Wills, Trusts & Estates Prof Blog

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

Thursday, November 24, 2016

Article on Jurisdictional Considerations for Family Charitable Entities

Charitable entityTina E. Albright recently published an Article entitled, Jurisdictional Considerations in Structuring a Family Charitable Entity, Trusts & Estates (Nov. 2016). Provided below is a summary of the Article:

Family advisors are often tasked with creating an entity that will be used to carry out a client’s philanthropic purpose. With increasing interest from global families in such vehicles, the advisor needs to consider where to form the charitable entity. The potential options may narrow if the client is seeking to obtain tax relief on a transfer to the charity. In that case, the entity may need to be formed in the jurisdiction of the client’s residence or where the potential charitable tax relief is sourced. In some cases, a charitable entity formed under the laws of a treaty country may be an option.

In considering which jurisdiction best suits a particular client, the advisor should consider a number of key factors. What type of charitable entity is available, for example, non‑stock corporation, trust, foundation or other? Are charitable entities in that jurisdiction tax-exempt? Are there any restrictions or requirements as to who may serve in a governance position? Is the charitable entity subject to jurisdictional regulation? Is regulatory compliance onerous and/or costly? Is the charitable entity required to have audited financials and if so, how often? May the charitable entity make grants to entities and/or for purposes outside of the jurisdiction where the entity was formed? Is the charitable entity required to make distributions at certain intervals, for example, annually? Must any of its distributions be made within the jurisdiction of formation? Are there limitations and/or restrictions on charitable entities regarding the types of investments, custodian and/or banking relationships?

This article provides an overview of the key considerations in forming charitable entities in the United States and the United Kingdom. In future articles, other countries will be addressed.

November 24, 2016 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Walt Disney's Drafted Will Goes Up for Auction

Walt disneyWalt Disney’s first draft of his last will and testament will be auctioned off for an estimated $60,000. Disney drafted the will in August 1941, which included an interesting breakdown: half of his Disney stock was split between his two children with the other half being put into an employee bonus pool. Disney ultimately drafted two more wills before he died in 1966. 

See Walt Disney Where There’s a Will . . . There’s a Way to Spend $60K!, TMZ, November 24, 2016.

November 24, 2016 in Current Events, Estate Planning - Generally, Film, Wills | Permalink | Comments (0)

Article on the "Asset Shuffle"

Assets protectionBryan Camp recently published an Article entitled, Collecting Tax Liabilities from Third Parties, 152(11) Tax Notes (2016). Provided below is an abstract of the Article:

Creditors call it fraud. Debtors call it asset protection. I call it the “asset shuffle.” Whatever you call it, it is an age-old dance done by debtors trying to keep their assets from creditors they don’t like. Debtors either transfer assets to favored parties or else try to disguise their true interests in assets. From the creditor’s point of view, the wrong people have the money.

Debtors do the asset shuffle with the IRS. I have come across more than one taxpayer who thinks they will “win” if they die with unpaid tax debts. What they do not realize is that their death does not end the dance. Sure, they may pass assets to their beneficiaries. But those beneficiaries often unwittingly inherit what Burgess and William Raby aptly called “the cloud inside the silver lining.”

Over time, the IRS has developed three counter-moves to the asset shuffle. This article explains how the IRS uses those counter-moves to collect from third parties, parties who may become your clients and who are at risk for such collection actions. The key to helping such clients---including knowing even what questions to ask them---is to understand how the IRS takes property from third parties to satisfy the tax liability of a taxpayer.

The names for the IRS counter-moves are “Transferee,” “Nominee,” and “Alter Ego” liability. The three names describe the three types of special relationships that might allow the IRS to collect the taxpayer’s tax liabilities from those types of third parties. They are legally distinct doctrines and have different legal process, although they often end up mushed together in a single proceeding.

Part I gives a couple of background points of law. Part II compares and contrasts the substantive law of these three theories. Part III compares and contrasts the procedural rules of the three theories and gives thoughts on possible actions to defend your clients.

November 24, 2016 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Robin Williams' Estate Plan Air Tight?

Robin williams2Robin Williams’ estate plan was fairly solid, but what fancy footwork did his lawyers have to do over the years to keep it from failing? Williams’ publicist disavowed the 2010 trusts that came to light, claiming they did not reflect his estate plan at the time of death. The trusts became public when a co-trustee passed away, creating a public issue for filling the hole in the line of succession. After these trusts became public and the gap was filled, the trustees did not waste time covering them up, which was presumably easy considering the decanting methods available. However, had Williams’ trust given the trustees power to appoint a replacement, there would have been no need to file a public appeal. With serious legal power on his side, Williams avoided several disasters in carrying out his estate. 

See Scott Martin, Robin Williams Hid His Assets After All, but Any ILITs May Have Backfired on His Planners, Trust Advisor, November 20, 2016.

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

November 24, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Wednesday, November 23, 2016

Article on How to Write a New York Will

Will draftingGerald Lebovits recently published an Article entitled, Will of Fortune: New York Will Drafting ­– Part 1, 88 N.Y. St. B.J. 64 (2016). Provided below is an abstract of the Article:

This article explains how to write in New York will. The first of this two-part column outlines how intestacy laws affect an estate, what every will should include, how to avoid some common mistakes, and how to execute a will properly. Part 2 will outline some areas in a will that require special consideration and, therefore, special clarity.

November 23, 2016 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

How to Respond to Our Own Deaths

Spritual deathDoctors facing their own death can truly begin to understand the vital roles that spirituality and religion play in their patients’ lives. Psychological research suggests that people seek means of symbolic immortality through religion, their children, their creative work, or “experiential transcendence.” Our society has difficulty grasping the finality of death, engaging in widespread denial of life’s end. Ultimately, no one knows what happens when we die, but we should work on finding better ways to accept the finality of death either symbolically or through other means.

See Robert Klitzman, How Should We Respond to Our Own Deaths?, CNN, November 22, 2016.

November 23, 2016 in Death Event Planning, Estate Planning - Generally, Religion | Permalink | Comments (0)

Pre-Death Accountings in Breach of Fiduciary Duty Trust Actions

Trust accountingIn Higendorf v. Estate of Coleman, the court held that absent a claim of fiduciary duty, there is no duty to provide accountings for a contingent beneficiary of a revocable trust during the settlor’s lifetime. In this case, prior to the settlor’s death, a qualified beneficiary and successor trustee were appointed representatives of the estate. Ultimately, the qualified beneficiary filed suit against the successor trustee for pre-death accountings from the trust without asserting a claim for breach of fiduciary duty. However, pre-death accountings are not required by a revocable trust. The court concluded that the trust’s terms gave authority to compel the trustee to render accountings while the trust is revocable. This decision seems to allow breach challenges to obtain pre-death accountings when the trust is revocable. 

See Brian Spiro, Are Pre-Death Accountings Available in Breach Action Against Trustee When Trust Was Revocable?, Florida Probate Lawyers, November 22, 2016.

November 23, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Corporate and Trust Law Dimensions

Trust lawKathryn Chan recently published an Article entitled, Corporate and Trust Law Dimensions of the Trinity Western University Law School Debate (2016). Provided below is an abstract of the Article:

The dispute over Trinity Western University’s exclusionary Community Covenant raises difficult issues about the scope of the institutional autonomy to which various religious entities may be entitled under the Canadian Charter of Rights and Freedoms, and the balance that should be struck between institutional religious freedom and equality rights in cases where the two collide. In this piece I argue that we cannot fully address these conflicts without engaging more deeply with the institutions at their heart.

I begin by outlining several principles relevant to the ascertainment of the legal personality of a corporate charity, and making the case for the stronger application of these principles in proceedings involving TWU (Part II). I then identify three significant features of the institution at the heart of the dispute over the Community Covenant, noting that (1) TWU has a sole corporate object, (2) TWU has a very small membership, and (3) TWU must act for the public benefit. I analyze the legal incidents of these features of TWU’s corporate personality, and reflect on their possible relevance to its religious freedom claim (Part III). I conclude that if we want to engage seriously with the institutional dimensions of religious freedom claims, we must be attentive to the legal personality of the institutions that bring them, and the legal rights and obligations they enjoy.

November 23, 2016 in Articles, Estate Planning - Generally, Religion, Trusts | Permalink | Comments (0)

Tuesday, November 22, 2016

Article on ABLE Accounts & Their Role in Estate Planning

Able accounts2David A. Rephan & Joelle Groshek recently published an Article entitled, ABLE Act Accounts: Achieving a Better Life Experience for Individuals with Disabilities with Tax-Preferred Savings (and the Old Reliable Special and Supplemental Needs Trusts), 42 Mitchell Hamline L. Rev. 963 (2016). Provided below is an abstract of the Article:

This article provides a very basic overview of the new ABLE accounts and the role they play in assisting elderly clients in planning for their own disabilities or for the disability of a family member. Part II provides a brief background on the requirements of traditional disability planning devices, including individual special needs trusts, pooled special needs trusts, and third-party supplemental needs trusts. Part III provides an overview of the ABLE Act in terms of its general restrictions and parameters; its tax provisions, including monitoring; its Medicaid payback provision and its limits; and when Minnesota residents can expect to start using ABLE accounts. Part IV finishes with an analysis of the new ABLE Act accounts, how the Act compares with the traditional disability planning tools such as special and supplemental needs trusts, and what spot the Act occupies in the estate planning toolbox, ultimately concluding that the structure of the new ABLE accounts is restrictive enough that ABLE accounts do not serve as replacements for the traditional disability planning tools, but that ABLE accounts' tax savings may be worth taking advantage of in certain circumstances.

November 22, 2016 in Articles, Elder Law, Estate Planning - Generally, Trusts | Permalink | Comments (0)

IRS Is Hunting Down Bitcoin Tax Evaders

BitcoinThe IRS is hunting down those who are using Bitcoin to evade taxes. In fact, the IRS sent a request to the largest Bitcoin exchange asking for all customer records, showing who bought virtual currency between 2013 and 2015. This request comes shortly after the Treasury Department’s inspector general chastising the tax agency for not taking more aggressive steps to curb unlawful activities by those using virtual currencies. Further, this request is the most sweeping single effort to track down those using virtual currency. Bitcoin users are most likely not aware that they should be tracking their losses and gains as taxable events every time they make a purchase with their Bitcoins. The characteristics of virtual currencies are enabling users to evade taxes by using traditional abusive tax arrangements online.

See Nathaniel Popper, Bitcoin Users Who Evade Taxes Are Sought by the I.R.S., N.Y. Times, November 18, 2016.

Special thanks to Jerry Hesch (Attorney, Aventura, Florida) for bringing this article to my attention.  

November 22, 2016 in Current Events, Estate Planning - Generally, Technology | Permalink | Comments (0)