Wills, Trusts & Estates Prof Blog

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

Thursday, December 8, 2016

Article on Future of Federal Estate Tax

Estate tax3Kevin T. Keen recently published an Article entitled, The Only Thing Is Uncertainty: The Future of Estate Planning Without the Federal Estate Tax, 51 Real Prop. Tr. & Est. L.J. 129 (2016). Provided below is a synopsis of the Article:

Given the current political environment, the possibility of a federal estate tax repeal has seemingly become more likely. The effect of a possible near-term repeal of the federal estate tax creates further uncertainty in a field that is constantly evolving. This uncertainty is nothing new. However, taking into consideration the substantial and cascading changes of the American Taxpayer Relief Act of 2012, focusing on current proposed legislation to repeal the estate tax is important to present estate planning efforts. With the 2016 presidential election looming on the horizon, it is not unrealistic to foresee significant changes to the existing income and transfer tax regime ahead.

This Article discusses the current happenings with respect to the most recent efforts to repeal the federal estate tax, offers a glimpse into the possible consequences to the federal income and wealth transfer taxes as a result of such repeal, and explores what considerations may drive future estate planning should one of two circumstances involving a repeal of the estate tax materialize. It behooves the estate planner to consider these potential outcomes and leverage the uncertainty in planning. In any case, income tax considerations will continue to have an increasingly meaningful role in sophisticated estate planning, regardless of the uncertainty that lies ahead.

December 8, 2016 in Articles, Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Wednesday, December 7, 2016

Article on Retained Rights Triggering IRC Section 2036

Irc 2036Leslie M. Levy recently published an Article entitled, Section 2036 of the Internal Revenue Code: A Practitioner’s Guide, 51 Real Prop. Tr. & Est. L.J. 75 (2016). Provided below is a synopsis of the Article:

This Article summarizes the current law and issues surrounding section 2036 of the Internal Revenue Code (Code). Specifically, this Article examines retained rights that trigger section 2036. It also addresses the issues surrounding the definition of a “bona fide sale” and the different tests employed by different courts. Lastly, this Article examines the definition of “adequate and full consideration in money or money's worth” and two highly debated issues in that area. It concludes that understanding the Internal Revenue Service's (Service) position on the issues involving section 2036 can reduce the likelihood of a Service audit and lead to substantial estate tax savings.

December 7, 2016 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Family Starts Foundation After Son Dies from Food Allergy

Nut allergyA family is raising awareness on the life-threatening symptoms of food allergies after the sudden death of their son. After eating a nut contained in a piece of cake, a small blister appeared on the boys lip. Shortly after, he went into anaphylactic shock, and the administered EpiPens could not halt the outcome. To help raise awareness, the family has created the Red Sneakers Foundation in their son’s memory. With this foundation, the family hopes to launch educational programs, fund research, and contribute to the formation of public policy.

See Boy’s Death After Unknowingly Eating Nut in Cake Leads Family to Start Foundation, Fox News, December 6, 2016.

December 7, 2016 in Current Events, Estate Planning - Generally, Food and Drink | Permalink | Comments (0)

Widow Sues Over Husband's Death Due to Emotional Distress

WalgreensA widow is suing an Orlando Walgreens, alleging that the store held her husband captive and made him clean the store’s bathroom. She claims that the humiliation caused emotional distress that led to death of her husband. The lawsuit does not detail how much time passed between the incident and the husband’s death. The amount the widow is suing for is undetermined, but there is a standing offer to settle the suit for $500,000.

See Man Dies of Emotional Distress After Being Forced to Clean Walgreens Bathroom, Widow Says, WFTV 9, December 6, 2016.

December 7, 2016 in Current Events, Estate Planning - Generally, New Cases | Permalink | Comments (0)

Article on Doctrines of Reimbursement, Contribution & Subrogation

Doctrine of reimbursementBrian D. Hulse recently published an Article entitled, After the Guarantor Pays: The Uncertain Equitable Doctrines of Reimbursement, Contribution, and Subrogation, 51 Real Prop. Tr. & Est. L.J. 41 (2016). Provided below is a synopsis of the Article:

This Article addresses the equitable doctrines of reimbursement, contribution, and subrogation as they apply to guarantors and other secondary obligors. Specifically, it explores in detail guarantors' and other secondary obligors' rights after they make payment under the guaranty or other secondary obligation and then seek to recover some or all of the amount paid from the borrower, other guarantors, or the collateral for the primary obligation. This article discusses the inconsistencies in the case law on these subjects, which can create unpredictable results. It concludes that, when multiple parties are liable on a common debt, in whatever capacity, they should enter into appropriate reimbursement and contribution agreements at the outset of the transaction to avoid litigation and unpredictable outcomes.

December 7, 2016 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, December 6, 2016

Article on Intellectual Property Dimensions of Real Property

Intellectual propertyMichael N. Widener recently published an Article entitled, Brand: Modern Realty Transfers' Iconic Dimension, 51 Real Property, Trust & Estate L.J. 23 (2016). Provided below is an abstract of the Article:

Any real estate project branded "Trump [Product Type]" is better positioned in marketing circles than equivalent projects lacking that association.* The preceding sentence reminds you that real estate is a consumer product in one seminal respect. Brand, even in real property development, reflects upon the lifestyles of persons shopping, eating, working and sojourning in a unique place. Development projects today need branding to differentiate themselves from other places and to message to potential shoppers, consumers, tenants or buyers what it's like to engage in a dynamic environment or to enjoy the creative energy of fellow occupants or the surrounding neighborhood. Messaging has much to say about the image and reputation of a commercial property – and the expected momentum of the project's lease-out or unit sales. It creates an emotional, visceral connection with shoppers, travelers, workers or whomever is the target of the "experience" narrative. 

Such vital components of those images and messages that cumulatively constitute the "brand" of a real estate development must follow ownership or leasing of the project. This paper identifies all the critical branding elements, discusses how in this digital age they are registered (secured) in their creators, and how (and why) future use of those elements must be secured by the buyer or the ground tenant – whomever is the transferee of the physical project. As new means of expression such as Memes and GIFs, followed by emoticons, populate the branding realm, the practitioner must stay on her toes to advise transferees of their burdens of due diligence and securing rights in the brand. This paper suggests the proper path to transferees' ongoing rights to control the brand elements beyond closing on the concurrent real property transaction. 

*If you doubt this proposition, consult Donald Trump for his view. This abstract itself tests the power of the surname Trump to secure "views" and downloads of the accompanying paper.

December 6, 2016 in Articles, Estate Planning - Generally, Technology | Permalink | Comments (0)

Wealthy Families, the Next Generations & Philanthropic Desires

UnhwWealthy families can now transfer their wealth to the next generations at a transfer tax discount of up to 50% while receiving up to a 50% charitable income tax deduction. Two important developments have allowed ultra wealthy families to enjoin their desires for multi-generation wealth transfer and expansion of charitable visions. A 2004 revised regulation permitted charities to create new pooled income funds (PIFs) that distributed income in the form of post-contribution long term capital gain under a trustee as long as it was included in the trust document—or a total return PIF. This new regulation allowed PIFs to distribute significantly more over time. This opportunity has only recently become an opportunity as these total returns PIFs are now permitting multi-generation donor agreements. Further, any realized long-term capital gain that is not distributed is considered permanently set aside for charity and not taxed to the trust or beneficiaries. This feature allows income to grow and compound tax-free for the benefit of future generations. These availabilities create more opportunity for ultra high net worth families and their charitable desires.

See Richard Haas, Fusing Family and Philanthropic Visions, Wealth Management, December 5, 2016.

December 6, 2016 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Wealth Transfer Tax Reform

Wealth transfer taxJoseph M. Dodge recently published an Article entitled, Three Whacks at Wealth Transfer Tax Reform: Retained-Interest Transfers, Generation-Skipping Trusts, and FLP Valuation Discounts, 57 B.C. L. Rev. 999 (2016). Provided below is an abstract of the Article:

This Article offers three sets of proposals to reform the existing federal wealth transfer tax system, the common theme being the link between the timing of the taxable transfer and valuation. Under the first set of proposals, transfers with retained interests would be taxed at the first to occur of the transferor's death or the date the interest expired. In addition, the term “retained interest” would be broadly construed to encompass the power to revoke and the possibility of receiving income or corpus under another person's power. The second set of proposals relates to the generation-skipping tax. To achieve accurate valuation, the tax would be imposed only on taxable distributions, and the exemptions would either be the unused gift/estate exemptions of deemed transferors or separate per-transferee exemptions. The third set of proposals relates to valuation discounts of interests in family-held entities, mostly family limited partnerships. The lack-of-marketability discount for family investment-holding entities should be ignored because the tax-motivated destructions of non-unique value are against public policy, and the removal of the value-depressing restrictions is likely to occur in the future. Minority-interest discounts should not be recognized where minority status exists by reason of marital property rights or arises by gift or bequest. As a transition rule (or as an alternate approach), the disappearance of value-depressing restrictions and the recombining of minority interests into a majority interest should, where valuation discounts were previously obtained, be subject to a recapture excise tax.

December 6, 2016 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax | Permalink | Comments (0)

How Your Income Affects Your Longevity

Rich v. poorA recent study shows that poverty, on average, cuts ten years off American men’s lives and seven off women’s. The study examined longevity, smoking, obesity, and childhood poverty among other health information for the richest and poorest Americans. Individuals who grow up in low-income and deprived areas are likely to have lower health trajectories. If there is continued failure to address economic, educational, and health disparities, it will lead to a larger gap between the rich and the poor.

See Richest Americans Live Seven to 10 Years Longer than Poorest, Fox News, December 5, 2016.

December 6, 2016 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

Monday, December 5, 2016

How Will Trump Affect Charitable Giving

Charitable giving1Due to our nation’s recent political changes, there is uncertainty about where charitable giving is headed. Trump optimists say that if he expands the economy, there will be additional wealth, which will lead to more giving. This along with tax cuts should allow the wealthiest people to continue leading the category for the most charitable contributions. However, the wealthiest people often give to get their name put on a building rather than to those in need, so it is important to have a wide array of givers. As we wait for these events to unfold, we should not forget that December is the biggest giving month and look to the positive of the future of charitable giving.

See Albert R. Hunt, Where Charitable Giving May Head with Trump, Bloomberg, November 27, 2016.

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

December 5, 2016 in Current Events, Estate Planning - Generally | Permalink | Comments (0)