Ten 2011 Developments in Estate Planning

McGuire Woods published an article detailing the top ten developments in the estate planning and estate tax world. These developments are listed and briefly described below:

10. Petter v. Commissioner affirmed “the technique of donating a nonmarketable asset by transferring a total specified interest but allocating a specified dollar value to family members and any excess to charity.”

9. Letter Ruling 201117005 (Jan. 5, 2011): The IRS ruled that when a taxpayer died, “the entire value of assets distributed to the CRUT would be deductible in calculating the taxable estate.”

8. America Invents Act provides that tax strategies are not patentable.

7. Estate of Giustina v. Commissioner and Estate of Gallagher v. Commissioner: In both of these cases, the Tax Court scrutinized the executors’ appraisers reports.

6. Florida et al. v. Dep’t of Health & Human Services, et al.: The Supreme Court heard objections to the Patient Protection and Affordable Care Act and should have a decision by next summer. This decision should influence the election.

5. Hendrix v. Commissioner: Hendrix approved the use of a defined value clause but emphasized factors such as the size and sophistication of the charity, how early the charity participated, among others. Essentially, this case narrowed the use of defined value formulas.

4. $1 million Exemption Rumor: There was a rumor that the gift tax exemption would be lowered to $1 million effective on November 23, 2011. The rumor was false, but the buzz in the estate planning community showed a desire for news about the stabilization of the estate, gift, and GST tax environment.

3. Administrative Guidance: The Treasury and the IRS have addressed 7 of 17 concerns for Gifts and Estates and Trusts. This is the first guidance they have provided since 2009.

2. Linton v. United States: The 9^th Circuit remanded a District Court decision against taxpayer to “permit evidence of a nine-day interval between the funding of the LLC and the gift of LLC interest.”

1. The Sensible Estate Tax Act of 2011: The Sensible Estate Tax Act would reduce the estate and gift tax exemptions to $1 million in 2012. It would then index that amount for inflation since 2001, but would begin that indexing in 2013, not 2012.

For more in depth discussion of these updates, please visit:

See Ron Aucutt’s “Top Ten” Estate Planning and Estate Tax Developments of 2011, Dec. 21, 2011; see also David Perry, Top Ten Estate Planning Developments – One Attorney’s Take, Wealth Strategies Journal, Dec. 23, 2011. 

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.