Wills, Trusts & Estates Prof Blog

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

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Saturday, November 22, 2014

CLE on Tax Developments for Estate Planners

CLE Photo

The American Law Institute Continuing Legal Education (ALI CLE) is holding a CLE entitled, Recent Tax Developments for Estate Planners, on December 10, 2014 from 12:30 – 2:00 p.m. Eastern, available via telephone seminar or audio webcast.  Here is why you should attend:

Since the passage of the American Taxpayer Relief Act of 2012, plans to minimize estate taxes have been much less important for the majority of Americans. However, higher marginal income tax rates and the “Medicare” tax on net investment income can still negatively affect estates and beneficiaries.

As 2014 draws to a close, what recent tax developments should be considered by estate planners so that they can most effectively assist their clients with wealth management and estate planning? Join veteran estate planners with expertise in taxation issues for an enlightening discussion of caselaw and administrative and legislative changes that affect testators, grantors, and beneficiaries.

November 22, 2014 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0) | TrackBack (0)

Friday, November 21, 2014

2013 Estate Tax Tables

TaxesThe IRS has updated the SOI Estate Tax Data Tables to include 2013. The three tables (1) Selected Income, Deduction, and Tax Computation Items, By Tax Status and Size of Gross Estate, (2) Selected Tax Computation Items, by State of Residence, and (3) Charitable Bequests, by State of Residence, can be found here.

See Jiaqi Wang, IRS Released Statistics of Estate Tax Returns for Filing Year 2013, Wealth Strategies Journal, Nov. 13, 2014.

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

November 21, 2014 in Estate Administration, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

Recent Changes That Create Need For Married Couples to Update Wills

MarriedThere have been recent changes to tax laws that create the need for married couples to review their wills, especially provisions intended for tax planning purposes. Here are three major changes that create a need for a reread:

  1. Estate Tax Exemption. In the past 10 years the exemption amount has risen from $600,000 to a little over $5 million this year, changing considerations for estate planning since what may have been a taxable estate when the will was last reviewed may no longer be.
  2. Portability. Now that a surviving spouse can inherit the unused portion of their deceased spouse's exemption, will provisions creating a bypass trust may no longer be needed.
  3. Income Tax. Increased income tax rates create a change in considerations for whether bypass trusts will be beneficial, especially with the addition of the portability option.

See Kirk R. Wilson, Estate Tax Provisions for Married Couples in Recent Wills, Trusts May be Obsolete--Part I, Your Houston News, Nov. 14, 2014.

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

November 19, 2014 in Estate Planning - Generally, Estate Tax, Income Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 18, 2014

10 Worst States for Retirement


Many Americans look forward to living blissfully in retirement.  However, obstacles such as stagnant wages, rising living expenses, and inadequate savings force many people to make difficult decisions about their “golden years.” 

Location plays a large role in retirement planning since some states are better suited to offer desirable benefits to retirees.  MoneyRates examined the best and worst states for retirement, according to five major categories including: senior population, economics, crime, weather, and senior life expectancy.  Below are the ten worst states in America for retirees:

  1. Alaska. Because of its weather and bottom ranking economic factors, Alaska is the worst state in America for retirement. 
  2. Louisiana. This state has one of the smallest senior populations in the country due to a high crime rate and low life expectancy.
  3. Tennessee. Tennessee ranks low due to high crime and low life expectancy.
  4. Illinois. A weak labor market and high property taxes make Illinois a poor place for retirement. 
  5. Nevada. Violent crime per capita and a struggling economy make Nevada the fifth worst state in retirement for America.
  6. (tie) Georgia. Although Georgia ranks well for its climate, it is below average in every other category.
  7. (tie) Maryland. This state ranks poorly in economic factors due to a high cost of living that can deplete modest incomes and retirement accounts.
  8. (tie) New York. With a poor climate and economic factors such as high cost of living and high property taxes, New York is not an ideal place for retirement.
  9. Michigan. Although Michigan has an increasing growth rate of its senior population, the state ranks below average in every other category, especially with economic factors.
  10. Alabama. Alabama ranks poorly in life expectancy and crime. 

See Eric McWhinnie, 10 Worst States for Retirement Living, USA Today, Nov. 15, 2014. 

November 18, 2014 in Elder Law, Estate Planning - Generally, Estate Tax | Permalink | Comments (1) | TrackBack (0)

Monday, November 17, 2014

International Estate Planning


While estate planning is crucial for almost everyone, if you have international ties, you have even more reasons to take the time to carefully plan your estate.  Whether you are part of an international family, married to a non-citizen, or you live abroad, here are four reasons to look into international estate planning:

  1. Decrease your tax burden. Non-citizens of the United States must follow different estate tax and gift tax laws.  If you own property abroad, you could end up getting taxed twice, in two different countries.  These are just a few rules that illustrate why you should seek guidance on your international estate plan.
  2. Prevent confusion and delay. If you fail to plan your estate, the red tape could delay your loved ones in getting the support they need.  Worst case, it could prevent your loved ones from getting what you wished.
  3. Shield wealth and property. When you forego planning your estate, it is left in the hands of the government.  If you have international property, the future of your assets depends heavily on where they are located, and estate law can vary from country to country.
  4. Protect children. If you want your children to have a guardian who lives abroad, it is essential you plan your estate so your guardianship wishes are clear.  International families should appoint both a temporary and permanent guardian.

See Janet Brewer, Four Great Reasons For International Estate Planning, JD Supra, Nov. 17, 2014. 

November 17, 2014 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Guardianship, Travel | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 11, 2014

New Book on Estate Tax and Movies

Art of the Estate Tax ReturnKeith Schiller's new book, Art of the Estate Tax Return, Second Edition-Estate Planning at the Movies, uses films to illustrate estate planning and tax concepts.  Provided below is the description of the book from Bloomberg BNA:

Art of the Estate Tax Return, Second Edition – Estate Planning at the Movies® provides in-depth tax analysis and strategic counsel, while offering the ultimate in readability, by connecting well-known motion pictures to practical estate planning and compliance. These connections create great reminders of significant strategies or law, lending humanity to technical issues, and making the tax law fun. 

Art of the Estate Tax Return will enhance your practice and enable you to potentially save your clients millions of dollars in estate taxes by presenting strategic analysis for preparation, presentation, and post-filing defense and advocacy with tax-saving results.

Underlying the cinematic connections, the author shares his best practice tips from a career of preparing, reviewing, and defending estate tax returns, and his greater than 25 years of teaching experience for tax professionals.

With a Foreword by former IRS Appeals Team Manager John Schooler, and an Afterword by Charles W. Morris, the former IRS Territory Manager, Estate and Gift Tax for the Western United States, Art of the Estate Tax Return unsnares the traps and explores the nuances of law and procedure that enter into the preparation and defense of Form 706, including:

  • Expanded coverage of portability elections
  • Illustrated estate tax returns for 2013
  • Maximizing valuation discounts and deductions
  • Protecting FLPs and FLLCs
  • Securing best appraisal results
  • Tips to avoid audits
  • Pointers on GST reporting
  • Cautions and help for fiduciaries
  • Warnings and opportunities from inconsistencies in the law
  • Strategies for audits and appeals
  • Comprehensive analysis
  • And much more!

November 11, 2014 in Books, Books - For Practitioners, Estate Planning - Generally, Estate Tax, Film | Permalink | Comments (0) | TrackBack (0)

Saturday, November 8, 2014

Purposeful Planning


Almost every trust and estate lawyer has stories about trust fund beneficiaries who embody the traits of spoiled rich kids.  John Warnick's story is what led him to reevaluate estate planning and realize it has been missing the human component.  “I said, ‘There has to be a better way to do planning so all this tax-efficient, elegant trust planning doesn’t hurt people,’” he said.  “I saw well-intentioned, technically precise plans reap negative unintended consequences.” 

After a decade of work, Mr. Warnick created the Purposeful Planning Institute.  Purposeful Planning’s goal is to get people who want to create a trust to think more deeply about the document’s language and how it binds trustees to make distributions now and into the future.  While the movement is fervent, there are only about 345 members.  The approach is also controversial and faces resistance from professionals who practice estate planning in more traditional ways.  “The attorneys who don’t like this don’t like it because it’s way outside the box.  And they have a very legitimate point.  They need documents that will stand up in court when they’re tested.” 

Purposeful planning is different from traditional planning approaches in that it ensures estate planning has a deeper purpose and meaning than just being driven by taxes.  “The challenge is to get those core planning disciplines—lawyers, C.P.A.s, wealth managers—to start with ‘why’ instead of immediately marching into ‘how.’” 

See Paul Sullivan, Focusing on the Human Element of Estate Planning, The New York Times, Nov. 7, 2014. 

November 8, 2014 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 4, 2014

Japan Braces for Spike in Estate Tax

JapanSeniors in Japan are bracing themselves for the increase in the estate tax on January 1.  The bump stems from a view among Japanese that pronounced wealth inequality is a bad thing.  “The feeling is it’s not good for society to have all these people born with silver spoons in their mouths.”

To shield their estates, some retirees are purchasing life insurance.  Others buy 18-karat gold Buddhist icons that can be passed on tax-free because of exemptions for religious items.  For some, the secret is in property.  “You pay a lot less tax if you move your cash into real estate.”

Inheritance taxes in Japan are so onerous that they even have their own proverb, translating to something like, “a fortune build in one generation will be taken by the government in the next three.” 

Currently, the National Tax Agency takes a piece of any estate worth more than $460,000, or 50 million yen.  Starting next year, Japan will lower the exemption to $280,000.  This means six percent of inheritances will be taxed, compared with about four percent now.  And Japan did not stop at inheritance taxes.  To help pay off the public debt, Japan ratcheted up the sales tax this year to eight percent from five percent.  It is scheduled to reach ten percent next year. 

See Jason Clenfield, Kathleen Chu and Katsuyo Kuwako, Land Loophole Looks Ever Juicier as Japan Bumps Inheritance Tax, Bloomberg Businessweek, Oct. 29, 2014.

November 4, 2014 in Current Affairs, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Garden State Tax Measures

New JerseyIf you are planning on inheriting a large estate, you may not want to move to New Jersey.  Only $675,000 of an inherited estate is exempt from state taxes.  This is a relatively small exemption in a state where home values are among the highest in the country.  Contrastingly, the federal estate tax exemption is $5.34 million.

The state’s current estate tax may not be the only reason why the Garden State is the worst place in the country to die.  New Jersey also has an inheritance tax that is applicable to anyone other than a surviving spouse, child, parent, grandparent or charity.  The top tax rate is 16 percent and only the first $25,000 of inheritance is exempt. 

However, a bill introduced by Assemblyman Joseph Lagana would raise the estate tax exemption to $1.5 million.  It would also eliminate the inheritance tax for some relatives of the decedent.  While the proposed estate tax exemption is far below the federal threshold, it is a step in the right direction. 

See The Record: Death and Taxes, NorthJersey.com, Nov. 1, 2014.

November 4, 2014 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

States Focusing on Being a Good Place to Die

ChangeAs I have previously discussed, significant changes to state estate tax laws are coming in 2015 and beyond. States have begun to focus on directing efforts of demonstrating their state’s beneficial qualities at retirees. Since the 2005 repeal of the Federal estate tax credit for state estate tax paid, estate and inheritance taxes have become an increasing focus of choice of state to retire and die in. Of the 14 states with estate tax exemptions lower than the Federal exemption and seven states with an inheritance tax, Tennessee, Maryland, Minnesota, and New York will increase their state’s exemption amount in 2015.

See Sandra Block, State Are Lowering Their Estate Taxes to Lure Retirees, Kiplinger, Oct. 2014.

November 4, 2014 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)