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February 2022
Transcript for Episode 4
Published February 23, 2022
Last year saw the emergence of several proposals under the Build Back Better Act that would impact U.S. taxpayers if signed into law. However, at this time, they have not come to fruition. According to Belinda Herzig, senior wealth strategist at BNY Mellon Wealth Management, other near-term developments could still lead to higher taxes. In this episode, Herzig covers expiring federal tax provisions, the prospect of higher gift and estate taxes, and using strategic borrowing to meet tax liabilities while still remaining invested. Join Ben McGloin, host of Your Active Wealth and head of advice, planning and fiduciary services at BNY Mellon Wealth Management, as he and Herzig discuss everything you need to know about taxes this year.
Below is a list of terms and acronyms discussed in this episode:
ESBT – Electing small business trust: A single trust for administrative purposes, such as having one taxpayer identification number and filing one tax return.
AFR – Applicable federal rates: The minimum interest rate that the IRS allows for private loans.
SLAT – Spousal lifetime access trust: An irrevocable trust where one spouse makes a gift into a trust to benefit the other spouse (and potentially other family members) while removing the assets from their combined estates.
GRAT – Grantor retained annuity trust: A financial instrument used in estate planning to minimize taxes on large financial gifts to family members.
IDGT – Intentionally defective grantor trust: An estate planning tool that is used to freeze certain assets of an individual for estate tax purposes, but not for income tax purposes.
CLAT – Charitable lead annuity trust: A charitable trust where a charity, donor advised fund or foundation of the grantor’s choosing received annual payments, either for a term or the grantor’s lifetime.
ICL – Investment credit line: A loan backed by assets in your portfolio, which can offer substantial loans at relatively lower rates.
ILIT – Irrevocable life insurance trust: A type of trust funded during your lifetime with one or more life insurance policies.
SALT deduction – State and local tax deduction: Allows taxpayers who itemize their deductions to reduce their taxable income by the amount of state and local taxes they paid that year, up to $10,000.
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