USA - Private Wealth: Central Region Lawyers & Law Firms - HNW | Chambers and Partners
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HNW Guide

Private Wealth: Central Region — USA

Overview

USA: An Introduction to Private Wealth Law Contributed by Katten Muchin Rosenman LLP

Wealth management in the United States is an ongoing, ever-evolving practice. The complex problems confronting clients involve local, federal, and international tax, estate planning, trust and estate administration, and dispute resolution laws and regulations. The wealth management process focuses on creating and implementing an integrated planning structure that will accomplish the client’s objectives in a tax-efficient and predictable manner, with sufficient flexibility to address unanticipated change and with sufficient documentation to withstand unanticipated contest. High net-worth individuals turn to professionals for unique, holistic solutions that respond to their personal and estate planning needs and family governance wishes.

Succession planning is a key component to wealth management for business owners and wealth creators. Moving beyond managerial succession, legal advice centres on restructuring business entities and other holdings in a manner that achieves efficient wealth transfer and cohesive management across generations.

The most pertinent developments in wealth management over the last 12 months include:

Federal Estate, Generation-Skipping Transfer (GST) and Gift Tax Rates

For 2017, the federal estate and gift tax exclusion amount is $5.49 million. The maximum rate for estate, gift, and GST taxes remains at 40%.

Annual Gift Tax Exclusion

The annual gift tax exemption amount remains at $14,000 per donee in 2017 and is at $28,000 for a married couple. Gifts made to noncitizen spouses are limited to a different annual gift tax exemption amount, which is $149,000 in 2017.

Potential Republican Tax Reform

Now that Donald Trump is President and Republicans have control of Congress, it is possible that new tax legislation may be passed. Trump has released his proposal for tax reform, and the House Republicans released their own proposal for tax reform in June. The following is a brief summary of these tax proposals, which may be considered by the new administration and Congress.

Individual Income Tax

Both Trump and the House Republicans call for rates of 12%, 25%, and 33%. Both proposals would also eliminate the alternative minimum tax (AMT) and all itemised deductions, with the exception of the deduction for mortgage interest and the charitable deduction.

Trump’s plan would retain the existing capital gains rate structure, with a maximum rate of 20%. Carried interest would be taxed as ordinary income. Trump's proposal would also eliminate the Net Investment Income Tax. As a result, the current top rate of 23.8% would be reduced to 20%. Under the House Republicans’ proposal, interest, dividends and capital gains would be taxed as ordinary income, but subject to a 50% exclusion. This would be equivalent to taxing interest, dividends, and capital gains at half of the ordinary income rates (with a top rate of 16.5%).

Estate and Gift Tax

Both Trump and the House Republicans propose to repeal the estate and gift tax. Trump's plan proposes the imposition of capital gains tax at death on estate assets in excess of $10 million for married couples. While there may be much discussion on estate tax repeal during 2017, there are many impediments to passage of such legislation (including the significant complications that would result from the imposition of carry over basis and the government’s loss of both estate tax and estate fiduciary income tax revenues). Historically, all attempts at estate tax repeal have been unsuccessful. And even new legislation repealing the estate tax may be overturned or modified to reinstitute the estate tax in the future. Due to these uncertainties, we do not recommend delaying estate planning based solely on the possibility of repeal.

Planning Opportunities to Consider Immediately

• Review and revise your estate plan to ensure it remains appropriate.

• Consider trust income tax planning, now that estate tax exemptions are so high.

• Make gifts to take advantage of the increased applicable exclusion amount.

• Create grantor-retained annuity trusts (GRATs) while hurdle rates are at historic lows.

• Make sales to "defective" grantor trusts while the applicable federal interest rates are at historic lows.

• Create charitable lead annuity trusts (CLATs) while hurdle rates are at historic lows.

• Gift residences or vacation homes using qualified personal residence trusts and other trusts while real estate valuations are depressed.

• Consider buyback of appreciated low basis assets from grantor trusts.

• Make intra-family loans, including to purchase life insurance, while interest rates are at historic lows.

• Consider creating or amending existing family limited partnerships consistent with the latest case law developments this year.

• Consider the use of life insurance for income and transfer tax mitigation.

• Consider charitable planning.

New Regulations

It may be some time before we see much needed regulatory guidance in areas affecting our practice. On January 20, the day of Trump’s inauguration, Chief of Staff Reince Priebus issued a memo instructing the heads of governmental agencies and executive departments to refrain from sending any new regulations, including proposed regulations, to the Federal Register until advised by the administration. He instructed agency heads to withdraw any regulations that had been sent to the Federal Register but had not yet been published and temporarily to postpone for at least 60 days the effective date of any regulations that had already been published but had not yet taken effect. On January 30, Trump signed an executive order to cut regulations and costs, requiring agencies to eliminate two rules for every new rule they issue. The combined effect of these two mandates has left agencies such as Internal Revenue Service in a quandary how to proceed.

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Kirkland & Ellis LLP

From the Chambers HNW guide

David Handler is recognised as "a leader in this field and one of the most intelligent lawyers you will ever work with." He focuses his practice on trust and estate planning and represents numerous HNW clients. One source notes: "He is a real expert on HNW clients with private equity interests who need high-level planning. That is his key strength." Another adviser adds: "He is one of the most well-established names in Chicago and even seasoned professionals ask his advice." Handler also acts for families, business owners and tax-exempt organisations. "He deals with every issue in the most comprehensive way. He is a very lucid and creative thinker," notes one source, while another reveals: "He is a pre-eminent adviser. He exudes confidence and gravitas. Clients will listen to his every word as he has such impeccable judgement."

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Carol A Harrington

McDermott Will & Emery LLP

From the Chambers HNW guide

Carol Harrington practices in Chicago and leads the firm's global private client practice. "She has been a fantastic leader of that group," reports one source, while another interviewee notes that "she is one of the best trust and estate practitioners around." She advises on all aspects of wealth management and estate planning and is noted for her expertise in tax and succession issues. One insider reveals: "She is the world's foremost expert on generation skipping tax matters and is also an incredibly bright estate planner." Another source adds: "She is very insightful and analytical when solving complex problems."

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Thomas W. Abendroth

Schiff Hardin LLP

From the Chambers HNW guide

Thomas Abendroth heads the trusts and estates group. A source says he is "a highly refined lawyer – the quality of his judgement has been demonstrated many times in difficult situations. He does some really outstanding work." He focuses his practice on estate planning, federal transfer taxation as well as estate and trust administration. One peer reports: "He is seen as an expert on a wide range of wealth management matters and can explain these difficult concepts to clients in a very easy way." Another wealth expert reveals: "He has authority – when he speaks, people listen."

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Schiff Hardin LLP

From the Chambers HNW guide

Since publication, Susan Bart has moved to Schiff Hardin from Sidley Austin. She is praised as "a nationally recognised practitioner who has made serious academic contributions to the wider industry." Her practice focuses on estate and gift tax planning, trust and estate administration, charitable planning and fiduciary counsel. "She is very intelligent and can provide detailed and sophisticated advice," enthuses one source, adding that "she is very thoughtful and really knows the law inside out." A market insider further reports: "She demonstrates excellent judgement on behalf of her clients and really knows how to advise wealthy families to ensure all their interests are protected."

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Bryan Cave LLP

From the Chambers HNW guide

Based in St. Louis, Lawrence Brody of Bryan Cave LLP is noted for his comprehensive experience in the area of private client law. He focuses his practice on the use of life insurance in HNW estate planning, and is well known for this work. A market insider reports: "He has a sterling reputation and is seen as an expert on life insurance matters. He is the go-to guy for such matters." Another wealth professional notes: "He has really strong legal expertise and I respect his technical skills. He is extremely thorough and responsive, and he is acknowledged as a national expert on insurance matters."

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Baker Botts LLP

From the Chambers HNW guide

Stephen Dyer leads the Baker Botts LLP private client department in Houston. He is described by one peer as "a wonderful lawyer with a very impressive client base." His practice encompasses all aspects of estate and business planning and he also advises on trust and estate administration. A source enthuses: "He has a gift of making very complicated matters seem simple and straightforward for all his clients."

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Harrison & Held

From the Chambers HNW guide

Chicago-based Louis Harrison of Harrison & Held advises on all aspects of estate and tax planning. "He is a very bright attorney with a very sharp mind," enthuses one source, adding: "He is very driven, energetic and has made a large contribution to the wider industry." His clients include business owners and company executives. Another interviewee adds: "He has expertise in complex family wealth planning and is very good at relating to and communicating with his clients."

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Lawrence P Katzenstein

Thompson Coburn LLP

From the Chambers HNW guide

Lawrence Katzenstein of Thompson Coburn LLP advises on a range of estate planning matters, including tax issues and charitable giving. "He is a fantastic adviser with a national reputation," enthuses one source. Katzenstein garners specific praise for his expertise in tax matters, with one interviewee noting that "he is a numbers guy and really understands the intricacies of tax." Another observes: "He is an excellent tax lawyer and can understand all the numbers and the mad, difficult tax calculations."

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Stinson Leonard Street LLP

From the Chambers HNW guide

Sources describe Charles Redd of Stinson Leonard Street LLP as "a fabulous lawyer" with "very strong technical skills." Located in St. Louis, he advises on both contentious and non-contentious matters. One source enthuses: "He is very insightful and bright, and has a panoramic and in-depth understanding of tax law." Another source adds: "He has very close relationships with a number of leading American banks. He has a strong national following."

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Christine L Albright

Holland & Knight LLP

From the Chambers HNW guide

Christine Albright is a Chicago-based practitioner who is "very experienced and has plenty of experience dealing with complex matters." She focuses her practice on estate planning for HNW clients and advises on taxation, business succession matters as well as trust and estate administration. A source says: "She is extremely well-versed in the law. A very thoughtful attorney with innovative approaches. She is a tireless advocate for her clients and tirelessly contributes to the wider industry."

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McDermott Will & Emery LLP

From the Chambers HNW guide

Chicago-based David Herpe is described as "a strong all-round attorney with a good working knowledge of all aspects of trust and estate law." He advises on wealth transfer and estate planning for HNW families, business owners and corporate executives. He also has expertise in wills, trusts, life insurance and charitable planning. Another source says: "He has broad understanding and experience and can use that to determine the best course for the clients."

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Schiff Hardin LLP

From the Chambers HNW guide

David Hodgman primarily advises on estate planning, probate matters and private foundations from his office in Chicago. "He is a true counsellor and very good at dealing with complex problems for clients," says one legal source, while another expert notes that "he is analytical and very thoughtful in his approach." A wealth expert further reveals: "Clients see him as a long-term and trusted adviser. Clients feel very comfortable dealing with him and asking for his judgement on personal matters."

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Loeb & Loeb LLP

From the Chambers HNW guide

Since Chambers HNW 2017 went to press, Jordan Klein has joined Loeb & Loeb from Sidley Austin. He advises on a comprehensive range of wealth management matters from the firm's Chicago office. A market source reveals: "I've seen some fine technical aspects to his work. His client skills are excellent and he can handle complex and sophisticated matters. Clients find his demeanour and personality comforting, and he builds a great rapport with them." Klein also advises on business succession, tax planning and family governance issues.

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McDermott Will & Emery LLP

From the Chambers HNW guide

Richard Lang is recognised as "a very experienced and intelligent trusts and estates attorney," who is "efficient, timely and pragmatic in his approach." He focuses his practice on wealth transfer and income tax planning, and regularly acts for venture capitalists, entrepreneurs and family offices. One source reports: "He really understands the sensitivities and issues which arise in estate planning for wealthy families. He has very good instincts and clients appreciate his engaging demeanour."

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Kathleen R. Sherby

Bryan Cave LLP

From the Chambers HNW guide

Kathleen Sherby is based in the St. Louis office of Bryan Cave LLP, advising on all aspects of wealth transfer and estate planning. One source enthuses: "She has real pedigree in this market. She is extremely bright and has a very sharp mind." Another interviewee adds: "She has a great personality for a trusts and estates lawyer. You know clients will see her as a trusted adviser for their families."

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Up and Coming

Levenfeld Pearlstein LLC

From the Chambers HNW guide

Chicago-based Lauren Wolven of Levenfeld Pearlstein LLC focuses her practice on estate planning, wealth protection, estate and trust administration and business succession planning. "She has some really strong experience in interesting cases," reveals one source, adding that "she is a sensible person with a reasonable and fair mind."

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