Wills, Trusts & Estates Prof Blog

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

Friday, March 22, 2019

Article on Milking the Estate

MilkDavid R. Hague recently published an Article entitled, Milking the Estate, 121 West Virginia Law Review 83-134 (2018). Provided below is an abstract of the Article.

Recent Chapter 7 bankruptcy cases are exposing a widespread problem. Chapter 7 trustees are retaining their own law firms to represent them and then-in clear breach of their fiduciary duties to creditors-requesting illegitimate legal fees to be paid by the estate. This practice is immoral and particularly harmful to creditors. Indeed, every dollar paid to the trustee and his firm is a dollar that will not be distributed to creditors. The Bankruptcy Code, remarkably, allows a trustee to retain his own law firm to represent him in his capacity as a trustee. But this inherently conflicted arrangement is not a license for the trustee and his firm to milk the estate for all it is worth. While courts have recognized the dangers attendant to the trustee's retention of himself to serve as his own paid employee, they are routinely allowing it and only requiring the trustee to make one opaque showing: that the selection of the trustee's own law firm is in the "best interest of the estate."

This approach is significantly flawed. In nearly all cases, the trustee is able to satisfy the nebulous "best-interest" standard and secure employment of his law firm. However, the impropriety of such arrangement does not manifest itself until months or years later, when the trustee and his firm have already milked the estate. Instead of dealing with this issue when the damage to the estate .has already been done-or in some cases ignoring it-courts need to adopt protective measures, and this Article outlines several. Abusive fee tactics in bankruptcy will never disappear, but implementing the safeguards discussed herein will curtail the milking (and the bilking).

March 22, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Thursday, March 21, 2019

Article on Online Tools under RUFADAA: The Next Evolution in Estate Planning or a Flash in the Pan?

ToolsJustin H. Brown and Ross E. Bruch recently published an Article entitled, Online Tools under RUFADAA: The Next Evolution in Estate Planning or a Flash in the Pan?, Probate and Property Magazine, Vol. 33 No. 2, March/April 2019. Provided below is an introduction to the Article.

Over the past five years, the estate planning process for digital assets has dramatically transformed. Much of this transformation is the result of the United Law Commission's introduction of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in September 2015, which a majority of US states and territories have adopted with some variations. RUFADAA, like its predecessor, UFADAA, was drafted with the intent to unify and clarify states laws with respect to a fiduciary's ability to access an individual's digital assets and electronic communications. However, unlike UFADAA, which presumed a decedent's consent for the decedent's personal representative to access her digital assets, RUFADAA places the burden on the decedent to provide express consent through the decedent's will or another mechanism. Under RUFADAA, an individual may use an "online tool," which is an account-specific feature that an online custodian (e.g., Apple, Google, Yahoo) may offer that enable its users to provide directions for disclosure or nondisclosure of digital assets to a designated person. Online tools are account-specific - in other words, using Google's online tool will not dictate how information held in the decedent's Apple account should be shared. Any assets that are not addressed with an online tool are subject to the terms of a testator's estate planning documents. When digital assets are not addressed by an online tool or an estate planning document, a providers terms of service agreement will dictate access and disclosure of a decedent's digital assets and electronic information.

March 21, 2019 in Articles, Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Technology, Wills | Permalink | Comments (0)

Wednesday, March 20, 2019

Article on Estate Planning for Mary Jane and Other Marijuana Users

WeedGerry 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.

March 20, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Trusts, Wills | Permalink | Comments (0)

Monday, March 18, 2019

Baby Boomers More Prepared For Dying Than Living

RetirementAccording to a recent report from the Bankers Life Center for a Secure Retirement, baby boomers have become ready for death but have missed preparing for the years before it. The survey questioned 1,500 baby boomers (between the ages of 54 and 72) with incomes between $30,000 and $100,000, and the answers were surprising.

Only 18% had placed a high priority on receiving long-term healthcare or residing in a nursing home during their retirement, even though a much higher number of individuals said they expected to receive such care (45%). However, the Department of Health and Human Services said this number is still too low, predicting that a person that turns 65 this year will have a 70% of needing long-term care in their lifetime. Many people are placing their priorities in the after life, as 81% of those surveyed had made at least one formal preparation for what will happen when they die.

It is hard to determine if it is false confidence or denial when faced with these numbers: 79% of the boomers surveyed admitted that they had not set aside any money for long-term care yet 74% felt confident in their ability to manage their household’s health-care needs as they age.

See Christopher Robbins, Baby Boomers More Prepared For Dying Than Living, Financial Advisor, March 15, 2019.

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

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

March 18, 2019 in Current Affairs, Current Events, Disability Planning - Health Care, Estate Planning - Generally, Wills | Permalink | Comments (0)

Saturday, March 16, 2019

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

PuzzleRichard 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.

March 16, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, New Legislation, Trusts, Wills | Permalink | Comments (0)

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. 

Pets“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.

March 16, 2019 in Books, Books - For Practitioners, Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Thursday, March 14, 2019

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

Error4 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.

March 14, 2019 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Religion, Trusts, Wills | Permalink | Comments (1)

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

TransAshleigh 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?

March 14, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Wednesday, March 13, 2019

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

Son-in-lawWill 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.

March 13, 2019 in Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, March 11, 2019

How U.S. Tax Rules Apply to Inheritances and Gifts from Abroad

GiftAs Americans become more global within this modern society, they are asking estate planners questions about properties outside of the country's borders. One of the popular questions is whether an inheritance or gift from abroad will be taxed if brought into the United States. Usually, bequests are not subject to the income tax, and transfers by gift of property not situated in the U.S. from foreign nationals not domiciled in America are not subject to U.S. gift taxes. But depending on the circumstances, certain laws may still apply.

Foreign nationals who are green card holders are generally considered domiciled in the United States and as such are defined as lawful permanent residents. Residents and citizens are covered by one aspect of the estate and gift tax laws, and national without a green card may be considered domiciled for tax purposes. Transfers by foreign nationals not domiciled in the United States are covered by a different estate tax structure that imposes taxes on transfers of certain property situated in the United States.

If the decedent who bequeaths the asset is neither a U.S. citizen nor a foreign national domiciled in the United States, no U.S. estate tax is imposed on the transfer. There is also no tax resulting from the death transfer upon the beneficiary's receipt of a bequest. The United States also does not impose an income tax on inheritances brought into the country.

The United States has gift tax treaties which may eliminate the U.S. gift tax on certain transfers that are otherwise subject to gift taxes under the Code. An exemption from gift tax under a treaty is made on a gift tax return.

See How U.S. Tax Rules Apply to Inheritances and Gifts from Abroad, Find Law.com.

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

March 11, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Travel, Wills | Permalink | Comments (0)