United States

Proposed 2704 regulations have significant life insurance implications


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The long-awaited proposed regulations under section 2704 are out. If they become final, these regulations will have a profound impact on planning for transfers of interests in business entities.

The focus of the commentary on the proposed regulations has naturally been on the significant implications on wealth transfer planning and the associated valuation issues. And, to be sure, there will be renewed focus on transfers that do not involve the business entity itself, e.g. transfers of fractional interests in an underlying asset such as real estate.

Meanwhile, however, the implications of these regulations on the use of life insurance for estate liquidity are also quite profound, both for those whose irrevocable life insurance trusts (ILITs) own policies today and for those who are considering buying policies via ILITs. Read our white paper to learn about a few associated observations on what planners should be talking about in the coming weeks and months.


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