MAY 2007

MAY 2007

This is a listing of the articles in this issue. Subscribers have access to complete the complete text. Click here to search archives.


Spring is here, love is in the air and two women dance on our cover in Henri de Toulouse-Lautrec’s “Au Moulin Rouge: L’Union Franco-Russe” (1897). This print sold for $424,008 (216,000 GBP) on March 28, 2007, at Christie’s “Old Master, 19th Century, Modern and Contemporary Prints” auction in London.

Limited-edition prints are a relatively affordable way to own works of art, even by the most famous artists. The reason the price of this Lautrec shot high is because it’s from a 20-print edition and the continued existence of eight of those prints is uncertain.

While this Lautrec print is rare, the artist’s depiction of lesbians was not. Throughout the 1890s, he portrayed intimate scenes of female couples in bed or embracing on divans. As the decade progressed, he showed couples in more public locations, including the bars of Le Hanneton and La Souris and, as shown here, the dance halls of Le Moulin-Rouge.


Tax Law Update

David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports on recent case law, with these findings:

• Estate of Hester v. United States: assets improperly held by decedent includible in estate;

• Estate of Henson v. United States: no deduction for children for payment to Muppet master’s spouse under settlement agreement;

• Estate of Goldstein v. United States: estate’s payment was a deposit entitled to refund; and

• Estate of Roski v. Commissioner: Internal Revenue Code Section 6166 does not require bond or special lien in every case.


Defined-Value Clauses

By David G. Shaftel

Whenever a client wants to cap gift tax exposure, planners should consider using a defined-value clause implemented by use of an escrow trust. But proper implementation may be crucial to judicial acceptance. Careless use creates confusion with respect to basic state law property ownership concepts. Worse, without proper implementation, a defined-value clause in operation can appear dangerously similar to price-adjustment clauses, which already are judicially condemned.

David G. Shaftel is a partner in Shaftel Law Offices, P.C., in Anchorage, Alaska. He is involved in Alaska’s development of new estate-planning vehicles and participated in the drafting of Alaska’s new trust legislation. Shaftel has authored numerous articles about Alaska’s self-settled discretionary spendthrift trusts, family limited partnerships, family limited liability companies and Alaska’s optional community property system.


Practice Professionally: Ethics Matrix 2007

By Andrew Wilusz and the ethics committee of the Philadelphia Estate Planning Council

Clearly, it’s not just good for us spiritually, it’s also good business to keep up-to-date on the latest nuances in professional rules for advisors involved in wealth management and estate planning. It’s also smart to take an extra serving, to be aware not only of the rules governing one’s own profession, but also those for professionals with whom you might be dealing. Almost 10 years ago, the ethics committee of the Philadelphia Estate Planning Council (PEPC) poured over codes of professional behavior and identified five common areas of regulation: confidentiality, conflicts of interest/disclosure, compensation, competency and compliance. The PEPC presented its findings in a matrix, which Trusts & Estates first published in 1998 and later in its revised form in June 2004. Here, we present the most current matrix from the PEPC ethics committee. It summarizes codes of conduct for professionals practicing in the field of estate planning, including lawyers, accountants, financial planners, insurance agents, appraisers, trust officers, planned giving specialists and investment advisors.

Andrew Wilusz is the director of mergers and acquisitions at Value Management Inc. in Newtown, Pa. He is a member of the Philadelphia Estate Planning Council and is the chairman of its ethics committee. The 24 other members of the ethics committee who helped develop this matrix are listed on p. 37 of the article


Today’s Split Dollar

By Lawrence Brody and Charles L. Ratner

The final split-dollar regulations that were effective as of Sept. 17, 2003 became the operative guidance for arrangements that either were implemented or modified after that date. Despite the complexity of the regulations, clients still can use split-dollar plans to efficiently finance the premiums for substantial amounts of life insurance. Here is a guide for planning such arrangements that are subject to the final regulations.

Lawrence Brody is a partner in the private client group at Bryan Cave LLP in St. Louis. He is an adjunct professor at Washington University School of Law and a visiting adjunct professor at the University of Miami School of Law. He focuses his practice on estate planning for high-net-worth individuals and the use of life insurance in estate and non-qualified deferred compensation planning. He has authored two BNA tax management portfolios two books for the National Underwriter Company and is a frequent lecturer. He is a fellow of the American College of Trust and Estate Counsel and the American College of Tax Counsel.

Charles L. Ratner is the Cleveland-based national director of personal insurance counseling at Ernst & Young LLP. He is vice chair of the Trusts & Estate’s advisory board and chair of its insurance committee. In addition to articles for >Trusts & Estates, Ratner is published with the American Bar Association, Commerce Clearing House, and Best’s Review. He also is contributing editor to Ernst & Young’s Financial Planning Reporter and a contributing editor on the American Bar Association’s Insurance Counselor Series.

Life Insurance in Qualified Plans

Many people have turned to qualified plans to purchase life insurance because of asset protection and the tax benefits involved. Business owners in high tax brackets particularly like the fact that life insurance premiums in qualified plans are tax deductible. But while such plans are sometimes a good idea for business owners, sometimes they’re not. Advisors must be aware of the negatives and positives of placing life insurance in a qualified plan so they can decide what’s best for each client. A guide.

Carolyn Lloyd-Cohen is a principal at Carolyn Lloyd-Cohen LLC/Preferred Pensions LLC in Clifton, N.J. She serves on the board of The Estate Planning Council of Bergen County, is a past director of The Estate Planning Council of New York City and presides over continuing professional education courses for certified public accountants. She is also a member of the Bergen County District II-A Ethics Committee.

Still Nervous About That Insurable Interest

By Robert B. Barnett, Jr. and Jessica K. Vllasi

For years, advisors have gone blissfully along in their planning for families and business owners, devising wonderfully helpful trusts and solving liquidity needs with the use of life insurance. Then, two years ago, Chawla v. Transamerica Life Insurance Company, suddenly made everyone worry about whether all trusts can own life insurance. In response, states have been adopting new laws and practitioners have been asking for waivers to protect policyowners. A look at where we are today and what can be done for clients in the shadow of Chawla.

Robert B. Barnett, Jr. is managing partner at Carlile Patchen & Murphy LLP in Columbus, Ohio, and a fellow of the American College of Trust and Estate Counsel. He serves as a member of the board of governors of the Estate Planning, Trust and Probate Law Section of the Ohio State Bar Association. His specialties include family business law, closely held business law, taxation, estate planning, probate and employee benefits.

Jessica K. Vllasi is an associate at Carlile Patchen & Murphy LLP in Columbus, Ohio.

Handle With Care

By Bruce A. Tannahill

With more clients using non-qualified deferred annuities in their retirement planning, practitioners must factor in these unique financial products, taking into account their opportunities and traps, including the risk of double taxation. Here, author Bruce A. Tannahill explains how these plans work and how you can maximize the value of these plans through effective estate planning.

Bruce A. Tannahill is vice president of business and estate planning at Western Reserve Life Assurance Co. of Ohio in St. Petersburg, Fla. He has published articles on income and estate tax planning and is an active speaker before professional groups. He is second vice president of the Tampa Bay chapter of the Society of Financial Service Professionals, chair of the 2007 Life Insurance Marketing and Research Association Advanced Sales Forum, co-chair of the American Bar Association’s Real Property, Probate & Trust Section’s continuing legal education committee, and a representative to the Synergy Summit, a group of seven major financial and legal services organizations.



By Michael J. Jones

If an individual retirement plan fails to make required minimum distributions for any reason, there’s a 50 percent tax on the shortfall. Luckily, the Internal Revenue Service can waive the tax, but you have to know what to do. Here, amidst spotty guidance, author Michael J. Jones sheds some light.

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

TAGS: Research
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