Strategic Intergenerational Planning: Opportunities, Solutions and Concerns Event Recap

092016_meetingOn Tuesday, September 20 the topic of the FSP Milwaukee Chapter membership meeting was Strategic Intergenerational Planning: Opportunities, Solutions and Concerns. The meeting was sponsored by Protective Life Corporation and presented by Richard E. Kait, JD, LLM (Taxation), CLU, ChFC – VP of Advanced Sales. Below is a summary of the event by FSP Milwaukee Chapter Director Adam Wall, CLU, ChFC – Protective Life Corporation.


Richard Kait, JD from Protective Life presented at the most recent meeting. During the meeting Mr. Kait covered the current and proposed tax environment, basis planning, and some recent developments around intergenerational split dollar.

There are many tax proposals from the White House that are looking to increase revenue. Some of the large items are to increase the top estate tax rate to 45%, cap GRAT’s at 10 years, and repeal the “basis step-up”. Many of these would be a tough undertaking in the current political climate. The IRS is continually looking at adjusting the Gift and Estate tax rules and we expect that to continue going forward.

Estate planning has changed dramatically since the higher estate exemption and portability rules have come out. In the past many high net worth clients wanted to get assets outside of their estate. Now, rising income and capital gains brackets appear to be motivating clients and professional advisors to dive deeper into asset fact-finding, and to identify, compare and evaluate strategy alternatives, to quantify the net cost-benefits of gifting, selling and/or retaining appreciating assets prior to death (to enjoy basis step-up). The question now is to give or to hold?

In the world of high end estate planning there are planning techniques involving large valuation discounts in inter-family split dollar arrangements. The IRS has been auditing these plans and that has produced some high profile court cases. At this point the courts have sided with the estates saying they are following the split dollar rules set up by the IRS. This will be a point of interest for the IRS and these designs can expect to see very close scrutiny by the IRS going forward.

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