Wills, Trusts & Estates Prof Blog

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

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Tuesday, July 22, 2014

Social Security After Divorce: Not All Is Lost

DivorceIt is a common misconception that when you go through a divorce, you will lose Social Security benefits as an ex-spouse.  Given certain conditions, you are entitled to Social security benefits and need not be married to collect.  Provided below are some relevant facts to be aware:

  • You can receive benefits on you ex-spouse’s record even if they are remarried.
  • Your decision to collect on your ex-spouse’s earnings history will have no impact on the size of their benefits.
  • One individual can have multiple ex-spouses collecting on their earnings history, provided they were married to each spouse for at least ten years.

In order to be entitled to spousal benefits, you need to have been married for at least ten years or currently unmarried.  “Like everything else in Social Security, there are complexities involved here . . . There is no divorce decree anywhere that can preclude you from collecting Social Security benefits as an ex-spouse, provided you’ve met the conditions outlined above.”

See John Wasik, Getting Social Security Benefits After Divorce, Forbes, July 21, 2014.

July 22, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

The Reasoning Behind Hoffman’s Surprising Estate Planning Decisions

HoffmanAs I have previously discussed, Philip Seymour Hoffman’s will included a request that his son, Cooper, be raised in cities other than Los Angeles. Through reports by Hoffman’s accountant, the will provision and other surprising estate planning decisions by Hoffman were intended to serve a protective purpose for his children. Hoffman was worried about his children becoming dependant on a large trust fund and took steps to prevent that outcome, including limiting the uses of the trust for Cooper to "education, support, health, and maintenance." 

See Suzy Byrne, Why Philip Seymour Hoffman Didn’t Leave His Fortune to His Children, Yahoo, July 21, 2014.

July 22, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

The Artist Pension Trust

ArtRunning the World’s largest Private Art Collection is not all fun and games. Moti Shniberg used his background in data-mining tech startups to create the Artist Pension Trust, which has collected 10,000 pieces of art from nearly 2,000 artists worldwide. The trust has attracted the support of big name artists and art supporters based on its mission to help artists make more profit off of their art by making the trust a charitable middle man rather than for profit art dealer. The collection is so large that it can be difficult to manage all of the pieces and selling them may turn out to be harder than collecting them. There is also some risk that the artists are taking on when they join and add their art to the collective. The trust has just begun to sell some of the pieces donated to it ten years ago.

See James Tarmy, The Problem With Selling the Largest Private Art Collection in the World, Bloomberg, July 15, 2014.

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

July 22, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Saturday, July 19, 2014

6 Highlights of IRS QLAC Regulations

ChecklistAs I have previously discussed, the IRS issued final regulations on qualifying longevity annuity contracts (QLACs) on July 1, 2014. Here are some of the noteworthy points from the regulations:

  1. QLAC value can be excluded from RMD calculations
  2. QLAC payments must begin by the first of the month after age 85
  3. Limits apply to the amount of retirement funds that may be invested in a QLAC
  4. The limits are per spouse with a retirement account
  5. Variable or equity-indexed annuity contracts are not allowed
  6.  Cashing in earlier is not an option with QLACs

See Jared Trexler, IRS Regulations Create New Type of Retirement Income Annuity: The QLAC, Producers Web, July 7, 2014.

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

July 19, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Friday, July 18, 2014

Fourth Circuit Rejects Equitable Estoppel Claims for Life Insurance Coverage

Gavel2

Leslie Moon, the widow of a deceased employee, claimed that her husband’s employer’s actions resulted in Mr. Moon’s failure to convert his life insurance to an individual policy following the onset of his disability.  The Fourth Circuit rejected fiduciary breach and equitable estoppel claims for life insurance coverage by Mrs. Moon.  The Court determined that Mrs. Moon failed to establish that the employer was a fiduciary of the life insurance plan because the employer’s alleged failure to alert Mr. Moon that he was no longer covered  under the plan and its continued acceptance of Mr. Moon’s premium payments constituted administrative functions.  Furthermore, the plan was administrated by a third party.  Moon v. BWX Techs., Inc., No. 13-cv-1888, 2014 U.S. App. LEXIS 12525 (4th Cir. July 2, 2014).

See Todd Mobley, Fourth Circuit Rejects Widow’s Claim for Equitable Relief, Mondaq, July 17, 2014.

July 18, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Thursday, July 17, 2014

5 Situations That Call for a Revocable Trust

PlanA revocable trust is not appropriate in all situations, but sometimes they can be a favorable option. Here are 5 situations in which a revocable trust may be appropriate:

  1. When avoiding probate and saving costs is the primary goal
  2. When keeping assets and distribution choices private is a concern
  3. When a complicated family dynamic creates a need to protect children from being disinherited
  4. When future incapacity of a loved one is a concern
  5.  When the care a family member with special needs is a concern

See Tracy Craig, Does Your Client Need a Revocable Trust?, Financial Planning, July 14, 2014.

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

July 17, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Treasury Department Issues Final Regulations for QLACs

Books & GavelFinal regulations for qualified longevity annuity contracts (QLACs) have been issued by the Treasury Department. The final regs expand access to QLACs for those that wish to include them in their retirement plan. The regulations allow individuals who accidentally exceed limits to correct the error. The final regs also create a “return of premium” option, which allows for previously paid but uncollected funds to go back to the account when the account holder dies.

See Robert Bloink & William H. Byrnes, Final Longevity Annuity Regulations Clear Path for Future Growth, Life Health Pro, July 14, 2014.

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

July 17, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 16, 2014

How to Protect Retirement Accounts from Creditors After Clark

PadlockAs I have previously discussed, the Supreme Court ruled in Clark v. Rameker that inherited IRAs are not protected in bankruptcy because they are not retirement funds. In this new post-Clark world, the focus has become how to protect inherited retirement plans from creditors. The answer depends on who is inheriting the account, and here are common beneficiaries of inherited retirement accounts and what they can do:

  • The spouse: Rollover the inherited account into their own retirement account.
  • Anyone other than the spouse: Unfortunately the inherited account is not safe from creditors in the hands of a non-spouse, and the only clear solution is to pick another way to benefit the intended beneficiary.
  • A retirement plan trust: An “accumulation trust” will provide annual payments to intended beneficiaries and provide the sought creditor protection.

See Marc Cusano, Retirement Plan Trusts Headline IRA Forecast, Wealth Management, July 15, 2014.

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

July 16, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

New Self-Settled Asset Protection Trust Law

Money SafeMississippi recently enacted legislation that now allows self-settled asset protection trusts. The Mississippi Qualified Disposition in Trust Act permits the grantors to be trust beneficiaries in some situations. Here are some of the requirements to create such a trust under the new law and receive the creditor protection that comes with it:

  • The trust must be irrevocable
  • The settler is limited in the types of interest they may retain
  • A “qualified affidavit” must be signed by the settler
  • A liability insurance policy must be created for the trust

See Daniel G. Worthington & Mark Merric, Mississippi Enacts Self-Settled Asset Protection Trust Legislation, Wealth Management, July 15, 2014.

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

July 16, 2014 in Estate Planning - Generally, New Legislation, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Planning for Pets: The Good, the Bad, and the Iffy

Cute KittenPets can have many positive effects on pet owners, from protecting the home from intruders to helping the owner fight depression and high blood pressure. Older individuals could benefit greatly from the companionship of a furry friend but are fearful that a pet would be left uncared for after they pass away. Here are three commonly used attempts to solve the problem of pet care after the owner dies:

  • The Good: Setting up a pet trusts can help alleviate the fear of abandoning a pet and assures that the pet will be cared for after the owner is gone. There are many variations and options to choose from to fit various situations.
  • The Bad: Leaving assets to your pet. Unfortunately, your cat can’t own your bank account.
  • The Iffy: Leaving assets to a family member or friend with instructions for them to care for your beloved pet. This method leaves a pet's care to the discretion of the human beneficiary and care is not guaranteed.

See Ann Carrozza, Planning for Fido and Fluffy, Wealth Management, July 15, 2014.

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

July 16, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)