In continuation of our coverage of the Center for Agricultural Law and Taxation’s (“CALT”) Seminars on Ag Law and Estate Planning, here are some of the big topics discussed on the second day:
- Prof. Roger McEowen started the group off with a review of some of the major changes made with the American Taxpayer Relief Act (“ATRA”) of 2012. The Act provided some certainty and permanence of key provisions, like the estate tax exemption of at least $5 million in a transfer of an estate’s assets. Additionally, the exemption is now indexed to account for yearly inflation. ATRA also continued the unification of the estate and gift tax rates and exemption amounts. Finally, portability was continued, which allows a widow or widower to use their deceased spouse’s unused estate tax exemption.
- The Bar Association’s IRS insider, Kristy Maitre, discussed several procedural items of note for tax preparers to focus on for the upcoming season.
- Judge Elizabeth Crewson Paris of the U.S. Tax Court spoke about the history, purpose, and practices of the U.S. Tax Court. There are currently 17 tax judges (and 11 retired judges on recall) who hear and decide disputes taxpayers have with IRS notices of deficiency or determination. Each year, thousands of cases are filed in hopes of the court agreeing with their take opposing some IRS action.
- Attorney Kyle Irvin of Sioux City gave a presentation on several issues a fiduciary (i.e., a person who has a special duty of trust and responsibility to another person) can face in carrying out their duties. In trust situations, a fiduciary (“trustee”) has several very important duties, including making a sufficient, accurate accounting of all the trust’s assets. If you are the trustee of someone’s trust, it is strongly recommended you keep some sort of updated, detailed spreadsheet recording all of the deposits, withdraws, purchases, and sales of the trust property, money, and investments.
- Attorney David Repp of Des Moines discussed the recent case of Baur v. Baur Farms, a recent decision from the Iowa Supreme Court. The case involved a farm family that set up a corporation. One of the relatives, a minority shareholder in the farm corporation, sued the majority shareholder and manager. The Supreme Court determined that although the majority shareholder didn’t commit abuse, waste, mismanagement, or engage in self-dealing, the minority shareholder was still owed satisfaction of his ‘reasonable expectations’ from the majority shareholders. These reasonable expectations include sharing “proportionally in a corporation’s gains,” which can apply to distributions and the minority’s demand to sell shares back to the company for fair value. Using a reasonable expectations standards could allow a majority shareholder who was acting in good faith to be found by a court as acting oppressively. The ramifications of the holding and standard for Iowa business law will be played out in the future, but it seems safe to say that the traditional rule of the court deferring to a business’ own judgment has been reduced in some measure and, as Mr. Repp put it, “minority shareholders have gained significant bargaining power in negotiating their exit.”
- Des Moines attorney Margaret van Houten discussed the chilling and tragic case of Iowa v. Rodney Lee Bean, which came out of an appellate court in Iowa this month. Mr. Bean was the power of attorney for an elderly couple in Washington County, Iowa. Some of the terrible acts or failures Mr. Bean did in this capacity included shutting up the elderly woman into his home, neglecting to get her medical attention and medicine for her health problems and broken bones (we can only guess as to how she got those), and stealing her money. Mr. Bean was convicted of involuntary manslaughter, second-degree theft, neglect of a dependent person, and dependent adult abuse. Financial, mental, and physical abuse of elders is much too common, and community agencies and the law are doing new undertakings to catch up and prevent these types of situations. We strongly encourage you to alert the Department of Human Services, the county attorney’s office, or law enforcement agencies if you know or have good suspicion to believe anyone, but particularly the more vulnerable citizens of our communities, is being abused or taken advantage of by another.
- On that note, Prof. McEowen and Ms. Maitre came back on to finish with a survey of ethics for Iowa attorneys doing estate and tax planning for clients. Those areas of law are highly complex and, unlike some areas of law, the statutes and case law (and even just clients’ positions) continually change. It is crucial that attorneys keep themselves updated and aware of the recent developments in these fields, particularly.
It was another great year for the CALT conference, and we’re glad we went along. A hat tip goes out to each of the presenters and the hosts. Have a good weekend!