Outlook Not So Good:  Tax Court Speaks to Possible Estate Tax Treatment of Generational Split Dollar (GSD).

Topics: Estate planning, Irrevocable trusts, Split-dollar, Trusts

For the first time, two very recent Tax Court opinions (Est. of Cahill v. Commissioner and Est. of Morrissette v. Commissioner) have discussed the court’s view of the estate taxation of economic benefit GSDs. These arrangements generally involve a parent who enters into a private split-dollar agreement with a life insurance trust agreeing to pay…

Flipping the Script: Nongrantor Trusts with Grantor Trust Benefits – Can It Be Done?

Topics: Estate planning, Grantor trusts, Non-grantor trusts, Trusts

Grantor trusts, which tax the trust’s income to the trust creator (“donor”), have long been a planning mainstay, as they can enhance growth in the trust and offer significant flexibility in transactional planning with the donor. As discussed in WRMarketplace No. 18-03, however, new limits on tax deductions, including for state and local taxes, may…

Decoding Tax Reform: Grantor vs. Nongrantor Trusts – Which Way Do I Go?

Topics: Estate planning, Grantor trusts, Trusts

H.R. 1 (“Tax Act”) has dramatically altered the tax consequences and economics of many common irrevocable trust plans given the combination of higher exemptions for gift, estate, and generation skipping transfer taxes (collectively “transfer taxes”) and changes to the taxation of individuals and trusts. Grantor trusts, which tax the trust’s income to the trust grantor,…


Topics: Estate tax, IRS, Regulation, Trusts

In a recently-released series of apparently related PLRs, the IRS has again reviewed the tax consequences of incomplete gift, non-grantor (“ING”) trusts of married spouses involving the transfer of community property.

Reciprocal Trusts – A Refresher

Topics: Estate planning, Trusts

Legacy planning for spouses and other related parties often involves the creation of mutually-beneficial irrevocable trusts to provide equal protection and benefits for each party (e.g., spouses may each wish to establish a spousal lifetime access trust (SLAT) for the benefit of the other). Mutually-beneficial trusts, however, can run afoul of the reciprocal trust doctrine,…

IRS Continues to Rule Favorably on ING Trusts

Topics: Estate planning, IRS, Regulation, Trusts

In PLR 201742006, the IRS examined the tax implications of two identical incomplete gift, non-grantor trusts (“ING Trusts”) created by spouses, one by the husband and one by the wife (each a “grantor”). Each ING Trust provided for payments by a Distribution Committee (of which the grantor was a member) to the trust beneficiaries, including…

It Can Really Last Forever: Irrevocable Life Insurance Trusts & the Generation-Skipping Transfer Tax – 4 Things to Know

Topics: Estate planning, GST, Irrevocable trusts, Trusts

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.

Mandatory or Discretionary Trusts – Which, When, and Why

Topics: Estate planning, Trusts

A chief concern of many senior family members is that transferring wealth to the next generation may create disincentives or disrupt the lives or work ethic of younger family members. Trusts, when properly structured, offer an ideal solution to this concern. By basing distributions upon a beneficiary’s attainment of certain goals (graduating from college, matching…