Wills, Trusts & Estates Prof Blog

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

Friday, May 14, 2021

Article: What Would Settlor Do? Immortal Trust Settlors, Federal Transfer Taxes, and the Protean Irrevocable Trust

Kent D. Schenkel recently published an article entitled, What Would Settlor Do? Immortal Trust Settlors, Federal Transfer Taxes, and the Protean Irrevocable Trust, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

The increasingly protean irrevocable trust puts substantive trust law and the federal transfer taxes at cross-purposes. State trust law’s overriding objective is simply to carry out the intent of the trust settlor. Settlors intend to manage or control the benefits from gifts over some period of time—that is, after all, the purpose of the donative trust. In contrast, the federal transfer taxes seek, by major policy purpose, to decrease the incidence of dynastic wealth—wealth locked into single-family possession and passed on from generation to generation. Yet state legislative changes to trust laws—abandoning or extending the terms of rules against perpetuities, for example—pave the way for dynastic wealth by allowing trusts to entrench that wealth in families for generations, or even indefinitely. Evolving trust laws also increasingly permit trust settlors, often by postmortem proxy, to repeatedly modify, refresh or even completely restructure irrevocable trusts in response to post-transfer events.

This essay looks critically at a change to the common law equitable deviation doctrine that ensures that irrevocable trusts can always be optimized in the face of circumstantial uncertainty. This modified equitable deviation doctrine invites trustees and courts to first imagine how the settlor would respond to unanticipated circumstances affecting an irrevocable trust, then further directs modification of the trust terms accordingly. Although this development expands settlor control over irrevocable trusts qualitatively and chronically, thereby increasing both the durability and duration of dynastic wealth, current federal transfer tax provisions are likely insufficient to discourage its proliferation. Trust settlors privileged to take advantage of the post-disposition control offered by trust laws already own a vastly disproportionate share of the nation’s wealth. Perpetual post-transfer control of wealth by a trust settlor or his proxy further entrenches this inequality of ownership and contributes to the problems it causes, including the erosion of democratic institutions. Unmitigated allegiance to the expansive value of freedom of disposition and its corollary, “the intent of the donor,” should be tempered, in post-transfer analyses, with a view to its consequences. Failing that, especially but not exclusively where costs to third parties are implicated, certain post-disposition trust modifications should be deemed new dispositions that bring about transfer tax penalties to the trust corpus.

May 14, 2021 in Articles, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Trusts | Permalink | Comments (0)

Thursday, May 13, 2021

"Cost of dying" in America nears $20K

DeathcertificateThe cost of dying in the United States is approaching $20,000. The growth has many implications since death—and taxes—is one of the only things in life that is certain. 

Using 2020 figures from the National Directors Association and the CDC, "the group looked at the average 'cost of dying' across the U.S. based on the price of end-of-life care, funerals and cremations." 

The cost of dying is around $19,566, with Hawaii being the priciest state with end-of-life medical costs averaging $23,073, the average funeral cost at $14,478, and the average cost of cremation cost being around $12,095. The total: $36,124. Mississippi is the cheapest place today with the average cost of dying being $15,516. 

The CDC figures show that the cost of funerals and end-of-life care "jumped $63.8 billion in 2020, up 14.3% from a total of %55.8 billion in 2019." 

See Caitlin Owens, "Cost of dying" in America nears $20K, Axios: Vitals, May 12, 2021. 

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

May 13, 2021 in Death Event Planning, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Article: Dead Men (and Women) Should Tell Tales: Narrative, Intent, and the Construction of Wills

Karen J. Sneddon recently published an article entitled, Dead Men (and Women) Should Tell Tales: Narrative, Intent, and the Construction of Wills, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

Intent is a foundational principle that is referenced in many varied aspects of succession. This article will focus on the role of intent in will construction proceedings where intent is referred to as the “touchstone” and “pole star.” When an issue arises as to the meaning of a provision in a will admitted to probate, the probate court must undertake a construction proceeding. This article posits that a will naturally forms a narrative that courts use when interpreting and construing the language of the will. This natural narrative form and tendency for courts to reference narrative during construction proceedings can be more effectively leveraged by the will-drafter in a manner that is consistent with succession’s intent-serving policies. When the drafter approaches the will as a narrative and uses narrative techniques to inform the customization of what may be one of the oldest-forms of legal documents, the resulting document becomes more meaningful for the testator, the beneficiaries, the personal representative, and, if needed, the court. To illustrate, this article presents standard will construction cases and revises the problematic testamentary language using narrative-based drafting techniques.

This intent-effectuating approach to drafting promotes the ultimate implementation of the testator’s intent, especially when a construction proceeding is initiated by an interested person. The construction proceeding, after all, seek to determine and give effect to the testator’s intent. The narrative-based approach to drafting will support the court’s inquiry by providing more context and more meaning to the language of the will. This customization refers to the deliberate sequencing of provisions, accurately enhancing the description of the relationships and property, and even including a statement of purpose. This article acknowledges the potential dangers raised by using narrative-based drafting techniques. But, as this article stresses, narrative-based drafting does not refer to the inclusion of language that injects uncertainty and confusion in testamentary instruments. Instead, narrative-based drafting brings the person, the personality, and the personal into wills. Testators should tell tales.

May 13, 2021 in Articles, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Wednesday, May 12, 2021

Article: The Canadian Answer to the English Dilemma: Contribution-based Approaches over a Common Intention Constructive Trust in Family Homes

Alexander Ng recently published an article entitled, The Canadian Answer to the English Dilemma: Contribution-based Approaches over a Common Intention Constructive Trust in Family Homes, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

Determining each other’s proprietary interests in the shared home after relationship breakdown remains hotly debated. In Stack v Dowden, Baroness Hale stated that it was possible to impute an intention that the parties could never have had, to achieve fairness. In Jones v Kernott, imputation could only operate in quantifying interests. Also, imputation is limited to (1) presumption of resulting trusts, or (2) absence of evidence to infer common intention. This clarification limited its use in legal practice, but imputation remains controversial since it practises the court’s standard of morality.

However, this can be resolved by focusing on how the defendant is benefited, rather than summoning a common intention. This is particularly important when the defendant is the sole legal owner. After Pettkus v Becker, Canada shifted from an intention-based resulting trust to a remedial constructive trust approach, based on unjust enrichment. This shift absolves the need to find or impute a common intention. Any of the claimant’s contribution received by the defendant in relation to the home, domestic or financial, already constitutes enrichment. Gender discrimination is avoided since the claimant’s contributions are not judged against a (gendered) threshold for detrimental reliance.

This approach may attract criticism, since remedial constructive trusts are rejected in FHR European Ventures LLP v Cedar Capital Partners LLC. However, the focus here is the merits of a contribution-based approach. Whether a remedial constructive trust should be imposed is only part of the question. Routes to reclaim assets discussed in this article include proprietary remedies from unjust enrichment, and conventional trusts law (resulting trusts and Quistclose trusts). Shifting one’s attention away from the common intention is expected to promote fairness in asset division.

May 12, 2021 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, May 10, 2021

Article: A New Feudalism: Selfish Genes, Great Wealth and the Rise of the Dynastic Family Trust

Eric A. Kades recently published an article entitled, Selfish Genes, Great Wealth and the Rise of the Dynastic Family Trust, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

Today’s record levels of economic inequality are infecting our future as the top 0.01% bequest vast wealth to their descendants. With the death of the Rule Against Perpetuities (RAP), this inequality has the potential to harden social class lines not just for a generation or two but forever. Although it may sound implausible, interviews with estate lawyers serving very high net worth clients reveal that some of the wealthiest tier of testators are already exploiting the RAP’s elimination, along with a tax loophole, to establish dynasty trusts that will financially empower their bloodline as long as it continues. Evolutionary biologists will not be surprised by this finding. Recent work in their field shows a universal and powerful human drive for high status descendants — a drive for “quality” progeny so powerful that it appears to trump the usual desire to maximize quantity of offspring. Coupled with the long history of dynastic family wealth in England, this science suggests that today’s wealthiest testators will utilize powerful modern legal institutions (e.g. well-developed laws of contract and trust; deep and efficient capital markets) to forge a new sort of trust that I dub a Dynastic Family Trusts (DFT). These DFTs will be larded with innovative provisions leveraging a founder’s wealth to maximize descendants’ status for generation after generation. For those fearing the pernicious effects of concentrated wealth on democracy and equal opportunity, the rise of the DFT is alarming. Fortunately there is a very easy fix: simply reinstate the Rule Against Perpetuities. Given a race-to-the-bottom dynamic among the states, national legislation from Congress is necessary.

May 10, 2021 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, May 7, 2021

Pandemic Pets and Pet Companionship: Seven Benefits/Considerations for Care Coordination and Estate Planning

PetsOne thing that many people learned as they were forced to stay at home during the pandemic is that pet companionship is important. For many, life trapped in their home would've been unbearable had they not had their furry friends. 

An unanticipated effect of the pandemic was "a surge in interest in fostering and adopting pets." Although unanticipated, this effect is not surprising given the cancellation of social human interaction during the stay-at-home orders. 

With the surge in pet adoption, the significance and importance of care coordination and estate planning advice in regard to pets became increasingly clear. 

Below are seven benefits for pet owners and key considerations for aging individuals and people with special needs.

  1. Reducing Isolation and Loneliness
  2. Lowering Stress and Anxiety 
  3. Improving Fitness
  4. Increasing Social Interaction and Connection to the Community 
  5. Improving Cardiovascular Health 
  6. Improving Signs of Depression
  7. Providing Routine and a Sense of Purpose

Considerations: 

  • Choose someone you trust and who knows your pet to designate as a temporary or permanent caregiver for the pet.
  • Estimate how much it will cost to feed, care for, and provide veterinary treatment for your pet’s lifetime.
  • Include pets in your estate plan to ensure that they have a caregiver and money is set aside to pay for care. 
  • Write down information about the pet’s feeding schedule, personality and behavior, medical conditions, and veterinarian information and provide the information to the designated caregiver. 
  • Consider the benefits of pet trusts.

 

See Rebecca H. Miller, Pandemic Pets and Pet Companionship: Seven Benefits/Considerations for Care Coordination and Estate Planning, Chambliss Law, May 5, 2021. 

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

May 7, 2021 in Disability Planning - Property Management, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Thursday, May 6, 2021

How Should We Celebrate Elder Law Month?

With Covid-19 still lingering, elders are still subject to risk, creating a strong sense of urgency for those at risk to engage in elder law planning. "May is National Elder Law Month which allows the opportunity to educate seniors in local communities about their legal options and places an emphasis on the importance of planning early to ensure their wishes are in a legally binding format." 

One way we could help in celebrating elder law month is to communicate with the seniors in our lives by encouraging them and helping them create a plan to "protect their independence and assets." These conversations could be with loved ones, CPAs, financial advisors, attorneys, etc. 

It is important that a plan is carried out that best embodies the client's wishes, and not the State's or anyone else's for that matter. 

Estate planning attorney, Amanda Afton Martin, recently sat down with Julie Holton where they discussed a range of estate planning topics including: 

  • Estate Planning and Long-Term Care Planning
    • Who should be involved?
    • How may we ensure the client’s wishes are implemented?
    • How can early planning avoid court intervention?
  • Medicaid Planning
    • What is it?
    • When should it begin?
  • Impact of COVID-19 on Seniors
    • What is undue influence and what factors increase its likelihood?
    • How can we protect against undue influence?

 

See How Should We Celebrate Elder Law Month?, FosterSwift:mielderlawblog.com, May 3, 2021.

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

May 6, 2021 in Elder Law, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Article: Texas Estate Planning Judicial Update: Spring 2021 Edition

Gerry Beyer recently published an article entitled, Texas Estate Planning Judicial Update: Spring 2021 Edition, Wills, Trusts, & Estates Law ejournal (2021). Provided bel.ow is the abstract to the Article: Estate planning

This article discusses recent judicial developments (first quarter of 2021) relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters. The discussion of each case concludes with a moral, i.e., the important lesson to be learned from the case. By recognizing situations that have led to time consuming and costly litigation in the past, estate planners can reduce the likelihood of the same situations arising with their clients.

May 6, 2021 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, May 5, 2021

Article: How Should Inheritance Law Remediate Inequality?

Felix Chang recently published an article entitled, How Should Inheritance Law Remediate Inequality?, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article: Estate planning

This Essay argues that trusts and estates (“T&E”) should prioritize intergenerational economic mobility—the ability of children to move beyond the economic station of their parents—above all other goals. The field’s traditional emphasis on testamentary freedom fosters the stickiness of inequality. For wealthy settlors, dynasty trusts sequester assets from the nation’s system of taxation and stream of commerce. For low-income decedents, intestacy splinters property rights and inhibits their transfer, especially to nontraditional heirs.

Holistically, this Essay argues that T&E should promote mean regression of the wealth distribution curve over time. This can be accomplished by loosening spending in ultrawealthy households and spurring savings and investment in low-income households.


May 5, 2021 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, May 4, 2021

Article: Introduction of trusts into the Civil Code of the Republic of Moldova: the Decisive Role of the DCFR

Octavian Cazac recently published an article entitled, Introduction of trusts into the Civil Code of the Republic of Moldova: the Decisive Role of the DCFR, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the article: Estate planning

On 1 March 2019 the Moldovan Civil Code (adopted back in 2002) was considerably modernized by way of a Law to Modernize the Civil Code NO. 133 dated 15 November 2018. Most of its 1,624 articles were amended and some extra 1,000 articles were introduced.
One of the new legal institutions so introduced was Book 3, Title IV on trusts. The Moldovan drafters decided to adopt the model rules suggested in the DCFR to a degree of 95%. For a legislative drafter, the DCFR comes off as a well thought off soft law instrument, with a detailed commentary and insightful comparative notes, all useful for explaining it to drafters and to the legal community. This made it easy for the Moldovan drafters to take decisions. Sometimes policy choices had to be adapted to be more in line with the terminology and civil law tradition prevailing in Moldova.

May 4, 2021 in Articles, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)