Wills, Trusts & Estates Prof Blog

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

Saturday, May 28, 2016

Study Shows that the Rich Are Not Moving to Avoid Taxes

MillionaireAre millionaires moving across the country to benefit from tax breaks? A study based on thirteen years of tax data shows that this assumption is principally untrue. Oftentimes, millionaires are moving for reasons that have nothing to do with taxes. They usually have community roots that have promoted their successfulness, which makes it hard to uproot.

            Florida is only one of seven states with no income tax. Most millionaire tax flight, however, travels to the Sunshine State. If the study removed Florida from the list of states drawing tax-avoiding millionaires, tax migration would be virtually nonexistent. But, honestly, relaxing under a palm tree facing the Caribbean Sea makes tax avoidance pretty tempting for just about anyone with millions of dollars to spend.

See Higher Taxes Don’t Scare Millionaires into Fleeing Their Homes After All, Private Wealth, May 26, 2016.

May 28, 2016 in Estate Tax, Income Tax | Permalink | Comments (0)

Article on American Indian Land Tenure System

American indianJessica A. Shoemaker recently published an Article entitled, Complexity's Shadow: American Indian Property, Sovereignty, and the Future, Michigan Law Review (Forthcoming). Provided below is an abstract of the Article:

            This article offers a new perspective on the challenges of the modern American Indian land tenure system. While some property theorists have renewed focus on isolated aspects of Indian land tenure, including the historic inequities of colonial takings of Indian lands, this article argues that the complexity of today’s federally imposed reservation property system does much the same colonizing work that historic Indian land policies — from allotment to removal to termination — did overtly. But now these inequities are largely shadowed by the daunting complexity of the whole over-arching structure. 

            This article introduces a new taxonomy of complexity in American Indian land tenure and explores particularly how the recent trend of hyper-categorizing property and sovereignty interests into ever-more granular and interacting jurisdictional variables has exacerbated development and self-governance challenges in Indian Country. The entirety of this structural complexity serves no adequate purpose for Indian landowners or Indian nations and instead creates perverse incentives to grow the federal oversight role. Complexity begets more complexity, and this has created a self-perpetuating and inefficient cycle of federal control. However, stepping back and reviewing Indian land tenure as a system — a whole complex, dynamic, and ultimately adaptable system — actually introduces new and potentially fruitful management techniques borrowed from social and ecological sciences. Top-down Indian land reforms have consistently intensified complexity’s costs. This article explores how emphasizing grassroots experimentation and local flexibility instead can create critical space for reservation-by-reservation property system transformations into the future.

May 28, 2016 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Friday, May 27, 2016

Article on Presumptions of Resulting Trusts

Resulting trustJason Michael Chin, Archie Rabinowitz, & Aoife Quinn recently published an Article entitled, The Presumption of Resulting Trust and Beneficiary Designations: What's Intention Got to Do with It?, Alberta Law Review (Forthcoming). Provided below is an abstract of the Article:

            When opening an RRSP or RRIF, investors typically designate a beneficiary. We expect that, when making this choice, most investors intend that their designated beneficiary will indeed benefit from the investment on their death. And further, if there is a dispute between the designated beneficiary and the investor’s estate, we expect investors intend that their choice of beneficiary will prevail. Surprisingly, this is not the case in many provincial appellate courts, which in fact favour the estate in such disputes. More specifically, most Canadian courts apply the presumption of resulting trust to beneficiary designations: they assume, absent other evidence, that the designated beneficiary holds the proceeds of the RRSP or RRIF in trust for the deceased investor’s estate. Only Saskatchewan has taken a contrary position. The Alberta Court of Queen’s Bench in Morrison v Morrison recently weighed both options and endorsed the approach that applies the presumption of resulting trust.

            In the present article, we analyze the doctrine of resulting trust, its rationale as presented by several leading cases, and empirical evidence evaluating the intentions of Canadian investors. We conclude that applying the presumption of resulting trust to beneficiary designations betrays both the theory and purpose of the presumption. It also runs counter to the intentions of most Canadians and creates uncertainties in millions of beneficiary designations. Finally, we present several solutions for bringing the law in line with the intentions of investors, and indeed common sense.

May 27, 2016 in Articles, Trusts | Permalink | Comments (0)

Appointing a Stranger as a Will Executor?

Will executorIs it OK to appoint a stranger as executor of your will? Sometimes couples with no children find it hard to select someone to execute their will after one or both dies. So, if one partner dies first, it seems best to make the other the will executor with any necessary help. In selecting a will executor for when both die, it is best to shop around for or consult a lawyer that fits your criteria. Also, remember that friends and extended family members often have invaluable advice for recommendations.

See Quentin Fottrell, My Wife and I Don’t Trust Anyone To Be Executor of Our Will, MarketWatch, May 23, 2016.

May 27, 2016 in Death Event Planning, Estate Planning - Generally, Wills | Permalink | Comments (0)

Caring for Your Furry Friends After Death

Pet trustIf you’re wondering what will happen to your pet when you pass, do not worry any longer because you can create a pet trust! 49 states have enacted pet trust statutes to allow pet owners to continue caring for their furry friends. It is important to be specific in your care instructions, so the pet’s caregiver can administer accordingly. There are also alternatives to pet trusts, including making a conditional bequest of money to a specific person that will be spent on the care of the pet.

See Steven Maimes, Pet Trust States Grow as Owners Continue to Leave Money to Care for Their Dogs and Cats, Trust Advisor, May 20, 2016.

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

May 27, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Two Ways to 'Leave' Your Business

Gifting agency stockGifting the business is a great way to transfer the ownership of a business. Based on the circumstance, there are options to change the tax burden and/or have the owner still receive some money from the business. 

In some cases, the Grantor Retained Annuity Trust (GRAT) may be a preferred vehicle to gifting, especially if the estate is large. Working with the firm’s CPA and a qualified attorney will provide the owners the answers they need to use one of these two vehicles properly.

See Bill Schoeffler & Catherine Oak, Gifting Agency Stock & Grantor Retained Annuity Trusts, Insurance Journal, May 23, 2016. 

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

May 27, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, May 26, 2016

Case Summary—Rinehart v. Rinehart

Strong-Stacie"An interesting decision regarding the arbitrability of internal trust disputes (ie, those involving the trustee and beneficiaries rather than the trust and a third party entity) has just been handed down from the Federal Court of Australia.  In Rinehart v. Rinehart (No. 3) [2016] FCA 539 (26 May 2016) (the saga has been going on for some time), the court considered a number of key issues.   

The instant dispute involves an order sought by Mrs Rinehart " pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“NSW Act”) that the parties to this proceeding be referred to arbitration in respect of the matters the subject of the proceeding."  Ultimately, the court decided there should "be a trial of the question whether any of the following agreements is null and void, inoperative or incapable of being performed within the meaning of s 8(1) of the Commercial Arbitration Act 2010 (NSW) or the Commercial Arbitration Act 2012 (WA)."

The opinion considers sixteen agreed questions and is both very long (669 paragraphs) and very comparative, taking into account case and statutory law from a number of common law jurisdictions as well as international law (i.e., construction of the New York Convention).   One of the key issues focused on whether the trust could be considered commercial and thus within the scope of the commercial arbitration statute." 

Summary written by Stacie Strong, Manley O. Hudson Professor of Law, University of Missouri.

For the full decision—Rinehart v. Rinehart.

May 26, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Same-Sex Partner Misses Out on New Jersey Estate Tax Exemption

Same-sexThe New Jersey Tax Court ruled that a man was not entitled to a $101,041 estate tax deduction after his partner of 31 years died six days before their wedding because they were not married or in a civil union. Six days before their wedding, is this considered exceptional circumstances? The couple was registered as domestic partners but chose not to enter into a civil union. The court noted that it could not apply the Domestic Partnership Act in a way to provide estate tax exemptions for a couple that could have entered into a civil union or marriage.

See Leslie A. Pappas, Same-Sex Partner Not Spouse for New Jersey Estate Tax Break, Bloomberg BNA, May 17, 2016.

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

May 26, 2016 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Deciding Sumner Redstone's Mental Acuity

SumnerWith Sumner Redstone’s declining health, the case to decide his mental acuity is becoming more difficult and more pertinent with so many third parties involved. To determine his competency for deciding to oust two Viacom trustees, psychiatrists will look for evidence that Mr. Redstone understands relevant facts and appreciates the impact of his decisions. To determine any undue influence on the behalf of his daughter, the court will look at the facts placed before it to see if she threatened him or preyed on his emotions. Mr. Redstone will need to indicate a clear and consistent rationale for the change.

See Erik Eckholm, A Complicated Legal Battle Over Sumner Redstone’s Mental Acuity, NY Times, May 25, 2016.

May 26, 2016 in Current Events, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Nevada Now the Leading Jurisdiction for Trusts

NevadaMany people would rank Nevada as the leading jurisdiction for trusts. The opportunities found under Nevada law have prompted numerous estate planners and financial planners to situs their clients’ trusts in Nevada to take advantage of the advantages that Nevada offers that are not available in most other states. This article will highlight many of these opportunities. It is no longer sufficient to simply use the client’s home state as the trust situs. 

 See Neil Schoenblum & Steven J. Oshins, The Nevada Advantage: Why Nevada Has Become the Leading Jurisdiction for Trusts, Trust Advisor, May 25, 2016.

May 26, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)