Wills, Trusts & Estates Prof Blog

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

Saturday, May 25, 2019

CLE on The Probate Process from Start to Finish

CLEThe National Business Institute is holding a conference entitled, The Probate Process from Start to Finish, on Wednesday, June 5, 2019 from 8:30 AM - 4:40 PM at the Hilton Garden Inn San Antonio Airport in San Antonio, Texas. Provided below is a description of the event.

Program Description

Handling Probate from Initial Notices through the Estate Closing

This "a through z" guide to probate is designed to take you from the first days of the estate timeline through all the steps of marshaling and valuing estate assets, locating and paying the creditors, paying the beneficiaries, and laying the estate to rest. You will receive the latest updates on the probate court procedure and tax laws, practical guidance from experienced probate attorneys on using spousal elective share and resolving estate disputes, and sample forms and checklists to speed up the administration process. Build a solid foundation for your probate practice - register today!

  • Learn the procedure, rules and practical steps to effectively administer a probate.
  • Determine what form of administration is appropriate for a specific probate case.
  • Clarify the order of inheritance for an estate when there is no will.
  • Locate assets and obtain ownership documents more easily with a list of local and online resources.
  • Get a complete view of the sequence of events that must happen before the estate can be closed.
  • Identify common actions that trigger malpractice liability and get tips for staying in the clear.
  • Get practical advice for honoring or contesting all claims against the estate.
  • Find new ways to resolve liquidity issues that delay estate closing and final distributions and payments.
  • Learn what common closing mistakes can allow the estate to be re-opened, and how to avoid them.

Who Should Attend

This basic level seminar is designed for professionals who want to be more effective in handling the probate process, including:

  • Attorneys
  • Paralegals
  • CPAs and Accountants
  • Financial Planners and Wealth Managers
  • Tax Professionals
  • Trust Officers

Course Content

  • Initial Filing in Probate Court and Estate Timeline
  • Law of Intestate Succession
  • Inventory and Appraisement
  • Probate Property vs. Non-Probate Assets
  • Handling Claims Against the Estate
  • Tax Reporting and Post-Mortem Tax Matters
  • Ethics
  • Sale of Property and Distributions
  • Final Accounting and Closing the Estate
  • Probate Disputes and Litigation

May 25, 2019 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, Generation-Skipping Transfer Tax, Gift Tax, Intestate Succession, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Friday, May 17, 2019

CLE on Estate Planning: New Laws That Make Old Tools Obsolete

CLEThe National Business Institute is holding a teleconference entitled, Estate Planning: New Laws That Make Old Tools Obsolete, on Friday, June 7, 2019, from 10:00 AM to 11:30 AM Central. Provided below is a description of the event.

Program Description

Stay on the Cutting Edge of Your Practice

This timely update will review the latest changes in the rules and will offer new tools to adapt to the new regulatory environment. Make certain your clients get the most up-to-date representation - register today!

  • Get an incisive summary of the tax changes and their implications for existing planning tools.
  • Learn which deductions remain and how to obtain them.
  • Identify planning approaches that no longer help your clients.
  • Gain practical pointers for fixing old trusts.

Who Should Attend

This legal update is designed for attorneys. It will also benefit accountants and CPAs, trust and tax professionals, and paralegals.

Course Content

  • Leveraging and Reporting the Step Up in Basis (Recent IRS Guidance)
  • QPRT Replacements
  • Obsolete Small-to-Medium Size Estate Tools and How to Update Them
  • The Sky High Estate/Gift/GST Tax Exemption and the New Approaches it Dictates
  • Old Large Estate Techniques That No Longer Work and What to Replace Them With
  • Charitable Giving after TCJA
  • Using the QBI Deduction: New Opportunities
  • Fixing Other Old Trusts
  • What if? . . . How the Potential Clawback of the New Rules Affects Client Advice

May 17, 2019 in Conferences & CLE, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

Friday, May 10, 2019

Section 1035-Your Way Out of Obsolete Life Insurance Trusts

IrsThe estate and gift tax exemption increase has had many people wondering if they still need a life insurance trust, a tool that was once hailed for its savings potential. For some clients, dismantling existing life insurance trusts may be the smartest move—but not without considering the repercussions of that approach.

One possibility is the fact that the gift exemption may change in the future and revert back to his previous level of between $5 and $6 million. Another factor for clients is that many reside in states that are subject to separate state estate and inheritance taxes, and the majority of these states kept their thresholds at the same level as they were before the tax reform. Meaning that if state taxes were an issue for the client pre-reform, they continue to present the same issues now. Taxpayers with liability concerns regarding a business should also consider asset protection.

The process of dismantling a life insurance trust is very straight forward. The client could choose to give the policy to his or her spouse, and if there are no other assets held in the trust, that would be the end of it. Sometimes there are issues with remainder beneficiaries. But even if they do want to dismantle the trust, clients understand that they will, continue to have ongoing life insurance needs, be it providing for loved ones or using the cash value of the policy during retirement. Enter the 1035 exchange.

The IRC Section 1035 exchange rules allow the owner of a financial product, such as a life insurance or annuity contract, to exchange one product for another without treating the transaction as a sale. No gain is realized, thus there is no tax liability. To qualify, the policy owner must stay the same, except the IRS has allowed a change when the original policy insured two lives in a second-to-die policy and the exchange policy is a single product due to the death of the second person.

See William H. Byrnes and Robert Bloink, Section 1035-Your Way Out of Obsolete Life Insurance Trusts, Think Advisor, April 17. 2019.

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

May 10, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation, Trusts | Permalink | Comments (0)

Monday, April 29, 2019

Beating Bernie’s Bill in 2019

BernieIn January of this year, Senator Bernie Sanders introduced S309, otherwise known as the “For the 99.8 Percent Act” in the Senate. Because many of the propositions within the bill deal with changes in the tax code, any person involved in estate planning or wealth preservation should meet with their financial advisor to determine the appropriate steps. If passed, the Act will become effective January 1, 2020. This most likely not occur now with the current political set-up, but if the Democrats in 2020 take control of the presidency, the House, and the Senate, there is a material risk that some or all of the proposals will be enacted.

The Act rolls backs many of the changes that occurred in the Tax Cuts and Jobs Act. These alterations include lowering the estate tax exemptions to $3.5 million; reduces gift tax exemptions to $1 million; raises the highest estate tax rate to 77%; includes in the gross estate of a decedent all unrealized appreciation in their “grantor” trusts; imposes material restrictions on the use of grantor retained annuity trust (GRATs); limits the duration of dynasty trusts to 50 years, even in states that allow them in perpetuity; eliminates almost all valuation discounts on transfers of privately held entities; and virtually eliminates most Crummey powers from trusts.

As these changes run the gambit for many prudent clients, they should speak with their advisors to determine if any strategies they are using will have to be altered.

See William D. Lipkind, Beating Bernie’s Bill in 2019, WinsonNesler.com, April 25, 2019.

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

April 29, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

Thursday, April 25, 2019

CLE on Probate: Tax Return Deadlines, Preparation, Coordination and Filing

CLEThe National Business is holding a webinar entitled, Probate: Tax Return Deadlines, Preparation, Coordination and Filing, on Wednesday, May 8, at 12:00 to 3:15 PM Central. Provided below is a description of the event. 

Program Description

Walk Through the Key Tax Steps of Probate

Final tax returns are an indelible part of the probate process. If done incorrectly, they can cause undue burden on the estate and beneficiaries, keep the estate opened for years to come, and get the executors and attorney in trouble with the IRS. This essential tax guide will give you the fundamental knowledge to ensure all deadlines are met and no planning opportunities are missed. Register today!

  • Clarify the timeline of the estate and tax form procedures.
  • Learn how to use disclaimers and valuation discounts.
  • Make use of all crucial income tax planning opportunities.

Who Should Attend

This tax legal course is designed for attorneys. It will also benefit accountants and CPAs, tax professionals, estate planners, trust officers, and paralegals.

Course Content

  • Final Tax Returns Timeline, Forms and Filing Procedure
  • Estate Accounting and How it Affects Tax Returns
  • Income Tax Considerations in Probate
  • Estate, Gift, GST Tax Liability and Returns
  • Coordinating with Decedent's Accounting or Investment Advisors
  • Common Property Tax Issues

April 25, 2019 in Conferences & CLE, Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation, Trusts, Wills | Permalink | Comments (0)

Wednesday, April 24, 2019

The Rise of Gray Divorce and Disinheritance

GraydivorceThe past 25 years has seen a dramatic rise in the amount of divorces for those over the age of 50 and even 65. For the 50 and up group, divorce doubled; 65 and up saw the divorce rate triple. Many of them remarry, and this can cause dire consequences for their adult children.

When it comes to a second or third marriage, family dynamics may be split along bloodlines. When one spouse dies before the other, the entire estate may transfer to the other spouse, leaving the children of the first spouse out of luck because their step-parent may not be obligated to leave them anything.

Here are some steps that can protected an heirs inheritance when there is a gray divorce and subsequent marriage.

  • Negotiate a prenuptial agreements with the new spouse. This may take some sensitivity, but it will protected all members of the blended family.
  • Prior to the gray divorce, establish a life insurance policy with the children as beneficiaries and for it to be held in trust by a third party.
  • Sign a post-nuptial agreement if a prenup was not performed so that both parties' estate plans provide for either's spouse as well as their own children.
  • Purchase long-term care insurance so that the inevitable costs of aging do not deplete either spouse's estate.
  • Gifts during a spouse's lifetime or a fully discretionary trust that permits distributions to be sprinkled among a child and grandchildren would keep the assets out of the reach of creditors, including a divorced spouse of a child..
  • An estate plan that includes a marital trust that provides for the subsequent spouse during their life, and then at their death, distributes the assets to the children, step-children, and grandchildren in accordance with the terms of the trust.

See Nancy S. Hearne, The Rise of Gray Divorce and Disinheritance, Saul.com, April 2019.

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

April 24, 2019 in Current Affairs, Disability Planning - Property Management, Elder Law, Estate Administration, Estate Planning - Generally, Gift Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, April 22, 2019

7 Celebrity Estate Planning Pitfalls

WillCelebrities have made the news numerous times for either not performing any estate planning, or not enough planning. Here are a few things that any person can learn from celebrities mishaps to plan for different situations:

  • Plan for the unknown
    • No one has a crystal ball (that actually works), so there is a chance that after you make your will you could have a child or a child on the way that is not mentioned. The pretermitted statute of your state could allow the child to not be completely disinherited, but this could throw your entire succession plan off.
  • Plan early
    • People can die at any age, either by accident, addiction, sudden disease, or any other unfortunate tragedy. Planning early is the only way to know that your estate is in order before your death.
  • Update your estate plan
    • Every major life event can alter the way you want your assets to be distributed, whether it be the death of a family member, the birth of a child, or your own marriage.
  • Be specific
    • Do not leave anything to the discretion of the beneficiaries to separate, because this could cause discord among them.
  • Consult a tax professional
    • One of the goals of estate planning is to minimize estate taxes to maximize the gifts to your beneficiaries, and the professionals will know the most efficient ways to do it.
  • Fund the trust
    • If you establish a living trust, remember to place assets in it before you pass away. If you fail to do so, the trust will not be valid and your estate will be passed through the probate process.
  • Plan, period
    • Failure to plan and lack of proper estate planning can cost you and your beneficiaries plenty of wasted time, money and energy.

See Lerea Funderburg, 7 Celebrity Estate Planning Pitfalls, Rolling Out, April 21, 2019.

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

April 22, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts, Wills | Permalink | Comments (0)

Tuesday, April 16, 2019

California Estate Tax: Gone Today, Here Tomorrow?

RobinhoodRecently, California State Senator Scott Wiener introduced a bill that would impose estate, gift, and generation-skipping transfer tax on any transfers, both during life and at death, after December 31, 2020. California law dictates that if the legislation passes any new bill that imposes transfer tax, the law does not go into effect unless the voters approve it. So if the bill passes the California Legislation, the bill will be on the November 2020 ballot.

Under the proposed bill, taxpayers will be subject to a 40% tax rate of all transfers, same as the federal rate. There will be a credit for transfer taxes paid to the federal government to avoid double taxation. But where the federal basic exclusion amount for each type of transfer is $11,400,000 and is adjusted for inflation, the California exclusion amount will only be $3,500,000 and will not be adjusted for inflation. Among several of the issues and complexities that accompany the bill, with a full credit for federal transfer taxes, only estates between $3,500,000 and $11,400,000 will be subject to the California tax. Essentially, an estate of a Californian worth $100,000,000 would pay the same California estate tax as someone with an estate of $11,400,000. There is also no marital deduction in the current draft, but this is most likely an oversight and should be resolved.

All of the monies generated from the bill, including the transfer taxes themselves, interest, and penalties would fund the proposed Children’s Wealth and Opportunity Building Fund, which will fund programs to help address socio-economic inequality.

See California Estate Tax: Gone Today, Here Tomorrow?, National Law Review, April 4, 2019.

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

April 16, 2019 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Legislation, Wills | Permalink | Comments (0)

Monday, April 8, 2019

Article on We Can Do It? How the Tax Cuts and Jobs Act Perpetuates Implicit Gender Bias in the Code

RiveterAnne Bauer recently published an Article entitled, We Can Do It? How the Tax Cuts and Jobs Act Perpetuates Implicit Gender Bias in the Code, Tax Law: Tax Law & Policy (2019). Provided below is an abstract of the Article.

In December of 2017 Congress passed sweeping tax “reform” legislation known as the Tax Cuts and Jobs Act. This article highlights three aspects of the legislation that reflect implicit bias in the Code and facilitate the marginalization of women as a result of tax policy that fails to consider underlying demographic data with respect to the equitable distribution of tax expenditures. Specifically, this article analyzes the elimination of the alimony inclusion/deduction regime under §§ 71 and 215 of the Code, the disallowance of a deduction for legal fees associated with the settlement of sexual harassment and abuse claims that include nondisclosure agreements under § 162(q), and specific provisions designed to promote small businesses that exclude the vast majority of businesses owned by women.

This article proposes that real tax reform should endeavor to eliminate implicit bias in the Code by addressing the circumstances giving rise to the need for alimony in the first place; the barriers to success faced by women in the market, including discrimination, sexual harassment, and sexual assault; and the circumstances that propel female entrepreneurs toward the types of business models that are excluded from substantial benefits under the Code.

In order to effectuate the equitable distribution of tax expenditures and facilitate economic efficiency through tax policy, real tax reform should reevaluate the normative view of marriage, families, and traditional business models reflected in the Code taking into consideration underlying demographic data with respect to the effects of tax legislation on discrete groups of people. Further, real tax reform would adopt a more holistic approach that takes into consideration the interconnected nature of the private and public lives of women struggling to participate equitably in the market and achieve financial independence and economic self-sufficiency.

April 8, 2019 in Articles, Current Affairs, Current Events, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, New Legislation | Permalink | Comments (0)

Monday, March 11, 2019

How U.S. Tax Rules Apply to Inheritances and Gifts from Abroad

GiftAs Americans become more global within this modern society, they are asking estate planners questions about properties outside of the country's borders. One of the popular questions is whether an inheritance or gift from abroad will be taxed if brought into the United States. Usually, bequests are not subject to the income tax, and transfers by gift of property not situated in the U.S. from foreign nationals not domiciled in America are not subject to U.S. gift taxes. But depending on the circumstances, certain laws may still apply.

Foreign nationals who are green card holders are generally considered domiciled in the United States and as such are defined as lawful permanent residents. Residents and citizens are covered by one aspect of the estate and gift tax laws, and national without a green card may be considered domiciled for tax purposes. Transfers by foreign nationals not domiciled in the United States are covered by a different estate tax structure that imposes taxes on transfers of certain property situated in the United States.

If the decedent who bequeaths the asset is neither a U.S. citizen nor a foreign national domiciled in the United States, no U.S. estate tax is imposed on the transfer. There is also no tax resulting from the death transfer upon the beneficiary's receipt of a bequest. The United States also does not impose an income tax on inheritances brought into the country.

The United States has gift tax treaties which may eliminate the U.S. gift tax on certain transfers that are otherwise subject to gift taxes under the Code. An exemption from gift tax under a treaty is made on a gift tax return.

See How U.S. Tax Rules Apply to Inheritances and Gifts from Abroad, Find Law.com.

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

March 11, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Travel, Wills | Permalink | Comments (0)