Last week, the tax reform effort took major steps forward, as the House passed its version of the Tax Cut and Jobs Act (“House Bill”) and the Senate Finance Committee passed its legislative mark-up (“Senate Bill”). Yet, the Bills differ in several key areas, including: (1) estate and GST taxes, (2) the state and local…
The GST tax generally applies to transfers to irrevocable life insurance trusts (“ILITs”) that benefit both “skip persons” (e.g., grandchildren and more remote descendants) and non-skip persons (e.g., children). The annual GST tax exclusion and GST tax exemption are available to apply to ILITs, but the rules regarding their application are complex.
Change always brings opportunity. Families and advisors should remain consistent in their approach to implementing flexible life insurance and legacy planning, since planning will remain beneficial regardless of the evolving details of tax reform.
In related PLRs, the IRS reviewed whether an affirmative allocation of GST exemption to a gift transfer to an irrevocable trust was effective despite husband’s and wife’s respective failure to attach a Notice of Allocation to their timely filed gift tax returns and their election out of the automatic allocation rules.
The IRS has privately ruled on how certain trust modifications impact the trust’s GST tax exempt status. The facts in a series of PLRs involved trustees who had petitioned a court to resolve the drafting attorney’s inadvertent omission of trust provisions that would have:
A Branch Chief for the IRS Office of Chief Counsel announced at the Federal Bar Association Tax Law Conference that, due to “budget cuts and prolonged strain on agency resources,” the IRS is temporarily suspending the issuance of private letter rulings relating to certain GST tax issues, including modifications of GST tax-exempt trusts. The IRS…