BRIEFING

9/ Tax Law Update

David A. Handler, partner, and Alison E. Lothes, associate in the Chicago office of Kirkland & Ellis LLP, report on:

• Proposed regulation NPRM REG-119532-08 — The Internal Revenue Service provides a method for determining the portion of a trust that’s includible in a deceased grantor’s gross estate if the grantor held a graduated retained interest in the trust.
• Regulations that revise mortality tables — Using data most recently available from the U.S. census, the IRS issued regs that affect how to value annuities, interests for life or term of years, remainder interests and reversionary interests.

FEATURES

Estate Planning & Taxation

10/ Tax on a Phantom Tax
By Joseph C. Mahon

The New Jersey Tax Court has stunned members in the estate-planning community, revealing the aggressive position state tax authorities may take to increase revenues from decoupled state estate taxes. Although Estate of Stevenson presented unusual facts, practitioners around the country should pause and revise tax clauses in clients’ wills under decoupled estate tax systems—it’s the best way to avoid the mess created by Stevenson. Author Joseph C. Mahon offers sample tax clause language to help.

Joseph C. Mahon is a partner in the Princeton, N.J., office of Cooper Levenson.

17/ Nice Booby Prize
By Michael J. Jones

When, if ever, might trusts that are includible in the estate of a decedent avoid income in respect of decedent (IRD) and receive fresh basis? Your knee-jerk answer may be "IRD is still IRD when held in trust." But look beyond the surface, and explore how IRD may not be IRD when held in trust.

Michael J. Jones is a partner in Monterey, Calif.’s Thompson Jones LLP. He also chairs the Trusts & Estates retirement benefits committee.

21/ Play Ball!
By Kevin Matz

Ahh! To be young, rich and on top of the game. Sounds like heaven. But heaven may be closer for some superstars than they realize. That’s where estate planners can help. Those who represent professional athletes need to convince young sports stars to plan so that their families would be financially secure even if the athletes become disabled or worse. Pros also present unusual estate-planning concerns such as intense needs for asset preservation, protection and domicile considerations. Planning for an athlete? Here’s your rulebook.

Kevin Matz is a managing partner of Adams & Matz LLP in New York.

28/ Use Spousal Agreements For Asset Protection
By Alexander A. Bove, Jr. & Melissa Langa

A post-nuptial agreement should be an integral part of most couples’ asset protection plan. That includes even the couples who’ll never divorce. Why? Because there are no adverse tax consequences to the post-nuptial agreement and related transfers, and the benefits far outweigh the risks. So, although there are currently no cases exactly on point to support this recommendation, there are cases holding that valid post-nuptial agreements may be effective to protect assets from creditors of a transferor spouse. You decide.

Alexander A. Bove, Jr. is a shareholder in the Boston law firm of Bove & Langa P.C.

Melissa Langa is a shareholder in the Boston law firm of Bove & Langa P.C.

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