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Issue 44 – July, 2024
NAEPC Journal of Estate & Tax Planning
Editor-in-Chief Note
Author: Mavis N. McKenley, CTFA, AEP®, CFP®
In-Depth Analysis of SLAT Planning in Preparation for 2025 and the Scheduled Sunset of the TCJA’s Applicable Exclusion Amount
The estate and gift tax exemption is set to be cut in half at the end of 2025. Estate planners are seeing an uptick in client inquiries who are seeking to utilize their exemptions prior to the scheduled reduction. For many of these clients that know they should use their exemptions now but are not sure they can, the SLAT may be a good technique. This article provides an in depth analysis of SLAT planning.
Authors: Andrew M. Katzenstein, Esq. and Caroline Robbins, Esq.
Features
Repairing the Broken Trust: Irrevocable Trust Modifications after CCA 202352018
For many years, the IRS has taken a fairly permissive view of irrevocable trust modifications. However, Chief Counsel Advice 202352018 suggests that position is changing. Advisors should understand the potential shift in the IRS’s position, the circumstances where a modification could create concerns under the CCA’s analysis, and how to draft irrevocable trusts that are flexible enough to address unexpected changes.
Author: Scott W. Masselli, Esq.
Connelly v. United States: Implications for Estate Tax Planning Involving Closely-Held Businesses and Life Insurance
The Supreme Court recently decided a rare case involving an estate tax issue. The Connelly case centered around the valuation of a deceased shareholder’s interest in a closely held business for estate tax purposes, an issue which seemed settled based on a 2005 Eleventh Circuit Court decision. In the present case, all parties agreed that the life insurance proceeds were to be included in the value of the company for estate tax purposes. The Court’s unanimous 9-0 decision in this case will have significant implications for estate tax planning involving closely held businesses and the treatment of life insurance proceeds in such circumstances.
Author: Kathi L. Ayers, Esq.
Anatomy of an Informed Decision: Dissecting Client Organ Donation under the Uniform Anatomical Gift Act
One can easily find a sensationalized story about organ donation in the media. With news story hooks such as “The dark side of organ donation”, “Patient wakes up as doctors get ready to remove organs”, “A body donated to science—but used to test bombs”, and “Stolen heads shine a light on body donation”, it is not surprising that the average person may feel skeptical about the industry. In fact, the authors’ home state of Arizona has contributed to such perceptions.
Authors: Riley L. Arter, JD and Ashley L. Case, JD, LL.M., AEP®
Application of the Corporate Transparency Act to Common Trust Structures
Under the Corporate Transparency Act (the “CTA”), limited liability companies, corporations and other business entities generally must disclose information about their beneficial owners to the Financial Crimes Enforcement Network—otherwise known as FinCEN. Although FinCEN has issued regulations on how to determine an entity’s beneficial owners, determining an entity’s beneficial owners can be challenging when the entity is owned directly or indirectly by a trust. This article explores several examples of how the CTA may apply when a reporting company is owned by a trust and highlights unanswered questions about how the CTA should be applied to certain trust structures.
Author: Christina S. Hammervold, JD
The Daunting Deluge of Foreign Reporting Requirements
Reporting obligations for cross border activity and affiliations are escalating at a rapid pace, affecting an increasing number of Americans with connections outside the U.S. This article outlines the key reports required from a wide swath of Americans with foreign connections. It then discusses recent cases and enforcement activities that illustrate the growing initiatives by U.S. government agencies seeking information.
Author: Joan K. Crain, CFP®, TEP, AEP® (Distinguished)
Developments with Respect to the Material Purpose Standard in the Modification of a Trust
Irrevocable trusts are an often-used tool in, and can have important benefits for, asset management, asset protection, and planning for estate, gift, and generation-skipping transfer taxes. However, the irrevocable nature of such trusts regularly leads to questions regarding the interpretation of the trust, and even regarding modification or termination. In those situations, the interests of the settlors, trustees, and beneficiaries might not align.
Author: Meghan Gehr Hubbard, JD
Life Settlements – The Hidden Tool to Unlock, Preserve and Rescue Value in the Estate Plan
In developing an estate plan for clients, life insurance can often play a key role. However, many clients do not understand the complexity of the product being purchased or realize the risks in the contract and potential for the life insurance to lapse prior to life expectancy. In addition, it is possible for a life insurance contract as it matures to reach a “crossover point” when continued investment in the contract may not yield an optimal financial result. This article seeks to help estate planning and probate attorneys, including fiduciary litigators, as well as financial, wealth, insurance and other tax advisors to understand the life settlement strategy for exiting a life insurance contract if the insurance policy cannot, should not or will not be maintained, and the potential liability for fiduciaries of life insurance trusts who fail to become informed regarding the life settlement market and share such information with trust grantors and beneficiaries.
Content in this article was derived from an article originally published by The Quarterly, a publication of the Trusts and Estates Section of the California Lawyers Association.
Authors: Tama Brooks Klosek, JD and Michelle Graham
News Nook: A Compendium of Current Affairs
NAEPC Monthly Technical Newsletter
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