How the Loper Bright Decision May Affect Your Estate Planning

The Loper Bright ruling stemmed from a case dealing with interpreting trust terms concerning asset distribution and the rights of beneficiaries. The result of the case would affect the future distribution of the assets. The PublicLawLibrary says the decision giving courts interpretive authority on questionable wording will affect many future cases dealing with estate planning and trusts.

Courts Allowed to Interpret Ambiguous Laws

Removing the Chevron doctrine, JDSupra says, leaves courts at liberty to make decisions based on their interpretation of the laws where the language is imprecise or ambiguous. As a result, there will be many changes in how some regulations are interpreted and a variety of how laws are interpreted. The impact will certainly cause challenges to the estate planning and tax industry.

Although courts can consider the interpretation of ambiguous laws already made, they are no longer under any obligation to do so. The decision opens the door for many new cases to arise that challenge the decisions made by previous court cases, especially the ones involving non-specific laws.

Past Cases May Still Be Enforced

U.S. Supreme Court Chief Justice John Roberts said that eliminating the Chevron doctrine does not mean that it is necessary to review previous cases. It is not enough, he said, to say that a court’s decision on a past case was based on the Chevron doctrine to demand a retrial.

New and Stricter Wording Will Be Required

Removing the principles of the Chevron doctrine will likely mean that the language of new laws will have to be more precise to reduce being reinterpreted because of ambiguities in the language. Any governmental agencies responsible for expanding and clarifying those meanings must also be precisely limited as to what they can or cannot do with the new laws.

The Loper case means that new laws coming out of Congress must be more detailed. Expect the more precise language to cause estate planners to have more limitations in their options and an increased need for them to stay up on the latest laws.

Tax-Planning Strategies May Be Limited

Removing the Chevron doctrine, WealthStrategiesJournal says, may slow changes in tax laws and their application. It will happen because clarifications on existing laws may be needed, and new ones will need more details added.

Current and new cases dealing with tax laws, Jacob Raska, a managing partner of Carrera Capital Advisors, points out, will have to consider whether or not the Internal Revenue Services’s interpretation of the tax laws made by Congress is accurate. If the court uses independent judgment and finds that an ambiguous IRS regulation is unreasonable, it may decide it is unnecessary to enforce.

Estate-Planning Documents May Need Revising

People who thought their estate plans were beyond being challenged in court now face the possibility that their documents could be declared ineffective if a court needs to decide the case posthumously. Everyone should go to their estate-planning attorney and have their documents evaluated and possibly rewritten every so often to ensure they can accomplish their original goals.

The Stare Decisis Principle

One legal principle that helps ensure similar cases get treated like previous cases is stare decisis. The Cornell Law Institute says this Latin term means that cases like previous cases need to make decisions in agreement with those earlier cases. The principle ensures a more uniform and predictable process of law.

The Change May Lead to More Personalized Plans

The Supreme Court’s decision in the Loper Bright case will likely cause estate planners to create documents that more precisely fit the client’s needs. Standard package plans may no longer be suitable for their needs. They also must be more careful to ensure their documents agree with the changing estate planning laws.

Anyone who challenges regulations from the Treasury Department or the IRS may end up in an undesirable situation. TaxesAlert says it may cause a court case to take much longer than hoped and cost much more.