Wills, Trusts & Estates Prof Blog

Article on Estate Planning in the Antebellum South

Stephen Duane Davis II (Associate, Maynard, Cooper & Gale P.C.) & Alfred L. Brophy (Judge John J. Parker Distinguished Professor of Law, University of North Carolina School of Law) recently published their article entitled, "The Most Solemn Act of My Life": Family, Property, Will, and Trust in the Antebellum South, 62 Ala. L. Rev. 757 (2011). The abstract of the article is available below:

“The Most Solemn Act of My Life” combines an empirical study of probate in Greene County, Alabama, one of the wealthiest counties in the United States in the years leading into Civil War, with a qualitative examination of property doctrine and ideology at that time. The data address three key themes in recent trusts and estates literature. First, what testators did with their extraordinary wealth; in particular, how they worked to maintain property within their families--and especially how male testators were suspicious of loss of their families' wealth through their daughters' marriages. Second, how testators used sophisticated trust mechanisms for both managing property and keeping it within their families. In the antebellum period, Americans celebrated the ways they harnessed technologies, from the steam engine to the telegraph to the printing press, to create wealth and improve society. This study reveals that trusts should be added to that list of technologies that assisted in the creation and management of wealth. Finally, the data reveal the salience of enslaved human property--often managed through trusts after their owners died and also frequently divided between family members--to the maintenance of family wealth.

While some in the United States at the time--including some jurists as well as politicians and novelists--questioned the desirability to our country of inheritance, the Greene County data show an extraordinary devotion to maintenance of family wealth. The findings in “The Most Solemn Act of My Life” invite further study in other Southern counties, as well as Northern, to gauge the extent to which wealth (particularly a wealth based on human property) led to different patterns of bequest from those seen among the rest of our nation's testators during that critical period of American history.

Overestimating the Cost of Insurance

Reports and surveys indicate that many consumers believe that the cost of insurance is higher than its actual cost. This number is in some ways related to number of people who believe that they do not own an adequate amount of life insurance. About a third of the consumers surveyed in the 2012 Insurance Barometer Study thought that they did not have an adequate amount of life insurance. The reason that most people do not have more life insurance is because they claim that it is too expensive. The groups that are most affected by this are minorities, women, and young adults. 

Another reason that most people do not obtain more life insurance is that have other financial concerns that take priority over purchasing life insurance. With the financial troubles of the day, at least half of all consumers surveys stated that they were more concerned with having funds for their retirement than they are with having enough life insurance.

See Consumers Overestimate Cost of Life Insurance By Nearly Three Times, MarketWatch: Wall Street Journal, Apr. 25, 2012.

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

"The Trust" -- The novel to be released July 17, 2012

On July 17, 2012, Norb Vonnegut's newest financial thriller, The Trust, will be released.

Here is some information about this book from the publisher:

Norb Vonnegut (cousin of the late Kurt Vonnegut) is a former Wall Street insider and master of financial intrigue. The author of 'Top Producer' and 'The Gods of Greenwich', Norb has combined his wealth management expertise and intuitive, darkly humorous writing into a fast-talking, suspense thriller that burrows inside the world of big-money philanthropy and reveals how financial criminals hide behind the First Amendment. Who would have known that charitable donations could be so deadly?

One sultry morning in Charleston, South Carolina, real estate magnate Palmer Kincaid's body washes ashore, the apparent victim of accidental drowning. Palmer's daughter calls Grove O'Rourke, stockbroker and hero of Top Producer, for help getting her family's affairs in order. Palmer was Grove's mentor and client, the guy who opened doors to a world beyond Charleston. Grove steps in as the interim head of the Palmetto Foundation, an organization Palmer created to encourage philanthropy.

Community foundations, like the Palmetto Foundation, are conduits.

Philanthropists gift money to them and propose the ultimate beneficiaries. But in exchange for miscellaneous benefits-anonymity, investment services, and favorable tax treatment-donors lose absolute control. Once funds arrive, community foundations can do whatever they decide.

 For years Palmer showed great sensitivity to his donors, honoring their wishes to funnel funds into the charities of their choice-his unspoken pledge-and it was this largesse which made him a respected pillar of the Charleston community. But after Grove authorizes a $25 million transfer requested by a priest from the Catholic Fund, he discovers something is terribly wrong. He gets a call from Biscuit Hughes, a lawyer representing the people of Fayetteville, North Carolina, against a new sex superstore in their town. Biscuit has traced the store's funding to a most unlikely source: the Catholic Fund.

Together, Grove and Biscuit launch an investigation into the fund, but the deeper they dig, the more evidence they find that the fund's money isn't being used to support the impoverished-it's going somewhere much more sinister. When someone close to him disappears and the FBI starts breathing down his neck, Grove knows he has to figure out who's pulling all the strings before the shadowy figure who will stop at nothing to keep the fund a secret gets to him.

Supreme Court Makes Its' Ruling In Astrue v. Capato

The Social Security Administration denied social security benefits to a pair of posthumously conceived twins. The twins were conceived when their mother decided to use in vitro fertilization to become pregnant using the preserved semen of her late-husband. The question before the Court was whether these children should be denied social security benefits based upon the timing of their conception. In this case, the twins were conceived after the death of their father.

The Supreme Court of the United States held in Astrue v. Capato that the courts should use the applicable state intestacy law to determine whether a child is considered a "child" of the deceased parent and entitled to benefits. The state intestacy law that should be used is the law of the state where the deceased was domiciled at death. The problem with this ruling, as some have pointed out, is that the law would be applied differently and inequitably among the various states. 

See Gregory F. Monday, Supreme Court Unanimously Rules That State Law Can Define Family Relations for Federal Program, Trusts & Estates, May 30, 2012.

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

Jerry A. Kasner Estate Planning Symposium

Santa Clara Law and the Office of Planned Giving will present the 8th Annual Jerry A. Kasner Estate Planning Symposium on Friday, September 21, 2012.

This program is a one-day estate planning seminar for attorneys, accountants, certified life underwriters, bank trust and investment officers, financial advisers, and other wealth planning professionals. The seminar will provide attendees with most current information regarding the tax, legal, and financial issues concerning estate planning and trust and estate administration. The program includes a series of individual presentations, lunch, breakout sessions, and an afternoon reception. CLE credit hours offered.

This year’s speakers include, among others, Prof. Stanley Johanson, Robert Temmerman, Esq., Michael J. Jones, CPA, Prof. Wendy S. Goffe, and Steven E. Trytten, Esq.

Man Dies At Gentlemen's Club

A 67 year old man named Robert White died after enjoying the services that a gentlemen's club in El Paso, Texas offered. When it was time to pay the fee, the workers at the gentlemen's club found him unresponsive even after their repeated attempts to revive the man. It was later determined that White died from a heart attack at some point in the evening. 

See Andy Campbell, Robert Gene White Dies During Lap Dance, The Huffington Post, May 16, 2012.

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

A New Financial Advisor For a New Time

With the rise in domestic partnerships, there is need for financial planners to become educated on issues that relate specifically to unmarried couples. The College on Financial Planning now has a program that allows a financial planner to become a Accredited Domestic Partnership Advisor. These programs focus on planning for same-sex couples and heterosexual unmarried couples. This type of education is important because of the differences in the benefits that married couples can receive as opposed to unmarried couples. To learn more about this program, a person should read the full article below. I have provided a link.

See Jerry Gleeson, Learn How to Financially Advice Unmarried Couples, Registered Rep, May 29, 2012.

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

Adopting Ex-Husband Won't Work to Inherit More Shares

Wilbert Gore founded a company in his basement and ended up with $3 billion in annual revenue to divide. Susan Gore, one of Wilbert Gore and Vieve Gore’s five children, adopted her ex-husband, Jan Otto to even the playing field.

Susan and Jan had three children, and each of Susan’s four siblings had four children. This meant that Susan’s children were going to inherit fewer shares. To remedy this, Susan went to court to secretly adopt 65-year-old Jan in 2003. In an unsuspected maneuver, Jan decided to keep the potential distribution from the trust for himself. In 2005, when Susan was considering whether to un-adopt Jan, Susan’s mom died, releasing the trust assets.

On Tuesday, Delaware’s Supreme Court ruled that the unconventional adoption did not entitle Jan to inherit a share of the trust proceeds. Susan keeping the adoption secret for so long was just more convincing evidence that she was acting intentionally to disrupt Vieve’s plans.

See Court: Gore-Tex Heiress Can’t Adopt Ex-husband, Reuters, May 30, 2012.

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

Nonprofits and the Strain of the Form 990

Nonprofits and Hospitals are spending too much time and money reporting their finance and other activities to the federal government.

The House Ways and Means Committee hosted a hearing recently where this view was revealed, and where there was a call to change standards for getting charity status to wear groups get that title by making positive contributions as opposed to refraining from lobbying and engaging in untaxed business activities.

The new 990 tax form has resulted in many reporting burdens on institutions because it requires so much information. Hospitals should be spending their limited resources on meeting their community’s health care needs as opposed to reporting the processes they used to meet those needs.

See Derek Lieu, IRS Urged to Reduce Paperwork Burden on Charities, The Chronicle of Philanthropy, May 16, 2012.

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

Article on Irrevocability of Special Needs Trusts

Mary F. Radford (Marjorie Fine Knowles Professor of Law, Georgia State University College of Law) and Clarissa Bryan (Candidate for J.D., Georgia State University College of Law) recently published their article entitled, Irrevocability of Special Needs Trusts: The Tangled Web that is Woven When English Feudal Law is Imported into Modern Determinations of Medicaid Eligibility, NAELA J., v. 8, p.1 (2012). The abstract available on SSRN is below: 

Often personal injury victims who will need costly medical assistance throughout their lives will direct any settlement or judgment they receive into a “Special Needs Trust” (SNT). Federal law allows these individuals to use the trust funds to supplement the medical assistance that is available from basic Medicaid benefits so long as the SNT is an irrevocable trust. Recently, the Social Security Administration (SAA) has disqualified certain trusts, even though they are specifically designated as irrevocable trusts, by applying arcane doctrines from English feudal law, such as the Doctrine of Worthier Title. The article explains these doctrines and examines examples of inconsistent or faulty application of the doctrines by the SSA. The article concludes with a recommendation that the SSA cease its administratively burdensome and at times inappropriate attempts to apply these doctrines and adopt a simple rule that respects that a SNT that is designated as “irrevocable” is in fact irrevocable.