The New Legislative Landscape and Beyond FIRMA New Orleans, LA April 27, 2009 Sally Miller

Emergency Economic Stabilization Act $700 Billion to purchase troubled assets (Troubled Assets Relief Program) $700 Billion to purchase troubled assets (Troubled Assets Relief Program) $150 Billion in tax cut extensions $150 Billion in tax cut extensions

Emergency Economic Stabilization Act Fannie Mae/Freddie Mac losses treated as ordinary losses for tax purposes Fannie Mae/Freddie Mac losses treated as ordinary losses for tax purposes FDIC insurance coverage for interest bearing accounts raised to $250,000 FDIC insurance coverage for interest bearing accounts raised to $250,000

Emergency Economic Stabilization Act Charitable IRAs Charitable IRAs One-year AMT patch One-year AMT patch Cost basis reporting Cost basis reporting

Other Emergency Measures PPIP PPIP TGLP TGLP TALF TALF MMIFF MMIFF ● Common/ Collective Funds

FDIC Insurance Premiums bps Premiums bps Special Assessment bps Special Assessment bps Impact on deposit insurance levels Impact on deposit insurance levels Sweep disclosures Sweep disclosures

American Recovery and Reinvestment Act Executive Compensation Executive Compensation Bonuses/ Clawbacks Bonuses/ Clawbacks Golden Parachutes Golden Parachutes Say on Pay Say on Pay

Accounting Mark-to Market Mark-to Market OTTI OTTI

Market Issues Naked Short Selling/Uptick Rule Naked Short Selling/Uptick Rule Credit Rating Agencies Credit Rating Agencies Commodities Commodities

Safety of Trust and Custody Assets Segregated from bank assets Segregated from bank assets Custody assets on trust system: same Custody assets on trust system: same Deposit instruments of trustee bank, collateralized over insured amount Deposit instruments of trustee bank, collateralized over insured amount

Safety of Managed Assets Supervision/Examination Supervision/Examination Segregation of Duties Segregation of Duties Recordkeeping Recordkeeping Audit Audit

Regulatory Restructuring Systemic Regulator Systemic Regulator Resolution Process for Non- Banks Resolution Process for Non- Banks GAPs GAPs ● Regulatory Groups ● Credit Default Swaps ● Hedge Funds

Trust and Wealth Management Issues Tax Tax Employee Benefit Employee Benefit Securities Securities

Deductibility of investment advisory fees ● Section 67(e)(1) exception to 2% floor: “costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate.” “costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate.”

IRS Proposal IRS Proposal: Only costs that are “unique” are fully deductible; “unique” if an individual could not have incurred the cost in connection with property held in trust/estate, e.g., accountings, fiduciary income tax filings, estate tax returns, beneficiary communications, will or trust contests or constructions, fiduciary bonds. IRS Proposal: Only costs that are “unique” are fully deductible; “unique” if an individual could not have incurred the cost in connection with property held in trust/estate, e.g., accountings, fiduciary income tax filings, estate tax returns, beneficiary communications, will or trust contests or constructions, fiduciary bonds.

IRS Proposal Non-unique: custody, management, investment advice, gift tax returns, and property management, thus subject to 2% floor. Non-unique: custody, management, investment advice, gift tax returns, and property management, thus subject to 2% floor. Unbundling of trustee fees required under proposal to identify unique/non-unique portions. Unbundling of trustee fees required under proposal to identify unique/non-unique portions.

Supreme Court Decision Supreme Court decision: Investment advisory fees subject to 2% floor of Section 67(e). Supreme Court decision: Investment advisory fees subject to 2% floor of Section 67(e). ● Rejected taxpayer argument. ● Impact on IRS proposal?

Practical Considerations Practical Considerations as a result of Knight decision: Practical Considerations as a result of Knight decision: ● Knight does not require unbundling of trustee fees for 2008 tax year. ● Impact on income beneficiaries ● Next Steps

Cost-basis Reporting Require brokers to report adjusted cost basis, and acquisition or disposition dates Require brokers to report adjusted cost basis, and acquisition or disposition dates Equity 1/1/11 Equity 1/1/11 Mutual Funds: 1/1/12 Mutual Funds: 1/1/12 Debt: 1/1/13 Debt: 1/1/13 Treasury to issue proposed regulations Treasury to issue proposed regulations

Estate Tax Reform Economic Growth and Tax Reconciliation Act of 2001 (EGTRA) Economic Growth and Tax Reconciliation Act of 2001 (EGTRA) ● Complete repeal of estate tax in 2010 with carryover basis; ● Reverts in 2011 to a 55% tax rate on that portion of an estate exceeding $1 million with step-up basis.

Estate Tax Reform Administration Proposal – freezes in 2009 form - $3.5 million exemption; top tax rate of 45% Administration Proposal – freezes in 2009 form - $3.5 million exemption; top tax rate of 45% Retroactivity? Retroactivity?

Tax Filing For Trusts Auto. filing extension for K-1: currently 10/15 Auto. filing extension for K-1: currently 10/15 IRS Regulations: shorten to 9/15 IRS Regulations: shorten to 9/15 Possible compromise 9/30 Possible compromise 9/30

Employee Benefit Issues Fee disclosure Fee disclosure Collective fund education Collective fund education Investment advice Investment advice

Employee Benefit Issues Defined benefit funding Defined benefit funding Required minimum distributions Required minimum distributions Target date funds Target date funds

Call Report Changes Confidential treatment eliminated Confidential treatment eliminated ● Fiduciary Income, Expense & Loss Data ● Effective 3/31/09 Other changes- 12/31/09 Other changes- 12/31/09

Questions?