Wills, Trusts & Estates Prof Blog

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

Friday, January 17, 2020

Article on Discretionary Dilemma: Trustee Consideration of Beneficiary Financial Resources

Trusts2Jacob L. Geierman recently published an Article entitled, Article on Discretionary Dilemma: Trustee Consideration of Beneficiary Financial Resources, Probate & Property Magazine, Vol. 34 No. 1 (Jan/Feb 2020). Provided below is the introduction to the Article.

Trust instruments often provide trustees with discretion to distribute trust assets to or for the benefit of the beneficiaries. By their nature, discretionary trusts often create difficulties in ongoing administration. One common, but often overlooked, difficulty is administrating discretionary trusts is determining whether and how the trustee should consider beneficiary financial resources when making discretionary distributions.

January 17, 2020 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, January 16, 2020

Dying in the Neurosurgical I.C.U.

BrainscanWhen a doctor diagnoses a patient with brain death, no matter what a doctor does, the organs and rest of the body inevitably follows. But when an injury is devastating to the brain but has not incurred in becoming brain dead, the decisions of the physician as well as the family of the patient can be much more difficult.

Often times inconsistent communication and support between medical staff members and families exacerbate the situation. A new field, neuropalliative care, seeks to focus “on outcomes important to patients and families” and “to guide and support patients and families through complex choices involving immense uncertainty and intensely important outcomes of mind and body.” Together, family members and neuro-I.C.U. caregivers can agree on the appropriate action when the patient has not provided a legal document dictating their wishes, including transitioning the patient to comfort care and allowing the patient to die.

Doctors often think it is most important to be precise and not make mistakes; to predict the future and provide patients and their families with medical certainty. But usually connection and empathy are far more important than certainty. Patients and families want to know that the physicians care about them and that they appreciate their pain in difficult circumstances.

See Joseph Stern, M.D., Dying in the Neurosurgical I.C.U., New York Times, January 14, 2020.

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

January 16, 2020 in Current Affairs, Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, Science | Permalink | Comments (0)

Wednesday, January 15, 2020

CLE on The SECURE Act: Who Are You and What Have You Done With My Minimum Distribution Rules?

CLEThe American Law Institute is holding a webcast entitled, The SECURE Act: Who Are You and What Have You Done With My Minimum Distribution Rules?, on Thursday, February 13, 2020 from 12:00 pm to 1:30 pm Easter. Provided below is a description of the event.

Why You Should Attend

The minimum distribution rules that apply to many IRAs and retirement plans have been around over 30 years. They have been challenging to interpret and apply, but the tax and estate planning community has gradually learned to work with them. During this period total U.S. IRA and retirement plan assets grew to nearly $25 trillion, accounting for 36% of household financial assets. Most of these funds are income tax deferred, representing significant potential tax revenue.

The SECURE Act that was signed into law on December 20, 2019 is the most significant retirement plan legislation in many years. The SECURE Act made many changes to retirement plan rules that have been touted as providing benefits to individuals and small businesses. How did Congress decide to pay for these changes? By curtailing the post-death deferral period under the minimum distribution rules, thus tapping into that $25 trillion nest egg more quickly.

If you’re a tax or estate planning practitioner, you need to get up to speed on these new rules right away. Register today for this 90 minute webcast and learn when to apply the new rules and when the old rules still apply.

What You Will Learn

A faculty of highly experienced estate planning practitioners and ACTEC Fellows will address:

    • Why age 72 is the "new" 70-½
    • The new post-death rules for "designated beneficiaries"
    • Special rules that apply to certain "eligible designated beneficiaries"
    • New trust rules grafted on top of existing see-through trust rules
    • Planning for the spouse as beneficiary
    • Planning for children as beneficiaries
    • Planning for chronically ill and disabled beneficiaries, including special needs trusts
    • Building flexibility into trusts to make use of the post-mortem planning window
    • Effective date rules
    • What practitioners should consider in reviewing and updating existing plans

All registrants will receive a set of downloadable course materials to accompany the program.

Who Should Attend

Estate planners, tax advisors, and other related professionals will benefit from this webcast jointly offered by ALI CLE and ACTEC.

January 15, 2020 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Tuesday, January 14, 2020

Singer Prince's Estate Battling Sister Tyka in Court, Fight Over Control of His Legacy

PrinceTyka Nelson, the sister of the late singer Prince, recently informed the court that she sold a portion of her interest in her brother's estate to Primary Wave IP Fund. The estate's personal representative, Comerica, is objecting to the sister's request that Primary Wave now be privy to all matter concerning the estate, including confidential business matters.

Comerica is arguing that it is Tyka and not Primary Wave that is an heir to Prince's estate, who passed away without a will, and thus the company should not be entitled to the "unique role in the administration of this Estate" that the named heirs received. The sister claims that she consulted with legal and financial professionals on her rights as an heir to the estate, and believes that it was fully within her ability to enter into the Expectancy Interest Transfer Agreement with Primary Wave. She added that she did it "in order to realize some value from the Estate before the completion of the Estate administration.” Earlier this month Tyka was ordered to pay numerous attorneys that worked for her $850,000, pertaining to the administration of Prince's estate, so it is not surprising she wanted quicker cash.

See Ryan Naumann, Singer Prince's Estate Battling Sister Tyka in Court, Fight Over Control of His Legacy, The Blast, December 9, 2019.

January 14, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Music | Permalink | Comments (0)

Article on Victoria Meets Confucius in Singapore: Implied Trusts of Residential Property

ConfuciusKelvin F.K. Low recently published an Article entitled, Victoria Meets Confucius in Singapore: Implied Trusts of Residential Property, Wills, Trusts & Estates Law eJournal (2019). Provided below is an abstract of the Article.

Co-ownership of residential property is commonplace in Singapore. This is the result both of necessity (as private property is expensive) and incentives (generous subsidies are made available to family units purchasing public property). Yet the rules on implied trusts (both resulting and constructive) governing such ownership have resisted developments seen in other common law jurisdictions such as England and Australia or even Hong Kong. This has led to criticisms that the rules perpetrate gender inequality. This may strike observers as odd given the progressive views on gender of the Singapore government, as can be seen in in its enactment of the Women’s Charter as early as in 1961. It is less odd, however, when viewed from the conservative Confucian perspective of the family as the basic unit of society. The cases therefore demonstrate not so much an objective of marginalising women but of preserving the especial place of the family, conceived of as a man and a woman in a formal State-recognised marriage, values conveniently found in some of the Victorian laws inherited by Singapore as a former British colony. Developments in trust law that threaten the hallowed status of the formally State-recognised family unit are viewed by the courts with suspicion and trepidation. This paper considers if this apprehension continues to be viable in the face of a changing society.

January 14, 2020 in Articles, Estate Administration, Estate Planning - Generally, Travel, Trusts | Permalink | Comments (0)

New SECURE Act Affects Estate Planning for Retirement Plans

SecureactpiggybankThe Setting Every Community Up for Retirement Enhancement Act (SECURE Act) went into effect January 1st of 2020 and for the foreseeable future drastically changes estate planning with retirement plans. Prior to the Act, beneficiaries could stretch out the distributions from an inherited IRA over thir lifetime to get the tax-deferred benefits. That is no longer the case and many may need to review their plans.

Now most inherited retirement plans must be fully distributed within 10 years of the participant's death, unless they fit into these 5 categories: (1) the participant's spouse; (2) the participant's minor children; (3) disabled beneficiaries; (4) chronically ill beneficiaries; and (5) beneficiaries less than 10 years younger than the participant. A surviving spouse can also still roll over inherited benefits into their own IRA.

Conduit trusts may become a relic under the Act as they could cause punitive income tax consequences. Also, trusts with conduit provisions no longer provide the long-term control or protection of retirement benefits and their proceeds for beneficiaries that many plan participants previously expected. An accumulation trust could still be an option for plan participants which allows the required distributions to collect inside a trust, with the trustee maintaining discretion regarding distributions to trust beneficiaries. The retirement account must still be fully distributed to the trust within 10 years.

See Sarah B. Bowman and Catherine (Cat) N. L. Connell, New SECURE Act Affects Estate Planning for Retirement Plans, K&L Gates Hub, January 13, 2020.

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

January 14, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Monday, January 13, 2020

Lifetime Transfers Considered an Advance on Inheritance

Court2California’s second appellate district recently ruled in Sachs v. Sachs that lifetime transfers of property to a person can be treated as an at death transfer, and therefore as an advance on any inheritance. The transferor kept a record of when he periodically certain amounts to his children, and the court found that the writing satisfied California Probate Code section 21135.

David Sachs created a trust in 1980 and named his two children, Benita and Avram, as the main beneficiaries. He began to keep a written log of distributions under what he labeled "The Permanent Record" in 1989 and told the children about it. After a stroke that triggered cognitive issues, David had a bookkeeper maintain logging the distributions. The bookkeeper said David had mentioned "keeping the list was important so that payments made to his children could be deducted from their respective inheritances.”

David's care became expensive, and Benita became trustee. Avram was adamant about continuing distribution and that he was fine with it being put on "The Permanent Record." After David’s death, Benita filed a Petition for instructions to equalize the distribution of assets from the trust, claiming that the disparity in lifetime distributions and transfers in favor of the other beneficiary should be deducted from their distributive share of the Trust and considered an advance on his inheritance. The trial court agreed with Benita, and Avram appealed. The appellate court held that the permanent record was a writing that satisfied the requirements of section 21135 because:

  • It was in the testator's hand.
  • It was contemporaneous.
  • Had no other purpose other than to equalize distributions between the children.

See Lifetime Transfers Considered an Advance on Inheritance, Probate Stars, January 8, 2020.

January 13, 2020 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Saturday, January 11, 2020

Article on Resolving the Status of the Bare Trust

TrustsRobert Flannigan recently published an Article entitled, Resolving the Status of the Bare Trust, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

A number of diverse arrangements commonly are described as “bare trusts.” Trustees are said to be bare trustees where, for example, they have no active duties, they are controlled by settlors or beneficiaries, or their trustee status is imposed on them for arrangements they create, actions they take or wrongs they commit. The question that arises is whether the bare trust designation describes a distinct legal form. Do these arrangements constitute a class of trust that is regulated in ways that other trusts are not, or is the bare trust designation no more than a convenient descriptor for a functional difference that has no substantive legal significance? I shall explain that bare trusts do not differ in kind from other trusts. They simply are trusts that have a narrow function. The function of the trustee is, or becomes, merely to hold legal title to the trust assets, whatever other relations or obligations might be involved ex ante or concurrently. I shall explain that bare trustees, to the extent of their trustee capacity, are not subject to unique rules. I will illustrate that primarily by refuting the assertion that bare trustees are not status fiduciaries. I will coincidentally refute the assertion that a controlled bare trustee is a novel amalgamation of trust and agency status.

January 11, 2020 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, January 10, 2020

CLE on 2020 Tax Updates for Trusts and Estates

CLEThe National Business Institute is holding a video webcast entitled, 2020 Tax Updates for Trusts and Estates, on Thursday, January 30, 2020 from 9:00 AM - 4:00 PM central. Provided below is a description of the event.

Get the Latest Information and Tools to Save Clients on Taxes

This incisive course will get you up to speed on the year's developments in estate planning and asset protection tax laws so you can make tactical decisions and provide cutting -edge representation. Let our esteemed faculty guide you through ongoing legislative developments, key laws and rulings so you can enhance your tax planning strategy and ensure compliant returns - register today!

    • Clarify recent changes in tax law and regulation and prepare for their potential effects.
    • Analyze the most important case law of the year to glean future threats and opportunities for your clients.
    • Hear about new tax tools to add to your arsenal.
    • Get an advance look at future developments coming down the pike.

Who Should Attend

This essential tax update is for attorneys. Accountants, tax professionals, wealth managers, trust administrators/officers and paralegals will also benefit.

Course Content

    • Current Relevant Federal Tax Laws, Rates, Exemptions
    • Trust Tax Deductions under TCJA: Core Changes and Clear Guidance
    • IRS Tax Forms and Procedures Updates
    • Unpacking the Section 199A Changes and Opportunities
    • SECURE Act and Its Effect on IRA Planning
    • Current IRS Guidance and Enforcement Initiatives
    • Cross-Border Tax Issues Every Estate Planner Needs to Know
    • Reassessing and Repairing/Replacing Old Tax Planning Techniques
    • Legal Ethics and Tax Planning
    • Looking Ahead

January 10, 2020 in Conferences & CLE, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

This Man Got $221,000 of Student Loans Discharged in Bankruptcy

DebtKevin J. Rosenberg, a Navy veteran, borrowed $116,500 of student loans between 1993 and 2004 to earn a bachelor’s degree from the University of Arizona and a law degree from Cardozo Law School at Yeshiva University. The loan had increased to $221,400 by the time he filed for Chapter 7 bankruptcy in 2018. Judge Cecilia G. Morris, a US bankruptcy judge in New York ruled that he will not have to repay his student loan debt because it will impose an undue financial hardship, even though he is not unemployable, not disabled nor was he defrauded.

Student loans are not usually dischargeable in a bankruptcy filing, though there are exceptions, including if certain conditions regarding financial hardship are met. These conditions are set under the Brunner test, which is used by all circuit courts, except the 8th circuit and 1st circuit. The Brunner test has 3 provisions to meet: the borrower has extenuating circumstances creating a hardship; those circumstances are likely to continue for a term of the loan; and the borrower has made good faith attempts to repay the loan.

It is unclear if this will become the standard for student loans as this is a single legal ruling. But there may be a beacon of hope for many: federal judges and Democrat and Republican members of Congress are open to changing the law to make it easier for borrowers to discharge their student loans in bankruptcy. There are also other avenues if a person is struggling to repay their student loans, including income-driven repayment plans, refinancing, and paying off higher interest debts first.

See Zack Friedman, This Man Got $221,000 of Student Loans Discharged in Bankruptcy, Forbes, December 10, 2020.

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

January 10, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, New Cases | Permalink | Comments (0)