Wills, Trusts & Estates Prof Blog

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

Thursday, September 21, 2017

Est. of Sower v. Commissioner: IRS Allowed to Examine Predeceased Spouse’s Estate Tax Return

Baton_passingIn Estate of Minnie Lynn Sower v. Commissioner, Husband predeceased Wife in 2012 with a deceased spousal unused exclusion (DSUE). Husband’s estate elected portability for the DSUE. When Wife passed away in 2013, her estate claimed the husband’s DSUE. The IRS examined Husband’s estate tax return as part of an investigation into Wife’s estate tax return and found a deficiency in Wife’s estate based on the return submitted by Husband’s estate. Wife’s estate argued that the IRS could not examine Husband’s estate tax return due to the statute of limitations and because the letter accepting Husband’s estate tax return represented a closing agreement between the parties. 

The Tax Court ultimately held that the statute of limitations did not bar the IRS from examining a deceased spouse’s estate tax return to determine the deceased spousal unused exclusion (DSUE), and that the letter accepting Husband’s estate tax return did not signify a closing agreement.

See Est. of Sower v. Commissioner: IRS Allowed to Examine Predeceased Spouse’s Estate Tax Return, Wealth Strategies Journal, September 12, 2017.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

September 21, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

CLE on The Probate Process From Start to Finish

0000000 CLEThe National Business Institute is holding a conference entitled, The Probate Process From Start to Finish, which will take place Tuesday, September 19, 2017, at the Holiday Inn Louisville East-Hurstbourne in Louisville, KY. Provided below is a description of the event:

Program Description

Handling Probate from Initial Notices Through the Estate Closing

This "a through z" guide to probate is designed to take you from the first days of the estate timeline through all the steps of marshaling and valuing estate assets, locating and paying the creditors, paying the beneficiaries, and laying the estate to rest. You will receive the latest updates on the probate court procedure and tax laws, practical guidance from experienced probate attorneys on using spousal elective share and resolving estate disputes, and sample forms and checklists to speed up the administration process. Build a solid foundation for your probate practice - register today!

  • Learn the procedure, rules and practical steps to effectively administer a probate.
  • Determine what form of administration is appropriate for a specific probate case.
  • Clarify the order of inheritance for an estate when there is no will.
  • Locate assets and obtain ownership documents more easily with a list of local and online resources.
  • Get a complete view of the sequence of events that must happen before the estate can be closed.
  • Identify common actions that trigger malpractice liability and get tips for staying in the clear.
  • Get practical advice for honoring or contesting all claims against the estate.
  • Find new ways to resolve liquidity issues that delay estate closing and final distributions and payments.
  • Learn what common closing mistakes can allow the estate to be re-opened, and how to avoid them.

Who Should Attend

This basic level seminar is designed for professionals who want to be more effective in handling the probate process, including:

  • Attorneys
  • Paralegals
  • CPAs and Accountants
  • Financial Planners and Wealth Managers
  • Tax Planning Specialists
  • Trust Officers
  • Tax Preparers

Course Content

  1. Initial Filing in Probate Court and Estate Timeline
  2. Law of Intestate Succession
  3. Inventory and Appraisement
  4. Probate Property vs. Non-Probate Assets
  5. Handling Claims Against the Estate
  6. Tax Reporting and Post-Mortem Tax Matters
  7. Sale of Property and Distributions
  8. Final Accounting and Closing the Estate
  9. Probate Disputes and Litigation
  10. Ethics

Continuing Education Credit

Continuing Legal Education – CLE: 6.75 *

Financial Planners – Financial Planners: 8.00

International Association for Continuing Education Training – IACET: 0.70

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

Professional Achievement in Continuing Education – PACE: 8.00 *

* denotes specialty credits

September 21, 2017 in Conferences & CLE, Estate Planning - Generally, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

San Francisco Trial Weighs Breach-of-Trust Claim by McClatchy Family Member

McclatchyCarlos McClatchy, son of James B. McClatchy, is filing suit against the McClatchy Company alleging that trustees and the company’s former chairman mishandled trust assets when they purchased Knight Ridder, another newspaper company, for $4.4 billion. Carlos McClatchy, a beneficiary of the trust, is arguing that the purchase led to a decline in McClatchy’s common stock value, which in turn led to a cessation of dividend payments. John Poulos, an attorney representing  the McClatchy Company, retorted that Carlos’s argument overlooks the fact that “that there was this thing called a financial crisis” occurring at the time and “other newspaper companies were suspending dividends.”

See Mark Glover, San Francisco Trial Weighs Breach-of-Trust Claim by McClatchy Family Member, The Sacramento Bee, September 13, 2017.

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

September 21, 2017 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Wednesday, September 20, 2017

Article on Relaxed Formalism: The Validation of Flawed Wills

ElementsDoron Menashe Sr. recently posted an Article entitled, Relaxed Formalism: The Validation of Flawed Wills, Wills, Trusts, & Estate Law eJournal. Provided below is an abstract of the Article:

Section 25 of the Succession Law, 19651 authorizes the courts to validate flawed wills if certain “fundamental elements” of the will are present and the court has no doubt that the will “represents the true and free wishes of the testator.” This Paper attempts to explore the meaning and implications of the statutory burden of proof set by Section 25. The section was amended in such a manner as to end case law disputes, arising over the years, regarding the character of flaws which may be overcome through the use of this burden. Such flaws had been known as “dynamic elements,” as opposed to flaws which are so constitutive as to preclude the use of Section 25. 

In Part II, I briefly present background regarding the conceptual and normative framework in which probate law functions. In Part III, I discuss Section 25’s role within the Succession Law and in the general framework of inheritance law; I will also examine the interpretation of Section 25 in the Supreme Court case law. According to this interpretation, judicial examination must determine beyond any doubt that the will, though flawed, expresses the free and true wishes of the testator. I criticize the approach taken by the Supreme Court. Its interpretation, even if practicable, seems to lay an unbearable burden on the party wishing to validate the will, and is at odds with the objective of the Succession Law in general and of Section 25 in particular: realization, to the extent possible, of the testator’s wishes. In Part IV, I delineate a general theory of the “wishes” protected by and based in the Succession Law. In Part V I use this theory to develop a model for the analysis of the burden of proof set by Section 25. I do this using disutility equations based on classic considerations in decision-making under conditions of uncertainty; my conclusion is that the burden of proof currently imposed by courts on a beneficiary seeking to validate a flawed will is considerably stricter than it should ideally be.

Finally, I summarize, and touch on “heretical” doubts as to whether the realization of the testator’s wishes can indeed be established as the logical base of inheritance law.

Special thanks to Robert H. Sitkoff (John L. Gray Professor of Law, Harvard Law School) for bringing this article to my attention.

September 20, 2017 in Articles, Current Events, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

The Foreign Asset Protection Trust Failures Continue in Solow

Protecting-your-moneyMr. and Mrs. Solow shuffled nearly $6.5 million into a Cook Island Trust by mortgaging their homes. This fortuitous transfer happened to occur before the SEC filed suit against Mr. Solow alleging that he had participated in a fraudulent trading scheme. Mr. Solow, being a somewhat clever man and facing $5.2 million in damages, begged the court’s mercy under the impossibility defense as he, a paper-pauper, could clearly not pay the debt. Unmoved, the court noted: “where assets are held in an offshore trust, the ‘burden of proving impossibility as a defense to contempt will be especially high.’” Continuing, the court also held that Mr. Solow’s defense claiming he could not pay the debt was not available “where the inability was created by the defendant.”

See Hale Stewart, The Foreign Asset Protection Trust Failures Continue in Solow, Hale Stewart’s Law Blog, September 13, 2017.

September 20, 2017 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Book on The End of Alzheimer's: The First Program to Prevent and Reverse Cognitive Decline

BookDale Bredesen recently published a book entitled, The End of Alzheimer's: The First Program to Prevent and Reverse Cognitive Decline (2017). Provided below is a summary of the book:

A groundbreaking plan to prevent and reverse Alzheimer’s Disease that fundamentally changes how we understand cognitive decline.
 
Everyone knows someone who has survived cancer, but until now no one knows anyone who has survived Alzheimer's Disease.  
 
In this paradigm shifting book, Dale Bredesen, MD, offers real hope to anyone looking to prevent and even reverse Alzheimer's Disease and cognitive decline.  Revealing that AD is not one condition, as it is currently treated, but three, The End of Alzheimer’s outlines 36 metabolic factors (micronutrients, hormone levels, sleep) that can trigger "downsizing" in the brain. The protocol shows us how to rebalance these factors using lifestyle modifications like taking B12, eliminating gluten, or improving oral hygiene. 
 
The results are impressive. Of the first ten patients on the protocol, nine displayed significant improvement with 3-6 months; since then the protocol has yielded similar results with hundreds more. Now, The End of Alzheimer’s brings new hope to a broad audience of patients, caregivers, physicians, and treatment centers with a fascinating look inside the science and a complete step-by-step plan that fundamentally changes how we treat and even think about AD.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

 

September 20, 2017 in Books, Disability Planning - Health Care, Estate Planning - Generally | Permalink | Comments (0)

Tipping the Scales: Part II—How Anna Nicole Smith’s Billionaire In‑Laws Secretly Lobbied the Courts

AnnaJ. Howard Marshall II was a Texas oil billionaire perhaps most famous for his short marriage to Playboy model Anna Nicole Smith. When Marshall’s heirs found themselves in a $75 million dispute with the IRS over taxes, they gained an unlikely ally in Barber-Scotia College. The college was founded after the Civil War and was the first institution of higher learning established for black women. Once a beacon of hope, the school is currently weighted down with debt, has difficulty paying staff, and has been stripped of accreditation. Curiously, the name of the school appears on an amicus curiae brief supporting the Marshall family’s position along with four other historically black colleges. While the school denies any involvement, the brief appears to be part of a sinister campaign by the Marshall family to influence two of this nation’s highest courts.

See Zachary R. Mider, Tipping the Scales: Part II—How Anna Nicole Smith’s Billionaire In‑Laws Secretly Lobbied the Courts, Bloomberg, September 13, 2017.

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

September 20, 2017 in Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Tuesday, September 19, 2017

Window Cleaner Bequeathed £300,000 by Customer Faces Jail for Failing to Hand Money Back To Her Family

CrapsAlbert Pearce was left a small fortune, nearly £300,000, when 98-year-old Julie Spalding changed her will. After her death, her nephew, Cecil Bray, challenged the will and was successful in getting a court to order Pearce to return the money. Pearce initially claimed that he lost the money through extensive travel and gambling. He has also said the entire amount was confiscated when his car was impounded by High Court bailiffs, as he had hidden the money in the boot. The case has been adjourned until October to give Pearce time to seek legal counsel.  

See Martin Evans, Window Cleaner Bequeathed £300,000 by Customer Faces Jail for Failing to Hand Money Back To Her Family, The Telegraph, August30, 2017.

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

September 19, 2017 in Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Article on Borrowing in the Shadow of Death: Another Look at Probate Lending

Payday-loan-storeDavid Horton recently posted an Article entitled, Borrowing in the Shadow of Death: Another Look at Probate Lending, Wills, Trusts, & Estate Law eJournal. Provided below is an abstract of the Article:

“Fringe” lending has long been controversial. Three decades ago, demand for subprime credit soared, and businesses started to offer high-interest rate cash advances, such as tax refund anticipation loans, payday loans, and pension loans. These products have sparked intense debate and are subject to a maze of rules. However, in Probate Lending, 126 YALE L.J. 102 (2016), a co-author and I examined a form of fringe lending that has gone largely unnoticed: firms that pay lump sums in return for an heir or beneficiary’s interest in a pending decedent’s estate. Capitalizing on a California law that requires companies to file these contracts in probate court, we analyzed seventy-seven loans that stemmed from deaths in 2007. In this companion Article, I report the results of a study of an additional twenty-two months of probate records. My research provides hard evidence about the multi-million dollar inheritance-buying industry, including the prevalence of loans, characteristics of borrowers, how often lenders are repaid, and annual interest rates. I then use this data to compare probate lending to other species of fringe lending and to outline how courts and lawmakers should regulate the practice.

Special thanks to Robert H. Sitkoff (John L. Gray Professor of Law, Harvard Law School) for bringing this article to my attention.

September 19, 2017 in Articles, Estate Administration, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

GOP Plan to Kill Estate Tax Sets up Charitable Giving Conflict

TaxMost Republican lawmakers seem to favor a repeal of the estate tax as part of overall tax reform. What many have failed to consider are the negative repercussions for charitable giving if the repeal is successful. When the estate tax was temporarily repealed in 2010, gross charitable bequests dropped over 37% from the previous year.   William Gale, co-director of the Urban-Brookings Tax Policy Center, noted that, “Charitable contributions are highly concentrated among very wealthy households. It [the estate tax] encourages people to give during life as well.” This may be true, but many view the estate tax as being inherently unfair. While the tax affects a small minority, the idea of severely taxing assets that have already been heavily taxed does not seem equitable. Jim Jordan, a representative from Ohio, echoes this sentiment: “I want to preserve charitable contributions, but I definitely want to get rid of the estate tax. It’s peoples’ money. It’s their families’ money. It’s not the government’s money.”

See Sahil Kapur, GOP Plan to Kill Estate Tax Sets up Charitable Giving Conflict, Bloomberg, August 25, 2017.

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

September 19, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)