Taxation-Federal Estate and Gift Commons^™

From The Greedy To The Needy, Wendy G. Gerzog

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In some instances when the taxpayer makes a charitable donation, the loss of revenue to the government, and the corresponding gain to the taxpayer, far exceeds the benefit to the charity. Some of these losses may be generated by government sanctioned complex transactions and even government created devices. This article proposes a new way to examine "quid pro quo" charitable gifts that reflects the rationale for the charitable deduction.The article analyzes various charitable donations in terms of the dollars gained by the taxpayer, the dollars lost by the government, and the dollars received by the charity. After considering a sliding …

Shape Up Or Ship Out: Accountability To Third Parties For Patent Ambiguities In Testamentary Documents, Angela M. Vallario

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The attorney's preparation of a testamentary document (hereinafter sometimes referred to as a will or revocable trust) should clearly and accurately reflect the client's last wishes. Although these testamentary documents should reflect the client's intent, they often fall short of accomplishing that goal. There are numerous examples of will and trust construction cases that exhaust tremendous resources in an effort to ascertain the client's wishes or intent. Many of these cases involve the construction of patent and/or latent ambiguities which should have been resolved by appropriate drafting. This article's scope is limited to patent ambiguities caused by the attorney's negligence …

Spousal Election: Suggested Equitable Reform For The Division Of Property At Death, Angela M. Vallario

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Testators have traditionally enjoyed immense discretion in directing the disposition of their wealth upon death; however, when a spouse survives the testator, public policy dictates a limitation on the testator's ability to dispose of property. American jurisdictions impose this limitation through the elective share in common law states and by the nature of property ownership in community property states. Ideally, this limitation should ensure equitable financial protection for the surviving spouse and protect his or her interest in assets that were accumulated with the decedent, yet the current elective share methods fall short of these goals.

Estate Planning Malpractice: Is Strict Privity Here To Stay?, Angela M. Vallario

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Under Maryland case law, a plaintiff in an estate planning malpractice action must be in strict privity with the attorney who drafted the will. To date, Maryland has not extended the third-party beneficiary exception to the estate planning arena.

Legatees specifically identified in a will by name or class are generally precluded from bringing a cause of action against the attorney for the attorney's alleged negligence, because in Maryland in order to recover for legal malpractice, a plaintiff must:show: "(1) the attorney's employment; (2) his neglect of a reasonable duty; and (3) loss to the client proximately caused by that …

Last Gasp Estate Planning: The Formation Of Family Limited Liability Entities Shortly Before Death, Walter D. Schwidetzky

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Family limited partnerships have been popular gift and estate tax planning vehicles for many years. In recent years, family limited liability companies (LLCs) have also become common, particularly in those states that have updated their statutes to take the check-the-box regulations into account. LLCs with more than one member are usually classified as partnerships for federal income tax purposes. In a typical structure, when there is adequate planning, the donors form a limited partnership or an LLC (jointly, 'family limited liability entity' or FLLE), to which they contribute assets expected to appreciate in value. This article will focus on such …

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance?, Evelyn Brody

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This piece, included in the University of Hawaii Law Review's symposium issue on the Bishop Estate, explores the relationship between the new intermediate sanctions law and the IRS's power to revoke tax exemption under § 501(c)(3). Inspired by the storied setting, I indulge in a fantasy: This article pretends that the IRS revoked the Estate's exemption, and takes the form of the Tax Court declaratory judgment opinion. I reluctantly 'rule' that exemption was not appropriate, because State enforcement action against the trustees was proceeding. (However, this forum allows me to hedge my argument by producing two concurring and one dissenting …

Living Trusts In The Unauthorized Practice Of Law: A Good Thing Gone Bad, Angela M. Vallario

All Faculty Scholarship

An elderly man recently lost his wife and visits the lawyer's office for assistance in the administration of her estate. After the attorney expresses her condolences, she asks if his wife had a will. The client reaches into a brown shopping bag and retrieves a two-and-a-half inch black binder containing several trusts. The elderly gentleman and his deceased wife were told this would eliminate the expensive legal nightmare of probate. Unfortunately, like many others, this couple was victimized by a trust mill.

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance? (Symposium), Evelyn Brody

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No abstract provided.

Death By A Thousand Cuts: The Rule Against Perpetuities, Angela M. Vallario

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This article suggests the policy and social justifications against dead hand control far outweigh transfer tax advantages provided to wealthy settlors and the potential revenue expected to be generated by the abolishment legislation. The abolishment legislation may be readily adopted by other jurisdictions in light of the legislatures' failure to recognize the consequences of unlimited dead hand control.

This article recognizes that the Rule is complicated, and Rule violations present harsh consequences for practitioners and their clients. In fact, violations of the Rule, due to its complexity, have been held as an attorney error, not subject to a malpractice claim. …

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption (Symposium), Evelyn Brody

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No abstract provided.

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption, Evelyn Brody

All Faculty Scholarship

This piece explores the broad financial relationship between the public and the charitable sectors. Tax exemption operates as a peculiar subsidy - offering the greatest benefits to charities carrying on the most profitable activities and owning the most valuable property. Perhaps, then, the property tax and income tax exemption of charities can be explained by a 'sovereign' view of the charitable sector. Resembling the federal tax treatment of state and local governments, exemption for charities respects the independence of the nonprofit sector, and minimizes the involvement of charities in the political process. Unfortunately, the long history of Anglo American philanthropy …

'Tis A Gift To Be Simple: The Need For A New Definition Of "Future Interest" For Gift Tax Purposes, Jeffrey G. Sherman

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No abstract provided.

Below Market Loans: From Abuse To Misuses – A Sports Illustration, Phillip J. Closius, Douglas K. Chapman

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Below market loans have been traditionally used as substitutes for gifts, salaries, and dividends for the primary purpose of tax avoidance in the transfer of wealth. The Supreme Court's opinion in Dickman v. Commissioner subjected both demand and term loans in an intrafamilial setting to the federal gift tax. Congress, while subjecting all below market loans to either income or gift tax, applied different valuation formulas to term and demand loans and, in so doing, favored the use of demand loans as a salary substitute. This Article analyzes the current status of below market loans by examining their use in …