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Planning for Large Estates
Author:
Rapkin, Stephanie G.
(Author)
Practice guide for attorneys working with large estates designed to reduce clients' taxes and save money for beneficiaries.
Publisher: Matthew Bender Elite Products
View other formats
International Order InquiryAnalysis of the latest legal trends, planning notes, illustrative examples, practice forms and tax-saving techniques you need to handle large estates. While estate freezing techniques have been severely curtailed by Congress, planning for large estates continues to be a technically demanding and dynamic area of practice.
Planning for Large Estates is 100% practice oriented. It is specifically designed to meet the needs of attorneys working with large estates. As your practice grows in size and complexity, and as your clients' assets appreciate, this all-inclusive planning guide, updated yearly by an expert practitioner, will grow in value.
Our expanded guide shows you how to reduce your clients' taxes and save money for their beneficiaries. It pinpoints proven tax-saving procedures and takes you through the most effective freeze methods step-by-complicated-step.
This publication zeroes in on the most effective wealth transfer techniques:
• Limited liability companies
• Multi-tier family limited partnerships
• Irrevocable life insurance trusts
• Intrafamily business transfers
• Corporate recapitalizations
• Intrafamily and charitable gifts
• Sales techniques
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Chapter 1 Estate Freezing: Perspectives and Parameters
1.01 Summary of This Chapter
1.02 Estate Freezing: An Overview
1.03 Basic Principles of Taxation
1.04 Impact of Tax Trends on Estate Freezing
Chapter 2 Corporate Recapitalizations
2.01 Summary of This Chapter
2.02 Planning Objectives in Recapitalizations
2.03 Recapitalizations: Defined
2.04 Recapitalizations: Requirements
2.05 Income Tax Considerations: Distributions of Stock
2.06 Income Tax Considerations: I.R.C. Section 306 Stock Defined
2.07 Income Tax Considerations: Disposition of I.R.C. Section 306 Stock
2.08 Income Tax Considerations: I.R.C. Section 304 Stock; Disproportionate Exchanges
2.09 Gift Tax Considerations: In General
2.10 Gift and Estate Tax Considerations: Valuation of Preferred and Common Stock
2.11 Mitigating Gift Tax Exposure: Transfers to Key Personnel
2.12 Estate Tax Considerations: Retention of Voting Rights--The Anti-Byrum Rule
2.13 Estate Tax Considerations: Revocable Transfers
2.14 Case Study: Estate of Salsbury
2.15 Personal Holding Company Alternative: Advantages and Disadvantages
2.16 Drafting the Recapitalization: Design Alternatives
2.17 Drafting the Recapitalization: Rights and Powers of Stock
2.18 Subchapter S Corporations: An Overview
2.19 Subchapter S Considerations in Freezing an Estate
Appendix 2
Chapter 3 Multi-Tier Family Partnerships
3.01 Summary of This Chapter
3.02 Estate Planning Objectives
3.03 Partnership Defined
3.04 Family Partnership Rules: Requirement of Capital Interest
3.05 Partner's Interest in Profits
3.06 Choosing Between General or Limited Partnership
3.07 Capitalization of the Partnership: Tax Considerations
3.08 Allocation of Income and Loss
3.09 Planning the Freeze: Liquidation, Withdrawal, and Conversion Rights
3.10 Gift Tax Considerations
3.11 Gift Tax Considerations: Gifts of Capital and Income
3.12 Estate Tax Considerations: Retained Interests
3.13 Limited Liability Companies (LLCs)
3.14 Drafting Considerations: Sample Partnership Agreement
3.15 Drafting Considerations: Sample LLC Operating Agreement
Chapter 4 Sales Techniques
4.01 Summary of This Chapter
4.02 Overview of Planning Objectives
4.03 Overview of Tax Considerations
4.04 Securing the Seller's Interest
4.05 Installment Sales Arrangements: In General
4.06 Intrafamily Installment Sales: In General
4.07 Intrafamily Installment Sales: Second Disposition
4.08 Intrafamily Installment Sales: Disallowance of Loss Deduction
4.09 Intrafamily Installment Sales: Terms and Conditions
4.10 Intrafamily Installment Sales: Disposition of Promissory Obligation
4.11 Installment Sale to a Defective Trust
4.12 Self-Cancelling Installment Notes (SCINs)
4.13 Internal Design of Self-Cancelling Installment Notes
4.14 Private Annuities: Defined
4.15 Private Annuities: Income Tax Considerations to Annuitant
4.16 Private Annuities: Gift and Estate Tax Considerations to Annuitant
4.17 Private Annuities: Tax Considerations to Obligor
4.18 Private Annuities: Selection of Assets Transferred
4.19 Private Annuities: Sale to a Trust
4.20 Private Annuities: Securing Payment
4.21 Private Annuities for a Term of Years
4.22 Private Annuity Case Study and Form of Agreement
4.23 Sale of Remainder Interests
4.24 Split-Interest Acquisitions
4.25 Restrictive Agreements
Appendix 4
Chapter 5 Intrafamily and Charitable Gift Techniques
5.01 Summary of This Chapter
5.02 Overview of Planning Objectives
5.03 Gifts: A General Analysis
5.04 Gift Tax--Planning for Exclusions and Credits
5.05 Net Gifts
5.06 Installment Gifts
5.07 Marital Gifts
5.08 Family Trusts
5.09 Gifts: Income and Estate Tax Considerations
5.10 Gifts: Selection of Assets
5.11 Interest-Free Loans
5.12 Gift-Leasebacks: In General
5.13 Gift-Leasebacks: Tax Considerations
5.14 Gift-Leasebacks: Design Considerations
5.15 Charitable Lead Trusts: Planning Objectives
5.16 Charitable Lead Trusts: Estate and Gift Tax Considerations
5.17 Charitable Lead Trusts: Income Tax Considerations
5.18 Charitable Lead Trusts: Funding the Trust
5.19 Charitable Stock Bailouts
5.20 Charitable Remainder Trusts
5.21 Pooled Income Funds
5.22 Charitable Remainder Unitrusts: Tax Considerations
5.23 Charitable Trusts--Asset Replacement Through Irrevocable Life Insurance Trusts
5.24 Grantor Retained Income Trusts (GRITs)
5.25 Grantor Retained Annuity Trusts (GRATs) and Unitrusts (GRUTs)
5.26 Irrevocable Life Insurance Trusts
5.27 Incidents of Ownership Held by Insured
5.28 Trustee of Irrevocable Life Insurance Trust
5.29 Taxation of Irrevocable Life Insurance Trusts
5.30 Second to Die Insurance
Appendix 5
Chapter 6 Valuation Considerations
6.01 Summary of This Chapter
6.02 Valuation: In General
6.03 Valuation of Closely-Held Corporation: In General
6.04 Valuation of Intangible Assets of Closely-Held Corporations
6.05 Valuation of Preferred and Common Residual Stock in Closely-Held Corporations
6.06 Methods of Valuation
6.07 Valuing the Business: Capitalization of Earnings
6.08 Valuing the Business: Underlying Assets
6.09 Which Valuation Method Is Best?
6.10 Valuing the Business: Discounts and Premiums
6.11 Corporate "Asset Freeze": Recapitalizations
6.12 Corporate "Asset Freeze": Holding Companies
6.13 Partnership "Asset Freeze"
6.14 Valuing Interests in an Estate "Asset Freeze"
6.15 Characteristics of Frozen Interests
6.16 Valuation of Frozen Interest Using Publicly-Traded Stock
6.17 Characteristics of Frozen Interests: Effect on Value
6.18 Characteristics of Growth or Residual Interests
6.19 Valuation of Residual Interests
6.20 The Limited Life Freeze: An Overview
6.21 Appraiser's Role in "Freeze" Valuations
Appendix 6
Chapter 7 The Mathematics of Estate Planning and Estate Freezing
7.01 Summary of This Chapter
7.02 Purpose of This Chapter
7.03 Measuring the Effects of Estate Tax Planning: Techniques and Problems
7.04 Size of Estate Tax Burden: Client's Perception
7.05 Size of Estate Tax Burden: Simplified Analysis of Unlimited Marital Deduction
7.06 Marital Deduction Planning: Asset Growth
7.07 Marital Deduction Planning: Stepped-Up Basis
7.08 Methods and Costs of Financing Estate Taxes
7.09 Quantitative Effects of Estate Freezing: In General
7.10 Using Gifts to Freeze the Estate
7.11 Mathematics of Using Discounts to Freeze Estate
7.12 Sales to Beneficiaries
7.13 Mathematics of a Traditional IRA
Chapter 8 Valuation of Intrafamily Transfers--the Anti-Estate Tax Freeze Rules
8.01 Summary of This Chapter
8.02 Valuation of Transferred Business Interest and Retained Interest in Trust
8.03 Retained Interests in a Corporation or Partnership
8.04 Valuation of Liquidation Rights Combined With Distribution Rights
8.05 Treatment of Accumulated Distributions
8.06 Exceptions to Valuation Rules
8.07 Avoiding Double Taxation in Transfers of Interests in a Business Entity
8.08 Transfers in Trust to Family Members
8.09 Statute of Limitations on Gift Tax Assessment
8.10 Buy-Sell Agreements
8.11 Lapsing Rights and Restrictions
Appendix 8
Chapter 9 Planning for Unique Circumstances in an Estate
9.01 Summary of This Chapter
9.02 Planning for Pets
9.03 Planning for Gametes
1.01 Summary of This Chapter
1.02 Estate Freezing: An Overview
1.03 Basic Principles of Taxation
1.04 Impact of Tax Trends on Estate Freezing
Chapter 2 Corporate Recapitalizations
2.01 Summary of This Chapter
2.02 Planning Objectives in Recapitalizations
2.03 Recapitalizations: Defined
2.04 Recapitalizations: Requirements
2.05 Income Tax Considerations: Distributions of Stock
2.06 Income Tax Considerations: I.R.C. Section 306 Stock Defined
2.07 Income Tax Considerations: Disposition of I.R.C. Section 306 Stock
2.08 Income Tax Considerations: I.R.C. Section 304 Stock; Disproportionate Exchanges
2.09 Gift Tax Considerations: In General
2.10 Gift and Estate Tax Considerations: Valuation of Preferred and Common Stock
2.11 Mitigating Gift Tax Exposure: Transfers to Key Personnel
2.12 Estate Tax Considerations: Retention of Voting Rights--The Anti-Byrum Rule
2.13 Estate Tax Considerations: Revocable Transfers
2.14 Case Study: Estate of Salsbury
2.15 Personal Holding Company Alternative: Advantages and Disadvantages
2.16 Drafting the Recapitalization: Design Alternatives
2.17 Drafting the Recapitalization: Rights and Powers of Stock
2.18 Subchapter S Corporations: An Overview
2.19 Subchapter S Considerations in Freezing an Estate
Appendix 2
Chapter 3 Multi-Tier Family Partnerships
3.01 Summary of This Chapter
3.02 Estate Planning Objectives
3.03 Partnership Defined
3.04 Family Partnership Rules: Requirement of Capital Interest
3.05 Partner's Interest in Profits
3.06 Choosing Between General or Limited Partnership
3.07 Capitalization of the Partnership: Tax Considerations
3.08 Allocation of Income and Loss
3.09 Planning the Freeze: Liquidation, Withdrawal, and Conversion Rights
3.10 Gift Tax Considerations
3.11 Gift Tax Considerations: Gifts of Capital and Income
3.12 Estate Tax Considerations: Retained Interests
3.13 Limited Liability Companies (LLCs)
3.14 Drafting Considerations: Sample Partnership Agreement
3.15 Drafting Considerations: Sample LLC Operating Agreement
Chapter 4 Sales Techniques
4.01 Summary of This Chapter
4.02 Overview of Planning Objectives
4.03 Overview of Tax Considerations
4.04 Securing the Seller's Interest
4.05 Installment Sales Arrangements: In General
4.06 Intrafamily Installment Sales: In General
4.07 Intrafamily Installment Sales: Second Disposition
4.08 Intrafamily Installment Sales: Disallowance of Loss Deduction
4.09 Intrafamily Installment Sales: Terms and Conditions
4.10 Intrafamily Installment Sales: Disposition of Promissory Obligation
4.11 Installment Sale to a Defective Trust
4.12 Self-Cancelling Installment Notes (SCINs)
4.13 Internal Design of Self-Cancelling Installment Notes
4.14 Private Annuities: Defined
4.15 Private Annuities: Income Tax Considerations to Annuitant
4.16 Private Annuities: Gift and Estate Tax Considerations to Annuitant
4.17 Private Annuities: Tax Considerations to Obligor
4.18 Private Annuities: Selection of Assets Transferred
4.19 Private Annuities: Sale to a Trust
4.20 Private Annuities: Securing Payment
4.21 Private Annuities for a Term of Years
4.22 Private Annuity Case Study and Form of Agreement
4.23 Sale of Remainder Interests
4.24 Split-Interest Acquisitions
4.25 Restrictive Agreements
Appendix 4
Chapter 5 Intrafamily and Charitable Gift Techniques
5.01 Summary of This Chapter
5.02 Overview of Planning Objectives
5.03 Gifts: A General Analysis
5.04 Gift Tax--Planning for Exclusions and Credits
5.05 Net Gifts
5.06 Installment Gifts
5.07 Marital Gifts
5.08 Family Trusts
5.09 Gifts: Income and Estate Tax Considerations
5.10 Gifts: Selection of Assets
5.11 Interest-Free Loans
5.12 Gift-Leasebacks: In General
5.13 Gift-Leasebacks: Tax Considerations
5.14 Gift-Leasebacks: Design Considerations
5.15 Charitable Lead Trusts: Planning Objectives
5.16 Charitable Lead Trusts: Estate and Gift Tax Considerations
5.17 Charitable Lead Trusts: Income Tax Considerations
5.18 Charitable Lead Trusts: Funding the Trust
5.19 Charitable Stock Bailouts
5.20 Charitable Remainder Trusts
5.21 Pooled Income Funds
5.22 Charitable Remainder Unitrusts: Tax Considerations
5.23 Charitable Trusts--Asset Replacement Through Irrevocable Life Insurance Trusts
5.24 Grantor Retained Income Trusts (GRITs)
5.25 Grantor Retained Annuity Trusts (GRATs) and Unitrusts (GRUTs)
5.26 Irrevocable Life Insurance Trusts
5.27 Incidents of Ownership Held by Insured
5.28 Trustee of Irrevocable Life Insurance Trust
5.29 Taxation of Irrevocable Life Insurance Trusts
5.30 Second to Die Insurance
Appendix 5
Chapter 6 Valuation Considerations
6.01 Summary of This Chapter
6.02 Valuation: In General
6.03 Valuation of Closely-Held Corporation: In General
6.04 Valuation of Intangible Assets of Closely-Held Corporations
6.05 Valuation of Preferred and Common Residual Stock in Closely-Held Corporations
6.06 Methods of Valuation
6.07 Valuing the Business: Capitalization of Earnings
6.08 Valuing the Business: Underlying Assets
6.09 Which Valuation Method Is Best?
6.10 Valuing the Business: Discounts and Premiums
6.11 Corporate "Asset Freeze": Recapitalizations
6.12 Corporate "Asset Freeze": Holding Companies
6.13 Partnership "Asset Freeze"
6.14 Valuing Interests in an Estate "Asset Freeze"
6.15 Characteristics of Frozen Interests
6.16 Valuation of Frozen Interest Using Publicly-Traded Stock
6.17 Characteristics of Frozen Interests: Effect on Value
6.18 Characteristics of Growth or Residual Interests
6.19 Valuation of Residual Interests
6.20 The Limited Life Freeze: An Overview
6.21 Appraiser's Role in "Freeze" Valuations
Appendix 6
Chapter 7 The Mathematics of Estate Planning and Estate Freezing
7.01 Summary of This Chapter
7.02 Purpose of This Chapter
7.03 Measuring the Effects of Estate Tax Planning: Techniques and Problems
7.04 Size of Estate Tax Burden: Client's Perception
7.05 Size of Estate Tax Burden: Simplified Analysis of Unlimited Marital Deduction
7.06 Marital Deduction Planning: Asset Growth
7.07 Marital Deduction Planning: Stepped-Up Basis
7.08 Methods and Costs of Financing Estate Taxes
7.09 Quantitative Effects of Estate Freezing: In General
7.10 Using Gifts to Freeze the Estate
7.11 Mathematics of Using Discounts to Freeze Estate
7.12 Sales to Beneficiaries
7.13 Mathematics of a Traditional IRA
Chapter 8 Valuation of Intrafamily Transfers--the Anti-Estate Tax Freeze Rules
8.01 Summary of This Chapter
8.02 Valuation of Transferred Business Interest and Retained Interest in Trust
8.03 Retained Interests in a Corporation or Partnership
8.04 Valuation of Liquidation Rights Combined With Distribution Rights
8.05 Treatment of Accumulated Distributions
8.06 Exceptions to Valuation Rules
8.07 Avoiding Double Taxation in Transfers of Interests in a Business Entity
8.08 Transfers in Trust to Family Members
8.09 Statute of Limitations on Gift Tax Assessment
8.10 Buy-Sell Agreements
8.11 Lapsing Rights and Restrictions
Appendix 8
Chapter 9 Planning for Unique Circumstances in an Estate
9.01 Summary of This Chapter
9.02 Planning for Pets
9.03 Planning for Gametes