Wills, Trusts & Estates Prof Blog

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

Sunday, December 10, 2017

US Senate Passes Tax Reform Legislation – Here Is What You Need to Know

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-10/6584bca4-ca98-4f41-8995-c47261bb41fa.pngOn Saturday, December 2, the Senate pushed through its version of tax legislation that is poised to represent some of most sweeping legislation the tax code has endured in a generation. The bill squeezed past by a narrow 51-49 margin, with Sen. Bob Corker (R-TN) and every Democrat voting against the bill. Leaders in both houses are soon expected to start conferencing their versions of the bill. The apparent goal for the House and the Senate is to put a finalized version of tax legislation on President Trump’s desk before Christmas.

See Tax Strategy and Benefits Practice Group, US Senate Passes Tax Reform Legislation – Here Is What You Need to Know, The National Law Review, December 4, 2017.

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

December 10, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation | Permalink | Comments (0)

Friday, December 8, 2017

New U.S. Tax Law Could Curb Charitable Donations

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-08/09361590-ed91-4ccb-b048-6b1a812207d4.pngThe tax bill currently meandering its way through Congress may inadvertently impact end-of-year charitable giving. Many taxpayers wait until late December to provide their donations to charity in order to make the timing cut-off for taking a deduction in that tax year. With standard deductions likely going up, these last-minute donors have less incentive to itemize their deductions, which may lead to fewer gifts to charities. The increase and possible abrogation of the estate tax may also negatively affect donations to charity, as fewer high-net-worth taxpayers will be concerned with the tax consequences of passing their estate on to their beneficiaries.

See Beth Pinsker, New U.S. Tax Law Could Curb Charitable Donations, Reuters, November 30, 2017.

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

December 8, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Tuesday, December 5, 2017

CLE on Current Developments in Estate and Tax Planning 2017

0000000 CLEAmerican Law Institute CLE (ALI CLE) and The American College of Trust and Estate Counsel (ACTEC) are holding a conference entitled Current Developments in Estate and Tax Planning 2017, which will take place on Wednesday, December 13, 2017, via telephone seminar and audio webcast. Provided below is a description of the event:

Why You Should Attend

Do you want to provide your estate planning clients with the best possible advice going into the new year? Are you up-to-date on the most significant developments to have come out of 2017? Set aside just 90 minutes to gain valuable insights on emerging trends in estate and tax planning, and learn how the newest cases, IRS guidance, and proposed regulations will impact your practice and your clients’ estate plans.

What You Will Learn

The faculty, all Fellows of The American College of Trust and Estate Counsel and highly-experienced estate and tax planning practitioners, will discuss:

The withdrawal of the Section 2704 Proposed Regulations

The proposed tax legislation and whether the estate tax will be repealed

Recent cases addressing:

- portability

- estate tax apportionment and net gifts

- asset transfers and family partnerships

- buying assets from trust for promissory note

- decanting without a state statute

Binding the IRS to trust reformations and modifications

New directions for processing applications to release the estate tax lien on estate property

Have a question for the faculty? Send your questions to tsquestions@ali-cle.org. Questions submitted during the program will be answered live by the faculty. In addition, all registrants will receive a set of downloadable course materials to accompany the program.

Who Should Attend

Estate planners and other professionals will benefit from this CLE on estate and tax planning developments jointly offered by the American Law Institute CLE and ACTEC.

December 5, 2017 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Trusts | Permalink | Comments (0)

Friday, December 1, 2017

In Pursuit of Portability

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-01/9e3caa7a-db2c-4c59-85b8-e7e35a63e42f.pngThe American Taxpayer Relief Act of 2012 permanently enshrined the concept of portability as part of estate tax law. The portability provision included in the act allows a decedent’s spouse to claim the deceased spousal unused exclusion amount (DSUEA) to protect the deceased’s estate from gift and estate tax. A number of important developments relating to portability occurred in 2017: 1) the surviving spouse must now timely file the estate tax return, 2) the deadline to elect portability was extended, and 3) the Tax Court addressed the limits of the Treasury’s authority to go investigate a deceased spouse’s estate tax return.

See Clary Redd, In Pursuit of Portability, Stinson, Leonard, & Street, November 22, 2017.

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

December 1, 2017 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Saturday, November 25, 2017

Should You Insure Against an Inheritance Tax Bill? This Is What It Costs

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-11-24/ee832791-2e48-413a-8ac5-bd5c11b44197.pngUK families are becoming increasingly inventive in their efforts to thwart the ever-unsatisfied taxman. This is especially true as the inheritance tax is bringing in record levels of funds to Her Majesty's Revenue and Customs (HMRC). As part of this avoidance effort, some have turned to purchasing life insurance policies to help their beneficiaries pay taxes due after their demise. There are a number of plans available depending on need, but they each come with potential risks. It is best to seek out the advice of an estate or financial planner to determine what plan is best for you.

See Sam Brodbeck, Should You Insure Against an Inheritance Tax Bill? This Is What It Costs, The Telegraph, September 2, 2017.

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

November 25, 2017 in Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)

Sunday, November 19, 2017

Court: Kids of Divorced Stepparent Must Pay Inheritance Tax

285px-StepByStepOpeningPaula Tyler and Mark Alcorn were raised by their mother, Connie Smith, and stepfather, Donald Hitzhusen. The couple later divorced, but Hitzhusen remained close to Tyler and Alcorn. Close enough, in fact, that he left them 77% of his $1.9 million estate. Because the distribution occurred in Iowa, Tyler and Alcorn were subject to a $200,000 inheritance tax. The pair challenged the validity of the tax, claiming that they were essentially being punished for the divorce of their parents. The court did not buy the argument and held that the Iowa Legislature’s goal to promote family cohesion was legitimate.

See David Pitt, Court: Kids of Divorced Stepparent Must Pay Inheritance Tax, Los Angeles Times, November 17, 2017.

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

November 19, 2017 in Current Events, Estate Planning - Generally, Estate Tax, New Cases, Wills | Permalink | Comments (2)

Thursday, November 16, 2017

Funding Education? Consider A Trust Instead of A 529 Plan

960x0529 plans are generally excellent savings vehicles for funding a child’s education. Among a number of attractive features are tax-free asset growth, clear investment options, and flexibility. While these plans work well for the vast majority of parents, those with substantial estates may find it more advantageous to use a trust. Trusts generally have a broader choice of investments, may be drafted to accommodate expenses other than education, and can offer asset protection from creditors and foolish spending habits. Implementing a trust strategy is complex and requires experienced counsel.

See Rob Clarfeld, Funding Education? Consider A Trust Instead of A 529 Plan, Forbes, August 22, 2017.

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

November 16, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, November 15, 2017

The Very Bad Arguments for Killing the Estate Tax

Lead_960Conservatives and freedom-loving patriots have put forth a number of arguments for repeal of the estate tax. Once premise in the litany of reasons is the very real fact that the estate tax accounts for such a small proportion of overall revenue: a scant one-half of 1%. Another oft-cited reason for abrogation is that taxing a decedent’s estate is fundamentally unfair. An individual working, sweating, and sacrificing during life, continually paying taxes honestly and without quibble, must further suffer the indignity of an additional tax on previously taxed assets.

A fundamentally flawed argument in support of the estate tax is that the practice of taxing estates upon death “is almost as old as recorded history itself.” Appeals to historical precedent, while supportive of the practice, bear little weight in logical discourse. A more general appeal for more stringent estate taxes rests on the ideal of taking from the affluent and giving wealth to lower-income families. Apparent from the success of the current American welfare system, it is almost certain that these additional funds would make a difference in the most deserving communities.

See Derek Thompson, The Very Bad Arguments for Killing the Estate Tax, The Atlantic, November 13, 2017.

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

November 15, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, November 9, 2017

CLE on Top Estate Planning Techniques

0000000 CLEThe National Business Institute is holding a conference entitled, Top Estate Planning Techniques, which will take place on Tuesday, November 28, 2017, at the Courtyard Alexandria in Alexandria, LA. Provided below is a description of the event:

Program Description

Focus Your Efforts on Techniques That Work

This engaging course will take you through the basics of estate planning and beyond with old and new techniques that our attendees have voted to be the most effective in their practice. Find out what makes these estate planning tools "superstars" and gain practical tips for maximizing their uses. Enroll today!

  • A simple will remains one of the most effective tools in estate planning - learn how to phrase it to maximize its effectiveness.
  • Gain practical tips for drafting legally defensible transaction agreements to make sure the gifts are properly documented.
  • Help your client transfer a business to beneficiaries without diminishing its value or surrendering too much control.
  • Protect yourself with thorough knowledge of laws and regulations governing the actions of fiduciaries.
  • Learn why it's important to know when to file the tax return for grantor trusts.
  • Determine whether a client qualifies as a beneficiary of a special needs trust and gain tips for drafting one.
  • Don't reinvent the wheel - learn from experienced faculty how to create airtight qualified personal residence trusts.
  • Maximize your asset protection: learn how to make sure all your clients' assets are accounted for in the trust documents.
  • Use spendthrift language in ILITs to limit the ability of beneficiaries to assign interest and creditors to make demands on the trustees to pay the debts of beneficiaries.

Who Should Attend

This basic-to-intermediate level seminar offers an overview of the best practices in estate planning and will benefit:

  • Attorneys
  • Paralegals
  • Financial planners
  • Accountants and CPAs
  • Tax Preparers
  • Trust officers

Course Content

  1. Wills
  2. Annual Exclusion Gifting
  3. Tax and Estate Planning for Pension and IRA Assets
  4. Grantor Trusts
  5. Irrevocable Life Insurance Trusts
  6. Qualified Personal Residence Trusts
  7. Business Entities
  8. Special Needs Trusts

Continuing Education Credit

Continuing Legal Education – CLE: 6.60 *

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

November 9, 2017 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Update: Proposed Tax Policy By Republicans Would Enable Wealthy to Pass On A Massive Income Tax Deduction to Their Heirs Upon Death

ImagesThe new GOP tax plan proposes to eliminate the estate tax while maintaining the allowance for step-up in basis and the ability for taxpayers to depreciate their rental property. This proposal would allow the ultra-wealthy to transfer their assets to beneficiaries tax-free. Beneficiaries would then receive assets with a stepped-up basis and could, in the case of rental property, depreciate the property to receive an income tax deduction. Such a continued concentration of power and land in the hands of the few might lead to decreased social mobility and drive us back to a feudal system. 

Update: To summarize, the proposed tax changes could possibly lead to the creation of an ultra-wealthy class of landowners by combining three tax breaks that have not previously been combined. A repeal of the estate tax, continuation of the step-up in basis provision, and re-utilization of depreciation for the same assets would provide beneficiaries of real property the ability to inherit land completely tax-free, receive basis equal to the value of the property, and then re-depreciate the asset. The result of this transfer for the beneficiaries is a tax break, which can be extensive depending on the value of the property, that is gained simply by the fact that the beneficiary was fortunate enough to inherit valuable property. 

See Kevin A. Pollock, Proposed Tax Policy By Republicans Would Enable Wealthy to Pass On A Massive Income Tax Deduction to Their Heirs Upon Death, Kevin A. Pollock BLAWG, November 3, 2017.

November 9, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)