Wills, Trusts & Estates Prof Blog

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

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Thursday, November 27, 2014

Auction of Bunny Mellon's Jewelry and Home Items Increase Estate Sale Total

AntiquesAs I have previously discussed, the auction of  artwork from the collection of Rachel 'Bunny' Mellon exceeded expectations by bringing in $158.7 million from 43 pieces by famous artists.  In a second auction that featured items from Mellon's estate that were from her U.S., Europe, and Caribbean homes again exceeded the expected results by  bringing in $14.3 million. In total, Mellon's estate sale brought in $218.1 million through three separate auctions.

See Bloomberg News, Mellon Estate Sale Fetches $218 Million, Led by Rothkos Rabbit, FA, Nov. 25, 2014.

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

November 27, 2014 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 26, 2014

Stepping Up as Successor Trustee


When a current trustee is unable to serve, a successor trustee fills the vacancy.  In order to act, the successor trustee will need to show a certificate or affidavit of trust, as this is indicative that they embody the legal authority to act on behalf of the trust. 

Upon an individual’s death or incapacity, the assets held in trust are not frozen and the successor trustee can access and manage the assets without court intervention.  However, any assets that are not held in trust will be frozen until someone with proper legal authority to manage them comes forward.  This may require court intervention. 

In order to take advantage of potential tax benefits, minimize trustee liability, and maintain proper records, careful attention should be taken by the trustee to complete all of the required duties.  Consider seeking professional help, as it may expedite the settlement process and insure no steps are missed.

See Carissa Giebel, Acting as a Successor Trustee, Green Bay Gazette, Nov. 24, 2014. 

November 26, 2014 in Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Battle Over Officer's Estate

Dave Monrogio

A battle is brewing over the estate of a Naples police officer who killed himself during a domestic violence double shooting. 

The Board of Trustees of the Naples Police Officers’ Retirement Trust Fund filed a complaint this month, asking a judge to determine who should receive Officer Luis “Dave” Monroig’s $100,000 lifetime pension: his ex-wife or his mother. 

Although Monroig’s sixteen-year marriage ended in divorce in August 2013, he never changed the primary beneficiary of his city pension benefits before shooting both himself and his girlfriend in her Estero home. 

The complaint states, “The Board of Trustees cannot determine which defendant is entitled to the death benefit under the terms of the (pension) plan, the marital settlement agreement, the beneficiary designation and (a new state law) without running the risk of double payment.” 

Under the law, which went into effect July 1, 2012, if the policy holder designated an ex-spouse as a primary beneficiary before their marriage legally ended and the policy holder dies on or after July 1, 2012, that beneficiary is considered predeceased and benefits would then go to the contingency beneficiary. The law affects life insurance policies, annuities, IRAs, 401Ks and other employee benefit plans.

Monroig’s father is also challenging his daughter-in-law’s right to his estate, which involves a car worth $5,000 and other personal effects, clothing, and furniture. 

See Aisling Swift, Battle Heats Up Over Dead Officer’s Pension, Estate, Naples News, Nov. 23, 2014.

November 26, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Families of Miners Killed in Explosion Seek Restitution

Gavel2Over four years ago, a mine explosion in the Upper Big Branch mine in West Virginia killed many miners, and a year later the mine's owner agreed to pay restitution to the miners' families as part of a non-prosecution agreement. Now, some of the families have filed a lawsuit against the company claiming they were never paid their restitution and seeking payment to be made.

See Yawana Wolfe, Miner's Families Sue Over Death Payments Delay, Courthouse News Service, Nov. 25, 2014.

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

November 26, 2014 in Current Affairs, Current Events, Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 25, 2014

Share Family's Money History During Holidays

Family dinner

For many families, Thanksgiving is one of the only times the entire family will be together.  This provides an opportunity to tackle family finances and long-term planning decisions.

While many families shy away from addressing touchy subjects around the holidays, discussions can lead to some rewarding and productive exchanges. 

To start, do not jump right into talks about money or future living arrangements.  Rather, begin with family history and legacies.  “Encourage them to share with their children and grandchildren their successes and failures.  And it’s almost impossible to talk about anything in life without talking about money.”

Family gatherings are an ideal opportunity to pass along money lessons to children.  This is also a good time for elderly parents to talk with adult children about family heirlooms and let them know which items have sentimental value to them. 

See Glenn Ruffenach, This Thanksgiving, Share Your Family’s ‘Money History’, Market Watch, Nov. 24, 2014.

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

November 25, 2014 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Swiss Museum Accepts Gurlitt's Bequest

Swiss Museum

The trustees of the Kunstmuseum Bern announced that the museum would accept the bequest of the art collection of Cornelius Gurlitt.  Because the collection is believed to contain looted works and could expose the Swiss museum up to years of litigation, the institution has taken the full six months allowed by German probate law to make the decision to accept or reject the gift. 

As I have previously mentioned, the collection comprises of around 1,300 works by artists including Picasso, Chagall and Renoir found in Gurlitt’s Munich apartment in 2012 during a routine tax investigation.  The majority of the collection is believed to have been accumulated by Gurlitt’s father, Hildebrand Gurlitt, a Nazi-era art dealer.

The president of the Jewish World Congress, Ronald Lauder, warned the Bern museum that accepting the bequest would “trigger an avalanche of lawsuits.” 

See Julia Michalska and Javier Pes, Swiss Museum Accepts Gurlitt’s Problematic Bequest, The Art Newspaper, Nov. 24, 2014. 

November 25, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Later-in-Life Divorce Finances

Divorce 2

For many Baby Boomers, “gray divorces” are ever prevalent.  According to research from the National Center for Family and Marriage Research at Bowling Green University, the divorce rate for adults ages 50 and older doubled between 1990 and 2010.  If you are over 50 and headed for a divorce from a long-term marriage, it may be complicated to come to a settlement agreement that will safeguard a comfortable financial future. 

“There are no ‘do-overs’ after you agree to a settlement.  After 50, you’ll have fewer years to recoup from financial errors, so it’s essential to get this right.”  Below are a few tips for protecting your finances during a later-in-life divorce.

  • Stay level-headed. Try to view divorce as a business deal.  “The more a couple is willing to divide assets objectively, and not emotionally, the faster they can complete the process and move on.”
  • Use a third party. While some couples are able to mediate on their own, other couples may need an impartial third party to provide guidance.  A financial adviser can be useful to “triage all assets and provide accurate valuation and liquidity for each item.”
  • Analyze shared and individual debt. “Hidden debt is a common nasty surprise among divorcing couples.”  It can be even worse if you live in a state with community property laws, “You’ll be held responsible for half your spouse’s debt, even if the debt isn’t in your name.”
  • Analyze assets and retirement benefits. Since most assets will be considered marital assets, consider a lump sum payment to yours spouse for less than what a payout would be to hold onto assets.  It may also be a good idea to transfer certain assets into a life estate or into a trust for other family members. 
  • Consider children and grandchildren. Estate planning during a divorce may clash with existing estate plans that gift assets to trust s and to children and grandchildren.  This could affect immediate generations and your taxes.  Determine how the divorce will financially impact any children and try to minimize damage to existing estate plans as much as possible, particularly in terms of inheritance.

See Anna Helhoski, Protect Finances in Later-in-Life Divorce, USA Today, Nov. 23, 2014. 

November 25, 2014 in Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, November 24, 2014

CLAT 101


A charitable giving and tax planning strategy known as the Shark-Fin charitable lead annuity trust (Shark-Fin CLAT), is a split-interest trust that is designed to offer substantial fixed and determinable benefit to a taxpayer’s favorite charity, while also providing the taxpayer’s heirs with the potential for an excess benefit that is contingent on assets held in the trust outperforming the IRS’s established rate of return. 

A CLAT involves the contribution of property to an irrevocable trust that requires annual annuity payments to charity over a term that can either be: (1) a fixed number of years; or (2) based on the life of an individual.  The value of the charitable annuity is determined by discounting the scheduled annuity payments to charity back to present value at the IRC section 7520 rate, which the IRS sets monthly.  A CLAT that is structure as a grantor trust for income tax purposes provides the grantor with an income tax charitable deduction for the present value of the charitable annuity, but the grantor must pay tax on any income that may be earned by the CLAT during the term. Additionally, the grantor receives a gift tax charitable deduction for the present value of the charitable annuity so the only difference between the amount contributed to the CLAT and the present value of the charitable annuity is preserved as a taxable gift to the remaindermen. 

See Jordan Smith, Time to Head Back Into the Water, Wealth Management, Nov. 21, 2014. 

November 24, 2014 in Estate Administration, Estate Planning - Generally, Gift Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Proposed Changes to Canada's Income Tax Act Could Have Significant Estate Planning Effects

ChangeA bill that includes draft legislation from Canada's Department of Finance that proposes an addition to the Income Tax Act is currently being considered by Parliament. The changes will significantly impact estate planning for Canadian couples by treating the income from a spousal trust as income of the deceased spouse, which will be taxed to the spouse instead of the trust. Concerning implications of this change were addressed during the comment period for the draft legislation by The Joint Committee on Taxation of the Canadian Bar Association and Chartered Professional Accountants of Canada, but the draft legislation was included in the bill without changes.

See Kim G. C Moody, Canada: New Draft Legislation Will Have A Great Impact On Traditional Estate Planning For Canadians, Mondaq, Nov. 11, 2014.

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

November 24, 2014 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0) | TrackBack (0)

Estate of Boris Berezovsky Valued at Zero

EmptyAs I have previously discussed, attempts to settle the estate Boris Berezovsky, who at one time was the second richest man in Russia, have been entangled in complexity and confusion over finding a willing executor of his estate and whether there were even any assets left. According to probate records, Berezovsky died intestate and his UK estate was valued at nothing, though it is still unknown whether overseas trusts or other assets of value may exist.

Opinions are divided on whether Berezovsky's death was a suicide or somehow connected with his public criticism of Russian President Vladimir Putin. His family believes his death was not a suicide, but no evidence of murder was found by police, and the coroner's report includes an open verdict on cause of death.

See Stephanie Linning, Russian 'Billionaire' Boris Berezovsky Found Dead in Bath Last Year Left Nothing in His Will After Dying Penniless, Daily Mail, Nov. 22, 2014.

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

November 24, 2014 in Current Affairs, Estate Administration, Intestate Succession | Permalink | Comments (0) | TrackBack (0)