New Tax Haven: Puerto Rico

By Jeffrey M. Verdon, Esq., Travor Moses, Esq. & Fernando Goyco-Covas, Esq. Puerto Rico’s politicians have aimed to spur investment and economic activity in Puerto Rico by changing their tax code.  These series of reforms, including the Individual Investors Act (Act 22-2012 and 138-2012), now mean that Puerto Rico offers the potential for exceptionally advantageous United States and Puerto Rican income tax exemptions which, as long as certain requirements are met within the United States Internal Revenue Code of 1986, as amended (the “IRC”),[i] can provide remarkable income tax relief to a wide universe of US citizens, residents, and even…

Should Your Clients Be Using the “OBIT” Instead of the AB?

By Edwin P. Morrow III, J.D., LL.M.(Tax), CFP®, RFC® For many taxpayers, the traditional trust design for married couples is now obsolete. Traditional AB trust designs risk incurring higher income taxes after the first death, and reduced basis increase at the second death.  New trust designs can not only mitigate against this risk, but create income tax advantages over outright bequests. Some practitioners advocate using a marital deduction trust, even if there is no need for the federal marital deduction, to allow the family to achieve a second step-up in basis with the asset protection and control of a trust….

The Hybrid Domestic Asset Protection Trust

Featured in the American Bar Association’s Real Property Trust & Estate Law June eReport today, was this article about the Hybrid Domestic Asset Protection Trust (also known as the “Hybrid DAPT”) authored by nationally renowned estate and asset protection planning attorney, Steven J. Oshins, J.D., AEP (Distinguished). Background Asset protection has become one of the hottest areas of law and has become the ideal complement to estate planning. Consequently, the Domestic Asset Protection Trust (“DAPT”) has become one of the most popular asset protection tools in the planner’s toolbox. As more states have enacted DAPT legislation, practitioners have started doing…

Advise Clients to “Shift” Opportunities Rather than Grab It Themselves

By Jeremy Spackman, Esq. Opportunity Shifting is a technique where a client’s parent, grandparent or other person sets up a beneficiary controlled Dynasty Trust for the benefit of the client and the client’s descendants.  The client, as trustee of the Dynasty Trust, uses the gift made by the parent or grandparent to invest in a hot business or investment opportunity inside the Dynasty Trust, thereby protecting the opportunity from estate taxes, creditors and divorcing spouses for the duration of the trust. BENEFICIARY CONTROLLED DYNASTY TRUST Before explaining the steps involved in an opportunity shifting transaction, it is important to understand a beneficiary…

New Private Letter Ruling Approves NING Trust

By William D. Lipkind, J.D., LL.M. (Taxation) & Steven J. Oshins, J.D., AEP (Distinguished) For many years, practitioners have used the so-called DING Trust to save substantial state income taxes for their clients.  “DING Trust” is short for Delaware Incomplete Gift Non-Grantor Trust.  It’s an irrevocable trust that the settlor sets up for the benefit of himself and other discretionary beneficiaries.  Transfers to the trust are not completed gifts for gift tax purposes, yet the trust itself is the owner of the assets for income tax purposes.  Because the trust pays the income taxes, a settlor who lives in a…

Steve Oshins’ 4th Annual Domestic Asset Protection Trust State Rankings Chart Released

Nationally renowned estate planning and asset protection attorney, Steven J. Oshins, Esq., AEP (Distinguished), has just released his 4th Annual Domestic Asset Protection Trust State Rankings Chart. Some of the Highlights: 1. South Dakota closes in on Nevada, but doesn’t quite get there. These are still the top two states. 2. Ohio comes from nowhere to jump into the first tier. 3. Alaska, Tennessee, Wyoming and Utah all make positive changes. 4. Utah remains ranked low because of its state income tax uncertainty (but is now a great state for Utah residents). 5. For the first time ever, the State…

PLR 201310002: DING Redux

Reproduced with Permission by and Courtesy of Leimberg Information Services, Inc. (LISI). For information about how to subscribe to LISI, click here. “A DING trust (standing for Delaware Incomplete Non-Grantor trust) is a strategy designed to eliminate State income taxes on the Grantor’s investment income by having the Grantor transfer his investments to a trust domiciled in a non-tax state which transfer is, on the one hand, an incomplete gift and, on the other hand, not made to a grantor trust. After a hiatus of some six years, the IRS has now ruled, in PLR 201310002 in favor of a…

Estate Planning & Asset Protection in 2013 & Beyond by Steven J. Oshins, Esq., AEP (Distinguished)

The House has just approved the Senate bill. President Obama will sign it later this week. Now what? [Hint: You’ll be doing NEARLY EXACTLY what you’ve been doing the past few months, but without the time pressure.] Estate Planning: We now have a “permanent” $5MM (indexed for inflation) estate, gift and GSTT exemption and a 40% tax rate. Remember that the word “permanent” really means “until they change it next time”. This is an opportunity for all of your clients to continue to use their $5MM gift and GSTT exemptions by making gifts into Dynasty Trusts. All of our wealthy…

Steve Oshins’ Tips for Getting Through the Pre-Fiscal Cliff Gifting Chaos

Nearly everybody is out of 2012 capacity at this point. So… Consider setting up a simple one-page gift trust with just the essential terms so you have a valid trust under the state law you are selecting. Give the settlor’s best friend as Trust Protector the power to completely amend and restate the trust (maybe for a selected period of time like three months) in that Trust Protector’s sole and absolute discretion (and obviously draft around a GPOA). Get it fully executed and funded with the $5MM gift before year-end. Enjoy the New Year’s. Take a deep breath. Reconvene in…