Wills, Trusts & Estates Prof Blog

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

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Friday, April 11, 2014

Article on New Green Book Proposals

GreenbookRobert L. Moshman (Attorney, New York and New Jersey) recently published an article in The Estate Analyst entitled, New Green Book Proposals, The Estate Analyst (Feb. 2014). An excerpt from the article is below:

The Administration’s budget proposal for 2015, also referred to as the “Green Book,” contains several new provisions relating to estate taxation.

Crummey Trusts: The present interest requirement for gifts qualifying for the annual gift tax exclusion would be abolished, making it unnecessary to provide a trust beneficiary with a Crummey withdrawal power. This proposal resembles one made by the Clinton Administration. The annual exclusion would apply to a gift that is made directly to an individual or to a trust for a single individual. The trust assets would be includible in the beneficiary’s estate if the donee died before the trust assets were distributed. The proposal would allow up to $50,000 of annual exemption for gifts to trusts or of other property that would not currently qualify as a transfer of a present interest.

April 11, 2014 in Articles, New Legislation | Permalink | Comments (0) | TrackBack (0)

Sunday, April 6, 2014

Tax Court Ruling Helps Trusts Avoid Passive Loss Limitations

GavelRecently, the Tax Court in The Frank Aragona Trust v. Comm'r.,  held that it is now an option for a trust to qualify for the coveted title of "real estate professional" under the passive loss rules. This holding permits trusts to avoid the passive loss deduction limitations. The IRS claimed the trust could not be a real estate professional because the test for real estate professional looked to "personal services," and a trust was an entity that could not perform personal services. Additionally, the IRS if a trust qualified, the relevant participation must come from the fiduciaries in their capacity as fiduciaries and not as employees. The court disagreed with the first claim and did not rule on the second issue, but did say a trust could qualify as a real estate professional.

See Steven R. Schneider, Tax Court Decision Will Help Trusts Avoid Passive Loss Limitations and New 3.8% Tax, Tax Law Round Up, Mar. 29, 2014.

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

April 6, 2014 in Current Affairs, Current Events, Income Tax, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 2, 2014

Article on State Tax Law in a Post-Windsor World

Rings Nicholas A. Mirkay III (Creighton University -School of Law) recently published an article entitled, "Equality or Dysfunction? State Tax Law in a Post-Windsor World", (March 11, 2014). Creighton Law Review, Vol. 47, No. 2, 2014. Provided below is the abstract from SSRN:

Depending on one’s religious and political proclivities, the United States Supreme Court’s decision in United States v. Windsor can either been seen as a progressive step towards equality or a troublesome departure from traditional marriage norms. Notwithstanding, from a federal tax perspective, the Windsor decision clearly raised a myriad of issues that spanned virtually the entire Internal Revenue Code (the “Code”), including but not limited to income taxes (including filing status), estate and gift taxes, payroll taxes, and the tax treatment of retirement account contributions and social security benefits. In the aftermath of Windsor, the Internal Revenue Service (“IRS”) was left with a quandary in administering marital-status-dependent Code provisions: should it base its administration of the Code on the taxpayer’s valid marriage in the state in which it was performed (commonly referred to as the “state of celebration” test) or the taxpayer’s state of residence or domicile (commonly referred to as the “state of residence” test)? The IRS resolved most of the federal tax issues raised by Windsor in its issuance of Revenue Ruling 2013-17, which chiefly adopted a state of celebration test for income and other tax purposes. However, the ruling did not extend to quasi-marital statuses, such as domestic partnerships and civil unions, resulting in federal tax non-recognition and complexities for couples in those legally recognized relationships.

Windsor also raised innumerable state and local taxation issues, particularly for the majority of the states that outright ban, or otherwise do not recognize, gay marriages. The Windsor decision’s failure to completely repeal all provisions of the Defense of Marriage Act (“DOMA”), specifically Section 2, permits states to continue such bans or lack of recognition, resulting in significant state and local tax complexities for same-sex couples that reside in such states but chose to marry in one of the seventeen states (and District of Columbia) that permit it. Thus, a post-Windsor world remains complex and uncertain for a majority of married same-sex couples. As with federal taxation, for couples in a domestic partnership or civil union, their state and local taxation issues remain much as they did prior to Windsor and Revenue Ruling 2013-17 – complex and uncertain.

April 2, 2014 in Articles, Current Affairs, Current Events, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, March 31, 2014

Proposed Changes For Retirement Accounts

ChangeAs I have previously discussed, President Obama has released his proposed 2015 budget, which includes changes to retirement accounts. Many of the proposed changes regarding retirement were included but not enacted in last year’s proposed budget. However, even though the proposals for changing retirement accounts may not be enacted this year either, there are seven proposed changes that are important to note.

  1. Change the required minimum distribution rules for Roth IRAs to those of other retirement accounts
  2. Limit the maximum tax deduction for IRAs and 401(k)s to 28%
  3. Require full withdrawal of funds within five years from inherited retirement accounts by non-spouses
  4. Implement cumulative savings cap for all retirement accounts
  5. Eliminate required minimum distribution if all retirement accounts are $100,000 or less in total
  6. Allow non-spouse beneficiaries to move funds from one inherited retirement account to another
  7. Require auto-enrollment IRAs to be offered to employees by any business with more than 10 employees that has been in business for two years or more.

See Jeffrey Levine, Required Minimum Distributions for Roth IRAs?, Financial Planning, March 5, 2014.

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

March 31, 2014 in New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

New Tennessee Law on the Tenancy by the Entirety Joint Revocable Trust

BillTennessee is a leader in trust law. As a result, there are many available estate planning tools that attorneys can use. The most recent tool will become available on July 1, 2014: The Tenancy by the Entirety Joint Revocable Trust.

According to the Tennessee Attorney's memo, the bill will be on the Governor's desk soon. However, the state legislature website claims the house amended the bill and is waiting on approval from the senate. Despite the discrepancy, the new bill if passed will allow a Tenancy by the Entirety Joint Revocable Trust. The determination of whether property is held as a tenancy by the entirety turns on intent.

Now, attorneys can protect their clients by removing any doubt as to whether a tenancy by the entirety exists. The property held in the trust is shielded from creditors when the first spouse passes away. Creditors of the surviving spouse will be permitted to go after assets held in the trust. The amendment to the bill also permits estates under $50,000 to qualify for probate under a shortened procedure, which is more cost effective.

See Rob Malin, Tennessee Legislature Passes Tenancy By The Entirety Joint Living Trust, Estate Planning in the Mid South, March 28, 2014.

March 31, 2014 in Current Affairs, Current Events, New Legislation, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, March 30, 2014

CLE on Planning Techniques for Large Estates

6a00e008d9ca4a8834019b05236cfd970dThe American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, Planning Techniques for Large Estates, on Wednesday-Friday, April 23-25, 2014.  Provided below is a description of the event:

Register today for this intensive program that consistently ranks as one of the highest rated estate planning programs. Get the tools you need to excel in high net-worth planning!

Our faculty of seasoned practitioners will conduct discussions on a transactional basis, with an emphasis on changing factual patterns rather than on bare principles of law or statute. Instruction will cover the most practical and useful planning tips, including alternative approaches that may suit your clients’ needs best.

March 30, 2014 in Conferences & CLE, Current Affairs, Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Sunday, March 23, 2014

Same-Sex Marriage in Michigan is Left in Legal Limbo

GavelAs I have previously discussed, federal judge, Bernard Friedman, ruled the Michigan law on banning same-sex marriage violates the U.S. constitution and explained, "Today's decision ... affirms the enduring principle that regardless of whoever finds favor in the eyes of the most recent majority, the guarantee of equal protection must prevail."

 

Now, just one day after Friedman struck down Michigan’s same-sex marriage law, the United States Court of Appeals for the Sixth Circuit suspended the ruling. As a result, the county clerks office can no longer grant same-sex marriages. The injunction has put same-sex couples that were married earlier in the day in a place of uncertainty. It is estimated that 300 couples had exchanged vows by the time the injunction was ordered. The injunction will be in effect at least until Wednesday, when the court will decide whether to extend the injunction during the consideration of the appeal.

 

See John Eligon and Erik Echolm, For Gay Couples in Michigan, A Day of Joy Ends in Legal Uncertainty, NY Times, Mar. 22, 2014.

March 23, 2014 in Current Affairs, Current Events, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Article on Conservation Easement Statutes

SsrnNancy A. McLaughlin (University of Utah S.J. Quinney College of Law) and Jeffrey Pidot (Maine Attorney General's Office) recently published an article entitled, Conservation Easement Enabling Statutes: Perspectives on Reform, (2013). Utah Law Review, Vol. 3, p. 811, 2013; University of Utah College of Law Research Paper No. 61.  Provided below is the abstract from SSRN:

All states have enacted some form of legislation that facilitates the creation of conservation easements. However, these state enabling statutes do not always contain the safeguards necessary to protect the public interest and investment in the easements. This short article proposes a variety of reforms intended to build needed protections into state law. No longer should the public be willing to invest in conservation easements without assurance that the protected lands have high conservation value, the easements are accurately valued, and the easements will not erode or be lost over time due to, for example, inadequate recordkeeping, holder incapacity or mismanagement, confusion or controversy over applicable laws, misapplication of common law real property doctrines, or other legal infirmities.

March 23, 2014 in Articles, New Legislation | Permalink | Comments (0) | TrackBack (0)

Saturday, March 22, 2014

Michigan Law Banning Same-Sex Marriage is Unconstitutional

Rings Federal judge, Bernard Friedman, ruled the Michigan law on banning same-sex marriage violates the U.S. constitution and explained, "Today's decision ... affirms the enduring principle that regardless of whoever finds favor in the eyes of the most recent majority, the guarantee of equal protection must prevail." Texas, Virginia, Kentucky, Oklahoma and Utah have had similar holdings. However, public opinion on this hot-button issue has shifted from Americans favoring restrictions to Americans in favor of supporting same-sex marriage. A recent ABC News/Washington Post survey revealed that 59% of Americans favor same-sex marriage.

See Greg Botelho, Federal Judge Strikes Down Michigan's Gay Marriage Ban, CNN, Mar. 21, 2014.

March 22, 2014 in Current Affairs, Current Events, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, March 21, 2014

Minnesota Supreme Court Rules on Assisted-Suicide Law

GavelThe Minnesota Supreme Court reversed the conviction of William Melchert Dinkel, former nurse; of helping two people, he met on the internet to commit suicide. The court reasoned that part of the state’s assisted-suicide law is unconstitutional. Specifically, the part of the law that pertains to "encouraging" suicide is unconstitutional due to free speech. However, the court held that the ban on "assisting" suicide is constitutional. The case was remanded to determine if Dinkel "assisted" in the suicides. Dinkel's sentence has been put on hold pending the ruling of the appeal. 

See Amy Forliti, Court Reverses Convictions in Aiding-Suicide Case, Mobile AP, Mar. 20, 2013.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention. 

March 21, 2014 in Current Affairs, Current Events, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)