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Issue 43 – December, 2023

NAEPC Journal of Estate & Tax Planning

Editor-in-Chief Note
Author: Eido M. Walny, Atty, AEP®, EPLS

Remembering Hart Axley, the “Heart” of the National Association of Estate Planners & Councils
Long-serving NAEPC Board of Directors member Hartman Axley, CLU®, ChFC®, JD, CFP®, MSFS, RHU, AEP® (Distinguished) passed away on November 2, 2023. This tribute honors Hart and his impact on the association and the broader estate planning community.
Author: Eleanor M. Spuhler


Five Lessons from Recent Pre-Sale Planning Cases
Many clients look to minimize the tax costs of business succession when selling to a third party, employees, other shareholders, or transitioning within the family. It may seem the IRS thwarts attempts to do so that are outside the lines of accepted planning and tax rules. This article examines five lessons to be learned from three recent cases and one Chief Counsel Advisory (CCA) in which the IRS challenged pre-sale planning techniques.
Author: Mark R. Parthemer, JD, AEP®, ACTEC Fellow

Avoiding the Pitfalls: Practical Tips for Today’s Collectors
Recently, Heritage Auctions’ Trusts & Estates Department was approached by an heir who had inherited half of his father’s comic book collection and wanted to know what the sale potential and market value was for his inheritance. The comics turned out to be wonderful examples of some rare and excellent condition Golden and Silver Age comics from the 1940s through 1960s.
Author: Taylor Strander

Improving the Tax-Inefficiencies of GRATs with PPLI
Grantor Annuity Trusts (GRATs) allow clients the ability to move a large amount of assets outside of the estate so that part of the future appreciation of the assets is outside of the estate. However, they also introduce tax-drag and income tax-liabilities that these assets might not otherwise be exposed to. Therefore, the best way to maximize the value of a GRAT is to utilize the GRAT for assets that are tax-inefficient. This holistic estate and investment approach can be improved further by utilizing the GRAT as a vehicle to invest in private placement life insurance (PPLI) which allows the assets to compound without the tax drag.
Author: Rajiv Rebello, FSA, CERA

Do we know the impacts of Living Wills & the POLST Paradigm on the Health & Life Insurance Sectors
Living wills & the POLST (Physicians Orders for Life Sustaining Treatment) are well intended documents but have resulted in unintended consequences that have resulted in a national patient safety concern related to both over treatment and under treatment. Little is known on how this movement to embrace end of life documents has impacted the finances related to both the life and disability insurance sectors. We present an overview and call for more in depth research.
Authors: Ferdinando Mirarchi, DO, Thaddeus Pope, J.D., Ph.D., and Andrew Erman

Money Market Funds – What the Future Holds and Is My Money Secure?
Money Market Funds have grown at an explosive rate with the advent of higher interest rates being offered investors as a result of the Federal Reserve increasing the Federal Funds Rate over the last 20 months. This article describes recent SEC Amendments to Rule 2a-7 which governs Money Market Funds. These rule changes will hopefully provide more confidence to investors and advisors in determining how safe their money is within these funds.
Author: Paul S. Viren, CLU®, ChFC®, AEP®

A Guide to Admitting a Will to Probate for the Purpose of Validating the Exercise of a Power of Appointment
In this article, we explore why a common trust provision—a power of appointment exercisable by will—may require involvement of the probate court, and we suggest an alternative to a typical probate proceeding while still providing a mechanism to confirm the validity of the exercise of a power of appointment under the powerholder’s will.
Authors: Steven Platt, Esq., Jadene Tamura, Esq., and Suzie Vardanyan, Esq.

Charitable Giving from a Business Interest
In 2019, the World Giving Report reported a decrease in charitable donations by the US, despite being in a bull market (March 2009-Feb 2020). The United States did not rank in the top ten for donating money but did rank (5th) in the top 10 countries for donating time. However, another report shows that during 2020 there was a 48% increase from 2017 by affluent (defined as ≥ $1M net worth, excluding primary residence, and/or ≥ $200,000 annual income) households, which is probably more related to the 2009-2020 bull market as well as less to spend money on during the 2020 COVID-19 pandemic lockdown.
Authors: Thomas M. Griffith, AEP®, CAP®, ChFC® and Bronwyn L. Martin, MBA, ChFC®, CLU®, CLTC®, CRPC®, CFS®, CMFC®, AEP®, LACP, AIF®

“Messing” with Mom’s Estate – A Lawyer’s Guide
Interference with or manipulation of an estate plan is common. This article will explain the principal ways it happens and suggest how it can be recognized and corrected.
Author: Douglas H. Frazer, JD

Basic Estate Planning Documents: Overview and Planning Considerations
Professional articles and webinars so often focus on new developments, complex or creative new planning ideas, as practitioners are always seeking to understand what is changing and new ideas that they can bring to clients. However, the “bread and butter” of many practitioners, and a focal point of discussions all practitioners in all disciplines have with clients concerns the clients will, revocable trust, financial powers of attorney and health care documents. These “basic” or “core” documents, so important to practitioners and clients, don’t seem to get the limelight in the literature that they deserve. This article will seek to provide a practical discussion of these core documents. While many of the points are familiar to practitioners, the comments should be helpful to younger practitioners, and those not fully specialized in estate planning. Also, the discussions following will hopefully include many practical pointers some of which will hopefully be helpful to even experienced practitioners.
Authors: Thomas A. Tietz, Esq., Martin M. Shenkman, CPA/PFS, MBA, JD, AEP® (Distinguished), and Abigail E. O’Connor, Esq.

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