Wills, Trusts & Estates Prof Blog

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

Friday, October 20, 2017

Killing the Estate Tax Could Help Art Sales, Sotheby’s CEO Says

9713-Andy-Warhol -MaoArt experts have complained that the repeal of the estate tax would decrease donations to charitable organizations. Since art collectors would no longer have to worry about paying an estate tax on their high-value collections, there would be no incentive to reduce estate tax liability by donating to charities. Sotheby's CEO, Tad Smith, has a different perspective on the debate. Smith believes that many wealthy individuals put off selling or donating their collections until death in order to benefit from the step-up in basis. "A lot of people delay selling their art or transacting in the art market until some event happens, until the estate tax kicks in. So, eliminating the estate tax is a reason to eliminate the delay. So I think it will provide more liquidity to the market.”

See Robert Frank, Killing the Estate Tax Could Help Art Sales, Sotheby’s CEO Says, CNBC, October 16, 2017.

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

October 20, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Thursday, October 19, 2017

Article on Corporate Family Law

Allison Anna Tait recently posted an Article entitled, Corporate Family Law, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

There is no such thing as corporate family law. But there are corporate families, and corporate families fight. What happens when corporate family members fight and the conflict is so severe that one or more of the parties wants out of the corporate relationship? Corporate law provides some solutions, but they are shaped by the assumption that all parties will bargain effectively for protections when seeking to exit a corporate relationship. Under this theory, family business is, after all, just business. The problem with this assumption is that corporate family members do not bargain the way that corporate law expects. Corporate family members are idiosyncratic bargainers who operate from a position of bounded rationality and self-interest. Consequently, they are unlikely to take steps to protect themselves against corporate oppression. The result is a mismatch between corporate law and its underlying assumptions for a substantial swath of family business owners who are subject to corporate law and corporate oppression. Thus far, lawmakers have not looked to family law to solve this problem. This Article argues that they should.Family wealth laws—divorce and inheritance—offer an alternate model of asset allocation at the end of a relationship, providing robust financial protections for parties who are vulnerable in light of their idiosyncratic bargaining position. Such laws provide the theoretical foundation for a more realistic and fair conception of protection for corporate family members subject to corporate oppression. There may be no such thing as corporate family law, but there should be.

October 19, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Article on Tax Savings with Income-Based Charitable Bequests

Magritte_the-treachery-of-images-this-is-not-a-pipe-1948Estate planners typically view charitable bequests as a means to avoid estate tax but not income tax. This narrow perspective represents a lost opportunity for income tax savings. Such savings may be achieved through income-based charitable bequests. A possible strategy to achieve this end is to reallocate charitable bequests to the income section of the controlling instrument. Such a move represents a complete change in the traditional methodology for drafting charitable bequests.

See Christopher R. Hoyt, Tax Savings with Income-Based Charitable Bequests, Probate and Property Magazine, October 2017.

October 19, 2017 in Articles, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Trump Tax Plan Paints Pretty Picture for Art Collectors

PJ-BH298_barnes_G_20120523175632Attorney Malcom Taub, an expert in law dealing with art, noted that the abrogation of the estate tax might be bad news for universities, museums, and other institutions that benefit from the federal government vandalizing the estates of individuals passing away with large art collections. Though art collectors would certainly benefit, President Trump has painted the plan as a boon for family businesses, especially family farms. A harsh critic of the estate tax, Trump brushed it aside as a “tax that has destroyed so many businesses and kept those businesses out of your family, your children, your grandchildren.”

See Catherine Lucey, Trump Tax Plan Paints Pretty Picture for Art Collectors, ABC News, October 16, 2017.

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

October 19, 2017 in Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Article on Wills & Trusts

Beyer_TeachingGerry W. Beyer recently posted an Article entitled, Wills & Trusts, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

This article discusses judicial developments relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters during the Survey period of December 1, 2015 through November 30, 2016. The discussion of most cases includes a moral, that is, the important lesson to be learned from the case. By recognizing situations that resulted in time-consuming and costly litigation in the past, the reader may be able to reduce the likelihood of the same situations arising with his or her clients.

October 19, 2017 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

Wednesday, October 18, 2017

Article on "It's Not My Fault!": Inequality Among Posthumously Conceived Children and Why Limiting the Degree of Benefits To Babies Is a "No-no!"

Octomom-movi-incjpg-825x580Katie Christian recently published an article entitled,  "It's Not My Fault!": Inequality Among Posthumously Conceived Children and Why Limiting the Degree of Benefits To Babies Is a "No-no!", 36 Miss. C.L. Rev. 194 (2017). Provided below is an abstract of the Article:

Girl meets boy. Boy likes girl. Girl and boy decide to get married. Like most young adults, the boy and girl dream of having children. But what if the possibility of having children came with a price? Many situations arise that can either foster or hinder a young couple's ability to start a family. For example, suppose Fitz and Marie got married in 2010.  Three years later, unexpectedly and to the devastation of both Fitz and Marie, Fitz is diagnosed with cancer causing the young couple to put their plans for a family on hold. Told that a side effect of chemotherapy and radiation treatment is infertility, the couple decides to utilize a sperm bank to freeze Fitz's sperm. In the event that Fitz could overcome the cancer, the frozen sperm would give the couple the opportunity to have the family they always wanted. Sadly, Fitz dies six months later. Still desiring a child, Marie, through assisted reproductive technologies ("ART"), uses Fitz's frozen sperm to become pregnant with a baby boy. Should this baby, who was conceived after the death of his father, have less of a right to inheritance benefits from Fitz's estate just because Fitz died before he was born? The answer to that question is "it depends," and the outcome will be determined by what state Fitz and Marie resided in at the time of Fitz's death.

October 18, 2017 in Articles, Estate Planning - Generally | Permalink | Comments (1)

Unholy Row As Court Decides on Religious Woman’s Will

Photodune-13634516-senior-woman-signing-last-will-and-testament-at-home-xsSandra Marie Hatton died in 2015 of ovarian cancer at the Warwick Hospital in Queensland, Australia. In an effort to save money in the final disposition of her estate, Hatton decided to use a do-it-yourself will kit. The four-page will form had numerous handwritten attachments along with multiple changes. Hatton had changed her mind about possible charitable beneficiaries a few times toward the end of her life. Multiple errors and befuddled beneficiaries will likely end up costing her estate tens of thousands of dollars in legal fees and probate costs.

See Kay Dibben, Unholy Row As Court Decides on Religious Woman’s Will, news.com.au, October 15, 2017.

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

October 18, 2017 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

4 Ways You Can Start Planning for Possible Tax Law Changes Now

6a00d8345157c669e201b8d23bb74c970c-800wiJean-Luc Bourdon, principal and wealth advisor at BrightPath Wealth Planning, was critical of President Trump’s sparse tax plan: “In the tax world, a nine-page tax framework is equivalent to a tweet. It leaves many questions unanswered.” With so many unknowns regarding tax reform, most advisors are recommending waiting out the proposed legislation. For a few of the less ambiguous provisions though, pre-planning may be beneficial. The elimination of many currently allowable itemized deductions may end up costing retirees. It may be beneficial for these individuals to pack up and ship out to a more tax-friendly state if tax reform legislation is passed.

See Robert Powell, Retirees, 4 Ways You Can Start Planning for Possible Tax Law Changes Now, USA Today, October 13, 2017.

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

October 18, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Article on The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts

Bulk-cash-smuggling-photoAdam Hofri-Winogradow recently published an Article entitled, The Demand for Fiduciary Services: Evidence from the Market in Private Donative Trusts, 68 Hastings L.J. 931 (2017). Provided below is an abstract of the Article:

Recent revelations on the use of fiduciary services raise concerns regarding their use for tax and creditor avoidance. Yet given the secrecy shrouding much of the fiduciary industry, we do not know which fiduciary services are used for such purposes, and to what extent. Shining a light on a particularly obscure part of the industry, this Article presents and analyzes the results of the first-ever global survey of professional service providers to private donative trusts, having obtained 409 usable responses from professionals in 82 jurisdictions, amplified by twenty-five interviews conducted with professional trust service providers in five jurisdictions. I report new data on four controversial features of current trust practice: (1) perpetual and extreme long-term trusts; (2) trust terms exonerating trustees from liability to beneficiaries; (3) tools rendering beneficiaries' entitlements inaccessible to their creditors; and (4) the control of trusts by their creators.

I find that trusts drafted to subsist for more than a century are fairly common, especially offshore, but many such trusts are not in fact likely to survive that long. Trustee exculpatory terms are now standard in donative trusts serviced by professionals, with most settlors neither demanding nor receiving any quid pro quo for their inclusion. Anti-creditor techniques protecting beneficiaries' entitlements are even more ubiquitous than trustee exculpatory terms, particularly in trusts serviced by U.S.-resident providers. Many protected beneficiaries are not less able than the average person to take care of their financial affairs. Finally, express reservation of powers by trust settlors is a majority phenomenon in the United States, but a minority one elsewhere. The actual control of trusts by their settlors is likewise far more common in the United States than elsewhere. I conclude the Article with recommendations for law reform that makes trusts likelier to benefit their beneficiaries and less likely to avoid duties owed to creditors and the state.

October 18, 2017 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, October 17, 2017

Conversion of Non-grantor Trust To Grantor Trust Not Taxable

Convert-buttonIn a private letter ruling, the IRS decided a number of issues relating to the conversion of a non-grantor trust to a grantor trust. The taxpayer proffered a number of questions: 1) whether such a transfer was taxable, 2) if the transfer would be considered self-dealing, and 3) if the transfer would result in a charitable deduction. The IRS ruled that the conversion was not a taxable property transfer, was not self-dealing, and that it would not result in a charitable deduction for the grantor.

See Mary Ellen Meara, Conversion of Non-grantor Trust To Grantor Trust Not Taxable, Withum, 2017.

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

October 17, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)