Wills, Trusts & Estates Prof Blog

Estate Planning Pro Software Version 5.0

National LawForms Incorporated has recently announced the release of 5.0 of its software entitled Estate Planning Pro.   A free demo program is also available.

Here is a description of the program:

Quickly and easily create professional customized estate planning documents for your clients! (available in all 50-states). Version 5.0 incorporates many new features, is state specific and utilizes state-of-the-art document assembly technology to provide a flexible and individually customized estate planning package for each and every client.

Years of research and development have gone into this new release and National LawForms, the company creating quality legal forms and software for the legal professional for the last thirty years is confident that this program will be an invaluable tool for your practice!

Designed to be compatible with all word processing programs and runs on computers with Microsoft Windows. Simply answer questions on screen to tailor your clients’ estate documents.

All documents were created by a group of estate planning attorneys, for attorneys. These documents may be easily customized or edited as needed.

Man of Cloth Accused of Murder to Obtain Trust Fund

Check out the following facts as reported in Pastor who gave eulogy accused of murder, CNN.com, Nov. 30, 2006 and Former California Pastor Accused of Killing Man for His Multimillion-Dollar Trust Fund, FOXNews.com, Nov. 29, 2006:

• Frank Craig (a farmer in his 80s) hired Rev. Howard Douglas Porter to help him develop a museum in Hickman, California.
• Frank named Rev. Porter as the trustee of Frank's estate with an estimated value of $4 million which Frank had inherited from his brother.
• Frank removes his family members as beneficiaries and replaces them with Rev. Porter's church.
• In 2002, Frank and Rev. Porter had a car accident in which Rev. Porter veered his truck off a rural road and struck an oak tree.  Craig survived the crash but was crippled.
• In 2004, Rev. Porter plunged his pickup truck into an irrigation canal and Frank drowned; Rev. Porter walked away unharmed.
• Rev. Porter eulogized Frank at Frank's funeral.
• Frank's family members share their suspicions with police but the police are slow to act because they were focused on the Scott Peterson case.
• Frank's family sued Rev. Porter for fraud, claiming that Frank's two sisters were deprived when the trust was changed to benefit Rev. Porter's church.
• Frank's family and Rev. Porter settle a wrongful death lawsuit.
• Rev. Porter detained this week at a border checkpoint at San Ysidro while returning to the United States from Mexico.
• Rev. Porter is expected to face charges of murder, attempted murder and embezzlement from an elderly person.

Special thanks to all of you who sent me information about this case.

Uniform Disclaimer of Property Interests Act

Adam J. Hirsch (Florida State University College of Law) has recently posted on SSRN his article entitled Disclaimer Reform and UDPIA: The Disappointing Amendments of 2006.  The article will also be published in Estate Planning, Vol. 33, p. 24, December 2006.

Here is the abstract of his article:

This article assesses amendments made to the Uniform Disclaimer of Property Interests Act (UDPIA) in 2006. The article argues that these amendments - which are confined to a single provision of UDPIA concerning the devolution of a disclaimed interest in a remainder, or in a living trust-suffice to cure a glitch in UDPIA. Nevertheless, the solution lighted on by the drafters of the amendment is sub-optimal, in that it contradicts the probable intent of the benefactor in some instances and creates an asymmetry between the devolution of disclaimed property under a will and a living trust, even when the two are functionally indistinguishable.

This article also argues that the 2006 amendments are too limited. They leave untouched sections of UDPIA that call for reform, either because they are constitutionally suspect or because they endanger the effectiveness of disclaimers for tax purposes under the Internal Revenue Code. The article explores how UDPIA's transitional rule, its safe-harbor for disclaimers that satisfy the IRC, and its provision giving effect to both statutory and common law disclaimers raise either one or both of these potential objections. Finally, and perhaps most disturbingly, UDPIA's provision covering disclaimers of joint interests in property creates a loophole in fraudulent conveyance law that asset protection planners can exploit to protect wealthy individuals who face large malpractice or other liabilities.

The article urges the drafters of UDPIA to revisit these concerns and, if necessary, urges local drafting committees to address them independently.

Since most of the states that have adopted UDPIA thus far have already tinkered with it in substantive ways, further tinkering will conform with the existing pattern of enactment of this Uniform Act.

Metadata in Estate Planning Documents and Pleadings

The ABA has recent issued Formal Opinion 06-442 entitled Review and Use of Metadata.  This opinion opens the door to lawyers to comb through electronic versions of documents to seek out potentially usefully metadata such as "the last date and time that a document was saved and by whom, data on when it was accessed, the name of the owner of the computer that created the document and the date and time it was created, and a record of any changes made to the document or comments written into it."  See Lawyers Receiving Electronic Documents are Free to Examine 'Hidden' Metadata: ABA Ethics Opinion, ABA News Release, Nov. 9, 2006.

The opinion places the burden on the sender to remove metadata or to print and then scan/fax the printout.  Here is the ABA's summary of the opinion:

The Model Rules of Professional Conduct do not contain any specific prohibition against a lawyer’s reviewing and using embedded information in electronic documents, whether received from opposing counsel, an adverse party, or an agent of an adverse party. A lawyer who is concerned about the possibility of sending, producing, or providing to opposing counsel a document that contains or might contain metadata, or who wishes to take some action to reduce or remove the potentially harmful consequences of its dissemination, may be able to limit the likelihood of its transmission by “scrubbing” metadata from documents or by sending a different version of the document without the embedded information.

Living Wills Need to be Specific

Extremely important observations about living wills are made in Jane E. Brody, Medical Due Diligence: A Living Will Should Spell Out the Specifics, NY Times, Nov. 28, 2006.

[T]he simple statements contained in most living wills, more often than not, are hard to apply to the great variety of medical situations that can arise.

For example, let’s say you’re a 70-year-old active retiree with congestive heart failure who develops pneumonia and has trouble breathing. You go to the emergency room, living will in hand, stating that if you become terminally ill,  you do not want to be treated with antibiotics or placed on a ventilator. * * *

The admitting physician reading your living will may interpret it as a “do not resuscitate,” or D.N.R., statement, meaning you want no treatment for your life-threatening infection, in which case you would probably die. Yet a course of antibiotics and a week or so with assisted breathing could restore you to your previously active state. * * *

Dr. Mirarchi * * * has studied how health professionals interpret living wills and found that the overwhelming majority think they mean that the patient wants to be treated as D.N.R., when in fact aggressive life-saving interventions could restore some patients to their previous state of health.

Accordingly, he has devised a more comprehensive living will — an advance directive he calls a medical living will with “code status” — that people can fill out in consultation with their physicians and perhaps an attorney to help assure they get the kind of care they would want if they could ask for it. The “code status” tells medical personnel exactly how someone wants to be treated in a life-threatening medical emergency, removing the guesswork.

If, for example, you choose “full code,” the directive would say: “I would like to receive all lifesaving and supportive measures should an emergency arise. Should my condition fail to improve and I am no longer able to make my own decisions, then I would like my advance directive to be active and followed.”

Only at that point, then, would individually stated requests be honored, such as not being resuscitated, defibrillated, ventilated, fed by tube, transfused, given antibiotics or placed on a dialysis machine.

Your living will should also state that you (or your heirs) will not sue health care workers or facilities for following your stated wishes. The document can also call for a two-physician conference before life-prolonging treatments are withdrawn. The final document should be notarized.

Special thanks to Matthew B. Bogin (Rockville, Maryland) for bringing this article to my attention.

Reasons to be an Organ Donor

In Simple choice can save many lives, TownOnline.com, Nov. 24, 2006, Daniel B. Kline provides his anecdotal experience with a person in need of an organ transplant.  Here are some of his thoughts:

She sits on that [organ transplant] list, along with so many others, because too many of us are too selfish, too frightened or just plain too lazy to be organ donors.

I understand people who elect not to be an organ donor because of religious beliefs. I even understand, but don't condone, the person who doesn't want to be cut up after death. What I can't understand is the millions of people who support organ donation, but aren't donors.

Maybe they forget, maybe they just can't be bothered, but none of those reasons matter to the people on the donation waiting list who run out of time to wait. There simply aren't enough organ donors to help everyone, and if you don't sign up as a donor, upon your death your organs won't be donated.

Being an organ donor requires nothing more than checking a box when you get or renew your driver's license. Make that mark and, in the event of your untimely death, many other people get to live because of your gift.

Inheritance Taxation and Equality of Opportunity

Anne Alstott (Yale University - Law School) has recently posted her article entitled Equal Opportunity and Inheritance Taxation on SSRN. 

Here is the abstract of her most interesting article:

Equality of opportunity is understood to be one of the bedrock principles supporting the taxation of inheritance. The idea is that inherited wealth offers an unjustified head start for some individuals at the expense of others. In political theory, this principle is closely identified with the branch of liberalism known as resource equality. But the resource equality ideal has not been fully translated into the legal literature.

The classics of the legal literature use the term "equal opportunity" quite generally and often blend equal opportunity with goals that are quite distinct, like wealth equalization.

This Essay revisits the topic of inheritance taxation to see whether a single-minded focus on equality of opportunity, interpreted as resource equality, can shed new light on questions of legal design. I conclude that the present estate tax and major proposals for inheritance taxation only weakly track the equal opportunity principle. A system of inheritance aimed at equality of opportunity would look radically different than current law or the classic proposals for reform, in at least four dimensions.

First, the equal-opportunity principle suggests that inheritance taxation should be combined with a social inheritance, meaning a government expenditure program that would pay a universal, public inheritance.

Second, in an equal-opportunity regime, gifts and inheritance received from close relatives should be taxed, while those received from peers, spouses, friends, and strangers should be exempt. This counterintuitive rule would reverse the standard result, which is to tax inheritance from parents, children, and other close relatives at the same rates or at lower rates.

Third, the equal opportunity view implies that there should be no penalty on so-called "generation-skipping transfers," which occur when a grandparent leaves her wealth to her grandchildren rather than to her children.

Fourth and finally, equal opportunity suggests that gifts and bequests received by younger individuals should be taxed at higher rates than those received by older individuals.

Inter Vivos Trusts

Travis Robbins of the The Online Lawyer has recently posted a discussion of inter vivos trusts entitled Estate Planning: Intervivos Trust a/k/a Living Trust.

Although this article provides some useful information, readers should note with care the statement that "[t]he expense involved in a Trust is almost always significantly less than that involved in probate administration."  This may be in true in states with expensive, complex, or time-consuming probate systems.  But, in other states such as Texas, this statement is likely to violate Rules of Professional Conduct.  For example, Interpretive Comment No. 22 to the Advertising Rules provides that a lawyer may not advertise that a "[l]iving trust will always save the client money" or that "[t]he probate process is always lengthy and complicated * * * [and] should always be avoided."

Philanthropy & the Estate Tax

Louis Uchitelle, Lure of Great Wealth Affects Career Choices, NY Times, Nov. 27, 2006, explains how changes in the estate tax rate impact spending and career choices as follows:

In an earlier Gilded Age, Andrew Carnegie argued that talented managers who accumulate great wealth were morally obligated to redistribute their wealth through philanthropy. The estate tax and the progressive income tax later took over most of that function — imposing tax rates of more than 70 percent as recently as 1980 on incomes above a certain level.

Now, with this marginal rate at half that much and the estate tax fading in importance, many of the new rich engage in the conspicuous consumption that their wealth allows. Others, while certainly not stinting on comfort, are embracing philanthropy as an alternative to a life of professional accomplishment.

Special thanks to Prof. Joel C. Dobris of the University of California-- Davis for bringing this article to my attention.

Sumner M. Redstone and Midway Games

Earlier on this blog, I discussed a family battle which includes allegations of trustee misconduct with regard to holdings of Sumner M. Redstone, the Viacom chairman.

Geraldine Fabrikant, Play Again, Mr. Redstone?, NY Times, Nov. 27, 2006, discusses the issues surrounding Mr. Redstone's holdings in Midway Games whose stock has dropped considerably in value over recent years.