American Bar Association has posted following daily Report of the 45th Annual Heckerling Institute on Estate Planning.
Report 3, Tuesday January 26, 2011
In this presentation, Michael V. Graetz analyzed the policy and politics of the federal taxes on bequests. In his presentation, Mr. Graetz referred to his book: "Death by a Thousand Cuts: The fight over Taxing Inherited Wealth). Mr. Graetz presented a history of estate taxes and analyzed the role that politics played on the transformation of the estate taxes.
Presented by Natalie B. Choate
Ms. Choate's presentation focused on QPRT, which she described as a form of a leveraged gift. Ms. Choate's outline, as reported by an ABA reporter, in part states: "When an individual gives his residence to a QPRT, he makes a gift to his descendants, but also holds something back: Specifically, the donor reserves the right to occupy the residence for a certain period of time (the QPRT term). When that term expires, ownership of the residence will pass to the remainder beneficiaries of the trust. Typically, the QPRT also provides that, if the donor dies before the end of the QPRT term, the trust terminates and the residence reverts to the donor's estate. Therefore, the remainder beneficiaries receive the trust property only at the end of the term, and will not receive it even then if the donor dies prior to that time."
Ms. Choate further compared QPRT with other drafting techniques, presented drafting challenges with QPRTs and discussed exit strategies from QPRTs.
Presented by Louis A. Mezzullo
Mr. Mezzullo discussed installment sales of assets to grantor trusts and the implications of such planning method. Mr. Mezzullo further analyzed tax consequences of such technique on income, gift, estate and gst taxes.
In the world where donors are increasingly demanding accountings from charities, state and local governments are seeking more endowment assets, nonprofit trustees are making detrimental investments and above all Congress is seeking to regulate the use of the endowments by institutions, Ms. Miree's presentation pointed out the dangers to client's endowments and offered suggestions on more proactive approach to avoid the potential pitfalls.
For a detailed discussion of the above presentations, click here.
The entire collection of Heckerling Reports: 2011 is available here.
Posted by Mariya V. Link, Associate Editor, Wealth Strategies Journal
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