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From the issuance of the Internal Revenue Service’s Priority Guidance Plan to new COVID-19 relief legislation, we have seen some significant developments in estate planning and business law. To ensure that you stay abreast of these legal changes, we have highlighted a few noteworthy developments and analyzed how they may impact your estate planning and business law practice.
Being a Trustee of a trust is no easy task. Trust assets need to be managed, accountings and reportings need to be prepared and filed, and the trust scheme for distributions needs to be followed. Trustees also have fiduciary duties – duties of loyalty, care, and prudence. But to whom does a Trustee owe a duty? Could it be to a creditor? Also, what happens if an Agent lets bills go unpaid? Is the Agent liable?
These issues were recently litigated in Brownell v. Johnson. Kathleen Brownell filed suit against Scott Johnson, who was her former stepson, on the argument that he intentionally interfered with her contract for alimony payments. Kathleen and Phillip were married in 1994. During the marriage, Phillip’s health took a turn for the worse and so he engaged in proactive Medicaid planning. A trust was drafted and Phillip funded the trust with all of his assets. Phillip was the initial Trustee, and Scott was the successor Trustee. Scott and his brothers were remainder beneficiaries.
A few years later, Kathleen and Phillip got divorced. As part of the stipulated decree, Phillip agreed to pay Kathleen alimony of $1,600 per month until one of them died. Phillip made such payments to Kathleen until he transitioned into a nursing home. Scott, acting as Agent under Power of Attorney for Phillip, continued to make the alimony payments to Kathleen. Scott then petitioned to have the alimony contract terminated or modified, and stopped making the payments to Kathleen altogether. After phone calls and other attempts to get Scott to resume payments to her failed, Kathleen filed the instant suit against Scott, alleging intentional interference with a contract.
On December 27, 2020, President Trump signed into law H.R. 133, the Consolidated Appropriations Act, 2021 (the Act). Included among the Act’s nearly 5,600 pages are provisions related to COVID-19 pandemic relief. Key tax provisions include: (1) Paycheck Protection Program (PPP) updates, including the allowance of deductions for qualified expenses paid for with PPP loan proceeds that are subsequently forgiven, the extension of the program, the introduction of “second draw” PPP loans, and the expansion of eligible expenses for which PPP loan proceeds can be spent; (2) the extension of paid sick and family leave and family credits for wages paid through March 31, 2021; and (3) the extension of the employee retention credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act through June 30, 2021.