Archive for the ‘Thursday Reports’ Category

The Thursday Report – 4.30.15 – April Showers Give the Thursday Report Special Powers

Posted on: April 30th, 2015

Voluntary Disclosure of Offshore Assets by Alan Gassman, Leslie Share, and Brandon Ketron, Part I

Seminar Spotlight – The Florida Bar 2-Day Asset Protection Program in Miami Next Week

Teaser Points for Richard Oshins’s Ave Maria Presentation: Conventional Wisdom Knocked on its Ear

Greek Tax Amnesty Opportunity Ends May 12th

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Review Questions

Richard Connolly’s World – Bar Exam Under Fire & New Rules on Reporting Law School Graduates’ Success

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.

Voluntary Disclosure of Offshore Assets, Part I
by Alan Gassman, Leslie Share, and Brandon Ketron

“While many of us thought that late offshore trust and investment amnesty and other filing programs would not be seen or heard about because virtually all US taxpayers with these issues came forth under the 2009 and 2011 Offshore Voluntary Disclosure Program (known lovingly by those who have used it as OVDP,) time has shown that a certain small but definite percentage of the population will not come forward unless or until there are family dynamics, required reporting by foreign trust companies or individuals, death, or other circumstances.”

Executive Summary:

Clients have a difficult time understanding the myriad of complicated rules associated with disclosure of offshore assets. We have summarized the current potential vehicles a client in this situation may use to come into compliance with the law. It is also a good refresher on what sort of penalties clients could face if the correct paperwork is not filed.

Generally, there are four options available for a taxpayer who neglected to properly file the required forms to disclose offshore assets. The options are:

  1. “Quiet” Disclosure
  2. Delinquent International Information Return Submission Procedures
  3. Streamlined Filing Compliance Procedures
  4. Offshore Voluntary Disclosure Program

To be eligible for the IRS Delinquent International Information Return Submission Procedures and the Streamlined Filing Compliance Procedures, the taxpayer must show that the failure to disclose was due to “reasonable cause” or “non-willful” conduct. Acceptance into one of the programs is not automatic. Prior to forgoing the criminal immunity and formal closing agreement offered under the Offshore Voluntary Disclosure Program, the taxpayer should consider the likelihood of an unsuccessful outcome under the other programs and the risk associated with that outcome.

Facts:

What is required to be filed?

Some of the most common filing requirements for offshore assets are: (1) Form 3520 – Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, (2) Form 3520-A – Annual Information Return of Foreign Trust with US Owner, (3) Form 8938 – Statement of Specified Foreign Financial Assets, (4) Report of Foreign Bank and Financial Accounts (FBAR), (5) Form 5471 – Information Return of US Persons with Respect to Certain Foreign Corporations, and (6) Form 8865 – Return of US Persons with Respect to Certain Foreign Partnerships.

A Form 3520 is required to be filed when a US person (1) creates or transfers money or property to a foreign trust; (2) receives (directly or indirectly) any distributions from a foreign trust or; (3) receives certain gifts or bequests from foreign persons, estates or other entities.

A Form 3520-A is an annual informational return required to be filed by any US person who is treated as an owner of any portion of a foreign trust under the grantor trust rules.

A FBAR is required to be filed if a US person has (1) financial interest or signature authority over one or more foreign financial accounts, and (2) the aggregate value of such accounts exceeded $10,000 at any time during the calendar year.

A Form 8938 is required to be filed by a US person having interests in certain specified foreign financial assets exceeding $50,000 on the last day of the tax year, or $75,000 at any time during the year ($100,000 and $150,000 respectively for taxpayer Married Filing Jointly).

Generally, a Form 5471 is required to be filed by US persons who are officers, directors, or shareholders in certain foreign corporations.[1]

A Form 8865 is required to be filed to report information regarding foreign partnerships controlled by a US person; transfers from a US person to a foreign partnership; or to report acquisitions, dispositions or changes in foreign partnership interests by a US person.

These requirements apply regardless of whether the assets were disclosed on another Form disclosing foreign assets. However, if assets were listed on Form 3520, the instructions for Form 8938 state, “If you reported a specified foreign financial asset on the [Form 3520, Form 5471, Form 8865, or another informational return] for the same tax year, you may not have to report it on Form 8938. However, you must identify the form where you reported the asset by indicating how many forms you filed.”

Penalties Applicable for the Failure to File

The penalties for the failure to file the required informational returns to report foreign assets can be severe. Below is a summary of the possible penalties, but see Options Available to Taxpayer to Correct Failure to File for information on how some or all of these penalties can be avoided.

A. Failure to file FBAR

The failure to file a FBAR can result in a penalty if the IRS determines the failure was not due to reasonable cause. The penalty is $10,000 per violation if the failure to file was non-willful. If the failure to file was willful, then the penalty can be as high as the greater of $100,000 or 50% of the account balance per year.

B. Failure to file Form 8938

The failure to file Form 8938 may carry a penalty of $10,000, with an additional $10,000 added for each month the failure to file continues after the taxpayer is notified of the delinquency up to a maximum of $50,000 per return.

C. Failure to file Form 3520

The failure to file Form 3520 with respect to foreign trusts may result in a penalty the greater of $10,000 or 35% of the gross reportable amount. If the return was required to be filed to report gifts, then the penalty can be 5% of the gift per month up to a maximum penalty of 25% of the gift.

D. Failure to file Form 3520-A

The failure to file Form 3520-A may result in a penalty of the greater of $10,000 or 5% of the gross value of trust assets determined to be owned by a US person.

E. Failure to file Form 5471

The failure to file Form 5471 may result in a penalty of $10,000. An additional $10,000 is added each month the failure continues beginning 90 days after the taxpayer is notified of the failure, up to a maximum of $50,000.

F. Failure to file Form 8865

The failure to file Form 8865 may result in a penalty of $10,000, with an additional $10,000 added each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000. A reduction in the otherwise available foreign tax credit could also be imposed. Additionally, the taxpayer is subject to a penalty of 10% of the value of any unreported transferred property, subject to a $100,000 limit.

G. Fraud Penalty

If the underpayment and non-disclosure is determined to be the result of fraud, the taxpayer is liable for a penalty that is generally equal to 75% of the unpaid tax.

H. Accuracy-Related Penalty

Depending on which component of the accuracy-related penalty is applicable, a taxpayer may be liable for either a 20% penalty or a 40% penalty. This statute reads as follows:

If this section applies to any portion of an underpayment of tax required to be shown on a return, there shall be added to the tax an amount equal to 20 percent of the portion of the underpayment to which this section applies.[2]

In the case of any portion of an underpayment, which is attributable to any undisclosed foreign financial asset understatement, subsection (a) shall be applied with respect to such portion by substituting “40 percent” for “20 percent.”[3]

For example, if a US citizen underpays his or her tax by $20,000, and that underpayment is directly attributable to an undisclosed foreign asset, a penalty of 40% may be assessed in addition to the tax owed. This could bring the total payment to $28,000 ($20,000 + (20,000 x 40%)).

I. Criminal Charges

In addition to owning the tax along with the above mentioned penalties, the taxpayer could be charged with tax evasion, filing a false return, and willfully failing to file a FBAR or filing a false FBAR. These charges could result in jail time and additional monetary fines.

Stay tuned for next week’s Thursday Report where we will discuss options available to correct failure to file.

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[1] See, IRS Instructions for Form 5471 for more detail on who must file Form 5471
[2] 26 USC § 6662 (a)
[3] 26 USC § 6662 (j)(3)

Seminar Spotlight
The Florida Bar 2-Day Asset Protection Program

The Florida Bar Continuing Legal Education Committee and Tax Section will present a 2-day Asset Protection Program on May 7th and May 8th, 2015.

This is a first-time two-day program, and attendees can choose to attend one or both days. Day One is a comprehensive Fundamentals Day designed to provide a well-balanced introduction/refresher, and Day Two will be an Advanced Day, well-suited for experienced practitioners and/or anyone who attended the first Fundamentals day.

Every attendee will receive a free course book onsite.

The schedule for Day One of this program is as follows:

DAY 1
ASSET PROTECTION FUNDAMENTALS

Day 1 Part 1

Day 1 Part 2

The Asset Protection Fundamentals course will qualify for 9.5 hours of CLE credit, including 0.5 hours of Ethics credit. It will also qualify for 9.5 hours of Tax Certification Credit and/or 9.5 hours of Wills & Trust Estates Certification Credit.

The schedule for Day Two of this program is as follows:

DAY TWO
ADVANCED ASSET PROTECTION

Day 2

The Advanced Asset Protection course will qualify for 9.5 hours of CLE credit, including 2 hours of Ethics credit. It will also qualify for 9.5 hours of Tax Certification Credit and/or 9.5 hours of Wills & Trust Estates Certification Credit.

The program will take place at the Hyatt Regency Hotel in Miami, Florida. Information for the hotel is as follows:

Hyatt Regency Downtown
400 South East Second Avenue
Miami, FL 33131
1-305-358-1234
www.miamiregency.hyatt.com

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

Teaser Points for Richard Oshins’s Ave Maria Presentation:
Conventional Wisdom Knocked on its Ear

The 2nd Annual Ave Maria School of Law Estate Planning Conference will take place TOMORROW at the Ave Maria School of Law in Naples, Florida.

One of the many great presentations to be featured at the conference is Richard Oshins on Oshins 11 – 11 Innovative Planning Techniques for the Tax and Estate Planning Professional. Richard Oshins is one of the most well-respected and creative estate tax planning authorities.

We asked Richard for some presentation highlights that we might share to promote both his presentation and the conference in general. He provided us with the following:

Here are a few of the highlights:

  • Life insurance is often a substantial component of many estate plans. There are some very powerful planning strategies that enable the planner to transfer the life insurance from and to clients with substantial tax benefits;
  • Trusts are the most flexible and powerful vehicle that exist in estate and wealth planning. Some new strategies will be discussed that can and should be used to enhance the benefits of trusts. Grantor trusts are especially beneficial, and strategies to use them on a multi-generational basis will be discussed;
  • There is a common belief among estate planners that a GRAT is an extremely safe strategy as the rules have been codified. However, there are some meaningful operational risks associated with GRATs that are not given adequate attention by planners and clients;
  • There is a common belief that the change in the estate tax exemption from $1 million to $5 million adjusted has substantially eroded the estate planning opportunities for advisors. There are still many estate planning opportunities available, only they are different than they previously were. There is a substantial array of opportunities that the skilled planner should be discussing with their clients that can exploit loopholes and tax reduction techniques that still exist to exploit the internal revenue code to the advantage of clients.

Richard’s Oshins 11 presentation will run from 8:30 AM to 9:30 AM at the 2nd Annual Ave Maria School of Law Estate Planning Conference.

Richard will also be speaking later in the day with Alan Gassman and Jerome Hesch on The Mathematics of Estate Planning. Don’t miss it!

To register for the conference, please click here http://estateplanning.avemarialaw.edu/.

Greek Tax Amnesty Opportunity Ends May 12th

Many of us have clients who have family in Greece, and the Greek economic crisis and lack of historical enforcement of the tax law has fostered a great deal of tax evasion or mistakes about whether to report US based income on tax returns for Greek citizens and residents.

Greece has an amnesty program that waives interest and penalties on unreported income, which ends on May 12th, 2015.

Greece also has a law which will enable the revenue agency to require that all Greek citizens disclose their worldwide assets, but this has not yet been implemented. It is unknown whether Greek citizens who gift assets now to special trusts for their families will have to report these assets if and when the asset reporting rules are released and implemented.

If you do not mind advertising that you actually open The Thursday Report, you could forward this to these clients or others, and they are welcome to subscribe at no charge.

Further information will be provided in subsequent Thursday Reports.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Review Questions
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

To see previous editions of this presentation, please click below:

Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6Chapter 7

This week, we are featuring some questions to help you review the materials we’ve discussed in Chapters 1 through 7 of this series.

Answer each of the following questions with TRUE or FALSE, then check your answers below.

  1. Roth IRAs are not subject to the Required Minimum Distribution rules until the owner of the Roth IRA dies.
  2. A Traditional IRA cannot roll over tax free to a Roth IRA.
  3. If a person other than the Plan Participant’s spouse is a beneficiary of the IRA, the Recalculation of Life Expectancy principle will still apply.
  4. A Conduit Trust must pay all distributions received directly from the IRA/Plan to a Designed Beneficiary upon receipt by the trustee.
  5. A Plan Participant who has not reached aged 59½ will pay a 10% excise tax on taxable distributions in addition to the normal income tax.
  6. Required Minimum Distributions (RMDs) are the amounts that must be paid out in a given year under the Applicable Payment Mode, based upon the life expectancy of the Plan Participant or the Designated Beneficiary.
  7. The date on which lifetime distributions to the Plan Participant must begin is April 1 of the calendar year preceding the calendar year in which the Plan Participant attains the age of 70½.
  8. A Plan Participant cannot withhold federal income tax from Required Minimum Distributions.
  9. There is no requirement that Required Minimum Distributions be paid in cash.
  10. A conversion from a traditional IRA into a Roth IRA for someone under the age of 59½ does not trigger the 10% penalty fee on early withdrawals.
  11. IRA to HSA Account transfers are always extremely beneficial.
  12. A taxpayer cannot deduct a loss on the sale of securities if a substantially identical security is repurchased within 30 days after the loss-generating sale.
  13. The Designated Beneficiary is the person whose life expectancy is used for the purpose of determining the applicable payment mode of the required minimum distributions that will apply to an IRA/Plan.
  14. The designation date is September 30 of the calendar year following the year of death of the Plan Participant.
  15. The Designated Beneficiary of an Accumulation Trust, for the purposes of the Required Minimum Distribution rules, is the youngest individual beneficiary of the trust.
  16. A Conduit Trust can have beneficiaries older than the Designated Beneficiary, Non-Persons as beneficiaries and unlimited power of appointment powers, so long as all distributions from the IRA/Plan to the trust are required to be paid to the Designated Beneficiary upon receipt from the IRA/Plan during his or her lifetime by trust during his or her lifetime.
  17. Q-TIP Trusts qualify as a Conduit Trust.
  18. Regarding Q-TIP Trusts, if a surviving spouse’s right to withdraw from the IRA/Plan is restricted, the spouse will not be allowed to rollover the IRA/Plan into his or her own.

For the answers to these questions, please click here.

For an explanation to these questions and more, please review Chapters 1 through 7 using the links provided above.

Richard Connolly’s World
Bar Exam Under Fire & New Rules on
Reporting Law School Graduates’ Success

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 a link to the articles.

This week, the first article of interest is “Bar Exam, the Standard to Become a Lawyer, Comes Under Fire” by Elizabeth Olson. This article was featured in The New York Times on March 19, 2015.

Richard’s description is as follows:

For decades, law school graduates have endured a stressful rite of passage, spending the first 10 weeks after classes end taking cram courses in the arcane details of the law before sitting down for the grueling, days-long bar exam. Those who do not pass cannot practice law, at least in nearly all the states and the District of Columbia that consider the exam the professional standard.

But that standard, so long unquestioned, is facing a new round of scrutiny – not just from the test takers, but from law school deans and some state legal establishments. Some states, including Arizona, Iowa, and New Hampshire, are exploring or have adopted other options, questioning the wisdom of relying on a single written test as the gateway to legal practice.

Please click here to read this article in its entirety.

The second article of interest this week is “Law Schools Face New Rules on Reporting Graduates’ Success” by Jacob Gershman. This article was featured in The Wall Street Journal on March 17, 2015.

Richard’s description is as follows:

US law schools face renewed scrutiny over claims about their ability to find work for their graduates, a crucial selling point amid one of the legal industry’s work-ever job markets.

Some of the schools have been creating temporary jobs for grads by paying nonprofits and others to employ them, a move that, in some cases, has boosted the school’s standings in the much-followed US News & World Report rankings.

Last year, George Washington University Law School reported that 469 out of its 603 graduates in the Class of 2013 had jobs by nine months after graduation. The school sponsored 88 of these jobs, or 19 percent.

A new rule adopted in March by the accrediting arm of the American Bar Association will tighten such claims, giving law schools less credit for jobs that they subsidize.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)
by Sigmund Ross

Psychologist

According to Dr. Freud, there is no such thing as an accident. It follows, then, that there is no such thing as an accident attorney. If you think you see an accident attorney, that is just a manifestation of your childish desire for a parental type who will blame someone else for your problems.

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IN LEGAL NEWS:

Lawyers

Top law firms fight each other over the opportunity to argue the right to gay marriage in front of the Supreme Court. Opposing side represented by an empty space next to a ten foot pole.

Upcoming Seminars and Webinars

LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE 

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

Additional Information:  For more information, please click here http://estateplanning.avemarialaw.edu/ or email Alan Gassman at agassman@gassmanpa.com.

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR ASSET PROTECTION PROGRAM

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES. 

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here, and the many very useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE. This luncheon will qualify for 2 CLE credits.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: Italy Today | 6743 Main Street, Miami Lakes, FL 33014

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

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LIVE UNIVERSITY OF FLORIDA PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a five hour workshop on legal practice and making the most of your legal practice to Professor Dennis Calfee’s summer workshop class. Experienced professionals are also welcome to attend by making a $150 donation to the Lind Chair.

Date: To Be Determined

Location: University of Florida | 2500 SW 2nd AE, Gainesville, FL 32611

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

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LIVE WEBINAR:

Alice Rokahr, President, Trident Trust Company (South Dakota) Inc., and Alan S. Gassman will present a free, 30-minute webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTA – DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

Date: June 9, 2015 | 12:30 pm

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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.

Date: August 22, 2015 | 9:00 AM – 5:00 PM

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 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: 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 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

April Applicable Rates

The Thursday Report – 4.23.2015 – UF Tax Institute Special Edition

Posted on: April 23rd, 2015

2nd Annual UF Tax Conference Information

Donate to the Stephen A. Lind Eminent Scholar Chair

Will the Real Life Expectancy Table Please Stand Up?

Not Every Home Will Grow at the “Average Rate” by Frank Catlett and Alan Gassman

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – The Charts You’ve Always Wanted, All in One Place

A Word from Scott Barnett

Richard Connolly’s World – The Surviving Spouse Estate Tax Trap

Seminar Spotlight – The 2nd Annual Ave Maria School of Law Estate Planning Conference

Florida Matters Radio Show to Re-Air Alan Gassman’s Talk on Same-Sex Marriage, Sunday, April 26 at 7:30 am on WUSF 89.7 FM

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.

2nd Annual UF Tax Conference Information

Calfee with Gassman Shirt and Alligator

Alan Gassman and Dennis Calfee review the t-shirts that are being given to Lind Chair qualified donors.

Front of Shirt

Mike Little and Andrea

Alan Gassman, UF Tax student Maria Yole, and Mentor Mike Little
at the 2nd Annual UF Tax Conference

Andrew Comiter and Renee

Alan Gassman, UF Tax Conference student Rene Vezina, and Mentor Andrew Comiter
at the 2nd Annual UF Tax Conference

Gassman, Crotty & Denicolo, P.A. is proud to be a contributing sponsor for the 2nd Annual University of Florida Tax Institute. Please visit our booth in the Exhibit Hall to meet Alan’s assistant, Maribeth, and sign up for one of the following opportunities:

  1. Meet Professor Calfee to talk about making a donation to the Lind Chair to get a free t-shirt.
  2. Sign up to attend a Saturday summer workshop with Professor Calfee, Alan Gassman and a number of tax students to discuss much of what it takes to be a successful professional. ($150 donation to the law school for each non-student attendee – scholarships available for recent alumni.)
  3. 80% of the proceeds from the sales of our books will go to the University of Florida Tax Program, and earmarked especially to buy beer for the professors who gave Alan a B or better while he was there in any course.
  4. Sign up to provide a 30 minute mentorship phone call or meeting with a University of Florida Tax law student at a time of your convenience. They have a lot of questions and this is a very scary place in their lives – you can help them make some big decisions and let them see that our profession is a friendly universe. Thank you to everyone who donated 30 minutes last night, under the influence of alcohol, each of which had a nice candid conversation with a young up-and-coming tax lawyer.
  5. Receive a special edition collectors t-shirt or gator ring toss toy for making a $200 or more pledge this week to the Lind Chair, or the same items signed by Professor Calfee for a $400 or more pledge.

Donate to the Stephen A. Lind Eminent Scholar Chair
by Professor Dennis Calfee

Lind with Saying

The Stephen A. Lind Eminent Scholar Chair in Federal Income Taxation is part of a group solicitation project to raise an endowed fund of $1.5 million for the Graduate Tax Program at the Levin College of Law. This Chair honors Professor Stephen Lind, who taught tax courses at the College from 1970 to 1998 and was one of the founding faculty members of the Graduate Tax Program.

The income from the endowed fund will be used to attract an Eminent Scholar in Taxation who is not a member of the College faculty at the time an offer is extended to occupy this chair. This Eminent Scholar will replace faculty members who have taught in the graduate tax program for many years. This Chair ideally will be occupied by someone who mirrors Steve both professionally and personally.

Contributions to this project qualify for a deduction under Section 170. Pledges can be over a five-year period or payable in any year in the five-year period.

Thank you, in advance, for your assistance with this project to honor Steve. He has touched and influenced so very many in a very positive way over his academic tenure. If you have any questions, please contact Professor Dennis Calfee at (352) 273-0911.

Currently, the Stephen A. Lind Eminent Scholar Chair, Fund number F019521, held at the University of Florida Foundation, has nearly $400,000 in contributions and pledges. We are proud to be donors to this chair and the Calfee chair

We are also pleased to announce that at the Florida Tax Institute, Professor Dennis Calfee will sit at the dunking booth during the Ethics portion of the Conference. Those who discreetly duck out and donate $15 towards the Stephen A. Lind Chair will get the chance to dunk Professor Calfee!

Dennis Calfee - Dunk Tank.REVISED.FINAL

Will the Real Life Expectancy Table Please Stand Up?
by Alan Gassman, Brandon Ketron and Barry Flagg

The 1950s and 1960s television contest show “To Tell the Truth,” featured a panel of four celebrities whose object was to correctly identify a described contestant who had an unusual occupation or experience. The contestant was sworn to tell the truth, but was accompanied by two imposters who were free to answer the questions of the panel anyway they pleased. After the celebrity panel voted on who they thought was the real contestant, host Bud Collyer would ask “Will the real [person’s name] please stand up?”

When clients buy life insurance someone has to explain that the rate of return will be based upon how long the client will live, hence the question will the real life expectancy table please stand up?

For example, a 65 year old non-smoker female has an 89 year life expectancy according to one of the biggest life insurance carriers (and probably several of them).

If she is to pay (two thirds of $258,000) a year for her life to receive a $10,000,000 death benefit, what is the probable rate of return?

But, according to the Society of Actuaries 2008 Valuation Basic Table, life expectancy for a 65 year old female who meets non-smoker Preferred health-risk underwriting criteria is age 91, as opposed to the 89 years forecasted by the life insurance carrier.

Which table should we believe?

The two year difference has a big impact – the rate of return calculation comes to 5.51%, as opposed to the 6.53% forecasted by the carrier.

Assuming that the Society of Actuaries 2008 Valuation Basic Table described above is accurate, would the average affluent American who can afford a $172,000 a year premium be more or less likely to live to his or her life expectancy?

One would think that this person would have better medical care, better education, and less stress, at least from a financial standpoint, than the average American.

The Society of Actuaries sponsored the High Face Amount Mortality Study published in April 2012 that compared policies with a face amounts greater than $1,000,000 to those with smaller face amounts concluded by study that individuals were more likely to live if their lives were insured by $1,000,000 or more by an expected mortality ratio of 82% by face amount and 84% by policy count. In laymen’s terms, this means that the life expectancy of an individual whose life was insured by $1,000,000 or more, should be expected to have a longer life expectancy. Assuming that the insured’s life expectancy is increased to age 93, the rate of return drops to 4.68%, which is much lower than the original 6.53% forecast.

That said, the individual’s life expectancy may not be 93, but if life expectancy is to be used as a measure for the rate of return that is reasonable to expect, then the age 89 life expectancy indicated by the carrier appears incorrect. The life expectancy indicated by the 2008 VBT for Preferred health-risks is age 91, and the High Face Amount Mortality Study published by the Society of Actuaries indicates that the LE for high face amount policies/high net worth insured is older than 91. As such, the rate of return at life expectancy is likely less than 5.0% and potentially less than 4.0%. In addition because the rate of return is very sensitive to the accuracy of the life expectancy, and because life expectancy is an inherently imprecise variable (i.e. no more accurate than flipping a coin), the range of returns that are reasonable to expect are quite volatile.

The chart below shows the rate of return expected on death, highlighting the carrier’s projected life expectancy, the 2008 Valuation Basic Table’s life expectancy, and the possible increased life expectancy for an individual with a high face policy

The rate of return at selected ages is as follows:

Life Expectancy Table

Other Considerations

Many of the large carriers take their guarantees out to age 121, but the life insurance carrier estimates that this person only has a 1.24% chance of living to age 105.

One carrier in the situation above would be willing to reduce the premiums on the life insurance policy by $3,652 (2.1%) if the death benefit guarantee is only good until age 105.

One option would be to decrease the guarantee to age 105 and invest the difference in the premiums. For example of the $3,652 difference were invested at a 4% rate of return, the client will have accumulated an additional $466,956 by age 105. If the difference were invested at an 8% rate of return, the client will have an additional $1,025,599 by age 105.

Assuming that the client would live until age 106 (and there is a 0.97% chance of this according to the Actuarial Society 2008 Valuation Basic Tables) $10,000,000 will be lost, but that is 40 years from now, and by then there may be no estate tax, and if inflation averages 3% per year from now until 40 years from now the value of $10,000,000 will only be equal to $3,065,584 of buying power in today’s dollars, and the value of this person’s $100,000,000 investment portfolio will be expected to be approximately $461,630,000 if it grows at 4% per year (after taxes) for 40 years.

By the same token if the $172,000 is invested at 4% (which may be the average long term bond rate of return in the United States for the next 40 years) then $ 16,998,164 will have been accumulated after taxes.

How is a fiduciary to decide whether to buy this policy under a trust established by the client’s husband before he died?

Do you pay the extra $172,000 per year as insurance in case the medical industry has the revolution we all hope for (I’m sorry sir – your pancreas is not working properly but we can grow a new one in a pig and transplant it for you in the next 24 months).

Not Every Home Will Grow at the “Average Rate”
by Frank Catlett and Alan Gassman

Frank Catlett

Frank A. Catlett is a State-Certified General Real Estate Appraiser (FL), General Real Estate Appraiser (NC), and Certified General Real Property Appraiser (GA) with over 37 years of experience. Mr. Catlett is President of Trigg, Catlett & Associates, located in Tampa, Florida, which provides appraisal and brokerage services to not only the Tampa Bay, but most parts of Florida as well as North Carolina.

A great many senior Americans borrow money on “Reverse Mortgages” based in part on being told that their homes will go up in value with “national or regional averages,” which is often not the case.

For many of these homeowners, the better decision would be to downsize and not try to hold onto more house than they can afford. The decision to stay in a house that is too large causes the loss of investment resources in return and increased expenses. One national study has indicated that the cost of maintaining a home is based upon 3.53% of its value. Having a $200,000 home, when only a $100,000 home is needed, may therefore cost the senior citizen not only the investment return on $100,000, but also an additional 3.53% or more per year in expenses for utilities, taxes, insurance, and maintenance.

The reverse mortgage industry has encouraged many seniors to stay in their “too large” homes, based in part upon showing them projections that will indicate a likelihood of a 4% per year increase in value.

In fact, a 2013 actuarial report prepared for the US Federal Housing Administration (FHA) has indicated that a “worst case scenario” bottom 25th percentile Monte Carlo simulation has predicted that home prices could go down by more than 20% between 2014 and 2018 and might not recover to 2018 levels until 2024.

While the “average home” in a given area can be expected to increase in value on average over a term of years, the retiree’s home will typically be expected to go up in value at a slower rate, if it does go up in value, for the following reasons:

1.) The home gets older every year. The age of a home is a factor in valuation and appreciation. If the average home in a given area is 28 years old now, and the average house will be 26 years old in 20 years, then a 48-year-old home 20 years from now will be worth less than a 26-year-old home will be and will not be expected to have kept up with the “average growth rate.”

2.) The above is corroborated by the fact that homes have a typical estimated life expectancy of 60 years, and thus, depreciate in value to some extent. An appropriate rate of depreciation might be 1.667% of the value of the home itself each year, separate and apart from the land, because typically, a 60 year life expectancy will apply (1/60 = 1.667%). On the other hand, should this be 3.333% per year (2 x 1.667%) if the home is 30 years old to begin with?

If a typical house is worth 77.5% of the combined value of the house and land together, and the 77.5% house portion is going up by 3.5% statistically, not counting age, but then depreciating at 1.667% a year, then 22.5% of the total value (the land portion) is going up by 3.5% annually, and 22.5% of the value (the home portion) is going up by the excess of 3.5% over 1.66%, which is 1.89% per year.

Therefore, the average growth rate for a house might only be 2.2433% ((22.5% x 3.5%) + (77.5% x 1.89%)), on average.

3.) Senior citizens typically do not restore or renovate their homes, especially if they are of the average household that has the need to borrow on a reverse mortgage. A high percentage of the “average” homes in any given area have new kitchens, bathrooms, and other primary aspects installed or refurbished every 20 to 25 years. A senior citizen’s home will have a much lower restoration rate on average, which would bring the average growth rate in the above example well below the 2.2433% described above.

4.) Oftentimes, neighborhoods or surrounding areas start to turn for the worse, and mobile homeowners will move to more secure economic areas and neighborhoods where values normally increase at or above the average. Reverse mortgage borrowers are not able to do this, and are thus unable to move when value issues are likely to arise, and thus, have a less than average chance of being situated in a proper neighborhood for appreciation to be expected.

Based upon the above, we believe that it is a significant fallacy, and actually, a deceptive trade practice, for the reverse mortgage industry to tell homeowners that their homes can be expected to go up in value based upon statistical averages now being used.

Further, 4% as a normal projection rate seems ludicrous when the average home rate value increase in the last 20 years in the United States has been only 3.4%, before taking into account the issues described above.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – The Charts You’ve Always Wanted, All in One Place
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement. The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.” This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules. We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see previous editions of this presentation, please click below:

Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6, Chapter 7

This week, we are featuring all of the charts that were included in Chapters 1 through 7 of this presentation.

To see all of the charts included in the first seven chapters of our Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits presentation, please email agassman@gassmanpa.com.

A Word from Scott Barnett

Scott Barnett

Our friend Scott Barnett, J.D., LL.M., was kind enough to give us the following testimonial for our Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits series.

“The Gassman firm has, again, captured in one series an important aspect of tax and retirement planning. Qualified plans hold a mammoth part of the retirement assets needing planning. This new series on distributions is needed and well done.”
– Scott F. Barnett, J.D., LL.M. (Taxation)
scottfbarnett@scottfbarnettconsulting.com

Thanks very much, Scott, for your endorsement!

Richard Connolly’s World
The Surviving Spouse Estate Tax Trap

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 a link to the articles.

This week, the article of interest is “The Surviving Spouse Estate Tax Trap” by Ashlea Ebeling. It was featured on Forbes.com on March 25, 2015.

Richard’s description is as follows:

The Internal Revenue Service is poised to release permanent regulations on portability, a newish provision of the estate tax law, and the American Institute of CPAs is requesting that the IRS make the rules more family-friendly. The problem is if you don’t know what portability is and how to elect it, you could be hit with a surprise federal estate tax bill.

The AICPA is concerned about estates not being able to take advantage of portability because many executors – and some accountants and lawyers – are unaware that you have to file an estate tax return at the first spouse’s death to elect portability.

In a letter to the IRS, the AICPA is asking for two other common sense fixes to the portability regime. To elect portability, executors have to file an estate tax return (Form 706 runs 31 pages, and the instructions are 53 pages). Instead, the AICPA says the IRS should provide a short form 706-EZ (like the 1040-EZ for income taxes) to make the portability election.

The other fix would be to allow a surviving spouse to file for portability. Now only the executor of a decedent’s estate can make the election. But it’s the surviving spouse – who may not be the executor – who has a vested interest in filing an estate tax return to elect portability – and save taxes at the second death.

Please click here to read this article in its entirety.

Seminar Spotlight
The 2nd Annual Ave Maria School of Law Estate Planning Conference

Ave Maria Continuing Education

The 2nd Annual Ave Maria School of Law Estate Planning Conference will take place at the Ave Maria School of Law in Naples, Florida on May 1, 2015.

This conference is designed for estate planners, including attorneys, trust officers, accountants, insurance advisors, and wealth management professionals. The one-day program will include lectures and panel discussions designed to examine current developments in estate planning and to strengthen the practitioner’s knowledge and application of estate planning techniques.

The Ave Maria School of Law Estate Planning Conference qualifies for 9.5 General CLE Credits, 1.0 Ethics CLE credits, 7.0 Elder Law Certification Credits, 7.0 Wills, Trusts & Estates Certification Credits, and 6.25 CTFA Credits. Don’t miss this exciting opportunity!

The schedule for the event is as follows:

Ave Maria Schedule UPDATED

To register for this great event, please click here.

For more information, please contact Jean Takacs at jtakacs@avemarialaw.edu or by phone at (239) 687-5405. You may also contact Alan Gassman at agassman@gassmanpa.com.

Florida Matters Radio Show to Re-Air Alan Gassman’s Talk on Same-Sex Marriage, Sunday, April 26 at 7:30 am on WUSF 89.7 FM

The U.S. Supreme Court will be holding oral arguments this week on several same-sex marriage cases.  As such, WUSF will be re-airing Alan Gassman’s radio interview with Florida Matters on Sunday, April 26, 2015 at 7:30 a.m.  WUSF is 89.7 FM.  The 4 minute summary version of Alan’s talk can be heard by clicking here and the link to listen to the interview with Alan and Michael Reedy can be heard on Sunday by clicking here. Tune in and let us know any questions or comments you may have!

Humor! (or Lack Thereof!)

Please enjoy the latest from our comedy contributor, Ron Ross!

IN THE NEWS:

Scientists in Cerne Abbas have used the Large Hadron Super-Collider to smash together a proton and an electron to recreate conditions at the time of the Big Bang – Attorneys claiming to represent the respective particles arrived and immediately demanded compensatory damages for their clients.

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An iambic pentameter poem by Ron Ross:

Iambic pentameter is a commonly used type of metrical line in traditional English poetry and verse drama. The term describes the rhythm that the words establish, which is measured in small groups of syllables called “feet”.

In Xanadu did Kublai Khan a stately pleasure dome decree

With a treasure room and a mortgage fixed at percentage five point three

Then the vicious Mongol Horde rode in and the Khan’s palace was sacked

The treasure room was looted and the dome was slightly cracked

Now cash poor, Kublai tried to modify his rate

But the bankers, being bankers, refused to negotiate

So Kublai sent a friend to a friend in the Mongol Horde

Saying, “Why settle for less, don’t you know where the real treasure is stored?”

The Mongols robbed the bank and burned every mortgage and lien

And spent the night, finding they enjoyed being someplace clean

They used to live in the saddle to steal what others own

Now they take your money the legal way, at “Mongol Horde Savings and Loan”

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THE STAGES OF GRIEF FOR A LAWYER WHO HAS JUST LOST A CASE:

DENIAL of a motion to set aside the judgment.

ANGER at the person who was late bringing the coffee, which must be the reason the case was lost.

BARGAINING with the opposing attorney to go “double or nothing” on the next case.

ACCEPTANCE of a job offer to argue in mock court on behalf of the witch that Hansel and Gretel threw in the oven.

Upcoming Seminars and Webinars

LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS.

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION:

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS.

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION:

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING. If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning. This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date: Friday, May 1, 2015

Location: Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

Additional Information: For more information, please visit http://estateplanning.avemarialaw.edu/ or email Alan Gassman at agassman@gassmanpa.com.

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LIVE MIAMI PRESENTATION:

FLORIDA BAR WEALTH PRESERVATION PROGRAM

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar. Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES.

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here, and the many vary useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach. Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE. This luncheon will qualify for 2 CLE credits.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: Italy Today | 6743 Main Street, Miami Lakes, FL 33014

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

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LIVE UNIVERSITY OF FLORIDA PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a five hour workshop on legal practice and making the most of your legal practice to Professor Dennis Calfee’s summer workshop class. Experienced professionals are also welcome to attend by making a $150 donation to the Lind Chair.

Date: To Be Determined

Location: University of Florida | 2500 SW 2nd AE, Gainsville, FL 32611

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

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LIVE WEBINAR:

Alice Rokahr, President, Trident Trust Company (South Dakota) Inc., and Alan S. Gassman will present a free, 30-minute webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTS – DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

Date: June 9, 2015 | 12:30 pm

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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.

Date: August 22, 2015 | 9:00 AM – 5:00 PM

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 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: 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 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)

LIVE PRESENTATION:

RUTH ECKERD HALL PLANNING GIVING COUNCIL MEETING

This exciting two-part event will feature an educational presentation and a networking session. Attorneys and CPAs may receive CLE and CPE credit for attending the educational presentation.

The educational presentation will be an entertaining, interactive workshop led by Jack Halloway, a well-known improvisational coach and actor. He is directing “The Complete Works of William Shakespeare (Abridged)” and will share some thoughts on how Shakespeare used law, lawyers, and money in his plays. Some improv will also be included.

Jack Halloway’s presentation will be followed by a social networking and info session. Enjoy some wine and time with fellow Planned Giving enthusiasts!

Everyone who brings a potential donor or new member to the Planning Giving Council will be entered into a raffle for 2 tickets to an upcoming show.

Date: April 21, 2015 | Educational Presentation begins at 4:30 PM | Networking sessions begins at 5:30 PM

Location: The New Murray Theatre at Ruth Eckerd Hall

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com. RSVPs may be sent to Maribeth Vongvenekeo at maribeth@gassmanpa.com, Suzanne Ruley at sruley@rutheckerdhall.net, or Kristy Philippe at kristy.philippe@ms.com.

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LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please visit http://www.floridataxinstitute.org/agenda.shtml for a complete schedule or contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

April Applicable Rates

The Thursday Report – 4.16.15 – The Tax Lawyer on the Roof

Posted on: April 16th, 2015

Will 529 Plans Distort Your Client’s Estate Plan?

New Crummey Case – Worth its Weight in Gefilte Fish?

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron, Part VII

Risk Management in a Percentage-of-Premium Contract by Pariksith Singh, M.D.

St. Petersburg College 6th Circuit Pro Bono Newsletter, Spring 2015 Edition

Richard Connolly’s World – 15 Body Language Blunders Successful People Never Make

Seminar Spotlight – University of Florida Tax Institute – April 22nd – 24th

Donate to the Stephen A. Lind Eminent Scholar Chair

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.

Welcome to the 143rd Edition of The Thursday Report

Please forward this report to anyone you like or dislike, know or do not know. We welcome your input, criticism, and nudges!

Thanks sincerely to all of our contributors, and this week, we also thank the amazing team that has put together the ultimate 3-day Florida Tax Institute for April 22nd through April 24th to benefit the University of Florida Levin College of Law Tax Program and those of us who attend. It is not too late to sign up for one or more days, or just show up and crash the receptions (with your checkbook, please!)

For more information on the Tax Institute or to find out how you can donate to the Stephen A. Lind Eminent Scholar Chair, please keep reading. We’ll see you next week at the Florida Tax Institute!

Will 529 Plans Distort Your Client’s Estate Plan?

Commonly, clients want all assets divided equally among children, but what about 529 Plans that may be set aside for younger children or children who have not been educated?

Do you specifically ask the client whether they want everything equally divided, or should the 529 Plans be above and beyond the equal division?

Another question is who the owner of a 529 Plan will be if the client dies?

The following language can be useful to explain and provide for the mechanics associated above:

For the Client Explanation Letter:

We have put in a special provision that provides for having the 529 Plan designated for each child kept separate and apart for that child, and not included in the total value of assets that will be divided by three to otherwise determine what is placed in trust for each child.

For the Document:

Notwithstanding the above, I recognize that my spouse and I have funded 529 Plans that presently exist for one or more of our children, and that we wish to have the 529 Plan or Plans designated for each child held for the sole benefit of the designated child, without having the share of such child otherwise reduced or impacted as a result thereof. Therefore, the Trustee shall make adjustments as appropriate to facilitate fulfilling this intention. For example, if on the death of the survivor of myself and my spouse, there is a $100,000 529 Plan designated for one child, a $150,000 529 Plan designated for a second child, and $3,000,000 of other assets, then each child’s Trust described below will be funded with $1,000,000, with such child additionally having the sole and exclusive benefit of the 529 Plan designated for him or her, in a manner as determined appropriate by the Trustee to fulfill the above intentions.

We have updated our article on comparing 529 Plans to Variable Annuities as investment vehicles. You can review the updated article by clicking here.

New Crummey Case – Worth its Weight in Gefilte Fish?

The recent tax court victory in the case of Mikel v. Commissioner was the subject of an excellent write-up by Jonathan Gopman in the Steve Leimberg Newsletter No. 2301. It can be viewed by clicking here.

Our friend and idol Edwin Morrow has written a draft LISI newsletter, which can be viewed by clicking here that we welcome questions, comments, and suggestions on.

Additionally, our humor section features Kristen Sweeney’s lyrics for “If I Had a Crummey Power” from the never-to-be-performed Broadway musical Tax Lawyer on the Roof. Scroll down to our “Humor! (or Lack Thereof!)” section to see this wonderful poem.

We will have more on this case in future Thursday Reports. Stay tuned!

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part VII
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

Learn or remember the six different payout methods and review four tricky situations (not related to Richard Nixon!) in this continuing drama.

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see previous editions of this presentation, please click below:

Chapter 1 , Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6

IRA SERIES CHAPTER 7

Payout Methods (if Life Expectancy Rule distribution method is selected):

1.) Joint Life Expectancy Method (“Uniform Lifetime Table”). See Appendix A, Table A

This table is based upon annual recalculation of the life expectancy of the Plan Participant and a hypothetical spouse who is 10 years younger. This method is used while the Plan Participant is alive, regardless of whether the Plan Participant is married. This method may also be used by the Surviving Spouse of the original Plan Participant if the Spouse becomes the owner of a spousal rollover Plan, in which event, the Surviving Spouse will be treated as if she is the original Plan Participant. This will not apply if the Spouse treats the Plan of the deceased Plan Participant as an inherited IRA or is the beneficiary of an Accumulation Trust or a Conduit Trust.

2.) Much Younger Spouse Method (“Joint and Last Survivor Table”). See Appendix A, Table B

This table allows the use of a longer joint life expectancy for annual recalculation during the life of the Plan Participant if both of the following apply:

  1. The spouse of the Plan Participant is more than 10 years younger than the Plan Participant; and
  2. The spouse is the sole beneficiary of the plan. If the spouse is presently the sole beneficiary of only a portion of a plan, it is best to divide the plan into two separate plans so that he or she can be the sole beneficiary of one plan for this purpose.

A Surviving Spouse who rolls the Plan Participant’s Plan into his or her own IRA can use this method if he or she remarries someone who is more than 10 years younger than the Surviving Spouse.

3.) Recalculated Surviving Spouse One-Life Method (“Single Life Table – Recalculated Annually”). See Appendix A, Table C

This method is used for payouts made directly to the Plan Participant’s Spouse after the Plan Participant’s death where the Spouse is the sole beneficiary of the IRA/Plan that is not rolled over. Additionally, where the Plan Participant’s Spouse is the beneficiary of a trust that qualifies as a Conduit Trust, the Spouse’s life expectancy can be used and recalculated annually according to the Single Life Table.

The first year distribution is based upon the life expectancy of the Surviving Spouse as listed in the Single Life Table, which is the Surviving Spouse’s oldest age in the calendar year following the calendar year of the Plan Participant’s death used in determining the Required Minimum Distribution. For each subsequent year, the applicable Required Minimum Distribution divisor is recalculated based upon the Surviving Spouse’s age in each year. For example, if the Surviving Spouse inherits the Plan Participant’s IRA/Plan, and she reaches age 72 in the calendar year in which a Required Minimum Distribution must be paid, then the applicable divisor will be 15.5. In the following year, when the Surviving Spouse has reached age 73, the applicable Required Minimum Distribution divisor will be 14.8.

4.) Non-Recalculated One-Life Method – Also Known as “Fixed Term” or “Single Life Reduced by One” Method (Single Life Table is used, with the applicable Required Minimum Distribution Divisor being reduced by one in each year after the first year after the Plan Participant’s death). See Appendix A, Table C.

The method is used where benefits are payable as follows:

  1. To the Plan Participant’s Spouse (after the death of the Plan Participant) where the Plan Participant’s Spouse is not the sole primary beneficiary, i.e. the IRA/Plan beneficiary designation or plan document provides that the Spouse and a non-spouse individual or an entity is also named as a primary beneficiary of the applicable IRA/Plan;
  2. To a Non-Spouse Beneficiary after the death of the Plan Participant; or
  3. To the beneficiary named by the Plan Participant’s Spouse or other non-spouse beneficiary that would inherit the IRA/Plan after the death of the Plan Participant’s Spouse or non-spouse beneficiary, as applicable (note: this will not apply where the Plan Participant’s Spouse inherited the Plan Participant’s IRA/Plan and rolled it over into his or her own IRA/Plan, subsequently remarried, and left his or her IRA/Plan to his or her new spouse) after the death of the Plan Participant’s Spouse, where the Plan Participant’s Spouse was the sole beneficiary of the Original Plan Participant’s account and has not rolled over the account.The first year distribution is based upon the life expectancy of the beneficiary as provided in the Single Life Table (Table C). If the Plan Participant’s Spouse is the beneficiary, the Spouse’s oldest age in the calendar year following the calendar year of the Plan Participant’s death is used in determining the Required Minimum Distribution. If the named beneficiary of the Plan Participant’s Spouse is the beneficiary, the beneficiary’s oldest age in the calendar year of the Spouse’s death is used in determining the Required Minimum Distribution.Each year thereafter, the previous year’s life expectancy divisor is reduced by one. Thus, if the first year’s life expectancy divisor is 19.5, the second year’s divisor is 18.5, the third year’s is 17.5, etc.

5.) “At Least as Rapidly” Rule Method (to apply where the Plan Participant dies after his or her Required Beginning Date).

This method is used where the Plan Participant dies on or after his or her Required Beginning Date, as discussed in Chapter Two’s Crucial Definitions and Rules.

In such a situation, the IRA/Plan funds must be distributed “at least as rapidly” as they were required to be distributed at the time of the Plan Participant’s death. However, the regulations provide for a longer distribution period if the Plan Participant has named an individual as Designated Beneficiary or an Accumulation Trust or a Conduit Trust through which the IRS will look to determine the Designated Beneficiary for Required Minimum Distribution purposes.

Where a Designated Beneficiary exists, Required Minimum Distributions can be made based upon the Designated Beneficiary’s life expectancy (if the life expectancy of the Designated Beneficiary is longer than that of the deceased Plan Participant). Alternatively, the “At Least as Rapidly” Method can be used when the Plan Participant has a longer life expectancy than the Designated Beneficiary in order for a longer distribution period to apply.

Where no Designated Beneficiary exists, Required Minimum Distributions can be made according to the remaining life expectancy of the deceased Plan Participant, notwithstanding whether the beneficiary is an individual, but only if the Plan Participant dies after the Required Beginning Date.

Planning Point for Plan Participant with Terminal Illness. The “At Least as Rapidly” Rule Method can work to the advantage of individual plan beneficiaries who are older than a Plan Participant who has a terminal illness if the Plan Participant begins to take distributions to have the rule apply.

6.) Five-Year Rule Method (5th December 31st after the calendar year of death of the Plan Participant – 5th Year After Death Payment required, as previously described).

Under this method, all account funds must be distributed on or before December 31st of the fifth anniversary of the calendar year of the Plan Participant’s death, as described in Chapter Two’s Players and Definitions, the 5th Year After Death Payment Requirement. This is the “default method,” which applies if there is no named Designated Beneficiary, the trust named as a beneficiary does not qualify as an Accumulation Trust or a Conduit Trust, or a non-person is named as a beneficiary of the IRA/Plan (such as an estate, partnership, or corporation).

This method can be advantageous where the Designated Beneficiary (and entire realm of potential Designated Beneficiaries) has a life expectancy of under 5 years, as calculated by the applicable table, or if the Designated Beneficiary has a short life expectancy.

Note: The Five-Year Rule Method is always available to beneficiaries of IRA/Plans, because they can always withdraw more than the Required Minimum Distributions.

6 Methods Chart

IRA rules are extremely complex and each situation must be analyzed with care. Some scenarios can be tricky, while others are relatively straightforward. Below (Figure 4.1) are a few examples of those tricky situations that will hopefully assist you in avoiding some of the common errors made.

Figure 4.1
Tricky Situations

Figure 4.1

See Figures 4.2 – 4.5 (pictured below, click to enlarge) to determine the applicable Payout Method in each beneficiary situation.

Figure 4.2
For Surviving Spouse – Participant Dies Before Required Beginning Date

Figure 4.2

Figure 4.3
For Surviving Spouse – Participant Dies After Required Beginning Date

Figure 4.3

Figure 4.4
Participant Dies Leaving No Surviving Spouse, with Multiple Beneficiaries,
Before Required Beginning Date

Figure 4.4

Figure 4.5
Participant Dies Leaving No Surviving Spouse, with Multiple Beneficiaries,
After Required Beginning Date

Figure 4.5

The Appendix with the tables applicable to methods 1-4 can be accessed by clicking here.

Risk Management in a Percentage-of-Premium Contract
by Pariksith Singh, M.D.

4 - Singh

Pariksith Singh, M.D. is truly a visionary in every meaning of the word. Dr. Singh is a board-certified internal medicine physician who received his medical education at Sawai Man Singh Medical College in Rajasthan, India (where he was awarded honors in internal medicine and physiology).  His residency training occurred at All India Institute of Medical Services (New Delhi, India) and Mount Sinai Elmhurst Services, (Elmhurst, New York).  Upon completion of his residency, Dr. Singh relocated to Florida and worked for several years before establishing Access Health Care, LLC in 2001, before the city of Spring Hill changed its name to Singh Hill.

In a recent meeting of health care executives, a concern was raised about the viability of an entity that manages risk-based contracts with Medicare Advantage products. The concern became acute when certain cases with catastrophic costs were reviewed. It may be important to address this concern and plan for such unforeseen events in order to mitigate the extremely high expenses entailed with such admissions.

To my understanding, there are various layers of protection and planning involved with risk-management in a global premium or percentage-of-premium setting for an IPA or physicians’ group. These are:

Regulatory:

The Federal government requires that a re-insurance be maintained for catastrophic cases. This is usually obtained from insurance companies that specialize in this industry. Self-insurance may also be obtained by IPAs that have more than 25,000 members. The numbers should be reviewed periodically to ascertain that the best possible rates and deductibles are maintained. Rates must be bid out across the industry and attempt must be made to sign up with policies that give optimum results. Attention must be paid to transplant and end-stage renal patients who are liable to incur heavy charges.

Reserve:

A good reserve would include at least 3-4 months of operational expenses for the company. Letters of credit must be maintained along with the reserve as the first line of defense against catastrophic expenses since this payout is immediate and does not wait for re-insurance, which is often adjudicated at the end of the year.

Risk Management and Operations:

In a bigger sense, every option in the company should come under the purview of risk management. However, specific to managed care, it is important to create a culture of cost-efficiency, compliant and evidence-based care that focuses on quality. MRA diagnoses must be compliantly documented and tracked to ensure that the premium is maintained optimally and appropriately. Star Ratings affect the premium of the plan, and it is critical to focus on HEDIS, CAHPS, and HOS.

Care Management, including utilization management, case management, and disease management, ensure that the expenses are managed the right way. Strong executive teams that have a sense of ownership, empowerment, and holding a stake in the company are critical. Continuity of care in the hospital setting or SNFs or ALFs or home-based patients via various contracted or employed providers ensures that patients do not fall through the cracks. Ensuring that patients with multiple visits to ERs or hospital discharges or high risk patients are treated aggressively and in a timely fashion can alleviate high costs. Part D expenses with brand drugs, too, can be addressed effectively to reduce recurring monthly expenses.

Rates:

Contract management is another critical component of the equation. The incentives and design benefits become important when lop-sided terms with health care entities are reviewed. Real-time data, analytics, and business intelligence on a timely basis would be important to track such rates and act on them in a nimble manner.

Recoveries:

A system to review claims contestation and cost re-allocation is important. If claims can be reviewed prior to payment by the payer, it is ideal. A close tracking of claims to ensure subrogation and duplicate payments are addressed helps reduce the liability of the organization and improve returns.

Retention:

Turnover of providers and patients is extremely expensive. Service and value-creation to both along with strong peer communication and community may be helpful. Incentives to providers need to be aligned with the overall goal of the company along with great service and care to patients. If retention and consolidation are managed well, the right growth strategy can then be established. Provider education (for both primary and specialist physicians) and mentoring with staff training on a constant basis creates the strongest bulwark against such fluctuations.

Revenue Management:

If the company is run on the correct principles and strong fundamentals, including the right systems, infrastructure, tight and adequate network development, platform maintenance along with reduction of inefficiencies and tightly linked information technology will ensure that the risk of unpredictable events can be mitigated even if never fully prevented. The revenue management cycle with auditing, billing, and transmission of claims is not the end of one’s work. The organization needs to ensure that the encounters reach the plan and eventually to CMS.

Relationship Management:

A strong and close-knit network is a deterrent against arbitrary or biased plan decisions to terminate contracts with the IPA or skew them in the plans’ favor. Stability of the organization eliminates the risk of losing contracts with the payers and increases negotiating power giving the ability to have better rates and preferred contracts.

Although these eight measures are not all-encompassing a vigilant review must be constantly kept and Andy Grove’s dictum seems very apt here: “Only the paranoid survive.”

The approach needs to be systematic, methodical, and consistent along with the understanding that those who do not fit in the culture of cost-effectiveness can no longer be part of the organization. The ability to move quickly and effectively can be very important in eliminating non-compliant staff or providers.

St. Petersburg College 6th Circuit Pro Bono Newsletter,
Spring 2015 Edition

Picture of AmyAmy Bhatt

Future Super Lawyer Amy Bhatt, who is also a contributing cartoonist and writer for The Thursday Report, is a straight-A student majoring in Paralegal Studies at St. Petersburg College. She also serves as the Editor of the SPC Legal Studies Society’s 6th Circuit Pro Bono Newsletter. Thanks to Amy and Faculty Advisor Dr. Rachel Bennett, Esquire for making this newsletter available to Thursday Report readers!

The spring edition of the newsletter contains several volunteer opportunities for attorneys. St. Petersburg College Legal Studies Society and Bay Area Legal Services, Inc. are looking for volunteers to participate in the Legal Clinic on Saturday, April 25th from 10 AM – 2 PM. Volunteer attorneys are needed to answer student’s legal questions concerning family, criminal, bankruptcy, landlord/tenant, and personal injury law.

The St. Petersburg Bar Association in partnership with the Pinellas County Urban League is also looking for volunteer attorneys to participate in the monthly “Ask A Lawyer…” panels. Can you answer legal questions? Do you have answers to questions about child support, divorce, social security, employment issues, bankruptcy, unfair arrests, wills, disabilities, or more? Contact Wendy Lane from the Pinellas County Urban League at wlane@pcul.org to volunteer. A schedule of monthly topics for the Ask a Lawyer panels can be found on Page 2 of the newsletter.

To download a PDF copy of the 6th Circuit Pro Bono Newsletter, please click here.

For more information, or to join the 6th Circuit Pro Bono Newsletter mailing list, please email Dr. Rachel Bennett at rachel.bennett@spcollege.edu.

Richard Connolly’s World
15 Body Language Blunders Successful People Never Make

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 a link to the articles.

This week, the article of interest is “15 Body Language Blunders Successful People Never Make” by Travis Bradberry. This article was featured on Forbes.com on March 12, 2015.

Richard’s description is as follows:

Our bodies have a language of their own, and their words aren’t always kind. Your body language has likely become an integral part of who you are, to the point where you might not even think about it.

If that’s the case, it’s time to start, because you could be sabotaging your career.

TalentSmart has tested more than a million people and found that the upper echelons of top performance are filled with people who are high in emotional intelligence (90% of top performers, to be exact.) These people know the power that unspoken signals have in communication, and they monitor their own body language accordingly.

What follows are the 15 most common body language blunders that people make and emotionally intelligent people are careful to avoid.

The 15 Most Common Body Language Blunders are:

  1. Slouching
  2. Exaggerated Gestures
  3. Watching the Clock
  4. Turning Away from Others
  5. Crossed Arms
  6. Inconsistency
  7. Exaggerating Nodding
  8. Fidgeting with your Hair
  9. Avoiding Eye Contact
  10. Eye Contact that’s Too Intense
  11. Rolling your Eyes
  12. Scowling
  13. Weak Handshakes
  14. Clenched Fists
  15. Getting Too Close

We can all learn from this article.

Please click here to read this article in its entirety.

Seminar Spotlight
University of Florida Tax Institute

UF Pics

The Florida Tax Institute, sponsored by the University of Florida Levin College of Law, will take place at the Grand Hyatt Tampa Bay in Tampa, Florida on April 22nd, 23rd, and 24th, 2015.

This program features top speakers on tax, business, and estate planning issues. It is designed to be practical, informative, engaged, and state of the art!

Legal credit (CLE) will be available for a variety of states with an ethics program. Accounting, CFP, CTFA, PACE, and Enrolled Agents credit has also been requested in all states for attendance at the Florida Tax Institute.

The agenda for the Florida Tax Institute is as follows:

Wednesday Chart

Thursday Chart

Friday Chart

Each attendee to the Florida Tax Institute will receive a complimentary commemorative book provided by Gassman, Crotty & Denicolo, P.A.

To register for the conference, please click here.

For more information, contact The Florida Tax Institute at admin@floridataxinstitute.org or by phone at (216) 241-3922.

Donate to the Stephen A. Lind Eminent Scholar Chair
by Professor Dennis Calfee

Lind

The Stephen A. Lind Eminent Scholar Chair in Federal Income Taxation is part of a group solicitation project to raise an endowed fund of $1.5 million for the Graduate Tax Program at the Levin College of Law. This Chair honors Professor Stephen Lind, who taught tax courses at the College from 1970 to 1998 and was one of the founding faculty members of the Graduate Tax Program.

The income from the endowed fund will be used to attract an Eminent Scholar in Taxation who is not a member of the College faculty at the time an offer is extended to occupy this chair. This Eminent Scholar will replace faculty members who have taught in the graduate tax program for many years. This Chair ideally will be occupied by someone who mirrors Steve both professionally and personally.

Contributions to this project qualify for a deduction under Section 170. Pledges can be over a five-year period or payable in any year in the five-year period.

Thank you, in advance, for your assistance with this project to honor Steve. He has touched and influenced so very many in a very positive way over his academic tenure. If you have any questions, please contact Professor Dennis Calfee at (352) 273-0911.

Once the required pledge level is reached, we can all gather for a celebration. Currently, the Stephen A. Lind Eminent Scholar Chair, Fund number F019521, held at the University of Florida Foundation, has nearly $400,000 in contributions and pledges. We are proud to be donors to this chair and the Calfee chair, which is pictured below.

Calfee final

You can make an online contribution to the Stephen A. Lind Eminent Scholar Chair in Federal Taxation by clicking here or by calling the Gift Processing office at 1-877-351-2377 or by giving your check directly to Professor Calfee at the Florida Tax Institute on April 22nd, 23rd, or 24th.

Humor! (or Lack Thereof!)

We are pleased to announce that at the Florida Tax Institute, Professor Dennis Calfee will sit at the dunking booth during the Ethics portion of the Conference. Those who discreetly duck out and donate $15 towards the Stephen A. Lind Chair will get the chance to dunk Professor Calfee!

Dennis Calfee - Dunk Tank.REVISED.FINAL

Please also be on the lookout at the Conference for unofficial commemorative signed t-shirts and inflatable gator ring toss memorabilia. It’s not the type of memorabilia that was important when we were at tax school, but what the heck?

*************************************

If I Had a Crummey Power
(excerpted from the never-to-be-performed Broadway musical Tax Attorney on the Roof)

By Kristen Sweeney-stein and Alan Gassman (but mostly Kristen)

Mr. Koskinen, you levy many, many taxes on trusts.
I realize, of course, that we all must pay some taxes.
But it’s no great treat, I tell you!
So, what would be so terrible if I made one little gift?”

If I had a Crummey Power,
Yubby dibby dibby dibby dibby dibby dibby dum.
All day long I’d biddy biddy bum.
Gifting annually whenever I can.
It’s that I’ve already worked hard.
Ya ha deedle deedle, bubba bubba deedle deedle dum.
To become a biddy biddy rich,
Idle-diddle-daidle-daidle man.

I’d draft a document up with beneficiaries by the dozen,
All with the right to withdraw.
I’d include a clause about not holding back the trust,
So that everybody could get their distributions,
Thanks to the history of Kohlsaat,
If there is a problem, the beth din will be just.

If I had a Crummey Power,
Yubby dibby dibby dibby dibby dibby dibby dum.
All day long I’d biddy biddy bum.
Gifting annually whenever I can.
It’s that I’ve already worked hard.
Ya ha deedle deedle, bubba bubba deedle deedle dum.
To become a biddy biddy rich,
Idle-diddle-daidle-daidle man.

If I could make tax-free gifts, it would give my children free time
To sit in the synagogue and pray.
They could visit Brooklyn instead of only call.
And I’d secure their future with my own hard work, caring for them every single day.
That would be the sweetest thing of all.

If I had a Crummey Power,
Yubby dibby dibby dibby dibby dibby dibby dum.
All day long I’d biddy biddy bum.
Gifting annually whenever I can.
It’s that I’ve already worked hard.
Ya ha deedle deedle, bubba bubba deedle deedle dum.
To become a biddy biddy rich,
Idle-diddle-daidle-daidle man.

Federal taxes, I save them where I can,
The judge decreed I should be what I am.
Now did it spoil some vast eternal plan?
That I have stayed a wealthy man.

**********************************

We regret that the rest of the humor for this week’s Thursday Report has been censored by the National Newsletter Censoring Board (NNLCB.) The NNLCB is not to be confused with the National Nonsense and Lunacy Control Board, also known as the NNLCB, of which we are a proud member.

Upcoming Seminars and Webinars

LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY – PART II.

This webinar is a continuation of the How to Handle Stressful Matters in an Ethical Way webinar that was presented by Dr. Rao and Alan Gassman on February 19, 2015. This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced.

See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well.

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: April 21, 2015 | 12:30 p.m.

Location: Online webinar

Additional Information: Please click here to register or email Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS. 

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE 

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

Additional Information:  For more information, please visit http://estateplanning.avemarialaw.edu/ or email Alan Gassman at agassman@gassmanpa.com.

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES. 

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here http://www.flprobatelitigation.com/, and the many vary useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE. This luncheon will qualify for 2 CLE credits.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: Italy Today | 6743 Main Street, Miami Lakes, FL 33014

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

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LIVE UNIVERSITY OF FLORIDA PROFESSIONAL ACCELERATION WORKSHOP:

Alan Gassman will present a five hour workshop on legal practice and making the most of your legal practice to Professor Dennis Calfee’s summer workshop class. Experienced professionals are also welcome to attend by making a $150 donation to the Lind Chair.

Date: To Be Determined

Location: University of Florida | 2500 SW 2nd AE, Gainsville, FL 32611

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

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LIVE WEBINAR:

Alice Rokahr, President, Trident Trust Company (South Dakota) Inc., and Alan S. Gassman will present a free, 30-minute webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTS – DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

Date: June 9, 2015 | 12:30 pm

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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.

Date: August 22, 2015 | 9:00 AM – 5:00 PM

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 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: 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 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

RUTH ECKERD HALL PLANNING GIVING COUNCIL MEETING

This exciting two-part event will feature an educational presentation and a networking session. Attorneys and CPAs may receive CLE and CPE credit for attending the educational presentation.

The educational presentation will be an entertaining, interactive workshop led by Jack Halloway, a well-known improvisational coach and actor. He is directing “The Complete Works of William Shakespeare (Abridged)” and will share some thoughts on how Shakespeare used law, lawyers, and money in his plays. Some improv will also be included.

Jack Halloway’s presentation will be followed by a social networking and info session. Enjoy some wine and time with fellow Planned Giving enthusiasts!

Everyone who brings a potential donor or new member to the Planning Giving Council will be entered into a raffle for 2 tickets to an upcoming show.

Date: April 21, 2015 | Educational Presentation begins at 4:30 PM | Networking sessions begins at 5:30 PM

Location: The New Murray Theatre at Ruth Eckerd Hall

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com. RSVPs may be sent to Maribeth Vongvenekeo at maribeth@gassmanpa.com, Suzanne Ruley at sruley@rutheckerdhall.net, or Kristy Philippe at kristy.philippe@ms.com.

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LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please visit http://www.floridataxinstitute.org/agenda.shtml for a complete schedule or contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

April Applicable Rates

The Thursday Report – 4.9.15 – The Lind Chair and More Naked Truth About See-Through Trusts

Posted on: April 9th, 2015

Proper Treatment of Army Reserve Personnel by Alyssa Perez

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron, Part VI

Seminar Spotlight – University of Florida Tax Institute

Donate to the Stephen A. Lind Eminent Scholar Chair

Richard Connolly’s World – What’s New with Law School Programs

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.

Proper Treatment of Army Reserve Personnel
by Alyssa Perez

Many companies hire military personnel while they are at home. But what happens when they are once again called upon to perform their military duties?  What is the obligation of the employer? 

What is a reservist?

A reservist is a person who is a member of a military reserve force.  They are otherwise civilians, and hold careers outside of the military.  All five branches of the United States armed forces have their own Reserve Forces, whose reservists can be called upon to serve anywhere at any time.  During times of peace, the Reservists spend one weekend a month and two weeks a year annually in training.  Otherwise, the Reservists are available to continue working at their respective employers.

What federal law allows reservists to maintain employment, and when was it enacted?

The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) is a federal law that establishes the rights and responsibilities for the uniformed services members and their civilian employers.  This law is intended to ensure that persons who serve or have served in the Armed Forces, Reserves, National Guard or other uniformed services are (1) not disadvantaged in their civilian careers because of their service; (2) are promptly reemployed in their civilian jobs upon their return from duty; and (3) are not discriminated against in employment based on past, present, or future military service.1 USERRA protects the job rights of individuals who voluntarily or involuntarily leave employment positions to participate in the uniformed services.  It also prohibits employers from discriminating against past and present members of the uniformed services as well as their applicants.2

The USERRA supercedes any state law, contract, agreement, policy or other matters that reduces, limits, or eliminates in any manner any right or benefit provided in the USERRA.3  Therefore, states cannot enact laws that would limit uniformed servicepeople from obtaining their civilian jobs nor can states discriminate against them.

What if the reservist volunteers for more than the required duty?

The USERRA protects the civilian careers of uniformed persons regardless of whether or not they voluntarily or involuntarily left their employment positions to serve.  However, reservists do need to comply with section 4312 of the USERRA, which provides the reemployment rights of persons who serve in the uniformed services.

First, the reservist must give advance written or verbal notice of such service to their employer.  Second, the cumulative length of absence and of all previous absences from a position of employment does not exceed five years. Third, the reservist should submit an application for reemployment to the employer.4  If there is a military necessity for the reservist, or giving notice is otherwise impossible or unreasonable, then it is not a requirement.  However, the reservist must notify the employer of their intent to return to a position of employment with the employer upon completion of a period of service.5  If the reservist fails to report or apply for reemployment within the appropriate period, it will not automatically forfeit their entitlement to the rights and benefits of reemployment, but instead will subject the reservist to discipline regarding the employer’s conduct code.

A reservist has properly applied for reemployment if the application is timely; the person has not exceeded service limitations (i.e. 5 years); and the person’s entitlement to the benefits has not been terminated due to a separation from a uniformed service (i.e. discharge or dismissal).6 Further, a reservist is entitled to the position of employment in which the person would have been employed if the continuous employment of such person with the employer had not been interrupted by their service. If, after such reemployment, documentation becomes available that establishes that the reservist did not meet those requirements, the employer of such person may terminate the employment of the person.

An employer will violate the USERRA if the employer would not have taken an adverse employment action but for the employee’s military service or obligation.7  An employer will not be able to escape liability by claiming it was discriminating against an employee on the basis of his or her absence when that absence is for military service.  However, if the reservist does not place the employer on notice prior to leaving the job for military service, the employer has a right to terminate them.

In the United States Federal Court of Appeals, the Erickson court held that the United States Postal Services’s removal of an employee for excessive use of military leave constituted discrimination under USERRA; however, because the employee failed to timely request reemployment, the termination could potentially be lawful.8  If an employee makes a discrimination claim under USERRA, they bear the initial burden of showing by a preponderance of the evidence that their military service was a substantial or motivating favor in the adverse employment action.9  If, however, the employer can demonstrate that it would have taken the same action without regard to the employee’s military service, the termination is lawful.10  Congress enacted USERRA in part to make clear that discrimination in employment occurs when a person’s military service is a “motivating factor,” and not to require that military service be the sole motivating factor for adverse employment action. The Court held that because USPS did not provide any other factors for adverse employment action besides plaintiff’s military duty, the court was discriminating under USERRA.

The plaintiff in Erickson, however, did not comply with USERRA rules regarding reemployment application.  Section 4312 of the USERRA provides that when a person accepts duty for less than 31 days, they must report to the employer no later than the beginning of the first full calendar day following the completion of the period of service and that period will expire eight hours following the transport of the person to his or her place of residence.11  In the case of a person who performs uniformed services for more than 30 days but less than 181 days, they must submit an application for reemployment no later than 14 days after the completion of their service.  If the person performs uniformed services for more than 180 days, they have 90 days to submit their application for reemployment.12  Therefore, if a reservist does not file their application for reemployment as required under the USERRA, it is proper to take adverse employment action against the reservist.

Conclusion:

Employers should not terminate employees simply because of long leaves of absence due to uniformed services.  Whether the reservist chooses to perform their duties voluntarily or involuntarily is irrelevant.  It is up to the employee to ensure that they too are in compliance with the USERRA.  The reservist must give proper notice to the employer that they are leaving for uniformed service duty, and must, upon completion of that service, apply for reemployment as required by statute.  If the reservist fails to give notice or apply for reemployment, the employer is able to take adverse employment action.

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1Pub.L. 103–353, Oct. 13, 1994, codified as amended at 38 U.S.C. §§ 4301–4335.
2Id.
3Id at § 4302(b).
4Id at § 4312(a)-(b).
5Id at § 4312(e).
6Id.
7Erickson v. USPS, 571 F.3d 1364 (Fed. Cir. 2009).
8Id.
9See Sheehan v. Dep’t of the Navy, 240 F.3d 1009, 1013 (Fed.Cir.2001).
10Id at 1013.
11§ 4312(e).
12Id.

Planning for Ownership and Inheritance of Pension
and IRA Accounts and Benefits – Part VI

by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see previous editions of this presentation, please click below:

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

IRA SERIES CHAPTER 6

IRA and Plan Benefits Payable to Trusts

Probably the most complicated and misunderstood area of IRA and retirement plan structuring involves the complex labyrinth of rules that will apply when the beneficiary is one or more trusts or trust systems. We have provided an easily understandable system to help planners understand what the rules are and which trusts they apply to.

Illustration 3.0 below is a summary of which rules apply to each kind of see-through trust, and then the rules are explained in further but efficient detail below.

IRA Chart 5

This week, we will be looking at rules that apply to conduit trusts only and toggling from a conduit trust to an accumulation trust (and vice versa.)

I. RULES THAT APPLY TO CONDUIT TRUST ONLY:

A. Income must be paid to the trust beneficiary upon receipt by the Trustee.

The trustee has no power to accumulate distributions from the IRA/Plan, and any distribution from the IRA/Plan must be paid directly to the trust beneficiaries[1].

B. Remainder beneficiaries do not count for Required Minimum Distribution Purposes.

Designated Beneficiaries are treated as sole direct beneficiaries of the IRA under a Conduit Trust.  A Conduit Trust can thus have beneficiaries older than the desired Designated Beneficiary, Non-Persons as beneficiaries and unlimited power of appointment rights, so long as all distributions from the IRA/Plan to the trust are required to be paid to the Designated Beneficiary upon receipt from the IRA/Plan during his or her lifetime by trust during his or her lifetime.  Remainder beneficiaries are disregarded as mere potential successors and if older than the designated beneficiary would not cause Required Minimum Distributions to be paid out over a shorter life expectancy.

C. Conduit Trusts can pay trust expenses.

The Designated Beneficiary is treated as the sole beneficiary for Required Minimum Distribution purposes regardless of whether the Conduit Trust can pay expenses.  PLRs 200432027 and 200432029 concluded that the trust was “a valid, conduit, see-through trust” even though the trust assets could be used to pay expenses.[2]

D. Conduit Trust Flow Chart

See Illustration 3.3 below to determine the applicable Payout Method.

Illustration 3.3

IRA Chart 4

II. TOGGLING FROM A CONDUIT TRUST TO AN ACCUMULATION TRUST (AND VICE VERSA?)

Private Letter Ruling 200537044 confirmed that it is possible to “Toggle” what would have been a Conduit Trust into an Accumulation Trust on or before the Designation Date (September 30th of the calendar year of death of the Plan Participant).  The conversion may only occur once, regardless of its direction. This can be accomplished by providing powers to independent Trust Protectors named under the trust agreement, if the exercise of such powers will be considered a disclaimer under state law that will result in the disclaimed powers and rights being considered as never having existed (i.e., void ab initio).  The Trust Protectors would have the power to void the provision in the trust agreement that requires that all Required Minimum Distributions be currently distributed to the Designated Beneficiary of the trust.  This can enable the trustee to accumulate IRA/Plan distributions in trust, and distribute such funds according to his or her discretion.

The Toggle provision described above will typically provide that the following changes will apply when the Toggle switch is flipped:

  1. Remove any non-person beneficiary as a beneficiary of the trust.
  2. Remove any possible individual beneficiary older than the Designated Beneficiary as a possible beneficiary of the trust.
  3. Restrict any power of appointment over trust assets to be exercisable solely in favor of individuals younger than the Designated Beneficiary.
  4. A non-generation skipping exempt Conduit Trust (where IRA/Plan distributions are all paid to the Designated Beneficiary) need not limit the exercise of any power of appointment to individuals younger than the Designated Beneficiary.

For example, a trust that provides that all IRA/Plan distributions are to be paid to the Surviving Spouse, and that a charity is a permissible beneficiary, could be changed by having the spouse disclaim the right to receive all IRA/Plan distributions and any power of appointment that he or she has over the IRA/Plan distributions (without disclaiming the right to receive amounts as needed for health, education, maintenance and support), and the charity can be paid out in full, or paid enough so that it agrees to no longer be a beneficiary as of the Designation Date.   If the other requirements for an Accumulation Trust are met, then this will be considered to have been successfully toggled to an Accumulation Trust.

Toggling from a Conduit Trust to an Accumulation Trust has several benefits, including creditor protection and asset preservation, especially if the beneficiary is young, unsophisticated, or may have creditor, spendthrift, or divorce risk factors. Several states (including Florida) provide statutory creditor protection for inherited IRAs/Plans held by beneficiaries in their individual name.  However, any distribution from a retirement plan will not be exempt from the beneficiary’s creditors in some states.  As further discussed in Chapter One, Section I (G)(1) of this handbook, Florida Statute Section 222.21(2)(c) provides that any money or other assets, or any interest in any fund or account that is creditor exempt, does not cease to be exempt by reason of death or a direct transfer or eligible rollover to an inherited IRA/Plan. This is one reason why using an Accumulation Trust will often be favored over leaving an IRA/Plan outright to a Designated Beneficiary or to a Conduit Trust.

Conversely, toggling from an Accumulation Trust to a Conduit Trust could possibly occur by giving Trust Protectors the ability to mandate distribution of all Required Minimum Distributions made to the trust to a specified Designated Beneficiary. This could be beneficial in situations where a beneficiary, who once had creditor issues, is free of such issues within 9 months after the death of the Plan Participant.  However, the authors are not aware of any ruling or precedential authority which would permit the toggling of an Accumulation Trust into a Conduit Trust, and the IRS might be less inclined to approve such toggling and may claim that this constitutes the addition of beneficiaries or trust provisions, as opposed to a disclaimer or removal.

Caution should be exercised when employing the toggling strategy. The endorsement of this strategy by the IRS has occurred only under Private Letter Rulings, which are not precedential except as to the requesting party.  Thus, it is possible that the IRS could take the position that toggling powers held by Trust Protectors could cause a Conduit Trust to be an Accumulation Trust, even when not “toggled” on the basis of asserting that it is possible that distributions could be made to a person other than the Designated Beneficiary of the Conduit Trust before pulling the Toggle switch. This is one reason to not have beneficiaries other than individuals the same or younger ages than the intended “Designated Beneficiary.”[3]

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[1] “All amounts distributed from A’s account in Plan X to the trustee while B is alive will be paid directly to B upon receipt by the trustee of Trust P…no amounts distributed from A’s account in Plan X to Trust P are accumulated in Trust P during B’s lifetime for the benefit of any other beneficiary.” Reg. § 1.401(a)(9)-5, A-7(c)(3), Example 2
[2] PLR 200432027 – 200432029 held specifically that the trust was a valid conduit see-through trust and that “The use of Trust T to pay expenses associated with the administration of Trust T (in effect, expenses associated with the administration of the Trust T assets for the benefit of Taxpayers B, C, and D) or the possibility, under these facts, that Trust T assets may be required to be used to pay an estate taxes due…does not change this conclusion.”
[3] Howard M. Zaritsky’s “The Year in Review” annual write-up for Bloomberg/BNA Tax Management Estates, Gifts & Trusts Journal includes the following discussion of Private Letter Ruling in Footnote #2:

Private letter rulings (PLRs) and technical advice memoranda (TAMs) are not legal precedents.  §6110(k)(3).  They may, however, show how the Service might address a similar case, and they have been cited and discussed by several courts.  See, e.g., Wolpaw v. Commissioner, 47 F.3d 787 (6th Cir. 1995), rev’g T.C. Memo 1993-322 (taxpayers can rely on 20-year-old PLR, absent definitive regulations); Estate of Blackford v. Commissioner, 77 T.C. 1246 (1981) (noting that the Service litigation position was contrary to a prior PLR); Xerox Corp. v. United States, 656 F.2d 659 (Ct. Cl. 1981) (stating that PLRs are useful in ascertaining the scope of the doctrine adopted by the Service and demonstrating its continued and consistent application by the Service); Fanning v. United States, 568 F. Supp. 823 (E.D. Wash. 1983) (noting that a distinction between the facts of the instant case and those of prior cases had been cited in a TAM, and that TAMs are often relied upon by the courts).

Seminar Spotlight
University of Florida Tax Institute

The Florida Tax Institute, sponsored by the University of Florida Levin College of Law, will take place at the Grand Hyatt Tampa Bay in Tampa, Florida on April 22nd, 23rd, and 24th, 2015.

This program features top speakers on tax, business, and estate planning issues. It is designed to be practical, informative, engaged, and state of the art!

Legal credit (CLE) will be available for a variety of states with an ethics program. Accounting, CFP, CTFA, PACE, and Enrolled Agents credit has also been requested in all states for attendance at the Florida Tax Institute.

The agenda for the Florida Tax Institute is as follows:

Wednesday Chart

Thursday Chart

Friday Chart

Each attendee to the Florida Tax Institute will receive a complimentary commemorative book provided by Gassman, Crotty & Denicolo, P.A.

To register for the conference, please click here.

For more information, contact The Florida Tax Institute at admin@floridataxinstitute.org or by phone at (216) 241-3922.

Donate to the Stephen A. Lind Eminent Scholar Chair
by Professor Dennis Calfee

Lind

The Stephen A. Lind Eminent Scholar Chair in Federal Income Taxation is part of a group solicitation project to raise an endowed fund of $1.5 million for the Graduate Tax Program at the Levin College of Law. This Chair honors Professor Stephen Lind, who taught tax courses at the College from 1970 to 1998 and was one of the founding faculty members of the Graduate Tax Program.

The income from the endowed fund will be used to attract an Eminent Scholar in Taxation who is not a member of the College faculty at the time an offer is extended to occupy this chair. This Eminent Scholar will replace faculty members who have taught in the graduate tax program for many years. This Chair ideally will be occupied by someone who mirrors Steve both professionally and personally.

Contributions to this project qualify for a deduction under Section 170. Pledges can be over a five-year period or payable in any year in the five-year period.

Thank you, in advance, for your assistance with this project to honor Steve. He has touched and influenced so very many in a very positive way over his academic tenure. If you have any questions, please contact Professor Dennis Calfee at (352) 273-0911.

Once the required pledge level is reached, we can all gather for a celebration. Currently, the Stephen A. Lind Eminent Scholar Chair, Fund number F019521, held at the University of Florida Foundation, has nearly $400,000 in contributions and pledges. Gassman Denicolo and Crotty are proud to be donors to this and to the Calfee chair, which is pictured below.

Calfee final

You can make an online contribution to the Stephen A. Lind Eminent Scholar Chair in Federal Taxation by clicking here or by calling the Gift Processing office at 1-877-351-2377.

Richard Connolly’s World
What’s New with Law School Programs

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 a link to the articles.

This week, the article of interest is “Law Students Leave Torts Behind (for a bit) and Tackle Accounting” by Elizabeth Olson. This article was featured in The New York Times DealBook on February 12, 2015.

Richard’s description is as follows:

A group of 170 Brooklyn Law School students cut short their winter break and headed back to campus in January for an intensive three-day training session. But not in the law.

Instead, they spent the “boot camp” sessions learning about accounting principles, reading financial statements, valuing assets and other basics of the business world – subjects that not long ago were thought to have no place in classic law school education.

Law schools as diverse as Brooklyn, Cornell, and the University of Maryland are offering focused sessions that aim to bring students up to speed on business practicalities.

Last year, Cornell University Law School started a similar business-focused workshop, called “Business Concepts for Lawyers.” The idea came from a Harvard Law School survey of employers released in February 2014, said Lynn A. Stout, a professor of corporate and business law at Cornell.

The 124 firms that responded to the survey called “What Courses Should Law Students Take? Harvard’s Largest Employers Weigh In,” listed accounting, financial statement analysis, and corporate finance as the best courses to prepare lawyers to handle corporate and other business matters.

Please click here to read this article in its entirety.

The second article of interest this week is “Law School Program Emphasizes Practical Skills” by Joe Palazzolo. This article was featured in The Wall Street Journal on January 4, 2015.

Richard’s description is as follows:

In recent years, as more clients have refused to pay for young lawyers to learn on the job, many law schools have tinkered with their curricula, making courses more practical and less theoretical as graduates compete for fewer openings.

Most of these efforts are too new to assess. But a study to be released this month suggests that the University of New Hampshire’s Daniel Webster Scholar Honors Program, launched in 2005, has largely succeeded in turning out new lawyers who are ready to practice law when they graduate.

Please click here to read this article in its entirety.

Humor! (or Lack Thereof!)

Watt

In the News
by Ron Ross

The NSA is now listening in on the string tied between two tin cans. They’ve discovered that Bobby was totally lying when he said he kissed Sally in the treehouse.

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100 Year Old Defendant Behind on Taxes Tries Stalling Tactics Against the US Government – “One of us is going to go eventually,” he said. “I’m betting it’s them. But I’m a winner either way.”

Upcoming Seminars and Webinars

LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Kenneth Crotty, and Christopher Denicolo will be presenting a not-so-free 90-minute webinar for Bloomberg BNA Tax & Accounting on WHY FLORIDA IS DIFFERENT – IMPORTANT THINGS THAT ESTATE AND TAX PLANNING PROFESSIONALS NEED TO KNOW.

Date: Thursday, April 16, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY – PART II.

This webinar is a continuation of the How to Handle Stressful Matters in an Ethical Way webinar that was presented by Dr. Rao and Alan Gassman on February 19, 2015. This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced.

See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well.

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: April 21, 2015 | 12:30 p.m.

Location: Online webinar

Additional Information: Please click here to register or email Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS. 

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE 

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

Additional Information:  For more information, please visit http://estateplanning.avemarialaw.edu/ or email Alan Gassman at agassman@gassmanpa.com.

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES. 

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here, and the many vary useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE. This luncheon will qualify for 2 CLE credits.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: Italy Today | 6743 Main Street, Miami Lakes, FL 33014

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

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LIVE WEBINAR:

Alice Rokahr, President, Trident Trust Company (South Dakota) Inc., and Alan S. Gassman will present a free, 30-minute webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTS – DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

Date: June 9, 2015 | 12:30 pm

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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.

Date: August 22, 2015 | 9:00 AM – 5:00 PM

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:

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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

RUTH ECKERD HALL PLANNING GIVING COUNCIL MEETING

This exciting two-part event will feature an educational presentation and a networking session. Attorneys and CPAs may receive CLE and CPE credit for attending the educational presentation.

The educational presentation will be an entertaining, interactive workshop led by Jack Halloway, a well-known improvisational coach and actor. He is directing “The Complete Works of William Shakespeare (Abridged)” and will share some thoughts on how Shakespeare used law, lawyers, and money in his plays. Some improv will also be included.

Jack Halloway’s presentation will be followed by a social networking and info session. Enjoy some wine and time with fellow Planned Giving enthusiasts!

Everyone who brings a potential donor or new member to the Planning Giving Council will be entered into a raffle for 2 tickets to an upcoming show.

Date: April 21, 2015 | Educational Presentation begins at 4:30 PM | Networking sessions begins at 5:30 PM

Location: The New Murray Theatre at Ruth Eckerd Hall

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com. RSVPs may be sent to Maribeth Vongvenekeo at maribeth@gassmanpa.com, Suzanne Ruley at sruley@rutheckerdhall.net, or Kristy Philippe at kristy.philippe@ms.com.

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LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please visit http://www.floridataxinstitute.org/agenda.shtml for a complete schedule or contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

April Applicable Rates

The Thursday Report – 4.2.15 – The Naked Truth About See-Through Trusts

Posted on: April 2nd, 2015

1933 Reasons Not to Buy Gold Coins

BP Claims Update: Policy 495, Part II

The Naked Truth: Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron, Part V

Richard Connolly’s World – Celebrity Estate Round-Up, Part II

Thoughtful Corner – Pilates – Fitness’s Best Kept Secret by Emily Wenzel

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.

1933 Reasons Not to Buy Gold Coins
by Alyssa Perez, Brandon Ketron, and Alan Gassman

What’s so special about pre-1934 gold coins? Apparently nothing, but this has not prevented many dealers and others in the market of gold coins from violating FTC rules and leaving investors and collectors to believe that there is a legal difference between pre- and post-1933 gold coins.

Thursday Report writers Alyssa Perez, Brandon Ketron, and Alan Gassman provide us with the following coverage:

EXECUTIVE SUMMARY:

A great number of investors, both sophisticated and unsophisticated, bought gold coins and bullion as it increased 465% in value from April 2001 to April 2011; which is an average rate of return of 46.5% per year. [i]  It is noteworthy, however, that in 2013 alone, gold prices fell  28% while the S&P Stock Index returned 32%, including dividends.[ii]  Some sophisticated investors have concluded that if the world economy shuts down, having gold on hand will be as good as anything, while others believe that holding onto gold makes almost no sense at all. In any event, the 1933 gold law misconception is one of the reasons that many people are clutching old gold coins for no good reason, and clients should not assume that it is an appropriate investment for any more than a very small portion of their portfolio.

Gold’s inability to accrue interest, coupled with the fact one must actually pay for its safe storage, undoubtedly has played a factor.[iii] In fact, the Wall Street Journal reported that those who purchased gold within the last four years (without distinguishing what type) lost money.[iv] In this day and age, gold is just a tough sale for those companies that were making significant money preying on naivety and a sense of panic that many not so well educated investors have experienced.

In order to combat these inescapable truths, many within the precious metals industry have found a way to profit by scamming unsophisticated buyers. A grandiose hoax—one that has long flooded cable television’s airwaves—continues to be used today.

The fact is that gold coins predating 1933 are not more “collectible,” or “valuable,” based solely on the fact that they were created before this date. The outdated Executive Order that allowed the federal government to confiscate citizens’ gold is clearly old news. Many laws have since replaced it and allowed for the attainment and enjoyment of any and all gold coins by any citizen, not just by “collectors.” An American “collectible” gold coin is worth only as much as its weight in gold—do not let the scammers convince you otherwise.

FACTS:

The government effectively confiscated gold coins in 1933, in a law that continued through 1969 and grandfathered pre-1933 gold coins.  Legislation in 1975 made all of this history irrelevant, yet many laymen and some advisors believe that pre-1933 coins have some sort of grandfathered legal status, which is absolutely not the case.  However, local precious metal firms, coin dealers, and banks supply hundreds of people with historical gold coins at prices that greatly exceed their melt value on the false basis that the federal government may, once again, confiscate gold coins. The sellers of numismatic gold coins claim that the holder can save gold coins from confiscation by buying coins struck before 1933. No current federal law or Treasury Department regulation supports any of these claims. In fact, the Federal Trade Commission (“FTC”) released an article warning against the scam of increased prices and government confiscation conspiracy theories.[v]

Where did this myth come from? President Franklin Delano Roosevelt issued an executive order on April 5, 1933 requiring that all persons in possession or in control of gold coins, bullions, or certificates, turn them in to any Federal Reserve Bank, or any branch or agency thereof.[vi] Roosevelt thereby effectively seized any gold bullion and coin that was not “rare and unusual.” While the Order never defined “rare and unusual,” it became an accepted practice that any gold coin minted prior to 1933 was exempt from the 1933 seizure.

After many ineffective Treasury regulations throughout the next thirty years, the practicality of banning gold ownership had ended. “On April 22, 1969, the [US] Treasury . . . issued rules and regulations . . . that eliminated all licensing requirements for the importation of gold coins produced prior to 1934.”[vii] The Treasury defined “rare coins” as such: “‘Gold coins made prior to 1934 [are] considered to be of recognized special value to collectors of rare and unusual coin.’”[viii]  Additionally, the Treasury stated that “‘[gold coins] of recognized special value to collectors of rare and unusual coin may be acquired, held, and transported within the United States without the necessity of holding a license therefor.’” Although private gold ownership was banned in 1933, following the 1969 amendments, those engaged in the scholarly pursuit of the study of gold coins were protected. Moreover, the Treasury did not intend to provide a loophole to private citizens who wished to hoard gold for its monetary value, and provided that: “‘gold, as a store of value, can be held only by the government and that private citizens and entities in the United States can acquire gold only for legitimate and customary industrial, professional, and artistic uses.’”[ix]

All of these rules and regulations, however, became moot on January 1, 1975 when President Gerald Ford signed a law allowing US citizens to privately own gold.[x] Private gold ownership was once again legal and has been ever since.

The issue now is that many precious metal firms maintain that US gold coins minted prior to 1933 are “collectible” and therefore not subject to any future gold confiscations.[xi] These firms claim that federal law allows the federal government, in times of national crisis, to confiscate gold coins, yet nothing in the law or Treasury Department regulations support this argument.[xii] The myth stems from the now-extinct Executive Order of 1933, and firms still use this law today to promote the sale of their overpriced “rare, collectible” gold coins.[xiii]

CMI Gold & Silver Inc. proffers:

Many gold and silver dealers foster the circulation of many myths, misunderstandings, and outright lies about the purchase and sale of [precious metals]. Generally, these misconceptions and falsehoods promote the notion that the government may again call in gold as it did in 1933 . . . . By cultivating such fears in investors, unscrupulous firms can sell high-priced (and nearly always over-priced) coins with greater margins of profit. Investors who believe these stories invariably pay too much or buy the wrong coins.[xiv]

In line with this claim, the FTC encourages investors to compare pricing before making a purchase, and informs consumers that there is no federal law or regulation supporting any claim that the federal government may someday, somehow, confiscate gold coins once again.[xv] In 2010, the FTC presented to the Subcommittee on Commerce, Trade, and Consumer Protection (of the Committee on Energy and Commerce in the US House of Representatives), a statement on The Precious Coins and Bullion Disclosure Act. The FTC acknowledged the scam artists who falsely tout “coins and precious metals as low-risk, high-yield investments to hedge against the economic downturn and fears of a declining [ ] dollar.”[xvi] These marketers fail to disclose the hidden mark-ups and premiums added onto the purchase of the coin, and thereby “divert consumers from purchasing investment opportunities from legitimate dealers.”[xvii] High inflation rates in the 1980s led to numerous enforcement actions brought against various operators.[xviii] “The FTC has brought 17 cases against companies that sold overpriced and/or misgraded historic coins for investment purposes.”[xix] These dealers sold coins with mark-ups as high as 100 to 300% over the market price, and made return on the investment impracticable.[xx] With the FTC stepping in, consumers have become more educated in understanding the differences among their investments.

COMMENT:

The long-lived tale that pre-1933 gold US coins are more valuable than newer coins, due to the older ones forever being exempt from government confiscation, is nothing short of a full-blown scam. Currently, coins predating 1933 may sell for more because of a continuing falsity being distributed by many within the precious metals industry (that they are “collectible,” and thereby exempt from any federal taking); however, these “rare coins” will only ever produce a profit more than their post-1933 counterparts, if, and when, the federal government once again calls for a nationwide confiscation of all gold coins minted after 1933. The fact is that there is no law, whatsoever, that gives credibility to these claims. Moreover, it is clear that the intention of the federal government is to continue to allow private citizens (not just collectors) to own gold coins, regardless of their rarity, collectiveness, or date of production. Attempts to sell these “collectible” coins for above-market prices on the basis of outdated “law” is a sham of tremendous proportion.

For charts on the real rate of return on gold, please visit http://www.usagold.com/publications/Mar2015R&O.html.

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[i] Richard Salsman, The Bank Runs of the Early 1930s and FDR’s Ban on Gold, Forbes (Apr. 6, 2011), http://www.forbes.com/sites/richardsalsman/2011/04/06/the-bank-runs-of-the-early-1930s-and-fdrs-ban-on-gold/
[ii] Tatyana Shumsky. Gold vs. Stocks: The 10-Year Winner is… Wall St. J. (Nov. 18, 2014, 3:44 PM EDT), http://blogs.wsj.com/totalreturn/2014/11/18/gold-vs-stocks-the-10-year-winner-is/. (Investors who bought gold in the years 2010 to 2014 and didn’t sell it are carrying losses, while those who went with riskier stock investments are likely sitting on gains.)
[iii]  Id.
[iv] Id.
[v] Federal Trade Commission, Investing in Gold, Consumer Information (May 2011), http://www.consumer.ftc.gov/articles/0134-investing-gold.
[vi] Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates, Exec. Order No. 6102, § 2 (1933).
[vii] Confiscate This!, Only Gold (Aug. 24, 2002), http://www.onlygold.com/articles/ayr_2002/CONFISCATE_THIS(August_24_2002).asp.
[viii]  Id.
[ix] Id.
[x]  Pub. L. No. 93-373 (Aug. 14, 1974).
[xi] Gold Confiscation Myths, CMI Gold & Silver Inc., http://www.cmi-gold-silver.com/ gold-confiscation-1933/ (last visited Mar. 27, 2015). (Headquartered in Phoenix, Arizona, CMI Gold & Silver Inc. is one of the oldest gold and silver dealers in the United States and has played a major role in introducing investors to the gold and silver markets.)
[xii]  Id.
[xiii] Id.
[xiv] Id.
[xv] Investing in Gold, supra note 2. The FTC further notes in their consumer report that “if you are interested in buying gold, do some digging before investing.  Some gold promoters don’t deliver what they promise, and may push people into an investment that isn’t right for them.” Id.
[xvi] Prepared Statement of the FTC on The Precious Coins and Bullion Disclosure at 1–2 (2010), available at https://www.ftc.gov/sites/default/files/documents/public_statements/ prepared-statement-federal-trade-commission-precious-coins-and-bullion-disclosure-act/ 100923coinsbulliamact.pdf.
[xvii] Id. at 2.
[xviii] Id. at 2–3.
[xix] Id. at 3–4.
[xx] Id. at 4.

BP Claims Update: Policy 495, Part II
by John Goldsmith and Alan Gassman
with assistance from Brandon Ketron and Noah Fischer

John Goldsmith recently appeared on a webinar with Alan Gassman to discuss the claims filing deadline and the various industries impacted by the accrual requirements.

This webinar can be viewed by clicking here.

To see Part I of this article, please click here.

If a claim is determined to be unmatched, Policy 495 provides seven methodologies that a claim administrator uses to achieve sufficient matching. The methodology used depends on the type of industry the claimant is assigned. The methodologies are as follows:

  1. Annual Variable Margin Methodology (AVM)
  2. Construction Claim Methodology
  3. Agricultural Claim Methodology
  4. Educational Institution Claim Methodology
  5. Professional Service(s) Claim Methodology
  6. Failed Businesses and Failed Start-Up Businesses
  7. Start-Up Businesses

Non-Profits

In November 2012, the BP Claims Administrator issued regulations which said that for non-profit organizations, revenues include both gifts and grants. This was subsequently approved by the court. Up until recently, BP never appealed this ruling, but BP is now trying to attack it almost two years later. As it currently stands, revenue includes gifts and grants. There are three important issues that arise from questions on how to match revenues with expenses in a non-profit organization. These issues significantly impact not-for-profit organizations’ claims, and usually for the worse.

The first issue that is presently up on appeal through the appeal and reconsideration process of BP involves a claim where incoming money is placed into an endowment fund whereby only the income from that fund can be spent for charitable purposes. BP is saying that only the interest on the endowed money should be counted, not the capital amounts raised. This is ludicrous because it does not take into account that charitable organizations show capital contributions as income, and these contributions slowed down after the BP Spill. Donors were holding on to their donations, and for the most part, never caught up with what the normal levels of contributions had been in previous years. Charitable organizations that were having special fund-raising events during this period of time lost significant endowment funding that can never be recovered, and this should be recognized in the same way that it would apply to any business.

The second issue up on appeal dealing with non-profit claims relate to restricted gifts. If a gift is restricted to a particular purpose or use and cannot be used in the month in which the money has come in, BP claims that the money must be spread out over the months for which that money is spent for its restricted purpose, although, they have not been entirely consistent in this. For example, if the money is given to buy food for three months, and it is given in September, they will spread it over September, October, and November. This will help some claims, but it will hurt others. Remember, they are looking at the purpose of those gifts and the dates they were to be spent, not the date they were pledged or received.

The third issue on appeal dealing with non-profit claims relates to capital campaigns, which are a very particular type of restricted gift. Basically, the money is given for something that will be of long-term use. Assume that the capital campaign states “we are giving you this money for the purpose of constructing a building.” The question is, if the money is used to construct the building, is it then spread over the time it took to construct or the forty-to-fifty year life of the building?

Helpful Hint

The biggest mistake that people seem to make is that they voluntarily give too much information to the BP claim administrator. Instead of giving a full and complete answer to BP’s claim accountants as to the specific questions they ask, people volunteer excess and often unrelated information resulting in further questioning and possible claims reductions and denials. BP claim accountants are thoroughly reading and looking through everything, so if you give them something they do not ask for, you are asking for a lengthier and possibly more in-depth process. There is also a higher chance that they may misunderstand something and reduce or eliminate the claim. It is safest in our opinion to have answers provided by a very experienced appeals lawyer who may handle the appeal if the BP administrator’s conclusion is not accepted or if BP contests it so that the appeals lawyer can best shape the issues, tone, and content of the information given.

Retail

In dealing with retail claims, the BP claim administrators want to know when purchases occur and when items are sold in order to ensure revenue is properly matched with the expenses incurred in earning it. They will want to see the data you have in support of your sales and purchases reconciled with information found on the profit and loss statements. If you do not have it, then they will apply what is called the Annual Variable Margin methodology (AVM).

This method is usually unfavorable for claimants because the claims administrator will match revenues and expenses by totaling each fiscal year’s variable expenses and allocate those expenses on a prorated basis to monthly revenues for the corresponding period, effectively smoothing out the variable expenses. This is only used when there is no supporting information of any kind or financial statements for revenue.

This can be avoided if the proper information is provided; for example, providing information that the average length of time inventory is on the shelf is very short. In some instances, they seem to recognize there are industries that, by their very nature, do not have inventory that stays on the shelves for a long time period. The objective is to provide information to support the timing of activities to earn revenues. If a claimant can avoid the claims administrator from applying the annual variable margin, then the claimant will usually be in much better shape. Remember, do not volunteer information. Take time to figure out what exactly they are asking for and give a full, fair, and complete answer only to the question asked by the claims administrator.

BP claims administrators are always asking for information on owner/officer compensation benefits and bonuses. If a claimant paid money to an owner as either salary or benefits, BP views this as if the company made a profit and will pull out owner/officer compensation from the expense model. Therefore, it makes a big difference if a claimant can submit the claim correctly by pulling out the owner/officer compensation to begin with due to the fact that BP will require this in any case.

We are often asked whether there are any differences between internet and brick and mortar stores in retail cases. The answer to the question is quite simple: there is no difference. Even if a claimant has an internet business with no brick and mortars, the business may still have a claim.

Medical Practices

While BP has appealed and fought almost every single medical and similar professional practice claim, the vast majority of medical practices earn their income in close proximity to the time in which they receive their money. Medicare normally pays within 14 days after the services are rendered, and most other payers are consistent and not far behind. Some medical practices and businesses are paid farther in arrears in some situations, such as compensation for Letters of Protection in personal injury.

The most common stumbling block for medical practices and many professional companies is owner/officer compensation, which is required to be stripped out and is irrelevant, for the most part, in the claims eligibility and determination process. Oftentimes, the amount of the claim ends up being directly related to the drop in income that the physician may have had during a three-month time period between May and December of 2010 in comparison to previous, pre-spill years during that same time period.

Filing Deadline

The Settlement Agreement provides that the filing deadline is six months after the last opportunity to appeal the settlement has expired. The Supreme Court denied certiorari review of BP’s appeal of the settlement on December 8, 2014. Accordingly, the final deadline to file any Claim Forms for claims other than Seafood Compensation Program Claims is fast approaching at a mere four months away. This deadline may end up being later, but the BP Claims Administrator continues to assert the deadline will remain June 8th, 2015. Realistically, it may take months for the lawyers and accountants to gather and analyze all of the information needed to submit a claim, so anyone who thinks they may have a potential BP claim should get their information to their lawyers and accountants as soon as possible. Once the deadline is missed, there is nothing that can be done about it!

There is no doubt that hundreds of millions of dollars of claims will never be filed or will not be calculated accurately, in good part because of the confusion and extra work caused by the fairly recent decision that receipts and expenses should be matched, to some extent, in a manner similar to that which applies under the accrual method of accounting.

June 8th will be here before we know it! If there are any questions or if we can be of assistance in looking at any complicated or perplexing BP claim situations, please let us know. Alan Gassman can be reached at agassman@gassmanpa.com, and John Goldsmith can be reached at jgoldsmith@trenam.com.

The Naked Truth: Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part V
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see Chapter 1 of this presentation, please click here.

To see Chapter 2 of this presentation, please click here

To see Chapter 3 of this presentation, please click here

To see Chapter 4 of this presentation, please click here.

IRA SERIES CHAPTER 5

IRA and Plan Benefits Payable to Trusts

Probably the most complicated and misunderstood area of IRA and retirement plan structuring involves the complex labyrinth of rules that will apply when the beneficiary is one or more trusts or trust systems. We have provided an easily understandable system to help planners understand what the rules are and which trusts they apply to.

Illustration 3.0 below is a summary of which rules apply to each kind of see-through trust, and then the rules are explained in further but efficient detail below.

Illustration 3.0

IRA Chart 5

I. RULES THAT APPLY TO ALL SEE-THROUGH (BOTH ACCUMULATION AND CONDUIT) TRUSTS:

A. The trust must be valid under state law.

B. The trust must be irrevocable, at least immediately after the death of the Plan Participant.

C. The beneficiaries of the trust must be identifiable by being named, or by being members of a class of beneficiaries that makes each person identifiable.

D. Only beneficiaries on the Designation Date count.

Trust beneficiaries who are no longer entitled to receive any benefit on the Designation Date (for example by disclaimer or satisfaction of all bequests by September 30 of the calendar year following the year of Plan Participant’s death) will not be counted for Required Minimum Distribution purposes.  Only those beneficiaries present on the Designation Date are considered in determining the Designated Beneficiary

E. Information must be provided to the Plan Administrator by October 31 of the year after the year of the Plan Participant’s death.

The IRA/Plan administrator must receive appropriate trust documentation by October 31 of the calendar year after the calendar year of the Plan Participant’s death.  This will normally be accomplished by providing the IRA/Plan administrator with a copy of the actual trust document.  Alternatively, the trustee of the trust can provide the IRA/Plan Administrator with a final list of all beneficiaries of the trust as of the Designation Date, and a certification by the trustee that all requirements necessary for the trust to qualify as a See-Through Trust have been met.

F. Deceased Beneficiary Rule

A beneficiary who survived the Plan Participant but does not survive the Designation Date (September 30 following the death of the Plan Participant) is still considered as a beneficiary of the trust for Required Minimum Distribution purposes, unless the beneficiary (or his successor in interest) has received full payment or has executed a valid disclaimer of all of such beneficiary’s interests in the IRA/Plan or trust receiving the IRA/Plan before the Designation Date.

Notwithstanding the above, there may be situations in which meeting the applicable “See Through Trust” requirements is not as important.  For example, if the oldest trust beneficiary is the same age or older than the Plan Participant, “See Through Trust” qualification will not result in a longer applicable distribution period. The applicable distribution period will be the same if the trust satisfies the “See Through Trust” requirements (the longer of the life expectancy of the Plan/Participant or the life expectancy of the oldest trust beneficiary) than if the trust did not satisfy the “See Through Trust” rules (the life expectancy of the Plan Participant)[1].

II. RULES THAT APPLY TO ACCUMULATION TRUSTS ONLY:

A. Powers of Appointment must be limited only to certain appointees.

There is specialized drafting that is required for powers of appointment held by beneficiaries of an Accumulation Trust.  Holders of powers of appointment over IRA/Plan assets should not have the power to appoint the IRA/Plan assets to any individual (including spouses) older than the Designated Beneficiary or any Non-Person, nor the power to appoint or transfer assets to another trust that could have individuals older than the Designated Beneficiary or a Non-Person as a beneficiary.

Oftentimes planners provide beneficiaries with Powers of Appointment that can be exercised in favor of creditors of the power holder’s estate to avoid imposition of federal generation skipping tax.  Because a creditor of the power holder’s estate could be a non-individual, or an individual older than the Designated Beneficiary, this will cause problems in qualifying the trust as a See-Through Trust.  The clause can be drafted to provide that the power is exercisable only in favor of individual creditors of the estate who are younger than the otherwise applicable Designated Beneficiary[2].

B. Permit Powers of Appointment only in favor of individuals who are younger than the Designated Beneficiary of any Accumulation Trust.

Most commentators believe that it is safe to allow the power of appointment to be exercisable in favor of any living individual younger than the Designated Beneficiary, while one or more conservative commentators believe that the powers should only be exercisable in favor of a limited class of individuals, such as descendants of the grandparents of the Plan Participant who are younger than the Plan Participant.  This is because the Regulations state that a power of appointment can only be exercisable in favor of “individuals identifiable from the trust document.”  Reg. §1.401(a)(9)-4, A-5 and A-6.

Conservative planners who believe that only “individuals identifiable from the trust document” who are younger than the Designated Beneficiary may be named as possible appointees can assure avoidance of imposition of generation-skipping tax by giving a non-skip beneficiary the power to withdraw trust principal, which may be subject to approval of an independent trustee, trust protectors, or other non-adverse parties.  This power can achieve the same generation skipping tax avoidance results as the use of a power of appointment exercisable in favor of individual creditors of the estate of the power holder.

C. Programming for Tax Efficiency as between GST and Non-GST Trusts

Where trusts are to be divided into generation skipping and non-generation skipping trusts for generation skipping transfer tax planning purposes, it will make sense to have a non-Roth IRA/Plan payable to the non-generation skipping trust so that the generation skipping trust will be funded with less built-in taxable income than is inherent with IRA/Plans, and be able to accumulate more wealth for subsequent generations.  For example, if John Smith dies unmarried with a $2,100,000 IRA, and $4,330,000 of other assets, he can leave $5,430,000 to a trust that will benefit his children without being taxed in their estate, and another $2,000,000 to a non-GST trust that has to be considered as owned by one or more of the children for estate tax purposes when they die.  It seems to make sense to first allocate the IRA/Plan to the non-GST trust so that John’s GST exemption is not used on assets that will incur income tax at ordinary income rates in the future (with no opportunity for a step-up in basis).  Additionally, the formula to be used to define the assets that pass to the non-GST trust should be a fractional formula, and not a pecuniary bequest, because the use of an IRA/Plan to satisfy a pecuniary bequest may trigger tax upon funding[3].

The opposite rationale applies where a Roth IRA/Plan exists, because of the tax advantaged status of a Roth IRA/Plan – there is no income tax payable on withdrawals from a Roth IRA.  Therefore, Roth IRA/Plan benefits would be allocated first to the GST Trust, and then secondly to the non-GST Trust.  See Illustration 3.1 below.

Language that may be used in a Trust Agreement to facilitate the above can be found in Appendix B.

Illustration 3.1

IRA Chart 1

IRA Chart 2

D. Contingent beneficiaries count for Required Minimum Distribution purposes.

Even contingent distribution provisions that would only apply if no named beneficiary under an Accumulation Trust survives will be problematic unless the provision simply relies upon the applicable intestacy rules under local law.  For example, the Accumulation Trust can provide that “if none of my descendants survive then all remaining assets will be distributed based upon the intestacy rules of the State of Florida that would apply to my estate if I died intestate” as opposed to “if none of my descendants survive then pay out to the descendants of my grandparents, per stirpes.”  The second alternative would cause the Required Minimum Distributions to have to be distributed over the life expectancy of the oldest descendant of the Plan Participant’s grandparents, even if the Plan Participant has surviving descendants.  As a planning note, if the client wants to use “descendants of my grandparents” language, then the provision can be carved out to instead read “to the descendants of my grandparents, per stirpes, who are born after the date of birth of my oldest living descendant who survives me.”

E. Prevent the adoption or addition of an older beneficiary.

The trust instrument should prevent any individual who is older than a Designated Beneficiary from being considered as a beneficiary of any trust that is the recipient of IRA/Plan benefits. Also, any person to be adopted and qualify to receive benefits would need to be younger than the otherwise applicable Designated Beneficiary under an Accumulation Trust.

F. Q-TIPPING an Accumulation Trust

What Rules Apply to Determine What Portion of Any Payments from an IRA or Pension to an Accumulation Trust Are Income for Purposes of Defining How Much Has to Be Paid out to the Surviving Spouse?

Note – With a Conduit Trust, the Spouse must receive 100% of the distributions so this analysis may not be pertinent.  With a QTIP Trust that is an Accumulation Trust, the Spouse only has to receive the “income” as determined under state law – some or all of an IRA or pension distribution may consist of a return of principal.  The analysis that applies is as follows:

The law in each state will vary with reference to what portion of an IRA distribution will be considered as income for trust income calculation and distribution purposes.

  1. Fla. Stat. § 738.602 governs the character of payments from deferred compensation plans, annuities, and retirement plans or accounts. § 738.602(4) describes the method a trustee should use to allocate income and principal with respect to payments made. The trustee is required to follow the steps set forth below in allocating a payment to principal or income:
    1. If the payor characterized a portion of the payment as income, that portion shall be allocated to income by the trustee, and the remaining portion shall be allocated to principal.
    2. If the payor does not characterize a portion as income, then the following shall apply:

1.) The trustee must attempt to determine the income derived from the applicable investment (i.e. the account statement for a mutual fund). The trustee can then allocate the lesser of the income of the fund or the entire payment to income, and the remaining portion of the payment to principal.

2.) If the trustee “acting reasonably and in good faith” determines that neither A nor B is available, the trustee shall allocate 10% of the payment to income, and the remaining portion to principal.

This differs from the Uniform Principal and Income Act, which states that:

1.) To the extent that a payment is characterized as interest, a dividend or a payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income.

2.) If no part of a payment is characterized as interest, a dividend, or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10 percent of the part that is required to be made during the accounting period and the balance to principal.

II.  The IRS has indicated that the UPIA 10% rule “does not satisfy the marital deduction income requirements of Section 20.2056(b)-5(f)(1) and Section 1.645(b)-1 because the minimum distribution rules are not based upon the total return of an IRA. Revenue Ruling 2006-26.

However Florida’s Principal and Income Act requires the trustee to invest trust assets on a “total return basis”, and gives the trustee the ability to adjust income so that the treatment of income is “fair and reasonable” to the beneficiary.  Fla Stat. § 738.103(2), 738.104(1).

It is likely that Florida’s Uniform Principal and Income Act will satisfy the all-income-for-life requirement of Section 20.2056(b)-5(f)(1) and Regs. § 1.643(b)-1 due to the trustee’s power to adjust, as well as the additional good faith determination requirements for allocating income from a retirement plan.

Florida law also states that certain unitrusts mandating annual payouts between 3% – 5% will be treated as trusts requiring the payments of all income. Fla Stat. § 738.1041(10)

Regs. § 1.643(b)-1 specifically states that:

…a state statute providing that income is a unitrust amount of no less than 3% and no more than 5% of the fair market value of the trust assets, whether determined annually or averaged on a multiple year basis, is a reasonable apportionment of the total return of the trust. Similarly, a state statute that permits the trustee to make adjustments between income and principal to fulfill the trustee’s duty of impartiality between the income and remainder beneficiaries is generally a reasonable apportionment of the total return of the trust.

III.  The American College of Trust & Estate Counsel (ACTEC) has expressed concern with respect to the 10% rule via their Employee Benefits Committee, and have recommended amendment and/or elimination of the 10% provision of the UPIA.  A majority of states statutes do not satisfy the marital deduction income requirements, so until an amendment is made planners should exercise caution in this area. Some practical solutions to this problem are discussed in the next section.

One approach that will work is to treat the IRA as a “trust-within-a-trust”.  Under this approach income earned under the IRA is treated as income of the trust to the extent distributed.  This approach is only possible when the trustee can easily distinguish the IRA’s internal income from principal, meaning that the trustee must be able to determine exactly how much the IRA investments earn in income each year.  The IRS has approved this approach for marital deduction trusts.

A second approach is to treat the trust as a unitrust.  Under this approach the beneficiary will receive an annual income payment based upon a fixed percentage of the trust assets each year.  This will satisfy the marital deduction requirements if (1) it is permitted by state law and (2) the fixed percentage is no less than 3% and no more than 5%.  This approach was approved by the IRS under Rev. Rul. 2006-26.

Illustration 3.2

IRA Chart 3

Stay tuned next week, where we’ll discuss rules that apply to conduit trusts only and toggling from a conduit trust to an accumulation trust (and vice versa)!

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[1] Choate’s The 201 Best and Worst at 3-100
[2] PLR 200235038 – 200235041 and Robert S. Keebler, CPA. New IRS Ruling Validates the “IRA Inheritance Trust™”
[3] Natalie Choate Outline Making Retirement Benefits Payable to Trusts ¶6.5.07

Richard Connolly’s World
Celebrity Estate Round-Up, Part II

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 a link to the articles.

This week, we are featuring a few more stories on the issues surrounding celebrity estates. The first article is entitled “Feud Over Saints Owner Tom Benson is More Common Than You May Think” by Danielle and Andy Mayoras. This article was featured on Forbes.com on March 11, 2015.

Richard’s description is as follows:

Yes, Tom Benson has a great deal more money and power than most of us. How much? Try $1.9 billion, according to the annual Forbes rankings.

The successful owner of the NFL’s New Orleans Saints and NBA’s New Orleans Pelicans, Benson built a wide-ranging empire of car dealerships, banks, various real estate holdings, and a television station. He still actively participates in running his businesses – most of all his beloved Saints.

But for all of his wealth, prestige, and status, Tom Benson is in the midst of the same type of probate-related court battle that entangles many elderly individuals in our country. Some of Benson’s heirs do not believe the 87-year-old is mentally competent to make his own decisions any more. They are seeking to have him declared legally incompetent and protect him from what they claim is undue influence.

So what makes a fight of this nature more common than most people realize? The very same type of competency battles are common in blended families across the country, even when billions of dollars aren’t on the line.

Please click here to read this article in its entirety.

The second article this week is “Death and Domicile – No Joking Matter: Will New York try to take a final death-tax bite in the estate of Joan Rivers?” by Charles Douglas. This article was featured on WealthManagement.com on January 5, 2015.

Richard’s description is as follows:

While the late Joan Rivers’s will has yet to be probated, her case illustrates how someone might reside in one state (New York) and be domiciled in another (California.) This can be important for tax and estate planning. It also shows why individuals who relocate to other states or individuals with residences outside their state of domicile would do well to maintain accurate, reliable records to support the contention that they aren’t residents of or domiciled in a particular state.

This is a big deal. Based on Joan’s estimated estate of $150 million, there is approximately $24 million of estate tax in New York and no estate tax in California.

Please click here to read this article in its entirety.

Thoughtful Corner
Pilates – Fitness’s Best Kept Secret
by Emily Wenzel

Emily Wenzel is the owner of Kapok Pilates & Wellness at 908 McMullen Booth Road in Clearwater, Florida. She is a Certified Personal Trainer through the National Academy of Sports Medicine, Certified Pilates Instructor, Herbalist, Food Artist, Organic Gardener, and the President of the Florida Herb Society.

Kapok Pilates & Wellness, located across from Sam Ash Music in Clearwater, is a fully equipped Pilates studio that offers private sessions, small group classes, Pilates mat, yoga, Tai Chi, Aerial Yoga, and more, and is a friend of the Gassman Law Associates firm. Gassman, Crotty & Denicolo, P.A. has no financial relationship with Emily or Kapok Pilates, but this is a great opportunity we thought we would share.

If you don’t know what Pilates is, then you are missing out on one of the best exercise and fitness systems that has ever existed – maybe even the very best.

The country has entered a new era when it comes to self-care. There is a growing awareness on the part of Americans of all ages to exercise more, eat better, and incorporate a mind-body connection into not only physical activity but daily life. The trouble is knowing which exercise systems are just marketing fads and which are truly effective and provide lasting results.

One of the fastest-growing and most successful programs across the country is called Pilates. Although gaining quickly in popularity, it’s hardly new. The founder, Joseph Pilates, was born in Germany in 1880. He was a sickly child, but he improved his health through physicial activities such as gymnastics, boxing, and skiing. He worked as a nurse in England during World War I and began to develop his techniques and methods there.

Mr. Pilates provided exercises for the injured by utilizing springs from hospital beds and other props to create resistance training, improving strength and flexibility in patients.

The results were astounding.

He later moved to New York and opened a studio with the equipment he created, known as the Pilates Reformer. The Reformer has a spring loaded moveable surface that can be converted to look like a bed or mat with a pulley system. He went on to develop 3 other machines called the Cadillac, the Wunda Chair, and the Ladder Barrel.

The beauty of the Pilates method is that it is safe for someone with physical limitations and challenging for those at a higher level. There are modifications and progressions within the method, and the springs offer assistance or resistance depending on the needs of the individual. It is also helpful for people of all ages, even those with physical ailments, low stamina, inexperience with exercise, or even those in need of rehabilitation.

In 60 minutes, you can get an amazing workout that does not feel like a workout.

In addition, there are Mat Pilates classes, which address the same principles without the use of the Reformer. There are often small props such as magic circles, bands, and stability balls incorporated into this kind of work.

Some of the major principles of the Pilates method are described below:

The Core – Physically speaking, the stronger the “core” of your body, the greater your physical potential. Breath and posture have a major impact on the effectiveness of your fitness program. Pilates exercises give you a sense of energy and confidence by increasing your strength while finding more flexibility.

Concentration – Concentrate on mastering the relatively simple movements each time to a point of subconscious reaction. It won’t be dull; this will happen with some consistent Pilates instruction. This is how to progress from visualizing improvement to incorporating changes into your everyday life.

Breathing – Pilates helps make you aware of the “automatic” task of breathing and helps you breathe more efficiently and effectively. An increase in the amount of oxygen in your bloodstream will benefit the health of all your cells, improving brain function, blood circulation, and physicial coordination. It can also help you feel more tranquil.

Centering – Centering is finding those muscle groups which are important for stabilization (pelvic stability) and strength. Probably the most important activity many of us do not do properly is walking upright. Correcting posture begins with sitting and standing a little straighter and taller every day, but Pilates exercises will help support good posture as well.

Humor! (or Lack Thereof!)

Cartoon 1

Cartoon 2 - TO PUBLISH

Upcoming Seminars and Webinars 

LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Kenneth Crotty, and Christopher Denicolo will be presenting a not-so-free 90-minute webinar for Bloomberg BNA Tax & Accounting on WHY FLORIDA IS DIFFERENT – IMPORTANT THINGS THAT ESTATE AND TAX PLANNING PROFESSIONALS NEED TO KNOW.

Date: Thursday, April 16, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY – PART II.

This webinar is a continuation of the How to Handle Stressful Matters in an Ethical Way webinar that was presented by Dr. Rao and Alan Gassman on February 19, 2015. This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced.

See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well.

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: April 21, 2015 | 12:30 p.m.

Location: Online webinar

Additional Information: Please click here to register or email Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS. 

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES. 

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here, and the many vary useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: TBD

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

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LIVE WEBINAR:

Alice Rokahr, President, Trident Trust Company (South Dakota) Inc., and Alan S. Gassman will present a free, 30-minute webinar entitled WHAT IS SO SPECIAL ABOUT SOUTH DAKOTS – DOMESTIC ASSET PROTECTION TRUST LAW AND PRACTICES.

Date: June 9, 2015 | 12:30 pm

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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.

Date: August 22, 2015 | 9:00 AM – 5:00 PM

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:

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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

RUTH ECKERD HALL PLANNING GIVING COUNCIL MEETING

This exciting two-part event will feature an educational presentation and a networking session. Attorneys and CPAs may receive CLE and CPE credit for attending the educational presentation.

The educational presentation will be an entertaining, interactive workshop led by Jack Halloway, a well-known improvisational coach and actor. He is directing “The Complete Works of William Shakespeare (Abridged)” and will share some thoughts on how Shakespeare used law, lawyers, and money in his plays. Some improv will also be included.

Jack Halloway’s presentation will be followed by a social networking and info session. Enjoy some wine and time with fellow Planned Giving enthusiasts!

Everyone who brings a potential donor or new member to the Planning Giving Council will be entered into a raffle for 2 tickets to an upcoming show.

Date: April 21, 2015 | Educational Presentation begins at 4:30 PM | Networking sessions begins at 5:30 PM

Location: The New Murray Theatre at Ruth Eckerd Hall

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com. RSVPs may be sent to Maribeth Vongvenekeo at maribeth@gassmanpa.com, Suzanne Ruley at sruley@rutheckerdhall.net, or Kristy Philippe at kristy.philippe@ms.com.

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LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please visit http://www.floridataxinstitute.org/agenda.shtml for a complete schedule or contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

April Applicable Rates

The Thursday Report – 3.26.15 – The Positive Universe, No Time for Sargeants, and the Tipping Point of Health Care

Posted on: March 27th, 2015

No Time for Sargeants Article Published on Leimberg Information Services

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron, Part IV

The Tipping Point in a Health Care Network by Pariksith Singh, M.D.

Richard Connolly’s World – Celebrity Estate Round-Up, Part I

Thoughtful Corner – Einstein’s Positive Universe – It’s More Than Just Relativity. Positive Equals a Better Professional Life and Performance Squared.

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.

No Time for Sargeants Article Published on Leimberg Information Services

An article entitled “Wells Fargo v. Barber: The Barber of Seville Replaces No Time for Sargeants” by Alan S. Gassman and Travis Arango, as edited by Duncan Osbourne, was published on March 24 on Leimberg Information Services.1 The article explores a case where a foreign LLC membership is seized by a judgment creditor in Florida.

“It is shocking that a Florida judgment creditor would be able to seize a Florida debtor’s solely owned Nevis Limited Liability Company’s membership interest, but not stock in a foreign corporation, but the federal judge sitting in Orlando has credible support for his conclusion. In Sargeant v. Al-Saleh, the stock in a foreign corporation could not be reached by the court while in Wells Fargo Bank v. Barber, sole ownership of a Nevis LLC was considered to be like any other intangible personal property that a Florida judgment could be applied against. It is time for planners to change the way they do things in this area.

The court distinguished the Nevis LLC from foreign stock certificates:

Although Defendants repeatedly refer to Blaker Enterprises, LLC as a “foreign corporation”, (see Doc. 32, pp. 6, 7), Blaker Enterprises, LLC is not a corporate entity but a limited liability company. (Doc. 1-1, Ex. J). Unlike stock certificates in a corporation, a membership interest in a limited liability company is intangible personal property, which “accompanies the person of the owner.”2

If you would like to read more about this case go to www.leimbergservices.com and check out the Asset Protection Planning Newsletter #287.

Jay Adkinson was kind enough to send us another case on this topic: Sand Creek Partners LTD v. American Federal Savings and Loan Association of Colorado.3 In this case the plaintiffs had a judgment in excess of three million dollars against the defendant Bortles.4 Bortles was the owner of general partnership interests in 2 limited partnerships.5 Bortles claimed that he owned “zero percent” interest in each partnership.6

The issue in this case, among other things, was whether Bortles had to surrender his interests in the Hawaiian limited partnerships.7 The charging order was governed by Hawaii’s statute which states “(1) ‘[a] charging order constitutes a lien on the judgment debtor’s transferable interest,’ (2) ‘[a] transferable interest shall be personal property,’(3) ‘the judgment creditor has only the rights of a transferee,” not a manger or partner,’ and (4) ‘[t]he court may order a foreclosure upon the interest subject to the charging order at any time.’”8 Bortles claimed that the plaintiff’s request for a charging order was not allowed under Nevada law.9 The court held that limited partnerships are generally governed by the law of the jurisdiction in which they were formed.10 Bortles’ second argument was that no property exists for the plaintiffs to charge against since he owns zero percent interest.11 The court stated this argument was contradictory as he is the general partner of the partnerships.12 The court granted the charging order.13

It is interesting to see how this court came to the same conclusion as the one in Barber but through a different route. This court held that the charging order was allowed because the Hawaiian partnerships were governed by Hawaiian law, while the court in Barber held that the partnership interests were intangible personal property and thus Florida law applied even though the partnerships were formed in Nevis.

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1 LISI Asset Protection Planning Newsletter #287 (March 24, 2015) at http://www.leimbergservices.com. Copyright 2015 Leimberg Information Services, Inc. (LISI).
2 Barber, 2015 WL 470589.
3No. 2:14©CV©444©GMN©VCF, 2015 WL 316750,  (D. Nev. Jan. 26, 2015)
4 Id. at 1.
5 Id.
6 Id.
7  Id. at 5.
8 Id.
9 Id.
10 Id.
11  Id.
12 Id.
13 Id. at 6.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part IV
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see Chapter 1 of this presentation, please click here http://gassmanlaw.com/the-thursday-report-3-5-15-live-long-and-thursday-more-warped-humor/

To see Chapter 2 of this presentation, please click here http://gassmanlaw.com/the-thursday-report-3-12-15-spock-o-prudence-the-needs-of-the-many-outweigh-the-needs-of-the-few-335-s-w-3d-126-tex-2010/

To see Chapter 3 of this presentation, please click here http://gassmanlaw.com/the-thursday-report-3-19-15-bp-ira-the-look-and-the-investigation-process/

IRA SERIES CHAPTER 4

CRUCIAL DEFINITIONS AND RULES (Part Two):

1.) Other Income Tax Planning Considerations, Opportunities, and Traps

OPPORTUNITIES 

a. Estimated Taxes Coordination Opportunity – A Plan/Participant can withhold federal income tax from Required Minimum Distributions by filing a Form W-4P. The tax withheld from retirement plan distributions is treated as if it was paid equally on each of the due dates for estimated tax payments.  § 6654(g)(1).  Therefore a distribution from a retirement plan paid on December 31st, but withheld for income tax purposes, will be treated as four equal payments made on March 31st, June 30th, September 30th, and December 31st.  For example, a $100,000 distribution on December 31st will be treated as if $25,000 was paid on March 31st, $25,000 on June 30th, $25,000 on September 30th, and $25,000 on December 31st.  This effectively allows a taxpayer to delay paying estimated taxes until the end of the calendar year.

Be wary as this strategy becomes more risky the older the Plan/Participant gets.  If the taxpayer dies before the Required Minimum Distribution is used to pay taxes, then the estate will become liable for the penalty on underpayment of income taxes in the year of the Plan/Participant’s death.[1]

b. Appreciated Employer Stock Withdrawal Opportunity – A participant in an employee sponsored retirement plan has the opportunity to withdraw a lump sum distribution from the account and only be taxed on a portion of the withdrawal.  The taxable portion is the value of the stock over the plan’s transferred basis (what the stock was originally purchased for).  The remaining portion is treated as “net unrealized appreciation” (NUA) and is not taxable until the recipient sells the stock.  The portion of net unrealized appreciation is taxed at long-term capital gains rates when sold. This can result in significant tax savings for plan/participants whose ordinary income rate is much higher than the capital gains rate and need cash upon retirement.[2]

For example, a CEO in the 39.6% tax bracket holds $100,000 in company stock upon retirement.  The stock was originally purchased for $20,000.  The CEO has the option to either distribute all of the company’s stock or roll the stock into an IRA account subject to the minimum distribution rules.

If he chooses to distribute all of the stock and elect to use the net unrealized appreciation tax treatment, then the tax on the distribution would be $7,920 (39.6% x Cost Basis of $20,000).  He then immediately sells the stock triggering a capital gains tax of $19,040 (23.8% x net unrealized appreciation of $80,000).  The CEO would pay total tax of $26,960.

If the CEO instead rolled the Employer Plan into an IRA the results would be much different.  The CEO would pay ordinary income tax on the entire balance resulting in total tax of $39,600.  By using net unrealized appreciation tax treatment the CEO would be able to save $12,640 in taxes.

Whether the net unrealized appreciation tax treatment will be beneficial depends on a number of factors, some of which include the following:

  1. Tax rates
  2. The amount of Net Unrealized Appreciation
  3. The length of time until the distribution
  4. Age of participant (individuals born before 1936 are eligible for a special averaging tax rate)[3]

As a general rule the shorter the Plan/Participant plans to keep the assets in the plan, the more attractive NUA tax treatment becomes.  However if the Plan/Participant plans to keep the assets under an IRA for a longer period of time the benefits of tax deferral become more attractive.

c. There is no requirement that Required Minimum Distributions be paid in cash.  A Plan/Participant has the option to take Required Minimum Distributions in kind, rather than selling the investment in the IRA and paying out the cash.  If assets are distributed in kind their fair market value on the date of the distribution is included in ordinary income, and becomes the Plan/Participant’s tax basis in subsequent years.  This could be beneficial for two reasons:

  1. Taking Required Minimum Distributions in kind saves commissions on selling the investment and then re-buying the investment outside the plan.
  2. Once distributed any post distribution gain will be taxed at capital gains rates rather than being taxed at ordinary income when distributed from the IRA. Therefore assets that are currently undervalued or assets that are considered to be growth stocks are the best candidates for in kind distributions.

Natalie Choate points out that this strategy is difficult due to the limited amount of guidance available on how to determine the “fair market value” of securities on the date of distribution, so “unless there is a good reason to do otherwise, pay RMDs in cash.”[4]

d. Convert to Roth in low income tax years or marry a developer with lots of losses and convert to a Roth! – If a Plan/Participant experiences a significant drop in income in a given year, he or she should consider converting all or a portion of a Plan into a Roth IRA. The Plan/Participant will have to pay tax on the amount converted at ordinary income rates, but will pay no tax on later distributions.  By converting into a Roth IRA in low income tax years, the Plan/Participant can take advantage of the lower tax rate now and not be subject to a higher tax rate in subsequent years.  A conversion into a Roth IRA for someone under the age of 59 ½ does not trigger the 10% penalty on early withdrawals.  Also, the income limitations that exist for Roth IRA contributions do not apply to IRA conversions.  A taxpayer can convert a retirement plan into a Roth regardless of their level of income.

TRAPS

a. IRA to HSA Account transfers are rarely beneficial.  The income tax deduction for contributions to an HSA is worth more than being able to take a Required Minimum Distribution tax free by funding an HSA the majority of the time.  It could however be beneficial in the following situations:[5]

  1. An individual under the age of 59 ½ with no other liquid investment funds in his or her HSA to avoid the 10% penalty on early distributions.
  2. An individual wants to avoid having an IRA distribution appear on his or her bank account due to creditor concerns, financial aid considerations, ex-spouse or state income tax effects.

b. The Required Minimum Distribution Rules continue to apply through the year of the Plan/Participant’s death as if the Plan/Participant was still living.  This means that beneficiaries will be responsible for ensuring that any distribution not otherwise satisfied before the end of the calendar year in which the Plan/Participant died is distributed from the plan.  This final distribution will be classified as Income in Respect of Decedent.

c. The Roth IRAs and IRA wash sales rules – Clients who would like to sell a security to trigger capital losses may wish to immediately repurchase the same security under an IRA.  The wash sale rule states that a taxpayer cannot deduct a loss on the sale of securities if a substantially identical security is repurchased within 30 days after the loss-generating sale.[6]  According to Rev. Rul. 2008-5, 2008-3 I.R.B.,  the sale of a security outside of an IRA will be matched with the purchase of a security inside an IRA/Plan for the purposes of applying § 1091. Therefore, the repurchase under an IRA/Plan needs to take place more than 30 days after the original sale to avoid the wash sale rule.[7]

2.) Distribute or Sell Hard-to-Value Assets ASAP. Currently IRA providers have the option to check the box and “flag” hard-to-value assets on Forms 5498 and the 1099-R.  Some commentators believe that this reporting requirement is likely to become mandatory soon, maybe even as early as 2016.[8]  The Plan/Participant should either sell the asset in an arm’s-length transaction to an unrelated party, or distribute the asset as part or all of a Required Minimum Distribution.  This should be done as soon as possible before the IRS requires providers to flag these assets, which will subject them to higher audit risk.

3.) Rolling Over Qualified Retirement Plan into IRA Gives Plan/Participant More Options. Some Qualified Retirement Plans only offer the death benefit to be payable in a lump sum.  Therefore Plan language should always be checked to see if distribution election options preferred for a particular taxpayer are permitted. Even if the stretch options are available, an employer could terminate a plan resulting in a lump sum distribution.  A qualified retirement plan Participant should consider rolling plan benefits over to an IRA as soon as this can occur, if the Participant is leaving the benefits to (a) a non-spouse designated beneficiary that will be expected to stretch the payout over his or her life expectancy, or (b) a accumulation or conduit trust where an individual will be the Designated Beneficiary for plan distribution determination purposes in order to avoid these potential pitfalls.[9]

We’re noteworthy that 403b plans can only be invested in annuity contracts or mutual funds offered by the plan, whereas IRAs offer much more flexibility than a 403b plan or the typical qualified retirement plan.  Qualified retirement plans may also assess administrative expenses and costs against Participant’s accounts.

With qualified plans, the Participant may be able to borrow funds, have the plan own life insurance, or collectibles.

Age/qualified retirement plan 10% excise tax considerations.  Normally, any taxpayer who is not an individual who has reached age 59 ½ will have to pay a 10% penalty in income withdrawn from the qualified retirement plan or IRA.

An individual will not be subject to this penalty on withdrawals from a retirement plan if the individual has separated from service on or after reaching age 59 ½.

Under an IRA (but not a qualified retirement plan) a Participant can elect to receive substantially equal periodic payments for life and avoid the 10% excise tax on those amounts received.

4.) Rollovers from Qualified Retirement Plans Should be Kept Separate from Regular IRA Plans.  Rollovers from qualified retirement plans should be kept separate from regular IRA plans because of the federal bankruptcy court exemption rules which limit protection for IRAs held by residents of states that do not have IRA creditor protection to $1,000,000 for IRAs that have been funded with annual contributions.  If qualified retirement plan monies have been mixed with IRA contribution monies, the exemption limit rules will be challenging at best.[10]

5.) Asset Allocation Rules. While many financial planners will balance IRA and non-IRA investments using the same ratios of fixed income to equity, a good many financial advisors believe that the better approach is to have taxable bonds and equivalent fixed income investments under the IRAs, with equities outside of the IRAs.  Equities are tax advantaged because the capital gains on sale will not occur until sold, whereby taxable income on bonds and other interest can be deferred under an IRA, which would otherwise turn long term capital gains into ordinary income if equities are held under the IRA.[11]

6.) Annuitized IRA. An IRA can be “annuitized” by investing the IRA assets in an annuity contract whereby the insurance carrier issuing the contract will make a series of annual or more frequent lifetime payments to the IRA owner.  These payments will be considered to satisfy the minimum distribution rules, and neither of the payments or the value of an annuitized annuity will be aggregated with any other IRA or retirement plan for purposes of calculating the minimum distribution requirements.  The annuitized payments will typically exceed the required minimum distribution amounts that would have applied.

For example, a male age 70 who is otherwise subject to the payout amounts described in Illustration 2.1 above, might instead cause his IRA to purchase an annuitized contract that would require payment of 7.67% of the initial amount invested each year for his lifetime.  Alternatively a female might cause her IRA to purchase an annuitized contract that would require payment of 7.12% of the initial amount invested each year for her lifetime.

Payments received from an annuitized IRA by an owner/participant who has not reached age 59 ½ will not be subject to the 10% excise tax described below.

Below (Illustration 2.9) is an example provided by one investment company of hypothetical payments for a male and female age 70 who annuitizes $100,000 of his or her IRA to receive lifetime payments that will never run out in lieu of minimum distributions which would be less.

2 -  IRA Chart

7. Qualified Longevity Annuity Contract (“QLAC”). A QLAC is an annuity contract held under an IRA that begins paying a lifetime annual, or more frequent, annuity amount years after acquisition. Before going into payment mode, the value of a QLAC is not counted in determining minimum distribution payment amounts.  When payments begin, they must be distributed in full each year, and will normally exceed the minimum distribution amount until the client reaches a fairly high age.  (Upper 80’s and older).[12]  The Treasury Regulations released on July 2, 2014 permit the lesser of $125,000 or 25% of the applicable IRA balance to be held under QLAC contracts that can be disregarded with respect to the value of the IRA in determining minimum distribution requirements.  The contract will pay fixed dollar amounts at stated intervals over a number of years for the life of a taxpayer, beginning no later than age 85.  If the taxpayer dies before he or she has received payments equal to the amount paid for the contract, then the contract may offer a return of premium option so that the taxpayer in effect receives back all amounts invested, without interest, but this return of premium option is not required by the Regulations, and will cause reduction in the minimum annual amount paid.  The lesser of $125,000/25% limitation can be somewhat confusing, and is described, with further detail in LISI Archive Message 639 by Alan Gassman, Christopher Denicolo & Brandon Ketron: A Practical Approach to Qualifying Longevity Annuity Contracts (QLACs) – Using the (King) L.E.A.R. (Life Expectancy And Return) Analysis to Determine Whether Clients Should Invest in Specially Designed Annuity Products under Their IRA or Qualified Retirement Plans, Steve Leimberg’s Employee Benefits and Retirement Planning Email Newsletter located in Appendix E.

As of publication of this outline AIG is the only carrier presently offering QLACs, and Vanguard personnel have reported that they will have QLACs “within the next few weeks.”

8.) Designed Beneficiary. The individual beneficiary whose life expectancy is used for the purpose of determining the Applicable Payment Mode of the Required Minimum Distributions that will apply to an IRA/Plan.  This is the age that the Designated Beneficiary will attain in the calendar year following the Plan Participant’s death.  A Designated Beneficiary could be any of the following:

  1. A beneficiary of an IRA/Plan if an individual is directly named as beneficiary based on a beneficiary designation or the terms of the applicable IRA/Plan governing document;
  2. The oldest individual beneficiary of a trust that qualifies as an Accumulation Trust; or
  3. The beneficiary of a Conduit Trust to whom all payments from IRA/Plan to the trust must be made.
  4. Note – If the Designated Beneficiary is not an individual, the IRA/Plan will be subject to either the Five Year Rule, if the Plan Participant died before his or her Required Beginning Date or the At Least as Rapidly Rule, if the Plan Participant died after his or her Required Beginning Date.

9.) Designation Date. The Designation Date is September 30 of the calendar year following the year of death of the Plan Participant. This is the date on which the Designated Beneficiary is determined for the purposes of calculating the Applicable Payment Mode of the Required Minimum Distributions.  As stated above, it is possible to remove or eliminate one or more beneficiaries shortly after the death of a Plan Participant, but before the Designation Date. See Illustration 2.10 below for a summary of important dates after the Death of the Plan Participant.

4 - IRA Chart 2

 

10.) See Through Trust. An Accumulation Trust or a Conduit Trust, as used by the IRS to denote a trust that may not be considered as a Non-Person if the trust is named beneficiary of an IRA/Plan.  Assuming that certain requirements are met, and that the trust qualifies as a Conduit Trust or as an Accumulation Trust, the trust is “looked through” to the Designated Beneficiary for the purpose of determining the Applicable Payment Mode of Required Minimum Distributions.

11.) Accumulation Trust. A trust that is the beneficiary of an IRA/Plan where the trustee thereof has the power to accumulate some or all of the Required Minimum Distributions and other payments from the IRA/Plan (i.e., the terms of the trust instrument do not require the trustee to distribute all Required Minimum Distributions and all other payments from the IRA/Plan to a particular beneficiary).  Thus, the Trustee need not necessarily distribute monies received from an IRA/Plan by the trust, unlike a Conduit Trust where any and all distributions from the IRA/Plan to the Trust must be in turn paid out to the Designated Beneficiary.  Such trust can have no Non-Person beneficiaries after September 30 of the calendar year following the death of the Plan Participant (i.e., the Designation Date) and must properly register certain information with the Plan Administrator by October 31 of such calendar year.  If the trust has any Non-Person beneficiaries after the Designation Date, then the trust cannot qualify as an Accumulation Trust.

The Designated Beneficiary of an Accumulation Trust for the purposes of the Required Minimum Distribution rules is the oldest individual beneficiary of the trust, even if such person is merely a contingent beneficiary.  This is discussed further in Chapter Three, Section II.  Any potential appointees under a power of appointment held by a trust beneficiary over property held under an Accumulation Trust are taken into account for the purposes of determining the Designated Beneficiary of the IRA/Plan.  Therefore, no power of appointment should be exercisable in favor of individuals who are older than the desired Designated Beneficiary, or in favor of any Non-Person entities, because this would invalidate the ability to use the Designated Beneficiary’s life expectancy for Required Minimum Distribution purposes.

For example, power of appointment language may be limited by the following:

Notwithstanding the above, the holder of any power of appointment of any trust herein established which is the recipient of any IRA or pension plan distributions may not exercise such power of appointment in favor of any individual younger than the applicable “Designated Beneficiary” or any entity that is not an individual.

Further, any appointee must be a descendant of the great-grandfathers and great-grandmothers of the grantor of this trust.

Accordingly, any Non-Person beneficiaries of a desired Accumulation Trust should be eliminated before the Designation Date (September 30 of the calendar year following date of death of Plan Participant) by full payment of the share of the trust otherwise allocable to them by such Non-Person beneficiaries, by amendment of the trust by independent trust protectors, or possibly by court order.  Further, powers of appointment may be trimmed back before the Designation Date, and any powers held by the trustee or any other party (such as trust protectors) that would allow for the addition of Non-Person beneficiaries or individuals older than the Designated Beneficiary should also be trimmed back as well.

It is also possible to draft so that a conventional credit shelter trust or generation skipping trust can be the recipient of IRA/Plan benefits to be paid out over the lifetime of a Designated Beneficiary by having a separate “shadow trust” established under the trust instrument with identical dispositive provisions to the main trust, except that certain provisions are modified as necessary in order to result in the maximum deferral of IRA/Plan benefits. “Shadow trust” provisions will typically provide that only individuals younger than the Designated Beneficiary can receive benefits from the trust, and that appointees under any power of appointment must be individuals who are younger than the Designated Beneficiary.  The non-IRA/Plan assets can be held, managed, and administered under the main trust provisions, and would not be subject to the provisions of the separate shadow trust.

12.) Conduit Trust. A trust that is the beneficiary of an IRA/Plan which requires that all distributions from the IRA/Plan must be paid to a specified Designated Beneficiary, and does not authorize the trustee thereof to accumulate or withhold any distributions from the IRA/Plan.  The Required Beginning Date and Required Minimum Distribution rules will normally apply as if the Designated Beneficiary of the Conduit Trust is the sole direct beneficiary.  Thus, all beneficiaries (other than the Designated Beneficiary) can be disregarded for the purpose of determining the Designated Beneficiary, and the Designated Beneficiary will be treated as the individual beneficiary for Required Minimum Distribution rule purposes.  A Conduit Trust can thus have beneficiaries older than the desired Designated Beneficiary, Non-Persons as beneficiaries and unlimited power of appointment powers, so long as all distributions from the IRA/Plan to the trust are required to be paid to the Designated Beneficiary upon receipt from the IRA/Plan during his or her lifetime by trust during his or her lifetime.

Under most circumstances, the proceeds received by the Designated Beneficiary will not be protected from the creditors of the Designated Beneficiary, or from the federal estate tax at the Designated Beneficiary’s death, because a Conduit Trust requires that he or she must receive all IRA/Plan distributions.  However, a Conduit Trust may provide that a charity or another Non-Person is a beneficiary of the trust, and this will not jeopardize use of the desired Designated Beneficiary’s life expectancy for the purposes of determining the Applicable Payment Mode.

It might be possible to “toggle” a Conduit Trust into an Accumulation Trust within nine months after the death of the Plan Participant in most states, if the Designated Beneficiary who is to receive all distributions of IRA/Plan benefits per the trust instrument disclaims his or her right to receive mandatory distributions of all IRA/Plan payments.

It may also be possible for a Trust Protector to hold an amendment power to “toggle” a Conduit Trust into an Accumulation Trust; however the power must be exercised prior to the Designation Date. A Trust Protector given this ability should also have the power to change remainder beneficiaries within 9 months following the death of the Plan Participant as necessary to comply with the Designated Beneficiary Rule discussed in #5 below. See PLR 200537044.

13.) Q-TIP Minimum Distribution Rules. When IRA/Plan benefits are payable to a Q-TIP trust that must pay all income to the surviving spouse to qualify for the estate tax marital deduction, Revenue Ruling 2006-26 requires that both (a) the Plan/IRA and the Q-TIP trust each make affirmative marital deduction elections; and (b) that the greater of the Required Minimum Distribution percentage or all income from within the plan must be paid to the Q-TIP trust annually.  Further, the spouse must have the right to require that all income earned within the Plan be distributed to the Q-TIP Trust, and the normal Q-TIP Trust rules provided under Internal Revenue Code Section 2056 will apply.

A Q-TIP trust will qualify as a Conduit Trust, and the Surviving Spouse will be considered to be the Designated Beneficiary thereof if the IRA/Plan meets the requirements set forth above.  This is further discussed in Chapter Three, Section II (F) of this outline.

14.) Delay in Division Problem. What if the Plan Participant’s trust agreement or will provides that a trust or trusts held for the Designated Beneficiary will not be separated until after an event which will not occur before the deadline for the establishment of separate accounts (December 31st of the calendar year following Plan Participant’s death). For example, the applicable trust provides that the trustee is to “divide the assets equally into separate trusts for my children after my youngest child has reached age 25.” Based on this language, each trust is going to have to take Required Minimum Distributions out over the life expectancy of the oldest child (assuming that the children and individuals younger than the oldest child are the only beneficiaries of the trusts that will be established).

A better approach would be to provide for funding of a side trust that could be used to provide health, education, maintenance, and support for the youngest child or children, with the net remaining amount to be distributed equally among the trusts for the children once the youngest child has reached age 25.  The IRAs/Plans can then be allocated equally among the trusts for the children, which can be formed on or before the deadline for establishing separate accounts.

15.) Separate Accounts Rule. This rule allows an IRA/Plan to be paid to multiple beneficiaries based upon their respective life expectancies if separate IRA/Plan accounts are established.  The applicable distribution period for each separate account is determined by disregarding the other beneficiaries, but only if the separate accounts are established on a date which is no later than the last day of the year following the calendar year of the Plan Participant’s death.  Reg. 1.401(a)(9)-8, A-2(a)(2).  However, when IRA/Plan account division occurs by operation of a single trust that is named as beneficiary, the separate accounts rule is not available for purposes of determining the life expectancy of multiple beneficiaries.  Reg. 1.401(a)(9)-4, A-5(c).  Where the Plan/IRA beneficiary is a trust with multiple beneficiaries, the life expectancy of the oldest possible Designated Beneficiary is used to determine the applicable distribution period.

EXAMPLE: Where an IRA is payable by beneficiary designation to a trust with three beneficiaries, and after the death of the Plan Participant the IRA splits into three separate shares payable to each beneficiary, the Minimum Distribution Rules will apply under each separate share as if each beneficiary was the same age as the oldest beneficiary. PLR 200317041; 200317043; 200317044; 200432027.

16.) Separate Trust Rule. Permits separate trusts for separate beneficiaries to each use the life expectancy of the respective Designated Beneficiary where the Plan/IRA is payable directly to each separate trust, notwithstanding that each separate trust may be established after the death of the Plan Participant by testamentary Will provision or under a revocable trust.  This applies as long as the IRA/Plan is divided into separate IRAs/Plans, with the applicable separate trust being named as the beneficiary of the corresponding separate IRA/Plan under the beneficiary designation.[13] Each trust (at the time it receives benefits) must be a separate trust under applicable state law, with its own taxpayer identification number.

EXAMPLE:  An IRA that is payable 1/3 to a trust for one grandchild, 1/3 to a trust for another grandchild, and 1/3 to a trust for a third grandchild will qualify to facilitate having the applicable distribution period determined separately, according to the respective life expectancy of each grandchild.  Note that this can have a much better result than what would apply in the example of the Separate Accounts Rule, especially if there is a large age difference between the beneficiaries of a trust.

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[1] See Natalie Choate’s The 201 Best and Worst Planning Ideas for Your Client’s Retirement Benefits at 3-11.
[2] Id. At 3-12
[3] Choate’s The 201 Best and Worst at 3-13.
[4] Choate’s The 201 Best and Worst at 3-16.
[5] Choate’s The 201 Best and Worst at 3-18 and 3-19.
[6] § 1091
[7] Choate’s The 201 Best and Worst at 3-37
[8] Choate’s The 201 Best and Worst at 3-16 and 3-17.
[9] Choate’s The 201 Best and Worst at 3-26
[10] The rule reads as follows, and no-one knows how it will work: “For assets in individual retirement accounts described in section 408 or 408A of the Internal Revenue Code of 1986, other than a simplified employee pension under section 408(k) of such Code or a simple retirement account under section 408(p) of such Code, the aggregate value of such assets exempted under this section, without regard to amounts attributable to rollover contributions under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed $1,000,000 in a case filed by a debtor who is an individual, except that such amount may be increased if the interests of justice so require.” 11 USC § 522
[11] Choate’s The 201 Best and Worst at 3-37
[12]  The author used to think that a fairly high age was 30, when the author was 20.  Now the author thinks that 70 is young.
[13] Some commentators believe that the separate trust rule will still apply if the IRA/Plan is not divided into separate IRAs/Plans, so long as the beneficiary designation specifies that a distinct portion of the IRA/Plan will be payable to each separate trust.  The authors are not aware of any IRS guidance on this issue, but conservative planners will want to divide the IRA/Plan into separate IRA/Plans during the Plan Participant’s lifetime to assure that the separate trust rule will apply.

The Tipping Point in a Health Care Network
by Pariksith Singh, M.D.

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Pariksith Singh, M.D. is board certified in Internal Medicine. Dr. Singh received his medical education at Sawai Man Singh Medical College in Rajasthan, India (where he was awarded honors in internal medicine and physiology).  His residency training occurred at All India Institute of Medical Services (New Delhi, India) and Mount Sinai Elmhurst Services, (Elmhurst, New York).  Upon completion of his residency, Dr. Singh relocated to Florida and worked for several years before establishing Access Health Care, LLC in 2001.

The tipping point of a health care network in a selected geographic area is reached when the growth of the network begins to happen on its own. This occurs when the resistance to development begins to melt away and providers in the area realize that they have a significant advantage in joining the network.

While economies of scale may play a role in reaching the tipping point, the more important aspect is economies of scope and a sense of mutually beneficial relationships among the community of vendors and providers. At this point, a strongly integrated network becomes inevitable in the mind of the community with an understanding that such a development brings a shift in the way health care will be practiced and it brings tremendous advantages.

The most important aspect of such network development in my mind, is its emphasis on relationships, a long-term investment from all parties, and a building up of trust. Service and value-creation are the key based on integrity and credibility. Initially, there may be significant resistance, even verbal and emotional violence, warnings of grave injury to providers and patients. But as the network is built brick by brick, rather person by person, such resistance melts away into sheer resistance.

What are the components of building a health care network? The key is to develop an anchor practice or multiple anchor practices, preferably in primary care, which makes one a part of the community. This is the most difficult step and requires hard work against great resistance. The second step is to build a non-confrontational relationship with patients, vendors, facilities administrators and health care providers. Once the anchor practice takes hold, it should be expanded or enlarged by bringing in more providers or creating more offices using a hub and spokes model.

The emphasis of the practice should be on customer satisfaction, quality, compliance and evidence-based medicine. The stronger the engagement with patients, the easier it is to develop the network. One often finds that a physician community is seldom completely united. There are factions, old grudges and a sense of dissatisfaction with the status quo among the non-group members. It is extremely important to know the lay of the land, areas of population concentration and the dynamics of various factions among the physicians. Invariably, these physicians will want to develop relationships and might wish to outdo one another when the tide turns.

It is important to be focused on one’s mission, and it is best to do so in a non-threatening manner. Having a higher cause is great help. Financial and operational benefits that might accrue to other providers when they join the band wagon should be reviewed compliantly with a sense of service and humility. There are times when one may need to take a stand but that must be done so professionally and with gentle firmness.

It may be important to offer several lines of service, to touch the provider at multiple levels and in multiple ways. Building relationships in a team based approach helps since each provider is different in aptitude, background, preference and needs. A team comprising of a physician liaison, compliance and quality officers, managed care or accountable care solutions and resources, IT services, data and analytics, and legal and financial counselors may be used to reach out to providers in a holistic manner.

Besides building a primary care network, one should strongly consider building a specialty network made up of a network of hospitals, nursing home specialists, and various outpatient services such as radiology, physical therapy, home health care, phlebotomy stations and specialty testing. A specialty network brings tremendous dynamic value to a primary care network since it helps build strong relationships with specialists, hospitals and skilled nursing facilities especially if patients are managed in a strong care management environment.

A specialty hospitalist network can enhance the primary care network several-fold by helping cover physicians who are strictly out-patient, bring a focused effort to take excellent care of the ‘captive’ inpatients and ensuring continuity of care without the chance of patient care ‘falling through the cracks’ if thoroughly integrated.

Market saturation may be important but presence and proper branding of one’s product is more important. Marketing is helpful for new physicians in the area or after a strong base for a primary care network is created but is not the main goal of the network. Activities and events to create community outreach are important to avoid the appearance of being ‘carpet baggers’ (using manipulation or fraud to obtain an objective).

Even after a network is built, it is important to provide excellent service that is always making an effort to improve, is provider- and patient-centric, and focused on quality and compliance. Inducements are prohibited and are never necessary for patients or providers.

If these principles are followed, a network is inevitably created and is able to develop in the correct way. Patience and systems thinking is a must along with a vast vision that does not react constantly, is detail-oriented, and yet extremely nimble with operational leverage.

Richard Connolly’s World
Celebrity Estate Round-Up, Part I

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 a link to the articles.

This week, we are featuring stories on the issues surrounding celebrity estates. The first article is entitled “Robin Williams’ Widow Starts a Court Battle – But Why?” This article was written by Danielle and Andy Mayoras and featured on Forbes.com on February 3, 2015.

Richard’s description is as follows:

When Robin Williams tragically committed suicide, he left behind three children from his first two marriages (ages 23 to 31) and a widow of less than three years, Susan Schneider Williams. Unlike many celebrities, Robin Williams took the time to create a thoughtful and detailed estate plan, including various trusts to benefit his three children and Susan. The trust established for his wife, called the Susan Trust, referred to and was consistent with a prenuptial agreement the couple signed when they were married in late 2011.

Because Robin Williams’ estate planning was carefully crafted, it initially appeared that his heirs would avoid the bitter family squabbles that affect many mixed-marriage families (in Hollywood and around the country). After all, it is his wishes that matter, and because those wishes were seemingly captured through the proper legal documents, there should be nothing left to fight about, right?

Not so fast. Within the past 24 hours, the news broke that the Williams family will not be so lucky. Susan, through her lawyers, started legal proceedings a few days before Christmas. She asked for a probate court in California to take jurisdiction over the Robin Williams Trust to interpret various provisions that she feels are in dispute. Robin’s three children – themselves coming from two different marriages – filed a unified response through their attorneys and opposed Susan’s court filing. The battle is on.

Please click here to read this article in its entirety.

The second article this week is “Estate of Ernie Banks in Turmoil as Caregiver Claims to be Sole Heir.” This article was also written by Danielle and Andy Mayoras and was featured on Forbes.com on February 19, 2015.

Richard’s description is as follows:

[Mr. Cub] Ernie Banks died on January 23rd at age 83 from a heart condition. Interestingly, his death certificate listed dementia as a “significant condition contributing” to his death. Why is that important?

Only three months before he died, Banks signed a new set of estate planning documents, including a power of attorney, healthcare directive, new will, and a trust. The new documents left his caregiver and talent agent, Regina Rice, in control of everything. Strangely, the will and trust completely excluded his family members and named Rice as his sole beneficiary.

The Banks’ family attorney says his children plan to vigorously contest the will. They believe that Rice coerced their father to sign the new estate planning documents, by controlling and manipulating him. They also say that in the months leading up to his death, Rice prevented them from speaking with their father by phone. They believe that Rice used her position of trust and confidence to take advantage of Banks’ dementia to their detriment.

It will be interesting to see what precautions were taken by the attorney who drafted the “final” estate plan.

Please click here to read this article in its entirety, and stay tuned next week for stories on the conflicts surrounding the estates of Joan Rivers and New Orleans Saints owner Tom Benson.

Thoughtful Corner
Einstein’s Positive Universe – It’s More Than Just Relativity. Positive Equals a Better Professional Life and Performance Squared.
by Dr. Srikumar Rao, as edited by Alan S. Gassman

5 - Rao

If you were not able to join us for the March 5, 2015 ethical credit, 50-minute presentation of How to Handle Stressful Matters in an Ethical Way by Srikumar Rao, then please consider doing so by clicking the link below and contact us about receiving a one-hour credit.

Professor Rao’s discussion was extremely interesting and useful. His discussion of Albert Einstein’s theory of a positive universe was both original and insightful, as represented below:

Let me take you to someone who is one of the greatest known scientists of the world. The person I am referring to is someone you have all heard of. His name is Albert Einstein.

Albert Einstein is revered as a genius, but when we revere him as a genius, we are primarily thinking about his scientific accomplishments. Einstein was the person who gave us first the special theory of relativity, then the general theory of relativity. He was the person who discovered the photo-electric effect for which, in fact, he received the Nobel Prize, and there are numerous other things he did; his scientific accomplishments are legendary.

What few people know is that Einstein was also a philosopher who had a pretty deep understanding of the universe and the way it operates. One of the observations he made is something which is immensely relevant. I found it extraordinarily helpful in my life; it has been extraordinarily helpful in the lives of many thousands of people who have taken my programs and my workshops, and, if you think about it, it will be enormously helpful to you personally.

What Einstein said is that the most important decision you are ever going to make is, “Is the universe friendly?” Let me repeat that – the most important decision you are ever going to make is, “Is the universe friendly?”

Now we all know people who believe that the universe is unfriendly. They believe the sole purpose of the universe is to frustrate you when you are trying to accomplish something. These are the people who believe that the universe knows when you are running late and will arrange for a massive traffic jam exactly when you are running late. We all know people like that. Fortunately, they are few in number. The vast majority of us believe that the universe is indifferent to us. “Here I am doing my thing, and there is the universe doing its thing, and sometimes we seem to collaborate, and sometimes we work across purposes, but eventually, I am me, and the universe is the universe, and the universe does not know about me and does not care about me,” and that is the world the vast majority of us live in.

We all know what we experience in this world. We experience stress, and we experience frustration; some of the time things go so serendipitously well, and we are elated, but much of the time, we are not. But let’s turn the thing around. What if the universe was friendly? Friends do not shaft friends, do they? No, of course not. So if the universe was friendly, would it ever do anything to harm you? Of course not. But then why does the universe do things that you look at it and say, “Hey, this is terrible”?

Well, is it possible, is it just barely possible, that you do not have a sufficient understanding of what forces are in play?

Imagine you are a small child; you are an infant or a baby. What a baby would like is a tub of ice cream, but what would a wise parent provide? Fruits and vegetables. The baby does not want fruits and vegetables. When presented with fruits and vegetables, the baby is happy to label it – “This is bad” – and it is only much later, at a deeper level of understanding and maturity, which the child can say, “Boy am I glad I did not get a tub of ice cream, and I got fruits and vegetables back then.”

What if it is exactly like that in your life? Something happens, and you are about to label it “bad.” That is what the universe gave you, but maybe it isn’t. Maybe that is exactly what you needed. So if that is exactly what you needed, you stop bemoaning the fact that this “bad” thing happened and start thinking about what are the ways in which it can be good? It is an expansion of the Good Thing, Bad Thing parable I have shared before.

So if the universe is friendly, then no matter what you are confronting, it is exactly what you need for your personal growth at this instant.

So here is something for you to think about. Regardless of whether or not the universe is friendly, if you believe that the universe is friendly, your life will be immeasurably improved.

People have no problem in accepting it. They can readily know that – regardless of whether or not the universe is friendly – if you have a deep belief that the universe is, in fact, friendly…then life will improve. The problem is that just because you have an intellectual understanding that a particular model is better than the one you are using, it does not necessarily mean that you can adopt the model. So what can you do to believe that that universe is friendly?

For a live recording of this talk, please click here.

To see Dr. Rao’s website including his amazing course syllabus, please click here.

To hear more from Dr. Rao, a continuation of the webinar from which this article was taken, will be presented on April 21, 2015. This entire session will consist of Professor Rao answering questions on the topic of How to Handle Stressful Matters in an Ethical Way – No Question is too difficult or inappropriate. Please email your questions to agassman@gassmanpa.com and/or srikumarsrao@gmail.com and don’t make them easy! Real stories and predicaments are especially useful. To register for the webinar, please click here.

Humor! (or Lack Thereof!)

In the News
by Ron Ross

NBC cancels new reality show Millionaire Murderer Matchmaker after potential spouses kept disappearing.

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Lab rats, working in their spare time, come up with a cure for old age. They refuse to share the secret with humans out of sheer spite.

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Congressman with Downton Abbey replica office is forced to resign after he is revealed as the father of Edith’s illegitimate child.

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Recent publicity criticizing a lack of diversity inspires The Walking Dead to add a zombie character in a wheelchair. The survivors who fight the zombies refer to him as “Speedy.”

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New research indicates the Founding Fathers were especially proud of the Second Amendment to the US Constitution. “This one is so crystal clear, no court will ever have problems interpreting it,” they said.

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Regular customers of the recently-closed Orlando “Arabian Nights” attraction are invited to a free night at the new local dinner theatre “Cannibal Times.” Hurry! The number of invited guests will be smaller each week.

Upcoming Seminars and Webinars

LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a free 30-minute webinar on COMPARING THE FINANCIAL STRENGTH AND RISKS ASSOCIATED WITH DIFFERENT LIFE INSURANCE CARRIERS.

Date: March 31, 2015 | 5:00 PM

Location: Online webinar

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

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Kenneth Crotty, and Christopher Denicolo will be presenting a not-so-free 90-minute webinar for Bloomberg BNA Tax & Accounting on WHY FLORIDA IS DIFFERENT – IMPORTANT THINGS THAT ESTATE AND TAX PLANNING PROFESSIONALS NEED TO KNOW.

Date: Thursday, April 16, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY – PART II.

This webinar is a continuation of the How to Handle Stressful Matters in an Ethical Way webinar that was presented by Dr. Rao and Alan Gassman on February 19, 2015. This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced.

See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well.

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: April 21, 2015 | 12:30 p.m.

Location: Online webinar

Additional Information: Please click here to register or email Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS. 

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE 

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE WEBINAR:

Alan Gassman and noted trust and estate litigator, LL.M in estate planning, and blog master Juan Antunez, J.D., LL.M. will be presenting a free 30-minute webinar on ARBITRATING TRUST AND ESTATES DISPUTES. 

Don’t miss Juan’s wonderful blog site entitled Florida Probate & Trust Litigation Blog, which can be accessed by clicking here, and the many vary useful articles thereon.

Date: Tuesday, May 19, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE MIAMI LAKES WORKSHOP:

Alan Gassman will be speaking at the Miami Lakes Bar Association Luncheon on the topic of ACCELERATING YOUR LAW PRACTICE.

Date: Thursday, May 21, 2015 | 11:45 am – 1:45 pm

Location: TBD

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

RUTH ECKERD HALL PLANNING GIVING COUNCIL MEETING

This exciting two-part event will feature an educational presentation and a networking session. Attorneys and CPAs may receive CLE and CPE credit for attending the educational presentation.

The educational presentation will be an entertaining, interactive workshop led by Jack Halloway, a well-known improvisational coach and actor. He is directing “The Complete Works of William Shakespeare (Abridged)” and will share some thoughts on how Shakespeare used law, lawyers, and money in his plays. Some improv will also be included.

Jack Halloway’s presentation will be followed by a social networking and info session. Enjoy some wine and time with fellow Planned Giving enthusiasts!

Everyone who brings a potential donor or new member to the Planning Giving Council will be entered into a raffle for 2 tickets to an upcoming show.

Date: April 21, 2015 | Educational Presentation begins at 4:30 PM | Networking sessions begins at 5:30 PM

Location: The New Murray Theatre at Ruth Eckerd Hall

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com. RSVPs may be sent to Maribeth Vongvenekeo at maribeth@gassmanpa.com, Suzanne Ruley at sruley@rutheckerdhall.net, or Kristy Philippe at kristy.philippe@ms.com.

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LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please click here for a complete schedule or contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

8 - Rates Chart

 

The Thursday Report – 3.19.15 – BP, IRA, “The Look” and the Investigation Process

Posted on: March 19th, 2015

BP Claims Update: Policy 495 by John Goldsmith and Alan Gassman, with assistance from Brandon Ketron and Noah Fischer, Part I

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron, Part III

The Internal Investigation Process for Healthcare Providers by Stephen H. Siegel, Esquire, and Gabriel Imperato, Esquire

The Problem with “The Look” by Rahma Sultan

Richard Connolly’s World – The Executor’s $1.2 Million Mistake

Thoughtful Corner – Why You Should CC Yourself by Email When You Mail a Letter

The Worst Humor Ever!

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.

BP Claims Update: Policy 495, Part I
by John Goldsmith and Alan Gassman
with assistance from Brandon Ketron and Noah Fischer

What is Policy 495?

In a decision last year, the 5th Circuit Court of Appeals held that a claim for losses under the BP Deepwater Horizon Economic & Property Damage Settlement must be supported by Profit and Loss Statements that sufficiently match revenues and expenses. Policy 495, created by BP Claims’ Administrator Patrick Juneau, is an 88 page “solution” to this problem.

Policy 495 attempts to precisely measure losses associated with the oil spill by treating Profit and Loss Statements in claims made by cash-basis businesses more like Profit and Loss Statements in accrual basis accounting. In cash-basis accounting, revenues and expenses are recorded when cash changes hands as opposed to when they actually occur; this leads to unmatched revenues and expense. Policy 495’s goal is to match revenue and expenses by smoothing out the impact of revenue spikes, and variable and occasional expenses, which can distort the monthly accounting of a cash-basis business. Variable expenses change according to sales in a given period, while occasional expenses arise as a result of a change in business environment, such as an oil spill.

When revenues and expenses do not match, the claims’ accountant adjusts the accounting records so that a more “realistic” measure of loss is determined. As a result, your initial estimated compensation may change, requiring additional time to process and receive the claim. In reality, it is generally making most claims lower or eliminating them entirely, but in rare instances, it is actually helping claims.

The original Settlement Agreement allowed alleged victims to base claims on any three-month post-spill time frame they chose. Policy 495 now allocates those occasional expenses across the fiscal year by weight in order to show the monthly variation in a business’ revenue. The policy also establishes additional hurdles to businesses using cash-basis accounting by requiring them to change their accounting method so that revenues get matched with the expenses incurred in earning them.

The following is a basic example of how Policy 495 may be applied:

A law firm operating on a contingent-fee would be required to file a claim that allocates the amount of the fee proportionately across the life of the case instead of in the month it is received.

Linh owns a boutique law firm and uses cash-basis accounting. Her business was affected by BP’s oil spill, so she is planning on filing a claim. During the applicable time period, Linh was in the middle of a contingent fee case which was finally settled in December. The settlement provided her with attorney’s fees of $100,000 which she received in December. The revenues and expenses as recorded are shown below, followed by the adjustment that would have to be made under Policy 495.

2 - Accounting Charts

When viewing the revenues and expenses in charts, it is easy to see why claimants are distraught about their cash-basis businesses’ income being “smoothed over” when switching to accrual basis accounting. In a small amount of cases, Policy 495 has helped businesses receive a larger claim, but “smoothing” has worked in BP’s favor for the far majority of claims.

More on Policy 495

Policy 495 contains seven trigger events that a claim administrator uses to determine if a claim is sufficiently matched. If any of the triggers are not tripped, the claim is presumed to be sufficiently matched; however, if any of the triggers are flipped, the claim will be subject to further scrutiny. The seven trigger events used to analyze profit and loss statements submitted by a claimant are as follows:

  1. Negative total revenue is recorded for any month included within the Benchmark Year(s), Compensation Year, or 2011.
  2. Total revenue recorded in any month included in the Benchmark Year(s), Compensation Year, or 2011 exceeds 20% of the claimant’s annual revenue for the year which includes that month.
  3. The monthly profit and loss statements or other documentation submitted shows that the claimant’s business experienced a period of dormancy during the Benchmark Year(s), Compensation Year, or 2011.
  4. Total variable expenses when summed up are negative for any month within the Benchmark Year(s) or Compensation Year.
  5. Total variable expenses for any month within the Benchmark Year(s) or Compensation Year exceed 25% of the claimant’s annual variable expense for the year which includes that month.
  6. Variable margin percentages when compared between any two months included within the Benchmark Year(s) and Compensation Year vary by more than 50 percentage points.
  7. In any given month within the Benchmark Year(s) or Compensation Year, the variance between that month’s percentage of annual revenues as compared to that same month’s percentage of annual variable expenses exceeds 8 percentage points.

Benchmark Period: The Pre-Deepwater Horizon Spill time period that the claimant chooses as the baseline for measuring its historical financial performance. The claimant can select among the following Benchmark Periods: 2009, the average of 2008-2009, or the average of 2007-2009.

Compensation Period: Selected by the Claimant to include three or more consecutive months between May and December 2010.[1]

The claim accountants must exercise their professional judgment after the trigger event has occurred in order to determine the matched or unmatched status of the profit and loss statements. It is likely that a trigger will be tripped because they are overly inclusive and are set up to encompass the majority of claims. If the claim accountant uses their professional judgment, claims based on an accrual method of accounting should pass as sufficiently matched because the accrual method records income when earned and expenses when incurred, regardless of when payments are made or received. Judge Clement strengthens this stance by stating “the parties apparently agree that matching is required and occurring with respect to the vast majority of accrual basis claims.”[2] Unfortunately, claim administrators have given little deference to accrual accounting based claims based on the fact that as of December 2014, close to 90% of all claims have been deemed “unmatched.”[3] A quote from Tom Young’s article Cleared by SCOTUS, Audit; Juneau & Judge Barbier Should Revisit BP Matching Policy 495 sums up how bizarre this really is:

Fortune 500 businesses, publicly traded companies and entities keeping their books as per Generally Accepted Accounting Principles (GAAP) are now being deemed deficient under the Settlement Program’s matching protocol. Wall Street would likely be quite surprised to hear that the largest and most sophisticated companies in the world are misstating their earnings according to the Claims Administration’s vendors.

Accrual based accounting systems claims should be classified as being matched but instead are subject to adjustments under Policy 495, which strikes the authors as odd due to the fact that the main principle behind accrual accounting is “matching.”

Next week, we will discuss the seven methodologies under Policy 495 and provide details on how Policy 495 applies to claimants whose industry/business falls into one of the more difficult categories for matching revenues with expenses. This includes industries such as non-profits, retail, and medical practices.

John Goldsmith recently appeared on a webinar with Alan Gassman to discuss the claims filing deadline and the various industries impacted by the accrual requirements.

This webinar can be viewed by clicking here.

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[1] http://blogs.reuters.com/alison-frankel/files/2014/05/bp-policy495.pdf
[2] October 2, 2013 Opinion in 13-30315 at 17 (emphasis added)
[3] Young, Tom, Cleared by SCOTUS, Audit; Juneau & Judge Barbier Should Revisit BP Matching Policy 495 www.legalexaminer.com. Claris Law, January 19, 2015. February 27, 2015.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part III
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

4 - Chris

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see Chapter 1 of this presentation, please click here.

To see Chapter 2 of this presentation, please click here.

IRA SERIES CHAPTER 3

CRUCIAL DEFINITIONS AND RULES (Part One): 

1.) 10% Excise Tax. A Plan Participant who has not reached age 59 ½ will pay a 10% excise tax on taxable distributions (in addition to the normal income tax) unless one of the below exceptions from Internal Revenue Code Section 72(t)(2) applies:

  1. A distribution for the payment of certain higher education expenses.
  2. A distribution of up to $10,000 to fund the purchase of a primary residence for a first-time home buyer.
  3. Distributions for certain medical expenses.
  4. Distributions from retirement plans to individuals called to active duty.
  5. The Plan Participant is disabled.4
  6. Annuitized IRA annuity distributions – part of a series of substantially equal annual or more frequent payments made over the life expectancy of the Plan Participant, or over the joint life expectancy of the Plan Participant and his or her Designated Beneficiary. Thus, an annuitized IRA annuity will qualify under this exception.

2.) Required Minimum Distributions or “RMDs.” The amounts which must be paid out in a given year under the Applicable Payment Mode, based upon the life expectancy of the Plan Participant or the Designed Beneficiary. The Applicable Payment Mode also depends upon whether the IRA/Plan names the Plan Participant’s Spouse as the sole beneficiary of the IRA/Plan after the death of the Plan Participant. The majority of plans cannot be aggregated together to satisfy the Required Minimum Distribution Rules. Below (Illustration 2.3) is a chart that summarizes the aggregation rules for Required Minimum Distributions.

Illustration 2.3

3 - Aggregation Rules for Distributions

3.) Required Beginning Date or “RBD.” The date on which lifetime distributions to the Plan Participant from the Plan must begin; this date is April 1 of the calendar year following the later of (a) the calendar year in which the Plan Participant attains the age of 70 ½; or (b) the calendar year in which a non-shareholder Plan Participant retires from being employed by the company which maintains a qualified retirement plan as to such plan.

Illustration 2.4

4 - Minimum Distribution Rules
NOTE: “Age 70 ½” means the April 1st of the calendar year following age 70 ½.

4.) 70 ½ First Year Delay Right.
A Plan Participant who has reached the age of 70 ½ can take some or all of the first year Required Minimum Distributions on any day or days during the calendar year in which age 70 ½ is reached, or by April 1st of the following calendar year. Therefore, the first two annual Required Minimum Distributions could be taken in the calendar year following when the Plan Participant has reached age 70 ½ (by April 1st as to payments required for the first year, and by December 31st as to the payments required for the second year.)The Plan Participant should consult with a tax advisor after reaching the age 70 ½ to determine whether the “first year required payment” should be deferred until the following year, based upon the expected tax bracket or rates of asset growth applicable to the Plan Participant.

If the Plan Participant is going to be in the highest tax bracket in both years, then it most likely makes sense to defer all of the first year Required Minimum Distribution until the second year. If the Plan Participant is not in the highest tax bracket, then it makes sense to spreadsheet the expected tax liability for the two years, while applying a time value of money adjustment for deferral, in order to determine how to best apportion the first year payment.

EXAMPLE (see Illustration 2.5 below) – Claire turns 70 ½ on May 1, 2015, and pursuant to the Minimum Distribution Requirement Table set forth above, has a Required Minimum Distribution of 3.65% of the account balance that must be taken prior to April 1st of 2016 and a 3.77% distribution that must be taken prior to December 31st of 2016. Claire can pay the above percentages in 2015 or 2016, or she may elect to make a 3.65% payment of the 2014 account balance and a 3.77% payment of the 2015 account balance, both in 2016. The amount that would have been paid out in 2015 does not reduce the balance of the amount held in the plan that is used to determine the 2016 Required Minimum Distribution amount. For example, if the account is worth $1,00,000 as of December 31, 2014, and grows by 5.00% during the subsequent two years, then Claire could have distributed 3.65% ($38,325.00) in 2015 and 3.77% ($40,047.15) in year 2016 for a total of $78,372.15. If Claire waits until 2016 to satisfy both years, then the total amount paid will be $79,889.25.

Illustration 2.5
Deadlines for Required Minimum Distributions
Illustration 2.6

Distribution Options

5.) Age 70 ½ First Year Delay Crossover Analysis. What after tax rate of return on investments would a hypothetical 43.4% tax bracket IRA owner need to earn to make it worthwhile to delay taking the first year minimum distribution, after accounting for the excess amount that has to be paid out (but later) if the first year payment is moved from December 31st of the year after turning 70 ½ to April 1st of the second year after turning 70 ½?Based upon the following (Illustrations 2.7 & 2.8), we believe that the rate of return is approximately 2.39%. A return below this level would not generate enough tax-deferred growth to offset the additional tax owed in the second year.

Illustration 2.7

5 - Crossover Analysis
Illustration 2.8

Crossover Analysis Chart

6.) Other Considerations in Delaying the First Year’s Minimum Distribution.

  1. Social Security Benefits – Social security benefits become taxable if “provisional income” exceeds a certain amount. Provisional income is calculated by making certain adjustments from the taxpayer’s gross income. Distributions from retirement plans count for the purpose of determining if tax is owed on Social Security Benefits and are considered as part of provisional income. Therefore, the effect on the taxability of social security payments should be considered in deciding when to take the first year’s required minimum distribution.
  2. Audit Risk – The IRS is currently in the middle of a major initiative to crack down on Plan/Participants who do not distribute their required minimum distributions. If a taxpayer decides to delay the first year’s required minimum distribution, he or she will check the box that indicates to the IRS that the Plan/Participant is over the age of 70 ½ and distributions are required; however, the taxpayer will report no distribution and have no 1099-R on file. This could raise a red flag even though the taxpayer has not done anything wrong.
  3. Avoiding the Confusion – As discussed above, the two RMDs will be computed using different account balances, different divisors, and have different deadlines. The simplest option is to just take the entire first year’s Required Minimum distributions on or before December 31st in the year the Plan/Participant turns age 70 ½.

Stay tuned next week for Part IV of “Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits.”

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4 An individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Secretary may require. § 72 (t)(2)(A)(iii)

The Internal Investigation Process for Healthcare Providers
by Stephen H. Siegel, Esquire, and Gabriel Imperato, Esquire

6 - Siegel and Imperato

Stephen H. Siegel received his Juris Doctor from the Georgetown University Law Center in Washington, D.C. He is Board Certified in Health Law by the Florida Bar and has been Certified in Healthcare Compliance by the Health Care Compliance Association. With 30 years of health law experience, Mr. Siegel is currently with Broad and Cassel, where he represents a wide range of health care providers and suppliers and helps clients navigate the changes in the health care industry that are the result of the Affordable Care Act and HIPAA-HITECH. Mr. Siegel can be reached at shsiegel@broadandcassel.com.

Gabriel L. Imperato received his Juris Doctor from De Paul University College of Law. He is Board Certified in Health Law by the Florida Bar and has been Certified in Health Care Compliance by the Heath Care Compliance Association. Mr. Imperato is the Managing Partner of the Fort Lauderdale office of Broad and Cassel and serves on the Firm’s Executive Committee. His personal practice includes representing individuals and organizations accused of health care fraud and assisting health care organizations with corporate governance and compliance matters. Mr. Imperato can be reached at gimperato@broadandcassel.com.

Healthcare providers and vendors who provide items and services to providers have many reasons to carefully evaluate their legal and financial risk. One reason might involve learning that the organization is being investigated by the federal government (for example, the OIG, CMS, or FBI). Alternatively, a staff member or vendor may tell the owner about questions regarding the documentation supporting the business’ billings. The provider/vendor needs to investigate the allegations, evaluate the legal and financial risk, and take appropriate corrective action; otherwise, the risk of facing significant administrative, civil, or criminal sanctions can become very real.

Many organizations do not see a value in or have the resources to conduct an internal investigation and resist doing so. Conducting an internal investigation is sometimes viewed as an admission that something is “wrong” and there is a “problem.” The obligation to and cost of fixing the “problem,” both financial and reputational to the organization and senior management, is another concern. Frequently, it also is difficult to demonstrate how internal investigations contribute to the “bottom line.”

Every Medicare or Medicaid provider is expected to implement and maintain a compliance program that satisfies all 7 elements set out in the Federal Sentencing Guidelines. How sophisticated a practice’s compliance plan needs to be and the resources devoted to it should be a reflection of the size of the organization. Significantly, in order to satisfy at least 4 of the elements, a provider/vendor needs to be able to conduct effective internal investigations.

Although every internal investigation is different, there are common elements. Specifically, determining (i) the facts and identifying the associated risks; (ii) what happened and who was involved; and (iii) what needs to be done to rectify the situation.

In many situations, there is no realistic alternative to conducting an internal investigation. Healthcare providers and vendors cannot safely disregard allegations involving, for example, receipt of incorrect payments from Medicare or involvement in an arrangement that violates the Stark Law. There is an obligation to institute an internal investigation in order to determine the truth of the matter and take appropriate corrective action, including repaying Medicare. To make that obligation clear, a provider must repay any “known overpayment” to Medicare, usually within 60 days of discovery. Otherwise, the organization may become a defendant in a lawsuit brought by either the government or a “Whistleblower” under the Federal False Claims Act, where penalties are as much as treble damages plus $11,000 per claim, and possible exclusion from the Federal health care programs.

An effective internal investigation requires identifying the individuals (staff and/or outsiders) who have the needed expertise. Whether to bring in outside legal counsel, thereby potentially having the ability to conduct the investigation under the attorney-client communications privilege, is an important issue that should be addressed at the planning stage. The ability to assert this privilege may become critical in the event of future litigation or settlement negotiations.

After determining the facts and establishing responsibility, an internal investigation’s findings should provide the business’ senior managers the information needed to understand and weigh the risks, decide further actions, and oversee the development and implementation of appropriate corrective actions. For example, the organization may develop and implement new policies and procedures, terminate/add/re-train personnel, implement or expand staff training, engage consultants, and/or take advantage of the government’s various voluntary disclosure protocols.

Today, every healthcare provider and vendor should anticipate that it will need to conduct multiple internal investigations. If the business does not have the resources internally (and many do not), it should be prepared to look for the expertise outside. While the internal investigation process is not desirable, pleasant, or inexpensive, in the long run, a provider or vendor that finds and fixes its problems itself is going to be better off than one that ignores the problems and acts like an ostrich until forced to do so by either a Whistleblower and/or the government.

The Problem with “The Look”
by Rahma Sultan

Rahma Sultan is in her 2nd year at Stetson University College of Law where she is a candidate for the Social Justice Advocacy Certificate. She hopes to pursue a career in civil litigation upon graduation.

Abercrombie and Fitch is a popular, preppy, teen retail store. They are being sued by the Equal Employment Opportunity Commission (EEOC) on behalf of Abercrombie applicant Samantha Elauf for basing its hiring practices on religious discrimination.

In 2008, when Elauf was 17 years old, she applied for a job at an Abercrombie Kids store in Tulsa, Oklahoma. She was interviewed for the position by Heather Cooke, an assistant manager at the store. Elauf was given a high score for the interview, and Cooke recommended her to be hired, but Cooke advised her superiors (the ones that make the final hiring decisions) that Elauf wore a headscarf, which she assumed was for religious purposes. At the interview, Eluaf wore a black headscarf, which is apparently a big no-no for Abercrombie. The superiors, upon hearing this, advised Cooke not to hire Elauf.

The retailer told the EEOC that “under The Look Policy, [sales] associates must wear clothing that is consistent with the Abercrombie brand. Associates cannot wear hats or other coverings, and they cannot wear clothes that are the color black.”

Abercrombie describes its style of clothing as “All-American” and they go on to explain that America is a diverse place and no one will be discriminated against based on race, religion, ethnic origin, etc. Abercrombie has a very detailed and strict policy on how its employees should dress. The employee handbook covers everything from nail polish to jewelry to hair color to how to style clothing and more. Abercrombie strictly enforces its “Look Policy,” but there are circumstances where Abercrombie and Fitch will make an exception. For example, “head coverings, including baseball caps, are not permitted. For certain purposes, such as religion or disability, however, associates may be permitted to wear appropriate head coverings.”

This exception was put into place after Abercrombie settled a similar lawsuit with one of its former employees, Hani Khan. Khan worked at Hollister (another retail store owned by Abercrombie) in their stockroom for about four months. During a visit from the district manager, Khan was asked to remove her headscarf because it did not fit the company’s “Look Policy.” When she refused to remove the scarf, she was suspended and then ultimately terminated.

The Supreme Court has two options in this case. Employers will either be granted the discretion to silently stereotype people and base their hiring practices off of the way a person looks and dresses, or the employer can simply ask the employee or applicant why they wear a headscarf, turban, or yarmulke and whether or not they would seek a religious accommodation. The latter will be the result if Elauf and the EEOC prevail in this case.

While it may be an awkward (and perhaps unnecessary, in most instances) conversation to have with potential employees, the second option addresses the issue head-on. If Abercrombie really believes in the “All-American style,” the company should have no problem hiring anyone based on appearance.

On the other hand, opponents might argue, is it really so bad that Abercrombie has a “Look Policy”? As a clothing store, does it not have a right to require its employees to dress a certain way in order to promote its brand?

We will find out the answer in June! The Supreme Court is expected to make its ruling on this matter by the end of its term.

Richard Connolly’s World
The Executor’s $1.2 Million Mistake

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 a link to the articles.

This week, the article of interest is “The Executor’s $1.2 Million Mistake” by Ashlea Ebeling. It was featured on Forbes.com on March 4, 2015.

Richard’s description is as follows:

Here’s a tale of caution about being an executor, the person you appoint in a will to oversee your estate after your death.

The cast of the story includes a 73-year-old high-school-educated homemaker named executor of a nonagenarian cousin’s will; an attorney who was secretly battling brain cancer; seven distant relatives; and three charities all due a piece of a $12.5 million estate, and an Internal Revenue Service bill for $1.2 million in penalties and interest for failure to file an estate tax return and pay taxes on time levied on the estate.

In an appeal to the US Court of Appeals for the Sixth Circuit filed in February, the executor is trying to recover the $1.2 million. The question at hand: was her failure to file the return and pay the tax on time due to reasonable cause and not willful neglect?

The details might make you think twice about who you appoint as executor of your will – or whether you agree to take on the role for a friend or relative.

Please click here to read this article in its entirety.

Thoughtful Corner
Why You Should CC Yourself by Email When You Mail a Letter

Some clients request that correspondence and documentation not be emailed to them, or they do not have an email address at all. This is fine, but how will your staff find this correspondence later if they are trained to rely upon email searches to recover things? What if you need an extra copy down the line and want to see exactly what was sent to the client? How will you verify that the letter has actually gone out?

The simple solution is to have your assistant always have you listed as a carbon copy (“CC”) party to each letter. Have this “CC” go via email with your email address. Then, when the correspondence is ready to be sent, you will be emailed a copy, and everyone will be able to both verify that the correspondence was sent to the client and be able to find the correspondence later, if necessary.

If you simply save a copy of the correspondence to the client’s computer directory, you will not necessarily be able to confirm later that the correspondence was actually sent, but if you receive the correspondence via a “CC” in your email inbox, then you know the client has received the correspondence, too.

The alternative is to utilize the blind carbon copy (“BCC”) function to implement this practice. We do this for each letter – whether it is going to the client by email or not – so correspondence can always be easily tracked and substantiated.

Speaking of the “BCC” feature, however, be careful when you send an email to someone and “BCC” someone else!

If the person receiving the “BCC” hits “Reply All” and transmits a message, then the person or people who received the original email will know there was a “BCC” included with the message. For instance, say you send an email to Person A and Person B. You also include on this email a “BCC” to Person C. If Person A or Person B hits “Reply All,” their message will not be transmitted to Person C, and Person C will not show as a recipient anywhere within the transmission. However, if Person C hits “Reply All,” everyone will receive their message, and therefore, Person A and Person B will know you included a “BCC” on the original email.

This could set your relationship back to 44 BC, which is when Caesar was killed by Marcus Brutus and 59 co-conspirators adjacent to the Theatre of Pompey on the 15th day of March after it was determined that his emperor malpractice policy did not have sufficient limits of liability to cause a trial to be worthwhile. Salad dressing has not been the same since.

The Worst Humor Ever!

Illegal Pad 1

Illegal Pad 2

Upcoming Seminars and Webinars

LIVE WEBINAR:

Alan S. Gassman, Christopher J. Denicolo, and Edwin P. Marrow, III will present a 90-minute Strafford Publications, Inc. webinar entitled STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EVOLVING TOOL TO MAXIMIZE STEP-UP IN BASIS.

In an environment wherein the focus is shifting toward maximizing income tax basis step-up, counsel must be knowledgeable of all tools necessary to reach this goal. One tool that is beneficial for preserving both the inheritance tax exemption and basis step-up is the joint exempt step-up trust (JEST).

This panel will review questions such as:

  • What are the best practices for structuring a JEST?
  • What drafting techniques must be implemented to maximize basis step-up at both the first-to-die and surviving spouse’s deaths?
  • What is the IRS guidance on this tool offered through the Technical Advice Memorandum and Private Letter Rulings?
  • Under what circumstances is the JEST most appropriate?

Date: Tuesday, March 24, 2015 | 1:00 PM – 2:30 PM

Location: Online Webinar

Additional Information: For more information or to register, please click here. You may also email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 30-minute webinar on COMPARING THE FINANCIAL STRENGTH AND RISKS ASSOCIATED WITH DIFFERENT LIFE INSURANCE CARRIERS.

Date: March 31, 2015 | 5:00 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Juan Antunez will be presenting a 30-minute webinar on ARBITRATING TRUSTS AND ESTATES DISPUTES.

Date: Tuesday, April 14, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Kenneth Crotty, and Christopher Denicolo will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on WHY FLORIDA IS DIFFERENT – IMPORTANT THINGS THAT ESTATE AND TAX PLANNING PROFESSIONALS NEED TO KNOW.

Date: Thursday, April 16, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY – PART II.

This webinar is a continuation of the How to Handle Stressful Matters in an Ethical Way webinar that was presented by Dr. Rao and Alan Gassman on February 19, 2015. This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced.

See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well.

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: April 21, 2015 | 12:30 p.m.

Location: Online webinar

Additional Information: Please click here to register or email Alan Gassman at agassman@gassmanpa.com for more information.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS. 

This webinar includes over 30 interactive spreadsheets and explanatory tools that you need to know how to use to best serve your clients!

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION: 

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT 

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION: 

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE 

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION: 

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

The tentative schedule for this one-day program is as follows:

5 - Martin County Schedule

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

8 - Rates Chart

The Thursday Report – 3.12.15 – Spock-o-prudence: The Needs of the Many Outweigh the Needs of the Few – 335 S.W.3d 126 (Tex. 2010)

Posted on: March 12th, 2015

Live Long & Thursday: Readers Respond

Initial Life Insurance Applications May Need to be in Separate Increments

Advising Clients on What to Take to the Division of Motor Vehicles to Transfer Ownership of a Motor Vehicle or a Florida Registered Boat

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part II by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

Richard Connolly’s World – Lawsuits’ Lurid Details Draw an Online Crowd

Thoughtful Corner – What is Write About the Following?

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 Janine Gunyan at Janine@gassmanpa.com.

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

The Needs of the Many Outweigh the Needs of the Few

This now iconic line was first spoken by Leonard Nimoy as Spock in 1982’s The Wrath of Khan. Spock stated, “Logic clearly dictates that the needs of the many outweigh the needs of the few.” Captain Kirk responded with, “Or the one,” thus setting up a pivotal scene near the end of the film. To see a clip of Spock speaking the famous axiom, please click here.

This phrase has had a great cultural impact, as its philosophy continues to be widely demonstrated in film, television, and books of all genres.

The phrase even made its way into the Texas Supreme Court. See 335 S.W.3d 126 (Tex. 2010). Spock’s famous quote was cited in Robinson v. Crown Cork & Seal when the court stated:

Fortunately, we are not without guidance. Appropriately weighty principles guide our course. First, we recognize that police power draws from the credo that ‘the needs of the many outweigh the needs of the few.’ Second, while this maxim rings utilitarian and Dickensian (not to mention Vulcan), it is cabined by something contrarian and Texan: distrust of intrusive government and a belief that police power is justified only by urgency, not expediency. That is, there must exist a societal peril that makes collective action imperative.

To see more from this 2010 case, please click here.

Live Long & Thursday: Readers Respond

We had a great response to last week’s article tribute to the late Leonard Nimoy. To see the article (and our other Star Trek humor!) please click here.

Here are just a few of the messages we received:

“Thanks for the tribute to Leonard Nimoy (Mr. Spock) who was then, is now, and will always be my friend. Star Trek remains, to this day, my favorite, both the TV shows and the movies. RIP Mr. Spock; you will be missed always.”
– Velma Saccone, vsaccone@verizon.net

“I had quite a chuckle on the Nimoy article. I think I’ll Photoshop my picture over yours and save $200 – only for “fair use,” though.”
– Edwin P. Morrow, III, edwin_p_morrow@keybank.com

“Live long and prosper, Alan!”
– Jacqueline Maltry, jmaltry@tampabay.rr.com

“Alan, you are FUNNY! This [article] is great! Thanks for making my weekend!”
– Dr. Srikumar Rao, srikumarsrao@gmail.com

Who is your favorite Star Trek character? Tell us at agassman@gassmanpa.com!

Initial Life Insurance Applications May Need to be in Separate Increments

Initial life insurance applications may need to be in separate increments so policies purchased can be more flexible overall.

For example, recently, a client applied to well-known insurance carrier for two multi-million dollar universal life insurance policies. When it was time to take delivery of the policies, we requested separate policies in $5,000,000 increments instead.

This would have enabled the client to drop some of the coverage without complicated internal adjustment repercussions that would have otherwise applied.

The carrier refused to issue the policies in this manner, thus requiring the client to go through underwriting again to receive new offers from the initial carrier and/or other carriers, as opposed to having the flexibility that had always existed in the industry.

We can’t tell you which carrier this was with, but we can tell you that their name had to do with the Gettysburg Address.

As the result of this, it appears that we need to urge clients and insurance agents to put applications in for separate incremental policies.

This can be particularly important with term insurance coverage because a great many term policies cannot have the death benefit reduced and thus, are completely inflexible.

Advising Clients on What to Take to the Division of Motor Vehicles to Transfer Ownership of a Motor Vehicle or Florida Registered Boat

So often, we advise clients (or should advise clients) to transfer ownership of a car or boat, but they are not sure how they are to go about doing so. The following list was prepared by Stetson Law Student Rahma Sultan, given the lack of such instructions or information on the DMV website or Wikipedia.

Instructions for Transferring Ownership of a Florida Motor Vehicle

To transfer ownership of a vehicle currently titled in Florida, you must bring the following to any DMV office:

  1. The Application for Certificate of Title With/Without Registration properly completed by both the buyer and the seller
  2. A Notice of Sale or Bill of Sale is suggested and may be required.
  3. Purchaser’s name, selling price, and odometer reading (if applicable) must be entered.
  4. Proof of current Florida Property Damage and Personal Injury Protection insurance
  5. The name of your Florida licensed insurance company and policy number
  6. Each applicant must be present to sign a new Application for Title, or a properly completed Motor Vehicle Power of Attorney may be furnished.
  7. Personal identification, such as a driver’s license, is required for notarization of signatures.
  8. If the applicant does not hold a Florida Driver License or Identification Card, a photocopy of their out-of-state license or United States passport is required.
  9. A copy of your current auto registration when transferring a license plate is required.
  10. Any alterations on the Title may require additional documentation.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – Part II
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

4 - Chris

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

To see Chapter 1 of this presentation, please click here.

IRA SERIES CHAPTER 2

PLAYERS:

1. IRA/Pension Plan/Retirement Plan Accounts

For the purposes of this handbook, we use these terms interchangeably, and will most commonly refer to them as “IRA/Plan.”

Many pension plans and IRA custodians limit beneficiary designation rights, sometimes necessitating rollover to an IRA that will permit the desired planning configuration, whether before or after the death of the Plan Participant.

The actual technical names given to the various plans that come under these rules are as follows:

  1. IRA
  2. SIMPLE IRAs
  3. Simplified Employee Pension (SEP)
  4. Employer sponsored retirement plans, such as 401(k) plans, defined benefit plans, defined contribution plans, and profit sharing plans
  5. 403(b) plans
  6. 457(b) plans
  7. Roth 401(k) plans
  8. Roth IRAs; however, Roth IRAs are not subject to the Required Minimum Distribution rules until the owner of the Roth IRA (or the spouse of the deceased owner who rolled over into his or her own Roth IRA) dies.
  9. Canadian Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Plans (RRIFs) will now be treated as US IRA equivalents to a certain extent as per Rev. Proc. 2014-55.

Almost any of the above plans can be transferred to another of the above plans during the life of a Plan Participant.  An IRS chart (Illustration 2.0) released on November 17, 2014 can be found on the following page, as featured in Leimberg Information Services Tax Tips November 24, 2014.

Illustration 2.0

Illustration 1

Also see Appendix D for a recent article by the authors “Bobrow Raises Brows” discussing the limitations on rollovers after Bobrow v. Commissioner which held that a taxpayer is only allowed to roll over one IRA in a calendar year.

2. Person. An individual.

3. Non-Person Beneficiary. An estate, charity, company, trust or other “non-individual” named as the direct beneficiary of an IRA/Plan, or a non-individual that is the beneficiary of a trust to which an IRA/plan is made payable.

4. Original Plan Participant, or just “Plan Participant”. The person who is the IRA owner or qualified retirement plan participant, while alive, or after death.

5. Beneficiary. The person, trust, or other entity named as the direct beneficiary of an IRA/Plan or the person who will inherit directly upon the death of the Plan Participant.

6. Non-Spouse Beneficiary. Any Beneficiary other than the Plan Participant’s spouse.

7. Plan Participant’s Spouse/Surviving Spouse. The person married to the Plan Participant is his or her spouse.  The person married to the Plan Participant on his or her death is the Surviving Spouse.  We are using these terms interchangeably.

Note – Federal pension law gives the surviving spouse an absolute right to be considered the sole beneficiary of certain qualified retirement plans of his or her spouse, unless this right has been legally waived.[1]

8. Bobrow Problem. The January 28, 2014 Tax Court Decision of Bobrow v. Commissioner shocked a great many advisors by finding that a taxpayer who followed IRS Publication 590 and a proposed regulation when making two “tax-free roll overs” during a single year was penalized when the IRS guidance he followed was not permitted under Internal Revenue Code Section 408(d)(3)(B), which only permits one roll over per calendar year.

This case is discussed in Appendix D and casts at least a light gray cloud on much of the conventional wisdom in this area.

9. Designated Beneficiary. An individual beneficiary of a trust receiving IRA/Plan distributions whose life expectancy will be used for purposes of determining the Required Minimum Distributions that will apply.

Note – As discussed below, for a Conduit Trust (which must pay all IRA/Plan withdrawals to the Designated Beneficiary) older individuals and other entities that are beneficiaries of the Trust can be ignored.  For an Accumulation Trust, the Designated Beneficiary must be the oldest named possible individual beneficiary of the trust to which the IRA/Plan is payable, and there can be no non-person beneficiaries under the Accumulation Trust as of September 30 of the calendar year after the death of the Plan Participant.

10. Administrator. The IRA sponsor or qualified retirement plan administrator, or comparable person or entity.  For a pension or 401(k) plan this will typically be someone who works for the sponsoring company who administers the plan.  For an IRA this will typically be the company that sponsors it, such as Schwab, Wells Fargo, Vanguard, and at banks and credit unions.

11. IRA Custodian. A company or bank that sponsors an IRA account such as Merrill Lynch, Schwab, Vanguard, or Wells Fargo.

Note – Many sponsors will not permit an inherited IRA to be distributed intact to a trust that receives the IRA on the death of the Plan Participant, so custodians/brokers/banks may have to be changed after the Plan Participant dies.  These sponsors will sometimes only be willing to have inherited IRAs, or portions thereof, payable to a trust only after the receipt of a court order and/or an IRS private letter ruling.  The most notable of these is Schwab, under both conventional and institutional accounts/managed accounts.2

12. IRA Trustee. A bank with trust company powers, or a nonbank trust company that has been approved by the IRS under Treasury Regulation 1.408-2(e) to serve as a trustee/custodian under the rules that permit trusteed IRA arrangements.  These rules permit the same customized trust agreement that is entered into with the trustee to also control disposition and payment rights, to avoid having to program these into the Plan Participant’s will and/or living trust system, but the same rules with respect to required minimum distributions (e.g., the requirements with respect to the determination of the Designated Beneficiary of the Trust), will still apply.

13. Individual Retirement Trust “IRT”. The Individual Retirement Trust arrangement is permitted under Internal Revenue Code §408(a) and known as an “Individual Retirement Trust or “IRT.”  An Individual Retirement Trust is very similar to a typical IRA custodianship arrangement because a trust company holds the trust assets to comply with the IRA administration rules.  But, unlike a typical IRA custodianship arrangement where the beneficiary may be an individual, Conduit Trust, or Accumulation Trust, an Individual Retirement Trust can in effect become a Conduit Trust or an Accumulation Trust without the need of extraneous trust documents or provisions under a Last Will and Testament.

In other words, instead of having a traditional IRA that would be payable to trust on death, and then having the Trustee receive minimum distributions each year, that in turn can be accumulated, paid out to the beneficiary, or paid to third parties on behalf of the beneficiary, an Individual Retirement Trust avoids the need for an intermediary Accumulation Trust or Conduit Trust.  See Edwin Morrow’s article “Trusteed IRAs: An Elegant Estate Planning Option,” Trusts and Estates, Sept 2009 for an excellent discussion on Individual Retirement Trusts in Appendix C.

14. Qualified Annuity. An annuity contract issued by an insurance carrier using IRA/Plan monies which qualifies as an IRA/Plan, and therefore follows the IRA/Plan rules set forth herein as opposed to the “non-qualified annuity” rules under Internal Revenue Code Section 72.

15. Applicable Payment Mode. The method of payment of Required Minimum Distributions, as described in Chapter Four – Payout Methods, which will apply after the death of the Plan Participant, and will usually continue after the death of the Designated Beneficiary of the Plan Participant’s IRA/Plan.

16. Applicable Life Expectancy Table. The life expectancy table published by the IRS, which applies based on the Applicable Payment Mode of Required Minimum Distributions after the Plan Participant attains his or her Required Beginning Date, or after the death of the Plan Participant.

17. Applicable Required Minimum Distribution Divisor. The divisor for the year in question under the Applicable Life Expectancy Table which is used to determine the amount of the Required Minimum Distribution for a given year. The value of the IRA/Plan on December 31 of the prior calendar year is divided by the divisor in order to determine the amount of the Required Minimum Distribution for the given year.

18. Recalculation of Life Expectancy. The method of calculation whereby the person’s life expectancy is determined each year from the Applicable Life Expectancy Table, which takes into account that every year a person’s life expectancy is reduced by less than one year.  This rule will apply during the lifetime of the Plan Participant, and during the lifetime of a Surviving Spouse beneficiary who is able to follow the rollover rules.  The Applicable Payment Mode is determined by looking at the age of the Plan Participant or the Plan Participant’s Spouse (as applicable) on the Applicable Life Expectancy Table for each year in which a Required Minimum Distribution must be made.  The life expectancy of the Plan Participant or the Plan Participant’s Spouse is therefore “recalculated” each year.

For example, if an unmarried Plan Participant turns age 72 during Year 1, then she would look at the row under the Uniform Lifetime Table that corresponds to age 72 in order to determine the Applicable Required Minimum Distribution Divisor (25.6).  In the next year, when the Plan Participant turns age 73, she will look at the row under the Uniform Lifetime Table that corresponds to age 73 to determine the Applicable Required Minimum Distribution Divisor (24.7).

If a Person other than the Plan Participant’s Spouse is a beneficiary of the IRA/Plan, or if the Plan Participant’s Spouse is a beneficiary of the IRA/Plan but is not the sole or designated beneficiary of the IRA/Plan, then the Recalculation of Life Expectancy principle will not apply.  Instead, the Applicable Required Minimum Distribution Divisor for the first calendar year after the year of the Plan Participant’s death is determined by looking at the row under the Single Life Table that corresponds to the oldest age of the Designated Beneficiary in such calendar year, and the Applicable Required Minimum Distribution Divisor is determined for all subsequent years by subtracting one from the Applicable Required Minimum Distribution Divisor of the preceding calendar year.

For example, if the Designated Beneficiary is not the Plan Participant’s Spouse and is age 72 in the calendar year after the year of the Plan Participant’s death, then the Applicable Required Minimum Distribution Divisor for such year is 15.5. For the next calendar year when the Designated Beneficiary is age 73 the Applicable Required Minimum Distribution Divisor is 14.5, and for each subsequent year, the Applicable Required Minimum Distribution Divisor for the preceding year is subtracted by one, and will therefore be 13.5 years, rather than re-determining life expectancy each year by “recalculation.”

The following chart illustrates the effect of each of the four calculation methods, and the significant difference between the results that apply under each method where the beneficiary of an IRA is age 70 in the first year of withdrawal (as original owner, or beneficiary where original owner died before reaching age 70 ½).

Illustration 2.1
Chart to demonstrate minimum distribution rule calculations for an individual who begins receiving distributions at age 70 (or designated beneficiary) where distributions begin at age 70; also displayed in percentages based off of the applicable divisor % = 1 ÷ divisor)

Illustration 2

Illustration 3

19. See Through Trusts, Accumulation Trusts, and Conduit Trusts. As described below in much more detail, certain trusts can receive IRA/Plan benefits after the death of the Plan Participant without triggering the “5th Year After Death Payment Requirement” by having a Designated Beneficiary whose life expectancy can be used for required minimum distribution rule purposes.  An Accumulation Trust can retain distributions from the IRA/Plan whereby a Conduit Trust must pay all distributions received directly from the IRA/Plan to a Designated Beneficiary upon receipt by the trustee.3  The term “See Through Trust” refers to both Accumulation Trusts and Conduit Trusts.

20. Fifth Year After Death Method. The Required Minimum Distribution rule that requires benefits to be paid out by the last day of the 5th calendar year following the death of the Plan Participant who has not reached age 70 ½, which will apply if no more favorable method of Required Minimum Distributions apply.  If the Plan Participant dies after age 70 1/2 , then the five year rule cannot be used, and instead the life expectancy of the deceased Plan Participant will continue to be used under the “at least as rapidly” method.  For example, if the Plan Participant dies in 2015 before he has attained the age of 70 ½, and no other more favorable method of payment applies, then all assets must be distributed from the IRA/Plan by December 31, 2020, and likewise, no distributions must be made whatsoever until December 31, 2020, notwithstanding, whether an alternative Applicable Payment Mode based upon life expectancy of a beneficiary would apply.  This may be more advantageous for older Designated Beneficiaries.  For example, if the life expectancy of the Designated Beneficiary is only 4.6 years because he or she is age 93, then the choices for distributions would be as follows in Illustration 2.2:

NOTE: This method can only be used if the deceased Plan Participant dies before April 1 of the calendar year following the year of turning 70 ½.

Illustration 2.2
Life Expectancy Method vs. Five Year Alternative

Illustration 4

21. Trust Protector. An individual and/or entity given the power to make changes to trust agreement provisions.

22. Toggle. To, in effect, pull a switch that causes changes in a trust document to facilitate tax or other planning, which will often be in the form of having trust language that permits fiduciaries to change what would have been an Accumulation Trust into a Conduit Trust before the Determination Date (September 30 following calendar year of death of the Plan Participant).          See Chapter Three Section IV.

23. Natalie Choate’s Definitions. Natalie Choate’s book, “Life and Death Planning for Retirement Benefits”, is an indispensable guide and the standard of practice for anyone giving advice in this area.  You can order the book by going to ataxplan.com.  We strongly recommend that you also take a look at what is available from Natalie’s website.  It may be useful to have the following abbreviations from Natalie’s book, and an extra copy of this abbreviation sheet is provided in Appendix D to this outline, so that you can tear it out and insert it into Natalie’s book as a book marker to help with your pilgrimage through her holy scriptures.  We thank Natalie Choate for permission to make mention hereof, or at least for not saying no when I sent her an email asking for permission.  (She now apparently spams us!)  She is without a doubt the most dynamic and constructive force that has occurred in any one area of estate and tax planning law for our generation of planners.

Acronyms and Definitions

Definitions

Stay tuned for the next installment of this series which will feature crucial definitions and rules along with more helpful illustrations.

Christopher Denicolo can be reached at christopher@gassmanpa.com.

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[1] This spousal waiver requirement can be satisfied by an appropriate document signed by the Plan Participant’s spouse before or after the Plan Participant’s death, and will apply to plans covered by ERISA. The waiver requirement will probably not be satisfied by the execution of a prenuptial agreement or an agreement to execute a waiver, because these types of agreements will not satisfy the applicable consent requirements. However nuptial agreements may provide that to the extent the nonparticipating spouse fails to release his or her claims to retirement plan benefits, the heirs of the participant spouse may have a cause of action.  For further discussion see Appendix C Exercise Caution When Drafting Nuptial Agreements With Retirement Benefits
2  The authors have seen emails exchanged with Schwab personnel to verify this, and thank financial planner, John M. Prizer, Jr., CFP, CFA, of Maitland, Florida, for sharing his concerns with respect to this.
3 Treasury Regulation 1.401(a)(9)-5, Q&A-7

Richard Connolly’s World
Lawsuits’ Lurid Details Draw an Online Crowd

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 a link to the articles.

This week, the article of interest is “Lawsuits’ Lurid Details Draw an Online Crowd” by Jodi Kantor. The article was featured in The New York Times on February 23, 2015.

Richard’s description is as follows:

Intimate, often painful allegations in lawsuits – intended for the scrutiny of judges and juries only – are increasingly drawing in mass online audiences far from the courthouses where they are filed.

Though all sorts of legal records circulate online – the document website Scribd has more than six million – those involving gender or claims of sexual misconduct tend to resonate more widely than complex corporate litigation or low-level disputes. Lawsuit papers are generally public, but before the advent of electronic filing, most of them remained stuffed inside folders and filing cabinets at courthouses.

Now some plaintiffs’ lawyers, calculating that they will be protected from defamation suits when making charges in civil complaints, distribute the first filings online as a way of controlling the narrative. But more often, electronic case databases, blogs, and social media propel a case into the spotlight even when the parties are not public figures.

Please click here to read this article in its entirety.

Richard also attached a related Op-Ed from The Wall Street Journal by Alan M. Dershowitz. This piece was published on January 14, 2015. Dershowitz is a retired Harvard Law Professor who recounts his experience with false accusations against him in a lawsuit in which he is not a party and has no standing to dispute.

Professor Dershowitz opens his piece with the following:

Imagine the following situation: You’re a 76-year-old man, happily married for nearly 30 years, with three children and two grandchildren. You’ve recently retired after 50 years of teaching at Harvard Law School. You have an unblemished personal record, though your legal and political views are controversial. You wake up on the day before New Year’s Eve to learn that two lawyers have filed a legal document that, in passing, asserts that 15 years ago, you had an inappropriate relationship with an underage female.

The accusation doesn’t mention the alleged victim’s name – she’s referred to only as Jane Doe #3 – and the court document includes no affidavit by her. But her name doesn’t really matter because you have never been with anyone other than your wife during the relevant time period. The accusations against you are totally false, and you can prove it.

The article discusses in detail why Professor Dershowitz has no legal recourse against his accusers and, when he denies the charges in public, he is sued for defamation by the lawyers who filed the lawsuit.

To read this article in its entirety, please click here.

Thoughtful Corner
What is Write About the Following?

Here are some grammatical questions that we run into in the day-to-day operations of our law firm:

Question #1:

Do you capitalize the word “section” when you mention a law, such as Internal Revenue Code “Section” 1236(a)(1)?

Answer #1:

According to the Bluebook Citations to Internal Revenue Code, if you are citing to the current edition of the Code, use the abbreviation “I.R.C.” and provide only the section number, using the regular Bluebook rules for numbering.

Examples:
I.R.C. § 61.
I.R.C. §§ 55-59.
I.R.C. § 368(a), (c)

You may use a section symbol followed by the appropriate section number as a short citation if the section has been cited at least 5 footnotes above.

Example:
Original Citation: I.R.C. § 897(f).
Short Citation: § 897 (e).

If you are citing to a previous edition of the Code, indicate to the reader that you are doing so by including the year in parentheses after the regular citation.

Example:
I.R.C. § 341 (1954).

Question #2:

When you indent quoted language, do you still need to use quotation marks, like in the following in-line quotation from Mark Twain: “The Thursday Report is the best literary thing to come out since Oliver Twist!”

Answer #2:

According to Purdue University’s Online Writing Lab, also known as OWL, when you indent quoted language, it is known as “block quotations.” These type of quotations are to be used when the quoted language exceeds more than four typed lines. It should be indented one inch from the main margin, and quotation marks are not necessary.

Question #3:

Can you use “and/or” without incurring the wrath of the grammar police?

Answer #3:

“And/or” means that two or more persons or entities indicated may together or separately take the action or responsibility so provided.

Unfortunately, the grammar police say no to this one. According to the English Language & Usage Stack Exchange, a question and answer site for etymologists, linguists, and “serious English language enthusiasts,” the conjunction “and/or” is advised against in formal writing.

It can, however, be a defined term in a contract such as the following:

“Pursuant to the provision above, John and/or Mary will be permitted to enter into the property for the purpose of printing out and reading a Thursday Report.”

The language above outlines that John and Mary are permitted to enter the property independently of the other, or they may do so together.

Question #4:

What the heck does “i.e.” mean?

Answer #4:

“i.e.” is an abbreviation taken from the Latin phrase id est, which means “that is” or “in other words.” When written, there should be a period after each letter, and it should always be followed by a comma.

A common mistake made by many people is the desire to use “i.e.” and “e.g.” interchangeably. This is a big no-no! The Latin phrase exempli gratia means “for the sake of example” and is the phrase “e.g.” is derived from. It is often confused to mean “for example.” This abbreviation should also be written with a period after each letter. Although it is usually followed by a comma, the use of the succeeding comma depends on the context in which the term is being used.

For more information, please click here.

Question #5:

What if you want to enumerate some items after using a semicolon, but the preceding phrase is a question? Can you put a question mark with a semicolon?

Answer #5:

Based on several forums, but no absolute or definite source, the consensus is that there is no need to use both a question mark and a semicolon; the question mark alone with suffice.

Example:
Correct: Which of the following three items do you prefer to do?
Incorrect: Which of the following three items do you prefer to do?:

We appreciate your comments, suggestions, and concerns about the above article. To share your thoughts, please email Alan Gassman at agassman@gassmanpa.com.

Humor! (or Lack Thereof!)

Pi Day Header

Don’t forget to eat pie on Saturday! It’s the perfect pi day: 3/14/15 – won’t happen again for a long time!

Thanks to Carl W. Jenne for bringing this to our attention!

Now, please enjoy the following from Thursday Report comedian Ron Ross:

YOUR NEW TRASH PICKUP SCHEDULE:

Monday – Lawn Trimmings
Tuesday – Trash
Wednesday – Recyclables
Thursday – Words and phrases we no longer use, such as “spiffy” and “rad”
Friday – Ugg Boots

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The Cat Who Knew Too Much

The prosecution had a case against Bentley Faberge
For bribery, tax evasion, and fraud
The only witness against him was his cat
Which turned against him when it was de-clawed.

Bentley sent hit men after the cat,
Planning a hanging or immolation.
But the cops led them astray with a trail of cream,
Heading away from the cat’s undisclosed location.

On the day of the trial, the cat was sworn in.
Bentley watched nervously, eyes open wide.
His hands shook as he poured from the pitcher.
Bentley took a sip of water and died.

He had been poisoned;
The investigation revealed this unsettling epilogue.
For his will had been changed, leaving all to the cat;
The only witness to the revision was the dog.

Upcoming Seminars and Webinars 

LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 22.5-minute webinar on SPLIT-DOLLAR IN 15 MINUTES.

Date: March 17, 2015 | 5:00 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan S. Gassman, Christopher J. Denicolo, and Edwin P. Marrow, III will present a 90-minute Strafford Publications, Inc. webinar entitled STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EVOLVING TOOL TO MAXIMIZE STEP-UP IN BASIS.

In an environment wherein the focus is shifting toward maximizing income tax basis step-up, counsel must be knowledgeable of all tools necessary to reach this goal. One tool that is beneficial for preserving both the inheritance tax exemption and basis step-up is the joint exempt step-up trust (JEST).

This panel will review questions such as:

  • What are the best practices for structuring a JEST?
  • What drafting techniques must be implemented to maximize basis step-up at both the first-to-die and surviving spouse’s deaths?
  • What is the IRS guidance on this tool offered through the Technical Advice Memorandum and Private Letter Rulings?
  • Under what circumstances is the JEST most appropriate?

Date: Tuesday, March 24, 2015 | 1:00 PM – 2:30 PM

Location: Online Webinar

Additional Information: For more information or to register, please click here. You may also email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 30-minute webinar on COMPARING THE FINANCIAL STRENGTH AND RISKS ASSOCIATED WITH DIFFERENT LIFE INSURANCE CARRIERS.

Date: March 31, 2015 | 5:00 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Juan Antunez will be presenting a 30-minute webinar on ARBITRATING TRUSTS AND ESTATES DISPUTES.

Date: Tuesday, April 14, 2015 | 12:30 PM

Location: Online webinar

Additional Information: To register for this webinar, please click here.

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LIVE BLOOMBERG BNA WEBINAR:

Alan Gassman, Kenneth Crotty, and Christopher Denicolo will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on WHY FLORIDA IS DIFFERENT – IMPORTANT THINGS THAT ESTATE AND TAX PLANNING PROFESSIONALS NEED TO KNOW.

Date: Thursday, April 16, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Kenneth Crotty, and Christopher Denicolo will present a 90-minute webinar for Bloomberg BNA Tax & Accounting on MATHEMATHICSLAND FOR ESTATE PLANNERS – OVER 30 INTERACTIVE SPREADSHEETS AND EXPLANATORY TOOLS THAT YOU NEED TO KNOW HOW TO USE FOR YOUR CLIENTS.

Date: Monday, April 27, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE OLDSMAR PRESENTATION:

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION:

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION:

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, and Barry Flagg will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on THE TAX ADVISORS GUIDE TO PERMANENT LIFE INSURANCE AND STRUCTURING TOOLS AND TECHNIQUES.

Date: Tuesday, May 12, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, please email Alan Gassman at agassman@gassmanpa.com.

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LIVE BRADENTON, FLORIDA 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.

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: Tuesday, May 12, 2015 | Time TBA

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

The tentative schedule for this one-day program is as follows:

5 - Martin County Schedule

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 AM

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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LIVE BLOOMBERG BNA WEBINAR:

Professor Jerome Hesch, Alan Gassman, Ed Morrow, Christopher Denicolo, and Brandon Ketron will be presenting a 90-minute webinar for Bloomberg BNA Tax & Accounting on ESTATE AND TRUST PLANNING WITH IRA AND QUALIFIED PLAN BENEFITS: AN UNDERSTANDABLE SYSTEM WITH CHARTS AND EASY-TO-UNDERSTAND MATERIALS.

This presentation will include a 300 page E-book for each attendee.

Date: Wednesday, June 10, 2015 | 2:00 PM

Location: Online webinar

Additional Information: To register for this webinar, 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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

8 - Rates Chart

The Thursday Report – 3.5.15 – Live Long and Thursday & More Warped Humor

Posted on: March 5th, 2015

1 - Header

* This issue’s date is displayed in Stardate format, in honor of Leonard Nimoy and the Star Trek franchise. To convert a Gregorian calendar date into a Stardate, please click here for a Stardate calculator.

Live Long and Prosper: Leonard Nimoy

Secretary of State Filings Now Slower than a Damaged Klingon Freighter on Impulse Battery Drive

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – A Thursday Report Series Designed to Decipher the Complexities Associated with the Taxation of Retirement Plans, Part I by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

Well-Respected Multi-National Trust Company Opens Office in South Dakota – Very Nice Informational Book Available at No Charge!

Richard Connolly’s World Double Header

Thoughtful Corner – Business Etiquette in Interacting with Clients and Colleagues

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 Janine Gunyan at Janine@gassmanpa.com.

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

Live Long and Prosper: Leonard Nimoy
by Stephanie Herndon and Alan Gassman

Those of us who grew up watching television in the late 1960s while entranced by the space program, the promise of a more ideal society, and the desire to travel in time and see new worlds and civilizations could’ve had no better vehicle, at least on Thursday nights, than Star Trek, and Mr. Spock was a big part of that.

Star Trek’s predecessor was the western show Wagon Train, where a somewhat emotional leader and a logical first mate riding shotgun on explorations to unknown lands made for a very successful formula. Star Trek was almost entitled “Wagon Train to the Stars” and was marketed as a western in outer space before its premiere in 1966.

Star Trek was creator and producer Gene Roddenberry’s science fiction twist for a Wagon Train equivalent, and, with science fiction, Roddenberry could go further in exploring a character so logical that he had to be an alien from another planet. This character was named Spock. He was half human, with shielded and locked up emotions, and half Vulcan, an extraterrestrial humanoid species from the planet with the same name, known for their ability to live logically and with tremendous mental and mathematical power. Spock exemplified these Vulcan characteristics, not to mention the ability to read minds and to pinch people’s shoulders and make them pass out.

Roddenberry intended each episode of Star Trek to tell two stories each week: one of suspenseful adventure and one of morality, like the stories contained in Jonathan Swift’s Gulliver’s Travels. Spock was in constant combat with his emotions, revealing an extremely ironic sense of humor. The character’s journey on the show illustrated an evolution from being extremely starchy and impersonal in the first few episodes to becoming likeable and eventually one of the most beloved, fan-favorite characters of all time.

Spock was portrayed by Leonard Nimoy, an accomplished and talented actor who became an international phenomena through Spock and Star Trek. Nimoy never had the chance to play the role of Colonel Sanders, but he continued to return to Spock and the Star Trek universe throughout his lengthy career.

Gene Roddenberry died in 1991. The following year, a portion of his ashes traveled to space on the space shuttle Columbia before returning to Earth after the crew completed Mission STS-52. Five years after that, a spacecraft owned and operated by Celestis, a company known for performing space burials, was launched into Earth’s orbit aboard a Pegasus rocket. The Celestis spacecraft contained a portion of Roddenberry’s ashes, as well as the ashes of Timothy Leary and 22 other people. This spacecraft disintegrated into the atmosphere in 2002. Roddenberry, Nimoy, and the entire Star Trek team have been credited with fueling public interest in space and space exploration programs.

The computer on the Starship Enterprise was more fun than Siri and proved to be 45 years ahead of its time. Quite likely, Apple computers, the monumental success of Steve Jobs, and Siri would not have happened if a generation of then-teenagers were not helped to see the incredible possibilities that Roddenberry and his team made not only evident but also seemingly probable.

So much of the science fiction portrayed in Star Trek has come true, and so much more will come true as technology continues to grow.

If you have never seen Star Trek, some of our favorite episodes include “The Trouble with Tribbles,” (Episode 44), written by David Gerrold and directed by Joseph Pevney and “The City on the Edge of Forever,” (Episode 28) written by Harlan Ellison and directed by Joseph Pevney. “The City on the Edge of Forever” also features guest star Joan Collins as Edith Keeler, who (spoiler alert!) makes out with Captain Kirk.

Leonard Nimoy and William Shatner (who played Captain Kirk on Star Trek) were very close friends. They, along with Gene Roddenberry, were highly interactive with each other and fans of the franchise.

2 - Alan and Actors

Alan Gassman had a very deep discussion with Leonard Nimoy and William Shatner in Las Vegas in 2009 during the 1.7 seconds that he was given to have his picture taken with Nimoy and Shatner, each of whom asked him for his autograph and invited him to their after-the-signing party to discuss intergalactic trust law and the use of time travel to capture the time value of money and Kentucky Fried Chicken franchises in the Romulan Neutral Zone.

While waiting for approximately 45 minutes for his turn to be photographed with them ($200 per person at approximately 1 person a minute for 45 minutes – not a bad deal for them!) Alan noticed a close friendship between the two and that they appeared to have a lot of things they wanted to talk to each other about.

In any event, we can always salute the late 1960s, Gene Roddenberry, Leonard Nimoy, William Shatner, and others for giving us something else to watch besides Lost in Space, which aired the night before Star Trek each week and makes Star Trek look like the most advanced television show ever created by comparison. (CBS was originally offered Star Trek but passed it up in favor of Lost in Space. Star Trek then landed on NBC instead.)

Kudos to Roddenberry, NBC, and Paramount for a show and storylines that indirectly objected to the Vietnam War and encouraged interracial relationships and helping others. Star Trek showed that people from diverse backgrounds can work together to achieve phenomenal results and that the engineer (Mr. Spock) should always tell the Captain that things take a lot longer than they really take so that he can look like a hero.

Hats off to Leonard Nimoy for being an important part of the team that gave us a fantastic vision, great humor, and most importantly, great motivation for doing the right thing, respecting human rights, taking risks when appropriate, using intuition, and bucking the system in the right way and the right time.

Live long and prosper Leonard Nimoy! We will see you in the next nebula.

See our Humor section below for some of Leonard Nimoy’s best quotes as Mr. Spock. Don’t miss it!

Secretary of State Filings Now Slower than a Damaged Klingon Freighter on Impulse Battery Drive

Due to recent system updates, mass annual report filings, or both, we have noticed a delay in the filing of LLC Articles of Organization when filed through the Florida Department of State online filing system. While we have come to expect that LLC Articles of Organization submitted through the online filing system would result in a confirmation of filing within 24 hours, we recently have encountered a delay of 2-3 business days for some of our LLC filings.

Please also be aware that recent system upgrades seem to have added an extra “last step” screen that can be slightly confusing and may result in your corporate filing not being processed at all. After entering information on the LLC Articles of Organization and hitting “Continue,” you are taken to the Filing Information screen and asked to review the filing for accuracy. If the information entered is correct, you will click on “Continue” and are then taken to a screen that says, “Florida Limited Liability Company Online Filing Information,” where you will be provided with a Document Tracking Number and the charge amount for your filing.

Since this screen provides you with a Document Tracking Number, it is easy to assume that your filing is complete and nothing else is needed. Please note that from this screen, you will have to again click “Continue” to move to the payment screen (and receive a second Tracking Number.)

Our staff has erroneously assumed filing was complete after the first Document Tracking Number was provided. When the LLC was not filed in a timely manner, we contacted the State by phone to provide our Tracking Number and check the status. We were told they had no information regarding our document in their system. Apparently, no information is saved on the Department of State system until payment is processed. The initial Tracking Number you receive will not allow you to check the status of a filing unless you proceeded to the next screen, submitted payment, and received the second Tracking Number.

In situations where time if of the essence, we have found fax-filing with the Department of State (which requires that you have a Department of State account) is often the fastest way to generate a timely filing.

Planning for Ownership and Inheritance of Pension and IRA Accounts and Benefits – A Thursday Report Series Designed to Decipher the Complexities Associated with the Taxation of Retirement Plans
by Christopher J. Denicolo, Alan S. Gassman, and Brandon Ketron

4 - Chris

The rules applicable to retirement plan and IRA distributions, contributions, rollovers, and otherwise can be difficult to understand and complex to implement.  The applicable Internal Revenue Code Sections and Treasury Regulations are somewhat complicated and convoluted, and use many technical “terms of art.”  This makes dealing with qualified plans cumbersome and difficult for laypersons and planners who are not experienced in this area.

We have attempted to simplify the applicable rules into a digestible format with concise explanations of the applicable rules.  We have also prepared charts and explanations to illustrate the key concepts and mechanics of important definitions, rules, and planning strategies.

The Thursday Report proudly will provide a multi-part series to exhibit our materials and charts, and we hope that you enjoy this series as much as we did in putting it together.

IRA SERIES CHAPTER 1 

There are many stages of IRA and pension distribution planning, and many different types of interactive knowledge needed. Nevertheless, a thumbnail sketch of the most important components of knowledge with reference to establishing and funding IRAs and making the best use of planning considerations follows:  

I. Accumulation Stage

  1. IRA Contribution Rules for 2014 tax year
    1. Basic Contribution limit is the lesser of
      1. $5,500 (but $6,500 if over the age of 50)
      2. Taxable compensation for the year
      3. Reduced by the amount of Roth contributions, as described in C.2 below
    2. Other Limitations if covered by a qualified plan at work
      1. Contribution limit begins to be phased out at $96,000 of adjusted gross income, and is completely phased out at $116,000 of adjusted gross income for married filing jointly taxpayers.
      2. Phase out begins at $60,000 of adjusted gross income, and is completely phased out at $70,000 of adjusted gross income for single or head of household taxpayers.
    3. In order to deduct contributions for the 2014 tax year, contributions must be paid prior to the due date for the 2014 tax return (April 15th, 2015). Even if you have not yet made a contribution after year end, a contribution made prior to the filing of the tax return due date is eligible to be treated as made in the prior year.
  2. Coverdell Education Savings Account (Education IRA) Contribution Rules – Grandmas and Grandpas should pay special attention to this. This allows tax-free growth and tax-free withdrawals to pay for permitted educational expenses.
    1. Contributions are limited to $2,000 per year per child. (Note –The limitation is on the total amount the child can receive per year, not on the amount contributed by each person. Therefore if multiple parties contribute to the Educational IRA the total contributions in the aggregate cannot exceed $2,000.)
    2. Balance must be disbursed on qualified education expenses prior to the beneficiary obtaining the age of 30 to avoid penalties and taxes.
    3. Only eligible if AGI of contributor is less than $110,000 ($220,000 if filing joint) (Planning Note – It is possible for the child to contribute to his or her own Educational IRA. If the contributor’s AGI is greater than the limitation, a gift of $2,000 can be made to the child, and the child contributes the money to the Educational IRA, assuming the Child’s AGI is below the limitation amount.
    4. Organizations such as corporations and trusts can also contribute, and there is no requirement for the organization’s income to be below a certain level.
    5. No contribution can be made after beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary.
  3. Roth IRA Contribution Rules
    1. Basic Contribution limit is the lesser of
      1. $5,500 (but $6,500 if over the age of 50).
      2. Taxable compensation for the year
      3. Reduced by contributions to traditional IRAs – See A.1.c above
    2. Other Limitations
      1. Contribution limit begins to be phased out at:
        1. $188,000 for married filing jointly
        2. 127,000 for single, head of household
      2. If contributing to both Roth and Traditional IRA, contributions in the aggregate cannot exceed the $5,500 limitation ($6,500 if over age 50)
  4. Converting Traditional IRA into Roth IRA
    1. You can withdraw all or part of the assets from a traditional IRA and reinvest them WITHIN 60 DAYS into a Roth IRA.
    2. If you started taking substantially equal periodic payments from a traditional IRA, you can convert the amounts in the traditional IRA to a Roth IRA and then continue the periodic payments.
    3. You CANNOT convert amounts distributed in accordance with Required Minimum Distributions Rules into a Roth IRA
    4. Do not include in gross income any part of a distribution from a traditional IRA that is a return of basis, but the rest is subject to income tax upon conversion and does not always make good sense. See Leimberg Information Services Newsletter Archive #549 by Alan S. Gassman, Kenneth Crotty and Christopher Denicolo, entitled One Good Reason Not To Do A Roth IRA Conversion.
  5. Eligible Rollovers
    1. See IRS Chart in Chapter Two.
  6. How Many Rollovers Each Year?
    1. Internal Revenue Code Section 408(d)(3)(B) provides that there can be only one tax free rollover by an individual within a twelve month period.
    2. 2014 Tax Court Memorandum decision of Bobrow v. Commissioner confirmed this treatment by severely penalizing a taxpayer that attempted to roll over multiple IRAs in one calendar year.
  7. Creditor Protection of Owner
    1. Fla. Stat. Ann. § 222.21 provides that retirement plans are exempt from creditor claims as discussed in Chapter Three Section IV. Therefore, the U.S. Supreme Court decision of Clark v. Rameker [1], which found that the federal bankruptcy law will not protect IRAs for those residing in states that do not have exemption statutes for IRAs, will not apply to Floridians.  Archive #251 by Christopher Denicolo, Alan S. Gassman and Brandon Ketron entitled Clark V. Rameker:  Supreme Court Rules that Inherited IRAs Are Not Creditor-Exempt in Bankruptcy.
    2. The majority of other states treat retirement plans as creditor exempt but see 50 State plus D.C. Creditor Exemption Statutes for IRAs, Non‐ERISA 403(b) and Roth Variants provided by Ed Morrow in Appendix C that outlines the Creditor Protection Statutes for each State.
    3. The authors believe that a distribution received by an individual beneficiary of an inherited IRA/Plan or a rollover IRA/Plan will be considered to be exempt from creditor claims from normal general creditors under Florida Statute Section 222.21(2)(c), and may therefore be placed into an exempt asset (such as a variable annuity contract, a cash value life insurance policy, or a tenancy by the entireties account) without being considered a fraudulent transfer (the transfer of funds from one exempt class of asset directly to another exempt class of asset will generally not be considered to be subject to being set aside under the Florida Fraudulent Transfers Act), although a Florida Bar article authored by David Pratt and Lindsay A. Roshkind “Roth IRA Conversions as an Asset Protection Strategy: Does it Always Work?” Feb. 2011 Vol. 85, No.2 indicates that there is a possibility that distributions would not be considered to be exempt from creditor claims.
  8. QDRO Rules – transferring IRA and/or pension balances tax-free upon divorce.
    1. A Qualified Domestic Relations Order is a domestic relations order which creates or recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a qualified plan (i.e. employer sponsored).
    2. QDROs must contain the following information:
      1. The name and last known mailing address of the participant and each alternate payee.
      2. The name of each plan to which the order applies.
      3. The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee.
      4. The number of payments or time period to which the order applies.
  9. Recent Pronouncement on Canadian Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs)
    1. Taxpayers who hold these funds will now automatically qualify for tax deferral similar to US IRA and 401(k) funds.
    2. Previously Canadian taxpayers were required to file a Form 8891 in order to qualify for tax deferral. The IRS has now eliminated Form 8891, and taxpayers are no longer required to file this form for any year, past or present.
  10. Grandfather Rule – TEFRA 242(b) elections
    1. In 1982 TEFRA made significant changes to the Required Minimum Distribution Rules.
    2. If elected prior to January 1, 1984 242(b) allows Plan Participants to use the more liberal rules prior to TEFRA
    3. Significant Rules allowed pre TEFRA
      1. Required Minimum Distributions can be postponed past age 70 1/2 until retirement, regardless of whether the Plan Participant owns more than 5% of the company.
      2. Death Benefits are not subject to the 5 Year Rule, or the At Least as Rapidly Rule.

II. Access Before Age 59 ½

  1. Generally any amount withdrawn prior to the age 59 ½ is subject to an additional 10% excise tax
  2. Exceptions
    1. 60 Day Rule – Any money can be withdrawn temporarily, as long as the money is placed back into the account within 60 days of the withdrawal.
    2. The taxpayer has unreimbursed medical expenses that are more than 10% (or 7.5% if you or your spouse was born before January 2, 1949) of your adjusted gross income.
    3. The distributions are not more than the cost of taxpayer’s medical insurance due to a period of unemployment.
    4. Taxpayer is totally and permanently disabled.
    5. Taxpayer is the beneficiary of a deceased IRA owner. The surviving spouse who is named as a beneficiary of a deceased participant’s IRA/plan who has not reached age 59 ½, may withdraw funds from the plan without being subject to the 10% excise tax unless or until the IRA/plan has been rolled over to the surviving spouse’s own IRA.  This would be a good reason to delay making a complete rollover before being sure that distributions from the IRA/plan for a spouse under age 59 ½ will not be needed.  A disadvantage of the above is that the  surviving spouse will not be able to change the disposition of the assets remaining under the deceased participant’s IRA/plan if the spouse dies without having completed a rollover into his or her own IRA/plan.
    6. Taxpayer is receiving distributions in the form of an annuity.
    7. The distributions are not more than the taxpayer’s qualified higher education expenses. [2]
    8. The taxpayer uses the distributions to buy, build, or rebuild a first home up to $10,000 for any of the following:
      1. The taxpayer
      2. The taxpayer’s spouse
      3. The taxpayer’s child or the taxpayer’s spouse’s child
      4. The taxpayer’s grandchild or the taxpayer’s spouse’s grandchild
      5. The taxpayer’s or the taxpayer’s spouse’s parent or other ancestor
    9. Roth IRA conversions
    10. Qualified Domestic Relations Orders (QDROs) – A transfer from one spouse to another in the event of a divorce. (Why are these not called Qualified Domestic No Longer Have A Relationship Orders?)

III.  Prohibited Transactions, Trusteed IRA’s, and LLCs Owned Under IRA

  1. Generally an IRA is limited to traditional investment categories
  2. Prohibited Investments Include:
    1. Life Insurance
    2. Certain types of derivative positions
    3. Antiques/Collectibles
    4. Most coins, but exceptions include
      1. One, one-half, one-quarter or one-tenth ounce U.S. gold coins (American Gold Eagle coins are the only gold coins specifically approved for IRAs. Other gold coins, to be eligible as IRA investments, must be at least .995 fine (99.5% pure);
      2. one ounce silver coins minted by the Treasury Department;
      3. any coin issued under the laws of any state;
      4. a platinum coin described in 31 USC § 5112(k) ; and
      5. gold, silver, platinum or palladium bullion (other than bullion that is made into a coin) of a certain fineness that is in the physical possession of a trustee that meets the requirements for IRA trustees under Code Sec. 408(a).
    5. IRA trustees are permitted to impose additional restrictions on investments. For example, while the IRS does not prohibit an IRA from investing funds in real estate, due to the administrative burdens many IRA trustees do not permit IRA owners to invest in real estate.
  3. However IRAs can invest in alternative arrangements if properly structured. Strict rules still apply, and the IRA can risk losing its tax-deferred status if these rules are violated.
  4. A prohibited transaction occurs when the IRA engages in a transaction with a disqualified person, which includes
    1. the IRA owner
    2. the IRA owner’s spouse
    3. the IRA owner’s ancestor
    4. the IRA owner’s lineal descendant
    5. any spouse of the IRA owner’s lineal descendant(s)
    6. investment advisors
    7. the IRA custodian or trustee
    8. certain entities in which the IRA owner owns at least 50% interest, such as a corporation, partnership or trust
  5. A prohibited transaction occurs when:
    1. sale or exchange, or leasing, of any property occurs between the IRA and a disqualified person;
    2. there is lending of money or other extension of credit between the IRA and a disqualified person;
    3. there is a furnishing of goods, services or facilities between the IRA and a disqualified person;
    4. the assets are transferred to – or used by or for the benefit of – a disqualified person;
    5. any action by a disqualified person who is a fiduciary whereby the fiduciary deals with the income or assets of the IRA in his or her own interests or for his or her own account; or
    6. receipt of any consideration by Plan Participant from any disqualified person who is a fiduciary dealing with the plan in connection with a transaction involving the income or assets of the plan
  6. For potential sample Operating Agreement language see Appendix B

IV. Access After 59 ½

  1. Distributions are taxable at ordinary income from a Traditional IRA unless:
    1. Rolled over within 60 days (only one per year per taxpayer under the Bobrow v. Commissioner case, discussed at Appendix D)
    2. Considered as a return of a nondeductible contribution
  2. The Coffee and Cream Situation (Partly Taxable Distributions)
    1. Basis (investment in the contract) is received for any non- deductible contributions or rolled over after tax amounts made into an IRA.
    2. Until your entire basis has been distributed, each distribution is partly non-taxable and partly taxable.
    3. The taxable and non-taxable portion is determined by the following formula:

5 - IRA Article Formula

V. Before 70 ½

  1. No distributions are required prior to reaching age 70 ½
  2. No difference between original owner, surviving spouse who received by roll over as direct beneficiary, or divorced spouse under QDRO
  3. Inherited IRAs are different, whether in trust or outright, minimum distribution rules will apply.

VI. After 70 ½ (actually after April 1 of the calendar year after the taxpayer reaches the age of 70 ½)

  1. Exception for Participant in Qualified Pension Plan who owns less than 5% of the Employer
  2. The Required Minimum Distribution rules apply during the lifetime of the taxpayer and/or to a surviving spouse who has rolled over an inherited IRA as a direct beneficiary thereof.
  3. $100,000 per year Charity Exception (Note – only extended through the 2014 tax year, but past history would indicate that it is likely to be extended to subsequent years) 

VII.  After Death of Participant

  1. Surviving Spouse Beneficiary
    1. Sole Beneficiary
      1. Spouse has option to roll over IRA and treat it as his or her own
      2. Can elect to be treated as beneficiary, and surviving spouse’s life expectancy will be recalculated annually
    2. Surviving spouse as sole beneficiary via estate/will or revocable trust
    3. One of multiple beneficiaries
      1. Separate Accounts can be established
      2. Spouse can elect to roll over his or her portion and treat as his or her own IRA.
    4. Surviving Spouse as beneficiary of Conduit Trust
    5. Surviving Spouse as beneficiary of Accumulation Trust.
    6. The best practice may be to have an Accumulation Trust that can be toggled into a Conduit Trust
    7. Income distribution requirements must be met for trust to qualify for the marital deduction.
  2. Individual Beneficiaries
    1. Separate Account/Trust Rules
    2. Life Expectancies are not recalculated annually
  3. Charitable Beneficiaries
    1. Beware of the traps associated with having a charity named as a beneficiary of a trust that is named as beneficiary of the IRA/Plan
    2. Generally, as long as the charitable distribution is made directly from the IRA, it is not taxable
  4. Dispositions to Trust – Here is Where the Rest of the World Lies!

VIII.  And Much More…

Stay tuned for the next installment of this series, Chapter Two, which will feature a rundown of the players involved in planning for ownership and inheritance of pension and IRA accounts and benefits, an acronym chart, and several illustrations to demonstrate different methods for calculating IRA distributions and enhance your learning experience.

Christopher Denicolo can be reached at christopher@gassmanpa.com.

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[1] 134 S. Ct. 2242 (2014)
[2] Qualified Education Expenses include: tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.  In addition if the student is at least a half-time student, room and board are qualified education expenses.

Well-Respected Multi-National Trust Company Opens Office in South Dakota – Very Nice Informational Book Available at No Charge!

Earlier this week, Trident Trust Company, Inc. announced the establishment of Trident Trust Company (South Dakota) Inc., a public trust company licensed and regulated by the South Dakota Division of Banking.

This new office will allow professional advisors and their clients to employ South Dakota’s highly-rated trust laws in a variety of planning situations including:

  • Acting as trustee of South Dakota revocable and irrevocable trusts established by US or foreign settlors (grantors)
  • Acting as trustee of Qualified Domestic Trusts (QDOT)
  • Serving as successor trustee of foreign trusts re-domiciled into South Dakota
  • Acting as trustee of South Dakota Dynasty Trusts
  • Establishing and administering Private Trust Companies

To see a summary of the South Dakota trust legislation and the benefits Trident Trust can offer, please click here to download the free Quick Guide to South Dakota Trusts, provided courtesy of Trident Trust Company (South Dakota) Inc.

Richard Connolly’s World
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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 a link to the articles.

This week, the first article of interest is “Trusts That Can Trim State Income Tax” by Liz Moyer. It was featured in The Wall Street Journal on January 23, 2015.

Richard’s description is as follows:

These trusts may have funny-sounding names, but for some high-net-worth individuals, they are serious tax-minimization tools.

Known as incomplete nongrantor trusts, they are often formed in Delaware, Nevada, and sometimes Wyoming, hence their acronyms DING, NING, and WING. Those states are chosen because they don’t tax the income of trusts established there, even by people who live elsewhere, or have favorable tax rules.

In a typical scenario, an individual would put into the trust an asset or assets that already have gone up a lot in value or that he or she hopes will appreciate sharply, such as shares in a private company that plans to go public. The aim is usually to sell the securities, at which point federal tax would be due – but not state tax. Alternatively, the trust could be used to hold assets that throw off a lot of income each year, sheltering that income from state tax.

While Ohio tax law makes use of this strategy difficult, this article could trigger inquiries from clients.

Please click here to read this article in its entirety.

The second article of interest this week is “Treasure Island: Puerto Rico Bids to Become New Age Tax Haven” by Lauren Gensler. The article was featured in the March 2, 2015 issue of Forbes magazine and was published on their website on February 11, 2015.

Richard’s description is as follows:

As the US Treasury Department continues to tighten its noose around offshore accounts, a new tax haven has sprung up under its nose in the Caribbean. Welcome to Puerto Rico, island of tropical breezes, and (for new arrivals only!) a 0% tax rate on certain dividends, interest, and capital gains.

Yes, this is legal. While the US asserts a sweeping right to tax citizens’ income wherever they live and wherever it’s earned, Section 933 of the tax code exempts residents of Puerto Rico from paying US income tax on their Puerto Rico sourced income. Instead, the Commonwealth of Puerto Rico has the exclusive right to tax local income as it sees fit.

Sadly, moving to Puerto Rico won’t buy you a total dispensation from the Internal Revenue Service. Uncle Sam still wants his cut on dividends you receive from US public companies, profits from mainland private businesses, pensions, and deferred compensation earned in the states, and Social Security benefits.

Make no mistake: to benefit from Act 22, you must become a bona fide Puerto Rico resident, which means being on the island at least 183 days a year. You can’t just rent a post office box in San Juan and call it “home” while keeping a $5 million house and your ties back in the States. Your business, family, bank and brokerage accounts, driver’s license and yacht should all move with you to the island.

To see this article in its entirety, please click here.

To see our write-up on this topic, co-authored with Puerto Rico attorney Erick Negrón, please click here.

Thoughtful Corner
Business Etiquette – Interacting with Clients & Colleagues

The following are a few tips concerning business etiquette when interacting with clients and colleagues.

1.) Learn How to Write

As a lawyer, you will be doing a lot of writing, including contracts, documents, letters, presentations, and more. This writing will be read by judges, clients, juries, and other attorneys.

Ask someone for an honest appraisal of your writing. Judges more than anyone go on and on about how poor many new lawyers are at drafting language for agreements, orders, and otherwise.

Clients have no way of knowing whether you are a good lawyer or not, but they will know if you cannot write worth a darn, and they will really know if what you write is not understandable to them. If the language in your correspondence to a client is not clear to the client, it probably won’t be comprehensible to a judge or a jury, either.

Ask someone else to read your letters and documents before you send them unless or until you truly have the hang of this invaluable skill.

Spend extra money as needed for a good proofreader or a good secretary. Require your employees to use spell check and grammar check, if available.

It is never too late to learn how to write, even if you are already a couple years out of law school, but it is too late to attempt to practice law before learning how to write. Documents and letters should not sound like an 8th grader’s text messages.

2.) Be on Time

Make every effort to arrive on time for appointments, whether that appointment takes place inside or outside of your office. Make every effort to be available for scheduled calls, if someone is scheduled to call you, or to be on the line on time if you are calling someone or calling in to a conference call.

Answer emails in a timely manner. Keep to previously agreed upon schedules, or make every effort to give ample notice if something in your schedule needs to change.

Clients and other business associates appreciate knowing that their time is respected and valued. Being on time is courteous and professional and will earn you the reverence of clients and colleagues.

3.) Do What You Say You Will Do

When you promise to deliver a work product and/or respond to a question in a specific time frame, make sure you honor that promise.

If you are unable to provide a response or a result in the time frame that you promised it, acknowledge this and apologize to the person who was waiting on you.

Doing what you say you will do demonstrates integrity. Your clients and associates will feel comfortable giving you work and/or referrals when they know that you will deliver what is promised.

This concludes our series on Business Etiquette. We will appreciate any questions, comments, or suggestions offered for the above article. It has been excerpted from a PowerPoint that we will present to third year law students and alumni (and you, too, if you would like to attend!) at the Ave Maria School of Law on a date to be determined. The presentation will be on professional acceleration. For more information, you can email Alan Gassman at agassman@gassmanpa.com or Janine Gunyan at janine@gassmanpa.com.

Humor! (or Lack Thereof!)

6 - Einstein

Leonard Nimoy’s Best Star Trek Quotes

The following are some of Leonard Nimoy and Mr. Spock’s best quotes:

“May I say that I have not thoroughly enjoyed serving with humans? I find their illogic and foolish emotions a constant irritant.” – Mr. Spock

“Computers make excellent and efficient servants, but I have no wish to serve under them.” – Mr. Spock

“My folks came to the US as immigrants, aliens, and became citizens. I was born in Boston, a citizen, went to Hollywood, and became an alien.” – Leonard Nimoy

“We must acknowledge once and for all that the purpose of a diplomacy is to prolong a crisis.” – Mr. Spock

“Spock is definitely one of my best friends. When I put on those ears, it’s not like just another day. When I become Spock, that day becomes something special.” – Leonard Nimoy

Upcoming Seminars and Webinars

LIVE ORLANDO PRESENTATION:

THE ADVANCED HEALTH LAW TOPICS AND CERTIFICATION REVIEW 2015

Alan Gassman will speak at The Advanced Health Law Topics and Certification Review 2015 on HEALTHCARE TAX ISSUES.

To see the complete schedule for this program, please click here.

Date: March 6 – 7, 2015 ǀ Alan Gassman will speak on March 6 at 11:00 AM

Location: Hyatt Regency Orlando International Airport | 9300 Jeff Fuqua Blvd., Orlando, FL 32827

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

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 22.5-minute webinar on SPLIT-DOLLAR IN 15 MINUTES.

Date: March 17, 2015 | 5:00 p.m.

Location: Online webinar

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

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LIVE WEBINAR:

Alan S. Gassman, Christopher J. Denicolo, and Edwin P. Marrow, III will present a 90-minute Strafford Publications, Inc. webinar entitled STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EVOLVING TOOL TO MAXIMIZE STEP-UP IN BASIS.

In an environment wherein the focus is shifting toward maximizing income tax basis step-up, counsel must be knowledgeable of all tools necessary to reach this goal. One tool that is beneficial for preserving both the inheritance tax exemption and basis step-up is the joint exempt step-up trust (JEST).

This panel will review questions such as:

  • What are the best practices for structuring a JEST?
  • What drafting techniques must be implemented to maximize basis step-up at both the first-to-die and surviving spouse’s deaths?
  • What is the IRS guidance on this tool offered through the Technical Advice Memorandum and Private Letter Rulings?
  • Under what circumstances is the JEST most appropriate?

Date: Tuesday, March 24, 2015 | 1:00 PM – 2:30 PM

Location: Online Webinar

Additional Information: For more information or to register, please click here. You may also email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 30-minute webinar on COMPARING THE FINANCIAL STRENGTH AND RISKS ASSOCIATED WITH DIFFERENT LIFE INSURANCE CARRIERS.

Date: March 31, 2015 | 5:00 p.m.

Location: Online webinar

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

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LIVE OLDSMAR PRESENTATION:

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION:

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION:

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE BRADENTON, FLORIDA PRESENTATION

Alan Gassman will speak at the Manatee County 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.

Date: Tuesday, May 12, 2015 | Time TBA

Location: Surgery Center at Pointe West | 6015 Point,e West Boulevard, Bradenton, FL, 34209

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

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LIVE STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

The tentative schedule for this one-day program is as follows:

5 - Martin County Schedule

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 a.m.

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

2015 UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay | 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please visit http://www.law.miami.edu/heckerling/.

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.

8 - Rates Chart

The Thursday Report – 2.26.15 – 529 vs. Variable Annuities, Puerto Rico Tax Haven, and Medical Billing 501

Posted on: February 26th, 2015

Are 529 Plans Better Investments than Variable Annuities, Even if Not Spent on Education?

Moving Business Operations and Personal Service Activities to Puerto Rico

Medical Billing 501: Quick Tips to Enhance an Already Efficient Billing Operation – Payer Underpayments by Colin Shalin

Seminar Spotlight – The Florida Bar Annual Wealth Protection Conference – Now 2 Days!

Richard Connolly’s World – Finding the ‘Right’ Way to Dispose of Ill-Gotten Gains

A Note From One of Our Readers – PDFs vs Word Documents as Attachments

Thoughtful Corner – Comparing Documents

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 Janine Gunyan at Janine@gassmanpa.com.

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

Are 529 Plans Better Investments than Variable Annuities, Even if Not Spent on Education?
by Alan S. Gassman and Brandon Ketron

Are 529 Plans better investments than variable annuities, even if not spent on education? If so, why ever use a variable annuity?

The authors would like to thank Michael E. Kitces, MSFS, MTAX, CFP, CLU, ChFC, RHU, REBC, CASL for his comments on this article. Be sure to check out his blog, Nerd’s Eye View, by clicking here, and yes, all of those initials after his name are real! 

Most clients view 529 Plans to be appropriate planning vehicles only when all or most of the monies will be devoted solely to college and graduate school tuition and permitted expenses. At the same time, a number of financial advisors often consider variable annuities viable for facilitating the deferral of tax on income. In this article, we aim to explore whether a 529 Plan might serve a similar purpose, and, in fact, be preferred over a variable annuity for many clients. There are a number of advantages to using 529 Plans beyond educational funding. In many situations, 529 Plans will be preferred to variable annuities, even when educational expenses are not the primary goal.

The primary purposes of this article is to help the reader understand important tax and investment characteristics of both variable annuities and 529 Plans and to question the wisdom of the purchase of variable annuities while reviewing the advantages and features of 529 Plans.

  1. Non-Educational Distributions from 529 Plans Carry Out Income and Basis Pro Rata; With Annuities, the First Dollars Out are Taxable

Distributions from variable annuities normally carry out accumulated income first and principal only thereafter. A client holding a $100,000 variable annuity that cost $80,000 must pay tax on the first $20,000 withdrawn. At the 43.4% tax bracket, this would cost $8,680 in combined income and Medicare taxes.

Monies withdrawn from a 529 Plan are only taxable pro rata to the income portion. In the above example, there would be tax on only $4,000 worth of income (20% of the withdrawal), so the tax would instead only be $1,736.

While it is true that the $4,000 will be taxed at the taxpayer’s highest tax bracket plus an additional 10%, the excess of $20,000 ($7,920) to 53.4% of $4,000 ($2,136) is a big difference.[1]

Yes, a variable annuity might be exchanged tax-free under Internal Revenue Code Section 1035 in order to facilitate less than $20,000 of the distribution being taxable. However, this would involve a tax-free exchange into multiple separate annuity contracts and then waiting 18 months before making the withdrawal.

Alternatively, two annuity carriers that we are aware of do offer products that allow pro-rata distribution of income, if the IRS accepts this, but the vast majority of annuity companies do not offer this option. One of the exceptions is the LincolnI4Life, where the current year’s income is paid out first, and then pro rata between earnings and basis after the current year’s income. Equitable/AXA has a similar product arrangement. 529 Plans are less expensive than these commercial annuities and have other characteristics as herein described.

  1. 529 Plans Can Continue After the Death of a Family Member

Variable annuities have to be paid out within five (5) years of the death of the annuity holder, or possibly over the life expectancy of a beneficiary, with the sole exception of the above being that a surviving spouse can facilitate deferral for his or her lifetime.

With a 529 Plan, there is no distribution requirement upon death or any other event. A 529 Plan can pass from person to person and generation to generation indefinitely and is not even limited by the rule against perpetuities, which is 365 years in Florida.[2]

  1. 529 Plans Reward Educational Pursuits

529 Plans encourage education and limit educational living expenses to levels that are recommended by applicable colleges and universities. No tax is payable on income that would otherwise be subject to tax when 529 Plan monies are spent in this manner.

There is no such protection with annuities.

  1. 529 Plans Can be Owned by Complex Trusts, Family Limited Partnerships and Other Entities

Variable annuities cannot be safely owned by trusts that are taxed independently from their Grantor unless the trust has special language that makes it clear that the annuity is held for the benefit of an identified individual(s) or a private letter ruling is received from the Service, if they are even willing to issue one.

Most financial advisors are not aware that upon the death of an individual annuity owner, contract ownership or other rights that pass to an irrevocable trust to be held for a spouse or descendants will probably have to be paid out within five (5) years, thus triggering all income tax. Presently, irrevocable trusts are in the 39.6% income tax bracket and are also subject to the 3.8% Medicare tax on undistributed income exceeding $12,055. Having to distribute this income to beneficiaries in lower brackets to save income tax may result in the assets being wasted by inappropriate spending, loss to creditors or spouses, or otherwise being mishandled in a way the Grantor did not intend.

Some planners suggest incorporating trust provisions similar to those required to allow a trust to spread its retirement plan distributions over the life of a trust beneficiary. Unfortunately, the IRS has refused to issue regulations to make this action safe, so clients are effectively bound by the five-year rule described above.

  1. 529 Plan Ownership Can be Transferred Without Triggering Income Taxes

Income within a variable annuity contract is triggered upon transfer. If someone wants to make a gift of a variable annuity contract, he or she is considered to have received all income from the contract at the time of transfer. If he or she has not reached age 59½, or the transferor is not an individual, then this income is taxed at the taxpayer’s highest income tax bracket plus an additional 10%.

On the other hand, 529 Plan ownership can be freely transferred without triggering such taxes.

  1. 529 Plans are Less Expensive to Purchase and Maintain

According to a Morning Star report dated February 28, 2013, for the average 529 Plan that is directly sold and actively managed, the annual expense is 0.84% per year, and the average variable annuity expense is around 2.5% per year. Hybrid index annuities that are designed to replicate market index results and avoid market index crashes are said to trail the actual market index plus dividends by 4% to 6% on average.

  1. 529 Plans Do Not Have Surrender Charges or Generate Large Commissions

Large commissions can influence advisors to sell clients products that may not be suitable to them or in their best interests. 529 Plans do not have surrender charges or generate large commissions that might influence advisors. While there are low cost, no-load annuity products that compete with 529 Plans from an expense standpoint, a great many investors do work with commissioned sales organizations, such as banks, brokerage firms, and insurance agencies, and should have access to the choices available in the commissioned product system.

For example, clients who would like to invest in a contract based upon the well-known and respected American Fund family could buy a State of Florida 529 Plan, which has average annual charges on the equity portion of the Plan of 1.14%.

The Lincoln Investor Advantage™ variable annuity (a loaded annuity contract,) which permits the contract owner to invest in American Fund, may cost approximately 2.92% and have surrender charges based upon 7% in year 1, 6% in year 2, 5% in year 3, 4% in year 4, and 3% in year 5.

Alternatively, when you consider a possible cost savings of 1.78% per year for 18 years and assume 6% a year in growth, a $100,000 investment would grow to $232,207.63 under a 529 Plan costing 1.14% a year, and only $167,433.12 under a variable annuity costing 2.92% a year.

Even if cashed in all at once, the $132,207.63 of income from the 529 Plan, taxed at 53.4%, leaves a total after tax of $138,167.15. The 529 Plan wins even after application of the 10% excise tax at the highest tax bracket![3]

A similar comparison can be conducted on no-load, low-cost 529 Plans and variable annuities, and the variable annuity will normally be superior if a large portion of the 529 Plan above and beyond its original cost basis is not spent on educational expenses. For example, a no load annuity contract through Vanguard could have annual expenses as low as 0.76% and the above analysis would have a much different result. But 529 Plans still have the other advantages described above and below.

It is of note that 529 Plans do have limits on the amount of assets that can be contributed on behalf of each designated beneficiary. These amounts vary among the states but are typically limited to amounts that are necessary to finance the designated beneficiary’s educational expenses. For example, a 529 Plan offered through Vanguard imposes contribution limits of $370,000.

  1. Five Year Forward Averaging of 529 Plan Gifts

Clients who wish to make gifts using 529 Plan funding can elect to have 80% of the amount transferred considered to have been gifted in the four years subsequent to the 529 Plan funding to maximize use of the $14,000 per person per year annual gift tax exclusion. For example, a $70,000 contribution to a 529 Plan for a grandchild can be considered to be a $14,000 gift in the year of contribution and in each of the four subsequent years. If the donor dies before the beginning of the fifth year, then the applicable portion of the unapplied gift will be considered an asset of the donor’s estate for estate tax purposes, assuming that the donor will be estate taxable with such addition.

A gift that is used to purchase a variable annuity will be considered to have been made 100% in the year of purchase.

It is noteworthy that monies paid directly for tuition are not counted as gifts under the federal estate and gift tax law, but monies put into a 529 Plan that is eventually used to pay tuition will be considered to be gifts but will use part of a person’s $5,340,000 estate tax exemption amount if and when exceeding $14,000 a year. Simple low-cost passive mutual funds which have very little income and generate qualified dividends and capital gains which are taxed at the 20% bracket (plus a possible 3.8% for Medicare tax, when applicable) may therefore be preferred over 529 Plans, at least for monies to be paid for tuition.

  1. In Some States, 529 Plans are Protected from Creditors but Variable Annuities are Not

Many states provide protection for all 529 Plans and variable annuities, and some states provide protection for 529 Plans but not for variable annuities or only for variable annuities to the extent deemed reasonably necessary to provide for the retirement needs of the owner. A few states, like Colorado, Virginia, and West Virginia, provide creditor protection for 529 Plans but not variable annuities.

  1. Widely Criticized Investment Aspects Found in Certain Variable Annuities are not Permitted in 529 Plans

Many investors have been disappointed to learn that “guaranteed income benefit features” and “equity index guaranties” that were explained to induce the purchase of variable annuities have turned out to have been not as expected and much more expensive than understood. State and federal regulation associated with 529 Plan investments and disclosures do not permit these or certain other features that most conservative investors and investment advisors find to be expensive and generally undesirable for the vast majority of clients. See Alan S. Gassman Evaluating Commercial Annuities and Reverse Mortgages: Are Deferred Payment Annuities too Good to be True?

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[1] Michael Kitces, co-author of the “Advisor’s Guide to Annuities,” provided the authors with the following comment: “Notably, there have been recent discussions in tax committees about raising the 10% penalty, specifically to dissuade people from using a 529 Plan as a non-qualified accumulation vehicle.”
[2] The authors expect that within 365 years, the rule against perpetuity will change. We regret that we will not be here in our present form to witness that.
[3] On the other hand, if the investment was in a Vanguard variable annuity with an average cost of 7/10ths of 1% as opposed to the Vanguard 529 Plan with an average cost of 0.21%, the net received after liquidation and taxes would be $191,368.75 for the 529 Plan and $185,766.72 for the variable annuity.

Moving Business Operations and Personal Service Activities to Puerto Rico
by Alan Gassman and Erick Negrón

2 - Negron

Attorney Erick G. Negrón Rivera was born in San Juan, Puerto Rico. He received a Bachelor’s degree in Economics from Yale University in 1982 and a Juris Doctor from Harvard Law School in 1985. As Special Counsel at the law firm of Rexach & Picó in San Juan, he has specialized for the last two decades in corporate, tax, and insurance regulatory matters. Since 2009, he has been a member of the board of Consero, A.I., the first captive international insurer that became licensed in Puerto Rico. Attorney Negrón has also published several articles on tax and economic development issues. Erick Negrón can be reached at negron@rexachpico.com.

Puerto Rico is a US-flag territory, but it is not a state or a US taxed jurisdiction. Puerto Rican’s do not vote for the United States President, have Congressmen, or pay US income taxes on their Puerto Rican income.

Besides great natural beauty, a fantastic culture, talented people, and a Ritz Carlton hotel in San Juan on the beach that can be seen from the airport, Puerto Rico offers US citizens who reside there the ability to pay income tax on many kinds of businesses and vocations at a rate much lower than standard US taxes. Puerto Rico corporations are “foreign” corporations for US tax purposes, and thus, not regularly subject to US income taxation.

Establishment of Puerto Rican Residence

To take advantage of these rules, it is necessary to truly reside in Puerto Rico and to have the business and work accomplished in Puerto Rico. Internal Revenue Code Section 937 provides guidance to determine if an individual truly resides in a territory such as Puerto Rico. The section establishes three tests: 1.) the presence test, 2.) the tax home test, and 3.) the closer connection test. All three tests must be satisfied in order to establish Puerto Rican residency for tax purposes. The general requirements of the three tests are as follows:

  1. Presence Test – Normally requires the taxpayer to spend at least 183 days in the territory
  2. Tax Home Test – The primary location of the taxpayer’s business activities must be in the territory where the residence is claimed
  3. Closer Connection Test – The taxpayer must have a closer connection to the territory where the residence is claimed than with the United States or some other location with which there may be a connection. Relevant factors include where the taxpayer votes, where the taxpayer has his or her driver’s license and bank accounts, where the taxpayer’s family lives, where the taxpayer conducts social, religious, and community activities, and the country of residence designated by the taxpayer on forms and documents.

Tax Incentives Offered to Bona Fide Residents of Puerto Rico

Act 20 of 2012, “An Act to Promote Exportation of Services,” allows a US citizen to own a Puerto Rican company that will be subject to corporate income tax at a rate of 4 percent with no tax on dividends paid to Puerto Rico residents. The Act also offers exemptions, or partial exemptions, on local real estate and municipal taxes and licenses. To be eligible for the tax benefits of Act 20, a company must maintain a “bona fide” office in Puerto Rico which carries out an approved service, and its activities must be determined to be “in the best economic and social interests of Puerto Rico.” This determination is made by the Department of Economic Development and Commerce of Puerto Rico and carries a 20 year term to protect the company from any future changes in the law.

This can be very attractive to individuals who make their living as computer programmers, Internet marketers, office-based management consultants, and in many other fields and professions.

Act 22, “An Act to Promote the Relocation of Individual Investors,” provides another tax incentive for new Puerto Rico Residents. An individual who did not reside in Puerto Rico during the six-year period prior to January 17, 2012 (that is, since January 17, 2006) will be eligible to become exempt for taxation gains on investments and passive income. This includes interest, dividends, and capital gains.

Close proximity to Florida makes this an appealing opportunity given the relatively inexpensive and plentiful flights available to visit family and customers in Florida, as long as the days actually spent here are minimal.

For more information on Puerto Rican Act 20 and Act 22, please click here to read a Mayer Brown report by Mark H. Leeds and Gabriel Hernandez.

Medical Billing 501: Quick Tips to Enhance an Already Efficient Billing Operation – Payer Underpayments
by Colin Shalin

Shalin with text

Colin Shalin is a Practice Management Consultant specializing in A/R and financial management with an emphasis on billing and collection process and performance improvement.  Contact him by phone at (727) 244-1179 or by emailing consultcolin@gmail.com. © 2014

Please click here to see Colin’s first Thursday Report article regarding Employee Incentive Plans. This week, Colin discusses how medical offices can improve their billing practices when it comes to payer underpayments. We thank Colin for making this content available to Thursday Report readers!

Monthly review of variances between payments posted and negotiated reimbursements will ensure payers are not underpaying for services and can enhance your ability to collect any additional reimbursement you are due. Most practice management systems have the capability to load, manage, and compare the reimbursement tables so as to allow this task to be performed relatively simply and timely. If you are not currently performing this task, of if you are pulling random EOB samples to accomplish it manually, you should develop a project team to work with your vendor immediately to implement this function in the most automated manner possible. Some ideas for either implementing or enhancing this task are as follows:

1.)  Ensure you load at least Medicare, Medicaid, and your contracted payers’ reimbursement tables. Be sure to load individual plans for which you have negotiated multiple reimbursement methodologies. If you still have any individual physician/provider, location, modality, or facility contracts with unique reimbursements, make sure you create a specific table for these as well. Be sure you allow for differences in rates based on modifies also.

2.) Most systems will allow reimbursement rate creation by procedure code based on a percent of Medicare. This will save a lot of manual entry during the initial load and annual updates. You can try to negotiate future contracts on this basis to allow for a simpler comparison process (which translates to an easier ability to identify underpayments), however, contract negotiation has been waning over the past few years as more payers move to location-based fee schedules (some of which may be based on a percent of Medicare, etc. methodology.)

3.) If you have a specific rate table for each procedure code, try to get the table in an electronic format which your vendor can accept for download.

4.) Report design is a crucial step. Work with your vendor to ensure the variance report:

  • Allows you to select a dollar or percent range for which to ignore variances. You do not want to have to pay attention to low dollar or cents variances but focus instead on those that are going to be worth your time and effort. Depending on your average gross charge per procedure, the minimum amount could be anywhere from $1 – $3, or 1% – 10%.
  • Gives you a run-time option to choose only a certain payer class, range of related payers, or specific payers. Depending on how you load your reimbursement tables, you may want to look at specific Insurance Company/Plan codes, Financial Classes/Carrier codes, or all loaded tables.
  • Gives you a run-time option to choose only a certain modality, range of procedure code, or specific procedure code either across payers or for the range chosen above.
  • Gives you similar run-time options for specific or ranges of payment posting dates, physician/providers or any other contract basis variation you may have.
  • Allows you to sort the output by payer, procedure code, variance amount, physician/provider, or any combination of contract basis variation thereof. The ability to output the data to a spreadsheet program for further sorting can also be useful.
  • Remember to consider modifiers during both the load and report design phases to ensure the most useful data output.

5.) Make sure all communication with payers regarding this issue demonstrates your belief that this is a serious and possibly egregious violation of your contract. You may consider involving your attorney or the Insurance Commissioner depending on the severity of the problem. Check your state’s prompt payment laws for identification of violations, statute of limitations, and possible remedies.

6.) Use the data to facilitate meetings in your office with Payer Reps to let them know you are watching remittances closely and to resolve the underpayments identified. Make sure you document the payer’s stated action plan and your agreed-upon deadline or follow-up date to ensure timely reprocessing by the payer. While they are often not excited to see them, a stack of paper claims with identified underpayments may help the payer visualize the issue and want to resolve it in a timelier manner.

7.) Remember to provide feedback to your payment posting or other staff should you find errors they made during the review. Don’t forget to include this data in your quality audit process by function and the annual performance review folder for affected staff.

Depending on your practice management system’s capabilities, monitoring payer underpayments can range from overwhelming to relatively easy. Whether it is performed manually on a periodic basis or in an automated fashion daily, the monitoring process is crucial to ensuring proper payments are received and needs to be visual to the payer to ensure conformity with contracted reimbursements.

Seminar Spotlight
The Florida Bar Annual Wealth Protection Conference

The Florida Bar Annual Wealth Protection Conference is expanding this year! The May 2015 program will feature a Thursday Fundamentals program and a Friday Advanced program. Come for one day, or come for both, but don’t miss it!

Denis Kleinfeld and Alan Gassman are pleased to announce that the 53rd Annual Tax Section Wealth Protection Conference this year will provide Bar members with the option to attend one or both days of a fundamentals program that will be well-suited to both lawyers who have limited knowledge and experience and experienced lawyers wishing to refresh and update their awareness and practices.

There will be an interactive cocktail party Thursday evening, and attendees are invited to attend the speakers’ dinner (Dutch treat) on Thursday evening as well. This is a great opportunity to mingle with the speakers and other professionals. Bring your own cigar!

The Thursday program will also feature panel discussions where every question and topic suggested by attendees will be answered to the fullest extent.

On Friday, the conference will feature an advanced program, which will be well-suited to both advanced practitioners and beginners who have completed the Thursday Fundamentals program.

All attendees will receive printed course books with over 600 pages of valuable information, which will also be available online and by PDF to registered attendees with no extra charge for the printed and electronic materials.

This year’s program will include 16 speakers, most of whom have a national reputation.

We have worked hard to ensure that this will be the best 2-day program available to cover fundamentals of asset protection, recent developments, and practical planning aspects of Wealth Protection.

Topics and speakers for Day One, Thursday, May 7, 2015, include the following:

  • Arthur C. Neiwirth and Ronald G. Neiwirth on Basic Bankruptcy – Welcome to the Fish Bowl
  • Ronald G. Neiwirth and Denis A. Kleinfeld on The Trick and Traps of Creditors’ Remedy of Fraudulent Conveyance
  • Professor Jerome M. Hesch on Basic Tax Laws and Planning Opportunities Associated with Commercial and Private Annuities, Life Insurance Policies, and Debt Forgiveness

Advanced topics and speakers for Day Two, Friday, May 8, 2015, include the following:

  • Denis A. Kleinfeld, Howard Fisher, and Alexander Fisher on Foreign Trusts, Powers of Appointment, Trust Protectors, Planning Opportunities and Traps for the Unwary
  • Ky Koch, Esquire and Courtney Koch, Esquire on Marital Agreements and Divorce Planning – What to Do Before, During, and After There is Trouble in Paradise
  • Alan S. Gassman and Christopher J. Denicolo on 10 Examples of Effective Asset Protection Plans That Have Worked
  • Michael C. Markham and Ronald G. Neiwirth on How an Aggressive Creditor’s Lawyers Will Attack Protection Structures

Registration information will be forthcoming. Please consider attending this event. A splendid time is guaranteed for all!

For more information, please email Alan Gassman at agassman@gassmanpa.com or click here to pre-register.

Mini-Spotlight
Martin County Estate Planning Council Annual Tax and Estate Planning Seminar

Don’t miss the one-day Martin County Estate Planning Council Seminar on May 15, 2015!

Alan Gassman will be the morning speaker at the event; he will be speaking on JESTs, Mathematics for Estate Planners, and The Estate Planner’s Guide to Planning for IRA and Pension Benefits – Yes, You Can Finally Understand These Rules! This presentation will take place from 9:00 AM to 12:00 PM.

The afternoon will consist of three one-hour presentations by Catherine Zieman, CFP, Stacey McMahon, Esquire, and Laird Johnson, CLU.

The Martin County Estate Planning Council Annual Tax and Estate Planning Seminar will take place at the Stuart Corinthian Yacht Club in Stuart, Florida.

Clasen with text

For more information, contact the amazing Lisa Clasen at lclasen@kslattorneys.com.

Richard Connolly’s World
Finding the ‘Right’ Way to Dispose of Ill-Gotten Gains

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 a link to the articles.

This week, the article of interest is “Finding the ‘Right’ Way to Dispose of Ill-Gotten Gains” by Paul Sullivan. This article was featured in The New York Times on February 6, 2015.

Richard’s description is as follows:

Several years ago, Thomas M. DiBiagio was asked by a large European company to run an internal audit on its South African operations. They suspected something might be amiss. And they were right. In the course of the audit, he discovered about $12 million that might best be described as ill-gotten gains.

Mr. DiBiagio, now a partner at the law firm Baker Botts in Washington, reported what he found to the company’s management and suggested something novel: Since the money had been earned “from aggressive business practices” – a euphemism for a crime he would not name – the company should give it to charity.

The company, which he described as a $35 billion to $40 billion business listed on a United States stock exchange, agreed.

The company gave him two years to give away the money…

The project, while rewarding, turned out to be far more complicated and time-consuming than he, with no experience giving away this kind of money, had imagined.

It was chock-full of lessons for wealthy donors and recipients – and could even be the seed of a new line of business for law firms with corporate clients who find their own wrongdoing before federal prosecutors get wind of it.

Please click here to read this article in its entirety.

A Note From One of Our Readers
PDFs vs Word Documents as Attachments

The Thoughtful Corner in last week’s Thursday Report focused on business etiquette in email communication. We endorsed the idea of sending document attachments in Word format instead of the more typically used PDF format. To see this article, please click here.

We received the following email from Smilie G. Rogers, who had this to say about our ideas:

“Not sure I agree with your suggestion that Word attachment should trump PDFs. First, Word documents are more likely to contain metadata. Second, PDF to Word conversion is easy, online, and free, but be that as it may, having a good converter program like Omnipage by Nuance is essential in my office for quickly (and accurately) converting PDFs (often deeds, but you name it) to Word. As an aside, as a semi-solo without staff, I like to use Dragon’s “Read That” feature to read a deed description back to me just in case my line-by-line review missed something.”

Thanks, Smilie, for sharing your insight into bettering business communication practices.

Thoughtful Corner
Comparing Documents

Until recently, it was considered to be rude by many to take a document that another lawyer drafted and make changes to it.

The proper protocol was to give suggestions for changes or possibly even send a letter outlining exact changes, but you typically would not copy the document and make the changes yourself. Doing so would take work away from the lawyer who drafted the document.

That rule seems long gone, at least from the point-of-view of those of us who have not been practicing law for 35 to 40 years. The following should go without saying but commonly does not:

  • When changing someone’s document, send them a compare version that clearly shows the changes you have made. Yes, that may take you an extra five minutes to do, but why put that burden on the other person when you have the updated document on your screen and have taken the prerogative to make changes to their document.
  • The corollary of the above is that you can be sued for malpractice if you make a change to a document that is wrong, not recognized by your own client, or possibly the other side. You owe the other side a compare, and you owe it to yourself to give the other side a compared version.
  • Never ever ever ever (we mean never!) save over a previous document and then tell the other side that it is not available because you saved over it.While you typically could pull the original document from an old email, it is much safer for a malpractice avoidance and from a document management standpoint to save every revised version of a document with a separate suffix and to show on your compare which version you are comparing back to.This also keeps your clerical staff honest. It may be a bit more work for your clerical staff, but you cannot rely upon even a very good secretary to be perfect every time. What if he, she, or the computer accidentally eliminated an important word, clause, or section? How would you know if you do not see a compare?We print a lot of draft documents in our office, and we kill a lot of trees, but we practice safe law, and in our opinion, this means printing compares and taking a look at every page.
  • Use strikeouts and underlines in your compares instead of the default Word version where what is deleted is shown in small boxes to the right. It takes the brain five times as much time and opens you up for mistakes if you cannot see exactly what happened in the text.We have found it best to use WordPerfect for documents we are likely to compare, however, the WordPerfect compare style can be emulated in Microsoft Word. To do this, all you have to do is navigate to the “Review” tab in Microsoft Word, click the arrow by the “Show Markup” button, and, under the Balloons drop-down menu, choose “Show All Revisions Inline.” This choice will force all changes in the compare to be shown in strikeouts and underlines, which will look very similar to the automatic formatting of a WordPerfect compare.

To see examples of a Word compare and a WordPerfect compare, please click accordingly: Microsoft Word Compare (unmodified). Microsoft Word Compare (modified). WordPerfect Compare.

We will appreciate any questions, comments, or suggestions offered for the above article. It has been excerpted from a PowerPoint that we will present to third year law students and alumni (and you, too, if you would like to attend!) at the Ave Maria School of Law on a date to be determined. The presentation will be on professional acceleration. For more information, you can email Alan Gassman at agassman@gassmanpa.com or Janine Gunyan at janine@gassmanpa.com.

Humor! (or Lack Thereof!)

Please enjoy the following from our resident comedy expert Ron Ross:

IN THE NEWS THIS WEEK:

3 - Humor 1

What Republican is NOT Running for President in 2016?

The list so far:

  • Abraham Lincoln
  • Theodore Roosevelt
  • The mythical moderate who can appeal to both liberals and conservatives

A Word From Our Sponsors

This week’s Thursday Report brought to you by “Nice Horsey” Hair Extensions. If it’s good enough for the Budweiser Clydesdale, it’s good enough for you!

4 - Humor 2

Upcoming Seminars and Webinars

LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 22.5-minute webinar on PREMIUM FINANCING IN 15 MINUTES.

Date: March 4, 2015 | 5:00 p.m.

Location: Online webinar

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

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LIVE FREE ETHICS CREDIT WEBINAR:

Alan Gassman and Dr. Srikumar Rao will present a free 50-minute webinar on HOW TO HANDLE STRESSFUL MATTERS IN AN ETHICAL WAY.

This webinar will qualify for 1 hour of CLE Ethics Credit and is classified as Advanced. See Professor Rao’s Ted Talk YouTube video, and you will understand how important this webinar might be to accelerating your law practice and enhancing your enjoyment of the practice as well. You can sign up for this free webinar by clicking here.

New Rao and Gassman

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 has taught the course at Columbia University, Northwestern University, University of California at Berkeley, and the London School of Business. He is the author of Happiness at Work and Are You Ready to Succeed? which can be reviewed by clicking here. Are You Ready to Succeed? has been published in over 60 languages!

Date: March 5, 2015 | 12:30 p.m.

Location: Online webinar

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

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LIVE ORLANDO PRESENTATION:

THE ADVANCED HEALTH LAW TOPICS AND CERTIFICATION REVIEW 2015

Alan Gassman will speak at The Advanced Health Law Topics and Certification Review 2015 on HEALTHCARE TAX ISSUES.

To see the complete schedule for this program, please click here.

Date: March 6 – 7, 2015 ǀ Alan Gassman will speak on March 6 at 11:00 AM

Location: Hyatt Regency Orlando International Airport | 9300 Jeff Fuqua Blvd., Orlando, FL 32827

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

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 22.5-minute webinar on SPLIT-DOLLAR IN 15 MINUTES.

Date: March 17, 2015 | 5:00 p.m.

Location: Online webinar

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

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LIVE WEBINAR:

Alan S. Gassman, Christopher J. Denicolo, and Edwin P. Marrow, III will present a 90-minute Strafford Publications, Inc. webinar entitled STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EVOLVING TOOL TO MAXIMIZE STEP-UP IN BASIS.

In an environment wherein the focus is shifting toward maximizing income tax basis step-up, counsel must be knowledgeable of all tools necessary to reach this goal. One tool that is beneficial for preserving both the inheritance tax exemption and basis step-up is the joint exempt step-up trust (JEST).

This panel will review questions such as:

  • What are the best practices for structuring a JEST?
  • What drafting techniques must be implemented to maximize basis step-up at both the first-to-die and surviving spouse’s deaths?
  • What is the IRS guidance on this tool offered through the Technical Advice Memorandum and Private Letter Rulings?
  • Under what circumstances is the JEST most appropriate?

Date: Tuesday, March 24, 2015 | 1:00 PM – 2:30 PM

Location: Online Webinar

Additional Information: For more information or to register, please click here. You may also email Alan Gassman at agassman@gassmanpa.com.

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LIVE WEBINAR:

Alan Gassman and Barry Flagg, CPF, CLU, ChFC, GFS, of Veralytic will present a 30-minute webinar on COMPARING THE FINANCIAL STRENGTH AND RISKS ASSOCIATED WITH DIFFERENT LIFE INSURANCE CARRIERS.

Date: March 31, 2015 | 5:00 p.m.

Location: Online webinar

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

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LIVE OLDSMAR PRESENTATION:

FICPA SUNCOAST SCRAMBLE GOLF TOURNAMENT

Kenneth J. Crotty and Christopher J. Denicolo will speak at the FICPA Suncoast Scramble Golf Tournament on the topic of MATHEMATICS FOR ESTATE PLANNERS INCLUDING 10 ESTATE PLANNING STRATEGIES NOT TO MISS. 

Date: Friday, May 1, 2015 | CPE Presentations from 9:00 AM – 11:30 AM 

Location: East Lake Woodlands Country Club | 1055 E Lake Woodlands Parkway, Oldsmar, FL 34677 

Additional Information: For more information about registration, sponsorship, or this event, please click here or click here to download the Tournament brochure.

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LIVE NAPLES PRESENTATION:

2nd ANNUAL AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Alan Gassman, Jerry Hesch, and Richard Oshins will present THE MATHEMATICS OF ESTATE PLANNING.  If you liked Donald Duck in Mathematics Land, you will love The Mathematics of Estate Planning.  This will not be a Mickey Mouse presentation.

Other speakers include Richard Oshins on 11 Outstanding Planning Ideas, Jonathan Gopman on Asset Protection, Bill Snyder, Elizabeth Morgan, Greg Holtz, and others.

Please let us know any questions, comments, or suggestions you might have for this amazing conference, which features dual session selection opportunities in one of the most beautiful conference facilities that we have ever seen.

Date:  Friday, May 1, 2015

Location:  Ave Maria School of Law | 1025 Commons Circle, Naples, Florida

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

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LIVE MIAMI PRESENTATION:

FLORIDA BAR WEALTH PRESERVATION PROGRAM 

Denis Kleinfeld and Alan Gassman have released the schedule and topics for FUNDAMENTALS OF ASSET PROTECTION AND ADVANCED STRATEGIES. This seminar will be presented on May 7th and May 8th, 2015, and is sponsored by the Tax Section of the Florida Bar.  Attendees can select one day or the other, or to attend both days.

Day One will be for fundamentals and will be an excellent review or an introduction to the basic rules and practice aspects of creditor protection planning for both new and experienced practitioners.

Day Two will be an advanced treatment of creditor protection and associated planning, which will be of great use to both new and experienced practitioners.

Date: May 7 – 8, 2015

Location: Hyatt Regency Miami | 400 SE 2nd Avenue, Miami, FL 33131

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

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LIVE STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured “headline” speaker the Martin County Estate Planning Council Annual Seminar. He will be doing a three-hour talk on the topics of JESTs, MATHEMATICS FOR ESTATE PLANNERS, AND THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

The tentative schedule for this one-day program is as follows:

5 - Martin County Schedule

Date: May 15, 2015 | 8:15 AM – 4:30 PM; Alan Gassman speaks from 9:00 AM to 12:00 PM

Location: Stuart Corinthian Yacht Club | 4725 SE Capstan Avenue, Stuart, FL 34997

Additional Information: For more information, please email Alan Gassman at agassman@gassmanpa.com or Lisa Clasen at lclasen@kslattorneys.com.

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR

Alan Gassman, Ken Crotty, and Chris Denicolo will present a webinar on A PRACTICAL TRUST PLANNING CHECKLIST AND PRACTITIONER COMPLIANCE GUIDE FOR FLORIDA CPAs for the Florida Institute of CPAs.

Review a practical planning checklist and practitioner tax compliance guide to facilitate implementing a comprehensive overview of practical planning matters and tax compliance issues in your practice. This presentation will cover over 20 common errors and missed planning opportunities that accountants need to understand and counsel their clients on.

This course is designed for practitioners who wish to assure that trust planning structures and compliance are both aligned with client objectives and that common catastrophic errors and misconceptions can be corrected.

Past attendees have indicated that this is an interesting and practical presentation that offers a great deal of practical information for both compliance and planning functions, based upon an easy to follow checklist approach.  Includes valuable materials.

Date: May 21, 2015 | 10:00 a.m.

Location: Online webinar

Additional Information: For more information, please contact Alan Gassman at agassman@gassmanpa.com or Thelma Givens at givenst@ficpa.org. To register, please click here.

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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: Friday, October 23rd and Saturday, October 24th, 2015

Location: To Be Determined

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

Notable Seminars by Others
(These conferences are so good that we were not invited to speak!)
 

LIVE PRESENTATION:

2015 FLORIDA TAX INSTITUTE

Date: Wednesday through Friday, April 22 – 24, 2015

Location: Grand Hyatt Tampa Bay, 2900 Bayport Drive, Tampa, FL 33607

Additional Information: Please contact Bruce Bokor at bruceb@jpfirm.com for more information.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: Hotel information to be announced

Additional Information: Information on the 50th Annual Heckerling Institute on Estate Planning will be available on August 1, 2015. To learn about past Heckerling programs, please click here.

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.

5 - Rates

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