Category Archives: Breaking News & Industry Updates

Flipping the Script: Nongrantor Trusts with Grantor Trust Benefits – Can It Be Done?

“With careful planning, donors of nongrantor trusts can achieve benefits similar to those provided by typical grantor trust provisions without triggering grantor trust status.”

To read the full report, click here.

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A View from the Experts: Select Insights from the 2018 Heckerling Institute on Estate Planning

“Presenters at the 2018 Heckerling Institute on Estate Planning identified several enhanced areas of focus for legacy and life insurance planning post tax-reform, including (1) basis adjustment planning, (2) the potential benefits and pitfalls of portability, especially in light of the doubled federal transfer tax exemptions, and (3) the need to review and refresh existing life insurance planning.”

To read the full report, click here.

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AALU – Moving On: Changing State Tax Residency – Easier Said than Done

 “States have become more sophisticated in challenging residency changes. To ensure a complete change in tax residency, relocating families must know the requirements in both the new and old state, sever as many connections as possible with the old state, and create substantial ties with the new one.”

To read the full report, click here

 

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The Big Six’s “Unified” Tax Framework: Potential Impact & Look Ahead

“The so-called “Big Six’s” proposed tax reform framework calls for significant reductions in income and corporate tax rates and a repeal of the estate and generation skipping transfer (GST) tax (but is notably silent on the gift tax).  Regardless of how the details shift as a final legislative package is crafted, life insurance remains an essential component of a comprehensive and well-balanced financial plan.”

To read the full report, click here.

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Case Study Series: Turbo-Charged Split-Dollar

“The customizable nature of private SDAs allows highly-illiquid clients to obtain needed life insurance coverage on a sustainable, long-term basis, even if they have minimal federal gift and GST tax exemptions to pay premiums. For example, a trust-to-trust SDA approach may be used where an existing trust, rather than the grantor, lends premium amounts to the ILIT. This “turbo-charged” approach (1) allows the client to leverage liquidity in an existing plan to provide for needed life insurance coverage without adversely impacting his or her personal liquidity or remaining transfer tax exemptions and (2) keeps both the life insurance death benefits and the value of the SDA receivable out of the grantor’s estate under general estate tax principles.”

To read the full report, click here.

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No Good Deed Goes Unpunished – Does the Executor Know He Can be Personally Liable for Unpaid Taxes?

“In the spirit of the IRS always gets theirs, a continuing trend, executors who pay general creditors or distribute property to beneficiaries before paying federal claims can be personally liable for any unpaid estate taxes.”

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Location, Location, Location: Changing the Situs of an Irrevocable Trust

“While changing a trust’s situs can be beneficial to both the trust and the trust’s beneficiaries, the process requires careful navigation of, and compliance with, the terms of the trust instrument and the statutes of both the current and proposed places of administration.”

To read the full report, click here.

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“Trouble Ahead, Trouble Behind,” and You Know that Notion Never Crossed My Mind: Avoiding 5 Common Mistakes in Life Insurance Planning

“In a world of increasing commoditization, adding value is key. Advising on product selection and identifying common trouble spots in the development of a life insurance plan can offer advisors significant opportunities to provide value to their clients. Collaborating with other allied advisors early on in the client’s planning also can alleviate many of these problems without creating extensive delays to policy issuance.”

To see the full report, click here.

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Private Annuities – Managing the Exhaustion Test

“Transferring assets to a grantor trust in exchange for a private annuity can transfer a family legacy while providing the individual with a fixed income stream for life to manage lifestyle expenses. In particular, this planning may be considered for an individual who has a shortened life expectancy but is not terminally ill. A private annuity for life approach, however, requires additional planning to avoid the exhaustion test, which requires that the trust have sufficient funds to pay the annuity until the annuitant reaches age 110.”

Click here to read the full report.

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