Technique of the Month: Decanting to Remove a Mandatory Income Interest

Download Printable Article By Steven J. Oshins, Esq., AEP (Distinguished) Trust decanting is the act of distributing assets from one trust to a new trust with different terms.  Just as one can decant wine by pouring it from its original bottle into a new bottle, leaving the unwanted sediment in the original bottle, one can pour the assets from one trust into a new trust, leaving the unwanted terms in the original trust. Which States Allow a Decanting to Removing a Mandatory Income Interest? There are now 25 states that have decanting statutes.  Of the 25 states, only six of…

Top Five Reasons Not to Overreact to the Possibility of Estate Tax Repeal

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) At the time of this writing, President-elect Donald Trump is preparing to take office. This marks a dramatic change in political philosophies as we will soon have a Republican president, a Republican-controlled House and a Republican-controlled Senate.  Thus, there is a likelihood that we will see and hear about drastic changes in the tax code. Does this mean that the estate tax will be abolished?  Does this spell the end to advanced estate tax planning?  If you listen to many estate planners or read many of the media articles, it…

The Viability of Delaware Dynasty Trusts After the Kloiber Case

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) It’s over!  One of the highest-profile cases in the history of the estate planning industry, and one that was being monitored by estate planners all over the United States, has been settled.  Delaware trust promoters had been holding their breath awaiting the result of the case that became the posterchild for jurisdiction selection and the importance of avoiding the use of a health, education, maintenance and support trust in a jurisdiction like Delaware that allows a divorcing spouse of a beneficiary to penetrate the trust. No estate planning professional can…

Hurry and Use the Restricted LLC/LP Statutes Before the IRC Section 2704 Regulations are Finalized!

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) Estate planners often use family limited liability companies and family limited partnerships to facilitate gifting and installment sales of minority interests or non-voting interests to family members or irrevocable trusts for the benefit of family members. Under Code Section 2704(b) and Treasury Regulations §25.2704-2(a), if an interest in an entity is transferred to or for the benefit of a member of the transferor’s family, any applicable restriction is disregarded in valuing the transferred interest.  Treasury Regulations §25.2704-2(b) defines an applicable restriction as a limitation on the ability to liquidate the…

Net, Net Gifts: Why NOW May Be the Best Time to Use This Strategy

By Michael J. Jones, CPA Estate and gift tax rates have never been lower. Presidential hopeful Hillary Clinton would like to change that, making this an especially important time to engage in lifetime gift planning. As if that isn’t enough to encourage gifts, proposed Treasury Regulations would all but eliminate family business valuation discounts for lack of marketability. However, paying gift taxes is hard to swallow. For some, the solution is not to pay gift taxes. Instead, have the donee pay gift taxes. Generally, when a taxable gift is made, the donor must pay gift taxes, once the gift exceeds…

The Private Decanting: A Do-Over Trust with your Privacy Intact

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) What is Trust Decanting? For many years, practitioners have struggled to find ways to change the terms of an irrevocable trust.  However, through common law and through the decanting statutes that have been enacted in many jurisdictions, it is now possible to modify an irrevocable trust.  The rationale for allowing such a modification is that a trustee who has the power to distribute the trust property to or for the benefit of one or more beneficiaries should be able to make the distribution to them in trust and dictate the…

Why I’m Jealous of Advisors Who Are NOT in Top-Tier Trust Jurisdictions

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) Trust practitioners often tell me that I am lucky to reside in a top-tier trust jurisdiction like Nevada that has excellent asset protection, valuation discount, decanting and dynasty trust laws, as well as no state income tax.  However, they have it all wrong!  Seriously. I largely have to rely on advisors outside of Nevada to refer me Nevada trust business, whereas practitioners in other jurisdictions have almost no competition among the local trust advisors since so few of them are taking advantage of out-of-state trust opportunities.  Thus, the ability to…

Getting It Right the First Time

Download Printable Article By Jason Oshins, Financial Advisor, MBA This article tells the unlikely account of a second chance and presents a framework for making sure protection is airtight. 5, 4, 3, 2, 1.  The whistle blows.  At the count of “two”, my 9-year old son, Spence, kicks the soccer ball, and just as the whistle is blown, he’s on the ground writhing in pain.  I sprint onto the field to comfort him.  He says he can’t feel his wrist and can’t move his hand.  Rewind to exactly one week before.  I’ve been on the phone with his healthcare provider…

David vs. Goliath: How Nevada Became a Leading Trust Jurisdiction

Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) “Always remember…Goliath was a 40-point favorite over David.” -Shug Jordan (1910-1980), athlete and football and basketball coach Many years ago, Delaware was considered the go-to trust jurisdiction.  However, other jurisdictions enhanced their trust laws through the years, and the consensus now is that Nevada, South Dakota, Alaska and Delaware are the first-tier jurisdictions, at least in the minds of most trust practitioners. Delaware has always been the Goliath in the trust industry, whereas the other jurisdictions have served the role of David.  But Delaware has made less material enhancements to…

Incomplete Gift, Non Grantor Trusts (aka DINGs, NINGs): Not Just for State Income Tax Avoidance

Download Printable Article By Edwin P. Morrow III, J.D., LL.M. (Tax), CFP®, RFC® There is increasingly becoming an important tool in their trust planning arsenal for high income taxpayers– the incomplete gift, non-grantor trust (“ING”).  These trusts are often colloquially known as “DINGs” or “NINGs”, short for Delaware or Nevada Incomplete Gift Non Grantor Trusts, even though other states with similar strong DAPT laws, such as Alaska, South Dakota, Wyoming or Ohio, may also be used.  Let’s explain the ING, why it’s used, what state limitations exist and how it can be used beyond state income tax avoidance. What is…