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.
“Intergenerational Split Dollar Planning Can Still Work. While Estate of Morrissette may encourage practitioners to transition away from recommending economic benefit split dollar arrangements, it is important to consider the impact that certain bad facts specifically noted by the Court in this case had on the decision. The results in this case may not significantly affect IGSD planning under the economic benefit regime, provided that the plan is established for the right non-tax reasons, the facts substantiate the treatment of the IGSD plan as a bona fide sale, and conservative discounts are taken when valuing repayment rights.”
“As part of their comprehensive legacy plan, clients who are charitably inclined, hold significant highly appreciated assets, and wish to create a lifestyle “annuity” should consider a CRT, especially if they can benefit from an income tax charitable deduction. Selling an appreciated asset inside a CRT may provide an economically superior result compared to selling the same asset in a client’s own hands, especially when done in conjunction with purchasing additional life insurance through an irrevocable life insurance trust (“ILIT”).”
“President Biden campaigned on a tax plan that would raise almost 4 trillion dollars – primarily by increasing taxes on individuals making more than $400,000 a year and raising the corporate rate. While the entirety of the plan is unlikely to become law this Congress it does provide a menu of policy options that Democrats in Congress will consider, especially once they turn to the forecast infrastructure and climate change bill expected this summer….What is likely to move forward, and what is likely to slip off the agenda?”
To read on for a breakdown on the prospects of the Biden tax plan in 2021, click here.
“Although the grantor of an irrevocable trust surrenders the right to revoke the trust and amend its terms, the restrictions are no longer as limiting as they once were. Alternatives to judicial modifications abound. From nonjudicial settlement agreements to new trends in decanting practices to innovations in modifications by consent, clients, trustees, and beneficiaries have many potential avenues for modifying an irrevocable trust to accomplish their legacy planning goals.”