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Formula Transfers for Estate Planning


This webinar has expanded to 1.5 hours. This topic was previously offered at 1 hour.
Cost Free
Presentation Length 1.5 hours

Recorded DateOctober 12, 2020
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaTaxes
Course LevelBasic
Course Description

When making estate planning transfers of business interests, one risks an IRS audit imposing gift tax consequences, because valuation involves judgment calls with which the IRS may disagree. To try to protect against adverse audit results, taxpayers may use formulas to define their transfers. Some formulas have protected taxpayers; others have not. Two 2020 tax court cases found certain formula transfers fatally flawed.

Some formula clauses involve excess values passing to charity or spouses. Other formula clauses define the purchase price so that the taxpayer is assured of transferring the entire business interest. Disclaimers may also work.

Learning Objectives:

  • Determine why sales to irrevocable grantor trusts work well for pass-through entities and how their risks compare to transfers to grantor retained annuity trusts (GRATs)

  • Determine when taxpayers have succeeded when an excess gift goes to charity (whether by formula gift or disclaimer) or the formula limits the transfer

  • Recall a 2020 tax court case disallowing a deduction for a formula gift to charity

  • Recall a 2020 tax court case disapproving of using dollar amounts for transfers

  • Determine how to design a formula purchase price designed to run the gift tax statute of limitations

  • Determine how to design the recipient trust to use a disclaimer

  • Determine how to design the recipient trust to run the gift tax statute of limitations

In addition to being accredited for CPE, CLE credit will be available for California, Illinois, Missouri, and Texas (pending).

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Thompson coburn llp

Steve has drafted trusts and a full range of estate planning documents for clients to help grow, preserve, and transmit their family wealth. He has also drafted organizational documents for limited liability companies, corporations, and partnerships to implement their owners' wishes regarding current and future control and transmission, including bringing in new owners and facilitating exit strategies. 

Steve enjoys helping clients structure their affairs to achieve their personal, business, and financial goals while trying to reduce the drag that taxes impose on them. His firm provides full service to businesses; however, he also acts as counsel on specialized matters while cooperating and facilitating the continued involvement of an existing legal, accounting, and financial services team. Steve maintains his CPA license but prefers to refer income tax returns to practicing CPAs.

Steve Gorin is the former president and an ongoing contributor to strategic initiatives of Covenant Place, a senior affordable housing community with a groundbreaking model for integrated residents with the surrounding community and facilitating holistic services to enrich their lives. 

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About Our Presenter

Thompson coburn llp
For approximately 90 years, Thompson Coburn LLP has provided the quality legal services and counsel our clients demand to achieve their most critical business goals. Whether helping with a tax, estate planning, real estate or employment issue, navigating a complex acquisition or defending a product or service in litigation, we have the knowledge and resources to meet any legal need.

With over 380 attorneys, we have experience in more than 50 areas of the law. Supported by our firm’s state-of-the-art technology, lawyers in our Chicago, Dallas, Los Angeles, St. Louis, Southern Illinois and Washington, D.C. office enjoy a nationwide practice.

Thompson Coburn live webinars are pre-approved for continuing legal education credit in California, Illinois, and Missouri. For those attorneys seeking CLE in other jurisdictions, the Certificate of Attendance can be used to seek CLE in those other jurisdictions. It will be the responsibility of each attorney to handle CLE in his or her own state. While Thompson Coburn adheres to the strict accreditation rules for California, Illinois, and Missouri, please note that our live webinars may not be eligible to receive credit in all states.