Wills, Trusts & Estates Prof Blog

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

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Tuesday, September 30, 2014

Estate Planning in the Wake of Genetic Advances

DNA

Today, the freezing of ova and a sperm for later usage is almost a common practice and is quickly developing.  However, laws have not caught up with these advances.  State law in this realm varies from one jurisdiction to another.  Some states treat genetic material that has been fertilized differently than genetic material that is not fertilized.  A few states mandate that there must be an indication that you intend to have children with the person providing the other half of the genetic material.  “Many areas of the law intersect in this area.  In addition, there are religious and moral issues.  It’s a political hot potato.”

Genetic advances generate issues for estate planning.  Most states recognize children born within nine months of a parents’ death as lawful heirs and few states recognize posthumously conceived children.  This raises questions concerning whether such a child will have inheritance rights and what will be done with the genetic material you left behind?

While these answers may not be clear, it is important to be explicit about your wishes when drafting your estate plan.  When defining beneficiaries who are eligible to inherit, include language such as, “all my children, including those born within X years of my death.” 

It may be better to use a trust for this purpose rather than a will.  “With a trust, you don’t have to close it out in 18-24 months.  You can have things sitting around waiting.”  For example, the trust can hold assets until a child reaches a certain age. 

See Gail Buckner, Some Estate Planning is Really Complicated, Fox Business, Sept. 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 30, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, September 29, 2014

Officials Scrutinize Andrew Madoff's $16 Million Estate

Andrew Madoff

Until he passed away earlier this month, Bernard Madoff’s last surviving son was under investigation for possible involvement in his father’s multibillion-dollar Ponzi scheme.  Despite his passing, scrutiny over his $16 million estate continues. 

The court appointed trustee seeking to recover money for conned investors began to dissect Andrew Madoff’s wealth far before his death, filing an updated lawsuit this summer accusing him and his brother of having full knowledge of their father’s scheme and using it as their “personal cookie jar” that they tapped through bogus loans, fabricated trades and overdue compensation. 

Although Andrew maintained he and his brother Mark knew nothing of the massive fraud, as they were the ones who went to the authorities after their father confessed to them, investigators said they believed the brothers were never unaware. 

Officials said it was likely Andrew Madoff would have faced tax evasion charges if he had not died.  The ultimate goal was using federal charges as leverage to get him to return money to investors.  After Andrew Madoff’s death, his will was publicized, revealing an estate worth $16 million.  The trustee is seeking to recover money from the estates of both brothers and has the power to pursue money and assets wherever they are disbursed. 

See The Associated Press, Bernie Madoff’s Last Surviving Son was Under Scrutiny Until he Died—and Questions Still Surround $16 Million Estate, NY Daily News, Sept. 28, 2014.

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

September 29, 2014 in Current Affairs, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Estate Planning Documents: Location, Location, Location

Location, location, location

“Location, location, location” are three words we often associate with real estate; however, location very much surrounds the realm of estate planning. 

Besides drafting a will, it is critical that family members and close friends know where they can locate documentation after a loved one’s passing.  A will establishes directives for disposing of a deceased’s assets, but it may not disclose where those assets can be found.  Additionally, a will may be silent on a deceased’s wishes involving funeral arrangements or other important details.  If these documents cannot be found, you run the risk of having your wishes go unfulfilled.  Hence, it is crucial to not only have an estate plan in place, but to have it where it can be found. 

Although planning out the details of your after-life wishes may seem uncomfortable, think of it as planning for loved ones’ peace of mind.  When thinking of where to place this information for others’ future use, remember, “location, location, location!”

See Margaret S. Barr, Location, Location, Location re: Estate Planning Documents, The National Law Review, Sept. 28, 2014.

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

September 29, 2014 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, September 28, 2014

Estate Planning for Today's Modern Family

Family

Today, non-traditional family households outnumber the so-called, “traditional,” husband-and-wife households.  According to U.S. Census Bureau data, married husband-and-wife couples represented 48 percent of American households in 2010, down from 52 percent in 2000 and 78 percent in 1978 percent in 1950. 

While shifting families seem to be the new norm, laws and policies across the U.S. have largely failed to keep pace.  This means that advisors who work with non-traditional families must take extra care when it comes to key estate planning matters.  “Estate planning for what I call a modern family, one that’s blended or has unmarried partners, for example, might require you to handle things like the will, powers of attorney and beneficiary designations differently than you otherwise would.” 

Discrepancies as to how federal and state laws treat couples based on marital status are one reason estate planning for non-traditional families “may require a lot of work-around strategies.” 

For example, it is crucial that estate planning legal documents explicitly specify the rights and powers a surviving partner will have in the event the other partner dies.  Otherwise, unmarried partners are effectively strangers in the eyes of the law, regardless if they have been together for years. 

See David Port, Estate Planning for the Modern Family, Life Health Pro, Sept. 25, 2014.

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

September 28, 2014 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 24, 2014

Article on The Art and Science of Disinheriting Heirs

WillRobert L. Moshman, Esq. recently published an article entitled, The Art and Science of Disinheriting Heirs —Part I: Practical Mechanics of Disinheritance, The Estate Analyst, September 2014—Part I. Provided below is the introduction to the article:

It has become a common refrain of late for wealthy people, such as Bill Gates or Gloria Vanderbilt, to announce that they are not leaving the bulk of their wealth to their children but instead are taking a “giving pledge.” Some celebrities, such as the late Philip Seymour Hoffman, have gone further by disparaging the corrosive influence of wealth and then “throwing shade” on trusts because they create spoiled “trust fund kids.” A significant number of ordinary estates have reasons for excluding or limiting particular heirs. Others can end up being disinherited by accident. How should disinheritance be implemented? What legal remedies are available for disinherited heirs? What alternatives should grantors consider? Here, in Part I of this article, we examine the practical considerations in drafting disinheritance clauses.

September 24, 2014 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, September 21, 2014

Estate Planning with Smartphones

Smartphone

With the release of the new iPhone 6, it is becoming more apparent that smartphones are relied upon to make lives a lot easier.  From checking the weather to buying stock, there is almost nothing these phones cannot do.  In Australia, an individual came up with another innovative use for his smartphone when he used it to prepare his Last Will and Testament shortly before taking his life.

Karter Yu typed his Will on the notes application installed on his iPhone, titling the document his “Last Will and Testament.”  When challenged, the Supreme Court of Queensland, Australia declared the electronic document to be the Will of Mr. Yu.  Thus, the document was admitted to probate.  The court specifically noted that the document contained the decedent’s signature and was automatically time and date stamped by the phone. 

While this is a unique example as to how technology is molding estate planning, it is not recommended that individuals use the same “do-it-yourself” digital approach.  Because technology is advancing rapidly, electronic communications can be easily lost or outdated.  Furthermore, these communications may fail to meet the traditional requirements of testamentary formalities.

See Are iWills the Way of the Future? The National Law Review, Sept. 19, 2014.

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

September 21, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Technology, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, September 19, 2014

Deceased Celebrities Provide Important Estate Planning Reminders

Shooting StarThe estate planning decisions and mistakes of the rich and famous can provide helpful illustrations and reminders for estate planning. Here are some estate planning lessons illustrated by recent celebrity deaths:

  • Robin Williams: The recent death of Robin Williams in August was an example of how the use of a trust can maintain privacy for a family during the grieving period. However, the terms of a reportedly outdated trust were made public after a co-trustee entered the document into court records to have a new trustee appointed. If a method for appointing a new trustee was established through the trust, then a court order would have been unnecessary and the trust terms would not have become public
  • Casey Kasem: The high-profile family drama that occurred at the end of Casey Kasem’s life highlights the importance of in-depth conversations with family members about end-of-life wishes and nurturing healthy family relationships, especially when multiple marriages complicate the family relationship.
  • Phillip Seymour Hoffman: The choice to use a will rather than trusts by Phillip Seymour Hoffman stirred discussion of the fear of wealthy individuals that their children will be spoiled if they have trusts to rely on for income. However, Hoffman’s decision resulted in significant tax consequences, which brings to light the importance that tax regulations play in estate planning.
  • Michael Crichton: The questions over whether Michael Crichton intentionally disinherited his youngest son provides a remainder of the importance of keeping wills and other estate planning documents updated when new life events occur.

See Thomas Fross & Robert Fross, Lessons Celebrities Can Teach Retirees About Estate Planning, Forbes, Sept. 16, 2014.

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

September 19, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Article on Tracing One Family’s Path to Freedom, Through Love

Terry FranklinTerry Franklin recently published an article entitled, Tracing One Family’s Path to Freedom, Through Love, 28 Probate & Property No. 5 (Sept. & Oct. 2014).  Provided below is an excerpt from the article:

This story is about my search, as a trust and estate lawyer, to find answers to questions about my family’s heritage and to try to discover evidence of the role that rape or love may have played in how my family came to be.

I grew up in Chicago, where my mother’s family lived after migrating from Southern Illinois. We always knew that our ancestors had settled in Southern Illinois in the mid-1840s. Family lore and research performed by a long-deceased distant cousin informed us that there was a will made by my great-, great-, great-, great-grandfather, John Sutton, who died in 1846. We had an abstract of a portion of the will made by John, a white farmer in Duval County, Florida. (Jacksonville is the county seat.) Based on the abstract, we knew that the will provided first for the payment of John’s debts and, then, for his “mulatto slave Lucie” and her eight children, including her daughter, Easter, and Easter’s own six children to be set free on John’s death. The will included a specific direction that they all be moved “to the states of Illinois, Indiana, Ohio, or a foreign country where they and their children could live free forever.”

September 19, 2014 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, September 18, 2014

Tom Clancy's Estate in Dispute

Tom clancy

Tom Clancy left behind an estate worth $83 million when he died in 2013.  Now, his widow’s lawyers are in court disputing that she should be exempt from the $6 million in taxes. 

The lawyers argue that rather than have Clancy’s widow, Alexandra, pay the taxes, the burden should shift to the four children from his first marriage.  Alexandra Clancy is the “sole or main” beneficiary of two-thirds of the estate.  Clancy’s executor previously declared that the $6 million in taxes would be paid by Alexandra’s trust.  However, her attorneys allege that Clancy modified his will a few months before his death to protect his wife from paying the taxes. 

A lawyer for the four adult children commented, “Obviously, we would hope that the original determination by the personal representative is the correct one, because it would be more detrimental to my clients if it were not.”

See Carolyn Kellogg, Tom Clancy’s $83-Million Estate Prompts Family Tax Dispute, LA Times, Sept. 18, 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 18, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Prince Harry Inherits Remainder of Princess Diana's Estate

Princess diana

Prince Harry, the son of iconic Princess Diana, finally turned thirty.  While this is a significant milestone in itself, it is even more momentous because Harry is now entitled to receive the remaining half of his mother’s assets.

After Diana passed away in August 1997, her mother and sister were named the executors of her estate.  The probate filings revealed that Diana left behind assets valued around £21 million (about 31.5 million in USD at the time), netting £17 million after estate taxes. Although Diana’s will called for the assets to be held in trust for her sons, William and Harry, until they turned 25, Diana’s executors petitioned the probate court for a “variance” of the will.  They successfully obtained the variance, which included a delay of the distributions to William and Harry until they each turned 30. 

Diana also addressed the distribution of her personal property in her will, directing the executors “to give effect as soon as possible but not later than two years following my death to any written memorandum or notes of wishes of mine.”  Diana wrote a Letter of Wishes, requesting all of her jewelry and three-fourths of her chattels pass to her sons, with the rest to her godchildren.  The court allowed the executors to ignore the Letter of Wishes because it did not contain certain language required by British Law and Diana’s mother and sister had discretion whether or not to honor her wishes. 

 While we can only speculate on how Diana may have felt about this, the lesson to be learned is that no one should ever rely on a letter, not or other informal writing to pass along significant assets.

See Danielle and Andy Mayoras, As Remainder of Princess Diana’s Estate Passes To Harry, Troubling  Questions Remain, Forbes, Sept. 16, 2014.

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

September 18, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)