Wills, Trusts & Estates Prof Blog

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

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Monday, November 24, 2014

Proposed Changes to Canada's Income Tax Act Could Have Significant Estate Planning Effects

ChangeA bill that includes draft legislation from Canada's Department of Finance that proposes an addition to the Income Tax Act is currently being considered by Parliament. The changes will significantly impact estate planning for Canadian couples by treating the income from a spousal trust as income of the deceased spouse, which will be taxed to the spouse instead of the trust. Concerning implications of this change were addressed during the comment period for the draft legislation by The Joint Committee on Taxation of the Canadian Bar Association and Chartered Professional Accountants of Canada, but the draft legislation was included in the bill without changes.

See Kim G. C Moody, Canada: New Draft Legislation Will Have A Great Impact On Traditional Estate Planning For Canadians, Mondaq, Nov. 11, 2014.

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

November 24, 2014 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

Illinois Amends Virtual Representation Statute

LawA recent amendment to Illinois' Virtual Representation Statute goes into effect January 1, 2015. The amendment clarifies the types of disputes and trust modifications that can be resolved and made without the need for court involvement. In addition to creating a list of settlement agreements that can be made without court proceedings, the amendments remove the prior limitation that the agreements had to be ones that would be court approved if brought in judicial proceedings.

See, Amendments to Virtual Representation Statute Take Effect on January 1, 2015, McDermott Will & Emery, Nov. 11, 2014.

November 19, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, November 14, 2014

'Tis The Season For Obamacare Shopping

Medicare tax

On Saturday the Obamacare exchanges will reopen for the second year of the Affordable Care Act’s open enrollment period.  This year, the shopping season is limited to three months (ending Feb. 15, 2015).  If you are planning to shop for 2015 coverage for yourself or your family, you should act quickly.  Below are three tips:

  1. Window Show At Healthcare.gov. The new and improved federal site lets you see what your options will be.  However, you cannot purchase coverage until after open enrollment begins.
  2. Work with a Health Insurance Broker. A professional may be able to help you find less expensive and more appropriate coverage than you would find shopping the federal or state health exchanges.  Brokers are well equipped to discern what your needs.
  3. Avoid Owing the Penalty for Foregoing Health Insurance. This year, if you did not have health insurance, you generally owe a penalty of $95 per person or 1% of your modified adjusted gross income.  However, for 2015, the penalty will triple at $325 per person or 2% of income. 

See Richard Eisenberg, 3 Tips For Obamacare Health Insurance Shopping, Forbes, Nov. 12, 2014.

November 14, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 12, 2014

Assisted Dying Bill Gaining Traction in UK

LawCurrently Lord Falconer's bill is before the House of Lords, which would change assisted dying laws in the United Kingdom to allow terminally ill patients to gain medical assistance to end their life if they are determined to have the required mental capacity and will die naturally within six months.

Recent events have made passage of changes to the assisted dying laws more likely. A recent amendment to the bill puts assisted death applications under judicial oversight. In addition, Dr. Kailash Chand, Deputy chair of British Medical Association, expressed his support for the bill and that he believes the term "dying with dignity" rather than  assisted dying should be used. Chand spoke in his personal rather than professional capacity, and also said that the change will come within the next two years.

See, Jamie Doward, Assisted Dying Will be Made Legal in UK 'Within Two Years', The Guardian, Nov. 8, 2014.

November 12, 2014 in Death Event Planning, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, November 10, 2014

New UK Intestacy Laws Change Treatment of Widows

LawAs I have previously discussed, new intestacy rules for intestate succession in the United Kingdom went into effect in early October. The new rules will affect many individuals since only one third of adults in the UK have a written will and one third of those are out dated or revoked, which can be caused by events such as marriage if the marriage is not expressly mentioned in the will. The rules effect estates that are valued over £250,000, which is lower than the average price of a home in the UK. The primary effect of the new rules is that they change the balance between how a spouse and children are treated in the intestacy process, with surviving spouse's now inheriting more and children less than under the previous statutory scheme.

See Adam Palin, More Rights for Widows in Intestacy Revamp, Financial Times, Sept. 26, 2014.

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

November 10, 2014 in Intestate Succession, New Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, November 7, 2014

Alaska Transfer on Death Act

LawAlaska has adopted the Uniform Real Property Transfer on Death Act. The act is now effective, and allows for property to be transferred upon death without the need for probate.  Individuals wishing to take advantage of the act can access the form through the Alaska Court’s website. The site also provides an informational Q and A page on the new act.

See Marissa Silver, New Uniform Property Transfer on Death Act to Go Into Effect, Your Alaska Link, Oct. 29, 2014.

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

November 7, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 4, 2014

IRS Rules on Testamentary Power of Appointment


In Private Letter Ruling 201444003, the Internal Revenue Service determined that a testamentary power of appointment (POA) did not constitute a general POA under IRC section 2041.  Furthermore, the IRS determined that the existence or exercise of a grandchild’s POA to appoint trust principal and accumulated or undistributed income would not cause the value of the trust property to be included in the grandchild’s estate.

Under Section 2041(a)(2), the value of a general POA created after Oct. 21, 1942 is generally includible in a decedent’s gross estate.  A general POA means a power that is exercisable in favor of a decedent, his estate, his creditors or his estate’s creditors.  Treasury Regulations Section 20.2041-1(c)(1)(a) provide that a POA isn’t a general POA if, by its terms, it’s exercisable in favor of one or more designated persons or classes other than the decedent or his creditors, his estate or his estate’s creditors.

See Dawn S. Markowitz, Testamentary Power of Appointment, Wealth Management, Nov. 3, 2014. 

November 4, 2014 in Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, October 31, 2014

Limits on Tax-Free Lifetime Gifts Increase


The Internal Revenue Service has raised the limit on tax-free transfers during life or at death.  Beginning in 2015 that amount, known as the basic exclusion, will increase to $5.43 million per person, up from $5.34 million this year.  This announcement, in Revenue Procedure 2014-61, indicates there will be no change in the annual exclusion, allowing you to give $14,000 in cash or other assets each year to as many individuals as you want without using the basic exclusion. 

The lifetime gift tax exclusion and the estate tax exclusion are expressed as a total amount and it is possible to use this basic exclusion to transfer assets at either stage or a combination of the two.  If you exceed the limit, you or your heirs, will owe up to 40%. 

For people who had previously used this basic exclusion have the option to top off with an additional $90,000 available for tax-free gifts next year.  Another way to use this extra exclusion amount is to benefit a descendant who was born after your initial planning, and is therefore not a beneficiary of earlier gifts. 

Although these decisions apply to just a portion of the population, these rules now apply to same-sex married couples.

See Deborah L. Jacobs, IRS Raises Limit On Tax-Free Lifetime Gifts for 2015, Forbes, Oct. 30, 2014.

October 31, 2014 in Estate Planning - Generally, Gift Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 28, 2014

Retirement Plan Contributions for 2015


The Treasury Department recently announced inflation adjusted figures for retirement account savings for 2015, and this year there is more room for savings for wage and salary types and the self-employed.  Provided below are some of the details:

  • 401(k)s. For employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings plan, the annual contribution limit is $18,000 for 2015, up from $17,500.
  • SIMPLE IRA. The contribution limit on SIMPLE retirement accounts for 2015 is $12,500.  This is up from $12,000 in 2014.
  • Defined Benefit Plans. These are powerful pension plans for high earning self-employed individuals, and the limitation on the annual benefit remains unchanged at $210,000 in 2014.
  • IRAs. For the third year in a row, the limit on annual contributions remains the same at $5,500.
  • Roth IRA Phase Outs. The AGI phase-out range for taxpayers contributing to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014.  For singles and heads of households, the income phase-out range is $116,000 to $131,000 up from $114,000 to $129,000.

See Ashlea Ebeling, IRS Announces 2015 Retirement Plan Contribution Limits for 401(k)s and More, Forbes, Oct. 23, 2014.

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

October 28, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Friday, October 24, 2014

Michigan's Cottage Transfer Statute Broadened

LawA new law in Michigan has expanded the state's law on from to whom can a cottage transfer occur without the property taxes being uncapped. The statute was signed into law on October 9, 2014, and not only expands the list of individuals that are considered a transferee, but also added trusts and inheritance vehicles, such as a will or through intestacy, to the definition of a transferor. The new law will be in effect in 2015 and will apply to transfers made on December 31, 2014 or later.

See Christopher J. Caldwell, Laura E. Radle, New Law Effective in 2015 is an Important Win for Cottage Owners, JD Supra, Oct. 23, 2014.

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

October 24, 2014 in Estate Planning - Generally, New Legislation, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)