Category Archives: Advice and Tips

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.

From the New York Times, “The High Stakes of Low Quality” by Yvon Chouinard, founder and former owner of Patagonia at https://www.nytimes.com/2023/11/23/opinion/patagonia-environnment-fast-fashion.html

• “I know firsthand the high stakes of low quality. When I started forging climbing equipment and selling it out of the back of my car in the 1950s, I was my own best customer. My dirtbag climber buddies and I wanted stronger pitons and sturdier carabiners to support us as we hung thousands of feet above the Yosemite Valley floor. If the metal were too soft or a joint too weak, the resulting fall would have killed me or one of my friends.  I wanted to stay alive, so I chose quality at every turn, creating products that were simple, versatile and made with the lightest, strongest materials I could find.”
• “People ask me how it has managed to stick around so long when the average life span of a corporation is less than 20 years. I tell them it’s been our unrelenting focus on quality, which includes making things that last and that cause the least amount of harm to our planet.” Quality is smart business. Even during economic downturns, people don’t stop spending. In our experience, instead of wanting more, they value better. Consumers should demand — and companies should deliver — products that are more durable, multifunctional and, crucially, socially and environmentally responsible.”

How does this relate to your practice and the clients you serve?  Do you believe that it’s better to do excellent planning and provide flawless implementation upfront, rather than to try to unwind poor planning and flawed implementation down the road?  The cost for working with the cheapest, least experienced, and perhaps, ethically-challenged professional can be prohibitively and dangerously high.

Many ultra-high net worth clients used all of their available gift/estate and GST exemptions in 2020 or 2021.  For an individual, the exemption increased by $120,000 in 2021, $360,000 in 2022 and is estimated to increase by $860,000 in in 2023.  We can make assumptions for the increases in 2024 and 2025.  What would it look like if we used the increases to fund additional life insurance.
Click here to find out.

“In legacy planning, the “clawback” refers to the additional estate taxes that could be triggered by lifetime gifts if the unified federal gift and estate tax exemption is less at the time of death than at the time of gift. If there is a lower exemption at death, without a special rule, the estate tax rules could recapture and tax the value of the gift that was originally sheltered from gift tax under a higher exemption. While final regulations issued in 2019 eliminated this clawback, the preamble to these final regulations acknowledged that the IRS needed to further consider whether gifts that they deem as not true inter vivos transfers should be excepted from this special rule.”

To read the full report, click here.

“In anticipation of potential tax legislation in 2021, many ultra-high net worth clients took advantage of the large exemption amount to transfer assets outside of their taxable estate. Despite this planning, numerous clients will still have a significant estate tax liability that will need to be funded. Trust-owned life insurance is a helpful planning solution that creates future liquidity outside of client’s taxable estate to help fund this liability.”

An excellent primer in Bloomberg Tax on the benefits of Private Split Dollar.

Click here to read the full article.

“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.

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. 

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.

“Individuals and businesses in high tax jurisdictions have been expressing unprecedented interest in relocating to states with more manageable tax regimes. This is especially the case with business owners looking to sell their businesses. But whether this trend rises to the level of an “exodus”—as many characterize it—is up for debate. The impetus for moving typically runs deeper than just taxes, though taxes often are the proverbial final straw. This article analyzes tax issues individuals and businesses should consider when evaluating whether to relocate from California or New York.”

To read the full article, click here.

All of us are use to face-to-face meetings.  We have always believed that they are essential.  Now, a year into the pandemic, I wonder what we think now?  An interesting Op-Ed in today’s NY Times.

“How many of those trips would have been unnecessary if I’d only Zoomed?  My estimate runs somewhere between most and all. Aviation is a modern miracle; it is also expensive, annoying and environmentally costly. Now that videoconferencing has been shown to be an acceptable way to get work done, there’s no reason to quit it when the virus is gone.  For years, it has been a truism that face-to-face meetings are far better than videoconferencing, for obvious reasons. They foster deeper relationships and perhaps better group decision-making.  “I grew up in a sales culture that said, ‘You want to close a deal, you go get in front of the client,’” said Darren Marble, an entrepreneur based in Los Angeles who used to travel to New York every other week. When the pandemic hit, he didn’t know how he’d do business. “Working at home was antagonistic to everything I’d learned over my career,” he said.  But in the Zoom era, everything worked out. In fact, Marble told me, 2020 was a “breakout year”; his firm, Crush Capital, recently raised more than $3 million from over 30 investors, all through Zoom. “Rapport is overrated,” Marble said.”

To read the full article, click here.