Wills, Trusts & Estates Prof Blog

Price for Cheating -- $5,000,000

According to Nick Allen, Tiger Woods 'offered wife Elin $5m after transgressions', Telegraph, Dec. 3, 2009, professional golfer Tiger Woods has offered his wife, Elin Nordegren, $5 million if she will remain married to him.

This may be a cheap offer seeing as reports indicate that she would receive $20 million if she stuck with Tiger until 2014 under an existing pre-nuptial agreement.  There are also reports that as part of $5 million payoff, a new marital agreement will give her $40 million as long as she stays married to him until 2011.

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

New York Senate Defeats Same-Sex Marriage Proposal

On December 2, 2009, by a vote of 24 to 38, the New York Senate defeated a bill which would have permitted same-sex marriage.

See Jeremy W. Peters, New York State Senate Votes Down Gay Marriage Bill, NY Times, Dec. 2, 2009. 

Japanese Man Marries Video Game Girlfriend

Many prior postings have covered the debate surrounding same-sex marriage.  Taking the non-traditional to the next level, a Japanese man reportedly married a video game character from a Nintendo video game.  While the wedding ceremony included a priest and a photo montage from the couple's "courtship," it is not completely clear whether the marriage is actually legally valid.  

I wonder if he later erases his wife's data whether he could be charged with murder.

See Huffington Post, SAL 9000: Man Marries Video Game Girlfriend (VIDEO), Nov. 23, 2009.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this to my attention.

Will California ban divorce?

A grass roots movement is underway in California to ban divorce. 

John Marcotte is collecting signatures on petitions to place a measure on the 2010 California ballot which reads as follows:

SECTION 1. Title. This act shall be known as the “2010 California Protection of Marriage Act.”

SECTION 2. Section 7.6 is added to Article I of the California Constitution, to read:

No party to any marriage shall be restored to the state of an unmarried person during the lifetime of the other party unless the marriage is void or voidable, as set forth in Part 2 of Division 6 of the Family Code.

The logic behind this family values proposal is that if it is impermissible for same-sex couples to marry because of the sancity of the marriage relationship, it makes sense also to ban divorce for the same reason.

If the measure passes, California would become the first state to ban divorce and would join nations such as Malta and the Philippines.

See Judy Lin, Movement under way in California to ban divorce, AP, November 30, 2009.

Follow this link to view two public service announcements supporting the proposed ban.

The Risks and Rewards of Stranger-Owned Life Insurance

The Nov. 2009 issue of the Illinois Bar Journal contains the following two articles addressing collectively entitled Stranger-Owned Life Insurance: The Risks and Rewards.   

Stephen M. Margolin (shareholder, Chuhak & Tecson, PC) & Valerie J. Freireich (partner, Chuhak & Tecson, PC), The Rewards: A Fictional Case Study, 97 Ill. Bar J. 568 (2009).

James C. Shanley (of counsel, Ungaretti & Harris LLP), The Risks and How to Minimize Them, 97 Ill Bar J. 569 (2009).

The introduction to the both of these articles is below:

Perhaps you've read about it or seen it on TV, or perhaps a client has approached you about it.  The plan works this was: an elderly person lets investors buy insurance on his life in return for a hefty cash payment.  At the end of two years, he can reimburse the investors the premiums they paid-plus interest-and keep the coverage, or he can drop it with no obligations.  And he keeps the cash up-front either way.  

It's called stranger-owned life insurance ("SOLI"), and it's a controversial but increasingly popular financial device.  Do the risks outweigh the rewards?  James C. Shanley is skeptical, Stephen M. Margolin and Valerie J. Freireich more sanguine.  Here are two sides of the SOLI story. 

NYC AV Rated Trusts & Estates Boutique Firm Seeks Associate or Counsel

A NYC AV rated trusts & estates boutique firm is seeking a mid-level Associate to Counsel level attorney.

Immediate Hire.

3-15+ years Trusts, Estates, and Probate experience required.

Part Time or Full Time.  Flexible schedule.  Sophisticated Practice in collegial environment.

Please submit resume to Norma Singh at nsingh@mtrustlaw.com.  

Tips for Avoiding Estate Litigation

US News reports that poor economic conditions have led to more estate litigation. While wealth transfers have increased over the past 20 years, currently reduced asset values make for a smaller pie and returns that are smaller than excepted.  Longevity and increased family complexity (2nd and 3rd marriages, for example) only add to disputes. 

US News suggests the following key tips for avoiding estate litigation.

1. Select a good, solid attorney who hasn't done any work for any of your beneficiaries.
2. Select an executor who can get along with your family, perhaps even a professional fiduciary if no one else could successfully fill this role.
3. Discuss your intentions with family before the will is drafted, taking away the surprise after death and making loved ones aware of personal wishes and desires.
4. Take state law into account, creating trusts to bypass probate if probate is especially burdensome under applicable state law.
5. Update the will or trust often so that challenges become more difficult.
6. Title assets appropriately so that the assets pass through or outside probate as intended.
7. Consider a no-contest clause coupled with testamentary gifts adequate to discourage disputes.  
8. Allow the estate some leeway with distribution of assets so that beneficiaries can agree to a distribution that suits them best.  

See Phillip Moeller, 8 Tips to Avoid Nasty Estate Surprises, U.S. News, Nov. 27, 2009. 

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

Passing Retirement Plan Assets

A recent Wall Street Journal article discusses the basics of passing retirement plan assets after death, covering the following:

• The use of beneficiary designation forms to pass the retirement plan assets to chosen loved one.
• The benefit of leaving retirement plan assets to a trust for the benefit of loved ones who can't manage the assets.
• The role a durable power of attorney may play for a beneficiary spouse who later becomes incapacitated.

See Kelly Greene, How to Hand Down Assets in Retirement Plans, WSJ, Nov. 21, 2009.

Special thanks to Patrick S. Sylvester (Attorney & Counselor at Law, Sylvester Law Firm, PC) for bringing this article to my attention.

Houston Oilman's Wishes to be Honored, Others Not So Lucky

Last week, a jury in Houston needed less than an hour to decide that the last will of Alfred Glassell, Jr., was valid.  Glassell's daughter had challenged the will on the ground that attorneys exerted undue influence upon her father when he changed the primary beneficiary of his estate to the Museum of Fine Arts in Houston. 

Lou Ann Anderson, in an article entitled Jury rules to honor Houston oilman's estate wishes, Bell County Legal News Examiner, Nov. 17, 2009, uses Glassell's estate as an example of Involuntary Redistribution of Assets: 

Estates have become a tool for Involuntary Redistribution of Assets (IRA) acts in which probate venues and/or probate instruments such as wills, trusts, guardianships and powers of attorneys are used to loot assets of the dead, disabled or incapacitated.

For more information, see the article, which contains a discussion of IRA acts and solutions, numerous links, and examples of prominent estates involving IRA actions like reconfiguring the estate through estate administration and contesting a probate document in hopes of getting a lucrative settlement.

Special thanks to Jerry Cooper (TrustAdvisorBlog) for brining this to my attention.

'Financial Institution Liability for Defective Survivorship Agreements'

Terry W. Wood (lawyer, Beaumont, Texas) has published his article entitled Survivor, No Survivor-Financial Institution Liability for Defective Survivorship Agreements, The Advocate, Fall 2009, at 36.

The following is an excerpt from the beginning of the article:

Everyone knows the past year has been a dangerous time for financial institutions due in large part to their own acts, mismanagement and mistake.  On a smaller scale, what dangers exist for financial institutions arising out of defective or nonexistent survivorship and pay on death (P.O.D.) accounts?

In order to understand financial institutions' liability for defective (or nonexistent) survivorship and P.O.D. accounts, it is necessary to understand Texas law on multi-party accounts. 

Estate Planning Mistakes to Avoid

Norma Montalvo Petrosewicz (attorney, Richmond, Texas) has published her article entitled Top Ten Mistakes Attorneys Make, The Advocate, Fall 2009, at 28. 

The introduction to the article is below:

Many attorneys are asked to draft a simple Will, and most attorneys will do so because all it takes is filling out a "form"-- right?  This article is presented to give non-estate planning attorneys the traps to be wary of in preparing an estate plan. 

Lou Dobbs Enlarges Estate by Not Working

Newscaster Lou Dobbs has reportedly accepted $8 million to terminate his contract with CNN early as a result of CNN's dissatisfaction with Dobbs' lack of reporting neutrality. From an estate planning perspective, Dobbs is increasing the size of his estate by agreeing not to work, an investment option many would likely seize.

See Michael Shain, Source: CNN wanted Lou out, N.Y. Post, Nov. 16, 2009.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

Passing Wealth for the First Time Can be Scary

The Financial times reports that although the current financial climate may have deceased the assets of the self-made-wealth entrepreneurs of the last decade, these newly-rich families still have enough assets to worry about.

The article claims that families with inexperience in passing on wealth want to delay inheritances by their children until their children reach their 30's and are married or in a stable relationship.  Additionally, families are educating their children on wealth at younger ages and continue to take advantage of financial bootcamps to educate their children about investment.  The bottomline, however, is that "'[p]eople want to make sure their capital doesn’t expire before they do.'” 

See Lucy Warwick-Ching, Succession planning: Tricky bussiness of giving it away, Financial Times, Nov. 10, 2009.

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

Over 14,000 Seek Amnesty for Offshore Accounts

Over 14,000 Americans have taken advantage of the IRS amnesty program by disclosing secret offshore accounts.  It is estimated that 12,000 of those disclosures came after the Swiss government agreed to reveal information about UBS accounts, which I reported here.  

According to Ryan J. Donmoyer and David Voreacos, IRS Gets Secret Account Data From 14,700 Americans, Bloomberg, Nov. 17, 2009, the voluntarily disclosed accounts will translate into billions in income for the U.S. government: 

The partial amnesty program, announced in March, let taxpayers repatriate offshore assets and avoid jail by paying back taxes, interest and reduced penalties. The tax agency will take 20 percent of a disclosed account’s assets based on its peak value in the previous six years. In cases of inactive accounts, the agency will confiscate as little as 5 percent.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

Testing Online Wills Causes Reaction From Estate Planners

A recent Wall Street Journal article has caught the attention of the estate planning world.  The article is entitled Before It's Too Late: A Test of Online Wills.  In the article, the author uses four online will-writing tools to plan for a hypothetical married and childless couple.  The author discusses various planning techniques used by the online planning sites, such as a living trust, revocable trust, living will, and advanced medical directive. 

For a thorough critique of the article and the hypothetical couple's reliance on the documents, see the comments posted in response to the article and the blog post published by the Law Offices of David A. Shulman in South Florida entitled The Wall Street Journal Totally Blows it on Online Wills.

Or, you could just read the last paragraph of the article: 

Which program produces the superior will? Each site purports to yield documents that clearly outline our intentions in the event of our demise or death, although we didn't hire a lawyer to review them. 

Maybe the real test will come when the hypothetical couple hypothetically passes away. 

See Jane Hodges, Before It's Too Late: A Test of Online Wills, WSJ, Nov. 12, 2009. 

Special thanks to Michael S. Knowles (J.D. candidate 2011, Creighton School of Law), Patrick S. Sylvester (Attorney & Counselor at Law, Sylvester Law Firm, PC), and  Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Article Discusses 2009 Estate Planning Legislation in Texas

Glenn M. Karisch (attorney, Austin, Texas) has published his article entitled 2009 Texas Probate, Guardianship and Trust Legislation, The Advocate, Fall 2009, at 15.

The introduction to the article is below:

Texas probate and trust practitioners will find a few gifts in their legislative stockings this year, as well as one or two lumps of coal.  They won't have to wait until Christmas to open these packages, since most of the changes are effective September 1, 2009.

As usual, our friends in the Texas Legislature have done their best to improve our laws and our lives, with mixed results. 

Fawcett's Will Available Online

A copy of Farah Fawcett's will is supposedly available online.  The will leaves $4.5 million to Fawcett's son and nothing to Ryan O'Neal, her boyfriend of nearly 30 years. Fawcett died of cancer this past June.    

See Fawcett left Ryan O'Neal zilch in will, New York Post, Nov. 16, 2009.

Philanthropy: Donor-Advised Fund or Family Foundation?

Foundation Source, a provider of support services for private foundations, has issued an article by Page Snow (Chief Philanthropic Officer, Foundation Source) entitled Family Foundations Made Easy: Helping Donors Choose Between Donor-Advised Funds and Family Foundations.  

This article discusses the potential advantages that private foundations provide to families, and compares these advantages with other charitable vehicles.  

Health Savings Accounts: Basic Components and Estate Planning Issues

John T. Bannen (partner, Quarles & Brady LLP) and Kristen A. Occhetti (associate, Quarles & Brady LLP) have published their article entitled Health Savings Accounts: The New Asset on the Estate Planners' Checklist, Prob. and Prop., Nov./Dec. 2009, at 30.

The introduction from the article is below:

Until recently, a client's health insurance posed few issues for the estate planning lawyer.  But as the federal government struggles with health care reform and as various pre-tax health savings plans have proliferated, the estate planner has a variety of issues to address.  Health savings accounts (HSAa) are available for employees who participate in high-deductible health plans (HDHPs).  As employers seek to control health insurance costs, these plans are gaining popularity at an exponential rate.  According to the U.S. Department of the Treasury, only 438,000 individuals were covered by HDHPs in 2004.  Today, that number has increased to 3.2 million and is projected to rise to between 14 million and 21 million by 2010.  Although HDHPs have lower premiums, their is also because of the public's increasing awareness of the substantial tax benefits of the HSA.  Still early in their development, HASs were created in 2004 as part of the Medicare Prescription Drug Improvement and Modernization Act, Pub. L. No. 108-173, 117 Stat. 2006, in response to the increasing cost of health care.  As such, they are designed to give an incentive to the consumer to control his or her own health care costs.  Unlike flexible savings accounts, HSAs do not have a "use-it-or-lose-it" functionality; account holders can carry over balances from year to year until the account holder's date of death or, with proper planning, until the account holder's spouse's date of death.

The basic concept that controls the HSA is tax-focused: all contributions to, distributions from, and income earned in the account occur on a federal income tax-free basis, as long as the assets are used to pay for qualified medical expenses (note that state tax treatment of HSAs varies from state to state).  As the wave of HSAs sweeps across the health care landscape, it is important for estate planners to be conversant with the basic operations of HSAs and the attendant estate planning implications of the accounts, which, if not addressed properly, can provide surprising and unfavorable results.  This article will first discuss the basic components of HSAs and then turn to the unexposed estate planning issues raised by HSAs for which each lawyer in the practice should prepare. 

Texas' 11th Annual Building Blocks of Wills, Estates and Probate Course

The Texas Bar CLE and the Real Estate, Probate & Trust Law Section of the State Bar of Texas are co-sponsoring a studio-produced webcast of the 11th annual CLE entitled Building Blocks of Wills, Estates and Probate Course on Jan. 15, 2009 and Jan. 21, 2009. Video replays will be provided in 13 Texas locations on Jan. 29, 2009.

The course will cover the following topics:

• Basic Estate Planning
• Elder Law Planning and Issue Spotting
• Office Technology and Administration: Kicking and Screaming into the 21st Century
• Probate Procedures and Alternatives
• Administrations Issues