Wills, Trusts & Estates Prof Blog

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

Thursday, October 18, 2018

Paul Allen May be Leaving Largest Estate in Washington History

PaPaul Allen constructed an empire over the 35 years after he left Microsoft that consists of funding local museums and arts festivals, sponsoring brain science and artificial intelligence research institutes, and even owning sports teams and an enormous real-estate portfolio. The disposition of possibly the largest estate in the history of the state of Washington poses many questions of the future of these endeavors, and the Internal Revenue Service will be poring through all of it.

There is familial continuity built in to the structure of Allen’s empire even though he was not married and had no children. His sister, Jody, helped carry out many of his endeavors. But there are early signs of how various pieces of the Allen empire have been subtly restructured to operate more independently. And rumors have already started about possible sales of Allen’s sports franchises, the Seahawks and Portland Trail Blazers.

Large estates such as Allen's have their assets moved into a revocable living trust. Engineered to administer an estate, a trust serves in place of a will, but is not subject to the traditional court process of probate. But the issue of estate taxes remain, with substantial estates facing the possibility of being hit with a combined federal and state estate tax rate as high as 52%.

Douglas Lawrence, a lawyer whose practice includes planning and probate matters at the law firm Stokes Lawrence, says that “It all boils down to: What’s the value of that enterprise?” He expects the process to take a full nine months, and he would not be surprised if the estate asks tax authorities for an extension.

See Matt Day, Paul Roberts, & Benjamin Romano, Paul Allen’s Death Leaves Many Questions Around What’s Likely the Largest Estate in Washington History, The Seattle Times, October 17, 2018.

Special thanks to Jay Brinker (Cincinnati Estate Planning Attorney) for bringing this article to my attention.

October 18, 2018 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Non-Probate Assets, Technology, Trusts, Wills | Permalink | Comments (0)

Article on The New Uniform Directed Trust Act Paves the Way for Creative and Thoughtful Divided Trusteeship

TrusteesJohn Morley & Robert H. Sitkoff recently published an Article entitled, The New Uniform Directed Trust Act Paves the Way for Creative and Thoughtful Divided Trusteeship, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

This chapter summarizes the four areas of practical innovation of the Uniform Directed Trust Act (UDTA). The first is a careful allocation of fiduciary duties. The UDTA’s basic approach is to take the law of trusteeship and attach it to whichever person holds the powers of trusteeship, even if that person is not formally a trustee. Thus, under the UDTA the fiduciary responsibility for a power of direction attaches primarily to the trust director (or trust protector or trust adviser) who holds the power, with only a diminished duty to avoid “willful misconduct” applying to a directed trustee (or administrative trustee). The second innovation is a comprehensive treatment of non-fiduciary issues, such as appointment, vacancy, and limitations. Here again, the UDTA largely absorbs the law of trusteeship for a trust director. The UDTA also deals with new and distinctive subsidiary problems that do not arise in ordinary trusts, such as the sharing of information between a trustee and a trust director. The third innovation is a reconciliation of directed trusts with the traditional law of co-trusteeship. The UDTA permits a settlor to allocate fiduciary duties between co-trustees in a manner similar to the allocation between a trust director and directed trustee in a directed trust. The fourth innovation is a careful system of exclusions that preserves existing law and settlor autonomy with respect to tax planning, revocable trusts, powers of appointment, and other issues.

Prepared for the 2018 Heckerling Institute on Estate Planning at the University of Miami, this chapter is an abridgment of John D. Morley & Robert H. Sitkoff, Making Directed Trusts Work: The Uniform Directed Trust Act, 44 ACTEC L.J. 1 (2018, Forthcoming), available at:


October 18, 2018 in Articles, Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Brothel Owner-Turned-Politician Dennis Hof Found Dead at Love Ranch

NevadaGrand Ol' Party Nevada legislature hopeful Dennis Hof, 72, died at his own brothel Tuesday after a campaign rally the evening before. There has not been any inclination of foul play, simply that he “went to sleep last night and didn’t wake up,” Nye County spokesman Arnold Knightly told the Reno Gazette Journal. His campaign manager, Chuck Muth, confirmed Hof's death on Twitter. “Ron Jeremy found him this morning when he went to wake him to go to a meeting.”

Hof had been running for Nevada Assembly and over the summer bested a Republican incumbent in a state primary for the southern Nevada district. Interestingly, due to Nevada election law, he will still be listed on the ballot in November, but signs will be posted at polling places in the district alerting voters that he has died.

If he manages to win from beyond the grave, the seat would be considered vacant, Nevada deputy secretary of state for elections Wayne Thorley told the Gazette Journal.

See Max Jaeger, Brothel Owner-Turned-Politician Dennis Hof Found Dead at Love Ranch, New York Post, October 16, 2018.

October 18, 2018 in Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0)

Chinese Woman Kills Herself and Children After Husband 'Fakes Death'

HeA 34-year-old Chinese man identified as Mr. He purchased an insurance plan worth one million yuan in early September without informing his wife about it. He had also named his wife as the beneficiary on the plan. Later that month, the car that Mr. He had borrowed was found in a river, though his body was never recovered.

Three weeks later on October 11, the bodies of his 31-year old wife, 4-year-old son and 3-year-old daughter was found in a pond near their home. A suicide note written by the wife had also been posted online before the bodies were found. Mr. He turned himself in to authorities the next day after he issued an online video in which he was crying and saying he had borrowed money to pay for treatment for his 3-year-old daughter, who suffered from epilepsy.

It has been determined that Mr. He had loans of more than 100,000 yuan. Mr. He has been detained on charges of insurance fraud and intentional damage to property, Xinhua police said in a statement.

See Chinese Woman Kills Herself and Children After Husband 'Fakes Death,' BBC, October 17, 2017.

Special thanks to Jay Brinker (Cincinnati Estate Planning Attorney) for bringing this article to my attention.

October 18, 2018 in Current Events, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Wednesday, October 17, 2018

Article on Digitalisation and the Future of National Tax Systems: Taxing Robots?

RoboJoachim Englisch recently published an Article entitled, Digitalisation and the Future of National Tax Systems: Taxing Robots?, Tax Law: Tax Law & Policy eJournal (2018). Provided below is an abstract of the Article.

It is generally assumed that already in the next decade, the use of labour-saving robots with implemented artificial intelligence will lead to a dramatic transition of the workforce in almost all sectors of production and services. The ensuing loss of jobs that have traditionally been performed by a human employees is likely to result at least temporarily in reduced wage tax and payroll tax revenues, increasing income inequality and a disruption of the labour market. Against this backdrop, the idea of taxing the use of robots that replace human workforce, or even taxing the robots themselves, has emerged in politics and scholarly writings. Several justifications have been brought forward by its proponents: the robot tax has been regarded, respectively, as a corollary to a soon-to-be-expected concession of civil law personhood to robots, as a tax on imputed income earned by means of the robot, as an equalisation levy to restore the level playing field regarding the taxation of robots and of human workers, as an instrument for economically efficient wage compression between winners and losers of automation among the human workforce, or as a corrective tax to slow down the disruption of the labour market.

This paper argues that upon a closer look, the case for taxing robots or their use is relatively weak, though, except when specific conditions are met. There is currently no compelling argument to make robots themselves taxable persons, neither for the purposes of income taxation nor for the purposes of indirect taxes on consumption expenditure. Moreover, significant objections can also be raised regarding suggestions to tax the use of robots. Some of the concepts advanced in literature rely on presumptions that are either conceptually flawed or lack credible empirical support. Other proposals have their merits, but when weighing in on their potential benefits, policymakers will also have to take into account that any tax on robots is liable to result in distortions, complexities, and reduced growth. Besides, proponents of a robot tax tend to underestimate how capital mobility and international tax competition could easily undermine the respective objective of such a tax. As a Pigouvian tax, a robot tax will therefore likely have a very limited field of reasonable application. Regarding income redistribution and revenue raising objectives, the taxation of robots should only be considered as a measure of last resort, and in any event a provisional one. Where politically feasible, priority should instead be given to intensified efforts to tax the return on capital investments and on profits in general, including an adequate taxation of ultimate shareholders. In any event, increasing automation should have implications for the international allocation of taxing rights.

October 17, 2018 in Articles, Estate Planning - Generally, Science, Technology | Permalink | Comments (0)

Dissecting Trump’s Inheritance and Tax History

Trump2New York Times reporter Susanne Craig was one of the authors of the 14,000 word expose of President Donald Trump's supposed $413 million inherited fortune and alleged tax evasion. She explains that she is disappointed that the story did not stay in the national spotlight for very long, but that she expects the investigative work the Times put in to play a role in his upcoming bid for reelection.

“We were able to get hundreds of thousands of tax returns, tens of thousands of pages of financial documents,” she said. “And that quest that lasted a year-plus allowed us to attack the foundational lie that Donald Trump is a self-made billionaire.”

POLITICO’s Jack Shafer also had a say on why the story did not dominate headlines. “It’s just that, for want of a better word, it just was not a sexy topic. There are no mistress payoffs. There are no stolen elections. What you have is just a fundamental accountant’s fantasy.”

See Ben White, Dissecting Trump’s Inheritance and Tax History, Politico, October 17, 2018.

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

October 17, 2018 in Current Events, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Using an Intentionally Defective Irrevocable Trust (IDIT) to Gift Your Family Business

GiftIf you are considering making a sizable gift to a family member, how you structure the transaction can have a meaningful impact on the success of the transfer, minimizing taxes, and the control you have even after making the gift.  Many that want to gift an interest in a family business usually have two main concerns: First, they want to make sure their children have the necessary skills and experience to successfully run the business. Second, they want to transfer partial ownership efficiently and in a way that affords them flexibility and helps minimize taxes.

There are several instances where the person making the gift as well as the recipient would benefit more to not receive the gift outright, but rather through a trust. Making a transfer in trust for the benefit of the child or family member can reduce many risks and concerns that the person making the transfer may have. If there are any worries that the person receiving the interest in the business will act irresponsibly, or lose the business to divorce or other debts, reserving it in an IDIT trust would solve these issues.

An intentionally defective irrevocable trust or IDIT (also referred to as an intentionally defective grantor trust or IDGT) is one of the tools that is frequently used for succession planning of closely-held businesses.These trusts provide protection against the beneficiary’s creditors and help minimize the chance of the beneficiary’s spouse obtaining any interest in the business as a result of a divorce. An IDIT can also provide flexibility by allowing the owner to swap assets transferred to the trust for other assets tax free.

See Robert Pagliarini, Using an Intentionally Defective Irrevocable Trust (IDIT) to Gift Your Family Business, Forbes, October 16, 2018.

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

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

October 17, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Ongoing CLE: 2018 National Conference on Special Needs Planning and Special Needs Trusts

CLECelebrating 20 years, the 2018 National Conference on Special Needs Planning and Special Needs Trusts is the premier conference for you and your colleagues to attend! This conference is a must for anyone working in the field of special needs planning. The conference offers three pre-conference intensives Tax, Pooled SNTs and Veterans Benefits along with the two-day national conference.

Pre-Conferences | Wednesday, Oct. 17, 2018

  • Tax Intensive: This full-day program, with breakouts, will focus on the tax issues in special needs planning from experts in the field of tax and planning from across the country.
  • Pooled Trusts Intensive: This full-day program, with breakouts, will focus on issues for pooled trusts administrators, attorneys and others who work with pooled trusts.
  • Veterans Benefits Intensive: This half-day program, will feature three hours of training on veterans benefits with the Honorable Michael P. Allen, U.S. Court of Appeals for Veterans Claims, and Professor Stacey-Rae Simcox, Stetson University College of Law. It will also feature an overview of the Office of General Counsel of the Department of Veterans Affairs by the VA General Counsel, and an update from Chief Judge Robert N. Davis, U.S. Court of Appeals for Veterans Claims.

VA accreditation requires approval from a State bar association and must also satisfy the requirements of 38 C.F.R. § 14.629(b)(1)(iii), Stetson University College of Law will apply to the state of Florida for CLE credit and the agenda will meet the requirements of 38 C.F.R. § 14.629(b)(1)(iii). Attendees will then be required to submit on their own for VA accreditation. 

National Conference | Oct. 18–19, 2018

  • The conference will start on Thursday and Friday mornings with general sessions on a variety of important topics, followed by breakout sessions on cutting-edge topics in the afternoon. Friday morning starts with a presentation by Samara Richardson, associate commissioner for the Office of Income Security Program (via video conference) followed by the not-to-be-missed experts panel. The conference closes with the popular The Update by Robert W. Fechtman and Robert B. Fleming.

October 17, 2018 in Conferences & CLE, Current Events, Elder Law, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Tuesday, October 16, 2018

CLE on Revocable Living Trusts from Start to Finish

CLEThe National Business Institute is holding a video webcast entitled, Revocable Living Trusts from Start to Finish, on Thursday, November 1, 2018, at 10:00 a.m. to 5:00 p.m. Central. Provided below is a description of the event.

Program Description

Draft Better Revocable Living Trusts

In this engaging overview, our expert estate planning attorney faculty will analyze the most popular and the most effective revocable living trust structures. Discover when a revocable living trust is a better alternative than a simple will, which trust to choose and what provisions must and should be included to give it the desired power. Register today!

  • Compare traditional estate planning with revocable trust planning to offer your clients the best alternative in each specific circumstance.
  • Get practical tips for making the best use of Qualified Terminable Interest Property Trusts.
  • Protect the interests of both spouses - draft better marital deduction trusts.
  • Review sample trust materials to avoid errors and save time drafting yours.
  • Protect your professional reputation with legal ethics advice from experienced attorneys.

Who Should Attend

This fundamental legal course breaks down the use of revocable living trusts into simple tips and tactics that will benefit attorneys. It may also be of interest to accountants and CPAs, estate planners, trust officers, and paralegals.

Course Content

  1. Key Estate Transfer Laws
  2. Revocable Living Trust Planning vs. Traditional Estate Planning
  3. Ethics in Estate Planning
  4. RLT Structures
  5. Drafting Tips and Clauses
  6. Marital Deduction Trusts in Detail
  7. Funding the Revocable Trust
  8. Common RLT Mistakes to Avoid

October 16, 2018 in Conferences & CLE, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (1)

Microsoft Co-Founder Paul Allen Dies of Cancer at 65

PaPaul Allen, co-founder of Microsoft, died from complications of non-Hodgkin’s lymphoma on Monday afternoon. Allen was 65 years old and revealed earlier this month that he was receiving treatment for the disease, the same disease he had fought and conquered in 2009.

Allen ranked among the world’s wealthiest individuals. As of Monday afternoon, he ranked 44th on Forbes’ 2018 list of billionaires with an estimated net worth of more than $20 billion. He was also the owner of the Seattle Seahawks and the Portland Trail Blazers. He was an avid electric guitarist who enjoyed jamming with celebrity musicians such as Mick Jagger and Bono, and he funded the Experience Music Project in Seattle (now dubbed the Museum of Pop Culture), devoted to the history of rock music and dedicated to his musical hero Jimi Hendrix.

Vulcan CEO Bill Hilf said, “All of us who had the honor of working with Paul feel inexpressible loss today.” Vulcan is a network of philanthropic efforts and organizations that Allen utilized to support research in artificial intelligence and new frontier technologies. The group also invested in Seattle’s cultural institutions and the revitalization of parts of the city.

Bill Gates, who co-founded Microsoft with Allen, said that “personal computing would not have existed without him.”

See Christine Wang, Microsoft Co-Founder Paul Allen Dies of Cancer at Age 65, CNBC, October 15, 2018.

October 16, 2018 in Current Events, Estate Planning - Generally, Sports, Technology | Permalink | Comments (0)