Wills, Trusts & Estates Prof Blog

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

Friday, January 20, 2017

Case Summary on Collecting Unpaid Estate Tax

Unpaid estate taxLewis J. Saret recently published a case summary entitled, Code Sec. 6324: Tax Court Allows IRS to Collect Estate’s Unpaid Estate Tax: Estate of Ruben A. Myers v. Commissioner, T.C. Memo. 2017-11, Wealth Strategies Journal, January 11, 2017. Provided below is an abstract of the Article:

P asks us to review a determination by IRS Appeals sustaining a lien notice and a notice of proposed levy to collect delinquent installment payments of estate tax. The gravamen of P’s complaint is that R abused his discretion during the 10-year period before the delinquency by not pursuing collection from nonprobate assets not under P’s control. Following the CDP hearing, the settlement officer prioritized collection actions first against nonprobate assets and certain jointly owned probate property. P misunderstands the I.R.C. sec. 6324(a)(1) special estate tax lien, which attaches automatically on the date of death to the gross estate without any action by R and which lapses in 10 years. P also misunderstands the scope of our review under I.R.C. sec. 6330(d). We do not conduct broad-ranging inquiry into the means by which R has sought to collect estate tax over the years since decedent’s death. Our narrow focus is on whether the settlement officer abused his discretion in sustaining the filing of the lien notice and the proposed levy notice. Moreover, we will not remand this case for consideration of changed circumstances because the 10-year duration of the special estate tax lien lapsed during the pendency of this case after R froze collection actions on the filing of the petition. Although the special estate tax lien has lapsed, the period for asserting I.R.C. sec. 6324(a)(2) transferee liability may be open.

Held: IRS Appeals’ determination is sustained. 

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


January 20, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Estate Planning for the Affluent Clients Living Longer Lives

Living longer estate planningAdvances in medical technology are allowing people to maximize longevity, which creates the possibility for more rewarding lives. Personal, family, and societal consequences, however, can ensue for those living past 100. These difficulties are heightened for ultra-wealthy families in how and when they transfer assets to subsequent generations. By not planning out your estate properly, disastrous family confrontations can occur. Sometimes transferring assets before death will solve several possible problems because of the possibility of dementia and elderly exploitation. In the near future, those affluent individuals who live longer rewarding lives will create gaining implications for wealth managers and tax professionals in planning their estates.     

See Russ Alan Prince, Estate Planning for the Ultra-Wealthy When Living to 120 or Beyond, Forbes, January 18, 2017. 

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


January 20, 2017 in Current Events, Estate Planning - Generally | Permalink | Comments (0)

Article on Gig Employees & Their Retirement Benefits

Gig economyPaul M. Secunda recently published an Article entitled, Uber Retirement, U. Chicago Legal Forum (2017). Provided below is an abstract of the Article:

The rise of the gig economy with its part-time, itinerant, independent workers, in conjunction with the employee-centric nature of occupational retirement benefits under ERISA, has led to gig employees largely lacking meaningful retirement benefits. Current proposals to provide portable benefits to gig workers as independent workers or independent contractors are unacceptable because such benefits would not be secured by the fiduciary consumer protections of ERISA. 

However, two developments with regard to the retirement security of the gig workers are promising. First, there is now increasing examples of gig workers being found to be common-law employees under tests like ERISA’s Darden test. As common law employees, gig workers are entitled to the reporting and disclosure, vesting, funding, and fiduciary protections of ERISA. Second, the use of an open MEP model, in which pooled employer plans (PEP) have a pooled plan provider (PPP) as the named fiduciary, are gaining growing bi-partisan acceptance. This article encourages Congress to promptly adopt the open MEP model, free of current regulatory restrictions, so that gig employees can enjoy retirement security with the peace of mind that ERISA fiduciary protections provide under industry-wide gig employee open MEPs.


January 20, 2017 in Articles, Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

IRS Formalizes Notice for Transcripts in Place of Estate Tax Closing Letters

Estate tax returnIn 2005, the IRS posted information online that a transcript notation with the code “421” could be used to determine when the IRS had concluded its review of a filed estate tax return, in place of obtaining a closing letter. This indicated that closing letters would no longer be automatically issued but could be requested. Now, this information has be formalized into a Notice, essentially to notify the probate courts that they can rely on IRS estate tax transcripts bearing the “421” transaction code. The Revenue Procedure also mandates that the IRS can still reopen the review under specified circumstances.    

See Charles Rubin, IRS Formalizes Transcripts as Substitute for Estate Tax Closing Letters, Rubin on Tax, January 18, 2017. 

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


January 20, 2017 in Current Events, Estate Planning - Generally, Estate Tax | Permalink | Comments (0)

Thursday, January 19, 2017

Article on Why Hitting the Pause Button for Your Taxes May Not Be Optimal

Trump taxes2Jonathan G. Blattmachr & Martin M. Shenkman recently published an Article entitled, Planning in a Time of Uncertainty: Part I—Why Hitting the Pause Button May Not Be the Optimal Approach, Tr. & Est. 106 (Jan. 2017). Provided below is an abstract of the Article:

The election of Donald J. Trump as our 45th President was largely unexpected. While it’s difficult to forecast the specifics of what that will mean during his term, and, perhaps, his second term, predictions can be useful to evaluate current planning. President-elect Trump has proposed wide-ranging changes to the nation’s tax system that will affect virtually all Americans and their advisors. He appears to have made tax legislation a priority for his administration. He’s suggested substantial reductions in corporate and individual tax rates and the simplification of the tax system generally through elimination of many deductions and other complexities. Estate planners, in particular, are already facing a dramatic impact on their practices, as many clients have hit the pause button on planning in anticipation of a possible repeal of the estate tax. This may not be the optimal approach for clients, and this two-part article will explore why. 


January 19, 2017 in Articles, Estate Planning - Generally, Estate Tax, Gift Tax, Income Tax | Permalink | Comments (0)

Call for Papers -- Modern Studies in the Law of Trusts and Wealth Management

The below announcement is posted at the request of Richard Nolan, Tang Hang Wu and Kelvin Low who would like to invite proposals for papers for a conference to be held in Singapore from 27-28 July 2017.

The Centre for Cross-Border Commercial Law in Asia, Singapore Management University, York Law School and the Singapore Academy of Law will convene the second conference in the “Modern Studies in the Law of Trusts and Wealth Management” series from 27-28 July 2017 in Singapore.  The website of the first conference may be found here http://www.sal.org.sg/conference/Trusts2015/default.htm

The theme of the conference is “The Use and Abuse of Trusts and Other Wealth Management Devices”. The theme of the conference focuses on current developments and challenges facing trust law, and those who study or practise it, in the present political climate. The conveners of the conference plan to produce a published volume from the papers presented at this conference. Selected papers from the last conference will soon be published by Cambridge University Press. Scholars working in the fields of trust law and wealth management are invited to submit proposals addressing the conference theme.  The conveners are keen to hear a diversity of voices on the topic and would welcome scholars from beyond the Commonwealth, women scholars and young scholars in the field.

We are in the process of confirming the keynote and various speakers.  Thus far, the confirmed speakers include Alastair Hudson (Exeter), Paul Davies (Oxford) David Pollard (Trust Law International/Freshfields), James Lee (KCL), Jamie Glister (Sydney), Lou Jianbo (Peking), Lusina Ho (HKU), Simon Douglas (Oxford), Simone Degeling (UNSW), Thomas Gallanis (Iowa) and Warren Barr (Liverpool).

Presenters from the general call for papers will be expected to meet their own travel costs and to pay the conference registration fee of S$500 (excluding Goods and Services Tax of 7%). Unfortunately, the conference organisers do not have any funding to help meet cost of travel or the registration fee.

If you would like to offer a paper, please submit a working title and an abstract (of no more than 1500 words) by 31 January 2017 by email to all of three of us: Richard Nolan (richard.nolan@york.ac.uk ), Tang Hang Wu (hwtang@smu.edu.sg ) and Kelvin Low (kelvinlow@smu.edu.sg )”.


January 19, 2017 in Conferences & CLE, Scholarship, Trusts | Permalink | Comments (0)

Plan Ahead for Your Estate

Writing a willThe current number of those who do not have a will can be astonishing, especially knowing that they run the risk of letting the state decide what happens to their estate. Those who do have wills also often fail to update them after a change in circumstances. With a lot of important estate decisions, it is necessary to prep for your loved ones—spouses, significant others, children, and grandchildren alike. Issues like body disposition and organ donation are crucial steps to consider because if not, you leave your family members guessing as to what you would have wanted, which often leads to fights. Further, in our technology era, it will be essential to specify actions for your digital accounts. Ultimately, one must plan their estate so that the bureaucracy does not consume those we care about at the worst possible time.  

See Lisa Pollack, One Day It Will Be Curtains, so I’m Planning for It, Financial Times, January 17, 2017. 

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


January 19, 2017 in Death Event Planning, Disability Planning - Health Care, Estate Planning - Generally, Wills | Permalink | Comments (0)

Article on Gift Tax Consequences Between American & Brazilian Spouses

American and brazilFlávia Allegro Gerola recently published an Article entitled, Gift Tax Consequences Between Spouses of Different Citizenships: A Comparative Analysis Between American and Brazilian Laws, 31 Probate & Property 54 (Jan/Feb 2017). Provided below is an abstract of the Article:

As globalization and immigration increase, the tax implications of marriages between citizens of different countries must be taken into consideration by practitioners designing an estate plan for such couples. In particular, gifts between spouses may have tax consequences in both countries. 

The United States has estate and gift tax treaties with 18 countries. These treaties minimize and avoid double taxation when two countries have the right to tax the transfers of a donor or decedent under the applicable domestic law. The treaties provide primary and secondary taxing rights, stius rules, and special rules dealing with credits, deductions, and exemptions. There is no tax treaty between Brazil and the United States, so the applicable law of both countries must be considered for gifts between American and Brazilian spouses. This article provides an overview of the most common gifting strategies and gift tax consequences for gifts made between American and Brazilian spouses.  


January 19, 2017 in Articles, Estate Planning - Generally, Gift Tax | Permalink | Comments (0)

The Final Battle of the War on Estate Tax

Democrat estate taxPresident-elect Donald Trump will soon assume his position, and as it stands, the Democrats have control over the Executive and Legislative branches, but their party was severely wounded after the election. Consequently, many assume that they will raise the white flag in regards to the estate tax. With the greatest wealth transfer in human history occurring, however, it would be foolish to assume the Democrats would not put up a fight. This final battle over the estate tax should not come as a surprise due to the long 100-year history on the United States’ war over taxation. Throughout this time span, liberal economists and academics have argued over the estate tax’s economic importance and its service to inequality. Those Republicans seeking to repeal the estate tax believe it will be one of the final components to stir economic growth, while the Democrats seek to maintain its existence.   

See Darren T. Case, Trump vs. the Democrats: Is This the End of the 100-Year War over the Estate Tax?, Hill, January 12, 2017. 


January 19, 2017 in Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0)

Wednesday, January 18, 2017

Article on ESOPs & EOTs

EsopChristopher Michael recently published an Article entitled, The Employee Ownership Trust, an ESOP Alternative, 31 Probate & Property 42 (Jan/Feb 2017). Provided below is an abstract of the Article:

For the last four decades, an employee stock ownership plan (ESOP) has been the optimal legal mechanism for transferring ownership of stock to employees in the company in which they work. A primary goal of ESOPs is often long-term employee ownership, as an ongoing employee reward program that leads to improvements in productivity and profitability and helps to ensure the longevity of the company. Unfortunately, the laws applicable to ESOPs have not kept pace with evolving trust law. In particular, legislators have not adapted ESOP policy to states’ widespread reform of the rule against perpetuities, the “exclusive benefit” rule imposed by federal law requires ESOPs to prioritize employees’ retirement income at the expense of employees’ continued ownership of their business and thus prohibits a perpetual ESOP trust. As such, ESOPs are an uncertain vehicle when it comes to safeguarding the ownership of a firm by its employees. The ESOP structure is also exceedingly complex, which warrants additional concern. This article discusses perpetuity and other related problems with ESOPs and introduces the employee ownership trust (EOT) as a viable alternative. 


January 18, 2017 in Articles, Estate Planning - Generally, Trusts | Permalink | Comments (0)