Wills, Trusts & Estates Prof Blog

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

Monday, December 11, 2017

Federal Estate and Gift Taxes Are a Mortality Risk

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-12-11/7f6e1c1f-a7c5-434b-933f-197f0a4d7b87.pngFor nearly two decades, the legislature has played political football with the federal transfer tax system. This haphazard treatment makes this area of law particularly subject to frequent and radical change. As the proposed repeal of the estate and gift tax seems more likely and looms ever closer, planners and clients may not feel a pressing need to address this issue. Despite the possibility of reprieve, the mortality risk associated with the transfer tax remains a very real concern for the wealthy and cannot be ignored for estate planning purposes.

See Steven Parrish, Federal Estate and Gift Taxes Are a Mortality Risk, Insurance & Risk Management, November 2017.

December 11, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

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 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)

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)

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)

Wednesday, November 8, 2017

Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan

Irs-cartoon-2The internal revenue code contains a number of estate planning provisions modified by exclusions, deductions, brackets, and exemptions that are updated annually to accommodate inflation. Around this time every year, the IRS releases these updated figures. This year, the release of the figures comes via Revenue Procedure 2017-58. There are a number of notable changes occurring in 2018. Among them are an increase in the lifetime estate tax exemption limits, an increase in the gift tax annual exclusion and the annual exclusion for a spouse who is not a U.S. citizen. Also for 2018, a taxpayer’s failure to file a tax return within 60 days from the due date will result in an increased penalty of $215 or 100% of the actual taxes due on the tax return, whichever amount is lower.

See Mary Rennie Rowe “M.R.” Litman, Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan, Williams Mullen, November 2, 2017.

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

November 8, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Tuesday, November 7, 2017

House GOP Tax Plan Explained

Ryan_pence_laugh_ap_imgThe House GOP plan looks very similar to President Trump’s original proposal, albeit with a few minor changes. The three tax brackets proposed in Trump’s plan remain, but the GOP’s plan additionally retains the current 39.6% bracket for higher earners. The GOP plan, like Trump’s plan, gets rid of the Alternative Minimum Tax and reduces the corporate tax rate from 35% to 20%. In an effort to help the average taxpayers with their returns, standard deductions have been increased while many special deductions disappear. This framework will probably change in the upcoming months, but it provides some insight into what Republicans will eventually put forward.

See David H. Lenok, House GOP Tax Plan Explained, Wealth Management.com, November 2, 2017.

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

November 7, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Monday, November 6, 2017

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

Armageddon-2721568__340The 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. 

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 6, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (1)

Friday, November 3, 2017

Book on Cunningham and Cunningham's The Logic of The Transfer Taxes: A Guide to the Federal Taxation of Wealth Transfers

2289754Laura E. Cunningham & Noel B. Cunningham recently published a book entitled, Cunningham and Cunningham's The Logic of The Transfer Taxes: A Guide to the Federal Taxation of Wealth Transfers (2017). Provided below is a summary of the book:

The Logic of the Transfer Taxes: A Guide to the Federal Taxation of Wealth Transfers, offers a broad survey of the federal transfer tax system. It thoroughly covers all of the fundamental rules of the gift, estate and generation skipping transfer taxes and provides numerous illustrative examples. It also offers a glimpse of some popular tax planning techniques, including FLPs, GRATS and IDGT’S, and the Special Valuation Rules of Chapter 14. It is appropriate for use as a coursebook for a two or three credit JD or LLM course, or as a reference for newcomers to the area. Teachers using the book as a principal text will have access to a related Problem Set and Teacher’s Manual.

November 3, 2017 in Books, Books - For Practitioners, Books - For the Classroom, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Trusts | Permalink | Comments (0)