Wills, Trusts & Estates Prof Blog

Article on New Zealand Trust Taxation

Mark Brabazon recently published an Article entitled, Trust Residence, Grantor Taxation and the Settlor Regime in New Zealand, New Zealand J. Taxation L. & Policy (Forthcoming 2016). Provided below is an abstract of the Article:

International trust taxation in New Zealand is dominated by the settlor regime under which the claim to tax accumulated trust income on a worldwide basis depends on the fiscal residence of the settlor. A trust entity is constituted by the trustees collectively, together with their right of access to trust assets, augmented by the agency obligations of a resident settlor. Although the statute avoids mention of trust residence, a trust is resident from an international and comparative viewpoint if the settlor nexus for worldwide taxation is satisfied. Analysis of historical material and the fiscal role of the settlor reveals a degree of tension between recognising the trust as economic agent for the settlor and statutory treatment of the settlor as agent for the trust. Comment is also made on the use of New Zealand as a tax haven.

The Florida Fiduciary Access to Digital Assets Act

As the age of technology flourishes, digital media assets are becoming increasing popular. The Florida Governor signed the Florida Fiduciary Access to Digital Assets Act into law on March 10, 2016. The Act allows people to plan for the management and disposition of their digital assets, such as emails, text messages, and social media accounts, by vesting fiduciaries with the authority to access, control, or copy these assets. Additionally, the Act has rules of priority for the disclosure documents where an online tool of disclosure will trump a user’s estate planning documents. Further, a custodian must comply with a request for disclosure of the digital assets when necessary. The Act goes into effect on July 1, 2016, and will apply to all fiduciaries acting under a will, trust, or guardianship.

See Jennifer J. Wioncek & Michael D. Melrose, Florida Passes Fiduciary Access to Digital Assets Act, Wealth Management, June 27, 2016.

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

Article on Exceptions to Traditional Texas Partnership Interests

Nikki L. Laing recently published an Article entitled, Planner Beware: A Peculiar Exception to Traditional Texas Community Property Rules, 8 Est. Plan. & Community Prop. L.J. (Book 2) 423 (Forthcoming 2016). Provided below is an abstract of the Article:

A number of puzzling inconsistencies exist in the application of traditional Texas community rules to partnership interests. Estate, business, and asset protection planners alike should be aware of the exceptions that exist in the treatment of partnership interests. Whether a client is considering investing separate property in a partnership, making a distribution from a partnership, or giving a partnership interest to a child with the expectation that it will remain the child’s separate property, advisors should warn the client of the risks involved.

Talking About Death Can Make Your Future Easier

No one wants to talk about the inevitable, but talking about death before it nears could make things a lot easier on both parents and children. With the improved economy, a survey reveals that children are pushing off this uncomfortable topic and waiting till after their parent’s retire or become ill. The survey also reported little discussion about wills and estate planning with more than 27% of children being unaware that they were the executor of their parent’s estate. It is important to talk about these issues before something unforeseen happens because it can become difficult to make critical decisions in the midst of a crisis.

See Everybody Dies. It’s Time to Have the Talk, Financial Advisor, June 28, 2016.

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

Absence of Marriage License Does Not Invalidate Marriage

Following a divorce, a husband and wife reconciled in 2012 and married in late 2013 when the husband became hospitalized. The couple, however, did not obtain a marriage license, and the husband died intestate the day after the wedding. Shortly after his death, the wife’s surviving spouse claim to her husband’s estate was denied due to the absence of the marriage license. When the wife appealed this decision, the judge reviewed North Carolina and United States Supreme Court precedent, concluding that the lack of a marriage license did not invalidate the marriage. The only question left was whether the couple consented to be married, or rather, did they understand all the legal consequences of marriage. With no evidence to the contrary, their marriage was confirmed upon appeal, entitling the wife to her surviving spouse allowance.

See Julianne Tobin Wojay, Lack of License Didn’t Invalidate Marriage, Bloomberg BNA Family Law Reporter, June 22, 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.

New Woman Claims to be Prince's Half-Sister

After Monday’s court hearing to determine Prince’s heirs, a woman is claiming to be Prince’s half-sister, alleging that his father is not his biological father. Venita Jackson Leverette claims that her and Prince share the same father, a man that was previously in a relationship with Prince’s mother. A DNA test could be permitted, but the Minnesota judge has already determined that this process will be lengthy.

See Chris Spargo, New Woman Stakes Her Claim for Slice of Prince’s $300 Million Estate as she Claims to be His Half-Sister, Alleging the Singer Was Actually the Son of His Mother’s Ex-Boyfriend, Daily Mail, June 28, 2016.

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

Putting Your Assets into Your Child's Emotional Trust Fund

Parents care about their children’s financial future, but it is also important to think about a child’s emotional future. So, what if parents thought about the capital they spend on their young children as assets for an “emotional trust fund.” If parents think in financial terms, it could make a difference in their children leading meaningful lives, regardless of any money they inherit. An emotional trust fund is similar to a regular trust, but how the assets are invested is what counts.

Looking at the different components of a trust, a parent is able to shape how their children are raised. Think of a nanny as stocks, their influence on children makes for a bright future, and you would never invest in a nanny or stock you thought would underperform. The parents in this scenario need to be respectful trustees when dealing with their nannies. Next, think of enrichment activities as bonds, focusing on how these activities are benefiting your child. Also, consider how you spend time with your children, this is the cash in your emotional trust fund, and you must consider how you will spend it. With emotional trust funds, parents cannot only reframe their children’s future with money but emotional security, too.

See Paul Sullivan, Investing in an Emotional Trust Fund for Your Children, NY Times, June 24, 2016.

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

Article on Caring for the Future of Disabled Adult Children

Jennifer M. Kirby-McLemore recently published an Article entitled, What Are Aging Parents Caring for Adult Children with Disabilities To Do?: A Comprehensive Framework for a Healthy, Stable, Financially Sound Future, 21 Roger Williams U. L. Rev. 45 (2016). Provided below is an introduction of the Article:

Part I of this Article provides the social and cultural backdrop that created the need for parental guidance concerning the care of adult children with disabilities. Part II introduces the importance of proper planning for adult children with disabilities as well as the key elements for every future care plan. The bulk of this Article is divided into hypothetical situations that would require parents to develop a comprehensive future care plan for their child. These hypotheticals will discuss the various elements included in those plans. Depending on the particular situation, these elements will include: ensuring eligibility for government benefits; establishing an adequate estate plan that contemplates asset distribution and guardianship appointment; and considering alternative options such as purchasing life insurance or gifting the adult child's inheritance to a future caretaker.

The hypothetical in Part III will center on those parents who are financially limited, and caring for a dependent adult child with a disability. Part IV will provide a plan for similarly situated middle class parents, while Part V will detail a plan for a well-to-do family with a partially self-sufficient adult child with a disability. Parents should note that these hypotheticals are meant to be illustrative and therefore do not exhaust all of the possible situations in which they may find themselves. Part VI augments the hypotheticals with a description of additional options that families with moderate to significant resources can use to substitute or supplement some elements of a Future Care Plan.

Article on Louisiana Succession Law

Dorothy F. Jackson recently published an Article entitled, Contemporary Issues on Louisiana Law: Successions—To Be Shared Equally or to Share and Share Alike?, S.U. L. Rev. (forthcoming Spring 2016). Provided below is an introduction to the Article:

For many years, lawyers have sought to draft last wills and testaments in an effort to comport with their clients’ wishes and to appeal to their clients’ intellectual sensibilities. Sometimes lawyers are tempted to use flowery words or phrases to impress the prospective testator, who is a lay person. A thorough reading of the Louisiana Civil Code’s provisions on legacies, joint or otherwise, should be carefully studied and understood by the attorney or notary before preparing or drafting a last will and testament. This article suggests that based upon the ambiguities that can result from the inarticulate drafting of wills, it may be necessary to amend or revise (once again) Louisiana Civil Code article 1588, which governs legacies made to more than one individual. Failure to use words that are clear and unambiguous, based upon the ordinary meaning of words, has resulted in some of the simplest drafted wills failing to comport with the client’s express intent.

Part I of this article will analyze the Lambert decision and discuss how various Louisiana courts have interpreted Lambert. Part II will discuss the Succession of Lain decision and the confusion surrounding it, its likely impact on the issue and the opportunity for future rulings (i.e. the new appeal). Finally, Part III will provide suggestions for a final resolution to the problem, one of which is to revise or amend Louisiana Civil Code article 1588 in order to avoid the confusion set forth in the Succession of Lain.

Inheritance Considerations for Wealthy Estates

Being submerged in one of the greatest wealth transfers in history, can force an estate planner to not only pay attention to financial strategies for a high-income individual’s estate but also the psychological and emotional impacts of such asset transfer. Wealthy individuals normally have more challenges creating a legacy due to the amount of assets and the various vehicles they use to pass their assets to the next generation.

Consequently, clients should have a comprehensive estate plan in order to accomplish their specific goals. Further, it is essential to understand the psychological and interpersonal issues that surround large inheritances due to their risky consequences. Allowing inexperienced heirs to become wealthy upon inheritance can surmount to unforeseen problems, which should be carefully planned for. First, the client must consider the specific concerns and risks for each wealthy individual and their family members. Second, the client should take into account the various alternatives to passing a legacy, including a debt-relief gift, contributions to educational funds, and special needs trusts. These steps will help take into account the reality of the family’s situation and what options are best for passing on their estate.

See Robert G. Kuchner, When Is an Inheritance Too Big?, Private Wealth Magazine, June 27, 2016.

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