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Ray Prather’s Article Published in Issue of the ABA’s Real Property, Trust and Estate Law’s eReport, August 2017

Ray Prather’s article, “Estate of Powell v. Commissioner,” was published in the July 2017 issue of the ABA’s Real Property, Trust and Estate Law’s eReport.

Ray uses the case to discuss steps attorneys should avoid when engaging in estate planning. Although the errors made should be familiar to most practitioners, the article serves as a useful reminder of how not to structure estate plans and asset protection plans. After summarizing the case, Ray’s article discussed errors made in planning the decedent’s estate, including misusing a power of attorney, engaging in aggressive last-minute planning, not having a business purpose for a family limited partnership, and running afoul of IRC §2036; and then move to the tax court’s opinion by discussing how the court used this case to extend IRC §2036(a)(2) to limited partnership interests and to open the door to a future case allowing double taxation (or an increased step up in basis).

The Powell case lays out basic mistakes that practitioners can make, and it provides an insight into where the tax court might go when people misuse family limited partnerships.