Houston Estate Planning Law Blog

The federal estate tax, often referred to colloquially as the "death tax," takes a cut out of the assets left behind by individuals at the time of their death. Currently, only estates valued over a certain amount are subject to the death tax.

However, while the estate tax is primarily aimed at wealthy individuals, many argue that it does not accomplish its goals and that it has a disparate effect on farmers and small business owners. Through careful estate planning, high net worth individuals can often circumvent the death tax entirely, while those with most of their worth tied up in land or business equipment may take huge hits. When a farmer or operator of a small business dies, their heirs may have to sell off land or other critical assets just to pay estate taxes, potentially resulting in the ruination of a profitable enterprise.

The laws governing the creation and administration of wills, estates and trusts can be a bit tricky. In a lot of ways, they are fairly straightforward, but as in other areas of law, there are always those quirky little loopholes that, in some cases, can lead to surprising outcomes.

Such a loophole is behind the recent story out of Florida. It's a story that some Houston readers might think reflects a clever and creative move and others might think shows a disregard for the intent of our laws and constitutes an abuse of the system: a 48-year-old man recently adopted his 42-year-old girlfriend so that he could move assets into a trust for his "children" and thus shield them from a pending wrongful death lawsuit against him.

Readers in Houston probably know that nearly 50 years after his death in a plane crash in 1964, country music singer Jim Reeves' songs and recordings continue to sell well. His albums and other intellectual properties, once valued in the millions, earn about $400,000 per year in sales to fans around the world. Income from those sales went to her widow, who died in 1999.

More than 12 years after her death, the question of who should inherit the rights to Reeves' recordings will finally be determined in probate court. Reeves' widow, who managed the business affairs of Reeves' estate, remarried after his death, and her second husband is fighting the provisions of her will that granted him a lump sum of $100,000 and some other property, but not the rights to the intellectual property. On the other side of the dispute are Reeves' niece and nephew, who want the widow's will to be executed as written.

The estate of the prominent Houston-area attorney John O'Quinn and the woman who said she was his common-law wife when he died reached a settlement in her lawsuit on Jan. 4, shortly before trial was to begin. Though the couple never married and O'Quinn did not name her in his will, the woman had contended that he had been her "husband, partner and lover" and meant to provide for her out of his estate.

O'Quinn, who operated a successful civil litigation firm and is the namesake of John O'Quinn Field at the University of Houston's Robertson Stadium, died in a car accident in October 2009. His will instructed that his entire estate should go to his foundation.