Friday, January 31, 2014

Under the portability rules a surviving spouse can elect to have the deceased spouse’s unused estate tax exemption (currently $5.34 Million) added to the surviving spouse’s estate tax exemption amount. But to do this, a federal estate tax return has to be filed within 9 months of the death of the first spouse, even if there is no taxable estate for estate tax purposes. The federal estate tax return is the only way to take advantage of the portability election.  The nine month time limit has proved to be an issue in regards to same-sex spouses, whose marriages were not recognized by the IRS until the Windsor decision on June 26, 2013.  Click here, here, and here to read about the Windsor decision. We believed the Windsor decision may have opened the door to the otherwise “late” portability elections for same-sex spouses, but were not sure how the IRS would treat an otherwise late return for this purpose.

Good News! Now, for deaths of same-sex couples that occurred in 2010, 2011, and 2012, Rev. Proc. 2014-18 provides a process for claiming portability for any spouse, same sex or not, who died between December 31, 2010 and December 31, 2013, even if otherwise a “late” election. (more…)

Tuesday, January 28, 2014

Yesterday, the IRS released Rev. Proc. 2014-18, which provides a simplified method for certain taxpayers to obtain an extension of time to make a “portability” election, allowing a surviving spouse to apply a deceased spouse’s unused exclusion amount (deceased spousal unused exclusion amount, or DSUE amount)  to the surviving spouse’s subsequent transfers during life or at death.  For more discussions on portability, see our prior posts herehere, here, here and here (can you tell portability has been a hot topic in recent years?)

Under section 2010 (c)(5)(A) of the Code, a portability election must be made on a timely filed Form 706 (Estate Tax Return).  If an executor would not otherwise be required to file an Estate Tax Return, the executor may file for an extension of time under section 301.9100-3 to make the portability election.  In general, such an extension will be granted if the taxpayer establishes that the taxpayer “acted reasonably and in good faith and that the grant of relief will not prejudice the interests of the government.”  In Revenue Procedure 2014-18, the Service sets forth a simplified method to obtain such an extension, if certain requirements are met. (more…)

Monday, January 27, 2014

A program related investment (PRI) is a powerful tool for a private foundation to positively influence social enterprise while advancing its philanthropy and satisfying its 5% annual minimum distribution requirement.
Traditionally, private foundations have used grant-making activities as the primary means to satisfy their 5% annual minimum payout requirement and to accomplish their tax exempt purposes. However, modern trends reveal a new focus of private foundations on PRIs to achieve the same results.

What is a PRI?

A PRI is an investment, rather than a grant, whose primary purpose is to achieve one or more of the private foundation’s tax exempt purposes and no significant purposes of which is the production of income or the appreciation of property. However, the fact that an investment produces significant income or capital appreciation is not conclusive evidence that income or appreciation was a significant purpose of the investment, and, therefore, does not preclude the investment from being a valid PRI. As a practical matter, many PRIs produce income or capital appreciation. The test is whether the production of income or capital appreciation is a significant purpose of the investment over the tax exempt purposes of the investment. As long as the tax exempt purpose of the investment is strong, the production of income or capital appreciation should be viewed as a mere ancillary benefit.

A PRI is also a great benefit to a private foundation. PRI counts towards a foundation’s qualifying distributions just as if they were grants and are exempt from the excess business holdings tax (imposed on foundation investments that exceed 20 percent of a for-profit venture) and the jeopardizing investment tax (imposed on investments that jeopardize the tax exempt purposes of a foundation).


Friday, January 24, 2014

The 7520 rate for February 2014 has increased to 2.4%.

The February 2014 Applicable Federal Interest Rates can be found here.

Friday, January 24, 2014

Recently, a man who died in Tennessee left his two cats a life interest in his estate. Upon the death of the surviving cat, the remaining estate will pass to the man’s family. Comments on the internet have focused on the cats’ safety, which reminds me of the old Disney move, The Aristocats, where a wealthy old lady leaves her estate to her cats for their lives and the remainder to her butler. After the will is drawn up, the butler tries to dispose of the cats, so he will inherit the estate immediately upon the lady’s death. When her cats expose the butler’s plan, with the aid of several other animals, the lady writes him out of her will and adds the animals that helped save her cats into her will.  You can read more about the Tennessee Aristocats here.

Leaving one’s entire estate to the pets is somewhat extreme. However, most people want their pets cared for after their death. For many reasons, it is important to make such arrangements in your estate planning documents for your current pets and any future pets.

Most people consider their pets members of the family, but under the law, pets are property. Pets are, of course, a special kind of property that require you to make decisions regarding their care and the funding for such care. Thus, you must decide who is best suited and qualified to care for your pets, what amount of money will be needed to care for your pets, and how you want to leave your pets and any money for their care, outright or in trust. (more…)

Wednesday, January 22, 2014


Northern District of Oklahoma Chief Bankruptcy Judge Terrence L. Michael’s introduction to the opinion in In re Harrison (2013 WL 6859303) serves as a good introduction to this post:

Whether for carpentry or estate planning, it is usually a good idea to use the right tool for the job. Unfortunately, when it comes to estate planning and asset transfer, people are often ill-informed about the tools available to them and the perils of choosing the wrong one. If a parent wants to gift an asset to a child only upon the parent’s death or incapacity, state law provides tools to accomplish that end. Unfortunately, use of the wrong tool could unwittingly result in a present transfer and the unintended loss of the asset.


Wednesday, January 15, 2014

Need a New Year’s resolutions to kick start 2014? Here is an idea you probably hadn’t considered: review your estate planning documents.

If you are like most people, you are probably thinking that reading legal documents does not sound like an even remotely enjoyable way to start a new year. But, it doesn’t have to be as unpleasant as it sounds. Reviewing your documents does not mean you have to read them cover to cover. If you know what are the most important elements, it is easy to review your will, trust, and powers of attorney regularly to ensure they still comply with your wishes. These documents not only determine who will receive your property when you die, but also likely determine who has the right to make financial and major medical decisions during your lifetime. Needless to say, it is important that you are still comfortable with the designations you have made.

To get you started, below is a basic checklist of items we suggest you review annually (make it a New Year’s tradition!).

1. Assess the changes in your life since you last updated your estate planning documents.

Have you gotten married or divorced? Had a child or adopted a child? Moved to a different state? Had a death in the family? Had a major financial event? Any of these life changes may affect your estate planning, and your documents may need to be revised.

2. Review your will and/or revocable trust.

Some individuals have only a will, others have both a will and a trust. In either case, one of these documents will direct where some or all of your property will go at your death. The following are the elements of these documents that are most important to review. (more…)

Monday, January 13, 2014

There is has been much talk recently about changing the New York State estate and gift tax structure. Currently, New York State estate tax is based on Federal law from 1998.  New York State imposes a state estate tax on estates valued at $1M. Just this week Governor Cuomo proposed increasing the estate tax threshold from the current $1M to $5.25M and lowering the top estate tax rate to 10% over the next four years. His hope would be that beginning in 2019, the New York State estate tax exemption would equal the Federal exemption, which is indexed to inflation.  This plan would ultimately exempt nearly 90% of estates from New York state estate tax and would eliminate any incentive for New Yorkers to move out of state and migrate to states with no estate tax imposed on its residents.


Friday, January 10, 2014

U.S. News Media Group and Best Lawyers® have released the 2014 “Best Law Firms” rankings. Our Private Client Group received Tier 1 rankings nationally, and in the Atlanta and St. Louis regions, as well as a Tier 2 ranking for Orange County, California. Bryan Cave received numerous national and metropolitan rankings in the fourth edition of this annual analysis.

The rankings of more than 11,000 law firms by practice area are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field and review of additional information provided by law firms as part of the formal submission process. All data was combined into an overall “Best Law Firms” score for each firm.

The national first-tier rankings were featured in the November U.S. News & World Report’s Money issue. The publication rankings can be viewed in their entirety at

Wednesday, January 8, 2014

zuckerbergThe Chronicle of Philanthropy recently released its list of the Top 10 biggest charitable gifts of 2013 (which is really the Top 15, since 5 gifts tied at 10th place), and do they make me wish I qualified as a charity!

Topping the list at Number 1 were Mark Zuckerberg of Facebook, and his wife, Priscilla Chan, who gifted $992.2 million of Facebook shares to the Silicon Valley Community Foundation. Number 2 on the list were Nike Chairman Phil Knight and his wife, Penelope Knight, who made a $500 million pledge to the Oregon Health and Science University Foundation.

The list continues:

3. Michael Bloomberg: $350 million pledge to Johns Hopkins University (more…)