Wills, Trusts & Estates Prof Blog

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

Thursday, May 24, 2018

Use of Transfer on Death (TOD) Deeds Broadened Under New Statute [Wisconsin]

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-24/b61f5fa9-f7d4-43ef-b25b-82e8a4ffaab5.pngWisconsin recently passed a statute that alters the use of Transfer on Death (TOD) deeds as it pertains to certain types of interests in real property. Previously, the only types of interests that could be passed through a TOD deed were those in property solely owned, owned by spouses as survivorship marital property, or owned by two or more persons as joint tenants. Under section 705.15(1)(m) of the Wisconsin Statutes, a person may use any document to name a TOD beneficiary, not just in a deed. Also, now the interests in real property owned as tenants-in-common and an interest in real property owned by a spouse as marital property without a right of survivorship may be transferred at death. The new law stipulates that a TOD document and all recording fees must be submitted to the register of deeds in the county where the property is located prior to the death of the owner.

See Jacqueline L. Messler, Use of Transfer on Death (TOD) Deeds Broadened Under New Statute, National Law Review, May 18, 2018.

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

May 24, 2018 in Current Affairs, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Article on Excluding the Income of State and Local Governments: The Need for Congressional Action

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-24/a90813b2-dd16-40f0-88b5-ddeead012453.pngEllen P. Aprill published an Article entitled, Excluding the Income of State and Local Governments: The Need for Congressional Action, Tax Law: Tax Law & Policy (2018). Provided below is an abstract of the Article:

This article, although more than 25 years old, has renewed importance in light of the 2017 tax legislation. The 2017 legislation introduced limits on the deductibility of state and local taxes as well as an excise tax applicable to various exempt organizations, including some governmental affiliates, on certain kinds of excess compensation. These legislative changes have focused attention on how the federal government categorizes state governmental entities and their affiliates. The many potential categories include states, their political subdivisions, integral parts of states or political subdivisions, governmental instrumentalities, entities with income derived from an essential governmental function, and governmental affiliates exempt under section 501(c)(3).

The article describes the criteria for and the implications of each of these categories, including their eligibility for deductible contributions. It examines the legislative history of these various statutory provisions as well as administrative and judicial interpretations of them. It explains that, in exempting the income of states and political subdivisions, the Internal Revenue Service relies on an implied statutory immunity rather than on the now discredited doctrine of a constitutional intergovernmental immunity. The contrast between this implied statutory immunity and the history of section 115(1), the provision that excludes “income derived from . . . the exercise of any essential governmental function and accruing to a State or any political subdivision thereof,” demonstrates how the understanding of the federal taxing power over states, their political subdivisions, and their affiliates has changed dramatically since the early 20th century.

The constitutional, statutory, administrative, and judicial issues raised by this piece can usefully inform current debates, such as proposals to allow credits against state taxes for contributions to charitable programs established by state governments.

May 24, 2018 in Articles, Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax, New Legislation | Permalink | Comments (0)

Wednesday, May 23, 2018

The 3 Reasons Why People Do Estate Planning

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-23/8728d035-95c6-4c14-b959-f6f32667371d.png55% of Americans do not have a will, and that is a great concern for many as some states has laws that designate how a descendant's belongings are distributed after their passing. Even if you believe that your assets are minimal, there is still a need to actively participate in estate planning.

Depending on how the probate process operates in your particular jurisdiction, there may be extensive fees or taxes that could be eliminated by hiring a knowledgeable estate planning attorney.

Estate planning is highly important for asset protection when thinking about nursing home care, Medicaid qualifications, and exceeding insurance limits due to medical emergencies.

Family dynamics can be thorny, and having tangible directions of who will manage your assets and how to decipher your last wishes would bring any person peace of mind.

See Joel Johnson, The 3 Reasons Why People Do Estate Planning, Forbes, May 21, 2018.

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

May 23, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Tuesday, May 22, 2018

Talking To Your Kids About Your Dying Wishes

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-22/bdd2ad74-8c2b-4a75-8d13-e5f82653cdb0.pngDeath is a frightening event, and putting the event into words more so. Some people do not mention death until they are diagnosed with a serious illness or when they suddenly find themselves in a hospital bed. If at all possible the conversation about your inevitable demise should be conducted before those two events. Even if that dialogue simply puts forth the idea that you do not want to linger on life support, your intentions should be known to your children at a reasonable stage of their lives.

Different states have options of expressing your intentions in writing depending on the state where you live.  It could consist of a health care directive, a living will, or a HIPAA waiver.

But remember - life support is not the only subject to discuss with your children. These topics may also include funeral arrangements, where to place your remains, etc. This exchange could be formal and take place at your lawer's office with your children in attendance.  It could also be a family meeting in your own living room.

See Christine Fletcher, Talking To Your Kids About Your Dying Wishes, Forbes, May 15, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 22, 2018 in Current Affairs, Death Event Planning, Disability Planning - Health Care, Estate Planning - Generally | Permalink | Comments (0)

Texas Supreme Court: Incorporating the AAA Rules Does Not Delegate Arbitrability Issues to the Arbitrator

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-22/e75619d1-e498-43e8-8926-30bf70348a86.pngIn 2013, the Supreme Court of Texas in Rachal v Reitz found that arbitration clauses in trust documents may be enforced regarding claims by beneficiaries against trustees. The finding was based on the intent of the settlor, and that mutual assent was satisfied through the theory of direct-benefits estoppel.

Rule 7(a) of the Commercial Arbitration Rules of the American Arbitration Association (AAA) specifies that parties may decide that an arbitrator has the power to decide initial issues, such as "validity, enforceability, and scope of an arbitration agreement."

However, in  Jody James Farms, JV v. Altman Grp., Inc., the Texas Supreme Court held on May 11, 2018 that an incorporation of the rules of AAA did not send arbitrability issues to the arbitrator as between nonsignatories to an agreement. The Court refused to rules on the issue at it pertain to signatories.

"Arbitrators are generally inclined to keep claims and parties in arbitration where courts may be more unbiased on those issues. So, now, where the beneficiary or trustee does not sign the trust/will, the court will determine these issues and not the arbitrator. This may greatly impact the enforceability of arbitration clauses in trusts and wills in Texas."

See David Fowler Johnson, The Texas Supreme Court Holds That Incorporating The AAA Rules Does Not Delegate Arbitrability Issues To The Arbitrator for Signatories, Texas Fiduciary Litigator, May 18, 2018.

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

May 22, 2018 in Current Affairs, Estate Planning - Generally, New Cases, Trusts | Permalink | Comments (0)

Monday, May 21, 2018

Applicable Federal Rates and Code Section 7520 Rate for June 2018 – Trending Up

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-21/9af22ec0-7889-4548-926b-a5f0ee57e698.pngThe applicable AFR is the minimum acceptable or safe-harbor interest rate that must apply to intra-family loans to avoid adverse income or gift-tax consequences. From January 2018 to June 2018, AFRs have been trending up, making intra-family loans and installment sales to grantor trusts less attractive.

The 7520 rate for the month in which a lifetime gift or testamentary transfer occurs is used to determine the gift or estate-tax value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest. The 7520 rate is equal to 120 percent of the applicable mid-term rate. The 7520 rate also has been trending up, making planning techniques like qualified personal residence trusts and charitable remainder annuity trusts increasingly attractive. On the other hand, grantor retained annuity trusts  and charitable lead annuity trusts have become less attractive.

See Carmen Irizarry-Diaz, Applicable Federal Rates and Code Section 7520 Rate for June 2018 – Trending Up, GTLaw-LegalAdvisors.com, May 18, 2018.

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

May 21, 2018 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

How the Non-Wealthy Can Organize Their "Big Book"

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-21/9e7a33bd-f564-4a71-a87d-9922db4215d3.pngIn many aspects, the very wealthy may have an easier path. Their portfolios, investments, and other important documents are handled by others in a family office. But for the average American, the method for organizing everything they need to pass on their assets appropriately may be up to debate. Many people may have an actual binder or "book" that comprises lists of their material belongings, bank accounts, and other vital information in to one efficient location.

Jamie Cox of Richmond-based Harris Financial Group concludes that, "Making sure you are organized is the most fundamental principle of financial planning.”

What should go in to the "big book?" It's more than wills, funeral arrangements, and power of attorneys. Passwords for email accounts, insurance policies, auto loan agreements, and much more should be included to make the transfer of your estate as smooth as possible.

Cox also suggests that using an online vault such as the Emoney software, which is owned by Fidelity Investments. "[A]ll the information is consolidated, the account numbers and holdings are up to date. If you change accounts or advisers or banks, you just reconnect to the new institution and all the information flows in. You have history.”

See Thomas Heath, Let's Talk About the Big Book: Everything Your Family Need to Know When You Die, Washington Post, May 18, 2018.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

May 21, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Wednesday, May 16, 2018

How Much Money Do Americans Need To Be Rich?

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-16/53e41cce-b394-4c48-b72e-5c4871388f53.pngA survey conducted for the second annual Modern Wealth Index from Charles Schwab revealed that Americans have differing definitions of  "wealth." Only 11% defined wealth has "having lost of money," while the majority interpreted the word in non-econimical terms such as loving relationship with friends and family, peace of mind, and living stress free.

From the 1000 Americans surveyed, it was determined that to be financially comfortable one's net worth should be $1.4 million, and to be wealthy one should be worth $2.4 million.

Joe Duran, chief executive officer of money manager United Capital, claims that money is simply a stepping stone to being wealthy. “I realized that money is nothing more than fuel,” he said. “It is a resource that lets you have choices, but if you don’t think about what you are working for, you will die rich but not live rich.”

See Suzanne Woolley, How Much Money Do Americans Need To Be Rich?, Financial Advisor, May 15, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 16, 2018 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

California Assisted Death Law Overturned in Court

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-16/d8166c0f-dded-496e-87ec-dc8f8c79d616.pngThe California legislature passed the state's assisted death law in 2016 during a special session. The session was called specifically for health care funding shortages caused by Medi-Cal. A Riverside County judge on Tuesday ruled that it was improper to push through and pass the law during the special session. Those that were in the process of accumulating the life-ending drugs find themselves with, "the carpet ripped out from under their feet," according to Assemblywoman Susan Talamantes Eggman, the Stockton Democrat who carried the bill.

Stephen G Larson is the lead counsel for the group of doctors that sued to stop the law, citing that, "lack of protections in the law, including an inadequate definition of terminal illness and a provision exempting doctors who prescribe the lethal drugs from liability." The group also claimed that the passing of the law during the special session was inappropriate, an argument that the judge agreed with.

Proponents of the law are optimistic, however, because the judge's ruling is not based upon the legality of physician assisted suicide. Public polls have also shown that there is a "widespread approval" of the law across California.

See Alexei Koseff, California Assisted Death Law Overturned in Court, The Sacramento Bee, May 15, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 16, 2018 in Current Affairs, Death Event Planning, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Sunday, May 13, 2018

How the Tax Haven of Bermuda Played Key Role in £10 Billion Sackler Family Fortune

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-13/8a0e2c7b-5bff-4a06-86f4-8f78013b31e9.pngThe Sackler's owned pharmaceutical companies Napp and Mundipharma may vehemently deny that avoided paying taxes in Europe and Australia by diverting profits to the tax haven of Bermuda, sources from within the business say otherwise.

The company Napp produced pharmaceuticals in Cambridge, and from there would sell the drugs either to the National Health Service in the United Kingdom or to Mundipharma entities worldwide. The source claims "worldwide" in fact meant transferring the profits of the drugs to the simple office block in Bermuda called Mundipharma House before selling them to other countries. Mundipharma House is held in trust by the two branches of the Sackler family, Mortimer Sackler and his brother Raymond Sackler. This scheme allowed for Mortimer Sackler, who is non-domiciled in the United Kingdom, to avoid paying taxes on any part of the company's profits that were not remitted to the United Kingdom.

See David Cohen, The Sackler Files: How the Tax Haven of Bermuda Played Key Role in £10 Billion Family Fortune, Evening Standard, May 11, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention

May 13, 2018 in Current Affairs, Estate Planning - Generally, Income Tax | Permalink | Comments (0)