Wills, Trusts & Estates Prof Blog

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

Monday, July 16, 2018

3 Principles for a Successful Family Legacy

LegacyThe next few decades will see the largest transfer of wealth between generations that has yet to occur in this country and in the world. Estate planning has become a less taboo subject among high net worth families as the prospect of extending their own legacy has become more prevalent and important. Those that adhere to the following three core legacy planning strategies have more success when transitioning wealth between generations.

  • Integrate planning
    • Your legacy is as much about providing financially for future generations as it is about how you wish to be remembered, and communicating with your advisors as well as your family will help you develop a detailed wealth plan that aligns with your legacy goals.
  • Evolve a healthy family wealth culture
    • A shared set of attitudes, values, goals and behaviors that characterize you as a family to many is more valuable and important than money in and of itself. Consider the elements that define your family’s culture, and keep them in mind as you designate goals for your wealth.
  • Develop the rising generation
    • Younger generations may have difficulty distinguishing between wealth and money, and their attitudes toward each may be apparent. Be a beacon and a role model, revealing to them how thoughtful spending, investing and charitable giving contribute to a sense of purpose.

See Catherine Schnaubelt, 3 Principles for a Successful Family Legacy, Forbes, July 13, 2018.

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

 

July 16, 2018 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Sunday, July 15, 2018

Article on Discretionary Trusts: An Update

TrusteesRichard C. Ausness recently published an Article entitled, Discretionary Trusts: An Update, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

In the past, settlors tended to limit a trustee’s discretion by setting forth a specific formula for the distribution of trust assets. Nowadays, however, settlors often prefer to vest more discretion in their trustees. This is partly due to the fact that beneficiaries tend to live longer and, therefore, trusts inevitably last longer, thereby requiring trustees to respond to changing conditions. In addition, settlors often believe that vesting increased discretion on the part of trustees will discourage beneficiaries from bringing expensive and disruptive challenges to their decisions.

Nevertheless, the trend toward increased discretion is not without its problems. First of all, there is a need to balance the wishes of the settlor against the duty of the courts to oversee the conduct of trustees and other fiduciaries. In addition, it is also necessary for courts to balance the wishes of the settlor with the right of the beneficiaries to receive fair and impartial treatment. Finally, it is necessary to determine when, if ever, creditors should be able to reach a beneficiary’s interest in a discretionary trust. The article begins with a description of the various linguistic formulas that settlors have typically used to describe the scope of a trustee’s discretion. It concludes that no language, however broad, can completely shield a trustee from judicial scrutiny. It then examines some of standards courts invoke when they purport to review the exercise of discretion by trustees. These standards be classified as subjective, objective or a combination of both.

The article also examines the ability of trust beneficiaries to challenge a trustee’s exercise of discretion. In addition, the article discusses the rights of creditors and concludes that discretionary and support trusts are treated like spendthrift trusts. This means that providers of necessary goods and services, as well as spouse, ex-spouses and minor children, can often reach a beneficiary’s interest in a trust. Finally, the article suggests some improvements in certain problem areas and advises drafters to be more specific about what a trustee can and cannot do when exercising discretion.

July 15, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Saturday, July 14, 2018

Unlike Some Feared, TCJA Did Not Block a Trust's Ability to Deduct Expenses Incurred Due to Property Being Held in Trust

TrustThe passage of the Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the ability of individuals to claim miscellaneous itemized deductions beginning with their 2018 income tax returns. Many professionals and clients worried that these deductions included those from property held in trust. IRC §67(g) provides that, "Notwithstanding subsection (a), no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026."

Notice 2018-61 clarified how the rule of miscellaneous itemized deductions, defined at at IRC §67(b) as any “itemized deduction” other than those listed from §67(b)(1)-(12), would impact trusts and estates. The notice also explains that certain types of deductions are not miscellaneous itemized deductions to the trust or estate and thus not barred as a deduction.

The trust will also be able to claim a deduction for itemized deductions that are not miscellaneous itemized deductions.  As the Notice points out: "For example, section 691(c) deductions (relating to the deduction for estate tax on income in respect of the decedent), which are identified in section 67(b)(7), remain unaffected by the enactment of section 67(g))."

See Ed Zollars, TCJA Did Not Block a Trust's Ability to Deduct Expenses Incurred Due to Property Being Held in Trust, Current Federal Tax Developments, July 13, 2018.

Special thanks to Mark J. Bade (CPA, GCMA, St. Louis, Missouri) for bringing this article to my attention.

July 14, 2018 in Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Friday, July 13, 2018

CLE on Estate Planning 101

CLEThe National Business Institute is holding a conference entitled, Estate Planning 101, on Wednesday, August 15, 2018, at the Hilton Garden Inn Albuquerque/Journal Center in Albuquerque, New Mexico. Provided below is a description of the event:

Program Description

Provide Your Clients With the Full Spectrum of Wealth Planning Options

Estate planning practice is incredibly complex, varied and intricate. This primer breaks it down into key governing principles and fundamental planning approaches to give you everything you need to successfully deal with clients' asset planning. Understand what the tools are, when they're used, and how they affect clients' taxes and plans. Register today!

  • Understand the laws, key parties and basic plan elements involved in estate planning.
  • Explore the various types of wills and trusts and determine which is best to use in the client's specific circumstance.
  • Predict tax effects of each estate planning tool and coordinate them properly.
  • Help your clients make critical decisions regarding beneficiary designations and powers of attorney.
  • Examine life insurance and marital issues involved in estate planning.

Who Should Attend

This basic level estate planning primer is designed for:

  • Attorneys
  • Accountants and CPAs
  • Estate Planners
  • Trust Officers
  • Tax Advisers
  • Paralegals

Course Content

  1. What is Estate Planning?
  2. Key Parties in Estate Planning: Their Rights, Roles, and Responsibilities
  3. Basic Wills: Goals, Provisions and Execution
  4. Trusts: What They Are and How They're Used
  5. Tax Fundamentals
  6. Probate Basics
  7. Life Insurance in Estate Planning
  8. Beneficiary Designations, POAs and Other Estate Planning Documents
  9. Custody Arrangements, Pre-Nuptial Agreements and Other Family Issues in Estate Planning

Continuing Education Credit

Continuing Legal Education – CLE: 6.60

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

* denotes specialty credits

July 13, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Thursday, July 12, 2018

Don't Split Heirs With Your Estate

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-07-13/9599b5d1-9640-41a8-a934-5f50409948b1.pngMark Accettura, estate planning attorney and author of Blood & Money: Why Families Fight Over Inheritance and What to Do About It, says that stepparents and stepchildren are natural competitors to children. “It’s the number one source of conflict in my practice.”

Your first responsibility should be your spouse, especially if they are not financially independent and look to you for economic support. A surviving spouse does have the right to claim certain amounts of the late spouse’s assets, in the absence of a will or proper prenup depending on their state's laws on the matter.

At the death of the first spouse, distribute at least a little cash to all the adult children, equally. It’s not so much the amount as the signal that you cared. If the relationships are appropriate, try to treat children and stepchildren the same.

A persistent source of conflict is the division of personal property, says John Scroggin, an attorney with Scroggin & Co. in Atlanta. First-family heirlooms might be claimed by second-family children — in the worst case leading to lawsuits.

See Jane Bryant Quinn, Don't Split Heirs With Your Estate, AARP Bulletin, July/August 2018.

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

July 12, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

Article on The "Charming Head" of the Rule Against Perpetuities

PandpDavid H. Fishman and Edward J. Levin recently published an Article entitled, The "Charming Head" of the Rule Against Perpetuities, Probate & Property Magazine, Vol. 32, No. 4, July/August 2018. Provided below is an abstract of the Article:

The September/October 2017 issue of Probate & Property contained an extensive article regarding purchase options and rights of first refusal. Kathryn E Allan et al., Rethinking Rights of First Refusal, Rights of First Offer, and Options to Purchase, Prob. & Prop., Sept./Oct. 2017 at 48. The article commented that, regarding purchase options, the Rule Against Perpetuities can "rear its charming head regularly, albeit sometimes in useless desperation. This occurs in cases with purchase options under commercial lease where the purchase price in the option clause may bear no relation to current market value of the property.

July 12, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

Aligning Client Lifestyle, Dreams And Legacy Goals With Wealth Objectives

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-07-12/360f065f-4af7-4e93-ae15-68871d6a3fc7.pngFinancial advising companies have a quite peculiar way to categorize their clientele. They determine that the "mass market" are clients that are worth $1 million or less, and that the "high net worth" category are those that have a net worth of more than $20 million. Two vastly different types of companies assist these types of clients, and that often means that the middle section of "lower millionaires" that could be overlooked.

These type of millionaires are often the self-made ones that are more determined and driven than the ones that have had their fortunes come to them through inheritance. Their dreams may be harder to define and it is the job of their advisor to help align their dreams with their reality.

Legacies for self-made millionaires can be tricky, as they understand the need for hard work but also the desire to enjoy the fruits of that labor. It may not just comprise of assets and accounts, but values that the client wants to pass on to their loved ones are desired organizations.

Any good financial advisor will consult with their client about their lifestyle: how they spend their money and how they save it, what brings them comfort and ease, how they like to live on a daily basis. Advisors must know these items if they expect to tell the client what’s necessary to achieve his or her goals. 

See Greg Powell, Aligning Client Lifestyle, Dreams And Legacy Goals With Wealth Objectives, Financial Advisor, July 6, 2018.

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

July 12, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Income Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, July 10, 2018

Executors Can Count On Long, Arduous Estate Settlements

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-07-10/2ddba9b9-4299-402e-b577-9492b13f5180.pngThe typical size of an estate at time of settlement is between $50,000 and $250,000, with about 11% falling below $10,000 or more than a million. According to a survey of 1200 people by EstateExec, a company based in the San Francisco area that creates software for estate executors, it takes an average of 16 months to fully settle an estate no matter its size. This generates around 800 hours of work for an executor, and the typical compensation for an executor is $18,000.

The survey found that nearly half, 44%, of those surveyed were part of, or were at least aware of, family conflicts that erupted in the settlement process. Worries included mistrust and stealing, with 19% of those asked claiming they were aware of perceived executor misconduct.

Texans can rejoice though - with their streamlined probate system, simple estates can be executed properly within 6 months.

See Karen DeMasters, Executors Can Count On Long, Arduous Estate Settlements, Financial Advisor, July 9, 2018, see also How Long Does Probate Take in Texas?, Farren Sheehan Law, November 10, 2017.

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

 

July 10, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0)

Estate Planning for Equine Owners: You Need an Expert

JustifyWith American Pharaoh and this year Justify winning the prestigious and elusive Triple Crown, Thoroughbred horse ownership has been propelled to the forefront of the public. But in relation to estate planning, it must be acknowledged that there is no one-size-fits-all for horses and horse owners.

If the bloodstock is quite large, some owners will opt to sell them off at a dispersal sale after their passing. Smaller horse operations could also benefit from a public auction unless their is a potential heir that shares in your love of horses.

"Horses that cannot be sold due to age or physical condition may require alternate arrangements. Thus, you may need to provide for the costs of aftercare or leave instructions for the delivery of retired horses to good homes."

See Shannon Bishop Arvin and Sarah Sloan Reeves, Estate Planning for Equine Owners: You Need an Expert, Insider Louisville, July 8, 2018.

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

July 10, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Sports, Trusts, Wills | Permalink | Comments (0)

Thursday, July 5, 2018

CLE on Firearms in Estate Planning and Administration

GunsThe National Business Institute is holding a conference entitled, Firearms in Estate Planning and Administration, on Friday, August 24, 2018, at the Wyndham Dallas Suites-Park Central in Dallas, Texas. Provided below is a description of the event:

Program Description

Legally Compliant Transfer of Firearms: Rules, Estate Planning Tools and Potential Pitfalls

Firearms in estate planning need extra attention to make sure you, your client and the beneficiaries inheriting the firearms are abiding by the intricate nuances of firearm law, especially after all the recent legislative and administrative changes. With the myriad of changing rules and regulations, if a firearm is transferred improperly or to an improper transferee, fines and jail time are a real possibility. Get a clear view of the gun rights, requirements and restrictions that impact your clients and your practice. This program will cover types of firearms, improper transfers and legal ownership of firearms. It will also offer an objective legal analysis of the use of inter-vivos and testamentary transfers and trusts that will allow your clients to successfully and legally transfer these unique assets to their intended beneficiaries. Register today!

  • Get an update on the latest laws, regulations, rulings and trends affecting gun ownership.
  • Distinguish between the different types of legal and restricted firearms.
  • Cover all your bases: can your client and beneficiaries legally own a firearm?
  • Review a sample gun trust to ensure airtight protections.
  • Review key forms, permits and background check procedures for gun transfers.
  • Choose the best estate planning instrument to transfer guns to beneficiaries in specific cases.
  • Confidently handle thorny interstate transfer issues.

Who Should Attend

This basic level seminar is designed for:

  • Attorneys
  • Accountants and CPAs
  • Trust Administrators and Officers
  • Tax Professionals
  • Paralegals

Course Content

  1. Gun Laws and Firearms Designations
  2. Transfers of Firearms: Key Rules and Tools
  3. Gun Trusts: Drafting and Administration
  4. Firearms Forms
  5. Legal Ethics
  6. Firearms in Estate Administration

Continuing Education Credit

Continuing Legal Education – CLE: 6.75 *

International Association for Continuing Education Training – IACET: 0.70

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

* denotes specialty credits

July 5, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)