Category Archives: Trust Law

Estate Planning for H-1B Workers: Part 2 – The US Death Tax and you.

mixture-69523_640If you are a in the US on an H-1B visa and have more than $60,000 in assets here, keep reading.  The United States Federal Estate Tax applies to you.  The tax will apply differently to you based on whether you intend to return to your home country or already consider the US home and you plan to stay.  Either way, the tax is very likely more a significant issue than you realize.  Planning is appropriate.  Continue reading Estate Planning for H-1B Workers: Part 2 – The US Death Tax and you.

Probate and Trust Bill Headed for Haslam’s Desk

Update: Read Public Chapter No. 290 here.

SA0426 which revises a number of areas of the Wills, Trusts and Probate statutes has cleared the Tennessee Senate and is headed to the Governor’s desk.  This bill updates law in the following areas:

This just in! Tennessee Tenancy by the Entirety Joint Revocable Trust

Codified as Public Chapter 829 and signed by Governor Haslam into law on April 29, 2014, a new form of joint trust is available for transfers to trusts on or after July 1, 2014.  Although the trust is not named by the statute, the trust substantially resembles the common law form of property known as tenancy by the entirety.  Some practitioners have appropriately referred to this trust as the “marital asset protection trust.”  I previously discussed this subject here and here, albeit briefly.

This statute has been codified as T.C.A. § 35-15-510.

Common law tenancy by the entirety.  Before I get into the finer points of the TE Trust, a refresher on how tenancy by the entirety works in general (and its benefits) is appropriate.  Continue reading This just in! Tennessee Tenancy by the Entirety Joint Revocable Trust

Governor Signs Tenancy by the Entirety Joint Trust into Law

Update: Click here to read more about the law.

I wrote about this new law in a prior post (click here to read). Its official, the law has now been signed into law by Governor Haslam and will come into effect on July 1, 2014.

Click here to read the law: Public Chapter 829.

Stay Tuned.

Rob Malin

Practitioners Beware: Modifying or Decanting a GST Grandfathered Trust can cause the Loss of GST Exemption

danger thin iceCare must be taken when decanting or modifying older trusts.  This is especially true if the goal is to extend the term of the trust.  In truth, it should generally be avoided.

Modifying or decanting an irrevocable trust can cause a trust that is exempt from the GST because it was irrevocable prior to the effective date for the GST in 1986 (known as a “Grandfathered Trust”) to lose its exempt status.

Administrative modifications such as changing trustees is generally OK.  What should generally be avoided is shifting benefits to a lower generation.  You should carefully review Treasury Regulation section 26.2601-1 before making any changes whatsoever.

Such trusts may nevertheless be decanted or modified for purposes of extending the term of the trust.  However, the longest time that such a trust may be extended is the latter of: Continue reading Practitioners Beware: Modifying or Decanting a GST Grandfathered Trust can cause the Loss of GST Exemption

Teaching that Old Trust New Tricks: Modifying, Amending or Terminating an Irrevocable Trust

Old Dog New TrickArkansas, Mississippi and Tennessee have each adopted the Uniform Trust Code (or some form of it).

One of the many things that the Trust Code has enabled practitioners to do is to change or perhaps simply “freshen” an old irrevocable trust.  With the Death Tax exemptions being so high, many of these old trusts are no longer needed—at least not for their original purpose.  Some of these changes require judicial approval, but many do not.

Modify to Achieve Income Tax Savings.  Lets take that old trust set up under Dad’s Will to use his tax exemption for Mom (still living).   Maybe Mom’s estate is not going to incur death taxes even if you took Dad’s trust into account.  Maybe the trust holds assets with low tax basis.

Continue reading Teaching that Old Trust New Tricks: Modifying, Amending or Terminating an Irrevocable Trust