Monday, January 22, 2018
The Totten trust became a legally valid estate planning tool in 1904, when the New York Court of Appeals decided the Matter of Totten case. Since then, the use of these trusts has become much more commonplace. A Totten trust allows a settlor to move assets to a bank account, to which they retain unfettered access while living, so a named beneficiary can receive these assets upon the settlor's passing. These trusts are also revocable, which allows the settlor to make changes to the previously designated beneficiaries as necessary. A benefit to using this type of trust is that funds transferred to the bank account avoid the probate process, which can be timely and costly.
See Inna Fershteyn, Esq., Breaking Down the Totten Trust, BrooklynTrustandWill, January 14, 2018.
Special thanks to Alexander Evelson for bringing this article to my attention.
Friday, December 29, 2017
The National Business Institute is holding a conference entitled, Frequently Used Trusts for Estate and Financial Planning, which will take place on Thursday, January 25, 2018, at the Hyatt Place San Jose/Downtown in San Jose, CA. Provided below is a description of the event:
Understand the Most Common Trust Structures, Their Various Uses and Tax Effects
Understand the underlying structures and functions of the key estate planning tools used to protect and transfer clients' assets. Whether you're a beginner or are in need of a refresher, this essential course will leave you with useful and practical tips from the pros. Register today!
- Clarify the tax uses and consequences of the various trust structures.
- Distinguish between testamentary and revocable trusts.
- Explore the most tax-efficient tools for specific client circumstances.
- Determine when an irrevocable trust is a better option.
- Understand the varied powers and duties of the trustee depending on the trust structure.
- Learn how special needs trusts are used to provide for daily expenses without risking benefits eligibility.
- Protect your practice and professional reputation with a tailored ethics guide.
Who Should Attend
This basic level seminar is designed for:
- Accountants and CPAs
- Trust Officers
- Tax Professionals
- Trusts Overview: Main Rules, Terms, Parties, Goals Identified
- Revocable Trusts: A Versatile Tool for Every Occasion
- Irrevocable Trusts: Tax Savings and Asset Protection
- Special Needs Trusts: Funding Long-Term Care
- Ethics and Trusts
Continuing Education Credit
Continuing Legal Education – CLE: 6.00 *
International Association for Continuing Education Training – IACET: 0.60
National Association of State Boards of Accountancy – CPE for Accountants/NASBA: 7.00 *
* denotes specialty credits
Monday, November 6, 2017
Marriage offers many benefits for those who choose to embark on the lifelong journey of matrimonial bliss. These advantages apply in estate planning and property law as well. One of the most notable estate planning benefits gained through marriage is the shared capacity of spouses to own property as a tenancy by the entirety (TBE). This form of property ownership serves to protect property owned by the couple from creditors’ claims against a single spouse’s property. TBE property also avoids probate on the death of the first spouse and neutralizes the loss of the estate tax exemption resulting from the marital deduction. There are a number of methods to take full advantage of TBE.
See George Karibjanian, The “Extra” Marital Benefits Gained Through Tenancy by the Entirety, Wealth Management.com, November 2, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
Tuesday, September 26, 2017
A federal judge, in Metro. Life Ins. Co. v. Teixeira, refused to allow Metropolitan Life Insurance Company to remove itself from a litigation triangle between the company and a decedent’s wife and girlfriend. Metlife filed with the court in 2016 anticipating the court would make the determination as to whether the company owed the wife or the girlfriend $40,000 from the decedent’s life insurance policy. The decedent-insured named his wife as the beneficiary of the policy over the phone. Later, he changed the beneficiary to his girlfriend via another phone call. This was in violation of Metlife’s own policies requiring beneficiary designations to be done in writing. Part of the cause for the judge’s refusal to dismiss Metlife stemmed from the company’s atypical handling of the situation that leaves it open to liability for negligence.
See Jacklyn Wille, MetLife Stuck Between Wife and Girlfriend in Benefit Battle, BNA Convergence, September 11, 2017.
Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.
Wednesday, March 29, 2017
Throughout the years, you spend time accumulating bank and brokerage accounts, real estate, retirement accounts, annuities, and other assets, so it is not uncommon to forget to update important information, like who are the beneficiaries and how your assets are titled. Securing your estate in these ways can help to quickly transfer your assets to loved ones, perhaps avoid probate, and even reduce estate taxes.
Specifically, there are two key features that can help you avoid probate and potentially limit taxes for your heirs: joint ownership and naming a “transfer on death” or “payable on death” beneficiary. There are several ways to structure joint ownership, all of which can create varying consequences. The three ways to title a joint account are joint tenancy with rights of survivorship, tenancy by entirety, and tenancy in common. Further, another simple step to help avoid probate is to name someone as a transfer on death beneficiary or payable on death beneficiary. However, there are a couple major drawbacks to designating assets in this way, including that these titled assets override whatever is stated in a will and can incur estate taxes. Ultimately, you should speak with an estate-planning attorney to help meet all of your estate planning goals.
See Estate Planning Must Dos, Fidelity, March 27, 2017.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
Sunday, March 5, 2017
In England, the government has ignored strong opposition and, by May 2017, will implement a sliding scale system for probate fees based on the value of an estate, which will ultimately see dramatic increases. On the high end, estates worth over $2 million will be forced to pay close to $25,000 just to execute a loved one’s will. This is a sharp contrast to the current price of just $250. This fee will also be charged on top of the already-maintained inheritance tax, which is levied at 40pc on an individual’s assets above $400,000. Of course, these changes will add further complexity to estate planning, but certain planning techniques, such as trusts, may help reduce the value of an estate.
See Sam Brodbeck, New Death Tax Confirmed: Probate Fees of Up to £20,000 Will Apply from May, Telegraph, March 1, 2017.
Special thanks to Jim Manel (Texas Tech University School of Law J.D. Candidate) for bringing this article to my attention.
Friday, March 3, 2017
Lucy Wood recently published an Article entitled, Transfer on Death Deeds in Texas: High Time for the TODD, 9 Est. Plan. & Community Prop. L.J. 59 (2016). Provided below is an abstract of the Article:
Last session, the 84th Texas Legislature passed the Texas Real Property Transfer on Death Act. This “Transfer on Death Deed” (TODD) statute, based largely on the Uniform Real Property Transfer On Death Act, allows an owner of real property to designate, via deed, a beneficiary to receive the property upon the owner’s death without going through probate.
The TODD is the latest swell in the nonprobate tsunami, but the nonprobate “revolution” has been in full swing since the 1980s. Every few years lawmakers come up with yet another way to avoid probate. But is adding another tool to the already-disorganized toolkit just going to create more confusion? Is the TODD really necessary?
This article will explain why those in favor of increased access to justice will support the TODD. First, it will offer a bit of background about the problems in Texas that led to its becoming the latest state to jump on the TODD train, before summarizing the basics of the new law. Next, this article will discuss how Texans—particularly those with little to no money—stand to benefit. Lastly, it will address some challenges associated with the TODD and begin a conversation about how to TODD responsibly.
Friday, February 3, 2017
Recently, the public has been privy to some bitter estate battles, but what are the main reasons families fight over estates? The dynamic between a local sibling who helps support an aging parent and a distant sibling can naturally make the local sibling feel entitled to more from that parent, which can lead to claims of undue influence and continuous litigation. Further, a late-in-life spouse or caregiver can also spur tension between the decedent’s family, resulting in disputes for those that stood to inherit and claims of undue influence. Other estate battles can stem from blended families, those who have more than one marriage with children from previous marriages. If a decedent leaves all assets to their spouse, then the spouse could, at some point, become separated from the stepchildren after the decedent’s death, which could prevent them from benefiting in the estate. Accordingly, estate planners should help their client’s prepare for potential fights and consider all non-probate assets in addition to the will.
See F. Skip Sugarman, Five Reasons Families Fight over Estates, Wealth Management, January 30, 2017.
Thursday, January 26, 2017
John Morley recently published an Article entitled, The Common Law Corporation: The Power of the Trust in Anglo-American Business History, 116 Columbia L. Rev. (2016). Provided below is an abstract of the Article:
This Essay challenges a central narrative in the history of Anglo-American business by questioning the importance of the corporate form. The corporate form was not, as we have long believed, the exclusive historical source of powers such as limited liability, entity shielding, tradable shares, and legal personhood in litigation. These powers were also available throughout modern history through a little-studied, but enormously important, device known as the common law trust. The trust was widely and very effectively used to hold the property of unincorporated partnerships and associations in England and the United States both long before and long after the passage of general incorporation statutes in the mid-nineteenth century. The trust’s success in wielding corporation-like powers suggests that the corporation’s role in legal history was smaller than — or at least different from — the one we have long assigned to it. This Essay thus lays the groundwork for a new account of the corporate form and its place in the development of modern business.
Friday, January 6, 2017
When working to minimize your family’s tax burden, it is best to start while your parents are still alive. There are several strategies to help save your parents money in their later years and limit the taxes owed after their death. One way to reduce taxes while your parents are alive is to have them sell their stocks that have losses, which may allow them to take a tax deduction. If the stock is not sold, then upon your parent’s death there will be no tax deduction for the loss. On the other hand, they should keep stocks that have gains because their heirs will benefit from the stepped-up basis rule. For retirement accounts, like an IRA, it will be beneficial to allow the funds to grow tax-deferred, further allowing the money you would have paid in taxes to earn interest for many years. It may also be wise for those families with large estates to gift assets to beneficiaries while the parents are still alive, reducing their tax liability at death. Another efficient estate planning tool is the trust, which will provide less hassle to beneficiaries. Tax efficiency is a major asset in itself both while alive and at death, so it is important to plan accordingly.
See Patrick O’Brien, How to Keep Your Parents’ Assets from the Taxman, Market Watch, January 6, 2017.