Archive for the ‘Thursday Reports’ Category

The Thursday Report 3.27.14 – Humor, Referrals, and IPAs

Posted on: March 27th, 2014

New Corporate Filing Forms in Florida for 2014

Florida Supremes: Baby. Baby. Where Did Our Cap Go?

Free R-Rated Meet and Greet Cocktail Hour on April 7 – Secrets of the Megastars – With National Treasure Zev Buffman – Producer of 40 Broadway Shows

The Balanced Scorecard of an IPA

The Other IPA – A Balanced Beverage History

Jerry Hesch’s Triple Play

Attorney Humor!

Free Phone call to Improve Your Estate Planning and/or Tax Practice – For Lawyers Only

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com

New Corporate Filing Forms in Florida for 2014

 The Florida Department of State, Division of Corporations has updated the corporate filing forms for 2014.  For LLCs, the new forms comply with Chapter 605, Florida Statutes and the Department of State is no longer accepting the “old” forms.  Articles of Organization and Articles of Amendment for Florida LLCs using the “old” form will be rejected by the Department of State and it will be necessary to re-submit the filing using the new 2014 form to receive a filing acknowledgment.

 All of the new corporate filing forms are available on the Division of Corporations website (www.sunbiz.org).  From the home page, simply click on “Forms” from the top right tool bar and choose the entity type to pull up all available forms in PDF format.

Florida Supremes – Baby, Baby, Where Did Our Cap Go?

In a decision that has surprised and disappointed many of us, the Florida Supreme Court found that the 2003 medical-malpractice law $500,000 cap on pain and suffering damages violates the Equal Protection Clause of the Florida Constitution.

 The Court also found that the rationale for the Legislation in 2003 was based upon faulty conclusions by the Legislature when it determined that there was a shortage of doctors in Florida resulting from the malpractice crisis.

 Much has already been written about this case, which was released on March 13 (everybody’s lucky day!).

 The following excerpts from the Court’s decision should be of interest to those who have not read it:

 Estate of Michelle Evette McCall, et al., Petitioners,
                                   vs.
United States Of America, Respondent

 Lewis, J. – This case is before the Court to answer four questions of Florida law certified by the United States Court of Appeals for the Eleventh Circuit that are determinative of a cause pending in that court and for which there appears to be no controlling precedent.

 Because this case involves a wrongful death, we rephrase the first certified question as follows:

 DOES THE STATUTORY CAP ON WRONGFUL DEATH NONECONOMIC DAMAGES, FLA. STAT. § 766.118, VIOLATE THE RIGHT TO EQUAL PROTECTION UNDER ARTICLE I, SECTION 2 OF THE FLORIDA CONSTITUTION?

 As explained below, we answer the first rephrased certified question in the affirmative and hold that the cap on wrongful death noneconomic damages provided in section 766.118, Florida Statutes, violates the Equal Protection Clause of the Florida Constitution.

 In this case, the district court limited the Petitioners’ recovery of wrongful death noneconomic damages to $1 million upon application of section 766.118(2), Florida Statutes (2005), Florida’s statutory cap on wrongful death noneconomic damages based on medical malpractice claims.  Id.¹  The district court denied a motion filed by the Petitioners that challenged the constitutionality of Florida’s wrongful death statutory cap under both the Florida and United States Constitution.  Id.  The district court also denied the Petitioners’ motion to alter or amend the judgment.  Id. at 947-48.

On appeal to the Eleventh Circuit, the Petitioners challenged the district court’s rulings with regard to both the application and the constitutionality of the cap mandated by Florida law on wrongful death noneconomic damages for medical malpractice claims.  Id. at 948.

The Eleventh Circuit affirmed the application of the statutory cap on noneconomic damages and held that the statute does not constitute a taking in violation of article X, section 6, of the Florida Constitution.  Id. at 953.  The federal appellate court also held that the cap does not violate either the Equal Protection Clause or the Takings Clause of the United States Constitution.  Id.  However, the Eleventh Circuit granted a motion filed by the Petitioners to certify four questions to this Court regarding the remaining challenges to the statutory cap under the Florida Constitution.  Id. 

EQUAL PROTECTION

All natural persons, female and male alike, are equal before the law.  Art. I, § 2, Fla. Const.  This Court has stated “[t]he constitutional right of equal protection of the laws means that everyone is entitled to stand before the law on equal terms with, to enjoy the same rights as belong to, and to bear the same burden as are imposed upon others in a like situation.”  Caldwell v. Mann, 26 So. 2d 788, 790 (Fla. 1946).

Unless a suspect class or fundamental right protected by the Florida Constitution is implicated by the challenged provision, the rational basis test will apply to evaluate an equal protection challenge.

Having carefully considered the arguments of both parties and the amici, we conclude that section 766.118 violates the Equal Protection Clause of the Florida Constitution under the rational basis test.  The statutory cap on wrongful death noneconomic damages fails because it imposes unfair and illogical burdens on injured parties when an act of medical negligence gives rise to multiple claimants.  In such circumstances, medical malpractice claimants do not receive the same rights to full compensation because of arbitrarily diminished compensation for legally cognizable claims.  Further, the statutory cap on wrongful death noneconomic damages does not bear a rational relationship to the stated purpose that the cap is purported to address, the alleged medical malpractice insurance crisis in Florida.

The Alleged Medical Malpractice Crisis

In addition to arbitrary and invidious discrimination between medical malpractice claimants, the cap on noneconomic damages also violates the Equal Protection Clause of the Florida Constitution because it bears no rational relationship to a legitimate state objective, thereby failing the rational basis test.  See Fla. Nurses Ass’n, 508 So. 2d at 319.

The Florida Legislature attempted to justify the cap on noneconomic damages by claiming that “Florida is in the midst of a medical malpractice insurance crisis of unprecedented magnitude.”

In enacting the statutory cap on noneconomic damages, the Legislature relied heavily on a report prepared by the Governor’s Select Task Force on Heathcare Professional Liability Insurance (Task Force), which concluded that “actual and potential jury awards of noneconomic damages (such as pain and suffering) are a key factor (perhaps the most important factor) behind the unavailability and un-affordability of medical malpractice insurance in Florida.”  Report of Governor’s Select Task Force on Healthcare Professional Liability Insurance (Task Force Report) (Jan. 29, 2003), at xvii.

To evaluate the constitutionality of the cap on noneconomic damages imposed by section 766.118, we are not required to accept the findings of the Legislature or the Task Force at face value.

Our consideration of the factors and circumstances involved demonstrates that the conclusions reached by the Florida Legislature as to the existence of a medical malpractice crisis are not fully supported by available data.  Instead, the alleged interest of health care being unavailable is completely undermined by authoritative government reports.  Those government reports have indicated that the numbers of physicians in both metropolitan and non-metropolitan areas have increased.  For example, in a 2003 report, the United States General Accounting Office found that from 1991 to 2001, Florida’s physician supply per 100,000 people grew from 214 to 237 in metropolitan areas and from 98 to 117 in nonmetropolitan areas, or percentage increases of 10.7 and 19, respectively.  Physician Workforce: Physician Supply Increased In Metropolitan and Nonmetropolitan Areas but Geograpic Disparities Persisted, No. GAO-04-124, (October 31, 2003), at 23, available at http://www.gao.gov/new.items/d04124.pdf.  Thus, during this purported crisis, the numbers of physicians in Florida were actually increasing, not decreasing.

 Additionally, an analysis of claim activity certainly does not provide a rational basis for the clear discrimination presented by the legislation.  Although assertions of a malpractice insurance crisis are often accompanied by images of runaway juries entering verdicts in exorbitant amounts of nonecomonic damages, see, e.g., Task Force Report at xvii, one study revealed that in Florida cases which resulted in payments of $1 million or more over a fourteen-year-period, only 7.5 percent involved a jury trial verdict.

 Such statistics led the authors of the study to conclude that jury trials constitute only a very small portion of medical malpractice payments.  Id. At 1345.  The authors also concluded that “tort reform efforts focused on jury verdicts are misdirected, at least with respect to $1 million verdicts in Florida.  Not only do jury trials constitute only a small portion of $1 million payments, [but] the settlements following verdicts tend to be substantially less than the jury awards.”  Id. at 1381 (emphasis is supplied).6   Thus, available data indicates the Task Force’s finding that noneconomic damage awards by juries are a primary cause of the purported medical malpractice crisis in Florida is most questionable.

 The Task Force stated that it “believes” the alleged crisis “could get worse in the coming years…Medical malpractice insurance premiums may become unaffordable, and/or coverage may become unavailable at any price to many physicians and hospitals.”  See Task Force Report, at 211-12 (emphasis supplied).  Further, despite blaming “actual and potential jury awards of noneconomic damages” for this ominous prediction, Task Force Report at xvii, the Task Force recognized that there are other explanations for the dramatic rise in medical malpractice insurance premiums.

 For example, the Task Force Report notes that in the opinion of Joanne Doroshow, Executive Director of the Center for Justice and Democracy:

 [T]his so-called “crisis” is nothing more than the underwriting cycle of the insurance industry, and driven by the same factors that caused the “crises” in the 1970s and 1980s.  According to…Doroshow, with each crisis, there has been a severe drop in the investment income for insurers, which has been compounded by sever [sic] under-pricing of insurance premiums in the prior years… [D]uring years of high interest rates or excellent insurer profits that are invested for maximum return, the insurance companies engage in fierce competition for premium dollars by selling under-priced premiums and insuring very poor risks.  Then…when investment income drops, either due to increases in interest rates or the stock market, or due to low income resulting from unbearably low premiums, the insurance industry responds by sharply increasing premiums and reducing coverage.

 …The tort reform changes in the 1980s had nothing to do with the flattening of rates.  The flattening was caused instead by modulations in the insurance cycle throughout the country.

 Also, the deputy director of the Florida Office of Insurance Regulation testified he had found no evidence to suggest that there had been a large increase in the number of frivolous lawsuits filed in Florida, nor was there any evidence of excessive jury verdicts in the prior three years.  Testimony of Steve Roddenberry, Senate Judiciary Committee Meeting, July 14, 2003, at 3, 10.

 During the subsequent floor debate, the following dialogue occurred between a senator and the Chairman of the Senate Judiciary Committee:

SENATOR: Were you able to determine whether or not there is an access to health care crisis in terms of the number of doctors licensed to practice medicine, the number of hospital closures or the number of emergency rooms closed?

CHAIRMAN: [T]his is not what I found.  What the testimony was from both the Department of Health, the Agency for Health Care Administration and various other people…was that there, in fact, are more doctors licensed to practice today in the State of Florida than there were five years ago.

 Applications to the medical schools in the State of Florida are up and have been up consistently for the past, for the past number of years.

 And also that emergency rooms have not been closing as a result of medical malpractice.

 As a matter of fact, the Department of Health and the Agency for Health Care Administration both testified under oath that they could not cite any incidents where because of a medical malpractice crisis patients were denied some type of care or directed someplace else.

 Based upon these statements and reports, although medical malpractice premiums in Florida were undoubtedly high in 2003, we conclude the Legislature’s determination that “the increase in medical malpractice liability insurance rates is forcing physicians to practice medicine without professional liability insurance, to leave Florida, to not perform high-risk procedures, or to retire early from the practice of medicine” is unsupported.

 The Impact of Damage Caps on the Alleged Crisis

 Even if these conclusions by the Legislature are assumed to be true, and Florida was facing a dangerous risk of physician shortage due to malpractice premiums, we conclude that section 766.118 still violates Florida’s Equal Protection Clause because the available evidence fails to establish a rational relationship between a cap on noneconomic damages and alleviation of the purported crisis.

 Thus, even if there had been a medical malpractice crisis in Florida at the turn of the century, the current data reflects that it has subsided.  No rational basis currently exists (if it ever existed) between the cap imposed by section 766.118 and any legitimate state purpose.  See generally Fla. Nurses Ass’n, 508 So. 2d at 319.  At the present time, the cap on noneconomic damages serves no purpose other than to arbitrarily punish the most grievously injured or their surviving family members.  Moreover, it has never been demonstrated that there was a proper predicate for imposing the burden of supporting the Florida legislative scheme upon the shoulders of the persons and families who have been most severely injured and died as a result of medical negligence.  Health care policy that relies upon discrimination against Florida families is not rational or reasonable when it attempts to utilize aggregate caps to create unreasonable classifications.  Accordingly, and for each of these reasons, the cap on wrongful death noneconomic damages in medical malpractice actions does not pass constitutional muster.

 CONCLUSION

 Based on the foregoing, we answer the first rephrased certified question in the affirmative and hold that the cap on wrongful death noneconomic damages in section 766.118, Florida Statutes, violates the Equal Protection Clause of the Florida Constitution.

 A full copy of the decision can be viewed by clicking here.

 The good news is that as a practical matter we had caps for over 11 years, and to some extent the malpractice insurance industry actuaries have already taken the possibility of the cap being lifted into account in setting rates.

 Nevertheless, this will clearly cause significant gyrations in the next Legislative session and elections process as the trial lawyers and the medical profession gear up again to raise monies and spend political capital on a situation that is certainly not helping the practice of medicine or medical professionals.

 Whether public sentiment will be sufficient to enable those who support positions to have a Florida Constitutional Amendment to override the Equal Protection Clause remains to be seen.

Buffman

The Balanced Scorecard of an IPA
By Pariksith Singh, MD

How does one evaluate an IPA (Independent Physicians’ Association)? This is an important question not only in assessing its value for sale or acquisition but also to measure its success, review the implementation of strategy and identify its key functions and metrics. We have seen the sale of several IPAs in the recent past in Tampa Bay and an interest among physician entrepreneurs in creating IPAs and attempt to make a fast buck.  In this endeavor, they seem to look only at the financial balance sheet or returns of the organization and forget the other measurements that are key in the appraisal of an IPA.

The Balanced Scorecard (BSC) is a concept first articulated in a 1992 Harvard Business Review article by Robert S Kaplan and David Norton.  It comprises of four perspectives which are necessary to have a composite snapshot of the state of health of a business. These perspectives are:

    1. The Financial Perspective
    2. The Customer Perspective
    3. The Business Process Perspective
    4. The Learning and Growth Perspective

In the book ‘The Balanced Scorecard: You Can’t Drive a Car Solely Relying on a Rearview Mirror’, Kaplan later expanded on this approach. It is ‘estimated that at least 40% of the Fortune 1000 companies use this methodology. ‘

 In my opinion, a BSC is the best way in which one can measure the pulse of an IPA, although given the specific nature of an IPA, certain new perspectives must be added. These additional perspectives should be:

    1. The Regulatory Perspective
    2. The Legal Perspective
    3. The Brand Perspective

If an IPA deals with Medicare lives and federally-funded dollars, the regulatory aspect of its functioning assumes an even more critical metric for any violation can threaten its very existence. Such a perspective should include compliance with HIPAA, OSHA, Stark laws, anti-kickback statutes, fee-splitting, Balanced Budget Amendments, the Affordable Care Act, etc. In light of some IPAs losing their contracts with HMOs recently, such a tally becomes immediate and significant.

An IPA is nothing if not relationships and contracts. If contracts do not exist, the IPA has no foundation and its entire structure collapses. Thus, strong and compliant contracts that are transparent and clear with powerful disincentives for breach would be essential. Without such contracts in place with coherent and ethical legal counsel to back it up, an IPA would founder and be unable to grow. Whatever growth and profits are accomplished are tenuous and expose it to further danger and vulnerability. It is my recommendation that all fees including administrative and re-insurance expenses be properly disclosed and attested by affiliates at the time of induction to the IPA. It is also my belief that the liabilities to the business be considered as one of the most critical sections of the BSC, i.e., the number of lawsuits against the organization, the potential damages from such lawsuits, the confidentiality of its data and reports or their loss, the nature of competition and poaching of its affiliates, conflicts in its relationships with the HMOs and potential OIG (Office of Inspector General) investigations of its practices.

The Brand of an IPA is the ‘X’ factor, its mystique and inevitability, uniqueness and desirability, customer loyalty and credibility of the organization and its officers. It is the factor that gives it its ‘oomph’ and saleability, and without the power of the Brand, an IPA becomes an also-ran.

Thus, the valuation of an IPA cannot be done solely on a fiscal basis. All the perspectives mentioned above must be calculated and counted. While the financials remain an important aspect of any valuation, they certainly are not the most important, or even, the largest component of a BSC for an IPA. At best, the fiscal status of an IPA can be used only if the organization scores a 100 on all other measures on its scorecard. At worst, the financials have to be completely discarded if the basics of business are not in place. We have seen that recently when a Fortune 500 corporation refused to take ownership or invest in an IPA solely because there were lawsuits against it for reasons of compliance.

The fundamentals of an IPA still remain the state of its compliance, the strength of its relationships and services, its feedback systems, employees, data and processes. Without these in place and sealed protectively, all one shall find is a house of cards. And the big problem with a house of cards is that the bigger it gets, the more vulnerable it becomes to sudden collapse. An IPA has to be based on an extremely strong foundation even though it needs to be nimble and flexible as regulations change and payment methodologies vary as we have seen with CMS in recent years.

When we measure the Business Process Perspective, we should measure the MRA, HEDIS, HOS, CAHPS and care management analyses, along with length of stays, continuity of care, ER visits, close follow-ups on nursing homes and hospitals, and post-acute care and post discharge care. The Operational metrics would also study the infra-structure, the state of IT, web services, reporting and sharing of information among the executives and owners.

The Customer Perspective should pay close attention to physician and employee satisfaction and retention, response rates and reputation. When practices are not wholly owned, this becomes an even more serious concern for any IPA. Also, the strength and managed care savvy of affiliates and risk of losses due to poor utilization by them cannot be ignored. If the IPA does not see itself as a fiscal intermediary and does not have adequate protections against a downturn and that it is in a risk business where the Pareto rule can get easily skewed from 20-80 to 1-99 and if the reserves are not strong or re-insurance is weak, all the juggling of numbers is of scarce significance.

An IPA is not any stronger by randomly signing up affiliates without interest, aptitude or drive to master managed care; in fact, the very opposite is true. Without proper infra-structure in place, an IPA should not attempt to grow. The continuous education and training of its employees is a sine qua non with any growth and a culture of compliance, quality and excellence should be a part of its DNA. The best IPA is a Learning Organization and a Knowledge-Creating Organization.

The concept of a Poison Pill in the valuation of any IPA is of much use. If the risk to the IPA due to significant legal or regulatory liability is high, it completely negates any financial valuation of the IPA almost like a junk bond and, in fact, may give it a negative status. We see this frequently in the market place when we see how the credit agencies appraise a company or a nation. Recently, we have seen how Universal Health Care, Inc, a Medicare Advantage plan, was taken over by a receiver thereby reducing its value to zero and with significant legal and financial liability to its executives and owners, when the Office of Insurance Regulations (OIR) decided that the plan was out of compliance. An IPA may come under the purview of the OIR too in a similar fashion.

Eventually, one must remember that any metric is only a reflection of an overall strategy, vision and mission, and the core competence of an IPA. If the IPA loses sight of these, no amount of tactical quantification would suffice in making it healthy and sustainable. Strategy must be integrated completely with the processes and the core strength of the entity should never be compromised.  For if the core is forsaken, all is forsaken and the vitality of the organization may be irretrievably lost.

The Other IPA – A Balanced Beverage History

India Pale Ale or IPA is a hoppy beer style within the broader category of pale ale. It was first brewed in England in the 19th century. IPA was born out of necessity.  When the British were colonizing India, the beers they sent down to their troops kept spoiling during the long sea voyage. Before refrigeration and pasteurization, the brewer’s only weapons against spoilage were alcohol and hops.  Alcohol and hops provide an unfriendly environment for microbes, preventing the growth of the bacteria that causes sourness. With an extra healthy dose of hops and alcohol, both having great preservative value, their problems were solved, and the world had another distinctive beer style.

Among the first brewers known to export beer to India was George Hodgson of the Bow Brewery. Ships transported Hodgson’s beers to India, among them his October beer, which benefitted exceptionally from conditions of the voyage and was highly regarded among its consumers in India. Demand for the export style of pale ale, which had become known as India pale ale, developed in England around 1840 and India pale ale became a popular product in England.

The IPA style of beer has a whole lot going for it. First and foremost is taste, which some could argue is an acquired one. The flavor of IPA beer highlights the complex and varied results that can be achieved through hops and other beer ingredient staples. The pronounced and unique flavor profile of IPA allows for a better understanding of brewing beer in general as hops and malts are often identified individually. Today, American craft brewers do more than emulate the style. They continue to push the envelope with strength and bitterness. Curiously, it’s much harder to find a true IPA from England these days.

p>2)            The Legal Perspective

3)            The Brand Perspective

If an IPA deals with Medicare lives and federally-funded dollars, the regulatory aspect of its functioning assumes an even more critical metric for any violation can threaten its very existence. Such a perspective should include compliance with HIPAA, OSHA, Stark laws, anti-kickback statutes, fee-splitting, Balanced Budget Amendments, the Affordable Care Act, etc. In light of some IPAs losing their contracts with HMOs recently, such a tally becomes immediate and significant.

An IPA is nothing if not relationships and contracts. If contracts do not exist, the IPA has no foundation and its entire structure collapses. Thus, strong and compliant contracts that are transparent and clear with powerful disincentives for breach would be essential. Without such contracts in place with coherent and ethical legal counsel to back it up, an IPA would founder and be unable to grow. Whatever growth and profits are accomplished are tenuous and expose it to further danger and vulnerability. It is my recommendation that all fees including administrative and re-insurance expenses be properly disclosed and attested by affiliates at the time of induction to the IPA. It is also my belief that the liabilities to the business be considered as one of the most critical sections of the BSC, i.e., the number of lawsuits against the organization, the potential damages from such lawsuits, the confidentiality of its data and reports or their loss, the nature of competition and poaching of its affiliates, conflicts in its relationships with the HMOs and potential OIG (Office of Inspector General) investigations of its practices.

The Brand of an IPA is the ‘X’ factor, its mystique and inevitability, uniqueness and desirability, customer loyalty and credibility of the organization and its officers. It is the factor that gives it its ‘oomph’ and saleability, and without the power of the Brand, an IPA becomes an also-ran.

Thus, the valuation of an IPA cannot be done solely on a fiscal basis. All the perspectives mentioned above must be calculated and counted. While the financials remain an important aspect of any valuation, they certainly are not the most important, or even, the largest component of a BSC for an IPA. At best, the fiscal status of an IPA can be used only if the organization scores a 100 on all other measures on its scorecard. At worst, the financials have to be completely discarded if the basics of business are not in place. We have seen that recently when a Fortune 500 corporation refused to take ownership or invest in an IPA solely because there were lawsuits against it for reasons of compliance.

The fundamentals of an IPA still remain the state of its compliance, the strength of its relationships and services, its feedback systems, employees, data and processes. Without these in place and sealed protectively, all one shall find is a house of cards. And the big problem with a house of cards is that the bigger it gets, the more vulnerable it becomes to sudden collapse. An IPA has to be based on an extremely strong foundation even though it needs to be nimble and flexible as regulations change and payment methodologies vary as we have seen with CMS in recent years.

When we measure the Business Process Perspective, we should measure the MRA, HEDIS, HOS, CAHPS and care management analyses, along with length of stays, continuity of care, ER visits, close follow-ups on nursing homes and hospitals, and post-acute care and post discharge care. The Operational metrics would also study the infra-structure, the state of IT, web services, reporting and sharing of information among the executives and owners.

The Customer Perspective should pay close attention to physician and employee satisfaction and retention, response rates and reputation. When practices are not wholly owned, this becomes an even more serious concern for any IPA. Also, the strength and managed care savvy of affiliates and risk of losses due to poor utilization by them cannot be ignored. If the IPA does not see itself as a fiscal intermediary and does not have adequate protections against a downturn and that it is in a risk business where the Pareto rule can get easily skewed from 20-80 to 1-99 and if the reserves are not strong or re-insurance is weak, all the juggling of numbers is of scarce significance.

An IPA is not any stronger by randomly signing up affiliates without interest, aptitude or drive to master managed care; in fact, the very opposite is true. Without proper infra-structure in place, an IPA should not attempt to grow. The continuous education and training of its employees is a sine qua non with any growth and a culture of compliance, quality and excellence should be a part of its DNA. The best IPA is a Learning Organization and a Knowledge-Creating Organization.

The concept of a Poison Pill in the valuation of any IPA is of much use. If the risk to the IPA due to significant legal or regulatory liability is high, it completely negates any financial valuation of the IPA almost like a junk bond and, in fact, may give it a negative status. We see this frequently in the market place when we see how the credit agencies appraise a company or a nation. Recently, we have seen how Universal Health Care, Inc, a Medicare Advantage plan, was taken over by a receiver thereby reducing its value to zero and with significant legal and financial liability to its executives and owners, when the Office of Insurance Regulations (OIR) decided that the plan was out of compliance. An IPA may come under the purview of the OIR too in a similar fashion.

Eventually, one must remember that any metric is only a reflection of an overall strategy, vision and mission, and the core competence of an IPA. If the IPA loses sight of these, no amount of tactical quantification would suffice in making it healthy and sustainable. Strategy must be integrated completely with the processes and the core strength of the entity should never be compromised.  For if the core is forsaken, all is forsaken and the vitality of the organization may be irretrievably lost.

Jerry Hesch’s Triple Play

Jerry HeschJerry HeschJerry Hesch

Jerry Hesch is an attorney at Berger Singerman in its Miami, Florida office and is Special Tax Counsel to Oshins & Associates in Las Vegas Nevada. He is the Director of the Notre Dame Tax and Estate Planning Institute, on the Tax Management Advisory Board, a Fellow of ACTEC, has published numerous articles, Tax Management Portfolios, and co-authored a law school casebook on Federal Income Taxation, now in its fourth edition. Jerry has been kind enough to schedule the following 3 interesting events with us:

 1.   On Monday, April 14, 2014 at 12:30 pm, Jerry will join Alan Gassman to lead a discussion on his latest thinking on self-cancelling installment notes, the Kite case, private annuities, and the ins and outs of triumph spit fires.

 Join Jerry, Alan, and Jerry’s triumph spit fire for an interesting conversation.  There is no charge for this webinar and participants will receive a picture of Jerry’s car.  CPAs will receive continuing education credit.

 2.   On Thursday April 17, 2014, Jerry will speak at a donor luncheon at Ruth Eckerd Hall in Clearwater, Florida on capitalized charitable tax savings: How to make sure that Uncle Sam contributes his share to maximize results.

 Financial advisors are welcome.  The lunch will cost less than $20.  Bring a friend or even someone who you do not like.

 3.   At 4:00 p.m., Jerry will be giving a free presentation at Ruth Eckerd Hall on capitalized innovative charitable giving techniques for the well tuned estate planner, and an outline will be provided.  This session is free and qualifies for 1 hour of continuing education credit.

Please also do not forget that on April 25, 2014, Jerry will be speaking at the Ave Maria Law School Estate Planners Day on the topic of Succession Planning for the Closely Held Business Upon Retirement or Death of the Principal.

Jerry also will be speaking at the Florida Bar Annual Wealth Protection Seminar on Capitalized Income and Estate Tax Issues for 2014 – Questions and Answers at the lunch presentation from 12:15 pm to 1:00 pm.

Following that Jerry will appear at the Sands Hotel in Law Vegas, Nevada to deliver his comedy routine on Timing Income Tax Deductions and Mother-In-Law Relationships.

Free Phone Call to Improve Your Estate Planning and/or Tax Practice
For Lawyers Only
On Thursday, April 3, 2014 at 3:00pm

Business coach Rick Solomon will be teaming up with Alan Gassman and Craig Hersch to establish a small group of estate planning and tax lawyers who will meet periodically to talk about improving our practices.

If you are interested in attending a short call on the afternoon of April 3, 2014 with Rick and a few other interested lawyers, please let us know.

From Rick:

There is a very special event coming up that could potentially have a significant impact on the growth and success of your practice. It is the launch of a special Masters Program for estate planning and tax attorneys that goes far beyond basic business and office development. It goes deeply into personal development and how to address limiting beliefs and issues that all successful professionals have. This can have a significant impact on our practices.

The program is headed by me, who has created and facilitated a special Masters Programs for CPAs. I am working with Alan Gassman and Craig Hesch to develop a Masters Program for estate planning and tax lawyers. Previously I have worked extensively with the organization that evolved into Wealth Counsel many years ago, and therefore has a good feel for situations specific to a law practice.

We are only interested in working with open-minded professionals who are willing to help one another and have or wish to have a great passion for what we do, more time off, and enhanced income.

Upcoming Seminars and Webinars

COMPOUNDING THE PROBLEMS AND OPPORTUNITIES FOR COMPOUNDING PHARMACIES

Date:  Tuesday, April 1, 2014 at 5:00 p.m.

Location: Online webinar

Speakers: Lester Perling and Alan Gassman

Additional Information: Please click here to register for the webinar.

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LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

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LEGAL COMPLIANCE FOR MEDICAL PRACTICES THAT USE NURSE PRACTITIONERS AND PRACTICE EXTENDERS

Date: Thursday, April 10, 2014 | 5:00 p.m. (30 Minutes)

Location: Online webinar

Speakers: Cynthia Mikos, Esq. and Alan S. Gassman, Esq.

Cynthia Mikos is an excellent speaker and healthcare lawyer.  Join her fan club by attending this informative webinar.  Her materials are excellent.

Additional Information: To register for this webinar please click here.

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JERRY HESCH’S LATEST THINKING IS ON SELF-CANCELLING INSTALLMENT NOTES, THE KITE CASE, PRIVATE ANNUITIES, AND TRIUMPH SPIT-FIRES

Date: Monday, April 14, 2014 | 12:30 p.m. (30 Minutes)

Location: Online webinar

Speakers: Jerry Hesch and Alan S. Gassman

Additional Information: To register for this webinar please click here.

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FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

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DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Alan Gassman will cover Using Estate Planning Techniques to Optimize Family Wealth Preservation.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact visit http://www.avemarialaw.edu/estateplanning/Index.aspx

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WHAT LAWYERS AND TAX ADVISORS NEED TO KNOW WHEN PLANNING FOR SAME SEX COUPLES – UNUSUAL RULES, STRATEGIES, CHECKLISTS AND TRAPS FOR THE UNWARY

Speaker: Alan S. Gassman

Date: Monday, April 28, 2014 | 12:30 – 2:00 p.m.

Location: Bloomberg BNA Tax & Accounting Online webinar

Additional Information:  For more information, to register and a discount code please email agassman@gassmanpa.com

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR (with 2 hours of Ethics CLE credit)

I think that we have hit the ball well out of the ballpark for the May 8, 2014 Annual Wealth Protection Seminar.

Please check out the schedule below and come and see us.

We are particularly looking forward to the ethical panel discussion that will include reviewing important components for fee agreements, conflict of interest rules, liability avoidance for professionals, and comprehensive practice checklists.

Date: Thursday, May 8, 2014

Speakers and Agenda:

8:30 a.m. B 9:00 a.m. – How I ask Questions and Obtain the Right Documents and Information to Develop a Clients Asset Protection Profile.

 Speaker: Denis Kleinfeld, Esq.

 9:00 a.m. B 9:40 a.m. – How I Structure an Integrated Income, Estate Tax, and Asset Protection Family Plan.

 Speaker: Alan S. Gassman, Esq.

 9:40 a.m. B 10:30 a.m. – The New Designer Entities B How to Use These Cutting Edge Tools to Protect Wealth.

 Speaker: Howard Fisher, Esq. and Alex Fisher, Esq.

 10:30 a.m. B 10:45 a.m.  Break (Mingle and Exchange Cards)

10:45 a.m. B 11:30 a.m. – What the Last Two Years of Legal Developments and Litigation Tells Us About Protective Planning With Trust and Associated Entities

 Speaker: Barry Engel, Esq.

 11:30 a.m. B 12:15 p.m. – What The Case Law Tells Me About Charging Orders and Declaratory Judgments.

 Speaker: Jay Adkisson, Esq.

12:15 p.m. B 1:00 p.m. Lunch (Box Lunch) – Income and Estate Tax Issues For 2014 B Q & A.

 Speaker: Jerry Hesch, Esq.

 1:00 p.m. B 2:30 p.m. – What We Think You Need to Know About Asset Protection Litigation and Obtaining A Good Result For the Client.

 Speakers: Jay Adkisson, Howard Fisher, Alex Fisher and Denis Kleinfeld.

 2:30 p.m. B 2:45 p.m.  Break

2:45 p.m. B 4:15 p.m. – What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves.

 Speakers: Barry Engel, Alan Gassman, Jerry Hesch, and Denis Kleinfeld.

 4:15 p.m. B 5:00 p.m. – Open Forum Q & A

 Speakers: Barry Engel, Jay Adkisson, Howard Fisher, Jerry Hesch, Alan Gassman and Denis Kleinfeld.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

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THE JOINT EXEMPT STEP-UP TRUST

Alan Gassman will be speaking at the Ohio Conference on Wealth Transfer on The Joint Exempt Step-Up Trust as well as participating in a panel discussion the evening before.

Date: June 4, 2014

Location: Hilton at Easton, Columbus, Ohio

Additional Information:  For more information on the conference and to register for the conference please contact agassman@gassmanpa.com

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HIRING AND TERMINATING EMPLOYEES; WHAT TO DO, WHAT TO AVOID

Speaker: Colleen Flynn, Esq., Dr. Stephanie Thomason and Alan S. Gassman, Esq.

Date: Wednesday, June 18, 2014 | 2:00 – 3:00 p.m.

Location: Bloomberg BNA Tax & Accounting Online webinar

Additional Information:  For more information, to register and a discount code please email agassman@gassmanpa.com

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40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Please send us your questions, comments and suggestions for Alan Gassman’s talk on Planning with Variable Annuities.  He will also discuss how to spreadsheet and illustrate how life insurance policies and mutual funds work in the taxable and non-taxable world, and how to evaluate whether real savings occur from tax deferral.

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

Past Seminar and Webinar Transcripts Available

For a transcript of Mr. Gassman’s remarks for the following, please email agassman@gassmanpa.com.

  • The Florida Bar Leadership Academy: March 2014 Regional Meeting

Alan Gassman joined Judge Claudia Rickert Isom and Hillsborough County Bar Association President Susan E. Johnson-Valez for a panel discussion on the Benefits of Serving as a Community Leader.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

APR

The Thursday Report 3.6.2014 – BP 5th Circuit Dec. and Much More

Posted on: March 6th, 2014

BP Claims Process – Appeals Fuel Delay in Payments and Confusion for Claimants

Please No More Tax Reform, an article by Denis Kleinfeld

Seminar and Webinar Announcements: Ave Maria Speaker Bruce Stone

Lawyer Tagged in Bankruptcy Court for $500,000 Transfer Through His Trust Account

Attorney Humor! – A Contradiction of Terms?

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

BP Claims Process – Appeals Fuel Delay in Payments and Confusion for Claimants

By: John Goldsmith and Alan Gassman

Although Significantly Delayed by the Fifth Circuit Appeals, Recent Rulings May Allow Claims to be Processed Again.

BP, apparently no longer concerned enough with its reputation to act as a good citizen, is instead acting as an ardent litigator attempting to renounce the settlement it negotiated and urged the Court to approve. The result has been an injunction which had the effect of preventing the BP Claims Administrator from adjudicating or paying any claims for almost five months while the Fifth Circuit resolved BP’s attempt to get out of the settlement.  Two recent rulings by the Fifth Circuit, rejecting BP’s attempt to reject the settlement, may lead to resumption of the BP Claims Administrator adjudicating and paying claims.  BP did, however, win one important legal battle which may have a significant effect on the computation of certain claims.

The recent decisions of the federal District Court and the federal Fifth Circuit Court of Appeals are summarized as follows:

  1. A three Judge panel of the Fifth Circuit, Court of Appeals has instructed the BP claims administrator from paying any BP claims, or making final determinations, until the Fifth Circuit resolves the issues discussed below. This injunction has slowed the processing of claims as well.
  2. The Courts recently required the BP Claims Administrator to develop new criteria to “match revenue with expenses”. It is not clear what that means, and BP and the BP plaintiffs’ steering committee have submitted competing guidelines to the claims administrator. The BP claims administrator issued draft guidelines two weeks ago but those guidelines have not yet been made public.  Given BP’s recent history it will likely challenge any proposed guidelines in the federal District Court, and then appeal any decision to the Fifth Circuit.
  3. The Fifth Circuit, in two recent rulings by different three Judge panels, ruled that claimants are NOT required to prove that their losses were caused by theoil spill. Rather, in conformity with the BP settlement agreement and with BPs original interpretations of the settlement, if the BP claimant has the required drop in revenue during the applicable period in 2010 in comparison to the same time period in prior years, and the required increase in revenue during the same time period in 2011, it is conclusively determined that any losses of a BP claimant were caused by the BP oil spill.
  4. A three Judge panel of the Fifth Circuit recently affirmed the Federal District Court’s December 2012 order approving the BP settlement agreement.  In an unprecedented move, BP joined the parties appealing the approval of the settlement agreement, thereby objecting to the same settlement agreement BP negotiated, agreed to, and actively sought approval from the Federal District Court. The Fifth Circuit specifically ruled that the U.S. Constitution and federal law do not require that each BP claimant make an individual claim showing that the claimant’s losses were caused by the BP Deepwater Horizon oil spill. This is an important victory for BP claimants and in keeping with the BP settlement agreement. BP asked the entire Fifth Circuit (referred to as “en banc”) to review this decision. 
  5. Based on these recent rulings, the Fifth Circuit ruled that the injunction preventing adjudication and payment of claims will be lifted as soon as the Fifth Circuit resolves whether it will review these decisions en banc. 

There is no deadline for a final decision on any of these issues. Our best guess is that no BP claims will be paid until June 2014, while these issues are hopefully sorted out. However, it could take much longer, perhaps more than a year. The only certainty is that there is a significant delay in the claims administrator making final determinations and payments on all BP claims.

Please No More Tax Reform
by Denis Kleinfeld

Kleinfeld

Congressman Dave Camp, Chairman of the House Ways and Means Committee, has proposed the Tax Reform Act of 2014 (TRA) 2014.

The press release proudly proclaims that this piece of legislation is a means to fix the broken tax code by lowering rates while making the code simpler and fairer for families and job creators.

This will spur stronger economic growth, greater job creation, and puts more money in the hands of hardworking taxpayers.

It does all this without raising the deficit. Of course, it doesn’t reduce the deficit either.

No prior tax law has fixed the tax code, made compliance simpler, enabled job creation, spurred economic growth or let hardworking taxpayers keep more of their money.

Not ever.

Chairman Camp wants the American taxpayer to believe that this time it is going to be different.

We are expected to swallow this since the legislation has been analyzed by the “non-partisan Joint Committee on Tax (JCT).”

For those poor souls who are unfamiliar with that tower of credibility the JVCT, it is a congressional committee composed of equal numbers of Democrats and Republicans. Every congressperson appointed to the JCT is there precisely because they are fiercely political and fervently partisan.

There is no argument by either Democrats or Republicans that the income tax is a broken system.

The draft legislation as proposed by Chairman Camp is a 900 page monstrosity that raises $600 billion dollars in additional taxes.

It is widely praised by every form of lobbying organization. Anyone who makes a living of off the government thinks the TRA 2014 to be a godsend.  Tax professionals are just giddy over the prospect of another tax reform law.

To put congressional tax reform legislation in perspective, the Tax Reform Act of 1969 was passed just as I was starting my tax career. That was followed by tax legislation, as best as I can recall,  in 1970, ’71, ’72, ’74, ’76,’78, ’80, ’81, ’82, ’84, ’86, ’88, —-almost every year right up to the now proposed TRA of 2014.

Nobody running for congress has ever read the Internal Revenue Code, but does promise most sincerely during each election cycle that if elected they will reform it and create more jobs to boot.

This is a political scam going into its 101st year.  Politicians know and rely on the fact that taxpayers have little to no understanding of the income tax law.

Then again, it is questionable whether tax professionals or the IRS is much better off.

Chairman Camp says the TRA 2014 will tackle waste, fraud and abuse at the IRS. It is an old story and a good con to pull especially around election time. Congress told this tale in the IRS Restructuring and Reform Act of 1998.  Congress assured us then that the abuse of taxpayers would end.

It did not.

The Internal Revenue Code is already some 75,000 pages long. It has been “reformed” one way or another by congress nearly every year since 1969.

Do you think that the income tax as imposed on you will get better or worse if congress monkeys yet again with the tax law?

I think that this time we should tell congress, “Please, no more tax reform.”

Ave Maria Law School 1st Annual Estate Planning Conference

Speaker Profile: Bruce Stone

BruceStone

Bruce Stone will be speaking on “A Dozen of My Top Favorite Planning Ideas That I’m Willing to Talk About.” at the 1st Annual Ave Maria Estate Planning Conference on Friday, April 25, 2014 at Ave Maria School of Law in Naples, Florida.  For information about the conference please click here.

Bruce’s talk will focus on a wide variety of issues and problems in estate planning and administration, with an emphasis on practical solutions.  The problems will be presented through specific real life examples commonly encountered in estate planning and administration.  The legal issues involved in each discussion will be discussed, and specific solutions (including model form for us in will and trust drafting) will be offered.

Bruce is a shareholder of Goldman Felcoski & Stone P.A.  His practice consists primarily of estate planning for both domestic and foreign clients. A significant portion of his practice involves disputed or complex problem situations in which he is retained to find creative planning solutions or to serve as expert witness, mediator or arbitrator. Bruce is admitted to practice in Florida. He is a lifelong resident of Florida. He graduated from the University of Florida with high honors in 1971 and was elected to Phi Beta Kappa. He graduated from the Florida State University College of Law with highest honors in 1973, where he was first in his class and editor in chief of the law review.

Bruce is a Fellow and current Vice President of the American College of Trust and Estate Counsel, and serves on its Executive Committee and Board of Regents. He is a past chair of the Real Property, Probate and Trust Law Section of The Florida Bar. Bruce is a member of the Joint Editorial Board for Uniform Trust and Estate Acts, which monitors and recommends updates to the Uniform Probate Code, the Uniform Trust Code, and all other trust and estate related uniform laws on a nationwide basis. He is a member of the Advisory Committee of the Heckerling Institute on Estate Planning. He is an Academician in the International Academy of Estate and Trust Law. He has been named as one of the top 10 or top 100 Florida attorneys in all issues of Florida Superlawyers since its publication, as one of the 45 best trusts and estates attorneys in the United States in the August 1998 issue of Town and Country magazine, and as one of the most influential people in Miami in the December 2012 issue of Poder Hispanic magazine. He is rated AV Preeminent by Martindale-Hubbell, has been listed in every edition of Best Lawyers of America since 1987, and is rated by Chambers USA in Band 1 for Tax: Estate Planning. In 2001 he received the first ever Friend of the Trust Industry award from the Florida Bankers Association. He was the principal drafter of Florida’s legislation in 2000 authorizing dynasty trusts and allowing modification and reformation of irrevocable trusts, and a 2010 statute governing planning for homestead property through the use of irrevocable inter vivos trusts. He has been extensively involved in the drafting of Florida legislation concerning elective share rights of surviving spouses and the administration of trusts.

In addition to his practice, Bruce is an adjunct professor at the University of Miami School of Law, where he teaches in the graduate master’s program in estate planning. He is a frequent lecturer for organizations such as the American College of Trust and Estate Counsel, the American Bar Association, ALI-CLE, the Heckerling Institute on Estate Planning, and the Florida Bar. 

Lawyer Tagged in Bankruptcy Court for $500,000 Transfer Through His Trust Account

By: Travis Arango and Alan S. Gassman

MichaelWilliamson

Judge Michael G. Williamson is the Chief Judge for the Middle District Bankruptcy Court in Tampa, Florida. He graduated from Duke University in 1973 and from Georgetown University Law Center in 1976.  He practiced for many years in Orlando with the law firm of McGuire, Voorhis & Wells, which became Holland & Knight.  He was appointed to serve as a Judge in the Bankruptcy Court in 2000.  Judge Williamson recently ruled on whether a lawyer who allows money to pass through his trust account in a fraudulent transfer situation can be found personally liable to the creditor pursuant to Bankruptcy Code Section 550(a)(1).  Information on this decision should be of great interest to lawyers who represent individuals who have eminent creditor situations and is discussed below.

New case law may have you thinking twice about listening to your client’s request to disburse funds in certain ways. This may seem counter-intuitive to lawyers who have always been taught to be loyal and zealous advocates for their clients.

Harwell establishes that a lawyer may be held liable for disbursing funds in the way a client wishes, if they are being disbursed with the intent to defraud creditors. The facts are pretty straightforward. The attorney in question was representing his client in two separate matters, a shareholder dispute and a judgment entered in Colorado. The first matter resulted in the client receiving a substantial settlement from a shareholder dispute action that was to be deposited into an escrow account held by the attorney’s firm. The second matter was a judgment entered against the client for over one million dollars. Neither the client nor the attorney revealed to the party which held the million dollar judgment that the client was receiving settlement payments.

Instead of satisfying the existing million dollar judgment, the client instructed the lawyer to disburse the funds to third parties which included the client’s wife, father, and other various people. The attorney followed the client’s instructions with the knowledge that there was this substantial judgment in place. The attorney was eventually served with a writ of garnishment which he in turn had quashed. After the writ was quashed, the attorney obtained and distributed cashier’s checks payable to his client and other third parties. A month later, the client filed for bankruptcy in Colorado. The trustee of the bankruptcy estate filed a claim against the attorney under 11 U.S.C. § 550(a)(1) to recover the funds that were disbursed by the “initial transferee.” Section 550(a)(1) states:

(a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from–

(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made;

The procedural history of this case is like a roller coaster:

This case began in Colorado but was then moved to the Bankruptcy Court in the Middle District of Florida before Judge Williamson, who is a very experienced jurist. The issue before the Bankruptcy Court on summary judgment was whether or not the lawyer, Mr. Hutton, or his firm, was the initial transferee. Based on the facts presented, Judge Williamson entered summary judgment in favor of Mr. Hutton, concluding that he was not an initial transferee, but only a “conduit” for the transfers. Judge Williamson’s analysis centered around the fact that the money was never actually paid to Mr. Hutton but was instead put in an escrow account. Because of this, he was found to have not been the initial transferee, and the court’s analysis went no further.

On appeal to the Federal District Court in Tampa, Judge James S. Moody, Jr. affirmed Judge Williamson’s decision and concluded that Mr. Hutton and his law firm received the funds in question on behalf of his client. Thus, he was acting in a fiduciary capacity and obligated to disburse the funds in accordance with instructions from his client. The District Court’s reasoning was based on the fact that the funds in the trust belonged to the client, and not to Mr. Hutton and the firm.

The case was then appealed to the 11th Circuit Court of Appeals, which concluded that the Bankruptcy Court and the District Court did not employ the required two-part test of 11 U.S.C. Section 550(a)(1), which reads as follows:

Initial recipients of the debtor’s fraudulently transferred funds who seek to take advantage of the equitable exceptions to § 550(a)(1)’s statutory language must establish (1) that they did not have control over the assets received, i.e., that they merely served as a conduit for the assets that were under the actual control of the debtor-transferor and (2) that they acted in good faith and as an innocent participant in the fraudulent transfer

It would therefore have to be shown that both of the following elements were satisfied:  1. that the defendant did not have control over the assets received and 2. that the defendant acted in good faith and was innocent in the fraudulent transfer. The 11th Circuit concluded that Mr. Hutton was in fact an initial transferee under 11 U.S.C. § 550 (a)(1).

The case eventually made its way back to the Bankruptcy Court where the attorney and the trustee could offer evidence and arguments on whether he had control over the funds and acted in good faith. After listening to both parties’ oral arguments, Judge Williamson delivered a humble and solid opinion, which included the following statement:

I thought the law was that if it’s a conduit, you don’t even get to good faith or knowledge because the attorney never controlled it . . . you have to be a conduit in the sense it has to be a trust account situation like this one. And you have to take in good faith, and be an innocent participant in the transfers in and out of a trust account. So under these circumstances… I find that the transfers made back to Mr. Harwell were not made in good faith, and there were still part of the same set of transactions that were meant to get the money away from the prevailing party in the judgment against Mr. Harwell. Under the Eleventh Circuit ruling in this case, Mr. Hutton cannot claim conduit status even for those transfers.

Judge Williamson observed that there are no excuses for a lawyer who initiates and personally effectuates a fraudulent transfer for the purpose of hiding assets from a creditor when they do not act in good faith. That is to say, when the attorney gains knowledge that the transaction may be fraudulent, they must “immediately cease participating and take actions to return the money being held to the client and cease participating and assisting the client in the steps that the client is undertaking to fraudulently transfer assets out of the reach of the creditor.”

This decision may have put attorneys between a rock (the duty to your client) and a hard place (knowing when to deny your client’s request). First, a lawyer may still be the initial transferee even when the money goes directly into escrow. Second, as an attorney your loyalty is to your client; however, if you know or should know your client is attempting to make a fraudulent transfer using your services you cannot actively assist them. The court gave a couple of ways to handle this situation: 1. refuse to receive the funds or 2. do not distribute the funds in a fraudulent way and instead just give them to the client directly. Hopefully this decision does not make attorneys fearful of their clients and concerned about any transfer. The court stated there will be times when lawyers will transfer funds in the ordinary course of business with no warning that they are actually helping a client with a fraudulent transfer. In this situation, good faith will protect the lawyer. Just do not be oblivious to serious red flags, such as your client having a judgment against them and quickly wanting to move funds to friends and family.

But, what happens when the attorney thinks the transfer is fraudulent but is mistaken? The attorney may lose a client and/or have a bar complaint filed against him or her.

If you have enjoyed this roller coaster ride and are thirsty for more, take a look at In re Cargo Transportation Services, Inc., 502 B.R. 875, 880 (Bankr. MD. Fla. 2013). This is a case with somewhat similar circumstances to In re Harwell, but in this case Judge Williamson ruled in favor of the law firm, stating that they were a mere conduit and acted in good faith. In Cargo, the law firm handled funds from a settlement and transferred the funds pursuant to what the court found to be as follows:

[T]he processes by which the Law Firm received and handled the settlement funds—including the payment of its fees from the funds transferred to its client—were entirely subject to federal court orders, federal law, and rules of professional responsibility. The Law Firm followed these proscriptions to the letter, and the money flowed through as it was required to do pursuant to various court orders entered by the bankruptcy court presiding over the case in which the settlement was approved.

When the trustee of the bankruptcy estate pursued the firm under section 550(a)(1), the court held that it never had control of the funds, and that it acted in good faith, thus meeting the two prong “control” test discussed above. The court also cited other cases with similar factual patterns.

In the end, use your legal expertise and common sense to know when something is fishy. Always be a zealous advocate for your client but know when to protect yourself and catch red flags so that you do not participate in a fraudulent transfer. Much like the Colonel’s secret recipe, you may never know the exact formula to follow to avoid being on the losing side of one of these cases, but you can avoid conduct that has gotten others in trouble in the past.

Attorney Humor! – A Contradiction of Terms?
by Ronald Ross 

How to coax an attorney out from under his desk after he’s read a John Grisham novel:

“Honestly, there is no conspiracy to kill our clients in order to win control over their estates, and we’re not trying to kill you so you don’t find out about the alleged conspiracy……………Yes, you’re a valuable member of this firm, and I promise if there was an exciting conspiracy, we would include you………Okay, if there was a conspiracy you can choose the actor who plays you in the movie……Bradley Cooper? I don’t think he would fit under your desk.”

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

March 2014 Annual 0.28% Annual 1.84% Annual 3.36%
Semi-Annual 0.28% Semi-Annual 1.83% Semi-Annual 3.33%
Quarterly 0.28% Quarterly 1.83% Quarterly 3.32%
Monthly 0.28% Monthly 1.82% Monthly 3.31%
February 2014 Annual 0.30% Annual 1.97% Annual 3.56%
Semi-Annual 0.30% Semi-Annual 1.96% Semi-Annual 3.53%
Quarterly 0.30% Quarterly 1.96% Quarterly 3.51%
Monthly 0.30% Monthly 1.95% Monthly 3.50%
January 2014 Annual 0.25% Annual 1.75% Annual 3.49%
Semi-Annual 0.25% Semi-Annual 1.65% Semi-Annual 3.46%
Quarterly 0.25% Quarterly 1.73% Quarterly 3.45%
Monthly 0.25% Monthly 1.93% Monthly 3.44%

The 7520 rate for March is 2.2% and for February was 2.4%

Seminars and Webinars

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

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TAX AND ASSET PROTECTION BASICS FOR THOSE WHO REPRESENT PHYSICIANS AND MEDICAL PRACTICES

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

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THE FLORIDA BAR LEADERSHIP ACADEMY: MARCH 2014 REGIONAL MEETING

On Saturday, March 15, 2014, Alan Gassman will join Judge Claudia Rickert Isom and Hillsborough County Bar Association President Susan E. Johnson-Valez for a panel discussion on the Benefits of Serving as a Community Leader.  We welcome any and all questions, comments and suggestions for this presentation. We are developing a criteria worksheet that professionals can use to decide what the costs and benefits are of the many different non-billable activities and causes that we all have the opportunity to support.

Date: Saturday, March 15, 2014

Location: Marriott Tampa Airport

Additional Information: To register for the program please email agassman@gassmanpa.com

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STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EMERGING TOOL TO MAXIMIZE STEP-UP IN BASIS

Date: Tuesday, March 18, 2014 | 1:00 – 2:30 p.m.

Location: Online webinar sponsored by Strafford Publications, Inc.

Speakers: Alan S. Gassman, Christopher Denicolo and Edwin P. Morrow, III, Esq.

Additional Information: To register for the webinar please visit https://www.straffordpub.com/products/structuring-joint-exempt-step-up-trusts-emerging-tool-to-maximize-step-up-in-basis-2014-03-18 or email agassman@gassmanpa.com

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COMPOUNDING THE PROBLEMS AND OPPORTUNITIES FOR COMPOUNDING PHARMACIES

Date: Wednesday, March 19, 2014 at 12:30 p.m. or Tuesday, April 1, 2014 at 5:00 p.m.

Location: Online webinar

Speakers: Lester Perling and Alan Gassman

Additional Information: To register for the March 19, 2014 webinar please click here.  To register for the April 1, 2014 webinar please click here.

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COUNSELING SAME-S** COUPLES IN 2014

Alan Gassman will be speaking at the Wealth Council Florida Forum on Counseling Same-S** Couples in 2014

Date: Friday, March 21, 2014 | 10:30 – 12:00 p.m.

Location: Holiday Inn at the Orlando Airport

Additional Information: For more information and to register for the program please email agassman@gassmanpa.com

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LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

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FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

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DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Alan Gassman will cover Using Estate Planning Techniques to Optimize Family Wealth Preservation.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact visit http://www.avemarialaw.edu/estateplanning/Index.aspx

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers and Agenda:

8:30 a.m. – 9:00 a.m. – How I ask Questions and Obtain the Right Documents and Information to Develop a Client’s Asset Protection Profile.

Speaker: Denis Kleinfeld, Esq.

9:00 a.m. – 9:40 a.m. – How I Structure an Integrated Income, Estate Tax, and Asset Protection Family Plan.

Speaker: Alan S. Gassman, Esq.

9:40 a.m. – 10:30 a.m. – The New Designer Entities B How to Use These Cutting Edge Tools to Protect Wealth.

Speaker: Howard Fisher, Esq. and Alex Fisher, Esq.

10:30 a.m. – 10:45 a.m.  Break (Mingle and Exchange Cards)

10:45 a.m. – 11:30 a.m. – How I Decide Whether To Use Domestic or Foreign or A Mix of Both in Creating a Protective Plan.

Speaker: Barry Engel, Esq.

11:30 a.m. – 12:15 p.m. – What The Case Law Tells Me About Charging Orders and Declaratory Judgments.

Speaker: Jay Adkisson, Esq.

12:15 p.m. – 1:00 p.m. Lunch (Box Lunch) – Income and Estate Tax Issues For 2014 B Q & A.

Speaker: Jerry Hesch, Esq.

1:00 p.m. – 2:30 p.m. – What We Think You Need to Know About Asset Protection Litigation and Obtaining A Good Result For the Client.

Speakers: Jay Adkisson, Howard Fisher, Alex Fisher and Denis Kleinfeld.

2:30 p.m. – 2:45 p.m.  Break

2:45 p.m. – 4:15 p.m. – What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves.

Speakers: Barry Engel, Alan Gassman, Jerry Hesch, and Denis Kleinfeld.

4:15 p.m. – 5:00 p.m. – Open Forum Q & A

Speakers: Barry Engel, Jay Adkisson, Howard Fisher, Jerry Hesch, Alan Gassman and Denis Kleinfeld.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

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THE JOINT EXEMPT STEP-UP TRUST

Alan Gassman will be speaking at the Ohio Conference on Wealth Transfer on The Joint Exempt Step-Up Trust as well as participating in a panel discussion the evening before.

Date: June 4, 2014

Location: Hilton at Easton, Columbus, Ohio

Additional Information:  For more information on the conference and to register for the conference please contact agassman@gassmanpa.com

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40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

The Thursday Report 2.27.2014 – Giraffe Beers, Couple Agmts and Seminars

Posted on: February 27th, 2014

Whammed and Spammed

Economic Relationship Agreements for Same-S*x Couples

SCIN, SCRAM, ANNUITY or SCGRAT – Don’t Leave Your Clients with Short Life Expectancies Flat

Seminar and Webinar Announcements: Ave Maria School of Law Estate Planning Conference and Strafford JEST Webinar

The Balanced Scorecard of an IPA, an article by Dr. Pariksith Singh

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Special thanks to Anne Sunne Freeman for her testimonial for the Thursday Report:

Good morning Alan,
I just wanted to thank you for the tax update in your newsletter this week. I am not a tax attorney and I found it very informative. You are awesome!
Take care,
Anne Sunne Freeman

Why are we saying S*X? Because when we say the other word we get:
Whammed and Spammed!!

Has your Thursday Report been in internet computer land?

Our series of information on planning for unmarried (same-s*x) couples caused a great many of our subscribers computers to automatically spam the Thursday Report because of the word that has the letter “X” in it.

You may therefore have unread Thursday Reports in your spam folder. SPAM goes great with Kentucky Fried Chicken, but the shelf-life of SPAM is longer, so please take a look at the Thursday Reports you have not gotten to, or send them to your mother-in-law for her birthday.

If you have been spammed and would like to keep receiving the Thursday Report please click here to send an email to Janine Gunyan at Janine@gassmanpa.com indicating that you would still like to receive the report.

Economic Relationship Agreements for Same S*x Couples
By: Alan S. Gassman, Esq. and Danielle Creech, Esq.

The following is a continuation of our sharing sections from the book we are writing entitled The Florida Advisors Guide to Counseling Same S*x Couples in 2014. Alan Gassman will be presenting these materials at the Wealth Council Florida Forum on Friday, March 21, 2014 in Orlando, Florida. More details regarding that seminar appear below, and all suggestions are welcome.

DIVORCE AND DOMESTIC PARTNERSHIP AGREEMENTS

Divorce is still very uncharted territory with respect to same-s*x marriages. Because many states do not recognize same s*x marriages, couples who got married in a state that was not their state of residence may find that their state of residence will not grant them a divorce. Thus, if the partners have a disagreement on how to split up the marital assets the court system will have no available remedy. Although states such as California and Massachusetts, which have done large numbers of same s*x marriages for couples across the country, do not have residency requirements for marriage, they do have residency requirements for divorce.1

The divorce prohibition in certain states could change in the not too distant future, and, if so, alimony and property settlement rights might date back to when the couple was originally married, as opposed to dating back to when the state legislature and governor might sign such legislation into existence.

When a same s*x couple lives in a state that does not recognize same s*x marriage, but is validly married in another state, they can consider a Domestic Partnership Agreement. A Domestic Partnership Agreement, in a way, works like a prenuptial agreement, for it is a contract between partners that provides the court a way to divide up the marital assets and even create support rights between partners.2 While there is no guarantee that a court in a non-recognition state will uphold same s*x domestic partnership agreements, it does not hurt to draft one to show a couple’s intent.

One Florida appellate court has upheld domestic partnership or cohabitation agreements between unmarried same s*x couples.3 The Fourth District Court of Appeals, in the case of Posik v. Layton in 1997, found that even though Florida prohibited same s*x marriages, it did not prevent a domestic partnership agreement from being legally enforceable.4 A copy of the decision can be found in the Appendix, and includes the following statement:

“By prohibiting same-s*x marriages, the state has merely denied homos*xuals the rights granted to married partners that flow naturally . . . But the State has not denied these individuals their rights to either will their property as they see fit nor to privately commit by contract to spend their money as they choose.”5

Thus, while we are unsure if premarital agreements will be upheld in Florida, privately contracted agreements, such as a Domestic Partnership Agreement, will most likely be upheld if properly drafted and implemented.

Example

Assume that things do not work out between Sam and George, and after four years of marriage they decide to get a divorce. They have a prenuptial agreement, and they were married in Massachusetts. Neither George nor Sam ever resided in Massachusetts, and to get married, they were not required to do so.

They go to the Florida courts to request a divorce, but they are denied. The judge determines that because they were married in a union that the state of Florida does not recognize, the state of Florida cannot grant their divorce.

Unfortunately, Massachusetts does have residency requirements for divorce. If the grounds for divorce occurred outside of the state (in this case, they occurred in Florida), then one spouse must be a Massachusetts resident for one year before the state will move forward with divorce proceedings.

As neither George nor Sam have any ties to Massachusetts, neither of them want to reside there in order to get the divorce. They may choose to separate without the legal divorce, but this has repercussions as well. If either of them remarries, it may technically be considered bigamy, though it is unclear as to whether this would apply in a state that does not recognize the marriage in the first place. Many states are currently facing lawsuits on this issue, and the legal community should keep an ear to the ground with respect to this issue.

Many attorneys for same s*x marriage are recommending prenuptial agreements for same s*x couples. This is particularly important as many couples who plan to or have recently married are older and more established, and therefore have more of their own independent wealth to protect in the event of divorce. On the other hand, if a couple lives in a jurisdiction that does not recognize same s*x marriage, they may not be entitled to a marital division of assets in the event of a split and the prenuptial agreement may not be valid.

Thus, a domestic partnership agreement is the most secure way of determining how a couple will divide assets in the event of separation in a non-recognition state.

The Domestic Partnership Agreement can contain many terms, and there are many considerations associated therewith.

Some important factors are as follows:

1. Summarize the economic reasons for the agreement, particularly if one partner is making career sacrifices to raise a child or children, or to concentrate on homemaking.

2. Follow the standards that apply to Florida postnuptial agreements with respect to the following:

a) Full and complete disclosure.

b) Strongly urging each party to have separate independent legal counsel.

c) Making sure that there is no duress or appearance of duress- sign before wedding invitations or any similar situation occurs.

3. If the parties are not married, consider the tax impact of pseudo-alimony payments and property settlement transfers that might occur. Would it be against public policy for the agreement to require that the parties become married upon the request of either spouse, in order to have the tax advantages that would apply in the event of a divorce?

4. Consider a geographic living limitation requirement if and when the parties have a common child or children.

5. Beyond simply agreeing that Florida law should apply as if the parties were married from a date agreed to, consider the following alterations to Florida law:

A. Binding private arbitration in lieu of public litigation, to the extent legally enforceable.

B. Allow either party to request bifurcation of arbitration proceedings, so that issues such as the enforceability of the agreement and specific provisions thereof can be determined by the arbitrator before going to the next step of adding discovery and arbitration hearings on legal rights that may not apply if the agreement is upheld or denied.

6. Consider attorney fee provisions in lieu of simply having the spouse more able to pay be responsible for all fees.

7. Consider requiring initial representation by collaborative lawyers to the extent legally enforceable.

FLORIDA LITIGATION – WILL THE TIDE TURN HERE?

Six couples in Miami, Florida have filed a lawsuit demanding that they be allowed to marry their same s*x partners.1 The suit was filed on January 21, 2014. A copy of the complaint filed by these couples can be found in the Appendix and includes a number of compelling arguments that may be successful to require Florida law to recognize and respect same s*x marriages. This could apply retroactively to same s*x couples who have been married in jurisdictions outside of Florida that recognize same s*x couple marriages.

The Complaint filed in this matter contains the following statements:

9. In the not so distant past, the majority of states, including Florida, had laws prohibiting marriage between people of different races. Until 1967, the Constitution and laws of Florida barred marriages between white and black persons. See former Art. 16, § 24, Fla. Const.; former Fla. Stat. § 741.11 (repealed by Fla. Laws 1969, ch. 69-195, § 1). The Supreme Court of the United States held such exclusions from marriage to be unconstitutional in Loving v. Virginia, 388 U.S. 1, 12 (1967), declaring: “The freedom to marry has long been recognized as one of the vital personal rights essential to the orderly pursuit of happiness by free men.” See also Van Hook v. Blanton, 206 So.2d 210 (Fla. 1968) (granting writ of mandamus declaring Florida anti-miscegenation laws invalid in light of Loving).

11. Marriage contributes to the happiness, security and peace of mind of countless couples and their families, and to the stability and well being of society. Florida, like other states, encourages and regulates marriage through hundreds of laws that provide benefits to, and impose obligations on, married couples. Florida in turn enjoys the well-established benefits that marriage brings: stable, supportive families that contribute to both the social and economic well-being of Florida. “There can be no doubt that the institution of marriage is the foundation of the familial and social structure of our Nation. . . .” Posner v. Posner, 233 So. 2d 381, 384 (Fla. 1970). Marriage means many things, including “cohabitation, the founding of a home, affections, and companionship,” and is premised on the reality that “we depend on each other during the changing vicissitudes of life.” Orr v. State, 176 So. 510, 514 (Fla. 1937).

12. When Florida withholds a marriage license from a same-s*x couple, Florida circumscribes individuals’ basic life choices, classifies persons in a manner that denies them the public recognition and myriad benefits of marriage, prevents couples from making a legally binding commitment to one another and from being treated by the government and by others as a family rather than as unrelated individuals, and harms society by burdening committed families and preventing couples from being able to fully protect and assume responsibility for one another and their children.

13. Florida’s exclusion of same-s*x couples from marriage violates the Due Process Clause and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Florida’s exclusion deprives same-s*x couples of their fundamental right to marry; infringes upon their constitutionally protected interests in liberty, dignity, privacy, autonomy, family integrity, and intimate association; and deprives them of equal protection of the laws.

The Complaint goes on to explain that each of the plaintiffs satisfy all requirements that would apply under Florida law to become married if they were opposite s*x couples, and then explains the history of Florida laws barring same-s*x couples, as follows:

27. In 1977, the Florida legislature amended Fla. Stat. § 741.04 to expressly limit the issuance of marriage licenses to opposite-s*x couples. Section 741.04 states in relevant part:

No county court judge or clerk of the circuit court in this state shall issue a license for the marriage of any person unless there shall be first presented and filed with him or her an affidavit in writing, signed by both parties to the marriage, providing the social security numbers or any other available identification numbers of each party, made and subscribed before some person authorized by law to administer an oath, reciting the true and correct ages of such parties; unless both such parties shall be over the age of 18 years, except as provided in s. 7410405; and unless one party is a male and the other party is a female. (Emphasis added.)

28. In 1997, in response to the possibility that some states might permit same-s*x couples to marry, the Florida legislature enacted Fla. Stat. § 741.212 to again prohibit marriages between same-s*x couples. That statute provides:

(1) Marriages between persons of the same s*x entered into in any jurisdiction, whether within or outside the State of Florida, the United States, or any other jurisdiction, either domestic or foreign, or any other place or location, or relationships between persons of the same s*x which are treated as marriages in any jurisdiction, whether within or outside the State of Florida, the United States, or any other jurisdiction, either domestic or foreign, or any other place or location, are not recognized for any purpose in this state.

(2) The state, its agencies, and its political subdivisions may not give effect to any public act, record, or judicial proceeding of any state, territory, possession, or tribe of the United States or of any other jurisdiction, either domestic or foreign, or any other place or location respecting either a marriage or relationship not recognized under subsection (1) or a claim arising from such a marriage or relationship.

(3) For purposes of interpreting any state statute or rule, the term “marriage” means only a legal union between one man and one woman as husband and wife, and the term “spouse” applies only to a member of such a union.

29. In 2008, Florida amended its Constitution to include a provision excluding same-s*x couples from marriage. Article I, Section 27 of the Florida Constitution provides:

Insomuch as marriage is the legal union of only one man and one woman as husband and wife, no other legal union that is treated as marriage or the substantial equivalent thereof shall be valid or recognized.

The counts in this Complaint are as follows:

Count One
Violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution (brought pursuant to 42 U.S.C. § 1983)

Count Two
Violations of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution (brought pursuant to 42 U.S.C. § 1983)

A. Discrimination Based on S*xual Orientation

B. Discrimination Based on S*x

C. Discrimination with Respect to Fundamental Rights and Liberty Interests Secured by the Due Process Clause

D. Entitlement to Declaratory Relief

Legal counsel for the plaintiffs included Nancy J. Faggianelli, Sylvia H. Walbolt, Luis Prats, Jeffrey Michael Cohen, Cristina Alonso of the Carlton Fields Jorden Burt, P.A. law firm in Tampa and Miami.

SCIN, SCRAM, ANNUITY, or SCGRAT

Don’t Leave Your Clients with Short Life Expectancies Flat
Planning for Clients with Short Life Expectancies After Davidson and CCA 2013-30-033

By: Alan S. Gassman and Kenneth J. Crotty

The following, or an improved version thereof, will soon be published with Leimberg Information Services.

Primary Implications of the Limited Choices That Planners Have to Assist Taxpayers – the Good News Is That the Choices and Solutions Are Understandable and Easily Implemented.

EXECUTIVE SUMMARY:

Since the Tax Court decision of Estate of Moss v. Comm’r in 1980 and the issuance of Treasury Regulation § 1.1275-1(j) in 1998, estate tax planners have used self-cancelling installment notes (SCINs) to save millions of dollars of estate taxes for taxpayers whose life expectancy may be shorter than that assumed under the 2000CM Mortality Table promulgated by the Treasury Department under Publication 1457. In the recent CCA 2013-30-033, the IRS has taken the position in the Davidson case that clients with shorter than average life expectancies may not rely on the 2000CM Mortality Table to determine their life expectancy for the purpose of valuing the SCIN and may make taxable gifts when the sale occurs if they do rely on the 200CM Mortality Table. To reduce the possible gift tax exposure for clients, practitioners using SCIN with clients who have reduced life expectancies may want to use the SCGRAT technique described below.

FACTS:

The industry practice for most well versed practitioners has been that the 2000CM Mortality Table can be used when the taxpayer has a better than 50% chance of living at least one year at the time that the SCIN or private annuity arrangement is entered into.

In order to avoid incurring income tax on the sale of assets for a SCIN or private annuity, most arrangements have entailed having an irrevocable trust established to be separate and apart from the taxpayer for federal estate tax purposes, while being disregarded for income tax purposes so that there is no income on the sale and no interest or Internal Code Revenue § 72 income recognized by the taxpayer as payments are received by the taxpayer from the trust during the taxpayer’s lifetime.

Treasury Regulation § 25.7250-3(b)(2)(i) was enacted to implement the “probability of exhaustion test” which generally provides that if the entity purchasing assets for a private annuity is not capitalized with sufficient assets to enable the trust to make the scheduled private annuity payments until the Grantor reaches age 115, assuming a market rate equal to what is known as the 7520 rate which is equal to 120% of the Federal midterm rate in effect under § 1274(d)(1) for the month when the transaction is entered into, rounded up to the nearest 2/10ths of 1%.

Because of the difficulty of satisfying the probability of exhaustion test, especially in periods of low interest rates, most estate tax planners have recommended the use of SCINs, which are not subject to that test. A commonly used planning industry rule of thumb has been that a trust purchasing assets from a Grantor in exchange for a SCIN should have a positive net worth equal to 10% or more of the value of the assets purchased in order to be considered a separate and viable entity for estate tax planning purposes.

When trusts do not have sufficient assets to pass the probability of exhaustion test or the “10% rule of thumb” described above then it is common to have beneficiaries or affiliated entities guarantee the note or the private annuity in order to meet the applicable test, the 10% test for a SCIN or the probability of exhaustion test for a private annuity.

Treasury Regulation § 25.7520-3(b)(3)(I), which states that the 2000CM Mortality Table can be used when the person whose life controls the document has better than a 50% chance of living at least one year, applies explicitly to private annuities.

Many leading commentators, including Howard Zaritsky and Ronald D. Aucutt, have concluded that most likely this regulation applies to SCINs, because in form and content a SCIN constitutes a series of payments over time that can in substance be exactly the same as a private annuity contract.

The Service has strongly disagreed with this approach, but has waited over 18 years since the enactment of the above-referenced Treasury Regulation and notwithstanding annual and continuing industry and leading treatise literature to the contrary, on the occasion of the death and estate tax return audit of William M. Davidson to challenge this approach, whereby over $1,000,000,000 of estate tax is being assessed by the Service (constituting over 25% of the total estate taxes that the U.S. government would receive for a given calendar year) as the result of Mr. Davidson having sold a large percentage ownership in the Detroit Pistons basketball team and other assets in exchange for multiple SCINs when Mr. Davidson is said to have been in failing health.

The Service further threw the gauntlet down in front of the estate tax planning industry by publishing CCA 2013-30-033 on August 5, 2013, as an IRS Chief Counsel Advice which concludes that a SCIN will be worth substantially less than its face amount if a willing buyer would pay a willing seller less than the face amount if there was open market negotiation for the note.

In other words, if Mr. Davidson sold $1,000,000,000 worth of assets for a $1,000,000,000 SCIN then the trust that sold the note would only be able to receive $300,000,000 pursuant to an auction of the note at an event where every willing buyer received notice of the auction. Mr. Davidson would then have made a $700,000,000 gift and he would be subject to $280,000,000 worth of estate tax, enough to purchase two F-35 fighter jets.

What is a planner to do now when a wealthy client has a short life expectancy – SCRAM, go flat or SCGRAT?

COMMENTS:

Door Number 1

A private annuity arrangement could be entered into with family members, such as occurred in the 2012 Estate of Kite v. Commissioner case. If a private annuity is entered into where the parent sells assets to children, the children’s basis in the assets will be equal to the annuity payments made by the children. If the parent dies before receiving any annuity payments, such as what happened in the Kite case, the children would have a zero basis in the assets received and would face a 23.8% capital gains tax on the full value of the assets when they were sold.

Alternatively, the planner must face the probability of exhaustion test if a grantor trust is used that would quite possibly allow a stepped up basis for the assets.

The probability of exhaustion test may not apply, as discussed in the University of Miami Heckerling presentation by Lawrence Katzenstein , but there is a significant risk that the probability of exhaustion test will apply.

Door Number 2

Go with a SCIN, but understand the risk posed by CCA 2013-30-033 and the Davidson case that the Grantor could be making a significant taxable gift at the time the transaction was entered into.

Door Number 3

Do nothing, but accelerate planning with charitable donations, discounting, and other methods.

Door Number 4

The box where Carol Merrill is now standing.

Door number 4 is the bread slicer – or at least what we think is better than sliced bread – a SCIN arrangement that would allow any gift element to not be subject to gift tax and to instead be repayable to the Grantor by use of a grantor retained annuity trust arrangement.

Instead of selling the assets to a typical irrevocable grantor trust the taxpayer first establishes a limited liability company owned 100% by the Grantor and places the assets that are being “sold” into the LLC and also receives a SCIN from the LLC while verifying that the taxpayer has a better than a 50% chance of living at least one year.

The taxpayer also executes a grantor retained annuity trust agreement (GRAT) which provides that a percentage of the value of the Day 1 GRAT assets will be paid back to the Grantor each year for two years on the anniversary date of the GRAT being established.

The Grantor then transfers ownership of the LLC to the GRAT and hires a valuation firm to determine the value of the assets owned by the LLC.

If the valuation firm opines that the assets in the LLC are worth less than the face amount of the SCIN, then the LLC will be considered to have a negligible value, and the payments owed back to the Grantor will be very small. There should be some positive value even if the assets in the LLC are worth less than the SCIN because the owner of the LLC has no downside and at least some limited upside potential that the assets will grow in value and yield a net return exceeding the amount owed on the SCIN.

If the assets have a value exceeding the value amount of the SCIN then assuming the 7520 rate is 2.4%, then the excess amount multiplied by approximately 51.8% will be the amount of the annual payment that the GRAT will make to the Grantor, which may be in cash that the LLC can distribute to the GRAT or in the form of assets equal in value to such amounts that the LLC may distribute to the GRAT each year.

After the second annual payment, the LLC will be owned by the GRAT or an irrevocable “remainder trust” that the GRAT pours into after the second year.

The SCIN will typically be an interest only SCIN with a balloon payment at the end of the term of the note which will normally be just before the standard life expectancy of the individual on whose life the note is based as determined under 2000CM Mortality Table or the mortality table under Treasury Regulation § 1.72-9, Table V.

The 2000 CM Mortality Table will typically have a shorter life expectancy and it is therefore safer to use it. For example, for a 78 year old the life expectancy under the 200CM Mortality Table is 9.44 and the life expectancy under Treasury Regulation § 1.72-9, Table V is 10.63.

To determine the value of the SCIN, either the interest rate of the SCIN will be increased, the face amount of the SCIN will be increased, or the interest rate and the face amount of the SCIN can both be increased to the extent appropriate to satisfy actuarial assumptions which make the note equal in value to the assets sold so that the seller is compensated to take into account that the note will vanish on death. This can be determined based upon standard life expectancies under actuarial tables using software programs like Leimberg’s Number Cruncher and Larry Katzenstein Tiger Tables. The links to obtain these programs are as follows.

http://www.leimberg.com/products/software/numberCruncher.html
http://www.tigertables.com/

The need to value the assets held under the LLC is a substantial reason to use the GRAT when assets are hard to value or discounts will be applicable.

A GRAT must be funded in a single transfer and there is no authority for the ability to sell assets to a GRAT in exchange for a note at the time of funding.

This is why well respected commentators have suggested that an LLC that is disregarded for income tax purposes will first be funded by the Grantor and that the Grantor can receive a note back from the LLC in order to provide appropriate financial leverage for the arrangement.

Many taxpayers will want to have their remaining assets be under the amount that would require an estate tax return to be filed in order to reduce the paperwork, expenses, and delay in estate administration that results from having to file a federal estate tax return. A SCIN will not be considered to be an asset owned at the time of death for estate tax return threshold filing purposes.

However, in Estate of Moss v. Comm’r, 74 T.C. 1239 (1980) , the Tax Court held in favor of the estate….***See: Cain v. Comm’r, 37 T.C. 185 (1961)

Where a marital deduction devise or charitable disposition may facilitate avoidance of federal estate tax on the death of the Grantor when used in conjunction with the SGRAT, it can still be advisable to have GRAT assets pass to fund a marital devise or trust and/or a charitable devise as remainder beneficiaries of the GRAT so that a federal estate tax return using it is more clear that the assets passing to fund a marital devise will receive a stepped up basis if held by the taxpayer on death, but the advantage of not having to file a federal estate tax return may outweigh the risk of not receiving a stepped up basis on assets passing to fund a marital or charitable devise.

Another consideration is whether to maximize the use of the taxpayer’s generation skipping tax exemption makes the filing of a federal estate tax return worthwhile. Generation skipping tax exemption can clearly be allocated to a marital deduction trust that is funded from the Grantor’s estate or revocable trust that receives the payments from the GRAT.

Many clients will prefer to zero out the GRAT in order to avoid the need to file a federal gift tax return for the year that the SCGRAT is implemented. It may therefore be important to be sure that there are no gifts exceeding $14,000 per donee or any gifts that do not qualify for the annual gift tax exclusion for the year in which a gift tax return would be filed, although even if a gift tax return needs to be filed it seems likely that a zeroed out GRAT would not be considered to be a gift that would need to be reported on a gift tax return.

Sample charts demonstrating this SCRAT technique are attached.

CONCLUSION:

Utilizing a SCGRAT may be the best choice for practitioners who would like to use SCINs with a client who has a reduced life expectancy. If the Service successfully challenges the transaction and reduces the face value of the note by applying the willing buyer willing seller standard, by using the SCGRAT the value of the GRAT formed by the client should be increased. If the value of the GRAT is increased, then the payments from the GRAT to the client will be increased. As a result, there should not be any additional gift tax liability for the client.
Seminar and Webinar Announcements

Ave Maria is Closer Than Korea

Ever wanted to go to Korea? This is not a good time to go to North Korea, but consider Naples. Not Naples, Italy, of course, but Naples, Florida.

You can attend the Ave Maria School of Law Estate Planning Conference (don’t miss breakfast because we are a breakfast sponsor) on Friday, April 25, 2014 and have your pick from over 10 sessions (many run concurrently). Please pick our session on Using Estate Planning Techniques to Optimize Family Wealth Preservation. We will be counting the people!

Not only that but you can then stay at the Ritz Carlton on Friday night and Saturday night for only $338 per room, and the courtesy van will take you to the Kentucky Fried Chicken located at 12225 Collier Blvd.,which is only 9 minutes from the Ritz Carlton.

Have buckets of fun in Naples, both for our session, and also choose from the following fantastic presentations and speakers:

7:30 am Registration Opens

8:00 am Breakfast (Co-Sponsored by Gassman Law Associates, P.A. – sorry no Kentucky Fried Chicken, mashed potatoes or gravy.)

8:15 – 8:30 am Welcome and Opening Remarks

Eugene R. Milhizer, Ave Maria School of Law President and Dean Jonathan Gopman, Office Managing Partners at Akerman LLP

8:30 – 9:30 am General Session: Income Taxation of Trusts and Estates

Speaker: William A. Snyder

9:30 am – 9:45 am Networking Break

9:45 am –10:45 am Concurrent Sessions:

Session 1: International Tax Planning and Asset Protection

Speakers: Jonathan Gopman and Kevin Carmichael

Session 2: Homestead Portability: Pitfalls, Opportunities, and Traps

Speaker: Barry A. Nelson

10:45 am – 11:00 am Networking Break

11:00 am – 12:00 pm Concurrent Sessions:

Session 1: Succession Planning for the Closely Held Business Upon Retirement or Death of the Principal

Speaker: Jerome M. Hesch

Session 2: Using Estate Planning Techniques to Optimize Family Wealth Preservation

Speaker: Alan S. Gassman

12:00 pm – 1:15 pm Lunch Presentation: Estate Planning Ethics

Speaker: Gregory T. Holtz

1:15 pm – 2:15 pm Concurrent Sessions:

Session 1: A Baker’s Dozen of My Top Favorite Planning Ideas That I’m Willing to Talk About

Speaker: Bruce Stone

Session 2: Pitfalls for Estate Planners

Speaker: Laird A. Lile

2:15 pm – 2:30 pm Networking Break

2:30 pm – 3:30 pm Featured Session: Domestic Asset Protection Trust Planning

Speaker: Al W. King, III

3:30 pm – 4:30 pm Estate Planning Power Panel Discussion and Cocktail Reception

Panelists: Al W. King, III, Bruce Stone, Barry A. Nelson, Alan S. Gassman and Jerome M. Hesch

Moderator: Christopher P. Bray

For additional information on the Ave Maria School of Law Estate Planning Conference please contact Karen Grebing at kgrebing@avemarialaw.edu or 239-687-5404.

Strafford JEST Trust Webinar Notice

Stafford Publications, Inc. has just put Alan Gassman and Christopher Denicolo together with noted author and tax thinker Edwin Morrow to speak on Tuesday, March 18 from 1:00pm-2:30pm EDT on JEST planning.

More about this webinar can be found in our Seminars and Webinars section below.

If you would like to register for this webinar with Strafford (they keep all of the money of course!) you can register by visiting: https://www.straffordpub.com/products/structuring-joint-exempt-step-up-trusts-emerging-tool-to-maximize-step-up-in-basis-2014-03-18 or call 1-800-926-7926 ext. 10  Ask for Joint Exempt Step-Up Trust on 3/18/2014 and mention code: ZDFCT.

The Balanced Scorecard of an IPA (Independent Practice Association)
By: Pariksith Singh, M.D.

Singh

How does one evaluate an IPA (Independent Physicians’ Association)? This is an important question not only in assessing its value for sale or acquisition but also to measure its success, review the implementation of strategy and identify its key functions and metrics. We have seen the sale of several IPAs in the recent past in Tampa Bay and an interest among physician entrepreneurs in creating IPAs and attempt to make a fast buck. In this endeavor, they seem to look only at the financial balance sheet or returns of the organization and forget the other measurements that are key in the appraisal of an IPA.

The Balanced Scorecard (BSC) is a concept first articulated in a 1992 Harvard Business Review article by Robert S Kaplan and David Norton. It comprises of four perspectives which are necessary to have a composite snapshot of the state of health of a business. These perspectives are :

1) The Financial Perspective

2) The Customer Perspective

3) The Business Process Perspective

4) The Learning and Growth Perspective

In the book ‘The Balanced Scorecard: You Can’t Drive a Car Solely Relying on a Rearview Mirror’, Kaplan later expanded on this approach. It is ‘estimated that at least 40% of the Fortune 1000 companies use this methodology’.

In my opinion, a BSC is the best way in which one can measure the pulse of an IPA, although given the specific nature of an IPA, certain new perspectives must be added. These additional perspectives should be:

1) The Regulatory Perspective

2) The Legal Perspective

3) The Brand Perspective

If an IPA deals with Medicare lives and federally-funded dollars, the regulatory aspect of its functioning assumes an even more critical metric for any violation can threaten its very existence. Such a perspective should include compliance with HIPAA, OSHA, Stark laws, anti-kickback statutes, fee-splitting, Balanced Budget Amendments, the Affordable Care Act, etc. In light of some IPAs losing their contracts with HMOs recently, such a tally becomes immediate and significant.

An IPA is nothing if not relationships and contracts. If contracts do not exist, the IPA has no foundation and its entire structure collapses. Thus, strong and compliant contracts that are transparent and clear with powerful disincentives for breach would be essential. Without such contracts in place with coherent and ethical legal counsel to back it up, an IPA would founder and be unable to grow. Whatever growth and profits are accomplished are tenuous and expose it to further danger and vulnerability. It is my recommendation that all fee including administrative and re-insurance expenses be properly disclosed and attested by affiliates at the time of induction to the IPA. It is also my belief that the liabilities to the business be considered as one of the most critical sections of the BSC, i.e., the number of lawsuits against the organization, the potential damages from such lawsuits, the confidentiality of its data and reports or their loss, the nature of competition and poaching of its affiliates, conflicts in its relationships with the HMOs and potential OIG (Office of Inspector General) investigations of its practices.

The Brand of an IPA is the ‘X’ factor, its mystique and inevitability, uniqueness and desirability, customer loyalty and credibility of the organization and its officers. It is the factor that gives it its ‘oomph’ and saleability, and without the power of the Brand, an IPA becomes an also-ran.

Thus, the valuation of an IPA cannot be done solely on a fiscal basis. All the perspectives mentioned above must be calculated and counted. While the financials remain an important aspect of any valuation, they certainly are not the most important, or even, the largest component of a BSC for an IPA. At best, the fiscal status of an IPA can be used only if the organization scores a 100 on all other measures on its scorecard. At worst, the financials have to be completely discarded if the basics of business are not in place. We have seen that recently when a Fortune 500 corporation refused to take ownership or invest in an IPA solely because there were lawsuits against it for reasons of compliance.

The fundamentals of an IPA still remain the state of its compliance, the strength of its relationships and services, its feedback systems, employees, data and processes. Without these in place and sealed protectively, all one shall find is a house of cards. And the big problem with a house of cards is that the bigger it gets, the more vulnerable it becomes to sudden collapse. An IPA has to be based on an extremely strong foundation even though it needs to be nimble and flexible as regulations change and payment methodologies vary as we have seen with CMS in recent years.

When we measure the Business Process Perspective, we should measure the MRA, HEDIS, HOS, CAHPS and care management analyses, along with length of stays, continuity of care, ER visits, close follow-ups on nursing homes and hospitals, and post-acute care and post discharge care. The Operational metrics would also study the infra-structure, the state of IT, web services, reporting and sharing of information among the executives and owners.

The Customer Perspective should pay close attention to physician and employee satisfaction and retention, response rates and reputation. When practices are not wholly owned, this becomes an even more serious concern for any IPA. Also, the strength and managed care savvy of affiliates and risk of losses due to poor utilization by them cannot be ignored. If the IPA does not see itself as a fiscal intermediary and does not have adequate protections against a downturn and that it is in a risk business where the Pareto rule can get easily skewed from 20-80 to 1-99 and if the reserves are not strong or re-insurance is weak, all the juggling of numbers is of scarce significance.

An IPA is not any stronger by randomly signing up affiliates without interest, aptitude or drive to master managed care; in fact, the very opposite is true. Without proper infra-structure in place, an IPA should not attempt to grow. The continuous education and training of its employees is a sine qua non with any growth and a culture of compliance, quality and excellence should be a part of its DNA. The best IPA is a Learning Organization and a Knowledge-Creating Organization.

The concept of a Poison Pill in the valuation of any IPA is of much use. If the risk to the IPA due to significant legal or regulatory liability is high, it completely negates any financial valuation of the IPA almost like a junk bond and, in fact, may give it a negative status. We see this frequently in the market place when we see how the credit agencies appraise a company or a nation. Recently, we have seen how Universal Health Care, Inc, a Medicare Advantage plan, was taken over by a receiver thereby reducing its value to zero and with significant legal and financial liability to its executives and owners, when the Office of Insurance Regulations (OIR) decided that the plan was out of compliance. An IPA may come under the purview of the OIR too in a similar fashion.

Eventually, one must remember that any metric is only a reflection of an overall strategy, vision and mission, and the core competence of an IPA. If the IPA loses sight of these, no amount of tactical quantification would suffice in making it healthy and sustainable. Strategy must be integrated completely with the processes and the core strength of the entity should never be compromised. For if the core is forsaken, all is forsaken and the vitality of the organization may be irretrievably lost.

A poem by Dr. Singh:

The Sky

The sky covers my eyes
With white flares of zinc.
All desires are dissolved
In its trackless mind.
The sky fills my brain
With vast stretches
Of sun-lit spaces,
Clouds that float in silence
With wistful thoughts,
And stars that intuit
In brilliant scintillations
Of insight and wit,
Spread out in shapes
As varied as constellations,
Filled with the inner glow
Of presence as an amethyst
That fills within
With waves of trapped light.
The sky is a brain
That replaces my own.

DO NOT MISS OUR MARCH 19, 12:30 pm or APRIL 1, 5pm FREE 30 MINUTE WEBINAR ON Compounding Pharmacy Law.

For many medical practices this will be the best thing that has happened for them in years. Find out why and how during this informative webinar.  Click here to register for the March 19 webinar.  Click here to register for the April 1 webinar.

Perling Picture

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

Applicable Federal Rates.February 2014

Seminars and Webinars

THE CLEARWATER BAR ASSOCIATION 444 SHOW – ASSET PROTECTION, ESTATE PLANNING AND LLC LAW UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman, Christopher Denicolo and Kenneth Crotty

Additional Information: To register for the webinar please visit www.clearwaterbar.org

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THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, March 4, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

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FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

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TAX AND ASSET PROTECTION BASICS FOR THOSE WHO REPRESENT PHYSICIANS AND MEDICAL PRACTICES

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

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THE FLORIDA BAR LEADERSHIP ACADEMY: MARCH 2014 REGIONAL MEETING

On Saturday, March 15, 2014, Alan Gassman will join Judge Claudia Rickert Isom and Hillsborough County Bar Association President Susan E. Johnson-Valez for a panel discussion on the Benefits of Serving as a Community Leader. We welcome any and all questions, comments and suggestions for this presentation. We are developing a criteria worksheet that professionals can use to decide what the costs and benefits are of the many different non-billable activities and causes that we all have the opportunity to support.

Date: Saturday, March 15, 2014

Location: Marriott Tampa Airport

Additional Information: To register for the program please email agassman@gassmanpa.com

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STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EMERGING TOOL TO MAXIMIZE STEP-UP IN BASIS

Date: Tuesday, March 18, 2014 | 1:00 – 2:30 p.m.

Location: Online webinar sponsored by Stafford Publications, Inc.

Speakers: Alan S. Gassman, Christopher Denicolo and Edwin P. Morrow, III, Esq.

Additional Information: To register for the webinar please visit https://www.straffordpub.com/products/structuring-joint-exempt-step-up-trusts-emerging-tool-to-maximize-step-up-in-basis-2014-03-18 or email agassman@gassmanpa.com

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COMPOUNDING THE PROBLEMS AND OPPORTUNITIES FOR COMPOUNDING PHARMACIES

Date: Wednesday, March 19, 2014 at 12:30 p.m. or Tuesday, April 1, 2014 at 5:00 p.m.

Location: Online webinar

Speakers: Lester Perling and Alan Gassman

Additional Information: To register for the March 19, 2014 webinar please click here.  To register for the April 1, 2014 webinar please click here.

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COUNSELING SAME S*X COUPLES IN 2014

Alan Gassman will be speaking at the Wealth Council Florida Forum on Counseling Same S*x Couples in 2014

Date: Friday, March 21, 2014 | 10:30 – 12:00 p.m.

Location: Holiday Inn at the Orlando Airport

Additional Information: For more information and to register for the program please email agassman@gassmanpa.com

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LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

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FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

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DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s. To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Alan Gassman will cover speak on Using Estate Planning Techniques to Optimize Family Wealth Preservation.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

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40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.” As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future. Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have. For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams. As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death. The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

The Thursday Report – 02.20.14 – 2014 What is April 22, 2015?

Posted on: February 20th, 2014

2014 FLORIDA TAX INSTITUTE EDITION

Quotes from the 2014 Florida Tax Institute

The Jack Freeland Experience

Remembering Michael Keane

Federal Estate Tax Planning for Same Sex Couples – Part 3

Physician Tax Update Series – Sales Tax Applicable to Leasehold Improvements by Michael O’Leary

W. George Allen – A University of Florida and National Hero Who Overcame Racial Obstacles to Succeed in Practicing Law and Helping Others.

What Debtor Creditor Lawyers Need to Know About Student Loans

Seminar and Webinar Announcement – The JEST, the SCGRAT, and the E-Street Software

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Calfee, Leimberg, and Gassman

Professor Dennis Calfee, Steve Leimberg, and Alan Gassman reflect upon what a great event the Florida Tax Conference is and what a wonderful thing an open bar can be! What a great day for UF!

Detzel, Gassman, and Phillips

Conference Chair Lauren Detzel, Alan Gassman, and Professor and Practitioner A. Brian Phillips who practices in Orlando, Florida discuss the Thursday Report and the mitigation of the statute of limitations near the Gassman Law Associates table.

Mark your calendar for Wednesday through Friday, April 22 through April 24, 2015 for the 2nd Annual Florida Tax Institute.

Quotes from the 2014 Florida Tax Institute

It is a unique opportunity when you can hear tax specialists in academia along with practitioners in the business.  Getting the different perspectives is invaluable and keeps you current as to not only prevailing law but also planning strategies that others are utilizing.”

- Steve Rosenbloom, Sheldrick, McGehee and Kohler, LLC, Jacksonville, FL

“This is a well planned, organized and executed conference!”

            - Tim Bronza, Business Valuation Analysts, LLC, Maitland, FL

“It is extremely motivating to continue practicing tax law at the highest professional standard.”

            - Robert Middleton, Nisen & Elliot, LLC, Chicago, IL

Josh Proper gave us his favorite quote from Professor Calfee:

“Put on your ice skates because then you’ll be ready when hell freezes over!”

“I went to prep school, undergraduate, law school and LL.M. at Florida and Florida is the only place I send a check.”

“Everyone is innocent until proven indigent.”

- A. Brian Phillips, A. Brian Phillips, P.A., Orlando, Florida, Class of 1990 and Professor of Criminal Tax Law

SPECIAL THANKS TO PROSKAUER ROSE, LLP AND DAVID PRATT

David Pratt

The Florida Tax Institute has been a great success.  It was estimated that 20 students from the LL.M. program would sign up.  In reality 70 signed up. David Pratt and his firm, Proskauer Rose, were kind enough to donate an additional $10,000 to fund the attendance of the extra students so hats off to Proskauer Rose for their very generous donation!

The Jack Freeland Experience

 Jack Freeland was a well loved and extremely talented and somewhat eccentric tax law professor at the University of Florida who many believe led the program to the preeminence that it still enjoys.

What follows is Tom Ellwanger’s and Bruce Bokor’s description of the Jack Freeland experience:

Tom Ellwanger’s Story:

For nearly 40 years, taking a tax law course in Gainesville gave you pretty good odds on encountering James J. “Jack” Freeland.  If that happened, the odds were even better than you’d consider becoming a tax lawyer, even if such a thought had never previously crossed your mind.

He was the scion of a well-known Miami family.  Jackson Memorial Hospital is named after his grandfather; his father owned Byron’s Department Stores, which later became JByron.  Jack did everything possible to neutralize his early advantages.  As a young man, he led a life which was sufficiently dissolute that his Puritanical father cut his inheritance to $100.  His response, he would say, was to dishonor his father’s memory by spending the entire $100 in “one night of riotous living”-this at a time when $100 would buy plenty of riotous living.

He graduated from Duke in 1950, graduated second in his class from the University of Florida College of Law in 1954, and became a graduate fellow at Yale.  He then joined the Miami law firm of Hugh F. Culverhouse as a federal tax lawyer.

His career there was short but productive.  After a year he was chosen to manage the firm, but by 1957 he had returned to Gainesville to teach tax law.  He turned that experience into nearly 40 years of entertaining war stories, with the best ones always told on himself.

He would recount how he got pretty good at tax litigation, to the point where the local IRS District Counsel wasn’t much of a match.  One Monday morning, however, he walked into court and found the District Counsel, unaccountably smiling at him.  Suddenly the courtroom doors flew open and there entered “two men in bowties carrying briefcases-lawyers sent down from the Chief Counsel’s Office in Washington,” who proceeded to kick Jack around the courtroom, leaving him dazed while they calmly repacked their briefcases and left for the airport.

Ah, yes.

As a tax professor, he defied expectations by being exceptionally entertaining and delightfully unstructured.  He disliked teaching from formal notes or an outline.  He disliked standing in one place.  He strove for spontaneity and achieved it while still making the most abstruse points clear.

He spoke a language all his own.  That hated element of trust income tax law, the throwback rule, became “the throwup rule.”  And, dollars saved by good tax planning became “real dollars”-real because they aren’t reduced by income tax.

His mentor, good friend, and writing partner was Professor Richard B. Stephens.  Professor Stephens was as brilliant and respected as Jack, although two men could hardly differ more.  One was dry, orderly, and dignified.  The other one wasn’t.  The pair collaborated on Fundamentals of Federal Income Taxation, the most widely used textbook, and, with Professor Carr Ferguson of NYU, on Federal Income Taxation of Estates and Beneficiaries, a ground-breaking explanation of one of the more arcane areas of tax law written, so clearly that an English major could understand it.

The two men also collaborated on establishing a graduate tax program at Florida in 1974.  The program has produced many of the outstanding tax lawyers in the country.  After the retirement of Professor Stephens, Jack was director of that program from 1977 through 1982.

Unfortunately, the creation of the program meant fewer chances for undergraduate law students to experience Jack.  Before that, he was recognized as the Outstanding Law Professor at Florida five times.  When in 1982 the Florida Bar Tax Section began to recognize an Outstanding Tax Attorney in the State of Florida, Jack was the first recipient.  That same year he was named a University of Florida Distinguished Service Professor, thus achieving the highest faculty rank at the school.

He had at least three wives-his private life was somewhat confusing to outsiders, if not to him-but this simply burnished his legend.

Probably the only complaint his students could have is this-through his brilliance, his enthusiasm, and his teaching skill, Jack gave us all the impression that tax law was clear, comprehensive, and above all, fun.  I for one feel somewhat misled.   But, I consider that was cheap price to pay for a chance to experience a great guy.

Bruce Bokor’s Story:

About 8 of us had Jack for a seminar course, Advanced Corporate Taxation, before there was an LL.M. program.

This course was by invite only for us “tax nerds with good grades in tax”. Jack loved the course and the students, and I think he gave us a final exam, but he told us we were all getting A’s.

He liked us so much that he had a party for us at his home the night all law school finals were over.

When we arrived, Jack was outside in shorts and a T shirt  smoking his cigarette with lots of clothes and other personal items laying on the ground next to him. Jack told us there would be no party because his wife had thrown him out of the house, and she was going to file for a divorce on Monday. I do not know which number wife this was, but Jack had no problem finding other wives or women.

Remembering Michael Keane

Michael keane

We are very sad to note the passing of St. Petersburg litigator, Michael J. Keane.  Michael was a great friend of almost every client he represented, and had magical powers both in the conference room and the court room.

Michael was always very sympathetic to clients having business, family, and emotional challenges.  Michael settled his matters whenever he could, but also would not hesitate to go to court to fight for his clients rights.

Perhaps one in one-hundred or three hundred lawyers has the passion, total dedication and amazing raw talent that Mike Keane had and so freely shared.

Mike had so many close friends in the community including from the time he spent as a great father, a baseball coach and a friend and confidant for many.  Almost everyone who practices in St. Petersburg and many of us who practice in the Tampa Bay area have a couple of great stories about Mike.  It is time to tell them!

Mike’s amazing partners Shirin Vesely, Brandon Vesely and Charles Gerdes and associates, R. Garrison Mason and Nicole M. Ziegler, along with their wonderful staff will carry the torch to help a great many people in the upcoming years.  Let’s wish them and Michael’s family the very best, and remember how privileged we are to carry our own torches to help others in need while serving as platforms to uphold and improve the integrity of our legal, tax and judicial systems.

We welcome any comments and suggestions for further observance of Michael Keane and express our most sincere condolences to his family and friends.

Federal Estate Tax Planning for Same Sex Couples

By: Alan S. Gassman, Esq. and Danielle Creech, Esq.

The following is a continuation of our sharing sections from the book we are writing entitled The Florida Advisors Guide to Counseling Same Sex Couples in 2014.  Alan Gassman will be presenting these materials at the Wealth Council Florida Forum on Friday, March 21, 2014 in Orlando, Florida.  More details regarding that seminar appear below.

Any questions, comments, and suggestions on these materials would be greatly appreciated:

CATEGORIES OF SAME SEX MARRIAGE RECOGNITION RULES

There are two basic categories of same sex couple recognition rules. The “state of celebration” and the “state or residence.”

1. “State of Celebration”

For some purposes, such as with the IRS and federal income estate and gift tax rules, a same sex couple will be considered as married, as long as their marriage is recognized in the jurisdiction where the ceremony and licensing took place, notwithstanding that the couple may live in a state that does not recognize their marriage, such as Florida.

2. “State of Residence”

For many purposes, however, a same sex married couple will not be considered as eligible to receive married couple rights if they reside in a state that does not recognize their marriage. An example of this is Medicaid eligibility.  Presently the Medicaid statutes do not require the states that administer the Medicaid program to recognize a same sex marriage.  The same applies for social security and the Family and Medical Leave Act.

DOMESTIC PARTNERSHIPS

Many Florida counties and cities have adopted domestic partnership registration ordinances, which permit same-sex couples to register as a Domestic Partnership to be provided with some or all of the following legal rights:

1.         The ability to visit one another and receive confidential healthcare information from facilities and providers.

2.         The ability to make healthcare decisions for one another.

3.         The ability to receive information from schools and other educational entities with respect to the education of each other’s children.

4.         The ability to have priority to serve as one another’s guardian if ever need be.

5.         The ability to make funeral and burial decisions.

In order to register as a Domestic Partnership, each partner must normally be at least eighteen (18) years old, and not be married or in another Domestic Partnership relationship and not related by blood.  The parties must normally reside together in a mutual residence.

Typically each party must agree to be jointly responsible for each other’s basic food and shelter and for the maintenance and support of the Domestic Partnership.  Each partner typically agrees to immediately notify the clerk of court for the county where they reside if the terms of the Domestic Partnership arrangement are no longer applicable.

The registration papers are typically required to be signed by both partners in front of two (2) witnesses and a notary.

The counties that offer this designation will typically issue a Certificate of Domestic Partnership to confirm the registration of the arrangement.

The county ordinances will typically provide for reciprocity so that domestic partners from other counties with similar statutes will bestow the same rights on visiting domestic partners.

The following Florida cities and counties have adopted a Domestic Partnership Registry.

Florida Counties:

Broward County

Leon County

Miami-Dade County

Monroe County

Orange County

Palm Beach County

Pinellas County

Sarasota County

Volusia County

Florida Cities:

Clearwater

Gainesville

Key West

Kissimmee

Miami

Miami Beach

Pensacola

Punta Gorda

Sarasota

South Miami

St. Cloud

St. Petersburg

Tampa

Tavares

West Palm Beach

The Pinellas County Domestic Partnership Registration Information and Summary of Rights and Legal Effects can be obtained by emailing agassman@gassmanpa.com

CONFLICT OF INTEREST RULES

      Advisors will have to be very careful to not violate ethical and practical rules with respect to conflicts of interest. It is important to educate clients so that they understand that information provided to a lawyer or other advisor under joint representation will be accessible to both clients, and that in the event of a conflict, the common lawyer would not be able to advise either client with respect to general subject matter without mutual consent.

Florida Bar’s Professional Responsibility Rule 4-1.7 provides the following language for regulation of conflict of interests between current clients.

RULE 4-1.7 CONFLICT OF INTEREST; CURRENT CLIENTS

(a) Representing Adverse Interests. Except as provided in subdivision (b), a lawyer shall not represent a client if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a substantial risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a conflict of interest under subdivision (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent                                                   representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a position adverse to another client when the                                           lawyer represents both clients in the same proceeding before a tribunal; and RRTFB – May 1,                                                 2013;

(4) each affected client gives informed consent, confirmed in writing or clearly stated on the record at                                        a hearing.

(c) Explanation to Clients. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

(d) Lawyers Related by Blood or Marriage. A lawyer related to another lawyer as parent, child, sibling, or spouse shall not represent a client in a representation directly adverse to a person who the lawyer knows is represented by the other lawyer except upon consent by the client after consultation regarding the relationship.

(e) Representation of Insureds. Upon undertaking the representation of an insured client at the expense of the insurer, a lawyer has a duty to ascertain whether the lawyer will be representing both the insurer and the insured as clients, or only the insured, and to inform both the insured and the insurer regarding the scope of the representation. All other Rules Regulating The Florida Bar related to conflicts of interest apply to the representation as they would in any other situation.

The Mike O’Leary Physician Tax Update Series – Sales Tax Applicable to Leasehold Improvements

O'Leary

 

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on sales tax applicable to leasehold improvements.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

A. Overview. Sales tax is imposed on the periodic payment of commercial rent, even though the lessor and the lessee are related parties.

B. Current DOR Position. Based on Seminole Clubs, Inc., 745 So. 2d 473 (Fla 5th DCA 1999), the Florida Department of Revenue has asserted that the construction of leasehold improvements by commercial tenants is also subject to the Florida sales and use tax if (i) the leasehold improvements are a condition of occupancy so that a failure to construct the leasehold improvements would result in a default under the lease and (ii) the improvements become the property of the landlord either during the term of the lease or at the end of the lease.

C. Seminole Clubs. In Seminole Clubs, the City of Sanford, the landlord, gave Seminole Clubs, Inc, the lessee, the option of expending five percent of gross revenues on capital improvements, in lieu of paying cash “rent,” in order to retain possession of premises. The court held that the Lessee’s capital improvements to the golf course premises represented “rent in kind” subject to sales tax.

D. Ruehl. In Ruehl, Case No. 2009-CA-1503, the landlord required the lessee, a retail mail tenant, to completely refurbish the interior of the store. There was no requirement that the tenant spend a particular amount of money on the improvements. The tenant challenged the position of the Florida Department of Revenue that the leasehold improvements were taxable as “rent in kind.” The Circuit Court of the Second Judicial Circuit in Leon County held that amounts spent by the tenant were not subject to sales tax. The factors cited by the court were as follows:

1. There was no record evidence to suggest that the amount the lessee spent on the improvements for refurbishing of the interior of the leased premises was in lieu of rent;

2. There was no requirement that a particular minimum amount of funds be expended;

3. There was no provision for the lessee to be credited against rental payment for such costs;

4. There was no evidence of record that the amount of rent to be paid was somehow manipulated by this provision. Rather, the court concluded, it was simply an expense which the tenant had to incur to get the premises in a condition that would be suitable for its intended purposes.

E. On January 3, 2012, the First District Court of Appeals affirmed the trial court’s holding that leasehold improvements constructed under two commercial leases were not subject to sales and use tax. Florida Department of Revenue v. Ruehl No. 925, LLC, 76 So.3d 389 (Jan. 3, 2012). The appeals court held that the parties to each of the leases did not “intend for the costs of the leasehold improvements to be part of the total rent charged” and therefore the “costs of the leasehold improvements were not part of the total rent and therefore not subject to tax under section 212.031, Florida Statutes.” The Department did not appeal the decision to the Florida Supreme Court.

F. After hearings DOR issued new proposed rules. The rules were never finalized, and new proposed rules are expected in the next few months. There is a bill to phase out the commercial rentals tax, but probably not much chance of passing due to the amount of revenue from the tax which is well over a billion in revenue raised annually.

 W. George Allen – A University of Florida and National Hero Who Overcame Racial Obstacles to Succeed in Practicing Law and Helping Others

By: Alan S. Gassman, Esq. and Dena Daniels

Born on March 3, 1936 in a totally segregated Sanford, Florida, Attorney W. George Allen was the first African-American to receive his J.D. from the University of Florida Law School. Allen grew up working in the celery fields of Sanford, Florida where the county closed down the black schools in the winter and forced every able-bodied black person to work in the fields.  Blacks were arrested for not working.   Mr. Allen never saw a toilet flush until he was four years old. He grew up in a small house on a dirt road and attended elementary school, middle school, and high school in all black programs.

After graduating with the highest grade point average from his high school, Crooms Academy, in 1954, Allen attended college at Florida A&M University in Tallahassee, FL. While he was a student there, Allen was a high level seeker. He mentions in his book, “Where the Bus Stops,”  “I sought out the hardest, most demanding teachers because I learned more from teachers who were demanding and who challenged students to achieve at their highest level.” Allen was extremely active on campus. He became a member of the Alpha Phi Alpha fraternity in 1955.  Allen became vice president and was elected president during his senior year of Beta Nu Chapter of Alpha Phi Alpha. He was also a member of the ROTC.  While in college, Allen suffered financial hardship, “Also, in my freshman year I did not have funds to buy the required texts, so I borrowed my books, principally from athletes who were mostly uninterested in studying and reading the books. I would read the entire book and go to class to take notes.” Because Allen did not have enough money to afford his books, he had two jobs during his junior year. Without being affected by his hardship, Allen gained popularity at FAMU, “I was popular, smoked a pipe, wore bowties, and engaged in my share of extracurricular activities. I made many trips to Hoffman Restaurant and Bar, which was near the campus and where most of the popular students met to drink Spearman Beer.”

Upon graduation in 1958, he was commissioned as a 2nd Lt. in Army Intelligence. In 1960 Allen applied to four law schools: the University of Florida, Florida A&M University, Harvard, and the University of California at Berkeley. Being accepted to the three of the four schools (he never heard from Florida A&M Law School), he decided to attend the University of Florida after George Starke (a Sanford native and the first black to be admitted to the University of Florida Law School) and Regina Langston (one of the first blacks to attend the University of Florida Medical School) withdrew from these University of Florida graduate schools due to unbearable racial discrimination.

Mr. Allen faced significant racial mistreatment from fellow students, but he had some support from the administration. In his book, “Where the Bus Stops”, Mr. Allen shares one of the many tensed racial moments that he experienced at the University of Florida School of Law. During his second semester of law school, Mr. Allen was standing in line for over 30 minutes to register for courses; the courses were assigned on a first-come, first-served basis. Mr. Allen details in his book:

“When it was my turn to choose courses, Ralph Paul Douglas, whom I did not know, stepped in front of me and said, ‘boy I’m next’. I became incensed about being called boy and his attempt to move in front of me, so I hit him with a right cross on the chin and knocked him out. I stepped over Ralph, spread my list of courses in front of Professor Weyrauch, and said, ‘Sir, I would like to register for these courses.’ The professor signed me up, I turned, stepped over Ralph and left the library with many students whispering about my violent behavior.”

Much to his surprise, years later, Mr. Allen appeared in West Palm Beach, FL for a hearing and the presiding judge was none other than the receiver of his deadly cross, Ralph Paul Douglas. Automatically realizing who each other was, the judge asked Mr. Allen, “Should I duck?” and his response was, “Only if I am insulted.” The two laughed as they both reflected on the once tensed situation, but regardless of their past, Judge Douglas was fair and justice was served.

Throughout his law school career Mr. Allen experienced an insurmountable amount of threats and discrimination. Allen and his wife attended a wedding in Tampa in 1958, and to celebrate they went to the famous Columbia Restaurant. They were not permitted to eat there because of their color. He mentions: “That treatment buttressed my desire to attend law school and fight to end discrimination in public accommodations in all institutions in Florida.” He even got into a few physical altercations. In an interview he stated, “I made it known that I don’t believe in non-violence like Martin Luther King. You bother me, I’m violent.” His no nonsense attitude shaped him to be the perfect individual to successfully handle the rigor of being black in a southern institution of higher learning. Allen graduated from the University of Florida Law School in 1963. He has run a successful practice in Ft. Lauderdale, FL for forty-two years, and he has helped to liberate many minority organizations and individuals from being mistreated.  Mr. Allen indicates that there is still a significant amount of discrimination and societal resistance to equal treatment, but he is proud of what he and other black lawyers have accomplished in the past five decades.

Please be sure to read W. George Allen’s autobiography, entitled “Where the Bus Stops.”  You will not want to stop until you are completely done with this book.

Dena Daniels is from the small town of Jasper, FL and is the first individual from both sides of her family to receive a bachelor’s degree.  Dena Daniels is a second-year law student at Stetson University College of Law. She was amongst the first group of students from Hamilton County High School to complete the dual-enrollment program at North Florida Community College; she graduated high school with 62 college credit hours. Dena graduated with her B.S. in Business Administration from the University of South Florida and her Masters of Business Administration from Valdosta State University. Dena is seeking a concentration in Social Justice Advocacy and is a law clerk at Gassman Law Associates.

What Debtor Creditor Lawyers Need to Know About Student Loans

By: Scott Cornwell

Scott Cornwell is currently a third year law student at Stetson University College of Law and a Law Clerk for Gassman Law Associates, P.A. He expects to graduate in May of 2014 with his J.D. and M.B.A.

Student loan debt has recently reached $1.2 trillion and currently accounts for roughly 6% of the national debt.1 With an influx of students seeking higher education, it is unlikely that this cumbersome debt will abate any time soon. Therefore, practitioners must ensure they remain up to date with the current law governing student debts.

Discharge of Student Loan Debt in Bankruptcy Proceedings

            Although many of Americans are encumbered by student loan debt, the bankruptcy courts are not inclined to provide much relief. To get a student loan dismissed, one would need to show “undue hardship”2, a very high standard that is commonly associated with a debilitating illness. Although undue hardship normally involves a debilitating illness, being diagnosed does not guarantee a successful claim. When adjudicating on a claim of undue hardship, the court must use a totality of the circumstances test.3  Essentially, the court looks at every aspect of a debtor’s situation and assesses it on a case-by-case basis.

            For instance, In re Hicks, involves a debtor with Multiple Sclerosis, an incurable and  degenerative  neurological disorder.4  The debtor worked part-time while her husband earned the majority of the family income. The Court looked at the income of both the debtor and her husband when deciding whether or not the debt rose to the level of an undue hardship. The Court asked the question, “Can the debtor now, and in the foreseeable future, maintain a reasonable, minimal standard of living for the debtor and the debtor’s dependents and still afford to make payments on the debtor’s student loans?” In answering the question, the court held that because her husband could work and was likely to maintain his current pay, there would be no undue hardship against the debtor, despite her illness.

            More often than not, a client’s situation will not rise to the level of an undue hardship. When making a claim for undue hardship, practitioners will be responsible for ensuring their clients have realistic expectations regarding the claim.

Where the Loan Came From Definitely Matters

            Student loans come in two forms, one is backed by the federal government and the other  is provided by private lending institutions. The provider of the loan makes a huge difference in regards to collections on delinquent accounts. The largest differences are found in the statutes of  limitation, how the creditor can collect the debt, and judgment renewal.

Federal Student Loans

Pursuant to  20 U.S.C.A. § 1091a(a), loans backed by the federal government have no statute of limitations with regards to collections. Furthermore, 20 U.S.C.A. §1091a(b) provides that “… no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action…” may be taken. The federal government reserves many powers to ensure it can collect on student loan debt.

In the unfortunate circumstance that a student loan enters default, the government can look to withholding money from your wages, withholding money from your tax refund or other federal payments (also known as a treasury offset), or pursue a judgment against your delinquent debt.

A judgment against a debtor sought by the government is governed by  20 U.S.C.A. §3201a. Going further, 20 U.S.C.A. §3201c establishes that the governments lien survives for 20 years and is subject to one renewal of 20 more years.

Private Student Loans

Unlike the federal government, private loan servicers have a statute of limitations to bring a cause of action against a debtor. The statute of limitations depends on the state, but in Florida it is governed by Florida Statutes §95.11 and any actions must be brought within five years. It is important to note that this is five years of non-payment, if a debtor stops payment for a year and then makes a random payment, the term begins all over again.

Private loan servicers cannot affect federal benefits in the same manner as the government, but they can seek to garnish wages, lien property, and pursue other remedies associated with obtaining a judgment in the state of the client’s loan origination.

Every state will be different regarding judgments and the length of time in which they expire. In Florida, judgments are governed by Florida Statutes §55.081 and expire after a term of twenty years. Although the §55.081 provides for only twenty years, Petersen v. Whitson, established that judgments can be extended by filing another suit and, essentially, renewing the judgment.5

Going forward, it is safe to assume that student debt is not going anywhere soon. A wise practitioner will be well versed in the laws governing student debts because many of their clients, current and future, will be encumbered  and have as assortment of questions when their education bill comes due.


1 Chris Denhart, How the $1.2 Trillion College Debt Crisis is Crippling Students, Parents and the Economy, Forbes (August 07, 2013, 12:30PM), http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/
2 In re Hicks, 331 B.R. 18 (Bankr. D.Mass. 2005)
3 Id.
4 Id.
5Petersen v. Whitson, 14 So.3d 300 (Fla. 2d DCA 2009)

Seminar and Webinar Announcements

webinar ad

To register for this webinar, please click here.

Applicable Federal Rates

Below we have this month’s, last month’s, and the preceding month’s Applicable Federal Rates because for a sale, you can use the lowest of the 3.

Applicable Federal Rates.February 2014

Seminars and Webinars

THE CLEARWATER BAR ASSOCIATION 444 SHOW – ASSET PROTECTION, ESTATE PLANNING AND LLC LAW UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman, Christopher Denicolo and Kenneth Crotty

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

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THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, March 4, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

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FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

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TAX AND ASSET PROTECTION BASICS FOR THOSE WHO REPRESENT PHYSICIANS AND MEDICAL PRACTICES

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

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STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EMERGING TOOL TO MAXIMIZE STEP-UP IN BASIS

Date: Tuesday, March 18, 2014 | 1:00 – 2:30 p.m.

Location: Online webinar sponsored by Stafford Publications, Inc.

Speakers: Alan S. Gassman, Christopher Denicolo and Edwin P. Morrow, III, Esq.

Additional Information: To register for the webinar please visit https://www.straffordpub.com/products/structuring-joint-exempt-step-up-trusts-emerging-tool-to-maximize-step-up-in-basis-2014-03-18 or email agassman@gassmanpa.com

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COMPOUNDING THE PROBLEMS AND OPPORTUNITIES FOR COMPOUNDING PHARMACIES

Date: Wednesday, March 19, 2014 at 12:30 p.m. or Tuesday, April 1, 2014 at 5:00 p.m.

Location: Online webinar

Speakers: Lester Perling and Alan Gassman

Additional Information: To register for the March 19, 2014 webinar please click here. To register for the April 1, 2014 webinar please click here.

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COUNSELING SAME SEX COUPLES IN 2014

Date: Friday, March 21, 2014 | 10:30 – 12:00

Location: Holiday Inn at the Orlando Airport

Additional Information: For more information and to register for the program please email agassman@gassmanpa.com

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LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

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FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

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DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Jerry Hesch and Alan Gassman will cover Buy-Sell Agreements and associated planning.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

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40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

The Thursday Report – 02.13.14 – Beatles, Same Sex, and Landlord Liens

Posted on: February 13th, 2014

Intro without firm name

 

Article Titles Correct

Our musical production Being for the Benefit of Mr. Kite has reached number one on the list of Youtube musical tax videos of all time, as documented by the Thursday Report Self-Serving Documentation Team (TRSSDT). TRSSDT thanks New York Actress and Singer Megan Crain for adding a special twist to an already twisted court decision.  You can see this talented artist sing the song and if you like we can send you a continuing education certificate for 3 minutes.  Just click here

O'Leary with quotes CORRECT

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on the IRS program that offers tax relief from misclassification of workers.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

            A. Overview. Whether or not a worker is performing services as an employee or an – independent contractor is generally dependent on whether or not the service recipient has the right to control and direct the services provided by the worker.

            Misclassifying a worker as an independent contractor instead of an employee can result in severe consequences for the employer, including a failure to pay required payroll taxes on compensation paid to the worker. Trying to fix a misclassification on a prospective basis has, in the past, often presented the issue of whether to also address this retroactively and/or a heightened exposure to the IRS seeking a retroactive reclassification and the associated liability for taxes, interest and penalties. As a result, employers have tended to just stay the course and live with the misclassification risk.

            B.        Voluntary Classification Settlement Program – Worker Misclassification Tax Relief. In September, 2011, the IRS launched a new voluntary correction program, known as the Voluntary Classification Settlement Program or “VCSP,” that allows employers to voluntarily reclassify workers from independent contractors to employees at a greatly reduced retroactive payroll tax cost. The program was revised in December, 2012 (Announcement 2012-45).

            C. Eligibility for VCSP. To be eligible for the VCSP, the employer:

            1. Must consistently have treated the workers in the past as nonemployees;

            2. Must have filed all required Forms 1099 for the workers for the previous three calendar years before the date of the application;

            3. Cannot be currently under employment tax audit by the IRS, the Department of Labor (“DOL”) or a state agency concerning the classification of these workers (can be under an income tax audit and still qualify); and

            4. Must have complied with results of a prior examination if the employer was previously audited by the IRS or DOL for the classification of workers.

            To participate in the VCSP, the employer must file Form 8952, Application for Voluntary Classification Program. Form 8952 can be filed at any time, but should be filed at least 60 days before the date the employer wants to begin treating the class or classes of workers as employees.

            D. Relief Provided by VCSP.

            Employers that are eligible and participate in the VCSP will receive the following relief:

            1. The employer will only be required to pay an amount equal to 10% of the employment tax liability that may have been due on compensation paid to the reclassified workers for the most recent tax year (which is approximately 1 % of the compensation paid to the reclassified workers for the most recent year) (the “VCSP Payment”);

            2. No penalties or interest will be due on the VCSP Payment; and

            3. The employer will not be subject to an employment tax audit regarding worker classification for prior years.

            E.         Other Consequences to be Considered: Although the VCSP provides relief from unpaid payroll taxes, employers must be aware of other consequences arising from the reclassification of employees. The areas in which the VCSP provides no relief include:

            1. The impact of the failure in the past to make any required pension contributions to a qualified plan with respect to the reclassified workers;

            2. The impact of the failure in the past to provide health and welfare benefits to the reclassified workers; and

            3. The impact of the failure to comply with wage and hour laws applicable to the reclassified workers.

            F. Summary. For many employers, the VCSP provides an excellent opportunity to begin the proper classification of workers as employees at a modest tax cost. However, proceeding under the VCSP program can open up a Pandora’s box that heightens the exposure to other costs and consequences. Thus, all implications arising from the reclassification of workers should be considered and evaluated before deciding to seek relief under the VCSP.

            Quality Stores/Severance Payments ­

            On October 1, 2013, the United States Supreme Court granted a writ of certiorari in U.S. v Oualitv Stores, Inc. (In re Quality Stores, Inc.), cert. granted No. 12-1408. Accordingly, the case will be considered by the Court during the 2013-2014 term.

            Normally, FICA tax must be paid on severance pay. However, in Quality Stores, 693 F.3d 605 (6th Cir. 2012), the Sixth Circuit held that there is no FICA tax due on severance pay that qualifies as supplemental unemployment benefits (“SUB payments”). The opinion of the Federal Circuit’s in CSX Corp. v United States, 518 F.3d 1328 (Fed. Cir. 2008) reached the opposite conclusion, that employers and employees both must pay FICA tax on severance payments. As a result of the split of authority between the Circuits, and because of the size of the potential FICA tax refund obligations, the Internal Revenue Service requested certiorari of the Quality Stores case.

       If Quality Stores is affirmed, billions of dollars of FICA taxes collected from employers and their former employees for tax years during which severance payments were made and for which protective FICA tax refund claims were filed would be refunded. If Quality Store is reversed severance pay that qualifies as SUB payments will continue to be subject to FICA for both employers and employees.

            Summary of Quality Stores case. Quality Stores closed all of its stores and distribution centers, and made lump sum severance payments to its employees pursuant to a plan. The severance payments were not linked to the receipt of state unemployment benefits, nor were they attributable to the provision of any particular services. Quality Stores paid FICA tax on the severance payments and filed a claim for a refund.

            SUB payments are a type of severance payment defined by IRC Section 3402(0 )(2)(A) as (1) an amount paid to an employee; (2) pursuant to an employer’s plan; (3) because of an employee’s involuntary separation from employment, whether temporary or permanent; (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions; and (5) included in the employee’s gross income.

            Under Revenue Ruling 90-72, the IRS takes the position that, for severance pay to be exempt from wages subject to federal income tax withholding and FICA, severance payments must be linked to the receipt of state unemployment compensation and cannot be paid in a lump sum.

            In arriving at its conclusion, the Sixth Circuit analyzed the legislative history of the definition of wages for FICA and federal income tax withholding purposes. The Sixth Circuit concluded that SUB payments were considered wages only for federal income tax withholding, and not FICA.

            At this time, all employers who have had involuntary employee terminations during the years currently open under the statute of limitations should consider filing protective FICA tax refund claims.

This is the second part of our series on advising same sex couples:

The chart below describes a number of issues that are discussed in our outline, from the standpoint of whether it is advantageous for a same sex couple to go to a state that permits marriage, and to be married there and reside in Florida, or in any other state in the United States.

            POSSIBLE ADVANTAGES OF SAME SEX MARITAL STATUS

POSSIBLE DISADVANTAGESOF SAME SEX MARITAL STATUS

GOOD FOR ONE SPOUSE, BAD FOR THE OTHER?

Public recognition of an important relationship and commitment. Possible social, professional, business, and family  discrimination for being in a public same sex relationship. Whether marital law can apply.
Presents and a great party. Loss of separate Social Security benefits on death of spouse. Pension inheritance rights- a spouse must consent in writing to not being the sole beneficiary of a federal pension plan.
Government or employer-provided health insurance and tax advantage of employer paying health insurance. For one spouse to receive Medicaid benefits, the other spouse (the community spouse) may need to spend down considerable assets. Alimony is taxable to receiving spouse, but deductible by the paying spouse if requirements are met.
Immigration rights. The marital tax penalty will often apply- higher tax brackets.
Ability to roll over an IRA on the death of one spouse to defer taxable withdrawals. Combined income can cause increase in 3.8% Medicare surtax threshold is $200,000 for a single person, and only $250,000 for a married couple.
Federal estate tax marital deduction for persons who are U.S. citizens having otherwise taxable estates (exceeding $5,340,000 for 2014 decedents). Joint income can cause taxability of Social Security benefits- an individual can earn up to $25,000 without being subject to tax on Social Security benefits.  A married couple can only earn up to  $34,000 without becoming subject to tax on  Social Security benefits.
Portability- the ability of the surviving spouse to make use of whatever part of the $5,340,000 exemption has not been used by the first dying spouse. Potential divorce scenarios, and uncertainty as to what marital law would apply.
The wealthier partner who is a U.S. citizen can make use of the $14,000 per year gifting allowance and the $5,340,000 exemption credit of the less wealthy spouse.
Tax-free transfers in the event of a divorce.
Deductibility of alimony to equalize estate income tax brackets in the event of a divorce.
Possible survivor benefits under governmental and employer pension plans.
Possible Social Security survivor benefits.
Possible creditor protection for tenancy by the entireties property in bankruptcy- discussion.
“Being Married” – Dr. Phil “Being Married” – Rodney Dangerfield

COMMUNICATIONS ETIQUETTE

Socially Acceptable Terminology For Same Sex Couple Conversations

NOT Socially Acceptable Terminology for Same Sex Couple Conversations

“Partner”1

“Husband” or “Wife”

“Equal Protection/Rights”

“Special Rights”

“Gay” or “Lesbian”

“Homosexual”

“Relationship” or “Couple”

“Homosexual Couple”

“Sexual Orientation”

“Sexual Preference”

“Significant Other”

“Domestic Partner”

 


1 Steven Petrow, Is it Gay Husband? Lesbian Wife? Or What?, New York Times (November 27, 2012).

With the prospect of more same sex couples, advisors will also want to be wary of proper etiquette.  According to the GLAAD Media Reference Guide which advises journalists on using appropriate terms, preferred terms include “gay,” “gay man,” “lesbian,” or “gay person/people” rather than “homosexual.”  In addition, “sexual orientation” or “orientation” is preferred, while “sexual preference” is considered offensive.

 Steven Petrow, a New York Times contributor addressing questions on gay and straight etiquette, suggests that the most practical approach is to listen to how a couple introduces themselves or refers to each other, since this will vary from couple to couple. This is an important matter to consider, and advisors should be careful to avoid “downgrading” a couple’s status.  As Petrow explains, “[w]ith all the work that it took for [same sex couples] to make their relationship legal in New York, my pal was not about to settle for ‘friend’ to describe the man he’s been partnered with for nearly three decades.”  When in doubt, Petrow advises that you should not be shy to ask the couple directly how they would like to be referred to.  “It’s not a nosy question–it’s a respectful one,” he says. A copy of Mr. Petrow’s article can be obtained by emailing agassman@gassmanpa.com.

 In an ever changing society, it is best to ask your client if they prefer to be referred to as gay, lesbian, partner, friend, spouse, or some other term.

WHERE TO LIVE- SO MANY DIFFERENT CHOICES

The following chart shows selected US states and some of the characteristics that planners can review with same sex couple clients who are considering where to live.  Other charts in this outline provide further information.  It is unknown whether states that do not recognize same sex marriages would let such couples enter into “Pre-Nuptial” or “Post-Nuptial” agreements or equivalent contracts from a public policy standpoint.

Recognizes Same Sex Marriage

Recognizes Same Sex Marriages From Other States

Same Sex

Prenuptial Agreements Upheld

Tenancy by the Entirety Allowed for Same Sex Couples

Prohibits Workplace Discrimination due to Sexual Orientation

Spouse Has Rights to Homestead

Permits Joint Adoption

California

Yes

Yes

Yes

No

Yes

Yes

Yes

Florida

No

No

Unknown

No

No

No

No2

Nevada

No

No

Unknown

No

Yes

Yes3

Yes

North Carolina

No

No

Unknown

No

No

No

No

Texas

No

No

No

No

No

No

No

New Jersey

Yes

Yes

Yes

Yes

Yes

Yes

Yes

New York

Yes

Yes

Yes

Yes

No

Yes

Yes

 


2 Florida’s Third District Court of Appeals ruled that a statute from 1997 which prohibited “homosexuals” from adopting was unconstitutional. Florida Dept. of Children and Families v. Adoption of X.X.G., 45 So. 3d 79 (Fla. 3d Dist. App. 2010).

3 Same sex couples will receive rights to homestead if registered with the state as domestic partners.

Same sex couples must become educated as to the various considerations that apply to them if they are married versus if they stay unmarried, and also other questions, such as the following:

    • Where to live.
    • Whether to have pre and postnuptial agreements.
    • Whether to have domestic partnership agreements in place and whether the law will allow it to be enforceable.
    •  How to handle beneficiary designations.
    • Survivor and employee spouses benefits and choices.
    • Whether they should file joint tax returns or separate returns, if married.

 YOU CAN MARRY YOUR COUSIN BUT NOT YOUR SAME SEX PARTNER

Many of the states that ban same sex couples from marrying allow 16 year old first cousins to tie the knot. Below is a chart showing the states that allow first cousins to marry and whether those states allow for same sex marriage (only 5 out of 16 do).  Thus, 11 U.S. states allow cousins to marry but do not allow same sex marriages, notwithstanding that the birth defect rate of children produced out of these marriages is between 4-6%.

Legal to Marry First Cousin Legal to Marry Same Sex Partner Minimum Age Minor Can Marry With Consent
Alabama Yes No 16
Alaska Yes No 16
California Yes Yes No Age Limit
Colorado Yes No 16
District of Columbia Yes Yes No Age Limit
Florida Yes No 16
Georgia Yes No 16
Hawaii Yes Yes 16
Maryland Yes Yes 16
Massachusetts Yes Yes Male: 14; Female: 12
New Jersey Yes Yes 16
New Mexico Yes No 16
New York Yes Yes 16
North Carolina Yes No 16
Rhode Island Yes No Male: 18; Female: 16
South Carolina Yes No 16
Tennessee Yes No 16
Vermont Yes Yes 16
Virginia Yes No 16

Please consider attending Wealth Council’s March 21st one day conference for estate planners in Orlando, Florida.  Alan Gassman will speak on counseling same-sex couples.  For more information please contact agassman@gassmanpa.com.

When dealing with personal property and liens, the question of whose lien is superior is one that is somewhat hazy to all parties involved. Both banks and landlords can have liens on an individual’s personal property, but only one has priority.

Perfecting a Lien

Concerning a landlord lien, the landlord is not required to file or record a lien or any other instrument in the public records in order to perfect his lien. The landlord’s lien is established and  perfected when personal property belonging to the tenant is brought onto the leased premises1.

When dealing with a bank lien, in order to perfect a lien against personal property, a UCC Form 1 must be executed and filed.2 Without the filing of this form the lien is not perfected and therefore has no standing.

Which Lien Has Priority

Without giving it much thought, the majority of people would automatically assume that the bank lien undoubtedly trumps the landlord lien. WRONG. According to Florida Statute §83.08 (2) the landlord lien “shall be superior to any lien acquired subsequent to the bringing of the property on the premises leased3. This means that the landlord lien trumps all proceeding liens brought against the personal property. A lien may have priority over landlord lien only if there was a perfected lien in existence before the individual signed a lease and brought his/her property onto the rented premises.

How to Seize Property

Once a landlord has determined that their lien is in fact superior (no prior existing perfected liens), they may enforce the lien when the lessee has failed to pay rent.

When attempting to enforce a lien, a landlord must obtain a Distress for Rent Writ. According to Florida Statute §83.11 “Any person to whom any rent is due may file an action in the court in the county where the land lies having jurisdiction of the amount claimed, and the court shall have jurisdiction to order the relief provided in this part. The complaint shall be verified (under oath) and shall allege the name and relationship of the defendant to the plaintiff, how the obligation for rent arose, the amount or quality and value of the rent due for such land, or the advances, and whether payable in money, an agricultural product, or any other thing of value.”4

When obtaining a distress writ, the landlord, based on Florida Statute §83.12, must pay a cash bond for double the amount of rent that is claimed to be due.5 Once the bond is paid (and approved by the clerk) and the writ is properly executed, the complaint can then be filed with the court requesting that the court issues a Distress for Rent Writ. Once the writ is issued by the court, the Sheriff then serves the complaint to the tenant. The purpose of the Distress for Rent Writ is to prevent the tenant from “disposing, moving or in any way secreting any of its personal property except on the premises”6 This writ informs the tenant that the property is currently under the control of court orders and is the most effective way for a landlord to collect the past due rent.

Hopefully, it is now clear as to whose lien is superior when more than one lien exists on personal property. We all like to think that banks run the show, but based on law, it is apparent that landlords are the underdog and come out on top in the end.

“Hey, I wanted you to know I wish you were mine”. Who knew that the lyrics to this hit song by the legendary rock band, Boston, would now be in relation to the rights of their many hit songs. 

The amendments to the copyright laws in 1976 granted artists who signed over their rights with little to no bargaining power in the early years of their career to finally reap the benefits of the rights to the music by terminating a copyright grant. The amendments to the copyright laws grant artists the opportunity to terminate a copyright grant 35 years after its first publishing.

Releasing their first album in 1976, Boston has reached the 35 year requirement set forth in the copyright amendment and are now on the hunt for the rights, but like Elmer Fudd hunting Bugs Bunny, this would not be an easy catch. In January of this year, lead guitarist and songwriter, Tom Scholz, filed a termination notice in an effort to reclaim rights from the band’s first two albums. His termination notice was rebutted with a lawsuit against him brought by the band’s original co-manager, Paul Ahern and Next Decade Entertainment. The suit claims that Scholz was employed on a exclusive basis as a songwriter and that Scholz, in 1975, “assigned to Ahern all musical works written by him prior to that date as well as those composed, created or conceived in whole or in part by him for a period of five years from that date of agreement.”

The lawsuit claims that there was a modification to the original agreement in 1978, but it had no effect on the 1975 “songwriter agreement”. Scholz claims that his copyright terms are governed by the 1978 modification, therefore, the grant would be eligible for termination in 2015.

There has been no progress in the case, but only time will tell if Boston will be able to have “More than a Feeling” from their music and finally get some rights. 

1 Jursinski, Kevin.Commercial Lease Newsletters. “Distress for Rent”. June 2007.  http://www.kfjlaw.com/kevinjursinski-122012/inc/Newsletter-June-2007.pdf
http://www.wbsonline.com/resources/filing-the-ucc1-form-for-personal-property-liens/
3  Fla. Stat. §83.08 (2)      
4 Fla. Stat. §83.11
5 Fla. Stat. §83.12
6http://www.kfjlaw.com/kevinjursinski-122012/inc/Newsletter-June-2007.pdf

Ever wonder how you can find out what a company’s website said in the past? The past is here, and this is a great discovery tool.

 You can simply go to the website www.archive.org and use the WayBack Machine. To utilize this world wide web online library, type in the company’s  website address and the WayBack Machine presents a calender in which you can view the website as it was on a specific day in the past.

 For example, click here to see he Colonel’s website from 2003!

 Fun Fact: The name Wayback Machine was chosen as a reference to a plot device used in The Rocky and Bullwinkle Show. The plot device, the “WABAC machine” (pronounced “Wayback”),was used by Mr. Peabody and Sherman to travel back in time to visit–and sometimes alter–important events in history.

 Our favorite quotes from the Rocky & Bullwinkle show:

 1. “Military intelligence, sounds like a contradiction of terms.” – Bullwinkle

 2. Bullwinkle: “You just leave it to my pal Rock.  He’s the brains of the outfit.”

General: “And what does that make you?”

Bullwinkle: “What else? The executive.”

 3.[Rocky and Bullwinkle have been flattened by a truck]

Bullwinkle: This movie’s getting kinda… 

Rocky: Don’t say it! 

Bullwinkle: Two-dimensional. 

Beatles will exist without us.” - George Harrison

“I didn’t leave the Beatles. The Beatles have left the Beatles‑‑but no one wants to be the one to say the party’s over.” ‑John Lennon

“Explaining the motives behind the breakup of the Beatles: “Personal differences, musical differences, business differences, but most of all because I have a better time with my family.” ‑ Paul McCartney

On December 31st, 1970, Paul McCartney filed a lawsuit in London=s High Court against the other three Beatles and Apple Corps to dissolve The Beatles’ partnership. He requested that the partnership be dissolved, that a receiver look over Apple throughout the duration of the case, and that Allan Klein, their business manager, be formally charged with mismanagement of The Beatles funds.

 The three reasons cited in favor of dissolution were: (1) The Beatles no longer performed together, and thus, the purpose of the partnership no longer existed, (2) the other Beatles breached their partnership agreement by appointing Allen Klein as exclusive business manager, even after objections from McCartney, and (3) McCartney had not been given audited accounts during the partnership.

 The suit was not settled for years, and The Beatles did not officially dissolve until 1975. Even though McCartney was correct that Klein had severely mismanaged their funds, Klein was not charged and, in fact, received approximately four million dollars of The Beatles’ legacy.

APR

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

February 2014 Annual 0.30% Annual 1.97% Annual 3.56%
Semi-Annual 0.30% Semi-Annual 1.96% Semi-Annual 3.53%
Quarterly 0.30% Quarterly 1.96% Quarterly 3.51%
Monthly 0.30% Monthly 1.95% Monthly 3.50%
January 2014 Annual 0.25% Annual 1.75% Annual 3.49%
Semi-Annual 0.25% Semi-Annual 1.65% Semi-Annual 3.46%
Quarterly 0.25% Quarterly 1.73% Quarterly 3.45%
Monthly 0.25% Monthly 1.93% Monthly 3.44%
December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%

S&W

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information:  Please contact agassman@gassmanpa.com for more information.

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, February 18, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

COUNSELING SAME SEX COUPLES

Alan Gassman is speaking to the WealthCounsel Florida Forum on the topic of Counseling Same Sex Couples

Date: March 21, 2014 | Time to be determined

Location: To be determined.

Additional Information:  To register for the forum please contact Alan Gassman at agassman@gassmanpa.com.

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

Notable Seminars

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters:       Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor:  UF Law alumni and UF Graduate Tax Program

Additional Information:  For more information and to register for the program please visit www.floridataxinstitute.org.  There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions.  See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities.  Students will be in attendance and will greatly value conversations with any advice from alumni.  Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback?  There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supporters of the University of Florida, the law school and the LL.M. program.

The Thursday Report – 02.06.2014 – Same Sex Couples Planning, Sale of Personal Goodwill and New Belize Regulations

Posted on: February 6th, 2014

Federal Estate Tax Planning for Same Sex Couples

Physician Tax Update Series – Sale of Personal Goodwill by Michael O’Leary

New Belize Regulations

Thursday Report Humor

Seminar and Webinar Announcement – The Annual Florida Bar Wealth Protection Conference, May 8, 2014 in Miami, Florida

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

University of Florida Tax Institute Webinar

Last Monday, January 27, 2014 Alan Gassman interviewed Professor Michael Friel, Professor Dennis Calfee, and Bruce Bokor, Esq. to find out about the University of Florida Tax Institute, which will be held Wednesday through Friday, February 19-21, 2014 at the Grand Hyatt in Tampa.

Please at least come by and say hello to your favorite tax professors (and visit our booth to win a bucket of Kentucky Fried Chicken) if you are in Tampa.  

To view the webinar click here.

To get a copy of the schedule for this excellent program, click here.  Please remember that you can buy a day pass and attend cocktail and breakfast events as well.

Federal Estate Tax Planning for Same Sex Couples

By: Alan S. Gassman, Esq. and Danielle Creech, Esq.

We were pleased to participate in a conference on same sex couple planning sponsored by the Pinellas County Chapter of the Florida Association for Women Lawyers at Stetson Law School.

             We will be sharing our materials in the next few editions of the Thursday Report.

             Our section on federal estate and gift tax and generation skipping tax planning for same sex couples was written for non-tax lawyers.  Please feel free to share this with anyone who wants to know what differences apply.

             We thank Henry Lee, Esquire of the Howard and Howard law firm in Detroit, Danielle Creech, Esq., and also Kylie Caporuscio, Esq., and India Ingram, J.D. for their work on our outline.

 FEDERAL ESTATE TAX PLANNING

            For more affluent married couples federal income, estate and gift tax planning will provide the most important financial differences when a couple decides whether or not to be married.

            Internal Revenue Service Ruling 2013-17

            On August 29, 2013, the IRS ruled that same sex couples will be considered as married for federal income, estate and gift tax purposes, for 2013 filings and for amending past returns based upon the normal amendment statute of limitations that prevents any change for tax years Any same sex marriage legally entered into in one of the 16 states that allow same sex marriages, the District of Columbia, or a foreign jurisdiction having legal authority to sanction same sex marriages is covered under this ruling, without regard to whether one or both  spouses live in a state or other jurisdiction that recognizes their marriage.

            The IRS pronouncement in Revenue Ruling 2013-17 indicated that individuals who have entered into alternative relationships to marriage, such as domestic partnerships, civil unions, and other non-marriage state or foreign country relationships will not be considered as married for federal income tax purposes.  The ruling provides that as of September 16, 2013, all qualified retirement plans are required to recognize same sex spouses for purposes of spousal inheritance rights and spousal rollover benefits.

            Internal Revenue Service Ruling 2013-17

            Since estate tax exclusion portability became available to taxpayers in 2011, the personal representative of the first dying spouse’s estate needed to file a Form 706 (the estate tax return) after the death of the first dying spouse in order to appropriately make the portability election for the surviving spouse.  This Form 706 needed to be filed within nine (9) months following the date of death of the first dying spouse, unless the personal representative filed for and was granted an automatic six (6) month extension to this deadline.

            However, a great number of personal representatives and surviving spouses were not aware of this deadline or otherwise did not file the Form 706 in order to take advantage of any unused estate tax exclusion amount that remained at the death of the first dying spouse.

            The IRS recently issued Revenue Procedure 2014-18, which provides for an extension of time for the personal representative of the first dying spouse to file a Form 706 with respect to the first dying spouse’s estate for the sole purpose of electing portability.  This Rev. Proc. generally allows the personal representative until December 31, 2014 to file a Form 706 for the first dying spouse’s estate if the first dying spouse died after December 31, 2010 and on or before December 31, 2013, and if no estate tax return was required to be filed for the first dying spouse because the first dying spouse died with assets with a value less than their estate tax exclusion amount.

            Under Rev. Proc. 2014-18, the taxpayer is entitled to relief under Treasury Regulation §301.9100-3, which allows the personal representative to file a Form 706 for the first dying spouse in order to take advantage of such spouse’s unused estate tax exclusion amount.  This Rev. Proc. only applies if the taxpayer is the personal representative of the estate of a decedent who (1) has a surviving spouse; (2) died after December 31, 2010 and on or before December 31, 2013; and (3) was a citizen or resident of the United States on the date of death.  Further, this Rev. Proc. only applies if the personal representative is not required to file an estate tax return because the first dying spouse’s assets were less than his or her estate tax exclusion amount upon his or her death or if the taxpayer did not timely file an estate tax return to elect portability.

            When filing Forms 706 pursuant to this Rev. Proc., the Form 706 must be complete and properly prepared in accordance with Treasury Regulation §20.2010-2T(a)(7) (i.e., it must be prepared in accordance with the instructions to the Form 706), and it must be filed on or before December 31, 2014.  Additionally, the following language must be included at the top of the Form 706 in capital letters: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER §2010(c)(5)(A)”.

            If the above requirements are satisfied, then the personal representative will be considered to have timely filed the Form 706 to elect for portability to apply, and the personal representative will receive an estate tax closing letter acknowledging receipt of the decedent’s Form 706.

            The impetus for this Rev. Proc. is the recent Supreme Court case of United States v. Windsor, in which the Supreme Court struck down Section 3 of the Defensive of Marriage Act to provide that a law defining “marriage” as a legal union between one man and one woman as unconstitutional.  After the Windsor decision, the IRS released Revenue Ruling 2013-17 to provide the IRS’ interpretation of the Internal Revenue Code vis-a-vis taxpayers’ marital status in light of the Windsor decision.  This revenue ruling held that for federal tax purposes the terms “spouse,” “husband and wife,” “husband,” and “wife,” include an individual married to a person of the same sex if the individuals were lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.

            Rev. Proc. 2014-18 provides a good analysis of the legal effect of Windsor and Revenue Ruling 2013-17 on the tax law, and indicates that this Rev. Proc. is significantly based upon the outcome in the Windsor decision and the IRS’ interpretation of the Internal Revenue Code as a result thereof.

            Nevertheless, the benefits afforded by this Rev. Proc. are available to provide relief for late portability elections for opposite sex surviving spouses, as well as same sex surviving spouses.

            This Rev. Proc. did not address the situation where a surviving spouse has previously filed a Form 706 late, and the Form 706 was not accepted for the purposes of electing portability due to the late filing.  It seems that in this case the surviving spouse would simply need to re-file the Form 706 (assuming that it was properly completed and appropriately prepared) with the magic capitalized words on top of the first page in order to take advantage of this other relief provided by this Rev. Proc.

            Therefore, for some personal representatives and surviving spouses who neglected to timely file a Form 706 to take advantage of portability, Rev. Proc. 2014-18 provides a second chance.

            Amending Prior Tax Returns

            Revenue Ruling 2013-17 notes that under Internal Revenue Code Section 6511 same sex married couples have the option of amending their prior tax returns by going back to the earlier of (a) three years from the time the return was filed or (b) two years from the time the tax was paid, whichever is later. Same sex couples may also choose to leave the prior returns intact and not amend one or more prior tax years.

            This gives same sex couples some very good choices for income tax planning purposes, but we expect that there will be legislation and/or litigation that will determine whether returns going back farther than the normal limits described above will be amendable. Many same sex clients feel that it is blatantly unfair that they paid more tax then they should have and are unable to amend further back than three years, while others feel that it is very fair that they get the best of both worlds, for they can either amend or not amend. We expect additional political jockeying and possible litigation over whether the equal protection clause is violated if same sex couples are not allow to amend back as many years as they would like.

            Any gift tax return that involved a transfer to a spouse that used up any portion of the donor spouse’s estate tax exemption should probably be amended to regain the exemption amount, unless there are other items on the gift tax return that are best not re-opened, such as large gifts with questionable values to non-spouse individuals, because amending a gift tax return gives the IRS three years after the date of the amendment to revisit all aspects of the gift tax return amended.  We may see possible legislation changing this as well.  Could people be denied a tax right and be punished by undergoing increased audit risk as the result of amending returns to get moneys or allowances back that they would have been entitled to as a matter of federal law in the first place?

            Almost all affluent married same sex couples (or couples where one spouse is affluent) will want to go to an experienced income tax advisor with the right software, to help determine what years they should amend and what years they should not amend.

            Estate and Gift Tax Advantages of Marriage

            Before the IRS issued Revenue Ruling 2013-17, a same sex couple would not receive full married couple benefits under the estate and gift tax and income tax laws unless they were (1) married in a state that recognized same sex marriages and (2) resided in a state that also recognizes same sex marriages.

            Before this decision we published an article entitled “Why Many Affluent Same-Sex Couples Will Be Leaving Florida and Where They Should Go”.  Fortunately, the landscape changed quickly in the right direction.

            As the result of Revenue Ruling 2013-17, couples can marry in any of the jurisdictions discussed above which authorize this and have full federal tax law benefits (and the benefit of having no state income tax or inheritance taxes) in states that do not recognize same sex marriages.

            Individuals in same sex relationships who expect to be subject to federal estate taxes will want to consider several significant advantages that marriage brings:

          1.        The estate tax exemption is presently $5,340,000, and will increase with the Consumer Price Index (CPI), which generally runs 0.5-1% under the inflation rate.

If the value of investments will double every 10 years, as it has in the past for many taxpayers, then a great number of Americans will be subject to federal estate tax in years to come.

          2.        Any gift exceeding $14,000 per year, per person results in the requirement to file a gift tax return, and reduces the applicable allowance on a dollar for dollar basis.

          3.        One spouse can make a large gift and have it be considered to come one-half from the other spouse, if the other spouse will sign a “split-gift” consent return.  Therefore, a wealthy spouse can make a large gift to descendants and have it be considered to come from the less wealthy spouse, to in effect use his or her exemption.

          4.        Gifts or amounts left upon death to a non-spouse can trigger gift tax or estate tax when the exemption has been used.  The tax rate is 40%.

                       There is an estate tax marital deduction for assets that pass directly to a surviving spouse, or into a special trust that is required to pay all income to the surviving spouse for his or her lifetime.

          5.        There is also a portability allowance that allows a surviving spouse to add the unused exemption allowance of a deceased spouse to his or her own, if certain requirements are met.  These requirements are that (1) the estate of the first dying spouse files an estate tax return permitting the portability allowance to exist, (2) the allowance is limited to the amount of estate and gift tax exemption not used by the first dying spouse, (3) the surviving spouse will lose the portability allowance if he or she remarries, and then if the next spouse dies first and leaves no exemption or a smaller exemption.

                       It is important to note that the portability amount does not grow with the Consumer Price Index, and it is therefore often much better to fund a “credit shelter trust” for the surviving spouse that can benefit him or her without being subject to federal estate tax on death, notwithstanding that the trust can grow significantly during the lifetime of the surviving spouse.

          6.        Marital Deduction and QTIP Trust

            Estate and Gift Tax Hypotheticals

            The several different primary tax differences that will occur for same sex married couples could perhaps be best explained by the following hypothetical:

                        First Example

George has a net worth of $15,000,000, and his partner, Sam, has no assets other than significant retirement benefits that he uses to pay his expenses.

George would like to leave $5,000,000 to Sam and $10,000,000 to his (George’s) children, but would also like to avoid federal estate tax.

Assume that George has a $5,000,000 estate tax exemption (even though the exemption increases with the consumer price index each year and is presently $5,340,000 in 2014 – We are sparing the reader the complexity of using that uneven number).

If George dies without being married, then his estate tax would be 40% of $10,000,000, which is $4,000,000.

If George marries Sam and then dies, there will be a $5,000,000 marital deduction for what goes to Sam.  Thus, instead of George’s taxable estate being $15,000,000, it will only be $10,000,000. George’s estate tax will be $4,000,000, a savings of $2,000,000 (40% of $5,000,000).

If George marries Sam, and makes a gift of $4,000,000 to a trust for his children (that George might be a potential beneficiary of if the trust is established in an asset protection state like Nevada, Delaware, or Alaska), and Sam signs a split-gift return, then the gift will be considered to have come $2,000,000 from Sam and $2,000,000 from George. Under this circumstance, George’s estate tax allowance would be reduced to $3,000,000 but he has gotten $4,000,000 plus the future growth thereon out of his estate.

When George then dies, leaving $5,000,000 to Sam, and his remaining $6,000,000 to his children, there would be an estate tax of only $1,200,000, so the gift with Sam’s help saves $800,000 in estate tax.  ($11,000,000 -$5,000,000 = $6,000,000. $6,000,000 – his $3,000,000 exemption = $3,000,000. $3,000,000 x 40% is $1,200,000. But $6,000,000 – his $1,000,000 exemption if no split gift with Sam = $5,000,000 x 40% = $2,000,000).

If George’s gift to the special trust had been $10,000,000, then there would be no estate tax in our example because Sam and George would have each used their $5,000,000 allowances and what goes from George to Sam on George’s death passes estate tax free.

In addition to the above, George can only gift $14,000 to each child per year while unmarried without reduction of his $5,000,000 exemption..  If George and Sam are married, and George has two children, they could gift a total of $56,000 a year. These gifts would reduce neither George’s nor Sam’s lifetime exemption amounts.

This can help keep future growth in George’s assets outside the reach of the estate tax system.

Second Example of Lifetime Gifting

Suppose that instead George has a $10,600,000 estate, and that the exemption amount has increased with the CPI to $5,600,000 and will continue to go with the CPI as it does under present law.

Assume that George is now satisfied with leaving the children $5,600,000, and would like the remaining $5,000,000 to be held for Sam’s lifetime benefit.

George can die, leaving the children $5,600,000, and leaving $5,000,000 in a trust to benefit Sam for his lifetime benefit without being subject to federal estate tax on Sam’s death.  This trust is called a QTIP trust and can qualify for the estate tax marital deduction on George’s death if it pays all income to Sam.

On Sam’s subsequent death, there will be no estate tax unless the combined value of the assets he owns on death, and the assets in the marital deduction trust at the time of his death exceeds Sam’s remaining estate tax exemption amount.  If Sam dies a few years after George then it is very likely that George’s children will be very glad that this happened, because instead of paying $2,000,000 of estate tax on the $5,000,000 they lose out on getting the income for a few years, but there may be no federal estate tax liability on Sam’s estate.

Based on the above and, of course, their love, George sees it as an absolute no-brainer to marry Sam, but only after Sam signs a domestic partnership agreement.

While this law is still untested, it appears as though a domestic partnership agreement will be binding on a same sex couple regardless of whether their state of residence currently recognizes same-sex marriage. This is discussed in more detail below.

             Third Example

             What if Sam dies before George and they are married?

Then, if Sam’s will permits this and he has no assets, or all of his assets go to charity, George can have whatever is left of Sam’s $5,340,000 estate tax exemption (if Sam dies in 2014) added to George’s to reduce George’s estate tax by 40% of $5,340,000 on his eventual death ($2,316,000).  Wow, George should find someone about to die soon and marry them for this reason alone!  Yes, this is happening throughout the US.

Alternatively, whether or not George and Sam are married, George can give Sam a special power to appoint up to the amount of Sam’s estate tax exemption from assets held under George’s revocable trust to a trust that can benefit George and his children and not be subject to estate tax on George’s death.  This way George could have effective use of Sam’s unused exemption without marrying Sam.  This technique is not 100% guaranteed to work, but has been approved by IRS Private Letter rulings granted to individual taxpayers and commented upon favorably by a number of estate tax planning authorities.

      Generation Skipping Tax Implications

      The federal generation skipping tax system prevents more than a certain amount of assets being held to benefit a donor’s children without being taxed at their demise.

For example, if George has a $20,000,000 estate and wishes to leave everything to his descendants, he would be able to have $5,340,000 pass into a trust in 2014 that would benefit his children without being taxed at their level (or go directly to the grandchildren), but anything above that would have to be subject to federal generation skipping tax, which is a 40% tax imposed in addition to the estate tax.

If George marries Sam and Sam has nominal assets, then in 2014 George could leave $5,600,000 worth of assets to a trust for his children that will not be subject to estate tax or generation skipping tax when each child dies, and the remaining $14,600,000 to a QTIP marital deduction trust (like the one described above) that would pay income to Sam, and would not only have the use of whatever remains of Sam’s $5,340,000 (plus increases for future CPI adjustments) for estate tax purposes, but also for generation skipping tax exemption purposes.

Therefore, if Sam dies 10 years later and the $14,600,000 worth of assets that were generating the income for Sam are then worth $15,000,000, and assuming that Sam’s other assets do not exceed $5,340,000 in value (or higher based upon CPI increases after 2014), George’s grandchildren will pay no estate tax or generation skipping tax on the death of their parents.

Alternatively, George could make a $5,000,000 gift to a trust for children, and if Sam allows the gift to be considered as having come ½ through him by filing a split gift consent on a gift tax return, then George will have only used $2,500,000 of his estate tax and generation skipping tax exemptions.  If George later divorces Sam and leaves these assets into a trust system for his descendants, the estate tax and generation skipping tax savings will be based upon the tax rates multiplied by whatever the $2,500,000 grows into before George’s death.

The Mike O’Leary Physician Tax Update Series – Sale of Personal Goodwill

Mike O'Leary

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on the sale of personal goodwill.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

            A. Overview. When a business is sold, buyers typically wish to acquire assets because (i) it generates higher tax benefits and (ii) avoids possibly being liable for debts of the seller. For example, assume a corporation has a valuable patient list and other goodwill worth $5,000,000, but with a tax basis of zero, plus tangible assets worth $100,000 and with a basis of$100,000. If a buyer pays $5,100,000 for the stock of the business, it takes over the business with no step up in basis of the assets (they continue to be a total of $100,000). However, if the buyer pays $5,100,000 for the assets of the business, then the buyer acquires goodwill with a basis of $5,000,000 (and tangible assets with a basis of $100,000). The buyer can amortize the $5,000,000 of goodwill over 15 years and obtain substantial tax benefits (assuming a marginal tax rate of 30%, the tax benefits would be worth $1,500,000 ($5,000,000 multiplied by 30%).

            If the seller is a C corporation, the tax generated by the sale of assets is substantial. In the above example, the C corporation would pay federal corporate level taxes of $1,700,000 ($5,000,000 multiplied by 34%) plus state corporate level taxes of $275,000 ($5,000,000 multiplied by 5.5%). In addition, the remaining assets of $3,125,000 ($5,100,000 less $1,700,000 less $275,000) distributed to the shareholders would generate additional tax at a 23.8% rate, or $743,750 ($3,125,000 multiplied by 23.8%), assuming that the basis of the stock is zero. Accordingly, the total taxes would be $2,718,750 ($1,700,000 plus $275,000 plus $743,750).

            B. S corporations. If a corporation has been an S corporation since its organization, then profit from the sale of assets passes through to the shareholders and there are no corporate level taxes. However, if the corporation has been a C Corporation and subsequently makes an S election, then the “built in gain” at the time of the S election is subject to corporate level taxes at the highest corporate level rate, currently 35%. In general, 10 years after the S election, there is no built in gain. However, for 2009 and 2010, the 10 year period was shortened to 7 years and for 2011, the 10 year period was shortened to 5 years.

            Example. If a C corporation makes an S election effective January 1, 2009, when the value of its goodwill is $5,000,000, but then sells the goodwill, as well as the rest of its assets in 2012, when its goodwill has a fair market value of $15,000,000, then the “built in gain” subject to double tax is $5,000,000 and the balance of the gain from the sale of goodwill ($10,000,000) is not subject to corporate level taxes.

            C. Issue: Can the substantial taxes due upon the sale of assets in a C corporation or an S corporation with substantial “built in gain” be minimized?

            D. Martin Ice Cream. In Martin Ice Cream Co., 110 T.C. 189 (1998), an individual, Arnold Strassberg (“AS”), had never entered into a covenant not to compete or even an employment agreement with a corporation, and the Tax Court held that the customer relationships of AS were a personal asset “entirely distinct from the intangible corporate asset of corporate goodwill.”

            E. Howard. In Howard, No. 2:08-cv-00365 (E.D. Wash. 7/30/10), the court held that goodwill was an asset of dissolving corporation, not of its individual sole shareholder, officer, and director, who worked for corporation under contract and with covenant not to compete.

            F. Kennedy. In Kennedy,.T.C. Memo 2010-206 (2010), the owner of a corporation, Mr. Kennedy, again had not entered into a covenant not to compete or an employment agreement with the corporation. Mr. Kennedy’s corporation was a C corporation and based on some tax advice after the deal terms had been agreed to, the parties (Mr. Kennedy and the buyer, Mack & Parker) agreed to allocate 75% of the purchase price to the sale of Mr. Kennedy’s personal goodwill and 25% to a consulting agreement between the buyer and Mr. Kennedy’s C corporation.

            The Tax Court agreed with Mr. Kennedy that the C corporation owned by Mr. Kennedy did not sell any intangible assets. However, the court focused on the tax treatment of the payments received by Mr. Kennedy, and held that a purported sale of goodwill by Mr. Kennedy must be treated as ordinary income subject to self employment taxes. The Tax Court’s decision was based on various factors, including that (i) the allocation of 75% of the purchase price to personal goodwill was not grounded in any business reality, (ii) Mr. Kennedy “undertook to work for Mack & Parker for five years until his planned retirement date of December 31, 2005,” (iii) Mr. Kennedy entered into a valuable noncompete agreement and (iv) Mr. Kennedy received virtually no compensation for his services for 18 months after the sale. However, the court made it clear that personal goodwill can exist but is a question of fact in each case.

            G. H&M, Inc. T.C. Memo 2010-206 (2010), H&M, Inc. sold its insurance brokerage business to a local bank $20,000. The shareholder of H&M (Harold Schmeets) received a compensation package of $600,000 over 6 years. IRS said $300,000 of payments to Mr. Schmeets were disguised purchase price payments to H&M, Inc. The court looked at personal relationships of Mr. Schmeets, experience in running the insurance agency and said compensation was reasonable.

            Court recognized the personal goodwill of Mr. Schmeets and said

            “Though we think it is clear that some part of his compensation wasn’t for his services, it’s not necessary for us to determine the exact allocation between what he was paid for his services to the agency, his personal goodwill and his promise not to compete, since Schmeets income tax liability is not before us.”

            Essentially court concluded that transaction had economic substance and not tax motivated.

            H. Proposed Approach. Based on Kennedy and Martin Ice Cream, if a shareholder/employee has not signed a noncompete with their own company, it does not appear that failure to allocate some of the purchase price to corporate goodwill should be a major concern (unless the parties really believe that there is corporate goodwill separate and apart from their own personal goodwill). Instead, based on Kennedy, the primary concern appears to be the IRS recharacterizing the payments to the shareholders from capital gain to either compensation or payments for entering into a noncompete agreement.

            In the treatise, “Mergers, Acquisitions and Buyouts” by Ginsburg, Levin and Rocap, the authors assert that “it should be permissible for the parties to allocate no portion of the purchase price to a non-compete covenant entered into in connection with a sale of personal goodwill on the grounds that the non-compete covenant is incidental to, and protective of, the goodwill, although it is not permissible to allocate an unreasonably small amount to a consulting arrangement. “

            Accordingly, if (i) a selling shareholder will be fairly compensated for any services the selling shareholder will provide to the buyer after the sale, (ii) there is no covenant not to compete with the selling shareholder’s corporation, and (iii) the allocation of consideration to personal goodwill is based on economic reality that can be supported, there should be a reasonable basis to treat the payments for personal goodwill as qualifying for capital gain treatment.

            Note that even if the IRS successfully asserts that a portion of the proceeds are allocable to a covenant not to compete, those proceeds are taxed move favorably than amounts allocated to corporate goodwill (approximately 54% combined rate if taxed to the corporation versus maximum 39.6% rate). Based on Barrett v. Comr., 58 T.C. 284 (1972), payments made pursuant to a covenant not to compete are not subject to employment taxes.

             I. Summary (where there is a C corporation or S corporation with significant built in gain and shareholder/employees don’t have a covenant not to compete).

             1. Don’t allocate any of the sales consideration to corporate goodwill unless the parties believe that there really is corporate goodwill (don’t make a random allocation of the purchase price to corporate goodwill).

            2. Make sure that the shareholder/employees are paid reasonable compensation for their services after the closing.

            3. Allocate consideration to a shareholder’s personal goodwill based on economic reality, which should be supportable.

We thank Michael O’Leary for this contribution.  Next week we will provide his write-up on tax relief from misclassification of workers.  If you have ever felt misclassified make sure that you read next week’s Thursday Report.

New Belize Regulations

Belize has always been one of our favorite jurisdiction for off shore trusts, because of the efficiency and effectiveness demonstrated by the people of Belize, not to mention a very good trust law.  We thank Tina Arvin of our office for preparing the following.

New accounting regulations in Belize took effect on October 12, 2013.  The regulations stipulate that accounting/financial records for Belize entities must be maintained and must be accessible at a designated location.  A copy of the Belize Accounting Records (Maintenance) Act 2013 can be viewed by clicking here.

In summary, the Act requires that financial records (further defined as “financial statements; general and subsidiary ledgers; sales slips; contracts and invoices; and records and documents relating to assets and liabilities, all sums of money received and expended and the matters in respect of which the receipt and expenditure take place, all sales and purchase, and all financial transactions”) are kept in one of the following locations:

1.         In Belize, at the office of the entity’s Registered Agent; or

2.         Outside of Belize, at a designated location to be provided to such Registered Agent by written resolution.  Such resolution should include language authorizing such Belize Registered Agent to request up to five (5) years of financial records at any time and that such financial records will be provided to the Registered Agent within one (1) business day of receipt of such request.

        Clients with offshore trusts where a Belize company serves as Trustee or Co-Trustee are also required to comply with the new accounting regulations.  We have developed a Written Resolution (click here to view) that can be completed by clients and provided to the Belize Trust, Co-Trustee or Registered Agent allowing the client to maintain financial and accounting records at his or her home, office or CPA’s office.

        Failure to satisfy the above requirements will constitute professional misconduct on the part of the Belize Registered Agent, punishable by suspension or revocation of license and/or imposition of a fine.

            Clients are strongly encouraged to provide the requested documentation to Belize Registered Agents as soon as possible to ensure the continuation of a favorable professional relationship.

Thursday Report Humor

Colonel Sanders is on his death bed and has one final wish.  So he calls up the Pope and says, “Pope, I’ll donate a million dollars to the Church if you do me a favor.”  The Pope asks what it is.

The Colonel says, “You know the Lord’s Prayer? The line that says: ‘Give us this day our daily bread?’ I want you to change that to ‘Give us this day our daily chicken.'”

The Pope thinks for a minute, because after all, it is a million dollars! But then says no.

The next day, Colonel Sanders calls back and says, “I’ll up my offer.  I’ll donate one hundred million dollars if you change the line to ‘Give us this day our daily chicken.'”

The next day, an announcement goes out to all the Cardinals and Bishops all over the world.  It reads “I have good news and bad news.  The good news is that we just got a one hundred million dollar donation.  The bad news is we just lost the Wonder Bread account.”

Seminar and Webinar Announcements:

The Florida Bar Annual Wealth Protection Conference, May 8, 2014 in Miami, Florida

Please note that the annual Wealth Protection conference will be held in Miami, Florida on May 8 at the Hyatt Regency Downtown, and will feature nationally known speakers and authors Barry Engle, Jay Adkisson and Howard Fisher along with well respected and practical Florida based speakers.

We are particularly looking forward to an ethics and practice development panel discussion entitled “ What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves” that will feature Barry Engle, Professor Jerome Hesch, Denis Kleinfeld and Alan Gassman.

Jerry Hesch will be presenting his ever improving materials on Income and Estate Tax Issues for 2014.

Please give this conference a try if you have never attended.  The interaction, synergism and information derived from the lectures and from other attendees is always dynamic.

For more information on this seminar please contact Alan Gassman at agassman@gassmanpa.com.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

February 2014 Annual 0.30% Annual 1.97% Annual 3.56%
Semi-Annual 0.30% Semi-Annual 1.96% Semi-Annual 3.53%
Quarterly 0.30% Quarterly 1.96% Quarterly 3.51%
Monthly 0.30% Monthly 1.95% Monthly 3.50%
January 2014 Annual 0.25% Annual 1.75% Annual 3.49%
Semi-Annual 0.25% Semi-Annual 1.65% Semi-Annual 3.46%
Quarterly 0.25% Quarterly 1.73% Quarterly 3.45%
Monthly 0.25% Monthly 1.93% Monthly 3.44%
December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%

Seminars and Webinars

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information:  Please contact agassman@gassmanpa.com for more information.

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, February 18, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and ConferenceCenter, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters:       Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor:  UF Law alumni and UF Graduate Tax Program

Additional Information:  For more information and to register for the program please visit www.floridataxinstitute.org.  There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions.  See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities.  Students will be in attendance and will greatly value conversations with any advice from alumni.  Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback?  There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supporters of the University of Florida, the law school and the LL.M. program.

The Thursday Report – 1.30.2014 – Velveeta, Portability and What’s My Line

Posted on: January 30th, 2014

Superbowl Edition

IRS Rev. Proc. Liberates Taxpayers Who Did Not File Timely Portability Elections, by Christopher J. Denicolo, J.D., LL.M.

Velveeta Cheese and the Superbowl

Heckerling Pearls of Wisdom – Part 2

Marty Shenkman’s JEST Review from Heckerling 2014

Colonel Sanders on What’s My Line?

Seminar and Webinar Announcements:

• See Our University of Florida Tax Institute Webinar
• Attend our Private Placement Life Insurance Webinar with Jerry Hesch, Thursday, February 6 at 12:30 p.m.
• The Annual Florida Bar Wealth Protection Conference, May 8, 2014 in Miami, Florida

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

IRS Rev. Proc. Liberates Taxpayers Who Did Not File Timely Portability Elections
By Christopher J. Denicolo, J.D., LL.M.

Chris with wording

Since estate tax exclusion portability became available to taxpayers in 2011, the personal representative of the first dying spouse’s estate needed to file a Form 706 (the estate tax return) after the death of the first dying spouse in order to appropriately make the portability election for the surviving spouse. This Form 706 needed to be filed within nine (9) months following the date of death of the first dying spouse, unless the personal representative filed for and was granted an automatic six (6) month extension to this deadline.

However, a great number of personal representatives and surviving spouses were not aware of this deadline or otherwise did not file the Form 706 in order to take advantage of any unused estate tax exclusion amount that remained at the death of the first dying spouse.

The IRS recently issued Revenue Procedure 2014-18, which provides for an extension of time for the personal representative of the first dying spouse to file a Form 706 with respect to the first dying spouse’s estate for the sole purpose of electing portability. This Rev. Proc. generally allows the personal representative until December 31, 2014 to file a Form 706 for the first dying spouse’s estate if the first dying spouse died after December 31, 2010 and on or before December 31, 2013, and if no estate tax return was required to be filed for the first dying spouse because the first dying spouse died with assets with a value less than their estate tax exclusion amount.

Under Rev. Proc. 2014-18, the taxpayer is entitled to relief under Treasury Regulation §301.9100-3, which allows the personal representative to file a Form 706 for the first dying spouse in order to take advantage of such spouse’s unused estate tax exclusion amount. This Rev. Proc. only applies if the taxpayer is the personal representative of the estate of a decedent who (1) has a surviving spouse; (2) died after December 31, 2010 and on or before December 31, 2013; and (3) was a citizen or resident of the United States on the date of death. Further, this Rev. Proc. only applies if the personal representative is not required to file an estate tax return because the first dying spouse’s assets were less than his or her estate tax exclusion amount upon his or her death or if the taxpayer did not timely file an estate tax return to elect portability.

When filing Forms 706 pursuant to this Rev. Proc., the Form 706 must be complete and properly prepared in accordance with Treasury Regulation §20.2010-2T(a)(7) (i.e., it must be prepared in accordance with the instructions to the Form 706), and it must be filed on or before December 31, 2014. Additionally, the following language must be included at the top of the Form 706 in capital letters: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER §2010(c)(5)(A)”.

If the above requirements are satisfied, then the personal representative will be considered to have timely filed the Form 706 to elect for portability to apply, and the personal representative will receive an estate tax closing letter acknowledging receipt of the decedent’s Form 706.

The impetus for this Rev. Proc. is the recent Supreme Court case of United States v. Windsor, in which the Supreme Court struck down Section 3 of the Defense of Marriage Act to provide that a law defining “marriage” as a legal union between one man and one woman as unconstitutional. After the Windsor decision, the IRS released Revenue Ruling 2013-17 to provide the IRS’ interpretation of the Internal Revenue Code vis-a-vis taxpayers’ marital status in light of the Windsor decision. This Revenue Ruling held that for federal tax purposes the terms “spouse,” “husband and wife,” “husband,” and “wife,” include an individual married to a person of the same sex if the individuals were lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.

Rev. Proc. 2014-18 provides a good analysis of the legal effect of Windsor and Revenue Ruling 2013-17 on the tax law, and indicates that this Rev. Proc. is significantly based upon the outcome in the Windsor decision and the IRS’ interpretation of the Internal Revenue Code as a result thereof.

Nevertheless, the benefits afforded by this Rev. Proc. are available to provide relief for late portability elections for opposite sex surviving spouses, as well as same sex surviving spouses.

This Rev. Proc. did not address the situation where a surviving spouse has previously filed a Form 706 late, and the Form 706 was not accepted for the purposes of electing portability due to the late filing. It seems that in this case the surviving spouse would simply need to re-file the Form 706 (assuming that it was properly completed and appropriately prepared) with the magic capitalized words on top of the first page in order to take advantage of this other relief provided by this Rev. Proc.

Therefore, for some personal representatives and surviving spouses who neglected to timely file a Form 706 to take advantage of portability, Rev. Proc. 2014-18 provides a second chance.

Velveeta Cheese and the Superbowl

The press has recently written about an expected shortage of Velveeta cheese this weekend. If you cannot find Velveeta try Spam. It is equally delicious or undelicious depending on the way you look at it.

Are they eating this or are they throwing it at cars?

The following should be pertinent:

Watch out for Velveeta Rita,
She will come to your party to de-cheese-ya,
And eat your crackers to defease ya,

Sticking with KFC is much less worse,
Because it is too slick to be put in Rita’s purse.

So when you stock up on picante and chips,
Visit the Colonel, or use Cool Whips,
Don’t have Velveeta, without a plan,
And you also can’t trust Sue, or John or Stan.

Velveeta cheese is not the best
But if you don’t care about your friends
It’s less expensive than the rest.

Heckerling Pearls of Wisdom – Part 2

Ken Crotty, Chris Denicolo and Alan Gassman attended the University of Miami Heckerling Institute on Estate Planning the week of January 13 – 17, 2014 and this is part 2 of their summary of a few of the outlines and presentations:

Robert B. Fleming -Representing Clients with Diminishing Capacity: What to Know and How to Bridge the Gap

This presentation provided several practical items to incorporate into the advisor’s practice:

• Never sit in front of the window. The bright light behind you makes it harder for your clients to see you.

• Speak loudly, clearly, and do not cover your mouth or place your hands on your face when speaking. Clients who are not able to hear you will almost never ask you to speak louder. If they do not have an issue hearing they will ask you to speak more softly. Clients who have issues hearing frequently read your lips to supplement their comprehension of what you are saying.

• Mr. Flemming never allows the child who brought the client to the meeting to come into the conference room before first discussing this with the client. His engagement letters state that they will not be able to come into the conference room.

• Be certain that the discussion in your conference room cannot be heard in the waiting room. Purchase a white noise machine if necessary.

Stephanie Loomis-Price and David Pratt – Wrapping Up Your Gift Tax Return with a Tidy Bow: Reporting Gifts with an Eye Toward Audit

• Make your gift tax return as boring as possible. The statement that you attach describing the valuation discount should provide a snapshot of the entire gift detailing what was given, who received the gift, and also the discounts taken. Consider reporting a sale to an irrevocable trust on the gift tax return to get the statute running on the sale instead of just reporting the seed gift made to the irrevocable trust.

• Remember to disclose charitable gifts. If there is an audit and the charitable gifts are not disclosed on the gift tax return, then the auditor may ask what other gifts were not reported. It is a matter of credibility.

Lee-Ford Tritt – Planning for Same-Sex Couples

• Advisors will need to redefine how their documents define a spouse. They will need different alternatives for different clients and this is something that you will need to discuss with the clients.

• Public policy arguments may prevent the definition of a spouse which excludes same-sex couples from being effective.

• Recognize that all same sex couples may not want to be married, either because of personal reasons or for economic reasons, such as avoiding the income tax marriage penalty and causing taxation of Social Security benefits.

Tourney Berry – Recent Developments for Fiduciaries 2014

Clients who have the desire to help charities and also save taxes have a number of opportunities that are not well-known to financial advisors. The tax benefits will almost never outweigh what goes to charity, so any client who starts off by saying that they want to give to charity to save taxes should be further questioned on whether they are willing to have less money after the transaction in order to help the charity. If the real motive is to save more taxes than what the contribution will cost the donor, end the conversation.

Besides an ordinary income tax deduction and reduction of the 3.8% Medicare tax, there are income savings techniques that can be used if the donor is comfortable making a 501(c)(3) organization a partner or shareholder in a family entity.

For example, a client with a $10,000,000 investment portfolio that has a very low tax basis might place the portfolio assets into a limited partnership, and retain the 1% General Partner interest while gifting the 99% Limited Partner interest to a charity.

The charitable gift might be valued at $6,000,000, and if the partnership thereafter sells the investments, there would be no capital gains tax recognized by the charity. This would save almost $2,380,000 of taxes, not counting state or city income taxes.

At a later time, and not based upon any pre-existing understanding, the client’s children might buy the 99% Limited Partnership interest from the charity for $600,000 in cash. It would be safest if this occurred more than three years after the donation in order to make it as clear as possible that this is not a “step transaction.”

The end result is the same as if the client had sold a discounted Limited Partnership interest to his or her children, but with the savings of almost $2,380,000 of capital gains taxes.

Another example involves the use of a charitable shareholder to avoid the tax on the reduction of stock.

If the same donor also owns 49% of a closely held corporation that can afford to redeem her, why not donate the 49% ownership interest to a charity. At a later time, the charity could be redeemed, and pay no income tax on the redemption.

Thanks to book purchasers at the 2014 Heckerling Seminar

We donated $5 for each book purchaser at the Heckerling Institute and thus wrote checks to several Universities, Colleges and Law Schools around the country. Most of the money went to the University of Florida and the University of Miami came in second (as usual!).

Thank you to everyone who supports higher education and estate and tax conferences.

Heckerling with Wording

Professor Jerry Hesch and Danielle Creech, Esq. at the Gassman Law Associates booth waiting for an order of Kentucky Fried Chicken with Velveeta cheese to arrive.

Marty Shenkman’s Heckerling 2014 Review

We were very proud that estate tax lawyer and author Marty Shenkman included mention of our JEST Trust (Joint Exempt Step-Up Trust) in his 47 page Heckerling review, which was provided in Leimberg Information Services Estate Planning Email Newsletter – Archive Message #2188 on January 24, 2014.

Marty’s summary of our JEST technique can be viewed by clicking here.

Our 2 part Estate Planning Magazine article from October and November of 2013 on the JEST Trust can be viewed by clicking here.

Don’t forget that married couples may be able to receive a stepped-up basis on all joint assets on the first death by using the JEST Trust or other techniques.

Colonel Sanders on What’s My Line

It is hard to imagine that such a recognizable figure as Colonel Sanders could have been so unknown. In 1963, when panelists on the popular TV show “What’s My Line” were asked to try to identify the occupation of Colonel Harland Sanders, not only were they stumped, but Colonel Sanders walked away with an extra $50. Maybe the panelists ate too much fried chicken and the grease went to their brains prior to the show which led to them not being able to correctly identify him.

Could this have been a set up? In 1963 there were already 900 Kentucky Fried Chicken restaurants throughout the United States which made it the largest fast food operation at the time in the U.S. Maybe he was disguised as Edward Snowden since there is no mention of Edward Snowden in the 1963 show and where was Mr. Ed? Doubtlessly making the hay somewhere.

So how does the game work? A group of panelists interview contestants with unusual occupations. The panelists are only allowed to answer “yes” or “no” to the questions, with the contestant winning $5 per “no” answer. The game ends with either 10 “no” answers (which was the case for Col. Sanders) or a panelist correctly guessing the contestant’s occupation.

Click here to view a clip of the show.

Seminar and Webinar Announcements:

See Our University of Florida Tax Institute Webinar

On Tuesday, January 27, 2014 we hosted a 15 minute webinar with Professors Friel and Calfee from the University of Florida and Bruce Bokor. You can view this informative webinar about the tax conference that will be in Tampa, Florida on Wednesday, February 19 – Friday, February 21, 2014 (1 day passes are available) by clicking here. For more information about the Institute and to register please click here.

Attend Our Private Placement Life Insurance Webinar with Jerry Hesch

On Thursday, February 6, 2014 at 12:30 p.m. Jerry Hesch and Alan Gassman will present a free live webinar to facilitate discussion of private placement life insurance and this year’s Notre Dame Tax Institute.
The Notre Dame Tax & Estate Planning Institute will be held on November 13 and 14, 2014 in South Bend, Indiana, and features two presentations being given simultaneously most of the time so that attendees can choose the presentation and speaker that best suits them. The focus this year will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis”. To register for the webinar please click here.

The Florida Bar Annual Wealth Protection Conference, May 8, 2014 in Miami, Florida

Please note that the annual Wealth Protection conference will be held in Miami, Florida on May 8 at the Hyatt Regency Downtown, and will feature nationally known speakers and authors Barry Engle, Jay Adkisson and Howard Fisher along with well respected and practical Florida based speakers.

We are particularly looking forward to an ethics and practice development panel discussion entitled ” What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves” that will feature Barry Engle, Professor Jerome Hesch, Denis Kleinfeld and Alan Gassman.

Jerry Hesch will be presenting his ever improving materials on Income and Estate Tax Issues for 2014.

Please give this conference a try if you have never attended. The interaction, synergism and information derived from the lectures and from other attendees is always dynamic.

For more information on this seminar please contact Alan Gassman at agassman@gassmanpa.com.

Applicable Federal Rates

Applicable Federal Rates.February 2014

Seminars and Webinars

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

LUNCH TALK – SOCIAL MEDIA

Date: Monday, February 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Aparna Tutak

Additional Information: To register for this webinar please visit www.clearwaterbar.org

PRIVATE PLACEMENT LIFE INSURANCE

Jerry Hesch will be joining Alan Gassman for a free 30 minute webinar to discuss private placement life insurance and this year’s Notre Dame Tax and Estate Planning Institute.

Date: Thursday, February 6, 2014 | 12:30 p.m.

Location: Online webinar

Speakers: Professor Jerry Hesch and Alan Gassman

Additional Information: To register for the webinar please click here.

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information: To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, March 4, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please click here.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: TBD

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: TBD

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: TBD

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s. To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.” As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate their limitations and problems they may cause in the future. Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have. For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams. As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death. The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report – January 23, 2014 – Dental Jokes, Heckerling & Steve Leimberg

Posted on: January 23rd, 2014

Heckerling Pearls of Wisdom – Part 1

Seminar Announcements: Steve Leimberg’s Revolutionary Legal and Estate Planning Practice Acceleration Talk at the University of Florida Tax Institute and PFAWL CLE Talk on DOMA

Affordable Healthcare Plans – The Website is Working – Example Results

Physician Personal Creditor Protection Planning for Healthcare Lawyers and Financial Advisors – with Joel Bronstein’s Outline and Checklist

Lewis Saret’s Wealth Strategies Journal 2.0

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Heckerling Pearls of Wisdom – Part 1

We attended the University of Miami Heckerling Institute on Estate Planning last week and summarized a few of the outlines and presentations for our readers, which are as follows:

Thomas W. Abendroth – Portability: Now Available in Generic Form:

• Consider not using a credit shelter trust and instead relying on portability.

• Provide that assets of the first dying spouse equal in value to the spouse’s portability allowance will pass outright to the surviving spouse, and then have the surviving spouse make a gift to an irrevocable trust using the portability allowance. Because this will be a grantor trust for the surviving spouse he or she can pay the income taxes incurred on the trust assets, and will thus work much like a “super charged credit shelter trust”, with the one difference being that the surviving spouse will not be a beneficiary of the trust unless it is properly structured and situated in an asset protection jurisdiction.

• To use the GST exemption of the first dying spouse in the example above, have the excess assets of the first dying spouse be held in a QTIP, and make a reverse GST election on the estate tax return. This will allow the GST exemption of the first dying spouse to be used on the QTIP assets. Therefore, provide that assets disclaimed from the credit shelter trust will be payable to a QTIP trust to facilitate the above.

Paul Lee- Venn Diagrams: Meet Me at the Intersection of Estate and Income Tax

• Favor recommending estate tax planning strategies that use financial leverage (such as installment sales to grantor trusts and GRATs), rather than advising clients to make large lifetime gifts. Lifetime gifts only shield the future appreciation of the gifted assets from estate tax, while leveraged estate tax planning strategies that take advantage of the low interest rate environment can result in greater estate tax savings while preserving much of the client’s exemption that can otherwise be used in making a lifetime taxable gifts or reducing or eliminating eventual estate tax.

• Income tax planning has become an integral part of the estate planning process. With state and federal income tax rates sometimes exceeding the estate tax rate, advisors need to consider the income tax ramifications of estate planning strategies, and whether clients will be better served by prioritizing planning for income tax avoidance rather than estate tax avoidance. Accordingly, some clients will be better served by causing inclusion of assets in their taxable assets in order to obtain a step-up in basis.

• It is important to draft trust agreements to provide for flexibility for income tax planning in the future. One drafting strategy involves creating a committee of independent trust protectors that would have the power to bestow a general power of appointment upon the grantor’s spouse or other beneficiaries of the trust in order to cause estate tax inclusion for step-up basis purposes. Another is the possible use of the JEST (Joint Exempt Step Up Trust) for married couples residing in non community property states.

Richard W. Nenno – There’s No Place Like Home, But Where’s Home? The Role of “Residence” and “Domicile” in State Income and Transfer Tax Planning — Foreign Service Officers, Corporate Executives, NBA Referees, and More

• Learn what will cause an individual and a trust to be considered to be a resident of a state to be able to sever the contacts with the state to avoid having to pay income tax to that state.

• Change the location of the trust before there is a recognition event. The worst case scenario for clients is to be taxable in more than one state because of the location of the client’s domicile, residence, or place of employment.

Christopher R. Hoyt- Health Care Surtax: Individuals —- Dancing Under a 3.8% Limbo Pole

• The 3.8% Net Investment Income Tax went into effect for tax years ending after December 31, 2012 for affluent individuals, estates and trusts. The tax applies to the lesser of the taxpayer’s (1) Net Investment Income; or (2) the amount by which an individual taxpayer’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples filing joint returns). For trusts and estates, the modified adjusted gross income threshold is $12,150 in 2014.

• “Net Investment Income” for the purposes of this tax means interest, dividends, annuities, royalties, rents, profits from a trade or business in which the taxpayer does not materially participate, profits from a trade or business of the trading of financial instruments or commodities (without regard to material participation), and taxable income from the disposition of property (such as capital assets) other than property disposed of in the course of the taxpayer’s trade or business in which the taxpayer materially participates.

• There are generally 2 ways to reduce a taxpayer’s exposure to the 3.8% surtax: (1) reduce the taxpayer’s income below the applicable threshold amount; or (2) reduce the taxpayer’s Net Investment Income, which can be done by converting income from Net Investment Income into income that is not Net Investment Income (e.g., by materially participating in the taxpayer’s trade or business), or by shifting Net Investment Income to family members in lower brackets or charities.

Donald O. Jansen– When Business Life Insurance Results in Income or Compensation — Depends on Who Owns the Policy

• Generally, where the employee owns the life insurance policy on his or her life, and the employer pays the premiums on the policy, the premium payments are considered to be compensation to the employee, and are therefore included in the employee’s gross income (with a corresponding deduction to the employer for the premiums paid). The policy death benefits are income tax-free under Internal Revenue Code Section 101.

• Where the employer owns the life insurance policy on the employee’s life, and the employer pays the premiums on the policy, the premium payments are generally not taxable to the employee if the employee does not actually or constructively receive the policy without substantial limitations.

• In some situations, both the employer and employee will share the cost responsibility for the life insurance policy on the life of the employee. The taxation of this type of arrangement is governed by the split dollar rules, which entitle the employer to receive out of the policy death benefits or the cash value of the policy at least the premium payments funded by the employer (or sometimes a larger amount). Split dollar arrangements generally can be divided into 2 categories: the loan regime, and the economic benefit regime. The loan regime entails the employee owning the policy and the employer loaning monies to the employee to provide funding for the policy premiums. At the termination of the split dollar arrangement, the employer would be entitled to receive repayment of its loan, with accrued interest based on a collateral assignment of the policy proceeds. Under the economic benefit regime, the employee provides funding for the premium payments each year based upon the “term cost” of the insurance coverage. The employee is the owner of the policy, and often endorses all or part of the policy proceeds to the employer to be payable upon the termination of the split dollar arrangement.

• When choosing between whether to use annual gifting and estate exemption allowances to allow for discounted entity transfers or to pay life insurance premiums, many planners will conclude that it is best to engage in discounted gifting while funding life insurance premiums by split dollar advances or from trusts that have assets that will be exempt from federal estate tax.

Gail E. Cohen- When You Must Adjust — How, When, Why and What Do the Professionals Do?

• The Uniform Principal and Income Act was enacted in 1997, and sets forth the general principle of investing trust assets for total returns. This approach blurs the distinction between income and principal, and gives the trustee discretion to adjust trust returns between principal and income.

• Fiduciaries need to consider potential conflicts of interest between current and remainder beneficiaries when exercising discretion in adjusting between principal and income. Often, the interests of current and remainder beneficiaries are at odds, and the fiduciary should be careful not to favor one class of beneficiaries over another without regard to maximizing the total return of the trust. With any decision, the trustee should document the process and reasoning for choosing an appropriate investment strategy for the trust in order to provide support for making the applicable decision.

• Trustee may implement a unitrust conversion whereby the trust will be converted into a unitrust that distributes a percentage of the value of the assets to the current beneficiaries each year. This can be a solution to balancing the interests of the current and remainder beneficiaries. This can occur under QTIP marital deduction trusts that would otherwise pay “income” to the surviving spouse.

Mickey R. Davis– Funding Unfunded Testamentary Trusts

• Funding testamentary trusts are often based upon formula funding clauses. The allocation of appreciation and depreciation that occurs between the date of death of the grantor and the date of funding is based upon the formula clause that is in the applicable trust instrument. The type of formula funding clause that is the best fit for a particular client generally cannot be determined at the time of drafting. Nevertheless, advisors should be wary of using pecuniary funding clauses in drafting testamentary trusts because an income tax realization event can occur if a pecuniary devise is funded with assets that have appreciated since the date of death.

• Consider the income tax basis of assets when funding testamentary trusts. For example, allocating appreciated assets to a marital trust might be preferable because the assets in the marital trust will receive a step-up in basis on the death of the surviving spouse. Also, it is important to coordinate probate assets with non-probate assets when funding credit shelter trusts.

• When credit shelter trusts are required to be funded per the trust instrument, but are not funded, advisors will need to look at their applicable state law to determine whether the credit shelter trust can be funded long after the decedent has died. There are several approaches that can be taken to address the issue of how assets are held under the law, and whether the IRS will respect the existence of the credit shelter trust. Mr. Davis’ outline goes into excellent detail with respect to these approaches.

Check back next week for more summaries from Heckerling.

Seminar Announcements:

Don’t Miss Steve Leimberg’s Revolutionary Legal and Estate Planning Practice Acceleration Talk in Tampa at the University of Florida Tax Institute on Friday, February 21, 2014 at the West Shore Hyatt at 8:30 a.m.

Leimberg

Steve Leimberg, Author and Photographer
(Click here to view Leimberg Information Systems.
Click here to view Steve Leimberg’s Photography Website)

“Steve Leimberg’s photography website gives naked trusts a new meaning.”

This talk alone is more than worth the $200 day pass cost, and the other speakers and topics for that day are as follows:

• 9:30 a.m. – John J. Scroggin on Basis Planning
• 11:00 a.m. – Lauren Y. Detzel and David Pratt on Formula Clauses: A-Z
• 12:15 p.m. – Samuel A. Donaldson on an Annual Update and Humor Extraordinaire!

All of that, of course, is secondary to the fact that our Thursday Report will be released the day before and personally autographed by Steve for anyone who has purchased any of the books that we are selling so that 75% of the sales revenues will go to the tax program.

Here is more information on Steve’s presentation. If you have never seen him speak you will not want to miss this:

WHAT’S IN IT FOR YOU?

Steve Leimberg’s MARKETING AN ESTATE PLANNING PRACTICE will show you how to build your name – and your firm’s name – into a brand name in your city – and bring more – and higher net worth quality clients into your office – and keep them there in a continuous lifelong stream.

Loaded with creative and innovative ideas, Leimberg’s talk will give you mind-stretching insights such as his “Positive Differentiation” Theorem, “Leimberg Leveraging”, the HT3 formula, The “Firestorm Technique”, The “Silence of the Lambs” Principal, The “Lexus” Technique, the “Nikon” Concept, “Mini-Marketing System, and “the “Pepperoni Bread Principle.

Steve’s objective is no less than to help you see the marketing of your name and your practice as the key to move your professional life to your “personal next level.”

You’ll learn Steve’s “mini-marketing systems” plan to effectively structure a stronger and even more successful estate, financial, business, employee benefit, and charitable planning practice.
You’ll learn the incredible marketing concepts that brought groups at the Heckerling Institute, the American Bar Association’s Tax Section Annual Meeting, The National Association of Estate Planners and Councils Annual Meeting, and the Annual Meeting of the AICPA’s Estate and Financial Planning Sections to their feet.

ABOUT STEVE LEIMBERG:

Steve Leimberg is “MR. MARKETING.” In a one month period of time, Steve was quoted in the Wall Street Journal and Fortune Magazine on Charitable Split Dollar, Forbes Magazine and Standard and Poor’s Outlook on Total Return UniTrusts, in Bloomberg’s Wealth Manager on Charitable Lead Trusts, and in Medical Economics on Abusive Trusts. The late Sylvia Porter called Steve Leimberg a crusader for personal financial freedom and he has served as an advisor for and TV show guest of Jayne Bryant Quinn. He was most recently quoted in the New York Times and Wall Street Journal.

If you are ready to move up to your “Personal Next Level” …

Don’t miss this very profitable session:
It will enrich your practice forever!

Also sign up for a trial membership of Steve Leimberg’s amazing newsletter system by clicking here.

Same Sex Marriage and Associated Laws We Should All Know About Anyway, on Thursday, January 30, 2014 at Stetson Law School

DOMA with language

Affordable Health Care Plans – The Website is Working – Example Results

We asked our law students to tell us how Obama Care would apply for a Pinellas County based 40-year old earning $20,000 a year.

The Bronze Plan with a $6,300 deductible and no co-payment obligation beyond that would cost $34/month with Humana, or $50 a month with Humana with a $4,850 deductible and co-payments of $75 or less per doctor visit until a certain point is reached.

The Silver Plan would be $61/month for a $900 deductible and smaller co-pays.

The Gold Plan would be $97/month for a $2,500 deductible and smaller co-pays.

The Platinum plan would be $131/month for a $1,000 deductible and smaller co-pays.

The details and a checklist chart can be viewed by clicking HERE.

We have found clients who are paying more out of pocket for healthcare than what the Obama Plan would cost them, and those clients presently do not have access to expensive testing or facilities or specialists that are on the Obama Care plans.

The Obama Care website can be accessed by clicking HERE.

Another result of Obama Care is the extensive survey that hospital patients are requested to fill out.

A sample hospital survey for pediatric services to be filled out by parents is attached.

Pediatric hospitals certainly are going to have to stay on their toes when this type of feedback is being requested.

You can view the survey by clicking HERE.

Physician Personal Creditor Protection Planning for Healthcare Lawyers and Financial Advisors – with Joel Bronstein’s Outline and Checklist

Bronstein

On January 17, 2014, Joel Bronstein, Esq. of Bronstein, Carlson, Gleim & Smith in St. Petersburg, Florida presented an excellent outline and checklist to the 2014 Representing the Physician Annual Conference in Orlando, Florida.
Joel has been generous enough to give us permission to reproduce the outline and checklists, which can be viewed by clicking here.

We thank Joel not only for sharing his outline with the Thursday Report readers but also for the many times he has spoken at the Representing the Physician Seminar, and for his stewardship and dedication to The Florida Bar activities, including having been the Chairman of the Tax Section of The Florida Bar, and having served as the Chairman of the Continuing Legal Education Committee for The Florida Bar.

Joel’s contact information is as follows:

Joel D. Bronstein, Esquire
Bronstein, Carlson, Gleim & Smith
360 Central Avenue
Suite 1200
St. Petersburg, FL 33701
727-898-6691
jbronstein@bcgs-law.com

Lewis Saret’s Wealth Strategies Journal 2.0

Saret with wording

Lewis Saret of Lewis J. Saret, Attorney at Law in Washington, DC has a fantastic Wealth Strategies Journal that he publishes on developments in estate planning and taxation, asset protection, business succession planning, fiduciary issues and many other issues. The Journal is free to anyone who wishes to receive it. To sign up please click here.

Here are some of the recent articles profiled in the Wealth Strategies Journal: (Click each one to be directed to the text of the article)
NYT Article on How a Doctor Decided to Become a CFP
Tax Break for IRA Gifts Expires Soon
Oklahoma’s Reduction in Top Rate Ruled Unconstitutional
New Mexico Supreme Court Legalizes Same-Sex Marriage Statewide
How to Regain Tax Exempt Status
The Affordable Care Act’s Impact on Business Reporting Requirements
Developing A Medium Term Investment Strategy With A Three To Five Year Term
Beware of Tax Preparer Fraud During Tax Season
Alimony Payments and Tax Status

Applicable Federal Rates

APPLICABLE FEDERAL RATES.January 2014

Seminars and Webinars

THE 444 SHOW – USING FOCUS GROUPS TO CREATE EFFECTIVE TRIAL GRAPHICS
Date: Thursday, January 23, 2014 | 4:00 p.m.

Location: Online webinar

Speakers: Marcus Castillo and Josh Hoeppner

Additional Information: To register for the webinar please visit www.clearwaterbar.org

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

UNIVERSITY OF FLORIDA TAX INSTITUTE INFORMATIONAL WEBINAR

Date: Tuesday, January 28, 2014 | 12:15 p.m.

Location: Online webinar

Speakers: Bruce Bokor, Alan Gassman, and additional speakers to be announced.

Additional Details: To register for the webinar please email Janine Gunyan at Janine@gassmanpa.com

LUNCH TALK – SOCIAL MEDIA

Date: Monday, February 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Aparna Tutak

Additional Information: To register for this webinar please visit www.clearwaterbar.org

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information: To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: TBD

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: TBD

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: TBD

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s. To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with an advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 10, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 11, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report 1.16.14 – Heckled at Heckerling

Posted on: January 16th, 2014

Heckled at Heckerling

Foreign Currencies and Overseas Bank Accounts, an article by Dr. Jack Barrett and Parker Evans

Our article, Imposing Punitive Damages was published last night on Leimberg Information Systems

Seminar Announcement – Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner with Jerry Hesch

Stump the Panel: Consanguinity or Affinity or Affluenza?

Why Wyoming?

The Story of Yellowstone and Teton National Parks

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

HECKLED AT HECKERLING

We brought our JEST (Joint Exempt Stepped-up Basis Trust) to Heckerling,
At booth four-three -oh,(430)
With our peer reviewed articles,
To explain and show,
That a stepped-up basis on the first death is doable,
Based on PLR’s, a TAM, and unique trusts that are movable,
(and no downside because if it doesn’t work
–you are back where you started–but more alert)

A lot of people like the JEST,
Because the only alternative is much less best,
And how proud we were that Professor Jeffrey Pennell,
Commented on our technique, which he found less than swell,

He alluded to TAM’s and PLR’s,
Which support our system, like tires work for cars,
He said that these authorities make the JEST a gift by the survivor,
But did not mention that they also allowed the marital
Deduction, (and that our incomplete gift design is even wiser)

He did say there was less than certainty on the 1014e Rule,
But did not read our article explaining that the suriving
Spouse would not be a surviving 1014e fool,

Professor Pinnell be nimble,
Professor Pennell be quick,
Professor Pinnell torched the JEST like a candle stick,

But we heard him exclaim as he rode out of sight,
“I also think that none of the Alaska, Delaware or
Nevada trusts will work right!”

When evaluating techniques for successful clients who took
Risks in businesses and professions after taking a look,
Make sure you warn them if you decide to be bashful,
Lest their heirs may complain and pursue you for a cashfull,

Especially if the reward is high and the risk is small,
If you don’t try for a higher basis you may take a fall

We thank the other speakers
Whose outlines mention the JEST
And happy Thursday to you and all of the rest.

Foreign Currencies and Overseas Bank Accounts, an article by Dr. Jack Barrett and Parker Evans

Barrett

Dr. John P. Barrett, a retired by very active Tampa Bay orthopedic surgeon, is an internationally known innovator, investor, philanthropist and serial entrepreneur. Dr. Barrett’s passion for investment management and research inspired him to create Successful Portfolios. Dr. Barrett can be reached via email at jpbmd@aol.com.

Parker2-214x300

With thirty years professional experience as an investment advisor, Parker co-founded Successful Portfolios in February 2010. Parker holds the Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Chartered Market Technician (CMT) designations. Parker’s commentary and papers have appeared in the Journal of Financial Planning, CFA Magazine and the Journal of Technical Analysis. He is the former President of First Discount Securities Corp., a pioneering discount brokerage firm acquired by First Union (now Wells Fargo). Parker is a former Vice President of First Union, Smith Barney, and Fifth Third Private Bank. He earned a B.A., with a major in Economics from Eckerd College where he won the Wall Street Journal Award for outstanding academic achievement. Parker received an MBA with Honors from Nova Southeastern University. Parker can be reached at 727-744-3614.
Many clients have asked us recently about buying foreign currency or opening bank accounts offshore to hold foreign currencies, so we asked Dr. Jack Barrett, MD and Parker Evans, CFA, CFP, CMT of Successful Portfolios LLC, a Clearwater based Registered Investment Advisor, for their thoughts on this. They have extensive experience with offshore accounts and foreign currencies and sent us the following memo.

Their memo mentions Interactive Brokers as a low cost broker – we are not endorsing Interactive Brokers here, but like the memo and are therefore making it available below. Doubtlessly there are many possible firms and platforms that offer what they are referring to, and we invite other investment advisors and professionals to chime in on the discussion below. While Switzerland has been the gold standard for bank safety and professionalism for many decades, it is essentially closed to direct accounts for Americans, and therefore intermediary organizations, Lichtenstein banks and other structures are evolving. Some clients may feel that it is best to have a portion of their money or wealth held in foreign currencies or in overseas accounts. Most clients do not have oversees currency or accounts and feel perfectly fine with that, as do we. Now, take it away Jack and Parker………………………

It is easy to see that the US dollar isn’t worth what it used to be. The US Treasury and Federal Reserve continue issuing debt and printing money at an unprecedented rate. High taxes, accelerating inflation and low interest rates could ultimately decimate the value of your cash reserves if held in only US Dollars. Rather than holding all your cash reserves in U. S. Dollars, it might make sense to diversify into currencies that could better protect your purchasing power. For example, historically the value of the Swiss Franc has appreciated versus the US Dollar. Consider too that Australian and Canadian Dollars deposits typically yield more than US Dollar deposits.

Next, let’s carefully examine the how and where of investing in foreign currencies. Consider these alternatives;

1. Go to your local commercial bank and buy the currency of choice. This is a very expensive way to acquire currency for investment purposes.

2. Purchase at the airport currency booth. Don’t do it! This is even more expensive than buying currency at your local commercial bank.

3. Open an account with Interactive Brokers (IB), a public company, where you can purchase up to US $1,000,000 of most any major world currency at low, transparent wholesale prices for a commission of just $2.50.

Once you acquire your foreign currency where do you keep it?

Option one, physical possession:

1. Stuff the paper money in or under your mattress and forget it.

2. A home safe is a better choice as long as no one knows about it.

3. A safe deposit box at your bank is the best choice for physical possession.

For reasons we won’t go into here, we strongly recommend you avoid in- or under-the-mattress currency storage. Also remember currency in a safe deposit box doesn’t earn interest. Not good. If you like the idea of holding some safe harbor assets in your safe deposit box consider holding gold and silver coin numismatics in addition to paper currency.

Option two, an Overseas Bank Account:

There is no requirement to have an overseas bank account to invest in foreign currencies. However, an overseas bank can be a good option for holding foreign currency deposits, especially if you plan on spending some time in the county and if you are ok with reporting your overseas accounts to the IRS as required by U.S. law.

Be aware that these days it is very difficult if not impossible for a US Citizen to open a Swiss Bank account offshore. There are foreign banks that will accept your deposit account if you jump through the required hoops. Caution is in order. Consider for example what might happen if a major hurricane submerges your favorite island tax haven. You should avoid banks paying higher than market interest rates on deposits. If you are adamant about opening an overseas bank account, remember that an affiliate of a systemically important, too big to fail, multinational bank holding company is a safer bet than small locally based banks. Subsidiary banks of any of the Canadian big five banks would likely be a safe choice.

For many investors the best option for buying and holding foreign currencies is……here it comes………. an online IB Brokerage Account. Consider:

1. You can quickly and easily buy a currency ETF (exchange traded fund) from most online on line stockbrokers like Schwab. Currency ETFs are safe but remember ETF prices will fluctuate.

2. At some brokers, like IB, you can buy currency in the cash FX (foreign exchange) market. This usually is the most cost effective approach. Executing a cash market FX trade requires a bit of a learning curve and is more complicated than simply buying an ETF.

3. You can buy FX futures contracts. There are some big advantages with this but don’t leave home without professional advice.

4. Another advantage of a brokerage account at IB is you have the option of investing your foreign currency balance in attractive stock or bonds directly in their home market. Many of these securities are not readily available for trading in US markets.

5. If you have a foreign bank account and an IB brokerage account, you can easily and economically convert your US Dollars to a foreign currency and then wire it overseas.

……and a bucket of Kentucky fried chicken for every IB account you open

Our Article on Punitive Damages

Our article on Punitive Damages was published last night by Leimberg Information Systems. We thank Steve Leimberg, Steve Adkisson, Dave Slenn and Charlie Lawrence for making the article on LISI possible.

Jay’s 12:35 a.m. email today made our day and reads as follows:

Alan,

Just wanted to drop you a line and tell you what a tremendous and helpful article this is — I am frankly awed by the excellent state-by-state research that you have done.

As I don’t have Charlie’s e-mail, please forward my comments to her with my best.

BTW, you guys gave me sole credit for the Cutuli/Elie article, but in truth Dave Slenn contributed tremendously to that article and was the co-author, but was not mentioned.

I do very much appreciate the credit, but Dave is also very deserving of sharing it.

Best,
— Jay

The introduction and the chart from the article are as follows:

“Some states are allowing punitive damages for fraudulent transfers in bankruptcy cases, some states are not allowing punitive damages, and some haven’t decided yet. The majority of states that have considered the issue have jumped on the bandwagon to allow punitive damages for fraudulent transfers, regardless of whether the transfer is considered a crime. Only time will tell how the remaining states will fall.”

After reviewing Jay Adkisson’s Asset Protection Planning Newsletter #229, Alan Gassman couldn’t help but investigate what was going on with punitive damages. He enrolled the help of Charlie Lawrence to investigate the situation, and their commentary captures what they found.

Alan S. Gassman, J.D., LL.M. practices law in Clearwater, Florida. Each year he publishes numerous articles in publications such as BNA Tax & Accounting, Estate Planning, Trusts and Estates, The Journal of Asset Protection, and Steve Leimberg’s Asset Protection Planning Newsletters. Mr. Gassman is a fellow of the American Bar Foundation, a member of the Executive Council of the Tax Section of the Florida Bar, and has been quoted on many occasions in publications such as The Wall Street Journal, Forbes Magazine, Medical Economics, Modern Healthcare, and Florida Trend magazine. He is an author, along with Kenneth Crotty and Christopher Denicolo, of the BNA Tax & Accounting book Estate Tax Planning in 2011 and 2012. He is the senior partner at Gassman Law Associates, P.A. in Clearwater, Florida, which he founded in 1987. His email address is agassman@gassmanpa.com

Charlie Lawrence is a 2013 Stetson Law School graduate and is a member of the Florida bar; she co-wrote this commentary while performing legal research for Gassman Law Associates, P.A.

States chart page 1

States Chart page 2

*Awarded punitive damages when conduct was not a crime
1Does not follow the Uniform Fraudulent Transfer Act.
2Transferee was found to have acted with intent to defraud.

Seminar Announcements

Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner with Jerry Hesch

On Tuesday, April 22, 2014 from 4:00 – 4:50 pm, Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Council meeting in Clearwater, Florida on the topic of Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner. This session will qualify for 1 hour of continuing education credit for lawyers and CPA’s.
Following Professor Hesch’s talk there will be a social program and networking along with a brief information session.

Ruth Eckerd Hall is also scheduling a donor luncheon so that Professor Hesch can explain how the government will contribute to charity when proper techniques are used.

Please plan to attend this great event.

April 22 Announcement.1e

Stump the Panel: Consanguinity or Affinity or Affluenza?

We see these words all the time in regards to inheritance, but what do they mean? Where did they come from?
Consanguinity means “related by blood.” The word is derived from the Latin word “consanguinitas,” meaning “blood relation.”

Affinity means “related by marriage.” The word is believed to be Latin, derived from “affinitas.”

Affluenza means the guilt or lack of motivation experienced by people who have made or inherited large amounts of money. The word comes from aff(luent) + (in) fluenza. Wikipedia has a good entry on Affluenza that can be reviewed by clicking here.  Also the book Affluenza: The All-Consuming Epidemic by John de Graaf is presently being reviewed by your Thursday Report editors to see how much of it we have. Click here to order your copy now.

Why Wyoming?

Bigger and better than Disney World?

The benefits of limiting liability of owners and shareholders exist under the law of many states and many clients are best served by using a state other than Florida for confidentiality, creditor protection and cost reduction purposes.

While Florida’s limited partnership and LLC laws are among the best in the country, the Florida Supreme Court decision in Olmstead, annual changes in the statutes thereafter, confusion resulting from the above, and the question as to whether there will be further changes leads some planning lawyers to the conclusion that Wyoming secrecy rules and stability help make it the appropriate jurisdiction for many entities.

Many clients are married and want their ownership of an entity to qualify as tenancy by the entireties, which cannot be assured unless the state where the entity is formed or recognition of tenancy by the entireties exists. Delaware and Wyoming are considered to be incorporation havens because they do not impose any income tax and have pro-business laws. In addition, both Delaware and Wyoming recognize tenancy by the entireties, and have good secrecy practices as well, but we have found Delaware to be much more expensive and cumbersome to use than Wyoming, except that Wyoming does not have electronic filing like Delaware does. Colorado and Nevada are also popular, but do not recognize tenancy by the entireties. Wyoming is the only state in the union that is a perfect rectangle with its lines being north and south and east and west. It is more square than Colonel Sanders.

The filing fees and annual report fees for limited partnerships and LLCs in Florida, Delaware, and Wyoming are as follows:

Wyoming Chart

Please note that a Registered Agent will need to be retained in the state of formation.

WHILE IN WYOMING – ON YOUR TAX DEDUCTIBLE TRIP – MAKE SURE TO VISIT JACKSON HOLE AND YELLOWSTONE NATIONAL PARK WHICH ARE AMAZING U.S. GOVERNMENT TERRITORY GIFTS THAT WERE PROVIDED BY JOHN D. ROCKEFELLAR, AS DESCRIBED BELOW.

The Story of Yellowstone and Teton National Parks

Wyoming and small parts of Idaho were well known to have incredible scenery, volcanic mountain, and incredible rivers, spring fed lakes, and natural beauty since originally surveyed by Ferdinand Vandeveer Hayden as part of the Hayden Geological Survey of 1871.

In 1924, John D. Rockefeller, then the wealthiest man in the world, visited part of the 2,221,766 acres that is now known as Yellowstone National Park. This trip turned into an annual family visit to the Yellowstone and Teton Mountain Range areas, including Jackson Hole.

In 1927, Mr. Rockefeller established the Snake River Land Company, which was administered by a Salt Lake City, Utah lawyer named Harold Pegram Fabian.

Much like Walt Disney did in Central Florida in the mid-1960s, Mr. Rockefeller remained completely anonymous as an affiliate of the Snake River Land Company, and the company had confidentiality agreements in place so that land owners were not aware that large portions of their area were being purchased.

The economic travails of the 1920s caused a significant number of land owners to sell their property to the Trust for less than what they felt it was worth, but more than they could get anywhere else.

The Snake River Land Company initially bought some of the 114,170 acres of land that had recently open for purchase on both sides of the Snake River. At that time, land to the west of the river cost $28/acre, and land to the east of the river merely $10/acre.

Most of the property would probably be described as being too mountainous to develop, but at approximately 2.5 million acres, these two parks cover roughly 4% of the real estate within the State of Wyoming. The federal government owns 48% of all land in Wyoming, and the state government owns an additional 6% of the land.

A great many of the citizens of the State of Wyoming were unhappy to learn that John D. Rockefeller had acquired approximately 35,000 acres of land for an overall average of $39.66/acre.  Although the property had been freely sold for a fair price, as soon as it was revealed that Rockefeller was behind the Snake River Land Company, there was indignation that the richest man in America did not have to pay more for the land he purchased. The lands were purchased under willing buyer/willing seller arrangements, but Rockefeller was rich and most of the sellers were suffering in the Great Depression, which drove the cost of land down. Furthermore, the western culture was not keen on being told what to do by a family from the northeast.

John D. Rockefeller held onto the property for 15 years, and finally wrote to President Franklin Delano Roosevelt stating that if the President did not accept the donation of this land immediately and create a national park, that he would dispose of the land privately. President Roosevelt used federal power to bypass local issues and declared the creation of the Jackson Hole National Monument on March 5, 1943.

This caused a major political upheaval in Jackson Hole and throughout Wyoming as people came to realize that they would not be able to live in developing communities, and that the federal government would be telling them what to do on Mr. Rockefeller’s property. The President’s actions were referred to as the death of democratic rights and even compared to the Nazi seizure of Austria, in the midst of World War II no less!

In 1944, President Roosevelt struck down a bill that had passed both houses of Congress, calling for the dissolution of Grand Teton National Park altogether. In 1950, the lands held under the Jackson Hole National Monument finally merged into the 310,000 acres of land that today make up Grand Teton National Park.

Also, a great many families had property within what would become the National Park System, and would not have road access to the outside or would have many miles to travel in order to get to non-public park property.

These negotiations with the federal government resulted in a number of compromises, including permission for big game hunting within specific hunting seasons, grazing rights, and even dude ranching on park property under certain circumstances.

The descendants of many of these families still reside on park lands today.

Once the idea of protecting national lands was extremely unpopular, but today Yellowstone and Grand Teton National Parks are huge tourist attractions. The Jackson Hole Airport accommodates approximately 285,000 visitors per year and is located entirely on the Yellowstone National Park. It is the only airport to be contained within national park property. It is currently undergoing expansion that will be completed in the spring of 2014.

Teton Village in the Jackson Hole area consists of approximately 3,200 acres of hotel, timeshare, condominium, ski resort and ski slope, and upscale housing. It is located at the base of Rendezvous Peak, and is a major tourist spot, particularly for avid skiers (Rendezvous Peak, at 10,536 feet, has the largest vertical rise in America- 4,139 feet).

The interplay between the federal park system and the outside private sector has been an integral part of the park system’s history since its inception.

There is an interesting parallel between the creation of Yellowstone and Grand Teton National Parks and the creation of the Walt Disney World Resort in Orlando, Florida. Like Rockefeller, Walt Disney quietly purchased over 30,000 acres of land in the heart of the state; in the 1970s, the average price was $180/acre. Rockefeller’s aim in purchasing the land was to preserve and protect it from development; Disney’s aim was to create a resort complex with theme parks and hotels for commercial gain. However, Yellowstone and Grand Teton generate a significant amount of commercial revenue from tourism each year, and Disney has a 12,000 acre nature preserve right on its property.

The Disney property today encompasses approximately 25,000 acres, roughly 0.62% of Florida’s 42,083,200 acres. The Magic Kingdom has the most visitors of any theme park in the world (17,536,000), and the Walt Disney World properties together drew 126,479,000 visitors in 2012.

Compared to that, Yellowstone and Grand Teton cover roughly 2.5 million acres, and draw 6,153,000 visitors per year. That is roughly 2.46 visitors per acre of national park. Disney attracts 5,059.2 visitors per acre annually.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

APPLICABLE FEDERAL RATES.January 2014

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2014

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2014, whether formally or informally. Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with an advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 10, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 11, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report – Heckerling, TBE, Important Conferences and the Sea

Posted on: January 9th, 2014

The fate of modern society is in your hands. Or would you rather have a beer? Decide tonight, after reading the Thursday Report (after drinking a beer). Substitute a glass of Silver Oak 2008 Cabernet if you must! No ice please unless you add whiskey.

The Stepped-Up Basis Conversation

Imposing Punitive Damages on Fraudulent Transfers: Where Will Florida Fall? With a State-by-State Chart

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask – Part 2 of a 4 part Series

Frank Jakes is Not Afraid of Virginia Woolf

Seminar Announcement – Same Sex Marriage and Associated Laws We Should All Know About Anyway, Thursday, January 30, 2014 at 5:30 p.m. at Stetson Law School

Downton Abbey and the Dreaded Fee Tail – A Far Worse Fate Than Not Having Air Conditioning, Microwaves or Hair Dryers

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

The Stepped-Up Basis Conversation

Our article with Jonathan Blattmachr entitled “The Stepped-Up Basis Conversation” has been published by Bloomberg BNA Tax Management Estates Gifts and Trusts Journal. The first page and our chart are reproduced with permission below. Click here to read the rest of the article.. We thank Tom Waits for providing the inspiration for this article and for the album Small Change. If you have not heard Small Change download it and listen to it, even before finishing this Thursday Report.

PDFArtic_Page_1

Blattmachr article chart

Imposing Punitive Damages on Fraudulent Transfers: Where Will Florida (and Other States) Fall? With an Informative Chart
By Alan S. Gassman and Charlie Lawrence

When asset protection goes painfully wrong, can your client and transferees be held liable for punitive damages due to fraudulent transfers? Courts in several jurisdictions have imposed punitive damages on transferors and transferees, however, no Florida court has taken a stand on this issue.

The first punitive damages award for a fraudulent transfer that we are aware of was the Ohio case of Locafrance United States Corp. v. Interstate Distribution Servs., Inc which was decided in 1983.

More recently, the California case of Elie v. Smith established that a judge may impose punitive damages on the perpetrators of a fraudulent transfer.1 The recent Pennsylvania case of Klein v. Weidner also imposed punitive damages on what was found to be an “outrageous and intolerable” situation.2

The Pennsylvania statute contains the same exact language as the Florida statute, with reference to enumerating the following language as being included in the remedies that a court can impose in a fraudulent transfer action:

“1) In an action for relief against a transfer or obligation under ss. 726.101-726.112, a creditor, subject to the limitations in s. 726.109 may obtain:

(c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:

3. Any other relief the circumstances may require.”3

In Klein, the punitive damages were imposed on the debtor, who willfully defied a court order and used unlawful and threatening means to impede the judicial process.”4 However, in the Elie case, punitive damages were imposed on both the transferee and the transferor because the debtor’s behavior was “despicable and subjected Elie to cruel and unjust hardship” that each defendant’s behavior was “vile, base, and contemptible.”5

In the Elie case, a wife owing money to a third party signed an amendment to her prenuptial agreement with her spouse, which required her to transfer all of her assets to him in exchange for consideration, if any, that was not discussed in the case. To apparently attempt to make this look at arm’s-length, the husband sued Mrs. Smith without giving notice to the creditor. The creditor intervened in the suit, and the husband and Mrs. Smith moved to Florida and filed for a Chapter 7 bankruptcy.

The California court and bankruptcy courts found that the husband and Mrs. Smith engaged in clearly egregious conduct, which included, but was not limited to, what was found to be a deceptive and entirely fraudulent transfer motivated conduct, but also concealing assets with the assistance of a lawyer and severely impeded the court.

The court did not comment on the lawyer’s behavior, but it did describe his involvement. The debtor used the lawyer’s services to transfer funds and held funds in the lawyer’s client-trust account.6 Jay Adkisson was not so kind. In his Asset Protection Planning Email Newsletter Archive Message 229, Mr. Adkisson expressed his view that “there will come a time in every planner’s career when a financially-distressed client will walk through the door seeking asset protection. … It is this point in time which separates the smart planners from the foolhardy ones. The smart planners might voice sympathy for the client’s plight, but will refuse to take the case… The foolhardy planners will give in to their urges, do planning where it lawfully shouldn’t be done, and thereby expose their clients, their own assets, and even their careers to potentially dire consequences.” However, Mr. Adkisson does note that Florida law is different. He explains that “in some jurisdictions, such as Florida, the courts have held that an attorney cannot be liable either under a conspiracy or aiding and abetting theory for a client’s fraudulent transfer.” In other jurisdictions, like California and Pennsylvania, the same act is considered a tort and, in some circumstances, a crime.

However, the lawyer in Elie has not seen the end of this battle. The Bankruptcy Trustee sued him on a number of claims, including unlawful and unfair business practice, injunctive relief, racketeering, negligence, fraudulent transfers, deceptive acts and practices, breach of fiduciary duty, conspiracy, accounting, and constructive trust. The case against the lawyer is set for trial for July 28, 2014. In the Trustee’s complaint to the court, he argued:

“The unlawful business practices of [lawyer] are likely to continue and therefore will continue to mislead the public because [lawyer] holds himself out as a professional who renders sound legal advice yet instead he performs the above-referenced unfair and unlawful activities under the guise of providing legitimate business services, which presents a continuing threat to the public.

As a direct and proximate result of [lawyer’s] conduct, [lawyer] has received and will continue to receive fees for his unethical and unlawful services that rightfully belong to members of the general public who have been adversely affected by [lawyer’s] conduct as well as to Plaintiff by virtue of the money and assets lost due to [lawyer’s] actions.”7

This is much different than a situation where a client who may have a litigation or contingent liability situation goes to a lawyer and determines it appropriate to engage in conventional estate and/or business planning actions that incidentally cause insulation of assets from creditors.

Several states have found that the Uniform Act’s “Remedies of Creditors” Section allows for punitive damages, including Maine, Ohio, and Utah. However, Colorado, Connecticut, and Wisconsin courts have found that punitive damages are not allowed under their respective Uniform Acts, regardless of how egregious the behavior is. All of the states relied on pre-existing state law and common law when interpreting the remedies available under the Act. See the table below for a look at where states have fallen on this issue.

What is the result of a judgment for punitive damages against the debtors besides the fact that the debtor owes more money to the creditor? If the debtor is already insolvent and has no other assets it may make no difference, but transferees will not want to have judgments against them! If the transferee receives money and can give it to the creditor this may not be a problem, but if the transferee receives an asset of questionable value and the judge finds it to be more valuable than it really was then the transferee can suffer an extreme loss, not to mention having to pay attorneys, fees and punitive damages.

For example, a client with a $500,000 IRA and a $200,000 bank account might transfer the $200,000 bank account into a variable annuity contract the day after a judgment is entered into by the debtor. Typically a court can award the creditor the right to set aside the transfer into a variable annuity, plus attorneys’ fees and costs.

Can the judge also order that punitive damages are owed, and will this cause loss of the IRA? Under Florida law, punitive damages are no more or less collectible than any other debt obligation, but, in bankruptcy, punitive damages for willful and malicious injury are not dischargeable.11

In re Fabian is one example of the bankruptcy court holding, and the district court affirming, that damages for willful and malicious injury are not dischargeable.12 In Fabian, the debtor, through a corporation in which he was the sole officer and shareholder, entered into several agreements with a leasing broker. The agreements allowed the leasing broker to purchase equipment and software from the debtor’s corporation, and then lease the same equipment and software back to the corporation. In many cases, the equipment and software did not exist or were of substantially less value than the “purchase price.” As a result of the agreements, the debtor’s corporation obtained approximately $32 million from the leasing broker.

After he defaulted on 11 leases, the debtor transferred money to a for-profit entity that was controlled by the debtor. In addition, he purchased beach property, donated to a private school, and indulged in private jet travel. The debtor’s corporation was forced into bankruptcy by two creditors. The bankruptcy court held, and the district court affirmed, that the transfers were fraudulent. Further, because the debtor acted intentionally, his actions met the willful and malicious injury requirement of Section 523(a)(6) of the Bankruptcy Code. The judgment regarding the willful and malicious injury caused by the debtor was not dischargeable.

States chart page 1

States Chart page 2

*Awarded punitive damages when conduct was not a crime
1Does not follow the Uniform Fraudulent Transfer Act.
2Transferee was found to have acted with intent to defraud.
Will Florida courts follow these decisions for similar egregious situations? It is possible. Our original expectation was that only states that consider a fraudulent transfer to be a crime would allow punitive damages. However, this is not the case.

California has a criminal statute that caused the subject transfers to constitute clearly illegal conduct.8 Florida has no statute making a fraudulent transfer a crime. In fact, the Florida Supreme Court has confirmed that an intentional fraudulent transfer into a homestead is immune from being subject to the Florida fraudulent transfer statute.9 Debtors who have any concern whatsoever about having a punitive damage claim brought against them and/or their transferee may prefer to make transfers to pay off mortgages on homesteads, to purchase new homesteads, or even adjoining homesteads to increase the property that they live on. Florida appellate courts have held that lawyers who intentionally represent and advise clients on transfers intended to avoid creditors are not liable to the creditor, because there is no cause of action against the lawyer.10

St. Petersburg lawyer, Joel Bronstein, has indicated as follows in an outline that will be presented for the Florida Bar Tax Section/Health Law Section Representing the Physician program on January 17, 2014 in Orlando:

However, another cause of action may exist. In Freeman, the court in dicta stated that “we caution that our answer to the certified question in this case is confined to the context of the Florida Uniform Fraudulent Transfer Act. We do not address whether relief is available under any other theory of liability or cause of action.” … Clients have the right to know their rights and advising them of their rights should not result in liability to the client’s creditors. However, if an attorney crosses the line and knowingly and intentionally participates in a client’s unlawful conduct to hinder, delay and/or fraudulently obstruct a creditor, the creditor is likely to bring an action upon a theory of law such as creditor fraud or as a co-conspirator in a fraudulent transfer.

However, Pennsylvania, like Florida, does not have a statute making fraudulent transfers to judgment creditors illegal and it still found punitive damages proper under the circumstances of Klein. Other states, including D.C., Hawaii, Kansas, Missouri, and Texas, have allowed punitive damages for fraudulent transfers when the fraudulent transfer was not considered a crime.

In conclusion, we do not know where Florida will fall on this issue. The majority of states that have considered the issue have jumped on the bandwagon to allow punitive damages for fraudulent transfers, regardless of whether the transfer is considered a crime. Only time will tell what the Florida courts decide to do in this area.

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask

Part 1 which appeared in the January 2, 2014 Thursday Report discussed strict liability for owners under the dangerous instrumentality rule, negligent entrustment and liability of two people who jointly own a car. Click here to read last week’s report.

Part 3 on 1.16.2014 will discuss special planning for children and ownership issues.

Part 4 on 1.23.2014 will discuss survivorship planning and why boats and airplanes are different.

AUTO INSURANCE ISSUES

Most of the exposures to liability for owning and operating a vehicle in Florida can be transferred to an insurance company by purchasing a Personal Automobile Policy (also called PAP). The Personal Automobile Policy gives “insured” status to the person named on the policy, the resident spouse, and any “family members” who must be related to the person named and must also be resident in the household.

“Adequate limits” are based upon personal preference and premium tolerance. The best way to increase your protection is through a “Personal Umbrella” policy that provides excess liability limits over automobile and homeowner’s policies. In fact the umbrella can be endorsed to cover most personal exposures, including boats and recreational vehicles (RVs) as well. It is critical to let the umbrella policy insurer know of all other coverages.

There are circumstances that require special care in structuring your insurance policy.

1. Corporate-Owned Automobile. Where an automobile is provided by a company that does not have a Personal Automobile Policy, a coverage gap can exist when the vehicle is not insured on the corporate policy for personal use. Two endorsements need to be added to the corporate policy, Drive Other Car and Named Individual Broadened Personal Injury Protection. Each family member will need to be named on these endorsements.

2. Non-Married Partners. Since the Personal Automobile Policy considers resident spouses and related family members as insureds, non-married partners should have a separate policy in their own name. It would be advisable to have the same limits and insurance companies to avoid claim issues.

3. Children. A common question is how to insure a child’s car while that child is at home. The safe answer is on the parent’s policy. Often this is the most expensive option since the child is then provided with the same liability limits as the parents. Under Florida law, the parent is liable for the minor child’s operation of a vehicle. Even when the child turns eighteen, they can still be held liable if the child is operating under the direction of the adult (running errands). For example, Susan and Bill have an eighteen-year-old child, Dave, who still lives at home. The vehicle is titled in Dave’s name, and Dave has his own policy. When Dave drives that car, his policy will respond to claims against Dave and his parents, but only up to the limit that Dave’s policy provides. Susan and Bill’s policy will not respond. If Dave’s policy has low limits, then Susan and Bill could have a large gap in coverage.

4. Rental Cars. The Personal Automobile Policy normally covers the named insured and family members for liability from any vehicles except those with less than four wheels. If the rental is for business purposes coverage only applies to private passenger vehicles, vans, or pickups. Coverage for damage to the rented vehicle is afforded based on the vehicle insured on the policy with the broadest coverage. The rental company may provide a physical damage waiver that would also pay for the rental company’s administrative costs and loss of use of a damaged vehicle.

USING SUBSIDIARY ENTITIES

Businesses and individuals who own their motor vehicles through a business entity may expose other assets and operations of the entity to judgments emanating from the driver=s negligence. Therefore, the company should consider establishing a subsidiary limited liability company (LLC) as an operating business to own one or more vehicles. If the driver of the automobile is an employee of the company, liability may accrue to the owner (employer) under the doctrine of Respondent Superior for negligent driving resulting in injuries to another that occurs in the scope of business. After-hours driving, however, which would include most DUI events, may not subject the operating company to liability when the car is driven for personal, non-business purposes after hours. Also, the company may not be responsible for obligations incurred outside of the normal scope of employment, which could include drunk driving. Thus, it is often recommended that the subsidiary LLC owning the vehicles meticulously draft its corporate documents and define its business purpose so as to limit its liability even further.

Clients with significant automobile and trucking operations may employ drivers through a separate company to limit liability that would otherwise accrue under Respondent Superior. It is generally recommended that such a company should be responsible for ownership, maintenance, operation, and all personnel practices relating to automobile and trucking operations. Alternatively, an independent employee-leasing company might handle personnel issues for both the primary operating company and the subsidiary, but it should be clear in all paperwork that the drivers are not identified as employees of the primary parent company.

Some companies with large vehicle operations have attempted to limit liability by creating a number of subsidiaries, each owning a small number of vehicles. In 2005, however, Florida Statute Section 324.021, which excludes rental companies from the limited liability rules, was amended so that “rental company” now includes a related rental or leasing company acting as a subsidiary of the same parent. Under this new statute, the famous case of Walkovszky v. Carlton would have a different outcome. In that case, a personal-injury plaintiff sued a taxi company. The parent owned a large number of small subsidiaries, each owning just two cabs. That court held that the plaintiff could not reach the assets of the parent or the other subsidiary companies. Under this new statute, the other subsidiaries could be liable.

For a parent company to be reached through the negligent acts of a subsidiary, the subsidiary company will have to be “pierced.” Florida courts regard veil piercing as an extraordinary remedy to be exercised with caution. Therefore, parties who seek to pierce the corporate veil carry a very heavy burden. The Florida Supreme Court held in Dania Jai-Alai Palace, Inc. v. Sykes that, before the general rule of limited shareholder liability can be disregarded, the party seeking to pierce the corporate veil must establish by a preponderance of the evidence that (1) the shareholder dominated and controlled the corporation to such an extent that the corporation had no independent existence; (2) the corporate form was used fraudulently or for an improper purpose; and (3) the fraudulent or improper use of the corporate form caused injury to the claimant.

Under the first prong, it must be shown that the corporation had no independent existence. The courts will review the administration of the corporation to determine whether (1) the stockholder controlled the corporation’s administration through centralized legal, accounting, and other support services; and (2) the stockholder eliminated many of the corporation’s own administrative services or the corporation depended on the stockholder for, among other things, its physical premises, data processing facilities, insurance, purchasing, employee benefit programs, employee relations and personnel services, public affairs, property management, internal auditing, legal services, telecommunications, cash management systems, and marketing research.

The existence of certain controls over areas of management and administration does not conclusively result in a finding that the stockholder dominated and controlled the corporation. Courts have recognized the value of centralized services in the holding company structure.

Under the second prong—improper conduct—the corporate veil will be pierced when (1) the corporation was organized, or after organization was used by the stockholders for fraudulent or misleading purposes; (2) “corporate property was converted or corporate assets depleted for the personal benefit of the individual stockholders”; (3) “the corporate structure was not bona fidely established”; or (4) “property belonging to the corporation can be traced into the hands of the stockholders.”

The Florida Supreme Court in Dania Jai-Alai Palace, Inc. v. Sykes held that improper conduct was proved when (1) the parent wholly owned the subsidiary; (2) the two corporations shared common officers; (3) the parent controlled the hiring and firing of the subsidiary’s employees; (4) the subsidiary “existed only to serve the needs of” the parent; (5) the subsidiary’s offices were in the parent’s premises, and gave all outward appearances of being an integrated operation; and (6) the two corporations filed joint tax returns and were jointly insured.17

After Dania, Florida courts have pierced the corporate veil only in extreme cases of abuse of the corporate form. Absent proof of intentionally fraudulent conduct, courts simply do not pierce the corporate veil under Florida law. For instance, in Hilton Oil Transportation v. Oil Transportation Co., the court did not find proof of fraudulent conduct and therefore refused to pierce the corporate veil even though the wholly owned corporation did not observe corporate formalities, had no capitalization and owned only one asset, and the sole shareholder exercised complete control over the corporation’s board of directors.

Further, the corporate veil will not be pierced solely because a subsidiary corporation is thinly capitalized. The claimant must also prove that a shareholder intentionally concealed the corporation’s thin capitalization or defrauded or misled investors as to this fact. The Supreme Court in Dania stated that if allowing corporate veil piercing whenever a corporation is loosely capitalized were the rule, “it would completely destroy the corporate entity as a method of doing business and it would ignore the historical justification for the corporate enterprise system.”

Frank Jakes is Not Afraid of Virginia Woolf

Intellectual property litigation lawyer, Frank Jakes, of the Johnson Pope Tampa office is more than just a phenomenal intellectual property law lawyer and litigator. He is playing the part of George in The Cornerstone Theatre Company’s production of Who’s Afraid of Virginia Woolf? by Edward Albee. The shows run Thursdays at 7pm, Fridays and Saturdays at 8pm and 2pm on Sundays from January 9 through January 26 at the Lowndes Shakespeare Center, 812 E. Rollins St. in Orlando.

Angel Allen plays Martha in this 1966 film adaptation and Chaz Krivan and Janae Riha also star in this 4 person cast. For more information please visit http://www.cornerstonetheatrecompany.com/.

Seminar Announcement
Same Sex Marriage and Associated Laws We Should All Know About Anyway

On Thursday, January 30th, 2014 at 5:30 p.m. at Stetson Law School, Alan Gassman will be speaking at the Pinellas County Chapter of the Florida Association for Women Lawyers’ CLE Program. Professor Jason Palmer, Professor Rebecca C. Morgan, and Charles F. Robinson, will also be speaking. Discussions will include various issues facing America after the Supreme Court decisions in U.S. v. Windsor and Hollingsworth v. Perry.

For registration please click here. Please come out and join us at this fantastic event!

The following are the profiles of 3 of the fantastic speakers:

robinson with wording

Charles F. Robinson, P.A.: Elder Law asset protection planning (Medicaid); fiduciary services

AA Degree, St. Petersburg Junior College
BA and JD degrees, University of Florida

Professional Accreditations:
Florida Bar Board Certified Elder Law Attorney
Accredited Attorney for Veterans Benefits
Certified Court Appointed Arbitrator
Certified as a Civil Circuit Court Mediator by the Florida Supreme Court.
Association of Professional Futurists

Professor Jason Palmer

Jason Palmer

Professor of Law, Stetson University College of Law
B.A., University of Virginia
J.D., George Washington University Law School

Professor Palmer joined Stetson after teaching legal writing and oral advocacy for six years as a professorial lecturer in law at George Washington University Law School. Most recently, he worked for the Department of State as a team leader representing the United States in international arbitration cases before the Iran U.S. Claims Tribunal. He also spent four years in Switzerland working as a claims judge for the Claims Resolution Tribunal for Dormant Accounts, adjudicating claims of victims of Nazi persecution; for the United Nations Compensation Commission, coordinating review of Palestinian claims against Iraq as a result of its invasion and occupation of Kuwait; and for the Europa Institute at the University of Zurich, creating and teaching a course for Swiss lawyers on U.S. legal writing. Before working in Switzerland and at the Department of State, Professor Palmer spent several years in private practice in Washington, D.C., focusing on commercial litigation and international arbitration.

Professor Palmer is the co author, along with Professor Arturo Carrillo, of the article “Transnational Mass Claims Processes in International Law and Practice,” published in 28 Berkeley J. Int’l L. 343 (2010). He is also the author of the book chapter “Remedying Mistakes in Mass Claims without Compounding Errors Lessons from the Palestinian Late Claims Program” in Designing Compensation After Upheaval: Insights From the Experience of the United Nations Compensation Commission (Oxford University Press). This two volume treatise is scheduled for publication in fall of 2010.

Professor Palmer was a judge for the 2010 Michael Greenberg Writing Competition for the National Lesbian, Gay, Bisexual, and Transgender (LGBT) Bar Association. He was also a deputy editor of the “International Year in Review” published in The International Lawyer in spring of 2010 and was an assistant editor for Volume 16 of the Legal Writing Institute’s Journal of Legal Writing. He is a corresponding editor for International Legal Materials, which is published quarterly by the American Society of International Law.

Professor Rebecca C. Morgan

Rebecca Morgan

Professor of Law, Stetson University College of Law
Boston Asset Management Chair in Elder Law and Director, Center for Excellence in Elder Law
B.S.B.A., Central Missouri State University
J.D., Stetson University

Professor Morgan teaches a variety of elder law courses in the J.D. and LL.M. programs and oversees the elder law concentration program for J.D. students. She is the successor co author of Matthew Bender’s Tax, Estate and Financial Planning for the Elderly, and its companion forms book (Lexis), a co author of Representing the Elderly in Florida, (Lexis), The Fundamentals of Special Needs Trusts (Lexis), Ethics in an Elder Law Practice (ABA) and Planning for Disability (Bloomberg BNA Portfolio). She is a member of the elder law editorial board for Matthew Bender. Professor Morgan has authored a number of articles on a variety of elder law issues and has spoken a number of times on subjects of elder law. She is the co editor of the Elder Law Prof Blog, http://lawprofessors.typepad.com/elder_law/ (with Kim Dayton (William Mitchell) and Katherine Pearson (Penn State).

Professor Morgan is a past president of the National Academy of Elder Law Attorneys, past president of the board of directors of the National Senior Citizens Law Center, past chair of the American Association of Law Schools Section on Aging and the Law and of the Florida Bar Elder Law Section, and on the faculty of the National Judicial College. She is a member of the American Law Institute (ALI), academic advisory board for the Borchard Center for Law and Aging, an academic fellow of the American College of Trusts & Estates Counsel (ACTEC), a NAELA fellow, and a member of NAELA’s Council of Advanced Practitioners (chair 2012 2014). After a term on the Board of the ABA Commission on Law and Aging, she is a special advisor to the ABA Commission on Law and Aging. She is a member of the board of directors for the Center for Medicare Advocacy.

Downton Abbey and the Dreaded Fee Tail – A Far Worse Fate Than Not Having Air Conditioning, Microwaves or Hair Dryers

“People are trapped in history and history is trapped in them.”
– James A. Baldwin

The Masterpiece Theatre hit series Downton Abbey is more than a 1900-1920s era English aristocracy and servant class study showcasing lush manors and decadent gowns. The series illustrates a thankfully now outdated concept in property law: the dreaded fee tail. The show centers on a wealthy family in the turn of the century England. Robert Crawley is the Earl of Grantham and head of the luscious estate Downton Abbey, which has been in the family for centuries. Crawley is married to a wealthy American and they have three daughters that live on the estate. As occurred on dozens of occasions after the turn of the century, daughters of wealthy US industrialists inherited large amounts and then found a shortage of well healed men in the US to marry. These wealthy daughters turned to England, where there was a welcomed shortage of women for aristocratic English men to marry, but there was one major catch—England was in a depression and the men needed cash to maintain their estates. In the case of Downton Abbey, Mr. Crawly married a wealthy American, who put her inheritance into Downton Abbey and was not able to get it back or direct how it would pass.

There is much ado about the future possession of the estate, because only a male could inherit title or ownership of Downton Abbey. The Earl’s cousin and son, his two closest male relatives, die on board the Titanic in an early episode of the show. The Earl’s eldest daughter, Mary, will not be eligible to inherit the estate because the estate can only pass to a male heir. As a result, the Earl was forced to reach out to his third cousin, Matthew Crawley, who is (ironically) a solicitor in Manchester, to inform him that he was due to inherit the massive estate. Further intrigue follows, but central to the plotting and scheming is the pestering fee tail.

The time period of the show is essential to understanding the importance that the estate holds to the family. In the early 1900s, land was more than just the soil built upon; land was the key to the aristocracy, a sacred status symbol, and gave the family the right to basically enslave individuals who had the need to work on farms or to extract minerals from the significant properties that were not available to common people in those times.

The property interest at the center of the controversy is a fee tail or entail. This type of property interest is all but abolished today, with only a watered down presence in four U.S. states. An owner of a fee tail cannot devise the property by will or alienate it, but rather, the property passes by law to the owner’s heirs upon his death. The fee tail was employed to keep the land in the family. This often caused confusion about the proper succession of the title of land, especially in a case of a gender specific fee tail, such as a “fee tail male” (seen in the show) which only sons could inherit. An owner of a fee tail could grant, at maximum, a life estate for the period of years of the grantee’s life. After the life estate expired the property would revert back.

In Downton Abbey, the women were excluded from the fee tail, as described above. Women were able to control property not subject to the fee tail estates at the time they were unmarried or widowed, but only after passage of the Married Women’s Property Act in 1882. Without a will, the property passed via the English law of primogeniture, which gave the oldest son the right to inherit real property in the absence of a will, and this was in effect until the Administration of Estates Act 1925. The most recent change in English succession law has been this year: the Succession to the Crown Act 2013, which allows the oldest child, female or male, to take precedence in line to the throne. Before the Act, the oldest male would take precedence over any older female.

Further commentary on the specifics of how this law applies to the characters in Downton Abbey, as published from an interview with an English Barrister, can be viewed by clicking here.

Potter Steward was an attorney who graduated from Yale Law School. He was a member of the U.S. Naval Reserve and served in World War II. In 1954, at the age of 39, Potter was appointed to the United States Court of Appeals for the Sixth Circuit, and in 1959, he was nominated to the Supreme Court.

Stewart was a member of the Supreme Court for landmark court decisions, including Griswold v. Connecticut, Miranda v. Arizona, Sierra Club v. Morton, Ginzburg v. United States, and Roe v. Wade. Stewart retired in 1981, and was succeeded by Sandra Day O’Connor. He is known for both his statement on censorship from the Ginzburg v. United States dissent, “censorship reflects a society’s lack of confidence in itself. It is a hallmark of an authoritarian regime,” and his statement in the obscenity case of Jacobellis v. Ohio. He died in 1985.

Applicable Federal Rates

APPLICABLE FEDERAL RATES.January 2014

The 7520 Rate for January is 2.2% and for December was 2.00%.

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2013, whether formally or informally. Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2013

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

48th ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING SEMINAR

Date: January 13 – 17, 2014

Location: Orlando World Center Marriott, Orlando, Florida

Sponsor: University of Miami School of Law

Additional Information: For more information please visit: http://www.law.miami.edu/heckerling/

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live

interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: Here is what UF is saying about the program on its website: “The UF Tax Institute will provide tax practitioners and other leading tax, business and estate planning professionals with a program that covers the most current issues and planning ideas with a practical, informative, state-of-the-art approach. The Institute’s schedule will devote separate days or half days to individual income tax issues, entity tax issues and estate planning issues. Speakers and presentations will be announced as the program date nears to ensure coverage of the most timely and significant topics. UF Law alumni have formed the Florida Tax Education Foundation, Inc., a nonprofit corporation, to organize the conference.”

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