Wills, Trusts & Estates Prof Blog

Article on When is an Execution Error Harmless: Electronic Wills Raise New Harmless Error Issues

Susan N. Gary recently published an Article entitled, When is an Execution Error Harmless: Electronic Wills Raise New Harmless Error Issues, Probate & Property Magazine, Vol. 33, No. 6 (Nov/Dec 2019). Provided below is the introduction to the Article:

The focus of the harmless error doctrine is the intent of the decedent when the decedent created a writing the decedent may have intended to be a will. Using the harmless error doctrine, a court can excuse a defect in the execution of formalities if the proponent of a will can establish, by clear and convincing evidence, that the testator intended the writing to be the testator's will. The will formalities serve as proxies for testamentary intent, and the harmless error doctrine replaces strict compliance with the formalities with direct evidence of that intent.

Article on The Tax Cuts and Jobs Act and Charitable Giving: Impact and Planning Strategies

Julie R. Sirrs recently published an Article entitled, The Tax Cuts and Jobs Act and Charitable Giving: Impact and Planning Strategies, Probate & Property Magazine, Vol. 33, No. 6 (Nov/Dec 2019). Provided  below is the introduction to the Article:

The Tax Cuts and Jobs Act (TCJA) effective January 1, 2018, represents one of the most significant changes to the US Tax Code in decades. One area in which the TCJA appeared to formally change little was the deductibility of charitable gifts. Other changes under the TCJA, however, particularly those resulting in dramatic reduction in the number of taxpayers who itemize, have had a profound impact of charitable giving and require new strategies for charitable gift planning. This article will explore those changes and suggest opportunities to maximize the tax benefits of charitable giving under the new law.

CLE on Current Developments in Estate and Tax Planning 2019

ALI CLE and ACTEC are conducting a webcast entitled Current Developments in Estate and Tax Planning 2019 on Thursday, December 5, 2019 at 12:00 p.m. to 1:30 p.m. Provided below is a description of the event.

Why You Should Attend

Do you want to provide your estate planning clients with the best possible advice going into the new year? Are you up-to-date on the most significant developments to have come out of 2019? Set aside just 90 minutes to gain valuable insights on emerging trends in estate and tax planning, and learn how the newest cases, IRS guidance, and proposed regulations will impact your practice and your clients’ estate plans.

What You Will Learn

The faculty, all Fellows of The American College of Trust and Estate Counsel and highly-experienced estate and tax planning practitioners, anticipate discussing:

• Inflation adjustments
• IRS Priority Guidance Plan
• Court decisions of significance, including: Kress, Jones, Dieringer, Kaestner / Fielding
• Presidential candidate proposals
• SECURE Act
• Anti-clawback regulations
• Estate and gift tax proposed legislation
• Uniform basis PLRs
• PLR on §1041 & grantor trusts
• Regulations on 170 SALT limitation workaround
• IRS Chief Counsel Advice on high/low trading prices

Additional breaking topics may be added as we get closer to the date of the program.

All registrants will receive a set of downloadable course materials to accompany the program.

Who Should Attend

Estate planners and other related professionals will benefit from this CLE on estate and tax planning developments jointly offered by the ALI CLE and ACTEC.

The Wealth Tax Plan Worrying US Billionaires

Democratic presidential hopeful Elizabeth Warren has made a potential federal wealth tax a pillars of her campaign. This would evolve the system in which the US federal government gets the majority of its revenue (income tax) by not only taxing the gains on investments, but also on the principal of those investments. A federal wealth tax would hit a household’s complete net worth every year, falling on all assets including homes, portfolios of stocks and bonds, art, land, etc. 

Warren has proposed what her campaign calls an “ultra-millionaire” tax of 2%  on assets above $50 million, plus a 1% t “billionaire surtax” on assets above $1 billion. Another candidate, Bernie Sanders, has put forth a plan that starts at 1%  on net worth above $32 million, and raises taxes in steps until it arrives at 8%  for wealth over $10 billion. Bill Gates is worth $107 billion, and under Warren's plan would have to cough up $6.4 billion while under Sanders' plan his invoice would stand at $8.4 billion.

Extreme wealth inequality is the reasoning for the push for taxing a person's wealth instead of simply their income or capital gains. The Unites States has the largest wealth inequality of any developed country and as of 2012 22% of the country's wealth could be found among the .1% richest Americans.  The wealthy are no longer ashamed of avoiding taxes, though this was not the case decades ago. “The attitude of people in power matters a lot,” said Emmanuel Saez, an economist from the University of California at Berkeley who designed the ultra-millionaire tax. “Franklin Roosevelt spent a lot of time on the radio shaming tax dodgers.” 

See Brendan Greeley, The Wealth Tax Plan Worrying US Billionaires, Financial Times, November 11, 2019.

Article on Private Land Conservation and Public Policy: Land Trusts, Land Owners, and Conservation Easements

Dominic P. Parker & Walter N. Thurman recently published an Article entitled, Private Land Conservation and Public Policy: Land Trusts, Land Owners, and Conservation Easements, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

We highlight the extraordinary growth in private conservation via land trusts and conservation easements and describe the problems arising from the interplay of public finance and private decisions. We offer a framework for understanding the popularity of easements and land trusts and for evaluating policy reforms aimed at improving their performance. The framework, grounded in institutional and organizational economics in the tradition of Ronald Coase, Oliver Williamson, and Yoram Barzel, focuses on the measurement and monitoring costs faced by public and private stakeholders under current and prospective policy arrangements. We illustrate how the framework can be applied to contemporary debates about the appropriate tax treatment of donated easements, requirements that they be held in perpetuity, and the extent to which government should regulate private land trusts.

Article on Fusion: Can It Encompass the Trust? An Assessment in Light of the Trusts Bill 2017

Anna Mclean recently published an Article entitled, Fusion: Can It Encompass the Trust? An Assessment in Light of the Trusts Bill 2017, Wills, Trusts, & Estates Law eJournal (2019). Provided below is an abstract of the Article.

This paper applies the fusion debate to the most recent reform of the law of trusts in New Zealand, the Trusts Bill. The fusion debate centres around whether a distinct role for equity is needed, or whether the common law and equity can integrate to form one unitary body of law. It aims to achieve coherence in the law – where equitable and common law doctrines aim to achieve the same objectives, it is incoherent to maintain reference to two distinct sets of rules. The Trusts Bill is analysed in light of this – can equity’s traditional flexibility and conscience-based approach be seen in the Bill and in the wider reform process? These values are often used to differentiate between equity and the common law. This paper argues that the Trusts Bill does take incremental steps towards fusing common law and equity even in relation to the trust, traditionally the heartland of a distinct equitable jurisdiction. Flexibility and conscience-based reasoning do not differentiate the law of trusts as seen in the Trusts Bill from common law doctrines. The shift towards a statutorily-defined framework, the language used throughout the Bill and the underlying rationale behind reform all show incremental steps towards fusion occurring even if complete fusion cannot yet be seen. The future of fusion is left to the courts, but the Trusts Bill shows increasing fusion even in this area of the law is possible.

Why Do People Hate Estate Taxes But Love Wealth Taxes?

People of all tax brackets seems to revile the federal estate tax but are enchanted by a proposed wealth tax. They both appear to slow down wealth inequality by taxing a low number of highly fortunate Americans, so why the difference in affections? Could it be simply that the estate tax has been in force for an extended amount of time while the wealth tax is shiny and new?

Both Elizabeth Warren and Bernie Sanders have proposed net worth taxes, which is how wealth taxes are usually defined. In April, Quinnipac University conducted a poll that found that 60% of respondents liked the idea of a 2% annual tax on “wealth over $50 million”; 34% opposed the idea. However, Quinnipac also ran a survey in November of 2017 and found that 48% of respondents in support of estate tax repeal while 43% wanted it to stay in place.

When the estate tax exemption was first created in 1942, it was set at $60,000 - equivalent just below $1 million today - and stayed there for a whopping 34 years. By the time lawmakers increased the estate tax exemption in 1976, that $60,000 exemption was worth about a quarter of what it had been in 1942. Opponents fought it on different grounds, including double taxation, and it was even repealed in 2001, only to be brought back from the grave just 10 years later. With the amount the exemption is at today, 99.4% of estate are exempt from it. This means that the top 10% of American income earners pay more than 90% of the estate tax; almost 40% is paid by the richest 0.1%.

See Joseph Thorndike, Why Do People Hate Estate Taxes But Love Wealth Taxes?, Forbes, October 30, 2019.

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

Book on Wills, Trusts, and Estates: A Contemporary Approach

Lloyd Bonfield, Joanna L. Grossman, and William P. LaPiana recently published a Book entitled, Wills, Trusts, and Estates: A Contemporary Approach, West Academic (2019).  Provided below is a summary of the book.

This casebook is designed to present in a comprehensive yet streamlined fashion the law of Wills, Trusts, and Future Interests to 21st–century law students. It assists the student in developing an understanding of the core legal concepts critical to a grasp of wills, trusts and future interests in a novel format that is clear and easy to understand, while maintaining the intellectual rigor of the subject. The book covers the standard topics, but is organized in an innovative fashion. It begins with an estate planning problem which introduces the student to the craft of the practitioner, providing context for the introduction of substantive law. It then presents the law of wills law by reference to the law governing the testator, the document and the property. Attention is given to non-probate transfers, and in particular, the law of trusts, private and charitable. A model trust instrument is also provided. It concludes with a comprehensive look at future interests and the rule against perpetuities. As with other books in the Interactive Casebook Series, it challenges students to think about issues raised by the cases as they are considered in the opinion through the use of text boxes. The accompanying electronic version allows students immediate access to the full text of cited cases, statutes, articles, and other relevant materials.

Preplanning for Medicaid Benefits - a Critical Step in Caregiving [Tennessee]

In Chattanooga, Tennessee, the cost of skilled care for chronic conditions such as Alzheimer's disease within a nursing home can run as high as $7,000 to $10,000 per month. If these numbers are seem daunting, one should start preplanning now for the possibility of turning to government benefits such as Medicaid.

The path towards Medicaid eligibility for long-term care is no walk in the park; regulation changes and clarifications, application forms, modernization of online portals, and other issues can be major pitfalls for any client. Here are some tips on how to navigate the path:

• Learn about the basic benefits, resource limits, eligibility criteria, and evidence requirements at your state's government website
• Gather important asset information (Medicaid has the right to know about the last five years, known as the look-back period)
• If your assets or income exceed Medicaid's allowance, research appropriate ways to "spend down" without giving assets away or attempting to hide assets - make sure to only take advice from knowledgeable sources
• Be aware that the most common reason for a denial of benefits is insufficient evidence

See Sally Brewer, Preplanning for Medicaid Benefits - a Critical Step in Caregiving, Chambliss Law, October 4, 2019.

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

Estate Tax Can Pay Off for States, Even if the Superrich Flee

Enrico Moretti of the University of California, Berkeley, and Daniel J. Wilson of the Federal Reserve Bank of San Francisco recently conducted research on the likelihood of wealthy individuals remaining in states with estate tax by the time that they die. As expected, the older the wealthy get, the less likely they are to continue to live in states that charge estate taxes. But there is still a definite upside to state estate tax, and thus a possible reason for them to continue: estate taxes raised more money for states that had them than they lost in income-tax revenue when billionaires left to avoid the estate tax.

Many of the Democratic presidential candidates are proponents of imposing a wealth tax or even lowering the exemption amount on federal estate taxes. Unlike state estate taxes, the wealthy cannot simply move out of state to avoid the federal tax on their estate. Before President George W. Bush’s tax-cut package of 2001, the government offered a federal tax credit to cover the state tax liability, and as such many states passed estate taxes that exactly matched the available federal credit. Now, as of 2017, only 13 states impose their own estate taxes.

If all states imposed an estate tax, of course, the rich would have no choice but to pay it. Gabriel Zucman, an economist at the University of California, Berkeley, who has advised Elizabeth Warren on taxation issues, suggests that an easy way to maximize states’ estate tax revenues would be to reintroduce the federal credit, eliminating interstate tax competition.

See Eduardo Porter, Estate Tax Can Pay Off for States, Even if the Superrich Flee, New York Times, October 20, 2019.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law), Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law), and Matthew Bogin, (Esq., Bogin Law) for bringing this article to my attention.