Trust planning seminar (1)
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Transcript of Trust planning seminar (1)
2015 TRUST PLANNING
OVERVIEW
JEFFREY LOVE, ESQ.
PRESENTED: PHILADELPHIA, PA
JANUARY, 2015
© 2015 WINNE BANTA BASRALIAN & KAHN, P.C.
The asset protection benefits of trusts
Spendthrift issues/immaturity
Inexperienced decision makers or investors
Dependency concerns
Professional liability claims
Existing or potential creditor claims
Potential disposition of assets outside the family
Beneficiaries reside in a jurisdiction that does not
fully exempt inherited property from equitable
distribution claims
Supplemental Needs issues
Non-tax issues which trust planning
can help to address
Potential asset protection afforded in a jurisdiction barring creditor claims against a self-settled trust – Delaware, South Dakota and Alaska
Marital trusts (testamentary or lifetime QTIPs)
Incapacitated spouse
Business continuity
Fulfill charitable objectives
Fulfill obligations under a marital agreement
Expedite probate (provide liquidity to heirs) and reduce
costs of administration
Avoid ancillary administration
Provide a measure of privacy
Estate and gift tax planning issues
to consider
Gifts to trusts to avoid or minimize state and federal estate tax
Grantor trusts versus non-grantor trust
Gifts to trusts to avoid or minimize GST tax
Often leveraged through life insurance, discounts
Trusts w/ ETIPs not afford immediate GST planning opportunity (e.g. GRATs or QPRTs)
Avoid estate tax exclusion for wealthy beneficiaries
Address tax implications of transfers to non-citizen spouses
Retain community property in joint revocable trust
(double step-up)
Provisions which can trigger adverse
estate or gift tax consequences
Grantor as Trustee
Beneficiary with power to make discretionary distributions to himself or herself
Trustee who has a duty to support a beneficiary
Beneficiary with power to remove and replace trustee not limited to non-related or non-subordinate trustee (672(c))
Retained powers of Grantor – e.g. power of
appointment
Consider building flexibility into an
irrevocable trust
Address Trustee succession
Include provisions to address future law changes or administrative issues
Be cautious when using mandatory estate tax funding formulas
Try to avoid wasting tax exemption – e.g. automatic income distribution to a taxable estate of beneficiary, 5 by 5 powers
Consider a provision establishing a marital trust in an ILIT
to address “taxable” transfer – e.g. within 3 years of death
Allow for swaps, exchanges, decanting and mergers
Consider trust protectors
Consider a change of situs
Notes from the Heckerling Institute
January 2015
Nothing has changed . . . but everything has changed
Tax planning for trusts established under the Will of predeceased spouse --
is it a build -up case or a break down case ?
A lot of issues which have been long ignored are starting to take precedence –income tax, tax basis, passive activity losses, DNI, depreciation
How do we define ourselves as “estate planners” – 87% of 706 work is gone
A lot of interesting and challenging work – but not the same
Become an “advanced” planner – one who can efficiently
implement routine plans, but has the capability to handle more
sophisticated work
Develop skills to become a business succession adviser
The “new” role of the
estate planner in 2015
How do we define ourselves as “estate planners”
87% of 706 work is gone
A lot of interesting and challenging work – but not the same
Become an “advanced” planner – one who can efficiently
implement routine plans, but has the capability to handle more
sophisticated work
Develop skills to become a business succession adviser
Disclaimer
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