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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 DateSeptember 28, 2022
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. Why? 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 don't. 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.

The first 30 minutes of this webinar will explain what an irrevocable grantor trust is and why a sale to such a trust is an effective tool.

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) and when 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 intended 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

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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 prepared 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 reducing the drag that taxes imposed 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 Covenant Place’s strategic initiatives. It is 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, New York, Los Angeles, Southern Illinois, St. Louis and Washington, D.C. offices enjoy a nationwide practice.