Wednesday, May 25, 2011

Morris and Grant to Present at Upcoming Seminars

Attorneys Robert L. Morris and David M. Grant will be presenting at the following legal seminars:

June 6th - “Trust Termination & Legal Ethics,” National Business Institute Seminar on Trust Administration and Preventing and Litigating Fiduciary Liability, to be presented in Las Vegas, NV on June 6, 2011. For more information go HERE.

June 24th - “Estate Planning in Light of Recent Tax Law Changes & Nevada Legislative Update,” State Bar of Nevada 2011 Annual Meeting, to be presented in Kauai, HI on June 24, 2011. For more information go HERE.

Monday, May 23, 2011

Just for Vets ~ Non-Service Related Pensions

Two little-known benefits available to vets or their widows are the Improved Pension and the Aid and Attendance Program.

The Improved Pension is an asset and income based program available to vets or their widows whose assets and income are below certain levels as adjusted annually for inflation.

The Aid and Attendance Program provides additional benefits if the vet or widow is age 65 or older and is permanently and totally disabled. Anyone requiring nursing home care is automatically considered disabled for purposes of qualifying for this program.

Eligibility for either program requires the vet to have served 90 days of active service with at least one day of service during wartime with no dishonorable discharge. Vets who entered service after September 8, 1980, may have a longer minimum period of service.

The benefit levels for 2011 are as follows:

  • Up to $1,644 per month for a single veteran
  • Up to $1,949 per month for a married veteran or a veteran with one dependent
  • Up to $1,057 per month for an unmarried widowed surviving spouse
These are valuable benefit programs for American vets. If you or someone in your family is eligible for these enhanced VA benefits, the VA will assist in helping you qualify.

For more information, go to

 - James M. O'Reilly, Certified Elder Law Attorney

Thursday, May 19, 2011

June AFRs Announced

Nice little drop...For the month of June 2011 the Applicable Federal Rates will be as follows:

In June the 7520 rate will drop to 2.8% from 3.0% where it was in May. To go directly to the IRS' publication of these rates, please visit the following website:

Wednesday, May 18, 2011

Comparison of Portability and Exemption Trust

Last week, I prepared and gave a presentation to the Financial Planning Association of Nevada on some of the details of the 2010 Tax Act and its impact on estate planning. One interesting thing that I came across in preparing my presentation was a comparison of an estate relying on the new portability provisions versus utilizing an “A-B”, “Bypass”, or “Credit Shelter trust. “

The assumptions are as follows:

• Married Couple with a $10 Million estate
• Husband dies in 2011
• Wife dies in 2019
• 2% rate of inflation
• 5% return on assets

The original source of the chart and calculations may be found here on page 40-42.

This example shows the power of capturing the appreciation of the assets in the credit shelter trust. Of course, various factors could affect the calculations, including inflation rate, changes in the Capital Gains rate, and an assumption that the Estate Tax rate will remain at 35%.

Wednesday, May 11, 2011

Jeffrey Burr Named as Preferred Estate Planning Firm

We are pleased to announce that the law firm of Jeffrey Burr has been selected by Legacy Quest as its preferred estate planning provider. Attorneys at Jeffrey Burr were selected by Legacy Quest, from among their competitors, based upon the firm’s long-running reputation for providing high quality, specialized services in the estate planning area.

Legacy Quest offers the Legacy Planner, a system for preserving and shaping a person’s legacy. The Legacy Planner is a first-of-its-kind planning tool used to assists individuals in better organizing their personal and estate information. It provides a structure for helping record personal histories, memories and letters, and includes a system for assembling genealogical information, final plans and directives, and other important financial and estate documents. Legacy Quest was started in 2009 by Hyrum Smith, one of the founders of Franklin Covey, the company behind the Franklin Day Planner.

It is truly an honor for our firm to be recognized as the preferred estate planner by the renowned people behind this innovative company.

Monday, May 9, 2011

Disposition of Tangible Personal Property By List or Statement - What Is "Tangible Personal Property"?

Nevada, like most states, permits a person’s Last Will And Testament and Trust to refer to a separate, written statement or list to dispose of “tangible personal property” not otherwise specifically disposed of by the terms of the Last Will And Testament or Trust. In this regard, the question often asked is “What is tangible personal property that can be disposed of by such a written statement or list?” The applicable Nevada statute attempts to answer such question by defining certain tangible personal property that cannot be disposed of by such a written statement or list, namely “money, evidences of indebtedness, documents of title, securities and property used in a trade or business.” NRS 133.045. Accordingly, a person should never attempt to dispose of “money, evidences of indebtedness, documents of title, securities and property used in a trade or business” via a written statement or list. Examples of these items are cash, financial accounts, promissory notes, deeds of trust-mortgages, stocks, bonds and real estate.

Common examples of tangible personal property that can be disposed of by such a written statement or list are furniture, furnishings, rugs, pictures, books, silver, linen, china, glassware-crystal, objects of art, wearing apparel, jewelry and guns. One of the most common examples of property disposed of by a written statement or list is the wedding and engagement rings of the testator passing to a particular daughter or granddaughter.

Some of the advantages of using such a written statement or list are that it can be prepared before or after the execution of the Last Will And Testament and Trust, and it can be altered by the testator after the list has first been prepared. However, one must be careful to abide by the legal requirements of a valid written statement or list under Nevada law such as the statement or list must contain the date of its execution, the statement or list must contain a reference to the Last Will And Testament or Trust, et cetera.

The attorneys at Jeffrey Burr Ltd. have many years of experience in estate planning, and always inform clients of their option of disposing of part or all of their “tangible personal property” via a written statement or list. In the event a client wishes to utilize such a written statement or list, we insure that such statement or list is valid, enforceable, and carries out the wishes of the client.

 - Attorney John Mugan

Wednesday, May 4, 2011

What Is a Trust?

Stupid question, right? Everyone knows what a trust is…or do they? Some people wrongly assume that a trust is an entity, like a corporation or limited liability company. While many states do recognize an organized business trust entity, the vast majority of trusts are not technically recognized as entities by the state. Simply stated, a trust is an agreement whereby property is held and administered by one person for the benefit of another.

There must be at least three parties to every trust agreement: the settlor, the trustee, and the beneficiary. The settlor is the person who forms the trust by contributing property to the trust agreement. Such property is known as the trust corpus or trust res. Sometimes a settlor is also referred to as a trustor, grantor, donor or creator. The trustee is the person who holds the trust corpus for the benefit of another. The beneficiary is the one for whom the trust corpus is held, and the one to whom distributions are made.

On a more academic level, a trust is created (or settled) when the title to property is split into two parts: legal title and beneficial title. Legal title refers to the ownership interest of a trustee. One who has legal title to property has the right to hold, possess, and deal with such property. Beneficial title, on the other hand, refers to the ownership interest of a beneficiary. One who has beneficial title has the right to enjoy the benefits of the property. Before the trust is ever formed, and title is thus bifurcated, the settlor will generally possess both legal and equitable title, or absolute title.

In common law jurisdictions, trust agreements are governed by the terms of the trust document, or trust indenture as they are sometimes called. The trustee is obligated to administer the trust in accordance with those terms as well as in accordance with governing law.

Common law trust doctrine first developed in the 12th and 13th centuries when landowners leaving England to fight in the Crusades would convey ownership of their land to a friend or family member, with the understanding that title would be conveyed back upon the Crusader’s return. Today, trusts are commonly used as testamentary devices (e.g., living trusts) or as tools to achieve one’s tax planning and asset protection objectives. Whatever a person’s legal needs may be with respect to property, it is almost certain that solutions can be found through the use of trust agreements.

 - Attorney David M. Grant

Monday, May 2, 2011

Large IRAs and Portability Under the 2010 Tax Act

Owners of large IRAs prior to the 2010 Tax Act generally had to decide between the income tax benefits of leaving the IRA to his or her spouse and the potential estate tax benefits of leaving some or all of the IRA to a credit shelter trust or a trust for children or grandchildren. Now, portability may allow owners of large IRAs to name the spouse as the beneficiary of the IRA while still preserving the owner’s unused estate tax exempt amount to be transferred to the surviving spouse.

Rules for IRAs with the Surviving Spouse as Beneficiary
When an individual with an IRA dies, leaving the surviving spouse as the beneficiary, the survivor has three options, all of which could have positive income tax results:

1. Roll the IRA into his or her own IRA, which allows the survivor to wait until he or she reaches the age of 70 ½ before having to take minimum distributions.

2. Keep the IRA as an “inherited IRA,” which allows the survivor to wait until the deceased spouse would have reached 70 ½ before taking distributions.

3. Convert the IRA to a Roth IRA, which has no required distributions during the lifetime of the survivor.

The problem with these options is that, if the survivor is the named beneficiary of the IRA, and the deceased spouse does not have sufficient assets to maximize his or her estate tax exemption, the exemption of the first spouse to die could be wasted.

Maximizing the exemption before the 2010 Tax Act
In order to avoid wasting the exemption, many couples were either naming another individual as a beneficiary of their IRAs, or they were leaving all or a portion of their IRAs to a credit-shelter trust in order to preserve the exemption of the first spouse to die.

A number of disadvantages and complexities arise when leaving an IRA to a trust, such as:

1. If you are only leaving a portion of the IRA to a trust, preparing a formula beneficiary designation is complicated and may not be accepted by the IRA custodian.

2. The IRA benefits will have to be paid over the life expectancy of the oldest beneficiary of the trust, which is usually the spouse. If the payments are distributed to the spouse, they will be included in the spouse’s estate. If they are distributed to other beneficiaries, the spouse will not benefit from the IRA. If they are accumulated, the compressed income tax rates applicable to trusts will apply.

Another option would be to name the family trust as the primary beneficiary, allowing the survivor to disclaim the proceeds to a disclaimer trust at the first spouse’s death. However, the spouse would have to decide whether to give up the potential estate tax benefits of fully funding the credit shelter trust and disclaiming the IRA and giving up the income tax benefits of the spousal rollover. Additionally, the spouse would not be able to have any power of appointment over the disclaimer trust.

After the 2010 Tax Act
Now, with the 2010 Tax Act allowing for a $5 million exemption per person, the unused portion of which can be transferred to the surviving spouse, the problems set forth above may be largely solved. The IRA owner can name the spouse as the beneficiary, with all the income tax benefits which come with that option. Any amount of unused estate tax exemption will be transferred to the survivor to use upon his or her own death. Not only will this preserve the estate tax benefits which were only previously preserved by the methods outlined above, but the planning will also be simplified for owners of large IRAs who do not have sufficient other assets to fully fund a credit shelter trust.

As we know, portability is only in effect for 2011 and 2012. In the event that portability is not extended or made permanent, the other methods to preserve the first spouse’s exemption will have to be revisited. For the next two years, however, IRA owners without sufficient nonretirement assets to fully utilize their estate tax exempt amounts should consider whether it would be desirable to name the spouse as beneficiary in light of the availability of portability.