Law Commons^™

Perpetual Dynasty Trusts: One Of The Most Powerful Tools In The Estate Planner's Arsenal, Brian Layman

Akron Law Review

One of the most effective tools to accomplish the goal of preserving family wealth is a perpetual dynasty trust. Such a trust permits discretionary distributions of income and principal for as many generations (in terms of years) as the state's law allows. Alaska, Arizona, Delaware, Idaho, Illinois, Maryland, Ohio, South Dakota and Wisconsin have abolished, or provided trust settlors with the ability to opt out of their respective Rules Against Perpetuities. This means that a trust established in one of these jurisdictions could last forever. The essence of such a trust is that, if properly drafted and funded, to be …

Promoting Retirement Security For Low-Income Workers In Illinois: An Analysis And Lessons For Other States, Philip C. Aka, Chidera V. Oku, Murna Habila

Akron Law Review

This Article makes suggestions for promoting retirement security among low-income workers in Illinois with pointed lessons for workers in other U.S. states. Adapting a framework from a previous study by the principal author, the Article portrays retirement preparedness for low-income workers in Illinois as a function of changes in Social Security, employer-sponsored pensions, and personal assets—the famed “three-legged stool” of retirement income—synchronized with reduction of disparities between socioeconomic groups in education, healthcare, and housing. Many studies on retirement security focus excessively on the national level sometimes at the expense of the subnational phenomena that complicate retirement security and increase the …

No Child Left Behind: Extending Ohio's Pretermitted Heir Statute To Revocable Trusts, Danielle J. Halachoff

Akron Law Review

Generally, pretermitted heir statutes protect a child, and under some statutes a more remote descendant of the testator from unintentional disinheritance. Their purpose is to carry out the presumed intent of the decedent to provide for a child inadvertently omitted from the will. Because revocable trusts are regularly used as substitutes for wills, primarily to avoid probate administration, presumptions regarding the intent of a decedent that are applicable to wills should also be applicable to revocable trusts. Additionally, many other problems that arise when disposing of a testator’s property at death may also arise with a settlor’s use of a …

Adding Insult To Death: Why Punitive Damages Should Not Be Imposed Against A Deceased Tortfeasor's Estate In Ohio, Alec A. Beech

Akron Law Review

A majority of jurisdictions in the United States have determined, either statutorily or judicially, that punitive damages cannot be imposed against deceased tortfeasors. However, a recent Ohio appellate court held to the contrary. In Whetstone v. Binner, the Ohio Fifth District Court of Appeals adopted the minority view when it held that punitive damages could be imposed against a decedent’s estate. This Comment takes the position that Whetstone was incorrectly decided. Specifically, this Comment argues that the longstanding purposes of punitive damages are not furthered when such damages are imposed against estates and that Ohio law supports this conclusion.

The Socio-Economics Of The Federal Estate Tax: Why Do So Many People Hate (Or Love) This Centenarian?, Richard Gershon

Akron Law Review

The federal estate tax has faced many detractors during its almost 100 years of existence. While the tax affects only a very small percentage of estates, many have called for its repeal. This Essay discusses the socio-economic reasons why the estate tax should be maintained. The tax is an important source of revenue, and it helps to rectify the growing issue of wealth and income inequality in the United States.

The Reed Case: The Seed For Equal Protection From Sex-Based Discrimination, Or Polite Judicial Hedging?, John P. Murphy Jr.

Akron Law Review

Reed is yet another example of how the Equal Protection Clause may be used to strike down state statutes which embody arbitrary classifications that are neither fairly nor substantially related to the object of the statute, and which bring about the invidious discrimination that is repugnant to the Fourteenth Amendment. It must stressed that the outcome of Reed is clearly commendable in terms of justice. What is troublesome is the fact that one may contend that the Supreme Court hedged, perhaps avoided, an excellent opportunity in which to expand the constitutional scope of the Equal Protection Clause. Reed afforded the …

The Uniform Probate Code And The Practice Of Law In Ohio, Robert M. Brucken

Akron Law Review

The author, an active probate lawyer, believes much of an attorney's time is wasted in present probate practice. Too much time is spent in attempting to cut the red-tape requirements of "make-work" probate procedures that serve no purpose in all but a very few cases. Therefore, it is worthwhile to call to the attention of the practicing bar the need for probate reform, and the attractive vehicle for reform which is now available.

This vehicle, the Uniform Probate Code, was prepared as a sevenyear project of the National Conference of Commissioners on Uniform State Laws, with the assistance of the …

Contractual Wills: Misplaced Marital Loyalties: Eunsuing Litigation: Increased Federal Estate Taxes, Addison E. Dewey

Akron Law Review

A MYSTIFYING PLETHORA OF RECENT CASES indicates that husbands and and wives seem to be placing much more euphoric confidence in the judicial enforcement of their contractual wills than they do in unbargained-for assurances by the spouse that the provisions of such will never be changed. Many cases indicate that married couples feel that while mutual trust and confidence may be a revered tradition resulting from matrimonial bliss, they prefer to superimpose upon testamentary dispositions of their estates the common law concept of contract as an agreement which the courts will enforce. The repeated pattern of the various cases is …

Nontaxable Transfers; Interest-Free Loans; Crown V. Commissioner, Linda Haught Robb

Akron Law Review

"INTEREST-FREE FAMILY LOANS remain outside the purview of the federal estate and gift tax statutes despite the recent efforts of the Internal Revenue Service to convince the judiciary that, in such loans, the fair market value of the foregone interest is a gift. This is an extrapolation of the Service's efforts to find income to the recipient in other interest-free money situations. In light of the Service's limited activity in dealing with tax consequences of the interest-free loans, the Seventh Circuit's decision in Crown v. Commissioner' will be an important reference for estate and tax planning. Doubtlessly, the Service will …

The Use Of Short-Term Trusts In Conjunction With Interests In Oil Or Gas Properties: A Practitioner's Guide, Robert W. Malone

Akron Law Review

This article will address the tax consequences of the funding of a short-term trust with an interest in oil or gas wells. At the end of this article there is set forth as Appendix 11 a form of short-term trust which could be used for this purpose. Appendix 11 contains an example of a situation where such use would be appropriate and a computation of the tax savings which can be generated by the use of such a trust.

Rediscovering The Resulting Trust: Modern Maneuvers For A Dated Doctrine?, Malcolm L. Morris

Akron Law Review

Usually thought of as only a remedial measure, the resulting trust may now be ready to take on an expanded role. Although not considered devolutionary vehicles per se, resulting trusts can direct the passage of title, and are therefore potentially useful estate planning tools. To serve in this capacity, the applicable principles used to raise resulting trusts must be introduced at the time of the transaction and not resorted to as an afterthought at some later date. Using resulting trusts in such a manner is arguably inconsistent with the theory supporting their existence. This article suggests, however, that the courts …

United States Trust Co. V. I.R.S., Scott D. Brackett

Akron Law Review

During the course of its administration, an estate may receive income that is subject to federal income tax. When, and if, an estate receives such income the executor is faced with the task of filing the estate's income tax return along with a number of related considerations. One of the more important considerations is the allocation of the burden of such tax between the beneficiaries of the estate and the estate itself.

Subchapter J of the Internal Revenue Code provides the mechanism to allocate that burden between the beneficiaries and the estate. Generally, Subchapter J attempts to allocate the tax …

The Ohio Designated Heir Statute, Albert H. Leyerle

Akron Law Review

This article will discuss the procedure for the designation of an heir, its vacation or revocation, and the effect of such a designation. The status of the designated heir, examples of unanswered questions and gray areas, and the practical significance of the statute will be included in this discussion. The conclusion will further illustrate just how powerful and practically significant a designation can be.

Justice Before Generosity: Creditors' Claim To Assets Of A Revocable Trust After The Death Of The Settlor, Lauren Ashley Gribble

Akron Law Review

The Ohio legislature recently passed the Ohio Trust Code, which primarily codified existing trust law. In keeping with the operation of revocable trusts and the principle that settlors should not be able to use such trusts to avoid creditors, it provides that creditors may claim the assets of a revocable trust during the lifetime of the settlor. It is, however, silent as to creditors’ ability to access trust funds after the settlor’s death. Two Ohio appellate courts have discussed the statute, only to arrive at different conclusions regarding its operation and significance in light of case precedent. This Article will …

A Time To Live, A Time To Die, Linda Shields-Stiefel

Akron Law Review

The purpose of this Comment is to review S.B. 1 and to compare it to other states living will statutes and to the proposed Uniform Rights of Terminally Ill Act.

Part I briefly overviews the American history of living wills. Part II reviews living will/right to die statutes in effect and major court decisions. Part III discusses Ohio's position on the right to die, both statutory and judicial. Part IV reviews S.B. 1 and suggests several changes. The conclusion recommends that a uniform living will statute be enacted to guarantee equal treatment for patients in all jurisdictions.

The Trust Throwback Rules: The Solution Remains After The Problem Fades, John R. Cunningham

Akron Law Review

This article will briefly review the history of the throwback rules and will then show that the small savings still available through trust accumulations that would result without the operation of the throwback rules do not justify the continuance of these complicated throwback rules. In fact, the tax savings through trust accumulations without the throwback rules can be matched even within the operation of the throwback rules. Finally, this article will show that through a small rate change that may be forthcoming for other reasons, the potential savings through the accumulation of income in trusts may be reduced to such …

Exposing The Hocus Pocus Of Trusts, Kent D. Schenkel

Akron Law Review

Part II makes the conceptual case for viewing the trust as an elective cost-externalization device. Part III offers the spendthrift trust as the archetypal model for purposes of our analysis, briefly describes the spendthrift trust, and explores its consequences to outsiders to the trust deal. Part IV offers some reasons why the elective externalities of trusts persist. Part V first examines and rejects a couple of approaches to minimizing the externalized costs of trusts that rely on the “bundle of sticks” approach to property interests. It then moves beyond the bundle of sticks approach, settling on a solution based on …

Recent Developments Concerning The Estate Tax Inclusion Of Transfers To A Family Limited Partnership, Brent B. Nicholson

Akron Tax Journal

After a brief examination of the statutory and regulatory background, this paper will summarize the significant cases prior to Shurtz, the significant cases in the last year, discuss the facts and holdings of Shurtz, and then outline the coordinates that have emerged to guide taxpayers

Ohio Trust Code Update: Recent Developments, Alan Newman

Akron Law Faculty Publications

This article is based on the author’s presentations at the 20th Annual Estate Planning Conference on Wealth Transfer in Columbus on June 26, 2009.

Since its enactment in 2006, effective January 1, 2007, the Ohio Trust Code (“OTC”) has been amended, a number of cases have been decided under it, and a variety of issues related to or raised by it have been identified. This article will review those developments.

Copyright Acknowledgment: This material is reprinted from the Probate Law Journal of Ohio with permission of Thomson Reuters. Copyright permission is on file.

Ohio Trust Code Update: Recent Developments, Alan Newman

Alan Newman

This article is based on the author’s presentations at the 20th Annual Estate Planning Conference on Wealth Transfer in Columbus on June 26, 2009.

Since its enactment in 2006, effective January 1, 2007, the Ohio Trust Code (“OTC”) has been amended, a number of cases have been decided under it, and a variety of issues related to or raised by it have been identified. This article will review those developments.

Copyright Acknowledgment: This material is reprinted from the Probate Law Journal of Ohio with permission of Thomson Reuters. Copyright permission is on file.

Shoemaker V. Gindlesberger: The Lack Of Privity Defense Survives, But Just Barely, Alan Newman

Akron Law Faculty Publications

In Shoemaker v. Gindlesberger, decided in May of this year, the Ohio Supreme Court held that: “A beneficiary of a decedent's will may not maintain a negligence action against an attorney for the preparation of a deed that results in increased tax liability for the estate.” In doing so, the Court approved and followed its 1987 decision in Simon v. Zipperstein. Under Zipperstein, an attorney who prepares a will for a client can not be liable in negligence to a third person the client intended to benefit under the will unless (i) the third person was in privity with the …

Shoemaker V. Gindlesberger: The Lack Of Privity Defense Survives, But Just Barely, Alan Newman

Alan Newman

In Shoemaker v. Gindlesberger, decided in May of this year, the Ohio Supreme Court held that: “A beneficiary of a decedent's will may not maintain a negligence action against an attorney for the preparation of a deed that results in increased tax liability for the estate.” In doing so, the Court approved and followed its 1987 decision in Simon v. Zipperstein. Under Zipperstein, an attorney who prepares a will for a client can not be liable in negligence to a third person the client intended to benefit under the will unless (i) the third person was in privity with the …

Revocable Trusts And The Law Of Wills: An Imperfect Fit, Alan Newman

Akron Law Faculty Publications

Over the centuries that wills have been used to dispose of testators’ property at death, the law of wills has developed to address issues that arose. Similarly, over the centuries that trusts have been used for non-testamentary purposes, the law of trusts has developed to resolve resulting issues.

In recent decades revocable trusts have become the most commonly used trust in the United States. To avoid estate administration, particularly in states in which administration involves cumbersome, time-consuming, and expensive court supervision, settlors make inter vivos transfers of assets that otherwise would be subject to administration on their deaths in trust. …

Revocable Trusts And The Law Of Wills: An Imperfect Fit, Alan Newman

Alan Newman

Over the centuries that wills have been used to dispose of testators’ property at death, the law of wills has developed to address issues that arose. Similarly, over the centuries that trusts have been used for non-testamentary purposes, the law of trusts has developed to resolve resulting issues.

In recent decades revocable trusts have become the most commonly used trust in the United States. To avoid estate administration, particularly in states in which administration involves cumbersome, time-consuming, and expensive court supervision, settlors make inter vivos transfers of assets that otherwise would be subject to administration on their deaths in trust. …

Ohio Trust Code: The Joint Committee's Proposal For Its First Amendment, Alan Newman

Akron Law Faculty Publications

This article discusses the changes included in the proposed amendment. Generally, the Joint Committee decided to include in the amendment straightforward changes as to which there was a broad consensus. The discussion below addresses the proposals included in the amendment in the order of the sections of the Revised Code that are affected.

Copyright Acknowledgment: This material is reprinted from the Probate Law Journal of Ohio with permission of Thomson Reuters. Copyright permission is on file.

Ohio Trust Code: The Joint Committee's Proposal For Its First Amendment, Alan Newman

Alan Newman

This article discusses the changes included in the proposed amendment. Generally, the Joint Committee decided to include in the amendment straightforward changes as to which there was a broad consensus. The discussion below addresses the proposals included in the amendment in the order of the sections of the Revised Code that are affected.

Copyright Acknowledgment: This material is reprinted from the Probate Law Journal of Ohio with permission of Thomson Reuters. Copyright permission is on file.

Powers Of Withdrawal, Claims For Set-Off, And Spendthrift Protection, Alan Newman

Akron Law Faculty Publications

If a beneficiary of a spendthrift trust has a right to withdraw property from the trust, may the beneficiary’s creditors reach the assets subject to the withdrawal power? That was the principle question recently addressed by the 1st District Court of Appeals in Great American Insurance Company v. Thompson Trust. Also of interest: the case may have involved an offset by the trustee of amounts distributable to the beneficiary to repay amounts owed by the beneficiary to the trust.

Powers Of Withdrawal, Claims For Set-Off, And Spendthrift Protection, Alan Newman

Alan Newman

If a beneficiary of a spendthrift trust has a right to withdraw property from the trust, may the beneficiary’s creditors reach the assets subject to the withdrawal power? That was the principle question recently addressed by the 1st District Court of Appeals in Great American Insurance Company v. Thompson Trust. Also of interest: the case may have involved an offset by the trustee of amounts distributable to the beneficiary to repay amounts owed by the beneficiary to the trust.

Modification And Termination Of Irrevocable Trusts Under The Ohio Uniform Trust Code, Alan Newman, Jamie R. Minor

Akron Law Faculty Publications

The adoption of the Ohio Uniform Trust Code (the “OUTC” or “the Code”) will constitute a comprehensive codification of trust law in Ohio. Among the many subjects it covers are the modification and termination of trusts. As noted in a comment to the national Uniform Trust Code (the “UTC”), “the overall objective of these [modification and termination] sections is to enhance flexibility consistent with the principle that preserving the settlor’s intent is paramount.” Given such factors as the increased use of trusts in recent years (including trusts created by non-lawyers and lawyers who do not specialize in estate planning); the …

Spendthrift And Discretionary Trusts: Alive And Well Under The Uniform Trust Code, Alan Newman

Akron Law Faculty Publications

Spendthrift and Discretionary Trusts: Alive and Well under the Uniform Trust Code

Among the provisions of the Uniform Trust Code (“UTC” or the “Code”) that have attracted the most attention are those of Article 5: Creditor’s Claims; Spendthrift and Discretionary Trusts. Although much of the UTC is a codification of the common law of trusts, there are many differences among the states in their handling of various creditors’ rights issues, and many jurisdictions have no law on some of those issues. As a result, there is no well-accepted, established common law on some of the issues addressed by Article 5. …