Wills, Trusts & Estates Prof Blog

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

Tuesday, November 19, 2019

Article on Tiered Structures for Family Office Operations: Integrating a Private Trust Company with a Family Office

Office1William J. Kambas, Amy M. Staehr, and Constance Shields published an Article entitled, Tiered Structures for Family Office Operations: Integrating a Private Trust Company with a Family Office, Probate & Property Magazine, Vol. 33, No. 5 (Sept/Oct 2019). Provided below is the introduction of the Article:

Both private trust companies (PTCs) and family offices (FOs) are often integral parts of the family-owned and family-controlled enterprises. As services organizations that are used to manage and control assets, orchestrate transition, and represent family interests within a multi-generational structure, the overall goal of both types of entity is to guide the use and enjoyment of family assets across generations. The reasons for establishing an FO or a PTC - or both - are numerous and varied. For some families, the most streamlines and efficient approach involves intergrating the two.

As a family enterprise grows, the integration of a PTC and an FO can be particularly attractive; if done properly, it can create economies of scale and result in efficiences like those found in multi-national corporation structured as a parent-subsidiary or branch operations. For example, one model moves the FO into a headquarter-type position as it takes on the supervision and control of the component parts of the operations of a family enterprise, resulting in consolidation, consistency, and substantial overal supervision of the group. The FO may supervise several subsidiary operations including fidicary services, insurance companies, and philanthropy management - much like a corporate holding company popular with many parent-subsidiary companies of the world. From an ownership standpoint, the FO would hold the equity interests in the subsidiary operations. This model is efficient, offers creditor protection, and promotes consistency among operations, much like a logitics center. An alternative model results in the PTC as the headquarters or parent component.

Such integration, however, is not without risk and can have unintended consequences. In this article, we focus on some of the leading issues faced with integrating a family's PTC with its FO. In certain cases, the combination of responsibilities into a unified structure will result in exponential benefits.

November 19, 2019 in Articles, Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

Estate and Gift Tax Exclusions Increase to $11.58 Million in 2020

IrsThe Internal Revenue Service (IRS) announced on November 6th the 2020 inflation adjustments for several tax items including the estate and gift tax exclusions and standard deductions. The current individual estate tax exclusion amount is $11.4 million, but for a person that passes away in 2020, the amount has increased by $180,000 to $11.58 million. The 2020 exclusion amount for married couples is twice that at $23.16 million. Taxpayers who are considering substantial lifetime gifts must “use or lose” the additional exemption before it reverts back to pre-2018 amounts in 2026.

One item that did not change is the annual gift tax exclusion, which is to remain at the 2019 amount of $15,000. But the annual gift tax exclusion amount for a US citizen to gift their non-citizen spouse increased by $3,000 to $157,000. If both spouses are citizens, there is no limit, and the gifts are excluded from federal estate and gift tax.

Also, the IRS increased the standard deduction to $12,400 for individual taxpayers and married taxpayers filing separate returns and to $24,800 for married taxpayers filing jointly. For heads of households, the standard deduction will increase to $18,650.

See Estate and Gift Tax Exclusions Increase to $11.58 Million in 2020, Hodgson Russ, November 18, 2019.

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

November 19, 2019 in Current Affairs, Current Events, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Monday, November 18, 2019

Article on Twenty-First Century Wills

Tech2Jennifer L. Fox recently published an Article entitled, Twenty-First Century Wills, Probate & Property Magazine, Vol. 33, No. 6 (Nov/Dec 2019). Provided below is the introduction to the Article.

In the 21st century, electronic wills are coming of age. Companies that sell boilerplate online will are advocating for electronic wills. Some states are reconsidering execution formalities to opt for more technologically-friendly will statutes. Electronic wills promise to be convenient and inexpensive, which means trhat planning may finally become accessible to all. But electronic wills pose challenges regarding authentication, fraud, and exploitation.

The function of will formalities is to ensure authentication. Robert H. Sitkoff & Jesse Dukeminier, Wills, Trusts, and Estates 141 (10th ed. 2017). Under traditional will formalities, every state requires a will to be written, signed by the testator, and attested. The first hurdle in creating any will is properly drafting it, and the second hurdle is properly executing the will. If a will is not properly drafted or executed, then it may be litigated and invalidated. With the demands of a society consumed with instantaneous services provided online, it is the task of the states to develop legislation on electronic wills that safeguards against abuse yet stays up to date with technology.

November 18, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Technology, Wills | Permalink | Comments (0)

Friday, November 15, 2019

Article on When is an Execution Error Harmless: Electronic Wills Raise New Harmless Error Issues

ElecSusan N. Gary recently published an Article entitled, When is an Execution Error Harmless: Electronic Wills Raise New Harmless Error Issues, Probate & Property Magazine, Vol. 33, No. 6 (Nov/Dec 2019). Provided below is the introduction to the Article:

The focus of the harmless error doctrine is the intent of the decedent when the decedent created a writing the decedent may have intended to be a will. Using the harmless error doctrine, a court can excuse a defect in the execution of formalities if the proponent of a will can establish, by clear and convincing evidence, that the testator intended the writing to be the testator's will. The will formalities serve as proxies for testamentary intent, and the harmless error doctrine replaces strict compliance with the formalities with direct evidence of that intent.

November 15, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Technology, Wills | Permalink | Comments (0)

Thursday, November 14, 2019

Article on The Tax Cuts and Jobs Act and Charitable Giving: Impact and Planning Strategies

Charity1Julie R. Sirrs recently published an Article entitled, The Tax Cuts and Jobs Act and Charitable Giving: Impact and Planning Strategies, Probate & Property Magazine, Vol. 33, No. 6 (Nov/Dec 2019). Provided  below is the introduction to the Article:

The Tax Cuts and Jobs Act (TCJA) effective January 1, 2018, represents one of the most significant changes to the US Tax Code in decades. One area in which the TCJA appeared to formally change little was the deductibility of charitable gifts. Other changes under the TCJA, however, particularly those resulting in dramatic reduction in the number of taxpayers who itemize, have had a profound impact of charitable giving and require new strategies for charitable gift planning. This article will explore those changes and suggest opportunities to maximize the tax benefits of charitable giving under the new law.

November 14, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Tuesday, November 12, 2019

Article on Fixed Intentions: Wills, Living Wills, and End-of-Life Decision Making

WillJane B. Baron recently published an Article entitled, Fixed Intentions: Wills, Living Wills, and End-of-Life Decision Making, Elder Law eJournal (2019). Provided below is an abstract of the Article. 

Contemporary trusts and estates law is built on the premise that individuals can and should have fixed intentions with respect to the disposition of their property at death. These intentions can and should be fixed in a written document, and that document can and should be fixed against other outside evidence of intention. Experience with end-of-life health care decision making gives reason to question these premises. In the health care context, intentions have proven to be fluid, and the documents purporting to record individuals’ wishes have often proved unreliable.

This paper examines the implications for wills of the literature on end-of-life health care decision making. Advance health care directives and property wills are alike pre-commitments, attempts in the present to bind the future, but studies in the end-of-life health care decision making context show there are serious issues with this process. Individuals simply do not care to decide about post-competency treatment, those who do make such decisions often change their minds, and cognitive biases operate to limit individuals’ ability to predict accurately in the present what they will want in the future. Many of these issues arise also in the context of end-of-life property decision making and unsettle many of wills law’s fundamental premises about intention.

The final part of the paper suggests avenues for further empirical study and explores the practical significance of this potential research for estates law, particularly the potential to displace the vision of the estates attorney as a passive scrivener who simply asks what the client wants and writes it down. It may be that the wishes expressed in a will may be formed in response to, and shaped by, the attorney’s questions rather than being brought out by those questions. The paper concludes by asking whether there might be a way to honor fluid intentions in the property context that does not destroy the utility of testamentary documents as a safe harbor.

November 12, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Season Ticket Transfers and Estate Planning: Football [Michigan]

FootballWhen putting together a will, often times people diligently lay out a laundry list of specific requests that have immense sentimental value. The gifts could involve cars, jewelry passed down through the family, or pieces of art. But for those that share a special pastime of watching sports with a child or other beneficiary, the ability to pass on season tickets might be one of the most memorable and meaningful component of an estate plan. Depending on the sports program, this ability could be attainable.

  • Detroit Lions
    • Season tickets can be transferred with prior approval of the ticket office, but partial transfers or subdividing accounts are generally not approved.
  • Michigan Wolverines
    • Officially, only a surviving spouse can be transferred season tickets, but the office may be willing to work with other family members. Since 2015, tickets can be transferred while alive during the month of December, with a nonrefundable transfer fee. Parking and priority points (used for bowl and away games) are not transferrable.
  • Michigan State Spartans
    • During life or at death, season tickets can only be transferred to the ticket holder's spouse, unless the holder has acquired special permission.

For other states' professional and collegiate teams, be sure to inquire about their season ticket policies.

See Rebecca K. Wrock, Season Ticket Transfers and Estate Planning: Football, Varnum Law, November 11, 2019.

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

November 12, 2019 in Current Affairs, Estate Planning - Generally, Sports, Wills | Permalink | Comments (0)

The Wealth Tax Plan Worrying US Billionaires

100sDemocratic presidential hopeful Elizabeth Warren has made a potential federal wealth tax a pillars of her campaign. This would evolve the system in which the US federal government gets the majority of its revenue (income tax) by not only taxing the gains on investments, but also on the principal of those investments. A federal wealth tax would hit a household’s complete net worth every year, falling on all assets including homes, portfolios of stocks and bonds, art, land, etc. 

Warren has proposed what her campaign calls an “ultra-millionaire” tax of 2%  on assets above $50 million, plus a 1% t “billionaire surtax” on assets above $1 billion. Another candidate, Bernie Sanders, has put forth a plan that starts at 1%  on net worth above $32 million, and raises taxes in steps until it arrives at 8%  for wealth over $10 billion. Bill Gates is worth $107 billion, and under Warren's plan would have to cough up $6.4 billion while under Sanders' plan his invoice would stand at $8.4 billion.

Extreme wealth inequality is the reasoning for the push for taxing a person's wealth instead of simply their income or capital gains. The Unites States has the largest wealth inequality of any developed country and as of 2012 22% of the country's wealth could be found among the .1% richest Americans.  The wealthy are no longer ashamed of avoiding taxes, though this was not the case decades ago. “The attitude of people in power matters a lot,” said Emmanuel Saez, an economist from the University of California at Berkeley who designed the ultra-millionaire tax. “Franklin Roosevelt spent a lot of time on the radio shaming tax dodgers.” 

See Brendan Greeley, The Wealth Tax Plan Worrying US Billionaires, Financial Times, November 11, 2019.

November 12, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Monday, November 11, 2019

Here’s a Way You Can Help Fight Alzheimer’s

AlzMicrosoft founder Bill Gates has become a prevalent advocate for Alzheimer's Disease in recent years, and believes that finding enough volunteers to participate in medical studies that will help us understand the disease better is a compounding problem. As the population ages, more and more individuals are suffering from this terrible condition. Nearly 6 million Americans are living with the disease today, and it is estimated that by 2050, the number could be as high as 14 million.

No new drug for Alzheimer's has been presented in over 15 years, in part due to the fact that clinical studies for the disease run 4 to 8 years compared to 1.5 years with studies for cardiovascular diseases. After the expensive process of diagnosing Alzheimer's, it is still difficult for a potential patient to enter into a clinical trial. 1 out of 10 people screened for certain types of Alzheimer’s trials will actually qualify, and 80% of do not meet their recruitment goals on time. So how can these issues be resolved?

  • Increase awareness of Alzheimer’s disease so patients start seeking help earlier in the disease’s progression.
  • Develop better diagnostics so that doctors can detect the disease sooner and help people enroll in the right clinical trials, including blood tests.
  • Raise awareness of—and  hopefully openness to—clinical trials among doctors and patients alike.

See Bill Gates, Here’s a Way You Can Help Fight Alzheimer’s, Gates Notes, November 5, 2019.

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

November 11, 2019 in Current Affairs, Disability Planning - Health Care, Estate Planning - Generally, Science | Permalink | Comments (0)

Case Note on Disability Law Center of Alaska v. Davidson

NaelaAdriona Horton recently published a Case Note on Disability Law Center of Alaska v. Davidson, NAELA Journal Online, July 2019. Provided below is an introduction to the Case Note.

On March 28, 2018, the U.S. District Court for the District of Alaska, in Disability Law Center of Alaska v. Davidson denied defendants’ motion for summary judgment on plaintiffs’ three Title 42 U.S.C. § 1983 claims alleging that defendants were in violation of federal Medi­caid law by failing to do the following:

    1. Provide adequate notice on how to apply for and access applied behavioral analysis (ABA) therapy under the Alaska early and periodic screening, diagnostic, and treatment (EPSDT) program;
    2. Reimburse for ABA under the program; and
    3. Provide ABA services under the program with reasonable promptness.
      Plaintiffs’ cross-motion for summary judgment was granted as to their claim that defendants were required to provide ABA services as part of the state EPSDT program and that the Centers for Medicare & Medicaid Services (CMS) was not authorized to relieve them of that obligation.

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

November 11, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)