Defined Value Clauses: Drafting Avoiding Red Flags



  • Available Until 4/26/2021
  • Next Class Time 1:00 PM ET
  • Duration 60 min.
  • Format MP3 Download
  • Program Code 0118354

Course Price: $79.00


Formula and defined value clauses are used in estate planning to attempt to “fix” the value of property transferred in a lifetime gift, a testamentary transfer, or a sale. These clauses are also frequently used in marital deduction and credit shelter trusts and in GST allocations. Carefully drafted formula clauses can withstand IRS scrutiny and optimize tax outcomes for a client’s estate. But the IRS has recently issued new guidance in this area and has become more aggressive in challenging formula clauses as not reflecting economic reality and understating the value of property transferred. This program provides you with an in-depth discussion of the uses of formula clauses in trust and estate planning, recent regulatory and case law developments, and practical guidance in drafting clauses to avoid red flags and withstand IRS scrutiny.

• Understanding the uses and risks of defined value clauses in trust and estate planning
• Types of clause—formula allocation by subsequent agreement, final value for gift taxes, price adjustment
• How clauses are used in marital deduction and credit shelter trusts and in generation-skipping transfer tax allocations
• Spotting red flags that may lead to adverse IRS action and planning to avoid them
• Recent case law and regulatory developments, including IRS 20-16-17 Priority Guidance Plan
• Special considerations in “decoupled” states

Speaker: Jennifer A. Pratt is a partner in the Baltimore office of Venable LLP, where she assists client with estate planning, charitable giving, and estate and gift tax controversy matters. She has extensive experience with estate administration, the preparation of federal estate and gift tax returns, and fiduciary income tax returns. She has particular expertise in adapting financial products to the estate planning needs of clients. Ms. Pratt received her LL.M. in taxation from the University of Baltimore.