Wills, Trusts & Estates Prof Blog

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

Wednesday, May 15, 2024

What Attorneys Need to Know About Handling Pet Care in Wills

PetsIn recent years, pets have become integral members of countless families, prompting many pet owners to include their beloved companions in their estate planning. However, navigating the complexities of pet trusts within wills can pose challenges for both attorneys and pet owners alike. 

One of the primary obstacles in addressing pet trusts within wills is the lack of proper oversight and implementation. Many wills lack clear instructions, leading to disputes and confusion among designated caregivers. To mitigate these issues, attorneys must draft pet trusts with precise instructions and establish clear responsibilities for caregivers. By doing so, they can ensure that the welfare of pets remains a top priority even after the owner's passing.

The notorious case of Leona Helmsley’s pet trust serves as a cautionary tale, highlighting the potential complications that can arise without proper planning. Helmsley left $12 million in a trust to her dog but excluded two of her grandchildren. The court decided to take $6 million from the pup’s trust and give it to the disinherited grandchildren. To avoid similar situations, attorneys must include contingency plans and designate alternative caregivers in pet trusts. By anticipating potential challenges and providing clear instructions, attorneys can safeguard the well-being of pets and minimize conflicts among beneficiaries.

The case of Nancy Sauer sheds light on the difficulties in handling pet care in wills, particularly when resource constraints come into play. Sauer left $2.5 million to her seven Persian cats to ensure they were kept together. However, after difficulty in completing this request, the cats ended up in the humane society. To address these concerns, attorneys should ensure adequate funding is provided in pet trusts to cover the pets’ lifetime expenses. Additionally, establishing mechanisms for regular oversight and consulting with pet care administration professionals can help navigate the complexities effectively.

For pet owners seeking to include their furry friends in their estate plans, there are several options to consider, including pet trusts, testamentary gifts, and planning for incapacity. By taking proactive steps to address their pets’ future care, pet owners can ensure a lasting legacy and peace of mind.

Recognizing the growing demand for pet-centric estate planning, pet care administration companies have emerged to provide specialized services in this niche area. These companies offer a wide range of services, including caregiver evaluation, sourcing pet caregivers, and overseeing pet trusts, making it easier for attorneys and pet owners to navigate the complexities of estate planning involving pets.

Incorporating pets into estate planning requires careful consideration and strategic planning to ensure their future well-being. By addressing key issues, learning from cautionary tales, and seeking assistance from pet care administration companies, attorneys and pet owners can navigate the complexities of pet trusts with confidence, safeguarding the welfare of their beloved companions for years to come.

For more information see Robert Greene What Attorneys Need to Know About Handling Pet Care in Wills”, American Bar Association Probate & Property, May 8, 2024.

May 15, 2024 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Tuesday, May 14, 2024

Uniform Laws Update - Conflict of Laws in Trusts and Estates

Estate-planning-967badd135bb43889abcea181ddaf72cThe Uniform Laws Update in Probate & Property highlights the evolving landscape of estate planning, which has shifted from primarily local to encompassing multiple jurisdictions due to increased mobility, changing wealth structures, and evolving state laws. With families relocating frequently and wealth being more fluid, estate plans often need to consider laws from various states. Moreover, the emergence of trust-friendly legislation in certain states has led to the strategic selection of trust jurisdictions, adding complexity to the choice of governing laws. Consequently, conflicts of laws have become more common, as litigators seek favorable forums for resolving disputes involving trusts with connections to multiple states.

Section 107 of the Uniform Trust Code delineates guidelines for resolving conflicts within trust matters, emphasizing that the determination of a trust's terms relies on the law of the designated jurisdiction, unless contrary to a strong public policy of the jurisdiction most relevant to the matter or in the absence of such designation, the law of the jurisdiction with the most significant relationship to the issue prevails. However, phrases like "strong public policy" remain ambiguous, leaving courts to interpret these terms. Meanwhile, the Restatement (Second) of Conflict of Laws offers more defined rules, though its antiquated framework fails to address modern complexities, such as the rise of trusts governed by laws from distant jurisdictions. This complexity extends beyond trusts to the realm of wills and probate procedures, prompting initiatives like the drafting of the Restatement (Third) of Conflict of Laws by the American Law Institute (ALI) and the Uniform Law Commission's (ULC) creation of a new uniform act on conflict of laws in trusts and estates. Collaboration between ALI and ULC aims to synchronize efforts and ensure coherence in legal outcomes, which is crucial given the significant assets held in trusts and the extensive time estate planners invest in navigating jurisdictional laws.

David Lieberman, a partner at Levin Schreder & Cary in Chicago, serves as the ABA Advisor for the project, facilitating communication between the drafting committee and American Bar Association (ABA) members. The drafting committee prioritizes respecting donors' autonomy in selecting governing laws while endeavoring to simplify conflict laws by minimizing distinctions between types of property and trusts and streamlining the application of laws in construction and interpretation matters. Nonetheless, the complexity of the subject necessitates thorough deliberation, with both ALI and ULC welcoming stakeholder input as they strive to produce comprehensive and impactful legal frameworks that address the intricacies of today's legal landscape effectively.

For more information see Benjamin Orzeske “Uniform Laws Update - Conflict of Laws in Trusts and Estates”, American Bar Association Probate & Property, May/June 2024.

May 14, 2024 in Estate Planning - Generally, New Legislation, Trusts, Weblogs | Permalink | Comments (0)

Thursday, May 2, 2024

Article: Trustees Competing Over Indemnity Rights

Matthew Conaglen (The University of Sydney - Faculty of Law), recently published, Trustees Competing Over Indemnity Rights, 2024. Provided below is an Abstract:

This article considers how, if at all, trustees’ indemnity rights compete with one another. Each trustee has its own right to indemnity, but each trustee’s indemnity is a single right to indemnification; not a series of separate rights generated by each legitimate transaction. The indemnity is a right for the trustee to be reimbursed or exonerated out of the trust assets before the beneficiaries can lay claim to those assets. Where more than one trustee claims indemnification, and there are insufficient assets to cover all such claims, it is suggested that a rateable sharing approach is preferable.

May 2, 2024 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Wednesday, May 1, 2024

Article: Enforcement

Kelvin F.K. Low (National University of Singapore (NUS) - Faculty of Law) recently published, Enforcement, 2024. Provided below is an Abstract:

The importance of enforcement to a trust is an inadequately examined issue: must beneficiary enforcement be realistic or does notional enforceability suffice? If a settlor entrusts property to a trustee and no beneficiary is realistically able to enforce it, does he create a trust? This variation of the famous philosophical thought experiment regarding observation and perception is unfortunately far from theoretical as modern trusts, perhaps epitomised by the massively discretionary trust, set up numerous obstacles to enforcement. First, there are informational barriers to enforcement: if no beneficiaries are aware of their beneficial interests, can enforcement follow? Secondly, modern trusts increasingly employ exemption clauses, ouster clauses and even no contest clauses to deter beneficiaries from challenging trustee decisions. How far can trust law accommodate settlor autonomy before it endangers the institution itself by rendering enforcement notional yet impractical? Furthermore, many jurisdictions have either introduced or are contemplating introducing non-charitable purpose trusts that do away with beneficiaries altogether. Alternative enforcement mechanisms are proposed in place of beneficiaries. But are these enforcement mechanisms realistic substitutes or do they again only cast a mirage of accountability?

May 1, 2024 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, March 29, 2024

Article: Revival Trusts

Victoria J. Haneman (Creighton University School of Law) recently published, Revival Trusts, 2024. Provided below is an Abstract:

It is estimated that 1,500 Americans have made arrangements to have their remains cryogenically frozen at time of death, and 400 people have actually been frozen. Cryonics is the practice of preserving human remains at temperatures below -120 degrees Celsius after pronouncement of legal death. The technology does not yet exist to reanimate the deanimated, but futurists believe that science will soon be able to restore the deceased to healthy living condition. It would be unfortunate for the reanimated to be alive but poor, and to that end, a revival trust or cryonic suspension trust is an estate planning tool utilized by those who have decided to have their remains cryogenically frozen. The purpose of these trusts is to ensure that the newly revived deceased will have sufficient financial resources whether they are revived decades or centuries from now. Reanimation would lead to any number of tax and estate planning difficulties given that the Internal Revenue Service has yet to take a position on whether a reanimated taxpayer would be classified as a new taxpayer or as his, her, or their former self. This Article considers the myriad of legal and tax issues involved with these trusts, the public policy ramifications of permitting these trusts, and planning tactics in the face of uncertainty.

March 29, 2024 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, March 11, 2024

Article: The Numerus Clausus as a Meta-principle of Trusts Law: Hiding in Plain Sight?

Luca Clover Alcolea (University of Otago) recently published, The Numerus Clausus as a Meta-principle of Trusts Law: Hiding in Plain Sight?, Trust Law International, Forthcoming. Provided below is an Abstract:

The doctrine of the numerus clausus holds that there is a closed list of forms of property recognised by the common law, new forms of property can generally only be created by legislatures, and new forms of existing property rights will be recognised only if they meet certain conditions. To date, there has been little explicit academic discussion of the doctrine's potential application to trusts but it is suggested that the courts have long applied it, either implicitly or explicitly, in a particularly clear way in two areas. The first is the law regarding prohibitions of restraints of alienation, and the second is that concerning general powers, which are now usually held to be tantamount to property. Both areas bear the imprint of the numerus clausus doctrine in restricting the ability of settlors to tailor the property rights they purport to create under a trust in ways that both harm the coherency of the law and harm the interests of third parties. However, if this is so what in the trust context forms part of the closed list of property forms? After analysing the writings of foundational proprietarian jurists, as well as the jurisprudence of the courts, it is suggested that both legal ownership and beneficial ownership form part of the closed list. Lastly, it is submitted that the numerus clausus is a hidden meta-principle of trust law which prevents the corruption of equitable principles and failing to appreciate this risks leading to serious missteps in the law.

March 11, 2024 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Wednesday, December 13, 2023

The Oxford Handbook of Comparative Trust Laws: The Conference

On April 5th to 7th, 2024 in Vancouver, Canada at the Peter A. Allard School of Law, this

"Conference will bring together most of the world's leading trust law academics to discuss key topics in the current law of trusts. It is one stage in the process of producing the forthcoming Oxford Handbook of Comparative Trust Laws, edited by Richard Nolan (York Law School, UK), Lusina Ho (Hong Kong University), Mark Bennett (Victoria University of Wellington, New Zealand) and Adam Hofri-Winogradow (Allard Law, UBC), and under contract with Oxford University Press. Each presentation will focus on a doctrinal, practical or theoretical topic, as dealt with under the laws of more than 30 countries around the world.

By attending the Conference, you're investing in a unique opportunity to broaden your legal horizons, gain insights that span the globe, and connect with trailblazers in the field. Whether you're seeking to enhance your professional acumen, deepen your academic understanding, or stay ahead in a dynamic legal landscape, this conference promises to deliver transformative insights. The conference is sponsored by STEP Canada. Everyone is welcome!

Follow this link to register.

December 13, 2023 in Conferences & CLE, Trusts | Permalink | Comments (0)

Tuesday, November 14, 2023

I’ve Hidden My Trust Fund for 15 Years. Do I Finally Tell My Spouse?

TrustA 44-year-old man writes to the NYT Ethicist because he has been keeping a secret from his spouse: a trust fund.

He has been married for ten years and together for 15, and he has a trust fund providing a monthly income of $25,000. Despite repeatedly assuring his dedicated doctor spouse that they don't need to work, the man has never disclosed the trust fund. The dilemma revolves around whether to reveal this financial truth, as family members advise against disclosure, but the burden of the secret is becoming challenging.

The columnist suggests that, although the first date may not have been ideal, the man should have disclosed his trust fund once the relationship became serious. 

Keeping such secrets can be burdensome over time. The recommendation is to reveal the truth quickly, as delaying any longer may complicate matters further. Anticipated challenges include the spouse questioning what else has been hidden and reflecting on the deception facilitated by apparent disinterest in daily activities. Seeking couples counseling is advised, acknowledging that trust is fundamental to a healthy relationship.

For more information see Kwame Anthony Appiah “I’ve hidden my Trust for 15 years. Do I finally tell my Spouse?”, The New York Times, August 11, 2023.

Special thanks to Naomi Cahn (University of Virginia) for bringing this article to my attention.

November 14, 2023 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Monday, November 13, 2023

What the Wealthy Can Do to Prepare for the Expiration of Today’s High Estate Tax Exemption

Estate planningEstate planners are advising wealthy individuals to utilize the current high lifetime gift and estate tax exemption of $12.92 million before it potentially decreases to around $7 million by the end of 2025. To do so, individuals are urged to employ sophisticated strategies despite the apprehension that comes with transferring a significant amount of wealth to another person's ownership or control. This includes considering spousal lifetime access trusts (SLATs). 

SLATs are irrevocable trusts where an individual sets up a trust for their spouse as the primary beneficiary, with children or grandchildren as beneficiaries after the spouse's passing. This allows the individual to remove assets from their estate while retaining a potential avenue to access the assets in the future through the spouse. SLATs must be funded with assets owned solely by the individual, and they help shield both the assets and future growth from estate taxes. However, challenges arise in the case of divorce, as SLATs are irrevocable, and the trust continues for the benefit of the ex-spouse, with the original creator still responsible for taxes on trust income.

For more information see Karen Hube “What the Wealthy Can Do to Prepare for the Expiration of Today’s High Estate Tax Exemption”, Barrons PENTA, November 7, 2023.

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

November 13, 2023 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

CLE: QTIP Trusts Holding Interests in LLCs and Partnerships (Danger Zone)

Seymore Goldberg provided information for an upcoming CLE: QTIP Trusts Holding Interests in LLCs and Partnerships (Danger Zone) on Thursday, November 16th. Please find more information below:

Many taxpayers may own partial interests in LLCs or partnerships.  Should such interests be the subject of a bequest to a QTIP trust? The instructor recently made a Revenue Ruling request to the IRS regarding this significant QTIP trust tax issue.  This request covered in part the following:

    • Systemic significant fiduciary income tax compliance issues for trustee may be triggered by such transactions under the trust accounting rules in New York State and eight other jurisdictions.  Who would want to be a trustee?
    • IRS rules for trust fiduciary income tax returns (Form 1041), QTIP marital deductions and the jurisdiction’s trust accounting rules. 
    • What if the jurisdiction’s [over 35] trust accounting rules go one way and the IRS rules go the other way?  QTIP/conflict of laws issue.
    • QTIP marital deduction at risk or not in over 35 jurisdictions.

Additional key topics include:

    • Waiver of IRS penalty rules under Secure 
    • Excise tax rules that apply for first distribution calendar year
    • Major IRS statute of limitation changes under Secure 2.0 Act of 2022
    • Major IRS penalty changes under Secure 2.0 Act of 2022
    • Estate planning and professional liability court case (privity issue)
    • Professional liability court case (privity issue)
    • IRA beneficiary malpractice court case
    • Actual and potential malpractice issues regarding retirement distribution advice.  Giving wrong advice or failure to give timely advice (includes systemic issues) in privity and non privity jurisdictions.
    • Systemic major non-compliance issues involving IRA trusts and Roth IRAs that you must be made aware of. Consequences of non-compliance can be severe for many.

November 13, 2023 in Conferences & CLE, Estate Planning - Generally, Trusts | Permalink | Comments (0)