79 th SEMI-ANNUAL TAX AND ESTATE PLANNING FORUM

Transcription

1 79 th SEMI-ANNUAL TAX AND ESTATE PLANNING FORUM Co-Moderators John J. Miesowitz, Esq. Ventura, Miesowitz, Keough & Warner, P.C. (Summit) John L. Pritchard, Esq. Law Office of John L. Pritchard, Esq. (Union) Speakers Robert I. Aufseeser, Esq. Ansell Grimm & Aaron, P.C. (Ocean) Richard H. Greenberg, Esq. Greenberg & Schulman (Woodbridge) Dennis M. Haase, Esq. Einhorn, Harris, Ascher, Barbarito & Frost, P.C. (Denville) Bruce E. Mantell, Esq. Mantell, Prince & Reynolds, P.C. (Murray Hill) Lauren S. Marinaro, Esq. Fink Rosner Ershow-Levenberg (Clark) Lori M. McNeely, Esq. McNeely McGuigan & Esmi, LLC (Moorestown) Jack F. Meola, Esq., CPA EisnerAmper, LLP (Bridgewater) Steven K. Warner, Esq. Ventura, Miesowitz, Keough & Warner, P.C. (Summit) Glenn A. Henkel, Esq., LL.M., CPA Kulzer & DiPadova, P.A. (Haddonfield) Alan F. Kornstein, Esq. McCarter & English, LLP (Newark) S0127a.18

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3 Table of Contents Page Section 199A Deduction for Qualified Business Income PowerPoint Presentation Alan F. Kornstein, Esq. 1 Attachment Examples 19 The Tax Cuts and Jobs Act of 2017 The Estate, Gift and Generation Skipping Transfer Tax Aspects PowerPoint Presentation Richard Greenberg, Esq. 27 Attachment Estate of Powell v. Commissioner of Internal Revenue 37 Estate Planning After the 2017 Tax Act Glenn A. Henkel, Esq. 91 Estate Planning Post 2017 Tax Act PowerPoint Presentation Glenn A. Henkel, Esq. 103 A Path Through the Maze of the New Jersey Elective Share John L. Pritchard, Esq. 113 Prologue: The Unique New Jersey Statute 113 Step One: Computation of the Gross Augmented Estate 113 Step Two: Reductions in the Augmented Estate 115 Step Three: Division by Three 115 Step Four: Reduction of the One-Third Share for the Spouse s Own Assets 115 Step Five: Satisfaction of the Elective Share from Other Person s Transfers 116 The Time to Make an Elective Share Claim 116 Claims by Incapacitated or Deceased Spouse s Estate 117 Time of Valuation and Valuation Methods 117 Estranged Spouses 118 Divorcing Spouses Under Carr v. Carr 119 Waiver of Elective Share 120 Domicile of Decedent 121 Medicaid Issues 122 Historical Background 122 Attachments N.J.S.A. 3B:8-1 et seq. 125 Emergency Message re: Change in SSI Supplemental/ Special Needs Trust Policy 131 Draper v. Colvin 133 N.J.A.C. 10:

4 Administering New Jersey Estates After the Enactment of the Tax Cuts and Jobs Act of 2017 and the Repeal of the New Jersey Estate Tax Bruce E. Mantell, Esq., LL.M., CPA 145 Federal Estate, Gift and Generation-Skipping Tax Changes Enacted as Part of the Tax Cuts and Jobs Act of 2017 (TCJA) 145 New Jersey Estate Tax Changes 146 Income Taxation of Trusts and Estates 147 How Does an Executor Provide Necessary Information to Beneficiaries of an Estate in Determining Tax Basis If No Death Tax Return is Required to Be Filed With the IRS or NJ Division of Taxation? 148 Trust Terminations Have Become More Prevalent in the Context of Estate Planning and Estate Administration. Are We Becoming Trust Busters? 148 Exhibits A Form L B Form L-8 Affidavit for Non-Real Estate Investments: Resident Decedents 155 C Form L-9 Affidavit for Real Property Tax Waiver: Resident Decedent 159 D Form 8971 Information Regarding Beneficiaries Acquiring Property from a Decedent 163 E NJ Rev. Stat. 3B:31-27 (2015) 166 Planning for Forever: The Effective Use of Dynasty Trusts John J. Miesowitz, Esq. 167 Introduction 169 Basic Concepts 170 Drafting for Flexibility for Generations to Come 170 Standard Terms for a Dynasty Trust 171 Trust Provisions to Allow Decanting, Merger, Amendment, and Termination of Trust 173 Modification and Termination of Trust 173 Power to Amend 175 Removal and Appointment of Fiduciaries 175 Miscellaneous Trust Provisions 176 Attachment N.J.S.A. 3B:31-26 et seq. 179 The Will to Die Should Suicide Lead to a Presumption of Incapacity, or Serve as Evidence of Sufficient Capacity, in a Will Contest? Steven K. Warner, Esq. 183 Testamentary Capacity: Generally 183 Presumption of Capacity 183 Very Low Threshold 183 Standard for Capacity 183

5 Unnatural/Unreasonable Distributions 185 Fact Specific Determinations 186 Suicide Generally 187 Historical Perspective 187 Background/Additional Factors 187 Is Suicide a Volitional or Non-Volitional Act? 190 Suicide/Attempted Suicide as Evidence of Testamentary Incapacity 192 New Jersey Cases 193 Out of State Cases 199 Takeaways from the Judiciary s Treatment of Suicide in the Context of Challenges to Testamentary Capacity 206 Hypothetical 207 Skillful Allocation of Capital Gains to Trust Beneficiaries Dennis Haase, Esq. 209 Introduction 209 Background 209 Federal Tax Considerations 212 Revised Section 643 Regulations New Definition of Income 213 Interrelationship of Fiduciary Accounting Income, Distributable Net Income, and Taxable Income 213 Fiduciary Accounting Income 214 Interplay Between Fiduciary Accounting Income and Taxable Income 215 Income Distribution Deduction and Distributable Net Income Rules 215 Income Distribution Deducted by Trustee 216 Income Taxed to Beneficiaries and the Role of Distributable Net Income 216 The Conduit Principle 216 Distributable Net Income 217 Taxable Income 218 Allocating Capital Gains to Distributable Net Income 219 Income Distribution Deduction and DNI Rules 220 Income Distribution Deducted by Trustee 220 Income Taxed to Beneficiaries and the Role of Distributable Net Income 221 When Governing Instrument and Local Law Are Both Silent or Unclear 221 Departures from Local Law 221 Example: Fundamental Departure from Local Law 222 Capital Gains Generally Excluded from DNI 222 Capital Losses 222 Specific Bequests 223 The Power to Adjust and Unitrust Statutes Capital Gains in DNI 223 Example: Power to Adjust DNI Includes Adjustments Between Income and Principal 223 Defining Income as a Unitrust Amount 224 Including Capital Gains in DNI The Problem 224

6 Section 643 Regulations: Including Capital Gains in DNI 225 Examples Derived from Treas. Regs Planning Possibilities 231 Other Possible Options to Include Capital Gains in DNI 233 Issues for Dealing With Cross-Border Divorce Jack F. Meola, CPA, Esq., LL.M., TEP 235 Background 235 U.S. Definitions 235 Requirements in the U.S. for a Prenuptial 236 Example of Prenuptial Planning for French and U.S. Couples 236 How Do You Ensure Recognition of the Agreement? 238 Which Provisions to Include 238 Prenuptial Agreements at Common Law Hong Kong 238 Conditions to Be Satisfied 239 Marital Regimes Defined 239 Tax Treatment of Community Property 239 International Couples on the Move 240 Change of Marital Regime 240 Forum Shopping 240 US Tax Consequences 241 Reversing the Transferor Results in the Following 242 Changing the Transferor to a NRA 242 Timeline: Gift and Income Tax Windows for Divorcing Spouses 243 POMS: Identifying Resources (Exceptions to Counting Trusts) 247 Draper v. Colvin 275 N.J.A.C. 10: About the Panelists 287