Archives: Estate Planning

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IRS Regulations Clarify Definition of Spouse for Federal Tax Purposes in Light of Obergefell v. Hodges

The IRS has issued final regulations clarifying the definitions of “spouse,” “husband,” “wife,” and “husband and wife” for federal tax purposes. The final regulations now define “spouse,” “husband” and “wife” as any individual lawfully married to another individual, and “husband and wife” as any two individuals lawfully married to each other, regardless of the individuals’ … Continue Reading

Beyer Beware: An Examination of a Family Limited Partnership Gone Wrong

The opinion issued on Sept. 29, 2016, in the case of Estate of Edward G. Beyer v. Commissioner of Internal Revenue was the culmination of an estate planning exercise that had an unfortunate ending for everyone involved (other than the IRS). The case involved a number of failed estate planning techniques. Background The situation began … Continue Reading

New Basis Reporting Requirements (and Penalties) for Decedents’ Estates

FEBRUARY 2, 2016 UPDATE: The final version of Form 8971 and the Instructions have been posted by the IRS. On July 31, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act (the “Act”) to reauthorize the Highway Trust Fund’s spending authority for another three months. To offset the legislation’s … Continue Reading

U.S. Supreme Court Agrees to Hear Cases Regarding the Constitutionality of Same-Sex Marriage Bans

The U.S. Supreme Court has agreed to hear four cases from Ohio, Michigan, Kentucky, and Tennessee, respectively, regarding the constitutionality of same-sex marriage bans by the states. While the Court’s decision to hear the cases was anticipated (as previously discussed here), the decision is nonetheless exciting. Arguments are expected to be presented in April of … Continue Reading

Colorado Court Leaves Valuation Question Unanswered When Valuing GRAT Appreciation

On March 20, 2014, the Colorado Court of Appeals, in Malias v. Malias, upheld the trial court’s determination that grantor retained annuity trust (GRAT) remainder interests were “property interests” for property division purposes,  and the corresponding valuation of the GRAT interests for those purposes.  Although the case has not yet been selected for publication, it … Continue Reading

Income Tax Reporting for Decanting

Decanting refers to the distribution of trust property of one trust (the “first trust”) to another trust (the “second trust”).  Over the past several years, the number of states specifically authorizing decanting by statute has grown rapidly.  As of March 2014, at least twenty-two states have passed or proposed a state decanting statute. Notwithstanding this … Continue Reading

SEC “Common Trust Fund” Exception Narrowly Construed for Private Trust Companies

Recent years have seen a dramatic increase in the number of Private Trust Companies (“PTCs”) established by wealthy families.  PTCs are used to consolidate the trustee function of multiple trusts within a family, and because these trusts are often invested in family-controlled investment vehicles they implicate various federal securities laws.  For instance, the Investment Company … Continue Reading

The Waiting Game: What to Do (and Not Do) While an Exemption Application is Pending

So, you have thoughtfully and thoroughly prepared the Form 1023 Application for Recognition of Exemption Under Section 501(c)(3) (“Form 1023” or “application”) on behalf of a charity, and filed it with the IRS along with a completed checklist and the correct user fee.  The charity is now anxious to fundraise and accept donations, commence its … Continue Reading


Because trusts are subject to the 3.8% Net Investment Income Tax at a very low income level, $12,150 for 2014, trustees of trusts owning interests in operating entities have been considering ways to meet the material participation requirements to avoid this tax.  As discussed in a prior post, differing points of view have arisen regarding … Continue Reading

Will Camp Tax Plan Impact Charitable Giving and Tax-exempt Organizations?

In late February 2014, House Ways and Means Committee Chairman Dave Camp (R-MI) released a nearly 1,000 page discussion draft addressing tax reform.  Chairman Camp’s proposal includes changes to numerous sections of the Internal Revenue Code, including changes with respect to the taxation of individuals, capital gains and businesses.  The discussion draft also includes changes … Continue Reading

Protecting Private Wealth: Recent Bankruptcy Cases Involving Tuition Payments and Profit Sharing Plans

The BakerHostetler Bankruptcy, Restructuring, and Creditor’s Rights team has issued an Executive Alert highlighting two recent decisions involving debtors in bankruptcy.  The first case holds that tuition payments for the debtor’s minor children’s parochial school tuition are not fraudulent transfers.  The second case holds that profit sharing plan assets used to fund the debtor’s IRA are not … Continue Reading

Transfers to Non-Citizen Spouses: Planning Considerations

Estate planning professionals commonly encounter married couples with mixed nationalities.  That is, one spouse is an American citizen and the other is not.  The U.S. estate and gift tax rules are generally the same for U.S. citizens and resident aliens.  However, the estate tax marital deduction differs significantly as applied to non-U.S.-citizen surviving spouses. The … Continue Reading

ACTEC Wealth Advisor App Offers Powerful Planning Tool for Wealth Management Professionals

The American College of Trust and Estate Counsel (ACTEC) is a national association of leading trust and estate attorneys.  ACTEC contributes to the field of trusts and estates law through scholarship, teaching, and bar leadership activities.  BakerHostetler’s private wealth planning attorneys have a long and active history with ACTEC.  Recently, BakerHostetler’s participation helped with the … Continue Reading

IRS “Wealth Squad” – Something to Keep in Mind During Tax Season

The IRS Global High Wealth Industry (“GHWI”) (part of the IRS Large Business & International Division) is auditing individuals with tens of millions of assets or income who utilize complicated financial and estate plan structures.  GHWI was established by the IRS in late 2009, but now has a few years of service “under its belt”.  … Continue Reading

‘Tis the Season – For Year-End Charitable Giving

Most people make the bulk of their charitable contributions during the year-end holiday season.  This post summarizes some of the charitable giving ideas and opportunities, as well as some planning reminders, that donors may want to consider: Gifts of Appreciated Securities Many people have benefited this year from the surge in the investment markets.   Appreciated marketable … Continue Reading

Normalizing Prenuptial Planning

Prenuptial planning is a common consideration for clients who are getting married.  There are several circumstances where a prenuptial agreement is particularly useful, such as second (or perhaps third) marriage situations, especially when the couple have children from prior relationships.  It is also not unusual for the children of wealthy clients to be strongly encouraged … Continue Reading

Planning for the Distribution of Tangible Personal Property: An Ounce of Planning Is Worth a Pound of Family Harmony

One of the most overlooked elements of an estate plan is the planning for the distribution of a person’s tangible personal property.  This property, which many people commonly referred to as “belongings,” encompasses jewelry, furniture, clothing, household furnishings, silverware, cars, boats, art work, and other physical possessions.  Without question, the distribution of these items is … Continue Reading

The Limits of Discretion: Trust Distributions for Health, Education, Maintenance and Support

Trustees are often granted the power to distribute trust property “in the Trustee’s discretion” for a beneficiary’s “general well-being,”  “best interests,” “comfort,” or, most commonly, “health, education, maintenance and support.”  This “health, education, maintenance and support” distribution standard is so common that most trustees and other trust advisors refer to it simply as the “HEMS” … Continue Reading

May I Pay Your Taxes?: Colorado Enacts a New Grantor Reimbursement Statute

Grantor trusts are a powerful tool in estate planning in part because they facilitate depletion of the grantor’s estate by the grantor’s payment of income taxes attributable to the trust.  There may be circumstances, however, when the grantor is no longer in a position to bear some part or all of the trust’s tax burden, … Continue Reading

Careful Estate Planning Required When Transferring S Corporation Shares to Trusts

S corporation shareholders must be careful not to inadvertently terminate their closely held company’s S election when engaging in estate planning. Closely-held entities, which choose not to be formed as a partnership or limited liability corporation, often elect to be taxed as an S corporation under the Internal Revenue Code to avoid the double taxation … Continue Reading