KEEPING CURRENT
About the December 2011 Issue

The December 2011 issue of Keeping Current explores these topics:

IRC Section 7520: Low Rates Provide Planning Opportunities and Risks

This article covers the planning aspects and implications of exceptional low IRC Section 7520 rates and provides the practitioner with helpful guidance on how these rates impact popular techniques, such as GRATs, CLATs, private annuities, and QPRTs. KC also provides insight on how the Section 7520 rate is determined and where you can find it when you need it.

The Turner Case: A Successful Twist on the Classic ILIT

The Turner case addresses whether an annual gift tax exclusion is available to a classic irrevocable life insurance trust when the grantor pays premiums directly to the insurer, rather than funding the trust and having the trust pay the premiums. In what is perhaps a surprising twist, the Tax Court found it irrelevant that the premium funding occurred directly and didn’t care that trust beneficiaries may not have even known of their annual withdrawal rights—it still found a present interest gift, and thus, the right to an annual exclusion. KC advises listeners to proceed with caution when following the Turner approach to paying ILIT premiums. There’s no guarantee that the IRS will follow the Tax Court’s decision on this issue.

Principal Life v. DeRose: Form Trumps Substance in Pennsylvania STOLI Case

In this article, Keeping Current discusses a recent Pennsylvania STOLI case that found in favor of the defendants on the issue of insurable interest. The court followed the strict letter of the law in concluding that an insured is free to transfer his or her policy to a party lacking insurable interest as long as there was insurable interest at the time the policy was purchased. The Pennsylvania court refused to apply a requirement of good faith where no specific good-faith language was required by the statute.

Insurable Interest and STOLI According to the Delaware Supreme Court:
The Dawe and Schlanger Cases

This article looks at the concept of insurable interest from the perspective of the Delaware Supreme Court—a substantially different view than that of the Pennsylvania court in DeRose. The Delaware Court looks beyond form and into the substance of the transaction—and the underlying purpose and intent of the state insurable interest laws. Unlike DeRose, this court concluded that the insured’s right to take out a policy with the intent to immediately transfer it is not unqualified—life insurance must be procured for a legal purpose and not as a wager on human life.

Keeping Current…a concise update that gives you so much for so little. Keeping Current is published quarterly and is available in the format of your choice—CD or podcast.

Keeping Current offers expert analysis by Stephan R. Leimberg, JD, CLU on the latest legislation, IRS rulings, tax cases, and court decisions. Supporting documents are available online to subscribers.

Annual Subscription (Select CD or podcast)
Society of FSP Members: $149
Nonmembers: $179

Single Issue Price (Select CD or podcast)
Society of FSP Members: $29.99
Nonmembers: $39.99

Order your December issue of Keeping Current today and keep in touch
with the important issues affecting the planning community.

To subscribe: 800-392-6900
Or order online at the Society Store.