Wills, Trusts & Estates Prof Blog

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

Sunday, October 23, 2016

Taxable Inherited IRA Distributions

Inherited iraRecently, the IRS released an information letter, explaining the tax treatment on two inherited retirement accounts. The beneficiary requested that all distributions from both IRAs be rolled over in order to avoid taxable income. Unfortunately, the IRS, under IRC § 402(b)(2), treats all amounts distributed from a retirement plan as taxable income. However, there is an exception—under § 402(c), distributions from a retirement plan that roll over into another plan, such as a direct trustee-to-trustee transfer, are treated as a direct rollover contribution. Although, if this distribution does not go to a spouse, then it is not eligible for rollover. 

See Dawn S. Markowitz, Inherited IRA Distributions Treated as Taxable, Wealth Management, October 20, 2016. 


October 23, 2016 in Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Article on Transfer on Death Deeds in Texas

ToddGerry W. Beyer recently published an Article entitled, Transfer on Death Deeds: A Texas Primer (2016). Provided below is an abstract of the Article:

The 2015 Texas Legislature enacted a “Texasized” version of the Uniform Real Property Transfer on Death Act joining over a dozen other states that have already done so. Transfer on death deeds (hereinafter “TODDs”) were previously authorized under Estates Code § 111.052 (recodifying Probate Code § 450) which validates “any provision in a...conveyance of property...stating that... property that is the subject of the instrument shall pass, to a person designated by the decedent in the instrument.” However, this “bare-bones” provision provided little guidance with regard to the myriad of issues that these type of deeds could raise. Passage of this legislation was designed to bring greater clarity to this technique. This article discusses the operation of the new statute.


October 23, 2016 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Saturday, October 22, 2016

Challenging Mental Capacity in Marriage

Capacity to marry A common scenario in estate litigation involves a common law widow seeking a share of an estate. Circumstantially, Texas recognizes common law marriage, and it is effectively the same as a formal marriage. In Estate of Matthews III, a court of appeals ruled that a decedent did not have sufficient mental capacity to marry when he married his caregiver only ten weeks before passing away. When evidence proving mental capacity is conflicting, oftentimes, the court will find that the decedent lacked the mental capacity. 

See J. Michael Young, Estate of Matthews: Successful Challenge to Marriage, Texas Probate Litigation, October 18, 2016. 

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


October 22, 2016 in Estate Planning - Generally, New Cases | Permalink | Comments (0)

Unrestricted Bequests

Will restrictionsRecently, the University of New Hampshire inherited nearly $4 million from a quiet librarian, and the university decided to spend $1 million of the inheritance on a new football scoreboard. Most saw this use of the money as unfit because the librarian’s passion was literature. The university defended its choice by saying that the funds were given to it without restriction. Indeed, most wills make bequests with no restrictions; in fact, most courts do not favor conditions because some of the time they are unenforceable. The danger of not having restrictions is that there is no guarantee the funds will be used in the way the testator intended. On the other hand, a trust will ensure that inheritances are distributed in a way the creator intended. 

See Ettinger Law Firm, The Danger of Unrestricted Bequests and Gifts, New York Estate Planning Attorney Blog, October 11, 2016. 

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


October 22, 2016 in Current Events, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Friday, October 21, 2016

Incentivizing Inheritances

Large inheritancesMoney is a true motivator, but how do you draft a will leaving inheritances that still encourages your children to work hard? This is becoming more and more of a concern as the baby-boomer generation is set to pass on $59 trillion, the biggest wealth transfer ever. The top American tycoons suggest cutting your children out all together because large sums of money works more for injury than good. Striking a balance between spending and saving is undoubtedly difficult when a massive inheritance comes your way. One economists argues that varying the level of inheritance to each child by creating incentive trusts is beneficial for forcing them to take your wishes seriously. These trusts include clauses that encourage educational success, hard work, and good behavior. Whatever the strategy, the upcoming years will stress the need for incentivizing inheritances. 

See Richard Davies, How to Make Inheritance an Incentive, 1843 Magazine, October 13, 2016. 


October 21, 2016 in Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Survey Reveals Helpful Insights for the Future of Estate Planning

Estate planning3In recent findings by WealthCounsel, the Estate Planning Awareness Survey helped to reveal estate planning insights that will impact the legal industry on both the firm and client levels. Nearly half of those surveyed (47%) believe that estate planning is largely for the wealthy, and 49% report feeling that their assets are not worth enough to consider an estate plan. Subsequently, the survey report addressed some of the major reasons why Americans are not planning, including feeling that their assets are not worthwhile (37%) and that they are not wealthy enough (29%). Additionally, only 27% of participants have talked with family members about creating an estate plan. Perhaps, this misinformation stems from the fact that 53% reported that it was difficult to find an advisor they trust in helping out with their estate planning needs. This Survey insightfully brings attention to the need for improvement in America’s awareness and understanding of estate planning, allowing for future opportunities to extend services to all Americans in need of these services. 

See What Do Americans Think About Estate Planning?: Key Findings of WealthCounsel’s Inaugural Estate Planning Awareness Survey, WealthCounsel (2016).

Special thanks to Peter MacKellar (Vice President, Financial Services (Communication Strategy Group)) for bringing this article to my attention.  


October 21, 2016 in Current Events, Estate Planning - Generally, Resource Links | Permalink | Comments (0)

Tax Planning Under the Constructive Sales Rule

Tax efficientSome hedge funds are racking up large unrealized gains in their portfolios, prompting them to reduce their tax exposure. Affirmative use of the constructive sale rules can help a fund to hedge an appreciation through the end of the year without recognizing the taxable gain. This rule triggers recognition of a taxable gain when a taxpayer holds this appreciated financial position and enters into enumerated offsetting transactions. There is an exception, however—if the transaction is closed on or before the 30th day after the close of the taxable year, if the taxpayer holds the appreciated position for 60 days beginning on the date the offsetting position closed, and if at no time during that period the taxpayer does not hedge the appreciated position, then the transaction is as if a constructive sale never occurred. Accordingly, those hedge funds looking to preserve gains in fourth quarter financial uncertainty can avoid breaking the constructive sale rules while doing so in a tax efficient manner. 

See Dominic Reilly, Ted Dougherty and Lisa Sergi – Tax Planning Using the Constructive Sales Rules – When Is a Constructive Sale Not a Constructive Sale?, Wealth Strategies Journal, October 21, 2016. 


October 21, 2016 in Estate Planning - Generally | Permalink | Comments (0)

Thursday, October 20, 2016

Forum Non Conveniens Doctrine in Probate Litigation

Forum non conveniansThe forum non conveniens doctrine allows courts to defer jurisdiction when justice and convenience principles favor the action in another forum, further requiring a three-step analysis. In Shu v. Wang, a Taiwanese billionaire died intestate with three separate families. These families were litigating against each other over the distribution of his assets. Normally, an adequate alternative forum exists when the defendant is amenable to process in another jurisdiction and there is a cause of action that provides the plaintiff with a satisfactory redress. Ultimately, the court held that the plaintiffs could obtain a satisfactory remedy in Taiwan because two of the defendants lived there and the other consented to its jurisdiction. 

See Jeffrey Skatoff, Forum Non Conveniens in Federal Probate Litigation, Florida Probate Lawyers, October 18, 2016. 


October 20, 2016 in Estate Planning - Generally, Intestate Succession, New Cases | Permalink | Comments (0)

Article on Dr. Jekyll's Testamentary Capacity for His Will

JekyllStephen R. Alton recently published an Article entitled, The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity, Tulsa L. Rev. (forthcoming). Provided below is an abstract of the Article:

Robert Louis Stevenson’s classic novella, The Strange Case of Dr. Jekyll and Mr. Hyde, published in 1886, is the well-known tale of a respected scientist (Dr. Henry Jekyll) who transforms himself into an evil-doer (Mr. Edward Hyde). While the work raises issues of tort and criminal liability, this article analyzes the legal issues presented by one particular and crucial plot device that Stevenson employs — the last will of Dr. Jekyll. It is this will that so obsesses Jekyll’s friend and solicitor, Gabriel John Utterson (through whose eyes the story unfolds), that Utterson is impelled to seek the truth behind his friend’s relationship to Hyde. At the end of Utterson’s search, the solicitor learns about Jekyll’s dangerous scientific experiment, which leads to the respected doctor’s moral downfall and his physical death.

This article is presented as an imagined dialogue between the article’s author and Jekyll’s lawyer, Utterson, about the issues surrounding Jekyll’s mental capacity to make the will that left the doctor’s estate to Hyde. Jekyll’s will is an excellent case study for the application of various legal rules and doctrines regarding a testator’s mental capacity to make a valid will. These rules include those relating to the general soundness of the testator’s state of mind, the issues of undue influence and duress, and the doctrine of insane delusion. Stevenson’s novella is a wonderful vehicle for examining important legal problems that remain as relevant in America today as they were in England during Queen Victoria’s reign.


October 20, 2016 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Wednesday, October 19, 2016

Putting Your Assets in a Living Trust

Living trustPutting your home and other assets in a living trust can make things financially and emotionally easier on your loved ones. A living trust is a legal document that holds your assets in trust while alive and transfers those assets to your beneficiaries at death. This type of trust can either be revocable or irrevocable, depending on the amount of control the creator of the trust desires. On the other hand, a will goes into probate, requiring court supervision of your property over a longer period of time. Diligently exploring your estate planning options can help make the process more manageable. 

See Why Should I Put My Home in a Living Trust?, Fox News, October 5, 2016. 


October 19, 2016 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)