Category Archives: Trusts & Estates
Nov 2, 2020 Sarah WaldeckTrusts & Estates
Victoria J. Haneman,
Funeral Poverty, __
Univ. of Richmond L. Rev. __ (forthcoming 2021), available at
SSRN.
Twenty years into teaching Estates, Victoria J. Haneman’s Funeral Poverty has made me reconsider my syllabus. Neither I, nor the textbook I use, discuss the death care industry, which includes funeral homes, pre-need sales, crematories, cemeteries, and third-party vendors of goods. Funeral Poverty convinced me that in a course where almost all content is death-related, we need to cover death services.
Professor Haneman writes that in 2019, the median cost of laying a loved one to rest was $9,000—a number that is “particularly stark” when 4 out of 10 Americans report they would have difficulty meeting an unexpected $400 expense. (P. 1.) For the average consumer, death services will be the third largest category of expenses over the course of a lifetime, behind only houses and automobiles. Moreover, “death care in the United States is an area of conspicuous consumption on which lower income families spend far more than high income families. . . . In 2014, the top 1 percent spent significantly less in absolute dollars than everyone else, the middle class fell in line with national averages, and the poor spent a 26% greater share of total expenditures than the national average.” (P. 32.) Continue reading "Teaching Our Students to Counsel Against Funeral Poverty"
Oct 2, 2020 David HortonTrusts & Estates
Shelly Kreiczer-Levy,
Big Data and the Modern Family, 2019
Wisc. L. Rev. 349 (2019), available at
SSRN.
In Big Data and the Modern Family, Shelly Kreiczer-Levy kicks the tires on a provocative idea: using big data to “personalize” the rules of intestate succession. Recently, scholars have suggested that the same miraculous technology that permits big retailers to predict their customers’ purchasing needs to customize the law. For example, in the first extended treatment of the topic, Ariel Porat and Lior Strahilevitz suggest that the government can exploit big data to abandon the conventional one-size-fits-all approach to default rules and instead tailor background principles to individual preferences. Porat and Strahilevitz’s marquee example is intestacy. They note that empirical studies reveal that married fathers are more likely than married mothers to leave their entire estate to their spouse. Thus, they argue that an intestate system that varied with the decedent’s gender would be more likely to carry out his or her intent. But why stop there? Porat and Strahilevitz claim that intestacy statutes could also vary based on the decedent’s job, wealth, health, length of marriage, and age of children. In fact, using an algorithm, a probate court could “determine how an intestate’s estate should be allocated based on an analysis of his consumer behavior during his lifetime.”
Enter Kreiczer-Levy. Her thoughtful article begins by arguing that the rules of intestate succession are outdated. Indeed, as she explains, these principles “are notorious for privileging the nuclear family, to the exclusion of modern forms of associations and relationships.” In turn, Kreiczer-Levy observes that this makes personalized intestacy intriguing. In sharp contrast to the bright lines and rigid barriers of current law, a bespoke regime could effectuate an intestate decedent’s wish to leave assets to a lover, a best friend, or a young person who was treated like a full-blooded child but never adopted. Continue reading "Personalized Intestacy?"
Sep 2, 2020 Michael YuTrusts & Estates
Timothy M. Todd,
Phantom Income and Domestic Support Obligations, 67
Buff. L. Rev. 365 (2019), available at
SSRN.
Professor Todd’s article addresses an issue at the intersection of divorce/family law, federal income tax law, and, even, trusts and estates law. For me, the article highlights that the ideal situation for spouses in a divorce (if, among other things, money were no object) is for each of them to have their own divorce/family law attorney, tax attorney, and estate planning attorney. That, or have Professor Todd on call.
The issue addressed in the article is how “phantom income” should be treated by courts in determining a domestic support obligation (whether child support or spousal support or a modification to either one, hereinafter “DSO”). “Phantom income” is “amounts that are includible as [gross] income under the federal tax code but that have not resulted in any actual current cash receipt.” (P. 386.) Individuals obligated to make DSO payments “have argued that phantom income should not be included when calculating such obligations because the individual’s ability to pay has not materially changed.” (P. 386.) Because those individuals never received any current cash receipt, they contend that the court should not increase a DSO based on any phantom income. Continue reading "Towards the Consistent and Equitable Treatment of Phantom Income in Determining Domestic Support Obligations"
Jul 14, 2020 Alexander Boni-SaenzTrusts & Estates
Andrew Gilden,
The Social Afterlife, 33
Harv. J. L. & Tech. 229 (2020), available at
SSRN.
The COVID-19 crisis has compelled many of us to move our lives (further) online, creating new social interactions and communities, as well as a larger digital footprint. The pandemic has also forced us to confront the risks and realities of mortality for ourselves and our loved ones. This highlights an important question: What will happen to our digital legacy after death? Legacy has both economic and noneconomic aspects, and inheritance law has primarily focused on the former. The latter, however, has risen to prominence with the growth of intellectual property rights and social media, both of which often have a stronger cultural or emotional legacy component. The law as it stands is thus ill-suited to deal with the noneconomic aspects of legacy. In The Social Afterlife, Professor Andrew Gilden tackles this problem with skill and nuance, and his sensible solution is to embrace contextual testation, in which control of each asset is allocated based on the unique socioeconomic context in which it arose. In the process, he provides the reader with an indispensable theoretical roadmap for understanding who might control our legacies.
The Article starts by describing four potential models of legacy stewardship. The first is the traditional model of freedom of disposition, in which the decedent controls who gets what. The decedent possesses the best information about their own social life, but such deference also risks too much dead hand control. The second model is family inheritance, in which control flows to the decedent’s family members. These individuals may also have special knowledge about the decedent, but are also tempted to exclude other relevant stakeholders in the decedent’s legacy, as many celebrity estates have. Empowering family members also hazards their exposure to harmful aspects of a decedent’s life hiding in cyberspace. Does a grieving widow want to know about her husband’s AshleyMadison.com account, on which he may have been pursuing affairs with younger women? Continue reading "Legacy Control"
Jun 23, 2020 Kent D. SchenkelTrusts & Estates
Allison Anna Tait,
The Law of High-Wealth Exceptionalism, 71
Ala. L. Rev. __ (2019), available at
SSRN.
In April of 2019 lawyers representing the “Kimberley Rice Kaestner 1992 Family Trust” argued a case against the North Carolina Department of Revenue before the Supreme Court of the United States. A few months later the Court unanimously ruled in favor of the trust in that case. The Court’s decision was a major victory for wealthy families; not so much for ordinary folks who pay state income taxes. You may not have heard of the Kaestner case. No news about it appeared in the New York Times. Ever. But you can and should read Allison Anna Tait’s insightful article, The Law of High-Wealth Exceptionalism. It’s about the Kaestner case. Well, it’s not really about the Kaestner case; actually Tait doesn’t even mention it. But her article is, at least in part, about the category of cases that the Kaestner case belongs to and it is about the state of affairs that brought about the case, and many others like it, and so much more.
In her article, Tait gives us a panoramic perspective—a bird’s eye view—of what she calls “the law of high-wealth exceptionalism.” The law of high-wealth exceptionalism is not any particular law, but rather a collection of favorable laws that, functionally, apply only to high-wealth families. Because, in theory, while anyone could take advantage of a scheme like that which the Kaestner family’s lawyers concocted to externalize the cost of governmental goods and services provided to Kimberley Kaestner by the State of North Carolina, in practice you really need to have a lot of wealth to do so. And as Tait points out, wealthy families “benefit not only from their material resources but also from the fact that most of the population is not familiar with the vast network of laws that govern family wealth and may even be disinterested in [legal] events that are of core concern to the family oligarchs.” Continue reading "The Rich (Families) Are Different"
May 25, 2020 Phyllis C. TaiteTrusts & Estates
Jason Oh & Eric Zolt,
Wealth Tax Design: Lessons from Estate Tax Avoidance, available at
SSRN.
Wealth tax, sometimes confused with estate tax, does not currently exist in the United States but has been proposed by a few political candidates. A wealth tax, if implemented, would be imposed on the wealthiest households based on all property owned including personal property, business interests and capital property with unrealized appreciation. This tax would be an annual tax, unlike the estate tax which is imposed once on the transfer of a taxpayer’s assets at death. Proponents offer the wealth tax as another source of revenue and weapon against wealth inequality. Opponents claim a wealth tax would inhibit economic growth and job creation. Professors Jason Oh and Eric Zolt address the subject of imposing a wealth tax and explore the ways in which estate tax planning strategies may inform how to structure a wealth tax.
First, Professors Oh and Zolt explore the ways in which charitable contributions–and ultimately charitable deductions–reduce the estate tax liability and could erode a wealth tax base. They explain how, over a representative five-year period, charitable testamentary contribution amounts were ten times greater than the amount of lifetime giving by taxpayers with net estates valued between $50 to $100 million. For taxpayers with net estates valued over $100 million, they contributed 20 times more funds in testamentary charitable contributions than lifetime contributions. These scholars posit a wealth tax would likely cause donors to shift from testamentary charitable bequests to lifetime charitable contributions to avoid or significantly reduce wealth tax liability. Continue reading "Can the Wealth Tax Effectively Serve as a Backstop to Estate and Gift Taxes?"
Apr 27, 2020 Solangel MaldonadoTrusts & Estates
Jane B. Baron,
Fixed Intentions: Wills, Living Wills, and End-of-Life Decision Making, 87
Tenn. L. Rev. __ (forthcoming, 2020), available at
SSRN.
For years, I have tried to understand why my father refuses to execute a will or an advance directive, even though my sisters and I have asked him to please “make plans for the future.” As a not-so-subtle nudge, I have told him stories of siblings torn apart by disagreements over health care decisions when a parent is incompetent and disagreements over property distribution after a parent’s death—family feuds that might have been prevented by an advance directive or a will, respectively. After reading Jane Baron’s article, Fixed Intentions: Wills, Living Wills, and End-of-Life Decision Making, I have a clearer understanding of the reasons that might underlie my father’s reluctance.
In the article, Baron challenges estates law’s fundamental assumptions that: (1) all or most individuals have intentions with regard to the disposition of their property at death, (2) these intentions are fixed, and (3) these intentions should be recorded in a written document. Drawing on studies of end-of-life health care decision making that explain why efforts to increase the use of advance directives have failed, Baron concludes that similar reasons may apply in the property distribution context. Specifically, she argues, if some individuals do not care to make decisions about their medical treatment should they become incompetent, it is likely that some individuals similarly do not care to make decisions about disposition of their property after death. Continue reading "End-of-Life Health Care Decision Making: Lessons for Wills, Trusts and Estates Law"
Mar 31, 2020 Gerry W. BeyerTrusts & Estates
Thomas E. Simmons, A Trust for Ted’s Head, 88 Miss. L. J. 20 (2019).
Over the past twenty years, a new type of bodily disposition for the deceased has come into vogue. It called cryonics: where the decedent’s body (hereinafter called the “frozen person”) is preserved at low temperature for an indefinite period until medical technology has hopefully advanced enough to revive the frozen person and give him or her renewed life. The chances of revival are estimated to be extremely slim. Nonetheless, there are approximately 250 people currently in cryonic preservation and about a thousand people who have arrangements for cryonic preservation upon their deaths. Four companies currently provide cryonic preservation, and these future frozen people must enter into contracts with these companies to preserve their bodies for an indefinite period of time (well beyond our lifetimes) and to attempt revival when medical technology has sufficiently evolved. But there are serious problems with these contracts.
After explaining the fascinating facts surrounding how the famous baseball player Ted Williams’ head was placed into cryonic suspension, Professor Thomas Simmons points out that breach of a cryonics contract is likely (i.e., mishandling the body, incorrect preservation procedures, mismanagement of the cryonics company, early defrosting, etc.) and that enforcement is problematic. Who would enforce it? The frozen person’s surviving family members (or their descendants)? The frozen person’s estate? Imagine if the cryonics company preserving the body went bankrupt hundreds of years later. Also, Professor Simmons points out that timing is extremely sensitive after death for someone who wants to be cryonically preserved. He explains that a directive in a will for moving the body into cryonic preservation could take many days or even longer to be followed while the body needs to be preserved as quickly as possible. Considering these issues, Professor Simmons proposes that a person planning to be preserved establish a non-charitable purpose trust (a “cryo-trust”) which would be a party to the cryonic contract, have standing to sue on behalf of the frozen person, have financial resources to monitor and enforce the contract, determine when medical technology has advanced sufficiently to attempt resuscitation, possess title to the body, and finally provide financial assistance to the formerly frozen person if resuscitation proves successful. Continue reading "A Cold Head Is Not Just for Beer Anymore"
Feb 28, 2020 Sergio ParejaTrusts & Estates
All areas of the law have certain foundational principles or beliefs that are widely shared. These underlying assumptions often go unchallenged. In the trusts and estates field, these principles include: (1) giving a certain amount of ongoing control to the transferor, or in the case of a decedent, to the “dead hand,” (2) respect for formality, (3) the importance of the traditional, legally-recognized family, and (4) the “wealth” narrative that focuses on the transmission of conventional forms of wealth.
In her thought-provoking article, Professor Naomi Cahn challenges these underlying principles. She, correctly, I believe, identifies the wealth narrative as the “strand…that structures the rest of the field.” For example, she notes that dead-hand control is only important when a decedent dies with wealth to be transferred, and she analyzes how wealth helps transfer privilege and maintain the status quo. Professor Cahn also looks at who has wealth and recognizes that the sociodemographic diversity of who has wealth impacts this area of law. She seeks to get her readers to challenge the foundational principles of the field by considering new perspectives from race, gender, class, and sexual orientation. Continue reading "Deconstructing Foundational Principles of Trusts and Estates Law"
Jan 30, 2020 Allison Anna TaitTrusts & Estates
Deborah Gordon,
Engendering Trust, 213
Wisc. L. Rev. 213 (2019), available at
SSRN.
In her new piece, Engendering Trust, Deborah Gordon takes on the relationship between women, wealth, inheritance, and the trust form. This intricate relationship is a long-standing one—a vintage marriage, so to speak—defined by gendered asymmetries, assumptions, and characterizations that are all grounded in historical norms. The landscape that gives life to this relationship between women and the trust form is replete with overt female archetypes, such as evil stepmothers, acquisitive mistresses, and vulnerable widows, and the linguistic coin of the realm is a highly gendered grammar that reveals these and other idioms of financial authority, avarice, and inexperience.
Based on a study of 540 cases involving trust law disputes, Gordon seeks to unearth how courts speak about and incorporate gender in their writing and “where cases show trust law clinging to its gendered past, both in language and effect.” (P. 223.) More specifically, she looks at three “key trust characteristics” in the opinions order to parse the role of gender and its effects. First, Gordon looks at trustee identity and finds that not only do men create marital trusts more frequently than women, but men also name someone other than the surviving spouse as trustee more often than women do. Women, by this measure, have still not gained full access to the world of trusteeship, a world in which—in years gone by—“[a]lmost every well-to-do-man was a trustee.” Pursuing this line of inquiry, it would also be interesting to know who courts choose as trustees in cases requiring the court to appoint one. Continue reading "Of Trusts, Grammar, and Gender"
