A summary of articles appearing in the November 2007 issue of Trusts and Estates magazines.

In this month's magazine:


Circular 230 Clamp Down
David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports that the Treasury Department has issued proposed amendments to Circular 230 that essentially say, “Yes, this applies to you. And your advice better meet a pretty high standard.” This tightening of the Circular 230 noose is scheduled to take effect in 2008.

Breakthrough To Benefit Charities
David T. Leibell and Daniel L. Daniels, partners at Wiggin and Dana LLP, in Stamford, Conn., report that the Internal Revenue Service finally has seen a charitable life insurance strategy that it likes. The life insurance industry has been working for years to create strategies that would enable donors to find money to pay premiums for a life insurance policy on their lives that is owned by the donors’ favorite charity. Congress and the IRS have shot down most of these attempts. Now, the industry may have hit pay dirt.



New Technique For Same-Sex Couples
By Michael P. Spiro

Because the federal government doesn’t recognize same-sex marriages, such couples often face significant estate tax burdens. Author Michael P. Spiro has developed the “split remainder sale” (SRS) technique, based on the premise that a transfer at death of a future interest in real estate carries a lower tax liability than the transfer of a present interest. Two added bonuses: it potentially could be used by unrelated heterosexual couples who own property in common, and could be applied to the ownership of brokerage accounts or other tenants-in-common property. But take note: to date, the SRS is untested.

Michael P. Spiro is an attorney at Flaster/Greenberg P.C. in Cherry Hill, N.J.

Long Live the GRAT
By Jonathan J. Rikoon, Cristine M. Sapers and Naftali T. Leshkowitz

When appropriate, estate planners love to recommend grantor-retained annuity trusts (GRATs). Properly designed, they can transfer future growth in value to family beneficiaries free of gift tax risk. The Internal Revenue Service recently proposed regulations that make GRATs even more adventageous to clients, by reducing the risk associated with a grantor dying before the term of a long-term GRAT expires. The new regs apply to a wide variety of trusts with a retained grantor interest, including grantor retained unitrusts (GRUTs), charitable remainder trusts (CRTs) and qualified personal residence trusts (QPRTs). And they also may have some impact on other arrangements.

Jonathan Rikoon is partner and chair, and Cristine M. Sapers and Naftali T. Leshkowitz are counsel in the Trusts and Estates Department of Debevoise & Plimpton LLP in New York.


There’s an IRA Trap in Community Property States
By Michael J. Jones

Federal laws won’t stop a deceased spouse from making a bequest of a community property (CP) interest in an individual retirement account. But for clients who’ve ever lived in one of 10 CP states, there could be trouble: The IRA of the surviving spouse could end up in the hands of someone other than the surviving spouse, and the surviving spouse could get stuck with the income tax bill when distributions are made to the beneficiaries. With appropriate planning, these twin disasters can be avoided.

Michael J. Jones is a partner at Thompson Jones LLP in Monterey, Calif. and an advisor on Trusts & Estates’ retirement benefits committee.


Your “Marauders Map”
By Timothy H. Throckmorton, Stephen Hodsen and Melissa N. Previte

Daunted by the complications of testamentary funding and the administration of charitable trusts? Funding a split-interest charitable trust can be wrought with complications because of the logistics involved. Here’s how to navigate through the maze of requirements.

Timothy H. Throckmorton is a chief trust officer and vice president, Stephen Hodsden is a senior trust officer and vice president, and Melissa N. Previte is a trust officer and assistant vice president with Merrill Lynch Trust Company in Pennington, N.J.



Going to Live Abroad
By Edward J. Finley, II

Increasingly, many clients are spending time outside their home country. You’ll need to advise them about a host of income tax issues—even before they step foot on foreign soil. Here’s a guide.

Edward J. Finley, II, is a senior banker at JP Morgan Private Bank in New York. He’s also a contributing editor for Trusts & Estates magazine.

Save U.S. Beneficiaries From Tax Disaster
By Dina Kapur Sanna

Planning after a grantor dies is never as good as planning long before that day. But there’s a lot that can be done post-mortem to reverse, or at least mitigate, unintended consequences to U.S. taxpayers. Here are some strategies—and some examples.

Dina Kapur Sanna is a partner at Day Pitney in New York.

When Your U.S. Trust Accidentally Becomes a Foreign Trust
By Carolyn F. Devore

It’s common for non-U.S. citizens who live and work in the United States to create U.S. wills and revocable trusts. This makes sense for estate planning purposes. But here’s the rub: Certain actions, like choosing a foreign trustee, could classify these trusts as “foreign trusts.” And there’s a host of income tax complications that will ensue. Find out the consequences and some proposed solutions.

Carolyn F. Devore is a partner in the Trusts & Estates, Tax and Nonprofit Organizations departments at Pullman & Comley LLC in Westport, Conn.

TAGS: Research
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