Wills, Trusts & Estates Prof Blog

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

Monday, September 24, 2018

CLE on New Tax Basis Reporting Requirements in Estate Administration

CLEThe National Business Institute is holding a teleconference entitled, New Tax Basis Reporting Requirements in Estate Administration, on Wednesday, November 7, 2018, at 11:00 a.m. - 12:30 pm. Central. Provided below is a description of the event:

Program Description

Are You Following the New Tax Rules?

The way tax basis of assets is reported during estate administration has changed. Are you confident in your knowledge of the basis consistency rules to ensure every estate is administered correctly? Clarify the new rules and get practical tax-saving tips from experienced faculty - register today!

  • Compare the new basis consistency rules and the old law.
  • Adopt your tax planning and reporting practices to reflect the new requirements.
  • Determine what asset valuation method to use for basis reporting purposes.

Who Should Attend

This tax law update is designed for attorneys. It will also benefit accountants and CPAs, estate planners, trust officers, and paralegals.

Course Content

  • New Basis Consistency Rules vs. the Old Law
  • What Executors/Personal Representatives Need to Know NOW
  • New Information That Must be Included
  • Valuation of the Assets for Basis Reporting Purposes
  • Reporting to Beneficiaries

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 1.50 -  AK
CLE 1.50 -  AL
CLE 1.50 -  AR
CLE 1.50 -  AZ
CLE 1.50 -  CA*
CLE 1.50 -  CO
CLE 1.50 -  CT
CLE 1.50 -  DE
CLE 2.00 -  FL*
CLE 1.50 -  GA
CLE 1.50 -  HI
CLE 1.50 -  IA
CLE 1.50 -  ID
CLE 1.50 -  IL
CLE 1.50 -  IN
CLE 1.50 -  KS
CLE 1.50 -  KY
CLE 1.50 -  LA
CLE 1.50 -  ME
CLE 1.50 -  MN
CLE 1.80 -  MO
CLE 1.50 -  MP
CLE 1.50 -  MS
CLE 1.50 -  MT
CLE 1.50 -  NC
CLE 1.50 -  ND
CLE 1.50 -  NE
CLE 1.50 -  NH
CLE 1.80 -  NJ
CLE 1.50 -  NM
CLE 1.50 -  NV
CLE 1.50 -  NY*
CLE 1.50 -  OH
CLE 2.00 -  OK
CLE 1.50 -  OR
CLE 1.50 -  PA
CLE 1.50 -  RI
CLE 1.50 -  SC
CLE 1.50 -  TN
CLE 1.50 -  TX
CLE 1.50 -  UT
CLE 1.50 -  VA
CLE 1.50 -  VT
CLE 1.50 -  WA
CLE 1.50 -  WI
CLE 1.80 -  WV
CLE 1.50 -  WY

Continuing Professional Education for Accountants

Credit Hrs State
CPE for Accountants 1.50 -  AZ
CPE for Accountants 1.50 -  NY
CPE for Accountants 1.50 -  WA
CPE for Accountants 1.50 -  WI

Financial Planners – Financial Planners: 1.50

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 1.50 *

* denotes specialty credits

September 24, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

What Every Spouse Needs to Know About Inheriting IRAs

IraInheriting an individual retirement account (IRA) can have some unforeseen pitfalls, and a few of the potential mistakes (and steps to avoid them) depend on if the beneficiary is a surviving spouse or another type of beneficiary. There are several solutions to this problem, depending on the tax or retirement goals of the individual inheriting the IRA.

An often unattractive option from a tax planning perspective, a person can distribute all of the IRA assets within five years of the original IRA owner’s death. The distributions will be included in gross income and taxed in the same way they would have been to the original owner, but if there is a need for cash, it needs to be considered.

A more appealing option for some is that of establishing an inherited IRA. This is accomplished by changing the legal name of the IRA and having the title include the name of the original owner, the fact that the original owner is deceased, "for the benefit of," and the name of the inherited owner. Each custodian may have its own particular wording, so be aware. For non-spousal beneficiaries, the required minimum distributions (RMDs) must begin by December 31 of the year following the original IRA owner’s death. For spouses, it can wait until the deceased spouse would have turned 70 1/2, or the surviving spouse can use their life expectancy.

Surviving spouses have the option of using the spousal rollover. In essence the spouse can distribute all of the assets of the deceased spouse's IRA into their own IRA or a new IRA for that purpose. The IRA is treated as if the surviving spouse was the original owner.

See Bob Carlson, What Every Spouse Needs to Know About Inheriting IRAs, Forbes, September 18, 2018.

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

September 24, 2018 in Estate Planning - Generally, Income Tax, Non-Probate Assets | Permalink | Comments (0)

Friday, September 21, 2018

Opinion: The 10 commandments of Retirement

RetireplanRetirement is about you. Taking care of you and your needs, wants, and wishes. Here is a list of 10 "commandments" of how to live in retirement comfortably.

  1. Set a sustainable lifestyle.
  2. Remember that Social Security is meant to replace no more that 40% of your income.
  3. Have an estate plan that provides for your spouse and loved ones in case they outlive you.
  4. Never forget the nonfinancial aspects of your retirement are important, too, such as relocation and leisure time.
  5. Pay attention to communications and deadlines from financial institutions, Social Security, and your employer.
  6. Put retirement savings goals in front of other financial goals.
  7. Save as much as possible as soon as possible.
  8. Remember that your taxes may remain as they are during retirement.
  9. Health care should be placed high on your list of fixed expenses.
  10. You want a steady flow of income, so invest in ways that will do just that.

See Richard Quinn, Opinion: The 10 commandments of Retirement, Market Watch, September 12, 2018.

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

September 21, 2018 in Disability Planning - Health Care, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Wednesday, September 19, 2018

Article on Noncompetes as Tax Evasion

AlcaponeRebecca Marrow recently published an Article entitled, Noncompetes as Tax Evasion, Tax Law: Tax Law & Policy eJournal (2018). Provided below is an abstract of the Article:

Al Capone famously boasted of his criminal empire: “Some call it bootlegging. Some call it racketeering. I call it a business.” Treasury Agent Frank Wilson and Prosecutor George Johnson put Capone behind bars not by disputing his characterization and pursuing murder or assault or RICO charges, but by accepting it and enforcing its tax implications. Irrespective of their legality, Capone’s businesses were profitable, and Capone had not reported their profits for tax purposes. A simple application of bedrock tax law achieved what other legal routes failed to achieve and sent Capone to Alcatraz. The trick was to see the tax argument.

Policymakers should use a similar approach to curtail the excessive, exploitative, and anticompetitive use of employment noncompete agreements. Currently, nearly one in five (or thirty million) American workers is bound by an employment noncompete. Employers claim that they adequately compensate employees for noncompete restrictions with higher wages, bigger raises, and/or more generous bonuses. Policymakers scoff at this claim and use contract law to attack them. Unfortunately, employment noncompetes are like Al Capone in that they have flourished despite the law’s efforts to restrain them. Recently, the largest study of noncompetes in U.S. history paradoxically found that their prevalence is unaffected by their enforceability. In states like California that refuse to enforce employment noncompetes, they are as common as in states that uphold them. Contract law has proved ill-equipped to respond to the pervasive, expanding, and damaging use of noncompetes.

This Article is the first to shift the focus and to argue that employment noncompetes, as employers currently use them, constitute tax evasion and should be attacked as such. If employers pay employees for noncompetes through compensation, then by employers’ own account, this compensation is not purely an expense associated with immediate benefits; rather, it is an expenditure associated with future benefits—benefits that the employer will enjoy years after payment. Thus, the IRS should stop allowing employers to fully immediately deduct the compensation they pay to employees subject to noncompetes and instead should require that an adequate portion of total compensation be allocated to the noncompete and amortized over the restricted period, beginning when employment ends.

September 19, 2018 in Articles, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Monday, September 17, 2018

CLE on Using Trusts and LLC Together in Estate Planning

CLEThe National Business Institute is holding a live video webcast entitled, Using Trusts and LLC Together in Estate Planning, on Tuesday, October 30, 2018, at 9:00 a.m. - 4:00 p.m. Central. Provided below is a description of the event:

Program Description

Enhancing Your Estate Plans by Combining Top Techniques

Make the best use of the two most effective and versatile estate planning instruments: trusts and LLCs. This practical legal guide will help you determine the best course of action for each client's unique situation, and implement your plan impeccably. Register today!

  • Stay up to date on the tax rules governing the participation of trusts in a business.
  • Ensure the transfer of an LLC into a trust goes off without a hitch.
  • Get the best prevention and resolution techniques for disputes most likely to arise.

Who Should Attend

This legal guide is designed for attorneys. It will also benefit accountants, estate planners, trust officers, business owners, and paralegals.

Course Content

  1. Material Participation by Trusts: Complying with the Tax Rules
  2. Using Asset Protection Trusts and LLCs Together
  3. The Intentionally Defective Grantor Trusts (IDGTs) and LLCs
  4. Transferring an LLC to a Trust (with Sample Documents)
  5. Trustees and Other LLC Members: Duties, Powers, and Decision-Making
  6. What to Do When the Trust Terms Conflict with the Interests of the LLC Members
  7. Transfers and Dissolution Issues
  8. Legal Ethics

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 6.00 -  AK*
CLE 6.00 -  AL*
CLE 6.00 -  AR*
CLE 6.00 -  AZ*
CLE 6.00 -  CA*
CLE 7.00 -  CO*
CLE 6.00 -  CT*
CLE 6.00 -  DE*
CLE 7.00 -  FL*
CLE 6.00 -  GA*
CLE 6.00 -  HI*
CLE 6.00 -  IA*
CLE 6.00 -  ID*
CLE 6.00 -  IL*
CLE 6.00 -  IN*
CLE 7.00 -  KS*
CLE 6.00 -  KY*
CLE 6.00 -  LA*
CLE 6.00 -  ME*
CLE 6.00 -  MN*
CLE 7.20 -  MO*
CLE 6.00 -  MP
CLE 6.00 -  MS*
CLE 6.00 -  MT*
CLE 6.00 -  NC*
CLE 6.00 -  ND*
CLE 6.00 -  NE*
CLE 6.00 -  NH*
CLE 7.20 -  NJ*
CLE 6.00 -  NM*
CLE 6.00 -  NV*
CLE 7.00 -  NY*
CLE 6.00 -  OH*
CLE 7.00 -  OK*
CLE 6.00 -  OR*
CLE 6.00 -  PA*
CLE 7.00 -  RI*
CLE 6.00 -  SC*
CLE 6.00 -  TN*
CLE 6.00 -  TX*
CLE 6.00 -  UT*
CLE 6.00 -  VA*
CLE 6.00 -  VT*
CLE 6.00 -  WA*
CLE 7.00 -  WI*
CLE 7.20 -  WV*
CLE 6.00 -  WY*

Continuing Professional Education for Accountants

Credit Hrs State
CPE for Accountants 7.00 -  AZ
CPE for Accountants 7.00 -  NY*
CPE for Accountants 7.00 -  WA
CPE for Accountants 7.00 -  WI

 * denotes specialty credits

September 17, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Congress Pushes Forward this Week with Tax Reform 2.0

GopHouse Republicans continue to push what has been titled "Tax Reform 2.0" through Congress, hoping to get the legislation's new three tax bills passed: H.R. 6760, H.R. 6756, and H.R. 6757.

H.R. 6760 Protecting Family and Small Business Tax Cuts Act of 2018, is sponsored by Representative Rodney Davis (R-IL). Notably, the bill would make the Tax Cuts and Jobs Act (TCJA) individual and small business tax cuts (the so-called pass-through tax cuts) permanent. The individual cuts are currently set to expire in 2025, while the TCJA corporate tax cuts are permanent.

Additionally, under the bill, the medical expense deduction would remain in place with a lower floor of 7.5% for tax years 2017 through 2020; the TCJA only allowed the limit through 2018. The bill would also make clear that, to claim the credit, a taxpayer identification number (TIN) would be necessary for any non-child dependent, which could consist Social Security number or an individual taxpayer identification number (ITIN).

See Kelly Phillips Erb, Congress Pushes Forward this Week with Tax Reform 2.0, Forbes, September 12, 2018.

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

September 17, 2018 in Current Affairs, Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Marital Trust Division Deemed a Non-Recognition Event, but Tax Implications Abound

IrsThe Internal Revenue Service released Private Ruling 201834011 on August 24, 2018, in which the IRS ruled that the proposed division of a marital trust into two separate trusts (Trust 1 and Trust 2, for simplicity) would neither trigger income or capital gain recognition nor preclude either trust from qualifying for treatment as qualified terminable interest property trusts, known as a QTIP trust.

Six issues were raised in the ruling, with each issue regarding different tax implications. Issues included whether IRC Section 2044(a) would cause the value of the surviving spouse’s deemed Section 2519 (remainder interest) gift of Trust 1’s remainder to be included in surviving spouse’s gross estate, whether the surviving spouse’s non-qualified disclaimer of all beneficial interests in Trust 1 (Renunciation) would trigger another deemed IRC Section 2519 gift from her with respect to Trust 2’s remainder, and whether the Renunciation would cause the surviving spouse’s interest in Trust 2 to be valued at zero under IRC Section 2702.

The ruling explained that IRC Section 2044(a) would not trigger because of the language of Section 2044(b), thus allowing the income interest property to not be a part of the surviving spouse if it was deemed a Section Section 2519 gift. The ruling held in the fourth and fifth issue that the Renunciation would not cause the surviving spouse’s continuing interest in Trust 2 to be valued at zero under Section 2702 because the two Resulting Trusts were to be analyzed as truly separate trusts.

See Stephen J. Putnoki-Higgins, Marital Trust Division Deemed a Non-Recognition Event, but Tax Implications Abound, Wealth Management, September 12, 2018.

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

September 17, 2018 in Current Events, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Saturday, September 15, 2018

House GOP Introduces New Tax Cut Bill Ahead of Midterm Elections

GopEarlier this week, Republican lawmakers of the House introduced legislation that would make the 2017 tax cuts for individuals permanent. Polls consistently show less than half of Americans approve of the tax cut, but members of the Grand Old Party want to highlight it as their largest economic triumph before the November midterm elections.

House Ways and Means Chairman Kevin Brady said in a statement, “This legislation is our commitment to the American worker to ensure our tax code remains the most competitive in the world.”

Last year’s tax overhaul set the individual changes to expire at the end of 2025 for budget reasons because it passed through a special process where a simple majority was necessary for passage. One of the many provisions was the SALT deduction cap, which is unpopular in high-tax states such as New York and New Jersey. Republicans elected from those high-tax states are now faced with a difficult choice of either supporting a new cap on state and local tax deductions, or voting against tax cuts backed by their party.

The bill includes several retirement-related provisions that would allow small businesses to more easily offer 401(k) plans, as well as new individual savings accounts for education and newborns. The legislation would also allow startups to write off more of their costs.

See Laura Davison & Allyson Versprille, House GOP Introduces New Tax Cut Bill Ahead of Midterm Elections, Time, September 10, 2018.

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

September 15, 2018 in Current Affairs, Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Thursday, September 13, 2018

CLE on The Use of Pass-Through Entities in Estate Planning Under the New Tax Law

CLEThe National Business Institute is holding a teleconference entitled, The Use of Pass-Through Entities in Estate Planning Under the New Tax Law, on Thursday, October 25, 2018, at 1:00 p.m. - 2:30 p.m. Central. Provided below is a description of the event:

Program Description

Align Your Estate Planning Techniques with the Latest Laws and Regs

The new tax law has changed the way pass-through entities are utilized in estate planning. This timely legal briefing will give you the knowledge and skills to adjust your approaches to best represent your clients in the new regulatory environment. Register today!

  • Get an insightful overview of the new rules.
  • Find new uses for the new tax deductions.
  • Identify key elements of existing estate plans and businesses that must be updated.

Who Should Attend

This timely legal briefing is designed for attorneys. It will also benefit accountants and CPAs, tax professionals, wealth managers, trust professionals, and paralegals.

Course Content

  1. New Tax Deduction for Owners of Pass-Through Entities: How Does it Work?
  2. "Domestic Qualified Business Income" (QBI) Deduction and the Level of Owner Participation
  3. Exclusions to the New Tax Deduction
  4. QBI Tax Deduction and Trusts
  5. Practical Tips for Modifying Existing Estate Plans and Existing Business Structures

Continuing Education Credit

Continuing Legal Education

Credit Hrs State
CLE 1.50 -  AK
CLE 1.50 -  AL
CLE 1.50 -  AR
CLE 1.50 -  AZ
CLE 1.50 -  CA
CLE 2.00 -  CO
CLE 1.50 -  CT
CLE 1.50 -  DE
CLE 2.00 -  FL*
CLE 1.50 -  GA
CLE 1.50 -  HI
CLE 1.50 -  IA
CLE 1.50 -  ID
CLE 1.50 -  IL
CLE 1.50 -  IN
CLE 1.50 -  KS
CLE 1.50 -  KY
CLE 1.50 -  LA
CLE 1.50 -  ME
CLE 1.50 -  MN
CLE 1.80 -  MO
CLE 1.50 -  MP
CLE 1.50 -  MS
CLE 1.50 -  MT
CLE 1.50 -  NC
CLE 1.50 -  ND
CLE 1.50 -  NE
CLE 1.50 -  NH
CLE 1.80 -  NJ
CLE 1.50 -  NM
CLE 1.50 -  NV
CLE 1.50 -  NY*
CLE 1.50 -  OH
CLE 2.00 -  OK
CLE 1.50 -  OR
CLE 1.50 -  PA
CLE 1.50 -  RI
CLE 1.50 -  SC
CLE 1.50 -  TN
CLE 1.50 -  TX*
CLE 1.50 -  UT
CLE 1.50 -  VA
CLE 1.50 -  VT
CLE 1.50 -  WA
CLE 1.50 -  WI
CLE 1.80 -  WV
CLE 1.50 -  WY

Continuing Professional Education for Accountants

Credit Hrs State
CPE for Accountants 1.50 -  AZ
CPE for Accountants 1.50 -  NY*
CPE for Accountants 1.50 -  WA
CPE for Accountants 1.00 -  WI

National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 1.50 *

* denotes specialty credits

September 13, 2018 in Conferences & CLE, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Wednesday, September 12, 2018

Rich People Win (Again) if the New RMD Proposals Become a Reality

RmdMandatory amounts people must withdraw from certain retirement accounts to not be penalized by the IRS, or required minimum distributions (RMDs), may be about to change. President Trump has directed the Treasury and Labor departments to consider the implications of delaying the age of RMDs.

Financial experts around the country believe that they already know the implications, which would be a great benefit - but only to wealthy clients. As for low- and middle-income retirees, it makes no to little difference, and it may even be a detriment to the government. "Since the point of RMDs are to generate taxable income from these distributions, it probably won’t help the federal deficit if they push the age back,” said Mark Beaver, a financial adviser at Keeler and Nadler in Dublin, Ohio.

Required minimum distributions most negatively affect retirees with large retirement account balances, because these withdrawals are taxed as ordinary income and push account holders into higher tax brackets upon distribution.

See Alessandra Malito, Rich People Win (Again) if the New RMD Proposals Become a Reality, Market Watch, September 7, 2018.

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

September 12, 2018 in Current Affairs, Elder Law, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)