Around the Water Cooler this morning, we look at decanting (of trusts, not wine), a fascinating story of business succession done well from Canada, the 100th anniversary of the estate tax and September interest rates.

Finally . . . September interest rates.  The current § 7520 rate for use with estate planning techniques such as GRAT’s, CRT’s, CLT’s, and QPRT’s is 1.4%. The applicable federal rate (“AFR”) for use with an intra-family loan having a duration of 3 – 9 years, a sale to a defective grantor trust,  or a self-canceling installment note (“SCIN”) is 1.22%.

The low § 7520 and applicable federal rates continue to present planning opportunities with GRAT’s, sales to defective grantor trusts, SCIN’s and intra-family loans with depressed assets that are expected to perform better in future years.

On August 2, 2016, the IRS issued proposed regulations which would eliminate a common estate tax planning technique for transfers of ownership interests in family-controlled entities, like family limited partnerships and family limited liability companies.  Holly Bastian and Lynn Pearle describe the proposed regulations and the impact on planning in Lexology.

Leah McElmoyl describes “The Top Five Responsibilities of a Trustee of a Special Needs Trust” in JDSupra.

In the Madison State Journal, Dan Caplinger writes about a common estate tax planning technique, the Irrevocable Life Insurance Trust.

The CPA Practice Advisor offers another look at the benefits of Irrevocable Life Insurance Trusts.

Forbes highlights the need for trust planning for minor children.

Shawn Gardner writes about Trust Protectors, an increasingly common tool in estate and trust planning, in the Yuma Sun.

In ThinkAdvisor, Adrienne Penta offers Top 5 Tips for Nonprofessional Trustees.

  • Wrapping up The Water Cooler this morning, two stories at the intersection of presidential politics and the world of exempt organizations:

As first reported by Richard Pollock of the Daily Caller, the IRS Commissioner has referred congressional charges against The Clinton Foundation to the IRS exempt organizations office for investigation; and

In Nonprofit Quarterly, Erin Bradrick offers her perspective on Donald Trump’s rhetoric calling for the repeal the Johnson amendment.


Around the water cooler this morning, there are articles on charitable remainder trusts, the net investment income tax, and a dispute brewing over the estate of Frank Zappa.

Amber Curto and Phil Jang in the National Review and Brude Udell in Kiplinger’s, examine the use of charitable remainder trusts.

In NIIT Again!, Keith Grissom offers techniques to reduce the net investment income tax.

In the LA Times, Randall Roberts takes a detailed look at the dispute brewing over the estate of Frank Zappa, the legendary musician.

We’ll lead off this morning with a piece on the developing Schwan Foundation litigation.  In the Nonnprofit Quarterly, Michael Wyland reports on oral arguments before the South Dakota Supreme Court over the issue of whether two of the founder’s sons who serve on the Trustee Succession Committee have legal standing to gain access to documents detailing foundation investment losses of $600 million.  It is interesting to note that while the South Dakota Attorney General found no criminal wrongdoing in the investment losses, the AG did not investigate whether there was a breach of fiduciary duty.  It would certainly seem that the sons’ access to the documents would be essential in order to determine if there has been a breach of the Trustees’ fiduciary duties.  There is a link in the story to the oral argument.

In JDSupra, Jeana Goosman writes about a common asset protection tool, the Domestic Asset Protection Trust.

And in celebrity news, Natalie Robehmed reports in Forbes that Prince passed away without a Will.

cncartoons019472-549The controversy continues at the Schwan Foundation, a charitable foundation focused on Lutheran causes.    In the Argus Leader, Jonathan Ellis details the latest developments.  The Schwan Charitable Foundation’s IRS 990 for 2011 reported an investment loss of $218,265,025 related to certain real estate investments and total assets plunged from $750 million to $470 million.  It will be interesting to see how this matter plays out.

In a piece in the New Yorker about the continuing Panama Papers story, John Cassidy provides an answer to Why Aren’t There More American Names?


In the New York Times, Paul Sullivan offers a compelling look at the discord that can be caused by failing to properly plan for the distribution of personal property.

William Sleeth discusses a growing trend in trust litigation involving Trust Protectors.

Sticking to growing trends, in the Wall Street Journal, Sara Randazzo writes about the rise of competency litigation through the lens of the Sumner Redstone dispute.

In the wake of the release of the Panama Papers, Huffington Post looks at Five Legitimate Reasons to Have an Offshore Company.

Finally, Peter Lazaroff in Forbes explains the difference between a fiduciary standard and a suitability standard after the Department of Labor released new rules regulating retirement savings/investment advice.

cncartoons032852-549Stephen Gardener looks at the unique challenges of planning for families with special needs children in the New York Daily News.

In Lexology, John Lueken and Eric Metzger explain the use of a Grantor Retained Annuity Trust (GRAT) to transfer, tax-free, a significant amount of wealth to beneficiaries while maintaining control over and enjoyment of the property transferred.

Jonathan Guyton describes how baby boomers will change philanthropy in the Wall Street Journal.

In The Art of Saying No as a Philanthropist, Paul Sullivan provides a compelling argument in the New York Times.

And finally, in a story that provides plenty of international intrigue, after a year long investigation into the Panama Papers, a report has been released which details the movement of money through offshore companies and trusts and connections to leaders from around the world.  NPR aired a segment  about the Panama Papers on yesterday’s All Things Considered: