Highlights of the 2025 Heckerling Institute on Estate Planning
Host: Jonathan I. Shenkman, President & Chief Investment Officer of ParkBridge Wealth Management (Contact: jonathan@parkbridgewealth.com)
Presenter: Kevin Matz, Esq., CPA, LL.M. (Taxation) Partner, ArentFox Schiff LLP (Contact: kevin.matz@afslaw.com)
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Jonathan Shenkman: Okay, I'm gonna give people another 15 seconds or so just to log in, and then we'll get started.
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Jonathan Shenkman: Okay, good morning. And welcome to the Park Bridge Wealth Management, Winter Webinar Series. This program is entitled Highlights of the 2025 Heckling Institute on Estate, Planning.
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Jonathan Shenkman: as always, my name is Jonathan Shankman, and I'm the president and chief investment officer of Parkbridge wealth management. In that role I serve in a fiduciary capacity to help my clients achieve their financial objectives. The goal of my programs is to bring professionals together to help them better serve their clients. This is done by educating attendees on the latest topics in wealth planning, and by encouraging collaboration between a client's attorney, Cpa. And financial advisor, where appropriate
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Jonathan Shenkman: my practice focus on working with high net worth families, businesses, and not-for-profits. I manage individual investment portfolios, trust accounts, corporate retirement plans and endowments to help my clients achieve their financial goals. In addition to the 20 or so events I run every year. I also do a fair amount of writing on the topics of investing and financial planning. You can read my work in a variety of periodicals, including Barron, Cnbc. Forbes, Kiplinger, the Wall Street Journal, and Trust and Estates Magazine to name just a few.
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Jonathan Shenkman: You can see all my work on my website at parkbridgewealth.com forward slash articles, or by following me on social media at Jonathan on money. Additionally, you can check out my weekly, podcast which is also called Jonathan money.
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Jonathan Shenkman: And you can listen on an apple spotify or wherever you get your podcast today, we're privileged to hear from Kevin Matz, partner at Aaron Fox shift based in New York, Kevin counsels, clients on wealth, transfer, planning, drafting wills, trust gifted estate income and generation, skipping, transfer, tax planning, charitable gift planning, and associated litigation as well as corporate counseling. Kevin has advised clients on entity and succession, planning, including the use of family
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Jonathan Shenkman: and limited partnerships, use of grant or retain annuity trusts transfer to irrevocable trusts involving complex valuations, qualified personal resident trusts, irrevocable life insurance trusts.
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Jonathan Shenkman: the use of charitable remainder trust and private foundations to further family planning and philanthropic objectives. Kevin is a Fellow of the American College of Trust and Estate Council chair of the New York City Bar Association, Estate and Gift Taxation Committee and the President-elect of the New York State Society of Cpas. He's also a prolific speaker and author on all the aforementioned topics.
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Jonathan Shenkman: Today Kevin will be speaking on highlights. Of the 2025 Heckerling Institute on estate planning, and with that introduction. I will now turn the program over to Kevin.
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Kevin Matz: Well, thank you, Jonathan. Hello, everyone. Good morning. So today is, as you see. February 28, th 2025, very significant. And and we'll talk about it shortly.
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Kevin Matz: Today I'm going to highlight or provide a summary of the highlights of last month's Heckerling Institute on estate planning for those of you who are not familiar with Heckerling. It is the largest single gathering of estate planning professionals in the country. It's always held in January, usually middle January. Since 2,007. It's been at the Orlando world, Marriott, and its scale is unlike anything you will otherwise see in this field.
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Kevin Matz: Typically, they have about 4,000 attendees, more than 3,000 in person. Another 1,000 via web.
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Kevin Matz: It's a it's a week long program from literally Monday morning until Friday at noon. It's a great way to network with other professionals. The the, I guess. Lobby bar area under world. Marriott is legendary there are folks there. They're a lot later than I am. But also just tremendous programming, too. So you get it to
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Kevin Matz: collaborate and network and and and connect with other professionals in the industry. Again, we're talking more than 3,000 person, more than 4,000 total, but also wonderful programming. And what I'm going to do during this next hour.
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Kevin Matz: It's just summarize the highlights of let the Cle and Cpe and ce highlights
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Kevin Matz: of last month's heckling and stood on estate planning. But I'm going to bring it, bring it current. Bring it current to this morning, in fact, because there have been some very significant developers this past week.
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Kevin Matz: including just last night, considering the corporate Transparency Act.
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Kevin Matz: and let me advance my screen. And there we are. So what I'm going to do is I'm going to talk about 16 different areas.
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Kevin Matz: and rather than go frantically through the slide deck. This slide deck is about 85 pages long. So I refer the materials to you. I'm really going to focus on the main points discussed on slides one and 2. And I'm going to start off actually going to item 7, because it's the most current corporate Transparency Act.
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Kevin Matz: and that, again is is the act of Congress that was signed into law. Back in January 1, 2021
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Kevin Matz: came effective as of January 1, 2024.
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Kevin Matz: That provides that reporting companies have to provide information
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Kevin Matz: to Finson, which is a bureau of the Us. Department of Treasury, and they have to provide information regarding so-called beneficial owners and beneficial owners is defined as individuals. Importantly, individuals who own or control these 25% of the interest in the reporting company, or were able to exercise substantial control over reporting company. Now, why is this so significant? Well.
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Kevin Matz: this was slated. This again went into effect, for newly formed reporting companies established in 2024 later, would have to file at least last year with Vincent within 90 days, unless an exception applies for disaster. Relief.
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Kevin Matz: That provision for newly formed companies is now 30 days here in 2025
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Kevin Matz: for reporting companies that were formed prior to January 1, 2024. The due date for filing was January 1, 2025. Now you'll see. January 1, 2025 is a date in a rear view window today's February 28, th 2025. Because I know a lot of folks who are going to be listening to the recording of this.
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Kevin Matz: So what happened in December, December? There was a nationwide injunction that was imposed by the Federal District Court in the Eastern District of Texas, in the so-called Texas Top Cop Shop case.
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Kevin Matz: Federal District Court, Eastern District of Texas. That said, we're we're going to enjoin the Cta Corporate Transparency Act from being enforced, and for many beneficial ownership information reports
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Kevin Matz: from having to be filed with Vincent. And we're going to. We're going to provide that in that injunctive relief.
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Kevin Matz: not just on a preliminary injunctive basis, not just against.
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Kevin Matz: With respect to the plaintiffs in the action, but also on a nationwide basis nationwide. So it essentially shut down
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Kevin Matz: Vincent's ability to require to enforce reporting. There was then another case, also Eastern District of Texas.
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Kevin Matz: Samantha Smith case that said the same thing. Now these cases were appealed Texas Top Cop Shop case, and the question was, should there be a stay of the injunction pending further appeal on the merits. The Supreme Court ultimately in Texas Top Cop Shop said there should be a stay of it, and then eventually the Samantha Smith case followed suit. So that's where we were as of
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Kevin Matz: 8 17 pm. Last night, with one further development. So Vincent then said, Okay, we're going to give you a 30 day grace period you have, until for the most part by and large, till March 2120, 25 to file your Boi reports. We recognize that that you didn't have to. It was all voluntary because of the injunctive relief that was provided.
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Kevin Matz: But we're now giving you from February 18, th rolling it forward. February 19, th rolling it forward to March 21. That is the D-day. That's where we were as of 8 17 Pm. Last night last night again for recording purposes being February 27.th
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Kevin Matz: It all changed. It has all changed, Vincent announced, and I'm signed up on a subscription basis for their alerts. So as of I checked right before right before this.
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Kevin Matz: webinar, it's still not appearing on their website, but I would assume that I would expect that it would be posted sometime later today.
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Kevin Matz: And they said, Well.
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Kevin Matz: you know what you don't have to worry about March 21st anymore, because, although it's still the deadline.
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Kevin Matz: We're not gonna issue any fines or penalties. If you don't report by that.
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Kevin Matz: and let me read to you what they they announced in their alert again. 8, 17 pm. Just last night, last night being February 27, th
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Kevin Matz: the headline Fincen, not issuing fines or penalties in connection with beneficial ownership, information reporting deadlines today, Finson announced. That's yesterday, February 27, th Finson announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership. Information Boi reports pursuant to the Corporate Transparency Act
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Kevin Matz: by the current deadlines. Again, that current deadline for the most part was march was to be March 21st 2025. No fines or penalties will be issued, and no enforcement actions will be taken, ie. That's a blanket waiver of penalties until a forthcoming. So it's not here yet. Interim final rule becomes effective and the new relevant due dates in the interim. Final rule have passed.
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Kevin Matz: This announcement continues Treasury's commitment to reducing regulatory burden on business, as well as prioritizing under the Corporate Transparency Act reporting of Boi for those entities that pose the most significant law enforcement and national security risks
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Kevin Matz: no later than March 2120, 25.
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Kevin Matz: They actually put that in bold. Vincent intends to issue an interim final rule that extends Boi reporting deadline. So again, they're saying, March 21 is off the table. They're not going to enforce it. Recognizing the need to provide new guidance and clarity as quickly as possible while ensuring that Boi, that is highly useful to important national security, intelligence and law enforcement activities is reported.
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Kevin Matz: and Vincent also says the following, Vincent also intends to solicit public comment on potential revisions to existing Boi reporting requirements.
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Kevin Matz: Vincent will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses, while ensuring that Boi is highly useful to important national security, intelligence and law enforcement activities, as well as determine what, if any, modifications to deadlines referenced here should be considered
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Kevin Matz: so a huge huge development last night, March 21st deadline is not being enforced as a blanket waiver of penalties, and Vincent, by March 21 has committed to coming out with further guidance, setting forth further deadlines, limiting, planning to limit the scope of who has to file.
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Kevin Matz: you know. So you know, if you have especially domestic entities, you might not even have to file anymore, and then also seek guidance on how to make things more finely tuned via a notice of proposed rulemaking
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Kevin Matz: very significant development. So I wanted to address that. First, st
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Kevin Matz: let's go back to item one, because this got a lot of attention to heckling.
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Kevin Matz: and, as did the Corporate Transparency Act and Boi reporting. And this, too, has a significant further development. Literally, in the last 2 days, tax legislation prospects for 2025, and the fate of 2017 tax Act.
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Kevin Matz: So the consensus ad hacker Link
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Kevin Matz: was concerned. Well, just to set, set the table on it.
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Kevin Matz: We have, of course, the Tax Cuts and Jobs Act that was enacted in December 2017, that while there are some provisions that are permanent.
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Kevin Matz: Most of its provisions are scheduled to sunset after December 31, 2025,
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Kevin Matz: December 31, 2025, and in the estate planning realm.
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Kevin Matz: There was a doubling of the exemption
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Kevin Matz: of the exclusions for estate gift and Gsd. Tax purposes. Gsd. Of course, shorthand for generous could be transfer tax purposes that increased it from 5 million as indexed to 10 million as indexed. And that amount here in 2025
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Kevin Matz: is $13,980,000,
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Kevin Matz: which means, let's call it 14 million. To make the math simple, it means that a married couple.
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Kevin Matz: the most part is able to to pass up to 28 million dollars Federal basis between spouses
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Kevin Matz: free of Federal estate gift and and Gsd. Taxes.
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Kevin Matz: Now that amount is scheduled to sunset
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Kevin Matz: after December 31 2025 to half that amount. So instead of 14 million or 13.9 9 million.
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Kevin Matz: it'll be with indexing probably a neighborhood of about 7.2 million dollars next year. That's what the law provides as of January 1, 2026. If Congress does not act.
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Kevin Matz: what happened, though well, in the election in November, the Republicans basically had a sweep
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Kevin Matz: oval office in both Houses of Congress.
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Kevin Matz: and we can look to history as to this and recent history when that last happened, was 2017 and that culminated in the Tax Cuts and Jobs Act, and that was done through a process known as budget reconciliation
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Kevin Matz: and budget reconciliation is very significant, because it allows a budget to be established
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Kevin Matz: and allows for action to be taken by Congress
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Kevin Matz: with a simple majority in the Senate.
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Kevin Matz: And again, the Republicans control the Senate and simple majority for this purpose, because they also control the oval office, and therefore the Vice President would be able to cast a deciding vote, and Ben of a tie means 50 votes.
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Kevin Matz: and that is in contrast to the ordinary rules of filibuster that
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Kevin Matz: require 60 votes for action by the Senate in order to, in order to have legislative action. So instead of 60, you only need 50. And again we look at the model of what was done. Back in 2017,
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Kevin Matz: in 2017, you had for the most part, again, a few provisions were permanent, but including in the estate gift and Gst tax realm. This also applies to the $10,000 salt limitation cap.
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Kevin Matz: We had an 8 year, Patch put in. It's scheduled to expire December 31, 2025. And why was it? 8 years?
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Kevin Matz: The answer to that is, that's all that could be fit within the the budget, and the budget was set
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Kevin Matz: at roughly 1.5 trillion dollars over 10 years, 1.5 trillion dollars over 10 years in 2017.
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Kevin Matz: So here we are. In 2025 the Republicans had the so-called trifecta in the in the recent election.
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Kevin Matz: What happens literally 3 days ago this week.
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Kevin Matz: We now have a budget resolution from the House of Representatives.
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Kevin Matz: and that budget resolution says that. Okay, we're going to permit the deficit to be increased by up to not 1.5 trillion, which, again, is a comparable from 2017. I guess you got to adjust for inflation cost of living adjustments, but rather by 4.5 trillion dollars over 10 years.
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Kevin Matz: 4.5 trillion. That is, nearly 3 times the roughly, 1.5 trillion dollars deficit cap under the 2017 tax Cuts and Jobs Act.
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Kevin Matz: Very significant. Now, the consensus at heckling was, well.
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Kevin Matz: some, you know there's a lot of concerns in Congress, including among the Republicans regarding the deficit. The 2 greatest contributors to the deficits are, or the 2 greatest spend items from year to year right now, not military spending.
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Kevin Matz: but rather number one and 2 are social security
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Kevin Matz: and debt service on the Government's debt, interest on debt.
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Kevin Matz: and much of the discussion was, well, you know we have deficit hawks within the Republican party and the like, and probably, if we get an extension
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Kevin Matz: and the consensus seemed to be Austin Bramwell, from Milbank stated, who actually used to work for the for a short period of time for the Trump administration back in 2017,
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Kevin Matz: in in Us. Department of Treasury. His prognostication was 85% likelihood, and some of the other speakers thought it was even higher, seemed to express even higher confidence. But we're probably looking at a short term extension.
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Kevin Matz: What I've heard the most, maybe 4 years, maybe 5 years.
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Kevin Matz: This completely blows it out of the water. This new development, because we're talking about tripling the cap. Now, granted, there are certain offsets there. There are commitments to that are involved that could be dollar for dollar reductions
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Kevin Matz: based upon a failure to actually have cuts in government spending and the like. But assuming that that math works out. We're talking about something that is even adjusted for inflation. Well, more than double, you know, but in terms of notional amounts, without adjusting for inflation 3 times what was done in 2017.
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Kevin Matz: Based upon upon that complete change in the playing field. I think we're not looking at just a short term extension. Right now, I think we're probably looking at something much longer term. It would not surprise me because of this development. Perhaps the
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Kevin Matz: the various components of the Tax Cuts and Jobs Act were to be made permanent, and their various views have been expressed concerning whether or not that could be done as far as how the scoring even goes into the 4.5 trillion over 10 years. But another huge post tech journaling development of an item that was discussed there.
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Kevin Matz: So much of the planning that was that was that was centered around. You know, the sunset talked about where where you have spouses, spousal lifetime, access, trust, and the like. And and you could do the planning, planning there, and various permutations so-called splittable slats
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Kevin Matz: which could perhaps not even have a have a spouse as a beneficiary day one. But perhaps have a protector, add a spouse down the road, that being the concern that with the tax Cuts and Jobs Act scheduled to expire. There is a use it and lose it. Principle that's embedded in the that's embedded in the principles involved for the exemption
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Kevin Matz: treasury in 2019, basically came out with final regulations. That said, Yeah, if you use all your extension, your exemption and you don't have something, basically, that is, that is not a completed transfer for estate tax purposes, basically a string provisions. Section 2036, as in the case of family limited partnerships. And you're
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Kevin Matz: you're not trying to be too cute with a failed, purposely failed grad or purposely flucking. Section 27. 0, 1. Regarding regarding certain rules concerning phantom gifts and the like. You're not trying to be too cute there.
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Kevin Matz: we're going to give you the benefit of the exemption. The higher the exemptions, exclusions at the time of gift or time of death.
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Kevin Matz: and unless you have these string provisions provide, there's no clawback. There's no deferred estate tax which set things up to what
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Kevin Matz: set things up to a posture of you. If you can afford to use the exemption now
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Kevin Matz: or otherwise, lose the benefit of the double exemption.
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Kevin Matz: and that was, that was the the key principle. There. Use it or lose it. If if 28 million is too much to give away. Maybe what you do is instead of gift splitting.
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Kevin Matz: you use one spouse's exemption, at least. Lock in using the entire
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Kevin Matz: 13.9 9 million amount
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Kevin Matz: here in 2025. Well, again, things. Dynamics have changed another dynamic. There has also been proposed a death tax Repeal Bill recently
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Kevin Matz: which has been signed on, I'm told, by more than 200 members of Congress again. You need a lot more to get anything passed. Do I think that's going to pass. I don't think that's going to pass, but again, it's another chip to add to the bargaining table for negotiations. But this this new expanded cap, and the way it's potentially scored.
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Kevin Matz: That that's just a game changer. And we're going to be hearing a lot more about that in the coming months.
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Kevin Matz: The consensus of Herculing was, any legislation would not get done until probably close to the finish line of the year. That's just the way Congress is. We look back at 2017 tax Cuts and Jobs Act got signed
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Kevin Matz: in late December or second half of December. We go about December 20th of 2017,
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Kevin Matz: maybe looking at something similar to that. But things seem to be hurrying up a lot lot faster now, especially with this new development, literally of this week.
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Kevin Matz: So something to watch. And again an item that was discussed very heavily at Hackerling.
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Kevin Matz: Just get my my phone just so I can monitor their time. I know we have an hour together. So another item that got a lot of attention.
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Kevin Matz: and Heckerly Marital Trust planning in particular, the Annenberg case and the Mcdougal case. People say, Why, what's so complicated about Marital Trust planning what was new about it?
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Kevin Matz: Well, we had 2 new cases that came out last year. The Annenberg case. Mcdowell case the deal with what happens
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Kevin Matz: where there's a quote where one spouse dies
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Kevin Matz: and leaves wealth. The surviving spouse in our favorite form of marital trust.
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Kevin Matz: qualified turbo interest, property, or Q-tip trust.
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Kevin Matz: and that, of course, qualifies for the estate tax barrel deduction
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Kevin Matz: and the big event. So what that does is that he has to provide income each year
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Kevin Matz: solely to the surviving spouse. There could be distributions of principle, but any distributions of principle could be made only to the surviving spouse.
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Kevin Matz: and if you do that and report it as such an estate tax return.
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Kevin Matz: you then are able to get an estate tax marital reduction allows the 1st spouse to die to control who gets what.
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Kevin Matz: on the second spouse's death you could, of course, give testamentary powers of appointment
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Kevin Matz: to the surviving spouse. But you don't have to. It allows for absolute control by the 1st spouse to die
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Kevin Matz: concerning who who gets the remainder. Interest in this Q-tip in the Q-tip Trust when the surviving spouse dies.
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Kevin Matz: But there's a flip side to it.
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Kevin Matz: Code has a provision called that's a section 2519, section 2519, in the to revenue code. That says, Okay, we're going to give you the benefit
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Kevin Matz: of this marital deduction.
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Kevin Matz: But you can't do anything that compromises
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Kevin Matz: the setup that you have here, and the regime that you have here. So if you surviving spouse.
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Kevin Matz: if you make a gift of your income interest again. Surviving spouse gets the entire, all the income each and every year at least, payable at least annually, for life.
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Kevin Matz: and you gift it away to anyone. We're gonna deem that basically on a phantom transfer basis, we're going to deem it to be a gift
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Kevin Matz: of the remainder interest.
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Kevin Matz: And if there's a hundred 1 million dollars in the Trust, and that's remainder interest.
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Kevin Matz: In addition to the ordinary gift tax principles that would apply to the gift of the income interest. We're going to deem you to be making a gift of a hundred 1 million dollars
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Kevin Matz: even if you didn't.
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Kevin Matz: So 2519 is a very blunt instrument, and that's what the Irs invoked
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Kevin Matz: in the Annenberg case, the Mcdougal case, Annenberg case.
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Kevin Matz: There was one key difference in the fact. So Anna Burke case you have had this surviving spouse. And she then got together
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Kevin Matz: with the kids and said, Okay, let's add this plan here.
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Kevin Matz: And essentially, the plan is, you know, we're going to terminate the trust kids. You're going to consent termination, the remainder interest.
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Kevin Matz: It's all gonna go to me, the surviving spouse. And then what I'm going to do is I'm gonna then sell the assets or a good chunk of the assets that I've received
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Kevin Matz: over to A to a trust being established for you.
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Kevin Matz: and you'll pay for it. Trustee will pay for it, issuing a promissory note at the applicable Federal rate.
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Kevin Matz: Now, why is it advantageous to the kids. Well, if the surviving spouse
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Kevin Matz: lives a long period of time.
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Kevin Matz: the remainder interest doesn't get paid out to the kids
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Kevin Matz: until way way down the road again in order to have a Q-tip barrel. Trust
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Kevin Matz: the only beneficiary during lifetime. The surviving spouse can be
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Kevin Matz: the surviving spouse, and no one else.
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Kevin Matz: So you know, the kids consented to this because there was a plan in place.
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Kevin Matz: Irs does not like plants, and they've been successful.
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Kevin Matz: especially when spouses are involved serving a straw persons. The small Dino case, going back a couple years ago
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Kevin Matz: is an example that and the Irs said, We're gonna deem this to be a termination
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Kevin Matz: of this Q-tip marital Trust and section 2519 applies, and therefore the entire amount
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Kevin Matz: is subject to gift tax.
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Kevin Matz: Pay up now 40 cents on the dollar.
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Kevin Matz: So there was litigation on this in tax court decision that came out in May of last year.
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Kevin Matz: Task Court held in favor of the taxpayer favor the surviving spouse.
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Kevin Matz: saying, Well, there was a yes, there was a transfer.
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Kevin Matz: There was a transfer which could potentially trigger section 2519.
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Kevin Matz: But who was the transfer from the transfer was from the Marital Trust, which is deemed to be owned by the surviving spouse to whom to the surviving spouse.
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Kevin Matz: And we're not going to be concerned with the fact that maybe there was a subsequent transfer.
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Kevin Matz: We're not Court said we're we're not gonna look any further. There was a transfer from
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Kevin Matz: the deemed spouse, the Q-tip marital trust to the surviving spouse. It may have been a transfer, but it's not a gift, unless the transfer is from one person or deemed person to another person.
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Kevin Matz: because it was from effectively the surviving spouse and trust the surviving spouse. Individually
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Kevin Matz: there is no gift. 2519 does not apply for that reason.
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Kevin Matz: Taxpayer wins.
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Kevin Matz: Mcdougal case had similar facts, but the Irs was a little bit more clever in how they structured it, their arguments.
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Kevin Matz: and in the Mcdougal case the Irs made the exact same thing. It was. It was the husband who was surviving spouse here a gentleman by the name of Bruce Mcdougall
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Kevin Matz: and the Irs said, Okay, hold on a second. So we're we're making the same argument here and the tax court again, citing the Annenberg case. The old case came out September 2024.
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Kevin Matz: Annenberg case was, no, I'm sorry. Yeah. Annenberg case was May 2024. Irs made the same argument. Court said, we've already decided this.
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Kevin Matz: We decided less than 4 months. About 4 months ago, in the Annenberg case.
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Kevin Matz: Taxpayer wins 2519 doesn't apply. But hold on a second.
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Kevin Matz: The Irs is making a second argument here, and that second argument
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Kevin Matz: is that there was a gift by the kids to the surviving spouse.
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Kevin Matz: How so?
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Kevin Matz: Well the kids consented to the termination of the Q-tip marital trust.
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Kevin Matz: and in doing so they surrendered all their rights in the trust remainder interest to their dad.
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Kevin Matz: And yeah. Their dad may have gone ahead and sold and then sold assets that were in his own name over to a grant or trust for the benefit of the kids.
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Kevin Matz: But we're not going to collapse those steps here bottom line is looking at the form of it. The kids gave up a right. They didn't have to give up by consenting to the termination. The Q-tip Trust
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Kevin Matz: and the transfer of the assets, and because they gave up their remainder interest.
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Kevin Matz: we think, Tax Court said. It's a gift.
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Kevin Matz: Now we question what's the amount of the gift. I believe there's about 60 million dollars in trust, is it up? 60 million dollars?
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Kevin Matz: What if question, what? What if there are powers of appointment that the surviving spouse has that could essentially divest the remainder interests of children of what they would otherwise receive in favor of someone else.
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Kevin Matz: How does that work?
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Kevin Matz: Not an issue? For the court Court said, it's a gift.
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Kevin Matz: and from what I understand this is right. The this is continuing litigation. There are depositions dealing with the valuation issue of how much that gift is but very significant.
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Kevin Matz: and that was sort of an overarching theme.
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Kevin Matz: You know, as far as the iris has been very aggressive.
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Kevin Matz: And it's been making arguments that you know, by consenting to something waiving one's rights, failing to object
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Kevin Matz: to actions by trustees could also be in the context of decanny potentially.
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Kevin Matz: That's a gift. And the Irs is saying, well, we're not going to decide what what amount it is that's to be determined.
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Kevin Matz: But if he can't figure it out, could be everything in the trust. 100 million dollars trust could be that
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Kevin Matz: valuation principles will apply. Now that actually is, is a principle that was discussed heavily at last year's hackerling concerning a chief counsel advice. I'm going to just jump down to item 6. And that chief counsel advice is 202-35-2018.
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Kevin Matz: And it was a ubiquitous item of discussion
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Kevin Matz: completely pervaded this year's Heckling Institute on estate planning as well.
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Kevin Matz: and that chief counsel advice. Well, let me just tell you what a chief counsel advice is.
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Kevin Matz: and I'll tell you what it is by telling you what it's not.
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Kevin Matz: It's not a regulation, it's not a revenue ruling.
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Kevin Matz: It's rather advice from the National Irs's national office
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Kevin Matz: to examining attorneys and auditors in the field in the context here of of a gift tax audit as to from a litigation perspective, and Stephanie Loomis Price, in the concluding session of Heckerling, did a wonderful job framing it. This is a litigator's position.
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Kevin Matz: This is not a revenue rule. This is simply a litigator's position, the litigator being the Irs as to what they think the gift task consequences are
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Kevin Matz: of giving up interest
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Kevin Matz: in a trust in this at Cca. Chief counsel, advise 202-35-2018.
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Kevin Matz: There's a gift. Has consequences of modifying a grant or trust to add a tax. Reimbursement cost.
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Kevin Matz: Now, just to set the stage here
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Kevin Matz: we estate planners, love planning with Granar trust, so-called intentionally defective grantor trust irrevocable trust that our Grantor trust
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Kevin Matz: why do we love it? Because it gives us the and our clients the best of both worlds.
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Kevin Matz: We plan with a trust that is designed to be outside of one's taxable state for a State gift and Gsd. Tax purposes the other side of the so-called proverbial tax fence.
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Kevin Matz: But for income tax purposes it's still one and the same as a grandeur.
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Kevin Matz: and that produces 2 very significant consequences. First, st consequence, it means that
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Kevin Matz: under revenue ruling 85, 1385, 13. If you have transactions between the Grantor and the Grantor Trust.
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Kevin Matz: they're tax nothings. They're disregarded. If I sell assets
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Kevin Matz: just like what was done in the by the surviving spouse in the Annenberg and Mcdowell case to a Granor Trust.
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Kevin Matz: and it's paid for with a promissory note. Does the sale generate capital gain?
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Kevin Matz: No, because it's selling to oneself and revenue ruling 85. Dash 13 says.
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Kevin Matz: don't recognize no realization on a sale of oneself between a grantor and a Grantor's trust.
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Kevin Matz: What about the interest on the promissory? No. Does that produce taxable income each and every year?
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Kevin Matz: Not if it's a grant or trust? Again, revenue ruling 85 to 13. It's a tax. Nothing. But it's the other side of the tax fence for state gift and Gsd tax purposes, which means all the growth
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Kevin Matz: occurs outside the tax fence, even though you could have transactions with it. That are tax tax nothings.
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Kevin Matz: Another consequence is because it's a grant or trust
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Kevin Matz: grantor. As long as the grantor doesn't give up a grant or trust trigger bears the income tax consequences
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Kevin Matz: of the assets in the trust, which means. Let's say there are sales of securities. Let's say there's interest. There's dividends. Other sources of income
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Kevin Matz: is the Grantor Trust itself taxed.
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Kevin Matz: No, it's the grantor who's taxed on it and revenue ruling 2,004 64 says
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Kevin Matz: that's simply tantamount to the grantor discharging his or her own income tax liability. That's not a gift.
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Kevin Matz: Economic consequences of that is, that is a tax-free gift. Year to year.
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Kevin Matz: You could be paying a million dollars
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Kevin Matz: of income taxes on the gains generated by sales in the intentionally defended grant or trust?
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Kevin Matz: And does that produce any tax
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Kevin Matz: any any gift? The answer is, no, because revery, ruling 2,004, 64 says it doesn't, because it's the granor's own
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Kevin Matz: obligation. It's a grant, or trust great results.
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Kevin Matz: great results until you find a grantor who says
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Kevin Matz: I don't want to pay my kids income taxes anymore in the Grantor Trust. I'm tired of it. I'm exhausted of it. I'm going broke. I need to swap and swap out assets. Maybe borrow from the trustee for that. I don't want any of that.
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Kevin Matz: I want to switch. Turn off will not turn off the grant our trust, Trigger, but do something different. I want to add a trustee reimbursement right? That doesn't exist under this particular trust. That was the case situation the Cca.
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Kevin Matz: Add this tax reimbursement right that didn't previously exist, so that the trustee and its discretion can reimburse me
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Kevin Matz: and revenue ruling 2,004 64 says, as long as that's done without an implied agreement or a situation that exposes the grantor or the assets in the trust of the Grantor's creditors under applicable State law.
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Kevin Matz: You don't have any estate tax risk associated with it.
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Kevin Matz: So that's what was done. There was a petition to modify the terms of the Grantor Trust to give the grantor a reimbursement right that previously didn't exist.
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Kevin Matz: and the Irs National Office, in providing guidance in the field to its to its gift. Tax
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Kevin Matz: attorneys and and auditors said, You know what our position here
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Kevin Matz: is that that is a gift
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Kevin Matz: by the beneficiaries of the trust because they consented to this modification. They didn't have to.
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Kevin Matz: because they consented. They gave up their rights effectively to add
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Kevin Matz: their dad, the grantor as a beneficiary, and he previously didn't have the and have an interest doesn't matter that Dad might have said. If you you know, if you don't consent to this. I'm not going to make any more transfers to you, either during your lifetime or in the terms of my will at death
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Kevin Matz: doesn't matter.
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Kevin Matz: That's not for for money or money's worth.
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Kevin Matz: Irs National Office and Cca. Says there's a gift. How much is a gift? Well, there was some loose language
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Kevin Matz: in the Cca. That says, if we can't figure out the amount on the gift.
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Kevin Matz: it's potentially a gift of everything.
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Kevin Matz: Ouch! See a hundred 1 million dollars in her trust
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Kevin Matz: you provide this this reimbursement, add this reimbursement provision that doesn't exist either under applicable provisions of State law, such as New York has, and default provisions, or under the terms of the governing instrument.
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Kevin Matz: and all of a sudden there's a massive gift. The Cca. Then goes on and and says, Well, we think that ordinary valuation principles should be able to determine the amount of this gift.
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Kevin Matz: We don't know what it is and the method, but you know it's up to the taxpayer to figure it out and propose it, and ultimately the Irs will review it.
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Kevin Matz: So the penumbra of that, you know.
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Kevin Matz: was pervasive throughout Heckerly. Now I will tell you a couple of things. So grant our trust, planning number one. This ordinarily should not be an issue.
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Kevin Matz: So in the great State of New York. We have a default provision that says that if you have a grant or trust.
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Kevin Matz: and even if it's silent as a default, unless you override. There is a reimbursement provision that authority that the trustee has unless you negate it so the trustee can reimburse
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Kevin Matz: and and also that doesn't cause it to be deemed a self-settled trust
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Kevin Matz: for for a gift or estate tax purposes or creditor rights purposes.
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Kevin Matz: In addition, if you have a State that doesn't have that. You could build in the right to reimburse under the terms of the trust instrument.
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Kevin Matz: I'd be a little bit concerned with exercising it. That reimbursement right too many times, because then the Irs could say, this kind of like sounds like an implied agreement, and maybe a death occurs. They might assert that section 2036 applies. But you could have that right in there as a safeguard.
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Kevin Matz: even if you don't have that.
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Kevin Matz: This is even there. There's there's a terrific technique. Loans from the trustee to the grantor.
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Kevin Matz: You gotta have to bear appropriate interest. Trust. Use a fiduciary, so maybe do a little bit more than Afr and reasonable commercial rates.
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Kevin Matz: because it's a it's a grant or trust.
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Kevin Matz: There's there's no interest income to be picked up each and every year. So there's no tax return from that. The liability that's produced reduces effectively reduces the Grantor's balance sheet for estate tax purposes. So that's the way to do it not modifying Grantor Trust, but the Irs, basically its national office. And Cca put everyone on alert
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Kevin Matz: that that is the position that they're taking. And whenever there's a valuation issue.
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Kevin Matz: and they're going to be very aggressive again from a litigation perspective. And they, moreover, said in the Cca. Well, you know, the facts here involved a consent
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Kevin Matz: by the beneficiaries to a trustee's proposed action
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Kevin Matz: that effectively reduces their interest. But we, the Irs, think that that can apply the same principle would apply, not only if there's affirmative consent.
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Kevin Matz: but also there's notice to the beneficiaries and a failure to object, or perhaps
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Kevin Matz: even the context of a trust decaning.
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Kevin Matz: So lots of concern stemming from the Irs being very aggressive. Here again, valuation issues. You know what's an interest worth here, and what's the value of what was done. What if there are powers of appointment that could potentially divest a beneficiary? I guess that enters the valuation, mix something that was alluded to in the Cca.
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Kevin Matz: You know. What if that adding a beneficiary dad is a beneficiary of a discretionary trust, where the where the deemed transfer or the kids are still beneficiaries. Isn't that a self-settled trust to that extent? As to the kids? And if it's a self-settled trust.
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Kevin Matz: there's a revenue ruling 76 103 that says that it's not depending on applicable local law unless you have asset protection Trust jurisdiction that applies.
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Kevin Matz: That's not even a completed gift until the actual reimbursement occurs. And if reimbursement occurs, well, does that create a state tax inclusion risk under on 2036 a 1? But maybe maybe not, because maybe, of the bona fide sale. Exception applied Independent Trustee. Lots of applications here, but that got a lot of attention to Hacker Link.
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Kevin Matz: We had some Supreme court decisions. Item 4. You notice I mentioned litigation.
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Kevin Matz: There could be a lot more litigation happening because it's now
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Kevin Matz: initiated actually here by taxpayers, because by virtue of 2 very significant Supreme Court decisions that were handed down during 2024. It's now a lot easier for taxpayers to challenge tax regulations. The Loper, Bright case and corner post
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Kevin Matz: background here is for 40 years since 1984, through 2024,
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Kevin Matz: there was what was known as the chevron doctrine, the chevron doctrine, and that doctrine says.
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Kevin Matz: from the Chevron case, Supreme Court decision, 1984, is where you have an administrative agency
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Kevin Matz: that's construing an ambiguous Federal statute.
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Kevin Matz: We're gonna we. The courts need to defer
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Kevin Matz: to the administrative agency as long as it has a reasonable construction, the statute.
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Kevin Matz: and it might not necessarily be the best construction, but as long as it's reasonable
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Kevin Matz: we courts are supposed to defer to it.
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Kevin Matz: and that administrative, the administrative agency's construction will prevail. Now there are always exceptions when the argument is made, and it's upheld by a course upheld by a court. That construction is not reasonable. Think, in terms of the situation involving Grant to retain annuity trusts, grats, and certain and certain and the so-called Walton Grant case, and, like Circa, about 2,000,
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Kevin Matz: but by and a large as long as it's a reasonable construction, it has to be sustained.
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Kevin Matz: And that was Supreme Court precedent. And what happened? Loper, bright. Loper Bright says we're the supremes. We're the Supreme Court
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Kevin Matz: precedent. We recognize precedent, but we can throw it out the window.
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Kevin Matz: We can overturn that precedent, because we're the Supreme Court. No one else can do it. But we can.
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Kevin Matz: And we don't like this rule. We think it's a bad rule, and we think that courts
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Kevin Matz: should be allowed to scrutinize statutes, ambiguous Federal statutes.
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Kevin Matz: and reach a conclusion because it's a judicial function as to what the best construction is what the best construction is, and the administrative agency. They're just a litigant.
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Kevin Matz: That's their position. They are not to be given any deference whatsoever so completely changes the field
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Kevin Matz: concerning the ability to challenge Federal tax regulations.
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Kevin Matz: It all gets looked at. Not from the standpoint of does has the administrative agency posit or put forth
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Kevin Matz: a reasonable construction of an ambiguous statute question becomes, what is the best construction of the statute administrative agency? You're taking your position.
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Kevin Matz: opposing party plaintiff. You're taking your position. If it's if it involves taxes, it's going to be a taxpayer taking that position. The court de novo has to resolve that, and, moreover, in corner post. Well, question is, well.
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Kevin Matz: when does it have? When does the action need to be brought by the tap? By the by the plaintiff.
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Kevin Matz: What if you have a statute that was construed by administrative agency 20 years ago?
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Kevin Matz: Way beyond the statute of limitations? One would think
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Kevin Matz: well, it all depends on. When the statute of Limitations begins to run.
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Kevin Matz: And Coroner Post said, the Supreme Court said, you look at when the injury occurred to the.
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Kevin Matz: to the plaintiff to the private individual.
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Kevin Matz: and only then, when the injury occurs, the statute of limitations begin to run. And when does the injury occur in this context of of taxes.
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Kevin Matz: Well, it's when the Irs for the most part issues a notice of deficiency. Or take some action that asserts that you're going to have to pay more taxes than otherwise would based upon this construction. Only then does the statute of limitations run so long and short of it.
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Kevin Matz: But good deal discussion at acroling concerned. You're probably gonna be seeing a lot more challenges
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Kevin Matz: to Federal tax regulations by virtue of these 2 recent Supreme Court decisions in 2024, because statute of limitations is is going to be open.
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Kevin Matz: and the ability to overturn
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Kevin Matz: and administrative agencies. The Irs's Treasury's construction of an ambiguous statute has become so much easier because it's a de novo analysis with no deference whatsoever. Chevron deference is now dead.
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Kevin Matz: a category of litigation. Now, where the Irs has been very successful. And this is going back
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Kevin Matz: to really the late 19 nineties, early 2 thousands
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Kevin Matz: is section 2036 of the Internal Revenue code. This. This is item 5 right now on the
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Kevin Matz: on the key developments, disgusted hackling. And that's
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Kevin Matz: in the context. Quite often a family living partnerships. It could also be family living liability companies, Fllcs.
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Kevin Matz: And the situation is is well presented as presented itself in a state of fields
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Kevin Matz: which involved a I won't say, a deathbed, but it was a transfer via a power of attorney
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Kevin Matz: given by given by the transfer.
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Kevin Matz: a lady by the name of Mrs. Fields. No, not not the Mrs. Fields from cookies. Fame, I wish.
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Kevin Matz: but but but nevertheless, of the name of of Mrs. Fields.
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Kevin Matz: and acting via her grand nephews
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Kevin Matz: power of Attorney Power of the Grand Nephew, basically came up with a plan which occurred
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Kevin Matz: roughly 30 days before his great aunt died.
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Kevin Matz: when she had severe Alzheimer's, and he basically was the sole party signing all the documents
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Kevin Matz: to create a family living partnership.
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Kevin Matz: and he was a general partner through an entity that he formed, he contributed $1,000.
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Kevin Matz: It's not a tremendous amount acting through the the power of attorney that his great aunt gave him.
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Kevin Matz: Mrs. Fields had a transferred over 17 million dollars to this family partnership. So think capitalization
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00:50:29.130 --> 00:50:34.789
Kevin Matz: limited partner over 17 million general partner, only 1,000,
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Kevin Matz: not really a big pooling of interest there. Right?
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Kevin Matz: And she died. 30 days later. She took back a limited partnership interest.
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Kevin Matz: and on the estate tax return
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Kevin Matz: the position that was taken by the executor, who was also the grandnephew. A gentleman by the name of Mr. Milner, was, well, what did Mrs. Fields own here? Did she own the 17 million dollars more than 15 million dollars by the which was in multiple securities. No.
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Kevin Matz: she held a limited partnership interest in this in this entity.
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Kevin Matz: and our appraisers say, well, limited partnership interest is not very liquid. You can't get out of it. You can't control distributions.
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Kevin Matz: There are discounts for lack of control, lack of marketability
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Kevin Matz: totaling 36.2 5%
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Kevin Matz: through that handiwork took position that 17 million dollars got eroded down to 10.8 million dollars
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Kevin Matz: by interposing this family partnership within 30 days of death.
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Kevin Matz: The Irs, needless to say, was not amused when the audit occurred.
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Kevin Matz: and they challenged it. They challenged them. The chief weapon
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Kevin Matz: challenge, the use of family and partnerships in such context. Section 2036 on the twin revenue code
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Kevin Matz: and section 2036 has 2 separate provisions, and then a big, very significant exception.
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Kevin Matz: 2 separate provisions, 2036. a 1 says, if you transfer property, and either expressly or implicitly.
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Kevin Matz: You retain the enjoyment of that property.
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Kevin Matz: That's the trigger for state tax inclusion under 2036, a. 1,
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Kevin Matz: then section 23, 6 a 2 says, well, if you transfer property to an entity.
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Kevin Matz: and even though you don't retain enjoyment, you retain the right to designate either alone or in conjunction with other persons, so not just oneself.
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Kevin Matz: but it could
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Kevin Matz: having control, but in conjunction with other persons, and the tax court in the state of PAL case 2017 says. That's what the statute says. That's what it means.
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Kevin Matz: Hello! Or in conjunction you could have a state tax inclusion there now, the saving grace
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Kevin Matz: where taxpayers quite often will win where they do win
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Kevin Matz: is basically a factual test based upon the so-called bona fide sale exception to section 2036, and long and short of it. Bona fide sale. Exception looks at 2 things. Number one is their proper maintenance of capital accounts, based upon the pro rata allocations for properties transferred, and then, more significantly.
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Kevin Matz: is there a substantial non-tax purpose in connection with the transferring property to this entity
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Kevin Matz: and substantial non-tax purpose. Courts going back to the Bond Guard case in 2,005
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Kevin Matz: have been telling us. You know, it's a real purpose at the time of transfer, not post
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Kevin Matz: post fact, post transfer explanations that are conducted that are concocted on a theoretical basis as to why there was a benefit.
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Kevin Matz: But what were the real reasons at time of transfer. And this is this involves evidence. It involves development of facts, involves testimony and introduction of evidence concerning that.
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Kevin Matz: So tax court looked at it, they said, Well, section 23, 6. a 1 applies here.
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Kevin Matz: Why? Because Mrs. Fields was was acting through her
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Kevin Matz: relative, her grandnephew, via a power of attorney
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Kevin Matz: and it was understood, because all the documents, the limited partnership agreement and and the interest on behalf of both Mrs. Fields is limited partner, and also the the the general partner entity, which Miss Milner owned, which contributed only the minimis amount of $1,000.
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Kevin Matz: We think that it was both expressed and implied that if Mrs. Fields needed the money
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Kevin Matz: she would get it
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Kevin Matz: whenever she wanted it, and would apply not only during her life, and again she made the transfer, ultimately only 30 days, but roughly, 30 days before she would.
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Kevin Matz: was to die, and had severe Alzheimer's at that time, but following her death, if amounts needed to be paid out in bequest, including to the primary beneficiary of her estate, which was Mr. Milner, or, if amounts needed to be paid to the Irs
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Kevin Matz: to fund estate taxes, those funds would be available
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Kevin Matz: as needed, and we think, the court said, both express and applied. We think there was retained interest in 2036. a 1 court then said 23, 6, a 2. Besides that.
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Kevin Matz: look at the estate of Powell. Case 2017 task court decision. This actually itself was
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Kevin Matz: same. Analysis was also set forth in the tax court memorandum, decision, the state of strategy from 2,003, I'd say the Turner would note that the Turner case from 2,01120 12 said it as well
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Kevin Matz: that
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Kevin Matz: Mrs. Fields, as a limited partner had the ability at any point in time
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Kevin Matz: to join, together with the other partners.
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Kevin Matz: specifically the the general partner here to liquidate the entity.
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Kevin Matz: She could also, and that is an estate tax trigger. Under 2036, a 2
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Kevin Matz: could see the State of Powell 2017 full tax court. Unanimous decision in that regard.
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Kevin Matz: So the tax. So what did Mr. Milner, the executor, then argue? He said, hold on a second. Yeah, I hear you 2036, 2030, a 1 and 2030, a 2. But there's a bona fide sale, exception to 2036, and if I show you a bona fide sale.
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Kevin Matz: and the evidence supports it.
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Kevin Matz: Taxpayer wins. And here we have 4 reasons why there's a bona fide sale. This is done for credit protection reasons. We were concerned for financial elder abuse. There were documented. There was a case about 5, 6 years before before Mrs. Fields died. Where that was. That was a concern. We're concerned that the power of attorney would not be honored, and also this provide a way to for continuation of management of assets.
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Kevin Matz: And the court, looked at it
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Kevin Matz: and said, You know what these are theoretical justifications.
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Kevin Matz: We think that you did this for one reason for the discounts.
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Kevin Matz: not for substantial non-tax purpose, but to save taxes.
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Kevin Matz: and that isn't good enough. That doesn't qualify you for the bona fide sale exception.
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Kevin Matz: Yeah, there may have been another partner, but there was not a genuine pooling of interest to align with those cases where the bona fide sale exceptions have been applied because successfully invoked because of a pooling of interest. Putting in $1,000 is de minimis. That's not a pooling of interest. You can't show that there was a change in investment strategy. You can't show that this was needed to prevent interfamily disputes, such as in the Shutt case going by circa, 2,004
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Kevin Matz: taxpayer failed to make its burden.
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Kevin Matz: and the government wins, and beyond that stern admonition
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Kevin Matz: it's not simply a matter of nothing venture, nothing gain.
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Kevin Matz: What the court then went on to hold was.
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Kevin Matz: well, we're going to impose penalties.
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00:58:18.330 --> 00:58:25.259
Kevin Matz: A 20% penalty for negligence, disregard rules and regulations
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00:58:25.630 --> 00:58:31.420
Kevin Matz: because we think you should have known Mr. Milner. That was unreasonable
401
00:58:31.640 --> 00:58:37.969
Kevin Matz: to take the position that you can convert a 17 million dollar asset into 10.8 billion just by interposing
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00:58:38.430 --> 00:58:41.470
Kevin Matz: a family living partnership 30 days before death.
403
00:58:42.050 --> 00:58:46.539
Kevin Matz: and Mr. Moon was saying, but hold on a second. I relied upon advice
404
00:58:46.790 --> 00:58:51.909
Kevin Matz: of counsel. Well, the evidence didn't show that he ever asked counsel about this.
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00:58:52.360 --> 00:58:56.349
Kevin Matz: an estate, planning lawyer or other advisor about this.
406
00:58:56.590 --> 00:59:07.759
Kevin Matz: and there was also documents and evidence that showed that his own lawyer was reaching out to the appraiser, saying, How can we get a bigger discount? How can we get a bigger discount? Not a great fact.
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00:59:08.201 --> 00:59:13.179
Kevin Matz: So that's what happened there now a few other items, because my time is running short.
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Kevin Matz: Connolly, Supreme Court decision buy, sell agreements. So we had a lot of action. Supreme Court bottom line is, if you have estate tax issues, a redemption agreement is not the way to go, because the Supreme Court and Connolly resolved a disagreement between the circuits that said that if you have a a stock redemption agreement.
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00:59:35.550 --> 00:59:46.980
Kevin Matz: you do not get an offset and you have life insurance. That's funding it. That's funding the stock redemption agreement. You do not get an offset for the obligation to pay off the estate to buy out the interest.
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Kevin Matz: So instead, you're going to see a lot more discussion of this and people using when estate taxes are an issue, cross purchase agreements, including potentially life insurance Llcs which which could achieve that result. Other cases, Huffman case involved option agreement price less than fair market value.
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01:00:08.730 --> 01:00:28.179
Kevin Matz: Section 27, 0, 3 applies there, unless you can show that you qualify for the exception, including because you have have a an arrangement that's comparable to what's done between unrelated parties at arm's length. Facts of Huffman. You had a a son.
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01:00:28.530 --> 01:00:47.430
Kevin Matz: Chad Hoffman purchase for 5 million dollars under an option agreement interest in an entity that were worth was worth over 31 million dollars, the Irs said. You know 31 minus 5. That's below market purchase. That's a 26 million dollars taxable gift right there.
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Kevin Matz: Please pay up at 40 cents on the dollar gift tax taxpayers and hold on a second. We had a binding agreement, and this was done pursuant to the agreement, and that controls. But the Irs then responded, well, if you have an agreement between related parties, section 27, or 3 is a weapon to disregard it, and you have to meet certain tests, including that you have to show that it's that the agreement was comparable to what's done between unrelated parties at arm's length. Taxpayer was unable to to establish that
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01:01:17.410 --> 01:01:32.530
Kevin Matz: few more items. I will address this very quickly in the last minute or 2 that I have final regulations, the basis consistency reporting this, this concerns the Irs form 8,971. We have proposed regulations that go back
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01:01:32.890 --> 01:01:57.079
Kevin Matz: to 2016. We had a much more favorable view concerning what needs to be reported bottom line is is that there used to be a rule that that there was a 0 basis rule. If you failed to report certain items on the form, 8,971, the basis information reporting report that's due 30 days after you filed the form 706 State tax return
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01:01:57.080 --> 01:02:23.690
Kevin Matz: that has been largely eliminated. There's also much more favorable rules concerning what information you have to provide in the form 8,971 schedule A to beneficiaries. You simply have to show what's actually distributed to them as to what could potentially be distributed to them. And there's a reduction in the extent of notices that need to be provided simply now, coinciding simply have to provide further schedule A's
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Kevin Matz: to subsequent transfers only when the Transferee is itself a trust.
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01:02:29.130 --> 01:02:54.309
Kevin Matz: Final regulations. Gst tax relief provisions, basically the 9,100 relief that we that we have that says that if you fail to make an allocation of Gst exemption, or you make a mistake, and time has passed, you have to apply to the Irs, and basically explain why you made the mistake. Sometimes have an advisor fall on their own sword and explain it.
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Kevin Matz: An 8,100 relief. The Irs has discretion to grant relief. They've effectively codified that, but made it very clear that they will not tolerate being whipsawed, so that if the situation is that an opt-in or opt out of Gst, exemption wasn't made, and the irs is of the view that it was wasn't that was done in part
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Kevin Matz: to basically keep something from coming to the Irs attention until after the gift tax statute of limitations runs. And then, after you're seeking that relief, they need to know via affidavit
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Kevin Matz: exactly why that was done, and if they think they're being whipsawed they will deny it.
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Kevin Matz: Planning retirement benefits on secured act secure 2.0. We finally have final regulations, and secure importantly, in the case of beneficiaries designated beneficiaries who are subject to the 10 Year rule. They were given waivers of excise taxes for each of the past few years, separate notices that came out in 2022, 2023, and 2024.
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01:03:52.600 --> 01:04:02.320
Kevin Matz: Those waivers were good until we finally had final regulations. Well, we now have final regulations, which means that even though even though taxpayers, or even though
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Kevin Matz: there doesn't have to be a makeup or required minimum distributions to those designated beneficiaries of the 10 Year rule for taking. It doesn't be makeup for prior years. Beginning in 2025, you have to start to receive your required minimum distribution, your Rmd, each each and every year.
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Kevin Matz: Discussion per per the discussion regarding business succession planning Partner
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Kevin Matz: Tom Avendroth did a wonderful presentation there. There's also a great presentation that was done by Ellen Harrison and another panelist concerning the use of Purpose trust, sometimes using 501 c. 4. Organizations similar to what was done in the Patagonia model, which essentially put this on the map.
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01:04:50.460 --> 01:05:00.259
Kevin Matz: Discussion of Portability. Use of both Spouses. Exemptions. Clary read wonderful presentation dealing with, among other things, advantages of portability
428
01:05:00.260 --> 01:05:16.630
Kevin Matz: using Clayton Q-tips defer estate tax decisions relating to the extent you fund either a marital trust or flipping over to a family trust until you file the estate tax return, which could be done with extensions up to 15 months after death discussion of various State law developments
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01:05:17.090 --> 01:05:40.269
Kevin Matz: concerning the use of no contest clauses. Basically, they're all over the map. You have to. You have to review research what particular State law applies. In some cases they're respected. Other cases. They're not. In some cases you could have challenges that are made to remove a trustee, possibly being embraced and sustained
430
01:05:40.540 --> 01:05:56.380
Kevin Matz: as as being violative of a no contest clause which could cause a forfeiture of interest. Other courts. Other states say, no, no, that that's not the case, especially if there's a for cause challenge. So some really good materials there.
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Kevin Matz: and miscellaneous items. Well again. It was a week long series of presentations, wonderful programming international issues as well, dirt, lawyering, wonderful presentations there, Farhad, Agdami, and also Gray Edmondson in a breakout session, talking about opportunity zones and the like, and some of the nuances on the tax rules there, and with that I see I've hit the end of my time.
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Kevin Matz: and those are the highlights of Hackerly.
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Jonathan Shenkman: Great. Thank you so much, Kevin, for those informative remarks. Again, if anyone has any specific questions, new business opportunities, or any other issues, they'd like to discuss. You could feel free to reach out directly to Kevin or myself where appropriate, and I'll be sure to include his contact information in the follow up email to this program. As I mentioned at the onset, the goal of these programs stay up to date on timely wealth management, related topics
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Jonathan Shenkman: and to collaborate where appropriate. I think we can all agree that the clients who are best prepared are the ones who are served by a team of knowledgeable advisors. 3 more quick items before I let you go first.st My next Webinar is on Tuesday, March 11, th at 8 30, Am. Featuring Galia and Debbie of Ruffleman, Plc. Based in Tel Aviv and New York, and she's going to be speaking on form 3,520, reporting under the proposed regulations. So any attendees with foreign trusts or clients with foreign trusts.
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Jonathan Shenkman: this program is sure to be informative, and I'll be sure to send out an invitation to this program in the coming days. In the meantime, I'd love to continue to grow this webinar community. So if you have a friend, colleague, or client
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Jonathan Shenkman: who'd like to be notified of my upcoming webinars. They can email me with the word webinar in the subject line. And I'll add them to my webinar distribution list. My email is Jonathan at parkbridgewealth.com. Second, you can follow all my work on X and Instagram at Jonathan on money, and by connecting with me on Linkedin. You could also listen to my weekly podcast called Jonathan on money, which is available on apple, spotify, or wherever you get your podcasts and you can watch my practical planning videos, which I post several times a week
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Jonathan Shenkman: by following me on Youtube at Jonathan, on money as well. And 3, rd please take 30 seconds to fill out my survey at the end of this program. It helps me improve my webinars and provide timely and interesting content to attendees, and I thank you in advance for that. And with that this concludes today's session, please stay safe and healthy and have a wonderful day. Everybody.