Wills, Trusts & Estates Prof Blog

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

Friday, October 2, 2015

How The Supreme Court Same-Sex Marriage Decision Will Impact Texas Couples

Same-sexThis article discusses the major impact that the Obergefell decision will have on Texas same-sex couples.  The State of Texas uses a community property system where assets accumulated during the marriage are dived evenly.  Texas also recognizes common law marriages (informal marriages).  If a couple agreed to be married, lived together as a married couple, and represented to others that they were married then the elements of a common law marriage in Texas are met.  The question many lawyers and same-sex spouses are asking is whether this common law marriage rule will apply to same-sex relationships that were formed before the Supreme Court decision.  This would have a huge impact on how the same-sex couple’s property is distributed. 

See J. Daryl Hinze, How The ‘Obergefell’ Decision Affects Texas Same-Sex Couples and Everyone Who Practices Law, Texas Lawyer, October 5, 2015.

October 2, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Guardianship, Income Tax, Intestate Succession, Trusts, Wills | Permalink | Comments (0)

After-Tax IRA Funds Can Be Taxable If Basis Cannot Be Proved Or Reconstructed

Tax shoulderAccording to a recent U.S. Tax Court ruling, if the IRA basis cannot be proved or reconstructed then those after-tax IRA funds can be taxed when withdrawn.  This can result in double taxation for the person withdrawing those IRA funds.  The court held that hardship distributions from a 401(K) and IRA are taxable and also subject to a 10% early distribution penalty.  Whenever a person contributes after-tax funds to an IRA that person must report it on IRS Form 8606.  The IRS would then know that those reported funds have already been taxed.  After-tax funds can be added to an IRA “either via nondeductible IRA contributions or via rollovers of after-tax retirement funds that were held in an employer plan, such as a 401(k).”

See Ed Slott, Sidestep Tax Hit by Reconstructing IRA Basis, Financial Planning, October 1, 2015.

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

October 2, 2015 in Current Affairs, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Thursday, October 1, 2015

Estate Planning For Works Of Art Can Get Complex

Estate plan artArt collectors often face complex issues when it comes to estate planning.  These collectors must contemplate financial matters that relate to inheritance.  The planning surrounding art collections has tangible and intangible aspects often involving legacy issues.  There can be tax consequences for heirs that depend on how they are related to the deceased collector. 

Specialist advisers are out there that can handle issues surrounding art collections by focusing on tax and legal concerns in estate planning and philanthropy.  There are various estate planning techniques discussed in this article like placing the art collection into a trust or corporation.  The location and appraisal value of the art collection is also important when putting together a plan.  Collectors need to be aware of the laws and tax regulations that apply to their individual circumstances. 

See Conrad De Aenlle, Estate Planning Can Get Tricky When Art Is Concerned, The New York Times, October 1, 2015. 

October 1, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

How A Lifetime Gifting Programs Are A Way For Clients To Think About Wealth Transfers

CharityThis column discusses the importance of keeping an up-to-date estate plan when giving away assets.  As tax and estate law continues to change each year clients need to be aware of the impact that current laws have on inter-vivos gifts.  Clients should adopt a program for lifetime gifting.  One of the considerations that they need to think about is planning for their own financial needs.  Another consideration is the age of the donor and the size of the estate.  A donor-advised fund (DAF) might be a good way for a client to leave gifts to their loved ones while also establishing a philanthropic legacy.  It is extremely important for clients to not procrastinate on these decisions and to speak with a competent estate planning professional as soon as possible.  

See Scott Thompson, Lifetime Gift Planning: A New Way to Think About Wealth Transfer, Atlantic Trust Blog, September 30, 2015. 

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

October 1, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Wednesday, September 30, 2015

What Non-Citizens Need To Know About Estate Taxes

CitizenshipThis article discusses some of the rules that non-citizen residents should know about estate taxes.  It is important to establish where that person is domiciled (where they live).  Attorneys should understand a person’s citizenship status and where they are domiciled in order to plan for any estate tax issues that the client might encounter.  Estate planning attorneys should gather this knowledge to help their client make better decisions about what sort of connection they might want to pursue with the United States.  The domiciliary test involves many different factors that are discussed in this article.  It is important to get an accurate picture of what assets the client owns and where they are located.

See Olivia Carbajal de Garcia, Understanding the Rules for Estate Taxes and Non-Citizens, Texas Lawyer, October 5, 2015.

September 30, 2015 in Current Affairs, Estate Planning - Generally, Estate Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 29, 2015

Trump Tax Plan Mostly Party Orthodoxy With Dash Of Unusual

ArticlePictureThe campaign of Donald Trump finally released its tax plan amid great pomp at the Trump Towers but offered little in the way of new policies. The plan calls for slashing the number of tax brackets and cutting the top rate to %25 while allowing those with incomes under $25,000 to live tax free. In addition, the plan calls for the end of the estate tax and alternative minimum tax while allowing companies to pay a onetime fee to repatriate funds from outside the United States that might otherwise be taxed. However, aside from one over the top requirement that requires non taxpayers to send “I win” forms to the IRS, the plan offers little in the realm of new policies although it firmly entrenches Trump’s rightward shift from his more liberal positions. Only time will tell if the policy proposals will help propel Trump to Washington.

See Russell Berman, Donald Trump’s Amazingly Conventional Tax Plan, The Atlantic, September 28, 2015.


September 29, 2015 in Current Affairs, Current Events, Estate Tax, Income Tax | Permalink | Comments (0)

Sunday, September 27, 2015

IRS Agent Arrested For Soliciting Bribe From Seattle Marijuana Dispensary

Medical-marijuana-dispensaryA revenue agent for the Internal Revenue Service (IRS) has been charged for soliciting a bribe from a Seattle marijuana dispensary owner.  Paul G. Hurley was charged with two counts of receiving a bribe and he appeared in U.S. District Court this past Monday afternoon.  There is currently a preliminary hearing scheduled for October 5, 2015.  Hurley started auditing the Marijuana dispensary’s 2013 and 2014 tax returns in July.  Marijuana dispensaries do not receive business deductions because Marijuana remains illegal under Federal law.  Hurley told the dispensary owner that he saved him more than a million dollars and then asked for $20,000 in cash.  The dispensary owner told his lawyer who then contacted the authorities.  Law enforcement officials then watched Paul G. Hurley accept bribe money in two meetings. 

See Michael Cohn, IRS Agent Charged With Soliciting Bribe from Marijuana Dispensary, Accounting Today, September 25, 2015.

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

September 27, 2015 in Current Affairs, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

CLE On Top Ten Revenue Rulings for Estate Planners

CLEThe American Bar Association is presenting a CLE entitled, Top Ten Revenue Rulings for Estate Planners, Wednesday September 30, 2015, 1:00-2:35pm Eastern, online.  Here are some details about the event:

This program will review ten key Revenue Rulings that should be part of every estate planner’s portfolio. The panel will begin with a summary of the provisions of each ruling. Where applicable, the panel will discuss what prompted the Department of Treasury to issue the ruling. The panel will then introduce practical planning tips for employing the rulings with illustrations of how these rulings have changed the way estate planners practice.

September 27, 2015 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Saturday, September 26, 2015

When An IRA Names A Trust As Beneficiary

IRA plantClients with Individual Retirement Accounts (IRAs) can consider naming a trust as a beneficiary of the IRA.  This technique is a way for the client to protect the interests of certain beneficiaries by placing controls over the distribution of IRA assets.  There are situations when a beneficiary might be a small child or a person with special needs.  The client may simply want to place spendthrift controls on someone that might be financially irresponsible.  Placing the IRA into a trust can also protect certain assets if the client is concerned that the beneficiary might later on be involved in a divorce.  The trust that is named as a beneficiary can either be a conduit or accumulation trust.  Conduit trusts pass IRA distributions to the beneficiary while accumulation trusts retain the money.  

See Donald Jay Korn, Should an IRA Pass to a Trust?, Financial Planning, September 22, 2015. 

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

September 26, 2015 in Estate Planning - Generally, Income Tax, Trusts, Wills | Permalink | Comments (0)

Friday, September 25, 2015

Yogi Berra And The Law

ArticlePictureYogi Berra was an American icon who will go down as one of the greatest and most influential players to ever grace the baseball diamond. However, his legacy extends beyond confines of the ballpark due to his legendary wit which made him a household name to even nonbaseball fans and earned him a place among the quotable greats such as H.L. Mencken and Mark Twain. As a result, some of his most famous saying have worked their way into court opinions including those of the US Tax Court. Phrases such as "the games not over till its over" and "It's deja vu all over again" have been found in opinions due to their wit and ability to get a point across. With Berra's passing, we have truly lost one of the titans of the 20th century.

See Peter J. Reilly, Yogi Berra's Sayings Worked Their Way Into Tax Decisions, Forbes, September 23, 2015.

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

September 25, 2015 in Current Affairs, Current Events, Income Tax | Permalink | Comments (1)