Estate Planning
Defined Value Clauses Better Defined
After a 2006 opinion from the U.S. Court of Appeals for the Fifth Circuit in McCord v. Commissioner,1 many practitioners expanded their use of defined...
Gain Is Realized at Death
An installment sale to an irrevocable grantor trust is a popular estate-planning tool that allows the grantor to freeze the growth of an appreciating...
No Gain at Death
In a 2002 article,1 we examined at length the income-tax effects of the termination of a grantor trust by reason of the death of the grantor in the context...
Arghhhhhh!
Here we sit like birds in the wilderness, birds in the wilderness. Here we sit like birds in the wilderness, waiting to be fed. Waiting to be fed. Waiting...
The FLP Quadrilogy
Estate and gift tax valuation positions associated with family limited partnerships (FLPs) often are challenged by the Internal Revenue Service and somewhat...
Clean House
If Ponzi schemer Bernard Madoff serves no other purpose, he's a stark reminder that anyone acting in a fiduciary capacity must maintain high standards...
Key Definitions
Certain definitions are critical when determining whether an obligation exists to file a Report of Foreign Bank and Financial Accounts (FBAR): The term...
Don't Give Directly To Special Needs Relatives
Often, grandparents, aunts, uncles, godparents and the like want to help disabled relatives by leaving them some money. That's why every attorney familiar...
Should Your Client Have A Non-charitable Foundation?
In the U.S. world of estate planning, it would be difficult (some might say impossible) to find an attorney who is not familiar with trusts. In that same...
Gimme Credit Shelter Trusts
It's well known that a traditional IRA is a great way to save. Assets in an IRA can grow tax-deferred for decades. But tricky planning issues arise when...
Disregarded But Not Forgotten
Is the transfer of an interest in a single-member limited liability company (LLC) a disregarded entity valued as a transfer of a proportionate share of...
Adopted Kids and Old Money
Imagine you are the beneficiary of a trust established by your great-grandfather more than 70 years ago. You've been receiving an annual income of $400,000...
Parent-Child Property Succession
An important policy debate is emerging in the United States concerning how the law of succession should change to encapsulate more fully modern American...
Consider the ESOP
In business succession and estate planning involving a closely held business, employee stock ownership plans (ESOPs) should be one of the prime planning...
To My Son, I Leave All My Passwords
The need to deal with passwords and digital property at death is coming at us faster than we may think...
Tax on a Phantom Tax
A recent decision out of New Jersey Estate of Stevenson v. Director, Division of Taxation1 illustrates a novel issue arising under the decoupled estate...
Nice Booby Prize
The booby prize when property held in trust is included in a decedent's taxable estate is that the property receives a fresh income tax basis...
Play Ball!
Estate planning for professional athletes can be a whole different ballgame...
Use Spousal Agreements For Asset Protection
It is well-settled law in all of our states that a husband and wife can contract with one another...
QPRT Exit Strategy
Okay you've sold your clients on the potential estate tax benefit to be achieved with a qualified personal residence trust (QPRT)...
The Pomeroy Bill Sledgehammer
Congress is considering a law that would kill the family limited partnership as an estate-planning strategy. But there are less draconian ways to eliminate perceived abuses...
Borrowing To Pay The Estate Tax
What to do when there are not enough bucks to take care of the financial damage...
What Clients Want To Talk About Now
You'd think that with interest rates at historic lows, assets highly undervalued and the prospect of a permanent estate tax, we estate planners would be deep in tax-planning sessions with clients...
QPRTs Can Be A Good Deal Now
It seems counterintuitive, but qualified personal residence trusts (QPRTs) can make a lot of sense now...
An Alternative to QPRTs
Transferring a personal residence to a qualified personal residence trust (QPRT) is a common estate-planning technique...
Michael Crichton's Posthumous Child
Michael Crichton left behind the makings of another kind of movie when he died on Nov. 4, 2008 at age 66...
The Increased Exemption Creates Opportunity
On Jan. 1, 2009, the federal estate tax applicable exclusion amount jumped from $2 million to $3.5 million the most significant increase since the passage...
Fees: How To Charge, Collect and Defend Them
We practice law because it is interesting, challenging, we are good at it, and we are professionals. We also practice law because it is our business....
Newman's Own Way
Legendary screen actor Paul Newman probably died a wealthy man. We can't know for sure just looking at his will. But we can see that the will was as smart...
Burials - Going Green, Greener and Greenest
Perhaps the first time most people would've heard of a green burial was in the last episode, aired during summer 2005, of the blockbuster HBO series,...
The Audit Rate Is Skyrocketing
There's an important yet unspoken phenomenon in the world of estate tax: As the number of estate tax filings has been decreasing nationwide since 2001,...
Welcome To Your Nightmare
The evil eye of Congress, much like the eye in The Lord of the Rings, is focusing on Middle Earth and Middle Earth is us. Rumors abound about the details...
Transfer Wealth Tax-free
You might think of the gift tax as the lesser of two evils for transferring wealth, with the other evil being the estate tax. Certainly, it can be cheaper...
The BIG Unknown
One of the questions that practitioners ponder is how to properly discount the value of stock in a closely held C corporation to reflect the future income...
Trust Fund Puppies
Mock pet trusts if you must. The fact that real estate magnate Leona Helmsley left $12 million to a pet dog named Trouble but nothing to two of her grandchildren...
The Net Gift Strategy: Good for a Bear Market
In a bull market, one of the best ways to transfer wealth is by a sale to a grantor trust. Little wonder that it's been so popular for the past 20 years....
What's the Bottom Line?
At David A. Handler's request, a New York-based team of the Wealth Management Group at Bernstein Global Wealth Management did an analysis of the economic...
Multi-Participant Trusts Need a Coordinator
Multi-participant trusts1 have become immensely popular. These trusts replace the single, all-powerful trustee with a host of independent decisionmakers,...
The MDT, Defined
The model for a managing directed trustee (MDT) comes from organizations like family offices and private trust companies (PTCs) that evolved, in part,...
High Flyer
Robert Craig Knievel, purportedly nicknamed by police after an arrest for stealing hubcaps off cars, was born on Oct. 17, 1938 in Butte, Mont., and died...
Throw Me From the Train
My message is not for the easily offended, but, in the closing months of 2008, I feel this must be said: Congress still has not done anything about the...
The Resurrection
As practitioners are acutely aware, the Internal Revenue Service has pursued a variety of arguments during the past decade to attack family limited partnerships...
Many Fronts
The Internal Revenue Service has almost literally thrown the (Internal Revenue Code) book at family limited partnerships (FLPs), seeking to negate their...
The Case for Principle Trusts And Against Incentive Trusts
The intention behind incentive trusts is excellent; the rigidity of these trusts is not. It's time to ditch the inflexible incentive trusts and instead...
Mysteries of the Blinking Trust
During the life of a trust, its tax status may change from grantor to non-grantor, or vice versa. This may be deliberate (a powerholder relinquishes a...
The Net, Net Gift
Practitioners are well-aware that lifetime gifts are more tax-efficient than transfers at death. But during the past seven years there's been a possibility...
Transferring Art When No Charity Is Involved
Taxes are never fun but unexpected taxes are especially annoying. If a Florida resident sells a painting through a worldwide auction house, which holds...
Rolling Short-term GRATs Are (Almost) Always Best
As the Internal Revenue Code's Section 7520 rate dropped this year to near-record lows (down to 3.2 percent in May 2008), some estate planners began recommending...
Practitioners Weigh In On 2 Percent Floor Debate
With the Internal Revenue Service on the verge of issuing final regulations,...
Section 2053 Proposed Regs
In an effort to provide uniformity and certainty in the valuation of claims for estate tax purposes, the Department of Treasury issued proposed regulations...
Gift Tax Nightmares
Think back to a time long, long ago, before the adequate disclosure rules of 1997, before the changes in the generation-skipping transfer (GST) tax deemed...
The SCIN-GRAT
Estate planners can learn from financial planners. For years, financial planners have used hedging techniques to reduce risk or to guarantee a desired...
Boulware Yipee! But Remember Lurie
For the first time, the U.S. Supreme Court has asserted that it not only believes in the taxpayer rights enunciated more than 70 years ago by Judge Learned...
My Crystal Ball
Let's look at the recent past, the better to see what the future of the estate tax will be in the years 2009, 2010, 2011 and beyond. My predictions about...
GRAT Effectiveness
Low Internal Revenue Service discount rates make this an ideal time to use grantor retained annuity trusts (GRATs), as it's easier now to get over the...
Father Does Not Always Know Best
The shock of actor Heath Ledger's untimely death has passed, but questions still linger. Although only 28 when he died, Ledger had a will. Yet the multi-millionaire...
Opt Out of QTIP?
A partial interest in property left by a decedent to a surviving spouse, such as an income interest, can lead to a credit for tax on prior transfer (CTPT)...
True to Form
During Leona Helmsley's lifetime, the real estate mogul and hotel magnate was reviled for allegedly saying only the little people pay taxes, then going...
TAX LAW UPDATE
David A. Handler, a partner in the Chicago office of Kirkland & Ellis LLP, reports: 5 percent discount for fractional interest in artwork There's a resolution...
Tax Law Update
David A. Handler, partner, and Margaret L. Hudgins, associate, in the Chicago office of Kirkland & Ellis report: Final and proposed qualified severance...
Pepperidge Farm Legacy
On June 25, 2007, the Supreme Court agreed to hear Knight v. Commissioner1 to decide whether trusts and estates can fully deduct the fees they pay for...
Disclaimer QTIP Trusts
Consider a not uncommon scenario. The date is Jan. 1, 2008. Bob Savvy is the sole shareholder of Family Fortune, Inc., an S corporation. Family Fortune...
Surviving and Thriving In the Tax Patent Era
Just as things seemed to be quieting down)after the Pension Protection Act of 2006, Jalong came the latest challenge to the peace of the estate-planning...
TAX LAW UPDATE
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, has this report: Estate tax value of lottery winnings is determined under the...
Trust Remodeling
does not truly mean Today, trustees and beneficiaries of an irrevocable trust no longer need to blindly accept the trust's terms but instead should consider...
How Big a Relief Is Roski?
In 1976, Congress enacted Section 6166 of the Internal Revenue Code so that, when a business owner died, his closely held business wouldn't have to be...
Estate Tax Reform?
While estate tax reform doesn't seem as pressing these days as the Iraq war or immigration, it is an important enough issue that members of the U.S. Senate,...
Pre-Mortem Probate
Pre-mortem probate surely that's an oxymoron? A will becomes effective only upon the death of its maker. To probate a person's last will and testament,...
A Graceful Exit
On April 17, 2007, the nation lost a grande dame of the arts and culture: Kitty Carlisle Hart, chair of the New York State Council on the Arts from 1976...
Des Americains en France
Thomas Jefferson did it in the 1790s. Ernest Hemingway did it and wrote about it in the 1920s. Today, as well, many Americans move to France to live....
Planning for Clients With Multiple Sclerosis
About eight months ago, my wife was diagnosed with multiple sclerosis (MS). We immediately started to learn everything we could about the disease, so...
Tax Law Update
David A. Handler, partner in the Chicago office of Kirkland & Ellis, LLP, reports: Fractional interest in artwork discounted for cost to partition. Based...
Tax Law Update
From David A. Handler, partner in the Chicago office of Kirkland & Ellis, LLP, we have this update: Proposed regulations for Internal Revenue Code Section...
Deathbed Opportunities
Estate planners have new opportunities to save taxes for their clients using deathbed planning techniques in states that have decoupled their estate taxes...
Defined-Value Clauses
Whenever a client wants to cap gift tax exposure, planners should consider using a defined-value clause implemented by use of an escrow trust. A defined-value...
Tax Law Update
From David A. Handler, partner in the Chicago office of Kirkland & Ellis, LLP, we have this report: Hester: Assets improperly held by decedent are includible...
IRS Okays Turning Total Return on Its Head
Many estate-planning attorneys have used total return trusts to cope with falling yields in an effort to balance the income beneficiary's need for income...
Sidestepping 2035
It's been a stable of estate planning for many years to have an irrevocable life insurance trust own life insurance. But advisors are careful to warn...
Dynasty Trusts: The Basics
A dynasty trust can offer significant benefits, but achieving these benefits is not simple. Crafting a well-constructed dynasty trust requires the planner...
LETTERS TO THE EDITOR
Dear Editor: The purpose of this letter is to address the February 2007 article The Preferred Method by Lance M. Hall. In that article, Hall not only...
Tax Law Update
From David A. Handler, partner in the Chicago office of Kirkland & Ellis, LLP, we have this update: Never say On March 13, Catherine V. Hughes, an attorney...
The Swiss Annuity
Asset protection planning is a moving target. Practitioners must constantly be aware of case developments and changes in the law, which must be reflected...
Tax Law Update
David A. Handler, a partner in the Chicago office of Kirkland & Ellis LLP, reports: Congressional Research Service (CRS) statistics. For all federal lawmakers'...
Lawyers' Group Protests The Appraiser Penalties
The Pension Protection Act of 2006 (PPA)1 imposes new penalties on appraisers that are deemed to have made substantial or gross valuation misstatements....
LETTER TO THE EDITOR
Dear Editor: The purpose of this letter is to address the December 2006 article Beneficiary-Controlled Trusts Can Lose Asset Protection by Charles Harris...
TAX LAW UPDATE
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports: Change to UBTI rule for CRTs Legislation passed in December 2006 now...
Basis Boosting
For years, practitioners have employed the estate-planning strategy known as sale to a grantor trust.1 Yet there's still substantial uncertainty and debate...
Civil Unions In New Jersey
Estate planning for New Jersey's more than 22,0001 same-sex couples has undergone several seismic changes for the better since 2004. First, the state...
Field Notes of A Family Business Consultant
Sam Beemer had asked his two sons to come to a family business meeting. Having just celebrated his 70th birthday, he was feeling his mortality.1 And he'd...
Bobby
The star-studded movie Bobby has put the untimely death of Robert F. Kennedy back in the news of late. But really, the Kennedys, even those long-deceased,...
Face the Fear
Businesses intended to remain family-held after the death of the founder need planning that goes far beyond the orderly and tax-efficient transfer of...
Tax Law Update
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports: Eighth Circuit affirms Korby. The U.S. Court of Appeals for the Eighth...
Burdens
With continuing confusion about transfer tax repeal or reform, estate planners have at least one constant and true certainty: compliance. Recently, requirements...
Local Solutions, Global Impact
If there was a theme in international estate planning in 2006 it might be local is global. Countries (principally in Europe) made changes that were largely...
Perpetual Trust States The Latest Rankings
If I had to rank the 23 perpetual trust jurisdictions, top honors would be awarded in this order: South Dakota is number one; Delaware is a close second;...
Private Annuity Regs
Andrew M. Katzenstein, a partner in the Los Angeles office of Katten Muchin Rosenman LLP, reports: Changes proposed to regulations (Treasury Regulations...
TAX LAW UPDATE
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports: Technical background on proposed regulations for tax treatment of annuity...
Got Real Estate?
Whatever happens to the value of real estate in coming years, one thing is certain: It has become and will remain a large, important part of wealthy clients'...
Lillie Rosen Revisited
Google Estate of Lillie Rosen and you'll get about 20,200 results. The number and breadth of websites devoted to Lillie Rosen and her family limited partnership...
Patenting Tax Strategies
If you were listening on May 20, 2003, you might have heard the collective gasp of tax practitioners across the country. On that day, the United States...
