Wills, Trusts & Estates Prof Blog

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

Saturday, July 23, 2016

Considerations for Leaving Assets to Your Heirs

Asset distribution As we continue to grow older, we begin to face decisions on how to leave our assets to our heirs upon passing. This process becomes more complicated when a greater amount of assets is involved. Accordingly, there are three main factors to consider when deciding how to distribute assets: liquidity, sentiment, and tax planning.

The more liquid assets you can leave your family the better. If you leave mainly hard assets, your heirs might have to sell them for a discounted price to pay the estate tax. Usually, families have several sentimental assets to bequeath, so it is best to discuss the disposition of these assets before passing to avoid family conflict. Also, when considering tax implications upon passing, the estate tax will be ascertained on the fair market value at death, so hard and virtual assets are the same in this regard. However, retirement accounts do not benefit from a step-up basis, leaving a heavy tax burden on your heirs. With all of these considerations, it is best to work with an estate-planning attorney to specifically document how your assets will be distributed.

See Tim Parker, Estate Planning: Which Assets Are Best to Leave Your Family, Investopedia, June 27, 2016.

July 23, 2016 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Friday, July 22, 2016

Estate Planning for Your Move to a New State

Moving to a new stateIf you plan on moving to a new state, then you need to consider the new state’s rules governing your estate planning documents and taxes. Before moving to a new state, you should meet with your estate planning attorney to change your wills and trusts according to the new state’s laws. Also, it is important to review the roles of fiduciaries in that particular state because of specific executor requirements.

Furthermore, when moving to a new state, there are also tax implications you must review, and some states have significant variations. For tax purposes, you must be able to prove you abandoned your previous domicile and adopted the new domicile. This is important because, if not, you may still be liable for your old domicile’s income taxes or unexpected estate taxes.

See Day Pitney Estate Planning Update, Estate Planning Update July 2016 – Moving to a New State?, Day Pitney LLP, July 14, 2016.

Special thanks to Jay Stapleton (Quinn & Hary Marketing) for bringing this Article to my attention.

July 22, 2016 in Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Monday, July 18, 2016

Book on Estate Planning Guide for Qualified Retirement Plan Benefits

Retirement book Louis A. Mezzullo recently published a book entitled, An Estate Planner’s Guide to Qualified Retirement Plan Benefits, Fifth Edition (ABA Book Publishing). Provided below is a summary of the book:

This ABA bestseller has helped thousands of estate planners understand the complex rules and regulations governing qualified retirement plan distributions and IRAs. Now newly updated, An Estate Planner’s Guide to Qualified Retirement Benefits provides expert and current guidance for structuring benefits from qualified retirement plans and IRAs, consistently relating key distribution issues to current estate planning practice. Topics covered include:

  • The different types of qualified plans and the tax and non-tax rules relating to them
  • The forms of distribution and the situations in which they need to be considered
  • Penalty taxes
  • Distribution requirements and how to calculate them
  • Income taxation and handling rollovers
  • Transfer taxes
  • Spousal rights, QDROs, and community property considerations
  • Estate and trust administration issues
  • Practical planning strategies to avoid penalty and excise taxes on distributions while incurring the lowest income tax

July 18, 2016 in Books, Books - For Practitioners, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Income Tax, Trusts | Permalink | Comments (0)

Sunday, July 17, 2016

Article on the Maintenance of Federal Estate Tax

Federal estate tax2Richard Gershon recently published an Article entitled, The Socio-Economics of the Federal Estate Tax: Why Do So Many People Hate (or Love) This Centenarian?, 49 Akron L. Rev. (No. 2) (2015). Provided below is an abstract of the Article:

The federal estate tax has faced many detractors during its almost 100 years of existence. While the tax affects only a very small percentage of estates, many have called for its repeal. This Essay discusses the socio-economic reasons why the estate tax should be maintained. The tax is an important source of revenue, and it helps to rectify the growing issue of wealth and income inequality in the United States.

July 17, 2016 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Saturday, July 16, 2016

CLE on Tax & Estate Planning in South Bend, Indiana

 CLEThe University of Notre Dame is hosting a CLE entitled, 42nd Annual Notre Dame Tax and Estate Planning Institute, which will take place on October 27–28, 2016 at South Bend’s Century Center on the banks of the St. Joseph River in downtown South Bend, Indiana at 120 South St. Joseph Street. Provided below is a description of the event:

The Institute will continue to present topics relevant for families exposed to the estate tax and for families with a net worth below the combined estate tax exemptions. The advantage of having simultaneous tracks is that one track will focus on creative planning for estate tax reduction, or even elimination, while the other track will cover topics relevant for all families, even families not exposed to the estate tax. Therefore, individuals attending the Institute can choose topics relevant to their clients.

As in the past, we clustered related topics together so that continuity can be enhanced. Of particular interest is the Thursday afternoon cluster on the use of trusts, culminating in a panel discussion on the three prior trust topics. A similar cluster deals with charitable planning.

The Institute presents topics that provide background attendees can use to expand their potential client base, such as how one can introduce both income tax planning and estate planning in the context of a divorce. This year the Institute added a session on the evolving area of Bitcoin, where the speaker will first explain the financial principles underlying virtual currencies and blockchains and then go on to how one can protect these unique assets. As in the past, the Institute will provide topics focused on income tax planning, such as obtaining income tax-free step up in basis at death and assignment of income to taxpayers in lower marginal income tax brackets, including elimination or deferral of state income taxes.

The Institute will also address a topic that is often overlooked: What the planning professional needs to do when there is a mistake in the documents or a mistake in one’s advice. The speaker will provide practical advice on how to deal with the aftermath of a mistake, including how to handle your firm’s partners, your firm’s malpractice carrier, how to manage the client, how to handle a possible IRS audit and what can be done to mitigate possible damage claims.

Download ND_TaxEstate_Oct2016 final brochure

July 16, 2016 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Friday, July 8, 2016

Dynasty Trusts Today

Dynasty trustEstate plans can experience federal and state estate taxes eating away at the value of an asset, which can be defeating when trying to gift further generations. Dynasty trusts are normally created to avoid the estate and generation skipping transfer tax when assets are being left to grandchildren or great grandchildren. The Rule Against Perpetuities, however, has destroyed the creation of dynasty trusts for many years now. Although, several states have moved toward eliminating that rule, creating 365 and 500 year trusts.

See Ettinger Law Firm, Dynasty Trust Reexamined, NY Estate Planning Attorney Blog, May 21, 2016.

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

July 8, 2016 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Trusts | Permalink | Comments (0)

Article on Socio-Economic Reasons for Maintaining the Federal Estate Tax

Federal estate taxI. Richard Gershon recently published an Article entitled, The Socio-Economics of the Federal Estate Tax: Why Do So Many People Hate (or Love) This Centenarian?, 49 Akron L. Rev. (No. 2) (2015). Provided below is an abstract of the Article:

The federal estate tax has faced many detractors during its almost 100 years of existence. While the tax affects only a very small percentage of estates, many have called for its repeal. This Essay discusses the socio-economic reasons why the estate tax should be maintained. The tax is an important source of revenue, and it helps to rectify the growing issue of wealth and income inequality in the United States.

July 8, 2016 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, July 7, 2016

Creating Flexibility in Trusts

Irrevocable trustIf you decide to make you trust irrevocable, it is important to determine whether you should add provisions that may enable trust modifications in changing times and circumstances. Things that may demand modification in the future, like trust distribution age, beneficiaries, trustees, and distribution amounts, could lead to regret from not only the grantor but the beneficiaries as well. Additionally, income and estate tax laws are constantly changing, which can create unintended scenarios for those involved. Consequently, several states have enacted statutes to permit the modification of irrevocable trust with tools like decanting, moving assets to various trusts, or allowing grantors and beneficiaries to consent informally to changes.

See Atlantic Trust, Creating Flexible Trusts in Uncertain Times, Wealth Management, July 1, 2016.

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

July 7, 2016 in Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

Wednesday, July 6, 2016

Next-Gen Art Collectors and Their Effect on Estate Plans

New gen art collectorsArt collectors throughout time have taken on many forms of motivation to acquire such great works, but only today has this commission been partially fixed on financial implications. A study surveyed 684 wealthy individuals with art collections, and there was a great divide amongst the traditional collectors and the next-gen collectors. The six cultural characteristics identified with this new breed of collectors carries implications for estate planning professionals everywhere. These characteristics include being financially driven, having heightened expectations, willing to sell, loaning art as collateral, socially engaging with art, and having a philanthropic mindset. With these next-gen art collectors perspective, it is essential for an estate planner to have a conversation early on about what is appropriate for their client’s art, including buying, selling, taxation, and applicable laws.

See Evan Beard & Ramsay H. Slugg, Six Characteristics of NextGen Art Collectors, Wealth Management, June 27, 2016.

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

July 6, 2016 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Monday, July 4, 2016

How Community Property Laws Can Effect You

Community propertyCommunity property laws are important to be aware of in case you plan on moving to a community property state or already live in one. These states view any property acquired during a marriage as owned by both partners. Wealth gained prior to the marriage and inheritances acquired at any time, however, are considered separate property, so be sure to keep these assets out of commingled funds if needed. Estate planners should also plan accordingly and be aware that when one spouse dies, half of the married couple’s assets become part of the estate, which can result in large tax bills. Further, because both spouses have ownership over all assets, neither partner can make a gift of their joint property without consent of the other. These community property laws are beneficial to keep in mind, so that you can best benefit your assets and marriage.

See Sonia Talati, How Community Property States Are Different, Barron’s Penta, June 28, 2016.

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

July 4, 2016 in Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)