Alternative Life Insurance Ownership Structures if Congress Takes a Swing at ILITs Using New Code Section 2901
Friday March 5
11:00AM ET - 12:30PM ET
A new regime in Washington advisors in the estate planning space concerned that the time-tested Irrevocable Life Insurance Trust could soon be in Congress’s crosshairs. Bernie Sanders’ “For the 99.8 Percent Act” would add new Section 2901 to the Code and would turn traditional ILIT planning on its head. The potential changes to the grantor trust rules embedded in new Section 2901 would force advisors to re-think everything they’ve learned about grantor trust taxation, and would force them to seek out alternative ownership structures for their clients’ wealth transfer/estate planning life insurance.
In their exclusive LISI Webinar, Michael Geeraerts and Jim Magner review how new Section 2901 would change grantor trust taxation in four important ways. First, all of the assets held in a grantor trust would be included in the grantor’s gross estate upon the grantor’s death. Second, any distributions from a grantor trust to a third party during the grantor’s life would be treated as a gift from the grantor to the beneficiary. Third, toggling the trust’s status from grantor to non-grantor would result in a deemed gift from the grantor to the trust’s beneficiaries. Fourth, note sale transactions would no longer remove assets from the grantor’s estate, and a note sale to a BDIT would no longer remove asset appreciation from the beneficiary’s estate.
Their webinar will cover a variety of critical planning issues, including:
- How Section 2901 works;
- Effective date and grandfathering rules
- How Section 2901 would apply to new and existing ILITs and BDITs;
- Alternative ownership structures:
- Using Non-grantor trusts
- Insurance-Only LLCs
- Ownership by children
Michael Geeraerts, CPA, JD, CGMA®, CLU® is an advanced planning consultant at The Guardian Life Insurance Company of America®. Prior to joining Guardian, Michael was a manager at PricewaterhouseCoopers LLP and a tax consultant at KPMG LLP. Michael has written articles for numerous national publications and has delivered continuing education courses to CPAs and attorneys on a variety of estate, business and income tax planning strategies.
Jim Magner is an advanced planning attorney at The Guardian Life Insurance Company of America®. Jim previously worked as an Attorney Advisor in the IRS’s Office of Chief Counsel in Washington, DC where he wrote private and public rulings on estate, gift, GST and charitable remainder trust issues.
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