Category Archives: Estate Planning

Marital Deduction Planning

By making a QTIP election, the Executor will enable the decedent’s estate to claim a full marital deduction. To qualify, the trust must provide that the surviving spouse be entitled to all income, paid at least annually, and that no person may have the power, exercisable during the surviving spouse’s life, to appoint the property to anyone other than the surviving spouse. Since the Executor may request a 6 month extension for filing the estate tax return, the Executor in effect has 15 months in which to determine whether to make the QTIP election. Continue reading

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Tax Court Holds Single Member LLC Not Ignored for Gift Tax Purposes

Pierre v. Com’r, 133 T.C. No. 2 (8/4/09) Continue reading

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Estate Planning Synopsis

The level of sophistication of estate plans varies with the size and complexity of an individual’s estate. A carefully drafted Will or revocable inter vivos trust is the starting point for many estate plans. Continue reading

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Life Insurance Trusts Mitigate Estate Tax Uncertainties

To view printer-friendly Memorandum, press here: Life Insurance Trusts Mitigate Estate Tax Uncertainties.wpd Irrevocable life insurance trusts (ILITs) enjoy vastly preferential status under the income and transfer tax laws. Properly structured, proceeds are not included in the insured’s gross estate. … Continue reading

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The IRC § 2036 Trap in Planning With FLPs & Grantor Trusts

Printer-friendly PDF Memorandum:  The IRC § 2036 Trap in Planning With FLPs & Grantor Trusts.wpd The IRS has advanced many theories to challenge the gift and estate tax savings occasioned by the use of family entities and grantor trusts in … Continue reading

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FAMILY DISCOUNT ENTITIES: INCOME TAX CONSIDERATIONS

FLPs (and LLCs) are ideal holding entities for family assets since fractional discounts yield substantial transfer tax savings. While the income tax treatment of asset transfers to and from these “flow thru” entities is generally placid, income tax planning should not be relegated to a mere afterthought. Continue reading

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Real Estate Title Issues in Estate Planning

Printer-friendly PDF:  Real Estate Title Issues in Estate Planning.BK! Estate planning and administration frequently involve the transfer of real estate to family members. The choice of deed to convey title is important, as the rights of the grantee may be … Continue reading

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Anticipating IRS Challenges to FLPs and FLLCs

Possessed of favorable tax attributes and tremendous flexibility, family limited partnerships (FLPs) and family limited liability companies (FLLCs) have proliferated over the past decade and have become an integral part of many estate plans. They can be used to manage a family business, to implement a plan of family succession and can even serve as extremely effective testamentary instruments. Recognized as separate legal entities, FLPs and FLLCs also accomplish formidable asset protection objectives. Continue reading

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Negotiating the Generaton-Skipping Tax

The Generation-Skipping Transfer (GST) tax thwarts multigenerational transfers of wealth by imposing a transfer tax “toll” at each generational level. Prior to its enactment, beneficiaries of multigenerational trusts were granted lifetime interests of income or principal, or use of trust assets, but those lifetime interests never rose to the level of ownership. Thus, it was possible for the trust to avoid imposition of gift or estate tax indefinitely. Continue reading

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Delaware Dynasty Trusts

Traditionally, trusts were viewed primarily as a means to protect immature or dysfunctional beneficiaries from themselves. Traditional trusts typically terminated when a minor child attained a certain age. Dynasty Trusts, on the other hand, seek to maximize all of the benefits of the trust arrangement, which include asset protection and tax savings, as well as the traditional objective of protecting immature or spendthrift persons. In fact, the Dynasty Trust can serve as the centerpiece of an estate plan. Continue reading

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The Continued Importance of Gift & Estate Tax Planning

Although the estate tax is repealed effective January 1, 2010, fiscal considerations may cause Congress to “repeal the repeal” allowing the estate tax to remain, albeit with a higher applicable exclusion amount, perhaps $3.5 million.  Time-tested estate tax planning techniques … Continue reading

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Death-Terminating Installment Notes Held to Generate Taxable Income

The Court of Appeals for the 8th Circuit, affirming the decision of a divided Tax Court, has found that installment notes which terminate upon the death of the obligee generate taxable income to his estate. Frane v. Commissioner, 93-2 USTC … Continue reading

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Life Insurance Trusts

Life insurance can be an invaluable estate planning tool. It can provide a broad measure of financial security for loved ones as well as provide the liquidity necessary to meet tax and other estate settlement obligations. Ownership of a life … Continue reading

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Inter Vivos Trusts

As a testamentary instrument, the living trust possesses attractive attributes, especially for elderly testators. For younger persons, the will is generally preferable as a testamentary device. Property placed in a will passes automatically into the probate estate, where it may … Continue reading

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Defining the Scope of Trustee Powers

A.     Introduction Early predecessors of modern trusts appeared in connection with land conveyances in England. Prior to the Statute of Wills, enacted by Parliament in 1540, it was impossible for a landowner to devise title in land to heirs. Moreover, … Continue reading

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