Wills, Trusts & Estates Prof Blog

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

Sunday, May 20, 2018

Not So Simple Estate Planning Considerations After 2017 Tax "Simplification"

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-20/a482af22-dcf9-48f3-ad84-1aae27624a2e.pngAfter the Tax Cuts and Jobs Act passed in December of 2017, the majority of the public's focus has been on the changes to personal and business income tax. There has not been a lot of media attention or awareness on the legislation's modifications to how people should approach their estate planning.

The estate and gift tax exemption and the generation-skipping transfer tax exemption were both increased  to $11,180,000 per person. Therefore, during lifetime and at death, a married couple may now transfer a combined $22,360,000 to family and friends without any gift tax or estate tax. However, this increase only lasts until December 31, 2025.

Most individuals and couples believe that due to the change, there is less of a need for them to seek the advice of an estate planner. But with the magic that is the American government, Congress and the President have the ability to reverse the exemptions to 2017 amounts at any time, and with several elections in the time frame before the end of 2025, that possibility of fluctuation is all too real. In general, it is vital that anyone with an estate plan that has seen no alterations in 3 years speak to their estate planning attorney as soon as possible.

See Megan L.W. Jerabek, Not So Simple Estate Planning Considerations After 2017 Tax "Simplifications," National Tax Review, May 17, 2018.

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

May 20, 2018 in Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Legislation | Permalink | Comments (0)

Friday, May 18, 2018

Ten Planning Lessons From Barbara Bush

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-18/019c0ec4-fe12-4c4a-af02-3856fe5fb170.pngMatriarch Barbara Bush left this life the same way that she lived, with dignity and class. Her end-of-life planning was ample enough to provide clear instructions to direct those around her. Here are 10 takeaways for clients based on what we know about vigilant end-of-life plans:

  • Understand Probate
    • Probate can be timely, expensive, and anything that occurs in probate is public knowledge.   
  • Plan for Contingencies
    • Always have a backup plan in estate documents, such as for when a trustee passes away before the estate author.
  • Sentimental Value is Real
    • Some personal items may mean more to a family member than their monetary value suggests.
  • Define Palliative Care
    • This type of medical assistance is specified for those with serious illness and focuses on comfort.
  • Leave an Account Roadmap
    • Attempt to consolidate unused accounts and list all of them in your estate plan.
  • Remember Taxes
    • Though the federal estate tax exemption has been doubled, soon many states may possess a much lower exemption.
  • Beneficiary Planning
    • Verify that every type of planning tool - 401k, IRA, insurance policy - has a documented and valid beneficiary.
  • Revisit the Plan
    • Life happens, and when it does, confirm that your estate documents are still in line with your wishes.
  • Respect the Experts
    • Sometimes the "fill-in-the-blank" wills can lead the best planner astray. Do not discount an expert's advice.
  • Everyone Can Plan
    • You do not have to be rich to need a comprehensive estate plan nor to establish your legacy how you see fit.

See Caroline Feeney, Ten Planning Lessons From Barbara Bush, Wealth Management, May 17, 2018.

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

May 18, 2018 in Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, Estate Tax, Wills | Permalink | Comments (0)

CLE on Estate Administration Procedures: Why Each Step is Important

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-18/83c53e29-8440-49f1-8f25-964c0cfcfd2e.pngThe National Business Institute is holding a conference entitled, Estate Administration Procedures: Why Each Step is Important, on Tuesday, June 19, 2018, at the Richmond Marriott in Richmond, Virginia. A description of the event is provided below:

Program Description

Properly Administer Your Client's Estate

Do you have a solid understanding of proper procedures surrounding estate administration? Do you feel confident that you can overcome the wide array of challenges you may face while working with each estate's unique requirements? Join us and gain a comprehensive understanding of the estate planning process so you can easily organize and manage your responsibilities. Register today!

  • Weigh the pros and cons of informal administration and learn how it can be advantageously used.
  • Make the entire process as efficient as possible when working with the personal representative.
  • Determine the survivors' immediate needs - and ensure they're met.
  • Know your options: take a look at alternative methods to closing the estate.
  • Competently file federal and state estate tax returns and know exactly what is required.
  • Learn how to handle the most common issues in probate litigation.

Who Should Attend

This basic level seminar will provide fundamental estate administration topics for:

  • Attorneys
  • Accountants
  • Paralegals
  • Trust Officers
  • Estate Planners
  • Tax Professionals
  • Financial Planners

Course Content

  1. Foundations of Estate Administration Defined
  2. Preparing to Begin the Administration Process
  3. Considerations for Collecting the Assets, Preparing the Inventory and Handling Claims Against the Estate
  4. Being Thorough to Close the Estate Without a Hitch
  5. Understanding Tax Procedures to Avoid Problems Later
  6. Ethical Challenges in Estate Administration
  7. Common Issues To Be Prepared for in Litigation and Probate

Continuing Education Credit

Continuing Legal Education – CLE: 7.00 *

Financial Planners – Financial Planners: 8.00

International Association for Continuing Education Training – IACET: 0.70

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 8.00 *

Professional Achievement in Continuing Education – PACE: 8.00

* denotes specialty credits

May 18, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Wills | Permalink | Comments (0)

Tuesday, May 15, 2018

Don’t Let New Estate Tax Law Cause Your Family to Pay Unnecessary Capital Gains Taxes

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-15/7d1ad6a5-f78a-41d3-80fe-cd22a3964f3c.pngThe threshold currently for the federal estate tax is $11.18 million due to the Tax Cuts and Jobs Act of 2017. 99% of Americans will not be subject to estate tax. But this does not mean that the planning one did before the increase is the most tax efficient.

Anything in a person's estate excess of the threshold amount is to be taxed at 40%. Previously, estate planners would advise that assets over the designated amount be placed in a trust. Often a trust would be subject to a capital gains tax, historically around 15-18%. In 2002, the estate tax threshold was $1 million. By comparison, a much larger estate in 2018 could be passed directly to beneficiaries without the worry of the 40% estate tax. Any asset that has been placed in a trust for protection against the estate tax is now being needlessly taxed according to the current capital gains tax.

See Ann Margaret Carrozza, Don’t Let New Estate Tax Law Cause Your Family to Pay Unnecessary Capital Gains Taxes, The Island Now, May 10, 2018.

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

May 15, 2018 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Monday, May 14, 2018

What You Don’t Know About Estate Planning Will Cost You

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-14/ee954a16-cf70-48f6-ba09-3122adc2cb5a.pngMinimizing estate taxes on the next generation's inheritance is not the only factor of estate planning that a parent or grandparent should consider. If the person planning their will has extensive assets to account for, there are practices to keep in mind.

Giving to Charity

Though there are tax deductions when a person gives to charity, the intangible benefits far outweigh them. When one donates a piece of their wealth to a charitable organization, they teach the next generation the importance of helping others less fortunate.

Giving to Loves Ones and Family

There is more to money than the idea of having money. Pressing upon children the noble effects of wealth other than "keeping up with the Joneses" is vital when laying out an estate plan. Equality is not always equal, and treating children different based upon their individual circumstances is completely appropriate.

Protecting Your Assets

Be honest with your estate and financial planners. If you believe one of your beneficiaries might not be a good steward of their own money, there is a high probability that they will not be responsible with their inheritance. Trusts and extra wording in a will may incentivize the rebellious child to mature.

See Ted Snow, What You Don’t Know About Estate Planning Will Cost You, Nightly Business Report, April 25, 2018.

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

May 14, 2018 in Estate Planning - Generally, Estate Tax, Wills | Permalink | Comments (0)

Wednesday, May 9, 2018

The Uncertainty of Taxes When it Comes to Death

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-09/3a52d989-d4ab-479d-96e8-4e8b330ccd5a.pngBenjamin Franklin coined the well-known saying that death and taxes are the only things certain in life, but that doesn't mean the combination of the two are certain. The Tax Cuts and Jobs Act of 2017 temporarily doubled the exclusion amount for estate and gift taxes. Without further legislative action, this amount will revert to the previous exclusion of $5 million in 2026.

The increase in the exclusion will decrease federal tax revenue by $83 billion according to an estimate by the Joint Committee. Specifically, there have been explanations that the decrease will be caused by the unlimited spousal deduction or as a result of careful estate planning, in essence causing the estate tax to become a "voluntary tax."

The presidential election of 2016 saw a large push for the complete elimination of the estate tax. However, with the unlimited deduction for charitable organizations, the disappearance of the estate tax will cause charities to lose this source of revenue.

See Roger Russell, The Uncertainty of Taxes When it Comes to Death, Accounting Today, May 8, 2018.

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

May 9, 2018 in Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Tuesday, May 8, 2018

Article on Afterlife of the Death Tax

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-08/ebdc277a-c11a-4468-8805-b3ed20ee9d31.pngSamuel D. Brunson published an Article entitled, Afterlife of the Death Tax, Tax Law: Tax Law and Policy eJournal (2018). Provided below is an abstract of the Article:

More than a century ago, Congress enacted the modern estate tax to help pay for World War I. Unlike previous iterations of the estate tax, though, this one outlived the war and accumulated additional goals beyond merely raising revenue. The estate tax helped ensure the progressivity of the tax system as a whole, and it limited the hereditary ability to accumulate wealth.

This modern estate tax almost instantly met with opposition, though. The opposition has never been sufficient to entirely eliminate the estate tax, but it has severely weakened its ability to raise revenue and to prevent the accumulation of wealth. As a result, today’s estate tax is functionally a zombie: it accounts for less than one percent of federal revenues and does little to prevent the accumulation of wealth among a small group of citizens. The estate tax largely serves to evoke fear and costly tax planning, but it only manages to bite the largest and slowest estates.

Although the estate tax has proven hard to kill, it is time for Congress to end it definitively, and transfer its functions as revenue-raiser and impediment to wealth accumulation to the income tax. To effect that transfer, Congress needs to do three things: first, it should treat death as a realization event, and tax estates on their assets’ unrealized appreciation. Second, it should treat the receipt of an inheritance as gross income in the hands of heirs, thereby requiring heirs to pay income tax on their inheritance. Third, Congress should eliminate the step-up in basis, and instead assign basis to inherited property under ordinary basis rules. By making these three changes, Congress can put to rest the zombie estate tax, while, at the same time, revivifying taxation at death.

May 8, 2018 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Friday, May 4, 2018

Is Estate Planning Now Dead?

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-04/322ada81-6b7e-416f-b021-87558018c5c8.pngThe tax reform of 2017 increased the federal gift, estate, and generation-skipping tax to more than $11 million per person and $22 million per married couple. This increase means that less than 1% of Americans will be subject to these taxes. But these are not the only expenditures to be considered during estate planning.

SA number of states still have an estate and gift tax. For some taxpayers, it might prudent to change domiciles prior to passing away to avoid additional taxation. Another estate planning concern is probate. This process can be costly and inconvenient, and it can be greatly beneficial to avoid it if at all possible. Blended, as well as traditional families, have additional complications when it comes to the needs or issues of particular beneficiaries.

See Tracy Craig, Is Estate Planning Now Dead, Kilpinger, May 1, 2018.

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

May 4, 2018 in Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

Monday, April 30, 2018

Update Estate Plans in Light of New Tax Law

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-04-30/25485cd4-a1b5-4871-bb37-fc022872a34f.pngThe federal estate-tax exemption doubled to over $11 million this year, but that doesn’t necessarily mean that the exemption shouldn’t alter your estate plan. Unedited or stale wills may be configured according to older laws and regulation which could inadvertently overlook intended beneficiaries. The idea that the estate-tax exemption increase lessens the need for many people to pursue estate planning is misplaced; it could cause you to pay more in income tax, improperly manage trusts, or cause loved ones receiving your assets to miss out on tax breaks.

It’s always a good idea to regularly spruce up an estate plan as families – and life – are always evolving.

See Eleanor Laise, Update Estate Plans in Light of New Tax Law, Kiplinger, April 28, 2018.

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

April 30, 2018 in Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

Saturday, April 28, 2018

7 Common Estate Planning Disasters and How to Avoid Them

0Baby boomers are now aging in a tax era that is favorable to transferring wealth to loved ones of younger generations. The recent increase in the estate and gift tax exemptions thresholds, along with expanding wealth, work to create an atmosphere conducive to transferring extensive assets after death. But many people believe that because of this amicable atmosphere, the process of passing along their estate is now so simple that they are able to take care of their estate planning on their own. However, due to longer lifespans, higher incidences of multiple marriages, and blended families, the process of creating an estate plan that satisfies all of your needs may be more complicated than originally thought.

See Michael Feinfeld, 7 Common Estate Planning Disasters and How to Avoid Them, Market Watch, April 26. 2018.

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

April 28, 2018 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)