Wills, Trusts & Estates Prof Blog

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

Monday, January 11, 2021

It’s Mother vs. Son in Britain’s Priciest Divorce War

DivorceTemur Akhmedov is not your average 27-year-old. Temur is being sued by his mother, Tatiana Akhmedova, for nearly $100 million in cash and assets. Temur's parents have divorced and Tatiana feels that her son has been shielding his father's—her ex-husband— assets. 

Ms. Akhmedova is attempting to gain a share of the $615 million divorce settlement, which is believed to be the largest in Britain's history. "Her ex-husband has refused to hand over a single ruble and has kept his money, and himself, far away from the United Kingdom and the reach of its courts."

Since Ms. Akhmedova has not been able to reach her husband or his assets, she got creative. Ms. Akhmedova sued her oldest son, Temur, a U.K. resident, putting his holdings within reach. 

As Temur's lawyers candidly put it, "[his father] showered Temur with unimaginable amounts of money." 

Included in the 27-year-old's assets are a three-bedroom apartment that is worth $40 million, a $460,000 Rolls-Royce S.U.V., Mercedes-Benzes and more. 

See David Segal, It’s Mother vs. Son in Britain’s Priciest Divorce War, N.Y. Times, January 5, 2021. 

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

January 11, 2021 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Friday, December 18, 2020

5 reasons musicians like Bob Dylan and Stevie Nicks are selling their song catalogs right now

MusicA trend involving musicians selling their "beloved and extensive song catalogs" has begun to make its stride in the music industry. Bob Dylan recently sold the rights to his entire catalog for an estimated $300 million to $400 million. This has been coined as possibly the biggest acquisition of music publishing rights from a single songwriter. The catalog consists of more than 600 songs and a Nobel Prize in Literature. 

Unlikely many artists, Bob Dylan owned most of his own songwriting copyrights. According to Marketwatch, the only likely competitor in value and influence would be the Beatles. Bob Dylan was nor the first nor the last artist to sell his catalog. 

Last month, Stevie Nicks sold 80% of her rights to her songwriting catalog for a reported $100 million. Also, in August, Imagine Dragons sold their back catalog for over $100 million. 

Hipgnosis Songs Fund, a British company that buys hit catalogs spent around $670 million in the months between March 2020 and September 2020 on multiple different catalogs consisting of more than 44,000 songs. 

It appears Dolly Parton is thinking about jumping on the train as well. 

Why the sudden surge? Many believe that "the Spotify effect" has a lot to do with it. Not only are older catalogs being played a lot more due to the easy access, it is not much easier to value music due to streaming revenues. Which also inherently makes these catalogs more profitable.  

Also, under the current tax plan and low interest rates, now may be the best time for artists and musicians to sell their catalogs and maximize profit. The low interest rates are good for investors that may want to invest in catalogs to receive royalties. Further, many musicians are not making as much money as they normally would because COVID-19 has essentially cancelled touring. 

One other great benefit is that musicians will not have to deal with their catalogs being fought over in court. With these clear transfers, it is clear who owns the rights and it is a great weight of their shoulders. 

As an artist, songwriter, or musician, now may be the best time and possibly the only time for awhile in which it is more beneficial than a detriment to sell the rights to the catalogs that lead to such great fame and success. 

See Nicole Lyn Pesce, 5 reasons musicians like Bob Dylan and Stevie Nicks are selling their song catalogs right now, Market Watch, December 16, 2020. 

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

December 18, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Music, Non-Probate Assets, Technology | Permalink | Comments (0)

Thursday, November 5, 2020

Creditor Protections for Inherited IRA Benefits and the Proposed Harmonization of Protections for Savings and Retirement Benefits Act

Albert Feuer has just posted his article entitled Creditor Protections for Inherited IRA Benefits and the Proposed Harmonization of Protections for Savings and Retirement Benefits Act which appeared in the Summer-Fall 2020 issue of te NYSBA Trusts and Estates J. Here is the abstract of his article:

There is ambiguity whether New York law permits a judgment creditor to enforce its claim against the debtor’s interest in an inherited individual retirement account (IRA). In contrast, some states have enacted legislation that protect inherited IRAs from creditors of a beneficiary. The article discusses New York protections for a debtor’s savings and retirement Benefits and the only Court decisions considering whether a creditor may enforce a claim against the judgment debtor's interest in an inherited IRA. Those decisions are all recent and find that such claims are enforceable. Although, the article argues that such decisions are unconvincing, they must be considered carefully by debtors and creditors. Thus, estate planners often recommend naming a spendthrift trust as the IRA beneficiary in order to protect the individual beneficiaries from their creditors.

November 5, 2020 in Articles, Non-Probate Assets | Permalink | Comments (0)

Sunday, May 24, 2020

Partition Law Abuse

VICE, a mini-documentary series that airs on Showtime (it used to air on H.B.O.), recently produced an episode on partition law abuse that has impacted so-called heirs’ property owners (tenancy-in-common property that typically is transferred by way of intestate succession) and that episode has been airing on Showtime this month. See https://www.sho.com/vice/season/1/episode/5/quitting-wework-and-losing-ground-and-italys-darkest-hour (you can stream it from this link).

This episode highlights how partition law abuse has contributed to substantial property loss in the African American community and it references the Uniform Partition of Heirs Property Act (UPHPA). Professor Thomas Mitchell of Texas A&M University School of Law, the Reporter/principal drafter for the UPHPA, helped the producer as he developed the segment and was interviewed as the national expert on partition law/heirs’ property.

A number of law professors have asked if VICE might be able to make the episode on partition law abuse available to teachers for use in their courses. The producer responded that he can send a link to a professor individually which would expire in a few weeks and that he is raising the bigger question about making it more accessible to teachers with his executive producers. He also indicated he could supply DVD copies but that might be for a fee. Already, a number or professors who teach Property law have contacted the producer.

Please contact him directly if you are interested in getting access to the episode. His name is Lyle Kendrick and his email address is lyle.kendrick@vice.com

Note that 16 states (and the U.S. Virgin Islands) have enacted the UPHPA into law with Virginia becoming the most recent state. This makes the UPHPA approximately the 5th most successful uniform real property act that the Uniform Law Commission ever has promulgated in its 128-year history (of about 40 such acts). In addition, the Florida legislature unanimously passed the UPHPA this spring and Governor DeSantis has indicated he intends to sign it into law sometime in the next several weeks. The Mississippi Senate has passed the UPHPA and the Mississippi House is considering the MS Senate bill at this time.

May 24, 2020 in Non-Probate Assets, Resource Links, Teaching | Permalink | Comments (0)

Thursday, April 16, 2020

Prudential Suspends Applications for Some Life Insurance Policies

InsuranceOne of the insurance industry's major players, Prudential, recently announced coronavirus-related changes that now limit American's choices for life insurance policies. The company said it would suspend its acceptance of applications for 30-year term life insurance policies due to “unprecedented market volatility” and “the anticipated low interest rate environment for the foreseeable future.” The suspension will be in place until at least June.

Prudential is the second-largest life insurer in the country based on net premiums written and the third-largest seller of individual life insurance based on new and recurring premiums. Les Masterson, managing editor at Insure.com, said it is quite possible other insurance companies could take steps of their own to limit risk, further limiting the choices of those seeking policies during this crisis.

When it comes to whether your insurance will pay out for deaths from coronavirus, experts at NerdWallet said most people are covered under traditional and term life insurance policies already in place.

See Brittany De Lea, Prudential Suspends Applications for Some Life Insurance Policies, Fox News, April 7, 2020.

April 16, 2020 in Current Affairs, Death Event Planning, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Tuesday, April 14, 2020

Can You Amend a Trust With a Post-It Note?

Post itIn Pena v Day, Anderson created a revocable trust in California in 2004 in which he was both the settlor and the trustee. The Trust specifically provided that amendments “be made by written instrument signed by the settlor and delivered to the trustee.” The Court was presented a question of whether Anderson validly amended the trust through the use of handwritten interlineations and a Post-it Note.

The settlor formally amended the trust in 2008, but then Anderson was diagnosed with abdominal cancer and then brain cancer in 2010, and Grey Dey moved in with him to care for him until his death in 2014. In February 2014, Anderson called an attorney regarding amending the trust document as well as other estate planning document, and the attorney requested that he send him copies of the documents that Anderson sought to amend. Anderson wrote on the trust document, crossed out some beneficiaries, added Dey and two other beneficiaries, and changed the distribution percentages. Attached to the trust documents was a Post-it Note that said: "Hi Scott, Here they are. First one is 2004. Second is 2008. Enjoy! Best, Rob." Anderson passed away before the attorney prepared the amendment for his signature.

The California probate court determined that the handwritten interlineations were not a valid amendment to the California trust as a matter of law. The Court ruled that interlineations in this case constituted a written instrument separate from the trust instrument. Because Anderson signed the Post-it Note, the Post-it Note being a separate writing," simply identifying the enclosed documents," and thus no signature was provided on the handwritten interlineations. Therefore, there was no effective amendment to the trust document.

See Can You Amend a Trust With a Post-It Note?, Probate Stars, April 10, 2020.

April 14, 2020 in Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0)

Monday, March 30, 2020

Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings

IRAThe bipartisan COVID-19 stimulus bill recently signed by President Trump includes welcome tax relief for retirees: The required minimum distribution (RMD) rules for Individual Retirement Accounts and 401(k)s are waived for 2020. This is the same as what occurred in 2009 during the Great Recession. For retirees, this means that instead of taking money out of their IRA this year, their investments can continue to grow.

Of course, for retirees that depend on their RMD to pay for expenses, the waiver is moot. For others, there may be benefits to still take some money out. Ed Slott, a CPA and IRA expert in Rockville Centre, New York, says “There are opportunities here. You might want to look at your tax bracket and get money out at low rates. If anything is obvious, it’s that tax rates are going to go higher.” 

The rules for who was required to take 2020 RMDs were already altered because of the SECURE ACT, passed in late December, which changed the age triggering RMDs from 70 ½ to 72, effective January 1, 2020. Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own personal age. If you have already received a distribution from your own IRA or one inherited from a spouse for 2020, you can roll it back into your IRA within 60 days of receipt.

See Ashlea Ebeling, Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings, Forbes, March 27, 2020.

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

March 30, 2020 in Current Affairs, Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0)

Wednesday, March 25, 2020

Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment

StockmarketMany investors may seem powerless with the market in such turmoil with heightened volatility and falling interest rates. The truth is that there are still many things one can control in this environment, including opportunities to provide for one's family and others that do not come around very often.

  • Donate to Support Your Communities
    • In 2020, you can deduct up to 60% of your adjusted gross income for gifts made to a public charity, and these deductions can offset normal earnings, such as salaries and bonuses, as well as dividend and interest payments and even capital gains.
  • Help Family Members Ride Out the Storm
    • Under the gift tax annual exclusion, an inidividual can give up to $15,000 in 2020 to each recipient without tax consequences, and for a married couple, the total is $30,000 per recipient.
  • Provide Long-Term Support by Using Your Exemption Amounts
    • Giving away assets that a person expects to appreciate as values recover makes use of their exemption while also shifting that appreciation to the next generation.
  • Use GRATs and CLTs to Make Additional Tax-Free Gifts
    • Grantor Retained Annuity Trusts (GRATs) and Charity Lead Trusts (CLTs) allow a person to pass the appreciation in the value of assets over a hurdle rate set by the IRS to their beneficiaries tax-free. Currently, the IRS hurdle rate is 1.8% and in April, the rate will drop to 1.2%. 
  • Refinance Your Debt and Family Loans
    • With interest rates at rock-bottom levels, it could make sense to refinance existing debt obligations such as a home mortgage and reduce the interest rate on any loans made to family members.
  • Convert Your Traditional IRA to a Roth
    • Since the taxes resulting from a conversion are based on the IRA’s balance at the time of conversion, depressed market prices help reduce the tax liability if an individual decides a ROTH conversion makes sense.

See Bryan Kirk, Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment, Fiduciary Trust, March 18, 2020.

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

March 25, 2020 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

Article on How Should Non-Probate Transfers Matter in Intestacy?

IntestacyMary Louise Fellows and E. Gary Spitko recently published an Article entitled, How Should Non-Probate Transfers Matter in Intestacy?, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article.

As American family structures have become more heterogeneous, status-based intestacy statutes have become less suited to promoting donative intent. Indeed, numerous scholars of wealth transfer law have noted the critical need for intestacy law reform to address the needs of decedents whose donative intent does not comport with traditional family norms. We propose addressing this concern by looking to intestate decedents’ non-probate transfers, such as a revocable trust, life insurance policy, 401(k) account, brokerage account, or joint tenancy with right of survivorship deed. In 2010, we, along with a co-author, published the first study to consider the relationship between donative intent with respect to the probate estate and donative intent as expressed in non-probate transfers. That study utilized a factorial research design to assess public attitudes and offered support for our new heir hypothesis, that, depending on the identity of the non-probate transfer beneficiary and the identity of the existing heir, a decedent would want a non-probate transfer beneficiary who is not otherwise an heir to be treated as an heir. The instant two-part study of estate planners produces additional knowledge about how best to integrate non-probate transfers into intestacy statutes. In the first part of our study, we conducted a paper survey of forty-five estate planners. The responses to this survey greatly influenced the second part of our study in which we conducted in-person or telephone interviews with nineteen estate planners. The findings reported in this study provide the framework for statutory reform. This study demonstrates that the new heir reform increases the likelihood of promoting intestates’ donative intent in a growing number of twenty-first century familial situations. 

March 25, 2020 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Trusts | Permalink | Comments (0)

Friday, March 20, 2020

Article on Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide

DeedDanaya C. Wright and Stephanie Emrick recently posted an Article entitled, Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide, Wills, Trusts, & Estates Law eJournal (2019). Provided below is the abstract to the Article.

This Article will examine one of the most recent will substitutes, the transfer-on-death (“TOD”) real-estate deed. Nearly half of the states have recognized, through common-law forms or legislation, a mechanism to allow for the transfer of real property on death without using a will, without following the will formalities, and without necessitating probate. This new tool in the estate planner’s toolbox is invaluable: revocable trusts have proven too expensive for decedents of modest means, and wills continue to require formalities that can easily frustrate non-lawyer-drafted estate documents. But the variety of TOD deed rules and mechanisms that the different states have adopted has led to disparity and uncertainty in form and outcome, resulting in litigation and frustration of decedent’s intent.

We believe this uncertainty and frustration will continue as even more states adopt the Uniform Real Property Transfer on Death Act (“URPTODA”), which purports to stabilize the law and facilitate testamentary intent. States grappling with this new form interpose significant differences, and lawyers and judges are not all on the same page as to the consequences. One source of confusion is the URPTODA’s provision that TOD deeds are non-testamentary and, at the same time, the Uniform Act provides that the property rights do not transfer until death.

Although it is one thing to declare that TOD deeds are non-testamentary even though property rights don’t transfer until death—which in itself goes against centuries of formal legal rules—it is quite another to get all the other legal consequences to fall into place accordingly. For instance, would a state’s anti-lapse statute apply to save a beneficiary designation if the deed is deemed non-testamentary, even though the intent is to have the real property transfer upon death?

In our opinion, the TOD deed pushes the juridical binary of inter vivos and testamentary transfers beyond coherence and rationality. The law of will substitutes has already undermined the rationality of maintaining the divide, and in this Article, we will argue that the time has finally come to reject the division between inter vivos and testamentary transfers and seek a rational and holistic set of tools and formalities to gain the benefits of probate avoidance that will substitutes provide with the ease of control and full revocability of wills. Elevating form over functionality, although a characteristic of the common law, inevitably disserves the interests of those who cannot afford lawyers who can easily draft around the sometimes-arcane distinctions between testamentary and inter vivos transfers to gain the benefits of each while avoiding the burdens.

March 20, 2020 in Articles, Current Events, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)