Successor Trustee

Successor trustees are critical to managing the assets during periods of the client’s incapacity and at the client’s death. These successor trustees will make decisions regarding how the assets should be invested and whether they should be distributed and to whom. Successor trustees also make decisions regarding trust administration. As we all know, a trustee who is “difficult” can make everyone’s life miserable, including the estate planning attorney who is hired for the trust administration. 

Clients often default to naming a family member to serve in that role. Sometimes that may be the best choice. However, that may not always be the best choice. Often, clients do not have family members with the ability to serve in that role. In some cases, it may be unfair to ask a family member to serve in that role. For example, a family member serving as trustee may have a hard time refusing to distribute assets to other members of the family who are beneficiaries even if refusing a distribution is the right thing to do. An institutional trustee does not have to sit across from the brooding beneficiary at the Thanksgiving dinner table! 

Sometimes, an independent third party is the right choice for successor trustee. Many years ago, the trust departments of banks were seen as the only choice. Now, there is a trend away from bank trust departments and towards independent trust firms, according to research by Tiburon Strategic Advisors in San Francisco. Banks control 40% of the market of personal trusts. However, independent trust companies and brokerage trust operations now dominate the market for revocable trusts, which represent approximately $4.5 trillion out of $6.8 trillion in personal trust assets.  

Your client needs to be sure to name someone who is up to the task of filling his or her shoes as a successor trustee. Does the potential successor trustee have the financial experience to manage the assets in the client’s absence – or the prudence to hire a financial advisor who does? Do they have the fortitude to make difficult decisions regarding distributions to other beneficiaries? 

Even if your client has an individual who is up to the task, they may want to consider naming an institutional trustee at the end of the line. Whether your client chooses a bank trust department, an independent trust firm, or a brokerage trust operation, an institutional trustee can provide a backstop for the trust. Your client will know that, if the savvy individuals they hoped would serve are unavailable, the trust will still be managed professionally to meet the client’s goals long after the client is gone. 

Stricter HIPAA Enforcement: What Will It Mean For Health Care Powers of Attorney?

The U.S. Department of Health and Human Services has begun enforcing HIPAA by imposing large financial penalties against healthcare providers for HIPAA violations. (In the first case, a healthcare provider received a $4.3 million civil penalty for failing to provide timely personal health information to patients upon their request; in the other, a different provider agreed to a $1 million settlement for disclosing patients’ personal health information without their approval).

If healthcare entities intensify their efforts to avoid HIPAA financial penalties, we may see a few things happen:

  • Patients themselves may have an easier time gaining access to their own medical information. And some may even get it more quickly. At the same time;
  • Patients’ family members — and others whom the patient wants to have access — may have a harder time getting the patients’ information.

What does this mean for your legal needs?

  1. Everyone need a Health Care Power of Attorney (HCPOA) more than ever. This document may increasingly do double-duty. In addition to its primary function, the HCPOA also serves as a de facto HIPAA Release. The HIPAA law expressly authorizes the health care agent to receive the patient’s personal health information (called “PHI” under HIPAA).
  2. You may increasingly need a separate HIPAA Release designating individual(s) — in addition to the health care agent — who can receive their medical information. Why? Peopleoften rely on someone other than their health care agent to help them navigate the healthcare system. This might be another family member, a friend, or a neighbor. Healthcare providers may be increasingly apt to request written authorization from the patient to deal with any of these folks on your  behalf.

    Alternatively, I address this need within the HCPOA document itself, rather than drafting a separate HIPAA Release. I have created a section in the HCPOA naming additional individuals to receive PHI under HIPAA, but who are not authorized as health care agents.

The stricter HIPAA enforcement may also create heightened challenges particular to college students and other young adults.  More to follow.

Family Trusts vs. Spousal Trusts

A Family Trust is a contract between husband and wife (Grantors) that gives instructions to financial institutions and county(s) in which they own real estate as to what to do with the assets if the Grantors are incapacitated for a short/long period of time or are deceased.  A Family Trust prepared by the Law Offices of Robert J. Mondo provides the following:


  1. The Spouses are the Grantors, Co-Trustees and Primary Beneficiaries.
  2. If funded properly, the Trust assets avoid probate.
  3. All property, including personal assets are titled in the Trust.
  4. Provides for Specific Gift giving that allows for changes without amendments.
  5. Provides instructions for the Grantor’s well being if ever handicapped.
  6. No decision as to which Trust to title an asset in. There is only one (1) Trust.
  7. Provides estate exemption portability (in 2018 the Federal estate exemption is $22.2M).
  8. No setting of basis until the surviving Grantor passes.
  9. Allows for control over gifts to minors.
  10.  Asset protection with Spendthrift provisions for Secondary Beneficiaries.
  11. Access to assets for both Spouses with no limits.
  12. The Secondary Beneficiary designation becomes irrevocable upon the death of the first Spouse.
  13. Any future Spouse is always considered an “Outsider.”
  14. Is valid in all U.S. jurisdictions with no need to amend if State and/or Federal law  or the Trust domicile changes.

Spousal Trusts

Spousal Trusts are a form of estate planning where each souse has his or her own Trust.  Spousal Trusts were all the rage when the Federal Estate Exemption was low ($650,000 per person in 1999 with anything in excess being taxed at 55%) and there was no unified credit (portability of any un-used exemption) that was offered to both spouses.  As such, many lawyers (me excluded) prepared Spousal Trusts, which provided the following:


  1. If funded properly, the assets avoid probate.
  2. Asset protection for the assets held in a non-at-risk Spouse’s Trust.


  1. You have to choose which assets are titled in which Trust.
  2. Access to the other Spouse’s Trust assets is limited.  Sometime to 5% of income/principal per year.
  3. If you divorce, the separately held Trust assets will not be available to you.
  4. Taxes. If a Spouse passes and an appreciated asset is held in the deceased Spouse’s Trust, then a new tax basis will be set, so that upon sale any appreciation since the new tax basis has been set, IS taxable at capital gains rates.
  5. Additional Lawyer Fees. The creation of additional Trusts upon each Spouse’s passing allows for the lawyer to continue to charge fees.

In my opinion, using Spousal Trusts, except in very few situations, is a wrong approach.  A Family Trust provides all of the benefits and protections of Spousal Trusts without the access, titling, tax and fee problems.

In all cases that I have reviewed, I have always recommended revoking the Spousal Trusts and creating a Family Trust

Role Reversal: Discussing Estate Planning With Aging Parents

The parent-child relationship is pretty well defined. Children generally don’t advise their parents. It’s the other way around. However, this dynamic can shift as parents get older and children become adults. This becomes especially prevalent when considering estate planning and elder law issues.

As parents grow older, adult children may start to have certain questions about the way mom and dad have planned ahead for the eventualities of aging. Being aware of what plans have been made opens the door for a conversation about what planning is left to be considered to make sure their wishes are carried out as they’d like them to be.

What’s Next?

Once an adult child comes to the conclusion that a discussion is needed with aging parents, determining how to proceed can be difficult. It’s not easy to reverse roles and ask parents to provide their children with sensitive financial information. One way for a child to approach the subject would be to explain their own estate planning efforts. By telling parents what you have done and why, you can then ask them what they have done. The question would arise naturally and organically. You have just explained your estate plan to your parents, so they may feel compelled to explain their plan to you.

This interaction is in their best interests, and it’s not just a conversation about the eventual transfer of financial assets. There is the matter of long-term care to take into consideration. Most Americans will need assistance with their day-to-day needs at some point in time. You may in fact notice that your parents are starting to have trouble getting around. This is something that impacts the entire family because most of the living assistance received by senior citizens comes from family members, friends and neighbors. When this is not possible, seniors often enter assisted-living facilities. Medicare does not pay for an extended stay in an assisted-living community or nursing home. These facilities are extremely expensive, and many seniors may not understand the extent of the financial burden.

Sense of Relief

Once you have expressed an interest in the planning efforts of your parents they may actually be quite relieved. You are demonstrating a high level of maturity as you tackle a difficult subject as a caring family member. As you gain an understanding of their existing plan you can make suggestions.

When your parents are aware of the fact that you want to be of assistance as they enter into the later stages of their lives, a new type of relationship may develop. They will know they can count on you as their own capabilities wane, and this can strengthen the parent-child bond.


Remembering Steve Jobs

The death of Steve Jobs really made me stop and think about how I will be remembered long after I’m gone. I think this is a fundamental question that we all have. We all want to be remembered well and not just be another faceless name on a family tree or a name on a headstone in some remote cemetery.

When Steve Jobs passed away, I was amazed to see the immediate shift in the news cycle on every major channel. One minute I was watching Piers Morgan on CNN, and the next minute the news that he had died changed everyone’s news coverage to Steve Jobs and his legacy. It was pretty incredible for a business leader to receive this much attention. I can understand this type of attention for a US President, a famous actor or a member of the Royal family, but this type of coverage shows the impact he has had on our society.

I was also encouraged by the impromptu memorials that popped up at Apple stores all over the world. It reminded me of what we saw when Princes Diana and Ronald Reagan died. It was a very impressive show of love and support for this great man.

Now, whether you’re a fan of Apple or not, you have to agree that Steve Jobs was a visionary man that changed the way we all live, work and communicate with others. Very few people can impact one industry in their lifetime and yet he was a pioneer in many. He revolutionized the personal computing industry with Apple and the Macintosh computer. He changed the animation world forever through Pixar. He turned the music industry upside down with iTunes. He shook up the portable music market with the iPod. He woke up the mobile phone industry with the iPhone. And, he made the mobile computing industry available and fun for millions of people with the iPad and the iPhone.

I really liken him to someone like Michelangelo, Galileo, Christopher Columbus, and others that not only impacted our lives but changed them forever with their art and discovery. I really don’t think we realize now how future generations will remember this man and all that he’s done for our society.

Now the tough question is, “How will you be remembered?” I don’t ask this to discourage you. The reality is that most of us won’t have this type of impact on our entire society, but we can on our families. I encourage you to take chances in life, be bold and most of all love your family with all that you have. You may not invent the iPhone, but to your family you are just as important. So start working now on your legacy to ensure that you are remembered well by all those that matter to you!

Bob Mondo

Privacy Through Trusts

Often, estate planning attorneys and clients ask why use a trust as the primary dispositive vehicle when a will could transfer the assets. There are many reasons.

  • Incapacity. As we learned in law school, “a will speaks at death.”  In other words, it has no impact prior to death. So, even if the will transmits wealth at death, it cannot control the management during life. A Power of Attorney can do so. However, practically speaking, people are much more reluctant to rely on a POA than to transact business with a trust.
  • Probate. In some states probate is time consuming and/or expensive. In other states it is less so. However, in almost all states, probate is a very public process. Nosy neighbors can go down to the probate court and see the client’s finances. Some people may not like that. Increasingly, clients are sensitive to the privacy issues. They do not like that the National Security Agency may be keeping their data and they may not choose to make all of their financial data public when there is a good alternative.

As an example of how easy it is to find information about a will, go to the Fairfax County, Virginia courthouse and you can see George and Martha Washington’s wills. Not only can anyone walk into the courthouse and see the wills, they can even go online and see them.

And it is not just the wills of historical figures that are available. Everyone who dies while a resident of a location has their will on file with the local probate court. For example, here is a link to the will of Philip Seymour Hoffman. (

With a trust, the terms are private. The assets are private. Some clients may not care about costs or delays after death. However, many of those will care about the privacy. Most of us do not think about how anyone could find out that very sensitive information. Who did they leave their money? How much money did you have? The person will be dead, but their beneficiaries have to live on with everyone knowing their business.

Pre-Mortem Will Contests

Can a will be contested while the testator (person who sets up the will) is still alive? Different states answer this question in varying ways. The traditional view is that a will contest is not “ripe” until a testator dies, because a will does not “speak” until death. In the past, courts have refused to hear pre-mortem will contests because to do so would mean expending resources on a claim that could be rendered moot by the testator’s subsequent amendment or revocation of the will.

Over the past several years, though, four states – Alaska, Arkansas, North Dakota and Ohio – have enacted statutes expressly allowing the pre-death validation of wills. Once a will is validated by the court, it can’t be contested after the testator’s death. Does this mark a nationwide trend toward allowing pre-mortem will contests?

Some states, New York included, have affirmatively rejected the idea in keeping with the traditional approach.

In a few states that don’t expressly allow pre-death validation, though, there does seem to be a subtle trend toward the recognition of certain pre-mortem claims concerning wills.

In California, for example, the traditional rule still stands, but an exception has been carved out that applies to substituted judgment proceedings. In a California substituted judgment proceeding, if a conservator (an outside party) can establish that a conservatee lacks testamentary capacity, that conservator can perform certain estate planning functions on behalf of the conservatee (a person that lacks sufficient capacity to act on his/her own behalf), including making a will. The conservator can then have the court validate the estate plan he or she has put in place for the conservatee. Once a probate court has validated a will as part of a substituted judgment proceeding, the issues decided in that proceeding are res judicata (settled). After the testator’s death, the pre-validated will can’t be contested.

In New Jersey, too, there seems to be a move toward allowing pre-death will contests, particularly where undue influence or lack of testamentary capacity are at issue.

It will be interesting to see how the states’ treatment of pre-mortem will litigation develops, and whether more states adopt the approach taken by Alaska, Arkansas, North Dakota and Ohio.

Guess what? You can avoid all of this by having me do your estate plan which includes a Living Trust and is incontestable.


Post-Death Palimony

What happens when an unmarried couple ends a long-term relationship? It’s not uncommon for a palimony claim to be filed, with one partner attempting to enforce an agreement that the other partner would provide him or her with long-term financial support.

What happens when that relationship is not ended by choice, but by the death of one of the partners? Increasingly, courts are seeing palimony claims against decedents’ estates. Whether these claims are recognized – and under what circumstances – is determined by state law.

In California, for instance, the factor that determines whether an oral agreement by one partner to support the other partner will be enforced is often whether or not the couple lived together. Where a couple cohabited and one partner passes away, the court will enforce a support agreement. On the other hand, even in the case of a long-term relationship, if the couple did not live together, the court takes a close look at the consideration supporting the agreement. If there’s no consideration above and beyond the existence of the relationship, the support agreement won’t be enforced, because it’s based on “illicit meretricious consideration.”

New Jersey takes a different and more restrictive approach. In 2010, the legislature amended the state’s Statute of Frauds to provide that, while cohabitation is not required, a palimony claim is only enforceable if there is (1) a written agreement to provide support and if (2) the agreement was made with the advice of independent counsel for both parties.

Other states, such as Florida, will not enforce an agreement for one unmarried partner to support another unmarried partner unless that agreement is undergirded by consideration other than the parties’ relationship itself. And in Iowa and Rhode Island, palimony claims against a decedent’s estate are not recognized at all.

Where on this spectrum does your state fall? Do you think states should allow post-death palimony claims, given the increase in non-traditional family structures? Or should these claims be disallowed in the interest of judicial economy?


When a decedent dies, a federal estate tax return (IRS Form 706) is not required to be filed unless the decedent’s gross estate exceeds their remaining federal estate tax exclusion. In 2017, for someone who has not used any exclusion during life, this would be $5.49 million. In 2019 the value is $11.4 million. However, this does not mean filing an estate tax return may not be the best course of action. If the decedent was married at death, their executor may wish to file a 706 to elect “portability.”

Portability is the ability for the surviving spouse to use the deceased spouse’s unused estate and gift tax exclusion after the deceased spouse’s death. Portability has been part of the law since late in 2010. Until 2012, portability was part of a law that had been set to sunset. In other words, it could not be relied upon. However, the American Taxpayer Relief Act of 2012 removed the sunset provision.

The preparation of an estate tax return often is a complex task. However, when the executor is preparing a return merely to elect portability, some shortcuts often may be available. For example, the regulations allow the value of assets going to the surviving spouse or charity to be estimated on such a return by the executor (in good faith), rather than a more formal and detailed appraisal. SeeTreas. Reg. § 20.2010-2. The estate tax return must be completed fully in other respects though.

The filing of the estate tax return ordinarily starts the statute of limitations running. Three years after the later of the filing of the return or its due date, the IRS ordinarily is precluded from questioning items which were established on the return. However, the IRS may examine a return, even after the expiration of the statute of limitations, to determine whether the amount of the deceased spouse’s exclusion which was ported to the surviving spouse was correct. See I.R.C. § 2010(c)(5)(B). This holds true even if the IRS had issued a “closing letter” after the filing of the deceased spouse’s estate tax return.

Thus, the filing of an estate tax return preserves the deceased spouse’s unused exclusion amount for the surviving spouse, but the IRS may always re-open the return to determine the appropriate amount of the exclusion which should have been allowed to be ported to the surviving spouse.

Pointers from Philip Seymour Hoffman’s Estate Plan

Philip Seymour Hoffman died unexpectedly February 2, 2014, at age 46. Hoffman had roles in dozens of films. He won the Academy Award for Best Actor for his role in 2006’ Capote and won many other awards for his roles over the span of his career.

Hoffman had been partnered to Marianne (“Mimi”) O’Donnell for 14 years. They had three children, Cooper, Tallulah, and Willa (ages 10, 7, and 5, respectively). Hoffman died with an estate valued at well over $35 million.

We know Hoffman died with a Will, since it was admitted to probate recently. It appears that no other planning, including tax planning, was done. According to his Will, which was signed in 2004, the bulk of his estate is left to his partner, Mimi O’Donnell.

As it stands, Hoffman’s estate stands to owe over $15 million in estate taxes. A little over $5 million of that will go to the state of New York and just under $10 million will go to the U.S. government.

There is much advance planning that could have been done to lessen the tax bite. (Of course, perhaps he did engage in such planning through irrevocable trusts of which we have no knowledge because of their privacy. Perhaps that planning brought his taxable estate down to its current level.) He could have set up a Grantor Retained Income Trust, with O’Donnell as the remainder beneficiary. He could have made annual exclusion gifts into a trust for O’Donnell and his children. There are many other strategies that could have been employed.

He and O’Donnell could have taken one step which would have saved his estate millions. They could have gotten married. Doing so would have allowed Hoffman’s estate to get a marital deduction for the assets left to O’Donnell. If they were firm in their decision to remain unmarried, he could have left his assets in trust for O’Donnell. That way, the assets could have avoided taxation in her estate at her death.

Hoffman could have kept the affairs of his estate private by using a revocable living trust as his primary estate planning vehicle. Then, we would not know the provisions of his plan. As it is, we can link to his Will on the internet.

Unfortunately, as the recent deaths of Philip Seymour Hoffman and Paul Walker demonstrate, even young, vibrant people can pass away suddenly and with little or no warning.