Wills, Trusts & Estates Prof Blog

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

Tuesday, January 22, 2019

Article on Receivership: Another Option for Partition of Heirs Property

WvJesse J. Richardson, Jr. published an Article entitled, Receivership: Another Option for Partition of Heirs Property, 120 W. Va. L. Rev. 917-942 (2018). Provided below is the introduction of the Article.

The Appalachian landscape contains an inordinate amount of land owned as "heirs property." Heirs property is highly correlated with poverty. This correlation results, at least in part, from the high incidence of neglect and abandonment of heirs property. This Article discusses the nature of heirs property and the negative consequences that arise in communities in Appalachia with significant amounts of land held as heirs property, including the significant role that this form of ownership plays in Appalachian poverty. A modified form of receivership is introduced as a possible solution of some of these properties.

The terms "heirs property," "heir property," and "property in heirs" describe a form of ownership where at least some of the owners have acquired the property through inheritance, usually without probate and with clouds on title from unknown heirs. Heirs most often hold property as tenants in common, given the acquisition by inheritance. Heirs property exists across the United States but pervades as a form of ownership in poor African American, Native American and Appalachian communities.

Heirs property raises two primary concerns: the vulnerability (or displacement) concern and the wealth (or efficiency) concern. The vulnerability concern involves the risk of being involuntarily stripped of property rights through a partition suit filed by another cotenant. The wealth concern refers to the fact that cotenants find it difficult, if not impossible, to access or utilize their share of the value of the property - by building a home, borrowing money against the property, or even by monetizing their interest.

Policy responses to heirs property have arguably focused on the vulnerability concern and the threat of partition suits. In particular, the Uniform Partition of Heirs Property Act ("UPHPA"), approved by the National Conference of Commissioners on Uniform State Laws in 2010, creates a separate partition process for heirs property. The UPHPA, however, has been criticized for creating barriers to the filing of partition suits and the subsequent consolidation of the interests in the property.
Finding adequate solutions for the problems presented by heirs property provides benefits for the owners of the property and for communities. Due to the issues presented by the nature of heirs property (the wealth concern), heirs property is likely to become abandoned and/or neglected. Abandoned and neglected properties present a myriad of concerns for communities in the United States.

Dissatisfied with common responses to abandoned and neglected properties, mainly code enforcement and eminent domain, several communities have turned to an old tool with some new twists: receivership. In receivership, a disinterested third party takes control of the management of the property and, in the case of vacant properties, either rehabilitates the property or conveys title to the property to an individual or entity with the means and desire to rehabilitate the property.

In addition to increased use of receivership, some states have developed other innovations to address heirs property and the issues arising from heirs property. Namely, some states have adopted adverse possession and forced sale provisions.

However, most of these efforts, and particularly receivership, focus on urban communities. Different solutions may be needed for rural Appalachia. Low population densities and "limited local economies" combine to "make it more difficult to put problem property to productive reuse." In addition, "(1) limited resources and economic activity in rural areas, (2) rural cultural tendencies, (3) limited planning and legal frameworks, and (4) the variability of rural issues" suggest that rural solutions may differ greatly from urban solutions.

This Article briefly describes heirs property and the issues that arise with heirs property. The Article then describes the link between abandoned properties and heirs property. Receivership in the abandoned property context is described, using examples from a few sample jurisdictions. Finally, related innovations to address heirs property are discussed. The discussion focuses on whether particular urban tools are appropriate for Appalachia. The Author concludes with recommendations for state and local government action in Appalachia to allow easier rehabilitation of heirs property so that the properties can contribute to the economies of their communities and to Appalachia as a whole.

Although some suggest that receivership may not be appropriate for rural areas, a close examination reveals that receivership seems particularly well-suited to resolve heirs property barriers to economic development. Given the prevalence of heirs property in Appalachia, receivership, while not a panacea, may be an important part of an Appalachian revitalization strategy.

January 22, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Thursday, January 17, 2019

You Must Plan for Your Clients' Extramarital Affairs

SecretRelationships that occur outside of the marriage happen enough that advisors should be aware of the situations arising from them even though not every client will need that particular advice. The extramarital relationship can have particular repercussions if the married person is affluent. The relationship can be short flings or long-term affairs, and the longer the affair the more likely the "stranger to the marriage" may feel entitled to certain assets or a certain percentage of the person's estate.

The conversation to convince the client to be honest about the affair may be awkward, but it could be pivotal to be forward thinking and cover all aspects of the client's testamentary desires. Clarity about the financial aspects of the relationship supported by legal documentation and legal structures can be very beneficial. An irrevocable trust with the paramour designated as the beneficiary can be effective to make sure they are provided for after the client's death while also guaranteeing that a jilted spouse or disenchanted descendants cannot alter it.

What about a rejected lover? "Hell hath no wrath like a woman scorned." The entanglement of embarrassment and revenge may add a certain spice to Hollywood movies but it does not do any favors for clients. Astute wealth planning and carefully worded nondisclosure agreements with substantial legal penalties can be effective in these unfortunate situations.

See Russ Alan Prince, Russ Prince: Yes, Advisors, You Must Plan for Your Clients' Extramarital Affairs, Financial Advisor Magazine, January 10, 2019.

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

January 17, 2019 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, December 24, 2018

CLE on Estate Planning and Administration: The Complete Guide

CLEThe National Business Institute is holding a conference entitled, Estate Planning and Administration: The Complete Guide, on Wednesday, January 23, 2019 - Thursday, January 24, 2019, at the Hilton Garden Inn San Diego Mission Valley/Stadium in San Diego, California. Provided below is a description of the event.

Program Description
Find Out How Key Estate Planning Tools are Drafted and Implemented


Every client's estate is unique in its assets composition, family dynamics and future needs, but all are ruled by the same principles and are subject to the same tax and legal limitations. In this comprehensive legal guide, experienced attorney faculty will guide you through the process of estate planning and administration and show you how to select the best trust instruments and wield them skillfully to avoid mistakes at probate. They will also teach you how to properly administer the estate and tackle potential mistakes of improperly drafted documents, changed circumstances and newly arising conflicts. Become fully prepared to protect your client's legacies - register today!


Get an update on the current tax regime and other key regulations.
Get the case off on the right foot with a thorough and thoughtful client intake.
Compare key trust structures and their effect on the grantor and beneficiary tax future burdens.
Help clients plan for and fund long-term care.
Ensure confidentiality before and after the client's death.
Get useful checklists for key dates and tasks in estate administration.
Clarify what can be distributed through non-probate transfers and how to do it correctly.
Explore creditor issues in estate administration and get trouble-shooting tips from the pros.
Find out how much planning can still be done after the client's passing.
Discuss the duties and powers of fiduciaries, their limits and real-life application.
Get tips for closing the estate to prevent future disputes.

Who Should Attend
This basic-to-intermediate level seminar on estate planning and administration is designed for:
Attorneys
Accountants and CPAs
Paralegals
Tax Managers
Trust Officers
Certified Financial Planners
Investment Advisers

Course Content
DAY 1: ESTATE PLANNING AND TRUST BASICS
Key Laws and Client Intake/Goal Setting
Planning for Long-Term Care and End-of-Life Decisions
Testamentary Documents - Drafting Do's and Don'ts
Common Trust Structures and When They're Used
Transfers During Life and Inter-Vivos Trusts
Tax Consequences of Trusts


DAY 2: PROBATE AND ESTATE ADMINISTRATION
Probate Process Overview
Marshalling Assets and Dealing with Creditors
Post-Mortem Tax Planning Options
Legal Ethics in Estate Practice
Trust Administration and Termination Basics
Closing the Estate

December 24, 2018 in Conferences & CLE, Current Events, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Saturday, December 22, 2018

CLE on Advanced Estate Planning Practice Update: Winter 2019

CLEThe American Law Institute is holding a webcast entitled, Advanced Estate Planning Practice Update: Winter 2019, on Tuesday, February 12, 2019, at 1:00 p.m. to 3:00 p.m. Eastern. Provided below is a description of the event.

Why You Should Attend
Join us in February to see why attorneys across the country tune in for this must-attend program three times a year!

This popular, advanced program covers significant recent developments and how they affect estate planning practice. Featuring a nationally renowned faculty of estate planning lawyers, as well as Professor Jeffrey N. Pennell, this webcast is designed for sophisticated practitioners who need to stay up-to-date on changes in the field!

What You Will Learn
This unique program captures late-breaking important opinions and legislative and regulatory developments, as determined by the faculty at the time of the presentation. Check back here in January for a list of the topics we anticipate addressing.

In addition to superb teaching, a favorite feature of past registrants is the comprehensive outline that all registrants get ahead of the program. It provides summaries written by the faculty on every topic discussed during the program, in the order in which it is addressed!

Who Should Attend
Experienced estate planning attorneys, trust administrators, and financial and tax professionals who provide guidance and strategies for transferring wealth and reducing estate taxes should attend this accredited CLE on advanced estate planning developments.

December 22, 2018 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Wednesday, December 19, 2018

Article on 'The ‘New’ New Property: Dealing with Digital Assets on Death'

DigitalHeather Conway & Sheena Grattan recently published an Article entitled, 'The ‘New’ New Property: Dealing with Digital Assets on Death,' Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article. 

What happens to digital assets when someone dies? This basic question raises a host of legal issues around ownership, privacy, access to usernames and passwords, and the duties of personal representatives when administering estates, which do not fit neatly within traditional succession law and property law concepts. The location of digital assets also leads to complex multi-jurisdictional legal issues, yet there is currently no ‘joined-up’ international law on the subject. This paper looks briefly at digital assets and how they are defined, before examining the challenges posed from an estate planning perspective.

December 19, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Technology, Wills | Permalink | Comments (0)

Monday, December 17, 2018

Article on Freedom of Testation and Family Claims in Canada

CanadaAlexandra Popovici & Lionel Smith recently published an Article entitled, Freedom of Testation and Family Claims in Canada, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

This paper explores the ways in which Canadian legal orders address the tension between freedom of testation and the claims of the family of the deceased.

The province of Quebec has a civilian law of succession, while the common law governs in the other provinces and in the territories. Under federal law, a different regime governs succession in relation to many members of First Nations.

At the dawn of the twentieth century, an unbridled freedom of testation prevailed in most of Canada. In the decades that followed, the law evolved to temper this principle in favour of protecting the family of a deceased person, so that obligations of support did not simply vanish upon death. The shape and structure of provision for the family is, however, diverse across the country. There is a great deal of variation even among the statutory regimes in the common law provinces; some require a claimant to show need, an inter vivos obligation of support, or both, while others allow claims even by adult independent children. Under those regimes, where a claimant has standing, the jurisdiction of the courts to intervene in the testator's chosen distribution is highly discretionary. In relation to those members of First Nations to whom it applies, federal law grants a wide power to intervene in the distribution of an estate, in this case not to the courts but to the relevant minister. In Quebec, by contrast, the courts and the Civil Code bear the imprint of a longstanding commitment to freedom of testation. Quebec law aims to convert legal obligations of support that existed at the moment of death into claims against the estate, rejecting any wide discretion and preserving freedom of testation as much as possible.

In a broadly comparative context, the unexpected conclusion is that in Canada, it is not the common law but the civil law of Quebec that offers the most freedom to a testator.

December 17, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, New Legislation, Non-Probate Assets | Permalink | Comments (0)

Thursday, December 13, 2018

Article on Lady Bird Deeds and Transfer on Death Deeds

DeedGerry W. Beyer recently published an Article entitled, Lady Bird Deeds and Transfer on Death Deeds, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

A carefully prepared estate plan often contains personal property which passes outside of the probate process such as beneficiary designations on bank accounts, life insurance, and retirement accounts. With regard to real property (often the family home), inter vivos trusts serve as the traditional non-probate transfer mechanism. Although this technique has many advantages, it adds complexity and cost to the estate planning process, especially for individuals with limited resources. Alternatively, estate planners may decide to use a life estate deed where the client retains a life estate and transfers the remainder interest to the desired recipient. A life estate deed, however, can not be changed after execution, creating problems if the client later wishes to undo the action or change the remainder beneficiary. Modern law now provides two alternatives to inter vivos trusts and life estate deeds: Lady Bird Deeds and Transfer on Death Deeds.

December 13, 2018 in Articles, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

In U.S., Instant Wealth Spawns Philanthropy Boom

MoneyhandsAccording to a survey released by BMO Wealth Management of 1,004 United States residents over the age of 35, if they suddenly received a large financial windfall, 53% said that sharing the wealth with their family, friends, and charities would be a primary goal.

The next popular goals were paying off debts at 51%, investing at 49%, and 43% claim that their financial goals would remain stationary. 29% of those surveyed were concerned with helping others at it pertained to their estate and legacy, and 15% were honest in that they would be worried about avoiding family conflicts over the money.

“Receiving an unexpected amount of money or assets can bring feelings of relief, joy and responsibilty, so it’s critical to take time to consider all the options,” said Tania Slade, national head of wealth planning at BMO Wealth Management (U.S.). Lotteries may be an obvious source of sudden income or wealth, but it may not be the most relevant. More than $12 trillion in assets are in the process of being transferred from the Greatest Generation to baby boomers, and more than twice that are expected to be transferred to their heirs in the next few decades. 

"At the peak, between 2013 and 2045, 10 percent of the total wealth in the United States will be changing hands every five years," the report said

See Raymond Fazzi, In U.S., Instant Wealth Spawns Philanthropy Boom, Financial Advisor, December 10, 2018.

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

December 13, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, December 10, 2018

A Year-End Estate and Financial Planning Checklist: Make Your List and Check it Twice

NyeWith so much going on during the holiday season, it may seem more stressful to think about review your estate plan. Here is a simplified list to assist, and not interfere with presents and champagne.

  1. Review required minimum distributions (RMDs).
    1. Those 70½ or older must take RMDs from certain retirement accounts by December 31 or face a penalty equal to 50%.
  2. Reduce taxable income and rebalance investments.
    1. Review your asset allocation and, if necessary, rebalance your investment portfolio.
  3. Max out company retirement plan contributions.
    1. If you are not able to contribute the maximum amount, try to contribute enough to qualify for any matching contributions by your employer.
  4. Review insurance coverage.
    1. Make sure you have adequate policies in place insuring everything you need, from your life to assets, to help plan against the unexpected.
  5. Review estate plans and beneficiary designations.
    1. These should be reviewed  periodically to be sure that the plan you have in place accomplishes your goals
  6. Make gifts.
    1. The annual exclusion is $15,000 per person before it counts against your lifetime exclusion.
  7. Fund your Health Savings Account (HSA).
    1. Those in high-deductible health-insurance plans can save as much as $3,450 in pre-tax dollars in these types of accounts. Those aged 65 and older cannot contribute to one, but can still use the money for eligible out-of-pocket medical expenses.
  8. Use your flexible spending dollars.
    1. Unused funds in a Flexible Spending Account (FSA) are typically forfeited at year’s end, so  spend them for eligible health and medical expenses by December 31
  9. Check your credit and identity.
    1. With technology, checking your credit has become easier.
  10. Organize your records for 2019.
    1. Gather and organize the documents and 2018 records that will be needed to prepare your tax returns in 2019, and shred what you do not need.

See A Year-End Estate and Financial Planning Checklist: Make Your List and Check it Twice, The National Law Review, December 6, 2018.

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

December 10, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Thursday, December 6, 2018

CLE on IRA Trusts: RMDs and Ensuring the Stretch

CLEThe National Business Institute is holding a teleconference entitled, IRA Trusts: RMDs and Ensuring the Stretch, on Thursday, December 20, 2018, at 11:00 a.m. to 12:30 p.m. Central. Provided below is description of the event:

Program Description
Ensure Clients Make the Most of Inherited IRAs
This focused course offers practical strategies for ensuring the inherited IRAs last as long as possible and comply with the RMD rules. Learn IRA trust drafting tactics and planning approaches to maximize the stretch, ensure asset protection, and minimize tax burdens. Register today!
Choose the most beneficial IRA trust structure and decide whether subtrusts are needed.
Get sample powers of appointment language that ensures the longevity of the trust.
Plan distributions to ensure RMD rules compliance.

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

Course Content
How the Mechanics of the Retirement Account Shapes the IRA Strategy
Ensuring the Stretch: Beneficiary Designations, Individuals vs. Trusts, and More
Structuring the IRA Trusts and Subtrusts: Asset Protection and Tax Tactics
Drafting Powers of Appointment That Ensure the Longevity and Health of the Trust
Effective Approaches to Ongoing Compliance with the RMD Rules

December 6, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)