Wills, Trusts & Estates Prof Blog

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

Saturday, September 21, 2019

Article on Directed Trusts: A Primer on the Bifurcation of Trust Powers, Duties, and Liabilities in Special Needs Planning

TrustWilliam D. Lucius, Esq., and Shirley B. Whitenack, Esq., CAP, Fellow recently published an Article entitled, Directed Trusts: A Primer on the Bifurcation of Trust Powers, Duties, and Liabilities in Special Needs Planning, NAELA News Journal, August 2019. Provided below is an introduction to the Article.

The provision of legal services in the fields of elder law and special needs planning has expanded over the past decade into a client-focused, holistic, and collaborative approach. Consequently, this developing philosophy has permeated into the estate plans and trust instruments related to these fields, such as special needs trusts (SNTs) and settlement preservation trusts (SPTs), wherein the selection of an appropriate fiduciary is no longer a choice between two or among several individuals or corporate trustees. Nontraditional “multiparticipant trust agreements,” in which the “powerholders” may be a potpourri of trustees, co-trustees, distribution directors, investment advisers, trust advisory committees, and trust protectors, are becoming more commonplace. With the advent of directed trusts, these powerholders may now encroach upon the traditional trustee’s once overarching authority and compel the trustee to act (or not act) in furtherance of the trust’s objective.

Consider the case of Nathaniel. Like most 4-year-olds, Nathaniel was curious and adventurous in equal measure. Due to the alleged negligence of a day care employee, Nathaniel left his day care facility through an open gate and wandered unsupervised to an adjacent parking lot. When Nathaniel attempted to climb through a half-open car window, his head became stuck and he could no longer support his weight. The near-strangulation caused a significant, irreversible traumatic brain injury. Now 8 years old, Nathaniel is incapacitated, has no gait strength or swallowing reflexes, has frequent seizures, and requires 24-hour supervised care. Nathaniel’s parents sued the day care provider and parking lot owner, securing an $8 million cash settlement, which includes a 40-year guaranteed structured annuity payment of $4,500 per month, adjusted 3 percent annually. The court that approved the settlement ordered the establishment of a first-party SNT for Nathaniel’s benefit that included, in part, the following language:

Art. 1.1 — Trust Company, N.A., shall serve as the initial Corporate Trustee. Distribution Directors, Inc., shall serve as the initial Distribution Director under this Agreement. Each of the entities shall serve as fiduciaries but shall only be responsible for the decisions that fall within their respective authorities as defined hereunder. Both may rely conclusively on the other if that instruction relates to a matter under the other’s purview, and neither shall have a duty nor obligation to review the underlying actions of the other.

Art. 1.2 — During the lifetime of Nathaniel, Distribution Director may direct Corporate Trustee to distribute, from income, principal, or both of this Trust, such amounts as the Distribution Director, in its sole, absolute, and unfettered discretion, may from time to time deem advisable or reasonable for Nathaniel’s special needs.

Art. 9.1 — Nathaniel’s mother is appointed as Trust Protector. The Trust Protector shall not be entitled to compensation for services rendered but shall be entitled to reimbursement of reasonable expenses in the exercise of her services. The Trust Protector is authorized, in her sole and absolute discretion, to remove from office, without Court approval, any Corporate Trustee or Distribution Director appointed herein, with or without cause and for any reason whatsoever, and may replace such Corporate Trustee or Distribution Director with another Corporate Trustee or Distribution Director who is not related to or subordinate to the Beneficiary (within the meaning of Internal Revenue Code § 672(c)) to act in place of the Corporate Trustee or Distribution Director so removed.

In Nathaniel’s case, by ordering a trust with bifurcated duties among various parties, the court followed the advice of the guardian ad litem, who recommended a multiparticipant directed trust arrangement to best address the investment management and discretionary decision-making complexities that will likely last the length of the trust’s administration.

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

September 21, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, September 20, 2019

Northern Illinois Law Seeks Entry Level Faculty

NIUNORTHERN ILLINOIS UNIVERSITY COLLEGE OF LAW invites applications for anticipated openings for two entry-level tenure-track faculty positions beginning August 2020. Duties include engaging in high quality research and teaching, as well as being an active participant in law school and university service. Requirements include a J.D. degree from an ABA accredited law school, an ability to engage in high quality research and teaching, and a willingness to actively participate in law school and university service.

We are particularly interested in candidates specializing in contracts, business associations, tax, torts, trusts and estates, and skills courses in the areas of pre-trial skills and/or business related skills.

If you have not registered for the AALS Faculty Recruitment Conference and wish to apply, please go to the position posting through the NIU applicant tracking system at the following link: http://employment.niu.edu/postings/47421.

Please note that to be officially considered for this position, a cover letter, resume, and a list of names/addresses/email addresses/phone numbers of three current professional references will be required as uploads to NIU’s applicant tracking system.

Please direct questions to Interim Assistant Dean for Student Affairs and Associate Professor Yolanda King, Chair of the Appointments Committee, Northern Illinois University College of Law, Swen Parson Hall, DeKalb Illinois 60115-2890 at lking@niu.edu , or Tita Kaus at 815-753-1068 tkaus@niu.edu . Preference will be given to applications received by September 24, 2019, although applications will be accepted until the positions are filled.

In accordance with applicable statutes and regulations, NIU is an equal opportunity employer and does not discriminate on the basis of race, color, national origin, ancestry, sex, religion, age, physical and mental disability, marital status, veteran status, sexual orientation, gender identity, gender expression, political affiliation, or any other factor unrelated to professional qualifications, and will comply with all applicable federal and state statutes, regulations and orders pertaining to nondiscrimination, equal opportunity and affirmative action.

In compliance with federal law, all persons hired will be required to verify identity and eligibility to work in the United States and to complete the required employment eligibility verification document form upon hire.

September 20, 2019 in Current Affairs, Estate Planning - Generally, Faculty Positions -- Permanent, Income Tax, Trusts | Permalink | Comments (0)

Wednesday, September 18, 2019

Illinois Enacts New Trust Code: What Fiduciaries Need to Know

IllinoisFiduciaries and estate planners in Illinois need to be made aware that starting January 1, 2020, the new Illinois Trust Code (ITC) will replace the Illinois Trusts and Trustees Act, ushering in several changes of note.

Before the ITC, all trustees had to account directly to all current income beneficiaries not under a legal disability. Now, settlor's can create so-called "silent trusts," in which a settlor may opt to (1) waive the trustee’s duty to account or provide information about the trust to beneficiaries under age 30, and (2) nominate “designated representative,” a fiduciary to whom the trustee must account and provide required trust information on behalf of the represented beneficiary during the trust’s silent period. The silent period must end once the represented beneficiary turns 30.

The ITC also creates two different trust accounting standards, with he key difference between the rules applicable to pre-ITC trusts and trustees and post-ITC trusts and trustees is that the ITC will give effect to a settlor’s waiver of the duty to provide annual accountings in a pre-ITC trust instrument.

The new Code will also make it easier for a trustee to delegate discretionary powers and it shortens limitations periods for claims against trustees in certain instances. There will now be a rebuttable presumption that any exculpatory clause in a trust instrument will be invalid if the trustee drafted the document or otherwise procured the inclusion of the exculpatory provision.

See Peter B. Allport, Nicole K. Mann, Jared R. Cloud, & Margaret Elizabeth Sanne Illinois Enacts New Trust Code: What Fiduciaries Need to Know, MWE.com, September 16, 2019.

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

September 18, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Larry King’s Estranged Wife Shawn King Breaks Silence on Divorce

LarrykingLast month, 85-year-old host Larry King filed for divorce from his 59-year-old wife, Shawn King, after 22 years of marriage. This is not the first time that papers have been filed in court to dissolve the marriage; in 2010 they called it quits, but months later they announced their reconciliation.

But now, Shawn King has opened up about the pending divorce. “It’s not fun. It hurts. Yeah, it hurts." The couple are parents of two boys, 20-year-old son Chance and 19-year-old Cannon. Both men have commented on social media showing their support and love for both Shawn and Larry. Chance said, "Despite what is being reported, let me set the record straight My mother never tried to steal my inheritance or my brothers. I want what any son wants for his family; health, happiness and peace.”

Larry also has three other children and has been married eight time to seven different women: to Freda Miller from 1952 to 1953, Annette Kaye in 1961, Alene Akins from 1961 to 1963, Mickey Sutphin from 1963 to 1967, Akins again from 1967 to 1972, Sharon Lepore from 1976 to 1983, Julie Alexander from 1989 to 1992, and married Shawn in 1997.

See Sarah Hearon, Larry King’s Estranged Wife Shawn King Breaks Silence on Divorce: ‘It Hurts,' US Weekly, September 17, 2019.

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

September 18, 2019 in Current Affairs, Estate Planning - Generally, Television | Permalink | Comments (0)

Article on The Social Afterlife

FbAndrew Gilden recently published an Article entitled, The Social Afterlife, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

Death is not what it used to be. With the rise of social media and advances in digital technology, postmortem decision-making increasingly involves difficult questions about the ongoing social presence of the deceased. Should a Twitter account keep tweeting? Should a YouTube singer keep singing? Should Tinder photos be swiped left for the very last time? The traditional touchstones of effective estate planning — reducing transaction costs and maximizing estate value — do little to guide this new social afterlife. Managing a person’s legacy has shifted away from questions of financial investment and asset management to questions of emotional and cultural stewardship. This Article brings together the diverse areas of law that shape a person’s legacy and develops a new framework for addressing the evolving challenges of legacy stewardship

This Article makes two main contributions. First, it identifies and critically examines the four models of stewardship that currently structure the laws of legacy: (1) the “freedom of disposition” model dominant in the laws of wills and trusts, (2) the “family inheritance” model dominant in copyright law, (3) the “public domain” model dominant in many states’ publicity rights laws, and (4) the “consumer contract” model dominant in over forty states’ new digital assets laws. Second, this Article develops a new stewardship model, which it calls the “decentered decedent.” The decentered decedent model recognizes that individuals occupy heterogenous social contexts, and it channels postmortem decision-making into each of those contexts. Unlike existing stewardship models, this new model does not try to centralize stewardship decisions in any one stakeholder — the family, the public, the market, or even the decedent themselves. Instead, the decentered decedent model distributes stewardship across the diverse, dispersed communities that we all leave behind.

September 18, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Technology | Permalink | Comments (0)

Monday, September 16, 2019

Article on A "Mere Expectancy?" What Rights do Beneficiaries of a Revocable Trust have Prior to the Death of the Settlor?

RevocabletrustRichard C. Ausness recently published an Article entitled, A "Mere Expectancy?" What Rights do Beneficiaries of a Revocable Trust have Prior to the Death of the Settlor?, Quinnipiac Probate L.J., Vol. 32 Iss. 4 (2019). Provided below is the introduction to the Article.

Revocable trusts became a popular form of a will substitute in the 1960s and remain so to do this day. If the trust is funded, the settlor typically retains the right to receive income from the trust, the right to invade the trust principal, and the right to modify the terms of the trust. In addition, the settlor may serve as trustee or may appoint a third-party trustee. At the settlor's death, the trust assets, which may also include property transferred to the trust from the settlor's probate estate by means of a pour-over provision in the will, will be distributed to the trust's remainder beneficiaries in accordance with the terms of the trust.

Because the settlor usually retains an absolute right to revoke or modify the terms of a revocable trust at any time, courts generally refuse to afford remainder beneficiaries any rights in the trust while the settlor is alive. Instead, courts have ruled that remainder beneficiaries have no standing to seek information about the trust or challenge the trustee's actions, regardless of whether the trustee is the settlor or a third-party. However, the situation becomes somewhat murky once the settlor dies and the interests of the remainder beneficiaries are no longer "mere expectancies."

Part II briefly examines the nature and origin of the revocable trust. Part III considers how courts treats objections by remainder beneficiaries to actions taken by the settlor while serving as trustee. Part IV surveys attempts by remainder beneficiaries to question whether the settlor lacks sufficient mental capacity to revoke or modify the trust or whether such actions are the product of undue influence. Part V concerns the ability of remainder beneficiaries to contest the actions of a third-party trustee while the settlor is alive.

Part VI deals with the problem of whether remainder beneficiaries should have the power after the settlor's death to challenge actions taken by the settlor while alive on the theory that the settlor was mentally incompetent or was subject to undue influence. Part VII looks at requests for information or an accounting from a third-party trustee made after the settlor's death. Part VIII focuses on the controversial and perplexing issue of whether a remainder beneficiary should be allowed to sue the third-party trustee of a revocable trust after the settlor's death for wrongdoing allegedly committed during the settlor's lifetime. Part IX evaluates both doctrinal and normative perspectives on the questions of remainder beneficiary rights after the death of the testator. Finally, Part X offers a solution to the conflict of authority on this issue.

September 16, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

As Aretha Franklin’s Heirs Dispute Control of Estate, Judge Orders Court Supervision

ArethaThe reigning queen of soul, Aretha Franklin, died in August of last year and the world believed that passed away without a will. But the discovery of three handwritten documents found in her home foreshadowed a rocky and emotional road for her family.

If Franklin had indeed died intestate, Michigan law dictated that because she did not have a spouse at the time of her death, her $80 million estate would have been divided equally among her four sons. But in each of the wills, provided specific provisions to be made for her oldest son, who reportedly has special needs, and that the balance of assets would then be distributed equally among her other three sons. But there remains a question of whether Franklin did create the wills herself, and the youngest son, Kecalf, convinced the judge to have a handwriting expert examine the wills to ensure his mother wrote the documents.

Aretha's niece, Sabrina Owens, was originally named the estate's personal representative, but Kecalf has also petitioned the court to replace her - with him, thus causing dissention among the family. Owens was Aretha's choice to handle her estate, and she is known to be a capable business person, but the largest asset to the estate is no surprise: the rights to the diva's music catalog and likeness. If properly managed, these can be a financial powerhouse to the heirs and preserve their mother's legacy for future generations.

See Cozen O'Connor, As Aretha Franklin’s Heirs Dispute Control of Estate, Judge Orders Court Supervision, Lexology, September 11, 2019.

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

September 16, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, Music, New Cases, Wills | Permalink | Comments (0)

Saturday, September 14, 2019

CLE on Avoiding a Wealth of Trouble: Ethical Issues for Trust and Estate Lawyers

CLEThe American Law Institute is holding a webcast entitled, Avoiding a Wealth of Trouble: Ethical Issues for Trust and Estate Lawyers, on Thursday, October 24, at 12:00 - 1:30 PM Eastern. Provided below is a summary of the event.

Today’s trust and estate planning attorney must have a wide range of knowledge of substantive law, but also pay careful attention to professional responsibility and liability concerns that can be unique to this area of practice.

Register today for this important CLE program taught by Fellows of the American College of Trust and Estate Counsel (ACTEC) for a critical discussion of both common and sometimes unexpected dilemmas in practice. You’ll learn not only about recent ethics decisions and case law from around the country, but also what the disciplinary and malpractice implications are for lawyers.

What You Will Learn

Ethical challenges to be discussed by an expert panel include:

    • client-driven aggressive estate planning
    • common mistakes that can defeat a client’s objectives
    • problematic conflicts of interest
    • client selection and the importance of engagement letters
    • having adequate insurance coverage and complying with the policy requirements when claims are made or threatened
    • other ethical pitfalls that can ensnare trust and estate lawyers

September 14, 2019 in Conferences & CLE, Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Thursday, September 12, 2019

Article on Janus as a Client: Ethical Obligations When Your Client Plays Two Roles in One Fiduciary Estates

TrustsKaren E. Foxx & Philip N. Jones recently published an entitled, Article on Janus as a Client: Ethical Obligations When Your Client Plays Two Roles in One Fiduciary Estates, ACTEC L.J., Vol. 44 No. 3 (2019). Provided below is an abstract of the Article.

Is it possible for an attorney to have a conflict of interest when the attorney represents a trustee who is also a beneficiary of the trust? Is that situation similar to having two clients? What if the trustee is not only a beneficiary, but also a claimant against the trust? Since the trustee has three roles to play, is that situation similar to the attorney having three clients? The issue presented by these potential conflicts was one of the most vexing for the drafters of the Fifth Edition of the ACTEC Commentaries. The range of possible approaches goes from a requirement that a separate lawyer is needed for each role to a view that a client with multiple roles can rely on one lawyer. This article examines the various court and ethics opinions, considers the arguments for the different approaches, and recommends best practices for attorneys when their clients have such conflicts.

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

Tuesday, September 10, 2019

Article on Freedom and Fairness in Retirement Villages: An Analysis of the Regulatory Framework

FairscalesJulia Marshall-Mead recently published an Article entitled, Freedom and Fairness in Retirement Villages: An Analysis of the Regulatory Framework, Elder Law eJournal (2019). Provided below is an abstract of the Article.

New Zealand’s ageing population has contributed to the rapid expansion of the retirement village sector and will continue to do so in coming decades. It is therefore essential that the regulatory framework governing retirement villages be fit for purpose and that it meet its policy objective of protecting retirement village residents’ rights and interests. The regulatory framework has not been subjected to a comprehensive review since the enactment of the Retirement Villages Act 2003. This paper analyses the degree to which the regulatory framework has achieved its aims. It draws on data from interviews with residents and management from retirement villages to identify ways in which the regulatory framework could be altered to better balance the rights of residents and operators. It proposes amendments to the framework to ensure that residents thoroughly understand their contracts with retirement village operators, and to provide for fairer provisions around the financial terms the contracts may contain. It also recommends the establishment of an independent advisory facility to support residents and intending residents both prior to and after their entry into villages.

September 10, 2019 in Articles, Current Affairs, Elder Law, Estate Planning - Generally | Permalink | Comments (0)