Wills, Trusts & Estates Prof Blog

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

Saturday, August 10, 2019

Note on Domestic Asset Protection Trusts: A Debtor's Friend and Creditor's Foe

DAPTNora Hood recently published a Note entitled, Domestic Asset Protection Trusts: A Debtor's Friend and Creditor's Foe, 13 Brook. J. Corp. Fin. & Com. L., 443-464 (2019). Provided below is an abstract of the Note.

In 1997, Alaska enacted the first law in the United States legalizing Domestic Asset Protection Trusts (DAPTs), also referred to as self-settled asset protection trusts, as valid legal entities. Under traditional trust law, a debtor cannot shield assets from creditors by placing them in a trust for his or her own benefit. Alaska's statute allowing DAPTs calls the traditional rule into question. This Note will examine use of DAPTs in the United States, including whether or not the recently amended Uniform Voidable Transaction Act would consider any transfer to a DAPT voidable per se, and discuss an approach that intends to prevent misuse of DAPTs to avoid liability.

August 10, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, August 9, 2019

ACTEC 2019 Annual Meeting Musings

BessemerSteve R. Akers published a summary of the ACTEC 2019 Annual Meeting. A synopsis of his musings is provided below.

Various seminars at the ACTEC 2019 Annual Meeting are summarized. Topics include: elder financial abuse, artificial intelligence, cryptocurrency, basis adjustment planning, family conflict, modification of trusts, settlor intent, directed trusts, Uniform Trust Act, Uniform Fiduciary Income and Principal Act, ethics of negotiations, and hot topics.


August 9, 2019 in Articles, Conferences & CLE, Current Affairs, Elder Law, Estate Administration, Estate Planning - Generally, Science, Technology, Trusts, Wills | Permalink | Comments (0)

CLE on Changing/Repurposing Old Trusts to Work Under the New Tax Rules

CLEThe National Business Institute is holding a webcast entitled, Changing/Repurposing Old Trusts to Work Under the New Tax Rules, on Monday, October 21, 2019 at 10:00 AM to 5:00 PM Central. Provided below is a description of the event.

Learn How and When to Modify a Trust

New tax rules are in effect, and your clients may be wondering what impact these major changes have had on their trusts. Whether to qualify for government benefits, minimize tax exposure or to take advantage of new incentives, there may be good reason to amend or restructure the trust. Do you have the knowledge and skills you need to make this happen? Our experienced faculty will walk you through the legal process of modifying a trust, offering solutions to specific trust issues in the new tax law and equipping you with the tools you'll need to respond to future changes. Register today!

  • Help your clients identify when a trust should be modified.
  • Understand who has the legal authority to make a change to the trust
  • Gain insight into the legal process involved with modifying an existing trust
  • Determine what to do with old credit shelter trusts
  • Learn how to build modification provisions into the trust and receive other helpful drafting tips.
  • Discover what has changed as a result of the new tax rules, what stayed the same, and what still works.

Who Should Attend

This course is designed for attorneys. It will also benefit financial planners, accountants and CPAs, tax preparers, trust officers, and paralegals.

Course Content

  • What Still Works
  • When Should the Irrevocable Trust be Modified?
  • Mechanisms for Making the Change
  • What to Do With Old Credit Shelter Trusts
  • Specific Solutions to New Trust Tax Problems and Opportunities
  • Qualifying Trusts for the New Pass-Through Entity Deduction
  • Drafting for Flexibility to Respond to Future Tax Law Changes
  • Legal Ethics

August 9, 2019 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Thursday, August 8, 2019

Article on Elderly Gun Ownership and the Wave of State Red Flag Laws: An Unintended Consequence That Could Help Many

GunTara Sklar recently published an Article entitled Elderly Gun Ownership and the Wave of State Red Flag Laws: An Unintended Consequence That Could Help Many, 27 Elder L.J. 35-49 (2019). Provided below is an abstract of the Article.

There is rising concern among health professionals and in legal circles to address gun ownership for older adults who display signs of cognitive decline, including dementia. However, elderly gun ownership remains underexamined, partly because incidents of gun violence among the elderly tend to occur in domestic settings and are much less visible than shootings in public areas. In contrast, there is widespread attention to curb mass gun violence through state legislation. Specifically, red flag laws, also known as Extreme Risk Protection Orders, have doubled in 2018 with thirteen states enacting red flag laws and over thirty states having introduced or planning to introduce this legislation. Although red flag laws were not intended to address elderly gun ownership, they uniquely apply where other gun control laws fall short, as red flag laws provide the legal process to temporarily remove access to guns for persons believed to be at an elevated risk of harming themselves or others.

This Article surveys the thirteen states that have enacted red flag laws and analyzes key legislative elements across these states. The state laws have notable variations, including authorized persons who can petition a court for a protection order, standard of proof requirements, and the length of time an order is in effect. These variations have implications for elderly gun owners and their families, particularly in how they relate to the climbing rates of cognitive decline, suicide in late life, and elder abuse. The current wave of red flag laws across the country offer an opportunity to provide greater awareness around elderly gun ownership and prevent crises from becoming tragedies.

August 8, 2019 in Articles, Current Affairs, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Who’s Responsible for Your Parents’ Nursing Home Cost? It’s Not Who You Think

LtcThe cost of long-term care is an expense that many people are wary of planning for, mostly because they do not want to imagine themselves being incapacitated or needing extra medical care. But not only is long term care becoming more of a reality, but the financial aspect can impact a patient's child as well.

In some case, courts have enforced that children are liable for the nursing home expenses of their parents if a state has enacted a filial law. They are on the books in 28 states and can provide a powerful motivation to encourage clients to plan for their future long term care costs. One case saw a son held liable for $93,000 in nursing home costs for his mother, even though her Medicaid application remained pending and without regard to whether other potential sources of payment (including two other siblings) existed. Another newer case involved one son suing his brother to reimburse costs for their mother's around the clock in-home care.

Long term care itself has become so expensive that several insurance providers have stopped offering standalone long-term care insurance policies entirely. Hybrid products that combine long term care insurance with an annuity can relieve many anxieties because if the insurance is never used, a death benefit can still be paid out. Planning for the unexpected is always more beneficial than leaving it up to chance, and possibly the bills up to your children.

See William H. Byrnes & Robert Bloink, Who’s Responsible for Your Parents’ Nursing Home Cost? It’s Not Who You Think, Think Advisor, May 10, 2019.

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

August 8, 2019 in Current Affairs, Disability Planning - Health Care, Estate Planning - Generally | Permalink | Comments (0)

Wednesday, August 7, 2019

Article on Estate Planning Highlights of the 2019 Texas Legislature

TexasGerry W. Beyer recently published an Article entitled, Estate Planning Highlights of the 2019 Texas Legislature, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

This article reviews the highlights of the legislation enacted by the 2019 Texas Legislature relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters.

August 7, 2019 in Articles, Current Affairs, Current Events, Elder Law, Estate Administration, Estate Planning - Generally, Guardianship, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

5 Key Tax Questions for Buying a Vacation Home Abroad

BeachThe allure and prestige of purchasing a vacation home in a foreign land is easy to understand. But there are several tax questions that must be asked to determine if the purchase is a prudent one.

  • Will buying a vacation home in a foreign country impact my U.S. income taxes?
    •  As long as a vacation home is purchased in an individual capacity and is not used to produce rental income, it should not trigger U.S. income tax.
  • Is the mortgage interest on my foreign vacation home deductible?
    • Yes, interest on up to $750,000 of principal is deductible as long as the debt was used to “acquire, construct or substantially improve” a primary residence or one secondary home. After 2025, the principal amount jumps up to $1 million.
  • If I incur foreign real estate taxes, are they deductible?
    • As of right now no, but starting 2026, the itemized deduction for foreign real estate taxes is scheduled to return.
  • I have a U.S. will and testament. Will it sufficiently address the eventual transfer of my foreign home to family or friends?
    • Different countries can have very different estate planning laws, so it is best to work with a tax attorney and an advisor to possibly create a foreign estate plan.
  • Do I risk exposure to double taxation from a wealth transfer perspective?
    • The U.S. estate and gift tax calculation includes the value of all your assets, including real estate abroad. If those foreign countries also impose a gift or estate tax, there may very well be double taxation.

See 5 Key Tax Questions for Buying a Vacation Home Abroad, Northern Trust, June 13, 2019.

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

August 7, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Travel, Trusts, Wills | Permalink | Comments (0)

Elizabeth Hurley's Son Prevails in Inheritance Fight

HurleysThe son of British actress Elizabeth Hurley and American businessman Steve Bing has come out as the winner in a fight over his inheritance portion of his billionaire grandfather's trust. The trustee of the trust had petitioned a Los Angeles court to clarify the term "grandchild" in an attempt to disinherit any grandchildren that were born out of wedlock. The petition was spurred in part by a request for information on the trust by Steve’s other child, Kira Kerkorian Bing, who Steve shares with tennis player Lisa Bonder.

Peter claims that he intended his 1980 trusts to only benefit future grandchildren who were born or adopted at a young age by Steve or his daughter Mary and “raised by [his] children as part of their families.” Peter says that he has never met Damian nor Kira, and that even Steve has yet to meet Damian, thus they are not part of his family as he intended the trusts to be meant for.

Judge Daniel Juarez has denied the motion filed by the trustee, stating that “[t]here is no ambiguity in the Trusts' use of the term ‘grandchild.'” The judge ruled that though estate planning documents "are to be construed in accordance with the testator's intent, it is the intent expressed by the words of the will itself which must be given effect rather than some undisclosed purpose or intent that may have existed in the mind of the testator.” A grandchild is by definition a child of that person's child, and said that Peter's interpretation of the word was unreasonable.

See Anna Sulkin, Elizabeth Hurley's Son Prevails in Inheritance Fight, Wealth Management, July 29, 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.

August 7, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Film, New Cases, Trusts | Permalink | Comments (0)

Tuesday, August 6, 2019

Comment on Losing Your Mind, Losing Your Rights?: A Certification Process to Safeguard Alzheimer's Patients and the Moving Target of the Lucid Interval

AlzKaitlyn C. Meeks recently published a Comment entitled, Losing Your Mind, Losing Your Rights?: A Certification Process to Safeguard Alzheimer's Patients and the Moving Target of the Lucid Interval, 44 U. Dayton L. Rev. 79-109 (2018). Provided below is an introduction to the Comment.

Picture this: you have awakened, on a seemingly normal day, to a drastic lifestyle change -- the care of your mother or father. You, the child, have now become the parent. Why has this happened? One, or perhaps both, of your parents was recently diagnosed with Alzheimer's disease ("AD"), rendering him or her incapable, in the eyes of the law, of maintaining complete and autonomous control over their life. The child is now the sole caretaker for the parent's health, safety, finances, well-being, and legacy. As the new primary caretaker for an ailing parent, your life has become overwhelmed with legalities -- Power of Attorney Forms, Health Care Directives, and Living Wills and Trusts. These stresses are in addition to the emotional effects as well as the financial and physical demands a caregiver is confronted with on a day-to-day basis.

Will you ever be able to see the parent you once knew again, or will the remainder of your parent's life be surrounded in a cloud of the unknown? And then, with no warning, it is as if nothing but time has changed, and there is a return to your loved one's true self. Yet, with the blink of an eye, the disease takes hold once again, and the moment of lucidity has vanished.

"Your brain is your most powerful organ[.]" However, it is exactly the powerhouse organ which is attacked when a person has a degenerative disease like dementia. Dementia is the collective name for a series of brain disorders which affect cognitive capabilities, generally worsening as time progresses. Alzheimer's disease ("AD") is the most common and prevalent form of dementia. Since AD was first discovered in 1901, our ability to treat and cure the disease has yet to encounter any significant medical breakthroughs.

"Every four seconds, someone is diagnosed with Alzheimer's Disease." Within the United States, someone develops the disease every sixty-six seconds. According to the 2017 annual report by the Alzheimer's Association, one in ten people over the age of sixty-five are currently living with the disease, and the data projects that the amount of people who will be affected by AD will double within the next thirty years as the baby boomer generation settles into the elderly population. The elderly and "oldest-old" populations are expected to account for nearly 80 million Americans by 2050.

AD primarily affects the elderly; however, the elderly, in general, are an age group which seems to traditionally be excluded from many research benefits, including financial resources. Perhaps this illuminates the reason why one of the most aggressive diseases in today's society has failed to be cured, halted, or even alleviated. While the fight against AD is not stagnant by any means, an inability to proactively address issues stemming from the disease will have adverse effects on numerous professions.

Examining the growth of the disease's prevalence, there is an inevitable chance of correlation affecting the legal system through capacity challenges pertaining to AD patients, both while alive and after death. While areas of capacity, have been argued, discussed, and critiqued throughout the years, it seems that no clear foundation or consensus on how to address these growing issues has been established. Undeniably, without clear visions, capacity issues with AD patients will only worsen, especially when taking into consideration it is not a "one size fits all" kind of disorder.

In consideration of capacity issues for those suffering from AD, brief, spontaneous moments of lucidity sets apart the legal complications of the disease from many other disorders. Both in the medical and legal sense, a lucid interval is defined as "[a] period of sanity intervening periods of insanity[,]" and is measured by its strength, in that "[i]t must be such a full return of his mind to sanity . . . enabling [a person] to understand and transact his affairs as usual." For a person with AD, especially an advanced state of the disease, a lucid interval may be the only time he or she is able to make decisions for him or herself, or to see that his or her wishes in place are being properly executed. Because of this, the lucid interval is a "moving target." There is simply no way to predict a lucid interval, and there is no way to confirm a lucid interval without awareness in the aftermath.
This Comment will examine the increasing importance of a more standardized approach for an attorney to take when counseling an AD patient. First, to set the scene, an in-depth examination of the disease is needed: what AD is, the history of the disease, the unsuccessful attempts to prevent or cure Alzheimer's, and its current and future impact on society and the economy. Second, this Comment will address the current state of AD within the courts. The focus will be on how AD is currently seen in a legal context and how the lucid interval is treated within the judiciary. In addition, a Puerto Rico statute, which seems to balance the rights of freedom to contract with the protections of the patient's current and future estate interests, creates an unattainable objective approach to balancing the lucid interval and AD.

Third, this Comment will examine the conclusions of prior and recent case law to demonstrate how the topic has been construed in various states, focusing on how the application varies within the judiciary. Lastly, the Comment will propose a certification process for attorneys who regularly assist as counsel to AD patients. The proposed course will certify any participating attorney as a "Certified Alzheimer's Legal Specialist" upon successful completion. A Certified Alzheimer's Legal Specialist would best be defined as an attorney who is substantially familiar with the disease itself, can fully comprehend the legal ramifications of the client's desired acts by taking the time to understand the condition as pertaining to the individual client, and can ultimately serve in the prime position to ensure that an individual possesses the requisite capacity mandated under the law. This standardized approach would serve as clear evidence that his or her client was within a lucid interval -- having adequate capacity -- at the time a document was executed. The attorney is then the party that both understands the legal ramifications and how those ramifications benefit the client. This will help to not only protect the rights of an AD patient's autonomy, but will ultimately help eliminate the inevitable flooding of the courts.

It is paramount to maintain objective standards when examining an AD patient's affairs, as opposed to the subjective standards that are currently employed, both in practice and throughout the judiciary. When particularly observing the influx of the baby boomers into the realm of Elder Law, this Comment's proposed certification process comes at the ideal time. Addressing these considerations, stricter procedures need to be enacted, and ideally, implemented and overseen by a governing legal association. This will ensure that an attorney for an AD client is able to execute a legally enforceable matter at that precise moment as a means to uphold the client's wishes as well as to protect against an almost certain rise in litigation that surrounds the future of this disease.

August 6, 2019 in Articles, Current Affairs, Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (1)

Aretha Franklin’s Sons Squabble Over Handwritten Will

ArethaThe discovery of handwritten wills in Aretha Franklin's home has left the control of the estate in question. Two of the singer's sons both argue they should be named the co-executors of the will, though a judge will determine the legitimacy of the documents found.

Theodore White II's attorneys told a Michigan judge last week in a court filing that he should be named co-executor, or personal representative, along with Franklin's niece, Sabrina Owens. He has been managing his mother's estate since she died. But a 2014 handwritten document shows her son Kecalf Franklin was also named a representative, and a 2010 document has the names of White and Owens crossed out, but they appear again in the handwritten will.

Michigan state law allows handwritten will to be valid, though that is not the case in other jurisdictions.

See Rachel Tesler, Aretha Franklin’s Sons Squabble Over Handwritten Will, Fox Business, August 6, 2019.

August 6, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Music, New Cases, Wills | Permalink | Comments (0)