Discretionary Trust Distributions From Corpus or Income: Avoiding Beneficiary Challenges and Adverse Tax Consequences

A live 90-minute CLE/CPE webinar with interactive Q&A


Wednesday, October 11, 2017
1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, September 22, 2017


This webinar will provide estate planning counsel and fiduciary advisers with a thorough, practical guide to making discretionary non-liquidating distributions of corpus assets from a discretionary trust. The panel will discuss the liability risks involved for trustees making these distributions, detail various state standards on discretionary distribution of corpus, and outline potential challenges from creditors or other beneficiaries to such distributions.

Description

Determining whether and when to make a discretionary distribution of trust assets presents significant challenges for trustees and estate planning counsel in drafting trusts. Estate counsel must fully understand the impact and risks to a fiduciary in exercising discretion to make distributions, particularly of trust corpus, when structuring distribution provisions in discretionary trusts.

A discretionary trust is a type of complex trust that allows a trustee discretion over income or assets distributed to defined beneficiaries. Generally, trust documents specify standards for discretionary distributions. The most common standard is the health, education, maintenance and support (HEMS) standard, defined in Treas. Reg. §20.2041-1(c)(1) as an “ascertainable standard.”

Trust drafters may include other, “unascertainable” standards to provide guidance to fiduciaries. Absent careful drafting and thoughtful trustee selection, use of an unascertainable standard may trigger a general power of appointment or other tax recognition event.

While courts generally give a wide latitude to a trustee’s exercise of distribution decisions within a discretionary trust, beneficiary challenges to distributions have succeeded in cases where the court finds flaws in the discretionary provisions or the trustee’s exercise of distribution powers. Counsel must be fully aware of permissible standards to deter beneficiary disputes and avoid negative tax consequences.

Listen as our experienced panel provides a practical guide to structuring distribution provisions in discretionary trusts, outlines liability risks involved, details various state standards, and examines potential creditor or other beneficiary claims against a distribution.

Outline

  1. Discretionary trusts defined
  2. HEMS standard allowable provisions
    1. Health
    2. Education
    3. Maintenance
    4. Support
  3. Unascertainable standards
  4. Risks in structuring discretionary distribution provisions
  5. Areas of successful beneficiary challenges

Benefits

The panel will discuss these and other important topics:

  • Unascertainable standards that present liability or tax risks to fiduciaries
  • Types of discretionary distribution provisions that courts have ruled defective
  • Elements of HEMS standards, IRC 2014 and governing regulations
  • Risks in distributing assets from corpus of a discretionary trust

Learning Objectives

After completing this course, you will be able to:

  • Identify discretionary provisions that potentially expose trustees to beneficiary disputes
  • Recognize tax risks to trustees or beneficiaries from defective distribution provisions
  • Discern between ascertainable and non-ascertainable standards in discretionary distributions

Faculty

Kenneth J. Fair, Partner
Wright & Close, Houston

Mr. Fair's practice focuses on in the area of general commercial litigation, with an emphasis on complex probate, trust, and fiduciary litigation. He represents executors, trustees, and beneficiaries in will contests, disputes over will and trust interpretation, removal actions, and fiduciary-liability actions. He has written and presented on trust, probate and guardianship issues.

Elizabeth B. (Beth) Taylor
Walny Legal Group, Milwaukee

Ms. Taylor focuses her practice on estate planning, gift and estate taxation, business succession planning, charitable giving, and trust and estate administration. She has extensive expertise in life insurance and its role in planning. She is a frequent speaker on estate planning topics including life insurance and its role in estate planning, planning for business owners, charitable giving, and drafting and funding irrevocable trusts. She is also an author and has been nationally published, including her work as the co-author of Add Flexibility to Irrevocable Life Insurance Trusts.


Live Webinar

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This webinar is eligible for at least 1.5 general CLE credits.

CLE credits are not available for PR.

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CPE on Live Event

Continuing Professional Education credit processing is available for an additional fee per person. You may register for CPE credit processing at any time before or after the program. To qualify for CPE you may not listen via the telephone.

This program is eligible for 1.5 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, drafting wills and trust documents, supervising other estate planners/accountants. Specific knowledge and understanding of gift tax rules and inter vivos transfer provisions; familiarity with valuation provisions and allocation rules governing trust transfers.

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


Recordings

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Additional copies of a recording can be purchased at a discount. Please call Strafford Customer Service toll-free at 1-800-926-7926 ext 10 or email customerservice@straffordpub.com to place your order.

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Live Webinar & Webinar Download $344.00

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Live Webinar & Audio Download $344.00

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Live Webinar & DVD $344.00 plus $9.45 S&H

Includes Special Savings of $250.00 (through 09/22/17)


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September 22, 2017
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Estate Planning Advisory Board

Gary D. Altman

Principal and Founder

Altman & Assoc.

Brian M. Annino

Partner

Annino Law Firm

Richard S. Franklin

Member

Franklin Karibjanian & Law

J. Leigh Griffith

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L. Paul Hood, Jr.

Consultant, Speaker and Author

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Denise L. Iocco

Partner

Windels Marx Lane & Mittendorf

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Atty

Donna J. Jackson, Attorney at Law

Salvatore J. LaMendola

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Giarmarco Mullins & Horton

Edwin P. Morrow, III, Esq.

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Scott K. Tippett

Atty

The Tippett Law Firm

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Partner

Perkins Coie

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