Wills, Trusts & Estates Prof Blog

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

Monday, November 23, 2020

Article on Parens Patriae and The Disinherited Child

Michael J. Hidden recently published an article entitled, Parens Patriae and The Disinherited Child , Washington Law Review (2020). Provided below is the abstract to the Article. Estate planning

Most countries have safeguards in place to protect children from disinheritance. The United States is not one of them. Since its founding, America has clung tightly to the ideal of testamentary freedom, refusing to erect any barriers to a testator's ability to disinherit his or her children-regardless of the child's age or financial needs. Over the years, however, disinheritance has become more common given the evolving American family, specifically the increased incidences of divorce, remarriage, and cohabitation. Critics of the American approach have offered up reforms based largely on the two models currently employed by other countries: (1) the forced heirship approach, in which all children are entitled to a set percentage of their parent's estate; and (2) family maintenance statutes, which provide judges with the discretionary authority to override a testator's wishes and instead award some portion of the estate to the testator's surviving family members. This Article takes a different approach and looks at the issue of disinheritance through a new lens: the doctrine of parens patriae. Just as this doctrine limits the decision-making autonomy of living parents vis-A-vis their children, this Article argues that it should likewise limit the dead hand control of deceased parents. Focusing on minor children, adult children who remain dependent as a result of disability, and adult children who are survivors of parental abuse, it is the contention of this Article that testamentary freedom must sometimes yield to the state's inherent parens patriae authority to protect children from harm. Specifically, this Article proposes that courts must refuse enforcement of testamentary schemes that disinherit children who fall into those categories if that disinheritance would constitute abuse or neglect. Such an approach is not only mandated by the doctrine of parens patriae but, in contrast to the approaches other countries have adopted, is much more deferential to testamentary freedom. The limitations imposed by this proposal represent a relatively modest curtailment of the rights testators currently possess and, at the same time, are consistent with existing exceptions to testamentary freedom, most notably those in place to protect spouses and creditors as well as those that prohibit the enforcement of testamentary provisions that violate public policy.

November 23, 2020 in Articles, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Sunday, November 22, 2020

Is Now the Right Time to Forgive Intrafamily Loans?

Estate planningIf you made intrafamily loans to family members in the past, or even more recently due to the COVID-19 pandemic, you should consider forgiving those loans. Here's why, as of now, the gift and estate tax exemption rates are at an all-time high. Also, the interest rates are at a record breaking low. 

It is possible that intrafamily loans can be used as an estate planning tool due to the ability to transfer wealth to your loved ones tax free so long as the loan proceeds reach a certain level of returns. 

"Generally, to ensure the desired tax outcome, an intrafamily loan must have an interest rate that equals or exceeds the applicable federal rate (AFR) at the time the loan is made. The principal and interest are included in the lender’s estate, so the key to transferring wealth tax-free is for the borrower to invest the loan proceeds in a business, real estate or another opportunity whose returns outperform the AFR."

Any excess from these investment returns over the interest expense will work as a tax-free gift to the borrower. With low interest rates, it is much easier to outperform the APR. 

If have some leftover exemption, forgiving an intrafamily loan will allow you to transfer the entire loan principal plus any accrued interest tax-free. This will allow you to take advantage of the $11.58 million exemption amount before it is gone. 

There are also income tax considerations. Typically, forgiving intrafamily loans will be considered a gift, which carries with it no income tax consequences. 

In deciding whether or not you should forgive an intrafamily loan, you should speak with your financial and/or estate planning advisor.

See Joseph R. Marion, III & David T. Riedel, Is Now the Right Time to Forgive Intrafamily Loans?, Adler, Pollock, & Sheehan P.C.: Insight on Estate Planning, October 27, 2020.

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

November 22, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0)

Saturday, November 21, 2020

The Family Feud Behind a $32 Million T. Rex Named Stan

PNG imageLegendary paleontologist brothers Peter and Neal Larson dug up the fossils of a 40-foot-long Tyrannosaurus rex out of the ground in South Dakota. The twenty-eight year old discovery, now known by Stan, sold for $32 million dollars, a record breaking price for a fossil. 

One would expect this would be a joyful moment for the Larson brothers. However, the Larsons have been in a yearlong legal battle, and the sale of Stan only added fuel to the flame. The hope was that the sale of Stan would bring the brothers closer together, but it appears that has not been the case. Friends have begun to worry that the high sale price "deepened the bad blood between the brothers" as Neal received all of the money. 

“I figured they might still dislike each other, but there’s no way they’ll ever get over this,” said Mark Norell, chair of paleontology at the American Museum of Natural History.

The original plan for Stan was to stay at the Larson brothers' Black Hills Institute of Geological Research in Hill City, S.D., but two years ago the brothers were in a complex ownership dispute and were ordered to divide the institute's assets and go their separate ways. 

The older brother, Peter, kept the institute and along with it, 100,000-plus fossils and 5,000-square-foot private museum, which was valued around $5 million. Neal, was given the rights to Stan and the proceeds as his buyout. At the time, the deal appeared financially equal, but of course at the time Stan was not predicted to sell for $32 million. 

As it turns out, neither one of the brothers thought they'd make that much "in the history of their entire business." 

See Kelly Crow, The Family Feud Behind a $32 Million T. Rex Named Stan, The Wall Street Journal, October 21, 2020. 

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

November 21, 2020 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Friday, November 20, 2020

Debt After Death: What You Should Know

BoxHeadAlthough some debts are relieved when you die, others may have a great impact on your family. Below are a few things you should know about incurring debt and how those debts may impact your family after your death. 

First, after you die, your debt becomes apart of your estate. Dividing up your debt is done in a process called probate. "The length of time creditors have to make a claim against the estate depends on where you live. It can range anywhere from three months to nine months. Therefore, you should get familiar with your state’s estate laws, so you are well aware of which rules apply to you."

You should know that Beneficiaries' money is partially protected but only if they are named properly. Unsecured creditors usually will not be able to touch funds that are in life insurance policies or 401(k)s. However, if beneficiaries are not named until after your death, the funds will go to the estate leaving them open to creditors. 

Credit card debt will not disappear so easily. It is the norm for the estate to pay credit card debt using the estate's assets. So long as children are not a joint holder on the account, they will not inherit credit card debt. If a surviving spouse is a joint borrower, they will be responsible for their deceased spouse's debt. It is important to pay attention to joint applicants and joint borrowers on your credit card accounts, whether or not they had anything to do with the credit card following the paperwork. 

Federal student loan debt will be forgiven. Once the borrower dies, the debt is forgiven, however, proof of death is required. This rule is not the same for private student loan debt. Although some loan programs offer loan forgiveness upon death, others are not so generous. Thus, it is important to know where your student loans came from and who the borrower was, especially for private loans. 

In regard to your mortgage, if your heirs inherit property, lenders must allow them to take over the mortgage. However, heirs are not required to keep the mortgage and can refinance or pay off the debt. This same rule applies to the surviving spouse. 

Marriage is very important. If your spouse dies, you are legally required to pay any "joint tax owed to the state and federal government."

It is very important for you to organize your debts and use any safeguards possible to plan for your debts and how they may impact your family in the event of your death. 

See Michael Aloi, Debt After Death: What You Should Know, Kiplinger, November 2, 2020.

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

November 20, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Biden Won’t Enforce DOL's Revamped ESG Policy, State Street Says

Estate planningPresident-elect Joe Biden's administration has gotten to work around the topic of retirement policy. It appears that the Biden administration will be focusing on ordering non-enforcement of the U.S. Department of Labor's "revamped ESG rule." 

The DOL modified the rule in response to a slew of criticism, but the Biden administration is "likely to do a sweep of all regulatory agencies to ensure that regulations encourage environmental social and governance investing and that companies address climate change, racial equity, and inclusion" said Melissa Kahn, State Street's managing director. 

Kahn further stated, “I think the Biden administration will say, ‘Let’s put a hold on any enforcement of this regulation.’ Whether they decide to pull back the regulation entirely or make revisions remains to be seen, but the first thing they can do is put in place a non-enforcement policy.” 

Kahn also predicted that the Biden administration will focus on fiduciary regulation. There still remains a great deal of uncertainty around the topic of fiduciary regulation, so it would not be surprising for the Biden administration to revisit the topic and possibly make corrections to the DOL's fiduciary rule pertaining to investment advice. 

The uncertainty has made it difficult for financial advisors regarding the recommendation of rollover space and whether it is a fiduciary act or not. 

Kahn stated that she does not believe the Democrats will win both Senate seats in Georgia, leaving control of the Senate in the hands of the GOP. 

See Tracey Longo, Biden Won’t Enforce DOL's Revamped ESG Policy, State Street Says, Financial Advisor Mag, November 17, 2020.

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

November 20, 2020 in Current Affairs, Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Thursday, November 19, 2020

Alzheimer’s Research Looks at Hot Spots Across the U.S.

AlzheimersApparently, where you live impacts the risk of getting Alzheimer's disease. Scientists and medical researchers have done loads of research on things that may increase the chances of developing Alzheimer's, but now, they are focusing on the potential role that location may play. 

Through research, researchers have found that certain counties and neighborhoods have a higher prevalence of Alzheimer's disease, the sixth-leading cause of death in the United States. 

The next step is seeking to find if these locations have common risk factors associated with Alzheimer's. 

"The data show, among other things, that overall prevalence is more highly concentrated in the Southeast and Gulf Coast states, including Florida and Texas, compared with Western states, such as Colorado and Arizona." 

The research has only just begun and as expected, there are still a lot of unanswered questions. One study has shown that Alzheimer's is more prevalent in poor neighborhoods while another showed a higher prevalence in in rural Appalachia compared with non-Appalachian rural counties. 

The data also showed that social determinants of health, like higher levels of poverty, fewer options for exercise, and less education are risk factors. 

This new research may also be an effective aid in helping researchers pinpoint which intervention efforts will be more successful. 

See Clare Ansberry, Alzheimer’s Research Looks at Hot Spots Across the U.S., The Wall Street Journal, November 16, 2020. 

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

November 19, 2020 in Current Events, Estate Planning - Generally, Technology | Permalink | Comments (0)

Stetson’s Journal of Aging Law & Policy Call for Papers

The below announcement is posted as a courtesy for Prof. Rebecca Morgan, Stetson University School of Law:

Stetson’s Journal of Aging Law & Policy, the preeminent journal for cutting-edge issues of national and international aging law and policy, is seeking articles for its Volume 13, which will be published in May 2022. Stetson’s Journal of Aging Law & Policy is a unique journal with an elder law emphasis that also focuses on both law and policy.

If you are interested in submitting an article for publication, please email Nicholas Marler, Managing Editor, at nmarler@law.stetson.edu.

Submission requirements: Articles must be in 12-point font and double spaced. Citations should be in accordance with either the ALWD or BlueBook citation manuals and the article must be related to a relevant elder law topic. Submission preferences: The Journal seeks articles that are between 10,000 and 20,000 words. However, consideration may be given to articles that fall outside of this word requirement.

Questions should be directed to Nicholas Marler, Managing Editor, at nmarler@law.stetson.edu.

November 19, 2020 in Scholarship | Permalink | Comments (0)

Call for Participation -- Trusts & Estates Collaborative Research Network of Law and Society Association

The below announcement is posted as a courtesy for Prof. Bridget Crawford of the Pace University School of Law:

CFP: Trusts & Estates Collaborative Research Network of Law and Society Association
Trusts & Estates Collaborative Research Network
Law and Society Association Annual Meeting
Chicago, Illinois (& Virtual), May 27-30, 2021

Call for Participation – Deadline December 31, 2020 11:59 PM ET(USA)

Submission Link: here 

The Trusts & Estates Collaborative Research invites proposals for (i) individual papers to be organized into panels; (ii) fully-formed panel proposals; and (iii) proposals for other sessions such as Author Meets Reader, Salon, or Roundtable discussions that explore any aspect of the law, practice or effects of trusts, equity, and estates, broadly defined. We also seek volunteers to serve as Chairs and/or Discussants for paper panels. Successful proposals likely will bear in some way on succession (also referred to as inheritance), equity, and/or wealth transfers (whether at death or during lifetime, outright or in trust). Subjects of inquiry may involve any aspect of government or social policy with respect to trusts, estates, inheritance, wealth transfer, equity or courts with jurisdiction over these issues.

If you would like to present an individual paper as part of a Trusts and Estates CRN panel, submit an idea for a fully-formed panel, or propose an Author Meets Reader, Salon or Roundtable session, please  submit your proposal by December 30, 2020 at 11:59 p.m. Eastern (USA) via the LSA submission page here: https://lawandsociety.site-ym.com/page/CallforSubmissionsLSA2021 

When you submit your proposal, please indicate that it is for CRN #56 Trusts and Estates. 

If you would like to volunteer as a chair or discussant, please email Bridget Crawford (bcrawford [at] law.pace.edu).

The CRN will organize submitted papers into panels with cohesive themes. You are welcome to link your paper in some way to the 2021 conference theme, “Crisis, Healing, Re-Imagining,” but there is no requirement to do so.

Our goal is to stimulate focused discussion of papers on which scholars are currently working and to discuss topics of current and common interest to those working in the fields of Trusts & Estates and Equity, broadly defined, both in the United States and internationally.  We welcome participation from scholars of any level of seniority working in any discipline, language, or country.  Although you may submit an individual proposal to present a paper that is closer to publication, we are especially interested in receiving proposals for works-in-progress that will benefit from discussion that the panels will provide.

We welcome participation of junior scholars, those who are untenured or in non-tenured positions, clinical and legal writing specialists, doctrinal teachers, advanced graduate students, as well as more experienced scholars. Scholars from around the world are warmly encouraged to apply; we welcome participation of colleagues from all nations.

Participants are encouraged to apply multi-disciplinary and interdisciplinary approaches in their scholarship. Possible areas of inquiry might include issues related to transfer of wealth between spouses or family members; preferences created for certain types of transfers or transfers to particular classes of individuals; the transfer of wealth to charities or non-profit organizations; generational equity; issues of social and economic inequality; comparative aspects of the law of succession and the law of trusts more broadly; the relationship between/among gender, race, sexual orientation, socioeconomic class, immigration, language status, disability and the law of succession and the law of trusts; the socio-linguistics of testation and wealth transfer; access to estate planning justice for low- and middle-income individuals; questions of cultural or group inheritance rights; and similar issues.

Please note that LSA rules limit you to one conference participation as a Paper Presenter, Roundtable Participant, Author or Salon Presenter.  There are no caps on appearances as Chair and/or Discussant on a panel.

We will attempt to accommodate all who are interested in participating in the CRN’s programming.

If you have any questions, you are welcome to contact CRN chair Bridget Crawford (bcrawford [at] law.pace.edu).

November 19, 2020 in Conferences & CLE | Permalink | Comments (0)

Year-end planning just got a whole lot more complicated

Estate planningAs Election Day approached, talk surrounding estate planning grew. Presidential candidate Joe Biden announced his tax plan proposal, which many thought may come to fruition if the Democratic Party won the Presidency and took over a majority of the Senate. The proposed tax plan would significantly reduce estate and gift tax exemptions. 

Although the election has come and gone, there is not yet much clarity surrounding the future of estate planning. It appears more likely than not that Joe Biden will be the next President, there is still a lot of discussion. Further, the determination of which party will control the Senate will not be made until the two runoff elections in Georgia are held in January.

Therefore, we will not know who will control the Presidency, House, and Senate until after 2020 has ended. Due to the uncertainty, estate planning has been and will continue to be difficult. 

It may be in your client's best interest to take advantage of the current tax exemptions while they are available. Whether this is what is best for your client will depend on their current financial situation. It may be the case that the potential reduced exemptions will not affect them.

However, "The harder situation is for those individuals who might not have a federal tax due at death if the exemptions stay where they are, but would owe tax if they were to be cut by 50% or more. Those of us who lived through 2012 have already seen this movie. In these cases, there may be ways to structure the gift to give a family more time to make the decision."

It is important to discuss the implications of the new exemption rates and the potential impact they could have on your client, whether or not the new tax plan is a sure thing.

See Scott Bieber, Year-end planning just got a whole lot more complicated, Thompson Coburn LLP, November 13, 2020. 

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

November 19, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Legislation | Permalink | Comments (0)

Wednesday, November 18, 2020

Article on Preserving the Artistic Afterlife: The Challenges in Fulfilling Testator Wishes in Art-Rich, Cash-Poor Estates

Hannah K. Feldman recently published an article entitled, Preserving the Artistic Afterlife: The Challenges in Fulfilling Testator Wishes in Art-Rich, Cash-Poor Estates, Fordham Intellectual Property, Media, & Entertainment Law Journal (2020). Provided below is the abstract to the Article. Estate planning

Artists' estates present unique legal issues distinct from the estates of art collectors-cum-investors, as these estates tend to be much more art-rich and cash-poor,leading to difficulties in funding legacies when there is no cash readily available and all of the value of the estate is tied up in the artworks themselves. Robert Indiana, an American sculptor who was frequently exploited throughouthis lfe and now appearsto be subject to posthumous exploitation, will be examined as a textbook example of such an artist'sestate. The issues surrounding Indiana's estate exemplify the challenges in following a testator's intent to leave a lasting artistic reputation when the artist has not also left behind the cash necessary to fund their dreams. This Note looks at the judicial doctrines of cy pres and equitable deviation and various legal scholars' proposed solutions to modifying such impracticable dreams, particularly in the case of artists 'and art collectors' estates. Specifically, the Note argues that Indiana's collection should not be housed in his ramshackle man- sion on a rural island in Maine, but rather should be bequeathed to the Farnsworth Museum in Rockland, Maine. Substantively, this Note concludes that public benefit should prevail over dead hand control in the case of artists'estates.

November 18, 2020 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)