Yet Another Estate, Gift, and Generation Skipping Transfer Tax Senate Bill

Posted on August 12, 2019January 22, 2021 by Lin Law

In an earlier post, “Dueling Estate, Gift, and Generation Skipping Transfer Tax Senate Bills,” we discussed two different Senate bills concerning the federal estate, gift, and generation skipping transfer (GST) tax rates and exemption amounts. On June 25, 2019, Senator Chris Van Hollen (D-Md) introduced yet another bill, the “Strengthen Social Security by Taxing Dynastic Wealth Act.” This bill would simultaneously reduce the federal estate, gift, and GST lifetime exemption amounts while increasing the applicable federal estate, gift, and GST tax rates.

The bill would reduce the lifetime exemption amounts to a basic estate tax and GST tax exemption of $3.5 million (the exemption amount in effect in 2009) and a gift tax exemption amount of $1 million. Notably, this would appear to “de-unify” the gift tax exemption from the estate and GST tax exemption amounts. In addition, the bill would increase the maximum estate tax rate from 40% to 45%. Finally, the bill would divert estate tax revenue to the Social Security Trust Fund in an attempt to bolster the program’s depleted reserves. The projected revenue generated by the bill would cover approximately one-fifth (1/5) of Social Security’s estimated long-term funding gap.

Like the previous two bills, this one is unlikely to become law. However, the number of bills introduced in the last year should remind us that the applicable exemption and exclusion amounts are always subject to change, and that it’s important to periodically review your estate plan with the current exemption amount in mind.

If you have any questions on this topic, please contact Lin Law LLC at (920) 393-1190.

Creating an Estate Plan for Your Digital Assets (and what they are in the first place)

Posted on July 29, 2019July 29, 2019 by Lin Law

In creating and implementing an estate plan, one category of assets is often neglected—digital assets. In addition to accumulating liquid assets and tangible personal property, we are increasingly accumulating more and more digital assets throughout our lifetimes. But what are digital assets? They can include:

Photographs and videos stored in an electronic format;
Playlists and digitally recorded music;
Social media accounts such as Twitter, Facebook, and Instagram;
Website domain names;
Other information and assets that are stored electronically, such as Bitcoin and other cryptocurrencies.

So, how do we plan for and protect our digital assets? First, create a list of any and all digital assets, including where to find them and how they are accessed. Second, make sure that this information is secure but accessible by your personal representative or trustee. Finally, ensure that your fiduciaries are authorized to access and use your digital assets by implementing an Authorization and Consent for Release of Electronic Information.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Dueling Estate, Gift, and Generation Skipping Transfer Tax Senate Bills

Posted on March 15, 2019January 25, 2021 by Lin Law

Earlier this year, two very different bills relating to the federal estate, gift, and generation skipping transfer (GST) taxes were introduced in the United States Senate.

On January 17, 2019, Senator Tom Cotton (R-Ark.) introduced a bill that would reduce the federal estate, gift, and GST tax rates to a flat rate of 20%. Under current law, these transfers are subject to a progressive tax rate that maxes out at 40% for transfers in excess of $1 million (subject to the federal lifetime exemption amount of $10 million, as adjusted for inflation).

Conversely, the “For the 99.8 Percent Act,” introduced by Senator Bernie Sanders (I-Vt.) on January 31, 2019, would reduce the federal estate, gift, and GST lifetime exemption amount to $3.5 million. The federal lifetime exemption amount is currently set at $10 million (adjusted for inflation to $11.4 million for 2019), and will decrease to $5 million when certain provisions of the Tax Cuts and Jobs Act of 2017 sunset on December 31, 2025. In addition, the Act would raise the federal estate, gift, and GST tax rates to 45% for transfers of $3.5 million to $10 million, 50% for transfers of $10 million to $50 million, 55% on transfers of $50 million to $1 billion, and 77% on transfers in excess of $1 billion.

Although neither of these bills is likely to make it through both houses of Congress to become law, it is always worth keeping an eye on legislation that has the potential to impact your estate plan.

If you have any questions on this topic, please contact Lin Law LLC at (920) 393-1190.

New year, new estate plan?

Posted on January 8, 2019January 22, 2021 by Lin Law

As we begin 2019, consider adding a review of your estate plan to your list of New Year’s resolutions. For most people, it is appropriate to review your estate plan every two to three years, or whenever a life-altering event occurs (e.g., marriage, divorce, a significant change in job or health, birth or adoption of a child).

In addition, the following are a few non-tax reasons to review your estate planning documents:

Children Need Powers of Attorney. Any child of yours that has attained the age of 18 since you implemented your estate plan (especially those away at college) should have basic estate planning documents in place, especially financial and health care powers of attorney.

Outdated Estate Planning Documents. Estate planning documents may have been prepared prior to a marriage or divorce or prior to the birth of your children. Individuals you have named as trustee, guardian, or power of attorney may no longer be appropriate under the present circumstances.

Specialized Planning / Asset Protection. Each family has its own unique situation that may require specialized estate planning, such as a blended family situation, a desire to make sure the assets you leave to your beneficiaries are protected in asset protection trusts, or a beneficiary’s disability and the considerations it presents in leaving assets to that disabled beneficiary.

In connection with reviewing your estate plan, it is also important to review the beneficiaries named on your life insurance policies and retirement accounts, to ensure that they are coordinated with your existing estate plan documents. Beneficiary designations that are not consistent with your estate plan can result in distributions that are inconsistent with your desires or cause unintended tax consequences to your beneficiaries.

This year, consider reviewing your estate plan to ensure that it continues to meet your needs.

If you have any questions on this topic, please contact Attorney Evan Y. Lin or Attorney Emily E. Ames at (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.

Fireside Chats During the Holiday Season

Posted on December 18, 2018January 22, 2021 by Lin Law

As the holidays approach and families gather together, topics like long-term care and estate planning are likely to be the last thing on your mind. However, the holidays are the perfect opportunity to discuss these difficult issues with your loved ones. For older relatives, it is important to discuss whether he or she has planned for future incapacity and/or assisted living or nursing home care needs.

In addition, if you and your older family members already have existing advance health care directives and powers of attorney for finance in place, the holidays are a good opportunity to ensure that your health care agents understand your wishes with regard to end of life care, and that your attorneys-in-fact have a good understanding of your finances, or that they know where to find that information if and when they need it.

If you and your family will be gathering together for the holidays, remember that the most difficult conversations are often the most important, and that when it comes to long-term care and estate planning, the earlier you begin planning, the better.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Up the river without a paddle – is one power of attorney as good as the next?

Posted on November 15, 2018January 22, 2021 by Lin Law

Not all powers of attorney are created equal. When planning for future incapacity, particularly if you anticipate requiring governmental benefits such as Medicaid, it is important that your financial power of attorney provide your agent(s) with all the powers he or she might need to provide for your elder law or special needs objectives. These powers may include, but are not limited to, the ability to:

– Create and fund revocable, irrevocable, or supplemental needs trusts;

– Make gifts above the annual exclusion amount or to him or herself, if necessary;

– Execute estate planning documents and other agreements, such as a caregiver agreement; and

– Change beneficiary designations on life insurance policies and retirement assets.

If you are planning for your future incapacity, make sure that your power of attorney grants your agent the powers he or she will need to accomplish your elder law and special needs objectives, so that your agent does not find themselves up the river without a paddle.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

What is guardianship and how do you avoid it?

Posted on August 23, 2018January 22, 2021 by Lin Law

Guardianship is a court procedure in which an individual is appointed to make certain decisions for another person (the “ward”). The purpose of a guardianship is to protect or assist an individual who, due to mental incapacity, is unable to make decisions, defend him or herself against exploitation, or otherwise provide for his or her needs.

The proposed ward may require a guardian of the estate and/or a guardian of the person. A guardian of the estate handles the ward’s financial matters, similar to a power of attorney for finances, whereas the guardian of the person handles day-to-day matters such as the ward’s living arrangements, medical care, etc. In addition, the person petitioning the court to appoint a guardian for the proposed ward may request a temporary or permanent guardianship. A temporary guardianship can generally be established within a few weeks and lasts for sixty days, with up to one sixty-day extension. A permanent guardianship, on the other hand, remains in effect until removed by the court. In order to establish a guardianship, the proposed ward must be found legally incompetent by two physicians or one physician and one psychologist.

The ultimate goal of a guardianship is to impose as few restrictions on the ward as possible (i.e., remove as few of the ward’s rights as possible), while also ensuring that his or her needs are being met. However, even the most minimally restrictive guardianships results in the loss of some of the ward’s rights. One way to prevent a guardianship from becoming necessary is to plan ahead and execute a Financial Durable Power of Attorney and Power of Attorney for Healthcare. These documents will usually provide the principal’s power of attorney or health care agent with sufficient authority to protect or provide for the principal’s needs without petitioning the court to establish a guardianship, thereby avoiding the time and expense of a court proceeding.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.

Special Needs Trusts

Posted on August 2, 2018January 22, 2021 by Lin Law

Are you planning to leave assets to a disabled beneficiary upon your death? If so, consider establishing a special needs trust (“SNT,” also known as a supplemental needs trust) for your beneficiary’s benefit.

An SNT is an irrevocable trust (i.e., the trust cannot be revoked or amended) established for the benefit of a disabled individual and managed by a trustee. Because the trust is not owned by the beneficiary, the trust assets can be used to provide for the disabled person’s needs over and above the essential primary care provided to the disabled person through public assistance programs such as Medicaid or SSI, without compromising his or her eligibility for those benefits. SNTs are divided into two general categories, first-party or third-party, depending on who the trust is funded by.

First-party SNTs are, as you may expect, funded with the disabled person’s own assets. A first-party SNT is established by the disabled person or on his or her behalf by a guardian, parent or grandparent, or the court. While a first-party SNT is a good option for a disabled person who wants to preserve assets he or she already has, upon his or her death the State can recover against the disabled person’s estate for benefits paid during his or her lifetime, including recovery against non-probate assets.

Third-party SNTs, on the other hand, are created by a third-party’s Will or Revocable Trust for the benefit of the disabled person and funded upon the third-party’s death from the proceeds of the third-party’s estate. There is no limitation on who may create a third-party SNT for the benefit of a disabled person, and upon the beneficiary’s death there is no estate recovery by the State.

While many SNTs are privately managed, they can also be created as a pooled and community trust (PACT) which is run by a nonprofit entity. While each PACT beneficiary has a separate account, the assets of all participating beneficiaries are pooled for investment purposes. PACTs, like private SNTs, can be either first- or third-party.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Is your child turning 18? Consider suggesting that he or she execute a durable power of attorney and advance healthcare directives.

Posted on June 18, 2018January 22, 2021 by Lin Law

As your child prepares to begin college or enter the workforce, estate planning is likely the last thing on his or her mind—or yours. However, there are numerous situations in which young adults can benefit from executing basic estate plan documents. For example, should a child be in an accident and become disabled or incapacitated, even temporarily, his or her parents may not be able to act on the child’s behalf without court approval. Alternatively, the child may be out of the country (or simply out of town) and require his or her parents to do something as simple as signing a lease or sending money to the child from his or her bank account.

A Durable Power of Attorney for financial matters, if activated, allows a parent or other individual designated by the child to act on the child’s behalf with respect to most financial and/or business matters. Similarly, a Power of Attorney for Health Care authorizes the child’s agent to make medical decisions on his or her behalf, including decisions regarding medical consent and life support issues. Further, a HIPAA Authorization provides the child’s parent or other designated individual access to the child’s healthcare and treatment information.

For these reasons, we strongly recommend that all adults, even those who have just turned 18, execute a Durable Power of Attorney, Power of Attorney for Health Care, and HIPAA Authorization for Release of Protected Health Information.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Someday, Even Your Estate Plan Will Be Electronic

Posted on June 1, 2018January 22, 2021 by Lin Law

In today’s day and age, most transactions may be accomplished electronically. However, there is still one field where old-fashioned pen and paper is typically still required: Trusts and Estates. Given the sensitivity of estate planning documents, difficulties in authentication, and the potential for data loss or hacking, many people would be (rightfully) hesitant to create or store such documents electronically. Despite these obstacles, interest in electronic wills and other estate planning documents has increased in recent years.

The Uniform Electronic Transactions Act (UETA) of 1999, setting forth nationwide rules for electronic transactions, has been adopted in 47 states (including Wisconsin) and the District of Columbia. The Electronic Signatures in Global and National Commerce Act, passed by Congress in 2000, allows the use of electronic records and signatures in interstate commerce. However, both Acts specifically exclude application to the creation and execution of wills, codicils, and testamentary trusts.

Currently, Nevada and Indiana are the only states to have enacted legislation explicitly authorizing electronic wills (although, electronic wills have been successfully admitted to probate in other jurisdictions under the harmless error doctrine). Efforts to pass similar legislation in Florida, Arizona, New Hampshire, and Virginia have been unsuccessful.

In late 2017, the National Conference of Commissioners on Uniform State Laws (NCCUSL) formed a Committee for Electronic Wills. According to the NCCUSL website, the Committee will “draft a uniform act or model law addressing the formation, validity and recognition of electronic wills.” See http://www.uniformlaws.org/Committee.aspx?title=Electronic%20Wills. In addition, the Committee will consider expanding its mission to address other estate planning documents, including advance medical directives and powers of attorney for health care and finance.

It will be years, or even decades, before electronic wills and other estate planning documents become commonplace, but the trend is clear: someday, even your estate plan will be electronic.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.