PowerPoint PresentationLittman Krooks LLP www.littmankrooks.com
House of Cards Main Title
House of Cards (Main Theme from the TV Series), track 1/1, disc 1/1
2016
Soundtracks
110.05681
© 2019
Draft estate plans that work Provide for possible contingencies Life is fluid; estate plan should also be
Anticipate potential changes in lives of clients and beneficiaries in the planning process Carry out the wishes of the client Incorporate client’s goals Avoid litigation
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Understand client’s needs and wishes first Only then, draft documents Clarity Flexibility Proper fiduciaries Appropriate powers
Plan for incapacity Distribution of assets upon death
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Manage assets during incapacity Power of attorney Trusts Avoid guardianship
Preserve value of estate for beneficiaries Estate tax not a concern for most Cost of long-term care Creditors
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Client diagnosis indicates possible loss of intellectual capacity or physical abilities Important to get things right the first time There may not be an opportunity to amend
People are living longer, more likely to get sick before dying Alzheimer’s disease and dementia Other chronic illnesses
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Loss of capacity may affect client’s ability to serve as fiduciary for others Client has been appointed as trustee or other
fiduciary Powers of appointment may no longer be able
to be exercised
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Key to proper estate plan Not enough time spent on this
Perfectly drafted estate planning documents will likely fail without proper fiduciary
Trustee Corporate v. individual Powers Successor trustee
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Depends on a number of factors Duration of trust Value of trust assets Type of assets in trust Beneficiaries of trust Special needs/spendthrift
Distribution standards Discretionary distributions are more
complicated to administer
Family values statement Statement of intent/wishes
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Incapacity of Settlor Removal of trustee for incapacity How to determine incapacity Sensitive issue for clients Difficult to confront one’s own mortality or
incapacity Concern that a third-party will too quickly
judge them incapacitated and they will lose control of their own assets
Failure by trustee to cooperate
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L.A. Clippers owned by revocable trust Donald and wife Rochelle were co-trustees NBA imposed lifetime ban on Donald resulting
in need to sell team Trustees both agreed to sale of team Donald later changed his mind Trust provided that any individual deemed
incapacitated shall cease to serve as trustee Rochelle attempted to remove Donald
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Definition of incapacity Two licensed physicians examine the trustee
and certify in writing that he is incapacitated Regularly called upon in their practice to
determine capacity of others Neither related by blood or marriage to any
trustee or beneficiary Donald removed as trustee and team sold
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Can someone other than settlor make modifications in event of incapacity Are these powers reserved solely to the Settlor Agent under power of attorney Guardian Trustee Trust protector Proper hierarchy Conflict resolution provision
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Mandatory distribution of income or principal Unitrust
Special needs trust Contingent SNT
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Wholly discretionary May v. shall Beneficiary does not have an enforceable right
to receive anything from the trust Most flexible for dealing with future issues Helps protect trustees from lawsuits by
beneficiaries (as opposed to standards) Restatement (Second) of Trusts §187 Abuse of discretion
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Presentation Notes
Restatement (Second) §187 says that not subject to control of court except where abuse of discretion
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Provides a level of entitlement to beneficiaries Income Unitrust amount Ascertainable standard Health, education, maintenance, support
Reduce flexibility Harder for trustee to deal with future issues
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Caveat Emptor Boilerplate language
HEMS What does it mean PhD or adult education class on meditation Ferrari or Ford
Discussion with client Principal invasion in case of need Eliminate conflicting provisions Consider other resources
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Trust is silent Restatement (Third) of Trusts §50 Other resources are generally considered but
trustee has some discretion Consider beneficiary’s income and other
periodic receipts Drafting issue Specify whether other resources should be
considered and which ones
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Other income v. other sources of income Convert non-income producing property to
income-producing property Other assets Must some or all be liquidated
Accustomed standard of living Restatement (Third) §50 At time irrevocable trust is created
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Presentation Notes
Comment d2 also states that amount of distributions under accustomed standard of living standard can be adjusted for inflation, deteriorating health, increasing financial burden
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More than 40 million Americans living with a disability Mental Physical 12% of U.S. population As many people as entire state of California
One in 6 children ages 3 to 17 have one or more developmental disabilities
One in 59 children have autism 21
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government Trust assets are considered unavailable Only actual distributions are counted Kansas/Texas
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Discretionary trust gives the trustee complete discretion to distribute all, some, or none of the trust income or principal to the beneficiary, as the trustee sees fit Restatement (Second) of Trusts § 155 May v. shall
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Support trust directs the trustee to distribute trust income or principal as necessary for the support and maintenance of the beneficiary Restatement (Second) of Trusts § 154 Hybrid trust
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Support trusts are usually available since a beneficiary can compel trustee to make distributions
Discretionary trusts are not usually available since a beneficiary cannot compel trustee to make a distribution
Settlor’s intent Supplemental language expressly stated If not specifically stated, then factual determination
must be made
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Intent of settlor will generally be followed so long as it does not violate public policy
Best to state in trust agreement Otherwise, subject to judicial vagaries and
very fact sensitive In support trust, beneficiary can compel
distribution Pot trust, multiple beneficiaries
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Testamentary trust for grandchildren Trustee shall apply income and principal for
support, care, maintenance, medical expense, educational expense, and general welfare in trustee’s sole and uncontrolled discretion
Beneficiary could not compel distribution Support v discretionary Intent of settlor
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Testamentary trust Sole and absolute discretion for support
and maintenance, including expenses of illness and disability
Consider other income and assets Trustee’s discretion shall be conclusive and
shall not be questioned by anyone
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Testator intent Beneficiary cannot compel distribution Not a support trust Undistributed income added to principal Release from liability for trustee Size of the trust
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to pay for beneficiary’s reasonable comfort during his life
Trustee may distribute in trustee’s discretion as trustee deems necessary for health, maintenance, and support of beneficiary
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Settlor intent Size of trust Reference to remainder beneficiaries Beneficiary cannot compel distribution Trust assets not available
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Court refuses to recognize the concept of a discretionary support trust
Testamentary trust Mandatory income provision Trustee is authorized and may distribute
principal as necessary for support, maintenance, medical expenses, care comfort, and general welfare
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Does not say uncontrolled discretion Restatement (Second) of Trusts § 155
Comfort and welfare language make it less like a support trust
Need to determine settlor’s intent Settlor intended to provide for beneficiary’s
care
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remainder beneficiaries No supplemental language Beneficiary could compel distributions
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Entertainment, education, travel, comfort, convenience, and reasonable luxuries, as the trustee, in its full discretion, deems advisable
SNT language Consider other resources Beneficiary has no power to withdraw Trust assets not available
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Act together or separate Monitor Compensation Springing v. immediately effective Revocation of prior powers of attorney
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Take steps to ensure POA will be honored Send to financial institutions Execute their own form in addition to yours Hot powers Gifting Annual exclusion Unlimited Prior pattern Gifts to agent
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Exercise power of appointment Disclaimer Waive elective share Replace trustee Waive arbitration Deal with IRS Hire counsel/waive attorney client privilege
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Need to access this info/property upon incapacity or death Must act quickly, some information gets
automatically deleted after a period of time Many bills/statements delivered by email, not
snail mail Services exist that will locate digital assets for a
fee
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Update list of digital assets and passwords Discuss with digital asset fiduciary
Maintain list in accessible place Consider online storage of list
Terms of service agreement Digital asset fiduciary Digital asset fire drill
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Preserve autonomy Quality of life Means different things to different people Recognize loved ones Personal hygiene Mobility
Visitation Second marriage situation
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End of life issues Pain management Physician assisted suicide Authority to move to another state that has
laws consistent with client’s wishes Appointment of surrogate decision-maker Living will
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Long-term care Where to receive care Funding sources Consider irrevocable trust to protect assets Caution re: invasion provisions
Spousal issues Right of election Waiver of right of election Caution re: revocable trust
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Doyle hired Hood to prepare SNT f/b/o wife Trust to be funded upon Doyle’s death Wife had Alzheimer’s disease Hood drafted SNT in revocable living trust After Doyle’s death, wife entered nursing
home Assets in SNT were considered available Trustee of SNT filed malpractice claim Statute of limitations had expired
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Crime of the 21st century Underreported crime Approximately 1 in 15 cases are reported
Affects 1 in 10 people over age 60 Costs seniors more than $3 billion annually
Difficult cases to prosecute Victim often reluctant to testify Not many cases make it to trial; plea bargain
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Internet and phone scams IRS Lottery winner Grandparent scams Facebook connections to see family
Two-thirds of financial elder abuse is committed by family members
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Senior Safe Act Enacted on May 24, 2018 Reporting suspicions made easier Provides immunity to investment advisors,
bankers and others who act in good faith to report elder abuse and financial exploitation to a regulatory or law-enforcement agency
Does not require disclosure To qualify for immunity, employees must receive
training; balance privacy interests
New FINRA rules Requires brokers to ask clients for trusted
person to contact if abuse is suspected Client does not have to provide; broker must ask Confidential information is not disclosed Safe harbor rule allows for 15-day hold on
disbursements if abuse is suspected Can be extended by 10 days if necessary No guidance on what should be done
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Ask clients and advisor if they have a TCP TCP could be the abuser
Alerted to more accounts Incorporate into estate planning documents Conflict if TCP is different from POA agent Should lawyer be contacted if broker suspects
abuse or if TCP is changed Sign of exploitation Change EP documents to avoid conflict
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Bifurcate responsibilities Caregiver background checks Work with agency
Communication among advisors Team approach
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Role of attorneys Model rule 1.14 Attorney/client privilege If you are complacent, are you complicit Permission in retainer agreement to speak
to others/APS Outside services Monitor bank and investment accounts for
unusual activity Bill-paying service for seniors
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House of Cards Main Title
House of Cards (Main Theme from the TV Series), track 1/1, disc 1/1
2016
Soundtracks
110.05681
Heckerling 2019Are You Building a House of Cards?
Are you Building a House of Cards?
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