Pasternak & Fidis Reporter

July 26, 2018

OPINION: Electronic Wills? Maybe, But Not Like This

B22-0169, the Electronic Signature Authorization Act of 2017, is pending before the DC Council, and it is dreadful.  The Uniform Law Commission (ULC), relevant sections of the DC Bar, and a number of DC Fellows of the American College of Trust and Estate Counsel (ACTEC) have submitted, formally or informally, written opposition to the bill.  We have it on good authority that this bill is unlikely to pass, and we hope that is the case.

Are electronic wills coming?  Of course they are.  Last year in Australia, an unsent text message was accepted for probate as someone’s last will and testament.  (Unsent!  With an emoji in it!)  In July of this year, the Michigan Court of Appeals affirmed a trial court decision to accept for probate an entry saved in an app on a decedent’s smartphone.  As estimable and time-honored as the practice of writing wills may be, we are not so antediluvian as to think this field of human endeavor alone is immune to technological advances.  However, B22-0169 and bills like it are not the right way to bring will execution into the modern era.

There are many traps for the unwary with electronic wills (How do I revoke it?  What if it was saved on my phone and then I got a new phone and didn’t mean to erase it?  Which digital file is my “original” will?  How will anyone find my attesting witnesses later when my will is challenged if they only saw me sign it via Skype?  How will anyone even know that it was really me who signed it?  Or where I really was when I signed it?  What state law applies if I signed it in DC but my witnesses were in Nevada?).  Any legislation on electronic wills should be designed to solve more problems than it creates.  B22-0169 and bills like it are not the thoughtful product of a careful balancing of the desire for expediency and ease-of-use against consumer protection concerns and the risk of elder financial abuse.  They are instead the product of technology companies seeking to sell DIY wills (advertising them via scare tactics that make intestacy sound a lot more expensive than it really is for persons of limited means) without concern for the integrity of the process or the document’s quality and without thinking through all these traps for the unwary.

As advances in medicine increasingly keep people alive long past the point of capacity, incidences of fraud and undue influence are already likely to increase, and advances in technology already make mischief easier.  B22-0169 and bills like it would exacerbate these problems by (among other things) dispensing with the requirement that a will be attested by two witnesses in the testator’s presence.  As a result, people who think they are saving a few thousand dollars of legal fees (and avoiding the dreaded evil of intestacy) by preparing their own DIY wills online may leave their families with tens or hundreds of thousands of dollars of legal fees for will contests and related litigation.

The ULC has a drafting committee working on a uniform act, which includes Fellows of ACTEC, other estates and trusts law practitioners, law professors, and even representatives of the technology companies that want to sell electronic wills.  Yours truly has attended the committee meetings as a (somewhat noisy) observer.  That committee is giving careful thought to electronic wills and all the implications they have.  We hope the DC Council and other state legislatures considering electronic wills legislation will wait for the ULC work product rather than enacting rushed bills that would help only app vendors at the expense of the public good.

July 26, 2018

Alimony Ends When Payor Spouse Retires . . . Or Does It?

Family lawyers are increasingly hearing from divorced clients who are getting ready to retire or have retired and who have a spousal support obligation or a right to receive support under a court order.  A court order may result from a trial or as part of a settlement agreement adopted by a court in the judgment of divorce.  Some payors think alimony payments automatically end at retirement, or that a court will decide to terminate payments at retirement as a matter of course, but this is not necessarily so.

Court-ordered spousal support terminates automatically only on the death of either party or—in Maryland and Virginia, but not the District—upon remarriage of the recipient.  When a court orders indefinite spousal support, i.e., support without a predetermined… MORE >

April 9, 2018

Premarital Agreements, Alimony, and the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act has eliminated the tax treatment of alimony that has been in place for more than 75 years.  Under the old law, alimony is deductible from the income of the payor and includible in the income of the recipient, provided the parties comply with the specific requirements of the Internal Revenue Code (I.R.C.).  Effective January 1, 2019, under the Tax Cuts and Jobs Act, parties will no longer have the option to enter into an agreement for taxable alimony nor will court-ordered alimony be deductible from the payor’s income and includible in the recipient’s income.  Some alimony obligations created prior to January 1, 2019, may receive alimony tax treatment under the old law; others may not.

An existing premarital agreement… MORE >

April 2, 2018

Impact of the 2017 Tax Cuts and Jobs Act on Divorcing Families

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In December 2017, Congress rushed to pass the Tax Cuts and Jobs Act:  a 503-page document that drastically alters several of the popular tax credits and deductions around which many divorcing families structure their financial planning.  This first major tax reform in decades affects taxes beginning in 2018 and will have a significant impact on divorcing families.  Family lawyers are still working on understanding the nuances of the changes and figuring out how to settle cases while some of the uncertainties in the application of the new law are being resolved by the Treasury Department.

Even the most amicable divorce can be expensive; it simply costs more to maintain two households.  Through effective use of the tax code, however, family law attorneys, often working alongside… MORE >

March 9, 2018

Tax Cuts and Jobs Act: Impact on Estate and Gift Planning

The Tax Cuts and Jobs Act (the “Act”), signed into law at the end of December, includes major changes to the Internal Revenue Code.  The Act is the most sweeping tax legislation to be enacted in decades and affects nearly all American taxpayers.  Under the Act, the federal estate, generation-skipping transfer (GST) and gift tax exemption amounts have increased dramatically.

The estate tax exemption amount is the amount that an individual can pass at death to anyone without incurring estate tax, and the GST tax exemption amount is the amount that an individual can pass to grandchildren and more remote descendants without incurring GST tax.  In addition to the estate tax exemption, there is the unlimited marital deduction, which permits an individual to transfer an… MORE >

January 30, 2018

State Estate and Inheritance Taxes after the Tax Cuts and Jobs Act

The doubling of the federal estate tax exemption under the Tax Cuts and Jobs Act has moved many wealthy Americans away from the impact of the federal estate tax.  However, state estate taxes and inheritance taxes remain a factor in estate planning for residents of a number of states, including Maryland and the District of Columbia.  Moreover, a state level estate or inheritance tax may be imposed on real estate located in a state with a tax even when the decedent resides elsewhere.

Currently, only a handful of jurisdictions have an estate tax.  These include the District of Columbia and Maryland as well as Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington.  The District of Columbia’s estate tax exemption… MORE >