Estate Planning Law Update

The Law and Planning Considerations

Presented by:

Anderson, Dorn &

Rader, Ltd.

Legacy and Wealth Planning Attorneys

Gerald M. Dorn, Esq.

Gerald (“Jerry”) M. Dorn, Esq. Managing Shareholder at Anderson, Dorn &

Rader, Ltd. (shareholder since 1997)

B.A. in Business Admin. with high honors, University of San Diego

J. D., Cal. Western School of Law with recognition in Who’s Who Among American Law Students

Certified Specialist in Estate Planning Law by the National Association of Estate Planning Councils

Fellow of the American Academy of Estate Planning Attorneys

Highest rating among peers and local judges (Top 5%)

Author and lecturer on numerous estate, tax and asset protection planning topics

Member of State Bars of Nevada and California

American Taxpayer Relief Act of 2012

Federal Estate & Gift Taxes

2015 Adjusted Federal Estate and Gift Tax

Exclusion Amount

Unmarried - $5,430,000

Married - $10,860,000

2016 Projected Exclusion Amount

$5,450,000

$10,900,000

Rate is 40%

American Taxpayer Relief Act of 2012

Federal Generation-Skipping Transfer Tax

Applies to transfers to beneficiaries who are 2

or more generations below you

Grandchildren, Great-Grandchildren, etc.

Grandnieces and Grandnephews

Unrelated beneficiaries who are 37.5 years

younger than you

2015 Adjusted Generation-Skipping Transfer

Tax Exclusion Amount

Unmarried - $5,430,000

Married - $10,860,000

Rate is 40%

American Taxpayer Relief Act of 2012

Federal Generation-Skipping Transfer Tax

2016 Projected Exclusion Amount

$5,450,000

$10,900,000

American Taxpayer Relief Act of 2012

2015 Adjusted Annual Gift Tax Exclusion

$14,000 per donee

2016 Projected Annual Exclusion Amount

$14,000 per donee

Portability

Surviving spouse may elect to use deceased spouse’s unused estate and gift tax exclusion amounts

Election must be made on the deceased spouse’s timely filed estate tax return

Not applicable to deceased spouse’s unused generation-skipping transfer tax exclusion amount

Not indexed for inflation

Planning Considerations

Married Couples

Applies to all married clients with Living Trusts created before 2013

Need to review estate tax planning provisions in the Living Trust

Reconsider the A/B Trust Planning

What is A/B Trust Planning?

A/B Trust Planning

Bill & Mary are the

Trustors and Co-Trustees

First Death

(Revocable) “A”

$350,000

(Irrevocable) “B”

$350,000

John Susan

Second Death

Mary is sole Trustee

and sole Beneficiary

INCOME

PRINCIPAL for: Health, Education,

Maintenance, &

Support

A/B Trust

Above ground

Below ground

A/B Trust Planning

Bill & Mary are the

Trustors and Co-Trustees

First Death

(Revocable) “A”

$350,000

(Irrevocable) “B”

$350,000

John Susan

Second Death

Mary is sole Trustee

and sole Beneficiary

INCOME

PRINCIPAL for: Health, Education,

Maintenance, &

Support

Considerations for Married Couples With Estates Under $5,430,000

Simple Married Trust No A/B provisions

All trust assets pass in trust to the surviving spouse.

Disclaimer A/B Trust Planning Funding of B Trust is in discretion of the

surviving spouse

Advantages Ease of administration at first spouse’s death

Lower administrative costs (attorney’s fees, appraisal fees, accountant's fees, etc.)

Considerations for Married Couples With Estates Under $5,430,000

Risks of No A/B or Discretionary (Disclaimer) A/B Planning Remarriage

Assets are exposed to the creditor’s of the surviving spouse (i.e., lawsuits and divorce if surviving spouse remarries)

Solution

A/B and remarriage provisions

Considerations for Married Couples With Estates Over $5,430,000

Simple Married Trust (No A/B Provisions)

Disclaimer A/B Trust Planning

Mandatory A/B or A/B/C Trust

Mandatory A/C Trust Electing Portability

Portability Followed by Gift by Surviving Spouse to an IGIVE Trust

Creditor Protection For Inherited IRAs

U.S. Supreme Court case Clark v. Rameker (2014)

Inherited IRAs are not considered “retirement accounts” under federal bankruptcy law

Inheritors can’t put additional funds into the account

Inheritors can take money out at any time without penalty

Exemption does not apply and creditors may attach inherited IRAs!

Planning for Same Sex Married Couples

US v. Windsor (2013)

US Supreme Court held that the federal definition of marriage under DOMA unconstitutional

Did not address the powers granted to the states to define marriage or other unions

Planning for Same Sex Married Couples

Obergefell v. Hodges (2015)

US Supreme Court held states cannot prohibit the issuing of marriage licenses to same sex couples and must recognize same sex marriages performed out-of-state

Same sex couples need to review their plans and consider new planning opportunities and issues resulting from these cases

Nevada Trust Law

Best state in the country to protect against a beneficiary’s creditors reaching Access and Sentry Trusts!

Divorcing spouses

IRS liens

Personal injury lawsuits

New Directed Trust Legislation

Trust Protectors

Trust Advisors

Decanting Legislation – can amend irrevocable trusts!

Nevada Trust Law

New 365 year Rule Against Perpetuities

New accounting rules applicable to Trustee’s of irrevocable trusts

Estate Planning Law is Dynamic

You should have your plan reviewed every two years

Coincides with changes that occur with each legislative session in Nevada

New tax law considerations generally arise at least every two years

Takes into account your ever changing family circumstances

Come see us for

a Trust Review!

Anderson, Dorn & Rader, Ltd.

“Helping families preserve their real wealth and legacy.”