Wills, Trusts & Estates Prof Blog

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

Sunday, July 31, 2011

Article on Digital Life After Death

John John Conner (2012 J.D. Candidate, Texas Tech University School of Law) recently published his article entitled Digital Life After Death: The Issue of Planning for a Person’s Digital Assets After Death, Texas Tech Law School Research Paper No. 2011-02 (2010). The abstract available on SSRN is below:

In “Digital Life After Death: The issue of planning for a person’s digital assets after death,” author John Connor discusses the concept of a digital asset and what happens to these assets when the owner dies. First, Connor lays the foundation to define what a digital asset is and why these assets can create problems in estate planning. Next, the author examines how various social networking sites, e-mail providers, and blog hosting sites are dealing with the concept of digital assets. Connor then provides possible solutions for dealing with digital assets. These solutions include: planning for digital assets prior to death, leaving instructions (including usernames and passwords) on how to access digital assets in the event of death, setting up a trust in which the usernames and passwords can be stored and accessed by the trustee and eventual executor, and possibly providing some information about digital assets in a will. Finally, the author describes the consequences of failure to provide for your digital assets after death.

July 31, 2011 in Articles, Estate Administration, Estate Planning - Generally, Technology | Permalink | Comments (0) | TrackBack (0)

Dynasty Trusts

Trust_0 More taxpayers are taking an interest in dynasty trusts thanks to the high lifetime gift and estate tax exemptions available until the end of next year. Delaware, New Jersey, and Pennsylvania are just a few of the several states that allow dynasty trusts, or trusts that never expire.

Delaware dynasty trusts offer more flexibility in asset investment options and more protection from creditors during civil litigation. Typically, out of state taxpayers who set up Delaware trusts do not pay state income or capital gains taxes on the trust’s accumulations. Out of state taxpayers only pay these taxes on distributions from the trust. Other states tax out of state taxpayers on the undistributed income and gains of dynasty trusts. Taxpayers must still pay federal taxes on the trust’s distributed and undistributed investment gains and income. Set up costs for a dynasty trust can range anywhere from $3,000 to over $30,000.

For more information on dynasty trusts see Elizabeth Ody, Dynasty Trusts Let U.S. Wealthy Duck Estate, Gift Taxes Forever, Bloomberg, Jul. 28, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) and Peter Parlapiano (MBA/M.S. Personal Financial Planning, Lubbock, Texas)

July 31, 2011 in Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, July 30, 2011

CLE on Asset Protection Trusts

CLE The American Bar Association is sponsoring a 90-minute teleconference and live audio webcast on August 2 entitled More Than Just Asset Protection: How to Get Other Benefits From Asset Protection Trusts. The program information is below:

This program will address how traditional uses of asset protection trusts can be expanded to provide enhanced services to estate planning clients. Our panelists will focus on the use of completed gift trusts as an estate planning technique in light of PLR 200944002. Attention will also be given to the use of Delaware Incomplete Gift Non-Grantor Trust ("DING") and how such trusts could potentially avoid state income tax. Finally, the panel will discuss how tenancy by entirety property can be preserved and held in a trust structure under Delaware Statutory Tenancy by Entirety Trust ("STET").

Our speakers will provide:

  • The basics on the tax consequences of complete and incomplete trusts.
  • Expert commentary from the creator of the STET (Delaware Statutory Tenancy by Entirety Trust "STET") and how the STET can be used to provide another layer of protection while preserving the tenancy by entirety in a flexible trust structure.
  • Expert commentary from the co-creator of the DING (Delaware Incomplete Gift Non-Grantor Trust "DING") and how the DING's qualification as a nongrantor, incomplete gift trust can benefit your clients.

This program is essential for estate planners ranging from beginner to advanced.

July 30, 2011 in Conferences & CLE, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Top SSRN Downloads

Ssrn_2 Here are the top downloads from May 30, 2011 to July 29, 2011 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days.

Rank Downloads Paper Title
1 417 Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns
Gerry W. Beyer,
Texas Tech University School of Law,
Date posted to database: May 31, 2011
Last Revised: May 31, 2011
2 232 Planning for Same-Sex Couples in 2011
Patricia A. Cain,
Santa Clara University - School of Law,
Date posted to database: June 9, 2011
Last Revised: June 9, 2011
3 224 Rewards from the Grave: Keeping Loyalty Program Benefits in the Family
Gerry W. Beyer, Mikela Bryant,
Texas Tech University School of Law, Estate Planning and Community Property Law Journal,
Date posted to database: July 8, 2011
Last Revised: July 8, 2011
4 89 Experiential Learning in Trusts and Estates Courses
Gerry W. Beyer, Mary F. Radford,
Texas Tech University School of Law, Georgia State University - College of Law,
Date posted to database: June 24, 2011
Last Revised: June 24, 2011
5 51 Which the Deader Hand? A Counter to the American Law Institute’s Proposed Revival of Dying Perpetuities Rules
Scott Andrew Shepard,
The John Marshall Law School,
Date posted to database: June 5, 2011
Last Revised: June 7, 2011
6 36 The Kennedy Supreme Court Giveth with Footnote 13, But Taketh with Footnote 10: The Department of Labor and Many Lower Courts Miss the Decision's Ultimate Meaning
Albert Feuer,
Law Offices of Albert Feuer,
Date posted to database: June 8, 2011
Last Revised: July 19, 2011
7 35 Rethinking the Intersection of Inheritance and the Law of Tenancy in Common
Sarah Waldeck,
Seton Hall University - School of Law,
Date posted to database: May 15, 2011
Last Revised: May 16, 2011
8 17 The Advance Directive Registry or Lockbox: A Model Proposal and Call to Legislative Action
Joseph Karl Grant,
Capital University School of Law,
Date posted to database: June 6, 2011
Last Revised: June 6, 2011
9 13 Fiduciary Obligations and the Remedial Constructive Trust
Beth Nosworthy,
University of Adelaide - Law School,
Date posted to database: July 19, 2011
Last Revised: July 19, 2011
10 12 'Gen Silent': Advocating for LGBT Elders
Nancy J. Knauer,
Temple University - Beasley School of Law,
Date posted to database: July 12, 2011
Last Revised: July 21, 2011

July 30, 2011 in Articles | Permalink | Comments (0) | TrackBack (0)

Judge Rules in Favor of Marvel Comics

Xmen In 2009, heirs of the late comic book artist Jack Kirby filed forty-five notices of copyright termination against comic book publisher Marvel Worldwide in an attempt to regain the rights to characters Kirby created in the late 50’s and early 60’s. Kirby’s heirs argued the characters were Kirby’s creations, and Marvel claimed the characters created by Kirby constituted “work for hire.”

Judge Colleen McMahon, a New York federal judge, recently ruled that the rights to Kirby’s creations belong to Marvel Worldwide. Judge McMahon stated, “This case is not about whether Jack Kirby or Stan Lee is the real 'creator' of Marvel characters, or whether Kirby (and other freelance artists [who] created culturally iconic comic book characters for Marvel and other publishers) were treated 'fairly' by companies that grew rich off their labor. It is about whether Kirby's work qualifies as work for hire under the Copyright Act of 1909."

The attorney representing Kirby’s heirs intends to appeal the ruling.

See Judge rules in favor of Marvel in suit brought by Jack Kirby’s heirs, Los Angeles Times, Jul. 28, 2011.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) and Ann Murphy (Associate Professor of Law, Gonzaga University School of Law) for bringing this article to my attention.

July 30, 2011 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Friday, July 29, 2011

New Rules for 401(k) Providers

401(k)The Department of Labor has given business owners who sponsor 401(k) plans until next June to demonstrate that the plan used is the best deal possible. Business owners must also itemize the money their employees pay to third-party service providers.

The Department pushed back the effective date for these new rules (originally set for July 16) to April 1, 2012. Vendors and employers have sixty additional days after the start date to roll out their new account statements.

Penalties for failing to itemize fees range from 15% of the plan’s assets to 100% if it takes the company longer than the current calendar year to fix the problem. The plan sponsors must personally pay for any penalties.

See Scott Martin, DOL Begins Crackdown on 401(k) Providers for Fee Bundling Abuses, The Trust Advisor Blog, Jul. 24, 2011.

July 29, 2011 in New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Prediction for the Current Estate Tax Exemption

Estate tax Ronald D. Aucutt recently published Capital Letter No. 28, ACTEC, Jul. 25, 2011 on the ACTEC website. In the Letter, Aucutt predicts the future of the current estate tax exemption by taking a look at the history of recent tax legislation. An excerpt from the Letter is below:

In hindsight, the December 2010 legislative experience may have confirmed a few more things about the estate tax. After all, in the House of Representatives, with all the concerns of state and the world to deal with, the sole amendment that was offered and debated dealt with our little estate tax. The proposal to substitute 2009 law for the “deal” was defeated by a vote of 194-233 on December 16, 2010, exactly one year after the Senate had failed to take up the same proposal that the House had passed 225-200. That shift of some thirty votes, coupled with the 277-148 margin (seven votes short of two-thirds) by which the “deal” was then approved by a Democratically-controlled House of Representatives that did not yet reflect the results of the 2010 elections, as well as the 81-19 approval vote in the Senate, could signify, in part, a resignation to substantial estate tax relief. Indeed, the very prominence and intensity of the unsuccessful December 2010 effort in the House to go back to 2009 law could reflect a realization that that vote was likely the last chance to do so.

This leads to the conclusion that Congress is unwilling to incur the political cost of permitting the estate tax to return to a level more burdensome than 2011 law. Even a return to 2009 law would be distasteful. A return to 2001 law would be intolerable. The fact that a return to 2001 law is already the law in 2013 if Congress does nothing means that the pressure to do something to prevent that will be very great. And if Congress does anything, the pressure to maintain an exemption no lower than $5 million (probably indexed for inflation) and a rate no higher than 35 percent will be almost as great. Anything is possible, and surprises seem almost inevitable, but the $5 million exemption and 35 percent rate of current law, themselves a surprise when they were introduced without even a phase-in last December, now have at least a fighting chance of sticking around.

But when will we know? If the debt ceiling deal, either now or in a subsequent phase, really does get broad enough to revisit the “Bush tax cuts,” even the estate and gift tax might be addressed. If not, then it’s hard to see anything happening until next year – perhaps, as almost happened in 2005, right after Labor Day. Otherwise, there is the true last minute, another lame duck session in December 2012. And maybe even overtime action in 2013. Those possibilities, in order of increasing anguish, may also be in order of increasing likelihood.

July 29, 2011 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Leaving Inheritances to Pets and Posthumously Conceived Children

Pets Successfully leaving behind money to pets or posthumously conceived children is a growing request among individuals today. Often times these requests are accomplished through the creation of a trust or by including specific instructions in an estate plan.

Estate planners typically recommend setting up a formal trust to ensure that a pet is properly cared for after the owner’s death. Two types of pet trusts exist, a traditional trust (effective in all states) and a statutory trust (effective in forty-six states plus the District of Columbia). The pet trust can be a living or testamentary trust.Though a living trust can cost between $1,500 and $6,000 to set up, it provides additional protection by ensuring that a pet is cared for in the event the owner is disabled.

When it comes to leaving money to a posthumously conceived child, many estate planners turn to Social Security survivor-benefits cases for guidance on the inheritance rights of these children. The intent of the deceased parent whose genetic material is used posthumously to conceive the child plays a large role in a court’s decision of the child’s inheritance rights. The best way to ensure that a posthumously conceived child will receive his or her inheritance is to specifically state the inheritance and include specific instructions in the estate plan.

See Saabira Chaudhuri, When Estate Plans Fail: Many People Overlook Arcane Issues, from Pets to the Unborn, The Weekend Investor, Jul. 23, 2011.

For more information on planning for your pets, see Gerry W. Beyer & Barry Seltzer, Fat Cats & Lucky Dogs – How to Leave (Some of) Your Estate to Your Pets (2010).

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

July 29, 2011 in Estate Planning - Generally, Trusts | Permalink | Comments (1) | TrackBack (0)

Fashion Designer Alexander McQueen Leaves £16m to Charities, Family, His Trust, and His Bull Terriers

Alexander mcqueen Fashion designer Alexander McQueen killed himself in 2010, leaving a total of £16m to charities, family, his trust, and his dogs. McQueen gave £100,000 to four charities, £50,000 to both of his two housekeepers, £250,000 to each of his five siblings, and £50,000 each to his godson, nieces, and nephews. McQueen also left £50,000 to his three bull terriers, Minter, Juice, and Callum. A trust for McQueen’s Sarabande charity received the remainder of his estate.

See Alexander McQueen leaves money for dogs to be pampered, BBC News, Jul. 26, 2011; Allyson Koerner, Alexander McQueen Leaves Large Amount of Money to His Dogs, Ecorazzi, Jul. 27, 2011.

For more information on planning for your pets, see Gerry W. Beyer & Barry Seltzer, Fat Cats & Lucky Dogs – How to Leave (Some of) Your Estate to Your Pets (2010).

July 29, 2011 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, July 28, 2011

Singer’s Death Can Cause Record Sales Increase

Obit-amy-winehouse-240cs072611_186x136 Many singers’ record sales increase after the singer dies. Record sales for Amy Winehouse, who passed away July 23, have increased since her death, causing her second album to reach the number 9 spot on the Billboard 200 albums chart.

According to MNSBC and Forbes, the record sales for the follow musicians also increased substantially following their respective deaths:

  • Elvis Presley
  • Michael Jackson
  • Ray Charles
  • Selena
  • Janis Joplin
  • Nirvana (Kurt Cobain)
  • The Notorious B.I.G.
  • Bob Marley
  • John Lennon
  • Tupac Shakur
  • Aaliyah
  • Jimi Hendrix
  • Frank Sinatra

See Risa Dixon, Celebrities whose deaths increased record sales, Newsday, Jul. 27, 2011.

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

July 28, 2011 in Music | Permalink | Comments (0) | TrackBack (0)