Wills, Trusts & Estates Prof Blog

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

Friday, August 16, 2019

New Zealand Adopts Trust Arbitration in New Trusts Act 2019

NZNew Zealand joins the ranks of other trust-friendly jurisdictions by adopting trust arbitration clauses within their new Trusts Act of 2019. The country recently revised its Arbitration Act of 1996 in May of this year, and followed it up with extending it to trusts.

There are two provisions of the Act that bring about the most positive changes: Section 144 and Section 145. Section 144 deals with unborn or unascertained beneficiaries of a trust that is subject to ADR, and Section 145 allows a court to enforce an arbitration provision in a trust.

See here for more information.

Special thanks to Stacie I. Strong (Manley O. Hudson Professor of Law, University of Missouri) for bringing this article to my attention.

August 16, 2019 in Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Travel, Trusts | Permalink | Comments (0)

Wednesday, August 7, 2019

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)

Friday, July 26, 2019

Descendants of Last German Kaiser Fight to Reclaim Royal Property

CecilIt has been over a hundred years since the last German monarch, but the Prussian royal descendants have continued to battle the government for what they believe are royal assets and properties. The Hohenzollern family argues that the bulk of the properties and possessions under dispute were expropriated by Soviet authorities at the end of World War II. The list includes Cecilienhof, the spatial palace that hosted the 1945 Potsdam conference between the leaders of the US, Britain and the USSR that settled the postwar order in Germany, which the family states they should be allowed to reside rent-free.

Günther Winands, a senior chancellery official, said that a meeting between representatives of the family and government officials did not come to a settlement. “But our goal remains to find a mutually agreeable solution soon, so we can avoid long-running legal confrontations.” Markus Hennig, a lawyer for the Hohenzollerns, said the family does not want to remove artifacts that are housed in museums, but rather desires to untangle the legal status of the possessions.

The revelation that the Hohenzollern family is striving to reclaim their former possessions and homes has sparked political outrage among German citizens. Many of the objects and Cecilienhof have been preserved through tax payer money, and thus they believe should not be handed over to the royal family that was involved with the rise of World War I and Nazism.

See Tobias Buck, Descendants of Last German Kaiser Fight to Reclaim Royal Property, Financial Times, July 26, 2019.

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

July 26, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Travel | Permalink | Comments (0)

Monday, July 22, 2019

Note on Baby Got Back? Enforcing Guardianship in International Surrogacy Agreements When Tragedy Strikes

SurrogacyChelsea E. Caldwell recently published a Note entitled, Baby Got Back? Enforcing Guardianship in International Surrogacy Agreements When Tragedy Strikes, 49 U. Mem. L. Rev. 848-882 (2019). Provided below is an introduction to the Note.

R.H. and her husband M.H., Italian citizens, have tried for eight years to conceive a child - utilizing every avenue of fertility services available to them in Italy, to no avail. Her doctor advises R.H. that it is unlikely she will ever be able to carry a child of her own and that adoption is the only option in Italy for the couple to expand their family. Not ready to give up yet, R.H. contacts a surrogacy agency located in the United States. After timely consultations, the couple is matched with surrogate mother C.E., who lives in Chicago. R.H. and M.H. fly to Chicago several times to complete a cycle of In Vitro Fertilization ("IVF"), creating several viable embryos. To the couples' long-awaited success, surrogate mother C.E. becomes pregnant after the embryo transfer. Nine months go by swiftly and R.H. and M.H. board a flight to Chicago for the birth of their son, S. Unfortunately, their plane crashes, leaving no survivors. The couple indicated in their International Surrogacy Agreement ("ISA") with surrogate mother C.E. that R.H.'s sister in Italy would be the appointed guardian should something happen to them. However, that agreement was drafted and completed in the United States. Italy does not recognize such contracts and, in fact, forbids them. What happens to stateless baby S?

International parents, like R.H. and M.H., come to the United States from foreign destinations where surrogacy is illegal or against public policy in their country of origin; they contract with surrogates in the United States to carry out their pregnancies, fulfilling their dreams of parentage to have a child of their own. The surrogacy agreement, however, is often the easiest part in this situation - international intended parent(s) ("international intended parents") must circumvent their countries' laws not only to carry out the surrogacy agreement but also to successfully establish legal parentage and desired citizenship of the child in their country of origin once the child is born.

Within this delicate situation comes the need for intended parents to address estate planning, specifically considering the possibility of a tragedy befalling them while their child is in utero with a surrogate in the United States. Currently, there is a disconnect in the estate planning realm, even domestically between American intended parents and American surrogates; most patients rely on inadequate consent forms provided by fertility clinics. The legal issues are more complex when considering cross-border surrogacy arrangements and international intended parents who face restrictive and conflicting laws regarding surrogacy.

With rapid medical advances in the Assisted Reproductive Technology ("ART") field and progressive hesitancy in foreign countries toward surrogacy, complexities resulting from prevalent cross-border surrogacy arrangements are sure to only increase, which is this Note's broad focus. Part II of this Note provides a brief introduction to international surrogacy: tracing the history of surrogacy's prevalence beginning in the United States to its expansion across borders and how estate planning is significant in this area. Part III delves further into surrogacy in an international context, offering a comparative view of surrogacy laws in different countries and some resulting, notable but common examples of challenges international intended parents face to establish parentage and citizenship in their country of origin. Thereafter, Part IV circles back to the main issue of estate planning for guardianship purposes and analyzes possible protections and future outlooks on existing international conventions: the Washington Convention and the Hague Convention. Finally, Part V presents a proposed standard of international comity, and Part VI concludes. Taken together, this Note hopes to bring greater clarity to the doctrinal tensions one finds in the contemporary law of international surrogacy.

July 22, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Guardianship, Science, Technology, Travel | Permalink | Comments (0)

Tuesday, July 9, 2019

Indian Man, 20, Wakes Up at his own Funeral After Being Pronounced Dead by Doctors

HeartbeatMohammad Furqan, 20, was pronounced dead by Indian medical professionals last week, coincidentally after the man’s family told the hospital that was treating him that they no longer had the funds to pay for his care. The man had been unconscious since June 21 after being involved in an accident. But later at his funeral, mourners were shocked to see him move during his funeral prior to his burial.

His older brother Mohammad Irfan said that they "immediately took Furqan to the Ram Manohar Lohia hospital where the doctors said he was alive and have put him on ventilator support."

The city’s chief medical officer says that an investigation is underway into the country’s medical practices, as the man is "definitely not brain dead. He has pulse, blood pressure and his reflexes are working."

See Lukas Mikelionis, Indian Man, 20, Wakes Up at his own Funeral After Being Pronounced Dead by Doctors, Fox, July 3, 2019.

July 9, 2019 in Estate Planning - Generally, Science, Travel | Permalink | Comments (0)

Saturday, June 29, 2019

Canadian Trust Subject to US Tax

CanadaIf a trust that is created and operated in Canada suddenly has an American beneficiary due to them moving to the states, a practitioner should understand the requirements for the American side of reporting.

Not only should the trust distribution be filed on a form 1040, U.S. Individual Income Tax Return, but also the beneficiary must also file a form 3520, Annual Return To Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, as well as form 8938, Statement of Specified Foreign Financial Assets, which may have specialized valuation rules. The reporting requirements do not stop there. If the beneficiary receives as a distribution equal to more than 50% of the trust's income, they must file FinCEN form 114, Report of Foreign Bank and Financial Accounts.

There is also individual state income tax reporting to consider. Many states impose a state-level income tax on trusts, and the rules vary widely from state to state. New York only taxes trust income if the trust was created by a New Yorker or the trust makes its income from within the state. California, on the other hand, will attempt to tax any trust income that any resident of their state receives. To makes this even more complicated, a Canadian practitioner should also consider estate tax issues and whether the trust falls above the exemptions amount, both at the federal level and the individual state level (if applicable).

See Catherine B. Eberl, Canadian Trust Subject to US Tax, Canadian Tax Highlights, Volume 27, Number 6, June 2019.

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

June 29, 2019 in Articles, Current Affairs, Estate Administration, Estate Tax, Income Tax, Travel, Trusts | Permalink | Comments (0)

Monday, June 24, 2019

1968 Ford Mustang that was Parked Over 40 Years Sold with Previous Owner's Remains Inside

GtAfter James passed away, his best friend Bruce bought his 1968 Mustang from his family. They transported it from the Florida barn it had been stored in for decades to North Carolina. Bruce decided he did not have the time or means to fix it up, so he put it up for sale on Craigslist. That is where Zach Taylor, a car collector out of Georgia, spotted the car.

Zach bought the Mustang for $7,000, even after Bruce told him the mason jar of ash was James' cremated remains. He also decided the car was too much work and placed it for sale as well, this time selling it to a UK restoration company, Corner Classics, for $23,000.

The owner of the shop, Colin Budden, says that the jar containing the ashes of James was in the center console when it arrived. He is still comtemplating about what to do with it, may figure out a way to work the ashes into the chassis so that James will remain with the car forever after the job is done six months to a year from now.

See Gary Gastelu, 1968 Ford Mustang that was Parked Over 40 Years Sold with Previous Owner's Remains Inside, Fox News, June 13, 2019.

Special thanks to Jerry Cooper for bringing this article to my attention.

June 24, 2019 in Current Events, Estate Planning - Generally, Travel | Permalink | Comments (1)

Wednesday, June 19, 2019

Insight on Estate Planning: Do you know when an FBAR Must be Filed

IrsThe IRS has been stepping up enforcement of foreign account reporting requirements, and therefore knowing when and what to report is vital. Either if you have a financial interest in or signature authority over a foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year, you must file FinCEN Form 114, “Report of Foreign Bank and Financial Accounts” (FBAR).

What is a foreign financial account? It is any financial account that is located outside of the United States, regardless of the nationality of the financial institution. Meaning that if the account is maintained by an American bank but within a branch outside of the country, it is a foreign financial account.

Anytime you designate another person to act on your behalf or transfer interests in your foreign financial account to other people or entities, you may trigger additional FBAR reporting obligations. If you own or control foreign financial accounts, consult your estate planning advisor to discuss your FBAR and other reporting obligations and their potential impact on your estate plan

See Joseph Marion, III & David Riedel, Insight on Estate Planning - June/July 2019: Do you know when an FBAR Must be Filed, Page 5, June 13, 2019.

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

June 19, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Income Tax, Travel, Trusts, Wills | Permalink | Comments (0)

Thursday, May 30, 2019

Should You be Able to Disinherit Your Child?

EiffelIn most of America, the question is not whether you can disinherit your child, but whether you should. A parent has every right to decide to completely block their assets from transferring to a particular offspring. In France, that is not the case. Under French law, for an estate with three or more children - such is the case with Johnny Hallyday - at least 75% of the estate must be divided equally among the children. Hallyday took the American approach and named is widow as the sole heir of his estate, estimated in the tens of millions.

The children from Hallyday's previous marriage filed in France, and obviously want French law to prevail. So the question truly is: was Hallyday more French or American, so what was his domicile? He had a home in both countries and died in France. From his stage name to his musical choices, the lifestyle he portrayed was much more American, though he was known as the "French Elvis" and very few Americans knew of him. He married a French-born American as his second wife, and she claims that he had plans to become an American citizen when they moved to Los Angeles. When he died in 2017 from lung cancer, hundreds of thousands of mourners flooded the streets at his funeral.

Though the court has yet to answer the question of which country has jurisdiction, the case has brought forth many questions from French citizens. The idea of forced heirship is derived from the French Revolution, when the reformers wanted to break up the wealth of the aristocracy. Now, parents are curious if they are required to leave assets to children that "have given them nothing but misery."

See Pamela Druckerman, Should You be Able to Disinherit Your Child?, New York Times, May 28, 2019.

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

May 30, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Music, New Cases, Travel, Wills | Permalink | Comments (0)

Tuesday, April 16, 2019

Sperm Donor Tells Australian High Court He is the Legal Father to Lesbian Couple's Daughter

FamilylawRobert Masson, as he is known to Australia's High Court, claims that he is the legal father to a lesbian couple's young daughter. He states that one of the women, a friend of his for 25 years, approached him to donate sperm on the contingency that he would play an important role in the future child's life. He is listed as the biological father on the girl's birth certificate, and he insists that she refers to him as "daddy."

He did not assert his legal claim to the girl until the couple wanted to take her out of the country. Now there is a constitutional issue as the parties argue that state law and Commonwealth law have different perspectives, one stating that a sperm donor is a legal father while according to the other the sperm donor is not.

A judge presiding over the case asked Tuesday: “Is there not a difference between the university student who is a donor to a sperm bank for a few bob and the sperm donor who plays a role in the life of the child?” The result of this case is primed to be a landmark decision in the argument over what the legal requirements are to be a parent.

See Kaylie Piecuch, Sperm Donor Tells Australian High Court He is Legally Father to Lesbian Couple's Daughter, Fox News, April 16, 2019.

April 16, 2019 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Science, Travel | Permalink | Comments (0)