Skip to Main Content
 

Beth Kaufman Speaks to The Wall Street Journal on Mikel Estate Tax Case

May 22, 2015, The Wall Street Journal

Caplin & Drysdale's President, Beth Shapiro Kaufman, spoke with The Wall Street Journal regarding the U.S. Tax Court case Mikel v. Commissioner where the court ruled against the IRS and allowed a New York couple to use a Crummey trust to make tax-free transfers of $1.6 million without dipping into their lifetime gift-tax exemptions.  For the full article, please visit WSJ's website (subscription required).

Excerpt taken from the article.

If the couple made gifts in December 2014 and January 2015—two different tax years—they could shield nearly $900,000 from gift or estate taxes in short order.

"When both partners are alive and have a flock of grandchildren, they can move a lot of assets quickly," says Beth Kaufman, an attorney with Caplin & Drysdale in Washington.

There's an important catch with Crummey trusts. To satisfy legal technicalities, the heirs (or their guardians) must have the right to withdraw funds for a certain period each year—usually 30 or 60 days.

.  .  .

There are other quirks as well. Income earned within Crummey trusts can be taxable to the beneficiaries even if the trust doesn't pay out income—a fact some tax preparers don't know, says Ms. Kaufman. She adds that people setting up Crummey trusts should consider at the outset whether it's better to have one trust to benefit all recipients or a separate trust for each one.

The Mikels' trusts were set up to benefit 60 different family members and used the annual exclusions then in effect. As a result, they were able to transfer $1.6 million tax-free without eating into the $1 million lifetime federal gift- and estate-tax exemption that each spouse had at the time. Now, the gift- and estate-tax exemptions are combined; this year, the break is $5.43 million.

The IRS challenged their maneuver, but the judge sided with the Mikels—the latest in a series of pro-taxpayer decisions that have broadened Crummey trusts over the decades.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
-Business, Investment & Transactional Tax
-Complex Litigation
-Corporate Law
-Employee Benefits
-Exempt Organizations
-International Tax
-Political Law
-Private Client
-Tax Controversies
-Tax Litigation
-White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office:
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000
        New York, NY Office:
600 Lexington Avenue
21st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2017 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practices