Wills, Trusts & Estates Prof Blog

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

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Friday, August 29, 2014

Article on How Creating Trusts for Student-Athletes Can Save the NCAA From Itself

Jonathan StromJonathan Strom (J.D./M.B.A. Candidate, Texas Tech University School of Law, May 2015) recently published a comment entitled, Putting Our Trust in the National Collegiate Athletic Association (NCAA): How Creating Trusts for Student-Athletes Can Save the NCAA From Itself, Estate Planning and Community Property Law Journal, Vol. 6 Bk. 2, Summer 2014. Provided below is an excerpt from the introduction of the comment:

“[A]mateurism is not a moral issue; [rather,] it is an economic camouflage for monopoly practice.” This is a harsh reality for the current state of college athletics. Finding the proper balance between maintaining amateurism status and compensating student-athletes is becoming a more controversial issue, with players like Johnny Manziel and Jadeveon Clowney brining in millions of dollars in revenue for their respective schools. Recent lawsuits have forces the National Collegiate Athletic Association (NCAA) to go into full defense mode, in hopes to maintain its current status quo.

This Comment addresses the recent issues facing the NCAA; specifically, it discusses the concern surrounding the O’Bannon lawsuit and its impact on player compensation. The O’Bannon lawsuit pertains to the use of student-athletes’ likeness in video games and massive television contracts for profit. Pulitzer Prize winner Taylor Branch ardently argues for compensating student-athletes. Branch asserts that student-athletes deserve compensation apart from college scholarships. Clearly, NCAA change is imminent whether it comes through restructuring or through the court system.

This comment presents a proposal for implementing trusts for student-athletes that will address the issue of compensation. The proposal for the creation of trusts for student-athletes allows the NCAA to address the issue of compensation and still maintain its core objectives. . . .

August 29, 2014 in Articles, Estate Planning - Generally, Non-Probate Assets, Sports, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, May 11, 2014

Easements Score Big In Tax Court


Former owner of the Tampa Bay Buccaneers, Hugh Culverhouse Jr., now owns Parker Ranch Holdings, LLC (PRH).  In 2006, PRH claimed a charitable deduction of approximately $24 million for the donation of an easement on 82 acres of land to Sarasota County, Florida.  The land is presently being used for a public park, community garden, and conservation area. 

Although the IRS was willing to stipulate that the easement was worth something (a contrary position from other easement donation cases), it objected to the amount of the deduction.  Although the Tax Court did not allow the entire deduction, they allowed most of it--$19 million.  The court ruled that 20% accuracy-related penalty did not apply.

One of the reasons the court allowed this deduction is because conservation easements are rarely bought and sold.  Problems arise in valuing the property by establishing what the property could potentially be worth.  In some cases, the IRS has found that easements were worthless, since they did not significantly add to existing restrictions. 

The Tax Court’s decision might make people rethink their involvement in conservation easements.

See Peter Reilly, Former Tampa Bay Buccaneers Owner Scores Touchdown in Tax Court, Forbes, May 8, 2014. 

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

May 11, 2014 in Income Tax, Sports | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 7, 2014

Is Sterling's Life Worth Insuring?


On the face of it, Donald Sterling could be a very attractive life insurance candidate.  The 80-year-old Sterling’s net worth is $1.9 billion while the Los Angeles Clippers are worth around $430 million by itself.  The premium for his policy would probably be very high, leading to a huge case for a life insurance producer willing to take the risk. 

However, do his more reprehensible qualities pose too many underwriting challenges?  His many legal entanglements, involvement with prostitutes, and stress-induced maladies from a bitter marriage may just be too much.

See Steven Kobrin, Would You Sell Life Insurance to Donald Sterling?, Producers Web, May 2, 2014.

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

May 7, 2014 in Current Affairs, Non-Probate Assets, Sports | Permalink | Comments (1) | TrackBack (0)

Sunday, May 4, 2014

Sterling May Be Worth More Dead Than Alive

Donald sterling

The inheritance tax is likely to have a major impact on the estate of disgraced Clippers’ owner Donald Sterling.

If Sterling sells the Clippers for an estimated $1 billion, he will pay an estimated $350 in capital gains and state taxes.  Then upon his death, his estate would pay an inheritance tax of about $250 million on the remaining $650 million.  This would leave his estate and heirs a mere $400 million in after tax proceeds.

If the Clippers were sold after his death, the estate would pay only around $400 million in inheritance tax as the tax basis of the Clippers would be stepped up to market value.  The net proceeds to his estate would then be $600 million, $200 million more than if the Clippers were sold while he was alive.  However, there are many legitimate ways the estate could save on inheritance taxes by adjusting the value of the Clippers.

See Jack Humphreville, Donald Sterling: Worth More Dead Than Alive, City Watch, May 2, 2014. 

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

May 4, 2014 in Estate Administration, Estate Tax, Income Tax, Sports | Permalink | Comments (1) | TrackBack (0)

Tuesday, April 1, 2014

New Twist in Case of Lorenzen Wright Estate


The Tennessee Court of Appeals recently ruled that Shelby County Probate Court Judge Robert Benham overstepped his authority in the battle over murdered NBA star Lorenzen Wright’s estate.

Benham appointed a guardian to investigate lavish spending by ex-wife Sherra Wright.  Within ten months, Sherra Wright spent almost all of the $1 million in proceeds she received from an insurance policy on her husband’s life.  The appeals court vacated Benham’s judgment directing the guardian ad litem to take actions, ruling he “acted beyond the scope of (his) jurisdiction.”

See Marc Perrusquia, BRIEF: Local Judge Overstepped Authority in Lorenzen Wright Estate Case, Appeals Court Says, Insurance News Net, March 28, 2014.

April 1, 2014 in Current Affairs, New Cases, Sports | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 11, 2014

Article on Estate Planning for Athletes


Ashley Lucas (2014 J.D. Candidate, Texas Tech University School of Law) recently published an article entitled, The Game of Russian Roulette: A Practitioner’s Guide to Protecting Professional Athletes from “The Final Head Blow” During the Estate Planning Process, 6 Est. Plan. & Cmty. Prop. L.J. 131(Fall 2013).  Provided below is the introduction to her article:

It is certainly no secret that anytime an athlete sustains a blow to the head, it is dangerous.  Unfortunately, the win-at-all-cost mentality in today’s sports world, especially at the professional level, entices many players to ignore their injuries, either by playing through the pain or by playing hurt.  There is no denying that it may be of no consequence for players to be tough and shake off certain types of injuries.  However, as national headlines blare about head injuries in professional sports, and research continually indicates that recurring head injuries trigger the early onset of neurodegenerative disease, especially among collision-and contact-sport athletes, it is inescapably clear that the risks and long-term consequences associated with sports-related brain injuries demand our undivided attention.

Over the past few decades, sports have become increasingly popular in the United States; this rise in popularity has, in effect, exposed a sizeable portion of our population to the risk of brain injury.  According to the United States Centers for Disease Control and Prevention (CDC), there are approximately 300,000 sports-related traumatic brain injuries each year.  Other studies show that approximately 1.6 to 3.8 million athletes in the United States suffer a traumatic brain injury related to participation in sports activities.  In today’s sports, not only are athletes, at all levels, bigger and faster, but also, they are much stronger than they were in the past.  Because athletes can create more power and speed these days, they contact their opponents with a force, unlike ever before, and with harder hits comes more head trauma.  While full-blown concussions are certainly a cause for concern, they are just part of the issue.  Recent findings in concussion research indicate “that repetitive small hits to the head can cause as much damage as big blows . . . They all count.”

The prospect of long-term neurological decline among professional athletes is undoubtedly a cause for concern.  Such concern is worthy of estate planning professionals’ attention.  Estate planners must be cognizant of the fact that a growing number of professional athletes suffer from neurodegenerative diseases, and although the patterns of progression of the different diseases may vary among athletes, most neurodegenerative diseases progressively attack the central nervous system and cause long-term, life-altering consequences. 

The purpose of this article is to bring awareness to the long-term health implications associated with head injuries sustained by athletes who participate in different collision and contact sports.  Not only does this article aim to educate estate planning attorneys of the importance of planning for the unfortunate possibility of a client’s long-term neurological decline, but it also seeks to offer guidance to those working with professional athlete clients because until now, there has been an absence of direction in this area.  Part III of this article provides background information about various collision and contact sports and discusses various professional athletes who have suffered from the effects of traumatic brain injuries.  Next, Part IV provides information about various neurological studies of former professional athletes, each of which augments the evidence linking head injuries to the prospect of long-term neurological decline.  Part V extends the evidence to illustrate the impact that sports-related head injuries have on the estate planning community.  Finally, Part VI highlights the fact that current estate planning tools do not adequately address the potential issue that professional athletes face, and it provides questions that practitioners can incorporate into their estate planning strategies to better protect this class of individuals.

March 11, 2014 in Articles, Estate Planning - Generally, Sports | Permalink | Comments (0) | TrackBack (0)

Monday, February 10, 2014

Team USA’s Taxes


Many national Olympic committees pledge money to anyone who can bring home a medal.  In the United States, gold medalists earn $25,000, silver medalists earn $15,000, and bronze medalists earn $10,000.

Many developed nations choose not to tax Olympians for these prizes, but the U.S. does tax income earned abroad.  Olympians in the top tax bracket, such as Shaun White or Team USA hockey players, would pay $9,900 on a gold medal while those in the bottom tax bracket would pay $2,500.

Rep. Blake Farenthold (R-TX) recently introduced the Tax Exemption for American Medalists Act, which would waive these taxes. 

See Eric Freeman, Here Are the Taxes Team USA Medalists Can Expect On Their Prize Money, Yahoo!, Feb. 8, 2014.

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

February 10, 2014 in Income Tax, Sports | Permalink | Comments (0) | TrackBack (0)

Sunday, February 2, 2014

Estate Planning Mistakes Made by NFL Players


In honor of today’s big game, here are 6 of the biggest estate planning mistakes NFL players make:

  1. Living in the present.  NFL players often experience a quick burst of wealth during their typically short careers.  And this burst of wealth is going to have to last them for a lifetime.  Advisers need to convince their clients to start working on their financial plan now.
  2. Choosing the wrong team of advisors.  Many times, pro athletes rely on friends or family to guide their financial decisions, which can lead to disaster.  Instead, players should find a reliable agent, attorney, CPA, financial planner, and insurance specialist, and bring them all together to create a “single voice.”
  3. Spending outside of their means.  NFL players that tend to live outside their means need to be educated on basic financial concepts like liquidity and cash flow management.  They also need to understand that instead of living like a king for five years, they can live like a prince for the rest of their life.
  4. Not staying liquid.  Because careers can often be cut short due to injuries or being cut from a team, NFL players need to have instantly accessible cash.
  5. Not protecting assets.  Creditor risk is real.  NFL players need to protect their material assets that could potentially be targeted by creditors.
  6. Failing to see the big picture.   Some NFL players never evaluate their strengths and skills outside of football.  Advisers need to get players thinking about their second careers.

See Maria Wood, The 6 Biggest Estate Planning Mistakes NFL Players Make, Life Health Pro, Jan. 27, 2014.

February 2, 2014 in Estate Planning - Generally, Sports | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 15, 2014

Judge Knocks Out Settlement


A U.S. District Court judge has denied initial approval of the $760 million concussion settlement between many former football players and the NFL.

Citing concerns about the sufficiency of the funds, Judge Anita Brody has placed a demand on attorneys to come up with more substantive documentation.  She was not satisfied that the settlement would cover the medical expenses of the 4,500 players involved.

See Jay Busbee, Judge Denies Initial Approval of $760 Million Concussion Settlement, Yahoo!, Jan. 14, 2014.

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

January 15, 2014 in New Cases, Sports | Permalink | Comments (0) | TrackBack (0)

Monday, December 16, 2013

Former NFL Player's Body Exhumed For CTE Testing

JovanFormer linebacker, Jovan Belcher's body was exhumed so that his brain could be studied for the existence of Chronic Traumatic Encephelopathy (CTE). Belcher was responsible for killing the mother of his child and committing suicide afterward over a year ago. The doctor who helped discover CTE said he would be willing to "bet one month's salary" that Belcher suffered from CTE. The delay in the testing could be attributed to the concussion settlement, which provides money to retired players with serious cognitive problems.

See Mike Florio, Jovan Belcher's Body Exhumed For Brian Examination, NBC Sports, Dec. 14, 2013.

December 16, 2013 in Current Events, Sports | Permalink | Comments (0) | TrackBack (0)