Wills, Trusts & Estates Prof Blog

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

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Monday, September 29, 2014

Changing Trends on Trustee Removal

TrustIt is often more difficult to remove and replace a trustee than to make the difficult decision of who to choose in the first place. However, a trend is being seen of lessening difficulty in removing trustees. The Uniform Trust Code includes a “no fault” provision for removing trustees in the states that have adopted the uniform law. The Superior Court of Pennsylvania removed a trustee in a case last year, on the showing of changed circumstances rather than requiring a showing of negligence or bias on the part of the trustee. In addition, recently created trusts tend to have provisions included that provide for trustee replacement.

See Amy Feldman, Dumping a Trustee, Barrons, Sept. 27, 2014.

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

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

Sunday, September 28, 2014

Estate Planning for Today's Modern Family


Today, non-traditional family households outnumber the so-called, “traditional,” husband-and-wife households.  According to U.S. Census Bureau data, married husband-and-wife couples represented 48 percent of American households in 2010, down from 52 percent in 2000 and 78 percent in 1978 percent in 1950. 

While shifting families seem to be the new norm, laws and policies across the U.S. have largely failed to keep pace.  This means that advisors who work with non-traditional families must take extra care when it comes to key estate planning matters.  “Estate planning for what I call a modern family, one that’s blended or has unmarried partners, for example, might require you to handle things like the will, powers of attorney and beneficiary designations differently than you otherwise would.” 

Discrepancies as to how federal and state laws treat couples based on marital status are one reason estate planning for non-traditional families “may require a lot of work-around strategies.” 

For example, it is crucial that estate planning legal documents explicitly specify the rights and powers a surviving partner will have in the event the other partner dies.  Otherwise, unmarried partners are effectively strangers in the eyes of the law, regardless if they have been together for years. 

See David Port, Estate Planning for the Modern Family, Life Health Pro, Sept. 25, 2014.

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

September 28, 2014 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, September 26, 2014

Sanctions Ordered in Wyly Brothers Case

GavelAs I have previously discussed, after a jury found Sam and Charles Wyly guilty of fraud, the SEC and the defense began arguing over the amount of sanctions that should be applied. Yesterday, U.S. District Judge Shira Scheindlin, ordered sanctions of $187.7 million for the Wyly's offshore trust scheme that brought in profits of $553 million for the brothers. The SEC had asked for over $700 million in sanctions, but is considering the ruling a win.

See Sara Jerving, Texas Entrepreneur Wyly Sentenced to Sanctions—Update, Dow Jones Business News, Sept. 25, 2014.

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

September 26, 2014 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Article on Estate Planning With Revocable Trusts

FogelbeBradley E.S. Fogel (Professor of Law, St. Louis University School of Law), recently published an article entitled, Trust Me? Estate Planning With Revocable Trusts, 58 St. Louis U. L. J. 805 (2014). Provided below is the abstract of the article:

Revocable trusts are one of the most common estate planning techniques. Unfortunately, many advisors use them without considering the merits for the particular client. Like any other estate planning technique, they are appropriate only for some clients.

Typically, a settlor creates and funds a revocable trust during his or her lifetime. The settlor then uses trust funds to pay living expenses. Upon the settlor’s death, the successor trustee administers the trust, collects the settlor’s assets, pays creditors, and distributes th e assets to the named beneficiaries. In the optimum case, this is done without any court involvement.

Due to the lack of court involvement, it is possible to use a revocable trust to avoid probate and reduce the associated expenses and delays. However, this goal is achieved only if settlor transfers all of his or her property to the trust during his or her lifetime. As a practical matter, this almost never happens.

Revocable trusts also provide advantages in terms of privacy (after the settlor’s death) and planning for the settlor’s incapacity. However, these advantages, like probate avoidance, are obtained only if the trust is funded during the settlor’s lifetime.

Revocable trusts also have disadvantages; most notably, increased complexity during the settlor’s lifetime and higher estate planning costs. The essence of the trade off is that the settlor suffers the disadvantages during his or her lifetime. The advantages are mostly savings and efficiencies that obtain only after the settlor’s death.

Whether this trade off is acceptable is up to the attorney and client to decide based on the situation of the specific client. Such a subjective balancing is not easy. However, the client is not well served by an estate planner that eschews careful analysis in favor of using revocable trusts for all (or no) clients.

September 26, 2014 in Articles, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, September 25, 2014

Seymour Goldberg Answers the "QTIP Conundrum"

IRCIn 2008, the National Conference of Commissioners on Uniform State Laws implemented amendments to the Model Uniform Principal and Income Act (UPAIA).  Of the amendments to the UPAIA was Section 505, entitled “Income Taxes.”  This amendment addresses income tax issues that are prompted by a trust that has interests in a pass-through entity, such as a Limited Liability Company (LLC) or partnership.  The 2008 amendments provide a formula to compute how much the trust needs to distribute to the mandatory income beneficiary and how much it needs to retain in order to pay its fiduciary income tax liability tax obligations.  Thus, the trust preserves the essential funds to pay its fiduciary income tax obligations with the balance of the cash distribution paid to the mandatory income beneficiary. 

Seymour Goldberg presents a problem on the interaction between the UPAIA and Income Act and the ownership of pass-through entities that are bequeathed to trusts for the benefit of a surviving spouse that could consequently jeopardize qualified terminable interest property (QTIP) treatment.  Outlining the problem through detailed examples and comprehensive explanations, Mr. Goldberg notes that the IRS has yet to come up with an easy fix for this issue.  “Over 30 states have adopted the revised version of the UPAIA.  It would be a disaster if the state trust law drafted in good faith to protect the trustee from a fiduciary income tax liability funding issue in essence destroyed the QTIP marital deduction with respect to a significant asset held by the estate.” 

To advance this effort, Mr. Goldberg has sent a letter to the Treasury Department requesting that it address these issues by providing some form of guidance that would protect existing estate plans from potentially adverse penalties. 

See Seymour Goldberg, QTIP Conundrum, CCH Estate Planning Review, Sept. 18, 2014.

Special thanks to Seymour Goldberg (Goldberg & Goldberg, P.C.) for bringing this article to my attention.  

September 25, 2014 in Articles, Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 24, 2014

Dividing Art in Contentious Times


During divorce proceedings or when a family member leaves behind a large estate, some of the most contentious fights that erupt are over the artwork.  “I’d put it in the same category as child-custody battles,” says family attorney Suzanne Landers.  “It takes far longer to decide who gets what painting or sculpture than it does to divvy up houses, cars or even money.” 

However, there are a few basic principles on how to decide (peaceably and equitably) who gets what.  For divorcing couples, the first step is to develop a detailed list of all the art bought before and during the marriage.  Art bought or obtained before the marriage, or acquired after the couple has separated or filed for divorce is not considered marital property and belongs to the same spouse who purchased it originally.   It may also be a good idea for couples to hire an appraiser.  Artworks may then be divided equally by value, or other assets can be made part of the bargaining—the house, the vacation home, etc. 

Decisions about art should be ingrained within the estate planning process.  Like houses, art that passes at death receives a step-up in value for tax purposes.  Sometimes collectors will sell art to help cover the cost of estate taxes.  By placing the art in a tax-exempt charitable remainder unitrust, the collector can receive distributions from the sale for the rest of his or her life, taxable as ordinary income, allowing the collector to avoid a 28 percent capital-gains tax.  When the collector dies, remaining distributions go to a designated charity.  If an art collection is donated to a nonprofit, the gift can be made all at once or in installments. 

See Daniel Grant, Tips for Dividing Art in a Divorce or Death, The Wall Street Journal, Sept. 21, 2014. 

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

September 24, 2014 in Estate Administration, Estate Planning - Generally, Gift Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Prenups Versus Trusts

Broken heartAn example of the benefits of a trust compared to to prenuptial agreement are illustrated in the current divorce litigation between Kenneth C. Griffin, hedge fund manager and founder and CEO of the investment firm Citadel LLC, and Anne Dias-Griffin, who took a break from being a hedge fund manager to care for her family. Griffin and Dias signed a prenup, which Dias is now attempting to have invalidated due to alleged collusion between her husband and psychologist. By opting for a prenup compared to a trust, a couple risks the agreement being invalidated and the contentious details of their financial affairs and divorce being made public.

See, Hedge Fund Titan Finds Out That Prenuptial Agreements Don't Make for a Good Asset Protection Hedge, Opines UltraTrust.com, PRWEB, Sept. 23, 2014.

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

September 24, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 23, 2014

Wisner's Heirs Lose in Court Battle

4th Circuit

The heirs of philanthropist Edward Wisner have lost their courtroom battle to continue reaping the benefits of a century-old trust that controls 52,000 acres of Louisiana coastline. 

A five judge panel on the Fourth Circuit Court of Appeal ruled unanimously that Wisner intended the Wisner Donation Trust to end on August 4, 2014 and that Mayor Mitch Landrieu need not be removed as the fund’s trustee. 

It remains uncertain as to whether the heirs will appeal to the state Supreme Court or whether the assets of the trust will be divided among the beneficiaries. 

The fund generates around $8 million a year in proceeds, and a large share goes to the city.  The remainder is divided among Wisner’s heirs, the Salvation Army, Tulane University and the former Charity Hospital controlled by LSU. 

See Richard Rainey, Mayor Mitch Landrieu Wins Latest Round in Wisner Trust Case, NOLA.com, Sept. 19, 2014.

September 23, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, September 22, 2014

Book: Nature's Trust: Environmental Law for a New Ecological Age

Mary WoodMary Christina Wood has published a book entitled, Nature's Trust: Environmental Law for a New Ecological Age, which explores concepts surrounding the public trust doctrine. Provided below is a description of the book from Cambridge University Press:

Environmental law has failed us all. As ecosystems collapse across the globe and the climate crisis intensifies, environmental agencies worldwide use their authority to permit the very harm that they are supposed to prevent. Growing numbers of citizens now realize they must act before it is too late. This book exposes what is wrong with environmental law and offers transformational change based on the public trust doctrine. An ancient and enduring principle, the trust doctrine asserts public property rights to crucial resources. Its core logic compels government, as trustee, to protect natural inheritance such as air and water for all humanity. Propelled by populist impulses and democratic imperatives, the public trust surfaces at epic times in history as a manifest human right. But until now it has lacked the precision necessary for citizens, government employees, legislators, and judges to fully safeguard the natural resources we rely on for survival and prosperity. The Nature's Trust approach empowers citizens worldwide to protect their inalienable ecological rights for generations to come.

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


September 22, 2014 in Books, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, September 20, 2014

Sitkoff to Chair Committee on Divided Trusteeship

Robert sitkoff

Robert H. Sitkoff, the John L. Gray Professor of Law at Harvard Law School, has been named Chair of the Uniform Law Commission (ULC) drafting committee for an Act on Divided Trusteeship.

The problem of a divided trusteeship stems from the increasingly common practice in estate planning to name a corporate trustee that is given custody of trust property, but with one or more of the investment, distribution, or administration functions of a trusteeship given to a person(s) who is not lawfully designated as a trustee.  Thus, uncertainty remains regarding the fiduciary status of nontrustees who have control or potential control over a function of trusteeship and about the fiduciary responsibility of trustees with regard to actions taken by such nontrustees.  The Drafting Committee on Divided Trusteeship will draft legislation addressing these questions and also outline compatible amendments to existing uniform trust and estate acts. 

As Chair, Sitkoff will oversee the work of the drafting committee, which includes more than a dozen Uniform Law Commissioners.  Sitkoff is an expert in wills, trusts, estates and fiduciary administration and has published numerous works in in leading scholarly journals.  Moreover, Sitkoff is also an active participant in trusts and estates law reform, serving under Massachusetts gubernational appointment as a Uniform Law Commissioner. 

See Sitkoff Named Chair of Drafting Committee for Act on Divided Trusteeship, Harvard Law Today, Sept. 19, 2014. 

September 20, 2014 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)