Virginia State Bar

An agency of the Supreme Court of Virginia

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Trusts and Estates

A Section of the Virginia State Bar.

Spring 2013 newsletter

Newsletter - Trusts and Estates

Volume 22, No. 8

Trust Planning: Still Relevant Despite Higher Estate Tax Exemptions and Portability
Kathi L. Ayers

Economic Development Funds and Taxation: Is There a Means to Tax Free Non-owner Contributions?
C. Arthur Robinson

New Virginia Law Overturns State Supreme Court Ruling Limiting Transfers of LLC Membership Interests: Potential Traps for the Unwary Remain
Arthur E. Schmalz


Message from the Chair
Southy Walton, Chair
Trusts and Estates Section

On behalf of the Board of Governors of the Virginia State Bar Trusts and Estates Section, I am pleased to introduce the Spring 2013 issue of our newsletter.

In this issue, Kathi L. Ayers reviews the reasons that trusts remain important in estate planning for many clients under the new Federal estate tax laws that are now in effect. The article addresses benefits of revocable trusts, using trusts in planning for minor and adult children, using trusts in planning for beneficiaries receiving government benefits without disrupting their eligibility, using trusts to protect the predeceasing spouse’s children in a blended family, and the benefits of using traditional bypass trusts for certain clients even in light of the new portability election option.

C. Arthur Robinson addresses the rules that govern non-owner contributions, particularly economic development funds, offered to businesses and how best to structure the business and transaction to assure that these contributions will be treated as nontaxable contributions to capital as opposed to taxable income to the business entity. In his article, the author reviews the key Supreme Court cases setting out the rules and the trend of decisions regarding the applicability of the exclusion from income to business entities other than corporations.

The article by Arthur E. Schmalz discusses a new Virginia law that will take effect on July 1 in response to the Virginia Supreme Court’s 2011 finding that Virginia law precludes allowing an assignee of a membership interest in a limited liability company (LLC ) from participating in the management of the LLC even where the governing documents of the LLC expressly grant such rights. This decision has been a matter of concern for estate planning attorneys who have clients with LLC memberships because beneficiaries take as assignees at the death of an LLC member owner, and thus the ability of a member to transfer his or her authority to participate in the management of the LLC to his or her family members or other chosen successors was in serious question. The article addresses what planning steps will still have to be taken to assure assignability of an LLC membership interest with full membership rights.

We thank our newsletter editor, Jennifer E. Shirkey, and assistant newsletter editor, Jennifer L. Moccia, for their work in producing this Spring 2013 newsletter.

This year, we are pleased to have offered a live telephone seminar this spring through Virginia CLE that was free to the first 133 registrants using a coupon code emailed only to Trusts and Estates Section members. The seminar featured Farhad Aghdami and Christine Piersall speaking on Trust Decanting, and all of the free registrations were used quickly. We hope to offer similar seminars to our Section members in future years.

Please visit our section website at for additional information about the Section. You should feel free to contact me or any member of the Section’s Board of Governors with any ideas or input on Section activities.

Spring 2013 Newsletter (.pdf)