Wills, Trusts & Estates Prof Blog

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

Tuesday, August 30, 2011

Texas Estate Planning Statutes With Commentary -- 2011-2013 Edition Published

Cover Gerry W. Beyer (Governor Preston E. Smith Regents Professor of Law, Texas Tech University) has recently published the 2011-2013 edition of Texas Estate Planning Statutes With Commentary.

This book is a compilation of Texas statutes which are significant to law school and paralegal courses related to estate planning such as Wills & Estates, Trusts, Estate Planning, Estate Administration, Probate, Elder Law, and Guardianship. Changes made by the 2011 Texas Legislature are printed in red-lined format to make the revisions easy for the reader to locate.

Many sections include carefully written commentary entitled Statutes in Context. These annotations provide background information, explanations, examples, and citations to key cases which will assist the reader in identifying the significance of the statutes and how they operate.

August 30, 2011 in Books | Permalink | Comments (0) | TrackBack (0)

Special Needs Trusts

Trust1_2 Proper estate planning is especially important for disabled individuals in need of Medicaid and Supplemental Security qualification. Individuals eighteen and older cannot receive these benefits under federal and state law if their assets exceed $2,000. A special needs trust can help disabled individuals circumvent this law by having the trustee hold the assets for the benefit of the individual.

Many options exist for the creation of a special needs trust. The trust can be individually or institutionally directed—institutionally directed trusts are funded with court-awarded settlements. Settlors can also fund trusts with regular life insurance, second-to-die life insurance, Social Security survivor benefits, military benefits, retirement funds, real property, inheritances, and many other available assets. Additionally, the settlor has a choice when appointing the trustee or co-trustees.

Though a special needs trust is a beneficial estate planning tool for disabled individuals, all situations are different. It is importation that individuals who wish to create a special needs trust consider their own family dynamic and personal financial needs.

See Toddi Gutner, Putting the special in special needs trusts, Reuters, Mar. 4, 2011; Speical Needs Trusts, Lawyers.com.

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

August 30, 2011 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (1) | TrackBack (0)

Ethical Decisions of the Family Counselor

Aucutt, ronald d. Ronald D. Aucutt (Attorney, Tysons Corner, Virginia and Washington, D.C.) recently published his article entitled Creed or Code: The Calling of the Counselor in Advising Families, 36 ACTEC L.J. 669 (Spring 2011). The abstract of the article is below:

Families succeed by maintaining a tradition of regular, honest, and wide-ranging communication. The highest calling of a counselor is to encourage and enable such communication, both in planned family meetings and as an ongoing mindset. This requires the counselor to earn the family's trust and to engage in open-minded listening that demonstrates that the family comes first.

But whenever the counselor has contact with so many members of the family, there are ethical implications that sometimes pose impossible dilemmas regarding conflicts of interest and the flow of information. The prevailing rules of professional conduct, rooted in the needs and limitations of litigation, are not always helpful, particularly when they might require the trusted and understanding counselor to withdraw from the engagement at a time of stress or conflict when the family might need that counselor's services the most. At those times, the counselor must consider whether technical rules should yield to the higher creed of placing the family first.

August 30, 2011 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Monday, August 29, 2011

Executor owes no duty to unsecured creditor

Texas Mohseni v. Hartman, ___ S.W.3d. ___, 2011 WL 2304133 (Tex. App.—Houston [1st Dist.] 2011, no pet. h.).

Unsecured Creditor sued Independent Executor (IE) for breach of fiduciary duty, negligence, fraud, and conversion.  The creditor claimed that IE’s misconduct caused the estate to lack sufficient funds to pay his claim.  The trial court granted IE summary judgment ruling that an independent executor owes no legal duty to an unsecured creditor of the estate.  The creditor appealed.

The appellate court affirmed holding “that an independent executor does not owe a general legal duty of care to the unsecured creditor of an estate in the management of the estate’s assets.”  The court explained that the executor’s duty runs to the beneficiaries of the estate.  It is the beneficiaries who have title to the property under Probate Code § 37 subject to the payment of debts.  The executor thus holds the property in trust for the benefit of the title holders, not the creditors.  The court made the analogy that a creditor cannot bring an action against living debtors who cannot pay their debts because they mismanage property.

The court also discussed how public policy supports the court’s holding.  To create “such a duty would undermine independent administrations and conflict with the executor’s duty to administer the estate for the benefit of the heirs and legatees * * *.  Also, it could conflict with the executor’s statutory duties to other classes of creditors. * * * The creditor’s remedy is to seek a judgment against the executor in her capacity as the estate administrator and seek execution against the estate[’s] assets.”

Moral:  An independent executor’s duties run toward the heirs and beneficiaries, not unsecured creditors who seek to deprive them of the property to which they are otherwise entitled.

August 29, 2011 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Domestic Partners in Community Property States

Goffe Wendy S. Goffe (shareholder, Graham & Dunn, PC) has recently published her paper entitled Marriage, Domestic Partnerships, Civil Union: The Developing Tax Landscape, Through Time: Using the Law to Support LGBT Relationships, Washington State Bar Association Qlaw Section CLE, Seattle, Washington. The abstract available on SSRN is below:

This working paper focuses mainly on recent changes in the IRS's position regarding how domestic partners in community property states report income for federal income tax purposes. Other topics include ERISA preemption and estate planning issues for the transgender client.

August 29, 2011 in Articles, Current Events, Income Tax | Permalink | Comments (0) | TrackBack (0)

Foreigners and the Current Gift Tax

Taxes 1 Wealthy non-citizens who live in the U.S. can, in some cases, take advantage of the current $5 million gift exemption to hedge their gifting. Individuals who are domiciled in the U.S. but who are not U.S. citizens must pay U.S. estate and gift taxes on transfers of “sitused” property located in the U.S. Non-domiciled individuals may gift unlimited non-U.S. situs property without incurring U.S. gift taxes, while U.S. domiciliaries will be subject to gift taxes on transfers of non-U.S. situs property that exceed the current exemption.

For more information of the current gift tax and its affect on non-U.S. citizens, see Beth D. Tractenberg and Kathryn von Matthiessen, Foreigners And The Gift Tax, Private Wealth Magazine, Jul. 2011.

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

August 29, 2011 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Living to be 1,000

1000 Currently, .03% of the U.S. population lives to be 100 or older. Scientists predict that this percentage will increase to .14%, or 601,000 people, by the year 2050. While this increase may seem extreme, many scientists believe that technological and medical advances may increase life spans far past 100 years. Aubrey de Greay, gerontologist and scientific provocateur, believes that people alive today may be the first individuals to reach 1,000 years old.

While a 1,000 year life span may be possible one day, scientists working on increasing life spans predict that an average life span of 150 years will be ascertainable in the near future. These scientists stress that they are attempting to increase both the quality and the quantity of life.

With a longer life, however, come concerns regarding the environment, population growth, the economy, and resource availability. Additionally, increased life spans may have an affect on more personal matters such as marriages, divorces, intra-family dynamics, estate planning techniques, and financial savings.

Bill McKibben, an environmental writer, argues against “techno-longevity”, claiming that “like everything before us, we will rot our way back into the woof and warp of the planet. Sonia Arrison, author of How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family and Faith (Basic Books 2011) is unconvinced, stating:

Arguments against life extension are often simply an appeal to the status quo. If humans were to live longer, we are told, the world, in some way, would not be right: It would no longer be noble, beautiful or exciting.

But what is noble, beautiful and exciting about deterioration and decline? What is morally suspect about ameliorating human suffering?

The answer is nothing. Everything that we have, socially and as individuals, is based on the richness of life. There can be no more basic obligation than to help ourselves and future generations to enjoy longer, healthier spans on the Earth that we share.

See Sonia Arrison, Living to 100 and Beyond, The Wall Street Journal, Aug. 27, 2011.

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

August 29, 2011 in Current Events, Science, Technology | Permalink | Comments (0) | TrackBack (0)

Deceased BitTorrent User Sued By Makers of The Hurt Locker

Antipiracy The makers of the movie The Hurt Locker have already sued 24,583 BitTorrent users for alleged copyright infringement. The makers started sending out subpoenas earlier this year, and it appears that one of the alleged infringers may have been deceased at the time of the offense.

More than 200,000 people have been accused of copyright infringement in the U.S. since last year, and with this many suits comes plenty of room for wrongful accusations (especially considering the fact that an IP-address is not a person).

See Anti-Piracy Lawyers Sue Dead Person, TorrentFreak, Aug. 26, 2011.

August 29, 2011 in Current Events, Humor | Permalink | Comments (0) | TrackBack (0)

Sunday, August 28, 2011

Developments in Elder Law

PearsonK Katherine C. Pearson (Professor of Law, Penn State Law) recently published her article entitled The Lesson of the Irish Family Pub: The Elder Clinic Path to a More Thoughtful Practice, 40 Stetson L. R. Vol. 237 ( 2010). The abstract available on SSRN is below: 

In this article, the Director of the Elder Law Clinic at Pennsylvania State University provides insight into the development of Elder Law as a unique discipline by tracking the history and challenges faced by her program as it approaches ten years of operation. A core focus of the Elder Law clinic, beyond practical experience, is to expose its students to the ethical issues confronted in Elder Law practice. Students in the clinic combine classroom discussions with practical experience representing clients, thereby becoming better prepared for their professional futures, while also gaining appreciation for the special concerns of the elderly client. To demonstrate a particular issue of concern, the Author recounts the story of one Irish family's struggle following the death of their father to nullify an unfavorable real-estate transaction prepared by an attorney insensitive to the needs of his elderly client. The history of this case illustrates a recurring theme in Elder Law -- the necessity of identifying the unique concerns of older clients and responding to their needs in the face of competing influences, such as the desires of the clients' family members.

August 28, 2011 in Articles, Elder Law | Permalink | Comments (1) | TrackBack (0)

Interview with Steven Oshins on New SMLLC Legislation

Steven-Oshins_220591 Provident Trust Group recently interviewed Steven Oshins, an estate planning attorney at Oshins & Associates, LLC, regarding his influence in drafting Nevada’s Senate Bill 405 (a bill dealing with remedies for creditors of single member limited liability companies, or SMLLCs). An excerpt of the interview is below:

Q. Why the need for new legislation addressing SMLLCs?

After reading the Olmstead case in early 2010 and seeing where the trend in the law was heading, I felt that it was time to clarify Nevada’s charging order laws to continue to enhance them and keep Nevada ahead of the rest of the pack. So I contacted Attorneys Rob Kim and Mark Smallhouse, both part of the Business Law Section of the State Bar of Nevada, and worked with them on the new language. This is the third time I have authored or co-authored the Nevada charging order laws. I also wrote them in 2001 and 2003. This change in Nevada law makes Nevada and Wyoming the only two states to statutorily legislate that a single member LLC gets the same protection as a multi-member LLC.

Q. The Nevada statute provides that a charging order is the “exclusive remedy.” Are you confident that the prohibition against any other remedy being imposed by a court prevents the imposition of equitable remedies such as a constructive trust or resulting trust?

Yes. In addition to the single member LLC changes, I added in language specifying that no equitable remedies can apply. Equitable remedies are remedies that the court will sometimes use where the legal remedies are insufficient for the judge to get to the desired result. I felt that South Dakota law had the best equitable remedy language, so I used that language.

Q. Is there a provision in the enacting legislation, if not in the statute itself, assuring that the new law applies to pre-existing SMLLCs?

There’s no specific language. It is clear that it applies to pre-existing SMLLCs.

Q. In Olmstead, the Florida Supreme Court pointed to an entirely independent statute that allowed creditors to foreclose on assets of the debtor. Is there any other provision in Nevada law that could be relied upon, as was the case in Olmstead?

There is no foreclosure language in the Nevada charging order statute. So this is not an issue under Nevada law.

See Neil Schoenblum, Nevada Extends Charging Order Protection to Single Member LLCs, Provident Trust Goup, Jun. 20, 2011.

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

August 28, 2011 in Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)