Wills, Trusts & Estates Prof Blog

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

Friday, April 19, 2019

More Than Half of Americans Want to Live to 100

RetirementAccording to a survey conducted by AIG Life & Retirement of those between the ages of 40 to 74 and had at least $50,000 in their retirement accounts, 53% of Americans now have their eyes set on reaching 100 years of age. But of those that seek longevity, half of them are worried their savings will not last, and almost 60% fear running out of that money more than they fear death itself.

Todd Solash, president of Individual Retirement, AIG, is excited that people want to live beyond the century mark. "We all know that life’s a journey, not a destination. We will do anything we can to help them along.’’

Though the respondents are excited at the prospect of leading such a long like, they are also anxious about the struggles they potentially will face. Generating lasting retirement income and the rising cost of health care tied as the most significant financial challenge they said they would face when planning for retirement, coming in at 23%. Only 16% said they were extremely confident that their partner would be able to manage his or her spending from retirement savings if they were to die first.

But respondents also credited financial advisors with allaying their financial fears about growing older and being secure in their retirement. 45% of those with advisors were very to extremely confident that their current retirement savings plan will sustain them to become centenarians. A mere 8% of those surveyed that admitted they did not have financial advisors felt the same level of confidence. Solash said in a prepared statement that "We must fundamentally change how we talk about retirement and replace what has been more of a singular focus on savings with a broader perspective that also includes protected lifetime income sources like annuities as part of an overall retirement plan."

See Jaqueline Sergeant, More Than Half of Americans Want to Live to 100, Financial Advisor, April 10, 2019.

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

April 19, 2019 in Current Affairs, Current Events, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Wednesday, April 17, 2019

CLE on For Better or for Worse: Spousal Rights in Retirement Plans

CLEThe American Law Institute is holding a webcast entitled, For Better or for Worse: Spousal Rights in Retirement Plans, on Tuesday, May 14, 2019, from 12:00 – 1:30 p.m. Eastern. Provided below is a description of the event.

Why You Should Attend
While the available tax incentives motivate more and more people to hold substantial wealth in qualified plans and individual retirement accounts, many plan participants don’t understand how the distributions work or how to pass that tax benefit on to their beneficiaries. Who can be a designated beneficiary? How do the distribution options change for beneficiaries that are spouses vs. non-spouses? What happens when the account owner is divorced or remarried?

In this 90 minute webcast, we’ll explore how spousal rights to retirement plans can vary from state to state and what your clients can to do ensure that their assets go to their intended party.

What You Will Learn
The presenters, all highly experienced estate planning practitioners and Fellows of the American College of Trust and Estate Counsel (ACTEC), will review:

The impact of Windsor and Obergefell on retirement plan benefits in same-sex unions
Spousal rights in retirement plans subject to ERISA
How spousal rights can vary considerably among the common law and community property states
ERISA preemption of state laws
Case studies illustrating spousal rights in both common law and community property states
Best practices in planning to maximize chances that clients’ intended outcome will occur

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

Who Should Attend
All estate planners and employee benefits practitioners will benefit from attending this webcast from ALI CLE and ACTEC.

April 17, 2019 in Conferences & CLE, Current Events, Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Monday, April 15, 2019

You’re a Widow. Now What?

BrokenheartLosing a spouse after decades of sharing your lives together can envelope anyone in a suffocating cloud of grief. Adding to that is the stress of now handling the financial affairs of your loved one, or possibly even the entire home if that spouse oversaw those household chores.

After Susan Covell Alpert lost her husband to leukemia in 2008 after 46 of wedded bliss, she was overwhelmed with juggling the responsibilities. She hired an accountant, a financial advisor, and a grief counselor. In 2013, she opened a consulting business for fellow widows and wrote a book entitled, Driving Solo: Dealing With Grief and the Business of Financial Survival. Alexandra Armstrong, a certified financial planner in Washington, says that widows should wait six months before making any dramatic financial decisions such as selling the home or investing insurance money into annuities. But at the top of the list (as soon as emotionally possible), grieving widows should notify the Social Security Administration, call the life insurance company and pay important bills.

Women statically live longer than men, so more women become widows rather than men becoming widowers. According to the Census Bureau about 34% of women in 2016 over the age of 65 were widows, while only 12% of men were widowers in the same age bracket. Knowing what to do when the time comes to handle a deceased spouse's affairs can make the grief just a little less exhaustive.

See Susan B. Garland, You’re a Widow. Now What?, New York Times, April 11, 2019.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

Special thanks to Matthew Bogin, (Esq., Bogin Law) for bringing this memorandum to my attention.

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

April 15, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Wills | Permalink | Comments (0)

Friday, April 12, 2019

Top 5 Reasons that Seniors Should Avoid Sharing a Joint Bank Account with an Adult Child

BankaccountOlder citizens often believe that adding one of their adult children to their bank account will make paying recurring bills and managing finances easier, but the reality is that it often has dire consequences. Once the account becomes a jointly owned bank account, the funds belong to both account holders equally. This means bank employees do not need to get the permission of both owners to transfer or withdraw all the funds.

Here are 5 reasons adding an adult child to your bank account if not a good idea:

  • Unintentional Disinheritance
    • When one account holder dies, the money in a jointly owned account automatically belongs to the other account holder without passing through probate. If the parent had wanted to disburse those funds between all their children, this could have the opposite effect.
  • Risk of Intentional Loss
    • For even the best child, the temptations of a windfall of money is too great. Once they are added to their parent's account, they may feel that there is no true harm by taking some "early."
  • Risk of Unintentional Loss
    • Adding a child to a bank account may also expose the parent's hard earned money to that child's creditors.
  • Risk of Meddling "Outlaws"
    • If a parent does not like or trust their adult child's spouse, being on a join bank account with that child could have unfortunate results. If the child's spouse has Power of Attorney of that child, they would have access to those funds if they had to act in the child's place.
  • Unexpected Risk
    • If the child needs to apply for public benefits after being added to the bank account, the funds may need to be spent before the child can qualify. The child would not be able to remove his or her name from the bank account because most programs for public benefits would consider this transaction an uncompensated gift or transfer to the parent that would otherwise create a period of ineligibility for the child to receive any benefits.

See Kara Gansmann, Top 5 Reasons that Seniors Should Avoid Sharing a Joint Bank Account with an Adult Child, CSHlaw.com, April 20, 2019.

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

April 12, 2019 in Current Affairs, Disability Planning - Property Management, Elder Law, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Wills | Permalink | Comments (0)

Tuesday, April 9, 2019

Kristoff St. John's Ex-Wife Mia Says She's the Sole Beneficiary of His Life Insurance Policy

KristoffThe family drama in the wake of Kristoff St. John's death is coming to a boil as different members vie for control of different sections of his estate. His father previously filed to become executor of St. John's estate, but then the eldest daughter of the deceased, Paris, objected and filed her own petition last month, stating that her father died without a will.

Now, his ex-wife Mia is jumping into the foray. “Kristoff did not have a will. What was found were pages in a journal. There were things that were scribbled out, crossed out, and we just want to make sure — my daughter just wants to make sure — that his wishes are carried out,” she says. Mia says her daughter his not fighting St. John's father, but rather trying to clarify her father's last requests. 

Mia and St. John were married from the years 1991 to 1995 and had two children together, Julian, died by suicide at age 24 in 2014, and Paris. Mia also claims that because of Julian's death, she is the sole remaining beneficiary of a life insurance policy for the actor. He was found dead in his home in the San Fernando Valley on February 3rd, and a month later his death was ruled an accident. 

See Elise Burger, Kristoff St. John's Ex-Wife Mia Says She's the Sole Beneficiary of His Life Insurance Policy, People, April 4, 2019.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.

April 9, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Intestate Succession, New Cases, Non-Probate Assets, Television, Wills | Permalink | Comments (0)

Monday, April 8, 2019

A Second Walk Down the Aisle can Complicate Estate Planning

MarriageMajor life events should result in a person reviewing and possibly revising their estate planning documents. Though most people hope to marry once in their lifetime, a reality of our society is that second marriages often occur. To ensure that you provide for your current spouse and juggle benefits for your children from both marriages, diligent planning is necessary.

  • Update your will and other document
    • Some states void an ex-spouse beneficiary or executor designation upon divorce, but it always a good idea to update documents to ensure that your intentions are clear.
  • Consider a prenuptial agreement
    • For states that have an "elective share" for spouses and disallow disinheriting - even when the new spouse is financially independent - prenuptial agreements can waive these rights to each other.
  • Review beneficiary designations
    • Just as with wills, beneficiary designations for insurance policies, annuities, and retirement plans may not change automatically upon a divorce. If a designation is a minor child from the previous marriage, keep in mind that your ex-spouse may become that child's guardian and have access to those funds.
  • Make the most of trusts
    • If you believe that it is possible that your current spouse or children may be irresponsible with any wealth given to them outright, trusts may be the answer. An option is to set up a trust that provides your new spouse with income for life and preserves the principal for your children.
  • Avoid unintended consequences
    • Discuss with your estate planning advisor any revisions necessary to ensure you are not surprised by unintended consequences down the road.

See A Second Walk Down the Aisle can Complicate Estate Planning, FSA law, March 25, 2019.

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

April 8, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Friday, April 5, 2019

House Committee Unanimously Passes Bill to Upgrade 401(k) Plans Amid 'Retirement Income Crisis'

CongressA key House committee this past Tuesday passed a bill intended to increase the flexibility of 401(k) plans and improve access to the accounts. The bill, known as the Secure Act, had a Republican and Democrat backing it from the tax-writing Ways and Means committee, and was passed unanimously.

The bill has a significant chance of passing the heavily divided Congress. It contains elements that have support from both industry groups and advocacy organizations. Committee Chairman Richard Neal (D-Mass.) called the bill "a major bipartisan accomplishment" on Tuesday. The bill would be the first major legislative action to affect retirement since the Pension Protection Act of 2006.

The bill will allow small businesses to band together to offer 401(k)s and creates a new tax credit of up to $500 for companies that set up plans with automatic enrollment. It also repeals the maximum age for IRA contributions and raises the age for required mandatory distributions from 70 1/2 to 72. It would also expand the use of 529s, from only college-related expenses to include private schools, home schools and student loans.

See Ylan Muai, House Committee Unanimously Passes Bill to Upgrade 401(k) Plans Amid 'Retirement Income Crisis', MSN, April 2, 2019.

 

April 5, 2019 in Current Affairs, Current Events, Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0)

Tuesday, April 2, 2019

Another Shock to the Long-Term Care Insurance Industry

AlzA company that was once the largest seller of long-term care insurance policies, Genworth, has announced that it will now only be selling its policies through direct-to-consumer channels or through employers or affinity groups. This market is a small one currently, but brokers fear that move could spur a wider industry trend as it decreases distribution costs.

The long-term care insurance is already swimming in stormy seas, as sales of traditional policies have declined by more than 90% over the past decade. Less than a dozen carriers still sell the policies. Generally, it is more common for consumers to buy combo or hybrid policies that link long-term care coverage with annuities or life insurance. Approximately 350,000 policies were purchased last year according to the American Association for Long-Term Care Insurance, but fewer than 60,000 were stand-alone policies. Combo policies can be seen as a more efficient purchase for consumers because they may use a portion of their death benefit of life insurance policies to pay for long-term care needs. Anything left over would go to their beneficiary.

Dementia and other neurological conditions have increased uncertainty risks within the industry. About half of all long-term care insurance claims come from policyholders with Alzheimer’s and other dementias. Last year, Congress and the Trump Administration allowed plans to offer non-medical supplemental benefits such as personal care aides or home modifications through the new Medicare Advantage benefits and services.

See Howard Gleckman, Another Shock to the Long-Term Care Insurance Industry, Forbes, April 1, 2019.

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

April 2, 2019 in Current Affairs, Current Events, Disability Planning - Health Care, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Monday, April 1, 2019

Am I Still Covered Under the Title Insurance Policy?

TitleAn important issue to keep in mind  when transferring property for estate planning purposes is whether the successor owner will be covered by the grantee’s title insurance policy. Title insurance policies insure only the title of the “Insured” identified in the policy, and older ALTA policies created confusion by being vague about whether certain subsequent owners were insured.

By expanding the definition of the "insured," the ALTA 2006 policy form eliminates much of the doubt regarding continuing coverage under a title insurance policy. This new clarification includes:

(A) successors to the title of the Insured by operation of law as distinguished from purchase, including heirs, devisees, survivors, personal representatives, or next of kin;
(B) successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization;
(C) successors to an Insured by its conversion to another kind of entity; and
(D) a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the title
(1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by the named Insured,
(2) if the grantee wholly owns the named Insured,
(3) if the grantee is wholly-owned by an affiliated entity of the named Insured, provided the affiliated entity and the named Insured are both wholly-owned by the same person or entity, or
(4) if the grantee is a trustee or beneficiary of a trust created by a written instrument established by the Insured named in Schedule A for estate planning purposes.

This definition does not expand those future owners that are covered by the title insurance policy, but instead clarifies which subsequent owners are deemed to take title to the subject property by operation of law.

See Ian Douglas, Am I Still Covered Under the Title Insurance Policy?, Swlaw.com, March 14, 2019.

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

April 1, 2019 in Current Affairs, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

Wednesday, March 27, 2019

Article on Making Directed Trusts Work: The Uniform Directed Trust Act

LawJohn D. Morley and Robert H. Sitkoff recently published an Article entitled, Making Directed Trusts Work: The Uniform Directed Trust Act, ACTEC Law Journal, Vol. 44, No. 1, Winter 2019. Provided below is an abstract to the Article.

Directed trusts have become a familiar feature of trust feature in spite of considerable legal uncertainty about them. Fortunately, the Uniform Law Commission has just finished work on the Uniform Directed Trust Act (UDTA), a new uniform law that offers clear solutions to the many legal uncertainties surrounding directed trusts. This article offers an overview of the UDTA, which particular emphasis on four areas of practical innovation. The first is a careful allocation of fiduciary duties. The UDTA's best approach is to tale the law of trusteeship and attach it to whichever person holds the powers of trusteeship, even if that person is not formally a trustee. Thus, under the UDTA the fiduciary responsibility for a power of direction attaches primarily to the trust director (or trust protect or trust advisor) who holds the power, with only a diminished duty to avoid "willful misconduct" applying to a directed trustee (or administrative trustee). The second innovation is a comprehensive treatment of non-fiduciary issues, such as appointments, vacancy, and limitations. Here again, the UDTA largely absorbs the law of trusteeship for a trust director. The UDTA also deals with new and distinctive subsidiary problems that do not arise in ordinary trusts, such as the sharing of information between a trustee and a trust director. The third innovation is a reconciliation of directed trusts with the traditional law of cotrusteeship. The UDTA permits a settlor to allocate fiduciary duties between cotrustees in a manner similar to allocation between a trust director and directed trustee in a direct trust. The final innovation is a careful system of exclusions that preserves existing law and settlor autonomy with respect to tax planning, revocable trusts, powers of appointment, and other issues. All told, if appropriately modified to fit local policy preferences, the UDTA could improve on the directed trust law of every state. The UDTA can also be used by practitioners in any state to identify the key issues in a directed trust to find sensible, well-drafted solutions that can be absorbed into the terms of a directed trust.

March 27, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Non-Probate Assets, Trusts | Permalink | Comments (0)