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Equitable Student Loan Forgiveness

Article I, §8 of the US Constitution gives Congress, not the President, the power to tax and spend. Thus, Congress could pass a law which authorizes the forgiveness of student loan debt because forgiving student loan debt is a form of spending on the part of the federal government. This means that the President does not have the power to forgive student loan debt, but Congress does. The U.S. House of Representatives and the U.S. Senate would need to pass a law to forgive the debt. If the President attempts to do so unilaterally, the Supreme Court would stop (enjoin) the effort to forgive student loan debt. But before the U.S. Supreme Court can intervene, a case needs to be brought to it by someone who has standing. Someone with "something to lose" is someone with standing. It is hard to see who specifically has standing in this situation. Just because I paid for my own education and my children's education does not necessarily mean I would be injured if someone else's loan is forgiven. Thus, I don't believe I would hypothetically have “standing” to stop the President, even though he does not have the constitutional authority to forgive the loans.

Here is a proposal that is not as divisive as forgiving the loans. Any loan amount that is forgiven will be recouped by the taxpayer out of Social Security benefits that would be received when the borrower begins receiving their Social Security payments. Further, if there is any forgiveness today, the future value of that money should be deducted from the Social Security benefit. For example, if $10,000.00 is forgiven today, and Social Security is claimed 20 years later, perhaps the value of $10,000.00 in 2022 has a future value of $20,000.00 in 2042. It is the later value that should be deducted from the Social Security benefit.

This is not a perfect solution but it's much better than blanket forgiveness. It is true that many student-loan borrowers have never worked and would not having any social security benefit to recoup the forgiveness from. But it is a much better and more equitable solution for all those taxpayers who were responsible with their own loans, or those who did not take a loan at all.

If you are interested in a media interview on this topic, please contact me at 206.240.7676 or at don@donbushell.com

The Constitution's protection against being convicted of the same crime twice.

The 5th Amendment of the U.S. Constitution has the Double Jeopardy Clause that states that a person cannot be tried for the same crime twice. A good example of such an illegal prosecution is the prosecution of burglary and attempted burglary of a defendant. He or she can be convicted of only one, because both crimes are comprised of the same elements. Thus a defendant could be convicted of burglary but not also of attempted burglary.

So, if each crime requires to the prosecution to prove the same set of circumstances against the same set of elements, the defendant cannot be convicted of both, meaning the defendant cannot be put in "double jeopardy". Even if the same crime resulted in separate charges, such as burglary, and separately, theft of goods greater than $5000.00, there would be no double jeopardy because burglary does not require proving theft of more than $5000. So, if the defendant commits a burglary where a large diamond was stolen, that same set of circumstances would not bar conviction of both crimes under the double jeopardy clause. Blockburger v. United States.

Further, burglary does not require that a theft occur, only that intent to commit theft (or some other crime) exist at the moment the defendant entered the structure being burglarized. Theft on the other hand, requires the taking and carrying away of goods with the intent to permanently deprive the owner of such goods, which is not part of the definition of burglary.

Compare this scenario where the defendant burglarizes a structure, and an overzealous prosecutor also charges the defendant with attempted burglary. The elements of attempted burglary are the same as a completed burglary. Both crimes require an actual or attempted breaking, entry, of a another person's dwelling, at night, with intent to commit a felony within the structure.

In this case, if the defendant broke a window, began to crawl through it and cut himself on the glass of the window and thus abandoned the attempt, it may be attractive to charge the defendant with both an attempt to burglarize, as well as charge him with burglary. But, under the double jeopardy clause, since both crimes have the same set of elements, the defendant cannot be convicted of both.

What if a trust is written such that it may be revoked, but the trust is silent on whether the trust may be amended?

A basic tenant of trust law is that the trustee must administer the trust in the manner proscribed in the trust. This would seem to foreclose the ability to amend the trust if the instrument does not provide for amendment. But, if the trust provides for revocation, an implied right of amendment is also provided, as long as the trust does not explicitly say otherwise.

A trustee is obligated to administer a trust in accordance with the trust terms. However, when the settlor of a trust has the power to revoke, she also has the power to amend the terms of the trust.

This is because a power to revoke a trust also includes the ability to modify or amend the trust instrument. Such is stated in Restatement (Third) of Trusts § 63 cmt. (g). In order to avoid construing documents ridiculously strictly, most courts have ruled the power to revoke implies a power to modify (IE amend) the trust instrument; If the courts required the more cumbersome process, the settlor would be required to revoke the trust, and then create a new trust with the desired amendment, while restating the original trust. This would be a very inefficient way to do estate planning and the courts do not require it, thus a revocable trust can be amended.

The Uniform Trust Code (UTC) has a similar rule (UTC § 602) stating that a trust is both revocable and amendable unless the trust instrument expressly provides otherwise. A "power of appointment" also allows a trust to be revoked or amended via a will except where the trust instrument explicitly disallows the power of appointment.

Contrast this analysis to the situation where the trust is irrevocable yet some attorneys feel compelled to amend the trust, which is not enforceable.

Some attorneys state that a trust which allows for draining of the principle implies a right to amend the trust, even if the trust states that it may not be amended. Courts have held that an implied right to amend does not exist where the trust explicitly forbids it. Why would there be an implied right when the trust explicitly states otherwise?

Caselaw under Crook v. Contreras 95 Cal.App.4th 1194 (Cal. Ct. App. 2002) supports the analyses above. The court held that "the trust instrument expressly prohibited Florence from revoking, modifying or amending the trust instrument in any respect whatsoever after Lumir's death, and no statute permitted Florence to do what the trust instrument precluded. Nevertheless, Contreras argues that Florence's power to withdraw all or part of the assets of Trust A during her lifetime impliedly permitted her to revoke Trust A, and this implied power to revoke included a power to amend. The crux of his argument is his assertion that Florence's power of withdrawal gave her the power to revoke notwithstanding the trust instrument's express preclusion of revocation."

If you would like assistance interpreting your trust, or drafting one, please contact me. Likewise, if you would like assistance enforcing trust provisions through litigation (or pre-litigation), please call Don Bushell at 206-240-7676.

What if a trust contains a "power of appointment"?

It is common to find a "power of appointment" outlined in a trust instrument. This language allows the maker (the "settlor") of the trust to change the distribution of the assets upon the settlor's death pursuant to the settlor's will. This can be very confusing to families dealing with this difficult situation. Many times, the settlor of the trust does not realize this power exists in the trust, and such language never makes it to the will, which makes the language in the trust instrument referencing the power of appointment useless.

A power of appointment in a trust might read "the settlor has a power of appointment of his or her assets to any of his or her natural born children, but in the absence of the exercise of such power, the assets go to the XYZ Charity." This language means that the assets of the trust will go to the charity unless the settlor changes his or her will and states that the "power of appointment granted in the trust is hereby exercised to give 50% of my assets to my youngest child, and the remainder split equally among my other natural born children" (as an example). This would be a valid exercise of the power of appointment. The settlor could potentially amend the will numerous times, changing the terms of the exercised power each time, and the last effective change would validly exercise the power of appointment.

In this example situation, the power of appointment can only be exercised in favor of the natural born children and not to anyone else; any property appointed elsewhere is not effective and goes instead to the default listed in the trust, in this case the XYZ charity.

The Restatement (Third) of Property: Wills and Other Donative Transfers § 19.14 (2011) states that the donee of a special (nongeneral) power can appoint the property over which the power is exercisable only to “permissible appointees” or “objects” of the power. See also Restatement (Second) of Property: Donative Transfers § 19.3. Permissible appointees are “the persons to whom an appointment is authorized.” Id. § 17.2(c). Appointments to impermissible appointees are invalid. Id. § 19.15.

If you want the assistance of an experienced wills and trusts attorney on your side, please call Don Bushell, attorney at law. He is licensed in Arizona, California and Washington state.