If Trump’s administration succeeds in eliminating the U.S. federal estate tax, there will still be plenty for estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Estate plans are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law.
Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI). Private placement life insurance is a variable universal life insurance policy that provides cash value appreciation based on a segregated investment account and a life insurance benefit. PPLI is designed to maximize savings and minimize the death benefit.
The investment account typically uses tax-inefficient hedge fund strategies. PPLI can be especially useful as an element of more complicated tax strategies. With advances in technology and greater efficiencies, private placement life insurance is becoming more popular for more wealthy individuals.
Certainly, other changes in tax law are likely to impact estate plans. It will be important as the new administration begins to tackle its campaign promises to keep abreast of changes in the law and speak with your estate planning attorney about the impact on your estate plan.
Whether or not the federal estate tax is eliminated entirely, or if a new estate tax structure is created, the only thing that is certain is that if changes are made, estate plans will need to be reviewed and revised. Make sure to keep in touch with your estate planning attorney as new laws take shape and new legislation is passed.
For those who are clients of Family Estate Planning Law Group, you know that we will be keeping abreast of any changes and should you have any questions, you can feel free to contact our office. Our next client workshop on January 25, 2017 will focus on some of the potential changes in estate planning. To register, visit our events page or explore our website for more information.
Reference: Forbes (September 29, 2016) “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?”