Bankruptcy Court Rejects Out-of-State Domestic Asset Protection Trusts

Thirteen states have adopted statutes expressly authorizing the creation of self-settled spendthrift trusts that will protect the grantor’s assets from the claims of his or her creditors. It seems clear that, apart from certain federal bankruptcy situations, these trusts will be respected as valid spendthrift trusts by the courts of the state under whose laws they are created. Questions remain, however, about the efficacy of a self-settled spendthrift trust created, under the laws of a state that affords such trusts protection, by a resident of a state that expressly disapproves of the use of such trusts.

Download: Bankruptcy Court Rejects Out-of-State Domestic Asset Protection Trusts.

The DSUE Amount as an Estate Asset With Value

The enactment of portability is, perhaps, the most important recent change in the estate tax law. Under Section 2010(c), a dece­dent’s executor can elect on a time­ly filed estate tax return to transfer the deceased spousal unused exclusion (DSUE) amount (the unused unified credit) to the surviving spouse. Portability has dramatically altered modern estate planning for many clients, allowing them to avoid the use of non­ marital trusts in a substantial number of instances.

Download: The DSUE Amount as an Estate Asset With Value.

Planning in the Post-Windsor World

The Supreme Court’s decision in Windsor v. Commissioner, 133 S.Ct. 2675 (June 26, 2013), striking down the federal definition of marriage that excluded same-sex marriages (Section 3 of the Defense of Marriage Act, or DOMA), and the IRS position in Revenue Ruling 2013-17, 2013-38 I.R.B. 201 (Sept. 16, 2013), validating for federal tax purposes any marriage that is valid in the state in which it was celebrated, have led to a number of estate planning issues.
Download: Planning in the Post-Windsor World