Tag Archives: Estate Planning

NY Times – “Millionaires Are Staying Put Despite New Tax”

NYTimes

 

“New Jersey recently decided to impose a so-called millionaires tax — effectively increasing state taxes 20 percent on people earning more than $1 million.

“Critics had an immediate, and unsurprising, reaction, arguing that such taxes will push the wealthy to move to lower- or no-tax states. But is that true?

“While some wealthy people will move, proponents of these taxes argue, few will make good on the threat to move to Florida (with no state income tax) or, in New Jersey’s case, to Pennsylvania (where the state tax rate is one-third its neighbor’s rate). They argue that high earners and entrepreneurs have family and community ties that keep them from moving away.”

To read the full article, click here.

View Post

Defined Value Clauses: An Important Tool for Turbulent Times

 WR marketplace 

“As the 2020 presidential election approaches, uncertainty continues regarding the potential for tax legislation and changing market conditions, causing many to consider using current transfer tax exemptions with gifts before year-end.  Individuals planning to transfer hard-to-value assets may wish to consider using a gift agreement with a defined value clause to shield against unwanted gift tax consequences.”

To read the full report, click here.

View Post

Case Study: The Reciprocal Trust Doctrine – A Trap for the Unwary

“The reciprocal trust doctrine can unwind legacy planning that involves mutually beneficial trusts; however, a careful and deliberate approach can shield transfers against application of the doctrine. In 2020, legacy planning for spouses and other related parties has focused largely on full use of their gift and estate tax exemptions due to the risk of prospective changes in the amounts of such exemptions. This type of planning often involves implementing mutually beneficial irrevocable trusts so that each party continues to have access to resources after the party gives assets away (e.g., spouses who each establish a spousal lifetime access trust (“SLAT”) for the benefit of the other spouse). However, such trusts can sometimes contravene the reciprocal trust doctrine, which applies to interrelated trusts that have substantially identical terms and are part of the same transaction or plan. While the facts of each case are unique, best practices indicate that related grantors vary several factors among the respective trust agreements to reduce the risk of reciprocal trust treatment.”

To read the full report, click here.

View Post

“Charting a Path for Planning Your Estate”

A very interesting article in the Business Section of the New York Times on Saturday, July 25th.  On-Line in “Wealth Matters” the article is entitled, “Need Help With Your Estate Plan? Go With The Flow, Advisors Say.”

“As older adults face mortality during the pandemic, lawyers and wealth advisers are using color-coded documents and flowcharts to help them understand estate planning.”  Andrew D. Hendry, vice chairman and general counsel for Colgate-Palmolive understood complicated legal documents.  “But when it came to his estate plan, Mr. Hendry, like many others, was not terribly interested in digging through hundreds of pages of legal documents….He found comfort in what his wealth adviser had created: a series of color-coded documents that laid out exactly who got what, when and why….‘I’m a lawyer, and I understand estate planning documents have to be pretty heavy for the estate plan to work. But they’re really not useful to make a decision….’  ‘More people are looking to review their estate plans if something happens, but it’s hard to keep track of everything without a schedule like this,’ said John J. Voltaggio, a managing wealth adviser at Northern Trust who creates color-coded charts and simple spreadsheets for his clients, including Mr. Hendry. ‘We have that on one page. And then we can ask, ‘Should we update any of it?’”

To read the full article, click here.

View Post

Highlights from the 54th Annual Heckerling Institute on Estate Planning

“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.

View Post

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

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.

View Post

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

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.

View Post

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

“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.

View Post

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

“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. 

View Post

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


“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.

View Post