Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, October 3, 2014

Is A Trust Right For You?


Unlike wills, trusts eliminate probate, a court proceeding that can be costly and time consuming.  Because many people want to steer clear of probate, they try to avoid wills altogether.  Below are some key questions to consider in determining whether a trust is right for you.

  • How much of your estate will go through probate? While trust assets do not go through probate, there are other ways to title assets to avoid probate.  Assets owned jointly with a right of survivorship and assets with designated beneficiaries do not go through the probate process.
  • How expensive is probate? A lawyer can charge three percent or more of the value of the assets going through probate as legal fees.  Additionally, the law allows executors to be paid around three percent of the estate.  Contrastingly, legal fees for trusts are about one percent.    
  • Do you own out of state property? If you own property in multiple states, avoid the probate problem by transferring out-of-state property into a trust. 
  • Will anyone contest your wishes? If you divide your estate unequally or disinherit anyone, a trust reduces the chance of a family fight in court.  If you use a will, certain family members must receive notice of the probate, and if they are left out, it is easier to challenge your wishes.

See Bonnie Kraham, Bonnie Kraham: When is a Trust a Better Option? Times Herald Record, Oct. 2, 2014.

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

Thursday, October 2, 2014

When Do Couples Become Spouses?

Rings 2

Courts are often asked to determine whether or not a plaintiff was a “spouse” of the deceased in estate litigation.  This may be referred to as the “threshold question,” since being recognized as a “spouse” generally enables the plaintiff a greater claim to the estate. 

The courts have made clear that there is no set criteria, however, there are many possible indicators.  Each couple’s spousal status must be reviewed in the context of their own unique facts. 

A recent decision from the British Columbia Supreme Court is illustrative.  Here, Ms. McFarlane and Mr. Goodburn had been family friends for years.  Following the deaths of their spouses, Mr. Goodburn moved into Ms. McFarlane’s home and they began an 11-year intimate relationship.  The couple regarded themselves as husband and wife despite maintaining separate finances.  When Mr. Goodburn became ill, he relied on Ms. McFarlane for care and assistance until his death.  In his will, he left nothing to Ms. McFarlane and she subsequently argued that the will ought to be varied in her favor as it failed to make a provision for her maintenance. 

To determine whether the will should be varied, the court had to consider whether she was Mr. Goodburn’s spouse.  The court answered this in the affirmative based on factors including: the couple shared a home and a bed, Ms. McFarlane provided care and support, the couple functioned as a unit, and each was committed to life-long financial and moral support of the other.  The court found Ms. McFarlane was in fact a spouse, and ordered the will be varied to provide for her. 

See Amy Mortimore, When are Couples Considered “Spouses”? Your Estate Matters Blog, Sept. 22, 2014.

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

October 2, 2014 in Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

The Tools of Personal Finance


Life, like personal finance, is unpredictable, and we must be prepared for the unexpected twists and turns.  Being prepared financially takes a number of steps and tools outlined below:

  1. Well-Funded Checking Account. This is the first line of defense against financial disaster.  Our goal is to never run out of funds in our checking account and to grow this cushion, we avoid spending money on some frivolities. 
  2. Emergency Fund.  This is a small pile of money sitting in a separate savings account away from our main checking account.  Emergency fund is the second line of defense meant to catch heavier blows to our finances that our checking account would not be able to sustain.
  3. Monthly Budget.  Monthly budgeting is an essential tool to plan expenses in accordance with needs.  While a budget will not save you from financial disaster, completing one will only benefit you in the long run. 
  4. Life Insurance.  A life insurance policy that would provide for a comfortable living to the surviving party by paying out a large sum of money to be invested to create monthly cash flow is a good investment vehicle. 
  5. Last Will and Testament.  You cannot always predict life, but at least you can prepare for it with a will.

See Prepare for Financial Disaster: You Need a Swiss Army Knife of Personal Finance, Money Ramblings of a Financial Underdog, Sept. 29, 2014. 

October 2, 2014 in Estate Planning - Generally, Non-Probate Assets, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 1, 2014

Possible Pitt, Jolie Prenup

PrenupRumor has it that in addition to pulling off a private wedding in France this past August, Brad Pitt and Angelina Jolie also put some estate and financial planning in place prior to their nuptials. The International Business Times in Australia has reported that in addition to executing wills, the couple signed a prenuptial agreement that gives Jolie full custody of their children if Pitt is unfaithful to their marriage, and in case of divorce, keeps their individual assets separate and puts marital property in a trust with their children as beneficiaries.

See, Brad Pitt and Angelina Jolie Prenuptial Agreement Makes Estate Planning Headlines Opines UltraTrust.com, PRWeb, Sept. 29, 2014.

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

October 1, 2014 in Current Affairs, Current Events, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 30, 2014

Estate Planning in the Wake of Genetic Advances


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


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


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)