Posts Tagged: Estate Planning

The Washington Report: – Wealth Transfer Edition

“Four questions that every ownership change should trigger.  Life insurance policies change hands for a seemingly endless number of reasons. They move between trusts through gifts, sales, decanting, mergers, and modifications; among family members, such as for estate planning or divorce; and for business needs through buy-sell restructuring, mergers and acquisitions, corporate liquidations, and the unwinding of split dollar or other executive benefit arrangements. More recently, policies have become increasingly active assets in the secondary market through life settlement transactions. In short, life insurance policies are not stagnant contracts, but dynamic financial assets that frequently evolve alongside a client’s planning objectives. Although ownership changes are common, they are rarely simple. In fact, policy transfer issues are among the most frequent technical questions received by advanced planning departments.”

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The Washington Report: – Wealth Transfer Edition

SYNOPSIS: Tax practitioners and estate planning professionals are closely watching developments in Elcan v. Commissioner, a Tax Court case involving the administration of grantor retained annuity trusts (“GRATS”), which could reshape high-net worth tax planning strategies and practice for years to come.  While the regulations do not appear to support the IRS’s current position in Elcan, the case is another reminder for clients and advisors that GRAT planning requires diligent administration throughout the GRAT term to ensure compliance with all statutory requirements.

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The Washington Report: – Special Edition

“California has a ballot proposal that would amend its constitution and impose a so-called “Billionaire’s Tax” on certain residents.  For taxpayers whose wealth is tied to a privately held business, the billionaire tax could present significant cash flow problems, forcing owners to potential divest of their businesses, or parts thereof, at inopportune and/or inefficient times. This could significantly disrupt long-term planning and investment at non-public companies. More broadly, if California passes a wealth tax along these lines, it could create momentum for a similar or analogous tax at the federal level.  Polling from February 2026 shows anywhere from 48% to 60% of Californians support the proposal. However, many politicians in CA, including the Democratic governor, oppose the measure.”

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“Five Financial Blind Spots That Burden Grieving Spouses – Surprise Debt, Locked Out of Accounts, Invisible Credit Records, New Budgets, Higher Tax Brackets.”

Forget the silly number-crunching.  Forget the extra point or two of return if we recommend putting the money elsewhere.  Forget estate taxes.  Forget all of the sophisticated planning machinations and tell me why a significant income tax-free cash infusion to a surviving spouse isn’t a good idea.  Whether it is $1 Million or $10 Million (the size of the estate is relative), I’ve never seen an estate in which a significant cash infusion didn’t make a difference.  Cash buys time, provides liquidity, and comforts at a most uncomfortable time.  Yet, throughout the entirety of my career, I’ve seen very few instances where advisors have considered the benefits.  A personally owned life insurance policy’s death benefit is one of the cleanest and most cost-effective ways to provide cash when needed (or wanted).

A Question – If we were sitting here today and the client had died last night what would we be discussing?  I suspect having enough sustaining cash would be near the top of the list.

The WSJ article can be found by clicking here.

“Surprise! You have a $100 million trust fund.  That is the message at “trust reveal” meetings hosted by wealthy families and advisers around the country. These days, business is booming.  Wealthy families are increasingly holding “trust reveal” meetings to inform heirs of substantial inheritances.”

The WSJ article can be found by clicking here.

I had a luncheon conversation in Toronto with one of Canada’s top tax attorneys. I asked, “What’s more important the hard, math side of estate planning or the soft, emotional side of estate planning?” Quickly and unequivocally, he answered that it was the soft, emotional side of estate planning that was more important and that one can always hire a “calculator” to crunch numbers. What’s it all about? Number crunching should only support what clients are truly trying to achieve. Are we leading planning conversations by asking the right questions and helping clients understand what is really important? I hope you find this “challenging” WSJ article thought-provoking.

The WSJ article can be found by clicking here.

From the article: “As a personal finance expert, I give advice on how to maximize wealth. At the end of my mother’s life, I realized there’s a more important question: What is our money for?  I have spent much of my career as a personal finance expert preaching how to save more, spend less and minimize taxes. It made me realize that I had book knowledge in a situation that demanded street smarts. Not much discussion of financial planning is geared toward how to take care of other people and how to make it possible for them to care for you. The people who reach out to me for advice want to talk about optimizing rates of return and navigating market risks, about Roth conversions and when to claim Social Security. I had always been right there for these discussions, but now this sort of strictly financial maneuvering seems to miss the most important question: What’s it all for?”

“The Rowland case has lawyers and accountants who prepare estate-tax returns on edge. The Tax Court sided with the IRS last month, disallowing the estate from using the common planning technique known as portability.”

The WSJ article can be found by clicking here.

The Washington Report: – Wealth Transfer Edition

“A family vacation home often holds sentimental value; however, sustaining that home within the family over multiple generations presents unique challenges and requires a realistic assessment about the family’s current and future commitment to maintaining the home and a plan for managing and funding that maintenance and potential development over the long term. In addition, owning a second home at death can augment the owner’s taxable estate, especially given rapidly appreciating real estate values in recent years.”

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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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