The Tax Chick Podcast THE TAX CHICK PODCAST LIVE!!!! The Estate Planning Toolkit - the importance of collaboration amongst advisors! (Part II)
Nov 2, 2022
Yoss Herman, an experienced estate-planning practitioner, joins to unpack the complexities of estate planning. He emphasizes the critical role of shareholder agreements in preventing family business disputes and offers insights on the necessity of documenting intentions for lifetime gifts. The discussion also highlights the strategic use of corporate-owned life insurance for liquidity and the importance of understanding family dynamics in planning. Yoss tackles emerging hot topics, such as the implications of joint ownership and the nuances of beneficiary designations.
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Document Shareholder Rules Early
- Do document shareholder agreements even among family to set clear rules for decisions, death, injury, divorce, or bankruptcy.
- Negotiate terms while relationships are good so disputes follow the agreement, not emotions.
Use Corporate Life Insurance For Liquidity
- Do consider corporate-owned life insurance to provide liquidity for buyouts and urgent needs when a shareholder dies or becomes incapacitated.
- Ensure the policy ownership and beneficiary align with the shareholder agreement so proceeds fund planned buyouts tax-efficiently.
Insurance Premiums Aren't Automatically Deductible
- Insurance premiums paid by a corporation are generally non-deductible and must meet strict Income Tax Act rules to be deductible.
- Treat corporate-paid premiums as liquidity tools, not guaranteed tax deductions, and check subsection rules like 21E.2.