THE AMERICAN LAW INSTITUTE Continuing Legal Education
Transcription
THE AMERICAN LAW INSTITUTE Continuing Legal Education
27 THE AMERICAN LAW INSTITUTE Continuing Legal Education Aragona Trust Deconstructed: What Is "Material Participation" by a Trust June 4, 2014 Telephone Seminar/Audio Webcast Impact of Trust Drafting on the Aragona Trust Decision Slides By Richard L. Dees McDermott, Will & Emery Chicago, Illinois 28 Impact of Trust Drafting on the Aragona Trust Decision Prepared by Richard L. Dees May 28, 2014 www.mwe.com Boston Bruxelles Chicago Düsseldorf Francfort Houston Londres Los Angeles Miami Milan Munich New York Orange County Paris Rome Séoul Silicon Valley Washington, D.C. Alliance stratégique avec MWE China Law Offices (Shanghai) © 2014 McDermott Will & Emery. Les entités suivantes sont collectivement désignées "McDermott Will & Emery", "McDermott" ou "la Firme": McDermott Will & Emery LLP, McDermott Will & Emery AARPI, McDermott Will & Emery Belgium LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, McDermott Will & Emery Studio Legale Associato et McDermott Will & Emery UK LLP. Ces entités coordonnent leurs activités via des contrats de prestations de services. McDermott bénéficie d'une alliance stratégique avec MWE China Law Offices, cabinet d'avocats distinct. Aragona Trust Structure Frank Aragona Trust • Trustees: 5 children and a lawyer – one son Anthony was disabled, Salvatore was a full-time dentist, Paul and Frank were full-time in the real estate businesses and Annette was a full-time employee of Holiday Enterprises, LLC, although not full-time in real estate apparently • Beneficiaries: All of the children with income paid annually in equal shares, discretionary principal could be paid by lawyer’s direction as independent trustee • Holiday Enterprises, LLC, that employed the three trustees was a disregarded entity, but that does not figure in the court’s decision. IRS argued that it should NOT be disregarded for purposes of determining material participation 2 29 Separate Trusts for Each Child Anthony Trust Annette Trust Paul Trust Frank Trust Salvatore Trust • Trustees: 5 children and a lawyer – one son Anthony was disabled, Salvatore was a full-time dentist, Paul and Frank were full-time in the real estate businesses and Annette was a full-time employee of Holiday Enterprises, LLC, although not full-time in real estate apparently • Beneficiaries: Each child is a beneficiary of his or her own separate trust; would accumulating income or naming the children’s descendants as beneficiaries too affect treatment under Section 469? • Holiday Enterprises, LLC, that employed the three trustees would not be disregarded 3 Separate Trusts with Different Trustees Anthony Trust Annette Trust Paul Trust Frank Trust Salvatore Trust • Trustees of each trust: named child and lawyer • Beneficiaries: Each child is a beneficiary of his or her own separate trust; would accumulating income or naming the children’s descendants as beneficiaries too affect treatment under Section 469? • Holiday Enterprises, LLC, that employed the three trustees would not be disregarded. Assume each trustee elects himself or herself to the Board of Managers of LLC 4