Friday, January 31, 2020
The New York State Bar Association released an ethics opinion on January 23 stating that a lawyer who possessed more than 500 wills could not dispose of the documents but in fact must retain the documents "indefinitely." Many of the wills had testators that could not be located, and even some were created more than 70 years ago.
Many of the documents were obtained from acquired law practices that had themselves obtained the wills from acquired practices. The lawyer has been unable to find the testators, executors or even beneficiaries through a diligent search of office records, the internet and the county surrogate’s court.
The ethics opinion sums up its advice this way: “A lawyer may not dispose of wills, whose testators’ locations and/or circumstances are unknown. The wills constitute property, and the lawyer must safeguard the wills indefinitely unless the law affords the lawyer an avenue to file or otherwise dispose of the wills.”
See Debra Cassens Weiss, Lawyer Who Can't Find Testators for Over 500 Wills Can't Toss Documents, Ethics Opinion Says, ABA Journal, January 27, 2020.
Thursday, January 30, 2020
Gerry W. Beyer recently published an Article entitled, Technology’s Impact on the Changing Future of the Trusts and Estate Practice, Wills, Trusts & Estates Law eJournal (2020). Provided below is an abstract of the Article.
Less than a few decades ago, technology had a minor impact on the legal profession. Today, a wide range of technology may be central to a lawyer’s practice, changing the way we plan for the future. While the integration of technology in the legal world has had its many benefits, keeping up with the wide array of rapidly changing technology now available is a dubious task for many practicing lawyers.
To stay ahead of the curve in your estate planning practice and lessen potential frustration and expense, it is important to understand and leverage the latest estate planning technology. This article will serve to inform estates and trusts lawyers of the available technology tools along with their benefits and disadvantages, with a special discussion of cryptocurrency and electronic wills.
Wednesday, January 29, 2020
Article on Ethics, ESG, and ERISA: Ethical-Factor Investing of Savings and Retirement Benefits Part 2
Albert Feuer recently published an Article entitled, Ethics, ESG, and ERISA: Ethical-Factor Investing of Savings and Retirement Benefits Part 2, Tax Law: Tax Law & Policy eJournal (2020). Provided below is the abstract to the Article.
Ethical-factor investing is investment decision-making that takes into account ethical factors. Part 1 described the three prudent approaches to ethical-factor investing: (1) the Incorporation approach, which does the right thing only if it improves financial returns; (2) the Tie-Breaker approach, which does the right thing if there no financial cost to doing so; and (3) the concessionary approach, which does the right thing if it does not reduce financial returns too substantially.
Fiduciaries making investments on behalf of ERISA plans, other than Top-Hat plans, may use the Incorporation approach, and must use it, to the extent it is part of prudent investing. They may use the Tie-Breaker approach, but not the Concessionary approach. The latter would violate the fiduciary duty to act for the exclusive purpose of providing benefits to plan participants and beneficiaries for ERISA plans, other than Top-Hat Plans.
Participants and beneficiaries of individual retirement arrangements or of self-directed ERISA savings and retirement plans, such as most 401(k) plans, may use any of the three ethical-factor investment approaches. Sponsors of Top-Hat plans may do the same. Fiduciaries choosing an investment option for most self-directed ERISA plans, other than Top-Hat plans, must use the Incorporation approach to the extent that it is prudent. They may also choose an option that uses the Tie-Breaker approach, but if it was also chosen by the Tie-Breaker approach it may only supplement rather than replace another investment option, such as an S&P 500 Index® fund.
The Arkansas Supreme Court granted an Arkansas estate creditor of a deceased person standing to directly pursue the alleged transferee of a fraudulent transfer, defined as a transfer of assets to another for the purpose of defeating the claim of a creditor. The transfer in question was a pay-on-death account.
In Heritage Props. v. Walt & Lee Keenihan Foundation, the decedent created a brokerage account at Ameriprise with $500,000, designating the transfer-on-death recipient as the Walt & Lee Keenihan Foundation. By the time of her death 18 months later, the account had grown to $1.1 million, which was transferred to the Foundation outside of probate. However, due to the $850,000 worth of claims against it by Heritage, the estate was found insolvent and the transfer allegedly fraudulent.
Heritage filed against the Foundation in a circuit court, not in probate court. The circuit court dismissed the estate creditor’s claim based on jurisdiction, standing, and the lack of sufficient evidence to establish its claim. However, the Arkansas Supreme Court rejected the lack of jurisdiction determination by the circuit court, explaining that circuit courts are courts of general jurisdiction. Because transfer-on-death accounts do not enter the probate process, the circuit court would indeed have jurisdiction over the action, and the third party creditor would have standing to directly pursue a fraudulent transferee for return of a fraudulent transfer.
The court also clarified that the creditor does not have to show that the decedent had actual intent to defraud the creditor. Instead, they may prove that the decedent made the transfer and "intended to incur, or believed or reasonably should have believed that she would incur, debts beyond her ability to pay as they became due."
See Arkansas Supreme Court Allows Estate Creditor to Directly Pursue Alleged Fraudulent Transferee, Probate Stars, January 23, 2020.
Tuesday, January 28, 2020
Many clients may be scrambling at the end of the year when it comes to certain tax related issues. But when it comes to annual gifting, acting earlier in the year may be more beneficial for a couple of reasons. The current annual gift tax exclusion amount is $15,000 per donee per individual, meaning a married couple may gift a single donee $30,000 with no gift tax consequences.
If you gift an asset with appreciation potential, such as stock or investment property, to an individual or trust, you are able to remove the appreciation and income from your tax base for the year of the gift as well as the following years. You also allow the recipient to benefit from the growth of the gift for the rest of that year.
However, the benefit to you of annual tax free gifts comes at the cost of the recipient receiving the asset with your cost basis. You may need to consider the recipient's tax liability for the gift. Annual exclusion gifting is most advantageous for individuals and married couples who expect to have a taxable estate for federal or state estate tax purposes, and with the passage of the Tax Cuts and Jobs Act in 2017, the threshold has more than doubled.
See The Annual Gift Tax Exclusion: The Power of Early, Wealth.NorthernTrust, January 2020.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Monday, January 27, 2020
The sudden death of basketball star Kobe Bryant sent shockwaves not only through the realm of sports, but through the world. Bryant, 41, was killed yesterday when the helicopter he was on crashed near Calabasas, California, along with his 13-year-old daughter, Gianna, and seven other individuals. But the man was more than a basketball player as he was showcasing his business mind with investments and other ventures.
In 2013, before he retired from the NBA, Bryant co-founded venture capital firm Bryant Stibel along with Web.com founder Jeff Stibel. The firm now has more than $2 billion in assets, with investments in dozens of technology, media and data companies, including Fortnite creator Epic Games, digital payment company Klarna and household products firm The Honest Company. Outside of Bryant Stibel, he had seen a return of millions of dollars with his investment in the sports drink Body Armor, which sold a stake to Coca Cola in 2018.
In 2016, Bryant founded Granity Studios, a media company that focuses on creative storytelling around sports. He wrote and narrated the short story Dear Basketball through the company, winning the Academy Award for best animated short film in 2018, and also released a series of books for young adults.
Bryant, along with LeBron James and Carmelo Anthony, signed a deal with Nike in 2003 when Michael Jordan retired. Nike put out multiple lines of Kobe shoes and gear. In 2017, the company brought Bryant on stage with then-CEO Mark Parker at its annual investor meeting to celebrate the launch of Nike's new business strategy. Bryant then began to grow his own brand, "Black Mamba," which was his nickname on the court. In a partnership with Nike, Bryant launched the "Mamba League" in 2017, a youth basketball league that allows hundreds of kids free access to the sport.
See Clare Duffy and Alexis Benveniste, Kobe Bryant Leaves Behind a Business Empire that Stretched Beyond the Basketball Court, CNN, January 26, 2020.
Sunday, January 26, 2020
The Arizona Court of Appeals in Pima County on Thursday upheld a lower court's order that a man can be cremated. The court cited testimony from the man's father and girlfriend that he wanted to be cremated. His mother objected, stating that her religious beliefs dictated that her son should be buried.
The ruling said the conflict between the man's parents as decision-makers identified under state law left it up to the probate judge to resolve the dispute. The court also said state law does not compel the probate judge to put the mother's religious preferences over her son's wishes.
See Ruling Upholds Judge’s Cremation Order Over Mother’s Wishes, KVOA.com, January 25, 2020.
Saturday, January 25, 2020
W. Burlette Carter published an Article entitled, Finding the Oscar, Wills, Trusts, & Estates Law eJournal (2012). Provided below is the abstract to the Article.
In 1940, Hattie McDaniel became the first African-American to be awarded an Oscar. The controversial role that garnered the honor was that of a slave "Mammy" in the 1939 film adaptation of Margaret Mitchell's Pulitzer Prize Winning novel, "Gone with the Wind." In 1951, McDaniel willed her Oscar to Howard University, but today no one knows where it is. Theories include that Howard students took it during the 1960s Civil Rights protests. that a Howard professor took it, or that it was simply put away for safekeeping but no one knows where. Howard's archives could find no records of having actually received it. Considering probate papers, archival materials, and interviews, the article traces the path of the Oscar from McDaniel's death to its arrival at Howard and offers a theory as to the Oscar's ultimate fate. It also ties the Oscar to the story of how historical racism suppressed the ability of African Americans, and particularly the descendants of slaves, to protect wealth and to transfer it intergenerationally.
Friday, January 24, 2020
Some states allow people to have professional licenses suspended or even revoked due to student loan debt, and these occupations widely and include nurses, doctors, and even truck drivers. Typically, these statutes only kick in if a borrower is delinquent or in default on their student loans.
Other occupations require a character and fitness exam or background check to obtain a professional license, including becoming an attorney. For Cynthia Marie Rogers, her student loan debt played a major role in the Ohio Board of Bar Commissioners denying her admission to the Ohio bar to practice law as an attorney there. When she graduation from law school, her student debt topped $300,000. Combined with her husband's student loan debt, their balance was nearly $900,000.
The amount was not the only factor, of course. The Board noted testimony from Rogers where she stated that neither she nor her husband were repaying their loans because their income was too low to require making payments. Under these types of programs borrowers earning below 150% of the poverty level for their family size are not required to make any payments on their federal student loan debt and after 25 years on the program the remaining debt will be forgiven. Rogers said she "knew there was no way for twenty years that I would ever be able to pay all that back" and that she would only work in legal services part-time.
This seemingly obvious dedication at not paying back her federal student loan debt coupled with the fact that she had filed nearly 60 civil lawsuits during the course of her lifetime, many of them frivolous, and that she failed to disclose this full history to the people who had recommended her for admission to the bar, was enough to deny her entry.
See Adam S. Minsky, Esq., Court Cites Student Loans as Reason to Deny Bar Admission to New Lawyer, Forbes, January 22, 2020.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Cremation became the top choice for funerals in 2015 and has risen in popularity ever since. The National Funeral Directors Association, or NFDA, states that more than half of all Americans who die this year will be cremated. The association even predicts that by 2040 80% of the US will choose cremation.
Mike Nicodemus, licensed funeral director and vice president of cremation services for the NFDA, says that cost and "the decrease in religious restrictions" are two reasons to blame to the shift. In 2016, the average cost of a funeral was $8,000, and a casket alone was between $2,000 and $10,000. That same year a direct cremation cost a mere $2,400. The Vatican has been loosening the rules on cremation since the 1960s. Noq, practicing Catholics are allowed to choose cremation; however, the church still wants them to have a ceremony and for the ashes to be buried, not scattered.
Many people are choosing to allow their loved ones to use their cremains in unique ways to celebrate their lives. The options now appear endless as more and more companies jump into the mix. Jewelry is easy: You can put bits of your ashes into small containers that are worn around the neck, or even have some ashes blown into a glass or diamond pendant. One company in the UK even lets clients create a vinyl with their ashes. Another domestic business allows loved ones to go out with a bang as a fireworks display.
See Sandee LaMotte, Cremation has Replaced Traditional Burials in Popularity in America and People are Getting Creative with Those Ashes, CNN, January 23, 2020.