Wills, Trusts & Estates Prof Blog

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

Friday, May 25, 2018

Article on Minority Discounts: The Alchemy in Estate and Gift Taxation

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-26/47106395-c2fb-486a-806b-0984c4bf1b4f.pngJames R. Reptti published an Article entitled, Minority Discounts: The Alchemy in Estate and Gift Taxation, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

A pernicious force is stalking the American economic landscape. Individuals owning valuable properties have watched their value decrease by 30 to 40% with the stroke of a pen. This wholesale and wanton destruction of value has not created consternation, however. Indeed, it is often the result of careful planning for which the owners of the devalued property pay large fees to appraisers and lawyers. A common tool of estate planning involves the purposeful diminution in value of family property in order to reduce estate and gift taxes.

May 25, 2018 in Articles, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

GST Tax Exemptions in Jeopardy

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-25/02fc22e7-9cd4-49d7-a482-7452b3182461.pngChapter 13 of the Internal Revenue Code specifically deals with the generation-skipping transfer (GST) tax, the tax which deals with transfers to individuals more than one generation below the donor. The belief of Congress is that property should be transferred once at every generation, so assets left to grandchildren should not avoid a taxation.

This tax generally applies to transfers made after October 22, 1986, but Congress grandfathered in transfers from irrevocable trusts that were in existence on September 25, 1985, but only if the transfer wasn’t made out of trust property that was added to the trust after that date or to income attributable to such later-contributed property. Altering these types of trusts can be tricky so that they do not lose their GST exemption. Modifications may generate irreversible damage to the trust and its beneficiaries. Any alterations, even simple ones, must be examined with a careful eye to ensure there are no unintended gift tax consequences and no accidental estate tax inclusion and that any exclusion from the GST taxing regime is retained. 

See Andrew M. Nernery and Brianna L. Guerrea, GST Tax Exemptions in Jeopardy, Wealth Management, May 18, 2018.

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

May 25, 2018 in Current Affairs, Estate Planning - Generally, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, May 23, 2018

CLE on Trusts From A to Z

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-23/f2cbd463-9e52-49fd-9a35-544b05e5b59b.pngThe National Business Institute is holding a conference entitled, Trusts From A to Z, on Monday, June 04, 2018, at the Best Western Plus North Haven Hotel in North Haven, Connecticut. Provided below is a description of the event:

Program Description

Understand All the Wealth Planning Options Available to Your Clients

Planning your clients' financial future and legacy is diverse and complex, with a unique tool for every unique client situation. In this fast-paced comprehensive program, our faculty will guide you through the plethora of trust options and give you a straightforward, incisive analysis of when and how each can be used for maximum effect. Explore the goals, functions, administration hurdles, and tax implications of the top trusts in the practice. Choose the best tool for the job every time - register today!

  • Weigh all the pros and cons to select the best trust options for specific client situations.
  • Anticipate tax consequences of various trusts.
  • Use sample trust language our faculty provide to save drafting time and avoid mistakes.
  • Clarify the powers and duties of trustees in different trusts.
  • Compare living and testamentary trusts for straightforward estate planning.
  • Distinguish between accounting and taxable income and learn how trust income tax is reported.
  • Understand how ATRA has changed the practice of marital trusts and learn when they are still useful.
  • Review common ethical missteps that can cost you your license - and how to avoid them.

Who Should Attend

This basic level seminar is designed for the professionals involved in creating and administering trusts:

  • Attorneys
  • Accountants and CPAs
  • Trust Officers
  • Tax Managers
  • Wealth Managers

Course Content

  1. What are Trusts? Main Trust Principles
  2. Simple Testamentary Trusts and Revocable Living Trusts
  3. Special Needs Trusts (SNTs)
  4. Grantor Trusts
  5. Marital Trusts in a Nutshell
  6. Tax Reduction With Trusts
  7. Charitable Trusts
  8. Other Trust Structures and Issues
  9. Legal Ethics

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 6.50 -  CT*
CLE 8.00 -  NY*

Enrolled Agent – Enrolled Agent: 8.00

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 23, 2018 in Estate Planning - Generally, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Monday, May 21, 2018

Applicable Federal Rates and Code Section 7520 Rate for June 2018 – Trending Up

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-21/9af22ec0-7889-4548-926b-a5f0ee57e698.pngThe applicable AFR is the minimum acceptable or safe-harbor interest rate that must apply to intra-family loans to avoid adverse income or gift-tax consequences. From January 2018 to June 2018, AFRs have been trending up, making intra-family loans and installment sales to grantor trusts less attractive.

The 7520 rate for the month in which a lifetime gift or testamentary transfer occurs is used to determine the gift or estate-tax value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest. The 7520 rate is equal to 120 percent of the applicable mid-term rate. The 7520 rate also has been trending up, making planning techniques like qualified personal residence trusts and charitable remainder annuity trusts increasingly attractive. On the other hand, grantor retained annuity trusts  and charitable lead annuity trusts have become less attractive.

See Carmen Irizarry-Diaz, Applicable Federal Rates and Code Section 7520 Rate for June 2018 – Trending Up, GTLaw-LegalAdvisors.com, May 18, 2018.

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

May 21, 2018 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

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)

Thursday, May 17, 2018

Article on Charitable Contributions in Lieu of SALT Deductions

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-17/ac422708-bea0-4c5e-8af3-268146de3cfc.pngDavid Gamage recently published an Articled entitled, Charitable Contributions in Lieu of SALT Deductions, Tax Law: Tax Law & Policy eJournal. (2018). Provided below is an abstract of the Article:

State governments are considering new charitable tax credits designed to circumvent the 2017 federal tax overhaul’s cap on state and local tax deductions. Will these plans work? This essay argues that the answer is: yes, but with some qualifications.

 

May 17, 2018 in Articles, Estate Planning - Generally, Gift Tax | Permalink | Comments (0)

Wednesday, May 16, 2018

CLE on Top Estate Planning Techniques

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-16/4c913a31-ccc4-4b08-a2c9-058975428840.pngThe National Business Institute is holding a conference entitled, Top Estate Planning Techniques, which will take place on Monday, June 11, 2018 at the Holiday Inn Princeton in Princeton, New Jersey. 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 - modify our sample trust documents 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.
  • Create clear final instructions and last wishes to lift the burden of funeral planning from heirs.
  • 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 level seminar offers an overview of the best practices in estate planning and will benefit:

  • Attorneys
  • Paralegals
  • Financial planners
  • Accountants and CPAs
  • Tax Professionals
  • 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
  9. Top Post-Mortem Planning Techniques

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 8.00 -  NJ
CLE 8.00 -  NY*
CLE 6.50 -  PA

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 16, 2018 in Conferences & CLE, Estate Planning - Generally, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, May 14, 2018

Article on Higher Education Savings and Planning: Tax and Nontax Considerations

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-14/afdd40aa-3bde-42dc-80d3-b2439c2203ff.pngF. Phillips Mann and Timothy M. Todd recently published an Article entitled, Higher Education Savings and Planning: Tax and Nontax Considerations, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article:

Funding higher education is among the critical financial decisions made by individuals and families. There are myriad options. Yet, the conventional wisdom — namely using Section 529 Plans — may not be the optimal vehicle to effectuate this goal. Therefore, this Article discusses various strategies to plan, save, and pay for higher education. It compares various savings methods including gifts, UTMA accounts, Section 529 Plans, trusts, and other vehicles. The analysis explores both tax and non-tax considerations, including the effect of different strategies on financial aid, transaction costs, investor control, income taxes, gift and estate taxes, flexibility, and creditor protection.

This Article concludes that the ubiquitous Section 529 Plan may not be as effective as conventional wisdom suggests. Indeed, we argue that Section 529 Plans are optimal only when capital can be exclusively committed to education funding, which may not be the most desirable savings tactic for a wide swath of American families who need to plan for other financial needs (e.g., retirement and unforeseen medical needs).

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

Tuesday, May 8, 2018

Estate Planning for Private Equity: What’s There to Know?

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-05-08/de3579e5-ca35-41b5-bdce-0f1e5c057336.pngPrivate equity managers have the ability to use giving to unlock more gifts. There are a few tips to know about estate planning for private equity.

Irrevocable gifts below the annual limit of $14,000 do not require the person giving the gift nor receiving the gift to pay taxes on it. Transferring assets at the moment of death will prevent them from being part of the taxable estate.

Defective grantor trusts and grantor retained annuity trusts are terrific tools to save money and transfer funds efficiently. But with the complexities that still exist from interest rates and taxes, it is never a bad idea to retain an estate planning attorney.

See Estate Planning for Private Equity: What’s There to Know?, FINSMES, May 4, 2018.

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

May 8, 2018 in Estate Administration, Estate Planning - Generally, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (1)

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)