Wills, Trusts & Estates Prof Blog

Article on Estate Planning for Mary Jane and Other Marijuana Users

Gerry W. Beyer and Brooke Dacus recently published an Article entitled, Estate Planning for Mary Jane and Other Marijuana Users, Probate and Property Magazine, Vol. 33 No. 2, March/April 2019. Provided below is the introduction of the Article.

An estate planner is more likely to encounter a client who regularly uses marijuana than a client who needs estate and gift tax planning, given that 55 million Americans are current users. Christopher Ingram, How Many Americans Regularly Use Pot: The Number Is, errr, Higher Than You Think, Wash. Post, April 20, 2018. At least 32 states and the District of Columbia currently exempt qualified users of medicinal marijuana from penalties imposed under state law. Additionally, ten states, Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington, and the District of Columbia authorize purely recreational use. See Legal Recreational Marijuana States and DC, ProCon.org (last visited Nov. 11, 2018). Accordingly, practitioners need to be aware of the interface between marijuana and estate planning.

This article provides a discussion of the major issues that arise in this context including: (1) impact of marijuana use on capacity; (2) interpretation of clauses conditioning benefits on the non-use of illegal drugs; (3) life insurance issues; and (4) marijuana-based assets in a decedent's estate or trust.

2 Ways to Combine Charitable Giving and Life Insurance

Financial planning can be an ongoing process as life can be ever-changing. Sometimes having a life insurance policy can be the sole manner in which to preserve household wealth, while other times in can be more efficient to combine it with charitable giving.

If you no longer need a particular life insurance policy, you can simply give it away. You may donate it outright to a certain charity, or used a Donor Advised Fund (DAF). By changing the ownership, you can be done with it and may even be able to take a charitable income tax deduction for the value of the policy at the time of the gift. But there may be an issue of ongoing premiums, which would also shift to the charity. You can either continue to pay the premiums for the charity either to the charity itself or to the insurance company, or “you could convert the policy to a reduced and paid-up policy and donate it with no ongoing premiums needed," according to Dana Holt, CEO of HOLT Consulting.

You may also give a new life insurance policy to a charity, but the charity must have an insurable interest in the donor (you). If this is hard to manage, you could also name the charity as a beneficiary of the policy, either as a partial or full beneficiary, or to a trust that establishes the charity as the trust beneficiary to maintain more control over the funds.

See Jamie Hopkins, 2 Ways to Combine Charitable Giving and Life Insurance, Forbes, March 6, 2019.

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

Article on Intervention to Prevent Abuse of Trust Structures [New Zealand]

Nicola Peart published an Article entitled, Intervention to Prevent Abuse of Trust Structures, Wills, Trusts, & Estates Law eJournal (2010). Provided below is an abstract of the Article.

Trusts are very common in New Zealand, but they are increasingly detrimentally affecting the rights of creditors and spouses or partners when their relationship ends. This article examines the current statutory and common law remedies available to creditors and spouses or partners whose rights are defeated by trusts.It concludes that the existing law does not adequately protect such persons. The article considers options for reform and recommends that Parliament review the balance between socio-economic imperatives and the protection provided by the general principles of trust law.

High Court Should Affirm Kaestner State Trust Tax Case

North Carolina’s Supreme Court held that the state cannot tax the income of a trust created and administered outside of North Carolina, even though the trust’s beneficiaries reside in North Carolina in Kimberly Rice Kaestner 1992 Family Trust v. North Carolina Department of Revenue. Now, the nation's higher court has agreed to hear the case.

The lower court founded its decision on two premises: that a trust is a separate entity from the beneficiaries - much like a corporation, and that the trust such as the one in the case lacked the required minimum contacts constitutionally required to be subject to taxation by the state. South Dakota v. Wayfair may have modified the minimum contacts requirement under the Commerce Clause, the due process analysis from Quill Corp. v. North Dakota remained the same. Because the state supreme court applied the proper analysis, the Supreme Court of the United States should affirm the decision.

“Purposeful availment” for minimum contact purposes pertains to the trust’s governance and the administration of its assets, not to trust communications with beneficiaries. Just because the beneficiaries reside in North Carolina does not give the state enough contact with the trust to tax the trust itself.

See Edward Zelinsky, High Court Should Affirm Kaestner State Trust Tax Case, Tax 360, March 5, 2019.

Article on Family Protection in the Law of Succession: The Policy Puzzle

Richard Storrow recently published an Article entitled, Family Protection in the Law of Succession: The Policy Puzzle, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

To promote the protection of families, succession law diminishes the power of testation in a variety of ways that shield surviving spouses and children from disinheritance. The article conducts a survey of the law in fifty states, five main territories, and the District of Columbia and uncovers a remarkable diversity of family-protection provisions. Less apparent than the substance of the provisions themselves are the policies behind them. In a comprehensive study, this article concludes that family-protection provisions seek to prevent decedents from using their testamentary freedom in ways that impoverish those who are dependent upon them or that work unfairness against family members who have contributed in important ways to the accumulation of their wealth. In addition to these concerns is a notable ambivalence about the extent to which family protection statutes should undercut the expectations of those who have been promised a share of a decedent’s estate.

Putting Fido in the Will Not Just for Super-Rich

It is becoming more commonplace for people to consider their pets as part of their family, and as such more people are also including their dog, cat, or other furry loved on in their estate plans. And it is not just the wealthy, though those are the ones that garner the most attention and media. 

“Setting up trusts for pets, or putting their care in the will, is becoming more popular as people become more aware that it is possible,” says Jason Smolen, an estate attorney at SmolenPlevy in Vienna, Virginia. There are a few states that have enacted laws, such as Virginia and Maryland, that dictate how pet trusts are to be set up. With such a trust, the owner can outline how he or she would like the pet taken care of, how often it should be groomed, how the pet trust money should be spent, and any other special needs the pet might have, Smolen said.

Pet trusts can be set up for the lifespan of the animal, or in the case of longer-living pets such as parrots, some states cap them at 21 years. Owners should meet with the designated caretaker and trustees, and update their will whenever they unfortunately lose a pet or possibly gain one. Without a will or trust, pets in most states are treated like property, Smolen explained.

For more information, see here.

See Karen DeMasters, Putting Fido in the Will Not Just for Super-Rich, Financial Advisor, March 14, 2019.

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

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

A Dying Man, a Typo and the Bitter Dispute Pitting 2 Nashville Religious Institutions Against 3 Children

4 non-profits, two of which are Nashville institutions, are fighting against three young children, claiming that they are the righting beneficiaries to land that has belonged in the family for more than 200 years. The acres were deeded to a Blackburn ancestor by President Andrew Jackson, prior to the War of 1812. But the lack of two words in a will of a Blackburn that passed away in 2014 has caused the organizations to believe that they deserve hundreds of acres now worth millions of dollars.

When Barry Blackburn, Sr., died at the age of 48 in 2014, his will left all of the land to his son Christopher in a lifetime trust, and then would pass to Christopher's children. If his son predeceased him, the land would go to his sister's three young children, aged 3, 8, and 13. If there were no surviving beneficiaries, the land would be divided equally among the Nashville Christian School, Harpeth Presbyterian Church (which was founded by Gideon Blackburn in 1811), the University of Mississippi law school and Boykin Spaniel Rescue. Christopher died a year after his father without begetting any children.

A Mississippi judged determined that the missing words, "or dies," amounted to a scrivener's error, and that the testator's intent had been to leave the land in the family. Evidence from Blackburn's assistants were introduced, including notes of conversations among them that showed his intent was for the charities to receive the land as a "last resort." The assistants claimed responsibility for the clerical error.

See Anita Wadhwani, A Dying Man, a Typo and the Bitter Dispute Pitting 2 Nashville Religious Institutions Against 3 Children, Tennessean, March 14, 2019.

Special thanks to Turney Berry (Wyatt, Tarrant, & Combs, LLP, Louisville, Kentucky) for bringing this article to my attention.

Article on Transgender Beneficiaries: In Becoming Who You Are, Do You Lose the Benefits Attached to Who You Were?

Ashleigh Rousseau recently published an Article entitled, Transgender Beneficiaries: In Becoming Who You Are, Do You Lose the Benefits Attached to Who You Were?, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

Suppose William Smith, father of Joseph Smith, executes a will to leave his estate to his children. In his will, the phrase “to my son, Joseph” is used, preceding a bequest for the property. Before William dies, Joseph embraces his transgender identity, obtains a lawful name change to Julia, obtains a lawful gender marker change, and undergoes sex confirmation surgery. William dies, and his estate is divided. Is Julia still entitled to Joseph’s portion of William’s estate? In embracing her transgender identity, is she deprived of her right to inherit?

What To Do When You Hate Your Son-In-Law: A Practical Lesson In Estate Planning

Will contests are avoided as much as possible because no family wants their dirty laundry aired out in public to become tinder for the gossip mills. So what do you do if you thoroughly despise the spouse of one of your children and must disinherit your child to insure that the hated individual gets nothing?

There is no law saying you must like the chosen spouse of your offspring, but it is presumed that you like your child enough to usually include them in your estate. As a "natural object of your bounty," disinheriting a child should be taking extremely seriously. It is important to consider alternatives such as trusts so that the child can still inherit without the dreaded spouse being unjustly enriched during the marriage or in the case of a divorce. A testator may also simply skip the child and allow the next generation, the grandchildren, to inherit in the place of their parents. 

You may not like their choice of spouse, but it was not your decision to marry them. A last will is not the forum to try to teach your child a lesson or to show them your ultimate disapproval. As a parent, you are inclined to protect them. A will or trust that shows them that though you may not agree with them, but you still love them, will resonate for many years to come.

See Cori A. Robinson, What To Do When You Hate Your Son-In-Law: A Practical Lesson In Estate Planning, Above the Law, March 12, 2019.

Special thanks to Carissa Peterson (Hrbacek Law Firm, Sugar Land, Texas) for bringing this article to my attention.

Steve Bing's Father Says Granddaughter Will Inherit NOTHING

20-year-old Kira Kerkorian Bing was raised believing she was the daughter of casino tycoon Kirk Kerkorian (who had been married to her mother, Lisa Bonder, for 28 days in 1999), even receiving $8.5 million from her alleged father's estate in 2016. However, a DNA test that same year revealed that she was the daughter of film producer Steve Bing, who is the son of multi-millionaire Peter Bing. Now, the sorority girl from UCLA is claiming that she is a beneficiary of a trust set up for Peter Bing's "future grandchildren."

The trust, however, defines grandchildren that would benefit from the trust very specifically, according to the trustee in court documents filed in Los Angeles.. They cannot be adopted at a later age, and if born out of wedlock, they must either live with their parent or spend significant time with them as a child. Because Kira did neither, the older Bing says that she is not entitled to be named as a trust beneficiary. The trust is requesting the court to confirm that Kira is not a trust beneficiary as well as blocking her from obtaining trust related information. 

The same would apply to the 16-year-old son of Steve Bing and actress Elizabeth Hurley. Damian Hurley neither lived with his father nor has yet to meet him. He denied that the boy was his son until a DNA test confirmed that he was, indeed, the father.

See Cheyenne Roundtree, Millionaire Steve Bing's Father says Granddaughter who Claimed to be Casino Tycoon Kirk Kerkorian Love Child Will Inherit NOTHING Because She was Born Out of Wedlock - and Neither Will Elizabeth Hurley's Son 'Who Steve Never Met,' Daily Mail, March 6, 2019.

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