To Inherit or Not to Inherit?

Pop artist Sting recently made headlines by proclaiming that he didn’t intend to leave his children any sizable part of his fortune. (Leaving aside the question of how one might actually spend hundreds of millions of dollars in one’s own lifetime…) But this CNBC study suggests that many young people of the millennial generation may still have some inheritance coming their way in the future. Many people opposed to inherited wealth worry about dead hand control (the old law school classic of the rule against perpetuities) and that their children may not develop the work ethic or business savvy necessary to be successful if they receive a sizable inheritance. On the other side, many people would rather leave the money to the family than to Uncle Sam and some may wonder if children raised in a  particular setting and accustomed to a certain lifestyle are in for a rude awakening if they can’t easily replicate that lifestyle once they’re out on their own.

What do you think? To inherit or not to inherit? That is the question (with apologies to Hamlet).

If my law firmJohnson Law KC LLC, can help you or your family with your personal estate planning or small business needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a free consultation.

(c) 2014, Stephen M. Johnson, Esq.

 

Advertisements

Estate Planning with Multiple Homes

Bloomberg has this article about Bill & Hillary Clinton’s estate planning techniques. Since leaving the White House, former President Clinton and his wife, the former Senator and Secretary of State, have amassed a fortune writing memoirs and giving speeches, while building their foundation’s global presence and buying multiple estates in New York and Washington, D.C. Not surprisingly, the Clintons are using several high end estate planning techniques similar to what Mitt Romney, Al Gore, and other wealthy politicians and business people use. Across the Pond, former British Prime Minister Tony Blair has developed a formidable business, philanthropic, and advisory empire. We’ve explored some of these techniques here, here, and here.

If my law firm, Johnson Law KC LLC, can help you or your family with your personal estate planning or small business needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a free consultation.

(c) 2014, Stephen M. Johnson, Esq.

 

 

Real Value & Conservation Easements

Today, the 2nd Circuit Court of Appeals (based in New York) decided Scheidelman v. Commissioner of Internal Revenue. Ms Huda Scheidelman donated a facade conservation easement (part of her townhouse in a historic district of Brooklyn) to the National Architectural Trust (a tax exempt organization). The area of Brooklyn where he townhouse is located is a “registered historic district” under federal law and New York law prohibits altering, reconstructing, or demolishing a federally registered historic building. Ms Scheidelman took a $115,000 tax deduction for donating the conservation easement to a tax exempt organization. But the IRS balked, arguing (1) she didn’t have a “qualified appraisal” and (2) her donated easement didn’t reduce the property’s fair market value because she didn’t give anything up by donating the easement. The Court found that the appraisal was seriously flawed and incomplete (see Slip at pp. 9-12), and the historic designation actually boosted, not diminished the value of her home.

While conservation easements are a useful estate planning tool, Scheidelman teaches that taxpayers need a good appraisal, to know the real value of their property, to avoid costly and embarrassing litigation and owing more money to the IRS. This year, the KC Estate Planning Society heard 2 great papers on conservation easements, which survey the landscape contours of conservation easements and how they fit into estate planning more broadly – this one by Laurie Hamilton and this one by Leah Mueller. (Excellent papers were also presented on special needs trusts and Sharia law and liberating a trust’s capital gains income from the net investment income tax under the Affordable Care Act.)

If my law firmJohnson Law KC LLC, can help counsel you or your family on conservation easements or other estate planning issues, call (913-707-9220) or email me (steve@johnsonlawkc.com) for a complimentary and convenient consultation.

(c) 2014, Stephen M. Johnson, Esq.

Time for a Vacation Home?

It’s mid June and (almost officially) summer time. Some people think or dream about vacation homes. The WSJ has this helpful reminder of various questions to be explored if you’re in the market for sharing a vacation home (or any other property) with other people. As one person in the article puts it, “you need a real estate prenuptial.”

Some questions:

(1) Start small – go for a pre-existing, planned community with maintenance and pool included.

(2) How to use the property – time share? rent?

(3) What if one co-owner can’t afford to stay in? How do you buy them out? Rights of first refusal to the other parties?

(4) Who pays for maintenance, repairs, and upkeep?

(5) Use a shared bank account? Put the property into a LLC or trust?

If my law firmJohnson Law KC LLC, can help counsel you or your family on these issues, call (913-707-9220) or email me (steve@johnsonlawkc.com) for a complimentary and convenient consultation.

(c) 2014, Stephen M. Johnson, Esq.