Wills, Trusts & Estates Prof Blog

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

Friday, January 13, 2017

The Legal Battle Ensues over Prince's Music

Prince tidalSeveral unanswered questions still remain as to the management and distribution of Prince’s estate since his death in April 2016. Specifically, much is still unknown about the status of his valuable music catalog. Jay-Z’s companies, Tidal and Roc Nation, are in a legal battle with Bremer Trust, the administrator of Prince’s estate, over the late singer’s intellectual property, which includes a vault of unreleased music. Bremer Trust filed a copyright infringement suit, alleging that Tidal only had exclusive rights to stream Prince’s new music for ninety days but instead streamed all fifteen Prince albums. The defendant companies claim they had an oral and written agreement with Prince to exclusively stream his music, while Prince’s label NPG Records claims they terminated any agreement made before his death. Currently, representatives for the singer’s estate are nearing a deal to stream his music on Apple Music and Spotify. However, with Prince’s highly critical perspective of the music industry, it would come as no surprise that Prince struck a deal with Tidal because they have a reputation of being substantially more artist-friendly.  

See Michael Feispor, Jay-Z’s Tidal, Roc Nation and Bremer Trust Battle over Prince’s Music, Forbes, January 11, 2017. 

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

 

January 13, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Intestate Succession, Music, New Cases, Trusts | Permalink | Comments (0)

Thursday, January 5, 2017

You Should Review Your Estate Plan as Soon as Possible

Review estate planCreating an estate plan is essential to assuring your legacy, but the process does not end when the plan is in place. You must periodically review your estate plan to assure it accurately reflects your current goals. An important time to revise your plan is when your personal or financial situation changes—more specifically, in the event of divorce, remarriage, birth or adoption of children, inheritance, or illness. It is also important to review your estate plan when tax laws change because they can often dramatically affect your plan. Life’s events show us that it is important to keep up with our estate plans to ensure that our assets will go to the proper place.   

See Mark Eghrari, 6 Reasons to Revise Your Estate Plan as Soon as Possible, Forbes, January 2, 2017. 

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

 

January 5, 2017 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Thursday, December 15, 2016

Case Summary on Gift Implications of Testamentary Scheme

Testamentary schemeINTERPRETATION: Testamentary scheme supports gift by implication. The decedent’s will made gifts of $2,000 to each of her eight children and two stepchildren, gave the largest amount that could pass free of federal estate tax to her nominated trustee in trust for her spouse for life, remainder to the 10 children and stepchildren and to the descendants of any who did not survive, and the residue to her spouse. The will made no provision if the spouse predeceased the decedent which happened. At the decedent’s death, the trust could not be funded because the decedent’s applicable exclusion amount had been consumed by lifetime gifts made by her agent, one of her eight children. Had the trust been funded, the remainders in the children, all of whom survived the decedent, would have accelerated. The failure of the residuary gift meant that the residue passed under the intestacy statute to the decedent’s eight children. One of the stepchildren began a proceeding to construe the will and prevailed in the Surrogate’s Court. On appeal, a New York intermediate appellate court affirmed, holding that the decedent’s general testamentary plan as evidenced in the will shows that the decedent intended to treat her children and stepchildren equally, does not show that the decedent intended a different result if her spouse predeceased, and therefore the general plan must be carried out by implying a will provision giving the residue of the estate equally to all ten children. In re Estate of Warren, 39 N.Y.S. 3d 282 (N.Y. App. Div. 2016).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

 

December 15, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Sunday, December 11, 2016

Case Summary on Determining Citizenship for a Trust

Trustee citizenshipKAREN LECRAFT HENDERSON, Circuit Judge: This case presents the question of how to determine the citizenship of a trust for diversity subject-matter jurisdiction pursuant to 28 U.S.C. § 1332(a). In light of the United States Supreme Court’s recent decision in Americold Realty Trust v. ConAgra Foods, Inc., 577 U.S.__, 136 S. Ct. 1012 (2016), we conclude that a so-called “traditional trust” carries the citizenship of its trustees. We accordingly reverse the district court’s Rule 12(b)(1) dismissal and remand for further proceedings. Fed. R. Civ. P. 12(b)(1).

See Wang v. New Mighty U.S. Trust, No. 12–7038 (December 9, 2016).

December 11, 2016 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Friday, December 2, 2016

What Happens When Your Husband Hides His $400 Million Fortune?

Hiding moneySarah Pursglove decided to take a deeper look into her husband’s finances when the Finnish entrepreneur left her. Robert Oesterlund swore in court that his fortune only totaled a few million dollars, but Pursglove could think of several family purchases that cost above and beyond that amount. She flew to the Bahamas to figure out what her husband was really worth. There she found an accounting statement that claimed Oesterlund was worth at least $300 million. As she packed her bags for the flight back home, her family’s fortune immediately began disappearing into various shell companies, bank accounts, and trusts under a worldwide financial system catering to the ultra rich. The system effectively offshores wealth and makes the richest people appear to own very little.

Over the next two years, Pursglove would rely on her wealth squad to untangle the defenses of the offshore financial world. It all started when Oesterlund created his businesses and was subsequently looking to avoid costly taxes. Eventually, he set up a Cook trust, suggested by his corporate counsel, who assured him he would be “untouchable.” As Pursglove’s lawyers began to figure out the scheme her husband was surmounting, they filed court documents for a divorce and to impose a sweeping asset injunction, which would prohibit Oesterlund from selling, merging, or borrowing against any of his assets and additional offshoring. The corporate fraud lawsuit proceeded in Florida, where the family’s companies were being run. It was eventually discovered that Oesterlund was using a Bahamas-based company to transfer all his assets and avoid all United States tax liability—a tactic referred to as “transfer pricing.” Pursglove’s attorneys claimed that Oesterlund began to shield assets from his wife as the divorce loomed near. Shortly after a judge ruled that Pursglove could see thousands of her husband’s documents, both sides’ lawyers met and discussed the possibility of Oesterlund going on the run if he had to fork the documents over. Consequently, this brought things to a head. Oesterlund would have to expose himself or threaten his fortune. Oesterlund’s one-time allies were now becoming his enemies to avoid fighting the greater good—the system. The wall of secrecy around Oesterlund’s accounts began to crumble. The case still remains open and the outcome is unknown, but it begs the question: is there justice in wealth battling wealth?

See Nicholas Confessore, How to Hide $400 Million, N.Y. Times, November 30, 2016.

December 2, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Income Tax, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, November 29, 2016

Article on Third-Party Liability in Equity

Trustee2Sarah Worthington recently published an Article entitled, Exposing Third-Party Liability in Equity: Lessons from the Limitation Rules, Equity, Trusts and Commerce Ch. 14 (Forthcoming). Provided below is an abstract of the Article:

This article provides a re-examination of third-party liability in equity. The exercise was prompted by a difficult case on limitation periods in equity, but the conclusions – if correct – have far wider significance. Three major points are made. First, it has long been conceded that the language of constructive trusts and constructive trustees is confusing. It is suggested here that the language disguises a relatively straightforward search for situations where there are property splits (trusts) or property management responsibilities (fiduciary responsibilities). Secondly, accessory liability in equity looks to be something of a misnomer, since it appears that the drive is not to find individuals with particular associations with the wrongdoer and shared liability for the primary wrong, but instead to find individuals who are themselves trustees or fiduciaries because of their particular association with the original managed property. Liability follows accordingly, and is primary not secondary liability. Finally, where there are fiduciary responsibilities for property management, liability is in two forms: compensation for loss to the managed assets; and disgorgement of disloyal gains. The former is distinguishable from common law compensation in its focus on remedying loss to the property fund, not the loss to individuals interested in the fund. These insights – in particular the fiduciary characteristics of third parties in equity, and the workings of equitable compensation – have significant practical consequences.

November 29, 2016 in Articles, Estate Administration, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Trump to Put His Businesses in a Blind Trust

Blind trustDonald Trump is planning to put his business assets into a blind trust run by his oldest children. However, he does not plan to meet the legal definition of a blind trust due to the trust not being managed by an independent party and him possibly having his hand in some of the decision-making. If he were to set up a true blind trust, he would need to appoint an independent trustee and liquidate his assets. On the other hand, Trump will be required to disclose his assets under the Ethics in Government Act. 

See Debra Cassens Weiss, Trump Plans to Place His Businesses in a Blind Trust Run by His Children; Will It Resolve Conflicts?, ABA Journal, November 14, 2016.

November 29, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, November 24, 2016

Robin Williams' Estate Plan Air Tight?

Robin williams2Robin Williams’ estate plan was fairly solid, but what fancy footwork did his lawyers have to do over the years to keep it from failing? Williams’ publicist disavowed the 2010 trusts that came to light, claiming they did not reflect his estate plan at the time of death. The trusts became public when a co-trustee passed away, creating a public issue for filling the hole in the line of succession. After these trusts became public and the gap was filled, the trustees did not waste time covering them up, which was presumably easy considering the decanting methods available. However, had Williams’ trust given the trustees power to appoint a replacement, there would have been no need to file a public appeal. With serious legal power on his side, Williams avoided several disasters in carrying out his estate. 

See Scott Martin, Robin Williams Hid His Assets After All, but Any ILITs May Have Backfired on His Planners, Trust Advisor, November 20, 2016.

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

November 24, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, November 14, 2016

Prince's Estate Says No Deal with Jay Z for Recordings

Jay zPrince’s estate does not want to make a deal with Jay Z to acquire the late singer’s music catalog. His estate fired off a letter to Jay’s team, stating that it had no interest in signing a deal for “Roc Nation to exploit any of the intellectual property assets of the Estate.” Jay originally offered approximately $40 million for Prince’s unreleased tracks. Additionally, Prince’s estate is accusing Tidal, Jay’s music app, of making fifteen of Prince’s albums available for streaming without authorization, which surely hints that there is potential for an upcoming lawsuit. 

See Prince Estate to Jay Z: No Deal for His Recordings . . . Issues with Tidal Deal Too, TMZ, November 13, 2016.

November 14, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Music | Permalink | Comments (0)

Tuesday, November 8, 2016

Article on Punitive Damage Awards Against Trustees

Puntiive damages trusteeSamuel L. Bray recently published an Article entitled, Punitive Damages Against Trustees?, Research Handbook on Fiduciary Law (2016). Provided below is an abstract of the Article:

This essay considers whether punitive damages should be awarded against trustees. It concludes that a satisfactory justification for awarding them has not been given. Seen from the rightful-position perspective, punitive damages fail to support the plaintiff’s forward movement to the rightful position. They are also inconsistent with the scope of liability in trust law. From the perspective of optimal deterrence, punitive damages would increase deterrence for those who need it least (risk-averse internalizers), and decrease deterrence for those who need it most (risk-seeking externalizers). From the viewpoint of law and equity, punitive damages in trust law would be an idiosyncrasy requiring an explanation, whereas no explanation is needed for their absence. Even if punitive damages were used selectively, they would likely be overused relative to the constructive trust. Indeed, the uncanny coinciding of the rise of punitive damages against trustees with the decline in American lawyers’ familiarity with the constructive trust raises the possibility that it is not greater knowledge, but greater ignorance, that led to the development. Whatever the reason for this rise, the best verdict that can be rendered for punitive damages against trustees is “not proven.”

November 8, 2016 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)