Wills, Trusts & Estates Prof Blog

Post-Election Tax Predictions

Two tax experts attempted to predict the post-election outcome of tax policy at a panel discussion on Monday at Accounting Today's Growth & Profitability Summit.  Brett Ferguson, one of the two exprets believes it is unlikely that Republicans will lose control of the House, but the Senate is not so predictable. He also noted that if Romney is elected, despite his attempts to push his tax policy goals, it is not likely that Democrats in the Senate will cave in.  

The other expert, Mark Luscombe talked about tax extenders legislation. In early August, the Senate passed a bipartisan tax extenders bill that extended dozens of expiring and already expired tax provisions.  The bill leaves out some provisions, so the IRS is still trying to decide what to do and the congressional committees are not sure what they should tell the IRS about extenders. 

Luscombe is skeptical that either administration would actually be able to accomplish a comprehensive tax reform like the kind that occurred in 1986.  The atmosphere is not right for such an overhaul because it is too polarized now.

With the uncertainty surrounding the estate tax, it is difficult to advise clients how to plan their estates.  The best prediction that Luscombe delivered on this matter is that he doubts the IRS would do a clawback once there is more certainty in the law.  

See Michael Cohn, Tax Planning Depends on Election Outcome, AccountingToday, Oct. 30, 2012. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Article on Children of Assisted Reproduction

Kristine S. Knaplund (Professor of Law, Pepperdine School of Law) recently published her article entitled Children of Assisted Reproduction, 45 U. Mich. J.L. Reform 899 (2012).  Here is the abstract of this article:   

More than three decades after the birth of the first child conceived through in vitro fertilization, few states have comprehensive statutes to establish the parentage of children born using assisted reproduction techniques (ART). While thousands of such children are born each year, courts struggle to apply outdated laws. For example, does a statute terminating paternity for a man who donates sperm to a married woman apply if the woman is unmarried? In 2008, the Uniform Probate Code (UPC) added two much-needed sections on the complicated parentage and inheritance issues that arise in the field of assisted reproduction. Yet it is unclear whether states will enact these new UPC sections; few states have enacted comparable provisions of the Uniform Parentage Act (UPA). The issues can be controversial, particularly regarding children born years after an intended parent’s death, or when the discussion turns to enforcement of a contract for a gestational carrier, the preferred term for a surrogate mother.

This Article explores the legal landscape for children conceived through assisted insemination, in vitro fertilization, intracytoplasmic sperm injection, and other techniques. The Article discusses the differences between the UPA and UPC sections that concern assisted reproduction. It examines the critical normative and ethical questions answered by these statutes and analyzes the likelihood that states will adopt either uniform act. The Article looks briefly at gestational carrier agreements to consider whether and how they should be enforced. The Article concludes by noting the need for legislation, the virtues of the UPC over the UPA, and the hope that states will address all those who use ART, including gay and lesbian couples, and single parents.

Personalized Haunted House May Be the Spookiest One Around

One of the most haunting moments of "A Christmas Carol" is when Ebeneezer Scrooge looks down at a freshly dug grave that bears his name.  Haunted house creator, Steve Kopelman, has invoked some creative uses of technology to bring this fear to life in his latest haunted house. 

Good Morning America has already dubbed The Nest haunted house as the spookiest place in America.  This year, he is improving upon his already spooky creation with RFID technology.  Visitors to the Nest can choose to answer some text message questions that reveal their name, birth date, and access to their Facebook accounts. Those who select this option will receive a lanyard that has an RFID tag attached, which will create a more personalized experience.  

For those who allow the Nest access to their information and Facebook accounts, the beginning of the Nest experience leads visitors through a dark maze where they will hear eerie voices calling out their names.  Then an extremely loud noise sounds and a photo is snapped of the visitor and that photo of their startled or scared expression is posted to their Facebok account.   Then the visitor encounters a tombstone that bears their name, birthdate, and that day's date as the date of death.  An image of this tombstone is also automatically posted to Facebook. 

As the visitor continues through the haunted house, there are pictures on the wall, some of which have been pulled from their Facebook albums.  In some of the photos, the visitors are made to look like zombies.  These photos are also posted to Facebook.  These photos that post to the visitor's wall serve as a memento of their visit to the house and also as advertisements for Kopelman's haunted attraction.  

While some may think that these advanced technological personalizations are too much, Kopelman notes that there were other crazy ideas that the creators thought of then abandoned.  For example, they considered having the technology call visitors' cell phones as they drive away and say, "Look in your rearview mirror."  The creators decided against this because they thought visitors should get some peace once they leave the haunted house. 

See Minda Zetlin, Inside the Quest to Build the Scariest Haunted House, Inc., Oct. 31, 2012. 

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

Effective Counsel for Witches

In 1663, Mary Barnes was convicted of witchcraft for her "familiarity with Satan" and subsequently hanged for her "crimes" in Connecticut. Now, her descendant Bernice Mable Graham Telian is trying to find justice for her wrongly accused ancestor. Aided by the Connecticut Wiccan & Pagan Network, Telian is still struggling in her efforts. She has several options that she could exploit, such asking the governor for a pardon but she wants something more than a pardon. If she were to get a pardon that would only remove the sentence. Telian is seeking "a formal declaration that Mary Barnes was not a criminal." The State Legislature of Connecticut already tried to pass a resolution that would have accomplished her goals but that resolution failed. She could also ask the Governor of Connecticut to publicly apologize for the executions and exonerate the convicted witches and warlocks. Some states have already taken this option and formally acknowledged the wrongfulness of the executions. Let's hope for Bernice Telian's sake that justice is served in this case for her ancestor even if we are 450 years too late.

See John Browning, Witches Need Lawyers, Too, Dallas Blog, Oct. 24, 2012.

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

Estate Planning Is Not Ghoulish

As I have previously discussed, if there is a holiday that is relevant to the practice of estate planning it is Halloween. However, the desire to plan for death is not as ghoulish as most people probably believe. It is important to remember the old adage, there are only two things that are certain in life: death and taxes. This year is no different. In fact, this principle has greatly affected the practice of estate planning here with 2012 coming to a close.

It is important to note that if a person wants to take advantage of the $5.12 million estate/gift tax exemption, there is still time but a person must act quickly. Remember, if Congress chooses to not act then the exemption will return to its pre-Bush era tax cut levels. This means that the exemption will be set at $1 Million with a top tax rate of 55% for all income that exceeds the exemption amount. There are other reasons why this a good opportunity for estate planning. For example, a person could gift property that has the potential to appreciate in value. In other words, the owner could gift the property and any appreciated value on that property would be able to escape the estate tax. Furthermore, there is a variety of estate planning tools that a person could use to retain greater control over the gift, such as a trust, if a person is reluctant to make gifts.

See Robert Wood, Estate Planning Isn't Ghoulish and Can Save Millions This Year, Forbes, Oct. 30, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Happy Halloween

Many law school classes have one or more holidays which are especially relevant.  For example, Family Law has Valentine's Day, Mother's Day, and Father's Day, Labor Law has Labor Day, Environmental Law has Earth Day, Military Law has Memorial Day, and Law and Religion has Christmas, Hanukkah, Ramadan, etc.

Halloween, with its fascination with death, may be the most relevant holiday to those who teach wills, trusts, estates, probate, and estate planning.

So, however you celebrate, have fun and be safe!

"Hobbits" By Any Other Name Are Still "Hobbits"

In 2003, archaeologists discovered a "one-metre-tall species of primitive human . . . on the Indonesian island of Flores." Because of their small stature, many people began referring to these humans as "hobbits," based upon the characters from JRR Tolkien's literary works. Now, the estate of the late author has prohibited a New Zealand scientist from using the term "hobbit" in a presentation on the subject. From the information about the presentation, it is clear that the scientist, Brent Alloway, did reference JRR Tolkien's work. The presentation itselt was scheduled "to coincide with the premiere of 'The Hobbit'" and he planned to call the presentation "The Other Hobbit."

The lawyer that represents the Tolkien Estate told Mr. Alloway that he could not use the term Hobbit in his title. Mr. Alloway stated that he was disappointed by the denial and somewhat confused because of its general use throughout scientific literature. Nonetheless, Mr. Alloway has changed the name of this program to "A newly discovered species of Little People - unraveling the legend behind Homo floresiensis."

See Alison Flood, Tolkien Estate Bans Reference to 'Hobbits', The Sydney Morning Herald, Oct. 31, 2012.

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

Financial Considerations in the Midst of the Hurricane

As Hurricane Sandy is affecting the East Coast, millions of Americans are concerned about ensuring that their financial issues are in order.  In the midst of the hurricane, it is important to keep a back-up of certain documents accessible.  The overarching concern is to be sure you set aside information that allows you to easily replace anything that might be lost in the event. What you keep in your financial emergency kit and where you keep it are both important considerations.

A few of the key items to keep in your kit include paper copies of your plastic payment options, insurance cards, contact information for medical personnel, and contact information for your employer.  To see more important items to set aside, please click here. 

See Jeanine Skowronski, Hurricane Sandy: The Money Papers You Need in Your Go Bag, credit.com, Oct. 29, 2012. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Sherman Hemsley Still on Ice and His Estate Still at a Standstill

As I have previously blogged about, there were disputes surrounding Sherman Hemsley's estate that were keeping him from being buried.  A worker at the San Jose Funeral Home in El Paso confirmed that Hemsley was still at the home, unburied, and that they were waiting on a court order that will instruct them what to do with the body.  

The trial on the actor's estate and remains was delayed when Richard Thornton came forward claiming to be Hemsley's brother.  Thornton is also challenging the signature on the will.  To complicate matters further, a third person has also come forward vowing to intervene on the issue prior to the October 31st bench trial date.  

Even if Thornton is actually determined to be Sherman's brother, he will still have to have a legal basis of challenging the will such as duress, lack of capacity or fraud. If Thornton is not actually Sherman's brother, then he will be held legally accountable for his fraud on the court. 

See Hollie McKay, Sherman Hemsley Still Not Buried 3 Months After Death; Bizarre Legal Dispute Continues, FoxNews, Oct. 29, 2012. 

Special thanks to Craig M. Scalise (Attorney and Counselor at Law, Scalise Law Firm) for bringing this article to my attention.  

How to Fix the Estate Tax and Why it Matters

So why should normal people care about a tax that only affects the wealthiest people in this county? The tax could affect normal people indirectly by affecting someone who could be affected by the reduction in the estate tax exemption amount. If the exemption were to return to the pre-Bush era exemption amount of $1 Million, it could force those who fall outside the exemption but nonetheless have incurred a tax due to the vast wealth they own in illiquid assets to sell those assets to pay the tax. If the wealth is locked within a business or a farm, this could cause downsizing of a company to where the employer would have to terminate his or her employees shut down a farm.

So what is the proper solution to this debacle? The author below argued that these were the changes that Congress should make to fix the estate tax problem.

• Congress should create a new tax cut or exemption to prevent the scenario I listed above to happen to those who are most at risk to suffer the affects of selling their assets to pay for the tax.
• The new estate tax exemption should be set at $3.5 Million and with the maximum tax rate set at 35%. 
• The author also suggested that Congress should:
  • "Eliminate the Family Valuation Discount Loophole"
  • "Eliminate the 'Crummy Withdrawal Right' Loophole"
  • "Wipe-Out the 'Zero-Out GRAT' Loophole"
  • "End the IDCT Installment Sale Loophole"

See Dwight Drake, The Estate Tax: Why to Keep and How to Fix, PlainTalk Planning, June 22, 2012.

Special thanks to Kyle Wolf (2012 J.D., Texas Tech University School of Law) for bringing this article to my attention.