Wills, Trusts & Estates Prof Blog

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

Monday, March 27, 2017

Book on Experiencing Trusts & Estates

Experiencing trusts Alfred L. Brophy, Deborah Gordon, Norman P. Stein & Caryl Yzenbaard recently published a book entitled, Experiencing Trusts and Estates (2017). Provided below is a summary of the book:

This casebook takes a more experiential approach to the teaching of trusts and estates law. This first edition features recent cases and model documents in almost every chapter of the book; it also preserves many of the most famous and teachable trusts and estates cases. The opening chapters introduce students to issues around planning for incapacity and death and to accessible and understandable material on estate and gift taxes. The remainder of the book focuses on estate planning for low and moderate income individuals, professional responsibility issues as they arise in a trusts and estates practice, and traditional and contemporary cases and documents designed to expose students to the most important concerns that arise in a trusts and estates practice. Each chapter also features extensive notes and questions designed to help lead students through the major issues, and an appendix provides full versions of various historical “celebrity” wills and contemporary model trusts. A voluminous teacher’s manual accompanies the book, with briefs of every principal case and extensive notes designed to aid the teacher in advancing classroom discussion on nearly every note in the casebook. The teacher’s manual also includes additional problems and other materials designed to develop professional skills.

March 27, 2017 in Books, Books - For Practitioners, Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, March 22, 2017

Article on Shifting Revenue to State & Local Governments

State and local govAlyssa A. DiRusso recently published an Article entitled, Wealth Management Planning to Shift Revenue to State and Local Governments, 31 Probate & Property 46 (2017). Provided below is an abstract of the Article:

With Donald Trump elected president, a new group of clients may have more allegiance to their state and more belief that the state will manage its budget wisely or in accordance with their political preferences than they have with respect to their federal government. Election aside, for a variety of reasons, individuals may believe in funding state and local government bodies over allocating funds to the federal government. Some Americans have become disillusioned with national government leaders or bureaucracy. Some view state or local government as a preferable situs of power and a more accurate representation of the views harbored by its electorate. Certain individuals may even prefer that their state secede and form an independent nation, such as those behind the Calexit movement. Whatever their reasons, a fair number of clients may prefer funding their state or local government over remitting funds to Washington.

Lawyers, however, have not commonly counseled their wealth management clients on the tax-efficient methods permitted by the Internal Revenue Code that allow for the reallocation of funds from the federal government to the state or local level. Clients with estates subject to the estate tax may zero-out their federal estate tax bill entirely by allocating funds to the state or local government of the client’s choice. Furthermore, transfers made to state or local government during life are eligible for an individual income tax deduction, meaning any such transfers are offset and effectively subsidized by the federal government.

March 22, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Article on New IRS Estate Tax Lien Requirements

Estate tax lien1Shaina S. Kamen & Michael S. Schwartz recently published an Article entitled, New IRS Release of Estate Tax Lien Requirements: The Sale of Homes or Apartments by an Estate Just Became a Little More Complicated, 31 Probate & Property 21 (2017). Provided below is an abstract of the Article:

The sale of a house or apartment can be very stressful for any prospective seller. Even with the help of a good broker or real estate attorney, the time and expense associated with a potential sale can seem daunting. This is especially true in the context of a sale of residential real estate by an estate, in which additional legal requirements may need to be satisfied to complete the sale.

New IRS rules have added further complexity to the already difficult sales process. In particular, before a Release of Lien will be issued, an estate must comply with new requirements designed to ensure the collectability of any federal estate tax that the estate may owe. These new rules could have a significant effect on the ability of an estate to sell real property or an interest in a cooperative apartment.

March 22, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Tuesday, March 14, 2017

Michigan Is the Latest State to Allow Asset Protection Trusts

DaptMichigan is now the 17th state that will allow wealthy individuals to set up domestic asset protection trusts, which can shield assets from creditors. The new law became effective on March 8, 2017, and also helps settlors save on estate taxes and keep their assets protected for several generations to come. The state has implemented a two-year statute of limitations for creditors to bring claims against the trust assets and a carve out for child support. Michigan residents can now rely on their own state laws to obtain good asset protection trust laws.  

See Ashlea Ebeling, Michigan Debuts the Latest State Asset Protection Trust, Forbes, February 10, 2017. 

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


March 14, 2017 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation, Trusts | Permalink | Comments (0)

Sunday, March 12, 2017

Article on Planning with Undivided Interests in Real Estate

Undivided interestLance S. Hall recently published an Article entitled, Planning with Undivided Interests: Rights and Restrictions and How They Affect Traditional Discounts, Tr. & Est. 60 (Feb. 2017). Provided below is an abstract of the Article:

While the jury is still out on how President Donald J. Trump’s administration will approach the estate tax and how it will address the estate-planning community’s concerns regarding the interpretation of the proposed changes to Internal Revenue Code Section 2704 (proposed regs), estate planners are left to ponder what planning techniques may still be available if the proposed regs are finalized. If the proposed regs are interpreted to reduce or eliminate discounts for lack of control and lack of marketability for real estate holding entities, one avenue of planning may be the use of undivided interests in real estate. In states where community property laws are in place, real property is automatically divided between spouses as undivided interests. As a result, some discount planning is already taking place. 

Let’s explore the rights and restrictions of an undivided interest holder (UIH) and how they may impact the magnitude of the traditional discounts for lack of control and lack of marketability. Given the evolving Internal Revenue Service and courts’ positions on undivided interest discounts, I’ll also provide a brief history of undivided interest discounts, as well as the current position of both the IRS and the courts. 


March 12, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Article on Basis Consistency Reporting for Unmatured Life Insurance Contracts

Basis consistency2Vince D’ Addona, Michael Geeraerts & Jim Magner recently published an Article entitled, Basis Consistency Reporting for Unmatured Life Insurance Contracts: Does Basis Step-Up and How Do Executors and Beneficiaries Deal with Reporting?, Steve Leimberg’s Income Tax Planning Newsletter (2016). Provided below is a summary of the Article:

Section 1014(a)(1) states that “the basis of property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent [is] the fair market value of the property at the date of the decedent’s death.”  The “step-up” in basis at death is something all estate planners know and use.  With the current $5.45M federal estate tax exemption, many planners intentionally structure assets to be included in a decedent’s estate so the beneficiaries will receive a step-up in basis.  While many advisors are of the opinion that the basis step-up rules apply to an unmatured life insurance policy, there is no case or ruling to cite that clearly supports this.

Now that we have basis consistency rules and Form 8971 to worry about, this is now a real issue for executors and beneficiaries.  Section 1014(f) states that the basis of certain property acquired from a decedent may not exceed its “final value [as] determined for purposes of” the federal estate tax, or if not finally determined, the value of that property as reported on a statement made under new Section 6035.  A policy’s value reported on Form 8971 that is required to be filed would appear to lock the beneficiary into that amount as his/her stepped-up basis, assuming that basis step-up applies to unmatured life insurance policies.


March 12, 2017 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Wednesday, March 8, 2017

Article on How to Deal with the Repeal of the Estate Tax

Estate and gift taTodd A. Flubacher recently published an Article entitled, How to Deal with Repeal: Dynasty Trust Planning Will Be an Essential Tool, Tr. & Est. 18 (March 2017). Provided below is an abstract of the Article:

Once again, it appears there’s a strong possibility that the federal estate tax and generation-skipping transfer (GST) tax may be repealed. President Donald J. Trump and the Republican majority in the House and Senate all support a repeal of the “death tax.” One must only revisit the last time Republicans held control of the House, Senate and the White House in 2001 to identify the last time the estate and GST taxes were repealed under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). EGTRRA was former President George W. Bush’s tax plan that gradually increased the gift, estate and GST tax exemptions from $675,000 to $3.5 million and lowered the tax rates from 55 percent to 45 percent, culminating in a single year of outright estate and GST tax repeal in 2010, followed by a “sunset” of the entire law on Jan. 1, 2011, returning the transfer tax system to its draconian pre-EGTRRA state. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act), signed into law on Dec. 17, 2010, established a $5 million exemption and 35 percent estate and GST tax rate beginning Jan. 1, 2011. However, heirs of wealthy individuals who died during 2010 benefited greatly from the only period in the last 100 years when our nation had no federal estate or GST tax. 

Unless Congressional Democrats have a dramatic change of heart, or Republicans pick up eight additional Senate seats in 2018, it’s safe to assume that any bill that includes estate tax repeal will sunset in 10 years. Without the vote of 60 Senators, the only way repeal can pass without getting blocked by a filibuster is to enact the law as a “reconciliation” bill, which, under Senate procedure, can’t last beyond 10 years. Of course, it’s also possible that repeal could be undone in as little as four years if enough Democrats are elected to the White House and Congress. Thus, any future transfer tax relief is likely to be only temporary, lasting as few as four and not more than 10 years. 


March 8, 2017 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Trusts | Permalink | Comments (0)

Monday, March 6, 2017

How Repeal of the Estate Tax Will Affect the Survivorship Insurance Market

Estate tax eliminationEstate tax reform is an easy issue to overlook, especially if your estate does not reach the threshold to enforce the tax. On the other hand, some wealthy individuals are buying survivorship or second-to-die insurance to help their spouse pay for the estate tax bill. If the estate tax were to be abolished, the insurance could theoretically become unnecessary, but there is still questions about changes to the current marital exemption and unlimited marital deduction for these policies. So, before cancelling your second-to-die policy, you must consider the possibility of a disappearing and then reappearing estate tax depending on who enters office, especially considering how it can be far more expensive to insure yourself four or even eight years down the road.  

See Evan Simonoff, Eliminating Estate Tax Could Torpedo Survivorship Insurance Market, Financial Advisor, February 28, 2017. 

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


March 6, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Sunday, March 5, 2017

Probate Fees to Increase in England by May 2017

Probate feesIn England, the government has ignored strong opposition and, by May 2017, will implement a sliding scale system for probate fees based on the value of an estate, which will ultimately see dramatic increases. On the high end, estates worth over $2 million will be forced to pay close to $25,000 just to execute a loved one’s will. This is a sharp contrast to the current price of just $250. This fee will also be charged on top of the already-maintained inheritance tax, which is levied at 40pc on an individual’s assets above $400,000. Of course, these changes will add further complexity to estate planning, but certain planning techniques, such as trusts, may help reduce the value of an estate.

See Sam Brodbeck, New Death Tax Confirmed: Probate Fees of Up to £20,000 Will Apply from May, Telegraph, March 1, 2017. 

Special thanks to Jim Manel (Texas Tech University School of Law J.D. Candidate) for bringing this article to my attention.


March 5, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, February 28, 2017

Article on Post-EGTRRA Death Tax Landscape

Estate tax historyMary Ellen Wimberly published an Article entitled, No State Left Behind: An Analysis of the Post-EGTRRA Death Tax Landscape and an Argument for Kentucky to Repeal State Death Taxes, 104 Ky. L.J. 525 (2015). Provided below is an abstract of the Article:

Part I of this Note discusses how both types of death taxes (inheritance and estate taxes) have progressed through history, the radical changes to the state death tax system caused by EGTRRA, and the increase in the federal estate and gift tax exemptions. Part II details the current death tax system in Kentucky and explores the trend to repeal state death taxes in other states. Finally, Part III argues that Kentucky's minority approach is unfair for a number of reasons and advocates for state-level repeal to avoid the fleeing of valuable tax-paying individuals to retirement havens or border states without state death taxes. Specifically, Part III argues that Kentucky's current inheritance tax unfairly targets certain individuals, encourages “ante-mortem capital flight,” and does not generate enough income to justify its enforcement. Furthermore, Part III discounts some of the popular arguments in favor of keeping state death taxes, such as decreasing income inequality, providing revenue to states, and encouraging charitable giving.


February 28, 2017 in Articles, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)