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COURSE SYLLABUS COLLEGE OF BUSINESS ADMINISTRATION GRADUATE

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COURSE SYLLABUS COLLEGE OF BUSINESS ADMINISTRATION GRADUATE ...

     COURSE SYLLABUS

     COLLEGE OF BUSINESS ADMINISTRATION

     GRADUATE DIVISION

     LOYOLA MARYMOUNT UNIVERSITY

Presented by: DAVID S. AIKENHEAD, ESQ.

     707 WILSHIRE BLVD., Suite 4450

     LOS ANGELES, CA 90017-3617

     213-312-1302 (PH)

     213-312-1301 (FX)

     email: daikenhead@acslaw.net

COURSE TITLE: “THE BUSINESS OF ESTATES & TRUSTS - PRESERVING

    AND DISTRIBUTING WEALTH”

COURSE SUMMARY DESCRIPTION:

     This course will survey the broad range of estate

    planning and administration issues confronting the business

    owner and his family today. Students will examine the business

    and financial aspects of the administration of a decedent’s

    estate; the basic concepts in the creation and administration of

    wills and trusts; the effects of typical community property laws

    in force in many states; the common features and purposes behind

    the revocable living trust, the credit shelter and qualified

    terminable interest (“QTIP”) trusts, the qualified personal

    residence trust (“QPRT”), the special needs trust, and

    charitable lead and remainder trusts; the fiduciary and

    management duties of a trustee/executor; the “prudent person”

    investment rule; basic trust accounting principles; common

    estate and gift tax avoidance devices; and the present and

    future impact of the changing estate and gift tax laws.

     The classroom setting for this course will be

    interactive, based on the assigned readings, classroom lectures,

    and considerable dialogue on hypothetical examples.

PLANNED EVALUATION OF STUDENT PERFORMANCE:

     Student performance throughout the course will be evaluated

    as follows:

     ONE MID-TERM EXAM February 22, 2006 25% of final grade;

     ONE TERM PAPER OF 5

     TO 10 PAGES IN

     LENGTH DUE APRIL 12, 2006 25% of final grade;

     CLASSROOM PARTICIPATION & OCCASIONAL

     WRITTEN ASSIGNMENTS 10% of final grade;

     FINAL EXAM MAY 3, 2006 40% of final grade.

    COURSE MATERIALS:

     TEXT: “WILLS, TRUSTS AND ESTATES”

     Third Edition

     By Gerry W. Beyer

     Aspen Law & Business, a Division of

     Aspen Publishers, Inc.

     2004 606 Pages

     (Instructional format with examples)

     Possible Supplemental Readings Not Yet Identified

COURSE TOPIC AND TEXT SCHEDULE:

     JANUARY 11 (CLASS #1): Introduction, overview and key

     terms; TEXT Pages 1 thru 9;

     JANUARY 18 (CLASS #2): Lifetime transfers, co-ownership

     and contractual transfers; TEXT, Part FOUR, Pages 249

     thru 301;

     JANUARY 25 (CLASS #3): Intestate succession; death

     transfers without a Will or Trust; TEXT, Part ONE,

     Pages 11 thru 66;

     FEBRUARY 1 (CLASS #4): Wills, validity of Wills,

     testamentary capacity, formal execution, holographic

     Wills, changes in circumstances after execution; TEXT,

     Part TWO, Pages 69 thru 142;

     FEBRUARY 8 (CLASS #5): Changes to Wills, Codicils,

     revocation, Will contests; TEXT, Part TWO, Pages 143

     thru 227;

     2

     FEBRUARY 15 (CLASS #6): Estate administration, both

     “testate” & “intestate”; TEXT Part THREE, Pages 229

     thru 247;

     Review for Mid-Term Exam; TEXT Parts ONE thru FOUR,

     Pages 1 thru 301;

     FEBRUARY 22 (CLASS #7): MID-TERM EXAM;

     MARCH 1 (CLASS #8): NO CLASS; INSTRUCTOR OUT OF TOWN

     MARCH 8: LMU SPRING BREAK - NO CLASS;

     MARCH 15 (CLASS #9): Trusts and trust creation;

     Appointment of trustees and designation of

     beneficiaries; TEXT, Part FIVE, Pages 303 thru 377;

     MARCH 22 (CLASS #10): Trust administration; the trustee’s fiduciary duties; trust investments; trust

     distributions; TEXT, Part FIVE, Pages 379 thru

    421;

     MARCH 29 (CLASS #11): Trust accountings, trustee

     compensation, trust modification, trust termination,

     trust enforcement; TEXT, Part FIVE, Pages 421 thru

     463;

     APRIL 5 (CLASS #12): Wealth transfer taxation; taxation

     of lifetime transfers; TEXT, Part SIX, Pages 465 thru

     489;

     APRIL 12 (CLASS #13): Wealth transfer taxation; Federal

     estate tax at death; TEXT, Part SIX, Pages 489 thru

     517;

     APRIL 19 (CLASS #14): Wealth transfer taxation;

     sheltering assets from estate tax; capital gain tax

     basis on lifetime gifts and gifts at death; disability

     and death planning, including durable powers of

     attorney for asset management or health care; TEXT,

     Part SIX, Pages 518 thru 565; (Please note: We will

     not study Chapter 26, Pages 567 thru 574, nor the

     sample forms on Pages 589 thru 606.)

     APRIL 26 (CLASS #15): Review for Final Exam; TEXT, Parts ONE thru SIX, Pages 1 thru 565;

     MAY 3 (CLASS #16): FINAL EXAM

     3

COURSE OUTLINE:

     I. WHY SHOULD BUSINESS GRADUATES LEARN ABOUT ESTATES AND

    TRUSTS?

     A. The next thirty (30) years will see billions of

    dollars of family wealth transfer to the next generation, to

    charity or to others, the effects of which will pervade our

    entire business and social climate;

     B. Structuring an employment relationship, a

    business merger or acquisition, or organizing a corporation,

    limited liability company or partnership, should all involve

    estate planning considerations;

     C. The likelihood is strong of being asked by

    business associates, clients, friends and family to serve as

    trustee or executor over some of the expected wealth transfer;

     D. Estate planning is universally and regularly

    discussed in business and social circles;

     II. THE ADMINISTRATION OF A DECEDENT’S ESTATE:

     To understand the basics of a good estate plan, one

    must first understand how an estate is administered following

    the death of the asset owner.

     A. Transfer of assets without a Will or Trust:

     1. Statutory Intestate Succession - as a result

     of no pre-planning; who are one’s heirs if

     there is no written estate plan in place?

     2. Common Community Property Laws in multiple

     states;

     a. What constitutes community property?

     b. What becomes community property

     intentionally or unintentionally?

     c. The commingling of separate and

     community property;

     3. Methods of holding title to assets;

     4

     a. Tenancy in Common requires court

     transfer under intestacy;

     b. Joint Tenancy and Community Property

     with Rights of Survivorship; Affidavit

     for title change on first death with no

     formal action;

     4. The capital gain tax implications of each

     method of holding title following the first

     death;

     B. The mechanics of administering a Will, or an

     intestacy, through the court probate process;

     1. Court Supervision of the administration;

     2. Court ordered Inventory of assets becomes

     public record and subject to access by

     anyone;

     3. Possible Need for Court Approval of Asset

     Sales;

     4. Expenses of Administration;

     a. Statutory Executor’s and Attorney’s

     Commissions;

     b. Court ordered probate referee fees in

     the asset appraisal process;

     C. The mechanics of administering a Revocable

     Living Trust, privately and without court supervision;

     1. No filing with any court is required;

     2. Private asset valuations vs court ordered

     appraisals;

     3. Sales of assets need no court supervision;

     4. Expenses of Administration;

     a. No statutory commissions imposed;

     b. Trustee fees and legal fees are

     negotiable;

     5

     III. BASIC ESTATE PLANNING OPTIONS:

     A. Determining Testamentary Capacity of the

     testator of a will or settlor of a trust;

     1. Knowledge and understanding of the “natural

     objects of one’s bounty”;

     2. Knowledge and understanding of the nature

    and extent of one’s assets;

     3. Estate contests;

     a. Undue influence issues;

     b. Typical “No Contest” clauses in will or

     trust;

     B. The common Will; its contents and execution

     requirements;

     1. The selection and appointment of an Executor;

     2. Wills for the single individual;

     3. “Reciprocal” Wills for the married

     couple;

     4. The “Holographic Will”;

     C. The typical Revocable Living Trust; its

     contents and execution requirements;

     1. The selection and appointment of a Trustee;

     a. Settlor[s] as initial trustee[s];

     b. Designation of successor trustees (key

     considerations in the selection

     process);

     2. Incapacity Provisions;

     a. To empower the successor trustee to act;

     6

     b. To avoid the potential need for a court

     appointed conservator in the event of

     disability;

     3. Trust provisions for children/grandchildren

     etc.;

     a. Income distribution regularly after

     certain age;

     b. Trustee power to invade principal;

     typical grounds for same;

     c. Beneficiary’s right to withdraw

     principal at specific ages or events;

     IV. THE ROLE OF THE TRUSTEE/EXECUTOR:

     A. The method of appointment of each;

     B. The fiduciary duties of each;

     1. The duty of loyalty;

     2. Inability to borrow or otherwise use trust

    or estate property for the personal benefit of

     the fiduciary;

     3. Preclusion against self-dealing;

     4. Regular reporting requirements (to the court

     and/or the beneficiaries);

     5. Differing duties of a trustee owed to income

     beneficiaries and principal beneficiaries;

     6. Duties of a trustee regarding

    underproductive property;

     7. Trust investments and the standard of care

     (the “prudent person rule”);

     7

     C. The trust/estate financial accounting;

     1. The nature and content of a financial

     accounting for a trust or estate; what

     information is it intended to convey and for

     what reason?

     2. The importance of regular financial

     accountings;

     V. COMMON ESTATE AND GIFT TAX AVOIDANCE DEVICES AND

     THE FUTURE:

     A. The Annual Gift Tax Exclusion;

     B. The Lifetime Gift/Estate Tax Exemption;

     C. The Credit Shelter Trust (to utilize the first

     decedent spouse’s lifetime exemption from estate

     tax);

     D. The Qualified Terminable Interest (QTIP) Trust

    (to hold the balance of the first decedent spouse’s

     community or separate assets);

     E. The Qualified Personal Residence Trust (QPRT);

    F. The Special Needs Trust (for the government

    supported disabled);

    G. The Irrevocable Life Insurance Trust and the

    reasons behind it;

    H. Charitable Lead and Remainder Trusts;

    I. The Present and Future Impact of the Changing

    Estate and Gift Tax Laws - what is the prognosis?

REVISED, December 28, 2005

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