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Law Offices of Givner & Kaye Newsletter | March Issue
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In their estate plan some parents want their children to get the assets, after both parents are gone, immediately. Other parents want to have the assets held in a perpetual trust for the maximum estate tax and creditor protection. The vast majority of parents decide on a variation of "birthday" clauses, e.g., 1/3rd at ages 25, 30 and 35.
There is an "in-between" approach referred to as a beneficiary controlled trust. This format provides for the assets to be held in perpetual trust for the child, but for the child to have these powers: (i) the child can, at any time, remove the trustee and name a new one; and (ii) the trust's assets must be contributed to a single member LLC of which the child is the non-member manager. This structure can be created in a manner which is either more, or less, restrictive. If the parents want more control, then the trustee can be a large corporate trustee, and if the child removes the trustee the child can only name another large corporate trustee. On the other hand, if the parents want the structure to be less restrictive, they can allow the child to name anyone as trustee.
If you wish to discuss an alternative format for distribution to your heirs, please give us a call. This is only one of many formats worth considering.
Best regards,
Bruce Givner
Owen Kaye
Kathleen Givner
Neda Barkhordar
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Featured Article: Why Is The Franchise Tax Board More Difficult Than The IRS?
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Some taxpayers and tax advisors think that the FTB professionals are simply not as nice as the professionals at the IRS, and that is the reason why dealing with the FTB is more difficult. That is simply untrue. The overwhelming majority (probably 99%) of all the people who work at both agencies are nice, thoughtful professionals, just like most of your friends.
There is a structural reason why it is more difficult to deal with the FTB. To understand you must first understand the Nirvana of the Federal Tax System. There are essentially three levels to the Federal Tax System: (i) the auditors; (ii) IRS Appeals (Nirvana); and (iii) Tax Court. The auditor's job (this is also true with the FTB) is to determine the law and apply the facts. It is not the auditor's job to "make deals." Once the auditor makes a determination, the taxpayer can agree and pay the tax; or can disagree. If the taxpayer disagrees, one way or the other the taxpayer will end up in IRS Appeals. The job of IRS Appeals is to keep taxpayers out of Tax Court. That is an important job because there are only 19 Tax Court judges and because taxpayers do not have to pay the tax to have their day in court. So IRS Appeals is very efficient in doing its job: it settles something like 95% of all cases.
The problem with the FTB system is that there is no corollary to IRS Appeals. The FTB does not care if the taxpayer goes to court. There are literally hundreds of Superior Courts in the State of California, and a taxpayer has to pay the tax and sue for a refund to have his or her day in Court. That is the fundamental, structural reason, why dealing with the FTB is significantly more difficult than dealing with the IRS: the FTB has no incentive to compromise.
So, if you have a deficiency in an IRS audit, you can have hope of reaching a compromise. By contrast, if you have a deficiency in an FTB audit, you are - more likely than not - going to have to pay the tax (unless the dollar amount is in the millions of dollars, making it worthwhile to spend $250,000 to wage a battle in Superior Court).
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YouTube Videos
We post new videos on YouTube each week filled with advice and tips. For more, click here.
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| Attorney Spotlight: Upcoming Engagements |
On May 4 Bruce will be speaking to the Pasadena Discussion Group of the L.A. Chapter of the California CPA Society on "Tax Planning for the Sale of Real Estate or a Business: Two Plus Years In Advance Is Best."
On May 7 the firm's Thursday Insight Series - from 2:30 to 4, both in the office and televised over the internet - will be on "Everything You Always Wanted to Know About Section 482 and Transfer Pricing Problems" with Bruce.
On May 21 the firm's Thursday Insight Series - from 2:30 to 4, both in the office and televised over the internet - will be on "Everything You Always Wanted to Know About The IRS Offshore Voluntary Disclosure Program and Foreign Bank Accounts" with Neda Barkhordar, Esq. of our firm.
On May 26 Bruce will be doing a nationally televised webinar for the Clear Law Institute on Retirement Plans For Nontaxable Estates.
On September 26 Bruce will be speaking to the Santa Barbara Paralegal Association on "How Parents Keep Control Both During Their Lifetimes And After They Are Dead."
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Bruce Givner & Owen Kaye |
Upcoming Thursday Insights Series Seminar:
Everything You Always Wanted to Know About Section 482 And Transfer Pricing Problems (And the Related International Tax Planning Opportunities) But Were Afraid to Ask with Bruce Givner, Esq.
Details to follow!
May 7
2:30pm-4pm
Join us in the office or online via webinar, where you can watch the folks in the room listen to and question Bruce.
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The IRS is now actively auditing 7 captive insurance company managers. Over the next few years the rules regarding Section 831(b) (A.K.A. "micro" or "wealth") captive insurance companies will, due to these audits, become clearer. Until then caution must be the watchword. Conservative premiums and dealing with only the strongest managers must be your guide.
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 For almost four decades, our experienced Los Angeles estate planning, asset protection and expert tax attorneys have met each client's unique planning needs by collaborating with our longtime partners - attorneys, accountants, business managers, financial planners, stockbrokers and insurance professionals. Contact Givner & Kaye today! |
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