Wills, Trusts & Estates Prof Blog

Advice for Caregivers Living in a Digital World

For those providing care to a person with special needs, technology can be an effective way to keep up with the daily demands of caregiving.

Besides all of the information caregivers can receive through online resources, caregivers can also use sites like Facebook or CaringBridges to help “coordinate care and mobilize support from scheduling transportation to meals.”

Caregivers can also use computer files or the cloud to safely store communications with professionals, medication spreadsheets, and signs or symptoms of a disease.

Aside from all the benefits, caregivers must be careful not to reveal too many personal details of a loved one on social media.  Many people now have a digital legacy, which caregivers should try to preserve.

See Professor Naomi Cahn & Rev. Amy Ziettlow, Caregiving in a Digital World, Special Needs Alliance, May 24, 2013.

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.

Public Guardian Permanently Suspended Over Billing Practices

Nashville Probate Judge Randy Kennedy has permanently suspended Jeanan Mills Stuart, the public guardian of Davidson County, for charging excessive fees to elderly and disabled people in her care.

Stuart’s job as public guardian was to make legal, medical, and financial decisions for elderly and disabled people with no family or friends to make these decisions for them.  Stuart purportedly “charged those in her care legal rates of $200 to $225 an hour to perform tasks such as shopping or helping them move to an assisted living facility.”

See Nashville Judge Permanently Suspends Public Guardian, WSMV.com, May 22, 2013.

Cognitive Disorders May Prove A Lack Of Capacity

Plaintiffs commonly argue lack of capacity when contesting the validity of a trust or will. Recently, a federal court in Maryland looked at whether major depression and alcoholism imply incompetence when an individual suffering from these disorders changes a beneficiary on a life insurance plan. William Ratz died from intoxication. A year and half prior to his death, he named his two daughters as his beneficiaries to his life insurance policy. However, a year later Ratz changed the beneficiary to his second wife who he had already divorced. The two daughters challanged his capacity. 

In Dorsey v. Ratz, the court held that the two daughters of William Ratz did not present admissible evidence, nor did they present contradicting evidence that proved their father was incompetent.The burden to prove incompetence is on the individual who brings that claim. 

See Luke Lantta, Alcoholism And Incapacity, Bryan Cave Fiduciary Litigation, May 24, 2013.

The Importance of Talking With Parents About Managing Finances After Death

Children should talk to their parents about the details of handling their financial affairs after death. Not doing so can create many problems for the children trying to manage their parent’s affairs post mortem. Parents willing to talk to their kids and plan a transition after death can save their children from stress and aggravation. Recently, the New York Times has come up with a few tips to help get the conversation started. Before the conversation, children should think about the type of information they want to find out. Some topics to consider are, wills, power of attorney, health care instructions, life insurance. Children should also check to make sure parents have made a list of all their debt and collection accounts. Using “I” statements can help keep the conversation from turning into a “power play.” Having people that your parents trust will also help. However, it is important to note that each person is unique and the rules will likely change. 

See Tara Siegal Bernard,The Talk You Didn't Have With Your Parents Could Cost You, New York Times, May 24, 2013.

May 29th is National 529 College Savings Plan Day

The college savings plan industry is gearing up for May 29th, National 529 Day. Many states are having huge promotions to educate people about 529 plans. Some states are advocating their 529 plans on different social media sites. Other states are giving away cash prizes to fund a 529 account. Virginia is giving away $5,000 to two people. One of the prizes will be given to someone who already has a 529 account. Additionally, Virginia is raffling off tickets for a prepaid college account. The promotions to open 529 accounts have been paying off. By the end of 2012 there were 11.1 million 529 accounts a large increase from past years. The 529 plans can either set up like a mutual fund or be prepaid accounts. People who have questions about 529's should consider attending a live Q&A Webinar with expert Joe Hurley on May 29th at 11:30am.

See Ashlea Ebeling, 529 College Savings Plan Giveaways On Tap on May 29, Forbes, May 29, 2013.

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

Law Firm’s Staggering $44 Million Contingency Fee Reduced to $2 Million

By order of the New York State Appellate Division, the firm Graubard Miller must reduce the fees owed by Alice Lawrence’s estate from $44 million to around $2 million.

Before her death, Alice Lawrence, the widow of commercial real estate mogul Sylvan Lawrence, hired Graubard Miller to represent her in an epic court battle against the executor of her husband’s estate.  The firm later convinced 80-year-old Lawrence to rework a new deal whereby the firm would receive a 40% contingency fee instead of Lawrence paying by the hour.

After negotiating a $111 million settlement, Lawrence owed the firm $44 million, roughly $11,000 an hour.  Because Graubard Miller failed to show that Lawrence fully knew and understood the terms of the new deal, the court “found that Lawrence’s estate should be charged the old hourly rate, which would add up to about a $1.7 million bill” and perhaps another $1.3 million in interest.

See Dareh Gregorian, State Appellate Judge Rules $11G per Hour a Bit Steep in Billionaire Estate Case, New York Daily News, May 24, 2013; see also Joseph Ax, Firm’s $44 mln Fee Request from Late Widow Reduced Again, Thomson Reuters, May 23, 2013.

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

Webinar on the Mathematics of Estate Planning

The American Bar Association will be hosting a Trust & Estate Webinar entitled, The Mathematics of Estate Planning on June 18, 2013 from 12:00 – 1:30 PM CT.  A description of the webinar is below:

Estate planning designed to minimize federal estate and gift tax (and state death taxes) starts with an understanding of how those taxes are calculated. It also requires an understanding of how strategies such as grantor retained annuity trusts (GRATs), qualified personal residence trusts (QPRTs), charitable remainder untrusts (CRUTs) and annuity trusts (CRATs), charitable lead annuity trusts (CLATs), installment sales to grantor trusts (IGTs), self-cancelling installment notes (SCINs), and other techniques can reduce those taxes. This webinar will provide an introduction to the essential principles for effective estate tax planning, with an emphasis on:

• Understanding the mechanics of different planning strategies and the economics and mathematics of how they produce tax benefits;
• The best ways of projecting the future costs and benefits of these strategies to identify the potential benefit for the client; and
• The clearest and most effective ways to present strategies to the client.

Article on Accidental Inheritance

Stewart E. Sterk (Yeshiva University - Cardozo School of Law) and Melanie B. Leslie (Cardozo Law School) recently published an article entitled, Accidental Inheritance: Retirement Accounts and the Hidden Law of Succession, New York University Law Review, Vol. 89, 2014, Forthcoming; Cardozo Legal Studies Research Paper No. 390.  Provided below is the abstract from SSRN:

Americans currently hold more than $9 trillion in retirement savings accounts. Those accounts, together with the family home, are the principal source of wealth for most working and retired Americans. But when a retirement account holder dies prior to exhausting retirement savings, what governs the distribution of the account? Most often, not the account holder’s will or trust, but a one-page fill-in-the-blanks beneficiary designation form that the accountholder filled out, typically without advice of counsel, when she or he opened the account.

When account holders fill out beneficiary designation forms, they are focused on starting a new job or beginning to save for retirement, not on estate planning. Yet the account holder’s beneficiary designations often trump express provisions in a will, trust instrument, prenuptial agreement or divorce decree -- documents prepared with inheritance in mind. Moreover, the account holder may neglect to change the beneficiary designation to take account of changed life circumstances, causing his or her retirement assets to pass to a beneficiary he or she never would have chosen later in life. To make matters worse, although wills doctrine has developed a set of constructional rules to deal with changes of circumstance, those rules do not generally apply to beneficiary designation forms. The current legal framework often frustrates the intent of the account holder. 

This problem, which has already spawned a significant volume of litigation, will become exponentially worse over the coming decade, as more holders of substantial accounts reach the end of their life expectancy. Reform is critical. The financial intermediaries who currently draft beneficiary designation forms have little incentive to improve them because account holders and employers are unlikely to choose providers based on the quality of their forms. Federal and state legislation is necessary to ensure that these assets are distributed consistently with account holders’ intentions.

Money Mysteriously Missing from Estate, Beneficiaries Want Answers

Five beneficiaries of Arlene Bowsher’s $900,000 estate recently appeared before the Milwaukee County Circuit Court to recoup over $180,000 missing from the estate.

Before her death, Bowsher instructed executor Rick Guerard to share half of his inheritance with the five beneficiaries.  The beneficiaries include friends of Bowsher, the Province of St. Joseph of the Capuchin Order, and Feeding America Eastern Wisconsin.  The beneficiaries were set to inherit about $68,000 each, but “the Capuchins received no money, and the others were shorted by about $30,000 each, court records show.”

Shortly before executor Guerard died, he moved over $105,000 from Bowsher’s estate into his own accounts.  Guerard’s attorney Mitchell Barrock collected almost $260,000 in fees from Guerard’s inheritance, despite a 2009 court order mandating the beneficiaries be paid before Barrock received fees.

The new executor of Bowsher’s estate is asking the court to find Guerard’s trust or Barrock in contempt for failing to pay the beneficiaries in full.

See Cary Spivak, Estate Funds Shifted to Executor’s Account, Lawyer Says, Milwaukee-Wisconsin Journal Sentinel, May 23, 2013.

CLE on Skills Training For Estate Planners

The American Bar Association of Real Property, Trust and Estate Law and the New York Law School  is offering a CLE program entitled, Skills Training For Estate Planners, on July 17-19, 2013.  Provided below is a description of the event:

Come to New York City July 17-19 for an intensive CLE program for experienced estate planning lawyers. The annual Skills Training for Estate Planners program has a NEW Advanced Topics course of study focused on current areas of interest and importance. This institute-type program allows lawyers to have a comprehensive CLE experience with coordinated sessions that build upon one another, covering advanced estate planning subjects. The sessions will be led by an outstanding faculty consisting of experts in all aspects of estate planning and will include time to speak with the presenters. The topics covered include:

Business Planning

• Family business planning
• Chapter 14 implications
• Valuation theory and practice
• QSSTs versus ESBTs
• Use and drafting of buy sell agreements
• Income tax exit strategies

Trust Considerations

• Use and drafting of split interest trusts
• Generation skipping transfer tax planning
• Impact of Section 2036 on drafting and planning
• Estate freezes, GRATs and sales to intentionally defective grantor trusts
• Life insurance trust planning
• The numbers of estate planning

Important Considerations

• Retirement planning and deferred compensation
• Planning for residences/vacation homes
• Planning for the multinational client
• Income tax considerations for taxable estates
• Ethical considerations

Registration Deadline - June 28

Register now for the Advanced Topics course!

For more information, including a complete schedule, list of speakers, CLE credit, and tuition rates, please visit our webpage. Contact Michael Kesler at (312) 988-5620 or[email protected] with any questions.

If you're looking for more fundamental training, visit our webpage for information on the Fundamentals course.