Category Archives: Estate Planning

“The increased complexity and sophistication of life insurance products emphasize the importance of the advisor’s role in explaining the fundamental differences between life insurance products to the client.”

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“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.”

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“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.”

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“Given the ease of using life insurance, charitable giving can be a popular year-end topic for clients looking to satisfy both philanthropic and tax planning goals.”

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“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.”

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“With income tax rates now exceeding transfer tax rates, trustees are becoming more proactive in understanding the state income tax exposure of non-grantor trusts.  Trustees have a fiduciary duty to consider the potential tax consequences of their trust administrative and distributions decisions, and moving the administration of the trust to a state with different tax rates or rules, changing trustees, decanting, or dividing a large trust into separate trusts can be useful tools when making these decisions.”

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“Higher income tax rates and compressed rate schedules applicable to non-grantor trusts, combined with the imposition of the net investment income tax on passive trust income, are key considerations in the administration of non-grantor trusts.  Evaluating the impact of distributions to beneficiaries in lower tax brackets, the acquisition of life insurance, and the re-configuration of investment portfolios are all important management tools available to trustees.”

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“Planning with estate “freezes” has been popular in this low interest rate environment. The potential for rising rates before year-end may incentivize clients to move sooner rather than later on these opportunities.”

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“The use of small captive insurance companies primarily for estate planning purposes is coming under increasing regulatory and legislative scrutiny.”

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“The deceiving simplicity of designating plan beneficiaries can sometimes lead to unwanted outcomes under the law, particularly when participants experience life-changing events and fail to change their beneficiary designations in accordance with the plan’s required procedures. The terms of the plan documents and the plan’s administrative processes will govern to ensure obligations under ERISA are satisfied.”

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