Income producing real estate is a valuable asset class for a diversified portfolio because of its potential for high (and stable) current yield, inflation protection and, more importantly, diversification.
Much has been made recently of professional athletes, like Phil Mickelson, considering fleeing less favorable state tax jurisdictions. Many clients will wander the country, and even the globe, in search of jurisdictions willing to tax less of their incomes or estates. Many states have imposed ever-higher taxes, resulting in a new migration of clients prepared to wander from their old place of domicile to a new, less-taxing place.
The First District, in an opinion last year, effectively nullified – perhaps inadvertently – an element of the Prudent Investor Rule in Illinois. The ramifications are still being felt, but trust counsel and practitioners alike must be on notice: the duty of a trustee to remain impartial when investing marital trust assets has been eviscerated by Carter v. Carter. An investment solely in tax-free municipal bonds for an entire trust was upheld without dissent in a ruling that was not filed under Rule 23.
There can be no better test of an estate planner's skill than with creative, focused drafting of estate planning documents to achieve client specific objectives. Tremendous value can be added to any estate plan by inventive, thoughtful estate plan drafting. And yet, whether the estate planner feels enriched and intellectually challenged may not be the correct focus. The question is what does the client anticipate and value.
When attorneys draft trust documents, it's important to include maximum flexibility mechanisms to better respond to future tax, societal and beneficiary changes. Despite our clients' and our belief in crystal ball prognosis, these situations really are unforeseeable.
The exit times from family limited partnerships are two fold, during life or at death. And the exit strategy most often applied is complete liquidation of the partnership and distribution of partnership assets. This is particularly true with a family partnership that is made up primarily of marketable assets (a “MAP,” or “marketable asset partnership”).
The article, “Should Pets Inherit?” by Frances H. Foster, is an important practical piece for estate planners. His theme, that pets should be allowed to inherit to a similar extent as individuals, is well argued, but along the way, he points out important pitfalls to practitioners when planning for pet bequests.
Insurance is often touted to be one of those rare assets free of estate tax. Not exactly. It is not free of estate tax to any greater extent than cash or marketable securities. But insurance transferred to a third party, much like cash and marketable securities transferred to a third party, is free of estate tax. And insurance, because it has no value (in the case of a term policy) or minimal value (in the case of a whole life policy) at inception of a policy, is a seemingly easier asset to gift than cash or marketable securities because the transfer of insurance has minimal gift tax concerns.