Tuesday, June 28, 2016
Being submerged in one of the greatest wealth transfers in history, can force an estate planner to not only pay attention to financial strategies for a high-income individual’s estate but also the psychological and emotional impacts of such asset transfer. Wealthy individuals normally have more challenges creating a legacy due to the amount of assets and the various vehicles they use to pass their assets to the next generation.
Consequently, clients should have a comprehensive estate plan in order to accomplish their specific goals. Further, it is essential to understand the psychological and interpersonal issues that surround large inheritances due to their risky consequences. Allowing inexperienced heirs to become wealthy upon inheritance can surmount to unforeseen problems, which should be carefully planned for. First, the client must consider the specific concerns and risks for each wealthy individual and their family members. Second, the client should take into account the various alternatives to passing a legacy, including a debt-relief gift, contributions to educational funds, and special needs trusts. These steps will help take into account the reality of the family’s situation and what options are best for passing on their estate.
See Robert G. Kuchner, When Is an Inheritance Too Big?, Private Wealth Magazine, June 27, 2016.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this Article to my attention.
Monday, June 27, 2016
Gerry W. Beyer & Brooke Dacus recently published an Article entitled, Puff, the Magic Dragon, and the Estate Planner, 3 Tex. A&M U.J. Prop. L. 1 (2016). Provided below is an abstract of the Article:
With the legalization of medical and recreational marijuana in almost half of the states, practitioners need to be aware of interface between marijuana and estate planning. This article provides a discussion of the major issues that arise. After bringing readers up-to-date with the history of legalized marijuana, the article focuses on how marijuana use may impact a user’s capacity to execute a will and other estate planning documents. The article then examines other estate planning concerns such as will and trust provisions conditioning benefits on the non-use of “illegal drugs” and the impact of marijuana use on life insurance policies. The article wraps up with a discussion of how an estate planner may deal with marijuana-based assets when planning an estate and how to value those assets after the owner has died.
Ying Khai Liew recently published an Article entitled, Reanalysing Institutional and Remedial Constructive Trusts, Cambridge L.J. (Forthcoming 2016). Provided below is an abstract of the Article:
It is often said that English law does not impose “remedial” constructive trusts because it is manifestly inappropriate and fundamentally unjustified to impose trusts through the exercise of judicial discretion and with retrospective effect. This paper observes the definitional deficiencies in this understanding, and reanalyses constructive trusts in terms of the rights which they give effect to. This understanding reveals that English law sets its face against the exercise of discretion in relation only to some “remedial” constructive trusts and not others, and that the perceived difficulties with remedial constructive trusts are often exaggerated. It ends by noting some crucial implications of the reanalysis for the future development of the law.
Friday, June 24, 2016
Alexandra Braun & Anne Roethel recently published an Article entitled, Passing Wealth on Death. Will-Substitutes in Comparative Perspective, Oxford Legal Studies Research Paper No. 38/2016 (2016). Provided below is an abstract of the Article:
Wealth can be transferred on death in a number of different ways, most commonly by will. Yet a person can also use a variety of other means to benefit someone on death. Examples include donationes mortis causa, joint tenancies, trusts, life-insurance contracts and nominations in pension and retirement plans. In the US, these modes of transfer are grouped under the category of 'will-substitutes' and are generally treated as testamentary dispositions.
Much has been written about the effect of the use of will-substitutes in the US, but little is generally known about developments in other jurisdictions. For the first time, this collection of contributions looks at will-substitutes in a comparative perspective. It examines mechanisms that pass wealth on death across a number of common law, civil law and mixed legal jurisdictions, and explores the rationale behind their use. It analyses them from different viewpoints, including those of owners of businesses, investors, as well as creditors, family members and dependants. The aims of the volume are to show the complexity and dynamics of wealth transfers on death across jurisdictions, to identify patterns between them, and to report the attitudes towards the different modes of transfer in light of their utility and potential frictions they give rise to with policies and principle underpinning current laws.
The Article details ten steps to take when kick-starting your estate plan. A couple important steps are to designate a power of attorney and health care power of attorney, so that when you are unable to make appropriate decisions, you have the help necessary. Another important step is to create a list of financial accounts and documents, keeping them in a safe place for when your family members need access to them. Additionally, as circumstances and laws change, always review your estate plan yearly.
See Natalie Campisi, Your Estate Planning Checklist: How to Create a Financially Sound Estate Plan, Go Banking Rates, June 22, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Wednesday, June 22, 2016
The University of Texas at Austin School of Law is hosting a CLE entitled, 13th Annual Changes and Trends Affecting Special Needs Trusts, which will take place on February 9–10, 2017 at the Radisson Hotel and Suites in Austin. Provided below is a description of the event:
Mark your calendar for the 13th Annual Changes and Trends Affecting Special Needs Trusts on February 9-10, 2017 at the Radisson Hotel and Suites in downtown Austin, Texas.
The conference brings together leading professionals in the SNT field, features the latest updates and hot topics, and offers a great set of materials including sample forms, drafting tips, sample language and resources. If you work with special needs trusts—or want to learn how to use, draft, fund, and administer them—don't miss this program!
Check the conference website for more information and updates.
The Radisson Hotel and Suites is offering attendees a special room rate of $199. Call 512.478.9611 and mention 'UT Law' by January 9, 2017 to receive this special rate.
We hope to see you in February!
Tuesday, June 21, 2016
Jeffrey N. Pennell & Alan Newman recently published a book entitled, Pennell and Newman’s Quick Review of Wills, Trusts, and Estates, 5th, West Academic Publishing (2016). Provided below is a description of the book:
This book provides an outline and analysis of Wills, Trusts & Estates, convenient for class or exam preparation. In addition, It provides clear and concise explanations of legal concepts and terms, along with exam hints, strategies, and study tips. Topics covered include intestacy, will execution formalities and contest, revocation, will contracts, will substitutes, construction, restrictions on disinheritance, trust creation and operation, powers of appointment, future interests, planning for incapacity, the Rule Against Perpetuities, wealth transfer taxation, and much more. This title also includes self-testing and diagnostic review questions. Sample essay questions with model answers and detailed explanations are also included.
With the Sumner Redstone saga receiving so much press, many are left to wonder how families become so entangled over financial woes. Perhaps, suggests one attorney, wealthy people should manage their families like they do their money. To help with these family squabbles, an advisor can help avert some of these end-of-life crises and engage the client in difficult communication about family relations. The advisor should stress that any family divides will inevitably lead to fights later on, especially with wealthy individuals. Additionally, it is essential to plan for your estate while competency is not at issue.
See Michael Fischer, Making Sure Your Client’s Estate Doesn’t Go ‘Redstone’, Financial Advisor Magazine, June 17, 2016.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Monday, June 20, 2016
Jonathan Gopman, Michael Sneeringer, & Alan Gassman recently published an Article entitled, West Virginia Passes Asset Protection Trust – Trust Legislation Effective June 8, 2016 – Here Comes the Mountainair Trust, Wealth Strategies Journal (May 16, 2016). Provided below is a summary of the Article:
West Virginia became the 16th state in the United States to establish a public policy and statutes enabling its citizens and persons residing outside of West Virginia to establish an irrevocable trust that can benefit the grantor without being subject to creditors of the grantor when appropriate circumstances apply. Unlike the handful of jurisdictions that have established legislation that invites those from outside the state to have the strongest protection available for transfers to trusts, West Virginia’s statute requires that there be no creditors existing that would be expected to be able to pursue the assets of the trust upon funding, and requires an extensive affidavit to be executed when any contribution is made to the trust that such contribution does not constitute a fraudulent transfer or other inappropriate arrangement.
Notwithstanding the conservative nature of the statute, the authors commend West Virginia’s new policy allowing its citizens and others to establish trust arrangements that will permit assets to be protected from the claims of creditors in situations where other exemptions and strategic forms of ownership that might be utilized would be more expensive, restrictive and inconsistent with investment, retirement and family planning objectives or needs. This statute also potentially provides West Virginia residents who have or will establish asset protection trusts in other jurisdictions to have some confidence that their local law may be applied in a challenge to such a trust structure in a supportive manner if the requirements of the West Virginia statutes are met (or close thereto). Clients who have trusted relatives or close friends in West Virginia who are establishing trusts well before problems are expected to occur may consider this state to be an appropriate situs, and use of the situs can help to prove that there are no expected creditor challenges at the time such a trust is established.
This article provides a summary of the new asset protection trust law in West Virginia and also discusses certain issues that the authors believe will need to be addressed quickly and corrected in subsequent legislation by the legislature in West of Virginia.
Friday, June 17, 2016
A new technique—the beneficiary defective inheritor’s trust (BDIT)—in estate planning has the potential to turn thousands of dollars into millions. A relative would set up the trust with an amount of cash and give the beneficiary, the child, immediate withdrawal power, and when the right to withdraw lapses, the child would then become the exclusive grantor of the entire trust. This would allow young entrepreneurs to “defectively” modify the withdrawal power and continue to withdraw limited funds for HEMS. For income tax purposes this technique would seem to work, but it comes with a lot of risk. Read the article to find out more about BDIT’s pros and cons.
See Allyson Versprille, Estate Planning Tool: Either Genius or Too Good to Be True, Bloomberg BNA, June 15, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.