Foley Hoag designs estate and business succession plans and trusts that fulfill our clients’ visions. We use prudent, state-of-the-art income, gift and estate tax strategies to maximize the amounts family members and other beneficiaries receive. And when carrying out estate plans or serving as Trustee, we provide advisory, tax and investment management services that balance current needs with flexibility for changing circumstances.
Estate and Succession Planning
We consider estate planning a multifaceted process and we use a range of lifetime and testamentary strategies to carry out each client’s personal objectives.
Minimizing estate taxes
Since the marginal federal estate tax rate is 48%, transfer tax planning is crucial. We help clients reduce estate taxes with "credit bypass" trusts, QTIP forms of marital trust for the surviving spouse and irrevocable life insurance trusts. When appropriate, we use strategies such as lifetime gifts of "leveraged" assets, valuation discounts, qualified personal residence trusts ("QPRTs") and family limited partnerships.
As a result of the increasing federal tax exemptions ($2,000,000 until 2008 and $3,500,000 in 2009) and new Massachusetts estate tax (with an exemption of $1,000,000 for this year and beyond), we recommend reviewing estate plans to see if they need updating.
Generation-skipping planning
Many clients want to pass property to future generations without incurring additional estate taxes in each generation. While the generation skipping transfer ("GST") tax makes it more difficult to reach this goal, we preserve trusts that are "grandfathered" from GST tax (leveraging the $1,500,000 GST tax exemption) and help clients make crucial decision about allocating their GST tax exemption to transfers during lifetime or at death.
Lifetime transfers to children and grandchildren
So that clients can make the most of lifetime gifting opportunities we may suggest “gift-splitting,” “super” minors' trusts, direct payments for educational expenses and medical bills, annual exclusion gifts, irrevocable insurance trusts or seriatim fractional gifts of real property. We also may recommend leveraging gifts through discounts and selection of assets likely to appreciate in value. When more aggressive lifetime giving programs are called for we draft lifetime generation-skipping transfer trusts, qualified personal residence trusts (“QPRTs”), or grantor retained annuity trusts ("GRATs").
Because we prepare gift tax returns in house and have access to knowledgeable and qualified appraisers, we generally anticipate quick and favorable resolution of any audits.
Marital Deduction Planning
When working with married couples we focus first on making the best use of the marital deduction for saving or deferring estate taxes. Since personal considerations such as protecting assets from creditors, second spouses, profligacy and maintaining assets in the family line can influence how to use the deduction we always take a client’s entire situation into account. We also provide advice on appropriate tax and personal strategies for partners in committed relationships.
Business Succession
We help identify family or non-family successors and create tax-favored strategies for an orderly transfer of ownership. When family members choose to exit the business we formulate equitable financial arrangements.
We may create deferred compensation and salary continuation agreements, stock option arrangements and ESOPs to provide for the lifetime tax-free purchase of the owner's interest or for a continuing stream of income to the business owner. When a transfer will occur at death, we draft buy-sell agreements that provide for the orderly sale of stock, including tax-free redemptions. We also help business owners plan for liquidity, with life insurance assessment or estate tax deferral.
Real Estate Holdings
Our lawyers help clients preserve and shelter their real estate holdings. We can place title to real estate in "nominee" trusts when privacy is a concern, protect primary residences from creditors, or ensure that children and grandchildren will be able to continue using a vacation home. As appropriate, we recommend limited partnerships, irrevocable trusts and specially designed arrangements for clients owning “family compounds.”
Bearing in mind that circumstances may change we address liquidity issues as soon as possible so that beneficiaries will be able to retain their real estate holdings. We also work to limit the potentially significant exposure that may affect an estate or its beneficiaries if environmentally contaminated property is owned by an estate.
Death Benefits
Since many estate plans employ life insurance for the payment of estate taxes, we use careful planning to shelter the proceeds from unnecessary taxation and creditors’ claims. We balance estate tax savings against income tax deferral, and help set the stage for achieving maximum post-mortem flexibility for pension and profit-sharing plans, Keogh accounts and IRAs.
We also provide important recommendations about beneficiary designations, elections and investments and, as needed, work with existing advisors on appropriate waivers and designations and assessing liquidity needs.
Charitable Giving
When clients wish to make charitable gifts, our lawyers help them choose the best timing and structure to achieve their goals. For clients who want to make a gift and retain an income interest we create deferred giving vehicles such as charitable remainder trusts, charitable lead trusts and pooled income funds. When appropriate we provide comprehensive advice on the establishment and administration of private foundation or on donations of artwork, intellectual property or other major gifts.
International Estate Planning
We work with residents who are non U.S. citizens, and those who have cross border holdings to minimize U.S. and foreign estate taxes. We coordinate our planning with the firm’s international tax group, and may use vehicles such as “offshore" trusts or corporations or “QDOT” trusts to avoid unnecessary U.S. taxation and defer estate taxes.
Estate Administration
We consider communication with family members and beneficiaries to be of paramount importance and work to provide an accurate timetable for the various stages of administration, avert conflict and transfer assets to recipients promptly and efficiently.
Probate Court Proceedings
If probate court proceedings are required, we prepare and file the probate petition, arrange for the allowance of the will, secure the appointment of the Executor, marshal assets and respond to creditors’ claims. Our lawyers represent the Executor (or Trustee) in any proceedings involving will or trust interpretation, defense of a claim or pursuit of any action, and when seeking court approval of accounts. For accuracy and efficiency, we prepare probate and tax returns documents in house.
Tax Planning
Since flexible and creative tax planning can significantly affect liabilities, we select a fiscal year for the estate and time trust funding and payment of deductible expenses for maximum advantage. If unforeseen circumstances or tax law changes arise while an estate is being settled we can use disclaimers, QTIP elections and GST allocations to improve the overall tax picture. When making distributions, we balance tax considerations with the donor’s intent, the terms of the trust and the needs and circumstances of the beneficiary.
Tax Reporting
We prepare and file all estate and fiduciary income tax returns, determining tax liabilities and planning for the orderly liquidation of assets to meet the payments. Our lawyers have a thorough knowledge of the applicable federal and state tax laws, rulings and cases, and are experienced in dealing with federal and state tax authorities if questions arise. We are fully prepared to handle routine and comprehensive audits, as well as to institute any necessary legal proceedings.
Special Assets
When estates include special assets such as real estate, closely held businesses, intellectual property or valuable art collections, we arrange for expert valuation and – depending on family goals and circumstances – work to retain or sell the assets. To provide continuity in the management of a closely held business, we can arrange for the appointment of temporary Executors to step in at once and close deals, execute contracts or run the company. We also explore ways to defer or finance the paying of estate taxes as needed.
Trust Services
We believe in understanding the goals of the individuals and their families who are our trust clients, and we work to develop comprehensive investment plans and tax strategies that meet their needs now and in the future.
Investment Management
We have over twenty-five years of experience overseeing investments for clients. Following a disciplined, long-term approach we tailor strategies for each client’s objectives. Trustees consult with our Investment Committee, which consists of five partners and the Director of Fiduciary Services, on all investment decisions. ThomasPartners of Wellesley, MA, a boutiques investments firm, advises the Investment Committee on the purchase of selected dividend growth stocks. We review all investment accounts quarterly.
Custody and Maintenance
State Street Corporation provides custody and safekeeping of Foley Hoag Trust assets, and provides monthly, quarterly and annual reports of asset valuation and account activity to Trustees and trust clients. ThomasPartners prepares quarterly market updates which are included with these reports.
Legal and Tax Advice
We provide advice on estate, gift and fiduciary income taxation, and represent clients in any tax disputes that may arise. Our lawyers counsel Trustees about their fiduciary duties, including the administration and interpretation of trusts, and represent Trustees in connection with accountings and in any contested proceedings.
We provide beneficiaries with information needed for their tax returns, and are available to prepare fiduciary income tax returns.
Personal Service
We work closely with beneficiaries to create reasonable distribution plans, balancing the needs and interests of all. In addition to making monthly or quarterly distributions of income, we can arrange to pay estimated taxes and mortgage bills, coordinate annual giving or set up comprehensive bill paying services. We can also prepare individual income tax returns.
We work with clients throughout New England, Maryland, Virginia and the District of Columbia.
