Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, July 19, 2019

Notre Dame Tax and Estate Planning Institute

Notre_DameHere is the description of the program provided by Notre Dame:

The 45th Annual Notre Dame Tax & Estate Planning Institute will be held September 26th & 27th, 2019, at Century Center, downtown South Bend, Indiana, with a bonus session on Wednesday, September 25th from 3:30 p.m. – 5:30 p.m., entitled, “How § 7872 and the OID Timing Rules Impact Intra-Family Notes and Their Valuation for Transfer Tax Purposes ", with Michael Strauss. 

The Institute continues to present practical topics relevant for all families, even those not exposed to the estate tax, as well as topics focusing on saving estate taxes.  With simultaneous sessions, we scheduled estate planning topics opposite practical topics to provide attendees with the opportunity to attend the sessions of interest to them and their clients.  And, the Institute will continue to offer topics not found in estate tax-focused estate planning programs.
With the recent Tax Court decisions expanding the reach of Section 2036 and 2038 to include in a decedent’s gross estate interests in family limited partnership owned in an irrevocable trust, the sessions will review these expansive court decisions, will discuss the how to draft or amend FLP agreements to avoid these IRS challenges and describe the best practices while still giving a decedent some control.
With the larger exemptions, practitioners are concerned with what to do with irrevocable structures no longer needed for tax saving or other reasons.  And, how should one deal with a trust no longer able to meet its financial obligations under a deferred payment arrangement because the trust’s assets have declined in value or because the annual payments increase each year by a stated percentage?  With grantor trusts, the grantor must pay the income taxes on the grantor trust’s taxable income.  Frequently, the grantor desires to toggle off grantor trust treatment, but the trustee, owing a fiduciary duty to the beneficiaries, may refuse to allow the trust to convert to a non-grantor trust.  What can be done to toggle off grantor trust treatment?  Frequently, another person has guaranteed the trust’s obligations.  When the trust is insolvent, swat is the responsibility of the trustee regarding the guarantor? These situations will be covered in the topic “Defrosting the Freeze.”  The “Fixing the QPRT” topic will deal with situations not considered when the QPRT was drafted, such as the impact of a divorce, using the up to $500,000 exclusion of gain when a principal residence is sold and obtaining a basis step-up at death.
With the proliferation of complex life insurance products, the family advisor may not be able to fully evaluate the life insurance product and the accompanying illustrations. The first speaker will discuss how to evaluate the different products and the accompanying illustrations.  Immediately following, a panel will discuss how the lawyer, the financial advisor and the trust company can work with the life insurance industry to assist in the evaluation process.  There frequently arises situations where life insurance was in integral part of the planning technique where the structure is no longer needed while there is a desire to keep the life insurance policy in place, such as when the ILIT is no longer needed.  The more difficult situation occurs when there is a buy-sell agreement in place that is no longer needed, and the life insurance policy is owned either by the company or by owners of the company who are not the insured.  Our speaker will discuss the obstacles that need to be addressed and how to solve these problems with little or no income tax exposure and not cause any financial problems.

With the estate planning profession’s renewed interest in income tax planning, one topic will address how powers of appointment can be used to obtain an income tax-free step-up in basis at death with no estate tax exposure.  Given recent attempts to exact a state income tax on the income of trusts created by a resident of the state where the trust is located in another state with no state income taxes, and the pending Supreme Court decision in North Carolina v. Kaestner, our speakers will describe the techniques designed to either eliminate state income taxes or how to at least defer the taxation of trust income by the states and evaluate their effectiveness. 


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