In the past month, we have seen significant developments in estate planning, business law, elder law, and special needs planning. We have highlighted the most noteworthy developments to ensure you and your firm stay informed of any changes. From a federal case addressing the valuation of terminated trust interests to a Department of Justice (DOJ) notice that longstanding Americans with Disabilities Act (ADA) guidance is unenforceable and new guidance on Trump accounts and artificial intelligence (AI), read on to learn how these developments may impact your practice. 

Estate Planning

Valuation of Terminated QTIP Trust Interests Must Be Based in Part on State Law and Must Account for Gift Taxes

Lewis v. Comm’r (consolidated with McDougall v. Comm’r), T.C.M. (RIA) 2026-058, 2026 WL 2165363 (July 20, 2026)

When Clotilde McDougall passed away in 2011, much of her estate passed to a trust (Residuary Trust) created under the terms of Clotilde’s will, designating her husband, Bruce, as the income beneficiary and their children, Linda Lewis and Peter McDougall, as the remainder beneficiaries. Bruce, as the representative of Clotilde’s estate, elected to treat the Residuary Trust property as qualified terminable interest property (QTIP) eligible for application of the unlimited marital deduction, and the estate claimed a marital deduction of approximately $54 million. In 2016, Bruce and the children, Linda and Peter, entered a nonjudicial agreement to commute the Residuary Trust and distribute all trust assets outright to Bruce; the parties stipulated that the fair market value of the Residuary Trust assets at that time was approximately $117.6 million. The Tax Court previously determined that this counted as a gift from Linda and Peter to Bruce, because they gave up valuable remainder interests (see our previous coverage of McDougall v. Comm’r, 163 T.C. 112 (2024) here), but left the issue of valuation for trial.

Linda’s and Peter’s expert valued each gift at as little as $156,000, arguing that because Bruce possessed a limited power of appointment over the Residuary Trust and could have appointed assets away from Linda and Peter, their gifts had only nominal value because they had only a remote chance of ever receiving trust assets as remainder beneficiaries. Their expert also adjusted Bruce’s life expectancy, treating him as five years younger than his actual age based on research suggesting that high earners tend to outlive the general population.

The Commissioner of Internal Revenue’s (Commissioner) primary position was that each gift was worth $53,408,746 based on the actuarial tables prescribed by Internal Revenue Code (I.R.C.) § 7520. The Commissioner also asserted that the value of Linda’s and Peter’s gifts should not be reduced by the obligation they would have had under I.R.C. § 2207A to reimburse Bruce for gift taxes he would have owed if Linda and Peter had received the distributions they would have been entitled to under Clotilde’s will; Clotilde’s will had established the Residuary Trust and directed that upon the termination of any trust created under the will, the trustee was to distribute to the beneficiaries, namely, Linda and Peter.

The Tax Court, in a memorandum decision, rejected Linda’s and Peter’s argument that their gifts had only nominal value because their remainder interests were not guaranteed as a result of Bruce’s power of appointment. The court determined that the value of the gifts to Linda and Peter was instead the value of the distributions they would have received if they had agreed to terminate the Residuary Trust without specifying how the assets would be distributed. The court concluded that a Washington state court would have upheld such a distribution and that Bruce’s limited power of appointment did not reduce the value of Linda’s and Peter’s remainder interests.

The court also rejected the Commissioner’s argument that the section 7520 actuarial tables should be used for valuation. Rather, as the US Supreme Court held in Morgan v. Comm’r, 309 U.S. 78 (1940) and Helvering v. Stuart, 317 U.S. 154 (1942), state law determines property entitlements, while federal tax law merely attaches consequences to those entitlements. Thus, applying Washington law, under which a court’s paramount duty is to effectuate the testator’s intent, the court found that it must determine a threshold question: What assets would Linda and Peter have been entitled to under Clotilde’s will? The court concluded that Clotilde’s will would have required the trustee to assume that the trust assets would have been distributed in equal shares to Linda and Peter upon Bruce’s death.

The court then addressed the impact of I.R.C. § 2207A, under which Bruce would have been entitled to recover gift tax from Linda and Peter. The court determined that the value of Linda’s and Peter’s gifts should be measured by the value they gave up: Consequently, the amount of their gifts to Bruce must be reduced by the amount they would have been obligated to reimburse Bruce for the gift tax liability he would have incurred under I.R.C. § 2519, had they actually received their distributions under Clotilde’s will.

Finally, the court rejected Linda’s and Peter’s assertion that Bruce should be treated as if he were five years younger than his actual age. The court found no evidentiary basis for departing from the standard Social Security actuarial tables merely because Bruce was a high earner, noting that Linda’s and Peter’s expert was not an actuary nor had he consulted one, interviewed Bruce, or reviewed Bruce’s medical records. The court explained that adjusting for some factors relevant to an individual’s life expectancy—here, income—while ignoring all others would introduce bias rather than improve accuracy.

Based on the foregoing reasoning, the court found that Linda and Peter each made a taxable gift to Bruce valued at $35,141,321.

Takeaways: The Lewis decision builds on the Tax Court’s earlier decisions in In re Estate of Anenberg v. Comm’r, No. 856-21, 162 T.C. No. 9 (May 20, 2024) (see our June 2024 monthly recap) and McDougall (see our October 2024 monthly recap), providing a framework for how the court will value a terminated interest. In Lewis, the court confirms that, in valuing a gift arising from the termination of a QTIP trust, the value of the distribution a beneficiary gave up is governed by the state law construction of the governing instrument, not by the section 7520 actuarial tables, which apply only to computations made for federal tax purposes. The decision also clarifies that a beneficiary’s avoided obligation to reimburse a donee for gift tax under section 2207A will reduce the value of a gift arising from a lifetime trust termination. Finally, Lewis provides a reminder that a valuation expert’s adjustment to a standard actuarial life-expectancy table requires a rigorous, individualized medical and actuarial basis; adjusting for one favorable factor while disregarding all others is, in the court’s view, methodologically unsound.

Pro Se Executor Cannot Represent Estate in Tax Refund Suit

Pellegrino v. United States, No. 2026-1215, 2026 WL 1846616 (Fed. Cir. June 26, 2026)

Mark Pellegrino, very much alive, filed suit as executor of his own estate—i.e., the Mark Pellegrino Estate—in the Court of Federal Claims, seeking federal tax refunds from the Internal Revenue Service (IRS). He alleged that the estate filed tax returns for 2021 through 2023 showing an overpayment of at least $10 million, and that the IRS mishandled the returns by failing to process them or issue a formal notice of disallowance for any year. He further alleged that a power of attorney form he had submitted confirmed his authority to represent the estate.

The government moved to dismiss, arguing that the complaint failed to state a claim upon which relief could be granted under Rule 12(b)(6) of the Rules of the United States Court of Federal Claims, and that Mark, as a nonattorney, could not represent the estate pro se under Rule 83.1.

The Court of Federal Claims ruled that the complaint pleaded insufficient information to discern whether an overpayment had occurred, concluded that it lacked jurisdiction over Mark’s allegations of IRS administrative misconduct, and held that Rule 83.1 barred him from representing the estate. Mark appealed.

The Federal Circuit affirmed. First, the court held that Mark could not represent the estate pro se. Although Mark argued that he had authority to litigate the refund claim based on his fiduciary filings, IRS-issued credentials, and power of attorney, he conceded that he had brought the claim on behalf of an entity—the estate—rather than himself. Accordingly, the court rejected his argument based on Rule 83.1, which precludes nonattorneys from representing an entity before the court.

Second, the court held that the lower court had correctly determined it lacked jurisdiction over the allegations of IRS mishandling and processing delays. It rejected Mark’s argument that the lower court had erred in dismissing his complaint based on the Tucker Act, which grants the court jurisdiction over refund claims. Rather, the court had correctly determined that it lacked jurisdiction because Mark’s allegations sounded in tort and were therefore unreviewable. Further, the lower court had correctly determined that Mark’s complaint failed to state a plausible refund claim because it provided no information about what the estate was, how it earned income, or how it overpaid its taxes.

Third, the court rejected Mark’s argument that the dismissal violated due process because the lower court failed to review his evidence. The court found that none of the documents he identified—his fiduciary filings, IRS-issued credentials, or power of attorney—would have cured the complaint’s failure to allege a refund claim plausibly or to bring his administrative-misconduct allegations within the court’s jurisdiction, even assuming those documents established his status as executor.

Because the court found no error in the dismissal, it did not reach other arguments Mark raised on appeal, including that the IRS violated 26 U.S.C. §§ 6402 and 6103(e)(6) by failing to release overpayments and obstructing his access to the estate’s tax account, that the Federal Circuit should exercise its equitable powers to correct the lower court’s errors, and that the DOJ lacked standing to move for dismissal.

Takeaways: The Pellegrino court did not address the elephant in the room, i.e., that Mark was a living person who brought suit as the executor of his own estate. However, the court’s decision highlights several important issues for executors and personal representatives who attempt to litigate an estate’s tax refund claim. First, fiduciary status alone—however well-documented through IRS credentials or a power of attorney—does not permit a nonattorney to represent an entity such as an estate in the Court of Federal Claims. Rule 83.1(a)(3) provides “An individual who is not an attorney may represent oneself or a member of one’s immediate family, but may not represent a corporation, an entity, or any other person in any proceeding before this court.” Second, a refund complaint must plausibly allege, with supporting facts, that the estate paid taxes exceeding the amount lawfully owed; general assertions of overpayment and IRS inaction, without more, will not survive a motion to dismiss. Third, allegations of administrative mishandling or delay by the IRS are generally unreviewable because they sound in tort rather than in a claim for money due.

Trust’s 30-Day Survivorship Provision Did Not Override Antilapse Statute Absent Express Language Conditioning Gift on Survival

In re Tung Trust, 121 Cal. App. 5th 1 (Cal. Ct. App. 2026)

In 2011, Ya-Ching Tung established a revocable living trust (RLT) naming her three children—Lin-Chuan Yeh, Lin-Chia Yeh, and Lillian Gaecke—as successor beneficiaries. The RLT directed that upon Ya-Ching’s death, all real property, including her Santa Monica residence, would pass to Lin-Chuan, with bank accounts divided among all three children. The RLT contained no residuary clause and no alternative disposition if a beneficiary predeceased Ya-Ching. The RLT included a survivor clause stating that if any person named in the trust failed to survive Tung by 30 days, “for all purposes of this trust, the person shall be considered to have predeceased the settlor.” In re Tung Trust, 121 Cal. App. 5th 1, 6 (Cal. Ct. App. 2026). The RLT also included language addressing additions to the trust stating: “Any addition to a trust that at such time has been wholly distributed shall be distributed to the beneficiary of such trust or, if he or she shall not be living, to his or her then-living issue, on the principle of representation.” Id. In addition, the RLT contained a no-contest clause providing if a beneficiary contested the RLT, “then that person’s right to take any interest given to him or her by this trust shall be determined as it would have been determined if that person had predeceased the execution of this declaration of trust without surviving issue.” Id.

Lin-Chuan predeceased Ya-Ching and was survived by his three children (the Yeh children). Ya-Ching died in 2019. Lillian, as successor trustee, petitioned the probate court for a determination that the transfer to Lin-Chuan had failed because he had predeceased their mother and that the Yeh children were excluded as beneficiaries. The probate court granted Lillian’s motion for summary adjudication over the opposition of the Yeh children, finding that the survivor clause expressed Ya-Ching’s contrary intent to override California’s antilapse statute, codified in section 21110 of the California Probate Code. The Yeh children appealed.

The Court of Appeal reversed. The court noted that the California antilapse statute, which is designed to prevent unintended disinheritance, presumptively allows the issue of a deceased transferee who is a close relative of the transferor to take in the transferee’s place unless the instrument expresses a contrary intention or a substitute disposition. Section 21110(b) states that a requirement that the initial transferee survive the transferor or survive for a specified period after the transferor’s death constitutes such a contrary intention.

The court held that in determining whether to apply the antilapse statute, the central issue is whether the relevant instrument shows an intent against its application with a reasonable degree of certainty. In the present case, the court held that the survivor clause did not impose a survival requirement within the meaning of section 21110(b). The court explained that the clause merely defined when a beneficiary who actually survived Ya-Ching would nonetheless be deemed to have predeceased her for purposes of the trust; it did not state, expressly or implicitly, that a gift would fail if the beneficiary did not survive her by 30 days. The court distinguished Burkett v. Capovilla, 112 Cal. App. 4th 1444, 1450 (Cal. Ct. App. 2003) (“[f]or all gifts under this instrument, the beneficiary must survive for sixty (60) days before entitlement to such gifts”), in which the trust instrument contained mandatory survival language and expressly conditioned gifts on the beneficiary surviving 60 days. The court found that Ya-Ching’s RLT did not include such language.

The court disagreed with the probate court’s view that the survivor clause must be interpreted to override the antilapse statute, because it could find no other application in the RLT. It discussed several other reasons why Ya-Ching might have included the clause. The court further held that, regardless of the purpose of the survival clause, a trust must be read holistically rather than isolating a single miscellaneous provision. Provisions of the RLT other than the survival clause—including the clause distributing later additions to a beneficiary’s “then-living issue” on the principle of representation and the no-contest clause referencing a contesting beneficiary’s “surviving issue”—indicated that Ya-Ching did not intend to disinherit her grandchildren. In re Tung Trust, supra, at 14. Because settlors are presumed to know about the antilapse statute when they execute a trust, and because courts must prefer interpretations that avoid intestacy or failure of a transfer, the court concluded that Ya-Ching’s boilerplate survivor clause did not amount to the clear, unambiguous language necessary to override the antilapse statute.

The court reversed the order granting summary judgment. It remanded with directions to vacate the order and enter an order denying the motion, allowing Lin-Chuan’s share of the RLT to pass to the Yeh children under the antilapse statute.

Takeaways: The Tung decision underscores that a boilerplate survival clause that does not expressly show a settlor’s intention that a gift will fail if a beneficiary does not survive, standing alone, is insufficient evidence of a settlor’s intention that the antilapse statute should not apply. To reliably override the antilapse statute, drafters should tie survival language directly to the specific gift at issue—for example, stating that a beneficiary must survive the settlor by a specified period to receive or as a condition of receiving the gift, and, where disinheritance of a predeceasing beneficiary’s issue is intended, including express language to that effect. Further, because courts will construe the instrument as a whole rather than focus on isolated clauses, practitioners should also ensure that other trust provisions, such as addition clauses and no-contest clauses, are consistent with the intended treatment of a deceased beneficiary’s issue. The RLT interview in Wealth Docx^® includes the option to add a provision about the application of antilapse statutes to avoid confusion about the settlor’s intentions.

Elder Law

DOJ Clarifies That Olmstead Guidance Regarding the Americans with Disabilities Act Integration Mandate Is Unenforceable

Statement of the Department of Justice on Enforcement of the Integration Mandate of Title II of the Americans with Disabilities Act and Olmstead v. L.C.—Clarification, 91 Fed. Reg. 45287 (July 20, 2026)

On July 20, 2026, the Civil Rights Division of the US DOJ published a notice in the Federal Register clarifying that its longstanding guidance document interpreting the integration mandate of Title II of the Americans with Disabilities Act (ADA) entitled Statement of the Department of Justice on Enforcement of the Integration Mandate of Title II of the Americans with Disabilities Act and Olmstead v. L.C. (Olmstead Guidance), issued on June 22, 2011, and last updated on February 28, 2020, is unenforceable.

The Olmstead Guidance, which takes the form of 18 questions and answers, states that it was created to help individuals understand their rights under the ADA’s integration mandate. It states that the integration mandate requires public entities to provide community-based services to individuals with disabilities in the most integrated setting appropriate to their needs, and that the guidance is intended to help state and local governments comply with it.

In its notice, the DOJ points to language within the Olmstead Guidance itself, which states that documents posted to the DOJ’s website “are not intended to be a final agency action, have no legally binding effect, and have no force or effect of law,” and that they “may be rescinded or modified in the DOJ’s complete discretion.” The DOJ described this language as consistent with Supreme Court precedent holding that agency guidance documents “do not have the force and effect of law,” Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 97 (2015) (citation omitted), but noted that numerous federal courts have nonetheless treated the Olmstead Guidance as authoritative in deciding cases involving the integration mandate. The DOJ stated that it was concerned about confusion regarding the unenforceable nature of the Olmstead Guidance and issued the clarification to resolve it.

The DOJ further explained that the Olmstead Guidance predates the Supreme Court’s 2024 decision in Loper Bright Enters. v. Raimondo, 603 U.S. 369, 400 (2024), in which the Court held that agency interpretations of a statute must be consistent with the statute’s “single, best meaning.” In light of that decision, the DOJ stated that it plans to revisit the Olmstead Guidance to assess whether it is consistent with the single, best meaning of the ADA’s statutory text, and that, in the meantime, it will not rely on the Olmstead Guidance in enforcing Title II of the ADA.

Takeaways: The DOJ’s clarification does not, by itself, change the underlying legal standard established in Olmstead; it addresses only the enforceability of the DOJ’s own guidance interpreting that standard. Because several federal courts have relied on the Olmstead Guidance when evaluating integration mandate claims, however, the DOJ’s disavowal of the guidance could affect how courts and state agencies approach such claims going forward, particularly in circuits that had previously treated the guidance as authoritative. Practitioners advising clients on rights under the ADA’s integration mandate should monitor any forthcoming replacement guidance issued in light of Loper Bright and watch for how courts in their jurisdictions respond to the DOJ’s clarification.

It is notable that on June 18, 2026, the DOJ issued a legal opinion expressing its view that, in Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999), the US Supreme Court did not hold that section 504 of the Rehabilitation Act or Title II of the ADA require states to treat mentally disabled patients in the most integrated setting appropriate to their needs. The DOJ’s view was that the Olmstead holding was narrower, i.e., that under Title II, “unjustified institutional isolation of persons with disabilities is a form of discrimination.” Id. at 600. The DOJ’s opinion provides a clear signal about how it will advise federal agencies on applying Olmstead going forward, potentially allowing states to rely on institutions to provide care for individuals with disabilities rather than home- or community-based care under Medicaid waivers. A shift towards institutional care could significantly impact special needs planning; as a result, attorneys should continue to monitor related federal and state legal developments.

Seventh Circuit Affirms Denial of ERISA Survivor Benefits Where Power of Attorney Lacked Express Authority to Waive Spousal Rights

Havlik v. Univ. of Chicago, No. 25-2821, 2026 WL 2084784 (7th Cir. July 20, 2026)

Edward Lyon, a University of Chicago physician, participated in two retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) from 1960 to 1996. In 1998, he designated his wife, Valerie Lyon, and his trust as beneficiaries, with Valerie’s notarized consent. The plans’ default forms of benefit were a 50 percent joint and survivor annuity, which a married participant could only change by making a “qualified election” accompanied by a spousal waiver that was explicit, written, and notarized, as required by both the plans and ERISA, 29 U.S.C. § 1055(c)(2)(A). Neither ERISA nor the plans addressed whether an agent under a power of attorney may consent to a spousal waiver on a spouse’s behalf.

In 2014, Valerie executed a Wisconsin statutory power of attorney naming her son-in-law, Daniel Davies, as her agent. The document granted Daniel general authority over a range of subjects and included special instructions permitting him to change beneficiary designations on Valerie’s accounts, but it did not expressly authorize him to waive her right to a survivor annuity. In 2019, shortly before his death, Edward submitted a new beneficiary form naming trusts for his 36 grandchildren as the primary beneficiaries of his retirement plans and removing Valerie as a beneficiary. Daniel signed the required spousal consent on Valerie’s behalf, also in 2019. TIAA, recordkeeper of the plans, initially rejected the form in December 2019, shortly after Edward's death, citing an apparent missing signature. The family did not learn until January 2022, well after both Edward and Valerie had died, that the real deficiency was that the power of attorney did not explicitly authorize Daniel to waive Valerie’s spousal rights, foreclosing any opportunity to cure it. Their heirs sued the university, its plans, and TIAA, asserting claims for benefits, breach of fiduciary duty, and negligence. The district court granted summary judgment to the defendants. The heirs appealed.

The Seventh Circuit affirmed. The court determined that Wisconsin’s Uniform Power of Attorney for Finances and Property Act distinguishes between actions that an agent may take under general authority and those requiring an express, specific grant. Under Wisconsin Statute section 244.41(1)(f), an agent may waive a principal’s right to a survivor annuity, including a retirement plan survivor benefit, only if the power of attorney expressly grants that authority. The heirs argued that a more general provision, Wisconsin Statute section 244.51(2)(i), governed because it allows an agent with only general authority to consent to a reduction in a payment from a trust or beneficial interest. The court rejected their argument, reasoning that the specific statute addressing survivor annuity waivers controlled over the more general estate-related provision, and that the placement of survivor-benefit waivers among the acts requiring express authorization reflected a deliberate legislative choice to guard against ambiguous waivers of spousal rights.

The court further found that, because Edward never made a valid qualified election choosing an alternative form of payment, the default joint and survivor annuity remained in effect, meaning that the express authorization requirement set forth in section 244.41(1)(f) applied on its face. Because Valerie’s power of attorney granted Daniel only general authority over beneficiary designations and did not specifically address waiver of survivor annuity rights, the 2019 spousal consent was invalid, and the heirs’ claim for benefits failed.

The court also denied the heirs’ motion to certify a question to the Wisconsin Supreme Court, finding that the proposed question mischaracterized the benefit at issue and that the case turned on fact-specific circumstances unsuited to certification. Finally, the court rejected the heirs’ alternative claims for breach of fiduciary duty against the university and negligence against TIAA, concluding that the university had acted consistently with the law and plan terms and that ERISA preempted the negligence claim because TIAA’s recordkeeping function was central to plan administration.

The court thus affirmed the district court’s judgment in favor of the defendants.

Takeaways: The Havlik decision confirms that, under Wisconsin law, a power of attorney must contain an express, specific grant of authority before an agent may validly waive a principal's spousal right to a survivor annuity benefit under a retirement plan—general authority to change beneficiary designations is not sufficient. Estate planning attorneys drafting or reviewing powers of attorney for clients with retirement plan interests should become familiar with state law requirements and ensure that the waiver of survivor annuity rights is specifically addressed, rather than relying on broader language that generally authorizes beneficiary changes.

ABA Revises Model Rule of Professional Conduct 1.14, Governing Representation of Clients with Decision-Making Limitations

Am. Bar Ass’n, Resolution 100 (Feb. 9, 2026)

On February 9, 2026, the American Bar Association adopted Resolution 100, revising Model Rule of Professional Conduct 1.14, which formerly applied when representing clients with “diminished capacity” and now governs the representation of clients with “decision-making limitations.” Resolution 100 noted several important reasons for the amendments, for example, the prior rule’s (1) unintentional encouragement of lawyers to pursue guardianships or conservatorships over clients; (2) conflicting guidance for lawyers who represent clients with surrogate decisionmakers; (3) outdated terminology; and (4) lack of guidance in several major areas. The amended rule does all of the following:

• Adopts modern terminology by replacing “client with diminished capacity” with “clients with decision-making limitations,” and explicitly defines those clients in Rule 1.14(a) by including that “a person has decision-making limitations if the person has substantial difficulty receiving and understanding information, evaluating information, or making or communicating decisions even with appropriate supports or accommodations”
• This change recognizes that “diminished capacity” implies a permanent deficit, whereas “decision-making limitations” acknowledges that a limitation may vary based on the situation involved and in degree or over time.
• Encourages lawyers to make accommodations, including the use of supported decision-making, designed to alleviate or eliminate clients’ decision-making limitations when possible
• Urges lawyers to seek the least intrusive protective measures, noting that guardianship or conservatorship should not be the default solution
• Confirms that when a client has appointed an agent, attorneys should take direction from the client and maintain communication with the client to the extent feasible unless the client has otherwise directed or is unable to provide direction
• Clarifies that when a court appoints an agent, such as a guardian or a conservator, attorneys may ethically consult with and represent clients who wish to contest the scope of the guardian’s or conservator’s power
• Bars lawyers from advocating for a guardianship or conservatorship that the client opposes
• Provides new guidance for representing minors and clients with decision-making limitations in criminal or guardianship proceedings

Takeaways: The new rule represents the first significant change to Rule 1.14 in over two decades. Because many states have adopted their own versions of Rule 1.14 that already differ from the current ABA model rule, practitioners should monitor whether their states adopt some or all of the new rule. The comments’ emphasis on supported decision-making and less restrictive alternatives to guardianship reflects a broader trend in state guardianship reform and disability-rights law that lawyers should be aware of, regardless of whether their own jurisdiction’s rule is ultimately amended.

Business Law

DOL and IRS Provide Guidance and Safe Harbors for Trump Accounts

U.S. Dep’t of Labor, Emp. Benefits Sec. Admin., Tech. Release 2026-02 (June 17, 2026); I.R.S. Rev. Proc. 2026-25 (June 29, 2026)

Section 70204 of the One Big Beautiful Bill Act (OBBBA), 139 Stat. 72, Pub. L. 119-21 (July 4, 2025), added section 530A to the Internal Revenue Code, creating Trump accounts, a new type of traditional individual retirement account (IRA) established for the exclusive benefit of an eligible individual under age 18. Contributions could be made to Trump accounts beginning July 4, 2026. The US Department of Labor (DOL) and the IRS recently issued guidance and safe harbors to address, respectively, whether Title I of ERISA applies to such accounts and whether contributions to the accounts are taxable gifts that trigger gift tax reporting obligations.

DOL Technical Release 2026-02

On June 17, 2026, the DOL’s Employee Benefits Security Administration issued Technical Release 2026-02, addressing whether Trump accounts or the employer contribution arrangements funding them under I.R.C. § 128 constitute “employee pension benefit plans” subject to Title I of ERISA. The DOL concluded that Trump accounts generally fall outside ERISA’s pension plan definition because most accounts benefit employees’ dependents rather than the employees themselves. Further, even where an employee is the account beneficiary (for instance, a 16- or 17-year-old worker), an employer’s section 128 contributions will not trigger ERISA coverage provided

• employee participation is voluntary, and
• the employer does not control investment decisions or restrict rollovers beyond what the Code requires, does not represent the program as an employer-sponsored benefit plan, and receives no compensation in connection with it.

The DOL further addressed the standard payroll deduction IRA safe harbor at 29 C.F.R. 2510.3-2(d), explaining that after an account beneficiary’s growth period ends, employers may make their existing IRA payroll deduction programs available to former Trump account holders without losing safe harbor protection, provided the employer remains neutral and avoids activities beyond permissible publicity, payroll collection, and remittance that would constitute endorsement of the program.

IRS Rev. Proc. 2026-25

To address concerns that individual donors’ contributions to Trump accounts could be characterized as gifts of future interests ineligible for the annual per-donee gift tax exclusion ($19,000 for 2026), thereby requiring millions of donors to file gift tax returns—although most are unlikely to ever owe gift, estate, or generation-skipping transfer (GST) tax given the current $15 million lifetime exclusion and GST exemption amounts, the US Department of the Treasury and the IRS issued Revenue Procedure 2026-25, which provides a transfer tax safe harbor. Under the safe harbor, a donor’s Trump account contributions will be treated as completed gifts that are not future interests and thus need not be reported on a gift tax return, provided

• the donor is an individual,
• the donor’s only taxable gifts for the year are cash contributions made to one or more Trump accounts before the calendar year in which each account beneficiary turns 18,
• the donor’s total gifts to each account beneficiary for the year do not exceed the annual exclusion amount,
• the contributions for a calendar year do not generate gift or GST tax liability after application of the donor’s remaining applicable credit or GST exemption, and
• the donor is not otherwise required to file, and does not otherwise file, a gift tax return for that year.

Takeaways: Employers offering or considering section 128 Trump account contribution programs can rely on the DOL guidance to structure their programs and avoid inadvertently creating an ERISA-covered pension plan, provided they comply closely with the four voluntariness and neutrality conditions the DOL identified. Because the safe harbor’s endorsement prong is fact-intensive, employers should document that their role is limited to facilitation (e.g., intranet postings, payroll deductions, and neutral informational materials) rather than promotion of a specific provider. Attorneys advising clients on multigenerational wealth transfer should note that growth-period restrictions make Trump accounts a distinct planning vehicle from traditional IRAs, but the special rules generally no longer apply once the account beneficiary turns 18.

In Revenue Procedure 2026-25, the IRS resolves uncertainty over whether contributions to Trump accounts trigger gift tax reporting obligations for the millions of individual donors expected to fund these accounts. Because the safe harbor is contingent on the donor’s total annual gifts to each account beneficiary remaining at or below the $19,000 annual exclusion amount, attorneys should consider advising clients who wish to make larger contributions, or who are already making other gifts to the same beneficiary, that exceeding the threshold will require the donor to file a gift tax return reporting all gifts to that beneficiary for the year—including the Trump account contribution—as a gift of a future interest. Attorneys should also confirm that a client’s contributions are made in cash and completed before the calendar year in which the account beneficiary turns 18, and that the client is not otherwise required to file a Form 709 for any other reason, since any of these circumstances would remove the donor from the scope of the safe harbor.

Louisiana and New York City Enact Click-to-Cancel Requirements

La. H.B. 750 (2026); Notice of Adoption, N.Y.C. Dep’t of Consumer & Worker Prot. (adding 6 RCNY §§ 5-110 to 5-110.3, eff. Oct. 1, 2026)

La. H.B. 750

Louisiana enacted House Bill 750, the Click-to-Cancel Act (the Act), adding a new chapter to the Louisiana Revised Statutes (La. Rev. Stat. §§ 51:3301–3305) regulating automatic renewal and continuous service contracts offered to Louisiana consumers. The Act, which is effective January 1, 2027, requires businesses to clearly and conspicuously disclose automatic renewal terms before a purchase is completed, obtain the consumer’s affirmative consent to those terms, and provide a retainable acknowledgment of the offer terms and cancellation policy. It further prohibits businesses from including information that undermines a consumer’s ability to affirmatively accept the terms. Businesses must also provide consumers with a cost-effective, easy-to-use cancellation mechanism that is not designed to deter cancellation, notify consumers of material contract changes, and provide advance notice before renewing contracts with terms of twelve months or longer.

The Act exempts several categories of businesses and transactions, including financial institutions, licensed insurers, FCC-regulated service providers, and contracts predating January 1, 2011. Businesses with fewer than fifty employees or less than $5 million in annual gross revenue are exempt from notice requirements, but remain subject to the disclosure, consent, and cancellation requirements. Violations are subject to a civil penalty of up to $500 per violation, enforceable by the attorney general, with a thirty-day cure period available for non-willful, non-repeated violations.

New York City Click-to-Cancel Rule

On July 10, 2026, the New York City Department of Consumer and Worker Protection (DCWP) established “click-to-cancel” requirements governing automatic renewal and continuous service offers after determining that a business’s failure to provide a clear, conspicuous, and streamlined cancellation method constitutes a deceptive and unconscionable trade practice under section 20-700 of the New York City Administrative Code, effective October 1, 2026. The rule requires any person making such an offer to clearly disclose the offer’s material terms before obtaining consent, to provide a cancellation mechanism that is at least as easy to use and through the same medium as the one used to obtain consent, and to refrain from imposing unreasonable or unlawful conditions.

A person who sends goods under a continuous service or automatic renewal arrangement without first obtaining affirmative consent must treat those goods as an unconditional gift. Any violation renders the offering party liable for restitution of amounts charged after the consumer’s first cancellation attempt, as well as civil penalties of up to $3,500 for third and subsequent violations.

The rule exempts certain regulated entities, including banks, credit unions, franchisees of political subdivisions, and businesses regulated by the Department of Financial Services.

Takeaways: Louisiana and New York City join a growing number of jurisdictions that have enacted click-to-cancel legislation requiring businesses to make cancellation of automatic renewal contracts at least as easy as enrollment. Businesses offering subscriptions or continuous services to consumers in those jurisdictions should review their enrollment flows, disclosure language, and cancellation processes to ensure compliance.

Please see our November 2024, June 2025, and August 2025 monthly recaps for discussion of a similar federal click-to-cancel rule that was vacated by the Eighth Circuit Court of Appeals in 2025. In early 2026, the Federal Trade Commission sought public comment on how to best regulate negative option programs, signaling that it may issue a new rule.

AI and Legal Tech

Alabama State Bar and IRS Issue AI Guidance

Ala. State Bar, Artificial Intelligence Use: Best Practices Under Existing Pro. Conduct Rules, Formal Op. 2026-01 (July 22, 2026); IRS, Office of Pro. Resp., Alerts from the Office of Pro. Resp. 2026-19 (June 24, 2026)

Alabama State Bar

The Alabama State Bar recently issued guidance, including best practices, addressing lawyers’ use of generative and agentic artificial intelligence (AI), emphasizing that AI does not create new ethical duties but instead recontextualizes attorneys’ existing obligations under the Alabama Rules of Professional Conduct, including the following:

• competence (Rule 1.1), which requires lawyers to gain a reasonable understanding of an AI tool's capabilities and limitations
• the prohibition on blind reliance (Rules 1.1, 3.1, 3.3), which requires independent verification of every AI-generated citation and factual assertion before filing
• confidentiality (Rule 1.6), which requires attorneys to avoid entering identifiable client information unless adequate safeguards exist or obtain client consent when risk cannot be eliminated
• supervision (Rules 5.1, 5.3), which treats AI as akin to a nonlawyer assistant, requiring documented review protocols
• reasonable billing (Rule 1.5), which permits lawyers to bill only for time actually spent, including genuine review time, rather than for time saved through AI use
• candor to tribunals (Rule 3.3), which applies when courts have established AI disclosure and certification requirements

The guidance also addresses agentic AI’s heightened risks given its capacity to act autonomously with minimal oversight and provides a practical, day-to-day checklist for lawyers to follow before deploying AI in a client matter.

Internal Revenue Service

On June 24, 2026, the IRS Office of Professional Responsibility issued introductory guidance addressing the responsible use of AI in federal tax practice, cautioning that while generative AI tools offer real efficiencies—faster research, document drafting, and, for the IRS itself, improved fraud detection and audit risk assessment—the risk of hallucinated citations, embedded bias, and opaque decision-making creates meaningful ethical exposure under Treasury Department Circular 230. The guidance discusses several provisions implicated by AI use, including the following:

• due diligence requirement (section 10.22), which obligates practitioners to independently verify any AI-generated facts, citations, or calculations before submission to a client or the IRS
• prohibition on unconscionable fees (section 10.27), which bars billing for time not actually spent where AI has meaningfully shortened the time spent on the work
• competence standard (section 10.35), which requires an understanding of how the AI tools themselves function and where they can fail
• mandate that firms maintain adequate internal compliance procedures (section 10.36), which includes staff training, data handling protocols, and vetting of third-party AI vendors
• requirement that written advice rests on reasonable, independently verified assumptions (section 10.37)
• confidentiality obligations under I.R.C. §§ 6713 and 7216(a), which expose practitioners to civil and criminal penalties for the unauthorized use or disclosure of taxpayer data fed into unsecured AI systems

Takeaways: Alabama and the IRS join the American Bar Association (see our September 2024 monthly update for discussion), Florida, North Carolina, California, Georgia, and other jurisdictions in providing guidance, revealing a consensus emerging nationwide—AI may assist the lawyer, but attorney verification, judgment, and oversight remain nondelegable, and lawyers who fail to independently confirm AI-generated work product risk sanctions, disciplinary exposure, and client harm regardless of firm size or resources.

Note: A helpful hint provided in a recent Bloomberg Law article is that a URL ending in “utm_source=chatgpt.com” may reveal that attorneys or staff in your firm have relied on ChatGPT for legal research or drafting assistance, signaling the need for review and independent verification.