Wills, Trusts & Estates Prof Blog

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

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Thursday, March 26, 2015

Tom Benson Speaks Out

Tom Benson speaksFor the first time on Tuesday, New Orleans Saints and Pelicans owner Tom Benson talked about the difficult decisions he had to make by ousting his former heirs from the family business.  Benson said he feels strongly about the state of both the franchises during an interview in Phoenix. 

Benson explained how his wife of ten years, Gayle, has been sitting in on more league meetings than ever before, including one Tuesday when she was allowed to join Benson, general manager Mickey Loomis and coach Sean Payton in a session that is normally limited to just three per club.  Although Benson’s heirs have questioned Gayle’s lack of experience and success in her former interior design business, Tom Benson pointed to that history as a plus.  "We got married about 10 years ago and before that she was in business. So it's nothing new to her. It's not like somebody who was never in business. She knows the difference. You've got to make a profit against a loss."  Benson stressed that the plan with Gayle in charge would keep things running the way they are now, with a mostly hands-off ownership allowing the bulk of decisions to be made by the vice president.

See Mike Triplett, Benson Defends Call to Shut Out Heirs, ABC News, March 24, 2015.

March 26, 2015 in Current Affairs, Elder Law, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Covering Your Basis

InvestmentWhen selling an asset such as a stock, you owe capital gains tax on the difference between the sale price and what you paid for it, which is your cost basis.  Yet, if you inherit certain assets, including marketable securities, you can “step up” their tax basis to whatever they were worth at the benefactor’s death.  This means highly appreciated inherited stock can be sold immediately with no capital gains, or later, when all the gains before you inherited are not counted.

Step-up became a more significant concept after the legislative deal Congress passed in 2013, which made permanent a generous exclusion from estate and gift tax.  In the same tax bill, Congress raised the top rate on long-term capital gains. 

There are several ways to minimize capital gains tax.  One includes making charitable donations.  For gifts of marketable securities to a public charity, donors are entitled to an income tax deduction for up to 30 percent of adjusted gross income if the stock is held for more than a year. 

Another tax-planning tool is to convert a Traditional IRA to a Roth.  Although you must pay income tax on the amount you are converting, after that no income tax is assessed on distributions by you or your heirs.  Moreover, any withdrawals by you or your heirs do not get added to taxable income. 

Finally, married couples who live in a community property state have a basis advantage.  Most of what you acquire once you are married and living in a community property state, you and your spouse are each considered a half-owner.  Thus, when the first spouse dies, both halves of the property get a step up in basis, effectively minimizing capital gains tax if the surviving spouse sells the property.

See Deborah L. Jacobs, What Every Investor Needs to Know About Basis, Morningstar, March 25, 2015.

March 26, 2015 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

House Committee Approves Estate Tax Repeal

CongressA bill approved Wednesday by the House Ways and Means Committee would repeal the 99-year-old U.S. estate tax. 

The legislation was backed on a 22-10 party-line vote and would benefit about 5,500 families who pay the tax each year plus thousands of others who organize their finances to avoid the 40 percent tax on their estates.  The caveat: it would deprive the U.S. government of $269 billion in revenue over a decade. 

Despite passing in the Ways and Means Committee, the measure will likely not become law under President Barack Obama, who would like to impose higher estate taxes.  Rather, the bill places a marker for business groups that have been pressing Congress to act and could possibly foreshadow what Republicans might do if they control both Congress and the White House in 2017. 

The bill, H.R. 1105, is sponsored by Texas Republican Kevin Brady and would levy a gift tax on transfers made during one’s lifetime.  The existing $5.43 million lifetime exemption would remain, and the rate would be reduced to 35 percent from 40 percent.  Under Brady’s bill, there would be no estate tax, but heirs would still owe capital gains taxes on the amount exceeding $20 million.

See Richard Rubin, Wealthiest Win as U.S. House Panel Advances Estate-Tax Repeal, Bloomberg Business, March 25, 2015.

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

March 26, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Article on Challenges Facing the Posthumously Conceived Child

Test tubesAndrew T. Peebles (J.D. Candidate, University of Missouri School of Law, 2015) recently published an article entitled, Challenges and Inconsistencies Facing the Posthumously Conceived Child, 79 Mo. L. Rev. 497-515 (2014).  Provided below is the article’s introduction:

The use of artificial reproductive technology (ART) has increased sharply in recent decades as families plan ahead in the face of such difficulties as disease and military service that raise doubts as to whether reproduction will be possible for an individual in the future.  Posthumous conception of children is a widely used form of ART, and it allows families to expand, even after the death of one of the parents.  In vitro fertilization is the newest form of this technology.  But for the posthumously conceived child, the difficulties continue as most states bar these children from inheriting Social Security survivor’s benefits from a deceased parent.  The Supreme Court of the United States case of Astrue v. Capato ex rel. B.N.C. has recently given authority to this inequality, holding that posthumously conceived children are eligible for such benefits if they qualify as a “child” under state intestacy law. However, the Court’s decision in this case has left several problems unresolved that will continue to plague courts in the future and will lead to further inconsistent decisions and disparities for children born through in vitro fertilization.  Due to the rise in the use of this innovative technology, these issues affect an increasing portion of the population.

This Note will discuss the problems with the Supreme Court of the United States’ decision, the inconsistencies that exist in state intestacy law, and the solutions that are necessary to remedy these challenges.  Part II gives a brief background of the facts and circumstances surrounding Astrue.

Part III discusses the history of the Social Security Administration and in vitro fertilization and points out the conflicting results from various jurisdictions that have dealt with this issue.  Part IV delves into the Supreme Court’s reasoning behind its decision in Astrue.  Finally, Part V comments on the reasons Astrue was poorly decided, the difficulties that will result from the decision, and the methods to resolve these complications.

March 26, 2015 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Technology | Permalink | Comments (0) | TrackBack (0)

Book on Asset Protection Planning

Asset Protection PlanningJames M. Lestikow and Robert Alan Romanoff's book plus DVD package entitled Asset Protection Planning also counts for 4.00 General and 1.00 Professional Responsibility CLE credit hours. Provided below is a description of the package from the ABA Store:

Protect your clients’ personal and business holdings against future risk with this book and video combination pack!

 Asset protection planning takes many forms. It includes basic advice, inherent in common estate planning strategies, covering such things as gifting, testamentary trusts, revocable trusts, and postmortem planning. It is one of the major motivations in creating limited liability entities for new businesses and to hold family assets. It impacts family lawyers who prepare premarital agreements, as well as real estate lawyers contemplating taking title to acquired property, as well as lawyers counseling clients filing for bankruptcy protection. At the other end of the spectrum are transactions related to removing assets from the easy reach of unknown and potential creditors, which include domestic and foreign asset protection trusts.

This Asset Protection Planning package covers these strategies and more, including sections on:

  • Practical and Ethical Considerations
  • Fraudulent Transfers
  • Bankruptcy Issues Under the Bankruptcy Abuse Prevention and Consumer
  • Protection Act
  • Protecting Family Assets
  • Drafting Considerations for Trusts
  • Planning for Exempt Assets
  • Protecting Business Assets
  • Asset Protection During Estate and Trust Administration
  • Onshore Trusts            

Benefit from highly experienced estate and financial planners as they guide you through how to protect your client’s family and business assets. Asset Protection Planning provides a thorough and highly informative resource for both seasoned planners and those who are still learning the foundations of a solid practice. Includes downloadable forms.

Video available for CLE credit: 4.00 General, 1.00 Professional Responsibility.

March 26, 2015 in Books, Conferences & CLE, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 25, 2015

2015 RPTE Law Student Writing Contest

Writing 2The American Bar Association Section of Real Property, Trust and Estate Law is holding the annual RPTE Law Student Writing Contest.  The goal of the contest is to encourage and reward law student writing on the subjects o real property or trust and estate law. Article submitted for judging are encouraged to be of timely topics and have not been previously published This contest is open to all law and LL.M students currently attending an ABA-accredited law school.  Top three articles will be awarded:

1st place:

  • $2,500 award
  • Free round-trip airfare and hotel accommodations to the RPTE Fall Leadership Meeting in Laguna Beach, CA 7-9, 2014. This is an excellent meeting to network with RPTE leadership!
  • One year free RPTE membership
  • Consideration for publication in The Real Property, Trust and Estate Law Journal, the Section's law review journal, which is mailed to 24,000 RPTE members
  • Name and essay title will be published in the eReport, the Section's electronic newsletter

2nd place: 

  • $1,450 award
  • One year free RPTE membership
  • Consideration for publication in The Real Property, Trust and Estate Law Journal, the Section's law review journal, which is mailed to 24,000 RPTE members
  • Name and essay title will be published in the eReport, the Section's electronic newsletter

3rd place: 

  • $1,000 award
  • One year free RPTE membership
  • Consideration for publication in The Real Property, Trust and Estate Law Journal, the Section's law review journal, which is mailed to 24,000 RPTE members
  • Name and essay title will be published in the eReport, the Section's electronic newsletter

March 25, 2015 in Estate Planning - Generally, Writing Competitions for Students | Permalink | Comments (0) | TrackBack (0)

CLE on Using Lifetime QTIPs

CLE Photo

The American Bar Association Section of Real Property, Trust and Estate Law is holding a CLE entitled, Creative Estate Planning Strategies for Using Lifetime QTIPs, on April 7th from 12:00 – 1:30 PM CT via webinar.  Here is why you should attend:

Lifetime QTIPs, once used infrequently, are now increasing in popularity as planners see their tremendous benefits. In fact, lifetime QTIPs are perhaps one of the best and most under-utilized estate planning techniques.

Recent changes to the income and transfer tax laws contribute to the utility of lifetime QTIPs, catapulting it into the main stream of every-day planners. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the American Taxpayer Relief Act introduced portability and generally increased the income tax rates relative to the estate tax rates. As a result of these changes, lifetime QTIPs can be used to ensure higher exclusions of both spouses are used notwithstanding the order of deaths and to achieve better income tax results, but that is just the tip of the iceberg!  

Lifetime QTIPs must provide a qualifying interest for life to the beneficiary spouse, notwithstanding the possibility of divorce.  The panel will sort through the post-divorce income tax and marital law implications that must be considered when establishing a lifetime QTIP.

March 25, 2015 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Kidney Catastrophe


MalpracticeIn 2013, Christine Clark underwent months of testing so that she could donate her kidney to a longtime friend with end-stage renal disease.  On July 2, 2013, almost an hour after doctors removed Clark’s kidney, they put her friend under anesthesia to receive the transplant.  Her friend had been under anesthesia for two hours when the hospital canceled the surgery.  Clark says doctors stopped the transplant because she had tested positive for hepatitis C. 

Clark and her husband subsequently filed a complaint in the Dauphin County Court of the Common Pleas, claiming the failure to perform the correct test in time “caused catastrophic consequences.”  The complaint further stated, “had appropriate protocols been established and/or followed, the intended recipient would have received plaintiff’s harvested kidney . . . Instead, they purportedly donated the kidney to a hepatitis C-positive patient at a different facility and obtained financial gain and prestige for said transplant.”

Having never received an explanation from the hospital about the failure of the transplant, Clark says the loss of her kidney has left her with various injuries including low blood pressure, nerve damage, scarring and humiliation.  She and her husband are seeking punitive damages from the hospital, Central Pennsylvania Transplant Foundation Inc., and its doctors and nurses for negligence, misrepresentation, and battery. 

See Lana Morelli, Kidney Donor Says Surgery Was a Disaster, Courthouse News Service, March 24, 2015.

March 25, 2015 in Current Events, Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Latest Battle in Ernie Banks' Estate

Ernie BanksThe caregiver in charge of Ernie Banks’ estate wants the late Chicago Cubs player’s estranged wife to turn over records of any assets he left behind in the couple’s California home when they separated.  In a court filing, Regina Rice said Banks had “attempted to retrieve” assets from the home after he moved out in 2012 but that he was unable to get them back from his wife.  Rice has asked Cook County Probate Judge James Riley to order Banks’ wife to turn over records of any assets in her control so Rice can complete a full accounting of the estate.  A hearing on the case is scheduled for Thursday. 

See Jason Meisner, Ernie Banks’ Caretaker Wants List of Assets from Ex-Cub’s Estranged Wife, Chicago Tribune, March 24, 2015.

March 25, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Guardianship | Permalink | Comments (0) | TrackBack (0)

Estate Planning Record Keeping Checklist

FileOnce estate planning documents are in order, making sure the individuals that will be implementing your plan have all the necessary information to do so is an important step. Here is a top ten list of information to include in the records stashed in a safe location that is accessible to those who will need them:

  1. A list of personal information, such as your legal name, address and birth date.
  2. Statements from all financial accounts and list of other locations that hold assets, such as safe deposit boxes.
  3. Copies of any lease agreements, titles, and insurance policies for real estate holdings.
  4. Business records, such as a copy of a partnership agreement.
  5. Recent statements for any account with beneficiary designations, such as life insurance.
  6. Documentation of any debt owed.
  7. Copies of estate planning documents with a instructions on where the originals are kept.
  8. Tax returns and records that provide supporting documentation.
  9. A detailed digital assets list accompanied with account information needed to access the accounts.
  10. An up-to-date contact list for all professional advisors.

See Megan L.W. Jerabek & Jaime D. Levine, Estate Planning Update--February 2015: Personal Record Retention Top Ten, The National law Review, Feb. 9, 2015

Special thanks to Jim Hillhouse for bringing this article to my attention.

March 25, 2015 in Estate Administration, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)