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.”

To read the full report, click here.

“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.”

To read the full report click here.

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.

The Washington Report: – Business Edition

“The Court removed from the taxpayer’s arsenal of arguments the theory that a redemption obligation necessarily reduces the net value of a corporation. But even before the Court’s decision, many advisors had been hesitant to rely on that theory because of its flawed logic. Taxpayers still have multiple avenues available for structuring redemption agreements funded with life insurance. Given the Connelly decision, it is highly recommended that taxpayers review their sale and redemption agreements to determine what changes, if any, should be made in light of the Court’s decision.” 

To read the full report, click here.

“The Court’s little-noticed decision in Connelly v. United States, issued in June, throws a wrench into a common succession strategy for many closely held firms with more than one owner. In this strategy, a company buys life insurance on its owners so that when one dies, there’s cash to repurchase his or her stock.  The goal is for the insurance payment to be tax-free and for the company to avoid the burden of funding a share repurchase from operating profits. In Connelly, however, the court ruled that the strategy didn’t provide the expected benefits.  As a result, the owner’s estate owed nearly $900,000 more in estate tax….”The bottom line: For many closely held business owners, dealing with the Connelly decision requires help from advisers aware of both income- and estate-tax consequences. This advice won’t come cheap and could suck energy away from running the business.  That’s an aggravation—but it’s not as big a pain as a surprise estate-tax bill.” 

The full article can be found by clicking here.

“High-end business partnerships like hedge funds and wealthy individuals such as real estate investors have inappropriately used labyrinthine structures to shield tens of billions of dollars from taxation, Treasury Department officials said Monday as they vowed to crack down on the practice. They announced several steps to address a tax planning strategy known as basis shifting, in which complex business partnerships can move assets from one entity to another on paper for no reason other than to avoid taxes.”

The Washington Post article which can be found by clicking here.

“While a very important tool, premium financed arrangements should be carefully evaluated and actively managed post implementation. Since the success of the arrangement is based on a positive economic arbitrage, advisors should carefully evaluate and stress test (i) fluctuations in interest rates; (ii) fluctuations in the insured’s portfolio; (iii) the parties assigned to monitor performance; (iv) exit strategies; and (v) tax implications.”

To read the full report, click here.

 The Washington Report: – Wealth Transfer Edition

“The IRS continues its attack on valuations, and there’s no end in sight.  The U.S. Tax Court recently issued its decision in Estate of Cecil v. Commissioner. The decision is important because it contributes to the discussion whether tax affecting is necessary and/or appropriate when valuing an S corporation. Additionally, the decision reveals the zeal with which the IRS is pursuing wealthy taxpayers on valuation matters and highlights the importance of deep expertise needed for successful business succession planning and using reliable appraisals. Taxpayers with successful family-owned businesses who desire to retain ownership of the business within the family are well advised to engage advisors well versed in business succession planning.  Reliable appraisals matter.”

To read the full report, click here.