Intergenerational Split Dollar Life Insurance in the Complex Estate Plan.
Alan Jensen and Brent Berselli - Intergenerational Split Dollar Life Insurance in the Complex Estate Plan.
Please join Alan Jensen and Brent Berselli in their 60 minute LISI webinar tilted "Intergenerational Split Dollar Life Insurance in the Complex Estate Plan." Intergenerational split dollar ("IGSD") arrangements are increasingly in the crosshairs of the IRS. In challenging such arrangements, the Service often takes a "kitchen sink" approach on audit and tax court litigation. Typical IRS challenges to invalidate the arrangement or limit its tax efficiency include:
(1) sham transaction, particularly if the arrangement lacks a substantial and apparent business purpose;
(2) step-transaction arguments pursuant to which the Service asserts that the IGSD amounts to a gift at inception; and
(3) valuation of the IGSD receivable included in the decedent's estate.
A favorable summary judgement ruling for the taxpayer in Morrissette v. United States alleviated one significant concern with respect to IGSD arrangements - a lump sum, single premium policy does not confer any benefit aside from current life insurance protection. Therefore, taxpayers may continue to avail themselves of the deemed ownership exception in the Treasury Regulations pursuant to which the donor is treated as the owner of the life insurance policies where the only benefit provided to the donee is current life insurance protection. Counsel structuring such arrangements, therefore, can have certainty that the structure will be governed by the economic benefit, rather than the loan, regime. Notwithstanding the taxpayer's initial victory, Morrissette remains in litigation. Messiers Jensen and Berselli will review the recent developments in Morrissette as well as provide insight into their experience litigating, and reaching a favorable settlement in, a similar case with the Service.
This presentation will also address:
· Overview and common uses of IGSD arrangements;
· Tax treatment (i.e. income, gift, estate) of structuring an IGSD arrangement under the economic benefit and loan regimes;
· Drafting tips to document the IGSD arrangement;
· Considerations in valuing the IGSD receivable in the decedent's estate; and
· Risks and traps to avoid in documenting an IGSD arrangement.
· And much more!
There will be no CE for this webinar
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