Finseca: “How Can Blended Families Use Life Insurance to Simplify Legacy Planning and Minimize Conflicts”

“While conventional estate plans focus on a “traditional” family notion of one husband, one wife, and their children, families today often involve far more complex relationships. Thus, modern-day families often present unique planning issues, such as the need to satisfy obligations under marital agreements, the goal to provide simultaneously for both the surviving spouse and children from prior relationships, and the desire to ensure “fair” treatment of children from prior relationships, all while minimizing potential conflicts between the spouse and those same children. The acquisition of life insurance, as well as other “tweaks” to the conventional core plan, can address these objectives.”

To see the full report, click here.

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Finseca (AALU) – “Life Insurance Mistakes that Keep Attorneys Up at Night”

2021 was a strange and challenging year in the estate and tax planning field, particularly life insurance….In the rush to address and mitigate potential consequences before they came into existence, practitioners, advisors, and clients all made decisions and took actions which, in retrospect, may not have been most advisable, were just plain mistakes, or failed to plan for the problems that these actions had potential to cause in the future, regardless of whether any of the concerning factors came to fruition. This article describes many of these “mistakes” which occurred due to rushed planning and may serve as a warning if we are (and we will be) faced with similar situations in the future.

To see the full report, click here.

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Finseca (AALU) – First, do no harm – Estate planning for an unknown future

There is an adage in the medical field that applies to planning for insurance trusts right now, namely: “First do no harm”. What is particularly difficult for estate and tax practitioners today is they are being asked to plan for previously proposed legislation that, while currently out of the legislative debate, might resurface and pass in the future. Given this situation, what can we do to position our clients so that we are helping them in the event that the now shelved legislation reenters the debate and is passed, while simultaneously not hurting them if the laws do not change?

To read the full report, click here.

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What You Know and What You May Not Know

What You Know: We Just Dodged the Defective Grantor Trust Bullet (or did we?)

What You May Not Know: It Is Still Important to Consider Hedging Re-Introduction of DGT Provisions

Please click here to see three planning/drafting scenarios to consider.

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Finseca (AALU) 🔴 President Biden Releases Framework on Spending Package

BREAKING NEWS from Finseca:

This morning, President Biden delayed his trip to see the Pope to meet with Congressional Democrats about moving forward on the Bipartisan Infrastructure bill (BIF) and on the reconciliation bill (Build Back Better plan, or BBB). In concert with that meeting, the White House released two documents (below) explaining the current state of play on the reconciliation package.

We view this as an offer, not a conclusion. These documents are focused on the big picture items. They leave out many important details. There are other items not covered here that key Democrats have said must be addressed in a final deal (i.e. SALT).

Here are the things we are watching closely:

Grantor Trusts. We do not read their absence from this document as a guarantee that they are off the table.
Millionaires Surtax. To what definition of income is this being applied?
199A. While this document is silent on 199A adjustments, it does reference expansion of the Net Investment Income Tax. The House bill expanded that to cover active passthrough income, a small business tax increase.
Estate Tax Exemptions Expiration. Not addressed in the announced framework.

Again, this is a very fluid situation. Please don’t hesitate to reach out with questions.

Armstrong Robinson
Chief Advocacy Officer, Finseca

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Finseca (AALU) – Grantor Trust Developments

“Contained in the House Ways & Means version of the reconciliation package was a significant change that would materially impact the usage of grantor trusts for estate planning. Since its release, Finseca has been advocating to preserve the tax treatment of life insurance death benefits and to protect the clients who utilize your services to meet the anticipated liquidity needs at death inclusive of the taxes to be paid. Your Finseca team has had several constructive conversations with policymakers in Congress about correcting the unintended impact on life insurance. As always, nothing is final until the President signs the bill, and we do expect changes. We anticipate an updated draft of the bill in a few weeks when it moves to the House Rules Committee. Notably, the crafters of the provision have changed effective date for Section 1062 that would disregard ownership for any sales/transfers/swaps between the grantor and the trust and subject them to a tax realization event.”

To see the current update, click here.

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Finseca (AALU) – Florida jumps into the deep end with major trust legislation

The Florida Community Property Trust Act (Florida Statutes Section 736.1501 et. seq.) and the Florida Uniform Directed Trust Act (Florida Statutes Section 736.1401 et. seq.), which became effective on July 1, 2021, enable spouses to create a Community Property Trust…. As a result, for those practitioners who regularly advise clients who are thinking of moving to Florida, these Acts will increase the allure of Florida as both a domicile and trust situs, particularly for those with an interest in wealth transfer planning.

To read the full report, click here.

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Finseca (AALU) – 🔴 BREAKING: Tax Increase Details

September 13, 2021— Yesterday, Finseca got hold of a list of tax increases planned to pay for the $3.5 trillion dollar ‘soft’ infrastructure package. This is an early document, and we expect changes before the bill reaches President Biden’s desk – candidly, it could change as soon as tomorrow.

To see the current details, click here.

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Finseca: “Estate of Morrissette and Intergenerational Split Dollar”

“Intergenerational Split Dollar Planning Can Still Work. While Estate of Morrissette may encourage practitioners to transition away from recommending economic benefit split dollar arrangements, it is important to consider the impact that certain bad facts specifically noted by the Court in this case had on the decision. The results in this case may not significantly affect IGSD planning under the economic benefit regime, provided that the plan is established for the right non-tax reasons, the facts substantiate the treatment of the IGSD plan as a bona fide sale, and conservative discounts are taken when valuing repayment rights.”

To read the full article, click here.

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WSJ: What Peter Thiel’s Roth IRA Means for Yours

An interesting article by Laura Saunders for the Wall Street Journal on July 2, 2021.

“Large Roth IRAs owned by the superrich are in the tax spotlight now, and all savers should consider the implications for their own retirement accounts….The story [ProPublica] claimed some wealthy Americans have multimillion- or even billion-dollar, tax-advantaged retirement-savings accounts. The largest one cited was a Roth IRA with $5 billion in assets (as of 2019) belonging to PayPal founder and investor Peter Thiel.”

To read the full article, click here.

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