Wills, Trusts & Estates Prof Blog

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

Sunday, June 17, 2018

Court Reinstates Doctor-Assisted Suicide in California

CaliflagLast month Judge Daniel Ottolia of Riverside County Superior Court declared a state law allowing terminally ill patients will months or less to live to receive prescriptions to end their lives unconstitutional, but not on its merits. The judge ruled that it had been improperly passed during a special session of the legislature. The state appeals court overturned that ruling and reinstated the law by an immediate state, but gave opponents until July 2, 2018 to file objections.

The Life Legal Defense Foundation, American Academy of Medical Ethics and several physicians were among those who sued to have the law overturned, claiming that the law violates the equal protection and due process clauses of the United States and California constitutions. Proponents of the End of Life Option, law such as Kevin Díaz, national director of legal advocacy for Compassion & Choices, seeing the ruling of the Fourth District Court of Appeals in Riverside sees the stay as " [A] huge win for many terminally ill Californians with six months or less to live because it could take years for the courts to resolve this case."

The first state to allow physician-assisted suicide in America was Oregon in 1997. California's law went into effect on June 9, 2016. Vermont, Washington, Colorado, Washington D.C., and Hawaii all provide end of life option laws for terminally ill patients.

See Court Reinstates Doctor-Assisted Suicide in California, KVOA.com, June 16, 2018.

June 17, 2018 in Current Affairs, Death Event Planning, Estate Planning - Generally, New Cases, New Legislation | Permalink | Comments (0)

Thursday, June 14, 2018

Colleges Get Tax Reprieve in Push to Value Endowment Assets

EmoryAround 30 private universities across the country will be liable for a 1.4% endowment tax on net investment earnings for the fiscal year starting July 1, 2018. To fit the criteria to be responsible to pay the tax schools must have: more than 500 tuition-paying students and net assets of at least $500,000 per student. However, the Internal Revenue Service procured some guidance to the colleges: "they won’t be taxed on unrealized income from their billions of dollars in assets before the levy was approved," thus using a "stepped-up" basis for calculating the tax owed.

“That’s very good news -- it will give colleges and universities an important element of certainty as they prepare to implement the new tax,” Hamill said, senior vice president of the National Association of College and University Business Officers, the trade group that sought the use of the stepped-up asset values.

Two bills involving the endowment tax have been introduced into the House of Representatives: One that will completely repeal the tax, and another that will waive the tax payment for universities that  spend a quarter of their annual earnings on middle-class tuition relief.

See Janet Lorin, Colleges Get Tax Reprieve in Push to Value Endowment Assets, Bloomberg, June 8, 2018.

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

June 14, 2018 in Current Affairs, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Tuesday, June 12, 2018

Heirs of Heirs of Heirs of Heirs Love Dynasty Trusts

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-06-12/bbf558f7-c180-457a-87e9-3247401b3165.pngThe lucky few have money not only to pass on to their children, but to their children's children's children. Due to the increase of the federal gift and estate tax exemptions under the Tax Cuts and Jobs Act, dynasty trusts are looking more appealing to those that can provide for their great-grandchildren and beyond.

A dynasty trust is a trust that has no expiration date and is available in a small number of states such as Delaware and South Dakota. The estate tax exemption is only double until 2025 and then will revert back to the previous amount of $11.2 million, so donors are taking advantage of the benefits of dynasty trusts while they can. The trusts can be funded by cash, stock, or assets, and beneficiaries do not have to pay capital gains on the assets until they are sold. They may still have to pay for income tax from the proceeds.

Dynasty trusts are efficient, tax-saving tools to help future generations and to provide an amount of control over your money, even after you have passed away.

See Ben Steverman, Heirs of Heirs of Heirs of Heirs Love Dynasty Trusts, Bloomberg, June 10, 2018.

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

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

June 12, 2018 in Current Affairs, Estate Planning - Generally, Gift Tax, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Monday, June 11, 2018

A Tax World Turned Upside Down For the Rich

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-06-11/1ae3b379-7825-4579-945e-c18697057bce.png
It has become common knowledge that the enacted Tax Cuts and Jobs Act doubled the federal exemption for the gift and estate taxes. What has not been overly publicized, however, is the manner in which the incredibly rich were affected by the new law. Withersworldwide professionals held a tax reform briefing in Manhattan on this past Thursday to broach questions by high net-worth clients that are actually seeing an increase in their taxes due to the reform.

Hedge funding is one platform of investing that has definitely seen a difference. The management fee taken by the company is now no longer deductible. So after carrying charges, the investor will actually be paying taxes on a higher percent of the hedge funds gain than they are receiving.

"The landscape for trusts and other investment vehicles has also dramatically changed under the Trump administration’s tax reform. The law wiped out many tax exemptions and other tax reduction strategies for family offices, according to Withersworldwide professionals."

See Gregory Bresiger, A Tax World Turned Upside Down For the Rich, Financial Advisor, June 8, 2018.

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

June 11, 2018 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Friday, June 8, 2018

Suicide Discussion is Evolving in the Wake of Kate Spade's Death

KateThe death of famous handbag designer Kate Spade earlier this week by suicide in her Manhattan apartment has reignited the conversation surrounding suicide, depression, and the way the two are linked. Spade’s longtime friend Elyce Arons told The New York Times this week that when the subject of celebrity suicides came up in their discussions about Spade’s depression, her friend assured her, “‘I would never do that. I would never do that. I would never do that.’ And I believed her.”

National Institute of Mental Health data show that, in 2016, 1 million U.S. adults made plans for death and attempted suicide. Eric Beeson, core faculty member at Northwestern University, says that being 'suicidal' is more than just a list of factors but rather a spectrum of behaviors, and that the act of suicide is not usually an act of impulse. “People talk about it being selfish; people talk about it being irrational,” says Beeson, “but actually I think a lot of suicides are very well-thought out, very well-contemplated."

The moral and philosophical discussion of suicide may also be changing. In ancient cultures such as Japan and Greece, suicide was seen as noble, available, and even honorable. Certain countries and states are passing "Death with Dignity" laws that allows phsyician assisted suicide for those diagnosed with a terminal illness. The conversation starts to travel down the path of when and under what circumstances suicide is "ok." As touchy as this subject may be for some people, the image of the men jumping out of the Twin Towers on 9/11 before they collapsed are not usually met with the proposition that they should be judged. “That analogy is not too different from someone who has a depressive disorder,” explains Beeson. “It’s not true flames, but it’s the flames of something."

See Cindy Dampier, In the Wake of Kate Spade's Death, Looking at Suicide Differently, Chicago Tribune, June 8, 2018.

June 8, 2018 in Current Events, Estate Planning - Generally, New Legislation, Religion | Permalink | Comments (0)

ABLE Accounts Give Disabled More Financial Freedom

1878136 States and the District of Columbia have joined behind the federal government after Congress passed the Achieving a Better Life Experience (ABLE) Act of 2014. ABLE accounts allow those individuals that have developed a qualifying disability prior to reaching the age of 26 (or their parents, relatives, or friends) to invest up to $15,000 per year and still be able to tap into it tax-free.

These accounts allow people with disabilities to save and invest money without fearing that they will lose their government benefits. Before the passing of the Act individuals would lose their Supplemental Security Income (monthly stripend) and their Medicaid (medical insurance) from the government if they held more than $2,000 in their own name. With the new ABLE accounts, individuals can have up to $100,000 without it affecting their SSI and there's no maximum balances for Medicaid benefits. And under the new tax law, you can also roll over money from a 529 college-savings account to an ABLE, up to the $15,000 total annual contribution limit.

10 states also give a tax deductions for contributing to an ABLE account. This biggest appeal, of course, is that it gives people with disabilities a sense of self-worth and pride because they can save money in their own name without jeopardizing their much-needed government benefits.

See Kimberly Lankford, ABLE Accounts Give Disabled More Financial Freedom, Kilpinger, June 7, 2018.

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

June 8, 2018 in Current Affairs, Disability Planning - Health Care, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Thursday, June 7, 2018

Estate Basis Consistency Rules Create Uncertainty for Executors and Beneficiaries

CpaWith the aging of the Baby Boomers generation, CPAs and estate planners alike are actively poised for the influx of clients and the largest transfer of wealth this country has seen. However, here have been some recent legislation that may cause some pitfalls for executors. The changes are contained "within Internal Revenue Code (IRC) section 1014(f) and its proposed regulations, which require the beneficiary’s basis for inherited property to be consistent with the property’s estate tax value." The rule seems simple at face value - stop the executor from valuing the decedent's assets low for estate tax purposes while distributing the property to the intended beneficiaries at a higher value. Furthermore, some of the regulation within the section are still in their proposed form and leave advisors without much guidance.

"This article focuses on the issues raised in the comments to the proposed regulations that address the administrative uncertainties of IRC section 1014(f).

  • Which executors are subject to the reporting requirements?
  • Are the proposed filing requirements and deadlines realistic?
  • Which assets are subject to the basis consistency rules?
  • What is the impact of omitted property and the effects of noncompliance?
  • Are there other considerations for CPAs serving as executors?"

See Richard L. Russell, Jr. and Richard L. Russell, Estate Basis Consistency Rules Create Uncertainty for Executors and Beneficiaries, CPA Journal, May, 2018.

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

June 7, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, New Legislation, Wills | Permalink | Comments (0)

Monday, June 4, 2018

Time to Rethink Foreign Trust Structure [South Africa]

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-06-04/b22ae5cb-97e0-4643-8426-2c4455566a65.pngForeign trusts have historically been the “automatic structure” chosen to hold funds sent offshore by South African residents that have to pay tax to the country. New legislation has passed that now creates a tax liability for certain loans paid to trusts. One way to avoid the tax liability is to be charged the official rate of interest (repurchase rate plus 100 basis points).

"The official rate of interest for a loan held in South African rand is currently 7.5%, but it has been foreshadowed in the 2017 Budget Review that it could be adjusted upwards to a more 'market-related' rate."

The costs of maintaining trusts has increased over time, and due to the increase in possible taxes or interest rate, trusts should not be used for small or minimal amounts.

See Amanda Visser, Time to Rethink Foreign Trust Structure, Moneyweb, May 29, 2018.

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

June 4, 2018 in Estate Planning - Generally, Income Tax, New Legislation, Travel, Trusts | Permalink | Comments (0)

Article on 'Dignity in Living and in Dying': The Henry H. H. Remak Memorial Lecture

DeathGeorge P. Smith published an Article entitled, 'Dignity in Living and in Dying': The Henry H. H. Remak Memorial Lecture, Elder Law Studies eJournal (2018). Provided below is an abstract of the Article.

Although no express right to die with dignity is found in definitive instruments on human rights, the Charter of the United Nations nonetheless addresses the need to protect and safeguard the essential dignity and worth of the human person during life and, arguably, also at death. Indeed, the United Nations has taken an active role in codifying a mandate to ensure human dignity be given and observed within various contexts of International Law. A powerful interface exists between human dignity and the right to life; for, many of the claims to a right to die with dignity actually reaffirm a more general commitment to a shared life of loving and of being set within the framework of living a full life in dignity. Since the conclusion of World War II, a number of European constitutions, in particular, acknowledge presently dignity as a first principle, a constitutional value, a normative standard for policy making, a constitutional right or even an absolute right . The current debate over the issue of dignitary status is broadened contextually when notions of death with dignity are introduced and examined. This Article probes the efficacy of the present conflicts arising from this extended debate and concludes that the very right to self determination, dignity, and to life itself, should be acknowledged and respected especially at its end-stage. Clear evidence of this progressiveness is to be found, domestically, in the United States by state legislative actions which allow pharmacologic assistance at death for terminally ill individuals. These actions may be seen, and applauded, as a nascent response to similar global actions allowed, notably, in The Netherlands, Belgium, and Switzerland. Judicial responses to this matter, however, remain guarded and indecisive.

June 4, 2018 in Articles, Death Event Planning, Elder Law, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Friday, June 1, 2018

Paul Newman Still Giving to Charity, Even in Death

NewmansPaul Newman founded the for-profit company Newman's Own, which produces and sells food and other household products. When Newman died in 2008, he left his entire interest of the company to his private foundation. The law at the time stipulated that the foundation was required to divest itself of the business interest by November 2018. However, Congress finally passed what is being referred to as the Newman's Own exception, which the company had been lobbying for for more than a decade. The exception allows private foundations to own for-profit companies if 100% of the profits are going to charity, the company is independently owned and operated, and other requirements.

See Karen Demasters, Paul Newman Still Giving to Charity, Even in Death, Financial Advisors, May 30, 2018.

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

June 1, 2018 in Current Affairs, Estate Planning - Generally, New Legislation | Permalink | Comments (0)