Wills, Trusts & Estates Prof Blog

Article: Electronic Communications of Deceased Users: How European Law Can Help Strike a Balance Between Post-Mortem Access and Privacy

Yann Conti (University of Geneva - Faculty of Law) recently published, Electronic Communications of Deceased Users: How European Law Can Help Strike a Balance Between Post-Mortem Access and Privacy, 2024. Provided below is an Abstract:

An issue of particular interest in the emerging field of digital inheritance is whether heirs and/or loved ones have a right to access the electronic communications of the deceased user.

Absent supranational law applicable to this question-and more generally to digital inheritance-, the ways in which Member States have dealt with this issue have given rise to a mosaic of different approaches throughout the European Union.

The situation may well change in the near future, since the matter has been added to the European agenda in the ambit of the Digital Decade Policy Programme of the European Union. In this context, the question arises as to how European law could effectively contribute to the regulation of digital inheritance.

Regarding the access to electronic communications of deceased users, the various solutions developed by Member States reveal strong common grounds from a functional perspective: on the one hand, the firm desire to take into account privacy concerns of the deceased user and, on the other hand, the trend in favor of reinforcing the latter's right to self-determination, which is jeopardized by the terms and conditions drafted by service providers.

This finding takes on its full meaning when we consider that these two fields are precisely where European law can play a significant role. Sensible reforms can be considered regarding two key tools that are in the hands of the European legislator: the General Data Protection Regulation and the Unfair Terms Directive.

Fake funeral “live stream” scams target grieving users on Facebook

Some scammers have the morals of an alley cat. But some sink even lower. Over the last few months, Malwarebytes Labs has discovered scammers active on Facebook that prey on bereaved people by using stolen images and phony funeral live stream links to steal money and/or credit card details.

These scammers are becoming more active and new cybercriminals are picking up the method as well, which is something we see very often. When some scheme works, more lowlifes join in. Currently, we are aware of two different approaches. One uses fake live stream links of the funeral. It asks people to follow a link where they can watch the funeral service and to share the link among their friends and family. The other asks for donations on behalf of the family of the deceased.

In March of 2024, the BBC warned that these cybercriminals sometimes respond to a posted memorial message within minutes. Using a fake profile and including the photograph and personal details of the dead person in their post.

The cybercriminals are good at making these Facebook posts look real. They often copy and paste real photographs of the deceased person taken from a funeral director’s site or a genuine tribute site. But they are fake and could turn out very costly for those that fall for them.

For more information see Pieter Arntz "Fake funeral “live stream” scams target grieving users on Facebook" Malwarebytes.com, August 23, 2024.

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

Arizona man says remains of late sister now missing after shipping through USPS

A Valley man who lost his sister earlier this year now says her remains are also lost after he shipped them through the United States Postal Service. At the end of April, Bob Severson mailed out packages with precious items, including his sister Joie Severson’s remains.

One of the packages was sent to their nephew, one to their sister, and the last to a man in northern Wisconsin, Gordy, with whom his sister had recently reconnected. While Joie Severson was still alive, she decided she wanted to be buried in northern Wisconsin. 

A week and a half later, after Bob had mailed out the packages, he said Gordy had contacted him, saying he had never received Joie’s remains. Out of the three of packages, only two of them made it. The one that was missing was the one with the remains inside.

A USPS spokesperson says an initial review suggests the urn separated from the box at some point from the initial drop-off in Arizona to the final destination in Wisconsin.

USPS has started a search for the urn and will continue to search to reunite the urn with the family. Now, nearly four months after the urn was last seen, Bob is trying to hold out hope his sister’s remains will be found.

USPS says there is a special process for shipping cremated remains, which includes ensuring the packaging is highly visible and that the remains are sent with expedited services.

For more information see Zach Prelutsky "Arizona man says remains of late sister now missing after shipping through USPS" 13News, August 24, 2024. 

Article: Wealth Taxes Under the Constitution: An Originalist Analysis

David M. Schizer (Columbia University - Law School) and Steven G. Calabresi (Northwestern University - Pritzker School of Law) recently published, Wealth Taxes Under the Constitution: An Originalist Analysis, 2024. Provided below is an Abstract:

A federal wealth tax is high on the wish list of progressive icons like Elizabeth Warren and Bernie Sanders, but is it constitutional? This Article shows that it is a "direct tax," which must be apportioned among the states. This means that the percentage of revenue collected in each state must match its percentage of the population. For instance, if two states each have three percent of the population, each must provide three percent of the revenue from a wealth tax. This leads to an unappealing outcome: if one state is less wealthy, it needs a higher tax rate to supply its share. To rescue wealth taxes from apportionment, distinguished commentators have offered a range of theories. For example, some treat apportionment as a mistake, while others dismiss it as a protection for the shameful institution of slavery.

But these commentators do not give the Framers enough credit. The taxing power was too important for them to be sloppy or to focus only on the institution of slavery. In our view, the taxing power reflects the same influences as the rest of the Constitution. Like the new government’s other features, the taxing power was supposed to be effective but limited. The Framers wanted to solve the fundamental problem under the Articles of Confederation (insufficient revenue), without recreating the fundamental problem under imperial rule (taxation without representation). Specifically, they sought to discourage what we call “fiscal raids,” in which states join forces to enact national taxes that mostly burden other states. As Professors Ackerman and Amar have shown, this risk could arise with an unapportioned tax on enslaved persons, since it would have been collected mainly in the South. But we show that the same was true of other region-specific practices, such as tobacco plantations and undeveloped land in the South, as well as ships, timber, farms, and manufacturing in the North. Apportionment was supposed to protect all these region-specific assets from fiscal raids.

In pursuing these various goals, what did the Framers mean by a “direct tax”? They considered a tax “direct” if it applied to taxpayers themselves, instead of to their transactions. A direct tax could be triggered merely by residing in the jurisdiction or owning property. In contrast, taxes on transactions—including on imports (“imposts”) and on domestic production and consumption (“excises”)—did not have to be apportioned. Admittedly, some courts and commentators have offered the narrower interpretation that “direct” is limited to head taxes and real estate taxes. But at ratifying conventions, John Marshall, Oliver Ellsworth, and other Framers offered a broader definition, which included livestock, business assets, and other personal property. Dicta in an early case, Hylton v. United States offered the narrower interpretation (head and land taxes), but the holding can be reconciled plausibly (although not perfectly) with our interpretation, while most other Supreme Court cases on the Direct Tax Clause align with our reading.

Technology-Property - Back to the Future of Digital Ink

The use of electronic signatures has become increasingly common in today's digital age, with many transactions now occurring virtually rather than in person. This shift was accelerated by the COVID-19 pandemic, which made in-person meetings challenging and led to the widespread adoption of e-signatures for legal and commercial transactions. The Uniform Electronic Transaction Act (UETA) and the Electronic Signatures in Global and National Commerce Act (E-SIGN) played significant roles in legitimizing electronic records and signatures, ensuring they cannot be denied legal effect simply because they are in electronic form. New York implemented its own Electronic Signatures and Records Act (ESRA), which allows for electronic records with specific exceptions, particularly in estate planning and health care directives.

As digital transactions became the norm, the distinction between electronic records and digital signatures became crucial. Electronic records are simply documents saved in digital formats like PDF or Word, but for them to be legally binding, there must be verification, similar to how ink signatures require witnessing. Digital signatures, however, go a step further by embedding specific signer information within the document, making it more secure and difficult to alter. These signatures capture details such as the time and place of signing, device used, and, in some cases, even use blockchain technology for enhanced security and traceability.

The adoption of eSignature platforms offers numerous benefits, including saving time and money by eliminating the need for in-person signings, reducing the risk of fraud, and ensuring that documents cannot be altered after signing. These platforms provide a full audit trail, allowing for the verification of the signer’s identity and authority. As a result, they have become a reliable and efficient way to manage legal documents and transactions, even across international borders.

When choosing an eSignature platform, several factors should be considered, including cost, ease of use, functionality, integration with existing systems, security, and compliance. It is also essential to assess the platform’s ability to handle identity verification, provide audit trails, and offer scalable management features. The ongoing evolution of eSignature technology, including the potential for blockchain integration, suggests that digital signatures will continue to play a vital role in the future of global commerce, replacing traditional ink signatures in many areas.

For more information see Seth Rowland "Technology-Property - Back to the Future of Digital Ink" ABA Probate & Property July/August 2024 Edition, July 1, 2024. 

Fixing Damaged ILITs (Plus a Checklist to Avoid Problems)

Long-term irrevocable trusts, particularly irrevocable life insurance trusts (ILITs), may need to be restructured or "fixed" due to various reasons such as poor initial design, changes in tax laws, or shifts in the grantor’s financial situation. These trusts, which often have life insurance as their primary asset, face unique challenges like managing Crummey withdrawal rights, generation-skipping transfer tax (GSTT) issues, and adapting to new life insurance policy options. 

One major issue in ILITs is the proper handling of Crummey withdrawal rights, which allow beneficiaries to withdraw gifts made to the trust, thereby qualifying them for the annual gift tax exclusion. If Crummey notice requirements have been neglected, steps can be taken to rectify the situation, such as documenting oral notice or filing a late gift tax return. The courts have ruled that the mere possession of a withdrawal right, even without notice, may be sufficient to qualify as a present interest for tax purposes, which could be leveraged in estate tax audits to argue that notice is not necessary.

Another common problem arises when the life insurance policy within the ILIT is no longer suitable or too expensive. Options to address this include using a tax-deferred exchange under I.R.C. § 1035 to replace the policy without recognizing gain, or establishing a new ILIT with a more appropriate insurance policy if the grantor is still insurable. However, caution is advised when lapsing or canceling a policy with outstanding loans, as this could trigger significant income tax consequences.

Finally, the article presents a detailed checklist for attorneys advising on ILITs, emphasizing the importance of avoiding reciprocal trust issues, ensuring that life insurance policies are owned exclusively by the ILIT trustee, and preventing the three-year rule problem by setting up the trust with a new policy. These steps help ensure that the ILIT functions as intended, providing tax benefits while protecting the assets for the beneficiaries.

For more information see Robert Adler and Michael J Hausman "Fixing Damaged ILITs (Plus a Checklist to Avoid Problems)" ABA Probate & Property July/August 2024 Edition, July 1, 2024. 

Fiduciary Considerations in ESG Investing

ESG (Environmental, Social, and Governance) investing has transformed from a well-intentioned trend to a complex issue for fiduciaries, particularly in trust administration. While ESG investing aligns with impact and socially responsible investing, its definition remains subjective, politicized, and evolving. The primary challenge lies in reconciling ESG's subjective nature with the fiduciary duty to maximize returns. Fiduciaries must rigorously analyze whether ESG investments align with the specific trust’s language, purposes, and applicable state laws, as incorporating these investments could risk breaches of fiduciary duty, especially when beneficiaries demand ESG-driven changes.

Fiduciary duties, as outlined in the Uniform Trust Code and the Uniform Prudent Investor Act, emphasize loyalty, prudence, and impartiality, making it challenging to integrate ESG investments, which often prioritize social good over financial returns. Some states have amended laws to accommodate ESG investing by allowing trustees to consider beneficiaries' preferences, yet this creates new complexities in balancing the desires of beneficiaries with the settlor’s original intent. Fiduciaries must navigate these challenges carefully, ensuring that any ESG investment decisions are well-documented, comply with state law, and consider the interests of all beneficiaries impartially.

The future of ESG investing is uncertain, as it faces increasing scrutiny from regulatory bodies and legal challenges. The SEC has intensified enforcement against misleading ESG practices, such as greenwashing, demanding greater transparency and consistency from investment funds. As economic and geopolitical factors diminish ESG’s appeal, the role of fiduciaries in ESG investing becomes even more precarious. Ultimately, addressing ESG considerations during the estate planning stage, with clear language in trust documents, is crucial to prevent potential conflicts and ensure compliance with fiduciary duties.

For more information see Laurel R.S. Blair "Fiduciary Considerations in ESG Investing" ABA Probate & Property July/August 2024 Edition, July 1, 2024. 

A Battle of Wills: The Uniform Probate Code Versus Empirical Evidence

Adam J. Hirsch's (Napoleon Jones Professor of Law and Herzog Endowed Scholar, University of San Diego School of Law) article, A Battle of Wills: The Uniform Probate Code Versus Empirical Evidence, was recently published in 33 S. Calif. Interdisciplinary L.J. 277 (2024). Here is the article's abstract:

This Article explores the goals, methods, and present state of empirical research relevant to inheritance law. The Article synthesizes extant empirical studies-including unpublished ones and two original data sets presented here for the first time-and compares them with default rules currently found in the Uniform Probate Code. The Article proposes revisions to the Code based on those studies. Finally, the Article suggests changes to the Uniform Law Commission's oversight process to make the Code more responsive to empirical evidence as it emerges in the literature.

Prof. Kaplan authors article on SECURE 2.0

Richard L. Kaplan (Guy Raymond Jones Chair in Law, University of Illinois Urbana-Champaign) recently posted on SSRN his article Analyzing the New Planning Opportunities in SECURE 2.0 for Retirement Plan Participants, 42 Elder L.J. 93-114 (2024). Here here is the abstract of his article:

This article examines and analyzes six major changes enacted by the SECURE 2.0 Act of 2022 pertaining to current plan participants in retirement plans. Those changes relate to: (1) increased contribution limits for 60-year-old employees, (2) longevity annuities, (3) charitable gift annuities, (4) long-term care insurance, (5) unused funds in section 529 college savings plans, and (6) emergency withdrawals. These provisions vary considerably in their connection to the principal purpose of employer-provided retirement plans – namely, to finance the retirement of affected employees. But they represent Congressional efforts to address some of the deficiencies in the present tax-subsidized matrix of employer-provided retirement savings plans and may appeal to affected plan participants. In this regard, they continue the pattern of recent years of using pension plans to accommodate an ever-widening array of social initiatives that are related only tangentially, if at all, to providing income when plan participants retire.

Article: The Law of Digital Resurrection

Victoria J. Haneman (Creighton University - School of Law) recently published, The Law of Digital Resurrection, 2024. Provided below is an Abstract:

The digital right to be dead has yet to be recognized as an important legal right. Artificial intelligence, augmented reality, and nanotechnology have progressed to the point that personal data can be used to resurrect the deceased in digital form with appearance, voice, emotion, and memory recreated to allow interaction with a digital app, chat bot, or avatar that may be indistinguishable from that with a living person. Users may now have a completely immersive experience simply by loading the personal data of the deceased into a neural network to create a chatbot that inherits features and idiosyncrasies of the deceased and dynamically learns with increased communication. There is no legal or regulatory landscape against which to estate plan to protect those who would avoid digital resurrection, and few privacy rights for the deceased. This is an intersection of death, technology, and privacy law that has remained relatively ignored until recently. This Article is the first to respect death as an important and distinguishing part of the conversation about regulating digital resurrection. Death has long had a strained relationship with the law, giving rise to dramatically different needs and idiosyncratic legal rules. The law of the dead reflects the careful balance between the power of the state and an individual's wishes, and it may be the only doctrinal space in which we legally protect remembrance. This Article frames the importance of almost half of a millennium of policy undergirding the law of the deceased, and proposes a paradigm focused upon a right of deletion for the deceased over source material (data), rather than testamentary control over the outcome (digital resurrection), with the suggestion that existing protections are likely sufficient to protect against unauthorized commercial resurrections.