Archive for the ‘Thursday Reports’ Category

The Thursday Report – 6.4.15 – Annie Get Your Thursday Report!

Posted on: June 4th, 2015

Gun Trust Questions & Answers – Explosive Coverage that Cannot be Silenced!

Are You Using the Right Durable Power of Attorney Forms?

Avoiding the Castellano Error by Always Leaving Assets in Trust, Not Outright, Part III

Richard Connolly’s World – Health Law & Estate Planning

Thoughtful Corner – Success Tips for First Year Lawyers

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.

Gun Trust Questions & Answers
Explosive Coverage that Cannot be Silenced!

We hope you haven’t yet gotten dis-gun-sted with our gun trust materials. It really helps to have an audience as we gear up for our upcoming webinar with Jonathan Blattmachr, Lee-Ford Tritt, and Sean Healy, so set your sights on this!

1.     Why are Gun Trusts So Complicated?

Gun trusts can pose significant problems for all parties involved. Not only must trustees and beneficiaries comply with state laws for creating and properly maintaining a trust, but the gun trust must also address the various and equally complicated state and federal laws on gun ownership, as well as what happens to the trust property upon the death of the grantor. To gain a better understanding of just how complicated they can be, take a look at the following questions.

2.     What is the National Firearms Act and Gun Control Act?

The National Firearms Act (NFA) and Gun Control Act (GCA) were enacted to restrict who may possess, buy, and sell certain restricted firearms and firearm accessories. The NFA operates primarily as a taxing statute by imposing a $200 statutory excise tax per item. It also requires the person to register all restricted firearms with the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

The GCA, on the other hand, was enacted to restrict the transfer of certain types of firearms between individuals. The GCA places weapons into two categories, and each has different rules. Title I firearms primarily include long rifles, shotguns, and handguns. Title II firearms include automatic machine guns, short-barreled rifles, sawed-off shotguns, suppressors (silencers), and destructive devices such as: grenades, bombs, explosive missiles, and poison gas weapons.

Together, the NFA and GCA impose various restrictions on the rights of gun owners to possess and transfer certain weapons.

3.     Why Use a Gun Trust When I Can Simply Register NFA Firearms as an Individual or Corporation?

A gun trust is the most comprehensive method to protect yourself and other individuals who you want to allow use or possession of NFA firearms. With a gun trust, the grantor can name as many trustees as they want to use and possess NFA firearms. A gun trust also allows you to properly pass those firearms to future beneficiaries, protecting them from criminal prosecution.

On the other hand, when a person registers an NFA firearm as an individual, they must satisfy several requirements, and even after that, it is not guaranteed they will be approved. Corporations, such as an LLC are usually easy to set up but do not offer the same estate planning tools that a gun trust does. Further, if you fail to pay the annual filing fee, the Secretary of State can dissolve the corporation, leaving you and its members in the unlawful possession of unregistered NFA firearms.

The chart below sums up the various requirements for registering a firearm as an individual, corporation, and gun trust.

Gun Trust Chart

4.     Can I Use Software like Quicken Will and Trust Maker?

While nothing is technically going to keep you from using products such as this, you should realize that they are not designed to address the complex issues involved with creating a gun trust. Substituting a generic trust form for a gun trust can also be dangerous, as they do not typically address the applicable federal and state laws.

Generic forms tend to be very simple and tend to only address how an individual’s property will pass on after death. A gun trust should have specific language on how the firearms will be managed during the grantor’s life and direct who they will pass to after death. Important consideration must be given as to who will qualify as a co-trustee and beneficiary and whether they will be permitted by law to use and possess firearms.

Furthermore, the trust must be structured to ensure that, at no time, the sole trustee is also the sole beneficiary. Otherwise, the doctrine of merger would invalidate the trust, leaving that person in the unlawful possession of unregistered firearms.

Unlike a generic trust, a gun trust should also include provisions that address what happens to the trust property if a grantor, trustee, or beneficiary becomes a prohibited person who is unable to use or possess any type of firearm. Typically, the gun trust will automatically disqualify them from any rights they had from the trust agreement, thus protecting all the other trustees from an illegal transfer of possession.

5.     Who May Access the Firearms Held by the Gun Trust?

The grantor can add as many or as few trustees as they want. Note that all trustees will have specific duties and obligations to perform pursuant to the trust’s provisions. In some states, trustees must be at least 18 years old to possess the firearms held by the trust, and in others, they must be at least 21 years old. However, in order to purchase firearms for the trust, trustees must always be at least 21 years old.

6.     What Role Do Beneficiaries Play?

As is the case with other trusts, a beneficiary is the individual entitled to the benefits of that trust. For a gun trust, that means the firearms are held under the trust for their benefit. There is no age requirement for beneficiaries, and they typically include the grantor’s minor children, if any. However, the gun trust should address the potential scenario where the grantor dies and leaves the trust property to their minor child. In this instance, there would be someone under the age of 18 in possession of restricted firearms, which is unlawful. Thus, a provision should be included that will allow the trustees to use and possess the trust property until the beneficiaries are old enough and mature enough to inherit the trust property.

Finally, it is important to note that while the law remains unclear, most conservative attorneys conclude that beneficiaries cannot solely use or possess NFA firearms owned by the gun trust outside the presence of at least one trustee. Thus, an individual who is only a beneficiary, as opposed to a trustee and beneficiary, cannot safely be in sole possession of the NFA firearm, regardless of their age. However, other attorneys are willing to take a chance in allowing beneficiaries to be in sole possession of NFA firearms by including language in the gun trust document that allows a trustee to appoint an individual as a temporary trustee so that they may lawfully use and possess NFA firearms.[1] The appointed trustee’s trusteeship will end when the firearms are returned to the permanent trustee of the gun trust.[2]

7.     What Must You Submit to the Bureau of Alcohol, Tobacco, Firearms, and Explosives When Registering and Transferring Firearms to the Trust?

First, when purchasing firearms or related items, the trust should be named as the purchaser, not the grantor or trustee. Furthermore, at the time of purchase, the trustee should submit the application form to the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The most common forms include Form 1 fore firearm manufacturing, Form 4 for the taxable transfer of a firearm, Form 5 for a tax exempt firearm transfer, and Form 20 for the interstate transport of an NFA firearm.

You are also required to submit a complete copy of the gun trust document, any schedules or attachments referenced in the trust, and proof that each “responsible person” is entitled to possess firearms via a Certificate of Compliance. The last item that should be sent is a check or money order payable to the BATFE for $200.

8.     I am Single. Should I Even Bother Setting Up a Gun Trust?

Presently, you may feel that it is unnecessary to establish a gun trust to hold NFA firearms just for yourself. However, doing so now will provide you with the flexibility to amend the trust during your lifetime so that you may add or remove additional trustees and beneficiaries as the occasion arises. While you may not have a spouse or children right now, that may not be the case in the future.

Furthermore, keep in mind that individuals purchasing NFA firearms must still pay the $200 tax stamp. Later on, if you wish to set up a gun trust so that you can lawfully pass your NFA firearms to friends and family, you must pay an additional $200 tax stamp for each weapon transferred to a trust.

9.     Who are Considered to be Prohibited Persons, and Can They be a Trustee?

A prohibited person cannot be a trustee of a gun trust. Furthermore, they are precluded from directly owning, purchasing, shipping, or transferring any type of firearm. The trustees of a gun trust must also ensure that they do not inadvertently transfer firearms held by the gun trust to these individuals. The following is a list of those individuals that are deemed to be prohibited persons:

  1. Any person who has been convicted in any court of a crime punishable by imprisonment for a term greater than one year;
  2. Any fugitive from justice;
  3. Any unlawful user of or any person who is addicted to a controlled substance;
  4. Any person who has been adjudicated as having a mental defect or who has been committed to a mental institution;
  5. Any alien who is illegally or unlawfully in the United States or, except as provided in 18 U.S.C. 922 (y)(2), has been admitted to the United States under a non-immigrant visa (as that term is defined in 8 U.S.C. 1101(a)(26));
  6. Any person who has been discharged from the Armed Forces under dishonorable conditions;
  7. Any person who, having been a US citizen, has renounced his or her citizenship;
  8. Any person who is subject to a restraining order; and
  9. Any person who has been convicted of a crime of domestic violence.

10.    If a Currently Own NFA Firearms, May I Transfer Them into the Gun Trust Without Paying the Transfer Tax?

No, this type of transaction will require a $200 tax stamp for each firearm transferred.

11.    Can I Add an Individual as a Trustee of the Gun Trust if They Live in a State Where NFA Firearms are Illegal?

Yes. However, in this situation, the trustee will not be able to use or possess the NFA firearms within that state. They will only be able to use and possess them in those states that permit NFA firearms and items. Furthermore, if the trustee lives in a state that imposes additional restrictions on the use and possession of NFA firearms that are different than what the State of Florida requires, then they must also comply with those additional requirements. For example, the trustee’s state may require them to obtain a Firearms Identification Card before they can lawfully purchase or possess firearms.

12.    Can my Friends and I Form a Gun Trust and Put NFA Firearms into the Trust?

Legally, there is nothing that will prevent someone from forming a trust in this manner. However, each friend must be aware of the potential consequences of sharing a gun trust. Most importantly, what happens to the trust property if the friendship ends?

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[1] http://nwgunlawgroup.com/can-a-beneficiary-be-in-sole-possession-of-an-nfa-firearm
[2] http://nwgunlawgroup.com/beneficiary-in-sole-possession-issue-solved

Are You Using the Right Durable
Power of Attorney Forms?

Many post-September 2011 Durable Powers of Attorney are inadvertently inadequate because every single enumerated authority listed under the statute has to be signed or initialed, and initialing or signing once to indicate that all of them count together is insufficient.  Just about every bookstore we have checked with has forms that do not comply with the statute and will cause significant harm to Floridians who use them.

Florida Statute 709.2202(1) provides that certain authorities can only be provided to an Agent under a Durable Power of Attorney if the principal signed or initialed next to each specific enumeration of authority.

Certain forms are being used by lawyers which provide for the principal to “initial here only if you want every power to apply.” This is an invitation to disaster.

Please get the word out so that those friends and colleagues can get back to their clients to tell them to come back in and re-sign after initialing each power individually.

The statute reads as follows:

709.2202 Authority that requires separate signed enumeration –

(1) Notwithstanding s. 709.2201, an agent may exercise the following authority only if the principal signed or initialed next to each specific enumeration of the authority, the exercise of the authority is consistent with the agent’s duties under s. 709.2114, and the exercise is not otherwise prohibited by another agreement or instrument:

(a) Create an inter vivos trust;

(b) With respect to a trust created by or on behalf of the principal, amend, modify, revoke, or terminate the trust, but only if the trust instrument explicitly provides for amendment, modification, revocation, or termination by the settlor’s agent;

(c) Make a gift, subject to subsection (3);

(d) Create or change rights of survivorship;

(e) Create or change a beneficiary designation;

(f) Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan; or

(g) Disclaim property and powers of appointment

Our book, Florida Law for Tax, Business, and Financial Advisors, provides further information and Durable Power of Attorney forms. You can purchase and/or take advantage of a free look inside the book by clicking here.

Avoiding the Castellano Error by Always Leaving
Assets in Trust, Not Outright, Part III

by Jonathan E. Gopman, Ryan J. Beadle, Michael A. Sneeringer,
Evan R. Kaufman, and Alan S. Gassman

Under the Castellano decision, a Will which provided that the inheritance of an insolvent beneficiary would instead be held in trust, was essentially set aside by a bankruptcy judge under the rationale that the beneficiary’s notification to the Trustee of insolvency constituted a fraudulent transfer into the trust system.

Click here to view Part I of this article. Click here to view Part II.

This article has also been published as a LISI Newsletter, which can be viewed by clicking here.

GOING FORWARD

Although Castellano I has been overruled, there remain practical lessons from Castellano II of which estate planning practitioners should be aware.

Spendthrift Provision Language

It is always better for asset protection purposes that family wealth is passed in wholly discretionary trusts for as long as possible under applicable law. If assets must be distributed outright to a trust beneficiary, practitioners may wish to draft the trust to clearly provide that such beneficiary will have no right to such distributions until the end of the trust administration or estate administration process. Additionally, practitioners may wish to give either an independent trustee or trust protector discretion over the timing of such distributions and the ability to withhold such distributions if such fiduciary is aware of creditor issues affecting the potential distributee. In those states that have adopted §504 of the Uniform Trust Code (“UTC”) or an equivalent provision, if the client insists upon the beneficiary serving as the trustee, a lifetime spendthrift trust is still possible. Such a trust would include an ascertainable standard for distributions.

Section 504 of the UTC provides:

(A) In this section, “child” includes any person for whom an order or judgment for child support has been entered in this or another State.

(B) Except as otherwise provided in the subsection (c), whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to the trustee’s discretion, even if:

  1. The discretion is expressed in the form of a standard of distribution; or
  2. The trustee has abused the discretion.

(C) To the extent a trustee has not complied with a standard of distribution or has abused a discretion:

  1. A distribution may be ordered by the court to satisfy a judgment or court order against the beneficiary for support or maintenance of the beneficiary’s child, spouse, or former spouse; and
  2. The court shall direct the trustee to pay to the child, spouse, or former spouse such amount as is equitable under the circumstances but not more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion.

(D) This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

(E) If the trustee’s or co-trustee’s discretion to make distributions for the trustee’s or co-trustee’s own benefit is limited by an ascertainable standard, a creditor may not reach or compel distribution of the beneficial interest except to the extent the interest would be subject to the creditor’s claim were the beneficiary not acting as trustee or co-trustee.

Practitioners should carefully consider applicable state law in drafting spendthrift provisions. The spendthrift clause in the Trust contained broad distribution authority (“Thereafter, the Trustee shall pay to or for the benefit of that beneficiary only those amounts that the Trustee, in its sole and absolute discretion, deems advisable…”), however, the spendthrift clause included a standard for distributions (“…for the education and support of that beneficiary until the death of the beneficiary…”).

A spendthrift provision should clearly provide that a trust beneficiary may not voluntarily and involuntarily assign such beneficiary’s interest. There is no reason to incorporate a standard (e.g., health, education, support, or maintenance) for distributions where the beneficiary is not the trustee. Finally, a trustee can be permitted to take actions or to make expenditures for the benefit of a beneficiary (such as purchasing a residence for the beneficiary to occupy rent free) without making a direct distribution to the beneficiary.

Trustee Succession

Despite Castellano II’s holding, practitioners should carefully plan for trustee succession. The court’s conclusion in Castellano I that the Debtor made a transfer was based in part on the familial relationship between Linda and Del Alcazar (albeit by marriage to Linda’s niece). Section 101(14) of the Bankruptcy Code provides:

The term “disinterested person” means a person that –

  1. Is not a creditor, an equity security holder, or an insider;
  2. Is not and was not, within 2 years before the date of the filing of the petition, a director, officer, or employee of the debtor; and
  3. Does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason.

Del Alcazar likely fell within the definition of a “disinterested person,” as he had no interest “materially adverse to the interest of the estate or any class of creditors” by virtue of his relationship with Linda. “The court in Castellano I simply assumed that Linda had control of Del Alcazar due to their familial relationship; however, the Castellano I court’s conclusion that Linda made a transfer based on Linda’s alleged control over Del Alcazar had no apparent basis in fact or law.[1]

Many states have adopted some variation of § 504 of the UTC, which provides that a creditor may not compel a distribution for the trustee’s own benefit where the trustee’s discretion is subject to an ascertainable standard. Where asset protection is a concern, it is best to appoint an unrelated third party as trustee and specify that any successor trustee should be similarly unrelated. Where a related party must be appointed as a trustee, practitioners should carefully draft the ascertainable standard. It may also be helpful to have an independent trust protector appoint successor trustees to avoid any argument that the beneficiaries may install a subordinate trustee.

CONCLUSION

Castellano I will certainly not be the last case in which a court misapplies the law to benefit a creditor, and practitioners should draft very carefully and consider having all distributions held in trust and not passing outright to avoid a costly court battle that will not be resolved by the decision in Castellano II. The case is also a reminder that bankruptcy court decisions are no more than any other “court of first impression,” and can be overturned by a federal district court.

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[1] Safanda, 2015 WL 1911130 at fn 4.

Richard Connolly’s World
Health Law & Estate Planning

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 “New Wrinkle for Health Law” by Stephanie Armour. This article was featured in The Wall Street Journal on April 12, 2015.

Richard’s description is as follows:

Millions of people have gained health coverage through Medicaid since states began expanding the program under the Affordable Care Act. That also means more Americans may find themselves caught in a little-known law that lets states go after their assets after they die.

For more than 20 years, federal law has allowed states to recover almost all Medicaid costs if recipients are 55 or older when they die. This now applies to many of the 11 million people who joined Medicaid since the health law’s expansion of the state-federal insurance program.

The upshot: Some families are discovering they may have to sell a home or other assets of a deceased relative to reimburse the government.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “How Freezing Eggs Can Affect Your Estate Plan” by Joan M. Burda. This article was featured on Forbes.com on December 10, 2014.

Richard’s description is as follows:

When Apple and Facebook made news for paying the expenses of their female employees to freeze their eggs, chances are you didn’t think it would have any effect on your estate plan, but if you have a daughter or a granddaughter, you may be mistaken.

If either decides to use assisted reproductive technology and freeze her eggs, you’ll need to consider whether to include unborn descendants in your estate plan.

Generally speaking, for estate planning purposes, children, descendants, and heirs refer to people who are genetically, biologically, or legally related to you. Egg freezing, however, increases the chances that you may have a descendant who is neither genetically nor biologically related to you. Then it’ll be up to you to decide whether to include him or her in your estate.

Ignoring how assisted reproductive technology could play a part in your estate plan can be a significant error. Someone you want to include as an heir may be wrongly excluded, and another you have no intention of including could be brought in to share your estate. By specifying whom you do and don’t want to include, you retain control over your estate.

Most clients are unaware of this issue. This article is one way to start the conversation.

Please click here to read this article in its entirety.

Thoughtful Corner
Success Tips for First Year Lawyers

Alan Gassman gave a five hour workshop on professional acceleration for a group of LL.M. and tax students and some practicing lawyers at the University of Florida last Saturday.  So sorry you missed it!  Some of Alan’s new tips for first year lawyers were as follows:

1.) Always show up with a legal pad and two pens in hand.

2.) Answer questions as concisely as possible and see whether more information is requested. Don’t try to explain anything beyond the absolute minimum information that the person needs when that person is another lawyer that you are working with. The person you are interacting with, be it client or other attorney, will ask you what they need to know in addition to that.

3.) Show up to a meeting with a memo you wrote on the topic to be discussed, and hand it to the lawyer you prepared it for. Bring an extra copy so you have one, too. They can glance through the memo and ask you what they need to know.

4.) Smile and be cheerful. If there is a serious situation, be serious, but in overall everyday interactions, be as friendly and humorous as you can.

5.) Say hello when you first see someone at your office during the day, and then say goodbye at the end of the day.

6.) Become the organizer of anything and everything that you are involved with. Use checklists, progress reports, and reminders. Once you manage a project, you “own it” and will become the go-to person. Always have your checklists and the latest progress on each item you are working on with you for meetings or otherwise. You never know when you will be asked about them.

7.) Consider sending anyone in the office that you have a project in progress with an email every evening at 7:00 PM enclosing where you are or anything they may want or need to see about the project. You can accomplish this by utilizing the delay function on your emails.

This email will (1) remind them that you are working on this and (2) establish a habit so that your colleagues know they can go to their 7:00 PM emails to access what you have been working on lately. Your colleagues will quickly learn that the 7:00 PM space in their Inbox always belongs to you!

8.) Work constantly to improve yourself beyond the law and what you do as a lawyer. Concentrate on what you like to do and do best to the extent that it is productive.

Stay tuned for more tips for first year success next week. Alan’s next scheduled workshop for law students and professionals will be on August 22, 2015, at Ave Maria Law School in Naples.  Schedule your tax deductible trip weekend in Naples, and attend this Saturday eight hour interactive workshop, while making new friends and helping others (and yourself) immensely.  A splendid time is guaranteed for all, not to mention one ethics credit hour and seven general credits.

Humor! (or Lack Thereof!)

Sign Saying of the Week

Sign

Cartoon

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IN THE NEWS
by Ron Ross

Fed-Ex/Kinko’s is proud to announce their latest merger, this time with Gassman, Crotty & Denicolo, PA! This exciting venture will greatly enhance Fed-Ex/Kinko’s ability to serve their customers. Now they can box and send a lawyer directly to your doorstep overnight!

Deliver by Thursday

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As you may have heard, parents across the country are complaining about the great number of standardized tests their children have to take. Here in Florida, a compromise has been reached. As an alternative to the FCAT, students may choose one of the following:

  1. Pull the sword from the stone
  2. Identify all of the Colonel’s secret herbs and spices
  3. Go on a scavenger hunt and find a well-paid teacher, a number one pencil, and someone who actually uses trigonometry in real life
  4. Attend an additional 40 days of school per year like the rest of the Western world

Test Taker

Upcoming Seminars and Webinars

LIVE WEBINAR:

Double Alice

Alice Rokahr earned her Juris Doctor at The University of South Dakota School of Law. She was a partner at the firm of Kennedy, Rokahr, Pier & Knoff, LLP for 15 years and has also worked with Wells Fargo Bank and Bankers Trust Company of South Dakota. She currently serves as the President of Trident Trust Company (South Dakota) Inc.

Alice Rokahr 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: Tuesday, 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 WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of THE NEW DOCTOR’S GUIDE TO WEALTH BUILDING, CREDITOR PROTECTION, TRUST PLANNING, AND WHAT THEY DIDN’T TELL YOU IN MEDICAL SCHOOL. There will be two opportunities to attend this presentation.

Date:   Wednesday, June 17, 2015 | 7:30 PM or Saturday, June 20, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for the Wednesday/7:30 PM webinar, please click here. To register for the Saturday/9:30 AM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.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: Thursday, June 25, 2015 | 12:30 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on FINANCIAL RELATIONSHIPS WITH PATIENTS, CO-PAYMENTS, GIFTS, AND GRAFT – HOW TO STAY OUT OF TROUBLE UNDER FLORIDA AND FEDERAL LAW.

This is an essential guide for medical practices and those who advise them. There will be two opportunities to attend this presentation.

Date: Tuesday, July 7, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR:

Alan Gassman will present a webinar on the topic of WHAT FLORIDA CPAS NEED TO KNOW ABOUT ASSET PROTECTION for the Florida Institute of CPAs.

More information about this webinar will be forthcoming. Please stay tuned!

Date: Thursday, July 9, 2015 | 9:30 AM – 10:30 AM

Location: Online webinar

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

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LIVE ORLANDO PRESENTATION:

ORLANDO BUSINESS AND PROFESSIONAL PRACTICE OWNER SYMPOSIUM

Alan S. Gassman, business coach and author David Finkel, and others will present a two-day conference for high-net-worth business and professional practice owners sponsored by Maui Mastermind®.

Alan’s topics will include BASIC AND ADVANCED PLANNING TECHNIQUES FOR THE PROTECTION OF WEALTH, THE 10 BIGGEST MISTAKES THAT BUSINESS OWNERS AND PROFESSIONALS MAKE, and ESTATE TAX AVOIDANCE TECHNIQUES FOR BUSINESS OWNERS AND PROFESSIONALS.

Other topics include A Proven Map to Grow Your Business and Get Your Life Back, Building Wealth Outside of Your Company, Tax Reduction Strategies, and Understanding How Investments Work and What They Cost.

Interested individuals can contact agassman@gassmanpa.com or David Finkel at david@mauimastermind.com.

Date: July 30th and 31st, 2015

Location: Hyatt Regency Orlando | 9801 International Drive, Orlando, FL 32819

Additional Information: To register, please click here or call Kelli Goode at 1-888-889-0944 ext. 915.

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LIVE WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE BRADENTON, 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: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

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

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LIVE 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: Saturday, 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:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on a topic to be determined. We are open to suggestions!

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

Location: Sarasota, Florida

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

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

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

Location: Online Webinar

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

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LIVE FORT LAUDERDALE PRESENTATION:

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

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

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

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

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LIVE WEBINAR:

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

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

Location: Online webinar

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

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LIVE WEBINAR:

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

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

This presentation will the following objectives:

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

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

Location: Online Webinar

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

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LIVE SARASOTA PRESENTATION:

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

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

Date: 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.

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LIVE ST. PETERSBURG PRESENTATION:

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

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

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning. Alan Gassman will speak on Florida Law Tricks and Traps for Estate Planners.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins, which is not affiliated with Anthony Hopkins.

Please provide us with your input for other topics for this year and next! Watch this space for more speaker and topic announcements.

Date: Wednesday, February 10, 2016

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

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

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: 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.

June Rates

The Thursday Report – 5.28.15 – Bullet Points for Gun Trust Webinar

Posted on: May 28th, 2015

Bullet Points for Gun Trust Webinar with Jonathan Blattmachr, Lee-Ford Tritt, Sean Healy, and Alan Gassman

Appeals Court Corrects Bankruptcy Error in Castellano, Part II

50,000 Reasons to Buy Natalie Choate’s New Internet Based and Updated Life and Death Planning for Retirement Benefits

There is No Obligation to File an Annual Minutes Requirement Statement by Mike O’Leary and Teresa Good

Richard Connolly’s World – Philanthropy and the Future

Amy Bhatt Graduates from St. Petersburg College!

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.

Bullet Points for Gun Trust Webinar with Jonathan Blattmachr,
Lee-Ford Tritt, Sean Healy, and Alan Gassman

Gun Trust Header

We are pleased to announce that Jonathan Blattmachr, Lee-Ford Tritt, Sean Healy, and Alan Gassman will present a one-hour, Bloomberg BNA webinar on Gun Trusts on Wednesday, August 5, 2015 at 12:00 PM.

Stay tuned for more information regarding this not-to-be-missed webinar, and don’t miss the bullet points below!

Bullet Points

Appeals Court Corrects Bankruptcy Error in Castellano, Part II
by Jonathan E. Gopman, Ryan J. Beadle, Michael A. Sneeringer,
Evan R. Kaufman, and Alan S. Gassman

Last week, we began publishing an article (and poem!) on the Castellano case, Part I of which can be viewed by clicking here. This week, we continue with Part II of the article.

We are also pleased to announce that this article was published this week as a LISI Newsletter, which can be viewed by clicking here.

Analysis Under Section 548(e)

Section 548 (e)(1) of the Bankruptcy Code provides:

(e)(1) [T]he trustee may avoid any transfer of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition if –

(A) Such transfer was made to a self-settled trust or similar device;

(B) Such transfer was by the debtor;

(C) The debtor is a beneficiary of such trust or similar device; and

(D) The debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that the transfer was made, indebted.

Section 101(54) of the Bankruptcy Code provides:

The term “transfer” means –

(A) The creation of a lien;

(B) The retention of title as a security interest;

(C) The foreclosure of a debtor’s equity of redemption; or

(D) Each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with –

(i) Property; or

(ii) An interest in property.

The terms of the Trust allowed Del Alcazar to transfer a portion of the Trust’s assets from one account to another. The court ruled that transferring assets of the Trust between accounts did not terminate the Trust’s ownership of such assets, or constitute a distribution to Linda, or otherwise create a new trust. According to the court, Linda’s share of the Trust “remained the property of the Trust in the custody of Merrill Lunch.”[1] The court ruled further that without a “transfer” (as defined in § 101(54) of the Bankruptcy Code) of an interest to Linda, § 548(e) did not apply. The court thus rejected the bankruptcy court’s application of § 548(e) of the Bankruptcy Code.

Unlike the court in Castellano I, the court in Castellano II did not provide extensive analysis on what a transfer of an “interest in property” delineates or what a “similar device” is or is not.

According to the court in Castellano I, Linda’s “interest” in “property” was “her share of the Trust assets.”[2] In Castellano II, the court noted that Linda had no interest; the $400,000 in the Spendthrift Trust Account was an interest in property of the Trust. Section 548(e)(1) of the Bankruptcy Code uses the term “interest,” as further modified by the phrase “of the debtor in property that was made on or within 10 years before the date of the filing of the petition”; while not explicitly defined elsewhere in the statute, the term “interest” was interpreted in In re Mortensen.[3] The court in Mortensen, quoting Butner v. U.S.,[4] remarked that “[o]rdinarily, it is state law, rather than the Bankruptcy Code, which creates and defines a debtor’s interest in property. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding.” However, the Mortensen court noted that Congress codified a federal “interest” in passing Section 548(e)(1) which required an interpretation of “interest” different from state law as articulated in Butner.[5]

What type of interest in the trust is required to make it a “self-settled trust” or “similar device?” Can a transfer only be avoided under this provision to the extent the trust is self-settled? Suppose a debtor transfers property to a trust and retains only the right to receive income (such as a grantor retained annuity trust) from the trust for a term of years or for life or suppose the debtor can only receive such payments in the discretion of an independent trustee where the trust is settled in a jurisdiction such as Delaware with asset protection legislation. Is an inter vivos QTIP trust a self-settled trust or similar device where the beneficiary spouse is given a power to appoint assets back to the grantor spouse?

Consider the case of a transfer of wealth to a charitable lead trust established in a jurisdiction such as Delaware with asset protection legislation where the remainder interest is directed to be distributed to a trust in which the debtor is a discretionary beneficiary of the income and/or principal. Suppose the term of the lead trust extends over ten (10) years. Query whether this is a self-settled trust under the statute or a similar device. Would the asset protection trust’s vested remainder interest in the charitable lead trust be considered an attachable property interest under this rule? This would seem to be the correct result.[6] It appears that the retention of a certain amount of control over the trust assets is an indication of the trust being classified as “something like” a similar device.

Neither the phrase “self-settled trust or similar device,” nor the individual words “self-settled trust” or “similar device” are defined in the Bankruptcy Code. Castellano I cited to Black’s Law Dictionary for the definition of a self-settled trust, which states that a self-settled trust is “[a] trust in which the settlor is also the person who is to receive the benefits from the trust, usually set up in an attempt to protect the trust assets from creditors.”[7] It appears that Congress intended that the courts turn to state law for these definitions, as articulated by Representative Chris Cannon, R-UT:

Under the Restatement of Trusts, a self-settled trust is a trust created by a person for his or her own benefit with a provision restraining the voluntary or involuntary transfer of a person’s interest, so the Restatement provides that such trust can be pierced by the person’s creditors…So what is an asset protection trust or self-settled trust? Neither the Internal Revenue Code nor the entire United States Code contain any reference to either of these terms. This is a matter of State law.[8]

In In re Porco,[9] the court highlighted commentary in Collier on Bankruptcy that states: “[t]he congressional decision to leave these terms ‘self-settled trust[s],’ a court will have the power to scrutinize them under the ‘similar device’ provision.” The Porco court ultimately stated that “consideration should be given to Congress’s purpose in enacting § 548(e)…to reverse the actions of state legislatures that had overturned the common law that a self-settled spendthrift trust could be reached by creditors or a trustee in bankruptcy.”[10]

Cases may give practitioners some insight into what a “similar device” might be. In Porco, a 2011 decision, the court noted that years after Section 548(e) of the Bankruptcy Code had been enacted (2005), no bankruptcy court opinions had yet to construe the words “self-settled” or “similar device.” Relying on the legislative history of Section 548(e) and Collier on Bankruptcy, the court determined that a resulting or constructive trust was not a “self-settled trust or similar device.” The court noted that self-settled spendthrift trusts “generally require (1) an irrevocable trust; (2) an independent trustee; (3) absolute discretion; and (4) distributions to beneficiaries, including the settlor.”[11] According to the court, the four elements contemplate the creation of an express trust. The court went on to reason that if the purpose of Section 548(e) was to reverse actions of state legislatures overturning the common law ban on self-settled spendthrift trusts and self-settled spendthrift trusts are express trusts, the language in Section 548(e) requires an express trust; therefore, resulting or constructive trusts are created by the courts and not by the express grant of a settlor.[12]

The court in Castellano II noted that in Del Alcazar’s creation of the Spendthrift Trust Account and holding of the $400,000 at Merrill Lynch, there was no act of distribution or creation of a new trust; there was merely a division of the property of the Trust pursuant to the terms of the Trust. Thus, the court in Castellano II reached the correct result in holding that there was no transfer of an interest and that § 548(e) does not apply.

Finally, it is worth noting that perhaps the term “similar device” refers to a trust that is not technically considered a “self-settled trust” nevertheless, the settlor retains (or likely retains) some significant benefit or benefits that are not necessarily apparent from the terms of the trust agreement, however, are either apparent from the facts and circumstances that occur after the trust is created and funded or because of powers and authority granted to certain parties who are closely related to the settlor or over whom a settlor can exert strong influence. Thus, for example, a trust for the benefit of a settlor’s spouse and descendants would not be considered a self-settled trust. Nevertheless, where the terms of the trust agreement grant the settlor’s spouse a broad special power of appointment that could be exercised in favor of the settlor, such a trust may be considered a “similar device.” A trust for the benefit of the settlor’s descendants may be considered a similar device where the settlor retains substantial control over the capital through broad investment authority either granted under the terms of the trust agreement or de facto control based on the facts and circumstances.

Next week, we will provide our conclusion and final thoughts regarding this important case.

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[1] Safanda, 2015 WL 1911130 at *8.
[2] In re Castellano, 514 B.R. at 560.
[3] 2011 WL 5025249 (Bankr. D. Alaska).
[4] 440 U.S. 48, 55 (1979).
[5] In re Mortensen, at *6-7.
[6] See In re Yerushalmi, 487 B.R. 98 (Bankr. E.D. N.Y. 2012).
[7] Black’s Law Dictionary 1746, 10 ed., 2014.
[8] 5 COLLIER ON BANKRUPTCY ¶ 548.10[1] (N. Alan Resnick & Henry J. Sommer eds., 16th ed.) (2005), citing H.R. Rep. No. 109-31, 109th Cong., 1st Sess. 449 (statement of Rep. Cannon).
[9] 447 B.R. 590 (S.D. IL 2001).
[10] Id. at 596.
[11] Id. at 596-97.
[12] For another example of a court scrutinizing a device that is not technically a self-settled trust, see In re Thomas, 2012 WL 2792348 (Bankr. D. Id., Slip Copy, July 9, 2012), whereby the court briefly discussed the issue of whether an IRA was a self-settled trust or similar device.

50,000 Reasons to Buy Natalie Choate’s New Internet Based & Updated
Life and Death Planning for Retirement Benefits
by Alan S. Gassman and Christopher J. Denicolo

The following article was published as a LISI Newsletter, which can be viewed by clicking here.

EXECUTIVE SUMMARY:

Your practice cannot go without Natalie Choate’s new Life and Death Planning for Retirement Benefits, and you will be amazed at the new heightened level of accessibility and speed made available in the new, updated 2015 interactive electronic version. Our firm has been using this book in the electronic version since we purchased it at the Heckerling Institute in January, and we have been nothing short of amazed at how easy it is to navigate and to find balanced, thorough discussions and answers as and when needed.

If you don’t have this updated version and are operating on the 2011 printed edition, or if you are without this book at all, then stop reading this evaluation and order the book online. If there is any doubt at all, please keep reading.

ABOUT THE DYNAMIC AUTHOR AND THE UNPRECEDENTED PLATFORM:

Choate

Natalie B. Choate practices law in Boston, Massachusetts, with the firm of Nutter McClennen & Fish, LLP, and she is the undisputed top author, lecturer, and authority in this complicated area. She is also an amazing writer and speaker and our hero in this area. Her practice is limited to consulting on estate planning and retirement benefits matters. Her books Life and Death Planning for Retirement Benefits and The QPRT Manual are leading resources for estate planning professionals. Any professional attempting to practice in these areas needs to have these books. Her amazing writing talents and supremacy in this area are made all the more cogent and relevant by what Jonathan Blattmachr and his team at Interactive Legal Systems have done with Life and Death Planning by putting it on an interactive platform in the Cloud that is nothing short of amazing in terms of the usability, speed, and efficiency in this challenging area.

COMMENT:

Recent studies show that more than $20 trillion of assets are held under IRA and qualified retirement plans, making this the largest asset class held by Americans. More importantly, with the increase in the federal estate tax exemption, many Americans will no longer be subject to estate tax. Instead, their primary tax planning focus will shift to income tax, especially with respect to IRAs and qualified retirement plans, which will be subject to income tax when distributions are paid therefrom.

The complexity and income tax planning associated with IRAs and qualified plan distributions has become a significant planning area where advisors can make a big difference to save tax money, preserve inheritances, and facilitate appropriate trust planning for clients who have or will inherit large IRA and pension accounts, and there are a great many of these. It is therefore critically important to understand the extremely complicated and somewhat cumbersome rules applicable to IRAs and qualified plans.

We know from experience that it is impossible to navigate this complicated and often otherwise uncharted area without a thorough and complete guide to the primary rules and all of the nooks and crannies that can create traps for the unwary. Fortunately, Life and Death Planning has been the one and only bible in this area for the vast majority of conscientious estate planners for more than 19 years. This is why it has sold more than 50,000 copies, and this is why everyone who has bought a copy in the past needs to be up to date in this area in this very special way.

This essential “red book” was last reprinted in 2011 as the seventh edition, but now, the book is available for the first time as an electronic version that is fully searchable. The electronic version will also be automatically updated to account for changes in the applicable tax law that will undoubtedly occur. The fantastic electronic platform was designed in coordination with Interactive Legal Systems, with input by Natalie’s good friend and unprecedented fellow tax planning genius, Jonathan Blattmachr, and with the notable participation and assistance of Michael L. Graham, who is also a tax heavyweight and a tremendous contributor to the tax and estate professional community.

This latest version of Life and Death Planning contains two additional chapters that are not included in the current print version: Chapter 10 on the topic of “Minimum Distribution Rules for Defined Benefit Plans and Annuitized IRAs,” and Chapter 11 on the topic of “Insurance, Annuities, and Retirement Plans.” Further, Chapter 7 on the topic of “Charitable Giving” has been updated through March 31, 2015 and expanded to include Natalie’s special report on charitable giving with retirement benefits that was previously sold as a stand-alone document. The latest edition also contains updates to the IRA and qualified retirement plan tax law that have occurred since the last edition was published in 2011.

What is even more impressive is an innovative and easy-to-use electronic platform, which enables the user to not only search for terms, code and regulation sections, and strategy and case names, but also to navigate by link from the table of contents and chosen words to other sections of the book (and back) with just a click. This feature is logical, intuitive, and very efficient to boot.

The applicable Internal Revenue Code and Treasury Regulations sections employ certain nomenclature and terms and art that need to be understood by those of us who work with IRAs and qualified retirement plans. Having a word search feature available at your fingertips greatly streamlines the ability to access and understand the authority and discussion with respect to IRAs and qualified retirement plan issues. Specifically, the search function allows readers to search the book for certain buzzwords and key terms relating to their desired area of discussion or to search for certain authority (such as Code and Treasury Regulation sections). This feature undoubtedly saves readers much time in thumbing through pages and expedites access to THE treatise on IRAs and qualified retirement plans.

For an example of the above, suppose that you need to know if a conduit trust could pay certain expenses, without jeopardizing the trust’s status as a qualifying conduit trust. Once you put the words “conduit trust” and “expenses” into the system, the following immediately pops up and provides an excellent answer to the question presented:

Section 6.3.05 (D) Payment of Trust Expenses

“Payment of trust expenses out of the retirement plan assets does not adversely affect conduit trust status.”

This search took mere seconds and eliminated the often cumbersome process of looking through a table of contents or index to determine the applicable pages, following by thumbing through a hard copy book to get to the desired page.

Any estate planner or advisor assisting clients in any fashion with respect to IRAs or qualified plans should not go without the newest edition of Life and Death Planning, and they are advised to strengthen their practice by adding this book to their library. Readers will be amazed by the new heightened level of accessibility and efficiency made available through this electronic version and will be pleased by the breadth and depth of the discussion of the tax law applicable to IRAs and qualified retirement plans.

The electronic version of the book reinforces its place as one of the sources that every estate planner should have in his or her library and is a testament to the enormous contribution that Natalie Choate has made to the estate planning industry.

We wholeheartedly agree with other testimonials for this book, which have included the following:

Must Have for Estate Planners
by Steven L. Zakrocki
As an estate planning attorney, this book is always within reach. It is a must have for understanding issues related to retirement benefits. I’ve also heard several other attorneys highly recommend this book.

The Premier Book for IRA Planning
by Rick Fingerman, CFP, CDFA
Natalie Choate is one of the three top experts in this area. Well, she is probably THE top expert, but you get the idea. This is a very technical book, but if the answer isn’t in here, it probably doesn’t exist. I find this to be one of the best resource guides available.

One of the Best Resource Guides Available
by Anita Week
As an ERISA specialist, I find this to be one of the best resource guides available. It’s highly recommended.

Thanks again to Natalie and Jonathan for all that they have done for our industry, and now particularly, for those of us who engage in IRA and retirement planning. New doors are opened, and with an efficiency and finesse that can only be made available by industry leaders like Natalie and Jonathan.

TABLE OF CONTENTS:

Chapter 1: The Minimum Distribution Rules
Chapter 2: Income Tax Issues
Chapter 3: Marital Matters
Chapter 4: Inherited Benefits: Advising Executors and Beneficiaries
Chapter 5: Roth Retirement Plans
Chapter 6: Leaving Retirement Benefits in Trust
Chapter 7: Charitable Giving
Chapter 8: Investment Issues; Plan Types
Chapter 9: Distributions Before Age 59½
Chapter 10: RMD Rules for Annuitized Plans
Chapter 11: Insurance, Annuities, and Retirement Plans
Appendix A: Tables
Appendix B: Forms
Appendix C: Resources

HOW TO ORDER:

The new electronic version can be subscribed to at www.retirementbenefitsplanning.com. The 7th Edition is available for purchase in print at www.ataxplan.com. This is an essential guide, and the electronic version is a tremendous bargain at only $9 per month, which includes all updates and resources. Live long and prosper with the best of the best in this industry and perhaps any industry!

There is No Obligation to File an Annual Minutes Requirement Statement
by Mike O’Leary and Teresa Good

oleary-good

he following short article by Mike O’Leary and Teresa Good was featured in the Trenam Kemker Legal Update for March of 2015. You can see the article, which originally ran in the September 2014 Legal Update by clicking here.

If you would like to see more Trenam Kemker articles, please click here to sign up for their newsletters.

Many of our corporate clients have received a letter or email from Compliance Services, containing an Annual Minutes Requirement Statement. The letter or email requests that the Statement be completed and returned with a filing fee. Although the Statement and the request look very “official,” there is no obligation to complete or file such a Statement. Compliance Services is just one of several companies that attempt to get Florida corporations, partnerships, limited liability companies, and other entities to pay for services that are not required.

The communications from these companies are intentionally designed to look official, with the appearance that these companies are affiliated with the Florida Department of State. Don’t be fooled – they are not affiliated with the Florida Department of State, and, indeed, the Department of State has specifically advised against completing this form or paying this fee. The only document required to be filed annually for a business entity in Florida is an Annual Report, required to be filed with the Florida Department of State. If you receive a communication that appears official, don’t just fill it out and send it in the money.

Thanks to Trenam Kemker for passing this important message along! Mike O’Leary can be reached at 813-227-7454, and Teresa Good can be reached by calling 813-202-7827.

Richard Connolly’s World
Philanthropy and the Future

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 “Don’t Skip Charitable Planning for Wealthy Clients” by Paul Hechinger. This article was featured on OnWallStreet.com on May 10, 2015.

Richard’s description is as follows:

For the very rich, how they give away their money may be just as important as how they make it.

The role that philanthropy plays in the lives of wealthy individuals is so crucial that advisors who don’t properly understand it risk becoming irrelevant, according to wealth industry professionals.

Wealthy clients are eager to discuss philanthropy, according to Claire Costello, U.S. Trust’s National Practice Executive for Philanthropic Solutions. She points out that one-third of clients want the subject brought up in an initial meeting with an advisor, while 90% say the conversation has to take place within the first three meetings.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “How Family Foundations Can Pass on the Philanthropy Flame to the Next Generation” by Veronica Dagher. This article was featured in The Wall Street Journal on April 12, 2015.

Richard’s description is as follows:

Many family foundations are set up to exist indefinitely. But “indefinitely” is going to come a lot sooner than expected if future generations have no interest in the family’s charitable work.

That’s a pressing issue these days as aging baby boomers look to their children and grandchildren to take the reins of the foundations they or their parents founded. Younger family members may be reluctant to step up, however, if they don’t feel a connection to the charities the foundation supports, are overshadowed by overbearing parents, or lack the time and skill needed to run a nonprofit organization.

This article features five things foundations can do to empower the next generation of leaders and ensure that the family’s philanthropic flame won’t burn out.

If you are helping clients set up their own foundations, or if you are advising clients with foundations, this article may be a good conversation starter.

Please click here to read this article in its entirety.

Amy Bhatt Graduates from St. Petersburg College!

Amy

Thursday Report contributor Amy Bhatt started working with our firm when she was just 15 years old. When she was in 10th grade, Amy took the highly demanding entrance test for the Early College Program and was one of the few students selected for the program from Pinellas County. Now, Amy has graduated from St. Petersburg College with an Associates of Arts degree – a degree she has earned before officially graduating from high school!

While in the Early College Program, Amy served as the President of the Honors College Student Consortium, the Lead Coordinator of the Honors College Research Conference, the Research Editor for the Interdisciplinary Journal (META), the Co-Chair of the Pre-Law Committee, and the Editor of the 6th Judicial Circuit Pro Bono Newsletter, which has been featured in the Thursday Report. She has also participated in the Teen Court Arbitration program since 2012.

During her first year at SPC, Amy received the Student of the Year Award in Honors Interdisciplinary Studies; she was one of the youngest students at SPC to ever receive this award. She has also won the All-Florida Academic Award conferred by the Commissioner of the Department of Education, the Dr. Theodore J. Mazzu Scholar of the Year Award, the Honors College Scholar of the Year Award, and the Early College Scholar of the Year Award.

Amy will be receiving the Presidential Scholarship Award in July, where she will be recognized as one of the most outstanding Pinellas County graduating high school seniors. She also won the prestigious Apollo Award from St. Petersburg College. The Apollo Award is the highest honor an Associate’s Degree graduate can receive, and it recognized Amy as the most outstanding student from all 10 SPC campuses in the areas of academics, service, and leadership.

Additionally, Amy conducted research on how the tactical victory of suffragettes resulted in the 19th Amendment women’s right to vote. She was invited to present this research at local, state, and regional research conferences. She has also been invited to present this research at the national level conference, which will be held in Chicago in November 2015.

Amy is continuing her studies at SPC, with a goal of earning a Bachelor’s Degree in Paralegal Studies by this time next year. She is also studying for the LSAT exam, with the hopes of attending a reputed law school next fall. Her ultimate dream is to serve as a Justice on the US Supreme Court.

Congratulations and good wishes can be sent to amy@gassmanpa.com.

Congratulations, Amy! We can’t wait to see what you accomplish next!

Humor! (or Lack Thereof!)

Sign Saying of the Week

Wizard of Sign

Cartoon - final

Upcoming Seminars and Webinars

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 and friends. Thank you very much to those successful professionals who have signed up to help lead discussions and enjoy the opportunity for reflection. Experienced professionals are also welcome to attend by making a small donation to the Lind Chair.

Date: Saturday, May 30, 2015 | 10:00 AM – 3:00 PM

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:

Rokahr

Alice Rokahr earned her Juris Doctor at The University of South Dakota School of Law. She was a partner at the firm of Kennedy, Rokahr, Pier & Knoff, LLP for 15 years and has also worked with Wells Fargo Bank and Bankers Trust Company of South Dakota. She currently serves as the President of Trident Trust Company (South Dakota) Inc.

Alice Rokahr 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: Tuesday, 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.

For a 25% discount (and an autographed copy of the PowerPoint printed on yellow paper!) please click here and follow the instructions.

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 WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of THE NEW DOCTOR’S GUIDE TO WEALTH BUILDING, CREDITOR PROTECTION, TRUST PLANNING, AND WHAT THEY DIDN’T TELL YOU IN MEDICAL SCHOOL. There will be two opportunities to attend this presentation.

Date:   Wednesday, June 17, 2015 | 7:30 PM
Saturday, June 20, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for the Wednesday/7:30 PM webinar, please click here. To register for the Saturday/9:30 AM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.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: Thursday, June 25, 2015 | 12:30 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on FINANCIAL RELATIONSHIPS WITH PATIENTS, CO-PAYMENTS, GIFTS, AND GRAFT – HOW TO STAY OUT OF TROUBLE UNDER FLORIDA AND FEDERAL LAW.

This is an essential guide for medical practices and those who advise them. There will be two opportunities to attend this presentation.

Date: Tuesday, July 7, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR:

Alan Gassman will present a webinar on the topic of WHAT FLORIDA CPAS NEED TO KNOW ABOUT ASSET PROTECTION for the Florida Institute of CPAs.

More information about this webinar will be forthcoming. Please stay tuned!

Date: Thursday, July 9, 2015 | 9:30 AM – 10:30 AM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE BRADENTON, 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: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

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

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LIVE 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: Saturday, 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:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on a topic to be determined. We are open to suggestions!

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

Location: Sarasota, Florida

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

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

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

Location: Online Webinar

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

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LIVE FORT LAUDERDALE PRESENTATION:

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

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

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

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

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LIVE WEBINAR:

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

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

Location: Online webinar

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

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LIVE 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.

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LIVE ST. PETERSBURG PRESENTATION:

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

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

Lauren Detzel will be speaking on Family Law and Tax Planning for Divorce, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning. Alan Gassman will speak on Florida Law Tricks and Traps for Estate Planners.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins, which is not affiliated with Anthony Hopkins.

Please provide us with your input for other topics for this year and next! Watch this space for more speaker and topic announcements.

Date: Wednesday, February 10, 2016

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

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

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

LIVE TAMPA PRESENTATION:

THE FLORIDA BAR TAX SECTION LUNCHEON

The Florida Bar Tax Section’s New Tax Lawyers Committee is holding a luncheon featuring The Honorable Juan F. Vasquez of The United States Tax Court as its guest speaker. The topic of the discussion will be CURRENT DEVELOPMENTS BEFORE THE TAX COURT.

There is no cost to attend the lunch, but an RSVP is required.

Date: Wednesday, June 3, 2015 | 11:45 AM – 1:15 PM

Location: The University Club of Tampa | 201 N. Franklin Street, Tampa, FL 33602 | 38th Floor

Additional Information: To RSVP, please email assistant@schmidtlawoffice.com if you would like to attend. A confirmation email will be sent a few days prior to the program.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: 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.

Applicable Rates

The Thursday Report (TTR) – 5.21.15 – Happiness is a Warm Gun Trust (HIAWGT)

Posted on: May 21st, 2015

Drafting a Gun Trust (DGT) – Don’t Take a Shotgun Approach, Part II

Appeals Court Corrects Bankruptcy Error (ACCBE) in Castellano, Part I

Feedback from the Florida Bar Asset Protection Program (FFBAPP)

Richard Connolly’s World – Finances Before & After Marriage (Uh-oh!)

Thoughtful Corner – Nothing But Initials (TC-NBI)

Humor! (or Lack Thereof!) (HLT)

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.

Drafting a Gun Trust – Don’t Take a Shotgun Approach, Part II
by Alan Gassman, Seaver Brown, and Travis Arango

The debate over gun control and gun rights has certainly become a contentious topic in the last few years. As a result, gun trusts have become a popular mechanism for individuals to properly manage automatic weapons, suppressors, and certain permitted explosives that are restricted by federal and state laws. In 1934, Congress enacted the National Firearms Act to regulate an individual’s ability to buy and sell machine guns, sawed-off shotguns, suppressors (silencers) and other items.[1] The Gun Control Act of 1968 and regulations promulgated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“Bureau of Alcohol”) provide rules for the possession and transfer of specified firearms and other items.[2]

In light of these regulations, gun enthusiasts are presented with three options when it comes to buying and selling certain restricted firearms/items. One option allows them to apply as an individual, another as a corporation, such as a limited liability company (LLC), and the last is through a gun trust. Each option has certain requirements that must be met in order for an individual to lawfully own and possess these types of firearms. This article will examine the various laws affecting gun owners’ rights, as well as the different methods that may be used to lawfully possess, use, buy, and sell these weapons.

Part I of our article, which ran in last week’s issue of The Thursday Report, can be viewed by clicking here.

Part II is as follows:

A gun trust is typically created to address three major concerns about the possession and transfer of firearms regulated by federal and state governments. First, they operate as a legitimate estate planning tool to determine the treatment of firearms upon the death or incapacity of a settlor. Second, they allow multiple trustees to lawfully possess and use the firearms held by the trust, which is contrary to a federal law that states that only on individual may possess a Title II firearm. Finally, they provide a way to avoid the requirement of providing fingerprints and obtaining the chief law enforcement officer’s signature of approval.

The gun trust must meet the requirements of the state’s trust laws where the trust is created. Most gun trusts are created strictly to deal with the complexities of owning and transferring Title II firearms, as opposed to Title I firearms. Thus, upon the death or incapacity of a settlor, special consideration must be given to whether or not the beneficiaries or remaining trustees are permitted to possess such firearms. Unfortunately, answering this question is never a simple task. As we discussed above, state and federal laws operate concurrently in the context of these firearms. When drafting a typical revocable trust, the drafter tends only to address the specific state laws in which the trust is created because it does not matter where a co-trustee or beneficiary resides upon the death of a settlor. This is simply not the case with a gun trust. For example, if you create a gun trust in the State of Florida and name your son, a Massachusetts resident, as either a co-trustee or a beneficiary, then they must have a Firearms Identification Card from Massachusetts to be in lawful possession of any firearm you leave them. The important point here is that each state has their own specific rules on gun ownership, possession, and transferability.

You are required to submit 1 of 2 forms to the Bureau of Alcohol in order to get authorization to own a Title II item. If you are buying a Title II item, then you will have to submit Form 4. If you are making a Title II item (i.e. shortening the barrel on a firearm, etc.) then you will have to submit Form 1. Regardless of whether you use a corporation, trust, or personal ownership, you must submit the form and gain approval before taking possession of the Title II item. Generally, you will go to a store and purchase the Title II item, get the necessary information, such as the serial number of the item, fill out the required form, and then send it in. While the application process takes place, the dealer will hold the item for you until you have been approved by the Bureau of Alcohol to take possession of the item.

Transferring the Title II item to the gun trust depends on who owns the item at the time. If the item is owned by a Class II dealer (i.e. a gun store that is licensed to sell Title II items) then the trust will purchase the item, and the store will hold the item until the Bureau of Alcohol approves the Form 4. You will want to purchase the item with a money order or with a bank account set up by the trust to avoid any issues with purchasing the item under your name. On the Form 4, which you will fill out and send in to the Bureau of Alcohol, the owner of the item will be the gun trust and the section requiring fingerprints and the chief law enforcement officer signature will be skipped. Detailed instructions for filling out the form can be found here: https://www.guntrustlawyer.com/form4.

If you are already the owner of a Title II item (i.e. you have already gone through the necessary steps to get a tax stamp through the Bureau of Alcohol for that item) and want to transfer it to a gun trust, then you will have to pay the stamp tax again for each item you want to send to the trust and fill out the required Form 4. This is because a stamp tax is required for each transfer of a Title II item, and transferring ownership from yourself to the trust (even if it is your trust) constitutes a transfer.

Gun Trust Benefits:

  • All named trustees have the right to possess or use the National Firearms Act firearm or item. This protects you and anybody else that has access to the item from committing a felony.
  • When compared to a corporation or LLC, which are generally open to the public, a gun trust will keep your information private, such as what items the trust owns and who owns them. However, while National Firearms Act firearms must still be registered with the Bureau of Alcohol, there is no need to notify local law enforcement.
  • No fingerprints, photographs, or chief law enforcement officer signature required.
  • Bureau of Alcohol approval is usually must faster than individual applications.
  • Provides greater protection that National Firearms Act firearms are passed on responsibly when an owner dies or is deemed incapacitated. In also keeps them from falling into the wrong hands after divorce.
  • Gun trusts protect the would-be executor of your estate. Normally, executors gather all your assets, pay off your debts, and then distribute what is left. However, this may lead to unintended consequences when the executor is not familiar with the National Firearms Act rules and restrictions on ownership, possession, and transfers of National Firearms Act firearms. This may cause them to inadvertently transfer the firearm to someone without registering it or obtaining approval from the Bureau of Alcohol.
  • Firearms can remain in the trust after the grantor’s death, meaning there is no transfer of the item at the current owner’s death. This allows the beneficiary to avoid the $200 transfer fee as well as the application process discussed above.

Below is a chart that shows what is required of each type of Title II purchase:

Gun Trust Chart

Another important point to note is that since 1986, there have not been any newly manufactured, fully automatic weapons that can be held in private possession. This has led to a decrease in the current supply of pre-1986 automatic weapons as they succumb to damage and poor maintenance. Thus, these older weapons have grown in value[3], which in turn has led to an ever growing market of collectors. In this sense, a gun trust is almost necessary to properly handle the weapon after the collector’s death. Using a trust ensures its value remains in the estate. It also ensures that when the beneficiaries or trustee of the gun trust decide to sell it, they will not be subject to any criminal liability.

Conclusion:

Without a gun trust, individuals who wish to own a Title II firearm must satisfy several requirements set forth by the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Those requirements include filling out a Form 1 or Form 4 for each item you want to register, paying a $200 tax stamp, submitting a photo and fingerprints, and allowing for a background check. They must also obtain a signature from the chief law enforcement officer in their area approving the application; however, most of this process can be bypassed by creating a gun trust.

If you are thinking about using a gun trust, make sure to use night vision goggles so you are not left in the dark. Stock gun trust forms and revocable trusts can be extremely dangerous when not properly drafted, even more so than the weapons they are intended to protect. Do not forget the safety either. Before you and your trustees decide to purchase or use any gun trust firearm, make sure that all trustees are required to take gun safety courses. Recommend they take physicals every year to ensure they are fit both mentally and physically. Be sure that they know to use protective eyewear and earplugs. Finally, ensure that the places they use these weapons allow for discharge of these types of weapons.

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[1] National Firearms Act of 1934, 26 U.S.C. §§ 5801 – 5872 (2006).
[2] Gun Control Act of 1968, 18 U.S.C. §§ 921 – 931 (2006).
[3] According to http://www.machinegunpriceguide.com/html/us_mg_4.html, as of December 2014, a pre-1986 fully automatic M16A1 rifle will cost on average $28,000, nearly a $13,000 increase from December of 2004.

Appeals Court Corrects Bankruptcy Error in Castellano, Part I
by Jonathan E. Gopman, Ryan J. Beadle, Michael A. Sneeringer, Evan R. Kaufman, and Alan S. Gassman

Faith Castellano died, and Linda Castellano was her daughter
Faith left her assets in a trust like she ought-er.
Del Alcazar was appointed Trustee
And noted that Castellano was filing for bankruptcy.
The spendthrift clause in the trust went beyond the norm
And specifically provided for an insolvent’s interest would be out torn
And would thus be applied in the sole discretion of the Trustee for education and support for life
With nothing there for the beneficiary’s husband or wife.
The bankruptcy judge took a look at it all
And for some reason decided that Castellano should take a fall.
The District Court on review, however, finally got it exactly right
So the drafter of the Trust and Castellano need no longer be uptight.
It would have been safer to have no outright distributions
And it is a shame they had to go to court and appeal to get the right solution.
Hats off to District Court Judge Manish Shah
And to Castellano and her lawyers for going this far.
The provision in this trust was the hero of the day
Put a stronger one in your trusts and some fortunes you may save.

The following is the initial executive summary and comment from a draft LISI newsletter presently in editing.

EXECUTIVE SUMMARY:

After much discussion in the LISI community[1], the result promulgated in In re Castellano[2] has been relegated to a footnote in history following the decision by the United States District Court for the Northern District of Illinois in Safanda v. Castellano.[3] While the decision may be considered on appeal, United States District Judge Manish S. Shah appears to have analyzed the pertinent issues properly to reach the correct result.  The bankruptcy judge’s conclusion that a debtor who notified the trustee of a spendthrift trust that she was not entitled to receive distributions due to her insolvency and the clear language of the trust, was somehow considered to have made a contribution to the trust that would be set aside, or would be impacted under the ten year look back period for self-settled trusts.

COMMENT:

The court in Safanda v. Castellano (“Castellano II”) relied on the facts of In re Castellano (“Castellano I”), which was previously reported to members in prior commentaries.[4] However, the court in Castellano II expounded on certain facts as such relate to Linda Castellano (“Linda”) and Bruno Castellano (“Bruno”) (collectively, the “Castellanos”). A brief summary of such facts is provided below.

CASTELLANO I and FACTS:

On February 18, 1997, Linda’s mother, Faith F. Campbell (“Faith”) settled the Faith F. Campbell Living Trust (the “Trust”) in South Carolina. Linda was a beneficiary of the Trust. Faith died on February 11, 2011. The Castellanos operated a moving company that closed in the summer of 2011 due to financial difficulties. On October 5, 2011, Linda’s attorney sent a letter (the “Insolvency Letter”)[5] to J. T. Del Alcazar (“Del Alcazar”), the trustee of the Trust. In November of 2011, the Castellanos filed for bankruptcy. The Trust provided that upon Faith’s death and “upon settlement of her estate, [the Trust] shall terminate.” The Insolvency Letter informed Del Alcazar that the Castellanos had closed their business, that the Castellanos were filing for bankruptcy protection, and that Linda’s insolvency required the trustee of the Trust to exercise the trustee’s authority under the Trust’s spendthrift provision to retain Linda’s interest in the trust.[6] Del Alcazar was the husband of Linda’s niece.

After Del Alcazar received the Insolvency Letter, he transferred approximately $400,000 from the Trust’s primary account at Merrill Lynch into a second Merrill Lynch account titled “Faith F. Campbell Spendthrift Trust f/b/o Linda Castellano” (the “Spendthrift Trust Account”). Although Del Alcazar opened the Spendthrift Trust Account, the court found no evidence suggesting that Del Alcazar created a new trust by simply transferring a portion of the Trust’s assets from one account at Merrill Lynch to another.

Three days after filing for bankruptcy, Linda signed a release (the “Release”), acknowledging that she received a trust accounting from Del Alcazar, that she approved Del Alcazar’s proposed distribution of the Trust’s assets in further trust, and that she released Del Alcazar from any claims she might have against Del Alcazar. Linda also agreed that (1) her interest in the Trust was terminated, (2) she had become a “life-time, limited beneficiary at the sole discretion of the trustee” of the Trust, (3) her insolvency required the trustee to retain her interest pursuant to the Trust’s “Spendthrift Provision,” and (4) she would receive no distribution from the Trust, but that the “Spendthrift Trust” (i.e., the second account at Merrill Lynch) would receive her “lifetime, limited beneficial interest … in full satisfaction of her rights and interests under the Trust, but reserving her beneficial interests pursuant to the Spendthrift Trust.”[7]

In December 2011, Del Alcazar made distributions from the Trust to Linda’s three siblings, however, no distributions were made to Linda. The bankruptcy trustee, Roy Safanda (“Safanda”) (Safanda, Linda, and Del Alcazar are hereinafter collectively referred to as the “Parties”), instituted an adversary proceeding against Linda and Del Alcazar. Safanda sought the avoidance of Del Alcazar’s transfer of the $400,000 to the Spendthrift Trust Account under § 548(e) of the Bankruptcy Code and the turnover of the $400,000 to Linda’s bankruptcy estate. In Castellano I, the bankruptcy court ruled in favor of Safanda, holding that Del Alcazar’s possession and retention of assets was avoidable somehow under § 548(e) of the Bankruptcy Code and that the funds should be turned over to the bankruptcy estate. Linda and Del Alcazar objected to the bankruptcy court’s findings.

CASTELLANO II and ANALYSIS

The district court reviewed the bankruptcy court’s proposed findings of fact and conclusions of law de novo.  The court (1) reviewed Safanda’s claims under § 541 and 548 of the Bankruptcy Code, (2) sustained Linda’s and Del Alcazar’s objections, (3) entered a judgment in Linda and Del Alcazar’s favor, and (4) terminated the civil case filed by Safanda.

Analysis Under Section 541(c)(2)

In Castellano II, the court dedicated a majority of the analysis in its opinion to § 541(c)(2) of the Bankruptcy Code. Section 541(c)(2) states that: “a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbankruptcy law is enforceable in a case under this title.” This section was not discussed in Castellano I, where the bankruptcy court’s analysis instead focused on § 548(e), which seemed inappropriate and flawed. When a debtor files bankruptcy, a bankruptcy estate is created and contains “all legal or equitable interests of the debtor in property as of the commencement of the case.”[8] However, property of a debtor in bankruptcy is not transferred to the bankruptcy estate if (1) such property consists of a beneficial interest in a trust, (2) the trust agreement contains language restricting the transfer of the interest, and (3) the transfer restriction is enforceable under applicable non-bankruptcy law.[9] If a debtor’s interest in a trust is excluded from the bankruptcy estate under § 541(c)(2) of the Bankruptcy Code, the bankruptcy trustee has no basis to set aside a transfer of such an excluded interest.[10]

The court explained that if § 541(c)(2) applied to exclude Linda’s interest in the Trust, Safanda could not pursue any transfer and turnover claims regarding such interest. While Linda did not claim an exemption of the Spendthrift Trust Account § 541(c)(2) in her bankruptcy petition, property interests under § 541(c)(2) need not be listed on Schedule C of a bankruptcy petition, as such property is entirely excluded from the bankruptcy estate, not merely exempted from the bankruptcy estate.[11]

To successfully argue that § 541(c)(2) did not apply to exclude Linda’s interest in the Trust from the bankruptcy estate, Safanda had to prove by a preponderance of the evidence that Linda did not have an interest in the Trust when Linda filed for bankruptcy, or, in the alternative, that the Trust did not restrict transfers of Linda’s interest in the Trust under applicable state law.[12]

Linda’s Interest was an Interest in Trust

The court dismissed Safanda’s claim that Linda had no interest in the Trust, and also foreclosed the bankruptcy court’s conclusion that the Trust somehow ended and was considered to have been distributed outright to the beneficiaries instantly upon Faith’s death. The terms of the Trust stated that “[u]pon the death of Faith F. Campbell and upon settlement of her “estate”, [the Trust] shall terminate.”

Safanda argued that because the Trust did not define the term “estate,” such term referred to Faith’s probate estate, and since a probate estate was never opened, Safanda argued that the Trust terminated immediately upon Faith’s death. Safanda’s interpretation of the Trust’s termination provisions would lead to the result that at the time Linda filed her bankruptcy petition, Linda did not have an interest in the Trust.[13]

The court noted that the purpose in interpreting a trust is to discover a settlor’s intent.[14] Section 4.10 of the Trust allowed the trustee to make loans from the “Trust Estate” to the executor or other representative of the “Trustor’s estate.” This provision indicated to the court that Faith intended her estate and the Trust’s assets to be separate entities. Numerous other provisions of the Trust instructed the trustee to accomplish certain tasks, before final distribution of the Trust’s assets to the remainder beneficiaries (including Linda). The court noted that Safanda’s interpretation of the Trust’s termination provisions was inconsistent with the remaining terms of the Trust, after reiterating that the Trust should be read to best reflect Faith’s overall intent.  Thus, the court ruled that on the date Linda filed for bankruptcy, (1) the Trust was still in effect and (2) Linda had a beneficial interest in the Trust.

The Trust had Spendthrift and Discretionary Provisions Which Restricted Transfers of Beneficiaries’ Interests

The court noted that the Parties and the bankruptcy court failed to identify that (1) the Trust contained a spendthrift provision (in the traditional sense), and (2) the Trust also contained a provision purporting to convert a beneficiary’s interest into a discretionary interest if such beneficiary was bankrupt or insolvent. The court interpreted the spendthrift provision and the discretionary holdback provision to mean that the Trust sought to restrict assignment of the beneficiaries’ interests twice.

The Trust Contained Valid Spendthrift and Discretionary Trust Provisions Under South Carolina Law, Illinois Law, and Wisconsin Law

The court had to decide if the relevant restrictions on the assignment of the beneficiaries’ interests in the Trust were valid under applicable state law such that the Spendthrift Trust Account would be excluded from the bankruptcy estate.[15] The court noted that the result would be the same under South Carolina law (the situs of the Trust), Illinois law (the state where the Castellanos filed bankruptcy), and Wisconsin law (the state where certain property owned by the Trust was located): at the time Linda filed for bankruptcy, the assignment of her interest in the Trust was validly restricted by the spendthrift and holdback discretionary trust provisions.

Next week, we will provide further commentary on this case.

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[1] Bove, “Castellano: The Wrong Result for the Right Reasons,” LISI Asset Protection Planning Newsletter #270, (Nov. 20, 2014) at http://www.leimbergservices.com; Vandenack & Wintz, “Drafting Considerations for Third-Party Spendthrift Trust after In re Castellano,” LISI Asset Protection Planning Newsletter #259, (Sept. 10, 2014); and Adkisson, Slenn & Martino “In re Castellano: A Wake-Up Call for Self-Settled Trusts and Spendthrift Provisions,” LISI Asset Protection Planning Newsletter #258, (Sept. 8, 2014) at http://www.leimbergservices.com
[2] 514 B.R. 555 (Bankr. N.D.  Ill. 2014).
[3] 2015 WL 1911130 (N.D. Ill. 2015).
[4] For the background facts of Safanda v. Castellano, see supra note 1.
[5] Id.
[6] For a more detailed analysis of the Castellano decision focusing on Linda’s attorney letter to Del Alcazar’s attorney, see Bove, supra note 1.
[7] Safanda, 2015 WL 1911130 at *3.
[8] 11 U.S.C. § 541(a)(1).
[9] 11 U.S.C. § 541(c)(2).
[10] See, e.g., In re Hill, 342 B.R. 183, 206 (Bankr. D.N.J. 2006) (“Even accepting the Trustee’s theory that Phyllis transferred a 17% interest in Daniel’s pension that should have been hers in equitable distribution, avoiding that transfer would not make any assets available for creditors.”); see also Matter of McClellan, 99 F.3d 1420, 1423 (7th Cir. 1996) (“Bankruptcy courts do not have subject matter jurisdiction and cannot administer property excluded from or outside the bankruptcy estate.”)
[11] See Safanda, 2015 WL 1911130 at fn 3. The court also explained that Linda’s misstatement of Illinois law on Schedule C did not preclude her from defending Safanda’s suit on the basis of § 541(c)(2) of the Bankruptcy Code, explaining:

On Schedule C of her petition, Castellano (or her attorney) cited 735 ILCS 5/12-1001(h)(3)-a wholly inapplicable Illinois law pertaining to payments made to a dependent under a life insurance policy. Safanda offers no authority for the rule, however, that such a mis-citation precludes Castellano from defending against this adversary proceeding on the basis of § 541 (c)(2) – especially when the statute was cited in the Joint Pretrial Statement and argued at trial. Moreover, “[a] voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.” Fed. R. Bankr. P. 1009(a). The bankruptcy case remains open here, so Castellano may revise the citation at any time.

Id.
[12] See Safanda, 2015 WL 1911130 at *2.
[13] Although Linda’s counter argument was that the term “estate” meant “Trust Estate,” the court rejected this interpretation. See Safanda 2015 WL 1911130 at *4.
[14] Harris Trust & Savings Bank v. Donovan, 145 Ill. 2d 166, 172 (1991).
[15] See 11 U.S.C. § 541 (c)(2).

Feedback from The Florida Bar Asset Protection Program

Earlier this month, on May 7th and May 8th, The Florida Bar Asset Protection Program, led by Alan Gassman and Dennis Kleinfeld, was held in Miami, Florida. Since the seminar, we have received the following responses about the experience (names have been withheld for anonymity):

“It was a tremendous professional delight and terrific learning experience to be able to attend the two-day Florida Bar Asset Protection Seminar in Miami earlier this month. After more than thirty years of practice, I must report that the seminar, with the hard-bound, accompanying exhaustive supporting reference materials, was the best legal education program I have ever attended. I also enjoyed the great dinner you and Dennis assembled and appreciate the personal time you so kindly shared with me. It was a delight to be able to be your student in Miami and to have dinner alongside you.”

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“Alan, thanks to you and the other speakers for sharing your knowledge with all of us at the Asset Protection seminar. That was definitely one of the most valuable CLEs I’ve attended.”

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“Alan, thanks to you and Dennis for putting on a great seminar. I’ve been attending these since 2010, and I have to say this has been the best one yet (and last year was pretty awesome with Jay Adkisson being there!) Two days is the way to go – asset protection is too complex for one day. The value provided far exceeded the extra sign-up fees for the second day, and all of the speakers were uniformly good. The drinks/dinner extravaganza was quite fun and much appreciated. My only regret is that we didn’t take a group photo. Thanks again for sharing your knowledge with us. I know I speak for a lot of our colleagues in saying that we really appreciate it. Well done!”

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In addition, we received the following comment from one of the conference’s speakers, Howard Fisher:

“Alan, Alex and I thank you very much for having invited us to speak at the Miami conference. We really enjoy the opportunity and the chance to see old friends. You asked why we stay for most of the program – it’s simple. The speakers are excellent, and we always learn something. That’s a real credit for the quality of the conference.”

A big thank you to everyone who attended the two-day Asset Protection seminar. We’ll see you all next year!

Richard Connolly’s World
Finances Before & After Marriage

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 “Divorce Funding Firms Help Spouses Expecting Big Payouts” by Paul Sullivan. This article was featured in The New York Times on February 27, 2015.

Richard’s description is as follows:

What these [divorce funding firms] are doing is offering high-interest money to people who have none and want to pursue a person they once loved for their share of what is always a lot of money. The firms all say their advances level the playing field against the moneyed spouse who can otherwise force the one without money to settle.

These companies generally lend around 20 to 25 percent of the value of an expected settlement and their minimum loans range from $100,000 to $250,000, meaning the settlements are $400,000 to $1,000,000 on the low end. The money doesn’t need to be paid back until months or years down the line when a settlement is reached. By design, divorce funding sharply reduces the value of the settlement, but there might not have been a settlement otherwise.

In turn, divorcees provide a hefty return for the companies in the industry, which are largely backed by private investors.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “A New Way to Use a Prenup” by Matthias Rieker. This article was featured in The Wall Street Journal on March 12, 2015.

Richard’s description is as follows:

Prenuptial agreements have long been used to protect the assets of a far wealthier partner in a marriage.

Now they are also being used by couples who enter marriage as financial peers to help establish financial parameters, according to experts and advisers. In many cases, both parties already have successful careers and significant assets, as well as important commitments to children from prior marriages, they say.

These kinds of prenups typically address issues such as how the couple will pay for a new shared home; which investments they will mingle or keep separate; and who will inherit each partner’s assets – not how much of a family’s fortune might be shielded from the newcomer.

Please click here to read this article in its entirety.

Thoughtful Corner
Nothing But Initials (NBI)

In 1973, Howard Selby founded a new computer corporation called NBI. At the time, NBI stood for Necton Bylinnium, Inc. Two years later, Selby turned leadership of NBI over to Thomas S. Kavanagh from Storage Technology Corporation, an off-shoot of technology giant IBM. When asked what NBI stood for, after it had become a 60 million dollar per year company with a large percentage share of the computer industry, Kavanagh replied that it meant, “Nothing But Initials,” which gives credence to the proposition that initials can be important from a communications, labeling, and perception of meaning standpoint.

On the other hand, initials can be a grand pain in the behind when anyone reviewing a document doesn’t know or remember what they mean, so quite often, we find ourselves going into documents and even reference texts and replacing the initials with the words that they stand for.

Perhaps 65 percent of the population that reads your documents will not memorize the initials and will then have less understanding and even less meaning to continue with a document.

Don’t forget the NBI story – when your clients read your documents, are they seeing “nothing but initials” or are they understanding what every provision of the document means?

Footnotes can work in the same way. If you want the client to read what you are sending, why would you put it in 10 point print at the bottom of the page and require the mental and physical calisthenics of going up and down and up and down while reading?

We prefer the way that Bloomberg BNA footnotes, which is directly under each section, as opposed to being at the bottom of each page.

NBI went bankrupt in 1991, which may tell you something about the strategy of overusing initials.

DUMBAS (Don’t Use Multiple Binary Abbreviations Systematically!)

WHYFTTBH[1]

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[1] We hope you find this to be helpful.

Humor! (or Lack Thereof!)

Sign Saying of the Week (SSW)

Humor

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Cartoon

Upcoming Seminars and Webinars

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 and friends. Thank you very much to those successful professionals who have signed up to help lead discussions and enjoy the opportunity for reflection. Experienced professionals are also welcome to attend by making a small donation to the Lind Chair.

Date: Saturday, May 30, 2015 | 10:00 AM – 3:00 PM

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

Alice Rokahr earned her Juris Doctor at The University of South Dakota School of Law. She was a partner at the firm of Kennedy, Rokahr, Pier & Knoff, LLP for 15 years and has also worked with Wells Fargo Bank and Bankers Trust Company of South Dakota. She currently serves as the President of Trident Trust Company (South Dakota) Inc.

Alice Rokahr 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: Tuesday, 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.

For a 25% discount (and an autographed copy of the PowerPoint printed on yellow paper!) please click here and follow the instructions.

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 WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of THE NEW DOCTOR’S GUIDE TO WEALTH BUILDING, CREDITOR PROTECTION, TRUST PLANNING, AND WHAT THEY DIDN’T TELL YOU IN MEDICAL SCHOOL. There will be two opportunities to attend this presentation.

Date:  Wednesday, June 17, 2015 | 7:30 PM
Saturday, June 20, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for the Wednesday/7:30 PM webinar, please click here. To register for the Saturday/9:30 AM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.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: Thursday, June 25, 2015 | 12:30 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on FINANCIAL RELATIONSHIPS WITH PATIENTS, CO-PAYMENTS, GIFTS, AND GRAFT – HOW TO STAY OUT OF TROUBLE UNDER FLORIDA AND FEDERAL LAW.

This is an essential guide for medical practices and those who advise them. There will be two opportunities to attend this presentation.

Date: Tuesday, July 7, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR:

Alan Gassman will present a webinar on the topic of WHAT FLORIDA CPAS NEED TO KNOW ABOUT ASSET PROTECTION for the Florida Institute of CPAs.

More information about this webinar will be forthcoming. Please stay tuned!

Date: Thursday, July 9, 2015 | 9:30 AM – 10:30 AM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE BRADENTON, 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: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

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

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LIVE 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: Saturday, 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:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on a topic to be determined. We are open to suggestions!

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

Location: Sarasota, Florida

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

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

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

Location: Online Webinar

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

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LIVE FORT LAUDERDALE PRESENTATION:

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

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

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

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

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LIVE WEBINAR:

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

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

Location: Online webinar

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

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LIVE 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 TAMPA PRESENTATION:

THE FLORIDA BAR TAX SECTION LUNCHEON

The Florida Bar Tax Section’s New Tax Lawyers Committee is holding a luncheon featuring The Honorable Juan F. Vasquez of The United States Tax Court as its guest speaker. The topic of the discussion will be CURRENT DEVELOPMENTS BEFORE THE TAX COURT.

There is no cost to attend the lunch, but an RSVP is required.

Date: Wednesday, June 3, 2015 | 11:45 AM – 1:15 PM

Location: The University Club of Tampa | 201 N. Franklin Street, Tampa, FL 33602 | 38th Floor

Additional Information: To RSVP, please email assistant@schmidtlawoffice.com if you would like to attend. A confirmation email will be sent a few days prior to the program.

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LIVE ORLANDO PRESENTATION:

50TH ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING

Date: January 11 – January 15, 2016

Location: 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/.

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LIVE ST. PETERSBURG PRESENTATION:

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

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

Lauren Detzel will be speaking on Recent Homestead Cases, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins, which is not affiliated with Anthony Hopkins.

Please provide us with your input for other topics for this year and next! Watch this space for more speaker and topic announcements.

Date: Wednesday, February 10, 2016

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

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

Applicable Federal Rates

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

Applicable Rates

The Thursday Report – 5.14.15 – Have Gun, Will Thursday

Posted on: May 14th, 2015

Drafting a Gun Trust – Don’t Take a Shotgun Approach, Part I

Charitable Board Members Liability Alert on BP Claims

Gregory Gay’s Corner – Grandparent Visitation

Get 25% Off Your Next Bloomberg BNA Webinar!

Gassman Firm Featured in Tampa Bay Rants and Raves!

Seminar Spotlight – Ave Maria Professional Acceleration Workshop

Richard Connolly’s World – The Trouble with Trustees and Using Gun Trusts to Smooth Firearms Transfer

Colonel Sanders and the Shootout

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.gassmanlawassociates.com.

Have Gun, Will Thursday

Have Gun – Will Travel was an American Western television series that aired on CBS from 1957 through 1963. The show was consistently rated in the top 5 in the Nielsen ratings every year of its first four seasons, and it even spawned a successful radio series in 1958.

The story follows the exploits of a man who called himself “Paladin,” a gentleman gunfighter portrayed by Richard Boone on the television series and voiced by John Dehner on radio. Paladin’s primary weapon was a custom-made, first-generation, .45 caliber Colt Single Action Army Cavalry Model revolver with a 7½ inch barrel. This weapon was carried in a black leather holster with a platinum chess knight symbol.

The television show was nominated for three Primetime Emmy Awards and can be seen today on the Encore-Western television channel.

For a favorite song about guns by Kay Kyser, entitled “Praise the Lord and Pass the Ammunition,” please click here. This song was written by Frank Loesser and published in 1942 in response to the attack on Pearl Harbor that marked the official entrance of the United States into World War II.

Drafting a Gun Trust – Don’t Take a Shotgun Approach, Part I
by Alan Gassman, Seaver Brown, and Travis Arango

Executive Summary:

Gun Trusts are quickly becoming the new rage in estate planning, and for very good reason. Machine guns and suppressors are becoming more and more popular among collectors and enthusiasts, not to mention sawed-off shotguns and other collectibles. There have been no machine guns manufactured that can legally be sold since 1986, so resale prices are going to levels that many knowledgeable people believe may become a new bubble to take advantage of.[1]

The normal approach is to register the gun to a single individual owner, and then, by federal law and in most states, the owner must be the only one who can have access to the firearm/item, and the owner can be the only one who uses it. However, not everyone wants various agencies to have their name identified as the “owner” of these dangerous weapons. This is one advantage of the gun trust. The federal regulations permit multiple Trustees to have joint responsibility but separate possession and use rights over automatic weapons, suppressors, and certain permitted explosives.

Gun enthusiasts considering how to take title and facilitate use and readiness of such weapons have three basic choices, and each choice will be impacted by different laws that will provide different results. The choices are individual ownership, corporate ownership, and trust ownership. This article will explain the advantages and disadvantages of the use of a Gun Trust and provide the basic information and legal framework that advisors need to be aware of when attempting to navigate these complicated and potentially perilous rules.

Facts:

When it comes to buying and selling firearms, individuals must sift through complex federal regulations and state laws, which operate concurrently with one another. For example, when someone wishes to transfer a firearm from one state to a gun trust established in another state, they must pay particular attention to each state’s rules on transferring firearms. All of this must be done while maintaining compliance with the various federal regulations. In addition to any of the federal or state gun laws an individual may be subject to, some local jurisdictions impose additional restrictions on the right to possess firearms. In any event, the failure to comply with the applicable federal, state, or local gun laws will result in either felony charges or some other sort of penalty. Most notably, these can include prison sentences in excess of a year, substantial monetary fines, parole or probation, forfeiture and seizure of restricted firearms, and usually the complete loss of all gun ownership rights.

The National Firearms Act and the Gun Control Act were enacted to achieve different results, but their purpose still remains the same – restrict who may possess, buy, and sell certain restricted firearms and firearm accessories. The National Firearms Act was intended to operate as a taxing statute and, in fact, still does. It imposes a $200 statutory excise tax per item and requires the person to register all restricted firearms with the Bureau of Alcohol, Tobacco, Firearms and Explosives (“Bureau of Alcohol”). Once the Bureau of Alcohol approves an application, they issue a tax stamp, which allows someone to then purchase or manufacture the National Firearms Act items specifically applied for.

The Gun Control Act, on the other hand, was enacted to restrict the transfer of certain types of firearms between individuals. As a practical matter, it is important to distinguish the types of weapons that the federal government restricts with the National Firearms Act and the Gun Control Act. The Gun Control Act places all weapons into two separate titles: Title I firearms and Title II firearms. Title I firearms primarily include long rifles, shotguns, and handguns, which make up the vast majority of firearms owned in the United States. Title II firearms, however, are composed of a slightly less popular, albeit sometimes more lethal, category of weapons including automatic machine guns, short-barreled rifles, sawed-off shotguns, suppressors, and destructive devices such as grenades, bombs, explosive missiles, poison gas weapons, and more.

Every state is charged with regulating the firearms that residents may possess and whether or not they will even allow possession and use of Title II firearms. For example, Florida Statute Section 790.221 (1) makes it unlawful for a person to own, have custody of, or have control over a short-barreled rifle, a short-barreled shotgun, or a machine gun that may be readily operable. However, Florida Statute Section 790.221 (3) has an exception for antique firearms, and, also, it is not unlawful to own the above firearms when in compliance with the provisions of federal law.

Comment:

Together, the National Firearms Act and the Gun Control Act of 1968 impose various restrictions on the rights of gun owners to possess and transfer their weapons. In fact, they allow for three different ways in which someone may purchase and/or transfer these weapons to others. The first is as an individual, which is perhaps the most difficult and the most susceptible to high levels of risk. The other two options come in the form of corporations and trusts, which are slightly easier to satisfy but are much more complex.

In most of the states that permit Title II firearms, applying as an individual will usually produce unfavorable results. With this route, the individual must fill out and submit the appropriate Bureau of Alcohol Form, pay the $200 excise tax, provide photographs and fingerprints, consent to a background check, and obtain a signature from a chief law enforcement officer (CLEO), which is generally the sheriff. Depending on the individual, the first three requirements are fairly easy to satisfy. However, many chief law enforcement officers are reluctant, and often refuse, to sign for a civilian to own and use restricted Title II firearms.

In the event someone is able to obtain a signature from a chief law enforcement officer, they must take extraordinary care not to allow other individuals to have either actual or constructive control over the Title II firearms. Actual control means allowing them to hold the item and/or fire the item. Constructive possession is when the non-permitted person has the ability to gain access to the item. Constructive possession includes having the item in the same house as someone not authorized to own the restricted item, the non-authorized person knowing the code to the safe that the item is kept in, etc. Based on these restrictions, one could easily imagine a scenario where a Title II firearm, such as a short-barreled rifle or automatic machine gun, is legally obtained and then stored in a home gun safe. If everyone in the house has the combination to the gun safe so that in the event of an emergency they can access a handgun or any other Title I firearm, they will be deemed to have constructive possession over the Title II firearm. Under these circumstances, they would almost certainly be subject to criminal liability, even if they did not know about the Title II item being inside of the safe.

The next option available to an individual who wants to possess a Title II item is to do so through a corporation such as an LLC. This process eliminates the need to submit fingerprints and obtain a chief law enforcement officer’s signature of approval. However, the person submitting the paperwork must still pay the $200 excise tax and submit to a background check. The obvious downside to this process is that all of the formalities of forming a corporation must be met, including the annual corporate filing fee. Over time, this can become more expensive than a gun trust. More importantly, however, if the corporation or LLC fails to pay this annual fee within the required time, the Secretary of State will dissolve the corporation, and all National Firearms Act firearms that were once lawfully owned by the corporation will be in your possession illegally.

Furthermore, trusts are private and do not require a public filing. Whereas, LLCs and corporations are not private and information concerning the individuals associated with them is of public record. In addition to the privacy issues, you will have to update the Secretary of State with changes in the management of the company whenever you want to change who can possess/use the Title II item, which can cost money and take time to do.

The final and perhaps most popular option today is the use of a gun trust. When compared to the aforementioned application processes, gun trusts are usually seen as the preferred method of acquiring Title II firearms. Applicants must still complete the standard Bureau of Alcohol forms, submit to a background check, and pay the $200 tax stamp per item, but there is no need for chief law enforcement officer approval or fingerprints. The individual must be a resident of the same State as the dealer when receiving the firearm/item.

However, just because a gun trust makes it simpler to own Title II firearms, that does not mean they are free of complications. Gun trusts may need to last for multiple generations, there may be more than one trustee with the ability to control the firearms, and, most importantly, they must address and comply with both state and federal weapon laws.

For more on this subject, see the Richard Connolly’s World section below, where we have, this week, featured an article about gun trusts. The conclusion to our article will run in next week’s Thursday Report.

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[1] For a comprehensive discussion on bubbles, see A Failure of Capitalism (2011) by Richard A. Posner.

Charitable Board Members Liability Alert on BP Claims

Charity donation and grant reductions from the BP Oil Spill are compensable according to the 5th Circuit Court of Appeals. This decision shows that charitable organizations can consider donations and grants as “revenue” to determine eligibility and amounts for BP Class Settlement Action, meaning advisors now have a fiduciary duty to make claims for charitable organizations.

A great many charitable organizations suffered a reduction in donations and grants following the April 2010 oil spill tragedy. The class action suit that enables charitable organizations to make claims on or before June 8th of this year was thought by most of us to include revenues resulting from donations and grants, but it was no surprise to find that BP thought otherwise and did not assert this position until well after the vast majority of its “bad publicity” days were over.

The Fifth Circuit found that “BP has failed to show that non-profits that operate on donation and grant funding are not engaged in commercial activity…” and that BP failed “to show that the non-profit revenue interpretation violates the language of the agreement.”

The vast majority of large charities have hopefully filed their BP claims, and a great many of them are on track to receiving significant awards, leaving open the question as to whether smaller charitable organizations, or those that have been on the fence, will be filing claims. It is noteworthy that the officers and directors of not-for-profit organizations have a fiduciary duty to maximize revenues, and therefore, by our view, an affirmative obligation to make BP claims or to call their errors and omissions carriers to give them notification of any decision to not make a BP claim.

Those officers and directors on boards and executive committees that have decided not to make BP claims by matter of principle or otherwise will be well advised to send formal objecting correspondence and/or to consider resigning because of the high level of potential liability this may bring.

To see the complete decision by the Fifth Circuit Court of Appeals, please click here.

Gregory Gay’s Corner
Grandparent Visitation

2 - Gregory Gay

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

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

This week Gregory Gay’s series continues with a brief look at Grandparent Visitation.

In 1984, the Florida Legislature passed a statute authorizing our courts to grant visitation rights to grandparents under certain limited circumstances. This court-ordered grandparent visitation was authorized for when the marriage of the parents of the child has been dissolved, a parent of the child has deserted the child, or the child was born out of wedlock and not later determined to be a child born within wedlock.

This statute required the court to first determine that such visitation would be in the best interest of the grandchild. In determining if this visitation was in the best interest of the grandchild, the Florida statute stated that the court was to consider the grandparent’s willingness to encourage a close parent-child relationship, the child’s preference, the child’s mental and physical health, and the grandparent’s mental and physical health.

While never finding this statute to be completely unconstitutional, the Florida Supreme Court has systematically ruled that various provisions of this grandparent visitation statute are unenforceable. This court has repeatedly held that the state should not permit grandparents to interfere with parental rights to custody and control of children except in cases where the health and welfare of a child is threatened. Even assuming that grandparent visitation promotes the health and welfare of the child, our courts have consistently held that the state may only impose a grandparent visitation over the parent’s objections on a showing that failing to do so would be harmful to the child. This right of a parent to be free from this form of governmental interference is based on protections afforded in the Fourteenth Amendment of the United States Constitution and the right of privacy provisions found in Article 1, Section 23 of our Florida Constitution.

All fifty states have statutes that provide for grandparent visitation in some form. In the year 2000, the United States Supreme Court confirmed in the case of Troxel v. Granville that the Fourteenth Amendment to the United States Constitution permits a state to interfere with a parent’s fundamental right to rear their children only when there is a showing of demonstrable harm to the child’s health or welfare. Thus, only where there is a showing of substantial harm to the child by denying a grandparent visitation is the state’s interest sufficiently compelling to warrant such governmental intrusion.

The harm to the grandchild often arises when a child loses a parent to illness or an accident and the surviving parent cuts off access to the deceased spouse’s family. Often, the deceased spouse’s parents have been a primary caretaker for the grandchild after school while the parents are still at work. In some cases, grandparent visitation is cut off when the spouse remarries. In these cases where the parents have allowed their child to closely bond with grandparents, a psychologist may find that the loss of that relationship can be equal to a child experiencing another death. This is especially true when a grandparent has been a regular caretaker and a psychological parent relationship has been formed between the child and grandparent.

If you would like to read the Florida Senior Legal Guide in its entirety, please visit http://www.seniorlawseries.com. Mr. Gay can be reached at gregg@willtrust.com.

Get 25% Off Your Next Bloomberg BNA Webinar!

Scott Harper, the Coordinator of Professional Learning with Bloomberg BNA, has provided us with a 25 percent discount promotional code to share with Thursday Report readers and their natural and adopted (but not in vitro!) descendants. This code will allow you to receive 25% off on any Bloomberg BNA Webinar.

To take advantage of this fantastic and generous offer, follow the steps below:

  1. Go to the Bloomberg BNA website and find the title of the webinar you wish to apply the discount code to.
  2. Select the title of your chosen webinar.
  3. Choose “webinar” from the drop-down menu and click on “Add to Cart.” At this point, you may be asked to sign in to bna.com.
  4. Navigate to the checkout screen.
  5. On the right hand side of the checkout screen, there is a box that says “Promotional Code.” In that box, please type (do NOT copy & paste!) the promo code FIRMDISC25 and hit Enter/Apply.
  6. The dollar amount will decrease by 25%. Click “Proceed to check out” to complete the purchase.

Once the purchase has been made, an automatically-generated email will arrive containing the connectivity information to be used the day of your chosen program.

Thanks, Scott Harper, for sharing this great offer with us! Scott can be contacted at sharper@bna.com.

Gassman Firm Featured in Tampa Bay Rants and Raves!

We received the following message from Bob Clark:

This appeared on the blog Tampa Bay Rants and Raves this week. Couldn’t agree more. Your signs always brighten the day!

The people behind Tampa Bay Rants & Raves had this to say about our sign:

Thanks to the Gassman Law Firm on Court Street in Clearwater for always bringing a smile to our face with their catchy marquee. It is truly a Sign of the Times.

Rants and Raves

Thanks to Tampa Bay Rants & Raves for their endorsement, and thanks to Bob Clark for bringing it to our attention! To see the full article, please click here.

Seminar Spotlight
Ave Maria Professional Acceleration Workshop

On August 22, 2015, 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.

This interactive workshop is CLE approved and will completely engage all participants in personal goal setting, one-on-one conversations about how to handle practical challenges and obstacles, important strategies for business and personal relationships, and one-on-one client interaction guidelines and techniques used by the most successful professionals in law and other important industries.

The workshop will run from 9:00 AM to 5:00 PM in the Thomas Moore Commons at the Ave Maria School of Law. Lunch will be included. The address for the workshop venue is as follows:

Ave Maria School of Law
1025 Commons Circle
Naples, FL 34119

To download the official invitation to this event, which includes a more detailed look at what each hour of the workshop will include, 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.

See you there!

Richard Connolly’s World
The Trouble with Trustees and
Using Gun Trusts to Smooth Firearms Transfer

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 “The Trouble with Trustees” by Liz Moyer. This article was featured in The Wall Street Journal on November 21, 2014.

Richard’s description is as follows:

It’s a matter of trust.

Beneficiaries of family trusts stand to inherit stock portfolios, childhood homes, and treasured heirlooms. Yet those assets come with what can be a delicate relationship with the trustees who control the purse strings.

A trustee can be a valued partner and mentor. But if disagreements develop, the result can be costly problems and years of frustration.

This article talks about how to manage a delicate relationship with a trustee.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “Planners Use Gun Trusts to Smooth Firearms Transfer” by Anna Prior. This article was featured in The Wall Street Journal on November 10, 2014.

Richard’s description is as follows:

Estate planning can get complicated when it involves transferring a collection of art, cars, or other such possessions. It gets trickier still for guns.

Some lawyers and advisors say these often can be solved through the use of a so-called gun trust.

Typically set up as a revocable living trust, a gun trust is crafted specifically to hold firearms, with the gun owner generally acting as the trustee.

They are most commonly used to hold certain federally-restricted items, such as silencers, because they can help cut down on some of the paperwork needed to possess, transfer, and own such possessions, but estate planners say they are increasingly being used to create a road map for families left to handle a deceased loved one’s collection.

Please click here to read this article in its entirety.

Colonel Sanders and the Shootout

One of the most commonly heard “fun facts” about Colonel Sanders is that he once killed a man in a shootout. This so-called fact, like many other so-called facts that can be found on the Internet, is not true. Colonel Sanders never killed a man, but he did shoot one.

Colonel Sanders was once involved in a shootout with a business rival. He shot the rival in self-defense, but that man did not die. The man who died in the shootout was Colonel Sanders’s business associate. Colonel Sanders was arrested after the shootout occurred.

To find out what happened upon Colonel Sanders’s arrest, or for the full story about how and when the shootout occurred, please click here for a fun and informative article by Matt Novak.

Humor! (or Lack Thereof!)

Sign Sayings of the Week

Sign

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Amy Cartoon

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In honor of our new article about Gun Trusts, we are featuring one of our favorite jokes from comedy writer Ron Ross, who provided us with this poem for our Christmas 2014 Edition of The Thursday Report.

‘Twas the Night Before Christmas aka The Story of Standra Claus
by Ron Ross

‘Twas the night before Christmas
And all through the house
Sirens were blaring
Because Dad is a louse

Santa lies on the floor
Inside a chalk outline
And Dad will get off
Without even a fine

He got Santa with a bullet
Right square in the jaw
But Dad is not worried
Because “Stand Your Ground” is the law!

Upcoming Seminars and Webinars

LIVE STUART, FLORIDA PRESENTATION:

Alan Gassman will be the featured headline speaker at the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the following:

  1. JOINT EXEMPT STEP-UP TRUSTS (JESTs)
  2. MATHEMATICS FOR ESTATE PLANNERS
  3. THE ESTATE PLANNER’S GUIDE TO PLANNING FOR IRA AND PENSION BENEFITS – YES, YOU CAN FINALLY UNDERSTAND THESE RULES!

Date: Friday, 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

Clasen

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 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 small donation to the Lind Chair.

Date: Saturday, May 30, 2015 | 10:00 AM – 3:00 PM

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: Tuesday, 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 WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of THE NEW DOCTOR’S GUIDE TO WEALTH BUILDING, CREDITOR PROTECTION, TRUST PLANNING, AND WHAT THEY DIDN’T TELL YOU IN MEDICAL SCHOOL. There will be two opportunities to attend this presentation.

Date:   Wednesday, June 17, 2015 | 7:30 PM
Saturday, June 20, 2015 | 9:30 AM

Location: Online webinar

Additional Information: To register for the Wednesday/7:30 PM webinar, please click here. To register for the Saturday/9:30 AM webinar, please click here. For more information, please email Alan Gassman at agassman@gassmanpa.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: Thursday, June 25, 2015 | 12:30 PM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on FINANCIAL RELATIONSHIPS WITH PATIENTS, CO-PAYMENTS, GIFTS, AND GRAFT – HOW TO STAY OUT OF TROUBLE UNDER FLORIDA AND FEDERAL LAW.

This is an essential guide for medical practices and those who advise them. There will be two opportunities to attend this presentation.

Date: Tuesday, July 7, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE FLORIDA INSTITUTE OF CPAs (FICPA) WEBINAR:

Alan Gassman will present a webinar on the topic of WHAT FLORIDA CPAS NEED TO KNOW ABOUT ASSET PROTECTION for the Florida Institute of CPAs.

More information about this webinar will be forthcoming. Please stay tuned!

Date: Thursday, July 9, 2015 | 9:30 AM – 10:30 AM

Location: Online webinar

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

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LIVE WEBINAR:

Alan Gassman will present a live, free, 30-minute webinar on the topic of CREDITOR PROTECTION PLANNING FOR PHYSICIANS AND MEDICAL PRACTICES. There will be two opportunities to attend this presentation.

Date: Wednesday, August 12, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Online webinar

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

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LIVE BRADENTON, 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: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

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

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LIVE WEBINAR:

Alan Gassman and Lester Perling will present a live, free, 30-minute webinar on the topic of MEDICAL LAW UPDATE – FEDERAL AND FLORIDA DEVELOPMENTS THAT MEDICAL PRACTICES AND ADVISORS NEED TO BE AWARE OF. There will be two opportunities to attend this presentation.

Date: Tuesday, August 18, 2015 | 12:30 PM – 1:00 PM and 5:00 PM – 5:30 PM

Location: Live webinar

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

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LIVE 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: Saturday, 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:

Alan Gassman will speak at the Southwest Florida Estate Planning Council meeting on September 8th on a topic to be determined. We are open to suggestions!

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

Location: Sarasota, Florida

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

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LIVE WEBINAR:

Molly Carey Smith and Alan Gassman will present a free webinar on the topic of THE 10 BIGGEST MISTAKES THAT SUCCESSFUL PARENTS (AND GRANDPARENTS) MAKE WITH RESPECT TO COLLEGE AND RELATED DECISIONS FOR HIGH SCHOOL STUDENTS.

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

Location: Online Webinar

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

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LIVE FORT LAUDERDALE PRESENTATION:

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

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

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

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

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LIVE WEBINAR:

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

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

Location: Online webinar

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

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LIVE 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/.

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LIVE ST. PETERSBURG PRESENTATION:

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

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

Lauren Detzel will be speaking on Recent Homestead Cases, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins, which is not affiliated with Anthony Hopkins.

Please provide us with your input for other topics for this year and next! Watch this space for more speaker and topic announcements.

Date: Wednesday, February 10, 2016

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

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

Applicable Federal Rates

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

The Thursday Report – 5.7.15 – UF Law May 30th PAW Workshop & More!

Posted on: May 7th, 2015

University of Florida Professional Acceleration Workshop on May 30th, 2015 with Dennis Calfee

“The Affability of Affidavits in Domestic Asset Protection Trust Planning” Published

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

H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015: The So-Called Medicare “Doc Fix”

Our EstateView Software Featured in the American Bar Association Probate & Property Magazine

Richard Connolly’s World – Estate Planning Before & After Divorce

Seminar Spotlight – Communicating for Positive Results Presentation

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.

University of Florida Professional Acceleration Workshop
on May 30th, 2015 with Dennis Calfee

Calfee with Gassman Shirt and Alligator

A Professional Acceleration Workshop, moderated by Alan S. Gassman and Professor Dennis Calfee, will be presented for law students and invited professionals at the University of Florida Levin College of Law on Saturday, May 30th, 2015. The presentation will begin at 10:00 AM and run until 3:00 PM. Lunch will be included.

Please join us for a 5-hour, CLE-approved, interactive workshop that will completely engage all participants in personal goal setting, one-on-one conversations about how to handle practical challenges and obstacles, important strategies for business and personal relationships, and one-on-one client interaction techniques that are commonly used by the most successful professionals.

The workshop will consist of five 55-minute sessions and is sponsored by Gassman, Crotty & Denicolo, P.A. Students and employees of the University of Florida may attend for free. Other attending professionals are requested to make a small donation to the Stephen Lind Chair at the University of Florida Tax Program.

A course notebook of over 300 pages of materials will be given to each participant at no extra charge.

For more information, please click here to download our program flyer.

To RSVP or for more information, please contact Alan Gassman at agassman@gassmanpa.com or via phone at 727-442-1200.

A splendid time is guaranteed for all!

If you can’t make this workshop, please consider the live Ave Maria School of Law Professional Acceleration Workshop on August 22, 2015 in beautiful Naples, Florida – maybe next year it can be in Naples, Italy!

“The Affability of Affidavits in Domestic Asset
Protection Trust Planning” Published

An article by Alan Gassman and Dena Daniels entitled “The Affability of Affidavits in Domestic Protection Trust Planning” was published on the Leimberg network on April 28, 2015 and Leimberg Newsletter Number 293.

You can view the newsletter by clicking here.

Quotes therein from Jonathan Blattmachr and Steve Oshins were as follows:

Jonathan Blattmachr, who was involved in the drafting of the Alaska DAPT laws, and has active involvement with The Alaska Trust Company, was kind enough to share his thoughts on Affidavits of Solvency:

From my perspective, there are three purposes of the solvency affidavit. First, the requirement shows that Alaska (and other states with Affidavit requirements) is not promoting fraudulent asset protection planning.  It is to permit individuals to set aside wealth for future unforeseen events and to allow them to do efficient estate tax planning without permanently parting with all benefits of certain assets.  Second, it protects the “honest” client from claims that he or she was trying to hinder, delay or defraud a creditor…signing a false affidavit is, of course, a crime.  Third, it protects the trustee and the attorneys.  They have verification of the situation.  As you know, there was a recent case in Iowa where a lawyer faced possible serious disciplinary action because he unknowingly assisted a client essentially in a fraudulent transfer.  The state supreme court let him go because he didn’t know (and perhaps had no real reason to know)–a very scary prospect.

Steve Oshins made the following point to the authors when asked to comment:

It’s a good idea for advisors who use any of the six states that require new Affidavits of Solvency for every new transfer to meet with their clients at least once a year to make sure the clients are complying with this requirement.  If they find that they aren’t, then the cure is to move the trust to a DAPT jurisdiction that doesn’t have this requirement.  For those clients who, like me personally, add cash or other assets to their DAPT every month, having to prepare a new Affidavit each time would be a huge burden.  So I think that those clients who expect to frequently add to their DAPTs are better off selecting a situs that doesn’t have the Affidavit requirement.  The clients who are making one big up-front transfer to their DAPT are certainly fine using any of the better DAPT jurisdictions.

We will run this article in its entirety in a future Thursday Report. Stay tuned!

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

Share

Leslie A. Share received his J.D. from the University of Florida, where he was the Chief Tax and Research Editor of the University of Florida Law Review. He received his LL.M. in Taxation from New York University and is a member of the Florida Bar. Les has advised clients in numerous and diverse areas, including Broadway theatrical productions, real estate like-kind exchanges, and Internet matters. He speaks at various US and Caribbean seminars on subjects including Florida and offshore trust law, advanced asset protection techniques, and US tax treaties, among others.

We thank Les for his contribution to the following conclusion of our Voluntary Disclosure of Offshore Assets article and his support of The Thursday Report!

Last week, we discussed some of the most common filing requirements for offshore assets and the penalties incurred if the filing of these requirements does not happen or does not happen on time. You can view this report by clicking here. This week, we will discuss options available to correct a failure to file.

Options Available to Correct a Failure to File

A. “Quiet” Disclosure

The “quiet” disclosure option is very rarely recommended due to the significant risk that remains with the taxpayer even after the disclosure. Under this option, a taxpayer files amended tax returns and pays any related tax and possibly interest for previously unreported offshore income without otherwise notifying the IRS.

On May 7, 2009, the IRS had this to say about “quiet” disclosures:

Taxpayers are strongly encouraged to come forward under the Voluntary Disclosure Practice to make timely, accurate, and complete disclosures. Those taxpayers making “quiet” disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years. The IRS has identified, and will continue to identify, amended tax returns reporting increases in income. The IRS will be closely reviewing these returns to determine whether enforcement action is appropriate.

Therefore, except in rare circumstances, it would generally be unwise to engage in a “quiet” disclosure due to the red flags the amended returns raise with the IRS. While the “quiet” disclosure should not result in penalties after three years of the filing, the taxpayers could be subject to the above penalties (including the 75% fraud penalty) if the “quiet” disclosure was discovered and challenged. The risk does not seem to outweigh the reward.

B. Delinquent International Information Return Submission Procedures

In order to be eligible for the Delinquent International Information Return Submission Procedures, the taxpayer must meet the following requirements:

  1. Failed to file one or more required international information returns.
  2. Reasonable cause for not timely filing the information returns.
  3. Not currently under civil or criminal investigation by the IRS.
  4. Not already contacted by the IRS about the delinquent information returns.

The biggest limitation on eligibility for the Delinquent International Return Submission Procedures is generally the reasonable cause for the failure to file. The IRS provides that the “longstanding authorities regarding what constitutes reasonable cause continue to apply.”[1]

In order to meet the reasonable cause standard, the taxpayer must exercise ordinary care and prudence in determining his tax obligations. [2] Where tax advisors have been involved, the taxpayer must show that they (1) made a full disclosure to the expert, (2) relied on the advice of the expert, and (3) did not otherwise know that a return was due.[3]

In the recent unpublished case of James v. United States[4], the taxpayer established an irrevocable trust in Nevis, West Indies. The taxpayer provided all the necessary information to his accountant, and the accountant did not file Form 3520. The IRS assessed penalties totaling over $570,000 for the failure to file the appropriate forms. In support for a motion to dismiss, the Government argued that the reliance on a CPA cannot constitute reasonable cause, however, the court denied the motion holding that there was a genuine issue of material fact with respect to whether James’s reliance on the advice of his CPA was reasonable cause.[5] The taxpayer’s victory was short-lived, as he lost in the subsequent jury trial.

If eligible, the taxpayer must follow the procedures set forth below:

  1. File amended returns, including delinquent returns, along with Form 3520/3520-A, according to the applicable instructions.
  2. Attach to each delinquent form a statement describing “all facts establishing reasonable cause for the failure to file” signed under penalties of perjury.

If the IRS accepts the reasonable cause explanation, then the taxpayer will not be liable for any penalties. However, acceptance is not automatic and penalties will be imposed if the explanation is not accepted.

C. Streamlined Filing Compliance Procedures

In order to be eligible for the streamlined filing procedures, the taxpayer must meet the following general eligibility requirements:

  1. Individual taxpayers only (including estates.)
  2. Certify under penalties of perjury that conduct was non-willful.
  3. No current civil exam or criminal investigation “for any taxable year.”
  4. Must have a valid TIN.

The procedures differ for foreign residents and domestic residents. If the taxpayer does not meet the foreign residency requirements, the taxpayer must meet the following additional tests:

  1. Timely filed a US tax return for each of the most recent three years.
  2. Failed to report income from a foreign financial asset and pay tax, or may have failed to file a FBAR.
  3. The failures resulted from non-willful conduct.

Non-willful conduct is defined as “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.” Factors to consider include (1) willful blindness/recklessness, (2) whether accounts were disclosed to tax return preparer, (3) accounts in jurisdictions known for bank secrecy, (4) frequent movements of accounts or funds, (5) answers to Form 1040 Schedule B questions regarding foreign accounts, and (6) prior year compliant behavior.

Traditionally, the IRS has advised taxpayers to rely on the criminal definition of willfulness in determining willful or non-willful conduct, defining willfulness as “voluntary, intentional violation of a known legal duty.”[6] A recent case analyzing whether or not conduct was willful or non-willful in regards to the failure to file a FBAR presumably aids in interpreting willful conduct for other foreign informational filings.

In United States v. Williams, the court extended the definition to include “willful blindness.”[7] In this case, the taxpayer opened two accounts in Switzerland. The balance of these accounts totaled roughly $7,000,000. Mr. Williams failed to include the income earned on these accounts on his personal tax return and failed to file FBAR forms disclosing his foreign bank accounts. Mr. Williams’s CPA checked no on Form 1040 Line 7a, which asks: “At any time during the [tax year], did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account? See instructions for exceptions and filing requirements for [FBAR].”[8]

Mr. William’s defense was that he had never read Line 7a, or the instructions of the FBAR; therefore, he had no knowledge of his legal duty. The court declined to agree with Mr. Williams’s holding that he engaged in a conscious effort to avoid learning about the reporting requirements.[9] The court viewed this along with his previous admission in a criminal case that he was aware of the requirement as willful conduct.[10]

A second case, United States v. McBride, in an attempt to avoid tax in the United States, a taxpayer engaged in a risky scheme suggested by a financial management firm involving several offshore entities. Despite initial doubts, the taxpayer failed to seek a formal legal opinion on the proposed plan. The IRS assessed severe penalties on the taxpayer. In holding that the taxpayers conduct was willful, the court stated that willfulness includes recklessness and “willful blindness to the obvious known consequences on one’s actions.”[11] The court did not address if the result would have been the same had the taxpayer received a formal legal opinion.

The Internal Revenue Manual states that “the mere fact that a person checked the wrong box, or no box, on a Schedule B is not sufficient, by itself, to establish that the FBAR violation was attributable to willful blindness.”[12] Some commentators believe that the interpretation of willfulness is beginning to be pushed towards one of strict liability despite the language in the Internal Revenue Manual.[13]

If the taxpayer meets the above requirements, under the Streamlined Domestic Offshore Procedures, the taxpayer must follow the procedures set forth below:

  1. File amended tax returns, including all information forms (i.e. Form 3520, 3520-A, 8938) for each of the most recent three years.
  2. File delinquent or amended FBARs for each of the most recent six years.
  3. Include full payment of all tax and related interest.
  4. Include payment of a 5% penalty assessed on the highest aggregate balance of the taxpayer’s previously unreported foreign financial assets during the period or relating to such assets that were properly reported, but gross income in respect of the assets was not reported in that year.
  5. File Form 14654, Certification by US Person Residing in the United States for Streamlined Domestic Offshore Procedures statement, establishing eligibility for the procedure and that the failures were due to non-willful conduct.
  6. Provide supporting documentation of the 5% penalty calculation.

If the taxpayer follows these procedures, no additional penalties will be assessed. This means that the taxpayer will not be responsible for the failure to file penalties, failure to pay penalties, accuracy penalties, information return penalties, or FBAR penalties. Again, acceptance is not automatic, and the taxpayer could be liable for one or more of the mentioned penalties if the IRS determines that the taxpayer’s non-compliance was fraudulent and/or willful.

D. Offshore Voluntary Disclosure Program

In order to be eligible for the current version of the Offshore Voluntary Disclosure Program, the taxpayer must meet the following eligibility requirements:

  1. Taxpayer with legal source income invested in undisclosed offshore assets.
  2. Disclosure was initiated before IRS has received information from a third party regarding the taxpayer’s noncompliance and no civil or criminal investigation is pending against the taxpayer for any reason. In this regard, the IRS may, going forward, receive information from a third party when FATCA reporting has occurred.[14]
  3. Agree to cooperate with the IRS and DOJ offshore enforcement efforts.

Under the terms of the Offshore Voluntary Disclosure Program, the taxpayer must:

  1. Submit a letter and power of attorney to the IRS Criminal Investigation Lead Development Center by fax to request preclearance before making an offshore voluntary disclosure. Criminal Investigation will notify taxpayers or their representatives via fax whether or not they are so eligible. Preclearance does not guarantee a taxpayer acceptance into the program.
  2. Submit the Offshore Voluntary Disclosure Letter and attachment. Criminal Investigation will review the letter and notify taxpayers or representatives by mail or facsimile whether their offshore voluntary disclosures were primarily accepted as timely or declined.
  3. Submit the OVDP application package, which includes several special IRS OVDP-related statements.[15]
  4. Include eight years (where applicable) of original or amended federal income tax returns and copies of previously filed original (and, if applicable, previously filed amended) returns.
  5. Include eight years (where applicable) of FBARs and copies of previously-filed FBARs for each of the tax years in question.
  6. Include full payment of the tax and related interest.
  7. Pay a 20% accuracy related penalty.
  8. In lieu of payment of all other penalties on undisclosed foreign assets, including FBAR and offshore-related information return penalties, a payment of a 27.5% penalty (50% if any of the taxpayer’s undisclosed foreign financial accounts involved one of the “Foreign Financial Institutions or Facilitators” posted on the IRS website[16]) of the highest aggregate value of the offshore assets during the period covered (eight years).
  9. If applicable, the failure to file and failure to pay penalty for returns required under IRC 6651 (does not include filing of offshore information returns.)
  10. Include a waiver of the applicable Statute of Limitations.

COMMENT:

The most desirable option where eligible is generally disclosure through the Delinquent International Information Return Submission Procedures, but it can be difficult to establish reasonable cause. The next option would be filing the amended returns through the Streamlined Filing Compliance Procedures, which requires a showing that the failure to file was non-willful – arguably a lesser standard. The final option would be to enter into the Offshore Voluntary Disclosure Program.

A taxpayer is still eligible to enter into the Offshore Voluntary Disclosure Program, even if there was willful non-compliance. Disclosure through the Offshore Voluntary Disclosure Program provides protection from criminal prosecution, and may allow the taxpayer to pay significantly less in penalties than could be otherwise due. In order to begin the process, a taxpayer should submit a preclearance letter to the IRS, which is often fairly simple and can simply be faxed to hopefully “tag” the IRS before the IRS has “information from a third party” relating to the noncompliance.

It is also possible to file under the Offshore Voluntary Disclosure Program and then request removal by “opting-out” therefrom into a regular IRS examination, which should be based upon providing information demonstrating reasonable cause.[17]

The decision to opt out is irrevocable and also results in the forfeiture of criminal immunity offered under the Offshore Voluntary Disclosure Program.[18] Acceptance into one of the other programs is not automatic, and requires that the revenue agent handling the matter be convinced of reasonable cause for the failure to file. Therefore, the taxpayer should weigh the risk versus reward of opting out of the Offshore Voluntary Disclosure Program.

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[1] See, for example, Treas. Reg. § 1.6038-2(k)(3), Treas. Reg. § 1.6038 A-4(b), and Treas. Reg. § 301.6679-1(a)(3)
[2] I.R.M. 20.1.1.3.2 (11-25-2011)
[3] Estate of La Meres v. Comm’r 98 T.C. 294, 316-317 (1992)
[4] 2012 WL 3522610 (M.D. Fla. Aug. 14, 2012)
[5] James at *3
[6] Cheek v. United States 498 US 192, 200 (1991)
[7] U.S. v. Williams, 489 Fed. Appx. 655, 659 (4th Cir. 2012) (unpublished)
[8] I.R.M. 4.26.16.1
[9] Williams, at 658
[10] Id, at 660
[11] U.S. v. McBride, 908 F. Supp. 2d 1186, 1213 (D. Utah 2012)
[12] I.R.M. 4.26.16.4.5.3
[13] Government Wins Second Willful FBAR Penalty Case: What McBride Really Means for Taxpayers, 118 JTAX 187, 199; The FBAR Penalty: What Constitutes Willfulness? 46-Jun Md. B.J. 38.
[14] For a list of jurisdictions that have agreed to comply with the FATCA reporting requirements, see: http://www.treasury.gov/resource-center/tax-policy/treaties/pages/fatca-archive.aspx
[15] See, Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers #25
[16] See, Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers #7.2
[17] See, Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers #51
[18] Id.

H.R. 2 Medicare Access and CHIP Reauthorization Act of 2015:
The So-Called Medicare “Doc Fix”

Yes, it’s true! On April 16, 2015, President Obama signed into law the bipartisan bill H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, which is also called the Medicare “doc-fix.” We will no longer need to hear about upcoming physician compensation reductions by Medicare. This bill permanently repeals the Sustained Growth rate formula and replaces it with a stable Medicare payment system offering financial incentives to doctors for providing high-quality and value health care and to bill Medicare patients for their overall care, not individual office visits. This new law was signed just in time to head off a 21% cut in doctors’ pay that was due to take effect this month.

It is good to see the political parties working together for an appropriate common cause – physicians! No component of our professional services industry has sacrificed more, given more, or achieved more than the members of the medical profession. The best and the brightest from all over the world aspire nothing short of being practicing physicians here. We are so thankful that they are a part of our country, not to mention being our friends and our protectors.

The “doc fix” bill fixes a 1997 law that aimed to slow down Medicare’s growth through limiting reimbursements to doctors. The formula in the law linked Medicare doctor pay to economic growth while the new formula focuses on quality of care and requires means testing of Medicare beneficiaries. This is so higher income people will pay higher premiums. The old formula used to paying the Medicare doctors has been a long-time problem because health care costs have outpaced economic growth. Congress has fixed this problem in the past by overriding the reductions 17 times, but they were never able to establish a permanent solution. If they had not overridden the reduction, then the formula would have resulted in reduced pay rates.

The new formula will have positive rate increases for the next 4.5 years and incentivizes physicians to participate in Alternative Payment Models.

The deadline for action was actually April 1, 2015, but since Medicare doctors’ claims usually take at least two weeks to be paid by the government, the pay cuts were not expected to be implemented before April 15. The law will take place immediately in order to address payment rates to physicians for their services provided on April 1, 2015. In a written letter from the Centers for Medicare and Medicaid Services, the agency said that “only a small volume of claims” will be processed under the lower levels, but those payments will be reprocessed so that providers get the full amount of fees due.

According to the Congressional Budget Office, H.R. 2 will cost $141 billion over the next 10 years.

For a more detailed summary of what the law contains as well as a breakdown of key provisions of the law, please click here to view an article from Annemarie Wouters from Manatt, Phelps, and Phillips, LLP.

To view the complete H.R. 2 bill, please click here.

Our EstateView Software Featured in the American Bar Association
Probate & Property Magazine

The EstateView Software developed by our firm along with Jerome Hesch, J.D., and David Archer, MBA, was one of only three estate tax illustration and planning software programs chosen for review in the January/February 2015 edition of the American Bar Association’s Probate & Property Magazine. EstateView was highlighted in the Technology Probate section, which provides information on current technology and microcomputer software of interest in the probate and estate planning areas.

Here is what they had to say about EstateView:

EstateView Planning Software is a new entrant into the estate planning and calculation software field. EstateView’s most striking feature is its elegant user interface. The software uses a multi-window design that incorporates a modern feel and strikes the right balance between user-friendliness and advanced customization options. Beginning users can jump right in and start using the software right out of the box. More advanced users have a wide range of customization options, including the ability to undock, hide, or reposition displays to match their personal preferences.

The user experience is further enhanced by simultaneous data updates across multiple screens. As the user enters information and tries out various scenarios, the relevant displays are instantly updated to show the results of the changing assumptions. This makes it easy for the user to make the necessary adjustments to achieve the desired results.

EstateView has preset scenarios to help design and illustrate the most common estate planning options. Baseline scenarios for a married couple include:

  • No planning (which can be configured with or without portability),
  • Use of a credit shelter trust
  • Use of a credit shelter trust with annual gifting
  • Use of a credit shelter trust with discounted annual gifting,
  • Combination of a credit shelter trust, discounted annual gifting, and one or more irrevocable life insurance trusts, and
  • Installment sale to a defective grantor trust using a conventional or self-canceling installment note (with the ability to toggle grantor trust status in a given year).

These scenarios allow the user to illustrate most-often-used estate planning strategies with ease. Changing any of these scenarios will change the current illustration, which remains open throughout the entire process. This provides instant feedback without having to toggle between different screens.

EstateView makes it easy to generate a customized client letter to explain estate planning scenarios to clients. Once all information is entered, the user can generate a client explanation letter that uses color illustrations to explain the estate planning techniques involved. This letter can be saved as a Microsoft Word document and modified as necessary before presentation to the client. If the estate planning assumptions are changed at a later time, a new letter can be easily produced to illustrate the new scenario.

EstateView is still in the beta testing phase and is currently free for use by interested planners. Interested professionals can email estateview@gassmanpa.com and receive a link to download a free 180-day trial version of the software.

To see the complete story from Probate & Property, please click here.

To download the software, you may also email agassman@gassmanpa.com or janine@gassmanpa.com for the link.

Once you download the software, be sure to check out our EstateView tutorial webinar by clicking here. The best thing to do would be to use two screens – have the software open on one screen, and watch the webinar on the second. Do this, and you’ll be good to go!

Thanks to the ABA and Technology – Probate editor Jason E. Havens for featuring EstateView!

Richard Connolly’s World
Estate Planning Before and After Divorce

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 “How to Keep Your Inheritance in a Divorce” by Neil Parmar. This article was featured in The Wall Street Journal on November 9, 2014.

Richard’s description is as follows:

For the happily wed, marriage is often about sharing everything – including generous gifts bestowed by parents or grandparents.

But when a relationship ends in divorce, that perspective can change dramatically. At that point, however, it may be too late to keep inherited assets such as vacation homes, rare collections, and other gifts away from a former partner, even if those assets were never intended to go to that person.

What is considered separate versus marital property can vary, depending on the state in which a couple lives.

While the financial outcome of a divorce may boil down to where you live, there are things you can do to help sway the outcome, especially when it comes to inheritances, experts say. This article looks at a few strategies, including negotiating a pre-nup, saving documentation, maintaining separate accounts, relying in trusts, and keeping titles in one name only.

Please click here to read this article in its entirety.

The second article of interest this week is entitled “After Divorce, Separate Your Estate Plans, Too” by Liz Moyer. This article was also featured in The Wall Street Journal on February 20, 2015.

Richard’s description is as follows:

If you have just gotten divorced, you may be focused on getting on with your life, but make sure you also have updated the financial arrangements that kick in at your death.

Failure to do so – or failure to alert all relevant parties to the changes – could result in certain assets and benefits unintentionally going to your former spouse or his or her family upon your death.

Lawyers point to a current court case in New York as an example of how things can go wrong. The family of Robyn Lewis, who died five years ago at the age of 43, is battling her former in-laws, who stand to inherit a $200,000 home in Clayton, NY, even though she and her husband divorced in 2007.

Ms. Lewis executed a will in 1996 that named her then-husband to receive her property after her death. That included the house, which had been in her family for generations. She named her then-father-in-law as the secondary beneficiary.

While under New York law, the divorce automatically cut her ex-husband out of her will, it didn’t automatically cut out her father-in-law, who presented a copy of the 1996 will to the court.

Please click here to read this article in its entirety.

Seminar Spotlight
Communicating for Positive Results Presentation

The Clearwater Bar Association’s Solo & Small Firm Section will be sponsoring the following talk to be presented on May 12, 2015.

Bob Feckner will be presenting Communicating for Positive Results at the Clarion Inn & Suites at 20967 US Highway 19 N in Clearwater. The presentation will take place from 5:30 PM to 7:00 PM.

Bob Feckner is a fantastic teacher and always an inspiration to work with and hear from. He is with the Dale Carnegie program, and we can’t say enough good things about Dale Carnegie or Bob. He is a Senior Performance Consultant and Senior Instructor with Dale Carnegie Training Tampa Bay where he helps individuals and businesses improve performance in terms of Leadership, Communications, Employee Engagement, Sales, Sales Leadership, Customer Service, Teamwork, Human Relations, Productivity, and Presentations.

Join with solo practitioners and lawyers from small firms for networking to build your practice and improve practice management skills. This presentation is given at no charge to members of the Clearwater Bar Association.

To learn more about the type of training you could receive at this presentation, please visit http://tampabay.dalecarnegie.com/

Click here to register for this talk.

Humor! (or Lack Thereof!)

Our Favorite Memorial Day Invitation

We received the following invitation to a Memorial Day party. Names and addresses have been changed or removed to protect the innocent.

Fire in the Grill
(also known as Grills Gone Wild!!!)

Frequently Asked Questions*

  1. Q: Who Can We Bring?
    A: You and your significant other. Kids are okay, but you gotta keep an eye on them yourselves ~ and not the whole Cub Scout troop.
  2. Q: What Can We Bring?
    A: About twice as much as you think you’ll drink. Maybe three times ~ you be the judge. A side dish as well since it’s a potluck thing. Please coordinate that with The Mistress of Ceremonies.
  3. Q: Do We Need to Let You Know if We’re Coming?
    A: Yeah, that would be super nice. Please let Jane know. If you tell John, he may not remember to tell Jane.
  4. Q: Will the Party Go On Until the Wee Hours?
    A: Yes! Probably until 9:30 or 10:00 PM. Then get the hell out.
  5. Q: Will There be Vegan Options?
    A: Yes, of course! You always have the option to go hungry (you’re probably used to that) or bring your own tofu and kale.

(*) I was dreaming when I wrote this; forgive me if it goes astray.

Upcoming Seminars and Webinars

**Please note our Bradenton presentation has been moved from May 12th, 2015 to August 13, 2015 so that they could build a new wing to accommodate all of the people who RSVP’d for this important presentation.**

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 STUART, FLORIDA PRESENTATION

Alan Gassman will be the featured headline speaker at the Martin County Estate Planning Council Annual Tax and Estate Planning Seminar. He will be doing a three-hour talk on the following:

  1. JOINT EXEMPT STEP-UP TRUSTS (JESTs)
  2. MATHEMATICS FOR ESTATE PLANNERS
  3. 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

Clasen

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 small donation to the Lind Chair.

Date: Saturday, May 30, 2015 | 10:00 AM – 3:00 PM

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 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: Thursday, August 13, 2015 | 6:00 PM

Location: Coastal Orthopedics and Sports Medicine | 6015 Pointe West Boulevard, Bradenton, FL, 34209

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

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LIVE 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/.

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LIVE ST. PETERSBURG PRESENTATION:

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

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

Lauren Detzel will be speaking on Recent Homestead Cases, while Michael Markham will be speaking on Bankruptcy and Creditor Protection/Fraudulent Transfer in Context with Estate Planning.

We thank Lydia Bailey and Lori Johnson for their incredible dedication (and patience with certain members of the Board of Advisors.) All Children’s Hospital is affiliated with Johns Hopkins, which is not affiliated with Anthony Hopkins.

Please provide us with your input for other topics for this year and next! Watch this space for more speaker and topic announcements.

Date: February 10, 2016

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

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

Applicable Federal Rates

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

Applicable Rates

The Thursday Report – 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?

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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

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