New life insurance forms enhance its use as an effective estate planning tool

Article Abstract:

Estate tax planning strategies typically seek to transfer future appreciation since the tax levied at the death of the first spouse can be deferred. Successful estate planning can postpone payment of the estate tax until the death of the surviving spouse. New types of life insurance can be used effectively in estate planning to transfer future appreciation. Both a husband and a wife can be insured under a survivorship life insurance policy, which pays the death benefit upon the death of the surviving spouse. Irrevocable life insurance trusts can eliminate income taxes and estate taxes. Life insurance can be used to convert the generation-skipping transfer tax exemption from $1 million per transferor to over $1 million per transferor. Charitable remainder trusts allow individuals to distribute funds to beneficiaries, with the remainder being used for a charitable purpose.

Management, Planning, Transfer taxes, Life insurance trusts

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Franchises have created new challenges for the estate planner

Article Abstract:

Estate planning for franchise owners can be more complex than for sole proprietorships or closely held businesses due to the myriad of restrictions usually found in franchise agreements. When franchises are involved, planners should focus on the transferability of the business itself, and should solicit the input of the franchisor early in this process. Franchises present unique problems in valuation, and for estate tax purposes their value generally falls somewhere between the value of their hard assets and their value as a going concern. Business owners can employ their children and pay them significant salaries as a beneficial estate planning strategy, and Section 6166 allows deferred payment of estate tax liability when the franchise is continued as a going concern by the family of a deceased franchisee.

Franchises

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Stock included in estate despite FMV sale of remainder (fair market value)(Estate Planning)

Article Abstract:

The Tax Court ruled in 'Estate of D'Ambrosio' that the fair-market-value sale of the remainder interest in the stock does not automatically allow a taxpayer to exclude the stock from an estate. The court considered the bona fide sale exception in the context of a sale of a remainder interest and ascertained if the FMV of what was received had to match only the value of what was sold or the value that would have incorporated in the estate if the sale was not made. Following prior cases, the court judged that the stock was not excludable from the estate through the sale of the remainder interest, rejecting the argument of the estate that the stock was excludable because the life interest of the decedent already expired upon her death.

Remainders (Estates)

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