The Rise of Directed Trusts
One only need look at any of the old wills online, such as George Washington’s or Benjamin Franklin’s, to realize how the issues involved in estate and trust planning have evolved over the years. We see this evolution today especially in the areas of trustee responsibility and delegation. The landscape of family succession planning is constantly shifting to accommodate planning structures which allow families to maintain an element of control, while also allowing other professionals to step in with their particular areas of expertise. This is the essence of what is known as open architecture trust design or “OATD.” The primary driver of OATD is the advent of the directed trustee concept which allows for the bifurcation of… Read more
Use of a Charitable Remainder Trust in Managing an Art Collection
Quite often an art collection forms a substantial portion of a collector’s assets. Sometimes, a collector is ready to part with a particular work of art or perhaps might be in need of income. A collector might sell the artwork to generate cash. However, if the artwork has substantially appreciated in value in the hands of the collector, this appreciation will generate tax upon the sale. The tax impact can be substantial at 28% capital gain rate or the ordinary income tax rates, depending on how the artwork is classified in the hands of the collector. If You Must Sell, Make the Most of It An alternative to a direct sale is to contribute the artwork… Read more
How to Use Conservation Easements to Help Future Generations Enjoy Your Family Compound
Bob and Sylvia put together a family compound where they gathered their children and grandchildren for visits and special occasions. They loved watching their grandchildren grow up learning to hike and fish and to appreciate the remoteness, the sunsets, the wilderness, and their time together. As the years advanced, they wondered what they could do to hold the compound together after their deaths, so that future generations of their offspring and the public would develop an appreciation for wilderness. Bob and Sylvia wanted to conserve the property in its natural state and worried that disagreements among future generations would result in the property’s being subdivided and sold off for development lots, which was already happening to surrounding large properties. After… Read more
Ensuring Communication of Your Health Care Wishes: Bridging the Gap Between Advance Directives and End-of-Life Care
A Common Story John Smith has an inoperable brain tumor and is showing early signs of dementia. Five years ago, while in good health, John met with his attorney and signed an Advance Directive, naming his wife, Betty, as his Health Care Agent. In his Directive, John indicated his treatment preferences: if he was in a terminal condition or state of permanent unconsciousness, he wanted his Agent to “allow my natural death to occur.” John’s physician meets with John and Betty and tells them there is nothing more he can do for John. John has about six months to live, but when his physician asks John whether he wants to be resuscitated if… Read more
Rethinking Estate Planning
Much research in the legal industry has focused on the question of what factors contribute or impede not only the transfer of wealth but also the sustainability of families and their business enterprises. While attorneys have written extensively about the confiscatory nature of the estate tax system, the tax code in not the only culprit. Ask any private client attorney about what it means when we say there is a failure of “wealth transfer” and our stories are prolific: Children losing their incentive to be productive working adults due to having more wealth than they need; family business planning (or lack thereof) that sows the seeds and eventually incites fractionalization among the family; and unstable structuring for investment management… Read more