Attorney: Now is the Time to Plan Estate

Attorney: Now is the Time to Plan Estate
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An attorney specializing in estate planning says now is a good time for horsemen and others to establish tax-friendly programs that pass along assets to descendants –- but warned that time was of the essence in organizing such efforts.

Louisville attorney Turney P. Berry made the assessment to those assembled for the 23rd National Conference on Equine Law, which opened a two-day run April 30 at the Embassy Suites hotel in Lexington.

Berry, who works with the Wyatt, Tarrant & Combs law firm, told his fellow attorneys and others that current tax laws provide several good avenues to execute estate plans, including those that include equine interests, but feels the clock is ticking on such favorable financial conditions.

“The golden age of estate planning is about to end,” said Berry, who also focuses his practices on fiduciary matters and charitable planning. “It might be eight months from now, it might be longer … but children and heirs will eventually be paying more taxes.”

In a self-deprecating presentation that poked fun at the sometimes mundane minutia involved in estate planning, Berry compared available financial choices to how doctors once felt in battles with disease.

“We’re kind of where medicine was a few years ago,” he said. “We’ve got all kinds of antibiotics that will kill everything right now. And we do too, right now.”

Berry said estates with horses could benefit from such programs as the Grantor Retained Annuity Trust, or GRAT, which can distribute funds to heirs without the penalty of a gift tax. In a GRAT, an initial funding of the trust is set up under a term-limit of years, and the funding party is annually paid a taxable annuity. At the end of the term, providing the funding party is still alive, qualified beneficiaries receive the balance of the assets tax-free.

For those that wish to incorporate donations to charities, there is the Charitable Lead Annuity Trust, or CHAT. In a CHAT, a portion of the trust’s income is donated to charities, and after a specified term-limit, the remainder of the assets can be transferred to the beneficiaries with reduced tax liability.

But Berry jokingly said lawmakers are “grumpy,” and are looking at ways to shut down loopholes, particularly in recent times of low interest rates. Plus, he said, he believes in the “regression to the mean,” which is a statistical theory that says benchmark numbers are eventually forced to rise or fall.

“Capital gains taxes are at an all-time low; dividend taxes are at an all-time low,” he said. “It’s not a political statement, but regression to the mean says that they are going to go back up. So urgency is of the essence, and needs to be addressed with your clients.”

Berry also noted trusts for animals that some states allow, including Kentucky. There, funding can be set up to provide care for one or more animals, including horses, with the balance passed to qualified beneficiaries upon the last animal’s death.

Other presentations at the law conference included an overview of pertinent case law involving horses, a discussion on legal approaches to horse sale disputes, and liabilities regarding equine and equestrian equipment.

More than 180 people registered for the law conference, which event chairman Joel B. Turner said was a record. Turner said more than half of the registrants were from outside of Kentucky.

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