When the Estate Plan Goes South: Fiduciary Litigation – Beneficiary versus Trustee.

fiduciary litigationI know you have been hanging on my every word.  I know that you have been wondering what could I possibly be up to that is so important that I don’t have time for you.   I’m sorry.  I never intended to neglect you.  My only excuse is that litigation is taking up more and more of my time.

But Rob, I thought you were an estate planner!  What are you doing in litigation?   That’s an excellent question.

The answer is: Fiduciary Litigation.

What is Fiduciary Litigation you ask?  Another great question.

Well, lets start with what a fiduciary is.   Continue reading When the Estate Plan Goes South: Fiduciary Litigation – Beneficiary versus Trustee.

Trust Investment Advisor: You can ensure that your family’s relationship with your trusted Financial Advisor continues after you are gone.

Picking a trustee is no easy task.  Trustees have immense discretion.  Trustees can steal if nobody is watching them.  As my boss likes to say, there are no “Trust Police.”

Certain businesses are capable of serving as a trustee.  Many banks have trust departments.  There are also businesses known as “trust companies.”  Other companies specialize in investments and have associated trust companies.  Businesses that are qualified to serve as trustees are known as “corporate trustees.”  My firm has strong relationships with a number of these companies.  They are pros.

Most often, trusts are utilized after you are gone to control your money for your spouse and/or children.  I frequently encourage clients to consider corporate trustees, particularly when the client does not have a relative or friend that they feel absolutely comfortable with naming as a trustee.

But what happens to your trusted financial advisor after you have passed?  Your advisor that you have established a relationship with and trusted with all of your deepest secrets…  Your advisor that knows your family through and through…

Continue reading Trust Investment Advisor: You can ensure that your family’s relationship with your trusted Financial Advisor continues after you are gone.

Koch Brothers and Norquist Zero in on the Tennessee Hall Income Tax

TargetAccording to the Tennessean, a number of groups have set their sights on the repeal of Tennessee’s Hall Income Tax—even enlisting more than 90 legislators by having them sign pledges.  These groups include the Tennessee Chapter of Americans for Prosperity, Americans for Tax Reform and the Tax Foundation.

Whoa, wait—Tennessee income tax? That’s right, Tennessee does have an income tax.  The Hall income tax is a tax that Tennesseans pay on dividends and interest.

Although many legislators have signed on to repeal, unless and until Tennessee solves its revenue problem, it seems unlikely that the tax is going anywhere.  That being said, many professionals said the same thing about the Tennessee Gift and Inheritance Taxes.  The Tennessee Gift Tax was repealed in 2012 and the Tennessee Inheritance Tax has been gradually repealed through 2016.

Stay tuned.

Rob Malin

Thank you to Justin Carter, CPA of the Marston Group for bringing this to my attention.

Divorced? It is time to update…

soapboxLet me guess.  The last person you want to see after a divorce is me, another dad-gum lawyer.  I don’t blame you.

However, before you say that, know this: your designated beneficiary did not change just because you got a divorce.  Here I am referring to life insurance, retirement accounts such as 401(k)’s and IRAs, and anything that allows you to name a beneficiary.  If you did not change your beneficiaries after you got a divorce, then your ex-spouse probably gets everything if something happens to you.

In both Arkansas and Tennessee, provisions to an ex-spouse are revoked.  This is not the case in Mississippi.  In Mississippi, the provisions for the ex-spouse remain and he or she takes whatever you may have left them—perhaps everything.

No matter where you live, it is still time to revise your Will.  Had a knowledgeable probate judge not been on the bench when Lorenzen Wright’s ex-spouse walked into probate court with his Will that left her everything, she might have been appointed in control of his estate.  In fact, she tried.  Order opening estate of Lorenzen Wright

Now you’re thinking (perhaps cynically)—there’s nothing left to get. Ok. Even if that’s true now, that may not be true five or ten years from now.

When will you update if not now?

Its time for an update.

Stay Tuned.

Rob Malin

What is a Revocable Living Trust?

Excellent question.  I’m glad you asked.

Broadly speaking, in estate planning there are two types of trusts: revocable and irrevocable.  This post will address revocable trusts.

Revocable trusts are also known as living trusts.  The short answer is that a revocable trust is a Will substitute.  For the most part, after death the same things can be done with revocable trusts as can be done with Wills.

The real difference between a revocable trust and a Will is that to function properly, a revocable trust must actually own your assets (or be named as a beneficiary).  In this sense, revocable trusts are like personal holding companies.  A good analogy is thinking of a public company such as FedEx.  FedEx owns planes and numerous other assets.  FedEx has shareholders and a CEO named Fred Smith.  During your lifetime, you are the CEO (or trustee) of your trust.  You are also the founder (known as either grantor, trustor, or settlor) and the shareholder (or beneficiary).

Continue reading What is a Revocable Living Trust?

Tennessee Legislature Passes Tenancy by the Entirety Joint Living Trust

Update: Click here to read more about the law.

Tennessee is without a doubt one of the leading Trust Law jurisdictions, and Tennessee estate planners have more tools than ever before.

In 2000, Tennessee adopted the Uniform Principal and Income Act which provides certainty and safe harbor to Trustees with respect to trust accounting principles.  In 2002, the Uniform Prudent Investor Act did the same with respect to the management of investments.

In 2004, Tennessee adopted the Uniform Trust Code (one of the first five jurisdictions to adopt it).  Although the Trust Code did not diverge significantly from the common law, it made Tennessee Trust Law more accessible and cohesive.  Among other things, the Trust Code gave Tennessee attorneys innovative methods such as virtual representation, Non-Judicial Settlement Agreements, and judicial and non-judicial trust modifications and terminations to deal with some of Trust Laws most vexing issues.

2007 brought a 360 year rule against perpetuities (which coincidentally I may be able to thank for my job!), self-settled asset protection trusts (innocuously named the Tennessee Investment Services Act), and updates to the now non-uniform Tennessee Uniform Trust Code which allowed beneficiaries to serve as their own trustee without jeopardizing the spendthrift protections granted to them by the trust.

2010 brought further Trust Code updates, but more importantly brought the Tennessee Community Property Trust Act.  Read more about Community Property Trusts here.

In 2012, Tennessee retroactively repealed the Tennessee Gift Tax and gradually repealed the Tennessee Inheritance Tax through 2016.  Read more here.

Finally, 2013 brought comprehensive reform to the (now ironically named) Tennessee Uniform Trust Code.  As is discussed in a previous post, 2013’s reform essentially did three things: (1) enhance asset protection for beneficiaries, (2) protected Trustees by giving them far more discretion, and (3) allowed for directed trusts to allow trusts to segregate the roles of investment and trust administration.  Another change enhanced the attractiveness of Tennessee Asset Protection Trusts.  Read more here.

The Reveal.  So. . . What’s next? It looks like Tennessee Attorneys will have yet another arrow in their estate planning quiver come July 1, 2014: The Tenancy by the Entirety Joint Revocable Trust.  Click here for a summary of HB2068/SB1907.

Continue reading Tennessee Legislature Passes Tenancy by the Entirety Joint Living Trust

Wrong Ruling in Lorenzen Wright Case? Appeals Court Rules that Lower Court had no Authority to Investigate Ex-Wife’s $1 Million Apparent Misappropriation

Update: According to the Commercial Appeal, a court is contemplating removing Sherra Wright as Trustee of the Insurance Proceeds Trust (the article does not relate which, but I expect that it is the Circuit Court).  Click here to read more.

In an opinion dated March 27, 2014, the Tennessee Court of Appeals ruled that a Probate Court Judge exceeded his authority when he appointed an attorney (known as a Guardian ad litem) to investigate how Sherra Wright spent the nearly $1 million dollars that she was in charge of for the benefit of Lorenzen Wright’s children.

This particular proceeding was the latest in a series of cases involving the children and their inheritance from their father, Lorenzen Wright.

In this proceeding, Sherra Wright (the mother of Lorenzen Wright’s children) and Herbert Wright (Lorenzen Wright’s father, and the grandfather of the children) fought Continue reading Wrong Ruling in Lorenzen Wright Case? Appeals Court Rules that Lower Court had no Authority to Investigate Ex-Wife’s $1 Million Apparent Misappropriation

Protecting your family from life.

%d bloggers like this: