2015 PROBATE SYMPOSIUM

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1 c 2015 PROBATE SYMPOSIUM Moderator Richard H. Greenberg, Esq. Greenberg & Schulman (Woodbridge) Speakers Andrew J. DeMaio, Esq. Neff Aguilar, LLC (Red Bank) Anita J. Siegel, Esq. Siegel & Bergman, LLC (Morristown) Leonard J. Witman, Esq. Witman Stadtmauer, P.A. (Florham Park) Lawrence A. Friedman, Esq. Certified as an Elder Law Attorney by the National Elder Law Foundation FriedmanLaw (Bridgewater) Glenn A. Henkel, Esq., LL.M., CPA, A.E.P. Kulzer & DiPadova, P.A. (Haddonfield) Steven K. Mignogna, Esq. Archer & Greiner, P.C. (Haddonfield, Flemington, Princeton; New York City; Philadelphia, PA; Wilmington, DE) In cooperation with the New Jersey State Bar Association Real Property, Trust and Estate Law Section S

2 2015 New Jersey State Bar Association. All rights reserved. Any copying of material herein, in whole or in part, and by any means without written permission is prohibited. Requests for such permission should be sent to NJICLE, a Division of the New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey

3 Table of Contents Page 2015 Probate Symposium Leonard J. Witman, Esq. 1 Introduction 3 Benefits Payable to a Surviving Spouse Via an Accumulation QTIP Trust 5 IRA Stretch Out Via Outright Distribution to Surviving Spouse vs. Accumulation QTIP Trust Arrangement 7 Single Life Expectancy Table 10 Benefits Payable to a Surviving Spouse Via a Conduit QTIP Trust 12 Outright Distribution to a Surviving Spouse vs. Conduit QTIP Trust Arrangement 14 The Conduit IRA QTIP Trust vs. an Accumulation IRA QTIP Trust 16 Benefits Payable to a Credit Shelter Trust for the Surviving Spouse and Children 18 Benefits Payable to a Surviving Spouse Via a Disclaimer (Credit Shelter) Trust 20 The Conduit IRA Bypass Trust vs. a Traditional IRA Bypass Trust 22 Benefits Payable to Non-Spouse Beneficiaries (Credit Shelter or Other Trusts) 24 Should I Fund My Credit Shelter Trust With a Roth IRA or a Traditional IRA? 26 The Estate Distribution in Multiple Marriage Situations 28 Using the Portability Option in Lieu of a Credit Shelter Trust When the Primary Asset is a Qualified Retirement Plan Benefit 30 Analysis of Stretch Out IRAs Under Different Spousal Beneficiary Options (Death After RBD) 32 Appendix A Uniform Table, Lifetime Required Minimum Distributions 38 Hot Trends in Probate Litigation: Steven K. Mignogna, Esq. 39 Detailed Table of Contents 41 Uniform Fiduciary Access to Digital Assets Act 85 Privacy Expectation Afterlife and Choices Act (PEAC) 115 Act to Amend and Re-enact PEAC (S.1450) 119 Elder Law and Special Needs Considerations Lawrence A. Friedman, Esq. 123 Disability Benefits 123

4 Financial Eligibility for Disability Benefits 125 Qualified Income Trusts/Miller Trusts 125 Special Needs Trusts Use and Types 127 Special Needs Trusts Formation 129 Trust Distributions & Medicaid Eligibility 131 Trust Itself as Medicaid Countable 133 Tannen v. Tannen & Government Benefits 133 Design & Administration of Special Needs Trusts Lawrence A. Friedman, Esq. 137 Disability Benefits 137 Financial Eligibility for Disability Benefits 140 Trusts & Means Tested Aid 141 Special Needs Trusts to Protect Means Tested Aid 142 SNT Administration 147 Charitable Planning in the Current Tax and Economic Environment Anita J. Siegel, Esq. 151 Charitable Deduction Limitations 151 Gifts Currently Enjoyed by Charity 153 Deferred Gifts to Charity 157 Impact of IRC 7520 Rate on Various Charitable Vehicles 167 Lifetime Donations vs. Testamentary Gifts 168 Allocation of Estate and Inheritance Taxes 169 Restricted Gifts vs. General Gifts 170 Pecuniary vs. Residuary Devises: Income Tax Aspects 170 The Upside Down World of Estate Planning Income Taxation Takes Over Richard H. Greenberg, Esq. 173 Generally 173 The New Income Tax Rates 174 Section 1411 The Net Investment Income Tax 175 The Additional Self-Employment Tax 177 The PEASE Limitation 177 The PEP Limitation 178 Income Tax Considerations Take Over Basic Planning Requires Retooling 179 Drafting Strategies to Provide Appropriate Flexibility 185 Trustee and Co-Trustee Ability to Distribute to Surviving Spouse 185 Provide a Third Party With the Authority to Grant the Surviving Spouse a General Power of Appointment 186 Monitorization Now a Requirement 187 Income Taxation of Estates and Trusts Now a Brave New World 188 Undistributed Taxable Income 189 The Exceptions (There Always Are) 191 Grantor Trusts 191

5 Simple Trusts 191 Electing Small Business Trusts 192 Distribution Planning to Minimize Income Tax Liability 192 Distributions and the Use of Entities The Best of Both Worlds? 193 The Plan (Caveat Emptor) 194 The Amount of the Distribution Section 663(b) to the Rescue 195 Distributable Net Income and Fiduciary Accounting Income Here Come the Tax Traps 197 The Cure If One is Available 199 Capital Gains The Distribution Maze 200 The Consistency Rule 204 The Utilization Rule 205 Investment Alternatives to Minimize Trust and Estate Income Taxation 207 Diversification in a Different Form 208 Conclusion 209 New Jersey Estate Tax Update Basis, Booth and Bross Trucking Glenn A. Henkel, J.D., LL.M., C.P.A., A.E.P. 211 Detailed Table of Contents 213 About the Panelists 253

ASPPA ANNUAL CONFERENCE TRUSTS AS BENEFICIARY ISSUES

ASPPA ANNUAL CONFERENCE TRUSTS AS BENEFICIARY ISSUES October 19, 2015 Leonard J. Witman, Esq. Witman Stadtmauer, P.A. 26 Columbia Turnpike, Suite 100 Florham Park, NJ 07932 (973) 822-0220 1 TABLE OF CONTENTS