Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Saturday, May 16, 2015

CLE On Estate Tax Returns, Estate Expenses

CLE PictureThe American Bar Association Paralegal Elearning Program presents, From Undertaker to Litigator and Steps in Between: The Role of the Paralegal in Estate Administration, Distribution and Resolution, Thursday June 4, 2015 from 12:30-1:30pm Central, online. Here is why you should attend:

Attendees of the Paralegal eLearning Program will learn substantive legal and ethics issues – as well as best practices – from leading industry professionals with in-depth knowledge and hands-on experience in Trust & Estate Law.  The program will offer ten 60-minute eLearning sessions, and attendees can register for the entire series or individual sessions.

As an added bonus, all Paralegal eLearning Program series registrants will receive a complimentary Associate membership in both the ABA and Section of Real Property, Trust & Estate Law for the 2014-2015 bar year.

May 16, 2015 in Conferences & CLE, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Thursday, May 14, 2015

Article on Valuation, Penalty, and Liability Issues in the Federal Estate Tax

Nikki LaingNikki Laing (Capshaw Green, PLLC) recently published an article entitled, Expect the Unexpected: Valuation, Penalty, and Liability Issues in the Context of the Federal Estate Tax (May 3, 2015).  Provided below is the abstract from SSRN:

Failing to timely file the estate tax return, timely pay the estate tax, and properly report the values of the gross estate and related deductions can result in significant financial penalties not only to the estate, but to the personal representative and beneficiaries of the estate, as well. This article explores statutes and recent case law regarding issues involving valuation, penalties, and liability that can crop up when dealing with the federal estate tax.

May 14, 2015 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 12, 2015

Estate Tax Consequences of Retirement Relocation

Moving BlogPicMoving after retirement has become increasingly popular over the years but it may have unintended consequences for estate planning. Sixteen states have estate taxes that vary in exceptions allowed and rates imposed after death. A state such as New Jersey has an exception threshold under $700,000 and maximum tax rates of %14 which could dramatically alter the value of an expected bequest if a retiree had moved from a tax free state. Whenever your client talks about relocation make sure they understand the potential consequences moving may have and advise them how to minimize the potential impact.

See Kyle Krull, Retirement Relocation? Watch Out for Death Taxes!, Wealth Management, May 8, 2015.

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

May 12, 2015 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0) | TrackBack (0)

Monday, May 11, 2015

Article on Estate Tax and Family Law

Margaret RyzanarMargaret Ryznar (Indiana University Robert H. McKinney School of Law) recently published an article entitled, The Odd Couple: The Estate Tax and Family Law, Louisiana Law Review, Forthcoming.  Provided below is the abstract from SSRN:

Although the estate tax is dynamic and frequently the center of tax policy debates, the right to inherit in the United States and many other countries is well-established. In the United States, inheritance rights are deeply rooted in the law. There also have been many economic arguments offered to support inheritance rights, often hinged on the positive incentives created by inheritance. However, there is another important reason for inheritance that this Article considers — the family.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

May 11, 2015 in Articles, Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Irrevocable Life Insurance Trust To Secure Support Arrangements

Trust ChartAs part of divorce arrangements, life insurance may be required in order to guarantee the support agreements for dependents or the former spouse. Due to potential tax liabilities it may be advisable to use an irrevocable life insurance trust that is fully funded in order to ensure that the funds go to intended beneficiaries and avoid potential estate tax consequences. This article offers some interesting tips on creating and using insurance trust and when they may be appropriate.

See Kira Masteller & Anthony Storm, Benefits of an Irrevocable Life Insurance Trust as Security for Support, JDSupra, May 8, 2015.

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

May 11, 2015 in Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, May 9, 2015

Repeal of State Estate and Gift Tax Legislative Priority

Cutting TaxesOnly 15 states currently have estate and gift taxes but that number will likely shrink as legislatures make it a priority to repeal or curtail the assessments. Critics of the taxes claim that it slows economic growth and many states agree as Indiana and Tennessee have accelerated repeals while Maryland and New York are increasing exemptions. Taxes will be a major factor in all estate planning so these changes should be carefully monitored going forward.

See Scott Drenkard & Richard Borean, Economic Growth Slowest in Estate Tax StatesNational Center for Policy Analysis, May 8, 2015.

 

Scott Drenkard and Richard Borean

 

Scott Drenkard and Richard Borean

 

Scott Drenkard and Richard Borean

 

Scott Drenkard and Richard Borean

 

May 9, 2015 in Estate Planning - Generally, Estate Tax, Gift Tax, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 6, 2015

New York Estate Tax Changes

LawChanges to New York's 2015-2016 Executive Budget change and clarify the changes made by last year's budget. The new budget takes away the window of time for the state's estate tax to apply to the estates of deceased individuals, and applies the schedule to all estates of individuals that die after April1, 2014. A clarification was made to the three-year gift add-back, which now applies to those who die on or after January 1, 2019, instead of applying to when the gift was made. The budget did not create portability and the estate tax "cliff" has not been changed.

See Barry I. Lutzky & Elizabeth A. Candido, New York State Enacts Several Modifications to Estate Tax Law, National Law Review, May 4, 2015.

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

May 6, 2015 in Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 5, 2015

Repealing the Estate Tax

Estate tax2The estate tax is so narrow that it only affects about 5,500 wealthy American households per year.  Now, Congressional Republicans want to eliminate the tax altogether, creating a bonus for heirs. The move to repeal the estate tax, thereby ensuring that heirs would not owe any capital gains taxes on the increased value of assets over the deceased’s life, would let billions of dollars in income and assets escape all U.S. taxes.

Ed McCaffery, a law professor at the University of Southern California, says that the bill makes no sense, “[I]t would get a bad grade in a law school final exam . . .  [it] is telling old people, clutch onto things until they die.  That’s not how the American economy works.”  However, repeal is unlikely to happen anytime soon, especially with Obama proposing higher estate taxes. 

See Bloomberg News, Why Republicans Want A Bigger Estate Tax Repeal Than Ever, Private Wealth, Apr. 13, 2015.

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

May 5, 2015 in Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Monday, May 4, 2015

To Gift or Bequeath? That is the Question

Estate taxFor those who are fortunate to enjoy their retirement and have enough money to leave behind, they might be wondering whether it is best to leave an inheritance or gift their assets?  Although the percentage of taxes owed on gifts and inheritance is the same, one is inclusive and one is exclusive, and the dollar difference between the two is huge. 

For both gifts and inheritances, the person giving the money pays the tax.  However, the receiver of the gift or inheritance will not owe taxes, it is your estate that is responsible.  In examining the tax differences, the gift tax is exclusive.  For example, if you were in the 40 percent tax bracket and gave $1 million, you would also owe the IRS $400,000.  Contrastingly, the inheritance tax is inclusive.  For example, if you began with $1,400,000 but left it as an inheritance, 40 percent would go to estate taxes.  Thus, the IRS would receive $560,000 and heirs would net $840,000.  In both cases, you started with $1.4 million, but in one case your giftee ended up with a million and in the other case the person who inherited received $840,000. 

Hence, it may be better to gift while you are alive than to leave an inheritance after you are gone.

See Ken Moraif, Why It’s Better to Give Than to Bequeath, Market Watch, May 4, 2015.

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

May 4, 2015 in Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0) | TrackBack (0)

Monday, April 27, 2015

Estate Tax Payers Outnumbered by Moon Walkers

Bill maherOn his April 17th show, Bill Maher made an “out-of-this world” comparison to undermine the argument that the estate tax threatens the livelihoods of “family farmers.”  Of the 5,000 Americans who paid the estate tax in 2013, twenty farmers paid it. Maher compared that number to the twenty-four Americans who have been to the moon.  “More astronauts have been to the moon than farmers who paid the inheritance tax.” 

While seemingly absurd, Maher’s claim is mostly true.  According to the Tax Policy Center, an estimated 20 small farms and small businesses would have had to pay the estate tax in 2013, accounting to a total of $6.9 million of tax with an average tax rate of 4.9 percent. Alan D. Viard, scholar at the conservative American Enterprise Institute, says the estate tax has flaws, but the effect on farmers is “just not the right grounds to criticize this tax.”  He believes Maher’s point was strong. 

See Katie Sanders, Bill Maher Says More Americans Have Been to the Moon Than Farmers Who Paid the Estate Tax in 2013, Politifact, Apr. 23, 2015.

April 27, 2015 in Estate Planning - Generally, Estate Tax, Humor | Permalink | Comments (0) | TrackBack (0)