Wills, Trusts & Estates Prof Blog

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

Thursday, February 11, 2016

What Happens When Medicare Stops Covering A Person’s Drugs?

AgingWhen a Medicare prescription drug plan changes the drugs that it covers, or if a person switches into a different plan that does not cover their medication, it could leave someone without the coverage for the drug that they need. When this situation happens Medicare drug plans are required by law to provide that person with a 30-day transition supply of the drug that they were taking. “All Medicare drug plans, including Medicare Advantage plans with prescription drug coverage and stand-alone drug plans, must offer these transition refills.” These plans must also provide the person with written notice that they are using a transition supply and informing them of their rights. The purpose of this 30-day supply is to give the patient time to talk to their doctor about prescribing a substitute drug or to request a coverage exception from the current Medicare plan.

See Your Right to Refills If Medicare Drops Coverage of Your Drugs, Elder Law Answers, February 11, 2016.

February 11, 2016 in Elder Law, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Wednesday, February 10, 2016

President Obama Proposes Changes To Tax Policy In New Budget

White houseThis article describes the changes in tax policies that are suggested in Obama’s new proposed budget. “It contains tax provisions affecting education, health care, and retirement, as well as proposing extensive changes affecting businesses.” These proposed changes will impact things like the earned income tax credit, child and dependent care credit, and education credits. Some of the new proposals will also deal with community colleges and retirement savings. There are also proposals to increase the capital gains tax rate and to reduce tax benefits for high-income earners. Included in the proposals are also tax credit proposals designed to incentivize bringing jobs back to the United States. Many of these proposals will likely not be passed by a Republican controlled congress. There will probably have to be changes in order to secure the necessary bi-partisan support to pass these proposals into law.

See Alistair M. Nevius, President’s budget proposes many tax changes, Journal of Accountancy, February 9, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

February 10, 2016 in Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Court Blocks State From Retroactively Recovering Medicaid Benefits From Estates

JudgmentAn appeals court in Michigan has recently barred states from being able to recover Medicaid benefits from estates before the date “that the estate recovery program was implemented.” This column provides a brief description of how In Re Estate of Gorney held that "by applying the recovery program retroactively to July 1, 2010, the Legislature deprived individuals of their right to elect whether to accept benefits and encumber their estates, or whether to make alternative healthcare arrangements." The court held that the notice that the state provided to the estate in 2012 did not violate due process, but the state could not retroactively go back to July 1, 2010 to recover benefits. The full text of the Michigan Court of Appeals decision can be found here.

See State Cannot Retroactively Recover Medicaid Benefits from Estates, Elder Law Answers, February 9, 2016.

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

Lessons To Take Away From David Bowie’s Estate

David bowieRock legend David Bowie has left his family an estate that is worth about $100 million. According to his will each of his two children will get a quarter of his estate, though his youngest child is not yet legally allowed to inherit. “Unless Bowie made other provisions, such as a trust, the state -- in this case, New York -- will appoint a financial guardian to manage the money until Alexandria is of age, says Leslie Thompson, managing principal and co-founder of Spectrum Management Group in Indianapolis.” This column discusses how trusts allow celebrities like David Bowie to engage in flexible estate planning. A person does not need to be wealthy like David Bowie to have an estate plan. There are many estate planning issues that impact people in all income levels and it is a good idea to plan ahead for these kinds of situations.

See Judy Martel, Lessons from David Bowie’s estate, Bankrate, February 10, 2016.

February 10, 2016 in Estate Planning - Generally, Estate Tax, Income Tax, Music, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, February 9, 2016

Why Keeping Beneficiary Designations Updated Is Important

Beneficiary designationThis article discusses the importance of updating all beneficiary designations in an estate plan. In 2001 the Supreme Court held in Egelhoff v. Egelhoff that the federal law governing ERISA preempted any contradictory state laws that disinherited ex-spouses. This case involved a divorced father who forgot to update the beneficiary designations on his retirement accounts. The stepmother ended up winning because she was still listed as the beneficiary of the retirement account after the divorce. This is a very common problem that people need to be careful to plan ahead for. This article provides a list of the type of common events that will trigger the need to update beneficiary designations in an estate plan. There is also a list of the type of assets through which a person may designate beneficiaries.

See Kyle E. Krull, What is the Big Deal about Beneficiary Designations?, Wealth Management, February 8, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

February 9, 2016 in Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

The Strategy O.J. Simpson And Lance Armstrong Use To Protect Their Assets

Lance and O.J.Many people are aware of the tax deferral benefits of 401(k) plans and traditional IRA accounts, but these types of retirement accounts can also provide asset protection benefits. This column discusses how there are certain retirement assets that a person can protect from creditors in the event of a personal bankruptcy or legal liability. There are some real life examples of this playing out involving both O.J. Simpson and Lance Armstrong. “Mr. Simpson still owns a defined benefit plan from the NFL, valued at over $4 million.  Despite O.J.’s $33 million liability, under ERISA law the former star’s defined benefit plan is protected from the Goldman and Brown families.” Lance Armstrong has also been involved in many lawsuits after his doping scandal but he has used different estate planning techniques like creating trusts to help shield many of his assets.

See Martin Walsh, How O.J. Simpson and Lance Armstrong Protected Their Millions, Wealth Management, February 8, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.  

February 9, 2016 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

How Remarriage Impacts Estate Planning

MarriageThere are many people getting remarried who are not aware of how their new marriage will impact their estate planning situation. As a consequence there are far too many people who do not do enough to plan ahead. This article goes into some detail describing how remarriage can effect just about every aspect of estate planning. People that are entering into another marriage need to be aware about things like the spousal elective share, community and personal property rights, homestead rights, and spousal support requirements. This article also goes into the implications that ERISA has on marriage. It is also extremely important to make sure all the beneficiary designations as well as the will is up-to-date to avoid all the probate issues that will come about from a person dying intestate. Because the laws vary from state to state estate planners will often encounter very complicated issues.  

See John J. Scroggin, Estate Planning Implications of Remarriage, Journal of Financial Planning, February 9, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

February 9, 2016 in Estate Planning - Generally, Estate Tax, Guardianship, Income Tax, Intestate Succession, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, February 8, 2016

Making The Conversion From A Traditional IRA To A Roth

Estate planning changesThere are some financial advisers who are saying that now is a good time for savers to shift from a traditional IRA to a Roth account. Contributions into a traditional IRA are tax-free, but the withdrawals are not. With a Roth IRA the taxes are paid up-front, but the distributions made during retirement are tax-free. This column goes into some more detail describing the differences between traditional and Roth IRAs. There are many factors that financial planners will need to consider when deciding whether to recommend a traditional to Roth conversion to a client. This article points out the importance of being strategic with retirement planning. People that want to get more specific advice that applies to their own situation should schedule a meeting with an experienced estate planning adviser.

See Rebecca McClay, Converting Your Traditional IRA to a Roth: A Balancing Act, The Street, February 8, 2016.

February 8, 2016 in Elder Law, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Estate Planning Tips To Remember This Tax Season

New estate planWith tax season approaching now is a good time to start reviewing the estate plan. It is important to review any changes in circumstances that might require making changes to a will or power of attorney. Make sure that the beneficiary designations for insurance plans, 401(k)s, IRAs, and other retirement plans are all updated. People might also consider the idea of creating a “living trust” to help channel assets directly to heirs. “The US Treasury Department recommends that owners of savings bonds prepare a list that records serial numbers, issuance dates, and the name and address on each bond, along with the Social Security number of the owner.” Finally, it is important for senior citizens to be wary of attending many of the free lunch seminars that they might get invited to.

See Julian Block, Estate Planning Reminders for This Tax Season, Accounting Web, February 8, 2016.

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

February 8, 2016 in Estate Planning - Generally, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

New Legislation Makes Charitable Deduction Laws Permanent

New legislationThere have been some charitable provisions that have been extended permanently in the recent Protecting Americans from Tax Hike Act of 2015. “An individual age 70½ or older can make direct charitable gifts from an individual retirement account, including required minimum distributions, of up to $100,000 each year to public charities (other than donor advised funds (DAFs) and supporting organizations) and not report the IRA distributions as taxable income on his federal income tax return.” This new legislation which has no expiration date has been in effect since January 1, 2015. This article also discusses how the new legislation will impact S Corporations that make charitable contributions. It also explains the requirements of eligibility for the enhanced deduction, and also touches on qualified conservation contributions. It would be a wise decision to meet with an estate planning professional to learn more about how these new changes will impact you.

See Conrad Teitell, Charitable Deduction Laws Now Permanent, Wealth Management, February 5, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

February 8, 2016 in Current Affairs, Estate Planning - Generally, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)