Author Archives: Robert Mondo

Celebrity estates are always on display, especially those gone wrong. Using those estates as instructive lessons regarding how to avoid disaster has provided many a topic for this blog. I often discuss the benefits of creating and reviewing an Estate Plan regularly. Simply put, none of us should leave our legacy to chance. Recently, a friend sent me a link to a New York Times Magazine article expanding that narrative with respect to the Murdoch family.  The article provides a much deeper dive into the underlying facts, worthy of any Succession plot. The article explains that this saga began years ago and came to a boiling point.  Turns out, my first article in this series barely scratched the surface of this complex legal and family drama.

Rupert Murdoch (“Rupert”) understands legacy better than most. Late in 2023, Rupert filed a petition to amend the terms of an irrevocable trust that holds his approximately 40% interest in News Corporation (“News”) (which owns The Wall Street Journal) and Fox Corporation (“Fox”) because he wanted to solidify leadership of his empire and decided that his eldest son, Lachlan Murdoch (“Lachlan”), was the child best-suited to the task. According to the New York Times, Murdoch initiated the petition to prevent James Murdoch (“James”), Elisabeth Murdoch (“Liz”), and Prudence Murdoch (“Prue”) from receiving their respective voting rights in the entities because he disagreed with their politics.

As the New York Times Magazine article explained, Rupert created the subject trust in 1999 when he divorced his second wife, Anna, so that he could marry his third wife. At that time, three of his four children, Lachlan, James, and Liz, all worked in the family business and competed to assume control of the companies. As part of the negotiations during the divorce, Rupert and Anna agreed that upon Rupert’s death, his four children, Lachlan, James, Liz, and Prue would split control of the companies. None of his future children, if he had any, would have any rights to the companies. Note that this is an unusually harsh Estate Planning result. Rupert then married his third wife and within five years they had two children, Grace and Chloe Murdoch. At that time, he negotiated with his oldest children to restructure the plan to split his fortune equally among all six children, but the youngest two would have no voting rights. The restructured trust expires in 2030 but until that time, the shares remain together and essentially under Rupert’s control. The trust allows Rupert to make modifications to it if such change benefits the beneficiaries.

After restructuring the plan in the early 2000s, the older children continued to compete with one another, hoping that Rupert would name one of them as his successor. Several years into the battle scandal rocked the company, forcing Rupert and the children to pivot. Late in 2019 Lachlan became chief executive of Fox and co-executive chairman of Fox and News, which title he shared with Rupert until he retired in late 2023. As the plan currently works, one corporate trustee administers the trust. The corporate trustee has a board of six directors. Each child with voting rights appoints one director, and each director has one vote. Rupert appoints two directors, each of whom has two votes, ensuring that Rupert maintains control during his lifetime. His four votes split among the four children with voting rights if he dies prior to 2030.  Thus, notwithstanding Lachlan being the sole child with a title and the attendant responsibilities, James, Liz, and Prue also have voting rights.  Rupert sought to change that by amending the trust to consolidate voting rights in Lachlan and deprive James, Liz and Prue of their voting rights.  Given his advanced age and the looming expiration date of the trust, Rupert needed to act quickly.

In December 2024, the probate commissioner issued a 96-page opinion denying Rupert’s amendment. The commissioner suggested that Rupert and Lachlan acted in bad faith, that the newly appointed directors worked to cement Lachlan’s control and in so doing abused their discretion and breached their fiduciary duties. While Rupert and Lachlan have moved to appeal the decision, sources indicate that an overturn of the decision seems unlikely. It will be interesting to see if Rupert attempts something else as men like him rarely concede defeat.  At 93 years old, he’s running out of time to impose the changes that he wants prior to the trust’s expiration in 2030.

We can take numerous lessons from this case although the biggest one is that incorporating flexibility into an Estate Plan helps prevent later litigation. That should be the last resort as it rarely ends the way the parties intend and generally only benefits the lawyers. Here, it seems that this last battle ended a long-standing family feud. Murdoch’s children have discovered his true feelings regarding their role in the future of his empire, and that is probably a bitter pill to swallow given their earlier involvement in the companies. No family is immune from squabbles, although a well-drafted, flexible Estate Plan may prevent future litigation.  While we get to watch the reality that served as the basis for the hit TV show Succession, it’s hard to imagine living with the emotional toll that has resulted from the events leading up to this result. Don’t leave your legacy to chance; too much can go wrong if you do. 

If you haven’t upgraded to a REAL ID yet, now is the time to do so. Beginning May 7, 2025, the Department of Homeland Security (DHS) will require a REAL ID-compliant driver’s license or identification card for travelers aged 18 and older to board domestic flights and access certain federal facilities. Originally scheduled for an earlier rollout, the deadline was extended to ensure more Americans have adequate time to obtain their updated identification.

For Members attending the Academy Spring Summit, which ends on May 5, 2025, this new requirement is particularly important if you plan to extend your trip or fly home after the event. Ensuring you have a REAL ID in advance will help avoid travel disruptions.

What Is a REAL ID?

The REAL ID Act was passed by Congress in 2005 in response to the 9/11 Commission’s recommendations to set minimum security standards for state-issued driver’s licenses and ID cards. A REAL ID is a more secure form of identification, designed to reduce identity fraud and enhance national security.

If your current driver’s license or state-issued ID does not have a gold or black star in the top right corner, it is not REAL ID-compliant. Some states use a bear with a star or another state-specific symbol, but the presence of a verification mark indicates compliance.

Who Needs a REAL ID?

If you plan to:

• Fly domestically within the United States
• Enter federal buildings or secure facilities that require ID
• Visit military bases (if applicable to you)

then you will need a REAL ID, a U.S. passport, or another TSA-approved form of identification after May 7, 2025.

How to Get a REAL ID

To obtain a REAL ID, you must visit your state’s Department of Motor Vehicles (DMV) in person and provide specific documents, which generally include:

1. Proof of Identity (e.g., valid passport, birth certificate)
2. Proof of Social Security Number (e.g., Social Security card, W-2 form)
3. Two Proofs of Residency (e.g., utility bill, rental agreement, bank statement)
4. Proof of Legal Name Change (if applicable, such as a marriage certificate or court order)

Check with your state’s DMV website to confirm the exact requirements, as they may vary slightly.

Do You Need a REAL ID If You Have a Passport?

No. If you already have a valid U.S. passport, you do not need a REAL ID to board domestic flights or enter federal buildings. However, many people choose to get a REAL ID for convenience, especially if they do not want to carry a passport for domestic travel.

What Happens If You Don’t Have a REAL ID by May 7, 2025?

If you try to board a domestic flight after the deadline and do not have a REAL ID or another TSA-accepted form of identification (such as a passport or military ID), you will not be allowed to fly. Similarly, access to certain federal buildings and secure facilities will be denied without proper identification.

REAL ID Readiness: Key Steps to Avoid Travel Delays

1. Check Your ID Now – Look for a gold or black star on your driver’s license or state ID. If you don’t see it, your ID may not be REAL ID-compliant.
2. Make an Appointment Early – DMV offices will get busier as the deadline approaches. Schedule an appointment now to avoid long wait times.
3. Gather Your Documents in Advance – Each state has slightly different requirements, but you’ll generally need proof of identity, a Social Security number, and two proofs of residency. Check your state’s DMV website for specifics.
4. Consider Alternatives – If you already have a valid passport or another TSA-approved ID, you may not need a REAL ID for flying, but it’s still useful for other federal purposes.
5. Verify Your Name Matches – Ensure that the name on your documents matches your ID exactly, especially if you’ve had name changes due to marriage or other legal reasons.
6. Bring Originals, Not Copies – Most states require original documents (or certified copies) when applying for a REAL ID.
7. Check for Enhanced Licenses – Some states offer Enhanced Driver’s Licenses (EDLs), which also serve as REAL ID-compliant identification.
8. Plan for Extra Processing Time – Even if you apply in advance, processing times can vary. Don’t wait until the last minute.
9. Spread the Word – Remind family and colleagues, especially those attending the Academy Spring Summit, so they don’t run into travel issues if extending their stay past May 5.
10. Double-Check Before Your Trip – If you’re unsure about your ID status, confirm with your state’s DMV and review TSA guidelines before heading to the airport.

Don’t Wait – Upgrade Your ID Now

With the deadline approaching, DMVs nationwide will likely experience long wait times as more people rush to get their REAL ID. To avoid last-minute stress, make an appointment at your DMV well in advance of May 7, 2025.

For more information, visit the Department of Homeland Security’s official REAL ID page or check your state’s DMV website.

When I began practicing law, clients created irrevocable trusts with caution because the trust was then set in stone. Now, clients created irrevocable trusts with more frequency and considerably less caution because changing irrevocable trusts became commonplace. Trusts and Estate practitioners have several mechanisms that allow them to change an irrevocable trust. The first part of this three-part series explored changes to irrevocable trusts using judicial or nonjudicial modification Are Irrevocable Trusts Really Irrevocable – Part I. The second part examined decanting Are Irrevocable Trusts Really Irrevocable – Part II, and this final part in the series reviews the use of a Trust Protector to modify an otherwise irrevocable trust.

While judicial and nonjudicial modification and decanting derive from state law, Trust Protector provisions originate from the trust instrument itself and by extension, from the grantor. The grantor decides which powers to give a Trust Protector. For example, the Trust Protector may possess the power to remove and replace a Trustee or appoint additional Trustees; to direct, consent, or veto investment decisions; to modify the trust in response to changes in tax or state law; to change governing law or situs; to appoint assets to a class of people or charity in a non-fiduciary capacity; to alter beneficial interests in the trust; to modify the trust in response to changes in trust assets; or to turn off grantor trust status. Think about the Trust Protector as someone who fixes a specific issue only and has no input regarding daily trust administration. The Trust Protector has considerable flexibility and provides the Grantor with a means to address and resolve conflict before it occurs. The Trust Protector may also prevent a court proceeding by exercising any of the powers granted to him or her in the trust agreement.

Sometimes documents refer to Trust Protectors as a trust advisor, distribution advisor, or Special Trustee. The powers given, rather than the name used, determine the party’s role as Trust Protector or something else. Trust Protectors have a limited but vital role and maintain the power to adjust the trust in the future, long after the creation of the trust and perhaps, after many generations when the trust needs a quick fix. While the Trust Protector sounds like a panacea for all Trust issues, it’s important to engage an experienced Estate Planning attorney to help avoid unintended consequences and to ensure that the Trust Protector exercises the powers granted appropriately.

The underinformed may think of the Trust Protector as a Trustee, but that’s not the case. Remember that the Trust Protector may not have the same fiduciary duties as the Trustee. State law determines whether Trust Protectors have fiduciary duties. Some states, like Missouri, have statutes that impose fiduciary duties upon the Trust Protector but allow the grantor to override that in the trust instrument. Other states, like Alaska, impose the reverse presumption that a Trust Protector has no fiduciary duties and require the grantor to make the Trust Protector a fiduciary in the governing instrument, if desired. Remember to consider the interplay between the Trustee and the Trust Protector, especially if you intend for the Trustee to take direction from the Trust Protector. Remember too, that the Trust Protector may have the power to name a new Trustee which may or may not align with the grantor’s intent. The Trust Protector may have other powers to amend the trust which state law may not limit. For that reason, the grantor needs to consider this position carefully in consultation with a Trusts and Estate practitioner. Note that it’s possible to provide for appointment of a Trust Protector without naming a specific individual to serve in that role.

As this article demonstrates, Trust Protectors offer yet another way to add flexibility to an irrevocable trust. The Trust Protector allows for adaptation to changing needs, different laws, or even things that no one considered when creating the Trust. Trust Protectors avoid court, do not require the cooperation of the trustee or beneficiaries, and offer quick solutions without significant attorney fees. Trust Protectors may accomplish things that judicial or nonjudicial modification or decanting cannot. Trust Protectors have the powers enumerated in the trust and under state law. With some careful consideration of the Trust Protector’s powers, it’s easy to create an irrevocable trust that will evolve with changing needs.

When I began practicing law, clients created irrevocable trusts with caution because the trust was then set in stone. Now, clients are creating irrevocable with more frequency and considerably less caution because changing irrevocable trusts became commonplace. Trusts and Estate practitioners have numerous options to consider if they want to change an irrevocable trust. The first part of this three-part series explored changes to irrevocable trusts using judicial or nonjudicial modification Are Irrevocable Trusts Really Irrevocable – Part I. This second part examines decanting, and the final part in the series reviews the use of a Trust Protector to modify an otherwise irrevocable trust.

Unlike judicial and nonjudicial modification or the use of a Trust Protector, decanting relies upon powers that already exist in the trust. When the Trustee decants, the Trustee exercises their power to distribute trust assets and moves the assets from the existing trust with unfavorable terms to a new trust containing more favorable terms, much like pouring wine from the bottle into a decanter brings better flavor to the wine.

State laws differ considerably in the changes permitted in the new Trust. The new trust could provide the opportunity to correct a drafting mistake, clarify ambiguities, correct and update trust provisions, remedy problems in administration, change trust situs, expand or limit trustee powers, restrict beneficiaries’ rights to information, provide asset protection, adjust trustee succession, appoint a trust protector, alter distributions, or adapt trust provisions to address changes in beneficiaries’ circumstances depending upon the laws of the state in which decanting occurs. Over half of all states have enacted statutes authorizing decanting. Each state’s statutes regarding decanting vary widely, although most recognize that if a trustee has discretionary power to distribute trust corpus to the beneficiaries, such power constitutes a special power of appointment enabling the trustee to appoint the trust corpus to a new trust for the benefit of those same beneficiaries. That’s not the end of the inquiry, though.

Even if your state statutes do not specifically authorize decanting, you may still have options. Some states recognize a common law right to decant. Others allow inclusion of the authority to decant in the terms of the trust itself. Finally, even if none of the foregoing apply, you could consider changing the situs of the trust. The trustee or another authorized party can utilize a change in situs provision to move administration of the trust to a state that allows decanting. Once the trustee changes situs, then the trustee can take advantage of the new state’s decanting statutes. Most states that allow decanting have adopted some form of the Uniform Trust Decanting Act. Note that experts tend to cite South Dakota as the state with the most favorable decanting statute.

This article begins to scratch the surface of the issues involved with decanting. Decanting adds another option to solve trust troubles, although it’s vital to consult with me regarding applicable statutes, trust provisions, both in the original trust and the new trust, tax implications, notice, consent, and Trustee powers and fiduciary duties. Note that if a Trustee occupies the dual role of Trustee and beneficiary, that complicates things.

Decanting provides a great estate planning opportunity in the current environment. Clients are encouraged to review their plans, especially irrevocable trusts created many years ago to confirm that those trusts accomplish the goals of the grantor and properly protect the needs of the beneficiaries. If the trust fails to properly address beneficiary needs or otherwise could use some tweaking, decanting provides a great opportunity to re-write the trust with more favorable terms.

The final article in this series will explore using a Trust Protector to remedy defects in an irrevocable trust or provide more favorable terms.

When I first began practicing law, I remember cautioning clients about the detriments of creating an irrevocable trust. The trust provided great benefits but came with a significant downside – irrevocability with no way to make changes should the need arise and you give up the constructive and legal ownership of the assets that you transfer to the trust. The landscape regarding planning with irrevocable trusts changed significantly. Often, I counseled that “irrevocable trusts aren’t really irrevocable” and meant it. Now, clients have numerous options to consider if they want to change an irrevocable trust. This first part of a three-part series explores changes to irrevocable trusts using judicial or nonjudicial modification. The second part examines decanting, and the final part in the series reviews the use of a Trust Protector to modify an otherwise irrevocable trust.

Clients often think that an irrevocable trust means that the terms of the trust have been set in stone and that there’s no room to modify, amend, or terminate the trust without spending a significant amount of money. That usually involved obtaining an order from a judge after having spent significant money on attorneys’ fees. While that may have been true years ago, that’s no longer the case. Anyone desiring to modify an irrevocable trust has several options to consider.

For the thirty-six states that have enacted the Uniform Trust Code (“UTC”), section 411(a) allows a trustee, beneficiary, or the grantor of the trust to bring an action to modify such trust if the grantor and all beneficiaries agree, even if the modification violates a purpose of the trust. This powerful provision allows the parties to re-write the trust if everyone approves. Section 411(b) of the UTC allows modification without the grantor’s consent which gives the beneficiaries the ability to override the wishes of the individual who created the trust if they can convince a judge that the modification is not inconsistent with a material purpose of the trust. That’s powerful. This means that even if the grantor has died, the beneficiaries may change the trust. Finally, Section 411(e) of the UTC allows modification over the objection of a beneficiary if such modification is not against a material purpose of the trust and if adequate protections exist for the objecting beneficiary.

Even in the fourteen states that have not enacted the UTC, it may be possible to bring an action to modify an irrevocable trust. Some non-UTC states have statutes like those of UTC states and allow modification if the objecting party has adequate protection. Further, even if the non-UTC state lacks a modification statute, that doesn’t preclude moving jurisdiction of the trust to utilize a statute in another state to commence modification. Of course, the trust either through the trustee or the beneficiaries needs to have sufficient connection with the new state to avail itself of that state’s statutes.

For those looking for a less expensive and faster way to modify trusts, section 111 of the UTC allows interested persons to enter a nonjudicial settlement agreement (“NJSA”) as to any matter involving a trust. The agreement cannot violate a material purpose of the trust and must include terms and conditions that a court could otherwise approve. The UTC limits the matters resolved by an NJSA; however, interested parties have broad latitude in the use of an NJSA to resolve trust matters. Some non-UTC states such as Delaware, Idaho, Illinois, and Washington have adopted statutes allowing use of NJSAs. Here again, motivated beneficiaries in states without NJSA provisions may move the trust to a state with such provisions provided sufficient contacts exist.

For UTC and non-UTC states alike, multiple options exist to modify an irrevocable trust. Given the current high exemption and potential changes to the tax code, now is a great time to review existing estate plans that include irrevocable trusts. Exploring nonjudicial modification can add flexibility to those trusts to account for changed circumstances. Experienced Estate Planning attorneys know how to review proper statutes, determine the necessary parties, and understand the permissible modifications. NJSAs provide just one of several methods to modify an irrevocable trust giving beneficiaries an opportunity to achieve tax benefits, provide asset protection, as well as other benefits.

The next article in this series will explore how decanting provides another nonjudicial remedy to defects in an irrevocable trust or provides better terms.

In 2024, there were 27 major disasters including hurricanes, floods, and wildfires. This year has begun in much the same way with wildfires ravaging parts of California. During any crisis, people tend to feel an increased sense of anxiety and a decreased sense of control. These normal reactions underscore the importance of planning for calamities in whatever form they take. This includes reviewing your Estate Plan to ensure accuracy and completeness. A basic Estate Plan mandates what happens both during your life and at death and consists of a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney, a Healthcare Power of Attorney, a Living Will, and a Health Insurance Portability and Accountability Act (HIPAA) Authorization. As part of the review, you can take certain ancillary acts that will provide the benefit of helping prepare for extremely unexpected events such as a fire, tornado, hurricane, or flood.

First, store the documents in a safe place. It may be a fireproof or waterproof safe, a trusted advisor’s office, or a portable safe deposit box. Utilizing one of these storage options safeguards the written expression of your wishes should a catastrophe occur by protecting the documents. Include other related documents such as copies of insurance policies, medical records, appraisals, birth certificates, marriage licenses, and passports which keep everything together should anyone need access, either to submit an insurance claim or in a worst-case scenario. In addition to keeping hard copies safe, create digital copies of these documents and store them in a secure password-protected cloud storage platform.  That allows for easy accessibility and backup should something happen to the hard copies.

Many trusted advisors, including me, ask clients to create a detailed asset list as part of their Estate Plan. When making the list, include real estate, vehicles, collectibles, artwork, jewelry, and electronics along with other valuable possessions. This list should provide the location of the item and the approximate value. Creating the list prior to disaster strikes helps facilitate submission of insurance claims afterward. Even in the absence of disaster, it’s a good idea to create and update this list often as it will help your fiduciaries understand the nature and extent of your assets upon your disability or death.

I often insist upon reviewing and updating beneficiaries of retirement accounts and life insurance policies to align with an Estate Plan. This planning provides assurance that should a loved one die during a disaster, the family can access these funds quickly. The funds help the family transition and the sooner the transition begins, the faster the healing starts.

Any Estate Plan that uses a Trust works only if the individual who created the Trust funds it. Funding a Trust means transferring title of assets to the Trust. If the trust holds title to real estate, it’s vital to alert the carrier of the homeowner’s insurance and title insurance to the change. List the Trust as an additional insured on the homeowner’s policy to avoid issues with claims, especially after a disaster. Often title insurance companies include provisions in the policies that extend coverage to transfers to a Trust, but if it does not, then consider purchasing a new policy, adding an “additional insured” endorsement to the original policy, if possible, or use a Deed in Trust, Warranty Deed, rather than a Quit Claim Deed to transfer the property. Even if disaster isn’t staring down your door, if you have a Trust as part of your Estate Plan, confirm that your insurance carriers know that your home has been transferred to the Trust. Further, Review and update your insurance policies to ensure adequate coverage for your home, health, and other assets in a disaster. Consider additional coverage specific to disasters common in your area, such as fire, flood or hurricane insurance.

In summary, preparing a complete Estate Plan involves both practical and legal steps that mitigate the stress that occurs during a natural disaster while facilitating a smooth transition to “normal” after. An Estate Plan serves as a set of instructions regarding your wishes, especially if you are unable to articulate them. Those instructions help guide loved ones. Many times, I play a crucial role in advising clients on how to protect their assets and loved ones during such unpredictable events. If 2025 has shown us anything in its first few weeks, it’s that proactive steps now can help ensure peace of mind when disaster strikes. Remember, an Estate Plan should be as resilient as you.

 recently received an e-mail soliciting feedback on Estate Planning and baseball. I discovered that Sheel Kamal Seidler (“Sheel”), the widow of San Diego Padres (“Padres”) owner, Peter Seidler (“Peter”), filed a lawsuit in Texas accusing her brothers-in-law, Robert Seidler (“Robert”) and Matthew Seidler (“Matthew”), of various misdeeds in handling Peter’s Estate and Trust. Peter had an interesting story. He was one of ten children born to Roland Seidler and Terry O’Malley Seidler. Peter’s mother was one of the few women who served as principal owner of a Major League Baseball team, inheriting half of the ownership interest in the Los Angeles Dodgers after her father, Walter O’Malley, died in 1979. In 1992, Peter founded Seidler Equity Partners (“SEP”) and eventually invited his brothers, Matthew and Robert, to join him in that endeavor. Peter married Sheel in 2008, and they remained married until his death on November 14, 2023. They had three children together. In 2012, Peter, his uncle, Peter O’Malley, and Ron Fowler formed the O’Malley group to purchase the Padres. Peter served as chairman of the Padres from 2020 until his death.

Peter, Sheel, and their children resided in the community property state of Texas. Peter created the Peter Seidler Revocable Trust on January 19, 2001 (“PS Trust”) naming himself as beneficiary and Trustee. He amended and restated the PS Trust on June 20, 2019, and again on July 18, 2021 (“2021 Amendment and Restatement”). He executed two amendments to the 2021 Amendment and Restatement, neither of which is at issue. Upon Peter’s death, Robert became Trustee of the PS Trust and Executor of Peter’s Estate. Robert resigned both fiduciary positions in May 2024 and Matthew began serving as Executor and Trustee. According to the complaint filed by Sheel, the PS Trust assets include “the largest single ownership block and explicit control rights of the Padres professional baseball team.” The block and control rights form the basis for Sheel’s complaint.

Upon Peter’s death, the PS Trust requires the Trustee to divide the Trust into an Exemption Trust and a Marital Trust. The Exemption Trust consists of an amount equal to Peter’s remaining generation-skipping transfer tax exemption and the remainder funds the Marital Trust. Both Trusts name Sheel as the sole income beneficiary during her lifetime and allow the Trustee to make distributions of principal to her for her health, education, maintenance and support in her accustomed standard of living as of Peter’s death. Upon Sheel’s death, the assets in both trusts pass to the Seidler 2012 Irrevocable Trust the provisions, beneficiaries, and Trustees of which are unknown.

Sheel filed suit in Travis County, Texas on January 6, 2025. The lawsuit contains nine counts and numerous allegations regarding the Trustee’s inaction and breach of fiduciary duties. First, Sheel alleges that since Peter’s death, the Trustee failed to fund either the Exemption Trust or the Marital Trust, disregarding the terms of Peter’s Will and Trust and “intentionally schemed to take for themselves the Estate and Seidler Trusts’ valuable rights and assets” by misleading and demeaning Sheel, engaging in self-dealing and using Trust assets to pay attorneys’ fees. Sheel’s complaint alleges that the Trustee used Trust assets improperly by paying personal obligations and suggesting that the Trusts owe Robert and Matthew money. The complaint also contains allegations that the Trustee has denied distributions, information, and other intangible benefits to Sheel, including naming her as the “Control Person” for the Padres. According to the complaint, the Control Person for a Major League Baseball Team wields significant power over the management and business affairs of the team and conveys the right to control the future of the franchise and ownership interests. Peter served as the Control Person of the Padres during his lifetime and left the ability to appoint the Control Person at the discretion of the Trustee of the PS Trust. Finally, the Complaint accuses Robert and Matthew of trying to erase Peter’s vision and legacy and insert themselves as Peter’s true heirs. Sheel’s lawsuit asks the court to remove Matthew as Trustee and to name her as Control Person among numerous other requests for relief.

Million-dollar estates that end up in litigation provide wonderful learning opportunities for Trust and Estate practitioners and their clients. First, exercise care when naming individuals as fiduciaries. Presumably, Peter believed that his brothers would divide the PS Trust and make distributions from the Trust to Sheel and their children. The documents make clear that Peter named his brothers as Trustees but also makes clear that the entire estate benefits Sheel and their children. Interestingly, the PS Trust requires all Trustees to be Independent Trustees thereby eliminating the possibility of Sheel serving as Trustee. Even more fascinating was that this was the first marriage for both Sheel and Peter and neither had any children other than the three they had together. Spouses in first marriages who share all the same children often name the other as successor Trustee or give them the right to veto certain Trustee decisions. That didn’t happen here and there’s nothing to indicate the underlying reasons.

Next, make sure that all of your documents clearly lay out your plans and address alternate scenarios. Sheel and Matthew have each asserted different individuals to serve as Control Person. The Complaint submitted by Sheel contains what she purports is Peter’s handwritten list of candidates to serve as Control Person after his death. Sheel was at the top of that list and Peter’s brothers were several spots down. Matthew counters that assertion in a letter penned to the Padres community and indicates that Peter always intended for one of his siblings to serve in that role. That letter further indicates that Sheel signed a document agreeing that she had no right to become or designate the Control Person and foregoing initiation of any legal proceeding seeking to become the Control Person upon Peter’s death. The court record contains no copies of those documents, but that may change as this case progresses.

The Defendants have yet to file any responsive pleading, although Matthew’s letter to the Padres’ community may give us a preview of the defense. Even if Peter intended for one of his brothers to serve as Control Person, it appears that few or none of the usual actions required by a successor Trustee after taking office have occurred since Peter’s death. While intriguing, it’s unfortunate that this matter will play out on a public stage. Typically, when litigation ensues, only the lawyers benefit as will no doubt be the case here. Litigation takes time and costs money during periods of significant grief. Given the complex nature of this case, we will no doubt have a front-row seat to watch the drama unfold.

Congress enacted the Corporate Transparency Act (the “Act”) for Fiscal Year 2021 as part of the National Defense Authorization Act with an effective date of January 1, 2024. The Act requires any “Reporting Company” to file a “Beneficial Ownership Information” (“BOI”) report with the Financial Crimes Enforcement Network (“FinCEN”) disclosing its “Beneficial Owners.” Every Reporting Company created on or after January 1, 2024, also needs to disclose its “Company Applicants.” Reporting Companies also need to report changes in Beneficial Owners as they occur. Failure to report the required information may result in civil penalties of up to $500/day until corrected or criminal penalties of 2 years imprisonment or a $10,000 fine. The penalties increase depending on the severity of the failure to report. For greater detail on the definitions of these words or the general provisions of the Act itself, refer to the earlier blogs.

The Act has created waves in the Estate Planning community because of its broad application, steep penalties, and complex provisions. Plaintiffs have challenged the Act in at least fourteen different federal court cases. Of those cases, National Small Business United, et al. v. Yellen, et al., United States District Court, Northern District of Alabama, Case No. 5:22-cv-01448-LCB seemed to have the most traction because the district court granted the plaintiff’s motion for summary judgment and ruled that the Act exceed Congress’ constitutional authority. The court enjoined the Treasury Department from enforcing the Act against the plaintiffs in that case. It was important because it was the first case to declare the Act unconstitutional, albeit with a narrow class of litigants. The Treasury Department appealed to the 11th Circuit Court of Appeals which heard oral arguments on September 27, 2024. As of this writing, the court has not issued an order, although many expect a remand to the lower court.

I have watched these cases closely and have advised clients regarding the need to file the BOI reports and tried to answer questions regarding who should file, the information required in the filing, and the deadline for disclosure. Countless resources have reminded everyone that as of January 1, 2025, every single Reporting Company, regardless of its date of creation, needs to file its initial BOI report. The holding of a recent case questions the obligation to file the report by that deadline, the imposition of penalties for failure to file, and the legality of the Act itself.

On December 3, 2024, Judge Amos L. Mazzant, III granted a preliminary injunction preventing the government from enforcing the terms of the Act in the United States District Court for the Eastern District of Texas, Sherman Division case, Texas Top Cop Shop, Inc., et. al. v. Merrick Garland, Attorney General of the United States (E.D. Tex., No. 4:24-cv-00478). For those interested in reading the opinion in full, you can find it at Bloomberg Law Court Dockets Case No. 4:24-cv-00478-ALM.

In the opinion, Judge Mazzant carefully considered the scope of the injunction and indicated that the Constitution vests district courts with the “judicial power of the United States” which gives the court power to issue a nationwide injunction. That power exists only insofar as necessary to provide complete relief to the plaintiff. The opinion continues that in this case, the plaintiffs find complete relief only with a nationwide ban because the plaintiffs were located nationwide; anything short of that would not work. Ultimately, the opinion concluded that the Act was unconstitutional because it exceeded Congress’ power. It reasoned that the reporting rule that implemented the Act was likewise unconstitutional and thus enjoined the government from enforcing the provisions of the Act.

Although the opinion in this case purported to invalidate the Act nationwide, that is not the end of the story. The Texas court issued only a preliminary injunction meaning that the court could reconsider it at any time. More likely, though, the government will appeal this decision to the United States Court of Appeals for the Fifth Circuit and depending on what happens there, the case may make its way to the Supreme Court. Unless and until that happens, or until another court dissolves the Texas Top Cop Shop injunction, Reporting Companies have no duty to comply with the Act reporting requirements but that does not necessarily mean that they should not comply. Failure to file a BOI report carries significant penalties. Arguably, if the Act does not apply, then neither do those penalties; however, if a court lifts that injunction or a higher court dissolves it, that could result in significant penalties for all Reporting Companies that failed to file their BOI reports. A Reporting Company can avoid penalties by filing its BOI report. Anything else leaves the Reporting Company, or rather the individuals running the company, vulnerable to imposition of penalties.

As this article demonstrates, the Act has faced significant scrutiny since its passage. Given the numerous challenges and this recent ruling, questions exist regarding the constitutionality of the Act. Ultimately, each Reporting Company needs to determine whether the benefits of filing when unnecessary and thereby avoiding any potential penalties outweigh the potential burden of filing and disclosing the requested information.

The election has concluded giving former President and now President-Elect Donald J. Trump control of the White House come January. The Republican Party will have a majority in the Senate. As of the writing of this blog, they have 53 seats with one race uncalled. The Republican Party also leads the Democratic Party in seats in the House of Representatives, now controlling 219 seats with 3 races uncalled. Given these numbers, the newly elected President will have the support of the Senate and the House for legislation he wants to pass. While campaigning, Donald Trump floated several tax policy ideas including extending the expiring Tax Cuts and Jobs Act of 2017 (“TCJA”) changes currently set to occur on January 1, 2026, restoring the unlimited deduction for State and Local Taxes (“SALT”), exempting various types of income from imposition of income tax, and imposing new tariffs on imported goods. Let’s investigate the potential implications for nation’s tax landscape.

If President-Elect Trump extends the expiring provisions of TCJA that will impact the Estate Planning world directly. Trusts and Estate Practitioners may find themselves doing considerably less work than they anticipated. After all, several of us have spent the last two years discussing what would happen should TJCA expire and making suggestions for techniques that those clients could implement in order to utilize the temporarily doubled Applicable Exclusion Amount (“AEA”). The AEA dictates the amount of assets that any individual can transfer during life or at his or her death without imposition of gift or estate tax. Extending or making permanent the provisions of TCJA means even higher AEAs as the years progress. Currently, each taxpayer can pass $13.61 million in assets to any non-spouse without imposition of tax. On January 1, 2025, that amount rises to $13.99 million. Spouses can pass an unlimited amount to their United States citizen spouse. Clients may ask Estate Planning attorneys to review and update plans designed to utilize the temporarily doubled AEA as they consider whether the plan continues to work for their circumstances in light of the increased AEA.

Interestingly, Donald J. Trump suggested that he would allow the $10,000 SALT limitation enacted under the TCJA to expire. The SALT deduction allows taxpayers who itemize their deductions to deduct certain income taxes paid at the state and local levels. TCJA capped the deduction at $10,000. This limitation will impact those living in states with high-income taxes. Residents of those states were unhappy with enactment of the cap, some even going so far as to move to other states to avoid paying income taxes without an offsetting deduction at the federal level. Removing that cap benefits those taxpayers living in high-income states. While this doesn’t directly impact Estate Planning, practitioners in states with high state income taxes may see more clients as former residents move back or as new residents arrive.

Finally, in addition to leaving the income tax brackets as they exist now, Donald J. Trump expressed a desire to exempt Social Security benefits, tips, and overtime pay from income taxation. He also suggested creating a loan for automobile loan interest and a tax credit for family caregivers. Finally, he suggested the enactment of tariffs on foreign goods. While the potential tax implications of each of those exceed the scope of this article, many of these income tax provisions have broad applications and affect more than just the wealthiest of individuals.

Obviously, the proposals that President-elect Donald J. Trump decides to enact will determine the impact on our tax planning landscape, possibly for years to come. At this moment, it’s hard to predict whether any of these proposals will come to fruition. It’s easy to make promises when campaigning, it isn’t always as easy to enact legislation keeping those promises. Sometimes other priorities appear or the incoming administration encounters roadblocks. In this case, Donald J. Trump enacted the original legislation on which he campaigned which might mean that it’s given higher priority than other issues. Further, he has the benefit of a House and Senate aligned politically which theoretically means fewer barriers to passage. No matter what happens in the coming months, count on me to keep you informed.

Charitable gifts offer a great opportunity to reduce income tax liability. When a taxpayer makes a charitable contribution, typically they get an offsetting charitable income tax deduction. Unfortunately, that offsetting deduction doesn’t always end up reducing the total tax burden. To take a charitable income tax deduction, the taxpayer needs to itemize their deductions. If the charitable contribution and other itemized deductions don’t exceed the standard deduction amount, then it makes sense to take the standard deduction and forego the itemized deductions.

Let’s look at an example. Assume that Charlie Charitable has taxable income of $100,000 each year. He files as a single taxpayer with a standard deduction of $14,600 (in 2024). He has $10,000 of state and local taxes (an itemized deduction and the most one could take as a deduction for such taxes under current law). In addition, he makes a charitable contribution each year of $2,500 to his alma mater. His itemized deductions would be $10,000 plus $2,500 = $12,500, i.e., less than the standard deduction amount of $14,600. It doesn’t make sense for Charlie to itemize his deductions since they would be less than the standard deduction he could take without itemizing.

If Charlie Charitable spoke with an advisor, he would discover that by making several years’ worth of charitable contributions in one year, he would increase his charitable deductions to an amount exceeding the standard deduction amount. Charlie could refrain from making charitable contributions in the “off” years and simply take the standard deduction amount. Charlie likes that idea and decides to make a charitable contribution of $10,000 in 2024. That raises his itemized deductions to $20,000. This saves him the tax on $20,000 (his itemized deductions) less $14,600 (the standard deduction) = $5,400. Assuming he’s in a combined state and federal bracket of 40%, that would result in savings of above $2,160. In the “off” years of 2025, 2026, and 2027, he’d take the standard deduction amount each year and the strategy would not impact his taxes in those years. In 2028, he could repeat the large charitable contribution for another itemized deduction.

Another way for Charlie to optimize his charitable deduction would be by using a Donor Advised Fund (“DAF”). Contributions to DAFs give an immediate income tax deduction to the donor while creating a reservoir of assets for distribution to charities in the future. In addition, DAFs provide an opportunity for donors to invest contributed funds and make suggestions regarding which charities should receive the distributions. Donors may change their recommendations regarding the charitable distributions allowing great flexibility coupled with immediate benefits. In our example above, that means that Charlie could continue to make charitable contributions to his alma mater, but Charlie could decide to switch to a different charity altogether. In the interim, Charlie could invest the funds as he determined was appropriate prior to their distribution to a charity.

Donors may combine DAFs with other strategies to produce even better results. For example, if a donor gave highly appreciated public stock to a DAF, the donor would receive an income tax deduction for the full value of the appreciated stock without ever paying tax on the gains. Going back to our Charlie example, assume that Charlie gave $10,000 worth of publicly traded stock in which he had a basis of $1,000 to the DAF. If Charlie had sold the stock, he would have had to pay tax on the $9,000 gain. Assuming a state and federal combined capital gain tax rate of 30%, he’d owe $2,700 on the gain. If he then contributed the proceeds to charity, he’d only have $7,300 to contribute to charity. By giving the appreciated publicly traded stock directly to the charity (or DAF), he increases the amount that he contributes to charity which increases the deduction he receives.

DAFs complement any charitable giving strategy already in effect and provide a great opportunity for those new to charitable giving to discover the benefits it provides. It allows one to maximize the tax benefit from charitable giving while retaining a say over the timing and distribution of the money.