Wills, Trusts & Estates Prof Blog

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

Monday, February 20, 2017

How Will We Make Up for the Estate Tax Repeal?

Estate tax repealAs we all know, President Trump has promised to repeal the estate tax, claiming that the tax is just plain wrong. It is easy to say that our country should repeal the estate tax, considering so few families actually pay the tax, but other tax areas will have to give in order to make up for the loss. The estate tax has two siblings—the gift tax and the generation-skipping tax. As of now, it is unclear how President Trump will balance the three taxes. His campaign website sketched out a plan that involved replacing the estate tax with a tax on all capital gains and no mention of the other two taxes. Ultimately, with the estate tax only generating 0.005% of annual tax collections, the tax incites more of a political debate than a federal revenue one. 

See Brian J. O’Connor, Once Again, the Estate Tax May Die, N.Y. Times, February 18, 2017. 

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


February 20, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (0)

Friday, February 17, 2017

Articles in the ACTEC Law Journal

Actec ljSeveral authors recently published Articles in the American College of Trust and Estate Counsel (ACTEC) L.J., Volume 42 (2016). Provided below are the Articles’ titles and authors:

Foreword – The Supreme Court’s Estate Planning Jurisprudence by Bridget J. Crawford

The Four Horsemen and Estate Taxation by Jasper L. Cummings, Jr. 

The U.S. Supreme Court and the Law of Trusts and Estates: A Law Reformer’s Perspective by Thomas P. Gallanis

Irwin v. Gavit: Income Is (Sometimes) in the Eye of the Beholder by William P. LaPiana

Taft v. Bowers: The Foundation for Non-Recognition Provisions in the Income Tax by James R. Repetti

Helvering v. Clifford: The Supreme Court Spoils the Broth by Mark L. Ascher 

Helvering v. Horst: Gifts of Income from Property by Jerome M. Hesch & David J. Herzig

Helvering v. Safe Deposit & Trust Co.: Underestimating the Power of a Power of Appointment by Samuel A. Donaldson

Oklahoma Tax Commission v. United States: Death Taxes on Restricted Indian Personalty by Thomas E. Simmons 

Smith v. Shaughnessy: Slippery Remainder Interests and the Intersection of Gift and Estate Taxes by Ann-Marie Rhodes & Erica E. Lord 

Robinette v. Helvering: Valuation of Gifts to Split-Interest Trusts by Stephanie E. Heilborn & Cindy Zhou

Merril v. Fahs: Release of Marital Rights Is Insufficient Consideration for Transfer Tax Purposes by Kevin E. Packman 

Fidelity-Philadelphia Trust Co. v. Smith: Form over Substance? by Deborah V. Dunn & Domingo P. Such, III

Commissioner v. Estate of Noel: The Double Life of Life Insurance by John McGown, Jr. & Jason Melville 

Commissioner v. Estate of Bosch: 50 Years of Relevance by Jonathan G. Blattmachr & Madeline J. Rivlin 

United States v. Estate of Grace: Seeking a More Objective Test for the Application of the Reciprocal Trust Doctrine by Dennis I. Belcher & Kristen Frances Hager 

United States v. Byrum: Too Good to Be True? by Ronni G. Davidowitz & Jonathan C. Byer

Dickman v. Commissioner: Loans as Property Transfers by Carlyn S. McCaffrey & John C. McCaffrey

Commissioner v. Estate of Hubert: How the I.R.S. Stole Hubert’s Blessing by Kristen E. Caverly

United States v. Windsor: The Marital Deduction that Changed Marriage by Lee-ford Tritt


February 17, 2017 in Articles, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Tuesday, February 14, 2017

Jho Low Trusts Request to File Late Claims

LowThe trusts holding millions of dollars in assets that Malaysian financer Low Taek Jho acquired with money siphoned from a state investment fund are asking a United States judge to let them file late claims in the forfeiture lawsuits. The requests were filed in the same federal court where the Justice Department filed several cases to recover more than $1 billion in assets that were bought by Low and his accomplices with funds stolen from 1Malaysia Development Bhd. These claims come weeks after new trustees were appointed to represent the trusts’ interests, and the new trustees’ lawyers allege that the government will seek to win the case on procedural technicality rather than on the merits. Low asserts that he provided consulting to 1MDB and that he did not break any laws. 

See Edvard Pettersson, Jho Low Trusts Ask to File Late Claims in Forfeiture Lawsuits, Bloomberg, February 14, 2017. 

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


February 14, 2017 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, February 13, 2017

Article on Arkansas Trust Law

Arkansas trustLynn Foster recently published an Article entitled, Arkansas’s Trust Code and Trust Planning: A Ten-Year Perspective, 38 U. Ark. Little Rock L. Rev. 301 (2016). Provided below is an abstract of the Article:

In 2001, the Uniform Law Commission adopted the Uniform Trust Code, which regulates certain aspects of trusts. One impetus for the trust code was the ever-increasing popularity of revocable trusts as part of standard estate planning packages. Another was the fact that few states-including Arkansas--had well-developed common law trust rules, let alone any statutory trust codes. In 2005, the Arkansas legislature enacted a slightly modified version of the Uniform Trust Code (UTC), titled the Arkansas Trust Code (ATC). At that time, the University of Arkansas at Little Rock Law Review published my article summarizing the most important features of the new Trust Code, compared and contrasted with the then-current Arkansas common law of trusts. Since then, over ten years have passed, rendering further commentary timely. This update addresses two broad themes. Part II examines how the ATC has fared in Arkansas courts. Part III discusses some recent aspects of Arkansas trust law not covered by the ATC. Overall, the cases and statutes discussed herein are examined in the context of how they affect estate planning and administration.


February 13, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, February 10, 2017

Article on Fraudulent Transfers to Trusts

Fraudulent transferAlexander A. Bove, Jr. recently published an Article entitled, Can an Incompetent Individual Make a Fraudulent Transfer?, 44 Estate Planning 23 (2017). Provided below is a summary of the Article:

Boston attorney Laurence Barrow (the estate planning equivalent of Clarence Darrow) had recently completed a complicated estate plan for one of his clients. In addition to a maze of international entities and the usual estate planning documents, the plan included a domestic asset protection trust, to be established in Ohio, and which was to hold a substantial portion of the client’s liquid assets. This seemed like a reasonable plan, as the client, Sarah Bellum, was a pediatric brain surgeon and was continually concerned about exposure to malpractice claims. 

Pleased with the plan, Sarah made an appointment to sign the documents in Attorney Barrow’s office. On the morning of the day of that appointment, Sarah was scheduled to perform surgery on a five-year-old patient. She performed the surgery, and after checking on the patient proceeded to Barrow’s office. The surgery appeared to be successful, but a short time after the patient was discharged, the child’s parents noticed some strange behavior by the child. A physician who examined the child advised the parents that the behavior could be part of the recovery process and could possibly cure itself in time, but the child should be watched. 

At Barrow’s office, Sarah reviewed and then signed all documents. It was agreed that Barrow would follow up with instructions on transferring Sarah’s assets to the Ohio trust. On the way home from Barrow’s office, however, Sarah was involved in an automobile accident, suffering a severe concussion that left her in a coma. The doctors felt she had a good chance of recovery, but they could not say when. In their own words, “It could be four weeks or four months or four years.”

Sarah’s coma turned out to last longer than four weeks or four months. She finally regained her competence after four years. As it also turned out, the child’s condition never improved since the parents obtained the second opinion, and it became clear that the child would have a mild handicap for life. Thus, a malpractice suit was brought against Sarah on behalf of the child for the child’s personal injury. In due time, the child’s suit was successful, and the child was awarded a substantial judgment for damages. In suing on the judgment, the child’s attorney asked the court to treat Sarah’s transfer of assets to the trust as a fraudulent transfer, because the child was a creditor at the time of the transfer, and the suit was brought well within the allowable time period. 


February 10, 2017 in Articles, Estate Planning - Generally, Malpractice, Trusts | Permalink | Comments (0)

Ivanka Trump Was Trustee for Murdoch Daughters' Trust

MurdochIvanka Trump was a trustee for a group of shares in 21st Century Fox and News Corp that belong to Rupert Murdoch’s two youngest daughters. During the presidential campaign, she served as a trustee for Grace and Chloe Murdoch, who own a combined $300 million’s worth of shares in the two media groups, highlighting the close ties between the President’s family and the media mogul. A spokesperson for President Trump stated that Ivanka stepped down from the board of trustees at the end of December 2016. 

See Matthew Garrahan, Ivanka Trump Oversaw Murdoch Daughters’ Trust, Financial Times, February 8, 2017. 

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


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

Wednesday, February 8, 2017

CLE on Advanced Estate Planning and Probate

CLEThe State Bar of Texas is holding a CLE entitled, 41st Annual Course: Advanced Estate Planning and Probate, which will take place June 7–9, 2017, at the Westin Galleria in Houston, Texas. Provided below is a description of the event:

Hot Topics:

  • Grievances and Malpractice in Estate Planning and Probate
  • Asset Protection Strategies and Recent Developments
  • Pre-Litigation Strategies in Dealing with Difficult Executors and Trustees
  • Drafting for Flexibility of Trust Modifications
  • Trusts "With Everything"
  • Estate Planning in Light of the New Administration - What Do We Tell Our Clients Now?

Come a day early for Intermediate Estate Planning & Probate Course

Intermediate Estate Planning and Probate will address the ins and outs of taking that next step from basic wills to more sophisticated planning techniques and approaches.

Topics Include:

  • Privacy for Clients - How to Make Someone Disappear
  • What Every Estate Planner Needs to Know About Mineral Interests
  • IP Law for Estate Planning and Probate Attorneys
  • Able Accounts, Arc of Texas, and Special Needs Trusts
  • A Spoon Full of Sugar Helps the Premarital Agreement Go Down - Tips for Representing Perturbed Parties to Premarital Agreements
  • Dissecting a LLC Agreement
  • IRS Lingo
  • Duty of Full Disclosure
  • Best Practices in Interfamily Loans
  • Practical CYA Advice

February 8, 2017 in Conferences & CLE, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, February 6, 2017

The IRS Wants a Piece of Michael Jackson's Growing Estate

BrancaIt has been almost eight years since the King of Pop passed away, and the Michael Jackson Trust is likely worth more than $1 billion, which his children are receiving in disbursements. The IRS, however, is taking Jackson’s executors to court, alleging that $702 million of the inheritance is owed in penalties and back taxes. Under California law, an estate tax filing is supposed to represent a person’s assets on the day they die, which includes a star’s name and likeness. Specifically, the IRS is claiming that Jackson’s likeness had a value of $434 million, whereas his estate claimed it was worth only $2,105 due to his negative coverage in the press. John Branca was the guy responsible for Jackson’s record deals in the thirty-seven years before his death, so it comes as no surprise that he was appointed executor of the late singer’s estate. Branca has been praised for his hand in one of the most remarkable financial and image resurrections in music, grossing the Jackson estate upwards of $500 million after his death. The IRS took notice. Now, Jackson’s personal effects are limbo, creating hardship on his children, but Branca has vowed to not let this IRS feud tarnish his image and his cherished friendship with the King of Pop.  

See Devin Leonard, Michael Jackson Is Worth More than Ever, and the IRS Wants Its Cut, Bloomberg Businessweek, February 1, 2017. 

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


February 6, 2017 in Current Events, Estate Planning - Generally, Music, Trusts | Permalink | Comments (0)

Article on Domestic & Offshore Trust Accounts

Trust accountsMatthew Russo published an Article entitled, Asset Protection: An Analysis of Domestic and Offshore Trust Accounts, 23 Mich. St. Int’l L. Rev. 265 (2015). Provided below is an abstract of the Article:

The focus of this article is to provide an analysis of domestic and offshore trust accounts, including their similarities, differences, benefits, and disadvantages. Because clients seeking trusts come to attorneys at many different stages in their financial lives, it is important to consider the relevant factors that go into determining which trust is better suited for the particular client. This article will present a detailed background on relevant case law, statutes, and other secondary sources that discuss domestic and offshore asset protection trust accounts. Examples of domestic and offshore asset protection trusts will be explained and analyzed. Thereafter, this article will offer a determination on which trust would be better for a client in a given set of circumstances.


February 6, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Sunday, February 5, 2017

Is There Still a Conflict of Interest in Trump's Empire?

Trump trustDays before his inauguration, President Trump stood by his tax attorney at a press conference as she announced that his vast business holdings would go into a trust, a move that would alleviate fears the new President could exploit his presidency for personal gain. However, his eldest son, Donald Jr., and his chief financial officer, Allen H. Weisselberg, have been named trustees of the trust, giving them broad legal authority over his assets and creating speculation for many of his opponents. Further, President Trump will receive notice of any profit or loss on his company and can revoke the trustees’ authority at any time. The purpose of the trust is to hold assets for the exclusive benefit of the President, as the trust remains under his Social Security number for federal tax purposes. Consequently, many are questioning just how far removed Trump is from his businesses so that he abides by the conflict of interest rules.    

See Susanne Craig & Eric Lipton, Trust Records Show Trump Is Still Closely Tied to His Empire, N.Y. Times, February 3, 2017. 

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


February 5, 2017 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)