Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Wednesday, October 1, 2014

Fifth Circuit Rules on Art Estate Taxes

Picasso

The Fifth Circuit Court of Appeals recently agreed that shared ownership of a multimillion dollar blue chip art collection entitled a Texas family to a substantial tax break when it came to settling an estate. 

Over the course of nearly three decades, Houston-based James Elkins and his wife Margaret collected 64 works by artists including Pablo Picasso and Paul Cezanne.  Prior to their deaths, they arranged a grantor-retained income trust (GRIT) by which partial ownership of the art passed to each of their three children.  The Elkins family reasoned that the restricted ownership impacted the value of the works and that the estate taxes owed on them should reflect a discount of 44 percent in determining their fair market value.  The IRS however, disagreed, and the family was hit with a tax bill stating they owed more than $14 million plus interest.

The ruling, handed down September 15th, sided with the family.  The judge ruled, “deficiency resulted solely from the IRS Commissioner’s disallowance of the ‘fractional ownership discount.’”  The court ruled for more extensive discount that ranged from 52 to 80 percent, depending on the work in question and based on the testimony of the estate’s experts. 

See Eileen Kinsella, Court Ruling on Art Estate Taxes Could Save You Millions, Art Net, Sept. 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.

October 1, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Alaska Public Trust Doctrine Case

GavelThe Alaska Supreme Court recently decided a case regarding the public trust doctrine. Alaskan minors were seeking for the court to declare that the state had a fiduciary duty to protect the atmosphere, and order a reduction of carbon dioxide emissions under the public trust doctrine. The court affirmed the plaintiff's case being dismissed by the lower courts, but indicated that a similar suit may be successful in the future.

See J. Wylie Donald, Alaska Supreme Court Opens the Door for Alternative Theory in Public Trust Litigation, JD Supra, Sept. 29, 2014.

October 1, 2014 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 30, 2014

Carl Pohlad's Estate Goes to Tax Court Over Minnesota Twins Valuation

Gavel2As I have previously discussed, the estate of Carl Pohlad, who owned the Minnesota Twins, is currently engaged in a valuation battle with the IRS. The battle is not over the value of the Twins, but rather over the value of Pohlad's ownership interest at his death. Pohlad's estate argues that after Pohlad transferred part of his interest in the Twins to his sons before his death, Pohlad's ownership interest was only worth $24 million. The IRS believes that the $24 million claimed by the estate was deficient and that the actual value of Pohlad's interest at the time he died was $293 million. The case went to tax court yesterday, where a judge will decide the valuation of the ownership interest.

See David Phelps, Pohlad Estate-Tax Trial Begins Monday in Houston, Star Tribune, Sept. 28, 2014.

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

September 30, 2014 in Estate Planning - Generally, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Sunday, September 28, 2014

Estate Fiduciary Held Personally Liable for Unpaid Taxes

Tax1Under the Federal Priority Statute, an estate fiduciary can be held personally liable for unpaid tax liability owed to the IRS if the fiduciary instead uses estate funds to pay other debts. Marci McNicol was the executrix of the estate of Robert Reitano, and instead of paying the estate taxes, she distributed stock that had been owned by Reitano to herself. A case was brought against McNicol by the Department of Justice and a Massachusetts district court held her personally liable for the tax debt.

See Marshall Senterfitt & Mark Swirbalus, T&E Litigation Newsletter – September 2014 #1, JD Supra, Sept. 12, 2014.

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

September 28, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, September 27, 2014

Indictment Shows Strong Commitment to FATCA Enforcement

GAVELAs I have previously discussed, the Foreign Account Tax Compliance Act (FATCA), was enacted in 2010 and requires that foreign banks and other financial institutions report large accounts held by U.S. account holders. The U.S. government's commitment to enforcing FATCA requirements was demonstrated in the recent indictment of financial managers and others allegedly involved in an offshore money laundering scheme for the benefit of their U.S. clients. The case is the result of a complex sting operation that began in 2012 and involved collaboration efforts of multiple government agencies.

See Miriam L. Fisher and Brian C. McManus, Bandfeild Confirms Aggressive FATCA Enforcement Tactics, JD Supra, Sept. 17, 2014.

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

September 27, 2014 in Estate Planning - Generally, Income Tax, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, September 26, 2014

Divided at Death

Gavel2

In Wilson v. Wilson, a divorced couple was at odds with each other over where to bury the ashes over their 23-year-old son, who was killed tragically in a car crash.  When he died, he left no will, and his parents were the co-personal representatives and sole beneficiaries of his estate.  They agreed to have his body cremated, but could not agree on what to do with the ashes. 

William, the father, petitioned the Florida probate court to declare the ashes ‘property’ to be apportioned between he and his ex-wife, Lili, as the beneficiaries of the estate under the probate code.  Lili did not want the ashes divided for religious reasons, and argued the ashes were not property and not subject to ownership by anyone.    

While courts have recognized that a person has the right to dictate what should be done with his own body when he dies, neither probate nor intestate succession statutes govern what happens to the body of a decedent.  This is because a person does not have a property interest in his own body while he is a live.  Hence, a decedent’s corpse has never been an asset of his estate when he dies.  In this case, the court held that the ashes were not property, and therefore could not be partitioned and divided between his parents. 

In an order appealed from in Wilson, the probate court had given the parents 30 days to try to reach an agreement about what to do and suggested that if they could not figure it out on their own, then the court might appoint a curator to make the decision for them.  Because there is no Florida law specifically governing the disposition of bodily remains, there is not much else the courts could do for them. 

See John T. Brooks and Jena L. Levin, May He Rest In Pieces? Wealth Management, Sept. 24, 2014.

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

September 26, 2014 in Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Man Behind Bitcoin Ponzi Scheme Forced to pay Millions

BagAs one of the most well known cyber-currencies, Bitcoin has attracted many commentators, promoters, and scam artists. Earlier this week, the U.S. District Court for the Northern District of Texas entered an order for Tendon T. Shavers to pay disgorgement of $40 million and imposed a civil penalty of $150,000 for the Bitcoin Ponzi scheme that he ran on investors of Bitcoin Savings & Trust. Shavers targeted his victims through chat rooms and forums intended for those interested in Bitcoin, and operated under the user-name “pirateat40.”

See Jay Adkisson, BitcoinSavings & Trust Comes Up $40 Million Short on Trust Part, Forbes, Sept. 25, 2014.

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

September 26, 2014 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Sanctions Ordered in Wyly Brothers Case

GavelAs I have previously discussed, after a jury found Sam and Charles Wyly guilty of fraud, the SEC and the defense began arguing over the amount of sanctions that should be applied. Yesterday, U.S. District Judge Shira Scheindlin, ordered sanctions of $187.7 million for the Wyly's offshore trust scheme that brought in profits of $553 million for the brothers. The SEC had asked for over $700 million in sanctions, but is considering the ruling a win.

See Sara Jerving, Texas Entrepreneur Wyly Sentenced to Sanctions—Update, Dow Jones Business News, Sept. 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.

September 26, 2014 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, September 25, 2014

Murder Suspect Ordered to Return Father's Estate

Gavel2

When Susan Van Note was charged with murdering her father, authorities discovered that it had only been four months after she was appointed the personal representative of her father’s Missouri estate. 

The Missouri Appeals court said Tuesday that Van Note could be held in the Clay County Jail until she repays at least part of her father’s estate.  The appeals court noted in its eight-page opinion that, as the estate’s personal representative, Van Note had “made numerous distributions of property to herself including real property, personal property, and cash,” and then she had “sold several of the pieces of real property she had distributed to herself during that time.”  Court records estimate Van Note’s father’s estate to be at least $1.6 million. 

It is alleged Van Note shot and stabbed her father’s companion Sharon Dickson in October 2010.  Her father was also shot in the attack, but survived and was transported to the University Hospital in Columbia.  The next day, Van Note showed hospital officials a durable power of attorney document giving her the authority to make her father’s health care decisions, and she said he preferred death rather than being kept alive by medical intervention.  Once life support was withdrawn he died.  Prosecutors later charged Van note with forgery for that document and with first-degree murder.  Her trial is set to begin next February. 

See Bob Watson, Court Upholds Order for Murder Suspect to Return Part of Father’s Estate, News Tribune, Sept. 24, 2014. 

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

Tuesday, September 23, 2014

Wisner's Heirs Lose in Court Battle

4th Circuit

The heirs of philanthropist Edward Wisner have lost their courtroom battle to continue reaping the benefits of a century-old trust that controls 52,000 acres of Louisiana coastline. 

A five judge panel on the Fourth Circuit Court of Appeal ruled unanimously that Wisner intended the Wisner Donation Trust to end on August 4, 2014 and that Mayor Mitch Landrieu need not be removed as the fund’s trustee. 

It remains uncertain as to whether the heirs will appeal to the state Supreme Court or whether the assets of the trust will be divided among the beneficiaries. 

The fund generates around $8 million a year in proceeds, and a large share goes to the city.  The remainder is divided among Wisner’s heirs, the Salvation Army, Tulane University and the former Charity Hospital controlled by LSU. 

See Richard Rainey, Mayor Mitch Landrieu Wins Latest Round in Wisner Trust Case, NOLA.com, Sept. 19, 2014.

September 23, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)