Mar 1, 2007 12:00 PM

By Charles L. Ratner, national director of personal insurance counseling, Ernst & Young LLP, Clevela

It's been five years since the Internal Revenue Service issued Notice 2002-8, the pronouncement that was supposed to clarify treatment of those split-dollar plans that had been established before the Service issued the final regulations. But many of the most fundamental questions about the tax implications of even the simplest steps taken to address these plans remain unanswered. Despite the uncertainties, though, one thing is clear: The tax and economic issues underlying many of these plans, particularly those involving irrevocable life insurance trusts (ILITs), are not going to be any easier to address as insureds get older and the amounts potentially subject to tax get bigger. It may be time to stop hoping that the IRS will provide the necessary guidance, start drawing some conclusions ourselves, and figure out what to do with these plans.

The type of plan we'll focus on here is typical: a collateral assignment equity split-dollar plan on the life of an employee (or joint lives of an employee and spouse) established before Sept. 17, 2003, the date the final regulations became effective. More particularly, we're focusing on plans that were in effect as of Jan. 27, 2002, the key date for special safe harbors afforded by Notice 2002-8. We'll refer to these pre-Jan. 28, 2002, plans as “existing plans.”

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

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