Wills, Trusts & Estates Prof Blog

The Importance of Following IRS Documentation Rules

Steven J. Fromm (Attorney, Steven J. Fromm and Associates, P.C.) recently published a blog entry entitled IRS Slams Taxpayers: Attention to Tax Details Matter.  In the blog post, he discusses Durden, TC Memo, 2012-140.  Durden exemplifies that documentation rules imposed by the IRS should be followed meticulously if you want to claim a charitable deduction. Please click here to read the blog post about the taxpayers' unfortunate fate in Durden.

Fun blog for mid-lifers

Richard Barnes, a lawyer and author from Valdosta, Georgia, has recently started a blog for mid-lifers "trying to make sense of it all" entitled The Sunder Years.

Richard's initial postings are most interesting and I hope he continues to post on a regular basis to give us the benefit of his insights, wit, and humor.

Social Media Site Legislation Pending in Nebraska

A bill pending in Nebraska would treat Facebook, Twitter, email accounts, and other social media accounts as digital assets that appointed representatives could manage following a user’s death. If Nebraska passes the bill, it would become the second state to pass legislation that grants estate representatives the power to manage a decedent’s social media and online accounts.

The Nebraska bill is modeled after Oklahoma’s similar law that was enacted last year. The Nebraska bill aims to “clarify the right of personal representatives in the new digital age.” Facebook’s currently policy states that the social media site will put a deceased user’s account in a “special memorialized state,” unless a family member of the decedent requests that the page be taken down.    

See Debra Cassens Weiss, What Happens to Your Facebook Page After Death? Nebraska Bill Gives Say-So to Estate Representative, ABA Journal, Mar. 19, 2012.

Steve Jobs Doll Gets Nixed

A Hong Kong toy maker, In Icons, came out with a Steve Jobs doll a few weeks ago and Apple’s attorneys quickly shut down the idea. Prior to his death, Jobs carefully assigned control of his distinctive likeness, including archival footage and the right to re-edit previous appearances. Some estate planners believe Jobs assigned his rights of publicity to his trust or a corporate entity. Apple also reportedly owns the right to sell commercial products bearing the names of its employees (i.e. Steve Jobs).

For clients hoping to protect their distinctive likenesses posthumously, the issue can get a bit tricky. Most states’ laws establish that control over publicity ends at death. Some states, however, have enacted laws to help individuals retain control over their likeness after death. For example, in 1999 California voted to extend the right to profit from a celebrity’s likeness to seventy years. However, the individual must be considered a celebrity for this law to apply.

Attorneys may suggest that clients hold their intellectual property in trust for future generations. It is also important that clients give a clear statement regarding their wishes for control over publicity even in states with no posthumous publicity laws. State laws change, and having a client’s statement on file can ensure that his or her wishes are followed.

See Scott Martin, Steve Jobs Doll Dead On Arrival After Showdown With Family and Estate Managers, The Trust Advisor, Jan. 22, 2012.  

Periodic Table of Estate Planning Elements

Wealth Planning Professionals recently published the Periodic Table of Estate Planning Elements on its website. The table and a brief description of the table are below:

Periodic Table of Estate Planning Elements

 InKnownVision, LLC

Charitable Remainder Uni-Trust	Charitable Remainder Annuity Trust	LLC/CRTs	Rent to Own	Grantor Retained Annuity Trust	ILIT	Offshore Captive Planning
TCLAT	Gift Annuity	Frozen TCLAT	Life Settlements	Sale for Installment Note	Family LP and LLC	QPRTs
Charitable Life Estate	NIMCRUT	Long Term Care Insurance	Pet Trusts	Gifting	Asset Protection	Leveraged Roth Conversion
Private Foundations	FLIPCRUT	Art and Collectibles Planning	Family Bank	Annuity Withdrawal	Intra Family Loans	ESOP Planning
Family Charity Plan	CLUT	Revocable Living Trusts, DPAs	Crummey Powers	Dynasty Trust	Corporate Recapitalization	412(i)
Supporting Organizations	CLAT	Preferred LPs	Jurisdictional Trusts	Premium Finance	SCIN	IRA Maximizer
Bargain Sales	Donor Advised Funds	Life Insurance	Succession Planning	Buy-Sell Agreements	GDOT	Qualified Plan Limited Partnership

 Charitable Planning Tools                           Personal Planning Tools            Qualified Planning Tools

 

The Periodic Table of Estate Planning Elements™ can be used in a number of different ways. With a prospect or client We use the periodic table in initial client meetings in order to help clients understand that there are a number of different techniques, tools and strategies that could be used to help them accomplish their goals. This is always somewhat of an education for clients who are only used to being exposed to revocable living trusts and irrevocable life insurance trusts. In many cases clients have told us that they did not realize that there were other opportunities available to them.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

Problems with Handwritten Wills

The testator left his real property and two bank accounts to his brother under a handwritten will. The will also listed five other individuals and stated, “I would [sic] all the people above to share equally in my estate.”

The Estate Trustee applied for direction on the will’s interpretation, asking whether the real property and accounts passed to the brother only, or whether the property and accounts were to be divided amongst the brother and five beneficiaries, equally.

In Re Brooks Estate, 2011 BCSC 166 (CanLII), the court held that the property was to be divided amongst the brother and the five named beneficiaries according to the plain and ordinary meaning of the words used in the will. The court noted that the only extrinsic evidence of relevance in the case was the fact that the testator’s significant assets consisted solely of the real property and the bank accounts. However, because the court determined the will contained no ambiguity, it found that extrinsic evidence was not required in this case.

See Paul E. Trudelle, To Whom Does the “Estate” Pass?, Toronto Estate Law Blog, Dec. 1, 2011.

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

Unified Management Accounts in Trust Market

Earlier this year, Citigroup added trust services to its Unified Management Accounts (UMA) platform to be competitive in the trust market. A UMA allows advisors to “build a client portfolio out of securities from multiple asset classes and hold them on the same platform.” More advanced UMAs inform clients of third-party investment ideas that they can overlay on their accounts. Citigroup has now added this more advanced UMA option to their platform.

Scott Martin, Citigroup Adds Trust Services to Its UMA Platform, The Trust Advisor Blog, Mar. 6, 2011.

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

Review of The Descendants

Paul E. Trudelle recently posted a review of the move the Descendants on the Toronto Estate Law Blog. Trudelle’s review of the movie is posted below, in full:

I saw “The Descendants” on the weekend. It is a great movie in its own right, but also a great movie from the perspective of an estates and trusts lawyer. The movie raises a number of estates and trusts issues: trusteeship, powers of attorney, living wills, and the threat of estate litigation.

Without wanting to give away the plot, one of the issues referred to in the movie is the “rule against perpetuities”. I don’t expect that “rule against perpetuities” movies will be a new film genre. However, it is an interesting concept and significantly moves the story in “The Descendants” forward.

Simply put, and as well explained in the movie, the rule provides that no interest in a trust will be valid if the trust vests more than twenty-one years after the termination of some life in being at the time of the creation of the trust. The effect of the rule is that a trust cannot continue on indefinitely, and must vest at some point: that is, the trust must vest twenty-one years after the death of a prescribed person.

Much case law, legislation and commentary has evolved in relation to the rule against perpetuities. However, the general application of the rule in most cases remains, and property in a trust cannot be held in the trust indefinitely. We cannot freeze the past forever, and must move on.

Paul E. Trudelle (Attorney, Toronto, Ontario, Candana) Hollywood, and the Rule Against Perpetuities,

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

Web Sites Aimed at Helping Nursing Home Patients and Familes

Last year, the Nursing Home Abuse Blog posted a listed of fifty web sites that are aimed at helping nursing home patients and their families. Ten of the fifty websites listed on the blog are below:

Patient Advocate Sites

1. American Association for Homecare http://blog.aahomecare.org/
   • This blog focuses on accessing care for people and advocating for people in their homes. They provide information about compliance, trends, education, and training and information for the patients and their families.
2. Pathway Medical Staffing http://pathway-medical.com/blog
   • Pathway Medical Staffing recruits and employs nurse case managers and non clinical nursing professionals for nursing home environments.

Nursing Care

1. Caregiver list http://www.caregiverlist.com/blog/Julie/Default.aspx
   • This blog gives updates on important health care information ifor the elderly. It helps those who are caregivers properly care for the elderly.
2. ElderLaw Answers http://www.elderlawanswers.com/
   • This gives an array of answers to some of the legal questions that are faced by the elderly population in the United States. It also gives people information on elder law attorneys across the nation.

Elder Care

1. Eldercare ABC Blog http://eldercareblog.com
   • This blog deals with all sorts of issues in caring for the elderly ranging from financial elder abuse, aging parents to average nursing home costs.
2. Elder Abuse by David Kessler http://elder-abuse-cyberray.blogspot.com
   • David discusses the prevalence and problems with elderly abuse in society today. He discusses ways to detect and report the abuse. Contact David Kessler at davidkessler@protectingtheelderly.com.

Family Resources

1. Mama’s Health http://www.MamasHealth.com
   • Mama’s Health provides tools that help educate people to lead healthier lives which makes people lead happier, more productive and lower stress lives.
2. The Health Care Blog http://www.thehealthcareblog.com/the_health_care_blog/
   • All issues of healthcare are discussed by a multitude of authors. Topics range from the healthcare costs, family responsibility to patient safety.

Legal Resources for Patients and Families

1. South Carolina Nursing Home Blog by Ray Mullman of Polikoff & Associates http://www.scnursinghomelaw.com/
   • One of the most diligent bloggers around, Ray does a tremendous job keeping us updated on the ongoings regarding nursing home abuse both in South Carolina as well as the rest of the country.
2. Legal Medicine http://legalmedicine.blogspot.com/ by Dan Frith and Lauren Ellerman of Frith & Ellerman Law Firm
   • Dan and Lauren are Virgina attorneys who do a tremendous job clearly explaining complex issues in medical malpractice and nursing home negligence cases.

Jonathan Rosenfeld, 50 Essential Web Sites For Families With a Loved One In A Nursing Home, Nursing Homes Abuse Blog, Dec. 23, 2010.

Blog Post Regarding Digital Assets

Scott R. Zucker (attorney, Fairfax, Virginia) recently posted a blog on his Wills and Estate Planning Blog entitled Digital Estate Planning: Is the U.K. Ahead of the U.S.? In his blog, Zucker discusses how a study released by the Centre for Creative and Social Technology (CAST) at Goldsmiths, University of London, appears to illustrate that the British are more aware of and concerned with passing on digital assets than Americans are.

Zucker also addresses why the passage of digital assets appears to be more complex in the U.S. than in Britain, with at least thirty-nine online firms vying for the opportunity to provide digital death and afterlife services to Americans.

Zucker also poses several thought provoking questions regarding digital property and the potential laws, concerns, and legal questions that may dictate how an individual can bequeath these assets.

See Scott R. Zucker (attorney, Fairfax, Virginia) Digital Estate Planning: Is the U.K. Ahead of the U.S.?, The Zucker Law Firm PLLC: Thoughts on Wills & Estate Planning, Oct. 21, 2011.

Experts Say Steve Jobs Died Tax-Free

While the specifics of Steve Jobs’ estate plan will likely never be made public, many tax experts claim that his estate will likely not pay a penny in estate tax. 

Jobs transferred real estate into two trusts while he was living. According to SEC filings, Jobs also transferred 5.5 million shares of Apple stock and 138 million Disney shares into  trusts.

It is likely that Jobs’ did not earn anything from Apple or Disney since the transfers. Thus, Jobs likely died with no assets in his name, passing away estate tax-free.

See Steve Martin, Billionaire Steve Jobs Died Tax-Free, Experts Say, The Trust Advisor Blog, Oct. 9, 2011.

Special thanks to Jerry Cooper (senior editor, the Trust Advisor Blog) for bringing this article to my attention.

Blog Post About Steve Jobs' Estate Plan

David Goldman (attorney, Apple Law Firm, PLLC) posted a blog on the Florida Estate Planning Lawyer Blog yesterday about Steve Jobs' estate plan. The blog post is below, in full:

Today there is much speculation about what Steve Jobs' will reading will reveal about his life. Steve Jobs has always been very quiet and protective about his personal life and we all know that he has been very good at protecting business secrets.

I was interviewed today about what Steve Jobs's will and the potential huge estate tax that will be paid. I think if you look at how he managed his life and businesses, it is likely that if Steve had a will, it will not be read and there will be no probate. I believe that none or almost none of his assets will pass under a traditional probate and that there will be no boom to the economy from his huge estate. Steve was married at the time he died and as such jointly held assets or those in a joint trust will probably not be subject to any estate taxes.

It is unlikely that we will hear anything in the next few months and may never know about Steve's estate.

David Goldman (Attorney, Jacksonville, FL), Steve Jobs Will Reading and His Estate Plan, Florida Estate Planning Lawyer Blogs, Oct. 6, 2011.

When a Court Appointed Guardian is Needed

A properly drafted Power of Attorney and Living Will can supply the authority needed to preclude the need for a court to appoint a legal guardian. However, these documents do not bar the need for legal guardianship.

A court appointed guardian may still be required if the named agent dies and no successor agent exists, when multi-party agents raise disputes, or if the agent does not act in accordance with fiduciary standards. Additionally, a court appointed guardian may still be required to stop a client with diminished capacity from engaging in business and monetary dealings to the detriment of his or herself and family.

See Deirdre Wheatley-Liss, When a Power of Attorney isn’t Enough a Guardianship may be Needed, New Jersey Estate Planning & Elder Law Blog, Sep. 8, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this post to my attention.

Clarification on Deductibility of Advisory Fees

The IRS reissued a proposed regulation that would clarify when a taxpayer may fully deduct an estate’s or nongrantor trust’s investment advisory expenses for income tax purposes. Typically, advisory expenses are subject to severe restrictions that can significantly reduce the expense’s deductibility.

In Knight v. Commissioner, the United State Supreme court clarified which of an estate’s and nongrantor trust’s expense are subject to the two percent floor for itemized deductions. The court stated that expenses that are unique to estates and nongrantor trusts are not subject to the floor, while expense that are “customarily” or “commonly” incurred when an individual holds property are subject to the two percent floor when incurred by an estate or nongrantor trust.

See Robert Bloink, Esq., LL.M. and William H. Byrnes, Esq., IRS Clarifies Deductibility of Advisory Fees by Estates and Trusts, Advisory FYI, Sep. 19, 2011.

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

The Estate Tax Saga

Editors of The New York Times’ Bucks Blog recently posted a blog entitled The Estate Tax Saga That Never Ends. The blog covers Paul Sullivan's article on the current state of estate taxes and is posted below, in full:

Paul Sullivan’s topic this week in his Wealth Matters column is estate taxes — specifically taxes on the assets of the wealthy who died in 2010, the year the estate tax lapsed.

When President Obama and Congressional Republicans agreed to reinstate the taxes this year, they also decided to give heirs of those who died in 2010 a choice: file an estate tax return under the new law or opt out and be subject to a different set of taxes. And figuring out those different taxes has turned out to be a major headache, Paul writes, in part because the Internal Revenue Service has not yet completed the form that must be used for filing the alternate taxes.

Yes, this is a problem for the very wealthy. But the trials and tribulations of the rich and famous are often interesting to the rest of us. Take note that among the billionaires who died in 2010 were Dan L. Duncan, an oil tycoon whose estate was the subject of this Times article, and George M. Steinbrenner, who owned the New York Yankees.

Special thanks to Matt Bogin (attorney, Rockville, MD) for bringing this blog to my attention.

Estate Planning for the Cryogenically Frozen Client

Former “American Idol” judge, Simon Cowell, recently told GQ magazine that he wants to be frozen when dies, with the hope that science will advance enough to where he can be unfrozen and live again. Cowell is not the only person considering cryogenic freezing after death. The ALCOR Life Extension Foundation in Phoenix, Arizona already has 100 frozen patients, with almost another 1,000 on the waiting list. But with the possibility of “coming back from the dead” comes issues of paying for the body’s upkeep and preserving assets for if or when the patient is unfrozen.

ALCOR currenlty charges $90,000 for freezing the entire body and requires another $110,000 in a trust for maintenance and storage. As far as providing financially for the patient after he or she is unfrozen, some attorneys point to dynasty trusts. Peggy Hoyt, and estate planner in Florida, drafts “personal revival trusts” specifically designed for cryogenically preserved clients. The trust allows intermediate beneficiaries like family and charities to inherit if something goes wrong and allows for payments to the cryogenic facility.

Regardless of an estate plans’ sound structure today, however, the changing laws of estate planning may make any plan obsolete by the time the patient is unfrozen. When asked her thoughts on preserving assets for a cryogenically frozen client, Pepperdine Law Professor, Kris Knaplund, said “who knows what things will be like in 300 years. If you created a trust for specific purposes in 1711, it is unlikely it would function in the same way today, even if you might have wanted it to.”

Scott Martin, Simon Cowell’s Cryogenic Goals Test Limits of Conventional Trust Planning, The Trust Advisor Blog, Sep. 4, 2011.

Humorous Will Challenge From 1933

Stan Rule (Attorney, British Columbia) posted a blog on the Rule of Law Bolg on August 20 entitled Estate of Watts. The blog discusses a humorous will challenge involving a woman’s bequest to her husband. The blog is below, in full:

Although I don’t recommend taking shots at family members from the grave in your will, it can make for entertaining reading.

I came across a case from New Brunswick, In re Estate of Watts, 1933 CarswellNB 9 (S.C. App. Div.) in which the will-maker left to her husband the sum of $1 "as memento of the manner in which my husband treated me during our married life."

Her husband was not overly pleased with the will. After her death he challenged it in court. He argued that she was under an insane delusion that he had been unfaithful to her, and accordingly that she did not have the mental capacity to make the will. If the Court found that the will-maker was influenced in her decision to essentially disinherit her husband by an insane delusion about him, then she likely was incompetent and the will invalid. There was evidence that she did indeed believe that her husband was unfaithful.

But the Court had some trouble with the argument that the will-maker’s belief that her husband was unfaithful was a delusion, notably the evidence of the family physician that he had treated the husband for gonorrhea, and then treated her for the same disease.

The husband also argued that the amount of the gift was itself an indication of incapacity. In rejecting that argument, Gimmer J. for the court wrote at paragraph 12:

12 It has been held that mere estrangement, distrust, unfounded jealously and unjust resentment of fancied wrongs will not necessarily constitute delusions. They must be shown to be due to some erroneous belief for which there is no foundation in evidence. Mere peculiarities of mind and eccentricities of conduct in the testator are not in themselves sufficient to render him incompetent. Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.

Inequities Faced by Same-Sex Couples

In her recent blog on Forbes.com, Deborah Jacobs draws parallels between current day inequities faced by gay couples and past inequities faced by women, African Americans, and interracial couples.

The current civil rights laws governing same-sex marriage became law under the Clinton Administration’s Defense of Marriage Act of 1996. DOMA defines marriage as a “legal union between one man and one women.” Forty states currently have some sort of ban on same-sex marriage. More and more courtrooms today, however, are hearing lawsuits challenging the constitutionality of DOMA.

See Deborah L. Jacobs, It's Time To Stop Fighting About Same-Sex Marriage, Forbes, Aug. 4 2011.

Passing on Rights to Purchase Season Tickets

The Faculty Lounge Blog recently blogged about an article published by Sara B. Andrew (Attorney, S.C.) entitled Green and Gold Legacy: Estate Planning for Green Bay Packers Season Tickets, Inside Track, Aug. 3, 2011. The article explains how an individual can pass on his rights to purchase season tickets to his loved ones after his death. In summary, an individual can either leave testamentary instructions detailing what should happen to the tickets after his death, or he can give instructions to the team itself concerning the tickets.

See Estate Planning for Packers Fans, The Faculty Lounge, Aug. 3, 2011.

Special thanks to Alfred L. Brophy (Judge John. J. Parker Distinguished Professor of Law, UNC School of Law) for bringing this to my attention.

Best and Worst Trust Accounting Software

The Trust Advisor Blog recently conducted a poll on the best and worst trust accounting software available. Scott Martin has now posted the results of the poll in a blog entitled the Best and Worst Trust Accounting Software of 2011. The verdict? According to those polled, the winning title goes to AddVantage based on its numerous features, portfolio management, and system wide balancing. Trust Advisor Blog’s chart of the best and worst software of 2011 is below:

click here to download