Three of our attorneys recently returned from Florida after attending the week-long Heckerling Institute on Estate Planning. This annual conference, run by the University of Miami's School Law, is now in its 47th year and is perhaps the foremost educational opportunity available to estate planning attorneys nation-wide.
This year, the primary focus was on the estate and gift tax aspects of the American Taxpayer Relief Act of 2012 ("ACTA"), which Congress passed a few hours after midnight on January 1, 2013. While ACTA made few actual changes to the existing estate and gift tax statutes, the new law finally resolves the debate over whether to repeal these taxes. For the first time in 12 years, a stable estate tax environment prevails, which translates into greater certainty for estate planners and more peace of mind for our clients.
Stability, however, should not be confused with permanence, especially considering the budgetary problems facing the Congress. Many presenters at the conference expressed concern that Congress may still impose new restrictions on taxable gifts before the year is out. Gifting techniques considered ripe for reform include:
- Sales to intentionally-defective grantor trusts (IDGTs);
- Gifts to grantor retained annuity trusts (GRATs);
- Valuation discounts for interests in family limited partnerships (FLPs); and
- Perpetual exemption from the tax on generation-skipping transfers (GSTs).
- Anyone still contemplating making large taxable gifts as part of their overall estate plan might benefit by acting sooner rather than later.
Gift Tax Return Tsunami:
A topic of particular interest at Heckerling was the substantial number of large gifts made near the end of 2012 and the equally substantial number of gift tax returns to be filed by April 15. The IRS faces a daunting challenge just to process the anticipated returns, thus placing a premium on filing a return that is free of any "red flags." The Law Office of Jane Frankel Sims regularly prepares such returns; we are well-versed in all of the legal concepts involved. Clients who regularly rely on a CPA or other non-attorney professional to prepare their gift tax returns are strongly urged to seek the assistance of an experienced attorney, even if only for this one year. The stakes are high, and as the Midas Muffler Man used to say "You can pay me now, or pay me later."
Some of the more fascinating seminars at Heckerling dealt with the unexpected impact of now-familiar technologies. Assisted reproduction has made it possible to conceive a child after the death of one (or even both) genetic parents, often with surprising legal results. For example, if a child is not conceived "during the marriage" of the parents, the normal presumptions of paternity do not apply. Should the child be permitted to inherit from the father? What if the child is born years after the inheritance was already paid to the conventionally-conceived children?
Digital Assets: An entirely different set of challenges surrounds "digital assets," which would include a Facebook account, digital books and music downloaded through an Amazon account, or even a valuable domain name purchased through a GoDaddy.com account. The terms of service governing these accounts (which nobody ever reads) may not allow anyone else to access the account on behalf of the original account owner, even after that person becomes incapacitated or dies. Under those circumstances, a guardian or an executor would have no legal right to demand access and might commit a federal felony by signing on using the owner's username and password. And, even if federal law is changed, the challenge remains of how best to get that private information into the hands of the person who will later serve as the guardian or executor. This is a rapidly-evolving field of law, but one that perhaps is not evolving rapidly enough.