We created the Estate Planning Newsletter to help you stay up to date on current estate planning topics, as well as other relevant legal developments and trends. We highlight two alerts in this edition: the first considers the ramp down of the IRS' Offshore Voluntary Disclosure Program; the second reviews how the national opioid epidemic impacts the preparation of client estate plans, wealth preservation and asset protection.

Last Chance to Disclose to IRS?

United States citizens and green card holders ("U.S. person(s)") are urged to come forward now to report to the IRS any previously undisclosed foreign income and/or foreign assets. The Internal Revenue Service announced in March 2018 that it would ramp down the latest version of the Offshore Voluntary Disclosure Program (OVDP), and close the program entirely on Friday, September 28, 2018.

The OVDP was initially launched by the IRS in 2009, and updated versions were instituted in 2011, 2012 and 2014. OVDP potentially offers reduced civil financial penalties, and may avoid criminal prosecution for the failure to report.

U.S. taxpayers who have undisclosed foreign financial assets and income in offshore accounts, including accounts with institutional banks and brokerage companies, should consider taking full advantage of the OVDP while it remains in effect.

Under applicable provisions of the Bank Secrecy Act, United States persons are required to annually file a report with the U.S. government if they have a financial account in a foreign country with a value exceeding U.S. ten thousand dollars (US $10,000.00) at any time during the calendar year. Under current law, taxpayers are supposed to note this on the filing of their U.S. income tax returns and by separately filing a Report of Foreign Bank and Financial Accounts (FBAR), which form is now known as FinCEN 114. This includes all accounts where a U.S. person has a financial interest in—or signature authority over, or other authority over—one or more financial accounts located in a foreign country.

Whether the Internal Revenue Service will provide some type of replacement program after September 28, 2018, has not been determined at this time. Individuals and potential clients who desire to participate in OVDP or wish to evaluate whether to consider participating in the OVDP are urged to act as quickly as possible before the program comes to an end.

How the Opioid Crisis affects your Estate Planning

There is a growing epidemic of addiction to painkillers, prescription and illegal drugs, resulting in many daily deaths from accidental drug overdoses. Here are some of the most common issues associated with opioid and other addictions in the preparation and implementation of client estate plans, wealth preservation and asset protection.

I. Identification

It can be difficult to identify when an individual may be using and/or abusing prescription or illegal drugs, and suffering from substance abuse or an addiction. These conditions place stress and strain on the family unit, and involve emotional and financial issues which, in many cases, flare up into conflict and even violent behavior.

II. Beneficiary

If an individual suffering from addiction is to receive outright a share of an estate when a family member dies, it would be wise to consider placing the property in trust for that affected individual and having the assets managed by a capable independent individual or a professional trustee, such as a bank or trust company. Another option could be a complete disinheritance of the affected individual, but most parents and others don't want to take this drastic step as they would like to have assets available for treatment of the problem and rehabilitation of the person.

III. Fostering Good Family Relations

Frequently, siblings of an affected individual harbor resentment or lack empathy for the addiction problem, including its destructive power. In many family situations, depending on the personalities and dynamics, it is a mistake to insert siblings of the addicted individual in the fiduciary position of trustee to manage income, money and assets for such person's benefit. It puts them in the confrontational position of having to always say "no" in response to a request for funds, and it negatively affects family dynamics and relations. The use of corporate fiduciaries should be considered as they are professionals and can appropriately say "no" when the estate planning documents are properly drafted to support these decisions, while still making available income and principal to be used for treatment of the problem and rehabilitation of the person.

IV. Fiduciary

If an addicted individual is also named to serve as a trustee, co-trustee or other fiduciary, or as a successor fiduciary, the estate planning documents should have appropriate protections to prevent such addicted person from serving as a fiduciary of a trust for his or her benefit or on behalf of other family members.

V. Trust Protector

Under applicable law, one or more individuals can be appointed to serve as a "protector" of the trust. This should be an independent person who could remove the addicted trustee, or otherwise appropriately intervene for the benefit of the trust and the affected person's protection.

These complicated and difficult estate planning decisions cannot be made in a vacuum, and should be thoroughly discussed, with all planning options made available. This is especially important where trusts can now last for a very long period of time, such as the lifetime of the affected individual, or in perpetuity if it is a generation-skipping or dynasty trust.