Category Archives: Estate Planning

Buy-Sell Agreements Facilitate Family Business Planning

A traditional buy-sell agreement may enable the estate of an owner of a closely held business to raise cash to fund testamentary bequests and pay estate taxes. The agreement may also be effective in valuing an estate for tax purposes. … Continue reading

Posted in Estate Planning | Leave a comment

Rolling GRATs

A GRAT is a grantor trust for a term of years in which the grantor retains a fixed annuity interest and makes a gift of the remainder interest. The present value of the remainder interest is the amount of the … Continue reading

Posted in Estate Planning, GRATs, Trusts | Leave a comment

Qualified Personal Residence Trusts (QPRTs)

In essence, a QPRT is formed when a grantor transfers a personal residence (and some cash for expenses) into a residence trust, and retains the right to live in the residence for a term of years. If the grantor dies before the end of the trust term, the trust assets are returned to the grantor’s estate, and pass under the terms of the grantor’s will. However, if the grantor outlives the trust term, the residence passes to named beneficiaries without any gift or estate tax event. Continue reading

Posted in QPRTs | Tagged , , , , , , , , , , | Leave a comment

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

Posted in Estate Planning, Life Insurance Trusts, Trusts | Tagged , , , , , , | Leave a comment

Will May be Preferable to “Living Trust”

As a testamentary instrument, the living trust may be attractive for some elderly testators. For younger persons however, a Will is generally preferable. Despite statements to the contrary, a living trust is possessed of no inherent tax benefits. Furthermore, few, … Continue reading

Posted in Inter Vivos Trusts, Probate & Administration, Trusts, Wills | Leave a comment

New York Revised Legislation Re: Revocable Inter Vivos Trusts (October 1997)

New York attorneys have often looked closely at what revocable inter vivos trusts (RIVTs) have to offer as a testamentary substitute only to ultimately recommend against their use in favor of a Will. Although immensely popular in California and Florida, … Continue reading

Posted in Inter Vivos Trusts, Tax News & Comment | Leave a comment

Estate Planning Checklist

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 plans. The revocable inter vivos trust is highly … Continue reading

Posted in Estate Planning, Tax News & Comment | Leave a comment

Charitable Remainder Trusts

Extremely useful in estate planning, charitable remainder trusts (CRTs) provide for specified distributions at least annually to one or more beneficiaries for life or for a term of years, with an irrevocable remainder interest passing to a designated charity. The … Continue reading

Posted in Charitable Entities, Charitable Remainder Trusts, Trusts | Leave a comment

Avoiding Inclusion of Life Insurance Proceeds in Estate

IRC Sec. 2042 provides that all policies of insurance received by or “for the benefit of” the estate are included in the decedent’s gross estate. Proceeds paid to beneficiaries are also includible if the decedent assigned the policy but possessed … Continue reading

Posted in Estate Planning, Life Insurance Trusts, Tax News & Comment, Trusts | Leave a comment

Perspectives in Estate Planning

Effective estate planning actually encompasses many objectives, the most obvious of which is to implement a legally effective method of transferring wealth to loved ones. Estate planning should also reduce the incidence of gift and estate taxes, through full use of available tax credits and their leverage where possible. Estate planning should seek to maximize the value of the estate through use of tax-favored investment vehicles. Finally, estate planning should also seek to preserve and protect estate assets. Continue reading

Posted in Estate Planning, Tax News & Comment | Leave a comment

Valuation Discounts for LLCs

LLCs possess the desirable corporate attribute of limited liability, and the valuable “flow thru” partnership tax attribute. New York’s LLC statute, although containing default terms, permits customization of the operating agreement. The LLC form therefore provides the opportunity for members to structure the management, tax classification and capital structure of the entity to suit the members’ needs. Continue reading

Posted in Estate Planning, Family Entities | Tagged , , , , , , | Leave a comment

Marital Deduction Trusts

Property passing by bequest outright to a surviving spouse qualifies for the unlimited marital deduction. Property placed in trust for the surviving spouse may, depending upon the trust language, also qualify for the marital deduction. However, Code Sec. 2056(b) provides that a bequest to a surviving spouse will not qualify for the deduction where the interest passing to the surviving spouse will “terminate or fail.” Terminable interests are generally those which enable a person other than the surviving spouse to possess or enjoy any part of the property after a lapse of time or the occurrence of an event, such as the surviving spouse’s remarriage. Continue reading

Posted in Estate Planning, Marital Deduction, Marital Deduction Trusts, Tax News & Comment, Trusts | Tagged , , , , | Leave a comment

Family Limited Partnerships

Income tax problems associated with family limited partnerships (FLPs) are rarely serious enough to militate against their use in estate planning. Nevertheless, income tax issues arising in connection with the formation and operation of FLPs deserve consideration, since problems can minimized by careful tax planning. Continue reading

Posted in Family Entities, Tax News & Comment | Leave a comment

Irrevocable Life Insurance Trusts (ILITs)

Life insurance proceeds are excludible from beneficiaries’ income under §101, provided the policy had not been transferred for valuable consideration. Proceeds from policies transferred in trust will also be excluded from the insured’s gross estate provided the insured (i) retained … Continue reading

Posted in Estate Planning, Life Insurance Trusts, Trusts | Tagged , , , , | Leave a comment

Asset Sales to Grantor Trusts Discussed at ABA (June 2000)

[Louis A. Mezzullo, Esq., of Mezzullo & McCandlish, Richmond, Va., presented a paper discussing installment sales to grantor trusts at the ABA Tax Section’s midyear meeting in San Diego.] Generally, the grantor of a trust who retains the right to … Continue reading

Posted in Asset Sales to Grantor Trusts, Estate Planning, Tax News & Comment | Leave a comment