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Can a Trust Own an S Corporation Stock?

[vc_row triangle_shape="no"][vc_column][vc_column_text] Many people ask if a trust can own S Corporation stock. In general, living trusts and testamentary trusts may hold S corporation stock only for two (2) years after the date of death of the grantor.  After death, the trusts become ineligible shareholders and the corporation will lose its S-election due to the Grantor's death. While the grantor of a living trust is living, the Trust would be qualified as a "grantor trust" for income tax purposes, thus allowing all items of income and expense to flow through to the trust's grantor.  Upon death, the grantor trust status is switched off.[/vc_column_text][vc_empty_space][/vc_column][/vc_row][vc_row...

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Qualifying Domestic Trust (“QDOT”)

A Qualifying Domestic Trust, or QDOT, allows taxpayers who are not U.S. citizens to claim the marital deduction for estate tax purposes, while keeping the property in trust for other future contingent beneficiaries.  A non-citizen spouse is not otherwise eligible for the marital deduction.  QDOTs can be used when trust assets would likely be subject to the federal estate tax (married couple with taxable estate greater than $5 million), without the marital deduction otherwise being available.  Otherwise, without a QDOT, the surviving spouse must become a U.S. citizen before her deceased spouse’s estate tax return is filed. QDOT Requirements.  The following...

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Nevada Wills: Drafting a Last Will and Testament in Nevada

Fundamental Discussion Before Drafting a Will.  As an estate planning attorney, it is important for me to ask the right questions of my clients.  I need to know about the client’s life, goals, family and relationship status, as well as about their assets, liabilities, income and expenses.  Before making recommendations, I really need a good picture of their financial and personal life.  Without such information, mistakes will be made and important planning opportunities will be lost.Many new clients come to me with a wrong understanding of how the law works.  For example, they think if they have a Will that...

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Thoughts on Estate Planning and Over-Seas Flights

Imagine that you are preparing to fly an airplane from Los Angeles to Honolulu. You know that airplane engines need to be serviced and overhauled after a certain number of hours of operation and you also know that the plane you are going to fly to Honolulu, over 3,000 miles of open water, has not been serviced recently. Would you choose to ignore the service requirements of the engines of that airplane, knowing that  you have only one chance to get it right and that failure is not a viable option, particularly when that plane must travel non-stop for 3,000...

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Protect Your Home with a Personal Residence Trust

For most of us (at least up until the real estate crash of 2007-2008!) our major asset is our home and the “equity” we have in our home, which is the excess of the value of the home over the mortgage against it. While it is possible to file a “homestead” to protect our home equity, even if the homestead will, for now cover our home equity against possible creditors, there are certain risks that the homestead cannot protect against. The good news is that with recent court rulings, we can confidently establish Nevada personal residence trusts, qualified personal residence...

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The Nevada Onshore Trust: It’s Also An Estate Tax Planning Tool

A full copy of Mr. Grant's article can be found here: The Onshore Trust as an Estate Tax Planning Tool. In his article he answers the question, what is an onshore trust?  He also explains the benefits and downsides of using an onshore trust vs. an offshore trust.  The article also examines some tax planning ideas to be considered as one goes about forming a Nevada onshore trust or self-settled spendthrift trust, as they are sometimes called.  Lastly, Mr. Grant provides some estate planning techniques and suggestions. This article, The Onshore Trust as an Estate Tax Planning Tool, was written by David Grant while he was...

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Migrating the Domestic Asset Protection Trust Offshore

On October 2, 2009 Attorney David M. Grant presented an article, "Migrating the Domestic Asset Protection Trust Offshore," at the Annual Southpac Offshore Planning Institute in Las Vegas, Nevada.  The full article can be found here: Migrating the Domestic Trust Offshore. The article discusses techniques for trust migration or trust redomiciliation.  It also provides reasons for using a domestic asset protection trust prior to going offshore.  Moreover, the article provides the following chart explaining the specific rules relating to trust migration for particular offshore jurisdictions: Jurisdiction Governing Law Inbound Migration Outbound Migration Anguilla Anguilla Trusts Ordinance Allowed if recognized by previous governing law Allowed if recognized by the new governing law...

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Sunshine Laws in University Presidential Searches

While Mr. Grant was a law student he wrote a paper regarding the law and higher education.  The full version of his paper can be found here: Sunshine Laws in University Presidential Searches. The introductory section is reproduced here: "It is often said that selecting a new president is the most important duty entrusted to a governing university board.[1] Thus, most presidential searches at universities are generally conducted using the same time-tested, similarly-formulated process.[2] This process in most cases begins almost immediately following the announcement that the current president is stepping down[3] and may continue for up to one year or more.[4] The...

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WHY ESTATE PLANNING STILL MATTERS

For many years, estate tax planning was a fairly insignificant area of tax law, primarily because there were not that many people who had estates to tax. But with the advent in 1981 of what is known as the “Unlimited Marital Deduction”, and with the increase in the estate tax exemption from less than $100,000 in 1981 to $600,000 by 1987, coupled with a general increase in wealth, primarily resulting from booming stock markets and real estate markets in the 1980’s, 1990’s and well into the 2000’s, estate tax planning came to the forefront. At the same time, income tax...

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Don’t Forget about Annual Exclusion Gifting

As published yesterday in LISI Estate Planning Newsletter #2056 (January 30, 2013).* With all eyes focused on a potential “fiscal cliff” in the last quarter of 2012, some might have missed the IRS’ October 18, 2012 announcement of an increase in the gift amount allowable under the annual exclusion.  See Rev. Proc. 2012-41.  In 2013 a person will be able to give $14,000 to each donee, free of gift tax.  While as of late planners have largely been concerned with helping clients make larger gifts under the unified credit, this announcement reminds us of our old friend—the annual exclusion.  This article...

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