Wills, Trusts & Estates Prof Blog

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

Tuesday, May 14, 2019

Comment on Retiring the One-Party Consent Statute for Long-Term Care Residents' Rooms

NursinghomeLynsie Zona recently published a Comment entitled, Retiring the One-Party Consent Statute for Long-Term Care Residents' Rooms, 50 Ariz. St. L.J., 1347-1378 (2018). Provided below is the introduction to the Comment.

A recent article in the Arizona Daily Star opened with a heartbreaking story: A woman learned that her father had not received a critical medication during a month's stay at an assisted living facility. His health declined rapidly, and he died a few months later. The article featured an interview with a Tucson attorney, who noted that litigation often prompts long-term care facilities to make improvements. According to the attorney, "[i]f facilities are being looked at and watched more closely, they generally will attempt to do better." But litigation comes too late for some families hoping to protect their loved ones. Instead, families may turn to technology to watch their relative's facility more closely and ensure their loved ones are being cared for properly.

The use of an electronic monitoring device ("EMD"), such as a camera, in a long-term care resident's room raises critical ethical and legal questions regarding privacy and responsibility. Currently, most states, including Arizona, rely on wiretapping statutes to govern the use of EMDs in long-term care residents' rooms. In theory, long-term care residents in one-party consent states should be able to capture conversations to which they are a party without seeking the permission of any other party. But the nuanced environment of long-term care complicates the legal analysis, because a resident's room is a home, a health care facility, and a workplace. In states with one-party consent statutes, reliance on wiretapping statutes is inefficient, and exposes facilities and residents to unnecessary risks through uncertainty about rights and responsibilities. Tailored statutes governing EMDs in long-term care facilities clarify the rights and responsibilities of facilities, residents, and residents' family members.

EMD legislation addresses a modern reaction to enduring concerns about inadequate treatment in long-term care facilities. These laws require facilities to permit a resident to use an EMD and outline responsibilities of facilities, residents, and family members. While efforts to legislate the use of EMDs in long-term care facilities span nearly two decades, success has been slow. Only six states have passed legislation addressing EMDs in long-term care facilities. But several factors indicate that EMD legislation may become more popular in state legislatures. First, advances in technology have made it easier than ever to capture and share disturbing videos of elder abuse or neglect in long-term care facilities. A rash of news stories featuring these videos have captured public interest, drawing attention to EMDs. Second, families are interested in using technology to "validat[e] good care." One study found that more than half of individuals with a relative in a nursing home would be likely to request a camera in their relative's room. Finally, the discourse surrounding the most recent EMD legislation suggests that stiff resistance from the long-term care industry may have softened a bit. But the long-term care industry remains wary of efforts to permit residents to install EMDs in their rooms.

This Comment advocates for balanced, thoughtful legislation that permits long-term care residents to use an EMD without interference, but allows a facility to adopt custom EMD procedures. Although the proposed statutory language could benefit any one-party consent state, the approach is tailored for Arizona. The state's demographics, and a recent Arizona Supreme Court decision addressing claims of elder abuse, make Arizona an ideal framework for EMD legislation analysis. Part II examines Arizona law addressing elder abuse, then describes ongoing struggles within the long-term care industry. Part II.C provides a brief overview of one-party consent laws, focusing on Arizona's wiretapping statute. Part III.A describes the privacy concerns surrounding EMDs in long-term care residents' rooms. Part III.B highlights failed EMD legislation efforts and explores the strength of the long-term care industry's influence in state legislatures. Part III.C introduces EMD legislation in four one-party consent states and compares key provisions. Part IV draws upon the provisions in Part III.C and proposes EMD legislation language for Arizona that balances a family's desire to protect a long-term care resident while providing flexibility for the facility.

May 14, 2019 in Articles, Current Affairs, Disability Planning - Health Care, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Sunday, May 12, 2019

CLE on Medicaid Update 2019: Knowledgeably Advise Clients on the New Medicaid Changes

CLEThe National Business Institute is holding a seminar entitled, Medicaid Update 2019:Knowledgeably Advise Clients on the New Medicaid Changes, on Thursday, June 6, 2019, from 9:00 AM to 4:30 PM at the Illinois Business & Industry Services in Naperville, Illinois. Provided below is a description of the event.

Program Description

Knowledgeably Advise Clients on the New Medicaid Changes

Do you have the most current information relating to the impact of the new Medicaid changes? Are you confident in your ability to advise your clients due to these changes? Join us at this seminar to not just learn what changes have been made, but also gain insight into how the changes will affect your clients. Get yourself up to speed - enroll today!

  • Gain valuable insight into Medicare Part A through D so you can help clients ensure that hospital services, medications and medical visits are covered.
  • Help clients make smart financial planning decisions with a solid understanding of the new framework.
  • Avoid precedence conflicts by analyzing the new federal reforms versus your state's Medicaid policies.
  • Review the possible financial outcomes and get tips for helping with planning decisions in light of the Medicaid changes.
  • Guide clients through the Medicaid qualification process by knowing what's involved.
  • Translate the recent Medicaid reforms into the day-to-day practice skills you'll need to advise your clients.
  • Understand limitations on Medicare, long-term insurance and HMO coverage so your clients can plan for uncovered expenses.

Who Should Attend

This basic level seminar is designed for those who need to stay current on the latest in Medicaid law and practice, including:

  • Attorneys
  • Accountants
  • Insurance Professionals
  • Nursing Home Administrators
  • Paralegals

Course Content

  • State and Federal Medicaid Laws Update
  • Qualifying Clients for Medicaid and Medicare Benefits
  • Planning Tips and Traps
  • The Medicaid Application and Appeals Process
  • Understanding Medicare Parts A Through D, Veterans' Benefits and the Impact on Medicaid Benefits
  • Limitations on Medicare, Long-Term Insurance and HMO Coverage
  • Medicaid Estate Recovery

May 12, 2019 in Conferences & CLE, Current Affairs, Disability Planning - Health Care, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Friday, May 10, 2019

CLE on Qualified Opportunity Funds and Opportunity Zones: What Estate Planners Need to Know

CLEThe American Law Institute is holding a webcast entitled, Qualified Opportunity Funds and Opportunity Zones: What Estate Planners Need to Know, on Thursday, ‎May ‎30, 2019, 12:00 to 1:30 pm Eastern. Provided below is a description of the event.

Why You Should Attend

The 2017 Tax Cuts and Jobs Act includes a new tax incentive provision that is intended to promote investment in economically distressed communities, referred to as "Opportunity Zones." Through this program, investors can achieve significant tax benefits: deferral of gain on the disposition of property to an unrelated person until December 31, 2026 so long as the gain is reinvested in a Qualified Opportunity Fund (QOF); elimination of up to 15% of that gain; and potential elimination of tax on gains associated with the appreciation in value of a QOF.

This webcast, taught by highly-experienced estate planning practitioners and Fellows of the American College of Trust and Estate Counsel (ACTEC), will focus on the critical tax rules that you need to know in advising your clients on investing in and establishing QOFs. Particular emphasis will be placed on the estate planning challenges and opportunities that can be presented through such investments.

What You Will Learn

Topics include:

  • The income tax consequences resulting from the death of a taxpayer who has deferred gain through a timely reinvestment of such gain in a QOF
  • The consequences resulting from the gift of an interest in a QOF including with respect to the tacking of holding periods
  • The impact of holding QOF investments through grantor trusts, and whether the ordinary tax rules involving grantor including Rev. Rul. 85-13 apply in the context of QOFs as well
  • The application of the 180-day period for rollover of gain to a QOF in the case of partners, S corporation shareholders, and beneficiaries of estates and trusts, and the special timing concerns that may arise in the context of trusts and estates
  • Non-tax considerations relating to QOFs, including fiduciary duties and investment related considerations
  • Estate planning applications and considerations

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

Who Should Attend

Any estate planner with a client interested in investing in Opportunity Zones and QOFs should attend this webcast from ALI CLE and ACTEC.

May 10, 2019 in Conferences & CLE, Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

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)

Saturday, May 4, 2019

California's New Uniform Trust Decanting Act

DecanterLast year, California enacted a uniform trust decanting law under Chapter 407 of the California Statutes. The new law allows "a fiduciary of an irrevocable trust may distribute the property of a first trust to one or more 2nd trusts or modify the terms of the first trust without the consent of the beneficiaries or approval of the court, subject to certain exceptions."

The California Commission on Uniform State Laws (CCUSL) is the source of the new law, and the Commission is part of the Legislative Counsel Bureau. The CCUSL is required to "do all in its power to promote uniformity in state laws upon all subjects where uniformity is deemed desirable and practicable."

See Keith Paul Bishop, California's New Uniform Trust Decanting Act, National Law Review, May 2, 2019.

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

May 4, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Memo on The Secure Act (HR 1994) and the Stretch Payment Rule Changes as it Relates to IRA Account Owners

ScalesSeymour Goldberg recently drafted a Memo entitled, The Secure Act (HR 1994) and the Stretch Payment Rule Changes as it Relates to IRA Account Owners, explaining three shortfalls of the drafted Act. He suggests that for the first issue that it be amended, and for the other two issues that grandfather clauses be inserted to waive liability for trustees of IRA trusts created prior to the new legislation.

The first issue mentioned is that HR 1994 has no provision providing for a minor who is not a child of the IRA owner who has not reached the age of majority under the general rule (cut off rule).  This means that if an IRA owner names their grandchild or other relative that is not their own child as beneficiary, and that child is still a minor 10 years after the IRA owner's death, they are forced to receive the IRA disbursement. Because of the windfall, many jurisdictions would require the hassle of setting up a guardianship for the minor to receive the funds, pay the income taxes, and everything else that this entails. Though this can be avoided if the IRA custodial agreement rules provide that payments can be made to a Custodian under the Uniform Transfers to Minors Act or a parent of the minor, there is no guarantee the IRA document will contain this provision.

The second issue deal with IRA trusts named as beneficiaries of the IRA, and the general cut off rule in the new HR 1994. The new legislation requires payment to be made to the IRA trust beneficiary at age 50 under the general cut off rule, but many IRA trusts have named other ages for vestment, including over the lifetime of the beneficiary. A violation of the general cut off rule would then trigger a 50% penalty on the shortfall amount of the required minimum distribution that is mandated under the new legislation. Yet the trustee is now violating the terms of the IRA trust. The most efficient fix would be to allow existing IRA trusts drafted and executed prior to the legislation be exempt from the new general cut off rule.

For more information, you can read the memo in its entirety here.

May 4, 2019 in Current Affairs, Elder Law, Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Thursday, May 2, 2019

Best (and Worst) States for Entering the Afterlife

EstatetaxAs the saying goes, nothing in life is certain except for death and taxes. So what are the best and worst states for estate taxes? Though the federal exemption is $11.2 million for an individual, there are 18 states (plus the District of Columbia) in the union that also have state or inheritance taxes of their own. 6 of those 18 states have inheritance taxes, which differ from estate taxes as they apply to the heirs or beneficiaries of the decedent, and the long arm of the law reaches them even if they live outside of that state. Those states are Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania, according to Moneytips.com. Spouses, however, are exempt from inheritance taxes.

The jurisdictions that have an estate tax are Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. Yes, Maryland has both estate and inheritance taxes. Rhode Island has the lowest threshold at $850,000, which means any estate worth more than that amount will be subject to the state's 16% estate tax. District of Columbia and Hawaii have the same exemption as the federal government, so any estates in those jurisdictions over $11.2 million will have to pay the 40% federal estate tax and the jurisdiction's estate tax (16% and 15.7%, respectively).

So what are the best states to die in? The other 33 states that have neither state estate taxes nor state inheritance taxes. To take advantage of the tax benefits, you will need to establish residency in that state and know the requirements to do it. Florida’s rules are quite extensive and include filing a declaration of domicile, getting a driver’s license and registering your vehicles, opening bank accounts, registering to vote, notifying tax officials, applying for the homestead exemption and updating your estate plan.

See Bryce Sanders, Best (and Worst) States for Entering the Afterlife, Accounting Web, May 1, 2019.

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

May 2, 2019 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Intestate Succession, New Legislation, Trusts, Wills | 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)

Article on Is the Taxpayer Bill of Rights Enforceable?

TaxcalcLeandra Lederman recently published an Article entitled, Is the Taxpayer Bill of Rights Enforceable?, Tax Law: Tax Law & Policy eJournal (2019). Provided below is an abstract of the Article.

In 2016, Congress enacted a statutory Taxpayer Bill of Rights containing a list of ten rights but lacking an explicit remedy or enforcement mechanism. Are the rights listed therefore merely aspirational, or are some or all of them enforceable? It is worth noting that the statute does not say that these rights are unenforceable. Recently, taxpayers such as Facebook have begun to demand remedies for alleged violations of the rights listed in the statute, such as “the right to appeal a decision of the Internal Revenue Service in an independent forum.” This Essay argues that not only does the statutory text not provide a private right of action, U.S. Supreme Court case law does not permit such a right to be inferred. The Essay further argues that the history of the statute, which was largely the initiative of the National Taxpayer Advocate, supports the conclusion that there is no private right of action to enforce the statute. Rather, as the statute states, the Commissioner of the Internal Revenue Service is charged with ensuring that the listed taxpayer rights are protected.

April 29, 2019 in Articles, Current Events, Estate Planning - Generally, Income Tax, New Legislation | 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)