Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, May 29, 2015

When Should A Person Get A QPRT?

HouseThe dismal real estate market is starting to recover from the 2008 financial crises and the Qualified Personal Interest Trust (QPRT) is making a comeback.  If done right a QPRT would allow a person to live in their home with a life estate while being able to transfer the house to a loved one at the lowest possible tax cost.  The Grantor should be careful about selecting the term of years that the trust will have.  Clients should be advised to select a term that they expect to outlive, but it should not be too short because that would bring about a lower wealth transfer.  Any person considering a QPRT should speak with an experienced estate planning attorney. 

See Kyle E. Krull, Reconsidering the venerable QPRT?, Wealth Management, May 28, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 29, 2015 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, May 28, 2015

Article On Digital Assets and Fiduciaries

ComputerNaomi Cahn (George Washington School of Law), Christina L Kunz (William Mitchell College  of Law), and Suzanne Brown Walsh (Martha Cullina LLP) recently published an article entitled, Digital Assets and Fiduciaries, GWU Legal Studies Research Paper No. 2015-18. Provided below is an excerpt from the article:

This chapter addresses the appropriate treatment of a person's digital life when the account holder can no longer manage it. As the Internet becomes an increasingly important presence in our daily lives, the law has a significant role to play in determining the management of digital assets upon the account holder's incapacity or death. In the past, people put hard copies of photos in albums, listened to record albums, and paid bills with a stamped envelope. Today, most people use the Internet to store photos, listen to music, and pay bills. Yet few people have considered how to dispose of their digital assets.

This chapter explores the legal issues for trusts, estates, conservatorships, and powers of attorney. It addresses the importance of fiduciaries being able to manage an account holder's digital assets, and the obstacles under federal and state law to a fiduciary assuming that role. Finally, it shows how the Uniform Fiduciary Access to Digital Assets Act provides a solution to ensure effectuation of the account holder's intent.

May 28, 2015 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 27, 2015

In Modern Estate Planning Basis Plays Important Role

ScaleThe American Taxpayer Relief Act of 2012 raised the federal estate tax exemption to $5 million for each individual.  This amount is adjusted to inflation which means an individual can transfer up to $5,430,000 before being effected by the estate tax.  The change to estate tax law has shifted the focus of many estate planners from “estate tax” planning to “basis” planning.

“Basis” is an income tax concept which the IRS uses to calculate the tax a person owes after selling an asset.  Individuals and couples should consider the fair market value of their assets before deciding on whether to give the asset away as a gift or transfer it at death.   Estate Planners should be prudent about considering basis in order to reduce the income tax liability that a client will face.

See Virginia Carter & Zachary Lamb, Ward and Smith, P.A. Modern estate planning – It’s all about that basis, May 27, 2015.

May 27, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

B.B. King’s Children Face Long Complex Legal Battle

Old bb kingI have previously discussed the dispute over the estate of B.B. King.  The late blues is currently survived by 11 living biological and adopted children.  King’s children are currently in a high profile dispute with LaVerne Toney, the Musicians former business agent who currently has power of attorney over King’s estate.  The children of B.B. King have a long legal battle ahead of them, this dispute is far from over.

See Justin Wm. Moyer, B.B. King: 15 children and potentially a big legal mess, The Washington Post, May 22, 2015.

May 27, 2015 in Current Affairs, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

North Carolina Lawyer Who Misappropriated $1.6 Million Loses License

PeterCapeceA North Carolina attorney who worked for a prestigious Lincoln County law firm has been disbarred after admitting to misappropriating $1.6 million from an estate that he was executor of.  Peter Capece, who was executor of the estate of Fritz Detmers, used the money that he misappropriated for his own personal gain.  Judge Donald Stephens ruled that the disgraced attorney will lose his license for at least five years.  Capece has also been fired from the Jonas law firm, which released a statement expressing it was “dismayed that a former employee, a person we invited into our firm and treated as one of our own, would betray the trust of a client.”

See Joe Marusak, Lincoln County Lawyer Disbarred For Misappropriating $1.6 Million, The Charlotte Observer, May 20 2015.

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

May 27, 2015 in Current Affairs, Estate Planning - Generally, Malpractice, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 26, 2015

Trustee Motions For New Payment Plan To Compensate Victims

GavelA court appointed bankruptcy trustee who is managing the funds of the now bankrupt Life Partners Holdings has filed a motion for a new payment plan.  H. Thomas Moran II was appointed in March to serve as trustee after Life Partners Holdings filed for chapter 11 bankruptcy.  The Waco based company had lost to the SEC and had a $46 million judgment imposed against it.  Moran claims that the LPH has been ripping off investors for a long period of time.  The Trustee would like to pay off defrauded investors by utilizing the cash surrender value and premium reserves that are on hand.

See David Lee, Trustee Wants To Use Assets For Victims, Courthouse News Service, May 26, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 26, 2015 in Current Affairs, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

District Court Overturns Bankruptcy Court’s Living Trust Decision

Jay adkissonA recent decision by the U.S. District Court for the Northern District of Illinois has overturned a bankruptcy court in a case involving the estate of Linda Castellano.  The District Court has decided that the Bankruptcy court improperly held that a Living Trust created by Linda could be reverted back to her bankruptcy estate at her death and be subject to the claims of creditors.  The Court held that under Bankruptcy Code section 541(c)(2) the living trust was excluded from Linda’s estate.  The Trust did not terminate at Linda’s death “but continued to live a vibrant existence even as of the time that Linda commenced her bankruptcy case.” 

A lot of problems would have been created with living trusts if the District Court would have upheld the Bankruptcy Court’s judgment.  The original ruling was overly expansive and could have caused almost all living trusts to be set aside as “self-settled trusts.”   This decision creates more certainty in the interpretation of section 541(c)(2), a section which is still open to much interpretation. 

See Jay Adkisson, Estate Planning Bar Breathes Sigh Of Relief As Castellano Gets Turned Around, Forbes, May 25, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.     

May 26, 2015 in Current Affairs, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, May 25, 2015

Major Estate Disputes That Have Been Reported On

New bb kingThere have been a few high profile estate disputes that have involved major celebrities and people of interest.  The estates of BB King, Michael Jackson, Leona Helmlsey, Ted Williams, Nelson Mandela, Nina Wang, and Liliane Bettencourt have all been subject to high profile disputes over a wide variety of issues.  These problems range from disputes over things like inheritance, guardianship, pet trusts, mental capacity, power of attorney, and what to do with a body after death.  These highly reported on celebrity disputes bring attention to the wide range of problems that poor estate planning can cause.  It shows the complex factors that a wise estate planner needs to account for when creating wills and trusts and helping a client plan for their future. 

See The who’s who battle for wills, bodies, and legacies, BBC News, May 24, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 25, 2015 in Current Affairs, Death Event Planning, Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, May 24, 2015

Donor-Advised Funds Will Face More Congressional Scrutiny

Donor-advised-fundsMembers of congress from both parties are calling for increased scrutiny of Donor-Advised Funds (DAFs) because of the way these funds are used as a tax avoidance technique.  DAFs have been growing dramatically in recent years, there are now at least 217,000 DAFs representing a 34% increase in the last seven years. 

A DAF is an account set up by a donor and placed under the control of an IRS approved charity.  The charity makes payments from the account to legally recognized charitable beneficiaries who were chosen by the donor.  Donors can also receive a charitable tax deduction for assets put into a DAF while postponing the decision on which charity to support.  Another benefit of a DAF is privacy that a donor gets that would not be available if a donation was made directly to a charitable foundation.  There are many lawmakers who would like to change things because DAFs are costing the treasury a lot of money in lost tax revenue. 

See Diana Britton, The New Reality In Donor-Advised Funds, Wealth Management, January 26, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 24, 2015 in Current Affairs, Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, May 23, 2015

New York Woman Will Leave $200,000 to Her Pet

PetRose Ann Bolasny has decided that after her death she will leave $200 thousand from her estate to her pet Maltese, Bella Mia.  When Rose Ann eventually passes away Bella Mia is set to inherit her “Florida vacation home; the jewels; the wardrobe, and a trust fund, which will pay for a caregiver who can take care of the dog, including taking her on strolls in a baby carriage.”  Rose also has two sons who are going to inherit the majority of the estate. 

See Woman Leaves $200,000 Inheritance To Her Beloved Puppy, Inside Edition, May 22, 2015. 

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

May 23, 2015 in Current Affairs, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)