Wills, Trusts & Estates Prof Blog

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

Wednesday, November 28, 2012

Thursday, November 29: Tax Help Through a Live Chat With Kiplinger Personal Finance Editor

Unknown-5Tomorrow, November 29, from 1 to 2 pm ET, Sandra Block of Kiplinger's Personal Finance will be available for a free live web chat to answer your tax questions! Participants can leave questions at any time before or during the live chat and then they can later go back and access a transcript of the chat.  

Please click here to access the live chat! 

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

Democrat Max Baucus Supports Maintaining Bush Tax Cuts

IRS 2As I have previously discussed, farmers and ranchers are worried about the adverse potential effects of allowing the Bush-era estate tax exemption to decrease and the rate to rise. This economic reality and their plight has been heard by members of the Senate who have decided to cross the aisle to support those who could be most affected by the inaction of Congress. For example, Democratic Senator and the Finance Committee Chair Max Baucus has decided to support maintaining the estate tax exemption at $5 Million with the tax rate at 35%. He claimed that he also wants to "maintain a wind production tax credit, which has helped create amount 2,000 jobs in his state." 

See Kevin Robillard, Report: Max Baucus Wants To Preserve Estate-Tax Cut, Politico.com, Nov. 26, 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, Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Man Discovers He Married A Woman Who Used To Be Man and Files For A Divorce

MarriageIn Belgium, a man named Jan married a woman named Monica. After 19 years of marriage to Monica, Jan discovered that the woman he thought he married was actually born a man and had undergone a sex change. Jan felt betrayed because he only recently discovered this. This occurred after a difficult legal battle to even bring Monica to Belgium. When he tried to bring her, the immigration authorities would not allow it because her birth documents seemed to be not authentic. The authorities eventually allowed her entry into the country. 

Jan claims that he had no idea that Monica was originally a man. He reasoned that the reason he had no idea was because that they decided to not have children and that she would fake having a monthly menstrual cycle. He only discovered this after rumors surfaced that she had sex-change operation after he discovered that Monica was receiving "amorous messages" from other men. Once he confronted her about it, he learned the truth from her and became violent. The police were called to subdue Jan. Following this incident, Jan has started annulment proceedings and has opted to seek therapy.

See Bruno Waterfiled, Belgian Discovers His Wife Used To Be A Man After 19 Years, Telegraph, Nov. 26, 2012; see also Sarah Wolfe, Belgian Man Finds Out His Wife Is A Man After 19 Years, GlobalPost, Nov. 27, 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 (1) | TrackBack (0)

State Court Holds Statute Supersedes Insurance Policy

Court FightA case in Colorado involves the insurance policy of Jeffrey M. Johnson. Johnson, now deceased, married Laurel M. Christensen in 2001. He soon purchased a life insurance policy and named Christensen as the primary beneficiary with his mother as the contingent beneficiary. From then, Johnson's mother passed away in 2006 and he and his wife divorced in 2008. At the time of his death, Johnson did not have any surviving heirs. The only family member that survived him was his sister, Dawn Wilson, the current personal administrator of his estate. Shortly after Johnson's death, his ex-wife filed a claim to receive the proceeds from the life insurance policy he purchased. The trial court in this case granted summary judgment against his ex-wife claiming that the divorce removed her rights to his policy. The same court also dismissed her claim to try to reform the beneficiary designation form. The court there held that the applicable statute that could have restored her rights, § 15-11-806, was inapplicable. 

On appeal in Christensen v. Wilson, the Colorado Court of Appeals affirmed the holding of the trial court concluding that the applicable state statute, § 15-11-804(2), not only removed her rights as the beneficiary of the estate but also superseded her insurance policy that stated that only the owner could modify the rights of a beneficiary. The court further contended that the trial court was correct in holding that § 15-11-806 did not apply for three reasons. First, the statute was not applicable because the statute was enacted after Johnson had died. Second, the court concluded that this decision was correct because once § 15-11-804(2) removed her as a beneficiary, "there was no governing instrument for the court to reform." The last reason that the court offered was that § 15-11-804(2) was the only statute that provided remedies to former spouses. In this case, the court concluded that none of the remedies applied to Christensen. 

See In re the Estate of Jeffrey M. Johnson, deceased, Colorado Court of Appeals No. 12CA0191, Nov. 21, 2012.

Special thanks to Patrick Thiessen (Poskus, Caton & Klein, PC) for bringing this article to my attention.

November 28, 2012 in New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Charlie Sheen Pays Off Lindsay Lohan's Tax Debt

Gift TaxAccountingToday has reported that Charlie Sheen has paid off half of Lindsay Lohan's tax debt or about $100,000 worth of the $233,904 in unpaid taxes for 2009 and 2010.. Sheen first offered Lohan to paid off a portion of her tax debt when the two were filming Scary Movie 5 and Lohan turned down the offer. After Lohan rejected Sheen's offer, she later recanted and accepted his offer. The question that now exists is how this will affect Sheen and Lohan's taxes. If Sheen does not declare the money to be a gift then Lohan will owe about $35,000 in income taxes. If Sheen chooses to declare the money as a gift then he will likely incur a gift tax on the amount in excess of his exclusion. 

See Michael Cohn, Charlie Sheen Pays $100,000 of Lindsay Lohan's Tax Debt, AccountingToday, Nov. 27, 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, Gift Tax | Permalink | Comments (1) | TrackBack (0)

Tuesday, November 27, 2012

Potential Powerball Winner Might Fare Better Taking Lump Sum

Unknown-4Negotiations in Washington to avert the double blow of expiring tax breaks and automatic spending cuts next year may change how lottery winners choose to accept their money. If somebody has the lucky number to win Wednesday's $500 million Powerball jackpot, the winner might want to take the lump sum of roughly $327 million, before taxes.  Taking the annuity option over a period of 30 years will result in more taxes in the long run.  Regardless of which option a winner takes, the winnings should be enough to last a lifetime if the winners are careful with how they spend and invest the prize. 

See Jonelle Marte, Fiscal Cliff May Clip Powerball Winner, The Wall Street Journal, Nov. 27, 2012. 

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

November 27, 2012 in Current Events | Permalink | Comments (1) | TrackBack (0)

Estate Planning Lessons, Part 5

Unknown-3Larry Hagman is best known for playing J.R. Ewing in the drama, "Dallas".  He also starred in "I Dream of Jeannie".  Hagman passed away earlier this month due to complications with throat cancer.  There are two lessons to be learned from Hagman's death and estate planning. 

First, it is never too early to begin simple estate planning, including a will, advance health directives, and a durable power of attorney.  Hagman drank heavily during his acting career and this required him to get a life-saving liver transplant in 1995.  Not everyone gets a second chance like Hagman did, but this goes to show that it is never too early to start planning because some health events can be immediately fatal.  It is better to have an estate plan in place before it is too late to make one.  

Second, sometimes leaving behind a positive legacy that is not measured in dollars and assets can last longer than leaving possessions behind.  Hagman used his second chance to work with the American Cancer Society and the Kidney Foundation to raise money and awareness. Hagman used his health problems as a way to help others, and this can be an important thing to leave behind. 

See Evan Guthrie Law Firm, Estate Planning: Lessons Learned From Larry Hagman, JDSupra, Nov. 26, 2012. 

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

November 27, 2012 in Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Study on Impact of a Constitutional ban on Same-Sex Marriage in Indiana

UnknownIndiana law currently bans same-sex marriage, but in 2011, opponents of same-sex marriage and civil unions passed a proposal to write that ban into the Indiana Constitution.

25 Indiana Law Students investigated the legal consequences that would follow if Indiana wrote a ban on same-sex marriage and civil unions into the state constitution.  Their investigation found that 614 laws would be affected, including probate laws and family laws.  

See Marcia Oddi, Ind. Law-"Opponents of Indiana Ban on Gay Marriage Cite Concerns About Impact on 614 Laws," The Indiana Law Blog, Nov. 27, 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 27, 2012 in Current Events | Permalink | Comments (0) | TrackBack (0)

Court Says No to Lodha's Petition in Priyamvada Birla Estate Case

Unknown-2In August, the Supreme Court of Kolkata vested control of the Rs 5,000 crore estate of the late Priyamvada Birla to a three-member committee of administrators. Harsh Vordhan Lodha filed a special leave petition challenging that order and the High Court recently dismissed this petition.  The Court held that they found no merit in the petitions, so the administrators will not be allowed to represent the estate and have the rights and powers of a registered member of the Birla Corporation.  The administrators will appraise the asset, be recorded as representatives of the estate, and enjoy the rights and privileges of shareholders.  

See Court Rejects Petition in Birla-Lodha Case, The Hindu Business Line, Nov. 27, 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 27, 2012 in Current Events, New Cases | Permalink | Comments (0) | TrackBack (0)

Article on the Expansion of the Future Interest to the Annual Gift Tax Exclusion

William C BrownWilliam C. Brown (Attorney, Iowa) recently published an article entitled, Judicial Expansion of the Future Interest Exception to the Gift Tax Annual Exclusion – Examination of the Legislative History and Policy Basis for the Future Interest Exception, Tax Lawyer, Vol. 65, No. 3 (2012). Provided below is part of the introduction to his article:

When the Tax Court issued its opinion in Hackl v. Commissioner in 2002, the estate planning community initially stood up and took notice. The case represented a dramatic new line of attack by the Service against one of the best tools in the estate planner’s arsenal—the family limited partnership (FLP). Prior to that time, the Service had principally attacked FLPs with only limited success on the grounds that they constituted transfers with retained interests includable in the donor’s estate under sections 2036(a)(1), 2036(a)(2), and 2038, or as indirect gifts of the underlying assets, without valuation discounts, under substance over form grounds. By and large, the estate planning community had adjusted to these potential attacks by (1) making sure personal assets were not placed in an FLP, (2) advising clients not to use FLP funds to pay personal expenses, (3) meticulously documenting the form of the formation transaction and subsequent transactions with the FLP, (4) retaining sufficient donor assets outside of the FLP to support the donor following the formation of the FLP, (5) not pursuing an FLP strategy for terminally ill donors, and (6) avoiding contemporaneous formation and gifting of FLP units. The Hackl case represented a new threat with which planners needed to deal effectively to assure the maximum benefits available from an FLP planning strategy.

November 27, 2012 in Articles, Gift Tax | Permalink | Comments (0) | TrackBack (0)