Wills, Trusts & Estates Prof Blog

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

Tuesday, August 23, 2016

Panama Papers Scandal Has Trust Companies Reviewing Their Client Lists

PanamaAfter the Panama Papers scandal, trust companies are scrutinizing their client lists in order to identify any tax cheats who could drag them into an evasion lawsuit. Companies were setting up offshore trusts to reduce exposure to new proposed regulations targeting tax evasion enablers. The government has authorized new measures to reduce this avoidance by fining advisors and accountants facilitating the evasion. Advisors will be required to send letters to clients who have been provided offshore services within the past three years. 

See Vanessa Houlder, Trusts Comb Client Lists for Tax Cheats, Financial Times, August 18, 2016.

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

August 23, 2016 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Proposed Regulations Will Keep Wealthy Americans from Lowering Estate Taxes

IRSThe IRS will implement new rules likely limiting techniques used by rich individuals to lower their estate and gift taxes. These new regulations apply to valuation discounts, which allow people with assets greater than the current $5.45 million exemption to lower the value of their assets subject to gift and estate taxes. Asset owners of this type typically put their assets into a holding company that is not traded, giving shares of the company to family or charity. Subsequently, the assets’ value drops due to dispersed control of the company. The proposed regulations will allow the IRS to ignore these discounts.

See Laura Saunders, The Controversial Way Wealthy Americans Are Lowering Their Estate Taxes, Wall Street Journal, August 19, 2016.

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

August 23, 2016 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation | Permalink | Comments (0)

UK Inheritance Tax Will Affect the Non-Doms

Non-domNew Treasury guidelines will require that residential property be subjected to inheritance tax even if the property is owned offshore. These guidelines add pressure to wealthy UK residents who are domiciled elsewhere; it forces them to consider the benefits of remaining in the UK. The rules will take effect on April 6, 2017 and subject non-domiciled residents to inheritance tax on their residential property. However, the guidelines will allow non-domiciled individuals a grace period until April 2018 to separate their assets.

See Hugo Greenhalgh, UK Inheritance Tax Move to Hit Non-Doms, Financial Times, August 20, 2016.

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

August 23, 2016 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Friday, August 19, 2016

CLE on International Trust & Estate Planning in Washington, D.C.

CLEThe American Law Institute is hosting a CLE entitled, 19th Annual ALI CLE Advanced Course of Study on International Trust and Estate Planning, which will take place on October 27–28, 2016, at the Washington Plaza Hotel in Washington, D.C. at 10 Thomas Circle. Provided below is a description of the event:

The two-day program provides an in-depth review of the factors to consider when providing tax and estate planning advice to wealthy individuals and families with U.S. and foreign contacts. Some of this year’s important topics include:

  • U.S. tax rules applicable to foreign “grantor” and “non-grantor” trusts
  • Common Law trusts and their analogues in other legal systems
  • Trust and related tax law developments outside the United States
  • Practical advice for clients with foreign trusts and business interests
  • Update of current multinational initiatives impacting cross-border wealth and tax planning
  • New options for international charitable planning and related developments
  • S. immigration and citizenship rules relevant to estate planning
  • The current “mark-to-market” expatriation tax rules, including the proposed section 2801 “inheritance” tax regulations
  • The effect that the international exchange of beneficial owner information embedded in CRS and FATCA is likely to have on cross-border tax and estate planning

As in past years, the course’s distinguished faculty will use interactive panels to address the latest wealth planning strategies and trends. There will be ample time to discuss your questions with the faculty and to network with them and a national audience of your peers.

August 19, 2016 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Thursday, August 18, 2016

The Rise of the British Inheritance Tax

Inheritance taxSince 2010, the British inheritance tax bill has risen by more than 90%, becoming a general tax on middle England. The Treasury has become increasingly dependent on this tax, nearly doubling its proportionate share of the overall taxman’s income. This realization will call for the Conservatives to cut the inheritance tax quicker than anticipated in the general election. Under the new proposed system, families will be allowed to pass £1 million onto their children inheritance tax free.

See Ben Riley-Smith, Inheritance Tax Bill Has Nearly Doubled Since Tories Took Power, Figures Show, Telegraph, August 15, 2016.

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

August 18, 2016 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Saturday, August 13, 2016

Article on the Future of the Estate Tax

Estate tax1Kevin T. Keen recently published an Article entitled, The Only Thing Certain Is Uncertainty: The Future of Estate Planning Without the Federal Estate Tax, 51 Real Prop., Trust & Estate Law J. (No. 1), 129 (2016). Provided below is an abstract of the Article:

Given the current political environment, the possibility of a federal estate tax repeal has seemingly become more likely. The effect of a possible near-term repeal of the federal estate tax creates further uncertainty in a field that is constantly evolving. This uncertainty is nothing new. However, taking into consideration the substantial and cascading changes of the American Taxpayer Relief Act of 2012, focusing on current proposed legislation to repeal the estate tax is important to present estate planning efforts. With the 2016 presidential election looming on the horizon, it is not unrealistic to foresee significant changes to the existing income and transfer tax regime ahead.

This Article discusses the current happenings with respect to the most recent efforts to repeal the federal estate tax, offers a glimpse into the possible consequences to the federal income and wealth transfer taxes as a result of such repeal, and explores what considerations may drive future estate planning should one of two circumstances involving a repeal of the estate tax materialize. It behooves the estate planner to consider these potential outcomes and leverage the uncertainty in planning. In any case, income tax considerations will continue to have an increasingly meaningful role in sophisticated estate planning, regardless of the uncertainty that lies ahead.

August 13, 2016 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

The Upcoming Election and Estate Tax

Estate taxes1The GOP establishment has long considered tax-free inheritance as one of the foundations of the conservative movement. They have made the repeal an issue of fairness—why should people have to pay tax again when they die? However, much of this income at death represents unrealized capital gains that have not previously been taxed. The upcoming election will set a stage for how estate taxation can soon shape the future of inherited wealth around the nation.

See Pual Krugman, Hair Meets Heirs, NY Times, August 10, 2016.

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

August 13, 2016 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Friday, August 12, 2016

Article on the Current Law & Issues: Section 2036 of the IRC

IRCLeslie M. Levy recently published an Article entitled, Section 2036 of the Internal Revenue Code: A Practitioner’s Guide, 51 Real Prop., Trust & Estate Law J. (No. 1), 75 (2016). Provided below is an abstract of the Article:

This Article summarizes the current law and issues surrounding section 2036 of the Internal Revenue Code (Code). Specifically, this Article examines retained rights that trigger section 2036. It also addresses the issues surrounding the definition of a “bona fide sale” and the different tests employed by different courts. Lastly, this Article examines the definition of “adequate and full consideration in money or money’s worth” and two highly debated issues in that area. It concludes that understanding the Internal Revenue Service’s (Service) position on the issues involving section 2036 can reduce the likelihood of a Service audit and lead to substantial estate tax savings.

August 12, 2016 in Articles, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Tuesday, August 9, 2016

States Compete to Shelter the Assets of the Top 1%

Wealthy peopleNevada is one of a handful of states that seeks to compete for the lucrative business of shielding assets owned by the mega wealthy in trust. Nevada has aggressively pressed public officials to pass laws, consolidate regulations, lower fees, and elevate the level of treatment to help the top one percent protect their wealth. With such fierce competition, states try to gain marginal advantages while exploiting their rivals’ weaknesses. The federal government allows each state to draft its own trust laws, and some draw a fine line between tax evasion and sheltering assets. For some of these states, abetting criminal activities sits at the forefront of some lawmakers’ minds.

See Patricia Cohen, States Vie to Shield the Wealth of the 1 Percent, NY Times, August 8, 2016.

Special thanks to Jerry Borison (Professor of Law, University of Denver Strum College of Law) for bringing this article to my attention.  

August 9, 2016 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Friday, August 5, 2016

Best Options for Inheriting Retirement Assets

Inheriting a reitrement accountUsually, surviving spouses will rollover their deceased spouse’s retirement assets into their own account. However, it would be wise to consider a few other options before making a decision. From a tax perspective, taking a lump sum can be costly. If your life expectancy is high, the monthly benefit for life option is a good choice, especially if you are not comfortable with the market or do not plan on leaving a bequest. Also, an IRA transfer is possible depending on the plan documents, from there it will be treated as having belonged to you. Lastly, an inherited IRA might be a good choice if you are significantly younger than your deceased spouse.

See Dan Moisand, Inheriting a Retirement Account? Lump Sum Payouts Can be Costly, Market Watch, July 25, 2016.

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

August 5, 2016 in Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)