Wills, Trusts & Estates Prof Blog

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

Tuesday, September 30, 2014

Inside the Rollins Family Feud

Rollins Family

The Rollins family is known for two things: killing vermin and throwing parties.  Unfortunately, for the Rollins family, the party is over. 

Orkin, and the nine related extermination companies housed under Rollins Inc., remains the leading company in pest control.  When Glen sued his father, Gary, CEO of Rollins Inc., as well as his uncle Randall, company chairman, one of the nastiest intergenerational battles took place.  Glen’s three siblings joined in the lawsuit, claiming they were being denied their rightful cash allocations.  While Randall’s five children stuck by him and Gary, Ruthie took her children’s side when she filed for divorce from Gary after 45 years.  In this money fight, fathers, sons, wives, and cousins were pitted against each other, “It’s like a Greek tragedy.”

The feud, which has played out over the past four years, may finally reach a finale—the trial in the core case, deciding whether the older generation is withholding handouts, is projected to begin next year. 

Yet it is clear that a verdict is already in: “A lifetime’s work, and a family legacy, was destroyed by shoddy estate planning and questionable parenting.”  Glen stated, “There’s plenty of assets.  It has to do with extreme and destructive efforts by my father and uncle to control.  No one disputes those assets are ours.” 

A spokesman for Gary and Randall contend “The plaintiffs’ lawsuits are motivated by greed and self-interest . . . They have no regard for the structure of the Rollins family assets.”

See Clare O’Connor, Inside an $8 Billion Family Feud: Who Poisoned The Orkin Fortune? Forbes, Sept. 29, 2014.

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

September 30, 2014 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Estate Planning in the Wake of Genetic Advances

DNA

Today, the freezing of ova and a sperm for later usage is almost a common practice and is quickly developing.  However, laws have not caught up with these advances.  State law in this realm varies from one jurisdiction to another.  Some states treat genetic material that has been fertilized differently than genetic material that is not fertilized.  A few states mandate that there must be an indication that you intend to have children with the person providing the other half of the genetic material.  “Many areas of the law intersect in this area.  In addition, there are religious and moral issues.  It’s a political hot potato.”

Genetic advances generate issues for estate planning.  Most states recognize children born within nine months of a parents’ death as lawful heirs and few states recognize posthumously conceived children.  This raises questions concerning whether such a child will have inheritance rights and what will be done with the genetic material you left behind?

While these answers may not be clear, it is important to be explicit about your wishes when drafting your estate plan.  When defining beneficiaries who are eligible to inherit, include language such as, “all my children, including those born within X years of my death.” 

It may be better to use a trust for this purpose rather than a will.  “With a trust, you don’t have to close it out in 18-24 months.  You can have things sitting around waiting.”  For example, the trust can hold assets until a child reaches a certain age. 

See Gail Buckner, Some Estate Planning is Really Complicated, Fox Business, Sept. 29, 2014.

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

September 30, 2014 in Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Supreme Court Considers Hearing Gay Marriage Cases

Supreme court

On Monday, the nine U.S. Supreme Court justices met behind closed doors to consider whether they should consider whether states can ban gay marriage. 

The court currently has seven cases pending before it concerning bans in five states: Virginia, Utah, Oklahoma, Wisconsin and Indiana.  If the court agrees to take one or more of these cases it has the chance to rule if gay men and women in the 31 states that now bar gay marriage could get marriage licenses. 

An announcement on whether the court will hear the same-sex marriage dispute could come later this week.  Yet, given the weight of the controversy and that the justices only in recent weeks received the petitions, an announcement may come at a later time.  The court officially reconvenes next Monday for its new term, which runs until the end of June.

See Lawrence Hurley, Supreme Court Meets to Consider Taking Gay Marriage Cases, Reuters, Sept. 29, 2014.  

September 30, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Roth IRAs for 50-Somethings

Roth ira

Roth IRAs appeal to investors in the early stages of their careers that expect to pay taxes at a higher rate in retirement; however, older investors may want to use Roths to generate more retirement income than they could with a traditional IRA. 

Although the strategy may work well in certain circumstances, the advantages for investors saving with a Roth could be small.  New research by T. Rowe Price Group indicated that investors in their 50s and early 60s who pay taxes at a lower rate in retirement can fare better in a Roth. 

Even if you do not know what your tax rate will be, a Roth can be useful.  By having money in both Roth and traditional accounts, you may be able to diversify your tax exposure so not every cent of your retirement savings is taxed at whatever rate a future Congress may set for ordinary income.  Furthermore, tax free Roth distributions will not trigger taxes on Social Security benefits, as can sometimes occur with withdrawals from a traditional IRA or 401(k). 

See Walter Updegrave, The Roth-IRA Math for 50-Somethings, Fox Business, Sept. 26, 2014.

September 30, 2014 in Elder Law, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Carl Pohlad's Estate Goes to Tax Court Over Minnesota Twins Valuation

Gavel2As I have previously discussed, the estate of Carl Pohlad, who owned the Minnesota Twins, is currently engaged in a valuation battle with the IRS. The battle is not over the value of the Twins, but rather over the value of Pohlad's ownership interest at his death. Pohlad's estate argues that after Pohlad transferred part of his interest in the Twins to his sons before his death, Pohlad's ownership interest was only worth $24 million. The IRS believes that the $24 million claimed by the estate was deficient and that the actual value of Pohlad's interest at the time he died was $293 million. The case went to tax court yesterday, where a judge will decide the valuation of the ownership interest.

See David Phelps, Pohlad Estate-Tax Trial Begins Monday in Houston, Star Tribune, Sept. 28, 2014.

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

September 30, 2014 in Estate Planning - Generally, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Professor's Widow Leaves Substantial Gift at Her Death to University

Gift1A 90-year-old widow of a University of Arizona professor, made large donations to the university during her life and a gift of $50 million at her death. Agnese Nelms Haury was a philanthropists, and founder and president of the Agnese N. Lindley Foundation. Her gift will be used to create a program at the university that will focus on environmental and social justice studies.

See, $50M Gift From Haury Estate to Focus on Environment, Society and Southwest, PressReleasePoint, Sept. 22, 2014.

September 30, 2014 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Gap Growing for Retirement Savings

GapIt is not knew news that there is a large gap between the retirement savings account values of the lowest and highest income brackets in the U.S. However, the gap has grown significantly over the past decade. Top bracket individuals have seen a 24% increase to their median value of their retirement accounts and savings, while savings accounts for the lower income brackets have seen a 20% decrease from 2004 to 2013. In addition, 90% of wealthy individuals and only 9% of low-income individuals have a retirement savings account.

See Melanie Hicken, Retirement Savings Gap Widens Between Rich and Poor, CNN, Sept. 18, 2014.

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

September 30, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

U.S. Requires Assistance to Enforce FATCA

PuzzleAs I have previously discussed, the U.S. government has shown a strong commitment to investigating violations and enforcing compliance with the Foreign Account Tax Compliance Act (FATCA). The global anti tax-evasion law that requires foreign financial institutions to reveal account information of wealthy U.S. citizen owned accounts, requires international corporation to effectively enforce. Since refusal to cooperate with the U.S. in FATCA enforcement could result in inability to participate in U.S. markets, participation has been widespread across the globe. However, concern over Canada's commitment to enforcement has arisen due to recent staff and budget cuts that affect Canada's Revenue Agency.

See Robert W. Wood, Armed With FATCA, IRS Hunts Offshore Tax Evaders, While Canada Eases Up, Forbes, Sept. 22, 2014.

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

September 30, 2014 in Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, September 29, 2014

Officials Scrutinize Andrew Madoff's $16 Million Estate

Andrew Madoff

Until he passed away earlier this month, Bernard Madoff’s last surviving son was under investigation for possible involvement in his father’s multibillion-dollar Ponzi scheme.  Despite his passing, scrutiny over his $16 million estate continues. 

The court appointed trustee seeking to recover money for conned investors began to dissect Andrew Madoff’s wealth far before his death, filing an updated lawsuit this summer accusing him and his brother of having full knowledge of their father’s scheme and using it as their “personal cookie jar” that they tapped through bogus loans, fabricated trades and overdue compensation. 

Although Andrew maintained he and his brother Mark knew nothing of the massive fraud, as they were the ones who went to the authorities after their father confessed to them, investigators said they believed the brothers were never unaware. 

Officials said it was likely Andrew Madoff would have faced tax evasion charges if he had not died.  The ultimate goal was using federal charges as leverage to get him to return money to investors.  After Andrew Madoff’s death, his will was publicized, revealing an estate worth $16 million.  The trustee is seeking to recover money from the estates of both brothers and has the power to pursue money and assets wherever they are disbursed. 

See The Associated Press, Bernie Madoff’s Last Surviving Son was Under Scrutiny Until he Died—and Questions Still Surround $16 Million Estate, NY Daily News, Sept. 28, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

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

Article on the Elective Share

Martin begleiter

Martin D. Begleiter (Drake University School of Law) recently published an article entitled, Grim Fairy Tales: Studies of Wicked Stepmothers, Poisoned Apples and the Elective Share (July 15, 2014), Albany Law Review, Forthcoming.  Provided below is the abstract from SSRN:

Ever since the statutory elective share replaced dower and curtesy, courts have been trying to expand the property subject to the spouse’s elective share. The courts have used a number of justifications for their attempts to accomplish this. In a previous article, the author offered an interpretation of the proper use of public policy by courts when a statute on the subject has been enacted by the Legislature. This article applies that test to attempts by courts to expand the elective share to will substitutes, and finds such attempts to be an impermissible use of public policy by courts.

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