Wednesday, January 17, 2018
Washington State police are attempting to locate the owner of an urn, remains included, that was donated to a local Goodwill. Authorities believe the urn was brought to the store and discovered by an employee on Sunday. Police are currently working under the premise that the odd act of giving away the remains was accidental.
See Elizabeth Zwirz, Owner of Urn Donated to Goodwill Being Sought by Washington State Police, Fox News, January 14, 2018.
According to new Tax Policy Center estimates, the new Tax Cuts and Jobs Act (TCJA) will reduce the number of households claiming an itemized deduction relating to gifts given to non-profits from 37million to around 16 million for 2018. The new law will also reduce the federal income tax subsidy from $63 billion to about $42 billion, or by roughly one-third. The TCJA brings about four changes that will likely discourage charitable giving. First, it lowers individual income tax rates, which lowers the value of all tax deductions. Next, it caps state and local tax deductions as well as doubling the standard deductions. Finally, TCJA doubles the current estate tax exemption threshold to $22 million for couples, which serves to discourage tax-motivated bequests by highly affluent households.
See Howard Gleckman, 21 Million Taxpayers Will Stop Taking Charitable Deductions Under the New Tax Law, Forbes, January 11, 2017.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
A Counterpart Basis Analysis Applied to Disregarded Promissory Notes and Assets Owned in Grantor Trusts
The idea that a payment of tax on a tax begets an unconscionable result is among the foremost principles of tax law. Rules relating to grantor trusts and subsequent derivations are insufficient to offer a suitable mechanism to avoid tax when a grantor undertakes a transaction with his own grantor trust. Rev. Rul. 85-13, though it answers important questions regarding a grantor trust’s tax basis in the assets received from the sale of a grantor trust, is notably silent on the ancillary question relating to the treatment of an individual taxpayer’s basis in a note from such a trust. The idea of a counterpart bases provides a supporting framework that satisfies the need to avoid tax on a tax by making sure that assets having income tax existence are provided an appropriate adjustment for gift or income tax paid on the transfer of a note stemming from the sale of a grantor trust.
See Carl King & John Hodnette, A Counterpart Basis Analysis Applied to Disregarded Promissory Notes and Assets Owned in Grantor Trusts, Probate and Property Magazine, December 2017.
Tuesday, January 16, 2018
Estate plans are similar to homes or vehicles in that they require regular maintenance to ensure they continue to function properly. Like the mammoth pothole to a car or a tornado to a house, the recent tax legislation represents an external event that may necessitate a damage assessment. Meeting with an estate-planning professional for an update is the best way to determine if your estate plan is still in good working order, or if it needs a major overhaul. When meeting with your planner, there are five important topics you should consider for discussion: 1) whether and how the new tax law affects your estate plan, 2) the new exemption for married couples, 3) state estate taxes, 4) estate document customization, and 5) an appropriate time for a follow-up visit.
See David Robinson, 5 Questions to Ask Your Estate Planner After the New Tax Law, Forbes, January 9, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
Article on Honoring Probable Intent in Intestacy: An Empirical Assessment of the Default Rules and the Modern Family
Danaya C. Wright & Beth Sterner recently published an Article entitled, Honoring Probable Intent in Intestacy: An Empirical Assessment of the Default Rules and the Modern Family, 42 ACTEC Law Journal 341 (2017). Provided below is an abstract of the Article:
This article provides preliminary analysis of an empirical study of nearly 500 wills probated in Alachua and Escambia Counties in the State of Florida in 2013. The particular focus of the study is to determine if there are noticeable patterns of property distribution preferences among decedents based on their diverse family relationships. Earlier empirical studies of distribution preferences indicated that a majority of married decedents wanted to give all or most of their estates to their surviving spouses. As a result of these studies, most states amended their probate codes to give surviving spouses a sizable percentage of a decedent spouse's estate under their intestacy provisions. But with the explosive growth of nontraditional families, particularly blended families with stepchildren, the standard estate plan for these nontraditional decedents is actually a revocable trust with a QTIP provision to provide for the surviving second or third spouse, thus protecting a significant portion of the property for the children by a prior marriage. As family patterns have changed and the blended family has become more ubiquitous, there is a growing divergence between the estate plans of those who can afford to make them, and the default rules of intestacy.
In this article, we report our initial findings in a comprehensive study of testate estates through the lens of family relationship patterns. Focusing on distributions to second or subsequent spouses, and bequests to stepchildren, we show that intestacy laws still tend to fit most decedents' preferences regarding bequests to surviving spouses, though certainly the fit is less close than with first spouses, but that there is a significant gap in the intestacy law's treatment of step-children. Moreover, these are definite gender-based differences in treatment of surviving second-spouses that suggest our intestacy laws are not providing as close a fit as they could.
The 37th Annual Kansas City Estate Planning Symposium will take place on Thursday, April 26 through Friday, April 27, 2018. The symposium is presented with the cooperation of the Estate Planning Society of Kansas City and the University of Missouri Kansas City School of Law. Topics include: recent developments in trust and estate planning, financing long-term care, powers of attorney, planning for IRAs, and much more. Sam Donaldson, professor at Georgia State University School of Law, commented that the symposium is a “big conference with the small conference feel. In two days you can get, really, the equivalent of a week’s worth of education.” The conference features nationally-recognized speakers, offers up to a year’s worth of Continuing Education credits, and provides an opportunity to build relationships and gain knowledge that will directly benefit clients.
The U.S. State Department warned Americans traveling to North Korea that such a trip might be a death wish. The State Department published an announcement on its website cautioning potential travelers to the Hermit Kingdom with notice that the “U.S. government is unable to provide emergency services to U.S. citizens in North Korea as it does not have diplomatic or consular relations with North Korea.” The few approved U.S. visitors to North Korea are urged to draft a will and make property and funeral arrangements with friends and family: “Draft a will and designate appropriate insurance beneficiaries and/or power of attorney; discuss a plan with loved ones regarding care/custody of children, pets, property, belongings, non-liquid assets (collections, artwork, etc.), funeral wishes, etc.”
See Katherine Lam, Visiting North Korea? Draft a Will and Make Funeral Plans, State Department Says, Fox News, January 15, 2018.
Monday, January 15, 2018
The National Business Institute is holding a conference entitled, Trusts - Made Simple, which will take place on Monday, January 29, 2018, at the Wyndham Garden Ventura Pierpont Inn in Ventura, CA. Provided below is a description of the event:
Provide your clients with the full spectrum of wealth preservation options.
When assessing complex information, it often helps to break items into basic building blocks. The same approach can be successful when dealing with asset protection. Be prepared for specific challenges associated with various types of trusts by understanding their unique characteristics. Our intensive full-day primer will provide you with a comprehensive overview of the wide variety of trusts available. Register today!
- Determine what role the settlor will play by weighing the pros and cons of establishing an irrevocable trust over a revocable trust.
- Learn what not to do when selecting and drafting a revocable trust to avoid common mistakes.
- Learn how to choose the most beneficial vehicle for preserving your client's wealth: understand the purpose behind the various types of irrevocable trusts.
- Explore the powers and duties of personal representatives in irrevocable trusts.
- Save money on taxes with effective use of defective trusts.
- Learn why it's important to know when to file the tax return for grantor trusts.
- Determine whether a client qualifies as a beneficiary of a special needs trust.
- Don't reinvent the wheel - modify our sample trust documents and use our drafting tips to create airtight trusts.
Who Should Attend
This basic level seminar is designed for the professionals involved in creating, administering and terminating trusts:
- Accountants and CPAs
- Trust Officers
- Financial Planners
- Tax Professionals
- Where to Begin? - An Overview of Trusts
- Revocable Living Trusts
- Trusts Used for Tax Reduction
- Grantor Trusts
- Estate Planning for the Disabled
- Ethical Considerations
Continuing Education Credit
Continuing Legal Education – CLE: 6.75 *
Financial Planners – Financial Planners: 8.00
International Association for Continuing Education Training – IACET: 0.70
National Association of Legal Assistants, Inc. – NALA: 6.50 *
National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *
National Federation of Paralegal Associations, Inc. – NFPA
Professional Achievement in Continuing Education – PACE: 8.00
* denotes specialty credits
Historically, trusts have evaded the NC [numerus clausus] filter for highly formalistic reasons: the trust form separates legal from equitable title, and traditionally, NC has applied only to forms of legal title, ignoring all of the myriad equitable interest trusts create. As I explain below, this distinction makes little sense. I argue that the NC should apply to the beneficial interests of trusts just as it applies to other property forms. Bringing equitable interests into the NC analysis would change the legal landscape of trust law and force a much more rational discussion of the role that trusts play in our society and our estate planning.
Early data from the United Network for Organ Sharing shows the number of deceased organ donors has increased for the fifth straight year for a record high in 2017. There was also a record set for the number of total donors, both living and deceased, at 16,462, or a 3% increase from the prior year. Some of the increase can be explained by the US opioid epidemic. Dr. David Klassen, chief medical officer at the Network, said that about “40% of the increase (in the past five years) tracks back to the drug intoxication issue.” Klassen also notes that while the “opioid epidemic is clearly not something anyone expected,” it does have a “little bit of a silver lining.”
See Nadia Kounang, Drug Overdoes Contribute to Record Number of Organ Donors, CNN, January 10, 2018.