Wills, Trusts & Estates Prof Blog

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

Tuesday, September 24, 2019

Article on The Location of Holographic Wills

WillKevin Bannardo & Mark Glover recently published an Article entitled, The Location of Holographic Wills, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

North Carolina should abolish its location requirement for making a holographic will. Under the North Carolina holographic wills statute, a handwritten document must be found in an approved location after its author’s death in order to be regarded as a holographic will. No other state has mandated a location requirement for holographic wills since 1941.

The location requirement furthers neither of the core functions of will execution formalities: it makes probate courts’ decisions less efficient but no more accurate. And, because holographic wills in North Carolina are not technically executed until they are found postmortem, confounding doctrinal issues arise when testators attempt to revoke them before death. The location requirement of the holographic wills statute imposes costs without countervailing benefits.

Thus, the North Carolina General Assembly should abolish the location requirement from the holographic wills statute. In its place, the location in which a decedent stores a purported holographic will should be relegated to simply one contributing factor in assessing testamentary intent. Such a revision would reflect sound policy and bring North Carolina into accord with the rest of the country when it comes to the making of holographic wills.

September 24, 2019 in Articles, Current Affairs, Estate Planning - Generally, Wills | Permalink | Comments (0)

In with a Bang and Out with a Whimper: Second Circuit Challenge to Popular Withdrawal Liability Calculation Method Settles

PensionA case that was watched by many employers and pension plan members alike went out with little drama, as the Second Circuit docket sheet of New York Times Company v. Newspaper and Mail Deliverers' Publishers' Pension Fund pinged to life with a stipulation withdrawing the case with prejudice on last Monday.

The issue that was the great importance to its many followers was that of the challenge to the Segal Blend discount rate assumption, used by many multiemployer pension plans to calculate employer withdrawal liability. Any variation to this discount rate assumption can have a massive effect on the liability. ERISA requires actuaries to select a discount rate for withdrawal liability and an interest rate for minimum funding purposes that reflect the actuary's "best estimate of anticipated plan experience."

The New York Times argued that the Fund's 7.5% interest rate reflected the actuary's best estimate, the 6.5% Segal Blend rate did not, and the Fund must employ a higher rate, thus decreasing the withdrawal liability of the employer. The arbitrator upheld the use of the Segal Blend rate and the case went to trial, where the Southern District of New York reversed the arbitrator, finding that the Segal Blend runs afoul of the statutory requirement to use a discount rate that reflects the actuary's best estimate of anticipated plan experience. The Fund appealed, but the case was dismissed with prejudice due to an obvious settlement.

The dismissal of the case means that the Southern District of New York's opinion still stands, but the opinion will not be binding authority for many employer withdrawals. The opinion can be useful for employers to challenge the use of the Segal Blend, while the District of New Jersey’s decision upholding the use of the Segal Blend in Manhattan Ford Lincoln, Inc. v. UAW Local 259 Pension Fund will assist funds defending their use of the Segal Blend. That case was also settled before it made it to the next level of appellate court.

See Gregory J. Ossi & Christopher R. Williams, In with a Bang and Out with a Whimper: Second Circuit Challenge to Popular Withdrawal Liability Calculation Method Settles, National Law Review, September 18, 2019.

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

September 24, 2019 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Monday, September 23, 2019

For Noncitizen Spouses, Beware Estate and Gift Taxes

DeathtaxesOften times a couple can come in for a basic consultation that seems simple, but then a situation arises that has serious tax repercussions. For Sean Wilson, a senior director in the product and portfolio solutions and distribution area of TIAA Wealth Management in New York, one such couple dealt with a husband that was an American citizen while the wife was a French citizen.

Married couples that are both US citizens get to enjoy the benefit of the unlimited marital deduction, while a couple that has parties of different citizenships do not. Well, the American spouse can receive gifts from their spouse without fear of paying gift or estate taxes, but the noncitizen cannot. For those married to noncitizens, the maximum amount they can gift to their spouse tax-free each year is limited; in 2019 the cutoff is $155,000 and any gifts in excess of that require filing a gift tax return. At the death of the citizen spouse, estate taxes may come in to play. Because the noncitizen spouse does not qualify for the unlimited marital deduction, any amount that is over the federal exemption amount would be subject to federal estate tax.

Not all hope is lost, however, as there are some options to save a multi-citizenship couple from suffering from estate taxes. One is an irrevocable life insurance trust (ILIT), a type of living trust that's designed to hold a life insurance policy. The trust would be named the beneficiary, with the noncitizen spouse as the beneficiary of the trust, and the assets in the trust are not taxable. The other option is a qualified domestic trust (QDOT), a special kind of trust that allows surviving noncitizen spouses to take the full marital deduction on estate taxes. One trustee must be an American citizen or qualified domestic corporation.

See Ben Mattlin, For Noncitizen Spouses, Beware Estate and Gift Taxes, Financial Advisor, September 19, 2019.

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

September 23, 2019 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Sunday, September 22, 2019

Barron Hilton Leaves 97% of Massive Fortune to this Foundation

BarronBarron Hilton, the magnate behind Hilton Hotels success, passed away on Thursday at his Los Angeles home at the age of 91. The billionaire left 97% of his fortune to the Conrad N. Hilton Foundation, the charity started by his father, which increased its endowment by $3.4 billion.

The Foundation, established in 1944, invests in seven program areas: Catholic sisters, disaster relief and recovery, foster youth, homelessness, hospitality workforce development, safe water, and young children affected by HIV and AIDS.

The remaining 3%, which still constitutes millions of dollars, were left for him family, including the well-known heiress Paris and Nicky Hilton. Altogether Barron left behind eight children, 15 grandchildren, and four great-grandchildren. "The Hilton family mourns the loss of a remarkable man," ,his son and chairman of the Conrad N. Hilton Foundation, Steven M. Hilton, said in a statement. "He lived a life of great adventure and exceptional accomplishment."

See Matthew McNulty, Barron Hilton Leaves 97% of Massive Fortune to this Foundation, Fox News, September 22, 2019.

September 22, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Television, Trusts, Wills | Permalink | Comments (0)

Saturday, September 21, 2019

Article on Directed Trusts: A Primer on the Bifurcation of Trust Powers, Duties, and Liabilities in Special Needs Planning

TrustWilliam D. Lucius, Esq., and Shirley B. Whitenack, Esq., CAP, Fellow recently published an Article entitled, Directed Trusts: A Primer on the Bifurcation of Trust Powers, Duties, and Liabilities in Special Needs Planning, NAELA News Journal, August 2019. Provided below is an introduction to the Article.

The provision of legal services in the fields of elder law and special needs planning has expanded over the past decade into a client-focused, holistic, and collaborative approach. Consequently, this developing philosophy has permeated into the estate plans and trust instruments related to these fields, such as special needs trusts (SNTs) and settlement preservation trusts (SPTs), wherein the selection of an appropriate fiduciary is no longer a choice between two or among several individuals or corporate trustees. Nontraditional “multiparticipant trust agreements,” in which the “powerholders” may be a potpourri of trustees, co-trustees, distribution directors, investment advisers, trust advisory committees, and trust protectors, are becoming more commonplace. With the advent of directed trusts, these powerholders may now encroach upon the traditional trustee’s once overarching authority and compel the trustee to act (or not act) in furtherance of the trust’s objective.

Consider the case of Nathaniel. Like most 4-year-olds, Nathaniel was curious and adventurous in equal measure. Due to the alleged negligence of a day care employee, Nathaniel left his day care facility through an open gate and wandered unsupervised to an adjacent parking lot. When Nathaniel attempted to climb through a half-open car window, his head became stuck and he could no longer support his weight. The near-strangulation caused a significant, irreversible traumatic brain injury. Now 8 years old, Nathaniel is incapacitated, has no gait strength or swallowing reflexes, has frequent seizures, and requires 24-hour supervised care. Nathaniel’s parents sued the day care provider and parking lot owner, securing an $8 million cash settlement, which includes a 40-year guaranteed structured annuity payment of $4,500 per month, adjusted 3 percent annually. The court that approved the settlement ordered the establishment of a first-party SNT for Nathaniel’s benefit that included, in part, the following language:

Art. 1.1 — Trust Company, N.A., shall serve as the initial Corporate Trustee. Distribution Directors, Inc., shall serve as the initial Distribution Director under this Agreement. Each of the entities shall serve as fiduciaries but shall only be responsible for the decisions that fall within their respective authorities as defined hereunder. Both may rely conclusively on the other if that instruction relates to a matter under the other’s purview, and neither shall have a duty nor obligation to review the underlying actions of the other.

Art. 1.2 — During the lifetime of Nathaniel, Distribution Director may direct Corporate Trustee to distribute, from income, principal, or both of this Trust, such amounts as the Distribution Director, in its sole, absolute, and unfettered discretion, may from time to time deem advisable or reasonable for Nathaniel’s special needs.

Art. 9.1 — Nathaniel’s mother is appointed as Trust Protector. The Trust Protector shall not be entitled to compensation for services rendered but shall be entitled to reimbursement of reasonable expenses in the exercise of her services. The Trust Protector is authorized, in her sole and absolute discretion, to remove from office, without Court approval, any Corporate Trustee or Distribution Director appointed herein, with or without cause and for any reason whatsoever, and may replace such Corporate Trustee or Distribution Director with another Corporate Trustee or Distribution Director who is not related to or subordinate to the Beneficiary (within the meaning of Internal Revenue Code § 672(c)) to act in place of the Corporate Trustee or Distribution Director so removed.

In Nathaniel’s case, by ordering a trust with bifurcated duties among various parties, the court followed the advice of the guardian ad litem, who recommended a multiparticipant directed trust arrangement to best address the investment management and discretionary decision-making complexities that will likely last the length of the trust’s administration.

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

September 21, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, September 20, 2019

Why Client's Dog Should be in the Estate Plan

PetsA proper estate plan should consider every aspect of a client's life, not just their children and their home. If the client has a pet, having someone ready and willing to look after them is crucial.

Pets can be a crucial and emotional facet of a person's life, so having an executor who can handle the estate quickly is prudent. Melanie McDonald, Vice-President and Regional Director, Trust & Estate Services, BMO Private Wealth, comments that, “Then they should have a longer-term plan of who can take care of their pet for their lifetime in a will or in a power of attorney. It’s important to pick a couple of people because depending on timing, the first person may not be able to take care of the pet."

Even the nicest or most charitable friend many not be willing to take care of another person's pet for free, so it is important to leave money to provide for the animal's needs during their lifetime. "Pets have day-to-day expenses, and food and vet bills. Then people can also give a little extra amount as a thank you gift for taking on that responsibility," McDonald explains.

Having the money placed in a purpose trust can give the pet owner more control instead of just bequeathing their friend a certain amount of cash with the instruction to provide for the pet. "If you are giving somebody responsibility, you want to make sure that they agree to it and are able to handle it.”

See James Burton, Why Client's Dog Should be in the Estate Plan, Ottawa Retirement Planner, September 18, 2019.

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

September 20, 2019 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Northern Illinois Law Seeks Entry Level Faculty

NIUNORTHERN ILLINOIS UNIVERSITY COLLEGE OF LAW invites applications for anticipated openings for two entry-level tenure-track faculty positions beginning August 2020. Duties include engaging in high quality research and teaching, as well as being an active participant in law school and university service. Requirements include a J.D. degree from an ABA accredited law school, an ability to engage in high quality research and teaching, and a willingness to actively participate in law school and university service.

We are particularly interested in candidates specializing in contracts, business associations, tax, torts, trusts and estates, and skills courses in the areas of pre-trial skills and/or business related skills.

If you have not registered for the AALS Faculty Recruitment Conference and wish to apply, please go to the position posting through the NIU applicant tracking system at the following link: http://employment.niu.edu/postings/47421.

Please note that to be officially considered for this position, a cover letter, resume, and a list of names/addresses/email addresses/phone numbers of three current professional references will be required as uploads to NIU’s applicant tracking system.

Please direct questions to Interim Assistant Dean for Student Affairs and Associate Professor Yolanda King, Chair of the Appointments Committee, Northern Illinois University College of Law, Swen Parson Hall, DeKalb Illinois 60115-2890 at lking@niu.edu , or Tita Kaus at 815-753-1068 tkaus@niu.edu . Preference will be given to applications received by September 24, 2019, although applications will be accepted until the positions are filled.

In accordance with applicable statutes and regulations, NIU is an equal opportunity employer and does not discriminate on the basis of race, color, national origin, ancestry, sex, religion, age, physical and mental disability, marital status, veteran status, sexual orientation, gender identity, gender expression, political affiliation, or any other factor unrelated to professional qualifications, and will comply with all applicable federal and state statutes, regulations and orders pertaining to nondiscrimination, equal opportunity and affirmative action.

In compliance with federal law, all persons hired will be required to verify identity and eligibility to work in the United States and to complete the required employment eligibility verification document form upon hire.

September 20, 2019 in Current Affairs, Estate Planning - Generally, Faculty Positions -- Permanent, Income Tax, Trusts | Permalink | Comments (0)

Court Holds That A Trustee Has To Serve Until Properly Replaced

CourtroomA Texas court has held that when a trust document does not state the procedure for the appointment of a successor trustee under the current circumstances, the Texas Trust Code will come into play. In Waldron v. Susan R. Winking Trust, the court also ruled that "A trustee’s fiduciary duties are not discharged until the trustee has been replaced by a successor trustee," and thus the resigning trustee was allowed to bill for reasonable expenses and fees.

The beneficiary, the daughter of the settlors, appealed the court's decision, believing that the trustee's resignation was complete the moment she received the letter of resignation. She had petitioned the court to allow for herself to be appointed trustee as an individual after she could not find another bank that would agree to act as trustee. The appeals court affirmed the lower court's decision, stating that "Since no bank or trust company could be found that was willing to serve, Waldron could not appoint a successor and her attempt at removal by letter without naming a bank or trust company as successor was ineffective." Although the current trustee was "ready and willing to be replaced," the court said, the trustee "was obligated to continue in the performance of his duties until replaced by a successor trustee."

See David Fowler Johnson, Court Holds That A Trustee Has To Serve Until Properly Replaced, Tx Fiduciary Litigator, September 17, 2019.

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

September 20, 2019 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Thursday, September 19, 2019

Article in Be Right Back: Black Mirror and the Importance of Digital Estate Planning

Black mirrorMichael J. Polk recently published an Article entitled, Be Right Back: Black Mirror and the Importance of Digital Estate Planning, South Carolina Lawyer, July 2019. Provided below is the introduction of the Article.

The Netflix series "Black Mirror" imagines the effect technology will have in the near future. In the Be Right Back episode, a young woman's boyfriend suddenly dies. Grieving, the woman signs up for a service that creates a virtual boyfriend by using his past text and email communications, social media accounts and artificial intelligence. The more information fed into the service, the more accurate the interactions with the virtual boyfriend become (spoiler alert: there isn't a happy ending). The episode makes the point that our digital life has become pervasive, and it becomes more so with each passing day. Lawyer must address and plan for digital assets and accounts both on a professional and personal level because, in the words of John Maynard Keynes, "In the long run, we are all dead."

September 19, 2019 in Articles, Estate Administration, Estate Planning - Generally, Technology, Television | Permalink | Comments (0)

Britney Fans Insist it is Time to #FreeBritney!

BritneyBritney Spears, the pop princess that dominated the charts in her late teens and early twenties before her extremely public break down in 2008, is still under a conservatorship in California. This year she cancelled her Las Vegas residency and she went to a mental health facility. But her fans believe that she is being silenced and was put into the facility against her own free will, and was able to be forced because of the conservatorship with her father, Jamie, at the helm.

Conservatorships - or guardianships as they may be known in other jurisdictions - are intending to help those who cannot take care of themselves and are unlikely to gain that ability, such as the elderly or mentally disabled. Spears's father is control of her finances and many personal choices (including healthcare), but it is apparent that the musician can provide for herself. She has produced four albums since the start of her conservatorship, was a host on The X Factor, even went on four world tours. Attorney Stanton Stein, whom Jamie has hired for #FreeBritney damage control, rejected the idea that Spears had been coerced or manipulated in any way. “She’s always involved in every career and business decision,” he said. “Period.” There have been no more public outbursts, break downs, or suicide attempts.

So why is there still a conservatorship in place? Her fans believe that she is being micromanaged and manipulated to the point of being under complete control of her father. What really gave the rally cry #FreeBritney fire, however, was a voicemail left on a podcast that dissects Britney's Instagram posts. The caller, identifying himself as a former paralegal for an attorney who worked with Spears’ conservatorship, claimed that the singer’s father was involved in getting her to drop her Las Vegas residency. He also made a series of other allegations and raised concerns about her personal autonomy.

In the meantime, Jamie Spears has requested that the conservatorship be extended to more states, including where his daughter lives to vacation, and his suing individuals with slander over the many accusations.

See Laura Newberry, Britney Spears Hasn’t Fully Controlled Her Life for Years. Fans Insist it’s Time to #FreeBritney, Los Angeles Times, September 18, 2019.

Special thanks to Adam T. Uszynski (Bradicich, Moore & Uszynski, LLP, Victoria, Texas) for bringing this article to my attention

September 19, 2019 in Current Events, Estate Planning - Generally, Guardianship, Music, Television, Travel | Permalink | Comments (0)