Planning Potpourri


Alternate Valuation:

An estate is allowed, in very general terms, to value estate assets 6 months after death. With asset values declining this can be important. Consider making a protective Code Section 2032 election as a hedge against IRS valuation attacks. The executor can check the box on Form 706 indicating "Yes" for the alternate valuation election, and then write the words "protective", and file the 706 with regular values.  Because of the economy some practitioners are making this procedure a regular practice. There does no seem to be any prohibition in the regulations against this. Caution: Using alternate valuation may change relative values of assets and help qualify the estate for other tax bennies, like the IRC Sec. 6166 estate tax deferral, or zap your ability to qualify. Thanks to Steven B. Gorin, Esq. of Thompson Coburn LLP, St. Louis, Missouri for this clever idea at the ABA RPTE Spring Meeting.

529 Plans:

Wealthy taxpayers have always set up trusts for children, and in particular grandchildren to pay for college. Now that those trust investments have been so hammered, and the wealthy families feeling the pinch of recession and market meltdown, many are looking to invest the trust funds into 529 plans to eliminate the costs of maintaining trusts and/or to better qualify the grandchildren for financial aid since trust assets may be counted more heavily then are 529 assets. The trust itself may be able to transfer assets to a 529 plan. Another approach is that the language of the trust may be broad enough to permit the funds to be distributed out of the trust to a 529 plan.

Love Life insurance: We don't sell insurance so we can tell you with a straight face -- when President Obama raises taxes on the wealthy the tax deferred growth inside that permanent insurance policy is going to look pretty appetizing (well, so long as the insurance company stays in business). Put that in the pot as you rethink insurance coverage in light of all the other changes.

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