Commentary.Omnibus.2017.08.14: Americans Not Paying Estimated Taxes; Estate Planning Not Just for the Rich; Fiduciary Cases; Are Trusts Still Useful If Estate Tax Repealed; New IRS Criminal Tax Initiatives

  • WSJ: Number Of Americans Caught Underpaying Estimated Taxes Surges 40%.  TaxProf Blog  Wall Street Journal Tax Report, Number of Americans Caught Underpaying Some Taxes Surges 40%: Attention gig workers, retirees, business owners and investors: Double-check your estimated-tax payments to Uncle Sam. For reasons that aren’t clear, a growing number of people who pay taxes quarterly are getting their payments wrong and incurring…
  • Estate Planning Is Not Just For The Ultra-Rich Anymore, Financial Planning:  Hollywood’s stereotype of estate planning usually features assorted nieces, nephews and cousins gathered in the drawing room of a 100-year-old mansion greedily waiting to hear what an eccentric rich relative left them.
  • Court Affirms Submission of Mitigation Instruction In A Breach Of Fiduciary Duty Case To Affirm A Jury’s Finding Of No Damages:  In E.L. & Associates v. Pabon, a company sued two former directors and their son for breaching fiduciary duties when the company lost a lease for a restaurant it operated and the directors’ son opened a nearly identical restaurant in the same location.  No. 14-15-00631-CV, 2017 Tex. App. LEXIS 4547 (Tex. App.—Houston [14th Dist.] May 18, 2017, no pet. history). A jury found that the directors breached their fiduciary duties and that their son assisted in the breaches of fiduciary duty, but awarded no damages to the company. The company appealed and complained that the trial court should not have submitted a mitigation instruction in the damages question. The instruction stated: “Do not include in your answer any amount that you find E.L. & Associates, Inc. could have avoided by the exercise of reasonable care.” Id. at *7.
  • Court Holds That Majority Shareholders In Closely Held Corporation Do Not Owe Fiduciary Duties To Minority ShareholdersIn Herring Bancorp, Inc. v. Mikkelsen, a corporation acquired a majority of the outstanding shares of preferred stock by “repurchasing” those shares in accordance with the articles of incorporation, including the shares owned by a trustee. No. 07-15-00327-CV2017 Tex. App. LEXIS 5131 (Tex. App.—Amarillo June 2, 2017, no pet. history). This was against the wishes of the trustee, a minority shareholder. The trustee filed claims for oppression of a minority shareholder in a closely-held corporation and breach of fiduciary duty.
  • Court Holds That Board Of Trustees Of A Nonprofit Do Not Owe The Same Duties As A Trustee Of A Trust:  In Young v. Heins, Young brought third-party claims against the board of trustees of a nonprofit home owner association for breach of fiduciary duty, breach of the duty of good faith and fair dealing, breach of contract, intentional infliction of emotional distress, and for a declaratory judgment. No. 01-15-00500-CV, 2017 Tex. App. LEXIS 5075 (Tex. App.—Houston [14th Dist.] June 1, 2017, no pet. history). In his claims for breach of fiduciary duty and the duty of good faith and fair dealing, Young argued that because the trustees had a fiduciary relationship with him, they owed him a “duty to refrain from self-dealing, a duty of care and loyalty, a duty of full disclosure, a duty to act with the strictest integrity, and the duty of fair, honest dealing.” Id. Young further argued that they breached their duties to him because they had claimed that he had violated deed restrictions, knowing that he had not done so, and claimed that he had not timely paid his maintenance assessments, knowing that he had in fact paid them. The trustees filed a summary judgment motion, which the trial court granted. The court of appeals noted that the association’s bylaws, states that the affairs of the association “shall be managed by a Board of five . . . trustees, who need not be members of the Association.” But the court held that the mere use of the word “trustee,” does not create a trust or a trustee relationship. Id. (citing Nolana Dev. Ass’n. v. Corsi, 682 S.W.2d 246, 249 (Tex. 1984); Stauffacher v. Coadum Cap. Fund 1, LLC, 344 S.W.3d 584, 588-89 (Tex. App.—Houston [14th Dist.] 2011, pet. denied)). The court concluded that “the duties that a trustee has to a trust do not apply to a director of a nonprofit corporation.” Id. The court affirmed the summary judgment for the board of trustee members.
  • Are Trusts Still Useful If the Estate Tax Is Repealed?:    With Republicans in control of Congress and the presidency, there is talk of eliminating the federal estate tax. In 2017 the tax affects only estates over $5.49 million, meaning that for more than 99 percent of Americans, it’s already been repealed….
  • IRS Criminal Investigation chief plans new enforcement programs: The Internal Revenue Service’s Criminal Investigation unit is readying two new programs focusing on data investigations and international tax evasion.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

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