Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, March 17, 2012

Saving Money For Foreign Clients

Unknown-8Ms. Debra Treyz works with JPMorgan Chase & Co. and saves foreign clients money by effectively using U.S. estate and gift tax rules applicable to non-U.S. citizens. She recently set up an estate plan for a couple based in Hong Kong by setting up a foreign offshore trust that will become a U.S. device when the couple dies. As the IRS has set up yet another program to find out what money is being hid abroad, Ms. Treyz has seen more cross-border clients. Ms. Treyz can help those clients minimize transfer taxes with proper planning techniques such as life insurance trusts, offshore grantor trusts, and gifting property that is not actually situated in the U.S.

See Elizabeth Ody, Tax Hunt Pushes Global Wealthy Into Offshore Trusts For Children in U.S., Bloomberg.com, Mar. 6, 2012; see also Ian Horowitz, Use of Foreign Trusts to Avoid Estate & Gift Tax, Wealth Strategies, Mar. 6, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

March 17, 2012 in Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Undisclosed Foreign Accounts Can Get You Into Trouble

Images-9One Alaska physician unsuccessfully tried to transfer money to a Panama bank to hide assets from his ex-wife. When the physician transferred the money in 2008, Panama was a notorious haven from the IRS and other creditors. In November, 2010, Panama signed a tax cooperation and information exchange agreement with the United States.

The Doctor’s Panamanian advisor tried to convince the Doctor that his best bet to protect his money would be to put it in a U.S. bank account under the guise of a foreign corporation. He made all the wire transfers by September 2011, but Homeland Security came in and seized it.

One California tax attorney cautions against undisclosed offshore accounts. They can quickly turn civil proceedings into criminal ones and so those with foreign accounts should report them to the IRS to be safe.

See Janet Novack, Hiding Millions From Your Ex Gets Harder, Thanks To Offshore Tax Crackdown, Forbes, Mar. 16, 2012.

March 17, 2012 in Estate Planning - Generally, Income Tax | Permalink | Comments (0) | TrackBack (0)

Texas Guardianship Manual (3rd ed.)

Texas-guardianship-manual-webTexas Bar Books has published Texas Guardianship Manual (3rd ed.) (2012). A description of the book is below:

The Texas Guardianship Manual has demonstrated its value to every lawyer who administers guardianships. The manual is organized by the logical sequence of events that would occur while following a matter from beginning to end. Each chapter contains a detailed table of contents; each contains practice notes concerning the topic of the chapter. The forms take up the greater part of most chapters. The uniform format of practice notes and forms is designed to enhance readability and ready reference and to accommodate easier word-processing use of the forms.

The new edition features new sections on end-of-life planning and declaration for mental health treatment. New and updated sections include:

  • Surrogate Decision Making (with subsection on end-of-life planning)
  • Interventional alternatives
  • Declaration for mental health treatment
  • Pooled trust subaccounts
  • Management of community property by spouse
  • Probate court jurisdiction

New and thoroughly updated forms include:

  • Authorization agreement for nonparent relative
  • Engagement letter
  • Application and order for no administration/family allowance
  • Application and order for removal of disabilities of minority
  • Physician’s Certificate of Medical Examination

In addition, the new digital product (included with purchase of the manual) contains a custom tool bar for Word that allows users to show, hide, print, and delete all instructional material in the forms. And using the forms is made easier with prompts that help the user navigate through the decisions and options necessary to complete each form.

March 17, 2012 in Books, Books - For Practitioners, Elder Law, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Article on CLAT Structures

Lee_paulTurney_Berry Hall_Martin_72Paul S. Lee (Attorney, New York, New York), Turney P. Berry (Attorney, Louisville, Kentucky), and Martin Hall (Attorney, Boston, Massachusetts) recently published their article entitled, Innovative CLAT Structures: Providing Economic Efficiencies to a Wealth Transfer Workhorse, 37 ACTEC L.J. 93 (Summer 2011). An overview of the article is below:

In this article, the authors outline the benefits of Charitable Lead Annuity Trusts (“CLATs”) as an estate planning tool. Special attention is focused on designing CLATs without level payment streams, but with “back loaded”or “shark-fin” annuity patterns that “zero-out” the value of the gift of the remainder interest and leverage historically low interest rates.The authors discuss the tax advantages and disadvantages if the CLAT isa non-grantor or grantor trust, if the CLAT is inter-vivos or testamentary,and if the charitable lead interest is a term of years or based upon a measuring life. The article outlines a number of technical issues that must be considered in the design of a CLAT, including the tricky endeavor of choosing which retained powers will provide grantor trust status without causing the assets of the trust to be includible in the estate of the grantor,and the income tax consequences of a termination of grantor trust status.In addition, they compare CLUTs and CLATs today if the remainder beneficiaries are skip-persons for GST tax purposes, and they review the application of the private foundations rules, the investment implications of a back-loaded annuity CLAT, and the planning implications surrounding the choice of different charitable and non-charitable beneficiaries.They conclude the article with a number of planning examples that illustrate the flexibility now afforded estate planners, including CLATs holding private equity interests, concentrated stock positions, life insurance policies, and family limited partnerships holding commercial real property or publicly-traded securities.

March 17, 2012 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, March 16, 2012

Same-sex Couples Struggle With Income Tax Returns

Unknown-7Same-sex couples struggle with filing tax returns every year. To be in compliance with the rules, it costs more for same-sex couples to file their returns. In states that recognize gay marriage, they have to file a state return and two separate federal returns because the U.S. government does not recognize same-sex marriages.

The gay community is divided between those who do not want to lie and those who do not want to break the federal tax laws. Refuse to Lie is a website that offers advice and testimonials for couples from couples who have decided to defy the law. It is not clear how many people who file jointly in spite of the law actually get caught because the IRS does not ask for gender on tax returns. If same-sex couples file jointly and are caught by the IRS, they have to pay the fees and penalties and re-file the returns individually.

See Catherine New, Income Tax Dilemma Faces Gay Couples Who File Jointly and Defy Federal Law, Huffington Post, Mar. 14, 2012. 

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

March 16, 2012 in Income Tax | Permalink | Comments (0) | TrackBack (0)

Why Delaware Is The Best Place To Set Up a Trust

Images-8Delaware is the number one spot to set up trusts. The state currently holds over $1 trillion in trusts. The New York Private Trust Company has complied a report that explains why Delaware is the top choice for setting up a trust. The report addresses why Delaware is the best venue for dispute resolution, why Delaware protects your client’s business interests best, how Delaware’s banking system works, and why Delaware’s trust law is considered the friendliest in America.

Please click here to view the report.

March 16, 2012 in Trusts | Permalink | Comments (0) | TrackBack (0)

How To Best Avoid Complications with Estate Planning As Boomers Are Passing

Unknown-6As medical advances are keeping older loved ones alive longer, they are using more money on care and have less to pass on. Children are sometimes stuck paying for parent’s medical care too, draining their money as well. As people are living longer and families are becoming more complex, more communication is needed about estate planning. These complications with inheritance can cause family fights. Despite these concerns, over $20 trillion is set to be transferred to heirs in the next 50 years as boomers pass away.

The number of centenarians is growing, but half of those who live beyond 85 end up with Alzheimer’s disease, which is costly to care for and erodes assets. Proper planning is necessary to prevent running out of money. More complications arise as well because children who take care of their parents expect that they would inherit more than siblings who didn’t care for the parents. Most parents distribute assets evenly amongst children despite who cares for them more.

The complex families that result from the high rate of divorces and new marriages complicates planning because some people don’t want to share or help blended family. This makes planning more important so that people can clearly dictate what they would like to be done with their assets.

Some people are left with inheritances that are more trouble than they’re worth, but they still feel obligated to carry out the wishes of the deceased. It is best to discuss what will be done with your assts while you’re still living because it is not a matter of if you will die, it is a matter of when.

Early planning, good communication, and being mindful of the fact that many are receiving the fruits of their older relatives’ labor while they are still living are the main things that can be done to help avoid the complications discussed above.

See Haya El Nasser, With More Blended Families, Estate Planning Gets Ugly, USAToday, Mar. 15, 2012.

March 16, 2012 in Estate Planning - Generally, Intestate Succession, Wills | Permalink | Comments (0) | TrackBack (0)

Toddler Chooses Winning Lottery Ticket

Unknown-5Afsheen Ahsan, from Queens, New York, recently won the lottery thanks to a ticket selection by her two-year-old daughter. Afsheen doesn’t usually play the lottery, but Anaya Hussain, her toddler, put her hand on a ticket and Afsheen thought it was a good omen. Afsheen and Anaya ended up being right and now Afsheen will receive $31,152 a year until 2031. She wants to go on vacation and start a grocery store with her winnings.

See Toddler Wins $1 Million Lottery For Mom: Anaya Hussain Picked Winning Ticket, Huffington Post, Huffington Post, Mar. 16, 2012.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

March 16, 2012 in Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Texas Legislative Update

Pargaman_Bill_colorWilliam D. Pargaman (Attorney, Austin, TX) recently gave a presentation on his article What Has The Legislature Done To Us Now? (Don't Worry--It's Not Too Bad!) (2012). An excerpt from the article is below:


5.6 The Nonsubstantive Estates Code Passed. Legislative Council chose the “Estates and Guardianship Code” as the new name for the recodified Probate Code. It was filed in the as H.B. 2502 by Rep. Hartnett and S.B. 2071 by Senator Duncan. However, Rep. Hartnett felt that the new name was a mouthful, so the name of the new Code was shortened to just the “Estates Code” when H.B. 2502 passed on the floor of the House. It passed the Senate without further amendment and will go into effect on January 1,2014.

5.7 The Substantive IndependentAdministration Recodification Bill Did Not Pass.The substantive recodification bill relating to independent administration did not pass in 2009, falling victim to the last-minute log jam of bills in the Senate that had a multitude of causes, an explanation of which would substantially lengthen this paper. However, they were included in REPTL’s 2011 Decedents’ Estates bill.

5.8 Recodification of the Guardianship and Power of Attorney Portions of the Probate Code. As noted above, the guardianship and power of attorney portions of the Probate Code underwent a nonsubstantive revision by the Legislative Council’s legal staff for introduction in the 2011 session. REPTL appointed Deborah Green of Austin and Linda Goehrs of Houston (the current and immediate past chairs ofREPTL’s Guardianship Committee) as the co-chairs of its Probate Code Codification Committee dealing with this aspect of the recodification process. This portion of the nonsubstantive recodification was introduced as H.B. 2759 (Hartnett) and S.B. 1299 (Duncan). The House version of this bill was signed by the Governor June 17th and is effective January 1, 2014.

5.9 Revisor’s Report for the Estates Code. Legislative Council has prepared and posted online an 882-page Revisor’s Report indicating the derivation of each section of the portion of the new Estates Code passed in 2009. The last 20 pages consist of a handy disposition table. You can find a link to the full Revisor’s Report on the Legislative Council website at:www.tlc.state.tx.us/code_current_estates.htm.In early 2012, an updated Revisor’s Report including information on the portions of the Estates Code passed in 2011 should be available at the same location.

5.10 Professor Beyer’s Estates Code. Prof. Gerry Beyer of the Texas Tech University School of Law has prepared and posted online a compilation of the entire Estates Code through the 2011 session,including substantive revisions, and both derivation and disposition tables. This version of the Estates Code can be found at:http://professorbeyer.com/Estates_Code/Texas_Estates_Code.htm

5.11 Continuing Codification. Since the portion of the Estates Code that was enacted last session doesn’t go into effect until 2014, and it is intended to be a nonsubstantive codification of the Probate Code as it exists immediately prior to 2014,there is a continuing need to make additional nonsubstantive revisions to incorporate changes to the Probate Code made prior to that time that were not incorporated into the Estates Code. In addition, one reason for the delayed effective date of the Estates Code is to provide time for “errors” to be discovered and corrected prior to that effective date. These same issues apply not just to the Estates Code, but to other codes enacted as part of the nonsubstantive codification process. S.B. 1303 (West) is a very lengthy bill that makes “nonsubstantive” revisions to a number of Statutory Changes Affecting Probate, Guardianships, Trusts, Powers of Attorney, Etc.


March 16, 2012 in Articles, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Changes to Indiana Inheritance Tax Laws


The Indiana Speaker of the House has signed  Senate Bill 293, an Indiana Bill that makes changes to the state's inheritance tax laws. The digest of the bill is below, in full:

Inheritance tax. Reclassifies a spouse, widow, or widower of a child of the transferor as a Class A transferee instead of a Class B transferee. Reclassifies a spouse, widow, or widower of a stepchild of the transferor as a Class A transferee instead of a Class C transferee. Increases the inheritance tax exemption amount for Class A transferees from $100,000 to $250,000 with respect to taxable transfers resulting from the deaths of individuals dying after December 31, 2011. Phases out the inheritance tax over 9 years beginning in 2013. Phases out the inheritance tax replacement amounts payable to counties over 10 years beginning with amounts payable for the state fiscal year beginning July 1, 2012.

March 16, 2012 in Estate Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)