Wills, Trusts & Estates Prof Blog

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

Wednesday, February 10, 2016

President Obama Proposes Changes To Tax Policy In New Budget

White houseThis article describes the changes in tax policies that are suggested in Obama’s new proposed budget. “It contains tax provisions affecting education, health care, and retirement, as well as proposing extensive changes affecting businesses.” These proposed changes will impact things like the earned income tax credit, child and dependent care credit, and education credits. Some of the new proposals will also deal with community colleges and retirement savings. There are also proposals to increase the capital gains tax rate and to reduce tax benefits for high-income earners. Included in the proposals are also tax credit proposals designed to incentivize bringing jobs back to the United States. Many of these proposals will likely not be passed by a Republican controlled congress. There will probably have to be changes in order to secure the necessary bi-partisan support to pass these proposals into law.

See Alistair M. Nevius, President’s budget proposes many tax changes, Journal of Accountancy, February 9, 2016.

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

February 10, 2016 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Lessons To Take Away From David Bowie’s Estate

David bowieRock legend David Bowie has left his family an estate that is worth about $100 million. According to his will each of his two children will get a quarter of his estate, though his youngest child is not yet legally allowed to inherit. “Unless Bowie made other provisions, such as a trust, the state -- in this case, New York -- will appoint a financial guardian to manage the money until Alexandria is of age, says Leslie Thompson, managing principal and co-founder of Spectrum Management Group in Indianapolis.” This column discusses how trusts allow celebrities like David Bowie to engage in flexible estate planning. A person does not need to be wealthy like David Bowie to have an estate plan. There are many estate planning issues that impact people in all income levels and it is a good idea to plan ahead for these kinds of situations.

See Judy Martel, Lessons from David Bowie’s estate, Bankrate, February 10, 2016.

February 10, 2016 in Estate Planning - Generally, Estate Tax, Income Tax, Music, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, February 9, 2016

How Remarriage Impacts Estate Planning

MarriageThere are many people getting remarried who are not aware of how their new marriage will impact their estate planning situation. As a consequence there are far too many people who do not do enough to plan ahead. This article goes into some detail describing how remarriage can effect just about every aspect of estate planning. People that are entering into another marriage need to be aware about things like the spousal elective share, community and personal property rights, homestead rights, and spousal support requirements. This article also goes into the implications that ERISA has on marriage. It is also extremely important to make sure all the beneficiary designations as well as the will is up-to-date to avoid all the probate issues that will come about from a person dying intestate. Because the laws vary from state to state estate planners will often encounter very complicated issues.  

See John J. Scroggin, Estate Planning Implications of Remarriage, Journal of Financial Planning, February 9, 2016.

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

February 9, 2016 in Estate Planning - Generally, Estate Tax, Guardianship, Income Tax, Intestate Succession, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, February 8, 2016

What People Should Know About Conservation Tax Incentives

Conservation easementsAccording to the National Conservation Easement Database, there are about 40 million acres of land in the United States that get protection from perpetual conservation easements. “Conservation easements serve a very important public purpose and can be a powerful planning tool for the right client.” The Pension Protection Act of 2006 first introduced the enhanced conservation easement tax incentive. Congress had enacted a series of short-term extensions of the tax incentive until 2014 after they expired in 2011. The Protecting Americans from Tax Hikes Act of 2015 has reinstated the conservation easement tax incentive retroactively. This article describes how these incentives can benefit farmers and ranchers as well as the strict requirements for deductions. People taking advantage of the incentives need to be careful to follow the necessary requirements.

See Margaret St. John, In Land We Trust, Wealth Management, February 8, 2016.

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

February 8, 2016 in Estate Planning - Generally, Income Tax, Trusts, Wills | Permalink | Comments (0)

Estate Planning Tips To Remember This Tax Season

New estate planWith tax season approaching now is a good time to start reviewing the estate plan. It is important to review any changes in circumstances that might require making changes to a will or power of attorney. Make sure that the beneficiary designations for insurance plans, 401(k)s, IRAs, and other retirement plans are all updated. People might also consider the idea of creating a “living trust” to help channel assets directly to heirs. “The US Treasury Department recommends that owners of savings bonds prepare a list that records serial numbers, issuance dates, and the name and address on each bond, along with the Social Security number of the owner.” Finally, it is important for senior citizens to be wary of attending many of the free lunch seminars that they might get invited to.

See Julian Block, Estate Planning Reminders for This Tax Season, Accounting Web, February 8, 2016.

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

February 8, 2016 in Estate Planning - Generally, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

New Legislation Makes Charitable Deduction Laws Permanent

New legislationThere have been some charitable provisions that have been extended permanently in the recent Protecting Americans from Tax Hike Act of 2015. “An individual age 70½ or older can make direct charitable gifts from an individual retirement account, including required minimum distributions, of up to $100,000 each year to public charities (other than donor advised funds (DAFs) and supporting organizations) and not report the IRA distributions as taxable income on his federal income tax return.” This new legislation which has no expiration date has been in effect since January 1, 2015. This article also discusses how the new legislation will impact S Corporations that make charitable contributions. It also explains the requirements of eligibility for the enhanced deduction, and also touches on qualified conservation contributions. It would be a wise decision to meet with an estate planning professional to learn more about how these new changes will impact you.

See Conrad Teitell, Charitable Deduction Laws Now Permanent, Wealth Management, February 5, 2016.

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

February 8, 2016 in Current Affairs, Estate Planning - Generally, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Friday, February 5, 2016

Avoiding Financial Mismanagement When Caring For An Aging Parent

AgingThis column discusses a common problem involving adult children with no financial management skills taking over the responsibility of caring for an aging parent with dementia. It is very important to make sure that the person who is named to have power of attorney over financial matters is competent and prepared to handle the complex responsibilities. The person who is named to be a guardian or to have a medical power of attorney also needs to be prepared. There can be terrible consequences for not making sure that the person who is named to handle these responsibilities is competent for the task. This article presents a situation where a person terribly mismanaged the financial affairs of a mother who had dementia. It is extremely important to plan ahead with a competent adviser.

See Carolyn Rosenblatt, Aging Parents And Loss Of Wealth In Widowhood, Forbes, February 5, 2016.

February 5, 2016 in Elder Law, Estate Planning - Generally, Guardianship, Income Tax, Non-Probate Assets, Wills | Permalink | Comments (0)

Estate Planning For An Unplanned Early Retirement

Check writingPeople do not always retire when they plan on it, and an unplanned event that causes an early retirement will have estate planning implications. This article discusses the steps that people should take if they find themselves in a situation where they are unintentionally retired. Planning for a surprise retirement event should include making good choices with assets, developing a tax-smart withdrawal strategy, and developing a budget to plan on living within means. This article discusses things that retirees will need to know about health savings accounts and both traditional and Roth IRAs. There are many different circumstances that could cause a person to retire early that ranges from being laid-off or having to retire due to some type of medical disability. Each of these different situations will require a unique estate planning and retirement strategy.

See Unplanned Early Retirement?, Forbes, February 5, 2016.

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

February 5, 2016 in Elder Law, Estate Planning - Generally, Income Tax, Non-Probate Assets | Permalink | Comments (0)

Thursday, February 4, 2016

Legitimate Tax Write-Offs For Legal Fees

Legal feesThere are many legitimate legal fees that people can write-off from their taxes if they are careful to observe the rules. Fees for tax advice are deductible, but personal legal bills cannot be deducted. Business legal fees that are paid in a person’s trade or business are deductible. Contingent legal fees can be tricky, but legal fees in employment cases can be deducted fully. Investment legal fees that don’t relate to a business but only to investments are miscellaneous itemized deductions. When determining what they can deduct people need to think about which fees might be considered reasonable. It is a good idea to get more professional advice from an estate planner who can properly advise clients about their individual tax situations.

See Robert W. Wood, Perfectly Legal Tax Write-Off? Lawyer Fees – Even $1,200 An Hour, Forbes, February 4, 2016.

February 4, 2016 in Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Wednesday, February 3, 2016

Does A Deceased Person Have To File Taxes?

Business_expenseThis column discusses whether a deceased person is required to file a tax return. The date of death is when a decedent’s tax year ends and there is usually an executor appointed to handle legal matters that include any tax issues facing the estate. The estate might also have to file for federal and possibly state estate taxes if it meets the estate tax threshold. The executor is going to want to get a federal identification for the estate and also open accounts to handle estate’s financial affairs. “The executor will file two returns that year, an individual Form 1040 for pre-death earnings and a Form 1041, which is a fiduciary or estate rerun for the income through the end of the calendar year.” The role of an executor carries with it many fiduciary responsibilities and those who are accepting the role need to be aware any tax filing requirements.

See Edward J. Loughrey, Tax filing for the deceased, Bluffton Today, February 3, 2016.

February 3, 2016 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax | Permalink | Comments (0)