Bielski Law Office, Ltd.

Republicans Seek to Block IRS Rule Changes

Several Republicans in Congress are seeking to block the changes to valuation discounts that were recently announced by the IRS.

The Internal Revenue Service recently announced regulation changes to the ways valuation discounts will be treated for estate tax purposes. The changes are very technical and complicated, but the IRS sees them as closing a loophole it has long sought to shutter.

Previously, the IRS had repeatedly asked Congress to do so, but as Congress has refused the agency did so on its own. As the effect would be to increase the estate taxes some estates have to pay, some lawmakers are seeking to block the new regulations according to Wealth Management in "Lawmakers Target Spending Bill to Block Estate Tax Rules."

At this point it is unclear whether the Republicans seeking to block the changes have the ability to get it done. If the bill is presented as a stand-alone piece of legislation, then it might be easy for President Obama to veto it unless a lot of Democrats in Congress get behind the bill.

However, Republicans might attempt to add this to another piece of legislation, such as a spending measure, that would be more difficult to veto. As of now, they are not certain what they will do.

Of course, the prospects for this bill and anything else having to do with the estate tax could change dramatically after the elections in November if either party scores a big victory.

Reference: Wealth Management (Oct. 5, 2016) "Lawmakers Target Spending Bill to Block Estate Tax Rules."

Desmond Tutu on Assisted Suicide

Former archbishop and Noble Peace Prize winner Desmond Tutu is seeking the right to end his own life in the future.

Desmond Tutu is one of the most respected men in the world. The archbishop and anti-apartheid activist was picked to head the Truth and Reconciliation Committee in South Africa and won the Nobel Peace Prize in 1984.

Tutu has not been in the news much recently as he has retired. However, now he is making something of a come back to activism as he is advocating for physician-assisted suicide. His inspiration for the position might be his own recent illnesses and wanting to have the right to take his own life when he is ready to do so.

The Guardian reported on this story in "Desmond Tutu: I want right to end my own life through assisted dying."

Physician-assisted suicide is perhaps the most controversial topic in elder law. Advocates and the elderly themselves are deeply divided over the issue. Doctors and other medical professionals who might be called upon to assist the terminally ill to take their own lives are also deeply divided on the issue.

In the U.S. only a handful of states have passed laws allowing the practice. It is illegal in most states and in most countries. Recently, the U.K. refused to allow it despite polls showing overwhelming public support for it.

This issue will remain controversial for a long time, perhaps forever. If you would like to know its legal status in your state, contact an elder law attorney.

Reference: Guardian (Oct. 7, 2016) "Desmond Tutu: I want right to end my own life through assisted dying."

Enforcing Charitable Pledges

A lawsuit brought by Duke University has brought media attention to charitable pledges and whether they are enforceable against an estate.

It is common for wealthy people to make pledges to donate money to charity at some future date. Doing so gives the wealthy person time to come up with the liquid assets to donate, if necessary, and lets the charity know when to expect donations.

It also allows donors to keep their assets and profit off them in the time between when the pledge is made and when it is fulfilled. However, what happens if the pledge is not fulfilled?

The answer to that question has been in the news recently as Duke University filed a lawsuit against the estate of Aubrey McClendon and her $10 million unfulfilled pledge.

The Wills, Trusts & Estates Prof Blog looked at some ways a court might decide to enforce the pledge in "History of Charitable Pledges."

Basically, courts will first look to see if there is an enforceable contract, either bilateral or unilateral. Failing that, the court might try to use a legal doctrine known as “promissory estoppel.” In layman's language that means something like, "You made a promise and the other party relied on it. You received some benefit from your promise, so you should not be able to disavow it."

The bottom line is that the legal system has a public policy preference of seeing that charitable pledges are fulfilled and will seek legal ways they can be enforced.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 9, 2016) "History of Charitable Pledges."

Redstone's Battles Finally Over

The last of several probate cases filed this year challenging the competency of Sumner Redstone has finally ended.

As you may have heard, 93-year-old media mogul Sumner Redstone has faced an onslaught of legal cases challenging his mental competency this year. The trouble began when his estranged daughter came back into his life and his estate plan was rewritten in her favor.

The first case was filed by a longtime girlfriend who was ousted from his home and care. Redstone won that battle, but almost immediately afterward faced another battle brought by shareholders of his companies who were upset that he ousted longtime friend Philippe Dauman from his position at Viacom. That case eventually settled when Dauman and others decided they did not have the resources to see it through.

That left the last case challenging Redstone's competency to be dealt with. It was brought by his granddaughter Keryn Redstone.

She claimed she had been forced out of Sumner's life by his daughter and that she was being treated unfairly in his estate plan. She has now agreed to drop her case after meeting with her grandfather. As Private Wealth reports in "Redstone Ends Trust Battle After Meeting with Granddaughter," it remains to be seen whether the two reached any agreement to resolve any of her other claims.

While all legal challenges against Sumner Redstone are now concluded, it should not be assumed this is the end of the story entirely. Unless everyone resolves their differences, the battle over his estate after he passes away could get ugly.

Reference: Private Wealth (Oct. 7, 2016) "Redstone Ends Trust Battle After Meeting with Granddaughter

Skipping a Generation

One of the new post-Brexit ministers in the U.K. is urging grandparents to leave inheritances to their grandchildren instead of their children.

Gavin Barwell, the new Housing Minister in the U.K., has made an unusual request of older people in that country. To help younger people get started in life and accumulate wealth, he has asked that pensioners not leave their estates to their children, but leave them to their grandchildren instead.

According to a report in The Telegraph titled "Inheritance should skip a generation, says minister," the main reason for the request is somewhat unique to the U.K. That country faces a housing shortage and rising prices that leave younger people without the means to buy a home.

The idea can still be helpful to some families in the U.S., however. Despite being the most educated generation in history, many Millennials are having a difficult time getting started with their careers as they are still affected by fallout from the Great Recession. For older Americans whose children have good careers and means of their own, it might be a good idea to skip a generation and leave their wealth to their grandchildren.

Anyone who does this, however, should make certain the entire family is aware of the plan and in basic agreement.

If the adult children are expecting the inheritance and have made plans for it, then bypassing them in favor of grandchildren is likely to cause bitter feelings and conflict within the family.

Reference: The Telegraph (Oct. 9, 2016) "Inheritance should skip a generation, says minister."

'The General' and the Widow

A former mob informant received a $100 million inheritance from a widow in New York. Questions abound about what happened.

Details about the life of Alben Sagan, known as "The General," are sketchy. There is a good reason for that. Alben Sagan is not the man's birth name. It is the name that federal authorities gave him when he entered the witness protection program.

It is known that Sagan was formerly a military officer in Eastern Europe who informed the government about many mob-related crimes and was put into witness protection and given a new life in Wisconsin as dna info reported in "How a Mob Informant Who Left Witness Protection Got $100M From a Widow."

Sagan was apparently not happy with his new life and at some point returned to New York City. In 2008 he showed up at the home of Lee Power, a wealthy widow, to ask about renting an apartment in one of her many properties. Soon after that Sagan became Power's driver.

However, their relationship grew from there and eventually Sagan controlled every aspect of Power's businesses.

When she passed away in 2014, it was discovered that her estate plan had been changed to leave almost everything to Sagan. Under the new estate plan he would receive approximately $100 million in assets.

Power's family has challenged the validity of the estate plan claiming undue influence. They appear to have good grounds for the claim.

Reference: dna info (Sept. 20, 2016) "How a Mob Informant Who Left Witness Protection Got $100M From a Widow."

Art Heir Accused of Fraud in France

Guy Wildenstein, the heir to a major art estate, has been accused of massive tax fraud by French authorities.

The Wildenstein family has been one of the largest collectors and dealers of valuable art for a long time. The internationally known French clan has property all over the world, much of it acquired after they fled France for the U.S. to escape the Nazis during World War II.

The Guardian reports that the heir to the family fortune is in trouble with French authorities in "Heir to art-dealing estate in court in major French fraud trial."

The trouble began in 2001, when family patriarch Daniel Wildenstein passed away. While the exact details of what happened are complex and contested, it is known that one member of the family accused the others of cheating her out of an inheritance.

During the court case it was discovered that the family may have hidden vast sums of money in offshore accounts in tax havens to hide it from French authorities who would have applied an estate tax to it.

Guy Wildenstein, the current heir to the family faces a tax bill of over 500 million Euros and up to 10 years in jail if convicted.

While this is a French case, it should be a reminder for Americans as well. It is not a good idea for estates to transfer money overseas to hide it from tax authorities and the estate tax. If discovered, the penalties are severe both in France and in the U.S.

Reference: Guardian (Sept. 22, 2016) "Heir to art-dealing estate in court in major French fraud trial."

Clinton Modifies Estate Tax Position

Democratic Presidential candidate Hillary Clinton has changed her position on the estate tax by proposing an even bigger increase to it than previously proposed.

In her campaign for the Presidency, Hillary Clinton has always been proposing an increase to the estate tax. Her previous plans were for a relatively modest increase.

However, as the Wills, Trusts & Estates Prof Blog reports in "Hillary Clinton's Proposed 65% Estate Tax Rate," Clinton now proposes that the top estate tax rate be 65%. The rate would be applied to amounts over $500 million for an individual. She also wishes to apply a rate of 50% to estates over $10 million and 55% to estates with total assets over $50 million. Finally, Clinton proposes to eliminate the step-up basis for capital gains. It is estimated that these proposals would raise a total of $260 billion in tax revenues.

If the proposals seem familiar, that is because they are very similar to what her primary opponent Bernie Sanders proposed during his campaign. That makes it likely that Clinton has adopted his proposals in an effort to win over some of his supporters who remain opposed to her.

Clinton's opponent, Donald Trump, has proposed that the estate tax be eliminated entirely.

As long as Congress remains divided it is unlikely either candidates' estate tax proposals will become law. However, those who are interested in the tax should pay close attention to what the next President proposes when in office anyway.

Reference: Wills, Trusts & Estates Prof Blog (Sept. 25, 2016) Hillary Clinton's Proposed 65% Estate Tax Rate."

Eliminating Will Contests

Many people are justifiably concerned that someone will challenge their last wills and be successful. There are some ways that the possibility can be made much less likely to actually happen.

Most people have probably known someone who has expressed dissatisfaction with an inheritance. It is not unusual for people to think that someone else received too much and that they received too little.

Sometimes, that dissatisfaction leads to people challenging the validity of the wills in probate court. These facts lead many people to seek out ways to make it less likely that their own wills might be challenged.

The USA Today recently offered some tips that can help in "5 ways to make a bulletproof will" including:

• No Contest Clause - These clauses are inserted into a will and declare that anyone who challenges the validity of the will forfeits anything he or she is supposed to receive under the will. Each state has its own rules about when these clauses can be enforced.
• Communication - Telling relatives the basic details of your will can make them less likely to challenge it.
• Doctor Verification - If there are going to be any questions later, it is a good idea to have a doctor verify that you are competent and in good mental health at the time you sign your will.
• Hire an Attorney - An attorney can help ensure that your will is legally sound and hiring one is a much better option than creating your own will or downloading a form will to fill out.
• Get a Trust Instead - By using a trust instead of a will to distribute your assets after you pass away, you make it much less likely that your estate plan can be successfully challenged.

Reference: USA Today (Sept. 24, 2016) "5 ways to make a bulletproof will."

Estate Sale Agent Concerns

Estates sales can be an excellent way to get rid of personal possessions either as part of the estate administration process or for an elderly person preparing to move into a nursing home. Be careful when picking an agent to handle the sale.

Estate sales are increasingly popular as older Americans seek to get rid of a lifetime's worth of personal possessions they no longer need. This is especially the case as they prepare to move into smaller residences or nursing homes.

They are also popular with estate administrators who need to dispose of a deceased person's personal property and who do not have time to sell it all themselves. However, as estate sales have grown in popularity, more problems with estate sales agents are being reported.

This issue was picked up by the New York Times in "It Pays to Be Wary When Hiring an Estate Sales Agent."

Some people have reported that the estate sales agents they have hired have paid much later than expected, paid them less than promised and even bounced checks. To avoid having these problems with the estate sales agent you hire it pays to do your homework on the agent.

Do not just pick the cheapest agent you talk to. Ask around and speak to other people who have had estate sales about their experiences with agents. You want to make sure that you hire someone with a track record of expertise and fair dealing.

It is also important that you have a signed contract with the agent and that you get a copy of the contract for yourself. You might also consider speaking to an estate attorney and asking if the attorney knows reputable agents in the area.

Reference: New York Times (Sept. 23, 2016) "It Pays to Be Wary When Hiring an Estate Sales Agent."