Tuesday, April 15, 2014
The testator’s will created a trust for his surviving spouse giving her income for life and authorizing the trustee to invade principal for the surviving spouse and their issue for health, education, maintenance, and support. The trust also gave the trustee the power to terminate the trust should further administration become impractical. On termination, the trustee was to pay the trust property to the income beneficiary. The trustee terminated the trust under this provision and the surviving spouse then renounced any interest in the trust property which was delivered directly from the trust to the couple’s son and daughter. The surviving spouse applied for Medicaid benefits approximately 13 months after the termination of the trust. In a case of first impression, a Pennsylvania court upheld a determination by an administrative law judge disqualifying the spouse from benefits for a period of time, holding that the renunciation was a transfer of assets for Medicaid purposes. Schell v. Department of Public Welfare, 80 A.3d 844 (Pa. Commw. Ct. 2013).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.
A special needs trust permits people to remain eligible for public benefits such as Medicaid and Supplemental Security Income, while taking supplemental income. A first-party special needs trust is only available to those who qualify or expect to need public benefits but have limited income to pay for their care. These trusts are good for people expecting a large inheritance or settlement that might disqualify them from receiving public benefits.
See Elizabeth I. Liu, Intro to First-Party Special Needs Trust, Wealth Strategies 2.0, April 12, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Monday, April 14, 2014
Interest on Damages for Improper Discretionary Distributions Payable Only from Date of Beneficiary’s Death
The trustee was found liable for making improper discretionary distributions of principal to the sole life income beneficiary of the trust. The trial court awarded prejudgment interest at the statutory rate from the date of each principal invasion and the intermediate appellate court affirmed. On appeal by the trustee, the Supreme Court of Georgia reversed, holding that interest could be awarded only from the date of the life income beneficiary’s death because had the improperly distributed assets remained in the trust, any interest they would have earned would have been distributed to the life beneficiary. Reliance Trust Co. v. Candler, 751 S.E.2d 47 (Ga. 2013).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.
The American Bar Association is sponsoring a CLE entitled, What It Means To Be A Fiduciary, on April 15, 2014 at 1:00 pm ET. Provided below is a description of the event:
Trustees are the stewards of the grantors legacy. They are required by law to fulfill the wishes of the grantor who set up the trust, to invest responsibly, and to always put the needs of the trust and its beneficiaries above their own.
However, serving as a trustee is increasingly risky. Beneficiaries have discovered that the courts are a place where they can seek redress for actual or perceived wrongs. Even conservative and cautious trustees can stumble over the execution of their fiduciary duties when dealing with real people and their complicated circumstances.
Knowing the trust instrument and your core duties and responsibilities as a trustee are key.
Following consistent processes for administration and decision-making often will lead to a better substantive result and not just liability mitigation (Need to go beyond policies and procedures manual). Good communication with beneficiaries is absolutely critical. Involve all the right people and experts in decision-making. Learn when you have entered risky territory. Practice good risk management to avoid or at least mitigate future challenges.
Good results are the product of a consistent and thoughtful process.
Sunday, April 13, 2014
Thomas P. Gallanis (University of Iowa College of Law) recently published an article entitled, Trusts and Estates: Teaching Uniform Law, 58 St. Louis U. L. J. 761 (2014). Provided below is the abstract from SSRN:
The law school course in Trusts and Estates provides a valuable opportunity for students to gain a deeper understanding of the processes and products of one of the principal law-reform organizations in the United States: the Uniform Law Commission, also known as the National Conference of Commissioners on Uniform State Laws. Within the law school curriculum, the course in Trusts and Estates is well suited for this purpose because the Uniform Law Commission has been and will continue to be highly active and influential in the field of trust and estate law. This essay, prepared for a symposium issue of the St. Louis University Law Journal on "Teaching Trusts and Estates," proceeds in six main parts. Part I provides background on the Uniform Law Commission. Part II highlights the many uniform acts in the field of trusts and estates. Part III introduces the Joint Editorial Board for Uniform Trust and Estate Acts and its role in the on-going monitoring and updating of uniform acts in this area of the law. Part IV summarizes the process by which uniform laws are drafted, approved, promulgated, and enacted. Part V examines aspects of the structure of uniform laws which are important for purposes of law school teaching. Part VI discusses the procedures for updating and amending uniform laws. A brief conclusion follows.
Thursday, April 10, 2014
The American Legal Institute, is sponsoring a CLE entitled, Representing Estate and Trust Beneficiaries and Fiduciaries, on July 24-25, 2014 in Renaissance Chicago Downtown. Provided below is a description of the event:
This advanced course goes beyond basics and delves into topics that specifically affect beneficiaries and fiduciaries. Plus, registrants get solutions to their most pressing concerns through small roundtable discussions and networking opportunities.
Experienced planning chairs Steve Fast and Bob Whitman, and the rest of the nationally known faculty panel, provide two full days of knowledge, insight, and even a bit of humor as they update you on all the current law developments affecting beneficiaries and fiduciaries.
The program schedule and faculty for this course are still being finalized. Please check back to this page for updates.
Wednesday, April 9, 2014
Join nationally known leaders Craig C. Reaves, Robert B. Fleming, and Mary Alice Jackson in this timely and important webinar as they address challenging SNT administrative issues faced by trustees, attorneys, financial planners and money managers involved in Special Needs Trusts.
This webinar will offer practical information by leaders in the field of Special Needs Planning that can be immediately implemented in your practices:
- Identify best practices for SNT dministration. As a result of court cases over the years, we have seen processes, policies and procedures change. Understand the best way to handle administrative matters, so you don't end up as a party in the next case!
- Learn how to recognize, interpret and apply the four common trust distribution standards when making distribution decisions.
- The ACA in real time: what are the implications of the Affordable Care Act for beneficiaries who live in states which have adopted Medicaid expansion as opposed to those living in states which did not adopt expansion? What happens when your beneficiary moves to another state? A step-by-step analysis will be provided for Trustees to use when considering coverage under Medicaid or the ACA.
The American Law Institute Continuing Legal Education (ALI CLE) and the University of Wisconsin Law School are cosponsoring a CLE entitled, Estate Planning in Depth, on Sunday-Friday, June 22-27, 2014. Provided below is why you should attend this event:
An intensive, interactive classroom experience complemented by opportunities to learn informally after-hours from expert faculty and from fellow registrants at various events including evenings at the Student Union and a picnic supper
- A relaxed campus environment that helps make learning fun, plus an affordable housing and meal package that keeps costs low
- Comprehensive study materials — typically 1,000 pages or more – that are among ALI CLE’s best
- Half-day Sunday primer that brings less-experienced practitioners up to speed
- Engaging registrants - last year 28 states - and an expert faculty from across the country who shares ideas with one another over the course of five days.
Tuesday, April 8, 2014
Jerome Borison (University of Denver Sturm College of Law), Naomi Cahn (George Washington University - Law School), Susan N. Gary (University of Oregon - School of Law), and Paula A. Monopoli (University of Maryland Francis King Carey School of Law) recently published an article entitled, Contemporary Trusts and Estates – An Experiential Approach, Saint Louis University Law Journal, v. 58, 2014, p. 727-738. Provided below is the abstract from SSRN:
In this essay in a special issue dedicated to teaching trusts and estates, the co-authors of Contemporary Trusts & Estates: An Experiential Approach (2d. ed. Aspen 2014) reflect on how the teaching of trusts and estates can integrate policy, practice, doctrine, and centuries of tradition. They describe the genesis of their problem-based casebook and the influence of the Carnegie Report on their choice of pedagogic framework. Each of the co-authors embraced the fundamental principles advocated by the Carnegie Report, which counsels that legal education should integrate “theoretical and practical legal knowledge and professional identity.” This essay goes on to outline how the book incorporates a problem-based methodology as well as an innovative choice of ordering the chapters that tracks the chronological path of estate planning, addressing the lifetime use of trusts first, followed by issues of will validity and interpretation. Drafting exercises complement the problems as well as traditional cases that illuminate theory and practice. With chapters on planning for disability, the federal estate and gift tax, estate administration and charitable trusts as well as basic doctrine on intestacy, wills and trusts, the book reflects the contemporary challenges addressed by trusts and estates lawyers. The co-authors have found that the book’s innovative approach engages students in a way that makes the study of trusts and estates relevant and students practice-aware.
This article is part of the Journal's annual Teaching Issue, "created as a forum for scholars, judges, practitioners and students to discuss methods for the effective teaching and learning of particular law school courses. With the constant evolution of legal topics and instructional resource options, this issue provides a resource for professors, deans, and anyone interested in the continued development and improvement of legal education."
Monday, April 7, 2014
The American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, FATCA and Trusts: What You Need to Know and How to Prepare for the July 1 Deadline, on Thursday, April 17, 2014. Here’s why you should attend:
There are few topics more confusing for those trying to implement Foreign Account Tax Compliance Act (FATCA) than the treatment of trusts and personal investment companies.
Recent regulatory actions have changed the rules on the treatment of trusts under FATCA and how they must be treated for nonresident alien (NRA) withholding and reporting purposes. Expert faculty at this CLE seminar on FATCA will cover the relevant issues and provide practical advice on how to tame the confusion.