Wills, Trusts & Estates Prof Blog

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

Tuesday, November 24, 2009

Reverse Mortgages -- A disaster waiting to happen?

Reverse Mortgage The potential pitfalls of reverse mortgages are detailed in Reversals of Fortune, Consumer Reports, Sept. 2009, at 35.

Here is an excerpt from the article:

Reverse mortgages can be valuable as a last resort for seniors who want to stay in their homes and have significant equity but need money to supplement income or banish an existing mortgage payment. With a reverse mortgage, they can trade some of that equity for a lump sum and monthly payouts.

But those loans can be terrible for customers who don't understand the complicated rules governing them and how quickly high fees and interest charges can balloon. They can end up stranded in their homes without any remaining equity to cover unexpected costs later in life.

Use of the loans is exploding as lenders—who shoulder almost no risks—push them to the growing ranks of retired baby boomers, especially for spending on vacations, new cars, and more.

Lawmakers and regulators are getting worried.

November 24, 2009 in Articles, Elder Law | Permalink | Comments (1) | TrackBack (0)

Estate Tax Proposal: Treating Earned Wealth & Inherited Wealth Differently

Estat tax The New York Times recently featured an op-ed piece by Ray D. Madoff (professor of law, Boston College), which essentially proposes that the federal estate tax be reformed as follows:

  • Earned Wealth: Provide a large estate tax exemption, as much as $10 million, for the transfer of family farms and businesses that constitute a significant portion of the estate and that both generations have been involved in running for several years.
  • Inherited Wealth: Provide a small estate tax exemption amount, suggesting that a $1 million or $2 million exemption and a 55% estate tax would be reasonable. 

See Ray D. Madoff, Protect the Farm, Tax the Manor, NY Times, Nov. 21, 2009.  

For a detailed review of this estate tax proposal, see Hani Sarji, Ray D. Madoff's opinion on fixing the federal estate tax: an unbalanced proposal, Future of the Federal Estate Tax, Nov. 21, 2009, which begins as follows:

On one hand, Madoff's proposal comes off as balanced. She would lower the estate tax for its most vocal opponents -- farms, ranchers, and small business owners -- but she would raise the tax for others, including those with "manors."
On the other hand, imposing a higher estate tax on everyone other than farmers and small business owners leans to the left.

November 24, 2009 in Estate Tax | Permalink | Comments (1) | TrackBack (0)

Monday, November 23, 2009

How to Deal With a Rogue Executor

Mediation Edward J. Patterson (partner, Fullbright & Jaworski L.L.P.)  & Wesley L. Bowers (associate, Fullbright & Jaworski) have published their article Dealing With the Rogue Executor: A Page From the Fiduciary Litigation Playbook, The Advocate, Fall 2009, at 44. 

The introduction to the article is below:

For most folks, the death of a family member is one of the most difficult situations they encounter.  This difficult situation is made all the more painful when they are faced with an unfamiliar and seemingly daunting estate administration.  Unfortunately, there are instances when this painful situation is exacerbated by the introduction of a recalcitrant and uncooperative executor who restricts the flow of information and controls the resources of the estate.  This bad actor is often referred to as the "rogue executor."  While the executor has been left with the proverbial keys to the kingdom, he or she does not always look out for the best interests of all beneficiaries of the estate.  As most estates in Texas proceed under an independent administration, the rogue executor is allowed to operate with minimal supervision from the courts and from the beneficiaries.  This article explores some of the methods and resources that are available to beneficiaries to deal with a rogue executor under Texas law. 

November 23, 2009 in Articles, Estate Administration | Permalink | Comments (0) | TrackBack (0)

Houston Oilman's Wishes to be Honored, Others Not So Lucky

Will Last week, a jury in Houston needed less than an hour to decide that the last will of Alfred Glassell, Jr., was valid.  Glassell's daughter had challenged the will on the ground that attorneys exerted undue influence upon her father when he changed the primary beneficiary of his estate to the Museum of Fine Arts in Houston. 

Lou Ann Anderson, in an article entitled Jury rules to honor Houston oilman's estate wishes, Bell County Legal News Examiner, Nov. 17, 2009, uses Glassell's estate as an example of Involuntary Redistribution of Assets: 

Estates have become a tool for Involuntary Redistribution of Assets (IRA) acts in which probate venues and/or probate instruments such as wills, trusts, guardianships and powers of attorneys are used to loot assets of the dead, disabled or incapacitated.
For more information, see the article, which contains a discussion of IRA acts and solutions, numerous links, and examples of prominent estates involving IRA actions like reconfiguring the estate through estate administration and contesting a probate document in hopes of getting a lucrative settlement.

Special thanks to Jerry Cooper (TrustAdvisorBlog) for brining this to my attention.

November 23, 2009 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

The wisdom of establishing an agency to regulate the charitable sector

Helge_Terri Terri Lynn Helge (Associate Professor of Law, Texas Wesleyan University School of Law) has recently posted on SSRN her article entitled Policing the Good Guys: Regulation of the Charitable Sector Through a Federal Charity Oversight Board.

Here is the abstract of her article:

Recently, public confidence in the charitable sector has eroded due to a barrage of media reports on scandals and abuses. The principal parties charged with regulation of the charitable sector, the Internal Revenue Service and state attorneys general, are saddled with bureaucratic constraints that make it difficult to enforce the laws governing the fiduciary responsibilities of charity managers. Substantial reform in the regulation of charitable organizations is necessary to curb the reported abuses that have undermined confidence in the charitable sector.

Some advocate expanding private regulation of the charitable sector to improve enforcement of the fiduciary responsibilities of charitable managers. While some of these private regulatory alternatives have had success in isolated situations, none are satisfactory in providing comprehensive and effective oversight of the charitable sector. Overall, the policies underlying oversight of charitable organizations support maintaining primary responsibility for their regulation in a centralized authority. However, the financial, political, institutional, and agency constraints imposed on the Internal Revenue Service and state attorneys general make them unlikely to implement enough internal reform to be an ongoing, effective enforcement presence in the charitable sector.

This Article advocates the creation of a new, federal, quasi-public agency that would be the principal regulator of the charitable sector. The new agency would be a self-funded, independent, and proactive regulator that would serve the dual purposes of curbing the abuses that have eroded public confidence in the sector and educating charity managers of their obligation to be responsible stewards of charitable resources. The proposed agency would be primarily responsible for enforcing federal tax laws aimed at influencing fiduciary behavior of charity managers and preserving charitable assets for public benefit. Its formation, therefore, would separate oversight of charity governance from the tax collection function, thus harmonizing the United States with other countries that have established independent charity oversight agencies.

November 23, 2009 in Articles | Permalink | Comments (0) | TrackBack (0)

Declared Dead and Refrigerated While Still Alive

Toe tag A North Carolina man who was accidentally declared dead, placed in a body bag, and refrigerated in Franklin County, N.C., has sued the medical examiner who allegedly ignored the suggestions of many paramedics that the man was still alive. 

A county judge ruled that the medical examiner is not protected by sovereign immunity, and the court of appeals heard arguments on the issue last week. 

See Martha Neil, Family of Living Man Declared Dead Seeks to Sue Medical Examiner, ABA Journal, Nov. 19, 2009. 

Special thanks to Ken Coughlin (ElderLawAnswers) for bringing this case to my attention.

November 23, 2009 in Current Events, Death Event Planning | Permalink | Comments (0) | TrackBack (0)

New Estate Tax Legislation Introduced

Estat tax On Nov. 19, 2009, Rep. Pomeroy (D-ND) introduced H.R. 4154 "to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, to retain the estate tax with a $3,500,000 exemption, and for other purposes."

For more information see Rep. Pomeroy introduces a new bill, H.R. 4154, Future of the Federal Estate Tax, Nov. 22, 2009. 

Special thanks to Hani Sarji (LL.M in Tax candidate at New York Law School) for providing this information.

November 23, 2009 in Estate Tax | Permalink | Comments (0) | TrackBack (0)

Sarkozy Proposes Moving Remains of Writer Albert Camus

Camus French President Nicolas Sarkozy would the remains of French writer Albert Camus to be moved to the Paris Pantheon, a monument to great men and women of France and one of the most hallowed burial grounds in the country.  Camus's son, however, is opposed to the move, and some are accusing Sarkozy of trying to raise approval ratings with the move.

Camus received the Nobel Prize for literature in 1957.  If moved, Camus's remains would be among the remains of Valtaire, Louis Pasteur, Victor Hugo, Alexandre Dumas, and Murie Curie. 

See David Jolly, Son Objects to Moving Camus's Remains, NY Times, Nov. 22, 2009.

Special thanks to Alfred Brophy (professor of law, University of North Carolina) for bringing this article to my attention.

November 23, 2009 in Death Event Planning, Estate Administration | Permalink | Comments (1) | TrackBack (0)

Sunday, November 22, 2009

'Financial Institution Liability for Defective Survivorship Agreements'

Bank Terry W. Wood (lawyer, Beaumont, Texas) has published his article entitled Survivor, No Survivor-Financial Institution Liability for Defective Survivorship Agreements, The Advocate, Fall 2009, at 36.

The following is an excerpt from the beginning of the article:

Everyone knows the past year has been a dangerous time for financial institutions due in large part to their own acts, mismanagement and mistake.  On a smaller scale, what dangers exist for financial institutions arising out of defective or nonexistent survivorship and pay on death (P.O.D.) accounts?

In order to understand financial institutions' liability for defective (or nonexistent) survivorship and P.O.D. accounts, it is necessary to understand Texas law on multi-party accounts. 

November 22, 2009 in Articles, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

States Increase Income Tax in Face of Financial Woes

Income tax According to the Wall Street Journal, states facing income deficits are increasing taxes on their wealthiest residents to fill the gap:

A flurry of rate increases occurred this year, and tax analysts say the trend will accelerate in 2010.  . . .

Californians, who have a top individual rate of 10.55% on income over $1 million, actually gained in sideways fashion from recent rate raises around the country. The state dropped below Hawaii, Oregon and New Jersey on the list of places with the highest individual tax rates.

Hawaii enacted a top individual rate of 11% on income over $200,000, Oregon has a new 11% rate on income over $250,000, and New Jersey enacted a 10.75% rate on income above $1 million.

Arden Dale, States Turn to 'Millionaire's Tax,' WSJ, Nov. 13, 2009.

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

November 22, 2009 in Income Tax | Permalink | Comments (0) | TrackBack (0)