Wills, Trusts & Estates Prof Blog

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

Thursday, August 10, 2017

Estate Planning Is Not Just For The Ultra-Rich Anymore

ArnoldEstate planning has been historically associated with those who have enough assets to justify the expense of hiring an attorney. The complexities of drafting a will and establishing trusts for beneficiaries can be very expensive. As many families are discovering though, you do not have to have a large estate for family members to start fighting over money or grandma’s antique boudoir furniture.

Given the odd and materially ravenous nature family members can assume after a loved-one’s death, it is important for those with even modest wealth to do some estate planning. The most important part of an estate plan is a will. While some assume their state’s intestacy scheme will pretty much follow their final wishes, there can be some unexpected surprises. In Texas, for example, if there are children from a prior marriage, your spouse will not receive any part of your community property. This can be extremely problematic if a decedent’s assets are illiquid and the surviving spouse is forced to sell a home or business to pay taxes and divide the property.

Setting up a trust may be beneficial if you are interested in giving away assets to beneficiaries with certain restrictions on how the assets will be used. This is especially useful when you want to take care of a child or grandchild that has proven to be financially illiterate or has interests that actively impair their decision-making skills. Trusts may also be used as tax shelters in some circumstances. Finally, designate a power of attorney. It is extremely important to have someone that you can trust readily available to make decisions for you in case of incapacity.

See Ernie Burns, Estate Planning Is Not Just For The Ultra-Rich Anymore, Financial Advisor, August 3, 2017.

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

 

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

 

August 10, 2017 in Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, August 8, 2017

Article on Foreign Trusts, the Panama Papers and the Shewan Report

Michael Littlewood recently published an Article entitled, Foreign Trusts, the Panama Papers and the Shewan Report, Wills, Trusts, & Estate Law eJournal (2017). Provided below is an abstract of the Article:

The New Zealand tax system is so structured as to allow the country to be used as a tax haven. Specifically, it allows foreigners to use trusts established in New Zealand (referred to as “foreign trusts”) to avoid and evade the tax they would otherwise have to pay in their home country. It would seem possible, too, for foreigners to use such trusts for other illicit purposes, in particular money-laundering and financing terrorism. In April 2016 the publicity given to the so-called Panama Papers attracted attention to this aspect of the New Zealand tax system. The government responded by appointing a distinguished Wellington accountant, John Shewan, to advise. He recommended that the law be changed and the government accepted his recommendations. This article explains how the foreign trust rules work, and how the amending legislation is designed to preclude this form of abuse.

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

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

August 8, 2017 in Articles, Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

Monday, August 7, 2017

Hated Estate Tax Valuation Rules On Trump's Hit List

6bd08f12115b5a9d70be6ce51169107bFamily business owners and their allies are trying to block rules proposed during the Obama-era that would curb valuation discounts and lead to increased estate taxes. Proponents for the rules claim it would end a loophole for the wealthy. With the discounts, family businesses are able to value their assets at reduced levels. This allows them to pass on their hard-earned wealth to beneficiaries free from some estate and gift taxes. Much of the conversation would be moot if President Trump is able to get rid of the estate tax. With this, the safest course of action is to undertake valuations based on current law. Even if repeal were to occur, it is not guaranteed to be permanent.

See Ashlea Ebeling, Hated Estate Tax Valuation Rules On Trump's Hit List, Forbes, August 1, 2017.

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

August 7, 2017 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, August 2, 2017

CLE on Estate Administration Boot Camp

0000000 CLEThe National Business Institute is holding a conference entitled, Estate Administration Boot Camp, which will take place August 03, 2017, at the Holiday Inn Memphis-University Of Memphis in Memphis, TN (It's in Memphis). Provided below is a description of the event:

Program Description

Everything You Need to Know about Effectively Administering an Estate

Are you fully confident in your knowledge of the latest court and tax rules and the most effective transfer tools to ensure each client's estate is laid to rest according to the decedent's wishes, with minimal tax burden? This comprehensive 2-day instruction will give you all the skills you need to administer estates that include trusts and/or business interests without a hitch. Register today!

  • Don't miss any crucial notice and filing requirements when opening the estate - learn what must be done right away.
  • Get helpful forms and checklists that will help you in administration.
  • Understand how income and estate tax deductions interact and find the most advantageous way to structure the tax returns
  • Learn how to use disclaimers more effectively.
  • Clarify what must be done when the trust becomes irrevocable.
  • Protect your professional reputation with a practical legal ethics guide focused on trusts and estates practice.
  • Prevent mistakes in final petition and ensure each estate is closed quickly and without disputes.

Who Should Attend

This two-day, basic level seminar is designed for:

  • Attorneys
  • Accountants/CPAs
  • Enrolled Agents
  • Certified Financial Planners
  • Trust Officers/Administrators/Managers
  • Paralegals

Course Content

DAY 1

  • Forms of Administration and When They are Used
  • First Steps and Notices, Executor Duties, Opening the Estate
  • Marshalling the Assets
  • Key Intestacy Laws You Must Know
  • Handling Debts and Claims Against the Estate
  • Spouse Elective Share and Disclaimers
  • Trusts that Affect Estate Administration

DAY 2

  • Income Tax Returns
  • Portability and Estate, Gift, GST Taxes
  • Handling Distributions
  • Business Interests in Estate Administration
  • Legal Ethics in Estate Administration
  • Closing the Estate and Final Accounting

Continuing Education Credit

 

Continuing Legal Education – CLE: 12.00 *

International Association for Continuing Education Training – IACET: 1.20

National Association of State Boards of Accountancy – CPE for Accountants: 14.00 *

* denotes specialty credits

August 2, 2017 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Wednesday, July 26, 2017

Philip Seymour Hoffman’s $12 Million Estate Planning Mistake

17105Philip Seymour Hoffman was an incredibly talented actor. He earned a plethora of awards for his roles in movies like Capote and The Master. Unfortunately for Hoffman’s heirs, his acting talent did not transfer to estate planning. Hoffman cultivated an aversion to leaving money to his children in a trust, as he was wary of creating “trust fund kids.” To avoid this issue, Hoffman left his $35 million estate to his girlfriend, Mimi. Because the pair was not married at the time of Hoffman’s death, the estate is subject to probate and approximately $12 million in estate taxes. If Philip had married Mimi, the estate would have completely avoided the estate tax. Hoffman’s estate is also subject to additional probate costs and possible legal challenges from creditors. These avoidable costs may potentially cost the estate millions more in expenses. Advanced estate planning could have provided Hoffman’s estate with extensive tax savings.

See John M. Goralka, Philip Seymour Hoffman’s $12 Million Estate Planning Mistake, Kiplinger, July 2017.

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

July 26, 2017 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Tuesday, July 25, 2017

Little Tax Plan Promises Big Benefits For Wealthy Clients

LafferOn April 26, the Trump Administration laid out a terse proposal for sweeping tax law changes. The current plan bears little resemblance to the ideals Trump espoused on the campaign trail, but it still offers many benefits for affluent taxpayers. The proposed tax cuts would eliminate the estate tax, the alternative minimum tax, and the 3.8% net investment income tax. The cuts would also reduce the highest marginal income tax rates for businesses and individuals. While these tax reductions would benefit many Americans, there is some concern among planners and advisors that there are additional implications that may negatively impact some clients.

See Eric L. Reiner, Little Tax Plan Promises Big Benefits For Wealthy Clients, Financial Advisor, May 22, 2017.

July 25, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Another Death Bed Limited Partnership Formation Fails to Accomplish Its Objectives

Snoopy-irs-cartoon[1]Decedent Nancy Powell, after the Tax Court’s holding in Estate of Nancy H. Powell, now represents another taxpayer who failed to achieve estate tax savings through the creation and funding of a limited partnership. Nancy Powell’s son, Jeffrey, acting with a power of attorney, formed a limited partnership—NHP Enterprises, LP—in August of 2008. He then transferred $10 million worth of cash and securities into the limited partnership. Nancy Powell retained a 99% interest as a limited partner with Jeffrey Powell receiving the remaining 1% interest. The partnership agreement allowed Nancy Powell to determine the timing and amount of distributions. The agreement also allowed her to dissolve the partnership with the consent of her son.

After forming the limited partnership, Jeffrey Powell transferred the 99% interest held by his mother into a charitable lead annuity trust (CLAT). The court held that this gift to the CLAT amounted to the relinquishment of the decedent’s power to dissolve the partnership and control asset disposition. Because the transfer occurred within three years of Powell’s death, an application of Internal Revenue Code (IRC) Section 2035(a) pulled the full value of the previously transferred assets back into the gross estate.

The court’s willingness to apply this section to a scenario in which a decedent only holds a partnership interest makes any retention of any held interest a precarious proposition. It is likely this case will be appealed.

See Another Death Bed Limited Partnership Formation Fails to Accomplish Its Objectives, Lexology, July 18, 2017.

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

July 25, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Trusts | Permalink | Comments (0)

Monday, July 17, 2017

Taxable Estate Tax Returns

GraphIn 2013, only 0.18% of deaths triggered estate tax liabilities. This is considerably lower than the high of 7.65% seen in 1976. This drop is a reflection of increased estate tax exemptions.

 

See Taxable Estate Tax Returns, Tax Policy Center, July 10, 2017.

 

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

July 17, 2017 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, July 13, 2017

Why Northfield, MN Is a Great Place to Retire

NorthfieldNorthfield, MN rests peacefully within a majestic tree-scape just forty-five miles south of the hustle and bustle of the Twin Cities. The city houses two colleges: St. Olaf College and Carleton College. The presence of these institutions injects a youthful element into a city with a substantial population of retirees. The city’s unique character caters to lovers of the arts with a plethora of music festivals, film screenings, and live performances. The downtown area is a veritable hive of activity and features an open-air market each Saturday as well as festivals throughout the year.

Do not pack your bags too quickly though, as Minnesota is not a tax-friendly state for retirees. Income and sales tax rates are both very high, and Social Security income is taxed the same as on your federal tax return.

See Pat Mertz Esswein, Why Northfield, Minn., Is a Great Place to Retire, Kiplinger.

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

July 13, 2017 in Estate Planning - Generally, Estate Tax, Income Tax, Travel | Permalink | Comments (0)

Friday, July 7, 2017

 Latest State to Repeal Estate Tax: Delaware

EscapeDelaware is now the latest state to have repealed its estate tax. Representatives recognized the need to repeal the tax as many former residents escaped to Florida to avoid the burden. “We came to the realization that it was absolutely necessary to do [estate tax repeal] because we were losing more in income tax than what we would gain in estate tax,” says Rep. Mike Ramone, the bill’s primary sponsor and a small business owner. The Delaware change will make that 17 states plus D.C. for 2018. New Jersey’s estate tax is also a goner as of Jan. 1, 2018, but its inheritance tax remains on the books. In Delaware, 10 Democrats voted for repeal in the House, and three in the Senate. Fellow Democratic Rep. John Kowalko, in an opinion piece in The News Journal, called their votes “betrayal” and said that estate tax repeal victimizes the state’s needy at the expense of the wealthy. This piece seems to ignore the basic understanding that as more tax-paying residents migrate to states without the estate tax, overall revenues decrease.

See Ashlea Ebeling, Latest State to Repeal Estate Tax: Delaware, Forbes, July 5, 2017.

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

July 7, 2017 in Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)