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High Net Worth Family Tax Report, Vol. 16, Issue 2

Welcome back to Loeb & Loeb’s High Net Worth Family Tax Report, bringing you in-depth articles highlighting important topics and providing practical insights for high net worth individuals, with a focus on trusts and estates, tax, family offices, and tax-exempt organizations. 

With the new year almost here, this issue includes articles on year-end planning reminders and 2024 inflation adjustments, summarizing actions that individuals may want to consider as part of their tax planning for the remainder of this year and into the next.

Associate Vanessa Davidson and partner Danielle E. Miller review planning opportunities for high net worth families to maximize the benefits of the higher federal gift, estate and generation-skipping transfer tax exemptions ($13.61 million in 2024) before these increased levels sunset in 2026. In our Family Office Corner, featuring insights on topics of interest to our family office clients, partner Stefan Schick discusses the unique world of Broadway entertainment and the issues family offices and other potential investors should consider before investing in a Broadway production. 

Looking at the increasing popularity of directed trusts and corresponding developments in state legislation, partners Camille Lu, Danielle E. Miller, Cristine Sapers and Todd I. Steinberg; senior counsel Jennifer M. Smith; and associates David V. Khanjyan and Erica Stern summarize the rules applicable to settlors and trustees when creating directed trusts in various states, including the recent enactment of the California Uniform Directed Trust Act, which takes effect on Jan. 1, 2024. 

Finally, in case you missed it, partner Alyse N. Pelavin and senior counsel Christina Hammervold summarize the reporting requirements taking effect on Jan. 1, 2024, that will require most entities to report beneficial ownership information to the U.S. government in their alert Beneficial Ownership Reporting Under the Corporate Transparency Act (CTA)—Key Questions Answered, and partners Kimberly Eney and Diara M. Holmes and associate Kensington Wolgamott review recently issued proposed regulations affecting donor-advised funds, including what qualifies as a “donor-advised fund,” a “donor” and a “donor-advisor,” in their alert Proposed Regulations on Donor-Advised Funds—Part I of the Anticipated Guidance: What Qualifies and What Doesn’t.

In This Issue:

Year-End Planning Reminders: Last-Minute Action Items

With 2024 looming, individuals should consider several year-end planning action items. Read more here.

2024 Inflation Adjustments for Personal Tax Planning

The IRS has announced 2024 inflation adjustments for several personal tax planning items. Read more here.

Planning for 2026: Opportunities and Drafting Guide

To maximize the benefits of higher gift and generation-skipping transfer tax exemptions before they sunset in 2026, high net worth families may want to consider planning opportunities such as a gift and/or sale to a grantor trust and/or the creation of a spousal lifetime access trust. As 2026 nears, heightened demands will be placed on advisors and potential trustees to help implement transactions, so it is advisable to consider planning sooner rather than later. Read more here.

Family Office Corner: The Basics of Investing on Broadway

To mount Broadway plays and musicals, the producers raise much of the financing from individuals and family offices. At a time when the Broadway industry is still rebounding from the COVID-19 pandemic and established producers are looking to widen their investor base, more and more individuals and family offices are being offered Broadway investment opportunities. Anyone contemplating an investment in a Broadway show should consider several important issues and questions. Read more here.

Using Directed Trusts to Create More-Customized Estate Plans: Legislative Developments in California and Other States

So-called directed trusts have become increasingly popular in trust planning as a “team” approach to trust administration. Many states, including most recently California, have enacted legislation specifically to address directed trusts. When considering directed trusts, trust settlors, trustees and others given powers to provide directions for the trust should understand the responsibilities and liabilities applicable under state law and which rules, if any, can be modified or waived by the trust agreement. Read more here.
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