Wills, Trusts & Estates Prof Blog

Here’s How to Maintain Peace Among Your Heirs

For parents, deciding how to divvy up their assets can be an incredibly onerous task. This is especially true for those with substantial wealth and multiple children or beneficiaries to consider. A common mistake parents make when undertaking estate planning is focusing too much on legal issues while ignoring family dynamics. It is important for parents to have meaningful conversations with their kids to ensure relative peace is maintained between siblings after they are gone. These discussions may help children understand the reasoning behind certain decisions and can help reduce the chance of future struggles.

When an estate plan necessitates the establishment of a trust, parents often choose a close friend or one of their children to act as trustee for each child’s trust. This choice may end up being problematic, as trustees work under stringent financial and legal responsibilities that many are not equipped to handle. Sharon Klein, president of the New York Region of Wilmington Trust, remarked, “You have to understand what you’re asking someone to do. Even the appearance of impropriety can cause problems. The people who are left out feel antagonistic.” In many cases, the use of a corporate trustee can mitigate or avoid serious altercations between siblings.

See Paul Sullivan, Here’s How to Maintain Peace Among Your Heirs, The New York Times, March 22, 2018.

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

Article on Fiduciary Principles in European Civil Law Systems

Martin Gelter & Geneviève Helleringer published an Article entitled, Fiduciary Principles in European Civil Law Systems, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

This chapter surveys fiduciary principles in Western European civil law jurisdictions. Focusing on France and Germany, we suggest that functional equivalents to fiduciary duties have developed on the Continent, although they do not always carry exactly the same connotations as their common law counterparts. We suggest that the common law developed fiduciary duties as a distinct category largely for two reasons. First, the common law distinguished between law and equity, with fiduciary law developing within equity. By contrast, contracts law required consideration, which meant that fiduciary principles for gratuitous actions necessarily arose outside of contract law. Civil law generally did not develop this particular categorization. For example, the paradigmatic fiduciary relationship, the mandate (agency), is by default a gratuitous contract. Consequently, the lines between fiduciary and contract law remained blurred. Second, common law bargaining for contracts emphasizes part autonomy more strongly, while the civil law of contracts incorporated a stronger duty of good faith, thus making it more hospitable to an implied and inchoate loyalty obligation. The duty of loyalty in civil law jurisdictions is not categorically different from such duties, but exists on a continuum with them. Consequently, civil law duties of loyalty in those relationships that would be considered fiduciary under the common law can be seen as an extension of weaker loyalty obligations elsewhere. We survey the civil law of agency, equivalents of trust, as well as corporate and financial law. Germany and countries influenced by German law began to identify duties of loyalty in corporate and trust relationships in the middle of the 20th Century and identified them as a larger civil law principle permeating different areas of law. France and related jurisdictions have been more reluctant to adopt such duties, and have been more likely to rely on specific statutory prohibitions to reach similar results.

Mike ‘The Situation’ — My Lawyer Wants to Delay Sentencing…Tax Season is Taxing!

Mike Sorrentino, also known as “The Situation,” is facing up to five years in prison for failing to pay his taxes. A sentencing hearing is scheduled for April 25. His lawyer, Henry Klingeman, is seeking the judge’s permission to delay the hearing claiming that Sorrentino’s accountant is currently drudging through past tax returns. As part of a plea deal, Sorrentino was required to resubmit his tax returns for the years 2010, 2011, and 2012. This meant his accountant had to review 1,500 pages of financial documents to finish the returns.

See Mike ‘The Situation’ — My Lawyer Wants to Delay Sentencing…Tax Season is Taxing!, TMZ, May 30, 2018.

Article on Islam and Elder Care in Egypt after the Arab Spring Uprisings: Between Divine Law and Secular Law: Quo Vadis?

Mohamed A. Arafa published an Article entitled, Islam and Elder Care in Egypt after the Arab Spring Uprisings: Between Divine Law and Secular Law: Quo Vadis?, Elder Law Studies eJournal (2018). Provided below is an abstract of the Article:

An accurate and thoughtful understanding of the Islamic perception of the essential rights of elderly Muslims that considers the substantial contemporary fluctuations and adaptations of their cultural, economic, social, and emotional necessities, evolutions, and renovations calls for attention to Shari‘a (Islamic) principles and religious norms. It should be noted that a socio-cultural framework based on Islamic ideals is considered a crucial feature of Arab and Middle Eastern regions in the shaping of their political and legal support systems. In light of Islamic philosophies and code of ethics, the family remains the keystone for the sustenance of the elderly; placing the elderly, especially parents, in nursery homes or similar places is prohibited, as it represents a direct transgression of the divine Law of God. However, family unity cannot be assumed to be secure, given the new demographic and economic realities.

Based on this succinct backdrop regarding the interconnection between Islam and elderly care, this article examines what Islamic elder and human rights laws propose for the needs of the elderly. Part one briefly reviews theological concepts (discourse) on ageing and old age. Part two discusses the maintenance of the elderly (parents) and their essential rights according to Islamic theory. Part three highlights an action plan (or model) for the future regional strategy on treating the elderly in Muslim countries where positive law fails or otherwise cannot insure the basic care required by Islamic law, and by vital international human rights instruments. This section will track how Shari‘a law and reasoning in this arena can be a more fruitful alternative. Finally, the paper offers conclusions on how the axiomatic view of Islamic elder law is, in essence, fashioned by religious theories, laws, and divine practice, via a critical discussion of these Islamic principles. Ultimately, I will contend that Islam constitutes an appropriate and comprehensive design for the care of elderly people, so much so that national statutes should strive to meet its criteria.

CLE on Estate Planning with Family Entities in the Powell Aftermath: Risks and Practical Guidelines

The American Law Institute is holding a conference entitled, Estate Planning with Family Entities in the Powell Aftermath: Risks and Practical Guidelines, which will take place on Wednesday, April 11, 2018 via telephone seminar and audio webcast. Provided below is a description of the event:

Why You Should Attend

The May 2017 ruling in Estate of Powell v. Commissioner may be the most important family partnership case to be decided by the Tax Court in recent years. Invest just 90 minutes of your day to learn about the key components of the case and the requirements for avoiding estate tax inclusion (or double inclusion!) of gifted interests in family entities. If you are an estate planner representing family entities, attend this program to ensure your clients are complying with the dictates set forth by this decision.

What You Will Learn

The faculty, all Fellows of The American College of Trust and Estate Counsel and highly-experienced practitioners, will:

explain the key factors from the Powell case that resulted in the IRS victory

discuss the risks in estate tax planning with family entities that are increased due to Powell and the steps that can be taken to minimize or eliminate the risks

examine the applicable principles from the Byrum case and insights from the particular circumstances in Powell

This program was originally presented on February 27, 2018. Questions submitted during the replay will be answered by email within two business days after the program.

Need this information now? Purchase the on-demand course here. Questions submitted on-demand will be answered within two business days.

Who Should Attend

Any estate planner who advises family entities will benefit from listening to this webcast jointly offered by the American Law Institute CLE and ACTEC.

Arnold Schwarzenegger Undergoes Emergency Heart Surgery

Arnold Schwarzenegger has just undergone an emergency open-heart surgery. Sources close to Schwarzenegger reported the original aim of the procedure was “to replace a pulmonic valve that was originally replaced due to a congenital heart defect in 1997. That 1997 replacement valve was never meant to be permanent and has outlived its life expectancy, so he chose to replace it yesterday through a less-invasive catheter valve replacement. During that procedure, an open-heart surgery team was prepared ... in case the catheter procedure was unable to be performed.” Physicians standing by in case the valve replacement encountered any issues that Schwarzenegger needed the emergency surgery. He is currently in stable condition.

See Arnold Schwarzenegger Undergoes Emergency Heart Surgery, TMZ, March 30, 2018.

Article on Presumptions of Survivorship or Simultaneous Death in Cases of 'Common Calamity': Scots Law Against the Background of European Legal Developments

Reinhard Zimmermann & Jakob Gleimrecently published an Article entitled, Presumptions of Survivorship or Simultaneous Death in Cases of 'Common Calamity': Scots Law Against the Background of European Legal Developments, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

The property of a deceased person can pass only to someone who has survived him or her. It can, however, turn out to be impossible to establish the order of death, particularly if both persons have died in a common peril or "calamity". In the sources of Roman law we find two survivorship-presumptions relating to the simultaneous death of parent and child as well as a number of decisions concerning other, individual case scenarios. On that basis, the French Code civil of 1804 established a complex set of presumptions based on age and sex. The rules in the codifications of the German-speaking countries were much more straightforward, for they established a presumption of simultaneous death. The present article traces the interpretation and reform of the various presumptions. And it traces the development of Scots and English law against the background of continental European law of which the Scots and English courts had a somewhat skewed perspective. Since the position at common law was regarded as unsatisfactory, in both legal systems the legislator has intervened.

Thinking About Having a ‘Green’ Funeral? Here’s What To Know

The idea of a typical American funeral tends to elicit images of a polished, wood coffin, bouquets of delicate flowers resting nearby, and the musty, darkened chapel where family and friend will gather to mourn. A question that many are now asking is: “How necessary are all these accoutrements?” Markets have responded to the query, albeit minimally at this stage, with the “green burial.” Though the specific procedures entailed by a green burial vary widely, they generally require far fewer resources than a traditional burial or cremation. The procedure skips the embalming process, forgoes the concrete vault, and aims to protect nature from the environmentally destructive traditional burial or cremation. Michelle Acciavatti, who works for a service that helps families peruse their end-of-life options, warns, “scattering small amounts can be hazardous in a delicate environment such as an alpine environment or vernal pool.”

See Sonya Vatomsky, Thinking About Having a ‘Green’ Funeral? Here’s What To Know, The New York Times, March 22, 2018.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

Tips from the Pros: The “Hook” of Increased Income Tax Basis

The $11.18 million estate tax exemption ushered in under the Tax Cuts and Jobs Act may represent the prelude to a “Golden Age” of estate planning. The new exemption threshold offers a hook for clients: an increased income tax basis. If a client and an elderly or sickly relative both have assents below the exemption limits, the client can set up a trust granting the relative a testamentary general power of appointment (GPOA). When the powerholder passes away, the assets in the trust would be included in their estate, but not to such an extent that it would trigger the need to file an estate tax return. Furthermore, if the trust contains depreciated assets at the time of the powerholder’s demise, there is no step-down in basis for those assets. While this type of transaction may not be appropriate for every client, the potential for basis increase has very broad-ranging appeal.

See Turney P. Berry, Tips from the Pros: The “Hook” of Increased Income Tax Basis, Wealth Management.com, March 22, 2018.

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

Article on Note: What Should We Do With Norman Bates? Proposing Reform To the Uniform Probate Code to Allow Inheritance in Cases of Legal Insanity

Declan J. Murray recently published an Article entitled, Note: What Should We Do With Norman Bates? Proposing Reform To the Uniform Probate Code to Allow Inheritance in Cases of Legal Insanity. 31 Quinnipiac Prob. L.J. 190 (2018). Provided below is an abstract of the Article:

The legal system in the United States of America contains a number of broadly accepted moral propositions, among these, the idea that it is unjust to allow one to profit from a wrongful act and the idea that it is unjust to punish a person to whom we cannot impose blame. These specific propositions are brought to bear in the form of laws related to unjust enrichment, specifically section 2-803 of the Uniform Probate Code (“UPC”) and the insanity defense. However, on occasion, these moral propositions come into conflict. The UPC is silent on what should occur when a legally insane person stands to inherit from someone they killed. This Note seeks to rectify this conflict by proposing that the UPC “slayer statute,” section 2-803, be amended to specifically allow inheritance in cases where a person kills while legally insane. Case law on this specific situation is sparse and statutory help is nearly nonexistent. This puts judges in the uncomfortable position of having to interpret and apply the law where none exists, essentially forcing them to “make a determination that the legislature should have made.” While concerns about killers inheriting from their victims are legitimate, the insanity exception is designed to be narrow, just as the insanity defense offers a narrow exception to criminal liability. This Note's proposed amended statute would not open the door to inheritance to the conniving son or scheming wife, who has been the subject of many an Agatha Christie novel or episode of CSI: Crime Scene Investigation.

This Note will explore the interaction and conflict between legal insanity and slayer statutes through a number of sections: beginning with a discussion of the policy considerations behind slayer statutes and the insanity defense, followed by a discussion of how different courts have analyzed this issue, and concluding with the proposed language of the amended statute, as well as a discussion of its import. This proposition seeks to further the policy considerations underlying both the slayer statute and the insanity defense, as well as to provide a statute that is more conducive to uniform interpretation.