Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Monday, August 31, 2015

A Few Financial Matters To Keep In Mind When A Client Dies

HeadstoneDeath is always difficult to deal with and the burden grows stronger when it is a person with a strong personal connection. However, the planner must keep a clear head due to the responsibility that is placed on their shoulder and should keep the following in mind:

  • Contact the other advisers the client might have such as a tax planner, accountant, and attorney. Coordination between everyone will allow the client to have all information at hand which will ease the grieving process and help protect the client's interest.
  • Ensure that the basis in any property is stepped up or down to the fair market value. Depending on circumstances, valuation will be based on the date of death or an alternate valuation date.
  • Evaluate any inheritance for items that need to be disclaimed. The reason for doing this are many ranging from decreasing a tax burden, desire for the next person in line to inherit, or because the property is valueless or difficult to administer.
  • Make sure assets that are to be divided are split fairly with an eye towards their ultimate use by the heir. For example, giving a volatile asset to someone near retirement when a stable but low growth one was available might not be advisable.

See Lindsay Garland, 4 Steps for Moving Forward After a Client's Death, Financial Planning, August 26, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 31, 2015 in Death Event Planning, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Sunday, August 30, 2015

Some Issues To Consider When Creating Trusts For Troubled Adult Children

Trust AltWhen a family has an adult child that suffers from addiction or mental disease they will want to ensure that the child's well being is protected after the death of the parents. However, some precautionary steps should be taken to ensure that the child will be taken care of for the longest possible time. First, a trust that is established should have limitations set on the distributions made to the child with the problem. For example, distributions should be premised on need and remain within the discretion of the trustee since a fixed sum might provide more than is needed and help support an addiction.

In addition, a statement by the settlor explaining the circumstances of the child's problems should be provided so that future trustees known the circumstances behind the formation of the trust. Finally, serious consideration should be given to a trust that never distributes in full to the troubled child even if the mental condition or substance abuse remains dormant for years. Both problems may be triggered by unforeseen life events, even after years of successful treatment, which could lead to financial disaster if the corpus of the trust is in the child's hands. Ultimately a trust must be tailored to the reality of each situation with the history and severity of any afflictions being carefully considered when fixing the terms of the support trust.

See Paul Sullivan, For Parents With Troubled Adult Children, Financial Hurdles Abound, New York Times, August 28, 2015.

Special thanks to Matthew Bogin for bringing this article to my attention.

August 30, 2015 in Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, August 28, 2015

Is The Trustee Or Director On The Hook For A Directed Trust?

Trust AltIn a traditional trust, the trustee is the ultimate authority and will be held accountable for any misconduct or other fiduciary violations. However, when a director has been appointed to the trust then the ultimate responsibility is harder to determine. The Uniform Trust Code, for example, absolves the trustee of any liability unless the director's order is clearly out of line with the trust terms or seriously breaches a fiduciary duty. In addition, the director, as long as they are not a beneficiary, is presumed to be a co-fiduciary and will be liable for any breach. Ultimately, one must look to an individual state's law to determine what the duties and liabilities of a director might be. Each state has a unique take on a director's liability compared to that of a trustee and will control the issue in the event of conflict.

SeeCharles A. Redd, Tips From the Pros: Directed Trusts—Who’s Responsible?, Wealth Management, August 27, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.


August 28, 2015 in Estate Administration, Trusts | Permalink | Comments (0)

Tuesday, August 25, 2015

Estate Tax Implications For Fractional Art Ownership

Article PictureFor years, the IRS denied a estate tax valuation discount to works of art that had split ownership and other restrictions on sale. However, a recent Tax Court and 5th Circuit Court of Appeals ruling has upended this restriction with valuation discounts now being offered in spite of the seeming restrictions in section 2703. The Tax Court applied a flat %10 valuation discount but this approach was rejected by the 5th Circuit which agreed in principle with allowing a discount but did not outline a method to determine the amount. Going forward, new rules and regulation will have to be developed but they could wind up giving a large estate tax saving to any pieces of work that are inherited between multiple heirs.

See Marjorie W. Hornaday & Ronald D. Spencer, Art Law on Estate Tax on Inherited Collections, Artnet News, August 23, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 25, 2015 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Monday, August 24, 2015

Estate Planning Considerations For Military Members

MilitaryMilitary veterans account for millions of the population and have special benefits due to their service making retirement planning for the group unusual. However, there are some simple tips that every estate planner can follow that can make planning for a veteran easier:

  • Military pensions are guaranteed and should be treated as a low risk asset when planning. As a result, other assets may be safely invested in portfolios that have a greater potential risk but also return.
  • Make sure the service member is aware of the Survivor Benefit Plan. The plan must be opted into within three years of retirement and a premium paid in order to guarantee a percentage of the income stream for a surviving spouse or qualified dependent including disabled adult children. 
  • Run the numbers to test if the Serviceman’s Group Life Insurance policy is worth opting into. Private plans might offer better returns but the SGLI might be the better option is the client is suffering from poor health or other issues that increase the cost of a private plan.

See Wilson Moy, Unique Estate Planning Considerations for Members of the Military, Wealth Management, August 21, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.


August 24, 2015 in Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Friday, August 21, 2015

A Few Simple Steps To Help Prevent After Death Identity Theft

ScamIdentity theft is a common problem due to the massive amount of information that is available. This problem is as common for the deceased as it is for the living since the dead cannot protect themselves which could lead to problems down the line for an estate or heirs. However, there are a few simple steps that may be taken that can help prevent the identity of a parted loved one from winding up in the hands of a conman:

  • When preparing an obituary do not include any details that may be useful to an identity thief. Birthday's should not be mentioned since this is information that is required in almost all security checks. In addition, avoid personal details like the maiden name of the deceased mother or even the name of the high school they attended. Both of those pieces of information are often used as security questions and will give a hacker the chance to get into accounts.
  • Send documentation of death to all financial institutions in order to start the process to freeze accounts. In addition, report the death to the credit reporting agencies so they can put an alert on the account for anyone that looks up a credit report. However, follow up on all these acts since the process of proving death can be ponderous and take longer than the time required for a thief to steal the identity.
  • Cancel identification cards especially drivers licenses and passports. Keeping both active is a risk since a thief could request a new copy and, with some minor alterations, get an ironclad ID they can use to commit any sort of crime.
  • The most important step though is to keep an eye on the deceased credit reports and accounts for a period after death. Even with the steps above, a skilled impostor can gain access the an identity so monitoring a credit report a few times a year could save much hassle for an heir or estate administrator.

See David H. Lenok, Protecting Deceased Clients from Identity Theft, Wealth Management, August 19, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

August 21, 2015 in Death Event Planning, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Some Ways To Assist Clients That Have Suffered A Tragedy

ArticleThe death of a loved one, or any other tragedy, will put a person into a compromised position as they cope with the grieving process. Important decisions may be put off or assets wasted because the person no longer has the interest to bother with the mundane details of life due to the grief they feel at a loss. However, there are some ways that an advisor could help a client in a situation such as this.
First, take the time to check in with the client since many people withdraw from the day to day world in order to cope and will need others to reach out to them. Another good technique is to focus on the pressing issues and leave any smaller matter to a later time when the client is in a better place. Due to perceived burden, a bunch of small decisions could cause the client to lose interest in the important acts that must be done. While an advisor cannot act as a counselor, they can offer support by making sure the best interest in the client are looked after even if the client has, temporarily, lost interest in managing their affairs.
See Karen Demasters, How To Help Grieving Clients, Financial Advisor, August 20, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.

August 21, 2015 in Estate Administration, Estate Planning - Generally | Permalink | Comments (1)

Wednesday, August 19, 2015

CLE On Digital Data After You Die

CLE PictureThe American Bar Association is presenting a CLE entitled, Privacy, Probate, and What Happens to Your Digital Data after You Die?, Tuesday September 22, 2015, 1:00-2:30pm Eastern, online.  Here are some details about the event:

As Americans increasingly live their lives online, they are leaving more and more data behind in digital form when they die. Should families be able to retrieve the digital data of loved ones? Under what circumstances?
Can probate lawyers and estate executors get access to the deceased digital data and, if so, how? How are social media handling the many requests for access to digital data, and can such access be provided consistent with the Electronic Communications Privacy Act and other laws? To address this, the NCCUSL has drafted the Uniform Fiduciary Access to Digital Data model law, which the ABA approved in August 2014. Some have criticized the UFADDA as insufficiently protective of privacy interests, and have advocated a competing measure known as the PEAC.

August 19, 2015 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Tuesday, August 18, 2015

Google Creates New Options To Access Account Of Deceased User

GoogleGoogle has recently changed the options that estate administrators and others may use to gain access to or protect the account of a deceased user. The updated page now grants the option for someone seeking to access an account to provide the name of the deceased and other information to Google for review. Some options require the uploading of proof such as obituaries or court certified testamentary letters. In addition, Google provides users the ability to determine what will happen to their account in the event of death. As online account access becomes a bigger player in estate administration, Google's preemptive move to make gaining access easier is a welcome step forward and will hopefully spur others to take similar steps.

See David Shulman, Google Updates Page Regarding a Deceased User’s Account, South Florida Estate Planning Blog, July 30, 2015.

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

August 18, 2015 in Estate Administration, Estate Planning - Generally, Web/Tech | Permalink | Comments (0)

Article On Prudent Investing And ERISA

Article PictureMelanie L. Fein (Fein Law Offices) recently published an article entitled, Prudent Investing and ERISA: Fees and the Fiduciary Duty of Care. Provided below is an excerpt from the article:

This paper addresses the treatment of investment costs—including fees and compensation—under the duty of care as embedded in the Uniform Prudent Investor Act and other statements and codifications of the law of trusts. This paper shows that, under well-established trust law principles, cost is only one of an array of prudent investing factors a fiduciary must consider under the fiduciary duty of care. This paper then discusses the duty of care under ERISA and shows that ERISA applies a similar duty of care. The duty of care under both trust law and ERISA rejects “least cost” as the governing standard.

August 18, 2015 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)