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The Thursday Report – 9.5.13 – Same Sex Couple Planning for Floridians and They Skinny on SCINs

Posted on: September 5th, 2013

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Same Sex Couple Planning for Floridians

The Skinny on SCINs

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 5 of a 7 Part Series

Phil Rarick’s Informative Client Blog Entries: Standby Elective Share Trusts

Thursday Report Jokes

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.

Why Same Sex Couples Will Be Moving to Florida

By Alan S. Gassman, J.D., LL.M. and Nathan West, J.D., LL.M.

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

The above interpretation is consistent with the Supreme Court’s decision in the United States v. Windsor case as discussed in our Leimberg Newsletter #2123, which was entitled Many Affluent Same-Sex Couples Will Be Leaving Florida and Where They Should Go. This piece was premised upon the court’s decision to the effect that a same-sex couple would not be considered as married for tax purposes if the state where they resided did not recognize the marriage. That changed very quickly!

On Thursday, August 29, 2013, the IRS took a very big step forward in ruling that same sex couples will be considered as married for federal income, estate and gift tax purposes. Any same sex marriage legally entered into in one of the 13 states that allow same sex marriages, click here to see the chart, the District of Columbia, or a foreign jurisdiction having legal authority to sanction same sex marriages is covered under this ruling; notwithstanding whether the spouses live in a state or other jurisdiction that recognizes their marriage legally.

The rules and implication thereof were very thoroughly explained by George Karibjanian in Steve Leimberg’s Estate Planning Email Newsletter Archive Message #3137 that was published on September 3rd and can be viewed by clicking here.

As the result of this, affluent married couples can move to Florida to avoid state inheritance taxes, state estate taxes, and state income taxes, because Florida has none of these taxes and is also a pretty darned neat place to live (when it is not 100 degrees outside with 100% humidity and the power is not working because of a lightning storm).

In addition to the above, same sex couples can bring their guns to Florida and use them almost any time they want, as described in our “Are We the Gunshine State? Justifiable Use of Force in Florida in Chapter 776 – Or Did They Mean Section 1776?” article that begins in next week’s issue of the Thursday Report.

Revenue Ruling 2013-17 provides that Internal Revenue Code Section 6511 gives same sex married couples the option of amending their prior tax returns, going back 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. Same sex couples may also choose to leave the prior returns in tact or to amend one or more prior tax years.

This gives same sex couples some very good choices for income tax planning purposes.  Almost all affluent same sex couples (or couples where one spouse is affluent) will want to go to a good income tax advisor with the right software to help determine what years they should amend and what years they should not amend.

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.

Amending a gift tax return will give the IRS three years after the date of the amendment to revisit all aspects of the gift tax return amended.

Same sex couples who are not formally married in one of the recognition states should consider whether the estate and gift tax and income tax advantages of getting married outweigh potential disadvantages. These disadvantages can include;

  • having to leave qualified plan benefits to a surviving spouse who will not sign a waiver associated therewith,
  • having alimony and property settlement right vest in a new spouse if the new spouse will not sign a binding prenuptial agreement as requested by the other spouse,
  • having to have the new spouse on the healthcare plan of an employed spouse whose employer requires this,
  • having to inform an employer that a same sex marriage exists in order to comply with personnel, office and associated requirements (which may occur in states that do not prevent discrimination against homosexual individuals, such as Florida, however many cities and counties in Florida have enacted ordinances prohibiting sexual orientation discrimination in the workplace),
  • having to decide who to invite to the ceremony and who is going to pay for it or,
  • whether to go to Justice Ginsberg’s house since she will probably not charge because it would have to be disclosed on her income disclosure form.

Advisors who represent one or more members of an affluent same sex couple will need to reach out to let them know that if and when they are married they can have a new estate tax plan that includes marital deduction planning, QTIP trust planning, and associated rights and responsibilities.

When the couple resides in Florida it is probably also useful to have them consider a prenuptial agreement, even though Florida law will not give either spouse “marital rights or responsibilities” in the event of a divorce at the present time.  This 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 Florida legislature and a future governor might sign such legislation into existence.

Also consider some advantages vs. disadvantages of marriage shown below.

Advantages of Marriage

Disadvantages of Marriage

  • Savings with sharing a single health insurance plan: While the rules vary by state and employer, many health insurance companies already offer benefits to domestic partners and same-sex unions; others require marriage for shared coverage.
  • Responsibility of health care: Depending on which state you live in, if your spouse cannot pay their health care bills, then you may be held liable for the cost.
  • Security benefits go to the surviving spouse: Widowed spouses are entitled to their spouses’ Social Security benefits if they are greater than their own.
  • Loss of benefits if you get remarried: If you are a widow or widower receiving a deceased spouse=s retirement benefits or social security benefits you may lose those benefits if you get remarried
  • No Employer Taxes: If you work for your spouse they do not have to pay social security taxes or unemployment taxes on your behalf..
  • Spousal debt responsibility: In community property states, most debt incurred by either spouse during marriage are owed jointly by the couple, even if only one spouse signed for the debt.                             
  • “Being Married” – Dr. Phil
  • “Being Married” – Rodney Dangerfield

The Skinny on SCINs – IRS PUTS SCINS IN THE SUNLIGHT. WILL TAXPAYERS GET BURNED?

By Alan S. Gassman, J.D., LL.M. and Kenneth J. Crotty, J.D., LL.M.

Chief Counsel Advice (CCA) 201330033 was issued recently in what came as a surprise and disappointment to a great many planners and commentators. In this pronouncement the IRS Chief Counsel’s Office rejected the traditional practice of using the § 7520 mortality tables to value a self-cancelling installment note (SCIN) where the note holder had a better than 50% chance of living longer than one year. Instead, the office announced that in their view the valuation of a SCIN would have to take into account a manual review of what a willing buyer would pay a willing seller, after assessing the note holder’s specific life expectancy based on the note holder’s medical history and such other factors as arm’s-length parties would consider under Treas. Reg. §25.2512-8. Departing from the established system of using actuarial tables would lead to uncertainty as to how to properly value a SCIN, as well as dramatically increasing litigation. Hopefully the IRS will read its own regulations and recall this seemingly erroneous pronouncement. As Howard Zaritsky and others have pointed out, § 7520 states that it must be used to value “an interest for life or a term of years,” which precisely describes the payments scheduled to be made under a SCIN. Before this CCA was issued, the IRS had never indicated to the contrary after decades of literature and many cases have been decided. To change the way of looking at this now would be inappropriate, to say the least. Others have called for use of the § 7820 tables, which are even more taxpayer friendly than the § 7520 tables, as discussed below.

The case addressed in the CCA memo involved five separate transfers that a decedent entered into in the final year of his life. While all personal information had been redacted from the CCA, subsequent reports have indicated that the case involved William M. Davidson, a successful businessman and most notably the owner of the Detroit Pistons NBA basketball team. The stakes here are very large. According to Mitchell Gans and Jonathan Blattmachr in LISI Estate Planning Newsletter #2135, the proposed deficiency claimed by the IRS could reach close to one billion dollars. Specifically at issue were two transfers of closely held stock to grantor trusts in exchange for SCINs. Shortly after these transactions were made, the decedent was diagnosed with a health issue. He died within six months of this diagnosis.

One of the main issues of the CCA—and the focus of this article, was how the fair market value of the SCINs should be determined. The notes had been valued based on § 7520 mortality tables. The Chief Counsel’s Office determined that the § 7520 tables should not be used to value the notes in this situation, explaining that “[b]y its terms, § 7520 applies only to value an annuity, any interest for life or term of years, or any remainder.” Without any further explanation, the memo hastily cites to General Counsel Memorandum 39503 concluding that the notes should be valued based on a method that takes into account the willing-buyer willing-seller standard.

A SCIN differs from a regular installment note in that the remaining balance owed is cancelled on the death of the obligee. Thus, the noteholder can receive higher payments during his or her lifetime in exchange for there being no payments after his or her death. SCINs are frequently used in intra-family transfers of property, and on many occasions will cause avoidance of estate taxes. These transactions are of course most beneficial when the seller dies before his or her actuarial life expectancy, but in many situations the noteholder will live longer than his or her life expectancy and receive back payments that exceed what he or she would have otherwise received. If a noteholder dies before the note’s term, the self-cancelling provision cancels the remaining balance on the note, and the entire value is transferred to the buyer without any transfer taxes. Thus, the ideal candidate is said to be “someone in poor health, but whose death is not imminent, or someone with a very poor family health history.” Commentators will often refer to this as a “bet-to-die” technique because the sooner that the seller dies after the sale the greater the beneficial estate tax consequences will be. Because the note may never be repaid, a risk premium is added to either the interest rate, principal amount, or both, and the note must be set to be paid in full or scheduled to balloon before the life expectancy of the note holder, as of the date that the note is made.

Howard Zaritsky explains the importance of the premium that is derived from the IRC § 7520 tables:

All of the cases upholding SCINs stress that the self-canceling feature was a bargained-for consideration between the parties and that the buyers paid a distinct premium for that features. This is a critical feature for transfer tax purposes. The failure to pay a premium for a self-canceling feature in a SCIN strongly suggests that the transaction is, at least in part, a gift with a retained life estate includable in the decedent’s gross estate under Section 2036(a).

In the past, the IRS has acquiesced in court decisions upholding the cancellation provision as part of the bargained-for consideration, and to some extent, have even recognized the principle. As long as the transaction is bona fide, a SCIN sale should not be subject to a gift tax. To be bona fide, a reasonable expectation of repayment should exist along with an established payment schedule. In cases where no evidence of repayment exists, the court has upheld IRS challenges.

The issue at the heart the of the CCA turns on how SCINs are classified and the applicable valuation method to apply. Traditionally, practitioners use § 7520 to value SCINs. In fact, much of the basic software used to value SCINs is based on the § 7520 rate. Practitioners Robert Held and Charles Newlin support this approach explaining that “[w]hile Section 7520, by its terms, applies only to the value of an annuity, term interest, remainder or reversion, there seems little reason (beyond semantics) not to apply its rationale and consistency to the SCIN.” Additionally, Howard Zaritsky has advocated for the application of § 7520 rates. Zaritsky states:

Section 7520 states that it must be used to value ‘an interest for life or a term of years,’ which precisely describes the payments under a SCIN. Furthermore, the IRS publication ‘Actuarial Values, Alpha Volume,’ which implements the IRS actuarial tables under Section 7520, includes an example that uses the tables to determine ‘the present worth of a temporary annuity of $1.00 per annum payable annually for 10 years or until the prior death of a person aged 65….’ This, too, appears to describe precisely the calculation of the premium for a SCIN. Thus, Section 7520 appears to apply by its terms to the valuation of a SCIN premium.

Treasury Reg. § 20.7520-3 places restrictions on the use of § 7520. Of particular interest in the SCIN context, the section sets forth a twelve-month rule for a person that is terminally ill:

the mortality component prescribed under Section 7520 may not be used to determine the present value of an annuity, income interest, remainder interest, or reversionary interest if an individual who is a measuring life is terminally ill at the time of the decedent’s death. For purposes of this paragraph (b)(3), an individual who is known to have an incurable illness or other deteriorating physical condition is considered terminally ill if there is at least a 50 percent probability that the individual will die within 1 year.

The section then goes on to establish an eighteen-month rebuttable presumption, often referred to as the safe-harbor provision:

[i]f the individual survives for eighteen months or longer after the [effective date of the note], that individual shall be presumed to have not been terminally ill at the date of death unless the contrary is established by clear and convincing evidence.

Therefore in situations where the noteholder has survived the sale by eighteen months or longer, the IRS may still challenge the use of the § 7520 mortality tables but would have the tougher burden of establishing by clear and convincing evidence that these tables should not apply. The practical consequences of the terminal illness restrictions on SCIN holders means that they should first get a doctor’s letter. To be safe, the letter could state that there is more than a 50% chance that the holder will be alive on the maturity date of the note.

However, not every commentator agrees with using § 7520 valuation, and it seems that more recently, what rate to apply has been a point of contention for some commentators. The problem is that § 7520 rules explicitly apply to annuities, life estates, remainders, and term interests and estate planners have differing views on how SCINs fit into this spectrum. According to Steve Akers and Philip Hayes from the 2013 Heckerling Institute on Estate Planning:

[t]here is not universal agreement on how payments under a SCIN are properly valued, for there is no clear answer concerning which mortality tables should be used and which discount rate should be applied to value these payments Some commentators use the life expectancies in Table 90 CM for May 1999-April 2009 and Table 2000CM from May 2009 forward and a rate equal to the greater of 120% of the mid-term AFR, assuming annual payments, as prescribed by Section 7520, or the AFR for the actual term of the note, as prescribed by Section 7872. Others use the annuity tables under Section 72 and the AFR as prescribed by 7872. Additionally, some commentators have recommended that the actual life expectancy be used.

Elliott Manning and Jerome Hesch argue that for a SCIN taxable as an installment sale, the AFR prescribed in §§ 1274 and 7872 should apply—not the § 7520 rate. They base this argument on the idea that a SCIN is not a term interest under § 7520, stating that the “same considerations that lead to the conclusion that an installment note is not a retained life estate also lead to the conclusion that it is not a term interest.” Manning and Hesch explain that their argument is consistent with “(i) the analysis in Reg. § 1.1275-1(j) that a SCIN is treated as a debt obligation subject to the OID rules, including the provisions of § 1274, and (ii) the similar conclusion in G.C.M. 39503 for a SCIN with a maximum term less than the seller’s life expectancy is treated under the installment sale rules of § 453.” They also claim that the Tax Court’s decision in Frazee v. Commissioner, employing § 7872 to determine the interest rate for the value of a note for both income tax purposes and gift tax purposes, further supports their position.

Manning and Hesch further suggest that the unintended gift issue should be eliminated. They explain:

[t]reating all SCINs and private annuity sales as installment sales means that the AFR determines the discount rate. If the same valuation principles are used for both income and transfer tax purposes, valuation disparities for the same transaction can be avoided. Therefore, § 7520 does not apply. Consequently, the unintended gift problem and other distortions can be avoided.

The best answer may be case-specific. Akers and Hayes suggest:

AFRs should not be used by the faint of heart. A conservative planner probably should use the higher of the § 7520 rate or the AFR for the actual term of the note, as recommended by Covey. Clearly, many if not most, practitioners are using the higher of the § 7520 rate or the AFR for the actual term of the note; the estate tax risk of using a rate that is too low is simply too great.

Despite these differences of opinion over what actuarial tables to apply, the IRS flat out rejects the use of any of these practices in this latest CCA memo and uses a new approach: the “method that takes into account the willing-buyer willing-seller standard in Treas. Reg. 25.2512-8” which is the method typically applied to gift taxes. The IRS further states that the medical history of the decedent should be considered. The IRS fails to provide further guidance as to how to apply the valuation standard, which would make the process very subjective, to say the least. Some have speculated that a combination of actuarial, medical, and investment risk factors would need to be considered–a process that would undoubtedly be more difficult and imprecise than relying on § 7520 tables. With no certainty in procedures and what seems like a greater potential for challenge, the IRS is stripping away the biggest advantage of establishing a SCIN in the first place which is that there should be no gift tax consequence.

A well-known authority in the area has criticized the CCA memo, stating that it should not be given much credence and that the IRS is simply trying to take the best position that it can in light of the Davidson case. The CCA appears to assume that the payment was supposed to be within the decedent’s actuarial life expectancy, but we are not provided his actuarial life expectancy at the time of the transaction. Although it might seem odd that the health issue suddenly came to light not long after the transaction, no information is provided as to the decedent’s health at the time of the transaction.

After acquiescing for years to the use of the § 7520 tables, the IRS suddenly seems to want to no longer use these tables to value a SCIN. The CCA provides a quick cite to General Counsel Memorandum (GCM) 39503 for this proposition–a non-binding memo issued by the IRS in 1986. This Memorandum stated as follows:

Under an installment sale, a gift tax will not be imposed if the sale price and length of payment are reasonable in light of the facts and circumstances of the case. The value of the installment obligation and the property sold must be substantially equal. However, unlike the private annuity, there is no requirement that the actuarial tables are to be used in determining the gift taxation of an installment sale. Thus, the taxpayer’s particular health status may be considered, and there is more room to establish that the terms of the sale are reasonable (emphasis added).

As the language clearly shows, the GCM is not rejecting the use of the mortality tables at all. The memo simply acknowledged that Revenue Ruling 80-80 required taxpayers to use the mortality tables in Treasury Regulation § 20.2031-10 to value private annuities, and reiterated that no such requirement existed for SCINS. The fact that the use of the § 7520 tables is not required, does not mean that these tables do not offer the most practical valuation system for SCINs as well. And again, this memo was released in 1986. The subsequent Rev. Rul. 96-3 deemed Rev. Rul. 80-80 to be obsolete. Yet the CCA characterizes the GCM for the proposition that mortality tables should not be used and the willing-buyer willing-seller standard should be used instead. Simply put, the CCA mischaracterizes the GCM for standing for a much broader principle than it actually does. The 2013 Tax Management Estates, Gifts, and Trusts Portfolios, Edward Wojnaroski reflects on the 1986 GCM Memo:

While GCM 39503 may give planners substantially more flexibility in structuring SCIN Transactions, the reasonableness of the SCINs terms relative to a private annuity involve a subjective interpretation. In addition to evaluating the seller’s health, it is crucial to obtain a realistic value for the property being transferred. To the extent that the property sold is difficult to value, this will compound the probabilities of scrutiny by the IRS.

And despite the fact that this GCM was released over twenty-five years ago, we have not seen significant changes in the valuation process from the IRS–until now. With no real precedent to resort to, the issue really seems to come down to semantics. By changing the valuation of a SCIN, the IRS is abandoning a mechanical valuation system for a system that practitioners can only speculate about. Although Hesch and Manning have cited to the GCM memo previously, they have still advocated the use of § 7282 tables, which at least provide clarity. Prior to the release of the CCA, Wojnaroski also recommended using the tables in Tax Management Estates, Gifts, and Trusts Portfolios, arguing that the IRS should have greater respect for the use of the tables:

The risk premium for a SCIN does not have to be obtained by reference to the actuarial tables. The planner or client may engage an actuary for this purpose. However, it would appear that relying on the tables provides a greater degree of certainty that the IRS will respect the terms of a SCIN if the assumption about the seller’s life expectancy are reasonable and reflect recent mortality data. If the taxpayer chooses to set the terms of a SCIN by looking outside of the tables, it is advisable to consider the amount of the down payment being made, the length of the contract, and the seller’s actual health (assuming the measuring life used is the seller’s). The IRS has indicated it will not require the value of the consideration paid for the property being transferred pursuant to a SCIN to be identical, but the consideration and transferred property must be substantially equal. The subjective valuation of a SCIN makes the job of satisfying this “substantially equal” test a difficult and perhaps expensive hurdle for the taxpayer with respect to intra-family transactions if the seller’s life expectancy is substantially less than what his or her life expectancy would be under standard actuarial tables. It would appear that there may be a greater risk of a gift tax when working with a SCIN than there would be with a private annuity.

Regardless of how the face value of the SCIN is determined, the only winner is likely to be the IRS, while practitioners are left uncertain on the use of the SCIN, and clients are forced to litigate the potential gift tax trend.

Is the CCA memo binding? The IRS explains that CCA memos “are legal advice, signed by executives in the National Office of the Office of Chief Counsel and issued to Internal Revenue Service personnel who are national program executives and managers. They are issued to assist Service personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues.” But most importantly, the IRS states that “these documents cannot be used or cited as precedent.” While the memo might not be binding, it does appear that the IRS is suggesting that the willing-buyer, willing-seller standard should apply to every SCIN. And these memos frequently serve as announcements of the litigation position that the IRS will take. Based on the memo, caution might suggest that a client get additional appraisals beyond that of the underlying assets to include an appraisal of the actual note, as well as a determination of a reasonable interest rate that should be used. The CCA seems to indicate that when the SCIN holder dies before the end of the term, the estate better prepare for litigation. As one authority put it, clients need to “have an appraiser bless the rate, and then the Service has to have their appraiser tell you why it’s wrong.” This prospect may make many estate planners opt for an alternative, safer technique such as a private annuity.

Going forward, estate planners can look forward to seeing whether the IRS provides clarification on its expectations for the valuation process, takes a stronger stance toward the willing-buyer willing-seller standard, or allows the working system to remain intact. In the meantime, private annuities will be more popular and more widely used by planners who do not want to cross the line in the sand that may be moved by waves, tides, and sand kicking bullies in years to come. 

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 5 of a 7 Part Series

Koch and Jirotka

This week we cover the important topics of how much disclosure is enough disclosure, whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure and circumstances by video taped interview or written correspondence.

  • Part 1 presented on Thursday, August 8, 2013, the reader was introduced to the present overall status of prenuptial agreement statutory law and case law, and talks about prominent malpractice traps and how to get clients prepared for what they can encounter in the prenuptial agreement universe.  Click here to be directed to the Thursday Report for August 8, 2013.
  • Part 2 on Thursday, August 15, 2013, discussed the important topics of how much disclosure is enough disclosure and whether or not both parties need to have lawyers.  Click here to be directed to the Thursday Report for August 15, 2013.
  • Part 3, on Thursday, August 22, 2013, Questions to ask the lawyer or spouse you are not representing to document appropriate disclosure circumstances by video-taped interview or written correspondence.  Click here to be directed to the Thursday Report for August 22, 2013.
  • Part 4 on Thursday, August 29, 2013, discussed Castro v. Castro and Belcher v. Belcher, and what they mean for clients and lawyers who are involved in the pre and post nuptial agreement planning.  Click here to be directed to the Thursday Report for August 29, 2013.
  • Part 5, Today, September 5, 2013, Today we have a discussion of alimony and lawyer fee obligations that may not be waivable in pre-nuptial or post nuptial agreements, and offset clauses and other ways to handle these.
  • Part 6, On Thursday, September 12, 2013, Bifurcation – whether you can require the validity of the pre-nuptial or post-nuptial agreement be litigated or also before having to also litigate what the result could be if it is or is not enforceable.
  • Part 7, On Thursday, September 19, 2013, How to keep marital and asset information confidential in a divorce scenario, arbitration, and the Roddy v. Roddy case.

Our fifth part of the interview will cover temporary alimony and lawyer fee obligations that may not be waiveable in a pre-nuptial or post-nuptial agreement, and offset clauses and other ways to handle these.

Alan Gassman: Well for the tax lawyers who are listening here, and we don’t know much about this, how long would you expect to pay temporary alimony in the pendency of one of these types of actions?  So this would be a reason for the less monied spouse to object to the enforceability of the agreement so that there could be a long time for him or her to receive temporary support?

Judge Jirotka: That’s correct.  I am going to take a guess. I don’t have the exact figures in front of me, but in general a dissolution of marriage case in Pinellas County runs very short or very long.  There’s really no way you can tell.  If there are no assets and it’s what’s called a simple or simplified dissolution of marriage, that can go very quickly.  In fact, those are even handled in county court as opposed to circuit court.  Once you get into lengthy arguments as to assets, which of course is why you’d have this prenup agreement, it can go on for a number of years.  Ky has that been your experience?

Ky Koch: Absolutely, you know I don’t want to generalize Alan, but I would think 8 to 12 months is probably an average.  You would see some that go quicker.  You’d see some that go longer.  A case that Judge Jirotka and I are both intimately familiar with ran for five years and cost approximately $500,000 in lawyer and expert fees during that five years, in addition to having the husband be required to pay a significant amount of temporary support.

Judge Jirotka: Cases also can have appeals going on at the same time, or certain aspects of the case will grind to a halt at the trial level while a particular issue is appealed.

Ky Koch: You know Alan, another subject the Judge and I should talk about today is in my opinion, a lot of us are missing out on something that’s very important to consider in these prenuptial agreement drafting issues and that is this isn’t just a divorce lawyer issue.  It’s not just an estate planning lawyer issue.  I think the two disciplines have got to merge and deal together on drafting an appropriate agreement for people going through these prenuptials.

Alan Gassman: I agree with that. That’s a great point.

Ky Koch: There are so many death implications in a divorce.  I won’t deal with it because I don’t know how to, but I feel like it’s a must for those two disciplines to come together in drafting a prenup because there are so many ramifications that go both directions.

Alan Gassman: Yeah that’s a very good point.

Ky Koch: You all don’t know what goes on in the courtroom in a divorce.  We don’t know what goes on in the estate planning side of it and both of them are severely impacted, dramatically impacted by every prenup.  I think it’s nearing mistake if you don’t engage both lawyers, estate planning and divorce, to become involved in a prenuptial agreement.

Alan Gassman: That makes good sense – absolutely.  Of course, then you deal with the clients saying I need two lawyers.  It’s going to cost more than $600 now.

Ky Koch: And that’s a whole other problem because most people come into your office and say you know look at that computer there.  Can you push the prenuptial button and just put my name and my spouse’s name there?  Then we’ll be in tomorrow morning to sign it.  That is a misconception.  It’s difficult for me to convey to a client because they’re sitting there looking at you thinking gee, you’re just talking up fees here.  In fact, these things are not cheap.

Phil Rarick’s Informative Client Blog Entries: Standby Elective Share Trusts

 Rarick

 

Our friend Phil Rarick of Rarick, Beskin & Garcia Vega, P.A. in Miami has been kind enough to allow us to provide one of his excellent client communications articles each week until you have read all of them.

Phil has 30 years of experience in both private and public legal work. He is a past President of the Miami Lakes Bar Association and formerly counsel to the National Association of Attorneys General.

This week’s topic is Standby Elective Share Trusts.

Florida’s elective share statute allows attorneys to draft standby elective share trusts.  (For a summary of Florida’s elective share see the post: Florida’s Sweeping Elective Share.) Trusts that create property  interests contingent upon an election being  made are qualified to fund the spouse’s elective share interests.

Click here to read the blog

Thursday Report Jokes

An important conversation between Colonel Sanders and Professor Jerry Hesch:

Hesch Sanders

I would tell another Chemistry joke, but all the good ones Argon

What do you call an alligator in a vest?

– An investigator

Did you hear about the hungry clock?

– It went back four seconds

What do you call a dinosaur with an extensive vocabulary?

– A thesaurus

Where did the computer go to dance?

– To a disc-o

What did the keyboard say to the other keyboard?

-You’re not my type.

 Applicable Federal Rates

Please click here to view a chart of 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.

SEMINARS AND WEBINARS

AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m. and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

BP CALCULATIONS FOR CPAS: TRICKS & TRAPS SEMINAR WITH JOHN GOLDSMITH AND ALAN GASSAMAN

Date: Monday, September 16, 2013 | 6:00 p.m.

Location: Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater

Additional Information:  Each attendee will receive written materials and a wine tasting and light hors d’ oeuvres will be served.  To register for the event please click here.

NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA, PhD, SOB

Location: Online webinar

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

NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Alan Gassman and Christopher Denicolo will speak on The Florida CPA’s Guide to Planning with Physicians and Medical Practices

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

WEDU ESTATE PLANNING SEMINAR

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berman Family Broadcast Center

Additional Information:  If you would like to sign up for this seminar please click here.

THE 444 SHOW – STAND YOUR GROUND LAWS

Date: Thursday, September 26, 2013 | 4:00 p.m. (50 minute webinar)

Location: Online webinar.

Presenters: Kym Rivellini and Denis deVlaming

Additional Information:  This webinar qualifies for 1 hour of continuing education credit and costs $30.00.  To register please visit www.clearwaterbar.org

LUNCH TALK – THE POWER OF POSITION MARKETING FOR ATTORNEYS

Date: Monday, October 7, 2013 | 12:30 p.m.

Location: Online webinar

Presenter: John Graden

Additional Information:To register please visit www.clearwaterbar.org

MEET & GREET COCKTAIL HOUR WITH DR. SRIKUMAR RAO

Noted author and nationally recognized speaker, Dr. Srikumar Rao will be joining us for a cocktail party on Wednesday, October 9, 2013 at 6pm in the evening.  We will begin with light hors d’ oeuvres followed by a talk by Dr. Rao on GOOD THING – BAD THING – WHO KNOWS? CHANGING YOUR IMMEDIATE AND LONG-TERM RESPONSES TO EVENTS AND CHALLENGES.

DATE: Wednesday, October 9, 2013

Location:  Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater, Florida

Additional Information:  To register for the event please click here.

PLANNED GIVING CONSORTIUM LUNCHEON

Kenneth J. Crotty, Esq. and Christopher J. Denicolo, Esq. will be speaking at the Planned Giving Consortium Luncheon on the topic of FLORIDA LAW FOR THE ESTATE AND FINANCIAL PLANNER

Date: Thursday, October 10, 2013 | 12:00 – 1:00 p.m.

Location: Spartan Manor, 6121 Massachusetts Avenue, New Port Richey

Additional Information: For more information or to attend this event please email agassman@gassmanpa.com

INTERACTIVE HALF-DAY WORKSHOP WITH DR. SRIKUMAR RAO

On Saturday, October 12, 2013 we are co-hosting an interactive workshop with Dr. Srikumar Rao on the subject of ENHANCED EFFECTIVENESS AND ENJOYMENT OF YOUR PROFESSIONAL AND PERSONAL LIFE – 5 TOOLS YOU CAN START USING IMMEDIATELY.

Date: Saturday, October 12, 2013 | 1:00 – 6:00 pm with an optional 7:00 – 8:00 p.m. question and answer session.

Location: Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater, Florida

Additional Information:  To register for the event please click here.

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.  Also Paul and attorney Barry will be discussing stepped-up basis tools and techniques, including our JEST Trust.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

Please click here to view the brochure and to register.

PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS, including same sex marriage, estate tax planning software (with all attendees to receive a free beta version of our new software), and other important topics.

Sandra Diamond will speak on the new Florida laws that impact estate planning, amending of decanting existing irrevocable trusts, and other recent Florida law developments.

Barry Flagg will speak on insurance and estate planning.

Sean Casey of Fifth-Third Bank will give an economic update.

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council  please click here or email agassman@gassmanpa.com

2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

DECODING HEALTHCARE SEMINAR

Alan Gassman will be moderating the Decoding Healthcare Seminar hosted by Fifth Third Bank.

Speakers will include John Harding, President and CEO of Adventist Healthcare Systems, Stephen Klasko, Dean and President of USF Health College of Medicine, David Lewis, CEO of United Healthcare of Florida, Nancy Templin, CFO of All Children’s Hospital and a mystery speaker (other than Colonel Sanders) to be identified.

We sincerely thank Fifth-Third Bank, President Brian Lamb, Ryan Sloan and the Tampa Bay Business Journal for hosting this important public “town hall” discussion that will hopefully lead to improvement of our healthcare systems in the Tampa Bay area.

Date: Tuesday, October 29, 2013

Location: Grand Hyatt, 2900 Bayport Drive, Tampa, Florida

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location:  The Peabody 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 Peabody Hotel near Walt Disney World, which is world famous for its daily “march of the ducks” through the lobby (wear easy to clean shoes) and maybe we will have peking duck for dinner.

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 Peabody Hotel for a discounted rate per night, single occupancy.

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.

NOTABLE SEMINARS PRESENTED BY OTHERS:

MEDITATION, Science, Spirituality, Sustainability – An Experimental Workshop by the Bridge and Maulik K. Trivedi, M.D.

On Saturday, September 28, 2013 from 10 am to 1pm the Bridge, a not-for-profit organization that promotes ecocentric living, social justice and personal development is providing a 3 hour workshop on Meditation.  The session will be administered by integral psychiatrist and Yogi, Dr. Maulik K. Trivedi and will be accompanied by accomplished sitar player, Douglas Werner.

Date: Saturday, September 28, 2013 | 10am – 1pm

Location: Carrollwood Cultural Center, 4537 Lowell Road, Tampa

Additional Details: The cost for attending this workshop is $45 and you can register by clicking here. [LINK: http://www.thebridgetampa.org/compenent/registrationpro] or call 813-416-3069 for more information.

THIRD ANNUAL FEDERAL TAX INSTITUTE OF NEW ENGLAND

Date: September 27, 2013

Location: Hartford Marriot Farmington Hotel, Farmington, Connecticut

Sponsor: Connecticut Bar Institute

Additional Information: Chairman Frank Berall will be using part of an earlier Thursday Report article on same-sex planning in his presentation. You can also catch an early dose of Jerry Hesch’s talk on Income Tax Ideas for Estate Planning here before the Notre Dame Tax Institute in October, and Bruce Stone will be speaking on Assisted Reproductive Technology Children.  For more information or to register please visit the Institute’s site here.

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 click here.

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

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.”

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – 8.29.13 – The Power to Disassociate, Essential Trust Drafting and a Probate Quick Reference Guide

Posted on: August 29th, 2013

No Comments

Legal and tax journalism at its worst.

 3 days until Labor Day.  Time to catch up on your Thursday Report reading.

Ken Crotty’s LLC Clinic – The Power to Disassociate

Phil Rarick’s Fantastic and Informative Client Blog Entries: Florida Probate Quick Reference Guide

12 Personal Finance Lessons, Broken Down, In Woody Allen’s ‘Blue Jasmine’ a Forbes Blog by Deborah Jacobs

Essential Trust Drafting Considerations – Let’s Not Forget What We Learned in Elementary School, Part 1 of a 2 part article by Tom Ellwanger

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 4 of a 7 Part Series

Seminar Spotlight: Sandra Diamond Shines as a Speaker for the Pinellas County Estate Planning Council

Internet Tip of the Week: How to Help Your Clients Get Free Credit Reports

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.

Ken Crotty’s LLC Clinic – The Power to Disassociate

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Practitioners need to be aware of the changes the new Florida LLC Act makes to the ability of a member to dissociate from an LLC.  In many cases, Operating Agreements will need to be revised to take these changes into account to better protect the LLC and its remaining members.  Although an LLC’s Operating Agreement may not prevent a member from dissociating, the Operating Agreement may contain provisions that cause the dissolution to be wrongful and provisions that govern the obligations owed by the dissociated member to the LLC.

Current Florida LLC law does not allow a member to dissociate from an LLC prior to dissolution of the company unless the Articles of Organization or the Operating Agreement allow the member to dissociate.  This default provision has been changed under Section 605.0601 of the new Florida LLC Act which provides that a member may dissociate from an LLC.

A member that expresses the intent to dissociate as provided under F.S. 605.0602(1) may do so even if the dissociation was wrongful.  In addition to willful dissolution, F.S. 605.0602 lists several other instances in which a dissociation occurs, including, but not limited to: (1) an event stated in the Operating Agreement, (2) the expulsion of a person as a member, (3) the death of an individual, and (4) the incapacity of a member in a member-managed LLC.

A member’s dissociation is considered  wrongful if: (1) the dissociation is in breach of an express provision of the Operating Agreement; or (2) the member dissociates before the LLC is wound down and the dissociation occurs by (1) the person’s express will, (2) a judicial order pursuant to F.S. 605.0602(6), (3) pursuant to F.S. 605.0602(8) (dealing with the bankruptcy of a member in a member-managed LLC), or (4) dissociation of the member by willful dissolution  F.S. 605.0602(2).

If a member wrongfully dissociates, the member remains liable to the LLC and other members for any liabilities owed by the member before dissociation. F.S. 605.0601(3) The member is also liable for any damages caused to the LLC as a result of the dissociation and may be liable for damages caused to other members as a result of the dissociation subject to the provisions of F.S. 605.0801.

A dissociated member is no longer a member of the LLC.  F.S.  605.0102(40)(b).  F.S. 605.0603 also lists additional effects of dissociation on the member.  If a managing member of an LLC resigns or otherwise ceases to be a manager, he or she will continue to be a member and will not be deemed to have dissociated from the LLC simply by reason of no longer serving as a manager.  F.S. 605.04072(6).  It is important to note that if a member transfers some or all of the member’s LLC interest to a third party, then the person who transferred the interest may still vote on LLC matters as if the person was a member of the LLC unless the person has dissociated in accordance with F.S. 605.0602(5)(b).

Pursuant to Section 605.0105(3)(i) of the new Act, the Operating Agreement of an LLC may not limit the ability of a member to dissociate.  Section 605.0105(3)(i) of the new Act provides that the Operating Agreement may require that the dissociating member give notice to the LLC as described in Section 605.0602(1).  If a member dissociates, the Operating Agreement or Articles of Organization of the LLC may still provide that the membership interest may not be assigned before the affairs of the LLC are wound up and the LLC is dissolved.  F.S. 605.0601(4).

The obligations of the LLC to a person who has dissociated governed by the Operating Agreement.  F.S. 605.0107(2).  If the continuing members of an LLC amend the Operating Agreement after a person has dissociated, then such amendment will be binding on the dissociated member with respect to a debt, obligation or other liability owed by the LLC or its members to the dissociated person.  F.S. 605.0107(2)(a). The amendment will not be binding on the dissociated person if the amendment imposes a new debt, obligation or liability on the dissociated person.  F.S. 605.0107(2)(b).

A dissociated person is still entitled to receive distributions from the LLC in proportion to those received by the members on the basis of the agreed value stated in the LLC’s records until the company dissolves and winds up its affairs.  F.S. 605.0404(1).  Similarly, the profits and losses of the LLC must continue to be allocated between the members and the dissociated person on the basis of the agreed value. F.S. 605.0404(5).  A person who has dissociated may still be entitled to receive information about the LLC.  See F.S. 605.0410.  Such person may exercise such right through an agent or legal representative.

Phil Rarick’s Fantastic and Informative Client Blog Entries: Florida Probate Quick Reference Guide

Rarick

Our friend Phil Rarick of Rarick, Beskin & Garcia Vega, P.A. in Miami has been kind enough to allow us to provide one of his excellent client communications articles each week until you have read all of them.

Phil has 30 years of experience in both private and public legal work. He is a past President of the Miami Lakes Bar Association and formerly counsel to the National Association of Attorneys General.

This week’s entry is entitled Florida Probate Quick Reference Guide.

This guide has several helpful checklists and discusses:

  • The three types of Florida proceedings
  • The time frames and attorney fees connected to each proceeding
  • Six Critical Deadlines
  • Ancillary Probate for non-Florida decedents who own Florida property
  • Homestead: the most confusing issue for many

Read More by clicking here: Florida Probate Quick Reference Guide

Have you considered writing articles like this for your clients and for those in your community?

Phil sets a great example for this.

Visit his website at www.rbgvlaw.com

12 Personal Finance Lessons, Broken Down, in Woody Allen’s ‘Blue Jasmine’ a Forbes Blog by Deborah Jacobs

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Deborah Jacobs

Deborah L. Jacobs is a lawyer and award-winning journalist specializing in legal topics. In her best-selling book, Estate Planning Smarts, she draws on more than 15 years of writing about the stressful issues that surround estate planning. Her articles have appeared in The New York Times, Bloomberg Wealth Manager, BusinessWeek and many other publications. She is currently a senior editor at Forbes, where she writes a popular blog about personal finance for baby boomers.

Jasmine needs a good shrink (and better medication than just xanex), but some financial planning and legal representation would not have hurt either.  She could have moved to Florida and been a retired millionaire instead of sticking it out in New York and losing everything.  Check out Deborah Jacob’s great Forbes blog article on this interesting and educational story.  Click here for the blog.

We thank Deborah Jacobs for sharing her insightful piece with us.  Deborah’s contact information is as follows:

Deborah L. Jacobs

579 Fourth Street

Brooklyn, NY 11215-3008

djworking@nyc.rr.com

 Essential Trust Drafting Considerations – Let’s Not Forget What We Learned in Elementary School, Part 1 of a 2 part article by Tom Ellwanger

 Ellwanger

Trusts and estates lawyers are virtually all different in the form documents from which they work, but they are all similar in the pride they take in those documents and the hostility with which they greet any attempt to force them to use alternative forms.

This attachment is understandable.  A lawyer’s forms often reflect the lawyer’s deepest feelings about how his or her job should be done.  No two lawyers approach the law exactly the same way.  So, no two lawyers are likely to use exactly the same forms.

This is true even within the same law firm.  The notion of efficiency suggests that trusts and estates lawyers within the same firm should use the same forms.  Firms have spent thousands of attorney hours, representing millions of dollars in unbillable time, developing forms for everyone to use.

Sometimes the powers that be can, by sheer force of personality, extract universal promises to use the identical forms.  But, it doesn’t matter.  Starting immediately, changes will creep in, little by little, until within 30 days no two lawyers will be using the same forms.  (If you need confirmation on this point, check with any associate or paralegal who has the misfortune of drafting estate planning documents for different partners.)

The disagreements rarely arise because somebody’s forms are “wrong.”  We are not talking about Will forms which neglect to include a residuary clause.  Instead, we are seeing the effects of a psychological truth:  obsessive-compulsive disorder selects for success in most of the learned professions, nowhere more so than in the law, and nowhere more in the law than in the estate planning arena.

Background

I became a tax lawyer despite a somewhat unusual background:  virtually useless English degree; low-paid small-town journalism job; well-paid but dead-end legal writing job; comparatively low-paid entry-level position in insurance defense.

All of this, followed by 30+ years of practice in the trusts and estates area, has led me to some general theories about drafting estate planning documents.  In this article I will set them out, followed (if my strength holds out) by examples of how I have applied them to revise my own standard forms.

Some of my theories will seem pretty obvious.  Some of them will no doubt seem a little odd, or even more than a little odd.  Although 30-plus years of practice does have a way of destroying one’s health, optimism, and youthful exuberance, the flip side is that it can alleviate to some extent the fear of appearing stupid.  So, here we are.

One caveat about this article:

I learned two things in my first week of practice.  One was that my job required, at all costs, sounding like I knew what I was talking about.  I have not yet shaken this bad habit.  Therefore, do not confuse my forcefulness in expressing a conclusion with the amount of confidence I have in it.

(The other thing I learned my first week in practice?  That people would lie to get money.)

These are my principles.  If you don’t like them, I have others.

Groucho Marx

What I want my documents to do

I hope that my documents help keep me from getting sued.  So, I hope that my forms do what my clients want them to do; I hope that they produce valid trusts, enforceable anywhere in the country outside of Louisiana; and I hope that they do not produce horrendous tax consequences of the unanticipated variety.

I further hope that my forms will not hinder the achievement of my desire to live a reasonably profligate lifestyle—something which requires turning a profit on estate planning work.

We lawyers can only charge so much for estate planning work, and there are only so many hours in a year when we feel like doing it.  Which means that I hope my documents can help overcome two serious limitations I face:  (i) the amount of time I can spend extracting information from clients, and (ii) the amount of time I can spend imparting knowledge to clients and dragging decisions out of them.

Problem 1:  not enough information

Ideally my documents will work relatively well even if I don’t have every piece of information which I would need to have to do a comprehensive job of estate planning.  This is important, because I will never have that much information.

Yes, I could have my clients fill out a questionnaire designed to elicit the date I need.  I have traditionally used such a questionnaire.  Unfortunately, a questionnaire designed to get me even 75% of the information I need would run 20 pages or more, far past my own attention span, not to mention the attention span of a typical client.

Even a 20-page questionnaire might not be enough.  A recent case permitted the reformation of estate planning documents because the attorney thought the client’s grandchildren would be included in the phrase “lineal descendants.”  Which they normally are; but not where they have been adopted away from the client’s child, who was a natural parent, which is precisely what had happened.  Who would think to ask a client if any of her descendants have been adopted away?  Not me.  Getting to that level would probably require a 50-page questionnaire.

And, however I obtain it, the little bit of information I do obtain could easily be outdated within the week–when an S election is made for the family business, the triplets are born, old granddad finally drowns in his Old Granddad, or one spouse finally figures out how to read the other spouse’s email.

This means that my documents need to carry out the wishes of my clients even if I don’t know nearly enough about those wishes.  This is important, because with clients of ordinary means, I will never know anywhere near enough about those wishes.  Time is money.  If they don’t want to spend the money—and they don’t—then I don’t want to spend the time.  Under the circumstances, the best I can do is guess what is likely to be important and focus on that.

Problem 2 “Not Enough Education” will be discussed next week.

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 4 of a 7 Part Series

Koch Jirotka

This week we cover the important topics of how much disclosure is enough disclosure, whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure and circumstances by video taped interview or written correspondence.

  • Part 1 presented on Thursday, August 8, 2013, the reader was introduced to the present overall status of prenuptial agreement statutory law and case law, and talks about prominent malpractice traps and how to get clients prepared for what they can encounter in the prenuptial agreement universe.  Click here to be directed to the Thursday Report for August 8, 2013.
  • Part 2 on Thursday, August 15, 2013, discussed the important topics of how much disclosure is enough disclosure and whether or not both parties need to have lawyers.  Click here to be directed to the Thursday Report for August 15, 2013.
  • Part 3, on Thursday, August 22, 2013, discussed questions to ask the lawyer or spouse you are not representing to document appropriate disclosure circumstances by video-taped interview or written correspondence.  Click here to be directed to the Thursday Report for August 22, 2013.
  • Part 4, Today, August 29, 2013, the article discusses Castro v. Castro and Belcher v. Belcher, and what they mean for clients and lawyers who are involved in the pre and post nuptial agreement planning.
  • Part 5, On Thursday, September 5, 2013, a discussion of alimony and lawyer fee obligations that may not be waivable in pre-nuptial or post nuptial agreements, and offset clauses and other ways to handle these.
  • Part 6, On Thursday, September 12, 2013, Bifurcation – whether you can require the validity of the pre-nuptial or post-nuptial agreement be litigated or also before having to also litigate what the result could be if it is or is not enforceable.
  • Part 7, On Thursday, September 19, 2013, How to keep marital and asset information confidential in a divorce scenario, arbitration, and the Roddy v. Roddy case.

Below is the next part of the interview:

The fourth part of this interview will cover the vitally important cases of Castro v. Castro and Belcher v. Belcher, and what these cases mean for clients and lawyers who are involved in pre and post nuptial agreement planning.

Alan Gassman: That’s really useful – thank you very much.  Can we discuss Casto v Casto?

Judge Jirotka: Casto v. Casto was a case that was decided in 1987.  In other words, it predates the current statute.  It was an interesting case in the sense that it dealt with a version of a premarital agreement called a “postnuptial agreement.”  For our purposes, I think we can consider them both to be the same.  Both spouses had been married before.

In fact, one could say that one or the other was a serial marryer.  There were no children born of the marriage.  That’s an important fact to keep in mind because another issue that you cannot preclude in a premarital agreement is anything to do with children’s finances, specifically  child support.

Ky probably wouldn’t put it in there.  Good lawyers would not put it in there.  You can put it in there but it’s not going to be enforceable.  We have a situation where this couple had married in 1964.  They divorced in 1966.  Remarried in 1967.

Ky Koch: Obviously a marriage made in heaven.

Judge Jirotka: Right, and the husband was a fairly well-to-do shopping center developer if I understand the story correctly.  The wife was a stay-at-home wife, and there were no children of the marriage.  Approximately 10 years after the remarriage, in 1977, they entered into a postnuptial agreement.  Probably we can ascertain that something was wrong to begin with because the petition for dissolution of marriage came about 12 months later.

Ky Koch: There was an agenda going on.

Judge Jirotka: The postnuptial agreement, much like a prenuptial agreement, attempted to lay out what each spouse would get to keep if the marriage went awry.  The wife would get to keep the parties’ Fort Lauderdale home.  She’d get a $100,000 cash settlement.

The husband would make mortgage payments for a certain period of time..  The wife would receive certain what we would call incidental benefits.  Most importantly, each party would waive any right to alimony, support or further distributions.  If the parties had any property in their individual ownership, they would continue to own that separately and each party would pay their own attorney’s fees in any divorce proceeding.

As I mentioned, about 12 months later the husband filed for divorce.  Tried to claim in a very short form filing petition for dissolution of marriage because of the postnuptial agreement and that the matter could be very readily settled.  Like any case, the wife was allowed to respond, and lo and behold she did, seeking among other things the ability to invalidate the agreement.  She also counterclaimed for attorney’s fees, costs, alimony, etc.

Her grounds for asking that the agreement be set aside were not unusual grounds – duress, overreaching, unfamiliarity with husband’s assets and income, etc.  It went to an evidentiary hearing.

Ky Koch: This litigation went on for quite a long while, and Justice Overton wrote this opinion after almost four years of litigation and various appeals. Ms. Casto was no stranger to this process.  This was actually divorce number five for her.

The evidence was very clear that Ms. Casto had knowledge of the assets possessed by her husband, but that she had no knowledge, nor was there reasonably available to her information, to establish the value of those assets.

Lack of disclosure is what caused the agreement to be set aside.  During the prenuptial agreement she had talked to two different lawyers, but she was never told the value of the assets.  As you might imagine for a five-time divorcee, she was quite depressed the week before signing this postnuptial agreement.

Judge Jirotka: And I think also in the postnuptial agreement there may have been very generic reference to the properties owned by husband.  There was the ranch in Idaho statement.

Alan Gassman: Oh, very vague.

Ky Koch: Now the two lawyers that Mrs. Casto had been to see both told her “Don’t sign the agreement.”  Mr. Casto was not happy about this, and keep in mind now this was a postnuptial agreement so they were married about 10 years.  According to Mrs. Casto, her husband told her that she would lose the home, lose all the furniture if she did not sign the agreement.

He would never give her a complete financial affidavit.  She better find a lawyer who would let her sign the agreement or else. In my opinion this gets Mr. Casto into the divorce hall of fame.  The husband was suggesting that he would blow up the house and  and perhaps threatened her in a Mafia manner.

Alan Gassman: Beautiful.

Ky Koch: The trial court invalidated the agreement, saying that Mrs. Casto was not adequately advised as to her husband’s assets and income, that she did not have competent assistance in counsel, and that the agreement was unfair and inequitable to the wife.  Now those three things are real important as we’ll get to Justice Overton’s opinion in just a minute.  We’ll see that item A was and still is a valid basis to set aside an agreement.  Items B and C not so much.

The trial court awarded to Mrs. Casto about $1,500,000, paid in installments.  Then we get to the appeal and Justice Overton’s ruling that a spouse may set aside or modify an agreement by establishing that it was reached under fraud, deceit, duress, coercion, misrepresentation or over reaching.  They found in this situation that those aspects apply in terms of the postnupital agreement arrived at in the Casto case.

Regarding ground 2B, that the challenging spouse must present in evidence the parties’ relative situations, including their ages and educational opportunities- things of that nature.  The trial court must find that the agreement is disproportionate to the means of a defending spouse.

Judge Jirotka: And then the burden shifts.

Ky Koch: And once that burden shifts, the rebuttal must show that there was full and frank disclosure at the time of the signing of the agreement as to the assets, and in determining debts of the parties, or that the other spouse had a general and approximate knowledge of the reasonable means of the other spouse.  Now why you would ever draft an agreement relying solely on general and proximate knowledge by the challenging spouse is beyond me.  There’s no reason that should ever appear in an agreement as the basis for financial disclosure.  Certainly I think if you are drafting an agreement you want to say that we’ve attached all the disclosure.  There has been actual disclosure here and in addition there’s been a general and proximate knowledge of the terms of the relationship.  They’ve lived together. They’ve known each other’s circumstances for quite some time.

Judge Jirotka: In other words, your advice is to travel under the first bullet not the second one?

Ky Koch: Absolutely.  Okay, so what all of this means, and what Justice Overton’s opinion in Casto means and what our new Statute says to everybody in the State of Florida is still able to make a bad deal for themselves and just because this is a bad deal, whether a bad deal at the time you sign it or a bad deal at the time you’re going through the divorce – doesn’t matter.  A bad deal is not a ground by itself to vacate or modify the prenuptial agreement.

Number two, if an unreasonable agreement is freely entered into, it is enforceable, period.  And by the way this is a very well written opinion so if you’re ever in a situation where you are defending the validity of a pre- or postnuptial agreement, I highly recommend to you a very careful read of this.  It’s very specific and will be very instructive.  Justice Overton also said that erring in not having a lawyer at all is not on its own a basis to set aside an agreement.  Judge, is there anything you would add on the Casto case?

Alan Gassman: So we go to Belcher v Belcher?

Judge Jirotka:  There is no way that you can cut off a spouse when you are still married to that spouse from support or alimony, etc. is the different issue.  Spouses are supposed to support each other.  Therefore, you cannot specify in a prenuptial agreement that if the rubber hits the road, that you cannot cut off your then current spouse from support and alimony.  Likewise in the support category, you cannot cut off your current spouse from access to temporary attorney’s fees.  What the Lasconi case deals with, the issue of whether the agreement is enforceable or not, is being litigated.

And also as we mentioned, I do not believe this is particularly in Belcher, but it might be. I don’t have that case in front of me exactly.  As I mentioned before, child support also is addressed in there.

Seminar Spotlight: Sandra Diamond Shines as a Speaker for the Pinellas County Estate Planning Council on New Florida Law Coverage for Estate Planners and The Bottom Line on Decanting or Amending Irrevocable Trusts – A Hard Act to Follow!

 atty-diamond

On Wednesday, October 23, 2013 Sandra Diamond will be speaking at the Pinellas County Estate Planning Council Half-Day Seminar.

Sandra will be speaking on the new Florida laws that impact estate planning, amending or decanting existing irrevocable trust, and other recent Florida law developments.  Most people do not know that Sandra’s father was a U.S. Congressman, and that Sandra is a long-time member of the Florida Board of Governors.  Go to the dictionary and look for the word pillar and you will find Sandra’s picture.

Barry Flagg will speak on insurance and estate planning.

Sean Casey of Fifth-Third Bank will give an economic update.

Alan Gassman will be speaking on the topic of hot topics for estate planners, including same sex marriage, the new IRS SCIN position, estate tax planning software (with all attendees to receive a free beta version of our new software), and other important topics.

Please come out and support the Pinellas County Estate Planning Council.  The event will be held from 8am until 12pm.  To register for the event or more information please click here or email agassman@gassmanpa.com

Internet Tip of the Week: How to Help Your Clients Get Free Credit Reports

When clients come to you for estate planning are you telling them how to get a free credit report? Or, better yet, are you getting one for them?

Think about making this part of the suite of services you offer.  It should take your secretary no more than ten minutes to print out a credit report on your client if you have their information and their consent.

The three national credit reporting agencies, TransUnion, Experian, and Equifax, are required to provide one free credit report upon request every twelve months, though these free reports do not include a credit score.

To access the credit reports, visit https://www.annualcreditreport.com/cra/index and select your state.  Information such as current address, previous address, social security number, and birth date will be required.  Once you are ready to go into each credit reporter’s portal, you will need some personal information in order to advance to the reports.  This can differ per reporter and per visit, but the questions will always be culled from a person’s credit, banking, and residence history.  Once a person’s identity is confirmed you can view all three reports for free.

 Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presenter: Rob Cochran

Location: Online webinar

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

NEW STANDARDS FOR EXPERT WITNESSES

Date: Wednesday, September 4, 2013 | 5pm (30 minute webinar)

Presenters: Briggs P. Stahl, CPA and Diane Womack, CPA

Location: Online webinar

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

AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m. and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

BP CALCULATIONS FOR CPAS: TRICKS & TRAPS SEMINAR WITH JOHN GOLDSMITH AND ALAN GASSAMAN

Date: Monday, September 16, 2013 | 6:00 p.m.

Location: Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater

Additional Information:  Each attendee will receive written materials and a wine tasting and light hors d’ oeuvres will be served.  To register for the event please click here.

NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA, PhD, SOB

Location: Online webinar

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

NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Alan Gassman and Christopher Denicolo will speak on The Florida CPA’s Guide to Planning with Physicians and Medical Practices

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

WEDU ESTATE PLANNING SEMINAR

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berman Family Broadcast Center

Additional Information:  If you would like to sign up for this seminar please click here.

THE 444 SHOW – STAND YOUR GROUND LAWS

Date: Thursday, September 26, 2013 | 4:00 p.m. (50 minute webinar)

Location: Online webinar.

Presenters: Kym Rivellini and Denis deVlaming

Additional Information:  This webinar qualifies for 1 hour of continuing education credit and costs $30.00.  To register please visit www.clearwaterbar.org

LUNCH TALK – THE POWER OF POSITION MARKETING FOR ATTORNEYS

Date: Monday, October 7, 2013 | 12:30 p.m.

Location: Online webinar

Presenter: John Graden

Additional Information:To register please visit www.clearwaterbar.org

MEET & GREET COCKTAIL HOUR WITH DR. SRIKUMAR RAO

Noted author and nationally recognized speaker, Dr. Srikumar Rao will be joining us for a cocktail party on Wednesday, October 9, 2013 at 6pm in the evening.  We will begin with light hors d’ oeuvres followed by a talk by Dr. Rao on GOOD THING – BAD THING – WHO KNOWS? CHANGING YOUR IMMEDIATE AND LONG-TERM RESPONSES TO EVENTS AND CHALLENGES.

DATE: Wednesday, October 9, 2013

Location:  Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater, Florida

Additional Information:  To register for the event please click here.

INTERACTIVE HALF-DAY WORKSHOP WITH DR. SRIKUMAR RAO

On Saturday, October 12, 2013 we are co-hosting an interactive workshop with Dr. Srikumar Rao on the subject of ENHANCED EFFECTIVENESS AND ENJOYMENT OF YOUR PROFESSIONAL AND PERSONAL LIFE – 5 TOOLS YOU CAN START USING IMMEDIATELY.

Date: Saturday, October 12, 2013 | 1:00 – 6:00 pm with an optional 7:00 – 8:00 p.m. question and answer session.

Location: Holiday Inn Express, U.S. 19 & Gulf-to-Bay Blvd, Clearwater, Florida

Additional Information:  To register for the event please click here.

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.  Also Paul and attorney Barry will be discussing stepped-up basis tools and techniques, including our JEST Trust.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

Please click here to register for the event and for more information.

PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS, including same sex marriage, estate tax planning software (with all attendees to receive a free beta version of our new software), and other important topics.

Sandra Diamond will speak on the new Florida laws that impact estate planning, amending of decanting existing irrevocable trusts, and other recent Florida law developments.

Barry Flagg will speak on insurance and estate planning.

Sean Casey of Fifth-Third Bank will give an economic update.

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council  please click here  or email agassman@gassmanpa.com

2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

DECODING HEALTHCARE SEMINAR

Alan Gassman will be moderating the Decoding Healthcare Seminar hosted by Fifth Third Bank.

Speakers will include John Harding, President and CEO of Adventist Healthcare Systems, Stephen Klasko, Dean and President of USF Health College of Medicine, David Lewis, CEO of United Healthcare of Florida, Nancy Templin, CFO of All Children’s Hospital and a mystery speaker (other than Colonel Sanders) to be identified.

We sincerely thank Fifth-Third Bank, President Brian Lamb, Ryan Sloan and the Tampa Bay Business Journal for hosting this important public “town hall” discussion that will hopefully lead to improvement of our healthcare systems in the Tampa Bay area.

Date: Tuesday, October 29, 2013

Location: Grand Hyatt, 2900 Bayport Drive, Tampa, Florida

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location:  The Peabody 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 Peabody Hotel near Walt Disney World, which is world famous for its daily “march of the ducks” through the lobby (wear easy to clean shoes) and maybe we will have peking duck for dinner.

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 Peabody Hotel for a discounted rate per night, single occupancy.

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.

NOTABLE SEMINARS PRESENTED BY OTHERS:

MEDITATION, Science, Spirituality, Sustainability – An Experimental Workshop by the Bridge and Maulik K. Trivedi, M.D.

On Saturday, September 28, 2013 from 10 am to 1pm the Bridge, a not-for-profit organization that promotes ecocentric living, social justice and personal development is providing a 3 hour workshop on Meditation.  The session will be administered by integral psychiatrist and Yogi, Dr. Maulik K. Trivedi and will be accompanied by accomplished sitar player, Douglas Werner.

Date: Saturday, September 28, 2013 | 10am – 1pm

Location: Carrollwood Cultural Center, 4537 Lowell Road, Tampa

Additional Details: The cost for attending this workshop is $45 and you can register by clicking here or call 813-416-3069 for more information.

THIRD ANNUAL FEDERAL TAX INSTITUTE OF NEW ENGLAND

Date: September 27, 2013

Location: Hartford Marriot Farmington Hotel, Farmington, Connecticut

Sponsor: Connecticut Bar Institute

Additional Information: Chairman Frank Berall will be using part of an earlier Thursday Report article on same-sex planning in his presentation. You can also catch an early dose of Jerry Hesch’s talk on Income Tax Ideas for Estate Planning here before the Notre Dame Tax Institute in October, and Bruce Stone will be speaking on Assisted Reproductive Technology Children.  For more information or to register please visit the Institute’s site here.

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

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.”

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – 8.22.13 – Annuities, Statement of Authority and ICS

Posted on: August 22nd, 2013

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First Part for Website

 

Could ketchup be considered a vegetable for school lunch programs? From Wikipedia:

 The ketchup is a vegetable controversy refers to proposed United States Department of Agriculture (USDA) Food and Nutrition Service (FNS) regulations, early in the presidency of Ronald Reagan, that intended to provide more flexibility in meal planning to local school lunch administrators coping with National School Lunch Plan subsidy cuts enacted by the Omnibus Regulation Acts of 1980 and 1981.[1][2] The regulations allowed administrators the opportunity to credit items not explicitly listed that met nutritional requirements. While ketchup was not mentioned in the original regulations, pickle relish was used as an example of an item that could count as a vegetable.[3]  Click here to keep reading

Tax and Practical Planning with Commercial Annuities

Ken Crotty’s LLC Clinic – Statement of Authority – How to Prevent Theft or Having Unauthorized Managers or Officers Invade Real Estate, Borrow Money or Take Other Actions That Should Not Be Permitted

Insured Cash Sweeps: Insuring Your Peace of Mind for Large Deposits

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 3 of a 7 Part Series

Dali’s The Persistence of Memory:  Persistently Memorable

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.

Tax and Practical Planning with Commercial Annuities

This is the first of a multi-part series on planning with commercial, variable and fixed annuity products from a tax and business advisors standpoint.

The contents of this series will become the basis of the Notre Dame tax institute outline that we are preparing to be presented on Wednesday, October 16, 2013 at 3:30 p.m. at Notre Dame in South Bend, Indiana.

Questions, comments and suggestions are always appreciated.

The opinions expressed in this article do not necessarily reflect all of the input that has been given to us by a great many advisors, carriers, and agents.

If you have clients that are involved with variable or fixed annuity products we urge you to become very familiar with the issues discussed in this series, and to express your own conclusions and opinions as appropriate.

INTRODUCTION

The financial services industry has caused variable and fixed commercial annuity products to proliferate despite tax and expense issues discussed in this article.  In some cases these issues can be overcome with strategies and advantages, as herein discussed. In other cases the client comes to the advisors with the contract already in place and sometimes already laden with income that will be taxed upon eventual withdrawal.  This article discusses several often overlooked strategies for handling those and other common situations. Furthermore, there is a diverse landscape across the United States in relation to creditor protection for annuity proceeds.  The vast majority of states provide an exemption of some form relating to annuity proceeds against creditor claims, whether that is a full exemption or some maximum allowed exemption.  However, six states, Colorado, Massachusetts, Montana, New Hampshire, Virginia, and West Virginia provide no exemption for creditor claims for annuity proceeds.

The vast majority of annuity contracts are with nationally recognized carriers and are regulated by state insurance commissioners and Federal law, but there is also an active offshore and “private placement” community that can provide more flexible and in some cases very creative planning opportunities for large investment portfolios or single purpose family or personal investments.

Separate and apart from tax and investment asset planning considerations are the asset protection and financial guarantee features of annuity contracts, which can be unique and attractive.  Many states, including Florida have statutes that provide that annuity contracts are exempt from creditor claims, and many countries have such laws as well.  The federal bankruptcy law will permit a debtor residing in these states to keep an annuity contract as an exempt asset while eliminating judgments against the debtor, unless fraudulent transfer statutes or other common exemption exceptions apply (such as the IRS and the Federal Trade Commission as “super creditors”).

A great many state registered carriers provide “minimum withdrawal right guarantees” that can give investors a degree of comfort with respect to the risk of losing investment value in underlying mutual fund investments if there is another stock market crash that is not recovered from, but these guarantees are commonly misunderstood, even by those who sell them, so great care must be taken to be sure that the “guarantees” are understood and not exaggerated or overused.

What we are referring to in this series are annuity contracts held by individuals and trusts, and not contracts that may be held as “IRA Annuities” or under pension or other qualified retirement plans or IRC 412(I) plans.  Those annuities are subject to separate rules, and typically not deemed to be appropriate because of the lack of any tax benefit provided by an annuity product held under an IRA or pension arrangement that already offers tax deferral.  A brief discussion of Section 412(I) plans will also be included in a later edition.

Separate and apart from annuities is the related world of cash value, universal, variable and whole life insurance, which can be structured similar to annuities in many ways, and can also be used (and misused) as an income tax planning tool, a creditor exempt investment, subject to certain maximum allowance limitations and other provisions, in all states, and an investment product with guarantees.  The main differences between an annuity and a life policy are that life policies have large death benefits, life policies have large “mortality risk expenses,” and permanent life insurance often costs more and results in much larger commissions to agents who sell it, life insurance policy loans do not normally trigger tax to the policy holder, and if the policy holder is lucky enough to die while the policy is in place there will be no income tax imposed on growth within the policy.

Fixed annuities typically consist of contracts that are set to pay a fixed annual or more frequent amount to the owner for a period of time or life, or which in some cases pay an interest rate based on rate of return that may be fixed for a period of years or variable and based on what the investment results of funds will be and industry decision making is.

Variable annuities consist of contractual agreements between an insurance company and an individual, individuals, or other owners that meet certain requirements discussed in this article.  The financial performance and payment rights under a typical variable annuity will be based solely upon the performance of underlying mutual funds that can be chosen and changed by the annuity owner or investment advisor, although usually the owner is guaranteed that on death the value passing to beneficiaries will at minimum be based upon the amounts invested less the policy expenses and withdrawals.

The owner contributes money to the insurance company, and these are placed into a contractual account, and invested in one or more money market and/or mutual funds that will perform based upon the market or markets in which they are invested. The law prevents creditors of the insurance carrier from reaching the invested funds or monies held under the policy.  For offshore arrangements special account structuring can be used to assure that the financial institutions holding the assets for the carrier will not permit the carrier to draw upon the assets without consent from an independent appointed professional advisor to prevent theft by a family Carrier.  It is of course very important to work with a reputable carrier that has signed legal opinions from U.S. based law firms who do comparable work for United States based nationally known carriers.

The annuity contract and company is required to be registered in each state where it does business, and to follow applicable disclosure and benefit laws that apply under state and federal law.

Insurance carriers registered only outside of the United States are subject to varying degrees of supervision and regulation.  For example, a Cayman Islands, Bermuda, or Bahamas insurance carrier can invest annuity monies into private companies, individual stocks, or even real estate, subject to diversification rules that apply if the contract is to qualify as an annuity under the Internal Revenue Code.

Offshore annuity contract planning may include allowing the client or family members to sell appreciated assets to the variable annuity contract or other entity that it might own in exchange for an installment note or annuity payment in order to defer gain on the asset, and allow future appreciation thereon to be realized income tax free in the case of a life insurance policy or income tax deferred in the case of an annuity policy.  For example, an individual owning stock with an income tax basis of $10,000 and a fair market value of $100,000 might sell that stock to a life insurance policy in exchange for a $100,000 annuity payable $10,000 a year for 11 years.  The income tax on the $90,000 of gain would therefore be deferred but recognized over 10 years.  If the life insurance policy later sells the stock for $1,000,000 it would pay no tax and if the insured dies while the policy is intact all of the policy proceeds will go to the beneficiaries tax free.  These techniques are also used in the offshore life insurance arena with the goal being complete avoidance of federal income tax by maintaining the policy through the lifetime of the insured and permitting loans as allowed under the Internal Revenue Code Section 7872 and minimum corridor requirements for a non-MEC (modified endowment contract) policy.

As also described in greater detail in this series, an annuity can be “annuitized” whereby the tax basis of the annuity is applied to each post-annuitization withdrawal to be ratably credited over the expected life expectancy of the annuitant, which is an additional tax advantage.  The annuitization usually means that the policyholder will only receive a fixed annual rate of return, and cannot have the contract invested in equities that might yield a greater rate of return, but the private letter rulings that will be discussed in this series may be structured to allow for what the author calls “synthetic annuitization,” which may be of interest to tax planners.

This article will provide a summary of annuity taxation rules, highlighting some of the important subsections of Internal Revenue Code Section 72.  This section will also examine, from a planner perspective, the importance of certain subsections of Section 72 and many strategies that can be used, and traps to be avoided.

The items of tax discussion will include the following:

  1. Section 1035 exchange rules, exchanging for long-term care insurance and related issues.
  2. The i4LIFE private letter rulings obtained by Lincoln Financial Group with respect to “synthetic annuitization,” that allow periodic payments that have basis applied to each of them and nevertheless can be fueled by market based mutual funds.  The article will examine how that rider works, the private letter rulings that made it permissible, and then examine the application of the i4LIFE Advantage technique and other approaches to handling the following situations:
    1. Inheritance rules, including where trusts are annuity beneficiaries;
    2. Non-married domestic partners application;
    3. Trusts as original owners; and
    4. Lifetime gifts of annuity contract ownership.
    5. Taxation of annuity contracts held under irrevocable trusts and the 10% excise tax issue.
    6. Anti-abuse rules.
    7. How to avoid annuity tax treatment while retaining contractual and state law creditor protection rights.

Third, we will review the primary features of a number of presently available annuity products in order to assist the reader in developing fluidity and a sense of how to compare various products and opportunities and issues associated therewith.  Additionally, within this section we will include a recent letter to a client along with charts to illustrate the practical implications that application of these different contract features can have on the decision making process and annuity performance.

ANNUITY TRIVIA

  1. When annuity monies are transferred to a long-term care policy does it carry out only income or ratable income and principal from the annuity contract?
  2. Does the “guaranteed income feature” guarantee minimum income to be earned on the annuity account principal, or minimum payments that will reduce the annuity account as low as zero?
  3. How does the new Florida law impact variable annuity sales, commissions, and surrender charges?
  4. How do the anti-abuse rules under Internal Revenue Code Section 72 affect multiple owned annuities?
  5. What is a flexible private placement variable annuity?
  6. Do the minimum death benefit provisions under Internal Revenue Code Section 72 allow for any designated beneficiary to be treated as the contract holder upon the death of the initial contract holder?
  7. Does Internal Revenue Code Section 1035 allow taxpayers to make a partial exchange of only part of an existing annuity contract for a new annuity contract, resulting in two annuities?
  8. When an annuity contract is “annuitized” normally, how much of the income payments are considered gross income for income tax purposes?
  9. Do same sex couples face any issues when entering variable annuity contracts in dealing with application of the Internal Revenue Code?

The above questions and many more will be answered in our newest series entitled Planning with Annuities.

Ken Crotty’s LLC Clinic – Statement of Authority – How to Prevent Theft or Having Unauthorized Managers or Officers Invade Real Estate, Borrow Money or Take Other Actions That Should Not Be Permitted

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As discussed in the August 8th Thursday Report, the new Florida LLC Act introduces the concept of a Statement of Authority.  Beginning January 1, 2014 an LLC will be able to file a Statement of Authority with the Secretary of State which can either empower or restrict the ability of the listed individuals or a class of individuals to take certain actions.  For example, if the LLC owns real estate, it can file a certified copy of an appropriate Statement of Authority naming the only manager or managers who would be able to mortgage or transfer that real estate.  The properly filed certified copy of the Statement of Authority will be deemed to have been provided to any third party with respect to the authority to deal with the real estate.

Some states have Statements of Authority available online which can be filed.  Currently, Florida has not developed a Statement of Authority form.  We have drafted a Statement of Authority that we believe will be sufficient until the Florida Secretary of State provides a standard form.  You can see our sample Statement of Authority by clicking here.

Any LLC formed on or after January 1, 2014 will be governed by the new Act.  Any LLC established before January 1, 2014 may elect to have the new Act apply on or after January 1, 2014, and the new Act will apply to such LLCs no later than January 1, 2015.  To protect the LLC, it’s Managers, and it’s Members, practitioners may want to consider sending correspondence to their clients encouraging their clients to elect into the new Act, filing a Statement of Authority, and recording the Statement in the appropriate counties where applicable.  Practitioners could draft Minutes for the Manager or Members of the LLC to elect into the new Act and also provide a Statement of Authority for signature.  The documents could be signed effective as of January 1, 2014 and filed immediately after the end of 2013.

Insured Cash Sweeps: Insuring Your Peace of Mind

Insured Cash Sweeps: Insuring Your Peace of Mind

“It’s not return on my money I’m interested in, it’s return of my money” – Mark Twain

Like Mark Twain, bank customers are extremely interested in return of their money and how to insure against any losses. Many clients have much more than $250,000 in one bank, and this concerns them about bank failure and the FDIC $250,000 limit.

But what does a client who needs immediate access to cash and wants FDIC coverage do?

Here comes the ICS.

ICS does not stand for Intensely Complicated Stuff!  It stands for INSURED CASH SWEEP, and it was developed by Promontory Interfinancial Network, LLC in order to allow large depositors to have the benefit of a small but positive rate of return and complete access without delay to monies deposited.

The ICS system basically works like this: Dave Depositor signs an ICS agreement and deposits a cash balance with a participating bank, referred to as a “relationship bank”. The relationship bank keeps up to $250,000 in this original transaction account, and the remaining balance is divided into portions of less than the FDIC-insured maximum of $250,000. Each of these portions are transferred to a different FDIC-insured banking institution and are then eligible for FDIC insurance.

Through its network of banks, Promontory offers customers participating in the ICS program, such as Dave, two deposit options: a savings option and a demand option. Click here to find a  participating bank. The savings option sends the funds to money market deposit accounts and allows customers to make up to six withdrawals every month from the invested funds.  The demand option places the funds into demand deposit accounts and provides customers with unlimited withdrawals. Either or both of these options can be utilized by depositors.

To keep Dave informed about where his money is located, he will provided a statement listing the various banks which house each portion of his ICS account and the balances at those locations. Depositors are also able to utilize a Promontory website for online access to his account information.

For the investor of excess cash who values yield over liquidity, Promontory also offers a program called CDARS. This program is similar to ICS in that it uses a network of multiple FDIC-insured institutions to guarantee the security of a gross balance far greater than the $250,000 cap. However, unlike a ICS which deposits funds into money market accounts, the CDARS program utilizes time deposits such as CDs.  Futhermore, whereas ICS offers almost complete liquidity, CDARS offers different holding periods corresponding to different yields.

For a further discussion on CDARS see our Thursday Report dated April 24, 2013 where we reviewed the CDARS program which allows banks to participate out CDs and other time required deposits with a system of participating banks.

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 3 of a 7 Part Series

Koch and Jirotka

This week we cover the important topics of how much disclosure is enough disclosure, whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure and circumstances by video taped interview or written correspondence.

  • Part 1 presented on Thursday, August 8, 2013, the reader was introduced to the present overall status of prenuptial agreement statutory law and case law, and talks about prominent malpractice traps and how to get clients prepared for what they can encounter in the prenuptial agreement universe.  Click here to be directed to the Thursday Report for August 8, 2013.
  • Part 2 presented on Thursday, August 15, 2013, discussed the important topics of how much disclosure is enough disclosure and whether or not both parties need to have lawyers.  Click here to be directed to the Thursday Report for August 15, 2013.
  • Part 3, This week, Thursday, August 22, 2013, Questions to ask the lawyer or spouse you are not representing to document appropriate disclosure circumstances by video-taped interview or written correspondence.
  • Part 4, On Thursday, August 29, 2013, the article discusses Castro v. Castro and Belcher v. Belcher, and what they mean for clients and lawyers who are involved in the pre and post nuptial agreement planning.
  • Part 5, On Thursday, September 5, 2013, a discussion of alimony and lawyer fee obligations that may not be waivable in pre-nuptial or post nuptial agreements, and offset clauses and other ways to handle these.
  • Part 6, On Thursday, September 12, 2013, Bifurcation – whether you can require the validity of the pre-nuptial or post-nuptial agreement be litigated or also before having to also litigate what the result could be if it is or is not enforceable.
  • Part 7, On Thursday, September 19, 2013, How to keep marital and asset information confidential in a divorce scenario, arbitration, and the Roddy v. Roddy case.

Below is the next part of the interview:

Ky Koch: That brings up another point in drafting prenuptial agreements that I think lawyers miss out on sometimes, and that is you don’t necessarily need to have a videotaped signing ceremony every time you do one of these.  Although I think that’s probably the preferred method, spouses typically don’t want to go through that. They hate that process and I can see why.  It’s very sterile, it’s very distrustful, it’s very everything you don’t want to be thinking about as you’re preparing for a wedding.

What I recommend is whether I’m doing a signed videotape signing of a prenuptial or not, I do a list of questions that I want the other spouse to answer, and I send them to the other lawyer saying these are questions I’m going to ask your client at the videotaped signing.  I just want you to be prepared for it, have a chance to go through it with him or her because this is what I’m going to ask on the record.

You don’t need to do that. You can do that same thing in the form of an interrogatory and send it to them.  They have 10/12/15 days to answer it.  They respond with all the appropriate answers and you got some additional corroboratory evidence in terms of supporting this agreement that you wouldn’t otherwise have.

Alan Gassman: What are some of those questions?

Ky Koch: Well, I’ve had this come up in a situation where there was no lawyer on the other side.  One of those questions is: Do you understand that I’ve never met you before?  I’m not your lawyer.  Never have given you advice.  Any communication between you and I is not my legal advice.  If you think it is you’re wrong.  You need to get yourself a lawyer.  Do you understand all these things?  That’s one of them.

The other is: Have we had fair negotiations back and forth. Have you had a chance to review this?  Have you talked to your lawyer about it?  Have you contemplated the possibility of alimony in a setting where you’re married for 7, 10, 15, 20 years, but recognize that you’re giving it up here.  Do you understand that the waiver of alimony can never be changed, and you can’t come back to court later and say well I didn’t understand that I was giving that up?  Another series of questions I’ve got in there relate to our prenuptial agreement by definition.

Judge Jirotka: So you’re sort of explaining to the other side…

Ky Koch: Explaining to the other side with the idea that this is going to be presented to you when he or she comes in and tries to contest this agreement.

Another series of questions that I ask in there relates to the definition of what a prenuptial agreement is, and that is it’s a contract that alters Florida law.  As to this marriage, as to this couple this is now Florida Statute 61 as opposed to Florida Statute 61.

This prenuptial agreement is replacing Florida law and it’s an agreement between these folks and do they understand that.  There’s a bunch of different areas.

Please email Ky Koch at kkoch@kh-pa.com for a list of questions he promised to share!

Ending the Patient-Physician Relationship

An excellent summary of rights, responsibilities, and strategies that we reprint with permission of the American Medical Association, Copyright © 2013

Erosion of the Physician-Patient Relationship: What to Do When a “Breakup” is Needed?

The patient-physician relationship is one based on trust and continuity in care. Because this is a fiduciary relationship, where a physician-patient relationship has been formed, a physician must ethically place a patient’s welfare above his own. However, a physician is free to terminate a relationship so long as his withdrawal is effectively communicated to the patient. Where a physician-patient relationship becomes too burdensome, the physician must follow specific protocol to minimize his exposure to litigation based on claims of patient abandonment. As shown by multiple reports, communication is key when attempting to avoid litigation. A lack of communication demonstrates a lack of concern for the patient’s welfare and causes erosion of the physician-patient relationship.  As such, poor communication unsurprisingly increases the chance that a patient with adverse outcomes will file a malpractice suit.

Where the existence of a physician-patient relationship has become so difficult that termination must occur, the physician must take steps to communicate this termination to the patient in order to minimize his liability.1 However, there are some notable exceptions to this rule. Where a physician does not have a relationship with a patient, he cannot be held liable for abandonment. For example, where a specialist treats a patient, he will not be held responsible for all subsequent treatment, unless specifically agreed to. In other words, a physician may limit the scope of treatment by clearly communicating to the patient that no relationship exists. It is important to note that although the physician is under no duty to inform the patient of the specific reasons for withdrawal, he must always give the patient sufficient time to find a new treating physician before terminating the relationship. The following article outlines the specific protocol, based upon the A.M.A.’s Code of Medical Ethics, which should be followed when terminating a physician-patient relationship.

Ending the Patient-Physician Relationship

Once a patient-physician relationship is begun, a physician generally is under both an ethical and legal obligation to provide services as long as the patient needs them. There may be times, however, when you may no longer be able to provide care.  It may be that the patient is noncompliant, unreasonably demanding, threatening to you and/or your staff, or otherwise contributing to a breakdown in the patient-physician relationship.  Or, it may be necessary to end the relationship simply due to relocation, retirement, or unanticipated termination by a managed care plan and/or employer.

Regardless of the situation, to avoid a claim of “patient abandonment,” a physician must follow appropriate steps to terminate the patient-physician relationship.  Abandonment is defined as the termination of a professional relationship between physician and patient at an unreasonable time and without giving the patient the chance to find an equally qualified replacement. To prove abandonment, the patient must show more than a simple termination of a patient-physician relationship.  The plaintiff must prove that the physician ended the relationship at a critical stage of the patient’s treatment without good reason or sufficient notice to allow the patient to find another physician, and the patient was injured as a result.  Usually, expert evidence is required to establish whether termination in fact happened at a critical stage of treatment.

A physician who does not terminate the patient-physician relationship properly may also run afoul of ethical requirements. According to the AMA’s Council on Ethical and Judicial Affairs, a physician may not discontinue treatment of a patient as long as further treatment is medically indicated, without giving the patient reasonable notice and sufficient opportunity to make alternative arrangements for care.  Further, the patient’s failure to pay a bill does not end the relationship, as the relationship is based on fiduciary, rather than a financial responsibility. According to the AMA’s Code of Medical Ethics, Opinion 8.115, physicians have the option of terminating the patient-physician relationship, but they must give sufficient notice of withdrawal to the relatives, or responsible friends and guardians to allow another physician to be secured.

Appropriate steps to terminate the patient-physician relationship typically include:

  1. Giving the patient written notice, preferably by certified mail, return receipt requested;
  2. Providing the patient with a brief explanation for terminating the relationship (this should be a valid reason, for instance non-compliance, failure to keep appointments.);
  3. Agreeing to continue to provide treatment and access to services for a reasonable period of time, such as 30 days, to allow a patient to secure care from another person (a physician may want to extend the period for emergency services);
  4. Providing resources and/or recommendations to help a patient locate another physician of like specialty; and
  5. Offering to transfer records to a newly-designated physician upon signed patient authorization to do so.

Following this protocol may be easier in some situations than others. For example, if a physician has signed a covenant-not-to-compete, chances are the employer will not hand over the patient list upon notice of departure.  In instances such as these, you (in consultation with your attorney) may want to provide a model patient termination letter to the party withholding your patients’ addresses, and request that the addresses and letter be merged for distribution to your patients. Ideally, you should not be in a contractual arrangement that makes contacting your patients difficult.  However, if you find yourself in this situation, work with an attorney to ensure that appropriate steps are taken.

Dali’s The Persistence of Memory:  Persistently Memorable

Dali

If you want to stretch your imagination and also enjoy a world away from our own spend a few hours at the Salvador Dali Museum in St. Petersburg, Florida with a good docent, or someone who knows Dali’s art and is willing to describe it.

The term for the style seen in Salvador Dali’s The Persistence of Memory, “paranoiac-critical,” seems a particularly apt description of the scene, even if you know neither the definition of paranoiac-critical nor meaning behind the painting.  The primary facet of this Dali-pioneered technique is to link objects to completely disassociated qualities or elements. Does your mind try to find some link between the soft watches and your billable hours?  The result of this elegant precursor to the modern mash-up can be haunting, humorous, disturbing, fantastic, or, most likely, all of the above.

The 1931 painting’s setting is actually from Port Lligat (or Portlligat), a small fishing village on Spain’s Mediterranean coast near the French border that today houses a Dali museum (and in 1931, housed his house).  The inspiration for the rest of the elements is less straightforward:  take a little “horrible traumatism of birth,” temper it with prenatal “feelings of timelessness,” toss in a pinch of anxiety about when your wife will return from a night out, add a healthy slice of smooth, creamy camembert cheese, and finish with an amorphous self-portrait “abandoned on the beach.”  Waa-la – masterpiece!  (quotes from Dali, by Paul Moorhouse)

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

LEGISLATIVE UPDATE – AUGUST 444 SHOW

Join us later today at 4pm for The 444 Show.  This month we will be speaking on the new legislative update with Sandra Diamond, Aimee Diaz Lyon and Jim Daughton.  The webinar qualifies for 1 hour of continuing education credit.

Date: Thursday, August 22, 2013 | 4:00 p.m (50 Minutes)

Speakers: Sandra Diamond, Aimee Diazlyon and Jim Daughton

Sponsor: The Clearwater Bar Association.

Additional Information: To register for this webinar please click here or email Janine Gunyan at Janine@gassmanpa.com

WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presenter: Rob Cochran

Location: Online webinar

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

AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m. and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here .  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA

Location: Online webinar

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

NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Topic: Alan Gassman will be speaking on Estate and Asset Protection

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

WEDU ESTATE PLANNING SEMINAR  

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berman Family Broadcast Center

Additional Information:  If you would like to sign up for this seminar please click here.

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.  Also Paul and attorney Barry will be discussing stepped-up basis tools and techniques, including our JEST Trust.  Please click here to register.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Other Speakers: Other speakers include Barry Flagg on Insurance and Estate Planning; Sean Casey, SR. VP Fifth Third Bank on an Economic Update, and Sandra Diamond on a topic to be determined.

Additional Information: To attend the meeting or to receive information on joining the Council please click here  or email agassman@gassmanpa.com

2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

DECODING HEALTHCARE SEMINAR

Alan Gassman will be moderating the Decoding Healthcare Seminar hosted by Fifth Third Bank.

Speakers will include John Harding, President and CEO of Adventist Healthcare Systems, Stephen Klasko, Dean and President of USF Health College of Medicine, David Lewis, CEO of United Healthcare of Florida, Nancy Templin, CFO of All Children’s Hospital and a mystery speaker (other than Colonel Sanders) to be identified.

We sincerely thank Fifth-Third Bank, President Brian Lamb, Ryan Sloan and the Tampa Bay Business Journal for hosting this important public “town hall” discussion that will hopefully lead to improvement of our healthcare systems in the Tampa Bay area.

Date: Tuesday, October 29, 2013

Location: Grand Hyatt, 2900 Bayport Drive, Tampa, Florida

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topics of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT, ESTATE TAX PLANNING SOFTWARE AND HOW TO USE IT, CREDITOR PROTECTION FOR THE ESTATE PLANNER, and other topics to be determined.

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location:  The Peabody 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 Peabody Hotel near Walt Disney World, which is world famous for its daily “march of the ducks” through the lobby (wear easy to clean shoes) and maybe we will have peking duck for dinner.

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 Peabody Hotel for a discounted rate per night, single occupancy.

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.

NOTABLE SEMINARS PRESENTED BY OTHERS:

THIRD ANNUAL FEDERAL TAX INSTITUTE OF NEW ENGLAND

Date: September 27, 2013

Location: Hartford Marriot Farmington Hotel, Farmington, Connecticut

Sponsor: Connecticut Bar Institute

Additional Information: Chairman Frank Berall will be using part of an earlier Thursday Report article on same-sex planning in his presentation. You can also catch an early dose of Jerry Hesch’s talk on Income Tax Ideas for Estate Planning here before the Notre Dame Tax Institute in October, and Bruce Stone will be speaking on Assisted Reproductive Technology Children.  For more information or to register please visit the Institute’s site here.

MEDITATION, Science, Spirituality, Sustainability – An Experimental Workshop by the Bridge and Maulik K. Trivedi, M.D.

On Saturday, September 28, 2013 from 10 am to 1pm the Bridge, a not-for-profit organization that promotes ecocentric living, social justice and personal development is providing a 3 hour workshop on Meditation.  The session will be administered by integral psychiatrist and Yogi, Dr. Maulik K. Trivedi and will be accompanied by accomplished sitar player, Douglas Werner.

Date: Saturday, September 28, 2013 | 10am – 1pm

Location: Carrollwood Cultural Center, 4537 Lowell Road, Tampa

Additional Details: The cost for attending this workshop is $45 and you can register by clicking here.  or call 813-416-3069 for more information.

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 click here.

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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

Dualinars, In-State Tuition and Some Humor

Posted on: August 15th, 2013

No Comments

Wednesday was a blur; to Thursday I demur.

Demur is defined later in this report.

PROFESSIONAL QUOTE OF THE WEEK

“I am always glad to try to help another practitioner if I can”

-       William “Bill” P. Weatherford, Jr.

 Anyone who knows Bill Weatherford in Winter Park is aware that he is a gentleman and a scholar.  The above was sent to us after thanking him for going through an ex-client’s file and letting us know where to find important documents.  He did this without delay.  Thanks again Bill!

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 2 of a 7 Part Series

In-State Means In-State:  A Quick Overview of the Residency Requirements for In-State Tuition at Florida’s Public Universities – It’s Not What You Think It Is by Alan S. Gassman and Eric Brooks

Phil Rarick’s Fantastic and Informative Client Blog Entries: Homestead: Three Tricky Issues to Watch

Profiled “Dualinars” of the Week: Financial Planning Association of Tampa Bay and the Third Annual Federal Tax Institute of New England

11 Steps to Happiness at Work

Our Best Testimonial Ever!

Thursday Report Jokes

Definition of the Week and a Quick Contest

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer or to win $1,000,000 in KFC gift certificates, please email Janine Gunyan at Janine@gassmanpa.com.

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

Our Best Testimonial Letter Ever! 

We have never met Susan King, but she became our favorite person in the galaxy when she sent the e-mail quoted below on Thursday, August 1:

Hello Alan,

I have been receiving your Thursday Report for several months now and I find it very helpful so I wanted to thank you for all of the work and information that goes into each report. As a solo practitioner your office webinars and reports have become a great resource.

I also wanted to thank you for the great information on Florida Land Trusts in the August 1, 2013 edition. This type of trust is something that I feel could be helpful to certain clients of mine but until I read your article I was a bit unsure how to present it to them. I now feel better prepared and will bring this up for discussion.

 I would like to recommend to some of my colleagues that they ask to be put on your e-mail list. May I just forward them your e-mail address or is there a different one that should be used for this purpose? I added to the list after attending my first webinar and I do not recall if there is a separate link to sign up.

 Warmest regards,

Susan King picture with quote

Susan M. King
Attorney at Law
2499 Glades Road
Suite 111
Boca Raton, FL 33431
Tel:  561.989.0622
Fax: 561.989.9982
sking@smkinglaw.com
www.smkinglaw.com
 

We thank Susan so much for this wonderful compliment.

This is a wonderful reminder of how easy it is to make someone else’s day by telling them something nice about themselves, whether it is true or not!

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 2 of a 7 Part Series

Koch and Jirotka with quotes

This week we cover the important topics of how much disclosure is enough disclosure, whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure and circumstances by video taped interview or written correspondence.

  • Last Thursday, August 8, 2013, the reader was introduced to the present overall status of prenuptial agreement statutory law and caselaw, and talks about prominent malpractice traps and how to get clients prepared for what they can encounter in the prenuptial agreement universe.  Click here to be directed to the Thursday Report for August 8, 2013.
  • Part 2, today, August 15, 2013, discusses the important topics of how much disclosure is enough disclosure and whether or not both parties need to have lawyers.
  • Part 3 on Thursday, August 22, 2013, Questions to ask the lawyer or spouse you are not representing to document appropriate disclosure circumstances by video-taped interview or written correspondence.
  • Part 4, on Thursday, August 29, 2013, the article discusses Castro v. Castro and Belcher v. Belcher, and what they mean for clients and lawyers who are involved in the pre and post nuptial agreement planning.
  • Part 5, on Thursday, September 5, 2013, a discussion of alimony and lawyer fee obligations that may not be waivable in pre-nuptial or post nuptial agreements, and offset clauses and other ways to handle these.
  • Part 6, on Thursday, September 12, 2013, Bifurcation – whether you can require the validity of the pre-nuptial or post-nuptial agreement be litigated or also before having to also litigate what the result could be if it is or is not enforceable.
  • Part 7, on Thursday, September 19, 2013, How to keep marital and asset information confidential in a divorce scenario, arbitration, and the Roddy v. Roddy case.

Below is the next part of the interview:

Alan Gassman: Now on the amount of disclosure, does it have to be a 30 page disclosure document that shows the spouse a copy of every type of document, including brokerage statements and prior tax returns, or can it be schedule of the 12 biggest assets, which add up to $9,000,000.  What kind of financial disclosure would you be providing for your clients if you were practicing Judge?

Judge Jirotka: Well, my understanding from the cases I have reviewed is that it cannot be just a simple statement: ranch in Idaho, stock.  It has to be a little bit more detailed – a little bit is my word, not necessarily the appellate court’s word.  What kind of stock, how many shares, how big a ranch, where is it?  There is some case law on this, and Ky correctly points out that we don’t have a whole lot of case law on the statute per se.  We do have some pre-statute case law that requires much more disclosure than simple statements.

Ky Koch: My advice to clients when I’ve got the monied spouse is to tell them to put it all on the disc and pack it with your tax returns.  If you’ve got business valuations put them in there.

Alan Gassman: Financial statements.

Ky Koch: Brokerage statements, all your financials you’ve given to the banks.  Give them more rather than less because you don’t want it to be challenged for insufficient disclosure.  By the way, I tell them if you’re going to estimate values, estimate on the way high side.  For instance, if you were in business and you estimate its value at $100,000 in your prenup, if you get divorced, and your wife relied upon that representation, it is not good if she comes back in and says well that business is really worth $10,000,000, not $10,000.

Alan Gassman: Wow.

Ky Koch: Those are the kind of things that you need to be cautious of in drafting these agreements and attaching financial disclosures.

Alan Gassman: In the basic elements there’s no mention that there has to be a lawyer representing either party.

Judge Jirotka: That is correct.

Alan Gassman: So people are going to bookstores, I guess, and buying these agreements.  Those are going to be interesting, but Ky what’s your attitude when you draft one of these agreements and the other party just signs it and sends it back?  Do you require them to have a lawyer?

Ky Koch: Well, those are difficult situations, but you’ve got the agreement packed with language saying the undersigned has been advised to seek counsel and have this agreement in their possession for X number of days, weeks or months.  They have either sought counsel or have chosen not to do it and they’re doing so at their peril.  Judge Jirotka’s going to talk in a minute about a case he was just alluding to and that’s about representation of lawyers.

Judge Jirotka: Ky, if I could just ask in your preparing of these type of agreements and the disclosure aspect that Alan was talking about, would you attach the monied spouse’s financials to the agreement as an exhibit or would you do a separate document, or refer to it or how would you do that?

Ky Koch: In every instance we have it attached to the agreement.

Judge Jirotka: So it would be a copy – for example of the then current brokerage statement?

Ky Koch: Exactly, and I would make it as complete as possible.  I’ll have a summary sheet, which would be a financial statement, and then backup.

Profiled “Dualinars” of the Week:

A dualinar is two seminars profiled at once in a weekly report – Webster’s World Dictionary

Financial Planning Association of Tampa Bay 2013 Florida Symposium

Zahan

 

This two day intensive financial planning seminar will take place next Monday and Tuesday, August 19 and Tuesday, August 20 and is called FPA of Tampa Bay 2013 Florida Symposium at the Marriott Westshore Tampa, 1001 N Westshore Blvd.

Alan Gassman will be joining Ken Zahn, CFP at the Financial Planning Association (FPA) Tampa Bay 2013 Florida Symposium.   Ken Zahn and Alan Gassman will speak Monday, August 19 from 3pm until 5pm on the mechanics of the federal estate tax and use of the new software program developed by Gassman Law Associates, which will be distributed at no charge to attendees.

Ken Zahn, is a very well known and respected CFP course author and lecturer.  He has a great sense of humor, amazing common sense, and most importantly he reads the Thursday Report.  Ken has also provided us with very good advice for the next improved version of our software.

Other notable speakers at the Symposium include Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC and Dale Van Scoyk, GFS.  On Tuesday afternoon there will be a 2 hour program that will fulfill the CFP ethics portion of the recertification process.  For more information and to register for this webinar please click here.

Please plan to attend this excellent event.

Third Annual Federal Tax Institute of New England

Federal Tax pictures

The Federal Tax Institute of New England is hosting its Third Annual Comprehensive All-Day Program for 2013 and Beyond on Friday, September 27, 2013 in Farmington, Connecticut.  Speakers for the event include Professor Jerry Hesch, Bruce Stone, Ronald Aucutt and Lawrence Brody to name just a few.  This will be a fantastic event that you will not want to miss.  Click here for more information.

 Weekend in New England (our lyrics by Barry Taxesmelow are based off of the lyrics and song by Barry Manilow)

Time in New England.

Took me away.

To a tax deductible seminar.

Hip hip hooray.

I got to see Bruce Stone and Jerry by the Bay.

Not to mention Larry Brody, a bell man with a goatee.

With nice cool weather I Wish I could stay.

When will our forms meet?

When can I PowerPoint?

Why will this strong seminar have to end?

Even Barry Manilow may attend this fantastic one-day seminar in Farmington.

Fly into Hartford on Thursday afternoon and enjoy a day by Batterson Pond Park.

Attend the seminar on Friday, and then drive along I84 to see the leaves change.

Listen to continuing education tapes on the way and discuss them with your extremely tolerant significant other.

Rooms are available at the Hartford Marriot Farmington Hotel.

If you have never seen Connecticut or if you have seen it and want to go back, here is your opportunity.

And who signed the Declaration of Independence for Connecticut?

It was none other than Samuel Huntington, Roger Sherman, William Williams, and Oliver Wolcott.

11 Steps to Happiness at Work, a Profile of Dr. Srikumar Rao’s book Happiness at Work 

Rao with quote

 

Dr. Srikumar Rao is the creator of the groundbreaking program Creativity and Personal Mastery in which he has helped thousands of professionals find happiness in their professional and personal lives.  He is also the author of two acclaimed books, Happiness at Work and Are You Ready to Succeed.

Dr. Rao will be visiting us in Clearwater the week of October 7, 2013.  He will be speaking at a Meet & Greet cocktail party and a half-day workshop.

The topic for the Wednesday, October 9, 2013 Meet & Greet is “Good Thing – Bad Thing – Who Knows? Changing Your Immediate and Long-Term Responses to Events and Challenges.”  This event will take place at the Holiday Inn Express on U.S. 19 and Gulf-to-Bay Blvd. in Clearwater and begins at 6pm with wine and hors d’oeuvres.  All Thursday Report readers are invited to attend the cocktail party and can register for the event by clicking here.

On Saturday, October 12, 2013, Gassman Law Associates, Dean & Associates CPAs, LLLP and Spine & Orthopedic Center, P.A. will sponsor a half-day workshop with Dr. Rao on Enhanced Effectiveness and Enjoyment of Your Professional and Personal Life.  The cost of the workshop is $575, however if you register before September 1, 2013 you will pay the discounted rate of $495.  Full time students and medical interns and fellows can attend for $285.  This workshop will also take place at the Holiday Inn Express on U.S. 19 and Gulf-to-Bay Blvd.  The program begins promptly at 1pm and will end around 6pm.  There will be an optional question and answer session with Dr. Rao after a brief dinner break.  If you would like to attend the half-day workshop please click here to register.

Dr. Rao’s program began in top business schools including Columbia Business School and the London School of Business.  Through the years he has honed his expertise into a series of tools and exercises designed to help you rid yourself of the stresses of daily life, learn to appreciate the things you have and look toward the future with a clear vision of the path ahead.  The half-day workshop will touch on a few of the tools that Dr. Rao teaches in his program.

Forbes writer, Jacquelyn Smith, has written a profile on Dr. Rao’s book Happiness at Work that is quite instructive.

To achieve greater happiness at work, you don’t need your boss to stop calling you at night. You don’t need to make more money. You don’t need to follow your dream of being a sommelier, or running a B&B in Vermont. So says Srikumar Rao, the author of Happiness at Work. The biggest obstacle to happiness is simply your belief that you’re the prisoner of circumstance, powerless before the things that happen to you, he says. “We create our own experience,” he adds. Here are 11 steps to happiness at work, drawn from his recommendations.

1. Avoid “good” and “bad” labels. When something bad happens, don’t beat yourself up, says Rao. Instead, when you make an error, be aware of it without passing judgment. “Do what you have to do, but don’t surrender your calmness and sense of peace.”  For example, if you make a mistake at work the best thing to do is to realize your mistake, figure out what you can learn from the mistake and then move past it.  Dwelling on the mistake only leads to further mistakes and can lead to a bad day all around.

2. Practice “extreme resilience.” Rao defines “extreme resilience” as the ability to recover fast from adversity. “You spend much time in needless, fruitless self-recrimination and blaming others,” he writes. “You go on pointless guilt trips and make excuses that you know are fatuous. If you’re resilient, you recover and go on to do great things.” (He also says that if you fully take his advice to avoid “bad thing” labels, you don’t have to practice resilience at all.)

3. Let go of grudges.  Rao says that a key to being happy at work is to let go of grudges. “Consciously drop the past,” he writes. “It’s hard, but with practice you will get the hang of it.”

4. Don’t waste time being jealous.  “When you’re jealous you’re saying that the universe is limited and there is not enough success in it for me,” says Rao. “Instead, be happy, because whatever happened to him will happen to you in your current job or at another company.”

5. Find passion in you, not in your job.  Sure, you can fantasize about a dream job that pays you better and allows you to do some kind of social good, work with brilliant and likable colleagues and still be home in time for dinner, but Rao warns against searching for that perfect position, or even believing that it exists. Instead, he advocates changing how you think about your current situation. For example, instead of thinking of yourself as a human resources manager at a bank, identify yourself as someone who helps other bank employees provide for their families, take advantage of their benefits and save for the future.

6. Don’t view people as mechanisms.  “Much of the time we evaluate other persons in terms of what they can do for us,” Rao says. “[For instance], we are super nice to senior executives because of the help they can give us.” Don’t relate to people in terms of the role they play; rather relate to them as one human being to another–“and serve them because that is what you are on Earth to do.”

7. Picture yourself 10 years ago and 10 years from now.  “Most problems that kept you awake ten years ago have disappeared,” says Rao. “Much of what troubles you today will also vanish. Realizing this truth will help you gain perspective.”

Even in corporate America, where so much of work is every man for him or herself, Rao advocates inhabiting an “other-centered universe.” If the nice guy gets passed over for a promotion, he still may succeed in less tangible ways or land an even better job down the road. “They may rise later in the shootout,” says Rao. “I’m challenging the assumption that you need to be a dog-eat-dog person to survive in a corporate environment.”

8. Banish the “if/then” model of happiness.  Rao says that many of us rely on a flawed “if/then” model for happiness. If we become CEO, then we’ll be happy. If we make a six-figure salary, then we’ll be happy. “There is nothing that you have to get, do or be in order to be happy,” he writes.  To see Dr. Rao’s TED video please click here.

9. Invest in the process, not the outcome.  “Outcomes are totally beyond your control,” Rao writes. You’ll set yourself up for disappointment if you focus too much on what you hope to achieve rather than how you plan to get there.

10. Think about other people.  Even in corporate America, where so much of work is every man for him or herself, Rao advocates inhabiting an “other-centered universe.”

11. Swap multitasking for mindfulness.  Rao thinks that multitasking gets in the way of happiness. “Multitasking simply means that you do many things badly and take much more time at it,” he writes. He recommends instead working on tasks for 20-minute intervals that you gradually increase to two-hour spans. Turn off any electronic gadgets that can be a distraction. He claims that with practice, you’ll be able to accomplish much more and with less effort.

Dr. Rao was also featured in a new article on Fast Company.  To view the article please click here.

For more information or to attend either program please email agassman@gassmanpa.com.

Thursday Report Humor

Our copyrighted joke:

What do you call a wallaby with gangrene? 

Click here for the answer to our copyrighted joke.

Permission to use this joke is given only to those who receive the Thursday Report and like it!

Colonel Sanders and the Pope

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 a favor for me.” 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, a million dollars! But then says no.

The next day, Colonel Sanders calls back. “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 that we just lost the Wonder Bread account.”

Phil Rarick’s Fantastic and Informative Client Blog Entries: Florida Homestead: Three Tricky Issues to Watch

Rarick

 

Our friend Phil Rarick of Rarick, Beskin & Garcia Vega, P.A. in Miami has been kind enough to allow us to provide one of his excellent client communications articles each week until you have read all of them.

Phil Rarick has 30 years of experience in both private and public legal work. Mr. Rarick concentrates in the fields of estate planning (wills and trusts), asset protection, probate, and corporate law. Integrated asset protection with an estate plan designed to protect wealth and secure tax advantages are a primary focus of his practice. He is an active member of the Elder Law Section of the Florida Bar, and the Real Property, Probate and Trust Law section of the Florida Bar Association.

Mr. Rarick is the author of a number of popular guides for fellow attorneys and the public, including Florida Probate Quick Reference Guide and Understanding Living Trusts for Florida Residents.

Mr. Rarick is the President of the Miami Lakes Bar Association, and served as a Director of the Association since its founding in 2005.

This week’s entry is entitled Florida Homestead: Three Tricky Issues to Watch and can be found by clicking here.

Have you considered writing articles like this for your clients and for those in your community?

Phil sets a great example for this.

Visit his website at www.rbgvlaw.com

In-State Means In-State:  A Quick Overview of the Residency Requirements for In-State Tuition at Florida’s Public Universities – It’s Not What You Think It Is

By: Alan S. Gassman and Eric Brooks

We are fortunate to have a very good university system in Florida.  Many of us had not expected that this would ever occur.

The difference between being a Florida resident and not being a Florida resident for tuition purposes is significant.

The following are the full-time annual tuition amounts that someone would expect to pay to go to Florida’s 4 largest state universities and selected private schools for the 2013 – 2014 academic year (based on 30 credit hours).

Name of University  Number of Students  Floridian Tuition  Non-Floridian Tuition
 University of Florida 32,776 $6,263.10 $28,540.20
Florida State University 32,171 $6,506.50 $21,673.00
University of South Florida (Tampa) 30,289 $6,409.70 $19,664.90
University of Central Florida 50,968 $6,317.10 $22,415.40
Flagler College (private) 2,588 $16,180.00 $16,180.00
University of Miami (private) 10,590 $41,580.00 $41,580.00
Rollins College (private) 1,884 $41,460.00 $41,460.00

*The above assumes that the student takes off the summer to catch up on Thursday Report readings and work at Kentucky Fried Chicken!

 

There is obviously a staggering difference between what a Floridian and a non-Floridian will pay at the state schools.

What does it take to be a Floridian for tuition purposes?

That answer can be as complicated as many tax questions, and advance planning may be essential.

In 2005 the Florida Board of Governors standardized the residency requirements for in-state tuition at all public universities.

Gone are the days of paying out-of-state tuition for the first year, staying around during the summer to qualify for in-state tuition thereafter.  That is still possible, but no longer simple.

Here is the methodology to follow to determine whether in-state tuition is possible:

A.        Is the student dependent or independent?  If the student is independent then you can skip to Step C below.

Your family must determine if the student will be classified as “dependent” or “independent.”  The State of Florida defines a dependent child for tuition purposes as a person who is eligible to be claimed by his or her parent as a dependent (aka, “a qualifying child”) under the federal income tax code.

To qualify as a dependent, all four of the following four tests must be met:

1. Relationship Test – the student meets the relationship test if he or she is a child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these. 25 U.S.C.A. § 152(d)(2) (West 2013).

2. Residence Test – the student must have “the same principal place of abode as the [parent/guardian] for more than one-half of such taxable year. 25 U.S.C.A. § 152(c)(1)(B).

3. Age Test – the student must be younger than the parent/guardian claiming the student as a dependent and is under the age of 24. 25 U.S.C.A. § 152(c)(3).

4. Support Test – the student seeking dependency must not have provided more than one-half of his or her own support for the year. 25 U.S.C.A. § 152(c)(1)(D).

B.        Which family member will be used to qualify the student as a resident for in-state tuition?

Once you have determined whether the student is dependent or independent you can then decide which family member will be the basis for your student’s residency claim.  If you decided that the student was independent, the student will be used as the basis for residency.  The more common determination is that the student is still a dependent.  In this case, either parent can be used as the basis for determining residency.  This leads us to our final and most important question;

C.        Does the family member claiming residency qualify as a Florida resident for tuition purposes?

The student or parent claiming residency must have established a legal residence in Florida and maintained that residence for at least 12 consecutive months immediately prior to the student’s initial enrollment in an institution of higher education. There must also be proof that the claimed residency is the product of a “bona fide” domicile, which is one’s intention to reside in Florida in comparison to a temporary arrangement made in order to qualify for a lower tuition rate.

What follows is the (nonexhaustive) statutory list of potential forms of residency evidence a college or university’s admissions department would evaluate when considering a claim for Florida residency.

Verification of residency includes two or more of the following documents:

1. The documents must include at least one of the following:

  1. A Florida voter’s registration card.
  2. A Florida driver’s license.
  3. A State of Florida identification card.
  4. A Florida vehicle registration.
  5. Proof of a permanent home in Florida which is occupied as a primary residence by the individual or by the individual’s parent if the individual is a dependent child.
  6. Proof of a homestead exemption in Florida.
  7. Transcripts from a Florida high school for multiple years if the Florida high school diploma or GED was earned within the last 12 months.
  8. Proof of permanent full-time employment in Florida for at least 30 hours per week for a 12-month period.

And may include one or more of the following documents:

    1. A declaration of domicile in Florida.
    2. A Florida professional or occupational license.
    3. Florida incorporation.
    4. A document evidencing family ties in Florida.
    5. Proof of membership in a Florida-based charitable or professional organization.
    6. Any other documentation that supports the student’s request for resident status, including, but not limited to, utility bills and proof of 12 consecutive months of payments; a lease agreement and proof of 12 consecutive months of payments; or an official state, federal, or court document evidencing legal ties to Florida.

Definition of the Week and a Quick Contest

Demur as a verb is defined as: Raise doubts or objections or show reluctance.

Next week’s Thursday Report will cover the noun demur.

Contest: The first five readers who click here will be before everyone else.

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

August 2013 Annual 0.28% Annual 1.63% Annual 3.16%
  Semi-Annual 0.28% Semi-Annual 1.62% Semi-Annual 3.14%
  Quarterly 0.28% Quarterly 1.62% Quarterly 3.13%
  Monthly 0.28% Monthly 1.61% Monthly 3.12%
July 2013 Annual 0.23% Annual 1.22% Annual 2.80%
  Semi-Annual 0.23% Semi-Annual 1.22% Semi-Annual 2.78%
  Quarterly 0.23% Quarterly 1.22% Quarterly 2.77%
  Monthly 0.23% Monthly 1.22% Monthly 2.76%
June 2013 Annual 0.18% Annual 0.95% Annual 2.47%
  Semi-Annual 0.18% Semi-Annual 0.95% Semi-Annual 2.45%
  Quarterly 0.18% Quarterly 0.95% Quarterly 2.44%
  Monthly 0.18% Monthly 0.95% Monthly 2.44%

The 7520 Rate for August is 2.0% and for July was 1.4%.

Seminars and Webinars

  • FINANCIAL PLANNING ASSOCIATION (FPA) TAMPA BAY 2013 FLORIDA SYMPOSIUM

Alan Gassman will be joining Ken Zahn, CFP for a joint seminar on A Brief Introduction on the Art of Wealth Protection Planning. This seminar will also include a demonstration of our new EstateView Estate Planning Software.  Attendees will also receive a link to download the software to use on their own clients’ matters for a number of weeks.  For more information and to register for this webinar please click here.

Ken Zahn is probably the best known CFP course teacher in the country.  Thousands of certified financial planners have taken Ken’s course, and it is highly recommended for anyone in the financial, legal, or tax services business.  You can access Ken’s excellent website by clicking here.

Date: Monday, August 19, 2013 | 3:00 – 5:00 p.m.

Speakers: Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC, Ken Zahn, CFP and Alan Gassman, JD, LL.M.

Location: Marriott Westshore Tampa, 1001 N. Westshore Blvd, Tampa, Florida

Additional Information: For more information and to register for this webinar please click here.

  • THE JOINT EXEMPT STEP-UP TRUST (JEST) TELESEMINAR WITH ALAN GASSMAN AND CHRISTOPHER DENICOLO

Many lawyers are using our Joint Exempt Step Up Trust to enable clients in non-community property states to receive a stepped-up basis on all “joint trust assets” on the death of the first dying spouse.  Our Leimberg article on the Joint Exempt Step-Up Trust can be viewed by clicking here and the accompanying chart can be viewed by clicking here.

The Ultimate Estate Planner, Inc. is also featuring our Joint Exempt Step Up Trust forms, client explanation letter and other materials on their website.  To order the forms you can click here.

Date: Wednesday, August 21, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  The cost of the teleseminar is $139 for the teleseminar only or $189 if you would like to receive both the teleseminar and the accompanying PowerPoint and downloadable PDF materials.  For more information and to register please click hereThe JEST Trust will also be discussed at the Notre Dame Tax Institute in September by Paul Lee and attorney Barry.

LEGISLATIVE UPDATE – AUGUST 444 SHOW

Join us on Thursday, August 24, 2013 for The 444 Show.  This month we will be speaking on the new legislative update with Sandra Diamond, Aimee Diazlyon and Jim Daughton.  The webinar qualifies for 1 hour of continuing education credit.

Date: Thursday, August 24, 2013 | 4:00 p.m (50 Minutes)

Speakers: Sandra Diamond, Aimee Diazlyon and Jim Daughton

Sponsor: The Clearwater Bar Association.

Additional Information: To register for this webinar please click here or email Janine Gunyan at Janine@gassmanpa.com

  • WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presenter: Rob Cochran

Location: Online webinar

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

  • AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m. and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

  • NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA, PhD, SOB

Location: Online webinar

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

  • NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Christopher Denicolo and Tom Davis will speak on the Affordable Care Act; Alan Gassman will be speaking on a topic to be determined.

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

  • WEDU ESTATE PLANNING SEMINAR  

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berman Family Broadcast Center

Additional Information:  If you would like to sign up for this seminar please click here.

  • NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

      Date: Wednesday, October 16 through Friday, October 18, 2013

      Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.  Also Paul and attorney Barry will be discussing stepped-up basis tools and techniques, including our JEST Trust.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

  • PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Other Speakers: Other speakers include Barry Flagg on Insurance and Estate Planning; Sean Casey, SR. VP Fifth Third Bank on an Economic Update, and Sandra Diamond on a topic to be determined.

Additional Information: To attend the meeting or to receive information on joining the Council please click here or email agassman@gassmanpa.com

  • 2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

DECODING HEALTHCARE SEMINAR

Alan Gassman will be moderating the Decoding Healthcare Seminar hosted by Fifth Third Bank.

Date: Tuesday, October 29, 2013

Location: Grand Hyatt, 2900 Bayport Drive, Tampa, Florida

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

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

  • SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email 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.

NOTABLE SEMINARS PRESENTED BY OTHERS:

  • MEDITATION, Science, Spirituality, Sustainability – An Experimental Workshop by the Bridge and Maulik K. Trivedi, M.D.

On Saturday, September 28, 2013 from 10 am to 1pm the Bridge, a not-for-profit organization that promotes ecocentric living, social justice and personal development is providing a 3 hour workshop on Meditation.  The session will be administered by integral psychiatrist and Yogi, Dr. Maulik K. Trivedi and will be accompanied by accomplished sitar player, Douglas Werner.  For more information on this event, please click here.

Date: Saturday, September 28, 2013 | 10am – 1pm

Location: Carrollwood Cultural Center, 4537 Lowell Road, Tampa

Additional Details: The cost for attending this workshop is $45 and you can register by clicking here or call 813-416-3069 for more information.

  • THIRD ANNUAL FEDERAL TAX INSTITUTE OF NEW ENGLAND

Date: September 27, 2013

Location: Hartford Marriot Farmington Hotel, Farmington, Connecticut

Sponsor: Connecticut Bar Institute

Additional Information: Chairman Frank Berall will be using part of an earlier Thursday Report article on same-sex planning in his presentation. You can also catch an early dose of Jerry Hesch’s talk on Income Tax Ideas for Estate Planning here before the Notre Dame Tax Institute in October, and Bruce Stone will be speaking on Assisted Reproductive Technology Children.  For more information or to register please visit the Institute’s site here.

  • 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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – Is Col. Sanders in Witness Protection?

Posted on: August 8th, 2013

No Comments

“Pleasure in the job puts perfection in the work”

Aristotle

Ken Crotty’s LLC Clinic – Statement of Authority

Pre-Nuptial and Post-Nuptial Agreements: An Interview with noted divorce attorney, Ky Koch and Judge George Jirotka – Part 1 of a 7 Part Series

Clayton Kreis’ Excellent Advisor Checklist

Four Questions Asked by a New Doctor Approached by Various Salespeople

Great Morning Tampa Event for WEDU PBS

Back by Popular Demand – More Ogden Nash Poems

Research on Google 

IS ANYONE INVESTIGATING COLONEL SANDERS, AND WHY? 

While Colonel Sanders reportedly died in 1980, perhaps he was hidden away because of the FBI’s 1970 investigation file.  Perhaps the opening of the new KFC “11” stores that will not feature his likeness or name is a further step in this direction.  In 1970 Colonel Sanders sent J. Edgar Hoover an invitation to his 80th birthday party and promised to provide him with a bribe – personalized transportation if he would attend.  J. Edgar Hoover did not attend. Click here to read the letter from Colonel Sanders to Hoover.

It may or may not be true that the government is still investigating many of these people, and those who have associated with him, but it is not true that Alan S. Gassman has gone into hiding.  Nevertheless, changing identities can sometimes be a good thing.  Click here to see a possible costume that would confuse even the best federal agencies.

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.

Our LLC Clinic – Statement of Authority Rules by Ken Crotty and Alan S. Gassman

Have you ever wondered what prevents someone from making themselves a Manager of an LLC on Sunbiz and proceeding to buy or mortgage real estate, or go to a bank and withdraw money without the knowledge or approval of the LLC owners?

The new Statement of Authority law that was passed this year provides that third parties will be bound by appropriately filed Statements of Authority under the circumstances described below.

Drafting and maintaining an appropriate Statement of Authority will therefore be a very important function for those of us who form and/or maintain limited liability companies.

This law arises under Florida Statute Section 605.0302, which you can read by clicking here.

Please note that to be binding upon real estate the Statement of Authority must be not only filed with the Secretary of State, but a certified copy of the Statement has to be recorded in the public records of the county where the real property is located.

One of the new items introduced by the 2013 Florida LLC Act is the concept of a Statement of Authority (“Statement”). Pursuant to Section 605.0302 of the Act, a limited liability company may now file a Statement with the department.

The Statement can specify the authority or limitation of authority for Members, Managers, Officers, and others to act. The Statement can also provide that one or more of such individuals have the authority or do not have the authority to do any of the following:

1. Execute an instrument;

2. Transfer real property held in the name of the LLC;

3. Enter into transactions on behalf of the LLC; and

4. Act for or bind the LLC

It is important to note that Statements of Authority will expire five years after they have been filed, so a calendar system needs to be set up for this. The Amendment of a Statement will be considered an extension so that the 5 years restarts upon the filing of the Amendment.

Any Amendment or cancellation must include the name of the LLC, the street and mailing address of its principal office, the date the Statement became effective, and a description of how the original Statement is being amended or a declaration that the original Statement is being cancelled.

If a Statement has been filed which grants authority to an individual (except for transfers of real property) and a third person gives value in reliance on this Statement, then such person is entitled to rely on the Statement unless (a) the person had knowledge to the contrary; (b) the Statement had been amended or cancelled; or (c) another Statement limiting the authority had been filed.

For transfers of real property, if a certified copy of the Statement has been filed in the appropriate recording office then a person who gives value in reliance on this Statement is entitled to rely on the Statement unless (a) the Statement had been amended or cancelled and a certified copy of the amendment or cancellation has been filed with the appropriate recording office; or (b) another certified Statement limiting the authority had been filed with the appropriate recording office.

Therefore, if the LLC is concerned that an individual or entity may attempt to transfer real estate owned by the LLC, then the LLC should file a certified Statement of Limitation with the appropriate recording office. If a certified Statement of Limitation is filed, then all persons are deemed to know of the limitation contained in the Statement of Authority and the property would be protected. Because of this, practitioners should be filing Statements of Authority for their clients’ LLCs in the counties where the LLCs have real property to provide additional protection for these assets.

Generally when Articles of Dissolution are filed or a termination of an LLC occurs this cancels any Statements of Authority that the LLC filed. It is possible for the LLC to record a Statement of Authority which is designated as a post-dissolution Statement of Authority to grant a person or entity the authority or limit the authority of a person or entity to transfer real property that had been owned by the LLC.

If a person disassociates from an LLC or resigns from an LLC and such person files a Statement of Resignation pursuant to Section 605.0216, this Statement of Resignation will terminate the authority of the person contained in the original Statement.

Section 605.0303 of the Act provides that a person who has been granted authority in a Statement may deny the authority. Such person must file a Statement with the department signed by the person that provides the name of the LLC, the caption of the Statement of Authority to which the statement or denial pertains, and that the person denies the grant of authority.

If you would like to read the entire Florida Statute Section 605, please click here.

Pre-Nuptial and Post-Nuptial Agreement Traps and Strategies – A Very Interesting Interview with Board- Certified Family Lawyer Ky Koch and Judge George Jirotka – Part 1 of a 7 Part Series

Koch and Jirotka

Alan Gassman was fortunate enough to interview Ky Koch and Judge George Jirotka in a Clearwater Bar sponsored 444 Show on Thursday, May 23, 2013.  The 50 minute recording of this interesting webinar, along with an informative PowerPoint presentation, can be purchased from the Clearwater Bar Association for $30 (less than 2 buckets of chicken – but if you have the choice go for the chicken) by clicking here.  The webinar qualifies for 1 hour of continuing education credit and is an extremely interesting and informative presentation.

Ky Koch is a board certified marital and family lawyer with the firm of Koch and Hoffman, P.A.  He has been practicing law since 1978.  He is a fellow of the American Academy of Matrimonial Lawyers and the International Academy of Matrimonial Lawyers.  Mr. Koch has also previously served as President of the Clearwater Bar Association and can be reached at kkoch@kh-pa.com or 727-446-6248.

Judge George M. Jirotka is a judge of the Sixth Judicial Circuit in Pinellas County.  He received his master’s degree in business administration from the University of Chicago and his law degree from the University of Texas and was admitted to the Bar in 1983.  Prior to becoming a judge, he worked for Fowler White Boggs Banker in the Government, Environmental and Land Department Real Estate Practice Group.  Judge Jirotka also served as mayor of Belleair Shores from 1991 until 1998.

Part One of this series introduces the reader to the present overall status of prenuptial agreement statutory law and caselaw, and talks about prominent malpractice traps and how to get clients prepared for what they can encounter in the prenuptial agreement universe.

  • On Thursday, August 15, 2013, How much disclosure is enough disclosure, whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure and circumstances by video-taped interview or written correspondence.
  • On Thursday, August 22, 2013, Whether both parties need to have lawyers, and questions to ask the lawyer or spouse you are not representing to document appropriate disclosure circumstances by video-taped interview or written correspondence.
  • On Thursday, August 29, 2013, Discussion of Castro v. Castro and Belcher v. Belcher, and what they mean for clients and lawyers who are involved in the pre and post nuptial agreement planning.
  • On Thursday, September 5, 2013, Alimony and lawyer fee obligations that may not be waivable in pre-nuptial or post nuptial agreements, and offset clauses and other ways to handle these.
  • On Thursday, September 12, 2013, Bifurcation – whether you can require the validity of the pre-nuptial or post-nuptial agreement be litigated or also before having to also litigate what the result could be if it is or is not enforceable.
  • On Thursday, September 19, 2013, How to keep marital and asset information confidential in a divorce scenario, arbitration, and the Roddy v. Roddy case.

Below is part 1 of the 7 part interview:

Alan Gassman: Ky and Judge Jirotka, thank you so much for being here with us today.  You both have a significant amount of knowledge in the family law area, and with respect to the new Florida Statute Section 61.079, which is entitled the Uniform Premarital Agreement Act and was enacted effective October 1, 2007.

Ky Koch: Thanks Alan.  By way of background, this act came into effect in Florida in 2007.  There are now 26 states that have some form of this law, and though not identical, most of them are awfully close in nature.  Since it was enacted in 2007, we don’t have any case law interpreting it in Florida.  It’s a relatively short time to have negotiated a pre-nuptial agreement, been married, divorced, and be up on appeal.  I’m sure we’ll be seeing some cases here real soon, because six years is about the right time to get from point A to point B.

The Uniform Act was meant to make the drafting, interpretation and enforcement of pre-marital agreements much more predictable and frankly, easier to enforce.  It has pretty much embodied the case law that existed prior to that time and streamlined it into a one page statute.

The bottom line of this new statute is that the prenuptial agreement must be in writing and must have been signed by each of the two parties.  That’s also in the prior case law.  Consideration for a prenuptial agreement only needs to be the marriage itself.  There need not be any other particular consideration, and that’s embodied very explicitly in the statute.

Amendment and abandonment of the agreement can only occur also upon a written or signed agreement.  Here’s where we get into the items that Judge Jirotka sees, I’m sure on almost a daily basis, and that is how do you set aside a prenuptial agreement?  Perhaps you could comment on that for us, Judge.

Judge Jirotka: Well we don’t see them all that often in terms of being contested.  It may have to do with the fact that the prenuptial agreements are usually entered into not in a first marriage, but rather the second and subsequent marriages.  They generally are entered into by spouses that come into the marriage with unequal footing.

The issues that we most often see are involuntary execution, fraud, duress, coercion, overreaching, and largely the issue of unconscionability, ‘he or she didn’t tell me what he or she owned,’ or financial disclosure, ‘he or she made me sign this two minutes before the priest came in.’

Ky Koch: ‘Hey honey, I’ve got something for you to look at.’

Judge Jirotka: Exactly!  The ones that I have seen as a judge fall into two categories.  One is lack of full disclosure or the allegation of lack of full disclosure.  I’d say of the cases that I’ve seen, that’s got to be 75% or higher.  The remaining cases that I’ve seen are he or she gave it to me after we signed the caterer’s agreement or something like that.

Ky Koch: Whether it was pressure bearing from the wedding contingency?

Judge Jirotka: Right, the invitations already went out.  Those are the two areas that we see the most.

Ky Koch: I would agree.  You know as a practitioner several issues come up. I have seen from personal experience that prenuptial agreements are a malpractice trap extraordinaire for a million reasons.

One reason is that the law changes over time.  Two is you are virtually trying to crystal ball a situation where people’s assets and debts are frozen in time as of today – the day you’re drafting the pre-nup until what happens 15, 20 years from now.  That’s virtually impossible as we all know, and circumstances change.  Trying to address all of those eventualities in a form of a written document is difficult.

I try to charge as much money as I can get out of my mouth when quoting a fee because these things are so darned hard.  People are in love and wanting to get married and excited about the wedding and have family coming in, and at the same time you’re negotiating their divorce.  And it is just hard.  There is no other way to describe it.

Alan Gassman: It’s a character test.  The client tells us that the spouse-to-be is absolutely in love with the client, but then this love seems to be tested when a reasonable prenuptial agreement is presented, and the person who loves my client so much no longer seems to love him or her as much when the monetary rewards for marriage are reduced.

Fairness is in the eye of the beholder, and it’s an interesting dynamic because of the emotions that are swirling around the negotiations.  You, as the lawyer, are expected to keep them together as a couple and negotiate their divorce for them at the same time, and it is not easy.

Judge Jirotka: Ky, what percentage would you say that you negotiate as being the first drafter as opposed to being the receiving attorney?

Ky Koch: Well it’s a lot easier being on the receiving side, because typically that is the less-wealthy spouse you are working for.  When you’re drafting, it’s the monied spouse.  That’s where the issues come and that’s where the rubber meets the road.  It’s much more difficult from that side than it is from the receiving side.  I think I probably see about 50% of each.

Alan Gassman: What do you tell your clients when you get them successfully divorced about their next love event and marriage?  How do you prep that?  What are your clients’ preconceptions about prenuptial agreements?  They must ask you about it during the divorce as they contemplate their next situation.

Ky Koch: I get asked that a lot and I tell them that I am a proponent of prenuptial agreements. They work. And they are enforceable in the State of Florida.  I tell them basically what we just talked about here, which is that they are very difficult because of the dynamics in the relationship while you’re negotiating their potential divorce.  I also tell them that when you negotiate a prenuptial agreement you are buying yourself perhaps two phases of litigation in divorce.

The first one is a phase of ligation dealing with validity or invalidity of the agreement, and if that doesn’t go so well a second phase is the divorce itself.  In doing a prenuptial agreement, typically the non-monied spouse has nothing to lose by litigating, because the worst they’re going to get is the enforcement of the prenup.  It only goes up from there, so that’s an issue that I think everybody’s got to look at when they talk about a prenuptial agreement.

Judge Jirotka: I agree, and temporary fees cannot be prohibited by the prenup.

Ky Koch: Yep, that’s true.  Judge Jirotka’s talking about the Belcher v. Belcher case out of our Supreme Court, which says that temporary attorney fees and temporary support cannot be signed away.  If they are addressed in the prenuptial agreement they’re unenforceable, and the court is duty bound to impose temporary alimony and temporary attorney fees.

Alan Gassman: Can that come out of eventual other things that happen?  Can they reduce the eventual property settlement?

Ky Koch: I have attempted that in the few prenuptial agreements I’ve done recently, where you set off against an ultimate award whatever the court order is for temporary alimony and temporary fees.  There’s case law on the topic that goes both directions.  I’m not convinced that you can do that, but why not build it into an agreement?  There’s no downside to trying it.

We thank Ky Koch and Judge Jirotka for their expert advice on this subject.

Stay tuned for next week’s discussion!

Clayton Kreis Checklist

Kreis with quotes

 

Clayton Kreis of Garcia & Ortiz, P.A. was kind enough to share the non-tax items from his excellent Year-End Planning Checklist that he provides for all corporate clients.

We were impressed at how he succinctly and efficiently covers many practical matters that client should be reminded to attend to periodically.

Clayton is truly a renaissance advisor when it comes to what he does for clients of the Garcia & Ortiz firm in St. Petersburg.  His consulting services include tax planning, compliance, financial reporting, structuring buy/sell agreements, accounting software implementation, fringe benefit programs, administration, financial budgeting, compensation planning, sales and purchases of businesses, and restructuring professional associations, as well as a wide variety of investment advisory consulting experience.

Excerpts from Clayton’s checklist are shown below.

1. Legal

a. Meet annually with your corporate attorney to review your Employment Contracts, Buy/Sell Agreements and other arrangements to ensure compliance with both federal and state laws.

b. Review your real estate lease to verify the renewal date.

c. Prepare yourself to negotiate leases in advance of due date to be sure you maximize your alternatives.

d. Confirm you are paying sales tax on all commercial leases.

e. Review terms and purchase options on equipment leases. Maintain a list of lease termination dates.

f. Update your corporate minutes annually. The increase in Federal and State audits may result in a request of your corporate minutes to verify compliance.

g. Review your Annual Report filed with the Florida Department of State for correct listing of officers, directors, and registered agent. This filing is due May 1 each year to avoid late filing penalties, or losing your corporate status.

h. Review your personal estate plan – Wills, Trusts, Durable Powers of Attorney, and Living Wills. Potential changes are possible in the next few years.

i. Review all legal documents that are older than five years.

j. Review your asset protection strategy, when applicable, with legal counsel.

k. Review unclaimed property with legal counsel. Property held by your company on behalf of others, such as un-cashed checks, deposits, credit balances, etc., may be owed to the State of Florida.

2. Insurance

a. Meet annually with your life, property, casualty, and workers’ compensation insurance agent. Confirm your policy coverage meets the business needs. Analyze the cost benefit of increasing your deductible to reduce the premium cost.

b. Review policy beneficiaries annually.

c. Identify with your insurance agent the areas of risk that may lack coverage, such as cyber security or business use of an employee owned vehicle.

d. Review your business and personal umbrella liability coverage.

e. Review your business interruption insurance coverage and deficiencies.

f. Review your disability insurance coverage. Identify age limitations and other policy limitations. Determine the time frame you need disability insurance and who should pay the premiums. Evaluate the tax benefit of having the premiums paid personally. Review benefits vs. cost if you are 65 years or older.

g. Review life insurance needs. Understand the advantages and disadvantages of the different types of products offered. Verify the accumulation value of your policy annually. Discuss with the agent any changes that have occurred.

h. Loans against life insurance policies can result in taxable gains upon sale, surrender, or exchanges. Review tax implications prior to changes.

i. Review your long term care insurance needs.

j. Obtain quotes on your health insurance policy 60 days in advance of the renewal date. Review with your agent the current trends businesses are utilizing, such as Health Savings Accounts, increased deductibles, different carriers, company payment, etc.

k. If you utilize an employee leasing company and plan on discontinuing or starting the service, schedule the change to occur at the end of the calendar year.

3. Employees

a. Consult with legal counsel regarding labor laws and classification issues.

b. Review the job description and duties of employees to confirm they are exempt from overtime compensation.

c. Non exempt employees are entitled to overtime compensation.

d. Review your workers’ compensation insurance to verify the proper classification of your employees.

e. “Moonlighting” professional employees may present liability issues. Please review with your insurance agent and legal counsel.

f. Perform financial and criminal background checks on all employees. Monitor possible changes in the law that may disallow some of these checks.

4. Employee Manuals

a. Review your employee manual annually for compliance and updates.

b. Changes to employee manuals should supersede prior releases.

c. Legal counsel should review the employee manual for compliance with state and federal employment laws.

5. Independent Contractors

a. Review the duties of those you pay for contract services. The tax implications for improperly compensating an individual as a contract laborer v. an employee are material.

b. Obtain Form W-9 from each independent contractor prior to paying for services.

c. Obtain proof of workers’ compensation insurance from each independent contractor.

d. Create a contract detailing the agreement between the company and the contractor. Clarify the treatment and responsibility of payroll taxes.

6. Cash Management

a. Maximize interest earnings on idle funds with money market accounts or other short-term investment instruments.

b. Evaluate budget expectations for managing cash levels in excess of operating and capital expectations.

c. Review outstanding debts, maturity schedules, and interest rates being paid.

d. Review all electronic withdrawals reflected on the bank statement monthly. Verify the payments are for authorized business expenses. There is a substantial increase in fraud regarding electronic banking which requires an extra effort from management.

e. Coordinate the payment of debts with depreciation expense to control the tax impact of taxable income for cash basis taxpayers.

f. Evaluate and monitor the interest rate on your CD’s and money market accounts. Review the CD maturity dates.

g. Confirm the FDIC insurance limits on your bank account(s). Reduce concentration of cash holdings in excess of FDIC limits.

7. Debts

a. Loans made by principals and officers to the business should be documented. Interest should be paid at least annually.

b. Review collateral agreements and debt covenants for compliance.

c. Anticipate renewal terms for lines of credit.

d. Meet with your banker annually to discuss financial trends, financing needs, and debt management. Consider bringing your independent CPA to this meeting to discuss your business plan.

8. Corporate Dividends

a. C corporations that accumulate profits without paying dividends could be subject to an accumulated earnings tax. Review the retained earnings and consider a dividend policy.

b. S corporation owners need to verify they have sufficient tax basis prior to issuing a distribution. Distributions in excess of tax basis may cause additional tax consequences.

9. Retirement Plans

a. Retirement plans are a great way to accumulate funds tax deferred. If possible, contribute the maximum amount allowed by the plan.

b. Verify with the plan sponsor that your plan is in compliance with current laws.

c. Periodically obtain an IRS favorable determination letter of your plan’s tax qualification.

d. Plan fiduciaries and trustees must obtain a Fidelity Bond to protect the plan against losses caused by fraud or dishonesty by those that control plan assets. The Fidelity Bond coverage is generally 10% of plan asset value.

We thank Clayton for his excellent checklist.  His contact information is as follows:

Clayton Kreis
Garcia & Ortiz, P.A.
888 Executive Center Drive West
Suite 101
St. Petersburg, FL 33702
Telephone: (727) 497-9455
Email: ckreis@garciaortiz.com

Four Questions Asked by a New Doctor Approached by Various Salespeople

Lester Perling has been kind enough to offer us answers to some of the pressing questions that new doctors after interaction with “well meaning salesmen”.  We hope that the doctors earn more than the salesmen.

1.  A lab company wants me to draw labs in the office and they are going to pay 20% of the drawing fee, is this legal?

LP:  This would be a problematic relationship.  Most payers, including Medicare, pay for phlebotomy (“the practice of drawing blood”).  They do not pay much, but they pay nonetheless.  The doctor should bill his or her own draw fees. 

Also, if there are Medicare patients involved this would create a Stark financial relationship and there would not be an exception because the payment would vary, it appears, with the volume of referrals by the doctor to the lab.  This would mean the doctor would be prohibited from referring Medicare/Medicaid patients to the lab.

2. A medical supply company wants to keep back braces in my office, and if I prescribe them to the patient they will give a $40 “fitting fee.”

LP:  This sounds like a kickback problem to me.  To my knowledge this would not be legitimate payment but perhaps there are facts with regard to the codes that would be billed.  In any event, I would still have kickback concerns and this has the same Stark problem as question 1.

3. A pharmaceuticals company wants me to have stock of medications (not controlled) and dispense to patients.

LP:  I do not have enough facts here.  It appears that you might be talking about a company that helps physicians become dispensing practitioners – they act as consultants and suppliers.  Those relationships, if structured properly, can be permitted.  There are a number of reputable companies who can help a physician’s office sell pharmaceuticals and comply with the many laws that apply.  These have become very popular with physicians who service HMO contracts because they can make sure that the patient has the medication in hand and has actually taken the first dose before he or she leaves the doctor’s office. 

4. A company who has device to check for dizziness wants to come in and do it in my office, I have to charge insurance – about $400 and pay them $150 out of it.

LP:  I would need more facts to give a better answer.  If this company is itself NOT a provider, i.e. they only provide the equipment and tech and in no situation do they bill payers themselves, this may be allowed. This could be subject to the Medicare mark-up limitation but would likely fit an exception.   Note, however, that Medicare (the primary payer for these services) has grave concerns about overutilization and this has been the basis for many audits/overpayments.  If the doctor is going to offer this service she will need to research Medicare requirements and be meticulous about her documentation of medical necessity etc.  There are other details related to FL Patient Self-Referral Act that would be relevant if she moves forward, but would not prohibit the service. 

Lester Perling can be contacted by email at lperling@broadandcassel.com.  He is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians with Alan Gassman, which can be ordered or previewed by clicking here.

Do Not Miss This Great Thursday a.m. September 19th Continuing Education and Networking Tampa Event for WEDU Television!

Do not miss the Thursday, September 19, 2013, 7:30 – 11:30 a.m. WEDU PBS program, which is announced below.  Free copies of our September 19th Thursday Report will be distributed, making this seminar more than worthwhile.  In fact, anyone signing up for this seminar will be entitled to a free extra copy of the Thursday Report delivered to the email address of your choice.

 

PBS Flyer

All attendees will receive a free copy of Alan Gassman’s book Creditor Protection for Florida Physicians which is published by Haddon Hall publishing. To purchase tickets to this event, please click here.

Back by Popular Demand – More Ogden Nash Poems

The Canary

The song of canaries

Never varies,

And when they’re molting

They’re pretty revolting.

The Cobra

This creature fills its mouth with venom

And walks upon its duodenum.

He who attempts to tease the cobra

Is soon a sadder he, and sobra.

The Cow

The cow is of the bovine ilk;

One end is moo, the other, milk.

The Eel

 I don’t mind eels

Except as meals.

The Guppy

Whales have calves,

Cats have kittens,

Bears have cubs,

Bats have bittens,

Swans have cygnets,

Seals have puppies,

But guppies just have little guppies.

-Ogden Nash

Research on Google

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Seminars and Webinars

  • FINANCIAL PLANNING ASSOCIATION (FPA) TAMPA BAY 2013 FLORIDA SYMPOSIUM

Alan Gassman will be joining Ken Zahn, CFP for a joint seminar on A Brief Introduction on the Art of Wealth Protection Planning. This seminar will also include a demonstration of our new EstateView Estate Planning Software.  Attendees will also receive a link to download the software to use on their own clients’ matters for a number of weeks.  For more information and to register for this webinar please click here.

Ken Zahn is probably the best known CFP course teacher in the country.  Thousands of certified financial planners have taken Ken’s course, and it is highly recommended for anyone in the financial, legal, or tax services business.  You can access Ken’s excellent website by clicking here.

Date: Monday, August 19, 2013 | 3:00 – 5:00 p.m.

Speakers: Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC, Ken Zahn, CFP and Alan Gassman, JD, LL.M.

Location: Marriott Westshore Tampa, 1001 N. Westshore Blvd, Tampa, Florida

Additional Information: For more information and to register for this webinar please click here.

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Many lawyers are using our Joint Exempt Step Up Trust to enable clients in non-community property states to receive a stepped-up basis on all “joint trust assets” on the death of the first dying spouse.  Our Leimberg article on the Joint Exempt Step-Up Trust can be viewed by clicking here and the accompanying chart can be viewed by clicking here.

The Ultimate Estate Planner, Inc. is also featuring our Joint Exempt Step Up Trust forms, client explanation letter and other materials on their website.  To order the forms you can click here.

Date: Wednesday, August 21, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  The cost of the teleseminar is $139 for the teleseminar only or $189 if you would like to receive both the teleseminar and the accompanying PowerPoint and downloadable PDF materials.  For more information and to register please click here.

  • WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presenter: Rob Cochran

Location: Online webinar

Additional Information: To register for the webinar please click here

  • AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m. and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

  • NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA, PhD, SOB

Location: Online webinar

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

  • NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Christopher Denicolo and Tom Davis will speak on the Affordable Care Act; Alan Gassman will be speaking on a topic to be determined.

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

  • WEDU ESTATE PLANNING SEMINAR  

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berman Family Broadcast Center

Additional Information:  If you would like to sign up for this seminar please click here.

  • NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.  Also Paul and attorney Barry will be discussing stepped-up basis tools and techniques, including our JEST Trust.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

  • PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council please click here or email agassman@gassmanpa.com.

  • 2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

  • SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email 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

NOTABLE SEMINARS PRESENTED BY OTHERS:

  • THIRD ANNUAL FEDERAL TAX INSTITUTE OF NEW ENGLAND

Date: September 27, 2013

Location: Hartford Marriot Farmington Hotel, Farmington, Connecticut

Sponsor: Connecticut Bar Institute

Additional Information: Chairman Frank Berall will be using part of an earlier Thursday Report article on same-sex planning in his presentation. You can also catch an early dose of Jerry Hesch’s talk on Income Tax Ideas for Estate Planning here before the Notre Dame Tax Institute in October, and Bruce Stone will be speaking on Assisted Reproductive Technology Children.  For more information or to register please visit the Institute’s site here.

  • 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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – 8.1.13 – Ringo, New Land Trust Law & LLC Clinic

Posted on: August 1st, 2013

No Comments

No No Song

By Ringo Thur

 A tax lawyer I know just came from Nashville Tennessee-o.

I smiled because he did not understand.

Then I held up a recent Thursday Report

And he said I was the smartest of the land

And I said no, no, no, no,

I don’t read updates no more (or fill in your favorite vise)

I’m tired of waking up on the floor

No, thank you, please, I’d rather have a disease than

Give up my Thursday Report, au revoir.

Ringo Young and Old

Land Trusts – Use, Abuse, and Confusion by Alan S. Gassman

Ken Crotty’s LLC Clinic – More Information Regarding the Duty to Update Inaccurate Information in the Articles of Organization of a Florida LLC

1st Annual Estate Planner’s Day at Ave Maria School of Law

Additional Filing Requirements for Disregarded LLCs, Part 3

Our Recently Updated Article from Leimberg Information Systems – The Windsor Effect – Why Many Affluent Same-Sex Couples Will Be Leaving Florida and Where They Should Go

Enhance your professional practice, and enjoyment thereof – an afternoon with Srikumar Rao, Ph.D.

Research on Google

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.

Land Trusts – Use, Abuse, and Confusion by Alan S. Gassman

Many of us use land trusts for a number of purposes.  In the purist form, a land trust is simply an ownership titling device, under which an individual or entity can be the full and controlling beneficial owner of real estate or other property that is titled in the name of a trustee that will act only as and when specifically instructed.

This can facilitate confidentiality in the public records, the ability to transfer beneficial ownership without a subsequent deed (by transferring beneficial ownership of the land trust itself), and avoidance of probate and guardianship if the land trust has provisions that specifically require the trustee to transfer legal title to a successor entity or beneficiary.  Oftentimes an out-of-state LLC can be formed in a jurisdiction that does not disclose ownership or officers to be the trustee of the land trust.

Most states do not recognize or have laws that will facilitate the many uses of land trusts that can be implemented in Florida, Illinois and the other states that have land trust judicial or statutory recognition.

Many layman, and some misled or confused professionals, believe that an individual or entity can place real estate under a land trust, and then transfer beneficial land trust ownership interests and avoid documentary stamp taxes and transfer reporting requirements.  This is simply not the case.  Florida land trusts can be very useful for avoiding the necessity of transferring deeds, and maintaining confidentiality of ultimate ownership, but for tax and transaction reporting purposes clients should be advised that the transfer of beneficial ownership of a land trust will have the same documentary stamp tax, corporate income tax, and other results as a transfer of the underlying real estate interests would have.

Quite often we will establish a land trust and have the Trustee be an LLC formed and maintained in a state that does not require publication of Member or Manager information.  Then the public records will reflect ownership by the foreign LLC, and the beneficial ownership of the property does not need to be revealed on the public records, and cannot be easily discovered.  This may include homestead, and is a technique commonly used for professional athletes, celebrities, and those who wish to not have the general public be able to easily see where they live on the website of the local County Property Appraiser.

Notwithstanding the above, homestead real estate owned by a land trust may not qualify for the Florida homestead exemption unless the land trust contains special language, at least according to one Property Appraiser in house lawyer.  The language that we often use to help us confirm that homestead property held under a trust will qualify for the homestead exemption is as follows:

Notwithstanding the paragraph above, as to any real estate owned under this Trust which is held in a county in Florida where my spouse resides, and any replacement real estate thereto so designated by the Trustee, my spouse shall have all rights of occupancy, use, and possession of such real estate as would apply to the owner of a life estate, as Homestead real estate, and thus shall have all equitable rights to use of such real estate consistent with Section 6, Article VII, of the Florida Constitution and Florida Statute 196.041(2), and as required by any applicable County Property Appraiser to qualify for homestead tax exemption and applicable increase caps and portability unless said spouse elects to the contrary by a written instrument executed.

The statute can be reviewed by clicking here.

Excerpts from this analysis are set forth below, and the comparison showing what we deleted can be reviewed by clicking here:

EXCERPTS FROM SUMMARY ANALYSIS

CS/CS/HB 229 passed the House on April 24, 2013, and subsequently passed the Senate on April 26, 2013.The bill codifies certain provisions already in use by practitioners regarding land trusts, and distinguishes a land trust by the limited nature of the powers of the land trustee.

A land trust is a form of ownership of real property in which a trustee holds legal title to the land and a beneficiary retains the power of direction over the trustee and thus retains the power to direct the trustee to sell or mortgage the real property. A land trust is primarily defined by language in the deed to the trustee which allows third parties to rely upon the ability of the trustee to transfer the property without inquiry into the consent of the beneficiaries. Because of its singular nature, there are laws applicable to other trusts which have no usefulness in the area of land trust law. Further, the standard of practice in this area has not been codified, but rather has been pursued by reference to legal treatises and Illinois law, under which the original land trusts were established. This bill:

  • Better defines the difference between a land trust and a general trust, defining a land trust by the largely ministerial duties of the trustee.
  • Codifies in the Florida Land Trust Act a number of land trust practices commonly used in Florida and Illinois and derived from judicial precedents or land trust treatises.
  • Includes improvements based on the experience of Florida land trust practitioners that are intended to facilitate and encourage the use of land trusts in Florida real property transactions.

This bill does not appear to have a fiscal impact on state or local governments.

Subject to the Governor’s veto powers, the bill is effective upon becoming law

I. SUBSTANTIVE INFORMATION

A. EFFECT OF CHANGES:

Background

Florida law recognizes a number of types of trusts. In most instances a trustee is obligated to use a high standard of care in investing and handling assets. There is a duty to account to the beneficiary and the assets of a trust might change. In contrast, the trustee of a land trust has legal title to a single asset for purposes of marketability, makes almost no discretionary decisions, and takes direction from the beneficiary regarding that asset. Thus, there is a distinct body of law that applies to land trusts already established, which this bill seeks to codify and standardize in Florida.

Land trusts were developed first in Illinois, which remains the model for the standard arrangement in order to create a vehicle for simple transfer of title to property owned by a number of people. As opposed to other types of trusts in Florida, the land trustee is a place-holder for ease of transfer and marketability of title. The trustee of a land trust takes direction from the beneficiaries, and therefore has few if any fiduciary duties, nor any duties to account to the beneficiaries beyond sales transactions. This distinction is significant since Florida also has enacted the Florida Trust Code,[1] which imposes significant duties upon other types of trustees. These duties have no real relevance to the duties of the land trust trustee described in the Florida Land Trust Act.[2]

Section 689.071, F.S., was enacted in 1963 as the Florida Land Trust Act to validate the use of Illinois land trusts in Florida and to confirm the marketability of real property titles derived through a land trustee. Accordingly, this statute has always focused primarily on the authority of the land trustee to convey good title to third parties if the prior deed to the land trustee granted to the trustee certainpowers to deal with and dispose of the property, commonly referred to as “deed powers.”[3] Acting primarily as a “title estoppel”[4] statute, s. 689.071, F.S., protects third party grantees, mortgagees and lessees who rely on the statutory authority of the trustee based on those recorded deed powers without requiring them to inquire into the identity of the beneficiaries or the terms of the unrecorded trust agreement.

Effect of the Bill

A. General Overview

This bill clarifies the distinction between a land trust governed by s. 689.071, F.S., and other express trusts governed by the Florida Trust Code,[5] yet preserves the title estoppel benefits of the existing statute for any conveyance to a trustee where the conveying instrument contains deed powers. To

accomplish this objective, this bill:

  • Defines land trusts based on the functional scope of the land trustee’s duties, although deed

powers would remain an essential element of a Florida land trust; and

Relocates all the title estoppel provisions of s. 689.071, F.S., to a newly created section[6] which

remains equally applicable to any conveyance to a trustee containing deed powers.[7]

A transitional provision makes the new functional land trust definition apply only to trusts created on or after the effective date of the bill, and a trust existing before the effective date is classified as a land trust based on the intentions of the parties as expressed in or discerned from the existing trust agreement.

The relocated title estoppel provisions in the new section apply to any real property conveyed to a trustee at any time by an instrument containing deed powers, regardless of whether the trust is a land trust or not. By separating the title estoppel statute from the land trust statute in this way, this bill does not change the results intended by the parties to any trust agreement existing on the date that the bill becomes effective.

In addition to transferring the title estoppel provisions to a new section,[8] the bill also codifies in amended s. 689.071, F.S., a number of land trust practices and principles commonly used in Florida and Illinois and derived from judicial precedents or land trust treatises.

B. Point-by-Point Analysis

1. Title Estoppel Provisions – Creation of s. 689.073, F.S.

The marketability of title, and sometimes the anonymity of the beneficial owner, are the primary reasons for a land trust. Anyone who deals with the trustee must be assured that the trustee has legal ownership and full authority to deal with the property, and must also be assured that any claims between the land trustee and the beneficiaries will not affect the transaction or the grantee.

Currently these assurance provisions, called “title estoppel” provisions are set out in ss. 689.071(3), (4), and (5), F.S. The bill relocates the title estoppel provisions to a new section entitled, “Powers conferred on trustee in recorded instrument,”[9] and creates a new subsection, s. 689.073, F.S. In moving the provisions to the new statute,[10] changes were made to:

  • Remove language regarding the vesting of both “legal and equitable title” in the trustee;
  • Remove the reference to real property “in this state;”[11]
  • Relocate to s. 689.073(5), F.S., certain existing criteria for applicability; and
  • Simplify the remaining language.

The bill continues to vest in a trustee full power and authority to deal with the property as provided in the deed powers granted in the deed. The exclusion for instruments governed by s. 689.07, F.S. [existing s. 689.071(12), F.S.], is relocated to s. 689.073(4), F.S., changing only the words “this act” to “this section.”

Currently, the title estoppel provisions are operative whether the conveyance deed refers to the beneficiaries or any unrecorded trust agreement.[12] The bill creates s. 689.073(5), F.S., which:

  • Carries forward the provision that conveyance by the trustee is free of claims of beneficiaries;
  • Expressly provides that the title estoppel provisions work regardless of the provisions of any unrecorded trust agreement and regardless of whether the trust is a land trust or an express trust; and
  • Clarifies that the title estoppel section applies both to deeds recorded after the effective date of the proposed amendments and to deeds recorded under the present statute.[13]

This provision confirms that the relocation of the title estoppel section is not intended to change the legal effect of any previous conveyances under the present statute, and for good measure all such previous conveyances are validated as vesting the trustee with the requisite deed powers.

2. Definition of “Land Trust” – Revisions to s. 689.071(2), F.S.

The bill revises the remaining provisions of s. 689.071, F.S., which were not moved to the new section.[14] The revised definition of “land trust”[15] still requires a conveyance to a trustee by a recorded instrument containing deed powers, but beginning with the effective date of the bill this definition focuses on the key functional distinction between a land trust and other express trusts: that a land trustee functions almost entirely as the agent of the beneficiaries or the person holding the power of direction under the trust agreement, whereas a trustee who is subject to the Florida Trust Code in ch. 736, F.S., has more extensive fiduciary duties and responsibilities to the trust beneficiaries, along with more extensive potential liability if the trustee fails to perform the trustee’s discretionary duties prudently.

A land trustee has a fiduciary relationship to the land trust beneficiaries and the persons holding the “power of direction” over the actions of the land trustee, just as any agent is bound as a fiduciary to the principal for whom the agent acts.[16] However, in practice, land trustees are rarely delegated duties under a land trust agreement beyond ministerial and administrative matters.[17] This lack of duties is a logical parallel to the exemption that land trustees enjoy from ch. 736, F.S., responsibilities and liabilities. The bill makes clear this practical distinction in the revised definition of a land trust[18] by stating that the trustee has limited duties as set out in the statute.

For trusts created on or after the effective date of the bill, the revised definition will limit the duties of a trustee of a “land trust” to the following:

  • The duty to exercise the trustee’s deed powers as directed by the beneficiary or by the holder of the power of direction (i.e., this is the agent’s fiduciary duty: to follow the principal’s directions);
  • The duty to dispose of the trust property at the termination of the trust (i.e., the classic “active” duty that historically saved Illinois land trusts from the statute of uses);
  • The duty to perform ministerial and administrative functions delegated to the trustee; and
  • The duties required of certain timeshare trustees by ch. 721, F.S.[19]

If the trustee’s duties exceed the foregoing limited duties and the trust is created after the effective date of the proposed amendment, then the trust will not be treated as a land trust and will not be excluded from the operation of ch. 736, F.S.[20]

Because the title estoppel provisions of the statute operate on any conveyance containing deed powers, the classification of the trust as a “land trust” will have no effect on the title to any real property held by the trustee.

3. Other Definitions – Revisions to s. 689.071(2), F.S.

Besides revising the definition of “land trust,” section 2 of the bill adds and clarifies some other

definitions of lesser significance in s. 689.071(2), F.S:

  • The definition for “holder of the power of direction” is revised and shortened to “power of direction” because “holder of” is not used consistently in the statute;
  • The phrase “person or entity” is shortened to “person” in numerous places (beginning with the definition of “trustee”) because the statutory definition of “person” includes entities;
  • New definitions are created for some basic trust concepts, such as “trust agreement,” “trust property” and “recorded instrument” (the latter being a cross-reference to the relocated deed powers provision now found in s. 689.073(1), F.S.); and
  • “Trustee” is redefined so that the term will work in the “switchbox”[21] provision to mean the trustee of a land trust or the trustee of another trust. For this reason, numerous references to “trustee” in revised s. 689.071, F.S., will be changed to “trustee of a land trust” where that meaning is intended.

4. Vesting of “Legal and Equitable Title” Revisions to s. 689.071(3), F.S.

The bill continues the existing statutory statement that a land trustee is vested with both legal and equitable title to the trust property. This vesting of “legal and equitable title” provision is a land trust characteristic imported from Illinois, and therefore it does not appear in the relocated title estoppel provisions in s. 689.073, F.S., that universally apply to any type of trust with deed powers. Although the “legal and equitable” language has been excised from a number of other subsections of s. 689.071, F.S., to avoid potential circularity, s. 689.071(3), F.S., will continue to contain the operative language regarding vesting of legal and equitable title in the land trustee.

5. Statute of Uses and Doctrine of Merger – Revisions to ss. 689.071(4) and (5), F.S.

New section 689.071(5), F.S., overrides the doctrine of merger with respect to a land trust, so that a land trust will not be extinguished if the trustee is the sole beneficiary. Former s. 689.071(5), F.S., is one of the title estoppel provisions relocated verbatim to s. 689.073, F.S.

6. Personal Property Option– Revisions to s. 689.071(6), F.S.

Currently, section 689.071, F.S., provides that the recorded instrument may define and declare the interests of land trust beneficiaries as personal property under Florida law.[22] The bill provides that this designation of personal property must be made in the recorded instrument or the trust agreement, or it will be considered real property.

Section 689.071(6), F.S., is changed in one regard: the optional personal property declaration may be made in the recorded instrument or in the trust agreement. This change is consistent with the relocation of the title estoppel provisions to new s. 689.073, F.S., which governs title matters that depend on the contents of the recorded instrument. Whether the beneficial interests are real property or personal property does not affect the nature of the title vested in the trustee or the ability of third parties to acquire good title to the trust property from the trustee in accordance with the powers contained in the recorded instrument.

7. Beneficiary Provisions– Revisions to s. 689.071(8), F.S.

Currently, customary provisions in land trusts are based upon treatises by Illinois land trust authorities, particularly Kenoe on Land Trusts.[23] The bill revises s. 689.071(8), F.S., in a number of respects to codify these land trust practices.

The purpose of including these provisions directly in the Land Trust Act is to increase practitioner awareness that such techniques are available without making reference to the treatise, thereby promoting the usage of land trusts in Florida generally.

The bill revises s. 689.071(8)(c), F.S., to reconcile the Land Trust Act with the Uniform Commercial Code (U.C.C.) Article 9 exclusion of interests in real property.[24] Case law[25] holds that a beneficial interest in a land trust is a general intangible within the scope of the Florida Uniform Commercial Code, and this result is codified in the present version of s. 689.071(8)(c), F.S., which provides that U.C.C. Article 9 governs the perfection of a security interest in a beneficial interest in a land trust. However, if the beneficial interest is defined as real property under s. 689.071(6), F.S., then there is a possible contradiction between the Land Trust Act (which says Article 9 applies to beneficial interests) and the U.C.C. (which says Article 9 excludes real property interests).

The bill revises s. 689.071(8)(c), F.S., to resolve this apparent contradiction by clarifying that the U.C.C. governs perfection if the beneficial interest in a land trust is declared to be personal property (as was the case in Cowsert), but that a mortgage instrument recorded in the real estate records is the proper method of perfection if the beneficial interest in a land trust is declared to be real property. In the latter case, the proper county for recording the mortgage may be specified in the recorded instrument or in a declaration of trust or memorandum that is recorded in the same county as the recorded instrument; otherwise the location of the trust property determines the proper county for recording the mortgage. The bill provides a transition rule[26] to provide for the continuation of perfection for any U.C.C. financing statement that may have been filed before the effective date of this clarification. It is an abbreviated version of the transition rules that were included in Revised U.C.C. Article 9 in 2001.

The bill revises the existing last sentence of s. 689.071(8)(c), F.S., to state more clearly that a lien or security interest perfected against a beneficial interest in a land trust does not affect in any way the legal or equitable title of the land trustee to the trust property. New s. 689.071(8)(d), F.S., makes explicit a concept that is inherent in a beneficiary’s ability to encumber a beneficial interest as described in existing s. 689.071(8)(c), F.S: the trustee’s legal and equitable title to the trust property is separate and distinct from the beneficiary’s beneficial interest in the land trust and the trust property. A lien, judgment, mortgage, security interest or other encumbrance against one interest does not automatically attach to the other interest. Section 689.071(8)(e), F.S., is also revised to clarify this same point: documents recorded by a beneficiary to transfer or encumber a beneficial interest do not affect the legal and equitable title of the trustee or the deed powers granted to the trustee in the recorded

instrument.

Sections 689.071(8)(f) and (g), F.S., as well as other parts of s. 689.071(8), F.S., have been edited for consistent usage of the defined terms “land trust,” “recorded instrument,” “trust agreement,” and “trust property.”

The bill adds s. 689.071(8)(i), F.S., which is intended to end the reported occasional practice by some judges of appointing a guardian ad litem to represent the interests of land trust beneficiaries in a foreclosure or other litigation affecting title to the trust property. Because a land trustee is vested with both legal and equitable title to the trust property, joinder of the land trustee in the action is sufficient without incurring the additional expense of a guardian ad litem.

8. Successor Trustee Provisions– Revisions to s. 689.071(9), F.S.

Most of the revisions to s. 689.071(9), F.S., are non-substantive edits for consistent usage of defined terms and modernization of language (e.g., replacing “office of the recorder of deeds” with “public records”). The bill deletes s. 689.071(9)(a), F.S., because the “switchbox” provision in subsection 689.071(12), F.S., globally addresses the inapplicability of chapter 736, F.S., to land trusts.

The current text of s. 689.071(9), F.S., uses the expression “each successor trustee” to avoid the longer phrase “the successor trustee or trustees.” Unfortunately, it is possible to misread the shorter phrase to mean “each and every successor trustee” in a series of successors.[27] The longer expression is clearer and replaces the shorter one.

Currently, s. 689.071(9)(f), F.S., provides that the beneficiaries may direct the land trustee to convey the trust property to another trustee. The bill changes this paragraph to provide that this direction to convey could also come from the person holding the power of direction.

9. Trustee as Creditor– Revisions to s. 689.071(10), F.S.

The bill revises s. 689.071(10)(a), F.S., to include a conforming reference to a mortgage (as well as a security interest) against a beneficial interest in a land trust. Other non-substantive edits include consistent usage of defined terms and the deletion of “or entity” after “person.”

10. Notices to Trustee Provisions– Revisions to s. 689.071(11), F.S.

The bill adds a new subsection to assure that the right parties receive any third-party notices concerning property held in a land trust by requiring that notice to a land trustee include certain identifying information if it appears in the recorded instrument.

11. Florida Trust Code – Scope Provision– Revisions to s. 736.0102, F.S.

The bill includes a conforming amendment to s. 736.0102, F.S., of the Florida Trust Code. The bill divides this section into two logical subsections, and a third subsection is added to address the exclusion of land trusts from the Florida Trust Code. New s. 736.0102(3), F.S., provides that the Trust Code does not apply to land trusts under s. 689.071, F.S., except to the extent provided in subsection 689.071(7), F.S., of the Land Trust Act and in the two provisions of ch. 721, F.S., that apply parts of ch. 736, F.S., to timeshare trusts.

The bill adds s. 736.0102(3), F.S., to provide that a Trust Code trust remains a Trust Code trust (and does not become a land trust) regardless of any amendment or change in asset composition or utilization of a sub trust.


[1] Chapter 736, F.S.

[2] Section 689.071, et seq., F.S.

[3] See s. 679.071(3), F.S.

[4] “Title estoppel” is the representation to a bona fide purchaser by a land trustee that he or she is fully able to transfer the legal title to the subject property, that the transferee is protected from title assaults by the beneficiaries of the trust, that the beneficiaries need not be disclosed, that the trust document need not be disclosed, and other assurances that the purchaser and others may safely deal with the trustee.

[5] Chapter 736, F.S.

[6] Section 689.073, F.S., is created.

[7] “Deed powers,” as used in this analysis refer to the language of s. 689.071(3), F.S, which is, “to protect, to conserve, to sell, to lease, to encumber, or otherwise to manage and dispose of the real property described in the recorded instrument.”

[8] Section 689.073, F.S.

[9] Section 1 of the bill relocates and slightly revises ss. 689.071(3), (4) and (5), F.S., moving them to a new s. 689.073, F.S. Subsections (4) and (5) are relocated as-is and renumbered s. 689.073(2) and (3), F.S.

[10] As revised, s. 689.071(3), F.S., becomes s. 689.073(1), F.S.

[11] This provision confirms that out-of-state lands may be held in Florida land trust regimes.

[12] Section 689.071(3), F.S.

[13] Id.

[14] Section 689.073, F.S

[15] Section 689.071(2)(c), F.S

[16] Raborn v. Menotte, 974 So.2d 328 (Fla. 2008).

[17] “The trustee is a mere vessel of title.” Brigham v. Brigham, 11 So.3d 374 (Fla. 3d DCA 2009).

[18] Section 689.071(2)(c), F.S.

[19] Section 721.08, F.S., provides that time share accommodations may be placed into a trust. This will be addressed in detail below, in regard to the effect of this statute.

[20] Chapter 736, F.S., is the Florida Trust Code and applies to express trusts.

[21] This transition rule exempts existing land trusts from the new duties-based test in s. 689.071(2)(c), F.S; rather, an existing trust is a land trust (or not) based on the intentions expressed in (or discernible from) the existing trust agreement. This is explained in more detail on page 8 of this analysis.

[22] Except of course for the stamp tax provision in s. 201.02(4), F.S

[23] The author, Henry W. Kenoe, wrote a number of treatises on land trusts which are now out of print.

[24] These provisions are found in s. 679.1091(4)(k), F.S.

[25] In re Cowsert, 14 B.R. 335 (Bankr.S.D.Fla. 1981).

[26] See the newly created s. 689.071(13), F.S.

[27] E.g., existing paragraph s. 689.071(9)(c), F.S., requires that “each successor trustee shall file a declaration of appointment.”

Ken Crotty’s LLC Clinic – More Information Regarding the Duty to Update Inaccurate Information in the Articles of Organization of a Florida LLC

Liability of Members and Managers for Inaccurately Filed Information

As mentioned in the July 25, 2013 issue of the Thursday Report, one of the changes made by Florida’s new LLC Act is that members (in a member-managed LLC) and managers (in a manager-managed LLC) are responsible for maintaining accurate information filed with the Department of State.  This information includes anything stated in the Articles of Organization and other records of the LLC that are filed with the Department.

In most situations it would seem that having inaccurate information on the Secretary of State website will not cause liability, but in some situations third parties might claim that they relied upon the Secretary of State website to determine the identity of individuals with authority to act on behalf of the LLC, and if they are swindled or misled by those individuals, they might have a cause of action not only against the LLC, but also against the manager or member who was responsible for making sure that the Secretary of State website had the correct information.

If any of the information stated on these filings becomes inaccurate at any point, it is the duty of managing members and/or managers, as applicable, to correct such information.  If the information filed is inaccurate and a third party relies on this inaccurate information, then the managing members and/or managers, as applicable, who had the duty to update such information could be exposed to liability to the third party.

Liability for some of the members of a member-managed LLC may be minimized by having the operating agreement of the LLC specifically state which members are responsible for maintaining accurate records with the Secretary of State.  Non-voting or non-managing members in a member-managed LLC may want to have such a provision included in the LLC’s operating agreement.

Members and/or managers responsible for maintaining accurate records of existing LLCs should be certain that the filed information for the LLC is correct by January 1, 2014.   These members and/or managers should also calendar future dates to periodically check and make sure the records have the most current information.  If any information is found to be inaccurate, corrected documents should be filed as quickly as possible.

It is important to note that duty to keep information correct and the potential liability related to incorrect information applies to both Florida and non-Florida LLCs.

1st Annual Estate Planner’s Day at Ave Maria School of Law

            Ave Maria School of Law located in Naples, Florida will be holding the 1st Annual Estate Planner’s Day on April 25, 2014.  This is the first annual event which will feature topics relevant to attorneys, accountants, bankers, trust officers, financial advisors and life insurance advisors.  Dean Ted Afield, Donna Heiser, Jonathan Gopman, Lester Law, Chris Bray, Greg Holtz and others are helping to make this 1st annual event a success.

Speakers include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.  The event is sponsored by Ave Maria School of Law and the Collier County Estate Planning Council.

If you would like more information on the event, have a suggested topic or would like to be a speaker at the event, please email Jonathan Gopman at jonathan.gopman@akerman.com.

Many Florida lawyers and other professionals are not familiar with Ave Maria School of Law or the other Florida law schools.   Ave Maria School of Law received ABA accreditation in 2005 and was originally located in Ann Arbor, Michigan, prior to the school being relocated to Florida in 2009. Ave Maria is described as a national law school that emphasizes the moral foundations of the law, presents insights from the Catholic intellectual tradition, and encourages a broader perspective of the law and its role in society. The Catholic institution boasts a diverse student body of approximately 500 students that represent almost every state and several other nations. With a curriculum designed to prepare students for the practice of law in any jurisdiction and employment area, Ave Maria School of Law has placed graduates in prestigious judicial clerkships, in firms of all sizes throughout the country, in positions with federal and state agencies, and in jobs with both domestic and international public-interest employers.

A chart of law schools and some information associated therewith is as follows:

In 1980, Florida had only five law schools, University of Florida, Florida State University, Stetson Law School, University of Miami, and Nova Southeastern University.

We now have 12.

Can you name them?

A Florida law school chart is as follows:

Law School

Year ABA Approved

Number of Students

Median GPA of Admissions Class

Median  LSAT of Admissions Class

Location

Tuition

Ava Maria

School of Law

2002

391

3.10

148

Naples

$37,270

Barry University Dwayne O. Andreas  School of Law

(FT & PT Programs)

2002

753

2.92

147

Orlando

$34,300 FT$25,900 PT

524 FT

2.92 FT

147 FT

229 PT

2.96 PT

147 PT

Florida A&M University

College of Law

(FT & PT Programs)

2004

655

3.09

146

Orlando

Resident:$13,675 FT

$10,028 PT

Non-Resident:

$32,936 FT

$24,153 PT

473 FT

3.11 FT

146 FT

182 PT

2.97 PT

148 PT

Florida Coastal School of Law

(FT & PT Programs)

1999

1,594

3.10

146

Jacksonville

$39,370 FT$31,854 PT

1,371 FT

3.10 FT

146 FT

223 PT

2.96 PT

145 PT

University of Florida Fredric G. Levin College of Law

1925

960

3.59

161

Gainesville

Resident:$21,421Non-Resident:$40,786

Florida International University

College of Law

(FT & PT Programs)

2004

508

3.60

156

Miami

Resident:$18,841 FT

$12, 886 PT

Non-Resident:

$33,086 FT

$22,535 PT

346 FT

3.58 FT

156 FT

162 PT

3.61 PT

151 PT

Florida State University

College of Law

1968

698

3.54

160

Tallahassee

Resident:$19,731Non-Resident:$39,744

University of Miami School of Law

1941

1,307

3.36

156

Miami

$42,938

Nova Southeastern University

Shepard Broad Law Center

(FT & PT Programs)

1975

1,029

3.14

150

Fort Lauderdale

$39,370 FT$31,854 PT

829 FT

3.15 FT

150 FT

200 PT

3.06 PT

148 PT

St. Thomas University

School of Law

1988

678

3.01

148

Miami Gardens

$ 36,226

Stetson University College of Law

(FT & PT Programs)

1930

1,004

3.28

155

Gulfport/

Tampa

$36,168 FT$25,068 PT

778 FT

3.31 FT

155 FT

226 PT

3.11 PT

153 PT

Thomas M. Cooley Law School

Has not received full ABA approval in FL yet.  Classes began in late 2012, but the school is not listed as a Florida law school on the LSAC website. Riverview

All of the above information is from the LSAC Official Guide.  The Wikipedia page on each of these law schools can be accessed by clicking here.

For Juris Doctors looking to become experts in a particular area of law, Florida law schools offer a number of Master of Law programs:

University of Miami:

LLM in International Law

LLM in Ocean and Coastal Law

LLM in Taxation

LLM in Real Property and Development

LLM in Estate Planning

LLM in Taxation of Cross-Border Investment

University of Florida:

LLM in Comparative Law

LLM in Taxation

LLM in International Taxation

LLM in Environmental and Land Use Law

Doctor of Juridical Science (S.J.D.) in Taxation

Florida Coastal School of Law

LLM in US Law (distance learning, for international lawyers)

Additional Filing Requirements for Disregarded LLCs, Part 3

Reporting Agents for Disregarded Entities and filing Form 8655

If an LLC is a single member LLC, the entity’s classification will determine who may sign a Form 8655.  If the entity is classified as disregarded, then the Form 8655 must be signed by the owner or by an authorized representative who can demonstrate the authority to sign the form.

A filed Form 8655 is required for a reporting agent to have authorization.  Such authorization may also be submitted on a substitute form approved by the IRS (see IRS Pub No. 1167).

The Form 8865 authorizes the reporting agent to (1) sign and file certain returns on behalf of the individual or entity; (2) make deposits and payments for certain returns; (3) receive duplicate copies of tax information, notices, and other communication regarding the individual or entity; and (4) provide the IRS with information related to penalty relief determinations for any authority granted under the Form 8655.

A Form 8655 for a corporation, including an LLC treated as a corporation, may be signed by (a) any officer with authority to bind the corporation, (b) any person designated by the governing body of the corporation, (c) any officer or employee granted written authority to sign by a principal officer, and (d) any other authorized person.

For a partnership, including an LLC treated as a partnership, the Form 8655 may be signed by any person who was a member of the partnership during any part of the tax period described in the Form 8655.

For a trust or estate, the Form 8655 must be signed by the fiduciary.

Form 8858 Filing for Foreign Disregarded Single Member LLCs

Form 8858 is the information return of a U.S. person which reports activity related to foreign disregarded entities (“FDEs”).  The accompanying Schedule M reports transactions between foreign disregarded entities of a foreign tax owner and the filer or other related entities.  This form must be filed by U.S. person that is considered to be the tax owner of FDEs, or that owns certain interests in foreign tax owners of FDEs.  Form 8858 is due with the U.S. persons income tax or informational returns, and must be filed each year.

Form 8858 has three categories of “U.S. Persons” who are required to file.

Category 1.  U.S. persons who are treated as the tax owner of a foreign disregarded entity at any point during the taxable year.   A disregarded entity is not considered a U.S. person.  So if a domestic or foreign parent disregarded entity owns a subsidiary FDEs, then the owner of the parent disregarded entity has the obligation to report the foreign disregarded entity.

Category 2.  U.S. persons who must file Form 5471 may be required to file Form 8858 if the controlled foreign corporation owns a FDE.  Form 5471 deals with controlled foreign corporations and has various categories of filers.  Only those persons who are considered to be Category 4 and Category 5 filers for Form 5471 are required to file a Form 8858.  These are U.S. persons who controlled the controlled foreign corporation for at least 30 consecutive days during the taxable year, and/or a shareholders of a controlled foreign corporation who owned at least 10% of the voting stock of the controlled foreign corporation for at least 30 consecutive days.  U.S. persons who are neither Category 4 nor Category 5 filers of Form 5471 do not have to file Form 8858.

Category 3.  U.S. persons who must file Form 8865 may also be required to file Form 8858.  Form 8865 is filed to report information related to controlled foreign partnerships which are treated as the tax owners of FDEs during the taxable year.  If a U.S. person controls 50% of the foreign partnership then that U.S. person needs to file the Form 8858.  If no U.S. person controls 50% of the partnership then U.S. persons owning 10% or more of the foreign partnership must file Form 8858.

Our Recently Updated Article from Leimberg Information Systems – The Windsor Effect – Why Many Affluent Same-Sex Couples Will Be Leaving Florida and Where They Should Go

Our July 11, 2013 Thursday Report entitled “Why Many Same-Sex Couples Will Be Looking to Leave Florida and Where They May Go” was updated to disclose recent state court litigation and was published last night on the Leimberg System.

You can read Steve Leimberg’s version of the article by clicking here.

What we added from the July 11, 2013 version is as follows:

Since the Windsor decision, a number of same-sex couples that were legally married in a state that recognizes same-sex marriage, but reside in states that do not, have filed lawsuits against state and local officials in order to have their marriage recognized for various state law purposes. Specifically, a couple in Ohio (which banned same-sex marriage in 2004) sued to have their marital status be reflected as “married” on their death certificates so that they can be buried next to each other in a cemetery that only allows spouses and descendants to be buried there.  One of the spouses is dying of Lou Gehrig’s diseases, and his family has a burial plot in the cemetery in question.

A federal judge ordered that the couple’s marriage should be recognized in Ohio because, despite Ohio’s ban on same-sex marriage, it has historically recognized out-of-state marriages that were legally valid where they took place.  Many states do not recognize same-sex marriage, but have laws which recognize marriages that are legally valid in other states, including marriages that involve cousins and minors.  This brings to the forefront the new issue of whether states can refuse to recognize same-sex marriages where the state has historically recognized marriages that are legally valid in other states.

Similar lawsuits have been initiated in Illinois, Kentucky, Nevada, New Jersey and Pennsylvania.  Time will tell how these cases are received by courts across the nation, and what effect this will have on the recognition of same-sex marriage across state lines.  Many states might wish to pass legislation which singles out same-sex marriages, and the resulting constitutional law implications could form the basis for dramatic social change in this country.

We have updated our same-sex couple state selection chart to take into account that Delaware repealed the previously planned sunset of its estate tax that would have otherwise occurred on July 1, 2013.  Click here to view the chart..

Enhance your professional practice, and enjoyment thereof – an afternoon with Srikumar Rao, Ph.D.

Dr. Rao 2

Many lawyers, accountants, and other professionals have taken a Srikumar Rao, Ph.D. course entitled Creativity and Personal Mastery, which was developed at Columbia University and later taught at Stanford University and the London School of Business, and for private and publicly traded companies.

We are co-sponsoring a Saturday afternoon workshop with Dr. Rao entitled Enhanced Effectiveness and Enjoyment of Your Professional and Personal Life – 5 Tools You Can Start Using Immediately in Clearwater on Saturday, October 12, 2013.

Dr. Srikumar Rao is a former business school professor, and head of The Rao Institute.  He created the singularly powerful course Creativity and Personal Mastery, which he has taught at leading business schools including Columbia and the London Business School.  Hundreds of executives have been transformed by CPM, including from such companies as Google, Microsoft, Merrill Lynch, General Electric, Morgan Stanley and others.  Dr. Rao has written two books, Are You Ready to Succeed? and Happiness at Work, and writes regularly on management practices and leadership.  He has received wide media  coverage and acclaim, and has been a speaker for TED and Leading @Google talks.  He received his PhD in Marketing from Columbia University, and has worked as an executive for Warner Communications, Continental Group, Data Resources and McGraw Hill.

“Over the past year I’ve attended several of Professor Rao’s lectures and courses, including his 3 month comprehensive course on Creativity and Personal Mastery.  The techniques I learned have made a tremendous difference in my life.  I am happier, more relaxed and handle stressful situations with greater ease.  I would recommend his program to anyone seeking a happier, more tranquil lifestyle.” Rose Dean, CPA

“Dr. Rao’s Saturday 5 hour workshop was an enjoyable experience. His program combines tools and exercises that are both practical and effective in day-to-day life and that are easily implemented. I recommend this program for people who want to enhance their happiness both in their personal and professional lives.” – Mahesh Amin, M.D.

“I attended Professor Rao’s Saturday, Saturday, August 18, 2012 workshop, and it was so good that I subsequently attended part 2 on Sunday September 23, 2012. As a business manager, husband and father I strongly recommend it for anyone who wants to be more effective, enjoy life more, and have better interactions with other. It was great to have someone of Professor Rao’s stature in Clearwater and to meet such a nice person.” Daniel Sweeney, Vice President, BayCare HomeCare

You can learn more about this event by click here.

Research on Google

            If you want to see a write-up of any topic that has been covered in our Thursday Reports just search “Thursday Report Gassman” and type in the topic and you will find that every Thursday Report covering that topic comes up.  Google directs you right to the page where that topic begins.  You can also search our website directly by using the search box on the top right hand side of the page.  This way you can search not only the Thursday Report but the other resources on our website.  You can view our website by clicking here.  Rumors that the Thursday Report has acquired Google are strenuously denied.

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

  • PLANNING FOR SNOWBIRDS: Tips, Traps and Tactics for Advisors with Clients in Florida – An Encore Presentation          

Our first presentation on this topic was so well received by Bloomberg BNA Tax & Accounting that they have asked us back for a replay of the original presentation.  There will be a live question and answer session at the end of the replay. 

Date: Wednesday, August 7, 2013 | 12:30 p.m.

Presenters: Alan Gassman, Gary Teblum, Kenneth Crotty and Christopher Denicolo

Additional Information: The cost of this webinar is $348 for the webinar and the CD, $249 for just the webinar or $249 for just the CD.  For more information and to register for this webinar please click here.

  • FINANCIAL PLANNING ASSOCIATION (FPA) TAMPA BAY 2013 FLORIDA SYMPOSIUM

Alan Gassman will be joining Ken Zahn, CFP for a joint seminar on A Brief Introduction on the Art of Wealth Protection Planning. This seminar will also include a demonstration of our new EstateView Estate Planning Software.  Attendees will also receive a link to download the software to use on their own clients matters for a number of week.  For more information and to register for this webinar please click here.

Date: Monday, August 19, 2013 | Time to be determined

Speakers: Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC, Ken Zahn, CFP and Alan Gassman, JD, LL.M.

Location: Marriott Westshore Tampa, 1001 N. Westshore Blvd, Tampa, Florida

Additional Information: For more information and to register for this webinar please click here.

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Many lawyers are using our Joint Exempt Step Up Trust to enable clients in non-community property states to receive a stepped-up basis on all “joint trust assets” on the death of the first dying spouse.  Our Leimberg article on the Joint Exempt Step-Up Trust can be viewed by clicking here and the accompanying chart can be viewed by clicking here.

The Ultimate Estate Planner, Inc. is also featuring our Joint Exempt Step Up Trust forms, client explanation letter and other materials on their website.  To order the forms you can click here.

Date: Wednesday, August 21, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  The cost of the teleseminar is $139 for the teleseminar only or $189 if you would like to receive both the teleseminar and the accompanying PowerPoint and downloadable PDF materials.  For more information and to register  please click here.

  • WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presneter: Rob Cochran

Location: Online webinar

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

  • AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA

Location: Online webinar

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

NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Christopher Denicolo and Tom Davis will speak on the Affordable Care Act; Alan Gassman will be speaking on a topic to be determined.

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

WEDU ESTATE PLANNING SEMINAR  

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: TBD

Additional Information:  If you would like to sign up for this seminar please email agassman@gassmanpa.com

ENHANCED EFFECTIVENESS AND ENJOYMENT OF YOUR PROFESSIONAL AND PERSONAL LIFE – 5 TOOLS YOU CAN START USING IMMEDIATELY

Gassman Law Associates, P.A. is co-sponsoring a half-day workshop with noted author and speaker, Dr. Srikumar Rao

Date:    Saturday, October 12, 2013 | 1:00 – 6:00 p.m with option 7:00 – 8:00 question and answer session

Location: Holiday Inn Express, U.S. 19 and Gulf-to-Bay Blvd, Clearwater, FL

Additional Information: For more information please click here or email agassman@gassmanpa.com

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council please click here or email agassman@gassmanpa.com

  • 2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

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

Speakers:  Speakers will included 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.

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 click here.

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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – 7.25.13 – New LLC Terms, BP Oil Spill Claims and Disregarded Entities

Posted on: July 25th, 2013

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Special Anniversary Edition

6 Catastrophic BP Oil Spill Claim Mistakes, an article by John Goldsmith and Alan Gassman

Ken Crotty’s LLC Clinic – Changing Terminology in Operating Agreements Under the New Florida LLC Act

Don’t Disregard the Disregarded Entities Tax Reporting Requirements (DDD-ETRR), Part 2

New Seminar and Webinar Announcements

Research on Google

Lawyers in History: The Impact of Law Practice on Their Lives and Careers – Thomas Jefferson

More of Our Favorite Albert Einstein Quotes:

Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.

If you can’t explain it to a six year old, you don’t understand it yourself.

SCHOOL’S OUT FOR SUMMER

Sanders and Alice Cooper

The above picture is real, but what Colonel Sanders and Alice Cooper said to each other is unknown, unless the FBI had a bug in the room.  Our information on the FBI and J. Edgar Hoover’s involvement with Colonel Sanders and other great Americans will be profiled next week.

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.

6 Catastrophic BP Oil Spill Claim Mistakes, an article by John Goldsmith and Alan Gassman

            For those of you who missed it, we were fortunate to have attorney John Goldsmith of the Trenam Kemker law firm join us on Wednesday, July 17, 2013 and Wednesday, July 24, 2013 for two very informative webinars on the BP Oil Spill claims process.  To view the July 24 webinar please click here.   The deadline for filing a claim is April 22, 2014, but a great many claims have already been filed.  John has studied the BP situation extensively, and his firm is keeping current with settlements and pronouncements associated therewith. He has handled over 30 appeals and has received many positive results.  John has also had the opportunity to correct many errors that have been made on BP claims, and to learn from these.

BP agreed in April of 2012 to accept and pay claims made based upon the best of 171 formulas and without the need for a lawsuit or dickering over many issues.  In exchange for this BP was relieved from paying punitive damage claims in the industries this applies to.

Consequently many legal and accounting firms are actively representing BP claimants in exchange for a percentage of the recovery, but we believe that most of these firms are not aware of very important legal and practical information and needed steps and analysis that will result in their clients not receiving what would be allowed and their percentage fee being lower than it would otherwise be.  There is no doubt that plaintiff law firms will be advertising and working malpractice cases against many lawyers and accountants as a result of this.

There are many ways that a professional and his or her client can leave themselves open to settling for far less than is possible.  Six of those ways are profiled below:

1.         Not using the most-favorable method of calculating the client’s loss.

Not using the highest-yielding lost revenue calculation is perhaps the easiest way for a professional to find him or herself facing a malpractice claim.  Anyone filing a claim for economic loss is entitled to use the calculation that results in the highest dollar amount.  According to John, there are 171 different ways to calculate a client’s losses.  Failing to find and utilize the right one could have serious implications for you and your client.  Businesses located in different geographic zones (Zones A though D) will require different calculations (i.e. V Test, Modified-V Test, Decline-Only Test, etc.).

2.         Not following the BP settlement terms as to what constitutes fixed variable expenses.

Professionals calculating a client’s lost revenue must use the current claims system’s definitions of fixed and variable expenses.  These calculations have a substantial impact on the amount of a claim. The current system for filing oil spill claims, which is currently scheduled to close on April 22, 2014, stems from BP’s class action settlement agreement that was approved by the court in December 2012.  This claims system is separate from, and independent of, the original Government Accountability Project (GAP) claims system.  The GAP system used a different method of calculating fixed and variable expenses than what is stipulated in the current BP settlement agreement.

3.         Not performing a Step 2 analysis.

Not performing a Step 2 analysis may mean your client’s claim amount comes in far lower than it otherwise could have.  Calculating the dollar value of a claim based on change in net revenue is called the Step 1 analysis.  Step 2 analysis involves a company that enjoyed increasing or steady revenue early in 2010, but then faced decreased revenues in the months immediately following the April 2010 spill.  The BP claims administrator is supposed to do this Step 2 analysis, but at the same time, the administrator is not required to make assumptions that benefit the claimant.  The professional representing the claimant needs to know this extra analysis should be performed; the best way to do that is make sure the analysis is done before the claim is ever submitted.

4.         Not using the correct, or the most favorable time period for calculating your client’s claim.

One mistake being made with some of these claims is that the most-favorable time period is not being used to calculate the client’s economic loss.  To initially qualify for an oil spill claim, the claimant has to show the loss of income over a three-month period in 2010, compared with the same periods in 2009, 2008, or 2007.  What is sometimes missed, however, is the same time period does not have to be used to calculate the amount of the claim.  Simply relying on the time period used to verify initial qualification, rather than examining multiple time periods for the greatest loss, could result in a lower claim for the client and a malpractice suit for the professional.

5.         Using off-the-shelf or faulty software to calculate your client’s claim.

Relying upon faulty software and not knowing about the nuances contained in published BP administrator decisions and other under-publicized factors can hurt both claimants and the professionals attempting to help them.  There are software programs available online that assist professionals in calculating BP oil spill claims.  Some are good and some are not, but what these programs cannot do – and what it is imperative for claimant’s advocates to do – is keep abreast of the constantly changing claims administration process.  Rulings by the claims administrator affect how issues are addressed going forward; software alone cannot incorporate these changes and the resulting calculations that were right one week may be wrong the next.  Keep in mind that there are hundreds of such rulings.

6.         Not thoroughly reviewing your client’s website, press releases, and other factual circumstances.

Professionals filing BP oil spill claims need to know that a client may have his or her claim disqualified because of information released into the public domain.  Certain businesses, such as insurance companies and trust companies, are prohibited from filing claims.  If a website, press release, or even the client’s public or regulatory filings indicate that the company participates in one of the prohibited industries, the claims administrator or BP can use that as evidence that the claim should be thrown out.  Thorough representation should include a careful review of all of these materials as well as the implementation of a pre-publication review system for any new materials before their release.

It seems clear that anyone handling BP claims needs to be very careful, and it certainly appears that law firms and CPA firms should be working together, and not in lieu of one another, to make sure that the financial, logistical, and legal aspects are covered.

Under the practice of law rules it will require a lawyer to handle any appeal, and BP has apparently been appealing almost all professional service corporation and professional individual claims for losses in the past months.  Clients need to be made to understand how complicated and uncertain this process can be.

Any questions, suggestions or ideas that you might have concerning BP claims can be shared with John at jgoldsmith@trenam.com.  We are also interested in your questions, comments and suggestions on BP claims as well.

Ken Crotty’s LLC Clinic – Changing Terminology for Operating Agreements Under the New Florida LLC Act

The new Florida LLC Act has changed some of the terminology that used to exist under the old Act.  It is important that practitioners and clients be aware of these changes to avoid unintended results.  We will discuss more of these changes in future Thursday Reports and want to focus in this report on the managing member.

The Act has removed the concept of a managing member.  Under the old act, an LLC could have a managing member instead of a manager.

Under the new Act, if the operating agreement states that it has a managing member then the LLC will be treated as a member-managed LLC.  The managing member will not be considered to be a manager, and therefore the LLC will not be a manager-managed LLC.

One of the reasons this is significant to note is because if an LLC is member-managed, then the consent of all of the members is required to amend the operating agreement.  For many clients, they will not want minority members to have to consent to the amendment of an operating agreement.  Therefore, if the client has an LLC operating agreement which would be considered to be a member-managed operating agreement under the new Act, during 2014 and before the LLC elects to have the new Act applied to it, the operating agreement should be changed so that the member who was the “managing member” of the LLC is now the manager of the LLC.  As a result, the LLC would be deemed to be a manager-managed LLC and the operating agreement could be further modified without the unanimous consent of all the members.

A second reason this could be important is that the new Act requires an LLC to update its information that is stated in the Articles of Organization when it becomes inaccurate.  In a manager-managed LLC the duty to update this information falls on the manager.  However, in a member-managed LLC the members are the ones who are required to keep this information current.  This could cause a member of a member-managed LLC to have potential liability if someone relied on incorrect information in the Articles of Organization, even if such member was a minority member had no effective control over the LLC.

Don’t Disregard the Disregarded Entities Tax Reporting Requirements (DDD-ETRR), Part 2

By: Kenneth J. Crotty, J.D., LL.M.

This is part 2 of a 2 part article on this topic, which discusses electing small business trusts and other issues with disregarded entities.  Ken’s article “Disregarded Entity Reporting Requirements appears in the July 24, 2013 Business Entities Email Newsletter on the LISI network.  To read the article please click here.

If the owner of a disregarded single member LLC has exempt status from federal income tax, then the LLC is not required to (1) pay federal income tax, (2) file a federal tax return, or (3) file an informational return.  Any such requirement to file a federal tax return or informational return on behalf of the LLC is the responsibility of the owner rather than the LLC.  A disregarded entity has the option to report and pay employment tax for its employees.

The federal income tax-exempt status of the sole owner will also apply to a disregarded single member LLC.  If the owner of a disregarded LLC is claiming exempt status, the owner must treat the finances and operations of the LLC as its own for federal tax and information reporting.  The LLC’s disregarded status is with respect to its classification as a separate entity, but the LLC is treated as an activity of the sole owner.  Any entity activities that are outside the tax-exempt purposes of the sole owner may impact the tax-exempt status of the owner, and may even create tax liability.

It is important to note that if the owner of the disregarded LLC has exempt status, the LLC should not file a Form 1023 or Form 990 exemption application.  By filing this application, the previously disregarded LLC will become an organization that is treated as separate from its owner.  If the owner of the LLC is concerned that transactions with or by the LLC may cause the owner to lose its exempt status, then the owner should request a private letter ruling.

If an LLC elects to be regarded as an entity separate from its owner on a Form 8832 or becomes an entity with two or more owners, then Section 508 of the Code applies to trigger the exemption notification requirements.  Subsequently the LLC must apply for federal tax exemption recognition, within the 27 month period after the end of the month when the LLC is no longer a disregarded entity.

ESBTs (Electing Small Business Trust)

A Grantor Trust is eligible to be a shareholder of an S corporation if all of the trust is owned by an individual.  Often planners who have clients selling or gifting ownership interests in S corporations to gifting trusts that are Grantor Trusts will also have the trust make an election to become an Electing Small Business Trust or “ESBT.”  By making this election, if another person contributes assets to the gifting trust causing it to no longer be a solely owned gifting trust, this will not cause the loss of the S corporation status because an ESBT is an eligible shareholder for S corporations.

An ESBT can have multiple shareholders or beneficiaries.  It can also accumulate its own income, and may distribute both principal and accumulated income to beneficiaries.  In order to make the ESBT election:

1.         All trust beneficiaries must be individuals, estates, and charities, or must meet other specific requirements described in §170(c)(1) or §170(c)(2)-(5), as applicable;

2.         Trust interests must not be available for purchase; and

3.         The Trustee of the trust must file for the ESBT election.

Certain trusts are prohibited from making an ESBT election including (1) Qualified Subchapter S Trusts; (2) Charitable remainder annuity trusts; and (3) Charitable remainder unitrusts.

Pursuant to Treasury Regulations, an ESBT has an “S Portion,” a “non-S Portion,” and if the trust is a Grantor Trust a “Grantor Portion.”

If a solely owned Grantor Trust has made an ESBT election, then the Grantor Portion comprises 100% of the Trust.  During the lifetime of the Grantor the trust is subject to the regular taxation rules that apply to Grantor Trusts.  The Grantor’s income tax return will reflect any income, deduction and credit that can be attributed to the ESBT which is considered to be owned by the Grantor.

After the death of the grantor, the Grantor Portion ceases to exist and the items of income and deduction for the trust need to be split between the S Portion and the non-S Portion.  This point often confuses practitioners.  After the death of the grantor of a wholly owned Grantor Trust, the resulting trust or trust are not taxed as normal simple or complex trusts.

The portion of the ESBT that consists of any assets other than the S corporation stock will compromise the non-S portion.  The income included in the non-S Portion will also consist of any corporation distributions classified as dividends, as well as interest accrued for installment payments for the sale of S corporation stock.  For the non-S Portion of the trust, the taxation of this portion of the trust is governed by the normal tax rules applicable to non-Grantor Trusts.

This is not true for the S Portion of the ESBT.  The S Portion of an ESBT, that is not a Grantor Trust, is treated as a separate trust and the taxable income is calculated separately.  The income of the S Portion includes:

1.         Any gains and losses on disposition of S corporation stock;

2.         The items of income, loss, deduction or credit required to be taken into account by an S corporation shareholder by §1366 and the regulations thereunder, except for the items mentioned above in the calculation of the non-S Portion’s income;

2.         Income taxes and administrative expenses related to the assets of the S Portion of the trust and any interest expense paid or accrued on indebtedness for acquiring S corporation stock.

Generally, the income calculated for the S portion of the trust is taxed at the highest marginal rate for trusts.  It is important to note that capital gains are not subject to tax at this highest rate.

Because assets of the S Portion of the trust are a separate part of the ESBT, the income and deductions from such items are excluded when calculating the distributable net income (DNI) of the ESBT.  The S Portion is not allowed a deduction if these items are distributed to the beneficiaries and the beneficiaries may not include such distributions when calculating their personal income.

 

New Seminar and Webinar Announcements

Below we have listed our most recent webinars and seminars for your reference. 

ESTATE TREK: DEEP SPACE NINE – An Update to Our EstateView Estate Planning Software – Attendees will receive free use of our software program.

On Wednesday, July 31, 2013 at 12:30 pm, Alan Gassman, Kenneth Crotty, Christopher Denicolo and software developer David Archer will be discussing our new estate planning software and the recent updates which include a client explanation letter that will automatically calibrate to the planning strategies, inserting appropriate numbers, client names, amounts, and other data.  Attendees will receive free use of our software as beta testers.  To register for the webinar please click here

WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Rob Cochran of Long-Term Care Insurance Services, LLC in Orlando, Florida will join Alan Gassman for a webinar discussing what clients are suitable for long term care insurance on Thursday, August 29, 2013 at 5pm for a 30 minutes webinar.  Rob is the author of two books Pills and Bills and  The Truth About Long Term Care Insurance (click here for more information) To register for the webinar please click here.   We have purposefully gone outside of our market area to find Mr. Cochran in order to facilitate an objective discussion of what clients will or will not be considered as appropriate to buy long term care insurance.  Many people would be able to rely upon Medicaid and cannot afford the premiums.  Others would be able to afford home care, and it would be tax deductible.

PLANNING FOR SNOWBIRDS: Tips, Traps and Tactics for Advisors with Clients in Florida – An Encore Presentation

Bloomberg BNA Tax & Accounting will be replaying our presentation from May 28, 2013 on Planning for Snowbirds on Wednesday, August 7, 2013 at 12:30 p.m., and we will attend to provide live question and answer responses at the end of the replay.  If you want to send us any questions now we will be ready for you and also respond in writing beforehand.  The cost of this webinar is $348 for the webinar plus CD, $249 for the webinar only or $249 for the CD only.  To register for this webinar please click here.   For discount access to this product email agassman@gassmanpa.com

FINANCIAL PLANNING ASSOCIATION (FPA) TAMPA BAY 2013 FLORIDA SYMPOSIUM – A TWO DAY SEMINAR

Alan Gassman will be joining Ken Zahn, CFP at the Financial Planning Association (FPA) Tampa Bay 2013 Florida Symposium.  The Symposium is a two day event on Monday, August 19 and Tuesday, August 20.  Alan Gassman will speak Monday, August 19 at a time to be determined.

ZahnKen_160x160

Ken Zahn, is a very well known and respected CFP course author and lecturer.  He has a great sense of humor, amazing common sense, and most importantly he reads the Thursday Report.  Ken has also provided us with very good advice for the next improved version of our software.

Other notable speakers at the Symposium include Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC and Dale Van Scoyk, GFS.  On Tuesday afternoon there will be a 2 hour program that will fulfill the CFP ethics portion of the recertification process.  For more information and to register for this webinar please click here

Please plan to attend this excellent event.

AVE MARIA SCHOOL OF LAW

On April 25, 2014, Ave Maria school of law will be hosting the 1st Annual Estate Planner’s Day.

Notable speakers for the event include Professor Jerry Hesch, Jonathan Gopman and, possibly by mistake, Alan Gassman.  The event is hosted by Ave Maria School of Law in Naples, Florida and is sponsored by the law school and the Collier County Estate Planning Council. 

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

Research on Google

If you want to see a write-up of any topic that has been covered in our Thursday Reports just search “Thursday Report Gassman” and type in the topic and you will find that every Thursday Report covering that topic comes up.  Google directs you right to the page where that topic begins.  You can also search our website directly by using the search box on the top right hand side of the page.  This way you can search not only the Thursday Report but the other resources on our website.  You can view our website by clicking here.   Rumors that the Thursday Report has acquired Google are strenuously denied.

Lawyers in History: The Impact of Law Practice on Their Lives and Careers – Thomas Jefferson

thomas Jefferson

Rounding out the month of July and the celebration of the birth of our nation, this week we are highlighting perhaps one of the most influential people of the time, Thomas Jefferson.  Born in 1743, Thomas Jefferson is noted as one of America’s Founding Fathers.  At the age of 16 Jefferson entered the College of William and Mary in Williamsburg, Virginia, where he first met George Wythe, with whom he clerked after graduating from college in only 2 years.

He practiced as a circuit lawyer for several years and represented Albemarle County in the Virginia House of Burgesses.  He was also a delegate to the Second Continental Congress beginning in June of 1775.  During his time in the Second Continental Congress, Jefferson became friendly with John Adams and Samuel Adams.  As the Congress progressed and began to consider drafting a resolution of independence a committee was formed with both Adams and Jefferson on it.  After the committee discussed the details of the document, they voted to have Thomas Jefferson write the first draft.  This document is now known as the Declaration of Independence.  Thomas Jefferson wrote the Declaration of Independence over a period of 21 days with limited time to work on the document.  He drew inspiration from the Virginia Constitution and the Virginia Declaration of Rights.

If you have not seen the musical video “1776” you will find it to be very interest.  Also, if you have not toured Independence Hall in Philadelphia you have really missed out.

On June 28, 1776 the final draft of the Declaration was presented to Congress and after several days of debate and voting, Congress made several changes to the document, eliminating almost a fourth of the text.  The document was ratified and signed on July 4, 1776 thus beginning the start of our nation.

Before becoming president, Jefferson was involved in several different aspects of our political system including:

  • Serving in the Virginia House of Delegates from 1776 until 1779;
  • U.S. Minister to France from 1785 until 1789;
  • Elected Governor of Virginia in 1779 and re-elected in 1780;
  • Becoming the Virginia Delegate in the Congress of Confederation;
  • Proposed that American currency be based on the decimal system.  (His plan was later adopted and put into place.)
  • Served as Secretary of State in George Washington’s cabinet from 1790 to 1793 during which time his letter to President George Washington set forth the founding principles of the Democratic Party.
  • Brokered a deal for the capital to be located on the Potomac River, now Washington, D.C.

Thomas Jefferson was almost always on the edge of insolvency, yet he donated his entire personal library to become the first Library of Congress.  He is also now well known for having co-habitated with a slave, Sally Hemmings, and they had six children together, and apparently an excellent relationship.  Sally Hemmings was the daughter of planter John Wayles and an enslaved woman, Betty Hemmings.  Thomas Jefferson’s wife was Martha Wayles Skelton, daughter of the same John Wayles and therefore half-sister to Sally Hemmings. 

In 1796 Thomas Jefferson ran for President as the Democratic-Republican candidate.  He lost to John Adams but had enough votes to secure the position of Vice President.  During his term as Vice President he sought to reform the duties and abilities of the Senate.

In 1800, Jefferson was elected President of the United States during a time when the Democratic-Republican and Federalist parties were at odds with each other.  In fact, Jefferson and one of his opponents, Aaron Burr, were tied for votes in the electoral college for the position of President.  Thomas Jefferson won out over Aaron Burr, due in part to the support of Alexander Hamilton, who was later shot in a duel with Aaron Burr.  Aaron Burr became Vice President.

Jefferson was known as the “People’s President” and during his term as President:

  • Ohio was admitted to the union (we will forgive him for this).
  • He authorized the Louisiana Purchase which doubled the size of the United States;
  • He negotiated the purchase of New Orleans from France, and won, thus purchasing New Orleans (this makes up for Ohio – even Columbus was disappointed);
  • Appointed Lewis and Clark on an expedition into the newly acquired territory; and
  • The U.S. Military Academy at West Point was started.

After a second term as President, Thomas Jefferson retired and sought to establish the first college not based on the principles of a church and urged the separation of church and state.  The University of Virginia was the first college to be centered around a library rather than a chapel.

Jefferson and Adams had a well known and very intense rivalry and love-hate relationship.

On July 3, 1826, Thomas Jefferson spoke his last words to his family and friends, stating “I have done for my country, and for all mankind, all that I could do, and now I resign my soul, without fear, to my God – my daughter to my country.”  He later passed around 1pm on July 4, 1826 on the fifteenth anniversary of the Declaration of Independence.  It is interesting to note that former President John Adams also died on the same day speaking his last words “Independence forever” and “Thomas Jefferson survives.”

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

MORE TWEAKS TO POA AND 50 SHADES OF RES JUDICATA – BINDING THE TRUST BENEFICIARY     

Please join us for this important and timely presentation – avoid being tied up in details that can cause negative client results and possible suffering.

Date: Monday, July 29, 2013 | 12:30 p.m.

Presenters: Tami Conetta, Esq. and Barry Spivey, Esq.

Location: Online webinar

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

ESTATE TREK: DEEP SPACE NICE – EVEN MORE UPGRADES TO OUR ESTATEVIEW ESTATE PLANNING SOFTWARE

ALL ATTENDEES WILL RECEIVE A LINK TO DOWNLOAD THE SOFTWARE FOR FREE THAT THEY CAN USE ON THEIR OWN CLIENT MATTERS FOR A NUMBER OF WEEKS

We now have the software issuing a client explanation letter and have improved other features as well.

Date: Wednesday, July 31, 2013 | 12:30 p.m. (30 minutes)

Presenters: Alan Gassman, Kenneth Crotty, Christopher Denicolo and David Archer

Location: Online webinar

Aditional Information: To register for the webinar please click here.

PLANNING FOR SNOWBIRDS: Tips, Traps and Tactics for Advisors with Clients in Florida – An Encore Presentation          

Our first presentation on this topic was so well received by Bloomberg BNA Tax & Accounting that they have asked us back for a replay of the original presentation.  There will be a live question and answer session at the end of the replay. 

Date: Wednesday, August 7, 2013 | 12:30 p.m.

Presenters: Alan Gassman, Gary Teblum, Kenneth Crotty and Christopher Denicolo

Additional Information: The cost of this webinar is $348 for the webinar and the CD, $249 for just the webinar or $249 for just the CD.  For more information and to register for this webinar please click here.

FINANCIAL PLANNING ASSOCIATION (FPA) TAMPA BAY 2013 FLORIDA SYMPOSIUM

Alan Gassman will be joining Ken Zahn, CFP for a joint seminar on A Brief Introduction on the Art of Wealth Protection Planning. This seminar will also include a demonstration of our new EstateView Estate Planning Software.  Attendees will also receive a link to download the software to use on their own clients matters for a number of week.  For more information and to register for this webinar please click here.

Date: Monday, August 19, 2013 | Time to be determined

Speakers: Elizabeth Jetton, CFP, Linda Chamberlain, JD, CMC, Ken Zahn, CFP and Alan Gassman, JD, LL.M.

Location: Marriott Westshore Tampa, 1001 N. Westshore Blvd, Tampa, Florida

Additional Information: For more information and to register for this webinar please click here.

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Many lawyers are using our Joint Exempt Step Up Trust to enable clients in non-community property states to receive a stepped-up basis on all “joint trust assets” on the death of the first dying spouse.  Our Leimberg article on the Joint Exempt Step-Up Trust can be viewed by clicking here  and the accompanying chart can be viewed by clicking here.

The Ultimate Estate Planner, Inc. is also featuring our Joint Exempt Step Up Trust forms, client explanation letter and other materials on their website.  To order the forms you can click here.

Date: Wednesday, August 21, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  The cost of the teleseminar is $139 for the teleseminar only or $189 if you would like to receive both the teleseminar and the accompanying PowerPoint and downloadable PDF materials.  For more information and to register  please click here.

WHAT CLIENTS ARE AND ARE NOT SUITABLE FOR LONG TERM CARE INSURANCE

Date: Thursday, August 29, 2013 | 5:00 p.m.

Presneter: Rob Cochran

Location: Online webinar

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

AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA

Location: Online webinar

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

NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Christopher Denicolo and Tom Davis will speak on the Affordable Care Act; Alan Gassman will be speaking on a topic to be determined.

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

WEDU ESTATE PLANNING SEMINAR  

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: WEDU PBS Berkman Family Broadcast Center – 1200 N. Blvd., Tampa, Florida

Additional Information:  If you would like to sign up for this seminar please email agassman@gassmanpa.com

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

PINELLAS COUNTY ESTATE PLANNING COUNCIL HALF-DAY SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council please click here or email agassman@gassmanpa.com

2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

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

Speakers:  Speakers will included 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.

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 click here.

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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – July 18, 2013, Einstein, New LLC Chart and Disregarded Entities

Posted on: July 18th, 2013

No Comments

Providing a link between Wednesday and Friday.

Special Albert Einstein Edition

How to File Tax Returns for Disregarded Entities and Grantor Trusts, with Sample Forms by Kenneth J. Crotty, J.D., LL.M.

Ken Crotty’s LLC Clinic – Increase in Non-Waivable Provisions

Last Call to Take Advantage of Ultra-Low Rates for GRATs? An Article by Stephen S. Schilling, CFA and Tara Thompson Popernik, CFA, CFP of AllianceBernstein

See Our New Seminars & Webinars Below in Blue

Lawyers in History: The Impact of Law Practice on Their Lives and Careers – John Penn 

Albert Einstein

Albert Einstein

Thursdays are an illusion albeit seemingly very real. 

While traveling on a train at 100 mph the Thursday Report remains stationary, and may therefore be equivalent to the speed of light.

E=Thursday Report3 

-        Albert “Colonel Sanders” Einstein, 1953

Princeton University, 1953 Lectures

From the book entitled My Life with Albert Einstein by Colonel Harlan Sanders

SOME OF OUR FAVORITE ALBERT EINSTEIN QUOTES:

We all know that light travels faster than sound.  That’s why certain people appear bright until you hear them speak.

The greatest mathematical discovery of all time is compound interest.

If a cluttered desk is a sign of a cluttered mind, of what, then, is an empty desk a sign?

Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction. 

For a discussion of Albert Einstein’s theory of relativity and the answer to the question as to whether light gets faster when projected from a moving object click here.

Dogs

THE THURSDAY REPORT CAN NOW BE READ ON YOUR RSS FEED.

To register the Thursday Report please use the following URL in your RSS Reader

http://gassmanlawassociates.com/feed/

For information on what an RSS feed is please click here.

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.

How to File Tax Returns for Disregarded Entities and Grantor Trusts, with Sample Forms

By: Kenneth J. Crotty, J.D., LL.M.

This is part 1 of a 2 part piece on this topic.  Next week Ken will cover electing small business trusts and other issues that arise with disregarded entities.

“Disregarded entities are an illusion albeit not a reality.” – Albert Einstein

Ken Crotty of our firm has spent a lot of time preparing an explanation of how to report disregarded entities and defective grantor trusts for federal income tax purposes.

We do not believe that this material is available anywhere else.

The most common disregarded entities are single member LLCs and “defective” Grantor trusts.  As a general rule, disregarded entities and Grantor trusts are not required to obtain employer identification numbers.  However, many financial institutions require employer identification numbers for income reporting purposes and will not allow the social security number of the owner or Grantor to be used.

Reporting Disregarded Entities

If a disregarded entity has an employer identification number and the ownership of the entity changes so that it no longer qualifies as a disregarded entity, the disregarded entity should retain its old employer identification number.  For example, if a disregarded single member LLC has an employer identification number, and then a second member buys into the LLC so that it is now treated as a partnership, the partnership should continue using the employer identification number that was assigned to the LLC when it was disregarded.

Generally disregarded entities do not need to file a separate tax return.  The items of income and deduction from the activities of the disregarded entity will be picked up on the owner=s tax return on the following Schedules:

Schedule C B Profit or Loss from Business (sole proprietorship)

Schedule E B Supplemental Income or Loss

Schedule F B Profit or Loss from Farming

The disregarded entity is treated as separate from its owner for employment tax purposes for wages paid on or after January 1, 2009 and for excise taxes reported and paid on Forms 720, 730, 2290, 11-C, or 8849 after December 31, 2007.  In these situations, the employment tax and excise tax return instructions should be reviewed to be certain that the disregarded entity is reporting the necessary information.

Reporting Grantor Trusts

If a trustee is not using one of the optional methods of filing, which are discussed below, and the entire trust is a Grantor trust, the trustee need only fill in the entity information on the Form 1041 and not show any dollar amounts on the Form 1041 itself.  Instead, the trustee should show the dollar amounts on attachments to the Form 1041.   The attachment should not be a Schedule K-1. The trustee must give the Grantor of the trust a copy of the attachment.

If the trust is only partially by a Grantor trust, then the items of income and deduction for the non-Grantor portion of the trust should be reported on the Form 1041 as normally would be done and the portion of the items treated as owned by a Grantor trust should be shown on an attachment.

The attachment must show the name, identifying number, and address of the persons to whom the income is taxable.  The income must be reported in the same detail as it would be reported on the Grantor=s income tax return if it had been received directly by the Grantor.  Any deductions or credits that apply to the income also need to be reported in the same detail as they would be if they had been received directly by the Grantor.  The Grantor then reports the items of income, deductions and credits on the Grantor=s personal return.

For Grantor trusts, there are three optional methods of filing, which the trustee may choose instead of filing the Form 1041.  If a trust is treated as owned by one person, then the trustee may select Option 1 or Option 2 described below.  If a husband and wife are treated as the owners of a trust, they will be deemed to be one person and therefore the trustee may select either Option 1 or Option 2 below.  If the trust is treated as owned by more than one person, then the trustee may select Option 3 below.

You can click here to see the sample documentation to be used to inform the IRS that a trust is disregarded for income tax purposes.  There is a sample default Form 1041 which can be filed for a Grantor Trust.  Also provided are samples showing the reporting necessary under Option 1 and Option 2.

Option 3 has the same reporting requirements as Option 2 but only applies in situations where there is more than one Grantor, and the Grantors are not husband and wife.  In this situation the trustee needs to determine which portion of the trust assets were payable to Grantor 1 and which portion of the trust assets were payable to Grantor 2.  The trustee would then provide each of Grantor 1 and Grantor 2 with the same information as shown under Option 2.

Option 1:        The trustee must give all of the payers of income during the year to the trust the social security number of the individual treated as the owner of the trust and the trust=s address.  To use this method, the owner of the trust must provide the trustee with a signed W-9.  If the owner of the trust is not the trustee or co-trustee, then the trustee must (1) give the owner a statement showing all of the items of income, deduction, and credit of the trust; (2) identify the payer of each item of income; (3) explain how the owner takes such items into account when preparing the owner’s tax return; and (4) inform the owner that these items must be included on his or her tax return.  If the trustee reports under Option 1 and the trust does not have an employer identification number, the trust does not need to obtain an employer identification number to satisfy Option 1.

Option 2:        The trustee must give all of the payers of income during the year to the trust the full name of the trust, the trust=s address and the trust=s tax identification number.  The trustee also must file with the IRS the appropriate Forms 1099 to report the income paid to the trust during the tax year.  These forms show the trust as the payer and the individual treated as the owner of the trust as the payee.  If the owner of the trust is not the trustee or co-trustee, then the trustee must (1) give the owner a statement showing all of the items of income, deduction, and credit of the trust; (2) explain how the owner takes such items into account when preparing the owner=s tax return; and (3) inform the owner that these items must be included on his or her tax return.  If the trustee reports under Option 2 and the trust does not have an employer identification number, the trust needs to obtain an employer identification number to satisfy Option 2.

Option 3:        The trustee must give all of the payers of income during the year to the trust the full name of the trust, the trust=s address and the trust=s tax identification number.  The trustee also needs to file with the IRS the appropriate Forms 1099 to report the income paid to the trust during the tax year.  These forms would show the trust as the payer and the owners as the payees.  The trustee must (1) give each owner a statement showing all of the items of income, deduction, and credit of the trust attributable to such owner; (2) explain how each owner takes such items into account when preparing his or her tax return; and (3) inform each owner that these items must be included on his or her tax return.  If the trustee reports under Option 3 and the trust does not have an employer identification number, the trust needs to obtain an employer identification number to satisfy Option 3.

If a trustee has been filing a Form 1041, the trustee can change to one of the three optional methods listed above at any time.  The trustee can do this by filing a final Form 1041 for the tax year immediately preceeding the first tax year that the trustee elects to use one of the optional methods of filing.  On the form of the final Form 1041, the Final return box in item F must be checked and the words “Pursuant to section 1.671-4(g), this is the final Form 1041 for this grantor trust” should be written on the first page of the Form 1041.

The filing of the relevant 1099s by the trustee, in relation to Options 2 and 3 above depends on the type of income for the Trust.  For example the turstee may be required to file a 1099-DIV for dividend income and file a 1099-INT for relevant interest income.

In relation to the reporting of income from long-term gain or loss from a partnership, S Corporation, or trust, Treasury Regulation 1.671-4(b)(5) provides that in the case of a trust that owns an interest, the distributive share belonging to the trust as a partner, shareholder, or beneficiary will not be includable by the trustee on any Form 1099 because the distributive share is reportable by the partnership, S corporation, or trust on the Schedule K-1.

Certain trusts are not allowed to use the optional filing methods.  These include the following:

1.         The common trust fund;

2.         A foreign trust or trust that has any of its assets located outside of the United States;

3.         A qualified Subchapter S trust;

4.         A trust which is treated as owned by one or more individuals who have a tax year other than a calendar year;

5.         A trust which is owned by one or more persons who are not U.S. persons; and

6.         A trust which is owned by one or more persons if at least one person is an exempt recipient for informational reporting purposes unless at least one other person is not an exempt recipient and the trustee reports the information without treating any of the owners as exempt recipients.

Ken Crotty’s LLC Clinic – Increase in Non-Waivable Provisions

The new LLC Act is a “default” act which generally allows the parties to customize the Operating Agreement for the LLC based on the agreement of the members.  However, some provisions may not be waived or modified.  Compared to Section 608.423 of the old act, Section 605.0105 of the new Act greatly expands these non-waiveable provisions.  The chart below compares these two Sections showing the differences.

We thank recent Stetson Law School graduate, Corinna Cicmanec who will be attending the University of Florida Tax Program this coming semester, for preparing the following chart and putting up with us for most of the summer.  Congratulations Corinna and enjoy your time in Gainesville relaxing with the Internal Revenue Code.

 

Provision

Old – §608.423 New – §605.0105

The Operating Agreement

The operating agreement:-        Regulates the conduct and affairs of the LLC;-        Establishes duties; and-        Governs relations between the members, and the members and the LLC Operating agreement specifically governs:

  1.  Relations between members, and between members and the LLC
  2. The rights and duties of managers
  3. The conduct of activities and affairs of the LLC
  4. Means and conditions of amending the operating agreement

Agreement Limitations

Cannot unreasonably restrict the right to information or access to records under §608.4101 (right to information provision) Cannot unreasonably restrict the right to information or access to information, but can impose reasonable restrictions on the availability and use of info, and may define appropriate remedies for breach of a reasonable restriction on use.
Cannot eliminate the duty of loyalty, but can:-        Identify activities that are not in violation of the duty of loyalty if not unreasonable; and-        Specify a number or percentage of members or disinterested managers that can authorize, or ratify, an act or transaction as not violating the duty of loyalty if all material facts were disclosed. Cannot eliminate the duty of loyalty or duty of care (under §605.04091, standards of conduct for members and managers), except for the rules that allowed under subsection 4 (see below)
-        Cannot unreasonably reduce the duty of care under §608.4225 Cannot eliminate the duty of loyalty or duty of care (under §605.04091, standards of conduct for members and managers), except for the rules that allowed under subsection 4 (see below)

Cannot eliminate the obligation of good faith and fair dealing, but can make standards of measurement for such obligation as long not manifestly unreasonable

Cannot vary requirement to wind up LLC’s business

Cannot restrict the rights of a person (other than manager, member or transferee of a member’s distributional interest) Cannot restrict the rights of a person, except as provided in the operating agreement
Cannot vary the capacity of LLC to sue or be sued
Cannot vary governing law
Cannot vary requirement, procedure, or other provisions regarding:-     Registered agents; orThe department, including records authorized or required to be delivered to the department for filing
-     Cannot vary the provisions regarding the signing and filing pursuant to judicial order
Cannot relieve or exonerate a person from liability for conduct involving bad faith, willful or intentional misconduct, or a knowing violation of law
Cannot vary the power of a person to disassociate, except to require notice of a person’s intent to withdraw (under §605.0602(1)) to be in a record
Cannot vary the grounds for judicial dissolution (as stated in chapter)
Cannot restrict the rights of a member to maintain an action under:-        The direct action of a member;-        A derivative action;-        Proper plaintiff;-        Special litigation committee (agreement can provide that the LLC may not appoint the committee, but cannot prevent the court from doing so);-        Proceeds and expenses; or

Voluntary dismissal or settlement; notice.

-        Cannot vary the right of a member to approve a merger, interest exchange or conversion
Cannot vary the contents of a plan of merger, interest exchange, conversion or domestication

Last Call to Take Advantage of Ultra-Low Rates for GRATs? An Article by Stephen S. Schilling, CFA and Tara Thompson Popernik, CFA, CFP of AllianceBernstein

People

Matt Gordon from AllianceBernstein’s Tampa office is a very well informed and dedicated advisor who has provided us with the following article prepared by AllianceBernstein’s amazing planning team.  Matt’s contact information is as follows:

Matthew Gordon
Bernstein Global Wealth Management
101 East Kennedy Blvd.
Suite 3200
Tampa, FL 33602
matthew.gordon@bernstein.com
Phone: 813-314-3328

Anyone considering a long-time GRAT or a QPRT should read this article and share it with clients and other advisors.

Steve S. Schilling is a Director in Bernstein’s Wealth Management Group and is based in the firm’s San Francisco office. He advises Bernstein’s Bay Area and Pacific Northwest clients regarding complex investment planning issues; his areas of expertise include diversification planning for holders of concentrated portfolios, multigenerational wealth transfer, philanthropy and pre-transaction planning. Schilling joined the firm in 2000 and has been a member of the Wealth Management Group since 2003, serving as an analyst and senior analyst before becoming a Director in 2009. Schilling earned a BA in economics from the University of California, Santa Barbara, and is a Chartered Financial Analyst charter holder.

Tara Thompson Popernik was named the Director of Research for the Wealth Management Group in 2011 and is responsible for leading research initiatives on investment planning and asset allocation issues facing high-net-worth families, family offices, and endowments and foundations. Previously, she was a wealth management specialist, and before that she was a senior investment planning analyst. Prior to joining the firm in 2003, Popernik was a paralegal in the Capital Markets Group of Cadwalader, Wickersham & Taft. She earned a BA with honors in comparative literature from Dartmouth College. Popernik is a CFA charter holder and a Certified Financial Planner certificant.

US investors interested in establishing a “zeroed-out” Grantor Retained Annuity Trust (GRAT) should consider acting fast to complete their transactions before rising interest-rates diminish their potential value—preferably before the end of July.

The “zeroed-out” GRAT has been a popular estate planning vehicle for many years because it can transfer wealth to the next generation while using little or none of the $5.25 million applicable exclusion amount (the money that you can give away either during your life or at death before gift or estate taxes kick in). That leaves all or most of the applicable exclusion available to shelter assets from estate tax. At an individual’s death, the cost basis for appreciated assets is increased to fair market value so the potential income tax on the appreciation is eliminated. This “step-up” has become even more valuable with the increase in US income tax rates effective 2013.

The key to a zeroed-out GRAT is that the present value of the annuity payments retained by the grantor must equal (or zero out) the value contributed to the GRAT, so that there is no taxable gift. Anything remaining in the trust after the annuities have been paid passes to the beneficiary’s gift tax-free. How large the annuity payments must be to zero-out the GRAT is based on current interest rates.  Lower interest rates are better because they lower the required annuity payments, and thus increase the chances that there will be something left over for heirs.

The Internal Revenue Service sets the required annuity rate for newly established GRATs each month, based on Treasury yields. The rate has fluctuated from an all-time high of 11.6% in 1989 to an all-time low of 1.0% in January 2013. The July rate of 1.4% reflects Treasury yields from May 15 through June 14, so it does not reflect the recent spike in bond yields; the August rate will.

Based on a methodology we believed to be similar to the IRS methodology, we predict that the August rate will be 2.0%, and, if current Treasury yields persist, the September rate will be 2.2%. So, there’s likely to be a significant benefit to completing a GRAT transaction before the end of July.

To give clients a sense of the large impact that interest rates can have on the success of longer-term GRATS, we estimated the remainder value of GRATs established under different historical conditions. In each case, a 10-year GRAT is established with $1 million invested in the S&P 500. For GRATs established in the quintile of months when the 7520 rate was lowest (between 1.2% and 2.6%), the median remainder value would have been about $2.1 million, almost four times the $533,000 median remainder value of GRATs established in the second quintile of months, when the 7520 rate was between 2.6% to 5.2%.*

[NOTE FROM THURSDAY REPORT EDITORS: We certainly hope that the interest rates will not go up to 5.2% any time soon! That is like having to pay $50 for a bucket of chicken!]

The good news is that there are still three weeks left to take advantage of the July rate, and the August rate will still fall within the lowest quintile of historical rates. But the window for locking in a low rate for a longer term GRAT strategy may be closing, as the days of hurdle rates below 2% may soon be at an end.

*This analysis includes 745 10-year periods, beginning monthly from 1941 through May 2003; using a proxy for the 7520 rate before 1989 based on IRS methodology. All strategies funded with $1 million. All assets are invested in an S&P 500 index. Wealth to beneficiaries is adjusted for inflation over the applicable time horizon.

The views expressed herein do not constitute, and should not be considered to be, legal or tax advice, and there is no relationship between AllianceBernstein and Colonel Sanders. The tax rules are complicated, and their impact on a particular individual may differ depending on the individual’s specific circumstances. Please consult with your legal or tax advisor regarding your specific situation. 

Click here to see our chapter on Grantor Retained Annuity Trusts in the Bloomberg BNA Estate Tax Planning in 2011 and 2012 book co-written by Alan S. Gassman, Kenneth J. Crotty and Christopher J. Denicolo.

Our Most Recent Seminar and Webinar Announcements

Below we have listed our most recent webinars and seminars for your reference.  We are also going to be sending these to you as a separate announcement.

BP OIL SPILL CLAIMS: AVOID MISTAKES AND MAXIMIZE CLAIMS

On Wednesday, July 24, 2013 at 12:30 p.m. please join John Goldsmith of the Trenam Kemker Law Firm and Alan Gassman for a 45 minute webinar regarding BP Oil Spill Claims.  There is a lot of criteria and options when seeking a claim and this webinar lays them out in a clear and understandable fashion. To register for the webinar please click here.

NOTE: This presentation was also given on Wednesday, July 17, 2013.  If you would like a copy of the video and the accompanying PowerPoint presentation please email Janine Gunyan at Janine@gassmanpa.com

THE 444 SHOW (a monthly online webinar series) on The Last Legislative Session and The Florida Bar’s Legislative Efforts

Please join us for the 444 Show on Thursday, August 22, 2013 at 4pm.  The 444 Show is a monthly webinar series sponsored by the Clearwater Bar Association and moderated by Alan S. Gassman.  Each show qualifies for 1 hour of continuing education credit.

We are pleased to welcome Sandra Diamond of Williamson, Diamond & Caton, PA., and Aimee Diazlyon and Jim Daughton who are the legislative consultants for The Florida Bar to this month’s show.  They will be speaking on the last legislative session and The Florida Bar’s legislative efforts.

To register for the webinar please click here.

WEDU 8th ANNUAL ESTATE & TAX PLANNING CONTINUING EDUCATION SEMINAR

Join speakers Daniel A Smith and Alan S. Gassman for the WEDU 8th Annual Estate and Tax Planning Seminar on Thursday, September 19, 2013.  The seminar starts at 7:30 am with a hot breakfast and goes until 11:30 am.  Tickets are $50 and includes breakfast.  Topics include: Coming Shifts in Estate Planning by Daniel A. Smith, Asset Protection by Alan S. Gassman and a panel discussion on Income Tax Reduction Strategies and 1041 Issues.

Daniel A. Smith’s extensive real-world experience brings his classroom information into immediate, practical, and applicable form. He specializes in integrating sales and relationship management with the complexities of estate planning, estate taxation, charitable giving, and investment management issues of the High Net Worth and Ultra High Net Worth client. Prior to joining Cannon in 1990, Daniel was a Trust Services Officer at First Hawaiian Bank and an Account Executive with Dean Witter Reynolds (now Morgan Stanley).  His years of experience with Cannon have added best practices from constant interaction with many of the nation’s top financial advisors and wealthy individuals.

When not teaching at Cannon Schools, Daniel is a frequent speaker at banks, trust companies, brokerage firms and other financial services companies nationwide. He also speaks at financial services conferences on estate planning, taxation, sales, sales management, quality service and industry trends. His work has been published in Trusts & EstatesRegistered Rep and other industry publications.  Daniel’s On Site training addresses sales and service issues and technical topics related to personal trust, investments, and estate planning. His consulting work is focused on developing custom sales presentation materials and computer-based training.

For more information and to register please visit http://www.wedu.org/events/ceseminar/

Lawyers in History: The Impact of Law Practice on their Lives and Careers: John Penn

Penn

As we continue to celebrate the month of July and the birth of our nation we recognize one of the signers of the Declaration of Independence, John Penn. Penn was born on May 17th, 1741 in Caroline County, Virginia. John Penn is not a man that is commonly recognized for his participation in the signing of the Declaration of Independence. In fact he is commonly mistaken for another John Penn, the grandson of William Penn, the founder of Pennsylvania. Although cast in the shadows, Penn was a courageous man that left his mark on one of the most important documents signed in United States history.

In addition, Penn accomplished many feats for a single child that came from a family that did not put education first. Penn attended a common school for only two years because his father did not consider education to be of importance. However, when his father died and his widowed mother became unable to support and care for herself and the farm that was left behind, Penn sought advice from his uncle, Edmund Pendleton, who was an esteemed attorney (stay tuned to a future Thursday Report on Edmund Pendleton and his practice of law). Pendleton was known for writing George Washington’s will the night before Washington was appointed Commander in chief by the Continental Congress and was described by his friend Thomas Jefferson as “the greatest orator” in the colonies. Penn, motivated by his father’s death, followed in the footsteps of his uncle, and with exposure to some of the finest lawyer’s in Virginia and one of the best libraries throughout the colonies, Penn became a member of the Virginia Bar only three years after his father’s death at the age of 21.

After practicing law in Virginia for twelve years, Penn moved his family to Williamsboro, North Carolina, for reasons that are not entirely clear. However, one reason Penn may have relocated may be due to the charges he was facing in Virginia for being disrespectful and making treasonous remarks about King George. (Anyone who is reading this wins a prize by clicking the next link.) It was believed that Penn made these remarks in a public meeting where he was then reported to royal authorities regarding his opposition to the King’s taxes and duties being imposed on the colonies.  Penn was found guilty and fined one penny, however he refused to pay the fine.

Penn was on the fast track for independence and his move to North Carolina gave him the opportunity to express his interest in liberty and to speak to those who would support him in his journey. After being accepted and recognized as a leader in North Carolina through his law firm and his role in politics, Penn arrived in Congress and declared, “My first wish is for America to be free.” The following are a few of Penn’s accomplishments:

  • Penn served in the Continental Congress for six years;
  • He signed the Declaration of Independence
  • He signed the Articles of Confederation
  • He signed the Halifax Resolves (the North Carolina Constitution)
  • He was virtual dictator of North Carolina at what many consider to be the turning point of the American Revolution in 1781-1782.

After being part of one of the most historical moments in United States history and serving in Congress for six years, John Penn died near his home in North Carolina on September 14th, 1788.

Here is the link referred to above.

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

  • MEDICAL EDUCATION RESOURCES PRIMARY CARE CONFERENCE

Alan Gassman will be speaking on the topic of LEGAL, TAX AND FINANCIAL BOOT CAMP FOR THE MEDICAL PRACTICE – A SPECIAL TAX, ESTATE PLANNING AND LAW CONFERENCE FOR PRIMARY CARE PHYSICIANS

Date: July 19 – 21, 2013 (Friday – Sunday mornings; Have fun at Disney in the afternoons and we will not ask what you do at night!)

Topic:         1)             The 10 Biggest Mistakes That Physicians Make In Their Investments and Business Planning

                                                9am – 10am on Friday, July 19, 2013

                    2)             Lawsuits 101

                                                10:10 am – 11:10 am on Friday, July 19, 2013

                    3)             Essential Estate Planning

                                                11:10 am – 11:40 am on Friday, July 19, 2013

                    4)             Asset Entity Planning for Creditor Protection and Buy Sell Arrangements

                                                10:10 am – 11:10 am on Saturday, July 20, 2013

                    5)             50 Ways to Leave Your Overhead – How to Enhance Medical Practice Profitability

                                                11:40 am – 12:40 pm on Saturday, July 20, 2013

                    6)             Stark Naked, or Well Prepared? – Health Law Compliance

                                                9:00 am – 10:00 am on Sunday, July 21, 2013

Location: Disney’s Boardwalk Resort, Orlando, Florida

Topics by Other Speakers: 2013 Tax Changes, Tax Deductions for Physicians, Medical Practice Financial Management, Physician Compensation, Tax Structures for Medical Practices and Retirement Plan Options for Physicians.

Additional Information:  For more information please visit www.MER.org  Please note that the program qualifies for continuing education credit for physicians.

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Date: Wednesday, August 21, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  If you would like to attend this teleconference please click here to register

  • NEW CHANGES TO THE FLORIDA TRUSTS & ESTATES TAX AND DURABLE POWER OF ATTORNEY ACT

Date: Monday, July 29, 2013 | 12:30 p.m.

Presenters: Tami Conetta, Esq. and Barry Spivey, Esq.

Location: Online webinar

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

  • AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here. To register for the Thursday, September 10, 2013, 12:30pm webinar please click here.

  • NIP & TUCK: MAKING THE CALL ON OFFICE-BASED SURGERY

Date: Wednesday, September 18, 2013

Presenter: Cheryl White, RN, BS, MSHL, LHRM, LNCC, MSCC, DFHRMPS and Lester Perling, J.D., MHA

Location: Online webinar

Additional Information:  To register for the webinar please click here

  • NORTH SUNCOAST FICPA MONTHLY MEETING

Date: Wednesday, September 18, 2013, 4:30 – 6:30 p.m.

Speakers: Alan Gassman will be speaking on the Affordable Care Act.

Location: Chili’s in Port Richey

Additional Information: To attend this seminar please email agassman@gassmanpa.com

  • WEDU ESTATE PLANNING SEMINAR

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Speakers/Topics: Daniel A. Smith of Cannon Financial Institute will speak on Coming Shifts in Estate Planning, and Alan S. Gassman will speak on Asset Protection.  There will also be a panel discussion on Income Tax Reduction Strategies & 1041 Issues.

Location: WEDU PBS Berkman Family Broadcast Center, 1300 N Blvd., Tampa, FL

Additional Information:  For more information or to register for this seminar please click here

  • NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

      Date: Wednesday, October 16 through Friday, October 18, 2013

      Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.

Email us now to get your football tickets to the Notre Dame-USC game on October 19.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

  • PINELLAS COUNTY ESTATE PLANNING COUNCIL SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council please click here or

email agassman@gassmanpa.com

  • 2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

  • SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email 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

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.”

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

Speakers:  Speakers will include Professor Jerry Hesch, 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 Jonathan Gopman at jonathan.gopman@akerman.com.  We thank Jonathan for all of his hard work to put this very special day together.

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

 

The Thursday Report – July 11, 2013, Same-Sex Chart and Gandolfini

Posted on: July 11th, 2013

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“Bringing New Meaning to Thursdays Throughout The Week – It’s Not Just the Day Before Friday Anymore!”

Why Many Same-Sex Couples Will Be Looking to Leave Florida and Where They May Go by Christopher J. Denicolo, J.D., LL.M.

What Your Clients Want to Know About James Gandolfini – A look at his Last Will and Testament and What Was Wrong With It – A LISI Article by Bruce Steiner

Ken Crotty’s LLC Clinic

Registration is Now Open for the Notre Dame Tax & Estate Planning Institute in October

Back by Popular Demand – Join us for our August 23, 2013 Presentation of the JEST Trust System as part of Phil’s Ultimate Estate Planner, including New Materials and Forms

Lawyers in History: The Impact of Law Practice on Their Lives and Careers – Aaron Burr

Today’s Thursday Report concentrates on two very important recent developments for estate tax planners, and providing our readers with more information and thinking than has been published by the conventional press and industries to date.

Clients want to know how these laws will affect them, their families, and their friends and colleagues.

We hope that today’s issue gives you solid information and planning ideas that you can offer to same-sex couples, and a thorough and interesting discussion of James Gandolfini’s estate plan, and what can be learned from this. 

We welcome all comments, questions (and complaints about the Kentucky Fried Chicken jokes) that we receive. 

The best suggestion award in response to this Thursday Report will be the coupon found below.  DON’T LEAVE HOME WITHOUT IT

 Certificate.FINAL

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

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

Why Many Same-Sex Couples Will Soon Be Looking to Leave Florida and Where They May Go

by Christopher J. Denicolo, J.D., LL.M.

            Almost everyone reading this report knows that the U.S. Supreme Court has held that same-sex couples cannot be denied equal protection under Constitution if they were legally married in a state that allows same-sex marriage, and reside in a state that recognizes same-sex marriage.

Florida does not recognize same-sex marriage, so same-sex couples who have been married in one of the states (or foreign jurisdictions) that recognize same-sex marriages will not be considered as married for federal tax and other federal law purposes if they reside in Florida at the time of death.

There are many other federal and state rights that are impacted by whether a validly married same-sex couple resides in a state that recognizes same-sex marriages.

In the Windsor case, Thea Spyer and Edith Windsor lawfully married in Ontario, Canada under Canadian law, while they resided in New York.  While New York did not allow same-sex marriages at the time, it did recognize same-sex marriages that were legal in out-of-state jurisdictions.  The IRS therefore lost its case against Ms. Windsor, who claimed the estate tax marital deduction as being a “spouse.”

Significantly more detail on the above can be found by clicking here.

The Windsor case leaves Florida same-sex couples in a quandary.  Do they stay in Florida, unable to make significant gifts to one another, and risking the payment of federal estate tax on the death of a wealthy spouse, or should they move their domicile, and thus their primary residence, to a state that does recognize same-sex marriages?

One question is what states they can move to, and how the tax law and creditor protection laws apply in each such state.

We have a chart of the states that recognize same-sex marriages, and which of these states also recognize tenancy by the entireties (for creditor protection purposes), have state inheritance and estate taxes, and have state income tax imposed upon individual income.  The chart can be accessed by clicking here.

Many Florida estate planning lawyers and advisors will be structuring same-sex couples’ arrangements with the help of legal counsel in the state where our clients become domiciled.

We are hopeful that the Florida legislature will recognize this quandary and enable same-sex Floridians who have chosen to be married in other jurisdictions to be recognized as married for the purposes of Florida law.

We welcome any questions, comments and suggestions on this important issue.

What Your Clients Want to Know About James Gandolfini – A Look at his Last Will and Testament and What Was Wrong With It – A LISI Article by Bruce Steiner

 Bruce Steiner

            With the passing of actor James Gandolfini come some interesting reports regarding his estate.  There are a few lessons to be learned from Mr. Gandolfini’s Last Will and Testament including some very expensive ones for his family.

Bruce Steiner, an attorney with Kleinberg, Kaplan, Wolff & Cohen, P.C. in New York City wrote the attached article for LISI and can be reviewed by clicking here.

Bruce Steiner has over 35 years of experience in the areas of taxation, estate planning, business succession planning and estate and trust administration. He is a frequent lecturer at continuing education programs for bar associations, CPAs and other professionals. He is a commentator for Leimberg Information Services, Inc., is a member of the editorial advisory board of Trusts & Estates, is a technical advisor for Ed Slott’s IRA Advisor, and has written numerous articles for Estate Planning, BNA Tax Management’s Estates, Gifts & Trusts Journal,Trusts & Estates, the Journal of TaxationProbate & PropertyTAXES, the CPA Journal, the CLU Journal and other professional journals. Bruce has been quoted in various publications includingForbesThe New York TimesWall Street Journal, Daily Tax Report, Lawyers Weekly,Bloomberg’s Wealth ManagerFinancial PlanningKiplinger’s Retirement Report, Newsday, theNew York Post, the Naples Daily News, Individual Investor, TheStreet.com, and Dow Jones (formerly CBS) Market Watch. Bruce has served on the professional advisory boards of several major charitable organizations and was named a New York Super Lawyer in 2010, 2011 and 2012.  Mr. Steiner can be reached at 212-880-9818 or via email at bsteiner@kkwc.com

Ken Crotty’s LLC Clinic

            Each week Ken Crotty will be providing a discussion each week on aspects of the new LLC Act and how these will impact clients and practitioners.  This week he discusses the New LLC Act and when it goes into effect.

            Effective Date of the New LLC Act

Florida’s new LLC Act will be effective as of January 1, 2014, for any LLCs formed on or after January 1, 2014.  For LLCs formed on or before December 31, 2013, there is some flexibility.  The latest the Act will apply to these LLCs is on January 1, 2015, and members and managers of these LLCs will have until this date to modify the LLC’s governing documents to comply with the Act and to avoid unintended results.

LLC’s formed on or before December 31, 2013, may elect to have the Act apply to the LLC at anytime between January 1, 2014, and January 1, 2015.  It is important to note, however, that if the LLC elects to have the Act apply then the entire Act applies to the LLC.  It is not possible to pick and choose certain provisions of the Act and elect them to apply to the LLC.  The election is an all or nothing decision.  Because of this, members and managers of LLCs that are in existence on or before December 31, 2013, should review their governing documents to be certain that there will not be unintended consequences of electing to have the Act apply before January 1, 2015, and should modify their documents accordingly before the election to have the Act apply is made.

Registration is Now Open for the Notre Dame Tax & Estate Planning Institute in October

Professor Jerry Hesch’s Notre Dame Tax Institute will once again provide significant income tax planning technique coverage in addition to estate, estate tax, and related topics.  The Institute is held in South Bend, Indiana each fall. This year the dates are Wednesday, October 16 to Friday, October 18, 2013.

Alan Gassman will be working with Professor Hesch in preparing and presenting Interesting Interest Questions, Planning with Low Interest Loans, Self-Cancelling Installment Notes, Private Annuities, Defective Grantor Trusts, and Similar Issues That Arise in a Low Interest Rate Environment.

Other speakers and their topics include:

  • Maintaining and Obtaining Income Tax Basis, by Turney Berry, Louisville, KY
  • Planning with Portability: What Do the Numbers Show? by Diana S.C. Zeydel, Miami, FL
  • The Tax Apportionment Clause: Often the Most Important Provision in the Will, by Jonathan Blattmachr, New York, NY
  • Structuring Trustee Powers to Avoid a Tax Catastrophe (Or 20 Things You Need to Know About Selecting Trustees and Structuring Trustee Powers) by Steve Akers, Dallas, TX
  • Myths, Mysteries and Mistakes: Common Transfer Tax Concepts That Are Not Well-Known or Understood, by Professor Jerry Pennell, Atlanta, GA
  • Current Developments of Importance to Estate Planners, by Professor Jeffery Pennell, Atlanta, GA
  • Fiduciary’s Guide to Retirement Benefits, by Natalie B. Choate, Boston, MA
  • Evaluating Mistakes Made with Commonly-Used Techniques (The Screw-Ups) and Evaluating the Risks Associated with Certain Techniques, by David Handler, Chicago, IL and Professor David Herzig, Valparaiso, IN
  • Yours, Mine and Ours: Estate Planning for Couples in a Second Marriage, by Eric A. Manterfield, Indianapolis, IN
  • Prenuptial Agreements and Divorce: A Minefield Or A Solution? by Linda Ravdin, Washington, DC
  • Monitoring Trustees: When, Why and How to Use a Trust Protector, by Professor Larry Frolik, Pittsburgh, PA
  • Special Needs Planning: What Every Estate Planning Professional Needs to Know, by Bernard Krooks, New York, NY
  • The Bet Not to Live: Using Private Annuities and SCINs for Individuals Not Expected to Survive Their Life Expectancy, by Jerome Deener, Roseland, NJ
  • Evaluating Premium Financed Life Insurance, by Rebecca Ryan, Chicago, IL
  • The Dueling Transferors’ Problem: The Uncertain GST Tax Consequences and Planning Implications of Having A Beneficiary Assign an Interest in a Trust, by Austin Bramwell, New York, NY
  • Evaluating Private Placement Life Insurance in a High Investment Tax Environment, by Leslie Giordani, Austin, TX
  • Valuation of Large Companies: Blockage and Other Factors, Professor Ashok Abbot, Morgantown, WV
  • Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns by Professor Gerry Beyer, Lubbock, TX
  • An Estate Planning Trilogy: Digital Assets, Guns and Pets, by Professor Gerry Beyer, Lubbock, TX
  • The Self-Management Structure: A Potent and New Age Solution to the Business Succession Planning Conundrum, by Avi Kestenbaum, Mineola, NY
  • Don’t End Up as Road Kill: Surviving Ethical Challenges in Transfers Between Family Members, by Charles “Skip” Fox, Charlottesville, VA
  • Converting Asset Protection to Asset Collection: A Creditor’s Perspective, by Melissa Langa, Boston, MA
  • It’s Yours If You Do As I Say: Conditional Gifts and In Terrorem Clauses, by Professor William LaPiana, New York, NY
  • Section 1411: Net Investment Income Tax, David Kirk, Washington, DC (invited)
  • Maintaining and Estate Planning Practice in the 21st Century in a $5 Million Exemption Era, Robert Romanoff, Chicago, IL
  • Using DINGs, NINGs, and Other Trusts to Reduce or Eliminate State Income Taxes, by Neil Schoenblum, Las Vegas, NV and Professor Jerry Schoenblum, Nashville, TN
  • Drafting Tips That Minimize The Federal Income Tax on Trusts, by James Blasé, St. Louis, MO
  • International Tax Planning: A Practical Approach, by Charles Schultz, Chicago, IL

To register for the Institute please click here and don’t forget to book your tickets to the Notre Dame vs. USC game on October 19.

Back by Popular Demand – Join us for our August 23, 2013 Presentation of the JEST Trust System as part of Phil’s Ultimate Estate Planner, including New Materials and Forms

Our first teleseminar with Phil’s Ultimate was widely received and we were asked to come back and present our materials again in a teleconference on Friday, August 23, 2013 at 12:00 p.m.

You can sign up for the teleconference with Phil’s Ultimate Estate Planner, which costs $139 (or $189 for printed materials and CD), by going to the website of Phil’s Ultimate Estate Planner, which can be viewed by clicking here.

Phil’s ultimate is also offering a special package.  The JEST Legal Document Form Package Plus Teleconference Participation (and CD) for a discounted rated of $395 (regularly $495).  The package contains the JEST legal document form package, teleconference participation, downloadable PDF materials, downloadable MP3 recording and a CD-ROM sent 5-7 days following the teleconference.

The JEST trust system permits a married couple living in Florida, or other non-community property states, to hold “joint assets” under one trust agreement that allows a clear step-up in basis and credit shelter trust funding from the share of the first dying spouse. The JEST trust system is also designed to facilitate using the share of the surviving spouse to fund a “capitalized credit shelter trust B” that we believe makes use of the remainder of the first dying spouse’s estate tax exemption using the same rational that the IRS has used for a technical advice memorandum and four private letter rulings, while also qualifying the assets from the surviving spouse for a step-up in basis, if our reasoning and the technique we have developed is correct.

The JEST trust and its assets will not qualify as tenancy by the entireties assets for creditor protection planning, and not all advisors will feel confident that the IRS will accept the intended treatment, but if our technique is accepted in the same manner as the technical advice memorandum and four private letter rulings then a full funding of a credit shelter trust and a full stepped up basis for joint trust property can be achieved. You cannot get what you do not ask for!

Lawyers in History: The Impact of Law Practice on their Lives and Careers: Aaron Burr

Burr with words

            On this day in 1804, Aaron Burr fatally shot his long-time political opponent, Alexander Hamilton in a duel.

Upon graduation from college at the young age of 17, Burr began to study law.  Upon hearing about the clashes with the British troops, Burr joined the Continental Army.  He served between the years 1775 and 1779 and had much success.  He saved an entire Brigade of men, including long-time friend, Alexander Hamilton, from capture by the British when they invaded Manhattan, but Burr never received a commendation for his actions.

Due to his declining health, he was forced to leave the Continental Army.  He then took up his study of law and was admitted to the New York Bar in 1782.  He practiced law in New York City and served in the New York State Assembly.  In 1789 he was appointed New York State Attorney General and in 1791 was elected a U.S. Senator.

In 1796 Burr ran for Vice President, only to come in fourth behind John Adams (elected President), Thomas Jefferson (elected Vice President) and Thomas Pinckney.  Upon his defeat he returned to the Senate and served until 1799.  During his time in the Senate he cooperated with Holland Land Company to obtain a law to permit aliens to hold and convey land.  During this time he became a key player in New York politics.

In 1799 he also founded the Bank of the Manhattan Company which later merged into Chase Manhattan Bank and eventually became JPMorgan Chase.  He did this under the auspices that he was forming a water company, which was needed in New York.  He commissioned the support of Alexander Hamilton and other Federalists.  Shortly after approval, Burr changed the charter to include banking knowing all along that a water company was not in his plans.  This was the start of Hamilton’s malevolence for Burr, calling his actions dishonest.

Because of his role in the political arena of New York, Burr was asked by Thomas Jefferson and James Madison to help them with the election of 1800.  He enlisted the help of social clubs to help Jefferson and Madison and through those actions, Burr is credited as being the father of modern political campaigning.

He was later placed on the ballot for the 1800 election and became Vice President under Thomas Jefferson, although Jefferson never trusted him and did not consult him on important matters.  Burr, however, as President of the Senate, was seen as even-handed and fair, especially during the impeachment trial of Justice Samuel Chase so Jefferson’s distrust of Burr was seen as unfounded.

Thomas Jefferson dropped Burr from his ticket in the 1804 election and Burr instead ran for Governor of New York state.  He lost that election to Morgan Lewis and blamed his loss on a personal smear campaign by prior Governor George Clinton, who believed that Burr entertained a Federalist succession movement in New York.  In April of the same year, the Albany Register, published a letter from Dr. Charles D. Cooper to Philip Schuyler, which relayed Alexander Hamilton’s judgment that Burr was “a dangerous man, and one who ought not to be trusted with the reins of government.”  Burr then sent a letter to his long-time friend, Alexander Hamilton asking for clarification.  Hamilton responded back that Burr should give specifics of Hamilton’s remarks and not Cooper’s.  The two exchanged several more letters escalating into Burr demanding that Hamilton retract any statement that would denigrate Burr’s honor over the past 15 years.  Hamilton refused and Burr challenged him to a duel, which had long been outlawed in New York state.  The two decided to hold their duel in New Jersey, even though it had been outlawed there as well.  The penalty for dueling in New York was death, whereas the penalty for dueling in New Jersey was less severe.

On July 11, 1804, Alexander Hamilton and Aaron Burr met outside of Weekhawken, New Jersey.  It is said that it was hard to figure out which gun was fired fist in the duel, as the shots were that close.  Alexander Hamilton missed his mark, blaming the sun and his placement in the duel.  Aaron Burr did not miss his mark.  He shot Hamilton in the stomach and Hamilton died the next day.  Burr was charged with multiple crimes including murder in both New York and New Jersey but he was never tried in either state.

In 1805 when his term as Vice President was over, Burr journeyed to the Western Frontier and met with General James Wilkinson, who was an agent for the Spanish.  It is said that during their meeting  Burr and Wilkinson had plotted to establish an independent nation.  To begin they wanted to seize territory from the Spanish in what is now Louisiana.  In the fall of 1806, Burr led a group of well-armed colonists toward New Orleans.  This move prompted an investigation by the government.  In an attempt to save himself, General Wilkinson turned on Burr and sent notice to Washington of what Burr was up to.  In February of 1807 Burr was arrested for treason.  He was tried in a U.S. circuit court in Virginia but was acquitted.

Although he was acquitted, he was seen as a traitor to his nation.  Burr fled to Europe for many years, before returning to New York and his law practice.

Although Burr was instrumental in the Revolutionary War, was an attorney, served many seats in the U.S. Government and was tried and acquitted for treason, he is perhaps best known for his duel with Alexander Hamilton.

 Duel with words

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

  • BP OIL SPILL CLAIMS – AVOID MISTAKES AND MAXIMIZE CLAIMS

Date: Wednesday, July 17, 2013 | 5:00 p.m. – 5:30 p.m.

Presenters: John Goldsmith, Esq. and Alan S. Gassman

Location: Online webinar

Additional Information:  To register for this webinar please click here.[ https://www2.gotomeeting.com/register/209179266]

 

  • MEDICAL EDUCATION RESOURCES PRIMARY CARE CONFERENCE

 

Alan Gassman will be speaking on the topic of LEGAL, TAX AND FINANCIAL BOOT CAMP FOR THE MEDICAL PRACTICE – A SPECIAL TAX, ESTATE PLANNING AND LAW CONFERENCE FOR PRIMARY CARE PHYSICIANS

 

Date: July 19 – 21, 2013 (Friday – Sunday mornings; Have fun at Disney in the afternoons and we will not ask what you do at night!)

 

Topic:         1)             The 10 Biggest Mistakes That Physicians Make In Their Investments and Business Planning

9am – 10am on Friday, July 19, 2013

 

2)             Lawsuits 101

                                                10:10 am – 11:10 am on Friday, July 19, 2013

 

3)             Essential Estate Planning

                                                11:10 am – 11:40 am on Friday, July 19, 2013

 

4)             Asset Entity Planning for Creditor Protection and Buy Sell Arrangements

10:10 am – 11:10 am on Saturday, July 20, 2013

 

                    5)             50 Ways to Leave Your Overhead – How to Enhance Medical Practice Profitability

11:40 am – 12:40 pm on Saturday, July 20, 2013

 

                    6)             Stark Naked, or Well Prepared? – Health Law Compliance

9:00 am – 10:00 am on Sunday, July 21, 2013

 

Location: Disney’s Boardwalk Resort, Orlando, Florida

 

Topics by Other Speakers: 2013 Tax Changes, Tax Deductions for Physicians, Medical Practice Financial Management, Physician Compensation, Tax Structures for Medical Practices and Retirement Plan Options for Physicians.

 

Additional Information:  For more information please visit www.MER.org  Please note that the program qualifies for continuing education credit for physicians.

 

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Date: Friday, August 23, 2013 | 12pm Eastern/9am Pacific

Sponsor: The Ultimate Estate Planner, Inc.

Additional Information:  If you would like to attend this teleconference please click here to register [http://ultimateestateplanner.com/lawyer/Teleconference_Registration_cp8532.htm]

  • AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

 

Date: Tuesday, September 10, 2013 | 5:00 p.m and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

 

Presenter: Sandra Greenblatt, Board Certified Health Lawyer

 

Location: Online webinar.

 

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here [ https://www2.gotomeeting.com/register/878841962] .  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here [https://www2.gotomeeting.com/register/706396738]

 

  • WEDU ESTATE PLANNING SEMINAR

 

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

 

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

 

Leading trust law expert Bruce Stone, Esq. will also speak on a topic to be determined.

 

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

 

Location: TBD

 

Additional Information:  If you would like to sign up for this seminar please email agassman@gassmanpa.com

 

  • NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

 

Jerry Hesch and Alan Gassman will be speaking on the topics of INTERESTING INTEREST QUESTIONS AND PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

 

Date: Wednesday, October 16 through Friday, October 18, 2013

 

Location: Notre Dame College, South Bend, Indiana

 

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.   To register for the Institute please click here [http://law.nd.edu/alumni/continuing-legal-education/] and don’t forget to get your football tickets to the Notre Dame-USC game on October 19.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

 

  • PINELLAS COUNTY ESTATE PLANNING COUNCIL CONFERENCE

 

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

 

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

 

Location: TBD

 

Additional Information: To attend the meeting or to receive information on joining the Council please click here [http://www.pinellascountyepc.org/displayevent.web?EventID=7141] or email agassman@gassmanpa.com

 

  • 2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

 

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START PLANNING THE SOONER YOU WILL BE SECURE

 

Date: October 25 – 27, 2013 | Times TBD

 

Location: TBD

 

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

 

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

 

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

 

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

 

Location: Seton Hall Law School, Newark, New Jersey

 

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

 

  • NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

 

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

 

Date: Saturday, November 2, 2013

 

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

 

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

 

  • SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

 

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

 

Date: Thursday, November 7, 2013

 

Location: Hilton Downtown Salt Lake City, Utah

 

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

 

NOTABLE CONFERENCES 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

 

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.”

 

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

The Thursday Report – Special July 4th Edition

Posted on: July 3rd, 2013

No Comments

A Special Independence Day Edition!

Let’s make this the best fourth of July ever, ever, ever, ever!

- Kentucky Fried Movie

Flag_with_Fireworks_Wallpaper__yvt2

 

In honor of Independence Day the Thursday Report is taking a break and providing you with this short but sweet (like KFC coleslaw) version.

We wish all Thursday Report readers and their families a very happy and safe Independence Day!

Some Quotes About Independence Day

I only regret that I have but one life to lose for my country.

- Nathan Hale

The Constitution only gives people the right to pursue happiness. You have to catch it yourself.

- Benjamin Franklin

Is life so dear or peace so sweet as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take, but as for me, give me liberty, or give me death!

- Patrick Henry

 This nation will remain the land of the free only so long as it is the home of the brave.

-        Elmer Davis

 This, then, is the state of the union:  free and restless, growing and full of hope.  So it was in the beginning.  So it shall always be, while God is willing, and we are strong enough to keep the faith.

-        Lyndon B. Johnson

 It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them.

-        Mark Twain

Our thoughts and prayers are with the families of the 19 firefighters killed in Arizona this week.

But sound aloud the praises, and give the victor-crown
To our noble-hearted Firemen, who fear not danger’s frown.
~Frederic G.W. Fenn, “Ode to our Firemen,” 1878

All men are created equal, then a few become firemen.  ~Author Unknown

Firemen never die, they just burn forever in the hearts of the people whose lives they saved.  ~Susan Diane Murphree

So as you look at the firefighter with his rake, hose or axe,
His beet red face or ice covered mustache,
You should know why he goes through that smoky front door,
And is forced to crawl like a baby down on the floor.
He does it to save both lives and property,
All that is precious to you and to me.
So take a good look at this modern warrior who serves his call proud and true,
And know that he would die just to save me and you.
~Robert J. Athans

You have to do something in your life that is honorable and not cowardly if you are to live in peace with yourself, and for the firefighter it is fire.  ~Larry Brown

            If you would like to do some reading this weekend our coverage so far this year on the new Florida statutes that were passed is as follows:

DID YOU KNOW….

As we celebrate the birth of our nation today, have you ever given thought to what happened to all of the people who signed the Declaration of Independence on July 4, 1776?

56 freedom fighters signed the Declaration of Independence and only a few of them are well known for their roles in America’s history, but what happened to the rest of them?

There were 24 lawyers in the group, 9 farmers, 11 merchants and several other well educated men who knew that by putting pen to paper and signing their names that they would face certain death if they were captured.  Five of the 56 were captured, tortured and killed.  12 had their homes destroyed, all in the face of freedom.  Two even had sons killed in the Revolutionary War.

One of the signers, Thomas McKeam, was so constantly pursued by British Soldiers that he had to move his family from place to place.  He also served in the Congress without pay while his family was kept in hiding.

British General Cornwallis took over one of the signers, Thomas Nelson, Jr.’s home for his headquarters during the Revolution.  While fighting the war, Thomas Nelson urged then General George Washington to open fire on his home.  General Washington did and in the process destroyed Mr. Nelson’s home.

Francis Lewis’ wife was jailed and died within a few months and his home and property were destroyed.  John Hart was driven from his wife’s bedside while she was dying and his 13 children were forced to flee.  He lived in the forest for over a year and when he returned home he found that his wife had died and his children were gone.  Additionally, his land had been destroyed.  He died a few weeks later, some say from a broken heart.

Of course we know the fate of those few famous signers like John Hancock, Benjamin Franklin, Thomas Jefferson and John Adams, but let us not forget both the famous and ordinary people who risked their lives for the freedom and country we enjoy today!

Applicable Federal Rates

Please click here to view a chart of 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.

Seminars and Webinars

FLORIDA HEALTH CARE LAW CHANGES: HOW THEY AFFECT PHYSICIANS AND MEDICAL ENTERPRISES WEBINAR

Date:  Wednesday, July 10, 2013 | 5:00 p.m. – 5:30 p.m. (30 Minute Webinar)

Speakers: Healthcare Expert Lester Perling, J.D., M.H.A. and Alan S. Gassman, J.D., LL.M.

Location: Online webinar.

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

ESTATE TREK: DEEP SPACE NINE – EVEN MORE UPDATES TO OUR ESTATE PLANNING SOFTWARE

Date: Tuesday, July 16, 2013 | 12:30 p.m. – 1:00 p.m. (30 Minute Webinar)

Speakers: Alan S. Gassman, Kenneth J. Crotty and Christopher J. Denicolo

Location: Online webinar

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

BP OIL SPILL CLAIMS – AVOID MISTAKES AND MAXIMIZE CLAIMS

Date: Wednesday, July 17, 2013 | 5:00 p.m. – 5:30 p.m. (30 Minute Webinar)

Speakers: John Goldsmith, Esq. and Alan S. Gassman

Location: Online webinar

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

MEDICAL EDUCATION RESOURCES PRIMARY CARE CONFERENCE

Alan Gassman will be speaking on the topic of LEGAL, TAX AND FINANCIAL BOOT CAMP FOR THE MEDICAL PRACTICE – A SPECIAL TAX, ESTATE PLANNING AND LAW CONFERENCE FOR PRIMARY CARE PHYSICIANS

Date: July 19 – 21, 2013 (Friday – Sunday mornings; Have fun at Disney in the afternoons and we will not ask what you do at night!)

Topic:         1)             The 10 Biggest Mistakes That Physicians Make In Their Investments and Business Planning

9am – 10am on Friday, July 19, 2013

2)             Lawsuits 101

                                                10:10 am – 11:10 am on Friday, July 19, 2013

3)             Essential Estate Planning

                                                11:10 am – 11:40 am on Friday, July 19, 2013

4)             Asset Entity Planning for Creditor Protection and Buy Sell Arrangements

10:10 am – 11:10 am on Saturday, July 20, 2013

                    5)             50 Ways to Leave Your Overhead – How to Enhance Medical Practice Profitability

11:40 am – 12:40 pm on Saturday, July 20, 2013

                    6)             Stark Naked, or Well Prepared? – Health Law Compliance

9:00 am – 10:00 am on Sunday, July 21, 2013

Location: Disney’s Boardwalk Resort, Orlando, Florida

Topics by Other Speakers: 2013 Tax Changes, Tax Deductions for Physicians, Medical Practice Financial Management, Physician Compensation, Tax Structures for Medical Practices and Retirement Plan Options for Physicians.

Additional Information:  For more information please visit www.MER.org  Please note that the program qualifies for continuing education credit for physicians.

AVOIDING THE TRAPS IN EMR/TECH CONTRACTS….NOW YOU TELL ME I’M STUCK WITH THIS FOR 5 YEARS!

Date: Tuesday, September 10, 2013 | 5:00 p.m and Thursday, September 12, 2013 | 12:30 p.m. (Each webinar will last 30 minutes)

Speaker: Sandra Greenblatt, Esq.

Location: Online webinar.

Additional Information: To register for the Tuesday, September 10, 2013, 5pm webinar please click here.  To register for the Thursday, September 12, 2013, 12:30 p.m. webinar please click here.

WEDU ESTATE PLANNING SEMINAR

Gassman Law Associates meets Big Bird – Sesame Street vs. Wall Street?

Alan Gassman will be speaking on the topic of ASSET PROTECTION – ESSENTIAL KNOWLEDGE AND HOT TOPICS

Leading trust law expert Bruce Stone, Esq. will also speak on a topic to be determined.

Date: Thursday, September 19, 2013 | 7:30 am – 11:30 am

Location: TBD

Additional Information:  If you would like to sign up for this seminar please email agassman@gassmanpa.com

NOTRE DAME TAX INSTITUTE

Jerry Hesch and Alan Gassman will be speaking on the topic of INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND PRIVATE AND COMMERCIAL ANNUITIES

Date: Wednesday, October 16 through Friday, October 18, 2013

Location: Notre Dame College, South Bend, Indiana

Additional Information: Professor Jerry Hesch’s Notre Dame Tax Institute will once again emphasize the importance of income tax planning and implications in addition to estate, estate tax, and related concepts.

Email us now to get your football tickets to the Notre Dame-USC game on October 19.

We welcome questions, comments and suggestions for the presentation that we are assisting Jerry in preparing and presenting.

PINELLAS COUNTY ESTATE PLANNING COUNCIL SEMINAR

Alan Gassman will be speaking on the topic of HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013 | 8:00 am – 12:00 p.m. (60 MINUTE PRESENTATION)

Location: TBD

Additional Information: To attend the meeting or to receive information on joining the Council please click here or email agassman@gassmanpa.com

2013 MOTE VASCULAR SURGERY FELLOWS – FACTS OF LIFE TALK SEMINAR FOR FIRST YEAR SURGEONS

Alan Gassman will be speaking on the topic of ESTATE, MEDICAL PRACTICE, RETIREMENT, TAX, INSURANCE, AND BUY/SELL PLANNING – THE EARLIER YOU START THE SOONER YOU WILL BE SECURE

Date: October 25 – 27, 2013 | Times TBD

Location: TBD

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

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE) HEALTH LAW SYMPOSIUM – AN ALL DAY SEMINAR

Alan Gassman will be speaking on the topic of WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm (Mr. Gassman speaks from 1:10 pm until 2:10 p.m.)

Location: Seton Hall Law School, Newark, New Jersey

Additional Information: Seton Hall University in South Orange, New Jersey was founded in 1856, and they have remodeled since.  Today, Seton Hall has over 10,000 students in its undergraduate, graduate and law school programs and is in close proximity to several Kentucky Fried Chicken locations.

NEW JERSEY INSTITUTE FOR CONTINUING LEGAL EDUCATION (ICLE)_SPECIAL 3 HOUR SESSION

Alan Gassman will be speaking on the topic of WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW – A 3 HOUR OVERVIEW BY ALAN S. GASSMAN

Date: Saturday, November 2, 2013

Location: Wilshire Grand Hotel, West Orange, New Jersey | 9am – 12pm

Additional Information: Please tell all of your friends, neighbors and enemies in New Jersey to come out to support this important presentation for the New Jersey Bar Association.  We will include discussions of airboats, how to get an alligator off of your driveway, how to peel a navel orange and what collard greens and grits are. For additional information please email agassman@gassmanpa.com

SALT LAKE CITY ESTATE PLANNING COUNCIL’S FALL ONE DAY “TAX AND DEDUCTIBILITY OF YOUR SKI TRIP” INSTITUTE

Alan Gassman will be speaking on the topic of PRACTICAL ESTATE PLANNING, WITH A $5.25 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Additional Information:  Please support this one day annual seminar conveniently located near skiing and tourism opportunities.  If you would like to attend this event or receive the materials please email 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

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.”

For details about each event, please visit us online at gassmanlawassociates.com/newsandevents.html

Thank you to our law clerks that assisted us in preparing this report.

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