Wills, Trusts & Estates Prof Blog

The Super Bowl -- Estate Tax Interface

Earlier on this blog, here, here, and here,  I've discussed the considerable family and business strife involved with the Pittsburgh Steelers professional football team.  Now that the Steelers are in the Super Bowl against the Arizona Cardinals, the interface between family-owned football teams and the estate tax has become a topic of increased conversation.

For a very interesting discussion, see Neil E. Hendershot, Steelers and Estate Tax,  PA Elder, Estate & Fiduciary Law Blog, Jan. 30, 2009.

Madoff's destruction of private foundations

By now, most people are aware that Bernard Madoff's schemes cost wealthy individuals a huge amount of money.

But, what is not as often discussed is the impact of his schemes on small private foundations.

Here are some excerpts from  Nicholas Kristof, Madoff and America’s (poorer) Foundations, NY Times, Jan. 29, 2009:

I’ve obtained a list of nearly all the private foundations that invested money directly with Mr. Madoff, at least at the time of their most recent tax filings. Even in the unlikely event that they cashed out since then, they may still have to repay the money to others.

What is staggering is how many of these 147 foundations had all their assets invested with Mr. Madoff and may have been wiped out as a result. For example, the Avery and Janet Fisher Foundation, which supported everything from various museums to meals-on-wheels programs, appears to have been fully invested with Mr. Madoff. And the same is true of dozens more.

The Picower Foundation of Palm Beach, Florida, with nearly $1 billion in assets and a major contributor to non-profits across the nation, has already announced that it will close down because of its Madoff investments. Its beneficiaries have included a neurological research institute at MIT, the New York Public Library and the Children’s Health Fund.

Many non-profit organizations invested with Mr. Madoff and will suffer a double-whammy, losing not only their own savings but also the support of foundations that previously donated regularly but are now broke. And they will also lose some of their individual donors who were invested with Mr. Madoff as well. * * *

I’m posting the list because this is a matter of public concern: These foundations serve the public interest, and if the non-profits that rely on them have been financially crippled we should get a heads up.

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

Zaritsky's Insights on Estate Planning 2009

The following is from an advertisement I received from BNA:

While the über-wealthy may still be sitting pretty upon their vast array of global assets…many of your clients may not be faring so well in the current financial climate.
   

Whether you’re working with those trying to capitalize on their 2008 charitable donations, or average Americans trying to plan for their future, staying up-to-date on every court decision and regulation that impacts estate planning can be a daunting task.  * * *
   

Access estate planning expert Howard Zaritsky’s annual Year in Review, a comprehensive survey of 2008 tax developments for estate planners. This review analyzes all the important 2008 Court decisions and IRS rulings, and also includes:   

• Legislative proposals for estate tax reform in 2009
• A review of the recent family limited partnership decisions and the lessons to be taken from them
• Significant new developments in charitable giving, including charitable trusts
• The new regulations for the generation-skipping transfers
• Sample drafting documents for (1) a family limited partnership, (2) a grantor trust with multiple grantor powers, and (3) a family split-dollar life insurance agreement.

For the complimentary Year in Review whitepaper, register and download here.

Bonds becoming a more popular GRAT funding source

The following excerpts are from Arden Dale, With Stocks Unsure, Bonds In GRATs, Wall St. J., Jan. 29, 2009:

Corporate bonds are making an unusual appearance in a popular form of wealth-transfer trust amid uncertainty over how other assets will fare in the coming year or two.

Low interest rates and slumping asset values have created an excellent environment for grantor-retained annuity trusts, commonly used to transfer wealth without paying gift tax. * * *

Bonds "rarely go into GRATs," but they are a more attractive bet now because they seem less uncertain than traditional equities and perhaps have a greater chance of outperforming a key interest rate * * *

Even as estate planners recommend GRATs and other gifting strategies, they are concerned about possible rule changes under the Obama administration that could take away some of their tax benefits.

For example, rules that let donors reduce taxes by discounting the value of assets in family limited partnerships and limited liability companies are widely expected to change. A new bill in Congress, H.R. 436: Certain Estate Tax Relief of 2009, would eliminate a method often used to reduce the worth of assets in FLPs and LLCs. An appraiser generally sets the value at a lower rate so that the gift will be reduced and less tax will be owed.

Special thanks to Patrick S. Sylvester (Attorney & Counselor at Law, Sylvester Law Firm, PC) for bringing this article to my attention.

Lady Helen Ward -- "The" Divorce Attorney

Earlier on this blog, I discussed how billionaire Bernie Ecclestone (president and CEO of Formula One Management and Formula One Administration) is planning to sue his trophy wife, Slavica, for over $100 million in his attempt to recover property he placed in off-shore trusts in her name.  I also mentioned that he hired Lady Helen Ward as his attorney.

Here is some additional about this powerful divorce lawyer from Robert Mendick, Madonna, Guy and the grande dame of divorce, Evening Standard, Jan. 30, 2009:

A workaholic, with a reputation for sending fierce legal letters at three in the morning, Lady Ward has carved out perhaps the most lucrative divorce practice in the world, with a celebrity client list coveted by her rivals. It is an impressive feat for a lawyer whose first words of advice to prospective clients are: "Why do you want to spend all this money getting divorced?"

Incidentally, her title comes through marriage to the Court of Appeal judge Lord Justice Ward, who divorced his first wife in 1982 before marrying Lady Ward a year later.

She is now poised to earn record fees. Her latest client is Bernie Ecclestone, the Formula One grandee, who appointed her last week after dispensing with his previous lawyer. Her task will be to claw back as much as possible of £2 billion that Ecclestone put in an offshore trust in the name of his wife Slavica for tax reasons. The settlement, when it finally comes (sources suggest the case will drag on for at least a year) is expected to be the biggest in history, earning Lady Ward, who charges £500 an hour, huge fees. One rival lawyer suggested she could make as much as £2 million this year alone. * * *

Other clients include Lord Lloyd-Webber, Paloma Picasso, Ian McEwan, Countess Spencer and David Seaman, the former England and Arsenal goalkeeper.

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

Impact of the Marshall decision

Robert M. Harper (Associate, Farrell Fritz, P.C.) has recently published his article entitled The Probate Exception to Federal Jurisdiction, Prob. & Prop., Jan. 2009, at 60.

Here is the introduction to his article:

Until the U.S. Supreme Court’s decision in Marshall v. Marshall, the probate exception to federal jurisdiction perplexed many federal courts and probate practitioners.  Indeed, before Marshall, the extent to which the probate exception barred U.S. courts from presiding over cases involving estates was unclear. This article discusses the Marshall decision and explains how its progeny have developed in the federal circuit courts throughout the country.

Call for Papers -- Rapid publication possible!

The following message is posted on behalf of the Estate Planning and Community Property Law Journal at the Texas Tech University School of Law:

The editors of the Estate Planning and Community Property Law Journal are currently seeking a law review style article (including footnotes) to complete Book 2 of its inaugural volume. It is permissible that the author previously published the article on SSRN or pursuant to a state bar seminar. Although the journal operates out of Texas Tech University School of Law, the article need not be confined to Texas law if it has a broad national appeal.
   

The article can be either academic or practical in nature, the subject matter of which can include: intestate succession, wills, trusts, testamentary substitutes, powers of attorney, inter vivos gifts, powers of appointment, joint tenancies, multi-party accounts, retirement accounts, annuities, life insurance, probate courts, probate proceedings and alternatives to formal proceedings, personal representatives, administrators, executors, trustees, trust and estate creditors, trust and estate beneficiaries, heirship proceedings, fiduciary litigation, income taxation of trusts and estates, federal and state transfer taxes (gift tax, estate tax, and generation-skipping transfer tax), alternative reproductive technologies, guardianships, medical powers of attorney, directives to physicians, anatomical gifts, long-term care insurance, disability income insurance, Medicare, Medicaid, elder abuse, marital property in community property jurisdictions, homestead and similar statutory asset protections, and historical, social, economic, international, ethical, professional responsibility and professional malpractice analyses related issues.
   

Do not miss the opportunity to be published with the only student-led estate planning journal in the nation. Please send all submissions or questions to [email protected].

Organ Donor Debate

Earlier today (January 29, 2009), a segment aired on Fox & Friends which focused on whether a person who has agreed to donate his or her organs should have priority for an organ over a person who is unwilling to donate his or her organs.

The debate was between Dave Undis (Executive Director, LifeSharers) and Dr. Robert Higgins (heart surgeon).

You may watch this segment by following this link (about 4:30 in length).

Off Topic -- Worst client ever?

I think Weusi McGowan may qualify as the worst client an attorney could ever have.

Why, you ask?

Weusi was on trial for kidnapping and assault.

On Monday, January 26, 2009, he smuggled a bag of feces (his?) into court and spread them in his attorney's (Jeffrey Martin) hair and on his face.  He then flung the rest at the jurors but his aim was bad so no jurors were hit.

The judge raised Weusi's bail from $250,000 to $1 million.

See AP, Man smears feces on his lawyer, flings it at jury, Newsweek.com, Jan. 28, 2009.

Special thanks to Joel Norris (May 2009 J.D. Candidate, Texas Tech University School of Law) for bringing this article to my attention.

If only it were true ----

This morning, I found the following message in my in-box.  Despite the enticing possibilities, I've decided to keep my "day job."

Hello Friend,
   

This is to notify you again for the last time that you have been listed as an Heir to the total sum of 'Ten Million Six Hundred Thousand Great British Pounds' in the codicil and last testament of the deceased (Name now withheld since this is our second letter to you). Our contact to you is based on the legal fact that you bear the same last name identity with the deceased therefore we can present you as the heir to the inheritance.
   

All legal papers will be processed on your acceptance of this deal. We request that you kindly forward to us your letter of acceptance; your current telephone and fax numbers and a forwarding address to enable us file necessary documents at our high court probate division for the release of this sum of money.
   

Please indicate your interest immediately via my private email for us to proceed. I shall feed you with full details of this transaction upon receipt of your reply towards this proposal.
   

Best Regards,

Mr. Issac Bailey

Tel: +44-703-596-9152

Email: contact.issac(at)rediffmail.com