Wills, Trusts & Estates Prof Blog

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

Monday, February 25, 2019

Article on Trusts and QBI: The New 199A Applied

TtulawAbigail E. O'Connor recently published an Article entitled, Trusts and QBI: The New 199A Applied, 11 Tex. Tech Est. Plan. Com. Prop. L.J. 107-136 (2018). Provided below is the introduction of the Article.

The Tax Cuts and Jobs Act, passed by Congress on December 20, 2017, by Public Law No. 115-97, and signed into law by President Trump on December 22, 2017, introduced a new Internal Revenue Code (IRC) Section 199A. The new law is effective for tax years beginning January 1, 2018 and sunsets on December 31, 2025. The new rule is designed to reduce taxes on flow-through income from partnerships, sole proprietorships, and S corporations, by allowing the owner to deduct up to twenty percent of the "qualified business income," subject to various limitations and exceptions. Proposed Treasury Regulations were published in August 2018.

Many trusts own interests in partnerships, limited liability companies, and S corporations. This article examines how trusts may takes advantage of the new rules to potentially receive deductions of up to twenty percent of qualified business income. Part II of this article briefly describes the Proposed Regulations. Part III provides selected definitions, all of which can be found in the Proposed Regulations. Part IV is a mechanical analysis of the deductions for trusts. Part V sets out the rules for aggregation. Part VI highlights certain reporting requirements. Part VII explains the multiple trust rules, which provide an important background for exploring whether a deduction is available. Part VIII concludes with some discussion and thoughts on estate planning with respect to the new rules.  Importantly, this article is based largely on the Proposed Regulations. Once the Regulations are finalized, some of the statements and explanations in this article may no longer apply. 

February 25, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Sunday, February 24, 2019

Karl Lagerfeld’s Cat: The Reality of Pet Inheritance

PawheartThe late Karl Lagerfeld, the German designer behind Chanel, passed away on February 19th. Over the past few years the childless artist has claimed that he expected to leave at least a portion of his massive estate to his beloved feline, Choupette, "among others." Society seems to enamored of rich pets, including a miniature poodle named Toby who allegedly inherited $40 million from a Gilded Age heiress in 1931, beating out the 2,300 people who claimed to be her heirs after her death.

Many people see leaving millions to a pet as an eccentricity for the uber wealthy, but the truth is that even the average person can see to their animal's well-being in their estate plan. Pets are not asset holders; under the law they are assets themselves. Dogs and cats cannot inherit directly, they cannot sign transfers, and they cannot hold bank accounts. Trusts must be made for their benefit and care. Jon Conder, a partner at wealth manager Macfarlanes in London, says “Trust law allows for a trust for purpose where the trust’s purpose is looking after animals. It’s not just a hope — it’s legally binding.”

A fixed trust has a specific purpose laid out, which in this case would be for the animal's health and management. A discretionary trust would leave the decisions to the designated trustee. If a pet is left an inheritance in a will and no trust has been established, it is the executor’s responsibility to set one up and appoint a trustee to manage the funds. If the pet happens to have offspring or "heirs" themselves, it can be specified within the trust document.

See Madison Darbyshire, Karl Lagerfeld’s Cat: The Reality of Pet Inheritance, Financial Times, February 21, 2019.

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

February 24, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Saturday, February 23, 2019

Article on Death in Texas: The Documents that Control Medical Treatment and End-of-Life Decisions

TtulawKaren Telschow Johnson recently published an Article entitled, Death in Texas: The Documents that Control Medical Treatment and End-of-Life Decisions, 11 Tex. Tech Est. Plan. Com. Prop. L.J. 75-106 (2018). Provided below is an excerpt from the introduction of the Article.

In my estate planning and elder law practice people face their mortality every day. They acknowledge this by preparing for their eventual deaths, and taking responsibility to ensure their loved ones are financially cared for and the transfer of assets and payments of debts can easily be handled upon their deaths. The more humbling conversations comes when we discuss what happens when the client is alive but has trouble communicating for themselves. What if they are alive but disabled by a traumatic brain injury, stroke, heart attack, fall, Alzheimer's diagnosis, cancer or other disease that causes a slow, but eventual demise? Who has a right to speak for you when you can no longer effectively communicate for yourself?

"When my time comes, my kids will know what I want. They'll figure it out," he says. In the meantime, the adult child across the table from me is crying, "It's hard to think about." An adult child who never had a conversation with an aging parent nearing the end of life should not be having it in a hospital room.

February 23, 2019 in Articles, Current Affairs, Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Wills | Permalink | Comments (0)

Wings Helps Widows Soar, Founder Says

WingsChris Bentley saw a need in Cleveland: more than 1,000 women in the Minneapolis-St. Paul, Minnesota area are widowed every year, that were desperate for financial and legal support. So he started the Wings for Widows program which offers free financial and legal help to those who have recently lost their spouses. He hopes to spread the service to other areas across the country and is perfecting its process.

The advisor realized there was a gap for widows when he learned from a friend whose spouse had recently passed that she had been getting more information from support groups than from banks and advisors. Now widows can take a three-minute assessment on their website, where three meetings will be scheduled with a financial advisor that volunteers his or her time. Often there will also be a widow volunteer who has already been through the process for emotional support. Though originally intended for widows, widowers are not turned away.

“I had been working with widows for more than a decade and found it was difficult for them to deal with practical issues when they were dealing with grief and loss,” Bentley said. “I saw a giant opportunity to do something more for them.” The program does not write wills, estate plans, or give legal advice, but they can provide a service directory.

See Karen DeMasters, Wings Helps Widows Soar, Founder Says, Financial Advisor, February 17, 2019.

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

February 23, 2019 in Current Events, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Friday, February 22, 2019

Kids Write ‘Funniest’ Obituary for Mom in the First Person. Now People Think She Wrote it Before Her Passing

DevilheartRecently there was a story of Sybil Marie Hicks, who passed away at the age of 82 and left behind a hilarious obituary that she appeared to have written herself. Now the truth has come out, and it resonates with sweetness, love, and respect.

Her children wanted to think of way to memorialize their mother in a unique and interesting way. They decided to write her obituary from Sybil's perspective. The obituary joked around about her husband and her children - each with a nickname - and had nothing but kind words for all 13 of her grandchildren. The topper, though. was saying that their mom finally had the smoking hot body she always wanted, as she had been cremated.

The internet went wild for what appeared to be a wild, quirky, interesting lady that enjoyed the everyday laughs with her family. 

See Sara Vallone, Kids Write ‘Funniest’ Obituary for Mom in the First Person. Now People Think She Wrote it Before Her Passing, Dearly, February 8, 2019.

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

February 22, 2019 in Current Events, Estate Planning - Generally, Humor | Permalink | Comments (0)

Why One of Karl Lagerfeld's Legacies Might be Estate Planning for Your Pet

ChoupetteThis past week has seen the late Karl Lagerfeld's Birman cat, Choupette, rise even higher in feline fame. As the fashion icon's beloved pet, the cat had her own modelling career, coffee table book, and an Instagram boasting thousands of followers. She continues to prance in the spotlights now that people are openly debating a concern her owner's death brought forward: the care of a pet after a person's death.

68% of American households have pets, according to the National Pet Owners Survey. For many, a pet is more like a beloved child, and no parent would want to leave their child without a guardian. A pet trust is a relatively straightforward arrangement where a person leaves money for the care and maintenance of the pet, and name a trustee as well as a caregiver. The complication is having two people that share the goal of caring for someone else's pet, but with Lagerfeld's estate being so large, it does not appear that this will be an issue.

Choupette lived a life of luxury that many humans only dream of, so it is likely that if Lagerfeld did leave her a pet trust, it will be well stocked. Many owners also plan for loved ones to visit the animal after their owner's passing. When the animal dies, many times the owner will plan for the remaining funds to pass to the caregiver, as a reward to taking such good care of the animal.

See Megan Gorman, Why One of Karl Lagerfeld's Legacies Might be Estate Planning for Your Pet, Forbes, February 20, 2019.

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

February 22, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Whether, When, and How to Honor Advance VSED Requests for End-Stage Dementia Patients

VsedThaddeus Mason Pope recently published an Article entitled, Whether, When, and How to Honor Advance VSED Requests for End-Stage Dementia Patients, Elder Law eJournal (2019). Provided below is an abstract of the Article.

The Director of Nursing at the Pleasant Valley Nursing Home has requested an ethics consultation for guidance on whether the staff should follow the directions of a resident’s health care agent. Rhea, the agent, has asked the staff to stop spoon feeding Gertrude. Gertrude has end-stage dementia. Rhea explains that Gertrude did not want any orally or artificially ingested food or fluids under those circumstances. She wanted to voluntarily stop eating and drinking (VSED).

The ethics consultant should ask (and answer) at least six questions:
1. Is the advance directive valid?
2. Who is the decision maker?
3. Has Gertrude, in fact, requested forgoing spoon feeding?
4. Does Rhea have authority to direct forgoing spoon feeding?
5. Is Rhea complying with applicable decision-making standards?
6. Does Gertrude’s opening and swallowing trump contrary instructions?

February 22, 2019 in Articles, Current Affairs, Death Event Planning, Disability Planning - Health Care, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Thursday, February 21, 2019

ING Trusts: The Hot Trend in HNW Estate Planning

TrustsThe tax reforms reflected in the 2017 Tax Cuts and Jobs Act continue to influence high net-work clients, especially the increased estate tax exemption, which at the moment is temporary until 2026. Incomplete Non-Grantor trusts, or ING trusts, can generate significant savings both in income taxes and in overall transfer taxes, meaning that it can be worthy to explore the ING trust strategy.

Central to the ING trust strategy is the presence of an “adverse party or parties" that have the ability to control the distributions of the trust to its beneficiaries. The parties can often include the creator of the trust or even the adult children of the creator. In many states - except New York - ING trusts enjoy reduced income taxes or even no state income tax at all. ING trusts are usually created in states that do not tax trust assets regardless of where the client lives.

Both the proposed and final Section 199A regulations complicate many non-grantor trust strategies by adding a new provision that requires aggregation of two or more trusts in certain circumstances. This is generally required when the trusts have substantially the came beneficiaries or grantors. For tax saving purposes, ING trusts will be most valuable to clients who have multiple natural beneficiaries who can each serve as beneficiary of one trust.

See Robert Bloink and William H. Byrnes, ING Trusts: The Hot Trend in HNW Estate Planning, Think Advisor, February 13, 2019.

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

February 21, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Legislation, Trusts | Permalink | Comments (1)

Article on Equity and Māori

MaoriJacinta Ruru published an Article entitled, Equity and Māori, Wills, Trusts, & Estates Law eJournal (2009). Provided below is an abstract of the Article.

This chapter concerns the impact of trusts law and equitable principles and rules on a number of Māori related issues. In particular, the chapter focuses on the range of unique Māori land trusts that are growing in popularity as a management tool for Māori freehold land, and on the role of fiduciary law in Crown-Māori and intra iwi/hapu relationships.

February 21, 2019 in Articles, Current Affairs, Current Events, Estate Planning - Generally, Travel | Permalink | Comments (0)

Will Karl Lagerfeld Make his Pet Choupette the World's Richest Cat?

LagerfeldChanel icon Karl Lagerfeld passed away yesterday at the age of 85 in a Paris hospital, and the entire fashion world mourned and continues to mourn his death. Many people are curious as to whom his fortune will go to. Though two heirs may are surely to be his male muse Brad Kroenig and his son Hudson, who is also Lagerfeld's godson, the beneficiary that could get the bulk of the estate may be his beloved cat, Choupette.

The feline has over 128,000 Instagram followers and is already worth a surprising 2.5 million pounds, but with Lagerfeld's passing it may increase to over 100 million pounds or more. Under German law such an arrangement could be feasible if the cat were to be named an "heir" under association or foundation. Originally belonging to Baptiste Giabiconi, after two weeks of house sitting for the French model in 2011, Lagerfeld told him, "I'm sorry but Choupette is mine." He would later joke that he abducted her before turning her into an international model.

Choupette has been living the luxurious life ever since her "abduction." She has two maids that took care of her whenever Lagerfeld was gone, a chef, a hairdresser for her long white coat, her own bedroom suite, and even an array of diamond necklaces, aka collars.

Last April Lagerfeld mentioned that he wanted to be cremated, have no funeral, and for his ashes to be scattered - with Choupette's, if she dies before he de does. Giving rise to the current debate, the fashion designer had said that he would be giving his riches to Choupette and "others."

See Peter Allen, Sara Malm, & Ross Ibbetson, Will Karl Lagerfeld Make his Pet Choupette the World's Richest Cat?, Daily Mail, February 20, 2019.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) and Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

February 21, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Travel, Trusts, Wills | Permalink | Comments (0)