Wills, Trusts & Estates Prof Blog

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

Wednesday, April 26, 2017

Estate Planning Will Not Become a Thing of the Past

Estate financial planThe estate tax repeal seems inevitable at this point. Accordingly, many people have been wondering whether traditional estate planning will be a thing of the past. The answer? No, estate planning will continue to be an essential part of clients’ financial future. The timing of an estate tax repeal remains uncertain, which could potentially force an excise in planning. The estate planning process should also consider an increase in capital gains taxes to substitute the repeal of the estate tax. Although a repeal may be coming, trusts and other tax efficient ways to distribute wealth are still relevant to estate planning. Overall, the potential estate tax repeal should not diminish the importance of comprehensive estate planning.

See Michael J. Nathanson, Ian D. Barclay & Cary P. Geller, Estate Planning: It’s Not Over, Financial Advisor, April 3, 2017.

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

April 26, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, April 25, 2017

Book on International Trust Laws

International trust lawsPaolo Panico recently published a book entitled, International Trust Laws (2d ed. 2017). Provided below is a summary of the book:

  • Compares trust law across a number of jurisdictions, providing the reader with references to offshore case law legislation and case law that is often inaccessible.
  • Covers law and practice in leading trust centres such as Jersey, Guernsey, the Cayman Islands, the Bahamas, and the Isle of Man, with examples drawn from a wealth of other jurisdictions including New Zealand, Dubai, Mauritius and the Cook Islands.
  • Provides detailed analysis of common law and the recognition and circulation of trusts in civil law jurisdictions where trusts are practised under the Hague Trust Convention.
  • Includes discussion of offshore and onshore trust jurisdictions.
  • The book can be used either with a focus on a particular jurisdiction, analyzing its trust law in relation to those of other jurisdictions; or with a focus on a particular topic, such as settlor's reserved powers, beneficiaries' rights to information, or protector's duties, illustrated by approaches from various trust jurisdictions.

April 25, 2017 in Books, Books - For Practitioners, Books - For the Classroom, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Details of David Rockefeller's Will Revealed

RockefellerDavid Rockefeller Sr., the last surviving descendent of oil magnate John D. Rockefeller, died last month at the age of 101, making him the oldest billionaire at the time of his death. Rockefeller’s will details all issues for his estate from his plans for his Maine island, to his art collection, to charitable gifts. A large part of Rockefeller’s estate was divided up amongst his five surviving children, while the assets that he personally controlled are being sold off to benefit charities. Upon liquidation of his assets, Rockefeller’s estate will likely donate approximately $700 million to various charities and use a leftover $250 million to finance the launch of the David Rockefeller Global Development Fund. Further, the will dictates that his children have first priority to purchase certain owned properties at fair market value, with any leftover properties being donated to historic preservation trusts, land preserves, or charities. Rockefeller also owned approximately 15,000 artworks. The bulk of this collection will go to the Museum of Modern Art.

See Michela Tindera, Inside Late Billionaire David Rockefeller’s Will: Picassos, a Beetle Collection and a Maine Island, Forbes, April 20, 2017.

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

April 25, 2017 in Current Events, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Monday, April 24, 2017

Article on Trustees Baring Legal Title

TrusteeTobias Barkley recently published an Article entitled, Trustees’ Bare Legal Title: Concept or Misconception?, 26 Australian Properly L.J. 44 (2017). Provided below is an abstract of the Article:

There is a widespread idea that trustees hold a ‘bare’ or ‘dry’ title, which is distinguishable from an absolute owner’s title. A number of cases in Australia have suggested this is a misconception and a trustee’s title should not be distinguished from that of an absolute owner. This is said to be required by the theory that beneficial interests are not carved out of the trustee’s title but grafted onto it. This paper will argue this is an error; ‘bare legal title’ is a legitimate and useful concept. First, the carving/grafting theory, when properly understood, is narrow in scope and does not conflict with the idea of bare legal title. Second, the distinctiveness of a trustee’s title is recognised in a wide enough variety of contexts that it can be accepted as a useful general concept for interpreting rules that refer to property.

April 24, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, April 21, 2017

How Can a Community Property Trust Benefit You?

Community property trustOne technique for keeping the value of your estate in the family is a community property trust, which can save clients substantial amounts of money in capital gains taxes. Upon creating a community property trust, the entire value of the property receives a basis step-up when a spouse dies, allowing the surviving spouse to sell the property with reduced or eliminated capital gains taxes. In other words, the capital gains taxes on the property will only be calculated from the appreciated value since the deceased spouse’s death, which will be minimal to zero. This tax-saving strategy is a valuable tool for certain couples, particularly those with low basis assets that wish to hold on to the assets until one spouse dies, but this type of trust should not be used for all client situations.

See What Is Community Property and What Are Community Property Trusts?, Wealth Management, April 18, 2017.

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

April 21, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on How Equity Finds Expression in the Constructive Trust

Nigeria trustKato Gogo Kingston & Mercy Oke-Chinda recently published an Article entitled, To What Extent Can Equity Find Expression in Constructive Trust Under the Nigerian Legal System?, 58 J.L., Policy & Globalization (2017). Provided below is an abstract of the Article:

The object of this paper is to examine the assertion that, constructive trust is a vital legal mechanism through which the conscience of equity finds expression. When real property is acquired in such circumstances that the legal title holder may not in good conscience keep the beneficial interest, equity makes him a trustee of the property. This treatise does not seek to provide a comprehensive philosophical analysis of constructive trust as a subject-matter however, it sets out to elucidate the landscape, growth and cogency for the imposition of constructive trust as probably a safer means by which the legal and equitable interests of the relevant parties may be protected in real and personal properties. Thus, the paper assessed the degree to which constructive trust as equitable remedy is applicable under the Nigerian legal system. Also, the paper seeks to offer viable suggestions for the improvement of the concept and applicability of constructive trust in contemporary settings.

April 21, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Liability from Breach of Duty by a Superannuation Trustee

SuperannuationJoseph Charles Campbell recently published an Article entitled, Some Aspects of the Civil Liability Arising from Breach of Duty by a Superannuation Trustee, Sydney L. Sch. Research Paper No. 17/31 (2017). Provided below is an abstract of the Article:

- Under the general law the drafter of a trust deed has great freedom to decide what equitable duties the trustee will be under, subject only to the irreducible core of obligations of a trustee, and any duties imposed by state legislation that are incapable of being excluded. The drafter of a superannuation trust deed is more limited, because unexcludable statutory covenants in s 52 Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”) provide a minimum set of trustee’s obligations, and s 56(2) SIS Act imposes a further limit on what general law duties can be excluded.

- Section 56 SIS Act gives all superannuation trustees a right of indemnity from the assets of the trust fund even for liabilities that the trustee has incurred in breach of trust. The right of indemnity is the same for all the trustees, even though the circumstances that can sometimes justify such a right of indemnity are not the same for all trustees. An unsatisfactory consequence of the existence of the right of indemnity is that a professional indemnity insurer of the trustee would be entitled to be subrogated to that right of indemnity. Administrative powers of ASIC or APRA might deter a trustee from exercising its right of indemnity, but the criteria on which such administrative action might be taken are not articulated.

- The jurisdiction of the Superannuation Complaints Tribunal can not only result in the Tribunal making orders against a superannuation trustee, but can also give rise to an equitable duty on a trustee.

- There is considerable doubt about whether equity will require a trustee who breaches a trustee’s duty to pay compensation to an individual beneficiary for consequential financial loss, or for personal suffering that arises from the breach of a trustee’s duty. Equity will sometimes impose liability on people who are associated with a trustee’s breach, but only in quite specific types of circumstances.

- In contrast with the situation in equity, when there has been a breach of a statutory covenant section 55 SIS Act enables a trustee, a director of a corporate trustee, and a person involved in a trustee’s breach of a statutory covenant, to be held liable for all the loss or damage that anyone suffers in consequence of that breach. Persons involved in a breach of a statutory covenant will be under a statutory liability under s 55 in circumstances where they would not have had liability under the general law. The damages payable under s 55, by both trustees and persons involved, are compensation for all financial loss and personal suffering caused by the breach. These damages are likely to be larger, in some cases, than any equitable compensation that might be recoverable for the breach.

April 21, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, April 20, 2017

Book on Trusts & Estate Planning in Israel

Israel trusts and estatesAlon Kaplan recently published a book entitled, Trusts and Estate Planning in Israel (2016). Provided below is a summary of the book:

Trusts and Estate Planning in Israel traces the trust concept in Israel and its use for private and commercial purposes under current Israeli trust law. The creation of trusts by law, by contract, by Hekdesh deed (an Israel trust) and testamentary trusts are analysed. Estate planning using the Hekdesh or testamentary trust and its tax implications, public and charitable trusts are explored, and special attention is given to trust protectors, privilege and confidentiality, court jurisdiction, arbitration, taxation and foreign trust recognition.

April 20, 2017 in Books, Books - For Practitioners, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Wednesday, April 19, 2017

The Future of the Gift Tax

Gift taxAt this point, Americans are convinced that the estate tax will be eliminated, but what about the gift tax? Estate planners are cautioning that this uncertainty should not be taken lightly, as changes to the gift tax could create undesired tax ramifications or potentially make it easier to avoid taxes. Because the gift tax is often viewed as a backstop to the estate tax, some may view their combined elimination as a sound option, but not so fast. The gift tax also backstops the income tax, potentially allowing people to play games and income-shift, while realizing a reduced number of tax brackets. One way to prevent taxpayers from playing income-shifting games is to increase the capital gains tax; however, this strategy could ultimately create further complications for dynasty trusts. Whatever the outcome may be, it is important for estate planners to advise their clients on the potential consequences of any changes to the gift tax.

See Allyson Versprille, Gift Tax Tweaks Could Lead to Unsavory Avoidance Tactics, Bloomberg, April 10, 2017.

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

April 19, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Tuesday, April 18, 2017

Article on Class Actions as Trusts

Class action trustSergio J. Campos recently published an Article entitled, The Class Action as Trust, 91 Wash. L. Rev. 1461 (2016). Provided below is an abstract of the Article:

The class action is controversial because the class attorney can litigate or settle the claims of the class members without their consent. Many scholars have turned to corporate law to address the potentially disloyal behavior of the class attorney. These scholars have used analogies to corporate law to support (1) the use of opt-out rights and (2) restrictions on class conflicts to constrain class attorneys, and the law has generally mirrored both requirements. In practice, however, both of these requirements have undermined the efficacy of the class action and prevented the class action from being used in many appropriate settings.

This Article argues that a more useful model for the class action is the trust. Unlike the shareholders of a corporation, the beneficiaries of the trust typically cannot exercise control over the trustee. Moreover, unlike the corporation, trust law facilitates the creation of trusts with conflicts among the beneficiaries. These features of the trust mirror the most controversial features of the class action.

The Article shows that both of these features are necessary to address problems of scale found in both contexts. Unlike in the corporate context, both the trust and class action contexts lack a well-developed market for managerial control which would allow beneficiaries/class members with conflicting interests to cede control to a third party with better aligned interests. In the absence of such a market, retaining control among the divided beneficiaries/class members prevents them from investing in the res/claims at the right scale.

Accordingly, trust law shows that class action requirements such as opt-out rights and class cohesion are misguided. The article concludes by applying the trust model of the class action to such class action issues as the ascertainability of class members, settlement pressure on the defendants, and cy pres awards.

April 18, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)