Friday, October 21, 2016
Money is a true motivator, but how do you draft a will leaving inheritances that still encourages your children to work hard? This is becoming more and more of a concern as the baby-boomer generation is set to pass on $59 trillion, the biggest wealth transfer ever. The top American tycoons suggest cutting your children out all together because large sums of money works more for injury than good. Striking a balance between spending and saving is undoubtedly difficult when a massive inheritance comes your way. One economists argues that varying the level of inheritance to each child by creating incentive trusts is beneficial for forcing them to take your wishes seriously. These trusts include clauses that encourage educational success, hard work, and good behavior. Whatever the strategy, the upcoming years will stress the need for incentivizing inheritances.
See Richard Davies, How to Make Inheritance an Incentive, 1843 Magazine, October 13, 2016.
Thursday, October 20, 2016
Reid K. Weisbord recently published an Article entitled, A Catharsis for U.S. Trust Law: American Reflections on the Panama Papers, 116 Colum. L. Rev. Online 93 (2016). Provided below is an abstract of the Article:
In April 2016, a massive leak of confidential legal documents, now known as the “Panama Papers,” attracted international scrutiny and condemnation of offshore asset protection trust arrangements. Such trusts are legal to create but notoriously susceptible to abuse by wrongdoers seeking to hide assets from the peering eyes of tax collectors and creditors. The Panama Papers offer compelling evidence of something long suspected but difficult to prove for lack of transparency — even though asset-offshoring techniques may be used for legitimate purposes, they are, in fact, too often abused as a cover for criminal activity and tax evasion. In response to the leak, the U.S. Department of Justice and several foreign law enforcement agencies opened investigations into the financial improprieties uncovered by the Panama Papers. However, before criticizing offshore trust havens for capitalizing on fraudulent behavior at the expense of nonresident claimants, U.S. state lawmakers should first reflect upon the recent wave of domestic trust legislation authorizing similar conduct here at home. This Piece is a patriotic catharsis lamenting the recent trend of U.S. trust law to sanitize some of the most controversial and widely abused offshore trust practices and urges lawmakers to take steps toward its reversal. Three aspects of U.S. trust law, in particular, have authorized asset protection techniques similar to those permitted in offshore trust havens: (1) self-settled asset protection trusts, (2) nonresident tax shelters, and (3) trust secrecy. The Piece concludes with a discussion of existing federal law protections against domestic trust abuse and recommendations for reform.
Wednesday, October 19, 2016
Putting your home and other assets in a living trust can make things financially and emotionally easier on your loved ones. A living trust is a legal document that holds your assets in trust while alive and transfers those assets to your beneficiaries at death. This type of trust can either be revocable or irrevocable, depending on the amount of control the creator of the trust desires. On the other hand, a will goes into probate, requiring court supervision of your property over a longer period of time. Diligently exploring your estate planning options can help make the process more manageable.
See Why Should I Put My Home in a Living Trust?, Fox News, October 5, 2016.
Tuesday, October 18, 2016
The American Law Institute is holding a CLE entitled, Estate Planning for the Family Business Owner, which will take place Thursday–Friday, November 3–4, 2016, at Dallas Marriott City Center in Dallas, Texas. Provided below is a description of the event:
Don’t miss this comprehensive conference on estate planning for family businesses! It will help you become better prepared to recognize and evaluate family business issues and, as a result, better skilled than ever at designing customized succession plans for your family business clients.
Featuring updates on the hottest topics, including the new proposed Section 2704(b) regulations, this nationally recognized program examines:
- Income tax issues and planning strategies for business entities
- Incentive or deferred compensation
- Practical uses of life insurance for the family business
- Buy-sell agreements
- Valuation of a family business
- Family rivalries and divisive reorganization planning
- Trust advisors, trust protectors for business interests
Register today for this webcast or in-person program on November 3-4. You can also register two or more from your organization and SAVE!
Thursday, October 13, 2016
S.I. Strong recently published an Article entitled, Institutional Approaches to Trust Arbitration: Comparing the AAA, ACTEC, DIS, and ICC Mechanisms, Arbitration of Trust Disputes: Issues in National and International Law 99 (2016). Provided below is an abstract of the Article:
Arbitration of internal trust disputes (meaning disputes involving trustees and beneficiaries and relating to the inner workings of the trust) has become increasingly common in recent years, both as a result of legislation and decisions of national courts. A number of arbitral institutions have also adopted provisions tailored to the arbitration of these types of disputes. However, these rules have not often by discussed by experts in trust or arbitration law.
This chapter considers several specialized rule sets that can be used in matters involving internal trust disputes and compares the relative benefits of the different mechanisms. Two regimes - one sponsored by the American Arbitration Association (AAA) and one created by the International Chamber of Commerce (ICC) - are already in place. Another approach has been proposed by the American College of Trust and Estate Counsel (ACTEC), although it has not yet been adopted by any arbitral institution or legislature. The final mechanism has been adopted by the German Arbitral Institution (DIS), but technically refers to internal shareholder (corporate) disputes. However, the DIS Supplementary Rules for Corporate Law Disputes provide some interesting insights into trust arbitration and are therefore discussed herein.
This chapter is part of a larger collection of essays discussing arbitration as a matter of both national and international law. Both the chapter and the book in which it is found consider trust arbitration from both a trust law and arbitration law perspective, which is critical to a proper understanding of the issues at stake. The chapter and the book also discuss trust arbitration as a matter of domestic and international law, thereby recognizing the differences in national approaches to trust arbitration while also respecting the importance of offshore jurisdictions in trust law and practice.
Trust arbitration is a new and exciting area of law, practice and scholarship, and one that is expected to expand rapidly in the coming years. This chapter provides an important introduction to the comparative, international and interdisciplinary issues that arise when institutions seek to support settlors who require arbitration of trust-related disputes thorough inclusion of an arbitration provision in a trust.
A charitable lead trust (CLT) can help balance your transfer of wealth and charitable goals while minimizing taxes. A CLT is an irrevocable trust that is established during the donor’s lifetime or at death, providing a stream of income to charities over a term, the lifetime of certain persons, or both. After the term, the remaining assets pass to non-charitable beneficiaries. Another benefit includes the availability of an estate tax charitable deduction to the donor’s estate for that amount passing to charity. Ultimately, the use of a CLT should be explored by charitably inclined donors.
See Jaclyn S. O’Leary, Nonprofit Newsletter Fall 2016 – It’s Time to Explore a Charitable Lead Trust – A Charitable Planning Technique Used by Jackie O., Day Pitney LLP, Fall 2016.
Special thanks to Jay Stapleton (Account Director/Public Relations, Quinn & Hary Marketing) for bringing this article to my attention.
There is a growing category of people who are seeking advice from estate and financial planners—wealthy, single, and childless individuals. Oftentimes, this group of people does not consider their own legacy because they have no one to leave it to. Advisors can help these individuals start investing their money in areas like charitable giving, retirement trusts, and long-term care needs. While an estate planner can help these individuals find close friends that will become beneficiaries to the estate. The risk of not planning is too substantial not to help this type of client extend their legacy.
See Christopher Robbins, Wealthy Clients Often Neglect Their Own Legacies, Financial Advisor, September 7, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Wednesday, October 12, 2016
The 5h Annual Dynasty Trust State Rankings Chart recently came out this month with the original appearing five years ago in 2012. The Chart ranks on several factors, including the rule against perpetuities, state income tax, and trust decanting state ranking. Further, the Chart allots different percentages to each category that attribute to the overall total score.
See Steve Oshins, 5th Annual Dynasty Trust State Rankings Chart, oshins.com, October 2016.
Monday, October 10, 2016
After a difficult meeting, Sumner Redstone resolved his legal battle with his granddaughter Keryn. This resolution ends all outstanding legal disputes in probate court over Redstone’s trust. The ongoing legal battles centered around Redstone’s mental health and caused him to lose some lifelong friends. Eventually, one of those friends, Philippe Dauman, was ousted from Viacom, but the lawsuits did not end there. Three investor complaints, which were later consolidated, challenged Redstone’s position as a member on the board, but the case will not be decided until next year.
See Janelle Lawrence & Chris Dolmetsch, Redstone Ends Trust Battle After Meeting with Granddaughter, Private Wealth, October 7, 2016.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Saturday, October 8, 2016
S.I. Strong recently published an Article entitled, Global Developments in Trust Arbitration (2016). Provided below is an abstract of the Article:
Over the last few decades, arbitration has become increasingly popular in a wide variety of contexts and jurisdictions. However, up until recently, one field - trust law - has stood apart and resisted the pull toward arbitration. Over the last few years, this tradition has begun to change. Indeed, an increasing number of jurisdictions have begun to embrace the arbitration of internal trust disputes, meaning disputes involving trustees and beneficiaries and relating to the inner workings of the trust.
Although trust arbitration has received support from numerous courts, legislatures and commentators, the procedure is still in its infancy, and numerous questions exist about the use, scope and validity of arbitration provisions found in trusts. This chapter describes the key issues in the area of trust arbitration as a matter of both national and international law and introduces the work of other contributors to a new volume of collected essays on trust arbitration. Both the chapter and the book in which it is found consider trust arbitration from both a trust law and arbitration law perspective, which is critical to a proper understanding of the issues at stake. The chapter and the book also discuss trust arbitration as a matter of domestic and international law, thereby recognizing the differences in national approaches to trust arbitration while also respecting the importance of offshore jurisdictions in trust law and practice.
Trust arbitration is a new and exciting area of law, practice and scholarship, and one that will be growing rapidly in the coming years. This chapter provides an important introduction to the comparative, international and interdisciplinary issues that arise when settlors seek to require arbitration of trust-related disputes through inclusion of an arbitration provision in a trust.