Wills, Trusts & Estates Prof Blog

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

Monday, December 10, 2018

A Year-End Estate and Financial Planning Checklist: Make Your List and Check it Twice

NyeWith so much going on during the holiday season, it may seem more stressful to think about review your estate plan. Here is a simplified list to assist, and not interfere with presents and champagne.

  1. Review required minimum distributions (RMDs).
    1. Those 70½ or older must take RMDs from certain retirement accounts by December 31 or face a penalty equal to 50%.
  2. Reduce taxable income and rebalance investments.
    1. Review your asset allocation and, if necessary, rebalance your investment portfolio.
  3. Max out company retirement plan contributions.
    1. If you are not able to contribute the maximum amount, try to contribute enough to qualify for any matching contributions by your employer.
  4. Review insurance coverage.
    1. Make sure you have adequate policies in place insuring everything you need, from your life to assets, to help plan against the unexpected.
  5. Review estate plans and beneficiary designations.
    1. These should be reviewed  periodically to be sure that the plan you have in place accomplishes your goals
  6. Make gifts.
    1. The annual exclusion is $15,000 per person before it counts against your lifetime exclusion.
  7. Fund your Health Savings Account (HSA).
    1. Those in high-deductible health-insurance plans can save as much as $3,450 in pre-tax dollars in these types of accounts. Those aged 65 and older cannot contribute to one, but can still use the money for eligible out-of-pocket medical expenses.
  8. Use your flexible spending dollars.
    1. Unused funds in a Flexible Spending Account (FSA) are typically forfeited at year’s end, so  spend them for eligible health and medical expenses by December 31
  9. Check your credit and identity.
    1. With technology, checking your credit has become easier.
  10. Organize your records for 2019.
    1. Gather and organize the documents and 2018 records that will be needed to prepare your tax returns in 2019, and shred what you do not need.

See A Year-End Estate and Financial Planning Checklist: Make Your List and Check it Twice, The National Law Review, December 6, 2018.

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

December 10, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Thursday, December 6, 2018

CLE on IRA Trusts: RMDs and Ensuring the Stretch

CLEThe National Business Institute is holding a teleconference entitled, IRA Trusts: RMDs and Ensuring the Stretch, on Thursday, December 20, 2018, at 11:00 a.m. to 12:30 p.m. Central. Provided below is description of the event:

Program Description
Ensure Clients Make the Most of Inherited IRAs
This focused course offers practical strategies for ensuring the inherited IRAs last as long as possible and comply with the RMD rules. Learn IRA trust drafting tactics and planning approaches to maximize the stretch, ensure asset protection, and minimize tax burdens. Register today!
Choose the most beneficial IRA trust structure and decide whether subtrusts are needed.
Get sample powers of appointment language that ensures the longevity of the trust.
Plan distributions to ensure RMD rules compliance.

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

Course Content
How the Mechanics of the Retirement Account Shapes the IRA Strategy
Ensuring the Stretch: Beneficiary Designations, Individuals vs. Trusts, and More
Structuring the IRA Trusts and Subtrusts: Asset Protection and Tax Tactics
Drafting Powers of Appointment That Ensure the Longevity and Health of the Trust
Effective Approaches to Ongoing Compliance with the RMD Rules

December 6, 2018 in Conferences & CLE, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

Sunday, November 18, 2018

Seven Estate Planning Considerations for Blended Families

AarpBlended families are becoming increasingly common, and with that comes specific considerations. When one of the parents/step-parents pass away, it leaves both step-children and biological children depending on the remaining person to make testamentary decisions that would have been supported by both. Unfortunately, that is not always the case.

Here are seven specific tips for second (or third, fourth, etc.) marriage couples:

  1. Upon the death of the first spouse, a trust can be established for the benefit of the surviving spouse to provide them with income and perhaps principal. The spouse should not be the only trustee, and consider giving a children a bequest upon the first death.
  2. If spouses want to sign a joint trust then the trust should be drafted so that it becomes irrevocable upon the first death.
  3. As troubling as it may be on the facade, consider worst case scenarios and open a separate bank account with the children named as beneficiaries.
  4. Discuss funeral arrangements and plans with family members proactively, and sooner rather than later.
  5. Consider naming your spouse and one of your children as co-attorneys in fact.
  6. Communicate, communicate, communicate! Make sure everyone is on the same page, knows your wishes, and does not feel betrayed.
  7. Beneficiary designations trump a well drafted estate plan, so double check them.

See Meredith Murphy, Seven Estate Planning Considerations for Blended Families, Salawus, November 13, 2018.

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

November 18, 2018 in Elder Law, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Friday, November 9, 2018

A To-Do List for Widows, and How to Protect the Identity of a Dead Loved One

Calla-liliesWidows and widowers are often facing debilitating grief while attempting to get their lives, futures, and finances in order. Having an effective plan and to-do list in place could make this difficult time more emotionally manageable. Also, having a deceased loved one's identity stolen can be a painful reminder of their absence, and a great violation to their memory, so taking steps to prevent it are important.

  • Inform Social Security of the loved one's death and notify all credit bureaus as well to freeze the person's credit.
    • Death Certificate and letters testamentary will be required.
  • Notify tax preparer, and financial institutions.
    • In the event that there is a non-qualified account then there should be a step-up in basis on at least 50% of the account and possibly 100% of the account, depending on the circumstances.
    • And IRA can be treated as a rollover account for a spouse
  • Review life insurance policies and see your options so you can decide what makes the most sense based on cash flow needs.
  • Meet with an estate planning attorney if there was a will or trust to understand the loved one's final wishes.
  • Have a tax projection prepared.
  • Sign proper forms for all brokerage accounts and new account forms in order to reflect the new ownership and title.

See Karin Price Mueller, A To-Do List for Widows, and How to Protect the Identity of a Dead Loved One, NJ.com, November 6, 2018.

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

November 9, 2018 in Current Affairs, Elder Law, Estate Administration, Estate Planning - Generally, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)

Sunday, October 28, 2018

CLE on Using Trusts in Estate Planning and Asset Protection

CLEThe National Business Institute is holding a conference entitled, Using Trusts in Estate Planning and Asset Protection, on Wednesday, November 28, 2018 - Thursday, November 29, 2018 at the Embassy Suites by Hilton Boston at Logan Airport in Boston, Massachusetts. Provided below is a description of the event:

Program Description

Successfully Handle Your Client's Trust Needs

The wide array of trusts available, combined with the numerous issues clients can bring to the table, can make choosing and using the right tool a daunting task - but it doesn't have to be. This insightful, two-day seminar will guide you through how to effectively use trusts for estate planning and asset protection. Explore a variety of planning tools that will help you tailor a trust that fits your client's specific situation. Don't miss this opportunity to make sure your trusts are thoroughly on point - register today!

  • Find out how to select the best trust option for each unique situation.
  • Protect retirement accounts with the use of IRA trusts.
  • Use trusts to help clients qualify for Medicaid while protecting their assets.
  • Discover ways to structure special needs trusts so beneficiaries still qualify for public benefits.
  • Learn how to minimize your client's tax burdens with the use of defective trusts.
  • Properly handle the administration of a trust.
  • Clarify who your client is to avoid conflicts of interest and other ethical violations.

Who Should Attend

This basic-to-intermediate level seminar is designed for professionals involved in structuring and administering trusts:

  • Attorneys
  • Accountants and CPAs
  • Trust Officers
  • Tax Managers
  • Wealth Managers
  • Paralegals

Course Content

Day 1

  1. Trust Overview
  2. Determining Which Trust to Use
  3. Grantor Trusts: When and How to Use Them
  4. IRA Trusts: Protecting Retirement Accounts
  5. Using Trusts to Qualify for Medicaid
  6. Charitable Trusts: Setting Aside Assets and Tax Planning

Day 2

  1. Special Needs Trusts: Planning for Disabled Beneficiaries
  2. Asset Protection Focus: Analysis and Tools
  3. Using Irrevocable Life Insurance Trusts (ILITs)
  4. Tax Planning with Trusts
  5. Administering Trusts
  6. Making Changes to Trusts
  7. Remaining Ethically Compliant

October 28, 2018 in Conferences & CLE, Current Affairs, Disability Planning - Property Management, Elder Law, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

Saturday, October 27, 2018

Estate Planning Pitfall: You Have not Properly Funded Your Revocable Trust

RevA revocable living trust compliments a will and enables your beneficiaries to receive some your wealth upon your death, with no complications. The truth is that it will not do anybody any good if the trust is not properly funded by transferring assets into it while you are alive. You must also change legal ownership of your assets from your name into the trust’s name.

If the assets are not properly the living trust will not accomplish its anticipated goal of avoiding probate. They will be governed by the instructions set forth in your will instead of the trust document. Bank accounts, securities, real estate and business interests are the types of assets to be transferred to a trust, though real estate may require extra paperwork to get accomplished. It’s often recommended that you transfer ownership of life insurance policies and annuities to the trust, but avoid transferring IRA and 401(k) plan or other retirement plan benefits to a revocable trust. This can trigger unwanted tax consequences.

See Estate Planning Pitfall: You Have not Properly Funded Your Revocable Trust, Littornolaw.com, September 19, 2018.

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

October 27, 2018 in Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (0)

Friday, October 19, 2018

Article on Making Directed Trusts Work: The Uniform Directed Trust Act

TrustJohn Morley & Robert H. Sitkoff recently published an Article entitled, Making Directed Trusts Work: The Uniform Directed Trust Act, Wills, Trusts & Estates Law eJournal (2018). Provided below is an abstract of the Article.

Directed trusts have become a familiar feature of trust practice in spite of considerable legal uncertainty about them. Fortunately, the Uniform Law Commission has just finished work on the Uniform Directed Trust Act (UDTA), a new uniform law that offers clear solutions to the many legal uncertainties surrounding directed trusts. This article offers an overview of the UDTA, with particular emphasis on four areas of practical innovation. The first is a careful allocation of fiduciary duties. The UDTA’s basic approach is to take the law of trusteeship and attach it to whichever person holds the powers of trusteeship, even if that person is not formally a trustee. Thus, under the UDTA the fiduciary responsibility for a power of direction attaches primarily to the trust director (or trust protector or trust adviser) who holds the power, with only a diminished duty to avoid “willful misconduct” applying to a directed trustee (or administrative trustee). The second innovation is a comprehensive treatment of non-fiduciary issues, such as appointment, vacancy, and limitations. Here again, the UDTA largely absorbs the law of trusteeship for a trust director. The UDTA also deals with new and distinctive subsidiary problems that do not arise in ordinary trusts, such as the sharing of information between a trustee and a trust director. The third innovation is a reconciliation of directed trusts with the traditional law of co-trusteeship. The UDTA permits a settlor to allocate fiduciary duties between co-trustees in a manner similar to the allocation between a trust director and directed trustee in a directed trust. A final innovation is a careful system of exclusions that preserves existing law and settlor autonomy with respect to tax planning, revocable trusts, powers of appointment, and other issues. All told, if appropriately modified to fit local policy preferences, the UDTA could improve on the directed trust law of every state. The UDTA can also be used by practitioners in any state to identify the key issues in a directed trust and find sensible, well-drafted solutions that can be absorbed into the terms of a directed trust.

October 19, 2018 in Articles, Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Non-Probate Assets, Trusts | Permalink | Comments (0)

Thursday, October 18, 2018

Paul Allen May be Leaving Largest Estate in Washington History

PaPaul Allen constructed an empire over the 35 years after he left Microsoft that consists of funding local museums and arts festivals, sponsoring brain science and artificial intelligence research institutes, and even owning sports teams and an enormous real-estate portfolio. The disposition of possibly the largest estate in the history of the state of Washington poses many questions of the future of these endeavors, and the Internal Revenue Service will be poring through all of it.

There is familial continuity built in to the structure of Allen’s empire even though he was not married and had no children. His sister, Jody, helped carry out many of his endeavors. But there are early signs of how various pieces of the Allen empire have been subtly restructured to operate more independently. And rumors have already started about possible sales of Allen’s sports franchises, the Seahawks and Portland Trail Blazers.

Large estates such as Allen's have their assets moved into a revocable living trust. Engineered to administer an estate, a trust serves in place of a will, but is not subject to the traditional court process of probate. But the issue of estate taxes remain, with substantial estates facing the possibility of being hit with a combined federal and state estate tax rate as high as 52%.

Douglas Lawrence, a lawyer whose practice includes planning and probate matters at the law firm Stokes Lawrence, says that “It all boils down to: What’s the value of that enterprise?” He expects the process to take a full nine months, and he would not be surprised if the estate asks tax authorities for an extension.

See Matt Day, Paul Roberts, & Benjamin Romano, Paul Allen’s Death Leaves Many Questions Around What’s Likely the Largest Estate in Washington History, The Seattle Times, October 17, 2018.

Special thanks to Jay Brinker (Cincinnati Estate Planning Attorney) for bringing this article to my attention.

October 18, 2018 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Non-Probate Assets, Technology, Trusts, Wills | Permalink | Comments (0)

Tuesday, October 16, 2018

CLE on Revocable Living Trusts from Start to Finish

CLEThe National Business Institute is holding a video webcast entitled, Revocable Living Trusts from Start to Finish, on Thursday, November 1, 2018, at 10:00 a.m. to 5:00 p.m. Central. Provided below is a description of the event.

Program Description

Draft Better Revocable Living Trusts

In this engaging overview, our expert estate planning attorney faculty will analyze the most popular and the most effective revocable living trust structures. Discover when a revocable living trust is a better alternative than a simple will, which trust to choose and what provisions must and should be included to give it the desired power. Register today!

  • Compare traditional estate planning with revocable trust planning to offer your clients the best alternative in each specific circumstance.
  • Get practical tips for making the best use of Qualified Terminable Interest Property Trusts.
  • Protect the interests of both spouses - draft better marital deduction trusts.
  • Review sample trust materials to avoid errors and save time drafting yours.
  • Protect your professional reputation with legal ethics advice from experienced attorneys.

Who Should Attend

This fundamental legal course breaks down the use of revocable living trusts into simple tips and tactics that will benefit attorneys. It may also be of interest to accountants and CPAs, estate planners, trust officers, and paralegals.

Course Content

  1. Key Estate Transfer Laws
  2. Revocable Living Trust Planning vs. Traditional Estate Planning
  3. Ethics in Estate Planning
  4. RLT Structures
  5. Drafting Tips and Clauses
  6. Marital Deduction Trusts in Detail
  7. Funding the Revocable Trust
  8. Common RLT Mistakes to Avoid

October 16, 2018 in Conferences & CLE, Estate Planning - Generally, Non-Probate Assets, Trusts | Permalink | Comments (1)

Thursday, October 11, 2018

Avoid Probate Court: Head to Your Bank Instead [Texas]

BankProbate court is expensive and time intensive, and the majority of accounts have beneficiary designations that allow them to be transferred outside of probate. With a trust, more assets can be transferred outside of a courtroom. Financial institutions are called upon to help a customer determine what type of account to use and, after death of the customer, review legal documents and carry out the transfer instructions.

There are other tools that can be utilized to avoid a formal probate process, such as a small estates affidavit in Texas for estates that have less than $75,000 in assets (excluding the homestead). If there is a will and there are no unpaid debts or a need for administration, the will can be admitted to probate under a unique Texas proceeding known as a “muniment of title.” No administrator will be assigned and banks will be presented with a certified copy of of either a a small estates affidavit or an order admitting a will to probate as a muniment of title to pay out the funds in the accounts.

Power of attorney (POA) can also avoid the complex issue of a guardianship, and under a new state statute passed in 2017, POAs in Texas have expanded powers. Due to this, financial institutes also have a statutory obligations to report alleged fraud or abuse of the elderly to the proper authorities.

Employees of financial institutes are finding themselves in position to answer difficult questions and find harder solutions. They may find themselves in more of an advisor role. They may need to become more knowledgeable about statutory changes and new estate planning options, especially self-help tools, that are available to customers and train their personnel accordingly.

See David B. West, Avoid Probate Court: Head to Your Bank Instead, Lexology, October 4, 2018.

October 11, 2018 in Current Affairs, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, New Legislation, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0)