Wills, Trusts & Estates Prof Blog

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

Saturday, June 27, 2020

Article on Proposed Technical Corrections for Cash-Flow Relief Provisions of the Cares Act for Individuals with Savings or Retirement Benefits

Albert Feuer recently published an Article entitled, Proposed Technical Corrections for Cash-Flow Relief Provisions of the Cares Act for Individuals with Savings or Retirement Benefits, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article: Unknown

The CARES Act provides cash-flow relief for individuals who want to access their savings and retirement plan benefits without adverse tax consequences. There are significant outstanding issues with those provisions. The article discusses and proposes technical corrections to address three such issues.

• Is there a single certification procedure to determine who is eligible to access their own savings and retirement benefits? The HEROES Act, the multi-trillion-dollar proposal to supplement the CARES Act that the House of Representatives approved in mid-May, addresses this issue differently than both the IRS guidance and the article’s proposal.

• Are those eligible to so obtain their own benefits defined sufficiently broadly? The HEROES Act broadens the eligibility for the Covid-19 enhanced family and medical care leave relief. The Act does not address the far narrower CARES Act eligibility criteria for individuals who wish to access their own savings and retirement benefits.

• Is there an unambiguous and intuitive method to determine the new amortization schedule for an eligible individual who wishes to take advantage of the CARE Act deferral of 2020 due dates for plan loans? The HEROES Act, again, does not address this issue.

The article also proposes a state law change to prevent adverse state and local personal income tax consequences for plans, participants, and beneficiaries who wish to take advantage of the cash-flow relief of the CARES Act to access their own savings and retirement benefits. For example, the CARES Act permits in-service distributions that would otherwise cause savings and retirement plans to lose their tax-exemption. State and local tax laws that are not coupled with the Internal Revenue Code may tax plans that decide to provide such cash-flow relief, and also prevent participants and beneficiaries from deferring tax on their plan benefits. The article therefore presents a technical correction to state and local personal income tax laws that conformed to the Code before the enactment of the CARES Act, such as those of New York State, to assure that those laws conform to the Code provisions changed by these relief provisions and only those provisions.

June 27, 2020 in Articles, Current Affairs, Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Monday, May 18, 2020

CLE on Estate Planning Strategies in an Era of Low Interest Rates and Volatile Markets

CLEThe American Law Institute is holding a webcast entitled, Estate Planning Strategies in an Era of Low Interest Rates and Volatile Markets, on Wednesday, June 3, 2020 at 1:00 - 2:00 p.m. Eastern. Provided below is a description of the event.

Why You Should Attend

While the pandemic has brought our economy to its knees, the resulting bear market of depressed asset valuations and record-low interest rates provides some incredible estate planning opportunities designed to take advantage of this kind of environment. This one hour webcast, taught by two highly experienced practitioners, will explore specific strategies available during a market decline that may help to reduce potential estate taxes and fulfill your clients’ estate planning goals, including the use of trusts, notes, gifts, and charitable giving.

What You Will Learn

Topics include:

• Grantor retained annuity trusts (GRATs), including GRATs as gifts and buying back assets from depressed or appreciated GRATs

• Charitable lead annuity trusts

• 2020 valuations

• Low interest notes and sales

• Refinancing notes

• Charitable giving

• Gifts of depressed assets

• Disclaimers as a hedge

• Why high volatility means higher discounts

• Spreading out transfers of gifts, GRATs, and sales


All registrants will receive a set of downloadable course materials to accompany the program.

Who Should Attend

All estate planners and financial advisors will benefit from listening to this webcast on estate planning strategies with low interest rates and unstable financial markets.

May 18, 2020 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Friday, May 15, 2020

Article on What Works in Online Teaching

OnlinelearningMargaret Ryznar recently published an Article entitled, What Works in Online Teaching, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article. 

This Article offers lessons from an empirical study of an Online Trusts & Estates course. More than 280 law students were surveyed over three semesters on what works well for them and what does not in this online course. Their top three answers in each category serve as guidance for faculty creating online courses.

May 15, 2020 in Articles, Current Affairs, Current Events, Estate Planning - Generally, Teaching, Technology | Permalink | Comments (0)

Tuesday, May 12, 2020

Does Little Richard’s Son Inherit his $40 Million Career or Will God Get Everything?

LittlerichardThe legendary musician Little Richard helped revolutionize music, bringing forth the rock-and-roll movement. It is rumored that he earned $40 million over his decades long career, but the question is how much of that is left? And who will it pass on to?

Richard's 49-year-old son Danny may be getting a portion of it, whether by default or design, as they remained on good terms during the musician's life. But the assets that could be inherited are questionable. Unfortunately, he sold the publishing rights to his songs in the mid-1950s and the intellectual property eventually ended up at Sony. Unlike for children of other older musicians, there is no vast copyright library to harvest income for future generations, nor a secret archive of unreleased recordings.

Hologram projections of his father may not be Danny's forte, as it is known that he is an individual that values his privacy.Richard's surviving siblings are too old to attempt to push the hologram feature, and the traditional churches he associated with are most likely not interested, either. 

See Scott Martin, Does Little Richard’s Son Inherit his $40 Million Career or Will God Get Everything?, Wealth Advisor, May 11, 2020.

May 12, 2020 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Music | Permalink | Comments (0)

Sunday, May 10, 2020

Heirs May Have to Return Stimulus Money Sent to the Deceased, But How and When?

StimuluscheckA number of family members or heirs of deceased loved ones recently received an unexpected stimulus check for the person that died. Some of the payments included a notation that the recipient was deceased, so they questioned if the payment was intentional or not. U.S. Treasury Secretary Steve Mnuchin said heirs should be return money that was sent in the name of someone who died, but did not elaborate.

So far, the government is not reporting exactly how many dead people were sent checks, but has said that it was an unintentional side effect of attempting to send out the checks to people as fact as possible. There is conflicting information if they already spent the money, or whether or not they have rights to the money as the recipient's natural heir. In a transcript of a April 17 White House briefing President Trump was asked about checks to dead people. He said, "we'll get that back."

See Connie Thompson, Heirs May Have to Return Stimulus Money Sent to the Deceased, But How and When?, April 29, 2020.

May 10, 2020 in Current Affairs, Current Events, Elder Law, Estate Planning - Generally | Permalink | Comments (1)

Friday, May 8, 2020

Some Small Businesses That Got Aid Fear the Rules Too Much to Spend It

PPPThe federal government's recent small business loan program to assist during the coronavirus pandemic appears to be a welcome reprieve, but the rules that allow the loans to be forgiven outright may be too stringent. What was meant as a lifeline to employers and employees alike, the Paycheck Protection Program was created to assist in payroll costs, but instead may create more stress for its recipients.

Under the program’s rules, George Evageliou, founder of a Brooklyn custom woodworking company, has eight weeks from the day he receives the cash to spend it. The clock started April 14, but he cannot bring his employees back while New York City is still relatively closed. If after the 8 weeks up and the city is still shut down, he will again have to lay off his 16 workers.

Many of the small businesses that received the loans are sitting on the money, unsure about whether and how to spend it. A number of the owners do not see the point in bringing back employees while business is so slow, and others believe the eight week deadline to spend three-quarters of the loan is far too short. The Treasury Department and the Small Business Administration has clearly defined the restriction: for the loan to be forgivable, businesses have to spend at least 75% of it on payroll. If not, the borrower will pay interest of 1% on any portion of the loan that is not forgiven.

Accounts, lenders, and lawyers alike appear to be mystified by the ambiguous wording of the Program. As such, they are giving tentative advice to clients and are anxiously waiting further instruction from the Small Business Association and Treasury Department.

See Stacy CowleyEmily Flitter and Some Small Businesses That Got Aid Fear the Rules Too Much to Spend It, New York Times, May 2, 2020.

Special thanks to Matthew Bogin, (Esq., Bogin Law) for bringing this article to my attention.

May 8, 2020 in Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, May 5, 2020

Article on How the CARES Act Takes Care of an Individual's Savings and Retirement Benefits

CARESAlbert Feuer recently published an Article entitled, How the CARES Act Takes Care of an Individual's Savings and Retirement Benefits, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article.

The CARES Act forgives federal student loan payments with due dates between March 27, 2020 and September 30, 2020 and suspends the minimum required distribution rules for distributions otherwise due during the 2020 calendar year. The CARES Act also provides cash flow relief for qualified individuals with savings and retirement benefits by enhancing provisions for direct loans and indirect loans (repayable distributions) of such benefits.

Guidance is needed to address at least six major issues. Who are qualified individuals, and how may they may be determined? What notices are required pertaining to the enhanced loan provisions, and to the enhanced distribution provisions? What is the DOL position with respect to fiduciary responsibility requirements pertaining to the enhanced direct and to the indirect loan provisions? Must plans defer loan payment due dates by qualified individuals for due dates between March 27 and December 31, 2020 in the same manner as IRS Notice 2020-23 requires plans to do so for all participants and beneficiaries for due dates between April 1 and July 14, 2020 How do plans determine the new amortization schedule for those deferring such payments? Must plan administrators give qualified individuals the right to avoid withholding on the enhanced distributions that the Act calls coronavirus-related distributions in the same manner that plan administrators must do so for all participants and beneficiaries on the distributions that would be 2020 required minimum distributions, absent the CARES Act? May qualified individuals repay all or only some coronavirus-related distributions within three years to an eligible retirement plan?

The longer this guidance is delayed, particularly with respect to the definition and the determination of a qualified individual, the longer will the relief to individuals needing such relief be delayed and the longer will those individuals be unaware of the available relief.

May 5, 2020 in Articles, Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0)

Leveraging Gifts in a Down Market

TaxcalcWealthy families generally take advantage of down markets during recessions when the tax advantages can be at their highest. 2020 has the unique benefit of having an extremely high federal lifetime estate tax exemption of $11,580,000 for an individual. The law is to sunset in 2025, unless it is extended, so in 2026 it may as well revert to pre-TDCJ amounts. The IRS has clarified that if you gift now, while the exemption is high, it will not count against you when the exemption decreases later.

You can generally make two types of gifts to take advantage of the transfer of wealth in a down market: making gifts equal to the gift tax exemption amount of $15,000 per recipient, making lifetime gifts that utilize all or a portion of your lifetime estate tax exemption amount. In doing such gifting, the property as well as any appreciation of the asset will no longer be considered in your taxable estate.

A word of caution, however: a person who receives the gift will receive your cost basis in it - carryover basis. So if you had purchased the asset low and it had appreciated before you gifted it, when the recipient sells the asset, the capital gains will be found using your purchase price. Alternatively, if you gift an asset at death that the recipient later sells, the capital gains will be calculated at the price it is valued at the time it was gifted to them. This is why investors usually look for assets that have a high cost basis when making a gift, and a low cost basis when keeping assets in their estate.

See Rebecca MacGregor, Leveraging Gifts in a Down Market, Lexology, May 4, 2020.

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

May 5, 2020 in Current Affairs, Current Events, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0)

Monday, May 4, 2020

The Tiger King and an Unexpected Lesson on Estate Planning

BaskinHey all you cool cats and kittens! Episode 3 of the recent Netflix hit Tiger King focused on the disappearance of the husband of the protagonist's arch-enemy. Joe Exotic was sentenced to federal prison for animal abuse and his part in a murder-for-hire plot against Carole Baskin. Baskin's former husband, millionaire Don Lewis, disappeared in 1997 and was declared dead in 2002. Though the man had a will and a trust for his children from a prior marriage, the episode insinuated that the documents were fraudulently altered.

According to the documentary, Lewis sought an injunction against Baskin after she allegedly threatened to kill him, possibly even for a second time. The adult children from his prior marriage claim that there was talk of divorce and suggested that Lewis had attempted to arrange his affairs to minimize any entitlement of Baskin when they separated. The episode also claimed that Lewis gave his assistant, Anne McQueen, an envelope that contained his will and power of attorney, naming McQueen as his agent and executor. The assistant also said that Lewis had told her to take the envelope to the police is anything should befall him. Supposedly, Baskin broke into the office and took the documents before presenting a different will and power of attorney to the court, with her as the agent and executor.

This new power of attorney indicated that it was prepared by Baskin and contained an eyebrow raising line: "This durable family power of attorney shall not be affected by any disability or disappearance.” In most jurisdictions, proof of the person’s death, either in the form of a death certificate or court order, is required in order to obtain probate and proceed to administer the estate. McQueen claims that Baskin filed for a court order to declare Lewis death "immediately" after the statutory five year period.

See Peter Askew, Tiger King: Murder, Mayhem, Madness and…Lessons About the Law of Estates?, April 1, 2020.

May 4, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, Television, Wills | Permalink | Comments (0)

Saturday, May 2, 2020

Article on The Secret Life of Testamentary Schemes

WillRichard F. Storrow recently published an Article entitled, The Secret Life of Testamentary Schemes, Wills, Trusts & Estates Law eJournal (2020). Provided below is the abstract to the Article.

The testamentary scheme, a poorly understood interpretative tool used by courts to determine the meaning of a will’s dispositive provisions, is insufficiently theorized in both case law and scholarly commentary. Based on a painstaking study of testamentary schemes in context, in this article I raise and defend three propositions: (1) a testamentary scheme is a dominant purpose that is intrinsic to the will; (2) a testamentary scheme is most appropriately used (a) to bring plain language into sharper focus or (b) to fill omissions in dispositive provisions; and (3) if a testamentary scheme can do either (2)(a) or (2)(b), there is no need to resort to evidentiary presumptions.

May 2, 2020 in Articles, Current Affairs, Estate Planning - Generally, Wills | Permalink | Comments (0)