Wills, Trusts & Estates Prof Blog

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

Friday, November 29, 2013

Supreme Court Grants Certiorari Over Inherited IRA Issue

GavelAs I have previously discussed, the Seventh Circuit Court of Appeals held that funds within an IRA are not necessarily retirement funds so the funds could not be shielded from creditors. Now, the Supreme Court has agreed to decide whether an inherited IRA is classified as a "retirement fund" and thus not subject to claims from creditors.

The IRS rule is that distributions of an inherited IRA to an individual beneficiary who is not a spouse must generally commence post-death required minimum distributions starting one year after the death of the IRA owner and is payable under a life expectancy rule.

In the case at issue, Heidi Heffron-Clark was the beneficiary to an IRA worth $300,000. During the distribution, Heffron-Clark declared bankruptcy. Typically IRAs are shielded from creditor claims, however, the trial court judge found that the IRA was not exempt because the funds were not supposed to be held for Heffron-Clark's retirement.

A federal judge reversed the ruling because he believed the funds should be treated as if they were the funds of the original owner. Since then, the 7th Circuit held that "by the time the Clarks filed for bankruptcy, the money in the inherited IRA did not represent anyone's retirement funds." The 7th circuit decision disagreed with the 5th circuit and agreed with the bankruptcy court. 

See Barbara Leonard, Question Over Inherited IRAs Goes to Washington, Nov. 27, 2013.

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

November 29, 2013 in Current Events, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Thursday, November 28, 2013

Study Shows Need for Family Dialogue


According to a recent study from Bank of America Merrill Lynch, many adults with over $250,000 in investable assets were not discussing important financial planning concerns with their families.

The study found more than half of respondents had not discussed issues such as wills and health directives with their children and almost a third had not discussed these issues with their spouse.

The main reasons for avoiding these discussions was avoiding family conflict and avoiding the discomfort.  However, the study concludes that advisers should encourage families to have these discussions so they’ll be prepared in the event of a family emergency.

See Mason Braswell, Families Don’t Talk to Each Other About Money, Says Merrill Study, On Wall Street, Nov. 18, 2013.

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

November 28, 2013 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Madeline's Uncertain Future


As I have previously discussed, neglecting to discuss estate planning matters with your adult children can lead to problems down the line.  The Bemelmans family is one such example.

Austrian-born American writer and artist Ludwig Bemelmans died at the age of 64 with an estate valued at only $200,000.  But before his death, he ensured his wife that a little girl named Madeline would be their Social Security.

That independent Parisian schoolgirl he created has since made the family business millions, but now, due to a lack of succession planning, the author’s descendants are struggling with what to do with Madeline. 

Grandson John Bemelmans Marciano has taken over writing and illustrating the Madeline books, but his mother Barbara Bemelmans, 77, still holds the keys to the Madeline kingdom.  Barbara is the late artist’s only daughter and has yet to sell any of her father’s paintings and drawings despite the demand for Ludwig’s artwork.

Barbara and Ludwig’s grandchildren are now faced with the continuing dilemma of trying to figure out what Ludwig would have wanted for Madeline.  For more on the real-life journey of Madeline, please click the link provided below.

See Deborah L. Jacobs, Madeline and the Family Business, Forbes, Nov. 27, 2013.

November 28, 2013 in Books - Fiction, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Article on The Fiduciary Relationship

SsrnPaul B. Miller (McGill University Faculty of Law) has recently published an article entitled, The Fiduciary Relationship (November 10, 2013). Provided below is the abstract to the article from SSRN:

Fiduciary law is rife with references to fiduciary relationships. Most notably, the attribution of fiduciary duties turns on the existence of a "fiduciary relationship." But does private law admit of such a construct, and if it does, is the fiduciary relationship distinctive relative to other kinds of private law relationship? Many fiduciary law scholars are skeptical on both counts. Leading scholars have claimed that the fiduciary relationship is indefinable. Others say that, when properly defined, the fiduciary relationship is seen to be non-distinctive. In this chapter I argue that the fiduciary relationship is both definable and distinctive. I advance a theory of the fiduciary relationship – the fiduciary powers theory – which suggests that fiduciary relationships are typified by the fiduciary’s exercise of powers derived from the legal personality of persons (normally, the person of the beneficiary or her benefactor). I argue for the viability and utility of the fiduciary powers theory by demonstrating that it can account for the fiduciary nature of relationships of recognized fiduciary status and by showing how it can help resolve disputes over the characterization of other relationships.

November 28, 2013 in Articles, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Supreme Court Will Decide If an IRA is Protected in a Bankruptcy Proceeding

GavelThe Supreme Court granted the petition for a writ of certiorari on November 26, 2013 in Clark v. Rameker 714 F.3d 559, (7th Cir. 2013). The issue is whether an inherited IRA is protected in a bankruptcy proceeding. According to an attorney involved in the case, oral argument will take place sometime in late March 2014. This is a major issue for estate and trust attorneys because if an inherited IRA is not protected in bankruptcy, then IRA trusts may be needed to protect IRA beneficiaries who have problems with creditors and are considering bankruptcy. Regardless of the outcome, the opinion of the Supreme Court is not binding in a non-bankruptcy proceeding in a state court. Only a few states have amended their state statutes to provide that inherited IRAs are protected in a non-bankruptcy proceeding.

Special thanks to Seymour Goldberg (Partner, Goldberg & Goldberg, P.C.) for bringing this to my attention.

November 28, 2013 in New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 27, 2013

Happy Thanksgiving!!

Happy Thanksgiving!!

November 27, 2013 in About This Blog | Permalink | Comments (0) | TrackBack (0)

CLE on Inherited IRAs


The Suffolk Academy of Law is offering a program entitled, Inherited IRAs: What the Practitioner Must Know, on Tuesday, December 10, 2013.  Provided below is a description of the event:

Retirement assets often represent a considerable portion of a taxpayer’s wealth. These assets may be accumulated in a 401(k) plan, a 403(b) arrangement, in another kind of qualified plan, or in an IRA. Regardless of the retirement arrangement involved, the tax consequences of making the right move at the right time can be financially beneficial – or, conversely, financially hazardous – for the taxpayer and the taxpayer’s family.

This program will help you avoid common errors when dealing with retirement assets during your client’s lifetime and after your client’s death, from both an IRS and New York State point of view. Tax planning with retirement assets, including integrating retirement assets in an estate plan, will be discussed.

Additionally, the presentation takes on special significance since courts are challenging the creditor proof status of inherited IRAs.

The presenter, Seymour Goldberg, is well known and highly respected for his expertise in this area. As a bonus, his manual, Inherited IRAs – What the Practitioner Must Know, will be given to registrants, at no additional cost, as part of the course materials. The 124-page manual contains more than 120 examples.

November 27, 2013 in Conferences & CLE, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Happy Hanukkah!



To all my readers of the Jewish faith, please accept my best wishes for Hanukkah.


November 27, 2013 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Reasons to Talk to Your Children About Estate Planning


Speaking freely with adult children about delicate estate planning matters can help to avoid problems down the line.  Here are seven reasons why you should clear the air:

  1. Avoid surprises.  Instead of leaving children wondering why you made certain decisions, be upfront about your intentions.
  2. Refine your plan.  Hearing a child’s preference might make you think twice about your current plan.
  3. Save taxes.  If the estate tax is an issue, making lifetime gifts now can save on estate taxes later.
  4. Adjust expectations.  If you’ve already given your children large gifts, they may be wondering if that’s all they are going to get.  Set the record straight.
  5. Explain yourself.  Children may accept your decision more easily if you’ve explained why you made your decision.
  6. Anticipate a disclaimer.  Find out if your children would consider disclaiming their inheritance.
  7. Promote harmony.  Talk to each child about their ideas and opinions.

See Deborah L. Jacobs, Seven Reasons to Tell Your Kids What They Will (Or Won’t) Inherit, Forbes, Nov. 27, 2013.

November 27, 2013 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Largest U.S. Charities

United way

Forbes recently released its list of the largest U.S. charities for 2013.  Here’s the list of the top ten and how much they received in gifts in 2012:

  1. United Way: $3.926 billion
  2. Salvation Army: $1.885 billion
  3. Task Force for Global Health: $1.660 billion
  4. Feeding America: $1.511 billion
  5. Catholic Charities USA: $1.447 billion
  6. Goodwill Industries International: $949 million
  7. Food for the Poor: $891 million
  8. American Cancer Society: $889 million
  9. The Y-YMCA: $827 million
  10. World Vision: $826 million

For more information on the above charities and the list of the top 50, click here.

See William P. Barrett, The Largest U.S. Charities for 2013, Forbes, Nov. 25, 2013. 

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

November 27, 2013 in Current Affairs | Permalink | Comments (0) | TrackBack (0)