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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Estate Planning

Date & Time
  • event Date

    Thursday, June 13, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE course will provide estate planning counsel with a comprehensive understanding and application of best practices in tax planning and trust document drafting to minimize income tax consequences of trust income. The panel will provide a thorough review of the rules and practices covering inclusion of capital gains in distributable net income (DNI) for trusts and estates and other critical considerations for minimizing income taxes on trust receipts through careful structuring of the trust's governing instrument.

Faculty

Robert S. Barnett
Partner
Capell Barnett Matalon & Schoenfeld, LLP

Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and partnership law and charitable planning.  His experience includes surrogate’s court practice, tax dispute resolution in both federal and state jurisdictions, and tax court representation.  Mr. Barnett frequently assists clients in structuring financial transactions and charitable gifts.  His articles and lectures encompass a wide variety of topics, including business succession, estate planning, generation-skipping, stock options, effective strategies for removing tax liens, proper utilization of the marital deduction and utilization of partnership elections.

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Jeremiah W. Doyle
Senior Vice President
Bank of New York Mellon, Corp

Mr. Doyle provides clients with integrated wealth management advice on how to hold, manage and transfer their wealth in a tax efficient manner. He is the editor and co-author of Preparing Fiduciary Income Tax Returns, a contributing author of Preparing Estate Tax Returns and Understanding and Using Trusts and a contributing author of Drafting Irrevocable Trusts in Massachusetts. He is a lecturer in law in the Graduate Tax Program at Boston University School of Law.

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Description

Among the most critical tasks for estate counsel and planners is ensuring that trust documents are drafted to achieve the settlor's intent in the most tax-efficient means possible. Another significant challenge is to avoid or defer income tax. Estate planners must have a thorough knowledge of the drafting techniques and considerations available to reduce income tax consequences on trust income by carefully structuring trust documents.

Estate and trust counsel should always draft trust documents with a view toward clearly delineating between income and principal in a trust document. This is particularly critical in structuring those provisions that define and allocate DNI. Trust distributions are generally taxed at the beneficiary level, and drafters should always be mindful to include in DNI all income that can be passed through to beneficiaries with a lower tax impact than if retained within the trust.

This is also true for trusts that anticipate significant capital gains. Lower overall taxes will often be achieved if capital gains are included in DNI rather than added to the corpus amount.

Listen as our experienced panel provides comprehensive and practical details on drafting trust documents to minimize income tax consequences by including capital gains into DNI and other drafting practices for income tax minimization.

Outline

  1. Default capital gains treatment inclusion in the corpus
  2. Treas. Reg. Section 643(a)-3(b) provisions for including cap gains in DNI
    • The instrument provides for inclusion in income
    • Allocated to corpus but treated as a distribution
    • Actually distributed
  3. Push-out provisions and prioritizing distributions
  4. Use of Section 678 withdrawal powers
  5. Non-tax considerations
  6. Drafting provisions for income tax minimization

Benefits

The panel will review these and other key issues:

  • What are the general requirements of IRC 643 on treatment of capital gains and FAI?
  • How can the trust document be structured--and interpreted--to allow the inclusion of capital gains in DNI?
  • What are local and state provisions that may allow capital gains inclusion in DNI?
  • Income push-out provisions
  • What are best practices for income tax minimization on trust accumulation?
  • How to properly consider available tax elections.