In Rev. Proc. 2003-42 (May 9, 2003), the IRS issued a sample declaration of trust for a qualified personal residence trust (QPRT) with alternate provisions. A trust instrument that is substantially similar to this sample will be recognized as meeting all of the requirements of a QPRT under Section 2702(a)(3)(A) and Reg. Section 25.2702-5(c). The full text is provided in Resources. Question 3.
IRS Issues New Sample Charitable Remainder Trusts
On August 1, 2003, the IRS issued a series of new Revenue Procedures (Rev. Proc. 2003-53 through Rev. Proc. 2003-60) which offer updates, annotations, and alternate samples for certain types of Charitable Remainder Trusts. The full text is provided in Resources.
Updated Product Features
New Intangible Tax Trust
Florida residents with significant intangible personal property (i.e., stocks, bonds, mutual funds, etc.) frequently ask how to avoid Florida's intangible personal property tax (imposed at the rate of $1 per $1,000 of intangible assets owned on January 1 of each year). Despite an exemption of the first $250,000 (or $500,000 for joint returns), the tax can be a nuisance for clients with moderate estates and a sizeable penalty for those with large portfolios.
In 2000, the Florida Legislature changed the law on taxation of intangibles owned by trusts, so that trusts are not taxed, but certain interests are taxed to the trust beneficiaries. In promulgating rules, the Department of Revenue has created a safe harbor for the use of a short term, irrevocable trust, hence, the Intangible Tax Trust (often known by other acronyms). The trust concept is that it is created in December (often early to mid-December) and is irrevocable until early to mid-January of the following year, at which time the assets are transferred back to the Grantor (or, more commonly, to his or her revocable trust).
Several nuances for these conceptually simple trusts are contained in the new document and include the ability to continue the trust from year to year-rather than have it terminate completely in early January-and to add contingent beneficiaries as a buffer against changes of position by the D.O.R. It is a shorter version of the more common Lawgic trusts, primarily because it is not intended to last as long. Question 3, New Questions 579 - 587.
New Ultra-simple Will
Most subscribers love our Simple Will because it is easy, yet thorough. Some, however, have clients for which an 8 page simple will is too overwhelming, and have asked for an even simpler version. We listened, and here it is - the Ultra-simple Will that weighs in at as little as 2 pages, increasing to 3 or 4 if you include a written list and standby trust. Question 2.
Expanded Elective Share Trust Availability
The contingent Elective Share Trust introduced in the April update is now available in additional circumstances, including where no gift is made to the spouse. In some cases, given the choice of trusts in the document, only the short form is appropriate and the program will so advise you. Questions 294.
New Option to Refer to Client as Widow or Widower
Some widows and widowers object to being identified as simply “unmarried” in formal documents. They are now given the option of being referred to as the widow or widower of their deceased spouse. Question 17, New Questions 19 and 20.
New Option to Include Explanation of Valuation Choices in Draft Document
Where either a “date of distribution” or “fairly representative” valuation formula must be chosen you now have the additional option of including an explanation of both in the draft document itself to facilitate discussion with your client. Questions 414 and 897.
Expanded Payment of Death Benefits Availability
A provision may now be included, even when no Marital and Family Trusts exist, to the effect that any life insurance proceeds are to be held in a trust outside of probate and are not to be used to pay claims against the estate (sometimes referred to as a “testamentary life insurance trust”). This provision assures that life insurance proceeds are administered under the terms of the document, but are not subject to a decedent's creditors (as they would be if paid to the estate). Question 875.
Question Numbers Now Displayed in Navigator
Question numbers are now displayed when you rest your cursor on any question in the Navigator.
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To view those questions that are new in this update, or whose Law & Strategy, choices, or default answers have changed, use the "Up_Nov03" flag file. From inside Lawgic, open any existing answer file; on the Flags menu, click Open Flags, select the appropriate Title (click OK), and next select the "Up_Nov03" flag file (and click OK). To view all flagged questions, click Expand All on the Answers menu and scroll the Navigator. Flagged questions will be indicated with bold text.
Please continue to send us your suggestions on existing or new products. Contact our Technical Support Department at 1-877-2-LAWGIC (252-9442) or e-mail us at support@lawgic.com.
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