Wills, Trusts & Estates Prof Blog

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

Thursday, April 1, 2021

Democrats Weigh Capital Gains Tax Hike For Millionaires At Death

Tax"Senate Democrats are circulating a plan that would trigger tax bills on the assets of the wealthy after they die as the lawmakers seek new sources of revenue to fund trillions of dollars in infrastructure spending and social programs." 

The legislation seeks to end a part of the tax code that allows assets to be passed onto heirs without "immediately generating tax bills." Democrats have long been aiming at these assets to be taxed. Joe Biden's campaign has encouraged the idea. 

Under current tax law, people are able to pass assets to their heirs without transferring capital gains from the property's appreciation, referred to as "stepped up basis at death." Basically, heirs will not have to pay taxes "on any of the gains that accused under the previous owner." 

Under the new plan, taxes would be levied on those assets of the wealthy at death subject to a $1 million exemption. 

According to Chris Van Hollen of Maryland, “The stepped-up basis loophole is one of the biggest tax breaks on the books, providing an unfair advantage to the wealthiest heirs every year. . . “It’s time to stop subsidizing massive inheritances for the rich and start investing in everyday Americans.”

This stepped up basis tax provision has become increasingly popular for the Democratic Party, although, under President Barack Obama, the proposal was blocked by Congress. 

With recent changes in the Senate and the House, it'll be interesting to see where the new proposed legislation goes. 

See Laura Davison, Democrats Weigh Capital Gains Tax Hike For Millionaires At Death, Financial Advisor, March 30, 2021. 

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

April 1, 2021 in Current Events, Estate Planning - Generally, Estate Tax, Income Tax, New Legislation | Permalink | Comments (0)

Thursday, March 25, 2021

Legislation Introduced to Repeal Federal Estate Tax

TaxLegislation has been introduced by lawmakers that would repeal the federal estate tax, also known known as the death tax. 

The proposed legislation is called the Death Tax Repeal Act of 2021 and currently has the support of close to 150 lawmakers in both houses of Congress. 

According to Zippy Duvall, President of American Farm Bureau Federation (AFBF), “Farmers and ranchers already face unpredictable challenges beyond our control yet persevere to protect our nation’s supply of food, fiber and renewable fuel. The tax code should encourage farm business growth, not add to uncertainty.”

Duvall also stated, “[e]liminating the estate tax removes another barrier to entry for sons and daughters or other beginning farmers to carry-on our agricultural legacy and make farming more accessible to all.”

Through research and analysis, the AFBF has found that federal estate taxes threaten more than 74,000 farms around the nation. Due to the increase in the transition of farmland that is projected to occur over the next 20 years, ag groups are "concerned about how estate taxes are going to impact the future of the farm economy," and for good reason. 

The Death Tax Repeal Act of 2021 could remove limitations on farmlands and would almost definitely create some comfort for ag groups. 

See Brian German, Legislation Introduced to Repeal Federal Estate Tax, Ag Net West, March 15 2021. 

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

March 25, 2021 in Estate Administration, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Wednesday, March 24, 2021

Spain passes law allowing euthanasia

Estate planningSpain recently passed a law that will legalize euthanasia. Spain is the fourth country in Europe to allow people to end their own life in some circumstances. 

The law was just recently approved by Spain's lower house of parliament. The House of Parliament had support from centre and left-wing parties. 

The law is expected to take effect and June and allows "adults with 'serious and incurable' diseases that cause 'unbearable suffering' to choose to end their lives." 

Prior to this new law, a person could be sentenced to jail for up to 10 years for assisted suicide. 

While right-to-die campaigners were happy about the new law, conservatives and religious groups are not happy. 

As of now, Belgium, Lexumbour, the Netherlands, Canada, and Colombia are the only other countries that have legalized euthanasia. 

See Spain passes law allowing euthanasia, BBC, March 18, 2021. 

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

March 24, 2021 in Estate Administration, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Tuesday, March 23, 2021

New Texas Bill Would Provide Release Relief To Trustees Who Deliver Adequate Accountings Without A Timely Objection By The Beneficiary

Estate planningA new bill has been submitted that would "provide a trustee relief for transactions described in an accounting where a beneficiary fails to timely object to the accounting and there is no fraud, intentional misrepresentation, or material omission." 

The bill provides: 

Sec. 113.153. BENEFICIARY’S APPROVAL OF ACCOUNTING. (a) This section does not apply to a trust that is under judicial supervision. (b) If a beneficiary does not object to a trustee’s accounting before the 180th day after the date a copy of the accounting has been delivered to the last known address of the beneficiary: (1) the beneficiary is considered to have approved the accounting; and (2) absent fraud, intentional misrepresentation, or material omission, the trustee is released from liability relating to all matters in the accounting.

If this bill were passed, it would take effect on September 1, 2021 and would apply to accountings delivered on or after the effective date. 

If this new bill is passed, there would likely be constitutional challenges addressing constitutional limitations to the statute as well as public policy arguments. 

However, the new bill is similar to a provision in the Uniform Trust Code, which has already been upheld as constitutional. 

It will be interesting to see the path and effect of this proposed bill. 

See David Fowler Johnson, New Texas Bill Would Provide Release Relief To Trustees Who Deliver Adequate Accountings Without A Timely Objection By The Beneficiary, Winstead: Texas Fiduciary Litigator, March 15, 2021. 

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

March 23, 2021 in Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Thursday, March 11, 2021

Oregon could become second state to allow human composting

BodycompostingOregon is known for being environmental friendly and implementing plans that have a positive impact on the environment, like recycling. 

It is quite possible that Oregon takes these commitments to the next level. State lawmakers are considering a bill that, if passed, would allow human composting as an alternative to traditional burial or cremation. 

"House bill 2574, sponsored by representatives Pam Marsh and Brian L. Clem, would allow bodies to be disposed of by alternative processes, including natural organic reduction — colloquially known as human composting. It also clarifies rules surrounding alkaline hydrolysis, known as aqua cremation, and extends other funeral industry privileges and responsibilities to include reduction." 

As of Monday, close to 100 people submitted written testimony in favor of the bill, with most of them citing environmental reasons. Apparently, composting is more resourceful as it uses less energy than cremation and traditional burials "involve harsh chemicals and take up land." 

If the bills is passed, Oregon will be the second state to allow human composting (Washington being the first). 

See Hannah Ray Lambert, Oregon could become second state to allow human composting, KOIN, March 2, 2021. 

 

March 11, 2021 in Current Events, Death Event Planning, Estate Planning - Generally, New Legislation | Permalink | Comments (0)

Wednesday, March 10, 2021

Mom Liked Me Better, and She Will Prove It: Pre-Mortem Validation—Permanent Solution or Fad?

ValidationAlthough much has changed, given the pandemic, recently election, and other things, will and trust contests are still a common occurrence. These contests often are brought by a child who feels they were treated differently than their siblings or other beneficiaries. A child may bring suit even if they were estranged from their deceased parent, even if it were for years before their parent's death. 

A child may contest the will based on allegations of lack of capacity and undue influence, which typically has the effect of tying the estate up for years and the build up of attorney fees and court costs—not to mention the detriment to family relationships. 

The sad truth is that the most important person in the matter, the decedent, will not be their to testify to their intent and wishes. In turn, the court will have to rely on testimony from witnesses and experts who very well may not know what was going on in the decedent's head when executing the will. Further, even if some of them do know, they may not tell the truth or be believed. 

One possible solution to avoid all of the litigation is Pre-Mortem Validation. Pre-Mortem Validation allows the maker of the estate planning document to to validate said document during their lifetime. So far, nine states have enacted legislation to allow Pre-Mortem Validation procedures, so that the voice of the most important person is heard. The list of states are provided below: 

  • Alaska, Arkansas, Delaware, North Carolina, New Hampshire, North Dakota, Nevada, Ohio, and South Dakota. 

Although the states may differ in their standards and the requirements for Pre-Mortem Validation, they all have implemented the statutory procedure for a similar purpose. 

See Michael Sneeringer et al., Mom Liked Me Better, and She Will Prove It: Pre-Mortem Validation—Permanent Solution or Fad? , American Bar Association: Probate & Property, March/April 2021.

March 10, 2021 in Estate Administration, Estate Planning - Generally, New Legislation, Trusts, Wills | Permalink | Comments (0)

Saturday, March 6, 2021

Article: Legislating Supported Decision-Making

Nina A. Kohn recently published an article entitled, Legislating Supported Decision-Making, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article. Estate planning

Supported decision-making is a process by which individuals who might otherwise be unable to make their own decisions do so with help from others. It has the potential to transform the lives of individuals with cognitive and intellectual disabilities by enabling them to function as legal actors, and not merely legal subjects. Fueled by this promise, by mounting concerns about guardianship, and by rhetoric surrounding the Convention on the Rights of Persons with Disabilities, states are rapidly adopting statutes that purport to enable and promote supported decision-making and advance the rights of persons with disabilities. This article shows how these statutes typically do neither. Rather, the statutes limit the rights of individuals with disabilities and place them at increased risk of exploitation. The article further shows that the wide gap between the concept of supported decision-making and its actual implementation in state legislation is the result of a confluence of political agendas, but that an alternative, person-centered approach is essential if supported decision-making is actually to empower individuals with disabilities. Finally, it outlines five concrete legislative approaches states could adopt—separately or in combination—to encourage supported decision-making that will actually advance the rights of persons with disabilities and reduce restrictive guardianships.

March 6, 2021 in Articles, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Guardianship, New Legislation | Permalink | Comments (0)

Wednesday, February 24, 2021

IRS Rolls Out Online Option For Submitting Authorization Forms

TaxThe Internal Revenue Service (IRS) has released a new online option that will allow tax professionals to electronically submit authorization forms. 

The two forms covered under the new option are "Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization. These forms allow taxpayers to authorize the IRS to disclose their tax information to third parties, such as, tax professionals." 

The Form 2848 allows taxpayers to authorize eligible individuals to speak to the IRS on their behalf and also allows that person to receive related confidential tax information. 

The Form 8821 isn't as useful because it only allows the appointed representative to inspect or receive confidential information verbally or in writing "for the type of tax and the years or periods you list on the form." This form does not allow anyone to speak on your behalf. 

You can use the new options by creating a Secure Access Account and is fairly simple and quick to set up. 

See Kelly Phillips Erb, IRS Rolls Out Online Option For Submitting Authorization Forms, Forbes, January 25, 2021. 

Special thanks to Mark J. Bade (CPA, GCMA, St. Louis, Missouri) for bringing this article to my attention. 

February 24, 2021 in Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0)

Thursday, February 11, 2021

Remote Witnessing of Wills: A Step in the Right Direction

Wills
The COVID-19 pandemic has incited some changes in the realms of estate and post-death planning. With the pandemic taking so many lives, many were forced to thinking about planning for their death, and they had nothing but time to do it. 

Many are required to self-isolate as to not risk their health or the health of loved ones. This has placed a burden on those that want to have wills executed, given the witness requirements and other things unattainable during the pandemic.

S.9 Wills Act 1837 sets out the requirements for executing and witnessing a will. Changes to current legislation may make it a bit easier to make a will during the global crisis. The "Physical presence" has been expanded to include virtual presence by means of videoconference or other visual transmission. 

The temporary change applies to all wills and codicils made between January 31, 2020 and January 31, 2022. After that, the revision will expire and things will go back to the way they once were. "It is important to note that, similar to other COVID-19 measures, the Government has the authority to shorten or extend this two-year period, should it be deemed appropriate to do so." 

In regard to "virtual presence" the most important element of virtual witnessing is that all parties have a "clear line of sight." Also, pre-recorded videos are not allowed. 

The Government also sets out other helpful rules, regulations, and guidelines to help out. 

See Simon Goldring & Elysa Jacobs, Remote Witnessing of Wills: A Step in the Right Direction, McDermott, Will, & Emery, February 10, 2021. 

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

February 11, 2021 in Current Events, Elder Law, Estate Planning - Generally, New Legislation, Wills | Permalink | Comments (0)

Monday, February 1, 2021

Article: Keeping America: Wealth Concentration and the Need for Repaired Revenues and Basic Income

M. Ryan Groff recently published an article entitled, Keeping America: Wealth Concentration and the Need for Repaired Revenues and Basic Income, Wills, Trusts, & Estates Law ejournal (2021). Provided below is the abstract to the Article. Estate planning

This paper comes from a place of deep concern about wealth concentration in the United States of America, but also from a place of hopeful expectation. When I started my research in mid-2019, I did not imagine preparing the final draft during a global pandemic which has already killed nearly half a million people. Unfortunately, the spread of COVID-19 exposed the fragility of the U.S. economy. While necessary, shelter in place orders suspended the livelihoods of millions without savings for unexpected expenses, and caused weekly unemployment claims to jump 1,068%. In a strong demonstration of its legal and moral duty to ensure the wellbeing of the American people during times of crisis, the U.S. federal government quickly passed the $2.2 trillion “CARES” Act, the largest appropriations bill in its history. Despite longstanding policy disagreements over using public funds for public welfare, a crisis compelled Congress and the White House towards unprecedented compromise on multiple stimulus bills in only a few weeks.

The same resolve will be necessary to combat wealth concentration. Deconcentrating wealth will not be easy. Effective solutions will require engaging unpopular topics like tax policy, estate planning and trust provisions, property law, and tedious readings of 18th century political theory. While few are qualified to propose solutions at this intersection, and even fewer are willing to undertake this Sisyphean task, it is as necessary as it is difficult.

The federal government must find the political courage to reverse half a century of policies creating unsustainable levels of wealth concentration by repairing revenues and guaranteeing Americans a basic income. The estate planning and private client bar should help.

February 1, 2021 in Articles, Current Events, Estate Planning - Generally, New Legislation | Permalink | Comments (0)