Estate Planning
Highlghts From The 2014 Heckerling Institute Conference On Estate Planning edit
Tuesday, January 28, 2014 19:00

Tags: estate planning

If you've never attended the Heckerling Institute on Estate Planning, you have been missing out on the best estate planning conference for wealth advisors. Some 2,874 professionals -- accountants, attorneys, bankers, insurance agents and financial planners -- descended on Orlando for this year's conference, the 48th, for a week of continuing education. It's possibly the best networking in the profession.

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Among the highlight topics presented two weeks ago were fundamental programs on:

  • estate planning with an emphasis on asset protection, which my partner, Dan Rubin, and I presented on for three hours
  • an introduction to the law of trusts presented by Harvard Law School's Professor Robert Sitkoff
  • numerous presentations dealing with planning with the new 3.8% surtax and the impact of higher income taxes on estate planning (creating a paradigm shift in how we will plan our client's wealth transfers in the future)
  • representing clients with diminished capacity
  • planning for same-sex couples
  • numerous workshops on planning for the under $10 million estate as well as larger estates, charitable planning, residence issues for state income tax and transfer tax and IRAs and charitable giving. 

It would be difficult to summarize each of the sessions in a brief manner, but I will select some of the highlights and report them over my next few blog posts. Let's start with the topic I presented on.


With the ever-increasing estate exemptions, planning to minimize estate taxes may become less important than maximizing wealth preservation (sometimes referred to as asset protection). Asset protection is more than planning with self-settled trusts. In the estate planning context, it suggests utilizing trusts to the exclusion of outright and mandatory distribution schemes. 

By utilizing discretionary trusts, your clients' wealth will be protected from divorce claims, nursing home impoverishment, bankruptcies and litigation. Too often, planners utilize a formula by which a portion of the inherited wealth is distributed at different ages, such as 25-30-35. We've all seen it. But I believe this could even be malpractice if the options are not fully explored with the client. 


Witness one recent example in my practice where an adult child inherited $20 million at a time when he had personally guaranteed a $25 million debt in a real estate transaction that had subsequently gone under water and he wanted to protect this inheritance. It was too late to do anything at that point since any transfer would constitute a fraudulent transfer, rendering him technically insolvent. If the parent had only left it in trust for him it would have been completely protected. 


Now, sometimes a client may balk at the thought of a trust and its perceived inflexibilities, administrative complexity and costs. But if drafted in a manner that gives the beneficiary significant control (i.e. power to remove and replace trustees, broad powers of appointment, investment powers, etc) such objections should fall by the wayside. 


We also discussed the use of self-settled trusts (sometimes referred to as domestic asset protection trusts or DAPTs) to achieve completed gift transfers while enabling the settlor to remain a discretionary beneficiary. This was described in a private letter ruling in 2009 which is discussed in a detailed articled co-authored by me and available on my firm's website,


If your client has not used their lifetime exclusion of $5,340,000, has assets likely to appreciate in the future but is concerned about giving it away should he suffer financial reversal, using a DAPT would allow him to remove it from his estate while retaining possible access to it should he need it in the future. There are many variations on how to achieve the best structure with the least tax exposure but that goes beyond what we can accomplish in a blog post. So read my article. 


I'll have more from Heckerling next time.


When To Rely On Portability? Answers To This And Other Questions About 2014 Estate Planning Techniques For Financial Planners edit
Friday, December 27, 2013 12:06

Tags: client education | CPAs | estate planning | financial planning

Some questions went unanswered at my recent webinar about estate planning techniques financial planners need to know about as 2014 begins. Below are answers to questions from attendees about when portability might be relied upon, the use of non-grantor trusts, and the disposition of digital assets at death.

(You can replay this webinar 24/7 and receive CFP, CIMA, CPWA, and CIMC continuing education credit, if you’re an A4A member, which costs $60 annually.)   

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When To Rely on Portability
Doesn't using portability allow for very low-basis assets to gain the advantage of the step-up in basis rules—of course, at the cost of the potential growth of the assets over time? Are there then not good reasons to rely on portability versus a Credit Shelter Trust.
You can achieve portability by using a marital QTIP trust and still achieve asset protection. Other good reasons are set forth on the last slide of my presentation, which is presented above
Can you gift out of a Roth IRA within the first five years established into some trust?
If you already are 59½ and you convert traditional IRA assets to a Roth, you can withdraw the assets you convert at any time without worrying about a five-year deadline or penalties. Again, it is a different story with any earnings on those assets: You must have held a Roth account for five years to withdraw any earnings tax free. But you generally don't need to worry about separating the converted funds from the earnings, since the withdrawal rules for Roth IRAs say that any distributions first come from contributions, then from conversions, and finally from earnings. As for a transfer to a trust, you may be able to transfer to a grantor trust but I suggest a PLR for this as it can be tricky.
Can I designate, in my will, who will own the rights to my digital assets? For example some digital assets will belong to my children and some will belong to my company.
Yes, but subject to the Internet Service Provider agreement
Do you help in giving second opinion on trusts?
Yes, please contact me.


Disposition Of Digital Assets At Death Presents A New Challenge For Financial Professionals; Uniform Law Commission Is Developing Model Legislation For Fiduciaries edit
Sunday, December 15, 2013 13:54

Tags: estate planning | fiduciaries | privacy; security

If you’re making car or mortgage payments online and die, what happens? What if no one knows your passwords? After you die, who is entitled to access your photos, personal journal, and Facebook account?

At an Advisors4Advisors webinar on Friday, Gideon Rothschild, chair-elect of the American Bar Association Real Property Trust And Estate Planning Section, warned financial advice professionals about a long list of thorny new legal issues that are cropping up surrounding an disposition of digital assets upon death. He urged practitioners to educate their clients about these estate planning issues that did not exist a decade ago.

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As an example of the issues financial planning practitioners must be prepared to deal with, Rothschild said that even if an individual has a decedent’s user name and password, a user agreement from could make it a criminal offense to log into the account. Meanwhile, Yahoo!’s user agreement, Rothschild says, allows deletion of an account upon presentation of a death certificate.


"Only with proper planning can we avoid disclosing secrets people want to maintain," Rothschild said.


Rothschild's remarks serve as a cautionary tale to fiduciaries, who are facing new professional responsibilities because digital assets have proliferated over the last decade as social media popularized Internet usage.

An executor of a will who logs into a decedent’s online accounts could be prosecuted criminally under the federal computer fraud and abuse law, Rothschild said, alluding to cases in which Facebook and’s user agreements were violated.
Eight states have adopted their own law on the disposition of digital assets, and the Uniform Law Commission is drafting model legislation for states to consider adopting, Rothschild said. The Commission is specifically focused on drafting a model law for states that will vest fiduciaries with at least the authority to manage and distribute digital assets, copy or delete digital assets, and access digital assets.


The disposition of digital assets was one of four topics Rothschild taught advisors about at Friday’s A4A webinar. Rothschild also spoke about:
  • last-minute tips about year-end estate planning that financial advisors should be speaking about with clients and communicating over social media about right now.
  • DINGs, NINGs, and WINGs, which are non-grantor trusts that have become a timely topic because of a recent IRS private letter ruling (PLR 201310002).
  • practical considerations for financial planning practitioners in addressing portability of a deceased spouse’s estate tax exclusion.
You can see a replay of Rothschild's webinar and get CFP, CPA, CIMA, CIMC, CPWA continuing professoinal education credit on our weekly webinars for financial fiduciaries, if you are an Advisors4Advisors member ($60 a year).
A4A members can also downlaod a free Digital Asset Inventory Questionnaire to begin to assist clients with planning the disposition of their digital assets upon death. If you're logged into A4A, click on the "View Public Profile" and then on the tab for "Rewards." Click on Premium Content link in red to get download the questionnaire. 
Rothschild, who has agreed to speak quarterly at A4A webinars, received a very high rating from attendees of 4.7 and their reviews are below:
  • Excellent estate planning overview
  • Great particularly on the digital assets
  • Very nice presentation by the speaker and his legal analysis is solid and makes sense. I think some of the material covered may be beyond the scope of a smaller advisor practice, but it's better to present more rather than less as it challenges the listener/viewer of the webcast to learn and understand new concepts and ideas.
  • Very good although some of the strategies were very specific for a small number of clients--although things he probably deals with every day.
  • Excellent overview of recent estate planning changes. Especially likes the Digital Assets ideas - which I will now share with my clients. The portability pros + cons were nicely laid out - again - very useful to share with clients. Please invite Gideon back soon - to delve into more depth various estate planning ideas. Would especially like hearing more about DINGS + how to better apply them to client situations.
  • Lots of great info-hadn't thought about the digital stuff.
  • Very good.
  • Excellent!
  • Best seen to date.
  • Well done & digital storage questionnaire will be helpful
  • Wow! Great presentation. Thank you for bringing Gideon to speak to us. I would like to have him come back to talk about asset protection.
  • Very good...
  • Excellent review of digital assets and what should be done with them
  • The information was good overall. A portion wasn't relative to my particular clientele, but I appreciated getting an update of the information nonetheless.
  • Good stuff
  • Excellent
  • Some good nuggets of information. Presenter covered a lot of detail that will be difficult to remember, but not sure how you get around that with this topic.
  • The section on digital assets made it well worth attending today's session. Valuable information. Things most people have not thought about.


You Don't Have To Spend A Ton On A Funeral, Says An Industry Insider edit
Tuesday, June 04, 2013 13:08


For advisors who don’t think they’re business is being disrupted, this should be a real eye-opener—forgive the pun: The director of the Funeral Consumers Alliance recently posted about to get a “send-off” that fits your taste and budget.
Joshua Slocum, who leads FCA, “a nonprofit organization dedicated to protecting a consumer's right to choose a meaningful, dignified, affordable funeral,” offers a breezy read into planning a funeral, and the information is, well, to die for.
Slocum says a funeral doesn't have to cost $10,000, and cites a federal law saying funerals homes must give price quotes by phone, give you a printed, itemized menu of prices right at the beginning of any talk about arrangements, and accept a casket you bought elsewhere or made yourself without charging a fee.
“Except for folks who have to "spend-down" to qualify for Medicaid, prepayment isn't usually in your best interests,” says Slocum.
While the cost of a funeral is something advisors should know about, the post illustrates how even the most taboo businesses are being disrupted by the transparency of the Web. Fopr financial advisors who don't see that happening are in denial.
And, by the way, please let me know if you would like Slocum as a speaker at one of our webinars. 


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Urgent 2012 Year-End Tax Planning Opportunity: Charitable Remainder Trusts And 3.8% Surtax edit
Monday, December 03, 2012 13:45

Tags: charitable giving | estate planning | trusts


The U.S. Treasury Department Friday issued proposed regulations for the 3.8% surtax, creating an urgent and immediate planning opportunity for existing charitable reminder trusts (CRTs). 

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Proposed. Regulation Section 1411-3(c)(2) addresses the application of the surtax to charitable remainder trusts. Under Internal Revenue Code Section 664, charitable reminder trusts are taxed under the four-tier accounting rules. 


While CRTs are exempt from the new 3.8% surtax, distributions of post-December 31th, 2012 net investment income will be subject to the 3.8% surtax.


In other words,, distributions of income and capital gains realized and recognized before  December 31th, 2012 will not be subject to the surtax.


Accordingly, harvesting gains and income in calendar year 2012 will likely reduce the surtax burden on future CRT distributions. Likewise, deferring losses and expenses until 2013 will also reduce the tax burden on distributions.



  1. Harvest long-term capital gains in 2012
  2. Accelerate interest, dividends and other income into 2012
  3. Defer harvesting losses into 2013
  4. Defer expenses into 2013



The Smith CRT has a total value of $2,800,000; including accrued interest of $75,000 and unrecognized gains of $325,000 and unrecognized losses of $100,000.  The total of the income, gain and losses totals $500,000 (on a gross basis).   By harvesting the gains and income and by deferring losses the trustee shifts gain and income into 2012 and defers substantial losses into 2013.   The net savings will be 3.8% of $500,000 for a total saving of $19,000.



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