Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Saturday, April 25, 2015

The Dispute Over Robin Williams’ Estate Shows The Need For Better Planning Techniques

Robin_williams1-267x300As I previously discussed, the ongoing legal dispute over the estate of late actor and comedian Robin Williams demonstrates that conflicts can emerge out of an “uncommonly sophisticated, tax-efficient estate plan.”  Darren Wallace, an attorney at Day Pitney’s Stamford office, often recommends creating a Qualified Terminable Interest Property Trust (QTIP) as a way for blended families to avoid many of the types of problems that Robin Williams' estate experienced.    

See Kevin Hunt, Robin Williams’ Foolproof Estate Plan? How To Avoid Family Fallout, Hartford Courant, April 22, 2015.  

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

April 25, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, April 24, 2015

When It’s The Right Call To Put IRA's In A Trust

IRA PictureFor certain high net worth individuals it may be beneficial to place an IRA into a trust fund for the protection of the IRA and beneficiaries from potential bankruptcy and other creditors. Inherited IRA’s do not have these protections so forming a trust might be worth the expense if any problems down the line might be foreseen including divorce and financial difficulties. In addition, trusts offer greater control over the disposition of the assets which might add to the appeal of using a trust. While this is not an issue that will apply to many clients, it is still worth keeping in mind for the right situation.

See Kenneth Roberts, Why You Should Put Your IRA In A Trust, Market Watch, Mar. 27, 2015.

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

April 24, 2015 in Elder Law, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 22, 2015

Attorney Sentenced for Probate Theft

Gavel 3Seventy-year-old Arizona attorney Rodney Matheson was found guilty on charges of theft and fraud for stealing money from his deceased clients’ probate accounts.  Maricopa County Superior Court Judge Bruce R. Cohen sentenced Matheson to 2 ½ years in prison and also ordered Matheson repay more than $1 million to an attorney representing the Mayo Clinic.  Cohen placed Matheson on probation on a fraudulent schemes conviction for seven years, which will begin once he is released from prison. 

According to court documents, Matheson orchestrated an elaborate “shell game” by stealing money from several estates in order to satisfy a court order for payment of $800,000 to the Mayo Clinic, the major beneficiary of a third estate.  The fraud was uncovered when the Mayo Clinic filed a civil suit to collect $1.2 million left to the hospital as a beneficiary by the Mary Jane Schalow Trust.

See Disbarred East Valley Attorney Sentenced to Prison in Probate Theft Case, AZ Central, Apr. 21, 2015. 

April 22, 2015 in Estate Planning - Generally, Malpractice, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Court Holds Trust May Be Reformed to Insert Beneficiaries

TrustAccording to the recent Florida case, Megiel-Rollo v. Megiel, 2015 Fla. App. LEXIS 5601 (Fla. Dist. Ct. App. 2d Dist. Apr. 17, 2015), a trust can be reformed to add beneficiaries when the trust initially fails to include any beneficiaries. 

In the aforementioned case, the decedent prepared a will naming her three children as equal beneficiaries.  Years later, the decedent created a revocable trust, deeding her real property to the trust.  However, upon the death of the decedent, the trust failed to name any beneficiaries.  A dispute subsequently arose among the three children of the decedent regarding the intended beneficiary. 

The drafting attorney filed an affidavit, stating he had made a mistake and should have prepared the Schedule of Beneficial Interest naming only two of the decedent’s children as the beneficiaries of the trust.  Under Section 736.0415 of the Florida Trust Code, a trust may be reformed to correct a mistake.  The court allowed for the possibility of reformation in order to limit the trust to the two children. 

See Jeffrey Skatoff, Trust Can Be Reformed to Add Beneficiaries, Florida Probate Lawyers, Apr. 22, 2015.

April 22, 2015 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Article on Wills, Trusts, Guardianships and Fiduciary Administration

Mary RadfordMary F. Radford (Marjorie Fine Knowles Professor of Law, Georgia State University College of Law) recently published an article entitled, Wills, Trusts, Guardianships and Fiduciary Administration, 66 Mercer L. Rev. 231-245 (2014).  Provided below is the article’s introduction.

This Article describes selected cases and significant legislation from the period of June 1, 2010 through May 31, 2011 that pertain to Georgia fiduciary law and estate planning.

April 22, 2015 in Articles, Estate Planning - Generally, Guardianship, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Gift Tax Implications of Arbitration and In Terrorem Trusts Provisions

GavelIn a recent Tax Court case, a married couple claimed a gift tax exclusion for up to the annual exclusion amount for gifts they each made to a Crummey trust. The IRS disallowed the exclusions because the beneficiaries lacked a "present interest in the property." The IRS based their position on the beneficiaries' inability to legally enforce the rights due to an arbitration and in terrorem provisions.

In Mikel v. Commissioner, the Tax Court granted partial summary judgment to the Mikels, finding that the trust transfers were a present interest. The court reasoned that the beneficiaries could still enforce their rights through arbitration, and the in terrorem provision did not prevent enforcement of withdrawal rights but only prevented challenges to a trust distribution.

See Steve R. Akers, Impact of Arbitration or “In Terrorem” Provisions in Crummey Trusts—Mikel v. Commissioner, T.C. Memo. 2015-64. (April 6, 2015), Bessemer Trust, Apr. 2015.

April 22, 2015 in Estate Planning - Generally, Gift Tax, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 21, 2015

CLE on Estate Planning in Depth

CLEThe American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, Estate Planning in Depth, on June 21-26, 2015, at the University of Wisconsin School of Law.  Here is why you should attend:

Hear the country’s most experienced practitioners share strategies, tips, and insights on some of the most complex challenges estate planners encounter, including:

    -    using trusts to manage inherited wealth
    -    what every domestic estate planner should know about international estate planning
    -    estate planning for digital assets
    -    portability
    -    selecting, educating, and protecting trustees
    -    estate planning with life insurance
    -    estate planning for business owners, including succession planning
    -    assisting elderly and disabled clients with their planning needs
    -    charitable planning from simple to sophisticated

April 21, 2015 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Section 8 Eligibility Lost Due to Special Needs Trust Payments

Gavel2After receiving a $330,000 settlement for personal injury claims, 59-year-old Kimberly DeCambre became the beneficiary of a court-established special needs trust. DeCambre also received Supplemental Security Income, Medicaid, and a Section 8 housing voucher. Her Section 8 eligibility was revoked by the Brookline Housing Authority (BHA) due to trust disbursements in excess of $60,000 in one year. DeCambre sued the BHA claiming disability discrimination and due process violations. One of her arguments was that the BHA's determination was improper because if her settlement had been in a lump sum instead of in a trust it would not have counted as income.

In DeCambre v. Brookline Housing Authority, the U.S. District Court for the District of Massachusetts affirmed the BHA's denial of benefits finding the determination reasonable, but noted that "until the rules and regulations are clarified, public housing authorities should provide clear guidance and instruction for potential tenants with regard to their financial planning and spending."

See SNT Payments Cause Section 8 Ineligibility, Elder Law Answers, Apr. 13, 2015.

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

April 21, 2015 in Elder Law, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Nevada Dynasty Trust Debate

DebateDebate over the constitutionality of dynasty trusts in Nevada has been sparked by differing opinions over a recent Nevada Supreme Court opinion. In a recent opinion the state court mentioned the statutory 365-year limit for non-charitable trusts as the law of the land, but did not address the constitutionality of the statute. Some have interpreted this as the court sending a message that the statute is constitutional. However, others have expressed that the issue is still wide open and the opinion does not give anything that a prediction on future constitutional rulings can be based on.

See Scott Martin, Grudge Match: Why the Blattmachr / Oshins 365-Year War of Words Won’t End, Trust Advisor, Apr. 20, 2015.

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

April 21, 2015 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, April 20, 2015

6 Expensive Estate Planning Mistakes

220px-JamesGandolfiniSept11TIFFThe issues surrounding late Soprano’s actor James Gandolfini's estate provide another example as to why proper estate planning is so important. Below are six mistakes that people often make that could cause headaches:

  1. You are not too young for a will. Not having a will can create a lot of hassle when it comes to naming a guardian for yourself or your children. Creating an estate plan is not that costly when contrasted with the consequences of not having one.
  2. Avoid placing property into joint ownership. Adding a person’s name to an asset like a bank account can create problems, thus, it is better to designate in a will.
  3. A will is not the final word. You might forget about other assets like a 401(k), insurance policies, or an IRA.
  4. Avoid letting the beneficiary squander the inheritance. Creating a trust can be a good way to manage the allocation of estate assets.
  5. Avoid creating sibling rivalry. Disputes between children over a decedent’s estate often cause rifts in families. It is good to plan ahead to avoid these types of problems.
  6. Do not make over-complicated plans. Using complex estate planning techniques, like creating a bypass trust, has its own set of problems. Speak with an attorney about the different viable options.

See 6 Costly Estate-Planning Minefields, and How to Avoid Them, Consumer Reports, Apr. 14, 2015.

April 20, 2015 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)