Wills, Trusts & Estates Prof Blog

Crummey Trust Successful

Wendy C. Gerzog (Professor of Law, University of Baltimore School of Law) recently published her article entitled FLP Loss But Crummey Win, Tax Notes Vol. 133, No. 9 (2011). The abstract available on SSRN is below:

In Turner the Tax Court determined that section 2036 applied to the decedent’s transfers of assets to his family limited partnership but that the insurance premiums he paid indirectly to his insurance trust qualified for the annual exclusion.

They’re Making a List and Checking it Twice

Just in time for the Christmas season, Anne M. McKinney (Estate Planning Attorney, Knoxville, Tennessee) has created a musical tribute to help individuals remember that their wealthy relatives can, and will, consider the spending habits of the younger generation when making their wills. The video of McKinney’s musical tribute is below:

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

Texas Tech Personal Financial Planning Program Becomes a Department

Texas Tech University will have a standalone Personal Financial Planning department starting in the fall of 2012. Professor Vickie Hampton will become the chair of the new department, and the department will be comprised of twelve full-time faculty and five graduate adjunct faculty members.

The Personal Financial Planning program has grown rapidly over the past ten years. As a department with more research opportunities, the planning group will be able to meet the needs of students more efficiently.

See Danielle Reed, Texas Tech’s Financial Planning Division Graduates to a Department, Financial Planning, Nov. 29, 2011.

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

Progression of The Online Donor

Network for Good, a fund-raising and volunteerism website, charted the evolution of the online donations over the past ten years. A list of how online donations today compare to online donations in 2001 is below:

• Four percent of people gave online in 2001, compared to 65% in 2011
• One-in-ten disaster relief gifts were given to help after September 11, 2001, compared to the one-in-three disaster relief gifts that were given after the earthquake in Japan 2011
• The average online gift in 2001 was $226, while the average online gift in 2011 is $73 (the network notes that “giving has gone mainstream”)
• The amount given through the Network for Good was $3 million in 2001, compared to the $140 million that has been given in 2011
• No one advanced causes through social media in 2011 because the technology was not prevalently used or known; in 2011, 40% of people advance causes through the use of social media

Cody Switzer, Charting a Decade of Online Donations, The Chronicle of Philanthropy, Nov. 23, 2011.

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

Improving Tax and Asset Protection Benefits Rung by Rung

Martin M. Shenkman (Attorney, New Jersey and New York) recently published his article entitled Stairway to Estate Planning Heaven, Wealth Strategies Journal, Nov. 29, 2011. An excerpt for the article is below:

Summary: Led Zeppelin's classic hit has remained popular with boomers as a paradigm for their estate planning. Rung by rung you can improve your tax and asset protection benefits by climbing upward towards estate planning heaven. We'll start at the bottom and work upward.

Father Knows Best Trust.

Coke classic might be great, but not Trust Classic. Most folks have used for a long time in their estate plans. These antiques typically mandate that income be paid out annually, name the beneficiary as a trustee, give the beneficiary in his capacity as trustee the right to distribute money to himself (often limited to an "ascertainable standard" - health, education, maintenance and welfare). Most of these trusts ) pay out trust principal at specified ages, say as 1/2 at ages 25, and the balance at 30. Well, if you think wearing one of those Jim Anderson outfits is fresh, then this is just the type of trust you'd still want in your planning arsenal - Not! If your trust is a model T, don't give up, you might be able to have the trust invest assets into a well crafted limited liability company (LLC) and create a new layer of control and protection. Other corrective steps might be possible. But this is not the kinda trust you want by choice.

Wife Has No Claim Against Husband’s Estate for Husband’s Negligent Death

Mr. Hubley died in a car accident caused by his own negligent driving. Following her husband’s death, Mrs. Hubley made a claim against her husband’s estate for the loss of her husband’s earnings, retirement pension benefits, care, guidance, and companionship she incurred as a result of her husband’s death.

Mrs. Hubley appealed to the Court of Appeal after her claims were dismissed. In Hubley v. Hubley Estate 2011, the Prince Edward Island Court of Appeal agreed with the lower court, framing the issue as being whether Mrs. Hubley was owed a prima facie duty of care by Mr. Hubley to protect himself from injury or death. The court held that finding a duty of care under the situation presented would result in far-reaching policy consequences.

See Paul E. Trudelle, Claim Against Husband’s Estate for Damages Arising from Negligent Death of Husband, Toronto Estate Law Blog, Nov. 29, 2011.

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

Michael Jackson’s Doctor Gets Four Years

Los Angeles Superior Court Justice Michael Pastor sentenced Conrad Murray, Michael Jackson’s doctor, to four years in jail for the involuntary manslaughter of the King of Pop. Judge Pastor declared Murray, 58, an unfit candidate for probation, stating, "He has absolutely no sense of remorse. [Murray] is and remains dangerous…I think Dr. Murray is so reckless that I believe he is a danger to the community."

The court will order Murray to pay restitution to the court in the amount of $800 and restitution to Jackson’s estate and children in an amount yet to be determined. Judge Pastor also ordered Murray to pay the $30 court security fee and a $40 criminal conviction assessment.

The decision of whether Murray will spend his sentence in a 23-hour lockdown cell or with the general jail population is left to the California Department of Corrections.

David Lohr, Conrad Murray Sentenced: Michael Jackson’s Doctor Gets 4 Years in Jail, The Huffington Post, Nov. 29, 2011.

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

Estate Tax as Applied To Nonresident Noncitizens

Bridget J. Crawford (Professor of Law, Pace University School of Law), Troy Lipp (Student, Pace University School of Law), and Jonathan G. Blattmachr (Millbank, Tweed, Hadley & McCloy LLP) recently published their article entitled Estate Taxation of Nonresident Noncitizens: A Primer, Tax Notes, Vol. 132 at 759 (2011). The abstract available on SSRN is below:

This article provides an overview of the U.S. estate tax rules that apply to nonresidents who are not U.S.citizens. The long arm of the U.S. federal estate tax extends to individuals who have assets located in the United States even if the individual is neither a resident nor a citizen of the United States. The statutory framework of subchapter B of chapter 11 of the Internal Revenue Code ode is not well understood, even by specialists. Those Code sections are not taught in most law school courses in federal estate and gift taxation. In light of the staggering staggering amount of foreign investment — $1,245.7 billion of financial assets (excluding derivatives) in 2010 — the estate tax rules governing nonresident noncitizens deserve attention.

Update Beneficiary Designations Now

One of the most important estate planning moves that you can make right now is to update your beneficiary designations for your bank accounts, brokerage firm accounts, life insurance policies, annuities, tax-favored retirement accounts, and company benefit plans.

Significant events in your life such as divorces or changes in the disposition of property that you would like to leave to specific children spur the need for updates. One of the common horror stories is when individuals die after a divorce without changing the beneficiary from their ex-spouse to another desired beneficiary. Even if the will says differently, the money goes to whomever is named on your most recent beneficiary form. It takes little time to update these beneficiary forms, so it is beneficial to make a habit of annually revisiting them to be sure that beneficiaries are appropriately designated.

See Bill Bischoff, Make This Estate Planning Move Now: Failure to Take This Action Can Have Dire Consequences, Smart Money, Aug. 9, 2011.

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

Team Approach To Estate Planning

You can accomplish more effective estate planning with a team approach. Attorneys, accountants, and planners can all work together to be sure that you take full advantage of benefits and avoid costly mistakes.

Though the team approach might be the ultimate goal for thorough estate planning, testators rarely utilize a team of planners. Some wealth management firms offer 10% off of the customer’s next quarterly bill if they will get together with an estate planning team, but the meetings still do not happen as often as the clients would like.

It is important for attorneys to offer clients options for more complex plans and for simple plans that may be more suited to their desires. One of the benefits of having a team of advisors is having several different experts in different areas express concepts from unique angles. Clients are more likely to attach to one of these varied explanations so that they can get the most out of their estate plan.

See Martin Shenkman, Come Together: The Merits of the Team Approach to Estate Planning, Financial Planning Magazine, Sept. 1, 2011.

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