Wills, Trusts & Estates Prof Blog

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

Thursday, April 30, 2009

Estate Tax Update

Estate tax

The following estate tax status update is from US Congressional Budget To Extend Current Estate-Tax Law, Wall St. J., April 27, 2009: 

The congressional budget resolution would maintain the estate tax at current levels, providing an exemption of $3.5 million for individuals and $7 million for couples, the chief Senate Democratic negotiator said Monday.

The value of estates worth more than those levels would be taxed at 45%, said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

April 30, 2009 in Estate Tax | Permalink | Comments (1) | TrackBack (0)

Will adopted partners be charged with incest?

Turnipseed Terry L. Turnipseed (Associate Professor, Syracuse Univ. School of Law) has recently posted on SSRN his article entitled Scalia's Ship of Revulsion Has Sailed: Will Lawrence Protect Adults Who Adopt Lovers to Help Ensure their Inheritance from Incest Prosecution?

Here is the abstract of his article:

There is a growing trend in this country - startling to many - of adopting one's adult lover or spouse for various reasons, mostly inheritance-based. Should one who adopts his or her adult lover or spouse be prosecuted for incest? Think about it: the person is having sexual relations with his or her legal child. Is that not incest? Even if a state agrees that it is, will Lawrence v. Texas now protect this behavior, preventing these people from being successfully prosecuted for this type of incest? Indeed, given its prevalence in modern society, will this be the first post-Lawrence individual sexual privacy rights case to which the Court will grant a writ of certiorari?

In no less than four instances, Justice Scalia in Lawrence warned that adult incest can no longer be outlawed by state or federal governments: with the decision in Lawrence, Justice Scalia lost his incest repellant (i.e., Bowers). Others have echoed Justice Scalia's sentiments. Since the Court's decision in Lawrence, the median viewpoint among legal scholars seems to be that incest is the next battle. It appears that neither Justice Scalia, nor legal scholars realize that the parade of horribles - with adult adoption of lovers leading the band - has already started. It has started with a whimper, though, and not a bang. It has not begun with what is considered "core" incest (sexual relations between biological parents and children or between biological full siblings), but instead with a growing set of behavior classified in many states as incest - sexual relations between an adult who adopts his or her lover or spouse where no parent/child relationship ever existed between the two (a subset of "non-core" incest that also includes sexual relations between distant relatives such as cousins).

For some time now adults - both heterosexual and homosexual - have been adopting their lovers and spouses all over the country for various reasons: to better guarantee the adoptee's right to inherit directly from the adoptor; to keep collateral relatives from having standing to contest the adoptor's estate plan; or to add a loved one to a class of trust beneficiaries (allowing the adoptee to inherit "through" the adoptor). It appears that, post-Lawrence, both the academy and the judiciary have completely overlooked this steadily growing, albeit stealthy, trend.

I wonder if both sides are scared to go to war? Are they scared to engage fully in a prosecution for this type of incest, only to be rebuffed by a Lawrence-based constitutional defense? The stakes are extraordinarily high. If a constitutional challenge to a prosecution for incest of an adult who adopted a lover where no parent/child relationship ever existed were successful, it would likely validate at least some, and possibly all, of Justice Scalia's anxious Lawrence dissent, and the whole house of sexual-crime cards could well fall with it: not only for this strand of incest laws, but also for laws addressing "core" incest, adultery, bestiality, masturbation, fornication, bigamy, and possibly ending with the brass ring of same-sex marriage. Though no one seems to realize it right now, the outcome of this upcoming battle might well impact millions of American lives.

It seems to me that, on balance, the stronger legal arguments favor constitutional protection against criminalization of sexual relations with one's adopted adult lover where no prior parent/child relationship ever existed, i.e., Lawrence protection for this non-core behavior. I suspect that with the right set of facts, the right proponents, and a Court that takes Lawrence at its word, incest laws as they relate to adult adoption of these lovers will fall, and fall relatively soon. My view is that incest statutes may survive a facial attack under Lawrence, but should fall in a challenge as-applied to the non-core incest scenarios addressed in this Article.

An adult who adopts his or her lover (neither ever having been in an adult/child relationship) would seem ripe for protection under Lawrence. This is happening with enough frequency that surely multiple cases will emerge over the next few years, very likely yielding differing results. This would make this issue primed for the Court to grant certiorari sooner rather than later, quite possibly the first post-Lawrence case down Justice Scalia's Teflon-coated slope. If, as I expect and hope, Lawrence is extended to protect against criminalization of this behavior, opponents and supporters will, in time, look back at this issue as the catalyst that spread the Lawrence wildfire. How much of the personal sexual privacy landscape that becomes enveloped by the protection of Lawrence is anyone's guess, but perhaps no post-Lawrence legal issue is presently riper for review, making adult adoption of lovers the stealth bomber that Justice Scalia should fear the most.

April 30, 2009 in Articles, Intestate Succession | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 29, 2009

Estate tax and family businesses

Estate tax David Joulfaian (U.S. Dept. of Treas.) has recently posted on SSRN his article entitled The Estate Tax and the Demise of the Family Business: A Comment.

Here is the abstract of his article:

A recent paper by Brunetti (2006) examines whether the US estate tax forces heirs with insufficient liquid assets to sell inherited businesses in order to pay the estate tax. It concludes that the estate tax has a positive effect on such sales. This note highlights features of the estate tax and succession planning by entrepreneurs that have been overlooked which could explain the observed pattern of business sales. These omissions, along with measurement errors, cast doubt on the reported findings.

April 29, 2009 in Articles, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Estate Planning for Jet Owners

Wade_Strohm Michelle M. Wade (Partner, Jackson & Wade, L.L.C., Shawnee, Kansas) and Dillon L. Strohm   (Associate, Jackson & Wade, L.L.C., Shawnee, Kansas) have recently published their article entitled Trusts, Estate Planning and The Family Jet.

The following is from the introduction to their article:

When a high-net worth family or individual is purchasing a jet that will be flown primarily for personal and family use, it can be useful to consider at the outset how the structure of the ownership and operation of the aircraft fits within the estate plan of the owner and any future ownership or usage by his or her heirs.

Early planning may help avoid the need for future transfers of ownership of the aircraft. Most States impose taxes on transfers of aircraft, and there may also be other state and federal tax issues involved. These often arise when trying to restructure the ownership of the aircraft and transfer it to a trust in order to satisfy estate planning needs.

April 29, 2009 in Articles, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 28, 2009

Should Spainish law adopt the common law trust concept?

Spain Sonia Martín Santisteban has recently posted on SSRN her article entitled The Trust Institution in the United States. Its Applications in Family Law, 2 InDret (Apr. 2009).

Here is the abstract of the article (Note: Article is in spanish):

European civil law jurisdictions that adopted statutes inspired by the Anglo-American trust institution focussed their efforts on the commercial applications, with no intend of adopting the trust as a general instrument available to all citizens. This paper suggests that the Spanish legislator should adopt a broader approach, including the trusts' applications to transfer and protect wealth within the family. The author explains the many applications offered by family trusts in the United States, where it is harder and harder to think of the trust as the tool of social elites or of the rich, only.

April 28, 2009 in Articles, Trusts | Permalink | Comments (0) | TrackBack (0)

Kennedy v. DuPont Analyzed

ERISA Albert Feuer (Attorney, Law Offices of Albert Feuer) has recently posted on SSRN his article entitled A Curious ERISA Case Before the Supreme Court Becomes More Confused.

Here is the abstract of his article:

Kennedy v. DuPont Savings Plan Administrator, No. 07-636 has become even more confused. The estate of a participant (William Kennedy denoted as William) claimed to be entitled to receive William's death benefit on the ground that the designated beneficiary and his former spouse (Liv Kennedy) had waived her right to receive the benefit thereby entitling William's estate, as contingent beneficiary, to that benefit. The waiver was part of a domestic relations order that was not a QDRO.

After hearing the oral argument the Supreme Court requested and received confusing supplemental briefs that were supposed to discuss in effect the question whether the waiver could be effective if the death benefits came from a life insurance plan, which is not subject to the prohibition on the alienation of benefits that is applicable to the death benefit from the pension plan at issue.

The Supreme Court may still be able to discern three ERISA core principles from all the briefs that have been filed in this case and from the oral argument. First, ERISA benefit entitlements are determined by Plan terms. Second, ERISA protects benefit entitlement after the plan has paid the benefits. Third, the QDRO Provisions apply to all DROs pertaining to pension plans. The Court may reinforce each principle by using them explicitly in a decision on behalf of the Plan administrator.

April 28, 2009 in Articles, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

A trustee has the duty to inform a beneficiary of the settlor’s revocation of the trust

Kentucky UPC § 7-303 requires the trustee to keep the beneficiaries of the trust “reasonably informed of the trust and its administration.”

Over a sole dissent, the court in JP Morgan Chase Bank, N.A. v. Longmeyer, 275 S.W.3d 697 (Ky. 2009), held that the identical provision of Kentucky law imposes on the trustee of a revocable trust a duty to inform the beneficiaries of the revocation of the trust under circumstances which could indicate the exercise of undue influence on the settlor.

The duty exists even though the trustee honored the revocation, entered into a custodial agreement with the new trustee, and notified the beneficiaries of the revoked trust only after the new trustee terminated the custodial agreement.

April 28, 2009 in New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, April 27, 2009

Same-sex marriages begin in Iowa

Iowa Earlier on this blog, I reported that the Iowa Supreme Court in Varnum v. Brien (No. 07-1499) held that the Iowa statute banning same-sex marriage is unconstitutional as a violation of equal protection.

Today, April 27, 2009, same-sex couples started to apply for marriage licenses.  There is also a report that a judge wavied the normal three-day waiting period and permitted a lesbian couple (Melisa Keeton and Shelley Wolfe) to marry in Des Moines.

See Amy Lorentzen, Same-sex couples across Iowa apply to marry, Google.com, April 27, 2009.

April 27, 2009 in Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Health and Education Exclusion Trusts

Giarmarco_Julius Julius H. Giarmarco, Esq. (Partner, Giarmarco, Mullins & Horton, P.C.) has recently written an article entitled How To "HEET" Up An Estate Plan.

Here is a summary of the article:

This article discusses the benefits of a health and education exclusion trust (HEET) and what considerations and tactics could be used to set one up. The main reason to set up a HEET is to avoid the gift tax and generation skipping tax. The article gives guidance on how to avoid the pitfalls of the generation skipping tax (GST). If the HEET is subject to the GST, then it is not as effective. For those who are not familiar with HEETs, this is a great place to start.

April 27, 2009 in Articles, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Action for accounting and removal of executor is not a challenge to will

Georgia The testator’s will contained an in terrorem clause applicable to any beneficiary who contests the validity of the will whether or not in good faith and with or without probable cause.

In Sinclair v. Sinclair, 670 S.E.2d 59 (Ga. 2008), the court held that a beneficiary is entitled to ask for a declaratory judgment to determine whether a proposed course of action would violate an in terrorem clause and that because an action for an accounting and removal of the executor is not a challenge to the validity of the will, the action did not violate the in terrorem clause.

April 27, 2009 in New Cases, Wills | Permalink | Comments (0) | TrackBack (0)