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.

Estate Taxes

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.