Posts Tagged: tax planning

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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“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

“From the Desk of an Estate Planning Attorney: Buy-Sell Planning Since Connelly – What are we doing now?”   KEY TAKE-AWAYS: Post-Connelly, closely held business owners must carefully consider the practical and various tax issues associated with life insurance funded buy-sell structures.

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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

“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.”

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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.”

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“Jensen Huang, the chief executive of Nvidia, is the 10^th-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.’”

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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.”

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“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.