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Table of Contents
-
List of Forms by Chapter - Chapter 1 — Beginning the Postmortem Estate Planning Process
- Chapter 2 — Administration of Trusts and Estates
- I. [2.1] Introduction
-
II. Fees: Executor and Trustee - III. Investment of Assets
- IV. [2.7] Cash Flow Planning
- V. Trust Division and Allocation Among Beneficiaries and Trusts
- [2.8] General Rules
- [2.9] Division of Special Assets
- [2.10] Calculating the Value of the Marital Trust
- Types of Formulas
- [2.11] Pecuniary Gift
- [2.12] Fractional Gift
- [2.13] Formula Bequests
- Types of Pecuniary Funding
- [2.14] True Worth Language
- [2.15] Lower of Cost or Market Value Language
- [2.16] Fairly Representative Language
- [2.17] Fractional Share Funding
- [2.18] Allocation of Income on Funding
- [2.19] Payment of Taxes or Expenses That Impact Income Allocations
- [2.20] Non-Pro Rata Distributions
- VI. Timing of Trust Funding
- VII. Settlement of Claims
- VIII. [2.29] Successor Trustees, Acceptances, Declinations, and Appointments To Get Desired Decision-Makers
- IX. Trust Protectors and Amenders; Directed Trusts; Decanting
- X. [2.33] Exercise of Powers of Appointment
- XI. [2.34] Determination of Principal and Interest
- XII. [2.35] Partition or Merge Trust
- XIII. Appendix
- Chapter 3 — The Effective Use of Disclaimers in Estate Administration
- I. Introduction
- II. The Federal Tax Rules
- In General
- [3.4] “Disclaimers” Defined
- [3.5] Evolution of Internal Revenue Code §2518 and the Applicable Treasury Regulations
- [3.6] Law Applicable to Disclaimers Not Governed by Internal Revenue Code §2518
- [3.7] Effect of a Qualified Disclaimer
- [3.8] Creditors’ Claims
- [3.9] Compliance with State Law
- Requirements for a Valid Disclaimer
- [3.10] Irrevocable and Unqualified
- [3.11] In Writing
- [3.12] Signed by Disclaimant or Another Acting on Disclaimant’s Behalf
- Time Limit
- [3.13] Overview
- [3.14] The Nine-Month Rule
- [3.15] Commencement of Disclaimer Period
- [3.16] Disclaimers of Jointly Owned Property
- [3.17] Other Situations
- [3.18] Planning Considerations
- No Acceptance of Benefits
- [3.19] Actions by a Prospective Disclaimant
- [3.20] Acts indicating acceptance
- [3.21] Acts not indicating acceptance
- [3.22] Actions by Fiduciaries
- No Direction by Disclaimant of Enjoyment of Disclaimed Interest
- [3.23] In General
- [3.24] To Someone Other than the Disclaimant
- [3.25] Without Direction
- [3.26] Disclaimer of Powers by Fiduciary
- [3.27] Disclaimer by Surviving Spouse
- [3.28] Partial Failure of Disclaimer by Disclaimant Other than Surviving Spouse
- [3.29] Effect of Precatory Language in Disclaimer
- Disclaimers of Less than an Entire Interest
- [3.30] Separate Interests
- [3.31] Severable Property
- [3.32] Powers of Appointment
- [3.33] Nominal Interests
- [3.34] Separate Interests in Specific Trust Assets
- [3.35] Disclaimer of an Undivided Portion
- [3.36] Disclaimer of a Pecuniary Amount
- [3.37] Simultaneous Application of Various Disclaimer Rules
- III. [3.38] Planning for Disclaimers — Drafting Considerations
- IV. Postmortem Planning with Disclaimers
- V. Problem Areas in Disclaimer Planning
- [3.43] Inability To Cut Back a Power
- [3.44] Inability To Disclaim What You Already Own
- [3.45] Inability of Minor, Unborn, or Unascertained Remaindermen To Disclaim
- [3.46] Beneficiaries’ Reluctance To Reduce Their Interests
- [3.47] Disclaimers of a Pecuniary Amount in Trust
- [3.48] The Difficulty in Anticipating Why a Disclaimer Might Be Needed
- [3.49] Difficulty with Formula Disclaimers of Formula Bequests
- VI. [3.50] Drafting a Disclaimer
- VII. [3.51] Appendix: Sample Disclaimer
- Chapter 4 — Going to Court — Or Not
- I. [4.1] Introduction
- II. [4.2] Ignoring the Estate Plan
- [4.3] Renunciation of Will by Decedent’s Surviving Spouse
- [4.4] The Right To Renounce Will Under Probate Act §2-8
- [4.5] Renunciation by Guardian of Surviving Spouse
- [4.6] Renunciation by Representative of Deceased Surviving Spouse
- [4.7] Determining Estate for Purposes of Calculating Renunciatory Share
- [4.8] Partial Renunciations
- [4.9] Lifetime Transfers
- [4.10] Deadline for Filing Renunciation
- [4.11] Revocation of Renunciation
- [4.12] Interaction with Estate Litigation
- [4.13] Tortious Interference with Testamentary Expectancy
- [4.14] Will Contests
- [4.15] Surviving Spouse’s Award and Surviving Child’s Award
- [4.16] Amount of Surviving Spouse’s Award
- [4.17] Payment of Surviving Spouse’s Award
- [4.18] Bequests to Spouse Under Will
- [4.19] Child’s Award If Not to Surviving Spouse
- [4.20] Equal Priority of Spouse’s Award and Child’s Award
- [4.21] Duty of Executor To Apply for Spouse’s and Child’s Awards
- [4.22] Payment of Award
- [4.23] Statutory Custodial Claims
- [4.24] Requirements of Claim Strictly Construed
- [4.25] “Living With”
- [4.26] “3 Years”
- [4.27] Care of Decedent
- [4.28] Amount of Claim
- Homestead Rights
- [4.29] Leave To Sell or Mortgage Real Estate
- [4.30] Homestead Exemption
- [4.31] Ordered Sale
- [4.32] Consent to Sale of Property
- III. [4.33] Understanding and Carrying Out Estate Plan
- [4.34] Jurisdiction of Court
- [4.35] Use of Declaratory Judgment
- [4.36] Construing the Instrument
- [4.37] Determining Settlor’s Intent
- [4.38] Admissibility of Extrinsic Evidence
- [4.39] Rules of Construction
- [4.40] Construction of Trusts vs. Construction of Wills
- [4.41] Early Vesting of Remainders
- [4.42] Presumption Against Intestacy
- [4.43] Presumption Against Disinheritance
- [4.44] Intestate Rules of Descent and Distribution
- [4.45] Specific Provisions vs. General Provisions
- [4.46] Presumption That Testator Knew Law in Effect at Execution
- [4.47] Construction as Question of Law or Question of Fact
- Apportionment of Estate Taxes
- [4.48] Executor’s Obligation To Pay Estate Taxes
- [4.49] Apportionment of Estate Tax Obligation Among Probate Assets
- [4.50] Equitable Apportionment of Estate Tax Obligations
- [4.51] No Apportionment of Estate Tax Liability to Spouse Taking Under Will
- [4.52] Right To Recover from Nonprobate Assets
- [4.53] Apportionment of Administration Expenses
- [4.54] Opting Out of Equitable Apportionment
- [4.55] For Additional Information
- IV. [4.56] Modifying the Estate Plan
- [4.57] Reformation
- [4.58] No Reformation of Wills
- [4.59] Will Substitutes
- [4.60] Reformation of Trusts
- [4.61] Grounds for Reformation
- [4.62] Scrivener’s Error
- [4.63] Mistake
- [4.64] Unilateral mistake
- [4.65] Mutual mistake
- [4.66] Changed Circumstances
- [4.67] Illegality or Violation of Public Policy
- [4.68] Cy Pres
- [4.69] Family Settlements
- [4.70] The Family Settlement Doctrine
- [4.71] Purpose of Trust
- [4.72] Contingent Future Interests
- [4.73] Interested Parties
- Virtual Representation of Interested Nonparties
- [4.74] Common Law
- [4.75] Virtual Representation Under the Trusts and Trustees Act Before the 2014 Amendments
- [4.76] 2014 Amendment to §16.1
- [4.77] Election To Become Total Return Trust
- [4.78] Conversion by Trustee
- [4.79] Conversion by Virtual Representation Agreement
- [4.80] Conversion on Order of Court
- [4.81] Administration After Conversion
- [4.82] Restrictions on Trustee-Beneficiaries
- [4.83] Exculpatory Provision
- V. [4.84] Challenging the Estate Plan
- [4.85] Will Contests
- [4.86] Strict Six-Month Time Limit
- [4.87] Will Contest May Be Filed by Any Interested Person
- [4.88] Right to Trial by Jury
- [4.89] Duty of Representative To Defend Will
- [4.90] Grounds for Contest
- [4.91] Undue Influence
- [4.92] Lack of Testamentary Capacity
- [4.93] Fraud and Duress
- [4.94] Contest of Denial of Admission of Will to Probate
- [4.95] Trust Contests
- [4.96] Time for Filing
- [4.97] Grounds for Contest
- [4.98] Mistake
- [4.99] Undue Influence
- [4.100] Lack of Capacity
- [4.101] Fraud and Duress
- [4.102] Application of the Doctrine of Election to Contest of Will Substitutes
- [4.103] Contests of Other Will Substitutes
- VI. [4.104] Planning After Incompetency
- [4.105] Estate Planning in a Guardianship
- [4.106] Estate Transactions Under Powers of Attorney
- [4.107] Renouncing Will on Behalf of Surviving Spouse
- [4.108] Making Gifts, Exercising Powers of Appointment, and Changing Beneficiaries
- [4.109] Preserving Principal’s Estate Plan
- [4.110] Establishing Revocable Trust for Principal’s Benefit
- [4.111] Formation of Special-Needs Trusts
- VII. [4.112] Small Estate Affidavits
- [4.113] Collection and Distribution of Estates of Less Than $100,000
- [4.114] Appointment of Agent To Access Safe-Deposit Box or Liquidate Property
- [4.115] Release for Actions in Reliance on Small Estate Affidavit
- [4.116] Affidavit To Collect Estate of Less Than $10,000 of Minor or Disabled Adult
- [4.117] Action To Recover Assets When Affidavit Is Refused
- [4.118] Private Sale by Guardian of Ward’s Small Interest in Real Estate
- Chapter 5 — Estate Tax Elections and Strategies
- I. [5.1] Introduction
- II. [5.2] Marital Trust Elections (Qualified Terminable Interest Property and Qualified Domestic Trust)
- [5.3] Qualified Terminable Interest Property Election
- [5.4] Protective Qualified Terminable Interest Property Elections
- [5.5] Partial Qualified Terminable Interest Property Elections
- [5.6] Contingent (Clayton) Qualified Terminable Interest Property Elections
- [5.7] Illinois State Qualified Terminable Interest Property Elections
- [5.8] Making Federal Qualified Terminable Interest Property Elections
- [5.9] Qualified Domestic Trust Election
- [5.10] Qualified Domestic Trust Requirements
- [5.11] Qualified Domestic Trust Bond and Security Requirements
- [5.12] Qualified Domestic Trust Election
- [5.13] Exception for Spouse Who Becomes United States Citizen
- [5.14] Deferred Estate Tax on Qualified Domestic Trust Distributions
- [5.15] Ability of Noncitizen Spouse To Create Qualified Domestic Trust with Outright Bequest
- Special Reverse Qualified Terminable Interest Property Elections
- [5.16] Generation-Skipping Transfer Tax Problems with Qualified Terminable Interest Property Trusts
- [5.17] Special Reverse Qualified Terminable Interest Property Election and Three-Trust Structure
- [5.18] How Reverse Qualified Terminable Interest Property Election Is Made
- [5.19] Marital Deduction Issues for Pre-1982 Marital Formula Bequests
- III. [5.20] Portability of Exemption
- IV. [5.24] Paying Estate Tax
- [5.25] Selling Assets To Raise Cash
- [5.26] Private Financing of Estate Tax
- [5.27] Using Assets in Family Business Entity To Pay Estate Tax
- [5.28] Graegin Loans
- [5.29] Internal Revenue Code §6166
- [5.30] General Terms
- [5.31] Eligibility
- [5.32] Making Election and IRS Review
- [5.33] Bond or Lien Requirement
- [5.34] Percentage Test
- [5.35] Definition of “Closely Held Business Interest”
- [5.36] Application of Family Attribution Rules
- [5.37] Closely Held Business Interest Must Be Active Business
- [5.38] Issues with Agricultural Property
- [5.39] Acceleration of Deferred Estate Tax
- [5.40] Penalties for Failure To Pay Installments
- [5.41] State Death Tax Deferral
- [5.42] Internal Revenue Code §303
- [5.43] Background
- [5.44] Requirements
- [5.45] Timing Rules
- [5.46] Other Estate Tax Extensions (Internal Revenue Code §§6161 and 6163)
- V. Other Postmortem Tax Elections and Issues
- [5.47] Alternate Valuation Election Under Internal Revenue Code §2032
- [5.48] Renunciation of Will by Surviving Spouse
- [5.49] Special-Use Valuation for Real Estate
- [5.50] Requirements for Special-Use Valuation
- [5.51] Real Estate Use in Farming or in Trade or Business
- [5.52] Qualified Use
- [5.53] Qualified Heirs
- [5.54] Percentage Test
- [5.55] Material Participation
- [5.56] Recapture of Estate Tax
- [5.57] Paying Expenses and Claims Before Due Date of Estate Tax Return To Ensure Deduction
- [5.58] Fees of Fiduciary
- [5.59] Whether Fees Should Be Taken
- [5.60] When Fees Should Be Taken
- Electing To Take Certain Deductions on Income Tax Return or Estate Tax Return
- [5.61] General Rules
- [5.62] Problem with Expenses at First Death
- [5.63] Transmission vs. Management Expenses
- [5.64] Issues To Consider in Choosing To Take Expense Deductions on Income Tax Return or Estate Tax Return
- Tax Basis Issues
- [5.65] General Rules
- [5.66] Gallenstein v. United States
- [5.67] Holding Period for Property Acquired from Decedent
- Chapter 6 — Gift Tax and Generation-Skipping Transfer Tax Elections and Strategies
- I. [6.1] Introduction
- II. [6.2] Gift Tax Elections and Strategies
- [6.3] Identification of Lifetime Gifts Made Prior to the Year of Death
- [6.4] Excluded Gifts Made Prior to the Year of Death
- [6.5] Taxable Gifts Made Prior to the Year of Death and Reported on Prior Gift Tax Returns
- [6.6] Taxable Gifts Made Prior to the Year of Death and Not Previously Reported on Prior Gift Tax Returns
- [6.7] Crummey Notices
- [6.8] Quantification of Any Exposures Related to Lifetime Gifts
- [6.9] Final Gift Tax Return in the Year of Death
- [6.10] Exclusion Gifts
- [6.11] Taxable Gifts Reported on the Final Gift Tax Return
- [6.12] Valuation Issues
- [6.13] Availability of Gift Tax Deductions on the Final Gift Tax Return
- [6.14] Gift Splitting on the Final Gift Tax Return
- [6.15] Final Crummey Notices
- [6.16] Final Gift Tax Return Filing Deadline
- Federal Estate Tax Implications of Adjusted Taxable Gifts
- [6.17] Adjusted Taxable Gifts
- [6.18] Gift Taxes Paid Related to Transfers Made Within Three Years of the Decedent’s Death
- [6.19] Internal Revenue Code §2035 Issues
- [6.20] Illinois Implications of the Final Gift Tax Return
- [6.21] IRS Form 2848
- [6.22] Interrelationship with Reporting Generation-Skipping Transfers in the Year of Death
- III. [6.23] Generation-Skipping Transfer Tax Elections and Strategies
- [6.24] Identification of Lifetime Gifts Made Prior to the Year of Death and Subject to Generation-Skipping Transfer Tax
- [6.25] Excluded Generation-Skipping Transfers Made in Years Prior to the Year of Death
- [6.26] Taxable Generation-Skipping Transfers Reported on Gift Tax Returns for Years Prior to the Year of Death
- [6.27] Taxable Generation-Skipping Transfers Not Previously Reported on Prior Gift Tax Returns
- [6.28] Allocations of Generation-Skipping Transfer Exemption to Lifetime Transfers in Years Prior to the Year of Death
- [6.29] Quantification of Any Exposures Related to Lifetime Gifts Made Prior to the Year of Death
- [6.30] Final Gift Tax Return in the Year of Death
- [6.31] Exclusion Gifts
- [6.32] Gift Splitting on the Final Gift Tax Return
- [6.33] Taxable Generation-Skipping Transfers Reported on the Final Gift Tax Return
- [6.34] Valuation Issues
- [6.35] Allocation of Unused Generation-Skipping Transfer Exemption on the Final Gift Tax Return
- [6.36] Final Generation-Skipping Transfer Tax and Gift Tax Return Filing Deadline
- Federal Estate Tax Implications of Generation-Skipping Transfers
- [6.37] Allocation of Generation-Skipping Transfer Exemption on Estate Tax Return
- [6.38] Allocations to Estate Tax Inclusion Period Trusts
- [6.39] Disclaimers
- [6.40] Splitting Trusts into Exempt and Nonexempt Sub-Trusts
- [6.41] Reverse Qualified Terminable Interest Property Election
- [6.42] Void Transfers Create More Generation-Skipping Transfer Exemption
- [6.43] Illinois Implications of the Final Gift Tax Return
- IV. [6.44] Conclusion
- V. [6.45] Appendix — Checklist
- Chapter 7 — Income Tax Elections and Considerations
- I. [7.1] Introduction
- II. The Decedent’s Income Taxes
- [7.2] The Decedent’s Final Return
- Filing a Joint Return
- [7.3] Eligibility
- [7.4] Income Included
- [7.5] Expiration of Losses
- [7.6] Executor Liability — Tax Planning Considerations
- [7.7] Estate Tax Deduction for Unpaid Income Tax
- Medical Expense Deductions
- [7.8] Election Available
- [7.9] Analysis
- [7.10] Making the Election
- Election To Accrue U.S. Savings Bond Interest
- [7.11] Background — Taxation of Interest Earned on U.S. Savings Bonds
- [7.12] Executor Election To Report Accrued U.S. Savings Bond Interest
- Tax Savings Considerations
- [7.13] Estate Not Subject to Estate Tax
- [7.14] Estate Subject to Estate Tax
- [7.15] Pecuniary Bequests
- [7.16] Election Not Binding on Transferees
- [7.17] Evaluating Savings Bond Accrued Interest
- [7.18] Series H/HH Bonds
- III. Fiduciary Income Tax Considerations
- [7.19] Overview
- [7.20] Relative Tax Rates — Beneficiary Distribution Planning
- Fiscal Year
- [7.21] In General
- [7.22] Making a Fiscal Year Election
- Fiscal Year — Tax Planning Considerations
- [7.23] Deferral of Beneficiary’s Tax Payments
- [7.24] Deferral of Estate’s Income Tax Payments
- [7.25] Splitting of Income
- Impact of Death — Property Tax Basis and Holding Period
- [7.26] General Rules
- [7.27] Exceptions and Modifications
- [7.28] Nontaxable Estates — Take Steps To Memorialize Date of Death Values
- Estate Distributions — Income Tax Considerations
- [7.29] 65-Day Election
- [7.30] Distributions of Appreciated Property
- [7.31] Distributions of Income in Respect of a Decedent
- [7.32] Distributions of Installment Obligations
- [7.33] Estimated Tax Payments
- [7.34] Charitable Contribution Deductions
- Election To Treat Decedent’s Revocable Trust as Part of Estate
- [7.35] In General
- [7.36] Benefits of Election
- [7.37] Eligibility
- [7.38] Making the Election
- IV. Income Tax and Estate Tax Interrelated Considerations
- Deduction for Certain Administration Expenses
- [7.39] General Description of Choice: Income Tax Deduction or Estate Tax Deduction
- [7.40] Distinguish Internal Revenue Code §642(g) Deductions and Allowed “Double Deductions”
- Analysis — Benefits and Impact of Deductions
- [7.41] Relative Marginal Tax Rates
- [7.42] Impact on Beneficiaries
- [7.43] Making the Election
- Timing Considerations
- [7.44] Cash Available for Payment
- [7.45] Assuring Income Tax Benefit for Expenses Paid
- Income Tax Deduction for Estate Tax Attributable to Income in Respect of a Decedent
- [7.46] Income in Respect of a Decedent Concept
- [7.47] Examples of Income in Respect of a Decedent
- [7.48] Internal Revenue Code §691(c) Income Tax Deduction for Estate Tax Paid
- [7.49] Computation of Internal Revenue Code §691(c) Deduction
- V. Considerations Arising from the Decedent’s Partnership and LLC Interests
- VI. S Corporation Stock Considerations
- [7.54] Allocable S Corporation Income in Year of Death
- Maintenance of S Corporation Status
- [7.55] In General
- [7.56] Decedent’s Estate as Permissible Shareholder
- [7.57] Decedent’s Revocable Trust as Permissible Shareholder
- [7.58] Trusts as S Corporation Shareholders
- [7.59] Qualified Subchapter S Trusts
- [7.60] Electing Small Business Trusts
- [7.61] Basis Adjustment at Death
- Chapter 8 — Retirement Plans and Individual Retirement Accounts
- I. [8.1] Introduction
- II. [8.2] Overview of Distribution Rules Applicable to Individual Retirement Accounts and Qualified Retirement Plans
- [8.3] Distribution Rules When Participant Dies After Required Beginning Date (Required Minimum Distribution)
- [8.4] Distribution Rules When Participant Dies Before Required Beginning Date (Required Minimum Distribution)
- [8.5] Multiple Beneficiary Rule and Separate Accounts Rule
- [8.6] See-Through Trust Status
- [8.7] Required Minimum Distribution Rules for Year of Decedent’s Death
- III. Eliminating Problem Beneficiaries
- Distribution on or Before the Beneficiary Determination Date
- [8.8] Eliminating Pecuniary Beneficiary That Would Prevent Use of Separate Accounts Rule by Distribution
- [8.9] Eliminating Beneficiaries of Trust by Distribution
- [8.10] Reformation of Trust Terms Prior to the Beneficiary Determination Date
- [8.11] Postmortem Amendments to Trust Prior to the Beneficiary Determination Date
- [8.12] Use of Qualified Disclaimer Prior to the Beneficiary Determination Date
- [8.13] Use of Disclaimer That Is Not a Qualified Disclaimer Under Internal Revenue Code §2518
- IV. [8.14] Designated Beneficiary Strategies
- [8.15] Spouse as Designated Beneficiary
- [8.16] Participant’s Spouse May Retain the Account of the Participant in the Individual Retirement Account or Qualified Retirement Plan
- [8.17] Participant’s Spouse May Roll Over to Individual Retirement Account or Qualified Retirement Plan or Elect To Treat Individual Retirement Account as Spouse’s Own Individual Retirement Account
- [8.18] Use of Net Unrealized Appreciation Treatment
- [8.19] Use of Qualified Disclaimer by Spouse To Fund Credit Shelter Trust
- [8.20] Use of Renunciation by Spouse To Effect Postmortem Change
- [8.21] Trust as Designated Beneficiary and Possible Beneficial Use of Inability of Trust To Utilize Separate Accounts Rule
- [8.22] Use of Separate Accounts Rule To Ensure Ability To Use of Life Expectancy of Designated Beneficiaries
- Non-Spouse Designated Beneficiaries
- [8.23] Net Unrealized Appreciation Treatment
- [8.24] Inherited Individual Retirement Accounts
- [8.25] Beneficiary Rollovers
- V. Charitable Beneficiary Strategies
- VI. Other Individual Retirement Account and Qualified Retirement Plan Issues
- VII. [8.32] Conclusion
- VIII. [8.33] Postmortem Individual Retirement Account and Qualified Retirement Plan Checklist
- Chapter 9 — Insurance
- I. [9.1] Introduction
- II. [9.2] Claims and Payment Options
- III. Taxation of Life Insurance Proceeds
- [9.3] Income Tax Considerations
- [9.4] Estate Tax Considerations
- [9.5] Inclusion in Gross Estate Pursuant to Internal Revenue Code §2042
- [9.6] Proceeds Paid to Executor
- [9.7] Incidents of Ownership
- [9.8] Inclusion in Gross Estate Pursuant to Internal Revenue Code §2035
- [9.9] Inclusion of Insurance on the Life of Another (Including Second-to-Die Insurance)
- Reporting Requirements and Payment of Estate Tax
- [9.10] Schedule D of IRS Form 706
- [9.11] Amount Includible in Taxable Estate
- [9.12] Alternate Valuation
- [9.13] Marital Deduction
- [9.14] Charitable Deduction
- [9.15] Payment of Tax
- IV. [9.16] Irrevocable Life Insurance Trusts
- V. Buy-Sell Agreements
- VI. [9.26] Split-Dollar Arrangements
- VII. Employee Benefit and Retirement Arrangements
- VIII. [9.30] Conclusion
- Chapter 10 — Business Interests
- I. [10.1] Introduction
- II. [10.2] Authority to Act
- III. [10.3] Operating the Business
- [10.4] Practical Difficulties
- Corporations
- [10.5] Gathering Information
- [10.6] Filling Vacant Positions
- [10.7] Determine the Status of the Corporation
- Partnerships and LLCs
- [10.8] Gathering Information
- [10.9] Filling Vacant Positions
- [10.10] Determine the Status of the Entity
- Termination of the Entity
- [10.11] Termination for Tax Purposes
- [10.12] Close of Partnership Taxable Year
- [10.13] Termination for Nontax Purposes
- [10.14] Language in Partnership Agreement or Operating Agreement
- [10.15] Uniform Partnership Act
- [10.16] Uniform Limited Partnership Act
- [10.17] Limited Liability Company Act
- [10.18] New Employer Identification Number
- [10.19] Sole Proprietorships
- [10.20] Liability
- IV. Transferring the Business
- To Sell or Not To Sell
- [10.21] Power of Sale
- [10.22] Professional Businesses
- [10.23] Other Businesses in Which the Decedent Was the Key Person
- [10.24] Trustee Duty of Diversification
- [10.25] Valuation of the Business Interest
- [10.26] Valuation
- Discounts
- [10.27] Lack of Marketability and Minority Interest Discount
- [10.28] Discount for Built-In Capital Gains
- [10.29] Other Discounts
- [10.30] Premiums
- [10.31] Buy-Sell Agreements
- [10.32] Cross-Purchase Agreement
- [10.33] Redemption Agreement
- [10.34] Hybrid Agreement
- [10.35] Rights and Obligations of Executor
- [10.36] Price
- [10.37] Internal Revenue Code §2703
- [10.38] Sales to a Trust
- Funding Bequests with Business Interests
- [10.39] Marital and Charitable Bequests
- [10.40] Marital Trusts
- [10.41] Prudent Investor Rule
- V. Tax Elections
- [10.42] Internal Revenue Code §303 Redemptions
- [10.43] Value
- [10.44] Shareholder
- [10.45] Timing
- [10.46] Type of Stock
- [10.47] Amount
- [10.48] Generation-Skipping Transfers
- [10.49] Accumulated-Earnings Tax
- S Corporations
- [10.50] Eligible Shareholders
- [10.51] Estate
- [10.52] Trusts with a Two-Year Limitation
- [10.53] Trusts After the Two-Year Grace Period
- [10.54] Qualified Subchapter S trusts
- [10.55] Electing small business trusts
- [10.56] Reform, disclaimer, or division of trust
- [10.57] Reform
- [10.58] Disclaimer
- [10.59] Division of the trust
- [10.60] Potential for Liquidation
- [10.61] Internal Revenue Code §754 Elections
- [10.62] Making the Election
- [10.63] Effect of the Election
- [10.64] Mandatory Election Under Internal Revenue Code §743
- [10.65] Exception — Income in Respect of a Decedent Items
- Internal Revenue Code §732(d)
- [10.66] In General
- [10.67] Making the Election
- [10.68] Effect of the Election
- [10.69] In General
- [10.70] Making the Election
- [10.71] Post-Death Events
- VI. Estate Taxes
- VII. [10.75] Forming New Entities
- VIII. Appendix — Forms and Checklists
- [10.76] Unanimous Written Consent of Shareholders in Lieu of Special Meeting and Written Consent in Lieu of Special Meeting of the Board of Directors
- [10.77] Checklist for Corporations
- [10.78] Checklist for Medical Practice
- [10.79] Checklist for Partnerships or Limited Liability Companies
- [10.80] Release of Trustee for Holding Business Interest
- [10.81] Small Business Trust Election
- [10.82] Qualified Subchapter S Trust Election
- Chapter 11 — Asset Protection During Estate and Trust Administration
- I. [11.1] Introduction
- II. Postmortem Asset Protection During Probate
- [11.2] To Probate or Not To Probate?
- Notice Requirements
- [11.3] Duty To Publish
- [11.4] Duty To Notify All “Known Creditors”
- [11.5] Timing for Notification by Mail
- [11.6] Duty To Search for Creditors
- [11.7] Priority of Claims
- Defending and Defeating Claims
- [11.8] Disallow
- [11.9] Defend
- [11.10] Whom Is the Claim Against?
- [11.11] Is the Claim Contingent?
- [11.12] Is the Claim Based on Oral Promises?
- Other Considerations
- [11.13] Claims Against Nonprobate Property
- [11.14] Living trusts
- [11.15] Joint tenancy accounts
- [11.16] Living trusts as tenants by the entirety
- [11.17] Substituting Estate in Existing Litigation
- III. Postmortem Asset Protection with Disclaimers
- [11.18] What Is a Disclaimer?
- [11.19] How Can Disclaimers Help with Asset Protection?
- Requirements for Validity
- [11.20] Federal Requirements
- [11.21] State Requirements
- [11.22] Form of Disclaimer
- [11.23] Delivery
- [11.24] Timing Issues
- Limitations When Using Disclaimers
- [11.25] Bars to Disclaimer
- [11.26] Illinois Probate Act of 1975: General Bars to Disclaimer
- [11.27] Omnibus Reconciliation Act of 1993: Bar to Disclaimer for Public Aid Recipients
- [11.28] Supreme Court: Bar to Disclaimer for Federal Tax Liens
- [11.29] Other Limitations on Use of Disclaimer
- [11.30] Personal Representative or Other Fiduciary
- [11.31] Bankruptcy
- [11.32] Fiduciary Concerns
- IV. [11.33] Postmortem Asset Protection for Special Recipients
- V. Postmortem Asset Protection in Trust Funding
- [11.40] General Considerations and Assumptions
- Asset Selection
- [11.41] Initial Funding Considerations
- [11.42] Conventional Wisdom
- [11.43] Funding Marital Trusts To Maximize Asset Protection
- [11.44] Additional Considerations for Family Trusts and Descendants’ Trusts
- Trust Changes
- [11.45] Situs and Governing Law
- [11.46] Changing Trust Terms
- [11.47] Construction or Reformation Actions
- [11.48] Virtual Representation Agreements
- [11.49] Trust Protectors
- [11.50] Trust Mergers
- [11.51] Trust Decanting
- [11.52] Changing Fiduciaries
- [11.53] Creation of Holdings Entity for Asset Management
- [11.54] Inherited Individual Retirement Accounts
- VI. [11.55] Conclusion
- VII. Appendix — Sample Forms
Authors
- Jared R. Cloud
Jared R. Cloud
Jared R. Cloud is a Partner at McDermott Will & Emery LLP in Chicago, where he focuses his practice on estate and trust litigation. He is a fellow of the American College of Trust and Estate Counsel, a member of the Chicago Estate Planning Council, and a Past Chair of the Chicago Bar Association’s Trust Law Committee (2015 – 2016). Mr. Cloud received his B.A. from the University of Chicago and his J.D. from the University of Chicago Law School.
- Stephen A. Frost
Stephen A. Frost
Stephen A. Frost is Of Counsel to Huck Bouma PC in Wheaton, where he focuses on business and estate planning. He is a member of the Illinois State, DuPage County, and Chicago Bar Associations. He teaches estate and gift taxation as an adjunct professor at DePaul University Graduate School of Business and trust and partnership law annually as a visiting professor at Vytautas Magnus University Law School in Kaunas, Lithuania. Mr. Frost received his B.S. from Iowa State University and his J.D. from the University of Iowa College of Law.
- Raylene DeWitte Grischow
Raylene DeWitte Grischow
No bio available.
- Kim Kamin
Kim Kamin
Kim Kamin is the Principal and Chief Wealth Strategist Member at Gresham Partners, LLC, in Chicago. She leads the development and implementation of estate, wealth transfer, philanthropic, educational, and fiduciary planning activities. Ms. Kamin is a Regent of the American College of Trust and Estate Counsel, serves on the Editorial Advisory Board of Trusts and Estates Magazine, is an adjunct professor at the Northwestern University Pritzker School of Law, where she was awarded the William M. Trumbull Lectureship, and is Past President of the Chicago Estate Planning Council. Ms. Kamin received her B.A. with distinction and departmental honors from Stanford University and her J.D. from the University of Chicago Law School.
- Stuart J. Kohn
Stuart J. Kohn
Stuart J. Kohn is a Partner and leads the Trusts & Estates Group at Levenfeld Pearlstein, LLC, in Chicago. He concentrates his practice in estate, gift, and income tax planning and business succession planning matters and has significant experience in complex estate and trust administration matters. He is a member of the American College of Trust and Estate Counsel. He is a Past Chair of the Executive Committee of the Chicago Bar Association’s Trust Law Committee and served as President and former member of the board of directors of the Greater North Shore Estate and Financial Planning Council. He is a member of the Illinois and American Bar Associations. In 2009, 2016, and 2017, he was named as a Leading Lawyer, in addition to being an Illinois Super Lawyer from 2007 – 2019. Mr. Kohn received his B.B.A. from the University of Michigan and his J.D. from Loyola University Chicago School of Law.
- James M. Lestikow
James M. Lestikow
James M. Lestikow is a Partner at Hinshaw & Culbertson LLP, in Springfield, where he concentrates his practice in estate planning, business transactions, and commercial real estate. He is a Fellow of the American College of Trust and Estate Counsel and has served on its Asset Protection Committee. He is the Vice Chair and a member of the Board of Directors of IICLE®. He is also a member of the American, Illinois State, and Sangamon County Bar Associations and the standing Advisory Committee to IICLE® for estate planning programming and publications. Mr. Lestikow received his B.S. from Northern Illinois University and his J.D. from the University of Illinois College of Law.
- John G. Moore
John G. Moore
No bio available.
- Michael E. Morden
Michael E. Morden
Michael E. Morden is a Partner at Honigman LLP, in Chicago, and focuses his practice on private clients. Mr. Morden received his B.A. from the University of Michigan, his LL.M. from the New York University School of Law, and his J.D. from the University of Michigan Law School.
- Marcia L. Mueller
Marcia L. Mueller
No bio available.
- Jason S. Ornduff
Jason S. Ornduff
Jason S. Ornduff is a Partner with Harrison & Held, LLP, in Chicago, where he counsels high-net-worth individuals and families on estate and gift planning, estate and trust administration, and tax issues and also counsels closely held companies on various legal issues, especially in the areas of succession planning and corporate taxation. He has spoken and written extensively for many publications and organizations. He is a Fellow in the American College of Trust and Estate Counsel (ACTEC). He is also Past President of the Greater North Shore Estate and Financial Planning Council and a member of the Chicago Estate Planning Council. Mr. Ornduff received his B.A. from the University of Illinois at Urbana-Champaign and his J.D. from the University’s College of Law, where he was Executive Editor of the Elder Law Journal.
- Sarah Delano Pavlik
Sarah Delano Pavlik
No bio available.
- Natalie M. Perry
Natalie M. Perry
Natalie M. Perry is a Partner at Harrison & Held, LLP, in Chicago, where she concentrates her practice in estate planning, estate and trust administration, business succession, estate and trust litigation, and tax planning. Ms. Perry is a Fellow at the American College of Trusts and Estate Counsel and is on the Chicago Estate Planning Council. She is also a Certified Public Accountant. Ms. Perry received her B.S. from Indiana University and her J.D. from DePaul University College of Law.
- Charles A. Redd
Charles A. Redd
No bio available.
- Stacy E. Singer
Stacy E. Singer
Stacy E. Singer is the National Practice Leader for Trust & Wealth Advisory Services for The Northern Trust Company in Chicago. She is a Fellow of the American College of Trust and Estate Counsel, a board member for IICLE®, Past President of the Chicago Estate Planning Council, and a frequent speaker for the Heckerling Institute on Estate Planning, the Notre Dame Tax & Estate Planning Institute, the Chicago Estate Planning Council, IICLE®, and ACTEC. Ms. Singer received her B.A. from the University of Michigan and her J.D. from the University of Michigan Law School.
- Eileen B. Trost
Eileen B. Trost
No bio available.
Postmortem Estate Planning (ARCHIVED 2014 EDITION)
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