Newsletter: September 2009
September 10, 2009
In this issue: Business Succession Planning, Estate Taxes and Long-term Care Coverage
Business Succession Planning
Use of a separate LLC to manage life insurance contracts for Buy-Sell planning
Have you ever considered using a separate LLC in conjunction with a Buy-Sell arrangement? Use of a properly designed LILC (Life Insurance Limited Liability Company) reduces the number of policies required under a Cross Purchase arrangement, provides simplified and predictable management of the policies during life and at death, avoids transfer for value implications upon transfer to or from the insured Members and circumvents estate tax inclusion of death benefits on a Member’s death. Is your interest piqued yet? Contact John or Lindsey for more information.
Gifts made via power of attorney
Clients need to be careful when using a financial power of attorney to make gifts: a District Court recently held that where gifts are made via a power of attorney, the document must explicitly grant the power to make such gifts to the attorney-in-fact; otherwise, the gifts must be added back to the estate for federal estate tax purposes.
Long-term Care Coverage
New law affecting 1035 exchanges draws in long-term care policies
The Pension Protection Act, effective in 2010, expands Section 1035 of the Internal Revenue Code to allow a life insurance, endowment, or annuity contract to be exchanged for a qualified long-term care contract. The new Section 1035 will also allows a qualified long-term care contract to be exchanged for another long-term care contract.
Please contact Smith and Condeni for more information. We look forward to hearing from you.