Wills, Trusts & Estates Prof Blog

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

Sunday, August 25, 2019

Article on Disrupting the Wealth Gap Cycles: An Empirical Study of Testacy and Wealth

MoneyDanaya C. Wright recently published an Article entitled, Disrupting the Wealth Gap Cycles: An Empirical Study of Testacy and Wealth, 2019 Wis. L. Rev. 295-323 (2019). Provided below is an introduction of the Article.

When many of us think about the wealthy, we assume that they have inherited wealth, trust funds, or at least a history of knowing the right people. There are always a few stories of the hard-working immigrants who pulled themselves up by their bootstraps, as well as the spendthrift scions of wealthy families who manage to squander vast riches in a remarkably short period of time. But we rarely hear about the vast numbers of modest and obscure families that grow wealth carefully from generation to generation, keeping their wealth and their family skeletons away from the spotlight. How those families grow and maintain their wealth is through judicious use of tax mechanisms to minimize income and estate taxes, judicious use of trusts to reduce squandering wealth by irresponsible children and grandchildren, and through estate plans that channel property to those who will protect it, use it wisely, and pass it on in ways that maintain the wealth.

In early-modern England, estate planning was usually done earlier than we do it today, when children were young enough to be influenced and when parents had a good sense of their children's personalities. It was done when the patriarch had sons about to marry and he could convince them to accept limitations on family property in exchange for access to income immediately to allow him to start a family. When the son's children came of marrying age, the hope was that he would have imbibed the spirit of protecting the family property and would willingly accept continued constraints, impose them on his children and, if everyone played along, the family dynasty would be protected through a strict settlement renegotiated at each generation. The use of trusts and conservative trustees was crucial to keep wayward family members in line by denying them access to income if they bucked the system.

For those in Jane Austen's day, estate planning came at mid-life, when new families were being formed. In our day, estate planning comes at the end of life, as each generation usually hangs on to property, especially earned wealth, perhaps to lord it over neglectful children, but more often because the best way to deal with the uncertainty of the future is to retain control as long as possible. But hanging on to property until the end puts the owner at risk that he will die without making appropriate plans and his estate will be dissipated through family squabbles, probate delays and expenses, and that dreaded of all wealth-destructors: the estate tax.

The common denominator for most people who want to grow and protect wealth has been capable estate planning, planning that provides adequate resources for the current generation, protects the principal for the future, and provides flexibility so that each generation gets what it needs without constraining the property too severely. The trust is the most common mechanism for preserving wealth, but it is not the only mechanism. Life estates, pre-nuptial contracts, powers of appointment, and joint tenancies have provided ways to protect assets while providing for basic needs of future generations. More recently, living and asset-protection trusts, beneficiary designations, and TOD real-estate deeds have made estate planning even easier for the wealthy and the not-so-wealthy alike.

This panoply of estate planning options, however, seems to have passed by many who could really benefit from it. The person of modest wealth who dies without any estate planning risks having her property be dissipated to pay for guardianships, probate, and shares for heirs, regardless of their need or ability to manage property. Those who die young, before they have amassed much wealth, and those who die without proper estate planning will often leave little for their dependents, heirs who themselves will suffer from lack of investment in human capital by their parents and grandparents, thus leaving them less likely to earn significant wealth and less likely to have sufficient wealth to pass on to the next generation. The cycle of wealth-building by those who already have wealth is enhanced by probate and tax laws, while the cycle of wealth-destruction is perpetuated by administration costs, onerous legal requirements, and everyday inequalities. While many structural factors may contribute to the dissipation of wealth by some and the accumulation of wealth by others, one factor that seems to correlate closely to the various wealth gaps is dying intestate and having one's property pass by the default statutory rules of intestate succession, and dying testate and having one's property pass according to the wealth-saving mechanisms and procedures of planned wills and will-substitutes.

In an empirical study of all decedents dying in 2013 in Alachua County, Florida whose estates were probated, either testate or intestate, the data show striking correlations between intestacy and lower wealth, and testacy and greater wealth. And the demographics of those who died intestate correspond to the demographics of those people at risk of falling into the cycle of wealth-dissipation. To explore the possible effects of intestacy and testacy on wealth and property succession, I analyzed 408 estates (293 testate and 115 intestate) across a variety of categories, including wealth, age, race, sex, and marital status. All of these lines of inquiry support the claims by many economists that wealth gaps between men and women, white and black, or married and unmarried couples are growing and should be of great concern to lawmakers. This study supports those claims and ends by calling for more focus on how to bring estate planning services to the populations most vulnerable to dying intestate.

August 25, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

Wednesday, August 21, 2019

Article on Voice, Strength, and No-Contest Clauses

WilltestamentKaren J. Sneddon recently published an Article entitled, Voice, Strength, and No-Contest Clauses, 2019 Wis. L. Rev. 239-268 (2019). Provided below is an abstract of the Article.

His will was read, and like almost every other will, gave as much disappointment as pleasure.

- Jane Austen

The will is a unilateral written disposition of probate property to be effective upon the will-maker's death. To have any legal effect, however, the will-maker's family, beneficiaries, and personal representatives, along with the probate court, need to implement the will provisions. To buttress the strength of the will, the language of the will is definitive, certain, and strong. But when the will relies upon standardized language, the voice of the will-maker is flattened or even non-existent. The absence of the will-maker's voice may jeopardize the legal effect of the will.

This Article argues that the over-reliance on "time-tested" formulaic language endows the will with a mechanical, masculine voice that is ill-fitting for most testators and does not advance the goals of testators. Specifically, this Article will focus on the use and language of the no-contest clause. Will-makers and will-drafters have long abandoned the language of in terrorem clauses that threaten eternal damnation for anyone who seeks to alter the terms of the will. The replacement language uses false strength to intimidate beneficiaries by referencing a potential forfeiture of a testamentary gift. The standard no-contest clause has continuing appeal to testators and drafters, despite concerns raised about the flattening of the testator's voice and provocative nature of the language.

This Article argues that the value of the no-contest clause is undermined by the generic, hollow language replicated in form no-contest clauses. Rather than discouraging will contests, the language may actually encourage will contests. To support this argument, this Article first sets the concept of voice in the context of testamentary language. This Article next examines the purpose, structure, appeal, and concerns of the no-contest clause. Then, this Article reviews how courts, focusing particularly on cases decided across the country within the last five years, have interpreted the language in no-contest clauses. This Article concludes by emphasizing how the reliance on "time-tested" formulaic language perpetuates stereotypes, most specifically gender stereotypes, and inhibits drafting innovation. After all, a will is more than a mere legal instrument that transfers widgets and greenacres. The voice in the will should be authentic and genuine.

 

August 21, 2019 in Articles, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Monday, August 19, 2019

Article on Fiduciary Litigation in Louisiana: Mandataries, Succession Representatives, and Trustees

Louisiana2Elizabeth Ruth Carter recently published an Article entitled, Fiduciary Litigation in Louisiana: Mandataries, Succession Representatives, and Trustees, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

This article provides an overview of common types of fiduciary litigation in the estate planning setting in Louisiana. The article briefly considers the history of fiduciary litigation in the civil law setting. It then considers actions against mandatories, succession representatives, and trustees. The article points out some of the challenges that are unique to Louisiana.

August 19, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

Saturday, August 17, 2019

Article on Are Premarital Agreements Really Unfair: An Empirical Study of Premarital Agreements

Prenup2
Elizabeth Ruth Carter recently published an Article entitled, Are Premarital Agreements Really Unfair: An Empirical Study of Premarital Agreements, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

Are premarital agreements categorically unfair? Critics of premarital agreements cling to the (unfounded) belief that premarital agreements are categorically one-sided, coercive, and designed to benefit the wealthier spouse — usually the man. Courts, legislators, and scholars have too often relied on assumptions about premarital agreements without delving in to the facts. They have looked almost everywhere to support their views, except for the one place that really matters: the actual agreements. The result, predictably, is a paternalistic system predicated on a near religious belief that women who sign premarital agreements are uneducated, unsophisticated, economically dependent actors who need the state to protect them from the overreaching of their husbands and their own stupidity. For the few women this paternalistic system might protect, it harms a great many more by reinforcing negative stereotypes and eroding individual autonomy.

This paper builds on my previous work and offers something that has been sorely lacking in the field — empirical data. This paper presents my initial findings of a study involving all of the premarital agreements between opposite-sex couples recorded in Jefferson Parish, Louisiana between January 1, 2013 and December 31, 2016 — a total of 474 premarital agreements. My findings cast considerable doubt upon many of the stereotypes about the parties that enter into premarital agreements. The quintessential stereotype of a couple with a premarital agreement is the rich businessman and his (much) younger “trophy” bride. For the couples in this study, however, large age discrepancies are the exception rather than the rule. We have long assumed that premarital agreements are most common in second marriages. Although that is generally true for the couples in this study, the reality is a good deal more nuanced. Nearly a quarter of the agreements in this study were entered into by two spouses with no prior marriages. Longstanding assumptions about substance and procedure are also challenged by my study. We have been suspicious of premarital agreements that are signed shortly before the wedding out of fear that they result from duress or coercion. Yet, the vast majority of the couples in this study signed their agreements shortly before their weddings. Isn’t it more likely that these couples procrastinated rather than coerced? We have long assumed that premarital agreements involve the waiver of property rights and spousal support by the poorer spouse for the benefit of the richer spouse. Again, the data paint a more complex and interesting picture.

August 17, 2019 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Thursday, August 15, 2019

Article on Digital Remains: The Users’ Perspectives

DigitalTal Morse & Michael Birnhack recently published an Article entitled, Digital Remains: The Users’ Perspectives, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

As our lives go digital, so will, inevitably, our death. Emails we send, photographs we post, and thoughts we share are all stored digitally. These are users’ digital remains that reflect their digital personalities and at the same time, make up the memories for friends and family. After death, the social norms and legal rules regarding access to digital remains are no longer clear. A conflict might arise between the privacy expectations of the user, and his or her family and friends’ wish to utilise the digital remains for mourning and commemoration. Some service providers and platforms have recently addressed the quandaries of digital remains, and legal systems slowly begin to follow. As these technological and legal responses emerge, we should not neglect the users themselves. What do users want? How do users wish to manage access to their digital remains? Based on a national survey of Israeli population, this chapter reveals the multiplicity of users’ perspectives, perceptions and practices regarding access to digital remains – their own and others. The chapter points to the emergence of new social perspectives on posthumous privacy and commemoration in the contemporary digital age, and comments on their relevance to policymaking.

August 15, 2019 in Articles, Estate Planning - Generally, Technology | Permalink | Comments (0)

Wednesday, August 14, 2019

Article on Knocking on Heaven's Door: Ending the Ban on Live Person-to-Person Solicitation to Close the Racial Estate-Planning Gap

KnockingDiane Klein recently published an Article entitled, Knocking on Heaven's Door: Ending the Ban on Live Person-to-Person Solicitation to Close the Racial Estate-Planning Gap, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

The well-documented and persistent racial wealth gap, together with the other barriers, has created a predictably racialized estate-planning gap, with damaging consequences in communities of color. Despite Anglo-American law’s strong and oft-expressed preference for testacy, a formal legal commitment to enabling those competent persons who wish to control the devolution of their property upon death to do so, and a rule of professional responsibility banning conduct with a discriminatory impact, the profession continues to burden itself with a rule that virtually ensures that (especially poor) people of color do not benefit from estate-planning as much as they might. This Article proposes a modification of Model Rule 7.3(b), to lift the solicitation ban as it applies to competent, non-dependent adults to whom non-litigation estate-planning services are offered, and from whom informed consent, confirmed in writing, is obtained for any resulting legal services. It is a clear, practical step that balances legitimate concerns about protecting vulnerable clients with the need for access to estate-planning services.

August 14, 2019 in Articles, Current Affairs, Estate Planning - Generally, New Legislation, Trusts, Wills | Permalink | Comments (1)

Monday, August 12, 2019

Article on Probate Funding and the Litigation Funding Debate

ProbateJeremy Kidd recently published an Article entitled, Probate Funding and the Litigation Funding Debate, 76 Wash & Lee L. Rev. 261-310 (2019). Provided below is an abstract of the Article.

Third-party funding of legal claims is becoming more common, and increasingly more controversial. Whether in the legislative arena or in the courts, the fight over whether and how independent parties might provide funding to litigants has become heated. The fight now threatens to spill over into the probate realm, where funders have begun purchasing probate rights from putative heirs. These probate funding transactions share many characteristics with broader litigation funding but also differ in important respects. The meager existing literature tends to address the issue in a pre-biased and methodologically unsound way, making it impossible to properly assess the nature of probate funding. This Article approaches probate funding in a neutral fashion, analyzing the characteristics of the transaction in order to gain greater insights into not only probate funding but also litigation funding, as well as illuminating the options for lawmakers in deciding how the law should react to the continuing evolution of legal funding generally.

August 12, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (1)

Saturday, August 10, 2019

Note on Domestic Asset Protection Trusts: A Debtor's Friend and Creditor's Foe

DAPTNora Hood recently published a Note entitled, Domestic Asset Protection Trusts: A Debtor's Friend and Creditor's Foe, 13 Brook. J. Corp. Fin. & Com. L., 443-464 (2019). Provided below is an abstract of the Note.

In 1997, Alaska enacted the first law in the United States legalizing Domestic Asset Protection Trusts (DAPTs), also referred to as self-settled asset protection trusts, as valid legal entities. Under traditional trust law, a debtor cannot shield assets from creditors by placing them in a trust for his or her own benefit. Alaska's statute allowing DAPTs calls the traditional rule into question. This Note will examine use of DAPTs in the United States, including whether or not the recently amended Uniform Voidable Transaction Act would consider any transfer to a DAPT voidable per se, and discuss an approach that intends to prevent misuse of DAPTs to avoid liability.

August 10, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, August 9, 2019

ACTEC 2019 Annual Meeting Musings

BessemerSteve R. Akers published a summary of the ACTEC 2019 Annual Meeting. A synopsis of his musings is provided below.

Various seminars at the ACTEC 2019 Annual Meeting are summarized. Topics include: elder financial abuse, artificial intelligence, cryptocurrency, basis adjustment planning, family conflict, modification of trusts, settlor intent, directed trusts, Uniform Trust Act, Uniform Fiduciary Income and Principal Act, ethics of negotiations, and hot topics.

 

August 9, 2019 in Articles, Conferences & CLE, Current Affairs, Elder Law, Estate Administration, Estate Planning - Generally, Science, Technology, Trusts, Wills | Permalink | Comments (0)

Thursday, August 8, 2019

Article on Elderly Gun Ownership and the Wave of State Red Flag Laws: An Unintended Consequence That Could Help Many

GunTara Sklar recently published an Article entitled Elderly Gun Ownership and the Wave of State Red Flag Laws: An Unintended Consequence That Could Help Many, 27 Elder L.J. 35-49 (2019). Provided below is an abstract of the Article.

There is rising concern among health professionals and in legal circles to address gun ownership for older adults who display signs of cognitive decline, including dementia. However, elderly gun ownership remains underexamined, partly because incidents of gun violence among the elderly tend to occur in domestic settings and are much less visible than shootings in public areas. In contrast, there is widespread attention to curb mass gun violence through state legislation. Specifically, red flag laws, also known as Extreme Risk Protection Orders, have doubled in 2018 with thirteen states enacting red flag laws and over thirty states having introduced or planning to introduce this legislation. Although red flag laws were not intended to address elderly gun ownership, they uniquely apply where other gun control laws fall short, as red flag laws provide the legal process to temporarily remove access to guns for persons believed to be at an elevated risk of harming themselves or others.

This Article surveys the thirteen states that have enacted red flag laws and analyzes key legislative elements across these states. The state laws have notable variations, including authorized persons who can petition a court for a protection order, standard of proof requirements, and the length of time an order is in effect. These variations have implications for elderly gun owners and their families, particularly in how they relate to the climbing rates of cognitive decline, suicide in late life, and elder abuse. The current wave of red flag laws across the country offer an opportunity to provide greater awareness around elderly gun ownership and prevent crises from becoming tragedies.

August 8, 2019 in Articles, Current Affairs, Elder Law, Estate Planning - Generally | Permalink | Comments (0)