Interactive Legal Blog

InterActive Legal Welcomes Deirdre R. Wheatley-Liss, Esq. and Scott M. Solkoff, Esq. to their Advisory Board

Melbourne, FL - InterActive Legal welcomes Deirdre R. Wheatley-Liss, Esq. and Scott M. Solkoff, Esq. to their Advisory Board.

It is my honor to welcome two of the nation’s top elder law attorneys, Deirdre Wheatley-Liss and Scott Solkoff, to the InterActive Legal Advisory Board. It is fitting that Deirdre and Scott join our cadre of Advisors at the same time, because each of them exhibits what I have come to appreciate as the essential qualities of many successful elder law attorneys: compassion for those they serve, a commitment to supporting the elder law community and their colleagues, and the entrepreneurial spirit to develop a thriving practice.

Deirdre, a long-time InterActive Legal subscriber, has a depth of knowledge in the areas of elder law and estate planning, and a phenomenal insight into the business of an elder law practice. She understands the needs of the broad spectrum of elder law attorneys, whether practicing at a large firm or in a solo practice. Scott, in addition to being a talented and successful elder law attorney, has a unique gift for teaching, which I had the pleasure of witnessing when I attended the 360° Elder Law Practice Builder Conference earlier this year. His ability to explain the foundational concepts of elder law and estate planning in a way that is comprehensive yet approachable led to numerous “a-ha” moments for all of us in attendance, regardless of background and level of experience.

 

Major Change in Planning for Retirement Benefits on the Horizon

by Vanessa L. Kanaga, Esq.

On May 23, 2019, the U.S. House of Representatives passed a bill that, if signed into law, would significantly change estate planning for Qualified Plans and IRAs (referred to herein, collectively, as "Retirement Benefits"). The Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act")[1] received overwhelming support in the House, passing 417-3. The SECURE Act extensively amends the provisions of the Internal Revenue Code (the "Code") relating to Retirement Benefits, including provisions that apply during the life of the account owner or participant (referred to herein as the "participant"), as well as provisions applicable to Retirement Benefits inherited by beneficiaries at the participant's death.

In addition to other changes affecting contributions to and administration of retirement accounts, the SECURE Act would eliminate the maximum age for contributions to "traditional" IRAs (currently age 70 ½).[2] It also would raise the age at which a participant must begin taking distributions (referred to as "Required Minimum Distributions" or "RMDs") from a Qualified Plan or traditional IRA from age 70 ½ to age 72.[3] However, one of the more significant changes in the SECURE Act, from the perspective of estate planning professionals, is its effect on the ability to stretch distributions of inherited Retirement Benefits over the life of the beneficiary.

Meet the newest member of InterActive Legal's content team, Mohineet Khosla!

 

Melbourne, FL — InterActive Legal extends a warm welcome to the newest member of its legal team, accomplished estate planning attorney, Mohineet Khosla.

Mohineet Khosla received her J.D. from New York University School of Law in 2001. Following law school, Mohineet practiced for over a decade at Milbank LLP in NYC, where she was a colleague of InterActive Legal Editor-in-Chief and Co-Author, Jonathan Blattmachr, and InterActive Legal President, Vanessa Kanaga. Her practice included providing sophisticated estate planning advice to high net worth families, both domestic and international. Mohineet has also represented clients in audits before the Internal Revenue Service and fiduciaries on complex estate and trust administration matters.

As a consultant with the InterActive Legal Content Team, Mohineet will apply her expertise in researching and developing content for the InterActive LegalSuite programs. Her depth of knowledge and experience, combined with her meticulous and reasoned approach to her work, will allow InterActive Legal to continue to enhance and expand its offerings while maintaining the quality and accuracy that have given InterActive LegalSuite its reputation as the premium automated document drafting system for estate planning and elder law attorneys.

The Merging of Estate Planning and Elder Law

by Scott M. Solkoff, Esq.[1]

Two major pressures are moving the practices of Estate Planning and Elder Law together. The dominant pressure is one of demand. For most Americans, the greatest threat to their financial well-being is not taxes. It is the cost of incapacity and long-term care. Addressing these needs with the ethics and skills of an attorney are in high demand. The second pressure is the continuing erosion of value proposition. This second pressure is further broken down twofold: perceived commoditization and the reduced market for tax planning.

Those who routinely deal with high net-worth clients are largely insulated by these pressures. The very wealthy can bear the storm of incapacity and long-term care and they are more apt to understand the value of good lawyering relative to taxes. Given today’s large exemption amounts, however, only one-tenth of one percent of Americans are subject to federal estate, gift and generation-skipping tax exemptions.[2] Most Americans need a different approach, one that blends the Estate Planning and Elder Law toolboxes.[3]

Estate Planning Attorneys are therefore looking to diversify their practices, address prevalent problems and preserve or increase their income streams. Many are wedding Elder Law to their existing practices. Elder Law is among the fastest growing areas of law and has a great level of personal reward. For Estate Planning attorneys, it is also a relatively easy practice area to incorporate since Elder Law and traditional Estate Planning are not-too-distant cousins. This blog post explains the core practice components of an Elder Law practice and how to determine whether Elder Law is right for you.

Healthy Debate Shines Light on Automated Drafting

by Vanessa L. Kanaga, Esq.

A recent set of articles published in the February issue of Trusts & Estates discusses the pros and cons of using Document Assembly Systems (referred to in the articles as "DAS"). The articles are nicely presented as a Point/Counterpoint feature. In the first article (the "Point")[1], Jonathan G. Blattmachr[2] and Martin M. Shenkman[3] discuss the advantages of using DAS in an estate planning practice, ultimately reaching the conclusion that DAS are a must for estate planning attorneys, because they offer the consistency and efficiency needed to stay competitive in the market. In the “Counterpoint” article[4], Douglas J. Paul[5] warns of the dangers of using DAS in an estate planning practice, primarily focusing on the concern that attorneys will become overly reliant on DAS, rather than applying their own expertise in planning and drafting documents for clients.[6]

Certainly, it goes without saying that my colleagues and I appreciate and share the views expressed in the Blattmachr and Shenkman article. However, what may come as a surprise is the extent to which we respect and welcome the objections and concerns discussed in the Paul article. It may be tempting for those of us in the DAS business to sweep the counterpoint article under the rug, or argue that it reflects an outdated view that will be irrelevant in the near future. Yet, the truth is that Paul raises reasonable points that should be in the mind of any good attorney considering the use of DAS in practice. In fact, I venture to say that those of us in the industry are intimately familiar with the concerns raised in the Paul article, because we face them every day, in addressing the questions of prospective customers, and in the decisions we make regarding our systems and the documents within them. The Trusts & Estates articles shed light on these concerns, creating a welcome opportunity to address them in an open forum. In this post, I will discuss how the concerns raised by Paul, though valid, can be addressed by selecting the right system for your practice.

No Time to Waste

© 2019 by Jonathan G. Blattmachr & Martin M. Shenkman. All Rights Reserved.

With the estate, gift and GST exemption at nearly $11.5 million and scheduled to grow until 2026 when they will be cut in half, few advisers are focusing on wealth transfer tax planning for their clients. And even fewer clients at wealth levels that are not significantly in excess of the current exemptions, e.g. couples perhaps under $25 million, are considering planning options. That may all prove a costly mistake. But nothing seems ever to stay static. And if the political winds turn sharply Democratic, there is a real likelihood that tax changes of extraordinary measure may occur. The good news for some is that the deduction for state and local taxes may be fully restored. There may be bad news for others, such as those holding stock in corporations that may have their income tax rates increased dramatically.

In any case, there are proposals (many of which have been made before) that would drastically affect estate tax planning. Many of the components of the proposals include restrictions on estate tax planning similar to those contained in President Obama’s Greenbook. The climate has also changed. There is an increasing chorus of complaints to the effect that the “wealthy are not paying their share of taxes.” This sentiment may have been compounded by the recent scandal of wealthy and famous people paying bribes to secure college acceptances for their children. Overall, this environment should cause worry for those of wealth and motivate them to act while they can. And because most estate tax planning typically takes years to produce significant positive results, it seems appropriate for practitioners to consider that impact of the proposals on their clients, advise them of potential changes and, at least in many cases, encourage them to act now. There are also significant benefits to beginning planning earlier, rather than waiting for more certainty that the law might in fact change. Every practitioner remembers the rushed transactions at the end of 2012 when it was believed that the exemption might decline from $5 million inflation adjusted to $1 million in 2013. Many of the plans were implemented with inadequate thought and planning, too short of a duration between asset transfers and trust funding and more. These problems were not the result of practitioners and clients both not knowing the risks, but rather were the inevitable result of the compressed time frame during which planning had to be completed. No one should want a repeat of that scenario.

One set of proposals is set forth in Senate Bill S. 309 introduced by Bernie Sanders. S.309 — 116th Congress (2019-2020), dubbed "For the 99.8 Percent Act" (“Proposal”). The title alone reinforces the anti-wealthy sentiment that seems to be growing. Here are some highlights of the bill and a brief discussion as to what the changes mean for certain clients and, perhaps, what they should do.

No One Can Read My Email, (And Other Myths in the Practice of Law Today)

By Michael L. Graham, Esq.

Your law firm email is secure, right? If it were not, you would have issues with your state’s ethical rules requiring you to keep client confidences. As a summary and guide for the multiple state ethical rules, ABA Model Rule of Professional Conduct §1.6(a) provides:

A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

Carrying this focus further, §1.6(c), provides:

A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.

First, are your laptop and desktop computers password protected, do they have locators on them so that they can be tracked if lost, and do they contain remotely activated erase software so that one can remotely erase the hard drive if someone tries to connect a stolen laptop to the internet? Is this important? ABA Formal Opinion 477R (revised May 22, 2017) tells us:

A lawyer generally may transmit information relating to the representation of a client over the internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access.

A New Face for Estate Planning

©2019 by Jonathan G. Blattmachr & Daniel J. Scott. All Rights Reserved.

Introduction

For decades, the primary focus of estate planning lectures and publications was about preserving the maximum value of an estate, primarily through estate tax planning. The emphasis was paying less tax in order to transfer more wealth to future generations using techniques such as irrevocable life insurance trusts, corporate and partnership “freezes,” grantor retained income trusts (GRITs), qualified personal residence trusts (QPRTs), grantor retained annuity trusts (GRATs), installment sales to grantor trusts, (family) limited partnerships (FLPs) and making lifetime gifts under the protection of the gift tax annual exclusion or to avoid transfer tax on gift tax paid. This seemed to make sense for many Americans when the estate and gift tax exemptions hovered around $600,000 or $1,000,000. In some states, the combined state and federal estate tax could exceed 50%. As a result, an individual dying with $1 million in assets could end up leaving her heirs less than $500,000. Virtually all of these arrangements involved changing the nature of what was owned by the time of transfer, whether during lifetime (by sale or gift) or at death. For example, the value of a limited partnership received in exchange of other assets, such as market securities, likely was lower than the value of the assets transferred to the partnership. The adage was: lower the value and thereby lower the tax.

Are Your Estate Plans Prepared for Digital Assets?

By Lee Poskanzer, CEO of Directive Communication Systems

The time to address digital assets as part of your client’s estate plan may have begun to run out. We’ve all heard about digital assets, cryptocurrency and occasional lawsuits by family members against social media giants like Yahoo! and Facebook. But now the topic of digital assets will necessarily have landed on your desk when you begin the estate planning process for a client.

Are you fully prepared to help your clients plan for this new asset class, and to protect yourself and your practice from doing the wrong thing?

Digital assets are the new frontier for Trust and Estates practitioners. It’s time to get up to speed about this important asset class.

For the purposes of this discussion, we will limit the focus to the most critical area of digital property: the disclosure of an account’s contents. Closing an account, removing the name from a family share plan and other “action” oriented events will be saved for another day.

The ING, Gifting, and O-Zone Investing: An End-of-Year Retrospective on the Opportunities Created by the TCJA

By Vanessa L. Kanaga

As any estate planner knows, the 2017 law commonly referred to as the "Tax Cuts and Jobs Act" or "TCJA" (Pub. Law 115-97) changed the landscape of estate planning, perhaps not permanently (because what tax law is ever permanent?), but for the near future. The Basic Exclusion Amount (the amount that can pass free of gift or estate tax) doubled to over $11 million under the TCJA, making estate tax planning far less important for most clients and their estate planners. In truth, this merely accelerated a decline in the importance of transfer tax planning that had been the trend for several years, or at least since the American Taxpayer Relief Act of 2012 "permanently" increased the Basic Exclusion Amount to $5,000,000, adjusted for inflation. The good news, at least for estate planners, is that the TCJA also enacted new provisions relating to the federal income tax that affect a number of estate planning clients, and provide new opportunities for the attorneys advising them.

Income Tax Planning Opportunities Using Non-Grantor Trusts

The $10,000 limit on the deduction for state and local taxes unrelated to a trade or business (sometimes referred to as the "SALT" deduction), in new Section 164(b)(6) of the Internal Revenue Code (the "Code"), has the potential to increase the federal income tax bill of many clients, particularly those in states with high income or property tax rates. In response to this new limitation, estate planners have devised new planning techniques involving Incomplete Non-Grantor Trusts and Non-Grantor Spousal Access Trusts (referred to in the InterActive Legal programs as the "ING" Trust and the "SALTy SLAT," respectively). These techniques are intended to effectuate the transfer of assets to trusts in order to avoid state income tax, or divide ownership among multiple taxpayers, each of which is entitled to its own SALT deduction. I mention these techniques as an example of the shift in focus to income tax planning under the TCJA regime, and will not go into detail here. If you are interested in learning more, I recommend watching the webinar recently presented by Martin Shenkman, Bill Lipkind, and InterActive Legal Editor-in-Chief Jonathan Blattmachr, INGs: Extraordinary Planning Tool to Reduce Income Tax Even for Those in Income Tax Free States, available on the Shenkman Law website.