How To Use The CD-ROM

Transcription

1 How To Use The CD-ROM The 2008 Cumulative Supplement to A Practical Guide To Drafting Marital Deduction Trusts (With Sample Forms and Checklists) appears on this CD-ROM as a.pdf document and matches the chapter and section layout of the main volume. Use the bookmark tab at the left to navigate to any particular section of the book to determine if there have been any updates in that section. The sample trust forms (Appendix 1 and 2) are in Rich Text Format and are easily editable using either Word or Word Perfect. Note: The 2004 original book text that has not been changed (i.e., has not been supplemented) is not highlighted. The 2006 Supplement text changes are highlighted in yellow. The 2008 Supplement text changes are highlighted in turquoise. Together, the original (i.e., non-highlighted) text and all of the highlighted text changes on the CD- ROM constitute the 2008 Cumulative Supplement. Caution: Because of the extensive updating of Appendix 3 and its accompanying charts, they contain no highlighting showing changes from the 2004 original text. Consequently, Appendix 3 and its accompanying charts should be read in their entirety since they contains numerous changes from the 2004 original text and from the 2006 Supplement. Practice Point: You can view the 2008 Cumulative Supplement changes by either viewing the changes on your computer screen, and comparing them to the original book s text, or by printing the relevant chapter from the 2008 CD-ROM. Because the 2008 CD- ROM contains the complete book (as updated), a printed chapter replaces the chapter in the original book. Nevertheless, the original book should be retained since it contains a more detailed table of contents, an index, citations, and other finding tools, which the CD-Rom does not contain. Together, the 2008 Cumulative Supplement and the original book provide a comprehensive and timely discussion of marital deduction trust planning.

2 2008 Supplement What s New In the 2008 Cumulative Supplement The 2008 Cumulative Supplement to A Practical Guide To Drafting Marital Deduction Trusts (With Sample Forms and Checklists) by Sebastian V. Grassi, Jr. updates the text of the main volume and includes the two complete updated marital deduction trust forms in an editable format. Among the many new and updated issues covered in the 2008 Cumulative Supplement are: Disclaimers by beneficiary-trustees. When a governing instrument s presumption of survival is ineffective for marital deduction purposes. Disclaimers by beneficiary-trustees. Funding the credit shelter trust through the use of disclaimers. Drafting the marital deduction trust in multiple marital situations. The tax consequences of a QTIP trust investing in a family limited partnership/family limited liability company, and whether a trustee has a duty to invest in such an entity in order to minimize transfer taxes upon the death of the surviving spouse. A discussion of the transfer tax consequences if a surviving spouse, as the sole executor of the estate, makes a Clayton contingent QTIP election. Supercharging an inter-vivos QTIP trust (with contributions by Jonathan G. Blattmachr, Mitchell M. Gans and Diana S. C. Zeydel). How to maximize income from a QDOT in order to minimize the payment of estate taxes on QDOT distributions. How a general power of appointment trust and a QTIP trust can hold non-income producing assets and still qualify for the marital deduction. Five new ways to draft flexibility into marital deduction trusts and credit shelter trusts. Predeceased parent rule and GST tax generation assignments. The final (and the recently proposed) GST tax qualified severance regulations. IRAs payable to trusts, and the IRS s recent ruling concerning the definition of income regarding retirement benefits payable to a marital deduction trust. New IRA distribution flowcharts (contributed by Robert S. Keebler, CPA, MST). And much more. Copyright 2008 Sebastian V. Grassi, Jr. 2

3 Drafting Marital Deduction Trusts 2008 Supplement About the Book and the Author The uncertainty surrounding the repeal of federal estate taxes under the 2001 Tax Act underscores the need for married couples with combined estates greater than $1 million to consider the use of marital deduction and credit shelter trusts to shelter their applicable exclusion amount from further transfer taxation and to defer estate taxation on the balance of their estate through the use of the estate tax marital deduction. There is also a need to draft marital deduction trusts and credit shelter trusts with sufficient flexibility to deal with the possibility of a permanent increase in the applicable exclusion amount (in lieu of permanent estate tax repeal) or the possibility of a permanent repeal of the estate tax. The one-year period of estate and generation-skipping transfer ( GST ) tax repeal during calendar year 2010 provides opportunities for shifting wealth to different family members. This book discuses how to draft the marital deduction and credit shelter trusts that can take advantage of this oneyear window period of opportunity, and provides sample language for the attorney s consideration. Two types of marital deduction trusts that provide flexibility during this period of uncertainty are discussed in detail - the Clayton contingent QTIP trust, and the marital deduction disclaimer trust. Both forms of trust are included on the accompanying CD-ROM. A sample form of inter-vivos QTIP trust with an optional unitrust income provision is also included on the CD-ROM. A Practical Guide To Drafting Marital Deduction Trusts by Sebastian V. Grassi, Jr. sets forth over 150 common (and not so common) tax and nontax issues that an attorney may encounter or want to consider when drafting a marital deduction trust after the 2001 Tax Act. The book demonstrates how to draft marital deduction trusts to take account of these issues, and how to provide flexibility in these uncertain times. Scattered through out the book are numerous Practice Points and Cautions that highlight unusual issues or warn of potential pitfalls. Many of the book s drafting examples are drawn from the sample trust forms, making it easier for the attorney to understand the context in which the sample language should be used. The book also discusses: The seven essential requirements for the marital deduction. The four requirements of a QTIP trust. The four requirements of a general power of appointment trust. The six requirements of a qualified domestic trust for a non-u.s. citizen spouse. The all income requirement for the marital deduction, and its 2 exceptions. The IRS s revised definition of trust income, and its impact on marital deduction trusts The IRS s recent determination of what constitutes income when retirement plan benefits are payable to a marital deduction trust. Fourteen common trustee powers that can affect the marital deduction. The Hubert regulations and their impact on the marital deduction. The 28 rules for GST tax planning with marital deduction trusts. The impact of the 2001 Tax Act on marital deduction planning and drafting. Suggestions for dealing with the repeal of the federal estate tax and generation-skipping transfer tax in Copyright 2008 Sebastian V. Grassi, Jr. 3

4 2008 Supplement The only form of marital deduction trust that is permitted both under current law and when the federal estate tax is repealed is Nine key tax issues concerning the beneficiary-trustee, and how to handle them. Eight issues to consider if the surviving spouse serves as a trustee. Fourteen ways to design flexibility into marital deduction trusts and credit shelter trusts. Thirteen advanced planning opportunities and techniques concerning the marital deduction. The advantages, disadvantages, and tax consequences of the seven most common marital deduction funding formulas. About the Author Sebastian V. Grassi, Jr. of Grassi & Toering, PLC, located in the Detroit suburb of Troy, Michigan, is a member of the Christian Legal Society, where he served on its national board of directors. Listed in The Best Lawyers in America, and in Michigan Super Lawyers, Sebastian is a Fellow of the American College of Trust and Estate Counsel ( ACTEC ), and has served as a member of the Michigan State Bar s Probate and Estate Planning Council. Sebastian s practice emphasizes business law, business transition-succession planning, estate planning and probate, and related real estate matters. Sebastian has published over 90 professional articles on business law, estate planning, and tax matters in ABA Probate & Property, ACTEC Journal, Estate Planning, Journal of Practical Estate Planning, The Journal of Taxation, The Journal of Taxation of Estates and Trusts, Michigan Bar Journal, Michigan Probate & Estate Planning Journal, Michigan Tax Lawyer, Probate Practice Reporter, Tax Management Estates, Gifts and Trusts Journal, Practical Tax Strategies, The Practical Lawyer, The Practical Tax Lawyer, and Tax Ideas. Sebastian is also a winner of the prestigious American Bar Association s Probate & Property Probate & Trust Excellence in Writing Award for Best Practical Use Article. Sebastian is a frequent lecturer for the State Bar of Michigan's Institute of Continuing Legal Education. He also serves on the Institute's Estate Planning Advisory Board, and has served on the Estate Planning Advisory Board of the American Law Institute - American Bar Association ( ALI-ABA ). Elsewhere, Sebastian has lectured at the Electronics Industry Management College, Beijing, Peoples Republic of China, at various ACTEC meetings, at various Probate and Estate Planning Bar Associations, The Michigan Probate Registers Annual Conference, The Annual Great Plains Federal Tax Institute, The Annual Minnesota Probate and Trust Law Section Conference, The Annual Notre Dame Tax and Estate Planning Institute, The National College of Probate Judges, as well as at the University of Michigan Law School. Sebastian is the author of A Practical Guide to Drafting Irrevocable Life Insurance Trusts (with Sample Forms and Checklists) - Second Edition, published by ALI-ABA (800) ( A Practical Guide to Drafting Marital Deduction Trusts (with Sample Forms and Checklists) published by ALI-ABA (800) ( and Understanding Your Eternal Estate Plan ( Copyright 2008 Sebastian V. Grassi, Jr. 4

5 Drafting Marital Deduction Trusts 2008 Supplement Sebastian and his wife, Elizabeth, have three children, Laura, Stephen, and Carolyn. Laura is a specialneeds child. Sebastian can be reached at svgjr@aol.com, or (248) Copyright 2008 Sebastian V. Grassi, Jr. 5