Wills, Trusts & Estates Prof Blog

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

Saturday, January 26, 2019

Article on Taxing Rich Dead People to Tackle Student Loan Debt

DebtVictoria J. Haneman recently published an Article entitled, Taxing Rich Dead People to Tackle Student Loan Debt, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article. 

Once upon a time, there was a generation of indentured servants called Millennials. They were ambitious and mysterious and clever and feckless, in the way that all young people can sometimes be. Droves of Millennials applied to universities, believing that a diploma was a barrier for entry to advance the careers of which they dreamt. Most were confronted with a conundrum: borrow to subsidize the dream career, with decades of (potentially unaffordable) payments when they were finally employed. The Generation Who Stole the World, commonly referred to as the Baby Boomers, had decided that unlimited access to debt in the United States was the most economically sound approach by which to offer equal opportunity in higher education, and the delectable irony of this tale is that the availability of debt accompanied the skyrocketing of costs. A vicious cycle resulted in an entire generation of educated American Millennials having mortgaged their futures — visibly sagging under the weight of the chains of their debt. The average student loan debt for the Class of 2017 graduate in the United States was $39,400.

In the U.S., Millennials are the first generation in modern history to enter adulthood far poorer than the immediately preceding generation. It is a generation that has taken on 300% more student loan debt than their parents, with Millennials between the ages of 25 and 34 each having an average of $42,000 in student loan debt. They are about half as likely to own a home as comparably-aged adults in 1976. Fifteen percent of people aged 25 to 34 live with their parents, as compared to 10% roughly thirty years ago. More than 75% of Millennials have less than $5,000 in savings, and more than 62% have more debt than savings. While wages for Millennials are stagnating, the Baby Boomers are living longer, retiring later, and hoarding jobs that should have long since been passed onto the younger generation. Baby Boomers reaped the benefits of a soaring market and robust safety net programs, whereas Millennials are bearing the brunt of the cost of three fundamental rights skyrocketing in cost — education, housing, and health care. It has been asserted that Baby Boomers have “. . . turned the economy into a miserable hellscape and [Millennials are] just going to have to deal with it.”

Contemporaneous with soaring student loan debt balances, the estate and gift transfer tax system in the United States continues to be curtailed — the Tax Cuts and Jobs Act nearly doubled the estate tax exemption from $5.49 million in 2017 to $11.18 million in 2018. Effectively, a married couple may gift during life or transfer at death nearly $22.5 million without incurring transfer tax liability. This paring of the transfer tax system is notable: Boomers are staring down the inevitability of death in relatively short order. The largest intergenerational wealth transfer in the history of the world will occur over the next three decades, with an estimated $30 trillion passing from Boomers in the United States to their heirs. With this transfer of wealth, we stand on the precipice of a “lawmaking moment,” in which the Boomers may accept responsibility (if we are optimistic) or be held accountable (if we are pragmatic) for the remains of their governance: facilitating intergenerational justice through the broadening of the estate and gift transfer tax system, with funds earmarked and dedicated to fixing the broken system of higher education. The purpose of this article is to generate a discourse among academics and policy makers about an idea that has largely escaped the focus of the media and scholars: the use of tax systems to further notions of intergenerational justice.

January 26, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Why Long-Term Care Policy Premiums are Rising so Sharply

LongtermcareConsumers around the country have seen steep increases in their premiums on long-term care policies in recent years.  Regulators approved rate increases of 40% or more on about half the requests that insurers made according to a 2016 survey conducted by the consulting firm Milliman. A little more than a quarter of their requests secured premium increases of 20 to 39%. The 26 respondents of the survey had annual premiums that represented 73% of the long-term care industry.

Each state's agency of insurance regulators determines whether insurers can adjust and increase the premiums. Many agencies also govern whether the companies are entitled to a rate increase and it cannot merely to increase their profit margins. "An insurer must justify its request by identifying which of its original pricing assumptions were inaccurate, and by demonstrating how they developed the new premium based on revised projections," says California Department of Insurance spokesperson Allison Castro.

Castro explained that large increases are currently being allowed for insurers because where long-term care insurance was introduced in the 1990s, the companies looked at consumer behavior with other insurance products when predicting how many would purchase the plans and eventually make claims. These predictions ended up being far too optimistic according to Castro, and "most companies' long-term care rates were too low to keep up with the cost of claims that were made years later." Life expectancies are longer and claims are higher than expected, and the original assumptions can no longer keep up.

See Cathie Anderson, Why Long-Term Care Policy Premiums are Rising so Sharply, Sacramento Bee, January 24, 2019.

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

January 26, 2019 in Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Science | Permalink | Comments (0)

Friday, January 25, 2019

Book on Effective Use of IRA Assets in Estate Planning

IrabookSeymour Goldberg published a Book entitled Effective Use of IRA Assets in Estate Planning (includes IRS Compliance Issues and Asset Protection Planning) (2018). Provided below is an excerpt from the book. 

Advantages of the trust as a beneficiary:

1. If the IRA death benefits are payable directly to a designated beneficiary, then the death benefits may be accelerated at any time by the designated beneficiary.

2. If the IRA death benefits are significant and payable to the trust, then a knowledgeable trustee may take advantage of the extended payout period if the IRS trust documentation requirements are timely satisfied with the IRA institution. The IRS trust documentation requirements must be satisfied by October 31st of the calendar year following the IRA owner’s year of death.

3. A mature trustee will control the investments while the assets are in the IRA.

4. If IRA death benefits are payable to a trust they may be protected from the creditors of the designated beneficiary under state law or in a divorce proceeding.

5. If IRA death benefits are payable to a spendthrift trust they generally should be protected if the designated beneficiary declares bankruptcy provided that the spendthrift trust is recognized under state law. Most jurisdictions recognize spendthrift trusts.

6. If IRA death benefits are payable to a trust for the benefit of a minor, it avoids the jurisdiction of the probate court or a similar court that has jurisdiction over the minor’s assets.

7. If IRA death benefits are payable directly to minor, then the probate court or a similar court is involved. The probate court or a similar court may not go along with an extended payout period of the IRA distributions.

8. A client should consider making provisions in his/her will and/or other legal documents that exonerate nonprobate assets such an IRA from the payment of the IRA’s share of the estate tax liability provided that there are sufficient other assets and that this provision is consistent with the client’s estate plan.

Exonerating the IRA and other retirement assets from any estate tax liability will permit more tax deferred growth of the IRA and other retirement assets and the tax exempt growth of Roth IRAs. However, this exoneration approach is at the expense of other beneficiaries of the estate.

9. A trust for adult child may be necessary if the adult child cannot handle money or would not otherwise reimburse the executor of the estate for the estate tax liability attributable to the IRA on a voluntary basis.

10. The life expectancy of child or grandchild will generally result in a greater deferral of income then if the surviving spouse was the designated beneficiary of the IRA.

11. The children or grandchildren benefit from growth of IRA instead of the surviving spouse. This should save a considerable amount of estate taxes on the subsequent death of the spouse.

12. The trust may be used as an exemption trust for estate tax purposes.

13. As a result of the Tax Cuts and Jobs Act effective January 1, 2018, significant income tax savings may be available if IRA assets are payable to trusts for the benefit of children or grandchildren.

14. As a result of the Tax Cuts and Jobs Act effective January 1, 2018 significant estate tax savings may be available if the IRA assets are payable to trusts for the benefit of children or grandchildren.

January 25, 2019 in Books, Elder Law, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Thursday, January 24, 2019

Man Claiming to be William Shatner’s Long-Lost Son Wants to Take Actor’s Name

ShatnerPeter Sloan, a 62 year old man from Florida, petitioned the Pinellas County court to have his last name changed to that of the man he believes to be his biological father. He claims that he is actually the son of William Shatner, of Star Trek fame.

Sloan says that he is ready to take a paternity test with Shatner. He says that in the 1950's the 87 year old actor worked with his mother, the late actress Kathy Burt, and the two had a one night stand. Sloan says he is the result of that night. Shatner has repeatedly denied that he is Sloan's biological father.

The actor’s lawyers filed a cease and desist order against Sloan, threatening further legal action if he continues with the name change.

See Stephen Sorace, Man Claiming to be William Shatner’s Long-Lost Son Wants to Take Actor’s Name, Fox, January 23, 2019.

January 24, 2019 in Current Affairs, Current Events, Estate Planning - Generally, Humor, New Cases | Permalink | Comments (0)

Article on Cryptocurrency -- What Estate Planners Need to Know

CryptoGerry W. Beyer recently published an Article entitled, Cryptocurrency -- What Estate Planners Need to Know, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

Less than a decade ago, if an estate planner asked clients whether they owned any cryptocurrency, the most likely response would be, “You mean, money to buy a crypt?” Now, due to the widespread media coverage of Bitcoin, the most famous of all cryptocurrencies, most clients will have some basic idea about what the estate planner is inquiring.

The use of cryptocurrency is increasing at a rapid pace. As of December 31, 2018, there were approximately 17.5 million Bitcoins in circulation worth over $67 billion. Although only a few cryptocurrencies in addition to Bitcoin are well-known outside the cryptocurrency community (e.g., XRP, Ethereum, EOS, and Stellar), over 2,000 different virtual currencies are actively traded. These other cryptocurrencies are sometimes referred to as altcoins, meaning that they are an alternative to Bitcoin.

A recent survey revealed that 25% of individuals between the ages of 24 and 38 who either had $50,000 of investable assets or earned $100,000 or more per year own cryptocurrency. A growing number of mainstream businesses already accept Bitcoin such as Microsoft, Subway, KFC Canada, many Etsy vendors, Whole Foods, Dish Network, and Expedia. In addition, some law firms are already accepting Bitcoin in payment of legal services.

This article starts by building a basic foundation about virtual currencies and how they operate. The article then reviews the estate planning and administration issues that arise with owning cryptocurrency and concludes with recommendations for how to address virtual currency in your practice.

January 24, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Technology | Permalink | Comments (0)

Juventus' Cristiano Ronaldo Fined for Tax Fraud, Avoids Jail Term

RonaldoCristiano Ronaldo, a former forward for Real Madrid who recently transferred to Juventus, will avoid serving a 23-month prison sentence for tax fraud.  He accepted a suspended sentence but he was also fined €18.8 million ($21.6 million) to settle the case. 

Ronaldo requested for a special security measures to avoid the hassle of the press and the public but was denied. He was required to enter the court room through the main entrance for his appearance, which only lasted 15 minutes because it consisted of merely signing previously agreed upon settlement.

Ronaldo denied an accusation in 2017 that he knowingly used a business structure to hide income generated by his image rights in Spain between 2011 and 2014. He testified at the initial trial, saying he had performed no wrongdoing. He also told the judge he felt victimized by the Spanish authorities, which partially prompted the trade to Juventus.

Ronaldo earns an estimated $93m (€80m) a year, according to Forbes, with approximately half coming from image-rights deals with his many sponsors.

See Juventus' Cristiano Ronaldo Fined for Tax Fraud, Avoids Jail Term, ESPN, January 22, 2019.

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

January 24, 2019 in Estate Planning - Generally, New Cases, Sports, Travel | Permalink | Comments (0)

Wednesday, January 23, 2019

Kentucky Newspaper Apologizes After Refusing to Run Obit Blaming Trump For Woman's Death

IreneFrances Irene Finley Williams of Kentucky was described as a fiery and opinioned woman, who had strong negative opinions about the current President and his administration. A few months before her death on November 21, 2018, she told members of her family that "If I die soon, all this Trump stuff has had an effect."

Williams' daughter, Cathy Duff, wrote the obituary for her mother, citing her love for babies, Elvis Presley, and of course dancing. Duff also mentioned Williams' affection for horse racing and the University of Louisville. The last line of the obituary, in accordance with her mother's high-spirited views, read "Her passing was hastened by her continued frustration with the Trump Administration." The obituary and a check for $1,684 was submitted to the Louisville Courier Journal to run it.

However, the paper rejected the obituary for its "negative" line about Trump, giving rise to Williams' son Art to post on Facebook about the predicament. The family decided they did not want to postpone the funeral and removed the last line so the newspaper would run the obituary. More than 100 people reacted to the post, and the newspaper later issued an apology and returned the fee. “Mrs. Williams’ obituary should have published as it was presented to our obits team and as requested by the family,” said Richard Green, the Courier Journal’s editor.

See Kentucky Newspaper Apologizes After Refusing to Run Obit Blaming Trump For Woman's Death, January 17, 2019.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.

January 23, 2019 in Current Affairs, Current Events, Estate Planning - Generally, Humor | Permalink | Comments (0)

New York Adopts Amendments Addressing Collection of Family Member Debts

LawJust a few days before the end of 2018 New York Governor Cuomo signed into law the Senate Bill 3491A, which adds amendments to the state’s General Business Law (GBL). The amendments address the collection of family debts and are scheduled to go into effect on March 29, 2019.

While the original intention of the amendments was to address the collection of a deceased family member’s debts, they are drafted more broadly. They prohibit “principal creditors and debt collection agencies” from: (a) making any representation that a person is required to pay the debt of a family member in a way that contravenes the FDCPA; and (b) making any misrepresentation about the family member’s obligation to pay such debts.

The original statute's definition of “principal creditor” is “any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be due or owed, or any assignee for value of said person, firm, corporation or organization.” The amendments specifically define a “debt collection agency” as “a person, firm or corporation engaged in business, the principal purpose of which is to regularly collect or attempt to collect debts: (A) owed or due or asserted to be owed or due to another; or (B) obtained by, or assigned to, such person, firm or corporation, that are in default when obtained or acquired by such person, firm or corporation.” 

See Barbara S. Mishkin, New York Adopts Amendments Addressing Collection of Family Member Debts, National Law Review, January 10, 2019.

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

January 23, 2019 in Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Article on Women Participation to Inheritance in Kosovo

KosovoEgzonis Hajdari published an Article entitled, Women Participation to Inheritance in Kosovo, Wills, Trusts, & Estates Law eJournal (2014). Provided below is an abstract of the Article.

The right to inheritance is one of the basic human rights. This right in Kosovo is regulated by the Law on Inheritance. This law represents a modern law harmonized with the highest international standards in this field. It regulates substantially, all the matters related to inheritance. The Law on Inheritance in Kosovo through its solutions ensures full equality of women with men to inheritance. Regardless of this, practical realities of life prove a completely different situation. Consequently, women participation to inheritance is estimated to be very limited. The reasons for this situation are numerous and of different natures. In fact, these reasons significantly are the reflection of still strong influence of the Albanian customary law in people's consciousness. This is the law that constantly treated women as a second hand subject. In this scientific paper is made a modest attempt to brief a short historical of women participation to inheritance issue in Kosovo, to continue with the legal aspect treatment and practical situation of women participation to inheritance manifestation in Kosovo during the period of time 2008-2012.

January 23, 2019 in Articles, Estate Planning - Generally, Intestate Succession, Travel, Wills | Permalink | Comments (0)

Tuesday, January 22, 2019

Could an Alzheimer's Vaccine be on the Horizon?

AdvaccineCompanies struggling to conquer Alzheimer's have been hindered by the side effects to patients even when there have been promising results. A start-up out of Dublin may be on the right path though they are hesitant to claim that they have solved the mystery of the disease.

United Neuroscience Inc. reports results from a small clinical, Phase II trial that show a 96% response from patients given the vaccine and without any serious side effects. The trial consisted of 42 individuals with mild cognitive impairments and believed to by in the early stages of Alzheimer's. The patients that were administered the vaccine currently called UB-311 by the company demonstrated improved brain function and showed a reduction in the protein plaque gumming up their neurons. Chief Executive Officer Mei Mei Hu says that there were improvements across the board compared to the placebo.

No one quite knows what causes Alzheimer's nor what exacerbates the disease, but the possible suspects are a couple families of proteins, amyloid and tau, that build up and then clump together and attack the brain. United’s vaccine stimulates the patient’s own immune system to attack amyloid, which many assume is the primary perpetrator. The vaccine's goal is to lessen and slow the clumping and possibly reverse some damage and restore brain function. 

The small number of participating patients may not allow United to draw any major statistical conclusions, the company is encourage enough to move forward with development of the vaccine, possibly with a larger partner, according to Hu.

See Ashlee Vance, United Neuroscience’s Alzheimer Vaccine Just Might Work, Bloomberg, January 16, 2019.

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

January 22, 2019 in Current Events, Elder Law, Estate Planning - Generally, Science, Technology | Permalink | Comments (0)