Wills, Trusts & Estates Prof Blog

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

Tuesday, February 6, 2024

Article: Heirs Property: An Examination of Probate Costs and the Costs of Postmortem Probate Inaction

Reid Kress Weisbord (Professor of Law, Rutgers Law School & Visiting Professor of Law, Columbia Law School) recently published, Heirs Property: An Examination of Probate Costs and the Costs of Postmortem Probate Inaction, ACTEC Law Journal, VOLUME 49, Number 1, Fall 2023 (pub 1/24). Provided below is an Abstract:

“Heirs property” describes a legal limbo that occurs when multiple heirs or will beneficiaries inherit real property as tenants-in-common without promptly probating the estate to transfer marketable title out of the decedent’s name. While other areas of probate law have demonstrated remarkable sophistication by supplying battled-tested default rules as contingencies for inaction, lawmakers have yet to implement effective contingencies for postmortem probate inaction. The lacuna, in turn, has led to a growing dilution of inherited wealth from estates plagued by heirs property, a phenomenon that disproportionally affects individuals already impacted by the racial wealth gap.

This Article draws on recent empirical research to examine the demography of heirs property. It then takes a closer look at the adverse economic impact of postmortem probate inaction by and upon the decedent’s inheritors. Using dollar amount estimates based on the recent field research in Philadelphia by the Pew Charitable Trusts, the Article explains and illustrates how the complicated task of untangling heirs property can significantly multiply probate costs. The Article concludes by surveying a package of innovative law reform proposals that could help mitigate the dilution of inherited wealth from heirs property.

 

February 6, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Monday, February 5, 2024

Article: Incorporating Social Justice and Environmental Sustainability Into Estate Planning Through Conservation Easements

Trace Brooks (Atlanta, Georgia) recently published, Incorporating Social Justice and Environmental Sustainability Into Estate Planning Through Conservation Easements, ACTEC Law Journal, VOLUME 49, Number 1, Fall 2023 (pub 1/24). Provided below is an Abstract:

As climate change and social inequalities become increasingly pressing issues, estate planning has emerged as a powerful tool for promoting both social justice and environmental sustainability. This article explores the intersection of estate planning, private land conservation, social justice, and environmental sustainability. Conservation easements, traditionally prized for the tax advantages, offer a valuable strategy for ensuring that land remains protected and available for future generations while advancing social justice goals and increasing environmental sustainability. After examining the legal and policy considerations that must be taken into account when creating a conservation easement in an estate plan, this article offers practical guidance on how to incorporate social justice and environmental sustainability objectives into estate planning. The article then reviews a case study that exemplifies the interaction between conservation easements, estate planning, social justice, and environmental sustainability. Ultimately, this article advocates for greater recognition of the potential of conservation easements in estate planning to advance both environmental sustainability and social justice, calls for greater coordination between donors, donees, and policymakers, and offers suggestions for how estate planners and policymakers can work together to maximize their impact.

February 5, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Friday, January 26, 2024

Article: Qualifying for Long-Term Care Insurance

Don Levin (Krause Financial) recently published, Qualifying for Long-Term Care Insurance, ABA Bifocal Vol. 45 Issue 1, 2023. Provided below is an Abstract:

When they hear the term long-term care, most people think of a nursing home—a place most want to avoid. The reality is most long-term care takes place in the home, allowing individuals to stay where they are most comfortable. Long-term care insurance (LTCI) makes it a lot easier to receive professional care at home, however, the key is to purchase LTCI before it’s too late.  Clients need to view long-term care as an event to plan for, rather than a place to avoid. Planning ahead for long-term care offers more options for future care and helps clients avoid depleting their life savings or exhausting loved ones.

January 26, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, January 23, 2024

Article: Is Estate Planning Ethical In An Increasingly Inequitable World

Harry S. Margolis (Margolis Bloom & D’Agostino) recently published, Is Estate Planning Ethical In An Increasing Inequitable World?, ACTEC Law Journal, VOLUME 49, Number 1, Fall 2023 (pub 1/24). Provided below is an Abstract:

It’s hardly news that over the last half century, in terms of income and wealth, our nation has become increasingly unequal. The question I will explore in this article is whether in that context what we do as estate planners, eseentially assisting our clients in passing on intergenerational wealth by minimizing taxes and easing the process, is ethical.

At first blush, there’s nothing wrong with this. We are simply helping our clients fulfill their goals in a lawful manner.

But does it matter that we are doing this in a nation that is becoming increasingly unequal, where it’s always been easier for some sectors of the population to build wealth than others, and where our services are only available to those who can pay our fees? Does the answer change depending on who our clients are, whether they are part of the top one percent financially, the next nine percent who are doing well in our economy, or everyone else? Does it matter how much we push the envelope on tax and asset protection planning? Or whether we lobby for or against laws that help our clients preserve their welath?

Of course, for many there’s nothing wrong with the great disparities in wealth or their continuation from generation to generation. Others who believe that growing inequality and concentration of welath is aproblem feel that it’s a public policy or philosophpical question, not one of ethics for individual attorneys. 

Yet, the greater concentration of wealth in the United States has been accompanied by changes in laws that further that concentration an its preservation from generation to generation, including the increase in the threshold for estate and generation skipping taxes, the development of domestic asset protection trusts, and the elimination of the rule against perpetuities. At the same time, new scholarship has demonstrated that the costs of probate, intestacy, partition and tax takings make it more difficult for families with fewer resources to accumulate wealth. 

This article will consider the question of whether estate planning is ethical with respect to different types of estate planning, various clienteles, and government policies that act to discourage many from engaging in estate planning and suggest steps individual attorneys and our professional organizations can take to make estate planning services more available to those who are not served today. 

January 23, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Sunday, January 21, 2024

Article: Citizenship and Solicitude: How to Overrule Employment Division v. Smith and Washington v. Davis

Christopher R. Green (University of Mississippi School of Law) recently published, Citizenship and Solicitude: How to Overrule Employment Division v. Smith and Washington v. Davis, Harvard Journal of Law and Public Policy, Forthcoming. Provided below is an Abstract:

This article looks to the original meaning of the Fourteenth Amendment’s provisions on equal citizenship to defend an approach to the free exercise of religion distinct both from Employment Division v. Smith and the Sherbert/Yoder regime it replaced. Members of all religious groups are equally citizens: in the first Justice Harlan’s words, a “component part of the people for whose welfare and happiness government is ordained.” Such citizens are entitled to equal solicitude from their states regarding even indirect costs of that state’s laws. Like trustees, states must affirmatively promote the interests of their citizens, not merely avoid targeting them for ill treatment. The same goes for burdens on different racial groups. Contrary to Smith, therefore, the Fourteenth Amendment requires more than a no-religious-targeting rule. And contrary to Washington v. Davis, it requires more than a no-racial-targeting rule.

The Court was right in both Smith and Washington, however, that strict scrutiny for any law causing significant impacts on racial or religious groups would threaten chaos. A refusal to countenance any impact on religious practices, no matter how harmful, would allow religious citizens to be a law unto themselves. A refusal to countenance any disparate impact on racial groups would require racially-discriminatory quotas that would themselves undermine equal citizenship. The Fourteenth Amendment requires a more nuanced assessment of the arbitrariness of the distinctions in state law and the costs they impose than a one-size-fits-all “compelling state interest” framework can supply. Instead of focusing solely on explicit or purposeful classifications, the Court should focus directly on the existence of adequate explanations for policies causing particular harms, the way it assesses “arbitrary and capricious” agency action in cases like Citizens to Preserve Overton Park v. Volpe and Motor Vehicle Manufacturers v. State Farm. The trigger for such an inquiry would not be the nature of the classification at issue, but simply the existence of the impact on particular citizens’ interests, economic interests included. The Fourteenth Amendment requires states to offer an adequate explanation why other citizens’ interests matter more than the ones suffering the burden, and would require states to present their actual reasons for decisions, rather than hiding behind post-hoc judicial rationalizations as approved in Williamson v. Lee Optical. Such an approach fits how the law of trusts has long dealt with multiple beneficiaries.

January 21, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, January 17, 2024

The Charitable Trust Doctrine: Application to Unrestricted Gifts

Richard A. Newman (ArentFox Schiff) recently published, The Charitable Trust Doctrine: Application to Unrestricted Gifts, ABA Probate & Property Magazine, January/February 2023. Provided below is an Abstract:

At common law, assets held by charitable nonprofit organizations are generally understood to be held by such organizations in trust for public benefit. See A. Curreri, Charitable Trusts Definitions and History--Purpose--Beneficiaries--Cy Pres Doctrine, 9 St. John’s L. Rev. 114 (Dec. 1934). This principle, called the “Charitable Trust Doctrine,” is mirrored in the Internal Revenue Code’s prohibition on organizations recognized as public charities for tax purposes from using more than an insubstantial portion of their assets for private benefit. I.R.C. § 1.501(c)(3)-1(c)(i). Although this principle is broadly recognized throughout the United States (see Harold L. Kaplan, Patrick S. Coffey & Rosemary G. Feit, The Charitable Trust Doctrine: Lessons and Aftermath of Banner Health, 23 Am. Bankr. Inst. J., no. 4, May 2004, at 28), the extent of its reach in shielding assets from the claims of creditors is unclear.

Two areas associated with the application of the Charitable Trust Doctrine in particular remain unclear: First, does the Charitable Trust Doctrine shield only assets that are restricted (expressly by the donor or by implication) to a narrow or specific charitable purpose of a charitable nonprofit corporation or does it shield unrestricted assets as well; and second, if such shield is narrowly applied to only “restricted” assets, how is such shield to be applied to an asset that derives from both restricted gifts and unrestricted gifts?

In this article, we outline the Charitable Trust Doctrine generally and provide examples of how it raises concerns in certain real-world settings. We then survey case law attempting to apply the Charitable Trust Doctrine in both bankruptcy and nonbankruptcy settings. Finally, we survey case law attempting to apply the Charitable Trust Doctrine to assets that derive from both restricted and unrestricted sources and suggest some (tentative) conclusions and suggestions for practitioners.

January 17, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, January 16, 2024

Solving Generation-Skipping Transfer Tax Problems: Five Practical Remedies to Resolve Exemption Allocation Issues

Carol Warley, Abbie M. B. Everist, Amber Waldman, and Rachel Ruffalo (Washington National Tax) recently published, Solving Generation-Skipping Transfer Tax Problems: Five Practical Remedies to Resolve Exemption Allocation Issues, ABA Probate & Property Magazine, January/February 2023. Provided below is an Abstract:

The intricacies of estate planning often bring to light a range of complex tax considerations, including the generation-skipping transfer tax (GSTT). Understanding the implications associated with the imposition of the GSTT is crucial when reviewing an estate plan, as it can significantly affect the distribution of wealth and the preservation of family assets.

The allocation of a transferor’s generation-skipping tax (GST) exemption protects transfers from the GSTT. The inclusion ratio of a trust, calculated under IRC § 2642(a), determines the portion of the trust assets that is subject to GSTT. The 40 percent flat GSTT is imposed on three triggering events: (1) a direct skip with no remaining GST exemption available under section 2612(c), (2) a taxable distribution from a trust with an inclusion ratio other than 0.000 under section 2612(b), and (3) a taxable termination of a trust with an inclusion ratio other than 0.000 under section 2612(a).

Below, we delve into five common GST exemption allocation problems that may arise when reviewing the GST status of a trust. We then provide suggested remedies to mitigate potential unintended consequences.

January 16, 2024 in Articles, Estate Planning - Generally, Generation-Skipping Transfer Tax | Permalink | Comments (0)

Sunday, January 14, 2024

Advance Directives: Drafting and Implementation

Allison R. Clapp (Stewart, Plant & Blumenthal) and Ashley F. Lanzel (Children’s National Hospital) recently published, Advance Directives: Drafting and Implementation, ABA Probate & Property Magazine, January/February 2023. Provided below is an Abstract:

An advance directive is a legal document that enables an adult client to (1) name one or more individuals as the client’s agent(s) or attorney(s)-in-fact to make health care decisions on the client’s behalf and (2) specify the client’s wishes with respect to his health care in certain circumstances.

Advance directives present a unique set of challenges for a lawyer who is experienced in drafting legal documents and advising about legal matters but who may have little knowledge or experience regarding medical issues. Because of the dual nature of this document as both a legal document and a medical document, the authors have joined together to combine their respective legal and medical knowledge to provide practical advice regarding how best to address clients’ interests in this important arena. This article will provide specific drafting tips for lawyers as well as recommended steps the client should take after signing an advance directive.

January 14, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, January 10, 2024

Article: The Law of a Last Request: Bury Me with My Favorite Toy, Part 2

William A. Drennan (Southern Illinois University) recently published, The Law of a Last Request: Bury Me with My Favorite Toy, Part 2, ABA Probate & Property Magazine, January/February 2023. Provided below is an Abstract:

Can you legally arrange to be buried with your teddy bear in one hand and your favorite comic book in the other, wearing your Michael Jordan jersey and your gold wedding band? Would it matter if none of your beneficiaries wanted any of these items and would just sell them as quickly as possible? What if the items had a combined value of over $15 million? See Juliene Kim, A Michael Jordan Jersey Is Sold for over $10 Million, Setting a World Record, NPR (Sept. 16, 2023), https://tinyurl.com/2yufkhaj; The 16 Most Expensive Comic Books Ever Sold, CGC Comics (Jul. 14, 2022), https://tinyurl.com/34xv2dwk (reporting a sale of Superman #1 for $5.3 million); Cheyenne Lentz, 12 Teddy Bears That Are Worth a Fortune (Sept. 6, 2018), insider.com (reporting a Steiff teddy bear sale for $143,000). What if their combined value was under $1,000? What if all you wanted was 10 $100 bills stuffed in your pocket just before they seal the casket?

Part 1 (37 Prob. & Prop. (Nov/Dec 2023) at 44) explored client motives for such last requests, described real life (and death) fact patterns, set forth the argument that such directions are void because they encourage grave robbing, and discussed techniques estate planners might use to counter the grave robbing argument, including avoiding public disclosure. This Part 2 explains why this is a difficult practical and legal area, sets forth the argument that these directions are void because they violate public policy by wasting property, and discusses what estate planners might recommend in response. Although this Part 2 often refers to the client’s “will,” as discussed in Part 1, the client and estate planner may choose to include the direction in a nonpublic document incorporated by reference into the client’s will.

January 10, 2024 in Articles | Permalink | Comments (0)

Tuesday, January 9, 2024

Trusts and Trustees: Their Successes and Successors

Mark Leeming (The University of Sydney) recently published, Trusts and Trustees: Their Successes and Successors, Australia Bar Review, 2023. Provided below is an Abstract:

This tenth John Lehane Memorial Lecture has three parts. The first contains some memories of John Lehane. The second concerns how some measures by which the success of the trust as an institution may be measured. The third addresses the relationship between former and successor trustee, including the consequences of death, the obligation to provide documents, and the right of indemnity. A theme of the address is the role of statute and its complex interaction with principles of the law of trusts.

January 9, 2024 in Articles, Estate Planning - Generally | Permalink | Comments (0)