A few months ago, I wrote about a group of boomers talking about a webinar they would like to attend. The webinar will be about planning for potential dependencies when they become “outdated”.
Now, the group is together once again. This time the topic is estate planning. More specifically, the topic is estate tax planning. Let’s tune in. We will not identify the speakers. We will catch what they are saying.
Has the storm passed?
“The last time we met, some of us were hearing from our estate-planning lawyers and our life insurance agents about some bad things that were going to happen to our irrevocable life insurance trust, our ILIT. Basically, if you can say ‘basically’ about any of these stuff, what was proposed would destroy the foundation of some plans and make any plans more expensive to maintain. Well, obviously, whatever it was, it never materialised.
“I know what you’re talking about. In fact, my life insurance agent sent me an article by two guys named Brody and Ratner. They walked me through the article and specifically pointed out that the proposed How and why the changes might upset some of our existing plans. I don’t know what your plans are, but in our case, our continued support of ILIT with gifts would have had an adverse effect on wealth tax. That from us to our planning team We are urging you to gather so that options can be considered to prevent damage to our plan.
“So, are you going to do this? I mean, is it really necessary?”
“I told her I appreciate her concern but I didn’t feel there was anything I needed to do. From what I can tell, the storm has passed. The estate and gift tax law is not scheduled to change for another few years.” And who knows, maybe for much longer than that. The exemption is now like $12 million and change, which means more than $24 million for some of us. Are you kidding me? We OK. And, our annual gifts obviously won’t be a problem. So, basically again, if it ain’t broke…”
“Anyone else wanna chime in?”
the need for an exit strategy
“I will. Our case differs from yours in that our plan to support ILIT involves loans, not cash gifts. But here’s the rub. My agents and everyone involved in setting up that plan got us started. I just pointed out that we need to do what we call an “exit strategy” for dealing with debt before it becomes a problem. Well, I’ve never gotten around to it. You know how it goes. But, apparently, they’re whatever. Also, it would have made that exit strategy very difficult and costly tax-wise to create. In fact, some of the techniques I would have used to get out might not even be available anymore. In a way, he’s telling me that my plan may not break today, but it’s on borrowed time and, if and when it does break, it can be very expensive to fix. Anyone else?”
“Well, that’s the message I’m getting from all sides. ‘You know what you have. We told you how much damage those offers would have cost and how expensive the repair bill would have been. You don’t risk becoming complacent Changes that were held back in the fall can be brought back into play very easily.’ Our lawyer said, ‘Don’t even think for a minute that the legislative text is still not on their word processor. And don’t assume that if and when the motions come up again, you have enough time to figure it out. Will have to decide what to do and get it done. Last fall, we saw things happen so fast and with so much uncertainty about the effective date that it was impossible to react all and everything at once. And by the way, not being complacent Another reason is that interest rates can rise soon and it doesn’t bode well for the planning techniques you can use to make your planning more efficient, let alone dealing with any tax changes. .’ The bottom line is that now is the time for us, clients and consultants, to take a deliberate approach to formulating any plans to be adversely affected by those changes.”
“You’re not alone about that exit strategy business. My tax advisor sent me the same article. We got off the phone talking about this year’s income and gift tax returns. He gently reminded me that we On more than one occasion she had discussed various approaches to what she calls “funding ILIT.” Again, it’s all about an exit strategy. She told me that, based on those proposals, if I were to trust If I stop funding the U.S. for too long, the only thing that can work out would be an exit strategy. The point, she said, is that I can still do what I could and a while ago Should have done it while I still can. Can’t argue with that! So, we’re meeting her and others next week.”
“You know, I have to run soon because I don’t have time. I’ve decided to move on too, mainly because my agent said something that really got our attention. He said, ‘Anxiety’ DON’T. It’s about mitigating the potential tax and cash flow impact associated with protecting that investment. I had to remind myself that she’s generally been right about things like this. It just takes me 10-15 years to realize it and a few more years to accept it. Just kidding So, I thought, why wait?”
“Okay. You make a lot of sense as always. You’re right, why wait and risk getting caught up in the flurry over and over again? I’m going to schedule the call now to my agent, my attorney, and my tax advisor. Sending a message. I’ll see you all on a webinar next week.”