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June 2020 Newsletter
The Farner & Perrin law firm is transitioning to reopening our offices. We have limited staff on site daily, with most of us working remotely. Be assured we continue to be operational and ready to serve your trusts and estates needs. However, in the interests of everyone’s health and safety we are not conducting in-person meetings at this time.
AND THE WINNERS ARE….
TOP TEN MOST COMMON ESTATE PLANNING MISTAKES
People work a lifetime to save and accumulate wealth, and usually intend to pass it on to their children (or other heirs) at death. Unfortunately, too many people neglect how their wealth will ultimately be transferred, and their lack of planning can wreak havoc with their good intentions. Reminiscent of the David Letterman show, here are the “top 10” estate planning mistakes that we commonly see, in reverse order:
ADDING INSULT TO INJURY
DEATH FOLLOWING DIVORCE
Spend some time searching on the internet, and you will find no shortage of studies, statistics and facts about divorce. You will find everything from its major causes (money, infidelity) to its demographics (highest rate in Russia, lowest in India) to its incidences among occupations (highest among bartenders, lowest optometrists). As the rate of marriage trends downward in American society, the rate of divorce is not surprisingly somewhat slowing. Yet, the rate of divorce in second marriages is higher than in first marriages. And another noteworthy trend is the divorce rate among people age 50 and older has doubled in the last twenty years.
If not fascinating, these factoids at least focus us on the reality of divorce in our families, now or in the future.
IN CASE YOU MISSED IT:
2019 LAW CHANGES AFFECTING ESTATES AND TRUSTS
The Texas legislature meets only in the odd years, so it is currently out of session. While 2019 was not a banner year for probate and trust law, allow us to share select highlights:
Access to Digital Assets. An executor now has specific authority to seek a court order to access the decedent’s digital assets. Digital assets are broadly defined. A good way to think about them is as electronic substitutes for items that used to be physically maintained, e.g., records, correspondence, books, CDs, and videos. Digital assets may also include email accounts and social media accounts, such as Facebook. An executor’s authority may be limited by the terms of certain accounts.
January 2020 Newsletter
Congress passed the Secure Act in the final days of 2019, effective as of January 1, 2020. This is a transformational tax law in terms of post-death income tax on inherited IRAs.
To provide context, the Investment Company Institute estimates there is almost $6 trillion in 401(k) assets and almost $10 trillion in IRA assets, as of 2019. So it is not really a surprise that Congress would seize on an opportunity to tax these assets sooner rather than later, as the aging of the population continues and the impending generational transfer of this wealth looms large.
And that is the main thrust of the Secure Act. Seniors will enjoy somewhat greater income tax deferral, but their heirs will encounter quite a compressed time frame for recognition of the income tax on what they inherit from an IRA or 401(k).
Channeling Clint Eastwood, allow us to share The Good, Bad and the Ugly.