The Practitioner's Perspective: Insight from Estate Planning Attorneys

• Publication year: 2022
• Citation: Vol. 43

43 Creighton L. Rev. 657. THE PRACTITIONER'S PERSPECTIVE: INSIGHT FROM ESTATE PLANNING ATTORNEYS

THE PRACTITIONER'S PERSPECTIVE: INSIGHT FROM ESTATE PLANNING ATTORNEYS

Mary A. Donovan (fn*)
Craig V. Mcgarry (fn**)
John N. Sulentic(fn***)

PROFESSOR VOLKMER:

We are moving in the direction from an academic level of discussion to more of what I would call the real world discussion. Estate planning is very practical. It is about people, it is about their wealth, and it is about decision making. As well as, if you will, the big picture policy decisions. So we are moving in the direction of the trenches in the practitioner level. And we have three very distinguished practitioners from the fields of estate planning and wealth transfer. And I think you will see in some of the discussions we have had a little preview among ourselves about what our commentators are going to say and I think you see us leading into a discussion similar to that of our TePoel lecturer, Professor Caron, with regard to the estate tax uncertainties. I think you may get a little preview of that in some of the comments of our presenters upcoming. I cannot resist saying, with regard to the last presentation, that my brother-in-law, a 1962 Creigh-ton law grad, has been exclusively involved in representing defendants in criminal tax prosecutions. And at least in my day of law school, which was many years ago, the question was asked what is the difference between tax evasion and tax avoidance? And in my day we had a simple answer: ten years in jail. I realize that is oversimplifying that topic.

I would like to introduce our panel today. You can see from the program that you were given that they have varying backgrounds in the field of estate planning work. Mary Donovan is an attorney with the Koley Jessen law firm here in Omaha. Ms. Donovan practices in the areas of business securities law, tax charitable giving non-profit organizations, etc. I might have mentioned that all three of our speakers are Creighton University School of Law graduates whom we are very proud. Next will be John Sulentic, senior vice president and fiduciary tax director at Wells Fargo bank. John comes at this topic more or less from a particularly fiduciary tax standpoint, which again in terms of Professor Caron's lecture, I think you will find that this is presenting issues peculiar to that area of estate planning. Finally, Craig McGarry, currently serving as president of Bulk Trade, a financial services consulting firm, former senior vice president of Wealth Management Group First National Bank of Omaha, having previously served in leadership positions in several banking organizations. So we have a very well qualified group coming, as I say, from an estate planning perspectives-from varying perspectives, and so I would like Mary Donovan to begin our discussion

MS. DONOVAN:

Thank you. The first topic I want to discuss I am actually throwing in, that is, I had not told Professor Volkmer about it. Listening to Professor Wendell's discussion reminded me of a good case that we had in the last couple of years relating to adult adoptions. And I thought it would be interesting to talk about that with a Nebraska case compared to the issues Professor Wendell brought up.

The case involved a Nebraska resident who died and had left a trust for his two children. The trust was split into equal shares for his children but was to be held in trust for his lifetime with discretionary distributions to them during their lifetimes. Upon their deaths, the daughter's shares was to distributed to her issues if she had any and if not it would go over to her brother or her brother's issue. The daughter did not have any natural children. The brother had natural children. The trust goes on for a number of years, the daughter did not have any children and decided that she wanted to do an adoption so that she could leave the half that had been delegated to her to who she chose as family-instead of going to her brother and her brother's children because she had issues with them and did not care for them. The daughter was a resident of California. Nebraska would not have allowed such an adult adoption. The daughter had moved to California which did allow adult adoptions. She was a resident of California and she wanted to adopt her adult cousin. The cousin was related to the testator but the testator had not specifically provided for him in his trust. But the daughter wanted to adopt her adult cousin. She cared for him. There was a family relationship. She cared for his children and wanted to help with their education expenses. So, she went through the process in California and was granted an adult adoption. So fast forward several years-like twenty years. The daughter dies and it is a Nebraska case the trust was established by a Nebraska decedent. The trustee was uncomfortable with just distributing the remaining shares to the adult cousin even though the trust specifically said that adoptions counted in terms of who the daughter's issue would be. The brother's children challenged the trust, stating they wanted to receive that share because Nebraska did not recognize adult adoptions and therefore such a distribution would be against public policy. They further argued that it would be against the intent of the testator. Well, the Nebraska Supreme Court looked at those arguments, saying there was not an issue of public policy and not an issue of intent of the testator in this case. Further, because of the adult adoption judgment in California, the Court was obligated under the Full Faith and Credit Clause to recognize the judgment of the California adoption and therefore ruled that the share went to the adult cousin.

This is a little different case than what Professor Wendel was speaking about because the Court did not discuss intent as their opinion rested on the Full Faith and Credit Clause. In doing some research, there are some cases in other jurisdictions where courts looked into the intent of the testator and did not allow the inheritance to go to the adult adoptive party. But in those cases, the relevant inheritance tax statutes prohibited the inheritance from going to adult adoptions. And that is a statute that does...