Monday, May 22, 2023
You Take a Friend on Your Yacht. Is It a Taxable Gift?
Supreme Court Justice Clarence Thomas has recently found himself in hot water over benefits received from his longtime friend, Dallas billionaire, and political donor Harlan Crow. The controversy has given rise to important questions about judicial ethics and disclosures, and begs the question, is generosity between friends taxable?
The U.S. gift tax was established in 1924 to prevent wealthy Americans from minimizing taxable estates by transferring assets to others before death. This year, the combined gift-and-estate-tax exemption is $12.92 million per individual or $25.84 million per married couple.
However, there is a gift-tax exemption in addition to the lifetime exemption, allowing a person to make annual tax-free gifts to another individual. The 2023 limit is $17,000 per giver, per recipient, and as seen in Justice Thomas’ case, experts aim to answer when hosting a friend on an expensive vacation becomes taxable.
The answer is whether or not the giver is present. In the yacht scenario, if the giver of the boat cruise is present, the trip looks more like a party than a gift despite the fact that the price of hosting said guest exceeds $17,000.
For more information see Laura Saunders “You Take a Friend on Your Yacht. Is It a Taxable Gift?” The Wall Street Journal, May 19, 2023.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
May 22, 2023 in Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)
Sunday, May 21, 2023
Taxing Wealthy Dynasties Seen Backfiring In States Like New York
The American Economic Journal: Economic Policy published a study in May that suggests estate taxes don’t pay off in every state. Enrico Moretti, an economics professor at the University of California, Berkeley, conducted research with Daniel Wilson of the Federal Reserve Bank of San Francisco.
The pair analyzed the behavior of hundreds of prominent billionaires starting in 2001 when the US made state-imposed estate taxes more costly. The study found that estate taxes do not pay off in states with above-average income-tax rates. However, in states with low or non-existent income taxes on the wealthy, there is virtually no downside to adopting the estate tax.
Looking at the state of New York, for example, the estate tax used to bring in more revenue than it lost. However, this ended in 2017 when the state’s top rate jumped to 10.9%.
“What we’re saying is you can either be progressive on income tax or be progressive on adopting an estate tax, but if you do both it’s going to backfire,” said Moretti.
For more information see Ben Steverman “Taxing Wealthy Dynasties Seen Backfiring in States like New York” Financial Advisor Online, May 3, 2023.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
May 21, 2023 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)
Saturday, May 20, 2023
Mutation Protected Man From Alzheimer’s Disease, Hinting at Treatment
Tests showed that a man had a gene mutation that guaranteed Alzheimer’s disease to impact him in his early 40s. Scans show atrophying and other hallmarks of the disease, such as plaques and tangles of tau proteins. However, he did not experience symptoms of the disease until he was 67. He is now central to a paper published in the journal Nature Medicine earlier this month.
An intense research effort is dedicated to discovering why this man did not develop the fatal disease. Experts believe this is due to the mutation of a different gene that blocked the condition from entering his entorhinal cortex.
More than six million people in the United States have Alzheimer’s. If a drug could replicate what the gene mutation in the man was able to do, it may be possible to stave off the disease.
“This really holds the secret to the next generation of therapeutics,” said Dr. Joseph F. Arboleda-Velasquez, a cell biologist at Massachusetts Eye and Ear in Boston, Massachusetts.
A woman was identified by the same research group who was also protected from Alzehimer’s by a gene mutation, albeit a different gene. Instead of lacking plaque and tau in just a tiny portion of her brain, it was absent entirely. These two gene mutations observed in the man and woman suggest a new way to treat Alzheimer’s.
For more information see Gina Kolata “Mutation Protect Man From Alzheimer’s Disease, Hinting at Treatment” The New York Times, May 15, 2023.
Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.
May 20, 2023 in Estate Planning - Generally | Permalink | Comments (0)
Friday, May 19, 2023
Priscilla Presley and Riley Keough Reach Settlement in Fight Over Lisa Marie's Trust: 'Everyone Is Happy'
Lawyers for Priscilla Presley and Riley Keough announced earlier this week that the family has reached a settlement in the battle over Lisa Marie Presley’s trust.
This update comes after Priscilla Presely filed documents in Los Angeles Superior Court in January challenging the "purported 2016 amendment" to Lisa Marie Presley's will. She claimed that the signature appears inconsistent with Lisa Marie's customary signature and was not properly notarized. This amendment ousted Priscilla as trustee of her daughter's estate in favor of Lisa Marie's eldest daughter, Riley Keough.
Lawyers for the family told reporters, "everyone is happy. Unified and together and excited for the future."
For more information see Daniela Avila and Rachel DeSantis “Priscilla Presley and Riley Keough Reach Settlement in Fight Over Lisa Marie’s Trust: ‘Everyone Is Happy’” Yahoo! Entertainment, May 16, 2023.
Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.
May 19, 2023 in Estate Planning - Generally | Permalink | Comments (0)
Thursday, May 18, 2023
The uphill battle for LGBTQ people after death
The Louisiana LGBTQ+ End of Life Guide was published in 2022 and is considered the first in the United States. Ezra Salter, a funeral director in suburban New Orleans, felt compelled to compile resources after witnessing horror stories in the industry. Salter worked with the New Orleans non-profit Wake, which provides death-care information and resources to publish the guide.
Salter describes scenarios in which estranged family members can override prearranged funerals, including excluding what many refer to as “chosen family” from the services. This is because, in Louisiana, all powers of attorney expire at the time of death. However, Salter found that many people were unaware of this. A possible solution is setting up a Funeral and Disposition of Remains Directive, a newly minted form to determine who gets to make decisions after death.
Nicholas Hite of Hite Law Group in New Orleans explains, “For queer folks, your biological family — the people who are legally the next in line to make decisions — are frequently the last people that you want making your decisions… So you need legal paperwork allowing your most closely held individuals — who aren’t necessarily married to you or related by blood — to be in the hospital and at the funeral home with you and on your behalf.”
For more information see Katy Reckdahl and Christiana Botic “The uphill battle for LGBTQ people after death” The Washington Post, April 21, 2023.
Special thanks to Naomi Cahn (University of Virginia) for bringing this article to my attention.
May 18, 2023 in Death Event Planning, Estate Planning - Generally | Permalink | Comments (0)
Wednesday, May 17, 2023
A Story of Dementia: The Mother Who Changed
A bitter family dispute in Iowa hinged on one crucial question: When cognitive decline from dementia changes someone's personality, should we respect their new desires?
Diane Norelius of Denison, Iowa, was the center of a heated legal dispute between her daughters and her new beau over her cognitive abilities and capacity after being diagnosed with dementia in 2017.
Norelius was the sole beneficiary of a trust after her husband of 53 years passed away. After his death, Diane became tasked with making significant financial decisions for the first time in her entire life. Daunted by the task, she asked her daughter Juli to be the trustee of the Diane F. Norelius Trust. This arrangement worked for several years until Diane's personality began to change.
She found love again with a horseshoer named Denzil, and Juli began to receive questions about how the trust was being handled. Denzil tells the story of a woman finding her voice and taking control of her life. Yet her daughters describe the abusive situation of an incapacitated woman being taken advantage of.
This article explores the emotional and legal journey of a family to discover when someone diagnosed with Alzheimer’s loses their decision-making capacity and how this impacts the estate planning process.
For more information see Katie Engelhart “A Story of Dementia: The Mother Who Changed” The New York Times Magazine, May 9, 2023.
Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.
May 17, 2023 in Elder Law, Estate Planning - Generally | Permalink | Comments (0)
Intercategorical Analysis of Law
Adam J. Hirsch (Napoleon Jones Professor of Law and Herzog Endowed Scholar, University of San Diego School of Law) recently posted on SSRN his article entitled Intercategorical Analysis of Law which is forthcoming in the Washington University Jurisprudence Review. Here is the abstract of his article:
This Article advocates the routine use of intercategorical analysis in lawmaking: When formulating (or revisiting) rules within one legal category, courts, legislators, and codifiers alike should explore analogous doctrines that prevail in related categories. Such exploration may provide lawmakers with both inspiration and data relevant to formulating the doctrine under consideration. The Article offers three, disparate illustrations of how intercategorical analysis could improve our law, regarding (1) nonpossessory liens, (2) formalities for transfers of property, and (3) in rem proceedings for winding up different kinds of estates. The Article also addresses the potential relevance of intercategorical analysis when drawing the boundaries of legal categories. Finally, the Article assesses the risks inherent in intercategorical analysis and relates this mode of analysis to other “law-ands.”
May 17, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Tuesday, May 16, 2023
Charitable Remainder Trusts: A Favorable Tax Strategy that Can be Aided by Higher Interest Rates
A Charitable Remainder Trust (CRT) is a powerful way to mitigate tax burdens while also giving back to charity and an attractive tool for an estate planning tool.
A CRT is an irrevocable trust that benefits both the testator and a charity and can be an adequate income and estate tax planning tool. With a CRT, a gift can be made to a trust and retain an annual payment amount from the trust for either a lifetime or a period of years, and at the end of the trust term, the balance of the trust goes to a charity of the testator’s choice.
Assets that appreciate in value are often best suited for a CRT, as they are subject to significant capital gains taxes once they are sold. By gifting these assets to a CRT, one can avoid paying capital gains taxes upon the sale. However, income tax payments will be applicable from payments received from the trust.
For more information on CRTs, see David Oh “Charitable Remainder Trusts: A Favorable Tax Strategy that Can be Aided by Higher Interest Rates” Fiduciary Trust International, May 4, 2023.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
May 16, 2023 in Estate Planning - Generally, Trusts | Permalink | Comments (0)
Monday, May 15, 2023
Expensive Mansions That Nobody Wants To Buy
Most might assume that houses on the market struggling to sell are undesirable homes; however, many mega-mansions sit on the market with zero takers. Despite gorgeous views and fantastic architecture, celebrity homes often sit on the market longer than expected for various reasons.
To check out 150+ mega-mansions that are still on the market today, see Audrey Kyanova “Expensive Mansions That Nobody Wants To Buy” Investing.com, March 4, 2023.
Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.
May 15, 2023 in Estate Planning - Generally | Permalink | Comments (0)
Sunday, May 14, 2023
Young Lawyers Network - What All Young Trust and Estate Litigators Should Know
Josh Crowfoot (Crowfoot Law Firm) recently published an article, Young Lawyers Network— What All Young Trust And Estate Litigators Should Know, ABA Probate & Property Magazine, May/June 2023. Provided below is an introduction to the article:
So you decided litigating trust and estate disputes might be interesting. Or, perhaps, you enjoyed your wills and trusts law-school course but wanted to represent clients in court. Regardless of how you arrived at this point in your legal career, welcome. If you haven’t already, you will undoubtedly find trust and estate litigation to be a rewarding and interesting practice. The intersection of money and family is rarely, if ever, dull, particularly in litigated matters. But what should you know to ensure that trust and estate litigation will be a rewarding and sustainable practice for you? Here is some relatively brief unsolicited advice.
May 14, 2023 in Estate Planning - Generally | Permalink | Comments (0)