Tuesday, December 2, 2014

As we discussed in our January 28 post, IRS Issues Revenue Procedure Regarding Portability Election, Revenue Procedure 2014-18 allows for the filing of an estate tax return for purposes of claiming a portability election for decedents who died after December 31, 2010 and on or before December 31, 2013.  The deadline for this extended filing is December 31, 2014 — if this applies to you, don’t miss it!

As we discussed in our second post on this topic on January 31, Update: Rev. Proc 2014-18s Effect on Same-Sex Married Couples and Portability Elections, this can be especially important for same-sex married couples who weren’t considered married for federal tax purposes until this year.

Monday, December 1, 2014

177855670When a will contains a so-called no contest clause or in terrorem clause that would cause a beneficiary to lose his or her interest in the deceased’s estate in the event the beneficiary contests the validity of the will, the court is often called upon to determine whether to enforce the forfeiture against the beneficiary if he or she loses the will contest. Just such an issue faced the Mississippi Supreme Court in Parker v. Benoist.

In this case, Bronwyn Benoist Parker (“Parker”) filed a will contest, contesting the validity of her father’s 2010 will. The 2010 will changed the disposition of the father’s estate from an equal division between Parker and her brother, William Benoist (“Benoist”), to a disposition where Benoist received a significantly greater portion of their father’s estate and Parker received a significantly lesser portion of the estate. (more…)

Thursday, November 27, 2014

Happy Thanksgiving from the Private Client group at Bryan Cave!  

Now is the time everyone comes together to remember what they’re thankful for this year.  In conjunction with being thankful for the blessings in our lives, it also is a good time to review your estate planning goals, such as the following:

  • Have you retained enough cash flow for you (and your spouse) in order to maintain your standard of living and provide you with security for your lifetimes?
  • Have you provided for your surviving spouse so he or she will be taken care of after you’re gone?
  • Have you prepared a prenuptial agreement to protect your assets upon divorce?  See our post on Prenuptial Agreements.
  • Have you protected your children (or other beneficiaries) by protecting their inheritance from creditors? See our post on Creditor’s Rights.
  • Have you protected your children (or other beneficiaries) by reducing your taxable estate and, ultimately, any estate tax due at your death, which will increase the amount ultimately passing to your beneficiaries?
  • Have you protected any special needs child by creating a special needs trust that will not affect the child’s eligibility for any necessary government assistance he or she may need? See our post on Planning For Special Needs.
  • Have you provided enough liquidity in your estate to pay any estate taxes that are due at your death?
  • Have you protected your grandchildren (and more remote descendants) by providing for the passage of assets from generation-to-generation without transfer tax, ultimately increasing the amount available for future generations?
  • Have you made provision for any charitable gifts you wish to make?  See our post on Deduction Rules for Charitable Gifts.
  • Have you assisted your loved-ones in finding both your physical and digital assets?  See our post on Treasure Maps.
  • Have you named someone to make your financial and healthcare decisions should you be unable to make them for yourself?  See our post on Planning the End that you Want.
  • Have you specified your healthcare treatment preferences if you are in a terminal condition or state of unconsciousness? See our post on Planning with POLST.
  • Have you named a guardian for your children should you be unable to care for them?

If any of these goals apply to you, but you feel they haven’t been addressed in your current estate planning documents (or you don’t have any current estate planning documents) be sure to contact your attorney to make the necessary changes to make sure your goals are addressed!

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Monday, November 24, 2014

451428613Advances in medical technology have made it possible for a child to be conceived after the death of one or both of his or her genetic parents with the use of stored sperm or ova. Recently, the New York State Legislature has sent a bill to Governor Coumo which clarifies when a child born after the death of his or her genetic parents, a so called posthumously conceived child, will be deemed a child of such parents for the purpose of inheritance and intestacy law. This issue may arise when a genetic parent who will ultimately have a posthumously conceived child dies without a Will or with a Will using the generic term child or issue. Does the posthumously conceived child take a share of his or her genetic parent’s estate? (more…)

Friday, November 21, 2014

stk119517rkeSeveral non-community property states have recently enacted statutes authorizing the creation of a joint trust by spouses that would be treated as entireties property, protected from the creditors of either spouse during their joint lifetimes, but would split into a separate Family Trust and Survivor’s Trust when one of them died. The question many estate planning lawyers have raised is whether the Family Trust would be includible in the survivor’s estate for Federal estate tax purposes when the survivor died. This question has now been answered at least as to one taxpayer in a private letter ruling, PLR 201429009 (released 7/18/2014).

In this private letter ruling, a Husband and Wife created a joint revocable trust. During their lives, they contributed their joint property to the trust and the trust provided that each of them held an undivided one-half beneficial interest in the trust as tenants in common and not as joint tenants.

On the death of Wife, the trustee was to divide the joint trust into a Family Trust with Wife’s trust assets and a Survivor’s Trust with Husband’s trust assets. Husband could amend and revoke the Survivor’s Trust, and on the death of Husband, he had a general power of appointment over the Survivor’s Trust. (more…)

Friday, November 21, 2014

The 7520 rate for December has decreased to 2.0%.

The December 2014 Applicable Federal Interest Rates can be found here.

Tuesday, November 18, 2014

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U.S. News and Best Lawyers have joined to rank more than 12,000 firms in the U.S. in 120 practice areas in 174 metropolitan areas and 8 states.

Bryan Cave’s Trust and Estates Practice Group (“Private Client CSG”) received National First Tier Ranking and the Atlanta, Kansas City, Orange County, and St. Louis offices all received First Tier Rankings in metropolitan cities.

Congratulations to the Private Client Group!

The 2015 report of more than 12,000 firms by practice area is based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field and review of additional information provided by law firms as part of the formal submission process. Results were combined into an overall “Best Law Firms” score for each firm.

Monday, November 17, 2014

97733572In two substantially identical private letter rulings, PLR 201423009 (released 6/6/2014) and PLR 201426005 (released 6/27/2014), the taxpayers requested guidance as to the impact of a sale of a survivor life policy from a grantor trust where both insureds are the grantors to a grantor trust where only one of the insureds is the grantor.

The proceeds of a life insurance policy are free from income taxation in the hands of the recipient after the death of the insured(s), unless during the life of the insured(s) there was a transfer of an interest in the policy for valuable consideration. However, the transfer for value rule does not apply in two circumstances set out in § 101(a)(2)(A) and (B).

1. As provided in § 101(a)(2)(A), the transfer for value rule will not apply where the basis in the policy for purposes of determining gain or loss in the hands of the transferee is the same as the basis in the policy for purposes of determining gain or loss in the hands of the transferor. (more…)

Wednesday, November 12, 2014

513104781Just as Mr. Dabney learned in our prior post, Dennis Bohner learned about the Plan Document Rule in Bohner v. Commissioner. Here Bohner participated in the Civil Service Retirement System as a government employee. When he retired, he received correspondence that he could increase the amount of his retirement annuity if he sent the plan administrator $17,832, which he did.

However, since Bohner did not have that cash available in any other account, he withdrew $5,000 from his IRA and borrowed the balance of the funds to make that payment. He then withdrew an additional amount from his IRA to pay back the borrowed funds. Like Dabney, Bohner ignored the Form 1099-R and did not report these withdrawals on his income tax return and treated them as rollovers from his IRA to his qualified plan. The IRS did not agree that these were rollover contributions and assessed a deficiency. (more…)

Friday, November 7, 2014

81178323The provisions of IRC § 408 do permit investment of IRA assets in any kind of asset other than those specifically prohibited, such as life insurance and collectibles. Therefore, it was somewhat reasonable for Guy Dabney to conclude that he could invest his IRA account assets in real estate. However, the Tax Court in Dabney v. Commissioner took Mr. Dabney to task for failing to follow the terms of the IRA Account Agreement that governed his IRA.

In this case, Dabney wanted to use his IRA assets to purchase a piece of undeveloped land in Utah that he considered to be priced below its fair market value. So he did what a lot of us do when we want to learn something new—he went to the Internet. Based on his Internet research, Dabney concluded that IRAs were permitted to invest in real property.

Dabney was smart enough to know that he should delve further in his research than just the Internet. Next, he contacted his CPA, who told him that he didn’t have any training in retirement account rules, but based on Dabney’s research confirmed that he could invest IRA assets in real property.

Here’s where Dabney went wrong, however. (more…)