Don’t Get Capsized by the Blue Wave: Opportunities for Wealth Planning in the Face of Proposed Democratic Tax Policies

Speakers: Edward Renn

Year: 2020



Clients should utilize gift tax exemption now to shift future appreciation out of their estates. Cash value life insurance significantly increases amounts passing to loved ones free from estate and GST tax. The presentation and materials will provide a quick review of the tax savings available by gifting assets now and thereby shifting future appreciation out of the estate vs. holding appreciating assets until death. A key part of the presentation will include a survey of IRS rules for the scheduled reduction of transfer tax exemption in 2026. The presentation will cover possible claw back scenarios if Democratic reductions in the transfer tax exemption are enacted as soon as 2021 and will highlight how cash value life insurance may be the optimal asset to respond to an immediate claw back or a date of death claw back of exemption in excess of the date of death limit. Proper planning will be necessary to allow the client to pivot if exemptions are reduced in a punitive fashion. Techniques presented to implement life insurance planning will include: Traditional irrevocable life insurance trusts; grantor trust gift/sale planning; loans to existing IDTs or GRAT continuation trusts in excess of the exemption amount (currently $11.4 million) to fund very large policies; gifts and loans to younger family members to fund generation two tax favored insurance plans; split dollar scenarios; and pros and cons of various options will be presented.

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