Grantor Trusts

We just attended one of the top estate planning conferences in the country. Held October 28th and 29th the Notre Dame Tax and Estate Planning Institute had speakers from around the country who presented as to the most current thinking on estate planning issues. In this era of legislative uncertainty there is one wealth transfer strategy with significant appeal for high net worth families-- grantor trusts.

Grantor trusts require the grantor (Dad) to pay the income taxes on the trust earnings while the full amount of the trust may accumulate for next generation beneficiaries (children and grandchildren). Structured properly, the income tax paid by Dad on a grantor trust represents transfer to next generation free of estate and gift tax. There are many possible enhancements to the strategy, however at the core stands the grantor trust as a powerful strategy that high net worth taxpayers should consider using.

Public-Employee Union is Biggest U.S. Election Outside Spender

One can't help but notice that on the heels of the U.K. announcing significant public-sector job cuts in an effort to balance their budget, in the U.S. the biggest outside spender for the 2010 elections is the American Federation of State, County and Municipal Employees (AFSCME).  Given an early 2010 Supreme Court decision that permits corporations and unions to use their own funds to pay for political ads, AFSCME is directing $87.5 million to help elect Democrats and presumably protect public sector jobs.

AFSCME's membership has grown 25% in the last decade, the Wall Street Journal reports http://tinyurl.com/284zude.  As government spending at all levels comes into the cross-hairs of those determined to reduce deficits, it is astounding to see the open effort by AFSCME to elect those who they will then turn to and ask for job protection.  Here's hoping the election winners are the candidates who will most honestly approach our budget deficit issues at the local, state and national levels!

U.K. Government Planning Significant Cuts

The U.S. should sit up and take notice at the significant cuts planned by the U.K. government http://tinyurl.com/26lpupc.  As many as 500,000 public sector jobs will be cut, although it is worth noting the U.K. presently has 6 million government jobs in a country with 62 million population, while the U.S. has about 2 million government jobs and 300 million population.

Still, the U.K. is taking the route of trusting that significantly shrinking the public sector will permit the private sector to flourish.  Maybe after the November elections some in political leadership will have the courage to follow a similar theme in the U.S. while we still have time to do more measured cuts and before we are backed into the same drastic cuts corner where the U.K. now finds themselves!