Wills, Trusts & Estates Prof Blog

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

Thursday, September 29, 2016

How an ILIT Can Help Preserve Your Assets

ILITAn irrevocable life insurance trust (ILIT) can help provide liquidity to pay estate taxes, safeguarding your assets for your family. When you set up an ILIT, the trust is a holding vehicle for life insurance that removes the policy death proceeds from your estate when you pass. These trust held assets are immune from probate and estate taxes, making them a valuable estate-planning tool. There are some important considerations to keep in mind when deciding to create an ILIT. 

First, you must clearly define your wishes as to how the trust assets will be distributed at death. Next, it is important to remember that the trust increases your liquidity without having to add other assets, like stocks and investment property, allowing you to maintain control over those assets while the ILIT builds value. Finally, you should put forth diligent consideration on who will be the trustee for your ILIT because they must have the willingness and ability to carry out the terms you set forth. 

See 3 Considerations for an Irrevocable Life Insurance Trust, Forbes, September 19, 2016. 

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

 

September 29, 2016 in Estate Administration, Estate Planning - Generally, Estate Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

Thursday, September 15, 2016

Florida Slayer Statute Denies Inheritance Without Murder Conviction

Slayer statuteA slayer statute denies an inheritance to a beneficiary who killed the deceased individual. More specifically, is a murder conviction required to trigger the statute? In Stephenson v. Prudential Insurance Co., a deceased Mr. Rigby owned a life insurance policy that named his partner, Mr. McGriff, as the beneficiary. Rigby ended up dying after a physical altercation between the two. The insurance company in charge of the funds filed an interpleader, allowing the court to determine the outcome of the competing claims between McGriff and Rigby’s estate. At trial, McGriff argued that because he was not charged in the death of Rigby, the slayer statute did not apply to him. The court ruled that a murder conviction is not required to determine the applicability of the slayer statute, only the court’s determination that the beneficiary “more likely than not” wrongfully caused the death of the decedent.

See Jeffrey Skatoff, Florida Slayer Statute in Federal Interpleader, Florida Probate Lawyers, September 14, 2016.

September 15, 2016 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Friday, September 2, 2016

Weighing Options for Inherited IRAs

Inheriting IRASurviving spouses have several decisions to consider when inheriting IRAs. If a surviving spouse under the age of 59 ½ is the beneficiary of an IRA, he or she should consider placing the funds into an inherited IRA, allowing the beneficiary to take distributions from the account with no requirements. If the beneficiary wishes to roll over the inherited IRA into a personal IRA, the beneficiary must keep records and be restricted on the amount withdrawn for a minimum of five years. Additionally, there are limitations for taking distributions for which a 10% penalty will apply.

See Dan Moisand, When Inheriting an IRA, You Need to Weigh Your Options, Market Watch, August 12, 2016.

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

September 2, 2016 in Estate Planning - Generally, Income Tax, Non-Probate Assets | Permalink | Comments (0)

Thursday, September 1, 2016

How Financial Advisors Add Value for Aging Clients

Elder managementFinancial advisors are slowly being viewed as the orchestrators of all the various financial planning components of a client’s life, such as asset management, estate planning, legacy building, long-term care planning, and insurance. There are two main principals driving this change—advisors wishing to differentiate themselves and retirees entering the distribution phase of their financial life cycle. Accordingly, there are four ways that advisors can be of value to their aging clients.

First, advisors can provide a holistic view of insurance, helping clients plan for every stage of their insurance needs, especially long-term care and health insurance. Second, estate planning is an essential aspect of post-retirement; therefore, advisors should be able to provide robust estate planning capabilities. Third, clients at this stage will need to prepare for any possible disability care, which will give clients a sense of empowerment over their inevitable futures. Finally, advisors should help wealthy clients apply tax-advantageous strategies to reach their charitable goals and legacy aspirations.

See Richard Whitworth, Looking Beyond Asset Management: Top Four Ways Financial Advisors Add Value for Aging Clients, Wealth Management, August 31, 2016.

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

September 1, 2016 in Disability Planning - Health Care, Elder Law, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Friday, August 19, 2016

Proceeds Go to Named Beneficiaries Not Later Will Bequests

Life insurance1In Collister v. Feller, a Washington court of appeal concluded that a man who was named as his ex-wife’s beneficiary on her life insurance policy is not required to distribute proceeds to later beneficiaries named in her will. A testator can only direct the distribution of life insurance proceeds to be payable to the testator, estate, or personal representative. The ex-husband in this case was named as the personal representative, and the will was not eligible to direct proceeds.

See Julianne Tobin Wojay, Named Beneficiary Trumps Testator’s Later Bequest, Bloomberg, August 11, 2016.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

August 19, 2016 in Estate Planning - Generally, Non-Probate Assets, Wills | Permalink | Comments (0)

Sunday, June 12, 2016

Life Insurance for Couples

Couples life insuranceWhen two people begin to build a life together, it is important to plan for the future and safeguard their assets as early as possible. Looking at the each partner’s goals can help advisors present appropriate options to meet their specific needs. If the couple is relying on both incomes, it is beneficial for each to retain a life insurance policy to rectify any loss. Additionally, couples with blended families need to create life insurance policies to cover all intended beneficiaries. Another useful strategy is an irrevocable life insurance trust, which are mainly used for wealthy couples that want to avoid taxes.

See Couples Insurance, Wealth Management, June 10, 2016.

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

June 12, 2016 in Estate Planning - Generally, Estate Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

Friday, June 10, 2016

When to Update Life Insurance Beneficiaries

Life insurance beneficiariesGreat consideration goes into choosing who will be the beneficiary of a life insurance plan, but as life goes on, our initial intentions can change. This imposes the importance of continual review for your life insurance policy. When life changes occur, your life insurance beneficiaries should be reviewed to ensure they are still the best fit. Some common life changes that should key you into reviewing your policy are birth, adoption, change in marital status, and death. Group plans through employers also need to be reviewed as they are often forgotten about at these life stages. So, although it is important to review your beneficiaries at these times, it is good practice to consider about once a year.

See Brad Cummins, When to Update Your Life Insurance Beneficiaries, Investopedia, May 17, 2016.

June 10, 2016 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

What to Consider After Establishing Your Estate Plan

Beneficiary designationsOftentimes, people think that they have completed their estate plan, but it is essential you take two last steps to ensure your assets are directed in the way you intended—examining your asset titles and beneficiary designations for life insurance and retirement funds. A study suggests that half of the assets passed in America pass by joint titling, beneficiary designations, and trusts. Joint titling and beneficiary designations will take precedence over wills for distributing assets. The Article further discusses the considerations for joint titling and beneficiary designations one must take into account when establishing their estate plan.

See Janet M. Colliton, Colliton: Retitling Assets Can Change the Estate Plan, Daily Local News, May 16, 2016.

June 10, 2016 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Thursday, June 9, 2016

Executor of an Estate's Jobs

Making inventoryIt is the executor of an estate’s job to make an inventory for probate. With this job, the executor will be making sure all is in order before going in front of the judge, but it is important to review your state’s laws if there are specific requirements for probate inventory.

First, the executor must locate the assets, usually the most time-consuming part, and turn over the tally to the court. After locating the assets, the executor will need to categorize them, which allows the executor to term broad categories. During this process, the non-probate assets do not need to be accounted for because they pass outside of the estate. Next, the executor will need to value the assets at the fair market value. And finally, the executor has a duty to manage the assets prudently, setting them up for liability if their actions are negligent.

See Terry White, How To Make an Inventory for Court in a Probate Case, Houston Chronicles.

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

June 9, 2016 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Wills | Permalink | Comments (0)

Wednesday, May 18, 2016

What Are The Alternatives To File And Suspend?

AgingThe popular file and suspend filing strategy for Social Security has been done away with by the Bipartisan Budget Act of 2015.  “The file and suspend option expired after Friday, April 29, 2016, and those who elect to delay receiving their retirement benefits will also no longer be able to request a lump-sum payment of delayed benefits if they elect to stop deferring their benefits.”  This article discusses some of the alternative claiming strategies that are still available for senior citizen couples wishing to begin or delay collecting Social Security benefits.  One strategy that still exists which this article discusses is the restricted application, but this will be phased out eight years from now and is only available to those who were at least 62 years old by the end of 2015. 

See Mark P. Cussen, Alternative Strategies to File and Suspend, Investopedia, May 18, 2016.

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

May 18, 2016 in Elder Law, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)