Houston Estate Planning and Elder Law Attorney Blog

New EU Rules May Impact Estate Planning for Land Owners Outside U.S.

Published on: August 24, 2015 | By McCulloch & Miller, PLLC

The European Union has put into effect new rules on inheritance laws that allow people to select which country’s laws they want to have applied to their wills. Americans who own property in the EU that they wish to pass on through their estate need to prepare for this change.

In the past, if you had a will written and executed in one country, and you died in that country, the law of that country would govern the distribution of your estate. A new rule from the European Union that is currently in effect will give you the option to choose which country’s laws you want to apply to your will. The country you have chosen must be designated in your will.

Thus, for example, if a German is living in Italy, he or she can write a will to be used in Italy but that applies German law. This is not limited to nations in Europe. An American living in Europe could chose to apply US law. The Connexion reported on this new rule in "New EU inheritance rules now in force ."

More States Seeking New Legislation to Protect Elderly Investors

Published on: August 21, 2015 | By McCulloch & Miller, PLLC

After a long and high profile life of philanthropic endeavors, socialite Brook Astor died in 2007 with an estate worth $200 million. Two years later, her son Anthony Marshall was convicted of stealing millions from her. Astor suffered from dementia, and Marshall was paying himself from her assets. While not all families enjoy this level of wealth, the fact pattern is not all that unusual. A large and growing number of Americans suffer from dementia-type illnesses and a equally large number of them will be taken advantage of by family members.

States are now trying to provide greater protection for elderly investors, according to a recent Reuters article titled “Protecting dementia sufferers from scammers gains ground in U.S.” Retail brokers – in three states thus far, have been permitted to help deter scams against people with dementia.

The laws, which are being examined by other state legislatures, allow brokerages to halt an older client’s request to transfer money to others (at least temporarily) if a wealth manager suspects that his or her customer may have dementia and may be unknowingly be the victim of a scheme.

Houston Families Should Take Note of Pending IRS Changes

Published on: August 20, 2015 | By McCulloch & Miller, PLLC

The word is out in the estate planning bar that the IRS is looking at making an announcement this September about a favorite tax benefit gained from the use of family partnerships and LLCs. New regulations would effectively raise the taxable value of assets transferred into these entities, which currently enjoy a generous discount. Wealthy clients are being advised to set up partnerships now to capture what remains of these discounts before the new rules take effect.

According an article in Barron’s titled “IRS Considers New Tax on Wealthy Families,” any changes to tax benefits affection family partnerships and LLCs could have significant consequences.

The article explains that partnerships and LLCs currently let families pass on a minority stake in the family business or in a pool of privately-held investments to their children with little or no tax consequences. This is because minority shares in a private business are illiquid, or unable to be easily sold or exchanged for cash without a substantial loss in value. They are worth less, from a tax perspective, than their stated market value. This is a big help to families who want to lower the taxable value of their assets, and in some cases below the $5.43 million gift-tax exemption. It also works even if the underlying investments getting passed on are liquid. The discount could be as much as 20% to 25%.

Future Trends? Some Savvy Retirement Loopholes May Be Changed

Published on: August 19, 2015 | By McCulloch & Miller, PLLC

Savvy individuals, estate planning lawyers and financial advisors are not averse to finding unintended benefits when Congress makes changes to laws regarding retirement accounts and Social Security payments. Unfortunately, when too many of these techniques are discovered and shared widely, the government sees revenue slipping away. Three of these loopholes have drawn the attention of various government agencies and may be changed in the near future.

A recent Reuters article, titled “3 Retirement Loopholes That Are Likely to Close,” discusses some of the loopholes that can be found, as an unintended result, due to changes in law.

Back-Door Roth IRA Conversions. Congress created this loophole by lifting income restrictions from conversions from a traditional IRA to a Roth IRA, but not placing such restrictions from the contributions to the accounts. As a result, those whose incomes are too high to put after-tax money directly into a Roth IRA so it can grow tax-free, instead are able to fund a traditional IRA with a non-deductible contribution then convert it to a Roth. Taxes are usually expected in a Roth conversion, but this work-around doesn’t cause much liability, the article explains, provided the contributor doesn’t have other money in an IRA.

Estate Planning Isn’t a “Cookie Cutter” Approach for All Millionaires

Published on: August 18, 2015 | By McCulloch & Miller, PLLC

A recent survey from CNBC.com shows that there are differences in how the wealthy perceive the need for estate planning, and not all millionaires behave the same way. There are differences between families at the $1 million – $5 million level and those with $5 million and more. However, a significant number of millionaires do not have an estate plan, and part of that may be due to estate planning fatigue.

According to a poll of 750 millionaires, individuals with $5 million or more (68%) were more likely to seek help with estate planning, compared to individuals with $1 million to $5 million in assets (61%). The survey, conducted by CNBC.com, reports their findings in a recent article: “Wealthy suffer from 'estate-planning fatigue'.”

The political break down was as follows: Republicans (68%) were more likely to use an estate planning expert to create an estate plan than Democrats (61%) or Independents (58%).

Retirement Planning: Use Caution on Houston’s Bumpy Roads

Published on: August 17, 2015 | By McCulloch & Miller, PLLC

With two-thirds of Americans experiencing disruptions to their retirement planning resulting from divorce, major illnesses, unemployment or business troubles, the road to retirement has become bumpier than ever, according to a new TD Ameritrade survey. The challenges add up to $2.5 trillion in lost retirement savings. The news is gloomy, but knowing that there are and will be problems on the road to retirement reminds us that planning should include these kinds of problems, and responding to financial disruption in a timely manner is necessary for successful retirement planning.

The website Real Deal Retirement gives us three ways to stay on track during our journey toward retirement. The article, titled “Retirement Interruptus: 3 Ways To Prevent Disruptions From Derailing Your Retirement Plans,”gets right to the point:

1. Consider Alternate Retirement Realities. Remember that an assessment of your retirement prospects from a retirement calculator, doesn’t mean that your retirement’s going to go precisely to that plan. Just like the weather forecast, things can change. “The best-laid plans of mice and men…”

Are Bitcoins Part of Your Houston Estate?

Published on: August 14, 2015 | By McCulloch & Miller, PLLC

To the digerati – the elite of the technology world – Bitcoins are as valuable as the dollar or any other state-sponsored currency. But the rules are still under development for estate planning purposes, and planning for an estate that includes Bitcoins must take this into account.

Most people know what Bitcoins are, even if they don’t use the digital currency that has become popular in the online world. The theory behind Bitcoins was that the world was ready for digital currency, an electronic peer to peer cash system that would eliminate the use of money created by countries.

Bitcoins were to be untraceable and uncontrollable by any government.

NY Psychiatrist Accused of Undue Influence Over Vulnerable Patient

Published on: August 13, 2015 | By McCulloch & Miller, PLLC

The classic story of a vulnerable wealthy elderly person being influenced by a caretaker who seeks to enrich him or herself has been updated in a dispute between a disinherited brother and psychiatrist/girlfriend of a Texas woman who is alleged to have been manipulated out of millions.

A successful and wealthy attorney with undisclosed health problems took a medical leave of absence from her law practice and traveled to New York City for treatment by a psychiatrist. Five months after treatment began, according to a statement submitted in court, things became complicated.

Several years later, the heavily-medicated attorney, Amy Blumenthal, passed away. What is alleged to have happened during those years might shock some people.

Are Your Houston Beneficiary Designations Current?

Published on: August 12, 2015 | By McCulloch & Miller, PLLC

For many Americans, the majority of non-real estate assets are their retirement accounts and life insurance policies. However, a large number of people forget to update their designated beneficiaries, which can lead to key assets going to unintended beneficiaries. An unusual fact pattern cited here reminds us of the importance of keeping beneficiary designations up-to-date.

Like millions of hardworking Americans, Austin Hardy's employer managed his retirement plan. Hardy may have been absent on the date that the HR department explained the importance of naming a death beneficiary for his plan; he either forgot or neglected to designate a beneficiary.

When he passed away, Hardy’s employer did the right thing: it followed the default rules of the plan. Those rules stated that if no surviving spouse or partner existed, then the plan should pass to a surviving child, whether biological or adopted.

Daughter’s Disinheritance Ruled “Unreasonable;” Mother’s Will Reversed

Published on: August 11, 2015 | By McCulloch & Miller, PLLC

In most cases, as long as basic principles are followed, a person is entitled by law to leave whatever he or she wishes to their heirs. There are no requirements to leave assets to adult children, but a recent ruling in a London Court of Appeals may change this.

When Thomas Jackson passed away in an industrial accident, he left behind a wife and a daughter who was only two months old. He left a small estate from his earnings and compensation for his death that went to Melita Jackson, the mother of his daughter, Heather Ilott.

At the age of 17, Ilott eloped with her teenage boyfriend. Despite the fact that the relationship continued for well over 40 years and the couple had five children, Melita Jackson never forgave her daughter and spurned all attempts at reconciliation.