The Donald’s Impact on Estate Planning: Good or Bad?

Jonathan G. Blattmachr & Martin M. Shenkman, two major gurus in the estate planning field, seem to think a Trump administration will lead to the need for most of us to engage in some planning:

The election of Donald J. Trump as President, along with a Republican-controlled House and Senate, may lead to the most radical changes to the estate tax since it was first enacted.

I’ve only read a brief abstract from the article at this link. I’ll report back after I’ve read the actual piece. (I’m not a fan of the online viewing option for this story. Hard to read.)

Just Leave It Alone?

As many will recall, then candidate Trump promised to eliminate the estate tax. That was then. This is now–he’s the President. What will he actually do? Will he also eliminate the estate tax’s two siblings: the gift tax and the generation skipping tax? No one knows, though many people care, especially those who preach tax fairness.

Given that married couples currently have to be worth almost $11 million dollars before  the estate tax kicks in–it’s more complicated than that, but still–eliminating the estate tax is going to help only the very, very wealthy. And maybe that’s a bad (or a good) thing.

I’m here to argue for the advisor. Estate planning attorneys, life insurance and investment advisors, CPAs and financial planners. I’m betting that each and every one of them agree with the following:

Because the estate tax generates a meager 0.005 percent of annual tax collections, according to I.R.S. figures, it generates far more political debate than federal revenue. And among many tax planners, the calls aren’t so much for reform as for stability, or at least a period of benign neglect.

“Just leave it alone so we can plan,” Mr. Jenney said. “But every administration seems to want to put their own twist on the estate tax.”

When We Last Looked in on Prince

As readers of this blog will remember, I posted a short piece about the news that Prince died without a will. To quote from that very brief article:

Something tells me this will neither go smoothly nor end well.

Well, look who’s a genius: Lawyers battle for control of late pop star Prince’s estate.

Veteran entertainment attorney L. Londell McMillan and CNN political commentator Van Jones were close advisers to Prince at different times in his life. Following the reclusive artist’s drug-overdose death in April, the two have ignited a family feud among his six known heirs—a sister and five half-siblings—over issues including the singer’s legacy, a memorial concert and the lawyers’ own conflicts of interest.

. . .

The development comes nearly a year after Prince’s death and offers a window into McMillan’s vision for how best to manage the estate—a view that differs in some respects from that of Jones. (emphasis supplied)

Actually, it doesn’t take much of a genius to see problems in the future when money is at issue–lots of it, in this case. I learned that years ago when I worked as a bank teller for a short time in a management training program I was in. I made a small mistake–25 cents if I recall correctly–when I entered the current balance in the customer’s passbook savings book. You would have thought that I’d just robbed Fort Knox.

Lesson? Be a real prince and have an attorney draft you a will–at least a will. And if you don’t want people peering into your estate through a “window,” have your attorney draft a revocable living trust as well. Unlike with a will (or an estate like Prince’s with no will), what goes on inside a trust is private.

Estate Planning Seminar at Pleasant Grove Library

I’ll be presenting a seminar on DIY — Do It Yourself — Estate Planning at the Pleasant Grove Library on Wednesday, March 8, 2017 at 7 PM. Come an enjoy the discussion. The address is 30 E Center St, Pleasant Grove.

If you have a question about wills, trusts, and other aspects of estate planning, maybe I can answer it.

Farm and Ranch Transition Conference–University of Wyoming College of Law

The Rural Law Center at the University of Wyoming College of Law is sponsoring the Farm and Ranch Transition Conference on March 3, 2017, a Friday, in Laramie. It’s free. The conference is open to the public. Those interested may attend either in person or via live streaming video. The  program sounds interesting.

Caregivers, Does this Describe You?

Northwestern Mutual recently published a survey of caregivers, those who take care of the infirm and aged. Among other things, this is what they found, according to Financial Advisor magazine:

Caregivers comprise a massive population segment, with 40 percent of the survey’s 1,003 respondents saying they were caregivers. Another 20 percent expect to step into that role.

While only 25 percent of future caregivers thought of financial support as a key attribute of caregiving, 64 percent of current caregivers ended up providing some level of financial support to their charges. Expenses related to giving care comprised nearly one-third of their budgets, according to the current caregivers.

Most future caregivers, 70 percent, expect to incur financial costs, yet only 60 percent said that they were equipped to handle the potential financial aspects of caregiving. (Emphasis supplied)

Just one more reason for people–both caregivers and those who will need it–to plan for the future. Long-term care insurance, life insurance, trust planning anyone?

How One Family’s Legacy is an Example to Your Family

So by now, you probably know that the Larry and Gail Miller family insured that the Utah Jazz would forever be the Utah Jazz--musical Mormon jokes aside (by the way ever heard of BYU’s Synthesis?). They did so via a so-called dynasty or legacy trust, a trust intended to live on and on and on, well beyond the lifetimes of the Millers and their children and even their grandchildren.

I intend to write more on this subject, but for now think about what financial legacy would you like to leave your family, your city, your school? A well-drafted trust will allow you to do that.

 

Your Genetic Code: Whose Property Is It?

440px-geneticcode21-version-2-svgSomething to think about from the MIT Technology Review:

In August 2015, Samantha Schilit went to her primary care doctor to get a blood draw. A PhD candidate at Harvard specializing in human genetics, she was itching to unlock the secrets of her genes with a test called whole-genome sequencing, which provides a full readout of a person’s DNA.

Patients must give their informed consent before undergoing whole-genome sequencing or any other genetic test. But there are no laws that restrict what patients can do with their own genetic information, or that require patients’ family members to be involved in the consent process. This raises questions about who owns an individual’s genetic code, since family members share many genetic traits and may harbor the same genetic abnormalities associated with certain diseases. (Emphasis supplied)

Odd as this may sound, this is an estate planning issue worth worrying about.

IRA Rollover Gotcha Down?

We all know the rule:

Sections 402(c)(3) and 408(d)(3) provide that any amount distributed from a qualified plan or IRA will be excluded from income if it is transferred to an eligible retirement plan no later than the 60th day following the day of receipt. A similar rule applies to § 403(a) annuity plans, § 403(b) tax sheltered annuities, and § 457 eligible governmental plans. See §§ 403(a)(4)(B), 403(b)(8)(B), and 457(e)(16)(B).

No, actually, we all know that rule stated this way:

You have 60 days to get your distribution from one IRA or retirement plan to another IRA or retirement plan, or you suffer the tax consequences. The “getting to one from another” is called a rollover–typically an IRA rollover.

If you fail to complete the rollover within 60 days, the penalties can be severe, including income and excise taxes, interest, and penalties.

get-out-of-jail-freePeople do rollovers for a variety of reasons. They retire. They change jobs. They become dissatisfied with their current IRA provider. In those cases and others, there’s a need to change move your retirement money from one plan to another. And typically the move goes smoothly–without a hitch.

Except when it doesn’t. What if the rollover takes more than 60 days? Then what?

Well, the IRS recently issued a new rule, Revenue Procedure 2016-47, that recognizes certain realities: Life happens.

  • Checks get misplaced
  • Houses burn down
  • The Post Office screws up
  • The fish were biting (just kidding)

Yup. If life hits you in the face, the IRS is going to wipe the tears away and tell you to go back outside and play–that is, they’re going to waive any penalties. There is a catch–of course:

  • What hit you in the face must be among the many excuses the IRS lists in the Revenue Procedure 2016-47 AND
  • You must complete the rollover “as soon as practicable” after the intervening reason no longer exists (there’s a 30 day safe harbor, though you can take longer) AND
  • You must self certify to your new plan administrator or IRA trustee that you meet the requirements of the Revenue Procedure AND
  • The IRS previously must not have denied a waiver.

The Revenue Procedure provides a  handy self-certification letter, the wording of which you must follow almost to the T.  You can find the sample letter here, in the appendix of the actual Revenue Procedure. Enjoy the read.

Enforcing Charitable Pledges: Well, You Said You Would Give Them Money. What Did You Expect?

An interesting piece at Wealthmanagement.com about how and why charities seek to enforce charitable pledges and what theories courts use to accommodate their claims. The first two paragraphs are key:

In August, it was widely reported in the media that Duke University had filed a claim against the estate of Aubrey McClendon, the former CEO of Chesapeake Energy Corp., for payment of nearly $10 million in outstanding charitable pledges, once again raising the question of whether and to what extent charitable pledges are legally enforceable.

States typically rely on one of three theories to find that a charitable pledge is enforceable.  A pledge may be enforceable as a bilateral contract, as when a donor pledges a sum of money in exchange for the charity’s naming a building after the donor.1 A second theory treats a charitable pledge as a unilateral contract.  A donor offers to make a gift in the future that’s accepted when the charity incurs a liability in reliance on the offer.2When the charity provides no consideration for a contract, a pledge may be enforceable under the doctrine of promissory estoppel, an equitable remedy applied when a charity would suffer damages if the pledge weren’t enforced.

The rest of the piece is worth a read, especially if you’re interested in how the law is developing or in why charities should care about those developments.

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