Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Monday, August 3, 2015

Congress Makes Changes To Tax Return Due Dates, Extensions, And Statutes Of Limitations

IrsCongress has recently passed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. This new legislation will include modifications to the mortgage reporting requirements, 1098 forms will now have to report the outstanding principle on a mortgage at the beginning of the calendar year.  Under the new law inherited property will not be able to have a higher basis than what was reported for estate tax purposes.  The law will clarify the six-year statute of limitations period whenever the basis is overstated.  Key changes to certain tax return due dates will also be part of the new legislation. 

See Kelly Phillips Erb, Mark Your Calendars Now: Congress Changes Many Tax Return Due Dates & Extensions, Forbes, August 3, 2015. 

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

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

Wednesday, July 29, 2015

The Balancing Act Involved With Charitable Giving

CharityWhen it comes to charitable giving there are multiple layers of intertwined motivations that are both personal and philanthropic.  A financial planner needs to perform a balancing act when assisting a client with overcoming conflicting desires in charitable giving.  This article discusses how financial planners will need to help their clients adapt to changes in the tax law dealing with charitable gift giving.  There will also be changes to how clients will handle charitable remainder unitrusts (CRUTs).  This article explains the different techniques advisers can use to help balance the client’s interest taking into account the interest of the beneficiary charity as well.  It discusses the different ways to structure split-interest gifts.  This article will hopefully provide more information about the importance of planning ahead when making charitable gifts. 

See Robert F. Sharpe, Jr., The Charitable Planning Balancing Act, Wealth Management, June 25, 2015.

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

July 29, 2015 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Monday, July 27, 2015

New Study Shows Death Taxes Hurt States That Impose Them

TaxasThe Heritage Foundation has released a new report which shows that states that impose estate taxes have driven away many of the wealthy from their states. As of now, thirteen states have the tax with rates ranging from 9% to 20% although many states have recently repealed the levy or cut the rate. The result of this outflow on capital from death tax states has lead to lesser investment in state as families look to safer tax regimes to invest their money. In addition, the revenue generated from the duty has fallen short of projections which has lowed the incentive to enforce the tax administratively and politically. Ultimately, the future of the estate tax at the federal and state level is still in doubt as both political parties have candidates that have indicated the estate tax will be an issue in the campaign.

See Stephen Moore & Joel Griffith, State Death Tax Is a Killer, The Heritage Foundation, July 21, 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 27, 2015 in Current Affairs, Current Events, Estate Tax | Permalink | Comments (0)

Saturday, July 25, 2015

Seven Things Personal Estate Representatives Should Avoid Doing


Estate planningWhen acting as a personal representative for a decedents estate there are things that you need to remember not to do.  Here is a list of seven things a personal estate representative should avoid doing:

  1. Avoid early distribution of assets. Make sure to make a full assessment of potential claims the estate could face.
  2. Do not spend estate assets on personal expenses.  This should be self-explanatory, but some people may need a reminder of why this would be a bad idea.
  3. Never ignore tax issues.  Tax liabilities can pile up, so it is always important to stay on top paying them.
  4. Obey court orders.  A personal representative has to submit to the jurisdiction of the court and disobeying court orders can open him or her up to personal liability.
  5. Do not distribute funds until all bills are paid. It can often be difficult to get money back from somebody once it has been paid out. 
  6. Do not ignore any claims.  It is a good idea to stay on top of any potential claims that you might face.
  7. Do not go forward without seeking attorney advice.  Seeking out expert advice from somebody who understands probate law can be a good strategy.

See Unique Estate Law Blog, What [Not] To Do After A Death: Seven Things Personal Representatives Should Never Do, Wealth Management, June 1, 2015.

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

July 25, 2015 in Estate Planning - Generally, Estate Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

New York Rules On Estate Tax Liability For Single-Member LLC Interests

Albany capitolThe New York State Department of Taxation and Finance has recently issued an advisory opinion that could have an impact on single-member LLC interests.  The Federal tax entity classification election could determine whether property that is owned through an LLC by an out of state person is liable for New York estate taxes.  Taxation officials would want to know if the LLC interest is characterized as tax exempt intangible personal property or taxable real property.  The advisory opinion ruled that if the wholly owned LLC is disregarded for Federal taxing purposes then it would also be disregarded for State purposes thus leaving any of the real in-state property open to estate taxes.  More details of the opinion can be read here

See Michael J. Cataldo and Paul T. Casas, New York State Department of Taxation and Finance To Disregard Single-Member LLC Interests For New York Estate Tax, Pillsbury Law, July 14, 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 25, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Tuesday, July 21, 2015

Unsuspecting People Might Be Liable For Estate Taxes

Estate planPeople often feel safe from the Federal estate tax because they do not meet the $5.43 million threshold.  Some unsuspecting middle-class households might exceed the exemption if they have a large life insurance policy, house, retirement account, or any other assets that could push them over the threshold.  It is also important to watch out for any State estate taxes that might impose a threshold that is lower than the Federal one.  When making plans for leaving life insurance to loved ones a person might consider setting up an irrevocable life insurance trust.  People should consult with a professional estate planner if they have any questions about what they need to do to plan ahead. 

See Bill Bischoff, You may be exposed to estate taxes without realizing it, Market Watch, July 21, 2015.

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

July 21, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Equal Dignity Act Proposed In Congress

Same-sex marriageThe Equal Dignity for Married Taxpayers Act of 2015 has been introduced in Congress.  The proposed bill would amend the Tax Code to clarify that same-sex married couples are to be treated equally to opposite-sex married couples.  One effect this legislation would have on the Tax Code would involve changing gender based pronouns into neutral ones.  Supporters of the legislation argue that it is time to reform the Tax Code in the wake of the recent Supreme Court decision Obergefell v. Hodge. Identical pieces of legislation have been introduced in both houses of Congress. 

See Dawn S. Markowitz, The Equal Dignity for Married Taxpayers Act of 2015, Wealth Management, July 20, 2015.

July 21, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Monday, July 20, 2015

South Africa Considers Revision Of Estate Tax

Cutting TaxesAs the battle over the future of estate taxes rages in the United States, South Africa has also been examining the potential overhaul of their tax regime. A legislative committee has reviewed the situation and found that the tax needs to be updated due to the fact that very few people will pay the tax that was last updated decades ago. Among the recommendations is to update the exclusion amount for inflation, the repeal of a conduit system that allowed tax evasion, and that retirement accounts remain tax free. The proposal is in a public comment phase and is not expected to be acted upon by the legislature anytime soon.

See Matthew Lester, Davis Tax Committee – Estate Duty needs modernisation, seeks public comment, Biz News, July 13, 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 20, 2015 in Current Affairs, Current Events, Estate Tax | Permalink | Comments (0)

Friday, July 17, 2015

How Closely Held Business Owners Can Use Irrevocable Insurance Trusts

RetirementOne common financial planning strategy used by people with large taxable estates is to have an irrevocable trust own life insurance policies.  With an irrevocable insurance trust the client’s beneficiaries would be able to receive the full value of the life insurance policy without having it subjected to any estate taxes.  This article gives an example of how an insurance trust can be used by partners in a closely held business.  The business owners might have life insurance that will purchase the decedent partners shares.  Under a buy-sell arrangement the client’s irrevocable trust would purchase the other decedent partners shares as the owner of the insurance.  It is important to consider whether the trust will have insurable interest, and also any possible gift tax consequence from paying premiums. 

See John P. Dedon, Buy-Sell Arrangements and Irrevocable Insurance Trusts, The National Law Review, July 17, 2015.

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

July 17, 2015 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

The Benefits Of An Irrevocable Insurance Trusts

TrustIrrevocable life insurance trust are a popular tool in the estate planner's arsenal because they allow the full value of the insurance to pass free of taxes. When the trust is fully funded during the life of the insured, the intended beneficiaries are offered excellent security without having to worry about probate or other complicating factors.

  Life insurance trust are also an excellent way to provide for the transfer of shares between partners in a small business at death. Each partner sets up an insurance trust that will buy the shares upon the death of the other partner. The trust will then take the shares, instead of the surviving partner personally, which prevents the taxable estate of the survivor from increasing. The above uses just scratch the surface of the potential for this type of trust which should be explored in more depth if it looks like a client may benefit from the arrangement.

See John P. Dedon, Buy-Sell Arrangements and Irrevocable Insurance Trusts, National Law Review, July 15, 2015.

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

July 17, 2015 in Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)