In five recent Private Letter Rulings, PLRs 201442042 – 01442046, the taxpayers asked the IRS to respect a trust reformation done by a State court to effectuate the intent of the trustor by correcting a “scrivener’s error.” Failure to respect the State court ruling would have resulted in additional estate taxes being paid due to the inclusion of the value of the trust assets in the estate of the trustor. The IRS ruled that it would respect the State court reformation proceeding because there was … [Read more...] about State Court Decisions Not Binding on IRS

Trustor’s Intent is Paramount All states require that a Will or a Codicil to a Will be in writing and witnessed (unless the Will is a holographic Will, which means it is entirely in the handwriting of the Testator (creator of the Will)).  Florida additionally requires that all testamentary directives in Wills and Trusts be in writing and witnessed. Florida Statutes Section 736.0405(2)(b). Most states do not require that a trust or an amendment to a trust be witnessed. However, because a trust … [Read more...] about Trustor’s Intent is Paramount

“Can We Talk” . . . About Estate Planning for Pets and People Two celebrities, Joan Rivers and Lauren Bacall, died recently. Both died very wealthy women and their heirs will be well cared for. However, each provided for their loved ones in very different ways. Because Joan Rivers had a living trust, much of the details of her estate plan are unknown. Living Trusts are not filed with the probate court after death, unlike a Last Will and Testament. In most locations, anyone can access a Will … [Read more...] about “Can We Talk” . . . About Estate Planning for Pets and People

Download educational eAlert template A in Microsoft Word format Download educational eAlert template B in Microsoft Word format Federal Court: Disclaimed Property Available to Pay Tax Lien Audrey Deinlein had three adult sons, Christopher (“Chris”), Ronald Jack, Jr. (“Jack”), and Paul. At the time of her death, she owned a condominium in Kentucky with a value of $303,000. The condominium had a mortgage of $104,352. After her death and before the property’s sale, Jack and Paul had made … [Read more...] about Federal Court: Disclaimed Property Available to Pay Tax Lien

With the rise of companies such as Legal Zoom, TotalLegal, LawDepot, and DoYourOwnWill.com, more and more consumers are attempting to create their own estate plans without the assistance of a lawyer. While it is possible to create a simple Will or other legal documents with the assistance of any of these companies or others, doing so can often lead to unintended results. Ann Aldrich, a resident of Florida, created her own Will in 2004 using an E-Z Legal Form preprinted Will. The Will listed all … [Read more...] about Do-It-Yourself Estate Plans: Unintended Results

In 1994, Elwood Olsen created a revocable living trust to hold his separate property and his half of the joint property. That same year his wife, Grace Olsen, created a revocable living trust to hold her separate property and her half of the joint property. At death, Elwood and Grace’s trusts were to divide into three sub-trusts, Marital Trust A, Marital Trust B, and a Family Trust. The Family Trust was to contain the amount of trust assets that could pass free of estate tax at death. The … [Read more...] about Failure to Divide Trust Cost over $400,000

The federal government and each state have a list of assets that are protected under the bankruptcy code. Every state protects personal residences. (Some states offer virtually unlimited protection and other states offer only protect a modest amount of equity in the home.) The amount of protection for qualified retirement plans governed by ERISA (Employee Retirement Income Security Act) and contributory IRAs is also defined by both federal bankruptcy law as well as state laws. An area of … [Read more...] about Supreme Court Rules on Bankruptcy Protection of Inherited IRAs

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