Wills, Trusts & Estates Prof Blog

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

Wednesday, May 30, 2012

Estate of Dito: Determination of Different Primary Rights Results in No Res Judicata

ImagesA decedent’s daughter sued the surviving spouse of the decedent for financial elder abuse of the decedent while he was alive. She sought an order of the trial court that the trial court should treat the surviving spouse as though she predeceased the decedent for purposes of distribution of the decedent’s estate.

The defense was res judicata—claiming that a prior court order acknowledging the marriage and the surviving spouse’s right to an omitted spousal share already precluded litigation on this matter. The trial court agreed and ruled in favor of the surviving spouse.

In Estate of Dito, the Appellate Court for the First District overruled the trial court, holding that the “primary rights” in the two litigations were different. The court found that the primary right in the first action was the surviving spouse’s right to inherit from the decedent’s estate, while the primary right in the second action was the decedent’s right not to be abused. Therefore, the elder abuse action was allowed to proceed.

See Kevin Rodriguez, Surviving Omitted Spouses Can Be Sued for Elder Abuse of the Decedent Spouse, JDSupra, May 25, 2012; see also, Estate of Dito, 198 Cal.App.4th 791 (2011).

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

May 30, 2012 in Estate Administration, New Cases | Permalink | Comments (0) | TrackBack (0)

Problems With Do-It-Yourself Estate Planning

WillsAs I have previously discussed, there are many problems that could result with Do-It-Yourself (DIY) Estate Planning. To further add to the case against DIY Estate Planning, there are many benefits that one could obtain from speaking with a licensed attorney.

  • First, DIY programs, such as LegalZoom, often to do not take into consideration laws that are specific to the state of where a client lives. An attorney would be able to explain and take into consideration these specific laws.
  • Second, an attorney consultation could isolate issues that are unique to a client's situation, and then draft documents that take into consideration these unique circumstances. 
  • Third, a client might want to take into consideration that the attorney has years of experience, and would likely be better prepared to handle his or her unique situation.

See Todd C. Ratner, Esq.Beware The Danger of Do-It-Yourself (DIY) Estate Planning, Estate Planning Bits, May 25, 2012.

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

May 30, 2012 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Gifts in 2012

IRS 2With the estate and gift tax exemption set at such a high level, experts claim that a good majority of people are taking advantage the beneficial tax exemption. However, there are some important aspects of gifts that taxpayer might want to take into consideration.

  • A taxpayer might want to forgive loans that the person might have made to other members of the family. However, it is important to follow the proper procedure for forgiving loans. The failure to follow the procedure could result in the I.R.S. determining that the loan was in fact a gift, which would change the tax treatment on the loan. Furthermore, following the proper procedure could prevent the borrower from receiving income as a result of the loan forgiveness. This could create an additional tax for the borrower.
  • A taxpayer might want to take this opportunity to even the amount that a taxpayer has gifted to each member of the family. The advantages of doing this could prevent a conflict from emerging later.
  • A taxpayer might want to gift his or her ownership within a family enterprise. 
  • A taxpayer might also want to create an irrevocable trust with a taxpayer's family members as the beneficiaries. This could help those who are worried about their taxes, but are also concerned with keeping enough of their estate to maintain support for themselves.

See Kelly Greene, A Golden Age of Gift Giving, Wall Street Journal, May 25, 2012. 

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

May 30, 2012 in Estate Tax, Gift Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

In Opposition to the Estate Tax

IRS 2It usually is not the case that a taxpayer would think that a tax would be so painful as to compare it to passing a kidney stone; however, it could provide an adequate metaphor for the pain that comes from taxing those who have already contributed something to society. Some argue that the estate tax should be abolished for three reasons:

  • The tax taken from the estate tax increases excessive governmental spending, and further entraps our society into paying for programs we do not agree with.
  • The argument that the estate tax is fair because it dilutes and spreads wealth, rather than allow wealth from concentrating in the hands of a few individuals is not a valid argument. A person might consider the fact that it might be better concentrate wealth in the hands of a few people rather than give the government more money to spend for society as a whole.
  • It is not right for us as a society to tax those who have already advanced our society as whole. A person might want to consider that the estate tax is largely anti-growth because it deters those from creating the future innovations that could advance our society. 

See John Tamny, Kidney Stone Horrors Explain Why The Estate Tax Should Be Abolished, Forbes, May 20, 2012.

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

May 30, 2012 in Estate Tax | Permalink | Comments (1) | TrackBack (0)

State Court Holds Discretionary Trust is an Asset for Medicaid Eligibility

Estate DisputeElma Gsellman formed an irrevocable discretionary trust and placed most of her tangible personal property within the trust. The Ohio Department of Job and Family Services denied her application for Medicaid benefits, because the agency argued that the assets placed within the trust constituted available assets for Medicaid eligibility. The total amount available assets that were placed within the trust set her above the Medicaid limitation.

In Gsellman v. Ohio Dept. of Job and Family Services, the Ninth District for the Ohio Court of Appeals held that the assets within an irrevocable trust should be considered an available asset because the trust could make payments to Ms. Gsellman when she wanted. The court further rejected the argument that the trust was not an available asset just because it was created to prevent payments Ms. Gsellman should she become incapacitated.  

See Discretionary Trust Is an Available Resource in Medicaid Eligibility, ElderLawAnswers, May 1, 2012.

May 30, 2012 in Elder Law, New Cases, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 29, 2012

Planning for the Unwed

Images-4Financial advisers and estate attorneys have recently found a niche area working with unmarried couples who have to deal with the same financial issues as those who are married. These unmarried couples just don’t have the certificate that simplifies the process. Unmarried couples account for about 6% of American households.

Professionals who have branched out to serve this group can hardly keep up with the demand. There is still concern because issues in this area can be so complex that even specialists devoted to this kind of planning can mess up, and those mistakes cause big problems. In spite of this concern though, even a little planning can go a long way for unmarried couples.

See Charles Passy, Financial Planners Are Wooing the Unwed, SmartMoney Magazine, May 16, 2012.

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

May 29, 2012 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Article on Testation and Speech

Horton2David Horton (Associate Professor of Law, Loyola Los Angeles) recently published his article entitled, Testation and Speech (Geo. L.J., Vol. 101 (2012)). The abstract available on SSRN is below: 

Courts, scholars, and lawyers think of testation — the creation of a will or a trust — as a transfer of wealth. As a result, they analogize the field of decedents’ estates to property, contract, and corporate law: other spheres that regulate the use, conveyance, and investment of assets. Conversely, this Article identifies a quality that makes testation unique: it is a singular form of self-expression. For instance, conditional gifts, charitable bequests, and other posthumous directives often communicate a testator’s or settlor’s deeply-felt views. Likewise, owners’ distributional choices can be profoundly revelatory: by rewarding some beneficiaries and snubbing others, they offer a final assessment of their lives, their loved ones, and the world. 

Recognizing testation’s expressive impact has broad implications. For one, there has long been consensus that the Constitution does not apply to limits on testamentary freedom. However, because testation is a “speech act,” some wills and trusts rules, such as the doctrine of undue influence, must satisfy the First Amendment. Moreover, conceptualizing testation as speech bolsters the normative case for testamentary freedom and cuts against the grain of recent developments in decedents’ estates. In the last decade, the rise of law and economics and an unprecedented intergenerational wealth transfer have inspired a series of doctrinal changes that shift power away from testators and settlors in order to enhance the value of the estate. This new fixation on profit maximization overlooks the virtues of testamentary self-expression — the fact that it facilitates autonomy and self-determination — and reflects an impoverished vision of wills and trusts law.

May 29, 2012 in Articles, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

New Jersey Considers a Law to Promote Uniformity for Elders with Guardians

Images-3The New Jersey Legislature may join a multi-state network that protects adults when families feud. A lot of problems have come up where there are venue challenges and jurisdictional challenges to a court’s appointment of a guardian.

The bill under consideration is the New Jersey Adult Guardianship and Protective Proceedings Jurisdiction Act would result in New Jersey’s guardianship orders to be recognized by other states that have also adopted the law. That network includes more than 30 states.

The bill in New Jersey has bipartisan support and was approved by the Senate’s health committee last week. The feuds the bill is attempting to avoid unduly deplete the elderly ward’s resources and tie up the courts at the taxpayer’s expense. The bill should help family members across states by providing consistent laws. One attorney points out that the legislation will not end disputes among family members, but it will help determine which state has legislation in a guardianship case.

See Beth Fitzgerald, New Jersey Considers Law To Prevent ‘Granny Snatching,’ NJ Spotlight, May 21, 2012.

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

May 29, 2012 in Elder Law, New Legislation | Permalink | Comments (0) | TrackBack (0)

Farmers Struggle With Succession Plans

Images-2The USDA’s 2007 Census indicates that the fastest-growing group of farm operators is those 65 or older. Young people are not dying to take over for retiring farmers, either. This means that farmers looking for someone to take over will have to be creative and start planning early. A son or daughter can slowly start taking on increasing responsibilities, or you can groom someone outside the family to take over eventually.

Rutgers University has created a website to assist farmers with their retirement planning. This site covers a range of topics from retirement income, financial assessments, asset distribution, and tax issues. There are also programs aimed at getting young people involved in agriculture.

Another hurdle to smooth transfer of farm ownership is Congress’s uncertainty surrounding estate tax. It is hard to make an estate plan without knowing the tax implications.

See Rick Jordahl, Commentary: Can Your Retire?, Drovers Cattle Network, May 28, 2012.

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

May 29, 2012 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Gifting For Grandparents

Gift TaxGrandparents might want to consider giving a gift in the form of paying their grandchildren's college tuition. The benefits of doing so are quite numerous.

For their grandchild, funding his or her college education can greatly benefit them financially. With the rising cost of education, students and their parents often have to borrow funds. As a result, the amount of debt that a college graduate leaves with is increasing, and it often offsets the well-paying job that the college graduate would hopefully receive. If a student leaves college debt-free, they would be at a significant financial advantage.

For the donor grandparents, a gift could provide a tax benefit. With the lifetime gift tax of $5 million and the annual exclusion of $13,000, a grandparent could make a number of gifts tax-free, which could reduce the amount of taxes that are subject to the estate tax upon their death.

See Darrell J. Canby, Grandparents Can Give a Gift, Get a Gift, MetroWest Daily News, May 28, 2012.

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

May 29, 2012 in Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)