JANUARY 2007

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Auction houses often proclaim record breaking sales. But Christie’s Nov. 8, 2006 “Impressionist and Modern Art Evening Sale,” in New York on Nov. 8, 2006, truly was. The total haul was close to half a billion dollars, setting a new record for any auction. The evening also set nine new world auction records for artists Paul Gauguin, Ernst Ludwig Kirchner, Gustav Klimt, and Egon Schiele.
Featured on the cover is Kirchner’s double-sided painting, which has both “Berliner Strassenszene” (shown) and “Baume” (on the reverse side) and set a world auction record by selling for $38.096 million. Among the other works highlighted in this issue are:

  • Schiele’s double-sided painting “Einzelne Haüser” (“Haüser mit Bergen”) (recto); “Monk I” (fragment; verso) (1915) sold for a world auction record for the artist at $22.416 million.
  • Klimt’s “Houses at Unterach on the Attersee” (1916) sold for $31.376 million.

  • Pablo Picasso’s “Plant de tomates” (1944) sold for $13.456 million.

  • Klimt’s “Birch Forest” (1903) sold for $40.336 million.

BRIEFING


Tax Law Update
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports on:
  • Korby—The U.S. Court of Appeals for the Eighth Circuit affirmed the Tax Court’s decisions in Estate of Austin Korby v. Commissoner, and Estate of Edna Korby.
  • QFOBI deduction denied—In Estate of Ronald G. Keeton v. Comm’r, the Tax Court held that the decedent’s estate was not entitled to the qualified family-owned business interest deduction, because it didn’t satisfy the requirements of Internal Revenue Code Section 2057(b)(1).
Charitable Giving
David T. Leibell and Daniel L. Daniels of Cummings & Lockwood in Stamford, Conn., report on:
  • Private Letter Ruling 200649027—Internal Revenue Service disallowed modification of charitable remainder trust, because it was not necessitated by a scrivener’s error.
Correction
Credit were credit is due for Daniel Mielnicki’s December article, “Lillie Rosen Revisited.”

SPECIAL REPORT: TAKING STOCK


Estate Planning & Taxation: Burdens
By Roy M. Adams

Compliance and disclosure requirements have increased dramatically, adding to the growing burden of estate planners’ duties—and the cost to those whom they serve. Not only did the Internal Revenue Service issue Circular 230, but also the Pension Protection Act of 2006 upped the ante on disclosure by charities. On top of that, many uniform trust code states have given beneficiaries of trusts in their jurisdictions rights to information that would cause most settlors to faint.

Roy M. Adams is a managing member of Constantine Cannon, Roy M. Adams and Associates PLLC in New York. He also is chair of the Trusts & Estates’ advisory board.

Insurance: Keep Up With Your Clients
By Charles L. Ratner

Even your rich clients are worried about creating income streams they can’t outlive. And many are turning to annuities to generate an income stream. They are also turning to cash value life insurance to help them maximize other expected sources of cash flow for their golden years. Planners must learn more about insurance products. After all, it’s easier to ride a horse in the direction it’s already going.

Charles L. Ratner is national director of personal insurance counseling at Ernst & Young, LLP in Cleveland, Ohio. He’s also vice chair of the Trusts & Estates’ advisory board.

Philanthropy: Role Models
By Karen H. Putnam

Warren Buffett broke new ground by giving billions to Bill Gates’ private foundation. Both men have still left a lot of ground for other philanthropists to cover. Expect other donors to work on a more human scale and to partner in other ways. A look at the possibilities.

Karen H. Putnam is a principal and director of philanthropy advisory services at Bessemer Trust Company, N.A., in New York. She’s also a member of the Trusts & Estates’ advisory committee on philanthropy.

Fiduciary Professions: A Tense Time for Trust Administration
By Gail E. Cohen Dumont casts a pall and Rudkin sends a chill, and folks fear that the new Democratic Congress will tinker with the capital gains rate.

Gail E. Cohen is executive vice president and general trust counsel at Fiduciary Trust Company International, in New York. She’s also chair of the Trusts & Estates’ advisory committee on fiduciary professions.

Investments: Commodity Link?
By Andrew Parker

Investing in commodities as an asset class has become mainstream. But are investors getting what they expect? The historical pricing relationships in this arena have changed and a passive indexed-approach may no longer be wise.

Andrew Parker is managing director and head of the quantitative strategies group at Bessemer Trust in New York. He’s also a member of the Trusts & Estates’ advisory committee on investments.

High-Net-Worth Families & Family Offices: Seeking Control
By Sara Hamilton

A recent survey of the nation’s wealthiest families finds them hiring an impressive number of advisors, thinking about starting their own private trust companies, interested in energy investments and discussing risk.

Sara Hamilton is founder and chief executive officer of the Family Office Exchange in Chicago. She’s also chair of the Trusts & Estates’ advisory committee on high-net-worth families and family offices.

Retirement Benefits: It Was a Pretty Good Year
By Michael J. Jones

In 2006, new legal developments paved the way for taxpayers, providing them with greater latitude to invest and plan with retirement funds.

Michael J. Jones is a partner at Thompson Jones LLP in Monterey, Calif. He’s also chair of the Trusts & Estates’ retirement benefits committee.

INTERNATIONAL PLANNING

Local Solutions, Global Impact
By Edward J. Finley, II

It’s time all advisors to the wealthy paid more attention to international laws. A lot of nations are passing legislation designed to address local problems, but these “solutions” have implications for clients who have financial interests, residences and family members around the world. A guide to some of the major changes in 2006 and what you can expect in 2007.

Edward J. Finley, II is vice president of JPMorgan Private Bank in New York. He’s also a contributing editor in international planning for Trusts & Estates.

Technology: Be More Efficient

By Donald H. Kelley
There’s constant change and improvements in software and web services for the trusts-and-estates practice. Keeping current requires some effort. To make it easier, we offer this quick guide. Author Donald H. Kelley also helps with a free, monthly newsletter.

Donald H. Kelly is of counsel to Scritsmier & Byrne, P.C. in North Platte, Neb. He’s also author of theTrusts & Estates Technology Review e-newsletter. To subscribe to the free enewsletter, visit www.trustsandestates.com.

Elder Law: Screwed
By Michael Gilfix and Bernard A. Krooks

Even great family fortunes can be compromised by unforeseen medical expenses—not only for the elderly in need of nursing care, but also for younger, disabled relatives who may need decades of extraordinary assistance. A lot of people mistakenly believe that Medicare will help pay for the cost of such care if it’s needed. That just may not be so. Last year saw federal lawmakers push Medicaid out of the reach of a lot of Americans, effectively abandoning many of the nation’s sick and elderly. The courts, however, were more sympathetic.

Michael Gilfix is principal at Gilfix & La Poll Associates in Palo Alto, Calif., and Bernard A. Krooks is a partner at Littman Krooks LLP in New York. Krooks also is a contributing editor to Trusts & Estates.

FEATURES

PHILANTHROPY

Cold Snap for DAFs
By Gerald B. Treacy, Jr.

The Pension Protection Act’s sweeping new rules for donor-advised funds (DAFs) are likely to immediately chill donations to these charitable entities. Even more alarming, the future deductibility of any contributions to DAFs is under a cloud. Author Gerald B. Treacy, Jr., suggests eight steps that donors and DAFs should take to cope with the new rules.

Gerald B. Treacy, Jr., is a partner in the Law Office of Gerald B. Treacy, PLLC in Poulbo, Wash.

ESTATE PLANNING & TAXATION

Perpetual Trust States—The Latest Rankings
By Daniel G. WorthingtonSouth Dakota is number one; Delaware a close second; Alaska and New Hampshire tied for third. What does this mean to practitioners? Ultimately, not that much. What really matters is the constellation of laws in each state that make them work, or not, for clients. A guide.

Daniel G. Worthington is president of the Worthington Consulting Group in Salt Lake City.

TAGS: Research
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