Whither Valuation Discounts?

The WSJ has this story about the IRS’ new proposed regulations on valuation discounts. If enacted, the new rules would curtail tax discounts on family business succession, farm/ranch, or closely held business interests: At stake are accounting and tax discounts which can dramatically reduce a business owner’s tax bill at death. The NYT has a similar story, and some commentators have good roundups of articles. Steve Akers (of Bessemer Trust) has these notes on the new proposed IRS regulations about valuation discounts (under Code §2704). Some think the regulations will be changed to a more taxpayer friendly form, while others think they exceed the IRS’ authority or may be ripe for legal challenges, but many commentators are urging clients considering a family LLC or family limited partnership (FLP) to act soon to ensure the discounts are still allowed by the IRS.

If my firm can help you with your family LLC or FLP needs, please call or email me at your convenience. My law firmJohnson Law KC LLC, works with clients on estate planning and probate matters to help clients take care of their legal needs quickly and inexpensively, and has years of experience counseling clients on a variety of probate, estate planning, and trust administration issues. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

Decanting 101

Steve Oshins and the Peak Trust Company recently did an excellent webinar on decanting trusts (slides). A client may have an irrevocable trust that worked great before, but now needs to be changed, and usually irrevocable trusts are set in stone and can’t be changed. Enter decanting. Decanting by statute (Missouri) or common law (Kansas) allows an irrevocable trust to be changed to meet the beneficiary’s evolving needs and help the trustee to more productively manage the assets in the beneficiary’s best interests.

My law firmJohnson Law KC LLC, is experienced counseling clients from all stages and walks of life on every aspect of trusts and estate planning, including decanting. We can help you answer your legal questions with confidence and friendly expertise. If we can serve you or your family with your trust or estate planning questions, please call (913.707.9220) or email us (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

New ACTEC Commentary

The American College of Trust and Estate Counsel (ACTEC) just published the 5th edition (free PDF) of their Commentaries on the Model Rules of Professional Conduct (2016), which helps attorneys interpret the legal ethics rules. This is a great reference resource for attorneys (regardless of ACTEC membership) involved in estate planning or probate law, and updates/supersedes the 4th edition published in 2006.

My law firmJohnson Law KC LLC, works with clients on estate planning and probate matters to help clients take care of their legal needs quickly and inexpensively, and we have experience counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

Good CLE on Taxes & Litigation – thanks!

Yesterday, I enjoyed presenting two continuing education sessions for attorneys on taxes and litigation at a great NBI CLE seminar at the Deer Creek golf course in KC. Good to see several lawyer friends and meet quite a few new people too – to everyone who came out, thanks for a great day of CLE presentations and discussion. Courtesy of our friends at NBI, here’s the text of my talks on taxes (slides), and litigation (slides).

My law firmJohnson Law KC LLC, works with clients on estate planning and probate matters (and other areas too) to help clients take care of their legal needs quickly and inexpensively, and we have experience counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

 

2016 Estate Planning Notes

Steve Akers (of Bessemer Trust) has these Heckerling Institute Musings and these ACTEC annual meeting musings. Mr Akers’ insights and notes summarize the current state of the art for practitioners and are excellent as always.

My law firmJohnson Law KC LLC, works with clients on estate planning and probate matters to help clients take care of their legal needs quickly and inexpensively, and we have experience counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

 

 

Prince: Why You Need a Will

Legendary music star Prince tragically passed away last week. Based on news reports, it appears that Prince died without a will, leaving a potentially massive estate in limbo and subject to taxes and years of legal wrangling. This is a legal tragedy, and unfortunately, a completely foreseeable and avoidable mistake. Prince’s lack of a will reportedly arose from his aversion to signing legal documents.

The NYT quotes a local entertainment lawyer with excellent advice for all of us: “It comes down to taking care of business. If you don’t take care of it, you’re leaving a mess to the family or the courts.” Have you taken care of business and signed your will? If not, you owe it to your family and yourself to take care of business soon.

Millennials and young professionals need a will too – as the Boy Scouts say, “be prepared” and don’t leave a mess for your family. None of us know when our time will come, but we can all be ready when the time does come. If you’re an adult, you need a will and estate plan.

As an attorney, I enjoy working with clients to do their wills and estate plans quickly and inexpensively. My law firmJohnson Law KC LLC, is experienced counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2016, Stephen M. Johnson, Esq.

Brenner: A Kansas Probate Loophole

The Kansas Court of Appeals decided the Estate of Brenner last Friday. Brenner comes to us from the fine town of Goodland, in western Kansas (Sherman County, near Colorado on I-70). Mrs Brenner died and her daughter asked the Court for letters of administration more than 6 months after her mother’s death (red flag). Mrs Brenner’s obituary tells the charming story of her life; unfortunately, after her death, conflict erupted.

Earlene F. Brenner died January 26, 2014. About 7 months later, on August 18, 2014, her daughter, Beverly Goodman, asked the court to open her mother’s estate and grant Ms Goodman letters of administration. The trial court (via Judge Scott Showalter) said “no,” refusing to open Brenner’s estate or grant Goodman letters. Brenner’s children disagreed if her estate had any probate assets – Brenner had some Texas real estate and bank accounts that passed outside probate.

Writing for the Court of Appeals (the daughter won, 2-1), Judge Kim Schroeder reversed the trial court, and granted letters of administration (K.S.A. 59-2232), as he found the “petition for administration [wa]s timely filed” (Slip, 10). The Court distinguished opening an estate for administration (no deadline) from filing a creditor claim (6 month deadline, K.S.A. 59-2239), and declared that “[a]n action to marshal assets does not invoke the non claim statute [59-2239]” (Slip, 9). The Court says “no harm [no foul]” – when Brenner’s estate is opened, if assets exist, the estate can administer them; if the estate’s empty, “the estate can be closed” (Slip, 10).

Judge Joseph Pierron was the lone dissenter, arguing that letters of administration fall under the 6 month deadline, like filing a will or creditor claims (Slip, 11), and observing that “the issuance of letters of administration is rarely a challenged issue” (Slip, 18). In addition to the daughter missing the 6 month deadline, Judge Pierron argued there were no probate assets, so no need to open a Kansas estate (Slip, 17).

Brenner‘s story may yet have another chapter. Goodman’s losing siblings in Brenner could ask the Court (1) to rehear or modify the case (Rule 7.05), (2) to hear the case en banc (Rule 7.02(a)(1), (b)), or (3) petition for review with the Kansas Supreme Court (Rule 8.03(e)(2)). And in 2016, the Kansas legislature could clarify the probate deadline, to check or balance the growing trend of courts freely reading the statutes of limitation (an arc going back to at least Tracy (2006)).

Bottom line: Kansas’ 6 month filing deadline only applies to wills and creditor claims, not letters of (intestate) administration. If someone dies without a will, their estate can be opened for administration after 6 months, and the estate opening window looks indefinite, a classic carte blanche loophole (“we can find no statutory bar to this action,” Slip, 10). Brenner adds an arrow to our quiver, expanding the attorney’s probate repertoire. And Brenner is yet another reason to encourage clients to do estate planning during their lives, as the Court’s decision arguably undermines probate’s finality (Slip, 11-12).

More food for thought for the bar: could Brenner affect the timing for filing (1) a small estate affidavit (K.S.A. 59-1507b) or (2) a determination of descent (K.S.A. 59-2250)? If letters of administration can be granted more than 6 months after death (even years later under Brenner‘s logic), that could delay the small estate affidavit or determination of descent, since those probate routes assume it’s too late for letters of administration (or that letters won’t be sought or granted) (Slip, 10, 17-18).

My law firmJohnson Law KC LLC, is experienced counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2015, Stephen M. Johnson, Esq.

Cresto: Kansas Undue Influence in Wills

Here’s the Kansas Supreme Court’s interesting undue influence opinion in the Estate of CrestoCresto is a Johnson County case involving alleged undue influence, children from different marriages being disinherited, an out of state attorney who had a relationship with a Will beneficiary, distinguished local counsel (who was not informed of the out of state attorney’s relationship with the Will beneficiary), and other adventures. And here’s the Kansas Supreme Court’s oral argument video.

My law firmJohnson Law KC LLC, is experienced counseling clients from all stages and walks of life on Wills and other estate planning documents, as well as the estate and trust administration processes. Call (913.707.9220) or email us (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2015, Stephen M. Johnson, Esq.

 

FLP 101

A family limited partnership (FLP) or family LLC is an entity that holds a business, real estate, or other asset within a family, allowing for flexible control and succession, while achieving various tax benefits. A FLP or family LLC can be used to for gifts or sales, to give multiple generations ownership, leadership experience, and a voice, and often allow significant valuation discounts to reduce tax bills.

My law firmJohnson Law KC LLC, is experienced counseling clients from all stages and walks of life on FLPs, family LLCs, and other entities to solve clients’ business, estate planning, and tax issues. Call (913.707.9220) or email us (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2015, Stephen M. Johnson, Esq.

Beneficiary trust 101

A beneficiary trust is a tax term for a trust whose income taxes are paid by the beneficiary (person who gets the money from the trust). The IRS Code has special rules that effectively allow for estate planning to use a long standing gap between estate taxes and income taxes to save clients and their families money.

My law firmJohnson Law KC LLC, is experienced counseling clients from all stages and walks of life on beneficiary trusts, taxes, and other estate planning issues. Call (913.707.9220) or email us (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2015, Stephen M. Johnson, Esq.