Gifts to Trust Complete Even With Retained Power of Appointment

In Chief Counsel Advice 201208026, the IRS rejected two arguments for transfers to an irrevocable trust to avoid gift tax. First, the taxpayer argued the gifts were "incomplete" because the donor retained a testamentary limited power of appointment over the trust, but no power over discretionary distributions to the current beneficiaries. The IRS stated that the gift was complete as to the income interest of the current beneficiaries, and incomplete as to the remainder. In addition, the "crummey" withdrawal powers were defective because the beneficiaries could not enforce them, and would lose their interests as a discretionary beneficiary if the powers were exercised. For more information, see Federal Taxes Weekly Alert.

The Truth About Financial Elder Abuse

The 2010 Dodd-Frank Wall Street Reform and Consumer Financial Protection Act (P.L. 111-203) established a new agency in the Federal Reserve, the Consumer Financial Protection Bureau.  The Dodd-Frank reforms include major financial regulatory reforms and changes to the financial services industry.

The law established an Office of Older Americans within the Bureau to educate and inform older consumers so they can make better financial decisions.  The Office is committed to carrying out their purpose in a way that produces tangible, measurable and real-life results.

Some facts about Financial  Elder Abuse:

- Older Americans are losing an estimated $2.9 billion a year to financial abuse.

- Three out of five families headed by a person over 65 do not have any money in retirement accounts.

- Women between 80 and 89 who live alone are twice as likely as men to be victims of financial abuse.

This problem is global.  The best way to combat financial abuse is to help seniors speak up and speak out about abusive and deceptive financial services.  For resources, information, or to share a story with the Office of Older Americans, please visit www.consumerfinance.gov/older-americans.

Portability Election for Estates of Decedents Dying in First Half of 2011

For decedents dying in 2011 or 2012 with a surviving spouse, the "deceased spouse’s unused exclusion" (DSUE) amount can be added to the surviving spouse’s estate tax exemption, subject to a number of restrictions. This means that the surviving spouse could potentially double his or her estate and gift tax exemption, but only if a timely filed U.S. Estate Tax Return (Form 706) is filed. The return is due nine months after date of death, but can be extended for six months by filing Form 4768. The IRS recently issued Notice 2012-21, 2012-10 IRB; IR 2012-24 extending the deadline to file the Form 706 for decedents dying in the first half of 2011 to fifteen months after the date of death, but only for "qualifying estate" defined as estates with a surviving spouse and the gross estate does not exceed $5 million. The estate must file Form 4768 by 15 months after date of death to receive this extension, even if Form 706 was filed before the 15 months (but after the 9-month) deadline. For more information, go to IRS Notice 2012-21.