Estates and Trusts Law Blog
Estates and Trusts
Planning for Responsible Inheritance: What "Brewster’s Millions" Can Teach Us About Estate Planning
The plot of the 1985 comedy “Brewster’s Millions,” starring Richard Pryor and John Candy, centers around Montgomery Brewster, a minor league baseball player who stands to inherit $300 million from a previously unknown great-uncle. The catch? To receive his inheritance, he must spend $30 million[1] within 30 days without receiving any assets in return, and without merely giving away all the money. If Brewster does not spend the entire $30 million in 30 days, he will inherit nothing. Hijinks ensue. At its core, the movie is a satire on capitalism and consumerism, playing on the common fantasy of inheriting a life-changing fortune from a wealthy relative. However, the film also explores a common concern that many clients have when making their estate plans. They are worried that their beneficiaries will squander their life’s savings and exhaust their inheritance on luxury items or speculative investments. These clients consider how they can ensure that their beneficiaries will responsibly manage a significant inheritance. Brewster’s great-uncle explains that his contest is not an arbitrary one. He wishes to teach Brewster a lesson, to hate spending money so much that he will learn to manage his inheritance wisely. By forcing Brewster to exhaust a fortune, he teaches Brewster to think very carefully about how he spends his money, making strategic and methodical decisions in pursuit of a singular goal. While the movie’s plot is exaggerated for comedic effect, in reality, there are several well-established estate planning techniques a client may consider to instill fiscal responsibility in a beneficiary without going to such extremes. Staggered Distributions and Trustee Discretion It is common sense that a client would not wish for a minor beneficiary to receive an outright inheritance, and virtually all wills and trusts will provide that a minor’s share will be held in trust until a milestone birthday. This ensures that a beneficiary will not receive their inheritance outright until they attain a mature age. To further mitigate the risk of a beneficiary squandering their inheritance, a client may stagger distributions over a significant period of time. For example, the client may direct that the beneficiary’s inheritance be held in trust until the beneficiary turns 25, at which time one-third of the trust assets will be distributed outright. A second distribution of one-half of the assets may be made at 30, with the assets becoming fully distributable upon the beneficiary's attainment of age 35. This approach enables beneficiaries to mature into their inheritance gradually. While the assets remain in trust, distributions may still be made by an independent trustee pursuant to an ascertainable standard, such as for the beneficiary’s health, education, maintenance and support (the “HEMS” standard). The trustee is empowered to decide if, when, and how much to distribute to the beneficiary. If, like Monty Brewster, the beneficiary appears to be recklessly spending their inheritance, the trustee can act as a stopgap and cease making distributions. Incentives Another common strategy is to incentivize the beneficiary to achieve specific goals to receive distributions. By dangling a “carrot” in front of the beneficiary, the client can guide and influence their beneficiary’s personal development and early career path. For example, the client may direct that the beneficiary will only receive a distribution upon obtaining a bachelor’s degree; if the beneficiary does not obtain a bachelor’s degree, their inheritance could be withheld for a longer period or even redirected to a charity. A client might further direct that distributions be made to the beneficiary for every year that they maintain full-time employment. A client could also include directions requiring a trustee to make distributions provided that they are used toward some productive goal, such as the purchase of a home. The client may encourage a beneficiary to keep a family home or vacation house in the family by providing an annual stipend for every year that the premises are maintained in good order. If the client is uncomfortable with such rigid, dead-hand influence over their beneficiary’s actions, they may still consider imparting some non-binding guidance or wisdom. For example, a client may express a preference for their beneficiary to use a portion of their inheritance for charitable purposes or to support a worthy cause. A client might also suggest, but not require, that their beneficiary employs a trusted family financial manager or accountant to assist them with managing their inheritance. Designating the Beneficiary as a Co-Trustee Another great strategy to foster fiscal responsibility is to name the beneficiary as the co-trustee of their trust fund until it is fully distributable. The client will then name a trusted individual or financial institution to serve as co-trustee together with the beneficiary. The beneficiary may be permitted to make distributions pursuant to the HEMS standard, but would not be permitted to participate in making discretionary distributions. This strategy provides greater flexibility and management over the beneficiary’s inheritance and the timing of distributions, while allowing the beneficiary the opportunity to manage their funds under the guidance and mentorship of a more experienced party. This may be especially valuable when the beneficiary has had little to no financial education or experience managing large sums of money. Conclusion Estate planning is much more than merely transferring assets; it is about preserving the client’s values and ensuring appropriate stewardship of the assets they leave upon their death. Estate planners have a variety of techniques and tools that can be employed to protect beneficiaries from themselves, oftentimes used in conjunction to maximize their effectiveness. The key is thoughtful and deliberate planning, exploring with the client the myriad of methods that can be used to achieve their goals and ensure preservation of their legacy. [1] Adjusted for inflation, this $30 million bequest would be approximately $90 million in today’s dollars.
September 18, 2025
Estates and Trusts
More Than Money: Planning for Jewelry, China, and Sentimental Belongings
When most people think about estate planning, their minds often go straight to the big-ticket items: the family home, retirement accounts, life insurance, and investments. In reality, it is almost always the personal belongings—jewelry, family heirlooms, artwork, collections, and sentimental items—that cause the most conflict among loved ones after someone passes away. If anyone followed the news surrounding the highly contested estates of Robin Williams, Aretha Franklin, or Casey Kasem, most of the strife related to the decedent’s personal property and how it should be distributed. The days of itemizing every item that you own in your Will are gone; nonetheless, it is still vital to thoughtfully address personal property in your estate plan. A well-drafted plan ensures that your wishes are clear, disputes are prevented, and your loved ones are provided guidance during a time when tensions often run high. Why Personal Belongings Matter in Estate Planning Personal belongings often symbolize a connection to the person who died or even to an entire family legacy. While these items may not always have a significant monetary value, they often carry deep sentimental significance. Who inherits your grandmother’s wedding ring, your father’s guitar, or the family photo albums may matter more than who receives a brokerage account. Unfortunately, without clear instructions, these items can spark tension, disagreements, and litigation. How New York Law Treats Personal Property Under New York law, your personal belongings (referred to as “tangible personal property”) are part of your estate, just like your financial accounts and real estate. Unless you provide specific instructions in your Last Will and Testament, tangible personal property will be distributed under the general terms of your Will. If you do not have a Will or another estate planning document, those items are then distributed pursuant to New York’s intestacy rules. That means: If you simply leave “all of my tangible personal property” to a beneficiary, the beneficiary is entitled to keep all of it or decide how to divide or distribute those items to others If you leave the distribution to the discretion of the executor, then the executor can distribute it as equitably as possible to your beneficiaries – no easy feat If there’s no Will, New York’s intestacy laws determine distribution, which may not reflect your wishes and can lead to further discord Using a Separate Personal Property Memorandum One estate planning tool used in many states is a personal property memorandum (sometimes called a “memorandum of personal property”). This is a separate list where you detail who should receive specific items, such as a watch, artwork, or family china. In some states, these memorandums are legally binding if referenced in the Will. In New York, however, the law does not automatically recognize a memorandum as enforceable unless strict requirements are met. That means: It is recommended that you instead list items directly in your Will, which can make updating the list more cumbersome since it requires executing a new Will or codicil in New York Alternatively, you can create a revocable trust, which permits a “pour-over” bequest in your Will to a trust. The trust must be executed and acknowledged by the parties, prior to or contemporaneously with the execution of the Will, and the trust must be identified in the Will. Practical Tips for New Yorkers Be specific in your Will. If you know who should inherit a particular item, name the person and the item directly in your Will. Work with your attorney on a memorandum. Ask your estate planning attorney if incorporating a personal property memorandum into your Will makes sense for you. Keep the list updated. Life changes and so do dispositions of your belongings. Review your instructions periodically. Communicate with your loved ones. Talking about sentimental items in advance can help avoid surprises or conflicts later. Don’t overlook digital property. Photos, social media accounts, and digital collections are increasingly valuable and should be addressed in your estate plan as well. Thoughtfully considering your personal belongings in your estate plan is not just about protecting financial value, it is about protecting relationships and honoring memories. By thoughtfully planning for your tangible personal property, you will prevent disputes, provide clarity, and ensure that the items that matter most are passed on with intention. If you live in New York and are updating or creating your estate plan, be sure to discuss with your attorney the best way to handle your personal belongings. A little foresight can bring a lot of peace of mind.
September 15, 2025
Estates and Trusts
Marriage in the Balance: Safeguarding Rights for Same-Sex Couples
The U.S. Supreme Court has been asked to overturn Obergefell v. Hodges, the landmark 2015 decision that legalized same-sex marriage nationwide. Whether the Court revisits the case now or in the future, the right to same-sex marriage appears less secure than it has in years. For same-sex couples, especially those in states where legal protections are weaker, this development is a call to action. Although several legal safeguards would remain in place, a reversal of Obergefell could create serious legal and personal complications for many families. What If Obergefell Is Overturned? If the Supreme Court strikes down Obergefell, the constitutional right to same-sex marriage would no longer apply. Same-sex marriage would not immediately become illegal, but the right to marry someone of the same sex would hinge on individual state laws — much as it did before 2015. This about-face would likely lead to a patchwork of marriage laws, under which same-sex couples could marry in some states but not in others. States that had bans against same-sex marriage before Obergefell could begin enforcing them once again or could reimplement bans that were repealed in the decade after the Court had declared same-sex marriage a constitutional right. Some Protections Would Remain Even without Obergefell, several important legal protections would continue to offer support for same-sex couples, though none is as comprehensive or stable as a constitutional right. Respect for Marriage Act Passed by Congress in 2022, the Respect for Marriage Act is a federal law that requires all states to recognize same-sex marriages lawfully performed in other states. In other words, if a couple gets married in a state where same-sex marriage remains legal, their home state would still have to recognize that marriage, even if the state stopped issuing licenses itself. But the Respect for Marriage Act does not require any state to allow same-sex couples to marry within its borders. It provides important recognition but not universal access. State Laws That Support Marriage Equality Some states took independent action to legalize same-sex marriage through legislation, constitutional amendments, or ballot referendums. In these states, marriage equality would remain intact even if Obergefell were overturned. Many other states still have pre-2015 bans on same-sex marriage written into law. Those bans are currently unenforceable under Obergefell, but they could be revived if the precedent is reversed. Existing Marriages Likely to Be Upheld Most legal experts agree that existing same-sex marriages would remain valid, under the legal principle that the government generally cannot invalidate a lawful marriage. Still, uncertainty could arise in areas like adoption, parental rights, inheritance, and medical decision-making, especially in states that chose to restrict marriage rights in a post-Obergefell era. What Same-Sex Couples Can Do Now Regardless of what the Court ultimately decides, couples can take proactive steps to protect their rights and relationships. Consider Getting Married If you’re in a committed same-sex relationship, consider marrying before the law changes. Tying the knot now could help preserve important legal protections, especially if the right to get married is eventually rescinded. Marriage provides many important benefits, including joint-ownership and survivorship rights, tax advantages, healthcare decision-making authority, inheritance protections, and parental presumptions. These rights could be lost in states that move to restrict marriage equality. Put Legal Safeguards in Place Whether they are married or not, all couples should have the following legal documents in place to protect themselves and their families: Wills ensure that your partner inherits your assets and that your final wishes are clearly stated. Durable Powers of Attorney allow your partner to manage your finances if you become incapacitated. Advance Medical Directives authorize your partner to make healthcare decisions on your behalf and outline your medical preferences. These documents can provide peace of mind and legal clarity in the event of illness, incapacity, or death, especially if your marital status is ever questioned or unrecognized. Looking Ahead Even if marriage equality remains intact for now, the issue could return to the Supreme Court in the future. Under Court procedures, only four justices are needed to accept a case for review, and challenges to Obergefell are likely to persist. Whatever the future holds, same-sex couples can take commonsense steps today to protect themselves and their families. Being prepared helps to ensure that your rights and relationships are as secure as possible in uncertain times.
September 11, 2025
Estates and Trusts
Trust Protectors – Should You Have One?
When creating a trust, determining who you want to serve as trustee(s) and benefit from the trust as beneficiaries are decisions that need to be made for every trust. The role of “trust protector” may not be as commonly known or understood, but the decisions whether to have one and, if so, who might best serve in the role, can be key to a smooth administration. A “trust protector” can provide valuable trustee oversight, flexibility, and inexpensive revisability — especially in long-term or complex trust arrangements. Deciding whether to have one and, if so, who might best serve in the role, can be key to a smooth trust administration. What is a Trust Protector? A “trust protector” is a person or entity appointed to monitor and, if necessary, intervene in the administration of a trust. Unlike a trustee, the trust protector does not manage trust assets or distributions. Instead, they are granted specific powers, defined in the trust document, to ensure the trust continues to operate in line with the grantor’s intent. Typical powers of a trust protector may include some combination of the following: Removing or replacing a trustee Amending trust provisions to comply with changes in law Resolving disputes between trustees and beneficiaries Approving or vetoing certain trustee actions This role is especially useful in irrevocable trusts, where flexibility is generally pretty limited. Does My Trust Need a Trust Protector? Not every trust requires a trust protector, but there are several scenarios where appointing one may make more sense: Long-Term Trusts: Trusts designed to last decades or generations benefit from a mechanism to adapt to changing laws and circumstances. Irrevocable Trusts: Since these trusts are difficult to modify, a trust protector can provide limited flexibility without court involvement. Complex Family or Business Dynamics: If there’s potential for conflict or concern about trustee performance, a trust protector can serve as a neutral safeguard. Asset Protection or Offshore Trusts: These often include a trust protector as a standard feature to enhance oversight and control. How Do I Choose the Right Trust Protector? If you’ve chosen to include a trust protector, how do you how do you decide which person is the right fit for your particular trust? Electing the appropriate trust protector is critical to ensuring the role adds value rather than complexity, and every situation should be evaluated on its own merits. That said, you might want to consider some or all of the following when making your choice: Independence: Ideally, the trust protector should not be either a beneficiary or a trustee to minimize or avoid altogether potential conflicts of interest. Expertise: Legal, financial, or fiduciary experience is beneficial, especially if the trust is complex or long-term. Trustworthiness: As the name implies, this role requires someone who can be relied upon to act in good faith and consistently with and in furtherance of the grantor’s intent. Availability: The trust protector should be willing and able to serve for the duration of the trust or have a succession plan in place. Often, clients choose a trusted advisor, attorney, or corporate fiduciary to serve in this role. Common Misconceptions About Trust Protectors Despite their growing use, the purpose and/or responsibilities of trust protectors can be misunderstood. Here are a few common misconceptions: “Trust protectors replace trustees.” It depends on what is meant by “replace” in this context. They generally oversee and intervene with the authority to replace one or more trustees with another only when necessary (such as when a trustee is perceived to be abusing his or her position or failing to carry out the terms or intentions of the trust). Trust protectors do not, however, manage assets or make routine decisions by substituting or “replacing” their own judgment for that of the appointed trustee(s). “Only large or offshore trusts need a trust protector.” While the use of trust protectors is common for large or offshore trusts, trust protectors can be helpful in domestic estate plans, especially where flexibility or oversight is desired. Reasons why a particular trustee may have been named at the time of drafting may no longer apply when the time comes. Successor trustees may not be in a position to step in as established in the trust (due to age or health issues, for instance). With a trust protector in place, it can be like having an added layer of defense against life’s unexpected twists. “Appointing a trust protector complicates the trust.” If “complicates” means the addition of more words, then yes, the addition of a trust protector does complicate things. Nevertheless, when properly drafted, a trust with a built-in protector can simplify administration of the trust and reduce, or even eliminate altogether, the need for court involvement. Take the situation faced by Jimmy Buffett’s widow. With Jimmy’s former legal counselor/advisor and his wife on equal footing as trustees, they quickly deadlocked over what can, should, or must be done with the assets and distributions. A well-chosen trust protector in Jimmy Buffett’s case could have served as the needed tie-breaking vote and/or insisted upon a “change in attitude” or occasioned a “change in latitude” by ousting whichever of the trustees, in the judgment of the trust protector, seemed to be missing the settlor’s intention, or as Jimmy might have said, acting as the “people our parents warned us about.” Final Thoughts A trust protector is not an essential requirement but, in the right circumstances, can be a valuable addition to a trust. The presence of a trust protector can serve as a “check and balance” feature to help ensure your trust remains effective, adaptable, and aligned with your goals over time by providing oversight after you passed on. If you're wondering whether a trust protector is right for a new trust you are considering, simply be sure to mention it to your estate planner/drafting attorney. If considering revising an existing trust to add a trust protector, seek a second opinion, separate from the initial drafting attorney, to evaluate your specific needs and objectives and whether these are more likely to be met with or without a trust protector.
August 25, 2025
Estates and Trusts
Planning and Parting Wisdom to Consider for Your College-Bound Children
Sending a child off to college is a major milestone — one filled with pride, excitement, and, in my case, a little anxiety. Two years ago, I sent my eldest to Europe for her university experience and, while my second is staying in the U.S., she is headed south this fall. I am sorry to report to the parents sending their child off for the first time that it does not get any easier. As parents, we spend years preparing them emotionally for this next chapter. But there’s another critical aspect of preparing them to fly the nest that often gets overlooked: legal documents and related planning. Once your child turns 18, you no longer have automatic access to their medical records, financial accounts, academic records, and in some states, you do not even have the right to make decisions on their behalf in an emergency. Without certain legal documents in place, you may be powerless in a situation where your guidance, input, and authority are most needed. Healthcare Proxy (sometimes referred to as a Medical Power of Attorney) A Healthcare Proxy allows your eighteen-year-old child to appoint someone (usually a parent) to make medical decisions on their behalf, in the event that they cannot articulate their wishes to care providers. This is crucial in emergency situations. Without this document, and pursuant to the Health Insurance Portability and Accountability Act (HIPAA), medical professionals are prevented from sharing any information, even with you, about your child’s condition. HIPAA Authorization Form HIPPA protects your eighteen-year-old child’s privacy once they are legally an adult. A HIPAA Authorization form specifically allows healthcare providers to release medical information to you, giving you the ability to communicate with doctors, access medical records, and be informed in case of an emergency. Durable Power of Attorney (POA) A POA empowers you, or whomever your child names, the authority to handle their financial matters. This can include managing bank accounts, signing tax returns, handling financial aid or tuition payments, and more, either on a temporary or ongoing basis. A POA is invaluable if your child is studying abroad, facing a logistical emergency, or simply needs help managing administrative tasks while adjusting to college life. FERPA Release Form The Family Educational Rights and Privacy Act (FERPA) limits a parent’s access to their child’s educational records (grades, disciplinary actions, tuition bills, etc.) once the child turns 18 or attends a postsecondary institution. If your child signs a FERPA release form, it authorizes the college to communicate with you directly about their academic records. Many universities provide this form during orientation, but it’s important to ask proactively. Digital Assets and Passwords University students, like all their peers, live much of their lives online. From email accounts to social media to online banking and cloud storage, ensuring a trusted individual has access to these digital assets in case of emergency is often overlooked. Encourage your child to create a secure list of important passwords or use a password manager that can grant emergency access to trusted individuals. Lists of passwords should never be stored on a phone or similar device that can be accessed by those who are not the appointed trusted individuals. Health Insurance Considerations When my child attended university in Europe, we discovered that her health care would be covered by university while in Europe. Still, we had to review her existing coverage here in the U.S., to ensure she still had coverage when she was home. It is imperative to verify whether your child will remain on your health insurance plan or if the university requires participation in a student health plan managed by the university. Sometimes the options provided by the university are more economical or make more sense if the university is far away and the plan has local coverage. If your child remains on your health care insurance, they should have at least a copy of their health insurance card. They should also understand how to locate in-network providers near campus and know the process for seeking care away from home, so that you are not stuck with a large medical bill from an out-of-network provider. Emergency Contacts and Local Resources Ensure your child’s phone has updated emergency contacts. It is recommended that named emergency contacts should be designated as such in their phone so others can assist in contacting you, if needed. In addition, make sure that your child has the names and locations of local, reputable urgent care centers, hospitals, dentists, mental health providers off campus, and pharmacies near their university. Emergencies are, by nature, unpredictable. In a crisis, the last thing you want is to be delayed by red tape. Having these documents in place not only gives you peace of mind but also empowers your child to step into adulthood with a well-prepared safety net. This is also a great opportunity to introduce your child to the concept of planning, in general, which is a personal responsibility and something to consider as they join the ranks of legal adulthood. By having these conversations now, you are not just preparing for emergencies, you are equipping them with the mindset of proactive life planning. Providing the tools to handle their newfound independence is one of the best send-off gifts you can give.
August 19, 2025
Estates and Trusts
Obergefell in Question: Estate Planning Risks for Same-Sex Spouses
On August 11, 2025, the United States Supreme Court was asked to reconsider Obergefell v. Hodges, the 2015 decision that federally guaranteed marriage equality for all couples. This new case involves the four-times married former Kentucky county clerk who famously denied marriage licenses to same-sex couples in 2015. She argues that her religious freedom should have allowed her to refuse to recognize same-sex marriage and asked the Supreme Court to take up her cause. While many remain cautiously optimistic that marriage equality will not be undone, the fact that the Court may even consider this petition is deeply unsettling for the LGBTQ+ population and their allies. (Axios, Forbes, The New Republic) Why This Matters for Estate Planning A Return to Patchwork State Laws If Obergefell were overturned, the U.S. would revert to a pre-2015 tapestry of laws in which individual states would have the opportunity to determine marriage rights for their own domiciliaries. For those residing in more conservative states, it could mean disaster for same sex spouses. Legal and Emotional Chaos for Families Suddenly, all the rights, protections, and privileges that come automatically with marriage, such as hospital visitation, medical decision-making authority, inheritance, and tax breaks, would once again require lawyers to draft elaborate, and admittedly brittle workarounds. In some states, lawmakers are bound to make those workarounds incredibly difficult to accomplish. Estate Planning Problems MagnifiedTax implications: Without a legally recognized spouse, couples will lose spousal estate tax exemptions at the federal and possibly state levels. Probate exposure: Without the automatic transfer rules of marriage, such as tenancy by the entirety designations on deeds, estates could be forced to go through a full probate proceeding or worse, pass to next-of-kin heirs, and not the spouse. Healthcare proxies and decision-making: Health care directives, such as Health Care Proxies, would need constant updates as cross-state enforcement could become uncertain when an individual’s status is demoted from “spouse” to simply “agent” under a health care directive. It should be noted that the rights of an agent are certainly less secure than spousal rights. Children and parentage issues: The parental presumptions, adoptions, and guardianships may also be under fire and could become contested in ways they have not been observed for a decade. As with documented workarounds for estate planning, it is concerning that parentage could hinge on an estate planning document that is enforceable in one state and not another. In summary, this possibility bears a real human cost if the federal government no longer sees a marriage as valid, and all the financial ease, parental securities, medical protections, and end-of-life comfort assumed to be guaranteed are no longer. Same-sex couples do not just lose a symbolic right to marry — they face disruptions to fundamental life, health, and legacy decisions. This is not just another court case: the ramifications will fundamentally reshape how families, especially those with trans and LGBTQ+ members, plan their lives, protect each other, and preserve their legacies. It is vital we pay attention, share the facts, and act with allyship.
August 14, 2025
Estates and Trusts
Settling an Estate with Efficiency and Care — Guidance for the Personal Representative
When someone dies, the task of settling the person’s estate descends upon the personal representative. Being appointed a personal representative, or “executor,” is an honor that includes a broad range of responsibilities. This person must be part administrator, part accountant, and part diplomat! Depending on the complexity of the estate, the process can drag on for years, or the estate can be opened and closed the same day. A typical estate takes nine months to a year to close. Regardless of how complex the estate is, the personal representative may want to begin with a phone call to an estates and trusts attorney for guidance. The attorney can simply point the personal representative in the right direction during a single consultation. Or the attorney can assume some or all of the duties of the personal representative, making the process considerably less burdensome. The challenge for most people settling an estate is that they do this only once in their lives, and therefore have to learn on the job. Here is an overview of the steps involved. Secure the Home If a house is sitting vacant as a result of the death, it is important to protect the property and its contents. Any valuables should be removed and kept in a safe place. Windows and doors should be locked and the alarm set, if there is one. If other people have keys to the house, consider having the locks changed. Mail should be forwarded to the personal representative, and a trusted neighbor should be asked to keep an eye out for any packages or fliers left at the door. It is also important to pay any mortgage installments, condominium fees, utilities, or property taxes as they become due. If funds for these expenses are not immediately available, the personal representative can advance these costs and seek reimbursement from the estate when possible. Locate the Will To open the estate, you will need the original will—not a photocopy. Once located, the will should be filed with the Register of Wills, even if the decedent had no assets. (If there is no will, the person has died “intestate” and the assets will be distributed according to Maryland’s rules of intestacy.) Upon opening the estate, the personal representative will receive “Letters of Administration,” putting him or her in charge of the estate and its assets. A tax ID number can then be obtained, and an estate checking account opened. Notify Agencies of the Death Banks and brokerage houses should be notified of the death, as well as insurance, credit card, and utility companies, and credit-reporting agencies. If the person received Social Security or other government benefits, notify the agencies that provided them. Marshal the Assets It may be advisable to liquidate any securities and other investments to lock in the value as close to the date of death as possible. The proceeds from any liquidated accounts should be deposited in the estate checking account. Prepare an inventory of the estate assets, including cars and household items, as well as real estate (whether in Maryland or elsewhere), bank accounts, CDs, investment portfolios, and life insurance policies. The inventory must include the date-of-death value of each item and be filed with the Register of Wills. Determine whether any of the assets name a beneficiary or have a co-owner. Those that do may be “non-probate” assets, which will transfer to the beneficiary or co-owner directly and are not part of the probate estate. Run the Numbers Creditors of the deceased have six months to make claims against the estate, and if there are sufficient funds, these will need to be paid from the estate account. Estimate the amount of cash needed to pay the claims and any taxes, and, as necessary, arrange for any assets to be sold for distribution. Deal with Taxes A Form 1040 individual income tax return must be filed for the portion of the year the decedent was living. This return is due by April 15 of the following year, just like a standard personal tax return. If the estate includes bequests to individuals who are not close family members, Maryland's 10% inheritance tax will apply. Unless the will specifically states otherwise, this tax is generally payable by the beneficiary who receives the bequest. Estate taxes may also apply, depending on the total value of the estate. In Maryland, estates valued at more than $5 million may be subject to state estate tax of up to 16%. At the federal level, estates exceeding $13.99 million in value (as of 2025) may trigger federal estate tax obligations of up to 40%. In addition, during the course of estate administration, if the estate generates more than $600.00 in income—perhaps from interest or dividends—fiduciary income tax returns must be filed. This includes IRS Form 1041 for the federal return and Maryland Form 504 for the state return. Because estate and tax matters can be complex, enlisting the help of an accountant experienced in estate administration is often a wise decision. Make Distributions Once an accounting showing all estate activity has been filed and approved by the Register of Will, a 20-day waiting begins. If no objects are made to the accounting as filed, it will then be time to distribute the remaining assets to the beneficiaries. The personal representative might first ask each beneficiary to sign a document releasing the personal representative from any future liability in connection with the estate. Settling an estate is more than a legal obligation—it is a final act of care and respect for the person who has died. By carrying out their wishes with diligence, fairness, and thoughtfulness, the personal representative helps bring closure not just to the estate, but to the life it represents. Though the work can be complex and at times overwhelming, it is also a meaningful way to honor the departed and ensure that their final wishes are handled with integrity and grace.
August 11, 2025
Estates and Trusts
Major Estate Tax Changes Under the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is a sweeping piece of legislation spanning nearly 1,000 pages. It includes significant changes to federal estate and income tax laws that will affect estate planning. Here’s an overview of a few key provisions in OBBBA and some strategic estate planning opportunities that it provides. Estate and Gift Tax Exclusion Increased Effective January 1, 2026, the federal estate and gift tax exclusion increases to $15 million per individual (or $30 million per married couple), with future adjustments for inflation. Although the increased exclusion was made “permanent” under the Act, it may still be changed or repealed by a future Congress or administration. High-net-worth clients should take full advantage of what may be a limited window for significant planning options. Spousal Lifetime Access Trusts (SLATs) and Grantor Retained Annuity Trusts (GRATs) are excellent options for front-loading an estate plan while still allowing the client or spouse access to assets. Individuals who have already utilized all or a portion of their current exclusions should consider “topping off” their current estate plans with additional gifts. While the increase in the federal exclusion amount provides substantial federal tax relief, state-level estate and inheritance taxes still apply, in many jurisdictions: 12 states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia continue to impose an estate tax Six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania) impose an inheritance tax Connecticut is the only state that also imposes a gift tax New York does not have a gift tax, but adds back gifts made within three years of death to the taxable estate With proper planning, assets can still be transferred free of both federal and state-level transfer taxes, but state-specific rules must be carefully navigated. Spousal Lifetime Access Trusts (SLATs), Dynasty Trusts, and sales to intentionally defective grantor trusts offer excellent opportunities to both leverage and utilize the $15 million federal gift tax exclusion while removing those assets from a state estate tax regime. New York’s Estate Tax “Cliff” New York’s estate tax has a particularly harsh feature known as the “estate tax cliff.” This means that estates just slightly over the exclusion amount may lose the exclusion entirely and owe significant tax. For example, in 2025: A New York taxable estate of $7,160,000 will owe no estate tax A New York estate of $7,161,000 will owe $2,863 in tax A New York estate of $7,518,000 will owe $707,648 This makes planning for residents of New York and similarly situated states especially important. New York State residents, and even non-resident individuals with substantial New York situs property, should consider making immediate and significant gifts designed to lower their New York taxable estates below the cliff. If they survive three years after the gift, the gifted property will be excluded from their New York taxable estate. Generation-Skipping Transfer (GST) Tax Exemption The federal GST tax exemption also increases to $15 million per individual beginning January 1, 2026. This is particularly relevant for gifts or bequests made to “skip persons” (such as grandchildren) or to trusts subject to GST tax. Despite the increase, careful planning is still needed to make full use of this exemption. Unlike the federal estate and gift tax exclusion, the increased GST tax exemption is not “portable” – meaning that unless both spouses’ GST exemptions are used during life, they may be forfeited at the first death. And like the federal estate and gift tax exclusion, the increased GST tax exemption is also subject to a potential repeal if the political winds change. For clients and their families focused on multi-generational planning, now is the time to “use it or lose it” by fully sheltering appreciating assets from the generation skipping tax in an irrevocable trust. Careful allocation of exemption is the key to maximizing tax efficiency and wealth for future generations. SALT Deduction Cap Raised — But with Limits Starting in 2025, the cap on deductions for state and local taxes (SALT) increases from $10,000 to $40,000. This is especially beneficial for residents in high-tax states. However, the increased cap phases out for high-income earners: For those with modified adjusted gross income (MAGI) between $500,000 and $600,000, the cap is reduced by 30% of the excess MAGI The deduction is completely phased out for taxpayers with MAGI of $600,000 or more Unless extended, the cap will revert to $10,000 in 2030. Clients living in high-tax states should consider “stacking” multiple non-grantor trusts. Since each trust is treated as a separate taxpayer under the Internal Revenue Code, carefully drafted multiple trusts can potentially reallocate MAGI and shelter thousands of dollars in SALT deductions that could not otherwise be taken on an individual’s income tax return. Changes to Charitable Giving Rules OBBBA introduces new benefits and limitations for charitable giving: The 60% limitation for cash contributions to qualified charities is not “permanent” Standard deduction filers can now take an additional $1,000 charitable deduction ($2,000 for joint filers) Itemizers are subject to a new 0.5% floor, meaning charitable deductions are only allowed to the extent that total contributions exceed 0.5% of adjusted gross income (AGI) before losses To maximize deductibility, the new 0.5% floor encourages consolidating charitable giving in a single tax year. For high-net-worth individuals, this is the perfect opportunity to fund or expand a private foundation. Donor-advised funds may also provide an option for maximizing charitable giving in a single year while providing flexibility in the choice of charities and the timing of distributions. Final Thoughts The OBBBA marks a significant shift in the tax landscape for estate planning. While some changes provide enhanced opportunities for wealth transfer and charitable giving, others introduce complexity and planning pitfalls — especially at the state level.
August 7, 2025
Estates and Trusts
Estate Planning for Musicians and Protecting Your Legacy Off the Stage
For musicians, estate planning is not just about deciding who inherits guitar collections or song royalties. It is about protecting your artistic legacy, ensuring your intellectual property is handled according to your wishes, and providing clarity for loved ones who may be unfamiliar with the nuances of the music industry. Unlike a typical estate plan, musicians face unique considerations, especially when it comes to rights management, royalties, and long-term protection of their creative works. Whether you are a seasoned performer or an up-and-coming artist, here are essential estate planning steps every musician should take. Catalog and Protect Your Intellectual Property Your songs, recordings, compositions, and even unreleased material are valuable assets. The first step is creating a comprehensive inventory of your published works, unreleased recordings or demos, copyright registrations, licensing agreements, and publishing contracts. Ensure these assets are clearly documented in your estate plan, which means if you have a revocable trust in place, these assets must be “assigned” to that trust to avoid probate. You should also provide instructions to your trustee or executor on how these assets should be managed, distributed, and monetized after your death. Establish Ownership Structures for Royalties Royalties can continue to generate income long after a musician’s passing. To ensure proper management, it is most efficient to set up a trust to collect and distribute these royalties to your beneficiaries. A trust can provide the mechanism to provide ongoing support to your loved ones to ensure they receive the funds in a way that makes sense, particularly if your beneficiaries are minors. Having a trust in place can also make it easier to manage the various income streams to ensure they flow centrally during your life in the way that you intend. Certain trusts can even provide creditor protection, protection from estate disputes, and mismanagement if you become incapacitated. When a trust is created, it is important to think about who will serve as your trustee if you can no longer act, or upon your death. The trustee chosen by you should have familiarity with your intellectual property, royalties, licensing, and the value of your catalogue. Assign Control Over Your Artistic Legacy Do you want your unreleased recordings shared with the world? Should certain songs be licensed for commercials or films? It is essential that you appoint the right person with this level of discretion to answer these questions because they can determine how your music is used after your death. It is, therefore, vital to ensure that the person you assign the control has an understanding of your legacy. This person is often referred to as a “creative executor” or a “creative trustee” who understands your artistic vision and can carry out your wishes regarding issues like posthumous releases, licensing decisions, and the preservation of your work. Digital Assets and Social Media A musician’s online presence can be as valuable as their physical recordings. A properly drafted estate plan will include instructions regarding your social media profiles, your official website, your digital music platforms (Spotify, Apple Music, YouTube channels), and access to each of those platforms. You may direct whether these platforms should remain active as they were during your life, or if you would prefer that they remain active as a memorial or taken down altogether. Business Succession Planning for Bands or Labels If you own a record label, music publishing company, or are part of a band with business agreements, succession planning is critical. Ensure that your partnership agreements address what happens in the event of your death or incapacity and how ownership interests will be transferred or managed. Your operating agreements and shareholder agreements should be reflective of your wishes and must address your particular circumstance; failure to do so allows your state to determine how those interests can be transferred or managed. Plan for Personal Assets and Family Needs Beyond your musical career, you must ensure that you have a traditional estate plan in place that also addresses bequests to your family members and friends, guardianship of your children, and designations of health agents and powers of attorney. If your musical career is successful, you should consider the issue of estate tax and consult with an insurance professional for life insurance policies that could provide economic support for your family or liquidity to pay estate tax. If your music catalog has significant value, proactive estate tax planning is essential. Strategies might include gifting portions of your catalog during your lifetime, setting up irrevocable trusts to shield assets, and working with a valuation expert to determine accurate appraisals for estate tax purposes. Musicians, like most artists, often experience fluctuating incomes, so proper planning is crucial for providing long-term security to loved ones. Final Thoughts Proper planning is the ultimate backstage pass to your legacy. It empowers musicians to control not just the financial aspects of their legacy, but also the integrity and future of their creative works. Without a solid plan, disputes over rights, royalties, and artistic decisions can tarnish the legacy you have worked so hard to build.
August 5, 2025
Estates and Trusts
When a Corporate Trustee May Be a Disadvantage for Your Trust
Last month I explored the potential advantages of naming a corporate trustee, acknowledging that the decision is ultimately a matter of personal preference. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. Should you name a financial institution as corporate trustee to manage your trust when you are no longer able to do so for yourself? Whether you name a financial institution to manage your trust assets when you are no longer able to do so for yourself is ultimately a matter of personal preference and choice. In this second part of a two-part, “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I take up potential disadvantages and reasons you might consider not naming a corporate trustee to manage your trust. $$$ - Higher Costs Relying on a financial institution to manage your trust when you are no longer able to do so for yourself generally requires a more substantial commitment to administrative costs. While friends and family might be willing to serve when you’re gone – and frequently agree to do so with no thoughts of compensation (or the time commitment potentially involved!) – no corporate trustee is going to undertake or continue the effort without being adequately compensated. Corporate trustees charge annual fees that typically range from 0.5% to 2% of the trust’s “assets under management,” depending on the size and complexity of the trust. These fees are intended to compensate reasonably for professional services required to manage the assets and administrative responsibilities. In my experience, family members and friends serving as trustees typically charge little or nothing for their trust/asset management efforts, regardless of the discretion afforded to them under the governing trust document(s). The decision whether to exercise this discretion in favor of taking a fee is typically driven on the one hand by a sense of entitlement and, on the other, by an inherent sense of fairness (including an assessment of the likelihood of heartburn and frustration) to be generated by beneficiaries’ uninformed and often unwarranted perception of impropriety occasioned by the resulting imbalance as violative of “equality for all” expectations. To be sure, individual circumstances vary widely, and a family/friend trustee should have no reservations about being reasonably compensated for work that money managers and financial advisors would otherwise be charging a significant sum. Most trusts expressly afford trustees discretionary authority to be compensated for their efforts. And, unless expressly stated in the trust document, Virginia, like most jurisdictions, allows such discretionary compensation by default. Consequently, one can generally expect trust administration costs under a corporate trustee to exceed what an individual trustee might be expected to charge (if anything) for his or her trust management services. It is typical to allow an individual trustee the discretion to take a fee for one’s services. The more substantial the trust, the more time and effort can be expected to monitor and manage – especially if one or more family members have their own expectations (however misguided or unrealistic they may be!) regarding the timing and extent of their inheritance. In my experience, there’s almost always at least one troublemaker beneficiary making things miserable for everyone else – especially the trustee. Lack of Personal Touch Corporate trustees are in the business of managing trusts and, therefore, manage many trusts at once. Consequently, a corporate trustee may not be able to provide the personalized attention that a close family member could. In all fairness, a corporate trustee cannot be expected to understand or appreciate the unique family dynamics or emotional aspects of the trust as well as a family member or close friend could. Perhaps you are in the 1% of those fortunate to have developed a close long-term relationship with a trusted advisor at a corporate trustee and have convinced yourself that no other friend or family member could possibly be trusted to do as good a job carrying out your wishes. I’m not here to talk you out of your blissful naivety, but you owe it to yourself to give due consideration to the probabilities of your trusted advisor dying and how familiar the likely successor(s) is/are with your situation. Less Flexibility Institutional trustees often operate under strict guidelines and may be less flexible or slower to respond than an individual who can make quick, informal decisions. This relative inflexibility stems, at least in part, from a higher likelihood of being held to task in hindsight for decisions which, at the time, may have seemed eminently reasonable. A beneficiary is more likely to attempt to create a legal issue about holding a corporate trustee liable for decisions that, in retrospect, turn out sub-optimally. Consequently, a corporate trustee can be expected to apply a more rigorously conservative approach to investing and discretionary distributions, for instance. Of course, this may be precisely what you’re looking for in a trustee. Alternative Asset Limitations Along with less flexibility in the manner in which they might be expected to make decisions regarding the assets under their management, corporate trustees are oftentimes limited in the asset classes they manage. Precluded from keeping particular types of assets in their portfolio, a chosen corporate trustee may become the tail wagging the proverbial dog when they prove incapable of serving 100% of your trustee needs. For instance, real estate is quite frequently beyond the purview of a corporate trustee. Therefore, if you have substantial “alternative asset” holdings (i.e., beyond the traditional “stocks and bonds,” annuities, and typical financial market holdings such as derivatives), a corporate trustee may not be the right choice for you. On the other hand, the more specialized or unique the holdings, the more likely you will want to try to find a trustee with the needed specialized expertise to manage these alternative assets appropriately. Special circumstances demand special consideration. Just recognize, as well that a corporate trustee with the relevant specialized skill set may not be the best choice to serve as your fiduciary for your other trust assets. And even if they are a potential fit across all of your asset classes, their relative expertise and/or comfort level may require some drafting cooperation to develop and settle on an arrangement with which the corporate trustee can get comfortable. For instance, we recently assisted a blended family in avoiding a potentially very costly legal fight by identifying and working with an independent corporate trustee to develop a settlement trust arrangement, the terms, procedures, and potential liability protections of which the trustee could accept. The new trust arrangement overcame the mutual distrust factors, avoided significant legal fees, and uncertain outcomes. Cooperatively addressing and overcoming the specific corporate fiduciary’s reservations ultimately afforded all of the trust beneficiaries the independent management/oversight they each needed. Final Thoughts I would be dishonoring the legal profession if I did not acknowledge, quite lawyerly, that “it depends!” If you haven’t figured it out yet, there is no one-size-fits-all “right” answer. Everyone’s situation is in some respects unique and people’s risk preferences fall across a full spectrum (from a nihilistic “what do I care? I’ll be dead!” to “I couldn’t possibly do that to my loved ones!”). Choosing a trustee is a deeply personal decision that depends on the size and complexity of your trust, your family situation, and your priorities for administration and oversight. For many, a hybrid approach—naming both a family member and a corporate trustee as co-trustees—offers the best of both worlds: professional management and personal insight. While I can’t possibly speak to my readers’ individual risk preferences, there are clearly certain factors that might lend themselves more favorably to a corporate trustee selection in a given situation. All other things being equal, you may want to consider appointing a corporate trustee in the following circumstances: Your trust is large or complex. There is potential for conflict among beneficiaries. You lack a trustworthy or capable family member to serve. You want to ensure long-term, professional management. The trust includes specialized assets such as real estate, business interests, or significant investments. Before making a final decision, I would encourage you to consult with your estate planning attorney or financial advisor to weigh the pros and cons in your specific situation. After the fact, if you find yourself trying to manage or extricate yourself from inheritance-related entanglements (with or without a trust), you should seriously consider engaging an experienced trust and estates litigator to assist in crafting and implementing an outside-the-box arrangement which might very well result in a third-party, corporate fiduciary as the answer . . . or then again, it might not. I would be glad to offer personal recommendations for an estate planning attorney, financial advisor, or trust and estates litigator, should you be interested. I would also welcome the opportunity to review your situation, provide thoughtful recommendations, and assist with implementation as appropriate. The potential significance and impact of a well-chosen trustee cannot be overstated. In short, there is no “one size fits all” solution, and, simply stated, a corporate trustee may not be right for your situation. A well-chosen trustee (corporate, professional individual, family member, or friend) can provide peace of mind. The wrong trustee choice could mean the dismantling of everything you’ve worked your entire life to accumulate and damn your loved ones to costly and frustrating litigation. Too dark? I wish. Trust management legal issues might account for only a small fraction of trust cases, but the actual percentage is of little or no consequence when 100% of the cases I’ve seen on a continuous basis for over 25 years involve some form of dispute with or over the trustee. “What about a ‘trust protector’ arrangement?” you ask. “Should I be insisting on one of those for my trust?” Next time!
July 24, 2025
Elder Law and Advocacy
Why Caregiving Matters More Than Ever in America
When Bradley Cooper released his new PBS documentary “Caregiving,” he didn’t just share a deeply personal narrative, he opened the door to a long-overdue national reckoning. His story of bathing his father, of holding his hand through cancer, of navigating a healthcare labyrinth with little support resonates because it is all of our stories. Whether we realize it yet or not. Caregiving is the invisible thread that holds my clients — the wealthy and not so wealthy — their families, and their communities together. This essential labor, both paid and unpaid, is finally stepping into the spotlight, demanding recognition, reform, and real support. The Growing Crisis The statistics are irrefutable: for the first time ever, Americans aged 65 and older are set to outnumber their children by 2034. Currently, 23 million care for older adults exceeding the 21 million caring for kids. It is important to note, however, that caregiving occurs at all ages and contributions. No one is immune from caregiving. Financial caregiving responsibilities can begin much earlier for a younger demographic if they are in a better financial position than their aging family members. Added to that, those who are having children later in life now care for their aging parents whom they presumed could help them raise their own young children. Unpaid family caregivers contribute nearly $600 billion worth of labor to the US economy annually, which is larger than the United States Department of Defense budget and a figure soon to hit $900 billion the next decade. Families, who represent the unpaid caregivers, absorb this enormous emotional, financial, and physical burden. As this author has written about in the past, caregivers generally must reduce work hours, give up career opportunities, or quit jobs entirely. These sacrifices lead to lost income, strained mental health, and mounting caregiving debt. Beyond the individual cost, caregiving faces much broader challenges, including the underfunding of resources, a fragmented health care system, policy neglect, and a lack of labor protections for professional caregivers. Millions of Americans, especially women, people of color, and low-income individuals are making impossible choices: career or care. Income or loved one. Sleep or safety. And while the dialogue surrounding caregiving has traditionally been viewed as a women’s or senior issue, it is clear that caregiving now touches every demographic and tax bracket. In fact, the recognition of today’s “Sandwich Generation,” adults caring for aging parents while raising kids, has been a topic of conversation, mostly because of the extreme pressure this generation feels with its caregiving responsibilities: even Gen Z is stepping in as caregivers, often for grandparents and disabled siblings. Most fall into caregiving during a crisis — an accident, a diagnosis, or a fall. Without a plan, the emotional, legal, and financial toll compounds quickly and sometimes in ways that cannot be controlled. Planning in advance provides options that planning during or after a crisis simply does not. The culmination of these issues leaves us all without robust systemic support, defining caregiving as a personal crisis rather than a shared responsibility. However, there is hope, and the way to hold onto that hope is through planning. Take Action Clarify wishes. Encourage your aging loved ones to clarify their wishes. Advance healthcare directives provide caregivers guidance and reduce stress of healthcare and end of life decision making. Ensure your Will or Trust is in place and up-to-date reflecting the beneficiaries chosen by the aging loved one, not by the state. Consider creating an ethical will to share with your family describing your hopes and wishes for their future and lessons you wish to impart long after you are gone. Protect assets. If your loved one’s assets are not infinite, it’s imperative to meet with an elder law attorney who can assess whether or not your loved one will qualify for Medicaid or Veterans benefits in the future to pay for long-term care. Determine if asset protection trusts can help your loved one qualify for benefits or resources in their area. If you still have time, speak with an insurance professional about qualifying for long-term care insurance. Organize roles. Nothing is more important than setting a plan in place. This means determining now who can help your aging loved one and contribute to their caregiving. Dividing and conquering roles like organizing medication, cooking meals, providing transportation to appointments, and managing finances can help caregivers avoid burnout and ensure that talents among all caregivers are utilized. Technology is even being developed to address the need such as software like Hero Generation which can make organization for the caregiver easier. Preserve dignity. Talk to your aging loved one about where they want to live as they age and, perhaps more importantly, where they do not want to live as they age. If your loved one is faced with a life-limiting condition, start the dialogue about what their idea of a “good death” looks like by consulting with organizations like Befriending Death or your local hospice agency. Thoughtful planning keeps care centered around the person’s needs, values, religious, and spiritual beliefs, not just the logistics of the end of their life. As caregivers, there is so much we can do beyond providing the care. We must acknowledge the heavy lift of caregiving: talking about it with family, co-workers, and friends to create community around the experience. We must offer respite to our friends who are caregivers and vote for public policies that support and expand care. And of course, elevate the conversation and share resources to make sure that it is easier for those who come after us. Roslyn Carter wisely said that “...there are only four kinds of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers." Caregiving is love in action and planning for it is essential. Wherever you are in your own caregiving or care receiving journey, ensuring a plan is in place is essential.
July 23, 2025
Estates and Trusts
Ashes to Ashes: Making Your Final Arrangements
William Wordsworth said that the best part of a good man's life is “his little nameless unremembered acts of kindness and of love." In this spirit, many of us work to fill each page of our life’s story with small deeds of compassion and helpfulness. One such deed we might not have considered is planning our final farewell. Anyone who has arranged a funeral knows what a challenge it can be. A funeral is the one event where the guest of honor has no say in what it should look like, where it should take place, or who should have a role to play—unless he or she plans ahead. Providing even a brief outline of your wishes is an enormous act of kindness to the people you leave behind. And this is one aspect of estate planning that doesn’t require a lawyer. There are documents a lawyer should draft. These include a will, Durable Power of Attorney, and Advance Medical Directive. But a statement of your funeral and burial preferences is one you can prepare on your own. When kept with your other important papers, these final instructions will ensure that your sendoff reflects your preferences and beliefs. Gone are the days when a funeral was almost always in a house of worship and the burial was invariably at a cemetery. In an increasingly secular society, many funerals and memorial services no longer include a religious component. And as cremation has become more popular, the person’s remains can be disposed of in any number of meaningful ways. What should your funeral look like? The decisions to be made are many and include: what funeral home to use, what kind of service you want, and whether you prefer a traditional burial or cremation. The service could include your favorite readings—whether sacred or secular—hymns, songs, or other music, and the names of loved ones who should play a part in the service. If your remains are to be present, the service is a funeral; if not, it’s a memorial service. Either way, you can name the people who are closest to you to act as actual or honorary pallbearers. If your remains are to be cremated, what should be done with the ashes? Those who desire a permanent resting place can purchase a columbarium niche to house the urn. But scattering the ashes at a meaningful location is another, less costly, option. Ashes can be scattered on the grounds of a private home that belongs to you or your next of kin, on the graves of beloved ancestors, or in a favorite body of water. Some cemeteries even have gardens specifically for scattering ashes. Ashes are not considered to be environmentally harmful, but check to make sure that your plans for disposing of them are legal. If the location is on land belonging to the government or a private party, you may need to get their written permission. Under the Clean Water Act, cremated remains must be scattered at least three nautical miles from land. The Maryland Department of Natural Resources prohibits disposing of ashes in the Chesapeake Bay within seven miles of shore. For inland waterways, you may need to obtain a permit from a state agency. Biodegradable urns are available for burials at sea; otherwise, the urn must be emptied into the water and disposed of separately (or saved as a keepsake). Whatever your wishes, get them down on paper, sign and date the document, and keep it with your important papers. As much as any bequest, this simple act of kindness will be a gift to those you leave behind.
July 10, 2025
Estates and Trusts
Corporate Trustees: Smart Choice or Risky Move?
Whether you name a financial institution to manage your trust assets when you are no longer able to do so for yourself, is ultimately a matter of personal preference and choice. In the first part of a two-part “point-counterpoint” consideration of corporate trustees serving as such for individuals’ personal trusts, I examine the potential advantages and reasons to do so. I’ll share the other side of the conversation—the potential drawbacks of naming a corporate trustee next month. What Is a Corporate Trustee? A corporate trustee is a bank, trust company, or professional fiduciary institution that manages trust assets for a fee. Such entities specialize in administering trusts and are regulated by state and federal laws to ensure ethical and competent asset management and protect against fraud and abuse. So, what are the advantages of utilizing a corporate trustee? Why should you name a financial institution to manage your trust? Is it the best choice in your situation? Consider the following top five advantages of a corporate trustee: Professional Expertise Most corporate trustees bring extensive knowledge in investment management, tax planning, fiduciary law, and trust administration. Managing others’ assets is what they do; it’s (typically at least) all they do. This can be especially valuable for complex trusts or large estates, where mistakes could be quite costly and have a substantial impact on the trust assets and both current and future, vested and/or contingent beneficiaries. Clearly, the level and extent of such expertise matters. When evaluating the potential advantages of a particular corporate trustee, consideration should be given to years of experience and the depth of knowledge of the team expected to manage one’s trust assets. Impartiality Face it, family dynamics can be, well, complicated. Appointing a family member or friend as trustee can sometimes lead to unintended and unforeseeable conflicts or strained relationships, especially when it comes to issues such as how to invest and whether and when to make distributions. For example, we only narrowly avoided litigation recently when one of several sibling beneficiaries determined herself to be on the wrong side of preferential treatment by their deceased parent’s hand-picked trustee, a long-time close family friend. For the trustee’s part, it was difficult not to play favorites when certain of the sibling beneficiaries considered and treated the trustee like family, while the lone sibling saw the trustee as nothing more than a favorites-playing impediment to her inheritance. In principle, at least, a corporate trustee affords objective decision-making, free from personal bias, or emotional involvement. Continuity and Reliability Unlike individuals who may become ill or infirm, die, or relocate, corporate trustees typically afford long-term stability and continuity. This can be particularly useful for trusts designed to last for decades or span multiple generations. Here too, however, one would be well-advised to recognize that not all trust companies are created equal. It is important to inquire about those trust company employees who will oversee and provide day-to-day management decisions regarding your trust and what, if any, checks and balances there might be if and when staffing changes occur. Fiduciary Duty Corporate trustees are legally bound to act in the best interests of the beneficiaries and are held to high fiduciary standards. Most also carry insurance and are subject to regulatory oversight, which adds extra layers of protection for beneficiaries who might not even be born at the time of making the trust. I note here, as well, that a generally conservative approach (erring on the side of caution – for the benefit of future/contingent beneficiaries) when it comes to investment/distribution decisions not only serves to provide an added layer of protection for the intended future beneficiaries but, thinking cynically, also happens to align with a corporate trustee’s own pecuniary self-interest, i.e. concomitantly serves to generate higher income for the institution. Administrative Efficiency Trust administration requires ongoing tasks, including record-keeping, periodic tax filing obligations, asset (re-)valuation responsibilities, timely periodic noticing, and asset distribution requirements (discretionary and mandatory). Corporate trustees generally maintain systems and staff to manage these responsibilities efficiently and accurately. At a minimum, one should evaluate a potential corporate trustee’s abilities and track record in this regard.* *As a pertinent aside here, I note that certain individual professionals offering “trustee services” (accountants, for instance) might afford a similar level of administrative efficiency, along with the types of fiduciary protections, professional expertise, and one or more of the additional benefits described above.
June 27, 2025
Estates and Trusts
Married? Consider Upgrading the Deed to Your House
In 1604, Sir Edward Coke said, “Your house is your safest refuge.” Or words to that effect. He was writing in Latin, but the venerable English judge got his point across well enough. The expression has come down to us in the 21st century as “A man’s house is his castle.” The family home should be a safe haven where we can take refuge from the perils and dangers of the outside world. Within its walls, relationships are nurtured, friendships are enjoyed, and children are loved and encouraged. In addition to the locks and security lights that attempt to keep burglars at bay, a married couple’s home can be protected from certain types of creditors simply by how the property is titled. Owning a house as “tenants by the entirety” is reserved for married couples and can provide significant benefits to those who take advantage of it. First, this form of ownership will transfer the house to the survivor if either spouse should die. This transfer will be automatic and efficient, even if the deceased spouse dies without a will. Second, it will protect the house from creditors with a claim against either spouse individually. Titled this way, the family home is less likely to be in jeopardy if one spouse becomes the target of a lawsuit, defaults on a loan, or needs to declare bankruptcy. This can be especially important to individuals in a profession that carry a high risk of personal liability, such as doctors, lawyers, and contractors, as well as teachers, realtors, and therapists. In this way, it serves as a form of free insurance. Ownership of a home as tenants by the entirety is available in many states, including Maryland. And thanks to recent changes in state law, married couples in Maryland can enjoy these creditor protections even if they place their residence in one or more revocable living trusts. The protection against creditors does have its exceptions. One is liens placed on the property by the IRS. Another is creditors who have obtained a judgment against both spouses jointly. The right to title your home this way is one of the unsung benefits of marriage. It is the state’s way of protecting marriages by ensuring that one spouse’s creditor problems don’t put the other spouse and any children out on the street. And, of course, with same-sex marriage legal nationwide, it’s a benefit that applies to gay and straight couples alike. If you and your spouse owned a house before getting married, it’s probably titled as “joint tenants with right of survivorship.” This form of ownership also transfers the property to the survivor if one spouse should die, but it does not protect against creditor liens. Fortunately, you can upgrade your ownership of the house simply by having a new deed prepared. Contact an attorney who practices in this area to get started. The executed deed will need to be filed with the county Land Records office, and you might need to obtain a lien certificate and pay any taxes or other obligations before the deed can be recorded. There should be no transfer or recordation taxes to pay, but there is a nominal recordation fee. If you have a mortgage, a conversation with the provider is advisable beforehand. Once the deed is recorded, you can take comfort in knowing that your castle now has an extra measure of protection from the perils and dangers of the outside world.
June 23, 2025
Estates and Trusts
Unintended Inheritance Happens More Than You Think: Ensuring Your Loved Ones Inherit as Intended
Roughly two-thirds of Americans are estimated to die without executing a valid will. As a result, assets in their name will pass under the laws of intestacy of their home state. The laws of intestacy are essentially default rules that typically transfer a decedent’s assets to their closest living relatives, such as a spouse, children, parents, or siblings. Intestacy laws would likely transfer the assets of many decedents to their intended beneficiaries. It would be uncommon for someone to wish to disinherit their spouse or one or more of their children. However, intestacy laws do not operate on “non-probate assets,” such as joint bank accounts with rights of survivorship, life insurance policies, or retirement accounts. As a result, it is likely that a portion of a decedent’s assets will not pass to their intended beneficiaries. Sometimes, this means that one beneficiary receives a larger share of a decedent’s assets than the others. Other times, virtually all of a decedent’s assets pass to someone they had no intention of ever receiving their assets, while their intended heirs are left without any recourse. Thankfully, some states have laws that will override a beneficiary designation of a non-probate asset if it is likely that the decedent, under the circumstances, would not have intended to provide for that person. One such common circumstance is when a decedent fails to update their beneficiary designations after divorce. For New Jersey residents, N.J.S.A. 3B:3-14 automatically revokes non-probate transfers of assets to a divorced individual, returning the assets to the decedent’s estate to be distributed pursuant to the terms of their will or the laws of intestacy. Similarly, for New York residents, EPTL 5-1.4 automatically revokes non-probate transfers of assets to a divorced individual. However, this automatic revocation will not apply in all cases and to all assets. For example, there is no automatic revocation where the assets are specifically disposed of under the terms of a “governing instrument.” A governing instrument includes a will, trust, deed, or securities, such as stocks and bonds. In the Matter of the Estate of Michael D. Jones, a case recently decided by the Supreme Court of New Jersey (the highest state court), the decedent married his ex-spouse in 1990 and named her as the pay-on-death beneficiary of his U.S. savings bonds. The decedent and his ex-spouse divorced in 2016. Their divorce settlement agreement (DSA) allocated certain assets to each individual and provided that all assets not specifically referred to in the DSA would be owned by the person whose name was on the title to the given asset. The DSA did not specifically mention the savings bonds. The ex-spouse also specifically waived her right to inherit from the decedent’s estate. The decedent passed away in 2019, intestate, without having updated the pay-on-death beneficiary of his U.S. savings bonds. His ex-spouse later redeemed the U.S. savings bonds. The decedent’s daughter was appointed the administrator of the decedent’s estate and promptly sought to recapture the proceeds from the U.S. savings bonds. The court ultimately concluded that the ex-spouse was entitled to the proceeds of the U.S. savings bonds, reasoning that the bonds were regulated by the IRS Federal Treasury regulations, the “governing instrument.” Specifically, these regulations provided that when the owner of a bond dies and is survived by the named beneficiary, the named beneficiary is recognized as the sole and absolute owner of the bond. There are a number of takeaways from this case. First, even if the facts of this case were different and the administrator of the decedent’s estate had won, it would have been a pyrrhic victory at best. The decedent’s beneficiaries would face delays in receiving their inheritance, and the estate would incur significant legal fees and costs in reclaiming these assets. Second, while this case only dealt with U.S. savings bonds, there are many types of assets that have “governing instruments” with specific provisions concerning the death of the account owner. For example, in LeBoeuf v. Entergy Corp., the plan participant of a 401(k), who was a widower at the time, named his children as his designated beneficiaries. He later remarried. When the plan participant died, his 401(k) account had a balance of approximately $3,000,000. His children discovered that the plan sponsor had paid the death benefits exclusively to his second wife. It was revealed that under the terms of the plan documents, a subsequent marriage automatically revoked the beneficiary designations in favor of the new spouse. One could argue that the benefit of this provision is that a plan participant would avoid inadvertently disinheriting their spouse. However, in LeBoeuf, it is almost certain that the death benefits were distributed contrary to the plan participant’s intentions. Lastly, it highlights the critical importance of regularly reviewing existing estate planning documents, the titling of assets, and designated beneficiaries, to ensure that they pass to your intended loved ones at the time of death.
June 23, 2025
Estates and Trusts
New York Advances Medical Aid in Dying Act Amid Ongoing Right-to-Die Debate
The New York State Senate passed the Medical Aid in Dying Act this week, taking a significant step forward towards legalizing physician and medically assisted death for terminally ill patients in New York. The Bill, which had previously been approved by the state assembly after an emotionally charged five-hour session, awaits Governor Kathy Hochul's action. If the Governor signs it into law, New York will become the 11th U.S. state, along with the District of Columbia, to codify an individual’s right to die with assistance from the medical community. What is the Medical Aid in Dying Act (MAID)? The latest incarnation of the signed legislation allows mentally competent, terminally ill adults with a prognosis of six months or less to be prescribed life-ending medication. In order to qualify, there are stringent requirements. First, the patient must request assistance in writing and verbally to their physician; a measure that might be a stumbling block for those whose affliction, disease, or condition may prevent one or the other. Once the request is made in writing and verbally, two doctors then must confirm the patient’s terminal diagnosis, prognosis of six months or less, and the patient’s capacity as it relates to being of sound mind. A terminal diagnosis and prognosis are more calculable standards than capacity, which, in New York State has always been a fiercely contested subject and, in some cases, subjective and specific to the matter at hand. The additional requirement mandates that there be two witnesses to the request to prevent any coercion. Certain individuals are explicitly prohibited from serving as witnesses: relatives by blood, marriage (even domestic partners,) adoption, any beneficiary entitled to a portion of the patient's estate, individuals affiliated with the healthcare facility where the patient is receiving treatment, as well as the patient’s care providers such as the attending physician and the consulting physician. The patient’s nominated health care proxy and agent under the Power of Attorney are also prohibited from serving as a witness. Many advocacy groups have been pushing for this legislation for the better part of a decade and argue that it finally offers terminally ill patients a compassionate option to end their life and, presumably, their suffering. However, there are groups on the other side that have been vocal in their opposition, including certain religious and disability rights organizations, which have expressed concerns that such a law could disproportionately impact the disabled community. Compassion & Choices, one such advocacy group in favor of the legislation, has repeatedly pointed out that a staggering 72% of New Yorkers support medical aid in dying and have urged lawmakers to advance the legislation that has long languished in committee in Albany. While it is unclear what Governor Hochul will do, the fact that the state assembly and senate have reached a consensus marks a significant milestone for those who advocate for such relief. The legislation hangs in the balance until Governor Hochul's decision is made but this author suspects that regardless of her decision, the controversy will continue about end-of-life care, patient autonomy, and the role government may or may not have in a person’s life and death.
June 17, 2025
Estates and Trusts
Insulate Your Marriage From Problems Online
The Greek philosopher Socrates once said, “When the debate is lost, slander becomes the tool of the loser.” He was lucky he didn’t live in the age of Facebook. Thanks to the vast social network, it has never been easier to express an opinion about someone—however unflattering the sentiment may be. In addition to posting written words, it can also be hurtful to upload photographs and videos that were meant for a private audience. And when the object of online derision is an ex-spouse, the pain inflicted can be especially acute. After choosing a companion of good character, it can be hard to image that he or she would so publicly betray the confidences of life’s most important partnership. But the adversity of marital problems can change people, and it sometimes brings out the worst in them. How then can an engaged couple ensure that their relationship won’t end with cutting remarks and embarrassing images on social media? Drawing up a prenuptial agreement is actually a good place to start. A prenup can include a “social media clause,” which explains how spouses, and former spouses, should behave online. Regardless of how long two people may have been together, they will likely have accumulated a vast trove of private information about each other. If this information found its way onto Facebook, Instagram, Twitter, or the like, the result could be worse than hurt feelings. A career could be ruined, business prospects harmed, and social circles decimated. By including a social media clause in their prenuptial agreement, a couple can make their expectations for themselves clear when it comes to online postings. Some couples go so far as to say they won’t change their Facebook relationship status from “Married” until they agree the time is right. This is an important detail in protecting each other’s ability to control news of their transition to single status. A prenuptial agreement has never been the stuff of storybook romance, and many people think of it as a recipe for divorce. Heavy with legal language, the document outlines how assets and debts will be divided if the marriage breaks down. But the reality is that by clarifying matters like these before the wedding even takes place, both partners can help protect their legal rights and establish what will be required of them. Many even say that preparing their agreement was a surprisingly comforting experience. Think of it this way: A prenuptial agreement is like an airbag for your marriage. When you drive a car, you aren’t planning to have an accident, and having an airbag won’t make it any more likely that you will. But if an accident does occur, you will be grateful that you had this important piece of safety equipment and that it was working properly. In the same way, by having a prenup prepared, you aren’t inviting a divorce, and you certainly aren’t making it any more likely that your marriage ends in one. But if things don’t work out, you will thank yourself for having had the presence of mind to protect your legal rights—and your online privacy—when you had the chance. With marriage now legal for same-sex couples nationwide, there are many benefits to enjoy. One of them is having a piece of paper in the drawer that says what happens if things don’t go as expected. The first step is to call a lawyer with experience preparing prenuptial agreements. Once the agreement has been signed, you can enjoy the peace of mind that comes from knowing that you’re prepared for whatever lies ahead.
June 12, 2025
Estates and Trusts
Choosing Mediation to Protect Families and Legacies
Why Mediation? Blood and money make for a tough mix. As an attorney with a decades-long trusts and estates practice, I’ve seen it all: siblings clinging to childhood grievances, children from a first marriage resenting a stepparent, new spouses competing with adult children, and half-siblings emerging after a parent’s death. Estate litigation is not only lengthy and emotionally exhausting, it’s also extremely expensive. By the time the legal dust settles, the parties have often spent more on attorney fees than they’ll receive from the estate. Worse yet, already strained family relationships are often left permanently fractured. Seeing the damage these disputes inflict on families is what led me to seek certification as a mediator. What Is Mediation? Mediation is a voluntary form of alternative dispute resolution where parties work together to resolve conflict with the help of a neutral third party—the mediator. The mediator doesn’t make decisions like a judge or jury. Instead, their role is to guide the parties toward a mutually acceptable agreement crafted on their own terms. Because the outcome is collaboratively reached, mediation often leads to less bitterness, fewer hard feelings, and more durable resolutions. How Does Mediation Work? The process begins with an initial meeting between the mediator and the parties. If attorneys are involved, the mediator may speak with them beforehand to gather background information. During the joint session, the mediator explains the process and invites each party to share a brief summary of the situation from their perspective. An agenda is then established. Each party is encouraged to listen respectfully to the other’s point of view. Following this, the mediator typically meets privately with each side to delve deeper into the issues, explore underlying tensions, and identify opportunities for resolution. This approach allows for creative settlements that courts may not be able to impose. Importantly, mediation is fully confidential. Nothing disclosed during the process is admissible in court should the mediation not result in a settlement. Why Choose Mediation? Cost-Effective: Mediation is significantly less expensive than litigation. While parties may still retain legal counsel, the process usually requires fewer billable hours and avoids extensive court procedures. Mediator fees are typically shared equally by the parties. Efficient: Court cases can drag on for months or even years. Mediation often resolves disputes in a matter of hours or days. Private: Unlike court proceedings, which generate public records, mediation is confidential and discreet. Flexible: The parties—not a judge or jury—control the outcome. This allows for creative, personalized solutions that reflect the unique dynamics of the family. Relationship-Preserving: By encouraging open communication and cooperation, mediation can help mend strained relationships and preserve family ties. Mediation offers a path forward that is more cost-effective, efficient, and humane than litigation. In the emotionally charged arena of estate disputes, it provides families with an opportunity not only to resolve their legal issues but also to do so in a way that promotes healing, dignity, and when possible, reconciliation.
June 5, 2025
Estates and Trusts
Protecting Legacy: Privacy and Estate Planning Tips for Athletes
Professional athletes face unique challenges when it comes to managing their personal, professional, and financial affairs. With significant public visibility, substantial income, a grueling training schedule, and a fast-paced lifestyle, athletes need to protect both their privacy and their legacy. Whether the athlete is just beginning their professional career or, like many of my clients, has already cemented their place into athletic history, effective estate planning and privacy protection can shield the new or long-established professional athlete from risk and exposure, providing long-term peace of mind. Why Privacy and Estate Planning Matter for Athletes There are many reasons why privacy is more of a priority for professional athletes than those in the general public. First and foremost, athletes experience intense media scrutiny. Interviews following each event, reporters covering their personal and family lives, bloggers commenting on their lifestyle, and their family members’ every move. This scrutiny often occurs “overnight” without providing the athlete and their family the opportunity to adjust and ease into this new level of inquisition. Added to the sudden celebrity, the athlete’s career span is generally shorter than the rest of us, which means that the bulk of their earnings is realized in a very short window of time. The lifestyle change happens swiftly, and the duration is generally limited. Because of this compressed time schedule, the athlete has a short runway to transition into their new life, leaving them particularly vulnerable to lawsuits, predatory actors and financial scams. In addition to the sudden shift in assets and scrutiny, an athlete’s family dynamics can also suffer the consequences. Whether it is because the newfound wealth and fame represents a departure from their former life, which they shared with friends and family members, or because those friends and family members feel entitled to share in the of the athlete’s earnings, there is immense pressure. Therefore, creating a thoughtful, discreet plan that safeguards the athlete’s earnings is essential. Establish a Comprehensive Estate Plan As this author has covered in other articles, an estate plan goes beyond a simple Last Will and Testament. It includes a structure that provides the opportunity to manage wealth and guard privacy during the athlete’s lifetime, through the end of their career, and thereafter protects their families upon the death of the athlete. A Last Will and Testament directs how assets will be distributed upon death and names guardians for minor children, but it is not private. Wills are “published” in the court and can be viewed by anyone. A Trust can take the place of a Will because it also directs the distribution of assets upon the athlete’s death, but it is not published in court. Instead, it is a private instrument that is managed by the athlete’s designated trustee upon their death. During the athlete’s life, the trust can also manage the athlete’s assets. Trusts can hold real estate, stocks, bonds, and even NIL rights, which hold value long after an athlete’s career is over. For many athletes, we take it a step further and establish certain trusts in states that provide an extra layer of privacy and creditor protection. Proactive Privacy Protection Privacy for athletes is not just about dodging the paparazzi; it is about controlling the narrative surrounding their professional and personal reputation, in addition to safeguarding their financial information. Establishing Corporate Structures. The use of Limited Liability Companies and other corporate structures can hold real estate interests, vehicles, and investments instead of holding those assets in the athlete’s personal name. Those corporate interests can then be “funded” into a trust instrument, as explained above. Securing their Digital Footprint. The digital footprint is a new facet of an athlete’s legacy and must be considered. There are cyber companies (www.360privacy.io) that monitor on-line mentions, prevent hacking, and help remove destructive and false claims to protect the athlete’s reputation and legacy. Companies like Regal Credit (www.regalcredit.com) take protective measures to safeguard an athlete’s credit and financial assets, as well. Minimize public records – For real estate purchases, athletes can use tools like trusts and corporate structures to ensure that their names are not disclosed via public records. Planning for the Unexpected. The average career of a professional athlete is, by any definition, short: the NFL athlete’s career hovers just over three years, and the NBA athlete’s career lasts about five years. Athletes have the added risk of an even shorter career in the event of an injury or any number of other unforeseen events. Planning now helps avoid chaos later. Insurance. Connecting with a reputable insurance advisor can be game-changing to cover injuries and disabilities if the athlete is unable to play, even temporarily. Life insurance not only covers the athlete’s family upon death but can also be an opportunity for investment strategy, particularly when income is earned quickly but for a shorter duration. Some athletes even invest in liability insurance to protect themselves from extortion attempts. In fact, Ernst and Young report that professional athletes sustained almost $600 million in fraud and extortion-related losses from 2004 to 2019, a number that has continued to climb. Pre-nuptial agreements. We all know the statistics: one in two marriages ends in divorce. Athletes are no different, and the added stressors of constant travel, a grueling training schedule, and fame can make marriages particularly vulnerable and challenging to maintain. Prenuptial agreements are a must for athletes to ensure that their hard-earned savings are protected, even in the event of a divorce. Update Your Plan Regularly An athlete’s life and financial situation will evolve over time; income levels, contracts, relationships, and even states of residence change with great frequency. An athlete should revisit their plan immediately after signing a new contract, upon injury, following a major purchase, upon marriage, the birth of children, upon retirement or when starting a new business venture. A properly created plan should be nimble and easy to update. Work with a Trusted Team As with any team sport, you should not go it alone. An athlete’s privacy and estate strategy should be guided by an experienced estate planning attorney, a licensed financial professional, a tax advisor, a security and privacy consultant, and an insurance professional. Athletes work hard to build a legacy on and off the field. By taking a proactive approach to privacy and estate planning, athletes can protect their assets, support their loved ones, and maintain control of their personal legacy.
May 30, 2025
Estates and Trusts
Estate Planning: Peace of Mind for Uncertain Times
In the late 19th century, death was almost fashionable. Funerals were well attended and even rivaled weddings in their splendor and expense. Department stores offered an array of luxury clothing for grieving mothers and widows. Black fabrics were reserved for those in deep mourning. Then shades of gray and mauve were mixed in as one felt able to rejoin society. If death wasn’t celebrated, it was at least taken very seriously. But then, our Victorian cousins were closer to death than we are today. The average person didn’t live to see his 50th birthday, and more than three-quarters of all deaths occurred in children under the age of five. Today, people are living longer than ever, and as a consequence, death is considerably less in vogue. Improvements in medical care, diet, and occupational safety have prolonged life. Still, they have done little to combat the new threats to our existence. The terrors of shootings and random acts of violence, the perils of hurricanes and other natural disasters, and the specter of civil unrest and even all-out war are reason enough to worry about what might lie ahead. In times like these, peace of mind comes controlling the things you can and being prepared for the unexpected, which means setting aside money for an emergency, having health and life insurance, and even safeguarding against your own disability or death. This last item can be the most challenging to consider. It includes thinking about what would happen if you couldn’t manage your own finances or health care. Someone should be put in charge of these essential responsibilities under a durable power of attorney and an advance medical directive. Armed with these documents, your spouse, partner, or someone else you trust can look out for your best interests if you ever become incapacitated. Without a power of attorney, it could be necessary for a loved one to become your legal guardian through a court proceeding. Guardianships usually require letters of certification from two healthcare professionals who have examined you, as well as an attorney to represent both you and the person seeking to become your guardian. The process is expensive and time-consuming, but it can be avoided altogether with a durable power of attorney. Failing to prepare an Advance Health Care Directive can also lead to unfortunate results. Responsibility for medical decision-making would probably fall to your next of kin, regardless of who that might be. It could be a spouse, but for a single person, an estranged family member could suddenly be responsible for making life-and-death decisions on your behalf. Without an advance medical directive, it’s not uncommon for multiple people to have this authority. For example, if your next of kin were a group of siblings, they might argue among themselves as to what sort of medical care you should receive. Some could remember you as a fighter who would want to try every possible treatment before giving up, while others might feel that you should be kept comfortable and not be allowed to suffer. An even worse outcome can occur when someone fails to prepare a will. It’s tempting to think that the “right people” will inherit when someone dies without a will. However, the rules of inheritance may provide only a portion of the estate to a surviving spouse and nothing at all to an unregistered domestic partner. In these times of uncertainty, take control of the things you can. Speak with an Estates & Trusts attorney about preparing a will and other planning documents to protect yourself and the people you care about. Then, enjoy the peace of mind that comes from knowing that you are prepared for some of life’s uncertainties.
April 16, 2025
Estates and Trusts
Building Adaptive Trusts: Ensuring Tax Efficiency in an Evolving Tax Landscape
The lifetime estate tax exemption amount is as high as ever. The estate tax exemption amount rose from $1,000,000 in 2002 to $5,000,000 in 2011. Then, Congress doubled the amount of the estate tax exemption in 2018. As of this writing, the current lifetime exemption amount is nearly $14,000,000 per individual. With such high exemption amounts, there are few estates subject to federal estate tax. The focus of estate planning has, therefore, shifted from removing assets from a decedent’s estate to minimize or eliminate estate taxes, to ensuring that assets remain in the estate for estate tax purposes so that the assets receive a step-up in capital tax basis at the time of death. The “step-up” in the capital tax basis of assets means that for capital gains tax purposes, assets in a decedent’s estate will reset to the fair market value of these assets at the time of their death. By way of illustration, if a stock were bought for $100 and appreciated to $1,000 at the time of the account holder’s death, the beneficiary would only pay capital taxes on any further appreciation above $1,000. If the beneficiary sold the stock for exactly $1,000, no taxes would be owed. On the other hand, assets gifted during lifetime or held in an irrevocable trust do not receive a step up in capital tax basis. With the ever-shifting tax landscape, the estate planner must carefully balance the likelihood that their client will have a taxable estate at the time of their death with the desire to include appreciated assets (especially assets with a low capital tax basis) in the Decedent’s estate so that they will enjoy the step-up. But what happens if that calculation seems imprudent or unwise based on facts and circumstances in the future? For example, suppose Peter wishes to provide all his assets to his wife, Mary. Peter’s assets, when combined with Mary’s assets, will be close to or exceed the lifetime estate tax exclusion amount. When Peter passes away, assets received by Mary will not generate any estate tax liability because spouses enjoy an unlimited marital tax deduction. However, it is possible that Mary may now have a taxable estate upon her death, especially if her assets continue to appreciate over her lifetime. Thus, the beneficiaries of Mary’s estate will pay estate taxes on the assets they receive in excess of the lifetime exemption amount in effect at the time of Mary’s death. There are several ways to address these concerns and minimize or eliminate any estate taxes that may be owed in the future. Peter could remove some of his assets from his estate by establishing an irrevocable trust. This trust could be established either during his lifetime or via the use of testamentary trusts (i.e., a trust established at the time of Peter’s death). However, Peter may want to avoid the costs and inconvenience of trust administration if it is possible that he and Mary will never have estate tax issues. Another option is the “wait and see” approach using a “disclaimer trust” that may or may not be funded after Peter’s death. Peter could direct in his will or revocable trust that his assets will pass outright to Mary. Mary may then make a qualified disclaimer, effectively refusing to accept some or all of Peter’s assets. Any disclaimed assets will bypass Mary’s estate and go into the disclaimer trust, which can be used to support Mary for the remainder of her lifetime. The assets that pass to the disclaimer trust, and any subsequent appreciation in these assets, will remain outside of Mary’s estate and will pass estate tax-free to her future beneficiaries. Suppose after funding the disclaimer trust that Mary’s assets are significantly spent down and exhausted during her lifetime. Perhaps a future Congress will increase the estate tax exclusion amount further or completely eliminate the estate tax. In any of these scenarios, the disclaimer trust will serve no tax purpose for Mary. Worse, the assets in the disclaimer trust will not receive the “step-up” in the capital tax basis at the time of Mary’s death. Is there a way to unwind the disclaimer trust and ensure that these assets are includable in Mary’s estate at the time of her death? With careful planning, the answer is “yes”. One powerful technique to resolve this issue is by appointing a trust protector for the disclaimer trust. A “trust protector” is a disinterested party with specific enumerated powers. The trust protector could be given the power to confer upon Mary a general power of appointment to choose any beneficiary she wishes to receive her estate assets, even her own estate. Pursuant to IRC § 2041, assets subject to a general power of appointment are includable in the power holder’s estate for estate tax purposes. Now, whether Mary exercises her general power of appointment or not, the assets will be included in her taxable estate and receive a step-up in capital tax basis. While this planning technique can provide significant tax benefits, it is not always the right choice in every situation. For instance, if Mary were to face creditor issues, granting her a general power of appointment would subject the entire disclaimer trust’s assets to creditor claims. However, when implemented thoughtfully, incorporating a trust protector with the ability to grant a general power of appointment adds valuable flexibility, allowing the estate plan to adapt to the ever-evolving tax laws and optimize tax outcomes.
April 3, 2025
Estates and Trusts
Trustee's Standing in Estate Distribution: A Legal Analysis of Estate of Barry Tarlow
In a groundbreaking decision that could reshape the landscape of California estate law, the Court of Appeal in the Second District Division Four has ruled in favor of trustee David Henry Simon, affirming his right to seek a judicial determination of trust assets under Probate Code section 11700. The court's ruling clarifies the legal framework under which trustees can seek judicial determination of their rights to trust assets, emphasizing the application of Probate Code section 11700. This pivotal ruling is a must-read for estate law practitioners, trustees, and beneficiaries as it navigates the complexities of estate administration with unprecedented clarity and precision. Factual Background Barry Tarlow, a prominent criminal law attorney, executed a will in 2005, with minor modifications in 2006, which held terms for a testamentary trust. The will divided his estate between his siblings, Barbara and Gerald. Gerald was to receive his share outright, while Barbara's share was to be placed in the "Barbara Tarlow Trust," with David Henry Simon named as trustee. Following Barry's death in April 2021, Barbara and Gerald became executors of the estate, and Simon retained his role as trustee. The Barbara Tarlow Trust was a spendthrift trust, which provided that upon Barbara’s passing, the residue would go entirely to Gerald, if living, or otherwise, to a donor-advised fund at Fidelity Charitable Gift Fund. The estate administration process revealed that Barbara's share, intended for the trust, was valued at over $20 million. Barbara disagreed with the use of the spendthrift trust and purchased from the contingent remaining beneficiary, donor-advised fund at Fidelity Charitable Gift Fund, the interest that might go to them to have a power of appointment. Further, to gain control over the trust assets, Barbara and Gerald filed an ex parte petition to replace Simon as trustee and modify the trust terms. After a denial of the ex parte petition, Barbara then disclaimed her entire interest in testamentary trust and Gerlad disclaimed his interest in the estate's personal property. As the joint executors, Barbara and Gerald filed a petition for final distribution, which would remove any distribution to the testamentary trust based on the disclaimers. This led to a series of legal disputes over the final distribution of the estate, including Simon filing a petition to determine beneficiaries of the estate under Probate Code section 11700. Legal Issues and Court's Analysis The central legal issue was whether Simon, as the named trustee, had standing to file a petition under Probate Code section 11700. This section allows any person claiming to be entitled to a share of the estate to seek a court determination of their rights. Simon argued that his role as trustee entitled him to such standing, while Barbara held that her disclaimer prevented such an interest to Simon as there was, therefore, no testamentary trust for him to administer. The court first analyzed the language of the code section as far as standing, providing that "any person claiming to be a beneficiary or otherwise entitled to distribution." In rendering their ruling, the court stated that this phrase, as included by the legislature, was broad and inclusive, allowing a wide range of individuals to file a petition for court determination. As such, it encompasses not only direct beneficiaries but also trustees and others who may have a claim to the estate assets. The Court of Appeals held that trustees are indeed "persons claiming to be entitled to distribution of a share of the estate" under Probate Code section 11700, reasoning that trustees are "persons entitled to distribution" because they are responsible for managing and distributing trust assets according to the terms of the will. This decision underscores the trustee's legal title to trust property, which vests as of the decedent's death, giving them a legitimate claim to the estate's distribution. The court's interpretation of section 11700 provides a clear precedent for future cases involving trustee standing in probate matters. Although Barbara argued that her disclaimer presumptive prevented Simon’s standing, the court highlighted that the presumption of the validity of disclaimers is not conclusive and can be challenged, which was contrary to the trial court’s assumption in these proceedings. This aspect of the ruling emphasized the need for a thorough judicial review of disclaimers and other estate-related documents. Ultimately, the Court of Appeals remanded the case for further proceedings to determine the validity of Simon's claims and Barbara's disclaimer, indicating that factual disputes should be resolved through evidentiary hearings. Conclusion and Implications The Estate of Barry Tarlow marks a pivotal moment in estate law, reinforcing the vital role of trustees and the necessity of procedural rigor in probate proceedings. By affirming the trustee's standing and emphasizing the importance of judicial review, this ruling ensures that the administration of estates is conducted with fairness and transparency. Legal practitioners, trustees, and beneficiaries can look to this case as a guiding beacon, illuminating the path to equitable and just estate distribution. This ruling has significant implications for drafting attorneys, trustees and beneficiaries alike. For drafting attorneys, the decision underscores the need for precise and detailed trust provisions to account for potential court involvement, which could complicate the estate planning process and necessitate more extensive legal advice. Trustees gain enhanced authority to manage and distribute trust assets, but they must be vigilant against potential misuse of their standing and be prepared for increased litigation risks. Beneficiaries benefit from greater protection, as trustees can now more confidently seek court intervention to safeguard their interests. However, this ruling may also lead to more frequent challenges to trustee actions, potentially straining relationships and increasing disputes. Overall, while the ruling strengthens the legal framework for trustees, it introduces complexities that all parties must navigate carefully. As the legal community absorbs the implications of this landmark decision, it is clear that the principles established here will resonate through future probate and trust law cases, shaping the landscape of estate administration for years to come.
April 2, 2025
Estates and Trusts
Cultural Perspectives on End-of-Life Planning: Traditions, Taboos, and Practical Considerations
The United States is an ever-changing cultural landscape. As a nation of immigrants, we are a complex patchwork of individuals from diverse backgrounds, each bringing distinct ethnic, cultural and religious beliefs. Estate planning attorneys must recognize and respect these differences, as they are deeply embedded in our social structure. To be culturally competent attorneys, we must view each client as a unique individual whose background may influence decisions regarding estate distribution, end-of-life planning and burial arrangements. Cultural Influences on End-of-Life Planning End-of-life planning involves some of the most intimate decisions a person may make, often shaped by religious and cultural beliefs. Attorneys cannot assume a client’s preferences regarding burial, cremation or body donation. Additionally, alternative burial practices such as green burials or organic reduction are gaining popularity, though they may be restricted in certain states or prohibited by specific cultural or religious traditions. Despite the discomfort these discussions may bring, engaging in frank and honest conversations with clients is essential to ensure their final wishes are honored. Religious and Cultural Funeral Practices Islam Islamic law emphasizes minimizing harm. When making end-of-life medical decisions, Muslims are encouraged to pursue treatments that preserve life while avoiding those that may cause unnecessary suffering. As death approaches, a Muslim may lie on their right side, facing Mecca. Upon passing, the deceased’s eyes and mouth are closed, and family members recite a final prayer. Islamic funeral customs require that the body be washed, shrouded, and buried as soon as possible. Embalming is generally prohibited, and cremation is strictly forbidden. The deceased is placed on their right side in the grave, facing Mecca, often with a layer of rocks covering the gravesite to prevent direct contact with the soil. Judaism Judaism also emphasizes the sanctity of life and minimizing suffering. Aggressive medical intervention is encouraged only when it does not prolong suffering. After death, mourners traditionally tear their clothing as a sign of grief. The body is cleansed, groomed, and wrapped in a simple white shroud. A designated “shomer” (guardian) remains with the body until burial, which should occur within 24 hours. Traditional Jewish burials use plain wooden caskets with no metal fastenings. Embalming and cremation are discouraged, and mourners may take part in filling the grave with soil as a final act of respect. Buddhism Buddhist traditions focus on facilitating a peaceful transition to the next life. Burning incense during a person’s final moments may be customary. After death, the body is often left undisturbed for a period, typically up to a week, to allow the soul to transition peacefully. Buddhist funeral customs vary by region, but cremation is the preferred method of disposition, as it is believed to free the soul. In Tibetan Buddhist tradition, a high-altitude burial, where the body is offered to vultures, is customary, though this practice is not permitted in the United States. Catholicism Catholics receive three sacraments at the end of life: anointing of the sick, confession, and Holy Communion. These sacraments provide spiritual comfort, forgiveness, and preparation for the afterlife. The anointing of the sick involves a priest blessing the individual with sacred oil, confession allows for absolution, and Holy Communion serves as spiritual nourishment. A Catholic funeral typically includes a vigil, a Funeral Mass and a Rite of Committal. While cremation is allowed, traditional burial is preferred, and cremated remains must be buried rather than scattered or kept at home. Eastern Orthodox Christianity Eastern Orthodox Christians emphasize sacraments at the end of life. A priest administers the final confession and Holy Communion, and individuals are encouraged to avoid medications that may cloud their consciousness during these sacred moments. After death, the family washes and clothes the body in the presence of a priest. Embalming is optional. A wake is held before the funeral, and hymns, such as the Trisagion, are sung during the procession from the funeral home to the church and then to the cemetery. Cremation is not permitted, as the body is considered sacred even after the soul has departed. Chinese Funeral Customs Chinese funerals are deeply rooted in tradition, with customs varying based on geography and religious beliefs. However, certain elements remain consistent across different communities. Before the funeral, families often consult a feng shui master to determine an auspicious date and time for the funeral and burial. In some cases, the master may also select the grave’s location, which is traditionally on a hillside but never beneath a tree. The deceased is typically dressed in white, though individuals who lived to be 80 or older may be clothed in colorful garments to celebrate the long life. Family members customarily hold a three-day visitation period, during which they spend time with their loved ones before the funeral. When the casket is sealed, all family members turn their backs to avoid the belief that their souls could be trapped inside. Similarly, they avert their gaze when the casket is lowered into the grave. Incense is often burned throughout the funeral service and at the gravesite as a sign of respect. Families may also burn spirit money, known as “joss paper,” to ensure their loved one’s comfort in the afterlife. While cremation is permitted, it is customary for family members to witness their loved one being placed in the cremation chamber. Hindu Funeral Customs Hindu funeral rites are deeply intertwined with the belief in reincarnation. Since the physical body is no longer needed after death, cremation is considered the most effective way to release the soul and facilitate its journey toward rebirth. Before cremation, the body undergoes a sacred cleansing ritual, during which it is washed with ghee, honey, milk, and yogurt. The head is anointed with oil, the hands are placed in a prayer position, and the big toes are tied together. The deceased is traditionally wrapped in a white sheet, adorned with a garland of flowers and rice balls. A lamp is placed near the head as part of the ritual. Hindu tradition emphasizes a swift cremation, usually within 24 hours of death. Until then, the body remains at home, allowing family members to pay their respects and participate in final rites. Unique Cultural Funeral Practices South Korea: Burial Beads In 2000, South Korea enacted a law requiring the removal of remains from burial sites after 60 years due to limited space. As an alternative, many South Koreans now transform their loved ones cremated remains into colorful beads, which are displayed in homes. This practice has also gained popularity among South Koreans who live in the United States. Ghana: Fantasy Coffins In Ghana, elaborate, custom-made coffins celebrate the deceased’s personality, profession or passions. These artistic coffins, crafted in shapes such as animals, airplanes, or everyday objects, serve as tributes and works of art, ensuring a vibrant and meaningful send-off for loved ones. Conclusion These are only a short list of the different cultural and religious traditions influencing end-of-life planning. Estate planning professionals must be sensitive to these diverse perspectives to ensure that the clients’ wishes are properly honored. By fostering open discussions and respecting cultural practices, attorneys can provide thoughtful, personalized guidance that aligns with their clients’ values, beliefs and traditions.
March 21, 2025
Estates and Trusts
How to Have "The Talk" About Estate Planning with Your Parents
Estate planning is one of the most important conversations you’ll ever have with your parents. Discussing wills, trusts, and end-of-life wishes can feel uncomfortable, but having a clear plan in place can save your family from confusion, conflict, and stress down the road. If you’ve been putting off the conversation, you’re not alone. Many adult children hesitate to bring up estate planning for fear of upsetting their parents or appearing greedy. But the truth is, approaching the topic with care and respect can actually strengthen family bonds and ensure that everyone’s wishes are honored. Moreover, learning about your parents’ plan may lead to additional productive conversations—if you are independently wealthy or have creditor concerns, you may not want your parents to leave you assets outright—you can encourage your parents to optimize their planning through the use of trusts or other alternatives. Here’s a step-by-step guide to having "the talk" about estate planning with your parents — without awkwardness or tension. Find the Right Time and Setting Timing and environment matter when discussing sensitive topics. Choose a time when everyone is relaxed and not rushed. A calm and private setting will help everyone feel more comfortable and open. Tip: If you’ve done your own estate plan, then an easy way to start the conversation naturally could be: “I’ve been working on my own estate plan and realized how important it is. Have you thought about yours?” Approach It with Care and Empathy This isn’t about money — it’s about protecting your parents’ wishes and avoiding family disputes later. Make it clear that your goal is to understand and respect their choices, not to control or influence them. Instead of saying, “We need to talk about your will,” try: “I want to make sure we’re prepared as a family if anything happens.” “It’s important to me that your wishes are honored — can we talk about how you’d like things handled?” By framing it as a conversation about their legacy and peace of mind, you’ll help them feel more at ease. Ask Open-Ended Questions Rather than diving straight into the details of their will or assets, ease into the conversation by asking thoughtful, open-ended questions like: “Have you thought about how you’d like your estate handled?” “What matters most to you when it comes to your legacy?” “If something were to happen, how would you want us to handle things?” Give them time to process and respond without pressure. If they hesitate or seem uncomfortable, reassure them that you’re there to listen, not to push. If they don’t feel comfortable discussing the details with you, offer to help them find an experienced estate planning attorney. Discuss the Essentials Once the conversation is flowing, gently introduce key estate planning elements. If they permit you to do so, include an estate planning attorney in the dialogue: Will: Do they have a will? Is it up-to-date and legally sound? A will ensures that their assets are distributed according to their wishes and can prevent costly legal battles. Trusts: Trusts can offer more control over how and when assets are distributed while helping avoid probate and potentially reducing estate taxes. Ask questions like: “Have you considered setting up a trust to protect certain assets?” “Would you want to make sure certain funds are distributed over time rather than all at once?” “Would a revocable or irrevocable trust make sense for you?” Many people don’t realize how flexible and powerful trusts can be for protecting assets and reducing tax burdens. Estate Taxes: Depending on your parents' estate size, estate taxes could significantly reduce the amount passed on to heirs. Questions to consider: “Have you spoken with an advisor about strategies to minimize estate taxes?” “Would you like to explore options like gifting or charitable donations to reduce tax liability?” “Should we look at how setting up a trust could reduce taxes?” Understanding how estate taxes work can help you and your parents make more informed decisions about structuring their estate. Power of Attorney: Have they appointed someone to make financial or healthcare decisions if they’re unable to? A durable power of attorney can give someone authority to manage their financial affairs, while a healthcare power of attorney ensures their medical wishes are respected. Healthcare Directives: Do they have a living will or healthcare proxy to outline their medical wishes? These documents help guide medical decisions if they’re unable to communicate. Beneficiaries: Are their assets (e.g., life insurance, retirement accounts) designated correctly? Beneficiary designations can override what’s written in a will, so they need to be up to date. Executor/Trustee: Have they named someone to carry out their wishes? This person will handle closing accounts, distributing assets, and working with the courts if needed. This isn’t about getting into the nitty-gritty details; it’s about ensuring the basics are covered, and that someone knows where to find important documents. Offer to Help (But Respect Their Decisions) Your parents might not have all the answers. Offer to help them get organized by suggesting they meet with an estate planning attorney. You could say: “Would you like me to help you find an attorney?” “If you want to put together a list of accounts and documents, I’m happy to help.” Of course, their estate plan is ultimately their decision. Your role is to support, not control. Keep the Conversation Going Estate planning isn’t a one-and-done conversation. Circumstances change — marriages, divorces, births, deaths, and financial shifts all impact an estate plan. Check-in periodically with your parents to see if they need to make updates or have questions. Keeping an open line of communication will help avoid misunderstandings later. Thank Them for Their Trust Talking about estate planning requires vulnerability — from both sides. Thank your parents for opening up and trusting you with such personal matters. Let them know how much it means to you that they’re taking steps to protect their legacy and make things easier for the family. Follow Up with Next Steps Once the conversation is underway, help your parents take action: Encourage them to meet with an estate planning attorney. Suggest setting up a trust if it makes sense for their situation. Help them gather financial records, account details, and important documents. Work with them to create a list of assets and liabilities. Following up shows that you’re invested in helping them protect their legacy — without pushing them to make uncomfortable decisions. Final Thoughts Discussing estate planning with your parents isn’t easy — but it’s one of the most loving things you can do as a family. By approaching the conversation with empathy, patience, and respect, you’ll help ensure that your parents’ wishes are honored and that your family is prepared for whatever the future holds.
March 20, 2025
Estates and Trusts
Not Considering the Importance of Charitable Giving
This is Part 10 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. When a client’s family does not wish to inherit a collection or if its inclusion in the estate would create a significant tax burden, it is crucial to explore charitable giving options. Proper planning can help maximize the benefits of a donation while avoiding unintended legal and tax complications. Ensuring the Charity Will Accept the Gift While many clients may assume that institutions will welcome their generous donation, not every organization is willing or able to accept a collection. Before naming a charity as a beneficiary in estate planning documents or making a present gift, it is essential to confirm the charity’s willingness to accept the donation and any conditions the client wishes to impose on its use. Establishing this agreement in advance can prevent post-mortem disputes and ensure the estate qualifies for the intended tax deductions. Tax Benefits of Lifetime Charitable Giving Beyond philanthropy, charitable gifting can provide substantial tax benefits. Clients should be advised on the income tax advantages of donating all or part of their collection during their lifetime. A charitable income tax deduction is available for contributions of art and collectibles to a public charity, provided the property qualifies as capital gain property and meets the related-use rule (discussed below). If these conditions are met, the donor can deduct the full fair market value of the collection in the year of transfer, subject to a limit of 30% of their adjusted gross income (AGI). Any excess deduction may be carried forward for five years. Since the property must qualify as capital gain property, a lifetime charitable deduction for the donation of art or collectibles is only available to clients who qualify as collectors. As noted in Mistake #1 of this series, creators and dealers recognize ordinary income upon the sale of art and collectibles. Moreover, creators have little incentive to donate their work during their lifetime, as any charitable deduction would be limited to the cost of materials rather than the item’s fair market value. Under the related-use rule, the donee charity must use the donated property in a manner that aligns with its exempt purpose under Internal Revenue Code Section 501. If the charity’s use is unrelated to its mission, the donor’s deduction is limited to the property’s cost basis rather than its appreciated value. Additional limitations apply under the Pension Protection Act of 2006 if the charity sells the donated property within three years of receipt unless the organization certifies that the donation was used for its exempt purpose. For the creator and dealer, it usually makes more sense to consider selling the item and donating the proceeds to charity. Doing so avoids the related-use rule and the requirement that the item be capital gain property. In such a case, the charitable deduction may offset, most if not all of, the ordinary income realized on the sale. Public Charities vs. Private Foundations Clients should also understand the key differences between donating to a public charity versus a private foundation. Donations to public charities allow a deduction based on the collection's fair market value, provided the collection is capital gain property and the related-use rule is met. Donations to private foundations, however, only permit a deduction based on the donor’s cost basis, and the deduction is limited to 20% of AGI. Excess amounts may still be carried forward for five years. Fractional Gifts and Changes Under the Pension Protection Act One of the biggest challenges in lifetime charitable gifting is persuading clients to part with their collection while they are still alive to enjoy it. Before August 17, 2006, clients could donate a fractional interest in tangible personal property, allowing them to share ownership with a charity while retaining partial possession. However, the Pension Protection Act introduced stricter valuation, time, and use limitations that impact the deductibility of fractional gifts. Under IRC Section 170(o), the deduction for a fractional gift is now limited to the lesser of: The value used to determine the deduction for the initial fractional donation, or The fair market value at the time of subsequent contributions. Additionally, the donor must fully transfer their interest in the property within 10 years of the initial fractional gift or before their death—whichever comes first. The recipient charity must also take substantial physical possession of the item within one year of the initial gift (and within one year of any additional gifts) and satisfy the related-use rule. Failure to meet these conditions may result in the recapture of previous deductions, plus interest and an additional 10% penalty. Charitable Bequests and Estate Tax Benefits An outright donation of a collection upon death—whether to a public charity or a private foundation—qualifies for an estate tax charitable deduction based on the fair market value at the time of death. Importantly, bequests of tangible personal property generally do not trigger the related-use rule, making this a valuable option for clients seeking to preserve their collection’s full value for charitable purposes. However, clients planning to donate a collection upon their death should always consult with the intended recipient during life to confirm the organization’s willingness to accept the gift. A public charity’s acceptance of art and collectibles typically depends on whether the donation aligns with its mission and whether it has the necessary facilities and financial resources to store or display the collection.
March 12, 2025
Estates and Trusts
Not Discussing Collections with Heirs
This is Part 9 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. A collection may hold deep personal significance for a client but may not carry the same sentimental or financial value for their heirs. It is essential to encourage clients to have open conversations with their heirs, as appropriate, to understand their intentions and expectations. In many cases, heirs may see a collection primarily as a financial asset rather than a legacy to preserve. Clients should consider alternative disposition strategies beyond an outright bequest if they intend to sell the collection. For instance, donating the collection to a museum, establishing a trust, or selling select pieces during their lifetime may better align with their goals. Even if heirs wish to keep the collection, clients should clarify whether they intend to retain it in its entirety or only select pieces. This distinction is crucial, as valuation discrepancies can arise when certain items are allocated to specific individuals, potentially impacting the overall fairness of asset distribution. Many clients express a desire to donate their collections to museums. However, before proceeding with such a gift, it is essential to confirm that the museum is willing to accept the items. Many museums already have extensive collections in storage and may not be interested in acquiring additional pieces. Additionally, if a museum does agree to accept a collection, it often requires a financial contribution to cover ongoing maintenance and preservation costs. Contacting the museum or other recipient organization before making the gift – especially if the donation is planned through a will or other testamentary document – is essential to ensure its acceptance. Most importantly, clients should consult with an expert in art succession planning. A knowledgeable advisor can help structure a well-organized, tax-efficient plan during life or at death and ensures a smooth transfer of the collection while honoring the client’s wishes.
March 7, 2025
Estates and Trusts
Essential Legal Documents Transpeople Must Update for Protection
Navigating life as a transgender individual involves critical steps toward ensuring that your identity is recognized legally and accurately, particularly in the current political climate. Updating your legal documents is an essential part of the process, especially in a world where current systems are not designed with gender diversity in mind. Updating these documents not only reflects your true identity but can also help you avoid potential challenges, whether it is at the doctor's office, in the workplace or when traveling. Below is a comprehensive list of essential legal documents that every trans person should consider immediately to ensure their identity is represented accurately: Legal Name Change One of the most important steps in affirming your gender identity is ensuring your government-issued identification reflects your gender and name. The process of a name change is different in every state. In New York, your local county Supreme Court provides an administrative form to request a name and gender marker change, which is the first step to ensure that all other government IDs can then be changed to align with your true identity. Once approved in New York, you will receive a court order to reflect your name and gender marker. A court order is not required in all states; many states have an administrative process to effectuate the change. Name Change: In New York, unless you are changing your name via marriage, adoption, divorce or citizenship, a court order is required. Once your name and gender marker are legally changed via court order, you may then update your driver’s license and begin the process of updating all other government IDs, including the reissuance of your birth certificate as discussed below. Gender Marker: In some states like New York, you can update the gender marker on your identification to reflect your gender identity. While the process and requirements vary by state, as discussed below, some states require proof of medical transition or a letter from your healthcare provider. Birth Certificate The birth certificate is a foundational legal document. The process of changing a birth certificate varies from state to state and will involve an administrative process or filing a court petition to obtain a court order or directive reflecting the change in name and gender marker. Name Change: Some states allow you to amend your name on the birth certificate without any additional steps or documentation, while others may require a court order. Gender Marker: New York allows you to amend the gender marker on your birth certificate. As of February 2025, Florida, Kansas, Montana, Oklahoma, Tennessee, and Texas are the only states that prohibit the changing of gender marker. Alabama, Arizona, Arkansas, Georgia, Guam, Kentucky, Louisiana, Michigan, Missouri, Nebraska, North Carolina, and Wisconsin all require medical proof of gender change. Certainly, many states make it challenging to amend the gender marker, but it is absolutely worth pursuing to ensure that your birth record aligns with your gender identity. Social Security Upon your legal name change you should update your records with the Social Security Administration (“SSA”). Updating your Social Security records ensures that your name aligns with your legal identity, especially for the purposes of employment, Social Security Disability or Retirement benefits, and taxes. In some states, failing to update your identity with the SSA could even result in the suspension or revocation of your state driver’s license. Name Change: You may update your name by submitting a legal name change document to the Social Security Administration, which is available online at www.ssa.gov. Gender Marker: As of the date of this publication, the Trump Administration has issued a directive to exclude the use of gender marker “X” and prevent the update of gender markers to reflect a transition. Passport Updating your United States Passport information is important for those who wish to travel outside of the country. Your passport must reflect your name and should reflect your gender to ensure ease of travel. A passport reflecting your true identity is necessary not only to leave the US but also to deal with border officials, obtain visas, and participate in immigration processes in other countries. It should be noted that an inconsistent gender marker does not automatically prohibit your travel, but it may cause complications within the United States when leaving or upon arrival in a different country. Name Change: To update your United States Passport, you will need to provide the court order or administrative ruling from your state reflecting your name and a copy of your newly issued birth certificate. Gender Change: The Trump administration has suspended issuing passports with X markers and passport renewals with differing gender markers. This directive is currently pending litigation and there has been no final determination of its legality. As of the date of the publication of this article, it is being widely recommended by trans-rights groups that until there is a legal determination and the policy is released, trans people who have a current, valid passport should refrain from attempting to renew or change it. Health Insurance and Medical Records Your health insurance and medical records should reflect your correct name and gender to prevent confusion and ensure that you are receiving the appropriate medical care. It goes without saying that doctors entrusted to provide medical care and treatment for their patients should be informed of your proper name and gender in the furtherance of health care. HIPAA requires that healthcare providers update a person’s gender identity or transition care and are prevented from sharing this information without your express consent. However, there are several legal battles brewing in states regarding the release of this information for minors and gender-affirming care. Health Insurance: You should contact your insurance provider to update your name and gender on all of your insurance records. In general, proof of a name change and gender markers are requested. Medical Records: Update your doctor, therapist, and other healthcare providers on your name and gender marker so that your medical records accurately reflect your identity. This will also help you avoid issues when seeking medical care, such as incorrect gender-specific treatments or tests. Employment Records Updating your name and gender with your employer ensures that your employer recognizes your identity at your company. Providing this updated information to your employer will avoid unnecessary confusion in official communication from your company, payroll, retirement benefits and health care benefit administration. Name Change: Once you have legally changed your name in your state, you must notify your employer so that your employer may update their records, including the name on your paychecks, your tax documents and your benefits enrollment. Gender Marker: Some employers offer the ability to update gender markers in their records, which can be important for workplace respect and to avoid misgendering. Many employers provide the opportunity for its employees to indicate their gender within office systems, such as email and signature blocks, to promote a culture of respect and affirmation. Estate Planning Transgender individuals should make sure their estate planning documents reflect their identity and desires. They should also ensure that their loved one’s estate planning documents naming them also reflect their name and gender marker changes. These documents may include: Executor, Trustee and Beneficiary Updates: Ensure that your name is properly reflected in your own estate planning documents such as your Last Will and Testament and Trust instruments. For others, ensure that the names of your chosen executors and beneficiaries in your documents are accurate and that their gender is respected in all related documents so that they can be easily identified in the probate or estate administration process. While many states, such as New York, have done away with gender terminology within official legal documents, it is important to note that others’ estate planning documents must also be changed if you were referred to in your parents’ documents as a daughter or a son and said identification no longer applies to you. Health Care Proxies and Powers of Attorney: Make sure that your health care proxies and health care appointment documentation have been updated with both your proper name and gender markers, as well as your agents’ proper names and gender markers. The same is true for Powers of Attorney, which are presented to financial institutions to gain access to your financial accounts. If an identity cannot be verified, often financial institutions will restrict access to prevent fraud and financial misdealing. Bank Accounts and Financial Documents Financial institutions require legal documentation to update your name on accounts, checks, and credit cards affiliated with the institutions. Name Change: You should provide your legal name change court order or administrative determination to your bank and financial institution to update the name on your accounts, credit cards, and other financial documents. You should also ensure that named beneficiaries on your financial accounts are updated when your loved ones have name changes. Gender Marker: While gender markers do not always need to be updated for financial documents, you may request that your gender be reflected accurately in your account details to avoid confusion. Academic Records Educational records held with universities and educational institutions must properly reflect one’s identity. Diplomas and other credentials should be updated to reflect your name and gender marker. Most private educational institutions allow you to change your records to match your name and gender identity; however state institutions will likely follow state law as it relates to name and gender markers. Name Change: You should contact the registrar at your educational institution or university to request that your name be updated on your academic records and diploma to reflect your identity. Gender Marker: Depending on the institution’s policies, you may be able to update your gender marker in school records. Updating official legal documents is a process that requires legal and administrative processes and often patience. However, it is an important step toward living authentically and without continued administrative hassle. Whether you are transitioning or you simply wish to align your documents with your identity, updating your legal records ensures that you are recognized for who you are.
February 26, 2025
Estates and Trusts
Death Tax Repeal Act
On February 13, 2025, Republican lawmakers in Congress introduced the Death Tax Repeal Act, which aims to permanently eliminate the federal estate tax. Since 2015, various legislative efforts to repeal the estate, gift, and generation-skipping transfer (GST) taxes have been introduced in Congress but have failed to pass. Current Federal Transfer Tax Framework The Internal Revenue Code imposes a tax on an individual’s right to transfer property during life and at death. The federal gift tax applies to lifetime transfers at a rate of 40%, though individuals benefit from a "unified credit" that allows a certain value of transfers to be made tax-free during life and at death. In 2025, the unified credit stands at $13,990,000. Any combined transfers exceeding this amount are subject to the 40% tax rate. Additionally, the GST tax applies to transfers made to individuals who are two or more generations below the transferor or to certain trusts benefiting such individuals. The GST tax is also levied at 40%, with an exemption matching the unified credit amount of $13,990,000. Impact of the 2017 Tax Cuts and Jobs Act (TCJA) Under the 2017 Tax Cuts and Jobs Act (TCJA), enacted during the first Trump administration, the unified credit and GST exemption were temporarily doubled. However, since the TCJA was passed as a reconciliation measure, it is set to expire on December 31, 2025. Unless Congress takes further action, the unified credit and GST exemption will revert to their 2016 levels, adjusted for inflation, or approximately $7,000,000 each. Key Provisions of the Death Tax Repeal Act The Death Tax Repeal Act seeks to go beyond simply extending the TCJA provisions beyond December 31, 2025. If enacted, it would: Permanently repeal the federal estate and GST taxes, allowing individuals to transfer unlimited amounts of property at death free of transfer tax. Establish a permanent $10,000,000 lifetime exemption against the gift tax (indexed for inflation to $13,990,000 in 2025). Transfers exceeding this exemption would be subject to a 35% tax rate. Retain the current "step-up" in basis for capital assets at death, minimizing capital gains taxes for beneficiaries upon the sale of inherited assets. Implications for Estate Planning The passage of the Death Tax Repeal Act would significantly impact estate and wealth transfer planning. Estate planning documents that currently reference the federal unified credit or GST exemption amount would need to be reviewed to ensure they align with the proposed law and the client's intentions. Additionally, several states impose a separate estate or inheritance tax — Connecticut, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska (County inheritance tax only), New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin — or have decoupled from federal estate tax provisions. If the Death Tax Repeal Act becomes law, many of these states will continue to impose their own estate and/or inheritance taxes. Clients residing in or owning property within these states may require substantial revisions to their estate planning documents to optimize state transfer tax savings. Next Steps Our team of estate and trust attorneys is closely monitoring the progression of the Death Tax Repeal Act in Congress. We are available to answer any questions and review your estate planning documents to ensure they accurately reflect your wishes under the proposed law.
February 25, 2025
Estates and Trusts
Not Properly Insuring a Collection
This is Part 8 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. Accidents happen—whether a piece of artwork or a collectible is damaged in shipping, affected by fire or water or even knocked over by Steve Wynn’s elbow. Having the right insurance in place can help mitigate financial losses and protect a client’s investment. Without proper coverage, even a minor incident could result in significant economic consequences. When insuring a collection, there are three primary options: Including it as part of a homeowner’s policy, Scheduling individual items separately, or Obtaining blanket coverage. For clients with valuable or extensive collections, we often recommend the additional effort and cost of scheduling items separately. This approach typically requires obtaining a qualified appraisal to establish fair market value at the time of coverage. To ensure continued protection, these appraisals should be updated regularly so that coverage reflects the collection’s current worth, rather than its purchase value. Total loss claims are rare. More often, insurers assess the damage to determine if an item is salvageable and provide funds for repairs or restoration. Unfortunately, this can lead to a loss in value that remains unquantifiable until the item is sold. To best protect collectible assets, clients should seek insurance from companies specializing in the relevant categories of items, even if it comes at a higher upfront cost. Additionally, different policies may be necessary if parts of a collection are housed in multiple locations. Are the items in a private residence, a storage facility or on loan to an institution? Are they owned directly by the collector or held within an entity or trust? Understanding these nuances ensures that each piece remains properly protected.
February 25, 2025
Estates and Trusts
Not Keeping Records of Your Purchases and Sales, Location, and Authentication Documents – Implications of Restrictions and Patrimony
This is Part 7 in a Series of the Top 10 Mistakes Made When Planning for Art and Other Collectibles: A Guide for Professionals and Their Clients. The provenance of any item is essential to determining its value. Proper documentation of an item’s history and proof of chain of title help establish authenticity, ensuring the highest fair market value at the time of sale. It also prevents clients from wasting money on items later found to be inauthentic. A complete record of an item’s history and chain of title should include the item’s current location and any restrictions on selling or moving the item. This is particularly important when the asset holds historical significance, and the client plans to transfer items between jurisdictions with high taxes on the sale or use of art and collectibles. Understanding the limitations of an item’s sale or transfer can be crucial. Limitations on the use of artwork, as well as patrimony claims often affect the value of an item. For example, in the Estate of Ileana Sonnabend case, Ms. Sonnabend, an art dealer, owned Robert Rauschenberg’s Canyon, a collage featuring a stuffed bald eagle. Federal laws prohibit the possession or trafficking of bald eagles, dead or alive, making the artwork unsellable – although Ms. Sonnabend’s gallery had received a permit allowing the work to be loaned and exhibited during her lifetime. On the federal estate tax return filed for the estate, Canyon’s value was reported as zero. The IRS Art Advisory Panel challenged the valuation, asserting a $65 million fair market value under the assumption that it could be sold on the illicit market to "a recluse billionaire in China." After litigation, the estate resolved the issue by making a long-term loan of Canyon to MoMA in New York City, receiving a full charitable deduction for its full value. Many nations and communities advocate for the return of artworks that hold historical, spiritual, or national significance, arguing that these pieces were taken under coercive or unethical conditions. Patrimony claims often center on the rightful ownership and cultural heritage of works that have been displaced, looted, or unlawfully acquired. Museums and private collectors frequently face both legal and ethical dilemmas when addressing repatriation demands. The most high-profile case involves the Elgin Marbles—renowned Greek sculptures removed from the Parthenon in Athens and currently housed in the British Museum. A UK parliamentary inquiry in 1816 concluded that Britain had legally acquired the Marbles. However, in 2000, the Greek government, in anticipation of the opening of the new Acropolis Museum in Athens, formally requested their return. In 2013, Greece sought UNESCO’s mediation between the Greek and UK authorities regarding the Marbles’ return, but both the UK government and the British Museum rejected UNESCO's offer to intervene. In 2021, UNESCO asserted that the UK had an obligation to return the Marbles and called on the UK government to begin negotiations with Greece. Despite these developments, the controversy remains unresolved. At the Parthenon Museum in Athens, a portion of the original Marbles are on display with white casts held in place of the Marbles, which are still currently on display at the British Museum. While not every client owns artwork as unique as Canyon or the Elgin Marbles, understanding the nuances of a client’s collection is essential for proper representation and estate planning. Every client should keep clear and accurate records that include the acquisition date of each item, its location, and any restrictions on its use.
February 18, 2025
