Last Month in Estate Planning (October 2011)

November 7, 2011
6235842449 7ae8d5f450 m Last Month in Estate Planning (October 2011)

Image by ForestGladesiWander via Flickr

The following is a summary of popular topics discussed in estate planning blogs and articles last month.

Federal Estate and Gift Tax Updates

The IRS announced that for 2012, the federal estate tax exclusion will increase to $5,120,000 (it was $5 million in 2011).  As Julie Garber of notes, this means that the lifetime gift tax exemption and generation-skipping tax exemption will also increase to the same amount in 2012.

However, these amounts are currently under review.  The Joint Committee on Deficit Reduction (aka the “Super Committee”) must release its plans to reduce the federal deficit by $1.2 trillion by a due date later this month.  One plan the Committee is considering includes reducing the estate and generation-skipping tax exemptions to $3.5 million and the gift tax exemption to $1 million for 2012.

Not everyone supports the Committee’s proposal.  As cited by Professor Gerry Beyer, Stephen J. Entin and Dick Patten of argued that repealing the estate tax would raise enough revenues over the next 10 years to cover almost one-third of the federal deficit.

The IRS also announced that the $13,000 annual gift tax exclusion will remain the same in 2012.

Steve Jobs

Perhaps the most discussed topic in estate planning last month was the death of Steve Jobs.  Most estate planning lawyers praised the fact that Jobs appeared to have most of his assets in trust, so little to none of his estate will have to go through the very public probate process.

In fact, it is unlikely that Jobs’ estate plan will ever be made public because he used living trusts, but this did not stop the speculation about his affairs.

For instance, some predicted that Jobs’ $6-7 billion estate could very well pass to his heirs tax-free.  On the other hand, others posited that this conclusion is either myth or if true, is not so uncommon in situations where the deceased has a surviving spouse.

Al Davis

Al Davis, longtime owner of the Oakland Raiders, also passed away in October.  Because Davis left the team to his wife, Mike Ozanian at predicts that the family will eventually owe hundreds of millions in estate taxes.  As a result, the Davis family may sell the team to cover this eventual expense.

Julie Garber posted this summary of the effect estate taxes have had on other MLB, NBA, and other NFL teams as well.

This led to a post by Len Berman of, hoping that his beloved Baltimore Orioles will be sold for similar reasons.

Arbitration Clauses in Trusts

Many trusts end up with disputes between beneficiaries and trustees.  To save the parties the cost of expensive lawsuits, many estate planning lawyers are now including clauses in trusts that instead require the parties to arbitrate their differences.

Recently, the Texas Court of Appeals in Rachal v. Reitz ruled that one trust’s arbitration clause was unenforceable because it did not meet basic contractual requirements.  According to Samantha Weissbluth and Simon Johnson at, Texas is now one of only four states to consider this question and use this rationale.  As of this date, Florida and Arizona are the only states whose legislatures passed laws that protect arbitration clauses.

Joel Schoenmeyer of the Death and Taxes Blog discusses the prevailing view amongst estate lawyers that trusts cannot be viewed as contracts, and also includes a sample arbitration clause he is currently using in his trusts.

The Federal Arbitration Act as a potential source of law for these clauses was considered in a rough draft of a forthcoming law review article by David Horton, Associate Professor at Loyola Law School in Los Angeles.  His full article can be downloaded from the Social Science Research Network.

Estate Planning and Technology

Digital Assets – Saman M. Jaffery of the Toronto Estate Law Blog discussed a recent survey of 2,000 U.K. adults conducted by Goldsmiths at the University of London, which indicated that 11% of users include internet passwords in their wills.  Later, I was greatly honored to have my post on this topic, comparing U.K. and U.S. digital asset policies, referenced in Professor Gerry Beyer’s award-winning Wills, Trusts & Estates Prof Blog.

Virtual Law Practice – Rania Combs, Esq. is one of the first and most successful estate planning lawyers maintaining a “virtual practice”, a law firm model where all services are provided to clients online.  Recently, she briefly discussed this practice model while also linking to an article on the topic by the American Bar Association.

 Last Month in Estate Planning (October 2011)
 Last Month in Estate Planning (October 2011)


Scott R. Zucker, Esq. is the owner of The Zucker Law Firm PLLC, located just outside the Capital Beltway in Annandale, within five miles of the City of Fairfax, the county seat of beautiful Fairfax County, Virginia. The firm focuses mainly on estate planning services for Virginia, Maryland and Pennsylvania clientele, and seeks to do so in an affordable and approachable way. People interested in learning more can contact Scott by phone or email.

More Posts - Twitter

Tags: , , , , , ,

4 Responses to Last Month in Estate Planning (October 2011)

  1. November 9, 2011 at 10:58 pm

    Hey Scott: Great summary of current events in the tax world.
    Really not sure about the Beyer, Enten and Patten point of view. They seem to have some theory and some states backing up these assertions but it seems a stretch. Are they basically saying that if rich people do not have an estate tax they will reinvest in the economy and in capital improvements, etc. I have trouble buying this, but I am just a dumb tax attorney and not an economist. It is probably more logical and likely that the lowering the exemptions and raising estate rates is more of a sure thing. What are your thoughts on this?

    • Scott
      November 10, 2011 at 3:14 pm


      The theory does seem to have a “trickle down” kind of feel to it, doesn’t it? As with many financial issues in our lives, the proposals seem to boil down to a “sure thing” vs. some kind of gamble. Then again, if we experience the kind of run-up we had in the ’90s, then the Enten / Patten idea would have no troubles — it’s just a tough time to ask us to rely on a great economic expansion that may or may not happen in the next 10 years.

      But here’s the thing I keep going back to — U.S. annual revenue from estate and gift taxes has ranged from 1 to 3% of overall revenues in every year since before World War II. They exceeded 1.5% of overall revenues in just one year (1999) since 1977. Annual revenues from estate and gift taxes have not exceeded $29 billion in any year, whereas overall annual receipts are in the trillions.

      It seems we spend an awful lot of attention on a matter that truly amounts to pennies on the dollar.

      Thank you for commenting! Please don’t hesitate to reply or comment further if you desire.


      P.S. BTW, if being a successful tax and estates attorney for 30 years along with an AV rating makes you a “dumb tax attorney”, then I don’t want to be a smart one!

      Be sure to click on Mr. Fromm’s name above for access to his law practice website — he also puts out an excellent tax newsletter to which you can subscribe.

  2. November 10, 2011 at 11:07 pm

    Hey Scott: Thanks for the kind words. I was not aware that the take was so small at least percentage wise for estate and gift taxes. But in actual dollars it is a boat load of money that does in fact go to the government. But if the recent protests about the rich getting richer and some statistics to back this up, then is there some social justice issues here, without becoming a socialist state.
    Currently, around our Philadelphia City Hall there are basically encampments of people who are just fed up with this imbalance and lack of jobs. If you look at it this way then can the argument be made that the estate tax should be much larger than it ever has been? Not sure about this but it makes you wonder.

    • Scott
      November 11, 2011 at 4:25 pm


      If folks feel disenfranchised by the rich enough to set up camps around City Hall, then that is certainly nothing to sneeze at. Maybe the Phillies can support the city’s efforts to find them jobs, now that they need to pay Jonathan Papelbon $50 million over the next 4 years. ;)

      But I’m just not sure the estate and gift tax is where the government can make up their $1.2 trillion annual deficit because there isn’t enough of a base to rely on each year because only about 5,500 families owe estate and gift taxes annually. Even if you charged a 100% estate tax on families with more than $3.5 million (2007-2009 rates), you still wouldn’t raise nearly enough to make up the deficit.

      It will be interesting to see how (and if) the deficit will be made up.

      Thanks again, Steve!


Leave a Reply to Scott Cancel reply

Your email address will not be published.

CommentLuv badge