The Washington Report – Business Uses Edition

Given the potential for significant adverse tax results, compensatory split-dollar programs should be reviewed by a 409A tax expert for compliance. That review should occur not only when the program is first designed, but also any time the program is modified.

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The Washington Report: – Wealth Transfer Edition

“The purpose of this article is to remind clients that “in the midst of chaos, there is also opportunity.” Below are five estate planning opportunities, which if implemented now, can yield significant and lasting benefits.”

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The Washington Report: – Wealth Transfer Edition

“Given the rapidly evolving legislative landscape, advisors should get in front of clients now to create a plan on how to move forward if and when we start to see more certainty regarding upcoming tax law changes. For many clients, that planning should involve a review of business succession needs, as this is a largely underserved area of planning.”

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The Washington Report: – Wealth Transfer Edition

“Although high net worth clients under the $50 million threshold (HNW clients) may continue to implement planning, we’re seeing some hesitancy now, since they have less total gifting capacity than UHNW clients and greater concerns about giving away too much. Many HNW clients prioritize control and flexibility, often viewed by them as the ability to “undo” planning if circumstances or laws change.”

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A basic, very good article by Lawrence D. Sprung.  Might it be a nice piece to forward and share with some of your clients?

• Estate planning isn’t about focusing on your demise; it’s about taking control and making decisions that ensure your loved ones are cared for.
• It’s a way to share your wishes and protect the people you care about most, leaving them a roadmap instead of unanswered questions.
• Without a will and a plan, state intestacy laws determine what happens to your hard-earned assets.

The full article can be found by clicking here.

From an excellent WSJ article by Ben Cohen interviewing Ron Shaich, billionaire entrepreneur; 

• “What can I do in the next three to five years that I will respect looking back from my deathbed?”
• “I imagine my body old and fragile, my breathing shallow, my life energy almost extinguished, he wrote in Know What Matters, his 2023 book.  I try to evoke the feeling I want to have in that moment – a sense of peace, completion and, most importantly, self-respect.  Then I ask myself:  What am I going to do now to ensure that when I reach that ultimate destination, I’ve done what I need to do?” 
• “I realized that the time to be having that review was not in the ninth inning with two outs.  It was in the seventh inning, the fifth inning and third inning.”

The most important question estate planners can ask their clients; If we (client, spouse, collaborative advisors) were gathered here today and you had died last night what would we be discussing?  The follow-up questions are situation and client specific.  The answers to the questions will help the advisors and the client to determine whether or not there are problems/issues that should be addressed today.  The degree to which the client is dissatisfied/unhappy with his/her current situation and the potential outcomes if premature death were to occur will determine how smoothly, quickly, and successfully the rest of the planning and implementation process moves forward.

I believe this is the most important question that we estate planners should ask every client now, not in the ninth inning with two outs.  It is the essence of what we do and, perhaps, the most productive thing we can do this year.

The WSJ article can be found by clicking here.

The Washington Report: – Special Tax Edition

“The top legislative priority for President Trump and congressional Republicans in 2025 will be to enact a reconciliation bill, prominently featuring tax provisions, including extending the 2017 Tax Cuts and Jobs Acts (TCJA). Major portions of the TCJA are set to expire after December 31, 2025. The expiring provisions include the basic structure of the Tax Code applicable to individuals and pass-thru businesses taxed as partnerships, S corporations and sole proprietorships. The very narrow majority in both the House and Senate will make enacting legislation through reconciliation very difficult.”

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“Jensen Huang, the chief executive of Nvidia, is the 10^th-richest person in the United States, worth $127 billion.  In theory, when he dies, his estate should pay 40 percent of his net worth to the government in taxes.  He is also the beneficiary of a series of tax dodges that will enable him to pass on much of his fortune tax free….The savings for his family are on a pace to be roughly $8 billion.  It likely ranks among the largest tax dodges in the United States.”

“’From an estate-tax-planning perspective, it’s a grand slam,’ said Jonathan Blattmachr, a prominent trusts and estates lawyer who reviewed Mr. Huang’s disclosures for The Times.  ’He’s done a magnificent job.’”

To read the full article, click here.

The Washington Report: – Wealth Transfer Edition

“The close of 2024 is the ideal time to initiate planning to maximize the remaining fruit of the TCJA, while beginning to position for a new, but familiar, landscape following the potential sunset. These approaches should work well regardless of the new tax environment. Clients looking for areas of impact should focus on (1) Roth conversions; (2) optimizing charitable deductions; and (3) acquiring life insurance.”

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The Washington Report: – Wealth Transfer Edition

“All trust jurisdictions are not created equal. Choosing the jurisdiction with the best laws for the successful family is critical. In this modern, mobile world, the residence of the settlor, beneficiaries, and fiduciaries must be monitored and managed to avoid unintended consequences.  Successful families, no matter their location, are beginning to think nationally when deciding where to establish their irrevocable trusts.”   

To read the full report, click here.