Wills, Trusts & Estates Prof Blog

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

Wednesday, October 21, 2020

Tax Planning by Accelerating Gain Recognition into 2020

TaxDemocratic Presidential nominee Joe Biden has recently released a tax plan which may significantly increase the capital gain tax. The plan includes a proposal, which if accepted, "would eliminate the preferred 20% rate on long-term capital gain and qualified dividends for taxpayers with more than $1 million in taxable income."

The Biden plan would subject this type of income to tax at regular tax rates, "with the highest bracket ordinary income tax rate returning to the 39.6% rate in effect prior to the Tax Cuts and Jobs Act of 2017."

"If this proposal is adopted wholesale, it would mean that capital gains subject to a 20% tax rate if recognized in 2020, could be subject to nearly double that tax rate in 2021 or 2022 (or later)."

When tax rates increases, it is possible for a taxpayer to to save income tax by accelerating income tax gain and measuring the potential opportunity cost of paying tax early. 

"By paying tax earlier, the taxpayer will not have the investment returns from funds used to pay the tax because the dollars used to pay the tax are no longer available for investment."

Below are a few ways taxpayers can cause the recognition of gain if interested in accelerating the gain and paying the income tax in 2020:

  • For those taxpayers who own highly appreciated publicly-traded stock, the taxpayer can simply sell and then repurchase the securities. The “wash sale” rule of Section 1091, which generally disallows losses when a shareholder sells securities for a loss and repurchases the same or substantially identical stock or securities, does not apply to disallow recognized gains.

  • Taxpayers who make installment sales in 2020 may elect out of installment sale treatment (causing all of the gain to be recognized in 2020 as opposed to be deferred until the future).

    Taxpayers who sold a company and reported part of the purchase price as an installment sale in prior years can generally accelerate the recognition of the capital gain on the installment sale by either pledging the note as security for a bank loan (which generally accelerates immediate recognition up to the amount of loan proceeds), or by selling, gifting, or exchanging the note. For example, taxpayers may consider gifting or selling the notes to a non-grantor trust, which would cause the gain to be recognized.

  • For taxpayers with closely-held business interests, with expectations of selling such business interests in 2021 or 2022, there are a number of ways to recognize the gain at today’s 20% rate, thereby generating basis that can be used to offset gain against sale proceeds in the future (which such proceeds may be taxable at the 39.6% tax rate)

See Stephanie J. Derks & Jason J. Kohout, Tax Planning by Accelerating Gain Recognition into 2020, Foley & Lardner LLP, October 14, 2020. 

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

October 21, 2020 in Current Events, Estate Planning - Generally, Estate Tax, Income Tax | Permalink | Comments (0)

Dementia deaths rise during the summer of COVID, leading to concern

"Deaths from dementia during the summer of 2020 are nearly 20% higher than the number of dementia-related deaths during that time in previous years, and experts don't yet know why."

Close to $61,000 people have died from dementia, a big jump from the usual $50,000 within that period. 

It is not clear why the dementia death tolls have risen, but Robert Anderson, chief of mortality statistics at the U.S. Centers for Disease Control and Prevention, stated that isolation caused by the pandemic has changed the lives of those battling dementia. 

There is a difference between social distancing and social isolation. Social isolation "leads to a sense of disconnection from the community." Unfortunately, caregivers have been forced to limit visits due to COVID-19. "Social isolation is a risk for poor health outcomes, particularly as people age. And in the U.S., 28% of those over 65 (13.8 million) live alone."

Socially isolated people also have higher rates of dementia, heart disease, high blood pressure, depression, cognitive decline and death. 

Further, the job of a caregiver for a family member with dementia is very difficult and the burnout rate is high. The job is difficult under normal circumstances, which makes it even more difficult in the unnerving times we are in now. Caregivers are also having to socially isolate themselves too, which just adds to the burden. 

Also, the access of medical care has been limited for those with dementia. 

One way to fight this awful plague is to understand your patients health goals and do the best you can to adhere to those goals.

See Laurie Archbald-Pannone, Dementia deaths rise during the summer of COVID, leading to concern, The Conversation, October 14, 2020.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

October 21, 2020 in Current Events, Disability Planning - Health Care, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Tuesday, October 20, 2020

The Law of Cryptoassets is the Law of the Horse

CryptoAkshaya Kamalnath recently published an article entitled, The Law of Cryptoassets is the Law of the Horse, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

The High Court of New Zealand, in Ruscoe and Moore v Cryptopia Limited (In Liquidation) had to decide an interesting question about whether cryptocurrencies traded on the exchange in this case have the legal status of property. If yes, there was also a subsequent question about whether such property is capable of being the subject matter of a trust. The court decided in the affirmative with regard to both these questions. This comment will focus on the former issue. After a discussion of the judgement inasmuch as the legal status of cryptoassets is concerned, this case comment will consider the implications of the decision and highlight some future areas of interest.

October 20, 2020 in Articles, Estate Planning - Generally | Permalink | Comments (0)

Article on Will Formalities in Louisiana: Yesterday, Today, and Tomorrow

Ronald J. Scalise recently published an article entitled, Will Formalities in Louisiana: Yesterday, Today, and Tomorrow, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. Wills

Louisiana’s form requirements for wills are a curious amalgam of civil and common law rules. Although the current law, which provides that a will may be executed in either olographic or notarial form, was premised upon good intentions and designed with the goal of simplicity in mind, the current state of affairs has regrettably resulted in law that is artificially and unnecessarily complex and rigid. It is a unique Louisiana product that has crystalized in the law and, in practice, results in many unnecessary intestacies today. It is time for reform. This Article dissects each of the individual requirements necessary for the making of a will in Louisiana with a goal not only of descriptive assessment but also of ascertaining whether each requirement is still necessary. This Article suggests that many — perhaps most — of the current form requirements for wills should be reconsidered, and it is hoped that this Article will provide a basis for discussion of future revision.

October 20, 2020 in Articles, Estate Planning - Generally, Wills | Permalink | Comments (0)

Monday, October 19, 2020

Having Dementia Doesn’t Mean You Can’t Vote

VoteEdward Kozlowski, who was born in Chicago 99 years ago, grew up on the farm. He often told his family about how his father walked across Siberia to come to America. 

Mr. Kozlowski enlisted in the Army Air Corps during World War II where he made four flights over Europe on D-Day. 

Mr. Kozlowski is a registered Republican who has voted in "virtually every election." “In my family, voting was the highest honor of citizenship,” his daughter, Judith Kozlowski, said. “You owed it to your country to vote; that was always the message.”

The right to vote and taking advantage of that right is something that is still important to Mr. Kozlowski, who is a resident of an independent living facility in Maryland. Understandably wary of exposure, Mr. Kozlowski did not want to vote in person,. With the help of his daughter, he was able to request a mail-in-ballot, despite him having dementia.

Although Mr. Kozlowski can become disoriented at times, he watches the news religiously and has tuned in for the presidential and vice-presidential debates. 

Mr. Kozlowski's daughter, Judith, read him the ballot in multiple short-sessions that spanned over several days. Mr. Kozlowski was able to tell his daughter which candidates he wanted to vote for, and that's all it takes. 

Although workers in nursing homes and assisted living facilities may believe that dementia disqualifies their citizens from voting and often refuse to assist them, it is simply not true. 

The only thing they need to be able to do, choose their candidate.

However, there are two considerations:

One: the person must express their interest in voting. If they express that they do not want to vote, the process should end there.

Two: If they are unable to read the ballot, you may help them but you cannot provide additional information or interpretation. 

See Paula Span, Having Dementia Doesn’t Mean You Can’t Vote, N.Y. Times, October 14, 2020. 

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

October 19, 2020 in Current Events, Elder Law, Estate Planning - Generally | Permalink | Comments (0)

Black Panther Star Chadwick Boseman Died Without A Will

BpAs you may be aware, Chadwick Boseman, the captivating actor that played the roles of Jackie Robinson, Thurgood Marshall, Black Panther, and many more, passed away on August 28, 2020. This death was one of the many heart wrenching deaths we have seen in this tough year. Boseman passed away from colon cancer which he had been dealing with for a few years, unbeknownst to the world, and even his colleagues and producers. 

Chadwick Boseman died intestate, which has been a cause for concern. Boseman's widow has filed for probate in Los Angeles, California. It has been reported that the estimated worth of Boseman's estate is $938,500. As of now, California law will govern the distribution of the estate. 

Under California Law, Boseman's widow, as his surviving spouse, is entitled to inherit the estate. "When a California resident dies with a surviving spouse and no descendants, California law provides that the surviving spouse inherits all community property and separate property."

Boseman's surviving spouse also has priority to serve as administrator of the estate. Priority for this appointment is set out in the California Probate Code. 

See Black Panther Star Chadwick Boseman Died Without A Will, Probate Stars, October 16, 2020.



October 19, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Intestate Succession, Television | Permalink | Comments (0)

Sunday, October 18, 2020

Article on When Email Fraud Meets Vesting Orders

FraudLusina Ho and Alex C.H. Yeung recently published an article entitled, When Email Fraud Meets Vesting Orders, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

This case commentary considers the novel use of the courts' statutory jurisdiction under s51 of the Trustee Act 1925 (s52 of the Hong Kong Trustee Ordinance) to vest choses in action held by a constructive trustee in another person.

It considers conflicting decisions to recover proceeds of fraud that have been held to be subject to a constructive trust under Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669.


October 18, 2020 in Articles, Current Events, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Article on Distribution of Inheritance under Islamic Law: An Appraisal of Online Inheritance Calculators

Shahbaz Ahmad Cheema recently published an article entitled, Distribution of Inheritance under Islamic Law: An Appraisal of Online Inheritance Calculators, Wills, Trusts, & Estates Law ejournal (2020). Provided below is the abstract to the Article. 

With the proliferation of the internet, new modes of access and dissemination have been invented. This paradigmatic shift is not only providing a stimulus for science and technology, but traditional fields of knowledge, such as religious studies and allied disciplines, are also among its beneficiaries. Once it was an uphill task to find a scholar well versed in Islamic inheritance law and ask for advice on the distribution of a deceased’s estate. Various online inheritance calculators have made it convenient, and to some extent, eliminated the inevitability of the consultation with scholars of inheritance. In this background, the paper analyzes some accessible online inheritance calculators and explores their strengths and weaknesses. For evaluative purposes, two benchmarks are devised: one is ‘accuracy score’ and another ‘efficiency grade’. The outcome of the assessment is mixed. Despite the accessibility of online calculators, one should not repose outright confidence without being aware of their merits and demerits. Some calculators have evolved a smooth and efficient system to solve a large number of propositions of inheritance, while others lack proficiency and accuracy.

October 18, 2020 in Articles, Estate Administration, Estate Planning - Generally, Religion, Trusts, Wills | Permalink | Comments (0)

Friday, October 16, 2020

Final regs. outline trust and estate expenses still deductible under TCJA

The IRS issued final regulations "clarifying that certain expenses incurred by, and certain excess deductions upon the termination of, an estate or non grantor trust are not affected by the suspension of miscellaneous itemized deductions for tax years 2018 through 2025." 

Section 67(g), known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, disallows itemized deductions for any tax year beginning after December 31, 2017, and before January 1, 2026. Prior to the TCJA, itemized deductions were allowed so long as their aggregate amount exceeded 2% of adjusted gross income. 

Section 67(e) discusses the computation of the adjusted gross income in regard to an estate or trust and exceptions that may arise in the computations. 

The IRS and Treasury recognized that excess deductions may consist of "(1) deductions allowable in arriving at AGI; (2) non-miscellaneous itemized deductions; and (3) miscellaneous itemized deductions."

Section 67(g) only suspends the third type of deduction. "Consequently, the proposed and final regulations provide rules for trustees to determine for a terminating estate or trust the character and amount of each deduction type and, therefore, their respective allocations to, and applicable limitations upon, the succeeding beneficiaries.:

See Paul Bonner, Final regs. outline trust and estate expenses still deductible under TCJA, The Tax Adviser, September 22, 2020. 

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

October 16, 2020 in Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

T&E TALK: The Pros and Cons of Lifetime Gifts

Estate 12.02.32 PMThe federal gift and estate tax exemption are at a record high of $11.58 million per individual, set to roll back to $5 million (adjusted for inflation) in 2026 and depending on this year's election, it could roll back even sooner. 

It may be time to take advantage of the current exemption, but first it may be helpful to consider some pros and cons of lifetime gifts. 


One major advantage of lifetime gifts is that gifting can reduce your estate tax bill. "A current gift of property likely to increase in value during your lifetime not only removes the property from your estate but also removes all post-gift appreciation..."

Another advantage is the use of two lifetime "gift-tax free" transfers that will not use up your gift tax exemption. The first one, the federal annual exclusion gift, will allow you to make tax-free gifts each year to any number of individuals up to a certain amount. Those numbers for 2020 are $15,000 per recipient. The second transfer allows you to make direct payments of tuition or medical expenses for another individual. 

There are also number of non-tax benefits of lifetime gifts. For example, gifting property will allow the beneficiary of your gift to enjoy gifted property upon receipt of the gift. 


One obvious disadvantage of lifetime gifts is that you will lose control over any assets that you give away. There are certain ways to structure a gift that will allow you access to gifted property (using a trust to gift to your spouse) just in case you need access to the funds. 

Another disadvantage may arise with gifts of appreciated property. If the gift depreciates or fails to to produce a "sufficient spot-gift investment return" there would be a disadvantage to making the gift. 

State laws can also hinder the normal advantages to making gifts. 

See Ada Clapp, J.D., T&E TALK: The Pros and Cons of Lifetime Gifts, Berdon L.L.P., September 29, 2020. 

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

October 16, 2020 in Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)