Wills, Trusts & Estates Prof Blog

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

Wednesday, October 19, 2022

New 2023 Estate, Gift and GST Exemption Amounts

Estate planningYesterday, the IRS released an advanced version of Rev. Proc. 2022-38 providing the annual inflation adjustments for more than 60 tax provisions to be used by individual taxpayers on their 2023 returns (to be filed in 2024.)

These updates are of particular interest to the estate planning field in regard to the following:

  • New unified credit against estate tax (impacts the gift and GST exemptions) will increase from $12,060,000 to $12,920,000.
  • Change in maximum reduction in valuation of qualified real property under Section 2032A. The new maximum decrease will be $1,310,000.
  • Increase in the “2-percent portion” of the estate tax payable under Sections 6166 and 6601. This will be $1,750,000.
  • The threshold amount for the maximum rate bracket for trusts and estates will kick in at $14,450.
  • The exemption amounts under Section 55 (phaseouts) will be $94,600 for the threshold and $208,200 for the complete phaseout amount.

Special thanks to Jim Roberts, (Glast, Phillips & Murray, PC) for bringing this to my attention. 

October 19, 2022 in Current Affairs, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Saturday, October 1, 2022

Is Choosing Death Too Easy in Canada?

Estate planningCanada recently changed its assisted death law, loosening the requirements for people to seek medical assistance to end their lives. The new law allows people with “grievous and irremediable” conditions to seek death, even if they are not terminally ill.

Canada is one of 12 countries and a handful of American states where assisted death is permitted, however, it is only one of three nations that permits assisted death without a condition being terminal. When the original law was suggested in 2016, it was a hotly debated issue that won broader public acceptance over time. But the new change is bringing back the debate, especially as the next expansion in 2023 will allow people with mental disorders to apply. Critics believe this is going too far.

Such critics include United Nations disability and human rights experts, who believe that this law devalues lives by suggesting disability is worse than death. Other critics point to the fact that the law makes medical clinicians the final arbiters of death despite no other jurisdiction treating end of life care as a standard medical practice. While proponents point out that any doctors who do not follow strict guidelines will face severe consequences, such as losing their medical licenses or facing criminal charges. They feel that the system is working well.

For more information see Ian Austen “Is Choosing Death Too Easy in Canada?”, The New York Times, September 18, 2022.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  

October 1, 2022 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

Sunday, August 21, 2022

The New Stock Buyback Tax: What It Means For Apple, S&P 500

CongressThe Inflation Reduction Act that was signed into law this week includes a 1% excise tax on corporate share buybacks that will go into effect in 2023.

A share buyback is when a public company uses excess cash to purchase shares of its own stock or make an offer to shareholders. Share buybacks reached a record high in 2021 and have already surpassed $500 billion paid out in 2022 so far. A significant percentage comes from five companies in particular: Apple, Alphabet, Meta, Microsoft, and Bank of America.

Proponents of the bill say that it is expected to raise about $74 billion over the next decade, which will be used to fund initiatives like credits to built electric cars. Experts say that the tax is not significant and likely won’t deter companies from repurchasing shares or push them towards dividends.

Since buybacks will remain tax-free through the end of 2022, some experts are preparing for a buyback frenzy, which could supports the S&P 500 at a volatile time.

For more information:

See Jed Graham “The New Stock Buyback Tax: What It Means For Apple, S&P 500” Investor’s Business Daily, August 9, 2022.

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

August 21, 2022 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

Monday, August 15, 2022

Article: Texas Estate Planning Judicial Update: Summer 2022 Edition

Gerry W. Beyer (Governor Preston E. Smith Regents Professor of Law at Texas Tech University School of Law) recently published an article entitled, Texas Estate Planning Judicial Update: Summer 2022 Edition. Provided below is an abstract of the Article:

This article discusses recent judicial developments (first half of 2022) relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters. The discussion of each case concludes with a moral, i.e., the important lesson to be learned from the case. By recognizing situations that have led to time consuming and costly litigation in the past, estate planners can reduce the likelihood of the same situations arising with their clients.

August 15, 2022 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Thursday, August 11, 2022

Inflation Reduction Act - NO Estate Tax Changes

CongressThe Inflation Reduction Act of 2022, which is a 755-page bill that tackles tax, climate, and health care, passed the Senate on Sunday. It will soon be up for vote in the House, where it is anticipated to pass.

The $700 billion package has many asking, what does this mean for the Estate Tax?

At this time, there are no changes to federal transfer taxes, gift taxes, estate taxes, or generation-skipping transfer taxes. However, with additional funding for the IRS, it is likely that the impact will be indirect, with an increase in enforcement in the form of audits and estate and gift tax returns will increase.

Bloomberg Tax Services prepared a summary, citing the big items as:

  • A 15% corporate alternative minimum tax
  • A 1% excise tax on stock buybacks
  • Numerous environmental and green energy tax credits

For more information:

See Matthew Eskrine “The Tax Impact of The Inflation Reduction Act” Forbes, August 4, 2022.

August 11, 2022 in Current Affairs, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, August 4, 2022

IRS Changes Guidelines for Inherited IRAs, Causing Confusion and Pushback

Estate planningIn February, the IRS proposed new rules for inheriting individual retirement accounts. Prior to this proposal, the rules were most recently updated in 2019, when a 10-year payout rule was introduced.

Many tax professionals believed that the 10-year rule meant that heirs could wait until the tenth year before taking any payouts, however, in February, the IRS issued guidance that requires heirs to take annual withdrawals where the owner died on or after his required date of taking distributions. This new guideline also applies to 401(k)s, however, typically employers have more restrictive payout rules. 

Many of those impacted have chosen to avoid the hassle of calculating their life expectancy and taking different distributions over nine years and instead opt to take out one lump sum payment. Kathy Houser of Ann Arbor, Mich., who previously worked as an IT professional, says “I can run a spreadsheet, but even this is making my head spin. It’s asking a lot of taxpayers.”

2021 heirs who have to take their first distribution this year, might benefit from holding off until closer to year-end to see whether the IRS or Congress makes changes to these rules.

For more information:

See Ashley Ebeling “IRS Changes Guidelines for Inherited IRAs, Causing Confusion and Pushback” Wall Street Journal, August 1, 2022.

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

August 4, 2022 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

Saturday, July 23, 2022

The wealthy now have more time to avoid estate taxes, thanks to an IRS change

Estate planningDue to recent changes from the IRS, those who have significant wealth will now find it easier to avoid federal estate taxes. The IRS improved “portability,” which is used by high-net-worth married couples expecting to owe federal estate taxes when one spouse dies. Now, surviving spouses will have up to five years, instead of only two years, to elect portability after their spouse passes.

In 2022, there is a $12.06 million exemption, meaning federal taxes won’t be levied on $12.06 million or less that is left to children or other non-spouse beneficiaries during life or at death. Anything above that will be subject to 40% estate taxes.

These new changes are made even easier by having the ability to elect portability on an estate tax return instead of having to request guidance from the IRS. While estate tax returns may cost between $5,000-20,000, that amount pales in comparison to 40% on every million dollars of the portability exemption.

For more information:

See Kate More, CFP “The wealthy now have more time to avoid estate taxes, thanks to an IRS change” CNBC, July 21, 2022.

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

July 23, 2022 in Current Affairs, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Sunday, July 17, 2022

These are America’s 10 cheapest states to live in as inflation surges

Estate planningWith current rates of inflation, some states are seeing a sharper rise in prices than others. For individuals looking to live in places where they can get more for their dollar, the following states were found to be the most affordable based on 2021 Average Cost of Living Index produced by the Council for Community and Economic Research:

  1. Mississippi
  2. Kansas
  3. Alabama
  4. Georgia
  5. Tennessee
  6. Missouri
  7. Iowa
  8. West Virginia
  9. Indiana
  10. Arkansas

For more information:

See Scott Cohn “These are America’s 10 cheapest states to live in as inflation surges,” CNBC, July 13, 2022.

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

July 17, 2022 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)

Thursday, June 9, 2022

ACTEC Releases Video on Chronic Illness and Long COVID in the Workplace

The following is from an ACTEC press release:

The American College of Trust and Estate Counsel (ACTEC) today released its video, Chronic Illness and Long COVID in the Workplace, to provide tools to help employers and employees navigate through managing Long COVID and other chronic illnesses in the workplace. The video is the College’s 19th in its monthly informational series Planning for a Diverse and Equitable Future, which is a project of ACTEC’s Diversity, Equity and Inclusivity Committee, and funded by The ACTEC Foundation.

The COVID pandemic has deeply affected the world and the workplace. Many people infected with the virus are experiencing long-term effects from their infection, known as Long COVID or Post COVID conditions (PCC). ACTEC Fellow Karen M. Stockmal interviews Erica Taylor, a staff attorney with the Atlanta Volunteers Lawyers Foundation, who is afflicted with Long COVID, to learn about her ongoing experience with this disease, talk about her strategies to combat the cognitive impacts, and offer recommendations to other Long COVID sufferers. Amy McAndrew, a labor and employment attorney with the MidAtlantic Employers’ Association, joins Karen and Erica to discuss the rights of employees and employers as they navigate Long COVID and other chronic illnesses.

Please share this video with your network. For further information about the Diversity, Equity & Inclusivity series, please visit actec.org/diversity

June 9, 2022 in Current Affairs | Permalink | Comments (0)

Saturday, May 7, 2022

The New Way to Get a Tax Break: NFT and Crypto Donations

CryptoAs popularity in nonfungible tokens (NFT) and cryptocurrencies has exploded, nonprofit organizations are trying to figure out how to navigate the acceptance of crypto donations. There is a fear of missing out on dollars, accompanied by a fear of doing something that’s going to result in noncompliance. 

The IRS treats crypto or NFTs as property, which has lead to an increase of investors donating them to charity. Donors are able to avoid paying capital-gains taxes on the assets they have held onto for longer than a year and have the option of deducting the value of the gift itself.

During the Oscars in March, a fundraiser was held for the people of Ukraine on Crypto.com, which raiser $1.6 million in donations, with 60% of the funds raised coming from the sales of NFTs that artists created for the cause. Experts suggest that fundraisers with NFT components will become increasingly popular, as it's a way to incorporate art into charity and give donors something to show for their contributions.

For more information:

See Jeremy Olshan, “The New Way to Get a Tax Break: NFT and Crypto Donations”, The Wall Street Journal, May 2, 2022.

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

May 7, 2022 in Current Affairs, Estate Planning - Generally | Permalink | Comments (0)