Trusts and Estates

Apparently Jack Donaghy knows a little something about estate planning.


Today Apple has opened its new Mac App Store which mirrors Apple’s App Stores for its popular iPad, iPhone, and iPod products. I don’t own a Mac computer but I am familiar with the App Store as I use it for my iPod touch. With all the buzz surrounding this new Apple service I decided to explore some of the Apps currently available in the new Mac App Store. One of the first Apps I came across was Compartments. The App is introduced simply as “fast, easy-to-use home inventory application.” After reading more I discovered that a Compartments user can input information about things they own in their home, organize that information by room, input warranty information, and generate insurance reports which estimates the current value of a user’s things just to name a few of its functions.

Reading all of the information about Compartments brought to mind many stories I have heard about families having to sort through their parents or grandparents stuff in their house trying to figure out what it is, what its worth, and who should keep it. With a lack of documentation or instruction from the owner of these items, the probate of an estate may be stalled  and even worse,  arguments often ensue among family members. With Compartments, most of these issues may be able to be avoided. Further, many states, such as Florida, permit a testator to draft a memorandum that inventories personal items such as household furnishings and designate who shall receive them at death instead of including that information in his or her actual will. Although Compartments may not be used to replace such document, it  may be used to help making this document an easier task.

Here are links to the Mac App Store description of Compartments and to the actual website for Compartments


Trying to figure out what estate tax rates will apply next year is almost as frustrating for estate planners as it is for ESPN in trying to figure out whether Brett Favre will retire or not. Georgia estate planner John J. Scroggin took the uncertainty to another level. According to the Wall Street Journal’s Financial Adviser’s Blog, he asked a group of estate planners to place bets on how Congress would handle the estate tax. The Jackpot: $200. Scroggin thinks there are three possibilities for the estate tax. “The options are a 45% tax on estates over $2 million; a 60% tax on estates over $1 million; or 60% tax on estates over $2 million.”

WSJ Financial Adviser Blog: On Estate Tax, All Bets Are…On


The Estate Tax Limbo Dance!

by Joshua on June 18, 2010

From CNN Money’s Estate Tax in Limbo:

Several key senators have been trying to cut a deal for months. Negotiations have stalled on more than one occasion.

“We’re almost half a year away from a tax policy that a super majority of senators say they don’t support. Yet, we’re stuck,” Sen. Charles Grassley, R-Iowa, said earlier this week. “This time-sensitive issue has taken a back seat to everything else.”

Anne Mathias, director of research at Concept Capital’s Washington Research Group, thinks it’s a fair bet to assume the new exemption level will fall somewhere between $3.5 million to $5 million.

But she also said if Republicans sweep the mid-term elections, and win at least 60 seats in the Senate, they may push to extend the repeal of the tax.

When Hartnett was asked what he thinks will happen with the estate tax next year, he gave the only answer he and his colleagues can give for many estate tax questions these days: “I don’t know.”

Basically, the Senate is doing the limbo dance!


Off to College? Think About Drafting a Will

by Joshua on June 13, 2010

There is a lot a teenager has to worry about before heading off to college. Will I like my random roomate? Will I get iced? However, Daisy Maxey, in her Wall Street Journal article Teens Need Wills, Too points out that many teens should think about drafting a last will an testament:

That’s the last thing, of course, any parent wants to think about. But some experts say a will should be drawn up as soon as a child turns 18, the age at which someone typically can enter into a legal contract.

Peter Bielagus, a former financial adviser who gives speeches to young people about managing their money, often tells his listeners to create a will simply because it starts them off on the right foot. Drafting a will gets young people thinking about what happens in the future—after they get married and have children—as well as about what they own and how much it’s worth, Mr. Bielagus says.

“It puts you in the mind-set of someone who’s going to have a successful financial life,” says Mr. Bielagus, who lives in Bedford, N.H.

There are more practical reasons, as well. Young adults often have money, possessions or families to protect. They may have a job that pays well. Or a grandparent may pass away, leaving them with a trust, says Carol Pepper, chief executive at Pepper International, a New York-based money-management company that works for wealthy investors. People leave all kinds of things to their children or grandchildren. If young adults want to direct where these possessions will go if they die, she says, “it’s important to have a will.”


For those worried that your New York pet trust may be invalid because of the Rule Against Perpetuities (RAP), have no fear — New York has eliminated RAP and provided that pet trusts terminate when the living animal beneficiary or beneficiaries of the trust are no longer alive.

See 2010 Sess. Law News of N.Y. Ch. 70 (effective May 5, 2010).

Wills, Trusts & Estates Prof Blog


Tax Foundation released a special report today The Federal Estate Tax: Will it Rise From the Grave in 2011 or Sooner?:

The scheduled but nevertheless unexpected repeal of the federal estate tax in 2010 and the prospect of its reinstatement in 2011 bring debate over the estate tax, or “death tax,” to the fore again.

Some of the arguments are new: Would it be constitutional for Congress to reinstate the estate tax retroactively for 2010? But some of the arguments are a century old or more: Does the estate tax accomplish any worthwhile social purpose? Is it a good way to raise revenue?

Here we condense and update some earlier Tax Foundation studies on this age-old topic, with specific reference to the recent, surprising death and potential new life for the estate tax.


According to The Hill, lawmakers are looking to include the in a single bill an estate tax fix and an extension of the Bush middle-class tax cuts:

Senate Finance Chairman Max Baucus (D-Mont.) told reporters the combination could happen since extending the Bush tax cuts and tax legislation aimed at small businesses will be separate measures, and the small business bill is too big to include an estate tax fix.

“Small business and Bush tax cuts are 2 separate bill,” he said. “It [estate tax fix] won’t go on the small business because that’s just too big.”

The idea behind the combination is that the current marginal rate cuts for the wealthy are unlikely to be a part of legislation extending the Bush tax breaks. Adding an estate tax fix to the bill provides richer taxpayers with at least some relief since they are the ones most likely to incur a tax on their estate.

Baucus did not say when the Bush/estate tax bill would move, but hopes to markup the small business tax bill next week.

Other related news from The Hill:
Kyl: Deal on the estate tax in the offering

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[Tax] Law and Order

by Joshua on May 11, 2010

Last night’s episode of NBC’s Law and Order was called The Taxman Cometh. The episode centered around the estate tax:

Detectives Cyrus Lupo (Jeremy Sisto) and Kevin Bernard (Anthony Anderson) are called in to investigate the death of a young heiress, Annie Douglas (guest star Morgan Lynch), who died of an apparent drug overdose. The detectives begin to suspect her cousin, Randy (guest star Daniel Abeles), whose inheritance was increased due to Annie’s death. As the investigation continues, Annie’s greedy relatives reveal another recent loss in the group. The case becomes more than a family matter as an experimental cancer clinic, fraudulent adoptions and unborn children are tied into the case.

(HT: TaxProf Blog)

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Here is an excerpt from an article on which discusses the state of the Estate tax and issues that are arising due to the uncertainty surrounding the tax repeal:

Estate planners and their wealthy clients are in purgatory, struggling with whether to spend tens of thousands of dollars to restructure wills, only to have to spend even more if the law is changed again.

Estate planning under ordinary circumstances is expensive and complex. The new environment poses unforeseen risks, such as potential heirs finding themselves unintentionally disinherited if wills aren’t properly rewritten, Christerson says. Others face new tax and accounting complications.

“It’s a total, complete nightmare,” says Carol Harrington, head of the private client practice group at Chicago law firm McDermott Will & Emery. “Clients are frustrated.”

It all happened because nine years ago, U.S. lawmakers approved a little-publicized footnote as part of phasing out the estate tax. To hold down the cost to government, Bush’s 2001 tax legislation replaced the estate tax in 2010 with capital-gains levies on inherited items that are sold.