Category Archives: Estate Planning

Tax Court Speaks to Possible Estate Tax Treatment of Generational Split Dollar (GSD)

“Despite positive opinions on GSD gift taxation, the Tax Court’s analysis of the potential estate taxation of economic benefit GSDs will require a long, hard look at these arrangements and their continued viability.  For the first time, two very recent Tax Court opinions (Est. of Cahill v. Commissioner and Est. of Morrissette v. Commissioner) have discussed the court’s view of the estate taxation of economic benefit GSDs.  Neither Cahill nor Morrissette is a final decision on the merits. Yet the court’s reasoning in Cahill strongly suggests that, at least in that case, the Tax Court may find that the parent’s estate includes the full value of the reimbursement right under the economic benefit GSD.  This finding would eliminate the possibility of a significant valuation adjustment for the reimbursement and undercut one rationale for using economic benefit GSDs in estate tax planning.” 

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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.”

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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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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.”

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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 Trust Companies: The What, Who, How, &Why

“With the trust departments of many financial institutions disappearing, and those that remain declining to manage trusts with “non-traditional” assets or even life insurance policies, families with complex legacies are looking for fiduciary alternatives that can provide the requisite services for the long haul.”

To read the full report, click here.

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