Sunday, December 31, 2006
|1||505||Estate Planning for Persons with Less Than $5 Million |
Jonathan G. Blattmachr, Georgiana J. Slade, Bridget J. Crawford,
Milbank, Tweed, Hadley & McCloy LLP, Milbank, Tweed, Hadley, & McCloy, LLP, Pace University - School of Law,
Date posted to database: October 26, 2006
Last Revised: December 21, 2006
|2||142||The Federal Gift Tax: History, Law, and Economics |
U.S. Department of the Treasury,
Date posted to database: October 30, 2006
Last Revised: November 22, 2006
|3||102||Comment: The Ambiguous Work of 'Natural Property Rights' |
Gregory S. Alexander,
Cornell Law School,
Date posted to database: November 7, 2006
Last Revised: November 7, 2006
|4||89||The Strict Character of Fiduciary Liability |
University of Saskatchewan,
Date posted to database: October 28, 2006
Last Revised: November 9, 2006
|5||88||Equal Opportunity and Inheritance Taxation |
Yale University - Law School,
Date posted to database: November 16, 2006
Last Revised: November 16, 2006
|6||79||McCord and Post-Gift Events |
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: October 25, 2006
Last Revised: October 25, 2006
|7||66||The Ebb and Flow of the Federal Tax Role of Fiduciary Duties in Family Limited Partnerships: From Byrum to Bongard |
Carter G. Bishop,
Suffolk University - Law School,
Date posted to database: September 17, 2006
Last Revised: September 17, 2006
|8||32||Fiduciary Obligations in Australia: The Essential Ingredient |
Mark R. Bender,
Monash University - Department of Business Law & Taxation,
Date posted to database: July 17, 2006
Last Revised: November 15, 2006
|9||31||McCord: Value of Gifts Must Be 'Tax Affected' |
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: December 6, 2006
Last Revised: December 7, 2006
|10||18||Whose Ownership? Which Society? |
Robert C. Hockett,
Cornell University - School of Law,
Date posted to database: September 27, 2006
Last Revised: November 15, 2006
Saturday, December 30, 2006
BOn Wednesday (December 27, 2006), a Florida doctor (Clark Mitchell) pleaded guilty to defrauding investors out of almost $1 billion.
The scheme involved 28,000 investors who bought into Mutual Benefits, a company which purchased life insurance policies of elderly or very ill individuals at discounted rates. The investors believed the investments were safe because Mitchell promised that doctors would determine the insureds' life expectancies to be sure they were low. In reality, officials of Mutual Benefits made the determinations which were often fraudulently low.
See Reuters, Florida doctor pleads guilty in $1 billion fraud, Dec. 27, 2006.
Friday, December 29, 2006
Here is the abstract:
This article examines the use of testamentary trusts and implications of the taxation of trust rules for such trusts. It looks at the advantages and disadvantages of creating a testamentary trust in the Will as distinct from leaving property to existing inter vivos trusts and deals with the rule against the delegation of testamentary power still existing in some States. It identifies difficulties associated with planning and amending such trusts. It identifies difficulties that may result in a new trust being created and identifies Capital Gains Tax issues arising from cloning or splitting trusts. The article also considers what it terms "after death trusts" and Capital Gains Tax issues arising from those as well as Capital Gains Tax issues arising from the premature ending of life interests. The article concludes that a testamentary trust is not just another trust but is associated with many aspects peculiar to testamentary trusts that do not apply to trusts inter vivos.
In case you are looking for a late Christmas gift, or even an after Christmas gift for yourself, the ABA has released an iPod nano with the CLE program Ethical Issues in Estate Planning and Administration preloaded. The nano has a 4GB capacity and comes in silver.
The blurb on the website describes this particular iPod as the new wave of CLE: " Take the experience of leading legal experts when you're on the move with an iPod preloaded with CLE in your practice area. With the next generation of CLE in your pocket, you can learn when and where it is best for you."
Thursday, December 28, 2006
Steve R. Akers covered the 8th circuit case of Estate of Korby v. Commissioner in the latest issue of the Real Property and Probate eReport, wherein the 8th circuit upheld including partnership assets under I.R.C. Section 2036.
Husband and wife funded an FLP with marketable securities worth about $1,850,000 in return for a 98% limited partnership interest, which they gave equally to irrevocable trusts for their four sons (24.5% to the trust for each son). These assets represented almost all of their assets, other than their residence and their right to receive social security checks (and a few other assets) which they retained in a living trust. Soon afterward, the FLP purchased an annuity, showing the FLP as the owner, but entitling the husband to receive annuity payments (and the sons as irrevocable beneficiaries if husband died during the payout period.) The FLP made substantial distributions to the living trust, which it used in turn to pay “many of the Korbys’ household expenses.” The expenses paid by the living trust and the FLP directly included payments to a nursing home, medical care providers, drug stores, utility and heating bills, property taxes, and insurance payments for the residence. The estate later claimed that these payments to the living trust (ranging from roughly $19,000 to $39,000; and ranging from 27% to 50% of the FLP income) were for management fees rather than distributions, although the Korbys did not report any self employment income for the first three years of the FLP and although the distributions were not based on a percentage of assets under management as is normal for determining management fees.
Summary of the Tax Court’s holding:
The Tax Court (Judge Goeke), in both related cases, held that §2036(a)(1) applies because of an implied agreement that the partnership income would be available to the Korbys, and held that the bona fide sale for full consideration exception to §2036 does not apply.
Summary of the Eighth Circuit’s holding:
The Eighth Circuit affirmed the Tax Court in an opinion filed on December 8, 2006. The court upheld under a “clearly erroneous” standard the factual findings of an implied agreement and of the lack of a bona fide sale.
Amy E. Heller (Weil, Gotshal & Manges LLP) has written Year-End Planning to Minimize Florida Intangible Personal Property Tax Liability No Longer Necessary for the latest issue of the Real Property and Probate eReport.
The article is reproduced below:
For the first time in decades, year-end planning to avoid the Florida Intangible Personal Property Tax (the “Intangibles Tax”) will not be necessary for Florida residents and their tax advisors. This past summer, Florida Governor Jeb Bush signed legislation repealing the Intangibles Tax, effective January 1, 2007. Intangibles Tax liabilities for 2006 and prior tax years are unaffected by the repeal.
Subject to certain exceptions, the Intangibles Tax is an annual tax on the market value, as of January 1 of the tax year, of stocks, bonds and other intangible personal property owned, managed or controlled by a person domiciled in Florida. For 2006, each taxpayer is entitled to an annual exemption of the first $250,000 of the value of property otherwise subject to the tax. Thereafter, the rate of the Intangibles Tax is 0.5 mils per dollar (e.g., $5 per $10,000) of taxable intangible personal property. The rate of the Intangibles Tax was significantly reduced over the decade preceding the repeal.
In order to avoid the Intangibles Tax, many Florida residents created irrevocable trusts to hold their intangible assets, frequently near the end of a calendar year as January 1 of the next year approached. Following numerous Florida Technical Assistance Advisements issued in response to inquiries regarding the use of such trusts, the Florida Department of Revenue amended the Florida Administrative Code in 1998 to provide “safe harbor” requirements that, if met, would enable trusts to avoid the Intangibles Tax. Trusts meeting the safe harbor requirements popularly became known as Florida intangible tax trusts (“FLINTs”) and Florida intangible tax exempt trusts (“FLITEs”). Now that that the Intangibles Tax has been repealed, FLINTs and FLITEs will no longer be essential tools of Florida estate planners.
What about existing FLINTs and FLITEs? If a FLINT or a FLITE was established as part of a broader estate plan, and not just to minimize exposure to the Intangibles Tax, it may make sense for the trust to be retained in its present form. If, however, a FLINT or a FLITE is no longer desirable or is no longer desirable in its existing form, it may be possible to amend the trust pursuant to an amendment power included in the trust agreement. Depending on the terms of the trust, it may also be possible for trust assets to be distributed to a beneficiary (e.g., the settlor or the settlor’s spouse) or for the settlor to exercise a limited power of appointment over trust assets in favor of individuals or other trusts, thereby effectively terminating the FLINT or FLITE.
Wednesday, December 27, 2006
In Dolenz v. Vail, 200 S.W.3d 338 (Tex.App.—Dallas 2006, no pet. h.), a creditor of the decedent claimed Decedent had given him a security U.C.C security interest in paintings held by Decedent’s trust. The creditor had already sought possession in prior proceedings. Saying that it lacked jurisdiction to hear the issue, the probate court denied the creditor’s motion when he sought to take possession of the paintings. The appellate court reversed, stating that collateral estoppel and res judicata were not jurisdictional issues that would prevent the probate court from hearing the matter. The probate court had to hear the creditor’s motion because “his claim is a matter relating to the distribution of [the] estate of a deceased person and thus a matter ‘incident to an estate’” under the Texas Code.
The December 2006 issue of Bifocal, Newsletter of the ABA Commission on Law and Aging has been released.
This issue features:
- Model Approaches to Statewide Legal Assistance Systems
- The State of Veterans’ Fiduciary Programs: What Is Needed to Protect Our Nation’s Incapacitated Veterans?
- Funding Opportunity: The 2007 Partnerships in Law and Aging Program
- Profile of the NebraskaState Bar Elder Law Section
- New Resources: Elder Law Clinic Replication Manual and Elder Abuse Detection and Intervention: A Collaborative Approach
- Lawyerly Conceits: “The Eulogy,” a Poem by Timothy J. Nolan
- Sally Crawford Ramm, chair of the National Association of Legal Services Developers, on Developing Legal Assistance Programs for Older Adults
Tuesday, December 26, 2006
Alice Silsby died unmarried and with no children of her own. She made her nephew and attorney, Herbert Silsby, the personal representative of her estate. She also made him the trustee of two trusts created for the benefit of her two sisters, Frances and Mary, during their lifetimes, with the residue to be distributed thereafter to the children of her five siblings, with one-fifth going to each family. Mary died first in 1988. Seven weeks before his mother died in 1989, France’s son Donald also passed away. Herbert read the devise from the trust to mean that Alice had not left anything to the estate of deceased nieces and nephews. Therefore, he distributed Donald's one-fifth portion according to the intestacy statute. The Supreme Court of Maine affirmed the Probate Court’s decision that the devise of the trust residue had vested and did in fact pass to Donald’s estate. Herbert was personally surcharged for the amount of the judgment. In re Estate of Silsby, 2006 WL 3411858 (Me).
Leslie McGranahan (Economist – Federal Reserve Bank of Chicago) has published her article Will Writing and Bequest Motives: Early 20th Century Irish Evidence on SSRN.
Here is the abstract:
This paper develops a simple model of the decision to write a will prior to death and tests the implications of the model using data from Ireland prior to the advent of state provided old age support. The model assumes that individuals write wills in order to change the distribution of their assets from the distribution that would occur in the absence of a will and that individuals incur will writing costs. The model leads to the predictions that individuals whose desired distribution differs most dramatically from the default and those who face the lowest costs will be the most likely to write wills. A data set that matches individual Irish estate records from 1901 to 1905 to household records from the 1901 Irish Census is used to test these implications. I find that age, wealth, and landholding influence will writing.