FREE ELECTRONIC LIBRARY - Dissertations, online materials

Pages:     | 1 |   ...   | 4 | 5 || 7 | 8 |   ...   | 27 |

«Aggregated Summary of Reports Provided by ABA-PTL and ACTEC-Prac List serves 2015 Heckerling Estate Planning INSTITUTE Edited, Aggregation of On-Site ...»

-- [ Page 6 ] --

Use of Section 7520 table issues are avoided so long as individual does not have an incurable illness or other deteriorating physical condition and greater than 50% probability of living for greater than one year. See Estate of Kite, where decedent sold asset to her children for a deferred, and she died prior to receipt of any annuity payments. Wife had a 12 and ½ year life expectancy at time of sale. Court held using IRS actuarial tables was appropriate even though annuity payments would not commence for 10-years, as wife was not terminally ill at time of sale and had a greater than 50% chance of living more than 1-year. Side note, Steve recommends using commercial software to determine actuarial factors.

The rationale for the exhaustion test is the annuity valuation tables are based on lives of individuals considering the actuarial likelihood of surviving up to age 110. Even if annuity is structured with grantor trust exhaustion test still applies. Failure to satisfy exhaustion test results in a gift. Ways to defend against the exhaustion test include challenging the regulation relating to exhaustion, enter into transaction with existing funded trust, or enter into personal guarantees, which did not work in Trombetta. A possible alternative to satisfy the exhaustion test without having a preexisting funded trust is to use a term annuity, for a stated term or annuitant’s life expectancy, whichever is shorter.

Steve concluded the presentation by discussing considering the use of a deferred annuity where the effect is to increase the likelihood that the annuitant receives no or few payments prior to death. Also consider sale of assets from a QTIP for a private annuity, reference to Estate of Kite.

2:50 - 3:40 Oh, What a Relief It Is: Curing Estate Plans that No Longer Make Sense in Light of the American Taxpayer Relief Act of 2012 (Focus Series) John F. Bergner As a result of ATRA, the federal wealth transfer tax system is no longer relevant to most taxpayers and less relevant to the rest. For most taxpayers it will be more important to plan for reducing income tax than for reducing transfer tax. Typical estate planning transactions that may have once been appropriate for a client may be less so in the post-ATRA world. This presentation explores how clients can escape from the no-longer-useful (or perhaps harmful) estate planning transaction or more efficiently administer those they cannot escape from.

Reporter: Michael Sneeringer Esq.

Mr. Bergner methodically described nine strategies that estate planning practitioners should review and recommend as needed to their clients post-ATRA. Mr. Bergner’s remarks are thoroughly described in the written materials so those wanting an in-depth discussion, with endnotes, should consult those materials.

Mr. Bergner began his presentation with an overview of pre ATRA planning and how estate tax savings were more important to clients than today whereby income taxes are more of an immediate concern. He described the frenzy of 2012 planning and the aftermath that is ATRA.

Mr. Bergner outlined the nine strategies that clients should pursue post-ATRA, including: (i) avoiding valuation discounts for client-owned assets; (ii) causing inclusion of trust assets in the settlor’s estate; (iii) causing inclusion of trust assets in a beneficiary’s estate; (iv) causing inclusion of trust assets in a third party’s estate; (v) causing inclusion of gifted assets (not in trust) in the donor’s estate; (vi) changing ownership of spousal assets to achieve a new income tax basis for appreciated assets and to preserve the income tax basis of “loss assets”; (vii) avoiding imposition of the 3.8% net investment income tax (“NIIT”); (viii) addressing life insurance policies and life insurance trusts that are no longer needed; and (ix) turning off grantor trust status to avoid unnecessary wealth shifts and to facilitate income tax planning.

Mr. Bergner noted that there are common issues in implementing these strategies, including, but not limited to:

planning for the future; ethical issues; state and local tax issues; state law regarding fiduciary duties; and governing documents.

Mr. Bergner first discussed avoiding valuation discounts for client-owned assets. He pointed out the example on page 6-7 of the materials in noting that after ATRA, although valuation discounts will still produce an income tax cost, because of reduced rates and increased exclusions and exemptions, valuation discounts may not yield as many estate tax benefits.

Next, Mr. Bergner discussed the strategy of causing inclusion of trust assets in the settlor’s estate. Within this strategy, he described the use of the “swap power” and noted the Estate of Halpern case as references.

Mr. Bergner then discussed causing inclusion of trust assets in a beneficiary’s estate. Some of the subtopics highlighted were the intentional triggering of the Delaware tax trap and avoiding funding the bypass trust upon a death of a spouse with an outdated estate plan. Mr. Bergner described the concept of using a family settlement agreement and the problems that can transpire there.

Next, Mr. Bergner discussed causing inclusion of trust assets in a third party’s estate. He noted that estate planning practitioners need to help their clients avoid Code Section 2014(e) and the one year transfer prior to death rule.

Mr. Bergner followed up that discussion with the strategy of causing inclusion of gifted assets (not in trust) in the donor’s estate.

In discussing changing ownership of spousal assets to achieve a new income tax basis for appreciated assets (and to preserve the income tax basis of “loss assets”), Mr. Bergner highlighted the discussion on page 6-56 in the materials. He highlighted in this strategy’s discussion how couples can live in a common-law state but still cause appreciated assets to be considered community property using an Alaska Community Property Trust or a Tennessee Community Property Trust.

Mr. Bergner only briefly described avoiding imposition of the 3.8% NIIT and addressing life insurance policies and trusts that are no longer needed. However, he noted that the ABA booth at this year’s Heckerling Institute had a wonderful PowerPoint presentation that it was giving out on NIIT.

Mr. Bergner finished up with the strategy of turning off grantor trust status to avoid unnecessary wealth shifts and to facilitate income tax planning. He noted that this strategy was of particular importance in the new income tax world whereby paying income tax when the client could get a step-up in basis is a bad move. He referred the audience to the seven alternatives on pages 6-77 through 6-89 of his materials.

In conclusion, as Mr. Bergner stated at the outset, even if the Estate Tax was repealed, everything in his outline would still be relevant!

3:55 - 4:45 Cain v. Abel: How to Prevent Sibling and Cousin Rivalry When a Family Owns a Business Louis A. Mezzullo The discussion will describe strategies to deal with disputes among siblings and/or cousins over business and family issues that are detrimental to the success of the business and a congenial family, taking into account trust, corporate, tax, and estate planning issues. In addition, it will cover ways of dealing with such conflicts once they occur.

Reporter: Joanne Hindel Esq.

Lou Mezzullo used Cain versus Abel as his theme story; he read a children’s version of the biblical story.

While most businesses in the U.S. are family owned it is estimated that only 30% survive to the second generation and only 12% to the third generation.

The most prevalent cause for the failure of family businesses is conflicts among brothers and sisters and/or cousins.

Some of the factors that cause sibling and cousin rivalries are:

1. Not all the siblings are active in the business and the inactive members would rather sell the business.

2. The siblings are in unequal financial conditions and those with less financial resources outside the business want more dividends or distributions.

3. Those family members who are not in the business may feel left out and not in control of the board of directors.

4. The family members without descendants will be likely to agree to the sale of the business.

5. If only one or some of the family members are named as trustees of the family trusts, the others will resent their control.

6. Similarly, if one of the family members is elected as president or CEO by the parent with control, the other siblings may resent that child.

For the lawyer representing the family business and the family there are ethical issues involving conflicts of interest in representing multiple clients with different interests and agenda. May also be difficult to represent active versus non-active family members or family members and non-family employees.

In the attempt to achieve a workable business succession plan the following factors may pose obstacles:

1. In-laws

2. Non-active family members

3. Owner’s unwillingness to give up control

4. Liquidity needs of the family and or/business

5. Divorce among the family members

6. Non-family key employees

7. Substance abuse Case studies In the majority of the cases Lou acted as an expert witness in the litigation. In some cases, he was able to make recommendations to avoid the problem, in others he could not.

He described the first case where the son was left as president of the family businesses and trustee of the family trusts – valued at about $4 Billion. Sisters became unhappy with his management and challenged their brother on a number of issues including his compensation and the return on the trust investments. A possible solution might have been to provide more specific terms in the trust authorizing the son/trustee to handle matters as he did.

In the second case one sibling was left as the president of the family business and trusts of the family trust and of a voting trust holding stock in the family business. The other siblings sued the brother because they wanted to sell the business but because the son/trustee had control of the voting trust they could not force the sale. The litigation revolved around the duties of the trustee of the voting trust.

In the third case non-active siblings were owners of interests in a pass-through entity. Since there was no provision in the partnership agreement to force distribution of cash, the owners could not access dividends to cover the taxes associated with the income allocated to them by the partnership return. A solution to the problem is to have a provision in the shareholders agreement that allows them to require the distribution of sufficient cash to cover the income tax liability.

In the fourth case, siblings asserted that one child exercised undue influence on the mother to leave the most valuable asset to that child in contradiction to the long- standing estate plan of the mother and father. One of the issues was the fact that the attorney who had represented the parents for years continued to represent the child who had allegedly committed undue influence.

Lou then described the George Halas Family dispute involving the Halas family and their ownership of the Chicago Bears. It revolved around the actions of the trustee of trusts that held interests in the company that owned the Chicago Bears. The lawsuit dealt with the trustee’s duty of notice to interested parties and the actions taken by the trustee and whether they were a violation of his fiduciary duty. The court addressed the language in the trust agreement and held that it authorized the trustee to engage in the conduct that he undertook.

Planning to avoid disputes With the founding owner a good approach is to encourage the owner to set policies while he is alive and set an example by being transparent about the business and the estate plan. The spouse of the owner plays a crucial role in ensuring that the next generation will function as a team.

When the second generation takes over the dynamics may change depending upon whether only one child or multiple children take control. If only one, this will be a lot like the original owner’s structure. If more than one child assumes control the possibility for conflict may increase.

By the third generation, the chances of having more remote family members in the business increases.

Management of the business may be more structured. The possibility of sale to a third party increases or the business could also go bankrupt.

A business should establish a mission statement and a strategic plan for the next five or ten years. These should be reviewed periodically and amended as the family changes.

The business should also adopt objectives and specific policies addressing compensation, standards for family employment, distributions of profits to the equity owners, retirement of family members, redemption of equity interests and other matters that create potential conflict.

The business should create communication guidelines that include regularly scheduled meetings of the family, perhaps the creation of an advisory board to add non-family members to the board of directors and eventually adding nonfamily members to the board.

A plan should be developed to address ownership of voting stock, the ability of active members to buy out inactive members and the use of premarital agreements to avoid dilution of ownership as a result of divorce.

4:45 - 5:35 Coping with Death and Incapacity: How the Uniform Fiduciary Access to Digital Assets Act will help Suzanne B. Walsh Our clients lead increasingly virtual lives. Unfortunately, both technology provider policies and federal and state laws lag far behind technology’s advances. The Uniform Fiduciary Access to Digital Assets Act (“UFADAA”), will give estate planners and fiduciaries the ability to plan for and manage digital assets, both before and after death.

Reporter: Tiffany L. Walker Esq.

Pages:     | 1 |   ...   | 4 | 5 || 7 | 8 |   ...   | 27 |

Similar works:

«CHAPTER 2 Principles of RADIATION THERAPY radiation therapy Michael J. Gazda, MS, and Lawrence R. Coia, MD This chapter provides a brief overview of the principles of radiation therapy. The topics to be discussed include the physical aspects of how radiation works (ionization, radiation interactions) and how it is delivered (treatment machines, treatment planning, and brachytherapy). Recent relevant techniques of radiation oncology, such as conformal and stereotactic radiation, also will be...»

«Alfred University 2015-2016 UndergradUate Catalog individuals i n s p i r e d Alfred University One Saxon Drive, Alfred, New York 14802 Editor: Lawrence J. Casey, Registrar, Alfred University Design: Rick McLay, Director of Publications, Alfred University Notice: The provisions of this catalog are not to be regarded as a contract between any student and the University. Course contents and regulations are under constant review and revision. The University reserves the right to change any...»

«SOLO PROVIDER RECORD ID INFORMATION FORM PACKET The Solo Provider Record ID Information Form Packet should be completed by any of the following:  A provider who will not be employing another professional provider  A provider who will be using his/her social security number (SSN) for tax purposes  A provider whose Federal Tax Identification Number (TIN) is legally in the provider’s name  A provider who is not incorporated The attached packet contains all of the forms that are...»

«HONOUR KILLINGS UNDER THE RULE OF LAW IN PAKISTAN Faiqa Ibrahim Faculty of Law McGill University, Montréal June, 2005 A thesis submitted to the Faculty of Graduate Studies and Research in partial fulfilment of the requirements of the degree of Master of Laws (LL.M.). © Faiqa Ibrahim, 2005 Library and Bibliothèque et 1+1 Archives Canada Archives Canada Published Heritage Direction du Branch Patrimoine de l'édition 395 Wellington Street 395, rue Wellington Ottawa ON K1A ON4 Ottawa ON K1A ON4...»

«PNNL-21785 Prepared for the U.S. Department of Energy under Contract DE-AC05-76RL01830 CCSI Risk Estimation: An Application of Expert Elicitation DW Engel AC Dalton October 2012 DISCLAIMER This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor Battelle Memorial Institute, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or...»


«An ASPIC-based legal argumentation framework for deontic reasoning Leendert VAN DER TORRE a, Serena VILLATA b,1 a University of Luxembourg, Luxembourg b INRIA Sophia Antipolis, France Abstract. In the last years, argumentation theory has been exploited to reason about norms, argue about enforced obligations and permissions, and establish the validity of norms seen as argumentative claims. In this paper, we start from the dynamic legal argumentation framework recently proposed by Prakken and...»

«NACUBO: The Buck Stops Elsewhere 12/2/14, 8:21 AM THE BUCK STOPS ELSEWHERE E-MAIL PRINT FAVORITES SHARE In a preview of the book Responsibility Center Management, Second Edition, due out this spring, authors John R. Curry, Andrew L. Laws, and Jon Strauss explain the basics of this method in which the CFO delegates financial responsibility to individual academic units. In spring 2013, NACUBO will release an update of Responsibility Center Management, first published in 2002. The original...»

«J Fam Econ Iss DOI 10.1007/s10834-008-9104-0 ORIGINAL PAPER Do Forbearance Plans Help Mitigate Credit Card Losses? Sumit Agarwal Æ Souphala Chomsisengphet Æ Lawrence Mielnicki Ó Government Employee: Federal Reserve Bank of Chicago 2008 Abstract In this paper, we examine how reinstated (i.e., re-aged) credit card accounts are likely to default again. Our sample data reveal that about 22% of the re-aged accounts default again, mostly in the first 24 months after reinstatement. We also find...»

«The London School of Economics and Political Science      Mediation in a Conflict Society  An Ethnographic View on Mediation Processes in Israel            Edite Ronnen              A  thesis  submitted  to  the  Department  of  Law  of  the  London  School  of  Economics for the degree of Doctor of Philosophy, London, October  2011    1    ‫‪For Inbar, Ori and Eran‬‬ ‫לענבר, לאורי – שבלעדיהם אין‬...»

«1 A Modest Proposal Concerning Laws, Counterfactuals, and Explanations 1. METHODOLOGICAL PROLEGOMENON Philosophical analyses may be pursued via a myriad of methods in service of as great a multitude of goals. Frequently the data upon which an analysis rests, and from which it receives its original inspiration, recount systematic connections between diverse realms of discourse or diverse sets of facts, events, actions, or objects. The aim of the project is elucidating the underlying logical,...»

«THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should consult an independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, you should consult another appropriately authorised independent financial adviser. You should read the whole of this document. If you have sold or otherwise transferred all of your Darty Shares (other than...»

<<  HOME   |    CONTACTS
2016 www.dissertation.xlibx.info - Dissertations, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.