Wills, Trusts & Estates Prof Blog

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

Thursday, May 25, 2017

Fans Mourn Chris Cornell's Passing

ChrisCornellChris Cornell, best known as lead vocalist for the bands Soundgarden and Audioslave, was cremated this past Tuesday. Those present included a small and select group of family and friends. The memorial service will be held on Friday and is also intended only for close friends and family. After the ashes are buried, fans will be allowed to enter Hollywood Forever cemetery in order to pay their respects. Officials at the cemetery are expecting a huge crowd after the service. Cornell joins legends like Mikey Rooney and Mel Blanc, who have also been laid to rest at the site.

See Chris Cornell Cremated, Private Service Planned but Fans Not Forgotten, TMZ, May 24, 2017.

May 25, 2017 in Current Events, Death Event Planning, Estate Planning - Generally, Music | Permalink | Comments (0)

The Estate Planning Enchiridion

NV-PeoplesBranchThe Estate Planning Enchiridion of Rushforth, Lee & Kiefer, LLP, contains up-to-date news on both trust and estate legislation in the great state of Nevada. Assembly Bill 314 passed both houses and is expected to be signed into law by the Governor shortly. This bill serves to clarify a number of Nevada laws relating to trusts and estates including clarifications in the probate code, court jurisdiction, and creditor’s claims against nonprobate assets. Assembly Bill 239 is expected to become effective in early October. This bill declares the law in respect to a decedent’s digital assets; this includes access to online financial sites and social media. Assembly Bill 413, if passed, would revise Nevada law dealing with certain electronic documents, including electronic wills. But, while not dead, Bill 413 has stalled in the Assembly and its passage is questionable.

See Layne T. Rushforth, Estate Planning News: Law Updates, Estate Planning Enchiridion of Rushforth, Lee & Kiefer, LLP, May 23, 2017.

May 25, 2017 in Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Trusts, Wills | Permalink | Comments (0)

I've Got Not So Much to Give

BarryBarry White’s son, Darryl White, is alleging that his father’s widow, Glodean White, is wasting monies left in trust on an opulent lifestyle. After his father’s death, Darryl agreed to forgo looking at the will in exchange for a promise from Glodean that she would continue to support him. The arrangement apparently worked until 2015. Now penniless, Darryl is filing suit so he examine the will to determine what his father actually left him.

See Barry White's Son Suing Late Singer's Estate and Widow, TMZ, May 24, 2017.

May 25, 2017 in Current Events, Estate Planning - Generally, Music, Trusts, Wills | Permalink | Comments (0)

Debt Dirge Despite Death

Dead debtIt is a guarantee that you are going to die and it is likely that you are going to die with debt. Approximately 73% of consumers pass away with an average of $61,554 in debt. If mortgages are not considered in this figure, the number falls to $12,875. A concern for many is what happens to their debt when they die. For the most part, the debt disappears with the decedent. But, this is not always the case. If, for example, you die while owing mortgage debt, family members still residing in the home may have to take over the mortgage payments or sell in order to satisfy creditors. Spouses and individuals sharing accounts with the deceased may also find themselves burdened with unwanted liabilities.

The best way to avoid passing debt to loved ones is, of course, to live within set and reasonable means. More realistically, meeting with an estate planner to discuss life insurance policies and possible estate plans may serve to effectively shield family from creditors.

See Christine Digangi, What Happens to Your Debt When You Die?, MarketWatch, May 20, 2017.

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

May 25, 2017 in Estate Planning - Generally | Permalink | Comments (0)

Wednesday, May 24, 2017

New Fiduciary Rule Guidance from US Labor Department

US Dept LaborThe U.S. Labor Department has released new fiduciary rule guidance on their website. The rules affect financial advisors, retirement plan sponsors, and individual workers and retirees. This release comes in advance of the June 9 applicability date.

See New Fiduciary Rule Guidance from US Labor Department, United States Department of Labor, May 22, 2017.

May 24, 2017 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on the Prudent Investor Rule and Market Risk: An Empirical Analysis

Crazy-Wall-Street-InvestorMax M. Schanzenbach & Robert H. Sitkoff recently published an Article entitled, The Prudent Investor Rule and Market Risk: An Empirical Analysis, 14 J. Empirical Legal Stud. 129 (2017). Provided below is an abstract of the Article:

The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of trust investment law. Repudiating the prior law's emphasis on avoiding risk, the rule reorients trust investment toward risk management in accordance with modern portfolio theory. The rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. Using data from reports of bank trust holdings and fiduciary income tax returns, we examine asset allocation and management of market risk before and after the reform. First, we find that the reform increased stockholdings, but not among banks with average trust account sizes below the 25th percentile. This result is consistent with sensitivity in asset allocation to trust risk tolerance. Second, we present evidence consistent with increased portfolio rebalancing after the reform. We conclude that the move toward additional stockholdings was correlated with trust risk tolerance, and that the increased market risk exposure from additional stockholdings was more actively managed.

May 24, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Farmers Looking to Take Back What's Theirs

FarmBrody Swanson recently published an Article entitled, Allowing Farmers to "Take Back" What's Theirs: Adoption of the Revocable Life Estate Deed, 21 Drake J. Agri. L. 409 (2016). Provided below is an abstract of the Article:

Deeds come in many different shapes and sizes. They are generally used to transfer one’s interest in real property but may also be a useful tool to transfer interest in personal property. This Note singles out one type of deed, the life estate deed, and proposes that Iowa, along with similar farm states, joins in adopting the revocable life estate deed. Superficially, carrying out a successful deed seems relatively simple, but in order for a deed to go into effect, there are certain prerequisites that must be met to satisfy the deeds validity. Typically, a valid deed must include: (1) a detailed description of the property being transferred, (2) the name of the party who receives the property, and (3) the signature of the transferring party signed in the presence of the notary. A deed is used as an instrument to convey ownership of real property and has been defined as “[a] written instrument, which has been signed and delivered, by which one individual, the grantor, conveys title to real property to another individual, the grantee; a conveyance of land, tenements, or hereditaments, from one individual to another.” In Iowa, a grantor “includes but is not limited to, a seller, mortgagor, borrower, assignor, lessor, or affiant,” and a grantee “includes but is not limited to a buyer, mortgagee, lender, assignee, lessee, or party to an affidavit who is not the affiant.” To understand the necessity for adopting the revocable life estate deed, this Note will provide a thorough explanation of the present life estate deed, the problems regarding the transfer of property, and the advantages and disadvantages of adopting the deed.

May 24, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, May 23, 2017

Michael Jackson's Estate Poised for Suit

502536-michael-jackson-617-409Both Lifetime and Netflix have soon-to-be-released movies with Michael Jackson as their centerpiece. While it may be unthinkable to release a cinematic depiction of the beloved pop star absent his unique music balancing the soundtrack, the networks would be better off without. Neither program has been officially authorized by Jackson’s estate. Given this, there are attorneys waiting on the sidelines to see if either film uses any unauthorized materials. The estate representatives have not seen the movies as of yet, so no action is currently underway. This circumstance may change by Monday.

See Michael Jackson Estate: Hey, Lifetime & Netflix...Make Your Movies, Just No MJ Tunes, TMZ, May 22, 2017.

May 23, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Film, Music | Permalink | Comments (0)

Article on Transfer to Limited Partnership Includible in Estate

LLP1Lewis J. Saret recently posted an Abstract entitled, Est. of Nancy H. Powell: Transfer to Limited Partnership Includible in Estate, Wealth Strategies Journal (2017). Provided below is the abstract:

On August 8, 2008, D’s son, J, acting on her behalf, transferred cash and securities to LP, a limited partnership, in exchange for a 99% limited partner interest. LP’s partnership agreement allowed for the entity’s dissolution with the written consent of all partners. Also on August 8, 2008, J, purportedly acting under a power of attorney, transferred D’s LP interest to T, a charitable lead annuity trust, the terms of which provided an annuity to a charitable organization for the rest of D’s life. Upon D’s death, T’s corpus was to be divided equally between D’s two sons. D died on August 15, 2008.
Held: D’s ability, acting with LP’s other partners, to dissolve the partnership was a right “to designate the persons who shall possess or enjoy” the cash and securities transferred to LP “or the income therefrom”, within the meaning of I.R.C. sec. 2036(a)(2).

Held, further, because D’s LP interest was transferred, if at all, less than three years before her death, the value of the cash and securities transferred to LP is includible in the value of her gross estate to the extent required by either I.R.C. sec. 2036(a)(2) or I.R.C. sec. 2035(a).

Held, further, neither I.R.C. sec. 2036(a)(2) nor I.R.C. sec. 2035(a) (whichever applies) requires inclusion in the value of D’s gross estate of the full date-of-death value of the cash and securities transferred to LP; only the excess of that value over the value of the limited partner interest D received in return is includible in the value of D’s gross estate. I.R.C. sec. 2043(a).

Held, further, J’s transfer of D’s LP interest to T was either void or revocable under applicable State law because D’s power of attorney did not authorize J to make gifts in excess of the annual Federal gift tax exclusion; consequently, the value of the 99% limited partner interest in LP, as of the date of D’s death, is includible in the value of her gross estate under I.R.C. sec. 2033 or I.R.C. sec. 2038(a).

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

May 23, 2017 in Articles, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Monday, May 22, 2017

Problems for the First-Generation Affluent Family

Parents-talking-to-kids-about-money_725x377-1365627520Rob Weiner remembers his first attempt at sitting down with his two daughters to discuss their inheritance. The oldest was then in college and the youngest in high school. He recalls their total lack of receptivity to the conversation. He believes the issue, at that time, was that the topic was simply not on their radar. Twenty years later, Rob and his wife Vicki are still attempting to do what many wealthy families struggle with: telling their children they are going to inherit a large estate upon their passing.

A majority of individuals polled with a net worth of over $20 million said they were apprehensive about sharing such information with beneficiaries and fewer than ten percent had actually done so. While this may appear odd, the reasoning is sound. Many of these wealthy families do not want to create an impetus for apathy.

Bill LaFond, president of the family wealth division at Wilmington Trust, advises families to make sure that everyone involved is ready to receive this information. He emphasizes that there must be a level of trust between parent and child. Still there are issues, especially with money that has not been passed down through multiple generations. Multi-generational trusts tend to have a system already in place to guide distribution. And while this does not necessarily serve as a stalwart guide, it provides a reference that many single-generation affluent families do not have.

Rob and Vicki, with daughters now married and in their 30s, ask for a family meeting each year. Here, they make an effort to discuss the estate planning consequences of their demise. They divulge what information their daughters request, but calibrate and maneuver the conversation based on their attitudes and receptivity. While this is a difficult conversation for many affluent families to endure, the Weiners attempt to normalize the discussion to make it less of an ethereal topic.

See Paul Sullivan, How the Wealthy Talk to Their Children About Money, N.Y. Times, May 19, 2017.

Special thanks to Matthew Bogin, (Esq., Bogin Law) for bringing this article to my attention. 

May 22, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)