Since congressional ratification of the “Tax Cuts and Jobs Act” of 2017 (“TCJA”), federal Internal Revenue Service (“IRS”) guidelines effective tax year 2017 have proven to be a challenge for estate planners. Reform introduced to “simplify” the tax reporting process for entities, the Act modifies estate income tax guidelines; imposing a new set of rules for transfers and exemptions.

Guidelines to Tax-free Transfers

Specifying rule changes affecting both estate and gift tax exemptions, as well as generation skipping transfer exemptions, the new law increases the amount to $11,180,000 from $5,490,000 per person with inflationary adjustments assigned annually. Portability election rules continue, allowing a deceased spouse’s estate and gift tax exemption to carry over to a surviving spouse for use while living. Effective January 1, 2018 through December 31, 2025, the Act now makes it possible for a married couple to transfer a total of $22,360,000 without tax on gifts or estate transfers to family, heirs, or other beneficiaries.

If the interest of a family-owned corporation part of an estate or trust has been violated, a derivative action lawsuit can be filed on behalf of those shareholders alleged to be harmed by improper fiduciary conduct. In probate litigation matters, family-owned corporation interests can complicate execution of an estate or trust. Derivative actions filed on behalf of inheritors of the shares of a family-owned business are subject to what is called “demand futility” analysis in court. This double-bind principle can be frustrating for beneficiaries seeking timely transfer of estate or trust family-owned business shareholder assets.

Demand Futility and Exceptions

The rule of “demand futility” is enforced by a court if it is determined that the plaintiffs who have filed a claim against a party allegedly making an independent and disinterested business judgment of detriment to the other shareholders. Such lawsuits are often dismissed by the courts, however, on a motion of the defense. The reason for dismissal? “Demand futility” – where it is deemed that the corporation suing itself is not in majority interests on basis of no adequately cited exception.  

A will that establishes an estate or trust based on outdated federal or state income tax exemption guidelines can be tied up in probate for an extended period and divest heirs of millions of dollars. With President Trump’s 2017 tax reforms increased exemptions for the ultra-rich have estate and trust planners scrambling. Evidence that the “Tax Cuts and Jobs Act” of 2017 (“TCJA”) will be pivotal to maximizing the high net wealth of some estates in the next eight (8) years. The new tax law has quite literally doubled the total asset amount allowable for transfer to beneficiaries. For dynasty trusts, the enhanced estate and gift tax exemption rules are a major opportunity to transfer wealth to beneficiaries tax-free.

Federal v. State Tax Exemptions

While state tax exemptions will remain at lower levels than the $11 million per person federal rules now provide, the incentive to take advantage of federal Internal Revenue Service (“IRS”) exemptions on transfers right now is significant. New York law allows for exemption of $5.25 million from estate tax. This leaves $5.75 million left open to state taxation. Sheltering assets from taxation, then, will still be relevant for many New York estates and trusts. Spousal and generation-skipping estate and gift transfer exemptions continue, however.

In 2017, reportedly 80 percent of all fine art collectors interviewed by the accounting consulting firm Deloitte thought art collections to be a valuable category of investment. A serious consideration for any investor interested in retaining and distributing the value of those tangible assets according to plan, a will, estate, or trust document specifies the future heirs of an investor’s artwork, antiques or rare collectibles. A professional estate planner can assist you to draft and execute a plan for passing on beloved and highly valuable treasures.

Estate Tax Law

The Internal Revenue Service (“IRS”) defines “collectibles” as artwork, antiques, rugs, fine jewelry or other metals and gems, stamps and coins, and vintage alcoholic beverages. Under IRC Section 408(m), the IRS allows estate holders to distribute personal property to heirs or to charities. Special tax and estate laws on distribution of artwork and other collectible assets held in an estate differ by state, as mentioned in New York Consolidated Laws, Tax Law – TAX § 1115. Exemptions from sales and use taxes.

Since introduction of Bitcoin as a valuable retirement fund asset, the significance of blockchain technology has come to influence the estate planning process as well. Estate planning investors with cryptocurrency assets acknowledge blockchain technologies are vital instruments for ensuring a will or estate does not extend into a lengthy probate proceeding. By registering a will, estate, or trust on a blockchain such as “Blockchain Apparatus” or “Proof of Existence,” many of the traditional legal issues surrounding settling executor responsibilities are more readily negotiated. The result: time-efficient distribution of assets or liquidation of those assets on behalf of heirs.

Self-executed” Registration and Modifications

Modification of blockchain wills, estate, or trust documentation is also easier. Estate holders can now elect to alter inheritance decisions without delay with smart contracts.  The platform Blockchain Apparatus allows an estate holder to “self-execute” a will without assistance from an estate planner or attorney. While the verdict is still out on blockchain will execution services, niche market digital legal services specifically for cryptocurrency investors like “Will and Testament Coin” which is in the early development stage, may soon be an option for those planning an estate.

New York law allows for a creditor to attach a debt collection order to an estate with a claim of lien. A judgment lien is a court ordered sale of real and personal property part of an estate such as antiques, art, jewelry, and other tangible valuables. A licensed attorney at law specializing in estate law and advise an executor or trustee of New York statutory rules of “Estates, Powers, and Trusts” pertaining to an estate that has been attached with a lien.

Notice of Lien Procedure

New York Laws CVP – Civil Practice Law & Rules, Article 52: Enforcement of Money Judgements §5202 and §5203 outlines statutory rules to lien procedure. A Claim of Lien must be filed with the Office of the Clerk in the county where the property is located four months after the work is completed or the materials supplied.

In New York, the admirable and highly instrumental private foundation is well-recognized means to venerable ends. Indeed, in 2017, the U.S. federal Internal Revenue Service (“IRS”) reported that New York’s private foundations donated $10,716,118,775 in funds to nonprofit charities, the highest in the nation. Rules to private foundations, otherwise known as tax-exempt “trust” within federal and New York statute, guide the formation and administration of those entities during the life of a benefactor and in to the future after they are gone.  


Defined as a form of “trust” in subparagraph (a)(1) of Section 8-1-4 of New York Consolidated Laws, Estates, Powers and Trusts Law – EPT § 8-1.8, “Private foundations: administration of certain trusts as defined in the United States Internal Revenue Code of 1954,” and more specifically in section 509 of the United States Internal Revenue Code of 1986, the private foundation is a tax-exempt entity formed to avoid liability of tax imposition on undistributed income.

What happens when a Facebook account holder dies and leaves valuable assets such as family photo albums and digital wallet details, including bank card information on the site? The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) of 2015 amended federal guidelines to family member, executor, attorney-in-fact, or trustee access to digital assets transferred to an estate, trust, or will. The statute specifies express authorization must be obtained by the owner before a family member or fiduciary can access a digital asset for any purpose.

Why arrange family and fiduciary access to an account?

The widespread use of digital assets in the form of a personal “account” are now characterized by a range of designated access user identities linking individuals to everything from Bitcoin accounts used for cryptocurrency trading, to social media accounts like Facebook and their ever-expanding platform of services. A fiduciary’s ability to access a decedent’s online accounts requires designation of control for disposition of digital assets by the account holder before death.

When Michael Jackson’s estate filed suit against ABC Inc. and the Walt Disney Company in May 2018, the world viewed the consequences to unauthorized use of the late celebrity musician’s intellectual property (IP). The estate currently holds all copyright to Jackson’s songs and music video work. The thirty works which the estate owns full rights to were included as part of a two-hour made for television documentary about the artist. Attorney representation in the lawsuit argues that the estate was never approached about license of Jackson’s material for use. The defending parties in the case maintain infringement of the estate’s rights to the property never took place; countering “fair use” of material already in circulation within the media.

Copyright, Control, Contestation

According to New York law, rights to copyright ownership continue as estate rights after a decedent has passed. A gift or bequest provides an executor or trustee explicit instructions for copyright(s) licensing, use, and distribution. Intellectual property transferred to an estate or trust after registered with the United States Patent and Trademark Office (“USPTO”) entitles a registrant continued rights to that work seventy (70) to one hundred twenty (120) years after death depending on type of work, and existing distribution or installation in the public domain.

Depending on the terms and conditions of a defined contribution plan, a participant may elect to extend the tax-deductible life of those assets by transferring them to an estate or trust prior to death. A key incentive for extending the distribution period of defined contribution plan assets is transfer of tax-deductible eligibility to beneficiaries of an estate or trust. Surviving spouses can consider a Spousal Rollover Independent Retirement Account (“IRA”) to shelter beneficiary distribution of those assets after the death of a defined contribution plan participant.

Required Minimum Distributions

The ratio of required minimum distributions (“RMDs”) from a defined contribution plan is generally more favorable in treatment during an estate holder’s lifetime. RMDs can be calculated during a participant’s lifetime, and initially based on a distribution period specified by the Uniform Lifetime Table.

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