Wills, Trusts & Estates Prof Blog

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

Thursday, October 19, 2017

Article on Wills & Trusts

Beyer_TeachingGerry W. Beyer recently posted an Article entitled, Wills & Trusts, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

This article discusses judicial developments relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters during the Survey period of December 1, 2015 through November 30, 2016. The discussion of most cases includes a moral, that is, the important lesson to be learned from the case. By recognizing situations that resulted in time-consuming and costly litigation in the past, the reader may be able to reduce the likelihood of the same situations arising with his or her clients.

October 19, 2017 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

Wednesday, October 18, 2017

Article on The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts

Bulk-cash-smuggling-photoAdam Hofri-Winogradow recently published an Article entitled, The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts, 68 Hastings L.J. 931 (2017). Provided below is an abstract of the Article:

Recent revelations on the use of fiduciary services raise concerns regarding their use for tax and creditor avoidance. Yet given the secrecy shrouding much of the fiduciary industry, we do not know which fiduciary services are used for such purposes, and to what extent. Shining a light on a particularly obscure part of the industry, this Article presents and analyzes the results of the first-ever global survey of professional service providers to private donative trusts, having obtained 409 usable responses from professionals in 82 jurisdictions, amplified by twenty-five interviews conducted with professional trust service providers in five jurisdictions. I report new data on four controversial features of current trust practice: (1) perpetual and extreme long-term trusts; (2) trust terms exonerating trustees from liability to beneficiaries; (3) tools rendering beneficiaries' entitlements inaccessible to their creditors; and (4) the control of trusts by their creators.

I find that trusts drafted to subsist for more than a century are fairly common, especially offshore, but many such trusts are not in fact likely to survive that long. Trustee exculpatory terms are now standard in donative trusts serviced by professionals, with most settlors neither demanding nor receiving any quid pro quo for their inclusion. Anti-creditor techniques protecting beneficiaries' entitlements are even more ubiquitous than trustee exculpatory terms, particularly in trusts serviced by U.S.-resident providers. Many protected beneficiaries are not less able than the average person to take care of their financial affairs. Finally, express reservation of powers by trust settlors is a majority phenomenon in the United States, but a minority one elsewhere. The actual control of trusts by their settlors is likewise far more common in the United States than elsewhere. I conclude the Article with recommendations for law reform that makes trusts likelier to benefit their beneficiaries and less likely to avoid duties owed to creditors and the state.

October 18, 2017 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, October 17, 2017

Conversion of Non-grantor Trust To Grantor Trust Not Taxable

Convert-buttonIn a private letter ruling, the IRS decided a number of issues relating to the conversion of a non-grantor trust to a grantor trust. The taxpayer proffered a number of questions: 1) whether such a transfer was taxable, 2) if the transfer would be considered self-dealing, and 3) if the transfer would result in a charitable deduction. The IRS ruled that the conversion was not a taxable property transfer, was not self-dealing, and that it would not result in a charitable deduction for the grantor.

See Mary Ellen Meara, Conversion of Non-grantor Trust To Grantor Trust Not Taxable, Withum, 2017.

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

October 17, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Trust Decanting: a Critical Perspective

How-to-decant-wine-01-950x633Stewart E. Sterk recently published an Article entitled, Trust Decanting: a Critical Perspective, 38 Cardozo L. Rev. 1993 (2017). Provided below is an abstract of the Article:

Trust decanting has some clear benefits. When the drafting lawyer has made a mess of the trust, decanting will sometimes enable the trustee to correct mistakes and to clarify ambiguities without the need for costly judicial proceedings. Decanting also enables trustees of some older trusts to avoid investment inefficiencies that were not well-understood when their trusts were drafted. In emphasizing these benefits, the proponents of decanting have largely ignored two significant issues raised by the decanting movement.

The first issue is whether a statutory grant of decanting power, when the trust instrument does not authorize decanting, conflicts with basic principles of testamentary freedom. Although the justification for decanting rests on its potential to effectuate the settlor's purposes, it is not always easy for a trustee to determine the intent of a now-dead trust settlor when the settlor did not memorialize that intent in the trust instrument. The trustee, who may have been selected for reasons other than intimate knowledge of the settlor's wishes, will not always be in an optimal position to assess that intent. Moreover, the trustee's own interests may cloud its judgment about whether to decant.

The second issue, which is in some tension with the first, is whether decanting enables trustees to effectuate the settlor's intent when, as a matter of policy, there is no good reason for exalting the settlor's presumed intent. The legal system has long tolerated the distributional inequities generated by trusts in large measure because of the incentives the trust device provides to potential settlors: people with wealth and talent may engage in more productive activity, and may partake in less frivolous consumption, if they know they can provide for future generations without worrying about the debt collector or the tax collector. But even if we assume that these efficiency considerations outweigh distributional inequities, is there any reason to enable trust beneficiaries to extract newly available benefits that could not possibly have influenced the trust settlor?

This Article: addresses these questions. After Part I's survey of trust law reforms that provided the impetus for the decanting movement, Part II explores the origins, justifications, and mechanics of trust decanting. Parts III and IV, the heart of the Article: , establish that the extraordinary breadth of decanting statutes risks frustrating the intent of settlors and enables trustees to impose external costs without generating commensurate social benefits. Part V concludes with a discussion of the potential obstacles to reform.

October 17, 2017 in Articles, Estate Planning - Generally, Estate Tax, Professional Responsibility, Trusts | Permalink | Comments (0)

Friday, October 13, 2017

Hugh Hefner, Role Model? He Was When It Came To Estate Planning

151207113336-hugh-hefner-playboy-playmates-exlarge-169When listing potential role models, few people would consider Hugh Hefner as a top contender for a spot. But, as is often the case, context can change everything. Though normally appearing surrounded by buxom blondes and pictured in a bathrobe and captain’s hat, Hefner’s laissez-faire persona worked to obscure his estate-planning acumen. Hefner’s business and real estate deals left him with a rent-free residence, a million-dollar-a-year allowance, and a final estate plan that seems impenetrable to contest. Though he appeared to be the quintessential playboy, Hefner’s acuity left his heirs with a solid inheritance through a meticulously designed estate plan.

See Danielle and Andy Mayoras, Hugh Hefner, Role Model? He Was When It Came To Estate Planning, Forbes, October 9, 2017.

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

October 13, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, October 9, 2017

Hefner Timed Death to Launch Playboy Reboot for Modern Era

Hef_bunniesAmidst the rabble of speculation and rumor, time is clearing away the idle speculation that Hugh Hefner died penniless and without a solid estate plan. Apparently, the Playboy mogul has had an ironclad succession plan in place for over 25 years. In 1991, he transferred the Playboy mansion, his art collection, clubs, intellectual property, and the company into a trust. Hefner later began transferring Playboy shares purchased from other stakeholders into a smaller, separate trust. During his life, the trustees acted as a de facto board of directors for Playboy and sought fit to grant Hefner the lifetime title of Editor in Chief and a healthy $1 million-per-year stipend. While the fate of the Playboy brand is uncertain under Hefner’s son, Cooper, there remains a substantial empire to manage.

See Scott Martin, Hefner Timed Death to Launch Playboy Reboot for Modern Era, Wealth Advisor, October 1, 2017.

Special thanks to Mark J. Bade for bringing this article to my attention.

October 9, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Saturday, October 7, 2017

CLE on Estate Administration Boot Camp

0000000 CLEThe National Business Institute is holding a conference entitled, Estate Administration Boot Camp, which will take place on Tuesday, October 10, 2017, at the Courtyard by Marriott San Luis Obispo in San Luis Obispo, CA. Provided below is a description of the event:

Program Description

Everything You Need to Know About Effectively Administering an Estate

Are you fully confident in your knowledge of the latest court and tax rules and the most effective transfer tools to ensure each client's estate is laid to rest according to the decedent's wishes, with minimal tax burden? This comprehensive 2-day instruction will give you all the skills you need to administer estates that include trusts and/or business interests without a hitch. Register today!

  • Don't miss any crucial notice and filing requirements when opening the estate - learn what must be done right away.
  • Get helpful forms and checklists that will help you in administration.
  • Understand how income and estate tax deductions interact and find the most advantageous way to structure the tax returns
  • Learn how to use disclaimers more effectively.
  • Clarify what must be done when the trust becomes irrevocable.
  • Protect your professional reputation with a practical legal ethics guide focused on trusts and estates practice.
  • Prevent mistakes in final petition and ensure each estate is closed quickly and without disputes.

Who Should Attend

This two-day, basic level seminar is designed for:

  • Attorneys
  • Accountants/CPAs
  • Certified Financial Planners
  • Trust Officers/Administrators/Managers
  • Paralegals

Course Content

DAY 1

  • Forms of Administration and When They are Used
  • First Steps and Notices, Executor Duties, Opening the Estate
  • Marshalling the Assets
  • Handling Debts and Claims Against the Estate
  • Spouse Elective Share and Disclaimers
  • Key Intestacy Laws You Must Know
  • Trusts That Affect Estate Administration

DAY 2

  • Income Tax Returns
  • Handling Distributions
  • Legal Ethics in Estate Administration
  • Estate and Trust Contests, Disputes, Challenges
  • Business Interests in Estate Administration
  • Portability and Estate, Gift, GST Taxes
  • Closing the Estate and Final Accounting

Continuing Education Credit

Continuing Legal Education – CLE: 12.00 *

International Association for Continuing Education Training – IACET: 1.20

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 14.00 *

* denotes specialty credits

October 7, 2017 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Intestate Succession, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Friday, October 6, 2017

What Your Estate Planning Clients Should Do in Response To Trump's Tax Plan

37152The Trump administration’s plan for tax reform is far from unequivocal, and this ambiguity leaves estate planners in a difficult position. But while the future remains unknown, there are a few suggestions planners can offer clients to deal with uncertainty. The first critical step is to make sure estate plans maintain flexibility. Consider granting another individual an expanded power of attorney in order that he may make the necessary changes to the principle’s estate plan if tax reform brings about significant changes. In a similar vein, independent trustees of irrevocable trusts may be granted additional powers so they can act to reduce future tax exposure. Regardless of possible tax reform outcomes, estate planning will remain important to those wanting to distribute assets to children prior to death, as those assets will likely face gift tax consequences unless moved to a trust.

See Carol A. Harrington, Ellen K. Harrison, & Carlyn S. McCaffrey, What Your Estate Planning Clients Should Do in Response To Trump's Tax Plan, Financial Advisor, September 29, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) & Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

October 6, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, October 4, 2017

Practical Issues When an IRA Owner Dies

8When the owner of an IRA passes away, many complicated legal issues can become problematic for the beneficiary. In many instances, advisors and planners handle these issues inappropriately. The myriad of possible legal missteps can potentially lead to costly consequences. Problems may be especially potent when the decedent’s spouse is the sole beneficiary of the IRA. In this case, the spouse may be in shock, or may be having an extremely difficult time processing the loss of the beloved and may be at a loss as to what steps they need to take next.

For an advisor, the solution in this scenario is to remain diligent. Upon the death of a client, it is most prudent to find out if the individual owned IRAs in order to assure adherence to the post-death distribution requirements. Overall, it is important to make sure someone is overseeing the process in order to ensure that all decisions are thoughtfully made and carried out.

See Seymour Goldberg, Practical Issues When an IRA Owner Dies, Ed Slott’s IRA Advisor, October 2017.

October 4, 2017 in Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Tuesday, October 3, 2017

CLE on Advanced Estate and Trust Administration

0000000 CLEThe National Business Institute is holding a conference entitled, Advanced Estate and Trust Administration, which will take place on Wednesday, October 11, 2017, at the Doubletree Hotel Downtown in Tulsa, OK. Provided below is a description of the event:

Program Description

Tackling the Toughest Issues You're Likely to Face in Estate Administration

In this fast-paced, incisive course, seasoned attorney faculty skip the basics and get right to the heart of the complex and diverse problems and peculiarities that make up the estate administration process. Get expert guidance on tough inventory issues, trust administration, claims and insolvency, taxes, and many more. Increase your legal mastery - register today!

  • Clarify what's recoverable under Medicaid estate recovery, and when and how it can be contested.
  • Effectively handle discretionary trust distributions in estate planning.
  • Find out how to locate and value digital assets.
  • Distinguish between mineral rights and royalties, and learn how to distribute them.
  • Get a tax law update and realign your practices with the new post-ATRA realities.
  • Tackle contentious beneficiary disputes in and out of court.

Who Should Attend

This advanced-level estate administration seminar is designed for:

  • Attorneys
  • Personal Representatives
  • Trust Officers
  • Paralegals
  • Accountants and CPAs
  • Tax Preparers
  • Enrolled Agents
  • Estate and Financial Planners
  • Investment Advisers

Course Content

  1. Tough Inventory and Appraisal Issues
  2. Post-Mortem Trust Administration
  3. Medicaid Recovery Claims Against the Estate
  4. Creditor Claims, Disputes, and Insolvency
  5. Legal Ethics
  6. Tax Planning and Reporting
  7. Estate Litigation
  8. Other Complex Estate Administration Issues

Continuing Education Credit

Continuing Legal Education – CLE: 7.00 *

Financial Planners – Financial Planners: 7.00

International Association for Continuing Education Training – IACET: 0.60

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 7.00 *

Professional Achievement in Continuing Education – PACE: 7.00 *

* denotes specialty credits

October 3, 2017 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0)