Tag Archives: AALU

Finseca (AALU) – Florida jumps into the deep end with major trust legislation

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The Florida Community Property Trust Act (Florida Statutes Section 736.1501 et. seq.) and the Florida Uniform Directed Trust Act (Florida Statutes Section 736.1401 et. seq.), which became effective on July 1, 2021, enable spouses to create a Community Property Trust….  As a result, for those practitioners who regularly advise clients who are thinking of moving to Florida, these Acts will increase the allure of Florida as both a domicile and trust situs, particularly for those with an interest in wealth transfer planning.

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Trust Modifications: Innovative Techniques for Outdated Instruments

Happy Thanksgiving to All:

“Although the grantor of an irrevocable trust surrenders the right to revoke the trust and amend its terms, the restrictions are no longer as limiting as they once were. Alternatives to judicial modifications abound. From nonjudicial settlement agreements to new trends in decanting practices to innovations in modifications by consent, clients, trustees, and beneficiaries have many potential avenues for modifying an irrevocable trust to accomplish their legacy planning goals.”

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Zooming Into a New Age of Trust Situs

“The novel coronavirus has led many people – trustees, trust beneficiaries and advisors alike – to relocate their primary workplace or residency for the time being, sometimes across state lines.  An irrevocable trust’s situs, or place of administration, may be impacted as this migration continues through the pandemic and likely into the future.  The results may be intentional or inadvertent, with each having its own benefits and risks that should be evaluated both opportunistically and out of an abundance of caution.”

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Defined Value Clauses: An Important Tool for Turbulent Times

 WR marketplace 

“As the 2020 presidential election approaches, uncertainty continues regarding the potential for tax legislation and changing market conditions, causing many to consider using current transfer tax exemptions with gifts before year-end.  Individuals planning to transfer hard-to-value assets may wish to consider using a gift agreement with a defined value clause to shield against unwanted gift tax consequences.”

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Case Study: The Reciprocal Trust Doctrine – A Trap for the Unwary

“The reciprocal trust doctrine can unwind legacy planning that involves mutually beneficial trusts; however, a careful and deliberate approach can shield transfers against application of the doctrine. In 2020, legacy planning for spouses and other related parties has focused largely on full use of their gift and estate tax exemptions due to the risk of prospective changes in the amounts of such exemptions. This type of planning often involves implementing mutually beneficial irrevocable trusts so that each party continues to have access to resources after the party gives assets away (e.g., spouses who each establish a spousal lifetime access trust (“SLAT”) for the benefit of the other spouse). However, such trusts can sometimes contravene the reciprocal trust doctrine, which applies to interrelated trusts that have substantially identical terms and are part of the same transaction or plan. While the facts of each case are unique, best practices indicate that related grantors vary several factors among the respective trust agreements to reduce the risk of reciprocal trust treatment.”

To read the full report, click here.

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Highlights from the 54th Annual Heckerling Institute on Estate Planning

“Modern strategies for legacy planning with today’s clients were the focus of discussions at the 2020 Heckerling Institute on Estate Planning.  The 54th Annual Heckerling Institute on Estate Planning (the “Institute”) focused on the ongoing effects of the Tax Cuts and Jobs Act (“TCJA”), including: (1) legal and regulatory developments concerning life insurance; (2) benefits and burdens of grantor and non-grantor trust status; (3) planning considerations for migratory clients; (4) state income taxation; (5) implications of the SECURE Act; and (6) planning for the generation-skipping transfer (“GST”) tax on nonexempt trusts.”

To read the full report, click here.

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AALU: Legacy Management: A Fresh Look at an Age-Old Business

While traditional estate plans may cost less, the value added with a comprehensive legacy management approach generally exceeds its marginally higher expense. Proactive management supported by a cooperative multi-disciplinary team helps families see what is on the horizon and efficiently navigate changes. Professional services rendered to implement and maintain a plan also eliminate many costly issues that routinely emerge when clients use a less sophisticated or “DIY” approach.

To read the full report, click here.

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AALU: Post-Mortem Liquidity Planning: A Fiduciary’s (Limited) Toolbox

“In the absence of life insurance, options for fiduciaries to generate needed liquidity for estate taxes and expenses may be limited, creating additional hurdles for estate administration and post-mortem planning.” 

To read the full report, click here.

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The §6166 Estate Tax Deferral for Closely Held Business: Q&A’s

“In business succession planning, a §6166 deferral election may provide a powerful post-mortem planning tool to help minimize the initial strain on the estate and prevent a forced sale of the estate’s business interest. However, the election’s complex administrative and compliance requirements and the potential for payment acceleration make it an insufficient substitute for lifetime succession planning.”

To read the full report, click here. 

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Watch Your Step – Fiduciary Pitfalls for Trustees of Irrevocable Life Insurance Trusts


“Sample cases targeting trustees vividly illustrate unique fiduciary challenges in terms of trust administration and asset management, including for irrevocable life insurance trusts (“ILITs”).  The growing complexity of life insurance products and the potential for increased gifts in the next several years can make ILIT administration far more complicated than anticipated, particularly for non-professional trustees.”

To read the full report, click here.

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