Wednesday, September 24, 2014

Putting a Price on Priceless Art for Your Estate Plan

This week’s Wall Street Journal covers a topic all of us have probably worried about 
sometime or other: how to account for a $10 million Rembrandt in our estate plan. Fortunately, there are steps to take to ensure that our wishes are met and our tax burden is minimized. First off, one must be careful not to sidestep the law. If beneficiaries simply walk into a decedent’s home and pull artwork off the wall before an estate clears probate, they can be held criminally liable.

Another item to bear in mind is that one must account for the value of artwork when designating beneficiaries. For example, if half of your $20 million estate is that $10 million Rembrandt, and you choose to leave it to Susie and the rest of your estate to Charley, Charley may get stuck with a tax hit for the painting. In a case like this, the will should specify that each party must pay his or her share of the estate tax.

For a more in-depth treatment on the matter, you can consult the article here.

Wednesday, September 10, 2014

A New Estate Tax Proposal to Address Wealth Inequality

          Bernie Sanders, an independent senator from Vermont, has published a new opinion piece in the Huffington Post addressing the need for increased estate taxes for the wealthiest Americans. Sanders believes that new estate tax laws are needed to reduce income inequality in the United States, and he cites a number of statistics to support his cause, such as the fact that the top one percent owns about 37 percent of our nation’s total wealth, while the bottom 60 percent owns only 1.7 percent. In addition to wealth disparity, Sanders points out that income gains have unevenly benefited the already affluent, with 95 percent of all gains going to the top 1 percent since 2008.

Greater estate taxes on the rich, Sanders argues, would not only reduce wealth inequality, but lower the national debt and raise money for investments in infrastructure and education. His proposal includes a tax rate of 40 percent for estates worth over 3.5 million, 50 percent for estates worth more than $10 million and less than $50 million, and 55 percent for estates worth more than $50 million. Additionally, there would be a billionaire’s surtax of 10 percent, which would be applicable to the less than 500 American families whose combined wealth totals over $2 trillion. The first $3.5 million of an individual’s estate would be exempt from taxes, meaning that 99.7 percent of Americans would not have to pay an estate tax. 

Thursday, July 24, 2014

Access to Digital Assets After Death Is About to Get Easier

Digital assets can be a thorny issue for estate planning. Probate law has not kept up with technology, and often fails to resolve who is able to access digital assets such as email accounts. This digital conundrum may be on the verge of a solution.

The Uniform Law Commission recently approved a Uniform Fiduciary Access to Digital Assets Act. As the name implies, the act would allow fiduciaries such as estate executors and trustees to have access to digital assets belong to the persons they represent. The Uniform Act solves the problem of who can access digital assets by using the concept of "media neutrality."

Media neutrality works by analogizing digital assets to tangible ones. If a fiduciary would have access to a tangible asset, that fiduciary will also have access to a similar type of digital asset.

The Act has received a positive response from some corners, but other observers have concerns. For instance, Gerry Beyer at the Wills Trusts and Estates Prof Blog worries that media neutrality may override the deceased's wishes and make private information public.

The Act would make digital assets accessible to fiduciaries by default. But it would also allow account holders to affirmatively maintain their privacy. It defers to an account holder's privacy choices as expressed in a document (such as a will or trust), or online by an affirmative act separate from the general terms-of-service agreement.

Whether the Act would simplify estate planning in the digital age or create more headaches remains to be seen. Because the Act is only a model code, no one knows for sure how media neutrality will play out, and we won't find out until a state adopts the Act into law.

Tuesday, June 3, 2014

Florida Court Considers Whether Human Remains Are Estate Property

Juan Antúnez of the Florida Probate & Trust Litigation Blog reports on an odd case out of Florida. A father wants his deceased son's ashes declared property and divided between him and the deceased's mother along with the rest of the deceased's estate.

Twenty-three-year-old Scott Wilson died in 2010. His divorced parents agreed to cremate his remains, but have yet to agree on what to do with the ashes. Deadlocked in court, Wilson's father suggested a compromise to the court: split the ashes between him and Wilson's mother so that each could choose where to bury part of Wilson's remain. To make the compromise work, Wilson's father argued that the ashes were property includable in Wilson's estate and subject to partition between Wilson's father and mother.

The court rejected the property argument. The issue was one of first impression for the court, and the judge turned to English common law for an answer, quoting from Blackstone for the proposition that human remains are beyond the reach of property law. 

The facts of this particularly case may be odd, but disputes over the remains of a deceased family member are not uncommon. According to Antúnez, the real problem in the Wilson case is the lack of any "mechanism under Florida law for resolving the kind of burial dispute represented by this case." 

For an answer, Antúnez points to the article Uniform Acts-Can the Dead Hand Control the Dead Body? The Case for a Uniform Bodily Remains Law. This article "provides a detailed, well-researched and thoughtful proposed statute from beginning to end."

Uniform Acts-Can the Dead Hand Control the Dead Body? The Case for a Uniform Bodily Remains Law, written by Western New England University School of Law student Tracie Kester, won the 2006 William J. Pierce Award from the National Conference of Commissioners on Uniform State Laws.

Tuesday, May 20, 2014

Delaware Bill Seeks to Resolve Issue of Access to Digital Assets after Death

Delaware Public Media reports that the Delaware General Assembly is considering a new bill that would give estate executors access to the deceased's digital accounts. The bill, introduced by Rep. Darryl Scott (D-Dover), would require Internet companies to surrender control of a user's accounts to persons named in the user's will. The companies would have 30 days to grant access after receiving an executor's request, or they would face civil penalties.
The bill would prevent digital assets from being lost by Internet providers deactivating accounts after a user's death and against the user's wishes.

In response to privacy concerns, Rep. Scott emphasized that the proposed bill has built in safeguards. "People can designate assets that they don’t want to be included as part of their estate,” Scott said. So if you don't want people to read your email after you die, you can exclude the account from your estate.

If approved, the Delaware bill will be the first comprehensive law of its kind. Seven other states grant different levels of access.

Tuesday, May 6, 2014

Crowdfunders Pass on Estate-Planning Game

In April the ABA Journal reported on a lawyer seeking crowdfunding for an estate-planning game. The lawyer behind the game is Stephanie Kimbro, an estate-planning practitioner and pioneer in law practice technology. The game is Estate Quest, a mystery/time-travel adventure where players take on the role of a detective who investigates the cases of people who died without estate plans. By traveling into the decedents' past, players uncover clues about what should have been included in the missing estate plans.

Kimbro sought crowdfunding throught According to her blog, Virtual Law Practice, Kimbro went the crowdfunding route because she wanted to "make this a game that’s free for the public to play and learn about some basic estate planning concepts. I’m also doing this to learn about how the crowdfund process might be used for other legal services related projects."

What Kimbro may have learned about crowdfunding is that the crowd isn't interested in educational legal games. The funding period for Estate Quest ended on May 1, and the project received $2,110, well short of the $20,000 that Kimbro requested.

Tuesday, April 22, 2014

The State of Elder Law Scholarship: SSRN Articles

Here is a sampling of recent articles on elder law and related topics. All of these articles were posted on SSRN within the last month, so they represent the latest in elder law scholarship.

  • Memento Mori: Death and Wills by Karen J. Sneddon
    Death. The mere mention of the word sends shivers down the spine or provokes a nervous giggle. Modern reactions to death range from avoidance, as shown by the abundance of death euphemisms, to fascination, as shown by the number of movies and television shows centered on death, including Twilight's vampires and The Walking Dead's zombies. Estate planning is the legal environment in which a person confronts his or her mortality and participates in the formulation of his or her legacy. Contextualizing the experience as a memento mori experience promotes the function of the estate planning process, specifically the drafting of the Will. The Will is the document that nominates the representative of the testator and the guardians of the testator's minor children. The Will gives cherished mementos of a life lived. "Remember you must die" prompts reflection and contemplation.

  • Health Care Spending and Financial Security after the Affordable Care Act by Allison K. Hoffman
    Health insurance has fallen notoriously short of protecting Americans from financial insecurity caused by health care spending. The Patient Protection and Affordable Care Act (“ACA”) attempted to ameliorate this shortcoming by regulating health insurance. The ACA offers a new policy vision of how health insurance will (and perhaps should) serve to promote financial security in the face of health care spending. Yet, the ACA’s policy vision applies differently among insured, based on the type of insurance they have, resulting in inconsistent types and levels of financial protection among Americans.

    To examine this picture of inconsistent financial protection, this Article offers a taxonomy to describe ways in which health insurance regulation can promote financial security. It then uses this taxonomy to map the effect the ACA will have on the financial security of various insured populations. Specifically, it analyzes how much a person in poor health might spend out of pocket on health care in three scenarios: a person with average coverage through an individual-market health insurance exchange, a worker with employer-sponsored insurance, and a retiree with Medicare and a supplemental insurance plan. This analysis reveals two effects. First, the ACA alleviates financial risk from health care spending to some degree in all three scenarios. But, secondly, the ACA preserves (and may even exacerbate) variability in the degree and type of financial risk remaining across the three scenarios. In effect, the ACA asserts and affirms different visions of the role of health insurance in promoting financial security for different people. This inconsistency leaves some insured especially vulnerable to spending and creates complexity that may impede insured from comprehending these points of vulnerability.

  • Contemporary Trusts and Estates - An Experiential Approach by Jerome Borison, Naomi Cahn, Susan N. Gary, & Paula A. Monopoli
    In this essay in a special issue dedicated to teaching trusts and estates, the co-authors of Contemporary Trusts & Estates: An Experiential Approach (2d. ed. Aspen 2014) reflect on how the teaching of trusts and estates can integrate policy, practice, doctrine, and centuries of tradition. They describe the genesis of their problem-based casebook and the influence of the Carnegie Report on their choice of pedagogic framework. Each of the co-authors embraced the fundamental principles advocated by the Carnegie Report, which counsels that legal education should integrate "theoretical and practical legal knowledge and professional identity." This essay goes on to outline how the book incorporates a problem-based methodology as well as an innovative choice of ordering the chapters that tracks the chronological path of estate planning, addressing the lifetime use of trusts first, followed by issues of will validity and interpretation. Drafting exercises complement the problems as well as traditional cases that illuminate theory and practice. With chapters on planning for disability, the federal estate and gift tax, estate administration and charitable trusts as well as basic doctrine on intestacy, wills and trusts, the book reflects the contemporary challenges addressed by trusts and estates lawyers. The co-authors have found that the book’s innovative approach engages students in a way that makes the study of trusts and estates relevant and students practice-aware.

  • Viable Solutions to the Digital Estate Planning Dilemma by Jamie Patrick Hopkins & Ilya A. Lipin
    Countless people are dying without proper digital estate plans in place, leaving billions of dollars of assets unaccounted for in the digital world. This is occurring in part because individuals are often unaware that traditional estate planning tools and techniques, such as wills, are ill-equipped to handle the unique challenges of digital estate planning. As a result, the majority of Americans are vastly unprepared for their digital afterlife, unintentionally foregoing digital estate planning altogether and leaving their assets trapped in a digital purgatory.

    With the ongoing growth in our reliance on technology, interaction via social media, digitization of individual’s property, and further advancement of new Internet technologies, the amount and value of our digital assets are growing exponentially. In response to this immediate need for digital estate planning and management of digital assets, some businesses began to offer their users the ability to plan for the disposition of their digital assets upon their death. However, due to the novelty of this area of law, the business solutions currently afforded often leave more questions than answers about what happens to the individual’s digital assets, raise concerns about privacy and security, and augment disputes over their overall effectiveness in the estate plan. This Essay examines the importance and increasing prevalence of digital assets, discusses the challenges facing traditional estate planning in the growing world of digital assets, and suggests a workable strategy for the creation of a well-developed and manageable digital estate plan.

  • Who Said Learning Trusts & Estates Can't Be Fun? by Gerry W. Beyer
    From even before their first day of law school, Texas Tech University School of Law students have the opportunity to appreciate the importance of the estate planning area and to understand that it can be both an enjoyable and rewarding area of law in which to practice. During orientation, which takes place the week before classes start, new students participate in full-day programs centered on a particular area of practice either of their own choosing or assigned by the administration. For the 2013 entering class, I was in charge of two full-day Estate Planning Tracks with a total of approximately thirty-five entering students.

    As their legal education continues, students have additional exposure, some mandatory and some optional, to estate planning topics. In my first year required Property course, I spend several days reviewing the basic principles of intestate succession and wills. Texas Tech then requires all students to complete a four-credit introductory course entitled Wills and Trusts as a condition of graduation during their second or third year. Students desiring a more sophisticated treatment may take courses such as Estate Planning, Texas Estate Administration, Guardianship, Estate and Gift Tax, Elder Law, and Marital Property. Students may also compete for a coveted position as an editor for the Estate Planning and Community Property Law Journal that Texas Tech publishes.

    This Article reveals my basic teaching philosophy and the general pedagogical techniques I employ to make Trusts and Estates topics both fun and relevant. I will then share with you the specific tools I use when teaching the introductory course as well as the advanced courses such as Estate Planning and Texas Estate Administration. It is my hope that you may be able to gain insight from my approach to enhance your own teaching and the experience you provide to your students.

  • Older Persons and Compromised Decisional Capacity: The Role of Public Policy in Defining and Developing Core Professional Competencies by Marshall B. Kapp
    Issues frequently arise concerning the cognitive and emotional ability of older individuals to make certain legally significant decisions. In confronting these issues, the professional involvement of both attorneys and physicians (and other health care professionals), acting both individually and collaboratively, is desirable. This article describes the possible contributions of public policy in developing, through fostering innovations in medical and legal education, core competencies for physicians and attorneys that are essential to improving interprofessional collaboration on behalf of older individuals suspected of being compromised in their ability to make certain significant decisions. Additionally, ideas are suggested to address certain aspects of the current policy environment that may inhibit attorneys and physicians from optimal interprofessional interaction in this sphere.