Wills, Trusts & Estates Prof Blog

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

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Wednesday, August 20, 2014

How Robin Williams Created a Solid Estate Plan

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Robin Williams’ tragic death sent shockwaves across the nation.  Yet, as painful as his loss was for fans, family, and friends, it seems as though Williams created a solid estate plan.

Although many wealthy entertainers fail to adequately prepare in handling the transfer of their wealth after their death, Williams used a revocable trust for the primary portion of his estate planning.  This will likely be adequate to avoid some of the complications and tax liabilities other celebrities’ families endured. 

Revocable trusts enable people to arrange for the disposition of their assets after death without any involvement from a probate court.  Additionally, the public has no right to see the trust document.  Consequently, it is likely we will never know what Williams’ trusts said.  Since trusts keep personal business out of the public eye, even family members who disagree with each other can choose to resolve disputes privately if they so choose. 

Aside from the procedural requirements, revocable trusts provide the ability to control how and when loved ones will receive assets.  Certain provisions allow advisors to act as a trustee and handle financial matters during the early part of children’s lives, and they ensure that children to not waste their inheritance. 

See Dan Caplinger, Robin Williams’ Estate Plan Spares His Heirs a Lot of Drama, Daily Finance, Aug. 14, 2014.

Special thanks to Neda Garrett (Texas attorney) for bringing this article to my attention.

August 20, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Morgan Stanley Liable to Banamex

Morgan stanley

Citigroup Inc’s Bnamex unit alleged that a unit of Morgan Stanley permitted funds from a family’s trust account to be used to repay third-party loans without its authorization.  A Financial Industry Regulation Authority (FINRA) arbitration panel found Morgan Stanley liable for negligence and ordered the firm pays $4.5 million to Banamex.

The trust at issue was created in 2007 with proceeds from the sale of property that a group of adult siblings and their mother inherited.  Banamex and the trust beneficiaries procured a broker at Morgan Stanley to manage their accounts the same year.  The accounts were set up in such a way that prevented the assets from being used as guarantees to pay off third-party loans taken by another family member’s account.

See Suzanne Barlyn, Morgan Stanley Must Pay $4.5 Million to Banamex: Panel, Reuters, Aug. 18, 2014.

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

August 20, 2014 in Current Affairs, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

What Robin Williams’ Estate Plan Did Right

Robin_WilliamsRobin Williams’ did not have a simple family situation, and his three marriages and children from two of them could not have made his estate planning process easy. However, Williams' seemed to have made the best of his complicated situation. While his life and accomplishments are headline news after his death, his estate planning decisions are not. At least not as much as those of other high profile celebrities', such as Philip Seymour Hoffman, and not as detailed. By relying on trusts instead of a will, Williams has ensured privacy for his family and immediate support for his children since they will not have to navigate the probate process.

See Stephen Lacey, Celebrity Tragedies Shine a Bright Light on Estate Planning, Florida Today, Aug. 18, 2014.

August 20, 2014 in Current Affairs, Estate Planning - Generally, Film, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Widow of Former Navy Seal Sues Estate Planning Attorney

Gavel3Taya Kyle, the widow of former Navy Seal and American Sniper author, Chris Kyle, is suing her estate planning attorney. The suit was filed in Dallas County last week. Kyle claims that her attorney and trustee of her family trust, Christopher Kirkpatrick, acted negligently with regards to the services he provided her and her late husband. Kyle also alleges that Kirkpatrick failed to inform her that he had a conflict of interest, which was an impediment to his representation of her and her husband. The estate of Chris Kyle is also a plaintiff in the lawsuit.

See David Lee, ‘American Sniper’s’ Widow Sues Her Attorney, Courthouse News Service, Aug. 18, 2014.

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

August 20, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Article on The Donald Sterling Case and Mental Capacity

SterlingLara Zeigler (Fiduciary Counsel) recently published an article entitled,The Donald Sterling Case and Mental Capacity, Of Minds and Money, Summer 2014. Provided below is the introduction to the article:

Rochelle (“Shelly”) Sterling, wife of Los Angeles real estate mogul and billionare Donald Sterling, made headlines in May when she argued to a probate court that her husband was mentally incapacitated—a charge he vehemently denied. The court’s decision had great implications for the Los Angeles Clippers, a 44-year-old professional basketball franchise held in a revocable trust for which both the Sterlings were co-trustees.

The ensuing legal battle brought to light an important question all wealthy individuals should address: What happens when you lose capacity to make sound decisions regarding your wealth? In this estate planning update, we explore the legal nuances of mental capacity through the lens of the Sterling case and offer practical tips on how to establish a clear plan in the event one’s cognitive abilities decline.

August 20, 2014 in Articles, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 19, 2014

New Case: In re Indenture of Trust Dated January 13, 1964

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Improper assignment is not a basis for trustee liability.  A trust beneficiary assigned his interest in the trust for the benefit of other beneficiaries, even though the trust terms contained a valid spendthrift provision prohibiting voluntary and involuntary alienation, in exchange for a cash payment from the trust.  The trustee made distributions in accord with the assignment. Twelve years later, after the trust’s termination, the assignor brought an accounting action. In affirming summary judgment for the trustee and another beneficiary, the intermediate Arizona appellate court held that the trustee was not liable for payments made in accord with an invalid assignment, that the assignor was not entitled to an accounting because he was no longer a beneficiary, and that in any event the assignor’s action was barred by laches.  In re Indenture of Trust Dated January 13, 1964, 326 P.3d 307 (Ariz. Ct. App. 2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

August 19, 2014 in Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Church Accuses JPMorgan of Mismanagement of Trust Funds

ChurchChrist Church Cathedral is suing JPMorgan Chase for self-dealing and mismanaging trust funds. JP Morgan resigned as trustee last December. The church became the beneficiary of the trusts after wealthy humanitarian Eli Lilly, Jr. died in 1997, leaving a large donation to the church in the form of the trusts. The church is alleging that JPMorgan lost $13million of trust funds by making investment decisions that benefited the bank.

See Maria Vultaggio, Christ Church Vs. JPMorgan: Bank Allegedly Mismanaged Millions, International Business Times, Aug. 13, 2014.

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

 

August 19, 2014 in Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, August 18, 2014

New Case: The Woodward School for Girls v. City of Quincy

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Failure to take inflation into account is breach of duty of prudence.  The trial court held that the trustee of a perpetual charitable trust had breached the duty of prudence by investing the fund solely in bonds and awarded damages based on what the portfolio would have been worth had the trustee followed specific investment advice it had sought but ignored.  The Massachusetts Supreme Judicial Court affirmed the finding of breach of the duty to invest prudently, holding that the failure to invest to protect the principal of the fund from erosion in value because of inflation “alone” was sufficient to constitute a breach.  The court affirmed the use of unrealized gains as a measure of damages but remanded for further hearing on the amount of the unrealized gains that must consider not the ignored advice but rather what the prudent investor should have done in the specific situation. The court also held that the action sounded in tort rather than contract but that the usual rule for award of pre-judgment interest in tort actions does not apply and that the trial court properly awarded interest from the date of the last breach.  The Woodward School for Girls v. City of Quincy, 469 Mass. 151 (2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

August 18, 2014 in Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

New Book on South Dakota Trust Law

TrustLindquist & Vennum LLP has published the South Dakota Trust Law Deskbook, which provides specific guidance for South Dakota trust law. The deskbook provides relevant statutes and guidance on creating trusts in the trust favorable state of South Dakota. Provided below is a description of this helpful reference guide from the author’s website:

Lindquist & Vennum LLP is pleased to announce that the firm has published the first-ever South Dakota Trust Law Deskbook. This practice aid compiles selected South Dakota statutes and administrative rules relating to trust law and private trust companies. Topics include taxation, judicial remedies, uniform probate code, property, banks and banking, fiduciaries and trusts, and administrative rules. The deskbook is intended to be used as a statutory resource by wealth advisors, trust officers, attorneys, and family office professionals across the country.

South Dakota is nationally recognized by professional advisors, industry publications, and wealthy families as a top jurisdiction for trust situs considering the state’s favorable trust laws, legislative awareness, a responsive judiciary, and business-friendly regulatory climate. The state has no rule against perpetuities, no income tax, and expansive domestic asset protection trust laws applicable to all U.S. citizens, resident aliens, and non-resident aliens. The state also offers low capitalization requirements for trust companies and reasonable insurance rates. South Dakota’s judiciary is responsive and willing to accommodate trust and estate matters, including holding emergency hearings and permitting the immediate sealing of trusts for those seeking privacy.

“It’s no accident that South Dakota is the nation’s premier trust jurisdiction,” says Mavis Van Sambeek, co-editor of the book, Trust & Estates partner in the Lindquist Minneapolis office, and fellow in the American College of Trust & Estate Counsel. “The State Legislature and Governor’s Trust Law Task Force have spent considerable effort to develop a statutory environment that is friendly to family wealth. Our new deskbook at last combines these trust statutes into an easy-to-use format.” 

August 18, 2014 in Books, Books - For Practitioners, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, August 17, 2014

Planning for Special Assets

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Oftentimes there are particular assets in one’s estate that may necessitate special consideration due to their nature, value, or significance.  Provided below are just a few examples of these special assets, and how they might be handled.

  • Businesses.  Because some businesses require a license or special expertise, they will require a special trustee or administrator be appointed to administer the asset. 
  • Firearms.  A gun collection can be held in a special gun trust managed by a trustee who has a firearm’s license.  The trustee can allow for the guns to be shared amongst various beneficiaries and for the guns to be stored and managed by designated individuals. 
  • Pets.   Pets depend on their owners, as they will need care during their owner’s disability and possibly a new home after their owner dies.  A pet owner’s trust can provide instructions to use the owner’s resources to pay for vet visits, boarding, etc.
  • Jewelry.  Sentimental or valuable jewelry needs to be itemized and kept in a secure location.  If jewelry is not given away during the owner’s lifetime then someone should be appointed to be in charge of it upon the owner’s death. 

See Dennis Fordham, Estate Planning: Planning for Special Assets, Lake County News, Aug. 15, 2014.

August 17, 2014 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)