Wills, Trusts & Estates Prof Blog

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

Friday, January 11, 2019

George Steinbrenner’s Estate Gets a Big Tax Break

YankeesOn October 9, 2018, Manhattan Surrogate Court Judge Rita M. Mella ruled that a QTIP (qualified terminable interest property) marital trust does not fall under New York estate taxation if the surviving spouse was pre-deceased by a spouse who died in 2010. The New York State Department had 30 days after being served with the judgement and notice of settlement, and according to court records the Department decided not to appeal.

The ruling will have broad implications, especially for larger estates such as that of George Steinbrenner, long-time principal owner of the New York Yankees. His will set aside an undisclosed portion of his $1.1 billion fortune into a QTIP trust for his widow, Joan, who died in December of 2018. It was tasked to Steinbrenner's attorney, Robert Banker, to determine when the trust would pay the estate tax, or to wait until Joan's passing. Based on the court ruling, it looks like Joan Steinbrenner's estate won't pay a QTIP tax at all.

A big question is on what legal grounds the New York State Department of Taxation and Finance could appeal the decision, if it chose to do so. “They could appeal … on the ground that the surrogate did not apply the law correctly to the facts of this case, [but] the facts were undisputed,” the law firm that represented the estate that the opinion was in reference to.

See Joyce Blay, George Steinbrenner’s Estate Gets a Big Tax Break, Financial Advisor, December 26, 2018.

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

January 11, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Sports, Trusts | Permalink | Comments (0)

Thursday, January 10, 2019

Purple Rain Shower in California — Prince’s Estate Chases Northern California Law Firm

PrinceFamed musical artist Prince passed away three years ago without a will or any form of estate planning. In Minnesota, Comerica Bank & Trust was named as administrator of his estate and recognized his six siblings and half-siblings as the heirs. 

In 2017, a music engineer that collaborated with Prince in 2004-2008, George Boxill, allegedly conspired with others to sell unreleased music without the approval of the estate and Prince's company, Paisley Park, and litigation ensued. Boxill signed a confidentiality agreement before starting work that confirmed Prince and Paisley Park’s ownership of any recordings. In 2018, an arbitrator found that Boxill breached the Confidentiality Agreement and awarded Paisley and Comerica nearly $4 million in damages and attorneys’ fees.

After the arbitration, the representative amended the complaint to include two law firms that Comerica believed induced Boxill and the other defendants into breaches of the agreement and the intellectual property interests of the estate. One of the law firms, Sidebar Legal of Redding, California, defaulted on its subpoena and Comerica filed a motion to compel compliance in the U.S. District Court for the Eastern District of California.

On January 3, 2019, Magistrate Judge Kendall Newman transferred the motion to the federal court in Minnesota. As the probate process drags on, Comerica has a duty to defend the Estate’s valuable interests in Prince’s released and unreleased music.

See Jeffrey S. Galvin, Purple Rain Shower in California — Prince’s Estate Chases Northern California Law Firm, Trust on Trial, January 7, 2019.

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

January 10, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Music, New Cases | Permalink | Comments (0)

Dementia May Never Improve, but Many Patients Still Can Learn

DementiaDr. Linda Clare, a clinical psychologist at the University of Exeter, directed a recent trial of cognitive rehabilitation in England and Wales. She has been studying cognitive rehabilitation and it evolved out of methods used for patients with brain injuries. The trial found that this therapy can help patients with dementia learn and preserve everyday tasks that they are struggling with.

Dr. Clare emphasizes that the therapy cannot reverse dementia and patients with not score higher on mental ability tests. But it can improve their capacity to perform the activities that they have decided will help them manage themselves. Those improvements persist over months, perhaps up to a year, even as participants’ cognition declines in other ways.

As pharmaceutical methods have failed, cognitive rehabilitation may be the future for many patients struggling with the illness. A smaller trial of cognitive rehab by Belgian researchers found that patients with early Alzheimer’s disease remained better able to do their chosen activities after a year. In the United States, Dr. Laura Gitlin, dean of the College of Nursing and Health Professions at Drexel University, has developed something called the Tailored Activity Program (T.A.P.). It is a similar therapy with the goal of reducing the troubling behaviors that can accompany dementia, such as repeated questions, wandering, rejecting assistance, verbal or physical aggression. A pilot study found that with T.A.P., the frequency of such behaviors decreased compared to a control group

See Paula Span, Dementia May Never Improve, but Many Patients Still Can Learn, New York Times, January 4, 2019.

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

January 10, 2019 in Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Science | Permalink | Comments (0)

Article on Digital Asset Planning for Minors

DigitalNatalie Banta & Naomi Cahn recently published an Article entitled, Digital Asset Planning for Minors, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

This article is one of the first to explore minors, digital assets, and estate planning. It argues that there are special considerations when it comes to minors and their control over their digital assets upon death or incapacity. First are issues concerning the capacity of minors. This is important in two contexts: the capacity of minors to execute a binding estate planning instrument and to enter into a contract with a service provider. Second, it observes that internet law does not treat all minors under the age of eighteen the same. The article offers guidance on how parents, children, and estate planners might approach digital asset planning.

January 10, 2019 in Articles, Current Affairs, Estate Planning - Generally, Science, Technology | Permalink | Comments (0)

Wednesday, January 9, 2019

How The Government Shutdown Affects Clients' Taxes

TaxcalcThe 21st federal government shutdown since the modern federal budgeting process was implemented is now in its third week as the Trump Administration desires $5 billion for a wall along the southern border. But with the shutdown comes thousands of IRS employees furloughed, and may have clients questioning what will happen to their tax returns and refunds.

Jeff Fosselman, a CPA/CFP and J.D. and senior wealth advisor for Relative Value Partners, says that though the IRS is not completely shut "it is significantly scaled back." Though it was originally reported that taxpayers would not receive any tax refunds, that has been withdrawn and reversed. The agency will still be processing electronic and paper returns and all those that are required to pay in are expected to pay at the appropriate time.

High-net worth taxpayers usually file extensions and "file as late as possible,” comments Mary Kay Foss, a CPA in Walnut Creek, California. Amended returns, however, will not be processed, and these are usually also filed by high-net worth individuals. “Any individual involved in lending that requires tax return transcripts for underwriting will be impacted as well, as the issuance of transcripts is limited during the shutdown to requests related to disaster relief.”

Audits have also been shuttered - unless those that are hindered by the statute of limitations. This will not increase the time a taxpayer has to come to an agreement with the agency. Many clients are also unaware that state tax returns and refunds are also affected.

See Jeff Stimpson, How The Government Shutdown Affects Clients' Taxes, Financial Advisor, January 7, 2019.

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

January 9, 2019 in Current Affairs, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Estate Planning Resolutions For 2019: How to be a Grown-Up in The New Year

WilltestamentNew Year, New Me! That seems to be the mantra for many people when January rolls around, coming up with redundant resolutions. But this year, a resolution that could be resourceful and highly beneficial would be to get a head-start of this perennial to-do list:

  • Write a Last Will and Testament:
    • Every person over the age of 18 should have this document to lay out the disposition of your assets and the guardianship of your children in the event you die.
  • Make a Power of Attorney:
    • This can include the power to bank, file taxes, and even sell and purchase real estate on behalf of another individual.
  • Execute a Health Care Proxy:
    • It is vital in this day and age to make your wishes known to your appointed agent, including your preferences for care in the event you suffer from a terminal illness with no chance of survival
  • Purchase a Life Insurance Policy:
    • This is not for you but for your family and loved ones after you pass away, making it easier financially for them.
  • Check Beneficiary Designation Forms:
    • Make certain that a proper beneficiary or secondary beneficiary is designated for all accounts, including retirement or insurance accounts.
  • Consider Long-Term Care and Disability Insurance:
    • If the unexpected occurs, this type of policy can supplement your income or pay a benefit toward home or nursing care.
  • Consult with a Financial Advisor:
    • The advisor may work together with your attorney to make certain you have a solid and comprehensive estate plan.
  • Talk to Your Parents and Grandparents About their Estate Plans:
    • When parents and children ultimately have to switch roles it is best to now what the older generation's wishes are.
  • Consider Burial Options:
    • Though it may be a morbid subject that you do not want to dwell on, it is a subject that needs to be discussed with your family.
  • Inventory Your Assets:
    • Take a survey of everything you own from real property, personal property, and intellectual property, and if there is a question as to rights of ownership, try to resolve them before those issues are passed on to your heirs.

See Cori A. Robinson, Estate Planning Resolutions For 2019: How to be a Grown-Up in The New Year, Above the Law, January 8, 2019.

Special thanks to Carissa Peterson (Hrbacek Law Firm, Sugar Land, Texas) for bringing this article to my attention.

January 9, 2019 in Current Affairs, Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Wills | Permalink | Comments (0)

Article on A Run for Your Money: Are ABLE Accounts Truly an Innovative, User-Friendly Financial Savings Tool for the Broad Spectrum of Disabled Americans?

AbleMadeleine Laser recently published a Note entitled, A Run for Your Money: Are ABLE Accounts Truly an Innovative, User-Friendly Financial Savings Tool for the Broad Spectrum of Disabled Americans? 34 Touro L. Rev. 789-821 (2018). Provided below is a portion of the introduction of the Note.

There are 8.8 million disabled American wage earners who receive social security disability income benefits. Although these 8.8 million disabled Americans are working, they are constrained to a life savings of no more than two thousand dollars. Disabled Americans, many of whom lobbied for the passage of the Achieving a Better Life Experience (“ABLE”) Act, desire a future where they no longer fear taking a full-time job or promotion. Passage of the ABLE Act, thus, represents more than a new savings tool that shields a disabled person’s assets, but also a growing opportunity for upward socioeconomic mobility and financial stability. Disabled Americans should not fear losing benefits because their benefits are protected in an ABLE account.

Disabled individuals who receive Supplemental Security Income (“SSI”) benefits and Medicaid are legally entitled to have two thousand dollars in savings without being disqualified. Against their better judgment, hard-working disabled individuals constantly spend their money to avoid losing these benefits by surpassing the two thousand dollar savings cap threshold. Disabled individuals are “[shackled] to a life of poverty,” unable to create a financial safety net or prepare for future goals. Recipients of SSI and Medicaid whose disabilities inhibit their ability to earn enough money to pay bills and keep food on their table describe their financial situation as a “constant state of anxiety and fear.” The Social Security Act (“SSA”) strictly limits how a recipient can earn, save, and spend money, which consequently discourages upward economic mobility for fear of losing benefits.

January 9, 2019 in Articles, Current Affairs, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Tuesday, January 8, 2019

Four Best Friends Decided to Share a Tombstone

CardsFor years, a tombstone in a Toronto intrigued visitors, containing the names of four women and in large bold letters: "FRIENDS." After a bit of research and hunting down the living relatives of the women, a reporter was able to track down the truth of the interesting gravesite.

Pauline Chorna, Annie Hrynchak, Anna Baran, and Nellie Handiak shared many things in life, as they all immigrated from a heavily communist area of Europe and settled into Canada. Though the particulars of the beginning of their friendship are shadowed in mystery, the women enjoyed the Carpatho-Russian cultural center and all shared a love of playing cards. 

In the 1960s, the women decided they would all be buried together within one cemetery plot. Handiak purchased the plot in 1968 and requested that the women be buried side by side - not stacked on top of each other. Chorna passed away first in 1977 and was laid to rest in the plot, along with the FRIENDS tombstone. Hrynchak died in 1993 and Baran was quick behind her in 1996. Hrynchak waited 10 years to join her friends, and her daughter states her mother was very "lonely" during that time. When she was buried in the shared plot, she was buried with a deck of cards.

See Opheli Garcia Lawler, Four Best Friends Decided to Share a Tombstone, The Cut, January 7, 2019.

Special thanks to Molly Neace for bringing this article to my attention.

January 8, 2019 in Death Event Planning, Estate Planning - Generally, Humor | Permalink | Comments (0)

Where Not to Die in 2019

TaxlawThough the estate tax exemption now only applies to the wealthiest of individuals, there are still 17 states and D.C. that impose state either an state tax or an inheritance on their citizens. Some states apply the tax for all estates, some are only for larger estates. Maryland is the only state that applies both taxes. Several states rebelled when the exemption increased drastically, and have their own amounts far below the federal level. If you are in a state that has a minimum and you are nearing the cliff of having to pay out, proper estate planning is vital.

In New York state, individuals can make deathbed gifts starting in 2019 without the assets being applied toward the decedent's estate. The exclusion amount in New York is $5.47 million, approximately half of what the increased federal estate tax exemption is under the Tax Cuts and Jobs Act. So to stay under the exemption amount, a New Yorker no longer has to gift items three years out - in can be at the time of their demise.

Connecticut is the one state that could potentially have an exemption amount that’s higher than the federal exclusion amount—in 2026. For 2019, it’s set at $3.6 million, then scheduled to increase to $5.1 million in 2020, $7.1 million in 2021, $9.1 million in 2022, and to match the federal exemption amount in 2023.

See Ashlea Ebeling, Where Not to Die in 2019, Forbes, December 12, 2018.

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

January 8, 2019 in Estate Administration, Estate Planning - Generally, Gift Tax, New Legislation, Wills | Permalink | Comments (0)

Article on Aproximaciones teóricas y metodológicas sobre las consecuencias de la sucesión en la distribución de la propiedad rural (Consequences of Inheritance in the Inequity of Rural Property, A Theoretical and Methodological Approach)

RuralJorge Miguel Cristo Gonzalez recently published an Article entitled, Aproximaciones teóricas y metodológicas sobre las consecuencias de la sucesión en la distribución de la propiedad rural (Consequences of Inheritance in the Inequity of Rural Property, A Theoretical and Methodological Approach), Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

The present article investigates the consequences of inheritance in the distribution of rural property. In order to achieve that, the fragmentation rate was estimated by succession, taking the distribution of rural property in the department of Cundinamarca as a basic guide, especially in two towns: Topaipí and Une. The article reports that, in the analyzed cases, inheritance is a factor that perpetuates the high inequality of the distribution of rural property. Moreover, a theoretical account is made on the foundations of inheritance throughout its existence in the Roman-Germanic juridical world and how this traditional law institution continues being currently so important that aims to be a mechanism that redefines the rights about property in a market society.

January 8, 2019 in Articles, Estate Administration, Estate Planning - Generally, Travel, Wills | Permalink | Comments (0)