The Thursday Report – May 30, 2013 – Quick Reference Guide for 2013 Bills for RPPTL Members, Delaware Law for Florida Clients and Lawyers in History

THE BEST QUICK REFERENCE FOR 2013 FLORIDA BILLS THAT WILL AFFECT RPPTL SECTION MEMBERS: MARTHA J. EDENFIELD AND PETER M. DUNBAR’S NUMERICAL INDEX SUMMARY OF 2013 LEGISLATIVE ISSUES

JOIN US FOR OUR JUNE 11TH PRESENTATION OF THE JEST TRUST SYSTEM AS PART OF PHIL’S ULTIMATE ESTATE PLANNER – NEW MATERIALS AND FORMS!

DO NOT ASSUME THAT DELAWARE LAW WILL APPLY FOR YOUR FLORIDA CLIENTS: FAIRSTAR: AN UPDATE ON THE PERENNIALLY HYPED OUT-OF-STATE LLC – An article by Jeff Vandrew Jr., J.D., CPA

LAWYERS IN HISTORY: THE IMPACT OF LAW PRACTICE ON THEIR LIVES AND CAREERS: DAVID BOIES

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.gassmanlaw.com.

THE BEST QUICK REFERENCE FOR 2013 FLORIDA BILLS THAT WILL AFFECT RPPTL SECTION MEMBERS: MARTHA J. EDENFIELD AND PETER M. DUNBAR’S NUMERICAL INDEX SUMMARY OF 2013 LEGISLATIVE ISSUES

There are a significant number of 2013 bills currently being presented or soon to be presented to Governor Scott. The Florida Senate’s 2013 Summary of Legislation Passed alone is 347 pages long! Click here for a copy of that “summary.”  Just reading the summaries of each law to see which may affect your clients could take a full day.

Thankfully, Martha J. Edenfield and Peter M. Dunbar of Pennington, P.A. have already done the work for you! Martha and Peter have created an excellent summary of the 2013 bills that will affect RPPTL members. They were able to boil down important bills into a few sentences so that readers can determine if they should further research the bill. Click here for a copy.

A big Thursday Report thank you to Martha and Peter for their excellent summary! Their work has saved all of us a lot of time. Make sure to thank Martha and Peter the next time you see them.

JOIN US FOR OUR JUNE 11TH PRESENTATION OF THE JEST TRUST SYSTEM AS PART OF PHIL’S ULTIMATE ESTATE PLANNER – NEW MATERIALS AND FORMS!

We are presently preparing new materials and forms for a June 11th presentation for Phil’s Ultimate Estate Planner on our JEST trust system, which was the subject of Liemberg Newsletter 2086. We are also working on a more advanced treatment of the subject for Estate Planning Magazine.

You can sign up for the teleconference with Phil’s Ultimate Estate Planner, which costs $149, by going to the website of Phil’s Ultimate Estate Planner, which can be viewed by clicking here.

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!

DO NOT ASSUME THAT DELAWARE LAW WILL APPLY FOR YOUR FLORIDA CLIENTS:

Fairstar: An Update on the Perennially Hyped Out-Of-State LLC

An article by Jeff Vandrew Jr., J.D., CPA

 We recently found the following article on New Jersey Attorney and CPA Jeff Vandrew Jr.’s blog and thought it was so good that we had to share it. Jeff was generous enough to allow us.

Jeff is a board-certified Estate Planning Law Specialist, a designation granted by the Estate Specialist Law Board (an organization accredited by the American Bar Association) and CPA based out of New Jersey. Jeff’s website can be found by clicking here. Jeff also writes a blog that is updated about monthly, which can be found by clicking here.  Jeff also teaches continuing education courses for attorneys around the country on estate planning and asset protection. Jeff can be reached via email at jeffvandrewjr@vandrew.com or phone at (609) 568-0109.

Jeff’s article discusses the 2011 Delaware case American Instutional Partners LLC v. Fairstar Resources Ltd. The Fairstar case is an excellent example of how an out-of-state LLC may not protect an LLC if it is operating in a state other than its state of incorporation. We have researched the topic in Florida and have not found any Florida case law to the contrary. Without any further ado, here is Jeff’s article:

Fairstar: An Update on the Perennially Hyped Out-of-State LLC

One of the first posts I wrote on this blog was about the perceived benefits of forming an LLC for asset protection in a state other than your state of business or residence. You can reread the post here.  The short summary of that post is that (with some exceptions) I often recommend forming an LLC in your state of residence or business rather than out-of-state.  The privacy and/or asset protection benefits offered by another state won’t help you if the LLC is operating in your home state. Rereading the original post will provide more details.

There are times when forming an out-of-state LLC (usually in Delaware) makes sense. These situations involve defining the management structure of an operating business, however, rather than any sort of creditor protection.

Since my last post on the topic, a new opinion has come down that has bolstered my feelings on the issue.  In American Institutional Partners LLC v. Fairstar Resources Ltd., 2011 WL 1230074; 2011 Google Scholar 3785030167496996465 (D.De. 2011), a federal court in Delaware was asked to get involved in a charging order entered against several LLCs which were formed under Delaware law. The whole matter began when Fairstar filed suit in a Utah court. Fairstar won the case, and in collecting on its judgment asked the court to sell the debtors’ interest in the LLCs in a foreclosure action, as is permitted under Utah law. The debtors objected, claiming that because the LLCs were formed in Delaware, Delaware (rather than Utah) law applied to all remedies against the LLC interests. Under Delaware law, foreclosure sales are not permitted and a charging order is the sole remedy against an LLC interest. The Utah court ruled that since the LLC interests were under Utah jurisdiction, the Utah court had the power to apply Utah law and order the foreclosure sale despite the LLCs being “Delaware LLCs”.

The debtors then filed an action in federal court in Delaware to attempt to invalidate the foreclosure sale ordered by the Utah court. They were unsuccessful. The court recounted that the debtors had raised their objection that Delaware law should apply in the Utah proceeding, and that the objection was denied by the Utah court. The Delaware court found that it was bound to respect the Utah judgment, and under the doctrine of res judicata, it could not re-hear an issue which had already been definitely ruled upon by a valid final judgment (in this case, the judgment from the Utah court stating that Utah, not Delaware, law applied).

Fairstar gives another reason why I don’t recommend forming LLCs in Nevada, Wyoming, Delaware, or any other “special” state unless you happen to live in or do business in one of those states. [One exception to this general rule would be LLCs which are operating active businesses with complex relations between the members; I generally recommend forming such entities in Delaware.] For New Jersey residents, most of the time, it makes the most sense to form a New Jersey LLC.

 LAWYERS IN HISTORY: THE IMPACT OF LAW PRACTICE ON THEIR LIVES AND CAREERS: DAVID BOIES

            As part of our ongoing search for ways to entertain and educate, the Thursday Report is proud to introduce our new semi-regular feature: Lawyers in History: The Impact of Law Practice on Their Lives and Careers, which will share some of our favorite stories about the law and lawyers.

David Boies

Reading has nothing to do with intelligence.  It’s just one way of getting information.  The important thing is how a person processes that information, the kind of person we are, the contributions we make, and the kind of utility we have for society.

Becoming a successful attorney is a difficult endeavor. Becoming a nationally recognized attorney who has had the honor of arguing in front of the United States Supreme Court is an incredibly difficult endeavor. Now imagine how difficult it would be to earn these achievements with a learning disorder. Attorney David Boies has done just that. Boies has dyslexia, however, his learning disability has not stopped him from achieving greatness in the law. Boies graduated from Yale Law School with honors and later represented Al Gore in the Supreme Court case Bush v. Gore. Among his many other achievements, Boies negotiated multi-billion dollar settlements for American Express in their cases against Visa and MasterCard (among the highest civil settlements ever), represented the NBA Players Association in the 2011 NBA lockout, and was even portrayed by George Clooney in the 2012 play “8.”

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

SEMINARS:

  • LUNCH TALK: HEALTH CARE REFORM 2013: WHAT LAWYERS NEED TO KNOW

Date: Monday, June 3, 2013 | 12:30 p.m.

Guest Speaker: Andrew McLaughlin, Esq.

Sponsor: Clearwater Bar Association

Additional Information: To register for this free webinar, please click here. [www.clearwaterbar.org]

  • THE JOINT EXEMPT STEP-UP TRUST (JEST)

Date: Tuesday, June 11, 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.

  • FLORIDA LAW FOR TAX, BUSINESS AND ACCOUNTING ADVISORS

Date: Wednesday, June 19, 2013

Location: Chili’s U.S. 19 in Port Richey

Sponsor: North Suncoast Chapter of FICPA

Additional Information: If you would like to attend the meeting or receive a copy of the materials please email agassman@gassmanpa.com

  • INTERESTING INTEREST QUESTIONS, PLANNING WITH LOW INTEREST LOANS, PRIVATE ANNUITIES, DEFECTIVE GRANTOR TRUSTS, AND COMMERCIAL ANNUITY PRODUCTS

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

Location: Notre Dame College, South Bend, Indiana

Sponsor: Notre Dame Tax Institute

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.

  • HOT TOPICS FOR ESTATE PLANNERS

Date: Wednesday, October 23, 2013

Location: TBD

Sponsor: Pinellas County Estate Planning Council

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

  • WHAT HEALTH LAWYERS NEED TO KNOW ABOUT FLORIDA LAW

Date: Friday, November 1, 2013 | 9am – 5pm

Location: Seton Hall Law School, Newark, New Jersey

Sponsor: Health Law Section of the New Jersey Bar Association

Additional Information:  To receive a copy of the materials please email agassman@gassmanpa.com

  • WHAT NEW JERSEY LAWYERS NEED TO KNOW ABOUT FLORIDA LAW by Alan S. Gassman

Date: Saturday, November 2, 2013

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

Sponsor: New Jersey Institute for Continuing Legal Education, A Division of the New Jersey State Bar Association

Additional Information: For additional information please email agassman@gassmanpa.com

  • PRACTICAL ESTATE PLANNING, WITH A $5 MILLION EXEMPTION AMOUNT

Date: Thursday, November 7, 2013

Location: Hilton Downtown Salt Lake City, Utah

Sponsor: Sale Lake Estate Planning Council

Additional Information:  If you would like to attend this event or receive the materials please email agassman@gassmanpa.com

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

Alan S. Gassman, J.D., LL.M. is a practicing lawyer and author based in Clearwater, Florida. Mr. Gassman is the founder of the firm Gassman, Crotty & Denicolo, P.A., which focuses on the representation of physicians, high net worth individuals, and business owners in estate planning, taxation, and business and personal matters.  He is the lead author on Bloomberg BNA’s Estate Tax Planning and 2011 and 2012, Creditor Protection for Florida Physicians, Gassman & Markham on Florida and Federal Asset Protection Law, A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians, The Florida Physician Advertising Handbook  and The Florida Guide to Prescription, Controlled Substance and Pain Medicine Laws, among others.  Mr. Gassman is a frequent speaker for continuing education programs, publishes regularly for Bloomberg BNA Tax & Accounting, Estates and Trusts Magazine, Estate Planning Magazine and Leimberg Estate Planning Network (LISI).  He holds a law degree and a Masters of Law degree (LL.M.) in Taxation from the University of Florida, and a business degree from Rollins College.  Mr. Gassman is board certified by the Florida Bar Association in Estate Planning and Trust Law, and has the Accredited Estate Planner designation for the National Association of Estate Planners & Councils.  Mr. Gassman’s email is Agassman@gassmanpa.com.

Thomas J. Ellwanger, J.D., is a lawyer practicing at the Clearwater, Florida firm of Gassman, Crotty & Denicolo, P.A.  Mr. Ellwanger received his B.A. in 1970 from Northwestern University and his J.D. with honors in 1974 from the University of Florida College of Law.  His practice areas include estate planning, trust and estate administration, personal tax planning and charitable tax planning.  Mr. Ellwanger is a member of the American College of Trusts and Estates Counsel (ACTEC). His email address is tom@gassmanpa.com.

Christopher Denicolo, J.D., LL.M. is a partner at the Clearwater, Florida law firm of Gassman, Crotty & Denicolo, P.A., where he practices in the areas of estate tax and trust planning, taxation, physician representation, and corporate and business law.  He has co-authored several handbooks that have been featured in Bloomberg BNA Tax & Accounting, Steve Leimberg’s Estate Planning and Asset Protection Planning Newsletters, and the Florida Bar Journal. He is also the author of the Federal Income Taxation of the Business Entity Chapter of the Florida Bar’s Florida Small Business Practice, Seventh Edition. Mr. Denicolo received his B.A. and B.S. degrees from Florida State University, his J.D. from Stetson University College of Law, and his LL.M. (Estate Planning) from the University of Miami.  His email address is Christopher@gassmanpa.com.

Kenneth J. Crotty, J.D., LL.M., is a partner at the Clearwater, Florida law firm of Gassman, Crotty & Denicolo, P.A., where he practices in the areas of estate tax and trust planning, taxation, physician representation, and corporate and business law. Mr. Crotty has co-authored several handbooks that have been published in BNA Tax & Accounting, Estate Planning, Steve Leimberg’s Estate Planning and Asset Protection Planning Newsletters, Estate Planning magazine, and Practical Tax Strategies.  Mr. Crotty is also the author of the Limited Liability Company Chapter of the Florida Bar’s Florida Small Business Practice, Seventh Edition. He, Alan Gassman and Christopher Denicolo are the co-authors of the BNA book Estate Tax Planning in 2011 & 2012. His email address is Ken@gassmanpa.com.

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

Eric Moody graduated from Stetson University College of Law in December 2012 and was recently admitted to the Florida Bar. While at Stetson, Eric was an Articles and Symposia Editor for the Stetson Law Review. In 2009, Eric received a B.S. in Business Management from the University of South Florida. Eric’s email address is Eric@gassmanpa.com.