Wills, Trusts & Estates Prof Blog

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

Tuesday, April 29, 2014

Legacy Planning Options


Robert De Niro recently told Esquire magazine his biggest regret:

I always wanted to chronicle the family history with my mother. She was always interested in that. I wanted some researchers I’d worked with to talk to my mother, but my mother was a little antsy about it. I know she would’ve gotten into it . . . But I wasn’t forceful, and I didn’t make it happen. That’s one regret I have. I didn’t get as much of the family history as I could have for the kids.

Today, we have opportunities to preserve family histories that never existed before.  To capture a client’s legacy, advisers should suggest a few simple options such as an ethical will or legacy letter, some insightful questions for the client to answer, or a videotaped legacy interview or personal documentary.  Advisers should also suggest that a client digitize existing artifacts like photos, letters, and other family documents.

See Victoria Collins & Jane Shafron, Legacy Planning in the Digital Age, Wealth Management, Apr. 21, 2014.

April 29, 2014 in Estate Planning - Generally, Film, Technology | Permalink | Comments (0) | TrackBack (0)

Article on LLCs and Charitable Investments


David Edward Spenard (Assistant Attorney General in the Kentucky Office of the Attorney General) recently published an article entitled, The Cycle of Innovation and Regulation: The Development of a State Charity Regulatory Dialectic for Charitable Investment in Social Enterprise Activity Through a Limited Liability Company Structure, 9 N.Y.U. J. L. & Bus. 603 (2013).  Provided below is his introduction:

The limited liability company (LLC) is a fairly recent innovation. Legislative authorization of a variation on the LLC framework allowing the creation of a so-called low-profit limited liability company framework via one specific form, an L3C, is even more recent. Whatever the claims that may surround the L3C framework at present, its principal purpose as manifest in the language of its design is to facilitate program-related investment, a specific type of high-risk investment permissible for a private foundation under the Internal Revenue Code (IRC).

Thus, the L3C creates a specific mechanism for aggregating charitable investment with non-charitable investment. As a charitable hybrid, the L3C can allow a charitable mission to exist alongside financial margin in the same enterprise. Nonetheless, through the IRC as well as the corresponding Treasury Regulations, there are significant restrictions applicable for such an arrangement, and there are penalties for a breach of the IRC or the Treasury Regulations with regard to investment in such an enterprise.

Vermont was the first state to enact legislation creating an L3C platform. Rather than each remaining state neatly falling in line behind Vermont, there have been variations on the Vermont theme. As Mr. Tyler notes in his article, Illinois “seems to have eliminated the ambiguity in its L3C statute by expressly subjecting L3C's in Illinois and their managers to the [[Illinois] charitable trust regime . . . .” Therefore, at least one state legislature has chosen to signal that the creation of an L3C or the operation of an L3C within the borders of its jurisdiction carries with it an additional level of supervision for the purpose of protecting the jurisdiction's interests in assets dedicated to a charitable or public purpose.

While the indication of additional supervision by state charity officials may not be a particularly favorable result for L3C advocates, it was predictable. As importantly, it is entirely necessary. In terms of the regulatory cycle, whenever there is innovation regulation will follow. Likewise, when there is regulation there will be innovation. As described by Edward J. Kane, “Introducing political power into economic affairs initiates a dialectical process of adjustments and counteradjustments.” The use of charitable assets in a venture or the claim of a charitable purpose for a venture will, unremarkably enough, trigger the interest of the state charity official. The creation of a new framework for aggregating capital that can include the investment or contribution of charitable capital will result in a regulatory counteradjustment. Thus, with regard to the use of charitable assets for social enterprise activity, the regulatory dialectic between L3C advocates and state charity officials is underway. 

There is a very strong argument that L3C advocates will best serve their own cause by assisting in the development of tailored, reasonable regulation of charitable assets in charitable hybrid enterprises rather than by denying the need for incremental regulation of the enterprise through state charity official supervision. The first step that advocates could take is through establishing a duty of care for the proper use of the charitable assets that applies to each non-charitable participant having the ability to manage or control a charitable hybrid enterprise.

April 29, 2014 in Articles, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

South Dakota Residents Challenge Same-Sex Marriage Ban

RingsNancy Robrahn and Jennie Rosenkranz have been together for 27 years. The same-sex couple married in Minnesota, and now plans to be the first South Dakota residents to challenge the same-sex marriage ban. In 1996, the South Dakota Legislature banned gay marriage. In 2006, the South Dakota voters passed a constitutional amendment that reiterates marriage is between a man and women. South Dakota would be the 29th state with a marriage equality case. Minneapolis Mayor Betsy Hodges said she knew that the nuptials would be used to challenge the same-sex marriage ban,” I fought very hard for marriage equality in Minnesota. Every state in our country should allow people to marry the person they love. That is equally true for South Dakota. If that makes that real in that state, I'm proud to be part of it," Hodges explains.

See Carson Walker, South Dakota Gay Marriage Ban to Face Lawsuit, UT San Diego,  Apr. 25, 2013.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention. 

April 29, 2014 in Current Affairs, Current Events | Permalink | Comments (0) | TrackBack (0)

CLE on Charitable Planning Techniques

The American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, CLECharitable Planning Techniques, on Thursday-Friday, June 12-13, 2014 in Boston Massachusetts. Provided below is a description of the event:

Do you advise donors with philanthropic goals? Do you work with charities and their planning giving programs? Or are you just looking to get into the field of charitable planning? Whether you are a novice or an old hand, this is the course for you!

The program will have basic and advanced dual tracks on the first day, allowing registrants to customize the course for their skill levels. A distinguished, national faculty provides a comprehensive review of lifetime and testamentary charitable giving techniques, including a full discussion of new developments. They address the technical, mechanical, and legal sides of the issues, with practical applications and "tips from the trenches."

April 29, 2014 in Conferences & CLE, Trusts | Permalink | Comments (0) | TrackBack (0)

Using Health Savings Accounts to Offset Health-Care Costs in Retirement

HealthWith average health-care costs during retirement at $250,000, it is important to effectively plan for these costs. Health savings accounts (HSAs) are a retirement planning tool that offers serious tax advantages, and can help retirees avoid having to cut into their retirement savings for health expenses. By being enrolled in a qualified HSA plan, an account holder can make annual contributions that are income tax free and follow them when they move jobs or health plans. Not only are contributions tax free, but so are withdraws for qualified health-care expenses. In addition, the HSA funds can be invested once the required minimum balance is reached.

See Tom Torre, One Way To Pay For Health-Care Costs In Retirement, The Washington Post, April 9, 2014.

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

April 29, 2014 in Income Tax | Permalink | Comments (0) | TrackBack (0)

Article on Intestate Inheritance and Stepparent Adoption: A Reappraisal

BabyJames T.R. Jones (Professor of Law, Louis D. Brandeis School of Law at the University of Louisville) recently published an article entitled, Intestate Inheritance and Stepparent Adoption: A Reappraisal, Property, Trust and Estate Law, Vol. 48, No. 2 (Fall 2013).  Provided below is the editors’ synopsis of this article:

Societal attitudes toward adoptions have shifted over time, and adoption statutes vary widely among U.S. jurisdictions.  Unique challenges arise when drafting statutes that affect the intestate inheritance rights of adoptees.  Drafters of uniform laws and state legislatures attempt to balance the goal of complete assimilation of an adoptee into an adopted family with the prevalence of remarriages and stepfamilies.  This Article analyzes the intestate inheritance rights of adoptees in stepparent adoptions generally, against the backdrop of Kentucky law.  Noting that stepchildren deserve a well-considered examination of their intestate inheritance rights, this Article offers suggestions for stepparent adoption statutes in Kentucky and nationwide.

April 29, 2014 in Articles, Intestate Succession | Permalink | Comments (1) | TrackBack (0)

Monday, April 28, 2014

Article on Charitable Trusts

Square circle

John Tyler (General Counsel and Corporate Secretary for the Ewing Marion Kauffman Foundation) recently published an article entitled, Analyzing Effects and Implications of Regulating Charitable Hybrid Forms as Charitable Trusts: Round Peg and a Square Hole?, 9 N.Y.U. J. L. & Bus. 535 (2013).  Provided below is the beginning of his article:

One of the principle motivating forces driving the creation, expansion, and use of new formal hybrid business structures is a desire among various entrepreneurs, investors/funders, and policymakers to dedicate financial capital and other resources to areas of society that might not be as clearly or easily pursued under traditional forms. These people have seen opportunities to address social problems in new and different ways with financial resources, business models, and compensation structures and incentives not normally targeted to such problems with the same vigor, if at all. They have wanted clearer and simpler legal contexts within which to pursue their purposes and help others do likewise.

It is not that both profit distribution and social or charitable mission are not simultaneously possible under traditional forms. Certainly they are, and various enterprises exist to prove the point, including well-known examples such as Ben & Jerry's, Google and its “dot org” division, the Calvert funds, the Omidyar Network, and certain for-profit hospitals and schools. Others are less well-known, such as businesses that have received program-related investments from private foundations. But a growing impatience with the complexity and real or perceived barriers of existing forms contributed to the emergence of new taxable forms designed to make the combination of profit distribution and social or charitable mission less complicated and more accessible.

April 28, 2014 in Articles, Trusts | Permalink | Comments (0) | TrackBack (0)

Timely File Those Estate Tax Returns

Running late pic

The lesson to be learned from the recent Woodbury case is to take IRS due dates seriously.

Estate practitioners are well aware that is can be difficult to collect the necessary information to prepare the estate tax return (Form 706) within the nine-month time period allotted by the IRS.  Because of this, the IRS allows a six-month extension obtained by filing Form 4768.  But the IRS is unwilling to make any more exceptions, regardless of the reasoning for late filing.  While some tasks can be delayed to other days, the timely filing of the estate tax return is not one of them.

See Patricia Tyler, Timely Filing of Estate Tax Returns Still Important, Lexis Nexis, Apr. 25, 2014.

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

April 28, 2014 in Estate Administration, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Insurance Policy Doesn't Cover Exploding Corpses

Plumbing ceiling stain

In 2008, an elderly woman’s body decomposed so badly that it exploded, which allowed bodily fluid to seep through the floor and into the apartment below.

The unlucky neighbor spent her own money to gut the apartment in an effort to get rid of the noxious odor. She claimed her insurance company, State Farm, needed to reimburse her for the damages.  However, a Palm Beach County court ruled that her insurance policy did not cover damages caused by bodily explosions. 

See Chris Joseph, Florida Woman Must Pay Damages After Corpse Explodes Above Her Apartment, Broward Palm Beach New Times, Apr. 28, 2014. 

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

April 28, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Article on Preserving Estates


Andrew G. Middleton (J.D. Candidate, Texas A&M University School of Law) recently published an article entitled, Power Failure: How the Texas Probate Code Leaves a Gap in the Ability to Preserve Estates After Death, 1 Tex. A&M L. Rev. 229 (Fall 2013).  Provided below is his abstract:

Upon a person's death in Texas, the decedent's heirs and beneficiaries are left without the legal power to preserve the separate probate estate. Although the Texas Probate Code provides for a temporary administration in the case of an immediate need to preserve an estate, the application and court process are not correspondingly responsive. This Comment focuses on the “gap” left behind by the Texas Probate Code and the statutory inadequacies that come to light in the face of current practical problems. Additionally, this Comment proposes amendments to the statute and describes an interim solution for practitioners with the goal of each to close this “gap” in order to better preserve decedents' estates.

April 28, 2014 in Articles, Estate Administration, New Legislation | Permalink | Comments (0) | TrackBack (0)