COURSE SYLLABUS
COLLEGE OF BUSINESS ADMINISTRATION
GRADUATE DIVISION
LOYOLA MARYMOUNT UNIVERSITY
Presented by: DAVID S. AIKENHEAD, ESQ.
707 WILSHIRE BLVD., Suite 4450
LOS ANGELES, CA 90017-3617
213-312-1302 (PH)
213-312-1301 (FX)
email: daikenhead@acslaw.net
COURSE TITLE: “THE BUSINESS OF ESTATES & TRUSTS - PRESERVING
AND DISTRIBUTING WEALTH”
COURSE SUMMARY DESCRIPTION:
This course will survey the broad range of estate
planning and administration issues confronting the business
owner and his family today. Students will examine the business
and financial aspects of the administration of a decedent’s
estate; the basic concepts in the creation and administration of
wills and trusts; the effects of typical community property laws
in force in many states; the common features and purposes behind
the revocable living trust, the credit shelter and qualified
terminable interest (“QTIP”) trusts, the qualified personal
residence trust (“QPRT”), the special needs trust, and
charitable lead and remainder trusts; the fiduciary and
management duties of a trustee/executor; the “prudent person”
investment rule; basic trust accounting principles; common
estate and gift tax avoidance devices; and the present and
future impact of the changing estate and gift tax laws.
The classroom setting for this course will be
interactive, based on the assigned readings, classroom lectures,
and considerable dialogue on hypothetical examples.
PLANNED EVALUATION OF STUDENT PERFORMANCE:
Student performance throughout the course will be evaluated
as follows:
ONE MID-TERM EXAM February 22, 2006 25% of final grade;
ONE TERM PAPER OF 5
TO 10 PAGES IN
LENGTH DUE APRIL 12, 2006 25% of final grade;
CLASSROOM PARTICIPATION & OCCASIONAL
WRITTEN ASSIGNMENTS 10% of final grade;
FINAL EXAM MAY 3, 2006 40% of final grade.
COURSE MATERIALS:
TEXT: “WILLS, TRUSTS AND ESTATES”
Third Edition
By Gerry W. Beyer
Aspen Law & Business, a Division of
Aspen Publishers, Inc.
2004 606 Pages
(Instructional format with examples)
Possible Supplemental Readings Not Yet Identified
COURSE TOPIC AND TEXT SCHEDULE:
JANUARY 11 (CLASS #1): Introduction, overview and key
terms; TEXT Pages 1 thru 9;
JANUARY 18 (CLASS #2): Lifetime transfers, co-ownership
and contractual transfers; TEXT, Part FOUR, Pages 249
thru 301;
JANUARY 25 (CLASS #3): Intestate succession; death
transfers without a Will or Trust; TEXT, Part ONE,
Pages 11 thru 66;
FEBRUARY 1 (CLASS #4): Wills, validity of Wills,
testamentary capacity, formal execution, holographic
Wills, changes in circumstances after execution; TEXT,
Part TWO, Pages 69 thru 142;
FEBRUARY 8 (CLASS #5): Changes to Wills, Codicils,
revocation, Will contests; TEXT, Part TWO, Pages 143
thru 227;
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FEBRUARY 15 (CLASS #6): Estate administration, both
“testate” & “intestate”; TEXT Part THREE, Pages 229
thru 247;
Review for Mid-Term Exam; TEXT Parts ONE thru FOUR,
Pages 1 thru 301;
FEBRUARY 22 (CLASS #7): MID-TERM EXAM;
MARCH 1 (CLASS #8): NO CLASS; INSTRUCTOR OUT OF TOWN
MARCH 8: LMU SPRING BREAK - NO CLASS;
MARCH 15 (CLASS #9): Trusts and trust creation;
Appointment of trustees and designation of
beneficiaries; TEXT, Part FIVE, Pages 303 thru 377;
MARCH 22 (CLASS #10): Trust administration; the trustee’s fiduciary duties; trust investments; trust
distributions; TEXT, Part FIVE, Pages 379 thru
421;
MARCH 29 (CLASS #11): Trust accountings, trustee
compensation, trust modification, trust termination,
trust enforcement; TEXT, Part FIVE, Pages 421 thru
463;
APRIL 5 (CLASS #12): Wealth transfer taxation; taxation
of lifetime transfers; TEXT, Part SIX, Pages 465 thru
489;
APRIL 12 (CLASS #13): Wealth transfer taxation; Federal
estate tax at death; TEXT, Part SIX, Pages 489 thru
517;
APRIL 19 (CLASS #14): Wealth transfer taxation;
sheltering assets from estate tax; capital gain tax
basis on lifetime gifts and gifts at death; disability
and death planning, including durable powers of
attorney for asset management or health care; TEXT,
Part SIX, Pages 518 thru 565; (Please note: We will
not study Chapter 26, Pages 567 thru 574, nor the
sample forms on Pages 589 thru 606.)
APRIL 26 (CLASS #15): Review for Final Exam; TEXT, Parts ONE thru SIX, Pages 1 thru 565;
MAY 3 (CLASS #16): FINAL EXAM
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COURSE OUTLINE:
I. WHY SHOULD BUSINESS GRADUATES LEARN ABOUT ESTATES AND
TRUSTS?
A. The next thirty (30) years will see billions of
dollars of family wealth transfer to the next generation, to
charity or to others, the effects of which will pervade our
entire business and social climate;
B. Structuring an employment relationship, a
business merger or acquisition, or organizing a corporation,
limited liability company or partnership, should all involve
estate planning considerations;
C. The likelihood is strong of being asked by
business associates, clients, friends and family to serve as
trustee or executor over some of the expected wealth transfer;
D. Estate planning is universally and regularly
discussed in business and social circles;
II. THE ADMINISTRATION OF A DECEDENT’S ESTATE:
To understand the basics of a good estate plan, one
must first understand how an estate is administered following
the death of the asset owner.
A. Transfer of assets without a Will or Trust:
1. Statutory Intestate Succession - as a result
of no pre-planning; who are one’s heirs if
there is no written estate plan in place?
2. Common Community Property Laws in multiple
states;
a. What constitutes community property?
b. What becomes community property
intentionally or unintentionally?
c. The commingling of separate and
community property;
3. Methods of holding title to assets;
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a. Tenancy in Common requires court
transfer under intestacy;
b. Joint Tenancy and Community Property
with Rights of Survivorship; Affidavit
for title change on first death with no
formal action;
4. The capital gain tax implications of each
method of holding title following the first
death;
B. The mechanics of administering a Will, or an
intestacy, through the court probate process;
1. Court Supervision of the administration;
2. Court ordered Inventory of assets becomes
public record and subject to access by
anyone;
3. Possible Need for Court Approval of Asset
Sales;
4. Expenses of Administration;
a. Statutory Executor’s and Attorney’s
Commissions;
b. Court ordered probate referee fees in
the asset appraisal process;
C. The mechanics of administering a Revocable
Living Trust, privately and without court supervision;
1. No filing with any court is required;
2. Private asset valuations vs court ordered
appraisals;
3. Sales of assets need no court supervision;
4. Expenses of Administration;
a. No statutory commissions imposed;
b. Trustee fees and legal fees are
negotiable;
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III. BASIC ESTATE PLANNING OPTIONS:
A. Determining Testamentary Capacity of the
testator of a will or settlor of a trust;
1. Knowledge and understanding of the “natural
objects of one’s bounty”;
2. Knowledge and understanding of the nature
and extent of one’s assets;
3. Estate contests;
a. Undue influence issues;
b. Typical “No Contest” clauses in will or
trust;
B. The common Will; its contents and execution
requirements;
1. The selection and appointment of an Executor;
2. Wills for the single individual;
3. “Reciprocal” Wills for the married
couple;
4. The “Holographic Will”;
C. The typical Revocable Living Trust; its
contents and execution requirements;
1. The selection and appointment of a Trustee;
a. Settlor[s] as initial trustee[s];
b. Designation of successor trustees (key
considerations in the selection
process);
2. Incapacity Provisions;
a. To empower the successor trustee to act;
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b. To avoid the potential need for a court
appointed conservator in the event of
disability;
3. Trust provisions for children/grandchildren
etc.;
a. Income distribution regularly after
certain age;
b. Trustee power to invade principal;
typical grounds for same;
c. Beneficiary’s right to withdraw
principal at specific ages or events;
IV. THE ROLE OF THE TRUSTEE/EXECUTOR:
A. The method of appointment of each;
B. The fiduciary duties of each;
1. The duty of loyalty;
2. Inability to borrow or otherwise use trust
or estate property for the personal benefit of
the fiduciary;
3. Preclusion against self-dealing;
4. Regular reporting requirements (to the court
and/or the beneficiaries);
5. Differing duties of a trustee owed to income
beneficiaries and principal beneficiaries;
6. Duties of a trustee regarding
underproductive property;
7. Trust investments and the standard of care
(the “prudent person rule”);
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C. The trust/estate financial accounting;
1. The nature and content of a financial
accounting for a trust or estate; what
information is it intended to convey and for
what reason?
2. The importance of regular financial
accountings;
V. COMMON ESTATE AND GIFT TAX AVOIDANCE DEVICES AND
THE FUTURE:
A. The Annual Gift Tax Exclusion;
B. The Lifetime Gift/Estate Tax Exemption;
C. The Credit Shelter Trust (to utilize the first
decedent spouse’s lifetime exemption from estate
tax);
D. The Qualified Terminable Interest (QTIP) Trust
(to hold the balance of the first decedent spouse’s
community or separate assets);
E. The Qualified Personal Residence Trust (QPRT);
F. The Special Needs Trust (for the government
supported disabled);
G. The Irrevocable Life Insurance Trust and the
reasons behind it;
H. Charitable Lead and Remainder Trusts;
I. The Present and Future Impact of the Changing
Estate and Gift Tax Laws - what is the prognosis?
REVISED, December 28, 2005