Wills, Trusts & Estates Prof Blog

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

Thursday, August 11, 2016

Donor-Advised Funds Give Charity a New Look

Donor advised fundsAs we see charitable giving increase, donor-advised funds are becoming the driving force in philanthropic delivery. These vehicles allow individuals to place money in charitable accounts while taking an immediate tax deduction. From here, the donor can choose when and where to disburse it. These invested dollars within the accounts can accrue for years to come. The donor-advised fund is also useful for individuals who want to lighten a position in securities that have gone up in value because upon donating, it enables them to deduct the full value of the securities while avoiding paying tax on the capital gain. Donor-advised funds will continue to gain popularity as retirees look for tax efficient ways to give back.

See Dan Kadlec, Why Charitable Giving Has a New Look, Time Magazine, August 2, 2016.

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

August 11, 2016 in Current Events, Estate Planning - Generally, Income Tax | Permalink | Comments (0)

Friday, August 5, 2016

Best Options for Inheriting Retirement Assets

Inheriting a reitrement accountUsually, surviving spouses will rollover their deceased spouse’s retirement assets into their own account. However, it would be wise to consider a few other options before making a decision. From a tax perspective, taking a lump sum can be costly. If your life expectancy is high, the monthly benefit for life option is a good choice, especially if you are not comfortable with the market or do not plan on leaving a bequest. Also, an IRA transfer is possible depending on the plan documents, from there it will be treated as having belonged to you. Lastly, an inherited IRA might be a good choice if you are significantly younger than your deceased spouse.

See Dan Moisand, Inheriting a Retirement Account? Lump Sum Payouts Can be Costly, Market Watch, July 25, 2016.

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

August 5, 2016 in Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Monday, August 1, 2016

Art Consultant Charged with Hiding $4 Million Inheritance

Lacy doyleLacy Doyle, an art consultant, has been arrested for failing to pay taxes on her $4 million inheritance from her father. She hid millions of dollars in a Swiss bank account, filed false tax returns, and created at last six undeclared foreign bank accounts. She opened an account for a sham foundation, which ended up containing almost all of the $4 million. She was charged with one count of obstructing tax law and one count of filing a false tax return. If convicted, Doyle will face up to six years in prison.

See Sarah Cascone, Art Consultant Accused of Hiding $4 Million Inheritance in Secret Swiss Accounts, Artnet News, July 29, 2016.

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

August 1, 2016 in Current Events, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Friday, July 29, 2016

Transfer of Foreign Money to the U.S.

Wealthy foreignerWhat do you do if you are a wealthy multinational planning for part of your estate to go to the United States? One idea is to create a foreign grantor trust that receives tax benefits for the grantee. The trust will grow tax-free and any distributions made to beneficiaries will be tax-free as well. With the obsession of minimizing income tax, the United States is becoming the place to stash foreign wealth. This makes income tax management the key to most estate planning today. Additionally, estate planners are playing around with basis as a tax reduction technique through inheritance. Ultimately, there should be a three-part harmony: first, structure the trust properly; second, a thoughtful use of entities to compose the trust structure; and third, proper asset allocation.

See Carol J. Clouse, Death and Taxes for Wealthy Foreigners, Private Wealth, June 17, 2016.

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

July 29, 2016 in Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0)

Friday, July 22, 2016

Estate Planning for Your Move to a New State

Moving to a new stateIf you plan on moving to a new state, then you need to consider the new state’s rules governing your estate planning documents and taxes. Before moving to a new state, you should meet with your estate planning attorney to change your wills and trusts according to the new state’s laws. Also, it is important to review the roles of fiduciaries in that particular state because of specific executor requirements.

Furthermore, when moving to a new state, there are also tax implications you must review, and some states have significant variations. For tax purposes, you must be able to prove you abandoned your previous domicile and adopted the new domicile. This is important because, if not, you may still be liable for your old domicile’s income taxes or unexpected estate taxes.

See Day Pitney Estate Planning Update, Estate Planning Update July 2016 – Moving to a New State?, Day Pitney LLP, July 14, 2016.

Special thanks to Jay Stapleton (Quinn & Hary Marketing) for bringing this Article to my attention.

July 22, 2016 in Estate Administration, Estate Planning - Generally, Estate Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Monday, July 18, 2016

Book on Estate Planning Guide for Qualified Retirement Plan Benefits

Retirement book Louis A. Mezzullo recently published a book entitled, An Estate Planner’s Guide to Qualified Retirement Plan Benefits, Fifth Edition (ABA Book Publishing). Provided below is a summary of the book:

This ABA bestseller has helped thousands of estate planners understand the complex rules and regulations governing qualified retirement plan distributions and IRAs. Now newly updated, An Estate Planner’s Guide to Qualified Retirement Benefits provides expert and current guidance for structuring benefits from qualified retirement plans and IRAs, consistently relating key distribution issues to current estate planning practice. Topics covered include:

  • The different types of qualified plans and the tax and non-tax rules relating to them
  • The forms of distribution and the situations in which they need to be considered
  • Penalty taxes
  • Distribution requirements and how to calculate them
  • Income taxation and handling rollovers
  • Transfer taxes
  • Spousal rights, QDROs, and community property considerations
  • Estate and trust administration issues
  • Practical planning strategies to avoid penalty and excise taxes on distributions while incurring the lowest income tax

July 18, 2016 in Books, Books - For Practitioners, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Income Tax, Trusts | Permalink | Comments (0)

Saturday, July 16, 2016

CLE on Tax & Estate Planning in South Bend, Indiana

 CLEThe University of Notre Dame is hosting a CLE entitled, 42nd Annual Notre Dame Tax and Estate Planning Institute, which will take place on October 27–28, 2016 at South Bend’s Century Center on the banks of the St. Joseph River in downtown South Bend, Indiana at 120 South St. Joseph Street. Provided below is a description of the event:

The Institute will continue to present topics relevant for families exposed to the estate tax and for families with a net worth below the combined estate tax exemptions. The advantage of having simultaneous tracks is that one track will focus on creative planning for estate tax reduction, or even elimination, while the other track will cover topics relevant for all families, even families not exposed to the estate tax. Therefore, individuals attending the Institute can choose topics relevant to their clients.

As in the past, we clustered related topics together so that continuity can be enhanced. Of particular interest is the Thursday afternoon cluster on the use of trusts, culminating in a panel discussion on the three prior trust topics. A similar cluster deals with charitable planning.

The Institute presents topics that provide background attendees can use to expand their potential client base, such as how one can introduce both income tax planning and estate planning in the context of a divorce. This year the Institute added a session on the evolving area of Bitcoin, where the speaker will first explain the financial principles underlying virtual currencies and blockchains and then go on to how one can protect these unique assets. As in the past, the Institute will provide topics focused on income tax planning, such as obtaining income tax-free step up in basis at death and assignment of income to taxpayers in lower marginal income tax brackets, including elimination or deferral of state income taxes.

The Institute will also address a topic that is often overlooked: What the planning professional needs to do when there is a mistake in the documents or a mistake in one’s advice. The speaker will provide practical advice on how to deal with the aftermath of a mistake, including how to handle your firm’s partners, your firm’s malpractice carrier, how to manage the client, how to handle a possible IRS audit and what can be done to mitigate possible damage claims.

Download ND_TaxEstate_Oct2016 final brochure

July 16, 2016 in Conferences & CLE, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Friday, July 8, 2016

Post-Death Stretch IRA

Stretch IRAThe income tax treatment of a nonqualified portfolio of investments is far superior than post-death distributions from qualified plans and retirement accounts. The reasons for this are that retirement benefits do not receive a step-up in income tax basis at the owner’s death, retirement benefits must be distributed post-death, and retirement benefits are taxed as ordinary income tax. One option for minimizing this post-death income tax treatment is to withdrawal only the RMDs during the owner’s lifetime, which allows a smaller percentage of accumulated wealth to be subject to the full basis step-up at death. Another option is to convert a portion of the IRA to a Roth IRA, allowing for lower income tax rate on the withdrawals and more accumulation in the Roth. Lastly, an additional option would be to take small IRA distributions and invest the after-tax amount into life insurance.

See James G. Blase, Does a Stretch IRA Always Make Financial Sense?, Wealth Management, June 24, 2016.

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

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

Thursday, July 7, 2016

Estate Planning for Retirees

RetireesIn the United States, the life expectancy continues to rise, meaning that Americans need more financial support as they age. If the aging population does not plan accordingly, they will be unable to maintain the quality of life they deserve during retirement. Estate planners need to help these retirement-age individuals address their new priorities accordingly. When planning for retirement, estate plans should pay attention to gift provisions, so that they do not take advantage of the retirees. Another examination is state income tax, which will effect where retirees establish residency. Estate planners should also consider a retirement trust for their clients, allowing children to disclaim all or some of the inherited retirement account benefits for their own kids.

See John M. Goralka, Estate Planning for an Aging Population, Wealth Management, July 5, 2016.

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

July 7, 2016 in Elder Law, Estate Planning - Generally, Gift Tax, Income Tax, Trusts | Permalink | Comments (0)

Creating Flexibility in Trusts

Irrevocable trustIf you decide to make you trust irrevocable, it is important to determine whether you should add provisions that may enable trust modifications in changing times and circumstances. Things that may demand modification in the future, like trust distribution age, beneficiaries, trustees, and distribution amounts, could lead to regret from not only the grantor but the beneficiaries as well. Additionally, income and estate tax laws are constantly changing, which can create unintended scenarios for those involved. Consequently, several states have enacted statutes to permit the modification of irrevocable trust with tools like decanting, moving assets to various trusts, or allowing grantors and beneficiaries to consent informally to changes.

See Atlantic Trust, Creating Flexible Trusts in Uncertain Times, Wealth Management, July 1, 2016.

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

July 7, 2016 in Estate Planning - Generally, Estate Tax, Income Tax, Trusts | Permalink | Comments (0)