About the Author ix
Introduction 1
Chapter 1 Estate Planning Objectives 3
Notes 5
Chapter 2 Inventory of the Client’s Assets and Objectives 9
A. Scope of Factual Analysis 9
B. Family 9
C. Assets and Liabilities 10
D. Cash Flow Analysis 11
E. Present Objectives for Estate Disposition 11
Notes 12
Chapter 3 Preliminary Estate Planning Considerations 15
A. Expanded Responsibilities of the Professional Tax Advisor 15
B. Facilitating Lifetime Capital Formation 16
C. Fundamental Federal Income Tax Planning 17
D. Managing and Structuring the Closely Held Business Ownership: Family Business Succession Planning 18
E. Additional Important Preliminary Planning Inquiries 19
F. Financial Adequacy of the Estate 22
G. Hypothetical Probate Administration 23
H. Lifetime Asset Management 23
Notes 24
Chapter 4 The Basic Federal Transfer Tax and Income Tax Structure 29
A. Estate, Gift, and Generation?Skipping Transfer Taxes 29
B. Related Federal Income Tax Considerations 45
Notes 52
Chapter 5 Fundamental Testamentary Planning 81
A. Basic Mechanisms for Transferring Property 82
B. Trusts 94
C. Credit Shelter Trust 112
D. Estate Tax Marital Deduction Transfers 114
E. Powers of Appointment 158
Notes 167
Chapter 6 Lifetime Asset Transfers 223
A. Lifetime Gifts—Arguments for and Against 223
B. Basic Federal Tax Considerations 225
C. Methods of Completing Gifts 232
D. Specific Types of Gifts 234
Notes 255
Chapter 7 Intrafamily Transfer Alternatives to Gifts 285
A. Intrafamily Sale/Leaseback or Gift/Leaseback 286
B. Intrafamily Installment Sales 287
C. Interest-Free Loans of Money 293
D. Loans of Property or Credit 297
E. Tax-Free Property Exchanges with Family Members 298
F. Private Annuities 300
G. Joint or Split Purchases 310
H. Sale of Remainder Interest in Property 317
I. Grantor Retained Annuity Trust and Unitrust 321
J. Personal Residence Trusts 327
K. Transfers of Family Properties Summarized 337
Notes 337
Chapter 8 Generation-Skipping Transfers 361
A. Purpose of the Generation-Skipping Transfer Tax 361
B. Definitional Provisions 362
C. Tax Computation 365
D. Exemptions 369
E. GST Tax Planning Considerations 370
Notes 371
Chapter 9 Special Nonprobate Planning Situations 377
A. Joint Property 377
B. Community Property 383
C. Life Insurance 394
D. Commercial Annuities 408
E. Charitable Transfers 411
F. Foreign Trusts 426
Notes 431
Chapter 10 Special Business Planning Situations 475
A. Family Business Planning Options 475
B. Closely Held Family Corporations 476
C. Closely Held Partnerships and Limited Liability Companies 492
D. Special Valuation for Family Farms and Real Property 502
E. Qualified Family?Owned Business Interests 511
Notes 514
Chapter 11 Special Executive Compensation/Deferred Benefits Estate Planning 543
A. Executive Compensation Planning 543
B. Qualified Pension and Profit?Sharing Plans 552
C. Self?Employed Individual 558
D. Individual Retirement Account 559
E. Business?Originated Life Insurance 561
Notes 569
Chapter 12 Post?Mortem Estate Planning 591
A. Planning Options 591
B. Income Tax Planning Opportunities 592
C. Renunciations and Disclaimers 597
D. Waiver of Fee by Fiduciary 600
E. Solving Estate Liquidity Problems 601
F. Alternate Valuation 609
Notes 610
Chapter 13 Estate Planner–Client Relationship 627
A. Professional’s Responsibility 627
B. Determining the Amount of the Estate Planner’s Fee 632
C. Income Tax Deduction of Estate Planning Fees 633
Notes 636
Appendix: Worksheets 647
Bibliography 721
