Wills, Trusts & Estates Prof Blog

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

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Friday, December 19, 2014

Imperial Sugar Money Missing

Imperial sugar

When the Imperial Sugar Refinery exploded in 2008, fourteen workers were killed and more than forty were injured.  Because of this devastating event, the children of the victims received money held in trust listed at $81,109.  However, an attorney for the families of the children notified Chatham County that the money is now missing through the actions of Probate Court clerk Kim Birge. 

In an ante litem letter, attorney Brent J. Savage wrote that the funds at issue were provided to the court to be held in trust “for the benefit of minor children who lost their fathers in the Imperial Sugar explosion” and “are currently unaccounted for.” 

Savage further wrote, “We believe that the county is responsible for the actions of the clerk of the Chatham County Probate Court and for the negligence of the judge of the Probate Court in its failure to properly monitor the actions of Kim Birge and for fiscal responsibility.”  The letter was sent to Chatham County Commission Chairman Al Scott, and County Attorney John Hart.  Savage is expected to seek damages for the lost funds, interest on those funds, and other general damages. 

See Jan Skutch, Money for Children of Imperial Sugar Victims Stolen By Fired Court Clerk, Attorney Says, Savannah Morning News, Dec. 19, 2014.

December 19, 2014 in Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Reinventing The Nursing Home

Nursing home

A new “culture change” movement in long-term care is reinventing the archaic model of nursing homes.  These hospital-like institutions most of us dread can be transformed, which will improve the quality of life for both residents and staff. 

One leader of this growing movement is Dr. Bill Thomas, a geriatrician in Ithaca, N.Y., who believes traditional nursing homes should be replaced with a model he labeled the Green House, a home of 10 to 12 elders, assisted by specifically trained staff.  The Green House is a leading example of a new trend in person-centered care that has been percolating for 15 years.  The Green House is known best for its homey environment, family-style dining room with hearth and comfy chairs.  Researchers are further finding that Green Houses not only provide a higher quality of care, but are also less expensive as residents have fewer hospitalizations and are able to maintain higher functioning.  Green Houses have higher occupancy rates and increased levels of resident and family satisfaction.

Today, with funding support from the Robert Wood Johnson Foundation and NCB Capital Impact, 170 Green Houses in 27 states are operating, and dozens more are in development.  While this is progress, it is only a fraction of the nation’s nearly 16,000 nursing homes. 

See Beth Baker, Reimagining What A Nursing Home Can Be, Forbes, Dec. 19, 2014.

December 19, 2014 in Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Taking Advantage of Current Estate Tax Breaks


December is a busy time for almost anyone.  Amidst the hustle and bustle, do not forget to take advantage of the current tax breaks offered under estate and gift planning laws.  If you miss these opportunities, they may not present themselves again.

One of the last tax breaks in the estate and gift tax system is your right to make gifts of $14,000 to any number of donees free of transfer tax this year.  In making these gifts, you are able to reduce your estate and avoid death taxes. 

If you make gifts in excess of the annual exclusion amounts, you will use some of your lifetime unified estate and gift tax exemption.  Yet, the sooner you use it, the more income and appreciation that will pass tax-free to your family in the future.  This is particularly true as the stock market continues to soar. 

If you are not comfortable in making gifts of $14,000 or of your $5.34 million exemption, you can put the gifts into a Crummey Trust instead.  A Crummey Trust (Gift Trust) can be designed so that you can take advantage of your annual exclusion gifts and still leave your family with access and control.  If your family needs access to the trust funds, the trust income and assets are available.  But if your family does not need them, they remain sheltered and grow. 

See John S. Lueken, How To Get The Most Out Of Your Year-End Gift And Estate Tax Planning, Bingham Greenebaum Doll, Dec. 15, 2014. 

December 19, 2014 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Title Insurance Issues Triggered By Estate Planning Transfers

Title insurance

While estate planning attorneys frequently advise their clients about the advantages of transferring real property to irrevocable trusts or other estate planning vehicles, they may not consider the potentially calamitous title insurance implications of such transfers.  The original property owners may have had coverage under their policy, however, once the property is transferred to the estate planning entity, coverage could be lost since the entity is no longer insured.

The consequences of losing valid title insurance coverage can be significant.  Covered matters include unmarketability of title, defects, liens, encumbrances on the title, and the like.  

In Kwok v. Transnation Title Ins. Co. (2009) 170 Ca4th 1562, insureds found themselves in an easement dispute with their neighbors.  Although they may have had a valid claim under their title insurance policy, they had transferred title to their property from their limited liability company to an irrevocable trust.  The insureds ineffectively argued that the transfer only effected a change in the method of holding legal title, not a change in their proportional beneficial interest. The court held that "Under the terms of the policy, appellants could only become insureds by operation of law. The transfer of property by an insured into a family trust is a voluntary act and not one that arises by operation of law."

The steps an estate planning attorney can take to avoid this title insurance conundrum include asking the client for a copy of the title insurance policy to make sure it defines “insured” to include estate planning entities.  Also, if the policy has a narrower definition of insured, contact the title insurance company and obtain an Additional Insured endorsement. 

See Karen Turk, Dead Man “Kwoking”: Estate Planning Property Transfers Can Trigger Title Insurance Nightmares, JD Supra Business Advisor, Dec. 18, 2014.

December 19, 2014 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

The Importance of Consistent Estate Planning

Tax3An important lesson in coordinating all accounts and estate planning tools to match estate planning goals was illustrated in a recent Private Letter Ruling. A trust was created which named charities to receive donations from the trust. There was not enough funding for the charitable contributions, but the trust was named as a beneficiary of an IRA. A state court approved the taxpayer's petition to reform the trust so the funds from the IRA to the trust and then from the trust to the charities would be direct bequests from the IRA to the charities.

In  Private Letter Ruling (201438014), the court's grant of the reformation for the purpose of beneficial tax treatment was not allowed, and the IRA distribution to the Trust would be income. Additionally, the donations would not be deductible because gross income was not required under the trust terms to be used to make the donations.

See Joseph Tamburello, Coordinate Your IRA Beneficiary Designation With the Terms of Your Estate Plan, The National Law Review, Dec. 18, 2014.

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

December 19, 2014 in Estate Planning - Generally, Income Tax, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Tax Extenders for Charitable Contributions Passed

Tax CutAs I have previously discussed, a bill that would have made three charitable tax breaks permanent failed in the House last week. However, with the Senate passing a one-year tax extenders bill on Tuesday, the three charitable tax breaks are now extended through December 31, 2014. The three charitable extenders are for charitable IRA rollovers, Conservation Donations, and Food Inventory Gifts.

See Ashlea Ebeling, Charity Tax Breaks Extended Through 2014 Only, Forbes, Dec. 17, 2014.

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

December 19, 2014 in Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Using Annuities to Decrease Tax Consequences of IRAs

IRAThe use of annuities along with other retirement and estate planning tools can help reduce tax burdens by differing taxes. If required minimum distributions from an IRA are unneeded or unwanted, a deferred annuity can be purchased up to 25% of each IRA's assets of $125,000 total max to reduce required distributions and tax consequences. Additionally, heirs of the annuity can now maintain tax deferral even if they switch insurers through a 1035 exchange. Tax deferral may also be achieved for trust income through a variable annuity.

See Karen Hube, Annuity Novelties, Barron's, Nov. 29, 2014.

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

December 19, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, December 18, 2014

New Breakthrough In Treating Strokes


Researchers in the Netherlands have discovered a treatment that improves the prognosis for people who have the most severe and disabling strokes.  By directly removing large blood clots blocking blood vessels in the brain, they are able to save brain tissue that would otherwise have died, in turn enabling many to return to an independent life. 

The study was published in The New England Journal of Medicine, and is being met with an inundation of exhilaration after three decades of failure.  One reason the treatment is thought to have worked this time, is that doctors used a new type of snare to grab the clots.  It is a stent, which is basically a wire cage, on the end of a catheter that is inserted in the groin and threaded through an artery to the brain.

Each year, about 630,000 Americans have strokes caused by clots blocking blood vessels in the brain.  In almost half of these cases, the clot is a large vessel, which can have devastating consequences. 

See Gina Kolata, Breakthrough Helps Treat Worst of Strokes, The New York Times, Dec. 18, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

December 18, 2014 in Current Events, Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Retirement Lessons From Ebenezer Scrooge


Many of us have seen the classic, A Christmas Carol, or have at least heard of the infamous Ebenezer Scrooge, the character Charles Dickens described as tight-fisted, squeezing, wrenching, grasping, clutching and covetous. 

Despite some of these flaws, Scrooge also possessed some qualities that make him a decent role model for achieving a secure and meaningful retirement.  Below are three ways we should emulate (in moderation) to improve our retirement outlook.

  1. Scrooge had a hard work ethic. Scrooge always put in a full days work.  The commitment to work that Scrooge displays is crucial to successful retirement because you cannot build a nest egg without regular income and the amount you earn and number of years on the job will determine you Social Security benefit—a key source of retirement income. 
  2. He was a prodigious saver.  Scrooge knew about saving a buck.  Although he went a little far by living in the dark, keeping a small fire and eating gruel from a saucepan, he had the right idea; if you live below your means by not splurging on vacation, cars and big houses, you will have a better chance of saving that can lead to a better retirement. 
  3. Scrooge (eventually) understood what mattered.  While it took a few visits from ghosts to transform Scrooge, he morphed into a generous and compassionate person who sends a turkey to the Cratchit home for Christmas dinner.  Similarly, retirement planning is not just about the money.  It is about creating a retirement lifestyle that has meaning and purpose as well as financial security.

See Walter Updegrave, What Scrooge Can Teach You About Retirement Planning, Money Magazine, Dec. 17, 2014.

December 18, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Should Your Teenager Open A Roth IRA?

Teenager moneyMany parents are concerned about how to prepare for their kids’ financial futures.  This apprehension is usually in the context of college savings or estate planning, however, some parents are also concerned for their children’s retirement.  Oftentimes, parents ask: “Should a teenager open a Roth IRA?”

Because of compound growth, the earlier you save for retirement, the better.  The tax benefits of a Roth IRA for kids can be great because you pay taxes on your contributions, not earnings or withdrawals.  Thus, helping your children start a Roth IRA in their teenage years can help them enormously down the road, especially since there is no minimum age for opening a Roth. 

Despite the advantages, opening a retirement for a minor can be tricky as there is a separate set of considerations from the ones you would use to open your own.  Furthermore, to be eligible to open a Roth IRA, your children must earn some taxable compensation income, and the yearly contributions to their account cannot exceed what they earn. 

Although creating a Roth IRA for your teenager is not very common, it can be a great way to instill financial independence early, specifically by making them responsible for their contributions. 

See Matt Shaprio, Is It A Good Idea For Teens To Open A Roth IRA? Forbes, Dec. 18, 2014.

December 18, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)