Wills, Trusts & Estates Prof Blog

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

Wednesday, March 25, 2020

Article on How Should Non-Probate Transfers Matter in Intestacy?

IntestacyMary Louise Fellows and E. Gary Spitko recently published an Article entitled, How Should Non-Probate Transfers Matter in Intestacy?, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article.

As American family structures have become more heterogeneous, status-based intestacy statutes have become less suited to promoting donative intent. Indeed, numerous scholars of wealth transfer law have noted the critical need for intestacy law reform to address the needs of decedents whose donative intent does not comport with traditional family norms. We propose addressing this concern by looking to intestate decedents’ non-probate transfers, such as a revocable trust, life insurance policy, 401(k) account, brokerage account, or joint tenancy with right of survivorship deed. In 2010, we, along with a co-author, published the first study to consider the relationship between donative intent with respect to the probate estate and donative intent as expressed in non-probate transfers. That study utilized a factorial research design to assess public attitudes and offered support for our new heir hypothesis, that, depending on the identity of the non-probate transfer beneficiary and the identity of the existing heir, a decedent would want a non-probate transfer beneficiary who is not otherwise an heir to be treated as an heir. The instant two-part study of estate planners produces additional knowledge about how best to integrate non-probate transfers into intestacy statutes. In the first part of our study, we conducted a paper survey of forty-five estate planners. The responses to this survey greatly influenced the second part of our study in which we conducted in-person or telephone interviews with nineteen estate planners. The findings reported in this study provide the framework for statutory reform. This study demonstrates that the new heir reform increases the likelihood of promoting intestates’ donative intent in a growing number of twenty-first century familial situations. 

March 25, 2020 in Articles, Estate Administration, Estate Planning - Generally, Intestate Succession, Non-Probate Assets, Trusts | Permalink | Comments (0)

Friday, March 20, 2020

Article on Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide

DeedDanaya C. Wright and Stephanie Emrick recently posted an Article entitled, Tearing Down the Wall: How Transfer-on-Death Real-Estate Deeds Challenge the Inter Vivos/Testamentary Divide, Wills, Trusts, & Estates Law eJournal (2019). Provided below is the abstract to the Article.

This Article will examine one of the most recent will substitutes, the transfer-on-death (“TOD”) real-estate deed. Nearly half of the states have recognized, through common-law forms or legislation, a mechanism to allow for the transfer of real property on death without using a will, without following the will formalities, and without necessitating probate. This new tool in the estate planner’s toolbox is invaluable: revocable trusts have proven too expensive for decedents of modest means, and wills continue to require formalities that can easily frustrate non-lawyer-drafted estate documents. But the variety of TOD deed rules and mechanisms that the different states have adopted has led to disparity and uncertainty in form and outcome, resulting in litigation and frustration of decedent’s intent.

We believe this uncertainty and frustration will continue as even more states adopt the Uniform Real Property Transfer on Death Act (“URPTODA”), which purports to stabilize the law and facilitate testamentary intent. States grappling with this new form interpose significant differences, and lawyers and judges are not all on the same page as to the consequences. One source of confusion is the URPTODA’s provision that TOD deeds are non-testamentary and, at the same time, the Uniform Act provides that the property rights do not transfer until death.

Although it is one thing to declare that TOD deeds are non-testamentary even though property rights don’t transfer until death—which in itself goes against centuries of formal legal rules—it is quite another to get all the other legal consequences to fall into place accordingly. For instance, would a state’s anti-lapse statute apply to save a beneficiary designation if the deed is deemed non-testamentary, even though the intent is to have the real property transfer upon death?

In our opinion, the TOD deed pushes the juridical binary of inter vivos and testamentary transfers beyond coherence and rationality. The law of will substitutes has already undermined the rationality of maintaining the divide, and in this Article, we will argue that the time has finally come to reject the division between inter vivos and testamentary transfers and seek a rational and holistic set of tools and formalities to gain the benefits of probate avoidance that will substitutes provide with the ease of control and full revocability of wills. Elevating form over functionality, although a characteristic of the common law, inevitably disserves the interests of those who cannot afford lawyers who can easily draft around the sometimes-arcane distinctions between testamentary and inter vivos transfers to gain the benefits of each while avoiding the burdens.

March 20, 2020 in Articles, Current Events, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Friday, March 13, 2020

Lawsuit Over FEGLIA Benefits Dismissed From Federal Court Over Lack of Subject Matter Jurisdiction

Lifeinsurance2Last month, the Sixth Circuit Court of Appeals dismissed a case pertaining to the Federal Employee’s Group Life Insurance Act (FEGLIA) for lack of subject matter jurisdiction. The FEGLIA is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, operated by the Office of Personal Management (OPM).

In Miller v. Bruenger, 949 F.3d 986 (6th Cir. 2020), a couple was issued a divorce, and pursuant to their property settlement agreement, the surviving spouse was to remain the beneficiary of the decedent’s life insurance policy, and it was included in the court order. FEGLIA requires that the court order be sent to OPM or the employing agency prior to death, and in this case, it was not. Upon the death of the policy holder the death benefit was paid to his only child, and the former spouse made a claim in state court. By agreement of the parties, the claim was dismissed. However, the daughter then filed an action for declaratory relief in federal court, seeking a declaration that she is the rightful owner of the death benefit.

The case was dismissed for lack of subject matter jurisdiction in the federal district court, and the Appeals Court affirmed, holding that no federal cause of action existed to allow for the enforcement of a marital settlement agreement in federal court regarding FEGLIA death benefits. According to the Court, FEGLIA does not contain an express cause of action for one private party to sue another private party over death benefits governed by FEGLIA, only suits against the federal government are expressly authorized.

See Lawsuit Over FEGLIA Benefits Dismissed From Federal Court Over Lack of Subject Matter Jurisdiction, Probate Stars, March 10, 2020.

March 13, 2020 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Non-Probate Assets | Permalink | Comments (0)

Friday, February 21, 2020

‘The Good, The Bad And The Ugly’ Of The SECURE ACT

SecureactpiggybankThe Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed by the House over the summer and the Senate on December 19th before being signed by President Trump on December 20th as part of the Further Consolidated Appropriations Act, 2020. The legislation has a combination of good aspects, negative portions, and possible 'ugly' outcomes.

The positive aspects of the Act are geared towards senior workers and improving retirement, including allowing IRA contributions beyond age 70½ if the contributor is still working and the required minimum distributions (RMDs) has been raised to age 72 rather than 70½. It will be simpler for part-time workers that have been employed long term to be able to join their company's 401(k) plan. Family planning will be easier now because each parent can withdraw up to $5,000 penalty-free when a child is born or adopted.

But one of the more non-positive parts of the legislation is the removal of the stretch IRA, which allowed a non-spousal beneficiary of a qualified plan to withdraw their distributions each year over their lifetime, based on the IRS rules and life expectancy table. Now, a non-spouse beneficiary of the IRA must withdraw all distributions within 10 years, and pay the subsequent taxes of the payout, usually while they are still working.

That slides right into the ugly part of the Act. IRAs are intended to assist during retirement, but many beneficiaries will be forced to take out significant distributions will employed. Many part time workers or employees of smaller businesses that were meant to benefit from the legislation, are not in a position to take advantage of the new rules and save more for retirement because they spend all the income on a month to month basis.

See Michael Chamberlain, ‘The Good, The Bad And The Ugly’ Of The SECURE ACT, Forbes, February 12, 2020.

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

February 21, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, New Legislation, Non-Probate Assets | Permalink | Comments (0)

Monday, February 17, 2020

Dear Mom and Dad: Are Your Finances Ready for Retirement?

RetirementCameron Huddleston, the author of Mom and Dad, We Need to Talk, says that the conversation with your parents about how they are going to financially survive after retiring can happen organically, even with premeditation. Many parents can be uncomfortable with the shift in the care dynamic - the child is placing themselves in the position to care for the parent. Amanda Clayman, a financial therapist and financial wellness advocate for Prudential, advises that the child can tie the conversation to their own life as a way to maintain the original roles. The parent can explain their own choices as an example to their children, and both sides can offer insight to each other.

Carol Levine, a senior fellow at the United Hospital Fund in New York, says that it is best not to bring up these difficult subjects during the holidays. Timing if important, of course, and adult children can get together before broaching the subject with their parents as a unit.

A simple guess of combining Social Security and a 401(k) may not be enough. Online retirement calculators such as AARP’s for the Social Security benefits and NerdWallet’s or T. Rowe Price’s can provide a better start, but eventually any person or couple will need to consult with a financial planner. Another tough subject to attack: whether the parent would want to move in with the child if the time should come that their independence becomes limited. Multi-generational homes are not as common in America as they are in other countries, but many parents may prefer it over living in a long-term care facility among strangers.

See Erin Lowry, Dear Mom and Dad: Are Your Finances Ready for Retirement?, New York Times, February 13, 2020.

Special thanks to Matthew Bogin, (Esq., Bogin Law) and Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.

February 17, 2020 in Current Affairs, Estate Planning - Generally, Non-Probate Assets | Permalink | Comments (0)

Thursday, February 13, 2020

Top 10 Tax Planning Tips for 2020


  • Evaluate the benefits of scheduling qualified charitable distributions from your IRAs. They can satisfy all or part of your required minimum distribution, and the portion transferred to the charity becomes non-taxable.
  • Your tax advisor can help ensure you have a proper amount of withholding taken out of any standard IRA distributions.
  • As you make charitable contributions throughout the year, save the documents in one spot, both cash and non-cash gifts.
  • Store tax documents in ONE SPOT as they come in the mail.
  • 1040-SR, US Tax Return for Seniors, is now available for taxpayers who are 65 or older, and feature longer fonts
  • This is the second filing season under the Tax Cuts and Jobs Act of 2017, expect your tax preparer to work on cleaning up and formalizing documentation rather than looking for any big changes.
  • If you are paying an individual caregiver, make sure you speak with your CPA about payroll tax reporting requirements if you haven't already. If the person receiving the care is chronically ill as certified by a health practitioner, the payments may be deducted as medical expenses.
  • Consult with your estate planning attorney about planning large gifts, as each taxpayer can gift $15,000 per year per recipient without having to file a gift tax return.
  • Payments made directly to medical providers or tuition payments made to educational institutions on another person's behalf do not count towards your lifetime gifting limit - such as paying your child's or grandchild's.

See Top 10 Tax Planning Tips for 2020, Chambliss Law, February 6, 2020.

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

February 13, 2020 in Current Affairs, Estate Planning - Generally, Gift Tax, Income Tax, Non-Probate Assets | Permalink | Comments (0)

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)