Wills, Trusts & Estates Prof Blog

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

Friday, August 14, 2020

Why High-Net-Worth Boomers Should Consider Gifting Their Estates In 2020

Estte"The U.S. is on the verge of the largest generational wealth transfer in history."

Millennials are set to inherit $30 trillion from boomers over the next two decades, making them America's wealthiest generation. However, the coronavirus pandemic will likely impact the trend. "Covid-19 has forced many Americans to think more seriously about their own mortality and the legacy they’ll leave behind."

The changes to estate tax legislation is one of the major issues concerning the wealth transfer from boomers to their heirs. Many Americans are having to choose between paying millions in estate taxes or passing on their fortune to their children or grandchildren. 

" Because it is so substantial, estate tax created a large incentive for people to create trusts instead of wills, as trusts are more dynamic – in the sense that you can change or amend them as you wish."

A bypass or AB trust, for example, allows married couples to avoid certain estate taxes when one of them passes away. "By putting $600,000 in a special trust, a wife could inherit $600,000 from her husband with unlimited exemptions."

The estate tax exemption number has grown over the years rising from $600,000 to $5 million. Before 2017, if the value of your estate was less than $5.49 per person or $11 million as a couple, you would be exempt from the 40% estate tax. However, President Trump double that exemption with the Tax Cuts and Jobs Act in 2017. The Act raised the exemption amount to $11.58 million person. 

See Nick Stonnington, Why High-Net-Worth Boomers Should Consider Gifting Their Estates In 2020, Forbes, August 6, 2020. 

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

August 14, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

Need A Loan? Tax Rules Now Let You Borrow From Family At Ultra Low Interest Rates

LoanThe coronavirus pandemic has pushed small business owners to seek for cash to keep their businesses alive and many of them are reaching out to their families for loans. These loans, with low interest rates are a lifeline. 

“People are risking their own money for their brother, sister, kids, grandkids,” says Rebecca MacGregor, an estate planning lawyer with Bowditch & Dewey in Boston, Massachusetts.

Surprisingly, the intergenerational generosity is not rare, as 71% of retirees said they would offer financial support if their family needed it due coronavirus, even if there was a possibility that it would jeopardize their own financial future.

The Internal Revenue Service has announced special interest rates, those rates are as follows:

Short-term — Three years or less: 0.17%

Mid-term — More than three years and less than nine years: 0.41%

Long-term — More than nine years: 1.12%

“You can’t get these rates at a bank! The rates are incredibly low, but the risk is incredibly high. That’s the nature of a family loan,” MacGregor says. 

See Ashlea Ebelin, Need A Loan? Tax Rules Now Let You Borrow From Family At Ultra Low Interest Rates, Forbes, August 6, 2020.

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

August 14, 2020 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

Thursday, August 13, 2020

New York Surrogate’s Court Reviews Will Contest Basics In Granting Summary Judgment Against Will Challenger

SjIn Matter of Tsinopoulos, the Rockland County Surrogate's Court showed that "it is possible to defeat a New York will contest on summary judgment."

Pat Tsinopoulos passed away in 2015 and was survived by a son and a daughter. Her daughter was the petitioner in the case while her son was the objectant. 

Petitioner found a will in a chest in decedent's bedroom about a month after decedent's death. The Will was "a two-page pre-printed form with blanks for the testator to fill in." The Will leaves a majority of the estate to the petitioner, aside form an $11,000 bequest to Objectant. 

After Petitioner offered the will for probate, Objectant challenged the will arguing " (i) the failure to adhere to proper execution formalities of EPTL 3-2.1 (ii) lack of testamentary capacity and (iii) fraud and undue influence." After discovery, Petitioner moved for summary judgment. Objectant opposed the motion, asserting that there was a genuine issue of material fact that remained unsolved.

Petitioner denied playing any part in preparing the Will or writing anything on the will. Petitioner also argued that she provided the original document to her attorney without altering it. 

In the opinion, the court provided a detailed overview of the analysis for summary judgment in a New York will contest, which is as follows:

First, the proponent of the will must introduce facts showing both due execution and the competency of the testator.

To defeat the motion, the Objectant must either (1) identify material facts that contradict the showing on due execution or competence; or (2) identify material facts that tend to show undue influence, fraud and/or coercion.

The allegations must not be mere conclusions, but should be specific and detailed.

The New York Surrogate Court granted Petitioner's motion for summary judgment, holding that the will was duly executed and that the decedent "possessed the basic requisite testamentary capacity. . ." 

See, New York Surrogate’s Court Reviews Will Contest Basics In Granting Summary Judgment Against Will Challenger, Probate Stars, July 29, 2020.

August 13, 2020 in Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

General Disinheritance Clause Defeats Omitted Child Claim Under California Probate Code

InheritanceHugh O'Brian, best known for his role as Wyatt Earp in the 1950's ABC Western television series, The Life and Legend of Wyatt Earp, died in September 2016. 

In Rallo v. O'Brian, the Court of Appeal of California, Second Appellate District, Division Three, the court considered claims raised by O'Brian's allegedly omitted children under the California Probate Code. One of the issue before the court was "whether a general disinheritance clause could defeat omitted child claims by unknown children born before the execution of a testamentary instrument."

O'Brian established the Hugh O'Brian Trust in January 1992. O'Brian married his long-time girlfriend Virginia in 2006. The Trust was mended multiple times and Virginia was the trustee of the Trust. 

O'Brian's death spurred inheritance litigation. "Adam, James Venverloh, Donald Etkes, and Kimberly Rallo brought claims seeking to receive an intestate share of O'Brian's estate as his unintentionally omitted children under section 21622 of the California Probate Code."

The trustee demurred to both Adam and Kimberly's separate petitions and Venverloh's jointly filed petition on the ground that the failed to state a claim for relief. "The trial court sustained the demurrers as to Kimberly and Adam with leave to amend, and they both filed separate petitions", while Venverloh and Etkers decided not to pursue their claims. 

Kimberly alleged that she was entitled as an omitted child to a share of O'Brian's estate equal to what she would have received if he had died intestate. Adam made the same argument. 

Omitted children are generally children who are born after the execution of a decedent's testamentary documents and who are not provided for in those documents. 

Kimberly and Adam argued that a general disinheritance clause cannot defeat an omitted claim under the California Probate Code, but can only defeat a claim brought by an unknown child born after the execution of a will or trust. The California appeals Court disagreed. 

There court found that, under California law, " a general disinheritance clause can be used to disinherit known and unknown children, born both before and after the execution of the testamentary documents, if the intent to exclude the children is shown in the documents."

See, General Disinheritance Clause Defeats Omitted Child Claim Under California Probate Code, Probate Stars, August 6, 2020.

August 13, 2020 in Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Wednesday, August 12, 2020

Woman with husband’s bones gets close look at Munich Airport

BoxPeople bring a lot of different things to the airport when they travel, toiletries, laptops, tablets, games, playing cards, etc. However, it is not very often, if ever, that a passenger packs a box of bones for a flight. 

Yet, police at Munich Airport got a surprise when they searched a wooden box belonging to a 74-year-old passenger. The box contained the bones of her deceased husband.

"Customs officials, a doctor and prosecutors were called in, and they determined no crime had been committed."

Police learned that the woman and her 52-year-old daughter were on traveling from Greece back home to Armenia via Munich and Kyiv. 

The mother said that her husband died in 2008 and was buried in Thessaloniki, Greece and that she and her daughter decided to bring his remains home to a final resting place in Armenia. 

See, Woman with husband’s bones gets close look at Munich Airport , AP News, August 4, 2020. 

August 12, 2020 in Estate Planning - Generally, Humor, Travel | Permalink | Comments (0)

Pennsylvania Supreme Court: Parent With No Legal Duty To Support Deceased Child Does Not Forfeit Share of Intestate Estate

CashIn Estate of Small v. Small, the issue involved the alleged forfeiture of a parent's share in his child's estate where his child died without a will. The question before the Pennsylvania Supreme Court was "whether an adult decedent, who became disabled after reaching the age of majority, was a dependent child for purposes of the Pennsylvania Probate, Estates and Fiduciaries Code's forfeiture statute."

The decedent was 18 when he was shot and became a paraplegic. The decedent died almost twenty years later at the age of 37, with no spouse and no children. Decedent's mother was granted letters of administration. The decedent's estate was made up of only a $90,000 wrongful-death award. 

Decedent's mother filed a forfeiture petition, arguing that decedent's father forfeited his share of the estate by failing to perform his duty of support.

The main issue was whether decedent was considered a "dependent child". The evidence presented showed that decedent was able to perform all of the ordinary life activities, except for walking. Witness testimony provided showed that decedent was mostly self-sufficient.

The Pennsylvania Orphan's Court denied decedent's mother's petition for forfeiture, finding that decedent was not a dependent child. Decedent's mother appealed arguing that the Orphan's Court "narrowed the scope of the phrase 'dependent child'." The Superior Court affirmed and the Pennsylvania Supreme Court granted further review. 

The Pennsylvania Supreme Court affirmed, holding that the mother failed to demonstrate that the decedent was a dependent child and that the father had a duty of care. 

See, Pennsylvania Supreme Court: Parent With No Legal Duty To Support Deceased Child Does Not Forfeit Share of Intestate Estate, Probate Stars, July 31, 2020.

August 12, 2020 in Estate Planning - Generally, Intestate Succession, New Cases | Permalink | Comments (0)

Tuesday, August 11, 2020

Dash for Cash – Informal Funding of Inheritance Has Hidden Dangers

CashVirginia Hammerle had a few clients who happened upon a cash envelope that belonged to their great-aunt after she passed away. After finding the envelope taped behind a dresser, they realized they were going to have to do some searching to find the rest of it. Their great-aunt did not believe in banks so she hid cash around her house.

Hammerle stated that this is not as rare as you might think. Hiding cash and valuables is "well-known phenomenon" especially for those that went through the Great Depression or who have dementia. Popular hiding spots include "inside the mattress, between the wall boards, behind a loose brick in the chimney, under the floorboard, tucked into clothing, buried under the backyard tree, or taped inside the piano."

Before you consider hiding your life savings in your home, you should know that it is not a good idea.

Having a houseful of cash can be dangerous. "Consider the case of Hee-Haw comedian David “Stringbean” Akeman and his wife who were murdered in 1973 after returning home from the Grand Ole Opry. The villains were two thieves who had heard that Akeman had thousands of dollars hidden in his house because he did not trust banks.  The thieves did not find the money, but they had been right; decades later thousands of dollars were discovered hidden in the couple’s chimney and clothing."

Further, your loved ones may never find your cash, your house could catch fire or be hit by a tornado, the cash could disintegrate or become moldy. Also, the "dash for cash" could leave a bad taste in your loved one's mouths. Your loved ones could become bitter and being racing to find the cash and may not be completely honest about what they find. 

You could also be setting your loved ones up for a criminal investigation once they have to deposit a boatload of cash into the bank. 

When you are estate planning, do not forget to make a plan for the distribution of your cash. 

See Virginia Hammerle, Dash for Cash – Informal Funding of Inheritance Has Hidden Dangers, Legal Talk Texas, August 2, 2020.

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

August 11, 2020 in Death Event Planning, Elder Law, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

How Conservation Easement Tax Shelters Became An Issue In A Current Georgia Congressional Race

Rome"The controversy over syndicated conservation easements tax shelters has raised its ugly head in the Congressional race in the 14th District in Georgia."

It is likely that representation of the district in Congress will be deterred by a primary run off for the Republican Party on August 11th. The runoff candidates for the nomination for the replacement of Tom Graves are neurosurgeon John Cowan and construction executive Marjorie Taylor Greene. 

Below is a statement Marjorie Taylor Greene's campaign issued criticizing her opponent for his connection to the syndicated conservation easement industry:

I’ve never been fond of rats, snakes, and swamp creatures... or liars. My opponent John Cowan is propped up and funded by the good ‘ole boy corrupt Rome swamp that is desperate for special favors and get out of jail free cards. Rome, Ga is plagued by a massive corrupt abusive tax shelter scam currently being investigated by the IRS and the DOJ. . . John Cowan only cares about slithering his way up to the big swamp in DC to join the other swamp creature and play the same age old game of greedy corruption all for power and money. The people won’t stand for this on August 11th! Vote Marjorie Taylor Greene to drain the swamp!"

Ms. Greene is the favorite to win the runoff as she finished first in the primary with 40.3% of the vote. John Cowan  came in second out of six with 21% of the vote. According to his website "he is Pro Trump, Pro Life and Pro Gun and is ready to “fight against any efforts by the left to rebrand socialism, undermine our Constitution or threaten our freedoms”.

If you own property and contribute an easement and passing on your rights to change the property to a qualified organization, you can take a federal income tax deduction for the value of that easement. "Since there is not a lot of market for easements you generally value them based on the difference between the before easement and after easement value of the property."

This allows an investor to invest in an easement and bring in a a whopping amount in tax revenue all for creating an easement. The IRS and the DOJ aren't too fond of the idea and the topic has become an issue in the congressional race. 

See Peter J. Reilly, How Conservation Easement Tax Shelters Became An Issue In A Current Georgia Congressional Race, Forbes, July 31, 2020. 

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

August 11, 2020 in Appointments and Honors, Current Events, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Monday, August 10, 2020

Estate Planning When You Own Cryptocurrency

CryptoIn 2010 Bitcoin had a value of less than one cent; in 2017, a value of $20,000; and at the end of July, 2020, a value of $11,000. 

Cryptocurrency has become a vital financial tool for individuals and businesses, since U.S. Congress has held hearings discussing the digitization of the dollar. Cryptocurrency planning has been neglected and cryptocurrency has been lost. "This has generated tales of people, who discarded their computer hard drives containing thousands of bitcoins now worth millions, sifting through mountains of garbage."

Cryptocurrency can be difficult to understand, so there are steps you should take to integrate cryptocurrency in your estate plan to ensure that your heirs and beneficiaries will avoid the associated risks. 

First, you should preserve the benefits of cryptocurrency. One of the best properties of Cryptocurrency is that it is highly secure. However, if you carelessly record the private key or seed phrase, that security is at risk. You should ensure that your planning procedures include how to secure this information. 

Next, avoid the risks of cryptocurrency. Since crypto can fluctuate even during the course of the day, so in a sense, it should be treated like stock. Also, crypto exists outside of government regulation, so no one is responsible for losses due to scams or theft. 

It is also important to note that without specific language, your trust will not be able to hold cryptocurrency. You must be extra careful if you are drafting your trust to include cryptocurrency, so that your heirs will be able to access it in the event of your death. 

You should ensure that if you or your business own any type of crypto that your estate, business succession and financial plans reflect that. 

See Matthew Erskine, Estate Planning When You Own Cryptocurrency, Forbes, July 30, 2020.

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

August 10, 2020 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Seven Reasons to Update Your Estate Plan Right Now

DynastyThe COVID-19 pandemic has pushed a lot of people to update or complete their estate plans. Due to the COVID-19 crisis, many people are beginning to realize that their estate plans have flaws and are taking steps to improve and correct them. 

Below are 7  common types of trust language in your trust documents that may need to be reconsidered given today's circumstances. 

  1. Mental Capacity Must Be Determined by Two Licensed Physicians
  • Even when things are normal, there aren't usually two physicians actively involved in a person's care. In the wake of the COVID-19 crisis, non-essential medical visits have been limited and physician's assistance is needed elsewhere. 
  1. “Springing” Powers of Attorney
  • The pandemic has given new meanings to the term "incapable" which can even refer to a person that is stuck in quarantine. Therefore, it may be smart to avoid springing powers of attorney. Springing powers of attorney "spring" into effect when your physician deems you incapable, and given the new ways you could be deemed incapable, a springing power of attorney could complicate your estate.
  1. Dead-End Succession Provisions
  • Since the pandemic has proven that is it possible for whole families to be hit with the virus at once, it is in your best interest to make sure there are other avenues and successors for your estate to pass on, in case your whole family is impacted.
  1. Too Much or too Little Detail in Your Health Care Directives
  • "In the pandemic, we have seen health care concerns morph, with intubation and ventilators playing roles not imagined before. For individuals with overly detailed health care directives, their guidance could end up restricting the treatment or, at minimum, confusing their agent’s decisions. "
  1. Overly Prescriptive Distribution Provisions
  • It may also be a good idea to take a look at the parameters you have set on the distribution of your trusts. In the case of the unexpected, it may be a good idea to grant your trustee broad discretion in making distributions. 
  1. Specific Bequest Amounts
  • Given the instability of the market and the uncertainty of the economy, it is a good idea to leave a special bequest to make sure that your loved ones are taken care of before anything else is done with the money left after your passing. 
  1. Providing for Your Communities
  • The pandemic has placed great stress on our communities, so it is important to consider playing a role in the revamp of your community.

See Anna Soliman, Seven Reasons to Update Your Estate Plan Right Now , Fiduciary Trust International, July 29, 2020. 

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

August 10, 2020 in Current Events, Death Event Planning, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)