Wills, Trusts & Estates Prof Blog

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

Thursday, July 19, 2018

Article on A Critique of the American Arbitration Association's Efforts to Facilitate Arbitration of Internal Trust Disputes

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-07-20/0526006d-fde1-47e4-b716-fe020a8ce0fb.pngE. Gary Spitko published an Article entitled, A Critique of the American Arbitration Association's Efforts to Facilitate Arbitration of Internal Trust Disputes, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

The American Arbitration Association (AAA) first promulgated rules specific to wills and trusts arbitration in July 2003. The AAA subsequently has amended those rules several times, most recently in June 2012. This chapter focuses on the AAA’s June 2012 Wills and Trusts Arbitration Rules. The Introduction to the AAA Wills and Trusts Arbitration Rules points out that every year the executors of estates and the trustees of family trusts, charitable trusts, and commercial trusts administer billions of dollars’ worth of property with respect to the estates and trusts for which they serve as fiduciaries. Inevitably, disputes arise with respect to the administration of these estates and trusts and the interpretation of these wills and trust instruments. The Introduction posits that arbitration may be a suitable means for resolution of these disputes “privately, promptly, and economically, utilizing as the arbitrator a lawyer or lawyers with substantial experience in the area of wills, trusts and estates.” Implicit in the touting of these virtues of arbitration by the drafters of the AAA Wills and Trusts Arbitration Rules is the understanding that the drafters sought to promulgate rules for administering wills and trusts arbitrations that would maximize these benefits of arbitration. Moreover, implicit in the very concept of arbitration rules specific to wills and trusts arbitrations is the expectation that the drafters would consider the nature of will and trust disputes in promulgating such specialized arbitration rules and would seek to promulgate rules complementary to this nature. This chapter evaluates the AAA Wills and Trusts Arbitration Rules in light of these goals that presumably were at the center of this pioneering effort to craft rules specific to the arbitration of will and trust disputes and therefore considers the extent to which the Rules promote the private, expeditious, cost-effective, and expert resolution of will and trust disputes.

The chapter finds the Rules wanting and suggests ways in which adopters might vary the procedures set forth in the Rules to better serve the interests of a testator, settlor, or parties arbitrating a will or trust dispute. The ability to contract around the oversights and shortcomings of the AAA Wills and Trusts Arbitration Rules, however, is not a panacea. Ad hoc drafting, especially when it is extensive, incurs the risk of litigation over the meaning of the customized provisions. Indeed, a presumed virtue of adopting an arbitral organization’s rules of arbitration procedure is that the rules will have been utilized by others extensively over time and their meaning will have become settled. Thus, the AAA itself should form a study group to analyze the nature of will and trust disputes and to recommend arbitration procedures best suited to that particular nature. The AAA should then revise the AAA Wills and Trusts Arbitration Rules accordingly.

July 19, 2018 in Articles, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Wednesday, July 18, 2018

CLE on Estate Planning for Farmers and Ranchers

CLEThe National Business Institute is holding a conference entitled, Estate Planning for Farmers and Ranchers, on Tuesday, July 24, 2018 at the Ramada Midtown Grand Island in Grand Island, Nebraska. Provided below is a description of the event:

Program Description

How to Protect Farm Assets and Transfer Them to Heirs

Estate planning for farms and ranches requires specialized knowledge and tools to ensure the best client representation. This legal course will give you the knowledge to preserve the farms and other assets your clients have worked their entire lives to acquire and build. Explore the challenges and opportunities unique to estate planning for farmers to help make good sense of difficult legal and financial policies. Learn what you need to know about estate taxes, wills, trusts, government programs, and other key elements. Help your clients take care of their estate planning needs and their family's future - register today!

  • Take full advantage of government farm programs and valuation discounts.
  • Explore the deciding factors in choosing the right business entity when planning ownership transfer.
  • Analyze the liquidity of farm assets and augment each plan accordingly.
  • Employ all available tools for transferring assets and preserving wealth.
  • Tackle harvest yield predictions and other unique factors of farm asset valuation.

Who Should Attend

This basic-to-intermediate level seminar is designed for:

  • Attorneys
  • Estate and Financial Planners
  • Accountants and CPAs
  • Tax Preparers
  • Trust Officers
  • Paralegals

Course Content

  1. Business Structure Choice and Conversion - Including Sample Documents
  2. Income and Gift Tax Planning
  3. Medicaid (Long-Term) Planning for Farmers and Ranchers
  4. Planning for a Gradual Transfer within the Family
  5. Transfers upon Death: Key Estate Administration Concerns

Continuing Education Credit

Continuing Legal Education – CLE: 6.00

Financial Planners – Financial Planners: 7.00

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 7.00 *

* denotes specialty credits

July 18, 2018 in Conferences & CLE, Elder Law, Estate Administration, Estate Planning - Generally, Income Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, July 17, 2018

Your Mid-Year Estate Planning Checklist

BeachSummer can be a busy time with kids out of school and vacations in full swing, but it can also be a prime period to review your estate plan and see if there needs to be any adjustments. Below is a checklist that could assist to make sure you cover the essential points.

  • Review your existing Will and any trust agreements.
  • Consider whether your named fiduciaries are still appropriate.
  • Review your beneficiary designations.
  • Consider income tax planning.
  • Review existing insurance coverage (life, homeowners, umbrella, disability, long-term care, etc.).
  • Review your investments – and your investment advisors.
  • Review how your assets are titled.
  • Fund your trust(s)
  • Determine/confirm your estate tax domicile.
  • Get educated – meet with your estate planning attorney and financial professionals to discuss all of the above.

See Lisa P. Staron, July 11, 2018 - Trusts and Estates Group News: Your Mid-Year Estate Planning Checklist, Murtha Law, July 11, 2018.

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

July 17, 2018 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Monday, July 16, 2018

3 Principles for a Successful Family Legacy

LegacyThe next few decades will see the largest transfer of wealth between generations that has yet to occur in this country and in the world. Estate planning has become a less taboo subject among high net worth families as the prospect of extending their own legacy has become more prevalent and important. Those that adhere to the following three core legacy planning strategies have more success when transitioning wealth between generations.

  • Integrate planning
    • Your legacy is as much about providing financially for future generations as it is about how you wish to be remembered, and communicating with your advisors as well as your family will help you develop a detailed wealth plan that aligns with your legacy goals.
  • Evolve a healthy family wealth culture
    • A shared set of attitudes, values, goals and behaviors that characterize you as a family to many is more valuable and important than money in and of itself. Consider the elements that define your family’s culture, and keep them in mind as you designate goals for your wealth.
  • Develop the rising generation
    • Younger generations may have difficulty distinguishing between wealth and money, and their attitudes toward each may be apparent. Be a beacon and a role model, revealing to them how thoughtful spending, investing and charitable giving contribute to a sense of purpose.

See Catherine Schnaubelt, 3 Principles for a Successful Family Legacy, Forbes, July 13, 2018.

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

 

July 16, 2018 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Helpful Guide to Locating an Advisor-Friendly Trust Company

Advisor_BookThis book, 2018 America's Most Advisor-Friendly Trust Companies 7th Edition: The Winners List: Details On Their Technology, Custodians, Fees, In-House Experts, Advisor Support and More, provides detailed information on trust companies which the authors believe are better at working with advisors.

With over 5,000 trust companies in the United States, this guide may assist both advisors and private investors in narrowing their search for the company which will best serve their needs.

In addition, the book provides useful information on how trusts operate and why they may make an effective part of a person's estate plan.

This publication is available on Amazon.com in Kindle format.

July 16, 2018 in Books, Trusts | Permalink | Comments (0)

Sunday, July 15, 2018

Article on Discretionary Trusts: An Update

TrusteesRichard C. Ausness recently published an Article entitled, Discretionary Trusts: An Update, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

In the past, settlors tended to limit a trustee’s discretion by setting forth a specific formula for the distribution of trust assets. Nowadays, however, settlors often prefer to vest more discretion in their trustees. This is partly due to the fact that beneficiaries tend to live longer and, therefore, trusts inevitably last longer, thereby requiring trustees to respond to changing conditions. In addition, settlors often believe that vesting increased discretion on the part of trustees will discourage beneficiaries from bringing expensive and disruptive challenges to their decisions.

Nevertheless, the trend toward increased discretion is not without its problems. First of all, there is a need to balance the wishes of the settlor against the duty of the courts to oversee the conduct of trustees and other fiduciaries. In addition, it is also necessary for courts to balance the wishes of the settlor with the right of the beneficiaries to receive fair and impartial treatment. Finally, it is necessary to determine when, if ever, creditors should be able to reach a beneficiary’s interest in a discretionary trust. The article begins with a description of the various linguistic formulas that settlors have typically used to describe the scope of a trustee’s discretion. It concludes that no language, however broad, can completely shield a trustee from judicial scrutiny. It then examines some of standards courts invoke when they purport to review the exercise of discretion by trustees. These standards be classified as subjective, objective or a combination of both.

The article also examines the ability of trust beneficiaries to challenge a trustee’s exercise of discretion. In addition, the article discusses the rights of creditors and concludes that discretionary and support trusts are treated like spendthrift trusts. This means that providers of necessary goods and services, as well as spouse, ex-spouses and minor children, can often reach a beneficiary’s interest in a trust. Finally, the article suggests some improvements in certain problem areas and advises drafters to be more specific about what a trustee can and cannot do when exercising discretion.

July 15, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Saturday, July 14, 2018

Unlike Some Feared, TCJA Did Not Block a Trust's Ability to Deduct Expenses Incurred Due to Property Being Held in Trust

TrustThe passage of the Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the ability of individuals to claim miscellaneous itemized deductions beginning with their 2018 income tax returns. Many professionals and clients worried that these deductions included those from property held in trust. IRC §67(g) provides that, "Notwithstanding subsection (a), no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026."

Notice 2018-61 clarified how the rule of miscellaneous itemized deductions, defined at at IRC §67(b) as any “itemized deduction” other than those listed from §67(b)(1)-(12), would impact trusts and estates. The notice also explains that certain types of deductions are not miscellaneous itemized deductions to the trust or estate and thus not barred as a deduction.

The trust will also be able to claim a deduction for itemized deductions that are not miscellaneous itemized deductions.  As the Notice points out: "For example, section 691(c) deductions (relating to the deduction for estate tax on income in respect of the decedent), which are identified in section 67(b)(7), remain unaffected by the enactment of section 67(g))."

See Ed Zollars, TCJA Did Not Block a Trust's Ability to Deduct Expenses Incurred Due to Property Being Held in Trust, Current Federal Tax Developments, July 13, 2018.

Special thanks to Mark J. Bade (CPA, GCMA, St. Louis, Missouri) for bringing this article to my attention.

July 14, 2018 in Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Friday, July 13, 2018

Protecting Your Pets: How to Make Financial Provisions in a Will or Trust

GarfieldIn our modern society pets are no longer simply considered an animal - they are members of a family, providing emotional support and comfort. Laws have not evolved to the point to see pets as not property, though, so certain steps but be taken to provide for your furry loved one after your passage.

Just as children with their growing list of sports, scholastic activities, and college tuition, pets can be quite expensive. According to a Harris Poll survey, Americans spend an average of nearly $1,500 on essentials such as food, grooming, boarding and trips to the veterinarian’s office for their pets each year. Horses are the most expensive at roughly $13,000 a year.

Here, National Head of Trusts and Estates, Gerry Joyce, answers commonly asked questions such as:

  • Should I Use a Will or a Trust to Protect My Pet after I’m Gone?
  • Could I Simply Leave Money to a Trustworthy Friend?
  • Why Is the Trust Document so Important?
  • How Long Can a Pet Trust Continue?
  • How Much Money Can I Leave to Care for My Pet?
  • What Are the Most Unusual Trust Provisions You Have Seen?

See Protecting Your Pets: How to Make Financial Provisions in a Will or Trust, Fiduciary Trust International, June 19, 2018.

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

July 13, 2018 in Current Affairs, Estate Planning - Generally, Humor, Trusts, Wills | Permalink | Comments (0)

CLE on Estate Planning 101

CLEThe National Business Institute is holding a conference entitled, Estate Planning 101, on Wednesday, August 15, 2018, at the Hilton Garden Inn Albuquerque/Journal Center in Albuquerque, New Mexico. Provided below is a description of the event:

Program Description

Provide Your Clients With the Full Spectrum of Wealth Planning Options

Estate planning practice is incredibly complex, varied and intricate. This primer breaks it down into key governing principles and fundamental planning approaches to give you everything you need to successfully deal with clients' asset planning. Understand what the tools are, when they're used, and how they affect clients' taxes and plans. Register today!

  • Understand the laws, key parties and basic plan elements involved in estate planning.
  • Explore the various types of wills and trusts and determine which is best to use in the client's specific circumstance.
  • Predict tax effects of each estate planning tool and coordinate them properly.
  • Help your clients make critical decisions regarding beneficiary designations and powers of attorney.
  • Examine life insurance and marital issues involved in estate planning.

Who Should Attend

This basic level estate planning primer is designed for:

  • Attorneys
  • Accountants and CPAs
  • Estate Planners
  • Trust Officers
  • Tax Advisers
  • Paralegals

Course Content

  1. What is Estate Planning?
  2. Key Parties in Estate Planning: Their Rights, Roles, and Responsibilities
  3. Basic Wills: Goals, Provisions and Execution
  4. Trusts: What They Are and How They're Used
  5. Tax Fundamentals
  6. Probate Basics
  7. Life Insurance in Estate Planning
  8. Beneficiary Designations, POAs and Other Estate Planning Documents
  9. Custody Arrangements, Pre-Nuptial Agreements and Other Family Issues in Estate Planning

Continuing Education Credit

Continuing Legal Education – CLE: 6.60

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

* denotes specialty credits

July 13, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Will Parents’ Long-Term Care Costs Sink the Farm? [Wisconsin]

FarmersFor those from a farming family, a farm is the family home as well as the family business. For medical-assistance benefits purposes, the value of the farm is not considered an asset. But when the parent that received the care passes away, the home's value is part of that person estate and the state will file against it to recoup some of the costs of the care benefits. The inheriting person or people may then have to come up with cash or sell of other assets to make sure the farm is not sold off.

Gifting the farm to the next generation of farming children could be an option, but there are risks. When applying for medical assistance, the state will use a "look back" process of checking gifts of assets transferred within five years. If there have been a hefty gifting of property, certain benefits may be withheld. The parent also loses all control over the farm that they worked so hard for.

A more viable option may protect the farm from long-term care costs but also retain control would be to place the farm in an irrevocable trust and have the parents named as trustees. It would still be reviewed by the state under the "look back" policy, but it will be protected and the parents will retain control.

See Aric D. Burch, Will Parents’ Long-Term Care Costs Sink the Farm?, Ruder Ware, July 11, 2018.

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

July 13, 2018 in Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Trusts | Permalink | Comments (0)