QTIP Termination 3 Years Before Death May Increase Estate Tax
We previously posted on the gift tax implications of terminating a Qualified Terminable Interest Property Trust (“QTIP”) before the death of the surviving spouse (“spouse”). To recap, a termination of a QTIP trust whereby the spouse relinquishes his or her entire interest in the trust gives rise to taxable gifts by the spouse under Code [...]
Wandry v Commissioner: Tax Court Blesses Use of Defined Value Formula Clause
In an extremely important taxpayer victory, the United States Tax Court issued a memorandum opinion upholding the use of a defined value formula clause to fix the value of the donor’s gift for federal gift tax purposes. Wandry v. Commissioner, T.C. Memo 2012-88 (March 26, 2012). This type of formula clause is intended to prevent [...]
Undue Influence and the Carpenter Factors: Courts Rely on More than the Original Seven
This post is from our good friend in Dean Mead’s litigation department, David P. Hathaway. In probate litigation, parties might contest the validity of a will or trust by arguing that the decedent was unduly influenced by a substantial beneficiary when the will or trust was made. To prove undue influence, one must demonstrate that [...]
Community Property in Florida – A Primer
In Florida, many clients and their attorneys do not consider the effect of community property laws on estate planning or estate and trust administrations. Many clients come to Florida from other states and countries in which they have acquired community property. These clients, and their attorneys, need to identify any community property and carefully consider [...]
Swiss Adopt Banking Protocol Allowing U.S. to Request Information
On March 5, the Swiss parliament adopted an amended ratification of the 2009 Protocol to the Swiss-US Income Tax Treaty. The protocol was signed by United States and Swiss tax officials on September 23, 2009 to allow a greater tax information exchange between the countries in the aftermath of the UBS tax evasion controversy and [...]
Just Say No; What Happens When The Trustee Refuses To Cover The PR’s Notice Of Insufficiency?
The use of a revocable trust to avoid probate is a standard estate planning technique. What happens when the decedent dies with no probate estate, but had assets held in a revocable trust and debts owed to creditors? We know that the personal representative (PR) can seek contribution of assets from the revocable trust to [...]
Foreign Financial Assets, Form 8938 Instructions
At the beginning of 2011, we posted about the new reporting requirement for certain individuals who own foreign assets over a certain threshold. For tax years beginning after March 18, 2010, citizens, resident aliens and certain nonresident aliens with specified foreign assets with an aggregate value exceeding the threshold must file the new Form 8938 [...]
Low Interest Rates – The Good and Not-So-Good Planning Opportunities
The IRS issues every month a “7520 rate” (named after the code section to which it relates) which is used as an assumed rate of return to measure the values of gifts in certain advanced estate planning techniques. The 7520 rate for March is at a historically low 1.4%. Generally, many estate planning techniques succeed [...]
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