Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Tuesday, July 7, 2015

Should The Government Take A Bite Of Charitable Gifts That Lower Estate Tax Liability?

CharityBill Gates and Warren Buffet took the world of extreme wealth by the storm with their initiative to get other super wealthy magnates to pledge their fortune to charity. However, this initiative has also lead to a major loss for Uncle Sam as those funds will never be subject to estate taxes due to the deductible nature of the giving. While this is not a problem with many estates, some have gotten the deduction based on donations to highly suspect family foundations whose charitable aim is not always to improve the lot of the unfortunate such as the poor or sick. In the article below, the author argues for a voluntary cut of the donated estates to go to the treasury to compensate for lost estate tax revenue. Agree or disagree with the author's assertion, it is worth a read for an interesting take on the new charitable trend among the Midas touched.

See Edward Zelinsky, The continuing benefits (and costs) of the Giving Pledge, OUP Blog, July 6, 2015

July 7, 2015 in Current Affairs, Current Events, Estate Tax | Permalink | Comments (0)

Monday, July 6, 2015

Supreme Court’s Same-Sex Marriage Decisions Effect On Estate Planning

Same sexAs a result of the Supreme Court’s recent decision in Obergefell v. Hodges advisers of same-sex couples are going to want to update their client’s financial, tax, and retirement plans.  The decision will make it easier for same-sex couples to file joint tax returns.  Surviving spouses in same-sex marriages will be able to receive IRA retirement funds as a direct rollover.  Same-sex couples will now receive equal access to social security benefits and will also be able to transfer wealth to each other as spouses.  The Supreme Court’s decision will have a major impact on how same-sex couples plan for taxes, retirement, and inheritance. 

See Andrew Samalin, The tax, estate and retirement planning ramifications of the Supreme Court’s ruling on same-sex marriage, Investment News, July 1, 2015. 

July 6, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Guardianship, Trusts, Wills | Permalink | Comments (0)

Conservatives Plan To Lower U.K. Inheritance Tax For Homes

Royal_Coat_of_Arms_of_the_United_Kingdom_(HM_Government)_svgThe Chancellor of the Exchequer, the British version of a Treasury Secretary, has announced changes to the inheritance tax threshold when it comes to family housing. The current amount needed to trigger the tax is £650,000 for a married couple but the new rules will allow for a £175,000 allowance to each spouse when a primary residence is being inherited. This change was proposed in the previous parliament but was blocked by the Liberal-Democrats who were, at the time, in coalition with the Tories.

See Svenja O'Donnell & Angelina Rascouet, Osborne Plans to Raise Inheritance Tax Threshold in Budget, Bloomberg, July 3, 2015.

July 6, 2015 in Current Affairs, Current Events, Estate Tax, New Legislation | Permalink | Comments (0)

Saturday, July 4, 2015

IRS Considering New Rules On Family Partnerships And LLCs

Tax regsThe U.S. Treasury Department is thinking about implementing new regulations that would raise the value of taxable assets that taxpayers transfer into family partnerships and LLCs.  It is common for wealthy families to obtain valuable tax discounts by making such transfers.  Speculators expect the changes, which will have major ramifications, to be made in September.  This column does a good job explaining how these asset transfers into family partnerships and LLCs work.  Financial planners are going to have to stay ahead of the proposed regulatory changes if they want to properly serve the interests of their clients.

See Robert Milburn, IRS Considers New Tax on Wealthy Families, Barron’s, June 30, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

July 4, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Friday, July 3, 2015

Top Concerns Of Ultra-High Net Worth Families

Estate planningThe “U.S. Trust 2015 Insights on Wealth and Worth” survey has gained insight on some of the top concerns of ultra-high net worth (UHNW) families.  These concerns range from personal physical and emotional health, to also having a desire to give back to society through charitable giving.  One of the main things that UHNW families worry about is whether their children will manage the inheritance left to them in a responsible manner.  There are financial techniques like setting up trusts that UHNW families can use to help provide guidance to future beneficiaries. 

See Maureen Nevin Duffy, Kids A Top Worry Of Rich Families, Survey Says, Private Wealth, June 23, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

July 3, 2015 in Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

A Portion Of Millionaires Have No Estate Plan

SavingsMore than a third of millionaires have not consulted with a financial planner to set up an estate plan.  Procrastination is a problem that has an effect on people in all income groups.  Recent changes in tax policies have created a sense of “estate planning fatigue” with some wealthy families.  Not having an estate plan can result in “complete chaos” as loved ones who are left behind fight over the estate.  It is a good idea for wealthy individuals to consult with a professional estate planner so that they can be prepared for the future.

See Alex Padalka, One-Third of Millionaires Have No Estate Plan, Financial Advisor IQ, July 2, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

July 3, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

There Are Three Retirement Loopholes That Are Probably Going Away

Home mortgagePeople use a number of tricks and tips to grow retirement benefits and bypass certain taxes.  As these tricks or “loopholes” become more common the government may end up cracking down on some of them.  Here are three retirement loopholes that the government may get rid of in the near future:

  1. Back-door Roth IRA Conversions.  President Obama has made a 2016 budget proposal that effectively calls for eliminating the back-door Roth IRA Conversions.  Gridlock in congress may keep this estate planning technique in place for the indefinite future, though there is a push to get rid of it.
  2. The Stretch IRA.  People who inherit an IRA have the option of taking distributions over their lifetimes, providing decades of tax free income.  There are a growing number of lawmakers who would like to get rid of the “stretch” and require non-spouse beneficiaries to withdraw the IRA money within five years.
  3. Aggressive Social Security Strategies.  The Obama budget has also proposed doing away with some of the “aggressive” social security techniques like “file and suspend” or “claim now, claim more later.”

See Liz Weston, Three retirement loopholes seen likely to close, Reuters, June 29, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

July 3, 2015 in Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

IRS Issues Final Regulations On The Portability Of Unused Exclusion Amounts

IrsPortability lets a surviving spouse carry over any portion of the deceased spouse’s unused exclusion (DSUE) to shield more assets from estate taxes.  It is a new provision that has been confusing lawyers, CPA’s, and their clients since it was brought into existence on Jan. 1, 2011. There are some people who miss out on these benefits by failing to elect for portability, some critics have called for a more simplified process.  The new rules will permit some people to elect for these exclusions even if they are past the 15-month extended estate tax filing period so long as their estate falls below the exclusion amount ($5.43 million in 2015). The IRS is adopting a stricter approach for larger estates by only granting a portability election if they file at the time of the first spouse’s death. 

See Ashlea Ebeling, IRS To Allow Do-Overs For Some Estates, Forbes, July 2, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

July 3, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

IRS Allows Reach Back On Estate Tax Portability For Some Estates

IRS LogoThe IRS announced new regulations to the system of portability which allows any unused estate tax exclusion to pass to the surviving spouse. Under the initial rules, the transfer was required to be part of the estate tax filing in order to pass to the spouse. The new rules will allow for a 15 month extended filing period after the estate tax return is submitted to apply for the exclusion transfer. However, any estate larger than the exclusion must apply for the transfer under the old rules or lose the right. Also issued was a regulation concerning non-citizen spouses, they make elect for the exclusion upon becoming a citizen after the death of the spouse.

See Ashlea Ebeling, IRS To Allow Do-Overs For Some Estates, Forbes, July 2, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

July 3, 2015 in Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, July 2, 2015

The Future Of Asset Discounts On Family Transfers Is Uncertain

Estate taxThe IRS is expected to issue proposed regulations by the end of 2015 that would restrict intra-family transfers that are designed to get valuation discounts.  Utilizing discounts on family transfers of closely held business and real estate interests has been a primary estate planning technique used to reduce gift and estate taxes for many decades.  The value of the transferred interests often comes in the form of non-voting stock or non-controlling limited partnership or assignee interest.  The IRS has taken the position that these transfers are not appropriate for a family setting and are done only for tax planning.  In the past the IRS has had limited success in combating these transfers, though that might all change with the new regulations that many expect will come out in the future.

See John P. Dedon, Are Asset Discounts on Family Transfers a Thing of the Past?, The National Law Review, June 30, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention. 

July 2, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)