LawyersUSA

A gift of debt: estate planning when money is owed

Gifts with strings attached aren’t always welcome. But what about real property passed on to a specific beneficiary with debt attached?

A recent case in Florida provides an example of the potential legal issues.

Stock loss caused by WorldCom fraud not deductible

A $1.3 million stock loss attributable to the fraudulent practices of WorldCom officials isn’t deductible under Internal Revenue Code provisions governing theft loss, the U.S. Tax Court has ruled.

The court said the employee failed to establish that he relied on WorldCom's representation to make his stock decisions.

Pay now, die later

Estate planners need to be aware of the risky nature of prepaid funeral plans given the marked increase in suits over misuse of this money by funeral homes.

The new owner of a Memphis mortuary recently announced he would not honor 13,500 prepaid funerals held by the company.

‘Innocent spouse’ tax relief limited to joint filers

The Internal Revenue Code’s “innocent spouse” provisions, which grant taxpayers relief from tax liability, apply only to spouses who file joint returns, the 9th Circuit has ruled.

Emotional distress damages are taxable

Damages awarded to an age discrimination plaintiff for “severe emotional distress” are not excludable from gross income, the U.S. Tax Court has ruled.

Decedent must specify that debts be paid from estate

Estate property should pass to a beneficiary encumbered unless there is clear evidence the decedent wanted the debt paid, the Florida Court of Appeal has ruled.

The case was filed by a son who objected when the trustee used estate money to pay off debt on farms inherited by another son.