Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, August 1, 2014

LegalZoom Plans to Expand After Legal Victories

LawAs I have previously discussed, LegalZoom has had multiple successes defending lawsuits alleging they are engaging in the unauthorized practice of law. In light of their recent legal wins, LegalZoom plans to expand their services, including offering new services. The new offerings, including legal advice from lawyers will add to current prepaid service options.

See Robert Ambrogi, Latest Legal Victory Has LegalZoom Poised for Victory, ABA Journal, August 1, 2014.

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

August 1, 2014 in Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Lawyer Disbarred for Living Trust Scam

Gavel2After participating in a living trusts scam, a Pennsylvania lawyer has been disbarred. The Pennsylvania Supreme Court issued the order on Monday. The lawyer was working with non-lawyer salespeople who would take marketing brochures created by the attorney to the home of elderly individuals. The salespeople would collect fees, and have the individuals fill out forms and sign documents, which would then be returned to the attorney for him to draft the trusts. The attorney did not interact with the clients accept through these forms collected at the client’s home and the preprinted brochures.

See Jeffrey Marshall, Living Trust Flimflam Gets PA Lawyer Disbarred, Marshall, Parker and Weber, July 30, 2014.

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

August 1, 2014 in Estate Planning - Generally, Non-Probate Assets, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Estate Planning Lessons From Sterling Lawsuit

SterlingAs I have previously discussed, Donald Sterling lost his attempt in probate court to stop the Clippers sale. The story of Donald Sterling serves as a reminder that estate planning is not just about what happens to assets after death, but should include careful planning of what happens in case of incapacity. The Sterling case came down to whether Donald Sterling’s diagnosis of mental incapacity and Shelly Sterling’s actions of taking over the trust were proper under the family trust provisions. When a clause is written for incapacity, it is important that the grantor pick their successor carefully and remember that the person closest to them, such as a spouse, may not always be the best person to take over their business. It is also important that various possibilities are considered and specifically planned for, such as intermittent or resumed capacity.

See Darla Mercado, Donald Sterling’s Battle Holds a Harsh Lesson for Advisors, Investment News, July 30, 2014.

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

August 1, 2014 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, July 31, 2014

Succession Planning in Taiwan

Taiwan Man

After starting with almost nothing, successful entrepreneurs now run some of Taiwan’s largest companies.  These firms have helped propel Taiwan’s rapid economic growth over the past decades, and are crucial to maintaining the island’s future. 

Yet some analysts estimate that only one third of these family run companies, which account for up to 90% of the island’s business, have a succession plan.  “In Taiwan, though, it’s still the emperor’s style of succession.  No-one outside can tell what will happen—it’s the founder’s decision.”

It is a traditional Chinese approach for founders to divide the family firm up between their children however, this tradition has divided companies.  Many Taiwanese companies have become so large that younger family members have been incapable of taking a leadership role.  “Family businesses are definitely very important in Taiwan and across Asia because they control a lot of resources . . . And if they make the wrong decisions . . . the whole economy will suffer a lot.”  Because many first generation entrepreneurs are workaholics, they have difficulty relinquishing their position as they want to make major decisions for their company.  Consequently, their successor does not have the opportunity to handle the whole company. 

See Cindy Sui, The Tricky Business of Succession Planning in Taiwan, BBC News, July 30, 2014.

July 31, 2014 in Estate Planning - Generally, Travel | Permalink | Comments (0) | TrackBack (0)

Estate Planning Steps for the Divorcee

Divorce 2

Although your divorce papers may be signed and custody arrangements are finalized, you are still technically married.  While you may be excited to begin a new chapter, it is important to tie up any loose ends before embarking on your new journey.  Provided below are just a few places to begin:

  1. Update your will.  Because your present will may include the name of your ex-spouse, make sure you change this if you do not wish to have your assets go to this person upon your death.
  2. Change your name.  If you change your name in the divorce agreement, you must notify the Social Security Administration.  You will also need to update your driver’s license and passport.
  3. Change passwords.  The last thing you want is your ex-spouse gaining access to your sensitive financial information.
  4. Spread the word.  Let your automobile and major medical carrier know of your new marital status because it could affect your coverage costs.
  5. Change power of attorney.  If your former spouse had power of attorney over you, make sure to revoke your power of attorney and create a new one, eliminating your former spouse from having the ability to make important medical decisions regarding medical care.

See Van Oorschot Law Group, PC, You’re Divorced. Now What? JD Supra Business Advisor, July 29, 2014.

July 31, 2014 in Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Tax Court Issues Ruling Against IRA Owner


In Dabney v. Commissioner, a recent U.S. Tax Court case, the Court ruled against an IRA owner and regarded his IRA as distributed and taxable since the IRA owner failed to properly execute his intended self-directed IRA real estate investment. 

Rather than invest his IRA into real estate, Mr. Dabney dispersed his IRA and used the funds to buy real estate outside of his IRA.  Charles Schwab subsequently issued Mr. Dabney a 1099-R for that distribution, which Mr. Dabney contested, arguing that the funds were used to buy a property owned by his Schwab IRA.  Yet, the Court ruled against him because his funds were distributed outside of his Charles Schwab IRA and because his IRA funds and the real estate were not held by a self-directed IRA custodian that allowed for IRAs to own real estate.  The Court explained that an IRA can hold real estate, but that Charles Schwab’s policies did not allow for Mr. Dabney’s IRA to own real estate.

In order to properly execute a self-directed IRA investment into an asset such as real estate, the IRA owner needs to roll over or transfer their IRA funds first to a self-directed IRA custodian who allows the IRA to won real estate and then that self-directed IRA will take title and ownership to the IRA asset directly. 

See Mat Sorensen, Tax Court Rules Against IRA Owner Who Failed to Properly Make a Self-Directed IRA Real Estate Investment, The Self Directed IRA Handbook, July 29, 2014.

July 31, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Article on Unconstitutional Perpetual Trusts


Steven J. Horowitz (Sidley Austin LLP) and Robert H. Sitkoff (Harvard Law School) recently published an article entitled, Unconstitutional Perpetual Trusts, 67 Vanderbilt Law Review, Forthcoming (June 16, 2014).  Provided below is the abstract from SSRN:

Perpetual trusts are an established feature of today's estate planning firmament. Yet little-noticed provisions in the constitutions of nine states, including five states that purport to al-low perpetual trusts by statute, proscribe "perpetuities." This article considers those provisions in light of the meaning of "perpetuity" as a legal term of art across history. The article considers the constitutionality of perpetual trust statutes in states that have a constitutional ban on perpetuities and whether courts in states with such a ban may give effect to a perpetual trust settled in another state. Because text, purpose, and history all suggest that the constitutional proscriptions of perpetuities were meant to proscribe entails, whether in form or in function, and because a perpetual trust is in purpose and in function an entail, we conclude that recognition of perpetual trusts is prohibited in states with a constitutional prohibition of perpetuities.

July 31, 2014 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Jesse Ventura Wins Lawsuit Against the Estate of a Navy SEAL

Jesse VenturaJesse Ventura has won his lawsuit against the estate of a Navy SEAL. Ventura says that the man wrote a book that included a false story that he punched out Ventura for making a negative comment about the Navy SEALs. Ventura won a $1.8 million verdict, and is now the target of criticism due to concerns of how the wife and children of the deceased man will be provided for after such a large hit to the estate. However, Ventura, also a former Navy SEAL, maintains that this suit was about the truth and clearing his name from the allegation of treason.

See, Jesse Ventura: No Regret Over Suing Widow of Navy SEAL, CBS News, July 30, 2014.

July 31, 2014 in Current Affairs, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

House Passes Charitable Giving Tax Breaks

LawThe “America Gives More Act of 2014” passed in the House earlier this month. If passed the act will extend the charitable IRA rollover and the enhanced conservation easement breaks which have expired. The act would also enact two new charitable giving tax breaks, which include extending the time to make charitable gifts to the tax return due date and changing the two tier excise tax for investment earnings by private foundations to a flat 1% rate.

 See Ashlea Ebling, 4 Charitable Giving Tax Breaks in Play, Forbes, July 18, 2014.

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

July 31, 2014 in Estate Planning - Generally, Gift Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Using Marriage as Deciding Factor for Death Benefits Ruled Unconstitutional in Alaska

GavelAfter the tragic death of Kerry Fadely, who was murdered while working a shift as a manager at Millennium Hotel, her same-sex partner Deborah Harris filed for workers compensation death benefits. Harris’s claim was denied because she wasn’t married to Fadely, which was based on the Alaska Workers' Compensation Board's interpretation of “widow” in the statute. The couple had been together for over ten years and shared responsibility for bills and raising their children.

In Harris v. Millennium Hotel, the Alaska Supreme Court overruled the denial of the death benefits. The court reasoned that using marriage as the test for awarding the death benefits was a violation of equal protection, and the case was remanded.

See Stephanie Goldberg, Same-Sex Partner of Murdered Woman Due Comp Death Benefits: Alaska High Court, Business Insurance, July 29, 2014.

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

July 31, 2014 in Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)