Archive for the ‘Thursday Reports’ Category

The Thursday Report – 10.1.15 – Charting Genetics

Posted on: October 1st, 2015

Marital Asset Preservation Systems (MAPS) by Alan Gassman

Physical Remains of a Decedent – Assets of the Estate or Subject to the Direction of a Personal Representative?

Coming Soon to a Conference Near You: Alan Gassman Live Presentations

Richard Connolly’s World – Six Financial Considerations Concerning Prenups and Divorces

Thoughtful Corner – Proper Conduct After a Client Meeting

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com. 

Quote of the Week

“I gave a presentation at Kennedy Space Center for about 4 days, probably about 6 hours a day of presentations. In those days, they used flip charts, and you gave them copies of your flip charts. I had hundreds and hundreds of charts.”

– Marvin Gassman

Marvin Gassman

Marvin Gassman worked for NASA on the Gemini, Apollo, SkyLab, and Shuttle programs in the Engineering and Operations divisions from the mid1960s until his retirement in 2003. Charting tendencies are, apparently, genetic.

Marital Asset Preservation Systems (MAPS)
by Alan Gassman

Alan

While not as exciting as NASA and rocket ships, helping married couples make sure that marital assets stay in the family is often a paramount concern that is not discussed in estate and financial planning. Once discussed, the scope and nature of an estate planning project will change significantly as the result thereof. The opportunity to have more charts to explain the systems is only one spin-off benefit!

One of the primary purposes for utilizing the Marital Asset Preservation System (“MAPS”) is to ensure that married couples keep their marital assets in the family for generations to come. In general, conscientious estate and tax planners will do their very best to meticulously plan and preserve assets for a surviving spouse while also enabling the surviving spouse to leave assets to common descendants of the decedent, with the minimal amount of taxes and probate expenses.

However, there is one question that is routinely left out of the discussion between married couples and estate planners during the planning process:

Would you like some assurance that your marital assets will only pass to your common descendants upon the death of the survivor of you?

The answer to this question is usually a resounding “yes” and, as such, requires the surviving spouse to protect the martial assets by not allowing them to be left to a subsequent spouse or some other future significant other. That answer leaves the estate planner with some rather intricate issues and challenges, not to mention more work, and an added layer of complexity to design and implement the various trust systems and strategies to be used.

Once the clients have decided that this is the right strategy for them, the planner must explain that upon the death of one spouse, the surviving spouse may serve as Trustee or Co-Trustee of one or more irrevocable trusts, with the power to change the trusteeship within pre-agreed parameters. These irrevocable trusts may only allow the surviving spouse to have access to assets and monies as needed for the spouse to maintain the standard of living that has been enjoyed during the marriage and to provide support for common descendants.

There are several restrictions that can be placed on a surviving spouse, one of which is to allow them to only make distributions outside of the family based upon an annual allowance that might be used for charity, religious organization dues, and donations and gifts to friends based upon guidelines that can be set forth in the documents. There can also be limitations placed on how much compensation might be paid to third parties for services like housekeeping, nursing, private lessons, personal trainers, and otherwise. There can also be limited access for charity, church or synagogue donations, and other defined causes.

An Ability to Provide Limited Benefits and Compensation to a Subsequent Spouse

While it is commonly assumed that the “next spouse” might threaten to deprive descendants of marital wealth and might place the surviving spouse in jeopardy of losing assets that would be needed for his or her well-being, there is also the possibility that the subsequent spouse will contribute meaningfully both to the preservation and enhancement of marital assets and with respect to providing care and support for the surviving spouse. It could be both unfair and counterproductive for the surviving spouse to not be able to allow a subsequent spouse to contribute meaningfully to marital assets and to be compensated for providing necessary services, whether personal, nursing, or managerial, where this is clearly in the best interests of the surviving spouse and possibly one or more of the descendants of the original marriage.

For this reason, the authors also provide that the MAPS Agreement or system may be amended by one or more of the adult descendants of the original couple and/or an independent Trust Protector or other advisor to take into account appropriate circumstances and formal requests for changes.

The above normally fits well and naturally under a credit shelter/marital deduction trust arrangement that will typically be established on the death of a first dying spouse where federal estate tax is a possible concern, but quite often, a good many assets will be owned outright by the surviving spouse or jointly with right of survivorship. IRA and qualified retirement plans are typically best left to a surviving spouse to enable postponement of having to take taxable distributions.

The planner must therefore explain that those assets that are not naturally captured under a trust system on the first death of a spouse will need to be either: (1) contributed to a trust system by the surviving spouse, as encouraged or required by planning documents and possibly a Marital Asset Preservation System (MAPS) Agreement; or (2) have the surviving spouse contractually bound by a MAPS Agreement requiring them to maintain existing marital assets and any income derived from those assets for the surviving spouse’s life. Also direct that those assets be left for only common descendants upon the surviving spouse’s death.

The author commonly uses one or both of these alternatives. These techniques are often coupled with carefully drafted trust provisions, as well as an explanation in the trust document to ensure that every possible step is satisfied that the MAPS objectives are met.

One issue for couples having more than the $10,860,000 exemption level situation, or expectation thereof, is whether limitations placed on inherited assets would cause loss of the federal estate tax marital deduction and consequent income tax to be paid on the first death. Each individual presently only has a $5,430,000 estate and gift tax exemption amount, which must be considered. This issue is especially important when the surviving spouse is contractually bound to preserve and leave the assets for subsequent descendants, as opposed to receiving the assets as the sole owner without any legal entanglements.

Generally, there is no marital deduction allowed for dispositions that do not at least allow the surviving spouse to have all income from marital deduction trust property and to be the sole beneficiary of a trust holding such property for his or her lifetime. A marital deduction may also not be received for assets that are paid outright to a surviving spouse who has significant contractual limitations on what he or she is able to do with the property.

In states that do not recognize community property, most planners will use separate revocable trusts for affluent husbands and wives because of established customs and the complexities associated with using joint trusts. In such situations, it is possible to have the revocable trust of the surviving spouse become irrevocable upon the death of the first spouse. For purposes of federal estate and gift taxes, this event will be considered an incomplete gift because it provides the surviving spouse with the right to veto payments to any person other than the surviving spouse during their remaining lifetime and the power to appoint trust assets to common descendants of the married couple. Alternatively, in states that do recognize community property, joint trusts are becoming more prevalent.

An objective for many estate and tax planners, regardless of the state in which they live, is to have the first dying spouse’s death cause a step-up in the income tax basis to a fair market value for any and all family assets. This strategy should be utilized to the extent that the family would benefit from having an increased basis, which would essentially take any property that appreciated during the decedent’s lifetime and provide the surviving spouse with the ability to not recognize any gain on such property when they come into possession.

Many planners in non-community property states are using Joint Exempt Step-Up Trusts (“JEST”), which may enable clients to receive this stepped-up basis on all joint trust assets upon the death of the first dying spouse. When the first spouse dies, assets held by the joint trust are used to fund a credit shelter trust for the benefit of the surviving spouse and descendants. These assets now held by the credit shelter trust will receive a full step-up in basis and escape tax liability upon the surviving spouse’s death.

Life insurance can also be integrated into the arrangement by having the death benefit payable to an irrevocable trust, which may be a separate trust that owns the policy so as not to be subject to federal estate tax on the death of the first dying spouse.

Waiver of Marital Rights

Most states have statutes which provide a surviving spouse with a minimal outright disposition, most commonly known as the Elective Share. In addition, some states provide a surviving spouse with homestead inheritance and other rights which may be waived during the estate planning process while both spouses are living.

The estate planner will have to be very careful with respect to disclosing conflict of interest issues and evaluating whether one or both spouses should be required, or at least strongly urged, to seek independent legal counsel before being legally bound to have limited access and control to marital and inherited assets after the death of one spouse. In the event that a conflict of interest does arise, the estate planner should withdraw and require the spouses to retain separate counsel. Furthermore, because the planner represented both spouses, they are prohibited from representing either one of them against the other, even with informed consent.

ABA-Model Rule 1.7 addresses the rules for Current Client Conflicts of Interest. In essence, Rule 1.7(a) states that a lawyer shall not represent a client if representing one client will be directly adverse to another client. However, this Rule is not an absolute bar to representing a client when there is a conflict. Subsection (b) provides that a lawyer may represent a conflicted client if (1) they believe they can provide competent representation; (2) it is not prohibited by law; (3) it does not involve one client asserting a claim against another client, both of whom are represented by the lawyer; and (4) each client gives informed consent. In the context of marital inheritance, subsection (b)(3) will almost always bar the attorney from representing one client over another, even with informed consent.

Physical Remains of a Decedent – Assets of the Estate or Subject to the Direction of the Personal Representative?
by Chuck Rubin

One would think that the body of the decedent is an asset of the estate that might be subject to Probate Code guidelines on real and personal property. According to the Florida courts, however, this is not necessarily the case.

Chuck - Final

Notable trust writer and dedicated writer/blogger Chuck Rubin wrote an outstanding article on this subject, based upon the May 2014 Palm Beach Probate court case of Wilson v. Wilson, in which divorced parents fought over whether or not their son’s remains were divisible after the 23-year-old’s untimely death. The father wished for the remains to be declared property so he could bury a portion of the ashes in a family plot in Georgia. The mother wanted the entirety of the remains to stay near her West Palm Beach home.

A summary of Chuck’s take on this case and the practical applications thereof are as follows:

Executive Summary

An heir unsuccessfully asserts that the decedent’s cremated ashes are estate property that should be divided with the other property of the estate.

Facts:

A father of a deceased child sought to have the cremated ashes of his son divided equally with his former wife who was the mother of the deceased child. The mother objected to the division on religious grounds. Both the Florida probate court and the appellate court held for the mother.

Florida law recognizes there is a legitimate claim of entitlement by the next of kin to possession of the remains of a decedent for burial or other disposition. However, the scope of that entitlement, especially when the decedent made no expression of desire as to the disposition of his or her remains and there is a dispute among the kin, is not well-defined.

To get around this uncertainty and obtain half of the ashes, the father posited that his son’s ashes were “property” of the probate estate and should be disposed of in accordance with the disposition of all the decedent’s property. Since he and the mother were the beneficiaries of their son’s estate, the remains should be divided equally between them.

Florida Statutes §731.201(32) defines property for Probate Code purposes as “both real and personal property or any interest in it and anything that may be the subject of ownership.” So, at first glance, it appears that bodily remains may fit within this definition. However, the Florida Supreme Court has articulated that the next of kin have no property right in the remains of a decedent. Kirksey v. Jernigan, 45 So 2d 188 (Fla. 1950); State v. Powell, 497 So 2d 1188 (Fla. 1986); Crocker v. Pleasant, 778 So. 2d 978 (Fla. 2001). The appellate court indicated that this position has deep roots in the common law, quoting Sir William Blackstone’s Commentaries that heirs have no property interest in bodies or ashes of decedents.

Thus, the appellate court rejected the father’s attempt to divide the ashes based on the ashes being property of the probate estate subject to division. This is not to say that the probate court, in exercise of its discretion in the matter, was without authority to divide the ashes – just that it could not be compelled to do so based on a property rights argument.

Comment:

Similar results should apply in other states outside of Florida that follow the common law. While not a perfect solution, dispositive directions in the Last Will of decedents over disposition of remains can help reduce disputes over remains, especially in circumstances where a later dispute is possible, such as second marriage situations or when the children do not get along.

Charles Rubin is a Managing Partner with Gutter Chaves Josepher Rubin Forman Fleisher Miller, P.A. Chuck earned both his J.D. degree and his LL.M. in Taxation from the University of Florida. He is Florida Bar Board Certified in Taxation and was named the 2015 Lawyer of the Year by Best Lawyers in Taxation in the Miami metropolitan area. He has been running Rubin on Tax, a tax blog on developments relating to Federal and Florida tax, estate planning, probate, and business law, since 2005. The blog currently features over one thousand posts, and can be viewed by clicking here http://rubinontax.floridatax.com/.

Coming Soon to a Conference Near You
Alan Gassman Live Presentations

October 2015

October 24th – 2015 Mote Vascular Symposium

Alan Gassman will be speaking on the topic of Estate, Medical Practice, Retirement, Tax, Insurance, and Buy/Sell Planning – The Earlier You Start, the Sooner You Will Be Secure.

This presentation will take place at the Hyatt Regency in Sarasota, Florida.

November 2015

November 5th – Interactive Estate and Elder Planning Legal Summit

Alan Gassman will be speaking on the topic of Scientific Marketing for the Estate Planner – How to Do More of What You Love to Do and Less of the Other While Better Serving Clients, Colleagues, and Your Community.

This presentation will take place at the New York Hilton – Midtown Manhattan in New York City.

November 12th – Suncoast Estate Planning Council

Alan Gassman will be speaking on the topic of Portability Under New Regulations and Alice’s Looking Glass.

This presentation will take place at All Children’s Hospital in St. Petersburg, Florida.

January 2016

January 8th – Representing the Physician: The Only Constant is Change

Alan Gassman will present three talks at the Florida Bar sponsored Representing the Physician seminar. His topics will include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice
  3. Where Tax and Health Law Simply Don’t Work Together (with Lester Perling)

This event will take place at the Rosen Plaza Hotel in Orlando, Florida. More information about this program will be featured in next week’s Thursday Report.

January 30th and January 31st – MER Internal Medicine for Primary Care Program

Alan Gassman will present four, one-hour Medical Education Resources, Inc. talks for cardiologists and other doctors who attend this four-day conference. His topics will include:

  1. The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  2. Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  3. 50 Ways to Leave Your Overhead
  4. Essential Creditor Protection and Retirement Planning Considerations

This presentation will take place at the Casa Marina Resort in Key West, Florida.

May 2016

May 6th – 3rd Annual Ave Maria School of Law Estate Planning Conference

Alan Gassman will be presenting a talk entitled Coffee with Alan: An Introduction to Select Estate Planning and Asset Protection Strategies. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of What We Wish We Knew When We Started Practicing Law – Non-Tax and Practical Advice for Estate Planners Young and Old.

This presentation will take place at the Ritz Carlton Golf Resort in Naples, Florida.

Attend all but one of the above presentations and receive 25 buckets of Kentucky Fried Chicken (thighs only!) and mashed potatoes, no gravy, delivered to your favorite mother-in-law the day before Thanksgiving, 2016. Attend all of the above presentations and receive a new mother-in-law!

Please note that we also speak at weddings and Bar Mitzvah’s!

Richard Connolly’s World
Six Financial Considerations Concerning
Prenups and Divorces

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Talking Prenups with Clients: 6 Tips” by Kimberly Foss. This article was featured in Financial Planning on May 18, 2015.

Richard’s description is as follows:

Many clients walk down the aisle with the security of a prenuptial agreement. Because the foundation of our work with clients is to plan for an unknowable future and ensure that they are prepared financially for whatever life throws at them, it is almost always advisable to sign a prenup.

But pitching the prenup isn’t always easy. Many clients initially view it as unnecessary and, well, unromantic.

Six tips for working with clients to create a successful prenup are as follows:

  1. Get a head start – Six months before a wedding is standard.
  2. Manage the romantics – Think of a prenup as insurance, not something that will tarnish a relationship.
  3. Discuss both assets & liabilities – This is especially important for people with student loan or other large sums of debt.
  4. Allow for (some) flexibility – Marriages can change over time; a prenup should be able to adapt, too.
  5. Think beyond money – Prenups can also include financial goals, investment strategies, annual vacations, and social media clauses.
  6. Use star power – Is the prenup still a tough sell? Use celebrity examples. Everyone enjoys a good Hollywood story.

To explore each of these tips in detail, please click here to read this article in its entirety.

The second article of interest this week is “Divorce and Money: Six Costly Mistakes” by Veronica Dagher. This article was featured in The Wall Street Journal on May 15, 2015.

Richard’s description is as follows:

Divorce can be hazardous to your financial health. Splitting up is expensive, and your cost of living is likely to go up when it’s all over.

If you are considering seeking a divorce, plan carefully in advance so that you can make rational decisions at a time when emotions may be running high. Six common mistakes to avoid are as follows:

  1. Overlooking assets – It is crucial to know what your family’s assets and liabilities are.
  2. Keeping the house – A household that took two people to run may be far too expensive for just one.
  3. Underestimating expenses – It is key to get a firm handle on expenses beyond housing.
  4. Seeking revenge – Couples are better off approaching divorce as an opportunity to strike a favorable business deal rather than a chance to settle scores.
  5. Forgetting about taxes – Be careful not to divide assets in a way that looks fair but sticks one spouse with a larger tax bill.
  6. Thinking the work is done – There are other important financial matters that need attending to after the papers are signed.

To explore each of these mistakes in detail, please click here to read this article in its entirety.

Thoughtful Corner
Proper Conduct After a Client Meeting

Client meetings can result in a great deal of information being gathered and a number of follow-up items. Ideally, we would all take perfect notes or have a scribe in the room to take perfect notes for us, but this rarely occurs.

If you are working as best you can on communication skills, creative thinking, and explaining things during a conference, it is unlikely that you can also take notes that can be relied upon the next day or week as an appropriate summary of what happened and what you need to know moving forward.

Lawyers who have a long drive home are blessed with the ability to dictate their notes from meetings and client follow-up letters (more on those below!) on their way. If you do not have a long drive home, the following steps are an excellent way to ensure that all work for a client is remembered and completed.

Have your office staff scan all notes and materials reviewed during the meeting so that it is not possible for them to get lost thereafter.

Sit in the same room you met with the client(s) in and sit in the same seat, facing the same direction, and tape record an explanation of what was discussed. Have a paralegal who can manage the client’s follow-up in the room during this recording.

If there is time, dictate a letter to the client with the paralegal sitting there listening and looking at the notes taken during the meeting. This letter can concentrate what was discussed and what your staff is doing. By having the paralegal in the room with you, he/she can interrupt to ask for more detail and remind you to note certain things in the letter that need to be done or that the client needs to do.

Then, follow your notes and explain what was discussed and what needs to be done directly to the paralegal. The paralegal can ask questions, which can prompt you to make decisions and begin thinking about issues and next steps immediately following the meeting. This discussion can also help you to recall exactly what was discussed.

If there is limited time, record the same ideas as a memo to yourself or to the file of what is needed to remember and what is needed to later explain. The information can then be crafted into a letter when time permits.

If anything significant comes up before the work promised in the follow-up letter is done, you can call the client or send them a quick email to make a mid-course connection or to clarify understanding while the client is still very much into the process as well.

Studies (and my experience) have shown that the best memory of an event comes when you sit in the same place you were in when that event occurred, so it is best to do this as soon as possible after the meeting has concluded.

If you’re able to dictate a letter to the client right away, it’s fine to indicate specific things such as, “as part of the work we will be doing for you, we will draft a clause that does this, a clause that does that, and will also provide…” because this gives the client an explanation of what you are doing while also providing a roadmap and a reference document for your paralegals, lawyers, and other team members.

This letter essentially serves as your “fee agreement” because it defines what you are doing, what you are not doing, and anything else that you may have discussed about costs. It is the most important post-meeting product and becomes the focal point for the project. This letter is typically completed before any other work is started.

We review this follow-up letter when a client comes back for another meeting, when document packages go out, or when we need to remember what we were doing or not doing for the particular client. An incidental benefit of this review method is that you will have much better recall of what was discussed with the client if you have immediately repeated the most important parts and told their story to a staff member.

This, and illustrating and charting all data on one Excel document, will be a very valuable part of your work product for the client. 

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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A Poem
by Ron Ross

Romans conquered the world with swords, arrows, and spears,
The weapons they used filled their enemies with fears.
Their ships deployed “the raven,” a kind of giant claw,
They also invented siege towers, catapults, and attorneys at law.

Etruscans once ruled Italy. Know why they don’t remain?
Romans took their land using imminent domain.
When Hannibal and Carthage attacked, they were left with two cents.
The court seized their army, declaring their elephants a public nuisance.

Wonder why the Jews found Romans so abhorrent?
They sacked the Holy Temple, armed with only a search warrant.
But payback comes to everyone, just as a matter of course.
Rome wept when the Eastern Empire was granted a divorce.

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In the News
by Ron Ross

Halloween is coming soon, and Presidential candidates are expected to be popular costume choices. Buy your Donald Trump or Bernie Sanders wigs now before they’re all gone!

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California announces that the 3,380 fires this year were caused by 3,379 different people who left the house without unplugging their iron.

In related news, two women discovered their husband was a bigamist when local news reported he accidentally burned down both of his homes by leaving the iron on.

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An elephant wandered away from the zoo and ended up in a nunnery where the sisters have taken a vow of silence. They literally cannot talk about the elephant in the room.

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: Hyatt Regency Sarasota | 1000 Boulevard of the Arts, Sarasota, FL, 34236

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on SCIENTIFIC MARKETING FOR THE ESTATE PLANNER – HOW TO DO MORE OF WHAT YOU LOVE TO DO AND LESS OF THE OTHER WHILE BETTER SERVING CLIENTS, COLLEAGUES, AND YOUR COMMUNITY.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY UNDER NEW REGULATIONS AND ALICE’S LOOKING GLASS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: All Children’s Hospital | 501 6th Avenue South, St. Petersburg, FL, 33701

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE ORLANDO PRESENTATION:

REPRESENTING THE PHYSICIAN: THE ONLY CONSTANT IS CHANGE

Alan Gassman will present three talks at the 2016 Representing the Physician seminar. His topics include:

  1. A Brief Introduction to the Current State of the Physician’s World (with Lester Perling)
  2. Creditor Protection for the Medical Practice
  3. Where Tax and Health Law Simply Don’t Work Together (with Lester Perling)

Other speakers at this event include Jerome Hesch, Michael O’Leary, Colleen Flynn, Jeff Howard, Darryl Richards, and others.

For a complete schedule, please click here.

Date: January 8, 2016 | Mr. Gassman will speak at 8:15 AM, 10:50 AM, and 4:25 PM

Location: Rosen Plaza Hotel | 9700 International Drive, Orlando, FL, 32819

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Alan will also moderate the Luncheon Speaker Panel with Jonathan Blattmachr, Stacy Eastland, and Lee-ford Tritt. The panel will cover the topic of WHAT WE WISH WE KNEW WHEN WE STARTED PRACTICING LAW – NON-TAX AND PRACTICAL ADVICE FOR ESTATE PLANNERS YOUNG AND OLD.

Don’t miss it!

Date: May 6, 2016

Location: Ritz Carlton Golf Resort | 2600 Tiburon Drive, Naples, FL, 34109

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information. 

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Rates

The Thursday Report – 9.24.15 – The Greatest Thursday Report Ever!

Posted on: September 24th, 2015

What Estate Planners Need to Know About Minority Owned Business Interests

Travel Insurance: A Practical Safeguard or Money-Making Scheme?

Who Really Lives (or Doesn’t) in Your Household? by Tim Ryles, Ph.D., AAI

Richard Connolly’s World – Recent Federal Tax, Estate, and Partnership Changes

Thoughtful Corner – Dealing with Clients Who Have a Terminal Illness

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

What Estate Planners Need to Know About
Minority Owned Business Interests

by Alyssa Eberle, J.D.

What You Need to Know to Not Inadvertently Lose Small Minority Business Status in Your Planning – One Wrong Transfer Can Spoil a Whole Company

The United States Small Business Administration has developed a program called the SBA 8(a) Business Development Program that helps minority-owned businesses develop through counseling, workshops, and management guidance. Some states, including Florida, have adopted the program into their own statues and legislation in order to address the pattern of past and continuation discrimination against minority business enterprises.[1]

The Florida Department of Management Services outlines the eligibility requirements to become certified as a minority business within the state. The minimum eligibility requirements are as follows:

  • The business must be registered in MyFloridaMarketPlace.
  • The business must be independently owned and operated, with a net worth not exceeding $5 million. The business must also employ 200 or fewer full-time permanent employees or must be recognized as a certified business by the federal government.
  • 51% of the business must be owned, managed, and controlled by: a minority, a woman, or a Florida veteran who is a citizen of the United States and a permanent resident of Florida.
  • If a professional license if required for the industry, the minority owner must be the license qualifier.
  • The minority owner did not acquire their majority ownership of at least 51% through a transferal of ownership occurring within a minimum of two years, when the previous majority ownership interests in the business was by a non-minority who is or was a relative, former employer, or current employer of the minority persons on whom eligibility is based.
  • The business must currently be in operation.
  • The business must be legally registered to do business in Florida.[2]

In order for the business to qualify as minority owned, the business must be unconditionally owned and controlled by the minority-owner. The owner will have control if he or she directs both the long-term decision making as well as day-to-day management and administration of the business’s operations. To be “unconditionally owned,” the ownership in the business must be direct.[3] In other words, the business cannot be owned by another business entity, nor can the business be owned by a trust such as an employee stock ownership trust.[4] However, ownership by a living trust is permitted and may be treated as the “functional equivalent of ownership” so long as the minority-owner is the grantor, a trustee, and the sole beneficiary of the trust. Once the ownership and control has been determined, the business can file with the Office of Supplier Diversity to receive their certification.

If the minority business owner determines that owning the business by way of a living trust is the most beneficial, the owner will want to be aware of relevant trust law. It is essential to note that living trusts are revocable trusts, meaning that they are able to be changed throughout the life of the grantor. However, minority business owners will want to be wary that the living trust could potentially become a self-settled trust since the owner is the grantor, the trustee, and the beneficiary. Self-settled trusts are trusts established for one’s own benefit and do not provide asset protection benefits.[5] If the business owner wishes to add a trustee to the trust, they must ensure that this will not affect the ownership or control of the business. Doing so could put the minority-owned status at risk.

Minority owned businesses are a growing participant in many industries in Florida. Women and minorities should be aware of the potential benefits in certifying their business, as well as the potential benefits in owning their business in a trust.

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[1] See Fla. Stat. §287.09451.
[2] More on the eligibility requirements for a Florida owned minority business may be found here: http://www.dms.myflorida.com/agency_administration/office_of_supplier_diversity_osd/certification/eligibility_requirements.
[3] 13 C.F.R. § 124.105.
[4] Id.
[5] See Fla. Stat. § 736.0540.

Travel Insurance: A Practical Safeguard or Money-Making Scheme?
by Noah Fischer, J.D. Candidate, Stetson Law School

You are 135 times more likely to match all but one number in the Florida Lottery than you are of suffering death or dismemberment in a plane crash. If you already have adequate life insurance, it would seem that the American Express and other similar Travel Accident Protection Insurance is unnecessary.

Executive Summary:

American Express (AmEx) credit card users are able to obtain Travel Accident Protection Insurance, covering accidental death and dismemberment, before departing on vacation. Users can pay between $11 and $35, depending on the terms of the specific AmEx card and the type of coverage offered. If you have the misfortune of needing the coverage while on vacation, you could earn between $250,000 and $1,500,000.[1] What are the odds of cashing in on this?

Some countries may not honor foreign medical insurance coverage, so it would make sense to purchase a policy that would cover any emergencies. AmEx offers a Global Medical Protection policy that covers emergency medical and dental expenses, as well as the cost of emergency medical transportation, for the first 60 days of a trip. The Travel Accident Protection Insurance, however, is less of a logical investment. If you already have adequate life insurance, you probably don’t need additional protection. You are more likely to die in a car crash on the way to the airport than in a plane crash on the way to or from your destination.

Why would someone purchase this coverage, despite the odds telling them they don’t need it? Orit Tykocinski, a professor at the Interdisciplinary Center Herziliya in Israel, plainly addresses why some people may be skeptical when it comes to passing up this offer:

“Why would I want to pay so much for a life-insurance policy that covers me only on airplane trips, which are the safest of all trips? It doesn’t seem like a good deal to me, but that’s just my brain talking. My gut thinks the insurance will make sure the plane gets me to that beach.”

As illustrated by the quote above, many people are provided with a sense of safety when they know they are insured against a plane crash, even though additional coverage does not raise the probability of keeping that bird in the sky.[2]

Facts:

Odds of Dying in a Plane Crash:

As most people know, the odds of dying in a plane crash are extremely low, especially in the United States. There were a total of only six fatal accidents involving US-registered jets during 2013, resulting in 17 fatalities.[3] According to the International Air Transportation Association (IATA), only 210 people died worldwide in airline crashes in 2013, with approximately 3 billion people boarding 35 million total flights in that same year.

Phil Derner, Jr., founder and president of NYCAviation, insists that the odds of dying in a plane crash in the United States are equivalent to the odds of being struck by lightning seven times.[4] For comparison purposes, the odds of winning the jackpot in the Florida lottery are 1 in 22,957,480, while the odds of matching all but one number are 1 in 81,409.[5] The average probability for dying in a plane crash in the US is 1 in 11,000,000.[6]

To further put these odds into perspective, the odds of dying in a motor vehicle crash are about 1 in 5,000, and the odds of dying in a railroad accident are 1 in 306,000.[7] Even if you do end up aboard a flight that happens to crash, according to the National Transportation Safety Board, 95.7 percent of passengers involved in a plane crash survive. Even in the most devastating of crashes, the passenger survival rate is still 76 percent.[8]

Policy Information:

Despite the odds, many people are risk adverse and would like to have the peace of mind that comes with knowing there is additional coverage protecting themselves and their families.

Should you choose to purchase Travel Accident Protection coverage, the coverage begins at 12:01 AM on the first day of the trip and ends at 12:01 AM on the day immediately following the trip’s conclusion date. If the trip that coverage has been purchased for lasts more than one year, only the first 365 consecutive days will be covered. The benefit for the purchased policy is payable if the covered person suffers accidental death or dismemberment while traveling into or departing out of a scheduled airline or common carrier.

The payout depends upon the extent of injuries sustained in a possible plane crash. For example, if your plane crashes and you lose a hand or lose sight in one eye, then 50 percent of the total policy will be paid out. Death, the loss of both hands, feet, eyes, or a mixture of any two of the three is required to have 100 percent of the total policy paid out. The benefit will be paid within 100 days of the accident that caused the death or dismemberment. If accidental death or dismemberment occurs from exposure to the elements while on the insured trip because of disappearance, sinking, or wrecking of a scheduled airline, the coverage will apply.

Death from riding in or driving a rental vehicle is not covered if you meet any one of the approximately 20 exclusions, such as intentional exposure to exceptional danger or any mental or emotional condition, whether it be diagnosed or undiagnosed.[9] Death from any sickness obtained while on the trip is also not covered under the Travel Accident Protection policy.

Once a claim for a death benefit is made, the accidental death or dismemberment benefits will be paid out in a single lump sum.

Comment:

The odds of needing to collect on AmEx’s Travel Accident Protection Insurance for accidental death and dismemberment are already low, even before taking into account the restrictions and exclusions of the policy.

For AmEx, however, it could be a pretty lucrative deal. Assuming that AmEx sells 200,000 of these policies per year with a premium of $23 (the average cost of the different policies), they would make $4.6 million profit while taking minimal risk. A plane would have to defy the 1 in 11 million odds of crashing, and a passenger on that plane would have to have Travel Accident Protection Insurance coverage through American Express, and that passenger would have to suffer a qualifying death or dismemberment under the policy before AmEx would have to dish out the benefit. Not to mention the price of $11-$35 per person per covered trip[10], if annualized, far exceeds the cost of a normal life insurance policy[11].

If you are planning to travel outside of the United States to a country that does not accept your health insurance or is inherently dangerous, you could look into AmEx’s Global Medical Protection plan, but if your flight is confined to the US, you are better off skipping the American Express travel insurance coverage and spending the cash on Florida lottery tickets instead.

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[1] “American Express Travel Insurance.” American Express Travel Insurancehttps://www295.americanexpress.com/travel-insurance/quoteDetail.do?aetiSource=AETI#99
[2] Tierney, John. “The Magic of Flight Insurance.” The New York Timeshttp://tierneylab.blogs.nytimes.com/2008/05/05/the-magic-of-flight-insurance/?_r=0.
[3] Zimmerman, John. “Have We Won the Safety Battle?” Air Facts Journal (2014). http://airfactsjournal.com/2014/01/won-safety-battle/ .
[4] Golgowski, Nina. “Odds of Dying in Plane Crash in US are Equal to Being Struck by Lightning SEVEN Times: Expert.” New York Daily News. http://www.nydailynews.com/news/national/common-plane-crashes-expert-weighs-deadly-week-article-1.1879212 .
[5] “Odds Calculation Results.” LottoStrategies.comhttp://www.lottostrategies.com/script/odds_calculate.
[6] Sherwood, Ben. “Flight Check: What are the Chances I’ll Die on my Next Plane Trip?” The Huffington Post. http://www.huffingtonpost.com/ben-sherwood/the-sky-is-falling-will-i_b_170038.html
Barrabi, Thomas. “After Air Algerie AH5017 Incident, A Statistical Look at the Probability and Chances of Dying in a Plane Crash.” International Business Times. http://www.ibtimes.com/after-air-algerie-ah5017-incident-statistical-look-probably-chances-dying-plane-crash-1638206.
[7] Ropeik, David. “How Risky is Flying?” PBS. http://www.pbs.org/wgbh/nova/space/how-risky-is-flying.html.
[8] “How Do People Survive Plane Crashes?” Curiosity.com. https://curiosity.com/playlists/how-do-people-survive-plane-crashes-o53cN3Xy/?utm_source=dsc&utm_medium=rdr&utm_campaign=rdrwork#intro-playlist
[9] “Platinum.” InsureMyTrip.comhttp://www.insuremytrip.com/popup/certificate/AETIP/accidentalDeathCommonCarrier.html?rev=5.[10] “American Express Travel Insurance.” American Express Travel Insurancehttps://www295.americanexpress.com/travel-insurance/quoteDetail.do?aetiSource=AETI#99.
[11] “Life Insurance Cost.” TrustedChoice.com. https://www.trustedchoice.com/life-insurance/compare-coverage/cost/.

Who Really Lives (or Doesn’t) in Your Household?
by Tim Ryles, Ph.D., AAI

Thank you to Tim Ryles, David Thompson, and the Florida Association of Insurance Agents for allowing us to bring this fascinating discussion that shows how complicated and non-intuitive defining residency can be to Thursday Report readers.

Ryles

Tim Ryles, Ph.D. provides consulting services and expert testimony in insurance litigation, regulatory matters, and consumer protection. He is also a frequent author and speaker on those issues. Dr. Ryles served as the Georgia Commissioner of Insurance from 1991 to 1995 and was appointed by Governor George Busbee to serve as Administrator of Georgia’s Governor’s Office of Consumer Affairs from 1975 to 1982. Dr. Ryles received his MA and Ph.D. in political science from the University of Georgia. He can be contacted at Tim Ryles Consulting Services, LLC by emailing timryles@bellsouth.net.

The following article is copyrighted by the Florida Association of Insurance Agents and is used with permission.

Given the broadening range of risks within modern families, the boundary lines between resident and non-resident are of great significance in determining coverage issues, including whether an insurer has a duty to defend. Determining residency in a blended-family society is, in many ways, a moving target for insurers and insureds. This article examines the issues raised by non-definition of “resident” in homeowners insurance policy and how it is sometimes construed.

Justice Roger Trainer once observed that, “Plain words, like plain people, are not always as plain as they seem.” Take the common language about who is an insured in homeowners policies as an example. The language of the Insurance Services Office, Inc. (ISO), Broad Form HO 2 policy provided below is representative.

“Insured” means you and residents of your household who are:
your relatives; or
other persons under the age of 21 and in the care of any person named above.
“You” includes the named insured and spouse if a resident of the same household.

The key terms “residents,” “household,” “relative,” and “in the care of” are undefined and have been the subject of considerable dispute and litigation. If past disagreements over their meanings aren’t enough reason to prompt insurers to define what the terms mean, two additional factors converge to highlight the problem: (1) dynamic sociological changes in family structure, and (2) varying court interpretations of the terminology.

Sociological Changes in American Families

Since many of our conceptions of what insurance terms mean may be grounded in an earlier social paradigm similar to that portrayed in “Leave it to Beaver” television series, insurers that fail to adapt to accelerating changes in the American family structure may be in for trouble in the future. Consider, for example, possible implications for risk of the following statistics and trends.

Census figures show that the ratio of marriages to divorces is about 2:1, that divorces annually affect over a million children (16.8 per 1,000 children); and children of divorce are more likely to suffer from psychological or emotional problems, drop out of school, incur teen pregnancies, and end up in prison for aberrant behavior. Of all weddings, 43 percent are remarriages for at least one parent, thereby giving rise to a continuing increase in the number of blended families in which children, parents, and grandparents may share no blood relationships.

Blended families not only combine offspring and in-laws from previous marriages, but also may create a fertile ground for domestic violence by bringing together inhabitants who hold deep-seated, hostile feelings toward one another. Increased step-parenting and live-in significant others may contribute to sexual abuse and other forms of violence against children. Persons living in strained family circumstances may engage in acts of displaced aggression toward others, thereby incurring greater liability for everyone. In other words, it isn’t just the family-dog threat that insurers need to be concerned about.

Who Lives Here? – What Courts Say

Since disagreements about residency often end up in court, a review of how judges resolve the issue is instructive; indeed, the directions taken by judges show that rather than clarifying matters, courts instead may clutter them. Among the factors courts often examine are issues of domicile versus residence, dual residency, and how a grant of child custody in divorces confers residency on children.

Domicile and Residence

It is customary to consult a dictionary for guidance when insurance terms are undefined, technically for the purpose of giving the words their ordinary meaning. Webster’s Ninth New College Dictionary accords the following definition to “resident”: “Living in a place for some length of time. RESIDING.” To “reside” is “to dwell permanently or continuously.” Although policy language does not mention the term “domicile,” some state statues and common-law principles distinguish domicile from residence.

Consistent with this, “resident” is not necessarily “domicile,” view. A New Jersey court distinguished the two as follows: Domicile is “the place where a person has his true, fixed, permanent home, and principal establishment, and to which, whenever he is absent, he has the intention of returning.” Conversely, a residence lacks “the elements of permanency, continuity, and kinship with the physical, social, and political attributes which inhere in a home.” The court added, “Intention adequately manifested is the catalyst which converts a residence from a mere place in which a person lives to a domicile.” [See Miller v. USF&G, 127 NJ Super 37 (1974).]

This “intention adequately manifested” adds a subjective element to the formula for determining resident status. Knowing where a person resides is insufficient – where that person intends to live is also a vital part of the formula. To allay cases of adjuster jitters, some courts temper this subjective element. For example, a California court asserted that exclusive reliance on this subjective indicator “would mean that coverage expands and contracts on the whimsical plans of a dependent family member.” [See Utley v. Allstate Insurance Company, 19 Cal App 4th 820 (1993).]

Other venues make no distinctions between resident and domicile. In West Virginia, for example, “The word residence, as used in divorce statues, is almost universally construed to be the equivalent of domicile.” [See Taylor v. Taylor, 128 W Va 198, 204 (1945), cited at fn. 5, Farmers Mutual Insurance Company v. Hubert Junior Tucker, 213 W Va 16 (2002).] Since blended families are usually the result of divorce proceedings, a prudent adjuster may need to consult a divorce law specialist in making final determinations of how “resident” is applied in a particular jurisdiction when determining a child’s residency.

Dual Residency

For insurance purposes, many states recognize that a person may have more than one residence, a status called dual residency. [See New York Central Fire Insurance Company v. Lawrence W. Perkey, et. al., 747 NYS 2d 878 (2002.)] Factors that call attention to dual residency include the ownership of second homes, child custody assignments in divorce cases, adult children in the process of establishing independence from parents, and elderly parents moving in with children. However, while the view in some states is that one can reside in more than one place, this is not a universal rule: Montana, by statute, does not allow dual residency.

Custody versus Residency

Generally, it may be assumed that in cases of divorce, residency is established by the custody awarded in the divorce decree. (Census figures show that 72 percent of custody awards are to the wife, 9 percent to the husband, and 16 percent are for joint custody.) That a divorce decree is not the final word, though, is well illustrated by the case of Miller v. USF&G, 316 A2d 51 (NJ 1974). In Miller, the divorce decree granted custody to the mother, but the court determined that in actual practice, both parents had custody; consequently, the child was covered under both homeowners policies (a finding of dual residency). Thus, the determining factor is not what the decree says, but what the people involved actually do that matters most. Insurers, therefore, must look beyond formal custody documents to determine residency.

Qualitative and Quantitative Factors: It’s More than Just Headcount

A Georgia court set forth the following guideline for establishing resident status: “The aggregate details of the family’s living arrangements must be considered…not any one factor.” [See Rainey v. State Farm Mutual Automobile Insurance Company, 257 Ga App 618 (1995).] In this approach, the inquiry is directed largely at measuring quantitative indicators, and much of the focus is determining whether separate households have actually been established. As the court noted in Rainey, “Physically maintaining living accommodations in the insured’s home is one, but not the sole, consideration” in determining residency.

New Jersey courts crafted the concept of a “substantially integrated family relationship” to ascertain resident status. Under this label, courts apparently look not only at the qualitative elements but also quantitative ones as well. Quantitative inquiries encompass questions about how people function together as family members in such activities as sharing meals, expenses, and pursuing common goals based upon common interests.

With the New Jersey and Georgia views in mind, it is easier to understand how courts have determined that people don’t have to live together under the same roof to qualify for resident status [Gibson v. Callahan, 158 NJ 662 (1999)] and that resident of a house does not automatically qualify one as a resident of a household for insurance purposes [Hawkeye Security Insurance Company v. Sanchez, 460 NE2d 873 (Ill App 1984)].

Conclusion

Since failure to define “resident” contributes to significant litigation, one might ask why insurers don’t read the judicial tealeaves and make appropriate amendments. Could it be that under the current language, insurers find it easier to deny coverage? For example, insurers can argue that a child visiting a parent on the weekend who causes property damage or bodily injury to others is not a resident, and that a negligent divorced parent who is held responsible for bodily injury suffered by a child during a visitation period and is sued by the other parent is a resident. Whether true or not, plaintiffs’ attorneys will most likely catch on to any apparent company inconsistency in claim adjudication whether it occurs by design or through lax claim management.

For claims personnel, lack of clarity imposes an added burden in investigations to make sure that their determination of who is a resident demonstrates a diligent effort to pursue quantitative and qualitative indicators of resident status and to show familiarity with the prevailing case law.

Finally, claimants may add ammunition to arguments for coverage by pointing out that “resident of your household” language has been found ambiguous [Gibson v. Callaghan] and contend further that different interpretations from one jurisdiction to another of what the word resident means automatically qualifies the term as ambiguous. Given this possible scenario, perhaps insurers should more seriously heed the words of Justice Traynor and assign plain definitions to plain words so plain people can be deterred from giving insurers a plain whipping in court.

For more great articles, check out the FAIA’s Education Library at https://www.faia.com/Resources.aspx?pid=198.

Richard Connolly’s World
Recent Federal Tax, Estate, and Partnership Changes

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “What Congress Didn’t Do Before Summer Vacation: Several Dozen Tax Benefits Remain in Limbo” by Laura Saunders. This article was featured in The Wall Street Journal on August 7, 2015.

Richard’s description is as follows:

As Congress was heading for recess in late July, lawmakers passed several important tax changes. This article provides information on the changes, with the dates they take effect.

Some of the notable changes include:

Partnerships – Starting in 2017, for the 2016 tax year, partnership tax returns will be due March 15 rather than April 15.

Estates – Some estates now will have to provide both heirs and the IRS with information about the value of certain assets to ensure that tax won’t be underreported if the asset is later sold.

The provision takes effect for estates filing returns after July 31, 2015, so it could affect the estates of some who died last year.

Please click here to read this article in its entirety.

The second article of interest this week is “Navigating Tougher IRS Rules for Family Partnerships” by Paul Sullivan. This article was featured in The New York Times on August 7, 2015.

Richard’s description is as follows:

The Internal Revenue Service is about to toughen the rules on a type of investment vehicle that has been abused by some very wealthy families to avoid millions of dollars in taxes.

The wealthy are allowed to use family limited partnerships, family limited liability companies, and their variants to hold family businesses, real estate, or other illiquid, hard-to-value investments.

But some partnerships have put marketable securities, even cash, into the entities and still claimed a discount, even though the investments have a value that is easy to determine.

Stung by its mixed record in challenging these entities in court, the IRS could soon get help from the United States Treasury. Cathy Hughes, an attorney-adviser at the Treasury’s office of tax policy, said in May that new regulations restricting what would be allowed with family partnerships could be released as soon as mid-September.

This article may be what you need to get a procrastinating client moving.

Please click here to read this article in its entirety.

Thoughtful Corner
Dealing with Clients Who Have a Terminal Illness

Throughout your career, it is likely that you will obtain a few clients who are facing terminal illnesses. Do not expect clients or people with terminal illnesses to be logical, to follow-through, or even to be appreciative of your services.

They are often having very big psychological, not to mention physical, issues, and talking about death and what happens after they die can be extremely painful.

One strategy for effectively serving these clients is to have them sign anything that will improve the situation they are in without much fanfare or expensive review. If they can sign a “quick interim plan” that improves on their situation while you also work on a conventional and more extensive re-vamp of their existing documents, everything will be much better if and when they die without getting back to you or before you can finish.

Time is very much “of the essence” in these situations, as people go through what Elizabeth Kübler-Ross wrote about in her landmark 1969 book, On Death and Dying. She established the Kübler-Ross model, which postulates a series of emotional stages experienced when facing either one’s own death or the death of a loved one.

A great many clients and advisors have found the book to be extremely accurate in describing the following states of psychological change and challenge that someone facing death will go through. The stages are as follows, though they can occur in any order:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

Also consider that people with terminal illnesses may be on mind-altering drugs and are certainly going through extreme changes with respect to their businesses, loved ones, and hobbies. Death is worse than losing everything because you lose not only your belongings but also your relationships and yourself.

Get the person to do as much as they are willing to do as soon as they are willing to do it while also showing compassion for their situation.

If you personally cannot keep the pace the client requests, delegate some of the work to someone else in the office and get it handled. Be willing to go to their house, their hospital room, their rehab, or whatever it takes.

It might also be a good idea to get the family members who will become your clients upon the person’s death and who will bear the consequences of your work to be as involved in the process as possible, but do not expect them to be as logical or necessarily supportive as they should be.

To read more about the Kübler-Ross model, please click here.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Cartoon 2 - final

Cartoon 3

Upcoming Seminars and Webinars

Calendar of Events

LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counter-intuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.17.15 – News and Views from the Notre Dame Tax Institute

Posted on: September 17th, 2015

News and Views from the Notre Dame Tax Institute

Should Every Estate Planning Lawyer Offer to be Appointed as a Trust Protector?

NAIC Closing the Loop on Illustrations by Barry D. Flagg

Richard Connolly’s World – The Latest in Estate Planning & How to Avoid EP Fatigue

Thoughtful Corner – Don’t React Immediately

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

News and Views from the Notre Dame Tax Institute

The 41st Annual Notre Dame Tax and Estate Planning Institute opened this morning with participation from hundreds of lawyers, accountants, and other professionals. The brochure for this event can be viewed by clicking here.

Jonathan Blattmachr is stuck in weather in the Arctic Circle, so Alan Gassman will be delivering his talk on Reducing Estate and Trust Litigation Through Disclosure, In Terrorem Clauses, Mediation, Arbitration, and Pre-Mortem Probate.

The first part of this presentation is reproduced below in the article entitled “Should Every Estate Planning Lawyer Offer to Be Appointed as a Trust Protector?”

Alan Gassman and Barry Flagg, whom we also have more from below, also contributed materials for the panel presentation on Life Insurance.

Thursday Report readers can obtain a copy of these Chapter 6 materials next week by contacting agassman@gassmanpa.com.

Next year’s Notre Dame Tax and Estate Planning Institute will be held on Thursday, October 27th and Friday, October 28th, 2016. A large Florida contingency should be there. Please put this on your calendar, and hats off to Jerry Hesch and his fine team at Notre Dame for putting together another amazing program!

Should Every Estate Planning Lawyer Offer
to be Appointed as a Trust Protector?

by Alan Gassman, J.D., LL.M. and Seaver Brown, J.D.

Should every estate planning lawyer offer to be appointed as a trust protector to help ensure that testamentary intent will be followed a la Minassian v. Rachins, 152 So. 3d 719 (Fla. 4th Dist. App. 2014)?

The use of a trust protector has generally been confined to offshore trusts, but a recent opinion from Florida’s 4th District Court of Appeals may cause them to become more common in Florida.

Executive Summary

Florida Statute Section 736.0808 allows the settlor of a trust to give a third person the sole discretionary power to amend or terminate the trust for certain specified reasons. This discretionary power is typically given to either a trustee or another individual other than the settlor.[1]

The concept of a trust protector has a long and storied history. Under British Common Law, it was well-accepted procedure to appoint a trust protector who could change the terms of the trust for the benefit of some or all of the beneficiaries and, in some instances, terminate the trust altogether. One reason settlors would confer this power to amend or terminate trust provisions was to have a viable remedy to address any unforeseen events after their death, some of the most prominent of which included: ambiguous trust provisions, a change in circumstances, or a change in the applicable estate tax laws. However, despite the various reasons why a trust might need to be amended, the underlying purpose has always been to effectuate the settlor’s original intent.

Facts

In the case of Minassian v. Rachins, there was a dispute between the settlor’s surviving spouse, acting as trustee, and his children from a prior marriage.[2] The crux of the matter dealt with a trust protector who had the sole and absolute discretion to determine and then alter provisions that were ambiguous or erroneous enough to defeat the settlor’s original intent.

The language provided in the trust agreement, with respect to the trust protector’s appointment and authority, read as follows:

“To protect…the interests of the beneficiaries as the Trust Protector deems, in its sole and absolute discretion, to be in accordance with my intentions…The Trust Protector is empowered to modify or amend the trust provisions to inter alia: (1) to correct ambiguities that might otherwise require court construction; or (2) to correct a drafting error that defeats my intent, as determined by the Trust Protector in its sole and absolute discretion, following the guidelines provided in this Agreement.”

The disputed revocable trust was created by Mr. Minassian in 1999 and was followed by an executed restatement of trust in 2008 that would become irrevocable upon his death. The primary purpose for creating this trust was so that he and his wife, acting as sole trustees, could provide for themselves during their lives and then have the remaining trust assets pass to his children. Mr. Minassian and his wife were both very passionate about horse racing and legal gambling, and he wanted to provide for his wife so she could continue to live in the same manner she had grown accustomed to. However, Mr. Minassian was concerned that there would be problems between his children and wife, especially in regards to the manner in which she would spend the money contained in the Family Trust during her lifetime.

Eventually, his fears became true, and the beneficiaries sued the wife as trustee, alleging that she breached her fiduciary duties by taking too much out of the trust. The wife moved to dismiss the children’s claims for lack of standing because they were not beneficiaries of the trust. She argued that the Family Trust would terminate upon her death, at which point a new trust would then be created naming the children as beneficiaries. Contrary to the wife’s argument, the children insisted that the trust provisions would not create a new trust upon her death but instead would create separate shares in the existing Family Trust for each child. The trial court found that the wording of the trust was unclear and that it would be inappropriate to allow the Trust Protector to change the trust to clear up the ambiguity.

The wife nevertheless appointed a trust protector to clear up these ambiguities, as permitted by the above quoted language of the trust. Under such language, the protector was permitted to correct drafting errors that would have defeated the husband’s intent and, in certain circumstances, modify the trust without court authorization. The trust document further required the trust protector to determine the husband’s intent and consider the interests of current and future beneficiaries as a whole.[3] However, amending the trust could only be done if the agreement benefitted the beneficiaries as a group or furthered the husband’s probable wishes in an appropriate way.[4] Most importantly, though, the trust made any exercise of these powers binding and conclusive on all parties.

Pursuant to these guidelines, the trust protector modified the ambiguous trust provisions but did so unfavorably to the children’s position. In response, the beneficiaries filed a supplemental complaint against the wife and trust protector, arguing that those modifications were invalid. Both parties then moved for summary judgment as to whether the modifications were valid. Initially, the trial court held that the modifications made by the trust protector were improper and did not benefit all the beneficiaries. The court reasoned that, under the proposed modifications, the children had no right to challenge the actions of the wife as trustee and invalidated the provisions modified by the trust protector.

The wife then appealed the trial court’s ruling on the grounds that the provisions of the original trust were ambiguous and the trust protector could have modified it so as to properly effectuate her husband’s intent. Thus, the appellate court first had to address the validity of the trust protector provision under Florida law. If it was found to be invalid, then any subsequent amendments made by the trust protector would have been invalidated. On the other hand, if they were found to be valid, then the trust protector provision would control, and the protector could exercise any powers with sole and absolute discretion.

Florida Statute Section 736.0808(3) allows the terms of a trust to confer on a trustee or other person (i.e. trust protector) the power to direct the modification or termination of a trust. The children’s primary argument here was that Florida Statute Section 736.0808(3) conflicts with the common law rule that a trustee cannot delegate their discretionary powers to another person or entity. Here, the Court held that it is the settlor who delegates the power to modify the trust in a third person, not the trustee. Further, “the common law principles of trust and equity supplement [the Florida Trust Code], except to the extent modified by this code or another law of this state.”[5] Essentially, the Florida Trust Code controls when the common law of trusts contradicts it.

The children also argued that Florida Statute Sections 736.0410 – 736.04115 and Section 736.0412[6] provide the sole and exclusive means of modifying a trust.[7] Again, the court disagreed and held that those Sections are not the exclusive means for modifying a trust, otherwise Section 736.0808(3) would have no effect. Therefore, the Florida Trust Code permits the settlor to appoint a trust protector with the power to modify the terms of the trust.[8]

In sum, the trial court initially found that the trust was unambiguous and that the trust protector acted contrary to the settlor’s intent when he modified those unambiguous provisions. On appeal, however, the court found that the provision stating the Family Trust would terminate on the wife’s death was ambiguous. Since there was an ambiguity as to the husband’s original intent, the court was free to consider extrinsic evidence outside the four corners of the document. The appellate court noted that the trial record contained un-contradicted extrinsic evidence of the husband’s intent.[9] Specifically, “from the trust protector’s affidavit…it appears that the husband settled on the multiple-trust scheme for the very purpose of preventing the children from challenging the manner in which the wife spent the money.”[10]

While the trust protector’s actions may have disadvantaged the children, he was authorized to correct ambiguities as long as the actions benefitted the group of beneficiaries, or, as in this case furthered the husband’s desire to resolve any ambiguity with a trust protector.[11] His intent would have been violated if the authority he granted to the trust protector was stripped and given to a court. Thus, the modifications initially proposed by the trust protector were valid because they furthered the husband’s original intent.

Comment:

For many years, trust protectors have been a common theme for offshore trust agreements, but not until recently have they become more prevalent in the design of domestic trusts. Settlors are not limited in who they may select to serve as trust protector, unless by state statute. The protector may be one or several trustees of the trust, as well as one or more of the beneficiaries. They may also be a trusted friend of the settlor, a third party advisor, or some combination of the above.

Generally, the powers granted to a trust protector can take any form, limited only by the Settlor’s intent. Some of the most common and, oftentimes, controversial powers granted to protectors include the ability to:

  1. Remove or replace trustees;
  2. Remove, replace, or add beneficiaries;
  3. Terminate the trust;
  4. Vary trust provisions to reflect changes in tax laws;
  5. Modify distribution provisions;
  6. Consent to or veto discretionary powers of the trustee, such as investments or distributions to beneficiaries;
  7. Change trust situs to a state with favorable laws;
  8. Resolve disputes between beneficiaries and trustees; and
  9. Appoint a successor trustee.

As you can see, trust protectors are beneficial for many reasons, most notably because they provide flexibility within trust vehicles that are traditionally not so flexible. For example, an irrevocable trust cannot be changed by the grantor or trustees, but a trust protector can make such amendments as needed. This flexibility, however, can pose some significant problems in the future that the settlor and estate planner did not contemplate.

A settlor who has their mind set on using a trust protector should limit the protector’s powers to replacing a trustee and appointing a successor trust protector only. The reason for specifically limiting the protector’s powers is to prevent future conflicts between the protector, trustee, and beneficiaries. Without doing so, the protector could inadvertently expose the trust to unnecessary court costs and even completely destroy the original intent of the settlor. In order to maximize these potential complications, the provisions of the trust should clearly delineate the rights and responsibilities between protectors, trustees, and beneficiaries.

This then begs the question – do trust protectors hold personal powers that would allow them to act with impunity, or are they held to the higher standard of conduct related to fiduciaries? Unfortunately, the concept of a trust protector is still relatively new, so there is little statutory and case law guidance defining the fiduciary roles and responsibilities of trust protectors. In those cases where a trust protector’s power is deemed to be personal rather than fiduciary, the protector is limited only by exercising such power in good faith. Personal powers are those that a protector is under no duty to exercise and can be contrary to the settlor’s intent absent any fraud.[12]

The Uniform Trust Code, which Florida adopted and modeled their Trust Code after in 2006, states that an individual providing direction to a trustee is a fiduciary per se, but it does not address whether the trust protector is a fiduciary outright.[13] States such as Alaska and Arizona have statutes that expressly allow for the use of trust protectors and provide that the protector will not be treated as a fiduciary unless the trust instrument expressly provides for such treatment.[14] By contrast, other states such as Idaho and Wyoming provide that a protector will be treated as a fiduciary unless the trust provides otherwise.[15]

Many times, the duties a protector owes to the beneficiaries of a trust are dependent on what other roles they hold with respect to the trust. Alexander Bove provides a fairly simple example that illustrates this point.[16] Imagine that a settlor names his daughter as the trust protector with the sole power to add and delete beneficiaries with no restrictions.[17] With this power in mind, the daughter then proceeds to remove all her siblings from the trust and replace them with her children. In this scenario, it is likely that her actions would have been fully contemplated by the settlor, and therefore, a proper use of her personal powers. Using the same scenario, imagine that instead of naming the daughter as trust protector, the attorney who drafted the trust is now the protector. If the attorney began to remove beneficiaries and supplement them with beneficiaries of his own choosing, it is far more likely that the protector breached the applicable fiduciary duty.

Thus, to determine whether a trust protector will be held to a fiduciary standard, one should ask whether the protector is acting pursuant to the powers granted by the trust and in furtherance of the trust and its beneficiaries, as may have been contemplated by the settlor. However, even if a state statute or trust instrument requires the protector to be held as a fiduciary, the scope of those fiduciary duties continue to remain unclear.

As we briefly mentioned above, because of this uncertainty, it would be wise to include language expressly stating whether or not the protector is a fiduciary and how they should exercise those powers. Furthermore, the trust protector should be someone that the settlor “trusts,” because without the proper safeguards in place, the protector has the ability to cause significant and expensive problems.

In addition to the practical considerations described above, there are important tax considerations that should not be overlooked and often should be carefully thought through. This includes any power to limit the rights of a surviving spouse that could cause loss of the federal estate tax marital deduction, naming foreigners as trust protectors, which can implicate the foreign trust reporting requirements and cause penalties and interests that could exceed the value of the trust assets over time and the impact that trust protector provisions can have upon the income tax status of an irrevocable trust.

Trust settlors, and to some extent, estate planners, typically do not give much thought about how to minimize the cost and frustration of future complications. In our experience, most law firms do not appoint trust protectors or themselves as trust advisors. Consequently, there is no one that will have the ability to resolve ambiguities outside of a court or arbitration. We believe that a trust protector can save a family time, money, and relationship problems when it comes to resolving ambiguities and questions as to intent and what actions have been or should be taken by the trustee.

Should you and your law firm be doing the same?

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[1] Fla. Stat. § 736.0808(3) (2008).
[2] 152 So. 3d 719 (Fla. 4th Dist. App. 2014).
[3] Id. at 722.
[4] Id.
[5] Fla. Stat. § 736.0106 (2008) (emphasis added); see also Abraham Mora, et. Al., 12 FLA. PRAC., ESTATE PLANNING § 6:1 (2013-14ed.) (“The common law of trusts supplements the Florida Trust Code unless it contradicts the Florida Trust Code or any other Florida law.”)
[6] This Section provides for non-judicial modification of an irrevocable trust, which requires the unanimous agreement of the trustee and all qualified beneficiaries.
[7] Minassian. 152 So. 3d at 724
[8] Id.
[9] Id.
[10] Id.
[11] Id. at 727.
[12] Trust Protectors: What Role Do They Play?, SS043 ALI-ABA 585, 588.
[13] See, Uniform Trust Code § 808(b) (amended 2005).
[14] See, Alaska Stat. Ann. § 13.36.370(d)(West); Ariz. Rev. Stat. Ann. § 14-10818.
[15] See, Idaho Code Ann. § 15-7-501 (2005); Wyo. Stat. Ann. §§ 4-10-710 – 4-10-718 (2005); Tenn. Code Ann. § 35-15-808 (2005).
[16] Bove, Alexander. The Trust Protector: Trust(y) Watchdog or Expensive Exotic Pet?, Estate Planning Vol. 30 No. 08: 390, 392, available at http://www.bovelanga.com/publications/articles/The_Protector.pdf.
[17] Id.

NAIC Closing the Loop on Illustrations
by Barry D. Flagg

Barry Flagg

Barry D. Flagg is the founder of Veralytic. He has more than 25 years of experience in the life insurance business. He is currently the youngest CFP in history and the inventor of all Veralytic patents. He is regularly engaged as an expert speaker on the topics of life insurance industry trends and regulations and has been a featured speaker at numerous national conferences. He has also been published or featured in ABA Trusts & Investments, AICPA Wealth Management Insider, National Underwriter, Financial Advisor, The Heckerling Institute on Estate Planning and more. Veralytic is a leading innovator in life insurance analytics. Their research has been trusted by dozens of brokerages and agencies across the United States representing billions in managing life insurance policies and assets.

On June 18, 2015, the Life Actuarial (A) Task Force of the National Association of Insurance Commissioner’s (NAIC) Life Insurance and Annuities (A) Committee adopted new Actuarial Guideline 49 governing indexed universal life (IUL) illustrations. The new guidelines are in response to overly aggressive marketing practices and are intended to make illustrations more reasonable. Despite insurance companies asking for a delay in implementation of this new Actuarial Guideline, it’s scheduled to become effective for all IUL policies sold on or after September 1, 2015 and all new business and inforce on March 1, 2016.

Uniform Guidance

NAIC Actuarial Guideline 49 was introduced to provide uniform guidance to IUL illustrations by:

  1. Addressing the obvious problem of using unrealistic index returns on illustrations;
  2. Limiting the policy loan leverage shown on illustrations; and
  3. Requiring additional consumer information to aid in consumer understanding

The NAIC acknowledges that this is just an interim guidance specifically for IUL illustrations, and on the April 16, 2015 conference call, they accepted that more needs to be done.

Mike Boerner, Chair of the Life Actuarial (A) Task Force said in a letter dated April 27, 2015, “the Life Actuarial (A) Task Force will consider requesting approval from the Life Insurance and Annuities (A) Committee to open Model 582 to incorporate the changes specified in the guideline and to address similar issues in other product illustrations. Revising Model 582 will provide the opportunity for the Task Force to ensure that a level playing field for all product illustrations is attained.”

Lack of Uniformity

NAIC adopted the Life Insurance Illustrations Model Regulation, which can be seen by clicking here.

Since then, there’s been continued evolution in products and their design, including the introduction of IUL with benefits that are tied to an external index or indices. “Although these [IUL] policies are subject to Model Regulation #582, not all of their features are explicitly referenced in the model, resulting in a lack of uniform practice in its implementation. In the absense of uniform guidance, two illustrations that use the same index and crediting method often illustrated different credited rates. The lack of uniformity can be confusing to potential buyers and can cause uncertaintity among illustration actuaries when certifying complicance with Model Regulation #582.”

Other Guidance

Other guidance suggests practitioners should avoid relying solely on hypothetical illustrations and embrace proven and long/well established Prudent Investor principles using research that independently measures policy charges and performance and provides documentation that the inforce policy and/or product being recommended is competitive and suitable relative to the universe of peer-group product alternatives.

In addition, comparing illustration of hypothetical policy performance can be “misleading,” are “strictly prohibited” by the chief regulatory body of the financial services industry are “fundamentally inapprorpriate,” according to a study by the chief actuarial body of the life insurance industry and “are subject to a high degree of fluctuation” and thus not reliable for determining the suitability of a given policy, according to the US Office of the Comptroller of the Currency.

A Good Start

This new guideline is a good start to a long and overdue process for reining in the life insurance illustration practices and educating the consumer on an essential financial product and should be considered together with emerging Best Practice Standards.

Richard Connolly’s World
The Latest in Estate Planning & How to Avoid EP Fatigue

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Breaking the Barriers of Estate Planning Fatigue” by Kimberly Bernatz. This article was featured on WealthManagement.com on September 8, 2015.

Richard’s description is as follows:

There’s been quite a buzz in the media since the recently published CNBC Millionaire Survey found that a third of those with at least $1 million in investable assets haven’t used a professional to establish an estate plan.

According to many industry experts, the constantly changing nature of federal estate tax laws has resulted in estate planning fatigue. We’ve had nearly a decade of uncertainty and changes in the tax law, and during that time, responsible advisors have been reaching out to their clients to explain those changes and encourage them to update their plans, if necessary. That consistent uncertainty is almost enough to make people wash their hands and say, “enough is enough.” Couple that feeling with the fact that today’s federal estate tax exemption amount of $5.43 million is making many people feel that planning is unnecessary if their estates fall below that threshold.

So while we, as professionals, understand the importance of an estate plan, the question is how do we most effectively communicate that message to our clients?

The answer might lie within psychological barriers that prevent our clients from taking important action.

Please click here to read this article in its entirety.

The second article of interest this week is “What’s Hot in Estate Planning Right Now May Surprise You” by the Wealth Counsel Staff at WealthManagement.com. This article was featured on their website on September 1, 2015.

Richard’s description is as follows:

Estate planning has truly evolved over the past 20 years. Gone is the uncertainty about federal estate taxes and the absolute requirement for married couples to use complex trusts to minimize these taxes.

But also gone is planning for the “traditional” family. In this article, you will learn why estate planning has become more complicated and what your clients need to do now to insure their estate plans are flexible enough to roll with the changes.

Please click here to read this article in its entirety.

Thoughtful Corner
Don’t React Immediately

There is no way to avoid having an emotional response to challenging situations. One of the things that our brain does is prompt an immediate reaction to such situations, and this reaction is often not rational.

One of the things our reptile brain does is provoke the “flee or fight” response. This response was helpful to prehistoric men and women, as they would not have been able to survive if they did not have an immediate response to dangers, challenges, or otherwise.

Fortunately, we no longer live in caves, and immediate response by email, in meetings, or on the telephone are simply not necessary or in the best interests of ourselves, our clients, or our business relationships if we are having an emotional response.

Many lawyers and other professionals are quite adept at setting up opponents or even clients to provide an emotional response that they can then take further advantage of. Don’t fall victim to this trap!

Also, emails may sometimes appear to be terse and rude, but they are instead simply shortened and filled with less eloquent statements made by someone who might not be thinking about how their message could be interpreted.

The adage to “count to ten and take deep breaths” certainly has a great deal of utility to modern man (and probably cavemen as well!) Ask for a minute to think things through. If you’d like, you can use an excuse, such as you need to make a phone call, go to the bathroom, check on something, or something else that could provide a moment alone.

You can get used to saying things like the following when these circumstances apply:

  1. I think I understand where you are coming from, but I need to think this through. I may also talk it over with _______________ and review before getting back to you.
  2. Thanks very much for…
  3. I’m very surprised that you said that and will simply not respond at this time.

If you “lose it” or say the wrong thing or let your emotions get the better of you or otherwise realize, perhaps an hour later, that you made a big mistake, apologize immediately and tell the person that they will receive a less emotional response from you the following day. Then, talk the situation over with someone you trust to get it off of your list of things to worry about.

The same principles apply with interacting with office staff, friends, or family members.

Why come to blows or risk doing something that can cause the loss of a good relationship, someone else to be upset, or undermining the ability to have productive team work?

Immediate reprimands work well with children but not necessarily with colleagues, clients, or employees. Let yourself cool down before deciding exactly how to communicate, unless you have already thought through the response in advance and know that it is appropriate based upon what the person has done.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Alan Gassman has been out of town this week, starting with a day in Boston and then heading on to the Notre Dame Tax and Estate Planning Institute in South Bend, Indiana. While he was gone, you might have gotten one of the following messages when attempting to send him an email:

Boston:

We hopped on Jet Blue for one day in Boston,
The streets are a maze, so we are now lost in
The cradle of the American Revolution,
Where tea-throwing seems a clever solution.

Marcia and I are dining on chowda,
Drinking Sam Adams, and saying to locals “How do-
you do? Do you pahk you cah?
I heah that Hahvahd is not very fah.”

Thanks for enduring this quick little blip,
So that we can focus on our very short trip.
The Freedom Trail is a great historical walk,
But mostly we just hear fans yelling “Go Sox!”

If you need to get in touch, our office is not yet on Yelp;
But you’ve got our number, so please call us for help.

Notre Dame:

On the first day of Notre Dame,
Marcia wouldn’t go with me,
“I’ll see you at the end of the week.”
I flew to South Bend, with anything but sorrow,
To learn from Jerry Hesch and Edwin Morrow

On the second day of Notre Dame,
I saw Natalie Choate speak,
She’s truly the bees’ knees.
And the exhibit booths were one big party,
I cut loose with Barry Flagg and many tax geeks.

On the last day of Notre Dame,
I just so totally freaked!
I learned all about jurisdictions that are weak,
I attended the lunch meeting (all the food was free),
And I brainstormed ideas for Steve Leimberg’s LISI.

………

On the Monday after Notre Dame, my assistant shrieked at me:
You have twelve clients in the lobby,
Eleven new estate plans,
Ten dozen unanswered voice mails,
Nine probate cases waiting,
Eight dozen follow up letters pending
Seven revised petitions,
Six angry attorneys,
FIVE IRS CLEARANCE LETTERS!
Four notebooks lost,
Three incomplete articles,
Two notebooks of un-reviewed bills……….

Oh, how long until the next Notre Dame???????

Thanks to Kristen Sweeney for the above poems!

Upcoming Seminars and Webinars

Calendar of Events

LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:30 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Alan’s Friday morning presentation will be entitled COFFEE WITH ALAN: AN INTRODUCTION TO SELECT ESTATE PLANNING AND ASSET PROTECTION STRATEGIES. During this session, Alan will offer an overview of the topics that will be presented throughout the Estate Planning Conference. Attendees new to these specific estate planning areas will find the presentation useful and helpful.

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others

LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.10.15 – Nothing Interesting, For a Change

Posted on: September 10th, 2015

Alan Gassman Kicks Off Distinguished Speakers Series for a Very Impressive Charity

Ross, Et. Al v. AXA Equitable Life Insurance Co. – Policy Holders Have No Recourse

Paying for College: Understanding Student Financial Aid, Part II

Gregory Gay’s Corner – Medicaid Nursing Home Assistance, Part II

Richard Connolly’s World – Special-Purpose Trusts & 529A Accounts

Thoughtful Corner – College Students: Homesickness and Separation by Dr. Diana Trevouledes

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“Knowing that you are living in a dream world is very liberating because it gives you the option of waking up.”
– Dr. Srikumar Rao

Nothing Interesting, For a Change

Based upon popular request, we have made the Thursday Report dull, dulled it down, and even used a form of the word dull three times in a sentence so as not to grab your attention and pull you from more important tasks that you may have to accomplish. Many readers asked that the Thursday Report not be so interesting that it distracts them so much from their jobs and their demanding and unreasonable bosses. In such event, we have worked very hard this week to make this Thursday Report not eye catching, not exciting, and not (as) insightful.

Hopefully, no statutes of limitations or filing requirements will be missed this week by reason of compulsive reading of the Thursday Report, and please don’t send copies of this Report to the Thursday Report Reporting Society, as it could hurt our 2.5 (out of 10) rating or the Federal Grant we receive for outstanding journalism needs by a non-501(c)(3) organization with private manurement.

Alan Gassman Kicks Off Distinguished Speakers Series for a Very Impressive Charity

Gassman & Payne - FINAL

On Tuesday, Alan Gassman kicked off the Distinguished Speakers Series put on by the Community Foundation of Sarasota County in partnership with the Southwest Florida Estate Planning Council. Alan presented on the topic of “Everything You Always Wanted to Know About Creditor Protection and Didn’t Even Think to Ask.”

Gassman Speech - FINAL

The Community Foundation of Sarasota County posted 28 great photos from this event, including the two featured here. You can view all 28 event photos by clicking here.

The Community Foundation of Sarasota County is a model for what all community foundations should aspire to be. A public charity founded in 1979 by the Southwest Florida Estate Planning Council, the Community Foundation of Sarasota County is a resource for caring individuals and the causes they support. Just last year, the Community Foundation distributed more than $19.3 million in grants and scholarships in the areas of education, health, human services, the arts, animal welfare, and the environment. Learn more about the Community Foundation of Sarasota County by clicking here.

Ross, Et. Al v. AXA Equitable Life Insurance Co. – Policy Holders Have No Recourse
by Alan Gassman and Alyssa Eberle, J.D.

Southern District of New York, 2015 – Policy Holders have No Recourse when it is Discovered that a Carrier has Violated State Law Reserve Requirements by Using Inadequately Disclosed Captive Reinsurance Carriers in Violation of State Law

In Ross v. AXA, a class action suit was brought on behalf of AXA insureds alleging that AXA was in violation of the New York insurance law by engaging in “shadow insurance” transactions. The Court held that the Plaintiff class failed to establish that AXA has incurred a financial loss worthy of federal judicial intervention at this time.

By way of background, the National Association of Insurance Commissioners (NAIC) introduced two model regulations: Regulation XXX and AXXX, which had been adopted in New York. These regulations were adopted by the state to increase the safety factor of reserve requirements by increasing the overall reserve level and limiting a company’s ability to use their admitted assets for anything other than supporting its reserves.[1]

In order to minimize the risk of the insurer not being able to pay off a large amount of claims in a small amount of time, many insurers obtain their own insurance called reinsurance. This is where a primary insurer pays a premium to the reinsurer in exchange for carrying some of the risk involved with claims payments. Reinsurance therefore allows the insurer to claim “reserve credits” which reduce the assets an insurer is required to maintain for its reserves. Consequently, reinsurance helps fulfill two objectives: (1) it manages risk and (2) it helps free up some capital for the insurer to use for another purpose.[2]

In the event that the reinsurer defaults, the primary insurer still remains liable on all policyholder claims. Because of this, insurance regulations allow for the primary insurer to take a reserve credit only when there is sufficient assurance of the reinsurer’s ability to pay for claims when it assumes the risk.[3] “[I]n essense, [such arrangements are] reducing the assets a primary insurer is required to maintain in support of its reserve liabilities.”[4] There are two categories of reinsurance transactions that are deemed to be safe enough to grant the insurer a reserve credit:

  1. Those with reinsurers who are licensed or accredited by the primary insurer’s own regulators (“authorized reinsurers”); and
  2. Those with unauthorized reinsurers who post sufficient high-quality, easily liquidated collateral to account for potential obligations – typically by maintaining a trust with a United States financial institution or by obtaining an irrevocable and renewable (“evergreen”) letter of credit from a United States financial institution.[5]

However, in spite of these requirements for claiming reserve credits for reinsurance transactions, a report issued by the New York Department of Financial Services (NYDFS) discovered that New York insurers had been using captive reinsurance to “end-run around higher reserve requirements” and “hide risk.”[6] An insurer would most likely be able to do this by creating an insurance entity in another state with less stringent regulatory requirements. Under these more loosely regulated states; the insurance companies use their parent company’s guarantees to back a letter of credit that is posted as collateral to obtain reserve credit for the reinsurance transaction.[7] This process allows insurers to acquire reserve credits –reducing the total amount of assets used to support their reserve liabilities – without transferring the risk associated with these policies, since the reinsurer’s obligations are not supported by its own financial strength, but with the financial strength of the parent company.[8] This process creates little to no detail regarding the reinsurance transactions, hence “shadow insurance.”

These undisclosed guarantees in the shadow insurance transactions could lead to potential disasters in the insurance industry. Most significantly, the report completed by the NYDFS found that none of the parent companies had established significant reserves or contingent liabilities to support reinsurance transactions; in fact, most had none. The implications of having little to no reserve means that a parent company would likely be subject to financial stress from its risk exposures, leaving reserves depleted and creating a risk that the insurer may not be able to pay claims.[9]

The class represented in the suit filed against AXA had all purchased life insurance policies in New York that were in effect at the time the suit was filed. Based on the NYDFS Report, the Plaintiffs alleged that the annual disclosures that had been filed by AXA were misleading since they failed to disclose details of the shadow insurance transactions; thereby making AXA’s financial strength appear stronger than it actually was.[10] For example, AXA reported $1.9 billion in letters of credit securing their reinsurance obligations in its 2011 annual statement. However, the reserve credit was not based on the financial strength of AXA alone but rather through “undisclosed or inadequately disclosed guarantees and indemnifications from an affiliate.”[11]

The Plaintiffs alleged that because AXA used letters of credit that were backed by undisclosed or inadequately disclosed parental guarantees to lower its reserves, AXA’s existing assets appeared to provide policyholders with greater protection against loss than was actually the case.[12] Plaintiffs did not allege, however, that the undisclosed or inadequately disclosed shadow insurance transactions caused them financial harm, nor did the plaintiffs allege that they were influenced by AXA’s representations.[13]

The United States District Court in New York concluded that the Plaintiffs lacked standing to pursue their claims. Indeed, while Plaintiffs sought to bring their claim under federal law, the Court stated that because the cause of action arises under state law, they lacked the jurisdiction to make a decision. The District Court concluded that:

Plaintiffs must established that at least one of them has otherwise suffered an injury sufficient to entitle him to sue in federal court – namely, the “invasion of a legally protected interest which is…concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”[14]

The Court noted that because the Plaintiffs did not allege that they would not have purchased life insurance policies from AXA but for its disclosures, or that they had suffered any past or current financial harm by AXA’s misrepresentations, any risk of harm is in the future – the risk that AXA, because of its shadow transactions, will be unable to pay Plaintiffs’ claims when they are eventually made.[15] Since the Court held that this theory was hypothetical and speculative, it did not justify federal judicial intervention. Therefore, the District Court dismissed the case for lack of subject-matter jurisdiction. However, in its conclusion, the Court noted that it did not arrive at its conclusion lightly. Indeed, the Court noted:

The pervasiveness of shadow insurance in New York – and AXA’s alleged failure to disclose details of those transactions – may well pose a threat to the stability and reliability of the state’s insurance system, as NYDFS suggested. Nevertheless, the Court cannot address the legality or propriety of AXA’s conduct without the constitutional authority to do so.

Though the Plaintiffs were unable to get a decision from the Court, the Complaint still served a purpose. The NYDFS created a new regulation after its investigation into shadow insurance that “explicitly require[s] disclosure of additional information regarding shadow insurance transactions.”[16] Time will tell whether the performance of AXA and other insurance carriers, coupled with possible consequent increases in premiums as needed to sure up the financial circumstances of such carriers will work an undue hardship on those who have purchased and maintained policies. This situation brings up the question as to whether insurance carriers are viable stewards for the amount of wealth and the many illustrative projections that they make in order to sell policies in a far from transparent and not-well-regulated environment.

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[1] LISI Estate Planning Newsletter #2328 (July 30, 2015) at http://www.leimbergservices.com.
[2] Id.
[3] Id.
[4] Ross, 14-cv-2904 – Document 138.
[5] Id at 4.
[6] Id citing NYDFS Report 4.
[7] Id.
[8] Id at 6.
[9] Id at 7.
[10] Id.
[11] Id at 8.
[12] Id.
[13] Id.
[14] Id citing Lujan, 504 U.S. at 560.
[15] Id at 19.
[16] Id at 22.

Paying for College: Understanding
Student Financial Aid, Part II
by Dena Daniels

Each year, the US Department of Education awards approximately $150 billion to assist students with paying for college. There are two main types of financial aid: (1) aid based on academic merit and (2) need-based aid. The former is not dependent upon the parents’ assets and income but rather the student’s academic performance, “if you have the grade, you get the aid.” The latter takes into account both the parents’ and the student’s income and assets.

Last week, we examined the different types of need-based federal financial aid available to students. To refresh your memory, please click here to see last week’s Thursday Report.

PART II – HOW TO APPLY

In order to receive federal financial aid, the student is required to complete the Free Application for Federal Student Aid (FAFSA). This application process is completed online, and both the student and the parents must apply for a PIN number and report their financial information. The student must fill out the FAFSA at www.fafsa.ed.gov.

How Eligibility is Calculated

Eligibility is determined by the following calculation:

Cost of Attendance – Expected Family Contribution (EFC) = Need

Cost of Attendance (COA) is the amount it will cost for the student to attend school. Most colleges and universities provide a “cost of attendance” breakdown for the entire school year (which includes the fall and spring semesters). The Cost of Attendance usually includes the following:

  • Tuition and Fees
  • Housing and Meals
  • Books and Supplies
  • Personal Expenses Including Transportation

The Expected Family Contribution, or EFC, is the minimum amount that the household is expected to contribute towards the cost of the student’s college education. It is calculated using the following three methods:

  1. Federal methodology
  2. Institutional methodology
  3. Consensus methodology

All three methods are based on the income and assets of the parents and student as reported on the FAFSA and the CSS Profile. The FAFSA is free to file and is income driven, while the CSS profile is charged a filing fee and is asset driven.

Although retirement assets are not included when calculating the EFC, other assets, such as checking and savings accounts, CDs, real estate investments, stocks, bonds, etc. must be reported. Parents are expected to pay 5.64% of the assets to pay for college when using the federal methodology and 5% of the assets to pay for college when using the institutional and consensus methodology. Small businesses, home equity, and non-qualified annuities are not counted in the federal methodology, but they are counted in the institutional and consensus methodologies. However, under the consensus methodology, home equity is capped at 1.2 times the parents’ adjusted gross income.

Excluded Assets for the FAFSA

The following assets are not counted when filling out the FAFSA form:

  • Possessions (i.e. car, stereo, furniture, etc.)
  • Family’s principal place of residence
  • Family-owned and controlled small businesses
  • Retirement plans and whole-life insurance

As far as retirement plans and whole-life insurance are concerned, the values are not counted as assets, but distributions are counted as income.

Small Business Exclusion

Since July 1, 2006, small businesses that are owned and controlled by a family are excluded assets. This exclusion was established by Section 8019(c) of the Higher Education Reconciliation Act of 2005. In order for the small business exclusion to apply, the family-owned and controlled small business must:

  • Have 100 or fewer full-time equivalent employees; two half-time employees count as the equivalent of one full-time employee.
  • Be owned and controlled by the family. This means that more than 50% of the voting rights must be owned by the family. For this purpose, a family includes: (1) persons directly related to the student (i.e. parent, sister, cousin) or (2) persons who are or were related to the student by marriage.

A business can be any type (i.e. LLC, LLP, C-Corp, S-Corp) to qualify as a family-owned and controlled small business. If the business qualifies as a family-owned and controlled small business, then the student and parents are not required to report any assets of the business on the FAFSA. However, income received from the small business is required to be reported.

The family owned small business exclusion is applied to the FAFSA, not the CSS Profile. However, only approximately 250 schools actually use the CSS Profile. The CSS Profile is a lot more detailed and takes an in-depth look at the assets of the family. The CSS Profile is used to determine institutional financial aid – that is, monies distributed by the school for need-based students – whereas the FAFSA is for federal funds.

Gregory Gay’s Corner
Medicaid Nursing Home Assistance, Part II

Gregory Gay

Gregory G. Gay, Esquire is an attorney from Tarpon Springs who specializes in meeting the special needs of senior citizens and the disabled. He is Board Certified in Wills, Trusts & Estates and in Elder Law by the Florida Bar. He has also been named a Certified Advanced Practitioner by the National Elder Law Foundation.

Mr. Gay is the author of the Florida Senior Legal Guide, the 8th edition of which can be purchased by clicking here. In the coming weeks, we will be profiling some of the best chapters from this excellent publication. Our deepest thanks to Mr. Gay for making this content available to Thursday Report readers!

This week, we take a look at promissory notes, loans, mortgages, undue hardships, irrevocable annuities, and how they influence Medicaid assistance eligibility. To see Part I of the Medicaid discussion, please click here.

Promissory Notes, Loans, and Mortgages

All promissory notes, loans, and mortgages signed on or after November 1, 2007, will be considered a transfer of assets without fair compensation unless the promissory note, loan, or mortgage has a repayment term that is actuarially sound based on Social Security’s life expectancy tables and has payments made in equal amounts during the term of the loan with no deferral or balloon payments and the note does not allow for debt forgiveness.

Undue Hardship

A nursing home patient who has made an uncompensated transfer subjecting him or her to a penalty period affecting eligibility and a person with a home equity interest exceeding $536,000 must be offered an opportunity by the Department of Children and Families to demonstrate that the imposition of the penalty period will create an undue hardship. This opportunity must be granted before the disposition of the application. Nursing home facilities are allowed to apply for an undue hardship waiver on behalf of an individual with the consent of the applicant or the designated representative. An undue hardship exists when application of the transfer of asset penalty or excess home equity penalty will deprive the nursing home patient of medical care such that his or her health or life would be endangered or the individual will be deprived of food, clothing, shelter, or other necessities of life.

Other federal and state laws prohibit a nursing home from evicting a resident without transferring the person to a safe place. Thus, the nursing home might be required to continue to provide care to an indigent patient without receiving public assistance until the undue hardship waiver has been determined.

Irrevocable Annuities

When an individual purchases an annuity, he or she generally pays to the insurance company that issues the annuity a lump sum of money, in return for which, he or she is promised regular payments of income in certain amounts. The payments may continue for a fixed period of time (for example, 10 years) or for as long as the individual (or another designated beneficiary) lives, thus creating an ongoing income stream. The annuity may or may not include a remainder clause stating that if the person who owns the annuity dies, the insurance company converts whatever is remaining in the annuity into a lump sum and pays it to a designated beneficiary.

Annuities, although usually purchased to provide a source of income for retirement, are occasionally used in conjunction with Medicaid planning. To avoid penalizing persons who validly purchased annuities as part of a retirement plan, but to capture those annuities that were purchased to shelter assets, a determination is made by the Department of Children and Families that the return to the annuitant is fairly computed. If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the beneficiary, the annuity is deemed sound for actuarial purposes and is not considered to have been purchased to shelter assets.

The annuity must also be irrevocable and non-assignable. The periodic payments (including the interest portion) are counted as unearned income in the eligibility determination and patient responsibility. An annuity that is revocable or non-assignable is not considered a countable asset. If the annuity is revocable, the asset value is the amount the purchaser would receive from the annuity insurer if the annuity is cancelled. If the annuity is assignable, the asset value is the amount the annuity can be sold for on the secondary market.

To determine that an annuity is sound for actuarial purposes, the life expectancy tables, compiled from information published by the Office of the Actuary of the Social Security Administration, are used. The average number of years of expected life remaining for the individual must coincide with the length of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value for the annuity based on the projected return. In this case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, possibly subjecting the individual to a penalty.

The penalty is assessed based on a transfer of assets for less than fair market value that is considered to have occurred at the time the annuity was purchased. For example, a male at age 65 has a life expectancy of 14.96 years, according to the table. Thus, if he purchases a $14,080 annuity to be paid over the course of 10 years, the annuity is actuarially sound. However, a male at age 80 has a life expectancy of only 6.98 years. Thus, if he purchases an annuity to be paid over 10 years, the amount that will be received for the last 3 years is considered a transfer of assets for less than fair market value, and that amount is subject to penalty.

The new Medicaid laws still permit a spouse with countable assets in excess of the $115,920 community spouse resource allowance to purchase an annuity with the excess assets. The annuity must be paid to the community spouse over no longer than his or her life expectancy. However, the new law requires that the state be named the first beneficiary for at least the total amount of medical assistance paid on behalf of the annuitant, except when the owner of the annuity has a spouse or a minor or disabled child. In this case, the State of Florida may be named as the secondary beneficiary after the spouse, minor, or disabled child. Since the new law addresses only the medical assistance paid on behalf of the person over whose life the payments are to be made, there is a question as to whether there is a repayment obligation if the annuitant is the community spouse.

The next edition of Gregory Gay’s corner will feature a discussion of the “half-a-loaf” method, personal service contracts, and exemptions to the transfer rules for those applying for Medicaid. If you would like to read the Florida Senior Legal Guide in its entirety, please visit http://www.seniorlawseries.com. Mr. Gay can be reached at gregg@willtrust.com.

Richard Connolly’s World
Special-Purpose Trusts & 529A Accounts

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “For Parents With Troubled Adult Children, Financial Hurdles Abound” by Paul Sullivan. This article was featured in The New York Times on August 28, 2015.

Richard’s description is as follows:

There are many painful, emotional issues surrounding crises like mental illness and addiction that affect children. But there are concrete financial steps parents can take that won’t worsen their child’s condition, enable their child’s addiction, or, in the case of mental illness, run afoul of limitations on the number of assets a person can have and still qualify for government benefits.

One starting point is a special-purpose trust, which can provide care for the suffering child and peace of mind for the parent.

Please click here to read this article in its entirety.

The second article of interest this week is “Tax-Free Savings Accounts for Disabled are Expected in 2016” by Ann Carrns. This article was also featured in The New York Times on August 28, 2015.

Richard’s description is as follows:

Special savings accounts for people with disabilities are likely to become available in most states next year.

The accounts were made possible in 2014 by the ABLE Act – for Achieving a Better Life Experience – and are loosely modeled on the popular 529 college saving accounts.

As with 529 college savings plans, 529A accounts allow contributed funds to grow tax-free and to be withdrawn tax-free for eligible expenses. Anyone – including family and friends of a disabled person, as well as the disabled person themselves – can contribute to the accounts, but there is no federal tax deduction for the contribution.

An important feature of the accounts is that they allow people with special needs to save for their care and education without disqualifying them from receiving government benefits.

This article answers questions about the new 529A accounts, including what sort of expenses can money in the accounts be used for, can an individual have more than one 529A account, and when 529A accounts will be available in a variety of states.

Please click here to read this article in its entirety.

Thoughtful Corner
College Students: Homesickness & Separation
by Dr. Diana Trevouledes

Trevouledes

Diana Trevouledes, Ph.D. is a licensed Clinical Psychologist and Social Worker with over 20 years of experience in a variety of mental health setting including university counseling centers and private practice. Dr. Trevouledes has held faculty positions at Fordham University, Mercy College, and the City University of New York, teaching psychology and mental health counseling at the doctoral, masters, and undergraduate levels.

Mehra - UPDATED

This article was brought to our attention by Dr. Rahul Mehra of MehraVista Health. He is boarded in adult psychiatry, boarded in child psychiatry, and boreded of both of them! His favorite heroes are Subway and Firehouse Subs, and you can view the MehraVista website by clicking here http://mehravistahealth.com/. Thanks, Rahul, for permission to bring this article to Thursday Report readers!

Although most students are excited about starting their college careers, the thought of leaving behind the comforts of home, high school friends, and family members can be very stressful. Even if your son or daughter has been looking forward to starting college and has demonstrated no apprehension prior to his or her arrival, it is not unusual for first-year students to feel somewhat anxious and uncomfortable once they actually arrive on campus. For the most part, students who experience homesickness and discomfort about separation will find that these feelings pass after a week or two. They make friends, get involved with activities, and feel like they are fitting in. But other students may not adjust after a few weeks on campus. Instead they may:

  • Be preoccupied by thoughts about what family members are doing at home and distracted by activities they might be missing.
  • Become tearful during their waking hours and have difficulty getting to sleep at night.
  • Feel anxious about making friends and fitting in (this is especially true of first-year students who will need to create a new social network upon their arrival on campus.)
  • Experience loneliness that comes from being disconnected from family and friends and not yet having established a new social network.
  • Experience increasing panic and a need to come back home (perhaps even calling urgently requesting to come home.)

Here are some suggestions about how parents can assist their student in managing the challenges of separation anxiety, homesickness, and loneliness:

  • Patiently listen to your son’s or daughter’s concerns regarding their separation anxiety. It is important to find a balance between panicking and not taking their distress seriously.
  • While letting your child know that you genuinely hear how uncomfortable he or she is, explain that separation anxiety typically does pass, even though it may feel that it will go on forever.
  • Reassure your son or daughter that many people have difficulty with transitions and that the feelings that they are experiencing are perfectly normal and to be expected.
  • Encourage your son or daughter to become involved in clubs, organizations, and co-curricular activities, particularly the activities that have been designed for new students.
  • Encourage him or her to stay at school and not return home immediately. Allowing your child to come home reduces everyone’s level of discomfort in the short run; however, it only prolongs separation anxiety.
  • Let your child know that his or her resident assistant or other campus helpers are there to offer comfort and support.
  • In order to build your child’s self-confidence during this time of transition, remind your child that he or she has confronted difficult situations in the past and mastered them.
  • Encourage your child to get involved in campus-sponsored volunteer activities. Many students get involved in these activities to meet other students as well as to help others.
  • Encourage your student to eat in the dining hall rather than in his or her room and study in the library or other public places rather than alone.
  • Remind your first-year student that it will take time to build friendships; therefore, encourage him or her to be persistent and not to be dismayed if this doesn’t happen immediately.
  • If, over time, your son or daughter continues to feel panicky, lonely, and unhappy, encourage them to contact the counseling center. Many students seek counseling to get support during the transition to college, and typically, they can be helped after just a few sessions.

The above article was featured in Success and Sanity on the College Campus: A Guide for Parents by Diana Trevouledes and Ingrid Grieger, which can be viewed on Amazon by clicking here.

Top Portion 2

For more information on how to help your student transition to college, be sure to check out the webinar by Alan Gassman and Molly Carey Smith entitled The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making. This webinar will be presented this Saturday, September 12, at 9:00 AM. Click here to register.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Failure to Read My Mind

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE BIGGEST MISTAKES TO AVOID CONCERNING YOUR HIGH SCHOOL CHILDREN – COLLEGE FAILURES IN THE MAKING.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:30 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 9.3.15 – Statute Changes, Succession Planning, and Understanding Financial Aid

Posted on: September 3rd, 2015

Update on Changes Made to Florida’s Estate Tax Apportionment Statute by Keith B. Braun

An Introduction to Succession Planning and Possibly All You Need to Know, Part III

Paying for College: Understanding Student Financial Aid, Part I

Seminar Spotlight – The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making

Richard Connolly’s World – Retirees Stung by ‘Universal Life’ Cost

Thoughtful Corner – Out of Sight, Out of Mind

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“Ready, Fire, Aim,” – H. Ross Perot

Ross Perot sold Electronic Data Systems (EDS) to General Motors (GM) in the 1980s. A few years later, he was asked to explain the difference between the two companies. Perot claimed that EDS had a “Ready, Fire, Aim” strategy, i.e. a “get on with it now” philosophy towards running the business.

Oftentimes, it is best to determine where your gun is pointed by firing it and then adjusting from there. This is often true for situations where trial and error is the most effective way to get things going.

When you need to get something done or determined, consider the ready, fire, aim concept.

Update on Changes Made to Florida’s Estate Tax Apportionment Statute
by Keith B. Braun

Braun

Keith B. Braun has practiced for over 30 years, primarily in the areas of estate planning and probate and trust administration. He received his law degree from the University of Pennsylvania Law School and is a partner of the Palm Beach Gardens law firm of Comiter, Singer, Baseman & Braun, LLP. Keith is admitted to practice in Florida and Michigan and advises many law firms in Northern states on Florida issues. He is AV rated by Martindale Hubbell; Board Certified Wills, Trusts, and Estate Lawyer by The Florida Bar Board of Legal Specialization and Education; a Chartered Advisor in Philanthropy® (CAP®); and an Accredited Estate Planner ® (AEP®).

Two weeks ago, we provided summaries and compared statutory language to help you mount the learning curve for these delightfully concise and straightforward changes efficiently and effectively. You can click here to review the changes, which have already been read by millions of people throughout the world and, allegedly, Colonel Sanders as well.

We thank Keith B. Braun, David J. Akins, and Pamela O. Price for their hard work and achievement in facilitating the updated tax apportionment statutes. Braun, Akins, and Price were the members of the Estate Tax Apportionment Subcommittee of the Estate and Trust Tax Planning Committee of the Real Property, Probate, and Trust Law Section of the Florida Bar that drafted the proposal which formed the basis of the Amendment. You can read their article about the changes to the tax apportionment statute by clicking here.

Keith’s special Thursday Report write-up on the apportionment statute is as follows:

This year, the Florida Legislature revised the Florida estate tax apportionment statute Section 733.817. The revised apportionment statute is much easier to read; it has been better organized and now includes titles. Further, the statute has been updated to reflect changes in the federal estate tax law, address issues not previously covered, codify existing case law, and, I believe, better reflect what most people would want.

Section 733.817 sets forth default rules for determining the apportionment of estate tax – federal and state – among the various property interests passing as a result of a decedent’s death, applying a modified equitable apportionment regime. These default rules can be modified.

The key changes made to the apportionment statute are as follows:

  • No estate tax is apportioned to gift taxes on gifts made within 3 years of death or to the recapture of excess 529 plan gifts made within 5 years of death.
  • Estate tax on protected homestead, exempt property, and family allowance is apportioned to other estate and revocable trust property. First, such taxes are apportioned to recipients of property passing by intestacy, thereafter, to recipients of residuary interests and pretermitted shares, and finally, to recipients of nonresiduary interests. Property necessary to satisfy the elective share will not bear any of the tax on these interests. Note that exempt property and family allowance receive the same favorable treatment as homestead.
  • The common instrument construction rules have been modified to treat all recipients of property passing from related governing instruments (pour over will and revocable trust or revocable trusts where one pours into another) as taking under a common instrument.
  • A direction in a governing instrument providing for apportionment in a manner different than provided in Section 733.817 (i.e., intra document apportionment must be express.)
  • Property included in the gross estate under both Section 2041 (general power of appointment) and Section 2044 (QTIP) is treated as includible under Section 2041. As a result, the greater specificity requirements of Section 2207A must be met to waive the right of recovery and such property bears the additional tax incurred by reason of inclusion of such property in the beneficiary’s estate.
  • The holder of a general power of appointment may expressly direct that property subject to such power bear the additional tax incurred by reason of the inclusion of the property in the power holder’s gross estate (i.e., be treated similarly to QTIP property).
  • If governing instruments contain conflicting tax apportionment provisions, the last executed tax apportionment provision controls. If a will or trust is amended, the date of the amendment is only controlling if the amendment contains an express tax apportionment provision.

Practitioners will be pleased with this revised statute.

Keith will also be presenting a more detailed talk on this subject entitled “Gobblin’ Up the New Estate Tax Apportionment Statute” at the Florida Bar sponsored Estate & Trust Planning/Asset Protection: Tricks, Treats and Really Scary Things seminar on Friday, October 23, 2015. For more information about this event, please click here.

An Introduction to Succession Planning and
Possibly All You Need to Know, Part III

by Alan Gassman

Two weeks ago, we covered terminology and important concepts relating to succession planning. You can review this by clicking here.

Last week, we covered approximately one-half of our substantive succession planning materials, which were written for intelligent laymen, which can be viewed by clicking here. The conclusion to these materials is as follows:

Shareholder Agreements

The present estate tax law has a very advantageous provision which allows stock in a family company to be valued based upon a formula or criteria that would be used by similarly situated arm’s-length parties. This provision applies even if the “low side value” results from use of the formula, which can take into account that there are no non-competition covenants in place between family members, if that is the case. For most businesses and industries, there are formulas that will result in a value that is significantly less than what the IRS would otherwise consider company ownership interests to be worth.

This is one advantage to having a purchase occur upon death between family members. In addition, or alternatively, shareholder agreements between family members which prevent the transfer of stock to third parties and have other restrictive provisions can help to reduce the value that the stock will be taxed upon in the event of an owner’s death.

Further, where company stock constitutes more than 35% of a decedent’s adjusted gross estate, it may automatically qualify for an advantageous estate tax payment plan that can be based upon interest only and a government subsidized rate for the first four years, followed by payments ratably over the following ten years. Many family businesses can easily survive and even prosper with that type of payment plan, but many families mistakenly have corporate debt or asset structuring that causes the net value of the corporate stock to be less than 35% of the shareholder’s adjusted gross estate (see Internal Revenue Code Section 6166).

Another common error is to have a real estate business that predominately leases its property on a triple net basis. The payment plan rules described above can apply to investment real estate where the property holding entity provides active management services. This is often the reason that affluent families have family members actively engaged in managing the family real estate (besides the fact that it keeps them off of the streets). Active management can also result in avoidance of the 3.8% Medicare tax that is often otherwise imposed upon net rental income.

Examples of Business Allocation Planning for Family Members

Scenario #1

The business entity assets will be allocated to the trust for my daughter to the extent not exceeding 50%, with the other assets being allocated to the trust for my son.

If the business entity assets turn out to be worth more than 50%, then my daughter’s trust will owe my son’s trust a note for the difference, payable upon such terms as the Trust Protectors deem appropriate.

If the business company is still renting the business real estate from me at the time of my death, then the business real estate may be allocated to the trust for my son, and the Trust Protectors may install a long-term fair market value lease with option.

Scenario #2

Get it sold early, but get it sold to a trust that can be changed based upon changes to the family dynamics.

For example, Father, Mother, and Son #1 may be running the business, and it is going well. Son #2 has no interest in the business, and Son #3 is still in high school.

Father and Mother believe that the business should most likely go to Son #1, but they are not sure about Son #3, and they are not getting along very well with Son #1’s wife, whom he married just two years ago.

They establish an irrevocable trust for all three children and give long-time family advisors and wise siblings the title of Trust Protector with the power to divide the trust into three parts, one for each son, and to allocate the assets as between the three parts as the Trust Protectors see fit.

During the lifetime of the parents, the trust receives ownership in the business, the entity that owns the real estate that is leased to the business, and monies are received by the company as distributions on the above real estate and entity ownership.

When Father and Mother die, they leave a trust that provides for the children to be treated equally from a net value standpoint and allows the Trust Protectors to value the business, allocate the corporate ownership as they see fit and in the best interests of both the company and the children, and to have notes due from a trust receiving excess value business interests to a trust receiving non-business interests as needed for balance.

On the death of the surviving parent, the Trust Protectors divide the assets in all of the above-referenced trusts as they deem appropriate.

The siblings do not fight with each other over the results, because the results are beyond their control.

Scenario #3 – Alternate Example for Life Insurance

Son #1 buys a second-to-die life insurance policy on the parents and enters into a binding Agreement to pay them an amount that is based upon a formula determined by the CPA for the company, which will hopefully be binding upon the IRS for valuation purposes.

The Agreement provides for the price to be paid in cash to the extent of 80% of the insurance proceeds and for the remaining 20% of insurance proceeds to be contributed to the company (or used to pay down debt and to release Father’s estate from any liability) as working capital and to help make sure the company is in compliance with any loans.

The purchase price above the 80% of insurance proceeds level is financed by a note that might be payable over 9 years by 108 monthly installments with interest at 1% above what the prime rate is on the death of the parent.

The child whose trust receives the company may be required to sign an Employment Agreement with a non-competition covenant that will require the child to work only for the company and dedicate all efforts to the company until the note is paid. It becomes the recipient child’s decision as to whether to involve siblings or others in the business.

Scenario #4

How about voting control for a situation where the mother owns 50% of the company and one daughter owns the other 50%, with several other siblings who are not as involved with the business?

In addition, what happens with respect to operating control of the business if the mother or her co-shareholder daughter become incapacitated but are still alive? How about providing for a “King Solomon Committee” that would have to agree with the remaining mother or daughter if one of them becomes incapacitated or dies with respect to continuing to run the business while giving each of them the option to buy the business at a fair market value price determined by the long-term CPA of the family?

For more on these and related topics, see Louis Mezzullo’s articles entitled Cain v. Abel: Dealing with Sibling and Cousin Rivalries and Business Succession Planning, which are available upon request by emailing agassman@gassmanpa.com. Louis Mezzullo is a lawyer, author, and well-known authority on succession planning. In fairness to Lou, his contact information is as follows:

Louis Mezzullo
Withers Bergman, LLP
6050 El Tordo
PO Box 2329
Rancho Santa Fe, CA 92067

Paying for College: Understanding Student Financial Aid, Part I
by Dena Daniels

Each year, the US Department of Education awards approximately $150 billion to assist students with paying for college. There are two main types of financial aid: (1) aid based on academic merit and (2) need-based aid. The former is not dependent upon the parents’ assets and income but rather the student’s academic performance, “if you have the grade, you get the aid.” The latter takes into account both the parents’ and the student’s income and assets.

PART I – TYPES OF NEED-BASED FEDERAL FINANCIAL AID

Federal Pell Grants

Federal Pell Grants are usually awarded to undergraduate students based on a combination of factors including: (1) the student’s financial need, (2) the institution’s cost of attendance, (3) the student’s enrollment status, and (4) the length of the academic year in which the student is enrolled. For the 2014-2015 academic year, the maximum Federal Pell Grant was $5,550 for the year. A student is eligible for this award for a total of twelve (12) semesters.

Federal Supplemental Educational Opportunity Grants

Federal Supplemental Educational Opportunity Grants are awarded to undergraduate students who have exceptional financial need. This type of aid is determined by the institution’s financial aid office and is contingent upon not only the student’s need, but also the available funds at the institution.

Direct Subsidized Loans

Direct subsidized loans are available to undergraduate students who demonstrate financial need. This type of loan usually has more favorable terms than unsubsidized loans to assist students. The loan amount is determined by the school the student attends, and the US Department of Education pays the interest on these loans as long as one of the following situations exists:

  • The student is enrolled in school at least half-time;
  • For the first six months after the student leaves school (this is referred to as a “grace period”); or
  • During a period of deferment.

Federal Perkins Loan Program

Federal Perkins Loans are low-interest loans for both undergraduate and graduate students who demonstrate exceptional financial need. The loans have an interest rate of 5%, however, not all colleges and universities participate in the Federal Perkins Loan Program. In this program, the school is the lender for the loan and payments are usually made to the school. The funds for this loan are limited based on the student’s need and the availability of funds at the school.

Federal Work Study

Federal Work Study provides part-time jobs for both undergraduate and graduate students who demonstrate financial need. This program affords students the opportunity to earn money to assist with the payment of education-related expenses, and in order to qualify, the student must be enrolled either full-time or part-time. The type of work in this program encourages community service work and work related to the student’s area of study.

Students participating in the Federal Work Study Program earn at least the current federal minimum wage, however, the student may earn more depending on the type of work and the level of skill necessary for the position. The total award a student receives under this program depends on: (1) when the student applies, (2) the level of financial need, and (3) the school’s funding level.

The means in which a student is compensated depends on whether the student is an undergraduate or graduate student. If the student is an undergrad, he/she is paid by the hour, whereas a graduate or professional student may either be paid hourly or by salary, depending on the work. The school must pay the student at least once a month, and the funds must be paid directly to the student unless the student requests that the school: (1) send the payments directly to the student’s bank account, or (2) use the money to pay for education-related institutional expenses and charges.

Next week, we will explore how to obtain the above types of federal financial aid, including eligibility requirements and how to apply.

Seminar Spotlight

The Biggest Mistakes to Avoid Concerning Your High School
Children – College Failures in the Making

Molly

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of The Biggest Mistakes to Avoid Concerning Your High School Children – College Failures in the Making on Saturday, September 12, 2015 at 9:30 A.M.

Molly Carey Smith, M.A. is the owner of College2Career in Tampa, Florida. College2Career is a career counseling business for college students and young adults. She brings years of experience in college guidance, essay and application guidance, career aptitude assessments, resume building, internship and job search strategies, and interview preparation. To find out more, visit her website at http://www.college2career.us.

The 10 mistakes that will be discussed during the webinar are as follows:

  • Sending your son/daughter to college without the emotional and mental maturity to succeed in college
  • Too much focus on athletic scholarships and sports in general
  • Allowing your son/daughter to choose a college major without your input
  • Failure to have a realistic and objective view of your son/daughter’s true abilities
  • Forgetting to introduce and to educate your son/daughter about the true costs associated with college each year
  • Believing that private universities have a better rate of return than public universities
  • Giving up scholarships from a public university in order to attend a private university
  • Not encouraging your son/daughter to work during college
  • Losing focus on the importance of character development
  • Not cultivating a mindset of financial independence

To hear more about these mistakes, please click here to register for the Saturday webinar.

Richard Connolly’s World
Retirees Stung by ‘Universal Life’ Cost

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the article of interest is “Retirees Stung by ‘Universal Life’ Cost” by Leslie Scism. This article was featured in The Wall Street Journal on August 9, 2015.

Richard’s description is as follows:

Retired high school teacher Nicholas Vertullo long felt confident that his wife, Grace, wouldn’t have to pinch pennies after he died. Nearly three decades ago, he bought a $238,000 life insurance policy and later bought three more policies, pushing the death benefit to about $500,000.

But he didn’t anticipate the policies’ annual costs would rise as much as they did, jumping to about $30,000 combined.

Low interest rates lead to soaring premiums for those who bought in the 1980s, and this article lists the things a client should do with an old policy, including:

  1. Get an in-force illustration from the insurance company to determine if the current premium will keep the policy in force.
  2. If the required premium is too high, look at reducing the face-value amount to an amount an affordable premium will support.
  3. If in good health, see if the client can qualify for a new policy with a lower guaranteed premium.
  4. If none of these options provides a good solution and the client is going to surrender the policy, look at selling it to institutional investors for more than its cash value through life settlement.

Use this article to encourage clients to have their policies checked out.

Please click here to read this article in its entirety.

Thoughtful Corner
Out of Sight, Out of Mind

Consider recommending a separate email address for mail related to litigation or similar highly distracting situations. Many times, clients are clearly haunted by on-going litigation or disputes, and it can be difficult to compartmentalize or not be distracted from these types of situations when there are periodic emails that appear.

We therefore often recommend that the client consider establishing a new, separate email address that would receive any and all non-urgent emails and messages concerning the matter.

The client can then check that particular email address every few days, once a week, or perhaps less frequently. This will allow them to not have the distracting situation interrupt them on a daily (or more frequent) basis.

“Out of sight, out of mind” is a powerful truism when it comes to focusing attention on what we know we need to handle and not being distracted by unproductive thoughts or interruptions.

Taking that pile of work constituting a particular project off your desk and asking someone to put it back on your desk at a particular time and date in the future can be a very good step towards enhanced productivity and focus.

How often do you take a step back and think through how the logistics of communications, work flow, and distractions are working for you in your office or at home?

Make two or three changes this week to free you up and to help others.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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IN THE NEWS
by Ron Ross

The parents of 2015 lament that it’s going through those angry teen years.

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Investigators trying to find Hillary Clinton’s Blackberry are now looking in a closet that also has a typewriter from the Truman administration, a telegraph machine from the time of Lincoln, and Jefferson’s quill pen and ink stand.

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A lion at Busch Gardens eats a completely innocent attorney in a misguided attempt at revenge. Says the lion, “I thought it was that dentist.”

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Because of the large field of Republican Presidential candidates, participants in the upcoming CNN debate will be selected based on whether or not Microsoft Word’s spellcheck recognized their name. Obvious winners include Bush and Trump.

Everyone who does not get into the debate will eventually get the chance to play Colonel Sanders in a future KFC television ad.

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A monster accidentally created by Fox News escapes and is applauded at Presidential debates by reactionary voters. Says a Fox News representative, “It turns out his core demographic is people carrying torches and pitchforks.”

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Latest polls show that reasonable sounding Republican Presidential candidates George Pataki and John Kasich, among others, rank in preference with GOP voters just below a replica of Darth Vader made out of bubblegum.

Upcoming Seminars and Webinars

Calendar of Events

LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE BIGGEST MISTAKES TO AVOID CONCERNING YOUR HIGH SCHOOL CHILDREN – COLLEGE FAILURES IN THE MAKING.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

September Rates

The Thursday Report – 8.27.15 – I Have Become Comfortably Thursday

Posted on: August 27th, 2015

Market Jitters by Gregg A. Biro

Medical Law Update with Lester Perling

An Introduction to Succession Planning and Possibly All You Need to Know, Part II

Richard Connolly’s World – Changes for Law Firms to Consider

Humor! (or Lack Thereof!)

Upcoming Seminars & Webinars

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

I Have Become Comfortably Thursday

The 1979 double album The Wall by Pink Floyd was written entirely by Roger Waters, both in music and in lyrics, and was a watershed moment for music in a number of ways.

While many view Pink Floyd as just another rock band or as a band that is fairly far out on the “far away from conventional music” scale, Mozart was quoted to the effect that “Pink Floyd is my favorite band. The beat is unsurpassable, and The Wall is, by far, my favorite album.” Even George Gershwin recognized the importance of The Wall when he wrote An American in Paris, recognizing that The Wall, in some ways, reflected the Berlin Wall, which was only 652 miles from Paris and built only 33 years after An American in Paris was composed.

Roger Waters was born in 1943 and joined Pink Floyd in 1967. He parted ways with them in 1985. Not to be confused with Muddy Waters, Roger Waters has been said by many to be one of the most talented writers and performers in the history of Rock and Roll, according to his press agent, his present girlfriend, and the 11.5 million people who have purchased The Wall, not to mention his later works, which included The Pros & Cons of Hitchhiking and Amused to Death.

Quote of the Week

“At first, I felt that it was confined to my liver and that the operation had completely removed it, so I was quite relieved. Then, that same afternoon, we had an MRI of my head and neck, and it showed up that it was already in four places in my brain, so I would say that night and the next day until I came back up to Emory, I just thought I had a few weeks left, but I was surprisingly at ease. I’ve had a wonderful life. I’ve had thousands of friends, and I’ve had an exciting, adventurous, gratifying existence, so I was surprisingly at ease – much more so than my wife was – but now I feel, you know, it’s in the hands of god and my doctors, and I’ll be prepared for anything that comes.”

– President Jimmy Carter, when asked how he felt when he found out he had cancer

James “Jimmy” Carter, Jr. is an American politician and author who served as the 39th President of the United States from 1977 to 1981. He was awarded the 2002 Nobel Peace Prize for his work with The Carter Center, a nonprofit organization that works to advance human rights and alleviate human suffering. In August of 2015, Carter announced that he was undergoing treatment for cancer in his liver and brain.

Market Jitters
by Gregg A. Biro

Biro

Gregg is the Director of Business Development and a shareholder with Resource Consulting Group. He joined the firm in 2010. Prior to joining Resource Consulting Group, he was a Vice President for Bernstein Global Wealth Management where he provided comprehensive wealth management solutions to clients in Florida. He also served in a similar role with Wells Fargo Private Bank in Orlando. He holds his Series 65 financial security license and held his Series 7, 31, and 66 financial securities licenses. He is a graduate of The Ohio State University with a Bachelor of Science in both Marketing and Computer Information Systems. A resident of Orlando since 1987, Gregg enjoys swimming, playing golf, and spending time with his three children. He supports several local nonprofits which provide support and guidance to children.

Thanks to Gregg, Michael H. Davis, and Resource Consulting Group for allowing us to share this report with Thursday Report readers! This article has been reprinted with permission.

Market Jitters…

We’ve all seen the headlines declaring that “markets are in a free-fall.” We don’t dismiss the anxiety that market corrections may cause investors, and we want to provide a few points to remember in times like these.

First, market corrections are completely normal. In fact, over the last 35 years, the average intra-year drop from a market high to a market low is approximately 14%. The current volatility is well within this normal range.

To see a chart of intra-year declines versus calendar year returns, please click here.

Second, maintaining your discipline during times of volatility is critical to investment success. Your investment strategy must be driven by your investing goals – not by short-term movements in the markets. It is important to remember that the capital markets have consistently rewarded the disciplined investor who endures these normal periods of market volatility.

Lastly, please remember why the media is in business: to generate ratings that sell more advertising. The old adage that “bad news sells” is very true. As you have no doubt already seen, and will continue to see, the media will use “breaking news” alerts and special coverage to wring the ratings out of this market downturn. You should also expect the media to feature various “experts” offering all sorts of predictions. But we all know those predictions have nothing to do with maintaining a long-term prudent strategy for investment success. 

Medical Law Update with Lester Perling
by Travis Arango

Perling

There have been some new developments in the state of Florida’s health care laws. This article will go over the specific bills and summarize the webinar presented by Lester Perling, J.D., MHA, and Alan Gassman, J.D., LLM. You can watch the webinar by clicking here.

HB 269 – Experimental Treatments

This is known as the “Right to Try Act.” This allows patients with a terminal condition to try a drug, biological product, or device that has successfully completed Phase 1 of a clinical trial but is not yet approved by the FDA. The licensing board may not take action against a physician’s license for recommending an experimental drug, product, or device. There is also an immunity for the manufacturer of the drug as well. Another interesting nuance is that the patient’s heirs are not liable for the patient’s debt related to the treatment. Keep in mind that most insurances are not obligated to cover experimental treatments.

HB 32 – HIV Testing

Definitions for “health care setting” and “non-health care setting” are added with this bill. Health care setting is defined as a setting devoted to the diagnosis and provision of medical care (hospitals, urgent care centers, health departments, etc.). Non-health care setting is defined as a site that conducts HIV testing only for diagnosis and does not provide any treatments (community based organizations, outreach settings, mobile health vehicles, etc.). The bill reiterates that informed consent is required for both settings. The bill also changed the notification requirements before an HIV test can be performed in both settings. One notification requirement is that the patient must be told that their results will be submitted to the Department of Health, and if they do not want to have the results reported, then they will be given the locations to anonymous testing sites.

HB 633 – Abortions and Informed Patient Consent

This bill requires physicians to inform pregnant women of the risks of having an abortion. The bill also requires that the physician performing the abortion or the referring physician be present in the same room when obtaining informed consent. There is now a 24-hour waiting period for pregnant women who wish to have an abortion. This is not a direct 24-hour wait period, but instead, the informed consent must be given no sooner than 24 hours of the procedure, thus creating a 24-hour wait period. There are exceptions for the 24-hour waiting period for women who are victims of rape, incest, domestic violence, or human trafficking, with documentation evidencing that she is the victim of one or more of these crimes.

HB 655 – Clinical Laboratories

This bill revises the definition of “licensed practitioner” to include consultant pharmacists and doctors of pharmacy. The bill requires clinical laboratories to make its services available to consultant pharmacists or doctors of pharmacies in addition to other licensed practitioners (currently, a clinical laboratory cannot accept human specimens from pharmacists because they are not included in the statutory definition of licensed practitioner.) Clinical laboratories may not charge different prices for its services based upon the practitioner’s licensing.

HB 697 – Public Health Emergencies

This bill amends Florida Statutes to include provisions on communicable diseases. It allows law enforcement to enforce isolation and quarantine orders. Before this bill, law enforcement did not have the power to do this. This bill provides definitions for “isolation” and “quarantine.” “Isolation” means the separation of an individual reasonably believed to be infected with a communicable disease. “Quarantine” means the separation of an individual reasonably believed to have been exposed to a communicable disease but is not yet ill. The goal for this bill is to “fulfill an important state interest.” This is likely a response to the Ebola situation we faced at the beginning of this year.

HB 751 – Emergency Treatment for Opioid Overdose

This bill creates the “Emergency Treatment and Recovery Act,” which allows health care practitioners to prescribe and dispense emergency opioid antagonists to patients for emergency purposes. It provides “good Samaritan” protection from civil liability to practitioners that prescribe and dispense emergency opioid antagonists and does not create a duty or standard of care for a practitioner who prescribes or dispenses or a person who administers an emergency opioid antagonist.

HB 889 – Health Care Representatives

Allows a person to designate a health care surrogate to act any time, including while the person is still competent and able to make his or her own decisions. If the individual is competent to make decisions, then his or her decision controls. This bill ensures that redetermination of incapacity is not necessary for a designated surrogate to make health care decisions. It also provides for the designation of health care surrogates for minors when the minor’s legal guardian cannot be timely contacted or is unable to provide consent for treatment. It specifies that a principal’s wishes are controlling while he or she has decision-making capacity.

HB 1127 – Insurance Fraud

The law expressly provides that charges and claims for reimbursement made by unlicensed health care clinics that are operating in violation of the health care clinic statute are unlawful and could constitute theft even if the claims were not paid to the unlicensed health care clinic. This bill revises the criminal penalties for such unlawful health care charges and classifies unlicensed clinic activities as a felony. This bill requires that when health care providers have knowledge of an unlicensed clinic, they must report the clinic. Failure to report an unlicensed clinic can result in licensing sanctions.

HB 309 – Patient Admission Status Notification

This law adds a provision that if a patient is on “observation status” rather than inpatient status in a hospital, services that are performed during the observation status (such as x-rays, lab tests, etc.) must be documented in the patient’s discharge papers. The bill requires hospitals to inform patients if they are on “observation status.” Medicare coverage varies depending on whether a patient is inpatient or observation, so the point of this law is to make it clear to the patient what his or her co-payment obligation will be; it is often higher if a patient is in observation status.

An Introduction to Succession Planning and
Possibly All You Need to Know, Part II

by Alan Gassman

Last week, we covered terminology and important concepts relating to succession planning. You can review this by clicking here.

This week, we are covering approximately one-half of our substantive succession planning materials, which were written for intelligent laymen, and are as follows:

PART II – A MULTIPLE CHOICE QUESTION

The majority of businesses in the United States are family-owned. Of those family-owned businesses, it is estimated that only 30% survive to the second generation, and merely 12% survive to the third generation.[1] Arguably, the most common reason that family-owned businesses fail to survive beyond the first generation is friction from within the surviving family. A close second may be irrational decision-making to “cash in” and do other things (like spend it all.) A third reason is failure of the business due to naïve or simply incorrect decision-making.

Family-owned business succession is rife with possibilities for discord. For example, consider a business that was founded and operated by a single owner in the first generation. In many cases, that business will be passed on to multiple siblings in the business’s second generation of ownership. These siblings, each with their own individual interests, visions, and rivalries, will now need to depend on each other for their financial security and the survival of the inherited business.

There are endless factors that may bring about or exacerbate contention among siblings. Oftentimes, family members of the second generation who were inactive in the family business would rather sell the business and reinvest the proceeds elsewhere. Similarly, second generation owners who do not have children will have different attitudes about retaining the family business than siblings who do.[2]

Each of these difficulties that are inherent to family-owned business succession are compounded if the business survives to the third generation, where both siblings and cousins may share control.

Clients with successful businesses and professional practices have limited choices when it comes to how they should pass their business on to the next generation or generations of family members. In practice, this tends to be a good thing because recognizing the choices and then the sub-choices that come with each possible direction can help assure that the senior family members have a good understanding of what is possible in the future.

Where Estate Tax is a Consideration

The present estate and gift tax exemption of $5,430,000 per person allows many clients to pass businesses without any concern for federal estate tax at the level of the present owners. This simplifies planning and also enables the next generation to receive inherited stock or businesses at a fair market value income tax basis.

Families facing federal estate tax challenges need to consider the integration of estate tax avoidance techniques into succession planning. However, in most situations, the available options can be kept open while estate tax planning takes place.

For example, stock in a closely held company can be transferred annually to an irrevocable trust that will not be subject to federal estate tax at the level of the parents using the $14,000 per year per person gift tax exclusion (a mother and father can gift $28,000 per year to each of their children, in-laws, grandchildren, etc.). The irrevocable trust can hold S-Corporation or other types of ownership interests and then have them pass without being subject to the federal estate tax at the level of the donating parent.

Other techniques include the use of special trust arrangements such as (i) Grantor Retained Annuity Trusts and (ii) installment sales to Grantor Trusts to move ownership and/or the eventual proceeds from sale and profit (not to mention dividends and other distributions) outside of the federal estate tax system.

Family members or trusted advisors can be named as Trust Protectors so that various family members can benefit from inheritance, continued trusteeship, or the purchase of stock as and when circumstances change.

Often these types of trusts and techniques are used shortly before a company goes public. The rule of thumb in most industries is that a company’s stock will be worth three times as much after a successful initial public offering (IPO) as compared to pre-IPO activities.

One key point that the estate and trust planner must understand is that family members often want maximum flexibility and any one or more of the techniques above can be used.

Life Insurance Arrangements

Life insurance policies that are funded under buy-sell or redemption arrangements are, by no means, the only or even the most common way to have ownership pass to subsequent generations, but they are often considered to be a good fit for many situations.

Inexpensive term life insurance is often used to help assure families that a premature death will not bring a company down or provide serious challenges to its survival because of a loss in cash flows, capitalization, or other tax issues.

It is quite common for many buy-sell arrangements to factor in the amount of money available to pay taxes and expenses as they come due, as well as whether those beneficiaries that may not inherit or benefit from the family business can receive a reasonable inheritance. For this reason, permanent life insurance may be used in certain situations, including second-to-die life insurance policies that will pay a death benefit only on the death of a surviving spouse or business owner. This can ensure that the family has plenty of liquidity to pay taxes, handle bank debt, or provide inheritance monies for those who may not participate in the family business.

We find that, in most instances, insurance is not owned or made payable by beneficiary designation in the most optimal manner. For example, the choice between a cross purchase agreement and a redemption agreement will often be made based upon custom, or simply from a misunderstanding of what choices are available. Our article on this topic, entitled A Logical Guide to Selecting a Buy-Sell Agreement Arrangement: Traditional Choices are not Always Best, is available here.

Another simplified way of using life insurance would be to establish a trust for the primary benefit of junior family members and for that trust to own life insurance on the senior family members so that it can then be used to facilitate a purchase of ownership upon the death of the senior family members.

We rarely recommend that life insurance be owned by an operating company because it is possible for creditors of the company to attach life insurance values or death benefits if the company has a catastrophic situation or the banks are inclined to call in loans upon the death of a shareholder.

Transferring the Business To or For the Benefit of Employees

On occasion, a client will not have family as the intended recipients of a business but will instead prefer to have the key employees take over ownership and possibly pay for the value from the profits of the business.

One method to accomplish this is called the Employee Stock Option Plan (“ESOP”), under which a small contribution is made to a new qualified retirement plan for employees, which then borrows money from a bank or other financial institution and pays the money to the business owner in exchange for the stock of the business.

The business owner will pay a capital gains tax on the payments received, and the business profits payable to the ESOP will not be subject to tax until, eventually, ESOP monies are payable to employees many years down the road.

For example, a business owner receiving $1,000,000 a year in profits and a $250,000 salary might sell his stock to the ESOP for $7,000,000 that would be taxed at the 20% plus state tax bracket instead of at the normal 43.8% plus state tax bracket.

For the next 7 years, the profits of the business would be payable tax-free to the ESOP, and the ESOP would use those profits to repay the $7,000,000 note to the bank.

The seller would remain as president of the company and continue to control it to assure that the $7,000,000 is paid. The seller would be well advised to put some or all of the net after tax monies received from the sale into bond or other safe funds or investments in case the company cannot pay the loan and the selling owner had guaranteed it.

Assuming a 20% capital gains tax and a 43.4% income tax, the tax savings from this arrangement over the seven years would be approximately $1,638,000 (23.4% of $7,000,000), and the owner may be a participant in the ESOP, and thus, retain a relatively high percentage of indirect ownership.

There are also a number of rigid tax law and pension law requirements that must be met to facilitate a successful ESOP transaction.

Join us next week when we conclude our succession planning series with a discussion of shareholder agreements and business allocation planning.

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[1] Cain v. Abel: Dealing with Sibling and Cousin Rivalries by Louis A. Mezzullo at 8-3.
[2] Id.

Richard Connolly’s World
Changes for Law Firms to Consider

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Will Law Firms Flock to .Law Domain?” by Jacob Gershman. This article was featured on The Wall Street Journal Law Blog on August 13, 2015.

Richard’s description is as follows:

Starting in mid-October, law firms and credentialed lawyers will be able to purchase web addresses ending in .law, a new domain reserved for their industry.

Law firms are going to have to pay to get a .law domain. The price to register .law starts at $200. Minds + Machines [a major registrar for many new top-level domains] says domains for practice areas, like divorce.law or antitrust.law, will cost more, with prices subject to negotiation.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Baker & Hostetler Weighs Giving All Partners Stake in the Firm” by Sara Randazzo. This article was also featured on The Wall Street Journal Law Blog on August 10, 2015.

Richard’s description is as follows:

What does it mean to be a law firm partner?

At some large firms, being a partner means having an actual voice in how the firm operates and a salary that rises and falls with each year’s profits. At others, the title comes with little influence and a salary barely higher than that of a senior associate.

Baker & Hostetler, LLP is proposing a change to put all of its partners on more equal ground by eliminating its so-called two-tier partnership in favor of one that gives every partner an equity stake in the 930 lawyer firm.

As Above the Law first reported, Baker & Hostetler leadership told its partners last month that it would like to switch systems to “strengthen” its culture “by having all partners invested in the success of the firm.” The partnership is expected to vote on the change in September, according to a memo obtained by the blog.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign Final

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Cartoon

Upcoming Seminars and Webinars

Calendar of Events

LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES.

This seminar will focus on how owners can transition their businesses to employees or others who buy over time. Topics include avoiding unnecessary capital gain tax on exit, deferred compensation, profits interests, redemptions, life insurance, and getting assets out of corporate solution to obtain a basis step-up (without self-employment tax.)

There will be two opportunities to attend this presentation. Attendees will be given the opportunity to receive over 850 pages of technical business planning materials at no charge.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE PRESENTATION

Alan Gassman will present a talk at the November meeting of the Suncoast Estate Planning Council on the topic of PORTABILITY AND RECENT DEVELOPMENTS.

Date: Thursday, November 12, 2015 | 8:00 AM – 9:00 AM

Location: TBD

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Byron Smith at bsmith@gsscpa.com.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Essential Creditor Protection and Retirement Planning Considerations

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com. 

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

August Rates

The Thursday Report – 8.20.15 – New Florida Laws and More

Posted on: August 20th, 2015

Seminar Spotlight – Ave Maria Professional Acceleration Workshop with Alan S. Gassman

Florida Statute Updates: Changes You Need to Know About

An Introduction to Succession Planning and Possibly All You Need to Know, Part I

Gregory Gay’s Corner – Medicaid Nursing Home Assistance, Part I

Richard Connolly’s World – All About GRATs

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“If you’re not confused, you’re not paying attention.” – Tom Peters

Tom Peters is a business management author best known for his 1982 book In Search of Excellence, which discussed solving business problems with as little business-process overhead as possible. The book also served to empower decision makers at all levels within a company. The quote above can be found in the book Thriving on Chaos: Handbook for a Management Revolution, which can be purchased by clicking here.

Seminar Spotlight
Ave Maria Professional Acceleration Workshop
For 3rd Year Law Students, Alumni, and Experienced Professionals

Alan

Please join us for an 8 hour, CLE approved, interactive workshop that will completely engage all participants in personal goal setting, one-on-one conversations about how to handle practical challenges and obstacles, important strategies for business and personal relationships, and one-on-one client interaction guidelines and techniques that are commonly used by the most successful professionals.

The workshop consists of eight sessions. In the first, we will talk about goals and all of the things each of us has to be thankful for. During the second session, we will discuss eliminating frustrations and obstacles that often arise when striving to reach the goals we identified in the first session.

The third session will be spent reviewing exercises that can be used to solve problems, develop strategies, and enable participants to think out of the box about unique and effective ways to achieve objectives and handle issues that everyone faces.

During the fourth session, we will talk about clients. We will discuss how they think and how we can most effectively attract, serve, and retain them. In the fifth session, we will talk about techniques and strategies to have appropriate work-life balance, maximize efficiency, and enhance overall life enjoyment.

In the sixth session, we will discuss techniques that can be used to implement the objectives that each of us adopt, and we will select 2 professional action items and 2 personal action items and schedule events to take the first steps forward on each of them.

In the seventh session, we will discuss the tools and strategies to develop a great team, and during the final session, we will pull everything together to have solid action steps for the future.

This workshop will be held from 9:00 AM to 5:00 PM at the Thomas More Commons at the Ave Maria School of Law in Naples, Florida. Cost of attendance is $20.00 for students or alumni of Ave Maria School of Law and $35.00 for other professionals. Lunch and snacks are included in the cost of attendance.

LIMITED SPACES REMAIN! Please click here to register and RSVP.

See you there!

Florida Statute Updates: Changes You Need to Know About
by Alan Gassman and Travis Arango

This year, the Florida Legislature has made some changes to Florida’s health care surrogate statutes, to the Florida tax apportionment statute, to the Florida Uniform Transfers to Minors Act, and to Florida guardianship law. Some changes were minor or simple, small additions to make things work more smoothly, but some changes were pretty severe. We briefly examine these changes below:

Florida’s Health Care Surrogate Statutes

Certain additions have been made to the Florida Health Care Surrogate rules. After October 1st, a person will be able to assign the power to a surrogate to make health care decisions for that person even if the person is not incapacitated. If there is ever a conflict between the surrogate and the principal, the principal’s decision is controlling as long as the principal has capacity. A principal may also amend or revoke the durable health care surrogate as long as the principal is not incapacitated. A principal can do this through a variety of different ways including written amendments or written revocation. Physicians still must discuss treatment and other important information with a person who is not incapacitated regardless of whether or not there is a surrogate.

Parents now have an option to name a health care surrogate for minors under 765.2035(6). This will be useful if a parent is unavailable to provide consent for treatment for their child. This could come up in a variety of situations, such as when the parents are traveling without their minor children.

Click here for a compare of the 2014 statute and the updated 2015 statute.

Tax Apportionment Statute

This statute has effectively been re-written. When you look at a compare between the 2014 version of Florida statute 733.817 and the new 2015 version of 733.817, you can see just how many changes were made. Some of the changes will only apply to decedents who pass away after July 1, 2015, while some changes will apply to proceedings that are pending or started after July 1, 2015. We will have more on this provision in future Thursday Reports.

Click here for a compare of the 2014 statute and the updated 2015 statute.

Florida Uniform Transfers to Minors Act

As of July 1, 2015, Florida allows custodianships to last until the age of 25. Florida statute 710.123 now allows for an age of 25 to be set as the termination date when the UTMA account is created. A Florida custodianship can be created if the custodian, minor, or transferor lives in Florida or if the property protected by the custodian is in Florida.

Florida Statute 710.123(2) was added, which grants minor beneficiaries of UTMAs with a termination age of 25 the ability to withdraw the funds at 21. However, there is also the ability to limit the right to withdraw to a certain duration so that if the beneficiary does not use their right within the specified time, then the assets cannot be withdrawn until the age of 25 when the UTMA terminates. This time period is generally 30 days. The reason for this addition is so the gifts are not treated as future interests under the Internal Revenue Code and, thus, will qualify for the gift tax annual exclusion. Stay tuned for tinkering and examples of the use and mistakes that will be made under this statute, and please keep in mind that creditors of a minor can reach these accounts, so they should generally be discouraged for any large amounts.

Click here for a compare of the 2014 statute and the updated 2015 statute.

Florida Guardianship Law

Previously, durable powers of attorney were suspended when anyone initiated judicial proceedings to determine incapacity of an individual or to have a guardian advocate appointed. This suspension lasted until the petition was dismissed or withdrawn. Now, if certain family members will not be automatically removed from being agents upon the incapacity of the principal, the powers provided in the document will continue. The legislature basically added an exception to the existing rule for the principal’s child, parent, spouse, or grandchild. The new statute also has a process to suspend a power of attorney that is held by a family member in case that family member is abusing their power.

New regulations require that professional guardians must have fiduciary bonds and liability insurance. Also, if a professional guardian was appointed as an emergency temporary guardian, then they are prohibited from becoming a permanent guardian with some limited exceptions. There is also a provision that expressly prohibits abuse by the guardian, and that provision has a mandatory reporting requirement.

Settlements involving minors are now confidential. This means that settlements that require court approval, petitions for approval of settlements, reports of ad litems, and the orders approving them are all confidential under Florida Statute 744.3701.

Click here for a compare of the 2014 statute and the updated 2015 statute.

Stay tuned for more information on other law changes, which include health care laws and rules with respect to allowing minors to read Thursday Reports without parental guidance.

An Introduction to Succession Planning and
Possibly All You Need to Know, Part I

by Alan Gassman

Welcome to a new work in process – defining succession planning with reference to passing family businesses to succeeding (and hopefully succeeding!) generations. This is a multiple choice exam, not an essay:

PART I – TERMINOLOGY

While there are many legal and tax concepts that even experienced professionals struggle with when designing succession plans, some basic terminology and concepts that can be understood are as follows:

Company or Corporation – An entity formed by filing with a Secretary of State, which limits the liability of its shareholders/members, unless they have personal liability by reason of having signed guarantees or engaged in personal conduct.

The liability limitation feature of a corporation is often called the firewall liability protection.

Limited Liability Company (“LLC”) – A more modern type of corporation that provides firewall protection and has the following two additional features:

  1. In most states, the creditors of a limited liability company owner (“member”) cannot seize the ownership interest, but may instead only put a “charging order” in place to receive whatever distributions the member would have received. Oftentimes, creditors will sell their position for nickels or dimes on the dollar because they cannot require that the LLC make a distribution.
  2. A regular corporation (often referred to as an “Inc.”) must be taxed as either an S corporation or a C corporation.
    1. An S corporation normally pays no tax and instead files a tax return called an 1120S and reports the net income or loss by K-1 form that causes each shareholder to pay the tax, or have use of the losses, on their personal tax returns.
    2. A C corporation is a separate taxable entity and pays tax on its net income, usually at lower than the highest tax brackets on its first $100,000 of net taxable income.

Many other differences exist between S corporations and C corporations. S corporations can only be owned by individuals, charities, and certain trusts that only benefit individuals.  Foreigners are not allowed to be S corporation shareholders, and S corporation distributions must be strictly pro-rata to ownership. There cannot be a “second class of stock,” meaning that, essentially, shareholders must be treated equally, except that there can be voting and non-voting shares.

LLCs can elect to be taxed as S corporations, C corporations, or partnerships. Partnership tax is similar to S corporation tax because income and deductions flow through to the partners, and the partnership itself does not pay tax. Partnership tax is much more flexible than S corporation tax. When appreciated assets are distributed to the owner of an S corporation, a tax is triggered as if the assets were sold. With a partnership, assets can be distributed tax-free to the partners.

An LLC owned by only one owner can also be disregarded for income tax purposes, meaning that all of its income and deductions are simply incorporated into the tax return of the owner.

Recently, the “drop and swap” partnership flexibility technique has become publicized among tax professionals. For example, assume that the father has a building worth $1,000,000 that he wishes to sell in the next few years, and that building has a $100,000 tax basis. The son has a stock portfolio worth $1,000,000 with a $1,000,000 tax basis that will not be sold. Father and son both put these assets into an LLC taxed as a partnership. Seven years later (or possibly just two years later), the partnership dissolves, the father receives the stock, and the son receives the building.

The son’s basis in the building will be $1,000,000, and the father’s basis in the stock will be $100,000. The son will sell the building and can pay no capital gains tax. The father will die owning the stocks, so they will get a stepped up basis.

Respondeat Superior and Structuring – Under the legal doctrine of Respondeat Superior, a company is responsible for the actions of its employees. However, a company is not responsible for the actions of its independent contractors.

An independent contractor is considered to be a separate business (even though it may be one person) that is not controlled as to activity or provided with all of the tools or a guaranteed wage or profit from the work it performs.

In the Florida Supreme Court case of Kane Furniture Corp. v. Miranda, a truck driver driving a furniture truck who killed Mrs. Miranda in an accident (after he had been drinking) was found not to be an employee of Kane Furniture Corporation, but instead, to be an employee of an independent contractor company that provided delivery services for Kane’s Furniture Corporation, even though the same family owned both companies.

The same result occurred in the Florida Supreme Court case of Dania Jai-Alai Palace, Inc. v. Sykes, where the valet parking operation of the Miami Jai Alai Fronton was found to be independent from the fronton itself, even though the valet company was owned by the fronton company.

Trust – A trust is an agreement between a grantor/contributor and the Trustee or Trustees for the benefit of one or more beneficiaries who have some degree of legal right to assure that the trust is properly managed for their eventual benefit.

Irrevocable Trusts – Irrevocable trusts can also be designed to be considered as separate taxable entities (complex trusts), whereby income not distributed is taxed at the highest bracket once it reaches $12,055 in a year.

Irrevocable trusts can also be designed to be “disregarded” whereby all income and deductions of the trust would be reported on the tax return of the grantor. A “disregarded” irrevocable trust can still be fully effective for creditor protection and estate and gift tax purposes and can buy assets from the grantor without tax in exchange for low interest promissory notes. The August 2015 rates that can be used are 0.48% on a note from 0 to 3 years, 1.82% for a note over 3 years and up to 9 years, and 2.82% for a note over 9 years.

A great many wealthy taxpayers set up irrevocable trusts that are disregarded for income tax purposes and make a seed capital gift, which is usually approximately 10% of the value of an asset or entity ownership interest that they then sell to the trust. This is called an “installment sale to defective grantor trust.”

An irrevocable trust that can benefit the grantor/contributor will generally be accessible to the creditors of the grantor/contributor unless it is properly formed and funded in one of the asset protection trust jurisdictions, which have specific laws that provide that creditors cannot reach into these trusts. The United States asset protection statutes have not yet been tested in federal court under the Full Faith and Credit Clause, which may allow a judge in Florida to rule that a Nevada trust is a sham or that Florida law would somehow apply to a Nevada trust if a Floridian sets up a Nevada trust and has significant direct or indirect control over it. The primary asset protection trust states are Nevada, Delaware, Alaska, and North Dakota.

Hybrid Asset Protection Trust – A “hybrid asset protection trust” will not include the grantor/contributor as a beneficiary but will have provisions that may permit the grantor to be added as a beneficiary if and when certain circumstances exist such as an adverse financial setback if and when there is approval by named Trust Protectors.

Crummey Trust – A crummey trust is a trust that allows for contributions to qualify for the $14,000 per year annual gift exemption as to each beneficiary holding a “crummey withdrawal power” which entitles such beneficiary to withdraw up to $14,000 worth of what is placed in the trust each year.

In the recent Tax Court case of Mikel v. Commissioner, there were 60 beneficiaries holding withdrawal powers, and the Tax Court held that this qualified the husband and wife donors for $1,440,000 of gift tax exempt gifts. The IRS continues to litigate with taxpayers who do not inform beneficiaries of each contribution, even though this is the third case that they have lost in Tax Court over the issue.

Grantor Retained Annuity Trust (“GRAT”) – A grantor retained annuity trust is a special trust that can receive a transfer and will have the obligation to make payments of money or assets back to the grantor over two or more years. The actuarial value of the payments to be made can equal the value of what is contributed to the trust, and if the assets grow in value, or if certain discounts are used, significant value can remain in the grantor retained annuity trust to benefit family members without being subject to federal estate tax upon the death of the grantor.

Charitable Lead Annuity Trust (“CLAT”) – A charitable lead annuity trust is a special trust that can receive a transfer and will have the obligation to make payments of money or assets back to the grantor over two or more years. The actuarial value of the payments to be made can equal the value of what is contributed to the trust, and if the assets grow in value, or certain discounts are used, significant value can remain in the grantor retained annuity trust to benefit family members without being subject to federal estate tax upon the death of the grantor.

An example would be to place $15,000,000 in investments into a limited partnership and to gift or leave the 99% limited partnership interest to the CLAT, which would then be valued at $10,000,000. There could be a 100% charitable deduction if the CLAT makes payments of $111,000 per year to charity for 11 years, and the CLAT may have significant assets remaining in year 12 for descendants.

Confidentiality Planning – Confidentiality planning refers to the use of entities and property ownership structuring so that someone looking in the public records cannot find out who owns or even has control over certain properties or businesses.

Some states, including Colorado, Wyoming, and Delaware, do not require disclosure of members or managers to the public. Commonly, we will establish a company in one of those states which will be the manager of a Florida entity. Florida only requires public posting of the name of the manager. Someone who sees that the manager is a Delaware company is then unable to find out who owns the Delaware company or who manages it.

In Florida, we are able to file a Statement of Authority in the public records of each county that such a company owns real estate in to require that our law firm or another third party must give written consent before real estate can be mortgaged or transferred. This prevents someone from fraudulently asserting that they manage the Delaware management company that owns Florida real estate. We commonly use this technique for clients who do not want their name to be in the public record with respect to ownership of their primary home. This is common with high profile physicians, professional athletes, and people involved with law enforcement.

This concludes Part I. Stay tuned for Part II of An Introduction to Succession Planning and Possibly All You Need to Know!

Gregory Gay’s Corner
Medicaid Nursing Home Assistance, Part I

Gregory Gay

Gregory G. Gay, Esquire is an attorney from Tarpon Springs who specializes in meeting the special needs of senior citizens and the disabled. He is Board Certified in Wills, Trusts & Estates and in Elder Law by the Florida Bar. He has also been named a Certified Advanced Practitioner by the National Elder Law Foundation.

Mr. Gay is the author of the Florida Senior Legal Guide, the 8th edition of which can be purchased by clicking here. In the coming weeks, we will be profiling some of the best chapters from this excellent publication. Our deepest thanks to Mr. Gay for making this content available to Thursday Report readers!

This week, we begin the conclusion of Gregory Gay’s series with a look at Medicaid Nursing Home Assistance.

Eligibility

A nursing home patient may be eligible for assistance in paying a portion of his or her skilled or custodial nursing home cost through the state of Florida’s institutional care program. However, there is a maximum amount of countable assets that a person applying for assistance and his or her spouse can own and still receive assistance. The institutionalized spouse entering a nursing home cannot own more than $2,000 in countable assets. In the year 2013, the community spouse who is not residing in the nursing home cannot own more than $115,920 in countable assets. A person who has no spouse can only retain $2,000 in countable assets if his or her income exceeds $828 per month in the year 2013. A person who has no spouse can only retain $5,000 in countable assets if his or her income is $828 or less per month in the year 2013.

There is also a maximum amount of monthly income that the institutionalized spouse can receive and still be eligible for nursing home assistance. The monthly gross income available to the institutionalized spouse cannot exceed the state monthly income cap of $2,130 in 2013. However, a nursing home patient with a gross monthly income in excess of $2,130 for 2013 can still qualify for the institutional care program by establishing an irrevocable qualified income trust. This trust if often referred to as a Miller Trust, after the name of the Colorado case that originally approved this concept. The nursing home patient’s income in excess of $2,130 is irrevocably assigned to the irrevocable qualified income trust that is used to pay the patient’s medical and nursing home expenses.

In determining the institutionalized spouse’s income available to pay the cost of the nursing home, a community spouse is first permitted to retain a minimum monthly maintenance income needs allowance that is sometimes referred to as a MMMNIA. This means that the community spouse may retain his or her income plus the portion of the institutionalized spouse’s income necessary to allow the community spouse $1,891.25 in income per month. There may be an additional amount of income diverted from the institutionalized spouse if the community spouse can demonstrate excess shelter expenses. However, the maximum monthly maintenance income needs allowance is $2,898 per month in 2013.

Non-Countable Assets

All assets owned by the institutionalized spouse or by the non-institutionalized spouse are considered countable assets unless exempted by state regulation. An individual with an equity interest in his or her home in excess of $536,000 is not eligible for long-term care. Home equity is calculated using the current market value of the home minus any debt. The current market value is the amount for which is can be reasonably expected to sell on the open market in the geographic area. If the home is held in any form of shared ownership, only the fractional interest of the person requesting long-term care assistance should be considered. The home equity policy does not apply if the residence is being occupied by the nursing home resident’s spouse, a child under age 21, or a blind or disabled child. The home equity must be revalued each year that the applicant remains on Medicaid nursing home assistance. This home equity limitation may be waived when a denial of long-term care eligibility will result in a demonstrated hardship to the individual.

One vehicle is excluded in computing countable assets, regardless of its age or value. A second vehicle is generally excluded if it is more than seven years old. If the total face value of the patient’s whole life insurance policies is $2,500 or less, the cash value of the policies is excluded as an asset. The full value of an irrevocable burial contract is excluded as an asset. Likewise, there is a $2,500 exclusion for bank accounts that have been designated for burial expenses.

It is also important to consider the exemptions and maximum allowances for tangible personal property such as clothing, jewelry, tools of a trade, pets, and household goods such as furniture and appliances. A community spouse is entitled to exclude all personal property, if his or her spouse is in a nursing home. A single person may exclude a wedding ring, one engagement ring, and any items required because of the individual’s medical or physical condition. A single person may also exclude household goods and personal effects up to a value of $2,000. It will be assumed that the household goods and personal effects are less than $2,000, unless the individual applying for personal assistance indicates he or she owns items of unusual value.

The total value of an individual retirement account (IRA) owned by an institutionalized spouse is not counted as an available asset if it is placed into payment status over the life expectancy of the institutionalized spouse. Likewise, the total value of an individual retirement account (IRA) owned by a community spouse is not counted as an available asset if it is placed into payment status over the life expectancy of the community spouse. Most districts of the Department of Children and Families require the IRA payments to be paid over Social Security’s life expectancy tables.

Life Situation #1

George has been in a nursing home for over twenty days. He will need to remain there because a massive stroke has disabled him to the degree that he will no longer be able to perform his daily living activities. George and his wife, Helen, own a residence having a fair market value of $250,000. They also have $138,980 in savings and a 1995 car with over 100,000 miles.

George’s monthly income is $1,000 from Social Security and $1,230 from a pension. Helen receives $700 each month from Social Security. Since a community spouse (the spouse living outside the nursing home) can only own $115,920 and a nursing home spouse can only own $2,000 in countable assets in 2013, George is presently not eligible for Medicaid nursing assistance.

One way to obtain eligibility is for Helen to replace the 1995 automobile with a new one that will cost about $20,000. This purchase will not disqualify George from Medicaid assistance since something of value was received by Helen, and the new automobile is a non-countable asset. Since George’s income exceeds the 2013 monthly income cap of $2,130, he will need to establish a Qualified Income Trust (QIT). The trust will need to state that any monthly income over the monthly income cap of $2,130 is assigned to the trustee of the trust. The excess income of $100 per month that is paid to the QIT will be used for George’s care.

Helen is entitled to a minimum monthly maintenance income needs allowance in 2013 of at least $1,891.25 each month and can divert $1,191.25 of George’s income ($1,891.25 minus Helen’s $700 Social Security) to meet her living needs. George will be able to retain $35 each month for his personal needs allowance. George’s remaining income of $1,003.75, after Helen receives her minimum monthly maintenance income needs allowance and George receives his $35 personal needs allowance, becomes George’s patient pay responsibility to the nursing home. The additional monthly cost of the nursing home will be paid to the nursing home facility by the State of Florida’s Department of Children and Families.

Transferring Assets

A gift to someone other than a spouse may cause the donor and his or her spouse to be ineligible for nursing home assistance for a period of time. Transfers made before November 1, 2007 to someone other than a spouse for no consideration caused the nursing home patient to be ineligible for Medicaid assistance for a certain period determined by dividing the amount of the uncompensated transfer by the state determined average cost of nursing home care. Thus, a gift by the nursing home patient to someone other than a spouse in October of 2007 results in an eligibility period lasting for 10 months, beginning with the month in which the gift was made.

Transfers made on or after November 1, 2007 to someone other than a spouse for no consideration will cause the nursing home patient to be ineligible for Medicaid assistance on the later of the following dates:

  1. The first day the individual would be eligible for long-term care Medicaid were it not for the imposition of the transfer period (this includes the filing of an application and meeting all other program criteria for long-term care Medicaid), or
  2. The first day of the month in which the individual transfers the assets, or
  3. The first day following the end of an existing penalty period

Thus, a gift by a person to someone other than a spouse of $73,620 in November of 2010 who then enters the nursing home on April 15, 2013 will result in an ineligibility period lasting for 10 months beginning May 1, 2013, which is the first month after an application is filed and the person meets all other program criteria for long-term care Medicaid. This means that the applicant who made the gift of $73,620 on April 15, 2013 will not be eligible for Medicaid nursing home assistance until February 2014. This is because the average cost of a nursing home is increased to $7,362 on April 15, 2013. The look-back period for gifts was 36 months. Beginning February 2014, the look-back period became 37 months. The look-back period will increase by one month until January 2015, when it will cap at 60 months.

Stay tuned for the next edition of Gregory Gay’s Corner, which will feature a discussion of promissory notes, loans, mortgages, undue hardship, irrevocable annuities, and how they influence Medicaid assistance eligibility. If you would like to read the Florida Senior Legal Guide in its entirety, please visit http://www.seniorlawseries.com. Mr. Gay can be reached at gregg@willtrust.com.

Richard Connolly’s World
All About GRATs

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Grab a GRAT Before It’s Too Late” by Robert Gordon. This article was featured on OnWallStreet.com on August 3, 2015.

Richard’s description is as follows:

If you have a client who is ever going to use a GRAT, now might be the time to act. In every one of his budgets, the president has tried to limit GRATs.

In addition, there is a growing sense in Washington that income inequality may have to be dealt with politically. Between the political environment and the current level of interest rates, one would have to conclude that if you are contemplating the use of a GRAT, the time is now.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Investors Rethink Stocks Given to Family Trusts” by Liz Moyer. This article was featured in The Wall Street Journal on March 27, 2015.

Richard’s description is as follows:

A strong stock market is prompting investors to rethink assets they previously gave away to family members in trusts.

Some individuals who set up grantor retained annuity trusts, or GRATs, in previous years now are swapping out the investments they put into those trusts and replacing them with other holdings, cash, or promissory notes that are of equal value today.

Buying an asset from the trust can lock in tax-sheltered appreciation for the trust beneficiaries.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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See if you can bear the following comic by Thursday Report cartoonist Joe Lyons!

Bear Cartoon

Upcoming Seminars and Webinars

Calendar of Events

LIVE AVE MARIA SCHOOL OF LAW PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a full day workshop for third year law students, alumni, and professionals at Ave Maria School of Law one week from this Saturday. This program is designed for individuals who wish to enhance their practice and personal lives.

Cost of attendance is $35.00. If you are a student or alumni of Ave Maria School of Law, the cost of attendance is $20.00.

Delicious lunch, snacks and amazing conversations included!

**LIMITED SPACES AVAILABLE**

CLICK HERE TO REGISTER 

Date: Saturday, August 22, 2015 | 9:00 AM – 5:00 PM

I was fortunate to attend the Law Practice and Professional Development Workshop conducted by Alan Gassman, Esq. in Clearwater, Florida on August 3, 2014.  The Workshop covered a wide range of topics from Goal Setting and Gratitude to as practical a topic as law office logistics.  Alan’s approach was intimate, self-revelatory and highly instructive.  I have been practicing law for 20 years and have never attended a program as broad ranging, practical and encouraging.  The depth of Alan’s thought and experience is obvious in the materials and in the ease with which he led the discussions.  This was not a dull lecture but a highly engaging workshop that was over before you expected it to be.

Daniel Medina, B.C.S
Board Certified in Wills, Trusts and Estates
Medina Law Group, P.A.

Course materials are available on Amazon.com for $1.99 and can be found by clicking here.

Location: Thomas Moore Commons, Ave Maria School of Law, 1025 Commons Circle, Naples, FL 34119

Additional Information: To download the official invitation to this event, please click here. To RSVP and for more information, please contact Donna Heiser at dheiser@avemarialaw.edu or via phone at 239-687-5405 or Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

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LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES. There will be two opportunities to attend this presentation.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Jonathan Gopman, Jan Dash, and David Neufeld will join Alan Gassman for an informative webinar on THE NEW NEVIS TRUST LAW.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 21, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE KEY WEST PRESENTATION:

MER INTERNAL MEDICINE FOR PRIMARY CARE PROGRAM

Alan Gassman will present four, one-hour, Medical Education Resources, Inc. talks for cardiologists and other doctors who dare attend this outstanding 4-day conference. Join us at Hemingway’s for a whiskey & soda and a ring of the bell. Beach Boys not invited.

Mr. Gassman’s topics will include:

  • The 10 Biggest Mistakes that Physicians Make in Their Investment and Business Planning
  • Lawsuits 101: How They Work, What to Expect, and What Your Lawyer and Insurance Carrier May Not Tell You
  • 50 Ways to Leave Your Overhead
  • Planning for Retirement – This Needs to Be Your #1 Objective

Date: January 28 – 31, 2016 | Mr. Gassman will speak on Saturday, January 30 and Sunday, January 31 | Time TBA

Location: Casa Marina Resort | 1500 Reynolds Street, Key West, FL, 33040

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event. 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

August Rates

The Thursday Report – 8.13.15 – It’s 5 o’clock Somewhere

Posted on: August 13th, 2015

Aggressive Income Tax Planning Becomes a Felony Conviction with Jail Time

Underwriting, Physical Exams, and Ratings

Back Seat Drivers Can Be Held Liable by Jeffrey M. Verdon, Esquire

Richard Connolly’s World

Thoughtful Corner – Stop Struggling and Allow it to Happen by Dr. Srikumar Rao

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Quote of the Week

“You are two people who have great talent, who have been very successful in life, who I am going to send to prison.” – Manhattan Federal Court Judge Denise Cote

To find out how this quote came to be and who it was directed to, see our Richard Connolly’s World section below!

Aggressive Income Tax Planning Becomes a
Felony Conviction with Jail Time

Adkisson Pic

Jay Adkisson is a partner of Riser Adkisson LLP and licensed to practice law in Arizona, California, Nevada, Oklahoma, and Texas. He practices in the area of creditor-debtor law and has authored books on asset protection and captive insurance. Adkisson has been an expert witness to the US Senate Finance Committee and is currently the Chair of the Committee on Captive Insurance.

For decades, legitimate businesses have been able to deduct insurance premiums paid to offshore related party insurance carriers, where there is a legitimate shifting of risk, resulting in income tax deductions for premiums paid and eventual capital gains income if and when the carrier does well and can be liquidated in later years.

Offshore insurance carriers may be able to invest their surplus monies on a tax-deferred basis.

Take these concepts and an aggressive platform, where there was apparently no real shifting of risk, and significant compensation paid to the middle men who set this up, and you have the perfect storm for abuse and treachery.

A good many professionals will remember the advertising and sales calls from Foster & Dunhill, an “exclusive agency” that specialized in offshore tax planning.

Creditor protection lawyer and author Jay Adkisson has done a fantastic job of summarizing the US District Court for the Middle District of Florida court decision in his Forbes article dated July 23, 2013, which can be viewed by clicking here.

In the article, Mr. Adkisson points out:

The rather obvious flaw with this arrangement is that the BPPs [business protection policies] were nothing like an insurance policy, since there was no “risk distribution,” i.e. no sharing of risks with others. Apparently, to get suckers like Thomas and Kidd to invest in these arrangements, the Foster & Dunhill scheme promised that “the profitability of each life policy’s reinsurance business is tied to that client’s company’s non-life policies and to none other.”

Kidd didn’t care that Attorney #2 had withdrawn his opinion letters, since Kidd “believed that he could always find another lawyer.” And he was right, since Jenkens & Gilchrist were in town – a law firm that was basically a drive-up window for opinion letters on transactions that were hopelessly flawed. In fact, by 2007, Jenkens & Gilchrist had folded, after paying a $76 million fine to the IRS and agreeing to cease practicing law – and facing a bunch of civil lawsuits by clients whose shelters had been blown up by the IRS.

On July 25, 2013, the indictment of Foster & Dunhill executives, Duane Crithfield and Stephen Donaldson, in Tampa was announced. They will face a maximum penalty of five years in federal prison and a $250,000 fine. In the first week of August 2015, the two executives signed a plea agreement admitting to one of the counts that is punishable by up to three years in prison. The prosecutors will drop two other counts in exchange for the plea agreement. One of the charges dropped was conspiracy to defraud the government.

This shows that the government will not be taking offshore captive life insurance and offshore life insurance policies lightly when they come across them. There are certainly legitimate and tax-advantaged purposes and uses for these vehicles, but they always actively rely upon impartial advisors who are independent of the “promoters.”

Jay’s article does a very good job of showing how law firms can become known as “opinion mills,” and thereafter, may be nowhere to be found when the dozens or even hundreds of opinions that they have issued turn out to be without foundation.

Anything too good to be true is quite likely too good to be true. Sometimes, it is best to pay our taxes and sleep safely at night knowing that what is left over after taxes is not going to be subject to question.

Underwriting, Physical Exams, and Ratings
by Barry Flagg, CFP, CLU, ChFC and Alan Gassman, Esquire

Underwriting is the carrier-based process of reviewing the application and medical information of a proposed insured in order to determine whether the carrier will be willing to offer coverage and upon what terms.

In this article, we explain what an informal application is and why it is important, as well as review some important information that policy owners may ask about this process. We will summarize typical ratings systems used by carriers.

The underwriters work closely with the issuing carrier to determine whether or not the carrier should provide insurance to the applicant and what rating will be assigned to the insured. The rating system ranges from preferred to standard and could have a modifier attached – such as “standard – smoker.”

If an applicant is a higher risk, they will be “rated” and categorized into a higher price table. The majority of companies have between 12 to 16 substandard rating classifications that range from 125% to 500% of the charge of standard rating.[1] The “average” rating will typically be standard smoker or standard non-smoker, though premiums will be much higher if that person is categorized as a smoker. Most cigar smokers will be characterized as smokers, even if they only occasionally smoke cigars.[2] Many carriers offer permanent life policies that will adjust to lower premiums if and when the insured can confirm that they have quit smoking for a minimum period of twelve (12) months. Nevertheless, such coverage will still be more expensive than if the person was classified as a non-smoker when the policy is issued.

The below charts show a typical ratings system employed by a well-respected carrier:[3]

Insurance Chart

Sometimes an underwriter will also attach an additional charge to the policy known as a flat extra. A flat extra is a charge per $1,000 of face amount that is added to any rating schedule changes. Usually, the flat extra is assessed for a limited time period.

Ask the carrier for a better rating.

It is not unusual for agents to call carriers and ask them to reconsider the health-risk rate offers that they have given, based upon nuances or complexities associated with health situations, and urge them to match superior health-risk ratings that may have been offered by competing carriers. The agencies that seem to report the most success with this strategy are those most capable of making a compelling argument for the better health-risk rate class and those that have a reputation for full and forthright field underwriting and communication with underwriters. This is most likely to occur in instances where those agencies have underwriters and medical directors on their staff. Underwriters are unlikely to match a competing rate or offer if they cannot or do not understand and assess the risk. Oftentimes, carriers will be more flexible to provide a more favorable rating at the end of a calendar month or quarter if business is slow, depending on the person in charge.

To begin the underwriting process, a policy application will be completed, and a medical examination will be scheduled. The vast majority of carriers will want to have all of the insured’s medical records and information for the preceding five (5) years, as well as conduct a one-on-one interview with a nurse or a physician assistant, who will visit the insured at a place of their choosing. Sometimes, an EKG will also be performed, depending on the amount of coverage and the age of the proposed insured.[4] The insured will not be charged for the examination and gathering of medical materials, notwithstanding whether a policy is purchased.

Most of the time, the exam will include taking blood and urine samples to check cholesterol, blood sugar, nicotine, traces of various controlled substances, and to detect urine protein to determine kidney function. In addition, an EKG (electrocardiogram) may be required.[5] If the policy face amounts are higher, policy amounts and older ages will typically dictate more extensive testing.

Marijuana users can expect to pay higher rates for coverage. Some carriers treat marijuana like tobacco, while others are more lenient. While nicotine will typically stay in the body for 7 to 10 days after smoking a cigarette, marijuana will typically stay in the body for about 10 days after being used.[6]

Applicants outside of Colorado and Washington State (and perhaps also in those states, because of federal laws) who use marijuana can expect to pay higher premiums or can be denied coverage altogether. An applicant who is dishonest on his or her insurance applications stands the risk of having the policy owner only receive a refund of premium in lieu of a death benefit in the event of death within two years.[7] Some carriers simply apply tobacco-smoker status to users who admit to marijuana use. Further, in many cases, disclosure of recreational drug use will lead to a more favorable underwriting classification than denying such use and having it show up on a blood test.[8]

Typically, this process will take between six to nine weeks because it involves receiving independent copies of medical records from all physicians for the past five years.[9] Well-organized agents will check after two to three weeks to see what records are still needed and may call doctor’s offices or other facilities to encourage them to comply with requests to provide medical records.

An insured is eligible for re-examination if there is a disagreement with a medical underwriting determination. Once the underwriter working for the carrier has reviewed the medical information, a rating will be issued, and premium costs can be established.

If a formal application is made, then the completed medical exam and application information will be provided to the Medical Information Bureau (MIB), which keeps the information on file for seven years, and will compare back to previous data to help assure that the medical information is accurate and that the participating carriers have access to this. The MIB obtains information through a release form from the applicant and keeps the data on file, making it available to all of its members, for a period of seven years.[10]

Many advisors urge policy owners and agencies to only file “informal applications,” whereby the medical information is not shared with the Medical Information Bureau, and the carrier or carriers receiving the information and an “informal application” will not formally rate or turn down the proposed insured, but will instead communicate what rating and terms for a policy will be offered, if the proposed insured wants to make a formal application. The results of these exams and proposed ratings are not shared with the Medical Information Bureau during or after the application process, so the privacy of the policy owner is preserved.

All 50 states have a two-year contestability period whereby a carrier cannot deny paying a death benefit if the application is more than two years old, even if it is inaccurate by not disclosing a substantial medical condition or circumstance that would have caused the carrier to not offer to provide coverage on the applicable terms that were accepted.[11] For this reason, many advisors recommend that old insurance policies be maintained for up to two (2) years as opposed to being dropped immediately when being replaced by new coverage.

Involved professionals should never aid, abet, encourage, or have any involvement in any application fraud. Those that do abet or aid in application fraud can lose their professional licenses and may owe liability to the carrier that has had to pay a claim based upon a dishonest application more than two years old, so extreme caution should be exercised.

Typically, the offer made by the carrier to write the policy is only open for six months from the date of the physical. Often, the insurance agent will strongly encourage that the insured accept an offer based on the premise that the carrier has offered a better rating than the insured would expect to qualify for later.

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[1] Gary Lee and Craig Wilkey, 807-2nd T.M., Personal Life Insurance Trusts.
[2] Id.
[3] These are hypothetical rating charts for illustrative purposes only and should not be interpreted as an indication for a purchaser’s ability to obtain life insurance.
[4] Gary Lee and Craig Wilkey, at A-26.
[5] Id.
[6] See Elijah Wolfson, What Happens When You Quit Smoking? Medically reviewed by George Krucik, M.D. on January 28, 2013. Available at: http://www.healthline.com/health-slideshow/quit-smoking-timeline.
[7] See Mark Barnum, Underwriting – Going to Pot, The Messenger, available at: http://www.scor.com/images/stories/pdf/library/messengers/Underwriting%E2%80%93Going_to_Pot.pdf.
[8] Id. Some carriers may also want to consider other circumstantial information when underwriting. More questions may be asked, and the insured’s age will become a bigger factor. Indeed, Mr. Barnum suggests that those who admit to using before age 18 should be declined insurance coverage.
[9] Id.
[10] Id. The MIB will not only record the height/weight, blood pressure, etc. of an applicant, they may also keep a record of the applicant’s driving record, participation in hazardous activities, or aviation.
[11] See definition of Incontestability clause at: http://www.investopedia.com/terms/i/incontestability-clause.asp.

Back Seat Drivers Can Be Held Liable
by Jeffrey M. Verdon, Esquire

Verdon Pic

Jeffrey Verdon is Managing Partner of Jeffrey M. Verdon Law Group, LLP. He has an LL.M. in Taxation from Boston University and practices law in the areas of taxation and comprehensive estate planning. He specializes in estate, trust and income tax planning, and asset and lifestyle protection planning for high net-worth clients across the US. He is also a highly sought-after speaker in the areas of taxation and estate planning, lecturing aboard cruise ships and at top Investment Conferences internationally.

To see this article in its original form, please click here. Thanks, Jeff, for sharing this Client Alert with Thursday Report readers!

Dear Clients, Colleagues, and Friends,

Josh and Jessica planned a Friday night movie date at home. They rented Fast and Furious, as they were both avid NASCAR fans. They were ready to see some exhilarating action scenes, but then they discovered they didn’t have any popcorn, so they jumped in the car for a quick trip to the store.

Jessica knew a short cut through the residential neighborhood. She also knew the road contained dips that would cause a vehicle traveling at a high speed to become airborne – they could create their own fast and furious adventure! She encouraged Josh by saying, “It’s fun to drive fast on them! You should do it!” She continued encouraging him to increase his speed. Josh finally put the pedal to the metal!

Then it happened.

Josh lost control of the vehicle and collided at 71 miles per hour with a parked vehicle. A neighbor was putting one of his children in a car seat when Josh’s vehicle slammed into theirs, killing the father upon impact.

The father’s widow sued Josh and Jessica for violating Vehicle Code Section 21701, willful interference with the driver of a vehicle so as to affect the driver’s control of the vehicle, as well as for civil conspiracy. For the section 21701 violation, the widow claimed that the passenger, Jessica, egged on Josh to drive at an unsafe speed over a road which Jessica should have known would cause his vehicle to become airborne. As to the alleged conspiracy, the widow claimed Jessica and Josh formed an oral or implied agreement to commit a wrongful act by driving on the residential street at an unsafe speed, which caused injuries to the plaintiff and decedent.

In her defense, Jessica moved for summary judgment, arguing that undisputed facts demonstrated she never interfered with Josh’s control of the vehicle for liability under Section 21701. She further argued there was no evidence of an agreement between her and Josh to support a tort conspiracy. In opposition, the widow argued that verbal encouragement and solicitation to commit a wrongful act can constitute a civil conspiracy.

The trial court sided with the defendant, Jessica. The plaintiff appealed, and the Court of Appeal reversed the trial court. The appeals court found sufficient basis for the case to go to a jury. The question was whether to impose joint liability on Jessica under theories of concert of action and conspiracy, and whether she unreasonably interfered with the safe operation of a vehicle. Would you want to be in the position of Jessica or her parents?

This case demonstrates there is now potential liability for someone other than the guilty party to have joint and severe liability if their conduct contributes to harm. See [Navarrete v. Meyer 2015 DJDAR 7012].

Parents: This is a serious situation. Your children can unwittingly expose you and your wealth to extreme risk of loss in a civil lawsuit, for which your insurance carrier is likely to decline coverage. We often witness tragic situations for the victim and his or her family, as well as for the parents of the often youthful defendant. When a young person makes a mistake, the parents get stuck with the tab and often with catastrophic results.

To what other areas of commerce might this theory of liability be extended? The prospects can be alarming. Please be extra vigilant, whether it’s your teenager behind the wheel or in the passenger seat, or whether you are engaged in a business or activity where someone else’s acts could result in your liability. Be prepared for any eventuality. Regardless of how a potential problem may arise, protect yourself with effective “firewall” estate and asset protection planning.

To see this case in its entirety, please click here.

Richard Connolly’s World

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Wealthy Couple Sentenced to Jail for Obstructing IRS at Audit” by Kelly Phillips Erb. This article was featured on Forbes.com on August 2, 2015.

Richard’s description is as follows:

“You are two people who have great talent, who have been very successful in life, who I am going to send to prison,” Manhattan Federal Court Judge Denise Cote advised Dr. Jeffrey Stein and his wife, Marla Stein, shortly before handing down their sentence.

Both will spend time in federal prison for their respective roles in cheating the Internal Revenue Service (IRS). Dr. Jeffrey Stein, a vascular surgeon, was sentenced to 18 months, while Marla Stein, a personal injury lawyer, was sentenced to one year plus one day.

The sentencing followed charges and a guilty plea filed earlier this year. The couple pleaded guilty to a scheme to lower their tax burden by providing “false and fictitious information” to their accountant. That information involved generating fake deductions to offset actual business income from their respective practices. When their returns were flagged by the IRS for audit, the two became even more creative: they made up documentation to support their lies.

Please click here to read this article in its entirety. For more information about this case, please click here.

The second article of interest this week is entitled “Estate Tax Tips for Wealthy Clients” by Ingrid Case. This article was featured on Financial Planning.com on February 2, 2015.

Richard’s description is as follows:

For the 2012 tax year, the following statistics are true:

For estates worth between $5 million and $10 million, the IRS audited 58.6% of returns and determined that heirs still owed an average of $105,388 per return, in addition to taxes already paid.

And while there were just 937 returns that year for estates worth more than $10 million, the IRS actually conducted 1,087 audits, going over returns repeatedly, and, on average, asked heirs for an additional $819,243 per return.

The lesson: the higher a client’s net worth, the more important it is to create an estate plan that can withstand careful scrutiny. For wealthy clients, a solid estate plan can offer tax benefits via strategies that work to reduce estate value, shelter estate value, and shift future appreciation between now and the second spouse’s death out of the estate.

Please click here to read this article in its entirety.

Thoughtful Corner
Stop Struggling and Allow it to Happen
by Srikumar Rao, MBA, Ph.D.

Rao Pic

Dr. Srikumar Rao is the creator of the original Creativity and Personal Mastery (CPM) course that has helped thousands of executives and entrepreneurs achieve quantum leaps in effectiveness. He earned a Ph.D. in Marketing from Columbia University and is the author of Happiness at Work and Are You Ready to Succeed?, which has been published in over 60 languages.

You don’t have to work hard and use willpower and rigid discipline to achieve phenomenal results.

Here is how most of us live life:

We set a goal for ourselves and then take appropriate action to reach that goal. When things do not go our way, we work harder. We put our “nose to the grindstone” and try to remember that “when the going gets tough, the tough gets going.”

Our lives are full of struggle as we accumulate accomplishments. This is just the nature of life, right?

Well, maybe not.

The Surrender Experiment by Michael Singer, author of The Untethered Soul, appears in the life-changing books section of the syllabus for the Creativity and Personal Mastery program. Singer describes a phase in his life when he was so tired of his mental chatter that he was spending virtually all of his time in deep meditation. His description of his life then is eerily similar to that of Ramana Maharshi when he first came to the temple at Tiruvannamalai and simply meditated in the cavernous rooms in the many-level temple basement.

Singer was in a doctoral program in economics at the University of Florida and had to take three exams. He registered to take the two that he was somewhat prepared for.

Somehow, he got registered for all three, and he had not done a stitch of work for his public finance exam. He was tempted to withdraw, but he was experimenting with surrendering to the universe rather than imposing his will on it.

He decided to take the exam and that the failure that happened would help in his struggle to vanquish his ego. On the day before the exam, he picked up his main public finance textbook and read three sections at random. He repeated this the next morning and left to take his exam fully expecting to fail and fully at peace with it because he was sure he would drop out of his Ph.D. program to devote full time to his spiritual practice.

There were six questions on the exam, and Singer was required to answer three. Three of the six questions dealt with the topics that he had studied.

He received an A on the exam and even got a commendation from the Dean on his exemplary performance.

Here is a scary thought:

Do you really have to impose your will, with all of the pain it involves and the drama it creates, on the universe to make things happen the way you want them to? Or can you learn to set aside your oh-so-strong preferences and let a greater wisdom guide you effortlessly through life?

Don’t rush to answer this question. This is a deep concept, so think about it, and let your answer emerge. Don’t force it.

Dr. Srikumar Rao can be contacted at mail@theraoinstitute.com. For more information on his Creativity and Personal Mastery program, please click here.

Humor! (or Lack Thereof!)

Sign Saying of the Week

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Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE PORT RICHEY PRESENTATION:

Alan Gassman will be speaking with Barry Flagg at the North Suncoast Chapter FICPA meeting on a topic to be determined.

Date: Wednesday, August 19, 2015 | 4:30 PM – 6:15 PM

Location: Chili’s | 9600 US 19 North, Port Richey, FL, 34668

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE AVE MARIA SCHOOL OF LAW PROFESSIONAL ACCELERATION WORKSHOP:

Alan Pic

Alan Gassman will present a full day workshop for third year law students, alumni, and professionals at Ave Maria School of Law one week from this Saturday. This program is designed for individuals who wish to enhance their practice and personal lives.

Cost of attendance is $35.00. If you are a student or alumni of Ave Maria School of Law, the cost of attendance is $20.00.

Delicious lunch, snacks and amazing conversations included!

**LIMITED SPACES AVAILABLE**
CLICK HERE TO REGISTER
 

Date: Saturday, August 22, 2015 | 9:00 AM – 5:00 PM

I was fortunate to attend the Law Practice and Professional Development Workshop conducted by Alan Gassman, Esq. in Clearwater, Florida on August 3, 2014.  The Workshop covered a wide range of topics from Goal Setting and Gratitude to as practical a topic as law office logistics.  Alan’s approach was intimate, self-revelatory and highly instructive.  I have been practicing law for 20 years and have never attended a program as broad ranging, practical and encouraging.  The depth of Alan’s thought and experience is obvious in the materials and in the ease with which he led the discussions.  This was not a dull lecture but a highly engaging workshop that was over before you expected it to be.

Daniel Medina, B.C.S
Board Certified in Wills, Trusts and Estates
Medina Law Group, P.A.

Course materials are available on Amazon.com for $1.99 and can be found by clicking here.

Location: Thomas Moore Commons, Ave Maria School of Law, 1025 Commons Circle, Naples, FL 34119

Additional Information: To download the official invitation to this event, please click here. To RSVP and for more information, please contact Donna Heiser at dheiser@avemarialaw.edu or via phone at 239-687-5405 or Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

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LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES. There will be two opportunities to attend this presentation.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT!):

Alan Gassman, Steve Roll, and Lauren E. Colandreo will present a webinar on the topic of STATE TRUST NEXUS SURVEY for Bloomberg BNA.

Date: Thursday, October 15, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

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LIVE NAPLES PRESENTATION:

3RD ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman will be presenting on a topic to be determined at the 3rd Annual Ave Maria School of Law Estate Planning Conference.

This one-day conference will take place in Naples, Florida on Friday, May 6, 2016.

On Thursday, May 5, there will be a special dinner with Jonathan Blattmachr. Jonathan will also present at the conference on Friday.

Please watch this space as details for these two great events are finalized in the upcoming months!

Date: May 6, 2016

Location: To Be Determined – Naples, Florida

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

Notable Events by Others 

LIVE CLEARWATER EVENT:

40th ANNIVERSARY SCREENING OF JAWS WITH RICHARD DREYFUSS

The Capitol Theatre ’70s Movies Series will present a special feature 40th anniversary screening of Jaws with a live appearance by Academy Award winter Richard Dreyfuss.

The 1975 thriller, directed by Steven Spielberg, will be followed by a rare, candid, interactive discussion and Q&A with the film’s star Richard Dreyfuss. The event will be hosted by Tampa Bay Times film critic Steve Persall.

A portion of the proceeds from this event will benefit the Clearwater Marine Aquarium.

Date: Thursday, September 10, 2015 | 7:00 PM

Location: The Capitol Theatre, 405 Cleveland Street, Clearwater, FL

Additional Information: For more information, or to purchase tickets for this event, please click here.

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LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and have a killer time with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event.

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning opened on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

August Rates

 

The Thursday Report – 08.06.15 – New York Taxes, FINRA & Mollaxes

Posted on: August 6th, 2015

New York Taxes Disregarded LLC Owning A Non-Resident’s Real Estate on Death

FINRAs to the Left, FINRAs to the Right

Disclaimer of Trust Assets to a Charity

Richard Connolly’s World – Avoiding Post-Death Financial Woes

Thoughtful Corner – Improving Your Mode of Thinking – Three Important Suggestions That Work

Look No Further for Professional Acceleration

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

New York Taxes Disregarded LLC Owning a
Non-Resident’s Real Estate on Death

Our friends and prolific writers Jonathan Gopman, Michael Sneeringer, and Eric Olsen wrote a pertinent review of the opinion provided by the New York State Department of Taxation and Finance regarding a membership interest in an SMLLC that owned a condominium for Steve Leimberg’s Estate Planning Newsletter.

Below are excerpts of their article.  For the entire article, you can click here.

Executive Summary:

The New York State Department of Taxation and Finance (the “Department”) recently opined that a membership interest in a single-member LLC (“SMLLC”) owning a New York condominium is real property subject to New York State “estate tax.”  This conclusion is based upon and applies to SMLLCs that are “disregarded” for Federal income tax purposes.

Facts:

In Advisory Opinion TSB-A-15(1)M, the Department responded to a New York resident (“Petitioner”) who contemplated contributing his New York condominium to a disregarded SMLLC and then moving to another state.  The Petitioner intended to remain the sole owner of the SMLLC for the remainder of his life and to reside outside of New York until his death.  The Petitioner asked whether the SMLLC is “intangible property” for estate tax purposes and would therefore not be treated as real property for New York State estate tax purposes.  The Department, in considering the SMLLC’s sole ownership, reasoned that the assets and activities of a disregarded SMLLC should be treated as the assets and activities of the SMLLC’s sole member/owner.  Accordingly, the condominium held by the SMLLC would be treated as real property held by the Petitioner for New York State estate tax purposes.

Comment:

Analysis

New York State imposes estate tax on the transfer by the estate of a nonresident decedent of real property and tangible personal property located in New York.[1]  In general, the transfer of a New York condominium by the estate of a nonresident decedent is subject to estate tax.[2]  New York real property may be held by a corporation or partnership; however, the interest in such entity (i.e., the corporate stock or partnership interest) constitutes intangible property.[3]  New York does not impose estate tax on intangible property held by nonresidents, even if such property is located in New York.[4]  Accordingly, the New York State estate tax is not imposed on the transfer by the estate of a nonresident decedent of an interest in a corporation or partnership that holds New York real estate.

Under U.S. Treasury Regulations, the tax classification of a business entity is determined by its number of owners and by an election, if any, made by the entity.  A business entity with only one owner is classified as either a disregarded entity or a corporation.[5]  As a default, a SMLLC is disregarded as an entity separate from its sole member/owner and the tax attributes of the SMLLC are imputed to its sole member/owner.[6]  Alternatively, a SMLLC may file IRS Form 8832 (Entity Classification Election) to be classified as “an association and taxable as a corporation.”[7]  An LLC with two or more members (i.e., owners) is classified as either a partnership or a corporation.  As a default, a multimember LLC is treated as a partnership and its tax attributes pass through to its members.[8]  Alternatively, a multimember LLC may file Form 8832 to be classified as a corporation.[9]

The key take-away point is that applicable state law creates legal interests and property rights for federal tax purposes, while the federal revenue acts designate what interests or rights, so created, shall be taxed.[10] Although the check-the-box regulations authorize the proposed entities to be ignored for federal income tax purposes, nothing in the Code or regulations authorizes or mandates that those entities should be ignored for purposes of the federal estate, gift and generation-skipping transfer taxes.[11] Thus, a person with similar circumstances as the taxpayers in the Opinions, albeit one with an iron stomach, could take on the Department using the rationale articulated in Pierre, so long as New York continues to have N.Y. LLC Law § 601 on its books.

Possible Solutions Without Litigation

As noted above, one should be able to rely upon the decision in Pierre despite the Opinions issued by the Department. However, to avoid future protracted litigation, clients will demand an alternative. One way to avoid litigation is to have a partnership own the underlying condominium, whether a traditional partnership structuring with perhaps one or more limited partners and a general partner, or through the creation of an LLC making an election to be taxed as a partnership.

Partnerships and multiple-member LLCs have their own set of separate issues, such as dealing with other partners/members and filing a partnership income tax return annually. Especially in the case of owning a single condominium unit, why would anybody want to put up with such a headache? Additionally, while one could follow the Opinions and opt to simply create a SMLLC and make the election to have it taxed as a corporation, this would entail its own sort of problems due to the basis step-up issues involved with corporations.

Query whether the Opinions would differ if the taxpayer formed an LLC to serve as a 1% general partner of a limited partnership where the condominium transferee owned all of the limited partnership interests as the 99% partner? While the partnership is deemed not to exist under Federal law for income tax purposes, this result differs under the check-the-box regulations.  What would be the result if the taxpayer’s grantor trust is the 1% general partner? These variations still create an existing partnership for state law purposes.

Conclusion

In Advisory Opinion (TSB-A-15(1)M May 29, 2015), the Department narrowly addressed a specific estate tax inquiry as it related to the facts presented by the Petitioner.  Decisions regarding entity classification may have significant federal and state tax implications and filing requirements.  Accordingly, taxpayers should make such decisions in consultation with their professional advisors. 

Cite As:

LISI Estate Planning Newsletter #2330, (August 4, 2015) at http://www.leimbergservices.com. Copyright 2015 Leimberg Information Services, Inc. (LISI).

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[1] N.Y. Tax Law § 960(a).
[2] N.Y. Real Prop. Law § 339-g.
[3] N.Y. Tax Law § 951-a(c).
[4] N.Y. Partnership Law § 51; Estate of Havemeyer, 17 N.Y. 2d 216 (1966).
[5] Treas. Reg. § 301.7701-2(a).
[6] Treas. Reg. § 301.7701-3(b)(1)(ii).
[7] Treas. Reg. § 301.7701-3(c)(1)(i).
[8] Treas. Reg. § 301.7701-3(b)(1)(i).
[9] Treas. Reg. § 301.7701-3(c)(1)(i).
[10] See e.g., Knight v. Comr., 115 T.C. 506 (2000); U.S. v. Bess, 357 U.S. 51 (1958); Morgan v. Comr., 309 U.S. 78 (1940); Aquilino v. U.S., 363 U.S. 509 (1960); Aldrich v. U.S., 346 F.2d 37 (1965); McGehee v. Comr., 260 F.2d 818 (1958); and TAM 199930013.
[11] Gopman, “Estate Planning with S Stock: the “Spreeze” Transaction,” 27 Est. Gft. & Tr. J. 155 (May 9, 2002).

FINRAs to the Left, FINRAs to the Right
by Alyssa Eberle, J.D.

Elderly Americans can call 1-844-57-HELPS (or 1-844-574-3577) for free advice.

FINRA is the congressionally ordained financial industry “self regulatory” agency that oversees investment licensee conduct, sets standard of practice protocols, and is otherwise considered to be the governing bodies in these areas.  FINRA has launched a number of programs to help consumers, although many believe that FINRA should more heavily regulate investment advisors as opposed to reaching out directly to consumers who may be being harmed by advisors and product choices that consumers are guided to that are not subject to fiduciary duty or disclosures.

While it is mostly for elderly Americans who are age 65 or older, anyone can use this hotline.  More about the situation is as follows:

Lawyers and financial advisors are becoming more exposed to cases in which heirs are facing hurdles in trying to gain access to a deceased loved one’s brokerage account. In some cases, heirs are not even permitted to see account statements.[1] This may cause problems, for example, when children with rights to the estate are attempting to access their deceased parent’s assets. While brokerage firms are under strict legal guidelines with regard to what and with whom information is shared, firms respond slowly to those that do meet the requirements and do not readily provide information to family members upon the death of an account holder.

Another issue that elderly investors face is the suitability of recommendations from advisors, some communications and sales practices could prove to be abusive and fraudulent.

In order to provide a solution to this problem, FINRA established the FINRA Securities Helpline for Seniors called HELPS. HELPS is a toll-free number that senior investors can call to get assistance from FINRA or raise concerns regarding brokerage accounts and other investments.

If a senior investor is struggling with questions about their brokerage account, FINRA’s hotline can help with: (1) achieving a better understanding of how to review investment portfolios and account statements; (2) raising concerns about the handling of a brokerage account; and (3) getting information about investor tools and resources from FINRA, including BrokerCheck®.[2]

Susan Axelrod, FINRA’s Executive Vice President for Regulatory Operations, stated the following regarding the helpline:

Protecting senior investors has been an important priority for FINRA for several years. Our goal in setting up this Helpline is to build on these efforts and provide an additional resource to senior investors. FINRA’s Helpline means that older investors are only a phone call away from getting help with questions or concerns they may have regarding their investments. FINRA staff will point seniors to educational tools that can help them better understand investing, savings, and investment products, as well as resources like BrokerCheck® that can provide valuable information about securities firms and financial professionals.[3]

It is important to address senior investor needs expeditiously, as they lack outside income and could have potential health complications and decreased mental capacity, which require immediate attention to their assets.  It is important for brokerage firms to take into consideration the age and life stage of the senior investor, and whether or not their heirs will require additional help in the future.

FINRA is hoping that HELPS provides assistance to senior investors as well as their heirs. Time will tell if HELPS coupled with the collaboration of estate planning attorneys will provide access to the deceased’s brokerage accounts without clogging the probate court system.

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[1] Matthias Rieker, The Hassle of Inheriting a Brokerage Account, The Wall Street Journal, July 10, 2015.
[2] FINRA Securities Helpline for Seniors – HELPS, available at www.finra.org/investors/finra-securities-helpline-seniors.
[3] FINRA Launches Toll-Free FINRA Securities Helpline for Seniors, April 20, 2015.

Disclaimer of Trust Assets to a Charity
by Kenneth J. Crotty, J.D., LL.M. and Alan S. Gassman, J.D., LL.M.

Have you considered allowing the disclaimer of trust assets to a charity where the grantor would like to see a donation but is not sure whether the beneficiary will agree or whether it may be best to pay the charity from income to receive an income tax deduction after the client’s death?

The following is a sample letter that you may want to share with a client considering this approach.  The language was developed by us to facilitate having trusts held for children and descendants be subject to disclaimer provisions that would allow the primary beneficiary (child) to direct the trustee to have a portion of the trust assets pass to one or more specific charities or to a donor advised fund designated by the client in his or her estate planning documents.

Dear [Client]:

            [CPA] asked about whether Mother, could use a disclaimer provision in her revocable trust to enable Daughter and Son to disclaim part of what would be their inheritance under the trusts being left by Mother, with the result that such disclaimed assets would pass to charity.

            To accomplish this, on Mother’s death, there might be a clause that would read as follows:

I would like to have up to $______________ transferred as a charitable devise to the __________ CHARITY FUND, but would like for the decision with respect to such devise to be made by my children, SON and DAUGHTER.

Therefore, to the extent that one or both of my children, SON or DAUGHTER, request the Trustees of any trust established for their primary benefit under this Trust Agreement make a disclaimer of assets otherwise passing into trust for such child of up to one-half of the amount listed above per child (1/2 of the amount stated in the paragraph above), the amounts and/or assets so disclaimed shall pass to the _______________ CHARITY FUND.  Such disclaimer must be made within 180 days of my date of death.

      To illustrate how this would work, let’s say that the charity is the Foundation To Support Thursday Reports, and that the maximum amount is $500,000.

         After Mother’s death, Daughter might decide to disclaim $100,000, and Son might decide to disclaim $250,000.  They will have nine months after Mother’s death to make this decision.

         As the result of the disclaimers, $100,000 that would have gone into a trust for Daughter would go to the Notable Charity, and $250,000 that would have gone into a trust for Son would go to the Notable Charity.

       Estate tax saved as the result of this would be expected to be 40% of $350,000, which is $140,000.

            The following clause, or language like it, would also be included.

To the extent that the disclaimer to charity by one child exceeds the disclaimer to charity by the other child, then the larger amount of estate tax attributable to the smaller or lack of disclaimer attributable to the one child will be charged against the share of that child.

By means of example, assume that the client (i) had authorized $500,000 to be devised as a charitable devise; (ii) DAUGHTER decided to disclaim $100,000; and (iii) SON decided to disclaim $250,000.  Further assume that as a result of the disclaimers, and assuming a 40% estate tax rate, disclaiming $350,000 saved $140,000 in estate tax ($100,000 + $250,000 = $350,000; $350,000 x 40% = $140,000).  Based on these assumptions, SON would have disclaimed $150,000 more than DAUGHTER.  The extra estate tax savings as a result of such disclaimer would be $60,000 ($250,000 – $100,000 = $150,000; $150,000 x 40% = $60,000).  As a result, the separate share established for the benefit of DAUGHTER would be reduced by $60,000.

        If Mother would like to give each child more flexibility as to what specific charity or charities their disclaimed amounts would go to, then she might name the Pinellas Community Foundation or the Community Foundation of Tampa Bay. These foundations are charities that basically receive dispositions, and then transfer the monies as requested by the family. Many local donors use the Community Foundation to get a tax deduction now, while having control over the investments and timing of the actual delivery of the intended funds to charity.

        Fidelity, Schwab, and other firms have similar donor advised charitable fund arrangements whereby they hold investments based upon the direction of a trustee or individual and can make distributions to charity when instructed to do so. The transfers of money to these funds will qualify for an income tax charitable deduction at the time of funding, notwithstanding that the actual end game charities may not receive distributions until years after the initial funding of the charitable account.

Best personal regards,

John Q. Thursday-Report

Richard Connolly’s World
Avoiding Post-Death Financial Woes

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Money Advice for Wives Whose Husbands Die Suddenly” by Kerry Hannon. This article was featured on Forbes.com on June 19, 2015.

Richard’s description is as follows:

One third of women who become widows are younger than 65, according to the Women’s Institute for a Secure Retirement. The financial issues they’ll immediately confront go far beyond losing an income.

In the weeks following a husband’s death, a widow will be forced to make dozens of decisions, so she’ll need to get a grip on finances as quickly as possible. This article illustrates how to accomplish that, based on research and interviews with two ace financial planners.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Death, Taxes, and Your IRA. Ouch.” By Jonathan Clements. This article was featured in The Wall Street Journal on June 11, 2015.

Richard’s description is as follows:

Your death could be more taxing than you imagine.

Thanks to 2015’s $5.43 million federal estate-tax exclusion, perhaps just one out of 600 deaths this year will trigger federal estate taxes. Yet many heirs will face steep tax bills, partly because some states levy their own estate tax, but mostly because of the income taxes due on inherited retirement accounts.

All this is bad news for many Americans. For the typical household approaching retirement age, retirement accounts are the second-largest asset they own, after their home…

What should these investors do? This article highlights three key strategies that many folks ought to consider and two others that could make sense for some families.

Please click here to read this article in its entirety.

Thoughtful Corner
Problem Solving and Making a Decision

Introductory Quotes to Live By

“Concentrate on a fantastic future!”

It is very easy to get caught up in things from the past that may disappoint or be of concern, but what good does that do you? We live to make the most of the now and the future. Exciting and feasible goals and taking the proper steps to achieve them will bring a much better peace of mind. Can clients be nudged that way in the conference room? Absolutely!

“The problem is never the problem. The problem is that you don’t know how to think about the problem.”

“Problems analysis” is a process that many people are completely unaware of. The “problem” itself is usually not the real issue. The way the person looks at the situation is the problem.

If you take a few minutes to write down the obstacles that have caused the problem and possible solutions to each obstacle, you will often be amazed at how quickly the problem can be solved.

Discussing this brief written analysis with someone uninvolved with the situation will often provide a quick solution. Remember, your problem may just be an expense if it can be removed by spending some money.

Making a Decision
Narrow Down the Choices, Evaluate the Options, and Get On With it!

No great achievement ever occurred without a decision being made. Use the Ben Franklin Fork in the Road or Decision to Be Made Chart and make a list of all of the things that you have not decided and the detriment suffered as a result.

Alternatively, start an experiment – READY, FIRE, AIM – what did you hit? How did it go? You could also ask an Ouija board, flip a coin, whatever it takes to get on with it.

We, as advisors and planners, help clients make important decisions. Let’s not forget that the opportunities they have may justify risks and actions that they can afford to handle. We can encourage this with appropriate analysis of exposure and how to best protect from risk.

Yes, it is our job to warn them of risks and help reduce problems ahead, but let’s not get carried away. If the client has the passion and the wherewithal to make an intelligent choice, then let’s do what we can to help them.

No great achievement has occurred without risk and ambition; doing nothing in the face of an important decision is often the wrong move.

As Yogi Berra said, “When you come to the fork in the road, take it.” What can we do to help clients understand that inaction can be very harmful in a number of ways?

No guts, no glory!

Problem Solving Without Clutter

Are you giving your brain the opportunity to problem solve, invent, and enjoy social situations, or are you cluttering it with social media and texting as a matter of habit?

There are thousands of things to think about when you have time. Most highly successful individuals prioritize their thinking, and, in quiet moments, whether while driving, fishing, or standing in line for a coffee, are able to think through solutions to problems, mentally rehearse for meetings, conversations, or presentations, and can elect to originate or replay enjoyable, calming, or otherwise useful daydreaming sequences.

When standing in line for 10 minutes for a coffee, are you scouring through emails, looking at Facebook, and generally providing an active conscious clutter out of habit or the desire to be sociable, or are you solving client problems (that you can bill for!), enjoying a cool fantasy, or mentally rehearsing for an upcoming event?

When you have a big event coming up, you will want to consider making sure that you have first thought through the following:

  • Materials needed
  • Knowledge needed
  • Agenda
  • Goals for the meeting or event
  • Mental rehearsal time – thinking through what you are going to say and how you are going to answer any questions
  • Who to discuss the above with

The above has been excerpted from the Professional Acceleration Workshop Workbook, which can be purchased by clicking here.

Look No Further for Professional Acceleration

Are you interested in learning strategies for business relationships and techniques commonly used by successful professionals? Check out the Ave Maria School of Law Professional Acceleration Workshop on August 22, 2015, with Alan S. Gassman.  This is an eight-hour version of the five-hour program given at the University of Florida on May 30, 2015.

This workshop is open to all 3rd year law students, alumni, and experienced professionals who wish to enhance their professional and personal lives.

The interactive workshop will engage participants in conversations about personal goal setting, handling practical challenges and eliminating obstacles, client interactions, finding a work-life balance, and, most importantly, lunch is included.  The workshop is also approved for CLE credit!

Registration for professionals is $35.00, and $20.00 for students or alumni of Ave Marie School of Law. Thursday Report readers may also register for $100.00, and receive a bucket of Kentucky Fried Chicken, two pints of mashed potatoes, and an extra stick of butter in exchange for their donation and a testimonial, which must be provided before the program in case you do not like it.  To register, contact Donna Heiser at dheiser@avemarialaw.edu or via phone at 239-687-5405 or Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Cartoon 1

Cartoon 2

Upcoming Seminars and Webinars

Calendar of Events

LIVE WEBINAR:

Alan Gassman and Christopher Denicolo will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For additional information, please email agassman@gassmanpa.com.

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LIVE BRADENTON PRESENTATION:

Alan Gassman will speak at the Coastal Orthopedics Physician Education Seminar on the topics of CREDITOR PROTECTION AND THE 10 BIGGEST MISTAKES DOCTORS CAN MAKE: WHAT THEY DIDN’T TEACH YOU IN MEDICAL SCHOOL.

This 50 minute informative talk with extensive materials will cover essential aspects and trip-ups that doctors often encounter in the area of personal and practice entity asset protection. It will also discuss tax and investment planning, advisor selection, health law, compliance, and other areas of interest for physicians.

Each attendee will receive a complimentary copy of Mr. Gassman’s book, Creditor Protection for Florida Physicians and other valuable materials.

Coastal Orthopedics, Sports Medicine, and Pain Management is a comprehensive orthopedic practice which has been taking care of patients in Manatee and Sarasota Counties for 40 years. They have sub-specialized, fellowship-trained physicians as well as in-house diagnostics, therapy, and an outpatient surgery center to provide comprehensive, efficient orthopedic care.

Date: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE PORT RICHEY PRESENTATION:

Alan Gassman will be speaking with Barry Flagg at the North Suncoast Chapter FICPA meeting on a topic to be determined.

Date: Wednesday, August 19, 2015 | 4:30 PM – 6:15 PM

Location: Chili’s | 9600 US 19 North, Port Richey, FL, 34668

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE AVE MARIA SCHOOL OF LAW PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a full day workshop for third year law students, alumni, and professionals at Ave Maria School of Law. This program is designed for individuals who wish to enhance their practice and personal lives.

Cost of attendance is $35.00. If you are a student or alumni of Ave Maria School of Law, the cost of attendance is $20.00.

Delicious lunch, snacks and amazing conversations included!

CLICK HERE TO REGISTER

Date: Saturday, August 22, 2015 | 9:00 AM – 5:00 PM

I was fortunate to attend the Law Practice and Professional Development Workshop conducted by Alan Gassman, Esq. in Clearwater, Florida on August 3, 2014.  The Workshop covered a wide range of topics from Goal Setting and Gratitude to as practical a topic as law office logistics.  Alan’s approach was intimate, self-revelatory and highly instructive.  I have been practicing law for 20 years and have never attended a program as broad ranging, practical and encouraging.  The depth of Alan’s thought and experience is obvious in the materials and in the ease with which he led the discussions.  This was not a dull lecture but a highly engaging workshop that was over before you expected it to be.

Daniel Medina, B.C.S
Board Certified in Wills, Trusts and Estates
Medina Law Group, P.A.

Course materials are available on Amazon.com for $1.99 and can be found by clicking here.

Location: Thomas Moore Commons, Ave Maria School of Law, 1025 Commons Circle, Naples, FL 34119

Additional Information: To download the official invitation to this event, please click here. To RSVP and for more information, please contact Donna Heiser at dheiser@avemarialaw.edu or via phone at 239-687-5405 or Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

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LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT):

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online Webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30-minute webinar on the topic of THE 10 BIGGEST LEGAL MISTAKES MOST BUSINESS OWNERS AND INVESTORS MAKE (AND HOW YOU CAN AVOID MAKING THEM.)

There will be two opportunities to attend this presentation.

Date: Thursday, September 24, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar.

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR (CONTACT US FOR A 25% DISCOUNT):

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES. There will be two opportunities to attend this presentation.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE CLEARWATER PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will have the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online Webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE WEBINAR:

Alan Gassman will present a free, 30 minute webinar on the topic of ESTATE AND ESTATE TAX PLANNING – CONVENTIONAL AND ADVANCED PLANNING TECHNIQUES TO MINIMIZE TAXES AND EFFECTIVELY PASS ON YOUR WEALTH.

There will be two opportunities to attend this presentation.

Date: Wednesday, October 14, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar.

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on Scientific Marketing For The Estate Planner – How to do more of what you love to do, and less of the other, while better serving clients, colleagues, and your community.

Other speakers include Jonathan Blattmachr, Austin Bramwell, Natalie Choate, Mitchell Gans, and Gideon Rothschild.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

Notable Events by Others

 LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and come have a “killer time” with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

 Date: January 11 – January 15, 2016

Come celebrate the 50th Year Anniversary (and 32 years of Alan Gassman not speaking at this conference) with us and our many friends (or at least they pretend to like us) at this important annual estate planning event.

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning will open on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfers in the Context of Estate Planning, Howard Zaritsky will talk about Income and Estate Tax Planning Techniques in View of Recent Developments, and Lee-Ford Tritt will speak on Gun Trusts and Same Sex Marriage Consideration Highlights.  Do not miss this important conference.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

August Rates

The Thursday Report – 7.30.15 – TeleThursday Report

Posted on: July 30th, 2015

The Future of Telemedicine

How has the 4% Rule Held Up Since the Tech Bubble and the 2008 Financial Crisis? By Michael Kitces

Resident – Does Anyone Really Know What it Means? By David Thompson, CPCU, AAI, API, CRIS

Richard Connolly’s World – Estate Planning for Single or Childless Individuals

Thoughtful Corner – Office Efficiency and Logistics, Part II

Humor! (or Lack Thereof!)

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Stephanie at stephanie@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

The Future of Telemedicine

Nowadays, everyone uses the internet for scheduling appointments – hair appointments, nail appointments, even doctor appointments – but what if you could also attend your appointment with your physician over the internet? This is the future of medicine, and it is called “telemedicine.”

Defined in the Florida Administrative Code as the practice of medicine where patient care, treatment, and services are provided through the use of one site to another via electronic communication, telemedicine is changing the way that doctors and patients interact. The Statute was set to be codified as Florida Statute Section 456.4501 on July 1, 2015, but the legislature is still working out some kinks. However, the following is what is expected to occur under the new regulations.

The proposed Florida legislation defines telehealth services to include: patient assessment, diagnosis, consultation, treatment, and monitoring.[1] It will not include optical-related issues, nor will it allow for the doctor to prescribe controlled substances, such as narcotic pain medication. Still, not only does this technology save the patient a trip to the doctor’s office, the appointment overall is significantly shorter, allowing the doctor to see more patients.

In order for a doctor to practice telemedicine as part of his office routine, a valid doctor-patient relationship must be established prior to providing telemedicine services.[2] The typical background history interview must be performed and documented as with any regular doctor appointment. Doctors must also ensure that the patient’s insurance will cover telemedicine visits and also ensure that their own liability insurance covers telemedicine as well.[3]

A representative from eVisit, a telemedicine company, stated that “[a] telemedicine visit is well suited for minor medical conditions and, in most cases, the patient is well aware of what’s wrong – i.e. ‘I’ve had a sinus infection, UTI, cold/flu, etc. in the past and this is what’s worked, etc.'” The representative also regarded the technology as beneficial for surgeons, especially, due to the idea that telemedicine saves them time and reduces unnecessary readmissions. Further, the representative stated that:

Physicians are trained to ask a series of questions to rule out other possible ailments…For example, if you thought you had a sinus infection, the physician would most likely ask you if you were experiencing soreness anywhere else, ruling out something more serious, like meningitis.

In fact, the reason why a patient-doctor relationship must be established is so that the doctor is able to make an accurate diagnosis via the telemedicine pathway as opposed to an in-office visit. Without a valid relationship, the doctor would be unable to make a definitive diagnosis.

While this concept could potentially prove to be more beneficial to doctors and patients, there have also been some points of contention regarding the proposed legislation. For instance, one problematic issue has been compensation. Sam Miller, a spokesperson for the Florida Insurance Counsel stated that insurers simply do not want the state to require them to compensate doctors the same rates for telemedicine visits as they do for in-office exams.[4] In fact, in February of 2015, the Senator proposing the bill removed language that would have required Medicaid to pay equal rates of reimbursement.[5] Another hurdle is cross-state licensure. Only 12 states have licensing procedures that allow physicians to give care via telemedicine techniques, and doctors are required to be licensed in the state where the patient receiving the services resides.[6]

Telemedicine is not only a more efficient way to provide healthcare, it is also less expensive and opens the door for a larger job market. The global movement towards telemedicine will provide high-quality, low-cost medical services to rural areas, at-need families, home-bound seniors, and patients who cannot travel to see their doctor.[7] With that movement will come an increase in the job market relating to telemedicine.

Paula Guy, the CEO of non-profit Georgia Partnership for Telehealth, stated that Florida will be the next state that offers new opportunities for the telemedicine industry. She further stated:

Jobs will open up for IT professionals to set up and maintain the secure teleconference, data-stream links and software. People will be needed to train and certify workers, to develop academic curricula and teach certification courses to tech-shy physicians and to coordinate the “nurse presenters” who serve as the remote physicians’ eyes, ears, and arms in dealing with on-site patients.[8]

Telemedicine, ranging from a simple telephone call to complex video conferencing, will help increase the job market in Florida for a multitude of industries and provide beneficial health care to people who need it most. A three to five minute meeting a doctor through a telemedicine interface will improve patient care by increasing the amount of patients that a doctor can see per day. Further, it will allow the patient to be in a more relaxed, comfortable environment and save them a trip to the doctor’s office. With what seems like everything being streamlined through the internet, it will be no surprise when doctor’s visits through telemedicine platforms become more and more commonplace.

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[1] See Fla. Stat. §456.4501
[2] Troy Kishbaugh and Julie Tyk, Telemedicine Update: AMA Guidelines and Florida State Law, Florida MD, July 2014.
[3] Id.
[4] Brian Heaton, Florida Lawmakers Debate Bill to Allow Virtual Medical Visits, South Florida Sun-Sentinel, March 16, 2015.
[5] Id.
[6] Id.
[7] Ron Hurtibise, Coming telemedicine boom to drive job opportunities in Florida, South Florida Sun-Sentinel, Feb. 21, 2015.
[8] Id.

How has the 4% Rule Held Up Since the Tech Bubble
and the 2008 Financial Crisis?

by Michael Kitces

Kitces

Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL, is a nationally recognized speaker and sought-after commentator on financial planning issues. He also writes extensively on a broad range of advanced financial planning topics. He is the co-author of books such as The Advisor’s Guide to Annuities and Tools & Techniques of Retirement Income Planning. He is currently a Director of Planning Research and a Partner at Pinnacle Advisory Group, Inc.

The following article was originally published on the blog Nerd’s Eye View: Commentary on Financial Planning News and Developments by Michael E. Kitces on July 29, 2015. Excerpts from the article are re-produced below.

To see the complete article, please click here.

The 4% rule has been much maligned lately, as recent market woes of the past 15 years, from the tech crash of 2000 to the global financial crisis of 2008, have pressured both market returns and the portfolios of retirees.

Yet, a deeper look reveals that if a 2008 or even a 2000 retiree had been following the 4% rule since retirement, their portfolios would be no worse off than any of the other “terrible” historical market scenarios that created the 4% rule from retirement years like 1929, 1937, and 1966. To some extent, the portfolio of the modern retiree is buoyed by the (only) modest inflation that has been occurring in recent years, yet even after adjusting for inflation, today’s retirees are not doing any materially worse than other historical bad-market scenarios where the 4% rule worked.

Ultimately, this doesn’t necessarily mean that the coming years won’t turn out to be even worse or that the 4% rule is “sacred”, but it does emphasize just how bad the historical market returns were that created it and just how conservative the 4% rule actually is, and that recent market events like the financial crisis are not an example of the failings of the 4% rule but how robustly it succeeds!

How the 4% Rule is Faring for 2000 and 2008 Retirees

The fact that the 4% rule is based on a particular subset of especially bad historical scenarios gives us a unique opportunity to compare recent challenging times for retirees, like those who retired in 2000 or 2008, and see how they compare. In other words, if we looked at how the portfolio of a retiree was doing in the first half of a retirement starting in 1929, 1937, or 1966, would a retiree who started in 2000 or 2008 be doing similar, better, or worse?

Chart 1

As the results reveal in the chart above, despite how shocking the tech crash and the 2008 financial crisis appeared to be in real time, the reality is that such retirees still have portfolios that are performing similar to or better than most of the historical 4% rule scenarios. The 2000 retiree is already halfway through the 30-year time horizon with similar wealth to a 1929, 1937, or 1966 retiree at this point, and the 2008 retiree is even further ahead than any of those historical scenarios (and even ahead of the 2000 retiree, too!).

Of course, an important caveat to the chart above is that it’s based on “nominal” dollars, not adjusted for inflation, which is important, because it means that retirees who had similar portfolio balances after the first half of retirement were not necessarily going to have the same buying power with those dollars for the rest of retirement (because of what inflation had been in the first half of retirement). This is especially true for the 1966 retiree, who experienced significant double-digit inflation in the first half of retirement.

Accordingly, the chart below re-calculates the progress of these retirees, based not on the nominal value of their portfolio through the first half of retirement, but based on the amount of inflation-adjusted spending they were doing from the portfolio at that halfway point. In other words, what was the retiree’s then-current withdrawal rate, year by year, as both the portfolio bounced around and inflation-adjusted spending requirements continued to rise each year?

Chart 2

In this chart (where lower numbers are good because it means the withdrawal rate is low and spending is modest relative to wealth), it quickly becomes clear after adjusting for the level of inflation-adjusted spending how much more severely adverse the first half of retirement was for the 1966 retiree than the others (the 1966 line is much higher than the rest). Even though the value of the portfolio was similar to the other retirements when measured halfway through retirement, the current withdrawal rate at that point was far more problematic, having already spiked above 10% with 15 years still to go. In fact, the only reason the 1966 retiree was able to finish retirement at all with such a high withdrawal rate at the midpoint is that, by the half-way mark of retirement in 1981, both the stock and bond markets had gotten so cheap (yields had gotten so high) that the superior returns (and declining inflation) made it possible to finish successfully.

Relative to the 2000 or 2008 retiree, though, the results continue to look reasonably in line. Certainly the markets are not as favorably valued now for the 2000 retirees as they were in 1981 for the 1966 retiree, but then again, the 2000 retiree is still only at a 6.2% withdrawal rate today (with just 15 years to go,) while the 1966 retiree was over a 10% withdrawal rate at this point. And in the case of a 2008 retiree, the withdrawal rate is already right back at the 4% initial withdrawal rate the retiree began with (after already doing 6 years worth of retirement spending!).

Keeping Retiree Market Disasters in Historical Context

Ultimately, the key point here is simply to recognize that the 2000 retiree is merely “in line” with the 1929 retiree and doing better than the rest. And the 2008 retiree, even having started with the global financial crisis out of the gate, is already doing far better than any of these historical scenarios! In other words, while the tech crash and especially the global financial crisis were scary, they still haven’t been the kind of scenarios that spell outright doom for the 4% rule.

To read more about the 4% rule, including an analysis of how conservative a 4% safe withdrawal rate is, as well as a further discussion on how to keep retiree market disasters in historical context, please click here to read the article on Nerd’s Eye View.

Resident – Does Anyone Really Know What it Means?
By David Thompson, CPCU, AAI, API, CRIS

Thompson

David Thompson, CPCU, AAI, API, CRIS, works in a training and education position with the Florida Association of Insurance Agents in Tallahassee, Florida, where he presents continuing education seminars throughout the country on a variety of insurance subjects. He received his degree from Mercer University in Macon, Georgia, and served as a commissioned officer in the US Army and US Coast Guard. He can be reached at dthompson@faia.com.

The following article is copyrighted by the Florida Association of Insurance Agents
and is used with permission.

Almost every personal lines policy uses the word “resident” somewhere in the form. The problem is few (if any) policies define what the term “resident” actually means. For example, the term “family member” is defined in the personal auto policy as “…a person related to you by blood, marriage, or adoption who is a resident of your household.” Having status as a resident often is the key to having coverage under the policy.

Lacking a policy definition of “resident,” court cases provide valuable insight in interpreting the term. I recently spent the better part of a day on the Internet reading court cases dealing with residency. Since few people would find that as interesting as I did, I’ll mention a few of the cases that were of interest.

College Kids

In the Oregon case of Waller v. Auto-Owners Insurance Company, the 17-year-old daughter of an insured moved from Florida to Oregon to attend college. She rented an apartment in her name and her father’s name, represented she lived in Oregon for the purposes of getting an in-state tuition rate, opened a bank account in her name, obtained utilities in her name, and obtained an Oregon driver’s license. The daughter also maintained a bedroom in her parent’s home in another state and some of her possessions remained there. She had never expressed intent not to return to her parent’s home after college, being unsure of her plans after graduation. After being injured in an auto accident, she claimed residency with her parents, seeking $1,475,000 in underinsured motorist coverage from her parent’s policy. While the trail court sided with the insurance company in denying the claim, the appeals court ruled the trail court had erred in its decision, and the case was sent back to the trial court.

Dual Residency

In the Ohio case of Prudential v. Koby, a 32-year-old captain in the US Army was ruled to have held dual residency, at his home as well as that of his parents. The court stated, “…there was no requirement that, in order for a person to be a resident of the named insured’s household, such residence must be the sole or exclusive residence of the person.”

Divorced Parents

In the Florida case of Progressive v. Wesley, a child, Taylor Wesley, was killed in an automobile accident. At the time of the accident, her parents were divorced, and the father was awarded primary custody of the child, however, both parents shared parental responsibility. The child kept a room at the home of both parents. Arguments were presented on both sides showing how the child lived with one parent. The court said, “Either determination of Taylor’s residency would be reasonable. We must accept the interpretation which would favor the insured.” Coverage was afforded under the policies of both parents.

Kids Renting from Mom and Dad

In the Florida case of Philbin v. American States, Richard and Rosemary Curtis owned a house and leased it to their son, William, who was the sole resident of the house. Richard and Rosemary owned another home and lived in that home full time. A pit bull dog owned by William attacked plaintiff Philbin, who sued Richard and Rosemary as owners of the house, and William as owner of the dog. Richard claimed residency under his parent’s policy, but lacking any evidence that William resided with his parents, coverage for the $2.3 million verdict against William was denied.

What Constitutes “Residency”?

During the eleven years after moving out of his parents’ home following high school graduation, the defendant had worked and lived on his own, married, and played professional hockey. Divorced and unemployed, he moved back in with his parents at age 29, although he “spent a lot of time” at his new girlfriend’s house. The Supreme Court supported an appeals court citation of three circumstances found by the Wisconsin Supreme Court to determine residency in a household: (1) living under the same roof, (2) a close, intimate, and informal relationship, and (3) when the duration of residency is likely to be substantial such that it is reasonable to conclude that the parties would consider the relationship in procuring insurance and in their reliance on it to protect them. Since the Minnesota Supreme Court found no conflict between these standards and Minnesota law and upheld the son’s status as an “insured” under the contract. (State Farm Insurance Company v. Short, et al., Minnesota Supreme Court, 1990.)

What is a “Resident” & what is “in the care of”?

An Indiana resident permitted her nephew’s three children to move in with her while he looked for work and a home. In a lawsuit that arose, the federal district court ruled that the children were “insureds” within a reasonable interpretation of the term “resident” because they manifested more than a mere physical presence in the household, were completely dependent on the named insured for food, clothing, shelter, and supervisory care. (Allstate Insurance Company v. Shockley, 793 F.Supp. 852, S.D. Ind., 1991.)

Residents of Multiple Households

A divorced woman’s son spent most weekdays at his father’s house, but most weekends, some weekdays, and most summers with his mother. The son was in the legal custody of his father, spent most of his time in his father’s house, kept most of his possessions there, and was living there when the occurrence happened that gave rise to a lawsuit under his mother’s policy. The court ruled that there was nothing in the mother’s policy that prohibited him from being a resident of more than one household. (Mutual Service Casualty Insurance Company, Minnesota Court of Appeals, 1987.)

Dual Households

An insured was divorced from his wife and she was awarded sole custody of their son, although the insured had extensive visitations rights and maintained a space in his home for his son’s frequent visits. The son was killed while riding in his mother’s car and the father sought recovery under the UM/UIM provisions of his auto policy on the basis that his son was a “family member” under his policy. The court found coverage on the basis that the policy did not preclude an insured from being a resident of more than one household. (American Family Mutual Insurance Company v. Thiem, Minnesota Supreme Court 1993). The same logic was applied in a homeowner’s case in the same state.

Children in College

Courts have generally held that children away at college are still considered to be “family members”, i.e., household residents (e.g. Crump v. State Farm Mutual Automobile Insurance Company, Missouri Court of Appeals, 1992). However, in one case, the jury determined that a child away at college was not a resident of the household – this determination enabled the child’s sister to recover over $600,000 under their father’s policy (he was driving the son’s auto) for a UM claim that would have been excluded if her brother had been considered a “family member” under the father’s policy, so this may have been a reason for this particular decision (Huskey v. Crisp, Tennessee Supreme Court, 1993). In addition, policy exclusions may apply even though the child may be considered an insured otherwise.

“Independent” Children

In one case, the named insured’s son who maintained his own apartment filed a UM claim under his father’s policy, contending that he was still a resident because he stored personal belongings and spent the night there occasionally – the court found that he did not meet the definition of a “family member” (Aetna C&S Company v. Gutstein, New York Court of Appeals, 1992). In a similar case, the court reached the same conclusion (State Farm Mutual Automobile Insurance Company v. Taussig, Illinois Court of Appeals, 1992).

Divorced Parents

As reported by IRMI, the Ohio Court of Appeals ruled that a child was a “resident relative” of a noncustodial parent’s household. Keith v. State Farm Ins. Co., 2007 Ohio 1878 (Ohio App. 4/20/2007).

As the above court cases demonstrate, determining residency is a complex task involving numerous issues. Each situation is unique and there is no “cut and dry” method to determine residency status. While courts tend to view coverage in favor of resident status (even when it appears there is sufficient doubt as to the status) the safe course of action is to gather all the facts and present the situation to the company for a coverage interpretation prior to the claim. As always, document answers given by the company for future reference.

Thank you to David and the Florida Association of Insurance Agents for allowing us to bring this article to Thursday Report readers! For more great articles, check out the FAIA’s Education Library at https://www.faia.com/Resources.aspx?pid=198.

Richard Connolly’s World
Estate Planning for Single or Childless Individuals

Insurance advisor Richard Connolly of Ward & Connolly in Columbus, Ohio often shares with us pertinent articles found in well-known publications such as The Wall Street Journal, Barron’s, and The New York Times. Each week, we will feature some of Richard’s recommendations with links to the articles.

This week, the first article of interest is “Estate Planning Essentials for Single People: It Can Be More Complex than for Married Couples” by Carolyn T. Geer. This article was featured in The Wall Street Journal on December 7, 2014.

Richard’s description is as follows:

In 1970, slightly more than a third of Americans age 15 and older were single, according to the US Census. By 2013, their numbers approached 50% of Americans.

Among US citizens aged 65 and older, more than half (53%) of women and more than one quarter (26%) of men were unmarried last year. That amounts to 18 million divorced, never-married, or widowed seniors.

It’s important to create, at minimum, a will and/or revocable living trust stating specifically how you want your assets to be distributed after you die and naming an executor and/or trustee to carry out your wishes.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Estate Planning for Childless Couples” also by Carolyn T. Geer. This article was featured in The Wall Street Journal on November 8, 2014.

Richard’s description is as follows:

A basic estate plan for a couple with children is pretty simple, but readers might be wondering, “What about marrieds without kids?”

A reader in California asked, “My husband and I own our house, are retired, with a high six-figure nest egg, and no will or trust. What is the minimum we need to do?”

You have two main tasks. One is to decide what will happen to your property after you die. The other, arguably more important – and trickier – task is to specify who will handle your medical and financial affairs if you’re incapacitated.

If you don’t want to risk disinheriting your relatives, or if you’d like to leave something to friends or charity, you need a plan.

Please click here to read this article in its entirety.

Thoughtful Corner
Office Efficiency and Logistics, Part II
by Alan Gassman

Ideas and Time Savers

The following is a list of ideas that may help you save some time during your daily office tasks:

  • Return all emails immediately. Then, they will not pile up, and you will not forget to reply to something important.
  • Use multiple computer screens for multiple purposes.
  • Print any email that needs a follow-up.
  • Use different colored paper for different printers and/or different types of documents.
  • Integrate reviewing draft bills into your weekly routine.
  • Give the client a book that will answer many of the questions they may have.
  • Use summary charts for key information and to facilitate client understanding. If you can chart it, do it. Once you own the chart, you own the client or the transaction.

Writing in the Margins

When in a client meeting or on a conference call, something said or discussed during the call or meeting may spark a remembrance of something you need to do with another client. Make note of this in the margin of your notepad in a way that, should the client you’re currently with read the notepad, they would not specifically know what other client or situation is involved.

If you have an assistant copy your notes after a meeting, they will notice that something is written in the margins. Request that they make extra copies of the pages that contain margin writing and follow-up with you as to what is needed or desired.

Those items can then be added to an action list or responded to appropriately.

“Ask Me Tomorrow”

Quite often, a team member will ask me a question, and my answer will be, “ask me again tomorrow.”

I will then write the question or matter down to activate my subconscious mind and allow it to begin thinking through what the final decision will be or should be.

The next day, or sometimes the day after, I will have an answer. It may come to me subconsciously or while thinking “offline.”

Given the choice between making sure that no one has sent you anything on Facebook in the last half hour or picturing yourself in the neatest place you’ve ever been or want to be with whomever you would prefer to have there with you, which do you choose?

Great ideas typically happen when you are “offline” from work but not normally while you are still plugged in to social media activities. Identify this time waster and set it aside so that you might have an answer for your team member the following day.

Your Smart Phone is Not All that Smart

It’s great to be able to get messages and reply to them on the go or anywhere in which you have a signal, but the great majority of professionals make a grave mistake by routinely answering questions and addressing opportunities with one finger, one letter at a time, without circling back to expound, connect, or follow-up. Here is why this is a grave mistake:

When you type, dictate a response for transcription, or call someone, you have a much easier flow of information, detail, creativity, and warmth to convey. When you reply by phone, you are much less likely to follow-up or really think through what the other person wants or needs.

The recipient is also not going to give much credence or thought to a hastily typed message that comes with the suffix “sent from my phone; please excuse typos and grammar errors.”

When I am away from the office and answering emails on my phone, I copy key people in my organization as a signal for them to follow up with me on the matter. I have my assistant print emails I sent on my phone whenever I am away for a long period of time. These print-outs help me ensure needed follow-ups are completed and any significant time spent reviewing messages or documents on my phone is billed for.

I am also mindful that responses and interactions composed via a phone will not be as rich, warm, or meaningful than they would be if I had a keyboard or a Dictaphone in front of me and act accordingly.

So many people just “fling” documents around and send scattered emails with no continuity as it is. Do not join that club. It will cheapen your image and weaken your response to important messages that deserve to be well answered. “I’ll get back to you” is an acceptable response and possibly the best response you can use in many cases.

Do not become a scattered mess like so many of our colleagues. The phone is to be our servant, not our master or our downfall.

The above has been excerpted from the Professional Acceleration Workshop Workbook, which can be purchased by clicking here.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

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Hedghog

Upcoming Seminars and Webinars

Calendar of Events

LIVE BLOOMBERG BNA WEBINAR:

Jonathan Blattmachr, Lee-Ford Tritt, Sean Healy, and Alan Gassman will present a Bloomberg BNA webinar entitled HAVE GUN TRUST – WILL TRAVEL: HOW TO DESIGN, DRAFT, AND IMPLEMENT GUN TRUSTS.

This webinar will examine pertinent aspects of the National Firearms Act (NFA), explain how to stay compliant with the NFA, and elaborate on how to develop fully-compliant gun trusts. This program can qualify for up to 1.0 CPE credits.

Date: Wednesday, August 5, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Edwin P. Morrow, III, and Christopher Denicolo will present a Bloomberg BNA webinar entitled ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS.

This webinar will provide participants with clear guidelines for understanding and applying the rules with reference to minimum distributions, transfers and rollovers, trust beneficiaries, and how to otherwise handle and plan for pension and IRA accounts. Participants will receive a handbook with over 200 pages of concise yet thorough explanations, colored charts and guides, Excel spreadsheets that can be used to illustrate account growth and taxes inside and outside accounts using distribution rule scenarios and more.

Date: Thursday, August 6, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Christopher Denicolo will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For additional information, please email agassman@gassmanpa.com.

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LIVE BRADENTON PRESENTATION:

Alan Gassman will speak at the Coastal Orthopedics Physician Education Seminar on the topics of CREDITOR PROTECTION AND THE 10 BIGGEST MISTAKES DOCTORS CAN MAKE: WHAT THEY DIDN’T TEACH YOU IN MEDICAL SCHOOL.

This 50 minute informative talk with extensive materials will cover essential aspects and trip-ups that doctors often encounter in the area of personal and practice entity asset protection. It will also discuss tax and investment planning, advisor selection, health law, compliance, and other areas of interest for physicians.

Each attendee will receive a complimentary copy of Mr. Gassman’s book, Creditor Protection for Florida Physicians and other valuable materials.

Coastal Orthopedics, Sports Medicine, and Pain Management is a comprehensive orthopedic practice which has been taking care of patients in Manatee and Sarasota Counties for 40 years. They have sub-specialized, fellowship-trained physicians as well as in-house diagnostics, therapy, and an outpatient surgery center to provide comprehensive, efficient orthopedic care.

Date: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE PORT RICHEY PRESENTATION:

Alan Gassman will be speaking with Barry Flagg at the North Suncoast Chapter FICPA meeting on a topic to be determined.

Date: Wednesday, August 19, 2015 | 4:30 PM – 6:15 PM

Location: Chili’s | 9600 US 19 North, Port Richey, FL, 34668

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE AVE MARIA SCHOOL OF LAW PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a full day workshop for third year law students, alumni, and professionals at Ave Maria School of Law. This program is designed for individuals who wish to enhance their practice and personal lives.

Cost of attendance is $35.00. If you are a student or alumni of Ave Maria School of Law, the cost of attendance is $20.00.

Delicious lunch, snacks and amazing conversations included!

CLICK HERE TO REGISTER 

Date: Saturday, August 22, 2015 | 9:00 AM – 5:00 PM

I was fortunate to attend the Law Practice and Professional Development Workshop conducted by Alan Gassman, Esq. in Clearwater, Florida on August 3, 2014.  The Workshop covered a wide range of topics from Goal Setting and Gratitude to as practical a topic as law office logistics.  Alan’s approach was intimate, self-revelatory and highly instructive.  I have been practicing law for 20 years and have never attended a program as broad ranging, practical and encouraging.  The depth of Alan’s thought and experience is obvious in the materials and in the ease with which he led the discussions.  This was not a dull lecture but a highly engaging workshop that was over before you expected it to be.

Daniel Medina, B.C.S
Board Certified in Wills, Trusts and Estates
Medina Law Group, P.A.

Course materials are available on Amazon.com for $1.99 and can be found by clicking here.

Location: Thomas Moore Commons, Ave Maria School of Law, 1025 Commons Circle, Naples, FL 34119

Additional Information: To download the official invitation to this event, please click here. To RSVP and for more information, please contact Donna Heiser at dheiser@avemarialaw.edu or via phone at 239-687-5405 or Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

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LIVE SARASOTA PRESENTATION:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on the topic of EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT CREDITOR PROTECTION AND DIDN’T EVEN THINK TO ASK.

Date: Tuesday, September 8, 2015 | 3:30 PM – 5:30 PM with dinner to follow

Location: Sarasota, Florida

Additional Information: For additional information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman and Al King, co-founder, co-chair, and co-CEO of South Dakota Trust Company, LLC, will present a Bloomberg BNA Webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA? DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

South Dakota’s legislature has attempted to take the best from each of the states that have the most favorable estate and trust laws to provide a fresh platform for examining and maximizing tax and non-asset protection objectives. This webinar will provide a practical and interesting discussion of both South Dakota and practical domestic asset protection law strategies. It will cover the legal aspects, present checklists and sample trust clauses, and provide creative and practical planning techniques that can be used by practitioners and their clients.

Date: Wednesday, September 9, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here. For additional information, please email Alan Gassman at agassman@gassmanpa.com

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

Date: Saturday, September 12, 2015 | 9:30 AM

Location: Online Webinar

Additional Information: To register for this webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE SOUTH BEND PRESENTATION:

41ST ANNUAL NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Rebecca Ryan, Bill Boersma, Daen Wombwell, Michael Halloran, and Alan Gassman will be presenting a talk at the Notre Dame Tax & Estate Planning Institute on the topic of UNDERSTANDING ILLUSTRATIONS, DESIGN OPPORTUNITIES, AND FINANCIAL EVALUATION OF WHOLE LIFE, UNIVERSAL, VARIABLE, AND EQUITY INDEXED LIFE INSURANCE.

Date: September 17 – 18, 2015 | Alan Gassman will speak on Thursday, September 17 | 11:30 AM – 12:30 AM

Location: Century Center | 120 South Saint Joseph Street, South Bend, IN 46601

Additional Information: Click here to download the 2015 program brochure. For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE FORT LAUDERDALE PRESENTATION:

Ken Crotty will be presenting a 1-hour talk on PLANNING FOR THE SALE OF A PROFESSIONAL PRACTICE – TAX, LIABILITY, NON-COMPETITION COVENANT, AND PRACTICAL PLANNING at the Florida Institute of CPAs Annual Accounting Show.

Date: Friday, September 18, 2015 | 3:30 PM – 4:20 PM

Location: Broward County Convention Center | 1950 Eisenhower Blvd, Fort Lauderdale, FL 33316

Additional Information: For additional information, please email Ken Crotty at ken@gassmanpa.com or CPE Conference Manager Diane K. Major at majord@ficpa.org.

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LIVE WEBINAR:

Alan Gassman, Christopher Denicolo, and Kenneth Crotty will present a 50-minute webinar entitled CREATIVE PLANNING FOR FLORIDA REAL ESTATE. This presentation will be free and worth every dollar!

There will be two opportunities to attend this presentation. This webinar will qualify for CLE and CPE credit.

Date: Wednesday, September 23, 2015 | 12:30 PM or 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 webinar, please click here. To register for the 5:00 webinar, please click here. For more information, please email agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman and Lee-Ford Tritt will present a webinar on the topic of WHETHER TO MARRY AND WHAT TO CONSIDER: A TAX AND ESTATE PLANNER’S GUIDE TO COUNSELING SAME-SEX COUPLES WHO MAY TIE THE KNOT for Bloomberg BNA.

Following the decision of the United States Supreme Court in Obergefell v. Hodges, same-sex couples now enjoy the same legal and tax benefits as opposite-sex couples. These benefits include marriage, divorce, adoption and child custody, separation agreements, Qualified Domestic Relations Orders (QDROs), marital property, survivorship spousal death benefits, inheritance through intestacy, priority rights in guardianship proceedings, and contract rights.

This program will discuss relationship and marital agreements, tax issues, reasons to marry or not marry, and a number of unique circumstances that can apply to same-sex couples as well as to opposite-sex couples.

Date: Wednesday, September 30, 2015 | 12:00 PM – 1:00 PM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Steven B. Gorin and Alan Gassman will present a free webinar on the topic of INCOME TAX EXIT STRATEGIES. There will be two opportunities to attend this presentation.

Date: Thursday, October 1, 2015 | 12:30 PM and 5:00 PM

Location: Online webinar

Additional Information: To register for the 12:30 PM webinar, please click here. To register for the 5:00 PM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of FAILURE TO LAUNCH: 20-SOMETHINGS WITHOUT A SOLID CAREER PATH – WHAT PARENTS (AND OTHERS) NEED TO KNOW.

Date: Saturday, October 3, 2015 | 9:30 AM

Location: Online webinar

Additional Information: Please click here to register for this webinar. For more information, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE PINELLAS COUNTY PRESENTATION:

Christopher Denicolo will be speaking at the Pinellas County Estate Planning Council meeting on the topic of PLANNING WITH IRAs AND QUALIFIED PLANS.

Date: Monday, October 5, 2015

Location: To Be Determined

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Christopher Denicolo at christopher@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman, Ken Crotty, and Christopher Denicolo will present a webinar on the topic of WHAT EVERY NEW JERSEY ATTORNEY SHOULD KNOW ABOUT FLORIDA ESTATE PLANNING. This webinar will qualify for 2 New Jersey CLE credits.

Most advisors with Florida clients are unaware of the unique rules and planning considerations that affect Florida estate, tax, and business planning. Unlike some other states, Florida’s laws regarding limited liability companies, powers of attorney, taxation, homestead, creditor exemptions, trusts and estates, and documentary stamp taxes are not simply versions of a Uniform Act. They have been crafted by the Florida legislature to apply to various specific issues in an often counterintuitive manner.

This presentation will the following objectives:

  • Unique aspects of the Florida Trust and Probate Codes
  • Creditor protection considerations and Florida’s statutory creditor exemptions
  • The Florida Power of Attorney Act
  • Traps and tricks associated with Florida’s Homestead Law and Elective Share
  • Documentary stamp taxes, sales taxes, rent taxes, property taxes, and how to avoid them
  • Business and tax law anomalies and planning opportunities

Date: Thursday, October 8, 2015 | 12:00 PM – 1:40 PM

Location: Online Webinar

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Eileen O’Connor at eoconnor@njsba.com.

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LIVE SARASOTA PRESENTATION:

2015 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START, THE SOONER YOU WILL BE SECURE.

Date: Saturday, October 24th, 2015

Location: To Be Determined

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE MANHATTAN PRESENTATION:

INTERACTIVE ESTATE AND ELDER PLANNING LEGAL SUMMIT

Alan Gassman will be speaking on a topic to be determined at the InterActive Estate and Elder Planning Legal Summit.

Date: November 4 – 6, 2015 | Alan Gassman will be speaking on November 5 | Time TBA

Location: New York Hilton Midtown Manhattan | 1335 Avenue of the Americas, New York, NY 10019

Additional Information: Please contact Alan Gassman at agassman@gassmanpa.com for more information or visit http://ilsummit.com/ to register.

Notable Events by Others 

LIVE TAMPA EVENT:

TAMPA THEATRE 14TH ANNUAL WINEFEST

Bust out your sweet dance moves and come have a “killer time” with Napoleon, Pedro, Kip, and Lafawnduh at Tampa Theatre’s 14th annual WineFest, Napoleon Wineamite. This year’s event features snacks and samples from local independent restaurants, sips from the finest wineries, and evening of rare, top-rated wines and – for the first time this year – a “Movie Under the Stars” screening of this year’s theme, Napoleon Dynamite.

While the theme may be silly, the purpose is most serious. Now in its 14th year, the annual WineFest is Tampa Theatre’s biggest fundraising event of the year, benefitting the historic movie palace’s artistic and educational programs, as well as its ongoing preservation and restoration.

Date: September 10 – 17, 2015

Location: Tampa Theatre | 711 N. Franklin Street, Tampa, FL 33602

Additional Information: Tickets are on sale now at www.tampatheatre.org/winefest. Sponsorship opportunities are also available. Please contact Maggie Ciadella at maggie@tampatheatre.org for more information about sponsorship or the event.

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LIVE ORLANDO PRESENTATION: 

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING 

Date: January 11 – January 15, 2016 

Location: Orlando World Center Marriott Resort & Convention Center | 8701 World Center Drive, Orlando, FL 32821 

Additional Information: Registration for the 50th Annual Heckerling Institute on Estate Planning will open on August 3, 2015. For more information, please visit http://www.law.miami.edu/heckerling/.

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LIVE ST. PETERSBURG PRESENTATION:

ALL CHILDREN’S HOSPITAL FOUNDATION 18TH ANNUAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

We are pleased to announce that Jonathan Blatttmachr, Howard Zaritsky, Lee-Ford Tritt, Lauren Detzel, Michael Markham, and others will be speaking at the 2016 All Children’s Hospital Estate, Tax, Legal & Financial Planning Seminar.

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins.

Date: Wednesday, February 10, 2016

Location: Live Event at the All Children’s Hospital St. Petersburg Campus; Live webcasts in Tampa, Fort Myers, Belleair, New Port Richey, Lakeland, and Sarasota

Additional Information: Please contact Lydia Bennett Bailey at lydia.bailey@allkids.org for more information.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

June Rates

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