Wills, Trusts & Estates Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, May 15, 2015

No Prenup? No Problem

Asset protectionWhile prenuptial agreements can be a great tool for protecting assets in a divorce, there are ways to safeguard your money even if you do not have this signed document.  Below are several ways to protect, albeit not all of, your money, without a prenup.

  • Keep Separate Funds. If you have an account that has funds in it you owned prior to the marriage or you received during the marriage or an inheritance and subsequently mixed in your earnings from your pay or joint funds from another account, the entire account becomes marital.  This is because courts consider money to be “fungible”—once the marital dollar goes in, you cannot tell which dollar is coming out.
  • Separate Real Estate. If you own a home prior to getting married, be careful before throwing your spouse’s name onto the deed.  Once the non-owning spouse’s name is on the deed, the court will presume you have given half the value to that spouse as a gift.
  • Use Non-marital Funds In Maintaining Non-marital Property. Use your own funds from your premarital or inherited account to maintain your non-marital property.
  • Get A Valuation of Your Business.  The court is able to carve off the appreciated value of a non-marital business. Thus, if your business was worth $1 million on the date of your marriage and $2 million on the date of your divorce, your spouse could be entitled to half of the difference.

See Rebecca Zung, How to Protect Your Money If You Don’t Have A Prenup, Business Insider, May 11, 2015.

May 15, 2015 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Thursday, May 14, 2015

New Edition: Inherited IRAs

Inherited IRAsAmerican Bar Association Publishing recently released the updated 2015 edition of Inherited IRAs: What Every Practitioner Must Know, by Seymour Goldberg, CPA, MBA, JD.  Here is why you should pick up a copy of this book:

Discover how to effectively implement an estate plan that includes retirement-type assets. Written especially for the practitioner, this updated edition of Inherited IRAs will alert you to the most critical retirement distribution rules that you must know in order to effectively safeguard your client and their retirement assets. Within this concise, easy-to-follow guide, you'll find:

  • More than 100 scenarios, questions, and answers that you will most likely encounter
  • Checklists, sample forms, and summaries of court rulings on inherited IRA cases
  • Information and resources to help your clients through what is often a very difficult time in their lives.

May 14, 2015 in Books, Books - For Practitioners, Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 12, 2015

Congress Proposes to Make Death Benefits Available to Fallen Officers

Fallen officerRecently the news has been inundated with reports surrounding the tensions occurring between police officers and members of their respective communities.  Less than two weeks ago, NYPD Officer Brian Moore was gunned down while on duty after stopping a man suspected of carrying a handgun.  In December 2014, two NYPD officers were killed while sitting in their cruiser.  These attacks are viewed as being unified in motivation—retribution for the high profile deaths of unarmed black men Michael Brown, Eric Garner, and Freddie Gray.  Though nothing can be done to ease the suffering of the families who have lost their loved ones, Congress is trying to ensure that they are supported financially. 

When an officer is killed in the line of duty, there are programs that will compensate the family of the deceased.  Families can receive workers compensation benefits as well as payments made by the Law Enforcement Assistance Administration.  There are also various other federal and state programs offering compensatory payments; however, the tax treatment of the amounts paid are unclear.  Congress has issued a string of bills to counteract this uncertainty that would exclude all amounts paid solely as a result of a officer’s death or disability in the line of duty from income tax. 

See Tony Nitti, Congress Proposes to Make All Death Benefits Paid to Families of Fallen Police Officers Tax Free, Forbes, May 11, 2015.

May 12, 2015 in Current Affairs, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Thursday, May 7, 2015

Could Working Be the New Retirement?

Nest eggA new survey from the Transamerica Center for Retirement Studies found that 82 percent of American workers age 60 and older are either currently working, or expect to keep working past the age of 65.  “The days of the gold-watch retirement where we have an office party and maybe some punch and cookies and never work again are more mythical than a reality,” says Catherine Collinson, president of the retirement studies center.  “It even raises the question is retirement the right word.”

Many workers are now worried that they will not have enough money to last during their lifetime.  Outliving investments and savings was a top concern for 44 percent of respondents in the survey.  One-third of all workers believe their standard of living will fall as soon as they stop working.  Yet, regardless a person’s age, they can still save for their golden years.  One rule of thumb Collinson recommends is to stop guessing how much is needed to retire and actually run the numbers, “From there you can build a plan . . . Planning not to retire is not a viable retirement strategy.  At some point in our lives we’ll all stop working.”

See Charisse Jones, Traditional Retirement Possibly Becoming a Thing of the Past, USA Today, May 5, 2015.

May 7, 2015 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Trust Retains GST Tax-Exempt Status After Conversion

GavelIn IRS Letter Ruling 201516028, an irrevocable trust that was grandfathered into tax-exempt status for the generation-skipping transfer (GST) tax, was ruled to have retained that status after it was converted from an income-only trust to a total return unitrust. The conversion was made pursuant to state law. The compliance with state statutes also avoided income and gift tax consequences for the switch.

See Wolters Kluwer Law & Business, GST-Exempt Status Not Altered by Conversion, Resourcefullaw.com, 2015.

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

May 7, 2015 in Estate Planning - Generally, New Cases, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 6, 2015

GRATs Targeted by Budget Proposal

TargetThe benefits of limiting gift tax and historically low IRS rates create favorable circumstances for the popularity of grantor retained annuity trusts (GRATs). However, the Obama administration's 2016 budget proposal could limit GRATs as another proposed way of increasing tax revenue.

See Thomas W. Abendroth, William R. Franzen & Harmon A. Brown, Obama Administration Targets GRATs, a Powerful Estate Planning Technique, National Law Review, May 4, 2015.

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

May 6, 2015 in Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 5, 2015

Article on Florida Family Trust Companies

Brian MalecBrian M. Malec (Dean Mead, P.A., Orlando, FL) and Scott A. Bowman (Proskauer Rose, Boca Raton, FL) recently published an article entitled, Florida Family Trust Companies: Tax and Nontax Considerations, 89 Fla. B. J. no. 5, 42 (May 2015).  Provided below is an excerpt from the article:

On June 13, 2014, Governor Scott signed the Florida Family Trust Company Act, creating F.S. Ch. 662. The act, which becomes effective October 1, 2015, governs the formation and operation of family trust companies (FTC) in Florida. At least 14 other states1 currently have legislation authorizing FTCs (private trust companies). The act, together with favorable trust law and the absence of a state income tax, should allow Florida financial, banking, accounting, and legal service providers to gain a share of the growing FTC business. However, unresolved federal income and transfer tax issues continue to loom over the use of FTCs, whether in Florida or elsewhere. This article provides an overview of the act and discusses key tax and nontax considerations related to FTCs.

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

May 5, 2015 in Articles, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)

Mother Accused of Stealing Social Security Benefits From Daughter

Theft1A South Dakota woman, Darla Kay Johnson, is facing charges of theft of government funds. Johnson is accused of spending Social Security benefits that were paid for her juvenile daughter's benefit after the death of her daughter's father. Suspicion of misuse of the funds arose after Johnson failed to respond to requests from a Social Security office to provide an accounting of what the funds were used for. Johnson is also charged with making a false statement, regarding her explanations for the funds use that are allegedly untrue.

See Evan Hendershot, Mother Allegedly Misuses $57K Of Daughter's Inheritance, The Daily Republic, May 4, 2015.

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

May 5, 2015 in Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Friday, May 1, 2015

More Dying Penniless

BrokeAccording to a new study by the employee Benefit Research Institute (EBRI), one in five of the oldest retirees is dying with no assets except a home, and almost a quarter of those 85 and older are dying with less than $10,000. 

More and more Americans are facing the terrifying fate of running out of money, and despite the “save more, work longer” mantras, health problems and age discrimination can make it impossible to work as long as you want.  Even substantial wealth is no guarantee you will not go through your fortune before you die.  The EBRI study shows people who are well off still risk dying poor, especially by the time they are 85.  It is difficult to avoid running out of money when you do not know how long you will live and it is easy to be wrong by more than a decade.  “Spend too much of your nest egg, and you might end up a destitute 93-year-old.  Spend too little and die young, and you missed the chance to enjoy your savings.”

See Bloomberg News, Dying Penniless: It’s Not Just the Poor, Financial Advisor, Apr. 29, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 1, 2015 in Elder Law, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)

Retirement Woes

Retirement planningThe recent 2015 TIAA-CREF Affluent Investor Barometer Survey found that most investors with $250,000 in assets are more concerned with saving for, or generating income in retirement, rather than building an inheritance for their heirs.  “Retirement looms large even for higher-net-worth Americans who recognize the importance of saving and investing,” explained Kathie Andrade, head of Individual Advisory Services at TIAA-CREF.  “Retirement can sometimes last 20 or 30 years or more, so individuals need to strike the right balance between shorter-term financial priorities and long-term planning to help ensure they’ll have income to last throughout their retirement.”

See Christopher Robbins, Investors Worried More About Retirement Income Than Leaving Inheritance, Financial Advisor, Apr. 29, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

May 1, 2015 in Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0) | TrackBack (0)