Structuring Joint Trusts in Separate Property States to Avoid Income and Gift Tax Pitfalls

Identifying "Problem" Assets, Coordinating JRTs With Credit Shelter Trusts, Drafting GPOAs, and More

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


Conducted on Tuesday, May 23, 2017
Recorded event now available


This CLE/CPE webinar will provide estate planners and advisers with a thorough and practical guide for utilizing joint trusts in separate property/common law states. The panel will outline the situations in which to use joint marital trusts and where to steer clear. The webinar will identify specific tax traps to avoid and will offer specific drafting language to maximize the benefits and minimize the risks of using joint marital trusts in common law states.

Description

The question of whether to utilize a joint marital trust in a state that does not default to community property law is one that can present both risk and reward. For couples in certain situations, separate trusts are generally more advisable; however, for many couples, setting up a joint trust is their preferred vehicle for wealth planning. There are specific tax pitfalls estate planning counsel must avoid when structuring joint trusts in separate property states.

Navigating the gift tax consequences is critical when setting up a joint trust in a separate property state. In circumstances where the spouses contribute unequal amounts, the funding of the trust could trigger a gift tax consequence if the trust instrument does not properly assign the power to revoke or withdraw assets.

There are also income tax risks in structuring a joint trust in a separate property state. Most of these issues can be avoided through careful drafting of the trust document, but estate planners must be prepared to identify and manage these hidden tax risks.

Listen as our experienced panel provides thorough and practical guidance to structuring a joint trust to operate in a separate property/non-community property state.

Outline

  1. Tax and non-tax considerations for utilizing a JRT in a separate property state
  2. Gift and estate tax issues to avoid in funding and administering a JRT in a separate property state
  3. Income tax issues and potential advantages of JRTs
  4. Drafting recommendations and resources

Benefits

The panel will review these and other key issues:

  • What are the gift tax risks to utilizing a joint revocable trust in a separate property state?
  • What “problem” assets require special attention when used to fund a joint revocable trust?
  • Coordinating joint revocable trusts with credit shelter trusts
  • Drafting general power of appointment in JRTs in non-community property states

Learning Objectives

After completing this course, you will be able to

  • Decide when counsel should recommend using a joint marital trust sited in a separate property state, based on client circumstances
  • Determine how to structure the trust to avoid gift tax consequences, both at the time of funding and settlement
  • Recognize other possible adverse tax events, including income tax recognition requirements, that may arise from funding a joint marital trust in a separate property state
  • Identify non-tax considerations for utilizing a joint trust in a non-community property state
  • Discern useful drafting language to ensure that the trust is structured in a tax-efficient manner

Faculty

Lauren Evans DeJong, Of Counsel
Stahl Cowen Crowley Addis, Chicago

Ms. DeJong counsels individuals with regard to estate planning, estate and trust administration, asset protection and tax and business planning. She works with individuals and their families in areas related to transferring and preserving wealth, business succession, planning for disability, special needs and health care coverage. She also represents clients in connection with probate, trust and guardianship proceedings and before the U.S. Tax Court with regard to federal tax matters. In the corporate arena, she counsels closely held businesses and start-ups in the areas of entity formation, organizational and strategic planning, and contract drafting.

Scott K. Tippett, Atty
The Tippett Law Firm, Oak Ridge, N.C.

Mr. Tippett's practice focuses on wealth law, as a comprehensive and integrated approach to domestic and international estate planning, asset protection planning, business matters, and tax issues. He is the principal author of The North Carolina Wealth Law Counselor and The Wealth Lawyer, informative blogs dedicated to wealth law, estate planning, and asset protection planning issues.


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Customer Reviews

The seminar was very informative and easy to understand.

Amy Allison

Anderson Hunter Law Firm

The webinar offered excellent insight into some specific areas.

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Virginia Beach Law Group

I thought the information provided was great.

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Law Offices of Marcia L Kraft

Better than I expected. Well done on both subject matter and production quality.

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The program was well organized and discussed the major issues.

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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

Partner and Practice Group Leader - Tax

Waller Lansden Dortch & Davis

L. Paul Hood, Jr.

Consultant, Speaker and Author

The University of Toledo Foundation

Denise L. Iocco

Partner

Windels Marx Lane & Mittendorf

Donna J. Jackson

Atty

Donna J. Jackson, Attorney at Law

Salvatore J. LaMendola

Member

Giarmarco Mullins & Horton

Edwin P. Morrow, III, Esq.

Senior Wealth Specialist

Key Private Bank Wealth Advisory Services

Scott K. Tippett

Atty

The Tippett Law Firm

Susan M. von Herrmann

Partner

Perkins Coie

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