Wills, Trusts & Estates Prof Blog

Five Common GST Allocation Mistakes and How to Avoid Them

The Generation-Skipping Transfer Tax (GSTT) is a complex aspect of estate planning that aims to prevent large wealth transfers from bypassing estate taxes by skipping generations. The article outlines five common mistakes taxpayers make in GST exemption allocation. These mistakes include failing to account for automatic GST exemptions for unreported gifts, overfunding trusts without enough GST exemption, and relying too heavily on automatic GST exemption allocation. Additionally, gifting to Spousal Lifetime Access Trusts (SLATs) without understanding gift-splitting implications and making distributions to non-skip persons from GST-exempt trusts can lead to inefficiencies in applying the GST exemption.

The first mistake involves taxpayers neglecting to report certain generation-skipping transfers on Form 709, which complicates tracking the GST exemption allocation. This can result in an incomplete gifting history, causing difficulties when determining the remaining GST exemption in the future. To avoid this, the article recommends filing a gift tax return even if not required, and maintaining a detailed record of automatic GST exemption allocations to ensure accurate future planning.

The other mistakes highlight the importance of thorough planning and record-keeping in estate tax strategy. For example, if a trust is overfunded with insufficient GST exemption remaining, a portion of the trust may become taxable, potentially incurring unexpected GSTT liabilities. To address these challenges, the article suggests careful review of all prior transfers, making an affirmative election regarding the GST exemption, and strategically structuring trusts to avoid misallocation or unintended use of the exemption. Ultimately, the article emphasizes proactive estate planning to avoid costly tax consequences.

For more information see Carol G Warley, Amber M Waldman, and Rachel Ruffalo "Five Common GST Allocation Mistakes and How to Avoid Them" ABA Probate and Property Journal, September 1, 2024.

Challenges in Estate Planning with Investment Real Estate

The article provides an in-depth analysis of the key challenges in estate planning for clients with significant real estate investments. First, it highlights the complexities of determining asset value, especially when dealing with varied property types such as residential, commercial, or rental properties. Market fluctuations, local conditions, and valuation techniques all influence the estate's worth, making accurate assessments difficult.

A major challenge addressed is liquidity. Unlike stocks or bonds, real estate isn't easily converted to cash, which complicates paying estate taxes or debts. This is especially important in high-value properties that don't generate sufficient cash flow. The article suggests strategies like taking out life insurance policies or selling certain assets to ensure liquidity.

Another critical issue is succession planning. Real estate assets may face legal disputes or management challenges if not handled properly. The article recommends creating trusts, outlining detailed plans for transferring properties, and considering family dynamics in structuring the estate. Long-term legal and financial planning is essential to avoid complications during the transition, making real estate an intricate aspect of estate planning.

For more information see Mary P. O'Reilly and Andrew L. Baron, "Challenges in Estate Planning with Investment Real Estate" ABA Probate and Property Journal, September 1, 2024.

AI and the Formulation of Critical Data for Trust Mediations

The article discusses how attorneys gather and use information in litigation, emphasizing that the ability to effectively process and apply information distinguishes good attorneys from ineffective ones. While attorneys must analyze facts and legal issues, the balance of information between opposing parties is often unequal. Discovery processes aim to level this imbalance, but time constraints and client needs—especially in trust disputes—can pressure attorneys to settle cases through mediation.

The article then explores the emerging role of artificial intelligence (AI) in assisting attorneys, particularly in trust litigation. AI platforms, including large language models (LLMs) and generative AI, are evolving to help attorneys manage and process information more efficiently. These technologies could soon support mediation, assisting with asset allocation in subtrusts, trust accountings, and other data-heavy tasks. AI's potential to automate complex calculations, verify opposing counsel’s projections, and organize financial records offers significant time and cost savings.

The future of AI in litigation will depend on its growing sophistication and the creative use of technology by attorneys, but its effectiveness in mediations and large-scale information processing is expected to increase dramatically. The question of whether AI can provide wisdom in decision-making remains open for debate.

For more information see John H Sugiyama "AI and the Formulation of Critical Data for Trust Mediations," ABA Probate and Property Journal, September 1, 2024.

Springing Trust Protectors — Now You See 'em, Now You Don’t

The article discusses the growing importance and use of a "trust protector" in estate planning, a role that wasn't widely understood until recently. Trust protectors originated with offshore asset protection trusts, where they provided an extra layer of control over the trust, offering flexibility and security for the settlor, who often hesitated to entrust large amounts of wealth to foreign trustees. This concept has since been adopted in U.S. trusts to allow adjustments to irrevocable trusts without needing court reformations, which can be complex, costly, and time-consuming.

A trust protector is a non-trustee individual with the power to oversee or modify trust provisions to respond to changing circumstances, such as laws, family dynamics, or economic conditions. Their powers may include modifying beneficiaries, relocating the trust, or even altering the trust's terms. However, the extent of a trust protector's powers and responsibilities requires careful drafting.

The article also explores the concept of a "springing protector," a protector appointed only when needed. This approach allows for flexibility without permanently binding the trust to a specific protector. Questions arise around the legal basis, liabilities, compensation, and scope of powers for both permanent and springing protectors, especially in terms of tax implications or potential creditor issues if a protector holds nonfiduciary powers.

Ultimately, the trust protector offers a practical solution to managing unforeseeable changes during the life of a trust, minimizing the need for court involvement and allowing for smoother administration.

For more information see Alexander A. Bove Jr "Springing Protectors — Now You See 'em, Now You Don’t" ABA Probate and Property Journal, September 1, 2024.

Creative life after death − or yes, you can control spinoffs from beyond the grave

The article discusses how the estates of deceased artists, like Michael Crichton, Isaac Hayes, and George Carlin, are involved in legal battles to protect their legacies and control over their intellectual property.

Michael Crichton’s estate is suing Warner Bros. for allegedly rebooting ER through a new medical drama The Pitt, invoking a "frozen rights" contract Crichton had signed, giving him and his estate approval rights over sequels. Such contractual rights can survive death, allowing estates to enforce them.

Copyright protection extends 70 years after an author's death, as shown by the estate of Isaac Hayes suing Donald Trump’s campaign for unauthorized use of his song, and Donna Summer’s estate’s lawsuit against Ye and Ty Dolla Sign for using her music without permission.

Publicity rights, which prevent unauthorized commercial use of someone’s name or likeness, also persist after death in some states. This is seen in George Carlin’s estate suing a podcast for using AI to mimic his likeness and voice. Little Richard's estate involved estate planning to ensure beneficiaries cooperated in managing his posthumous publicity rights, with penalties for interference.

These cases highlight how legal measures like contracts, copyright, and publicity rights help control the use of an artist’s work even after death, especially in the age of AI, where unauthorized reproductions are more common.

For more information see Naomi Cahn and Reid Kress Weisbord "Creative life after death − or yes, you can control spinoffs from beyond the grave" TheConversation.com, September 13, 2024. 

Special thanks to Naomi Cahn (University of Virginia School of Law) for bringing this article to my attention.

Simple request in Long Island woman's will sparked her son's devastating shotgun rampage on siblings

Joseph DeLucia, 59, from Long Island, fatally shot his three siblings and niece before killing himself after a dispute over their late mother’s estate. His mother, Theresa DeLucia, had left her home to be sold and the proceeds divided among her children, leaving Joseph, who had lived there his entire life, homeless. Struggling with mental health issues and panicked about losing his home, Joseph opened fire during a family meeting.

Despite reassurances from his siblings, Joseph believed he was being left out of the estate. He used a legally purchased shotgun to kill his family members inside the home before taking his own life outside. Neighbors and police noted his declining mental state, exacerbated by his mother’s death and fear of displacement.

Authorities revealed that Joseph had dealt with mental health problems throughout his life, and his hoarding tendencies worsened his isolation. His siblings had traveled from out of state for the meeting, and despite their efforts to resolve the situation, Joseph’s deteriorating mental state led to the tragic outcome.

For more information see James Gordon "Simple request in Long Island woman's will sparked her son's devastating shotgun rampage on siblings" The Daily Mail, September 12, 2024.

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

Alleged romantic deception leaves man broke, homeless

Skyler Houston, 29, from Wichita Falls, was charged with exploiting a 66-year-old man by manipulating him into handing over money and property under the promise of marriage. From February to July 2024, she withdrew over $42,000 from his bank account, even stealing his Medicare oxygen equipment, leaving him homeless. Houston’s history includes prior fraud charges, including exploiting a 76-year-old woman and using stolen money to pay her rent.

Houston, currently on probation for other fraud cases, has been arrested nine times since 2020 for fraud, forgery, and credit card abuse. Police are investigating more cases involving elderly victims.

For more information see Larry Statser "Alleged romantic deception leaves man broke, homeless" Texomashomepage.com, September 11, 2024. 

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

Call For Papers: Trusts & Estates Collaborative Research Network (CRN) of Law and Society Association

Trusts & Estates Collaborative Research Network
Law and Society Association Annual Meeting
Chicago, Illinois May 22-25, 2025

Call for Participation – Deadline September 29, 2024 

The Trusts & Estates Collaborative Research Network invites proposals for (i) individual papers to be organized into panels; (ii) fully-formed panel proposals; and (iii) proposals for other sessions such as Author Meets Reader, Salon, or Roundtable discussions that explore any aspect of the law, practice or effects of trusts, equity, and estates, broadly defined. We also seek volunteers to serve as Chairs and/or Discussants for paper panels. Successful proposals likely will bear in some way on succession (also referred to as inheritance) and/or wealth transfers (whether at death or during lifetime, outright or in trust). Subjects of inquiry may involve any aspect of government or social policy with respect to trusts, estates, inheritance, wealth transfer, equity or courts with jurisdiction over these issues. Our goal is to stimulate focused discussion of papers on which scholars are currently working and to discuss topics of current and common interest to those working in the field of Trusts & Estates, broadly defined, both in the United States and internationally.  We welcome participation from scholars of any level of seniority working in any discipline, language, or country. 

If you would like to present an individual paper as part of a Trusts and Estates CRN panel, submit an idea for a fully-formed panel, or propose an Author Meets Reader, Salon or Roundtable session, please  submit a 500-word abstract/description by Sunday, September 29, 2024 at 5:00 p.m. EST by emailing Carla Spivack ([email protected]) and Allison Tait ([email protected]).

When emailing us a submission, please provide:

• A 500 word abstract or summary of your paper/formed panel proposal/alternate session proposal;
• The title of your individual paper/formed panel/alternate session
• Your name and institutional affiliation; and
• A list of your areas of interest and expertise within Trusts & Estates/Equity Law.
• Whether you are willing to serve as a discussant or chair for another CRN panel

Please note that for Author Meets Reader, Salon, or Roundtable sessions, organizers should provide a 500-word summary of the topic, the names of the proposed participants, and the contributions they expect the proposed participants to make.

Please note also that LSA rules limit you to participating only once, either as a paper panelist or as a roundtable participant. We will give preference to proposed Trusts and Estates CRN panelists/participants who agree also to serve as a discussant or discussant/chair for another Trusts and Estates CRN panel (those appearances do not “count” for purposes of the 1-appearance rule). Please indicate your willingness to do in your email. Chairs organize the logistics of the panel, as well as moderate at the conference. Chairs will develop a 100-250 word description of the panel for inclusion in the Law and Society program. Discussants will read at least one assigned paper and prepare a short commentary to offer feedback and serve as a basis for discussion among the panelist and audience members.

Those selected by the Trusts and Estates CRN for participation in a panel or program will be informed no later than October 5, 2024.  Each participant will then need to register through the Law and Society system no later than October 15, 2024 using the panel number we assign. 

If you have any questions, you are welcome to contact Carla Spivack or Allison Tait.

2025 LSA Trusts & Estates CRN Planning Co-Chairs
Carla Spivack, [email protected]
Allison Anna Tait, [email protected]

Carol Burnett’s Estranged Daughter Erin Hamilton Speaks Out as Son’s Guardianship Ends

Erin Hamilton, Carol Burnett’s estranged daughter, spoke out about her son Dylan’s court-ordered guardianship ending as he turns 18. She expressed excitement about rebuilding their relationship, noting that Dylan graduated from high school and is now attending film school in New York. Erin shared her pride in Dylan’s achievements and her gratitude for the support he received during the guardianship.

In 2020, Carol and her husband became coguardians of Dylan due to Erin's struggles with addiction. Over time, Erin had supervised visitations, although her behavior led to visitation restrictions. Despite this, she maintained her sobriety and expressed her desire to reconnect with her son.

As the guardianship nears its end, Erin reflected on her sobriety journey and the positive steps she’s taken. She highlighted the importance of her job in treatment, her participation in a 12-step program, and her commitment to staying sober. Erin hopes to strengthen her relationship with Dylan as he enters adulthood.

For more information see Ryan Naumann "Carol Burnett’s Estranged Daughter Erin Hamilton Speaks Out as Son’s Guardianship Ends" InTouch, September 9, 2024.

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

Aging in Place Will Be Big Business for Home Builders

Remaining at home is most people’s wish as they get older, unsurprisingly. Older folks generally value familiar surroundings and do better in terms of health if they can age in place at home.

With the cost of nursing home care is soaring to $9,000 per month, on average, older people are more inclined to want to stay in their home as they age. Even though staying at home will save some money, it still requires a lot of renovations to make homes safe and accessible for senior citizens.  

Some of the common home upgrades are familiar items: Adding grab bars, wheelchair ramps, widening entryways, adding ground-floor bathrooms if needed, etc. Others might be less obvious: Raising electrical outlets and lowering switches to make them easier to reach, especially for people in wheelchairs. Switching flooring to softer options that cushion falls, like bamboo over cork. Adding pull-out shelves and lowering countertops in the kitchen to make work surfaces easier to reach.

Then there are the big changes: Adding a master bedroom on the first floor. Swapping bathtubs for lipless showers. Installing wheelchair lifts on the stairs. Constructing a wheelchair ramp leading up to the front entrance of the house. 

Builders are increasingly thinking about catering to age-in-place needs, too. More Realtors are reporting younger clients who say they want a “feet-first house,” a place where they can live for the rest of their lives. One example of thinking ahead: Some builders are stacking closets on upper and lower floors, to create the space for a future elevator, if one is needed. Builders and contractors that are interested can be certified as an Aging in Place Specialist by the National Association of Home Builders (NAHB).

Paying for these improvements can be challenging, of course. Older people who are short on cash but have lots of home equity might consider a reverse mortgage, which doesn’t need to be paid off until the home is sold. But read the fine print first to make sure you understand all the terms and conditions before going that route.

For more information see David Payne, "Aging in Place Will Be Big Business for Home Builders" Kiplinger.com, September 9, 2024. 

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