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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Estate Planning

Date & Time
  • event Date

    Wednesday, September 7, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$297.00
CLE
CPE
ALL

This CLE/CPE webinar will provide estate planners and advisers with a thorough and practical guide to the use of split-dollar life insurance arrangements after the U.S. Tax Court holding in the Levine case. The panelist will offer specific guidance on drafting split-dollar agreements (SDAs) considering the court’s ruling and will give practitioners useful tools to structure the arrangements to conform with the favorable economic benefit doctrine.

Faculty

Gerald R. Nowotny
Managing Partner
Law Office of Gerald R. Nowotny, PLLC

Mr. Nowotny has over 30 years in the insurance and financial planning industries. He has developed an expertise in tax reduction and deferral strategies. Mr. Nowotny has developed a national reputation in private placement insurance products which are institutionally priced insurance products for ultra high net worth and institutional buyers. His expertise covers domestic and international applications with these products.

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Chaim Borevitz
Managing Member
Crown Value, LLC

For over 20 years, Mr. Borevitz has valued all types of businesses, including manufacturing, wholesale, retail, professional services, IT, bio-tech, entertainment/sports, and natural resources. His experience valuing intangibles goes beyond various types of equity, debt structures, and derivatives. Mr. Borevitz has valued artistic copyrights, licenses, and is a nationally recognized expert in the valuation of intangible assets related to split dollar life insurance. In addition to valuation services, he provides consulting and exit planning advisory services to business owners and PE firms.

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Description

Estate of Levine v. Commissioner illustrates the importance of careful estate planning when using SDAs involving life insurance policies. The Tax Court held that the value included in a taxpayer's gross estate for a receivable created under a split-dollar life insurance arrangement was the value of the receivable and not the cash-surrender value of the insurance policies purchased under the arrangements.

The Tax Court's ruling represents a significant win for estate planners using split-dollar life insurance transactions. A critical component of the court's ruling was that Sections 2036 and 2038 did not require inclusion of the policies' cash-surrender values due to the fact that only the insurance trust, and not the decedent, could terminate the life insurance policies, and also stating that Section 2703 was inapplicable to the split-dollar receivable because there were no restrictions on it.

Counsel should understand the valuation rules to structure transactions to ensure that the transaction and the valuation of the receivables conform with IRS rules under the economic benefit and loan regime, which govern the income and gift tax consequences of split-dollar arrangements.

Listen as Gerald R. (Gerry) Nowotny, JD, LLM, Managing Partner at Law Office of Gerald R. Nowotny, provides guidance for structuring SDAs. The panelists will review the available "regimes" that govern taxability, estate planning benefits, appropriate life insurance policies, structuring the SDA, and termination.

Outline

  1. Benefits and complexities of the SDA
    1. Gift tax leverage
    2. Estate tax leverage
    3. Control
    4. Administration
  2. Income tax impact of Levine
    1. Questions regarding the valuation of receivables under an SDA
    2. Key considerations and challenges
  3. Structuring the SDA
  4. Termination

Benefits

The panelist will discuss these and other important topics:

  • What is the significance of the Tax Court's holding in Levine?
  • How to structure an SDA so it avoids the more restrictive valuation rules
  • What traps to avoid in the valuation of receivables arising from the purchase of the premiums in structuring an SDA?
  • Under what client circumstances would the use of an SDA be most appropriate?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify the advantages of utilizing the IRS' economic benefit regime in providing valuation of SDAs
  • Recognize the types of insurance policies and arrangements that are appropriate for SDAs held in trusts
  • Decide the ideal client situation for use of an SDA
  • Determine the existing valuation issues on receivables arising from an SDA

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex trusts and tax schedules; supervisory authority over other attorneys/estate planners. Knowledge and understanding of grantor trust structures, life insurance and split dollar arrangement plans. Familiarity with structuring sales transactions to trusts; familiarity with valuation discounting practices, acceleration and other trust provisions, and asset basis.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).