Tag Archives: tax 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.” 

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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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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Keep on Truckin’ – Leaving One State for Another? Don’t Get Stuck In Between

“As budgets are squeezed, more states are challenging state residency changes for income tax purposes.  Each state has its own unique set of rules for establishing or terminating income tax residency.  Some states base tax residency on an objective test that counts the number of days the individual is present in the state, while others impose a subjective test that looks at the individual’s state connections.”

To read the full report, click here.

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Estate Tax Apportionment – Surprise: Whose Paying My Transfer Tax Bill

“Apportioning estate taxes among various bequests is complex and requires an understanding of the individual’s wishes and assets and knowledge of the Federal reimbursement and applicable state apportionment statutes. Well thought out and carefully drafted tax apportionment provisions will facilitate carrying out the client’s intent and minimize controversy regarding the payment of taxes following the client’s death.”

To read the full report, click here.

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Rest in Peace: Adequate Disclosure on Gift Tax Returns – Seeking Closure on Clients’ Legacies

“If clients are going to spend the time and expense to plan, then they should also try to protect their efforts.  Adequate disclosure is a proactive tool for clients to ensure some finality in the valuation and potential taxation of their lifetime legacy planning.  Clients should plan to provide full and detailed disclosure, which will require extensive cooperation and coordination among all the client’s advisors (insurance, financial, accounting, legal) to avoid mistakes that could otherwise result in costly amendments of returns and additional audit and tax exposure to the client.”

To read the full report, click here.

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The Hits Just Keep on Coming: 2016 Gift, Estates & Trusts Priorities – IRS Names Grantor Trusts Among New Items

“The Priority Guidance Plan indicates that 2016 could be an eventful year for estate and life insurance planning.  The potential uncertainty of the scope, content and timing of the planned guidance emphasizes the importance of having access to not only updated technical information but also to practical analyses of these tax developments, their real world application, and how advisors and clients should respond.”

To read the full report, click here.

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