The following are summaries of the presentations from the 49th Annual Heckerling Institute on Estate Planning. For the official brochure and list of events, see  http://www.law.miami.edu/heckerling/pdf/2014/heckerling-brochure.pdf. For the full Heckerling reports, see http://www.americanbar.org/groups/real_property_trust_estate/events_cle/heckerling_reports.html.


Diana Zeydel on the New Portability Regime

The presentation began with Zeydel assuring attendees that despite the permanence of portability due to ATRA 2012, its application should be determined on a case-by-case basis and in no way makes traditional planning techniques irrelevant. Throughout her discussion, Zeydel provided suggestions for various applications of portability, e.g. in the event of remarriage or for a wealthier couple.

Following, the presentation moved on to the topic of a Supercharged Credit Shelter Trust, which would provide for the creation of a lifetime QTIP trust by one spouse for another. Zeydel stated that this lifetime QTIP trust would be the easiest out of all the planning with portability. The presentation ended with projections using JP Morgan’s MAPS system.


S. Stacy Eastland on Strategies to Reduce Income and Estate Taxes

In this session, Eastland presented several planning strategies to lower the income taxes for clients with highly appreciated assets. These included post mortem strategies to avoid estate taxes and pre-death charitable techniques, as well as ways to reduce the income in a trust by allocating it to a lower income tax bracket beneficiary. To conclude his presentation, Eastland described the use of IRAS in income tax planning.


Steve Akers on SCINs and Private Annuities

Self-canceling installment notes (SCINs) and private annuities are often used for clients with “shortened” life expectancies. Yet due to recent developments, including the CCA 201320033 and the Tax Court case, Estate of Davidson, Akers advised against using SCINs until further guidance is issued. In place of SCINs, he discussed the advantages of using private annuities as an alternative.

In his presentation, Akers provided a list of situations in which private annuities could be useful for, as well as a few advantages and disadvantages of private annuities. He finished the discussion by raising the three significant issues to address with private annuities: Sections 2036/2038, the valuation using tables under Section 7520 and the exhaustion test.


John Bergner on Curing Estate Plans in the post-ATRA world

Due to the American Taxpayer Relief Act of 2012, certain estate planning transactions may no longer be appropriate due to the reduced relevance of the federal wealth transfer tax system. In his presentation, Bergner provided nine strategies that estate planners should offer to their clients as needed in the post-ATRA world. A few of these included causing inclusion of trust assets in the settlor’s estate, in a beneficiary’s estate and in a third party’s estate. Next, he followed up by discussing each of these strategies in greater detail.

Bergner wrapped up his presentation with the strategy of turning off grantor trust status in order to avoid necessary wealth shifts and to facilitate income tax planning, which he deemed of the most importance in this new post-ATRA world.


Louis Mezzullo on Preventing Sibling and Cousin Rivalry

In the U.S., only 30% of family-owned businesses survive to the second generation and only 12% to the third. The most common cause for such failure is sibling and/or cousin rivalry. Mezzullo listed some of the factors that cause these rivalries, for example when not all the siblings are active in the family business and the inactive ones would prefer to sell the business.

Mezzullo then described five case different case studies, the majority of which he had acted as an expert witness in the litigation. After the case studies, he provided some advice for family businesses to avoid disputes ahead of time. One method is to encourage the founding owner to set policies while he is alive and to set an example for future generations by being transparent about the business plan. Another way is to have a more structured management of the family business, including establishing a mission statement and strategic plan for the next five or ten years.


Suzanne Walsh on the Uniform Fiduciary Access to Digital Assets Act (UFADAA)

Ms. Walsh discussed several aspects and challenges in the enactment of the Uniform Fiduciary Access to Digital Assets Act (UFADAA) in her presentation. In response to the exponential growth of technology, the UFADAA allows fiduciaries and estate planners to plan and manage digital assets alongside more “traditional” assets. However, as of the time of Ms. Walsh’s presentation, only nine states have enacted legislation regarding fiduciary access to digital assets, with Delaware as the one state whose legislation is similar to UFADAA.

Ms. Walsh commented that the most significant challenge with providing fiduciaries and estate planners with access to digital assets is federal laws such as the fourth amendment, which protects a high standard of privacy. Though the Stored Communications Act offers an exception to the fourth amendment, it does not expressly include fiduciaries in its reach. On a similar note, Ms. Walsh also addressed the possibility for fiduciaries to face criminal prosecution and civil damages for accessing digital accounts. With the expected gradual enactment of UFADAA across other states, these challenges will hopefully be overcome.

Posted by Elizabeth Cheung, Associate Editor, Wealth Strategies Journal.