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Each year, the Internal Revenue Service (“IRS”) publishes its “Dirty Dozen” list of the most notorious tax scams from the prior year. The Security Summit, a partnership among the IRS, state tax agencies, and the nation’s tax industry, has enacted a broader campaign under which the Dirty Dozen falls. For the nerds reading this blog, March 5, 2026, was “National Slam the Scam Day” and the IRS released the Dirty Dozen on that day to help raise awareness. The list alerts both taxpayers and tax professionals alike of the most common tax cons during the last year. The scams run the gamut from impersonating IRS officials to creating fake charities. Let’s break the Dirty Dozen down.

Perhaps unsurprisingly, six of the twelve scams making their way onto the Dirty Dozen focus on technology and personal information grabs. The first comes in the form of emails, direct messages, and texts that appear to be from the IRS. These communications frequently contain alarming language and QR codes directing taxpayers to fake websites to verify accounts, enter personal information, or claim refunds. Communications arrive in the form of a text, called “smishing” or an email called “phishing” and ask the taxpayer to provide personal information, allowing the scammer to steal the taxpayer’s identity. The IRS always initiates contact through mail, not email, text or direct message and warns taxpayers against clicking links or opening attachments in unexpected messages.

Tax professionals and businesses need to worry about the eleventh of the Dirty Dozen: “spearphishing” which is a phishing attempt targeted at a specific organization or individual. Tax professionals and businesses receive “new client” and “document request” emails that contain malicious links or attachments. A successful spearfishing attempt gives the scammer client data allowing the thief to file fraudulent tax returns, among other things, or gain access to the taxpayer’s or organization’s systems. The IRS warns everyone to exercise caution when responding to email requests, especially those requesting sensitive information, coming from mismatched or unfamiliar sender addresses, urgent payment demands, or links to non-IRS.gov websites, all of which likely indicate a scam. If a scammer accesses a hacked email account, they can then locate a genuine email from a prior victim’s account sent to their tax professional.

AI-enabled IRS impersonators using telephone robocalls, mimicking voices, and spoofing caller IDs nab the number two spot on the Dirty Dozen list. Unfortunately, as AI becomes smarter, these scams will proliferate and continue to evolve. The IRS reminds everyone that it usually contacts taxpayers via mail first and its agents do not leave urgent, threatening, or pre-recorded messages demanding immediate payment or threaten arrest. Further, the IRS reminds taxpayers that they should not rely only on AI-generated responses to tax questions and to verify information, calculations, or advice provided by AI.

The fifth scam involves scammers who steal personal information and use it to gain unauthorized access to the taxpayer’s IRS online account. These scammers may also pose as helpers during the account setup process and collect information then. The online account gives access to valuable tax information about the taxpayer and requires no assistance for creation. The IRS encourages each individual taxpayer to establish their own account. Anyone with access to the account could misuse the information found in the account. Taxpayers can create these accounts on their own directly through the IRS website and should not enlist the help of an unsolicited third party.

“Ghost preparers” take the number eight spot on the list. While many wonderful preparers exist, watch out for anyone who refuses to sign on the dotted line, who charges a fee based upon the amount of the refund, or who neglects to provide their IRS Preparer Tax Identification Number (“PTIN”). Any of those behaviors could signal a ghost preparer and taxpayers should stay away from them. Taxpayers should only sign a completed return and remember that regardless of preparation of the return, the taxpayers remain responsible for the information submitted. The IRS urges taxpayers to use trusted tax professionals for help and to avoid signing incomplete or blank returns.

Any list of fraudulent schemes would be incomplete without mentioning social media, which is the sixth and final of the technology-related and information-grabbing scams. The IRS notes that social media platforms often circulate inaccurate and misleading information, often using the term “tax hacks.” These hacks encourage taxpayers to file incorrect returns or claim credits for which they do not qualify. This leads to delays, audits, and civil or criminal penalties. Remember the old saying, if something sounds too good to be true, it usually is.

Two separate tax credits make the Dirty Dozen list. First, the IRS notes an increase in abuse of Form 2439 – Notice to Shareholder of Undistributed Long-Term Capital Gains. This form allows certain shareholders to claim a refundable credit for taxes paid on undistributed capital gains. Scammers overstate those gains or fabricate them altogether, either using organizations that don’t qualify or using real organizations without having an appropriate interest in the organization. The bogus “self-employment tax credit” and second of the two tax credits takes the number seven spot on the list. Scammers mislead taxpayers about this credit and encourage inaccurate filings that generate improper refunds. The IRS warns taxpayers to use trusted professionals rather than social media to determine their eligibility for tax credits.

Bogus charities pose a tremendous problem, especially after a natural disaster or crisis strikes. Number three on the list relates to scammers who set up fake organizations to receive contributions from unsuspecting taxpayers. These scams are particularly egregious in nature because they take advantage of tragedy and people’s generosity. The individuals running the fake charities collect personal information and exploit the taxpayers further. Remember that charitable deductions count only if given to qualified tax-exempt entities recognized by the IRS when accompanied by contemporaneous written acknowledgment. You can find information regarding charitable organizations through resources such as Charity Navigator. Number nine on the list also involves charities. Promoters of this scam promise to eliminate or substantially reduce tax liability. They achieve this by inflating the value of non-cash items donated using syndicated conservation easements or artwork. The IRS exhorts taxpayers to file accurate returns with certified appraisals and substantiation.

Overstated withholding schemes take the number ten spot on the list. This strategy uses any one of several Forms: Forms W-2 and W-2G, Forms 1099R, 1099-NEC, 1099-DIV, 1099-OID, and 1099-B, as well as the Alaska Permanent Fund Dividend, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed and encourages taxpayers to inflate withholding amounts (often described as “other withholding”). Participating in this scheme leads to delays, penalties, and enforcement actions.

Fraudulent “Offer in Compromise” (“OIC”) mills sit at number twelve on the list. The IRS offers OIC to people unable to pay their tax liabilities as a way to settle their debt. These programs play an important role in our tax system and require that the taxpayers desiring to avail themselves of such settlement meet certain qualifications. Mills promoting the OIC mislead taxpayers into thinking that they have a valid OIC with the IRS when they do not, which often costs the taxpayers thousands of dollars. Here’s a link to an online tool that allows taxpayers to check their eligibility: Offer in Compromise Pre-Qualifier tool.

The IRS encourages taxpayers to be wary, avoid sharing data, and to report fraudsters who promote these schemes, as well as those who prepare improper returns. Taxpayers need to protect their sensitive information and exercise caution and common sense both during tax time and throughout the year. Tax professionals can help by notifying their clients of the Dirty Dozen and discussing any issues that worry the client or seem outside the norm. Some of the scams listed in this article have been around for years, while others are new to the list this year. The Dirty Dozen serves as a good reminder to protect confidential information and to stay safe out there.

As I was checking a sports app on an entirely unrelated matter, I stumbled across an article that strayed well outside traditional sports reporting and landed squarely in the world of Estate Planning for family-owned businesses. The headline immediately caught my attention: “How Buss Family Infighting Drove the $10B Sale of the Lakers.” Naturally, I clicked. What followed was a story filled with intrigue, family conflict, and—at its core—an Estate Plan that failed to function as intended.

To understand how we got here, we need to rewind to 1979, when Dr. Gerald Hatten Buss (“Jerry”) paid $67.5 million to Jack Kent Cooke to purchase the Los Angeles Lakers, the Los Angeles Kings, the Forum arena, and a 13,000-acre California ranch. This is the same Lakers franchise that drafted Magic Johnson and won an NBA Championship in his rookie season. Jerry made it clear from the outset that selling the Lakers was never the goal. He famously said that if he had unlimited funds, he would buy the team all over again. That conviction never wavered even during periods of financial strain, in the face of lucrative purchase offers, and as he confronted his own mortality. According to his children, Jerry viewed both them and the Lakers as his legacy. Unfortunately, his intense focus on keeping the team in the family without fully accounting for governance, control, and human dynamics proved fatal to that vision. Just twelve years after his death, the Buss family no longer holds a majority controlling interest in the Lakers. By any reasonable Estate Planning standard, the legacy failed.

Jerry died on February 18, 2013, at age 80, survived by six children: Johnny (60), Jim (57), Jeanie (55), and Janie (53) from his former wife, Joanna, and Joey (32) and Jesse (29) from his longtime partner, Karen Demel. Through a series of family trusts holding Jerry’s 66% ownership interest, each child effectively inherited an 11% interest in the Lakers. Jerry spent significant time crafting an Estate Plan designed to preserve family ownership. The Trust included standard buy-sell provisions, required the acting Trustees, Johnny, Jim, and Jeanie, to support Jeanie as the controlling owner, and operated as a pooled investment vehicle. This meant that upon a sibling’s death, the interest held by that sibling was redistributed among the survivors in a “last-individual-standing” structure. To his credit, Jerry protected his grandchildren by requiring payment of the value of the deceased sibling’s interest in the team to their children, preserving generational wealth. On paper, the plan was sophisticated. In practice, it was unworkable.

Shortly after Jerry’s death, the siblings met to discuss a possible sale. Although he was serving as Executive Vice-President of Operations and controlled the on-court operations for the Lakers, Jim, joined by Johnny were open to selling. Jeanie, named successor controlling owner and President of the Lakers, was not. Because a sale required four of six votes, the proposal stalled. For several years, all six siblings remained involved in the organization. That fragile truce collapsed in February 2017, when Jeanie fired Jim. Jim responded by joining forces with Johnny in an attempt to remove Jeanie from the Board of Directors by calling an annual shareholder meeting. What they failed, or refused, to acknowledge was that the Trust required them, as Trustees, to support Jeanie’s role as controlling owner. Removing her would have violated both the Trust and the Lakers’ bylaws. Jeanie sought and obtained a Temporary Restraining Order. At that point, the structural flaws in Jerry’s Estate Plan were undeniable.

Eight years later, the end came when Jeanie sold all but 17% of the family’s interest in the Lakers. In the interim, tensions festered, relationships deteriorated, and the team struggled. The Trust’s “last-man-standing” provisions only intensified the conflict, as eventual control would pass to the youngest siblings, fueling the older siblings’ desire to sell. Although ownership percentages were equal, control was not. Jeanie held the reins, while the others remained bound by a Trust that limited their influence and options. That’s a recipe for disaster.

This case offers several critical Estate Planning lessons. First, just because a plan achieves the client’s goal doesn’t mean that plan works. Placing one sibling in control of another almost always invites resentment, litigation, or both. I regularly warn clients against this structure. No matter how close a family appears, putting one child in charge of another’s inheritance is a recipe for conflict. Second, Estate Planning demands honest discussion of worst-case scenarios. I have lost count of how often I heard, “That would never happen,” or “My children get along.” I suspect Jerry believed the same. Family, money, and legacy create a volatile combination, especially when that conflict involves a valuable, closely-held business that employs most of the family. Finally, business succession planning requires a clear-eyed assessment of who truly has the temperament and ability to lead. Estate Planning means relinquishing control and trusting others to execute that vision. Failing to plan for friction guarantees instability.

Jerry Buss made several classic Estate Planning mistakes. He failed to prioritize either business success or family harmony. He underestimated the strengths and weaknesses of his children. Finally, he underestimated the impact of his absence. Together, these missteps unraveled the legacy he worked so hard to protect.

Don’t let this happen to your business or your family. Thoughtful, realistic Estate Planning can make the difference between preserving a legacy and watching it unravel.

As an experienced trusts and estates practitioner, I advise that selecting the right Trustee has the potential to make or break a plan. I advise clients regarding the practical impact of the duties of a Trustee:  how they affect relationships with beneficiaries, interactions with family members, and the potential for conflict. These realities often do not become clear until long after the Grantor (individual creating the Trust) has died, at which point changing the Trustee can be difficult or expensive. A Trustee is not merely a name in a document; rather, the Grantor entrusts the implementation and realization of their legacy to the Trustee. If the Trustee lacks proper preparation, temperament, or discipline, the consequences can ripple for years and ultimately lead to failure of the plan. Let’s explore why Trustee selection matters so much and how to make this decision with confidence and foresight.

The Trustee’s role encompasses more than mere administration. The Trustee makes many day-to-day decisions, yet many think of the Trustee as someone who “moves the assets around” or “signs the checks.” That perception ignores a significant part of the role.   Trustees must balance competing beneficiary interests, respond to market fluctuations, handle tax matters and distributions, communicate clearly with beneficiaries—including difficult ones—and know when to bring in professional advisors and how to evaluate them. Trustees operate at the intersection of finance, psychology, and law. Few individuals thrive in all three areas. Discussing this with clients helps them make informed decisions regarding Trustee selection.

Personality and conflict avoidance matter. In practice, the worst conflicts arise not from a lack of legal authority but from human dynamics. Consider common issues that result in litigation, a Trustee who resents the beneficiaries, a Trustee who has a beneficial interest under the Trust and struggles with impartiality, a family Trustee lacking financial literacy, or co-Trustees who cannot agree on anything. Most Grantors name a spouse, adult child (often the eldest), or close friends as the Trustee because those individuals occupy a position of love and trust in their life.   Unfortunately, the Grantor often fails to consider whether that individual communicates well, says no when necessary, handles confrontation without escalation, or even wants the job once they understand the accompanying obligations.  Encouraging the Grantor to consider personality alongside fiduciary duties and responsibilities helps guide them in choosing the right Trustee and avoiding problems later.

Sometimes, the Grantor wants to appoint two (or more) individuals to serve as co-Trustees. During my years in private practice, I routinely advised against appointing co-Trustees without including a mechanism for resolving disputes. Fortunately, many viable options exist, whether through an internal tie-breaking mechanism in the Trust instrument or appointment of a neutral third party. The Trust should include language addressing how disagreements will be handled when they inevitably arise. Proper preparation avoids ending up at the courthouse.

In other cases, the Grantor prefers to name a professional fiduciary. While some clients recoil at the idea of a corporate or professional Trustee due to concerns about fees or impersonal service, that option is preferable to an unprepared or conflicted friend or family Trustee. The latter can cost far more in terms of stress, animosity, and litigation risk. Professional Trustees typically bring institutional experience, impartiality in family disputes, neutral decision-making, and established reporting and compliance processes. Here, the attorney adds significant value by helping the client select the right professional, balancing cost against complexity, asset size, and family structure.

No one creates an Estate Plan hoping it becomes a courtroom battleground, yet unaddressed Trustee issues are among the most common triggers when plans go sideways. When advising clients on Trustee selection, experienced Estate Planning attorneys guide clients by discussing the role of Trustee along with the duties and obligations that accompany the office. Further, they evaluate whether the proposed Trustee can manage conflict respectfully and impartially, has the time, temperament, and acumen necessary to fulfill the office. Finally, the client and I consider whether the individual wants to serve. Addressing these issues prior to executing the plan helps ensure that the client’s legacy will thrive long after their death.

If estate planning is about protecting a legacy, Trustee selection is about ensuring that protection endures. As you work with clients or as you consider your own plan, remember that the language of the Trust is only as powerful as the person entrusted to interpret and implement it. Choose well. Communicate clearly. This will give your client’s legacy the best chance to thrive.

I believe in the magic that exists at this time of the year. But to me, that means spending some time thinking about tax planning as 2025 draws to a close and the New Year dawns. Some years Congress tweaks the laws more than other years, and 2025 was certainly one of those years that resulted in major changes to the tax laws. On July 4, 2025, sweeping tax legislation dubbed the “One Big Beautiful Bill Act” (“OBBBA”) was signed into law, and its passage reverberated through the Estate Planning world. No doubt, this massive bill changed the landscape of tax planning both now and in the future. In large part, OBBBA extended or made permanent many of the provisions of the Tax Cuts and Jobs Act of 2017 that were set to expire at the end of 2025. While a complete examination of the impact of OBBBA exceeds the scope of this article, I’d like to highlight some of the salient changes for Trusts and Estate practitioners and their clients as we leave 2025 and head into 2026. Of note, most of the impactful changes in OBBBA are income tax provisions, rather than estate or gift tax provisions.

Estate Tax Planning

• Applicable Exclusion rises from $13.99 million in 2025 to $15 million in 2026
• GST Exemption rises from $13.99 million in 2025 to $15 million in 2026
• Annual Exclusion for present interest gifts holds steady at $19,000 in 2026
• Annual Exclusion for gifts to a Noncitizen Spouse rises to $194,000 in 2026

Not long ago, we thought that at the end of 2025, the Applicable Exclusion and the GST Exemption would revert to $5 million, adjusted for inflation from the 2011 base year. With the passage of OBBBA, that sunset disappeared and was replaced by a new, higher base amount of $15 million, which will be adjusted annually for inflation. As has been the case for a few years, this isn’t relevant for most Americans. However, if you have over this amount, the next few years present a great opportunity to undertake some high-end Estate Planning.

Income Tax Planning

• Standard deduction amount:
• Married, filing jointly, increases from $31,500 in 2025 to $32,200 in 2026
• Single, increases from $15,750 in 2025 to $16,100 in 2026
• Head of household, increases from $23,625 in 2025 to $24,150 in 2026
• Note that OBBBA increased the expected standard deduction for 2025 taxpayers
• State and Local Tax (SALT) deduction cap rose to $40,000 with phaseouts for those with Modified Gross Income over $500,000

Additionally, OBBBA

• Permanently eliminates miscellaneous itemized deductions, except for expansion of itemized deductions for educator expenses
• Simplifies overall limitation on itemized deductions for high earners
• Permits an above-the-line charitable deduction of $1,000 ($2,000 for married taxpayers)
• Imposes a new “floor” for charitable deductions – for those who itemize, the charitable deduction is limited to the extent they exceed .5% of Adjusted Gross Income
• Permanently eliminates personal exemptions
• Temporarily allows a $6,000 “senior deduction” for qualified individuals over the age of 65 with phaseouts beginning at $75,000 AGI ($150,000) for joint filers)
• Allows for an automobile loan deduction of up to $10,000 if the car is assembled in the United States
• Expands tax-free savings accounts for minors, called Trump accounts

As you plan for 2026, it’s important to reassess deduction strategies in light of the higher standard deduction and limitations on itemized deductions. For example, the additional .5% limitation that starts in 2026 makes the idea of bunching charitable contributions more attractive because it allows the taxpayer to surpass the floor and maximize their deduction. This strategy works well when used with a Donor-Advised Fund (“DAF”). If the donor makes a large deductible contribution to the DAF in that year, it allows for an immediate income tax deduction. The funds in the DAF need not be distributed and instead can be invested and grow tax-free. The donor then makes recommendations for grants to their favorite charities in later years and thereby maintains their typical pattern of giving.

For example, if you typically give $20,000 annually, you are better off taking the standard deduction. If, instead, you bunch five (5) years of donations together and give $100,000 to a DAF, you have a large deduction in that year, but through the DAF can continue your pattern of giving $20,000 per year.

Here’s hoping that everyone has a happy, healthy, and prosperous 2026!

As we gather with our family, friends, and loved ones to celebrate the holidays, let’s take a moment to savor the food and our time together. This time of the year offers a special opportunity to show our loved ones just how much we care. We can do this in any number of ways, including gifting.

Let’s make this year the year we give gifts that benefit both the recipient and the donor. Annual exclusion gifts provide a benefit not only to the recipient but also to the donor. Annual per donee exclusion gifts allow the donor to make gifts to multiple individuals without incurring any transfer tax consequences, provided that the total gifts to an individual are present interests and do not exceed the threshold amount. Internal Revenue Code (“Code”) Section 2503(b) sets the amount that an individual taxpayer can gift to any other person at $19,000 for 2025 and 2026. Giving now allows individuals to reduce the value of their taxable estate without impacting the lifetime exclusion amount of $13.99 million in 2025 ($15 million in 2026). In addition to allowing the donor to avoid use of any applicable exclusion amount, annual per donee gifts remove future appreciation on the assets gifted from the donor’s estate as well.

The Code imposes no limit on the number of annual per donee exclusion gifts per taxpayer, meaning that an individual taxpayer may gift up to that $19,000 amount to an unlimited number of individuals without ever worrying about estate or gift tax consequences. Gifting the funds or assets removes them from the donor’s taxable estate without ever impacting the lifetime exclusion amount. It’s one of the few totally “free” estate planning techniques. Because annual gifts reduce the size of the taxable estate, they also reduce the potential tax liability. For married couples, the benefit doubles because each spouse can gift the annual per donee exclusion amount to the same individual, and if the recipient has a spouse, then the donors can double the impact of their gifting again. Let’s review an example that demonstrates effective use of the annual per donee exclusion amount.

Assume that Mike and Carol recently met with their attorney, who suggested that they start reducing the value of their taxable estate. Mike and Carol were preoccupied with the pending nuptials of their daughter, Cindy. They realized that they better act quickly to utilize their 2025 annual per donee exclusion amounts. They decided to give each of their six now-married children, Greg, Marcia, Peter, Jan, Bobby, and Cindy, an envelope containing $76,000 ($38,000 from each of Mike and Carol to each child, plus an additional $38,000 for each spouse of each child) at Cindy’s wedding on New Year’s Eve 2025. After the clock strikes midnight, the family rings in 2026, and Mike and Carol hand out another set of envelopes, this time, with $76,000 ($38,000 from each of Mike and Carol to each child, plus an additional $38,000 for the spouse of each child) in each envelope.

In the example above, in just a few hours, Mike and Carol gave away over $900,000 without incurring any estate or gift tax consequences. Mike and Carol each gave $19,000 to each of their six children and their spouses, totaling $456,000 in 2025, and Mike and Carol each gave $19,000 to each of their six children and their spouses, totaling $456,000 in 2026, for a total of $912,000. In fact, Mike and Carol could each also gift $19,000 to a grandchild in 2025 and again to that same grandchild in 2026. The foregoing example demonstrates how quickly these gifts can add up and make a huge impact on an estate. In addition to using the annual exclusion gifts, the Code gives taxpayers a tax-free pass when they pay the medical bills of another individual or pay the tuition bills of a student. The Code imposes no limit on the amount of these medical and tuition gifts, as long as the amounts are paid directly to the provider. The Code also allows contributions to charitable exempt organizations. The Code imposes no limit on the amount of these contributions for gift tax purposes, which provides another easy option for those who want to do some easy estate planning. Such charitable contributions may also qualify for a charitable income tax deduction, up to certain percentages of the taxpayer’s adjusted gross income.

The upcoming holiday season presents the perfect time to consider these and other estate planning issues. Options may exist for the use of annual exclusion gifts in conjunction with trusts and a long-term Estate Plan. Giving now, rather than waiting until death provides several estate planning opportunities in the form of tax-free distributions, reduction of the gross estate, and appreciation outside of the taxable estate, not to mention the benefit to the recipient that the donor will witness while alive.

For many years, I have been interested in a tax strategy designed to defer the payment of capital gains taxes, to preserve wealth, to create reliable, predictable streams of income and to aid in effective intergenerational wealth transfer. This strategy is known as the Deferred Sales Trust™ or “DST” (not to be confused with the Delaware Statutory Trust per IRC §1031, also known as a “DST”). By this point in my journey with the DST, I have acted as the attorney for sellers curious about this strategy but uncertain as to whether or not it is a bona fide transaction (the “tax risk”), whether or not they can trust the various parties who take the seller through the process (the “defalcation risk”) and/or whether or not the proceeds of the sale will be invested properly and the principal preserved for ultimate recognition (the “market risk”). I have guided many such sellers through the process and every single seller whom I have advised has been thrilled with the outcome. This article will describe the transaction in the most general terms, address the three risks just noted and will identify the myriad of prospective users and professionals for whom this strategy holds tremendous value and utility.

In a DST, the seller is someone (an individual, a couple, a family, a partnership, a corporation or other entity, with a highly-appreciated asset (a business, a real estate holding (commercial or residential, investment or personal), artwork or other collectible) that the seller wishes to sell. However, in doing so, the seller is subject to federal capital gains taxes, state capital gains taxes (where applicable), the ACA tax, likely depreciation recapture and other burdens that may leave the seller with only half of the sale proceeds after all taxes and related obligations have been paid to the government. This is especially frustrating to the seller because he or she or the entity has been paying taxes on the business or the real estate holding year in and year out for many, many years in most cases. At the time of sale, this amounts to multiple levels of taxation. In other words, the seller is unable to recognize the full value of the sale after nurturing the asset along over time and paying taxes annually on the income derived from the asset in the hope that, at the time the seller is ready to sell, he or she will be able to enjoy the fruits of his or her labor. I call this “the reluctant seller.”

In the case of the DST, the seller identifies a prospective buyer for the asset but does not travel down the road too far toward consummating the transaction. The seller contacts an advisor who is licensed to employ the DST strategy and the seller negotiates how and when he wants his principal returned, how she wants her money invested, what type of return he desires and numerous other essential and ancillary terms. Once there is an agreement, a contract is formed and the trustee contacts the ultimate purchaser of the asset and agrees on the purchase price. The trustee then purchases the asset from the seller and simultaneously conveys the asset to the end buyer, taking possession of the sale proceeds. The trustee then works with the seller’s investment advisor to ensure that the proceeds are invested in accordance with the terms of the trust and in accordance with the seller’s risk tolerance and preference for certain types of managed accounts, securities, alternative investments, insurance products, etc. The trustee then delivers to the seller a note. The seller is now the “note-holder” and enjoys all of the legal rights and privileges, including the right to call the note, that anyone holding a note possesses.

At the end of the transaction, the note-holder has the note. The buyer has the asset. The trustee, acting on behalf of the note-holder, oversees all investment decisions made by the note-holder’s financial advisor. No capital has been received by the note-holder. No taxes are due. 100% of the sale proceeds are invested in accordance with the note-holder’s wishes by the note-holder’s trusted advisor(s) and the note-holder may take principal (and pay pro-rata capital gains taxes on same) pursuant to a predefined schedule. The note-holder will receive annual income at the predefined rate of return. This ordinary income (from the investments) will be subject to taxation at the note-holder’s applicable income tax rate. Ultimately, when the principal is delivered to the note-holder, in periodic payments or in a balloon payment at the conclusion of the trust (such that the note-holder can maximize the annual return during the course of the trust), the capital gains taxes are paid accordingly. It is a winning situation for the seller / note-holder, a winning situation for the buyer and even a winning situation for the government (state and federal), as the taxes are ultimately paid (unlike when there is a step-up in basis at death in a like-kind exchange). However, the taxes are paid on the taxpayer’s schedule, not the government’s, and at a time when it is most advantageous for the taxpayer. Thus, the reluctant seller is not so reluctant anymore (making real estate brokers’, business brokers’, financial advisors’ and other investment professionals’ lives a bit less stressful in the process).

To return, as promised, to the three main concerns on the part of prospective DST users, I will address them in order. The first concern is tax risk, the risk that the IRS will not recognize the transaction. This is a bona fide installment sale per Section 453 of the Internal Revenue Code. If the seller engages the DST professionals in a timely manner and adheres to their advice, the transaction will be fully respected by the IRS. Furthermore, counsel for the trust will handle any audit they may arise in relation to the sale and use of the DST free of charge and will pay any penalties assessed against the taxpayer (somewhat in theory, as this has never happened after billions of dollars of DST transactions). The IRS actually favors the DST and IRC § 453 transactions more generally, as the government actually receives the capital gains taxes on the appreciated property at some point in time, unlike other transactions with a step-up in basis where the government may never see any tax revenue.

In terms of defalcation risk (that is attorney language which means the risk that the DST professionals will run away with the seller’s proceeds). There are multiple documents that make each and every move that is undertaken with respect to the corpus of the trust and the investments made therefrom subject to multiple signatures by unrelated parties at multiple financial institutions, each with a fiduciary relationship to the trust and the beneficiary of the trust – the seller / note-holder. Moreover, all of the parties involved in these transactions have undergone substantive background checks and all have been found to be committed professionals with impressive pedigrees who are beyond reproach. Finally, the seller / note-holder is able to monitor his or her investments, undertaken by the trust, and the performance of these investments in real time from a computer, a tablet, a phone or other mobile device. In other words, the seller / note-holder always knows where the sale proceeds are and how the investments are performing.

Finally, in terms of market risk, the seller must distinguish a specified risk tolerance after completing a risk tolerance questionnaire prior to the transaction. This provides for the formation of the investment statement of the trust. The trust must adhere to the investment statement at all times. Under no circumstances can the sale proceeds be invested into any instrument that is purely speculative in nature, no matter the appetite for risk. That said, within the conservative boundaries of what is permissible, some degree of risk will produce a higher return. In all cases, a fully diversified portfolio of non-correlated investments is created in order to provide some degree of protection against normal market fluctuations. Ultimately, there is less risk in a DST portfolio than in a single mutual fund, precisely because of the diversification (and the likely inclusion of annuities and other insurance products that carry minimal to nonexistent risk).

This strategy works best for (1) the reluctant seller concerned about the onerous capital gains obligations at disposition; (2) sellers desiring the benefits of a Section 1031 exchange but are not qualified in terms of the like-kind provisions; (3) a backstop for a failed Section 1031 exchange in which the qualified intermediary is instructed to direct the sale proceeds to the DST instead of the taxpayer should the like-kind exchange fail, thereby avoiding a major taxable event; (4) sellers of going concern businesses with ample goodwill which cannot be part of a like-kind exchange; and (5) all others who seek to sell a concentrated highly-appreciated asset and reinvest the proceeds of the sale in a diversified, tailor-made basket of stocks, bonds, mutual funds, alternatives and other investments in a tax-deferred manner wherein 100% of the sale proceeds are deployed to produce income at a set annual rate over a predefined period of time.

For the reasons described above, adding the DST strategy is beneficial for real estate brokers, business brokers, financial advisors, insurance professionals, qualified intermediaries,  accountants and a host of other professionals who seek to retain and “wow” their high-net-worth clients and customers. Both as a tax and estate planning attorney who has guided numerous parties through the DST process and as a DST trustee, engaged in buying and selling highly-appreciated assets, I am happy to assist you whether you are a prospective user of the DST or whether you fall into one of the categories listed above as a trusted advisor having clients with highly-appreciated assets.

For years, the Department of the Treasury was concerned that all-cash residential real estate transactions offered an opportunity to launder illicit funds.  Bank-financed purchases already fall under lender Anti-Money Laundering (“AML”) obligations, but transfers that bypass institutional financing historically received far less scrutiny. Financial Crimes Enforcement Network (“FinCEN”)’s new residential real estate reporting requirement closes that gap by requiring reporting for non-financed real estate transfers to legal entities and trusts. The reporting requirement seeks to increase transparency in the residential real estate sector and deter money laundering.

Under the new reporting requirement, any transaction involving the transfer of residential real property to a legal entity or trust that does not involve a bank, or other financing, needs to file a report.  Covered “residential real property” includes single-family houses, townhouses, condominiums, cooperatives, and land intended for one-to-four family residences. Properties with mixed residential and commercial use may also qualify as “covered residential real property” if the structure contains a residential unit. A “transfer” broadly means any change in ownership, whether by deed or, for cooperatives, through shares or membership interests. The rule focuses on all-cash transfers to entities or trusts, meaning those without financing from a lender. It applies regardless of the purchase price and includes gifts or transfers with no payment.

The central question becomes who must file the report. FinCEN assigns this duty to the “reporting person,” generally the professional most directly responsible for the closing. The rule uses a “reporting cascade” to determine the responsible party.  Priority goes first to the settlement agent listed on the closing statement, then to the person who prepared the statement, then to the party who filed the deed, etc., through a defined list of individuals involved in the transaction.  The rule assigns responsibility to one reporting person only for a given transfer, though parties can also enter into a written designation agreement to shift that duty from one qualified participant to another. For Estate Planning attorneys who occasionally handle deed work directly, this framework means you could unexpectedly find yourself in the reporting role.

Understanding what counts as a “covered transferee” is critical. The rule looks for situations in which a legal entity—like a Limited Liability Company (“LLC”), corporation, or a trust acquires the property. Placing a rental property into a newly formed LLC triggers the requirement to report.    Likewise, deeding a beach house to a trust for the benefit of children also falls under FinCEN’s microscope. An individual deeding property into their own revocable grantor trust without consideration, does not trigger the requirement to report. Additionally, transfers because of death, divorce, bankruptcy, or pursuant to certain court orders also fall outside the rule’s scope.

FinCEN expects detailed information in these reports. A reporting person must disclose identifying information about the transferee and any beneficial owners behind an entity or trust. That includes names, dates of birth, addresses, citizenship, and taxpayer identification numbers. For trusts, the reporting person needs to know the grantor, trustee, and certain beneficiaries. Attorneys who have spent the past year digesting the Corporate Transparency Act’s beneficial ownership framework will recognize the overlap. The trigger here hinges on acquiring residential real estate without financing, rather than the existence of an entity.

Consider how this might play out in practice. A long-standing client asks you to help deed their vacation home into a family LLC for asset protection. In the past, you might have drawn up the transfer documents, filed them, and never given another thought to the transaction. After December 1, 2025, that same task requires you to determine whether you are the reporting person and, if so, to file the Real Estate Report using the Bank Secrecy Act filing system at  https://bsaefiling.fincen.treas.gov/main.html.  Reports need to be filed with FinCEN by the later of the last day of the month following the month of closing or 30 calendar days after closing. Imagine a parent transferring the family residence to fund a trust for children. FinCEN now flags that once-routine estate planning technique as a transaction with potential for money laundering that requires reporting. Even if you are not the reporting person because a title company handled the filing, your client’s trust information will be part of the report. This flies in the face of the idea espoused by many Estate Planning attorneys that trusts offer privacy.

For many, the initial reaction may be surprised that ordinary trust and family transfers are now subject to federal anti-money laundering reporting. FinCEN seeks to prevent the use of legal entities and trusts to purchase residential real estate with illicit funds. In practice, this means that even routine transfers without a hint of misconduct fall under the reporting rule requiring disclosure of substantial personal and ownership information about clients.

FinCEN’s residential real estate reporting requirement takes effect on December 1, 2025.  As this article demonstrates, the rule has some complex provisions that have broad applicability. This article provides only a brief synopsis of the most relevant provisions. Estate Planning attorneys who handle deeds, trusts, and family property transfers fall squarely within the rule’s scope, regardless of whether they serve as the reporting person. Preparing now by understanding which transfers are reportable, identifying the reporting person, and collecting the required information will help attorneys guide clients smoothly and avoid surprises. Taking these steps ensures that clients remain compliant and well-prepared for the new reporting obligations.

I really wanted to watch the Monday night football game, and I really needed to write this blog, so I thought I’d do both and write a blog about what football and Estate Planning have in common. Turns out it’s more than you think. Both Estate Planning and football focus on strategy, teamwork and preparing for the future. Both require assembling the right team, adapting to changes, and defining clear goals. To reach the desired conclusion, both Estate Planning and football require foresight, determination and a bit of grit. Finally, in both, it’s important to remember that it’s not over until it’s over.  While a game ends only once the final whistle blows, a well-drafted Estate Plan may not be subject to change after death but often lives well beyond the life of the individual who created it.

As we settle in for the first weekend of football, let’s explore what a football team and an Estate Plan have in common. Both require a solid game plan.  For football and Estate Planning alike, the game plan serves as the roadmap to achieve a specific objective, be it winning the game, or securing a legacy.  The “game plan” to secure a legacy for Estate Planning involves discussing the goals of the individual making the plan. Once the goals have been set, then the attorney drafts documents that create the Estate Plan.  Finally, once the individual has executed the documents creating the plan, the client, the attorney, and others work together moving assets, updating beneficiary designations, and filing required paperwork to implement the Estate Plan. Like the various plays executed by a football team, the legal documents for an Estate Plan’s create the “playbook” in Estate Planning. Well-drafted Estate Plans provide instructions for what happens both during life and at death. A comprehensive Estate Plan consists of a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney, a Healthcare Power of Attorney, an Advanced Medical Directive, and a Health Insurance Portability and Accountability (“HIPAA”) Authorization.  Preparing these documents, much like the game plan, is only the beginning.  As in football, application and execution of the “game plan” matters.

In addition to a great game plan, both football and an Estate Plan require a strong team to enact the plan. In Estate Planning, the attorney serves as the quarterback and needs supporting players such as a financial advisor, a certified public accountant or other tax professional, as well as other specialists. Each individual member has specific roles and responsibilities and brings their own expertise to the “game.” When these parties work well together, they create a seamless plan with flexibility. However, just like a football team, if a member of the Estate Planning team fails to do their job properly, that failure can have disastrous consequences. Much like the far-reaching impact of a quarterback throwing an interception or a defender missing a tackle, an individual failing to accomplish their portion of the plan may lead to significant unintended and negative consequences. Those consequences range from additional taxes or loss of government benefits to creditors obtaining access to or misappropriation of assets. Just like on the football field, minor mistakes have major consequences. Estate Planning, like football, presents opportunities to learn from mistakes and to evolve.

Not only does each team member need to complete their job in both football and Estate Planning, but each needs to adapt when circumstances warrant it. The football team needs to alter its offensive or defensive plays if they are not producing the intended results. Likewise, the attorney and the team responsible for creating and implementing the Estate Plan need to pivot when family dynamics, beneficiary needs, or finances change. Even in the absence of such changes, both football teams and estate planning clients need to review the playbook periodically to ensure that it continues to meet needs and respond to new challenges.

In both football and Estate Planning, sometimes the best offense is a good defense. Drawing parallels between the two was easier than I thought, after all, both focus on strategy, teamwork, preparing for the future, assembling a team of experts, adapting to changing circumstances, and defining clear goals to ensure a successful outcome. Finally, both require a flexible approach to address as many unknowns and potential outcomes as possible. In both, it’s impossible to predict everything, although it’s incumbent upon the team to address as much as possible. Thankfully, my team was able to do that on Sunday. For most of the game, it looked like they were going to lose. Instead, they never gave up, continued to adjust, and ultimately had faith in one another and relied upon their teammates. That winning combination allowed them to prevail, much as it does for an Estate Plan. If you are looking to secure your win, reach out to me about how I can help you structure your Estate Plan thereby securing your legacy.

I came across an article regarding Prince (born “Prince Rogers Nelson”) which got me more interested in his Estate. A small idea took root and as I researched, I discovered that despite the near decade that has passed since his death, Prince’s Estate remains a “Controversy.” Just this week, his former protegee and co-star in the 1984 film, Purple Rain, Apollonia (Patty Kotero) sued Paisley Park Enterprises, LLC accusing the company of using bad faith trademark proceedings to steal her name. According to the lawsuit, while Prince was alive he encouraged Apollonia to use the name professionally. After his death, his Estate undertook to acquire all things related to Prince, including cancellation of Apollonia’s trademarks and ownership of the name. Several sources explore those topics in detail, but that’s beyond the scope of this article. This article will focus on the completely preventable mess that Prince left behind when he died on April 21, 2016, at age 57.

Prince was born on June 7, 1958, and rose to fame as a singer, songwriter, musician and actor. He began releasing albums in the late 70’s and in 1984, he became the first singer to have a number one film, album, and single in the United States, with the release of the film, Purple Rain, its soundtrack, and his first Billboard Hot 100 chart-topping single, “When Doves Cry.” Even today, years after his death, he’s remembered as one of the most influential musicians of his generation. “Nothing Compares 2 U” sounds more poignant meaning now considering the void left behind by Prince who was adept at blending various musical styles, penning provocative lyrics, and playing multiple instruments, all while exuding a flamboyant, androgynous persona. Anyone who has heard him play live knows what he brought to the stage and how much the music industry lost when he died.

Prince’s death stunned many, especially when they learned that he died without an Estate Plan despite having assets valued at well over $100 million (some sources estimated it as high as $300 million). Prince left no surviving spouse and no issue resulting in a six-year legal battle as “Thieves in the Temple” began their plunder. Because Prince died without a Will or Revocable Trust, the laws of intestacy of his state of residence, Minnesota, governed distribution of his vast Estate. Interestingly, Minnesota intestacy laws include half-siblings as heirs, which underscores the idea that “The Beautiful Ones” (your closest loved ones) might not always inherit what you expect. Prince’s sister and five half-siblings spent six years fighting over his Estate, disagreeing over distribution and valuation, and initiating additional lawsuits.  It’s bittersweet to think that behind that brilliance, his own Estate would one day be a storm of “Purple Rain.”

Unfortunately, this type of protracted battle often occurs when an individual dies without an Estate Plan, particularly in situations involving sizeable Estates. Prince amassed tremendous wealth, held unique assets, and owned business interests at his death, yet failed to undertake any Estate Planning whatsoever. Arguably, he had over $150 million reasons to complete the task, yet Prince left no instructions regarding what should happen to his assets upon death.  That failure opened the door for his siblings to fight over his wealth and provided the attorneys handling the matter with considerable fees—perhaps they were the only ones singing “Take Me with U” to the bank. While most individuals don’t have anywhere near the level of wealth that Prince did, modest estates are not immune from these universal issues. Anytime an individual dies without an Estate Plan he or she leaves behind “Chaos and Disorder” rather than a “Kiss.”

A comprehensive Estate Plan goes a long way toward avoiding that confusion and expense.  Those documents – a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney, a Healthcare Power of Attorney, a Living Will, and a Health Insurance Portability and Accountability (“HIPAA”) Authorization serve as your personal “Sign o’ the Times” to the world, making clear your wishes. If an individual dies without a Revocable Trust or Will, that’s referred to as dying intestate, which was what Prince did. As we discovered by reviewing his Estate, intestacy statutes determine distribution of assets without any input from the decedent. Those statutes also fail to account for the specific needs of the individual recipients, such as receiving needs-based governmental benefits leaving those individuals to wonder “Why You Wanna Treat Me So Bad?”

Intestate estates need to go through the probate process which requires an individual to petition the court for appointment as executor, personal representative, or administrator. Once that appointment occurs, then the individual has the legal authority to collect and distribute the decedent’s assets pursuant to the distribution scheme in the statute. That individual likely will need to retain an attorney to understand and navigate the complex court system. A judge oversees the many steps involved in this public probate process. Probate makes private matters public—something Prince himself fiercely avoided in life. His privacy, his control, even his mystique—all surrendered to a court record. It’s ironic that a man who once sang “I Would Die 4 U” left behind no blueprint for those he cared about. A little planning could have made his exit as smooth as “Diamonds and Pearls.”

So, what’s the lesson? Don’t leave the “Beautiful Ones” in your life crying in the “Purple Rain.” Whether your Estate is the size of a “Little Red Corvette” or a whole “Paisley Park,” get your Estate Plan in place. Otherwise, the courts and attorneys may be the only ones singing “Take Me With U,” and your loved ones could end up “Delirious.” Estate planning isn’t glamorous, but it’s the best way to keep control of your legacy, protect your privacy, and make sure your wishes are honored—so your family can celebrate your life instead of fighting over it. “Let’s Go Crazy” about planning now, to avoid “Thieves in the Temple” later.

What do “Hulk Hogan” (born Terry Gene Bollea) and Disclaimers have in common? Potentially, Hulk’s daughter, Brooke Hogan (“Brooke”), if sources portray the situation accurately. I recently read an article asserting that Hulk Hogan had his affairs in order and had created a Revocable Trust prior to his death. For the curious, the terms of a Revocable Trust generally do not become public, which means that Hogan’s plan may remain a mystery. That changes if someone initiates a lawsuit. In this situation, that could happen given the discord demonstrated by his family in public.

Let’s start at the beginning, or rather the end, of Hogan’s life. Hogan’s wife of nearly two years, Sky Daily (“Sky”), and his two children, Nick Hogan and Brooke, survive him. Hogan left an estimated $25 million estate that includes his real estate portfolio of $11 million, his Clearwater, Florida compound, several business ventures, a bar, plans for another establishment near Madison Square Garden, along with trademarks and intellectual property related to his wrestling persona. If Hogan failed to update his Estate Plan after marrying Sky, Florida law entitles her to thirty percent (30%) of the elective estate. Of course, Hogan’s plan could give her more than that and unless Hogan’s Estate Plan becomes public, we must guess. While interesting, that’s not the focus of this blog post.

According to several articles, in 2023 Brooke asked Hogan’s financial advisor to remove her as a beneficiary of his estate. Reports indicate that Brooke made this request because she distrusted people in her father’s inner circle whom she believed were taking advantage of him. Here’s the twist, the financial advisor has no power to remove Brooke as a beneficiary, even of the accounts under the financial advisor’s control. Hogan himself would have had to undertake that task. If Brooke wants no part of her father’s Estate, then she needs to execute a disclaimer, it’s her only option, and that’s the focus of this blog post.

One might think that it’s easy to disclaim, in fact, it’s not. Executing a “qualified disclaimer” takes some planning. It’s important to note that a qualified disclaimer means that Section 2518 of the Internal Revenue Code (“IRC”) treats the disclaimant as though they predeceased the decedent, thereby avoiding potential gift tax consequences for the disclaimant. A non-qualified disclaimer, on the other hand, results in a gift from the disclaimant to the new beneficiary, which may trigger undesirable tax consequences. To avoid this, it’s essential to meet all the requirements for a qualified disclaimer.

First, the disclaimer needs to be in writing. Next, the disclaimer needs to be irrevocable. It cannot contain any contingencies, be subject to change, be reversed or be qualified in any other way. The disclaimant cannot disclaim based upon any condition, for example, another individual also disclaiming. The disclaimant needs to execute the disclaimer timely, within nine months of the creation of the interest, or within nine months of the beneficiary attaining the age of twenty-one (21). Determining the creation of an interest requires a careful review of the document creating the interest and the facts and circumstances surrounding that creation. In PLR 201407009, a settlor established an irrevocable trust in 1977 for the benefit of the settlor’s descendants. More than thirty-five (35) years later, a descendant who became eligible to receive assets under that trust was approaching the age of majority and inquired whether a disclaimer was possible. The Internal Revenue Service opined that the descendant could disclaim as long as the disclaimer met the other rules under IRC §2518. This PLR demonstrates the importance of understanding the facts and circumstances surrounding the interest sought to be disclaimed.

In addition to the requirements noted above, the disclaimant needs to execute the disclaimer before accepting any benefits from the property. If the disclaimant accepted benefits, then the disclaimant cannot disclaim. Interestingly, it’s possible to disclaim a partial interest in property. Finally, the disclaimant cannot control or direct the property in any way. This means that the disclaimant cannot say, I disclaim to David. That would be a gift. The disclaimant simply disclaims the property, and the document creating the interest directs what happens next and who receives the disclaimed property.

Inexperienced Estate Planning attorneys may not think of a disclaimer even when the situation warrants it. For example, some beneficiaries don’t need the money or property, perhaps the individual already has a taxable Estate without the gift. Perhaps they prefer that the property pass to the next individual in line for the gift, such as an adult child just graduating from college or buying their first home. Disclaimers add yet another dimension to the wild, wonderful world of Estate Planning and give us yet another tool to use. Properly executed disclaimers allow individuals to avoid tax and may help achieve a more desirable result than simply accepting property and then gifting it away.