Snap, Crackle, Swap: The Substitution Power in Grantor Trusts

Friday, May 29, 2020 12:00pm EDT


Jonathan G. Blattmachr, Esq., Professor Mitchell M. Gans, and L. Paul Hood, Jr., Esq.

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Presentation Materials

Course Description

Grantor trusts are ubiquitous in estate planning, but significant uncertainty still exists amongst practitioners about the “right” powers to make the trust a grantor trust for income tax purposes. In this 90 minute program, Paul Hood will conduct an exhaustive analysis of the power to swap assets with a grantor trust, which two revenue rulings made much more common in use. Along the way, Paul will address:

History of the swap power as a grantor trust power

• Clifford Regulations

• Analysis of IRC Sec. 675(4) and the corresponding regulations

• The meaning of “reacquire”

• Tax consequences of holding the swap power; Jordahl Estate v. Com’r.

• Tax consequences of exercising the swap power

• Who should hold the swap power and who shouldn’t

• How should the swap power be held and exercised, i.e., in a fiduciary or non-fiduciary capacity

• Outer limitations on the swap power and what can be substituted for the grantor trust assets; promissory notes

• Meaning of “equivalent value”

• Should the swap power be held in a fiduciary capacity or a non-fiduciary capacity

• Rev. Rul. 2008-22 and 2011-28; Rev. Proc. 2007-45: Comfort to use of the swap power?

• Effectiveness of the swap power

• Toggling the swap power and the consequences of such; Notice 2007-73

• Duties of the trustee when a swap power is exercised

• State court cases involving the swap power

• Uses of the swap power for basis planning

• Asset protection implications of the swap power

• Analysis of the proper language for the swap power, including forms!

Don’t miss this practical and comprehensive program!

Webinar Speakers

Jonathan G. Blattmachr, Esq., InterActive Legal Founder ^

Jonathan G. Blattmachr has over 35 years of experience in trusts and estates law and is currently a Principal at Pioneer Wealth Partners, LLC. He is a retired member of Milbank Tweed Hadley & McCloy and the Alaska, California and New York Bars.  Mr. Blattmachr writes and lectures extensively on estate and trust taxation and charitable giving and has authored or co-authored eight books and over 500 articles on estate planning topics.  He also co-developed Wealth Transfer Planning™, an InterActive Legal software system published for lawyers that provides specific client advice and automated document assembly for wills, trusts, powers of attorney, and other estate planning documents.

Professor Mitchell M. Gans ^

Professor Mitchell M. Gans is the Steven A. Horowitz distinguished professor in taxation at Hofstra University School of Law, and an Adjunct Professor of Law at NYU Law School. He is an Academic Fellow at ACTEC and is the Academic Editor of the ACTEC Journal. Professor Gans is a leading scholar in the estate-and-gift tax area, teaching courses for the IRS on estate and gift tax and valuation methodology. He is a frequent lecturer for ALI-ABA, NYU, ACTEC, the ABA and other groups and has written numerous articles on estate tax planning topics, including a recent Leimberg Information Services article, co-authored with Jonathan Blattmachr, on the Proposed Section 2704 Regulations.

L. Paul Hood, Jr., Esq. ^

A native of Louisiana (and a double LSU Tiger), Paul Hood obtained his undergraduate and law degrees from Louisiana State University and an LL.M. in taxation from Georgetown University Law Center before settling down to practice tax and estate planning law in the New Orleans area. Paul has taught at the University of New Orleans, Northeastern University, The University of Toledo College of Law and Ohio Northern University Pettit College of Law. The proud father of two Eagle Scouts and LSU Tigers, Paul has authored or co-authored seven books and hundreds of professional articles on estate and tax planning and business valuation.  He was with The University of Toledo Foundation for over four years as Director of Planned Giving, leaving in January 2018.

CLE Credits

InterActive Legal is not an approved Continuing Education Sponsor. However, several states and regulatory agencies for a variety of professionals that participate on our teleconferences may still receive continuing education credit for their participation. If a participant wishes to receive CE credit for their participation in these teleconferences, they must apply to receive credit on their own and through their individual states and regulatory authorities. It is the responsibility of the participant to file for CE credit and is not guaranteed by InterActive Legal.

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