In this article, guidance is offered regarding attempting to complete a taxable gift of securities, held in a brokerage account, before the gift can be reflected on the broker’s books. In the process, some of the governing law is identified to give the reader a foundation from which to answer other questions involving brokerage accounts. The author concludes that a declaration of trust, immediately followed by a conforming directive to the broker, labeled “irrevocable,” is generally the surest approach.
Thursday, February 16, 2023
Article: Validity Assessment of Legal Will Statements as Natural Language Inference
Alice Kwak (University of Arizona), Jacob Israelsen (University of Arizona), Clayton Morrison (University of Arizona), Derek E. Bambauer (University of Arizona), and Mihai Surdeanu (University of Arizona) recently published a Paper,Validity Assessment of Legal Will Statements as Natural Language Inference, 2022. Provided below is an abstract to the Paper:
This work introduces a natural language inference (NLI) dataset that focuses on the validity of statements in legal wills. This dataset is unique because: (a) each entailment decision requires three inputs: the statement from the will, the law, and the conditions that hold at the time of the testator’s death; and (b) the included texts are longer than the ones in current NLI datasets. We trained eight neural NLI models in this dataset. All the models achieve more than 80% macro F1 and accuracy, which indicates that neural approaches can handle this task reasonably well. However, group accuracy, a stricter evaluation measure that is calculated with a group of positive and negative examples generated from the same statement as a unit, is in mid 80s at best, which suggests that the models’ understanding of the task remains superficial. Further ablative analyses and explanation experiments indicate that all three text segments are used for prediction, but some decisions rely on semantically irrelevant tokens. This indicates that overfitting on these longer texts likely happens, and that additional research is required for this task to be solved.
February 16, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Monday, February 13, 2023
Article: The Heirs’ Property Problem: Racial Caste Origins & Systemic Effects in the Black Community
Brenda D. Gibson (Wake Forest University School of Law) recently published an article, The Heirs’ Property Problem: Racial Caste Origins & Systemic Effects in the Black Community, The City University of New York Law Review, 2023. Provided below is an abstract to the Article:
This article enters the conversation about Black poverty in a new way—discussing the phenomenon of the heirs’ property ownership model as an impediment to Black wealth. As discussed in this article, heirs’ property is “family-owned land that is jointly owned by descendants of a deceased person” by intestacy. This model of property ownership is found throughout the United States, usually in places with high poverty and minoritized populations. Without more, heirs’ property seems a rather innocuous concept in property law. However, juxtaposed with the history of Black people in the United States, particularly through the lens of the South Carolina Low Country, and American systems that have birthed and nurtured incalculable inequities for us, it becomes clear that heirs’ property ownership is much more. It is both cause and effect: cause as it was birthed out of America’s racial caste system; and effect in that it has effected continued Black land loss, which ultimately threatens the culture of America’s slave descendants.
The article begins with an overview of property law’s Estates Systems, discussing the rather antiquated manner in which property rights are enjoyed in America, generally, before moving to the history of Black property ownership in America. This discussion necessarily begins with slavery, a dark but relevant period in this country’s history, as it informs the way Black people, specifically those in the South Carolina Low Country, enculturated themselves and exist to this day. In Part II, the article begins to unpack the systemic manner in which American institutions have coalesced to impede Black wealth. This part of the article details (1) how “White hands,” the USDA, one of the federal agencies charged with helping Black farmers, conspired with state and local officials to steal their land, and wealthy White developers, utilized loopholes in the law to force partition sales or simply approached an errant heir to do so. More saliently, this part of the article explains how the heirs’ property ownership model bolsters the loss of Black-owned property in the Low Country—being both the cause of Black land loss and the effect. Part II ends with a poignant reminder that the Low Country is the home of a unique culture, the Gullah-Geechee culture. This part of the article explains that this culture, which is indigenous to the Low Country and inextricably tied to the land, is endangered by the loss of Black land in the Low Country. Finally, in Part III of the article, a few solutions to the prolific loss of Black land and impediment to Black wealth are pondered.
February 13, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Wednesday, February 1, 2023
Article: A Survey of Preferences for Estate Distribution at Death Part 2: Children and Other Beneficiaries
Yair Listokin (Yale Law School) and John Morley (Yale Law School) recently published a paper, A Survey of Preference for Estate Distribution at Death Part 2: Children and Other Beneficiaries, 2023. Provided below is an abstract to the Paper:
This is the second of two papers presenting the results of a nationally representative survey of 9,000 American adults in which we asked people how they want to distribute their property when they die. In the first paper, we focused on gifts to spouses and partners. In this second paper, we focus on gifts to children, parents, siblings, and other beneficiaries. We offer several important findings. First, respondents depart to a surprising degree from the pattern of lineal familial descent favored by intestacy law. Respondents give much less to their parents than the law of intestacy currently provides and much more to siblings, extended relatives, and friends. Second, people are surprisingly generous to their stepchildren. Our respondents prefer stepchildren over every type of family member other than their spouses and their own children. This result starkly contrasts with state intestacy law, which almost never provides stepchildren anything. Taken together, our results suggest unexpectedly strong preferences for younger generations over older ones and for personal affinities over blood relationships. Our survey method improves upon prior empirical studies of probated wills by offering a less biased sample and by providing the first reliable data on unconventional families and less common beneficiaries.
February 1, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Sunday, January 29, 2023
Article: Grantor Trusts: The MVP of the IRC
Kelly M. Perez (J.P. Morgan) recently published an article, Grantor Trusts: The MVP of the IRC, 15 Est. Plan. & Comm. Prop. L.J. , 2023. Provided below is an introduction to the Article:
Since the passage of the Tax Cuts and Jobs Act of 2017 (TCJA), taxpayers have enjoyed the benefit of increased exclusion amounts for the combined gift and estate tax, and the generation-skipping transfer (GST) tax (collectively referred to herein as transfer taxes). The terms "lifetime exclusion" or "exclusion amount" generally refer to the amount that an individual can give or pass on to others during one's lifetime or at death without triggering the payment of transfer tax, currently at a rate of 40%. This ever-changing exclusion amount has been a huge focus for wealthy families, tax and estate planning practitioners, and Congress over the last few decades.
We live in an era of heightened "bonus exclusion," where the current exclusion is at an all-time nominal high (since the introduction of the estate tax in 1916) of $12.06 million in 2022, going to $12.92 million per person for 2023. Like most of the individual tax benefits under the TCJA, this increased exclusion amount is scheduled to sunset after December 31, 2025, reverting to pre-TCJA amounts. When Joe Biden won the Presidency in 2020 and the Senate flipped to a very narrow Democratic majority in 2021, including any tie-breaking vote by Vice President Kamala Harris, the planning community was upended. It was fully expected, based on then Candidate Biden's platform and comments made by the Biden-appointed Secretary of Treasury, Janey Yellen, that any tax package proposed by a Biden Administration would include some form of reduction of this bonus exclusion, or an earlier sunset. Exclusion reduction, as well as fear of the elimination of the "step-up" in basis at death rule under Section 1014 of the Internal Revenue Code (the Code), was fully anticipated by taxpayers and resulted in a flurry of anxious tax consulting and planning at the end of 2020.
While everyone was focused on the exclusion and basis planning, Democrats in Congress, with the support of the Biden Administration, also had plans to make substantial changes to the grantor trust rules under Subpart E or Part I of Subchapter J of the Code. Many of these proposed changes seemed to come out of left field. On September 13, 2021, the House Ways and Means Committee introduced a bill known as the Build Back Better Act (BBBA), which threatened to effectively gut the efficacy of grantor trust planning. The bill itself was expected; it included some ideas from the Obama Administration's General Explanations of the Administration's Fiscal Year 2015 Revenue Proposals (the 2015 Green Book), as well as revenue-raising packages enacted in 2020 and 2021. What was not predicted by most were the proposed changes to the grantor trust rules.
These proposals were, without a doubt, more profound than a proposed rollback of the gift, estate, and GST tax exclusion amounts because of the sheer broad design of a grantor trust generates endless planning opportunities for families of wealth. Once a taxpayer uses all of his or her gift tax exclusion amount, planning techniques involving the use of grantor trusts can take wealth transfer into "extra innings," because they offer opportunities to shift additional wealth without the use of the exclusion. Arguably, there is no better estate planning tool than a properly structured irrevocable grantor trust to transfer wealth from grantor's taxable balance sheet to the non-taxable side of the family's balance sheet. This is why grantor trusts are the most valuable player of the Internal Revenue Code for purposes of wealth transfer. The possibilities are almost endless.
This Article briefly reviews the grantor trust rules contained in Subpart E of the Code, and specifically focuses on the current legislative standing of grantor trusts, as well as some of the more detailed nuances of grantor trust planning. Some of these special considerations are techniques such as: (1) terminating grantor trust status; (2) "toggling" grantor trust status on and off; (3) income tax consequences; (4) the efficacy of tax reimbursement clauses; and (5) other special considerations.
January 29, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Friday, January 27, 2023
Article: The More the Merrier? Issues Arising from Co-Trustees Administering Trusts
David Johnson (Winstead PC) recently published an article, The More the Merrier? Issues Arising from Co-Trustees Administering Trusts, 15 Est. Plan. & Comm. Prop. L.J. , 2023. Provided below is an introduction to the Article:
Settlors can draft a trust to have one trustee that has the sole authority and power to administer the trust. However, settlors can, and often do, require or allow a trust to be administered by co-trustees. Co-trustees generally have equal rights to administer the trust and should administer the trust in all respects together as a unit. There are certain advantages and drawbacks to using a co-trustee structure to administer a trust. Further, there are a number of permutations that can be used to effectuate a co-trustee management structure.
The co-trustees can be any potential combination. One potential combination is a settlor and a corporate trustee acting as co-trustees. In this example, the settlor intends for the corporate trustee to take the lead on investing and accounting functions, but the settlor is involved in big picture issues and distributions. Further, co-settlors (e.g., husband and wife) can create a trust with themselves as co-trustees so they can have equal say in how the trust is administered. Further, a settlor may want a corporate trustee and a family friend to be co-trustees. The thought once again, is that the corporate trustee takes the lead on investing and accounting functions, but the family friend knows the family dynamics, the settlor’s intent and is involved in big picture issues such as distributions. There is no limit to the combinations of co-trustees or the purposes of same.
When a trust is administered by co-trustees, many issues can arise. This Article is intended to address some of the more common issues so that settlors and potential trustees can evaluate the ramifications of co-trustee administration.
January 27, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Thursday, January 26, 2023
Article: Estate Planning for Ranch Owners
Tanya Feinlieib (Langley & Banack) recently published an article, Estate Planning for Ranch Owners, 15 Est. Plan. & Comm. Prop. L.J. , 2023. Provided below is an introduction to the article:
One of the threshold questions in planning for a ranch is whether the owner intends the ranch be passed on to subsequent generations in perpetuity. While many Texas ranches are multi-generational family legacies, recreational rural properties for high-net-worth individuals are also quite common and may not hold any specific sentimental value for the owner of his or her descendants. In the latter case, the owner may expect the ranch to be liquidated during his or her lifetime or shortly after his or her death.
January 26, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Wednesday, January 25, 2023
Article: Attempting a Weekend Taxable Gift of Securities from a Brokerage Account (If You Must)
Paul M. Cathcart Jr. (Hemenway & Barnes LLP) recently published an article, Attempting a Weekend Taxable Gift of Securities from a Brokerage Account (If You Must), ABA Probate & Property Magazine, Jan/Feb 2023. Provided below is an abstract to the article:
January 25, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Tuesday, January 24, 2023
Impact of changes to bar exam
I recently posted on SSRN my article entitled Danger Ahead! – Will Your New Estate Planning Associate Know Texas Law? Here the abstract of the article:
The Texas Bar Examination has changed and may change again. Recent conversations with Texas estate planning attorneys have revealed a lack of knowledge of current and upcoming changes to the Texas Bar Examination, which are likely to result in first-year associates lacking even basic understanding of Texas wills and trusts concepts. This article explains how this situation has developed, the steps you may take to hire Texas law-prepared associates, and how you may influence the future of the bar exam.
January 24, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)
Secured Act 2.0
Albert Feuer recently posted his article entitled Secure Act 2.0: A Missed Opportunity to Enhance Retirement Equity which appears in Tax Management Compensation Planning Journal, 51 01, 1/6/23, The Bureau of National Affairs, Inc., on SSRN. Here is the abstract of his article:
SECURE Act 2.0, which was enacted on December 29, 2022, represents a missed opportunity to enhance retirement equity. The Act’s 92 provisions provide small new tax incentives to those American workers struggling to save for a comfortable retirement, larger tax incentives to those with few retirement concerns, more complex retirement tax rules, and weaken compliance rules that are primarily applicable to those with few retirement concerns.
January 24, 2023 in Articles, Non-Probate Assets | Permalink | Comments (0)
Monday, January 23, 2023
Article: ‘Reform, Reform: Aren’t Things Bad Enough Already?’: The Case of the Trusts Act 2019
Lucas Clover Alcolea (University of Otago, Faculty of Law) recently published an article, ‘Reform, Reform: Aren’t Things Bad Enough Already?’: The Case of the Trusts Act 2019, 17 J Equ, Forthcoming. Provided below is an abstract to the article:
New Zealand has recently conducted a comprehensive reform of its trust law, both reforming certain rules and restating others in the New Zealand Trusts Act 2019. Although the Law Commission intended to replace what it had, in earlier law reform efforts, described as a “tyre in a hazardous state of deflation” it is unclear whether the provisions finally enacted by Parliament are an improvement on this position. This is because the Act contains significant innovations on the existing law which are nowhere defined or explained, such as the requirement for those interpreting the act to take into account a trust’s “terms and objectives” and trustees to take into account a trust’s “context and objectives” when carrying out their duties. Equally the provisions on information rights whilst intended to guide trustees as to when to provide information are so complex that they could provide a cloak for unscrupulous trustees to unreasonably refuse requests for information or even loot trust property. Additional issues are caused by creating a vague duty for the trustees to act honestly and in good faith and the codification of the duty of loyalty as merely a default rather than a mandatory provision. The present article aims to analyse these shortcomings and suggest means by which the courts may, in due course, patch the Act before it deflates altogether.
January 23, 2023 in Articles, Estate Planning - Generally | Permalink | Comments (0)