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A summary of articles appearing in the January 2008 issue of Trusts and Estates magazines.


Adding whole new meanings to the word “supermodel,” Kate Moss posed in a rather advanced yoga position for Marc Quinn’s monumental sculpture “Myth (Sphinx),” which measures nearly 10 feet high and is made of bronze with a white finish. The Moss piece is among a group of monumental works presented at Sotheby’s “Beyond Limits” auction and was part of “A Selling Exhibition of Modern and Contemporary Sculpture,” which ran from Sept. 8, 2007, to Nov. 4, 2007, at Chatsworth House in Derbyshire, England. The Sphinx sold privately for an undisclosed amount. (Cover Image: Courtesy of Sotheby’s)


Tax Law Update
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports on discounting the full amount of a company’s unrealized gains (Estate of Jelke III), medical expense deductibles (Revenue Ruling 2007-72), and disallowing a discount for family limited partnership assets (Estate of Rector).

Selector Power
David T. Leibell and Daniel L. Daniels, partners in the Stamford, Conn., office of Wiggin & Dana LLP report on Private Letter Ruling 200747001, in which the Internal Revenue Service concluded that the selector power was sufficient to cause grantor trust status in this case.

For Business Owners
Steven B. Gorin, partner in the St. Louis office of Thompson Coburn LLP announces the release number of a private letter ruling obtained for a client and featured in the Trusts & Estates September 2007 issue. It’s the first time the Service approved a premium-splitting mechanism to fund the purchase of life insurance.


Where We Are Now In . . .

Estate Planning: The Changing Face of Compliance
By Roy M. Adams

We’ve lived with Circular 230 for two years now and the experience is regrettable. Circular 230 requirements have increased the cost of tax opinions almost tenfold. Worse: Circular 230 puts wealth advisors busy representing clients in tax matters in the position of, at the same time, representing the government’s interests. The feds have in effect deputized practitioners—putting them in direct conflict with their clients.

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

The Fiduciary Professions: Hope
By Gail E. Cohen

Fiduciaries have been chewing on three major issues that threaten to choke them: state courts’ misinterpretation of portfolio diversification requirements; the Internal Revenue Service’s stance that trusts cannot fully deduct investment advisory fees; and compliance requirements of the U.S. Patriot Act. At long last, there may be relief on the first two problems.

Gail E. Cohen is general trust counsel and head of global wealth management at Fiduciary Trust Company in New York. She is also chair of the Trusts & Estates fiduciary professions committee.

Philanthropy: Positive Social Change
By Karen H. Putnam

Does the most successful social change come from the top down or the bottom up? What works best: American not-for-profits’ “top down” approach, in which they raise funds to underwrite what they determine to be solutions to social needs? Or is microfinance’s “bottom up” approach better, in which institutions raise money that gets channeled directly to individuals who then implement their own solutions to their own problems?

Karen H. Putnam is the director of Philanthropic and Family Wealth Stewardship Services at Bessemer Trust in New York. She’s also a member of the Trust & Estates philanthropy committee.

Insurance: Lessons Learned, Now What?
By Charles L. Ratner

Traditional planning is largely falling by the wayside. Too many planners believe it’s too labor-, people- and technically intensive a way to do business and sell insurance. Instead, they’re targeting the current liquidity need and offer a “pre-programmed, tax-packaged sale du jour.” Indeed, for some clients, the life insurance policy IS the plan. That approach is not always best, but for some clients, it can work extremely well.

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

High Net Worth: What the Wealthy Really Want
By Sara Hamilton

A focus group of 12 wealth owners from families with assets in excess of $100 million divulged what they really want: More financial education and peer networking for themselves and all their family members. So here’s how can advisors of all types can respond.

Sara Hamilton is founder and chief executive officer of the Family Office Exchange in Chicago.

Asset Protection: The United States Of Asset Protection
By Gideon S. Rothschild and Marlene Soukavanitch

Asset protection is growing ever more popular—and permanent. In 2007 alone: asset protection poster boy Stephen Lawrence finally walked free. Two more states adopted laws permitting self-settled trusts, while other states refined their laws. And courts in Florida and New York stymied creditors.

Gideon S. Rothschild is a partner and Marlene Soukavanitch is an associate at Moses & Singer LLP in New York. Rothschild is also a member of the Trusts & Estates advisory committee on estate planning and taxation.

Investments: It Doesn’t Take a Crystal Ball
By Michael E. Lewitt

The markets were a mess in 2007 and, make no mistake, 2008 won’t be pretty. Still, there are some positive signs and opportunities. Economic growth outside the United States remains robust. Meanwhile, in the United States, the financial and regulatory authorities will fight to avoid the worst consequences of the collapse of structured mortgage finance. Investors will continue to enjoy opportunities on both the long and short sides of the markets. But everyone is going to need to tread carefully and manage risk expertly in a highly volatile, emotionally fragile environment.

Michael E. Lewitt is president of Hegemony Capital Management, LLC, in Boca Raton, Fla. He’s also a member of the Trusts & Estates investment committee.

Elder Law: Whew!
By Bernard Krooks and Michael Gilfix

After years of new federal laws to restrict people’s access to needed public benefits and ability to protect their remaining assets, the best thing we can say of 2007 is that another such law was not added to the pile of woe. So we can catch our breath, sort of and look at other national issues worth noting, including the validity of caregiver agreements, and the ability to change testamentary trusts into special needs trusts.

Bernard A. Krooks is a partner at Littman Krooks LLP in New York and a contributing in editor for Trusts & Estates on elder law. Michael Gilfix is a partner at Gilfix & LaPoll Associates in Palo Alto, Calif.

Valuations: The Feds Carry a Bigger Stick
By Radd L. Riebe

Case law in 2007 slammed taxpayers, possibly ending the era of the family limited partnership. New rules ratcheted up penalties and sanctions against tax preparers and appraisers. But amidst all this harshness, there’s hope.

Radd L. Riebe is managing director in the Valuation and Financial Opinions Group at Stout, Risius Ross, Inc. in Cleveland. He is also chair of the Trusts & Estates valuation committee.

Retirement Benefits: Count Our Blessings
By Michael J. Jones

From rules requiring plans to permit inherited individual retirement accounts to private letter rulings showing mercy to surviving spouses, 2007 was a very good year. Here’s why.

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



Paying for the (Grand) Kid’s Education
By Sharon L. Klein

Rising tuition for college education is a daunting reality for many parents. Even the very wealthy prefer to pay for higher education in the most tax-efficient manner. There are a number of educational funding options to explore and integrate into financial and estate plans. Often, a combination of techniques yields the most advantageous results.

Sharon L. Klein is senior vice president, trust counsel and director of estate advisement at Fiduciary Trust Company International in New York.

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