Wills, Trusts & Estates Prof Blog

How a Will Can Be Unequal But Fair

Oftentimes, children see the inheritance from their parent’s as the final accounting of their love, so anything other than an equal split is hard to accept. However, it is possible for parents to leave inheritances that are unequal but fair. The challenging part comes with how those children will deal with such division. This is where good open communication can solve the hurt from tough decisions. Purposefully leaving money unequally requires greater foresight, so a conversation and good estate plan can help solve a lot of these problems.

See Paul Sullivan, How a Will Treating Children Differently Can Still Be Fair, NY Times, July 29, 2016.

Special thanks to Jerry Borison (Professor of Law, University of Denver Sturm College of Law) & Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

 

Another Victory for Dauman in the Fight Over Redstone's Trust

A Massachusetts judge has agreed to continue to hear the lawsuit over Philippe Dauman’s removal from billionare Sumner Redstone’s trust. This comes as a victory for Dauman, who is fighting Redstone over claims that his daughter is manipulating her dad to gain control of his companies. The fight has led to unsettled and delayed deals along with litigation in several states.

See Bloomberg, Redstone Loses Home Court as Viacom Feud Stays in Massachusetts, Private Wealth, July 28, 2016.

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

A Judge Rules Prince's Possible Heirs to Six

On Friday, a judge dismissed the claims of twenty-nine people, alleging they were related to Prince. This narrowed the possible number of heirs down to six—his sister, three half siblings, a niece, and a grandniece, who will undergo genetic testing. Prince also had no known children, and eighteen claimants were ruled out as his children.

See Khushbu Shah, Prince’s Possible Heirs Narrowed Down to Six, CNN, July 29, 2016.

Article on Important Features of Your Farm Succession Plan

Paul Goeringer recently published an Article entitled, Property Ownership and Transferring Are Important Features of Your Farm Succession Plan, (2016). Provided below is an abstract of the Article:

How property is owned can impact your farm succession plan, but can also aid in allowing ease of transfer to the next generation. This publication is an Extension fact sheet draft covering what producers need to consider on property ownership when developing a succession plan.

Article on Appropriate Scope of Contractibility with Fiduciary Loyalty

Amir N. Licht recently published an Article entitled, Motivation, Information, Negotiation: Why Fiduciary Accountability Cannot Be Negotiable, D. Gordon Smith & Andrew S. Gold, eds., Research Handbook on Fiduciary Law (Forthcoming). Provided below is an abstract of the Article:

In the debate over contractual freedom or enabling-versus-mandatory rules in fiduciary law, those who do not adhere to an unbridled contractatian approach tend to justify fiduciary law’s strict posture by appealing to transaction cost reasoning. In this view, fiduciary law more efficiently sets rules that the parties would adopt or, also efficiently, sets penalty default rules that they would not adopt. Drawing on new institutional economics and information economics, this paper advances another theory on the appropriate scope of contractibility with regard to fiduciary loyalty. The present account highlights information asymmetries that are more tenacious than those stemming from information production costs - to wit, asymmetries due to unobservable and unverifiable information. These asymmetries provide a compelling justification for a strict, full-disclosure-based accountability regime. A similar analysis vindicates a rather similar legal policy in traditional insurance law, in which insurance relations are based on utmost good faith and impose a duty of full disclosure on the insured.

Transfer of Foreign Money to the U.S.

What do you do if you are a wealthy multinational planning for part of your estate to go to the United States? One idea is to create a foreign grantor trust that receives tax benefits for the grantee. The trust will grow tax-free and any distributions made to beneficiaries will be tax-free as well. With the obsession of minimizing income tax, the United States is becoming the place to stash foreign wealth. This makes income tax management the key to most estate planning today. Additionally, estate planners are playing around with basis as a tax reduction technique through inheritance. Ultimately, there should be a three-part harmony: first, structure the trust properly; second, a thoughtful use of entities to compose the trust structure; and third, proper asset allocation.

See Carol J. Clouse, Death and Taxes for Wealthy Foreigners, Private Wealth, June 17, 2016.

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

Trustees with Special Skills

If you are a trustee with a special skill, you are expected to use it. For example, if you are a lawyer or a CPA, you have a higher degree of knowledge on certain issues, and you are expected to use those professional skills. Commonly, we see these professionals acting as trustees, and if something were to go wrong within that role, the trustee will be judged on a higher standard than an ordinary trustee. To have the benefit of these specialists, however, can really help in trust administration. To help protect a skilled trustee, it is important to have a process in place on how to manage trust assets and make decisions for the trust.

See California Trust and Probate Litigation, A Trustee’s Duty to Use Special Skill, Wealth Management, July 26, 2016.

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

Article on Framework of Charitable Trust in Common Law

Oonagh B. Breen recently published an Article entitled, Guardians of the Charitable Realm: Charitable Trust Supervision Practice and Procedure in the Common Law World, European R. Private L. (Forthcoming); UCD Working Papers in Law, Criminology & Socio-legal Studies Research Paper No. 11/2016. Provided below is an abstract of the Article:

This article examines the control framework for the supervision and oversight of charitable trusts in the common law world. It outlines the fundamental differences between private and public trusts that necessitate a separate enforcement regime for charitable trusts and explores the historical and political powers and duties of the Attorney General as parens patriae of charities. In light of the limitations of the Attorney General’s effective scrutiny, Part II considers the emergence of alternative charity regulators - from tax authorities to independent charity commissions - comparing the relative regulatory achievements of these agencies with that of the AG. Part III turns its attention to the role of the courts and tribunals in the enforcement of the interests of donors, beneficiaries and charitable entities. The article concludes in Part IV with a discussion of the merits and demerits of the charitable trust vis-à-vis the public benefit foundation.

Life Settlements as Part of Your Estate Plan

Estate planning attorneys often deal with life insurance policies that are no longer relevant, so life settlements are steadily gaining recognition. These estate planning attorneys have three priorities relating to life settlements: be confident with the market’s stability, acquire a better understanding of specific planning scenarios that will benefit your client, and avoid disappointing clients by setting realistic expectations.

For the first priority, the secondary market for life insurance is an increasing avenue for policy sellers trying to optimize the cash value of their unwanted life insurance policies. This market continues to gain recognition as it benefits customers who own static insurance assets. For the second priority, life insurance policies slowly become irrelevant to older clients’ estate plans. Consequently, estate planning attorneys will need to weigh their options and come up with the best solution for each individual client. Finally, for discussing life settlement options, attorneys will need to set realistic expectations for incorporating life settlements into a client’s estate plan because they can often be of great benefit.

See Jeff Hallman & Scott Thomas, Facilitating Life Settlements, Wealth Management, July 25, 2016.

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

How to Protect Your Assets When Getting Remarried

The biggest estate-planning question when getting remarried is, how do I reconcile preserving assets for my children from a previous marriage while still taking care of my commitment to my new spouse? Usually, heirs fear the new spouse because most all states give rights to a spouse to take some part of the decedent spouse’s estate. An ex-spouse could also still hold they key to certain assets if your estate-planning documents are not up to date before passing. Therefore, consider updating your estate-planning documents, including provisions about your new spouse as executor, the holding of assets individually or jointly, your new spouse on deeds, and specific bequeaths to children from previous marriages. Additionally, there are some common estate-planning mistakes after remarrying that you should avoid, such as no prenuptial, no verbal instructions to loved ones, and no planning for long-term care.

See Deborah Nason, Getting Remarried? Protect Your Assets and Your Interests, CNBC, July 28, 2016.

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