Highlights from the 54th Annual Heckerling Institute on Estate Planning

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“Modern strategies for legacy planning with today’s clients were the focus of discussions at the 2020 Heckerling Institute on Estate Planning.  The 54th Annual Heckerling Institute on Estate Planning (the “Institute”) focused on the ongoing effects of the Tax Cuts and Jobs Act (“TCJA”), including: (1) legal and regulatory developments concerning life insurance; (2) benefits and burdens of grantor and non-grantor trust status; (3) planning considerations for migratory clients; (4) state income taxation; (5) implications of the SECURE Act; and (6) planning for the generation-skipping transfer (“GST”) tax on nonexempt trusts.”

To read the full report, click here.

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Planning Ahead of the 2020 Election and Possible Changes to the Estate Tax and Valuation Discounts

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Paul Sullivan (Wealth Matters) writes today in the New York Times, “What needs to be analyzed for affluent individuals are the potential changes no candidate is talking about: lowering exemptions and raising rates for the estate and gift taxes and ending the valuation discount for closely held family businesses, a tax break that allows families to transfer a valuable asset for less than it is worth.”

To read the full article, click here.

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AALU: “Collaboration Among Advisors When Buying Life Insurance Is Essential” (My Favorite Topic)

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“The purchase of life insurance products and their implementation into a client’s broader legacy planning strategy requires clients to navigate through a complex web of financial and cashflow management strategies, transfer tax considerations, and tax reporting obligations that must be approached differently on a client by client basis.  Failure on the part of advisors to work together can result in avoidable planning gaps, most notably: (1) inability to fund premium payments on a sustainable basis; (2) inefficient use of lifetime estate, gift and GST tax exemption; and (3) poor product maintenance leading to negative outcomes.”

To read the full report, click here.

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Year-End Planning Considerations

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“As 2020 approaches, year-end planning considerations for clients include: 
(1) making use of temporarily higher transfer tax exemptions; (2) managing market gains in 2019; (3) planning to take advantage of continued low interest rates; (4) closing life insurance transactions; and (5) monitoring developments in generational split-dollar.”  

To read the full report, click here.

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AALU: Legacy Management: A Fresh Look at an Age-Old Business

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While traditional estate plans may cost less, the value added with a comprehensive legacy management approach generally exceeds its marginally higher expense. Proactive management supported by a cooperative multi-disciplinary team helps families see what is on the horizon and efficiently navigate changes. Professional services rendered to implement and maintain a plan also eliminate many costly issues that routinely emerge when clients use a less sophisticated or “DIY” approach.

To read the full report, click here.

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AALU: Post-Mortem Liquidity Planning: A Fiduciary’s (Limited) Toolbox

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“In the absence of life insurance, options for fiduciaries to generate needed liquidity for estate taxes and expenses may be limited, creating additional hurdles for estate administration and post-mortem planning.” 

To read the full report, click here.

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The §6166 Estate Tax Deferral for Closely Held Business: Q&A’s

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“In business succession planning, a §6166 deferral election may provide a powerful post-mortem planning tool to help minimize the initial strain on the estate and prevent a forced sale of the estate’s business interest. However, the election’s complex administrative and compliance requirements and the potential for payment acceleration make it an insufficient substitute for lifetime succession planning.”

To read the full report, click here. 

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Watch Your Step – Fiduciary Pitfalls for Trustees of Irrevocable Life Insurance Trusts

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“Sample cases targeting trustees vividly illustrate unique fiduciary challenges in terms of trust administration and asset management, including for irrevocable life insurance trusts (“ILITs”).  The growing complexity of life insurance products and the potential for increased gifts in the next several years can make ILIT administration far more complicated than anticipated, particularly for non-professional trustees.”

To read the full report, click here.

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Buy-Sell Basics – A Brief Introduction

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“Buy-sell arrangements (“BSAs”) address how the business or other business owners can “buy-out” an owner’s interests after a specified triggering event, such as death.  To be effective, the terms and structure of a BSA must be tailored to the unique needs of each business and business owner; there is no “one size fits all” form.  BSAs also should take a comprehensive approach to buy-outs, addressing not just an owner’s death, but also disability, divorce, and bankruptcy, among other events.  Business valuation and buy-out funding are also critical to a BSA’s success.”

To read the full report, click here.

 

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Out with the Old, In with the New – Revitalizing or Unwinding Existing ILITs

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“In legacy and life insurance planning, using ILITs to acquire life insurance was almost automatic. Now, with lower federal estate tax rates and higher exemptions, some clients may feel saddled with old ILITs that no longer match their goals or provide the intended tax benefits, even though retention of the life insurance makes financial and investment sense.” 

To read the full report, click here.

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