The Washington Report: – Wealth Transfer Edition
“Although high net worth clients under the $50 million threshold (HNW clients) may continue to implement planning, we’re seeing some hesitancy now, since they have less total gifting capacity than UHNW clients and greater concerns about giving away too much. Many HNW clients prioritize control and flexibility, often viewed by them as the ability to “undo” planning if circumstances or laws change.”
To read the full report, click 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 10th-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.
“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.
The Washington Report: – Wealth Transfer Edition
“Taxpayers should exercise caution in implementing ING trusts, particularly in light of California’s new law, which is effective retroactively. While the ING trust remains a viable wealth preservation strategy in many states, it is unclear how long this will continue. Taxpayers who implement this strategy are well advised to craft an exit strategy as well.”
Click here to read the full report.
Robert W. Finnegan has an excellent article in the current issue of Trusts & Estates (April, 2023) entitled, “The GRAT Enhancement Strategy.”
From the article:
Finnegan provides a robust and detailed Case Study illustrating the benefits of this planning and concludes with “The GRAT enhancement strategy is a powerful wealth transfer tool in and of itself. It’s applicable to GRATs, staged distribution trusts and any trust in which the assets have been removed from the clients’ estates but will be taxed in the children’s estates. Clients may be more receptive to additional planning if they can minimize their involvement and expenses and use assets that have already been transferred.”
I highly recommend this article for your review and consideration.
The GRAT Enhancement Strategy – Trust & Estates – 3.20.23
The Washington Report: Business Uses Edition
“A rabbi trust is a vehicle that provides for such informal funding without running afoul of tax or ERISA compliance issues resulting from “funded” NQDC plan benefits. This article addresses key questions to consider when adopting a rabbi trust, including (i) whether the rabbi trust should be irrevocable; (ii) even if irrevocable, when can assets revert to the employer; (iii) should the rabbi trust include enhanced protections upon the employer’s change in control; (iv) what kind of investments should the rabbi trust hold and what kind of control over those investments should the employer retain; and (v) can the rabbi trust hold employer stock?”
Click here to read the full report.
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.
“The IRS, clearly interested in intergenerational private split-dollar, attempted to secure a third victory. After Morrissette and Cahill, it looked like intergenerational split-dollar was trending the way of the dinosaurs. Then in Estate of Marion Levine, the Tax Court not only resurrected intergenerational split-dollar life insurance planning, but it also offered a roadmap for successfully structuring traditional private split-dollar plans as well.”
Click here to see the full report.