New Legislation Prohibits Tax Strategy Patents

By bmalec | October 7, 2011

In the 1998 decision of State Street Bank & Trust Co., v. Signature Financial Group, Inc. 149 F.3d 1368 (Fed. Cir. 1998), the Circuit Court of Appeals for the Federal Circuit opened the door to obtaining patents on tax strategies when it generally held that business methods were patentable.  Although State Street did not specifically…

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Fed Up with the QTIP Trust? Tax Results of Terminating QTIP Trust

By bmalec | September 9, 2011

Many of today’s modern estate plans employ a marital trust under Code sections 2056(b)(7) or 2523(f) known as a QTIP trust (QTIP stands for Qualified Terminable Interest Property).  This is a trust which grants a life income interest to spouse and upon his or her death, named beneficiaries receive the remainder.  The property funding the…

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Disclaimer Planning During Uncertain Tax Times

By bmalec | April 27, 2011

The Economic Growth and Tax Relief Reconciliation Act of 2001 incrementally raised the federal estate tax applicable exclusion amount (“exclusion amount”) from $675,000 to $3,500,000 over a decade, ending with a full repeal in 2010. Now we have The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 setting the exclusion amount at…

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Florida Homestead Planning

By bmalec | March 28, 2011

There are many benefits under Florida law applicable to a Florida resident’s primary residence, also known as the resident’s “homestead.” This includes protection from general creditors, ad valorem tax benefits (i.e., homestead exemption and “Save Our Homes” protection) and rights of a surviving spouse (assuming he or she has not validly waived such rights in…

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Cancellation of Life Insurance Policy Results in Taxable Income

By bmalec | March 14, 2011

In Sanders v. U.S., T.C. Memo 2010-279, petitioner purchased a whole life policy in 1979 and paid premiums until March 2006. The policy allowed petitioner to borrow up to the policy’s cash value, using the policy as security. Interest accrued on the loans at 8%. By its terms, the policy terminated if any unpaid loan,…

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IRS Responds to ABA Comments to Draft Form 8939

By bmalec | March 11, 2011

On January 31, 2011, the Real Property, Trust & Estate Law Section of the ABA submitted comments to the IRS on the draft Form 8939 released by the IRS on December 16, 2011. Robert Chapman of the IRS Forms Desk responded a week later. Here are a few highlights from the IRS response. 1. Due…

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Asset Protection QTIP Trusts

By bmalec | March 1, 2011

Section 736.0505, Florida Statutes, provides that a settlor’s creditors may reach the assets of a trust created by the settlor for his or her own benefit, a so called “self-settled” trust. New Section 736.0505(3), however, allows married couples to create irrevocable qualified terminable interest property (“QTIP”) trusts to achieve their asset protection, estate planning and…

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