Wills, Trusts & Estates Prof Blog

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

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Friday, January 23, 2015

MLK Children Resolve One Suit

Martin Luther King

Dr. Martin Luther King Jr.’s children have resolved one of two legal disputes dividing them.  On Thursday, the Estate of Martin Luther King Jr. Inc. dropped a lawsuit it had filed in August 2013 against the Martin Luther King Jr. Center for Nonviolent Social Change.  The suit asked a judge to stop the King Center from using Dr. King’s image, likeness and memorabilia.  A lawsuit filed by the estate against Bernice King over ownership of Dr. King’s traveling Bible and Nobel Peace Prize remains set for trial next month. 

See The Associated Press, Georgia: Dr. King’s Children End One Suit Over Legacy, The New York Times, Jan. 22, 2015. 

January 23, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Thursday, January 22, 2015

Implications of Obama's Capital Gains Plans

Capital gains

In President Obama’s State of the Union address Tuesday night, he largely focused on middle class economics.  With a new tax plan, administration officials say that marginal capital gains would increase to 28 percent and eliminate the stepped-up basis of capital gains assets at death. 

The question for financial advisors and their clients is how could these changes affect us and what planning considerations must we subsequently take?  If these changes are passed, advisors serving owners of closely held businesses and clients holding significant, highly appreciated securities would have to rethink clients’ estate plans to avoid leaving heirs huge tax bills. 

If changes to capital gains rules gain traction, advisors should keep in mind that a heavy tax bill could force heirs to sell a business they do not want to sell.  Children with a large bill upon inheritance may not have the liquid assets to satisfy what they owe, forcing a sale of the business that the grantor wished to remain in the family.  While the tax bill is unavoidable, planning to transfer enough liquid assets to cover the costs could prevent this occurrence. 

Advisors must also be conscientious that changes in capital gains rules could mean higher rates of charity donation.  This would be the only remaining way of avoiding the heavy tax bill of highly appreciated securities.  Higher capital gains taxes and elimination of stepped up basis could heighten the incentive to donate those assets to charity. 

See John Nersesian, What Obama’s Cap Gains Plan Would Mean for You & Your Clients, Financial Planning, Jan. 21, 2015.  

January 22, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Income Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 21, 2015

Hollywood Guardianship Proceedings

Amanda Bynes

Guardianships and conservatorships are proceedings that provide for the care of minors or disabled adults who are unable to make responsible decisions concerning their own person or assets.  The purpose of these proceedings is to protect and care for someone in need of assistance, but arguably amounts to taking away some of that individual’s civil rights. 

While every state code includes specific provisions governing guardianship proceedings, in California, the state’s mental health laws allow for any individuals who are a danger to themselves or others to be detained for up to 72 hours for observation and treatment.  The statute provides for additional involuntary confinement thereafter.  If a judge finds that the individual is gravely disabled as a result of a mental disorder, then a conservator may be appointed, and the judge may specify the conservator’s specific powers. 

Guardianships and conservatorships are becoming increasingly used in California by the parents of troubled Hollywood celebrities and former child stars, such as Britney Spears in 2008, and Amanda Bynes in both 2013 and 2014.  Amanda’s case is a perfect illustration as to why the decision to initiate guardianship proceedings is especially delicate.  When Amanda was under the conservatorship of her parents, she went through a series of troubling events, including an arrest for marijuana.  Per the California statute, she was put under psychiatric hold and her mother was appointed to control her finances.  Amanda was arrested again, and after she was released from the psychiatric hold, Amanda roamed the streets of Hollywood.  The next scheduled hearing in Amanda’s conservatorship proceedings is set to take place in February.

See John T. Brooks and Jena L. Levin, Trending Now: Hollywood Guardianship and Conservatorship Proceedings, Wealth Management, Jan. 21, 2015.

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

January 21, 2015 in Current Affairs, Estate Planning - Generally, Guardianship | Permalink | Comments (0) | TrackBack (0)

California Senators Introduce Right to Die Bill

Brittany maynard 3Despite wide support among the population, physician-assisted suicide remains illegal in California. 

Yet when Brittany Maynard brought the issue front and center, saying she had moved to Oregon from California so that she could legally end her life before her brain cancer could cause debilitating pain, several California legislators were emboldened to reintroduce the issue. 

The new bill that was recently introduced by State Senators Bill Monning and Lois Wolk, and closely follows the Oregon  “Death with Dignity” Act.  It would allow a person with a terminal disease and a prognosis of death within six months to obtain a physician’s prescription for a lethal dose of medication.  Although there are details within the bill that need to be amended, overall, this is an important piece of legislation that will allow Californians to determine their personal medical destinies. 

See The Times Editorial Board, Californians Deserve the Right to Die With Dignity, LA Times, Jan. 19, 2015.

January 21, 2015 in Current Affairs, Disability Planning - Health Care, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

NYC Murder Emphasizes Estate Planning Considerations

Estate plan 2

I have previously discussed the lurid story involving the late Thomas Gilbert Sr., who was fatally shot in his Manhattan apartment.  Shortly thereafter, Mrs. Gilbert’s son, Thomas Gilbert Jr., was arrested and charged with the murder. 

Reportedly, the younger Mr. Gilbert may still receive his inheritance due to the ambiguity surrounding Mr. Gilbert’s death.  This case serves as a reminder that advisers need to plan for events in which a beneficiary becomes unable to inherit. 

In general, slayer statutes prevent beneficiaries from profiting from their own wrongdoing.  In distributing the estate, the beneficiary who partook in the murder is disinherited and is treated as though he or she died before the grantor.  Non-probate transfers are also blocked from going to that individual.  States vary on their definition as to what type of killing results in a disinheritance, as well as how broadly the statutes apply to asset transfers.  Probate court is the path of recourse for surviving beneficiaries and family members can push back against criminal court findings that would permit the killer to inherit.

See Darla Mercado, Shocking NYC Murder Highlights Need for Estate Planning Contingencies, Investment News, Jan. 16, 2015.

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

January 21, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

New Jersey Aid in Dying Bill

LawAs I have previously discussed, the Aid in Dying for the Terminally Ill Act is currently being considered in New Jersey. The bill was passed by the state Assembly in November, and is currently before the Senate. Last week, Dan Diaz, husband of Brittany Maynard who ended her life three months ago under Oregon's Death With Dignity Law, spoke with legislators in New Jersey to advocate passage of the Aid in Dying bill. On a radio show segment called Ask the Governor, Governor Chris Christie expressed concerns regarding the bill, but did not definitely state what action he plans to take if the bill reaches his desk.

See Michael Symons, Christie Wary of 'Aid in Dying' for Terminally Ill, Asbury Park Press, Jan. 18, 2015.

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

January 21, 2015 in Current Affairs, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 20, 2015

State of the Union: Obama Proposals Call for Tax Increases


In tonight’s State of the Union address, President Barack Obama will call on the new Republican-led Congress to raise taxes on investments and inherited property as well as create or expand a range of tax breaks for middle-income families.

The President’s new initiatives include tripling the child-care tax credit, creating a new credit for families in which both spouses work, and consolidating and expanding education tax breaks.  The administration also plans to make retirement savings programs available to more people by requiring employers to enroll workers in an individual retirement account if they have not already done so. 

The plan would make sweeping changes to the tax bills of wealthier taxpayers by raising the taxes they pay in investments.  The top capital gains rate would rise to 28 percent form 23.8 percent.  Furthermore, the plan proposes to tax capital gains at death rather than allow them to pass income tax free to heirs as under current law.  This implementation would eliminate arguable the biggest loophole in the tax code for wealthy households since postponing realization of capital gains until death may allow a taxpayer to avoid millions of dollars in taxes on substantially appreciated assets.

While it seems unlikely Congress will approve the President’s proposals, they will surely provoke heated discussion. 

See Carol E. Lee, Colleen McCain Nelson, and John D. McKinnon, Obama to Propose Tax Hikes on Investments, Inherited Property, Market Watch, Jan. 18, 2015.

See also Len Burman, President Obama Targets the ‘Angel of Death’ Capital Gains Tax Looophole, Forbes, Jan. 18, 2015.

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

January 20, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Rich Expected to Get Richer

BagA large world-wide wealth transfer is expected over the next 30 years according to a recent report released last week by Wealth-X and NFP Family Wealth Transfer. The expected $16 trillion dollars to pass to the next generation in the next three decades, and $6 trillion in the U.S., is expected to create newly ultra-rich individuals, with proper planning, suggests the report. The report's authors warn that since over half of the world's ultra rich are self-made, it is important that they also pass down the values and work ethic to their children that got them to where they are. The report also warns that proper estate planning is a must as up to half of the next generation's inheritance could go to inheritance taxes.

See PW Staff, Rich Families Set to Transfer $16 Trillion, Financial Advisor, Jan. 16, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

January 20, 2015 in Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Monday, January 19, 2015

Article on Insuring Same-Sex Partners

Brian Balduzzi

Brian Balduzzi (Wilchins Cosentino & Friend LLP) recently published an article entitled, Insuring Equitable Lives: Why All States Should Amend Their Insurable Interest Laws to Provide Equal Protection for Same-Sex Partners, 23 B.U. Pub. Int. L.J. 219-243 (2014).  Provided below is a portion of the article’s introduction:

In the United States, over six hundred thousand same-sex couples cohabitate - a number which may be statistically underreported, despite increasing public support for marriage between same-sex partners. As of May 2014, seventeen states and the District of Columbia permit same-sex partners to marry. Additionally, at least three other states allow full domestic partnerships or civil unions between same-sex partners, at least one state offers limited domestic partnerships between same-sex partners, and at least one state recognizes out-of-state marriages between same-sex partners. Plaintiffs and supporting organizations continue to bring cases on behalf of same-sex partners in state and federal courts throughout the country. Despite these advances for equal marriage rights, thirty-one states still ban same-sex marriage by statute or constitutional amendment.

January 19, 2015 in Articles, Current Affairs, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

MLK Remembered In Spite of Lawsuits

Martin Luther King

Today is the 47th observance of the Martin Luther King Jr. national holiday; however, decades after King’s assassination, the heirs of the Georgia pastor who preached justice and peace are fighting over whether to sell his traveling Bible and Nobel medal to a private buyer. 

The family’s bickering was on public display last week when members appeared in court for the ongoing battle to force one of King’s daughters to relinquish control of the Bible and the medal.  The daughter has accused her brothers of trying to sell the bible and medal to a private buyer to raise money for the King estate, which supposedly suffers without a reliable revenue stream.  A judge in Fulton County Superior Court heard the case Tuesday, but did not rule and said the matter could go to trial next month. 

Although the legal battles between King’s heirs have no impact on their father’s legacy, their well-publicized disputes have been a turnoff for donors looking to support their work and the work of others who are associated with the Kings.  As far as the King legacy’s accessibility, historians say it has never been a better time to study the icon.  “King’s ideas are more freely available today than they’ve ever been—certainly more than there ever was during his lifetime.  None of that would have been possible without the estate.”

See Aaron Morrison, MLK Day 2015: Martin Luther King Jr.’s Message Thrives In Spite Of Legacy-Carrying Heirs’ Legal Battles, International Business Times, Jan. 18, 2015.

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

January 19, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)