Wills, Trusts & Estates Prof Blog

Professor Explains Legal Background Behind Murdoch Trust Dispute

Rupert Murdoch, the 93-year-old media magnate with holdings such as Fox News and The Wall Street Journal, recently lost a legal battle to amend the terms of his family trust. The Nevada probate commissioner ruled against Murdoch’s attempt to grant his eldest son, Lachlan, sole control of the family media empire. The trust, established during Murdoch’s divorce from his second wife, ensures equal voting shares for his four children and is irrevocable, making amendments challenging. This dispute, reminiscent of an episode of HBO’s Succession, carries significant implications for the future leadership and editorial direction of influential media organizations.

Murdoch’s argument centered on preserving the value of his businesses by maintaining their current editorial approach under Lachlan’s leadership. However, the commissioner determined that Murdoch and Lachlan acted in bad faith, prioritizing Lachlan's control over the beneficiaries' best interests. Nevada, known for being trust-friendly, offers unique protections for trusts, but the court rejected Murdoch's justification for the amendment. With proceedings sealed, details have surfaced through investigative reporting, while a court challenge to unseal records was denied. Despite this setback, Murdoch is expected to appeal the decision.

This case underscores broader lessons for trust and family law. Establishing an irrevocable trust requires foresight and careful planning to accommodate unforeseen circumstances. Building flexibility into trust agreements can help families avoid contentious legal battles. However, even the best planning may not prevent disputes, as demonstrated by the Murdoch case. The high-profile nature of this dispute highlights the complex dynamics of balancing family relationships, business interests, and legal frameworks in estate planning.

For more information see Cooper Allen, "Professor Explains Legal Background Behind Murdoch Trust Dispute" UVA Law, December 17, 2024. 

How to Recover Bitcoin for an Estate

When someone passes away owning Bitcoin or another cryptocurrency, the recovery process can be difficult or impossible. As a personal representative or executor of an estate, the first job is to locate, custody and protect the assets of the deceased. Recovery of Bitcoin and other cryptocurrencies is an essential part of being a personal representative.

In order to locate and collect the Bitcoin of a deceased person, the basic facts about Bitcoin and how Bitcoin has been held over they years is necessary. This is because Bitcoin has been held in a number of different forms over the years, including on brokerage exchanges, on cryptocurrency exchanges, and inside private wallets. So the first step is to look for clues about how the Bitcoin was being held.

How Has Bitcoin Been Custodied Over the Years?

Exchange-Traded Security

The most recent form for holding bitcoin is as an exchange-traded security, the most popular one known as the Greyscale Bitcoin Trust, traded on the New York Stock Exchange, under the ticker symbol GBTC. Greyscale is an Exchange Traded Fund (“ETF”), which simply holds a large number of Bitcoins. The shares in the fund trade like any other stock. Because GBTC can be purchased like any other stock in a brokerage account, it is the easiest and most convenient way in which to hold Bitcoin. Other large Bitcoin ETF’s are as follows (as of April 2024).

Recovery of a Bitcoin ETF for an estate should operate exactly like any other security held in a brokerage account. The Personal Representative of the Estate will need to supply Letters of Administration to the brokerage, and the brokerage should then turn over control of the brokerage account to the Personal Representative. Selling a Bitcoin ETF for cash should be simple, and operates exactly like selling any other security in a brokerage account.

Cryptocurrency Exchange

Cryptocurrency exchanges have been the most popular way to hold cryptocurrencies. Such exchanges operate very much like a brokerage account – the owner of the account should have a username and password. And if the password is ever lost, the exchange should have a password recovery protocol. Even without use of the password recovery protocol, any United States-based exchange will be required to honor the Letters of Administration of the Personal Representative and to follow court order. Offshore exchanges will be more difficult to deal with if the password recovery tools cannot be used.

Whether or not the deceased had a cryptocurrency exchange account requires some sleuthing. If access to the deceased’s email has been obtained, searches for the names of exchanges might be a good place to start. Unfortunately, many of the earlier exchanges went bust because of wholesale theft from the exchange or from fraud. Some of the exchanges went through (or are currently going through) bankruptcy or liquidation proceedings, so expanding the search for communications from persons associated with the bankruptcy could help. Here is a partial list of exchanges, along with their status (as of April 2024).

Cryptocurrency Wallets

Originally, the only way in which to hold Bitcoin was in a wallet that the owner controlled. This presented a number of issues, the main one being that cryptocurrency held inside of a wallet could not easily be sold, and adding new bitcoins to a wallet was not easy. Holding, buying and selling Bitcoins was far easier on an exchange. So the early exchanges were developed, to which early Bitcoin adopters flocked. Unfortunately, many of the early exchanges failed, due to theft or fraud. Most of the failed exchanges were outside of the United States, which allowed dodgy practices to proliferate. The current class of United States-based exchanges, such as Coinbase, seem to have solved the theft, fraud and custody issues, making the need for private wallets somewhat obsolete.

If the deceased was believed to have been an early Bitcoin investor or was strongly concerned by security or privacy issues, the decreased may have a wallet filled with cryptocurrency. Wallets come in four basic styles, but only the hardware wallet addresses safety and security concerns. The other types of wallets had fairly limited adoption and are not in wide use today, given how secure United States-based exchanges are. Nevertheless, in searching the deceased’s computer devices, searches for the names of the various wallet applications should be undertaken.

How to Probate Bitcoin
Probating Bitcoin should work like any other asset. The Personal Representative needs to locate, marshall and safeguard the Bitcoin, and then report the value of the Bitcoin on the estate inventory. If the Bitcoin is needed to pay creditors, the Bitcoin would need to be sold for cash and creditors paid. If not needed for creditors, any direction in the will regarding the Bitcoin should be followed. The Bitcoin can be distributed in kind to beneficiaries or sold for cash, depending on the terms of the will and the preference of the executor and beneficiaries.

We recommend that, after the death of the deceased, the personal representative of executor move the Bitcoin or other cryptocurrency onto a United States-based exchange, for transparency purposes and to facilitate transactions in the Bitcoin, such as distributions in kind or selling the Bitcoin. A personal representative must be able to “show their work,” to avoid any accusations of improprieties.

For more information see Jeffrey Skatoff, How to Recover Bitcoin for an Estate, December 2024. 

Special thanks to Jeffrey H. Skatoff (Florida Probate Attorney) for bringing this article to my attention.

More than $100 trillion in wealth is about to be inherited — here are the biggest winners

The Great Wealth Transfer is set to reshape the financial landscape, with an estimated $124 trillion expected to pass from older generations to heirs and charities by 2048, according to Cerulli Associates. This unprecedented shift reflects the doubling of personal wealth over the past 12 years and its concentration among the wealthiest Americans, particularly the top 2%.

Of the total transfer, $106 trillion will go to family and heirs, while $18 trillion will be directed to charities. Wealthy individuals, particularly the top 2% with a net worth of over $5 million, are expected to contribute $62 trillion to this transfer. Currently, $2.5 trillion is being passed down annually, a figure projected to rise to $3 trillion by 2030, $4 trillion by 2036, and over $5 trillion by the late 2040s.

Demographics will play a significant role in the distribution of wealth. Women are projected to inherit $54 trillion, primarily through spousal transfers. Generation X will benefit the most in the next decade, inheriting $14 trillion by 2034 and $39 trillion by 2048. Millennials will inherit $46 trillion starting around 2038, while Gen Z is expected to receive $15 trillion over the same period.

The projections have increased significantly due to inflation, soaring asset values, and wealth concentration. Since 2021, estimates have risen nearly 50%, reflecting increases in equity (27%) and real estate (39%) values. Wealth concentration at the top has grown, with individuals worth $10 million or more holding 44% of total wealth in 2023, compared to 40% in 2020.

This transfer will have significant implications for wealth management, philanthropy, and luxury markets. Advisors and firms are already focusing on planning efficient ways to pass wealth, while also preparing for a new client base that includes more women, millennials, and Gen Z. Firms will need to recruit younger and more diverse advisors to reflect the evolving demographics and priorities of their future clients.

For more information see Robert Frank "More than $100 trillion in wealth is about to be inherited — here are the biggest winners" CNBC, December 13, 2024.

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

Warren Buffett suggests all parents do one thing before they die, whether they have ‘modest or staggering wealth’

Warren Buffett advises parents to share and explain their wills with their children before signing, fostering understanding of the reasoning behind inheritance decisions and the responsibilities they entail. He emphasizes that discussing testamentary decisions can prevent confusion, resentment, and family conflicts after death.

Financial planners, such as Douglas Boneparth and Carolyn McClanahan, agree with Buffett’s advice, noting that clear communication about inheritance can manage expectations and strengthen family relationships. Parents should explain unequal distributions, such as accounting for past financial support or a child's specific needs, to avoid feelings of unfairness. Wealthier siblings might even consent to smaller inheritances to support less fortunate ones.

However, there are exceptions. In cases where children are financially exploitative, irresponsible, or immature, withholding details may be prudent to avoid exacerbating problems. Alternatives like posthumous explanatory letters might help mitigate misunderstandings.

Ultimately, Buffett and experts stress the importance of tailored estate planning conversations, considering each family's unique dynamics and circumstances.

For more information see Annie Nova, "Warren Buffett suggests all parents do one thing before they die, whether they have ‘modest or staggering wealth’", CNBC.com, November 25, 2024. 

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

Article: Integration of Taxes on Inheritances, Estates and Gifts into the OECD Model Tax Convention on Income and on Capital: The Curious Case of Special Provisions - Part 1

Jan Karol Szczepański (Independent) recently published, Integration of Taxes on Inheritances, Estates and Gifts into the OECD Model Tax Convention on Income and on Capital: The Curious Case of Special Provisions - Part 1, 2024. Provided below is an Abstract: 

Part 1 of this article considers the interaction between the special provisions in the OECD Model Tax Convention on Income and on Capital, and the conceptual foundations of taxes on inheritances, estates and gifts.

Article: Reimagining Marital Property at Death

Ram Rivlin (Hebrew University of Jerusalem - Faculty of Law) and Shahar Lifshitz (Bar-Ilan University - Faculty of Law) recently published Reimagining Marital Property at Death, 2024. Provided below is an Abstract:

This paper argues that death should not automatically terminate the marital partnership, and it suggests a novel and comprehensive model for the regulation of marital property upon death. According to the conventional view, the idea of marital partnership implies an equal division of the marital assets upon dissolution. Thus, in the event of death, just as in the event of divorce, the marital partnership comes to an end, and half of the marital property must be allocated to the surviving spouse, while the other half is distributed to the deceased's heirs. Contrary to this conventional view, this paper develops a new theory based on what we term the "surviving partnership." According to this approach, the economic partnership survives the death of one spouse. We justify our theory by focusing on the interests and desires of the spouses as individuals, as well as on the continuity of the familial unit. Our theory has three main legal implications. First, we argue that as a default rule, upon the death of one spouse, the entire marital property should be left in the hands of the survivor, as a matter of family law rather than succession law. For that reason, the law should distinguish between the decedent's portion of the marital property and her separate property. Second, we hold that the norms of will-making, which we view as an expression of the couple's freedom to define death as an event that does indeed terminate the partnership, should be subject to special requirements to ensure fairness and reciprocity between the partners. Therefore, termination of the partnership through a will should either operate reciprocally, regardless of which partner predeceases the other, or require notice to the non-testator spouse to ensure fairness. Third, our view has implications for how the surviving spouse should handle the marital property after her spouse's death, as well as for the norms that will apply to the disposition of the marital property upon her own, subsequent death. We offer a close analysis of current legal norms, demonstrating how the surviving partnership model sheds new light on, and offers amendments and improvements to, hidden aspects of marital property law, succession law, and property law. We conclude by demonstrating how the surviving partnership model is better equipped to deal with contemporary reality characterized by diverse family patterns.

‘Scottish Widows sent my dad’s life insurance policy to my estranged nephew’

A woman who had been caring for her late father, a former Royal Marine commando, has given up her fight with Scottish Widows after the company sent her father's £10,000 life insurance payout to her estranged nephew. The daughter had been living with her father in Cyprus, ensuring his care until his passing in April 2019. Before his death, her father requested Scottish Widows transfer his life insurance policy to her for safety reasons, a request the company initially acknowledged. However, after her father's death, it was discovered that the payout, along with two other accounts amounting to £37,000, was sent to her nephew, who was still the power of attorney.

The problem stemmed from a discrepancy between the deed of assignment and the power of attorney, causing the life insurance transfer to become invalid. Alan Lakey, a financial adviser, explained that financial transactions before death must involve the power of attorney, potentially nullifying the assignment the daughter believed had been completed. The daughter filed complaints with Scottish Widows and escalated the matter to the Financial Ombudsman Service, which later refused to take on the case, citing jurisdiction issues. Frustrated, the daughter expressed her disappointment in how Scottish Widows handled the matter, considering her long-standing relationship with Lloyds Bank, which owns the insurance company.

This case reflects a broader issue, with complaints against Scottish Widows rising significantly. The daughter discovered a Facebook group dedicated to complaints about the company, connecting with others who experienced similar frustrations. Campaigners, including Mark Radin, have been advocating for changes, as complaints about the company surged by 63% last year. Scottish Widows responded by saying they had made efforts to address customer service issues, including training and staff reallocation, but the company could not comment on the specific case due to the legal complexities involved.

For more information see Ruby Hinchliffe "Scottish Widows sent my dad’s life insurance policy to my estranged nephew" The Telegraph, October 6, 2024. 

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

People Without Kids Are Leaving Money to Surprised Heirs

As childlessness becomes more common, especially among older generations, many estates are being inherited by distant relatives, charities, or even pets. Without children to pass on their wealth, many individuals, particularly those without wills, unintentionally leave their assets to extended family members they may have little contact with. This trend has led to what estate planners call "laughing heirs," who unexpectedly receive inheritances.

Childless individuals are also more likely to leave their money to causes and friends. Some people, like Kelley Gilpin McKeig, who inherited money from a distant cousin, are prompted to create or update their wills to ensure their assets go to those they care about. Pets, too, are becoming common beneficiaries, with people like writer Rebecca Fornwalt and financial coach Susan Lassiter-Lyons leaving provisions for their animals in their estate plans.

A significant concern for childless individuals, beyond inheritance planning, is ensuring they have support in old age. Without children to rely on for help, such as medical care or daily tasks, many wonder who will assist them as they grow older. Financial advisors stress the importance of planning for both retirement and care needs, and of choosing executors who will honor their wishes.

For more information see Tali Arbel "People Without Kids Are Leaving Money to Surprised Heirs,"The Wall Street Journal, October 2, 2024. 

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

Richard Simmons' family hits back after longtime housekeeper files to be reinstated as co-trustee of estate

Richard Simmons' family has expressed strong disapproval of Teresa Reveles, his longtime housekeeper, for filing a petition to be reinstated as co-trustee of his estate. Reveles, who worked for Simmons for 36 years, claims she was pressured into signing documents that removed her as co-trustee shortly after Simmons passed away. The family, however, has described her actions as motivated by "greed" and believes Simmons would be "heartbroken" by her alleged betrayal of their decades-long friendship.

The family’s spokesperson emphasized that Simmons took great care of Reveles and ensured she was provided for in his will, even though she chose to decline her role as co-trustee. They accuse her of acting against the best interests of the estate and tarnishing Simmons' legacy. Furthermore, they claim Reveles is staying in Simmons’ house despite owning her own residence and has attempted to charge the estate for her living expenses. They also noted concerns over a documentary Reveles allegedly pitched to Netflix, which the family believes could harm Simmons’ legacy.

In her petition, Reveles argues that Simmons’ brother and sister-in-law pressured her into signing away her role as co-trustee while she was emotionally distraught following Simmons' death. She claims she feared losing her inheritance if she did not comply. The family maintains these allegations are false and views her legal actions as a waste of the estate's assets. They are confident the court will reject Reveles' petition once the full facts are presented.

For more information see Lauryn Overhultz "Richard Simmons' family hits back after longtime housekeeper files to be reinstated as co-trustee of estate" Fox News, September 26, 2024. 

Estate planning lessons from the $600M fight over Michael Jackson’s music catalog

Michael Jackson's estate has faced ongoing legal challenges and tax disputes since his death in 2009, despite the continued financial success of his music. A significant event occurred in August 2024 when a California court approved the $600 million sale of Jackson’s music catalog, despite objections from his mother, Katherine Jackson, who argued that Michael never wanted his assets sold.

Jackson’s will, signed in 2002, left most of his estate to his children through a trust and granted his executors the authority to sell assets. Katherine Jackson's challenge was dismissed because the court determined that Michael’s will allowed such sales, emphasizing the importance of formally documenting wishes in a will.

The situation underscores the importance of clearly defined wills and the broad powers often granted to executors. It also provides lessons for estate planning, advising that wills should be carefully drafted with an understanding of executor powers. Imposing restrictions on asset sales can create challenges and may not align with future circumstances, as shown in a similar case involving Joseph Pulitzer. Ultimately, estate plans must be formalized in writing and carefully considered to avoid posthumous disputes and unintended consequences.

For more information see The Conversation's "Estate planning lessons from the $600M fight over Michael Jackson’s music catalog" Theconversation.com, August 28, 2024. 

Special thanks to Naomi Cahn (University of Virginia School of Law) for bringing this article to my attention.