Wills, Trusts & Estates Prof Blog

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

Thursday, November 29, 2012

Helpful Chart To Explain the Fiscal Cliff

UnknownThe fiscal cliff involves the expiration of the current tax rates, along with the deep spending cuts that will be required in defense and domestic programs by the federal government.  As the end of the year nears, Washington continues to grow more concerned with this fiscal cliff.  Financial advisor Leo LaBrecque* and his team at LJPR LLC have created a chart to help people understand this fiscal cliff that has Washington all in a flurry.

Please click here to see the chart. 

*Leo LaBrecque is a CPA, CFP and CFA as well as managing partner and chief strategist at LJPR, which manages over $470 million in assets.  

See Michael Cohn, Charting the FIscal Cliff, Accounting Today, Nov. 28, 2012. 

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

November 29, 2012 in Current Events, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Collaborative Process: What is it and How Does It Work?

Images-1A collaborative process can be used in place of probate court proceedings to address issues in the disposition of an estate.  The collaborative process is less time-consuming, less expensive and less confrontational than a traditional adversarial case.  It is especially effective in disputes where monty is not the sole issue.  Akron.com explains what collaborative probate law is and how it works.  

1. What is collaborative probate law? This is a process that can be used to settle disputes over an estate in place of probate proceedings. Each collaboration participant is represented by his or her own attorney and all parties and their attorneys work in face-to-face meetings to resolve probate issues.  All interested parties get a spot at the table, and these kinds of settlements tend to be more satisfactory to the parties, and therefore more enduring.  

2. How does it work? All parties and their attorneys first get permission from the court to put the case on hold while a collaborative settlement is attempted.  All parties then sign a collaborative law participation agreement saying that they will all take a reasoned approach to the issues.  After the agreement is signed, each party meets with his or her attorney, and then the first collaborative meeting is held.  The attorneys agree that, if the collaborative process does not work, they will withdraw and not represent a party in any court proceeding substantially related to the dispute's subject matter. The five steps of the collaborative process are as follows: (1) determine goals, interests, and concerns; (2) gather relevant information; (3) develop options; (4) evaluate options; and (5) negotiate a settlement.  

See Collaborative Process Used to Settle Probate Disputes, Akron.com, Nov. 29, 2012. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

November 29, 2012 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Article on Potential Danger of Maximizing Taxable Gifts in 2012

WEB_Hesch_Jerome_05Jerome M. Hesch (Of Counsel, Carlton Fields) recently published his article entitled The Financial Danger of Maximizing Taxable Gifts in 2012.  The article points out that maximizing taxable gifts before year's end can cause financial hardships if the gifts are made to grantor trusts.  The introductory paragraphs to the article are below;

At present, clients and their estate planning advisors are contemplating making $5,120,000 taxable gifts (or twice that amount using the split gift election) before year-end because the gift tax exemption may revert to $1,000,000 (FN2) starting in 2013.   Before making the maximum taxable gifts for the remainder of the 2012 year, clients need to be made aware of the possibility that maximizing their taxable gifts can cause a financial hardship if the gifts are made to grantor trusts.  Before making such gifts, clients and their advisors need to take into account the financial impact caused by the grantor having to pay the income taxes on the grantor trust's taxable income and take precautionary steps if those projections show that the income tax treatment will not leave the grantor with sufficient assets for support in their later years.  

This article is designed to show that for individuals with a life expectancy of over 20 years, making the maximum taxable gifts may not be the optimal strategy.  In evaluating whether to take advantage of the $5,120,000 gift tax exemption for the rest of the 2012 year, one needs to take into account the ages of the clients, their living expenses and the amount of their income-producing assets.  The situation illustrated below shows that for a couple ages 62 and 59 with $46,000,000 of investment assets, they should not make the maximum $10,240,000 in taxable gifts to a grantor trust. 

Please click here to see the illustration referenced above.

November 29, 2012 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Advice To Powerball Lottery Winners

LotteryWhile the odds were astronomical that a person would actually win the Powerball lottery prize of $550 Million, there were several winners in last night's lottery. So, if you were one of these extraordinarily lucky individuals it is important to get a clear grasp of the fortune that you were just bestowed with and the knowledge that you now need to manage the million dollar windfall. Many people have different opinions of what a person should do to manage the lottery prize. 

At least, most (if not all) professionals believe that a winner should seek the counsel of a CPA, a CFP, an estate planning attorney, and a tax attorney to help the winner manage the winnings. On this tangent, some argue the winner should seek the advice of brokerage-house/steward that can handle investing the winning, such as Fidelity Investments. Others disagree and argue that a person should act conservatively with the winnings. One argued that a person should put 100% of the winnings in U.S. Treasury Bonds. That person concluded that a person could simply live off the interest; there was no need to risk the winnings especially if the winner could live comfortably for the rest of their lives. Regardless, of the winner's personal decision, all professionals urge the winner to think financially smart and not to squander the winnings. The last thing most people want to hear is how the lottery ruined another life.

See TheStreet Staff, What To Do If You Win the $550 Million Powerball Jackpot, The Street, Nov. 28, 2012

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

November 29, 2012 in Current Events, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Dealing with suspected financial abuse

The January 2013 issue of Consumer Reports contains an outstanding article entitled Protecting Mom & Dad's Money: What to do when you suspect financial abuse.

Here is a list of warning signs from the article:

• Unpaid bills when someone else has been designated to make payments.

• Missing property, large or unexplained withdrawals from bank accounts, or transfers between accounts.

• Excessively large reimbursements or “gifts” to caregivers or friends.

• New authorized signers on a person’s bank account.

• Changes in banks or attorneys.

• Bank statements and canceled checks no longer coming to the person’s home.

• Unfamiliar signatures on checks and other documents.

• Changes in spending patterns, such as purchases of items the senior doesn’t need.

• Lack of personal amenities such as clean clothes and grooming items.

• Changes in documents such as a will or power of attorney, or a change in beneficiaries that the senior can’t completely explain or comprehend.

• Excessive interest in the senior’s finances by a caregiver, friend, or relative.

November 29, 2012 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Private Letter Ruling on 663(b) Election

IRS 2In PLR 201245008, the representative of a taxpayer's trust asked for an extension of time to make an election under § 663(b) of the IRC. That section of the IRC allows a taxpayer to an election that would treat the amount "paid or credited within 65 days of any taxable year to be treated as paid or credited on the last day of the preceding year." The PLR held that even though the taxpayer missed the deadline, "the IRS has discretion to permit extensions of up to six months where the taxpayer acted reasonably and in good faith." Here, the IRS concluded that the taxpayer did act reasonably and in good faith and that the failure to file timely was only an inadvertence. 

See Conan Yuzna, PLR 201245008: Trust Granted 120-day Extension to Make 663(b) Election, Wealth Strategies Journal, Nov. 27, 2012.

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

November 29, 2012 in Income Tax | Permalink | Comments (0) | TrackBack (0)

CLE on Trust Selection

CLE ImageThe Illinois State Bar Association is offering a 1 MCLE Hour teleseminar entitled, Picking the Right Trust - A National Perspective, on December 19, 2012. The keynote speaker at the event is Blanche Lark ChristersonBelow is a description and highlights of the event as provided by the Illinois State Bar Association: 

Choosing the right trust for a client’s needs is a balance of finding the right vehicle for the client’s specific goals, obtaining maximum tax efficiency and yet maintaining as much flexibility as possible over time.  It can be a daunting process, including working through a wide variety of sophisticated trust planning techniques and their tradeoffs under federal and state law. The process has grown even more complicated as the estate and gift tax law has shifted widely in the last several years, putting a premium on flexibility. This program will provide you with a framework for assessing the different alternatives and decision-tree for determining which is best for your client’s specific circumstances.


  • Practical decision-tree for finding the best trust alterative for your clients
  • Revocable v. irrevocable trusts – balancing flexibility against tax benefits
  • Trusts alternatives for passing and preserving value of family businesses or property
  • Special purpose trusts – special needs trusts, exclusion trusts, life insurance trusts
  • Charitable trusts – options for separating and allocating income and principal for benefit of charity and benefactor
  • Limits of trust planning and integration into larger estate plans

November 29, 2012 in Conferences & CLE, Trusts | Permalink | Comments (0) | TrackBack (0)

Dispute Over Oklahoma City Bombing Funds

Oklahoma City Bombing MemorialThe Oklahoma City Community Foundation is an organization that charged with overseeing the distributions of the donations that were made in the aftermath of the Oklahoma City Bombing. The fund was established to provide benefits, both medical and educational, to survivors of the bombings. Now, a dispute has arisen over whether the $10 Million in the remaining funds should be distributed. 

Many survivors believe that the organization has done a marvelous job in managing the funds; therefore, the remaining funds should remain with the foundation. Of these survivors, many have noted that they received the funds that they needed when they qualified to receive some of the funds. The foundation agrees that this is probably the best course of action. On the other hand, there are some survivors that are upset with how the foundation has managed the funds. They claim that the foundation has not made distributions when they have needed and qualified for the funds. Others are angry because a portion of the funds might not even go the survivors at all, but to training future disaster responders and to the national memorial. They believe that the best course of action is to distribute the remaining funds to the survivors.  Unfortunately, even if the foundation agreed with the dissenters that the money should be distributed, there are numerous problems with this scenario. The main problem is determining just how much each survivor should receive from the funds.

In response to this dissent, the officers from the Oklahoma City Community Foundation stated that they will have the fund audited in effort to relieve "any concerns about the way the fund was administered." Other officers from the fund have argued that there are misconceptions and inaccuracies when it comes to how the funds have been distributed. Steven Mason, one of the funds trustee's, stated that he personally thinks that the foundation has made "'100 percent of the eligible expenses for people under that were put in place in 1995.'"

See Randy Ellis, Oklahoma City Bombing Fund Official Say Criticism Unjust, NewsOK, Nov. 12, 2012.

Special thanks to Trey Mims (Texas Tech University School of Law, J.D. Candidate 2012) for bringing this article to my attention.

November 29, 2012 in Current Affairs, Trusts | Permalink | Comments (1) | TrackBack (0)

Wednesday, November 28, 2012

Former Judge Resigns And Is Sentenced to Two Plus Years in Jail

Unknown-2As I previously blogged, Former Judge Heather Perrin was found guilty of deceiving an elderly client out of half of his 1M Euro estate.  Perrin has since resigned from her position as judge and received a two-and-a-half year jail sentence.  Perrin maintained her innocence throughout the eight day trial, but the jury unanimously voted her guilty and she now accepts that decision as "'right and proper.'"

The breach of trust was one of the most serious ones to come before the court and the former district court judge is the first member of the judiciary to be sent to jail.  After the verdict came in, Perrin offered her immediate resignation to the court. 

See Dearbhail McDonald, Video: Judge Heather Perrin Gets Two-and-a-half Years Jail For Deception Over Client's Will, Independent.ie, Nov. 29, 2012. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

November 28, 2012 in Current Events, Professional Responsibility, Wills | Permalink | Comments (0) | TrackBack (0)

Guidance on De-Identification Methods for Protected Health Information

Unknown-4On November 26, 2012, the Office for Civil Rights Division of the Department of Health and Human Services announced that a guide has been released regarding methods for the de-identification of protected health information in accordance with the Privacy Rule of HIPAA.  The privacy rule sets forth the standard for de-identification of protected health information as follows: health information is not individually identifiable if it does not identify an individual and there is no reasonable basis to believe that the information can be used to identify an individual. The Privacy rule goes on to state the two methods that can be used to satisfy the afore-mentioned standard: expert determination and a safe harbor.  

Expert Determination: 

Under the expert determination method of de-identification, "a person with appropriate knowledge and experience with generally acceptable statistical and scientific principles and methods for rendering information not individually identifiable" has to determine that the risk is small that the anticipated recipient could use the information to identify the individual and then documents the methods and results of the analysis he/she used to make that determination.

Safe Harbor: 

The safe harbor method requires that a covered entity removes all 18 enumerated identifiers from the data to be disclosed, and must not have actually knowledge that the information could be used to identify an individual who is the subject of the information. Once the data is de-identified in accordance with this method, a covered entity does not have to enter into a data use agreement with the recipient. 

See HiPAA De-Identification Guidance Published, McGuire Woods, Nov. 28, 2012. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

November 28, 2012 in Current Events | Permalink | Comments (0) | TrackBack (0)