If 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.
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
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.
Update: Click here to read more about the law.
Tennessee is without a doubt one of the leading Trust Law jurisdictions, and Tennessee estate planners have more tools than ever before.
In 2000, Tennessee adopted the Uniform Principal and Income Act which provides certainty and safe harbor to Trustees with respect to trust accounting principles. In 2002, the Uniform Prudent Investor Act did the same with respect to the management of investments.
In 2004, Tennessee adopted the Uniform Trust Code (one of the first five jurisdictions to adopt it). Although the Trust Code did not diverge significantly from the common law, it made Tennessee Trust Law more accessible and cohesive. Among other things, the Trust Code gave Tennessee attorneys innovative methods such as virtual representation, Non-Judicial Settlement Agreements, and judicial and non-judicial trust modifications and terminations to deal with some of Trust Laws most vexing issues.
2007 brought a 360 year rule against perpetuities (which coincidentally I may be able to thank for my job!), self-settled asset protection trusts (innocuously named the Tennessee Investment Services Act), and updates to the now non-uniform Tennessee Uniform Trust Code which allowed beneficiaries to serve as their own trustee without jeopardizing the spendthrift protections granted to them by the trust.
2010 brought further Trust Code updates, but more importantly brought the Tennessee Community Property Trust Act. Read more about Community Property Trusts here.
In 2012, Tennessee retroactively repealed the Tennessee Gift Tax and gradually repealed the Tennessee Inheritance Tax through 2016. Read more here.
Finally, 2013 brought comprehensive reform to the (now ironically named) Tennessee Uniform Trust Code. As is discussed in a previous post, 2013’s reform essentially did three things: (1) enhance asset protection for beneficiaries, (2) protected Trustees by giving them far more discretion, and (3) allowed for directed trusts to allow trusts to segregate the roles of investment and trust administration. Another change enhanced the attractiveness of Tennessee Asset Protection Trusts. Read more here.
The Reveal. So. . . What’s next? It looks like Tennessee Attorneys will have yet another arrow in their estate planning quiver come July 1, 2014: The Tenancy by the Entirety Joint Revocable Trust. Click here for a summary of HB2068/SB1907.