Wills, Trusts & Estates Prof Blog

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

Sunday, June 29, 2014

The Digital Era Creates the Social Media Prenup

Digital CameraA new trend in prenuptial agreements is emerging. Couples are increasingly including social media clauses in their agreements which describe how the couple will treat each other as far as digital media is concerned. The ‘social media prenup’ agreement is intended to protect the individuals’ reputations and keep any embarrassing or personal pictures off of the internet, by prohibiting the other partner from posting them.

See Melony Roy, Couples Beginning to Include Social Media Clauses in Prenuptial Agreements, CBS Philly, June 16, 2014.

June 29, 2014 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

New Jersey Considering Collaborative Divorce Bill

DivorceEarlier this month the New Jersey Senate Budget and Appropriations Committee passed a collaborative divorce bill. The bill is now headed for the full Senate. If passed, the new law will create another option for couples going through divorce, which will allow for a couple to work together to resolve their divorce rather than have to go to court. The process requires that the couple actually collaborates with each other, and the process would end if a temporary restraining order is involved or either party withholds relevant information.

See Cheryl E. Connors, Collaborative Divorce: A Peaceful and Less Expensive Alternative to Litigation, Wilentz Family Law, June 11, 2014.

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

June 29, 2014 in Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Saturday, June 28, 2014

DOMA One Year Later

Supreme court

Approximately one year ago, the U.S. Supreme Court struck down the Defense of Marriage Act.  The court’s recognition of marriage equality has transformed life for many same-sex couples.  The DOMA ruling has allowed many couples to receive spousal benefits from Social Security and Medicare. 

Since the ruling, Social Security and Medicare have made changes that benefit same-sex married couples.  However, complications have arisen.

While the Social Security Administration is processing spousal and survivor claims for benefits in states recognizing same-sex marriage, the Obama Administration believes amendments to the Social Security Act are needed so that the SSA can form a legal basis to recognize marriages regardless of where a couple lives.  Experts advise same-sex couples to file for Social Security.  This could qualify couples to receive retroactive benefits if the state of residence issue is resolved.

In states recognizing same-sex marriage, spouses are eligible for all of Medicare’s benefits.  People living in a state that does not recognize same-sex marriage, but were married elsewhere, have access to the benefits with one caveat: You cannot get premium free Part A based on your spouse’s work history unless you are in a civil union or domestic partnership and living in a state that recognizes inheritance rights.   

See Mark Miller, Retirement and Same-Sex Couples, A Year After DOMA Ruling, Reuters, June 26, 2014.

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

June 28, 2014 in Current Affairs, Disability Planning - Health Care, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

CLE on Balancing Income, Property, and Estate Tax Aspects of Estate Planning

CLE Photo

The American Law Institute Continuing Legal Education (ALI CLE) is holding a CLE entitled, Beyond Estate Tax: Balancing Income, Property, and Estate Tax Aspects of Estate Planning, on July 15, 2014, from 12:30 – 2:00 p.m. Eastern, available via telephone seminar or audio webcast.  Here is why you should attend:

Simply because the American Taxpayer Relief Act of 2012 does not “sunset” does not mean that transfer tax laws will remain forever as they are today. Tax advisors and their clients must continue to be mindful of transfer tax planning opportunities using currently favorable tax law. 

In considering the use of the plethora of lifetime and testamentary estate planning strategies available to our clients, however, a careful balance must now be struck between planning for possible transfer tax savings at the cost of increased income, capital gains or property taxes from the loss of the basis step-up at death.  And, as has always been the case, consideration must be paid to the non-tax burdens on clients of lifetime planning to avoid taxes that will only be imposed after they are dead and may only result in a relatively marginal tax benefit to the clients’ family.

Join nationally recognized estate planners for a thorough discussion of factors to be considered in striking the balance among income, property and estate tax aspects of estate planning--designed to minimize overall tax burdens, in life as well as in death.

June 28, 2014 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

4 Considerations When Planning Financial Protection for a Spouse

ChecklistMaking wise decisions on pension plans can have a direct impact on the plan holder’s spouse. Many couples face the choice between a pension that results in bigger payouts that covers the pension holder for life, and one with smaller payouts that also covers the spouse. If the goal is financial protection for the spouse after the plan holder dies, there are four things couples should consider:

  1. Don’t take out Social Security earlier than needed out of fear of dying before collecting
  2. Keep the account beneficiary updated
  3. Know which plans, like a 401(k), will go automatically to the spouse, and which won’t
  4. Not all annuities cover the life of the surviving spouse 

 See Jane Bryant Quinn, How to Financially Protect Your Spouse, AARP Bulletin, June 2014.

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

June 28, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Public School Teacher Leaves Surprisingly Large Endowment to Alma Mater

School SuppliesBernadette Steep did not grow up wealthy or live extravagantly.  She worked hard during college to pay for tuition and lived frugally throughout her life while working as a public school teacher. She also did not have many relatives in her later years. She did not have children or a spouse, and her sister who she lived with died in 2007. However, she did receive some large gifts later in life, and when she died she gave them to her true love, education. Steep left $2 million to her alma mater, Marquette University, to be used toward scholarships for the College of Education and the Law School.

See  Karen Herzog, Frugal Teacher Leaves $2 Million for Marquette Scholarships, The Journal Sentinel, June 18, 2014.

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

June 28, 2014 in Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, June 27, 2014

Lawyer in Tax Fraud Conspiracy Sentenced 15 Years

Money money money

Paul Daugerdas, a former partner at the defunct law firm Jenkens & Gilchrist, has been sentenced to fifteen years in prison in what prosecutors are calling the largest criminal tax fraud in U.S. history. 

Daugerdas, who once ran the law firm’s Chicago office, was found guilty by a New York federal jury on charges including conspiracy, tax evasion and mail fraud.  It is alleged that Daugerdas obtained $95 million dollars from a scheme which involved fraudulent tax deductions or benefits exceeding $7 billion and $1.63 billion lost in U.S. tax revenue. Prosecutors say Daugerdas devised and supervised the promotion of fraudulent tax shelters over almost two decades.   

U.S. district judge William Pauley ordered Daugerdas to forfeit $164.7 million and pay $371 million in restitution jointly with other co-conspirators.  The judge described him as being at “the apex of tax shelter racketeers.”

See Reuters, Former Law Firm Partner Gets 15 Years Prison for Record US Tax Fraud Scheme, The Guardian, June 25, 2014. 

June 27, 2014 in Income Tax, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

MAPTing Your Future


Many people fail to realize that the scope of estate planning extends far beyond that of a simple will.  Estate planning includes powers of attorney, health-care proxies, living wills and trusts. 

Not only are trusts beneficial for transferring assets to beneficiaries upon death, but they also provide for the grantor during their lifetime.  Hence, living trusts can serve as a form of disability planning because the grantor appoints a trustee who is in charge of the trust if the grantor becomes incapacitated.  If you do not have some form of long term care insurance, the best approach is to use a MAPT to protect your assets from nursinghome costs. 

For purposes of elder law estate planning, the most common trust for disability planning is the Medicaid Asset Protection Trust (MAPT).  Two rules apply to MAPTs: first, you may not be your own trustee; second, you are only entitled to income and not principal.  Because you do not have access to the principal, nursing homes do not have access to it either.  The assets must be in the trust for five years, pursuant to the “five-year look-back period,” before they can be protected from any nursing home costs.

A MAPT will not affect your lifestyle.  You will still receive pension and Social Security checks and have the right to use your home while keeping property tax exemptions. 

See Bonnie Kraham, Trusts Provide Several Benefits, Record Online, June 26, 2014.    

June 27, 2014 in Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Supreme Court Holds Presumption of Prudence In ERISA Stock Drop Prohibited

Supreme court

In Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court declined to adopt the Moench presumption of prudence.  Prior to the ruling, many circuit courts had dismissed ERISA stock drop claims unless plan participants had pled allegations that the company’s economic situation was calamitous or the company would breakdown.  Yet the Court made it clear that in order to survive a motion to dismiss, a participant must plead facts and circumstances that could lead to the conclusion that the plan fiduciaries acted imprudently.  “Absent ‘special circumstances,’ allegations that plan fiduciaries should have recognized from publicly available information that a company stock fund was under or overvalued are ‘implausible as a general rule.’”  If an allegation of imprudence is based upon nonpublic information, “A plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” 

See Russell Hirschhorn, SCOTUS Says No Presumption Of Prudence In ERISA Stock Drop Cases, Mondaq, June 26, 2014. 

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

June 27, 2014 in Elder Law, Estate Planning - Generally, New Cases | Permalink | Comments (0) | TrackBack (0)

Attorney Pleads Guilty to Fraud Scheme


Jamal and Leda Khoury thought they were investing their life savings wisely when they transferred $2.3 million into their attorney’s escrow account to buy commercial real estate property three years ago.  Yet within hours of the cash transfer, their attorney, Kathleen Niew, was stealing from the supposedly secure account to invest in her own scheme. 

Over the course of several weeks, Niew wired millions of dollars to mining investors in places such as Singapore, expecting to make huge profits for herself.  The mining companies failed miserably and Niew never earned a dime.  By the time the Khoury’s realized something was wrong, their retirement was completely gone. 

On Wednesday the couple watched as Niew pled guilty to ten counts of fraud.  Under federal sentencing guidelines, Niew faces up to eleven years in prison, but the judge is free to sentence her whatever he deems appropriate. 

See Jason Meisner, Former Attorney, Radio Host Pleads Guilty in $2.3 Million Fraud, Chicago Tribune, June 25, 2014. 

June 27, 2014 in Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)