October 28, 2021 – Charlie Pieterse and Deborah Tedford of the Tedford Law Firm PC (with assistance from Trevor Larrubia) presented “Where Angels Fear to Tread – Representing the Impaired Client and Preserving Their Estate Plan in the Face of Incapacity and Avarice” at the ALI-CLE’s annual seminar: Representing Estate and Trust Beneficiaries and Fiduciaries. Charlie and Debbie facilitated a discussion on, and offered insights concerning the steps an attorney or fiduciary can take to help preserve an estate plan in the face of the challenges presented by a client’s declining capacity and those who would seek to advantage themselves as a result. The PowerPoint Presentation is accessible by clicking this link.
September 29, 2021 – The House Ways and Means Committee’s recent tax proposal (the “Proposal”) would reduce the Federal Gift and Estate tax exemption from $11.7 million to the 2010 amount of $5 million, adjusted for inflation. While we cannot predict in what form the Proposal will be reflected in any final legislation that is enacted into law, if you are concerned about the Proposal then to take advantage of the current higher exemption while it is still available, gifts should be completed before December 31, 2021. If you would like to discuss gifts, please contact us as soon as possible. Please note, Connecticut also has a gift tax and the Connecticut gift tax exemption is only $7.1 million.
The Proposal also includes substantial changes to the treatment of grantor trusts, which generally include irrevocable life insurance trusts as well as grantor retained annuity trusts, qualified personal residence trusts, and any other irrevocable trusts that the income is reported on the grantor’s own income tax return. The bill proposes a new rule that would include such trusts funded or established after the enactment date in the grantor’s taxable estate. The language will impact any grantor trust established after the date of enactment and would apply to contributions made to existing grantor trusts which are made after the enactment date. If you are making annual exclusion gifts to an affected trust, it may be advisable to accelerate those payments. Additionally, insurance trusts are generally grantor trusts and as such will be subject to the same rule. Insurance proceeds attributable to premiums paid by the insured after enactment would be included in the grantor’s taxable estate if the Proposal is enacted. The enactment date may be before December 31, 2021. The Proposal would also treat a post enactment conversion of a grantor trust to a complex trust as a gift. Conversions of grantor trusts to complex trusts can also result in adverse income tax consequences, especially when the trust has debt or owns in pass-through entities with debt and anyone contemplating converting a grantor trust to a complex trust should consider accelerating the conversion so that it occurs prior to the enactment of the Proposal.
Please contact us with any questions on how these proposals may impact your estate plan.
April 28, 2021 – Charlie Pieterse presented “Preservation of the Estate Plan in the Face of Incapacity, Disruption and Avarice” at the Connecticut Bar Association’s Elder Law Section Meeting held in partnership with the University of Connecticut School of Law. With his co-presenter, Rebecca Iannantuoni of Day Pitney LLP, they facilitated an open discussion with law students and attorneys about the ethical considerations that attorneys must make when representing impaired clients and the identifying characteristics of impaired clients and those who unduly influence them. In addition, they provided tools and strategies for properly preserving a client’s estate plan and fulfilling a client’s testamentary objectives in the face of diminishing capacity. The PowerPoint presentation is accessible by clicking this link.
November 10, 2020 – Charlie Pieterse and Trevor Larrubia presented “The Hazards of Ethical Lawyering: Perspectives from a Planner and a Probate Litigator” at the 2020 Federal Tax Institute of New England. Together with their co-presenter, Rebecca Iannantuoni of Day Pitney LLP, they discussed aspects of ethical considerations that arise in the context of a trusts and estates practice, including the duty of confidentiality and the scope of the attorney client privilege, safeguarding against potential conflicts when representing a client with diminished capacity, and how technological developments are impacting the legal practice. The Powerpoint presentation is accessible by clicking this link and the written materials are accessible by clicking this link.
May 1, 2020 – There have been numerous state and federal tax changes in response to the COVID-19 pandemic that are intended to provide businesses and individuals with additional liquidity. Many of the federal changes are contained in the CARES Act, but there were also changes contained in the Family First Coronavirus Response Act. The federal changes include: Recovery Rebates (also known as Economic Impact Payments), increased charitable deductions, an above the line $300 charitable deduction, paid sick and family medical leave, tax favored retirement plan withdrawals, expanded retirement plan loans and relaxed repayment schedules, waiving of IRA required minimum distribution rules, tax favored employer-student loan repayment assistance, the removal of the limitation on excess business losses, the relaxation of the section 163(j) business interest deduction limitation, the repeal of the taxable income limitation for net operating losses, modification of the net operating loss carryback rule, the adoption of a federal employee retention payroll tax credit, Payroll Protection Program loans, modification of the corporate alternative minimum tax rules, and the correction of the depreciation period for qualified retail improvement property. The President also triggered section 139 of the Code, allowing qualified disaster relief payments to be excluded from gross income and at the direction of the President, the IRS granted automatic extensions for the filing and payment deadlines for certain types of taxes and adopted its People First Initiative, relaxing IRS collections procedures.
Many of the federal tax changes will also reduce a taxpayer’s Connecticut taxable income, and the Connecticut Department of Revenue Services has granted automatic tax payment and filing extensions for certain taxes that generally mirror the relief provided by the IRS. At the State level, the Governor has also ordered municipalities to provide payment deferrals for municipal taxes and has suspended the plastic bag tax.
The expansive tax relief provisions are of significant benefit to individuals and businesses, especially considering the limited availability of Paycheck Protection Program loans for businesses. Following is a link to an article discussing federal and Connecticut tax relief provisions. [LINK TO ARTICLE]
We encourage individuals and businesses to reach out to us with any questions that you may have regarding these tax changes.
April 6, 2020 – We previously summarized the Federal and Connecticut loan programs being offered in response to the economic hardships caused by the spread of COVID-19, including the Paycheck Protection Program (PPP) being administered by the U.S. Small Business Association (SBA). On April 2, 2020, the SBA published an interim final rule that has clarified and modified certain aspects of the PPP, including: (i) updates to the PPP application and documentation to be submitted by proposed borrowers; (ii) changes to the interest rate, maturity date and deferment period of PPP loans; (iii) clarifications regarding borrower eligibility for the program; (iv) clarifications regarding calculation of payroll costs; and (iv) changes to loan forgiveness accrual.
Please see the memo accessible by clicking this link for a summary of certain material information provided in the SBA’s interim final rule and reflected in the PPP loan application, which serves as an update to our March 27, 2020 alert.
We encourage individuals and businesses to reach out to us with any questions that you may have regarding the PPP or the Coronavirus Aid, Relief and Economic Security (CARES) Act generally.
March 27, 2020 – During these challenging times we want to make you aware of new small business loan programs approved by the U.S. Federal Government and State of Connecticut to combat the economic impact of COVID-19.
The U.S. Small Business Administration is offering loans to certain qualifying businesses impacted by COVID-19 to assist them in meeting their financial obligations over the coming months. Qualified loan recipients include (i) businesses with 500 or fewer employees, (ii) sole proprietors, (iii) independent contractors and (iv) eligible self-employed individuals. Qualified loan recipients will be eligible to receive a no-fee loan to cover certain costs including payroll, rent, mortgage interest and utilities. The loans have several attractive features including (i) government guarantee of 100% of the loan, (ii) waiver of collateral and personal guarantee requirements, (iii) waiver of pre-payment penalties, (iv) deferral of payments for 6 to 12 months, and (v) conditional loan forgiveness based on continued employment and payment of salary and wages.
The State of Connecticut has launched its own loan program for Connecticut-based small businesses affected by the COVID-19 crisis through the Department of Economic and Community Development. Eligible businesses can apply to receive a 12-month, 0% interest loan for up to the lesser of three months operating expenses or $75,000.
For more information regarding these loan programs, we have summarized key provisions of both programs in a memo accessible by clicking this link.
We encourage those interested in pursuing either or both of these programs to contact us to answer any questions you may have and to assist you in obtaining loans under the programs.
July 19, 2019 – Offshore trusts are a popular succession and tax planning tool for international clients who may live or have assets in the United States. They are also used for asset protection planning. Although perceived as immune from domestic litigation, offshore trust disputes often find their way into U.S. courts. When they do, these disputes raise a host of unique procedural, legal, and strategic questions.
Charles W. Pieterse and Wyatt R. Jansen, along with Richard LeVine of Withers Bergman, presented on this topic at the American Law Institute’s annual Representing Estate and Trust Beneficiaries and Fiduciaries conference in Boston, Massachusetts. Their presentation discussed common issues that arise in domestic litigation of offshore trust disputes, including:
- Jurisdiction: Many states have specific provisions governing jurisdiction in trust disputes. Common provisions create jurisdiction over trusts holding property in a state or with a settlor or beneficiaries in the state, regardless of where the trustee is located or the trust’s situs is. In jurisdictions like Connecticut that have adopted the Uniform Trust Code, these provisions largely remain in effect. But there are significant questions about the reach of these statutes given constitutional limits on personal jurisdiction, forum-selection clauses in trust instruments, and state long-arm statutes. Some trust disputes require only in rem jurisdiction, raising further questions.
- Forum selection clauses: While a common feature of offshore trusts, forum selection clauses in trust instruments are not necessarily governed by the same rules as those found in commercial agreements. For one, a standard forum-selection clause in many offshore trusts has been interpreted to exclude contentious matters. For another, courts have questioned the enforceability of forum-selection clauses against trust beneficiaries, who did not accede to them. In some circumstances, trust fiduciaries may also be constrained by their fiduciary duties in enforcing these provisions.
- Discovery: Discovery is ordinarily a procedural question determined by the law of the forum. Offshore trusts, however, may arguably be governed by the secrecy statutes enacted in various offshore jurisdictions that impose or purport to impose restrictions on disclosure of trust information in court proceedings or otherwise. Domestic courts have generally been reluctant to apply these statutes, but they remain a potential roadblock.
- Costs and benefits of domestic litigation: Clients may prefer to litigate offshore trust disputes in domestic courts for a variety of reasons including cost, convenience, trust in the U.S. legal system, familiarity with domestic counsel, and perceived procedural advantages. But because such proceedings will almost inevitably face costly jurisdictional challenges and other complications (such as cross-border discovery and judgment enforcement), careful consideration should be given to the costs and benefits of litigating domestically versus proceeding in an offshore jurisdiction. Where possible, both domestic and offshore counsel should be consulted to develop a tailored strategy.
- Resisting jurisdiction: Offshore parties who find themselves embroiled in domestic litigation may resist jurisdiction or otherwise seek to move the dispute to an offshore forum, but should proceed carefully to avoid the perception of seeking delay or obstruction.
The full presentation can be viewed here: https://www.ali-cle.org/course/Representing-Estate-and-Trust-Beneficiaries-and-Fiduciaries-2019-CB007/products