Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Tuesday, September 16, 2014

Planning With A Bypass Trust


The bypass trust is a common estate-planning tool for marital estates where the couple’s potential combined taxable estates exceeds the exemption equivalent for one of the spouses. 

Utilizing the bypass trust involves balancing the estates in terms of value pre-death and then each spouse having a will that mirrors the other spouse’s will.  The wills then divide each spouse’s property into two shares.  One share is tied to the size of the applicable exclusion and the other is left outright to the surviving spouse and qualifies in the first spouse’s estate for the marital deduction.   This strategy zeroes out the estate tax in the first spouse’s estate and minimizes the tax in the survivor’s estate. 

While the bypass trust is an effective strategy, it may not be best for you or your client.  There are several things to look for that may make utilization of portability and a simple will a better approach.  If the children are all adults and can handle large bequests, a trust may not be necessary.  Moreover, portability may be the way to go if the parents reside in a state that does not have an estate or inheritance tax.

See Roger A. McEowen, Should a Bypass Trust be Used as Estate Planning Tool? Agriview, Sept. 5, 2014.

September 16, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, September 15, 2014

Common Estate Planning Mistakes


While creating an estate plan is not at the top of everyone’s to-do list, it is important.  Yet, oftentimes when people do get around to making their after-death arrangements, there are a multitude of ways they can stumble.  Below are some classic estate planning mistakes people tend to make, so you will know what not to do when it comes to your own plan.

  1. Assuming Estate Plans Are Only for Wealthy.  Estate planning is for anyone who wants to know what will happen to their end-of-life medical care, assets, children or private affairs if they become incapacitated or die.  In other words, this includes all of us.  “Absolutely everyone, 18 and older, needs an estate plan, no matter his or her net worth.”
  2. Thinking Your Finances Are Too Simple for an Estate Plan. No one’s life is as simple as it may seem, and even if it is, you should still consider putting protections in place to help ensure your wishes are known.
  3. Procrastinating on Your Estate Plan.  For peace of mind, it is best to start the process earlier.  It is a great way to reduce familial stress when you are no longer in a position to make decisions.
  4. Neglecting Digital Assets.  Do not forget to tell your loved ones about your digital assets.  This may include making arrangements to transfer passwords and digital copies of important documents.
  5. Forgetting About Your Pets. Your pets are personal property so you should take the time to spell out who will be responsible for them.  Pet trusts can help you set aside money to outline how you will pay for their care. 

See Sheryl Nance-Nash, 7 Common Estate-Planning Blunders Not to Make, Forbes, Sept. 15, 2014. 

September 15, 2014 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, September 13, 2014

Estate Planning for Unmarried Couples

Couple doing paperwork

Estate planning is a must for everyone.  The benefits are palpable including tax savings, efficient disposition of assets, end-of-life decisions, financial security for heirs and general peace of mind. 

For unmarried couples, the issues concerning financial and estate planning can be complex and the rules burdensome.  Below are some key planning strategies unmarried couples should keep in mind to protect both partners:

  • Account and Property Titling. Legal ownership of property or accounts can affect how they are distributed in the event of a legal owner’s death.  Partners can utilize trusts, tenancies in common, and joint tenancies with the right of survivorship to own property.
  • Retirement Plans. Unmarried couples must make sure that the correct person receives retirement benefits and that they are not subject to avoidable taxes. To ensure your partner receives the assets from your retirement accounts you must fill out a beneficiary form. 
  • Wills, Healthcare and Power of Attorney. Wills allow unmarried partners to provide for loved ones.  A durable power of attorney for healthcare will specify the individual who can make healthcare decisions for you if you cannot make them for yourself.  Furthermore, you should have a financial power of attorney so your partner can make financial decisions on your behalf. 

See Cathy Pareto, Estate Planning Must-Haves For Unmarried Couples, Investopedia.

September 13, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, September 12, 2014

Keeping Private Estate Planning Documents Private


As I have previously discussed, Robin Williams’ decision to rely on trusts rather than a will for his estate planning protected the privacy of his estate and family. Despite his efforts to keep his estate matters private, some information regarding a no longer effective insurance trust was found by media outlets due to the instrument's involvement in previous litigation. Here are three tips for planning professionals to keep their clients private documents private:

  1. Avoid including any personal information in documents that is not necessary for the validity or use.
  2. Limit the number of full copies of testamentary documents and use redacted copies when possible.
  3. Be mindful when transmitting documents and use web security if possible.

See Kim Kamin, Protecting Client’s Privacy, Wealth Management, Sept. 5, 2014.

September 12, 2014 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 10, 2014

The Benefits of a Horse Trust

HorseHorse owners know that the long hours spent caring for their beloved horses can be difficult at times, but is worth it.  However, it is important to consider who will also be willing to put in the time and effort it takes to care for horses after the owner dies. If the horses are not provided for in the estate plan, they may end up going to someone who does not have the experience or interest in giving them the care required. While horses and the funds needed to cover care can be left to a trusted friend or family member through a will, a horse trust may be a more desirable option.

A horse trust gives the horse owner more control over the care of the horse, as the trust can give specifics on what funds can be used for and creates more oversight than a simple bequest of the horse through a will. In addition, a horse trust can plan for future events that may occur after the owner has died, such as the death of the new owner or left over trust funds when the horse dies.

See Catherine Eberl & Melissa Subjeck, Estate Planning for Your Horses: Protecting Your Horses if They Outlast You, JD Supra, Sept. 5, 2014.

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

For additional information on this topic, see Barry Seltzer & Gerry Beyer, Fat Cats & Lucky Dogs -- How to Leave (Some of) Your Estate to Your Pet, 2010.

September 10, 2014 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, September 8, 2014

Secret Trust of Famous Painter Found Valid

PainterThe dispute over the estate of Lucian Freud, an internationally renowned artist whom recently passed away, has been settled in a British court. The claim for recognition of a secret trust was brought by one of Freud's daughters, Rose Pearce, and Freud’s solicitor, Diana Rawstron. The defendant, one of Freud's sons, Paul Freud, claimed that the trust was not mentioned or validated in the will. Pearce and Rawstron stated that the trust was revealed to them by Freud, the proof of which is confidential.

A secret trust is not expressly mentioned in a will and the trustees traditionally disburse the residue to an unnamed entity, and a half-secret trust is mentioned in the will while the ultimate beneficiary still remains unnamed. Pearce and Rawstron contended that even if there was evidence of a trust, the criteria for a half-secret trust would still be met. The Judge sided with Pearce and Rawstron based on clause 6 of the will, in which they were mentioned specifically by name as trustees to jointly control the entirety of the estate.

See Ryan Mowat, Famous Painters and Secret Trusts, Dispute Resolution Law Blog, Sept. 1, 2014.

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

September 8, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, September 5, 2014

Wills of WWI Soldiers Garner Huge Interest

WWI SoldierAs I have previously discussed, last year the wills of thousands of fallen British soldiers from WWI were published online by Her Majesty's Court and Tribunal Service (HMCTS). The historic documents that were found in the pockets of the soldiers have garnered huge interest from scholars, historians, and the general public. The site has received over a million searches for these wills and over 10,000  individuals have purchased their own copy of one of the wills.

See Ministry of Justice, Over One Million Searches for War Heroes’ Wills, GOV.UK, Aug. 29, 2014.

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

September 5, 2014 in Estate Planning - Generally, Web/Tech, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, September 4, 2014

Local Politician Leaves Detailed Will, Deteriorating Estate

WillSteve Flood, who died three years ago, left a legacy of fighting corruption and uncovering political scandal as former Luzerne County controller in Pennsylvania. When Flood died at age 67 he had a detailed will in place that left generous gifts to close friends and academic institutions. Flood’s will also specified that any items in his estate linked to Adolf Hitler and his American medals could not ever be sold, but could be made available to the public by lending them to museums.  Despite the detail Flood included in his will, his executors are facing challenges in settling his estate due to unexpected financial pitfalls that affected Flood after he wrote his will, such as the recession negatively affecting his investments and a stroke that left him unable to work.

See Jennifer Learn-Andes, Steve Flood’s Estate is a Tangled Web, Times Leader, Aug. 30, 2014.

September 4, 2014 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Prince Harry and Prince William to Inherit Diana’s Wedding Dress

Princess_Diana_wedding_dressAs I have previously discussed, Prince Harry will inherit more than £10 million this month when he turns 30. Even though his share from his mother’s estate is equal to the share received by Prince William, Prince Harry will receive more due to the interest that has accrued since Prince William received his share in 2012. Additionally, Prince William and Prince Harry will receive other items such as Princess Diana’s wedding dress, which has been cared for by her brother until both princes reach age 30.

See Corey Charlton, Prince Harry to Inherit £10 Million Share of Diana’s Fortune When he Turns 30 Next Month, Aug. 31, 2014.

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

September 4, 2014 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 3, 2014

Six Financial Steps for the Newly Single


It can often be difficult adjusting to life after divorce both emotionally and financially.  Here are six financial steps for the newly single:

  1. Finalize Finances. Make sure that the terms of your divorce settlement are actually executed, including changing the way financial accounts are titled, transferring divided assets into new accounts, executing any necessary quitclaim deeds, etc.
  2. Disinherit Your Ex.  Prepare a new will, trust, medical directives, and power of attorney.  Select new beneficiaries on all retirement accounts and insurance policies. 
  3. Check Credit Reports.  It is important you establish a list of liabilities that need to have your name of your ex’s name removed from them. 
  4. Don’t Make Irreversible Decisions.  Think strategically rather than emotionally.  Undoing a rash decision can cost you a lot of money down the road.
  5. Think Strategically.  Although you may need to purchase a new car or house, be strategic about it.  If you need cash, do not liquidate your retirement accounts.  A better option may be to open a line of credit.
  6. Have a Team in Place.  Surround yourself with a CPA, trust attorney, and financial adviser who all share your values and possess a strong desire to work with you to preserve your income, protect your assets, and build your net worth.

See Steph Wagner, Newly Single? Here Are 6 Financial Steps Just For You, Philly.com, Sept. 2, 2014.

September 3, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)