Wills, Trusts & Estates Prof Blog

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

Friday, December 27, 2019

Effective Use of IRA Assets in Tax and Estate Planning After the Secure Act (Includes IRS Compliance)

Seymour Goldberg, CPA, MBA, JD, a senior partner in the law firm of Goldberg & Goldberg, P.C., Long Island, New York, will be presenting a program with the following description:

Many taxpayers have accumulated a considerable amount of assets in their retirement accounts. These assets may be in their 401(k), another type of qualified plan, a 403(b) arrangement, a 457 governmental plan, a traditional IRA and a Roth IRA. Estate and income tax planning are more important than ever, especially under the Secure Act, when advising a client that has substantial retirement type assets. This program covers many of the rules that you need to know when implementing an estate plan for the client that has substantial retirement assets. IRS Compliance is now a major issue in retirement distribution planning for IRA owners and IRA beneficiaries.

For more information about the program and how to register, follow this link: Download Effective Use of IRA Assets in Tax and Estate Planning - January brochure.

 

December 27, 2019 in Conferences & CLE, Non-Probate Assets | Permalink | Comments (0)

Wednesday, December 18, 2019

Ethical-Factor Investing of Savings and Retirement Benefits

Albert Feuer has recently posted his article entitled Ethics, ESG, and ERISA: Ethical-Factor Investing of Savings and Retirement Benefits - Part I on SSRN. Here is the abstract of his article:

Ethical-factor investing is investment decision-making that takes into account ethical factors. It includes faith-based investing, Environmental, Social or Governance (ESG) investing, and sustainable investing. It is becoming more and more widespread. This has occurred despite a lack of widely accepted definitions, performance metrics, or ethical preferences. There is increasing broad agreement that some ethical factors highlight business risks and opportunities in a predictable fashion, such as the effects of climate change, human capital needs, or corporate governance. Thus, more and more investors and enterprises are seeking to profit (including mitigating risks) from these factors in the same way they do from all business risks and opportunities. There are three prudent approaches to ethical-factor investing. The most widely used is the Incorporation approach. Such investing uses the value of doing the right thing to decide how to improve financial returns. Also, quite common is the Tie-Breaker approach. Such investing does the right thing if there no financial cost to doing so. Least common is the concessionary approach. Such investing does the right thing if it does not cost too much. Each of these approaches can be socially beneficial, i.e., improve the norms and behavior of enterprises in a cost effective manner. Investors can generate such benefits by funding enterprises with thinly traded securities whose preferred ethical-factor activities would not otherwise occur, or by participating in engagement campaigns to change the policies of widely traded securities in which they invest.

December 18, 2019 in Articles, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Monday, November 25, 2019

Systemic IRA Trust Compliance Issue Can Have Big Tax and Penalty Impact

IRAPost-death rules governing IRAs, particularly those involving trusts, are complicated and if not strictly adhered to can lead to severe ramifications for the intended beneficiaries. One such rule, often referred to as the “documentation rule” may not seem that complicated at first glance, but failure to meet its requirements can result in confiscatory penalties, as noted by our IRA expert commentator, Seymour Goldberg. Mr. Goldberg is the senior partner in the law firm of Goldberg & Goldberg, P.C. in Long Island, New York. He is Professor Emeritus of Accounting, Law and Taxation at Long Island University and has conducted continuing education programs with the IRS and well over 50 such programs over the last 15 years or more for practitioners (attorneys and CPAs) on IRA compliance issues. He has written two practitioner guides for the American Bar Association on IRA Compliance Issues as well. He has also written dozens of articles and several manuals on the subject area. Mr. Goldberg can be reached at 516-222-0422 or by email at info.goldbergira@gmail.com. You may also visit his website at TrustEstateProbate.com.

See Seymour Goldberg, Systemic IRA Trust Compliance Issue Can Have Big Tax and Penalty Impact, Estate Planning Review - The Journal, November 19, 2019.

November 25, 2019 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

Sunday, November 24, 2019

When it Comes to Gifting, There's No Time Like the Present

GiftOften, allowing your loved ones to have gifts before your death can have tremendous benefits, not least of all watching them enjoying the presents during your lifetime. If you have an estate that is more than the federal exemption amount which, as of 2019, is $11.4 million, giving away assets before you pass can lower any estate taxes due. Any amount lower than $15,000 per year is tax-free, and an be used as an effective way to gradually help children and grandchildren understand and appreciate their family’s wealth.

From a tax perspective, a downside of gifting assets during your lifetime is that assets that have appreciated in value do not receive a “step-up” income tax basis. This means if you gift appreciated property or securities, the recipient will be subject to capital gains tax on the built-in appreciation when they sell the assets. It is important to consider when to gift these types of assets so that the loved one can receive the greatest benefit, rather than a possible burden.

There are numerous other vehicles that can be utilized to gift children and grandchildren assets or even funds during ones lifetime, including:

  • 529 College Savings Plans, which acts similar to a retirement account in that the money placed in it grows without being subject to federal income tax.
  • Uniform Transfer to Minor Act accounts, and any property placed in the trust are taxes at the child's tax bracket
  • Delaware Dynasty Trusts, which are notorious (or famous, however you choose to look at it) for lasting in perpetuity.

See When it Comes to Gifting, There's No Time Like the Present, Franklin Templeton, November 18, 2019.

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

November 24, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Monday, October 21, 2019

Get Your Digital Accounts Ready in Case of Death

Black bookBefore our inevitable demise, it would be a gift to our loved ones if we packaged all of our social media account passwords, email passwords, and any other digital account information together to make final arrangements and settling our affairs simpler for them. Here’s how to set up a digital “little black book” for easy and secure information sharing with family members and trusted friends.

  • Share your account logins and other secure information with a password manager
    •  A password manager is a software application that securely and conveniently stores all your account logins as well as notes you want to keep safe. These usually cost a small annual fee, but are well worth it.
  • Record and save emergency info
    •  These can include funeral plans, living will wishes, safe or even smart phone combinations or codes, important contacts - including your attorney and/or financial advisor, locations of valuables and critical papers, recurring bill information (so nothing goes into default), and any other financial information that may be needed immediately upon your death.
  • Set up dead-man switches and assign custody for your digital accounts
    •  Some accounts allow you to designate a person that can gain access upon your death or even simply after an extended period of inactivity.
  • Drill practice — teach your loved ones how to survive without you
    •  Do not surprise your family with these wishes! Make sure they accept any designations, download any necessary applications, and remember to update your information on a yearly basis.

See Melanie Pinola, Get Your Digital Accounts Ready in Case of Death, New York Times, October 3, 2019.

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

October 21, 2019 in Current Affairs, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Technology, Wills | Permalink | Comments (0)

Thursday, October 3, 2019

CLE on 45th Annual Trust and Estate Conference at USC Gould School of Law

CLEThe University of Southern California Gould School of Law is holding a conference entitled, 45th Annual Trust and Estate Conference, on Friday, November 22, 2019 at The Westin Bonaventure Hotel in Los Angeles, California. Provided below is a description of the event.

why attend?

High-Quality Education

For over 40 years, USC Gould’s Trust and Estate Conference has provided high-quality continuing education customized for trust, estate planning, probate and elder law professionals.

Practical and Realistic Solutions

The Conference has a proven track record of teaching practical and realistic solutions to everyday and unexpected problems in estate planning, trust administration, probate, trust and estate litigation, elder law and client relationships. Speakers often share “howto” techniques and forms used in their practices.

Unrivaled Networking

Over 500 of your peers registered for the Conference last year for an unrivaled networking and learning opportunity from both the speakers and your professional colleagues.

who should attend?

The Conference is specially tailored for trust, estate planning, probate and elder law professionals including attorneys, paralegals, trust officers, accountants, financial institution executives, private professional fiduciaries, wealth management professionals, fiduciary officers, underwriters and insurance advisors.

what’s included?

Registration includes all sessions, continental breakfast, networking breaks, luncheon presentation, continuing education credit, and print and downloadable copies of the practical Conference Syllabus including the popular Resource Guide, a Trust and Estate Professional Directory covering Los Angeles, Orange and San Diego counties.

Free WiFi and an Event App will also be available for attendees at the Conference!

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

October 3, 2019 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, New Cases, New Legislation, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 24, 2019

In with a Bang and Out with a Whimper: Second Circuit Challenge to Popular Withdrawal Liability Calculation Method Settles

PensionA case that was watched by many employers and pension plan members alike went out with little drama, as the Second Circuit docket sheet of New York Times Company v. Newspaper and Mail Deliverers' Publishers' Pension Fund pinged to life with a stipulation withdrawing the case with prejudice on last Monday.

The issue that was the great importance to its many followers was that of the challenge to the Segal Blend discount rate assumption, used by many multiemployer pension plans to calculate employer withdrawal liability. Any variation to this discount rate assumption can have a massive effect on the liability. ERISA requires actuaries to select a discount rate for withdrawal liability and an interest rate for minimum funding purposes that reflect the actuary's "best estimate of anticipated plan experience."

The New York Times argued that the Fund's 7.5% interest rate reflected the actuary's best estimate, the 6.5% Segal Blend rate did not, and the Fund must employ a higher rate, thus decreasing the withdrawal liability of the employer. The arbitrator upheld the use of the Segal Blend rate and the case went to trial, where the Southern District of New York reversed the arbitrator, finding that the Segal Blend runs afoul of the statutory requirement to use a discount rate that reflects the actuary's best estimate of anticipated plan experience. The Fund appealed, but the case was dismissed with prejudice due to an obvious settlement.

The dismissal of the case means that the Southern District of New York's opinion still stands, but the opinion will not be binding authority for many employer withdrawals. The opinion can be useful for employers to challenge the use of the Segal Blend, while the District of New Jersey’s decision upholding the use of the Segal Blend in Manhattan Ford Lincoln, Inc. v. UAW Local 259 Pension Fund will assist funds defending their use of the Segal Blend. That case was also settled before it made it to the next level of appellate court.

See Gregory J. Ossi & Christopher R. Williams, In with a Bang and Out with a Whimper: Second Circuit Challenge to Popular Withdrawal Liability Calculation Method Settles, National Law Review, September 18, 2019.

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

September 24, 2019 in Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Wednesday, September 18, 2019

Dynasty Trusts: Best Way to Protect Family Wealth

RussiandollsAn irrevocable trust ensures a smooth, usually drama-free transfer of assets than a will, while also offering significant tax advantages, asset protection, privacy, and control. Dynasty trusts, which can last hundreds of years when they are allowed to do so, can provide the greatest benefit of all trusts.

Many states have laws against perpetuities, so it is important to take into account the location of the trust. Five states allow perpetual trusts, while six states allow trusts to last up to 360 years. If you are in a jurisdiction that is not one of these 11 states, a financial advisor well coursed in dynasty trusts can walk you through how to set one up in a state that does.

The estate tax is only assessed to dynasty trusts once, even though it can endure for several generations and increase in value exponentially. As a nice little bonus, trust assets are not subject to generation-skipping transfer tax (GSTT), which are notorious for complication bequests to grandchildren. Furthermore, a dynasty trust can expand a settlor's control over the trust assets for many generations, ensuring the family's legacy.

As with many trusts, a dynasty trust can also protect assets from creditors, including ex-spouses of family members. Because the assets are owned by the trust - not the beneficiaries - those assets cannot be included in jointly held estate. There is also increased privacy with trusts, keeping distribution of property out of the public eye, whether it be during a person's life or at the time of death.

See Harvey Bezozi, Dynasty Trusts: Best Way to Protect Family Wealth, News Max, September 16, 2019.

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

September 18, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Tuesday, September 17, 2019

CLE on Probate Process, Procedures and Documents: All the Forms and Checklists in One Place

CLEThe National Business Institute is holding a webcast entitled, Probate Process, Procedures and Documents: All the Forms and Checklists in One, on Tuesday, October 15, 2019 at 9:00 AM - 4:00 PM Central. Provided below is a description of the event.

Navigate Probate with Confidence

When the client is no longer there to make his or her voice heard, the task of interpreting his/her wishes to accurately settle the estate falls on your shoulders. Do you have all the tools you will need? This program will provide you with a comprehensive overview of the probate process, equipping you with the checklists, forms and documents you will need to guide your clients through each time-sensitive procedure. Learn what to do and when to do it, from the initial petition to the final accounting. Register today!

    • Don't miss a step - learn how to map out the entire probate process by utilizing a master checklist.
    • Examine the essential content of the initial petition and understand the procedure for filing it.
    • Receive practical tips on valuing and recording assets to be included in the estate inventory.
    • Handle creditor notices and responses.
    • Understand key provisions of trusts and their impact on the probate process.
    • Learn what must be included in the final accounting and review sample tax returns.

Who Should Attend

This program is designed for attorneys. It will also benefit accountants and CPAs, trust officers, and paralegals.

Course Content

    • Probate Process and Executor Duties: The Master Checklist with Deadlines
    • Wills: Key Provisions, Validity, Interpreting Unique Instructions
    • Initial Petition and Letters of Authority: Content and Procedure
    • Estate Inventory: Valuing and Recording Assets
    • Creditor Notices and Responses
    • Trusts: Key Provisions, Trustee Duties, and the Trust's Impact on Probate
    • Final Accounting: What Must and Should Be Included
    • TAX Returns and Schedules for the Estate and the Decedent: Forms, Deadlines, Exentions (With Sample Returns)
    • Estate Closing and Distributions: Notices of Proposed Action, Petition to Discharge the Fiduciary, and Other Key Documents
    • Ethical Practice Considerations and Concerns in Probate

September 17, 2019 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Non-Probate Assets, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Friday, September 13, 2019

Rubens and Hirst Artworks go to British Museums in Tax Deals

3808In 1910, United Kingdom chancellor David Lloyd George introduced a way for citizens to offset inheritance tax bills by donating works of art to the government. In 2013, the government added cultural gift schemes to allow people to donate art during their lives. Judging from the eclectic pieces collected this year, the bundled system is beneficial for both the government and the taxpayers.

Arts Council England (ACE) on Thursday published details of 46 objects and collections worth £58.6 million that will go to UK museums and galleries in lieu of tax. The total value of the objects more than doubled the previous financial year and the highest since the two schemes were bundled together in 2013. Sir Nicholas Serota, the chair of ACE, said that “It is also heartening to see that, in line with last year, around 86% of the total tax settled has been for items allocated outside London.”

One piece, Rubens portrait of Charles V in his full imperial armor, is a painting that the artist kept until his death in 1640. A sculpture of a decapitated, flayed pregnant woman, entitled Wretched War, has been given by the artist’s former business manager Frank Dunphy, settling £90,000 of tax.

Organizations and museums are then allocated the items, either on loan or permanently. A first-time recipient was the Royal College of Physicians, which was permanently given one of the oddest collections in the list: 450 antique medical and self-care objects which include nipple shields made from ivory, silver, glass, wood, leather and lead. The most valuable item on the list is a Bernardo Bellotto painting of Venice on Ascension Day, which settles £7m of tax and was allocated to Audley End house in Essex.

See Mark Brown, Rubens and Hirst Artworks go to British Museums in Tax Deals, Guardian, September 11, 2019.

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

September 13, 2019 in Current Events, Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)