Estate Planning is on everyone's mind in the high net worth space these days.  As good as the reasons are for that focus, lost in the shuffle are the other opportunities that the transfer of assets can create.

Just what do I mean?  A couple things.  One is the issue of trust asset management now that these ILIT's may be funded with large lump sums rather than annual exclusion gifts.  That scenario demands an entirely different skill set for the advisor as well as the trustee and creates a multitude of opportunities.  Today, however, we look beyond the grantor and asset management issues to the trust beneficiaries.

Clearly, the next generation stands to inherit an enormous amount of money.  If the family is in a position to make a large lifetime gift to take advantage of the current favorable tax environment, they are almost certainly in a place to take action on some planning for the next generation.  If you and your client do decide to execute on some Generation Two planning, clarity and documentation around Generation One's estate plan are essential ingredients in successfully implementing a life insurance solution as part of that plan.

There is at least one carrier out there that has gone as far as publishing guidelines for us to follow.  I also queried a few additional carriers and while they are open to the idea, they do not have any published guidelines and review these cases on their individual merits.  Here are some examples of the criteria the one carrier is looking for:

• Generation One needs to be fairly advanced in age, or have a very short life expectancy
• Review of estate planning documents to verify the transfer to Generation Two
• Third party verification of the net worth of Generation One

Obviously, these are all things that should already be known once the planning is complete for Generation One and I am sure that the carriers without published guidelines will also need to know these facts.  If the Generation One plan has been funded by a lifetime gift, we can even use annual exclusion gifts to fund the planning for Generation Two, and I certainly do not need to tell you that the cost of any insurance solution will never be lower than it is right now when Generation Two is of a nice young age!

The bottom line is that the recent estate tax law changes have created opportunities that are still being realized.  The irony is that the techniques being used are all tools that we have had at our disposal for years.  The only thing that has changed is perhaps a renewed sense of urgency in the planning community, and ideally, our clients.

Enjoy the long weekend, we will be closing at 2:00 Pacific.