Estate planning often encompasses, at least in part, business succession planning. Many individuals own family businesses with the idea of passing the business on to the next generation. Of course, the bigger the business, the more complex that endeavor becomes. Yvon Chouinard recently made headlines when he donated 98% of his $3 billion company to an Internal Revenue Code Section 501(c)(4) organization. The move saved him millions in taxes, furthered his family’s political agenda, and embodies a creative solution to a common planning and business succession planning issue.
While many taxpayers may be excited about the prospect of reduced loan balances as part of Biden’s Loan Forgiveness Program, they may have questions about the potential tax consequences of that forgiveness. Under normal circumstances, creditors that discharge debt issue a corresponding Form 1099-C Cancellation of Debt to the debtor for inclusion in that year’s income. While the administration works out the kinks in the loan forgiveness plan, it’s important to understand the current provisions of the Internal Revenue Code and the general principles that govern these situations.
As part of the Estate Planning process, an attorney explores numerous topics with the client to help create a unique plan tailored to the client’s circumstances. Many estate plans use a trust as the centerpiece of the plan. Some clients want to explore asset protection and let the attorney know they want to consider offshore planning. Sometimes, offshore planning works, but often it causes additional issues.
As part of the Estate Planning process, an attorney explores numerous topics with the client to help create a unique plan tailored to the client’s circumstances. Many estate plans use a trust as the centerpiece of the plan. Inevitably, clients want to understand the degree, if any, of asset protection that will result from the creation of a trust. There are numerous ways to achieve asset protection planning for a client.
To determine a decedent’s taxable estate, the Internal Revenue Code allows the decedent’s estate to utilize several deductions in various Code Sections, including Section 2053. The Treasury Regulations associated with Section 2053 were favorable to the taxpayer and contained broad language regarding the deductibility of claims and expenses. Recently, the Internal Revenue Service promulgated Proposed Treasury Regulations that would narrow the benefit of taking certain deductions to an estate.