The BDOT Option for Trusted Beneficiaries
The Beneficiary Deemed Owner Trust (BDOT) is one of several options to consider for “trusted beneficiaries” (pun intended) to whom you are open to giving some access to trust income and/or principal. (Another option might be the Beneficiary Controlled...It Pays to Be Ruthless When Killing GRATs
Using quantitative analysis, we’ll show that the grantor’s choice is almost always clear: If her two-year GRAT is funded with marketable securities and is underwater at all prior to the first annuity date, she should cut her losses and start a new GRAT. That...Warren’s Wealth Tax Unconstitutional
While the estate tax is a perennial boomerang, Warren’s wealth tax tomahawk chop flies in the face of the Constitution’s prohibition on unapportioned scalping: The Constitution prohibits federal direct taxes that are not apportioned by population,...HEET Trust Can Avoid GST Tax Heat, Teach Grandkids How to Pack Heat, and Help the NRA too!
Our Firearms Instruction and Responsible Stewardship Trust (F.I.R.S.T. Family Trust) takes many forms as it is custom like all our planning, but one variant involves a Health and Education Exclusion Trust. This type of trust allows you to give much greater...FPC 20180313: Flexibility to Avoid Taxes & Gun Control
When it comes to taxes and gun control, it’s hard to keep up with Sacramento and DC. One way is to have your estate planning attorney on speed dial. A smarter way is to have that attorney draft with flexibility in mind, so you can have peace of mind. We’ll focus...Clawback Under New Tax Law
Under either formulation of purpose, that is, the “unified” approach or the “fairness” approach, in issuing its regulations, the IRS would be compelled to use the basic exclusion amount in effect the time of the decedent’s death for purpose of computing the...Tax Act Signed — what does it mean for Estate Planning?
The Tax Cuts and Jobs Act((In both the House and Senate versions, the bill was called the “Tax Cuts and Jobs Act.” Due to a last-minute change in response to a procedural issue, the official title was changed to “To provide for reconciliation pursuant to titles...A modest proposal re estate tax: Get self-defense training!
The expected new Tax Cut and Jobs Act (not the official title anymore, but i’m sticking with it) doubles the applicable exclusion amount for estate tax but reverts to current law on January 1, 2026. That sunset provision reminds me of this funny old video...House GOP Tax Plan Avoids Carryover Basis Regime
So far, the House GOP’s proposed tax plan avoids the carryover basis regime that would have been necessary if it would have imposed a capital gains tax at death to replace the estate and generation skipping transfer taxes, as the Trump campaign seemed to favor....Rev Proc 2017-34 simplifies getting extension for portability election
Rev. Proc. 2017-34 SECTION 1. PURPOSE This revenue procedure provides a simplified method for certain taxpayers to obtain an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to make a “portability” election under §...Trump’s Tax Plan Raises Questions for Estate Planners
The tenuousness of the President’s plan raises a whole host of additional questions. These include: (1) whether the President’s plan would be coupled with a step-up in basis at death versus carryover basis (carryover basis would effectively increase total taxes...Ten Estate Planning Strategies While Waiting for Tax Reform
The election of Donald J. Trump to the presidency and Republican control of both houses of Congress make estate tax reform extremely probable in the next two years. However, given the new administration’s other proclaimed priorities, including the repeal of...IRS Recognizes Retroactive Validity of GRAT Based Upon Court Reformation
In this matter, the draftsman failed to include language prohibiting the trustee from issuing a note, other debt instrument, option or other similar financial arrangement in satisfaction of the annuity obligation as required by § 25.2702-3(d)(6) of the Gift Tax...Estate Planning Pitfall: You reside in a state with high estate tax
Sacramento is at this moment plotting to bring back the estate tax here. Also, you might own property, or plan to retire, in one of these states. Do you have a flexible estate plan? Reforms being debated by Congress could repeal the federal estate tax with...Conflicted Art Appraisals Lead to $1.77 Million Estate Tax Deficiency
Recently, in Estate of Kollsman v. Commissioner (T.C. Memo. 2017-40), the U.S. Tax Court held that an art collector’s estate significantly underreported the value of two artworks for estate tax purposes. The problem: the estate relied on appraisals by an...Dynastic Gamesmanship: Did David Rockefeller’s Crafty Trust Work Leave the IRS Holding the Bag?
The trust rules have evolved over the last eight decades. For one thing, depending on the state, a trust created now for David’s own grandchildren and beyond may never need to terminate.It could theoretically run forever, eternally beyond IRS reach if run...Tax Reform Bill On the Front Burner
In short, the ground has been laid for quick action in the House of Representatives the moment the health care debate concludes. Source: Tax Reform Bill On the Front BurnerCharitable Divorce Planning?
Charitable planning coordinated with dissolution planning merits serious examination. The work involved is well worth the effort to assure divorcing parties have maximized the use of all marital assets in a tax-efficient manner. The four techniques are...Tax Law Update: April 2017
The loss of income tax revenue would be the product of income tax saving strategies that would become viable in the wake of gift tax elimination. For example, without a gift tax, the use of a “straw taxpayer” would likely become a prevalent income tax planning...Avoid Taxable Gifts in 2017
Even though in our current environment, paying gift taxes could save estate taxes, and is therefore a rational strategy, our clients won’t view it this way if, this year or next, the estate tax is repealed. And this is so, even if the estate tax is repealed...McConnell: Tax reform unlikely by August
Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday poured cold water on the Trump administration’s goal of completing tax reform by the August recess. Source: McConnell: Tax reform unlikely by August | TheHillThe Future Of Proposed IRS § 2704 Modifications Is UNCERTAIN
In estate planning these days, there is uncertainty and there is UNCERTAINTY. Over the last few years we’ve gotten pretty good at developing techniques to deal with uncertainty, but the UNCERTAINTY surrounding the proposed regulations related to 26 USC §...Basis Consistency and Reporting for Property Acquired from a Decedent
Significant coverage was devoted at the recently concluded 51st Annual Heckerling Institute on Estate Planning in Orlando, Fla. to the Internal Revenue Service’s proposed regulations (proposed regs) concerning basis consistency and reporting for property...The Biggest Lie in Life Insurance
Valid point, especially now that the estate tax beast so rarely bites and may soon be destroyed. The article points out a few reasons for having life insurance, but omits some important ones such as estate creation for young families. Thus, the biggest lie in...Arguments for Keeping Death Tax Weak, BUT…
The arguments set forth in this Bloomberg article for keeping the death tax are weak (compare this other recent Bloomberg article pointing out the role inheritance plays in keeping whites richer than blacks), but the article comes close to making an important point so...Calif. Lawmaker Readies Estate Tax Plan if Congress Repeals
The name is Wiener, of course. SACRAMENTO, Calif. (CN) – Warding against the possibility of Congress nixing a lucrative federal estate tax, a California lawmaker on Tuesday announced a measure to ask voters to approve a mirroring state version. Source: Calif....Wife Has No Gain, Loss or Estate Inclusion on Transfer of Trust Assets Pursuant to Divorce Settlement Agreement
In Private Letter Ruling 201707008 (released Feb. 17, 2017), the Internal Revenue Service ruled that a wife wouldn’t recognize gain or loss from her husband’s transfer of property to a trust for her benefit under a proposed divorce settlement agreement....How do recent updates to estate tax laws impact your future?
Utility indeed, especially with added flexibility of the Clayton election and other precautionary provisions. Many of our married clients have structured their estate plans to apply the federal estate tax exclusion amount to create a trust for the benefit of their...Life Insurance: It Was Never Just About Taxes
This article raises important points — plan for the long-term and don’t let taxes direct the planning over more important goals — plus it’s a good review of the many benefits of life insurance. But as I’ve previously noted, the...Taxation of Aliens Trying to Leave America – Don’t Go Home without your IRS Sailing Permit or You Aren’t Coming Back
Article authored by my friend Brian Dooley, a top international tax expert: Before leaving the United States or any of its possessions permanently or for an extended amount of time, all U.S. resident aliens and nonresident aliens (with certain exceptions) must...Wealth Planners Are Not Afraid of Estate Tax Repeal
In fact, some attorneys see repeal as potentially being a boon for their businesses, especially if the tax is replaced with a capital gains tax such as the one proposed by President Donald Trump on the 2016 campaign trail. Source: Wealth Planners Are Not Afraid...Poor planning means government will take half of Prince’s estate
Prince’s estate has until Saturday to file an estate tax payment for the late rock superstar, and the taxes are expected to ultimately swallow nearly half the estate’s estimated $200 million value, meaning a likely windfall of roughly $100 million for the...Some Firms Apparently Not Yet Planning for Possibility of Repeal
While it is true that there is uncertainty in tax planning now (there always is) and there is a distinct possibility that the estate tax will be repealed and we should of course urge our clients to update after such a major change, it is not true that we cannot...New Regs re Dead But Not Forgotten IRC 1022
Think I’m noticing a trend here. A few months ago, IRS finally came out in support of using Clayton election for portability planning, after years of silence led to suspicion otherwise, and now years after repeal of 1022, the IRS decides to issue regs...Trumpian Carryover Basis Regime to Heat Up Life Insurance?
“Estate freeze” is a term that’s so commonly tossed around in the estate planning community that it’s actually become fairly useless shorthand, as it can be used to describe such a wide variety of techniques. However, as discussed by Jeffrey N. Pennell in his...Life After the Death Tax
Most agreed the new Republican regime in Washington may get rid of the long-loathed estate tax (this year levied at a top rate of 40 percent on assets above the exemption of just under $11 million for a married couple). Yet, it will almost certainly be replaced...Repeal and Uncertainty Impacts Estate Administration
Good advice in this article, but much of the uncertainty can be removed with thorough, comprehensive planning with an eye toward flexibility. For example, in our planning (http://Protect.LIFE), we offer not only the current flexibility of the Clayton election,...Six Things Family-Owned Firms Should Know About Succession Planning
Among the chief goals of succession planning is providing continuity of management and minimizing the tax costs of transferring property interests to new generations.Source: Six Things Family-Owned Firms Should Know About Succession PlanningImpact if Federal Estate Tax Repealed
Practitioners should review options with clients that might include: Outright bequest to surviving spouse, with contingent disclaimer trust, subject to the problems that this approach creates Clayton QTIP approach, subject to the complexity it creates...Fusing Family and Philanthropic Visions
Wealthy families can now transfer wealth to children and grandchildren at a transfer tax discount of up to 50 percent, while receiving up to a 50 percent current charitable income tax deduction—all while avoiding tax on the subsequent sale of appreciated...#AssetProtection: Senate Republicans May Oppose Trump Tax Cuts
It will be awhile before we know how all this may affect estate tax repeal: President-elect Donald Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels...#AssetProtection: Estate Tax Repeal to Get Big Push in New Congress
I hope it happens, as there is plenty for families to plan for besides taxes. If it does happen, my clients with the latest planning are prepared. Currently, individuals can inherit estates worth up to $5.45 million without being taxed. Estates valued over that...#AssetProtection: Avoiding Bypass Trust “AB Trap” of Capital Gains Tax
For many client situations, I continue to be a big proponent of using the Clayton election for flexibility in this age of estate tax uncertainty. The Clayton election continues to be the smart way, for many families, to avoid the “AB Trap” of capital gains...#AssetProtection: Risks and Opportunities for Your Clients Under President-Elect Trump
As always, flexibility is key: Recommend cautious optimism. The elimination of the estate tax in particular is likely to be welcome news to your higher net worth clients, but the proposal may be subject to opposition or compromise in Congress. This compromise could...#AssetProtection: Trumpeting 10 Year-End Tax Strategies Before They Evaporate
In light of Donald Trump’s election and his pre-election platform to reduce marginal income tax rates, there are several planning strategies that should be considered as part of your client’s year-end planning. John O. McManus, founding principal of McManus &...#AssetProtection: Inheritance Taxes under IRC 2801
Section 2801 Inheritance Tax Under Section 2801(a), a U.S. domiciliary (or a U.S. resident trust) who receives a gift or bequest from a covered expatriate (CE) is subject to a tax equal to the fair market value of the covered gift or bequest, multiplied by the highest...#AssetProtection: Tax and Wealth Planning Implications of a Trump Presidency
Transfer Tax Related Proposals Repeal the gift, estate tax and the generation-skipping transfer taxes, establishing in their place a carryover basis for appreciated property, subjecting beneficiaries to income tax on the gains when they dispose of the property in the...#AssetProtection: When People Laughed At The Idea Of #Trump Actually Being Elected President! Compilation – YouTube
Dear Wealth Manager, You cannot take care of your clients by simply regurgitating what you hear from the mainstream press, or the mainstream financial press, or even your clients. Get out and mingle with The People.#AssetProtection: What to expect from President-Elect Donald Trump | STEP
He proposes to eliminate estate and gift tax and to tax capital gains held until death with a USD5 million exemption (for an individual filer).With regard to individual taxation, Trump proposes to have three income tax thresholds (as opposed to the existing...
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