Wills, Trusts & Estates Prof Blog

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

Friday, January 13, 2017

The Legal Battle Ensues over Prince's Music

Prince tidalSeveral unanswered questions still remain as to the management and distribution of Prince’s estate since his death in April 2016. Specifically, much is still unknown about the status of his valuable music catalog. Jay-Z’s companies, Tidal and Roc Nation, are in a legal battle with Bremer Trust, the administrator of Prince’s estate, over the late singer’s intellectual property, which includes a vault of unreleased music. Bremer Trust filed a copyright infringement suit, alleging that Tidal only had exclusive rights to stream Prince’s new music for ninety days but instead streamed all fifteen Prince albums. The defendant companies claim they had an oral and written agreement with Prince to exclusively stream his music, while Prince’s label NPG Records claims they terminated any agreement made before his death. Currently, representatives for the singer’s estate are nearing a deal to stream his music on Apple Music and Spotify. However, with Prince’s highly critical perspective of the music industry, it would come as no surprise that Prince struck a deal with Tidal because they have a reputation of being substantially more artist-friendly.  

See Michael Feispor, Jay-Z’s Tidal, Roc Nation and Bremer Trust Battle over Prince’s Music, Forbes, January 11, 2017. 

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


January 13, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Intestate Succession, Music, New Cases, Trusts | Permalink | Comments (0)

Thursday, January 12, 2017

Article on the Doctrine of Secret Trust

Secret trustsAdam Tanner published an Article entitled, Secret Trusts: Are They a ‘Conceptual Conundrum’? (2016). Provided below is an abstract of the Article:

The Doctrine of the Secret Trust is a strong area of contention; academics struggle to agree on even the fundamental justifications and basic functions of the Secret Trust. This article seeks to purvey the view that there is not a ‘conceptual conundrum’ surrounding these issues. Whilst many academics may be in disagreement, the case law shows well founded reasoning for the doctrine. Through an analysis of the current leading cases the key arguments against the Secret Trust are disputed.

It is argued that the nature of the Secret Trust, when considered in light of judicial reasoning, is not disputable and that not only is there sound justification for the doctrine in the pursuit of preventing fraud but Secret Trusts also fall outside the scope of the Wills Act, therefore the view that they are unconstitutional in their circumventing of the Wills Act 1837 and ‘thus ‘go against the will of Parliament’ is completely unfounded.

This piece takes an alternative stance to the proposition, as well as to the majority of the literature referenced throughout, in stating that there should not continue to be debate surrounding this issue, as it is clearly demonstrable that the concepts of the Secret Trust are easily palpable and not a conundrum at all.


January 12, 2017 in Articles, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Wednesday, January 11, 2017

Article on Key Themes in Estate Planning for 2016

Estate planning 2016Barbara R. Hauser recently published an Article entitled, Watching and Waiting: Two Key Themes in the United States and Abroad, Tr. & Est. 56 (Jan. 2017). Provided below is a summary of the Article:

The year 2016 felt like a year “on alert,” “on pause” and both. Global unrest, an increase in nationalism, a year-long bitter election process in the United States, millions of migrants and refugees worldwide, Britain’s surprising vote to leave the European Union (Brexit) and, at the end of the year, the United States electing a completely new type of leader all contributed to an anxious year generally around the world. 

Maybe these high level preoccupations explain why the lower level, less complicated world of trusts and estates practice was fairly quiet. The lack of significant new legislation is also due to the “lame duck” end of the term of the U.S. President. For estate planners in the United States, the biggest news was probably having proposed regulations on valuation discounts for family assets. 


January 11, 2017 in Articles, Current Events, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Article on Fiduciary Duties in 2017

Fiduciary 2016Gail E. Cohen recently published an Article entitled, In Like a Lamb, Out Like a Lion: For Fiduciaries, 2016 Started Out Quietly, but 2017 Promises to Be a Wild Ride, Tr. & Est. 28 (Jan. 2017). Provided below is a summary of the Article:

The year 2016 started out quietly, seemingly a continuation of the status quo. We continued acting as fiduciaries of trusts that took advantage of tried and true tax strategies. Professional fiduciaries received good news in April when the Supreme Judicial Court of Massachusetts overturned the troubling Pfannensitehl decision of 2015, thereby providing assurance that discretionary trusts weren’t subject to claims of divorcing spouses in Massachusetts. Later in the year, as expected, the Internal Revenue Service put forth long-awaited proposed regulations intended to curtail the use of valuation discounts in gift and estate planning for family entities. 

Then came Donald J. Trump. Seemingly everyone expected Hillary Clinton to win the presidency, thereby continuing the status quo, albeit with higher income taxes and higher estate and gift taxes (or at least a lower exemption from those taxes). Up until the election, there was a flurry of activity to take advantage of valuation discounts prior to the Internal Revenue Code Section 2704 regulations becoming final. Now, we don’t know exactly what 2017 will bring. 

A few items to watch: lower income tax rates; elimination of gifts of appreciated assets to private charities; elimination of estate and gift taxes and presumably the generation-skipping transfer (GST) tax; income tax at death or carryover basis; and non-adoption of the proposed IRC Section 2704 regulations. Looking ahead, we should examine the potential impact that these actions may have on professional fiduciaries. 


January 11, 2017 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, January 10, 2017

Article on Undermining Medicaid Eligibility

Medicaid trustsLawrence A. Frolik & Bernard A. Krooks recently published an Article entitled, Beware of Undermining Medicaid Eligibility: Take a Close Look at Transfers of Assets, Especially to Trusts, Tr. & Est. 8 (Jan. 2017). Provided below is a summary of the Article:

Medicaid eligibility disputes continue to result in interesting court decisions. In several cases, individuals who transferred assets years ago undermined their attempt to qualify for Medicaid reimbursement of the cost of their nursing home care. In particular, Medicaid applicants discovered the perils of transferring assets to a trust. 


January 10, 2017 in Articles, Disability Planning - Health Care, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Trump's Secretary of State Receives $180 Million Nest Egg in Trust

TillersonOutgoing Exxon Mobil chief executive Rex Tillerson has recently been elected as President Trump’s Secretary of State. Exxon Mobil owes Tillerson a share of stocks in the company, but he will surrender them and instead receive a cash payment equivalent to their value—more than $180 million. This payment will be placed in an irrevocable trust, which will make distributions to Tillerson over time. Further, Tillerson agreed to sell the 600,000 shares in the company that he currently owns outright. The trustee of the trust will not be allowed to invest in Exxon Mobil stock and must manage the assets in a way consistent with the government ethics rules.   

See John McGregor, Trump’s Secretary of State Pick Will Receive Nest Egg Worth $180 Million, Placed in a Trust, Wash. Post, January 4, 2017. 


January 10, 2017 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, January 9, 2017

Article on Transformations in the Art World for Estate Planners

Art estate planningAlan Breus recently published an Article entitled, A Year of Transformations: Recent Developments in the Art World that Estate Planners Should Know About, Tr. & Est. (Jan. 2017). Provided below is a summary of the Article:

This past year has been one of transformations: a government agency wishes to re-evaluate the operational definition of “public trust;” a precedent-setting case gave an artist the right to reject attribution to a work; art purchasers were handed a landmark decision designed to “clean up” the art market; and the Trump win may have some idiosyncratic effects on the investment potentials in the art market. 


January 9, 2017 in Articles, Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, January 6, 2017

Article on Medicaid Irrevocable Income-Only Trusts

Medicaid trustLeo J. Cushing & Todd E. Lutsky recently published an Article entitled, Designing the Perfect Income-Only Irrevocable Trust, Estate Planning 1 (2017). Provided below is an abstract of the Article:

Careful drafting and funding of trusts can help clients qualify for Medicaid benefits and continue to make use of trust assets. The biggest question on the minds of elder law attorneys these days is whether to use Medicaid irrevocable income-only trusts as a planning tool. It is no secret that across the country these trusts are being challenged by the states more than ever. Thatbeing said, a recent series of cases and developments acknowledge that these type of trusts are an acceptable planning tool to protect assets from the costs of long-term care, provided however; that they are carefully drafted so as not to violate the federalor state laws governing these trusts. The balance of this article explains the important paragraphs to use as well as the paragraphs to avoid when drafting these trusts, along with income, gift, and estate tax ‘do's and don'ts‘ when operating themduring the donor's life.

References to state developments in this article frequently cite Massachusetts, as that is the state in which the authors practice. Readers should consider how the laws of their jurisdictions may differ when implementing the plannin

January 6, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (1)

Tax Efficiency While Alive and at Death

IRSWhen working to minimize your family’s tax burden, it is best to start while your parents are still alive. There are several strategies to help save your parents money in their later years and limit the taxes owed after their death. One way to reduce taxes while your parents are alive is to have them sell their stocks that have losses, which may allow them to take a tax deduction. If the stock is not sold, then upon your parent’s death there will be no tax deduction for the loss. On the other hand, they should keep stocks that have gains because their heirs will benefit from the stepped-up basis rule. For retirement accounts, like an IRA, it will be beneficial to allow the funds to grow tax-deferred, further allowing the money you would have paid in taxes to earn interest for many years. It may also be wise for those families with large estates to gift assets to beneficiaries while the parents are still alive, reducing their tax liability at death. Another efficient estate planning tool is the trust, which will provide less hassle to beneficiaries. Tax efficiency is a major asset in itself both while alive and at death, so it is important to plan accordingly. 

See Patrick O’Brien, How to Keep Your Parents’ Assets from the Taxman, Market Watch, January 6, 2017. 


January 6, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

Monday, January 2, 2017

Article on Use of Charitable Class in Tax Law

Chariatble classEllen P. Aprill recently published an Article entitled, Charitable Class, Disaster Relief, and First Responders, 153 Tax Notes (2016). Provided below is an abstract of the Article:

The notion of charitable class bedevils tax law. The IRS has issued no precedential guidance regarding its scope or application. After the 9/11 terrorist attack, Congress enacted special provisions applicable only to victims of that disaster. In response to statements in the legislative history of those provisions, the IRS has changed several of its positions regarding the doctrine of charitable class, changes announced only in a publication on disaster relief. Nonetheless, disaster relief continues to raise difficult issues involving charitable class for Congress as well as the IRS. In the 15 years since 9/11, Congress has enacted special legislation to permit a small group of California firefighters and two New York police offers to be treated as satisfying the charitable class requirements.

This article reviews the use of charitable class in tax law, including its relationship to trust law, with particular attention on establishing new charitable purposes and classes. It then discusses disaster relief, both in the case of the 1995 Oklahoma City bombing and September 11, 2001 terrorist attack. This discussion includes consideration of the roles that crowdfunding and exemption based on lessening the burden of government play in addressing disasters. The next section of the article examines the special legislation that Congress has enacted for two small groups of first responders. The piece concludes by recommending that the IRS both undertake a study of charitable class in general and issue precedential guidance regarding charitable class in the context of disaster relief. It also urges Congress to consider holding hearings and enacting special legislation for first responders.


January 2, 2017 in Articles, Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0)