LIQUIDITY PLANNING IN ESTATES AND TRUSTS

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1 LIQUIDITY PLANNING IN ESTATES AND TRUSTS First Run Broadcast: February 8, 2013 Live Replay: June 10, :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) Obtaining liquidity in an estate, both during the life of a client and after his or her death, is a major challenge for estate planners and administrators, particularly in an environment where asset values are only now stabilizing and credit is still exceptionally tight. Pre-mortem, a client with illiquid assets an interest in a closely held company, real estate, artwork or other property without a regular market may need liquidity to support themselves or pursue other ventures. Post-mortem, the client s estate will need cash to pay federal and state tax liabilities, and pay other final expenses. This program will provide you with a practical guide to obtaining liquidity in a client s estate, pre- and post-mortem, including elections to defer estate taxes, the use of Graegin notes, redemptions, buy-sell agreements and more. Estate planning and administration to obtain liquidity for illiquid assets Liquidity to fund tax liabilities, trust distributions, administrative expenses, and more Mechanics of electing a deferral of estate tax under IRC Section 6166 Use and advantages of using Gaegin notes to obtain liquidity Advantages and disadvantages of use of redemptions and buy-sell agreements Techniques to use life insurance products to obtain liquidity Speakers: Daniel L. Daniels is a partner in the Greenwich, Connecticut office of Wiggin and Dana, LLP, where his practice focuses on representing business owners, corporate executives and other wealthy individuals and their families. A Fellow of the American College of Trust and Estate Counsel, he is listed in The Best Lawyers in America, and has been named by Worth magazine as one of the Top 100 Lawyers in the United States representing affluent individuals. Mr. Daniels is co-author of a monthly column in Trusts and Estates magazine. Mr. Daniels received his A.B., summa cum laude, from Dartmouth College and received his J.D., with honors, from Harvard Law School. David T. Leibell is a partner in the Greenwich, Connecticut office of Wiggin and Dana, LLP, where he has an extensive estate, trust and charitable giving practice. He previously worked in the financial services industry, specializing in the financial aspects of estate planning. Mr. Leibell is a frequent lecturer on fiduciary topics throughout the United States, and has authored many articles on charitable, estate and tax planning topics. He is the author of a monthly column in Trusts & Estates magazine. He also authors a column for Registered Representative Magazine. Mr. Leibell received his B.A. from Trinity College and his J.D. from Fordham Law School.

2 VT Bar Association Continuing Legal Education Registration Form Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT Fax: (802) PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name: Middle Initial: Last Name: Firm/Organization: Address: City: State: ZIP Code: Phone #: Fax #: Address: I will be attending: Liquidity Planning in Estates and Trusts Teleseminar June 10, :00PM 2:00PM VBA Members $75 Non-VBA Members $95 NO REFUNDS AFTER June 3, 2013 PLEASE NOTE: Due to New Hampshire Bar regulations, teleseminars cannot be used for New Hampshire CLE credit PAYMENT METHOD: Check enclosed (made payable to Vermont Bar Association): $ Credit Card (American Express, Discover, MasterCard or VISA) Credit Card # Exp. Date Cardholder:

3 Vermont Bar Association CERTIFICATE OF ATTENDANCE Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: June 10, 2013 Seminar Title: Location: Credits: Liquidity Planning in Estates and Trusts Teleseminar 1.0 General MCLE 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.

4 PROFESSIONAL EDUCATION BROADCAST NETWORK Speaker Contact Information LIQUIDITY PLANNING IN ESTATES AND TRUSTS David T. Leibell Wiggin & Dana, LLP - Greenwich, Connecticut (o) (203) dleibell@wiggin.com Daniel L. Daniels Wiggin & Dana, LLP - Greenwich, Connecticut (o) ddaniels@wiggin.com

5 Liquidity Planning in Estate Planning David Thayne Leibell and Daniel L. Daniels 2011Wiggin and Dana

6 Daniel L. Daniels, Esq. David T. Leibell, Esq. Wiggin and Dana LLP Wiggin and Dana LLP 30 Milbank Avenue 30 Milbank Avenue Greenwich, CT Greenwich, CT

7 Increasing Need for Liquidity Planning More and more illiquid estates Much of America s wealth created through private enterprise Business owner families want to avoid firesale of illiquid assets at death Desire to pass illiquid assets to next generation

8 Lifetime Liquidity Concerns Lifetime liquidity needed for successful succession planning 93 percent of business owners almost completely dependent on business for their personal cash flow needs Need to move from control assured income to contract assured income

9 Contract Assured Income Shareholders agreements to provide for lifetime buyout Installment sale to children or to defective trust Long-term GRATs Employment agreements

10 Other Liquidity Sources Non-business liquid assets Outside investors Bank loans Private loans Life Insurance

11 Shareholder Agreements

12 Primary Purposes of Buy-sell Agreements Provide a market for an illiquid asset Provide liquidity to pay estate taxes Provide for continuing income for a surviving spouse Under circumstances, fix the value of the business for estate tax purposes

13 Other Purposes of Buy-sell Agreements Allow owner to maintain control during life and control the transition of the business at death Avoid disputes between active and non-active children Provide for owner s disability Ensure business s continued qualification as an S corporation

14 Basic Provisions of Buy-Sell Triggering events Permissible buyers Business valuation Funding methods

15 Charitable Planning for the Business Owner to Create Liquidity or Avoid the Liquidity Problem Benefits and Risks of Disposition of Business Interests to Charity Testamentary Planning Using the Estate Administration Exception to the Self-Dealing Rules Charitable Stock Bailout

16 Post Mortem Options Section 6166 election Graegin note