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Let’s Go Over this Again: Remember to Dot Your I’s and Cross Your T’s

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Even though you think you have done everything right, the statute of limitations may not have started to toll if your Form 709, Gift (and Generation-Skipping Transfer) Tax Return, contains errors. Once a properly completed (how much can we stress the words PROPERLY COMPLETED?) Form 709 is filed, the Service must assess the amount of any gift tax within three years of the filing date. Under the Regs, a transfer is adequately disclosed when the return provides the following:

(i) A description of the transferred property and any consideration received by the transferor; [and] … (iv) A detailed description of the method used to determine the fair market value of property transferred, . . . including any financial data . . . utilized in determining the value of the interest.

2016 Qualified Plan Limits

October 29, 2015

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2016 Qualified Plan Limits

October 29, 2015

Authored by: BenefitsBryanCave.com

They’re here—the 2016 IRS plan limitations-but they’re not new. Because the change in the cost-of-living index doesn’t trigger an adjustment, the qualified plan limits identified here do not change in 2016. See the chart below to see the 2016 limits as well as a summary of the limits over the preceding three years. Note that certain other limitations do change for 2016 (e.g. certain IRA limits), but not the qualified plan limits reported here.

Type of Limitation 2016 2015 2014 2013 Elective Deferrals (401(k), 403(b), 457(b)(2) and 457(c)(1)) $18,000 $18,000 $17,500 $17,500 Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (457(b)(3) and 402(g) provide separate catch-up rules to be considered as appropriate) $6,000 $6,000 $5,500 $5,500 SIMPLE 401(k) or regular SIMPLE plans, Catch-Up Deferrals $3,000 $3,000 $2,500 $2,500 415 limit for Defined Benefit Plans $210,000 $210,000 $210,000 $205,000 415 limit for Defined Contribution Plans $53,000 $53,000 $52,000

WHEN IS AN ADOPTION NOT EFFECTIVE TO CHANGE INHERITANCE RIGHTS?

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In Lubin v. AT&T Ret. Sav. Plan (2015 WL 4397703), an adoption was not given effect in determining who would receive the life insurance benefits at issue.

In this case, Austin Hardy participated in a Retirement Savings Plan (“Plan”), which included a life insurance benefit. At his death, he was survived by his sisters, Pauline Lubin and Frances Koryn (Plaintiffs), and his biological daughter, Jennifer Krokey. Although Krokey was Hardy’s biological child, she had been subsequently adopted by a step-father. Under Florida law, a child who is adopted is the child of the adopting parent and ceases to be a child of the biological parent for all purposes.

WHAT DO YOU MEAN THE TRUST IS NOT ASSET PROTECTED?

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In a recent bankruptcy case, Richard Lewiston unsuccessfully attempted to shelter his assets in the Lois and Richard Lewiston Living Trust (the “Trust”) from inclusion in his bankruptcy estate based on the Trust’s spendthrift provision. Here, the bankruptcy court looked to Michigan state law in applying the provisions of the Bankruptcy Code and concluded the Trust property was part of Lewiston’s bankruptcy estate.

A Mistake, Yes, But Fixable

A Mistake, Yes, But Fixable

October 19, 2015

Authored by: Kathy Sherby and Stephanie Moll

With drafting assistance from our Washington University School of Law extern, Alexander Fersa.

ThinkstockPhotos-488003222PLR 201536002 is a reminder that the Treasury Regs (specifically Treas. Reg. § 301.9100-3) offer relief to correct certain failures to make regulatory elections. Here, the decedent’s trust created Trust A and Trust B. Trust B provided for all income to be paid to the surviving spouse, so that Trust B otherwise qualified for the qualified terminable interest property (QTIP) election (if you need a refresher on what type of trusts qualify for the gift and estate tax marital deduction, click here). However, the attorney who prepared and timely filed the estate tax return failed to make the QTIP election for Trust B.

A QTIP election is to be made on the estate tax return and once made,

In California, Unambiguous Wills May Now Be Reformed

With drafting assistance from our Washington University School of Law extern, Alexander Fersa.

It seems the California Supreme Court agrees with Cole Porter that “times have changed.”

Abrogating 50 years of binding case law, in In re estate of Duke, the California Supreme Court elected to treat wills the same as trusts are treated under the Uniform Trust Code by allowing courts to look to extrinsic evidence when determining the intent of the testator. The Court concluded that an unambiguous will may be reformed if clear and convincing evidence establishes (1) that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and (2) the testator’s actual specific intent at the time the will was drafted.

The Court determined that there is no justification for a categorical bar on reformation of unambiguous wills so long as the reformation is supported by

Power Of Attorney Did Not Authorize Creation Of Trust

October 7, 2015

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Because powers of attorney are often used as an elder care planning tool, they are also often used by the attorney-in-fact to manage the estate planning and finances of the principal.  The creation of a trust can be an important estate planning tool, so, if the principal wants to authorize his or her agent to create a trust, that authorization should be specifically granted in the power of attorney.  Not surprisingly, there is increasing litigation over the scope of powerconveyed to an agent through a power of attorney, including litigation regarding the agent’s authority to create a trust for the principal.  In Dishman v. Dougherty, Kentucky was one of the latest states to have an appellate court weigh in.

Setting aside a very complex factual and procedural history that are recounted in detail in the opinion, one of the take-aways

Updates to Florida UTMA and Florida Health Care Surrogate Statutes

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Uniform Transfers to Minors Act

Florida’s Uniform Transfers to Minors Act (“UTMA”), found under Florida Statutes Chapter 710, provides a mechanism for the creation of custodial accounts for gifts, bequests or other transfers to minors, without requiring the presence of an appointed guardian for the minor. Previously, under Florida’s UTMA, minors were defined as persons under the age of 21. The new UTMA statute, effective July 1, 2015, permits custodianships to last until the age of 25. A custodianship under Florida law can be created if the transferor, the custodian or the minor resides in Florida or if the custodial property is situated in Florida.

Health Care Surrogates

A designation of a Health Care Surrogate is a written document appointing someone to make health care decisions for an individual (the “Principal”) or receive health information on such person’s behalf in

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