Wills, Trusts & Estates Prof Blog

A Clock That Uses An Algorithm To Predict When People Will Die

A group of scientists have recently teamed up with the insurance industry to create an algorithm which can help them predict when customers will expire.  This four year study being launched by the University of East Anglia will use a huge database of medical data to help determine life expectancy and any long-term illnesses people might have.  “The four-year project is being funded by a £800,000 grant from the Institute and Faculty of Actuaries (IFoA) and is using experts from insurance giant Aviva.”  As people continue to live longer lifespans insurance companies will need to continue developing new formulas and algorithms that can help them make more accurate predictions about their customers.  This research can also have practical benefits for figuring out how certain medicines or lifestyles can improve longevity and how people should be planning for retirement.

See Sarah Knapton, Scientists and insurers develop ‘death clock’ to predict when customers will die, The Telegraph, March 31, 2016.

How Estate Planners Should Prepare For Market Volatility

Volatility in the current market has created a lot of opportunities for estate planners.  “Clients with taxable estates (currently, over $5.45 million for individuals or $10.9 million for married couples) generate transfer tax savings by making gifts when asset values are low – and have potential for future appreciation.”  Often times it is a good idea for estate planners to work in sync with their client’s portfolio managers to achieve optimum investment results.  This column also discusses why it is a good idea to look into grantor retained annuity trusts (GRATS).  “With Internal Revenue Code Section 7520 rates around 2 percent, it doesn’t take much for a GRAT to be successful with securities whose value is impacted negatively by general market swings.”  In this volatile market it is important to have a good solid estate plan with the client’s intentions clearly expressed.

See Bryan D. Kirk, Making Use of Market Volatility, Wealth Management, March 31, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

Examining Reverse Mortgages In Retirement Income

This column discusses research on reverse mortgages in retirement income conducted by Harold Evensky, Shaun Pfeiffer, and John Salter of Texas Tech University.  These researchers “published two articles—beginning with the August 2012 issue of the Journal of Financial Planning—investigating the role of a standby line of credit.”  The motivation for this research stemmed from an incident which occurred during the financial crises in 2008 when a home equity line of credit (HELOC) kept getting canceled.  The HELOC had been established to serve as a line of credit for clients and was supposed to be there in times of market stress.  There was also similar research done by the Sacks brothers which this column discusses.  This column discusses the HECM Saver line of credit and how it can improve portfolio survivorship rates.

See Wade Pfau, Academic Acceptance for Reverse Mortgages in Retirement Income, Forbes, March 31, 2016.

Debt Increasing For Older Americans

This article discusses the recent trend of rising debt balances among older Americans.  It examines a blog published on February 24, 2016, by the Federal Reserve Bank of New York titled ‘The Graying of American Debt.’  These changing trends are going to have a major impact on the future economy.  The data is broken into different categories and presented in detailed charts.  According to this article these changes could present problems for future GDP growth.  Policy makers will need to look ahead when crafting policies to address these changes.  It is also important for individuals to tackle their own personal debts and come up with a practical estate plan.  The composition of debts across America are changing significantly and could present major problems in the future.

See What Does The Graying of American Debt Mean For You?, Seeking Alpha, March 31, 2016.

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

CLE On Advanced Estate Planning Strategies

The State Bar of Texas is presenting a CLE entitled, Advanced Estate Planning Strategies 2016, which will take place on April 28-29, 2016 at the Eldorado Hotel & Spa in Santa Fe, New Mexico. Provided below are some details of the event:

The discussions will be highly interactive between the audience and the panelists. Speakers will address estate planning situations and will answer the questions that have been perplexing you the most. This is a rare opportunity for you to consult with the experts and your peers. The course will not be recorded for future video replay, so you must attend to take advantage of this extraordinary opportunity to hear some of the state's and the nation's leading estate planning and probate lawyers discuss their practices, what they do and don't do, the opportunities and issues they deal with, and the most up-to-date strategies!

Article On Constructive Trusts In Canada

Anthony J. Duggan (Faculty of Law, University of Toronto) recently published an article entitled, Constructive Trusts in Insolvency: A Canadian Perspective. Provided below is an abstract of the article:

In Canada and the United States, the constructive trust is a proprietary remedy awarded mainly to prevent unjust enrichment or to deter wrongdoing; the remedy gives the plaintiff an equitable proprietary interest in the disputed asset, as opposed to simply a money claim for the value of the asset. This feature of the constructive trust is particularly important if the defendant is insolvent or, by extension, if there is a substantial risk that the defendant may become insolvent before the judgment is satisfied. A constructive trust in insolvency is analogous to a security interest: it allows the plaintiff to take the disputed asset out of the defendant's estate, with the result that the plaintiff recovers in full on its claim. This is at the expense of the estate, which is correspondingly depleted, and the claims of the defendant's unsecured creditors which are, as a result, diminished. The Canadian case law on the availability of constructive trust relief in the defendant's insolvency is unsettled and there is confusion in both the case law and the literature as to the doctrinal basis of the remedy and the relevant policy considerations. It is commonly argued that a key policy consideration is, or should be, whether the plaintiff voluntarily accepted the risk of the defendant's insolvency. But, while popular in restitution circles, this approach is deeply problematic from a bankruptcy perspective. This paper examines the current state of the case law in Canada, identifies and critically analyzes the main theoretical arguments in the literature and suggests the basis on which the courts should approach cases of this kind.

Michigan Joins Ranks Of States To Pass Digital Asset Access Law

The issue of who can access digital accounts and assets after the death of the owner has been in the news recently since most states did not have any statutes on point which leaves estates to the mercy of user agreements. But Michigan has joined the ranks of states taking action on the issue with new legislation recently signed into law by Gov. Rick Snyder. The bill allows a user to use online tools to dictate who may or may not have access to their online content which can be changed at any time. In addition, wills, trusts, and power of attorneys may set the parameters of who may access an online asset and what level of control may be exercised over it. However, the online tool will control over a will so those using it should keep that in mind when seeking to make changes to the access that was granted in a different document. A copy of the new statute can be found here.

See Alexandra Bahou, New Michigan law lets you designate a person to control your digital assets after death, WXYZ, March 30, 2016.

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

Man's Last Gift To Church Reveals Lifetime Love Of Cars

Dennis Erickson was 69 years old when he died and was survived by neither children, siblings, parents, nor a spouse. Instead, he bequeathed his home and possessions to the church that served as a substitute family where he had been a regular attendee and usher for over a decade. But when members of the church showed up to Dennis's home they discovered something unexpected, thousands and thousands of model cars that had been collected over his lifetime. With cars stacked from floor to ceiling in every room the collection completely blew away church representatives who had little idea of what awaited them. In addition, a number of real cars were found on the property including a 1959 Edsel, a Ford model that only ran for a handful of years in the late 50's, which is estimated to be worth up to $44,000. Interest in the model car collection has been high with calls coming in from collectors across the nation although the church has yet to finalize disposition of the estate.

See, Man donates home full of thousands of model cars to church, Fox News, March 29, 2016.

Preparing For The End Of The Stretch IRA

The stretch IRA might be ending in the future and if that happens a non-spouse beneficiary of an IRA will be required to pay the full income tax on an inherited IRA within five years of the IRA owner’s passing.  This article discusses some of the ways that people can act to mitigate the end of the stretch IRA.  There are many financial experts who believe that Roth IRA conversions deserve some serious considerations.  One of the problems though is that proposed legislation might also be targeting these sorts of Roth conversions.  There are also life insurance options that this article discusses which people should consider.  It is a good idea for people who will be impacted by the proposed changes to speak with an experienced estate planning professional about their situation.

See James Lange, Mitigating the Death of the Stretch IRA, Wealth Management, March 30, 2016.

More Retirees Considering Peer-To-Peer Lending

The current interest rates on money market and savings accounts as well as 3-year treasuries and Certificates of Deposit (CDs) are very low.  Investors are also getting low yields on municipal and corporate bonds.  This article discusses how low risk peer-to-peer (P2P) loans have been looking much better by comparison.  “It’s a system that lets individual and institutional investors fund loans directly to individual borrowers for purposes like credit card consolidation, education, home improvement and vacations.”  There are lending companies that act as intermediaries between the borrowers and lenders, and they handle “record keeping, fund transfers, fee assessments and delinquent loans, among other tasks.”  This article discusses some of the risks involved with peer-to-peer lending and how people can mitigate those risks.  There are many reasons why people might want to consider this investment option, but they will need to do careful research to see if it is the right option for their circumstances. 

See Amy Fontinelle, Peer-to-Peer Lending: How Retirees Can Make Money, Investopedia, March 29, 2016.

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