Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, October 31, 2014

CLE on SCINS and Private Annuities

CLEThe ABA Section of Real Property, Trust and Estate Law is presenting an eCLE entitled, SCINS and Private Annuities: Using Bet-to-Die Estate Planning Techniques, Thursday, November 20, 2014, 1:00 – 2:30 p.m. ET.  Here is why you should attend:

Advanced estate planning often includes leveraged sales in order to maximize the transfer of wealth to the next generation. Rather than always using a traditional promissory note, it is often beneficial to structure the payments using a SCIN or a Private Annuity. Both of these options are considered bet-to-die techniques because the payments generally stop upon the transferor's death.

In this program, the presenters will illustrate the advantages of using these payment options and why they can substantially increase the wealth transfer in comparison to using a traditional promissory note. Attendees should leave this presentation with a greater understanding of the various payment options, including an understanding of why each option might be selected for a given fact pattern.

October 31, 2014 in Conferences & CLE, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Thursday, October 30, 2014

5 Social Security Facts to Consider

Social security

The decisions you make about Social Security can have long lasting consequences that impact your quality of life in retirement.  In order to make smart decisions about Social Security and understand your options, below are five facts to consider:

  1. Benefit amount is based upon your full retirement age, years you have worked, and when you begin taking benefits. Although you may retire at a certain age, the Social Security Administration defines “full retirement age” differently.  The age is between 66 and 67 years, depending on your birth year.  If you take Social Security before this age, your benefits are reduced.  If you delay past this age, you increase your benefit amount.
  2. Maintaining income sources may be difficult as life expectancies are longer. Your ability to support yourself through retirement depends on thinking through lifespan scenarios.  To ensure you do not run out of money, figure out how long your retirement savings and other resources may last in retirement. 
  3. Strategize with your spouse to increase household benefits. Retiring at different ages makes a huge difference in a souse’s benefit amount if a couple is claiming a spousal benefit.
  4. Look into other claiming strategies to boost retirement income. There are various benefits available to married couples, same-sex married couples, widow and widowers, divorced spouses or dependent children. Explore options that could help maximize your benefit amount.
  5. Plan early.  By looking at your options early on, you can make decisions based on facts.  This in turn can deliver better benefits.

See Tom Halloran, 5 Social Security Facts You Need to Know, U.S. News and World Report, Oct. 28, 2014.

October 30, 2014 in Elder Law, Estate Planning - Generally, Non-Probate Assets | 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)

Monday, October 27, 2014

Venue Clause in Pension Plan Affirmed by Sixth Circuit

GavelA Kentucky district court dismissed the claims of a former employee regarding termination of enhanced compensation benefits under his pension plan. The case was dismissed due to a clause in the pension plan that set the venue for all claims in a specific Iowa court. The employee appealed, and through an amicus brief the U.S. Department of Labor (DOL) sided with the employee based on the argument that ERISA and venue selection clauses are incompatible.

In Smith v. AEGON Cos. Pension Plan,the Sixth Circuit affirmed the lower court and held the venue selection clause enforceable. The court noted that this was the majority opinion for courts that have faced this issue and that a prohibition on venue clauses for ERISA-governed pension plans was an issue for Congress.

See Stacey Cerrone & Russell L Hirschhorn, Sixth Circuit Declines Deference to DOL and Enforces Venue Selection Clause, The National Law Review, Oct. 24, 2014.

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

October 27, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Mandatory Retirement in Law Firms Receiving Critical Inquiry

DetectiveAlmost half of the largest law firms have mandatory retirement for partners at set ages. The Equal Employment Opportunity Commission (EEOC) began an investigation into the practice in 2010 to determine if the practice violates the Age Discrimination in Employment Act (ADEA), and early last week the American Institute of Certified Public Accountants asked the EEOC to end the investigation. The EEOC has had pending claims involving mandatory retirement in law firms at least twice before, but both cases settled.

See Ellen Rosen, Retirement-Age Probe Could Affect Firms: Business of Law, Bloomberg, Oct. 21, 2014.

October 27, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Treasury Department Changes Policy on Annuities

RetirementA policy change from the U.S. Treasury Department was announced Friday that is intended to encourage the purchase of annuities by those saving for retirement and help prevent the problem of retirees running out of their retirement savings. The policy now allows for long-term deferred annuities to be offered as the default 401(k) investment by retirement funds.

See Jason Lange & Chizu Nomiyama, Washington Tweaks Retirement Fund Policy to Encourage Annuities, Reuters, Oct. 24, 2014.

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

October 27, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Protection of Trust Information in Divorce

SecretMany otherwise private financial matters can quickly become public in divorce proceedings. However, trusts are often used to ensure privacy and often include information on multiple individuals. In a California divorce case, the wife requested family trust documents from her husband. The trial court granted the husband's protective order, and ruled that only information directly related to the husband was discoverable and that third party and general trust asset information were not to be turned over to the wife, and thus would be redacted.

In In re Marriage of Williamson, The Second District Court of Appeal affirmed the trial court's grant of the protective order, limitations of required disclosure of the trust information, and the protection of third party privacy.

See Luke Lantta, How Much Information About A Trust Must Be Disclosed In A Divorce?, Bryan Cave, Oct. 1, 2014.

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

October 27, 2014 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, October 26, 2014

Funding An Education With Retirement Assets


In an ideal world, parents would be able to save enough in a Coverdell Education Savings Account or a 529 Savings Plan to fund their child’s education.  However, with skyrocketing college costs, this may not be feasible.  Another option parents can consider is borrowing against your home, but this runs the risk of losing your home if you cannot make loan payments.

This leaves many Americans to turn to their biggest pile of cash—their retirement savings.  Below are the two main ways to tap into retirement savings:

  1. Loan from your employer’s plan. Retirement plan require no credit check and the interest goes back into your account.  Yet you must consider some of the downsides that include paying taxes on the interest when you eventually withdraw even if you already paid taxes on it.  This may be your best option if you can afford the payments and you can pay it off before you leave your job.  If not, it may not be worth the risk.
  2. Withdrawals from a retirement plan. The main advantage of withdrawals is that you do not have to repay it.  Hence, your retirement savings are permanently reduced.  Depending on the type of account and your age, the withdrawals may carry taxes and penalties.  Also, keep in mind that taxable withdrawals can reduce your child’s eligibility for future financial aid since they are counted as parental income. 

See Erik Carter, Should You Use Retirement Assets For Education Expenses? Forbes, Oct. 24, 2014.

October 26, 2014 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Jump Start Your Estate Planning

Power of attorneyWhile estate-planning may not be at the top of the list for busy boomers focused on planning their own retirements, among those who leave an inheritance, only 43 percent said they did not feel the need to discuss it with heirs.  Yet those who do break the silence will improve communication and problem solving within their families.  “While that may not seem like an urgent goal now, laying the foundation will help families function better in the decades to come, when health or elder-care crises are more likely to put family dynamics to the test.”

When experts talk about estate planning, splitting up assets is only a single part of the equation.  Parents should talk about naming an executor of a will, as well as financial and medical powers of attorney.  “These things are really loaded, particularly when they’re secret.” 

Parents can also explain about what these responsibilities entail.  It is important for adult children to know where to find key documents, such as bank and brokerage account information, and any life insurance or long-term care policies that are in effect. 

Experts recommend not to spring these topics on family members.  It is helpful to give a heads up about the topic under discussion.  “You want to build a sense of bonding and family before you introduce material that could be emotionally loaded.”

See Elizabeth O’Brien, Estate Planning: It’s Never too Early to Start, Market Watch, Oct. 23, 2014.

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

October 26, 2014 in Estate Administration, Estate Planning - Generally, Non-Probate Assets, Wills | Permalink | Comments (0) | TrackBack (0)

Friday, October 24, 2014

Workers Fear Running Out of Money

Retirement planning

New research shows that 22 percent of workers say they would rather die than run out of money.  However, 61 percent say they are not sacrificing a lot to save for their golden years. 

The Wells Fargo Middle Class Retirement survey looked at the retirement planning of Americans with household incomes between $25,000 and $100,000 who held investable assets of less than $100,000.  One third contribute nothing to a 401(k) plan or IRA, and half say they have no confidence they will have enough to retire. 

Although middle-class Americans have a median retirement balance of just $20,000, those who have an retirement plan are doing better than those without one. 

Most people do understand the need to save for retirement, yet they do not see it as an urgent goal requiring spending cutbacks.  Still, many individuals have room in their budget to boost their savings rates. 

“Of course, the larger problem is that a sizeable percentage of middle-class Americans are struggling financially and simply don’t [have] enough money to stash away for long-term goals like retirement.  As economic data show, many workers haven’t has a real salary increase for 15 years, while the cost of essentials, such as health care and college tuition, continues to soar.”

See Dan Kadlec, 22% of Workers Would Rather Die Early Than Run Out of Money, Time, Oct. 22, 2014.

October 24, 2014 in Current Affairs, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)