Wills, Trusts & Estates Prof Blog

Book Guiding Trustees

Christopher P. Cline (Wells Fargo Regional Wealth Management Director for Oregon and SW Washington) recently published his book entitled The Law of Trustee Investments (ABA 2009). 

A description of the book is below:

This book takes a very practical approach to the question that should be asked by every trustee, especially non-professional trustees: How do I fulfill my fiduciary duties to the trust beneficiaries (and thereby avoid liability for failure to do so) in determining how to invest the trust assets? The book begins with an in-depth introduction to investment basics, examines such issues as the law of diversification and the prudent investor act standard, explores how to determine breach and damages, and explains the effects of principal and income acts on investing. It concludes by addressing the drafting of an investment plan by the trustee, a key topic because under the UPIA a fiduciary is judged not on his or her actual investment performance, but rather on the appropriateness of the investment plan. This chapter provides practical guidelines for newly-appointed trustees on how to develop such a plan, including specific comments directed to life insurance trusts, where a life insurance policy is usually the primary investment. Appendices offer sample trust investment language and an investment plan flow chart.

Competent Children Don't Need an Inheritance

Chinese real estate tycoon Yu Pengnian announced that he is giving away his last $500 million to his charitable foundation. When asked whether his children were opposed to the donations, Yu stated, “If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm.” This idea is even more remarkable coming from a Chinese tycoon because wealth in Asia is dynastic by nature.

The idea is that by giving your children everything, you take away their joys in self-made success while telling them that you don’t think they can make it on their own.

See Robert Frank, If Your Children are Competent, They Don’t Need an Inheritance, W.S.J., July 26, 2010.

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

Bronx Wife-Killer Gets Liver Ahead of Thousands of New Yorkers

Johnny Concepcion confessed to stabbing his wife to death on July 5. He then took rat poison in an attempt to commit suicide, which damaged his liver.

This week, Concepcion was chosen over 1,805 New York City residents in need of a liver for a liver transplant. Fifty New York City residents have died this year waiting on a liver.

See David Goodhue, Confessed Killer Gets Liver Transplant Over Thousands of Candidates, All Headline News, July 27, 2010.

Palumbo Family Feud Over Money

Lord Palumbo of Walbrook has been arguing with his children about money for a quarter of a century. In the last courtroom brawl fifteen years ago, Palumbo’s three children from his first marriage claimed that Palumbo had improperly spent money from a £70m family trust set up by his own father.

Palumbo’s children’s latest claim alleges that Palumbo has been lying about missing trust property which he actually sold and used the proceeds for himself. His children claim the original trust agreement does not give Palumbo the right to dispose of the items. They want him removed as trustee and to conduct an accounting of the trust assets.

See Mark Hollingsworth and Caroline Davies, Palumbo Children Accuse Father of Extravagance as Family Feud Resumes, guardian.co.uk, July 27, 2010.

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

CLE on Minimizing Estate Tax

The National Business Institute is sponsoring a 90-minute national teleconference on September 10 entitled Minimize Your Clients' Estate Tax Burdens.  The program description is below:

Do you have reliable fundamental tax knowledge to effectively build your clients' estate plans in today's uncertain regulatory environment? Gain the skills you need to help your clients ensure their rightful heirs receive as much of the estate as possible. Don't miss this opportunity for a condensed estate tax update - register today!

• Learn what impact gift and estate taxes will have on beneficiaries and how estate plans can address how these taxes are handled.
• Explore the impact of generation-skipping transfer taxes.
• Ensure your marital deduction planning follows all legalities.

Lady Claims to be Michael Jackson's Daughter

Mocienne Petit Jackson has asked the L.A. County Superior Court to order a DNA test proving that she is the illegitimate daughter of Michael Jackson and Barbara Ross, Diana Ross’ sister. She claims that Michael secretly impregnated Barbara when he was 17, and that when Mocienne was 9, Katherine Jackson hatched a plan to protect Michael’s reputation by abducting her. Mocienne claims that all seven of her abductors were later murdered.

Mocienne wants her share of Michael’s estate as well as custody of his children to give them a “more normal life.”

Alleged MJ Love Child Surfaces -- Wants Money, TMZ, July 27, 2010. 

Special thanks to David Luber (attorney, Hollywood, FL) for bringing this to my attention. 

Tax and Trust & Estate Sections of the ABA Joint CLE

The ABA Section of Taxation and the Section of Real Property, Trust & Estate Law are sponsoring the 2010 Joint Fall CLE Meeting in Toronto, Ontario on September 23-25. Some information is below:

Toronto, ON welcomes the ABA Section of Taxation and the Trust and Estate Law Division of the ABA Section of Real Property, Trust and Estate Law to the 2010 Joint Fall CLE Meeting, September 23-25, 2010. Join us and take advantage of the opportunity to meet with the country’s leading attorneys and government officials to discuss the latest federal tax policies, initiatives, regulations, legislative forecasts and planning ideas. In addition, you will have the opportunity to earn valuable CLE and ethics credits and network with Tax Section and Trust and Estate Division members and government guests. The Sheraton Toronto will serve as the host hotel.

Take advantage of the opportunity to:

• Attend joint Section programs on the latest developments in tax, trust and estate law, which highlight the synergy of these two practice areas
• Learn more about updates on tax policies, regulations and procedures, including discussion of future proposals
• Network with government officials and practitioners in two specialty areas of the law
• Receive the latest IRS news from the Commissioner of the IRS, Douglas H. Shulman, at the Plenary Breakfast on Friday

Death Tax Affects Death Rates

I previously blogged about the lack of an estate tax in 2010 giving wealthy elderly individuals an incentive to die before the end of the year.

Australian academics conducted a study entitled Did the Death of Australian Inheritance Taxes Affect Deaths?, 6 Topics in Economic Analysis & Policy 23 (2006).  This study investigated whether or not the elimination of their death tax in 1979 actually affected death rates. They found that approximately 50 deaths were bumped from the week before the tax was eliminated to the week after. The academics concluded “that over the very short run, the death rate may be highly elastic with respect to the inheritance tax rate.” The question is whether or not the same thing will happen in the United States, but in the opposite direction.

See Daniel J. Mitchell, The Deadly Impact of the Death Tax, Forbes, July 14, 2010.

Planning for Your Funeral

Although one of the best gifts you can give your family is properly preparing them for your death, less than 30% of Americans have some form of estate plan. Properly planning for your funeral can allow your family time to grieve and recover rather than rushing through important and expensive decisions.

In addition to pre-planning your funeral, it is also helpful to pre-pay for it. Methods of doing this include saving, life insurance, funeral insurance, and pre-need trust agreements.

For more information on each of these prepayment methods as well as ideas regarding what to consider when planning your funeral, see Christopher P. Hill, How to Create a Smart End-of-Life Plan for Your Loved Ones, FuneralResources.com, June 14, 2010.

Tax Increases in 2011

Nancy Pelosi is making history by preventing discussion on the floor of Congress about a 2011 budget. Perhaps she fears that the public will retaliate in November elections if it finds out just how onerous the 2011 tax hikes are going to be. Some of the tax increases include:

• Each income tax bracket’s percentage will be increased
• Itemized deductions and personal exemptions will be phased out
• The estate tax exemption will only be $1 million along with a higher percentage taxed 
• Capital gains tax will rise
• Obamacare will add over 20 new taxes
• Business expense deductions will be less helpful to businesses

For more details, see Karlan Tucker, The Largest Tax Hike in American History, Producersweb.com, July 20, 2010.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.