Wills, Trusts & Estates Prof Blog

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

Friday, January 19, 2018

What the Wealthy Should Consider Because of the Higher Estate Tax Exemption Levels

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-19/589bb9ba-669a-4bdf-b70b-b877e8fa9dfe.pngA number of high-net-worth families will no longer have to worry about estate taxes due to the Tax Cut and Jobs Act. With the exemption threshold effectively doubled, the estate tax will impact far fewer households. Though advisers warn that the estate tax may come back in the future, many families are revisiting their estate plans with their planners. A big area of potential savings comes from modifying life insurance policies that are no longer needed. Frank Seneco, president of Seneco & Associates, says that if "there isn’t a need for life insurance to pay estate taxes, then the issue is how clients should best unwind or modify their existing life insurance policies." Possible solutions may be to adjust the death benefit, a life settlement, or to convert the existing policy into a private placement policy. By reexamining estate plans, the wealthy can pass on significantly more to their loved ones at death.

See Russ Alan Prince, What the Wealthy Should Consider Because of the Higher Estate Tax Exemption Levels, Forbes, January 15, 2018.

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

January 19, 2018 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Thursday, January 18, 2018

Ron Aucutt’s “Top Ten” Estate Planning and Estate Tax Developments of 2017

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-18/f4a3b61e-58e1-4dfa-9449-48a8d2ecf843.pngRonald Aucutt, partner at McGuire Woods, marked the following as the most notable estate tax and estate planning developments for the 2017 year:

10. Challenges involving the substantiation of charitable contributions,
9. The decline of state estate taxation,
8. Retroactive relief for married, same-sex couples,
7. Growing acceptance of asset protection trusts,
6. Portability developments,
5. Ongoing tension between Congress and the IRS,
4. Complete withdrawal of the proposed § 2704 regulations,
3. An extraordinary family limited partnership case,
2. The Trump administration effect on the regulatory environment, and
1. The Tax Act.

See Ronald Aucutt, Ron Aucutt’s “Top Ten” Estate Planning and Estate Tax Developments of 2017, McGuireWoods, January 11, 2018.

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

January 18, 2018 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

The Many Benefits of DAPTs

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-18/d7db7568-c49f-4c1d-a743-e5165fef877c.pngIt is unfortunate that the estate planning industry has come to view domestic asset protection trusts (DAPTs) as an equivalent to the self-settled spendthrift trust. This conflation is somewhat undesirable, as the term, “spendthrift trust,” is commonly used as a pejorative due to its regular use in hiding assets from creditors. But, whatever the name, DAPTs have a number of great benefits for settlors other than perpetrating fraud. A few benefits are: 1) protecting young adults upon receiving a large sum of wealth, 2) pre-marriage planning, 3) income tax planning, and 4) privacy. So, when it comes to considering the use of a DAPT, do not concentrate solely on the asset protection aspects of the trust in lieu of the plethora of additional benefits.

See Thomas E. Greene III, The Many Benefits of DAPTs, Wealth Management.com, January 12, 2018.

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

 

January 18, 2018 in Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Importance of Will Execution Formalities in Serbian Law

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-18/c3180a31-7ce1-43de-9349-277ebd760f1c.pngMiloš Vukotić recently posted an Article entitled, Importance of Will Execution Formalities in Serbian Law, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

This article deals with requirements of testamentary form and their application in judicial practice in Serbia. In contrast to the prevailing tendency of reducing formalism in the law of wills, Serbian courts require strict compliance with all will execution formalities. The main thesis of this article is that strict compliance with formalities should be abandoned in favour of substantial compliance and that some statutory formalities should be completely removed. The author discusses the general tendency of reducing formalism in a comparative perspective, the functions of will execution formalities and the formal requirements under Serbian law and their application in judicial practice.

January 18, 2018 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Update on New IRS Release of Estate Tax Lien Requirements

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-18/fd2605cc-59b2-4e12-bf4c-a569b234ef87.pngIn the summer of 2016, practitioners started reporting that the IRS, without any notice, was imposing additional requirements prior to issuing a Certificate Discharging Property Subject to Estate Tax Lien. Generally, this certificate is needed in order to sell a cooperative apartment or residential real estate by an estate. The result was an additional layer of complexity overlying an already cumbersome sales process. Unsurprisingly, practitioners and commentators alike took issue with the added burden and published a number of articles critical of the practice in effort to have the requirements clarified or modified. The IRS responded to the public pressure and released a memorandum providing interim guidance in April of 2017. The Interim Guide is the IRS attempt to clarify the process in order to decrease the burden associated with selling an estate.

See Shaina S. Kamen & Michael S. Schwartz, Update on New IRS Release of Estate Tax Lien Requirements, Probate and Property Magazine, December 2017.

January 18, 2018 in Estate Planning - Generally | Permalink | Comments (0)

Wednesday, January 17, 2018

Funeral Home Swapped $1700 Coffin with $70 One, Family Claims

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-18/fbf1fe17-4fb0-40d7-a748-f9a1343a5dea.pngA deceased Australian woman’s family is accusing the funeral director at Hart’s Family Funerals of fraud. Janice Cecilia Valigura’s family is alleging the funeral director, Tony Hart, switched out a $1,700, silk-lined, ornate coffin the family purchased with a cheap, $70 wooden box. Following the requiem mass at St. Mary’s Catholic Church, a family friend noticed the casket delivered to the crematorium, which had been delivered an hour late, was suspiciously plain. Kerry Rothery, Valigura’s niece, said that the family friend, “knew the family would have gone to a huge effort to give Janice a respectful send-off and what she was put in was absolutely degrading to my aunty.” Rothery also claims that when the family confronted Hart about the swap, he claimed that such practice a common occurrence. Hart offered a statement and acknowledged that he switched the coffins, but said it was necessary to prevent damage to the more expensive coffin from the cold.

See Frank Chung, Funeral Home Swapped $1700 Coffin with $70 One, Family Claims, Fox News, January 12, 2018.

January 17, 2018 in Death Event Planning, Estate Planning - Generally | Permalink | Comments (0)

Owner of Urn Donated to Goodwill Being Sought by Washington State Police

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-17/c7b9f9ee-20a9-47cf-acc6-608c33b665ca.pngWashington State police are attempting to locate the owner of an urn, remains included, that was donated to a local Goodwill. Authorities believe the urn was brought to the store and discovered by an employee on Sunday. Police are currently working under the premise that the odd act of giving away the remains was accidental. 

See Elizabeth Zwirz, Owner of Urn Donated to Goodwill Being Sought by Washington State Police, Fox News, January 14, 2018.

January 17, 2018 in Death Event Planning, Estate Planning - Generally, Humor | Permalink | Comments (0)

21 Million Taxpayers Will Stop Taking Charitable Deductions Under the New Tax Law

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-17/3cff4b6d-e5ca-46b3-a797-e51733b0c113.pngAccording to new Tax Policy Center estimates, the new Tax Cuts and Jobs Act (TCJA) will reduce the number of households claiming an itemized deduction relating to gifts given to non-profits from 37million to around 16 million for 2018. The new law will also reduce the federal income tax subsidy from $63 billion to about $42 billion, or by roughly one-third. The TCJA brings about four changes that will likely discourage charitable giving. First, it lowers individual income tax rates, which lowers the value of all tax deductions. Next, it caps state and local tax deductions as well as doubling the standard deductions. Finally, TCJA doubles the current estate tax exemption threshold to $22 million for couples, which serves to discourage tax-motivated bequests by highly affluent households.

See Howard Gleckman, 21 Million Taxpayers Will Stop Taking Charitable Deductions Under the New Tax Law, Forbes, January 11, 2017.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

January 17, 2018 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

A Counterpart Basis Analysis Applied to Disregarded Promissory Notes and Assets Owned in Grantor Trusts

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-16/063c2bff-9f54-4082-9347-33598706d169.pngThe idea that a payment of tax on a tax begets an unconscionable result is among the foremost principles of tax law. Rules relating to grantor trusts and subsequent derivations are insufficient to offer a suitable mechanism to avoid tax when a grantor undertakes a transaction with his own grantor trust. Rev. Rul. 85-13, though it answers important questions regarding a grantor trust’s tax basis in the assets received from the sale of a grantor trust, is notably silent on the ancillary question relating to the treatment of an individual taxpayer’s basis in a note from such a trust. The idea of a counterpart bases provides a supporting framework that satisfies the need to avoid tax on a tax by making sure that assets having income tax existence are provided an appropriate adjustment for gift or income tax paid on the transfer of a note stemming from the sale of a grantor trust.

See Carl King & John Hodnette, A Counterpart Basis Analysis Applied to Disregarded Promissory Notes and Assets Owned in Grantor Trusts, Probate and Property Magazine, December 2017.

January 17, 2018 in Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (1)

Tuesday, January 16, 2018

5 Questions to Ask Your Estate Planner After the New Tax Law

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-16/16724f3e-f586-47a1-986a-8665b99e1a70.pngEstate plans are similar to homes or vehicles in that they require regular maintenance to ensure they continue to function properly. Like the mammoth pothole to a car or a tornado to a house, the recent tax legislation represents an external event that may necessitate a damage assessment. Meeting with an estate-planning professional for an update is the best way to determine if your estate plan is still in good working order, or if it needs a major overhaul. When meeting with your planner, there are five important topics you should consider for discussion: 1) whether and how the new tax law affects your estate plan, 2) the new exemption for married couples, 3) state estate taxes, 4) estate document customization, and 5) an appropriate time for a follow-up visit.  

See David Robinson, 5 Questions to Ask Your Estate Planner After the New Tax Law, Forbes, January 9, 2018.

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

January 16, 2018 in Current Events, Estate Planning - Generally, Income Tax | Permalink | Comments (0)