Vernon Hollemon, III, has made available for download his article,Creating Tax Mitigation, Diversification, and Leverage in Grantor Trusts with Life Insurance, which was published in the Tax Management Estates Gifts & Trust Journal. The abstract is as follows:
After solid return years in the stock market in both 2013 and 2014, along with two filed tax returns where Grantors viewed the actual taxes — not just an estimated number — that they sent to the IRS, as well as a re-hydration period following the mad dash that occurred at the end of 2012, Grantors are now ready to focus on how to reduce the taxes they are personally paying in their Grantor Trusts (even if 2015 yielded modest or negative returns). The re-hydration period also may have included a swap of Trust assets in cases where Grantor made gifts at the end of 2012 and traded the gifted assets for other assets since that time.
The taxes paid in 2014 and 2015 have the attention of Grantors. While the argument that taxes paid by
Grantors are an additional estate planning benefit be cause they get dollars out of the taxable estate without imposition of a transfer tax or additional use of exemption amount has merit, Grantors deserve exposure to tax mitigation alternatives. Advisors and planners need to be pro-active in helping clients explore opportunities for tax reduction and other goal achieving planning benefits. Diversifying Grantor Trust assets with life insurance is one such strategy.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.