Wills, Trusts & Estates Prof Blog

How Would You Plan the Estate of a Man with 39 Wives?

Sixty-six-year-old Ziona Chana lives in a four-story building in India with his 39 wives, 94 children, and 33 grandchildren. The family consumes 200 pounds of rice and 130 pounds of potatoes each day. The women cook, clean, and wash while the men farm and take care of livestock.

Ziona, who heads the “Chana,” a local Christian religious sect that allows polygamy, said that he’s ready to expand his family and is “willing to go to any extent to marry.”

See Man Has 39 Wives, Nearly 100 Children, Yahoo! News, Feb. 22, 2011.

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

Texas court prevents trustee from proceeding pro se in representative capacity

In In re Guetersloh, 326 S.W.3d 737 (Tex. App.—Amarillo 2010, no pet. h.), Trustee attempted to represent himself pro se, that is, without an attorney, in both his capacity as a trustee and in his individual capacity.  The appellate court held that Trustee had no right to proceed pro se in his representative (trustee) capacity but could proceed without an attorney with regard to claims in his individual capacity.

The court explained that allowing Trustee to proceed pro se in his representative capacity would be the unauthorized practice of law.  The court stated that “if a non-attorney trustee appears in court on behalf of the trust, he or she necessarily represents the interests of others, which amounts to the unauthorized practice of law.”  The court relied on Steele v. McDonald, 202 S.W.3d 926 (Tex. App.—Waco 2006, no pet.) in which the court held that a non-lawyer may not appear pro se in the capacity as an estate’s independent executor.

Moral:  A trustee who is not an attorney may not appear in court pro se in the trustee’s representative capacity.

Planning for Chronic Illnesses

Martin M. Shenkman (Attorney at Law, Paramus, NJ) and Joshua S. Rubenstein (Attorney at Law, New York, NY) recently published their article entitled Chronic Illness Practical Planning and Drafting, Part 1, 25 Prob. & Prop. 36 (Jan./Feb. 2011).  The introduction is below:

Chronic illness is far more common than most practitioners realize. Addressing the implications of these health issues is essential to best serve clients. More than 400,000 people live with multiple sclerosis (MS), and estimates are that in total 120 million Americans live with some type of chronic illness. Of those ages 65 to 74, 26% have had their lives significantly affected by chronic illness. Twentytwo percent of the population is estimated to be living with two or more different chronic illnesses. More than 5 million Americans have Alzheimer’s disease (AD). AD accounts for approximately 70% of dementias in Americans age 71 and older. Recent headlines evaluated the issues surrounding the famous New York socialite Brooke Astor, who, at age 101 with Alzheimer’s disease, executed a will and a series of codicils, all of which are subject to challenge. AD is the fifth leading cause of death for those age 65 and older. Parkinson’s disease (PD) is also not rare; about 1% of all those over age 65 are diagnosed with PD. This makes PD second only to AD in terms of the number of people affected. The prevalence of these issues necessitates that practitioners have techniques available to them to assist clients facing the problems wrought by chronic illness.

This is not an elder law issue. Chronic illness does not discriminate in favor of older clients. About one-quarter of PD cases are diagnosed before age 60 (young onset PD, “YOPD”). YOPD has been diagnosed at ages as early as 30 years. So a significant portion of PD clients may have had their careers and savings negatively affected because of the early onset of their illness. A small percentage of those with AD are diagnosed in their 50s, or perhaps earlier (young onset AD). MS is typically diagnosed between ages 20 and 50 but has also been diagnosed in young children.

Many clients who live with chronic illnesses are fortunate not to experience symptoms significant enough to modify planning for health-related issues. For clients experiencing, or likely to experience, significant symptomsas their chronic illness progresses, planning and drafting are obviously affected. What planning and drafting modifications might be useful in these situations? Although the concepts are not technically complicated, the issues receive inadequate attention relative to their importance in terms of the number of clients affected, as well as the importance to those affected. It is hoped that the following discussion will serve as a catalyst for new ideas for planning and drafting for clients living with chronic illnesses.

Same-Sex Couples Receive a Tax Break in 2010 in Three States

Same-sex couples in California, Nevada, and Washington could save money on their federal income taxes this year due to unusual interactions between federal and state laws. These three states recognize domestic partnerships and apply community property laws to registered domestic partners. The IRS, which must follow state property laws, has determined that these couples should calculate their total community income and divide it down the middle. However, DOMA prevents the IRS from treating these same-sex couples as married joint filers. Thus, each partner claims half the community income while filing as the head of household. Chris Kollaja, a CPA in San Francisco, provided the Wall Street Journal with an example of how this results in an unintended benefit for same-sex couples:

David and Richard are registered partners in California who own a house together. In 2010 David earned $225,000 and Richard earned $20,000. Under the new IRS rules, they will merge their income and deductions, then divide them by half and file separate returns. Their total federal tax will be $40,744. If they filed a joint federal return, they would owe $3,144 more.

If David and Richard were two single filers but not registered partners in California, they would owe total taxes of $47,572, or $6,828 more. That is closer to what they would owe in states that recognize same-sex marriage or domestic partnerships but don't have community-property rules. In those states each partner files a separate federal return, claiming only his own earnings.

Laura Saunders, Same-Sex Couples and the Marriage Penalty, W.S.J., Feb. 19, 2011.

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

Business Succession Planning and the New Gift Tax Exemption

Clients with businesses who want to take advantage of the new gift tax exemption should start planning now. Owners who would like to pass on the business but also need to use it as a form of retirement income have several options:

• Owners can upgrade company retirement plans, enabling themselves to put more money away for retirement.
• Owners can purchase the building the company rents. They can lease it back to the company for a source of retirement income.
• Owners can establish a profit-sharing or defined benefit pension plan.
• Owners can continue working as a salaried employee, chairman, or consultant. Owners who didn’t pay themselves what they were worth may be able to recover “lost wages.”
• Owners can establish salary continuation plans. For IRS approval, such plans should be established long before retirement and pay reasonable amounts.
• Owners can sell shares to a defective trust for the benefit of their descendants. If structured properly, the owner won’t owe capital gains tax on sale proceeds, which can be used to fund retirement.

See Anne Tergesen, Family Businesses Catch a Big Break, W.S.J., Feb. 19, 2011.

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

Reverse mortgages analyzed

In Reverse Mortgages: Know the Traps, Consumer Reports, March 2011, at 14, the authors provide a concise and useful discussion of the pros and cons of the following types of reverse mortgages:

• fixed-rate reverse mortgages
• adjustable rate loans
• reverse home equity line

Top SSRN Downloads

Here are the top downloads from December 26, 2010 to February 24, 2011 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank	Downloads	Paper Title
1	561	The Fundamentals of Wealth Transfer Tax Planning: 2011 and Beyond John A. Miller, Jeffrey A. Maine, University of Idaho College of Law, University of Maine School of Law, Date posted to database: January 27, 2011 Last Revised: January 27, 2011
2	322	The Politics and Policy of the Estate Tax - Past, Present, and Future Michael J. Graetz, Michael J. Graetz, Columbia Law School, Yale Law School, Date posted to database: February 6, 2011 Last Revised: February 7, 2011
3	290	Lady Bird Deeds: A Primer for the Texas Practitioner Gerry W. Beyer, Kerri M. Griffin, Texas Tech University School of Law, Estate Planning and Community Property Law Journal, Date posted to database: January 9, 2011 Last Revised: January 9, 2011
4	167	The Debt-Equity Distinction Robert Flannigan, University of Saskatchewan, Date posted to database: January 21, 2011 Last Revised: February 9, 2011
5	139	Educational Tax Benefits: More Please Bridget J. Crawford, Shamik Trivedi, Kimberly Bliss, Pace University School of Law, Tax Analysts, Pace University School of Law, Date posted to database: January 12, 2011 Last Revised: January 12, 2011
6	98	Lawyers and Slaves: A Remarkable Case of Representation from the Antebellum South Jason Gillmer, Gonzaga University - School of Law, Date posted to database: February 4, 2011 Last Revised: February 4, 2011
7	77	The Prudent Investor Rule and Trust Asset Allocation: An Empirical Analysis Max M. Schanzenbach, Robert H. Sitkoff, Northwestern University - School of Law, Harvard Law School, Date posted to database: January 29, 2011 Last Revised: January 29, 2011
8	61	The Geography of Love: Same-Sex Marriage & Relationship Recognition in America (The Story in Maps) Peter Nicolas, Mike Strong, University of Washington School of Law, Unaffiliated Authors - affiliation not provided to SSRN, Date posted to database: February 9, 2011 Last Revised: February 11, 2011
9	38	What Leona Helmsley Can Teach Us About the Charitable Deduction Ray D. Madoff, Boston College - Law School, Date posted to database: January 19, 2011 Last Revised: January 19, 2011
10	33	Maryland's Affordable Housing Land Trust Act James J. Kelly, James J. Kelly, Washington & Lee University School of Law, University of Baltimore - School of Law, Date posted to database: December 19, 2010 Last Revised: December 19, 2010

South Carolina seeks Wills & Trusts Visitor

The University of South Carolina School of Law is seeking a Wills, Trusts, and Estates visitor for Fall 2011.

Interested individuals should contact Associate Dean Rob Wilcox.

Michael Jackson's Children Think Dr. Murray is Innocent

I previously blogged about Dr. Murray’s upcoming wrongful death trial for his involvement with Michael Jackson’s death here and here. MJ’s children don’t think that Dr. Murray had anything to do with their father’s death because MJ constantly bragged to the children about Dr. Murray being the “best doctor in the whole world.”

MJ’s former nanny, Grace Rwaramba, said that Dr. Murray came by the house at least twice a week and that MJ had some sort of mysterious leverage over him.

See MJ’s Kids – Murray Couldn’t Have Killed Our Dad, TMZ.com, Feb. 20, 2011.

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

How Advisors Can Help Clients with Signs of Dementia

One of the early signs of dementia is the inability to understand simple financial concepts, such as how bank statements or bill payments work. Within a year, patients lose more basic skills, such as paying with cash and counting coins.

Financial planners, who sometimes work closely with clients for many years, may be the first to notice worrisome developments. As soon as these signs show up, families need to start planning for the incapacity of the clients and make sure the proper documents are in place. If families wait too long, the client may not be able to be involved in the decision-making, and families will have to resolve things in court.

See Temma Ehrenfeld, How Can Advisors Help Patients Diagnosed with Dementia?, Financial Planning, Feb. 18, 2011.

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