Born in the USA - Larry Heller shares his journey with Sally Percy

Lawrence H Heller TEP, the US representative on STEP’s Council, can trace his involvement with the Society back to the early 1990s.

At the time, he was heavily involved with the International Bar Association (IBA), and Larry and fellow STEP member Bill Norman TEP organised the International Wealth Transfer Practice, an annual international wealth-planning conference in London. During one of the conferences, Larry attended an informal lunch meeting with STEP members in the UK, and, several years later, when consideration was given to starting STEP branches in Los Angeles and San Francisco, Larry decided to focus his attention on STEP, since its emphasis on trust and estate work so clearly complemented the focus of his legal practice.

‘STEP provides a much more targeted platform for trust and estate activities,’ he explains. ‘The IBA is huge, but it covers many broad areas.’

STEP in the US

Since then, Larry has played a key role in building up STEP’s presence in the US, which has been largely achieved through educational programmes. In 2006, he started the Los Angeles Branch of the Society, which, with the affiliated chapters in Orange County and San Diego, now boasts around 150 members. He also served as chair of STEP USA for three years and worked hard at increasing its membership, which currently stands at just over 1,000. Today, he still sits on STEP USA’s Council and on its Branch Development and Professional Standards Committees. He credits STEP members Warren Whitaker TEP and Michael Cadesky TEP as being big influences on his career with STEP USA. ‘Warren was really behind the initiative to expand STEP in the US,’ he reveals. ‘Michael was a huge supporter and lent a lot of time and effort to support us in terms of ideas and development of branches.’

STEP USA’s membership is largely made up of specialists in international estate and tax planning, which is in marked contrast with its neighbour, STEP Canada, whose members tend to concentrate more on domestic work. Larry admits STEP USA’s international focus presents challenges, as well as opportunities. ‘If you want to drive membership of a society, you’re somewhat limited if it’s only international,’ he explains. ‘But, by the same token, we want to define ourselves. There’s too much competition for us to be just another domestic trusts and estates organisation. Most of the leadership in the STEP branches supports the notion of focusing on international.’

My experience is that 99 per cent of US persons are tax-compliant. So I’d be interested to see statistics regarding what FATCA means in terms of increased revenue for the US Treasury

Nevertheless, Larry acknowledges that there is still a significant ‘domestic component’ to STEP USA because the Society considers cross-border trust and estate planning between different states – what Larry describes as ‘forum shopping’. He says: ‘I think that’s a natural area for STEP USA to focus on. Instead of just looking at local or federal US tax and estate-planning topics, we talk about the pros and cons of the income-tax issues in each state. There are a number of jurisdictions now, such as Delaware, Nevada, South Dakota and Wyoming, where they have special rules and are more flexible in trust matters.’ Delaware, for example, permits so-called ‘silent trusts’, whereby beneficiaries are not informed of the trust’s existence for a specific period of time. It is also one of the jurisdictions that allows for an irrevocable trust to be ‘decanted’ so that a new trust can be created with different provisions.

The importance of education

In his day job, Larry is an attorney in the Los Angeles office of Greenberg Traurig, specialising in domestic and international estate and tax planning. His clients are high-net-worth individuals and their family members. Since the West Coast of the US is an attractive destination for wealthy individuals from all over the world, many of Larry’s clients are not US citizens. Instead, they come from a range of jurisdictions, including Australia, Canada, China, New Zealand, the UK, the Middle East and Latin America. Often they are not permanently based in the US – they just have a ‘second, third, fourth or fifth home’ there – so much of Larry’s work is focused on what he describes as ‘pre-immigration planning’. This involves residency and domicile planning, taking into account US tax rules and residency requirements, not to mention international treaties.

Larry says there is a need to properly educate people who pay tax in the US so that they truly understand the rules. ‘Unfortunately, there’s a lot of misinformation out there, and a lot of confusion,’ he explains. With this in mind, he would support a STEP education initiative aimed at other professionals and vendors who deal with taxpayers and foreign citizens – for example, immigration attorneys and real-estate brokers. ‘It’s important that real-estate brokers, especially the ones who deal with foreign buyers, highlight to them the requirement for proper planning in this area,’ he explains.

US developments

In June 2013, the US Supreme Court struck down a key section of the 1996 Defense of Marriage Act, in a landmark ruling. The move, a major boost to same-sex couples, invalidated a section of the Act that denied federal benefits to married same-sex couples in a dozen states. Larry acknowledges the ruling will have an important impact on tax planning. ‘It’s helped to level the playing field for marriages between same-sex couples and provided some benefits that were otherwise only provided to heterosexual couples.’

With regard to other notable US legislation, Larry questions whether the contentious 2010 Foreign Account Tax Compliance Act (FATCA) is overkill. ‘My experience is that 99 per cent of US persons are tax-compliant,’ he says. ‘So I’d be interested to see statistics regarding what FATCA means in terms of increased revenue for the US Treasury. FATCA and other types of legislation are making it increasingly difficult for US citizens to open bank accounts and have financial resources in foreign jurisdictions.’

On the topic of whether the US is likely to enact effective anti-money laundering beneficial ownership identification in the near future, Larry says: ‘Money laundering is a concern, but there is also a concern for anonymity, privacy and confidentiality. So I guess there is a bit of a balancing act, which is why education of all parties is especially important.’

Helping STEP thrive

Returning to his role as a STEP Council member, Larry sees his job as twofold. ‘Part of it is representing the US at the STEP Worldwide level,’ he explains. ‘Secondly, it is about contributing to the continuing growth of STEP and the excellent services and benefits it provides to practitioners in the tax, trust and estate area.’ He believes it is important that STEP continues to maintain its outstanding standards and focus on ethics, while having ‘a voice in initiatives that are counterproductive to trust and estate practice’. He’s also keen to support US STEP branches in bringing in more students, and he wants to encourage more members to get actively involved with running the organisation. Larry notes wisely: ‘An organisation will thrive if you have a continuous flow of new ideas and new people involved.’