Wills, Trusts & Estates Prof Blog

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

Monday, November 12, 2018

Discussing the Issue of Aging Parents

DinnerThe recent changes in the tax law may induce several families to bring up the uncomfortable topic of aging parents this holiday season. But these types of conversations can offset the possibility of any unpleasant surprises in the future.

The decision will ultimately be up to the parents, but even if children are to be the ones that bring up the subject, preparation and research should be done beforehand. Durable power of attorney, health care agent and executor are all positions that have certain responsibilities and requirements. Each one should be discussed with family members or close friends, or if those parties are not acceptable (or they decline), other arrangements should be considered.

A frank discussion of parental assets may make it easier for children to understand the overall planning objectives and decision-making process. An understanding of parental assets can also help with long and short term planning, ranging from tax strategies and charitable giving to options in the event of a long-term care illness. The increase in the standard deduction many people will no longer itemize deductions, and the increased federal estate tax exemption of $11,180,000 may make some charitable donations obsolete - for tax benefit purposes. Beneficiaries may also benefit from a step-up basis for highly appreciated assets, thus saving in capital-gains taxes.

See Kristin Shirahama, Discussing the Issue of Aging Parents, Financial Advisor, November 6, 2018.

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

November 12, 2018 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation, Wills | Permalink | Comments (0)

Tuesday, November 6, 2018

Insolvent Estates of Wealthy Decedents

Probate2The Internal Revenue Service has been emboldened by the strength of federal law and a recent case in which federal taxes were deemed a higher priority than fiduciary fees, thus creating issues for unwitting executors for insolvent (yet materially wealthy) estates. These type of estates usually involve an impressive menagerie of assets anchored with debts, such as homes with large mortgages, promissory notes in favor of closely held businesses, and high credit card balances.

The messy web of debts may also be coupled with tangled relationships with ex-spouses, children, and disputes with present or former business associates. There could be obligations from a divorce decree or settlement that must be performed before other responsibilities, so an advisor should work with the executor to lay out a plan. It should succinctly explain all assets and liabilities and a strategy for locating other assets and liabilities, and understand state statutory requirements to prioritize certain claims if the estate cannot sufficiently pay all claims. Many states are modeled after the Uniform Probate Code, but may have subtle differences.

The executor is free to negotiate with creditors in the best interest of the estate, and many creditors are willing to do so. They may believe that some money is better than no money at all.

Lastly, devise a method to protect the executor. On the opening of the estate, the executor should consider filing in the probate court a request for authority to pay fiduciary compensation and other expenses of administration, even if those expenses are still unknown at the time.

See Mark D. Brandenburg, Insolvent Estates of Wealthy Decedents, Wealth Management, October 31, 2018.

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

November 6, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0)

Monday, November 5, 2018

CLE on Estate Planning and Administration: The Complete Guide

CLEThe National Business Institute is holding a conference entitled, Estate Planning and Administration: The Complete Guide, on Wednesday, January 23, 2019 - Thursday, January 24, 2019 in San Diego, California. Provided below is a description of the event.

Program Description

Find Out How Key Estate Planning Tools are Drafted and Implemented

Every client's estate is unique in its assets composition, family dynamics and future needs, but all are ruled by the same principles and are subject to the same tax and legal limitations. In this comprehensive legal guide, experienced attorney faculty will guide you through the process of estate planning and administration and show you how to select the best trust instruments and wield them skillfully to avoid mistakes at probate. They will also teach you how to properly administer the estate and tackle potential mistakes of improperly drafted documents, changed circumstances and newly arising conflicts. Become fully prepared to protect your client's legacies - register today!

  • Get an update on the current tax regime and other key regulations.
  • Get the case off on the right foot with a thorough and thoughtful client intake.
  • Compare key trust structures and their effect on the grantor and beneficiary tax future burdens.
  • Help clients plan for and fund long-term care.
  • Ensure confidentiality before and after the client's death.
  • Get useful checklists for key dates and tasks in estate administration.
  • Clarify what can be distributed through non-probate transfers and how to do it correctly.
  • Explore creditor issues in estate administration and get trouble-shooting tips from the pros.
  • Find out how much planning can still be done after the client's passing.
  • Discuss the duties and powers of fiduciaries, their limits and real-life application.
  • Get tips for closing the estate to prevent future disputes.

Who Should Attend

This basic-to-intermediate level seminar on estate planning and administration is designed for:

  • Attorneys
  • Accountants and CPAs
  • Paralegals
  • Tax Managers
  • Trust Officers
  • Certified Financial Planners
  • Investment Advisers

Course Content

DAY 1: ESTATE PLANNING AND TRUST BASICS

  1. Key Laws and Client Intake/Goal Setting
  2. Planning for Long-Term Care and End-of-Life Decisions
  3. Testamentary Documents - Drafting Do's and Don'ts
  4. Common Trust Structures and When They're Used
  5. Transfers During Life and Inter-Vivos Trusts
  6. Tax Consequences of Trusts

DAY 2: PROBATE AND ESTATE ADMINISTRATION

  1. Probate Process Overview
  2. Marshalling Assets and Dealing with Creditors
  3. Post-Mortem Tax Planning Options
  4. Legal Ethics in Estate Practice
  5. Trust Administration and Termination Basics
  6. Closing the Estate

November 5, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Trusts, Wills | Permalink | Comments (0)

Sunday, November 4, 2018

Article on Wrongful Living

AdvdirFredrick E. Vars & Alberto Lopez recently published an Article entitled, Wrongful Living, Wills, Trusts, & Estates Law eJournal (2018). Provided below is an abstract of the Article.

Executing an advance directive that specifies a patient’s wishes regarding end-of-life medical care is an exercise of self-determination – a conscious choice about the degree and type of medical intervention one wishes to receive under end-of-life circumstances. Empirical studies, however, consistently report that healthcare professionals fail to comply with advance directives; violations of a patient’s interest in self-determination are alarmingly common. From a practical perspective, the conduct of either patients or healthcare professionals may make an advance directive unavailable, which results in noncompliance. Legally, courts have historically rejected claims for “wrongful living” associated with the prolongation of life that results from unwanted medical intervention. As a result, healthcare professionals fear the liability threatened by a wrongful death claim more than the legal exposure risked by keeping an individual alive despite a contrary mandate in an advance directive.

In response to practical concerns regarding availability, this paper proposes the creation of a nationwide registry of advance directives and argues that sanctions for violations of professional responsibility as well as the risk of liability for legal malpractice encourage utilization of the proposed registry. To realign the skewed legal incentives, this paper argues that the compensable harms associated with battery and negligence claims filed in lieu of “wrongful living” claims should include the loss of enjoyment of life. Because damages for loss of enjoyment of life are rarely mentioned by courts or scholars in the context of violating advance directives, this paper describes loss of enjoyment of life damages and argues that such damages should be compensable in the same manner that tort law compensates for similar injuries that lack an objective market value. In combination, the practical and legal proposals incentivize compliance with an advance directive and thereby expand the protection afforded a patient’s interest in self-determination.

November 4, 2018 in Articles, Disability Planning - Health Care, Elder Law, Estate Tax | Permalink | Comments (0)

Tuesday, October 30, 2018

Article on The Social Meaning of the Tax Cuts and Jobs Act

Tax actLinda Sugin recently published an Article entitled, The Social Meaning of the Tax Cuts and Jobs Act, Tax Law: Tax Law & Policy eJournal (2018). Provided below is an abstract of the Article.

This Essay exposes the moral messages implicit in the Tax Cuts and Jobs Act (TCJA). It argues that the legislation reflects values that were not openly debated or discussed in the legislative process, but are crucial to the distributional effects of the law. The TCJA reduces progressivity and increases deficits because it favors traditional families, prefers capital to labor income, treats people as detached from each other, makes charity the narrow concern of the rich, and privileges the acquisition of assets. Fairness in taxation depends on explicitly identifying social values that produce economic justice and purposely designing the law to achieve fairness

October 30, 2018 in Articles, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

The Gift Tax Return Trap and How to Avoid it

IrsEven though the gift and tax exemption was increased drastically in 2018 to almost $11.2, it does not mean that a person that does not have a large estate should not file a gift tax return. The annual tax exclusion is $15,000 per beneficiary before it starts to count against a person's lifetime exemption. The Internal Revenue Service can still impose a penalty for not filing the gift tax return at all, even in the case of not being close to the annual exclusion for a particular year or having an estate valued well below the exemption.

Gifts above the annual gift tax exclusion amount made during the year generally must be reported on Form 709. The gifts might not be taxed, because of the lifetime gift tax exclusion. But the gifts reduce the lifetime exclusion and must be reported so the IRS can track your use of the lifetime exclusion amount. When the gift is a joint gift from a married couple, each spouse must file a tax return to show that they consented to the gift.

How would the IRS know about gifts if a person never files a gift tax return when they made a gift? The agency began clamping down on unfiled gift tax returns by searching for gifts that should have been reported, both during a person's lifetime and through an audit of an estate after a person's death.

See Bob Carlson, The Gift Tax Return Trap and How to Avoid it, Forbes, October 23, 2018.

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

October 30, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation, Wills | Permalink | Comments (0)

Monday, October 29, 2018

New York Estate Tax Win Opens Floodgates for Millions in Refunds and Future Tax Savings

NyIn the matter of the will of Evelyn Seiden, the court overturned the state’s 2014 tax on the marital trust established on her husband’s death in 2010, ordering a refund of $530,000 back to her estate. This quiet case could case upheaval for many New York trust and estates, as the parties could use similar arguments to receive equally large refunds and savings. The executor’s argument boiled down to this: New York cannot tax what the IRS cannot tax.

QTIPs usually allow tax deferral, as at the first spouse’s death, assets go into a trust for the lifetime of the surviving spouse, and is not taxed until it is included in the estate of the second spouse upon their death. But because of the one-year federal estate tax repeal in 2010 and the New York state estate tax laws, the Seiden estate lawyers argued that they could avoid including the value of the trust in the widow’s estate altogether.

Bruce Steiner, a New York estate lawyer who wasn’t involved in the case, notes that it potentially applies to not just surviving spouses of New Yorkers who died in 2010, but to others who filed only New York estate tax returns.

The state has until mid-November to appeal. And the legislature could amend the tax law to apply to future estates.

See Ashlea Ebeling, New York Estate Tax Win Opens Floodgates for Millions in Refunds and Future Tax Savings, Forbes, October 25, 2018.

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

October 29, 2018 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, New Cases, Trusts, Wills | Permalink | Comments (0)

Thursday, October 25, 2018

CLE on Tax Reform: The Big Changes You Need to Know

CLEThe National Business Institute is holding a video webcast entitled, Tax Reform: The Big Changes You Need to Know, on Thursday, November 15, 2018, at 9:00 a.m. to 4:00 p.m. Central. Provided below is a description of the event:

Program Description

Don't Miss Out on This Critical Update!

The new tax law is the most significant change to the federal tax code in the past several decades, ushering in sweeping impacts for businesses and individuals alike. Do you know how it will impact your clients? How can you help clients take advantage of the new regime? Our seasoned faculty will detangle the tax changes and explore how you can apply them to your practice. Start planning now and help clients minimize their tax liability - register today!

  • Find out what we know about the tax code changes, as well as what the unexpected results may be.
  • Discover what businesses should do to adjust to the new tax law.
  • Learn what the new changes mean for real estate and buying and selling a business.
  • Delve into estate planning implications for high-net-worth individuals.
  • Find out what tax reform means for LLCs and other pass-through entities.
  • Explore the impacts of tax reform on families and average Americans.

Who Should Attend

This program is designed for attorneys. Accountants, paralegals and other professionals may also benefit.

Course Content

  1. Overview
  2. Individual Income Tax Provisions
  3. What Tax Reform Means for LLCs and Other Pass-Through Entities
  4. Corporate Tax Provisions
  5. The New Tax Law's Effects on Real Estate, and Buying and Selling a Business
  6. Estate, Gift and GST Tax Provisions
  7. Legal Ethics: Attorney Fiduciary Liability, Fraud and More

October 25, 2018 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

Sunday, October 21, 2018

Paul Allen's $26 Billion Estate Will Take Years to Unravel

PaPaul Allen had no children nor spouse to divide his vast holdings through his parent company of Vulcan, assets that included real estate, art, sports teams, and venture capital stakes. But there are many others with possible interests, including family, staff and charities, as well as potential investors.

Darren Wallace, an attorney for Day Pitney who handles estate affairs for high-net-worth clients, predicts that “even if things go along as you might expect, it could easily be three to five years." At least half his $26 billion fortune is probably earmarked for charitable purposes after he joined the Giving Pledge almost a decade ago, and an estate tax bill will apply on much of what remains.

Lori Mason Curran, Vulcan Inc.’s director of real estate investment strategy, said no changes are imminent for Allen’s network of interests, including the investment firm itself. “Paul thoughtfully addressed how the many institutions he founded and supported could continue after he was no longer able to lead them,” she said in an emailed statement, without elaborating. “Now, is the time to focus on Paul’s life and allow his family and friends space to grieve. We will continue to work on furthering Paul’s mission and the projects he entrusted to us.”

See Noah Buhayar & Simone Foxman, Paul Allen's $26 Billion Estate Will Take Years to Unravel, Financial Advisor, October 18, 2018.

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

October 21, 2018 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, October 18, 2018

Paul Allen May be Leaving Largest Estate in Washington History

PaPaul Allen constructed an empire over the 35 years after he left Microsoft that consists of funding local museums and arts festivals, sponsoring brain science and artificial intelligence research institutes, and even owning sports teams and an enormous real-estate portfolio. The disposition of possibly the largest estate in the history of the state of Washington poses many questions of the future of these endeavors, and the Internal Revenue Service will be poring through all of it.

There is familial continuity built in to the structure of Allen’s empire even though he was not married and had no children. His sister, Jody, helped carry out many of his endeavors. But there are early signs of how various pieces of the Allen empire have been subtly restructured to operate more independently. And rumors have already started about possible sales of Allen’s sports franchises, the Seahawks and Portland Trail Blazers.

Large estates such as Allen's have their assets moved into a revocable living trust. Engineered to administer an estate, a trust serves in place of a will, but is not subject to the traditional court process of probate. But the issue of estate taxes remain, with substantial estates facing the possibility of being hit with a combined federal and state estate tax rate as high as 52%.

Douglas Lawrence, a lawyer whose practice includes planning and probate matters at the law firm Stokes Lawrence, says that “It all boils down to: What’s the value of that enterprise?” He expects the process to take a full nine months, and he would not be surprised if the estate asks tax authorities for an extension.

See Matt Day, Paul Roberts, & Benjamin Romano, Paul Allen’s Death Leaves Many Questions Around What’s Likely the Largest Estate in Washington History, The Seattle Times, October 17, 2018.

Special thanks to Jay Brinker (Cincinnati Estate Planning Attorney) for bringing this article to my attention.

October 18, 2018 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Non-Probate Assets, Technology, Trusts, Wills | Permalink | Comments (0)