Heckerling
Institute 2003
Reports from the event, as posted to the ABA-PTL List Serve |
Report #7
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to 2003 Table of Contents
This report from Glen Yale covers several presentations.
Also, a later report from John Warnick does the same. Joe
Hodges has provided a copy of the full institute program that sent
in a separate e-mail. If you have questions about the programs
referred to in this report, please see the program description.
- Gene Zuspann
As we have done in January for the last six years, and again with
the permission of the University of Miami School of Law Center for
Continuing Legal Education, we will be posting to this list throughout
the coming week highlights of the proceedings of the 37th Annual
Philip E. Heckerling Institute on Estate Planning that is being
held January 6-10, 2003 at the Fontainebleau Hilton Resort and Towers
in Miami Beach, Florida.
We also will be posting the full text of this year's Reports on
the ABA RPPT Section's Web site, as we have since the 2000 Institute.
Those Reports can be found at URL http://www.abanet.org/rppt/meetings_cle/heckerling/home.html.
In addition, each Report can also be accessed at any time from the
ABA-PTL Discussion List's Web-based Archive at URL http://mail.abanet.org/archives/aba-ptl.html.
A complete listing of the proceedings and speakers is available
on the Institute's Web site.
The URL for that site is http://www.law.miami.edu/heckerling.
===================================================
REPORT NO. 7
The following report was sent by Glen A.Yale. It covers Estate
Planning With GRATs and Near-GRATs – Opportunities and
Pitfalls of a Cloudy Crystal Ball by John R. Price, What Do You
Mean, Subpoena? I’m a Lawyer! by Russell G. Allen, and One
Percent, Two Percent, Three Percent, Four – No Matter What, You
Pay, the Bene Wants More by Susan Porter
Russell Allen gives superb coverage
of the issues involved in his two
sentence titled topic "What Do You Mean Subpoena? I'm a Lawyer!"
After
reviewing the attorney-client privilege, the attorney work product
doctrine
and the tax practitioner's privilege, Allen shows that under the
common law
there was a fiduciary exception to the attorney-client privilege
under the
notion that advice given the trustee was ultimately for the benefit
of the
beneficiaries and could be discovered. Recent cases in Texas and
California
in addressing situations in which the attorney-client privilege
is codified
take the better approach that the attorney represents the trustee
and the
beneficiaries are better served by permitting the attorney to seek
privileged advice. He gives proposed language to draft around the
problem
in states that do not follow the Texas and California approach.
In Federal tax controversies
the attorney-client privilege is often
unavailable because of the view that advice for tax preparation
was not for
purposes of litigation and that business advice or communication
to prepare
a tax return was not legal advice.
The work product doctrine suffers
particularly under the anticipation of litigation requirement.
Some recent
cases that take a more reasonable approach are
discussed. Communications
that involve advice may be protected if there
is no waiver and documents
that explain a transaction but does not contain legal advice
will also not
be privileged.
In Estate Planning with
GRATs and Near-GRATs ? Opportunities and
Pitfalls of a Cloudy Crystal Ball, the learned Prof. John R. Price
proposed
a new device after stating the two gambles of a GRAT, (1)
the value of the
property transferred will appreciate at a rate greater than
the §7520 rate
and (2) the grantor will survive the reserved term; and giving his
argument
that the IRS position is highly questionable
that IRC §2039 applies to
bring into the grantor's estate the entire trust property
when the grantor
does not survive the trust term. Prof. Price proposes
eliminating some of
the risks of the GRAT by a
sale to an income tax defective trust in
exchange for an annuity for a fixed term. His article
gave more detail on
the device:
1. Client creates an IDIT, from which discretionary
distributions can be
made to his children and grandchildren.
2. Client transfers a significant amount of property,
say $100,000 to
$1,000,000 to the IDIT. Client's GSTT exemption is allocated to
the
transfer so the IDIT will be completely exempt.
3. Client transfers assets that qualify for a substation
valuation
discount (e.g., closely held stock or units of an FLP or LLC) to
the IDIT
in exchange for payment of an annuity for a fixed term. Payments
are to be
made to the client as long as he lives. If the client dies before
the end
of the term any remaining payments are to be made to his estate.
The
annuity agreement should be drafted to meet the requirements of
§2702.
Prof. Price proceeded to set forth the income,
gift, GST and estate tax
consequences of his device. With Waltan and his new devise,
the advantages
are "almost irresistible."
Susan Porter with U.S. Trust
Company gives the independent trustee's
perspective on how to approach the
income beneficiary's and remainder
beneficiary's high expectations as to investment returns and
allocation of
income and principal as well as distribution expectations
in One Percent,
Two Percent, Three Percent, Four?No Matter
What You Pay, the Bene Wants
More. In her paper and her oral
presentation she explained how an
ascertainable standard limited to "health,
education, maintenance and
support" might not meet the grantor's expectations of
distributions to the
income or residuary beneficiaries. Further,
ascertainable standards may
require distributions that are not desired, such as
funds that disqualify
for government assistance. Independent
trustees favor "wide-open"
discretionary distribution standards so expected distributions can
be made.
Through three cases, McNeil I, McNeil II, and
Hinrichs, the distribution
decision-making where the trustee has sole discretion were
explored by Ms.
Porter. Trustees must give full communication to the beneficiaries
to avoid
liability, but after doing so the discretion at most
will be subject to a
reasonableness standard.
__________________________________________
GENERAL INFORMATION:
Inquiries/Registration:
Philip E. Heckerling Institute on Estate Planning
University of Miami School of Law
Center for Continuing Legal Education
P.O. Box 248087
Coral Gables, FL 33124-8087
Telephone: 305-284-4762 / FAX: 305-284-6752
Web site: www.law.miami.edu/heckerling
E-mail: heckerling@law.miami.edu
===========================================
Headquarters Hotel - Fontainebleau Hilton
4441 Collins Avenue
Miami Beach, FL 33140
Telephone (305) 538-2000, FAX (305) 674-4607
==================================================
NOTICE: Although audio tapes of all of the substantive session
at the Miami Institute currently are only made available to Institute
registrants for purchase, the entire proceeding of the Institute
are
published annually by Lexis/Nexis. For further information, go to
their Web site at http://www.lexisnexis.com/productsandservices.
The text of these proceedings is also available on CD ROM from
Authority On-Demand by LexisNexis Matthew Bender. For further
information, contact your sales representative, or call (800) 833-
9844, or fax (518) 487-3584, or go to http://www.bender.com,
or write to Matthew Bender & Co., Inc., Attn: Order Fulfillment
Dept.,
1275 Broadway, Albany, NY 12204.
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//-----------------------------------------------------------------------
Eugene P. Zuspann II
Denver, Colorado
Mail:
ezuspann@zuspann.com
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