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DESIGNING AND DRAFTING REVOCABLE TRUSTS First Run Broadcast: April 1, 2014 1:00 p.m. E.T./12:00 p.m. C.T./11:00 a.m. M.T./10:00 a.m. P.T. (60 minutes) Revocable trusts are among the most flexible and beneficial vehicles for estates of every size. In addition to their tax benefits, in many instances they allow property to be transferred outside of probate. They are also comparatively easy to administer. But they also come with complexity and traps. Distributions above certain low levels are taxable. Holding interests in family businesses, personal residences or life insurance policies each come with special challenges. Also, any failure to carefully coordinate revocable trust planning with settlors wills and larger estate plans can lead to a loss of all benefits. This program will provide you with a practical guide to designing and drafting revocable trusts, their relationship to pour over wills, discuss special issues related to family businesses, personal residences, life insurance policies, and cover distribution and tax traps.
Designing and drafting revocable trusts Drafting Funding/pour over and distribution clauses, and spendthrift protections Distribution and tax traps planning to avoid taxability commonplace distributions Issues related to personal residences, family businesses, life insurance policies and
married settlors Trustee issues selection, duties, removal/replacement Working with clients with mental competence issues Coordinating wills estate plans with revocable trusts
Speaker: William Kalish is a partner in the Tampa office of Akerman Senterfitt, LLP. His practice focuses on advising individual clients and their families on their estate and trust plans, including wills, revocable trusts, irrevocable trusts, charitable trusts, private foundations, and limited partnerships. He also practices in probate administration, asset preservation, business succession planning for family-owned entities, and the division of business interests in the context of divorce. He is a Fellow of the American College of Trust and Estate Counsel, formerly served as chair of ABA Tax Section, and has served as an Adjunct Professor of Law at Stetson Law School teaching estate planning. Mr. Kalish received his B.A. from the University of Pittsburg and his J.D. with honors from George Washington University Law School.
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Planning & Drafting Revocable Trusts Teleseminar April 1, 2014 1:00PM 2:00PM
1.0 MCLE GENERAL CREDITS
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Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: April 1, 2014 Seminar Title: Planning & Drafting Revocable Trusts
Location: Teleseminar Credits: 1.0 MCLE General Credit Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.
PROFESSIONAL EDUCATION BROADCAST NETWORK
Speaker Contact Information
DESIGNING AND DRAFTING REVOCABLE TRUSTS
William KalishAkerman Senterfitt, LLP Tampa, Florida(o) (813) email@example.com
Revocable Trusts &Pour Over Wills:Core ConceptsWilliam Kalish, Esq.April 1, 2014
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William Bill Kalish
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Settlor/Grantor: The person who creates the trust;
The Trust Agreement itself and its assets,
Trustee: the person who controls the trust and its assets, and
Beneficiaries: those who are entitled to receive the benefits fromthe trust asset, (i.e., income and principal)
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Not a required party
Can be used to implement Settlors wishes
Especially useful for post-mortem planning
The Trust Protector may:
Terminate the trust
Reduce or accelerate distributions to a beneficiary
Name additional beneficiaries
Remove or replace individuals and corporate trustee
Make changes to the trust to take advantages of tax laws
Change the situs of the trust for beneficial choice of law
The Trust Protector
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1) Business judgment, honesty and integrity
2) Ability/desire to exercise a high degree of care over trust property
3) Risk aversion (loss avoidance)
4) Legal capacity to contract (generally 18+ years of age)
5) Geographically close
6) Ability to manage / uphold Settlors goals (relative to the size of the assets)
7) If there is a business, then business acumen
8) Investment ability Prudent Investor
9) Nonprofessional Trustee (family/business partner)which may minimize fees charged by professionaltrustees.
Trustee SelectionImportant Factors
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Simple: All trust income is distributed in the year it is earned.
Complex: Can accumulate income, distribute principal and makecharitable gifts.
Qualifies as a separate tax entity that deducts incomedistributed and pay tax on income retained.
Revocable: Settlor retains the right to revoke the trust
Irrevocable: A trust that is not revocable
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When does a Rev Trust become Irrevocable?
The earlier of when:
the Settlor gives up the right to revoke or the Settlors death
It is possible to set triggering events such as incapacity
Irrevocability may trigger adverse gift tax implications
A taxable gift is made when a settlor parts with dominion and controlover property
Immediate gift taxation may be blocked by the reservation of atestamentary power of appointment over a remainder interest
Works even if the grantor becomes mentally incompetent sincethere is a legal presumption that capacity may be regained.
ConversionRevocable to Irrevocable Status
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Acts as a Will substitute that avoids estate administration
Delegate property management responsibility
May help facilitate Closely Held Business succession planning
Post death/disability continuity of management & income flow
Protects against personal asset management problems broughton by mental incapacity
if assets titled in own name, conservatorship/guardianship islikely required
Probate Avoidance: minimized delay and cost; increased privacy
Revocable TrustsWhy choose them?
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Reduce estate administration costs; may avoid out of state ancillaryprobate administration
Sometimes reduces potential for election against/contest of will (i.e., lackof capacity, undue influence) when trust is in operation during Settlorslifetime.
Dictate choice of law
Protect assets post-mortem for various beneficiaries with potentialcreditor issues or marital claims
Availability of generation skipping tax techniques
Revocable TrustsWhy choose them?
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When costs exceed benefits
May open door to creditors (e.g., assets held by the entireties)
When a trust strategy does not achieve asset management goals:
Example State statutes regulating the corporate practice ofprofessionals (e.g., physicians, lawyers, etc.) may prevent any non-licensed professional (individual or entity) from owning an interest in aprofessional service corporation.
Tax Issues: IRC 2032 alternate valuation entity; S Corporations Issues;and fiscal year end decisions
Transfers may raise property law, contract law, and insurance issues
May affect credit / lending opportunities
Inevitably missed assets (settlor doesnt fund / contribute properly)
Revocable TrustsWhen NOT to choose them/downsides:
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Most states require token funding at the creation of the trust
Dry Trusts may be deemed void
Maintain records of a valid devise to avoid problems
Records of Funding Key
Establishes the cost basis for income and gift tax purposes
Efficient fiduciary accounting
Option: Attach receipts list to trust document for all receipts of trust
Tangible Personal Property may be h