Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Wednesday, April 16, 2014

Possibility That an Accident Victim Would Have Died in a Year Subsequent to Year of Death When Estate Taxes Would Have Been Lower Is Not a Pecuniary Injury


The decedent died from injuries sustained in a motor vehicle accident.  In the subsequent wrongful death suit, the plaintiffs asserted, among other claims, one for economic damages equal to the difference between the federal estate tax paid in the decedent’s estate and the substantially smaller tax that would have been paid had the decedent, who was 91 years of age at death, had died in the following year.  The trial court granted the defendants’ motion to dismiss the estate tax claim, the intermediate appellate court reversed, and the Supreme Court of New Jersey reversed and reinstated the trial court’s judgment, holding that under state law, the estate taxes are neither contributions to heirs the decedent was prevented from making nor a pecuniary loss.  Beim v. Hulfish, 83 A.3d 31 (N.J. 2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

April 16, 2014 in Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Saturday, April 12, 2014

Article on the Prospects of Estate Tax Reform

Estate tax

Paul L. Caron (Pepperdine University School of Law) and James R. Repetti (Boston College Law School) recently published an article entitled, Revitalizing the Estate Tax: Five Easy Pieces, Tax Notes, v. 142, 2014, p. 1231-1241.  Provided below is the abstract from SSRN: 

In a previous article, we argued that contrary to the state of the law over 35 years ago — when George Cooper wrote his seminal article on the estate tax (A Voluntary Tax? New Perspectives on Sophisticated Estate Tax Avoidance, 77 Colum. L. Rev. 161 (1977)) — taxpayers today generally ‘‘can reduce the value of assets subject to transfer tax in many instances only if they are willing to assume the risk that the reduction may be economically real and reduce the actual value of assets transferred to heirs or, alternatively, in narrow situations if they are willing to incur some tax risk.’’ (The Estate Tax Non-Gap: Why Repeal a Voluntary Tax?, 20 Stan. L. & Pol’y Rev. 153 (2009)) In another article, we documented the dramatic increase in income and wealth inequality over the past 30 years and the accompanying adverse social consequences and long-term negative effect on economic growth. (Occupy the Tax Code: Using the Estate Tax to Reduce Inequality and Spur Economic Growth, 40 Pepp. L. Rev. 1255 (2013)) We argued that tax policy historically has played an important role in reducing inequality and that the estate tax is a particularly apt reform vehicle in light of the role of inherited assets among the very rich and the adverse economic effects of that inherited wealth. In this article, we advance five estate and gift tax reform proposals that would generate needed revenue, reduce inequality, and contribute to economic growth: (1) disallow minority discounts when the transferred asset or business is controlled by family before and after the transfer; (2) maintain parity between the unified credit exemption amounts for the estate and gift taxes; (3) reduce the wealth transfer tax exemptions to $3.5 million, increase the maximum tax rate to 45 percent, and limit the generation-skipping transfer tax (GSST) exemption period to 50 years; (4) restrict the ability for gifts made in trust to qualify for the gift tax annual exclusion; and (5) impose a lifetime cap on the amount that can be contributed to a grantor retained annuity trust (GRAT).

This article was presented on January 17 at a symposium in Malibu, California cosponsored by Pepperdine University School of Law and Tax Analysts. Twenty of the nation’s leading tax academics, practitioners, and journalists gathered to discuss the prospects for tax reform as it is affected by two crises facing Washington: dangerously misaligned spending and tax policies, resulting in a crippling $17.4 trillion national debt; and the IRS’s alleged targeting of conservative political organizations. A video recording of the symposium is available online.

April 12, 2014 in Articles, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Friday, April 11, 2014

“Old” World Economies Charging Higher Inheritance Taxes


According to a new study by UHY International, “Old” world economies are charging higher estate and inheritance taxes than “New” world economies.

Governments in established European economies are becoming increasingly reliant on the income streams from inheritance taxes.  The study found that the UK and Ireland impose the highest inheritance tax of all major economies.  The inheritance tax threshold in the UK has been frozen at  £325,000 (US $544,862), which is actually below the average London house price of £409,881 (US $686,058).  From an estate worth $3 million, the UK takes 25.8% and Ireland takes 26%.

By contrast, the US provides a $5.34 million exemption that is adjusted annually for inflation.  And with the anti-tax movement continuing to gain ground, more US states are likely to increase their exemption or repeal their estate taxes.  Australia, India, Israel, New Zealand, and Russia have repealed their inheritance taxes in an effort to encourage more wealth creation and transmission.

See Isaac M. O’Bannon, The Worst Countries for Inheritance Taxes, CPA Practice Advisor, Apr. 7, 2014.

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

April 11, 2014 in Estate Tax, Travel | Permalink | Comments (0) | TrackBack (0)

Adjusting to Changes in Estate Planning


Karen Ciegler Hansen has published an article addressing how practitioners in estate planning should deal with a variety of multilevel changes which may affect how to best craft an estate plan for clients. Among the topics discussed are changes in statutory law, shifting trends, changes in clients' lives and to the population at large, and a variety of specific situations that may require specialized attention or action.

See Karen Ciegler Hanson, The Modern Family and the Modern Estate, JDSupra, Apr. 2, 2014.

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

April 11, 2014 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Thursday, April 10, 2014

Article on Estate Tax Valuation


Kerry A. Ryan (Saint Louis University School of Law) recently published an article entitled, Tax Court Sends Message on Valuation in Richmond, Tax Notes, Vol. 142, No. 12, March 24, 2014.  Provided below is the abstract from SSRN:

In Estate of Helen P. Richmond, the Tax Court determined the proper value for estate tax purposes of a minority interest in a family-owned corporation holding mostly appreciated securities. The court also sustained an accuracy-related penalty against the estate, finding that it used an unsigned draft report by a noncertified appraiser as the basis for the stock valuation reported on Form 706.

April 10, 2014 in Articles, Estate Tax, New Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 9, 2014

CLE on Planning for Large Estates


The American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, Planning Techniques for Large Estates, on Wednesday-Friday, April 23-25, 2014.  Here’s why you should attend:

Technically demanding and strategy-dependent, planning for large estates is a dynamic area of practice that only a sophisticated and well-educated attorney can master. The more assets a client has, the more complex the estate plan may need to be because diversified assets lead to varying tax consequences. Are you prepared to properly protect your wealthy client’s assets in life and in death, while minimizing estate taxes, creditor claims, and disputes among heirs?

Register today for this intensive program that had been successfully revised last year from one week to three full days. Even more popular at this length and consistently one of the highest rated estate planning programs, this CLE program on planning techniques for large estates still provides the tools you need to excel in high net-worth planning. Our faculty of seasoned practitioners will conduct discussions on a transactional basis, with an emphasis on changing factual patterns rather than on bare principles of law or statute. Instruction will cover the most practical and useful planning tips, including alternative approaches that may suit your clients’ needs best.

So enjoy the warmth of Scottsdale while you learn, network, and strategize with your peers and a highly experienced faculty of trust and estate practitioners from across the country.

April 9, 2014 in Conferences & CLE, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Monday, April 7, 2014

3 Nontax Items You Need to Review


Tax time is also an effective time for an annual financial checkup.  Here are three essential nontax items retirees should be reviewing at tax time:

  1. Core Holdings.  These investments are your survival insurance, assets you never plan to sell unless it really hits the fan.  They should make up about 10% of your net worth and include precious metals, farmland, or other investments that historically hold their value against inflation.
  2. Long-term care coverage.  Whether it’s nursing home insurance, self-insurance, or something else, you need to have a way to pay for the likelihood of needing long-term care.  And if you think you will be able to rely on Medicaid as your backup plan, consult an elder-law attorney to be certain.
  3. Estate Plan.  Make your intentions clear in an up-to-date and properly executed will.  And make sure people know where to find it.  Consider a pour-over will to save your family from the headaches of probate.  And consider a Grantor Retained Annuity Trust or a Crummey trust if you’re worried about the estate tax.

See Dennis Miller, 3 Essential Nontax Items to Review at Tax Time, Market Watch, Apr. 2, 2014.

April 7, 2014 in Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, April 6, 2014

Overview of the Federal Tax System


The Joint Committee on Taxation has released its Overview of the Federal Tax System as in Effect for 2014. It provides a summary of the current 2014 tax system, consisting of four main elements--income tax on individuals and corporations (regular and alternative minimum tax); payroll taxes on wages (and self-employment income) to finance certain social insurance programs; estate, gift, and generation-skipping taxes (GSTs); and excise taxes on goods and services.

See Joint Committee on Taxation, Overview of the Federal Tax System as in Effect in 2014, JCX-25-14, Mar. 28, 2014.

April 6, 2014 in Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 2, 2014

Beware the New York Estate Tax Cliff


On April 1, New York state more than doubled its estate tax exemption amount from $1 million to $2,062,500.  And by 2019, the New York exemption will match the generous federal exemption, projected to be $5.9 million.  This will make planning easier for a lot of people, but there is still one big trap New Yorkers should look out for.

New Yorkers who die with just 5% more than the new exemption will face a “cliff.”  They will be taxed on the full value of their estate, not just the amount over the exemption.  This means the new law could translate into a marginal New York estate tax rate of nearly 164%, as shown in this comment letter from the New York State Society of CPAs.

See Ashlea Ebeling, The New New York Estate Tax Beware a 164% Marginal Rate, Forbes, April 1, 2014.

April 2, 2014 in Current Affairs, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Thursday, March 27, 2014

CLE on Estate Planning and Probate Course

CLETexas Bar CLE is sponsoring a CLE entitled, 20th Annual Advanced Estate Planning Strategies Course, on April 24-25, 2014, in Denver.  Provided below is a description of the event:

Panel discussions will detail:

  • Recipes for Income and Estate Tax Planning in 2014  
  • Stop the Bus, I Want to Get Off! Business Succession Planning in 2014   
  • It Slices; It Dices; It Makes Julienne Fries: Cutting-Edge Trust Tools   
  • It's Too Late to Say You're Sorry - A Selection of Litigation Topics

The discussions will be highly interactive between the audience and the panelists. Speakers will address estate planning situations and will answer the questions that have been perplexing you the most. This is a rare opportunity for you to consult with the experts and your peers. The course will not be recorded for future video replay, so you must attend to take advantage of this extraordinary opportunity to hear some of the state's and the nation's leading estate planning and probate lawyers discuss their practices, what they do and don't do, the opportunities and issues they deal with, and the most up-to-date strategies!

March 27, 2014 in Current Affairs, Current Events, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)