to complete the sale.

New IRS rules have added further complexity to the already difficult sales process. In particular, before a Release of Lien will be issued, an estate must comply with new requirements designed to ensure the collectability of any federal estate tax that the estate may owe. These new rules could have a significant effect on the ability of an estate to sell real property or an interest in a cooperative apartment.

March 22, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Tuesday, March 21, 2017

Article on Nonjudicial Settlement Agreements

NjsaLinda Kotis recently published an Article entitled, Nonjudicial Settlement Agreements: Your Irrevocable Trust Is Not Set in Stone, 31 Probate & Property 32 (2017). Provided below is an abstract of the Article:

A nonjudicial settlement agreement (NJSA) is a valuable tool for modifying trusts and addressing the construction of provisions when a trust is silent or unclear. It also can be used to resolve beneficiary and trustee disputes. Through an overview of the new Maryland law and a discussion of the ways in which NJSAs have been used and interpreted in other jurisdictions, this article will give the practitioner an understanding of the advantages and challenges presented by such agreements.

March 21, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Gun Trusts

Gun trustsMichael A. Sneeringer recently published an Article entitled, Gun Trusts—What’s All the Fuss?, 31 Probate & Property 11 (2017). Provided below is an abstract of the Article:

Distributing a firearm at death can be complicated. Is a gun trust the most viable solution? Gun trusts in the United States carry a stigma. The Internet perpetuates this stigma as a typical on-line search of the words “gun trust” turns up multiple misleading hits. What is fact and what is fiction? What can an attorney do to properly dispose of a client’s firearm?

March 21, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Monday, March 20, 2017

Article on Fiduciary Law's Mixed Messages

Fiduciary law2Evan J. Criddle recently published an Article entitled, Fiduciary Law’s Mixed Messages, Research Handbook on Fiduciary Laws (Forthcoming 2017). Provided below is an abstract of the Article:

Nearly a century ago, Judge Benjamin Cardozo famously declared that fiduciaries bear a "duty of the finest loyalty" that is "unbending and inveterate" and "stricter than the morals of the marketplace." Some legal scholars argue today that Cardozo's uncompromising formulation of the duty of loyalty should be consigned to the ashbin of history because it does not accurately capture how courts enforce the duty in practice. Although courts routinely invoke Cardozo's famous dictum, they rarely hold that a fiduciary has violated the duty of loyalty absent an unauthorized conflict of interest or other flagrant abuse of power. To skeptics, these features of judicial practice suggest that Cardozo's moralistic rhetoric is a misleading distraction that should be abandoned in the interests of promoting precision and transparency.

This Chapter draws on republican legal theory to propose a fresh justification for the divergence between fiduciary law's strict requirements for fiduciary conduct and its more deferential standards for judicial review. Fiduciary law's "unbending and inveterate" legal requirements are necessary to affirm that fiduciaries lack authority to dominate their principals and beneficiaries. But courts should defer to fiduciary decisions in contexts where judicial intervention is more susceptible to arbitrariness—and, hence, more dominating—than fiduciary decision-making alone.

In particular, the degree of deference courts accord to fiduciary decisions should turn on two considerations:

(1) whether or not the fiduciary has been entrusted with discretionary power to decide the relevant issue; and

(2) whether the fiduciary or the judiciary is in a better position to resolve the relevant issue in a manner that tracks the principal’s purposes and the beneficiary’s best interests.

Guided by these considerations, the Chapter outlines a general framework for determining when courts should apply strong deference, weak deference, or de novo review to fiduciary decisions.

March 20, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, March 17, 2017

Article on Boilerplate and Default Rules in Wills Law

Wills law2David Horton & Reid K. Weisbord recently published an Article entitled, Boilerplate and Default Rules in Wills Law: An Empirical Analysis, 102 Iowa L. Rev. (Forthcoming 2017). Provided below is an abstract of the Article:

The prime directive of wills law is to honor a testator’s intent. As a result, lawmakers take pains to populate the field with majoritarian default rules: those that fill gaps in an estate plan with principles that reflect the wishes of most property owners. However, this Article exposes a phenomenon that undermines these efforts. Using an original, hand-collected dataset of 230 recently-probated wills, it demonstrates that testators routinely opt out of majoritarian default rules through provisions that appear to be boilerplate. This practice is especially prevalent for “non-salient” matters: vital but obscure topics such as the consequences of a beneficiary dying before the testator, how to divide gifts among multi-generational classes, and who must pay mortgages and death taxes. The Article then uses these empirical results to urge judges and legislatures to reconsider the structure of default rules in wills law. Currently, most non-salient topics are governed by “simple” default rules, which yield to any contrary textual command. Conversely, the Article argues that “sticky” defaults, which are harder to displace, would better-insulate a testator’s likely desires from the plague of testamentary boilerplate.

March 17, 2017 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Article on Discretionary Trusts

TrusteeLionel Smith recently published an Article entitled, Massively Discretionary Trusts, Current Legal Problems (Forthcoming 2017). Provided below is an abstract of the Article:

Trust drafting practices have changed dramatically in recent decades. A range of considerations has led to an increase in the dispositive discretions held by trustees. In some cases, the trustees’ dispositive discretions effectively govern the whole trust structure, leading to what the author calls a ‘massively discretionary trust’. These trusts create a series of legal risks. These include the possibility that the trust property is held on resulting trust from the moment of the trust’s constitution and the possibility that the beneficiaries can collapse the trust and take the trust property. Some drafting techniques may be based on a misunderstanding of the law; some may invite litigation; and the governing legal principles, as understood by some drafters, may be subject to revision and refinement by the courts. This paper will examine some of these possibilities using concrete examples.

March 17, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, March 16, 2017

Article on Overlooked Reasons for Estate Planning

Estate planning reasonsJanice A. Forgays recently published an Article entitled, Overlooked or Underappreciated Reasons for Estate Planning: Ask the Right Questions, and Listen Carefully to the Answers, Tr. & Est. 80 (Feb. 2017). Provided below is an abstract of the Article:

Common reasons given for estate planning include: to avoid probate; to address taxes; to provide for spouse and family; and to preserve family businesses. Let’s explore important additional reasons, ordinarily left unaddressed, why estate planning is so important. These subjects often serve as substantial planning motivations for our clients, but aren’t found on client planning questionnaires and are frequently absent from the planning discussions and documents.

March 16, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (0)