Wills, Trusts & Estates Prof Blog

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

Monday, March 1, 2021

The 2020 Election and the Effect on Current Gift, Estate and Generation-Skipping Transfer Taxes

TaxDue to the election results and President Joe Biden taking Trump's position in the Oval Office, conversation continues to grow surrounding the area of taxes and estate planning. 

As many are aware of by now, Biden has brought forth a few proposals that will greatly impact estate planning for Americans. 

Gift tax, estate tax and generation-skipping transfer are among federal taxes that would be affected if Biden's proposals took effect.

"The gift tax (which applies to lifetime transfers) and estate tax (which applies to transfers at death) are “unified,” meaning that a single rate schedule applies to both taxes and there is a single “exemption” amount that each individual may transfer during life or at death without paying gift or estate taxes. The GST tax is an additional tax imposed on certain transfers made to persons more than one generation below the donor. The GST tax applies to transfers during life and to transfers at and after death." 

Under current law, gift, estate, and GST exemptions are currently at $11.7 million. These rates are expected to "sunset" on January 1, 2026. However, if Biden's proposals are adopted and implemented, the rates could return back to $5 million before 2026. 

Although it is not clear what changes will be adopted or made in the tax arena, it is important to stay updated and informed of what is going on. 

Some things to consider: 

  • Retroactivity and risk 
  • Disclaimer
  • Marital deduction
  • Loans and forgiveness 

See Daniel R. Donovan & Beth Abraham, The 2020 Election and the Effect on Current Gift, Estate and Generation-Skipping Transfer Taxes, Faegre Drinker, February 22, 2021.  

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

March 1, 2021 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink | Comments (0)

Wednesday, January 27, 2021

Trusts and Estates 2021 Tax Update

TaxWith the combination of the new president, Joe Biden, and the rebalancing of the House and Senate, it may be necessary to prepare for tax changes. During his campaign las year, Joe Biden announced a tax plan that "would decrease he federal estate tax exemption from the current amount of $11.7 million to $3.5 million. In addition, Biden’s tax plan, if implemented, would raise the individual income, capital gains, and payroll taxes for individuals with high levels of income. The changes to the capital gains tax would appear to be the most significant." 

The Tax Cuts and Jobs Act (TCJA) doubled the estate, gift and generation skipping transfer tax exemption to $10 million ($11.7 million adjusted for inflation) set to run from 2018 until 2025. However, with President Biden's tax plan, the exemption amount would be reduced to $5 million before the set date of the end of 2025. It is possible that the rate goes as low as $3.5 million, the amount the rate was in 2009. 

It may be necessary to take a look at your estate plan as these changes could have a big effect. You may want figure out what gifts are linked to the amount of exemption and use the exemption before it is reduced.

If you believe that these changes will or could affect you, it is imperative that you visit with an estate planner to review your financial situation and the implications of the potential tax changes.

See Trusts and Estates 2021 Tax Update, Downs, Rachlin, Martin PLLC, January 22, 2021. 

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

January 27, 2021 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink | Comments (0)

Millennials Embrace Prenups—but Through a Very Different Lens Than in the Past

Prenup Prior to the millennial takeover, prenups usually came up with young adults from wealthy families or couples entering marriages after a prior divorce(s). Now young adults of all income levels are using them for reasons apart from protecting accumulated assets. Due to the modern societal realities, there are more reasons to use prenuptial agreements. For example, the desire to keep debts separate, social-media use, embryo ownership, pet care and more. 

According to experts, one reason for the increase in use of prenups with millennial may be the fact that many of them are children of divorced parents and have seen the financial impact divorce carries. Further, the conversations surrounding money and finances before marriage is not nearly as uncomfortable or dreadful as it once was. 

Jacqueline Harounian, a partner with the law firm Wisselman, Harounian & Associates, stated, “You’re effectively negotiating your divorce agreement in advance in a way that’s more egalitarian than before.”

Some couples may use prenups to maintain separation of their finances in order to circumvent state laws that would combine their assets into marital property. Millennial also use prenups to address alimony provisions and debt issues. 

See Cheryl Winokur Munk, Millennials Embrace Prenups—but Through a Very Different Lens Than in the Past, Wall Street Journal, January 21, 2021. 

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

January 27, 2021 in Current Affairs, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, January 26, 2021

Keep Calm and Plan On: Estate & Gift Changes Ahead

TaxAs of now, the federal unified estate and gift tax exemption amount is $11.7 million per person. The exemption rate is set to automatically revert to approximately $6 million on January 1, 2026. 

However, President Joe Biden has brought forth a new proposal which could lower the exemption before 2026. When conversation began about this new proposal, many people felt more comfortable because the rebalancing of the House and Senate appeared to be a long shot. However, now that the rebalancing has occurred, the proposal will likely have more support than originally believed.

"Policy commentators speculate on possible exemption amounts as high as $6 million and as low as $3 million, and even surmise that there could be an end to the unified credit, resulting in a $3.5 million exemption from estate tax and a $1 million exemption from gift tax. . ." 

Another possible change will be elimination of the "step up" at death. There is also some speculation that the tax changes could be retroactive at the beginning of the year enacted. 

It is important to know that, as of now, these projections are merely conjecture. However, it is important, and perhaps necessary, to consider how these changes may effect you or your clients estate plans. 

See Keep Calm and Plan On: Estate & Gift Changes Ahead, Pierce Atwood L.L.P., January 20, 2021. 

January 26, 2021 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Sunday, January 24, 2021

Estate Planning for Retirement Benefits after the SECURE Act

Richard L. Kaplan recently published an article entitled, Estate Planning for Retirement Benefits after the SECURE Act, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. Estate planning

This brief essay examines one of the most significant intersections of Elder Law and Trusts & Estates – namely, distributions from defined contribution retirement plans after the participant dies. Particular attention is paid to recently enacted statutory changes, including the end of so-called “stretch IRAs,” which allowed non-spouse beneficiaries to spread withdrawals from inherited retirement accounts over their lifetimes. This essay also addresses strategic considerations in designating beneficiaries for such accounts.

January 24, 2021 in Articles, Current Affairs, Current Events, Estate Administration, Estate Planning - Generally | Permalink | Comments (0)

Thursday, January 21, 2021

So Many Have Died: COVID-19 in America's Nursing Homes

COVIDAs of late September 2020, 77,000 residents and staff of long-term care facilities have died of COVID-19 with adults 65 and older accounting for 79 percent of COVID-19 deaths in the United States. This number is exceptionally troublesome given the fact that the age group only accounts for 15.2 percent of the population.  

Why so many deaths? 

Well, the residents in nursing homes are much older and more fragile, leaving their immune systems more susceptible. Further, "the top three underlying conditions for those hospitalized with COVID-19 (heart disease, chronic lung disease, and diabetes) rise with age, posing a greater risk to those is nursing homes and similar facilities.

The high infection rate results from a combination of factors which are shown below:

  • Problems with high infection control in nursing homes, a long-time issue that the pandemic has exacerbated.  
  • Chronic lack of personal protection equipment (PPE) 
  • Failure to separate COVID-19 cases from non-covid residents 
  • Nursing home designs that make it easy for infections to spread
  • Staffing shortages made worse by the pandemic, and
  • Inadequate testing 

From a practical standpoint, in order to control the increasing death rate and lower the COVID-19 cases in nursing homes, these issues will need to be addressed.

See David English, So Many Have Died: COVID-19 in America's Nursing Homes , ABA: Probate & Property, Jan/Feb 2021. 

January 21, 2021 in Current Affairs, Current Events, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, January 19, 2021

State Death Tax Hikes Loom: Where Not To Die In 2021

TaxDue to the economic hardships many states are facing in the wake of the pandemic, many are looking to find revenue from death taxes. 

The District of Columbia has already put an estate tax levy in place that went into effect on January 1, 2021. The "Estate Tax Adjustment Act" reduced the exemption from $5.67 million in 2020 to $4 million for individuals who died on or after January 1, 2021. For reference, "a resident dying in 2021 with a taxable estate of $10 million would owe nearly $1 million in estate tax to D.C." 

Seventeen other states have imposed their own estate or inheritance taxes that are separate from the federal estate tax. As of now, the estate tax exemption is $11.58 million per person, but is set to drop back down to $5 million per person (adjusted for inflation). 

Conversation has developed over President-elect Joseph Biden's tax plan proposal which calls for the federal estate tax to go back down to $3.5 million per person, which was the level in 2009. 

The revenue from these taxes could possibly be used to help rebuild the country and repair the damage done by the pandemic. 

See Ashlea Ebeling, State Death Tax Hikes Loom: Where Not To Die In 2021, Forbes, January 15, 2021. 

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

January 19, 2021 in Current Affairs, Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Monday, January 18, 2021

Mickey Mantle baseball card shatters record, sells for $5.2 million

MickeyA Mickey Mantle baseball card sold for $5.2 million, crushing a 5-month-old record for highest-selling sports card of all time. 

The card, a 1952 Topps Mickey Mantle PSA 9—PSA is a grading system used for sports cards with a range from 1-10. The prior record was held by a one-of-one Mike Trout rookie card that sold for $3.94 million in August. Legend has it that there are only 6 PSA 9s of the Mantle card. 

Who purchased the card? Rob Gough, an actor who acquired the streetwear brand Dope in 2017. Gough stated, "The 1952 Topps Mantle is the holy grail of sports cards. As a kid ripping packs in the '90s, I always dreamt of owning one. . . I felt this Mantle was highly underpriced." 

Apparently, thousands of 1952 cards were dumped into the Hudson River in 1960 after overproduction. 

"Since August, Gough has amassed a 1916 Sporting News Babe Ruth rookie, a 1917 Collins-McCarthy Joe Jackson and several PSA 10 Michael Jordan rookie cards among others." 

The sale of the card is just one of many in the recent surge in big-money sports memorabilia—particularly rookie cards. 

See Dan Hajducky, Mickey Mantle baseball card shatters record, sells for $5.2 million, ESPN, January 14, 2021. 

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

January 18, 2021 in Current Affairs, Estate Planning - Generally, Sports | Permalink | Comments (0)

Thursday, January 14, 2021

Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client's will

Estate planningThe Georgia Supreme Court has suspended a state appeals judge and is engaging in an ethics investigation. 

The judge, Christian Coomer, allegedly made himself a beneficiary and his wife the executor when drafting wills for a former client. Coomer has also been accused of drafting an irrevocable trust for the client that designated Coomer as the trustee and beneficiary with the power to transfer funds to himself while the client was still alive. 

"A company owned by Coomer is also accused of borrowing $369,000 in a series of three loans from the client, the first of which was paid off on the day that the second loan took effect. Two of the loans listed the client’s own home as security, which Coomer later attributed to a scrivener’s error. The third loan was unsecured. Coomer has since repaid all of the loans." 

Coomer began representing James Filhart, the former client who is now 79-years-old, when Filhart sought guardianship of his girlfriend in a nursing home. 

According to the Georgia Judicial Qualifications Commission, Coomer transferred funds from his campaign account to his law firm account to cover minimal or overdrawn balances.

Coomer agreed to the suspension (with pay), but has denied any wrongdoing. 

See Debra Cassens Weiss, Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client's will, ABA Journal, January 6, 2021. 

January 14, 2021 in Current Affairs, Current Events, Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0)

Wednesday, January 13, 2021

David Bowie's estate launches a new TikTok account with his iconic hits and music videos to celebrate the late rocker's 74th birthday

BowieDavid Bowie's estate launched a TikTok account on what would have been his 74th birthday. TikTok announced that David Bowie, who died in 2016 at the age of 69, would be celebrated with a new account that will share his back catalog.

Also, Bowie's music will be available to the TikTok community as Bowie's dedicated page will include iconic videos from over five decades in the industry. On January 10th, TikTok launched the Starman challenge to mark the pass of five years since Bowie's death. 

"The hashtag challenges users to celebrate Bowie's life and work by recreating his iconic looks over the years to the track Starman, the lead single from his 1972 album The Rise and Fall of Ziggy Stardust and The Spiders." 

Paul Hourican, Head of UK Music Operations at TikTok stated, "He remains one of the most influential and acclaimed artists of all time and his music has defined multiple generations and cultural moments. We know the excitement our community will find discovering his music and creating using the indisputable Bowie sound." 

See Roxy Simons, David Bowie's estate launches a new TikTok account with his iconic hits and music videos to celebrate the late rocker's 74th birthday, Daily Mail (U.K.), January 8, 2021. 

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

January 13, 2021 in Current Affairs, Current Events, Estate Planning - Generally, Music, Technology | Permalink | Comments (0)