Wills, Trusts & Estates Prof Blog

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

Friday, October 20, 2017

Killing the Estate Tax Could Help Art Sales, Sotheby’s CEO Says

9713-Andy-Warhol -MaoArt experts have complained that the repeal of the estate tax would decrease donations to charitable organizations. Since art collectors would no longer have to worry about paying an estate tax on their high-value collections, there would be no incentive to reduce estate tax liability by donating to charities. Sotheby's CEO, Tad Smith, has a different perspective on the debate. Smith believes that many wealthy individuals put off selling or donating their collections until death in order to benefit from the step-up in basis. "A lot of people delay selling their art or transacting in the art market until some event happens, until the estate tax kicks in. So, eliminating the estate tax is a reason to eliminate the delay. So I think it will provide more liquidity to the market.”

See Robert Frank, Killing the Estate Tax Could Help Art Sales, Sotheby’s CEO Says, CNBC, October 16, 2017.

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

October 20, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Wednesday, October 18, 2017

4 Ways You Can Start Planning for Possible Tax Law Changes Now

6a00d8345157c669e201b8d23bb74c970c-800wiJean-Luc Bourdon, principal and wealth advisor at BrightPath Wealth Planning, was critical of President Trump’s sparse tax plan: “In the tax world, a nine-page tax framework is equivalent to a tweet. It leaves many questions unanswered.” With so many unknowns regarding tax reform, most advisors are recommending waiting out the proposed legislation. For a few of the less ambiguous provisions though, pre-planning may be beneficial. The elimination of many currently allowable itemized deductions may end up costing retirees. It may be beneficial for these individuals to pack up and ship out to a more tax-friendly state if tax reform legislation is passed.

See Robert Powell, Retirees, 4 Ways You Can Start Planning for Possible Tax Law Changes Now, USA Today, October 13, 2017.

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

October 18, 2017 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Sunday, October 15, 2017

IRS Faulted on Scrutiny of Estate and Gift Tax Returns

DownloadIn a recent report, the Treasury Inspector General for Tax Administration (TIGTA) recommended that the IRS fix a number of current processes associated with review of estate and gift tax returns. TIGTA encouraged the IRS to strengthen its internal controls and suggested that it should revise the Internal Review Manual. IRS management agreed with all the recommendations and is planning on taking some action to fix the issues. TIGTA Inspector General J. Russell George stated, “Taxpayers must be treated fairly and consistently. The IRS must effectively process, select, and assign estate and gift tax return cases for examination and identify the overall compliance impact of the program.”

See Michael Cohn, IRS Faulted on Scrutiny of Estate and Gift Tax Returns, Accounting Today, September 28, 2017.

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

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

Monday, October 9, 2017

Would Donald Trump’s Tax Plan Be a Bonanza for the Art World? An Analysis

4712306179621242The estate tax, along with divorce and outstanding debts, is among the more notable reasons for collectors to offer up their rare art masterpieces for sacrifice on the auction block. Ileana Sonnabend, a legendary art dealer who passed away in 2007, left bequests to family members that included works by Andy Warhol, Roy Lichtenstein, Cy Twomby, and Jeff Koons. Considered alone, the artwork left in the estate was valued at over $800 million. Closely behind these unique gifts stalked the tax man; Sonnabend’s heirs owed the federal government $331 million and New York State $140 million in taxes. This placed the family in an unpleasant position. Short on funds and heavy on illiquid assets, they were forced to sell a number of these masterpieces in order to satisfy their tax liabilities.

If the Trump administration’s tax plan makes it through Congress, it appears as though the estate tax would no longer be a concern. But, Ramsey Slugg, wealth strategist at U.S. Trust, notes that any repeal would probably be temporary. “The estate tax is kind of like a bad penny. It always comes back. It’s been repealed three or four times before, and it’s come back every time.”

See Eileen Kinsella, Would Donald Trump’s Tax Plan Be a Bonanza for the Art World? An Analysis, artnet news, October 2, 2017.

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

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

Saturday, October 7, 2017

CLE on Estate Administration Boot Camp

0000000 CLEThe National Business Institute is holding a conference entitled, Estate Administration Boot Camp, which will take place on Tuesday, October 10, 2017, at the Courtyard by Marriott San Luis Obispo in San Luis Obispo, CA. Provided below is a description of the event:

Program Description

Everything You Need to Know About Effectively Administering an Estate

Are you fully confident in your knowledge of the latest court and tax rules and the most effective transfer tools to ensure each client's estate is laid to rest according to the decedent's wishes, with minimal tax burden? This comprehensive 2-day instruction will give you all the skills you need to administer estates that include trusts and/or business interests without a hitch. Register today!

  • Don't miss any crucial notice and filing requirements when opening the estate - learn what must be done right away.
  • Get helpful forms and checklists that will help you in administration.
  • Understand how income and estate tax deductions interact and find the most advantageous way to structure the tax returns
  • Learn how to use disclaimers more effectively.
  • Clarify what must be done when the trust becomes irrevocable.
  • Protect your professional reputation with a practical legal ethics guide focused on trusts and estates practice.
  • Prevent mistakes in final petition and ensure each estate is closed quickly and without disputes.

Who Should Attend

This two-day, basic level seminar is designed for:

  • Attorneys
  • Accountants/CPAs
  • Certified Financial Planners
  • Trust Officers/Administrators/Managers
  • Paralegals

Course Content

DAY 1

  • Forms of Administration and When They are Used
  • First Steps and Notices, Executor Duties, Opening the Estate
  • Marshalling the Assets
  • Handling Debts and Claims Against the Estate
  • Spouse Elective Share and Disclaimers
  • Key Intestacy Laws You Must Know
  • Trusts That Affect Estate Administration

DAY 2

  • Income Tax Returns
  • Handling Distributions
  • Legal Ethics in Estate Administration
  • Estate and Trust Contests, Disputes, Challenges
  • Business Interests in Estate Administration
  • Portability and Estate, Gift, GST Taxes
  • Closing the Estate and Final Accounting

Continuing Education Credit

Continuing Legal Education – CLE: 12.00 *

International Association for Continuing Education Training – IACET: 1.20

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 14.00 *

* denotes specialty credits

October 7, 2017 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Intestate Succession, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Friday, October 6, 2017

What Your Estate Planning Clients Should Do in Response To Trump's Tax Plan

37152The Trump administration’s plan for tax reform is far from unequivocal, and this ambiguity leaves estate planners in a difficult position. But while the future remains unknown, there are a few suggestions planners can offer clients to deal with uncertainty. The first critical step is to make sure estate plans maintain flexibility. Consider granting another individual an expanded power of attorney in order that he may make the necessary changes to the principle’s estate plan if tax reform brings about significant changes. In a similar vein, independent trustees of irrevocable trusts may be granted additional powers so they can act to reduce future tax exposure. Regardless of possible tax reform outcomes, estate planning will remain important to those wanting to distribute assets to children prior to death, as those assets will likely face gift tax consequences unless moved to a trust.

See Carol A. Harrington, Ellen K. Harrison, & Carlyn S. McCaffrey, What Your Estate Planning Clients Should Do in Response To Trump's Tax Plan, Financial Advisor, September 29, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) & Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

October 6, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Friday, September 29, 2017

Trump GOP Tax Reform Framework Calls for Estate Tax Repeal

Estate-tax-cartoonIn its current form, the federal estate tax applies to estates valued at over $5.49 million. The tax is considered draconian by many, as assets in excess of the $5.49 million threshold are subject to a 40% tax. Couples may combine their exemptions and are able to shield up to $11 million from the tax. The generation-skipping tax (GST) applies to transfers of wealth that pass over a generation during life or upon death. A grandmother giving a gift to a grandchild would be an example where the tax applies.

The Trump Administration’s most recent framework for tax reform includes proposals for repeal of the GST and the estate tax. The plan also calls for the repeal of the alternative minimum tax, the elimination of itemized deductions and personal exemptions, and reductions to the top individual and corporate tax rates. Though repeal and tax reform is far from a certainty, those opposed to the death tax are optimistic. The Family Business Coalition is “all in” for the repeal of the estate and GST taxes believing that their elimination would boost the economy and spur job creation.

See Ashlea Ebeling, Trump GOP Tax Reform Framework Calls for Estate Tax Repeal, Forbes, September 27, 2017.

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

September 29, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, New Legislation | Permalink | Comments (0)

Friday, September 22, 2017

Estate Tax Exemption Projected to Top $11 Million Per Couple in 2018

Elephant-donkey-boxing.268130451_stdThe estate and gift tax exemption limits for 2018 are expected to increase to $5.6 million from the $5.49 million threshold in 2017. If this were the case, it would mean that couples would be able to leave over $11 million to beneficiaries without triggering the estate or gift tax. The annual allowable exemption for gifts is also expected to increase from $14,000 to $15,000 in 2018. This change represents the first time the yearly gift exclusion has been adjusted since 2013. While these increases make it slightly easier for individuals with significant assets to pass their estate to the next generation, those exceeding the threshold limits for exemption are more excited about the prospect of repeal.

Although estate and gift taxes affect a minute percentage of the American populous and bring in an insignificant amount of tax revenue, Republicans and Democrats are battling mightily along tightly drawn party lines. Democrats are holding the tax out as a great equalizer and a means to reduce social inequality. Republicans point to the ranchers and landowners that struggle to pay hefty estate taxes over multiple generations. Whatever side you chose, the legislative conversation about estate tax repeal will likely intensify before any commitment to action occurs.

See Ashlea Ebeling, Estate Tax Exemption Projected to Top $11 Million Per Couple in 2018, Forbes, September 15, 2017.       

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

       

September 22, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Thursday, September 21, 2017

Est. of Sower v. Commissioner: IRS Allowed to Examine Predeceased Spouse’s Estate Tax Return

Baton_passingIn Estate of Minnie Lynn Sower v. Commissioner, Husband predeceased Wife in 2012 with a deceased spousal unused exclusion (DSUE). Husband’s estate elected portability for the DSUE. When Wife passed away in 2013, her estate claimed the husband’s DSUE. The IRS examined Husband’s estate tax return as part of an investigation into Wife’s estate tax return and found a deficiency in Wife’s estate based on the return submitted by Husband’s estate. Wife’s estate argued that the IRS could not examine Husband’s estate tax return due to the statute of limitations and because the letter accepting Husband’s estate tax return represented a closing agreement between the parties. 

The Tax Court ultimately held that the statute of limitations did not bar the IRS from examining a deceased spouse’s estate tax return to determine the deceased spousal unused exclusion (DSUE), and that the letter accepting Husband’s estate tax return did not signify a closing agreement.

See Est. of Sower v. Commissioner: IRS Allowed to Examine Predeceased Spouse’s Estate Tax Return, Wealth Strategies Journal, September 12, 2017.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

September 21, 2017 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Tuesday, September 19, 2017

'Only Morons Pay The Estate Tax,' Says White House's Gary Cohn

FootGary Cohn’s speculation that only “morons” pay the estate tax, while being a poor choice of words, bears with it a kernel of truth. An examination of recent tax data shows fewer and fewer wealthy are paying the so-called “death tax”. According to IRS reports, 2015 saw only 11,917 estate tax returns filed, which marked a 75% decrease since 2006. Much of this decline can be attributed to the threshold for federal estate taxes increasing from $2 million to $5.49 million over the period. Another factor may be skillful maneuvering on the part of estate planners to help their clients avoid a 40% reduction of their estate to pay additional taxes on assets that have already been taxed. Whatever the cause, the value of keeping the estate tax seems to steadily decline as the threshold exemption continues to increase and savvy planners continue to find ways to shield assets.

See Robert Frank, 'Only Morons Pay The Estate Tax,' Says White House's Gary Cohn, CNBC, August 29, 2017.

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

September 19, 2017 in Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)