Wills, Trusts & Estates Prof Blog

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

Thursday, December 31, 2015

What Happens If A Person Missed The IRA Distribution Deadline?

End of yearIf a person is over 70 ½ years old and either owns or inherited an individual retirement account (IRA) they must make a required minimum distribution (RMD) by tonight, December 31, 2015. Failure to make the RMD by the deadline can subject that person to a 50 percent excise tax on the amount that was supposed to be distributed by law. If a person misses the December 31 deadline they should notify the IRS by filling out a Form 5329 and requesting a waiver on the penalty. This article discusses the reasons that could qualify a person for having the 50 percent penalty waived. There is also a waiver in existence for a person’s first RMD. A 50 percent excise tax penalty could harm a retiree’s financial situation so it is important for people to make sure that they make their required distributions on time.

See Sharon Epperson, Missed the IRA Distribution Deadline? Advice to Avoid Tax Penalty, NBC, December 31, 2015.

December 31, 2015 in Estate Planning - Generally, Income Tax, Non-Probate Assets, Wills | Permalink | Comments (0)

Mandate That People With Disabilities Be Integrated Into The Community Is Strengthened By Senate Bill

New legislationThe Disability Integration Act of 2015 which was recently introduced by Senator Charles Schumer (D-NY) “would require states and health insurers to provide services to people with disabilities in community settings rather than in institutions whenever possible, and gives grounds to sue of the requirement is not met.” Under the Americans with Disabilities Act there is an “integration mandate” to give people a right to live in the least restrictive setting possible. Even though the Supreme Court has upheld this integration mandate States continue to create lengthy waiting lists for community-based Medicaid services and they also cap the services that are provided. The new legislation would require states to develop a plan to implement community-based programs and could open them up to lawsuits if they are not in full compliance.

See Senate Bill Would Strengthen Mandate That People With Disabilities Be Integrated in the Community, Special Needs Answers, December 30, 2015.

December 31, 2015 in Estate Planning - Generally | Permalink | Comments (0)

How The DOL Fiduciary Proposals Will Impact The Annuities Industry

Charitable trustUnder a new proposal for financial planners created by the Department of Labor (DOL) all advisors and salespersons will be automatically elevated to level of fiduciary. This will mean that they will have to disclose any compensation that they earn from the sales or services that they provide to their clients. If these new proposed regulations are implemented this will have a huge impact on the annuity industry. There is opposition to these new proposals from within the industry with claims that the new requirements will lead to higher costs. Congress will have to eventually decide on whether to adopt the DOL proposals. People within the annuities industry that will be impacted by these proposed regulations will be eager to find out what the outcome is.

See Mark P. Cussen, What the Fiduciary Proposal Means for Annuities, Investopedia, December 31, 2015.

December 31, 2015 in Estate Planning - Generally, Non-Probate Assets, Professional Responsibility | Permalink | Comments (0)

Reasons Why People Should Call An Estate Planning Attorney

FirmThere are many people that avoid calling an estate planning attorney because they do not want to discuss difficult subjects like illness or death. Ignoring these issues will not make them go away and it is therefore important that a plan be in place. A person will want to have a discussion with their estate planning attorney if they have a serious illness or if there is a death in their family. If they have a child that is engaged to be married they will want to discuss putting together a prenuptial agreement. If a child is experiencing difficult issues like a substance abuse or gambling problem the parent might want to speak with an attorney about making changes to the estate plan. Even minor changes should still warrant a discussion with an estate planning attorney.

See ­­Reasons to call an estate planning attorney, Dedham, December 26, 2015.

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

December 31, 2015 in Elder Law, Estate Planning - Generally, Guardianship, Trusts, Wills | Permalink | Comments (0)

New State Joins The Estate Tax Free Club

ScissorsIf there has been a war on any one tax in American history it has been on the estate tax, or death tax as it is colloquially known. Now, Tennessee joins the ranks of jurisdictions that have completely abolished the tax as its four year phase out is complete come January 1, 2016. The abolishment has been hailed by anti-tax groups as a victory for the free market and will purportedly encourage wealthy families to move to or remain in the state. However, the estate tax has become a hot political issue as candidates, such as the popular presidential contender Sen. Bernie Sanders, call for an increase of the tax and lowering of exemptions at the federal level. But the trend among the states, both Democratic and Republican leaning, has been to lower or abolish the tax which bodes well for opponents of the death levy. But, as with many things, only time will tell the ultimate direction the political winds will blow.

See Andy Sher, Tennessee says goodbye to death (tax) on Jan. 1, The Times Free Press, December 30. 2015.

December 31, 2015 in Estate Tax | Permalink | Comments (0)

The Unwanted Moon Dust Of 10 Downing Street

The MoonWhen Apollo 11 returned from the first moon landing, a bit of moon dust was given as a present from Richard Nixon to then British Prime Minister Harold Wilson. At the time, this was a gift of great significance due to the absolute novelty of space flight during the 60's and saw the dust go on a nationwide tour of various science museums. However, public interest in the dust faded in the same way as it did with the Apollo program and the gift was eventually stored in an unobtrusive cabinet at 10 Downing Street. Not even the National Science Museum was interested in putting it on display with the curator once comparing it to a "toothbrush used by Napoleon" in significance. As a result, this unique curiosity will continue to languish in obscurity among the treasures of the British government until the day when it is once again considered an object worthy of display.

See, How Richard Nixon's moon dust gift ended up in a No 10 cupboard, The Belfast Telegraph, December 30, 2015.

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

December 31, 2015 in Science | Permalink | Comments (0)

HIPAA Does Not Offer The Privacy Protection Many Assume

MedicalAnyone that has been to the doctor knows about the ubiquitous HIPAA form that must be filled out and which is supposed to protect privacy. But it turns out that the protections that are offered by HIPAA are rather minimal due to the fact that a patient has no individual right to sue for a violation. The Department of Health and Human Services, the agency with the authority to conduct an enforcement action, formally acted on only 6 of 18,000 complaints in 2014 despite the fact that many of the violations were repeatedly by the same entity. Celebrities have long been the target of HIPAA violations when hospital employees sell the information to tabloids but ordinary people are also coming into the cross-hairs. For example, there have been many instances of sexually transmitted disease history being vindictively released on social media to shame and humiliate an individual. Critics of the current implementation of HIPAA are calling the HHS to amp up its enforcement since it can impose fines which are cycled directly back to agency which can then be used for additional patient protective measures. In addition, there are calls to allow patients to keep a portion of any fine levied for a violation against them which will encourage greater oversight by those at risk since they will be able to be reimbursed for the harm of a records violation. In any event, this is a problem that will only grow as digital technology makes it easier to access records by a wide variety of people. Let us hope Congress and the HHS will soon take notice and begin to take the privacy of patients seriously.

See Charles Ornstein, Your health records are supposed to be private. They aren’t, The Washington Post, December 30 2015.

Special thanks to Lewis Saret for bringing this article to my attention.

December 31, 2015 in Current Affairs, Science | Permalink | Comments (1)

Do The Super Rich Have An Unfair Tax Advantage?

The_worship_of_MammonDisagreement over the proper amount of taxes that should be paid is par for the course when it comes to politics but, in recent years, one particular group has been targeted over the amount in tax they pay, the super rich. In particular, the criticism has focused on the fact that their extreme wealth allows the access to tax specialist that are able to maximize savings using methods that are often dubious and not available to the general public. The penalty for a violation is not often of enough significance to deter abuse since the taxpayer has the means to fight out the case in tax court or settle for a significant reduction. In addition, the ultra rich have the ability to shift money between trust, foreign accounts, and various business entities in a manner that hides the money or drastically lowers the rate of tax paid. As we move deeper into the election season this issue will certainly grow in importance and it will interesting to see how the eventual candidates say they will handle the controversy.

See Noam Scheiber & Patricia Cohen, For the Wealthiest, a Private Tax System That Saves Them Billions, The New York Times, December 29, 2015.

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

December 31, 2015 in Current Affairs, Estate Tax | Permalink | Comments (0)

Wednesday, December 30, 2015

Important Things To Consider When Addressing Beneficiaries In Estate Planning

Beneficiary designationThere are many important things that people need to consider when addressing beneficiaries in estate planning. One important issue in estate planning involves who to name as a beneficiary on “life insurance policies, pension plan accounts, and IRAs.” When naming a beneficiary it is important to consider their age, ability to manage assets, pension plans, and any contingent beneficiary that is to be named. Beneficiaries also need to be named on any life insurance plans that are to be inherited. There are special tax considerations that need to be remembered for life insurance, pension plans, and IRA beneficiaries. Keep estate planning documents up-to-date with current beneficiary designations. It is a good idea to meet with an experienced estate planner to make sure beneficiary designations are done properly in compliance with local regulations.

See Lloyd Lofton, Addressing beneficiaries in estate planning, Life Health Pro, December 30, 2015.

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

December 30, 2015 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

How Mission Investing Is Receiving An Increasing Amount Of Attention

SpendingThe IRS has recently published guidelines that have heightened the attention mission investing, which is a catchall term used to describe a variety of investment strategies. This article examines the brief history of mission investing and how the concept today has expanded to include a wide range of activities. It discusses how screening and shareholder advocacy are the most common approaches adopted by organizations that are using socially responsible investing (SRI) principles. The article also discusses how the term “program-related investment” is defined in Section 4944 of the Internal Revenue Code and how the regulations apply. Under these new regulations organizations will be able to “continue to approach mission investing with enthusiasm as long as they are careful to exercise their fiduciary duties and comply with any applicable federal tax laws.”

See Charities and Mission Investing, McGuireWoods LLP, December 18, 2015.

December 30, 2015 in Estate Planning - Generally, Income Tax, Trusts | Permalink | Comments (0)