Practice Fundamentals Series: Managing Your Practice – Forming an Estate Planning Practice and Engaging New Clients

Program Date: Wednesday, October 7, 2015

Panelists: Tiffany O’Connell of O’Connell Law, LLC, and Tamara Lauterbach Sturges of Egleson & Sturges, LLC

Program Chairs: Anne L. Warren of Brown Brothers Harriman & Co.,   Tamara Lauterbach Sturges of Egleson & Sturges, LLC, and Heidi Seely of Rackemann, Sawyer & Brewster, P.C.

Materials: Click here for panelists’ outline.

Program Topic:  Panelists discussed the different methods of setting up an estate planning practice, including practice management software, drafting templates, benefits of drafting software, marketing, networking and building a client base.

Basis Consistency Requirements

By, Susan A. Robb of First Republic Trust Company

On July 31, 2015, the President signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the “Highway and Transportation Funding Act of 2015, Part II”) into law. The new law, which extended the Highway Trust Fund expenditure authority, enacted Sections 1041(f) and 6035 of the Internal Revenue Code. These new rules address the basis of property received from a decedent and require personal representatives of taxable estates to provide a statement to both the IRS and to any person acquiring an interest in property included in the decedent’s gross estate for federal estate tax purposes.

Under the stepped up basis rules of § 1014, the basis of property acquired from a decedent is generally the property’s fair market value, either on the date of death or the alternate valuation date. In the past, beneficiaries receiving such property were not required to use the same value reported by the estate. Beneficiaries could claim the property’s fair market value (and therefore their basis) was higher than the estate tax value. § 1041(f) now provides that the basis of property received from a decedent shall not exceed the value of that property as finally determined for federal estate tax purposes or, if the value has not yet been determined for federal estate tax purposes, the value of that property as reported on a statement provided pursuant to § 6035.

The new law applies to property for which a federal estate tax return is filed after July 31, 2015. However, pursuant to Notice 2015-57, the § 6035 reporting requirements have been delayed until February 29, 2016. The delay should allow the IRS and Treasury Department to issue additional guidance regarding compliance with § 1041(f) and § 6035.

See Also: Internal Revenue Bulletin: 2015-36 (Notice 2015-57)




Bank of America, N.A. v. Massachusetts Commissioner of Revenue

By, Claire Carrabba of Clements Pajak LLC

In Bank of America, N.A. v. Massachusetts Commissioner of Revenue, the Appellate Tax Board determined that income received by certain foreign corporate trustees was subject to taxes under M.G.L. c. 62 § 10. The statute provides that trust income is subject to taxes if: (1) the income is received by trustees of a trust that was created by a Massachusetts inhabitant and has a trustee who is an inhabitant of Massachusetts; and (2) the income is accumulated for the benefit of Massachusetts inhabitants or for the benefit of unknown or unascertained beneficiaries. The parties disagreed over whether the corporate trustees were considered inhabitants of Massachusetts and thus subject to taxes under M.G.L. c. 62 § 10.

Although the corporate trustees had commercial domiciles in other states, the Board nonetheless considered them inhabitants of Massachusetts under M.G.L. c. 62 § 1(f) (2).   Because the corporate trustees did a substantial amount of business (operating and staffing physical offices, maintaining relationships with grantors and beneficiaries, administering and distributing trust assets, consulting with clients, reviewing trust instruments, and researching and discussing trust issues) in Massachusetts, they maintained a permanent place of abode as described in M.G.L. c. 62 § 1(f) (2) and were therefore subject to tax under M.G.L. c. 62 § 10.

Estate Planning Brownbag Series: Introduction to the Uniform Fiduciary Access to Digital Assets Act

Program Date: Friday, September 25, 2015

Panelist: Colin Korzec, Esq., Managing Director and Estate Settlement National Executive, U.S. Trust, Bank of America Private Wealth Management

Program Chairs: Kerry L. Spindler, Goulston & Storrs PC  and Sara Goldman Curley, Nutter McClennen & Fish LLP, co-Chairs of the Trusts & Estates Section’s Estate Planning Brownbag Series

Materials:  To view the program materials, click here.

Additional Resources: A link to the Revised Uniform Fiduciary Access to Digital Assets Act can be found here.

Summary of Program Topic: As the number of digital assets held by the average person increases, questions surrounding the disposition of these assets upon death or incapacity are becoming more common.  Few laws exist on the rights of fiduciaries over digital assets and few individuals consider the fate of their online presences once they are no longer able to manage their digital assets.

The situation regarding fiduciaries’ access to digital assets is unclear, and even fiduciaries who believe they have been granted access to digital assets may inadvertently run afoul of uncoordinated probate, privacy and computer hacking laws.  To the extent that there is existing legislation, such laws are disparate and differ with respect to the types of assets covered, the rights of the fiduciary, the category of fiduciary covered, and whether death or incapacity are covered.

The Uniform Law Commission has promulgated the Uniform Fiduciary Access to Digital Assets Act, which is intended to create a uniform approach among states so as to increase certainty and predictability for courts, account holders, fiduciaries and internet service providers.  Many states, including Massachusetts, are considering adoption of the uniform statute.  This program discussed the substance, pros, cons, evolution and controversies surrounding the statute.


Pfannenstiehl v. Pfannenstiehl

By: Jillian B. Hirsch, Leiha Macauley, and Darian M. Butcher, Day Pitney LLP

On August 27, 2015, the Massachusetts Appeals Court held in Pfannenstiehl v. Pfannenstiehl, Nos. 13-P-906, 13-P-686, & 13-P-1385, 2015 Mass App. LEXIS 123, that a husband’s interest in an irrevocable trust with an ascertainable standard is a “vested beneficial interest subject to inclusion in the marital estate.” This is a significant decision that could impact the way in which trusts and estates practitioners in Massachusetts draft estate plans for clients concerned about divorce protection.  To read full Alert, click here.

Program Recap and Materials: Administration of “Unfunded” Irrevocable Life Insurance Trusts From the Trustee’s Point of View

Program Date: Wednesday, October 28, 2015

Panelist: Amiel Z. Weinstock, Thomas Brady & Associates

Program Chairs: Peter M. ShaplandDay Pitney LLP  and Stacy K. Mullaney, Fiduciary Trust Company, Boston, co-Chairs of the Trust Administration Committee

Materials:  To view the program materials, click here.

Summary of Program Topic:  The program reviewed the fiduciary responsibilities of a trustee of an “unfunded” irrevocable life insurance trust (“ILIT”).  The panelist discussed obvious trustee responsibilities (Crummey notices, timely payment of premiums and the like) and not-so-obvious responsibilities to monitor the performance of the particular policy (investment performance and performance in comparison to illustrations provided at time of purchase, and review of the financial strength of the issuing insurance company).