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Graegin Loans and Estate Tax Planning: Recent IRS Regulations, Requirements, and Potential Limitations

Recording of a 90-minute CLE/CPE video webinar with Q&A

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Conducted on Friday, May 17, 2024

Recorded event now available

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This CLE/CPE webinar will provide trusts and estates counsel guidance on utilizing Graegin loans to minimize estate taxes and potential limitations stemming from recent IRS regulations. The panelist will discuss recent developments and IRS guidance, review requirements under current tax law, and offer planning strategies to minimize estate taxes with Graegin loans.

Description

Graegin loans can provide estates the ability to defer and reduce estate tax liability. Estate planners must understand the requirements under current tax law when utilizing Graegin loans, pitfalls to avoid, and potential limitations under recent IRS regulations.

For low liquidity estates, a Graegin loan can be used as a mechanism to finance payment of estate tax and administration expenses. Rather than selling one or more illiquid assets to pay an estate tax, the estate may borrow cash through a Graegin-style loan. The loan can finance estate tax liability and defer cash payments if structured correctly. In addition, interest payments made over the term of the loan can be deductible, further reducing estate tax liability, especially for estates that would not otherwise qualify for estate tax deferral under IRC Section 6166.

To qualify for an interest deduction, the loan must be structured to comply with IRC Section 2053 and related regulations, which allows for the deduction of administration expenses from the value of the gross estate that are "actually and necessarily" incurred in the administration of the estate. However, recent IRS regulations appear to provide significant limitations regarding the use of Graegin-style loans and the tax benefits they provide.

Listen as Benjamin Lavin, Attorney at Katten Muchin Rosenman, discusses recent developments and IRS guidance, outlines requirements under current tax law, and offers planning strategies to minimize estate taxes with Graegin loans.

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Outline

  1. Graegin loans under current tax law
  2. Recent IRS regulations
  3. Structuring Graegin-style loans
  4. Best practices for trusts and estate attorneys

Benefits

The panelist will discuss these and other key issues:

  • How can Graegin-style loans be used to reduce estate tax liability?
  • What are the requirements under current tax law?
  • What pitfalls must be avoided when structuring Graegin loans?
  • What is the impact of recent IRS regulations?

Faculty

Lipoff, Lawrence
Lawrence M. Lipoff, CPA, TEP, CEBS

Director
CohnReznick

With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private...  |  Read More

Zeger, Sahri
Sahri Zeger

Principal
CohnReznick

Ms. Zeger, JD, MBA, leads CohnReznick’s Trust & Estates group. She has more than 20 years of experience...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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