Bryan Cave  Life Death and Taxes

Trust Bryan Cave

ARCHIVE

Main Content

GRAT Planning in a Down Market

GRAT Planning in a Down Market

September 30, 2011

Authored by: Justin Flach and Doug Stanley

As I walked into the office, I noticed that the market was already down 100 points today.  It’s been doing that a lot lately.  And then it goes back up a little.  And then back down.   While the market is busy doing gymnastics and we’re all concerned about our portfolios and retirement plans, the one thing that shouldn’t get lost in the haze of bad economic news is that now is a great time to do some estate planning.

Setting aside taxable gifts for the moment, let’s focus on a strategy that works best when assets have a built in potential to increase in value and interest rates are low: the grantor retained annuity trust, or a GRAT.

At its most basic level, a GRAT works like this: you give

I am the parent of a child with special needs…

Should my relatives give money directly to my child with special needs?

No.  Family members and friends should be cautioned against gifting money or property, or leaving money or property in their wills directly to your child except in ways that do not result in a loss of eligibility for public benefits or liability for the cost of your child’s care.  If you desire, a special needs trust can be established during your lifetime to accept such gifts.  It would be prudent to have grandparents’ wills reviewed by an attorney familiar with special needs trusts to avoid bequests that will have unintended and unwanted consequences.  Further, neither you nor your relatives should establish any Uniform Transfer to Minors Act (UTMA) accounts for your child, as these accounts may disqualify your child for Supplemental Security Income (SSI) and Medicaid.

IRS Announces October 2011 Interest Rates

September 20, 2011

Categories

The October 2011 7520 Interest Rate dropped to 1.4%.

The October 2011 Applicable Federal Rates can be found here.

With interest rates dropping, October may be  a good month to consider refinancing existing promissory notes.  Consider contacting your attorney if you have any existing notes with high(er) interest rates.

Bryan Cave Private Client Attorneys Named Best in America

September 15, 2011

Categories

Congratulations to the following members of Bryan Cave’s Private Client group, who were named to the 2012 edition of The Best Lawyers in America:

In our Atlanta office:

William Linkous, Jr.

Frank McGaughey

In our St. Louis office:

Lawrence Brody

Michael N. Newmark

John D. Schaperkotter

Kathleen R. Sherby

Franklin F. Wallis

In our Washington, D.C. office:

Mary Ann Mancini

For a complete list of the 116 Bryan Cave lawyers selected for the 2012 edition, click here.

Advance Directives, Preparing for Your Incapacity

A doctor must obtain informed consent from you before providing medical care or performing any type of medical treatment. If you are unable to communicate your wishes, state laws determine with whom the doctor should consult regarding these decisions and the decisions would be made with the medical preferences of the family member(s) and the doctor. However, you can direct who should make these decisions and establish your preference with an advance directive for healthcare.

An advance directive is a document authorized by state law that combines a living will with a healthcare power of attorney. This document is typically referred to as an advance directive because it allows you to provide your directions in advance of your incapacity, but the exact name of the document will vary from state to state. Most people have heard of a living will, which allows you to state end-of-life treatment preferences when you

How Reproductive Technology Can Affect Your Estate Plan in Unforeseen Ways

On August 29, 2011, the 8th U.S. Circuit Court of Appeals in St. Louis held that an eight-year-old Iowa girl born two years after her father died is not eligible to receive his Social Security benefits.   If your grandmother, like mine, would have thought it was fishy that a child was born less than nine months after a wedding, imagine her reaction to learning that a child was born two years after the father’s death!

But with the use of assisted reproductive technology, like in vitro fertilization and artificial insemination, it IS now possible for a baby to be born more than 9 months after a parent dies. The use of assisted reproductive technology means that, if a parent preserves his or her genetic material (his sperm, her eggs, or their

Intentionally Defective Irrevocable Trusts: A Great Way to Transfer Wealth, Especially In Low Interest Rate Environments

The current low interest rate environment provides excellent opportunities to transfer wealth to family members.   One approach commonly used to accomplish this goal is to sell assets to an intentionally defective irrevocable trust (“IDIT”).  An IDIT is an irrevocable trust for the benefit of someone other than the creator of the trust (the “Settlor”), perhaps Settlor’s descendants.  However, the “intentionally defective” component of the IDIT means that, for income tax purposes, the assets in the trust will continue to be treated as owned by Settlor.  Thus, Settlor’s sale of assets to the IDIT will not result in income tax consequences.   Additionally, Settlor’s payment of income taxes on the income earned by the IDIT provides an additional means of reducing Settlor’s taxable estate, while allowing the benefits of the income earned by the IDIT to benefit Settlor’s descendants.

Typically, Settlor will take back a promissory note for the assets

The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.