ANÁLISIS DE LA ENCUESTA DIRIGIDA A LOS CLIENTES DE LA

a. Obtain Copies, Review and Update Documents.

(1) Will – consider re-executing the will to reaffirm wishes and to make sure

witnesses are alive.

(2) Revocable Trust –fund it ifappropriate.

(4) Powers of Attorney – make sure it is durable; if the client will soon be disabled, do not make it a springing power; if a springing power is used, include physical impairments as well as just disability; consider ability to make gifts, listing limits and potential donees.

(5) Powers of Appointment – consider exercising, but observe that pre-1942

general powers of appointment are not included in the gross estate unless exercised.

(6) Pre-Nups and Post-Nups – now they really need to be reviewed because

they can override the will provisions.

(7) Buy Sell and Partnership Provisions – they can also override will

provisions and create conflicts.

(8) Health Care Documents – make sure they are valid in all states where the

client might be located; executing new ones does not revoke old ones.

(9) Guardianship Designations – in particular address the designation of who

should serve as guardian for the dying individual if needed.

(10) Funeral and Burial Directions – some states allow designating who can control burial arrangements; if not, make a bequest subject to the condition of making the desired burial arrangements.

(11) HIPPA Releases.

b. Update Dispositive Provisions of Documents.

(1) Beneficiaries, Amounts, Ages. Right people? Right amounts or

percentages? Right ages?

(2) Trusts. Should a trust be used for creditor or divorce protection purposes?

If so, review fiduciary dispositive standards.

(3) Naming Fiduciaries. This is what often keeps people from finalizing wills,

but it must be done at this point. (“Are you going to have a friend be the trustee – who won’t be a friend very much longer?”)

(4) Tax Apportionment. Tax apportionment clauses are very important

dispositive provisions. A “pay all taxes from the residue” clause can be dangerous if there are buy sell agreements; consider apportioning taxes to the recipients of the business interests governed by the buy sell agreement.

(5) Tangible Assets. Some states do not allow disposition of tangibles by a

writing, but do it anyway. It resolves disputes and people tend to honor the decedent’s wishes even if not legally binding.

c. Family Tree. Prepare a family tree so that the client’s knowledge of the family will

not be lost.

d. Guard Against Probate Contest.

(1) Testamentary Substitutes. Load up on testamentary substitutes. In some

states, there is a lower standard of capacity for executing a trust than a will. The statute of limitations for a contest may be shorter for trusts.

(2) Execution Ceremony. Have the client explain to witnesses what is being

(3) Multiple Wills. If there is time, consider doing new wills every several months. Under the doctrine of dependent relative revocation, if the latest will is not valid, the prior one becomes operative. A contestant must then contest multiple wills.

e. Review State Law Issues. Consider whether there should be a change of

domicile (which requires intent, so the client must be competent). Consider the effect of state law with respect to various issues.

f. In Terrorem Clause. States differ regarding the enforcement of in terrorem

clauses. If the state is toothless in enforcing them, consider providing some bequest to the “problematic” beneficiary in the final will, but in the next to last will cut out that beneficiary. The beneficiary will know that if he or she successfully contests the final will, the next prior will becomes operative which cuts out the beneficiary.

g. Review Assets and Titles. Clients invariably are wrong in knowing how their

assets are titled. Particularly consider whether survivorship accounts are coordinated with the estate plan.

h. Particular Asset Considerations.

(1) Highly Appreciated Assets. If the “well spouse” owns highly appreciated

assets, consider transferring them to the “ill spouse” to get a stepped-up basis. If the donee dies within a year and the original donor inherits the property back, there will be no basis step up, §1014(e). If the donee- spouse does not live a year, include disclaimer planning so that the surviving spouse can disclaim the bequest into a bypass trust. A basis step up might then be available.

(2) Life Insurance.

- Other favorable conversion options?

- Can additional insurance be obtained without a medical exam?

- Repay outstanding policy loans to reduce the gross estate making it easier to satisfy the various 35% tests (if any of them are relevant).

(3) Employee Benefits. If employee benefits were in pay status in 1985, they

still qualify for the $100,000 exemption from gross estate inclusion. If the benefits were in pay status in 1983, they are entirely excluded from the gross estate. (An individual who was age 65 and 1983 is now age 95; some of them are still around.)

(4) Buy Depreciating Assets. If the beneficiary will buy some “toy” (expensive

auto, etc.) after the client dies, have the client buy the asset to leave to the beneficiary. The asset will have depreciated at the client’s death, leaving a lower gross estate.

i. Consider Gifts.

(1) High Basis Assets. Give high basis assets.

(2) Annual Exclusion Gifts. Make annual exclusion gifts.

(3) Checks. The check must clear before death. Use a cashier’s check or

before death (even if it is just being delivered to an attorney as agent for the donees).

(4) Pre-fund Pecuniary Bequests. Pre-fund pecuniary bequests that would

otherwise be made under the will and make clear that the gift is in place of the bequest. The gift may be covered by annual exclusions; even if not, this may simplify the estate administration.

(5) Minority Interests. Give (or sell) discountable assets such as minority

interests in businesses; perhaps give enough to get the client’s retained interest below 50% as well.

(6) Charitable Gifts. Accelerate charitable gifts to get an income tax

deduction.

(7) Transfers to Fund Bypass Trust. Consider making a gift from the well

spouse to the ill spouse (or to a QTIP trust for the ill spouse) so that that the dying spouse has sufficient assets to be able to fully fund a bypass trust (though this is less important with portability).

(8) Split Gifts. Split gifts are possible, with the gift being made either by the ill spouse or the healthy spouse, but adverse tax results can result if the gift may be included back in the estate of the donor (such as a gift with a retained income interest). See Item 5.g.(4) above regarding payment of any gift taxes by the healthy spouse.

(9) Private Annuities. Private annuities work well in a low interest rate

environment, but if the client dies within 18 months, the client will be presumed not to have had a 50% likelihood of living one year and the actuarial tables will not be available for valuing the annuity.

j. Miscellaneous.

(1) Consider Marriage. Marry a long-term partner to qualify for the marital

deduction. (“Suck it up, no matter how unprincipled you think marriage is.”)

(2) GST Planning. Consider taking steps to cause estate inclusion in the

estate of G-2 in order to avoid a generation-skipping transfer tax.

(3) 35% Tests. If §§303 or 6166 apply, take steps to bolster the estate’s ability

to satisfy the 35% test by contributing nonbusiness assets into the business or disposing of nonbusiness assets.

(4) Losses. “Harvest” losses before death to utilize a loss deduction and avoid

a step-down in basis at death.

(5) Sales to Grantor Trusts. The trust should consider repaying the note

before death to remove the argument of whether there would be gain recognition with respect to post-death payments. If needed, the trust could borrow money from a third party to pay off the note with cash, and the bank could be repaid following death. Alternatively, the grantor could purchase appreciated assets from the grantor trust, preferably in return for cash (if a note is used, there is the possibility that the note would have a substituted basis). See Item 10.e above.

(6) Grantor Trusts. Continue having the grantor pay income taxes on grantor

trust income. If liquidity is needed to be able to pay the income taxes, the grantor could borrow money from family members to pay the taxes; the

note to family members would have been given for full consideration so it should be deductible for estate tax purposes.

(7) Upcoming Sale by Grantor Trust. If the grantor trust will be selling assets

in the near future, the assets should be sold before the grantor’s death, so the income taxes will be payable by the grantor’s estate (generating an estate tax debt deduction) rather than being a liability of the trust following the grantor’s death.