Wills, Trusts & Estates Prof Blog

Illinois: Electronic Wills and Remote Witnesses Act

The governor of Illinois has signed into law the "Electronic Wills and Remote Witnesses Act," making it the tenth American state to put into effect legislation for e-wills. The act takes effect immediately (July 26, 2021).  The Illinois act is non-uniform -- it is not based on the Uniform Electronic Wills Act of 2019.

Below is the link to the Act:

Public Act 0167 102nd General Assembly 

Special thanks to Adam J. Hirsch (Professor of Law at the University of San Diego School of Law) for bringing this Act to my attention.

Impact of President Biden's Tax Plan on Estate Planning

There has been speculation on what President Biden's tax proposal will look like and what effects it will have on estate planning. There is also a question about the likelihood that President Biden's tax plan will be enacted into law. 

The Biden Administration announced the American Families Plan in April 2021, which proposed "significant tax law changes to increase taxes on both corporations and high-net worth individuals and to provide more resources to enhance IRS tax enforcement efforts. 

In May 2021, the United States Department of Treasury issued a report entitled, "General Explanation of the Administration's Fiscal 2022 Revenue Proposals (generally referred to as the Green Book) which included more details on the tax law changes previously proposed in the American Families Plan." The memo provided an overview of the proposed changes of the American Families Plan and the impact those changes may have on estate planning. 

Under the current proposal, "there will be a realization of capital gains to the extent such gains are in excess of a $1 million exclusion per person, upon the transfer of appreciated assets at death or by a gift. . .the proposal would provide various exclusions and exceptions for certain family-owned and operated businesses. 

One thing that was not addressed in the Green Book are changes to the federal estate, gift and generation skipping transfer (GST) tax system, although Biden did propose these changes during his campaign. 

There is a lot of uncertainty surrounding new tax laws, so high-net-worth individuals with estate tax concerns should consider taking advantage heightened exemptions by implementing wealth transfer strategies like the following: 

• Intentionally Defective Grantor Trust (IDGT)
• Spousal Lifetime Access Trust (SLAT)
• Grantor Retained Annuity Trust (GRAT)
• Charitable Lead Annuity Trust (CLAT)
• Annual Gifts 
• And more. 

See Jeffrey M. Glogower, Stephen J. Bahr, & Adam W. Randle, Impact of President Biden's Tax Plan on Estate Planning, The National Law Review, July 26, 2021. 

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

Britney Spears' new lawyer files to remove father's control

Britney Spears' new attorney, Mathew Rosengart, petitioned to remove her father from the conservatorship that has "controlled her life and money for 13 years and replace him with a professional accountant." 

In documents filed in Los Angeles Superior Court, Rosengart said that the current legal arrangement "has grown increasingly toxic and is simply no longer tenable." Rosengart proposed that Jamie Spears be replaced with CPA Jason Rubin as conservator of Spears' estate. Documents state that Spears' estate includes $2.7 million in cash and more than $57 million in assets. 

Rosengart stated that he first priority is removing Jamie Spears as conservator of the estate, which he stays is "the most pressing issue facing Ms. Spears." 

Rosengart added, "[a]ny father who genuinely loves his daughter and has her best interests at heart should willingly step aside in favor of the highly respected professional fiduciary nominated here.”

Lynne Spears, Britney's mother and Jamie's ex-wife said that Jamie's "microscopic control" over her health care and business decisions was especially damaging. 

Since Judge Brenda Penny granted Britney Spears permission to hire an attorney of her choice, the ball has begun rolling, and it appears Britney Spears may have more hope at ending the conservatorship. 

See Andrew Dalton, Britney Spears' new lawyer files to remove father's control, ABC News, July 26, 2021. 

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

Family of James Brown settles 15-year battle over his estate

Entertainer James Brown's family has reached a settlement that will end a 15-year battle over the late singer's estate. David Black, an attorney representing Brown's estate, confirmed to the Associate Press, "that the agreement was reached July 9. 

The legal battle had been going on since his death at the age of 73 on Christmas Day 2006. James Brown's death led to a slew of "bizarre headlines, beginning with Tomi Rae Hynie—a former partner who claimed to be Brown's wife—being locked out of his 60-acre (24-hectare) estate while photographers captured her sobbing and shaking its iron gates, begging to be let in." 

There were over a dozen lawsuits filed by people attempting to get their hands on Brown's assets, which have been estimated to be worth anything from $5 million to more than $100 million. 

Brown was renowned for hundreds of iconic musical works including hits like “I Feel Good” and “A Man’s World,” and was known around the world for his flashy performances and dynamic stage presence. But years of drug problems and financial mismanagement caused his estate to dwindle.

The war over Brown's estate did not just include his assets, there was also a fight over what to do with his body. Brown's family fought over his remains for more than two months, "leaving Brown's body, still inside a gold casket, sitting in cold storage in a funeral home." 

Last year, the South Carolina Supreme Court ruled that Hynie had not been legally married to Brown and did not have a right to his estate. 

Justice also ordered a circuit court to "promptly proceed with the probate of Brown's estate in accordance with his estate plan, which outlined creation of a trust that would use his music royalties to fund educational expenses for children in South Carolina and Georgia." 

According to AP News: 

A 2009 settlement plan would have given nearly half of Brown’s estate to a charitable trust, a quarter to Hynie, and the rest to be split among his adult children. The state Supreme Court overturned that deal in 2013, writing that then-Attorney General Henry McMaster — now the state’s governor — hadn’t followed Brown’s expressed wishes for most of his money to go to charity, having instead selected a professional manager who took control of Brown’s assets from the estate’s trustees to settle debts.

See Meg Kinnard, Family of James Brown settles 15-year battle over his estate, AP News, July 23, 2021. 

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

'Donation of the century': South Korea unveils late Samsung boss' 23,000-strong art collection

Lee Kun-hee, Samsung's late chairman, had a collection of some 23,000 artworks. Those artworks were recently donated to South Korea and appeared in two exhibitions of the items in Seoul on Wednesday. 

Just months before the exhibits were opened, Lee's family announced the donation "as it seeks to settle an inheritance tax bill of over 12 trillion won ($10.4 billion)."

The art works are being shown at the National Museum of Korea and National Museum of Modern and Contemporary Art (MMCA). Items on display include "centuries-old antiques and contemporary Korean works, while paintings by Western names like Pablo Picasso and Claude Monet are set to be unveiled next year." 

Lee's father founded technology conglomerate Samsung in the 1930's. Lee died in October and was 78-years-old. 

In April, his family stated that it was expecting to pay more than half the value of his estate in inheritance tax over a period of five years. "That same day, South Korea's Ministry of Culture, Sports, and Tourism revealed that the Lee family was donating approximately 23,000 antiques and artworks to public collections." 

See Oscar Holland, 'Donation of the century': South Korea unveils late Samsung boss' 23,000-strong art collection, CNN, July 21, 2021. 

Why conservatorships like the one controlling Britney Spears can lead to abuse

Britney Spears testified in a California court that her dad was "ruining her life" and also stated, "I'm here to get rid of my dad and charge him with conservatorship abuse." 

Britney Spears claimed that "a team led by her father controlled her schedule, prevented her from having another baby and bullied her." 

A judge in the case recently made a ruling that will allow Spears to hire her own lawyer. Spears has decided to hire former prosecutor Mathew Rosengart. 

Typically, conservatorships are not imposed on those who do not have severe cognitive impairments, which makes Britney Spears' situation highly unusual. Spears has embarked on a world tour and earned $131 million "all while deemed legally unfit to manage her finances or her own body." 

Conservatorships are legal arrangements that give a third party control over someone else. The Court has the sole powers to enforce and terminate them. Generally, conservators/guardians hold broad powers. 

In Britney Spears' case, her dad Jamie Spears is her the conservator. As Britney Spears' conservator, Jamie has received at least $5 million in fees. 

The board powers and "anemic oversight make conservatorships subject to multiple forms of abuse, ranging from the imposition of unnecessary restrictions on the individual to financial mismanagement." 

Since nothing can be done if no one finds out about the abuse or reports it, the magnitude of the problem goes largely unnoticed. 

The National Center for State Courts estimated in 2016 that 1.3 million adults in the U.S. are subject to some kind of conservatorship – representing about $50 billion in assets – but a previous report suggested the number of cases could be more than double that.

There’s virtually no data on how often conservators misuse their power or when a conservatorship has been improperly imposed.

The "Free Britney" movement has brought a lot of attention and publicity to the issue of conservatorship abuse, and will hopefully lead to reforms. 

See Naomi Cahn, Why conservatorships like the one controlling Britney Spears can lead to abuse, The Conversation, July 19, 2021. 

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

Article: Family, Property & Inheritance: Institutions for Civilization and their Enemies

Ugo Stefano Stornaiolo Silva recently published an article entitled, Family, Property & Inheritance: Institutions for Civilization and their Enemies, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article:

English Abstract: In the history of ideas, few institutions are as important or are as closely related as Family, Property, and Inheritance, for on the establishment and function of an ordered society.

About them, many perspectives have been taken by legal and political thinkers and philosophers on both the traditional Catholic and libertarian schools and their contemporary variants, which coincidentally agree that all of them are products of a perennial order, in most cases of a spontaneous origin that manifests itself within Natural Law, and as such, must be protected by positive legislation, although its relation is always understood as one of logic and not one of institutions.

On the other hand, an opposing and hostile perspective on Family, Property, and Inheritance is promoted by revolutionary Marxism, revealing that, at least on its negation, there is a universal outlook on the mutual need of these three institutions to subsist as part of the social order, and particularly, as legal institutions, which uses, and formal aspects are protected by legislation to be applied in a particular community.

By exploring these stances, as well as the proper definitions of Civilization, and order, one may understand the meaning of family, private property, and inheritance, as well as their legal conceptions in the history of ideas, and the way they are universally opposed by the Marxist schools of thought, based on their own revolutionary ends.

Spanish Abstract: En la historia de las ideas, pocas instituciones son tan importantes o están tan estrechamente relacionadas como la Familia, la Propiedad y la Herencia, por lo que respecta al establecimiento y funcionamiento de una sociedad ordenada.
Sobre ellos, pensadores y filósofos jurídicos y políticos han adoptado muchas perspectivas tanto sobre las escuelas tradicionales católicas como libertarias y sus variantes contemporáneas, que coinciden en que todas ellas son producto de un orden perenne, en la mayoría de los casos de un origen espontáneo que se manifiesta dentro del Derecho Natural, y como tal, debe ser amparado por una legislación positiva, aunque su relación se entiende siempre como lógica y no institucional.
Por otro lado, el marxismo revolucionario promueve una perspectiva opuesta y hostil sobre la familia, la propiedad y la herencia, revelando que, al menos en su negación, existe una perspectiva universal sobre la necesidad mutua de estas tres instituciones de subsistir como parte de el orden social, y en particular, como instituciones jurídicas, cuyos usos y aspectos formales están protegidos por la legislación para ser aplicada en una determinada comunidad.
Al explorar estas posturas, así como las definiciones adecuadas de civilización y orden, se puede comprender el significado de familia, propiedad privada y herencia, así como sus concepciones jurídicas en la historia de las ideas, y la forma en que se oponen universalmente. por las escuelas de pensamiento de tipo marxista, basadas en sus propios fines revolucionarios.

Wife’s Fraudulent Transfer Claim Against Husband For Transferring Business Interests To Trust Failed Due To The Statute Of Repose

In Austin v. Mitchell, "a wife filed suit alleging her ex-husband fraudulently transferred a portion of his limited partnership interest in a family limited partnership to a trust for the benefit of his children." No. 05-19-01359-CV, 2021 Tex. App. LEXIS 4536 (Tex. App.—Dallas June 8, 2021, no pet. history). 

The trial court granted summary judgment in favor of the husband and the wife appealed. The court of appeals first addressed the husband's statute of repose defense. The wife claimed that the husband's transfer was fraudulent because it was made:

without fair consideration and the husband was left insolvent as a result; with actual intent to hinder, delay, or defraud the wife; or without receiving reasonably equivalent value at a time when the husband believed or should have believed his debt to the wife was beyond his ability to pay as payments became due.

The court affirmed the summary judgment after it found that the evidence showed that the wife should have known of the transfer more than four years before the suit due to the husband's testimony in a deposition, in which the Wife's attorney was present. 

Although the wife argued that she had standing, the court disagreed stating that the wife did not have sufficient connection to the trust. 

See David Fowler Johnson, Wife’s Fraudulent Transfer Claim Against Husband For Transferring Business Interests To Trust Failed Due To The Statute Of Repose, Texas Fiduciary Litigator: The Intersection of Texas Courts and the Fiduciary Field, June 29, 2021. 

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

Allen Weisselberg resigned from the top of the Trump Organization. So who’s running the company now?

"Allen Weisselberg—the Trump Organization's most powerful employee not named 'Trump'—resigned his post in the company's leadership." 

Weisselberg was one of two trustees at the trust that owns and controls Trump's company. Weisselberg resigned from Trump's company as well as "dozens of others at Trump subsidiaries" after he was charged with running a tax-fraud scheme inside the company. 

Although Weisselberg gave up his post as trustee, he still works at the company. The company is currently facing a slew of financial and legal problems. 

Due to Weisselberg's resignation and the other problems the Company is facing, there are some things that may be changing. As of now, Donald Trump Jr. is the most powerful officer of the Company. 

The Trump Organization is controlled by the Donald J. Trump Revocable Trust—"a legal entity to which Trump transferred his hundreds of companies when he took office in 2017." 

Trump's business was originally run by a trust so that he could "relinquish management" in order to avoid conflicts of interest as president. Although it is not clear why, Trump never changed the arrangement after leaving the White House. 

As it turns out, Trump never really gave up his power considering he used a revocable trust to hold his business assets. 

It will be interesting to see how the power shifts due to the problems the Company has endured and continues to face. 

See David A. Fahrenthold, Josh Dawsey, & Jonathan O'Connell, Allen Weisselberg resigned from the top of the Trump Organization. So who’s running the company now?, Washington Post, July 21, 2021. 

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

Are 1031 Exchanges Right for Me?

According to Casey Robinson, CFP: "[t]here’s a possibility the tax-deferral benefit of such property exchanges could end for some high-net-worth real estate investors, so that could speed up some property owners’ decisions."

President Biden has proposed a plan called the American Families Plan, which is exposing a popular tax deferral strategy used by property owners and real estate investors. President Biden's proposed spending package would eliminate the strategy in certain cases. 

A 1031 exchange (named for Section 1031 of the tax code) allows someone to defer paying capital gains on real estate profits if the proceeds are reinvested in another similar property of equal or greater value within a certain time limit. Biden's proposal would end the exchanges on real estate profits of more than $500,000 for singles taxpayers and $1 million for married taxpayers. 

While some see the 1031 strategy as a loophole used by investors, others argue that the repeated use of the strategy "contributes to an active real estate market and, therefore stimulates the economy." 

Although 1031 exchanges seem appealing, it is important to consider that they are only tax deferral strategies, meaning the tax on capital gains must be paid eventually. Thus, 1031 exchanges save investors in the short term. 

It is also important to note that 1031 exchanges have different benefits for investors who deal in multimillion-dollar transactions than they do for someone who owns a handful of smaller properties. For the high-end investors, 1031 exchanges may be more useful for them given the resources they have available. On the other hand, owners of smaller properties will have more "hurdles involved" lie fees, rigid regulations, and other things. 

See Casey Robinson, CFP, Are 1031 Exchanges Right for Me?, Kiplinger, July 18, 2021. 

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