Wills, Trusts & Estates Prof Blog

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

Wednesday, March 25, 2020

Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment

StockmarketMany investors may seem powerless with the market in such turmoil with heightened volatility and falling interest rates. The truth is that there are still many things one can control in this environment, including opportunities to provide for one's family and others that do not come around very often.

  • Donate to Support Your Communities
    • In 2020, you can deduct up to 60% of your adjusted gross income for gifts made to a public charity, and these deductions can offset normal earnings, such as salaries and bonuses, as well as dividend and interest payments and even capital gains.
  • Help Family Members Ride Out the Storm
    • Under the gift tax annual exclusion, an inidividual can give up to $15,000 in 2020 to each recipient without tax consequences, and for a married couple, the total is $30,000 per recipient.
  • Provide Long-Term Support by Using Your Exemption Amounts
    • Giving away assets that a person expects to appreciate as values recover makes use of their exemption while also shifting that appreciation to the next generation.
  • Use GRATs and CLTs to Make Additional Tax-Free Gifts
    • Grantor Retained Annuity Trusts (GRATs) and Charity Lead Trusts (CLTs) allow a person to pass the appreciation in the value of assets over a hurdle rate set by the IRS to their beneficiaries tax-free. Currently, the IRS hurdle rate is 1.8% and in April, the rate will drop to 1.2%. 
  • Refinance Your Debt and Family Loans
    • With interest rates at rock-bottom levels, it could make sense to refinance existing debt obligations such as a home mortgage and reduce the interest rate on any loans made to family members.
  • Convert Your Traditional IRA to a Roth
    • Since the taxes resulting from a conversion are based on the IRA’s balance at the time of conversion, depressed market prices help reduce the tax liability if an individual decides a ROTH conversion makes sense.

See Bryan Kirk, Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment, Fiduciary Trust, March 18, 2020.

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

March 25, 2020 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

CLE on Medicaid: Qualifying Clients for Immediate Care and Protecting Assets

CLEThe National Business Institute is holding a webcast entitled, Medicaid: Qualifying Clients for Immediate Care and Protecting Assets, on Friday, April 17, 2020 at Central: 9:00 AM - 4:00 PM. Provided below is the description of the event.

Program Description

Helping Clients Secure Nursing Home Coverage Without Destroying Family Assets

Medicaid planning is most effective when done ahead of time. Sadly, most clients seek help when the need for nursing home is urgent or when the loved one is already in the facility. Do you have all the tools at your disposal for tackling such tough cases? This practical guide zeroes in on the very techniques that work in the crisis situations - when the penalty period is already triggered or care is already being provided. Learn what asset transfer approaches are still available and how to make certain to protect family assets. Help clients make the best of a tough situation. Register today!

    • Clarify what types of asset transfers will NOT trigger penalty periods of ineligibility.
    • Get all the tools you need to provide for the spouse staying in the community.
    • Draft caregiver agreements that are sure to qualify for Medicaid compensation.
    • Learn what can still be done with an adverse Medicaid decision.
    • Protect the family home with techniques tailored to specific family dynamics and circumstances.

Who Should Attend

This Medicaid planning guide is designed for attorneys. It will also benefit nursing home administrators, accountants, geriatric care managers, care coordinators, social workers and paralegals.

Course Content

    • What Happens in an Emergency Medical Situation
    • Asset Purchase and Transfer Strategies
    • How to Transfer a Residence
    • Using Promissory Notes to Help Clients Currently in the Nursing Home
    • Life Care Contracts Between Parents and Children
    • Contesting Denial of Benefits, Penalty Period Dates and Other Adverse Medicaid Decisions
    • Providing for the Community Spouse
    • Legal Ethics in Medicaid Practice
    • Emergency Medicaid for Non-Qualified Non-Citizens and Undocumented Individuals

March 25, 2020 in Conferences & CLE, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Article on How Should Non-Probate Transfers Matter in Intestacy?

IntestacyMary Louise Fellows and E. Gary Spitko recently published an Article entitled, How Should Non-Probate Transfers Matter in Intestacy?, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article.

As American family structures have become more heterogeneous, status-based intestacy statutes have become less suited to promoting donative intent. Indeed, numerous scholars of wealth transfer law have noted the critical need for intestacy law reform to address the needs of decedents whose donative intent does not comport with traditional family norms. We propose addressing this concern by looking to intestate decedents’ non-probate transfers, such as a revocable trust, life insurance policy, 401(k) account, brokerage account, or joint tenancy with right of survivorship deed. In 2010, we, along with a co-author, published the first study to consider the relationship between donative intent with respect to the probate estate and donative intent as expressed in non-probate transfers. That study utilized a factorial research design to assess public attitudes and offered support for our new heir hypothesis, that, depending on the identity of the non-probate transfer beneficiary and the identity of the existing heir, a decedent would want a non-probate transfer beneficiary who is not otherwise an heir to be treated as an heir. The instant two-part study of estate planners produces additional knowledge about how best to integrate non-probate transfers into intestacy statutes. In the first part of our study, we conducted a paper survey of forty-five estate planners. The responses to this survey greatly influenced the second part of our study in which we conducted in-person or telephone interviews with nineteen estate planners. The findings reported in this study provide the framework for statutory reform. This study demonstrates that the new heir reform increases the likelihood of promoting intestates’ donative intent in a growing number of twenty-first century familial situations. 

March 25, 2020 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Trusts | Permalink | Comments (0)

Tuesday, March 24, 2020

New York Governor Allows Electronic Notarization Under Executive Order

Nygov-logoALERT: As part of Executive Order 202.7, electronic notarization is permitted under the following circumstances:

Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:

  • The person seeking the Notary's services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
  • The video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing);
  • The person must affirmatively represent that he or she is physically situated in the State of New York;
  • The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
  • The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
  • The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.

For more information, please see here.

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

March 24, 2020 in Current Affairs, Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs)

MoneyspouseUnder current law, the gift, estate, and generation skipping transfer tax (GST) exemption is $11,580,000, and double that amount for married couples. There are numerous reasons to utilize some or all of that amount now, especially since the exemption is temporary - it is set to lower back to pre-TCJA amounts in 2026. If there is a shift in administration in Washington before that, it could lower sooner.

Setting up trusts can be beneficial for using the tax exemption now and for protecting assets for future generations. But it may be prudent to place the property in a trust that benefit not only your children but also name yourself as a beneficiary so that you not completely cut off from the funds should the need arise for them. If you are married, you can set up a trust that names your spouse as a beneficiary. That way your spouse can access assets transferred as a beneficiary and you do not lose the ability to benefit from the wealth you accumulated. These trusts are sometimes called Spousal Lifetime Access Trusts or “SLATs.”

For those that are not married, the alternative is a domestic asset protection trust, or DAPT. 19 states allow these self-settle trusts, and generally people from those states agree that the trusts serve their intended purpose. If you create this type of trust in a non-DAPT state, be aware of that in many jurisdictions, a self-settled trust is void as to the settlor's creditors.

See Martin Shenkman, How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs), Forbes, March 22, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

March 24, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Monday, March 23, 2020

Five Tips to Decrease Social Isolation for Older People During COVID-19

RotaryphoneSocial distancing has become the new normal with the rise of COVID-19, but many older Americans may not be comfortable with digital devices. Approximately one-third of those 65 and older may have never used the internet and may not have internet access at home, and half of those that do have the internet need help to navigate it or set up a new device. As the virus spreads, so can loneliness, especially for the elderly who cannot or do not know how to take advantage of socializing through today's digital age.

Here are five tips to help older adults stay connected through technology:

  •  Most older adults have a smart phone, personal computer, or tablet, they may just not have the hardware - such as a microphone or speakers, or the software - such as an essential update, to get connected to others.
  • Games or programs such as bridge, chess, or mah-jong may help older individuals to ward off isolation, but need help downloading them. They may also need assistance in creating profiles on social media sites.
  • There are vast amounts of applications with the intention of keeping people connected, and more seemingly being created every day, but elders may just need a guiding hand. This is also a great way for kids to bond with grandparents, and to build up children’s confidence.
  • Elder financial abuse is rampant, so staying vigilant and explaining to older individuals the ins and outs of these scams are highly important as they spend more time on their devices.
  • For those that do not have the internet, staying connected through a land-line but seem antiquated, but it is a viable option. Family members can arrange a schedule of who will call, and maybe, during those calls, even talk about connecting through the internet.

See Naomi Cahn, Five Tips to Decrease Social Isolation for Older People During COVID-19, Forbes, March 18, 2020.

March 23, 2020 in Current Affairs, Current Events, Elder Law, Estate Planning - Generally, Technology | Permalink | Comments (0)

Sunday, March 22, 2020

New York Governor Suspends Statute of Limitations

NycThe New York State Bar Association provided the following Coronavirus (COVID-19) update:

The Governor has suspended and tolled any specific time limit for the commencement, filing of or service of any legal action. This includes but is not limited to time limits in the Criminal Procedure Law, the Family Court Act, the Civil Practice Law, the Court of Claims Act, the Surrogates Court Procedure Act and the Uniform Courts Act.

NYSBA strongly urged the Governor to take this action and applauds him for acting so quickly. The association also supported legislation tolling the Statute of Limitations introduced by state Senate Judiciary Chair Brad Holyman. We are proud to have been a leader on this issue.

The Governor also suspended sections of the vehicle and traffic law related to the expiration of driver's licenses, non-driver identification cards and vehicle registrations that expired on or after March 1, 2020.

A provision requiring shareholder meetings to be noticed and held in person has been suspended.

Finally, the Governor expanded the authority of the Commissioner of Taxation and Finance to abate interest for a period of 60 days for taxpayers required to file returns for sales and use taxes for the period that ended February 29, 2020. This expands upon existing authority of the Commissioner to abate late filing and late payment penalties.

To view the Executive Order By Governor Andrew Cuomo on March 2o, 2020, click here.

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

March 22, 2020 in Current Affairs, Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Saturday, March 21, 2020

Vanessa Bryant Files to Add Infant Daughter to Kobe's Trust

KobesuitKobe Bryant had set up a trust before his untimely death to provide for his widow, Vanessa, and their daughters, one of which perished alongside him in a helicopter crash in January. The trust was created in 2003 and amended several times, the last in 2017. The couple's most recent child, Capri, was born in 2019. Vanessa has filed to amend the problem, requesting that the infant daughter be added to the trust.

The trust agreement is reportedly set up to allow Vanessa and her daughters to draw from the principal and income during Vanessa’s lifetime, with the remainder going to the children upon Vanessa’s death. The widow is arguing that according to the trust document, Kobe's intent was to provide for all their children. The other two surviving children of the couple are Natalia, 16, and Bianka, 2.

Vanessa has also filed a lawsuit against the helicopter company that owned the vehicle in which her husband and daughter died and has demanded the deletion of reported graphic photos taken and distributed by deputies through her lawyer.

See Jack Baer, Report: Vanessa Bryant Files to Add Infant Daughter to Kobe's Trust, Yahoo Sports, March 19, 2020; see also Ralph R. Ortega, Kobe Bryant's Widow Seeks to Amend His Trust to Include Daughter Capri, Daily Mail, March 18, 2020.

Special thanks to Jim Hartnett, Jr. (Dallas, Texas Probate Attorney) and Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing these articles to my attention.

March 21, 2020 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Sports, Trusts | Permalink | Comments (1)

Friday, March 20, 2020

Article on Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide

DeedDanaya C. Wright and Stephanie Emrick recently posted an Article entitled, Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide, Wills, Trusts, & Estates Law eJournal (2019). Provided below is the abstract to the Article.

This Article will examine one of the most recent will substitutes, the transfer-on-death (“TOD”) real-estate deed. Nearly half of the states have recognized, through common-law forms or legislation, a mechanism to allow for the transfer of real property on death without using a will, without following the will formalities, and without necessitating probate. This new tool in the estate planner’s toolbox is invaluable: revocable trusts have proven too expensive for decedents of modest means, and wills continue to require formalities that can easily frustrate non-lawyer-drafted estate documents. But the variety of TOD deed rules and mechanisms that the different states have adopted has led to disparity and uncertainty in form and outcome, resulting in litigation and frustration of decedent’s intent.

We believe this uncertainty and frustration will continue as even more states adopt the Uniform Real Property Transfer on Death Act (“URPTODA”), which purports to stabilize the law and facilitate testamentary intent. States grappling with this new form interpose significant differences, and lawyers and judges are not all on the same page as to the consequences. One source of confusion is the URPTODA’s provision that TOD deeds are non-testamentary and, at the same time, the Uniform Act provides that the property rights do not transfer until death.

Although it is one thing to declare that TOD deeds are non-testamentary even though property rights don’t transfer until death—which in itself goes against centuries of formal legal rules—it is quite another to get all the other legal consequences to fall into place accordingly. For instance, would a state’s anti-lapse statute apply to save a beneficiary designation if the deed is deemed non-testamentary, even though the intent is to have the real property transfer upon death?

In our opinion, the TOD deed pushes the juridical binary of inter vivos and testamentary transfers beyond coherence and rationality. The law of will substitutes has already undermined the rationality of maintaining the divide, and in this Article, we will argue that the time has finally come to reject the division between inter vivos and testamentary transfers and seek a rational and holistic set of tools and formalities to gain the benefits of probate avoidance that will substitutes provide with the ease of control and full revocability of wills. Elevating form over functionality, although a characteristic of the common law, inevitably disserves the interests of those who cannot afford lawyers who can easily draft around the sometimes-arcane distinctions between testamentary and inter vivos transfers to gain the benefits of each while avoiding the burdens.

March 20, 2020 in Articles, Current Events, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Thursday, March 19, 2020

Coronavirus Trusts? Suddenly Estate Planning More Popular Than Stockpiling Food as Advisors Arrange Wills and Trusts for Elderly Clients

CovidThe global pandemic of COVID-19 has numerous people thinking a question they have refused to face - what if? But now that they are, they are now also facing their own mortality, and realizing that they do not have the basic estate planning documents.

To protect yourself and your loved ones, now's a good time to make sure that you have the following four documents prepared and updated.

  • A will or revocable trust.
    • Many people choose a trust for the passage of assets to loved ones at death without the need for probate, but others can choose a will, especially those that have modest estates.
  • Beneficiary designations on financial accounts.
    • Many assets do not pass through a will or trust, such as an IRA, 401(k) account, or life insurance policy, and instead the proceeds go to the person you name as beneficiary of that account.
  • Healthcare durable power of attorney.
    • A durable power of attorney for healthcare will give the person you designate as your agent the ability to make the medical decisions you specify on your behalf. Check with your healthcare provider to see what they prefer to see in a healthcare power of attorney to ensure a smooth transition if you become incompetent.
  • Financial durable power of attorney.
    •  In the chance that you become incompetent, financial responsibilities continue. You can tailor your financial power of attorney as narrowly or broadly as you want, ranging from simply being able to pay bills on your behalf to making major changes to your investment portfolio.

See Roland McMillian, Coronavirus Trusts? Suddenly Estate Planning More Popular Than Stockpiling Food as Advisors Arrange Wills and Trusts for Elderly Clients, Wealth Advisor, March 17, 2020.

Special thanks to Jerry Cooper (Wealth Advisor) for bringing this article to my attention.

March 19, 2020 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)