Section 2704 of the Internal Revenue Code was enacted to limit the discounts available to certain transfers of limited partnership or limited liability company ownership interests among family members. Section 2704(a) deals with lapsing rights. An example of a lapsing right might be an LLC in which the parents own the voting shares and the children own non-voting shares. There is a provision that upon death the voting shares become non-voting shares. Should the shares be valued as voting shares … [Read more...] about IRS Issues Proposed Regulations Affecting Advanced Estate Planning – Clients Should Act Now!

In U.S. v. Adent, 117 AFTR 2d 2016-1505 (7th Cir. 5/10/16), Leonard and Joyce Advent owned a commercial property as joint tenants with their son, Derek. Leonard and Joyce owed tax to the federal government. The Internal Revenue Service placed a lien on the property for the amount owed by Leonard and Joyce. The IRS then sought to foreclose and force a sale of the property and Leonard and Joyce objected to the sale, claiming it would prejudice Derek who was not a party to the tax liability owed … [Read more...] about Protect Against Creditor Claims – Even Tax Liens

Planning for the Unexpected: A Review of Whitney Houston’s Estate Plan   The tragic death of Whitney Houston’s daughter, Bobbi Kristina Brown, creates an opportunity to review Ms. Houston’s estate plan to determine what she did right and where there was room for improvement. Whitney Houston died on February 11, 2012, at age 48. With the surge in popularity of her songs as the result of her death, various news agencies put the value of her estate at between $20 million and $115 … [Read more...] about Planning for the Unexpected: A Review of Whitney Houston’s Estate Plan

Don’t Rely on Government Officials for Information about Medicaid Planning Options According to the United States Census Bureau, almost half of seniors 95 years old or older live in skilled nursing homes. Slightly over five percent of the entire senior population 65 years and older occupy assisted living, congregate care, and board and care facilities while just over four percent live in skilled nursing homes (for a total of almost ten percent of the senior population). As bad as these … [Read more...] about Don’t Rely on Government Officials for Information about Medicaid Planning Options

Celebrities Can Set A Good Example NOTE: The IRS has announced its gift and estate tax limits for 2016. The lifetime gift and estate tax exclusion amount is $5,450,000, up from $5,430,000 in 2015. This means a married couple can pass as much as $10,900,000 during life or at death with proper planning. The annual gift tax exclusion amount remains at $14,000. Now on to the main topic of our eAlert. Antoine de Saint-Exupéry said: “As for the future, your task is not to foresee it, but to enable … [Read more...] about Celebrities Can Set A Good Example

Will Invalid Due to Undue Influence Eva Johanna Rova Barnes (“Eva”) was born on July 17, 1916. She grew up on a parcel of land that was homesteaded by her parents. The property included a residence, where Eva lived alone after the death of her husband and daughter. The parcel of land also included a residential rental property that was owned one-half by Eva and one-half by relatives (“The Rovas”) and farmland. Michelle Wells (“Michelle”) was a rural mail carrier who befriended Eva. After Eva … [Read more...] about Will Invalid Due to Undue Influence

New Basis Reporting Requirements The IRS has long held that some taxpayers were cheating the system, claiming a low value for an asset on the estate tax return, while claiming a higher value for purposes of establishing basis for the asset when it is later sold (and thereby reducing any gain that must be reported for income tax purposes). The IRS has now enlisted the assistance of executors and trustees in ferreting out the income tax basis for beneficiaries of inherited assets from trusts … [Read more...] about New Basis Reporting Requirements

Courts Disagree on Intent of Marie Callender Heir Donald W. Callender was heir to the royalties from the Marie Callender restaurant chain. Donald passed away in 2009, leaving his wife, Catherine T. Callender (“Katy”), and his children, Cathleen Callender (“Cathe”) and Donald Lucky Callender (“Lucky”). Cathe is Donald’s daughter by his first marriage and Lucky is his son by his marriage to Katy. Donald’s estate was valued at approximately $143 million, with the largest percentage of the value … [Read more...] about Courts Disagree on Intent of Marie Callender Heir

Electing Portability Treatment Every person is entitled to give away a certain amount of money tax-free, either during life or at death. The amount has varied over the years due to acts of Congress, inflation adjustments, or both. In 2000, the amount that could be given estate and gift tax-free was $600,000. Congress then passed a law that increased the amount over the next decade to as high as $3.5 million per taxpayer. In 2010, the estate tax was eliminated, but it reappeared in 2011 with a … [Read more...] about Electing Portability Treatment

Passage of the Disabled Military Child Protection Act Expands Special Needs Planning Opportunities Adult disabled children often receive government assistance that is based on need. An example of two common programs are: (1) Supplemental Security Income (SSI) and (2) Medicaid. To qualify for SSI the recipient must be disabled (as defined by the Social Security Administration) or age 65 or older and meet certain strict income and asset guidelines. A person on SSI will automatically qualify for … [Read more...] about Passage of the Disabled Military Child Protection Act Expands Special Needs Planning Opportunities