Wills, Trusts & Estates Prof Blog

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

Tuesday, November 24, 2020

Article on Family Fiduciaries in the Protective Jurisdiction

Ben Chen recently published an article entitled, Family Fiduciaries in the Protective Jurisdiction, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

Baby boomers in Australia are entering retirement with a higher life expectancy and more wealth than any generation before them. Mental and physical decline can make it difficult or impractical for many older people to safeguard their own financial interests. In particular, guardians and attorneys who manage property for the elderly have the opportunity to misuse their power to enrich themselves. Responding to recommendations from law reform commissions, Australian legislatures tend to impose the strictest form of fiduciary regulation on guardians and attorneys.

Bucking the trend, this article argues in favour of a flexible model of fiduciary regulation. This model originates from historical Chancery jurisprudence and continues to enjoy support in New South Wales. The prevailing, strict model not only tends to be overprotective, it also ignores the reality that litigation about the properties of the elderly is often driven by inheritance expectations. The flexible model can alleviate the potential overprotectiveness of fiduciary law and accommodate harmless conflicts in close families.

November 24, 2020 in Articles, Estate Planning - Generally, Generation-Skipping Transfer Tax, Trusts | Permalink | Comments (0)

Article on Cooperative Compliance Program for Individuals and Trusts: A Proposal for a Compliance Passport

Philip Marcovici and Noam Noked recently published an article entitled, Cooperative Compliance Program for Individuals and Trusts: A Proposal for a Compliance Passport, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

Tax and beneficial ownership transparency regimes result in substantial costs and risks for many law-abiding individuals, family trusts, and private investment vehicles. Such parties suffer from substantial direct and indirect costs, legal uncertainties, and risks to their privacy. This article develops a proposal for a voluntary program which draws upon cooperative compliance programs such as the International Compliance Assurance Programme. Under the proposed program, the authorities of the relevant jurisdictions would determine on a joint basis whether the participant is in full compliance with their tax obligations and whether there are any money laundering concerns. The proposed program would ensure the participants’ compliance while reducing the costs and risks for the participants and the relevant governmental authorities.

November 24, 2020 in Articles, Current Events, Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

Monday, November 23, 2020

Article: Dr. Jekyll & Mr. Holmes A Tale of Two Testaments

Stephen R. Alton recently published an article entitled, Dr. Jekyll & Mr. Holmes A Tale of Two Testaments, South Carolina Law Review (2020). Provided below is the abstract to the Article. 

Author'sNote: This Article takes theform ofan epistolaryexchange across the centuries, comparing and contrasting two noted wills in Victorian literature. To preserve verisimilitude, the author lets these letters and emails speak for themselves, without any formal introduction, just as would have occurred in Victorian epistolary fiction. It is the author's hope that the relevant testaments and the legal issues they present will make themselves clear as these exchanges proceed.Any reader desiring a more formal introduction to this Article is directed to the first email (below) written by the author to Mr. Utterson and Mr. Holmes; this email has the subject line "Your Correspondence of 1905 An Introduction." This introductory email occurs in the text immediately preceding, accompanying, andfollowing notes 62-68, infra.

November 23, 2020 in Articles, Estate Planning - Generally, Teaching | Permalink | Comments (0)

Article on Parens Patriae and The Disinherited Child

Michael J. Hidden recently published an article entitled, Parens Patriae and The Disinherited Child , Washington Law Review (2020). Provided below is the abstract to the Article. Estate planning

Most countries have safeguards in place to protect children from disinheritance. The United States is not one of them. Since its founding, America has clung tightly to the ideal of testamentary freedom, refusing to erect any barriers to a testator's ability to disinherit his or her children-regardless of the child's age or financial needs. Over the years, however, disinheritance has become more common given the evolving American family, specifically the increased incidences of divorce, remarriage, and cohabitation. Critics of the American approach have offered up reforms based largely on the two models currently employed by other countries: (1) the forced heirship approach, in which all children are entitled to a set percentage of their parent's estate; and (2) family maintenance statutes, which provide judges with the discretionary authority to override a testator's wishes and instead award some portion of the estate to the testator's surviving family members. This Article takes a different approach and looks at the issue of disinheritance through a new lens: the doctrine of parens patriae. Just as this doctrine limits the decision-making autonomy of living parents vis-A-vis their children, this Article argues that it should likewise limit the dead hand control of deceased parents. Focusing on minor children, adult children who remain dependent as a result of disability, and adult children who are survivors of parental abuse, it is the contention of this Article that testamentary freedom must sometimes yield to the state's inherent parens patriae authority to protect children from harm. Specifically, this Article proposes that courts must refuse enforcement of testamentary schemes that disinherit children who fall into those categories if that disinheritance would constitute abuse or neglect. Such an approach is not only mandated by the doctrine of parens patriae but, in contrast to the approaches other countries have adopted, is much more deferential to testamentary freedom. The limitations imposed by this proposal represent a relatively modest curtailment of the rights testators currently possess and, at the same time, are consistent with existing exceptions to testamentary freedom, most notably those in place to protect spouses and creditors as well as those that prohibit the enforcement of testamentary provisions that violate public policy.

November 23, 2020 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Sunday, November 22, 2020

Is Now the Right Time to Forgive Intrafamily Loans?

Estate planningIf you made intrafamily loans to family members in the past, or even more recently due to the COVID-19 pandemic, you should consider forgiving those loans. Here's why, as of now, the gift and estate tax exemption rates are at an all-time high. Also, the interest rates are at a record breaking low. 

It is possible that intrafamily loans can be used as an estate planning tool due to the ability to transfer wealth to your loved ones tax free so long as the loan proceeds reach a certain level of returns. 

"Generally, to ensure the desired tax outcome, an intrafamily loan must have an interest rate that equals or exceeds the applicable federal rate (AFR) at the time the loan is made. The principal and interest are included in the lender’s estate, so the key to transferring wealth tax-free is for the borrower to invest the loan proceeds in a business, real estate or another opportunity whose returns outperform the AFR."

Any excess from these investment returns over the interest expense will work as a tax-free gift to the borrower. With low interest rates, it is much easier to outperform the APR. 

If have some leftover exemption, forgiving an intrafamily loan will allow you to transfer the entire loan principal plus any accrued interest tax-free. This will allow you to take advantage of the $11.58 million exemption amount before it is gone. 

There are also income tax considerations. Typically, forgiving intrafamily loans will be considered a gift, which carries with it no income tax consequences. 

In deciding whether or not you should forgive an intrafamily loan, you should speak with your financial and/or estate planning advisor.

See Joseph R. Marion, III & David T. Riedel, Is Now the Right Time to Forgive Intrafamily Loans?, Adler, Pollock, & Sheehan P.C.: Insight on Estate Planning, October 27, 2020.

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

November 22, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0)

Saturday, November 21, 2020

The Family Feud Behind a $32 Million T. Rex Named Stan

PNG imageLegendary paleontologist brothers Peter and Neal Larson dug up the fossils of a 40-foot-long Tyrannosaurus rex out of the ground in South Dakota. The twenty-eight year old discovery, now known by Stan, sold for $32 million dollars, a record breaking price for a fossil. 

One would expect this would be a joyful moment for the Larson brothers. However, the Larsons have been in a yearlong legal battle, and the sale of Stan only added fuel to the flame. The hope was that the sale of Stan would bring the brothers closer together, but it appears that has not been the case. Friends have begun to worry that the high sale price "deepened the bad blood between the brothers" as Neal received all of the money. 

“I figured they might still dislike each other, but there’s no way they’ll ever get over this,” said Mark Norell, chair of paleontology at the American Museum of Natural History.

The original plan for Stan was to stay at the Larson brothers' Black Hills Institute of Geological Research in Hill City, S.D., but two years ago the brothers were in a complex ownership dispute and were ordered to divide the institute's assets and go their separate ways. 

The older brother, Peter, kept the institute and along with it, 100,000-plus fossils and 5,000-square-foot private museum, which was valued around $5 million. Neal, was given the rights to Stan and the proceeds as his buyout. At the time, the deal appeared financially equal, but of course at the time Stan was not predicted to sell for $32 million. 

As it turns out, neither one of the brothers thought they'd make that much "in the history of their entire business." 

See Kelly Crow, The Family Feud Behind a $32 Million T. Rex Named Stan, The Wall Street Journal, October 21, 2020. 

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

November 21, 2020 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Friday, November 20, 2020

Debt After Death: What You Should Know

BoxHeadAlthough some debts are relieved when you die, others may have a great impact on your family. Below are a few things you should know about incurring debt and how those debts may impact your family after your death. 

First, after you die, your debt becomes apart of your estate. Dividing up your debt is done in a process called probate. "The length of time creditors have to make a claim against the estate depends on where you live. It can range anywhere from three months to nine months. Therefore, you should get familiar with your state’s estate laws, so you are well aware of which rules apply to you."

You should know that Beneficiaries' money is partially protected but only if they are named properly. Unsecured creditors usually will not be able to touch funds that are in life insurance policies or 401(k)s. However, if beneficiaries are not named until after your death, the funds will go to the estate leaving them open to creditors. 

Credit card debt will not disappear so easily. It is the norm for the estate to pay credit card debt using the estate's assets. So long as children are not a joint holder on the account, they will not inherit credit card debt. If a surviving spouse is a joint borrower, they will be responsible for their deceased spouse's debt. It is important to pay attention to joint applicants and joint borrowers on your credit card accounts, whether or not they had anything to do with the credit card following the paperwork. 

Federal student loan debt will be forgiven. Once the borrower dies, the debt is forgiven, however, proof of death is required. This rule is not the same for private student loan debt. Although some loan programs offer loan forgiveness upon death, others are not so generous. Thus, it is important to know where your student loans came from and who the borrower was, especially for private loans. 

In regard to your mortgage, if your heirs inherit property, lenders must allow them to take over the mortgage. However, heirs are not required to keep the mortgage and can refinance or pay off the debt. This same rule applies to the surviving spouse. 

Marriage is very important. If your spouse dies, you are legally required to pay any "joint tax owed to the state and federal government."

It is very important for you to organize your debts and use any safeguards possible to plan for your debts and how they may impact your family in the event of your death. 

See Michael Aloi, Debt After Death: What You Should Know, Kiplinger, November 2, 2020.

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

November 20, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Biden Won’t Enforce DOL's Revamped ESG Policy, State Street Says

Estate planningPresident-elect Joe Biden's administration has gotten to work around the topic of retirement policy. It appears that the Biden administration will be focusing on ordering non-enforcement of the U.S. Department of Labor's "revamped ESG rule." 

The DOL modified the rule in response to a slew of criticism, but the Biden administration is "likely to do a sweep of all regulatory agencies to ensure that regulations encourage environmental social and governance investing and that companies address climate change, racial equity, and inclusion" said Melissa Kahn, State Street's managing director. 

Kahn further stated, “I think the Biden administration will say, ‘Let’s put a hold on any enforcement of this regulation.’ Whether they decide to pull back the regulation entirely or make revisions remains to be seen, but the first thing they can do is put in place a non-enforcement policy.” 

Kahn also predicted that the Biden administration will focus on fiduciary regulation. There still remains a great deal of uncertainty around the topic of fiduciary regulation, so it would not be surprising for the Biden administration to revisit the topic and possibly make corrections to the DOL's fiduciary rule pertaining to investment advice. 

The uncertainty has made it difficult for financial advisors regarding the recommendation of rollover space and whether it is a fiduciary act or not. 

Kahn stated that she does not believe the Democrats will win both Senate seats in Georgia, leaving control of the Senate in the hands of the GOP. 

See Tracey Longo, Biden Won’t Enforce DOL's Revamped ESG Policy, State Street Says, Financial Advisor Mag, November 17, 2020.

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

November 20, 2020 in Current Affairs, Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, November 19, 2020

Alzheimer’s Research Looks at Hot Spots Across the U.S.

AlzheimersApparently, where you live impacts the risk of getting Alzheimer's disease. Scientists and medical researchers have done loads of research on things that may increase the chances of developing Alzheimer's, but now, they are focusing on the potential role that location may play. 

Through research, researchers have found that certain counties and neighborhoods have a higher prevalence of Alzheimer's disease, the sixth-leading cause of death in the United States. 

The next step is seeking to find if these locations have common risk factors associated with Alzheimer's. 

"The data show, among other things, that overall prevalence is more highly concentrated in the Southeast and Gulf Coast states, including Florida and Texas, compared with Western states, such as Colorado and Arizona." 

The research has only just begun and as expected, there are still a lot of unanswered questions. One study has shown that Alzheimer's is more prevalent in poor neighborhoods while another showed a higher prevalence in in rural Appalachia compared with non-Appalachian rural counties. 

The data also showed that social determinants of health, like higher levels of poverty, fewer options for exercise, and less education are risk factors. 

This new research may also be an effective aid in helping researchers pinpoint which intervention efforts will be more successful. 

See Clare Ansberry, Alzheimer’s Research Looks at Hot Spots Across the U.S., The Wall Street Journal, November 16, 2020. 

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

November 19, 2020 in Current Events, Estate Planning - Generally, Technology | Permalink | Comments (0)

Stetson’s Journal of Aging Law & Policy Call for Papers

The below announcement is posted as a courtesy for Prof. Rebecca Morgan, Stetson University School of Law:

Stetson’s Journal of Aging Law & Policy, the preeminent journal for cutting-edge issues of national and international aging law and policy, is seeking articles for its Volume 13, which will be published in May 2022. Stetson’s Journal of Aging Law & Policy is a unique journal with an elder law emphasis that also focuses on both law and policy.

If you are interested in submitting an article for publication, please email Nicholas Marler, Managing Editor, at nmarler@law.stetson.edu.

Submission requirements: Articles must be in 12-point font and double spaced. Citations should be in accordance with either the ALWD or BlueBook citation manuals and the article must be related to a relevant elder law topic. Submission preferences: The Journal seeks articles that are between 10,000 and 20,000 words. However, consideration may be given to articles that fall outside of this word requirement.

Questions should be directed to Nicholas Marler, Managing Editor, at nmarler@law.stetson.edu.

November 19, 2020 in Scholarship | Permalink | Comments (0)