Some clients have the view that an inheritance should be left outright and unencumbered to children and other beneficiaries, because they don’t want to be perceived as “ruling from the grave.” Leaving an inheritance in trust for a child or other beneficiary can sometimes be viewed as ruling from the grave, but, depending on the terms of the trust, the child or other beneficiary can have substantial control over the inheritance without losing the benefits a gift in trust can provide. If an … [Read more...] about Protecting an Inheritance as Opposed to Ruling from the Grave

New Rules for Same-Sex Couples Bruce and Bill were married under the laws of New York, where same-sex marriage is legal. Bruce was offered an executive position at Wal-Mart and the couple moved to Arkansas. Same-sex marriage is banned by a state constitutional amendment in Arkansas. Thus, Bruce and Bill’s New York marriage is not recognized by the state of Arkansas and they are considered legal strangers under Arkansas law. In United States v. Windsor, the United States Supreme Court held that … [Read more...] about New Rules for Same-Sex Couples

Estate of Hurford: a Taxpayer’s Tale of Woes In Estate of Thelma Hurford v. Commissioner of Internal Revenue, T. C. Memo 2008-278, Judge Holmes wrote: It is a truth universally acknowledged that a recently widowed woman in possession of a good fortune must be in want of an estate planner. Thelma Hurford had devoted her life to family and friends, leaving the management of finances to her husband Gary. When he died suddenly, she had to learn what they owned and decide what to do with it. While … [Read more...] about Estate of Hurford: a Taxpayer’s Tale of Woes

On June 26, 2013, the Supreme Court ruled in U. S. v. Windsor (“Windsor”) that Section 3 of the federal Defense of Marriage Act (“DOMA”) is unconstitutional as a deprivation of the equal protection of persons that is guaranteed by the Fifth Amendment of the Constitution. DOMA is the federal law which defines marriage as only between a man and a woman. Section 3 disallowed federal recognition of a same-sex marriage which is valid under a state law. DOMA was enacted by large majorities in both … [Read more...] about U. S. Supreme Court Rules DOMA Unconstitutional: Estate Planning for LGBTQ Couples Just Got Easier – and More Complicated

In a case of first impression relating to Bankruptcy Code Section 548(e)(1), the court in In re Huber, 201 B.R. 685, 701 (Bankr. Rptr. W.D.WA. May 17, 2013) held that an Alaska self-settled trust offered no protection with respect to claims of the grantor’s creditors in bankruptcy.   The grantor of an Alaska Domestic Asset Protection Trust (“DAPT”) was a lifelong resident of the state of Washington who had conducted business in Washington for decades. In 2008, when the grantor transferred … [Read more...] about Bankruptcy Court Delivers Unfavorable Ruling Relating to Alaska Domestic Asset Protection Trusts

On January 2, 2013, Congress passed the American Taxpayer Relief Act of 2012, which extended a majority of the “Bush Tax Cuts” and fixed the amount that can be passed free of gift, estate, and generation-skipping tax for 2013 at $5.25 million per person. This amount is set to increase in the future, based on annual cost of living increases. In his budget proposal for 2014, President Obama proposes to fix the amount that can pass free of tax at the levels which had been allowed in 2009. In other … [Read more...] about President’s Budget Proposal for 2014: Greater Estate Taxes, Income Taxes May Be in Your Future

In IR-2013-35 (March 28, 2013), the IRS reminded us that in most cases seniors who turned age 70½ during 2012 need to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, and other retirement plans by April 1, 2013. The April date only applies to persons who are taking their first RMD. For all subsequent RMDs, the senior will need to take the distribution by December 31st of that year. Of course, seniors who do decide to delay their first distribution to the year … [Read more...] about Planning for Retirement Assets Can be Difficult

Football fans (and others) were shocked on December 1st of last year to learn about the murder of Kasandra Perkins. Perkins had been killed by Kansas City Chiefs linebacker Jovan Belcher. Jovan subsequently committed suicide at Arrowhead Stadium in front of his coach and the team general manager. The deaths of Kasandra and Jovan left their four month old child, Zoey, the subject of a guardianship dispute between Cheryl Shepherd, Zoey’s paternal grandmother, and her maternal grandparents, Rebecca … [Read more...] about Guardianship Provisions Essential To a Comprehensive Estate Plan

Last month, we let you know that Congress let the United States go off the fiscal cliff, only to come to the rescue in the early morning hours of January 2, 2013, with the passage of the American Taxpayer Relief Act of 2012 (“ATRA”). To review, ATRA makes most of the provisions of the previous estate tax law permanent. The amount that can be passed free of gift tax and estate tax is indexed for inflation, with the figure set at $5.25 million for 2013. The maximum gift and estate tax rate was … [Read more...] about More Reasons for Clients to Review Their Estate Plans

On December 31st, the United States went off the “fiscal cliff.” But, less than twenty-four hours later, Congress passed the American Taxpayer Relief Act of 2012 (“ATRA”). ATRA makes most of the previous estate tax law permanent. The amount that can be passed free of estate tax in 2013 is $5.25 million, with annual adjustment based on the CPI. The estate tax and the gift tax remain unified, so what is used during life is not available at death. The generation-skipping transfer tax exemption is … [Read more...] about New Year’s Resolution #3 – Get My Estate Plan Reviewed