blog: estate planning updates…
Estate Planning Updates
advanced legal training institute
Powerful | Focused | Interactive Continuing Legal Education
Dear Attorneys and Wealth Planning Professionals,
When I started Advanced Legal Training Institute almost five years ago, the #1 goal was to offer timely, relevant, state-of-the-art legal education in a collegial and supportive environment that facilitates dialogue and debate. I knew that I would prefer attending a smaller meeting than one that is held in a hotel ballroom with a huge crowd with a tiny overhead screen on the stage. Our goal was to provide MCLE legal education that includes formal lecture presentations, case studies and small group problem solving sessions in a small classroom environment. We did it!
I chose an estates & trusts attorney, Frank Doyle, with a lengthy background as the founder of WealthPLAN and as somone who brings over 30 years of experience in tax, estate planning, litigation, probate and trust administration, to be the main presenter. Frank has taught law school and MCLE courses nationwide for Lorman, NBI, CalBar and more. Frank knows what works in the classroom and why. Our programs offer the best ideas from all of his presentations, case studies and professional experience to provide each of you with a step-by-step map to support our aging population as you design, develop and update their estate plans.
Sadly, estate planning attorneys are sued more than any other specialty. Frank has been frustrated with the fact that he never found the information that would allow an attorney to capture the basics of developing and expanding a thriving estate planning practice, so he created the menu of programs we now have on the process of integrated estate planning.
I would love for you to become a part of our community– sign up for our newsletter, attend a live seminar, purchase a pre-recorded videodvd and/or audiocd. You will not be disappointed. Often, lawyers, especially in smaller firms, frequently are not good business people, and there is often a reluctance to get involved in management. Laws change– then they change again. Unfortunately, this is a luxury that small law firms no longer can afford. It’s a highly competitive business today and law firms can’t afford not to have well-defined goals and objectives plus proactive technical leadership. Please look over our course offerings at our website online store here.
Many estate planning attorneys have clients that are in need of guidance and support as they manage their elder years. Through my company, Life Management Consulting, I also offer 1-on-1 coaching services for your clients on some of the challenging aspects of end-of-life/elder care such as choosing/evaluating a nursing home/assisted living center, professional organizing of important papers and documents, estate settlement and support with funeral planning, grief and loss. I have designed a consulting service to assist clients who are either in 1) the midst of handling a death of a loved one and executing their estate and/or 2) a client who has decided to get organized and plan ahead by completing their will, organizing their important papers, completing a checklist of final wishes and creating a legacy will. She also offers Succession Planning services for business owners and executives as they develop their vision and successors for generations to come.
Our goal at Advanced Legal Training Institute is to offer you the technical, managerial (planning, leading, organizing and controlling) and client support services to make your job easier and more fulfilling. Thanks again for your patronage and please let us know what educational resources and training you would like to participate in! Thanks.
All the best,
Mary G. Anderson
Founder, Advanced Legal Training Institute
March, 2011
A Note from Frank Doyle
Updates on Estate Planning
On Friday, March 25, 2011, I conducted the 2nd seminar in our 3-part seminar series on the new federal estate and gift tax law. The seminar focused on the impact of the new law on the terms and provisions of wills and trusts.
Here are two most important points made in the seminar:
1) Existing marital deduction/exemption trust formulas in wills and trusts need to be revised because the terminology of the new law is different than the terminology used to comport with prior law.
2) The new law’s “portability of exemption” between spouses and the new $5,000,000 estate tax exemption, will allow many estate plans to be simplified. However, it is advisable in almost every case to keep a ‘bypass’ hedge in the form of a disclaimer trust since the new law is set to expire in 2013 and with it “portability of exemption”. Further, if the new law expires– the estate tax exemption will return to a paltry $1,000,000.
Please visit our website for more information @ www.advancedlegaltraininginstitute.com
Let me know your thoughts.
Frank Doyle, WealthPLAN
February, 2011
A Note from Frank Doyle…
Updates on Estate Planning & Wealth Preservation
What You Need to Know… About the “New Tax Law”
After much speculation, in December of 2010, the President signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Act”), which contains important estate tax provisions.
There are three important temporary changes under the Act which impact your overall estate planning to which I would like to draw your attention:
- Lifetime gift tax exemption amount is increased to $5 million for gifts made in 2011 and 2012. This lifetime exemption returns to only $1 million in 2013.
- The estate tax exemption amount is increased to $5 million. The estate tax exemption also returns to only $1 million in 2013.
- Portability. This means that the first spouse to die can leave his/her entire estate outright to the surviving spouse, who makes an election on the deceased spouse’s federal estate tax return claiming the unused exclusion of the first spouse to die. Thus, at the death of the surviving spouse, he/she will have both his/her own exclusion amount plus any remaining exclusion amount of the first spouse to die. Barring any lifetime gifts, a married couple can pass $10 million to estate beneficiaries free of estate tax. In order to carry the predeceased spouse’s unused exclusion amount, a timely estate tax return must be filed and an election must be made.
Those clients who have already used most or all of their $1 million gift tax exemption now have an additional $4 million with which to work to transfer wealth to the next generation. As with all gifting, this will also transfer the future appreciation on the assets transferred now.
Those clients who sold assets to an irrevocable trust in exchange for a promissory note may simply want to forgive all or part of the outstanding balance of those notes given the new 5 million dollar gift tax exemptions now in play.
As an important matter, we must now determine whether the formula clause contained in the revocable trust of a married couple will function as intended. For instance, with the increased exclusion amounts, and the potential to pass $10 million to beneficiaries free of estate tax, the classic ABC formula three trust structure (Survivor’s Trust/Marital Trust/Bypass Trust) may no longer be desirable or appropriate. However, in many cases the ABC three trust structure mentioned above is still important for non-tax reasons because under that system, separate property and community property assets are typically divided into a decedent’s share and a survivor’s share consisting of each spouse’s one half of the community property and all of his or her separate property. The decedent’s share runs for the benefit of the surviving spouse but then passes to the deceased spouse’s children or other heirs and not to a new spouse of the survivor or some other person.
One of the benefits of this structure is the control afforded to the first spouse to die by guaranteeing that his/her share of the estate will be distributed to remainder beneficiaries whom he/she has chosen during his/her lifetime. Under the new tax law, this can still be accomplished, but without the need to divide the deceased spouse’s estate into both a Marital and a Bypass Trust. The Bypass Trust also offers creditor protection to the surviving spouse
Keep in mind, however that the substantial exclusion amount of $5 million falls back to $1 million in 2013. It is therefore important to draft plans which have some formula, either a disclaimer formula or a forced ABC formula, be in place for clients whose combines estates exceed $2 million in case Congress fails to exceed the current 5 million dollar exemptions.
An important choice must be made by the fiduciaries of estates of decedents that died in 2010. Fiduciaries have the option of electing to have their estates be subject to the federal estate tax at a 5 million dollar exemption level and obtain a full “step up” in basis under §1014 of the Internal Revenue Code to date of death value or alternatively elect out of being subject to the federal estate tax for 2010 and have the income tax basis of the assets in the estate remain that of the decedent before his or her death. The later position results in the heirs of the decedent receiving a “carry over” basis in the assets rather than a full “step up” to the date of death value of the assets. There are important upward adjustments allowed if one elects out of the estate tax, but in general these adjustments are limited to approximately $1,300,000.
The article in this issue is written with the goal that you will take a moment to consider how you are currently managing your planning activities around the ever changing Estate Tax Legislation. Find out how to develop a strategy that works during these tumultuous times in today’s article. And be sure to post a comment on our blog and tell us what you think, okay? Enjoy!
Let me know your thoughts.
Frank Doyle, WealthPLAN
P.S. A big “Welcome” to all of the new readers who have joined our ‘tribe’ of legal and financial professionals! You are going to come to rely on the practical, how-to-information, solutions and strategies you find here to help you develop and manage a successful estate planning practice.
A personal request from Frank:
Did the above article resonate with you? Do you disagree? ?Do you have an insight to add?
If so, I’d love to hear your thoughts & questions. Please feel free to comment on the above article on my corresponding blog post here: fbdoyle@advancedlegaltraininginstitute.com
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