Sunday, January 31, 2021
Article: On Bankruptcy’s Promethean Gap: Building Enslaving Capacity into the Antebellum Administrative State
Rafael I. Pardo recently published an article entitled, On Bankruptcy’s Promethean Gap: Building Enslaving Capacity into the Antebellum Administrative State,Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article.
As the United States contends with the economic crisis triggered by the COVID-19 pandemic, federal bankruptcy law is one tool that can be used to resolve the financial distress suffered by individuals and businesses. When implementing this remedy, the question arises whether the law’s application should be viewed as limited to addressing private debt matters, without regard for the public interest. This Article answers the question by looking to modern U.S. bankruptcy law’s first forebear, the 1841 Bankruptcy Act, which Congress enacted in response to the depressed economic conditions following the Panic of 1837. That legislation created a judicially administered system that nationalized bankrupts’ assets, some of which featured prominently in the business of slavery. This Article focuses on a specific episode from New Orleans, which at the time was the nation’s third-most-populous city, had the nation’s largest slave market, and had one of the nation’s largest money markets. One of the bankruptcy cases commenced in that city involved the administration and sale of Banks Arcade, which was a premier commercial exchange for auctioning enslaved Black Americans. This history about how the federal administrative state restructured one component of the U.S. slavery complex should prompt critical reflection on how present-day bankruptcy law manages the fallout from a financial crisis. This Article concludes that courts have the authority to permit the public to advocate for its interests in distressed assets redeployed through the federal bankruptcy system.
Saturday, January 30, 2021
Max M. Schanzenbach and Robert H. Sitkoff recently published an article entitled, Risk Management and the Prudent Investor Rule, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article.
The prudent investor rule, now enacted in every state, is the centerpiece of trust investment law. In accordance with modern portfolio theory, the rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. This article, recently published in Trusts & Estates magazine, summarizes the results of an earlier empirical study of the effect of the rule on asset allocation and management of market risk by bank trustees. We had two main findings. First, enactment of the rule was associated with increased stockholdings by bank trustees, but not among banks with average trust account sizes below the 25th percentile, a result that is consistent with sensitivity in asset allocation to trust risk tolerance. Second, enactment of the rule was associated with increased portfolio rebalancing by bank trustees, a result that is consistent with increased management of market risk. Given these findings, we concluded that reallocation toward additional stockholdings after enactment of the rule was correlated with trust risk tolerance and that the increased market risk exposure from those additional stockholdings was more actively managed.
Friday, January 29, 2021
A Hindu Daughter’s Right to Property: Is the Retrospective Amendment of Section 6 of the Hindu Succession Act a Step Towards Women’s Economic Empowerment?
Shalu Nigam recently published an article entitled, A Hindu Daughter’s Right to Property: Is the Retrospective Amendment of Section 6 of the Hindu Succession Act a Step Towards Women’s Economic Empowerment?, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article.
When Karl Marx explained his famous theory about the class conflict between the bourgeoisie and proletariat, he ignored those societies where the property and land ownership significantly play an important role and conflicts may be initiated on the basis of who owns and controls the material resources within the families or societies. More specifically, in India, an agricultural economy, the land holds not only economic but also an emotional value for individuals mostly from marginal families who may own smallholdings and/or other immovable property. As per the law, both men and women can acquire property and land through different ways such as purchase, inheritance, gift, or transfer by government. Yet, inheritance remains a significant option where land is privately owned. In the patriarchal North Indian society, for centuries, it is the male lineage that determines the ownership of the land and the control of the family property. Women, in such situations, where they hardly control any resources, are in financially constrained position than men in their ability to purchase any land or property. Therefore, for ages, Hindu women as daughters, mothers, and wives are facing economic discrimination within the hierarchical, unequal, and autocratic families. Owning immovable property or a piece of land or controlling economic assets, is a distant dream for the majority of women.
The amendments made in Section 6 of the Hindu Succession Act (HSA) of 1956 in the year 2005 grant the substantial equal right to daughters as that of sons in a Hindu joint family to benefit Hindu women who constituted 80 percent of women population in India. However, there are problems with the interpretations of this provision, mostly in cases, where the fathers have died prior to 09.09.2005, the courts have denied daughters their right to be the coparceners in such properties. It is on 11.8.2020, that the three judges’ bench of the Supreme court, in a landmark judgment has clarified that the amended provisions of Section 6 of the HSA to provide the daughters equal rights as that of sons in a joint Hindu family retrospectively and therefore the death of father before 09.09.2005, the day the amendments to HSA 2005 came into existence, has nothing to do with the daughter’s rights in the family property. This judgment has paved a way for the constitutional value of equality and democratic norms in an unequal world of the Hindu joint family. It is seemingly a step to make biased personal laws more gender-equal without any pre-conditions thus may lead to the economic empowerment of Hindu women in the long run. This article will discuss this interpretation of the Supreme Court in light of expanding the scope of women’s rights as daughters in Hindu families and argues that a lot more needs to be done to alter the personal laws to transform the patriarchal norms to bring constitutional values of equality, justice and democracy within families and societies not only for a women from Hindu communities but for all women.
"A silent trust limits the amount of information shared with beneficiaries or, in some cases, keeps the existence of the trust secret."
The duties of the trustee will vary from state to state as they are governed by state law. Most states require trusts to relay at least some information to beneficiaries who are not minorities. These states require the beneficiaries to be reasonably informed about the existence of a trust and its terms.
Most states also place limits on the information that can be provided to beneficiaries. "Some states, for example, allow the trust agreement to waive the trustee’s duty to inform the beneficiaries. Others allow the trust’s settlor (the person establishing the trust) to limit the trustee’s duty by executing a separate waiver document."
Some of the benefits of a silent trust are below:
- Maintaining confidentiality over the settlor’s financial affairs and estate planning arrangements,
- Avoiding beneficiary scrutiny of the trustee’s investment and management of trust assets,
- Preventing the disclosure of information about the trustee’s management of family business interests, and
- Potentially reducing disincentives for beneficiaries to behave in a financially responsible manner, pursue higher education and gainful employment, and lead a productive life.
There are also drawbacks with silent trusts given the fact that beneficiaries are not as informed as they are in normal trusts. They may also do not have the same encouraging effect on behavior as normal trusts.
If you are a secretive person, or if you do not want your family to be in the loop until after you are gone, a silent trust may be right for you.
See Joseph R. Marion, III & David T. Riedel, Shh! This is a Silent Trust — Let’s Keep it Quiet, Adler Pollock & Sheehan P.C., January 25, 2021.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Thursday, January 28, 2021
Pravatoudom when into the bank to pay some bills while her husband checked the tickets. When Pravatoudom got back into the car, her husband told her that they won the lottery.
“I was ecstatically happy, I was crying at the same time. I couldn’t believe it at first,” Pravatoudom said during a virtual celebration where she was presented the check. “I am going to buy a house, then if it’s allowed after Covid, I’m going to travel the world.”
Pravatoudom also told stories of how her and her siblings immigrated to Canada from Laos in 1980 and how hard her and her husband worked to support their family.
“My family was sponsored by a local church and because we had nothing, I am thankful for the great support they provided us over the years,” she said. “My husband and I have worked long hours as general labourers for over 40 years, trying to save what we could for our family. Due to the pandemic I was laid off last spring, so this money will certainly help make our lives much easier.”
The Pravatoudoms also plan on paying off their debts, helping out their children, and living life!
See A woman who won a $60 million lottery said she got the winning numbers from her husband’s dream, WSVN, January 25, 2021.
Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.
Comedy Legend Jerry Stiller died in May at the age of 92. He was known for his role in TV sitcom Seinfeld. According to his will, he designated money for his longtime personal assistant and his housekeeper, just to name a couple.
Stiller's estate was worth roughly $5 million dollars in which will be spread among his family, former employees, several New York organizations and more.
Stiller left $150,000 to his long-time assistant that was "in recognition of her exceptional services toward enhancing the professional careers of myself and my wife for many years."
Most of Stiller's property was left tho his wife who died in 2015. Stiller's children (Ben and Amy Stiller) are the beneficiaries.
Also included in the will are, Stiller's grandchildren, his sister, and niece and nephew. Stiller also left $25,000 to Syracuse University, his alma matter which he wanted to be focused on subsidizing productions in the theatre department.
Stiller also left $10,000 to the charity The Actors Fund of America for nursing homes and retirement homes.
See Elizabeth Rosner, Priscilla DeGregory, & Tamar Lapin, 'Seinfeld' actor Jerry Stiller's $5M estate divvied among family, aides, charities, Fox News, January 28. 2021.
Wednesday, January 27, 2021
With the combination of the new president, Joe Biden, and the rebalancing of the House and Senate, it may be necessary to prepare for tax changes. During his campaign las year, Joe Biden announced a tax plan that "would decrease he federal estate tax exemption from the current amount of $11.7 million to $3.5 million. In addition, Biden’s tax plan, if implemented, would raise the individual income, capital gains, and payroll taxes for individuals with high levels of income. The changes to the capital gains tax would appear to be the most significant."
The Tax Cuts and Jobs Act (TCJA) doubled the estate, gift and generation skipping transfer tax exemption to $10 million ($11.7 million adjusted for inflation) set to run from 2018 until 2025. However, with President Biden's tax plan, the exemption amount would be reduced to $5 million before the set date of the end of 2025. It is possible that the rate goes as low as $3.5 million, the amount the rate was in 2009.
It may be necessary to take a look at your estate plan as these changes could have a big effect. You may want figure out what gifts are linked to the amount of exemption and use the exemption before it is reduced.
If you believe that these changes will or could affect you, it is imperative that you visit with an estate planner to review your financial situation and the implications of the potential tax changes.
See Trusts and Estates 2021 Tax Update, Downs, Rachlin, Martin PLLC, January 22, 2021.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
Prior to the millennial takeover, prenups usually came up with young adults from wealthy families or couples entering marriages after a prior divorce(s). Now young adults of all income levels are using them for reasons apart from protecting accumulated assets. Due to the modern societal realities, there are more reasons to use prenuptial agreements. For example, the desire to keep debts separate, social-media use, embryo ownership, pet care and more.
According to experts, one reason for the increase in use of prenups with millennial may be the fact that many of them are children of divorced parents and have seen the financial impact divorce carries. Further, the conversations surrounding money and finances before marriage is not nearly as uncomfortable or dreadful as it once was.
Jacqueline Harounian, a partner with the law firm Wisselman, Harounian & Associates, stated, “You’re effectively negotiating your divorce agreement in advance in a way that’s more egalitarian than before.”
Some couples may use prenups to maintain separation of their finances in order to circumvent state laws that would combine their assets into marital property. Millennial also use prenups to address alimony provisions and debt issues.
See Cheryl Winokur Munk, Millennials Embrace Prenups—but Through a Very Different Lens Than in the Past, Wall Street Journal, January 21, 2021.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Tuesday, January 26, 2021
However, President Joe Biden has brought forth a new proposal which could lower the exemption before 2026. When conversation began about this new proposal, many people felt more comfortable because the rebalancing of the House and Senate appeared to be a long shot. However, now that the rebalancing has occurred, the proposal will likely have more support than originally believed.
"Policy commentators speculate on possible exemption amounts as high as $6 million and as low as $3 million, and even surmise that there could be an end to the unified credit, resulting in a $3.5 million exemption from estate tax and a $1 million exemption from gift tax. . ."
Another possible change will be elimination of the "step up" at death. There is also some speculation that the tax changes could be retroactive at the beginning of the year enacted.
It is important to know that, as of now, these projections are merely conjecture. However, it is important, and perhaps necessary, to consider how these changes may effect you or your clients estate plans.
See Keep Calm and Plan On: Estate & Gift Changes Ahead, Pierce Atwood L.L.P., January 20, 2021.
Ying Khai Liew recently published an article entitled, The Remedial Approach to Proprietary Estoppel in Singapore, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article.
This paper argues that the choice of remedial starting point in relation to proprietary estoppel is not simply a choice for claimants as matter of litigation strategy, contrary to the Singaporean Court of Appeal's view in Low Heng Leon Andy v Low Kian Beng Lawrence  2 SLR 799. It is a matter for the law to decide upon, since it raises an inherently normative question. The aim of proprietary estoppel, which is to avoid detriment, is best reflected when expectation relief is adopted as the starting point, but only where it provides a weak starting position.