Disclaimer Trusts and Estate Planning: Drafting Disclaimers, Clayton QTIPs and OBITs to Overcome Portability Limitations

Recording of a 90-minute CLE video webinar with Q&A


Conducted on Tuesday, February 23, 2021

Recorded event now available

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Program Materials

This CLE webinar will provide a comprehensive guide to both planning opportunities and post-mortem "fixes" through the proactive use of qualified disclaimers. The panel will offer suggestions for structuring joint accounts, beneficiary designations, disclaimer funded bypass or optimal basis increase trusts, Clayton QTIPs and formula powers of appointment to be "disclaimer-friendly," and using qualified disclaimers to fix estate plans, including when qualified plan benefits are made payable to trusts that may not otherwise be optimized for maximum tax deferral.

Description

Understanding the opportunities afforded by disclaimer planning is significantly important under current tax law with the increase in estate/gift/GST tax exemption (and the potential 2026 "cliff"). Disclaimer-funded trusts and Clayton QTIPs offer important post-mortem tax flexibility but are advisers properly planning for the optimal result once that decision is made? The panel will explore important differences between these two techniques and when they may even be used together.

Estate planners can maximize flexibility and, in many cases tax deferral, by properly using disclaimers as a component of spousal estate plans. Sometimes, even non-qualified disclaimers should be considered. Moreover, with an increased focus on basis, many planners miss the non-intuitive situations in which qualified disclaimers by surviving spouses can actually increase the cost basis of assets at the first decedent's death beyond what would be available without such disclaimer planning.

When used with optional basis increase trusts (OBITs), disclaimers provide a powerful income tax savings tool for estate planners.

Listen as our authoritative presenter will review the important basics of qualified disclaimers, special rules for spouses, and Clayton QTIPs, provide a comprehensive and practical guide to disclaimer trust planning, explain post-mortem tax and asset protection planning, and discuss maximizing the benefits of formula powers of appointment and see-through trusts.

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Outline

  1. Review of IRC 2518 and regulation requirements regarding "qualified disclaimers"
  2. Clayton QTIP
  3. Comparing, contrasting, and synthesizing disclaimer and Clayton QTIP planning
  4. Cascading spousal disclaimers
  5. Using qualified spousal disclaimers to increase basis at the death of the first spouse
  6. Unique features of optimal basis increase trusts vis a vis qualified disclaimers
  7. Proactive planning--begin with the end in mind by setting up contingent beneficiaries
  8. Post-mortem "fixes" via a disclaimer
  9. Post-mortem "fixes" to IRA see-through trusts via a disclaimer
  10. Contrasting nonqualified disclaimers and releases
  11. Asset protection impact of disclaimers
  12. Drafting tools and traps to avoid

Benefits

The panelist will review these and other key issues:

  • Circumstances where a disclaimer trust and/or Clayton QTIP is an advantageous alternative and when they should be avoided
  • Coordinating disclaimers with OBITs to overcome drawbacks of bypass trusts and traditional disclaimer funding
  • Issues and opportunities with large qualified plans and IRAs
  • Asset protection issues that arise

Faculty

Hood, Paul
L. Paul Hood, Jr., JD, LL.M, CFRE, FCEP

Consultant
Paul Hood Services

A native of Louisiana (and a double LSU Tiger), Mr. Hood obtained his undergraduate and law degrees from Louisiana...  |  Read More

Morrow, Edwin
Edwin P. Morrow, III, J.D., LL.M. (Tax), MBA, CFP, CM&AA
Wealth Strategist
Huntington National Bank Private Wealth Management

Mr. Morrow works with local Huntington Bank private wealth management teams and their clients. He focuses on thought...  |  Read More

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