- Wednesday, 05 October 2016 14:32
Hillary Clinton announced an updated estate tax proposal today. After previously supporting an increase in the estate tax rate from 40% to 45% and decreasing the amount of tax free assets to $3.5 million, she now wants to tax estates exceeding $10 million at 50%, estates exceeding $50 million at 55%, and estates exceeding $500 million at 65%. She also wants to remove the stepped up basis provision for estates so appreciated assets would also be subject to capital gains tax at death.
Two quick points without being too political because the proposal speaks for itself:
1. Apparently Hillary believes the Senator Warren adage that “you did not build this” so we are going to tax it mantra.
2. No word from her billionaire buddies Soros, Zuckerberg, Gates, and Buffet on how they feel about the government possibly taking 65% of their wealth and, frankly, I don’t give a damn about them.
- Friday, 16 September 2016 08:29
A former University of New Hampshire librarian who lived frugally, left his entire $4 million estate to the university. The UNH promptly fulfilled his mostly unrestricted bequest by allocating $100K to the library where he worked (some might say toiled) for 50 years, $1 million for a video scoreboard for the football stadium, and $2.5 million for the career center to presumably assist students with worthless majors like women’s studies, anthropology, and fine arts find jobs other than as baristas.
Several points only marginally associated with estate planning:
- By leaving his entire estate to charity, the former librarian will not incur state or federal estate tax.
- Even though he spent the last year of his life in an assisted living facility watching (and finally learning about) football, I highly doubt that he would approve of UNH spending $1 million in his name on a video scoreboard for their minor league football team (avg attendance 6,000 last year). I doubt the absence of a video scoreboard is keeping people away.
- Although assisting students with job placement after they selected useless majors is a questionable use of one’s savings, it is no less worthy than leaving money to a library in the 21st Century when most functions of a library are available on on-line (except for providing a physical warm or cool space for the homeless during the Winter or Summer).
- Friday, 09 September 2016 07:32
I wrote Paul Daugherty’s The Morning Line blog again yesterday. I covered UC’s Big 12 candidacy, Notre Dame’s quarterback situation, and myriad other topics including Bruce Springsteen’s forthcoming autobiography. I hope you enjoy it.
- Tuesday, 23 August 2016 16:46
A Penn State professor was allegedly murdered last week by the woman to whom he offered shelter and her friend. The professor was allegedly pushed off a cliff because he had recently revised his will and they thought they would benefit from his death. The woman was also miffed because he had criticized the parenting of her child. One of the reasons cited by the police in their arrest of the couple was they were “known drug users.”
One legal point and two “I can’t believe this” points”:
1. Most states, including Ohio and Pennsylvania, have “slayer statutes” which preclude murderers from benefiting from the will of someone they murdered.
2. It is incredibly presumptuous of the woman and her friend to assume that they were named as beneficiaries of the professor’s new will.
3. If “known drug user” is a marker for a criminal, then half of the adult population of Colorado are suspects for crimes there.
- Wednesday, 03 August 2016 21:38
Stepping away from celebrities for a minute and focusing on estate laws, yesterday the IRS issued proposed regulations to minimize valuation discounts in estate planning. In a nutshell, the regulations prohibit taxpayers from dividing property between family members and then claiming their proportionate shares are not worth the exact proportion because that small proportion does not have control of the property. Wonky? Yes.
Three small points:
1. These regulations have been bandied about for 25 years.
2. From a practice viewpoint, I have never completely bought into the idea of valuation discounts for marketable securities transferred to an LLC or partnership solely for the purpose of obtaining a reduced value for estate tax purposes.
3. Nonetheless, this issue seems to be one for Congress to address through legislation rather than one more edict from a lame duck (re: imperial) administration to issue in its waning days.
- Sunday, 31 July 2016 17:25
Mel Simon owned the Indiana Pacers with his brother, Herb, for 16 years. After the Malice in the Palace in 2004, the Pacers started losing money and Simon became disenchanted with his ownership of the team. He sold his interest to his brother in a very quiet deal that was two years in the making. The terms included being released from various personal guarantees. Simon died shortly thereafter of pancreatic cancer. The IRS determined that the deal was so favorable to his brother that his estate owes a gift tax of $21 million. His widow has sued the IRS for a refund of the gift tax paid.
Several quick points:
1. An individual may give away $5.45 million during his life before he has to start paying gift tax.
2. The gift tax rate is 40%.
3. The donor is the person responsible for paying the gift tax.
4. This deal between brothers sounds complicated. It is doubtful that one brother would intentionally give the other $83 million.
5. The widow can afford the tax bill – Simon’s estate was valued at $2 billion because of his pioneering development of shopping malls.
6. Ironic that Simon’s loss of interest in basketball ownership is tied to the Malice in the Palace. Ron Artest – the gift that keeps on giving.
- Sunday, 31 July 2016 17:17
In addition to a dearth of worthy estate planning news, it has been a busy and awesome two weeks. Two concerts, a soccer game in Columbus, business trip to Cleveland, and usual bike rides. With all of that, Jack’s smile is the highlight of the past two weeks. Post to follow.
- Thursday, 14 July 2016 20:56
Several very brief points:
1. Aniston’s mother was not required to leave any assets to Aniston by law. She may leave them to whomever she chooses.
2. Aniston certainly does not need any of her mother’s money.
3. Like any 40-something year old, it is doubtful that Aniston would want/need any of her mom’s tsochktes.
4. It is refreshing to read an article about Aniston that does not involve pregnancy speculation although it does mention Brad Pitt.
- Monday, 11 July 2016 23:21
Gosh, times are slow in the newsworthy estates and trusts area, except for the conga line of people claiming to be heirs of Prince. Reluctantly resorting to fiction for material, “The Nest” by Cynthia D’Aprix Sweeney is on many best books of summer lists. It has several estate planning lessons which can be gleaned from the following plot facts (all of which are in the first 40 pages so hopefully I not spoiling anything for anyone who wants to read the book).
A father created a trust for his four children. The trust was to be distributed when the youngest child reached the age of 40. His wife had the power to invade the trust in the event the children needed the funds earlier. One of the children had a power of attorney from his husband which allowed him to mortgage their vacation property without the husband knowing about the mortgage (trust me, I got the pronouns correct). Another child had a legal predicament which resulted in his mother lending him the entire proceeds of the trust to bail him out and hoping that he would re-pay the amount (called “the nest” by his siblings).
Points to be learned:
1. One should never give a power of attorney to a non-aged spouse unless it is contingent on disability. The potential for abuse is too great otherwise.
2. This trust should have divided into separate shares either at the conception or when the children were in their early 20s. Each child could have then borrowed from his or her share only, if necessary, rather than from the entire trust.
3. The wife/mother of the children should not have had the power to distribute all of the funds without being held to a prudent investor standard.
4. Of course, if there had been good estate planning there would not have been a novel, nor would I have a blog.
- Monday, 11 July 2016 23:15
Just returned from a four days in California Wine Country with Janice. Post to follow soon.
- Saturday, 02 July 2016 11:02
I subbed for Paul Daugherty on his The Morning Line blog yesterday for the Cincinnati Enquirer. I reviewed the best and worst of the first half year in sports. I hope you enjoy it.
- Monday, 27 June 2016 21:59
Scraping a bit for probate and will related news this week. William “Refrigerator” Perry shot to stardom as the large defensive lineman who sometimes played running back for the awesome 1985 Chicago Bears. He allegedly could dunk a basketball even though he weighed 300 pounds. He now lives in South Carolina under a legal guardianship created by his brother when he was near death 7 years ago. Fridge’s son wants to remove the brother as guardian while a court has stated that the guardianship can be removed if Fridge files the appropriate paperwork. Fridge, meanwhile, spends his days drinking with various friends, walking assisted by a walker, and generally not taking care of his health.
1. Any interested party can apply to be the guardian of another with the supporting medical documentation. The son could have applied to serve as guardian in 2009 but did not.
2. Guardians are compensated for their services. Despite the son’s allegations, the $1,250 annual compensation received by the brother is not the reason he continues to serve as guardian of Fridge.
3. A guy who starts drinking first thing in the morning and is unmotivated to file paperwork to remove a guardianship likely still needs the protection of the guardianship.
4. This has bothered me for 30 years. It has always been reported that Fridge could dunk a basketball. How hard would it have been to ask him to do it? It is not as if basketball courts are as scarce in this country as bobsled courses.
- Tuesday, 21 June 2016 22:03
Stretching to make several points:
1. In Ohio, a spouse can elect to receive 1/3 of the assets passing through the probate estate even if omitted from the will.
2. A former spouse has no statutory rights so Taylor was wise to finalize the divorce prior to his death.
3. I am surprised that someone with Taylor’s reputation for wild behavior was able to organize his affairs to divorce his long missing spouse and prepare a will omitting her, just in case, prior to his death.
4. $10 million is a lot of money for the drummer of the ‘worst band in the world”. Of course, the Kardashians are Exhibit A that talent and net worth are not correlated.
- Thursday, 16 June 2016 21:16
A woman was on a Jetblue flight to Orlando to attend the funeral of her grandson who was murdered last weekend by the Islamic terrorist. A Jetblue flight attendant whispered to each passenger about signing a sheet of paper to show their support for her. She wound up needing many pieces of paper because people were writing paragraphs of compassion for the grandmother. When the woman left the plane, every single passenger hugged her.
Read the whole article. Have your Kleenex at hand.