Wills, Trusts & Estates Prof Blog

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

Thursday, May 31, 2018

Blockchain Technology, Estate Planning and Resting Place Management

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-31/d2896537-21e0-4f91-87cb-afb48dce3da5.pngBlockchain, a type of real-type digital ledger, is not a tool usually spoken off in estate planning circles, but may in fact lessen complications when it comes to settling a descedant's estate. By registering wills or inheritance wishes on a blockchain, many of problems with executors or lapses in time could be avoided. The data would never be lost because it would be stored permanently on the blockchain. Blockchain-based wills would also be easier for people to modify and view throughout their lifetimes in order to keep them up to date.

Blockchain itself is creating an issue in estate administration when it comes to dealing with the selling off of cryptocurrency after a person passes away. However, blockchain-registered wills or smart contracts could transfer these assets automatically, therefore no written will or documents are needed.

Registering one's resting place could also be simplified through blockchain technology. As there is no universal database for grave sites or burial places, having this information stored in blockchain could be easier for descendants to know where to pay their respects.

See Christopher Tozzi, Blockchain Technology, Estate Planning and Resting Place Management, NASDAQ.com, May 30, 2018.

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

May 31, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Technology | Permalink | Comments (0)

Tax Courts Rules that Trust is a Sham

GavelmoneyA recent Tax Court case, Full-Circle Staffing, LLC, et al. v. Commissioner of Internal Revenue, in which the court found the taxpayers' trust to a be a sham, is a severe reminder that common law economic substance doctrines are even more vital in tax income cases due to the changes to federal gift and estate tax, showcasing the importance on coordinating estate and trust planning with income tax objectives.

The taxpayers in question reorganized their business, in which included an irrevocable trust nicknamed Watchman. The taxpayers were beneficiaries, the lawyer-draftsperson settlor, and a third party corporate service provider trustee. The trustee of Watchman was expressly prohibited from participating in the management and operation of Limited, a limited partnership that was funded by all the assets of the taxpayers previous S corporation. Because of this type of structure the majority of income from Limited went to Watchman, taking substantial distribution deductions, despite not actually distributing all of its income to Lighthouse (the taxpayers' nonexempt charitable trust).

To determine whether Watchman lacked economic substance, the Tax Court applied a four-factor test: (1) whether the taxpayer’s relationship to the property transferred to the trust materially changed after the trust’s creation; (2) whether the trust had an independent trustee; (3) whether an economic interest passed to the trust beneficiaries; and (4) whether the taxpayer felt bound by the restrictions imposed by the trust agreement or the law of trusts.

See Eric Fischer & Samantha S. Smith, Tax Courts Rules that Trust is a Sham, Wealth Management, May 30, 2018.

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

May 31, 2018 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Cases, New Legislation, Trusts | Permalink | Comments (0)

CLE on The Probate Process From Start to Finish

CLEThe National Business Institute is holding a conference entitled, The Probate Process From Start to Finish, which will take place on Monday, June 04, 2018 at the Four Points Hotel North Saginaw in Saginaw, Michigan. Provided below is a description of the event:

Program Description

Handling Probate from Initial Notices through the Estate Closing

This "a through z" guide to probate is designed to take you from the first days of the estate timeline through all the steps of marshaling and valuing estate assets, locating and paying the creditors, paying the beneficiaries, and laying the estate to rest. You will receive the latest updates on the probate court procedure and tax laws, practical guidance from experienced probate attorneys on using spousal elective share and resolving estate disputes, and sample forms and checklists to speed up the administration process. Build a solid foundation for your probate practice - register today!

  • Learn the procedure, rules and practical steps to effectively administer a probate.
  • Determine what form of administration is appropriate for a specific probate case.
  • Clarify the order of inheritance for an estate when there is no will.
  • Locate assets and obtain ownership documents more easily with a list of local and online resources.
  • Get a complete view of the sequence of events that must happen before the estate can be closed.
  • Identify common actions that trigger malpractice liability and get tips for staying in the clear.
  • Get practical advice for honoring or contesting all claims against the estate.
  • Find new ways to resolve liquidity issues that delay estate closing and final distributions and payments.
  • Learn what common closing mistakes can allow the estate to be re-opened, and how to avoid them.

Who Should Attend

This basic level seminar is designed for professionals who want to be more effective in handling the probate process, including:

  • Attorneys
  • Paralegals
  • CPAs and Accountants
  • Financial Planners and Wealth Managers
  • Tax Professionals
  • Trust Officers

Course Content

  1. Initial Filing in Probate Court and Estate Timeline
  2. Law of Intestate Succession
  3. Inventory and Appraisement
  4. Probate Property vs. Non-Probate Assets
  5. Handling Claims Against the Estate
  6. Tax Reporting and Post-Mortem Tax Matters
  7. Ethics
  8. Sale of Property and Distributions
  9. Final Accounting and Closing the Estate
  10. Probate Disputes and Litigation

Continuing Education Credit

Financial Planners – Financial Planners: 8.00

International Association for Continuing Education Training – IACET: 0.70

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

Professional Achievement in Continuing Education – PACE: 8.00

* denotes specialty credits

May 31, 2018 in Conferences & CLE, Death Event Planning, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets | Permalink | Comments (0)

Michael Jackson Estate Sues Walt Disney Company

MjThe estate of the late Michael Jackson is suing the Walt Disney Company for copyright infringement claiming the company never received permission to use footage and songs by Jackson in their TV special entitled "The Last Days of Michael Jackson." The program premiered last week to an audience of 5.5 million viewers. Disney's lawyers have stated that because the program was a documentary that permission to use the material was not necessary.

The TV special featured the late performer's funeral and his children's emotional statements which the estate says were never licensed for commercial use. Short recordings of the singer's famous songs "Beat It" and "Billie Jean" were also used, and the estate claims it was never approached by the Disney Company to use those songs.

The estate is suing for profits Disney made off the special and other damages.

See Michael Jackson Estate Sues Walt Disney Company, TMZ, May 30, 2018.

May 31, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Music, New Cases, Television | Permalink | Comments (0)

Wednesday, May 30, 2018

How to Include Valuable Art and Collectibles in Your Estate Plan

ArtWhen a person purchases property believing it to be an investment, it is generally real estate or land. However, 80% of collectors of art see their collections as investments. The IRS defines collectibles under IRC Section 408(m) and could consist of works of art, rugs, antiques, any metal or gem (with exceptions), any stamp or coin (with exceptions), valuable alcoholic beverages or “any other tangible personal property." Proper planning of these unique items of personal property can alleviate unnecessarily high capital gains taxes to your heirs, income or estate tax penalties, or depreciation of the asset’s market value.

Below is a list of ways in which you can decrease disagreements and improve settlement of these types of assets.

  1. Obtain one or more appraisals from certified experts and certificates of authenticity.
  2. Keep detailed records of purchase date, price, appraisals, damages, insurance coverages and any improvements of individual items in collections.
  3. Talk to your heirs and ask which items are most important to them.
  4. Consider ways to equalize inheritance amounts and ways to respond to potential claims of fairness that may arise among your beneficiaries.
  5. Consider taking advantage of annual or lifetime gift exclusions by gifting personal property during your lifetime.
  6. Articulate in your estate documents who will bear the cost of storing or shipping items. Also, be aware of whether beneficiaries have the means to cover what could be expensive delivery of larger or fragile items they stand to inherit.
  7. Understand potential benefits of gifting to charity.
  8. Verify that your investment adviser, CPA, estate planning attorney and executor are aware of any collectibles that may have value.

See Dawn Doebler, How to Include Valuable Art and Collectibles in Your Estate Plan, WTOP.com, May 30, 2018.

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

May 30, 2018 in Estate Planning - Generally, Estate Tax, Food and Drink, Gift Tax, Income Tax, Wills | Permalink | Comments (0)

Article on Equity as Supplemental Law

EquityPaul B. Miller recently published an Article entitled, Equity as Supplemental Law, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

How, in general terms, ought we to understand equity’s contributions to law? Most contemporary equity theorists endorse a broadly remedial conception of equity. The remedial conception suggests that equity is a handmaiden to law in the pursuit of justice. Equity, so understood, is not itself law in a conventional sense. Instead, equity intervenes in the law in aid of our ambition to do justice through law, and it does so primarily by way of remedies properly so-called, or by devices that restrain the enforcement of legal rights.

The remedial conception emphasizes important facets of equity but it misleadingly positions equity beyond law. In doing so, it excludes critically important contributions that equity has made to law as such (contributions ranging from the trust to the equity of redemption). In this chapter, I draw attention to these contributions and argue that they show that equity functions as an important source of supplemental law.

The chapter provides a detailed illustration and explication of the conception of equity as supplemental law. I emphasize that much equitable doctrine must be understood as law in a conventional sense, consisting, as it does, in deontic rules that are packaged in a modular way and that operate generally, prospectively, and in a manner typically invariant to context. Nevertheless, I argue, as supplemental law, equity is secondary to primary sources of law: equity assumes the existence of law derived from primary sources, and performs a gap-filling function relative to it. Recognizing that this account might draw the ire of those who believe fusion to be an existential threat to equity, the chapter canvasses some implications of broader recognition of equity’s supplemental function for the debate over the fusion of law and equity. Furthermore, recognizing that equity enjoys no monopoly on the supplementation of law, the chapter provides an analysis of the relationship between equity and alternative sources of supplemental law.


May 30, 2018 in Articles, Estate Planning - Generally | Permalink | Comments (0)

The World Isn't Prepared for Retirement

Robo  TOP TENThe Argon Retirement Readiness Survey of 2018 was a three question survey given earlier this year online to 16,000 participants in 15 countries.  The majority of those that took the test failed, illuminating a sobering lack of financial literacy.

Health was a common concern for may people, with 31 percent of Americans citing that worries of developing dementia of Alzheimer's being a primary worry during retirement age. More than 20 percent of workers didn’t grasp how higher inflation hurts their buying power.

One of the strangest findings of the survey was found following the question about “aging friendly modifications or devices” people envisioned having in their homes. Thirty-five percent of workers in India, 34 percent in Turkey and 18 percent in the U.S. figured aging could include video monitoring devices. Then there are the robots, which 20 percent of Chinese workers see coming in retirement, compared with 6 percent of American workers.

See Suzanne Woolley, The World Isn't Prepared for Retirement, Bloomberg, May 29, 2018.

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


May 30, 2018 in Current Affairs, Estate Planning - Generally, Humor, Technology | Permalink | Comments (0)

Health Care Reform and Expatriate Health Benefits

Aca"This article is intended to survey the law related to the manner in which the Patient Protection and Affordable Care Act ('PPCA' or 'ACA,' also referred to as 'Health Care Reform' or 'HCR') is applied to employees working outside of their home countries and the employer plans that provide health benefits to those employees. These employees are referred to in this article as either:

  • expatriate employees - U.S. citizens working in countries outside the United States; or
  • inpatriate employees - foreign nationals working in the United States.

As the use of the word 'expatriate' and 'inpatriate' imply, the focus of this discussion is primarily on employees or are working regularly for extended periods away from their home countries. Business trips and limited short-term assignments (that is, generally less than three months in duration, based on the short coverage gap exception discussed below) should not involve any significant application of PPACA law, and instead the laws of the employee's home country should prevail in those situations.

To most effectively address the evolving law on this topic, this article is divided into four parts:

  • Background - summarizing the various PPACA health coverage mandates;
  • Expatriate Compliance - addressing employer and employee under PPACA law for expatriate status;
  • Inpatriate Compliance - addressing employer and employee PPACA law for inpatriate status; and
  • Expatriate Health Coverage Clarification Act - summarizing the manner in which this law regulates employer plans that qualify as Expatriate Health Plans under the law."

See Tara Silver-Malyska & Mark Voelpel, Health Care Reform and Expatriate Health Benefits, Probate and Property Magazine, Vol. 32, No. 3, May/June 2018.

May 30, 2018 in Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Tuesday, May 29, 2018

Eight Life Insurance Mistakes Clients Make

LifeFinancial advisors often have to start the conversation about life insurance as the prospect of one's demise is not an enthusiastic topic. Here are eight mistakes that a conscientious advisor can help a client not fall in to.

  • They Don't Buy It
    • 70% of Americans have not purchased any life insurance, and 75% of millennials do not carry it.
  • They Don't Buy Enough
    • "As a rule of thumb, families should have enough life insurance to cover current living expenses for as long as the children will depend on the parents, plus any higher education expenses."
  • They Buy The Wrong Kind
    • For the young and healthy, term life insurance policies can be more cost effective. Cash-value policies are usually have premiums 10 times higher.
  • They But It at the Wrong Place
    • Policies purchased or given through the employer may not remain in place after changing employments.
  • They Only Buy It on the Breadwinner
    • Even stay-at-home parents should have life insurance policies on themselves, providing a working parent to devote more time to caring for their emotionally effected children.
  • They Don't Go Long Enough
    • Parents often only purchase policies that extend until their children graduate college. Sometimes these college-educated adults take longer than expected to be self-sufficient.
  • They Don't Protect The Policy Proceeds
    • A coming-of-age adult that receives policy proceeds could be irresponsible with the funds, so establishing a trust can be effective in protecting the proceeds.
  • They Cancel It Too Soon
    • Decide if clients should keep a policy is to divide the death benefit by the remaining life expectancy of the insured. If that amount is greater than the annual cost of the premiums needed to maintain the coverage, it’s probably a good idea to keep paying the premiums.

See Kevin McKinley, Eight Life Insurance Mistakes Clients Make, Wealth Management, May 25, 2018.


May 29, 2018 in Death Event Planning, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Inheriting Property Overseas Can be a Dream Come True, but it Comes With Challenges

TuscanCarey Maxon received an email in 2015 that appeared to be a scam, but was in fact a reality - she had inherited a beautiful Tuscan estate from a friend she had not seen in over a decade. Like other Americans who inherit property overseas, she had to navigate a foreign legal system — in another language — and file a daunting amount of paperwork. Maxon wanted to properly respect and preserve her friend's legacy so her desire was to get professionals that were trustworthy and had an overwhelming understanding of the applicable law.

“Wherever the real estate is, the laws of that country govern,” said Leigh-Alexandra Basha, an expert in international estate and tax planning at McDermott Will & Emery. No matter where a bequest is based, if the property is worth more than $100,000, it must be reported to the IRS, Basha said. If the property is held by a corporation and is worth more than $16,000, it must be reported to the IRS.

See Sara Clemence, Inheriting Property Overseas Can be a Dream Come True, but it Comes With Challenges, Washington Post, May 29, 2018.

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

May 29, 2018 in Estate Planning - Generally, Gift Tax, Travel, Wills | Permalink | Comments (0)