Leveraging Defined Value Clauses to Mitigate Estate and Gift Tax

Drafting Formula Clauses and Donee Selection Post-Petter

Recording of a 110-minute CLE/CPE webinar with Q&A

Conducted on Tuesday, May 31, 2011

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will provide guidance on using defined-value clauses in estate planning, estate administration, and intra-family sales, offer examples of Petter-type clauses, analyze pros and cons of alternative recipients for excess value, and discuss strategies for dealing with risks of IRS challenges.


The IRS has challenged certain formula clauses in estate planning and related party sales transactions for hard to value assets. Recent taxpayer victories using defined value clauses provide individuals with techniques including charitable lid planning to limit transfer tax liability.

The prior landscape set by Comm’r v. Procter was dramatically changed by cases including Estate of Petter v. Comm’r and Estate of Christiansen, which provide guidance for minimizing gift and estate tax risks associated with intra-family sales, gift transfers and estate bequests.

Care must be taken in structuring transactions involving interests in closely held businesses and other assets whose value may be subject to dispute. Using charitable vehicles and non-charitable trusts as recipients of excess value can play an important role in estate planning strategies.

Listen as our authoritative panel of estate planning specialists offers best uses for Petter-type clauses, suggests alternative recipients for excess value, and discusses strategies for dealing with IRS challenges.



  1. Defined value clauses
    1. Definition
    2. Case law
    3. Statutes and regulations
    4. Updates
  2. Uses of defined value clauses
    1. Wills
    2. Gifts
    3. Sales
    4. Trusts
    5. Disclaimers
  3. Alternative recipients for excess value under Petter-type formula allocation
    1. Public charity
    2. Donor advised fund
    3. Private foundation
    4. GRAT
    5. CLAT
    6. Intervivos QTIP
  4. Strategies for dealing with IRS challenges
    1. Documenting transactions
    2. Appraisals
    3. Decisions about reporting transactions on gift tax returns


The panel will review these and other key questions:

  • How can defined-value clauses best be used in estate, gift and inter-family sale transactions?
  • What are the best strategies to avoid invalid disclaimers?
  • What provisions should be included in trust agreements and purchase agreements?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Michael Whitty
Michael Whitty

Vedder Price

He concentrates his practice in estate planning, taxation, and estate and trust administration. He is a Fellow of the...  |  Read More

Susan M. Holzman
Susan M. Holzman

Orloff Lowenbach Stifelman & Siegel

Her focus is on tax and estate planning, including business succession planning, generation-skipping transfer tax...  |  Read More

David J. Slenn
David J. Slenn

Akerman Senterfitt

He is Co-Chair of the ABA's Asset Protection Planning Committee. He speaks nationally on the topic of asset protection...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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