IN THIS ISSUE:
News, Articles, and Updates for the Estate PlannerSee updates and article references involving charitable trusts and donations; elder law; estate and gift taxes; estate and trust administration--probate; estate planning; generation-skipping transfer tax; health care; retirement; small and mid-size law firm practice; special needs trusts; guardianships; trusts; and wills.
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The end of the year is an excellent time to promote a review of your client’s current estate planning documents to identify any potential updates needed based on a change in goals, finances, or family situation. In addition, updates may be needed due to changes in the law since the client’s plan was drafted or last updated. / The Estate Planner Archive
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NEWS, ARTICLES, AND UPDATES
For The Estate Planner
Charitable Trusts and Donations
IRS DECISIONS, REGULATIONS, AND GUIDANCE
IRS. Section 170 - Charitable, Etc. Contributions and Gifts. The IRS advised that taxable income for purposes of calculating the percentage limitation under I.R.C. § 170(b)(2)(A) on corporate charitable contribution deductions does not include an adjustment for taxpayer's excess inclusion income under I.R.C. § 860E, and taxpayer may not carry back any of its charitable contribution deduction for the year as part of that year’s net operating loss under I.R.C. § 172. WestlawNext: CCA 201143018; Westlaw: CCA 201143018, 2011 WL 5113900 (October 28, 2011); Web: CCA 201143018, 2011 WL 5113900 (October 28, 2011).
Elder Law
ARTICLES
Aging Inmates: Correctional Issues and Initiatives. Aging Inmate Committee. (Maryland Bar Journal, November/December, 2011). WestlawNext: 44-DEC Md. B.J. 22; Westlaw: 44-DEC Md. B.J. 22. (The Aging Inmate Committee is affiliated with the Maryland State Bar Association's Section on Correctional Reform)
Montana Supreme Court Affirms Legality of Aid in Dying. State Senator Anders Blewett. (Montana Lawyer, November, 2011). WestlawNext: 37-NOV Mont. Law. 6; Westlaw: 37-NOV Mont. Law. 6; Web: Montana Lawyer.
No, Physician-Assisted Suicide is Not Legal in Montana; It's a Recipe for Elder Abuse and More. State Senator Jim Shockley, Margaret Dore. (Montana Lawyer, November, 2011). WestlawNext: 37-NOV Mont. Law. 7; Westlaw: 37-NOV Mont. Law. 7; Web: Montana Lawyer
Problem-Solving Litigation for the Elderly: an Eventual Shift with a Cautionary Approach. Nadav Zamir. (Journal of Civil Rights & Economic Development, Summer 2011). WestlawNext:25 J. Civ. Rts. & Econ. Dev. 1023; Westlaw:25 J. Civ. Rts. & Econ. Dev. 1023; Web: Journal of Civil Rights & Economic Development.
OTHER
South Dakota. Coalition Submits Petition to State to Increase Sales Tax to Boost Medicaid and Education Funding. On November 1, Moving SD Forward announced that it had submitted enough petition signatures to the state to get a proposal to increase South Dakota’s sales tax by one percent to boost Medicaid and education funding on the November 2012 ballot. The proposal would raise the state’s sales tax from 4 percent to 5 percent after the Legislature reduced reimbursements to Medicaid providers by amounts from 4.5 percent to 11.5, lowered per-student K-12 funding by 6.6 percent, and cut other agencies by 10 percent. The announcement said an additional $180 million would be generated by the sales tax increase, with half going to Medicaid funding and half to K-12 education. Westlaw Next: 2011 WL 5188758 ; Westlaw: 2011 WL 5188758 (November 3, 2011); Web: SD Sales Tax Proposal Petitions Submitted to State, Moving SD Forward, November 1, 2011. .
WEBINARS
How to Assist the Client With Diminishing Capacity. Speakers: Rachel A. Kabb-Effron. (NBI, Inc (National Business Institute, Inc.), 12/27/2011 4:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
SSI vs. SSDI: Benefits and Eligibility. Speakers: Laura Gadness. (NBI, Inc (National Business Institute, Inc.), 12/14/2011 4:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Estate and Gift Taxes
ARTICLES
IRS Issues Carryover Basis Guidance for 2010 Estates. Michael G. Stevens. (Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 10; Westlaw: 38 ESTPLN 10.
Marital Deduction Eligibility for Refunded Retirement Home Fee. The Private Clients, Trusts and Estates Group of Schiff Hardin LLP. (Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 45; Westlaw: 38 ESTPLN 45.
New Life for the Qualified Personal Residence Trust. Brandon A.S. Ross. (Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 03; Westlaw: 38 ESTPLN 03.
The New Super-Charged PAT (Power of Appointment Trust). Wendy C. Gerzog. (Houston Law Review, Fall 2011). WestlawNext: 48 Hous. L. Rev. 507; Westlaw: 48 Hous. L. Rev. 507; Web: Houston Law Review.
Using Section 2519 to Enhance Estate Planning with QTIPs. Austin W. Bramwell.(Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 15; Westlaw: 38 ESTPLN 15.
IRS DECISIONS, REGULATIONS, AND GUIDANCE
IRS.Section 2041 - Powers of Appointment (Included v. Not Included in Gross Estate). The IRS ruled that decedent’s son’s proposed exercise of son’s power of apportionment, provided him in a generation-skipping trust created by his father for the son and son’s issue, outlining the manner in which the remainder of the trust shall be divided among son’s issue upon his death, will not cause the assets of the various trusts resulting from the division of the original trust to be includible in son’s gross estate under I.R.C. § 2041, or cause the trusts to become subject to generation-skipping transfer tax under Chapter 13 of the Code. WestlawNext: PLR 201143002; Westlaw: PLR 201143002, 2011 WL 5112606 (October 28, 2011); Web: PLR 201143002, Written Determinations (October 28, 2011).
IRS. Section 6166 - Extension of Time to Pay Estate Tax. The IRS advised that making the election under I.R.C. § 6166(b)(8) for holding company stock to be treated as business company stock means that the estate forfeits the deferral option provided by I.R.C. § 6166(a)(3). WestlawNext: CCA 201144027; Westlaw: CCA 201144027, 2011 WL 5255631 (November 4, 2011): Web: CCA 201144027, 2011 WL 5255631 (November 4, 2011)
IRS.Section 2032 - Alternate Valuation. The IRS granted a 120-day extension for an executor to make the alternate estate valuation election under I.R.C. § 2032 after the attorney, who prepared the Form 706, failed to advise the executrix that the estate could make the election. WestlawNext: PLR 201144011, 2011 WL 5255644 (November 4, 2011); WestlawNext: PLR 201144011, 2011 WL 5255644 (November 4, 2011); WestlawNext: PLR 201144011, 2011 WL 5255644 (November 4, 2011); WestlawNext: PLR 201144011, 2011 WL 5255644 (November 4, 2011); Westlaw: PLR 201144011, 2011 WL 5255644 (November 4, 2011); Web: PLR 201144011, IRS Written Determinations (November 4, 2011).
IRS. IRS Issues Final Rules on Portion of Grantor Retained Interests in Property Includible in Grantor’s Estate. Effective November 8, the IRS has issued final regulations (T.D. 9555) providing guidance on the portion of property, whether held in trust or otherwise, includible in a grantor's gross estate if the grantor has retained the use of the property or another interest for life, for any period not ascertainable without reference to the grantor's death, or for a period that does not in fact end before the grantor's death. The final regs clarify Treas. Reg. § 20.2036-1(c)(1)(ii), Paragraph (i) of Example 1 pertaining to the effect of a present value of an outstanding life estate on reduction of trust corpus and adds a step-by-step illustration of the method described in Section 20.2036-1(c)(2)(ii).The final regs also clarify the interaction of I.R.C.§ 2033 and I.R.C.§ 2036 when the decedent establishes a grantor retained trust whereby the retained interest is paid to the decedent for a specified term of years and, if the decedent dies prior to the expiration of that term, the retained interest is to be paid to the decedent's estate for the balance of the term, stating that under these circumstances payments that become payable to the decedent's estate after the decedent's death are not subject to inclusion under I.R.C.§ 2033, if I.R.C.§ 2036 is applied. WestlawNext: T.D. 9555, 76 FR 69126-01, 2011 WL 5325299 (November 8, 2011); Westlaw: T.D. 9555, 76 FR 69126-01, 2011 WL 5325299 (November 8, 2011); Web: T.D. 9555, 76 FR 69126-01, (November 8, 2011).
OTHER
BNA. New Guidance on Filing Protective Claims Helpful, Practitioners Say. On October 31, practitioners told BNA that recently issued Revenue Procedure 2011-48, which instructs fiduciaries on how to file a protective claim for refund when the estate has a claim or expense related to funeral costs, administration of estates, and claims against the estates for mortgages or other indebtedness not yet deductible under I.R.C. § 2053 and corresponding regulations, resolves the issue on how to file a claim and adds new benefits with conditions. Prior to this procedure, fiduciaries were allowed to file a protective claim, but had no guidance on how to do it. Fran Schafer, an executive director in Grant Thornton's National Tax Office, told BNA that “In 2012 we will have a special schedule,[the Schedule PC] to use to file protective claims so that it will all be done at the time an estate tax return is filed, ” and noted that fiduciaries must follow the procedures outlined in the guidance exactly, or they will forfeit that right to a limited scope examination. WestlawNext: 2011 WL 5188758; Westlaw: 2011 WL 5188758 (November 3, 2011).
U.S. Tax Court. Court Allows Estate to Deduct Interest Incurred by Trust-Beneficiary on Funds Borrowed to Pay Federal Estate Tax. On October 31, the U.S. Tax Court held that the Estate of Vincent J. Duncan, Sr. may deduct, as an estate administration expense under I.R.C. § 2053, interest incurred on $6.4 million borrowed by decedent’s revocable trust, which was the residual beneficiary of decedent’s estate and whose assets were included in his gross estate, from a trust created by decedent’s father for his benefit to enable the estate to pay its federal estate tax liability. The court also held that the estate may deduct additional attorneys’ fees and a $300 bank fee as administration expenses that were not originally claimed on its estate tax return. However, the court disallowed a $28,693 decrease in the gross estate claimed by the estate. Estate of Duncan v. Commissioner, T.C. Memo. 2011-255, No. 7549-10 2011 WL 5124704 (November 1, 2011) WestlawNext: T.C. Memo. 2011-255; Westlaw: T.C. Memo. 2011-255; Web: Estate of Duncan v. Commissioner, T.C. Memo. 2011-255, No. 7549-10 (November 1, 2011).
U.S. Tax Court.Court Upholds $2.57 million Estate Tax Deficiency, Finds Value of Assets Transferred to FLP Included in Estate. On November 2, the U.S. Tax Court upheld the IRS’s determination of a $2,573,171 federal estate tax deficiency against the Estate of Paul H. Liljestrand after concluding that the value of Dr. Liljestrand's gross estate should include the value of assets he transferred to a family limited partnership, pursuant to section I.R.C. § 2036(a)(1). Prior to his death in 2004, Liljestrand, formed the Paul H. Liljestrand Partners Limited Partnership, into which he transferred nearly$6 million in real estate and initially held a 99.98 percent interest in the partnership, later gifting partnership interests to his children. The court found that “(1) Dr. Liljestrand transferred assets to the PLP within the meaning of section 2036, (2) the transfer was not a bona fide sale for adequate and full consideration, and (3) Dr. Liljestrand retained enjoyment of the transferred assets.” Estate of Liljestrand v. Commissioner, T.C., No. 29397-08, T.C. Memo. 2011-259, 2011 WL 5213428 (November 2, 2011). WestlawNext: 2011 WL 5213428; Westlaw: 2011 WL 5213428; Web: Liljestrand v. C.I.R., T.C. Memo. 2011-259, U.S.Tax Ct.,2011 (November 02, 2011).
AICPA. Treasury Department Wants to Finalize Rules on Estate/Gift Tax Exemption Portability by Year End. On November 9, estate tax officials at the Treasury Department told members of the AICPA’s Fall Tax Division Meeting that the Department wants to finalize proposed rules on portability by the end of the year. Notice 2011-82, issued earlier this year, alerted executors of estates of people who died after 2010 that in order to claim the deceased spouse’s unused portion of his or her estate and gift tax exemption for the surviving spouse, they must file a complete and timely Form 706, even if the executor is not otherwise required tofile a return. However, officials are now faced with the question as to what constitutes a timely filed Form 706 when a return is due for an estate that is not required to file a return. WestlawNext: 2011 WL 5402604; Westlaw: 2011 WL 5402604 (November 10, 2011).
U.S. Court of Federal Claims. Court Denies Government’s Motion for Judgment on Late Filing of Estate Tax Return. On November 8, the U.S. Court of Federal Claims denied the government’s motion for judgment claiming that the late filing of an estate's federal estate tax return was inexcusable because it was due to willful neglect and not reasonable cause. The estate asserted that failure to timely file was due to its reliance on expert advice from the estate’s legal counsel on whether the estate could wait to file its tax return until after the widow of decedent, Morton Liftin, became a naturalized U.S. citizen and after the completion of related litigation against the estate in order to claim the marital deduction. The court concluded that the “estate has adequately alleged facts that, if proven, may well demonstrate that its failure to timely file was due to reasonable cause and was not the result of willful neglect.”Estate of Liftin v. United States, Fed. Cl., No. 10-589 T, 2011 WL 5397127 (November 8, 2011). WestlawNext: 2011 WL 5397127; Westlaw: 2011 WL 5397127; Web: Estate of Liftin v. United States, Fed. Cl., No. 10-589 T, (November 8, 2011).
ACTEC. Organizations Comment on IRS Notice on Electing Estate Tax Portability. Several organizations have issued comments addressing Notice 2011-82, which provides guidance under I.R.C. § 2010(c) on electing portability of the deceased spouse’s unused exclusion amount on a Form 706 so as to allow the surviving spouse to take advantage of any unused exclusion. The notice requires the election to be made by the filing a complete and timely Form 706, including schedules and attachments, but the American College of Trust and Estate Counsel argues in its October 28 letter that this makes it impractical for modest estates to elect portability. In an October 21 letter, the New York State Society of Certified Public Accountants requests guidance where the surviving spouse remarries after the executor of the deceased spouse’s estate has made a portability election and his or her second spouse dies without a portability election having been made, asserting that under these circumstances the surviving spouse should not lose the unused exemption he or she obtained from the first spouse. In a November 9 letter, the Florida Bar Tax Section and Real Property Probate and Trust Law Section called for the proposed rules to specifically state that reviews of returns electing portability are limited to estate and gift taxes and will not apply to income or generation skipping transfer taxes. WestlawNext: 2011 WL 5544441; Westlaw: 2011 WL 5544441 (November 16, 2011); Web: ACTEC Comments on Notice 2011-82, ACTEC (October 28, 2011).
WEBINARS
Estate and Gift Tax Planning With Alaska Domestic Asset Protection Trusts. Speakers: Richard H. Foley Jr. . (NBI, Inc (National Business Institute, Inc.), 12/12/2011 2:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Estate Planning With Discount Entities. Speakers: Wendy S. Rusch. (Milwaukee Bar Association, 12/06/2011 1:30 PM EST). 1 Hours, 0 Minutes. West LegalEdcenter: Live Video.
Income Taxation of Trusts and Estates. Speakers: Marla Castner. (NBI, Inc (National Business Institute, Inc.), 12/15/2011 2:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Top Mistakes and Dangers in Gifting. Speakers: Richard Mayberry. (NBI, Inc (National Business Institute, Inc.), 12/14/2011 10:00 AM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Estate and Trust Administration; Probate
ARTICLES
Decedent Retained Incidents of Ownership in Life Insurance Coaxum, TC MEMO 2011-135, RIA TC MEMO §2011-135, 101 CCH TCM 1651. RIA Current Tax Developments. (Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 37; Westlaw: 38 ESTPLN 37.
New York Enacts Important New Law Governing a Trustee's Power to Pay Trust Assets to a New Trust. Pamela Ehrenkranz, Michael I. Frankel, Lindsay N. O'Donnell. (New York State Bar Journal, November/December, 2011). WestlawNext: 83-DEC N.Y. St. B.J. 38; Westlaw: 83-DEC N.Y. St. B.J. 38.
Tax Court Adjusts Valuation of Limited Partnership Estate of Giustina, TC Memo 2011-141, RIA TC Memo §2011-141, 101 CCH TCM 1676. RIA Current Tax Developments.(Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 38; Westlaw: 38 ESTPLN 38.
Trusts, Estate, Probate & Immovable Property Law (Recent Developments). Chad P. Morrow. (Louisiana Bar Journal, October/November, 2011). WestlawNext: 59 La. B.J. 212; Westlaw: 59 La. B.J. 212; Web: Lousiana Bar Journal.
LEGISLATION
Alabama.Transfer of administration of estates, trusts, and guardianships or conservatorships from probate counrt to circuit court under certain conditions. Alabama has passed legislation relating to the administration of an estate or a guardianship or conservatorship in probate court. The legislation adds Sections 12-11-41.1 and 26-2-2.1 to the Code of Alabama 1975 and provides that in any county where the judge of probate is required to be learned in the law, the administration of an estate or a guardianship or conservatorship may be transferred to circuit court at any time before the proceeding on final settlement commences and to provide for the remand of the administration of the estate or a guardianship or conservatorship to probate court under certain circumstances. 2011 Alabama Senate Bill No. 48, Alabama 2011 Regular Session). WestlawNext: 2011 AL S.B. 48 (NS); Westlaw: 2011 AL S.B. 48 (NS)
WEBINARS
The Art of Trust Administration. Speakers: Attorney Brian Thomas. (NBI, Inc (National Business Institute, Inc.), 12/21/2011 1:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Income Taxation of Trusts and Estates. Speakers: Marla Castner. (NBI, Inc (National Business Institute, Inc.), 12/15/2011 2:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Medicaid Estate Recovery: What Can They Get?. Speakers: David J. Zumpano, Esq.. (NBI, Inc (National Business Institute, Inc.), 12/09/2011 2:00 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
The Probate Process: What Attorneys Need to Know. Speakers: Peter J. Bakarich. (NBI, Inc (National Business Institute, Inc.), 12/01/2011 11:00 AM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Audio.
Estate Planning (Generally)
ARTICLES
Anticipate and Smooth the Evolutionary Path of a Beneficiary. Richard E. Llewellyn, II. (Estate Planning, October, 2011). WestlawNext: 38 ESTPLN 30; Westlaw: 38 ESTPLN 30.
Estate Planning Considerations for Out-Of-State Property. Patrick J. Lannon. (Florida Bar Journal, November, 2011). WestlawNext: 85-NOV Fla. B.J. 49; Westlaw: 85-NOV Fla. B.J. 49.
Propriety of Attorney/Non-Attorney Business Venture Offering Estate Planning. Maryland Bar Association--The Ethic Committee. (Maryland Bar Journal, November/December, 2011). WestlawNext: 44-DEC Md. B.J. 67; Westlaw: 44-DEC Md. B.J. 67.
Trusts and Estates Section Mid-Year Review. Speakers: Kristin T. Abati; Kelly A. Aylward; Brad Bedingfield; Alison Irving Glover; Alison E. Lothes; Stacy K. Mullaney; Susan L. Repetti. (Boston Bar Association, 12/09/2011 12:30 PM EST). 1 Hours, 30 Minutes. West LegalEdcenter: Live Video.