Nov 27, 2013 Camille Davidson
Jamie Patrick Hopkins, Afterlife in the Cloud: Managing a Digital Estate, 5 Hastings Sci. & Tech. L.J. 210 (2013), available at SSRN.
In the article, Afterlife in the Cloud: Managing a Digital Estate, Professor Jamie Hopkins steps into the tangled web of estate planning for digital assets. Professor Hopkins’s article is timely and allows us to begin a much needed discussion about a new and important area of estate planning. He begins to answer the question of what happens to digital assets when an individual dies. Can an individual dispose of his or her digital assets in a will or trust? How should issues of security and privacy be addressed? Hopkins reminds us that digital assets are vast and complex and traditional estate planning tools do not adequately address the issues that are involved with transferring such assets at an individual’s death. He suggests a combination of federal legislation and better service agreements between service providers and users as a solution to the digital dilemma.
Although, I am not convinced that federal legislation is the appropriate mechanism, I agree that uniformity is in order. Since only a handful of states have addressed the issue, many individuals are not aware of whether they may transfer certain assets when they die. For example, in my will, I devise my real and personal property to my designated beneficiaries. When I executed my will several years ago, I used a 35mm camera to take pictures. I used a day planner to keep my schedule, I kept paper copies of bank statements and other financial documents, and I used a Rolodex to store information from professional contacts. Today, my digital photographs are stored on a hard drive or in a cloud. I use an online scheduler to keep my appointments, I use online banking for most of my investments, I share photographs and videos via Facebook, I download my music and books from ITunes, and I use Twitter for professional connections. I have numerous passwords to these accounts, and I have checked “I agree” to several online service agreements. Will my beneficiaries have access to my digital assets? Professor Hopkins’s article is a wake-up call for people like me.
Professor Hopkins defines digital assets broadly to include “any electronically stored information” that can be used for both business and social purposes. Digital assets contribute to the value of a business since businesses use digital assets for numerous purposes including marketing, payroll, and storing information. Social digital assets have now replaced once traditional assets.,Photographs are stored in clouds or on websites such as Facebook instead of in physical photo albums.
Since digital assets are stored “on a variety of mediums, devices, and locations,” anyone charged with managing such assets is bound to run into unforeseen complications. Even though most estate lawyers are not technology gurus, they may now have to locate digital assets and may be charged with determining the value of the assets in order to probate a simple estate. Not so long ago, a simple search through a desk or file cabinet could provide clues to bank accounts and other assets. Today, such a search may not uncover those digital assets that are stored in clouds or with third party services.
Even if the asset can be located, issues of privacy and ownership arise. A terms of service agreement may prevent an executor from gaining control of an asset in order to transfer it to a designated beneficiary. Terms of service agreements are not uniform and the issue of whether or not an account is transferrable may be governed by a contract between the service provider and the user. For example, Facebook memorializes a user’s account after his or her death and “is the sole holder of the any of the deceased’s digital assets.”
Professor Hopkins criticizes digital estate planning services because of the unanswered questions about owner privacy and security. For starters, given the rate of identity theft crimes, customers may not want to put passwords into a third party account. Also, there is high industry turnover so individuals may not be so trusting of companies without history.
Professor Hopkins highlights Oklahoma legislation that gives an executor control over a decedent’s digital accounts. But, as he points out, Oklahoma’s legislation does not address all digital assets. He suggests that since most states are on the sidelines, federal legislation is necessary to clarify digital asset ownership rights. Although the current fractured Congress will probably not pass federal legislation in the near future, the Uniform Law Commissioners are drafting model language with respect to digital accounts. Professor Hopkins also suggests that service providers should improve online service agreements. This seems much more feasible than the federal legislation.
I would like to see Professor Hopkins offer suggested language that would help resolve the digital dilemma. He has already highlighted issues of ownership and transferability. Suggested standard language for terms of service agreements or model legislation that each state legislature could then address would be beneficial to the discussion. In the meantime, there is no doubt that traditional wills and trusts will need to adjust to meet the challenges of the digital estate.
Oct 29, 2013 William LaPiana
In his latest article, Incomplete Wills, Professor Adam Hirsch undertakes an elaborate analysis of the law governing the disposition of the portion of the testator’s probate estate undisposed of by the testator’s will. The breadth and depth of the research on which the article rests is formidable indeed. Although at first thought one might quarrel with the author’s assertion that the examination and classification of reported cases is a form of empirical research, he is candid about the limitations of the technique and his use of the cases is really quite traditional: they are illustrations of the great variety of circumstances in which the courts have considered real problems, in this instance, those caused by incomplete wills. And this use of the illustrations that the cases provide is the message of the article. Because wills are incomplete for many reasons, all of which are to some degree unintentional, the usually bright line rules that govern, exemplified by the closely related treatment of these topics in Restatement (Third) of Property (Wills and Donative Transfers) and the Uniform Probate Code (UPC), often give results that to varying degrees are out of sync with what we can learn of testators’ intentions.
Prof. Hirsch first discusses negative wills at great length, asking under what circumstances express disinheritance should be effective to supplant the intestacy statute in the event of a partial intestacy (providing along the way a complete discussion of current American law on the subject). With appropriate noting of the limitations of the data, he attempts to classify the reported cases according to the reason for disinheriting a family member by means of a negative will. The most we can conclude from this effort is that “the data suggest a substantial scattering of testamentary motives.” That fact, in turn, leads to the conclusion that neither the traditional refusal to honor negative wills nor their blanket approval by the modern view exemplified by the Restatement and the UPC is the best way to go. He suggests instead a close inquiry into the motives for making a negative will. The legislature will need to create a presumption about the testator’s intent to create a negative will or not, a presumption which for now will be arbitrary but in the future will be refined in light of cases decided under the new rule of ascertaining testator intent.
Prof. Hirsch also draws a distinction between negative wills disinheriting potential heirs by name and “global negative wills” disinheriting all of the testator’s potential heirs. Although neither the Restatement nor the UPC draw the distinction, he believes it is worthwhile to do so because “scrupulous observance of global negative wills” would likely not carry out the testator’s intent. Global disinheritance clauses, he believes, citing cases in support, often result from clumsy attempts to excluded pretermitted children. In addition, where we can conclude such provisions are an expression of hostility toward the testator’s heirs, there are surely gradations of hostility. Besides, he asks, of a will that unexpectedly fails to dispose of the testator’s estate, if the resulting choice is between distribution in intestacy and escheat, how many testators who have disinherited all of their potential heirs would stick to a complete override of the intestacy statute? He suggests the legislative creation of a rebuttable presumption that a testator would not want a global disinheritance clause to stand in the event of an unanticipated partial intestacy.
The remainder of the article is similar: the existing rules, often as not enshrined in the Restatement and the UPC, do not take into account the wide range of testator intent illustrated in the cases. For example, both the Restatement and the UPC require that a negative will be created using express language and both state that the result of an effective negative will is that the disinherited are deemed to have disclaimed their intestate shares. In both cases, these bright line rules do not necessarily capture the intent of every testator who creates, or attempts to create a negative will. The deemed disclamer in particular creates odd results because under the UPC, a disclaimer overrides the application of the per capita at each generation scheme of representation, which is the default meaning of “representation” under the Restatement and the UPC.
The article continues with a fascinating discussion of “estate planning gimmickry” made possible by the negative will. For example, by disinheriting heirs, the testator might be able to prevent anyone from challenging the will (although Prof. Hirsch does note that the effectiveness of such an attempt is not at all certain). The author also suggests that it should be possible to create a “positive” will, a will that alters the statutory pattern of intestate succession. The article concludes with a discussion of the application of the doctrine of advancements to partial intestacy and the possibility of a distribution in partial intestacy following the distribution in the effective portion of the will. Here, Prof. Hirsch notes the problematic nature of the abolition of the “no-residue-of-a-residue” rule. Again, one can never be certain that an inflexible rule yields results that carry out the unexpressed intent of a majority of testators whose wills are incomplete and one can certainly point to cases where we can be fairly confident the rule does quite the opposite.
In the end, Prof. Hirsch advocates an approach to these cases of incomplete testamentary provision that is more like the approach of both courts and legislatures to cases of incomplete contracts, “a domain in which bracketed judicial discretion seems to function well enough in practice.” This is the sort of suggestion that is genuinely thought provoking, and when well described and supported, as it is here, well worth the effort to understand.
Sep 30, 2013 Anne-Marie Rhodes
Professor David Horton argues that testation is a form of expressive speech that may raise Constitutional concerns. In doing so, he reminds us of a basic reality—a will that disposes of property is also the will of an individual speaking to his or her family, friends, and community. Legal trends that emphasize efficiency over the testator’s individual voice are troubling.
Horton begins by examining three traditional analogies used by courts in deciding trust and estates cases—property, contract, and corporate law. In describing each analogy, Horton notes that none of these is spot on, there is an ill fit associated with each. This provides the intellectual space for other theories and perspectives, including speech. Horton acknowledges that his conceptualization of testation as Constitutional speech is also not a perfect fit; nevertheless it offers an intriguing lens through which to view some difficult cases and doctrines.
Testation and Speech considers history. The Roman origins of wills reveal a rich pattern of individual expression. These were public documents read aloud at civic gatherings. Over time, as laws, taxes, and lawyers became more involved in the estate planning process, the expressive voice of the individual testator arguably became less clear, though never silenced.
Testamentary expressive speech continues today, which Horton classifies in two ways—patent expressions (such as conditional bequests, gifts for purpose, and unusual commands) and expressions embedded in distribution plans. Patent expressions are well known to estate planning attorneys who at times need to counsel clients from including libelous statements in their wills. That such statements in a will can give rise to a libel claim underscores the testament-as-speech argument. Conditional gifts – such as involved in the highlighted Feinberg “Jewish clause” case—similarly confirm the expressive potential of a will. That many testators do not use these well-known provisions does not undermine the expressive speech function for those who do.
On the other hand, all testators dispose of their property. Horton believes the disposition of property can be an implied form of expressive speech—it communicates in concrete fashion the feelings and judgments the testator has made about the property and beneficiaries. It bears particular significance for two reasons. First, the disposition expresses the testator’s individuality at death—a time that carries great weight and moment for the testator as well as those who survive her. Second, the disposition is also comprehensive, the sum total of feelings and property. It is quite sobering for all involved. One quibble I had with the article is in this section. The conclusion that the three quarters of testators who divide their property equally among their children reveal little in their estate plans sounds off to me. Can it be that such a dispositive plan is equally expressive as a plan that orders disparate treatment? Those testators may simply be expressing equal love and affection for all their children, prodigals and stars alike.
Horton next tackles the policy implications of testation as speech. This is the novel and insightful crux of his article as he implicates a role for First Amendment free speech scrutiny as well as a return to the traditional emphasis on testator’s intent in close cases.
If testation is viewed as expressive speech, then certain legislative and judicial limits on testamentary freedom could raise First Amendment concerns. While the contours of First Amendment protection are “notoriously elusive,” a provision in a testator’s will (e.g., the “Jewish clause”) can be self-expression, contribute to the marketplace of ideas, and be a form of political speech; all of which values undergird classification of speech for First Amendment purposes.
Undue influence is troubling because many cases proceed from leaving property to nonrelatives, instead of the perceived norm of family. This plays out in case law as well as in legislation. California has a new statute that presumptively invalidates donative transfers from a “dependent adult” to a nonrelative paid caregiver. If such bequests are viewed through the lens of expressive speech, those bequests may similarly be a “ringing exercise of autonomy,” add to the marketplace of ideas, and arguably address “matters of public concern.” The statute and the doctrine may need to be rethought.
More troubling under his analysis are two UTC principles—the “benefit–the–beneficiaries” rule and that some doctrines are mandatory regardless of the settlor’s intent. The “benefit–the–beneficiaries” rule has generated much scholarly discussion but Horton’s expressive speech concern adds another perspective from which to ponder the new rule’s scope. He prefers an application that begins with, or at least takes into account, the settlor’s intent. More fundamentally he questions the need for the rule’s existence because traditional doctrines of modification and administrative deviation address the same issues of waste and loss that the rule ostensibly addresses.
A will can be more than merely a transfer of property, and when it is, a testator’s expressive speech should be valued, respected, and not dismissed as an inefficiency in wealth transmissions. Horton’s article is intellectually provocative, and it provides a new perspective on the endlessly fascinating issue of what people say, do, and mean in their wills.
Aug 13, 2013 Alyssa DiRusso
Adam Chodorow, Death and Taxes and Zombies, 98 Iowa L. Rev. 1207 (2013), available at SSRN.
Taxes and brains—or rather, braaaaaaains—have always gone well together, but never quite like this. The income tax and the estate tax present intricate mechanisms for levying assessments on the living and the dead. In Death and Taxes and Zombies, Professor Chodorow turns his attention to the middle of this Venn diagram: the undead. The article reveals that Congress and the IRS have utterly failed to address this topic, creating significant uncertainty as to how the tax laws would apply in the event of a zombie apocalypse.
The article leads the reader through a series of ordinary tax and legal scenarios and applies them to extraordinary circumstances. How do states address the question of what it means to be legally dead? When does federal law trump state law for purposes of determining whether an inheritance has passed? What constitutes taxable income? What are relevant valuation dates when property is transferred, and how are the basis rules applied in the context of transfers from a decedent? What are the loopholes in the estate tax and the income tax? And more important, how do these rules apply to zombies?
For example, Professor Chodorow addresses the question of whether a zombie would be taxed on earned income. The issue turns on whether the zombie is dead and controlled by another, in which case agency rules should attribute this income collected by the zombie to his principal. Self-directed zombies, however, appear to be “individuals” and “taxpayers” under the Tax Code, despite the lack of specific mention (readers are referred to section 7701 of the Internal Revenue Code). (Pp. 1220-21.) Whether the income is properly considered “in respect of a decedent” raises additional wrinkles. Professor Chodorow marvels that the regulations are silent on the matter. (P. 1221).
The best thing about the article may be its biting sense of humor. (“If people who become zombies are considered dead for federal estate and income tax purposes, little will change. Becoming a zombie will be no different than dying from pneumonia, aside from the part where you eat your friends and loved ones.” (P. 1222.)) The “call to arms” tone of the paper is a subtle critique of overzealous academics who get carried away with their own importance. Not everything is an apocalypse.
It is likely, though, that the true strength of the article is as a teaching tool. The basics of tax law are important for students to learn, but can be dry and inaccessible. For students, the article is concise (about 25 pages), fairly comprehensive, and an easy and enjoyable read. It models good legal writing and citation support. It also teaches the value of creativity and considering transactions from different perspectives. I will be assigning it as part of the second day’s reading in my Estate and Gift Tax class this fall.
It takes really meaty brains to put together an article this unique. I can only hope no zombie reads the article and decides to feast upon Professor Chodorow.
Jul 10, 2013 Stewart Sterk
Intestate succession law has traditionally been directed toward accomplishing two objectives: effectuating the likely intent of intestate decedents and minimizing administrative costs. Within the so-called “traditional” family, those objectives are rarely at odds. As a result, intestate succession law has traditionally been relatively simple: the decedent’s property is distributed to the decedent’s spouse and issue, and the only areas of controversy surround how much the spouse should take, and whether distribution to issue should be per stirpes, per capita, or by the UPC’s more refined “by representation” scheme.
In her recent article, however, Professor Susan Gary identifies the growing complexity in intestate succession law. That complexity is a response to increasing recognition that intestate succession statutes designed for the traditional family often frustrate the intent of decedents whose family is not traditional. To deal with non-traditional families, Professor Gary notes that a number of states have attempted to bring domestic partners, children born through assisted reproduction, stepchildren, and even informally adopted children within the intestate succession scheme, and cites a variety of scholarship supporting this expansion. Similarly, she identifies statutory provisions designed to disinherit intestate heirs when it would appear that the decedent would not want those heirs to take; in addition to slayer statutes, she discusses cases of child or spousal abandonment, and cases of elder abuse. These refinements of more traditional intestate succession statutes presumably increase the number of cases in which intestate succession doctrines effectuate the intent of intestate decedents, but, as Professor Gary observes, they are not perfect; they do not anticipate all of the circumstances in which a decedent might want to vary the most common patterns of distribution.
That leads to Professor Gary’s suggestion: we should focus less on fine-tuning intestate succession provisions, and more on giving courts discretion to consider how individual decedents might have wanted their assets distributed. Professor Gary recognizes that the idea is not revolutionary. She points out that some states already confer limited discretion on judges, and she emphasizes that family maintenance provisions in force in a number of Commonwealth countries operate, apparently successfully, even though they give judges even greater discretion in distributing estate assets.
Professor Gary’s article essentially raises a now familiar question in the intestate succession context: if we want to effectuate the intent of intestate decedents, should we do so through a regime of rules or a regime of standards? The prevailing approach to intestate succession law has been to use rules. Rules tend to be preferable when the legal problem at hand involves deciding a large number of cases, most of which fall into a much smaller number of patterns. In those circumstances, the investment in refined rules, which then can be inexpensively applied to individual cases, seems optimal. By contrast, when the number of patterns approaches the number of cases, the ex ante investment in rulemaking seems counterproductive, and we gravitate toward standards. Professor Gary’s thesis—and she may be right—is that as the number of family situations expands, intestate succession law should move in the direction of standards.
Of course, Professor Gary is fully aware of the most significant question about intestate succession law: how important is it to effectuate the decedent’s intent—especially when too much investigation into the issue could eat up much of the estate? People who expect their preferences to depart from legal norms always have the option to draft wills and revocable trusts that make intestate succession largely irrelevant. But, as Professor Gary points out, most people don’t write wills, making it at least somewhat important to try to have intestate succession doctrine reflect our best guess about a decedent’s intent.
Professor Gary nevertheless recognizes that if we move from rules to standards, we should at least have presumptive rules, and we should place obstacles in front of claimants who seek to rebut the presumption. She suggests, for instance, permitting judges to assess costs against the petitioning heir in order to discourage frivolous claims. Obstacles like these would go a long way towards making Professor Gary’s proposal workable; here, though, I might prefer an absolute rule depriving courts of any discretion, and requiring the claimant to post a bond as an admission ticket to any litigation. The bond would cover reasonable costs and attorneys’ fees of the presumptive heirs as well. That might discourage claimants from filing suit just to obtain leverage in any settlement discussions with the presumptive heirs.
In short, as always, Professor Gary has produced a thought-provoking article.
Jun 11, 2013 Phyllis C. Taite
When I read the title there were three questions that came to mind right away. First, I was curious how to determine the type of abuse that would serve as a presumptive bar. Next, I was curious how this presumptive bar would apply to wills and/or other forms of inheritance. Finally, I wondered what mechanism would be in place to prevent this proposal from being used to usurp a woman’s decision to transfer her own property the way she desires.
Professor Spivak answers the first question by proposing a presumptive bar to inheritance to an abusive spouse because it provides an opportunity to expand existing laws. The existing laws already provide a presumptive bar to inheritance to perpetrators of elder and child abuse of the decedent. Including spousal abuse as a barrier to inheritance sends the message that spousal abuse is just as an important public policy stance to deny an unjust enrichment to abusers as the others categories of abuse. As a policy matter I agree that perpetrators of spousal abuse should not be permitted to inherit in cases where systemic abuse exists. As a practical matter I envisioned this would be tougher to regulate because there are different types of abuse and how should abuse be defined for this limited purpose.
Professor Spivack answers with proposals for a specific set of behavior to regulate by limiting the proposed rule to circumstances evidencing “coercive control.” She defined coercive control as “a pattern of repeated battery and injury, psychological abuse, sexual assault, progressive social isolation, deprivation, and intimidation by an intimate partner.” Her proposal focuses on certain behaviors such as the strategic use of threats and force to “deter or trigger specific behavior, to win arguments or assert dominance” and controlling the victim through fear and intimidation. By barring spouse abusers from inheritance in these circumstances the bridge between intimate violence and women’s wealth inequality can be forged.
The article also addressed my question of how the proposed rule would apply to wills or other forms of inheritance. Professor Spivack proposed the best doctrine applicable to the circumstances is duress. Initially I wasn’t convinced it was the best approach since undue influence seemed tailor made for such a doctrine. Professor Spivack convinced me she was correct by demonstrating a key distinction between undue influence and duress as applied to her proposal. First, undue influence may easily be demonstrated because of the confidential relationship that exists between spouses. Based on the confidential relationship, the presumption of undue influence would apply if the spouse receives the bulk of the estate and the will occurred under suspicious circumstances. The problem, as she describes it, is that presumption may apply in too many cases which would render the rule too burdensome. The proposed rule is only intended to capture those cases of coercive control. With the additional element of coercive control, duress is more appropriate because the acts of violence or threats of violence, is already incorporated in the doctrine.
A couple of important points to make about the article are that proposal is not designed to deter spousal abuse and coercive control may be proven without a demonstration of actual coercion. I appreciated the fact that Professor Spivack recognized that perpetrators of spouse abuse are not likely to be deterred from abusing because they may lost he right to inherit from the victim spouse. In addition, she points out that coercion may be demonstrated by proving the abuse and making the connection that abuse has the effect of brainwashing the victim which, in turn, weakens the ability of the victim to exercise independent judgment. Keeping in mind the goal is to prevent the unjust enrichment of the abusive spouse, the justification for the proposed rule is still sound.
My final concern regarding this topic was whether the subject women would be totally prevented from disposing of their property in the manner they selected. She addresses the concern by stating her proposal is an attempt to respond to dynamics of the coercive relationship. She points out that political and social inequalities are a reality and the terms of this proposal does not change that.
Next she indicates that while women may resist their abusers, they are often more concerned with physical safety and may not have property transfers high on the list of priorities. In addition, she points out the victim, under the context of duress, is often in a position of making decisions based on options constrained by the will of the abuser. This could manifest in a will that devises all property to the abuser or a decision not to make a will or other non probate transfers. Finally, she points out that at the time the proposal would be applicable the victim is dead; therefore, not in a position to make any further decisions. As a result, the analysis is limited to determining how much weight to give to decisions she has already made. Based on the coercive nature of the relationship, the policy behind the proposal, to deny the unjust enrichment to the abusive surviving spouse, is sound because her actions or inactions may not be based on her own free will.
In addition to the above, she provides specific information indicating the type of evidence she that should be used to establish evidence of the coercive control. By providing specific definitions, it further provides guidelines to limit application of the proposed rule to certain types of systematic abuse, and not all cases where abuse might exist.
This article was very insightful and provided the policy justifications as well as the method to implement the changes. This article provides the framework to adopt the provision within applicable UPC and/or state law and I recommend this article to legislators, UPC drafters, and professors teaching trusts and estates.
Apr 7, 2013 Paula Monopoli
Kelly, Daniel B., Toward Economic Analysis of the Uniform Probate Code, 45 Univ. of Mich. J. of Law Reform 855 (2012), available at SSRN.
In his article, Toward Economic Analysis of the Uniform Probate Code, Dan Kelly fills a significant gap in the inheritance law literature. As he notes, a number of scholars have brought the lens of economic analysis to bear on trusts but few, if any, have taken a comprehensive look at intestacy and wills using the tools of economic analysis. Kelly takes on this task and the result is an important contribution to the field.
Kelly begins by tracing the important historical move from formalism to a functional view of inheritance law and gives the reader a succinct synopsis of the work of important inheritance law scholars like John Langbein and Larry Waggoner. He then describes the work of a younger generation of scholars like Rob Sitkoff, who has brought empiricism to trust law in particular. This literature summary is helpful in identifying the scholarly gap in the area of intestacy and wills, i.e., succession law.
Kelly applies three tools of economic analysis to succession law: (1) transaction costs; (2) the ex ante/ex post distinction; and (3) rules versus standards. He focuses on what he characterizes as second-order questions of institutional design rather than on first-order questions that address the very purpose of succession, e.g. freedom of testation, replicating or effectuating decedents’ intent and the efficient reallocation of property at death. Kelly hones in on the choice of rules themselves. For example, he notes that there are a number of benefits that flow to the testator by opting out of the default rules of intestacy. These include the ability to choose one’s executor and the guardian of one’s children, to leave bequests to people or institutions who may not be one’s heirs, and to minimize tax liability in some cases. But as Kelly points out, more than half of Americans fail to execute wills. This is, in part, due to transaction costs like the time and effort necessary to find an attorney and pay her fee. If these costs are greater than the benefits of having a will, many people will choose to die intestate. Thus, rules that increase the ease with which one can execute a will presumably produce more will-making. Whether or not that is a social good is another question that Kelly raises but does not answer in this article. He simply makes the point that the choice of rules drives the behavior of citizens one way or another.
Similarly, Kelly cites legal economists Louis Kaplow and Steven Shavell for the proposition that economists embrace the ex ante as opposed to ex post perspective as the superior mode of legal and policy analysis. This view is grounded in the idea that ex ante analysis “incorporates ‘the fact that the choice of legal rules may affect how individuals behave at the outset, which has an important influence on individuals’ well-being.’” It also reflects the view that the ex ante perspective “avoids the possibility of ‘hindsight bias’ by considering ‘all possible outcomes an individual might experience’ rather than just a salient, perhaps atypical, outcome that happens to occur.” Kelly offers a useful example from succession law citing the work of inheritance law scholar Adam Hirsch. He notes that some would argue that the law should limit one’s ability to waive the elective share. But ex ante analysis illuminates the possibility that if that were the rule, some people would not marry at all even though their potential spouses might be willing to waive the elective share. Kelly points out that ex ante analysis by itself does not determine whether waiving the elective share is a good or bad policy choice. But it does yield information that may be useful to policymakers in the process of choosing a rule.
Finally, Kelly turns to a third tool of economic analysis – rules versus standards. He describes this concept in terms of legal commands taking two forms. Rules are “commands that are given their content ex ante or before a person acts. (e.g., a rule that a driver not exceed 55 m.p.h.).” Alternatively, standards are “commands that are given their content ex post or after a person acts (e.g., a standard that a person drive “reasonably”).” Choosing which is optimal is aided by an evaluation of the costs and benefits of each in a particular context. Kelly notes that “rules entail higher drafting costs, lower decision costs, greater predictability and consistency, . . . lower agency costs” but less flexibility to do justice in a particular case. Standards, on the other hand, “involve lower drafting costs, higher decision costs, less predictability and consistency, higher agency costs and more flexibility” to make a contextual decision that may enhance fairness. In the context of the Uniform Probate Code, which incorporates both rules and standards, intestacy provisions that give a specific share to a surviving spouse constitutes a rule while the provisions that govern whether a parent-child relationship exists that turn on whether someone “functioned as a parent” constitute a standard. Kelly argues that being aware of the costs and benefits of each helps explain some of the choices made by the drafters of the Uniform Probate Code and will enhance its future development.
In the final part of his article, Kelly turns these three tools of economic analysis toward various provisions of the Uniform Probate Code. He concludes that “[m]oving towards an economic analysis of succession law that combines theoretical as well as empirical research has the potential to pay dividends for future law reform.” This article persuaded me that, in fact, Kelly is absolutely correct. With clear, elegant prose, Kelly has given the reader an excellent primer in the tools of economic analysis and has offered inheritance law scholars an important addition to the canon. I look forward to more scholarship by Kelly that builds on this very strong foundation.
Mar 4, 2013 Solangel Maldonado
In their forthcoming article, Torts and Estates: Remedying Wrongful Interference with Inheritance, John C.P. Goldberg and Robert H. Sitkoff illustrate the potential pitfalls of recognizing causes of action without any awareness or consideration of how other areas of law deal with claims arising out of similar facts. They argue that courts’ relatively recent recognition of the tort of wrongful interference with an expected inheritance is ill-conceived for two reasons. First, it is unnecessary given the remedies available under inheritance law—a will contest or action for restitution by way of constructive trust. Second, it conflicts with specialized inheritance law doctrines and procedures (such as inferences, presumptions, and burden shifting schemes, higher evidentiary standards, bench trials, and short statutes of limitations) developed to address the evidentiary challenges raised when the only person who can conclusively clarify or confirm his donative wishes is dead. A disappointed expectant beneficiary who brings a claim for tortious interference with an expected inheritance will have fewer procedural hurdles to clear because courts have rejected or ignored the rules and procedures that apply to will contests and restitution claims. A tort plaintiff may also recover substantial damages—including nonpecuniary and punitive damages—remedies that are unavailable in a will contest or action for restitution.
Goldberg and Sitkoff further argue that interference with expected inheritance claims are problematic conceptually. Since a donor’s wishes are the guiding principle of inheritance law, a disappointed expectant beneficiary has no independent right to the donor’s property absent the donor’s exercise of his freedom of disposition. As such, when a disappointed expectant beneficiary brings a wrongful interference with an expected inheritance claim, she is suing to vindicate the donor’s right to freedom of disposition rather than her own rights. However, as every first year law student knows, a tort plaintiff cannot recover for a wrong done to another person. She can only sue for a wrong done to her. Of course, we suspect that a disappointed expectant beneficiary doesn’t sue only (or primarily) to vindicate the donor’s freedom of disposition but to secure her interest in the property. While that may be the case, Goldberg and Sitkoff point out that the law cannot recognize her interest in the decedent’s property independent of decedent’s wishes because such interest would directly conflict with decedent’s freedom of disposition.
As a Torts teacher and Estates & Trusts teacher, I am a bit embarrassed not to have recognized the conceptual inconsistencies inherent in the tort of wrongful interference with an expected inheritance. I also had not thought about its conflict with the specialized rules and procedures that have been developed to address the evidentiary problems created by posthumous litigation. According to Goldberg and Sitkoff, neither did the American Law Institute (ALI) nor Dean William Prosser, a reporter of the Restatement (Second) of Torts. Goldberg and Sitkoff posit that subject matter specialization is partly to blame for this oversight. Torts professors and practitioners often know very little about inheritance law and, as a result, failed to recognize before endorsing the tort of interference with an expected inheritance, that it conflicted with fundamental inheritance law doctrines and policies. Goldberg and Sitkoff also attribute some responsibility to the ALI’s “top-down law reform of the common law through innovative Restatement … provisions that have not been tested in practice or vetted in the literature.” Few courts had recognized the tort in 1979 when it was included in the Restatement (Second) of Torts but which has since been adopted by a significant minority of appellate courts and is increasingly the subject of law review articles and discussion in leading casebooks. Law students also tend to remember the most famous tortious interference case—Marshall v. Marshall, 547 U.S. 293 (2006)—involving Playboy Playmate Anna Nicole Smith’s claim against her deceased husband’s son (her former stepson).
I must admit that until I read this article I commended courts’ willingness to award damages to petitioners who had been deprived of an expected inheritance or bequest as a result of defendant’s undue influence or fraudulent or coercive inducement of the donor to make a will or nonprobate transfer in defendant’s favor. In my view, although the disappointed expectant beneficiary could honor the decedent’s wishes by bringing a will contest or action for restitution, it did not seem just that the wrongdoer would merely lose the property he wrongfully secured and not suffer any other financial consequences. The risk of a will contest or restitution action also seemed insufficient to deter a potential wrongdoer given the unavailability of damages. In addition, plaintiffs often assert tort claims alongside or in lieu of equitable claims. For example, a custodial parent who has been wrongfully deprived of his child’s custody is entitled to the child’s return but can also sue for tortious interference with custodial rights.
After reading the article, I am no longer sure whether I support the tort. Goldberg and Sitkoff suggest that tort law, as compared to inheritance law and its specialized rules and procedures, is unlikely to improve the accuracy of the court’s determination of the donor’s wishes. Nevertheless, I am not yet convinced that inheritance law’s specialized rules and procedures are always better able to ascertain donor’s wishes. Is it possible that those rules make it easier for a wrongdoer to circumvent a donor’s wishes? After all, the wrongdoer has little to lose in a will contest or restitution action given that even the cost of defending the suit will be paid out of the donor’s estate.
Goldberg and Sitkoff acknowledge that inheritance law’s specialized rules and procedures may not be optimal but they object to courts’ ad hoc rejection of these rules by recognizing “a rival tort action” without reason. I agree that unprincipled reform could potentially be disastrous and agree that it is troubling that in those states that recognize the tort, a disappointed expectant beneficiary can “choose between two causes of action with differing standards of proof.” But I do not believe that courts have recognized the tort of interference with an expected inheritance without reason and those reasons might be equity and deterrence. Even if inheritance law’s rules are better able to protect decedent’s wishes, in those cases where courts determine that the defendant wrongfully obtained decedent’s property, inheritance law’s remedies are arguably inadequate. The petitioner is not compensated for the money, time, and energy expended on the litigation, and the wrongdoer will have gotten away with making a mockery of decedent’s wishes even if only during the pendency of the litigation as he shamelessly uses the donor’s property to finance his ongoing attempt to retain the property in circumvention of the decedent’s wishes.
I hope that Torts scholars and Estates & Trusts scholars will read this article and conclude, as I have, that we must address the inconsistencies between inheritance law and tort law. We might conclude that courts should eliminate inheritance law’s specialized rules and procedures or should extend them to tortious interference with an expected inheritance claims. Or we might conclude that inheritance law adequately protects a donor’s freedom of disposition and that there is no need or room for tort law. Whatever we decide, this article demonstrates the benefits of collaboration across fields. Had the drafters of the Restatement (Second) of Torts had the benefit of the insights of Estates & Trusts scholars, these questions might have been addressed before 1979.
Jan 28, 2013 Jeffrey Cooper
Lawrence W. Waggoner,
From Here to Eternity: The Folly of Perpetual Trusts, Univ. of Michigan Public Law Working Paper no. 259,
available on SSRN.
One of the notable current developments in modern estate planning is that of the dynasty trust, a device for passing family wealth though the generations without the imposition of estate, gift or generation-skipping tax along the way. Fueled by the combination of clients seeking a measure of immortality, state legislatures seeking to attract trust business, and lawyers and trust companies seeking to secure a “client” that will last for generations, the device has become a must-consider technique for wealthy Americans.
Professor Lawrence Waggoner does not think dynasty trusts represent good public policy, a theme he has addressed in many of his earlier writings. However, his argument in this piece is slightly different. Addressing his remarks not only to state legislatures, but to those clients considering implementing a dynasty trust, he contends that dynasty trusts may not serve any useful interest for the very clients clamoring to establish them. His argument takes two major forms. First, utilizing some mathematical modeling, he illustrates how the passage of time dramatically multiplies the number of eligible trust beneficiaries of a hypothetical dynasty trust and dramatically dilutes their genetic relationship to the individual who originally establish the trust. For example, Prof. Waggoner calculates that some 325 years after its inception, a typical dynasty trust might have over 100,000 beneficiaries, and after 450 years might have well over one million such beneficiaries.
Waggoner calculates that the genetic relationship between these beneficiaries and the original grantor would be infinitesimal (indeed no stronger than that of any two average Americans), raising the question of whether a client establishing a dynasty trust today truly would have any affinity towards these distant future relatives. In illustrating this problem, he doesn’t rely on numbers alone. Rather, he offers the visual illustration of the descendents of a single grantor being so numerous after 350 years later that the 114,500 members of this “family” could not fit in Michigan Stadium or the Rose Bowl. He also offers the case of Samuel Hinkley, who died in 1662 and is a common ancestor of George H.W. Bush, George W. Bush and Barack Obama. Had Hinkley established a dynasty trust, the Bushes and the Obamas would be current beneficiaries. Genetically, politically, economically, and just about any other way one can imagine, the Obamas and the Bushes are about as diverse as Americans can be. It’s hard to imagine what any estate planning goal would be served by those two families being sustained by a common source of funds established by a common ancestor.
Second, Professor Waggoner contends that this dramatic increase in the number of eligible beneficiaries creates a whole host of undesirable administrative problems. Included among these are concerns that current dynasty trust documents may ultimately prove to be as antiquated as their once “cutting-edge” predecessors such as the entail and the strict settlement. Waggoner also raises concerns about the administrative difficulties in dealing with trustee turnover, as well as the seemingly impossible task of a trustee exercising that trustee’s duty of impartiality when owed to so many beneficiaries in so many different stations of life. Professor Waggoner contends that these administrative complexities are a concern not only for society at large but for the very individuals contemplating establishing today’s dynasty trusts. If the wealthy really considered these complexities, Waggoner argues, they might conclude that dynasty trusts simply are not worth the tax advantages.
As with any article, those with differing viewpoints can certainly quibble with aspects of Professor Waggoner’s approach. Specifically, critics may suggest that he seems to tilt the analysis somewhat in his favor by characterizing the typical dynasty trust as a single trust for cascading generations of beneficiaries. In reality, as Professor Waggoner discusses in the footnotes of his Article, many of these trusts will subdivide over time so that only one family unit will be the beneficiaries of a given trust at a given time. If one envisions this structure being the practical norm, then some (but not all) of the administrative challenges he attributes to a dynasty trust (such as inevitable conflicts among multiple generations of beneficiaries) are no more problematic in the dynasty trust context than anywhere else in trust law. Indeed, one could even contend that it is more administratively efficient to have one trustee or trust company administer hundreds of trusts established under the same master document than it would be to have each generation retain new lawyers to draft new documents to be administered by new trustees.
Despite these potential minor objections, Professor Waggoner’s central thesis remains undisturbed: trusts lasting for centuries create a host of administrative and interpersonal complexities that clients should more carefully consider. In sum, this article represents a brief, entertaining, and enlightening contribution to the policy debate surrounding the continued utility of the rule against perpetuities and the desirability of establishing a dynasty trust. I recommend it highly.
Cite as: Jeffrey Cooper,
Rethinking Perpetual Trusts, JOTWELL
(January 28, 2013) (reviewing Lawrence W. Waggoner,
From Here to Eternity: The Folly of Perpetual Trusts, Univ. of Michigan Public Law Working Paper no. 259,
available on SSRN),
https://trustest.jotwell.com/rethinking-perpetual-trusts/.
Nov 9, 2012 Camille Davidson
McKen Carrington & Christopher Ogolla,
Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley, 4
Est. Plan. & Community Prop. L. J. 53 (2012), available at
bepress.
Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley reads like a fact pattern for a law school final examination. In the article, Professors McKen Carrington and Christopher Ogolla discuss the controversy surrounding the estate of Robert Nesta “Bob” Marley. Famed reggae icon and Rastafarian Marley died intestate in 1981 with an estate valued at approximately 30 million dollars at the time of his death. Although Carrington and Ogolla focus on Jamaican law, the issues they highlight extend far beyond Jamaica and provide a backdrop for discussing several issues important in the administration of a decedent’s estate. With respect to the administration of Marley’s estate, those issues included adopted children, out of wedlock children, intellectual property rights, fiduciary obligations of a trustee, ethical obligations of an attorney, and choice of law issues. Further, there were allegations of forgery and fraud. Carrington and Ogolla merely scratch the surface with each of these topics. I would love to see them expand on several of the topics they highlight. Real life stories make great topics for writing and teaching in the area of decedents’ estates.
One of the first issues addressed in the paper is who should be included in Marley’s family. The article provides a brief section on the Marley family structure. Although Marley was survived by a spouse, Rita and the three children born to their marital union, he was also survived by two children of Rita that he had adopted and six other children that he had fathered with other women while he was married to Rita. I would have liked for the authors to have included a little more detail about the Marley family.
Although this article relegates to one sentence that Rita was the custodial mother and caretaker of all the children, one unanswered question is why did she take on that role? Why did Marley father so many children outside of his marriage? Were all of the children really Marley’s? Where were their mothers? Who is a decedent’s child under Jamaican law? Is a genetic connection all that is necessary to inherit from one’s father in Jamaica? Is a genetic connection necessary in order to inherit from one’s purported father in Jamaica? In most jurisdictions in the United States, biological connection is generally not enough for a child to inherit from or through his father. A parent-child relationship or other acknowledgment is often required.
The authors suggest that the Jamaican intestacy system failed Marley’s heirs. They mention Marley’s mother, Cedella Marley Booker, and indicate that she and Marley were extremely close, yet under the law she received nothing. Marley’s surviving spouse Rita was entitled to 10 percent of his estate outright and a life interest in 45 percent of his estate. The children were entitled to 45 percent outright and the remainder of the life interest. The authors suggest that the couple built the 30 million dollar empire together and we are to infer that Rita should be entitled to more. In fact, the authors mention Texas law as an example of where a surviving spouse would be entitled to more. Perhaps a little more detail about community property states and separate property states is warranted. Why is the life interest not beneficial to Rita? We often create spousal trusts for lifetime use as an estate tax savings mechanism. Did the Jamaican system really fail Marley’s heirs?
The authors suggest that Marley was unlike most individuals who die intestate. Although he was a shrewd business person, his failure to devise an estate plan was for religious reasons. Some background on the Rastafarian religion may be helpful to the reader. Given the non-traditional nature of Marley’s family, an estate plan would have been a business plan. The authors could draft a practice-ready piece that highlights the importance of an estate plan especially for non-traditional families.
The second half of the article focuses on the many companies that Marley created and the ethical conduct of his spouse and business attorney. The authors state that the Model Rules of Professional Conduct do not adequately address the problems faced by estate planning attorneys. Indeed estate planning attorneys are often faced with potential conflicts of interest as they determine who exactly they represent. Carrington and Ogolla also remind us that there is a fine line between asset protection and fraud. But, the authors suggest that Marley’s estate problems arose because Marley did not have an estate plan. It appears from the article that some of the fraudulent transfers or misappropriations that Rita Marley made (with the assistance of David Steinburg took place prior to Marley’s death. Thus, an estate plan may not have prevented the fraudulent acts. Further, lawsuits filed by co-songwriters and band members probably would have still occurred even if Marley had a will. Even when a decedent dies with a will, determining the property that the decedent owns at the time of death may be controversial. Although everyone should have an estate plan, such plan will not prevent litigation.
Family Feuds reminds us that estate planning is essential for everyone and that being a lawyer is a noble profession.
Cite as: Camille Davidson,
Estate Planning Makes Business Sense for Non-Traditional Families, JOTWELL
(November 9, 2012) (reviewing McKen Carrington & Christopher Ogolla,
Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley, 4
Est. Plan. & Community Prop. L. J. 53 (2012), available at bepress),
https://trustest.jotwell.com/estate-planning-makes-business-sense-for-non-traditional-families/.
