2015 TRUST PLANNING

OVERVIEW

JEFFREY LOVE, ESQ.

PRESENTED: PHILADELPHIA, PA

JANUARY, 2015

© 2015 WINNE BANTA BASRALIAN & KAHN, P.C.

The asset protection benefits of trusts

Spendthrift issues/immaturity

Inexperienced decision makers or investors

Dependency concerns

Professional liability claims

Existing or potential creditor claims

Potential disposition of assets outside the family

Beneficiaries reside in a jurisdiction that does not

fully exempt inherited property from equitable

distribution claims

Supplemental Needs issues

Non-tax issues which trust planning

can help to address

Potential asset protection afforded in a jurisdiction barring creditor claims against a self-settled trust – Delaware, South Dakota and Alaska

Marital trusts (testamentary or lifetime QTIPs)

Incapacitated spouse

Business continuity

Fulfill charitable objectives

Fulfill obligations under a marital agreement

Expedite probate (provide liquidity to heirs) and reduce

costs of administration

Avoid ancillary administration

Provide a measure of privacy

Estate and gift tax planning issues

to consider

Gifts to trusts to avoid or minimize state and federal estate tax

Grantor trusts versus non-grantor trust

Gifts to trusts to avoid or minimize GST tax

Often leveraged through life insurance, discounts

Trusts w/ ETIPs not afford immediate GST planning opportunity (e.g. GRATs or QPRTs)

Avoid estate tax exclusion for wealthy beneficiaries

Address tax implications of transfers to non-citizen spouses

Retain community property in joint revocable trust

(double step-up)

Provisions which can trigger adverse

estate or gift tax consequences

Grantor as Trustee

Beneficiary with power to make discretionary distributions to himself or herself

Trustee who has a duty to support a beneficiary

Beneficiary with power to remove and replace trustee not limited to non-related or non-subordinate trustee (672(c))

Retained powers of Grantor – e.g. power of

appointment

Consider building flexibility into an

irrevocable trust

Address Trustee succession

Include provisions to address future law changes or administrative issues

Be cautious when using mandatory estate tax funding formulas

Try to avoid wasting tax exemption – e.g. automatic income distribution to a taxable estate of beneficiary, 5 by 5 powers

Consider a provision establishing a marital trust in an ILIT

to address “taxable” transfer – e.g. within 3 years of death

Allow for swaps, exchanges, decanting and mergers

Consider trust protectors

Consider a change of situs

Notes from the Heckerling Institute

January 2015

Nothing has changed . . . but everything has changed

Tax planning for trusts established under the Will of predeceased spouse --

is it a build -up case or a break down case ?

A lot of issues which have been long ignored are starting to take precedence –income tax, tax basis, passive activity losses, DNI, depreciation

How do we define ourselves as “estate planners” – 87% of 706 work is gone

A lot of interesting and challenging work – but not the same

Become an “advanced” planner – one who can efficiently

implement routine plans, but has the capability to handle more

sophisticated work

Develop skills to become a business succession adviser

The “new” role of the

estate planner in 2015

How do we define ourselves as “estate planners”

87% of 706 work is gone

A lot of interesting and challenging work – but not the same

Become an “advanced” planner – one who can efficiently

implement routine plans, but has the capability to handle more

sophisticated work

Develop skills to become a business succession adviser

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