Educational FYI's

Educational FYI's are written on topics that effect various aspects of estate planning and the laws that govern it. They are published and posted to this site when news worthy events happen that we feel you should be made aware of. The purpose of an Estate Planning Update is to bring important information to the financial advisors in the community. Our hope is that this information better equips you to assist your clients.

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Levine & Furman, LLC releases important estate planning and related articles when there are changes in the law that we feel have an especially large impact. Please take a moment to register to receive full access to our Educational FYIs.


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Will's Assertion of Mistreatment by Disinherited Child is Not Grounds for Invalidity

Decedent's will specifically disinherited his only child and some of his grandchildren "by reason of their ... treatment" of him. Son challenged the will, claiming that it was improperly executed, and also that the decedent had operated under "an insane delusion that four of his grandchildren did not care about him."

READ MORE Read the eFYI titled: Will's Assertion of Mistreatment by Disinherited Child is Not Grounds for Invalidity


Malpractice Claim May Be Brought By Successor Fiduciary Against Agent of Prior Fiduciary (CA)

During the pendency of a will contest, an attorney was appointed as administrator of a decedent's estate.  He hired another law firm to assist with complicated tax issues.  At some point, the administrator wrote to the tax lawyers confessing that he had misappropriated substantial funds from the estate; the tax lawyers initially attempted to help him borrow money to repay the estate, but ultimately wrote to him (in February) indicating that they withdrew from further representation and advising him to secure other assistance.  In May the administrator died; the tax lawyers turned their file over to another attorney in July.  In September the deadline ran out for filing IRS form 843, which would have extended the time for claiming a tax refund by three years.  In November, after resolution of the will contest, a new executor was appointed and he brought a malpractice action against the two groups of tax attorneys.  Both law firms argued that the plaintiff lacked privity with them, since they had been hired by the original administrator, and the trial court granted judgment for the defendants.  The intermediate state appellate court affirmed, and the estate appealed to the state Supreme Court.  That court now reverses, finding that the state probate code gives a successor fiduciary all the powers that his or her predecessor would have, impliedly including the power to bring an action such as the one here.

READ MORE Read the eFYI titled: Malpractice Claim May Be Brought By Successor Fiduciary Against Agent of Prior Fiduciary (CA)


Power of Attorney, Lacking Gift-Giving Authority, Does Not Authorize Gifts to Agent

Mother, suffering from mild dementia, executed a general power of attorney in favor of her son--the power of attorney did not include any language specifically authorizing gifts. Shortly thereafter she moved in and lived with him, and after about eight months moved to a nursing home. At the time of her move to the nursing home the son, using his power of attorney, transferred all her real property, stocks and other assets to himself. The mother died a little over a year later, leaving a will that devised all her assets equally to her son and daughter. After securing appointment as executor of the estate, daughter filed suit to recover the remaining assets, arguing that the purpose of the original conveyance was solely to protect the assets from being depleted by nursing home expenses and that with the mother's death they should be re-conveyed to her estate. Trial court ordered reconveyance and on appealed. Intermediate state appellate court affirms, noting that without a specific gift-giving provision in the power of attorney, a gift to the agent "carries with it a presumption of impropriety and self-dealing." In order to overcome that presumption, the recipient of the gift must make "the clearest showing of intent" on the part of the principal; evidence that the mother in this case trusted her son more, wanted him to manage her money, and may even have been fearful of her daughter did not meet that high standard of evidence.

READ MORE Read the eFYI titled: Power of Attorney, Lacking Gift-Giving Authority, Does Not Authorize Gifts to Agent


New Study Finds Changes Needed to U.S. Health System to Accommodate Needs of Boomers

The aging baby boom generation is likely to increase the nation's disabled population, and a study says the United States needs a better system to provide care for them. More than 40 million Americans currently have some sort of disability, the Institute of Medicine reported Tuesday.

READ MORE Read the eFYI titled: New Study Finds Changes Needed to U.S. Health System to Accommodate Needs of Boomers


Senate Resolution Freezes Estate Tax for Two Years

Senate Resolution 21, 110th Cong. 1st Session, passed the Senate by a vote of 91 - 1.

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Why Can't a NY Lawyer Counsel FL Residents on NY Law?

This article from the ABA Journal summarizes the case of a NY licensed attorney wanting to give advise to FL residents about NY matters. It does a good job of summarizing FL's position on unlicensed practice of law in FL.

READ MORE Read the eFYI titled: Why Can't a NY Lawyer Counsel FL Residents on NY Law?


Undisclosed Conditions Invalidate Life Ins Application (Est. of Bennett v. Crownlife Ins)

The applicant for a life insurance policy had seen the doctor twice, complaining of slurred speech, "fullness" in his ear and other symptoms.  The doctor determined that patient was probably suffering from multiple sclerosis or amyotrophic lateral sclerosis and referred him to a neurologist, but did not tell him about the possible diagnosis (because of the seriousness of the diseases).

READ MORE Read the eFYI titled: Undisclosed Conditions Invalidate Life Ins Application (Est. of Bennett v. Crownlife Ins)


SNT Current Developments

A growing body of case law deals with the vagaries of drafting Special Needs Trusts.  An estate planning / elder law practice that includes the drafting of SNTs cuts across a number of areas of law, including personal injury, tax, public benefits, Medicare, Medicaid, trust law, and even estates and liens.  A knowledge of public benefits laws, especially Medicaid and SSI, is critical in order for an attorney to handle SNT cases.

READ MORE Read the eFYI titled: SNT Current Developments


Failure to Order SNT Not Error (Matter of Mental Hygiene Legal Services fbo Thomas C.)

The long-time guardian of the property of a developmentally disabled adult secured the court's approval to pay $30,000 (of a total estate of $228,000) for day care services.  The guardian subsequently resigned.

READ MORE Read the eFYI titled: Failure to Order SNT Not Error (Matter of Mental Hygiene Legal Services fbo Thomas C.)


Survey Says One Fourth of Americans Say Its OK to Defraud Insurance Companies

Nearly one in four U.S. adults say that overstating the value of claims to insurance companies is acceptable, and more than one in 10 say they approve of submitting insurance claims for items that were not lost or damaged or for treatments that were not provided, according to a survey released today by Accenture.

READ MORE Read the eFYI titled: Survey Says One Fourth of Americans Say Its OK to Defraud Insurance Companies


Senator Hutchinson Reintroduces Charitable IRA Rollover Bill

U.S. Senator Kay Bailey Hutchison (R-TX) has re-introduced bipartisan legislation to allow donors to roll over assets from an Individual Retirement Account, or IRA, to a charity without incurring a tax liability. Senator Hutchinson said, "Charitable giving shouldn't be taxable event. Unfortunately, that's exactly what happens under current law if a donation comes from an IRA. This bill will encourage a valuable new source of American philanthropy." Senator Hutchinson went on to say, "one of my priorities has been to promote charitable giving and expand the role charities and faith-based institutions play in addressing social problems in the United States. This bill will make it easier for Americans to help those in need."

READ MORE Read the eFYI titled: Senator Hutchinson Reintroduces Charitable IRA Rollover Bill


IRS Underpayment Rates Lowest Ever

The interest rates the Internal Revenue Service uses for underpayments and overpayments over taxes for the calendar quarter beginning January 1, 2003 will drop by one percentage point in each category to:

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IRS Offers New Toll-Free Numbers to Assist Taxpayers

The Internal Revenue Service has announced two new toll-free telephone numbers to provide individual and small businesses with better service. These numbers became operational on December 2, 2002.

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Paying Reasonable Compensation to S Corp Shareholder-Employee

From the IRS Service Centers:
An S Corporation must pay reasonable compensation (subject to employment taxes) to shareholder-employee(s) in return for the services that the employee provides to the corporation, before a non-wage distributions may be made to that shareholder-employee. THIS ISSUE HAS BEEN IDENTIFIED AS AN AREA OF NON-COMPLIANCE AND WILL RECEIVE GREATER SCRUTINY IN THE FORESEEABLE FUTURE.

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IRS Rejects Valuation Discounts for IRAs

In TAM 200247001, the Service rejected estate tax valuation discounts for income taxes payable on IRAs and for the lack of marketability inherent in the asset.

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Two Views on the Benefits of Long-Term Care Insurance

The benefits of long-term care insurance are many and varied, and reach beyond policyholders themselves to include family caregivers. Public programs benefit as well, enjoying reduced expenditures on long-term care. The Health Insurance Association of America has released a white paper, which summarizes the major advantages of long-term care insurance for policyholders, caregivers, and public programs. These findings are based on analyses of empirical data collected over the last five years.

READ MORE Read the eFYI titled: Two Views on the Benefits of Long-Term Care Insurance


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