ALI-ABA Video Law Review Advanced Estate Planning Practice Update: Winter 2009 February 5, 2009 Live Video Webcast AGENDA AND SCHEDULE FACULTY PARTICIPANTS FACULTY BIOGRAPHIES STUDY MATERIALS TABLE OF CONTENTS Page ix 1. Advanced Estate Planning Practice Update: Winter 2009 1 Gift on Creation Argument Fails in FLP Context 2 FLP Malpractice 4 67(e) Exception to the 2% Floor 5 Disclaimer Planning is Unreliable 8 Power Subject to a Contingency 9 Protective Claims for Refund Procedure 12 Passive Asset Classification under 6166 13 Extension Denied for Making 6166 Election 15 Deduction of 6166 Interest 16 Tax Apportionment to Phantom Assets 17 Sale of Conservation Easement Triggers 2032A(c)(1)(A) Recapture 18 Conversion to Unitrust Does Not Trigger Gain Realization 19 Hiring the Drafting Attorney to Represent the Executor 20 2. Advanced Estate Planning Practice Update: Winter 2009 21 By Lawrence P. Katzenstein Attempted Charitable Reformation Fails Technical Advice Memo 200840008 22 Disclaimers and Qualified Reformation Save the Charitable Deduction Private Letter Ruling 200840030 24 Substitution Power in GRAT Upheld Private Letter Ruling 200846001 26 Another Failed Attempt to Reform a Defective Charitable Transfer ESB Financial V. U.S. 102 AFTR 2d 2008-6546 27 Charitable Remainder Trust Technique Designated Transaction of Interest by Internal Revenue Service Notice 2008-99 28 Tax Court Upholds Private Annuity Transaction Katz v. Commissioner T.C. Memo 2008-269 30 Trust Modification to Allow Swap Power OK d by IRS Private Letter Ruling 200848006 31 Transfer to Foreign Charitable Trust Qualifies for Gift and Estate Tax Charitable Deduction PLR 200901023 32 vii xi xiii
Borrowing Power Used to Trigger Grantor Trust Status And Allow S Corporation Ownership Private Letter Ruling 2008-40025 33 Duty to Diversity Case Decided by Eighth Circuit Court Of Appeals Nelson v. First National Bank and Trust Company of Williston 543 F.3d 432 34 Notice 2009-5 Interim Guidance Issued to Reflect Changes to Code Section 6694(A) 35 Service Approves Charitable Gift Annuity Reinsurance Plan Private Letter Ruling 200847014 36 IRS Liberalizes Investment Strategies for 529 Accounts Notice 2009-1 37 Are Lottery Winnings Valued Under Section 7520? Another Court of Appeals Weighs In Negron v. United States 38 3. Advanced Estate Planning Practice Update: Winter 2009 41 By Virginia F. Coleman Worker, Retiree, and Employer Recovery Act of 2008 and Extension of IRA Charitable Rollover 42 PLR 200843042: Parent is Designated Beneficiary of Trust for Child Named as Beneficiary of IRA 45 PLR 200846028 and ILM 200848020: Effectiveness Under Section 401(A)(9) of Reformation of Beneficiary Designation or Trust 46 PLRS 200845029 and 200850004: Assignment of D. B. PLAN or IRA to Charity Does Not Give Rise to IRD 49 PLR 200848009: Reformed Pecuniary Bequest Remains a Pecuniary Bequest 51 PLR 200837046: Disclaimer of Interest in IRA 52 PLR 200840038: Split Purchase QPRT Approved PLRS 200848003,007, 008 and 200901019: POST-QPRT QPRT Approved 53 Whitehouse Hotel LTD Partnership et al. v. Comm r, 131 T.C. No. 10: Historic Preservation Restriction Overvalued; Penalty Imposed 55 PLRs 200848002 and 200851013: Grandfathered Split Dollar Arrangements 57 viii
Advanced Estate Planning Practice Update: Winter 2009 Thursday, February 5, 2009 12:00 p.m. 3:15 p.m. Topics Legislative + Regultory Update Notice 2008-99: gain avoidance on accelerated termination of CRT Minimum distribution requirement waived for 2009 IRA $100,000 rollover to charity rule extended for 2009 & 2010 FLP gift on creation argument rejected: Gross FLP Everything Done Wrong: Hurford Trust reformation for 401(a)(9) purposes fails: PLR 200848020 Reformation of beneficiary designation fails: PLR 200849019 State court ordered designated beneficiary ignored: PLR 200846028 2055(e)(3) not met; state authorized reformation: TAM 200840008 2055(e)(3) by disclaimer: PLR 200840030 2055(e)(3) not met; state authorized reformat'n: ESB Financial v. US QPRT created for donors after QPRT termination: PLRs 200848003,7,8 + 200901019 Split purchase QPRT: PLR 200840038 No 67(e) unbundling for filing years before 2009: Notice 2008-116 Negron: Valuation of Annuity Stream Failed disclaimer precludes marital deduction: PLR 200846003 Beneficiary disclaimer of IRA: PLR 200837046 Liberalized investment changes for 529 plans: Notices 2009-1, 2001-55 Power subject to contingency: PLR 200847015 Intermission Questions & Answers Katz and private annuities v. GRATs; low interest planning opportunities Contingent v. successor beneficiary of IRA: PLR 200843042 675 trumps 678 for grantor trust purposes: PLR 200840025 Grantor's exercise of 675(4)(C) power: PLRs 200842007, 200846001 Reformation to add 675(4)(C) power: PLR 200848006, 15-17 No 691(a)(2): designated charity beneficiary: PLRs 200845029, - 50004 Reformation to convert pecuniary to fractional fails: PLR 200848009 6694 preponderance standard changed; Notice 2009-55 re: preparers Protective claims for refund procedure: ECC 200848045 No 9100 relief allowed for missed 6166 election: ILM 200848004 Passive asset or active corporation for 6166: PLR 200842012 Duty to diversify: Nelson v. First Nat'l Tax apportionment for 2035(b) liability: Application of Rhodes Foreign charitable trust; PLR 200901023 ix
Grandfathered split dollar: PLR 200848002 + 200851013 Waldman: Corporate Owned Insurance 2032A recapture triggered by conservation easement: PLR 200840018 Charitable gift annuity reinsurance: PLR 200847014 Conservation easement overvaluation: Whitehouse Hotel Deductibility of interest on 6161 deferrals: CCM 200836027 Cottage Saving on trust conversion: PLR 200840035 Ethics: fiduciary hires drafter: Savu v. Suntrust Bank Questions & Answers Please note that this agenda may be changed at the time of the seminar in order to present the most current topics. Times and order may change; some topics could be added or deleted. A fifteen minute break will be taken at approximately the midpoint. PROGRAM SCHEDULE February 5, 2009 Program Schedule Eastern Central Mountain Pacific Alaska Hawaii National Teleseminar/Webcast 12:00 p.m. 11:00 a.m. 10:00 a.m. 9:00 a.m. 8:00 a.m. 7:00 a.m. Adjournment 3:15 p.m. 2:15 p.m. 1:15 p.m. 12:15 noon 11:15 a.m. 10:15 a.m. Scope and Purpose: Participate in this live video webcast to stay current on developments and trends affected by important recent legislation, regulations, rulings, and cases. Total 60-minute hours of instruction: 3.0; Total 50-minute hours of instruction: 3.6. Suggested Prerequisite: Significant experience in estate planning. Educational Objective: To explore the most current and important issues in estate planning and wealth transfer taxation. Level of Instruction: Advanced PROGRAM (All Times EDT) 12:00 p.m. Estate Planning Update Panel discussion Questions and Answers* 3:15 p.m. Adjournment * Questions and Answers will be integrated into the program. Questions are welcome in advance of and during the seminar by e-mail to vquestions@ali-aba.org (Subject line: Faculty question). x
ALI-ABA Video Law Review Advanced Estate Planning Practice Update: Winter 2009 February 5, 2009 Live Video Webcast PLANNING CHAIR Jeffrey N. Pennell Richard N. Clark Professor of Law Emory University School of Law 1301 Clifton Road, NE Atlanta, GA 30322 FACULTY Virginia F. Coleman Ropes & Gray LLP One International Place Boston, MA 02110 Lawrence P. Katzenstein Thompson Coburn LLP One US Bank Plaza, Suite 3400 505 N. 7th Street St. Louis, MO 63101 xi
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Planning Chair FACULTY BIOGRAPHIES Jeffrey N. Pennell, Atlanta, Georgia Emory University School of Law B.S., J.D., Northwestern University Visiting Adjunct Professor, University of Miami School of Law Graduate LL.M. Program in Estate Planning (1980-1993, since 2000) Academic Fellow, American College of Trust and Estate Counsel (Regent, 1992-1998); Academician, International Academy of Estate and Trust Law Memberships: American Law Institute (Associate Reporter, Restatement (3d) of Trusts; Adviser, Restatement (3d) of Property -- Wills and Other Donative Transfers); American Bar Association (Chair, Probate & Trust Division Income and Transfer Tax Planning Group 2004-2006; Member of Council, 1990-1998, Real Property, Trust and Estate Section); Advisory Committee, Heckerling Institute on Estate Planning Publications include: CASNER & PENNELL ON ESTATE PLANNING (6th ed.)(3 vols. CCH); WEALTH TRANSFER PLANNING AND DRAFTING (West, 2005); ESTATE AND TRUST PLANNING (Co-Author) (ABA, 2005); F EDERAL WEALTH TRANSFER TAXATION (4th ed.)(west, 2003); ESTATE TAX M ARITAL DEDUCTION (BNA Tax Management Portfolio: Estates, Gifts, and Trusts No. 843-2005); E STATE TAX APPORTIONMENT (Co-Author) (BNA Tax Management Portfolio: Estates, Gifts, and Trusts No. 834-2001); F EDERAL TAXATION OF GIFTS, TRUSTS & ESTATES (Co-Author)(West, 1996); INCOME TAXATION OF TRUSTS, ESTATES, GRANTORS AND BENEFICIARIES (West, 1987) Planning Chair, ALI-ABA Courses of Study, Estate Planning in Depth (1990-2003); Annual Estate Planning Update; and Skills Training for Estate Planners (1995-2007) Faculty Virginia F. Coleman, Boston, Massachusetts Ropes & Gray LLP A.B., Radcliffe College; J.D., Harvard University Fellow, American College of Trust and Estate Counsel (Chair, Employee Benefits Committee; Estate and Gift Tax Committee; International Estate Planning Committee); Academician, International Academy of Trust and Estate Law Honors: Listed in BEST LAWYERS IN AMERICA and MASSACHUSETTS SUPER LAWYERS; Estate Planner of the Year (Boston Estate Planning Council, 2002) Government and Public Service: Law Clerk, Massachusetts Supreme Judicial Court Memberships: American Law Institute; American Bar Association (Real Property, Probate and Trust Law Section; Tax Section); International Academy of Trust and Estate Law; Sherrill House (Board of Directors); Mass General Hospital Human Subjects Committee; Mass CLE (Estate Planning Curriculum Advisory Committee) Publications Include: Editorial Board, PRAC. TAX LAW.; Editorial Board, ESTATE PLANNING xiii
Lawrence P. Katzenstein, St. Louis, Missouri Thompson Coburn LLP A.B., Washington University; J.D., Harvard University Adjunct Professor, Washington University School of Law Fellowship: American College of Trust and Estate Counsel Memberships: American Bar Association (Section of Taxation: Past Chair, Charitable Trust Subcommittee of Fiduciary Income Tax and Exempt Organizations Committee; Past Chair, Fiduciary Income Tax Committee); Missouri Bar Association; Bar Association of Metropolitan St. Louis; National Association of College and University Attorneys; New York University School of Law, National Center on Philanthropy and the Law (Board of Advisors); Saint Louis Symphony Orchestra (Trustee and Member of Executive Committee); American Civil Liberties Union of Eastern Missouri (Former President and Board Member); Citizens for Modern Transit (General Counsel, Past Board Member); Pershing Place Improvement Association (Trustee); Saint Louis Zoo (Board of Trustees) Publications include: Tiger Tables actuarial software; How to Squeeze the Most Tax Benefits Out of Charitable Giving, St. Louis Law (Nov. 2003) Planning Co-Chair, ALI-ABA Course of Study, Charitable Giving Techniques xiv