Each January, the University of Miami hosts the Heckerling Institute on Estate Planning, the country’s largest estate planning seminar. During the seminar, reporters for the American Bar Association’s Real Property Trust & Estate Law Section cover each part of the seminar, producing a dozen or so summaries of the information discussed by the nation’s leading estate planning and tax advisors. I forward their summaries, along with some brief commentary, to those who subscribe to my Heckerling Newsletter.
Below are links to the e-mailed reports sent to my newsletter subscribers this year, along with parts of my commentaries, which preface each set of reports.
- Portability: Lots of Questions, Few Easy Answers
Portability is especially important for clients with large retirement plan balances. Portability can also be dangerous if the couple has children from prior relationships. The surviving spouse might use the decedent’s exemption to fund gifts to the surviving spouse’s children, leaving no exemption available for the decedent’s children.
- Recent Developments 2016 - Part 1 and 2
After discussing the proposed regulations under Code § 2704, the report describes planning in light of tax reform and then discusses certain current developments. A speaker suggested that tax reform most likely will be done through budget reconciliation, which starts in March, takes shape somewhat in May, and would be enacted by the August recess.
- Placebo Planning, Getting Gratifying GRAT Results, Warming Up to Preferred Partnership Freezes, Helping Trustees Avoid Pitfalls in Common Transactions
“Placebo Planning,” focuses on how income tax and leveraged estate planning techniques interact. The “GRATs” session included advice on bequeathing post-mortem annuity payments. The “Preferred Partnership Freezes” talk included some creative ideas, as well as tips to try to make sure the partnership is protected from attack.
- Retirement Plan Accounts, Estate Planning Through an Asset Protection Lens, How to Help Protect Vulnerable Seniors from Financial Exploitation, Non-Tax Developments
The “Retirement Plan Accounts” session discussed the basics of spousal benefit planning. Consider the possible repeal of stretch when not leaving outright to a spouse or when there is no spouse.
- Worldwide Charitable Donations, Tax Considerations for Foreign Persons Owning U.S. Assets, Estate Planning Q&A Panel, Partnership Income Tax Fundamentals
These reports are excellent reads, so look at them instead of what I might have to say.
- SS 1-A Frozen Tasting Menu, Structuring and Drafting Trusts, International Recent Developments, Annual Taxable Gifts Approach
These reports included more on GRATS — including advanced planning strategies to try to get more leverage — and recent developments in disclosure issues in the U.S. and around the world.
- Managing Inherited Art, Planning for Privacy in a Public World, Charitable Giving for Family Business Families, Yes, I’ll Order That Trust “Fully Loaded”
The report on art included very interesting and creative ways to maximize sale price, avoid sales tax, and offset gain on sale. Reading it was a joy. The last report discussed the panel in which I participated, regarding various provisions to include in one’s trust.
- Review of the Past Year’s Significant Fiduciary Cases, Considerations Involving the Financial Exploitation of Seniors, Life Insurance Policy Selection
The report on life insurance is a useful summary, and the materials are excellent, so I recommend it for your reading. I am a big fan of insuring children in case something unexpectedly happens to make them uninsurable (an idea my father gave me). One option is variable universal life, which can be funded modestly before the insured is in a position to save and then can be funded more aggressively later.
- Nuts and Bolts of Private Foundations, Income and Transfer Tax Issues Every Fiduciary Should Know, State Taxation of Trust Income, Impact Investing When Settlors and Beneficiaries Want to Do More Than Make Money
The report on the basics of private foundations is very useful. A private foundation (PF) can be paired with a donor-advised fund (DAF). The PF can provide infrastructure for finding worthy programs and setting terms to grants. One can concurrently fund a DAF, which has much more favorable contribution deduction rules, is much easier to administer, and can be more lightly taxed.
- Considerations for Foreign Persons Owning U.S. Assets, GST Tax
The GST report serves as a good introduction to generation-skipping transfer (GST). What constitutes a GST trust that attracts automatic allocation of GST exemption as a indirect skip can be confusing – even according to those who drafted the language that Congress adopted! Also, remember that the gift tax return does not run the statute of limitations except to the extent that a direct skip is made.
- Protecting the Estate from In-Laws and Other Predators, Fiduciary Income Tax Essentials for Estate Planners, Pressure Points Associated with Sophisticated Estate Plans and How to Deal with Them, Private Foundation Governance and Grantmaking
The report on fiduciary income taxes is a good list of some basic issues. Anyone receiving this email may attend or encourage your colleagues to attend my free webinar February 7, "Fiduciary Income Tax Refresher and Update."
- Planning for Digital Property, Successful Succession, State Taxation of Trust Income — A Closer Look
The report on business succession was a good summary of several nontax considerations. A comment on Graegin loans: Proposed regulations are likely to be issued this year taking away the time value of money benefit of that strategy. The strategy is also difficult to settle with the IRS from a practical income tax perspective, because the recognition of income — without perhaps not getting all of the interest deduction — is painful.
- Lawyers Serving as Expert Witnesses, Strategies and Considerations for Impact Investing, Protecting Yourself from Malpractice Claims and Ethical Issues, The Art of Planning for the Corporate Executive
The panel on Impact Investing included the lawyer who, when at Treasury, promulgated the rules most relevant to the topic, and the professor who was the Reporter for the law governing charitable investments. Over the years, investment experts have figured out how to invest well while investing for good, so this topic is not just a far out idea.
- When to Claim Social Security Benefits, Income Tax Issues Facing Executors
The report on the basis consistency rules is also a good read, for those who have to file those returns. If the estate tax is repealed, this becomes moot for those estates that are not required to file estate tax returns.
Steve Gorin is a nationally recognized practitioner in the areas of estate planning and the structuring of privately held businesses. CPAs, lawyers, trust officers, family office professionals, and financial advisors are encouraged to sign up for Steve’s popular quarterly newsletter, “Gorin’s Business Succession Solutions.”