Wills, Trusts & Estates Prof Blog

Lawsuit Against Samsung Chairman

Lee Kun-hee is the chairman of the Samsung group and number 106 on Forbe’s list of the world’s top billionaires. His brother and sister accuse him of acquiring some of that fortune illegally in a recent lawsuit.

In February, Lee Kun-hee’s older brother filed the lawsuit and now he is joined by two other family members. The suit claims that when their father, founder of Samsung group, died, he left millions of shares in Samsung Life Insurance and preferred stock in Samsung Electronics, and cash in trust. Lee Kun-hee allegedly wrongfully transferred the stock and cash all to his name when he should have divided it amongst the heirs. The stock at issue is worth $877 million.

Questions surround the 25 years it took the older brother to bring this suit. The older brother says that he was trying to figure out what happened to the stock during that time period. A whistleblower eventually brought Kun-hee’s activities to light and Mr. Lee was prosecuted, and found guilty of tax evasion. He was forced to step down from his role as the Samsung Group chairman after this judgment, but he was later pardoned.

Lee Kun-hee refuses to settle in this case and will fight to South Korea’s highest court. The lesson of cases such as these is to plan your succession plan early. Choose those who will take over control with much care, and consult an estate planning attorney for proper drafting of a document to reflect those wishes.

See Danielle and Andy Mayoras, Samsung Billionaire Accused of Stealing Millions From Late Father’s Trust, Forbes, Apr. 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Electronic Discovery Enables Spouses to More Easily Detect Hidden Assets

Troubled couples may be hiding money or other secrets, but they should be warned that electronic discovery is making it easier to uncover these secretive activities.

Spouses can dig into web-surfing history or install software on home computers that record secrets. Attorneys have easier access to digital bank statements, credit-card bills and other files. Smartpones are also a helpful tool in discovering hidden assets. Spouses can enable “find my phone” software on her family’s smartphones and learn where another spouse is stopping when they’re away from home. GPS in a spouse’s vehicle works much the same.

It may not be legal for spouses to use some of these methods to discover another spouse’s secrets, so they would not be able to use them in trial, but they can usually use them for leverage in a negotiation. Lawyers advise clients not to use illegal activity, but spouses often disregard that advice and seek the information that they want to know.

31% of U.S. adults have admitted to being deceptive about money, and 58% of these adults hid cash from their partner or spouse, and 58% of those adults have hidden cash from their partner or spouse. One of the reasons that electronic discovery is so big right now is because more people are using technology to hide the assets – whether they hide them through text messages, social networks, or create cash hoards online. Many of these spouses forget the traces that their electronic activity leaves behind – even after they have erased an email or a facebook post. The best way to avoid all of this scandal is for spouses to maintain more open and honest communication.

See Veronica Dagher, Why Hiding Money From Your Spouse Has Gotten a Lot Harder, The Wall Street Journal, Apr. 30, 2012.

Special thanks to Naomi Cahn (John Theodore Fey Research Professor of Law, George Washington University School of Law) for bringing this article to my attention.

In-Depth Estate Planning CLE

As a reminder, ALI-ABA will sponsor a five day CLE from June 17-22, 2012 in Madison, WI entitled Estate Planning in Depth. An Optional Sunday afternoon session on wealth transfer taxation is also available. A description of the course is below:

Why Attend?

An intensive, interactive classroom experience complemented by opportunities to learn informally after hours from an expert faculty and from fellow registrants at a reception, a picnic supper, evenings at the Student Union, and more

Comprehensive study materials—typically 1,200 pages or more– that are among ALI-ABA’s best

A relaxed campus environment that helps make learning fun, plus an affordable housing and meal package that keeps costs low

A half-day Sunday primer that brings less experienced practitioners up to speed

Engaged registrants—last year from 31 states—and an expert faculty from across the country who share ideas with one another over the course of five days

A special panel discussion on what's hot and what's not in planning and administering estates in 2012, and a presentation on estate planning in these uncertain times

What You Will Learn

Presented at an advanced level and comprising more than 36 hours of instruction, including 2 hours of ethics credit, this annual course of study considers in depth significant tax and non-tax aspects of estate planning.

The course features an optional Sunday afternoon overview session (at no additional charge) on wealth transfer taxation principles, as well as a special panel discussion on what's hot and what's not in planning and administering estates in 2012 and a presentation on estate planning in these uncertain times.

Time is reserved throughout the program to address registrants’ questions.

Who Should Attend

The daytime sessions Monday through Friday are designed for lawyers with more than basic experience in estate planning. Practitioners lacking a foundational knowledge of trusts and estates law or wealth transfer taxation or who have a limited background in estate planning may benefit by careful preparation for every session, but basic material is addressed in the classroom sessions only as necessary to provide background for advanced understanding of more complex matters.

Second Marriage? Revocable Trusts Can Be Helpful for Life Insurance Planning

If you are getting married for the second time, how can you make sure that both your spouse and children from a previous marriage are provided for in life insurance policies?

If you already have life insurance with your first spouse as designated beneficiary, you should immediately change that beneficiary. Then you have to decide who to name as the replacement beneficiary. It is risky to name your children to the exclusion of your spouse, and also to name your spouse to the possible exclusion of your children.

One possible solution is to create a revocable trust and name the trust as the beneficiary of the life insurance policy. Upon your death, the life insurance policy can fund the trust, which you can set up however you would like. It is always best to consult with an attorney about what your best option may be, but the revocable trust is certainly a possibility.

See Second Marriages and Life Insurance, Elder Law Answers, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Blog Rankings Continue to Increase

The Wills, Trusts, & Estates Prof Blog ranked #18 in number of visitors and page views for the last quarter among blogs edited by law professors. The number of visitors is up 14.6% and the number of page views reflects a 16.2% increase.

Overall as of April 29, 2012, this blog is the Number 1 most popular Estate Planning blawg in the nation (out of 182) and the Number 13 most popular blawg in the nation out of (6,657).

To all my readers, I greatly appreciate your readership, support, and contributions.

Preparing a Will for a Client with Communication Challenges

Gerry W. Beyer (Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law) has recently posted on SSRN his article entitled Preparing a Will for a Client with Communication Challenges which appears in the April 2012 issue of Trusts & Estates, the newsletter of the Illinois State Bar Association's Section on Trusts & Estates. An abstract of the article is below:

Your client may have difficulty with communication, that is, the client may be unable to see, hear, write, or understand English. To effectively prepare a will for these clients, the estate planner must initially ascertain whether the client has a communication challenge and then take affirmative steps to make certain the challenge does not negatively impact the validity of the will. Extra attention must be given to make certain the requirements of a valid will are satisfied and that individuals displeased with the will do not use the communication challenge as a foundation for claims of undue influence or fraud. Even without other evidence, courts may subject the will of a communicationally challenged client to higher scrutiny.

This article reviews a variety of communication challenges (visually impaired, hearing or speaking impaired, physically unable to sign, illiterate, non-English speaking) and recommends techniques to reduce the likelihood of these challenges playing a part in setting aside the testator's will.

Note that although this article was prepared with the Illinois practitioner in mind, the general concepts and suggestions apply in other jurisdictions as well.

Fun blog for mid-lifers

Richard Barnes, a lawyer and author from Valdosta, Georgia, has recently started a blog for mid-lifers "trying to make sense of it all" entitled The Sunder Years.

Richard's initial postings are most interesting and I hope he continues to post on a regular basis to give us the benefit of his insights, wit, and humor.

Pet Mediation

Many clients going through a divorce find that one of the biggest challenges is determining the living arrangements for their pets, and some judges refuse to hear pet related disputes. As such, pet mediators have become a small but growing legal area. Pet mediators typically charge around $250.00 an hour, and can help a divorcing couple determine a pet’s living arrangements or develop a compromise between neighbors over a loud dog. Individuals struggling with a dispute involving an animal who would like to avoid litigation should look for a state-certified mediator to help resolve the issue.  The parties involved typically split the mediation fees and both parties have the opportunity to express their feelings on the subject at issue.  

For more information on pet mediators, see Veronica Dagher, A Dog's Bark Is Better Than Litigation's Bite, The Wall Street Journal, Apr. 30, 2012.

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

Article On The Portability and Rollover of Retirement Assets

Christopher R. Hoyt (Professor of Law, University of Missouri-Kansas City School of Law) recently published his article entitled, Retirement Assets to a Surviving Spouse–Rollovers and Portability Are Your First Choice, Probate & Property Magazine, Jan./Feb. 2012 at 21. The abstract from SSRN is available below:

This article examines the pros and cons of naming either a spouse or a trust for a spouse as the beneficiary of a retirement account. It integrates income tax planning with estate planning and recommends arrangements that will produce the best overall outcome.

Rollovers can pose challenges. For couples in a second marriage, there is no way to assure that the surviving spouse will leave any remaining rollover assets to the children of the deceased spouse’s prior marriage. An estate tax problem is that the rollover assets could inflate the size of the surviving spouse’s taxable estate. Thus, estate planners might recommend a QTIP trust or a credit-shelter/bypass trust. 

The income tax problem caused by naming a trust for a spouse as the beneficiary of a retirement account is that the required minimum distribution (“RMD”) laws will usually require the account to be liquidated over the surviving spouse’s remaining life expectancy. The implication for the 50% of surviving spouses who live longer than their original projected life expectancy: the tax laws will require the inherited retirement account to be completely liquidated while they are still alive and at a time when they might need money to pay medical or long-term care expenses. By comparison, a rollover of a deceased’s spouse’s account to a surviving spouse allows ample resources to remain in the account for the surviving spouse’s entire lifetime because of much smaller RMDs. 

The article then examines how the new “portability” estate tax law permits married couples to get the income tax advantage of a rollover and avoid the estate tax problem. For elderly couples and for couples in a second marriage, the article demonstrates how a two-generation charitable remainder trust can do for retirement assets what a credit-shelter/bypass trust does for conventional assets.

New Edition of Uniform Trust and Estate Statutes Forthcoming

Foundation Press has recently announced the forthcoming publication of Uniform Trust and Estate Statutes, 2012-2013 Edition, edited by Thomas Gallanis of the University of Iowa.  The book will be printed in mid-May, and the ISBN is 978-1-60930-136-1.  This new edition has the updated text and official comments of the Uniform Probate Code, Uniform Trust Code, and more than a dozen other acts relating to the field of trusts and estates.  The book also includes relevant provisions of the Restatement Third of Trusts and the Restatement Third of Property, as well as selected prior versions of UPC sections.   The book is ideal for teaching basic and advanced courses in wills and trusts.  It is also ideal for practitioner reference.

Here is the table of contents:

Part One: Probate Statutes

    Uniform Probate Code (1969, with Subsequent Amendments, including an extensive array of technical amendments in 2011)

    United Kingdom Inheritance (Provision for Family and Dependants) Act 1975, as amended by the Family Law Act 1996 and the Civil Partnership Act 2004

Part Two: Trust Statutes

    Uniform Trust Code (2000, with Subsequent Amendments)

    Uniform Principal and Income Act (1997, with Subsequent Amendments)

    Uniform Prudent Investor Act (1994)

    Uniform Custodial Trust Act (1987)

 Part Three: Other Uniform Acts

    Model Protection of Charitable Assets Act (2011)

    Revised Uniform Anatomical Gift Act (2006, with 2007 Amendments)

    Uniform Prudent Management of Institutional Funds Act (2006)

    Uniform Parentage Act (2000, with 2002 Amendments)

    Uniform Health-Care Decisions Act (1993)

    Uniform Simultaneous Death Act (1993)

    Uniform Transfers to Minors Act (1986)

    Uniform Fraudulent Transfer Act (1984)

    Model Marital Property Act (1983)

    Uniform Premarital Agreement Act (1983)