Wills, Trusts & Estates Prof Blog

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

Saturday, October 9, 2021

Is This the Time to Harmonize the Required Minimum Distribution Rules?

Albert Feuer has recently posted his article entitled Is This the Time to Harmonize the Required Minimum Distribution Rules? on SSRN. Here is the abstract of his article:

In September, the House of Representatives Ways and Means Committee released proposals requiring many employers without retirement plans to establish and automatically enroll employees in IRAs with the default contributions going to Roth IRAs or in simple 401(k) plans. The proposals would also require a person whose employee benefit plans, Roth IRAs, and traditional IRAs have an aggregate balance in excess of $10 million to withdraw at least 50% of the excess balance. Broadening those proposals to require Roth IRAs to comply with the same required minimum distribution (RMD) rules that now govern employee benefit plans and traditional IRAs, would better implement the common-sense policy of using tax incentives to encourage adequate retirement savings by focusing on retirement savings.

Roth IRAs are subject to the same RMD rules, as traditional IRAs and tax-advantaged pension and profit-sharing plans, including their Roth designated accounts, after the death of the IRA participant and the participant’s spouse. They should also be subject to the same RMD rules during the life of the IRA participant and the IRA participant’s spouse, if any.

Subjecting Roth IRA participants to the excess benefit distribution and to the RMD rules would better limit retirement tax incentives to retirement savings. Those with Mega-IRAs, such as Mr. Thiel’s multi-billion Roth IRA, could continue to receive tax incentives for reasonable-sized retirement accounts, but the tax incentives on any excess balances would be dramatically reduced. Similarly, participants with Roth or IRA accounts of any size would be required to withdraw significant funds during the expected life of the participant and the participant’s spouse, if any. Such harmonization would permit Congress to make more funds available to encourage adequate retirement savings, such as providing larger savings credits to low-income tax payers who make contributions to tax-favored retirement plans than the Ways and Means proposal offers.

October 9, 2021 in Articles, Non-Probate Assets | Permalink | Comments (0)

Webinar: Tax & Estate Planning w/IRAs After the Secure Act

The following is from the program's announcement found here:

Tax and Estate Planning with IRAs after the Secure Act

3 NY CLE Credits: 3 Skills; Transitional and Non-transitional; 3 NJ CLE Credits: 3 General; 3 CPE Credits for CPAs (NY only)
Faculty:  Seymour Goldberg, Esq., CPA, MBA (Taxation), JD

Many taxpayers have accumulated a considerable amount of assets in their retirement accounts.  The Secure Act has created many new technical deadlines that must be followed in order to avoid IRS penalties. 

Tax planning and estate planning for your clients that have substantial retirement assets have become more important than ever.  You need to be aware of common errors that frequently take place.

This 3-credit CLE/CPE program includes:

  • Overview of the Retirement Distribution Rules under the Secure Act
  • Advantages of Trusts as IRA Beneficiary
  • Common Errors in Retirement Distribution Planning
  • Why many IRA beneficiary forms are defective
  • Statute of limitation issues including IRA penalties
  • Unintended Beneficiaries of Retirement Accounts or "My IRA is Going Where?"
  • And much more

ABOUT the INSTRUCTOR:  Seymour Goldberg, CPA, MBA (Taxation), JD is a senior partner in the law firm of Goldberg & Goldberg, P.C., Melville, New York. He has conducted over 100 continuing professional education programs for attorneys and CPAs in the area of IRA distributions and IRA compliance issues. He is a former IRS agent and IRS instructor. Mr. Goldberg is  the recipient of Outstanding Discussion Leader Awards from both the AICPA and the Foundation for Accounting Education.  His manuals written for the American Bar Association can be found in well over 100 law school libraries.  Two of his manuals cover IRA issues and IRS compliance issues involving IRAs.

Mr. Goldberg can be reached at 516-222-0422 or by email at [email protected].

The New York and New Jersey CLE credits for this program will be issued by NYCLA 
The CPE credits* for this program will be issued by IRG Publications.
* CPA registrants must submit NYS CPA License Number after selecting registration option.

IRG Publications CPE details: 
Recommended CPE Credit Hours:  3 
Method of Presentation:  Webinar 
NY Sponsor:  IRG Publications 
Sponsor License No:  002963 
Subject area:  Taxation
Learning objective:  To  acquire knowledge involving tax planning and IRS compliance issues when dealing with IRA assets after the Secure Act
Level:  Intermediate 
Prerequisite:  Basic knowledge of taxation

Member (CLE Credit): $85
Non-member (CLE Credit): $105
CPA (CPE Credit ONLY): $75
JD/CPA Member (CLE & CPE Credit): $105
JD/CPA Non-Member (CLE & CPE Credit): $125

You must be signed in to register. If you do not have an account, you can create it for free.
For technical and account related issues, please contact us at [email protected]

October 9, 2021 in Conferences & CLE, Non-Probate Assets | Permalink | Comments (0)

Wednesday, September 8, 2021

Brother Had Standing Under Texas Slayer Statute To Seek Declaration Regarding Rights To Insurance Proceeds

Estate planningIn Lawrence v. Bailey, the Texas First District Court of Appeals addressed whether "a relative had standing under the Texas Insurance Code's Slayer Statute to obtain a declamatory judgment as to the disposition of life insurance proceeds." 

Steven Lawrence's wife LaQuita was named the primary beneficiary in his life insurance policy, which was issued by Hartford in January 2008. Their son Ross was named the contingent beneficiary. 

Steven and LaQuita were killed in their home in October 2013 and ross was indicted for capital murder for killing them. 

Hartford filed an interpleader petition in order to seek direction as to what to do with the life insurance funds. In the mean time, Hartford deposited the insurance proceeds with the registry of the court. 

Robert (Steven's brother) filed a tradition motion for summary judgment, in which he argued that based on the Texas slayer statute, he was entitled to the life insurance proceeds as a matter of law. 

The trial court ruled that it was granting the special exceptions and denying Robert's motion for summary judgment and set a trial for March of 2020. One month later, the administrator of Steven's Estate filed a "Motion to Close and Distribute Funds in Registry of the Court to the Estate of Steven Ross Lawrence, Deceased."

The trial court granted the administrator's motion and Robert filed a motion for new trial alleging that the trial court "spontaneously granted" the motion to distribute the interpleader funds to Steven's Estate, "without a hearing or notice" to him. 

Robert also asserted that "[t]his was a fundamental violation of Robert's right to due process." Robert asked the trial court to vacate the order awarding the insurance proceeds to Steven's Estate and grant him a new trial. The trial court denied the motion and Robert appealed. 

Under the Texas Insurance Code: 

A beneficiary of a life insurance policy or contract forfeits the beneficiary's interest in the policy or contract if the beneficiary is a principal or an accomplice in willfully bringing about the death of the insured.

The Texas appeals court determined that Robert had standing to obtain declaratory relief under the Texas slayer statute. The court determined that "the record also demonstrated that a real controversy exists between the parties regarding the insurance proceeds, since Hartford interpled funds indicating it anticipated rival claims to the funds." 

Despite the fact that the murder case against Ross had not been solved yet, the court found that the Texas Slayer Statute does not require that any criminal case relating to "whether the beneficiary willfully brought about the insured's death be resolved before the willfulness determination is made." 

See Brother Had Standing Under Texas Slayer Statute To Seek Declaration Regarding Rights To Insurance Proceeds, Probate Stars, August 30 2021. 

September 8, 2021 in Estate Administration, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Wednesday, August 25, 2021

Mega-IRAs, Boon or a Bane?

Albert Feuer recently posted an updated version of his article, Mega-IRAs, Boon or a Bane?, on SSRN. The article also appears in 49 Comp. Plan. J. No. 8, 179 (2021). Here is the abstract of this article:

Peter Thiel reportedly converted a 1999 Roth IRA investment of $1,700 in PayPal “founder’s shares,” into assets that appeared to be worth $7 billion on June 30, 2021. There are serious questions whether this IRA and other Mega-IRAs are entitled to the IRA tax benefits. The IRS should have the resources to challenge the tax exemption of any Mega-IRAs appearing to violate the current law. These Mega-IRAs will disappear when the IRS prevails. There should also be statutory changes to direct tax incentives not at Mega-IRAs and their owners, but at improving the retirement readiness of American working families. This was why traditional and Roth IRAs were introduced and why they are called individual retirement accounts. The following common-sense changes would help achieve this goal by narrowing the retirement savings focus of retirement tax incentives:

(1) All the IRAs of an individual whose traditional IRAs, Roth IRAs and designated Roth 401(k) IRAs have an aggregate value in excess of $5 million at the end of any calendar year shall be called Mega-IRAs and should lose their tax qualification if the Mega-IRAs do not distribute half of the excess by the end of the following year;

(2) All of an individual’s Mega-IRAs should lose their tax-qualification if the individual makes any contributions to any Mega-IRA for the following calendar year;

(3) The minimum required distribution rules applicable to traditional IRAs and designated Roth 401(k) IRAs should apply to Roth IRAs, i.e., annual distributions should start by April 1 of the year following the year, if any, the participant reaches age 72; and

(4) The annual excise tax for excess contribution to any IRA should be increased from 5% to 10% and should apply to the earnings associated with any excess contributions for the year at issue, rather than only to the excess contributions, as is now the case.

August 25, 2021 in Articles, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (1)

Wednesday, February 10, 2021

Kansas Supreme Court: “Any Person” Means What It Says In Double Penalty Probate Statute For Conversion Of Decedent’s Property

Estate planningIn In re Estate of Taylor, "the Kansas Supreme Court interpreted the plain language of the Kansas Probate Code’s conversion statute to determine that the double penalty provision for conversion of a decedent’s assets applies to any person who converts assets, not just the appointed executor or administrator." 

Thelma Taylor died testate in November 2015. Laura Kelly was named as executor in Thelma's will which directed that the executor "shall have absolute discretion to distribute any personal property not disposed of [by separate writing] or to sell all remaining property and add to the residue of my estate which shall then be paid in [its] entirety to the Boys and Girls Club of Atchison, Kansas." 

Kelly filed a petition to admit the will to probate. The petition stated that the estate included household furnishings and life insurance proceeds worth $1000 and $8300 respectively. The petition for informal administration was granted and Kelly was granted letters testamentary.

The Boys and Girls Club then moved for a supplemental inventory, which valued the estate assets to a little over $12,000. It also valued non-probate assets which included a checking account with $150 and $11,000 cash located in a safe deposit box. The cash in the deposit box were described as "[j]ointly owned with Laura Kelly as joint tenants with the right of survivorship." 

Kelly later petitioned for a final settlement granting the Club the amount leftover after paying debts and expenses, which would leave the Club with about $500. 

The Club objected to this amount and alleged that Kelly should be held liable for double the value of any converted property. 

The District Court held that Kelly wrongfully converted the safety deposit box's contents and breached her duties as Thelma's personal representative. The court ordered Kelly to pay $22,000, which is double the amount of the converted property ($11,000 in cash). 

The Court of Appeals found that Kelly converted the property, "but divided over the double penalty." 

Under K.S.A. 59-1704, "any person that. . . converts. . . any personal property of a decedent or conservatee, such person shall be liable for double the value of property. . . converted." 

The Kansas Supreme Court ultimately held that K.S.A. 59-1704 applies to any person, even appointed fiduciaries. 

Essentially, "You cannot convert estate assets prior to being appointed as executor and be exempt from the double penalty provision of the Kansas Probate Code’s conversion statute." 

See Kansas Supreme Court: “Any Person” Means What It Says In Double Penalty Probate Statute For Conversion Of Decedent’s Property, Probate Stars, February 4, 2021. 

February 10, 2021 in Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets, Wills | Permalink | Comments (0)

Monday, January 11, 2021

It’s Mother vs. Son in Britain’s Priciest Divorce War

DivorceTemur Akhmedov is not your average 27-year-old. Temur is being sued by his mother, Tatiana Akhmedova, for nearly $100 million in cash and assets. Temur's parents have divorced and Tatiana feels that her son has been shielding his father's—her ex-husband— assets. 

Ms. Akhmedova is attempting to gain a share of the $615 million divorce settlement, which is believed to be the largest in Britain's history. "Her ex-husband has refused to hand over a single ruble and has kept his money, and himself, far away from the United Kingdom and the reach of its courts."

Since Ms. Akhmedova has not been able to reach her husband or his assets, she got creative. Ms. Akhmedova sued her oldest son, Temur, a U.K. resident, putting his holdings within reach. 

As Temur's lawyers candidly put it, "[his father] showered Temur with unimaginable amounts of money." 

Included in the 27-year-old's assets are a three-bedroom apartment that is worth $40 million, a $460,000 Rolls-Royce S.U.V., Mercedes-Benzes and more. 

See David Segal, It’s Mother vs. Son in Britain’s Priciest Divorce War, N.Y. Times, January 5, 2021. 

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

January 11, 2021 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Friday, December 18, 2020

5 reasons musicians like Bob Dylan and Stevie Nicks are selling their song catalogs right now

MusicA trend involving musicians selling their "beloved and extensive song catalogs" has begun to make its stride in the music industry. Bob Dylan recently sold the rights to his entire catalog for an estimated $300 million to $400 million. This has been coined as possibly the biggest acquisition of music publishing rights from a single songwriter. The catalog consists of more than 600 songs and a Nobel Prize in Literature. 

Unlikely many artists, Bob Dylan owned most of his own songwriting copyrights. According to Marketwatch, the only likely competitor in value and influence would be the Beatles. Bob Dylan was nor the first nor the last artist to sell his catalog. 

Last month, Stevie Nicks sold 80% of her rights to her songwriting catalog for a reported $100 million. Also, in August, Imagine Dragons sold their back catalog for over $100 million. 

Hipgnosis Songs Fund, a British company that buys hit catalogs spent around $670 million in the months between March 2020 and September 2020 on multiple different catalogs consisting of more than 44,000 songs. 

It appears Dolly Parton is thinking about jumping on the train as well. 

Why the sudden surge? Many believe that "the Spotify effect" has a lot to do with it. Not only are older catalogs being played a lot more due to the easy access, it is not much easier to value music due to streaming revenues. Which also inherently makes these catalogs more profitable.  

Also, under the current tax plan and low interest rates, now may be the best time for artists and musicians to sell their catalogs and maximize profit. The low interest rates are good for investors that may want to invest in catalogs to receive royalties. Further, many musicians are not making as much money as they normally would because COVID-19 has essentially cancelled touring. 

One other great benefit is that musicians will not have to deal with their catalogs being fought over in court. With these clear transfers, it is clear who owns the rights and it is a great weight of their shoulders. 

As an artist, songwriter, or musician, now may be the best time and possibly the only time for awhile in which it is more beneficial than a detriment to sell the rights to the catalogs that lead to such great fame and success. 

See Nicole Lyn Pesce, 5 reasons musicians like Bob Dylan and Stevie Nicks are selling their song catalogs right now, Market Watch, December 16, 2020. 

Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.

December 18, 2020 in Current Events, Estate Administration, Estate Planning - Generally, Music, Non-Probate Assets, Technology | Permalink | Comments (0)

Thursday, November 5, 2020

Creditor Protections for Inherited IRA Benefits and the Proposed Harmonization of Protections for Savings and Retirement Benefits Act

Albert Feuer has just posted his article entitled Creditor Protections for Inherited IRA Benefits and the Proposed Harmonization of Protections for Savings and Retirement Benefits Act which appeared in the Summer-Fall 2020 issue of te NYSBA Trusts and Estates J. Here is the abstract of his article:

There is ambiguity whether New York law permits a judgment creditor to enforce its claim against the debtor’s interest in an inherited individual retirement account (IRA). In contrast, some states have enacted legislation that protect inherited IRAs from creditors of a beneficiary. The article discusses New York protections for a debtor’s savings and retirement Benefits and the only Court decisions considering whether a creditor may enforce a claim against the judgment debtor's interest in an inherited IRA. Those decisions are all recent and find that such claims are enforceable. Although, the article argues that such decisions are unconvincing, they must be considered carefully by debtors and creditors. Thus, estate planners often recommend naming a spendthrift trust as the IRA beneficiary in order to protect the individual beneficiaries from their creditors.

November 5, 2020 in Articles, Non-Probate Assets | Permalink | Comments (0)

Sunday, May 24, 2020

Partition Law Abuse

VICE, a mini-documentary series that airs on Showtime (it used to air on H.B.O.), recently produced an episode on partition law abuse that has impacted so-called heirs’ property owners (tenancy-in-common property that typically is transferred by way of intestate succession) and that episode has been airing on Showtime this month. See https://www.sho.com/vice/season/1/episode/5/quitting-wework-and-losing-ground-and-italys-darkest-hour (you can stream it from this link).

This episode highlights how partition law abuse has contributed to substantial property loss in the African American community and it references the Uniform Partition of Heirs Property Act (UPHPA). Professor Thomas Mitchell of Texas A&M University School of Law, the Reporter/principal drafter for the UPHPA, helped the producer as he developed the segment and was interviewed as the national expert on partition law/heirs’ property.

A number of law professors have asked if VICE might be able to make the episode on partition law abuse available to teachers for use in their courses. The producer responded that he can send a link to a professor individually which would expire in a few weeks and that he is raising the bigger question about making it more accessible to teachers with his executive producers. He also indicated he could supply DVD copies but that might be for a fee. Already, a number or professors who teach Property law have contacted the producer.

Please contact him directly if you are interested in getting access to the episode. His name is Lyle Kendrick and his email address is [email protected]

Note that 16 states (and the U.S. Virgin Islands) have enacted the UPHPA into law with Virginia becoming the most recent state. This makes the UPHPA approximately the 5th most successful uniform real property act that the Uniform Law Commission ever has promulgated in its 128-year history (of about 40 such acts). In addition, the Florida legislature unanimously passed the UPHPA this spring and Governor DeSantis has indicated he intends to sign it into law sometime in the next several weeks. The Mississippi Senate has passed the UPHPA and the Mississippi House is considering the MS Senate bill at this time.

May 24, 2020 in Non-Probate Assets, Resource Links, Teaching | Permalink | Comments (0)

Thursday, April 16, 2020

Prudential Suspends Applications for Some Life Insurance Policies

InsuranceOne of the insurance industry's major players, Prudential, recently announced coronavirus-related changes that now limit American's choices for life insurance policies. The company said it would suspend its acceptance of applications for 30-year term life insurance policies due to “unprecedented market volatility” and “the anticipated low interest rate environment for the foreseeable future.” The suspension will be in place until at least June.

Prudential is the second-largest life insurer in the country based on net premiums written and the third-largest seller of individual life insurance based on new and recurring premiums. Les Masterson, managing editor at Insure.com, said it is quite possible other insurance companies could take steps of their own to limit risk, further limiting the choices of those seeking policies during this crisis.

When it comes to whether your insurance will pay out for deaths from coronavirus, experts at NerdWallet said most people are covered under traditional and term life insurance policies already in place.

See Brittany De Lea, Prudential Suspends Applications for Some Life Insurance Policies, Fox News, April 7, 2020.

April 16, 2020 in Current Affairs, Death Event Planning, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)