Wills, Trusts & Estates Prof Blog

Tragedy Entangled in a Trust

On November 10, 2011, Derek Morris fatally shot himself and his six-year-old daughter at their North Carolina home.  Sarah Morris, who was first to discover her family, sued her husband Derek’s estate on behalf of their daughter for wrongful death.  

At the center of this probate dispute was a trust created by Derek nearly a decade prior to marrying Sarah.  The trust served to manage Derek’s settlement funds after he and his family had been injured in a car accident.  As the sole surviving trustee, Derek’s mother, Martha, claimed that the money should go to Derek’s siblings rather than Sarah.  The Georgia Court of Appeals held that the trust fund had passed to Martha as trustee and was not part of Derek’s estate for probate purposes.  The court declined Sarah’s attempt to apply North Carolina law, holding “Georgia’s relationship to the trust is more significant than that of North Carolina.” 

See Jeff D. Gorman, Trust Access Unavailable to Woman After Tragedy, Courthouse News Service, March 27, 2014. 

5 Ways to Lower Your Taxes

With tax day just around the corner, below are a few important changes anyone can make to permanently lower taxes:

1. Open a 401k. With a 401k, retirement savings contributions are provided (and sometimes proportionally matched) by an employer and grow tax deferred in your name. 
2. Open a Spousal 401k.  Maximize tax breaks even if there is only one income earner in the family.  This can be accomplished by funding a spousal 401k.  The breadwinner can contribute to the spouse’s retirement account, thus lowering overall taxes. 
3. Use a Roth IRA.  By financing a Roth IRA you can decrease your retirement bill.  Your account grows tax-free and similarly, future withdrawals are tax-free.
4. Use a 529 plan if you have kids.  A 529 plan is a tax-advantaged investment vehicle intended to encourage saving for higher education expenses.  If your children plan to go to college, use a 529 plan to lower your yearly tax bill. 
5. Open a Health Savings Account (HSA) or use a workplace FSA.  By opening an HSA, you can access quality health care at a lower premium cost and defer money for health spending.  HSAs work in conjunction with high-deductible plans, therefore, if your plan does not qualify as such, look into your company’s flexible spending account (FSA). 

See Mitch Tuchman, Lower Your Tax Bill For Life, Forbes, March 27, 2014. 

The Other "Talk"

70% of those 65 or older will need long-term care services at some point in their lives, and in many cases, their kids will become their caretakers.  People in their later years need to talk to their adult children about this fact, but many may have trouble having that “talk.”

Just like the talk about the birds and the bees, people may have trouble talking about their aging because it’s uncomfortable and it’s hard to face losing control.  But according to Tim Prosch, author of The Other Talk: A Guide to Talking with Your Adult Children About the Rest of Your Life, parents need to at least discuss the following:

• How to pay for long-term care; 
• Where to live if they need to move out of the home;
• Who is going to advocate for their medical needs; and    
• What are their end-of-life instructions.

See Michelle Singletary, Having ‘the Other Talk’ with Your Kids—Not Storks, But Aging, The Washington Post, March 28, 2014.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

iEulogy

iEulogy is a unique cloud-based online storage service that allows members to store messages and important documents to be accessed by family and friends in the event of their passing.

The goal of iEulogy is to relieve the pain of unanswered questions such as “What did he want his funeral to look like?” or “Did she say everything she wanted to say?” by allowing members to post important  messages, videos, and legal documents.

Article on Perpetual Conservation Easements in the 21st Century

Nancy A. McLaughlin (University of Utah S.J. Quinney College of Law) recently published an article entitled, Perpetual Conservation Easements in the 21st Century: What Have We Learned and Where Should We Go From Here?, (2013). Utah Law Review, Vol. 3, p. 687, 2013; University of Utah College of Law Research Paper No. 62. Provided below is the abstract from SSRN:

The public is investing billions of dollars in conservation easements, which now protect an estimated 40 million acres throughout the United States. But all is not well. Uncertainties in the law and abusive practices threaten to undermine public confidence in and the effectiveness of conservation easements as a land protection tool. This short article is part of a series of articles published in the law review discussing conservation easements, with a focus on what we have learned thus far and where we should go from here. This article sets the stage by describing the dramatic growth in the use of conservation easements, the various laws that impact easement creation and administration, a timeline of important legal and policy developments, and the recent surprising lack of certainty and consensus regarding what it means to protect land “in perpetuity” or “forever” with a conservation easement. The article concludes by discussing how the perpetuity issue might be productively resolved.

Real Property Trust and Estate Spring Symposia

The ABA Section of Real Property, Trust & Estate Law is presenting a CLE on  Real Property Trust and Estate Spring Symposia, on May 1-2,  2014.  Provided below is a description of this event:

This year's RPTE Spring Symposia offers CLE programs addressing the latest developments in estate planning, covering a wide range of topics.

A three-part Estate Planning Basics program might be of interest to newer lawyers, while more seasoned professionals will find a variety of specialized programs from which to choose. In honor of the 25th Anniversary of the Symposia, there will be two special panels of distinguished Section Chairs to share their reflections on the challenges and lessons from the quarter century just ended and the opportunities for our changing practice in the years ahead.

Take a look at some of our notable trust and estate programs and speakers:

Estate Planning Basics

Panelists:
Benetta P. Jenson, JP Morgan Private Bank
Paul Lee, Alliance Bernstein LP
Karin C. Prangley, Krasnow Saunders Kaplan & Beninati LLP
Donna Otis, Otis Law Group Ltd.
Lee-Ford Tritt, University of Florida Levin College of Law
Ryan Walsh, Hamilton Thies & Lorch LLP

The First Quarter Century: Former Section Chairs Reflect on Lessons from the Past and How We Have Grown

Panelists:
Christine L. Albright, Holland & Knight LLP
Louis A. Mezzullo, Withers Bergman LLP
Edward F. Koren, Holland & Knight LLP

Golden Words from Silver Tongues — A Panel Discussion with Recent Section Chairs on Maintaining a Successful Estate Planning Practice over the Next 25 Years

Panelists:
Steve R. Akers, Bessemer Trust
Tina Portuondo, University of Miami School of Law
Alan F. Rothschild Jr., Hatcher Stubbs Land Hollis & Rothschild
Gideon Rothschild, Moses & Singer LLP

How to Solder Broken Plans: Ten Estate Planning Blunders to Fix Now

Panelists:
Keri Brown, Baker Botts LLP
Katy Crafton Fluet, McDermott Will & Emery LLP
Mark R. Parthemer, Bessemer Trust

One is Silver and the Other Gold: Making Friends with the Enemy - How to Identify and Manage Difficult Opposing Counsel

Panelists:
Juli Adelman, Vantage Trial Consulting
Paul Fisher, Fisher Mediation
Jessica A. Uzcategui, Sacks Glazier Franklin & Lodise LLP

Seeking and Finding New Silver Patterns in a Changed Estate Planning Environment: Creative Inter Vivos QTIP Planning

Panelists:
Richard S. Franklin, McArthur Franklin PLLC
Lester B. Law, Abbot Downing
Barry A. Nelson, Nelson & Nelson, PA

If you've never been to the RPTE Spring Symposia, this is a great year to check it out! First-time attendees receive a discounted registration rate — 40% off the general rate!

Proposed Changes For Retirement Accounts

As I have previously discussed, President Obama has released his proposed 2015 budget, which includes changes to retirement accounts. Many of the proposed changes regarding retirement were included but not enacted in last year’s proposed budget. However, even though the proposals for changing retirement accounts may not be enacted this year either, there are seven proposed changes that are important to note.

1. Change the required minimum distribution rules for Roth IRAs to those of other retirement accounts
2. Limit the maximum tax deduction for IRAs and 401(k)s to 28%
3. Require full withdrawal of funds within five years from inherited retirement accounts by non-spouses
4. Implement cumulative savings cap for all retirement accounts
5. Eliminate required minimum distribution if all retirement accounts are $100,000 or less in total
6. Allow non-spouse beneficiaries to move funds from one inherited retirement account to another
7. Require auto-enrollment IRAs to be offered to employees by any business with more than 10 employees that has been in business for two years or more.

See Jeffrey Levine, Required Minimum Distributions for Roth IRAs?, Financial Planning, March 5, 2014.

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

New Tennessee Law on the Tenancy by the Entirety Joint Revocable Trust

Tennessee is a leader in trust law. As a result, there are many available estate planning tools that attorneys can use. The most recent tool will become available on July 1, 2014: The Tenancy by the Entirety Joint Revocable Trust.

According to the Tennessee Attorney's memo, the bill will be on the Governor's desk soon. However, the state legislature website claims the house amended the bill and is waiting on approval from the senate. Despite the discrepancy, the new bill if passed will allow a Tenancy by the Entirety Joint Revocable Trust. The determination of whether property is held as a tenancy by the entirety turns on intent.

Now, attorneys can protect their clients by removing any doubt as to whether a tenancy by the entirety exists. The property held in the trust is shielded from creditors when the first spouse passes away. Creditors of the surviving spouse will be permitted to go after assets held in the trust. The amendment to the bill also permits estates under $50,000 to qualify for probate under a shortened procedure, which is more cost effective.

See Rob Malin, Tennessee Legislature Passes Tenancy By The Entirety Joint Living Trust, Estate Planning in the Mid South, March 28, 2014.

Article on the Initial Estate Planning Interview

When a new client calls and schedules an initial interview, will you be ready?

For an in-depth discussion on the initial client interview in the estate planning process, read this informative article by L. Paul Hood, Jr., Esq. (Director of Planned Giving, The University of Toledo Foundation).  Back to the School of Hard Knocks: Thoughts on the Initial Estate Planning Interview - Revisited discusses the role of the estate planner in a client’s life, the mindsets of the participants in an initial interview, the perils of a poor initial interview, and the subconscious agenda of the estate planner.

See Back to the School of Hard Knocks: Thoughts on the Initial Estate Planning Interview - Revisited, Wealth Strategies Journal 2.0, March 26, 2014.

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

Reverse Mortgages Threatening Inheritances

A growing number of baby boomers are confronting a bitter inheritance.

Reverse mortgages have been a constant pitfall for older borrowers, but their survivors are increasingly being threatened by reverse mortgage companies to pay the mortgages in full or face foreclosure.  And most heirs don’t know that surviving family members are supposed to be offered the choice to settle the reverse mortgage for a percentage of the full amount, in some cases 95% of the home’s current value.

Some heirs say that lenders are moving to foreclose just weeks after the borrower dies while other heirs say they become stuck in a bureaucratic maze as they try to figure out how to keep the family home.

See Jessica Silver-Greenberg, Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs, The New York Times, March 26, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.