Effective estate tax planning often involves two competing objectives. On one hand, there is an objective to remove assets from a person’s taxable estate, so that estate tax liability can be reduced on such person’s death. On the other hand, there is an objective to retain the income and principal from a person’s assets, so that such person’s activities are not disrupted during such person’s lifetime.
Charitable activities are favored under the Internal Revenue Code. The income of a charitable entity can be subject to favorable income taxation, and transfers to a charitable entity can realize income tax and estate tax deductions. One type of charitable entity is a private foundation. This letter refers to the “private non-operating foundation.”
There are two types of reporting companies – “domestic reporting companies” and “foreign reporting companies.” It is important to remember that reporting companies that were formed or registered to do business in the United States on or before December 31, 2023 are required to comply with applicable “FinCEN” reporting by January 1, 2025 and reporting companies that were formed or registered to do business in the United States during 2024 are required to comply with applicable “FinCEN” reporting within 90 calendar days after receiving notice of such formation or registration.
“Buy sell” agreements often are funded by life insurance policies. Life insurance proceeds can affect the “estate tax” valuation of a deceased business owner’s ownership interest. And can have material implications for the terms of “buy-sell” agreements, business valuations, and other estate tax liability and estate planning issues.
Relative to its decisions concerning other areas of the law, the United States Supreme Court generally does not issue many decisions concerning tax law. Thus, when the Supreme Court does issue a tax decision, it definitely is noteworthy and deserves attention.
Succession is an important issue in estate planning. Usually, succession is discussed in terms of an asset owner’s or business owner’s death. Who should succeed me as owner and manager of my assets or business on my death? A less often discussed, but also significant, issue is succession in disability situations.