Wills, Trusts & Estates Prof Blog

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

Saturday, October 31, 2020

Article on Restraining Live Hand Control of Inheritance

Mark Glover recently published an article entitled, Restraining Live Hand Control of Inheritance, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

Inheritance law generally defers to the donor’s decisions regarding what property should be distributed to which donees. Because these decisions are carried out after the donor’s death, the law’s deference to the donor has become known as “dead hand control.” But just as the inheritance process is guided by the decisions of the dead, it is also influenced by the choices of the living. When the donor names a donee in their estate plan, the donee must decide whether to accept or reject the gift. If the donee accepts the gift, the property becomes theirs, but if the donee rejects the gift, the property is distributed to an alternate donee. Thus, inheritance law grants control not only to the dead hand of the donor but also to the live hand of the donee. This latter deference to the donee has become known as “live hand control.”

Although the law grants the donee broad freedom to accept or reject inheritances, it restrains the donee’s ability to reject a gift under some scenarios, and it restrains their ability to accept a gift under others. Legal scholars have devoted considerable attention to the study of each type of live hand restraint, but they typically have focused on one type or the other without exploring possible connections between the two. To fill this analytical void, this Article will bring together the law’s restraints of acceptance and rejection and seek to develop a unifying theoretical framework that can guide policymakers in deciding when and how to restrain the donee’s discretion to accept or reject a gift.

Specifically, this Article will argue that the law’s live hand restraints, whether of rejection or acceptance, are primarily founded upon the concern that the donee’s decisions to accept or reject a gift will impose costs on others that the donee likely does not take into account when making their decisions. In these situations, deference to the donee might not be socially beneficial, and, consequently, the law restricts their decision-making ability. Ultimately, informed by the insights gleaned from a comparative analysis of the two types of live hand restraints, this Article will explore specific reform proposals that can increase the social welfare generated by the inheritance process.


October 31, 2020 in Articles, Current Events, Estate Administration, Estate Planning - Generally, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Article on The Performance Interest in the Law of Trusts

Lusina Ho and Richard Nolan recently published an article entitled, The Performance Interest in the Law of Trusts, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

This article examines the structures and remedies for breach of trust and contractual obligations and argues that the obligations of a trustee are fundamentally different from the obligations of a contracting party.

The obligations of a trustee give primacy to the “performance interest” of beneficiaries of that trust: that is, the interest of those beneficiaries in actual execution of the trust rather than compensation for loss resulting from the trustee’s failure to execute the trust. The obligations of a contracting party do not attach the same importance to the performance interest: the contracting party will generally perform, but if that party does not perform, the counterparty may, in the vast majority of cases, claim the monetary equivalent of the reasonably foreseeable loss that flows from breach of the contract.

After considering the case law establishing the axiomatic principle of trust law - that trusts must be performed, the article examines the mechanisms, structural features and remedies by which the law of trusts secures performance. It then compares trust principles with those in contract law, and sets out the implications, both theoretical and practical, of these important distinctions between the law of trusts and the law of contract.

October 31, 2020 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Happy Halloween!

J0412052Many law school classes have one or more holidays which are especially relevant.  For example, Family Law has Valentine's Day, Mother's Day, and Father's Day, Labor Law has Labor Day, Environmental Law has Earth Day, Military Law has Memorial Day, and Law and Religion has Christmas, Hanukkah, Ramadan, etc.

Halloween, with its fascination with death, may be the most relevant holiday to those of us interested in wills, trusts, estates, probate, and estate planning.

So, however you celebrate, have fun and be safe!

October 31, 2020 in About This Blog | Permalink | Comments (0)

Friday, October 30, 2020

Federal Estate Tax Exemption Is Set to Expire – Are You Prepared?

EstateplanningAs the presidential election draws closer, so does the threat to the historically high estate tax exemptions. Due to the Tax Cuts and Jobs Act (TCJA) the lifetime gift, estate, and generation-skipping tax exemptions doubled the exemption, raising it to $11.58 million (adjusted for inflation) in 2020. Which is the highest it has ever been. 

Unfortunately, this high exemption will not last forever, and could be gone sooner rather than later. Therefore, it may be a good idea for you to take advantage of the exemption, or encourage clients to do so. 

As of now, the exemption rates are not set to sunset until the beginning of 2026, but the exemptions could sunset much sooner, especially if Joe Biden is elected. 

A few things you could do in preparation for the estate tax exemption sunset include: 

  • Consider Gifting Away Assets to Reduce Estate Taxes While You Still Can 
  • Take Advantage of Lower Valuations and Low Interest Rates
  • Consider Acting Now to Avoid the Last-Minute Rush 

See Chuck Cavanaugh, Federal Estate Tax Exemption Is Set to Expire – Are You Prepared?, Kiplinger, October 14, 2020. 

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

October 30, 2020 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Gift Tax, New Legislation | Permalink | Comments (0)

Legal Considerations of Living Together in a Multi-Generational Home

HouseDue to COVID-19, many people have had to balance working remotely with caring for their children. That being said, many are using their homes as an office and a school, while also maintaining it as a home. 

The difficulty balancing, remote learning and homework, virtual meetings and work calls, and shopping, cooking and cleaning has created more housework. It is no surprise that wear and tear and stress levels have increased. 

Many are considering moving in with their parents or children are needing to consider the legal implications of doing so. When living with multiple generations, new considerations come into play. These considerations include,  "the burdens and the benefits of raising and teaching the children together, dividing the chores, maintaining the home, and pooling their finances together during this time of uncertainty."

Below are a  few initial questions that you should discuss with your family when considering living in a multigenerational home: 

  • Who is contributing to the purchase price?
  • Is it a gift, advance on inheritance, loan, or will they hold an ownership interest equal to their capital contribution? 
  • How do you equalize your estate to the remainder of your family?
  • What happens if a couple gets divorced?
  • Who has the right to reside in the home and how will the ownership be divided?
  • What happens if a parent must later reside in a nursing home for care?
  • Do they have sufficient assets in their name to pay for nursing care or will Medicaid look to his or her ownership interest in the home for payment?
  • If one of the owners dies, who receives his or her interest in the home?

With all of the uncertainty surrounding us, these questions are very important, and the answers even moreso. 

See Rebecca MacGregor, Legal Considerations of Living Together in a Multi-Generational Home, Bowditch & Dewey, Estate, Financial & Tax Planning Group, October 13, 2020. 

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

October 30, 2020 in Current Events, Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Guardianship, Trusts, Wills | Permalink | Comments (0)

Thursday, October 29, 2020

Estate of late Holocaust survivor sues 'Borat' creators

"The estate of a recently deceased Holocaust survivor filed a lawsuit to keep her interview out of Sacha Baron Cohen’s upcoming “Borat” movie, saying she thought the film was a serious documentary."

Creator of "Borat" approached Judith Dim Evans, who passed away this summer, to talk about the Holocaust. It turns out, Evans agreed to the interview under the impression that "Borat" was a serious documentary and not a comedy. This lead to her estate filing a lawsuit this week in Fulton Superior Court. 

Ms. Evans was reportedly "horrified and upset" to find that the movie was intended to "mock the Holocaust and Jewish culture." 

The estate claims that Ms. Evans would not have agreed to the interview if she had known of the true purpose behind it and nature of the film for which it would be used. 

The estate is seeking for the scene including Evans' interview be removed from the film, as well as damaged less than $75,000. 

See Elizabeth Rosner, Estate of late Holocaust survivor sues 'Borat' creators, Apple News, October 14, 2020. 

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

October 29, 2020 in Current Events, Estate Planning - Generally, New Cases, Television | Permalink | Comments (0)

Chicago woman's self-written obituary goes viral for her wise advice

EstateplanningA Chicago woman wrote her own obituary in which she provided timeless advice. Due to the good advice the obituary contains and the special fact that the woman wrote it herself, it has gone viral.

Stacy Lois Oliver, died on October 4. at the age of 52. Oliver died of multiple system atrophy, a progressive neurodegenerative disorder. Her death came only two years after her diagnosis/ 

Stacy's husband, Jeff Oliver, stated that she decided to write her own obituary after she found out that there was no cure for MSA. 

Jeff Oliver told Good Morning America, "She knew the disease was going to start taking more and more of her away," and "While she had it, she decided to get her thoughts out quickly."

Inspiring words from Stacy Oliver included, “I'm not telling you what to do, but I am telling you what to do,” and “Stop worrying about your weight, go live, be, do. Smile, people don't get to feel them enough.”

Stacy encouraged people to enjoy the moment and to laugh and love in abundance. 

See Ann W. Schmidt, Chicago woman's self-written obituary goes viral for her wise advice, Fox News, October 16, 2020. 

October 29, 2020 in Elder Law, Estate Planning - Generally, Humor | Permalink | Comments (0)

Wednesday, October 28, 2020

Billionaire Robert Smith Admits He Cheated On Taxes For 15 Years

TaxRobert F. Smith, is known as a "brilliant investor who built Vista Equity Partners into a private equity powerhouse and a generous philanthropist lauded for paying off student debt of Morehouse College's entire graduating class last year." 

However, on Thursday, federal prosecutors claimed that Smith concealed income and evaded taxes for 15 years. 

Smith avoided prosecution by cooperating in a case against Robert Brockman, who was has been accused of using a "web pf Caribbean entities to hide $2 billion in income in what prosecutors called the largest U.S. tax case ever against an individual."

Smith admitted that he repeatedly made false filings with the IRS, even after he attempted to enter an amnesty program in 2014. Smith has signed a non-prosecution agreement and has also agreed to pay more than $139 million in back taxes, interests and penalties. 

"Smith admitted that he used $2.5 million in untaxed funds to buy and renovate a vacation home in Sonoma, California, paying for it in 2005 with private equity funds deposited into accounts in the British Virgin Islands and Banque Bonhote in Switzerland."

"In 2014, Smith directed Excelsior to contribute $182 million in shares in a Nevis-based entity, Flash Holdings LLC. The shares went to Fund II Foundation, a U.S.-based charity that he co-founded. Smith falsely claimed that he’d been required to make that charitable contribution as part of his original agreement with Brockman. Had it been true that the offshore assets had always been designated for charity, it could have supported the view that Smith didn’t owe taxes on them." 

There are also many other instances where Smith used funds to build homes and other properties using money he concealed from the IRS. 

See Neil Weinberg & David Voreacos, Billionaire Robert Smith Admits He Cheated On Taxes For 15 Years, Financial Adviser Magazine, October 16, 2020. 

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

October 28, 2020 in Current Affairs, Current Events, Estate Planning - Generally, Income Tax, New Cases | Permalink | Comments (0)

As They Aged, They Started Businesses for People Like Them

MaryAnneMary Anne Hardy, realized that her nursing career was coming to an end, but she was not ready to retire. Hardy had heard about patient advocates, who help the elderly and their adult children "navigate the increasingly complex American health care system." 

Hardy, 65, explained, “It was a light bulb. . . I thought about my parents’ experience, and it was a motivator.” Hardy became certified as an advocate and began taking clients in 2013. 

Hardy's mother had a stroke, followed by bowel surgery and a "cascade of infections and other preventable ailments." These mishaps lead to Hardy's mother being moved from facility to facility with "little communication among medical professionals or with her." 

"Ms. Hardy is at the intersection of two long-evolving trends — the rising number of later-in-life entrepreneurs and the growth in the so-called longevity market." 

"In 2019, roughly 25 percent of new entrepreneurs were between 55 and 64, up from 15 percent 20 years earlier, according to the Ewing Marion Kauffman Foundation, a nonprofit that promotes entrepreneurship." 

Hardy believes that her age could and often does work to her advantage, as she may be more knowledgeable in helping people through the process. 

See Susan B. Garland, As They Aged, They Started Businesses for People Like Them, N.Y. Times, October 16, 2020. 

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

October 28, 2020 in Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, October 27, 2020

A Per Stirpes Primer From The Connecticut Supreme Court

EstateplanningIn Schwerin v. Ratcliffe, the Connecticut Supreme Court analyzed the application of and rationale behind per stripes distribution. "The Court analyzed the terms of two family trusts and law from Connecticut and other jurisdictions to determine the correct generation to serve as the root for the per stirpes distribution in this case."

The plaintiffs, Francis and Brenda Schwerin sought a declaratory judgment regarding proper distribution of assets from two family trusts. The two trusts were (1) the Hubbell Trust and (2) the Roche Trust. Defendants were the trustees and potential beneficiaries of the trusts. 

The Hubbell Trust was to expire upon "the death of the last survivor of the grantor [Harvey Hubbell III], his wife Virginia W. Hubbell, his children Harvey Hubbell, Jr., William [Ham] Hubbell and Elizabeth H. Schwerin, and his grandchildren Lisa Lorraine Hubbell and Francis Timothy Schwerin …”

The Roche Trust was set to expire upon the death of the last survivor of the grantor [Roche], her son Harvey Hubbell, her grandchildren Harvey Hubbell, Jr., William [Ham] Hubbell and Elizabeth H. Schwerin, and her great-grandchildren Lisa [Lugovich] and Francis Timothy Schwerin …”

The people in quotations were defined as the measuring lives for the expiration of the Trusts. Therefore, the Trusts would expire upon the death of the last survivor of the measuring lives. 

When this case was brought, five of the measuring lives were deceased. 

In analyzing the rational behind Per Stirpes Distribution, the  Connecticut Supreme Court stated that when the testator has not "expressly provided otherwise" the law favors an equal distribution. 

The Court ultimately concluded that "the trial court properly determined that the per stirpes distribution began at the level of the children of the grantor, such that each child was the head of each stirpe." 

See A Per Stirpes Primer From The Connecticut Supreme Court, Probate Stars, October 20, 2020. 

October 27, 2020 in Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)