Archive for April 2008

The Giant Rat of Sumatra

April 28, 2008

This title will be familiar to readers of the adventures of Sherlock Holmes. It’s a story mentioned in one of the Holmes stories as one for which the world was not yet ready. Apparently, the world was never ready for the story, because the author died without having written about a giant rat, from Sumatra or elsewhere.

I think of this passage in the works of Sir Arthur Conan Doyle as an example of things left undone. We often have plans we would like to carry out but for some reason can’t get to. Sometimes, like Doyle, we never get to them. In my practice, I see this kind of procrastination frequently when the subject of life insurance comes up. (By the way, I neither sell nor benefit from the sale of life insurance.) Life insurance is a product with many useful tax characteristics, and its use has become more…useful in recent years because of developments in the insurance industry and businesses related to the insurance industry.

Among the valuable tax benefits of life insurance is that the receipt of the proceeds is generally free of federal income tax. I say generally because it’s possible to lose that tax exemption if, for example, the insurance policy is transferred for value, such as by selling it. There are ways of avoiding that problem, depending on the type of transfer.

The proceeds of life insurance may be subject to federal estate tax, which could reduce the amount of the proceeds significantly. But there’s a way to avoid estate taxation that is frequently used, especially for large amounts of insurance. If the life insurance policy is not owned by the insured but instead by an irrevocable life insurance trust, the proceeds will escape federal estate taxation. The trust document will determine where the proceeds will go. Often they’re held in trust for the surviving spouse for life and then paid to the children. Not having to pay estate tax, in addition to the exemption from income tax, is a doubly valuable benefit.

But if the trust is irrevocable, it’s difficult, if not impossible, to change it. Suppose you change your mind about where the proceeds should go, which could happen for any number of reasons. Are you stuck leaving the proceeds to those you might consider the wrong people, or the right people but on the wrong terms? One solution that people have considered is to set up a new trust and sell the policy, for its fair market value, from the old trust to the new trust. But that creates the potential transfer for value problem described above. Is there a way around this problem?

The IRS has just issued a revenue ruling, 2008-22, which confirms the ability to make such a transfer without jeopardizing either the income tax or the estate tax exemption. If the new trust is a grantor trust, which means a trust that is treated effectively as the same person as the grantor, then the transfer for value rule won’t apply. (In this situation, the grantor would be the insured.) But how do you make the trust a grantor trust? The Internal Revenue Code says that one way is to give the grantor the right to substitute property of equal value for the property in the trust. The grantor might never make such a substitution, but the right to substitute is enough. The ruling just issued tells us that having such a power need not cause the proceeds to become subject to federal estate tax. It’s one of those intricate drafting situations that actually works very simply and preserves the excellent tax benefits life insurance offers.

Like writing a will, buying life insurance is something that people sometimes avoid, with its suggestion of mortality. There are some complexities to it, but careful planning can make it an important part of your financial “story.”

Robert H. Louis
Saul Ewing


Blank Rome to Lose Half of Florida Office

April 24, 2008

Half of Blank Rome’s eight-attorney Boca Raton, Fla., office will be leaving for Greenberg Traurig, according to a story by The Legal’s sister publication,

Blank Rome spokesman Topper Ray confirmed that partner Bruce C. Rosetto would be leaving the office along with three associates. He said he was fairly certain the group was joining Greenberg Traurig.

According to sources cited in the article, Blank Rome’s administrative partner Michael H. Leeds, the two other remaining partners and the only remaining associate were also in talks to join another firm – possibly Greenberg Traurig.

Neither Rosetto nor Leeds returned requests for comment by the time of publication.

In an e-mail to, Leeds said, “I can only confirm that Bruce Rosetto and three associates are leaving but I do not believe that their new home has been decided for certain … Mr. Rosetto can provide any more detail as he wishes.”

If the entire group left, Blank Rome would be without a Florida office for the first time in 30 years, according to the article.

Ray said Leeds is staying at Blank Rome, and the firm is staying in the Florida market.

Rosetto and his group focus on mergers and acquisitions work, while Leeds focuses on trusts and estates matters. Ray said the firm would continue to have Leeds’ trusts and estates practice in Florida along with the litigation component the three other remaining attorneys provide.

According to Ray, Blank Rome is committed to the Florida market and is interested in lateral hires or combinations in a number of the firm’s offices, including Boca Raton.

Herb Hertner, owner of the legal headhunter Hertner Block & Associates of Miami, told he was surprised to hear the news about Blank Rome.

“I thought they were starting to put things together there,” said Hertner, who has worked for the firm locally. “They were going in the right direction. This is very surprising.”

Miami-based Greenberg Traurig has about 70 attorneys between its two Palm Beach, Fla., offices and around another 330 in its other five Florida offices.

–Gina Passarella, Staff Reporter

False Claims of Citizenship Can Render Aliens Inadmissible

April 23, 2008

There are many aliens in the United States today, both legally and illegally, who are faced with the dilemma of supporting either themselves or their families financially, both here in the United States and back home in their country of origin. The conflict that these aliens face is determining exactly how they are planning to survive while here in the U.S. Many aliens are here on B-2 Tourist Visas.  Under the Immigration and Nationality Act, any alien present in the U.S. on a B-2 Visa is prohibited from accepting employment while visiting the U.S.

Unfortunately, despite this prohibition, there are some aliens who have secured or attempted to secure employment while only holding a B-2 Tourist Visa.  Some aliens have done this by making a false claim of U.S. citizenship to a private employer on an I-9 Employment Eligibility Verification Form.  This is a costly mistake that will not only render the alien inadmissible under this country’s immigration laws but also will forever bar this individual from ever becoming a permanent resident and ultimately a U.S. citizen. Aliens who make this mistake may be subject to immediate removal proceedings and ultimately deportation from the U.S.

Section 212(a)(6)(C)(ii) of the Immigration and Nationality Act, as amended by the 1996 Immigration Act, renders inadmissible any alien who falsely claims to be a U.S. citizen for any purpose or benefit under the Immigration and Nationality Act or any other federal or state law. The amendments apply to false claims to U.S. citizenship on or after Sept. 30, 1996. The amendments do not apply just to citizenship claims made to obtain an immigration benefit. For instance, if a person claimed to be a U.S. citizen in order to vote in yesterday’s all-important Pennsylvania primary election, this person would be inadmissible under the statute.

In addition, it is not necessary for the claim to have been made only to a government official. A false claim of citizenship can also be made to someone in the private sector. One of the biggest mistakes that aliens have made is making a false claim of citizenship to a private sector employer on an I-9 Employment Eligibility Verification Form. If this false claim to a private employer was made on or after Sept. 30, 1996, this individual would be inadmissible.  Immigrants who are found to be inadmissible under Section 212(a)(6)(C)(ii) of the INA are permanently inadmissible.  There are absolutely no waivers available under this scenario.  Non-immigrant visa applicants may still apply for a discretionary waiver. 

If the false claim of U.S. citizenship was made prior to Sept. 30, 1996, that claim must have been made to a government official for the purposes of obtaining an immigration benefit such as a Visa or U.S. Passport. This individual would be declared inadmissible. However, waivers are still available to this individual if the claim was made to a government official to obtain an immigration benefit prior to Sept. 30, 1996. 

The bottom line is this: Making a false claim of U.S. citizenship to any person, whether a government official or private individual, is the kiss of death. Not only will you be declared inadmissible and be subject to removal or deportation proceedings but you will never have the opportunity to become a legal permanent resident and ultimately a U.S. citizen.

Rob C. Tonogbanua, Esq.
Dickie McCamey & Chilcote, P.C.

Planning to Live

April 21, 2008

Every so often, a partner in my firm will approach me in a sheepish manner to say he or she hasn’t done any estate planning recently or, in extreme cases, doesn’t have a will at all. Sometimes clients admit the same. I suppose this has to do with a belief that planning for the inevitable brings it that much closer. No one has ever suggested that buying homeowner’s insurance makes it more likely that your house will burn down. Again, some people will say, “I’ll let my kids worry about it” or “I won’t be here, so why should I care?” As a lawyer with an active practice in estate disputes, I can only say, “Thank you.”

Nothing is more certain than that individuals have an obligation to their spouses and their children to make plans for what happens after they are gone. It’s not planning for your own death; it’s planning for what will happen to those you leave behind. Will the sum of what you have accomplished in your life cause happiness or heartache for your family? If you make no plans and tell no one what you want them to do, you will be throwing away much of what you have accumulated, because it will either be wasted in litigation or will have a negative impact on your family, making it, in effect, a negative asset. You wouldn’t do such a thing while you were still alive, so why leave that as a legacy?

This came to mind recently because we had a tragedy in my firm. One of my partners died last week after a long struggle with cancer at age 44 leaving a wife and three small children. I believe he had planned carefully, because his illness lasted several years and its eventual result became clearer in recent months. But it has made a number of us, myself included, think about what our spouses and children might be faced with if we died. Several colleagues have asked for assistance with estate planning. Others have asked if their retirement accounts and life insurance would be sufficient to support their spouse and family.

Here’s a suggestion that everyone should consider, especially if you are the one handling financial matters in your family. Begin a notebook of financial information to be available to your spouse or other family members. One page should list your assets: home, retirement accounts, bank accounts, etc. On this page should be contact information for your financial adviser, accountant or other people who should be contacted. Another page should have all of your insurance information: life, health, disability, long-term care, homeowners; again, with the necessary contact information. I suggest a page with a calculation of the income that will be available to survivors, and another that lists the monthly expenses that have to be paid. If you don’t know what it costs to manage your home and other living expenses, you should know that. Perhaps you will add other pages, adding burial plans and other things that the family should know.

Somebody, probably Lincoln, said that we cannot escape the future. I would add that we need not dwell on it constantly, but we should plan while we are alive to help the lives of those we love be as comfortable and happy as we can make them. So, careful estate planning is not planning to die; it’s planning to live.

Robert H. Louis
Saul Ewing

Gun Concerns in Philly… Nation

April 16, 2008

Clinton’s Take: She said the U.S. Supreme Court might have trouble finding constitutional Washington, D.C.’s complete ban on all guns. She said there can be a balance between gun control and gun rights.

What works in New York City probably wouldn’t work in Montana, she said. Clinton said she wouldn’t support a federal law that tried to apply the same rules to all jurisdictions.

She would reinstate the “100,000 cops on the streets” policy that was created under her husband’s administration and make sure local police departments have access to federal information on illegal gun use.

Obama’s Take:  He said the U.S .Constitution, as a general principle, gives Americans the right to bear arms, but that doesn’t mean the government can’t constrain that right. He compared it to the right to own property and the government’s ability to create zoning laws. He said he never favored an all-out ban on handguns.

-Gina Passarella, Staff Reporter

Hillary Gives Shout Out to Rendell… Hillary

April 16, 2008

In case you didn’t catch where Sen. Clinton stands on a certain issue, you can check out her Web site. She has mentioned it twice so far…

She also gave credit to Gov. Edward G. Rendell for keeping foreclosure rates low in Pennsylvania. She said he saw the problems coming – unlike President Bush – and did a great job of keeping the numbers down.

-Gina Passarella, Staff Reporter


Iraq First Real Issue Discussed in Debate

April 16, 2008

Almost an hour into the debate, questions turned to real issues in the campaign instead of missteps in the campaigning.

Iraq was the topic and both senators defended their positions to pull troops out of Iraq – within 60 days for Clinton and 16 months for Obama.

Moderator Charlie Gibson questioned whether the senators were suggesting they knew better than Gen. David Petraeus.

Obama said it is the president who sets the mission and the general who carries it out. Clinton said the country needs to pay attention to other issues like Afghanistan and regain its credibility with the world.

“We don’t know what will happen if we withdraw,” she said. “We do know what will happen if we stay mired in Iraq.”

-Gina Passarella, Staff Reporter