Wills, Trusts & Estates Prof Blog

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

Wednesday, June 21, 2017

New Edition of "McCouch's Federal Income Taxation of Estates, Trusts, and Beneficiaries in a Nutshell" Released

BookGrayson M.P. McCouch recently published a book entitled, McCouch's Federal Income Taxation of Estates, Trusts, and Beneficiaries in a Nutshell (2017). Provided below is a description of the book:

This comprehensive guide can serve either as a course supplement or as a refresher for members of the bar. Expert commentary summarizes the law and offers critical perspectives on the federal income taxation of estates, trusts, and beneficiaries, including the decedent’s final income tax return; classification of estates and trusts; income in respect of a decedent; distributable net income; simple and complex trusts; distributions; grantor trusts; charitable trusts; and foreign trusts. Additional chapters cover basic income, gift and estate tax concepts, accumulation distributions, and specially treated trusts.

June 21, 2017 in Books, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Tuesday, June 20, 2017

Interview with Steven J. Oshins, Esq.

NingSteven J. Oshins, Esq., AEP (Distinguished) is an award-winning attorney practicing in Las Vegas, Nevada. He maintains clients throughout the United States. Oshins recently sat down for an in-depth interview covering a variety of topics. Part I of his interview considers the use of the Nevada Asset Protection Trust. Part II focuses on the Hybrid Nevada Asset Protection Trust, and Part III looks at the Nevada Incomplete Non-Grantor Trust. Part IV discusses Nevada Dynasty Trusts and reviews recent developments regarding these trusts.

See On Nevada Asset Protection and Trust Planning: A Conversation with Steven J. Oshins, Esq., AEP (Distinguished) Part III, First American Trust.

June 20, 2017 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, June 14, 2017

IRS Ruling Helps Surviving Spouses Who Face Estate Tax Trap

SuitcaseThe Internal Revenue Service has issued another round of relief for executors who mistakenly forget or fail to file an estate tax return that elects portability. One of the major misconceptions with the portability of the estate tax exemption for surviving spouses is the method of acquisition. Many executors believe the exemption is automatic, while the reality is that it must be requested and the IRS notified of the decedent’s death. As an example of applicability, say Harry dies with $5 million in his estate which he leaves to his spouse, Wanda. Wanda has $5 million in her own assets. At her death, Wanda dies with $10 million in assets and owes an estate tax. An executor may now use the updated procedures to elect portability and avoid estate taxes. He may also make a claim for a refund of estate taxes if the statute for filing the refund is open. The IRS has made a few exceptions and allowances in the past to aid executors who have missed the filing deadline to request portability. As it stands now, the deadline is set at a hard two years after death.

See Ashlea Ebeling, IRS Ruling Helps Surviving Spouses Who Face Estate Tax Trap, Forbes, June 12, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) & Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

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

Saturday, June 10, 2017

Article on A Tax Dead on Arrival: Classical Liberalism, Inheritance, and Social Mobility

ZzÅsbjørn Melkevik recently published an Article entitled, A Tax Dead on Arrival: Classical Liberalism, Inheritance, and Social Mobility, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

Historically, it is safe to say that very few laws did as much to stoke inequality as laws touching descents and hereditary transmissions. This paper attempts to see if the classical liberal tradition can endorse inheritance taxation so as to further fair equality of opportunity, as well as to lessen inequality of undeserved wealth. It argues that fair equality of opportunity is a necessary feature of market societies to make sure that they remain competitive. Hence, inheritance taxation is most likely necessary from a classical liberal point of view as an instrument of social mobility to counter notable problems of social immobility, say hereditary vocational stratification, which a system of private property rights creates.

Special thanks to Robert H. Sitkoff (John L. Gray Professor of Law, Harvard Law School) for bringing this article to my attention.

June 10, 2017 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0)

Thursday, June 8, 2017

Don’t Underestimate State Estate Taxes

Eatate2Today’s federal estate tax exemption is quite generous compared to historical standards. However, for families that reside in any of the 18 states, or the District of Columbia, that levy their own estate taxes, there may be significant ramifications for failing to plan their estate. The current federal estate tax exemption is set at $5.49 million. Some states have estate tax exemptions set much lower, starting at $1 million. A simple example, a taxpayer dying in Oregon with an estate valued at $5.49 million would owe no estate tax to the federal government. But, with a $1 million threshold, which is what Oregon allows for exemption, the decedent in this case would owe over $480,000 in state estate tax. There are a number of means to mitigate these taxes, and it is advisable to seek out the opinion of a financial or estate planning expert for help in this area.

See Kevin Duncan, Don’t Underestimate State Estate Taxes, Fiduciary Trust International, June 1, 2017

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

June 8, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Tuesday, June 6, 2017

Transfer Tax Rules for the Non-Citizen Spouse

KimTransferring wealth to a spouse that is not a citizen of the US can create complex tax challenges. An example, a resident alien domiciled in the US may have an estate that is subject to taxes in another nation in which he is a citizen. If the real estate is owned in a third jurisdiction, there may be even more taxes owed. Most countries have tax treaties that must be thoroughly examined at death and for certain taxable events. The provisions in these tax treaties are usually complex, but transfer tax planning for non-citizens cannot occur until all applicable treaties have been examined.

See Kimberly Stogner, Transfer Tax Rules for the Non-Citizen Spouse, Womble Carlyle, May 23, 2017.

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

June 6, 2017 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Monday, June 5, 2017

Article on Estate of Powell

Tax courtSteve R. Akers recently published an Article entitled, Estate of Powell v. Commissioner, 148 T.C. No. 18 (May 18, 2017), Bessemer Trust (June 2017). Provided below is an abstract of the Article:

This “reviewed” Tax Court decision may be the most important Tax Court case addressing FLPs and LLCs in the context of estate planning since the Bongard case (12 years ago). The Tax Court breaks new ground (1) in extending the application of §2036(a)(2) to decedents owing only limited partnership interests, and (2) in raising the risk of double inclusion of assets under §2036 and a partnership interest under §2033, which may (in the court’s own words) result in “duplicative transfer tax.”

The facts involve “aggressive deathbed tax planning,” and the fact that the taxpayer lost the case is no surprise. But the court’s extension of the application of §2036(a)(2) and the extensive discussion of possible double inclusion for assets contributed to an FLP or LLC are surprising (but whether a majority of the judges would apply the double inclusion analysis is not clear).

Special thanks to Scott M. Deke for bringing this article to my attention.

June 5, 2017 in Articles, Current Events, Estate Planning - Generally, Estate Tax, New Cases, Trusts, Wills | Permalink | Comments (0)

Friday, June 2, 2017

District of Columbia Slashes Estate Tax

David GrossoShould an individual’s already-taxed estate be subject to more taxes at death? If yes, then at what rate? Many states are looking into these questions and responding by raising the exemptions for estate taxes or getting rid of the taxes entirely. The District of Columbia recently followed suit by increasing the estate tax exemption from $1 million to $2 million. The exemption is expected to increase to match the $5.49 million federal exemption by 2018. There was some outcry to halt the scheduled cuts but to no avail. Councilmember David Grosso claimed that the loss of the estate tax revenue was a burden on the poorest and most marginalized population in D.C. In spite of the familiar rhetoric, the general trend among the states has tended to be either a full repeal of their estate taxes or an increase in the allowable exemption.

See Ashlea Ebeling, District of Columbia Slashes Estate Tax, Forbes, May 31, 2017.

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

June 2, 2017 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Minnesota Weakens Estate Tax

EstateCurrently, Minnesota is one of eighteen states that imposes state inheritance or estate taxes in addition to the federal estate tax. The Republican majority in the Minnesota legislature recently passed a budget that increased the estate tax exemption from the current $1.8 million level to $2.1 million for 2017. This change is retroactive to January 1, 2017. The budget calls for the exemptions to increase in increments, reaching $3 million by 2020. The Democrat Governor Mark Dayton expressed his concerns to the legislature in a letter to the Speaker of the House. Dayton noted that the budget affects only the wealthiest estates in Minnesota and argues that such a provision defeats the purpose of the progressive tax and relieves these affluent of their burden to pay their fair share of taxes. While Dayton is asking legislators to cancel the proposed increases, the possibility of acquiescence is unlikely.

See Ashlea Ebeling, Minnesota Weakens Estate Tax Retroactive to January 1, Forbes, May 31, 2017.

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

June 2, 2017 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Wednesday, May 31, 2017

Stranger Than Strangi and Partially Fiction

IRS_auditThe U.S. Tax Court, in Estate of Powell, recently held that cash and marketable securities transferred into a family limited partnership (FLP) under a power of attorney were includable in the decedent’s gross estate. The transfer was made about one week prior to death. There were unusual circumstances that made the decision less surprising, but the decision remains notable. In their discussion, the majority outlined a new analytical framework to prevent double taxation on an FLP interest and its underlying assets when there is an inclusion under Internal Revenue Code Section 2036(a). Practitioners advising clients regarding new or existing FLPs should be cognizant of Powell and engage in a pointedly holistic analysis of the FLP and the estate plan.

See N. Todd Angkatavanich, James Dougherty & Eric Fischer, Estate of Powell: Stranger than Strangi and Partially Fiction, Wealth Management.com, May 25, 2017.

May 31, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases | Permalink | Comments (0)