2020 Annual Estate Planning Seminar · 2020-03-04 · 2020 Annual Estate Planning Seminar Friday, March 6, 2020 Embassy Suites, 12520 Westport Pkwy, La Vista, NE 68128 Matthew McKeever,

2020 Annual Estate Planning

Seminar

Friday, March 6, 2020

Embassy Suites, 12520 Westport Pkwy, La Vista, NE 68128

Matthew McKeever, Carlson & Burnett, LLP

William C. Brown, Bridges Trust Company

Anthony Aerts, Rembolt Ludtke

Hon. Todd Hutton, Judge of the County Court, 2nd Judicial District

Hon. Holly Parsley, Judge of the County Court, 3rd Judicial District

Christina Werner, Administrative Office of the Courts and Probation

Susan J. Spahn, Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O.

William J. Lindsay, Jr., Gross & Welch, P.C., L.L.O

Lisa M. Line, Brodkey, Cuddigan, Peebles, Belmont & Line, LLP

Chris Aupperle, NLAP Director

The NSBA’s Real Estate, Probate, and Trust Law Section presents:

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88:30 am - Will My Bitcoins Follow Me to Heaven? Estate Planning in the Era of Blockchain Technology

Matt McKeever, Carlson & Burnett, LLP

9:30 am - What I Have Learned as a Trust Officer That I Wish I Had Known as a Practicing Lawyer

William C. Brown, Bridges Trust Company

10:30 am - Break

10:45 am - Family Farm and Ranch Succession Planning in a Changing Agricultural Landscape

Anthony Aerts, Rembolt Ludtke

11:45 am - Lunch

12:30 pm - Guardianship and Conservatorship Update

Hon. Todd Hutton, Judge of the County Court, 2nd Judicial District

Hon. Holly Parsley, Judge of the County Court, 3rd Judicial District

Susan J. Spahn, Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O.

William J. Lindsay, Jr., Gross & Welch, P.C., L.L.O

Lisa M. Line, Brodkey, Cuddigan, Peebles, Belmont & Line, LLP

2:30 pm - Break

2:45 pm - Secure Act and Planning for Minors

William J. Lindsay, Jr., Gross & Welch, P.C., L.L.O.

3:30 pm -

Location of CLE:

Embassy Suites

12520 Westport Pkwy

LaVista, NE 68128

2020 Annual Estate Planning Seminar

NE:

IA:

The NSBA Real Estate, Probate and Trust Law Section Presents:

Thank you to our Sponsors:


SPEAKER BIOS

Matt McKeever, Esq., Carlson & Burnett, LLP Matt grew up in Norfolk, Nebraska and earned his B.A. with honors from the University of Nebraska-Lincoln in 1993. He then moved to New York, where he earned his J.D. from Brooklyn Law School in 1996. Matt began his trial practice in New York City with a focus on civil and commercial litigation. Following his return to Nebraska in 1999, Matt continued to build his practice, developing expertise in complex commercial litigation, real estate litigation, creditors’ rights, insolvent estates and probate litigation. He also has experience helping clients navigate the emerging area of blockchain technology. Matt will be working as the lead litigator on Carlson & Burnett’s estate litigation and contested guardianship cases. Matt is engaged in the community through Maplewood United Methodist Church and the Omaha West Rotary Club.

William C. Brown, Esq., Bridges Trust Company William C. Brown joined Bridges Trust Company after a 33-year career in private law practice, focused mainly on financial areas of the law (estates/trusts, estate administration, business, contract, commercial, pensions/employee benefits, mergers/acquisitions). He graduated from the University of Iowa (B.G.S. 1982 with highest distinction, Phi Beta Kappa; J.D. 1985 with distinction, Iowa Law Review).

Anthony Aerts, Esq., Rembolt Ludtke Anthony is a member of Rembolt Ludtke’s agricultural, estate planning and business services practice groups. He was raised on a grain and livestock farm outside of David City, Nebraska, and attended Stanford University in California, prior to returning to Nebraska to settle into his legal career. Due to this rural upbringing, Anthony enjoys splitting time between his firm’s Seward and Lincoln offices, and working with Nebraska’s farm and ranch families to confront the complex needs facing their operations.

Hon. Todd Hutton, Judge of the County Court, 2nd Judicial District Judge Parsley serves on the Nebraska Supreme Court Commission on Guardianship and Conservatorship and the Guardian and Conservatorship Forms and Rules Committee.

Hon. Holly Parsley, Judge of the County Court, 3rd Judicial District Judge Parsley serves on the Nebraska Supreme Court Commission on Guardianship and Conservatorship and the Guardian and Conservatorship Forms and Rules Committee.

Susan J. Spahn, Esq., Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O. Susan Spahn was appointed by the Nebraska Supreme Court to serve on its Commission on Guardianships and Conservatorships, which also includes judges, clerk magistrates, law enforcement, and others with special knowledge of vulnerable adults. She also serves on the Commission’s Executive and Forms Committees. She is dedicated to making sure that the needs of vulnerable adults are met while also allowing them to maintain as much autonomy as possible.

She is a frequent speaker on estate and trust issues, with her presentations focusing on administration of estate and trusts and issues that arise in the litigation process. Ms. Spahn received her JD from the University of Nebraska-Lincoln College of Law.

William J. Lindsay, Jr., Esq., Gross & Welch, P.C., L.L.O. William Lindsay is a shareholder with Gross & Welch. His practice emphasis is in estate planning and probate, tax law, corporate and business, and real estate. Mr. Lindsay is an Adjunct Professor at Creighton University School of Law teaching Trusts and Estates. He received his Juris Doctor from Creighton University School of Law and his L.L.M. in Taxation from the University of Florida.

Lisa M. Line, Esq., Brodkey, Cuddigan, Peebles, Belmont & Line, LLP Lisa Line represents clients in matters of social security, estate planning, probate, and related litigation. She is admitted to practice in Nebraska and the U.S. District Court District of Nebraska, having entered the legal profession in 1993.

Ms. Line has been active in several groups, including the college and legal organizations of Omicron Delta Epsilon and Phi Alpha Delta. She acted as Scholarship Coordinator for MENSA from 1996 to 1999. Ms. Line is a graduate of the University of Nebraska, having earned her Bachelor's in Economics as a member of Omicron Delta Epsilon. She obtained her Juris Doctor from the University of Nebraska College of Law.

Chris Aupperle, Esq., NLAP Director Chris Aupperle is a graduate of Creighton University, earning his undergraduate degree in 1989 and his JD in 1992. Chris began his law career in private practice in Omaha, NE and eventually transitioned to in-house counsel for an Omaha corporation where he spent fourteen years practicing in the areas of property, environmental and contract law. Chris began volunteering on the NLAP Committee in 2001 and served as chair of the NLAP Committee in 2015-17. Chris was appointed as the Director of the Nebraska Lawyers Assistance Program (NLAP) in May of 2017. As NLAP Director, Chris coordinates outreach, education and services to all Nebraska lawyers, judges and law students who may be affected by mental health, cognitive or substance use issues. He also serves on the Advisory Committee for the Independence Center at the Bryan Medical Center in Lincoln.



Will My Bitcoins Follow Me to Heaven?

Estate Planning in the Era of Blockchain

Technology

Matthew McKeever, Esq. Carlson & Burnett, LLP

Friday, March 6th, 2020

Embassy Suites

La Vista, NE


3/2/2020

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Will My Bitcoins Follow Me to Heaven?Estate Planning in the Era of

Blockchain Technology

March 6, 2020NSBA 2020 Annual Estate Planning Seminar

Matthew S. McKeeverCarlson & Burnett, LLP

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About the Speaker

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Affiliation:Carlson & Burnett, LLP, Partner

Education: University of Nebraska – Lincoln, B.A.,1993Brooklyn Law School, J.D., 1996

Admitted:New York State Bar, 1997Nebraska State Bar, 1999U.S. District Court, District of Nebraska, 2000U.S. Court of Appeals, 8th Circuit, 2010

Practice Areas:Business Law, Civil Litigation, Commercial Litigation, Estate and Trust Litigation, Guardianship/Conservatorship, Digital Currency Regulation & Compliance

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Why Do People Want to Obtain Bitcoins?

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Who is Using Bitcoin?

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2018 Edelman Financial Survey

Ages 24-38

Either $50,000.00 of investable assets or$100,000.00 annual income

25% had owned cryptocurrencies in the past year

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U.S. Businesses Accepting Bitcoin

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MicrosoftOverstock.comExpedia.comIntuitVirgin GalacticDell (until recently)Time MagazineForbes MagazineWal-Mart (via Gyft)Sacramento Kings NBAChicago Sun-TimesFood delivery servicesNebraska: Jones Bros. Cupcakes, Charity, Dentist’s office, Office Share

Who is Using Bitcoin?

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1. Speculators.2. Day traders.3. Computer enthusiasts4. Libertarians5. Retailers/Small Businesses (save on fees)6. Financial Technology Industry (“Fintech”)7. Criminals (1%)8. International travelers9. International remittance10. Countries/regions with unstable currency11. Investors and FOREX traders (recent)12. UNL College of Law students and recent

graduates (anecdotal)

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What is Bitcoin?

What is Bitcoin?

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What is Bitcoin?

Bitcoin is a ledger book.

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What is Bitcoin?

Bitcoin is a ledger book.

1. “Bitcoin” is a software program that records andsecures transactions.

2. There are no physical coins.3. Units on the ledger are called “bitcoins”.4. A network of over 400,000 computers run the

to process transactions and maintain theintegrity of the ledger.

5. “Digital ledger book.” - Dan Schulman, Paypal

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What is Bitcoin?

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“Bitcoin is to money as the Internet is to communication.”

Compare:

1. U.S Postal Service to an email/text message

2. Check, credit card or wire transfer to Bitcoin

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Bitcoin is Decentralized

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• No central authority runs Bitcoin, no “Fed”.• Bitcoin program run by thousands of

computers linked over the internet – “miners”.• Peer-to-peer transactions - no “middle-man”.• “Trustless”• Not a “fiat currency”• No central exchange or a “CEO of Bitcoin”.• “Open source” software than anyone can

download, operate or alter.

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1. Cryptography and shared nature preventsduplication and fraud.

2. Transactions are held together by math puzzle.3. Bitcoin is a puzzle that is solved one piece at

a time, called a “block”.4. Each block holds records of a series

of transactions on the ledger.5. Each block of transactions must be processed

through a mathematical process known as a“hash function” or “hash” to write newtransactions onto the ledger.

6. The series of blocks is called the “blockchain”.

Bitcoin is Cryptography

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What is Blockchain Technology?

1. It is the software technology behindBitcoin.

2. Bitcoin is the first blockchain.

3. Combination of New TechnologiesA. Digital Ledger BooksB. Networked Computers (Internet)C. Cryptography

4. Also called “digital ledger technology” or“shared ledger technology”. 13


Transactions on a Blockchain

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Thousands of Blockchains

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1. Litecoin – faster version of Bitcoin2. Ethereum – Network for “smart contracts”3. Ripple – Private, centralized.4. Bitcoin Cash – Fork of Bitcoin to solve scalabilty5. Auroracoin - Iceland6. Mazacoin – Lakota Sioux Nation7. Peercoin – Partially “Proof of Work”8. Blackcoin – Completely “Proof of Stake”9. PowerCoin – Tokens to represent grid units

and…

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Thousands of Blockchains

Dogecoin

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Blockchain Applications – Not Just For Transactions

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1. Logistics and Quality Control (IBM)Tokens for produce, diamonds, or head of livestock

2. Records and DocumentsSecure encrypted medical records on blockchainRegister of Deeds, Notary, Wills?

3. AccountingAll transactions automatically tracked.

4. CopyrightsMusic industry (Embermine)Art & Photos (Kodak)Printing (Ink)

5. Banking (R3, First Nat. Bank of Omaha)Banking industry creating private blockchains forinterbank transfers.

6. Insurance. (Mutual of Omaha)

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Mining - How Bitcoins Are Created

1. Bitcoin is software run on a network offast, powerful computers.

2. Operators of the computers are known as“miners”.

3. Each miner’s computer is trying to break acode before the other miners.

4. Approximately every 10 minutes, a minerreceives a reward of 12.5 bitcoins.

5. Bitcoin is inflationary for now.6. Functional limit of 21 million bitcoins.7. Only 2.755 million bitcoins remain to be

mined. 21

How to I Send and Hold Bitcoins?

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1. Bitcoins are stored in “wallets”, computerfiles that interact with the software.

2. Wallet software creates your “wallet address”(your account number on the ledger) that ispublicly available.

3. You send bitcoins through use of “privatekeys” (PIN number) that unlock your walletand authorize the amount of bitcoins yousend. Private keys are secret, must besecurely kept and are often encrypted.

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What is the Basis for Bitcoin’s Value

1. Not backed or guaranteed by “fiatcurrency”, precious metals or other assets.

2. Not backed by “full faith and credit” of anysovereign government.

3. Intrinsic value is based upon:1. Utility – transmission of data2. Speed – instant but with verification3. Little to no transaction cost4. Security – blockchain cannot be

“hacked” 23

What are the Advantages of Bitcoin?

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•Volatility.•Privacy (pseudonymous)•Security•Speed•Transmit secure information•No government control.•Person-to-person like cash.•Alternative to credit cards and wire transfers.

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What are the Advantages of Bitcoin for Businesses?

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• Instant.• No transaction fees (2%- 3% plus swipe costs)• No transmission fees.• No currency exchange fees.• No chargebacks.• No hardware costs.• No chance of identity theft.• No physical cash• No bank account required (Colorado)• Small Business or Retail: Save 5% - 10%.

What are the Disadvantages of Bitcoin?

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1. Volatility2. Changing Regulation3. Acceptance4. Security5. Stigma of Criminal Elements6. Difficult to Obtain7. Learning Curve8. Competition: ApplePay,

GoogleWallet, Venmo9. Public Ledger (not so private)10. Rising Costs & Fees (Scalability)

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DefinitionsIndustry Terminology

Digital Currency – units or tokens shared, digital ledger books.

Virtual Currency – any form of online money that is not official currency

Crypto‐Currency – shared digital ledger entries secured and bound together by mathematical cryptography.

Distributed Ledger Technology ‐ term used for blockchain technology but also other forms of distributed ledgers.

Industry Terminology

ICO – Initial Coin Offering. The initial method of distribution of coins that may resemble securities.

Smart Contracts – Contracts that execute themselves. Possible when the money itself is programmable. Allows units of value to be told when and to whom to be delivered.

HODL ‐ Panic hold your investment and cancel any open sell orders. Not an acronym. Typist intended to cry “HOLD”!

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International Legal Status

1. U.S., Europe, Japan: Legal but regulated!

2. Iceland, China, Russia: Restricted

3. Canada, India & South Korea: Bank issues.

4. Banned: Venezuela (except for the“Petro”), Zimbabwe, Egypt, Bolivia

5. Implicit Bans: Vietnam, Indonesia, Taiwan

6. Foreign Countries: Warnings or Bans.

7. Trade Sanctions may restrict

U.S. Legal Status

1. Legal!

2. IRS: It’s a commodity.

3. Treasury Dept.: It’s a currency.

4. Federal Regulation: FinCEN, KYC and AML.

5. 48 State Money Transmitter Laws.

6. NY BitLicense & The Great Bitcoin Exodus

7. Foreign Countries: Warnings or Bans.

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State Laws ‐ Nebraska

Regulation: Money transmitters must apply for a money transmitter’s license.

Banks do not need a money transmitters license.

The Question:

Are you a “money transmitter”?

State Laws – Other States

1. Wyoming

Not money transmitters

Not securities

Exempt from property tax

Legislative campaign to attract industry

2. Arizona – Smart Contracts

3. New Hampshire – Not money transmitters

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Securities Regulation

1. Initial Coin Offerings are sales of newcryptocurrencies or tokens representingownership interests in companies.

2. “Pump & Dump”3. Definition of “security” challenged.4. ICOs are legal if they comply5. Regulation D and other SEC filings.6. State Blue Sky Laws7. Exchange Traded Fund approval.

Federal Tax Treatment

IRS Guidance of March 25, 20141. Asset, not currency2. Taxed as capital asset (short‐term or long‐term

capital gains rules are used)3. Wages paid in virtual currency must be subject to

withholding and taxes paid in fiat.4. Conversion to fiat or use in transaction is a taxable

event.5. Implications for Charitable Donations

Donation value is the value of currency at the time of thedonation.

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Federal Tax TreatmentCapital Gains Taxes

1. The tax basis in bitcoins is the cash purchaseprice.

2. Fair market value (FMV) at time ofacquisition.

3. Exchanges can use used to determine FMV.4. As with similar assets, taxable gain or loss in

dollars received on the sale is considered.Gain can be long‐term if owned for twelve(12) or more months .


Like‐Kind 1031 Exchanges:

While some taxpayers claimed “like‐kind”1031 exchange rules may apply, theirarguments have not been persuasive.

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Wash Sales:

“Wash sale” rules apply for assets with asimilar nature repurchased within thirty (30)days. The basis of their digital currencyinvestments. Only precedents are for sales ofexactly the same digital currencies, not onedigital currency for another.


1. Realization of gains creates taxable events.2. Bitcoin is treated no differently than any otherinvestment such as a share of stock.3. No taxes are due on the investment while itincreases in value until the investment is actually soldfor U.S. dollars or other official currency.4. Many digital currency exchanges help usersmaintain the complicated records needed to track5. Taxpayers must self‐report (or exchanges may).6. Step‐up basis for gifts and inheritances.

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Federal Tax TreatmentIncome Taxes

1. Miners receive income

2. Proof of Stake income

3. Hard Forks – Copies of the sameblockchain. Income is realized whentaxpayer assumes dominion and control ofunits of a new cryptocurrency. Rev. Rul.2019‐24 (Oct. 2019)

Federal Tax TreatmentMore Guidance Anticipated

IRS Information Reporting Program AdvisoryCommittee (IRPAC) Report October 24, 2018

1. Taxpayers need more guidance.

2. IRS Authorities need more guidance

3. Few reporting capital gains or income

4. Cooperation with foreign governments

5. Cooperation with foreign businesses

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How Do I Get Me Some Bitcoin?

1. Person‐to‐Person purchase (legal?).2. Bitcoin ATM (BTM) ‐ Aksarben or Haymarket3. Check cashing businesses / Western Union4. Find an Exchange – KYC & AML• Coinbase (San Francisco, USA)• Bitpay (Atlanta, GA)• Bitstamp (London & Slovenia)• ItBit (New York)5. Retail: Sell something for BTC.6. Post or Hold Up a QR Code.

Hi Mom Send Bitcoin

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Ukranian Relief Efforts

How Do I Make Money With Bitcoin?

1. Investment Strategies.

2. Buy low and pray.

3. Trading ( exploiting volatility)

3. Mine and sell.

4. Arbitrage.

5. Ancillary opportunities ‐ “Sell the shovels.”

6. Retail: Accept BTC for sales & save money.

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Getting Familiar With Digital Currencies

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1. Most User-Friendly Exchange: Coinbasewww. Coinbase.comEquivalent to setting up a new bank account.

2. Most User-Friendly Phone Wallet: MycelliumMycellium Bitcoin Wallet (Play Store)

3. Most User-Friendly Computer Wallet: Exoduswww.exodus.io

4. Fastest Way Locally: Bitcoin ATM or check-cashing storefront

Planning

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Estate planners should request whether the have any virtualcurrencies or other digital assets. This includes bitcoin,online bank accounts, venmo, Apple Pay, frequent flyermiles.

Your intake should include:1. Whether clients owns or plans to own digital assets.2. Locations of digital accounts and wallets.3. Usernames, passwords, private keys and 2-Factor

identification codes.4. Where backup data is or will be located.5. When, how and at what price the client acquired the

assets.

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Planning: Advice for Clients

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1. Risk and responsibility involved may require expertadvice for storage and trading.

2. Little oversight or regulatory control3. Prudent investor and fiduciary rules apply4. Volatility5. Necessity to keep precise records

Keeping Precise Records:1. Day-trading losses and gains2. Transfers3. Gifts4. Payments (taxable events?)

Planning: The Uniform Fiduciary Access to Digital Assets Act

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The Uniform Fiduciary Access to Digital Assets Actestablished model language in POAs, Wills and Trusts toallow fiduciaries, personal representatives and trustees toaccess and control digital currency. Banks, online tradingcompanies, cryptocurrency exchanges and othercustodians of Bitcoin accounts can be compelled toprovide a fiduciary with records of the digital assets andaccess to such accounts. Neb. Rev. Stat. §30-501, etseq.

Explicitly include this language in your documents.

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The Act applies to:

(1) a fiduciary acting under a will or power of attorney executed before, on, or after January 1, 2017;(2) a personal representative acting for a decedent who died before, on, or after January 1, 2017;(3) a conservatorship proceeding commenced before, on, or after January 1, 2017; and(4) a trustee acting under a trust created before, on, or after January 1, 2017.

Neb. Rev. Stat. §30-503


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The Act provides:

1. Procedures to disclose digital assets. §30-5062. Procedures to disclose electronic communication.

§30-5073. Disclosures of digital assets held in trust. §30-511,

et seq.4. Disclosures to conservators after hearing. §30-

5145. Termination of digital accounts. §30-515(g)6. Consents must be in the documents or you may

need motion practice. §30-507

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Trusts, Trustees and Digital Currencies

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1. Nebraska Ethics Advisory Opinion 17-03 indicatedthe Code of Professional Conduct allowsattorneys to also hold digital currencies in trustunder certain circumstances with reasonableprecautions.

2. Neb. Ct. R. of Prof. Cond. §3-501.15(a) allowsattorneys to store property as well as currencieson behalf of clients..

3. Clients must be specifically advised that theirdigital currencies held in trust or escrow will notbe converted to U.S. dollars.

Trusts, Trustees and Digital Currencies

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4. Reasonable measures include encrypting privatekeys, use of multiple private keys (“multisig”accounts) and offline storage (“cold storage”) in acomputer not connected to the Internet.

5. Bitcoins cannot be deposited in a client trustaccount created pursuant to Neb. Ct. R. §§ 3-901 to 3-907 (Trust Fund Requirements forLawyers). If received for a retainer, the lawyermust immediately convert the bitcoins into U.S.dollars (such as through a payment processor).

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Probate Issues

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1. Where are they “located”? Bitcoin Isdecentralized and accessible anywhere.

2. Valued date of death – recommend establishedexchange such as Coinbase, Coindesk.com orcoingecko.com

3. Inventory must show amounts at date ofdeath value.

4. Transfers: There is no “no PR Deed”, you mayneed expert IT support.

5. Transfers: Who is to receive them, how muchand how?

6. Transfers: Keep in cryptocurrency or distribute inU.S. dollars?

Probate Issues - Finding Digital Assets

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1. When to Search: When client, friendsand relatives indicate decedent orward had history or interest. Alsowhen decedent or ward is in the targetdemographic and income range.

2. Where to Search: Phones (needpassword), computers, flash drives,portable hard drives, bank records,credit card records, wire transferrecords, safe deposit boxes.

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Probate Issues - Finding Digital Assets

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3. Goal of the Search: Trying to find walletsoftware, visits to online wallets, downloads ofsoftware, visits to online currency exchanges.

4. How to Ask: Interrogatories, Requests forProduction, Requests for Inspection,Subpoenas

5. Template Discovery Demands:https://www.omahabarassociation.com/page/DECCLE2018 and click on “InterrogatoriesRelated to Cryptocurrencies”

Stablecoins:Wildcat Banking Revisted

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Stablecoins: Wildcat Banking Revisted

September 2018 ‐ NY State Department of FinancialServices approves dollar‐collateralized “stable coins”

1. Gemini Dollar (Gemini Exchange)

2. Paxos Standard (Paxos Trust)

3. Is this the bridge for cryptocurrencies:

Tokenized bank notes / certified checks?

4. “Tether” – USDT not backed by actual dollars.

Replacing Wills and Trusts With Smart Contracts?

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What is a Smart Contract?

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A smart contract is a self-executing contract based upon “if-this–then-that” logic. It is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.

An oracle is a trusted sources of data for use by the smart contract and/or the blockchain used to operate the smart contract.

Examples of Smart Contract Applications

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1. Transaction with escrow. Escrow funds areplaced under the control of a smart contract. Ifthe parties both indicate the transaction iscomplete, the funds are returned. If not, the fundsare destroyed.

2. Airline Insurance. If the flight arrives more than30 minutes late, virtual currency automaticallysent to you (such as more frequent flyer miles).

3. Landlord/Tenant. If you pay on time, the key codeis released to you. If the code is not released,your funds are returned.

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Examples of Smart Contract Applications

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4. Sports Betting. Using ESPN.com as an oracle, asmart contract can be created, money depositedand will self-execute to pay the winner.

5. Artist Royalties. Pay to unlock encrypted artworkor recordings.

6. Wills and Trusts. When an heir uses a key or anoracle reports a death, units of a blockchain suchas bitcoins can be transmitted to a destinationalong with data encrypted with the bitcoins (adigital will).

Wills, Trusts and Smart Contracts

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1. Nevada allows digital wills so long as they are“written, created and stored in an electronicrecord” and signed by the testator. This could beon a blockchain.

2. Process of a Blockchain “Will”A. Testator lists beneficiaries’ wallet

addresses.B. Smart contract created on blockchain to

distribute funds to beneficiaries.C. Cryptocurrencies transferred to become

subject to the smart contract.D. Upon death, funds automatically sent.

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Will Smart Contracts Leave Us All Unemployed?

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1. A professional will need to draft the termsof the smart contract.

2. Not everything that can be coded is legalor enforceable. (Arizona is better thanNebraska about this)

3. Code cannot resolve all disputes.4. Evolving field will need lawyers’ input.5. Our intrinsic value is advice and service.

“The future’s most successful business and planning attorneys may be those who can also code.”

Conclusion

Do NOT apply for Medicaid until proper planning is done.

See a Medicaid specialist attorney when faced with long-term care costs

Proper planning permits earlier qualification for Medicaid

Proper planning allows the family to retain more assets

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Thank you!

John AtkinsBill Lindsay

Elsbeth MagiltonMike Echternacht

Allyson FeltLiz Neely

Contact the Speaker:[email protected]

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Conclusion

Do NOT apply for Medicaid until proper planning is done.

See a Medicaid specialist attorney when faced with long-term care costs

Proper planning permits earlier qualification for Medicaid

Proper planning allows the family to retain more assets

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FAQ #1: Are you giving out free bitcoins?Answer: No, of course not.

FAQ #2: Will my bitcoins follow me to Heaven?Answer: There must be internet access in Heaven, so, yes.

FAQ #3: Where can I go for more information?Answer: Coindesk.com and CoinTelegraph.com

Matthew S. McKeeverCarlson & Burnett, LLP

(402) [email protected]

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What I Have Learned as a Trust Officer That

I Wish I Had Known as a Practicing Lawyer

William C. Brown, Esq. Bridges Trust Company


Embassy Suites

La Vista, NE


21T H E N E B R A S K A L A W Y E R J A N U A R Y / F E B R U A R Y 2 0 2 0

On January 1, 2019, after 33 years in private law practice,1 I became a Trust Officer for a state-chartered Nebraska trust company. Over the next year, I learned a significant amount about trust business and about trust administration and practi-cal drafting issues. The following is offered in the hope that current estate planning practitioners may benefit from my experiences.

Trust BusinessOverview

Ongoing2 trust business is conducted either through Nebraska-chartered trust companies;3 trust departments of Nebraska-chartered banks;4 or foreign trust companies or departments.5 The focus here is on Nebraska-chartered trust companies, as the law applicable to them is seminal as to the others.

The Nebraska Trust Company Act6 is the main applicable statute. It gives general supervision and control over trust com-

panies to the Nebraska Department of Banking and Finance (“NDBF”).7

Entity OrganizationA trust company must be formed as a corporation8 by at

least three incorporators.9 The name of the trust company may not cause confusion with others.10 Generally, only qualified trust companies may use the term “trust” in their names.11

There must be at least five directors,12 a majority of whom must be Nebraska residents,13 and as many as reasonably pos-sible of whom should be from the county of the trust company’s location.14 Directors must be people of good moral character, known integrity, business experience and responsibility, who must be approved by NDBF.15 Directors must meet at least quarterly and must keep written minutes of meetings.16

Trust companies must have capital of at least $500,000.17 They also must maintain a fidelity bond in an amount to be fixed by NDBF.18 The bond protects and indemnifies the trust company from loss via dishonest acts committed by its own officers and employees.19

Trust companies also must pledge securities with NDBF.20 The amount required to be pledged varies depending on the amount of assets the trust company holds.21 The largest amount is $500,000 for trust companies holding assets of $5 billion or more.22 The pledged securities are primarily liable for trust companies’ fiduciary obligations and losses.23

PowersTrust companies have the following powers:

• To receive, hold, manage, and invest trust assets.24 • To act as personal representative of estates.25

feature article

What I Have Learned as a Trust Officer That I Wish I Had Known as a Practicing Lawyer

by William C. Brown

William C. BrownWilliam C. Brown joined Bridges Trust Company after a 33-year career in private law practice, focused mainly on financial areas of the law (estates/trusts, estate administration, business, contract, commercial, pensions/employee benefits, mergers/acquisitions). He graduated from the University of Iowa (B.G.S. 1982 with highest dis-tinction, Phi Beta Kappa; J.D. 1985 with distinction, Iowa Law Review).


• To act as conservator.26

• To act as attorney-in-fact/agent.27

• To act as UTMA custodian.28

• To act as retirement plan trustee and IRA custo-dian/trustee.29

• To loan30 and borrow31 money.Trust companies may deposit securities with clearing agen-

cies and other organizations and such securities may be held in bulk in the name of a nominee.32

RestrictionsTrust companies (and entities generally) may not act as

agent/attorney-in-fact under health care powers of attorney.33 Trust companies may not substitute their own securities for those of a trust or estate.34 Loans of trust company assets or accounts may not be made to trust company officers or direc-tors.35 Trust company lawyers may not charge a fee for giving any legal advice.36 Real estate conveyances made by the trust company must be approved by the directors or a board com-mittee and by the trust company’s president or vice president.37

Regulation, Reporting, DisclosureTrust companies are subject to significant regulation and

reporting/disclosure requirements, including the following:• Annual internal examination. At least annually

the board must conduct a thorough examinationof the books, records, funds and securities heldfor the trust company and customer accounts.38

The board may instead engage an accountantor accounting firm to conduct an audit.39 Theaccountant/firm must be preapproved by NDBF.40

Extensive audit guidelines apply.41

• Bi-annual report. Each January and July, trustcompanies must file with NDBF verified reportsof the trust company’s condition.42 NDBF hasissued forms and instructions for these reports.43

Summaries of the reports must either be publishedor made available to the public upon request.44

• NDBF regulation. NDBF has broad-rangingauthority to examine and investigate trust compa-nies.45 NDBF can levy assessments46 and collectfees,47 suspend or revoke licenses for failure topay the same,48 impose fines,49 issue injunctions,50

exercise emergency powers,51 and take over a fail-ing institution.52 NDBF must approve change oftrust company main office location,53 establish-ment of trust company branch54 and representa-tive55 trust offices, acquisitions of control,56 andmergers/consolidations.57

• Other. Trust companies may maintain confiden-tially of client information with some exceptions.58

Records must be maintained in accordance withapplicable regulations.59 Trust companies aresubject to the Financial Data Protection andConsumer Notification of Data Security BreachAct of 2006.60

Policies and Procedures My firm has in place the following policies and procedures:

• Information Security Policy• Identity Theft Prevention Policy• Business Continuity and Disaster Recovery Plan• Anti-Money Laundering Policy• Conflict of Interest Policy• Ethics Policy and Code• Privacy Policy

NDBF requires the firm to train employees on these policies, and to present a comprehensive compliance review and risk assessment to the board, at least annually.

My firm implements the following additional physical security measures: redundant office entry security systems, overnight “clean-desk” and locked-doors/drawers policies, automatic personal computer log-off after twenty minutes of inactivity, end-of-day copy room security procedures, required shredding of discarded documents with confidential informa-tion, and multi-layered security for entry to vault containing original documents.

Trust and Estate AdministrationA significant part of my firm’s activities involves the

administration of trusts and estates. My firm has formed a spe-cific committee, the Trust and Estate Administration (“TEA”) Committee, that meets bi-weekly, and as needed, to discuss legal and administrative issues that arise in the course of trust and estate administration. The committee keeps minutes of its meetings and decisions, which minutes are reviewed by NDBF.

The TEA Committee reviews estate and trust documents prepared by many lawyers and firms. In that process, a variety of drafting and practice issues have arisen. Those are discussed in the next main section of this article.

Drafting and Practice Issues1. Discretionary Trust Distributions Based on Some

Standard. Many trusts allow distributions to be made if some standard is met (need, maintain current standard of living, etc.). Our TEA committee will investigate and determine whether the trust’s stated distribution standard is met. We may require the beneficiary to complete beneficiary needs state-

WHAT I HAVE LEARNED AS TRUST OFFICER



A common drafting error is to confuse first-party, or self-settled, special needs trusts (“SNTs”) with third-party SNTs. Self-settled SNTs are generally funded with assets deemed to be those of the special needs individual. Third-party SNTs are generally funded with assets deemed not to be those of the special needs individual.63 Properly-drafted first-party SNTs will include a right for relevant governmental agencies (e.g., Medicaid) to recover trust assets upon the death of the special needs individual.64 Third-party SNTs need not include such a right of recovery.65 We have seen third-party SNTs that erro-neously include a right of governmental agency recovery, when that is not necessary and may prevent assets from descending to trust beneficiaries.

Estate planning attorneys who are dealing with known special-needs individuals, but who are not familiar with the intricacies of SNTs, would be well-advised to associate with attorneys who are. This may be an ethical obligation under applicable rules of professional conduct.66 It may also be advis-able to include fail-safe SNT language in all trusts in the event any trust beneficiary may become a special needs individual in the future.

4. Name Testamentary Trusts. Some testamentary trustscreated within wills are not named. Giving the trust a name is helpful to the trust company. It avoids the awkwardness of having to refer to the trust only by the name of the testator, the date of the will, and the particular section of the will that creates the trust.

5. Avoid “Revocable” And “Living” In The Names OfTrusts. Using the terms “revocable” and “living” in the name of inter vivos trusts can cause confusion when the trust becomes irrevocable, for example, upon grantor’s death or incapacity.

6. Define “Disability” and “Incapacity”. Disability/inca-pacity status can impact all three major parties to a trust. If a grantor of a revocable inter vivos trust becomes incapacitated, the trust generally becomes irrevocable. If an individual trustee or co-trustee becomes incapacitated, that person should no lon-ger act as trustee. If a beneficiary becomes disabled or incapaci-tated, distributions that could otherwise be made outright may need to be directed elsewhere or retained in trust. If a disabled/incapacitated beneficiary could qualify for public assistance, stand-by SNT provisions may be triggered.

In each of these situations, trustees can be significantly aided if the trust document itself contains definitions of “dis-ability” and “incapacity” for all these purposes.

7. Define Trustee Succession Procedures. The NebraskaUniform Trust Code does have a fail-safe provision for estab-lishing acceptance of trusteeship.67 However, our experience is that the statutory methods are cumbersome, and that it is pref-erable for trusts to specify procedures for assumption of office

ments, which may include financial statements (balance sheet, income/cash-flow statements), tax returns, etc. This helps ensure compliance with the grantor’s intent and protection of remainder beneficiaries’ interests.

Practicing attorneys may want to inform their clients of this administrative practice. Clients may want to advise remainder beneficiaries of this (assuming the client otherwise discloses the estate plan to remainder beneficiaries).

2. Rule Against Perpetuities. A surprising number ofrecently-drafted Nebraska trusts that we see continue to recite the common-law rule against perpetuities. Nebraska has adopted the Uniform Rule Against Perpetuities Act.61 It allows a trust to mostly waive the rule.62

On the other hand, it may be desired, and it is possible, to shorten the otherwise-applicable perpetuities period. In at least one case, a trust we administered did just that, calling for imposition of a period of time intentionally shorter than that required under the particular state’s statutory rule against perpetuities.

3. Special Needs Issues. A frequent source of confusionand misunderstanding involves drafting and planning for spe-cial needs trust beneficiaries. In our experience, special needs issues cut-across all categories of society.

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Toll-Free: 800-844-6778www.landexresearch.com



16. Personal Property. The difficulties of dealing withtangible personal property in estates were generally known to me as a private practitioner. However, those difficulties were highlighted all the more to me as a trust officer of a corporate trustee. Use of corporate trustee time and efforts to dispose of tangible personal property can be inefficient and unwise. Disposition of such property other than through trusts can be preferable. Alternatives exist, such as collection/disposition by affidavit,71 or informal probate,72 if necessary. If a corporate- trusteed trust will end up holding tangible personal property, a complete and detailed list as to the property’s disposition is strongly preferred.73

17. Choice of Law/Situs. It can be helpful if trusts donot immutably specify a particular body of substantive law that applies or a particular situs. That allows the trust to adjust either or both facets in order to avail itself of better laws, changed circumstances, changed location of grantor and/or beneficiaries, and the like. A more flexible approach is to state that the trustee may change the situs and applicable substantive law of the trust.

18. Joint Trusts. The use of joint trusts in communityproperty states is common and consistent with a clear income tax advantage in community property states: all trust assets can receive a basis adjustment upon the first spouse’s death.74 The use of joint trusts in non-community property states can raise a number of legal and tax issues, including the extent to which basis-adjustment applies, and to which assets. Trust provisions addressing the basis-adjustment issue in particular can be very helpful to the Trustee.

19. Principal and Income Act. There are two aspects ofthe Uniform Principal and Income Act75 that merit particular attention:

a.) Trust income versus principal. Traditionally, trusts differentiate between income and principal. Especially with income yields at near-historic lows, alternative means have become timely and more prevalent. Practitioners’ familiarity with concepts such as the power to adjust between principal and income,76 and conversion to a total return trust,77 can be helpful, both at the drafting and administra-tion stages. b.) Retirement plan distributions to trusts. The Principal and Income Act provides that trust receipts of required retirement plan distributions are to be allocated 10 percent to income and 90 percent to principal.78 To the extent the distribution is not required, the entire amount is allocated to princi-pal.79 This can result in the trust-accounting princi-pal amounts80 being subject to income tax at trusts’ very-compressed income tax rates.81 Fortunately,

by successor trustees. This is especially true if there could be real estate conveyances.

8. Accurately Name Trustee. Mis-naming the corporatetrustee can cause undue complications. Again, this is especially true if there could be real estate conveyances.

9. Urge Clients to Update Documents for ChangedCircumstances. A significant portion of the difficulties we face as trustee involves planning that has not been updated to reflect clients’ changed circumstances. This can take a variety of forms, including: client no longer is, or has become, subject to federal estate tax; a trust beneficiary has become, or no lon-ger is, a special needs individual; client moves from one state to another; or marital and other family changes.

10. Account Titling. Effective estate planning shouldinclude consideration of assets that may pass by beneficiary designation and co-ownership. Pour-over wills generally can-not direct those assets to a trust.

11. Co-trustees. Clients sometimes insist on acting asindividual co-trustee. In those situations, it is very helpful if the trust document sets out, as specifically as possible, the alloca-tion of duties between the individual and the corporate trustee.

12. Form Documents. Form documents may save timeand cost over custom-drafted documents in the short run. However, we have seen them cause at least as many problems as they solve. Some issues we have seen include: language not in accordance with current applicable law, form language that contradicts other language in the same document, and form language that contradicts the grantor’s desires. The more custom, individualized language that can be drafted, the better.

13. Inter Vivos Gifts as Offset. If the client has madesignificant, unequal inter vivos gifts, it is best to document in each planning document thereafter whether or not the gifts are intended as an offset to ultimate trust (or estate) distributions.

14. Trusts as Recipient of Retirement Plan Assets. The taxand other law regarding trusts’ receipt of retirement plan assets is extraordinarily complex and beyond the scope of this article. As a very general matter, if the estate plan can be implemented without placing retirement plan assets in a trust, that is prefer-able. If it is deemed advisable to place retirement plan assets in a trust, great care, consideration, analysis, and pre-planning should be taken. The use of trusteed IRAs may be a viable alternative, along with beneficiary designation forms that can be lawyer-drafted and customized to fit clients’ particular plan-ning needs.68

15. Pre/Post Nuptial Agreements. Successful implemen-tation of an estate plan may depend on effective waiver of spousal inheritance rights. That can be accomplished in pre-69 or post-70 nuptial agreements. This is especially true in subse-quent marriages.



18 Neb. Rev. Stat. § 205.01. Our trust company has about $5.3 bil-lion assets under management and just under 50 employees, and it is required to maintain a $15 million bond with a $150,000 deductible.

19 Neb. Rev. Stat. § 8-205.01.20 Neb. Rev. Stat. §§ 8-209 to 8-217.21 Neb. Rev. Stat. § 8-209(2).22 Neb. Rev. Stat. § 8-209(2)(e).23 Neb. Rev. Stat. § 8-212.24 See, e.g., Neb. Rev. Stat. § 8-206(1) – (3), (6), (8), (11), 8-1302

& 1303.25 Neb. Rev. Stat. § 8-206(5).26 Id.27 Neb. Rev. Stat. § 8-206 (4) and (7). This allows trust companies

to act as agents under durable financial powers of attorney. See Neb. Rev. Stat. § 30-4002(1) and (7). But see text accompanying note 31.

28 Neb. Rev. Stat. § 43-2710(1)(a)(i).29 See IRS Rev. Proc. 2019-4, § 3.07; Treas. Reg. §§ 1.408-2(e)

(1) – 1.408-2(e)(8).30 Neb. Rev. Stat. § 8-206(8).31 Neb. Rev. Stat. § 8-206(11).32 Neb. Rev. Stat. § 8-1302. See also Neb. Rev. Stat. § 1303 as to

deposit of United States Government securities with the federal reserve bank.

33 Neb. Rev. Stat. §§ 30-3402(1) & (3).34 Neb. Rev. Stat. § 8-224.01(1).35 Neb. Rev. Stat. § 8-224.01(2).36 Neb. Rev. Stat. § 8-224.01.37 Neb. Rev. Stat. § 8-208.38 Neb. Rev. Stat. § 8-204. The board may assign this task to a

non-board member, but the board by majority vote must adopt the assignee’s report. NAC § 45-24-001.0. The board may also perform the examination throughout the year. NAC § 45-24-001.09.

39 Neb. Rev. Stat. § 8-204.40 Id. See also NAC § 45-24-001. Independence is a key issue.

NDBF has an online form for approval of the accountant/firm, at https://ndbf.nebraska.gov/sites/ndbf.nebraska.gov/files/industries/Approval%20to%20Conduct%20Audit%20or%20DirectorsExamRev%202017.pdf.

41 See NAC § 45-25-001.42 Neb. Rev. Stat. §§ 8-223, 8-224.43 See https://ndbf.nebraska.gov/industries/trust-company-forms. 44 Neb. Rev. Stat. § 8-224. See also https://ndbf.nebraska.gov/sites/

ndbf.nebraska.gov/files/doc/industries/trust_annual_disclosure.pdf.

45 Neb. Rev. Stat. §§ 8-108, 8-201.46 Neb. Rev. Stat. §§ 8-601, 605, 606.47 Neb. Rev. Stat. § 8-602. 48 Neb. Rev. Stat. § 8-607.49 Neb. Rev. Stat. § 8-1,134.50 Neb. Rev. Stat. § 8-1,136.51 Neb. Rev. Stat. § 8-1,134(3).52 Neb. Rev. Stat. § 8-1506.53 See https://ndbf.nebraska.gov/sites/ndbf.nebraska.gov/files/

industries/appmovemainoff-indtrustco.pdf.54 Neb. Rev. Stat. § 8-234.55 Neb. Rev. Stat. § 8-235. See https://ndbf.nebraska.gov/files/

industries/trustformA_0.pdf. 56 Neb. Rev. Stat. §§ 8-1501, 1502.

this unappealing income tax result can be avoided. One of the simplest ways is to override the Principal and Income Act provision by a trust provision set-ting out a different accounting convention (e.g., all retirement plan distributions received by the trust are trust-accounting income).82

20. Nebraska Uniform Directed Trust Act. Nebraskaadopted the Uniform Directed Trust Act on September 1, 2019.83 The Act sets out legal standards for trust directors84 and directed trustees,85 and delineates other duties and liabili-ties of those parties.86 Incorporation of the Act’s standards into trust documents can be of assistance especially when a corporate trustee is asked to be directed as to trust investments. This can occur, for example, when the client wishes to retain the client’s long-time investment advisor despite assets being held by the corporate trustee.

ConclusionTrust companies are financially secure, well-capitalized,

extensively regulated, highly trained professional fiduciaries. Trust companies are storehouses of legal knowledge and prac-tical administrative experience. Both during trust drafting and administration, trust companies can provide invaluable assistance to private practitioners and thereby to estate plan-ning clients.87

Endnotes1 My private law practice included ERISA, trust, estate and

probate, business, mergers/acquisitions, contract, tax, and com-mercial matters.

2 See also Neb. Rev. Stat. § 30-3820, requiring foreign corporate trustees to qualify as foreign corporations if the principal place of administration of a particular trust is in Nebraska.

3 See Nebraska Trust Company Act, Neb. Rev. Stat. §§ 8-201 to 8-235.

4 See Nebraska Banking Act, Neb. Rev. Stat. §§ 8-159 to 8-162.02; NAC §§ 45-21-001 to -003.

5 See Interstate Trust Company Office Act, Neb. Rev. Stat. §§ 8-2301 to 8-2313. See also 12 U.S.C. § 92a.

6 See supra note 3.7 Neb. Rev. Stat. § 8-201. See also Neb. Rev. Stat. § 8-103(1)(b).8 Therefore, the Model Business Corporation Act (“MBCA”),

Neb. Rev. Stat. §§ 21-201 to 21-2,232, applies.9 See supra note 7.10 Neb. Rev. Stat. §§ 8-1901 to 8-1903 and 21-230(b).11 Neb. Rev. Stat. § 8-226.12 Neb. Rev. Stat. § 8-204.13 Id. (unless NDBF approves otherwise).14 Id.15 Id. NDBF has issued a form to apply for approval as a direc-

tor. See “Application for Approval of a Director” at https://ndbf.nebraska.gov/sites/ndbf.nebraska.gov/files/industries/DirApp2018.pdf.

16 Neb. Rev. Stat. § 8-204.17 Neb. Rev. Stat. § 8-205(1) (for trust companies initially autho-

rized after August 1, 2000).



75 Neb. Rev. Stat. §§ 30-3101 to 3149.76 Neb. Rev. Stat. § 30-3119.77 Neb. Rev. Stat. § 30-3119.01.78 Neb. Rev. Stat. § 30-3135(c). 79 Id.80 To the extent they are income-taxable as income in respect of

decedent (See 26 USC § 691) and do not represent investment in the contract (see generally 26 USC § 72).

81 26 U.S.C. § 1(e).82 Neb. Rev. Stat. § 30-3118 (a) (1) allows the trust to override a

contrary provision of the Act. For a detailed discussion of this topic, see “Life and Death Planning for Retirement Benefits,” Natalie B. Choate, ATaxPlan Publications (2019), at pp. 395-402, §§ 6.1.02-6.1.04.

83 Neb. Rev. Stat. §§ 30-4301 to 4319. Note the effective date/applicability provisions of § 30-4319.

84 Neb. Rev. Stat. § 30-4308.85 Neb. Rev. Stat. § 30-4309.86 See, e.g., Neb. Rev. Stat. §§ 30-4310, 4311, 4312.87 The author wishes to acknowledge and express gratitude for the

efforts of his cohort, Jeanne Hauser, for her assistance in the preparation of this manuscript.

57 Neb. Rev. Stat. §§ 8-227 to 8-229.03.58 Neb. Rev. Stat. § 8-1401.59 NAC § 45-32-001.60 Neb. Rev. Stat. §§ 87-801 to 808.61 Neb. Rev. Stat. §§ 76-2001 to 76-2008.62 Neb. Rev. Stat. § 76-2005(9). Trust property must be salable for

any period of time beyond the otherwise-applicable perpetuities period.

63 See generally 42 U.S.C. § 1396p(d).64 See 42 U.S.C. § 1936p(d)(4)(A).65 See 42 U.S.C. § 1396p(d)(2)(B).66 Neb. Ct. R. of Prof. Cond. § 3-501.1, comment [1].67 Neb. Rev. Stat. § 30-3857.68 My firm sponsors only trusteed IRAs, and welcomes custom,

lawyer-drafted beneficiary designation forms. 69 See Neb. Rev. Stat. § 42-1004(1)(c).70 See Neb. Rev. Stat. § 30-2316(a). See also Devney v. Devney, 295

Neb. 15, 886 N.W.2d 61 (2016).71 Neb. Rev. Stat. § 30-24,125.72 Neb. Rev. Stat. §§ 30-2414 to 2424. 73 Neb. Rev. Stat. § 30-3844.74 26 U.S.C. § 1014(b)(6).

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§ 30-4301. (UDTA 1) Act, how cited.

Nebraska Revised Statutes

Chapter 30. Decedents' Estates; Protections of Persons and Property

Article 43. Nebraska Uniform Directed Trust Act

Current with changes from the 2020 Legislative Session through 2/20/2020

§ 30-4301. (UDTA 1) Act, how cited

(UDTA 1) Sections 30-4301 to 30-4319 shall be known and may be cited as the Nebraska Uniform

Directed Trust Act.

Cite as Neb. Rev. Stat. § 30-4301

History. Added by Laws 2019, LB 536, §1, eff. 9/1/2019.

__________________________________________________________________________

§ 30-4302. (UDTA 2) Definitions.





§ 30-4302. (UDTA 2) Definitions

(UDTA 2) In the Nebraska Uniform Directed Trust Act:

(1) Breach of trust includes a violation by a trust director or trustee of a duty imposed on that

director or trustee by the terms of the trust, the Nebraska Uniform Directed Trust Act, or

law of this state other than the Nebraska Uniform Directed Trust Act pertaining to trusts.

(2) Directed trust means a trust for which the terms of the trust grant a power of direction.

(3) Directed trustee means a trustee that is subject to a trust director's power of direction.

(4) Person means an individual, estate, business or nonprofit entity, public corporation,

government or governmental subdivision, agency, or instrumentality, or other legal entity.



__________________________________________________________________________

§ 30-4303. (UDTA 3) Application; principal place of administration.


(5) Power of direction means a power over a trust granted to a person by the terms of the

trust to the extent the power is exercisable while the person is not serving as a trustee.

The term includes a power over the investment, management, or distribution of trust

property or other matters of trust administration, including, but not limited to, amendment,

reform, or termination of the trust. The term excludes the powers described in subsection

(b) of section 30-4305.

(6) Settlor has the same meaning as in section 30-3803.

(7) State means a state of the United States, the District of Columbia, Puerto Rico, the United

States Virgin Islands, or any other territory or possession subject to the jurisdiction of the

United States.

(8) Terms of a trust means:

(A) except as otherwise provided in subdivision (8)(B) of this section, the manifestation

of the settlor's intent regarding a trust's provisions as:

(i) expressed in the trust instrument; or

(ii) established by other evidence that would be admissible in a judicial

proceeding; or

(B) the trust's provisions as established, determined, or amended by:

(i) a trustee or trust director in accordance with applicable law;

(ii) court order; or

(iii) a nonjudicial settlement agreement under section 30-3811.

(9) Trust director means a person that is granted a power of direction by the terms of a trust to

the extent the power is exercisable while the person is not serving as a trustee. The

person is a trust director whether or not the terms of the trust refer to the person as a trust

director and whether or not the person is a beneficiary or settlor of the trust.

(10) Trustee has the same meaning as in section 30-3803.




§ 30-4303. (UDTA 3) Application; principal place of administration

(UDTA 3) The Nebraska Uniform Directed Trust Act applies to a trust, whenever created, that has

its principal place of administration in this state, subject to the following rules:



__________________________________________________________________________

§ 30-4304. (UDTA 4) Common law and principles of equity.





§ 30-4304. (UDTA 4) Common law and principles of equity

(UDTA 4) The common law and principles of equity supplement the Nebraska Uniform Directed

Trust Act, except to the extent modified by the Nebraska Uniform Directed Trust Act or law of this

state other than the Nebraska Uniform Directed Trust Act.


(1) If the trust was created before September 7, 2019, the Nebraska Uniform Directed Trust

Act applies only to a decision or action occurring on or after September 7, 2019.

(2) If the principal place of administration of the trust is changed to this state on or after

September 7, 2019, the Nebraska Uniform Directed Trust Act applies only to a decision or

action occurring on or after the date of the change.


__________________________________________________________________________

§ 30-4305. (UDTA 5) Exclusions.





§ 30-4305. (UDTA 5) Exclusions

(UDTA 5)

(a) In this section, power of appointment means a power that enables a person acting in a

nonfiduciary capacity to designate a recipient of an ownership interest in or another power

of appointment over trust property.

(b) The Nebraska Uniform Directed Trust Act does not apply to a:

(1) power of appointment;

(2) power to appoint or remove a trustee or trust director;

(3) power of a settlor over a trust to the extent the settlor has a power to revoke the

trust;

(4) power of a beneficiary over a trust to the extent the exercise or nonexercise of the

power affects the beneficial interest of:

(A) the beneficiary; or

(B) the beneficial interest of another beneficiary represented by the beneficiary

under sections 30-3822 to 30-3826 with respect to the exercise or

nonexercise of the power; or

(5) power over a trust if:

(A) the terms of the trust provide that the power is held in a nonfiduciary

capacity; and

(B) the power must be held in a nonfiduciary capacity to achieve the settlor's

tax objectives under the Internal Revenue Code of 1986 as defined in

section 49-801.01.



__________________________________________________________________________

§ 30-4306. (UDTA 6) Powers of trust director.





§ 30-4306. (UDTA 6) Powers of trust director

(UDTA 6)



__________________________________________________________________________

(c) Unless the terms of a trust provide otherwise, a power granted to a person to designate a

recipient of an ownership interest in or power of appointment over trust property which is

exercisable while the person is not serving as a trustee is a power of appointment and not

a power of direction.

(a) Subject to section 30-4307, the terms of a trust may grant a power of direction to a trust

director.

(b) Unless the terms of a trust provide otherwise:

(1) a trust director may exercise any further power appropriate to the exercise or

nonexercise of a power of direction granted to the trust director under subsection

(a) of this section; and

(2) trust directors with joint powers must act by majority decision.

(c) A power of direction includes only those powers granted by the terms of the trust and

further powers pursuant to subdivision (b)(1) of this section must be appropriate to the

exercise or nonexercise of such power of direction granted by the terms of the trust.

§ 30-4307. (UDTA 7) Limitation on trust director.





§ 30-4307. (UDTA 7) Limitation on trust director

(UDTA 7) A trust director is subject to the same rules as a trustee in a like position and under

similar circumstances in the exercise or nonexercise of a power of direction or further power under

subdivision (b)(1) of section 30-4306 regarding:



__________________________________________________________________________

§ 30-4308. (UDTA 8) Duty and liability of trust director.





§ 30-4308. (UDTA 8) Duty and liability of trust director

(UDTA 8)

(1) a payback provision in the terms of a trust necessary to comply with the medicaid

reimbursement requirements of section 68-919 ; and

(2) a charitable interest in the trust, including notice regarding the interest to the Attorney

General.

(a) Subject to subsection (b) of this section, with respect to a power of direction or further



__________________________________________________________________________

§ 30-4309. (UDTA 9) Duty and liability of directed trustee.





§ 30-4309. (UDTA 9) Duty and liability of directed trustee

(UDTA 9)

power under subdivision (b)(1) of section 30-4306:

(1) a trust director has the same fiduciary duty and liability in the exercise or

nonexercise of the power:

(A) if the power is held individually, as a sole trustee in a like position and under

similar circumstances; or

(B) if the power is held jointly with a trustee or another trust director, as a

cotrustee in a like position and under similar circumstances; and

(2) the terms of the trust may vary the director's duty or liability to the same extent the

terms of the trust could vary the duty or liability of a trustee in a like position and

under similar circumstances.

(b) Unless the terms of a trust provide otherwise, if a trust director is licensed, certified, or

otherwise authorized or permitted by law other than the Nebraska Uniform Directed Trust

Act to provide health care in the ordinary course of the director's business or practice of a

profession, to the extent the director acts in that capacity, the director has no duty or

liability under the Nebraska Uniform Directed Trust Act.

(c) The terms of a trust may impose a duty or liability on a trust director in addition to the

duties and liabilities under this section.

(a) Subject to subsections (b) and (c) of this section, a directed trustee shall take reasonable

action to comply with a trust director's exercise or nonexercise of a power of direction or



__________________________________________________________________________

§ 30-4310. (UDTA 10) Duty to provide information to trust director or trustee.





§ 30-4310. (UDTA 10) Duty to provide information to trust director or trustee

further power under subdivision (b)(1) of section 30-4306, and the trustee is not liable for

the action.

(b) A directed trustee must not comply with a trust director's exercise or nonexercise of a

power of direction or further power under subdivision (b)(1) of section 30-4306 to the

extent that by complying the trustee would engage in willful misconduct.

(c) A directed trustee must determine that the trust director's exercise of power of direction

under subsection (a) of section 30-4306 or appropriation of further power under

subsection (b) of section 30-4306 is granted by the terms of the trust pursuant to

subsection (c) of section 30-4306.

(d) An exercise of a power of direction under which a trust director may release a trustee or

another trust director from liability for breach of trust is not effective if:

(1) the breach involved the trustee's or other director's willful misconduct;

(2) the release was induced by improper conduct of the trustee or other director in

procuring the release; or

(3) at the time of the release, the director did not know the material facts relating to the

breach.

(e) A directed trustee that has reasonable doubt about its duty under this section may petition

the court for instructions.

(f) The terms of a trust may impose a duty or liability on a directed trustee in addition to the

duties and liabilities under this section.

(UDTA 10)



__________________________________________________________________________

§ 30-4311. (UDTA 11) No duty to monitor, inform, or advise.





§ 30-4311. (UDTA 11) No duty to monitor, inform, or advise

(UDTA 11)

(a) Subject to section 30-4311, a trustee shall provide information to a trust director to the

extent the information is reasonably related both to:

(1) the powers or duties of the trustee; and

(2) the powers or duties of the director.

(b) Subject to section 30-4311, a trust director shall provide information to a trustee or another

trust director to the extent the information is reasonably related both to:

(1) the powers or duties of the director; and

(2) the powers or duties of the trustee or other director.

(c) A trustee that acts in reliance on information provided by a trust director is not liable for a

breach of trust to the extent the breach resulted from the reliance, unless by so acting the

trustee engages in willful misconduct.

(d) A trust director that acts in reliance on information provided by a trustee or another trust

director is not liable for a breach of trust to the extent the breach resulted from the

reliance, unless by so acting the trust director engages in willful misconduct.

(a) Unless the terms of a trust provide otherwise:



__________________________________________________________________________

§ 30-4312. (UDTA 12) Application to cotrustee.





§ 30-4312. (UDTA 12) Application to cotrustee

(UDTA 12) The terms of a trust may relieve a cotrustee from duty and liability with respect to

another cotrustee's exercise or nonexercise of a power of the other cotrustee to the same extent

that in a directed trust a directed trustee is relieved from duty and liability with respect to a trust

(1) a trustee does not have a duty to:

(A) monitor a trust director; or

(B) inform or give advice to a settlor, beneficiary, trustee, or trust director

concerning an instance in which the trustee might have acted differently

than the director; and

(2) by taking an action described in subdivision (a)(1) of this section, a trustee does

not assume the duty excluded by such subdivision.

(b) Unless the terms of a trust provide otherwise:

(1) a trust director does not have a duty to:

(A) monitor a trustee or another trust director; or

(B) inform or give advice to a settlor, beneficiary, trustee, or another trust

director concerning an instance in which the director might have acted

differently than a trustee or another trust director; and

(2) by taking an action described in subdivision (b)(1) of this section, a trust director

does not assume the duty excluded by such subdivision.

director's power of direction under sections 30-4309 to 30-4311.



__________________________________________________________________________

§ 30-4313. (UDTA 13) Limitation of action against trust director.





§ 30-4313. (UDTA 13) Limitation of action against trust director

(UDTA 13)



__________________________________________________________________________

§ 30-4314. (UDTA 14) Defenses in action against trust director.




(a) An action against a trust director for breach of trust must be commenced within the same

limitation period as under section 30-3894 for an action for breach of trust against a

trustee in a like position and under similar circumstances.

(b) A report or accounting has the same effect on the limitation period for an action against a

trust director for breach of trust that the report or accounting would have under section 30-

3894 in an action for breach of trust against a trustee in a like position and under similar

circumstances.


§ 30-4314. (UDTA 14) Defenses in action against trust director

(UDTA 14) In an action against a trust director for breach of trust, the director may assert the

same defenses a trustee in a like position and under similar circumstances could assert in an

action for breach of trust against the trustee.



__________________________________________________________________________

§ 30-4315. (UDTA 15) Jurisdiction over trust director.





§ 30-4315. (UDTA 15) Jurisdiction over trust director

(UDTA 15)



__________________________________________________________________________

§ 30-4316. (UDTA 16) Office of trust director.


(a) By accepting appointment as a trust director of a trust subject to the Nebraska Uniform

Directed Trust Act, the director submits to personal jurisdiction of the courts of this state

regarding any matter related to a power or duty of the director.

(b) This section does not preclude other methods of obtaining jurisdiction over a trust director.




§ 30-4316. (UDTA 16) Office of trust director

(UDTA 16) Unless the terms of a trust provide otherwise, the rules applicable to a trustee apply to

a trust director regarding the following matters:



__________________________________________________________________________

§ 30-4317. (UDTA 17) Uniformity of application and construction.





§ 30-4317. (UDTA 17) Uniformity of application and construction

(UDTA 17) In applying and construing the Nebraska Uniform Directed Trust Act, consideration

must be given to the need to promote uniformity of the law with respect to its subject matter

among states that enact it.

(1) acceptance under section 30-3857 ;

(2) giving of bond to secure performance under section 30-3858 ;

(3) reasonable compensation under section 30-3864 ;

(4) resignation under section 30-3861 ;

(5) removal under section 30-3862 ; and

(6) vacancy and appointment of successor under section 30-3860.



__________________________________________________________________________

§ 30-4318. (UDTA 18) Electronic records and signatures.





§ 30-4318. (UDTA 18) Electronic records and signatures

(UDTA 18) The provisions of the Nebraska Uniform Directed Trust Act governing the legal effect,

validity, or enforceability of electronic records or electronic signatures, and of contracts formed or

performed with the use of such records or signatures, conform to the requirements of section 102

of the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7002, as such

section existed on January 1 immediately preceding January 1, 2005, and supersede, modify, and

limit the requirements of the Electronic Signatures in Global and National Commerce Act.



__________________________________________________________________________

§ 30-4319. Date; applicability.





§ 30-4319. Date; applicability

(a) Except as otherwise provided in the Nebraska Uniform Directed Trust Act, on January 1,

2021:



(1) the Nebraska Uniform Directed Trust Act applies to all trusts created before, on, or

after January 1, 2021;

(2) the Nebraska Uniform Directed Trust Act applies to all judicial proceedings

concerning trust directors, trustees, and cotrustees commenced on or after

January 1, 2021;

(3) the Nebraska Uniform Directed Trust Act applies to judicial proceedings

concerning trusts commenced before January 1, 2021, unless the court finds that

application of a particular provision of the Nebraska Uniform Directed Trust Act

would substantially interfere with the effective conduct of the judicial proceedings

or prejudice the rights of the parties, in which case the particular provision of the

Nebraska Uniform Directed Trust Act does not apply and the superseded law

applies; and

(4) an act done before January 1, 2021, is not affected by the Nebraska Uniform

Directed Trust Act.

(b) If a right is acquired, extinguished, or barred upon the expiration of a prescribed period

that has commenced to run under any other statute before January 1, 2021, that statute

continues to apply to the right even if it has been repealed or superseded.


Family Farm and Ranch Succession

Planning in a Changing Agricultural

Landscape

Anthony Aerts, Esq. Rembolt Ludtke


Embassy Suites

La Vista, NE

NOTES

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Guardianship and Conservatorship Update

Hon. Todd Hutton

Judge of the County Court, 2nd Judicial District

Hon. Holly Parsley

Judge of the County Court, 3rd Judicial District

Susan J. Spahn, Esq.

Fitzgerald, Schorr, Barmettler & Brennan, P.C., L.L.O.

William J. Lindsay, Jr., Esq.

Gross & Welch, P.C., L.L.O.

Lisa Line, Esq.

Brodkey, Cuddigan, Peebles, Belmont & Line, LLP


Embassy Suites

La Vista, NE


1

Guardianship & Conservatorship Rule Amendments

William J. Lindsay Jr

Gross & Welch PC LLO

Summary of Rule Changes

• Opt out of Notice instead of Opt‐In §6‐1433

• Personal & Financial Information, Bank statements and brokeragestatements generally not to be sent to interested persons §6‐1433

• What annual filings are waived §6‐1433

• Limited Payment of attorney fees authorized without court pre‐approval §6‐1437

• Standby Guardian listing of what is to be filed upon activation ofappointment §6‐1443.01

• Generally Effective 04‐01‐2020

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Opt out for Receiving Annual Reports

• Annual reports previously required an interested person to sign andfile a request for notice to receive annual reports.

• For new appointments starting 4/1/2020 and for all cases starting1/1/2021, this process is reversed. All interested persons will receiveannual reports unless they sign and file a waiver form.

• Court may order the new rules to apply for appointments madebefore 4/1/2020.

• Someone who waives receiving these reports may request that theinterested person start receiving reports again.

What is Waived by Filing the Waiver of Annual Reports Form• Annual Report of Guardian and any associated accounting and otherdocuments.

• Annual Report of Conservator and any associated accounting andother documents.

• Application for Approval of Fees.

• Application for Approval of Annual Accounting

• Notices of hearing on any of the above filings.

• Sending copies of any other filings is not waived.

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Interested Persons

• This varies from time to time. §30‐2601.01• For purposes of article 26 of the Nebraska Probate Code, interested personmeans children, spouses, those persons who would be the heirs if the wardor person alleged to be incapacitated died without leaving a valid will whoare adults and any trustee of any trust executed by the ward or personalleged to be incapacitated.

• The meaning of interested person as it relates to particular persons mayvary from time to time and must be determined according to the particularpurposes of, and matter involved in, any proceeding.

• If there are no persons identified as interested persons above, theninterested person shall also include any person or entity named as adevisee in the most recently executed will of the ward or person alleged tobe incapacitated

Interested Persons Post‐Death

• After the death of a ward, interested person also includes thepersonal representative of a deceased ward's estate, the deceasedward's heirs in an intestate estate, and the deceased ward's deviseesin a testate estate. §30‐2601.01.

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Reimbursement of Expenses

• Personal Representatives may be reimbursed up to $500 for pre‐death claims without specifically informing the Court (up from $250)§6‐1437(A).

• Guardian or Conservator may be reimbursed for claims (this does notinclude compensation) up to $500.00 without prior court order, §6‐1437(B).

• Guardian or conservator may pay up to $1,000 of attorney fees peryear without prior court order §6‐1437(C).

• This does not apply to an attorney serving as guardian or conservator.• All attorney fees remain subject to court review. §6‐1437(C)(2)

Initial Inventory and Due Date for Annual Report• The annual reporting period will be for one year starting with the datethat the order of appointment is entered.

• The order is entered on the date on which the clerk’s seal is placed onthe order. §25‐1301(3).

• The due date of the annual reports will be 30 days after the one yearanniversary of the date of appointment. §6‐1442(B).

• Initial Inventory remains due 30 days after appointment. §6‐1442(A).

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What is Sent to Recipients of Annual Reports

• Annual Report of Guardian and any associated accounting and otherdocuments.

• Annual Report of Conservator and any associated accounting andother documents.

• Application for Approval of Fees.

• Application for Approval of Annual Accounting

• Notices of hearing on any of the above filings.

• Bank statements and brokerage statements are not sent to recipientsunless ordered by the court, but are filed with the court.

Budget Process

• The Court may allow a variance of up to 10% over the originalbudgeted amounts in its order approving the budget.

• The intent is to allow budgets to continue for several years.

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Guardian with No Authority over Estate

• Will not need to file an inventory unless the guardian becomes a representative payee.

• If the guardian becomes a representative payee the guardian will need to file an initial inventory and will need to account

Certificate of Proof of Possession

• The form remains available.

• It will not be required to be filed unless ordered by the Court.

• §6‐1442(C)

• See also §6‐1443(D)

• Note Letters restrictions now limited to no cash withdrawals or cash back without court order.

• Letters are to be filed with the Register of Deeds within a reasonable time. §6‐1443(F)

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Standby Guardian

• Within 30 days after filing assumption of authority forms must file

• General Information Form

• Address Information Form

• Personal and Financial Information Form

• Inventory, Affidavit of Due Diligence and Certificate of Mailing

• Within 30 days of receiving letters file Financial Institution Receipt ofLetters Form.

• §6‐1443.01

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Secure Act and Planning for Minors

William J. Lindsay, Jr., Esq.

Gross & Welch, P.C., L.L.O.


Embassy Suites

La Vista, NE


3/2/2020

1

SECURE ACT AND MINORSWilliam J Lindsay Jr

Gross & Welch PC LLO

Minority

• Nebraska’s age is 19.

• A person under age 19 who is married is not a minor

• An emancipated person is not a minor

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3/2/2020

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Minority Continued

• What about an 18 year old from Nebraska going to college in Iowa?

• Where parents of the child are separated by a decree of divorce, the child's domicilenormally follows that of the parent who has custody by virtue of the decree of divorce.

Palagi v. Palagi, 10 Neb.App. 231, 627 N.W.2d 765, (2001)

• A minor child may acquire a domicile of choice only if he or she is emancipated. Id.

Minor has some authority at 18

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3

Secure Act Beneficiaries

• Officially three categories

• Beneficiary

• Designated Beneficiary

• Eligible Designated Beneficiary

• 4th Category “Semi‐Eligible Beneficiary”

• Minor child of the participant while a minor is an EDB, then uponreaching majority becomes a DB.

Who is a Minor under Secure Act

• State law applies to some extent

• There is one exception under the Secure Act

• 401(a)(9)(E)(iii) Special Rule For Children— Subject to subparagraph(F), an individual described in clause (ii)(II) shall cease to be an eligibledesignated beneficiary as of the date the individual reaches majorityand any remainder of the portion of the individual's interest to whichsubparagraph (H)(ii) applies shall be distributed within 10 years aftersuch date.

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Exception under 401(a)()(F)

• 401(a)(9)(F) Treatment Of Payments To Children— Underregulations prescribed by the Secretary, for purposes of thisparagraph, any amount paid to a child shall be treated as if it hadbeen paid to the surviving spouse if such amount will become payableto the surviving spouse upon such child reaching majority (or otherdesignated event permitted under regulations).

• There is a special rule involving education.

Special Education Rule

• Q‐15. Are there special rules applicable to payments made under a defined benefit plan orannuity contract to a surviving child?

• A‐15. Yes, Pursuant to section 401(a)(9)(F), payments under a defined benefit plan or annuitycontract that are made to an employee's child until such child reaches the age of majority (ordies, if earlier) may be treated, for purposes of section 401(a)(9), as if such payments were madeto the surviving spouse to the extent they become payable to the surviving spouse upon cessationof the payments to the child. For purposes of the preceding sentence, a child may be treated ashaving not reached the age of majority if the child has not completed a specified course ofeducation and is under the age of 26. In addition, a child who is disabled within the meaning ofsection 72(m)(7) when the child reaches the age of majority may be treated as having notreached the age of majority so long as the child continues to be disabled. Thus, when paymentsdescribed in this paragraph A‐15 become payable to the surviving spouse because the childattains the age of majority, recovers from a disabling illness, dies, or completes a specified courseof education, there is not an increase in benefits under A1 of this section. Likewise, the age ofchild receiving such payments is not taken into consideration for purposes of the minimumincidental benefit requirement of A‐2 of this section.

• Treasury Regulation § 1.401(a)(9)‐6 Required Minimum Distributions For Defined Benefit PlansAnd Annuity Contracts.

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Course of Education

• There is no definition of specified course of education.

• Does a college degree in math when the child then goes to law schoolthe next school year meet the requirement?

• What about a student who takes a gap year after reaching age 19?

• What about a student who completes high school while age 19?

• What about vocational school?

• What is the effect of an associates degree?

Children affected

• A stepchild does not qualify as an EDB under the statute. Note theSocial Security Act specifically includes stepchildren, this act does not.

• 401(a)(9)(E)(ii)(II)— subject to clause (iii), a child of the employeewho has not reached majority (within the meaning of subparagraph(F)),

• Under Nebraska law a stepchild is not a child of the employee.

• Who is a child of the employee under Nebraska law?

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Child for purpose of the Probate Code

• 30‐2309. Meaning of child and related terms.If, for purposes of intestate succession, a relationship of parent and child must be established todetermine succession by, through, or from a person,

• (1) an adopted person is the child of an adopting parent and not of the natural parents exceptthat adoption of a child by the spouse of a natural parent has no effect on the relationshipbetween the child and that natural parent.

• (2) in cases not covered by (1), a person born out of wedlock is a child of the mother. That personis also a child of the father, if:

• (i) the natural parents participated in a marriage ceremony before or after the birth of the child,even though the attempted marriage is void; or

• (ii) the paternity is established by an adjudication before the death of the father or is establishedthereafter by strict, clear and convincing proof. The open cohabitation of the mother and allegedfather during the period of conception shall be admissible as evidence of paternity. The paternityestablished under this subparagraph (ii) is ineffective to qualify the father or his kindred to inheritfrom or through the child unless the father has openly treated the child as his, and has notrefused to support the child.

Social Security Benefits

• The court determined whether”…(U)nder Nebraska intestacy law, a childconceived after her biological father's death through intrauterineinsemination can inherit from her father's intestate estate.”

• Amen v. Astrue, 284 Neb. 691, 822 N.W.2d 419, (2012)

• The court stated that the heir must be conceived before the father's death.Therefore, our answer to the certified question is no.

• In determining whether an applicant is the child or parent of [an] insuredindividual for purposes of this subchapter, the Commissioner of SocialSecurity shall apply [the intestacy law of the insured individual's domiciliaryState]. Astrue v. Capato, 132 S.Ct. 2021, 566 U.S. 541, 182 L.Ed.2d 887, 80U.S.L.W. 4369 (2012)

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Minors who Must take out over 10 Years

• Stepchildren who have not been adopted.• Nieces or nephews• Grandchildren.• John is 6 and has a baby sister Janet who is 3 months when their parentdies. Both are EDB’s. However, if John dies, Janet must take out his share ofthe IRA over 10 years. Janet is not an EDB for John’s share of the IRA.

• If one parent dies and the other dies 6 months later

• If rollover has been completed children are EDB’s of surviving parent

• If rollover has not been completed they are EDB’s of surviving parent butmust take out over 10 years of death of first parent to die.

Effect of Parents’ deaths in common accident

• Parents die in a common accident• Under Uniform Simultaneous Death Act both have predeceased the other.• Thus children as contingent beneficiaries are the beneficiaries of eachparent.

• 30‐122. Simultaneous death of beneficiaries of another person'sdisposition of property.Where two or more beneficiaries are designated to take successively byreason of survivorship under another person's disposition of property andthere is no sufficient evidence that these beneficiaries have died otherwisethan simultaneously the property thus disposed of shall be divided into asmany equal portions as there are successive beneficiaries and theseportions shall be distributed respectively to those who would have taken inthe event that each designated beneficiary had survived.

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Provisions that Provide Otherwise

• However if there is a survivorship clause where Tom survived Mary questions arise.

• 30‐126. Simultaneous death; sections not applicable if decedent provides otherwise.Sections 30‐121 to 30‐128 shall not apply in the case of wills, living trusts, deeds, or contracts of insurance wherein provision has been made for distribution of property different from the provisions of sections 30‐121 to 30‐128.

• Nebraska adopted the act in 1947 and it will need to be updated to answer the question of whether a will can provide otherwise for non‐probate assets.

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PLANNING FOR A MINOR AND EFFECT OF THE SECURE ACT

William J. Lindsay Jr. Gross & Welch, P.C., L.L.O.

February 23, 2020

2

WILLIAM J. LINDSAY, JR.

EDUCATION: Creighton University, B.S. (Math), cum laude, 1975 Creighton University, J.D., cum laude, 1978 University of Florida, L.L.M. (Taxation), 1979

ADMITTED: Nebraska State Bar Association, 1978 U.S. District Court - Nebraska, 1978 U.S. Tax Court, 1985

MEMBER: Nebraska State Bar Association (NSBA) --Member, Real Property & Probate Section --Member, Elder Law Section --Member, Legislation Committee

Omaha Bar Association American College of Trust and Estate Counsel (ACTEC) Omaha Estate Planning Council

PRESENT AFFILIATION: Gross & Welch, P.C., L.L.O. Omaha, Nebraska

OTHER INFORMATION: --Member informal study group for changes in guardianship and conservatorship laws (1996-1997)

--Member Uniform Trust Code Study Committee 2001 - 2003 Interim Study Resolutions – Committee’s Report was

posted on NSBA website --Member Nebraska Supreme Court Committee Technology Committee (1999-2019) --Member Uniform Power of Attorney Study Committee --Member Nebraska Supreme Court Commission on Guardianships & Conservatorships (2013-Present) --Member Forms Committee Revising Guardianship & Conservatorship Forms (2013-Present) Speaker at numerous NCLE seminars

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I. WHAT IS A MINOR

Under the Nebraska statute §43-2101(1) a person who is under 19 years of age is a minor. Nebraska is one of three states whose age of majority is not 18. Once a person becomes or reaches the age of majority (19 as described above) a person is considered an adult.1

Minority can end earlier than 18 if a person marries under the age of 19. It can also end earlier than age 19 if the child is emancipated.

The age for marriage in Nebraska is 17.2 However, parental consent is required if the child is under 19.3

A consent to marriage under ag 19 can be given be given as follows:

1. Either of the parents if the parents are living together.2. The parent having legal custody of the minor if the parents are living separate and

apart from each other.3. The surviving parent if one of the parents is deceased.4. The guardian, conservator or person under whose care and government the minor

may be. If both parents of the minor are deceased or if the guardian, conservatoror person has the legal and actual custody of the minor.

Remember that if the minor marries the minority ends. Thus, a minor who is married and who is 17 years old is an adult. This means they have all the normal rights of any adult except those that are otherwise limited by age. For example, alcohol consumption and recently tobacco consumption requires age 21.

Emancipation means the freeing of the child for a portion of its minority from the care, custody, control, and service of its parents. Emancipation occurs where the parent renounces all the legal duties and voluntarily surrenders all the legal rights of his or her position to the child or to others. In determining whether a child has been emancipated, the intention of the parent governs. A child who moves out of a custodial parent’s home for a short time is not emancipated if that child continues to be supported by a parent. 4

Moreover, a child who is attending college full-time, living with a parent during vacations and holidays, and who is employed only in the summer, is not emancipated. Likewise, a child who lives away from home but whose parents pay a substantial amount of money for medical and educational expenses and independent-living arrangements is not emancipated.5

1 §43-2101(2) 2 §42-102 3 §42-105 4 Palagi v. Palagi, 10 Neb.App. 231, 627 N.W.2d 765, (2001) 5 Id.

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II. AUTHORITY OF A MINOR

There are some authorities granted to a minor.

For example, a minor age 17, with consent of the parent, or a minor who is 18 can enlistin the military.6 An 18-year old may make a will.

An 18-year old can enter a binding contract or least of any type and is legally responsible for the contract or lease including legal responsibility to third parties.7

The 18-year old minor can execute, sign, authorize, or otherwise authenticate and effect a financing statement, promissory note or other instrument evidencing an obligation to pay, or a mortgage, trust deed, security agreement, financing statement or other security instrument to grant a lien or security interest in either real or personal property, including fixtures, and is legally responsible for the document including legal responsibility to third parties.8

The minor can also acquire or convey title to property and has legal responsibility for the acquisition or conveyance including legal responsibilities to third parties.9

An 18-year old minor may consent to mental health services for himself or herself without the consent of a parent or guardian.10

There are two bills in the 2020 Nebraska legislature that would add to §43-2101. These have not yet passed. If they do pass, they would become effective 90 days after the end of the 2020 legislative session.

The first is L.B. 1036. It would allow an 18-year-old to make all his or her health care decisions without the consent of a parent or guardian. It would also allow anyone under age 19 who is committed to the Department of Correctional Services for secure care to consent to or make decisions regarding medical care, mental health services or related services while committed to the Department without the consent of the person’s parents or guardian. As the Bill would provide for an 18-year-old to make a medical decision, this applies to those under 18 who are in that situation.

L.B. 756 would allow an 18-year-old to buy and sell stocks, bonds, mutual funds, and all other types of securities and financial instruments, whether held directly, indirectly, or in any other manner, but would not include commodity futures contracts or call or put options of stocks or stock indexes.

6 10 U.S.C. §505(a) 7 §43-2101(2)(a)(i) 8 §43-2101(2)(a)(ii) 9 §43-2101(2)(a)(iii) 10 §43-2101(b)

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A minor does have additional authority to act under certain circumstances if there has been a testamentary appointment of a guardian a minor who is at least 14 years old may prevent the appointment of a testamentary guardian from becoming effective or may cause a previously accepted appointment to terminate by filing with the Probate Court a written objection to the appointment before it is accepted or within 30 days after notice of the acceptance. This does not prevent a regular guardianship appointment.11

If the minor who’s at least 14 nominates a guardian, the Court is to appoint that guardian unless the Court finds that the appointment of that particular guardian is contrary to the best interests of the minor.12

III. TESTAMENTARY APPOINTMENT OF A GUARDIAN FOR MINORS

A minor may need to have a guardian appointed. If a parent dies and if a guardian isneeded, the Will of the deceased parent may nominate a guardian. If one parent is incapacitated and the other parent has died, the Will testamentary appointment takes place. The procedure is to file the Acceptance of Appointment in the probate proceedings.13

A testamentary appointment may be accomplished by filing the Acceptance on the Will probated in another state which is the domicile. Once the appointment has been accepted, written notice must be given by the guardian to the minor and to the person having care or to the minors nearest adult relation.

When planning for the possible testamentary appointment of a guardian for a minor, the Will should consider two possibilities, first that the parent involved is the survivor and second that the surviving parent may not have made a nomination.

For example, the Will may provide something like I nominate [Name of Guardian] as guardian for my minor children in the event of my death, and if my spouse does not survive me, or if my spouse does survive me, but does not make an effective appointment of a guardian in my spouse’s Will, I nominate [Name of Guardian] as guardian for my minor children.

Under the Nebraska adoption statutes, an adopted child is treated the same as a biological child. Thus, an adoptive parent has the same authority to make a testamentary appointment for a guardian of a minor as does the other parent who might be a biological parent. For example, if a stepparent adopts a child, that child is now legally the child of the former stepparent.

A stepparent does not have this authority. This is because the child is not legally the child of the stepparent.

In a situation involving a divorce, if there is a potential problem with one of the former spouses, the attorneys in the divorce proceeding need to consider seriously whether there should be a finding of unfit parent.

11 §30-2607 12 §30-2610 13 §30-2606

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Nebraska has what is known as the “parental preference principle”. If there is an attempt to appoint a guardian when there is a parent still available (whether natural or adoptive), the parental preference principle applies.14

In the case of a child born out of wedlock where the other parent has died, the Court is to consider the wishes of the deceased parent as expressed in a valid Will. If someone other than the natural parent is named as guardian for the minor children, the Court is to take into consideration the designation by the deceased parent. In determining whether the natural parent should be given priority, the Court is to also consider the natural parent’s acknowledgment of paternity, payment of child support and whether the natural parent is a fit, proper and suitable custodial parent for the child.15

IV. NATURAL GUARDIANS

The parents are the natural guardians of their minor children.16 They are entitled to thecustody of their children and to direct their education, assuming they are competent themselves to transact their own business and are not otherwise unsuitable. If one of them dies or is disqualified for acting or has abandoned the family, the guardianship is upon the other parent except as otherwise provided in §30-2608. Thus, the presumption is the surviving parent is the natural guardian. Remember, an adoptive parent is treated the same as a biological parent.

What happens if you have one parent available and that parent is dying? The parent still has capacity and wants to continue to act as a parent. Nebraska law provides for the appointment of a stand-by guardian for a minor whose parent is chronically ill or is near death.17 The appointment of a stand-by guardian does not suspend or terminate the parental rights of custody to the minor. The stand-by guardian’s authority takes effect when the minor is left without the remaining parent upon the death of the parent, the mental incapacity of the parent, or the physical debilitation and consent of the parent.

Another possibility if the diagnosis has death occurring within six months is to delegate authority under §30-2604. A parent by a properly executed Power of Attorney may delegate to another person for up to six months any powers regarding the care, custody or property of the minor child except the power to consent to marriage or adoption of a minor ward. The parent of a minor who is at least 18 years old, if the minor is not a ward of the state, may delegate to the minor for a period not exceeding one year the parent’s authority to consent to the minor’s own health care and medical treatment.

Thus, we have two situations. If the minor is 18 years old, medical care decision making authority can be delegated by a Power of Attorney directly to the minor for the remaining term of the minority of the child.

14 In re Guardianship of Elizabeth H., 17 Neb. App. 752, 771 N.W.2d 185 (2009) In re Guardianship & Conservatorship of McDowell, 17 Neb. App. 340, 762 N.W.2d 615 (2009) 15 §30-2608(b) 16 §30-2608(a) 17 §30-2608

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The other possibility would be to delegate authority to the person who will be making decisions for a period of up to six months. This would also be done by a Power of Attorney.18

In either event there would be a concern that the death of the parent may occur sooner than expected. The planning under this section should also include the testamentary appointment of a guardian, which if the minor is at least 14 is subject to the minor’s veto. Thus, when the Will is probated, somebody can have authority.

An unanswered question is what happens if the parent grants the authority for one year for the minor to make the minor’s own health care decisions and the parent dies. Based upon the general principles of the law of Powers of Attorney, once the minor knows that the parent is dead, that the minor’s authority under §30-2604 ceases. Depending upon what happens in the 2020 Nebraska legislature, this may no longer be an issue as discussed elsewhere in this outline there is a bill that would allow a minor to make the minor’s own health care decisions.

Nothing in §30-2604 states the date on which the six-month delegation starts. It merely limits the time to six months. For that reason, you may wish to consider a temporary delegation to become effective upon the parent’s incapacity for six months.

What about a testamentary appointment of a conservator for a minor? Nothing in the Nebraska statutes for the appointment of a conservator for a minor is like the testamentary appointment of a guardian for a minor. However, it is good evidence. The parent’s intent would be considered highly probative by most courts and is likely to be considered. Although it is not a legally binding nomination, it is highly recommended.

V. UNIFORM TRANSFERS TO MINORS ACT

Nebraska, along with many other states, has adopted the Uniform Transfers to Minors Act. The Nebraska Act is contained at §§43-2701 to 43-2724.

Beneficiary designations, trusts, and wills need to all consider the use of the Nebraska Uniform Transfers to Minors Act.

If a transfer is authorized by a will or by a trust, the Personal Representative or Trustee may make a transfer to a custodian under the Nebraska Uniform Transfers to Minors Act as authorized by the will or trust. If the Testator or Settlor has nominated a custodian, the transfer must be made to that person. If they have not nominated a custodian, the Personal Representative or Trustee may designate the custodian.19

It is important to remember that there are limits on the ability of a transfer by a Personal Representative or Trustee to a custodian under the UTMA when the will or trust does not contain an authorization to do so. If the will or trust does not contain this authorization, the Personal Representative or Trustee must make a determination that the transfer is in the best interest of the

18 §30-2604 19 §43-2706

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minor, that the transfer is not prohibited by or inconsistent with the will or trust, and if it exceeds $10,000 of value, a court authorization is required to complete the transfer.20 The beneficiary designation may be made to a custodian for benefit of the minor and a successor custodian could also be named in the event the custodian dies before the individual creating the beneficiary designation.

It is also important to remember that if the transfer is established directly by the Settlor, by the Testator, or is made under the authority granted by either of them, as well as by a beneficiary designation, that it effects the term of the custodianship. If the irrevocable transfer is made by the person while they are alive or if it is made under the provisions of §43-2706, for example, under a power granted by the Testator, the custodianship with regard to that property does not end until age 21.21

If it is transferred in any other fashion, such as without the authority in the will or trust and even with a court order, the custodianship ends at age 19, the age of majority, but could end earlier. For example, if an 18-year-old gets married, their minority ends and the custodianship ends.22 In any event, the custodianship ends at the minor’s death.23

Let us say that the minor is a niece or nephew of the person doing their estate planning. One thing to consider is Nebraska inheritance tax. Remember, Class 2 beneficiaries have a $15,000 exemption and have a rate of 13%.

If a college savings plan (only the Nebraska state authorized plan currently held through First National Bank of Omaha) is used for the benefit of the minor, the funds in the college savings plan are not treated for inheritance tax purposes as owned by the person doing the estate planning and are not treated as owned by the beneficiary, the minor niece or nephew.24

Please remember to be certain to name a successor participant or successor owner. If you fail to do this, the beneficiary who is a minor becomes the owner. This may be contrary to what your client wants.25

If there is a conservatorship established as a result of an accident in which the minor is involved, remember that that settlement must be approved by the court. A conservatorship will need to be established. All the bonding requirements are involved or there must be restricted accounts. If there are restricted accounts, the court will require proof that the accounts are indeed restricted. The attorney does have a risk of potential liability if they do not make this clear to the conservator that funds can only be removed by court order.

20 §43-2707 21 §43-2721(1) 22 §43-2721(2) 23 §43-2721(3) 24 §85-1809(1) 25 §85-1809(9)

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It is recommended that in these cases that the attorney make certain that the account is established with the financial institution as a restricted account and that the financial institution has signed an acknowledgment that they have received that order.

Also, remember to advise the parents that this does not alter their primary obligation of support. If the accounts are restricted, they need to get a court order to have any funds released. Anything that comes within the normal obligation of support depends upon the parents’ ability to provide for that support.

VI. SECURE ACT AND MINORS

The Secure Act became effective January 1, 2020. It was passed as part of the bill toextend government appropriations through September 30, 2020. The Secure Act is generally effective for deaths occurring on or after January 1, 2020 when dealing with beneficiary designations. There is one exception to this. If a beneficiary is receiving as a result of a death of someone who died before 2020 and that beneficiary dies, the Secure Act will apply.

Officially there are three categories of beneficiaries of retirement plans after the Secure Act. These are shown below.

Beneficiary – A beneficiary is anyone who is entitled to receive under a retirement plan as a result of the death of the participant. Usually most beneficiary designations are set up with a primary beneficiary and a contingent beneficiary. If the primary beneficiary survives the participant, the primary beneficiary will receive the proceeds.26

Designated Beneficiary (DB) -- The next category is a designated beneficiary. A designated beneficiary is an individual who is a beneficiary. Remember, that a contingent beneficiary is not a beneficiary if the primary beneficiary survives the participant.

Eligible Designated Beneficiary (EDB) -- The new category is an eligible designated beneficiary (EDB). An eligible designated beneficiary is someone who will be able to use the old rules allowing the use of a life expectancy. There are five categories of eligible designated beneficiary.

26 Please note that if it is a qualified plan subject to ERISA, if the primary beneficiary dies within a very short period of time, we would need to look at Federal common law to see if they have adopted the survivorship provisions of state law. Nebraska adopted the Uniform Simultaneous Death Act in 1947. §30-121 provides that if the title to property depends upon the priority of death and when there is no sufficient evidence that the person died otherwise than simultaneously, the property of each person is disposed of as if he had survived except as otherwise provided in the statute. Thus, on an IRA if the participant and the primary beneficiary die in a common accident, a primary beneficiary will be treated as having predeceased the participant. Remember that a retirement plan can contain life insurance. §30-124 deals with what happens when the insured and the beneficiary in the police of life insurance die simultaneously. §30-126 provides that the decedent can provide otherwise with regard to simultaneous death. However, the Act was adopted in 1947 and needs to be updated to clarify its effect on non-probate dispositions.

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Summary Chart Old Law Categories Secure Act Categories Beneficiaries Beneficiaries Designated Beneficiaries Designated Beneficiaries

Eligible Designated Beneficiaries Unofficial Category “Semi-Eligible Beneficiaries”

Although officially minor children of the plan participant are eligible designated beneficiaries, they really are in a fourth category. I refer to them as semi-eligible designated beneficiaries. Upon reaching majority the minor who is not otherwise qualified as an eligible designated beneficiary now becomes subject to the 10-year rule.

Under Secure Act who is an Eligible Designated Beneficiary Surviving Spouse Yes Person less than 10 years younger than participant Yes Adult child who is not disabled and not chronically ill No Child who has not yet reached majority Yes, until majority

reached Individual who is disabled meaning he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.*

Yes

Chronically Ill individual who meets certain tests under IRC §7702B(c)(2) as modified by Secure Act.*

Yes

Any other individual or a probate estate No

Beneficiary Required Distribution Requirements

Beneficiary Old law Secure Act

Spouse Various life expectancy requirements No change

Less than 10 years younger Beneficiary

Various life expectancy requirements No change

Adult Child Various life expectancy requirements End of 10th year after the year in which death occurred

Child of Plan participant who is under Majority

Various life expectancy requirements Old rules until that child reaches majority then starting with 10-year rule at that point

Probate Estate 5-year rule means 12/31 of the year which is 5 years after the year including death. E.g. DOD 9/9/19 ends 12/31/2024

No change

Death of Eligible Designated Beneficiary

Continue current distributions 10-year rule starting with death of eligible designated beneficiary

Minor child of someone other than plan participant

Various life expectancy requirements End of 10th year after the year in which death occurred

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The 10-year rule is a change applicable to deaths occurring after December 31, 2019 of plan participants when the beneficiaries are all designated beneficiaries. If there are eligible designated beneficiaries, then you might want to check to see if they need to be separated out from the designated beneficiaries. For a minor who reaches majority, that date will be the starting point for the 10-year rule rather than the death of the plan participant.

If a plan participant dies July 1, 2020, the statute could be read to mean the ending date is July 1, 2030. However, the IRS regulations for the 5-year rule would say that it would be December 31, 2030. It is expected that the IRS will apply the same rules, but the rules have not yet been issued.

I refer to the 10-year rule as a cliff rule. In the example of a person dying July 1, 2020 there is no required minimum distribution in years 1-9. It is possible that there is a required minimum distribution in year of death, the decedent’s RMD, if any.

Under the 5-year rule, the only requirement is that the entire IRA be distributed by the end of the 5-year mark. This is also going to be true for the 10-year rule.

It is possible that there is a required minimum distribution during the year of death. If the plan participant had reached the required beginning date before death, then there is a required minimum distribution for the year of death because the plan participant had one.27

A minor will be subject to the old rules for required minimum distributions until the minor reaches majority. At that point the minor switches to the 10-year rule. In the year in which the minor reaches majority they will have already had a required minimum distribution for that year under the old rules that has to be taken.28

The minors who are eligible designated beneficiaries are only those who are children of the plan participant. The language of the statute appears clear and does not appear to include stepchildren. An adopted child would be included. The Social Security Act specifically includes stepchildren. However, this Act does not.

Minors who are subject to the designated beneficiary rules and the 10-year rule if they are not a minor who is a child of the deceased plan participant. Thus, grandchildren, stepchildren, nieces or nephews, and other minors who are not children of the plan participant are subject to the 10-year rule.

Planning ideas. 1. If the client is stuck with the 10-year rule, Alex could buy life insurance (if eligible).

These funds could then be received and sent aside. Withdrawals could be done in the 10th

27 The Secure Act raises the date for a required beginning date. For those born on or before June 30, 1949 but within 1949 their required beginning date for RMD’s is 2019. They reached 70 ½ in 2019. For those born July 1, 1949 or during the rest of the year, their required beginning date is different. The reach 70 ½ in 2020. In 2020 the age moved from 70 ½ to 72. Thus, there will be no persons who have an initial required minimum distribution in 2020. 28 If a minor is 18 when the plan participant dies in 2020 and reaches 19 in the year 2020, the minor may have a required minimum distribution for 2020 because under the old rules there is a required minimum distribution is the year after the year of death and the minor was subject to those rules until becoming an adult.

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year after death (gaining around 9-10 years of income deferral). The set aside life insurance proceeds could pay the tax.

2. Same as 1 but take part out each year (11 tax years) and use life insurance to pay thetaxes. Could annuitize the life insurance proceeds.

3. H & W each have IRA’s. Buy second to die life insurance policy (could help if onespouse’s health is questionable). Surviving spouse rolls over IRA into separate IRA, sosurviving spouse has 2 IRA’s. Upon death of surviving spouse could invest each onedifferently and could do distributions of one like 1 and the other like in 2.

4. Beneficiary of IRA is charitable remainder annuity trust. Could make distribution periodas long as 20 years (or life) depending upon age of beneficiary and interest rates at dateof funding. Note there will need to be tax advice needed on this one as calculations arecomplex. Make sure durable power of attorney authorizes rollover.

5. Buy life insurance to replace IRA. Use distributions to pay premiums. Life insurance tochildren and IRA to charity. Result no tax. Question, what happens if the policy matures?

6. Lifetime Roth conversions if eligible.7. Using lower income tax brackets with withdrawals during lifetime of the participant,

sometimes exceeding required minimum distributions. Make sure participant uses allavailable deductions, especially medical expenses.

8. Take larger lifetime distributions and spend money, e.g., family vacation.9. Make lifetime charitable gifts from IRA using qualified charitable distributions.10. Update power of attorney to authorize lifetime powers which may be needed. Set up a

written plan which you review annually.11. Remember these plans are subject to Nebraska inheritance tax as well. If Class 2 or 3

make sure that the payment of inheritance tax is properly funded.

VII. KIDDIE TAX

An individual uses IRS Form 8615, Tax for Certain Children Who Have Unearned Income (PDF) to figure their tax on unearned income over $2,200 if the individual under age 18, and in certain situations if the individual is older (see below). Attach Form 8615 to the tax return if all the following conditions are met.

There are special income tax rates on taxes on children. The following two situations may affect the tax and reporting of the unearned income of certain children. The following are the requirements for this special tax rate to be used. Unearned income Is greater than $2,200.00 Parents At least one parent is alive at end of year Return Status The child does not file a joint return for the year Age The child was under age 18 at the end of the tax year or

The child was age 18 at the end of the tax year and the child didn't have earned income that was more than half of the child’s support or The child was a full-time student at least age 19 and under age 24 at the end of the tax year and the child didn't have earned income that was more than half of the child’s support

Filing Requirement A return is required to be filed

https://www.irs.gov/pub/irs-pdf/f8615.pdf

https://www.irs.gov/pub/irs-pdf/f8615.pdf

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Under the 2017 tax law change, beginning in 2018, the tax rates and brackets for the unearned income of certain children were changed and were no longer affected by the tax situation of the child’s parent. Trust tax rates were used.

This use of trust rates was changed by the Secure Act effective for 2019 but optionally affected for 2018.29 Now the parent’s rates are used, and the old rules apply again.

Support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure the child’s support, count support provided by the child, the child’s parents, and others. However, a scholarship isn’t considered support if the child is a full-time student.

29 §501 of the Secure Act.

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Example Calculation of Effect of New Secure Act Rules on Minor Child of Participant

Plan Participant dies at age 69 Date of Death 12/31/2019 1/1/2020 Date of Birth 12/1/2014 12/1/2014 Age at Death of Participant 5.00 5.00 Year in which first RMD due 2020 2021 Minor Age in year first RMD 6 7 Life Expectancy that year 76.7 75.8 Value of IRA 1,000,000.00 1,000,000.00 RMD's Note: No adjustment made to Value of IRA

for withdrawals Old Law RMD New RMD Divisor Divisor

2020 13,037.81 0.00 76.7 2021 13,210.04 13,192.61 75.7 75.8 2022 13,386.88 13,368.98 74.7 74.8 2023 13,568.52 13,550.14 73.7 73.8 2024 13,755.16 13,736.26 72.7 72.8 2025 13,947.00 13,927.58 71.7 71.8 2026 14,144.27 14,124.29 70.7 70.8 2027 14,347.20 14,326.65 69.7 69.8 2028 14,556.04 14,534.88 68.7 68.8 2029 14,771.05 14,749.26 67.7 67.8 2030 14,992.50 14,970.06 66.7 66.8 2031 15,220.70 15,197.57 65.7 65.8 2032 15,455.95 15,432.10 64.7 64.8 2033 15,698.59 15,673.98 63.7 63.8 2034 15,948.96 0.00 62.7 2035 16,207.46 0.00 61.7 2036 16,474.46 0.00 60.7 2037 16,750.42 0.00 59.7 2038 17,035.78 0.00 58.7 2039 17,331.02 0.00 57.7 2040 17,636.68 0.00 56.7 2041 17,953.32 0.00 55.7 2042 18,281.54 0.00 54.7 2043 18,621.97 Entire Balance 53.7


Preventing Attorney Burnout

Chris Aupperle, Esq. NLAP Director


Embassy Suites

La Vista, NE


3/2/2020

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Chris AupperleNLAP Director

The Nebraska Lawyers Assistance Program (NLAP)Presents

Who we help: Lawyers, Judges andLaw students

Who we are: Lawyers and judges whovolunteer their time to help their colleagues in need.

What we offer:Confidential support 24/7Participation is voluntaryCalls can be anonymousReferrals:

Licensed professionals Group support

Peer support

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Stress/Burnout

Work-life balance

Anxiety and Depression

Alcohol/Drug Use Disorders

Cognitive Loss

Compassion Fatigue

Gambling Addiction

Other Mental Health Issues

Stress – 23% of lawyers are experiencing chronic stress.

Depression – lawyers are twice as likely to experience it.

Suicide – 12% of lawyers admitted to contemplating suicide during their career. Lawyer suicide rate is three times higher.

Alcohol Use disorders – 1 in 5 lawyers experience alcohol dependence (three times national average).

Job Satisfaction – Associates in law firm have lowest job satisfaction rates.

Sources: The Prevalence of Substance Use and Other Mental Health Concerns Among American Attorneys, Journal of Addiction Medicine (2016). Forbes Magazine: Happiest and Unhappiest Jobs Survey.

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Lawyers 65Law Students 14Judges 1

80

Substance Use Disorder 31%Mental Health 29%Dual Diagnosis 14%Stress/Life Balance 13%Cognitive Decline 10%Physical Illness/Death 3%

Male 66%Female 34%

Job burnout is a special type of work-related stress — a state of physical or emotional exhaustion that also involves a sense of reduced accomplishment and loss of personal identity.

"Burnout" isn't a medical diagnosis, it’s a description of how job stress is affecting you.

Source: Mayo Clinic

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Competency – Rule 3-501.1“A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, preparation and judgment reasonably necessary for the representation.”

Diligence – Rule 3-501.3“A lawyer shall act with reasonable diligence and promptness in representing a client.”

Communication – Rule 3 – 501.4Generally requires lawyer to keep client reasonably informed, promptly notify client of decisions or circumstances requiring clients decisions, explain matters to allow client to make an informed decision.

Declining or Termination Representation – Rule 3-501.16(a)Applies then the lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client;

Responsibility of Partner or Supervisor – Rule 3-508.1(a) and (b)Partner or lawyers possessing comparable managerial authority shall take reasonable measures to ensure lawyers within the firm conform to Rules of Professional Responsibility.

Lawyer’s having direct supervisory authority over another lawyer shall make reasonable efforts to ensure those lawyers conform to the Rules of Prof. Responsibility.

Duty to Report Misconduct – Rule 3-508.3(a)“A lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.”

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• Have you become cynical or critical at work?

• Do you do dread going to work and have trouble getting started?

• Have you become irritable or impatient with co-workers, customers or clients?

• Do you lack the energy to be consistently productive?

• Do you find it hard to concentrate?

• Do you lack satisfaction from your achievements?

• Do you feel disillusioned about your job?

• Are you using food, drugs or alcohol to feel better or to simply not feel?

• Have your sleep habits changed?

• Are you troubled by unexplained headaches, stomach or other physical ailments?

Source: Mayo Clinic

re·sil·ience (noun): Resilience is the process of adapting well in the face of adversity, trauma, tragedy, threats or significant sources of stress — such as family and relationship problems, serious health problems or workplace and financial stressors. It means "bouncing back" from difficult experiences.

Source: American Psychological Association

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Allows us to respond to stress appropriatelyYou need resilience to effectively tackle everyday stress like managing your workload, dealing with difficult clients, meeting deadlines and finding solutions rather than focusing on problems.

Gives us strength to tackle problemsIf you develop resiliency, you are more likely to perceive stress as a challenge that can be solved with the resources you have available, rather than a threat that invokes survival-based emotions like impatience, defensiveness or hyper-criticality.

Provides the ability to overcome adversityResiliency is more than surviving negative experiences, its learning what will allow you to thrive in the legal profession. To accept change and Loss are part of life.

Helps protect us against mental illnessAccording the Mayo Clinic research, resilience can help protect you from various mental health conditions, such as depression and anxiety. If you already have an existing mental health condition, being resilient can improve your ability to cope with that condition.

Without resiliency a lawyer may turn to unhealthy behaviors to cope with stress

When we lack resilience, lawyers may turn to unhealthy behaviors to cope with stress and loss; Some unhealth coping mechanisms are clearly harmful, such as reliance on alcohol, prescription or recreational drugs, gambling, dysfunctional eating, unhealthy relationships or isolation.

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General Factors• Having supportive relationships in your life

• The capacity to make realistic plans and take steps to carry them out.

• A positive view of yourself and confidence in your strengths and abilities.

• Skills in communication and problem solving.

• The capacity to manage strong feelings and impulses.

Source: American Psychological Association

Profession Specific Challenges:• Adversary System: Its often a profession of wins and losses

• Time Demands: Our calendar is directed by clients and courts – its typically not a40hr/week

• Help Resistant: Lawyers reluctance to ask for help or the lack of help resources

• Nature of the Work: Emotionally charged cases

• How We Work: Independent nature of legal employment

You can build and improve resilience• It takes intentionality and consistency

to make sustained progress.

• Set weekly goals and hold yourselfaccountable (calendar it!).

• Start working on one or two thingsand build on it.

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One of the most important factors in building resiliency is staying connected. Maintain social connections within and outside of the legal profession. Focus on the positive social connections in your life.

Healthy Lawyers: Socially connected Lawyers are more likely to have a positive outlook and to ask for help when they need it.

Warning Sign: Isolation. Only having work related relationships. The feeling of being disconnected from the people in your life.

You will have a lot of demands for your time,compassion and energy – set realistic limitsand expectations. Boundaries are not onlyneeded with clients and staff, but also in ourpersonal relationships.

Healthy Lawyers: Respond to clients in atimely manner but avoid an “24/7” approachto client service. They establish an expectationof timely (not instantaneous) responses toclients.

They put limits on electronic connection thatviolate those boundaries.

Warning Signs: You feel you mustrespond to everyone instantly. Youcannot shut off “work” thoughtsduring non-work time. You start toloose understanding, patience andcompassion for clients or otherpeople in your life.

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Know the difference between perfectionism andstriving for excellence. Great lawyers keep theirfocus on what they need to accomplish to achieveclient outcomes, not being perfect. Perfectionistsare not perfect but rather fear imperfection.

Healthy Lawyers: Focus on effectively andefficiently meeting client needs and achievingclient outcomes, not perfection or the appearanceof perfection.

Warning Signs: Are you being overly self-critical.Perfectionist may be less able to cope with theirself-perceived inability to meet the highstandards they set for themselves. They are oftenvery inefficient in the way they work andprocrastinate because they fear imperfection.

When facing a difficult situation, decide on a solution and take decisive action.Allowing stressful situations to linger will only increase your level of stress andanxiety.

Healthy Lawyers: When faced with a difficult situation, they don’t procrastinate orignore the difficult situation. They take on the situation that is causing them themost stress (i.e. that file on the bottom of the stack or delivering bad news to a client)and take decisive action.

Warning Signs:You are procrastinating andavoiding problems or just wishingthey would go away without havingto face them.

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Avoid blowing the event out of proportion or always going to the “worst case scenario”when problem solving. When struggling with having the right perspective aboutsomething, talk to someone else and get an objective view of the situation.

Healthy Lawyers: Look for broader context and long-term perspective. They don’tmake everything personal and seek the best solution under the circumstances.

Warning Signs: You always seem to focus on the negative. Frequently living in fear ofnegative consequences.

Take mental breaks throughout your day/week and engage in activities that allow you to recharge, so you are ready to be productive at work.

Healthy Lawyers: Take periodic breaks during the day. They eat lunch away from their desk. A walk around the block can give your brain the break it needs. Separate work and personal time. Use mindfulness and mediation to reduce stress and the clutter in our thoughts.

Warning Signs: Sitting at your desk for long hours without a break. Not taking vacations or only taking workcations. Believing that you value is solely hours spent working.

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It may seem obvious, but your physical and mental health are linked. Getting adequate sleep, exercising and good diet will boost your mental health. Make stress reducing activities a part of your daily routine. Try mindfulness and meditation.

Healthy Lawyers: Make self-care a priority in their lives.

Warning Signs: Changes in sleep (not enough, too much), loss of appetite or eating to cope with stress. Unexplained aches and pains that persist.

You can’t drink from an empty glass

Will this decision (job, location, area of law, clients, hours, employer culture) benefit or hinder your mental health? Will you fee inspired? Will you have a sense of purpose? Will there be opportunity for growth in this position. What sacrifices will this job requires? Will you be able to achieve the level of balance you want in your life.

Healthy Lawyers: Consider factors beyondmoney. Make decisions that are consistent withtheir personal values. Reflect prior to makingmajor life decisions.

Warning Signs: Making decisions based solely onfinancial considerations. Impulsive decisionswithout reflection on how the change will fitwithin our personal values and happiness.

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Sometimes despite our best efforts we getoff track and can’t seem to rebound.That’s when its time to ask for help. Aska friend, family member or mentor. Whenthat is not enough, seek professional help.Call NLAP and we will work with you tofind the appropriate resources.

Healthy Lawyers: Realize that asking forhelp is often the quickest and mosteffective way to overcome problems.

Warning Signs: Believing that asking forhelp is a weakness.

Strong Resiliency Weak Resiliency

Connected Isolated

Hopeful Discouraged

Sense of Purpose Going through the motions

Sets Realistic Goals No Goals or unrealistic goals

Flexible, Can Improvise Rigid

Change = Opportunity Change = Threat

Focused on Solutions Focused on problem or blame

Decisive Procrastination / Indecisive

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• Health Care Provider

• Mentor

• Trusted Friend

• Faith leader

• Employee Assistance Program

• Human Resources Professional

• Community Support Groups

• Lawyers Assistance Program

Be proactive – build resilience

Address issues early – don’t wait

Consider your mental health when making life decisions

Watch out for each other

Encourage others to get help

Support those seeking help

Be a voice for change

Hold open, positive conversations about why this is important

Adopt policies that encourage help seeking behavior

For Each Other

For the Profession

For Yourself

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Confidential – protected by Court Rule

24-Hour Helpline

Lawyers & judges helping lawyers, judges and law students – we understand

Help on any issue affecting your professional life

Want to be proactive with the wellness, we can help with that too!

NLAP Helpline: (402) 475-6527or

www.nebar.com/NLAP

Nebraska Lawyer’s Assistance Program

Confidential • 24/7 HelplineLawyers, Judges & Law Students

Chris Aupperle, Director(402) 475-6527 [email protected]

www.nebar.com/NLAP

Help for You, Help for Someone ElseNLAP

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