Wills, Trusts & Estates Prof Blog

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

Wednesday, August 29, 2018

Article on Congress and Commercial Trusts: Dealing With Diversity Jurisdiction Post-Americold

FlalawS. I. Strong published an Article entitled, Congress and Commercial Trusts: Dealing With Diversity Jurisdiction Post-Americold, 69 Fla. L. Rev. 1021 (2017). Provided below is an abstract of the Article:

Commercial trusts are one of the United Statesmost important types of business organizations, holding trillions of dollars of assets and operating nationally and internationally as a "mirror imageof the corporation. However, commercial trusts remain underappreciated and undertheorized in comparison to corporations, often as a result of the popular but mistaken belief that commercial trusts are analogous to traditional intergenerational trusts or that corporations reflect the primary or paradigmatic form of business association.

The treatment of commercial trusts reached its nadir in early 2016, when the U.S. Supreme Court held in Americold Realty Trust v. ConAgra Foods, Inc. that the citizenship of a commercial trust should be equated with that of its shareholder-beneficiaries for purposes of diversity jurisdiction. Unfortunately, the sheer number of shareholder-beneficiaries in most commercial trusts (often amounting to hundreds if not thousands of individuals) typically precludes the partiesability to establish complete diversity and thus eliminates the possibility of federal jurisdiction over most commercial trust disputes. As a result, virtually all commercial trust disputes will now be heard in state court, despite their complexity, their impact on matters of national public policy, and their effect on the domestic and global economies.

Americold will also result in differential treatment of commercial trusts and corporations for purposes of federal jurisdiction, even though courts and commentators have long recognized the functional equivalence of the two types of business associations. Furthermore, as this research shows, there is no theoretical justification for this type of unequal treatment.

This Article therefore suggests, as a normative proposition, that Congress override Americold and provide commercial trusts with access to federal courts in a manner similar to that enjoyed by corporations. This recommendation is the result of a rigorous interdisciplinary analysis of both the jurisprudential and practical problems created by Americold as a matter of trust law, procedural law, and the law of incorporated and unincorporated business associations. This Article identifies two possible Congressional responses to Americold, one involving reliance on minimal diversity, as in cases falling under 28 U.S.C. §§ 1332(d) and 1369, and the other involving a statutory definition of the citizenship of commercial trusts similar to that used for corporations under 28 U.S.C. § 1332(c). In so doing, this Article hopes to place commercial trusts and corporations on an equal footing and avoid the numerous negative externalities generated by the Supreme Courts decision in Americold.

August 29, 2018 in Articles, Current Affairs, Estate Planning - Generally, Income Tax, New Cases, Trusts | Permalink | Comments (0)

Why Your Power of Attorney Probably is an Accident Waiting to Happen

PoaPower of Attorneys (POA) are routinely - and should always be - included in an estate plan. They can often be the most important document in an estate plan and determines who will be making financial and other decisions in the unfortunate situation that the person becomes incapacitated. But a POA can be complicated and intricate, so there are several things to consider when making one appropriate for your circumstances.

  • Choose the agent carefully 
    • Do not feel obligated to appoint a certain person or family member
  • Consider appointing more than one person
  • Check with your financial institutions
    • Often they have their own guidelines and rules for honoring POAs
  • Consider when it takes effect
  • Establish some oversight
  • Appoint a protector
  • Make your intentions clear

See Bob Carlson, Why Your Power of Attorney Probably is an Accident Waiting to Happen, Forbes, August 24, 2018.

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

August 29, 2018 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Tuesday, August 28, 2018

Some Doubt LTC Insurance Industry's Future as Premiums Spiral Upward

GenworthGenworth, which has the nation's most long-term care (LTC) insurance policyholders, has almost regularly increased their premiums over the past couple years, and this year has approved a quarterly weighted average rate increase of 58% for some in 22 states. Other provided have applied for similar increases.

An explanation for the LTC market suffering from such high premium increases starts right from the beginning of the industry. When these products were developed, there was not a lot of statistics available to properly determine future claims utilization," explains Murray Gordon, CEO and founder of  MAGA Limited, an LTC insurance planning specialist and consulting firm. From the start the products were under-priced, so with rising costs in the medical industry the cost of LTC policies have to play catch-up.

But there are other factors affecting costs of the policies. Customers are living longer and filing more costly claims than originally expected, especially as health-care costs rise, and low-interest rates have adversely impacted carriers' earnings on reserves.

In 2017, the number of traditional LTC policies sold amounted to just 10 percent of those 20 years earlier, with several insurance companies deciding to sell new LTC policies altogether.

See Ben Mattlin, Some Doubt LTC Insurance Industry's Future as Premiums Spiral Upward, Financial Advisor, August 23, 2018.

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

August 28, 2018 in Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Article on The European Succession Regulation and the Arbitration of Trust Disputes

GlobeS.I. Strong recently published an Article entitled, The European Succession Regulation and the Arbitration of Trust Disputes, 103 Iowa L. Rev. 2205 (2018). Provided below is an abstract of the Article:

Over the last few decades, U.S. citizens have become increasingly mobile, with significant numbers of individuals living, working, and investing abroad. Estate planning has become equally international, generating ever-larger numbers of cross-border succession cases. While these sorts of developments are welcome, they require lawyers to appreciate and anticipate the various ways that the laws of different jurisdictions can interact.
One of the most important recent developments in international succession law comes out of the European Union. While the European Succession Regulation may initially appear applicable only to nationals of E.U. Member States, U.S. citizens can also be affected by its provisions. This Article analyzes the interaction between the Regulation and trust arbitration, which has become increasingly popular in various U.S. and foreign jurisdictions. In so doing, the Article discusses how trust arbitration furthers the goals of the Regulation and how individual provisions in the Regulation may support or restrict the possibility of arbitration of trust-related disputes.

August 28, 2018 in Articles, Estate Administration, Estate Planning - Generally, Travel, Trusts | Permalink | Comments (0)

How to Plan (Or Not Plan) for Social Security in Retirement

SSThe most recent Transamerican Retirement survey found that three-quarters of Americans are concerned that by the time they’re ready to retire, Social Security won’t be there for them, and it is especially common for Millennials and Generation X. There may be some helpful tips when analyzing the weight Social Security should have for your retirement and golden years.

  • Consider it—but Millennials shouldn’t count on it
    • Edward Gjertsen, a financial planner out Northfield, IL, says, “If a Millennial plans well, they won’t have to worry about Social Security. This generation really needs to understand that Social Security is, in fact, an anti-poverty insurance policy and not a personal pension."
  • Consider it—but benefit design could change
    • Ryan Fuchs, financial planner in Little Rock, AR, states, “I tell younger clients that I firmly believe that Social Security will be around when they reach their 60s and 70s. However, I tell them that I also firmly believe that it will probably look different than it does today."
  • Don’t give it full weight
    • Mackenzie Richards, financial planner in North Kingstown, RI, advises, “For Millennial clients, I recommend counting on 25% to 50% of what Social Security benefits are today."
  • Don’t count on it—consider it a potential bonus
    • Howard Pressman, financial planner in Vienna, VA, explains, “We do not think it’s prudent to factor Social Security benefits into the plans of our younger clients. Building plans based upon these conservative assumptions may lead to better outcomes whether Social Security is available for them or not.”

See Kate Ashford, How to Plan (Or Not Plan) for Social Security in Retirement, Forbes, August 24, 2018.

August 28, 2018 in Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Proposed Tax Reform Regulations: Application of Section 199A to Estates, Trusts, and Beneficiaries

IrsA trust can be considered in some cases as owned by the grantor, or creator, of the trust and the grantor would calculate qualified business income (QBI) for purposes of the new IRS Code Section 199A as if the QBI had been received directly by the grantor. When it is not considered a grantor trust, the deduction is calculated differently.

Section 199A provides a deduction of up to 20% of income from a pass-through entity. This deduction can be taken by certain individuals, and by some estates and trusts. It is beneficial to understand how trusts and estates are taxed, and the definition of certain terms, particularly distributable net income (DNI), income, and beneficiary.

  • Distributable Net Income (DNI) - The taxable income of the estate calculated with no deduction for personal exemptions or distributions, excluding gains from the sale of capital assets, and adding back tax-exempt income
  • Income - The amount of income for the estate or trust as defined by the applicable governing instrument and state law. In Iowa, this is determined under Iowa Code 637, the Uniform Principal and Income Act. This is commonly thought of as accounting income
  • Beneficiary - Any individual or entity receiving assets from the trust or estate, whether the assets are received pursuant to the trust instrument or by operation of law. In other words: heir, legatee, and devisee

More information about an overview of Section 199A can be found here.

See Jana Luttenegger Weiler, Proposed Tax Reform Regulations: Application of Section 199A to Estates, Trusts, and Beneficiaries, Davis Brown Law, August 23, 2018.

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

August 28, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Monday, August 27, 2018

Article on Running Past Landmines – The Estate Attorney’s Dilemma: Ethically Counseling the Client With Alzheimer’s Disease

Alz2Joseph Karl Grant published an Article entitled, Running Past Landmines – The Estate Attorney’s Dilemma: Ethically Counseling the Client With Alzheimer’s Disease, Elder Law Studies eJournal (2016). Provided below is an Abstract of the article:

This Article examines the ethical dilemmas faced by attorneys who represent clients suffering from Alzheimer's disease. To do so, this Article raises three (3) hypothetical case studies, and applies the ABA Model Rules of Professional Conduct, and the American College of Trust and Estate Counsel ("ACTEC") Commentaries, where appropriate, to those hypothetical case studies. Additionally, this Article proposes initiatives to ameliorate the lack of awareness and discussion of Alzheimer's disease in the law school curriculum, and finally, modest initiatives that the practicing bar can embrace to further a discussion and awareness among practicing attorneys about the ethical dilemma attorneys face in their daily interaction with actual and potential clients suffering from Alzheimer's disease. This article's objectives are twofold. First, the intention is to use this Article as a vehicle to expose law students, legal educators, practicing attorneys, policymakers, and layperson observers to the impact, medical symptoms and manifestations of Alzheimer's disease in accessible and easy to understand terms. Second, to use this Article as a tool for teaching, raising understanding, and providing guidance on a multitude of ethical considerations that law students (who will soon be lawyers) and practicing members of the bar should consider while being exposed to actual or potential clients who suffer from Alzheimer's disease.

August 27, 2018 in Articles, Current Affairs, Elder Law, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Like Prince, Aretha Franklin Died Without a Will. Why You Should Have One

IntestateThe tax and financial hassle of probate or intestacy can be huge, even for normal sized estates. When you add the extra zeros that go with a successful entertainer, the failures can seem much more agonizing. It is surprising the number of celebrities that had passed away in recent years without wills or with insufficient estate planning, including Prince, Heath Ledger, Philip Seymour Hoffman, and most recently, Aretha Franklin. Due to deficient planning, each of these sizable estates were hit with legal or financial issues that could have been easily avoided.

Franklin had been ill, so writing a will would have been logical. But also a will allows assets to become public knowledge, and many people - not just celebrities - can be uncomfortable with this prospect. For very little money you can create a revocable trust that calls for the disposition of your assets in a manner in which you choose. You still write a will, but the will just says that everything you own goes via the revocable trust, and your assets remain out of the public eye.

See Robert W. Wood, Like Prince, Aretha Franklin Died Without a Will. Why You Should Have One, Forbes, August 23, 2018.

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

August 27, 2018 in Current Events, Estate Planning - Generally, Music, Travel, Wills | Permalink | Comments (0)

CLE on Drafting Gun Trusts

GunsThe National Business Institute is holding a teleconference entitled, Drafting Gun Trusts, on Monday, September 10, 2018 at 1:00 p.m - 2:30 p.m. central time. Provided below is a description of the event:

Program Description

Why and How Gun Trusts are Used

Gun collections can hold a special significance to your clients and are often the part of the estate that is bequeathed to specific beneficiaries. When Title II weapons are involved, additional restrictions apply to their ownership, use and transfer. This practical course offers an objective legal analysis of the use of gun trusts, and will allow you to help your clients successfully and legally transfer these unique heirlooms to their heirs. Register today!

  • Trace the history of federal gun law and get an update on current legislative efforts.
  • Clarify how guns are classified and how firearms and accessories are regulated under the NFA.
  • Review the fundamentals of gun trust drafting and compare using trusts vs. business entities for gun ownership.

Who Should Attend

This timely legal course is designed for attorneys. Trust administrators/officers and paralegals may also benefit.

Course Content

  1. U.S. Gun Laws Overview
  2. Firearms Regulated
  3. The Gun Trust
  4. Drafting a Gun Trust
  5. Survey of Selected Advanced Planning Issues
  6. Firearms Forms of Note
  7. Liability Considerations
  8. Future of Gun Legislation and Gun Entity Planning

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 1.50 -  AK
CLE 1.50 -  AL
CLE 1.50 -  AR
CLE 1.50 -  AZ
CLE 1.50 -  CA
CLE 2.00 -  CO
CLE 1.50 -  CT
CLE 1.50 -  DE
CLE 2.00 -  FL*
CLE 1.50 -  GA
CLE 1.50 -  HI
CLE 1.50 -  IA
CLE 1.50 -  ID
CLE 1.50 -  IL
CLE 1.50 -  IN
CLE 1.50 -  KS
CLE 1.50 -  KY
CLE 1.50 -  LA*
CLE 1.50 -  ME
CLE 1.50 -  MN
CLE 1.80 -  MO
CLE 1.50 -  MP
CLE 1.50 -  MS
CLE 1.50 -  MT
CLE 1.50 -  NC*
CLE 1.50 -  ND
CLE 1.50 -  NE
CLE 1.50 -  NH
CLE 1.80 -  NJ
CLE 1.50 -  NM
CLE 1.50 -  NV
CLE 1.50 -  NY*
CLE 1.50 -  OH
CLE 2.00 -  OK
CLE 1.50 -  OR
CLE 1.50 -  PA
CLE 1.50 -  RI
CLE 1.50 -  SC
CLE 1.50 -  TN
CLE 1.50 -  TX*
CLE 1.50 -  UT
CLE 1.50 -  VA
CLE 1.50 -  VT
CLE 1.50 -  WA
CLE 1.50 -  WI
CLE 1.80 -  WV
CLE 1.50 -  WY
 
* denotes specialty credits

August 27, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Animals Who Inherit Money From Their Owners Pay Death Taxes Like Everyone Else [Pennsylvania]

HorseIn a recent case in Pennsylvania, the court decided that even though animals are not persons under the legal definition, neither are they included in the entities that are exempt from the state's inheritance tax nor listed in the types of entities that have lowered inheritance tax rates. The Chester County Orphans' Court Divison ruled in Lesley G. King Estate ruled that trusts set up at death for the health and benefit of animals are subject to the full Pennsylvania inheritance tax rate of 15%.

King passed away on May 14, 2016, and in her will established a trust for several animals, including 2 horse, 2 dogs, 2 cats, and a flock chickens, in which the assets then would pass to other human beneficiaries after the last animal's death. When the executor filed the estate's tax return in 2017, Pennsylvania hit the $410,000 estate with a 15% inheritance tax. The representative claimed that because the inheritance tax is only assessed against persons that inherit and therefore the tax should not be assessed at all.

The court disagreed, finding that even though animals are still not to be seen as persons under the law, trusts for their benefit set up at death can be assessed the state's full inheritance tax.

See Amanda DiChello, Animals Who Inherit Money From Their Owners Pay Death Taxes Like Everyone Else, At Your Bequest, August 14, 2018.

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

August 27, 2018 in Estate Planning - Generally, New Cases, Trusts, Wills | Permalink | Comments (1)