Much discussion has been had since Estate of Strangi ("Strangi II"), on that mysterious section, 2036 (a) (2) of the Code, and its implications. But estate planners have been dealing with 2036 (a) (2) and trusteeship issues for a long time.
Last month, this column examined the McCord’s analysis on the definitional gift issue, in which the 5th Circuit reversed the Tax Court and upheld the validity of a definitional gift for gift tax purposes. This month the column examines the discussion in the 5th Circuit’s opinion of the unusual net gift concept.
Many of our recent estate planning columns have focused on developments in the partnership area. The reason: the law in this area keeps evolving as more partnership decisions are handed down. And practitioners keep using partnerships as an estate tax strategy.
The grantor retained annuity trust (“GRAT”) has been statutorily allowed by Congress since 1990. Used properly, the GRAT can transfer part or all of a wealthy person's business to the next generation, free of gift tax and in a way that removes the business from estate taxation.
Picture the smiling face of a child staring at a cookie jar. What joy to see the cookies loaded in, knowing that, in time, the occasional cookie will be dispensed. Now imagine the joy on that same child’s face when he or she raids the cookie jar, cradling as many cookies as a child can hold.
Joint trusts-avant garde and often confused with that horrible species of instruments known as a "joint Will"-have been shunned as an estate planning vehicle by most practitioners in common law states, such as Illinois. They are used almost exclusively for estate planning for married couples in community property states, but that is because the community property laws lend themselves (and often demand) that a jointly owned trust be used to hold community assets.