Now that the Tax Cuts and Jobs Act (the Act) has doubled the estate, gift and generation-skipping transfer tax exemptions, many estate planners have been confronted by clients who are questioning the need for life insurance. Planners must help clients avoid making rash decisions and be prepared to answer specific questions regarding the value and need for insurance. In their article, “The Ways and Means of Tax Planning With Life Insurance After Tax Reform,” p. 47, based on a presentation that they gave at the 2018 Heckerling Institute on Estate Planning in Orlando, Fla., Charles L. Ratner and Lawrence Brody review some difficult questions planners may now face and provide some suggestions for how to answer them. Robert W. Finnegan also grapples with the future of life insurance in light of the increased exemption amounts in his article, “Planning With Life Insurance in Uncertain Times,” p. 54. Pointing out that the increased exemption amounts represent a “Golden Age of estate planning,” he explains that delaying planning isn’t wise and proposes a more holistic approach that focuses on a client’s financial security. Rounding out our Committee Report on Insurance is an article on an adaptable split-dollar technique—called the “switch dollar”—as an efficient way of funding a trust-owned life insurance policy.
The Act also affects clients with disabilities by making important enhancements to the provisions regarding Achieving a Better Life Experience (ABLE) accounts. ABLE accounts provide qualifying disabled individuals with an opportunity to save for their qualified disability expenses on a tax-favored basis. The new provisions are outlined in “ABLE After the 2017 Tax Act,” p. 17, by James W.C. Canup.
In his “Tips From the Pros” column, p. 10, Turney P. Berry offers a positive spin on the Act and picks up on the “Golden Age of estate planning” theme. He concludes that the Act ushers in this Golden Age by offering the “hook” of increased income tax basis.
