Wills, Trusts & Estates Prof Blog

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

Friday, September 25, 2020

Article on ESG Investing: Theory, Evidence, and Fiduciary Principles

Max M. Schanzenbach and Robert Sitkoff recently published an article entitled, ESG Investing: Theory, Evidence, and Fiduciary Principles, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

Trustees and other investment fiduciaries of pensions, charities, and personal trusts, and those who advise them, face increasing pressure to rely on ESG factors in the investment management of tens of trillions of dollars of other people’s money. At the same time, however, confusion abounds about the intersection of fiduciary principles and ESG investing. This article cuts through that confusion to provide guidance about when and how ESG investing by trustees and investment fiduciaries is permissible. We make four interrelated points:

(1) we provide a clarifying taxonomy on the meaning of ESG investing, differentiating between risk-return ESG (i.e., using ESG factors to improve risk-adjusted returns) and collateral benefits ESG (i.e., using ESG factors for third-party effects);

(2) we discuss the subjectivity inherent to identifying and applying ESG factors, which complicates assessment of ESG investing strategies;

(3) we summarize the current theory and evidence on whether ESG investing can improve risk-adjusted returns, finding the results to be mixed and contextual; and

(4) we show that American trust fiduciary law generally prohibits collateral benefits ESG, but risk-return ESG can be permissible if supported by a reasoned and documented analysis that is updated periodically.

September 25, 2020 in Articles, Estate Administration, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

Article on Inheritance Crimes

David Horton and Reid K. Weisbord recently published an article entitled, Inheritance Crimes, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

The civil justice system has struggled to resolve disputes over end-of-life transfers. The two most common grounds for challenging the validity of a gift, will, or trust—mental incapacity and undue influence—are vague, hinge on the state of mind of a dead person, and allow factfinders to substitute their own norms and preferences for the donor’s intent. In addition, the slayer doctrine—which prohibits a killer from inheriting from her victim—has generated decades of constitutional challenges.

But recently, these controversial rules have migrated into an area where the stakes are significantly higher: the criminal justice system. For example, states have criminalized financial exploitation of an elder, which includes obtaining assets through undue influence. Likewise, prosecutors are bringing theft charges against people who accept transfers from mentally diminished owners. Finally, legislatures are experimenting with abuser statutes that extend the slayer doctrine by barring anyone from receiving property from the estate of a senior citizen whom they mistreated.

The Article evaluates the benefits and costs of this trend. It explains that these new sanctions deter elder abuse: wrongdoing that is rampant, pernicious, and underreported. Nevertheless, the Article also exposes the dangers of criminalizing this unique area of law. First, criminal undue influence and the abuser doctrine may be unconstitutional in some situations. Second, inheritance crimes suffer from the flaws that make probate litigation so unreliable. Third, because inheritance law and criminal law are so different, jurisdictions have not yet figured out how to gracefully merge them. Finally, the Article builds on these insights to argue that states should abolish criminal undue influence, harmonize civil and criminal rules, and create exceptions to abuser laws.

September 25, 2020 in Articles, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Thursday, September 24, 2020

Probate Litigation And The President: Mary Trump Sues President Donald Trump and Estate of Late Brother Over Alleged Fraud

MaryDonald Trump's niece, Mary L. Trump has filed a lawsuit against the President, his sister Maryanne Trump Barry, and the executor of the estate of their late brother Robert Trump. Mary has alleged that: “For Donald J. Trump, his sister Maryanne, and their late brother Robert, fraud was not just the family business—it was a way of life.”

Mary has also alleged that when her father Fred Trump Jr. died, she inherited valuable minority interests in the family business and that Donald, Maryanne, and Robert committed to watch over those interests as fiduciaries. 

Mary has alleged that “they designed and carried out a complex scheme to siphon funds away from her interests, conceal their grift, and deceive her about the true value of what she had inherited.”

Mary specifically has alleged three fraudulent schemes that were committed against her:

  • The Grift:  “Defendants fraudulently siphoned value from Mary’s interests to entities Defendants owned and controlled, while disguising those transfers as legitimate business transactions.
  • The Devaluing: Defendants fraudulently depressed the value of Mary’s interests, and the net income they generated, in part through fraudulent appraisals and financial statements.
  • The Squeeze-Out: Following Fred Sr.’s death, Defendants forced Mary to the negotiating table by threatening to bankrupt Mary’s interests and by canceling the healthcare policy that was keeping Fred III’s infant son alive, and once at the table Defendants presented Mary with a stack of fraudulent valuations and financial statements, and a written agreement that itself memorialized their fraud, and obtained her signature.

Mary also asserted eight causes of action in her complaint:

1.  Fraudulent misrepresentation;

2.   Fraudulent concealment;

3.   Fraudulent inducement;

4.   Negligent misrepresentation;

5.   Civil conspiracy to commit fraudulent misrepresentation and concealment;

6.   Civil conspiracy to commit fraudulent inducement;

7.   Breach of fiduciary duty; and

8.   Aiding and abetting a breach of fiduciary duty.

See Probate Litigation And The President: Mary Trump Sues President Donald Trump and Estate of Late Brother Over Alleged Fraud, Probate Stars, September 24, 2020. 

September 24, 2020 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, September 23, 2020

Lawyer who 'almost got away with the perfect crime' convicted of throwing his wife overboard on luxury cruise

LawyerLonnie Loren Kocontes, a former California lawyer, was convicted and sentenced top life for throwing his ex-wife-s body off a cruise ship. 

The incident occurred in 2006, and Kocontes was convicted in June of "first-degree murder for financial gain." 

Kocontes and his ex-wife, Micki Kanesaki, were on a holiday vacation together on the day the incident occurred. Prosecutors argued that Kocontes killed Kanesaki in order to inherit more than $1M.

During the trial, Kocontes testified that he and Kanesaki had rekindled their relationship and planning to get remarried. Prosecutors did not believe this testament and instead stated that Kocontes was instead planning to kill his ex-wife and "make it look like an accident."

Kocontes claimed that he had taken a sleeping pill and Kanesaki was gone when he awoke. Kocontes reported his ex-wife missing later that evening and had already returned back to the U.S. by the time his wife's body was found. 

The FBI began investigating Kocontes in 2008, when he attempted to move $1M between bank accounts that he shared with another wife. 

"After a long investigation, which included Ms Nguyen telling the authorities that Kocontes had said he had asked a friend to kill his ex-wife, the 62-year-old was indicted for Kanesaki’s murder in 2013 and has been in police custody since then."

See James Crump, Lawyer who 'almost got away with the perfect crime' convicted of throwing his wife overboard on luxury cruise, The Independent, September 21, 2020. 

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

September 23, 2020 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, September 22, 2020

IRS Expands E-Signature Policy to Include Gift and Estate Tax Returns and Foreign Trust Reporting Forms

IRSThe IRS announced that it would temporarily accept e-signatures on certain forms. These forms included Form 8832, Entity Classification Election. Also, on September 10, the IRS expanded the list. The forms added to the list included:

Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; and Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner.

The e-signature policy will only apply to forms submitted on or before December 31, 2020. 

See Paul J. D'Alessandro, Jr., IRS Expands E-Signature Policy to Include Gift and Estate Tax Returns and Foreign Trust Reporting Forms, Bilzin Sumberg, September 11, 2020. 

 

September 22, 2020 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Woman declared dead found alive inside Detroit funeral home

Detroit"A 20-year-old woman who was declared dead by fire officials was found alive inside a Detroit funeral home. . ."

The woman was found unresponsive by Southfield Fire Department. After performing CPR and other life reviving methods for 30 minutes, the paramedics determined that there was no signs of life and she was declared dead. 

"The fire department contacted the Oakland County Medical Examiner's Office and provided the woman's medical data."

“The patient was again determined to have expired and the body was released directly to the family to make arrangements with a funeral home of their choosing,” Chief Menifee said in the statement.

The staff at James H. Cole funeral home later determined that the woman was still breathing.

The woman's name has not been released and no other information has been provided. 

See Woman declared dead found alive inside Detroit funeral home, Nexstar Media Wire, August 24, 2020. 

September 22, 2020 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Monday, September 21, 2020

Sperm donor fathers 36 children, parents later realize his bio was a lie

Chris-aggelesA whirlwind resulted from a Georgia sperm bank accidentally released information on children's sperm donors. 

Sperm donor 9623 had an impressive resume which stated he had "an IQ of 160, fluency in four languages, a doctorate in neuroscience engineering — and a resemblance to Tom Cruise." 

This accidental revelation has lead to an onslaught of lawsuits from parents. It has been revealed that the company did not attempt to verify the claims, which were false. 

The sperm donor, Chris Aggeles, actually did not finish college and had actually been convicted of burglar and was diagnosed with and hospitalized for schizophrenia. 

This has lead to parents being afraid that their children have been predisposed to mental illness. 

"Aggeles explained his remorse to Fox in the interview, saying that it began when he saw an advertisement in a student newspaper and thought it would be a good way to earn income as a struggling waiter and aspiring drummer."

He added, “I hope that the families involved, and particularly the children involved, can find it in their hearts to forgive me.”

See Russell Falcon, Sperm donor fathers 36 children, parents later realize his bio was a lie, Austin TX KXAN, September 12, 2020. 

September 21, 2020 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

You need to have a will: Here are some things to consider in getting one

EstateThe coronavirus has proven deadly and there are no signs that it will slow down anytime soon. Given the great risks that the coronavirus holds, there is a very important question you should ask yourself: Do you have a legal, written will? 

One common misconception is that you don't have to begin estate planning until you are old. However, according to Elizabeth R. Carter, professor at the LSU Law Center, "You should not wait until you are old to engage in estate planning."

With the many threats within our Country, you should begin strategizing your estate plan. But first, there are a few things you should consider.

First, you should not try to estate plan on your own. Although it's possible, it is not encouraged. You should seek out an attorney that has experience in estate planning. 

You should also avoid using fill in templates for wills that you may find online. Avoid this method at all cost. Many of the templates you will find may not be legally enforceable in your state. These templates are also not worth the money even if they are free!

You should also be sure to check if your state requires wills to be notarized. 

Your strategy may be different if you are creating a living will. These documents typically involve your wishes on end-of-life treatment. 

Overall, you should be very careful and strategic in your estate planning process.

See George Morris, You need to have a will: Here are some things to consider in getting one, The Advocate, August 24, 2020.

September 21, 2020 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Sunday, September 20, 2020

Billionaire Aldi Family Fortune To Hit German Court As Son Sues Mother For Embezzling Funds: Reports

TheoTheo Albrecht, cofounder of Aldi supermarket, passed away in 2010 and was ranked the 31st richest person in the world that same year. Albrecht's grandson Nicolay Albrecht has accused his mother Babette Albrecht and his three sisters of embezzling money from the trust. 

Nicolay Albrecht has has brought the action to a German court where the family members will argue over the fortune. Nicolay alleges that his mother and sisters have withdrew millions from a family trust that holds the family fortune. 

Nicolay's father, Berthold Albrecht was the beneficiary of the trust before his death in 2012. Babette is the widow of Berthold. 

"The conflict, which has been through many chapters, pits the cost-conscious elders who built Aldi against the younger generation who inherited the wealth."

Berthold's brother, Theo Jr., has already accused Babette and her children of "helping themselves to the assets" in the past. An alleged $88 million had already been withdrawn from the foundation in 2013, 2014, and 2015.

It appears that the elder generation felt that the younger, money-hungry generation, is disrupting the philosophy that the Albrecht family founded its success on. 

See David Dawkins, Billionaire Aldi Family Fortune To Hit German Court As Son Sues Mother For Embezzling Funds: Reports, Forbes, September 20, 2020. 

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

September 20, 2020 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Saturday, September 19, 2020

How to Divide Up Personal Possessions Without Dividing the Family

EstateWhen creating an estate plan, allocating and dividing your assets can be very difficult. You are more than likely trying to figure out how to allocate your possessions in a way that will not create tension between your family members after you are gone. When creating your estate plan, it is very important that you make your intentions clear and have your estate planning strategy in line with those intentions. 

Although possession that can be turned into cash are easy to divide, tangible things like jewelry and heirlooms will not be as easy to divvy up. You may also have items that hold sentimental value that multiple family members are hoping to get their hands on. The family fights are likely to be centered around these types of objects. 

It will likely be a tough decision, but whoever you decide to give these items to, you should make it very clear who you choose and why you have chosen them. 

Below are a few steps to help you along the way:

  • List the most important or valuable items in your will
  • Direct that certain items be sold
  • Write a memorandum 
  • Give everything away now
  • Get an appraisal
  • Use a letter 
  • Bidding 

If you make these decisions instead of leaving them in the hands of your family, the process will be much smoother.

See Randy M. Lish, How to Divide Up Personal Possessions Without Dividing the Family, Elder Law News, September 18, 2020.

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

September 19, 2020 in Elder Law, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)