Proactive Tax Planning Strategies in Uncertain Times
This presentation explores proactive tax planning ideas and strategies for financial professionals in navigating the uncertain tax environment, including managing assets, adapting to changes, and understanding potential tax implications. It covers current tax proposals, expectations from Washington, and key considerations for tax planning in 2017.
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Presentation Transcript
5 Planning Ideas for the New Tax Environment Proactive Planning in Uncertain Times Dick Kait, J.D., LL.M. (Taxation), CLU, ChFC 2nd Vice President - Advanced Sales Protective Life Insurance Company PLAG.10597.03.17 For Financial Professional Use Only. Not for Use With Consumers.
Important Information This presentation contains statements regarding the tax treatment of certain financial assets and transactions. These statements represent only our current understanding of the law in general and are not to be considered legal or tax advice by purchasers. Personal and business, income, estate, gift, and generation skipping tax rules are subject to change at any time. Neither Protective Life nor its representatives offer legal or tax advice. Purchasers should consult with their legal or tax adviser regarding their individual situations before making any tax-related decisions. The income tax on an IRA is not due until each distribution is taken. If the participant made non- deductible contributions to the IRA, a portion of the IRA proceeds may be an income tax-free return of basis. While these strategies may help reduce or eliminate income taxes, they may cause an equal or greater amount of estate taxes, depending on the client s individual situation. 2 For Financial Professional Use Only. Not for Use With Consumers.
Agenda Current Tax Proposals ? What s Next? Planning Ideas Messages and Opportunities 3 For Financial Professional Use Only. Not for Use With Consumers.
What to expect from Washington in 2017 Repeal/Replace Affordable Care Act (ACA) Border Adjustment Tax (BAT) or alternative One-Time 10% Tax on Offshore Corporate Profits Cut 35% corporate income tax top rate to 15%- 20% Tax relief for non-corporate small businesses is an option Individual Income and Capital Gains Tax Cuts Reduce income tax rates to 12%, 25%, 33% Repeal 3.8% surtax on investment income Reduce capital gains to 6%, 12.5%, 16% Repeal Estate and Gift Taxes (possible capital gains offsets) Treasury Regulations Suspension and Review 4 For Financial Professional Use Only. Not for Use With Consumers.
Planning Ideas for the Uncertain Tax Environment For Financial Professional Use Only. Not for Use With Consumers.
#1 - Flexibility and Adaptability Managing Assets Through Uncertain Times For Financial Professional Use Only. Not for Use With Consumers.
#1 - Flexibility and Adaptability Flexible Trusts Intentionally Defective Trusts 7 For Financial Professional Use Only. Not for Use With Consumers.
#2 Connect with Small Business New Optimism and Expectations about Growth For Financial Professional Use Only. Not for Use With Consumers.
#2 Connect with Small Business Owners Optimism in small business community Source of new sales opportunities More competition for skilled workforce Solving multiple needs of business owners Business Continuation Buy-Sell Agreements Key Person Protection Executive Compensation Plans Bonus Arrangements Deferred Compensation LIRP for Pass-Through Business Owner 9 For Financial Professional Use Only. Not for Use With Consumers.
#3 Thinking Inter-Generationally New relationships for new planning opportunities For Financial Professional Use Only. Not for Use With Consumers.
#3 - Thinking Inter-Generationally G1 Oldest Generation Grandparents G2 Middle Generation Children Youngest Generation Grandchildren G3 11 For Financial Professional Use Only. Not for Use With Consumers.
#3 - Thinking Inter-Generationally Develop Your Relationships with G2 and G3 Retain and expand your business Family protection and wealth transfer scenarios Business continuation Gift for Life Review Beneficiaries of ILITs and Dynasty Trusts Protecting Inherited IRA Wealth 12 For Financial Professional Use Only. Not for Use With Consumers.
Gift for Life G1 Pays Premium for Policy on G3 G1 G1 gifts premium for Life Insurance Policy on G3 G2 G2 may be under-insured G3 can access cash value for college, first home, or retirement income. G3 Policy 13 For Financial Professional Use Only. Not for Use With Consumers.
Existing ILIT with Multiple Beneficiaries $14,000 X Number of Beneficiaries G3 G3 G1 funds ILIT with G2 and G3 as Beneficiaries G1 G3 G3 G3 G3 G3 G3 G2 G3 G3 ILIT G2 G3 G3 G3 G3 G2 G3 G3 G3 G3 14 For Financial Professional Use Only. Not for Use With Consumers.
Inherited IRA Beneficiary Trust IRA owner creates IRA Beneficiary Trust as Designated Beneficiary of his/her Traditional IRA Traditional IRA 2 1 Trustee IRA Beneficiary Trust 2 2 Mandates Lifetime Stretch Protected from Creditors Beneficiaries 3 3 3 Son Age 42 Daughter Age 22 Son Age 45 15 For Financial Professional Use Only. Not for Use With Consumers.
#4 Stabilizing Asset Values New Opportunities with Basis Planning For Financial Professional Use Only. Not for Use With Consumers.
#4 Stabilizing Asset Values Insurance as an Asset Class Diversify Investment Portfolio Mitigate volatility and over-concentration Source of liquidity when needed Optimize Legacy Growing influence of Basis Planning More Granular Analysis of Client s Assets 17 For Financial Professional Use Only. Not for Use With Consumers.
Basis Planning Estate Planning Integrated with Income Tax Strategies 4 ways to transfer wealth inter-generationally each with its own impact on multiple levels: H G S L 18 For Financial Professional Use Only. Not for Use With Consumers.
Basis Planning We ask key questions 4 Fundamental Ways to Transfer Wealth each with its own purpose, usefulness and tax impact on various generations. Hold Until Death avoids tax on pre-death appreciation, but delays wealth transfer until after the owner s death. Lifetime Gift transfers wealth but loses step-up in tax basis if transferred occurs upon death. Sale Before Death transfers wealth, but with potential capital gains and/or income tax exposure. Loan Before Death Gives G2 access to G1 s wealth and ability to leverage G1 s financial strength before G1 dies. H G S L 19 For Financial Professional Use Only. Not for Use With Consumers.
#5 Efficient Planning for Couples For Financial Professional Use Only. Not for Use With Consumers.
#5 Efficient Planning for Couples Survivor UL market after Estate Tax Repeal? Before final legislation? Coverage up to 50% of Net Worth Survivor Term (convertible) 21 For Financial Professional Use Only. Not for Use With Consumers.
Uncertainty and Volatility Leads to Opportunity For Financial Professional Use Only. Not for Use With Consumers.
Thanks from Protective Lifes Advanced Sales Team Dick Kait, JD, LLM, CLU, ChFC, 2nd VP - Advanced Sales richard.kait@protective.com (513) 362-1537 hardait@protective.com Victor Gentner, Director Advanced Sales vic.gentner@protective.com (513) 362-4840 For Financial Professional Use Only. Not for Use With Consumers.
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