Wills, Trusts & Estates Prof Blog

Happy Halloween

Many law school classes have one or more holidays which are especially relevant.  For example, Family Law has Valentine's Day, Mother's Day, and Father's Day, Labor Law has Labor Day, Environmental Law has Earth Day, Military Law has Memorial Day, and Law and Religion has Christmas, Hanukkah, Ramadan, etc.

Halloween, with its fascination with death, may be the most relevant holiday to those who teach wills, trusts, estates, probate, and estate planning.

So, however you celebrate, have fun and be safe!

Top SSRN Downloads

Here are the top downloads from August 31, 2010 to October 30, 2010 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	193	Wills and Trusts Gerry W. Beyer, Texas Tech University School of Law, Date posted to database: September 11, 2010 Last Revised: September 11, 2010
2	146	Gay and Lesbian Elders: Estate Planning and End-of-Life Decision Making Nancy J. Knauer, Temple University - Beasley School of Law, Date posted to database: August 6, 2010 Last Revised: September 6, 2010
3	113	Case Law Update Gerry W. Beyer, Texas Tech University School of Law, Date posted to database: August 31, 2010 Last Revised: August 31, 2010
4	103	The Price of an FLP Annual Exclusion Wendy C. Gerzog, University of Baltimore - School of Law, Date posted to database: September 9, 2010 Last Revised: September 9, 2010
5	87	Financing Long-Term Care After Health Care Reform Richard L. Kaplan, University of Illinois College of Law, Date posted to database: October 16, 2010 Last Revised: October 21, 2010
6	68	Critters in the Estate Plan Gerry W. Beyer, Texas Tech University School of Law, Date posted to database: August 27, 2010 Last Revised: August 27, 2010
7	66	Risk of Death Ariel Porat, Avraham D. Tabbach, Tel Aviv University, Tel Aviv University, Date posted to database: September 1, 2010 Last Revised: September 1, 2010
8	49	Can a Modern Legal System Do without the Trust? Reinout M. Wibier, Tilburg University, Date posted to database: September 16, 2010 Last Revised: September 16, 2010
9	39	Disinheritance in New York State: Legacies We Do and Do Not Leave Jason N. Summerfield, Finkelstein & Virga P.C., Date posted to database: August 10, 2010 Last Revised: August 10, 2010
10	35	The Game is Afoot!: The Significance of Gratuitous Transfers in the Sherlock Holmes Canon Stephen R. Alton, Texas Wesleyan University-School of Law, Date posted to database: September 18, 2010 Last Revised: September 18, 2010

Smith's Boyfriend and Doctor Convicted in Drug Conspiracy

On Thursday, Howard Stern and Dr. Khristine Eroshevich were found guilty on charges of using false names to provide Anna Nicole Smith with drugs. With Stern’s permission, Eroshevich used Stern’s name, as well as other names, to get Vicodin prescriptions to Smith. The prosecution showed that Stern and Eroshevich used false names to hide Smith’s excessive prescriptions from the state’s monitoring system. The prosecution further argued that the doctors wanted to be part of Smith’s entourage, so they never said no to her drug-seeking.

Sentencing for the two defendants will be determined on January 6. They could each face a maximum of three years in prison.

See Alan Duke, Anna Nicole Smith’s Boyfriend, One Doctor Convicted in Drug Conspiracy, CNN, Oct. 28, 2010.

10 Ways to Put Your Body to Use After Death

J. Nathan Bazzel, a thirty-eight-year-old HIV-positive man, signed documents to donate his body to the Mutter Museum so that scientists can learn from his remains. Because being on display in a museum isn’t for everyone, CNN came up with a list of ten ways to put your body to use in the spirit of the Halloween season:

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      1. Donate Your Organs. Nineteen people die daily waiting for an organ. You could lower that number. 
      2. Donate Your Tissue. You can donate your bones, heart valves, corneas, or ligaments. 
      3. Will Your Body to a University. Help future doctors learn how to help others. 
      4. Help Doctors Practice Their Skills. Donate your body to a research institute for doctors to learn new techniques. 
      5. Leave Your Body to “The Body Farm.” This is where detectives study decaying bodies to learn how to determine time of death. 
      6. Become a Crash Test Cadaver. 
      7. Give Your Body to a Broker. Brokers take your body parts and transfer them to scientists who use them for training, research, and education. 
      8. Send Your Body on Tour. You could become one of the “Body Worlds” exhibits by donating your body to the Institute for Plastination. 
      9. Become a Skeleton. 
      10. Be on Display at a Museum. Like Bazzel, you could become a display at a museum. Museums are particularly interested in bodies with abnormalities.

For more information, including links to help you get started for any of these ten options, see Elizabeth Cohen, Ten Uses for Your Body After You Die, CNN, Oct. 28, 2010.

Special thanks to Hayden Olson (2011 J.D. Candidate, Texas Tech School of Law) for bringing this to my attention.

CLE on Grantor Trust Liabilities

My Legal Conferences is sponsoring a 60-minute live audio conference entitled Grantor Trust Liabilities: Keys to Avoid Income Tax Consequences in 2011 on November 10, 2010. The program summary is below:

Estate planning with Grantor Trusts can lead to complex income tax issues for grantors and beneficiaries. Whether the grantor is still alive, or has recently died, you must know the income tax essentials to properly secure the assets of your clients, and the proper filing guidelines when dealing with Irrevocable & Revocable Grantor Trusts in estate planning. Join us for a 60-minute audio conference, where you and your colleagues will discover:

• Income tax intricacies when planning with grantor trusts
• Treatment of income and gifts under GRAT regulations
• Grantor lifetime transfer policies & guidelines
• Grantor trust & non-grantor trust conversions

Suggestions for Dealing with Tax Uncertainty

Some tax professionals offered suggestions for dealing with this time of uncertainty in the tax world:

Investments. You may want to recognize your gains now and take the 15% rate. This is not necessarily always a good idea though, and the type of asset should play a role in your decision. 

Gifts. You can gift a trust to a spouse at this year’s gift tax rate and not have to elect to treat it as a marital or nonmarital trust until next October. Giving gifts to grandchildren is also a good idea because there is no GST tax this year. 

Estate Taxes. People have put off updating their estate plans because of the tax uncertainty, but meeting with an estate planning attorney is vital. Attorneys will know what planning is best for your situation, and they’ll know your state’s estate tax laws. 

Roth Conversions. Converting your IRA into a Roth IRA and paying 2010 taxes or spreading them out in 2011 and 2012 may be a valuable move. 

Business Owners. Due to the Small Business Jobs Act, those who make big outlays for business property this year can realize tax savings.

If this isn’t enough for you to worry about, Congress may decide to enact a retroactive tax law. While most professionals don’t anticipate Congress to do so, it is a theoretical possibility. In fact, Congress has done it before in 1987, and the Supreme Court upheld the law seven years later.

See Jan M. Rosen, The Watchword on Taxes This Year is Flexibility, N.Y. Times, Oct. 20, 2010.

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

Discussion About $20 Million Estates

The September and October 2010 editions of The Estate Analyst included a two-part discussion about $20 million estates by Robert L. Moshman (attorney and writer).

The introduction to the September edition, entitled The Unfortunate $20-Million Estate: When Things Go Wrong, is below:

A sobering reality is confronting many Americans in general, but there is a niche that has unique and serious planning problems—and we are not referring to all those who are going bankrupt, losing their homes to foreclosure, or filling out forms for unemployment benefits. They won’t be getting much sympathy from the one in seven Americans living in poverty, nor from the vast majority of Americans with less than $1 million in total assets, but those with $20-million estates may have the most to lose in a short time if they aren’t extremely vigilant right now—and over the next several years. Here we examine the unique circumstances and context of the $20-million estate, what can go wrong, and some defensive measures for keeping things under control.

The introduction to the October edition, entitled Resurrecting the $20-Million Estate; Don't Forget About the BDIT!, is below:

Two limousines pull up alongside each other. The passengers roll down their windows. A bottle is exchanged. Is it Dom Perignon? Is it Grey Poupon? Or is it…Pepto Bismol?

Worrisome economic times have humbled estates of all sizes. Even a once-mighty estate may now need to be nurtured back to fiscal health.

As the estate tax prepares for a dramatic return in 2011, the challenge of estate taxation has returned as well.

Let’s review some of the best planning options for estates of about $20 million. One of those options is the Beneficiary Defective Inheritor’s Trust (BDIT).

Elder Mediation Gains Popularity

Conflict Resolution Quarterly published a study in 2001 that found that nearly 40% of adult children caring for an elderly parent had experienced “serious conflict” with a sibling related to the care of the parent. In situations like this, elder mediation may be the solution. Elder mediators dig to the bottom of things, considering everyone’s viewpoint, and enable the family to sort out the important issues.

While elder mediation has been around for years, the practice has only recently gained recognition as a specialty area of mediation. Elder mediation still has no national credential program, so be careful in selecting a mediator. If you need an elder mediator, go to the National Eldercare Mediation Network website or Mediate.com to see profiles of elder mediators in every state.

See Joshua Tapper, When the Family Needs an Umpire, N.Y. Times, Oct. 28, 2010.

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

Rocky and Bullwinkle Cartoonist Dies at Age 90

Alex Anderson, the cartoonist who created the cartoon characters of Rocky and Bullwinkle, died on Friday from Alzheimer’s disease at the age of 90.

After serving in World War II, Anderson began working with his childhood friend, Jay Ward, to create “Crusader Rabbit.” The Rocky and Bullwinkle characters grew out of that collaboration. In 1991, Anderson saw a documentary about the show that didn’t give him any credit, so he filed suit against Jay Ward Productions. In 1996, the parties reached a settlement with a court-mandated acknowledgement that Anderson was “the creator of the first version of the characters” and a monetary component.

Anderson left behind his wife, four sons, a daughter, fourteen grandchildren, and five great-grandchildren.

See Dennis Hevesi, Alex Anderson, Creator of Rocky and Bullwinkle, Dies at 90, N.Y. Times, Oct. 25, 2010.

Special thanks to Trina Montalban (attorney, Portland, OR) for bringing this to my attention.

Now is the Time to Create a GRAT

Not only is the estate tax set to come back with a vengeance next year, but Congress is also trying to put limits on a popular trust used to avoid the tax. A grantor-retained annuity trust (GRAT) allows people to pass some of an asset’s future profits tax-free to heirs. Now is a great time to create a GRAT for several reasons.

First, Congress may make GRATs less valuable in the near future in order to raise revenue. Congress wants to require that GRATs remain in place for a minimum of 10 years rather than the current minimum of 2 years. This makes GRATs less useful for those with shorter life expectancies because if the owner of a GRAT dies before the trust expires, the entire value is included in the owner’s gross estate. Until Congress acts, short term GRATs can still be created.

Second, when interest rates and asset values are low, as they are now, heirs can receive a larger portion of future profits of assets in the GRAT. A GRAT’s owner must agree to take back the “hurdle rate,” which is lower when the interest rate is lower, leaving more appreciation for heirs.

Third, aside from premature death, there are little risks involved with GRATs. If asset values fall, the owner is no worse off than he or she would have been without the GRAT, except for the loss of money paid to create the GRAT.

See Anne Tergesen, Hurry Up and Fund That Trust, W.S.J., Oct. 16, 2010.

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