Wills, Trusts & Estates Prof Blog

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

Thursday, April 9, 2020

The Remote Witnessing of Estate Planning Documents During the COVID-19 Pandemic

DigitalGovernor Andrew Cuomo has signed various executive orders to address the issues faced by the state of New York and its residents during these unprecedented times as the country deals with the COVID-19 pandemic. On April 7, 2020, the Governor issued Executive Order 202.14 which modifies the laws concerning numerous documents pertaining to a person's estate plan.

The act of witnessing for the execution of certain instruments that is required under state laws is authorized to be performed utilizing audio-video technology. Those instruments include:

  • Last will and testament 
  • Lifetime trust
  • Statutory gifts rider to a statutory short form power of attorney
  • Real property instruments
  • Health care proxies
  • Instrument to direct the disposition of a person’s remains upon their death

See Cheryl L. Erato, The Remote Witnessing of Estate Planning Documents During the COVID-19 Pandemic, nyestatelitigationblog.com, March 8, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) and Ira Bloom (Justice David Josiah Brewer Distinguished Professor of Law, Albany Law School) for bringing this article to my attention.

April 9, 2020 in Current Affairs, Current Events, Death Event Planning, Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, New Legislation, Technology, Trusts, Wills | Permalink | Comments (0)

Wednesday, March 25, 2020

Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment

StockmarketMany investors may seem powerless with the market in such turmoil with heightened volatility and falling interest rates. The truth is that there are still many things one can control in this environment, including opportunities to provide for one's family and others that do not come around very often.

  • Donate to Support Your Communities
    • In 2020, you can deduct up to 60% of your adjusted gross income for gifts made to a public charity, and these deductions can offset normal earnings, such as salaries and bonuses, as well as dividend and interest payments and even capital gains.
  • Help Family Members Ride Out the Storm
    • Under the gift tax annual exclusion, an inidividual can give up to $15,000 in 2020 to each recipient without tax consequences, and for a married couple, the total is $30,000 per recipient.
  • Provide Long-Term Support by Using Your Exemption Amounts
    • Giving away assets that a person expects to appreciate as values recover makes use of their exemption while also shifting that appreciation to the next generation.
  • Use GRATs and CLTs to Make Additional Tax-Free Gifts
    • Grantor Retained Annuity Trusts (GRATs) and Charity Lead Trusts (CLTs) allow a person to pass the appreciation in the value of assets over a hurdle rate set by the IRS to their beneficiaries tax-free. Currently, the IRS hurdle rate is 1.8% and in April, the rate will drop to 1.2%. 
  • Refinance Your Debt and Family Loans
    • With interest rates at rock-bottom levels, it could make sense to refinance existing debt obligations such as a home mortgage and reduce the interest rate on any loans made to family members.
  • Convert Your Traditional IRA to a Roth
    • Since the taxes resulting from a conversion are based on the IRA’s balance at the time of conversion, depressed market prices help reduce the tax liability if an individual decides a ROTH conversion makes sense.

See Bryan Kirk, Planning Amid Turmoil: 6 Gifting and Tax Strategies for the Current Environment, Fiduciary Trust, March 18, 2020.

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

March 25, 2020 in Current Affairs, Estate Planning - Generally, Estate Tax, Gift Tax, Non-Probate Assets, Trusts | Permalink | Comments (0)

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)

Tuesday, March 24, 2020

How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs)

MoneyspouseUnder current law, the gift, estate, and generation skipping transfer tax (GST) exemption is $11,580,000, and double that amount for married couples. There are numerous reasons to utilize some or all of that amount now, especially since the exemption is temporary - it is set to lower back to pre-TCJA amounts in 2026. If there is a shift in administration in Washington before that, it could lower sooner.

Setting up trusts can be beneficial for using the tax exemption now and for protecting assets for future generations. But it may be prudent to place the property in a trust that benefit not only your children but also name yourself as a beneficiary so that you not completely cut off from the funds should the need arise for them. If you are married, you can set up a trust that names your spouse as a beneficiary. That way your spouse can access assets transferred as a beneficiary and you do not lose the ability to benefit from the wealth you accumulated. These trusts are sometimes called Spousal Lifetime Access Trusts or “SLATs.”

For those that are not married, the alternative is a domestic asset protection trust, or DAPT. 19 states allow these self-settle trusts, and generally people from those states agree that the trusts serve their intended purpose. If you create this type of trust in a non-DAPT state, be aware of that in many jurisdictions, a self-settled trust is void as to the settlor's creditors.

See Martin Shenkman, How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs), Forbes, March 22, 2020.

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

March 24, 2020 in Current Affairs, Estate Administration, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, New Legislation, Trusts | Permalink | Comments (0)

Saturday, March 21, 2020

Vanessa Bryant Files to Add Infant Daughter to Kobe's Trust

KobesuitKobe Bryant had set up a trust before his untimely death to provide for his widow, Vanessa, and their daughters, one of which perished alongside him in a helicopter crash in January. The trust was created in 2003 and amended several times, the last in 2017. The couple's most recent child, Capri, was born in 2019. Vanessa has filed to amend the problem, requesting that the infant daughter be added to the trust.

The trust agreement is reportedly set up to allow Vanessa and her daughters to draw from the principal and income during Vanessa’s lifetime, with the remainder going to the children upon Vanessa’s death. The widow is arguing that according to the trust document, Kobe's intent was to provide for all their children. The other two surviving children of the couple are Natalia, 16, and Bianka, 2.

Vanessa has also filed a lawsuit against the helicopter company that owned the vehicle in which her husband and daughter died and has demanded the deletion of reported graphic photos taken and distributed by deputies through her lawyer.

See Jack Baer, Report: Vanessa Bryant Files to Add Infant Daughter to Kobe's Trust, Yahoo Sports, March 19, 2020; see also Ralph R. Ortega, Kobe Bryant's Widow Seeks to Amend His Trust to Include Daughter Capri, Daily Mail, March 18, 2020.

Special thanks to Jim Hartnett, Jr. (Dallas, Texas Probate Attorney) and Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing these articles to my attention.

March 21, 2020 in Current Events, Estate Administration, Estate Planning - Generally, New Cases, Sports, Trusts | Permalink | Comments (1)

Thursday, March 19, 2020

Coronavirus Trusts? Suddenly Estate Planning More Popular Than Stockpiling Food as Advisors Arrange Wills and Trusts for Elderly Clients

CovidThe global pandemic of COVID-19 has numerous people thinking a question they have refused to face - what if? But now that they are, they are now also facing their own mortality, and realizing that they do not have the basic estate planning documents.

To protect yourself and your loved ones, now's a good time to make sure that you have the following four documents prepared and updated.

  • A will or revocable trust.
    • Many people choose a trust for the passage of assets to loved ones at death without the need for probate, but others can choose a will, especially those that have modest estates.
  • Beneficiary designations on financial accounts.
    • Many assets do not pass through a will or trust, such as an IRA, 401(k) account, or life insurance policy, and instead the proceeds go to the person you name as beneficiary of that account.
  • Healthcare durable power of attorney.
    • A durable power of attorney for healthcare will give the person you designate as your agent the ability to make the medical decisions you specify on your behalf. Check with your healthcare provider to see what they prefer to see in a healthcare power of attorney to ensure a smooth transition if you become incompetent.
  • Financial durable power of attorney.
    •  In the chance that you become incompetent, financial responsibilities continue. You can tailor your financial power of attorney as narrowly or broadly as you want, ranging from simply being able to pay bills on your behalf to making major changes to your investment portfolio.

See Roland McMillian, Coronavirus Trusts? Suddenly Estate Planning More Popular Than Stockpiling Food as Advisors Arrange Wills and Trusts for Elderly Clients, Wealth Advisor, March 17, 2020.

Special thanks to Jerry Cooper (Wealth Advisor) for bringing this article to my attention.

March 19, 2020 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0)

Monday, March 16, 2020

CLE on Building Asset Protection into Estate Plans

CLEThe National Business Institute is holding a webcast entitled, Building Asset Protection into Estate Plans, on Monday, April 6, 2020 from 9:00 AM - 4:00 PM Central. Provided below is description of the event.

Program Description

Effective and Compliant Ways to Shore up Creditor Protections

Guarding clients and their estates against creditors is a deep-rooted part of estate planning. Do you have all the knowledge and skills at your disposal to prevent frivolous creditor attacks and minimize asset vulnerabilities? This practical legal guide explores the most effective techniques available to trusts and estates practitioners today. Register today!

    • Accurately assess specific assets', income sources' and beneficiaries' risk of exposure.
    • Explore simple ways to protect clients from the biggest threats.
    • Learn how to use trusts and LLCs to strengthen creditor protections and build in flexibility.
    • Maximize the use of exempt assets to boost protections.
    • Understand what techniques work even after the death of the grantor.
    • Protect your professional reputation with a legal ethics guide tailored to the demands of the trusts and estates practice.

Who Should Attend

This legal guide is designed for attorneys. It will also benefit accountants, tax professionals, trust officers and paralegals.

    • Course Content
    • Tax Rules Overview and Updates
    • Identifying Vulnerabilities and Common Mistakes That Expose Assets to Creditors
    • Simple Methods of Guarding Assets
    • Trusts in Wealth Preservation - Not Only for the Ultra-Rich
    • Using LLCs and Limited Partnerships
    • Timing of Asset Protection Efforts: Preventing Fraudulent Transfers and Other Considerations
    • Asset Protection Issues in Estate Administration
    • Legal Ethics

March 16, 2020 in Conferences & CLE, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Trusts | Permalink | Comments (0)

Saturday, March 7, 2020

Comment on In Texas We Trust: The Need to Bring Domestic Asset Protection Trusts to Texas

TexastechJake Stribling recently published a Comment entitled, In Texas We Trust: The Need to Bring Domestic Asset Protection Trusts to Texas, Est. Plan. & Cmty. Prop. L.J., Vol. 12 Book 1 (Fall 2019). Provided below is the introduction of the Article.

 Billions in American-made money is currently being held in foreign jurisdictions. Just southeast of the United States in the Caribbean Sea, the number of financial institutions in the Cayman Islands is astonishing. The Cayman Islands are a small tourist destination in the middle of the Caribbean with many of the major investment centers found in a metropolitan area. The three Cayman Islands serve as a home to more than 212 different banks, holding over $1.5 trillion in internation assets. The Cayman Islands are one of the most highly sought after foreign destinations for American to store their money. The question is, why does America not get to keep all of that American money in our nation? The answer is, the United States can, if more states adopt domestic asset protection trusts into law, a reverse effect can and will happen.

 Seventeen states have adopted domestic asset protection trusts into law and experiencing widespread success. In order to continue this trend of bringing assets back into the U.S., more than seventeen states must follow suit. Texas, being a large and prosperous state with a booming economy, can benefit itself and the nation be choosing to legalize domestic asset protection trusts.

This comment will address the various issues and successes of domestic asset protection trusts. First, this comment will analyze the history of assets protection trusts to understand the origins and purposes of this unique form of trust. Next, this comment will explore different domestic asset protections trusts adopted by various states and the reasons why some states are more effective than others. Finally, this comment will discuss the need for Texas to join the trend of adopting asset protection trusts. In doing so, this comment will provide a set of criteria and a path for lawmakers to follow when Texas decides to adopt domestic asset protection trusts into law.

March 7, 2020 in Articles, Current Events, Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink | Comments (0)

Friday, March 6, 2020

Heirs of Ultra-Wealthy can Profit Even When Markets Plunge

StockmarketThe coronavirus is causing a panic worldwide and it is being felt domestically by the plunging stock market. Though many people are worried about the downward spiral of stocks, the super wealthy, or 0.1% of Americans, see it as a glimmer of hope in these dark times. 

The rich and their advisors take a longer-term view of market volatility because their beneficiaries are future generations -- some who haven’t even been born yet. “They have more money than they could ever spend,” Ali Hutchinson, a senior wealth planner at Brown Brothers Harriman, said of her ultra-wealthy clients. “Even though this volatility could go on for months, they’re not thinking about it in that short-term way. The smart ones are using it as an opportunity.” When stocks and interest rates are lower, the Internal Revenue Service cannot tax their wealth at the same level as before the dips, making it easier to pass money to the next generation tax-free. “You could almost say it’s a perfect storm for wealth-transfer planning,” said David Stein, a partner on the private client and tax team at Withersworldwide.

A Grantor Retained Annuity Trust (GRAT) is also an option that shows much more promise during times of damaged stocks. A wealthy family will put a stock or other asset in a GRAT, a transaction that is technically a loan. If the stock rises in value, those proceeds go to beneficiaries tax-free. If the stock drops, there’s no harm done and the shares just go back to the donor. The IRS requires that trusts pay interest back to the lender, the taxpayer that set up the GRAT. The rates, which are set by a formula and published each month, are a hurdle that GRAT investments must clear in order for returns to flow to beneficiaries. Stein expects the IRS’s April rate could drop to about 1.2% or even lower.

See Ben Steverman, Heirs of Ultra-Wealthy can Profit Even When Markets Plunge, Financial Advisor, March 6, 2020.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

March 6, 2020 in Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, Estate Tax, Gift Tax, Trusts | Permalink | Comments (0)

Wednesday, March 4, 2020

Article on Tax Reform Implications for Fiduciaries

FiduciarydutyNicole Pursley recently published an article entitled, Tax Reform Implications for Fiduciaries, Wealth Strategies Journal, March 4, 2020. Provided below is a summary of the Article.

The Tax Cuts and Jobs Act of 2017 (the Tax Act) made significant changes to the United States Tax Code, with implications on virtually all areas of taxation, including some that affect fiduciaries. This article provides a broad overview of some tax implications that may be of importance to trust and estate professionals. The primary areas of focus are related to the 199A deduction, Opportunity Zones, section 1202, and minimizing state income taxes with the use of non-grantor trusts.

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

March 4, 2020 in Articles, Current Events, Estate Administration, Estate Planning - Generally, Income Tax, New Legislation, Trusts | Permalink | Comments (0)