I’ve been watching Scrubs for years… Even the re-runs. And I’ve always loved Ted. Therefore, from The Billable Hour comes:
The Best of Ted
Monthly Archive for February, 2008
Another one from Greg Herman-Giddens of The North Carolina Estate Planning Blog that reminds me of one of my other posts:
Greg writes here about The Problem Of Joint Tenancy. His post is well-written and informative and explains the pros and cons of holding property jointly (sometimes with survivorship). Ans his advice should be well-taken.
However, the potential problems outlined in his post can be negated by simply funding your trust. Doing so would reduce or eliminate the potential tax problems, ownership/control issues, having the property not reach your heirs, etc.
If you do not have a trust, well then, call me, we’ll talk about whether you actually need one. If you do not need one then Greg’s post provides wise guidance on issues to think about when attempting to efficiently pass property to your heirs.
A little while ago Mitchell Port of The California Tax Attorney Blog posted about Hairbrained Tax Schemes. He linked to this article (PDF), called The Truth about Frivolous Tax Arguments which is “the [IRS’s] response to anyone who contemplates arguing on legal grounds against paying their fair share of taxes.”
It discusses and rebuts many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.
This 74-page document is updated at least once a year by the IRS and is designed to help individuals and groups understand their responsibilities and not violate the law.
The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. This document is available on IRS.gov and will help taxpayers avoid wasting their time with frivolous arguments and incurring penalties.
Why does it matter? Well, aside from losing your case, badly, the IRS is going to get you for “filing a frivolous tax return.” “In 2006, Congress increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.
Just last week Greg Herman-Giddens of The North Carolina Estate Planning Blog posted here about 4 new positions the IRS considers frivolous:
Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending. Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS. A nonexistent “Mariner’s Tax Deduction†(or the like) related to invalid deductions for meals. Certain instances of misuse or excessive use of the section 6421 fuels credit.
You’ve been warned.
Lawrence Lessig is considering running for congress and I couldn’t be happier about it. As a geek in my former life I have followed Mr. Lessig’s career (and read all his books) and have been consistently impressed by his obviously stunning intellect. As Slashdot said today (here), he is very technologically savvy (which our congress desperately needs – see Senator Stevens’ tubes) and has solid credentials as an intellectual leader.
This post by Charles Rubin of the Rubin On Tax Blog is an interesting one because it touches on a running debate in my firm, which is: To what extent should one of our client’s durable powers of attorney be able to modify their trust?
Some don’t like the extent of the power granted by our durable POA because it essentially allows the POA holder to completely restate or even revoke the Grantor’s trust. Usually, when dealing with husbands and wives the argument is merely academic. But such a broadly applied power has always made me nervous.
The case of ROSE GURFINKEL, etc., et al., Appellants, vs. JOSI, a/k/a JOSEPH MARMOR, etc., et al., Appellees., 3rd District. Case No. 3D06-1616. L.T. Case No. 05-3664. (Opinion filed December 12, 2007) speaks to the principal that when a trust and a POA are arguably in conflict, the trust will prevail:
In [this] case, a settlor’s revocable trust prohibited any conservator, guardian, or “any other person†from exercising the rights of amendment during the lifetime of the grantor. A holder of a durable POA asserted that the POA allowed him to modify the settlor’s trust.
The court made short-shrift of the POA holder’s argument, and held that the prohibition language include a POA holder.
A more interesting case would have arisen if the POA explicitly granted the power to amend to the POA holder – then there would have been a direct conflict between the POA and the trust. However, in the instant case, while the POA holder did assert that some language under the POA authorized amendment, the POA language really didn’t have any clear language to that effect.
In Terrorem clauses are often used by estate planner’s to coerce someone (usually a beneficiary, or someone who thought they should have been a beneficiary) to not sue the trust or estate. They can be useful but as this post by Professor Berry illustrates, they don’t prevent all actions against Trustees.
In Lesikar v. Moon, 237 S.W.3d 361 (Tex. App.—Houston [14th Dist.] 2007, pet. filed), a Beneficiary sued their Trustee for an alleged breach of fiduciary duty. There was a in terrorem clause in the trust and so the Trustee claimed that Beneficiary forfeited her share of the trust. The appellate court determined that the trial court was correct in not reaching the issue because Trustee’s motion for an interlocutory summary judgment was not timely filed.
In what is most likely dicta, the court concluded that even if the Trustee’s motion had been timely filed, Beneficiary’s conduct would not have triggered a forfeiture. The court explained that the right to challenge a fiduciary’s actions is an inherent part of a trust relationship and thus such conduct is insufficient to trigger a forfeiture.
Moral: A no contest clause will not prevent a beneficiary from bringing a breach of fiduciary claim against the trustee. It would be against public policy to permit the settlor to trigger a forfeiture when a beneficiary merely seeks to enforce the trust as written and assure that the trustee obeys the trustee’s fiduciary duties.
Thanks Professor. You don’t see these cases too often but they’re usually interesting when you do.
From today’s Slashdot:
“The AP is reporting that the Tolkien Trust and HarperCollins are suing New Line Cinema for $150 million in compensatory damages, unspecified punitive damages, and a court order revoking New Line’s rights to produce any more films on Tolkien properties.
The Tolkien Trust is managed (and was set up by) the youngest of the four Tolkien children, Christopher. At age 77 he established the trust to watch over the interests in dad’s estate after the last of his children pass away.
The AP reports here that, “[t]he Tolkien Trust says that New Line paid them only $62,500 to make ‘The Lord of the Rings’ trilogy of films — instead of the agreed-upon 7.5 percent of gross receipts of all film-related revenue. The suit may set back, if not kill, a film adaptation of Lord of the Rings prequel ‘The Hobbit,’ which Peter Jackson had recently signed up to make after his own legal row with the studio over payment for the sequels.”
Christopher Tolkien (who I think is the Trustee) is currently represented by Manches & Co in London… And man am I jealous of that client!
From The Elder Law Prof Blog and Kim Dayton comes a link to Dick Kaplan’s Top Ten Myths of Social Security:
(1) there is a trust fund,
(2) Social Security does not increase the federal budget deficit,
(3) retirees are only recovering their own money,
(4) Social Security will not be there when one retires,
(5) retirement benefits are proportional to one’s lifetime earnings,
(6) Social Security favors two-income married couples,
(7) Social Security favors long-lived marriages,
(8) one could do better investing directly,
(9) working after retirement makes financial sense, and;
(10) retirement benefits are taxed more heavily than other pension payments.
The full paper (from SSRN) is available here.
Thanks Kim!
Columbus’ Business First is running an article today (available here in PDF) by Brent Wilder called Columbus law firms waking up to blogs as client development tool and it (kind of) features yours truly!
Somewhere between an online diary and an electronic white paper is the law blog. While blogging is not yet widespread in the Columbus legal community, it is catching on among individual attorneys and is likely to become less of a novelty in law firm communication as blogging becomes increasingly common in the business world.
Both of the below articles come from my good friend Professor Beyer over at the Wills, Trusts & Estates Prof Blog.
New York Recognizes Same-Sex Marriages From Other Jurisdictions
On February 1, 2008, a New York appeals court that same-sex marriages that are valid in the jurisdiction where performed are entitled to recognition in New York. The case is Martinez v. County of Monroe (PDF).
What is especially interesting in reviewing the case are the two grounds that New York law has to prevent marriages entered into in other stated from being valid in New York – both of which failed here. (1) is the “positive law” exception: This is where the marriage in question is specifically prohibited by a New York Statute. (2) is the “natural law exception”: This exception has “generally been limited to marriages involving polygamy or incest or marriages “offensive to the public sense of morality to a degree regarded generally with abhorrence†* * *, and that cannot be said here.” Natural Law (more routinely referred to as “God’s law” in the generic sense) is typically the justification given by proponents of a less secular view of these unions and, by this court’s ruling it appears that reliance on said justification just got taken out at the knees.
The natural law exception also is not applicable. That exception has generally been limited to marriages involving polygamy or incest or marriages “offensive to the public sense of morality to a degree regarded generally with abhorrence†* * *, and that cannot be said here.
Defendants nevertheless contend that recognition of plaintiff’s same-sex marriage is contrary to the public policy of New York, as articulated by the Court of Appeals in Hernandez v Robles * * *, and thus falls within an exception to the rule requiring recognition of valid foreign marriages. We reject that contention. Hernandez does not articulate the public policy for which it is cited by defendants, but instead holds merely that the New York State Constitution does not compel recognition of same-sex marriages solemnized in New York * * *. The Court of Appeals noted that the Legislature may enact legislation recognizing same-sex marriages * * * and, in our view, the Court of Appeals thereby indicated that the recognition of plaintiff’s marriage is not against the public policy of New York.
It is also worth noting that, unlike the overwhelming majority of states, New York has not chosen, pursuant to the federal Defense of Marriage Act * * *, to enact legislation denying full faith and credit to same-sex marriages validly solemnized in another state. Thus, we conclude that plaintiff’s marriage to Golden, valid in the Province of Ontario, Canada, is entitled to recognition in New York in the absence of express legislation to the contrary. As the Court of Appeals indicated in Hernandez, the place for the expression of the public policy of New York is in the Legislature, not the courts * * *. The Legislature may decide to prohibit the recognition of same-sex marriages solemnized abroad. Until it does so, however, such marriages are entitled to recognition in New York.
Thus the court’s ruling makes a tacit plea to the legislature to resolve any lingering uncertainty in the hearts/minds of New Yorkers.
Oregon Same-Sex Partnership Law Takes Effect
Oregon citizens may now register as domestic partners because an attack on the law failed.
Its a little convoluted but, it appears that a group that wanted to a state law allowing same-sex couples to register as domestic partners put to a vote by referendum, fell 96 signatures short of the “55,179 needed to refer the law to the November 2008 ballot.”
Same-sex couples will be able to file joint state tax returns, inherit property and make medical choices on each other’s behalf, along with a other benefits given to married Oregonians.
Oregon becomes the ninth state to approve spousal rights in some form for same-sex couples, joining California, Connecticut, Hawaii, Maine, New Hampshire, New Jersey, Vermont and Washington. Massachusetts is the only state that allows same-sex couples to marry.
