Oct. 7, 2010

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Oct. 7, 2010


The Staubus|Randall Website is now online at www.srllp.com. In addition to describing the boutique estate litigation and estate planning practice of the firm, the website details the areas of litigation focused on by our experienced litigation team, the routine probate matters handled, and our sophisticated estate planning and asset protection planning practice. Also be sure to access the news and resources portion of the site, which in addition to featuring recent firm announcements and client testimonials, also makes available white papers which you can download on important topics including will contests, trust litigation and guardianships.


PKS_sm.jpgP. Keith Staubus presented the results of his research on important evidence in will contest trials at the 2010 Texas State Bar’s Advanced Estate Planning and Probate Course. Utilizing his research of the facts in all reported Texas will contest trials for the past 50 years, coupled with his own trial experience, the article identifies the statistical results of important fact scenarios in establishing claims of lack of testamentary capacity and undue influence. You can review the surprising results of the paper "Undue Influence and Lack of Testamentary Capacity: How Much Evidence Is Enough?” on the Staubus|Randall Firm Website.

He will be speaking at the Probate Litigation Seminar presented by the Tarrant County Probate Bar Association at Texas Wesleyan University School of Law on the topic of will contests on September 17, 2010.

Keith has also been asked to speak on Tuesday, September 28, 2010 at the Probate, Trusts & Estates Section of the Dallas Bar Association on the topic of will contests. The public is welcome to attend.


In 2001, Congress made sweeping changes to the federal estate, gift, and generation-skipping transfer tax laws, substantially increasing the amount a person could own before the tax applied.". However, as a compromise the 2001 law contained a "sunset” provision, meaning that it would expire at the end of ten years, at which time the provisions of the law in effect in 2001 would be reinstated. It was always assumed by lawmakers and estate planners alike that at some point during the ten-year period, Congress would be able to compromise on a more permanent solution to the transfer tax laws. This did not happen. On January 1, 2010, the estate tax and the GST tax were repealed for one year.

Ryan Randall, our estate planning and tax partner, sat down recently to address questions which our clients have been asking regarding the status of the Federal Estate Tax and how it affects their estates.

Q: "Ryan, what happens to the estate tax and the generation skipping tax beginning January 1, 2011?”

A: "In 2011, after the 2010 year in which there is no federal estate tax for any person passing away during that year, the estate and GST tax will be reinstated. The estate tax exemption will be reduced to $1 million, where it was in 2001, with a top rate of 55%. The GST exemption will be reduced to $1 million but indexed for inflation since 2001. The gift tax will return to the pre-2001 system with a $1 million exemption and a 55% top rate. The carryover basis provisions will no longer apply after the estate tax is reinstated in 2011.”

Q: "What is the impact of the deletion of the carryover basis rule?”

A: "Under the 2001 law, most appreciated assets obtained a new "cost basis” on the date of a decedent’s death, being the beginning point for calculating the gain on a later sale, equal to its date of death value. Thus, when heirs sold the inherited property equal to the date of death value, there was no gain on the sale, meaning that there was no capital gains tax on the increase in value that occurred during the lifetime of the decedent. Once the estate tax was repealed in 2010, the decedent’s basis in an appreciated asset began to "carryover” to the heirs. The capital gains tax kicks in once the gains in an estate exceed $1.3 million for non spousal beneficiary. Note that there is an extra $3 million exemption for assets left to a spouse. Many families will be affected by these carryover basis provisions. It has been estimated that an extension of the estate tax (with a $3.5 million exemption) would have affected about 6,000 estates in 2010, but the new carryover basis provisions could affect more than 70,000.”

Q: "What planning steps should clients be considering before the end of 2010, and going forward?”

A: "You should check to see whether your current estate plan would work properly this year, being the year with no estate tax, as well with the smaller $1 million exemption next year. Most couple’s wills are designed to use each spouse’s estate tax exemption. Under this scenario, when the first spouse dies, the exemption amount goes into a "bypass” trust for the benefit of the surviving spouse and children, and the rest goes outright to the surviving spouse. The survivor has access to trust income and, if needed, principal, but the amount in the trust bypasses his or her estate.

In a year with no estate tax, such formula-driven plans don’t work as intended, with too little, too much or even nothing left to certain heirs.

We are also discussing with clients who have large estates the possibility of transferring assets to long-term trusts for descendants that might be free of GST tax constraints. The trusts would be created under current law which provides for no GST tax, and if the GST tax is reinstituted, existing trusts that were created during a time that no GST tax existed may be grandfathered from the new tax laws.

We have some clients who are considering gifts to grandchildren that would otherwise be subject to the GST tax as "direct skips”. Of course, gifts in excess of the donor’s $1 million lifetime gift tax exemption and $13,000 annual exclusions will be subject to gift tax, but clients who had already planned to make large gifts anyway should consider doing it in 2010 while there is a chance that they may pay just a 35% gift tax rather than the top 55% rate that will apply beginning in 2011.

Finally, we have a number of clients who have considered making discounted gifts, outright or in trust, of fractional interests in real estate or of minority interests in closely held corporations, family limited partnerships, or limited liability companies, before Congress enacts substantial changes in the rules regarding valuation discounts.

Needless to say, you should consult with a qualified estate planner to address these planning opportunities and the effect of the impending federal estate tax changes on your estate plan.”


By P. Keith Staubus

Financial abuse of the elderly is a serious problem. According to a recent survey, one senior in five has been the victim of some type of financial abuse. In addition, half of the seniors surveyed reported experiencing some degree of economic exploitation. The Texas Department of Family and Protective Services reported that there were 17,000 cases of elderly exploitation state-wide in 2009.

The U.S. Department of Health and Human Services Administration on aging has identified a list of signs and symptoms of financial and material exploitation of the aging, which include the following:

  • Sudden changes in bank account or banking practice, including an unexplained withdrawal of large sums of money by a person accompanying the elder;
  • The inclusion of additional names on an elder’s bank signature card;
  • Unauthorized withdrawal of the elder’s funds using the elder’s ATM card;
  • Abrupt changes in a will or other financial documents;
  • Unexplained disappearance of funds or valuable possessions;
  • Substandard care being provided or bills unpaid despite the availability of adequate financial resources;
  • Discovery of an elder’s signature being forged for financial transactions or for the titles of his/her possessions;
  • Sudden appearance of previously uninvolved relatives claiming their rights to an elder’s affairs and possessions;
  • Unexplained sudden transfer of assets to a family member or someone outside the family;
  • The provision of services that are not necessary; and
  • An elder’s report of financial exploitation.

Fortunately, Texas law provides the family and friends of the elderly who are the subject of financial abuse legal tools to take control of situations where their loved ones are being exploited.

The Texas Probate Code authorizes a Probate Court, on its own motion or on the motion of any interested person, to immediately appoint a temporary guardian to take control of their at-risk elder, to provide safe living arrangements, and to secure their assets from further exploitation. The Court can also grant immediate temporary restraining orders to restrain culprits from accessing the elder’s accounts or from having contact with the elder, as well as a wide range of other emergency relief. Once stabilized, the situation may be secured for the long-term with the appointment of a permanent guardian.

If you suspect that someone is the victim of elder abuse, you should take active steps to intervene. You can begin by increasing your contact with him or her, and by talking to their caregiver or financial advisor. If you are still uncomfortable with the situation, it is our experience that your instinct is in all likelihood correct, and that you need to act before it is too late. At that point, you should seek assistance from Adult Protective Services and/or a law firm like Staubus|Randall that focuses on guardianship law, financial abuse of the elderly, and fiduciary litigation.


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