Wills, Trusts & Estates Prof Blog

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

Sunday, September 22, 2019

Barron Hilton Leaves 97% of Massive Fortune to this Foundation

BarronBarron Hilton, the magnate behind Hilton Hotels success, passed away on Thursday at his Los Angeles home at the age of 91. The billionaire left 97% of his fortune to the Conrad N. Hilton Foundation, the charity started by his father, which increased its endowment by $3.4 billion.

The Foundation, established in 1944, invests in seven program areas: Catholic sisters, disaster relief and recovery, foster youth, homelessness, hospitality workforce development, safe water, and young children affected by HIV and AIDS.

The remaining 3%, which still constitutes millions of dollars, were left for him family, including the well-known heiress Paris and Nicky Hilton. Altogether Barron left behind eight children, 15 grandchildren, and four great-grandchildren. "The Hilton family mourns the loss of a remarkable man," ,his son and chairman of the Conrad N. Hilton Foundation, Steven M. Hilton, said in a statement. "He lived a life of great adventure and exceptional accomplishment."

See Matthew McNulty, Barron Hilton Leaves 97% of Massive Fortune to this Foundation, Fox News, September 22, 2019.

September 22, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Television, Trusts, Wills | Permalink | Comments (0)

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

Why Client's Dog Should be in the Estate Plan

PetsA proper estate plan should consider every aspect of a client's life, not just their children and their home. If the client has a pet, having someone ready and willing to look after them is crucial.

Pets can be a crucial and emotional facet of a person's life, so having an executor who can handle the estate quickly is prudent. Melanie McDonald, Vice-President and Regional Director, Trust & Estate Services, BMO Private Wealth, comments that, “Then they should have a longer-term plan of who can take care of their pet for their lifetime in a will or in a power of attorney. It’s important to pick a couple of people because depending on timing, the first person may not be able to take care of the pet."

Even the nicest or most charitable friend many not be willing to take care of another person's pet for free, so it is important to leave money to provide for the animal's needs during their lifetime. "Pets have day-to-day expenses, and food and vet bills. Then people can also give a little extra amount as a thank you gift for taking on that responsibility," McDonald explains.

Having the money placed in a purpose trust can give the pet owner more control instead of just bequeathing their friend a certain amount of cash with the instruction to provide for the pet. "If you are giving somebody responsibility, you want to make sure that they agree to it and are able to handle it.”

See James Burton, Why Client's Dog Should be in the Estate Plan, Ottawa Retirement Planner, September 18, 2019.

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

September 20, 2019 in Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Court Holds That A Trustee Has To Serve Until Properly Replaced

CourtroomA Texas court has held that when a trust document does not state the procedure for the appointment of a successor trustee under the current circumstances, the Texas Trust Code will come into play. In Waldron v. Susan R. Winking Trust, the court also ruled that "A trustee’s fiduciary duties are not discharged until the trustee has been replaced by a successor trustee," and thus the resigning trustee was allowed to bill for reasonable expenses and fees.

The beneficiary, the daughter of the settlors, appealed the court's decision, believing that the trustee's resignation was complete the moment she received the letter of resignation. She had petitioned the court to allow for herself to be appointed trustee as an individual after she could not find another bank that would agree to act as trustee. The appeals court affirmed the lower court's decision, stating that "Since no bank or trust company could be found that was willing to serve, Waldron could not appoint a successor and her attempt at removal by letter without naming a bank or trust company as successor was ineffective." Although the current trustee was "ready and willing to be replaced," the court said, the trustee "was obligated to continue in the performance of his duties until replaced by a successor trustee."

See David Fowler Johnson, Court Holds That A Trustee Has To Serve Until Properly Replaced, Tx Fiduciary Litigator, September 17, 2019.

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

September 20, 2019 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Thursday, September 19, 2019

Article in Be Right Back: Black Mirror and the Importance of Digital Estate Planning

Black mirrorMichael J. Polk recently published an Article entitled, Be Right Back: Black Mirror and the Importance of Digital Estate Planning, South Carolina Lawyer, July 2019. Provided below is the introduction of the Article.

The Netflix series "Black Mirror" imagines the effect technology will have in the near future. In the Be Right Back episode, a young woman's boyfriend suddenly dies. Grieving, the woman signs up for a service that creates a virtual boyfriend by using his past text and email communications, social media accounts and artificial intelligence. The more information fed into the service, the more accurate the interactions with the virtual boyfriend become (spoiler alert: there isn't a happy ending). The episode makes the point that our digital life has become pervasive, and it becomes more so with each passing day. Lawyer must address and plan for digital assets and accounts both on a professional and personal level because, in the words of John Maynard Keynes, "In the long run, we are all dead."

September 19, 2019 in Articles, Estate Administration, Estate Planning - Generally, Technology, Television | 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)

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)

Dynasty Trusts: Best Way to Protect Family Wealth

RussiandollsAn irrevocable trust ensures a smooth, usually drama-free transfer of assets than a will, while also offering significant tax advantages, asset protection, privacy, and control. Dynasty trusts, which can last hundreds of years when they are allowed to do so, can provide the greatest benefit of all trusts.

Many states have laws against perpetuities, so it is important to take into account the location of the trust. Five states allow perpetual trusts, while six states allow trusts to last up to 360 years. If you are in a jurisdiction that is not one of these 11 states, a financial advisor well coursed in dynasty trusts can walk you through how to set one up in a state that does.

The estate tax is only assessed to dynasty trusts once, even though it can endure for several generations and increase in value exponentially. As a nice little bonus, trust assets are not subject to generation-skipping transfer tax (GSTT), which are notorious for complication bequests to grandchildren. Furthermore, a dynasty trust can expand a settlor's control over the trust assets for many generations, ensuring the family's legacy.

As with many trusts, a dynasty trust can also protect assets from creditors, including ex-spouses of family members. Because the assets are owned by the trust - not the beneficiaries - those assets cannot be included in jointly held estate. There is also increased privacy with trusts, keeping distribution of property out of the public eye, whether it be during a person's life or at the time of death.

See Harvey Bezozi, Dynasty Trusts: Best Way to Protect Family Wealth, News Max, 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 Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 17, 2019

CLE on Probate Process, Procedures and Documents: All the Forms and Checklists in One Place

CLEThe National Business Institute is holding a webcast entitled, Probate Process, Procedures and Documents: All the Forms and Checklists in One, on Tuesday, October 15, 2019 at 9:00 AM - 4:00 PM Central. Provided below is a description of the event.

Navigate Probate with Confidence

When the client is no longer there to make his or her voice heard, the task of interpreting his/her wishes to accurately settle the estate falls on your shoulders. Do you have all the tools you will need? This program will provide you with a comprehensive overview of the probate process, equipping you with the checklists, forms and documents you will need to guide your clients through each time-sensitive procedure. Learn what to do and when to do it, from the initial petition to the final accounting. Register today!

    • Don't miss a step - learn how to map out the entire probate process by utilizing a master checklist.
    • Examine the essential content of the initial petition and understand the procedure for filing it.
    • Receive practical tips on valuing and recording assets to be included in the estate inventory.
    • Handle creditor notices and responses.
    • Understand key provisions of trusts and their impact on the probate process.
    • Learn what must be included in the final accounting and review sample tax returns.

Who Should Attend

This program is designed for attorneys. It will also benefit accountants and CPAs, trust officers, and paralegals.

Course Content

    • Probate Process and Executor Duties: The Master Checklist with Deadlines
    • Wills: Key Provisions, Validity, Interpreting Unique Instructions
    • Initial Petition and Letters of Authority: Content and Procedure
    • Estate Inventory: Valuing and Recording Assets
    • Creditor Notices and Responses
    • Trusts: Key Provisions, Trustee Duties, and the Trust's Impact on Probate
    • Final Accounting: What Must and Should Be Included
    • TAX Returns and Schedules for the Estate and the Decedent: Forms, Deadlines, Exentions (With Sample Returns)
    • Estate Closing and Distributions: Notices of Proposed Action, Petition to Discharge the Fiduciary, and Other Key Documents
    • Ethical Practice Considerations and Concerns in Probate

September 17, 2019 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

From Hobby to Investment: How to Plan for Collectibles in Your Estate

CollectiblecarCollectibles may start off as a hobby, then evolve into a passion that amasses quite the value. Here are a few tips to preserve your investment:

  • Avoid a Fire Sale: Don’t Let Taxes Catch Your Heirs by Surprise
    •  Talk with a estate planning professional to determine the best method of to reduce the tax burden of your collection, whether it be gifting during your life or at death.
  • Put It on Paper: What Do You Own, Where Is It, and How Much Is It Worth?
    •  It would be prudent to group authentication paperwork, records of purchases, and any information regarding the history of the item to establish its provenance (chain of ownership) altogether with your estate planning documents.
  • Have a Backup Plan: Who Will Protect Your Collection if You’re Not Able?
    • If you become incapacitated or otherwise unable to manage your own affairs, a power of attorney allows a designated person to act as your agent, ensuring your collection is handled according to your wishes
  • Share Your Passion: Does Your Family Know Why You Collect?
    •  Do not just pass along the collection itself - explain to your family why it is so important to you, why it is your passion.
  • Preserve Your Collection: Find an Executor Who Knows How to Maintain It
    •  Having an executor that understands the particulars of your collection is extremely important, especially since they may need to find experienced appraisers for the items.
  • Reduce Taxes: Leave Your Treasures in the Hands of a Deserving Charity
    • When loved ones simply do not share your enthusiasm for a collection, or it becomes impossible to divide it equitably, a better choice may be donating it to charity and leaving other assets to your heirs.
  • The Takeaway: To Preserve the Value of Your Collection, Think Ahead

See From Hobby to Investment: How to Plan for Collectibles in Your Estate, Fiduciary Trust, September 4, 2019.

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

September 17, 2019 in Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Wills | Permalink | Comments (0)