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his article is the second installment Planning for her older age, Levine
gave her children statutory power of
Tof an annual update on recent Levine provides an
attorney in 1996 so they could manage
developments in trust, estate, and gift
her affairs if she became incapacitated. example of how to
taxation. The first installment appeared
Because the relationship between her structure split-dollar
in the November issue, and the third children was somewhat strained, Levine
installment will appear in the January also gave a power of attorney to a arrangements to avoid
2023 issue. The update covers develop- family friend and business associate, Secs. 2036 and
Bob Larson.
ments in estate and gift tax returns and 2038 altogether.
Marion Levine, Larson, Robert
planning during July 2021 through July
Levine, and Nancy’s husband, Larry
2022.
Saliterman, had formed 5005 Properties
and 5005 Finance to manage the fam- right to repayment would be considered
Estate tax — split-dollar life ily’s real estate holdings and associated a receivable that the estate would have
insurance arrangements businesses. Larson, Robert, and Larry to report on the estate tax return. Levine
Cash-surrender values not managed the day-to-day operations, ultimately loaned the trust $6.5 million
includible in decedent’s estate and Marion Levine provided the to pay the life insurance premiums.
The Tax Court, in a fully reviewed opin- funding. An accountant by training, To orchestrate this set of transactions,
ion,1 sustained an estate’s position that Larson ultimately became president of the estate planning firm created the
the cash-surrender values of certain life both companies. Marion Levine 2008 Irrevocable Trust
insurance policies were not includible Levine began planning her estate (an insurance trust) to own the split-
in the estate. Specifically, the court held in 1988, creating the Marion Levine dollar life insurance policies; Levine’s
that (1) a decedent who had entered into Trust (a revocable trust), for which (1) children and grandchildren were the
split-dollar life insurance arrangements she was the trustee; (2) Larson, Robert, trust’s beneficiaries. Robert, Nancy, and
that required her revocable trust to pay and Nancy were successor trustees; and Larson served as attorneys-in-fact, and
the policies’ premiums possessed a receiv- (3) Nancy, Robert, and their children the South Dakota Trust Co. LLC served
able created by the arrangements; (2) were the beneficiaries. In 2005, Levine as an independent trustee, with admin-
Secs. 2036(a)(2) and 2038 did not require resigned as trustee and made Larson, istrative obligations but no ability to
the policies’ cash-surrender values to be Nancy, and Robert the sole co-trustees. choose investments for the trust. Larson
included in the gross estate because the An estate planning firm worked was the sole member of the investment
decedent had no right to terminate the with Levine between 1996 and 2007 committee; South Dakota law defined
policies; and (3) Sec. 2703 applied only to to determine how best to handle her certain fiduciary obligations the invest-
property interests the decedent held when estate and pass it on to her children ment committee had to the insurance
she died. and grandchildren. The firm set up an trust and its beneficiaries.
Marion Levine launched several highly intergenerational split-dollar life insur- Larson approved the split-dollar
successful businesses and amassed a for- ance arrangement under which she (via life insurance arrangement on behalf of
tune of approximately $25 million by the the Marion Levine Trust) would con- the insurance trust and was subject to a
time she died. Levine’s business ventures tribute money to a trust organized for fiduciary duty to exercise his power to
began with a grocery store that she owned the benefit of her children and grand- direct the insurance trust’s investments
with her husband. After his death, she children, and the trustees would use “prudently.” Because Robert had a pre-
sold the grocery business and used the the contributed funds to purchase life existing health condition, the insurance
proceeds to branch into various real estate insurance policies on her two children’s trust decided to purchase two “last-to-
investments, stock portfolios, interests in lives. In return, the trust promised to die” life insurance policies on Nancy and
Renaissance fairs and mobile home parks, pay Levine the greater of (1) the money Larry rather than on Nancy and Robert.
and private lending. Her son, Robert, she advanced or (2) the policies’ cash In summer 2008, Nancy, Richard, and
worked in the family business as an adult, value upon the earlier of the insureds’ Larson, as attorneys-in-fact for Levine,
but her daughter, Nancy, did not. deaths or the policies’ surrender. The executed (1) paperwork on several loans

1. Estate of Levine, 158 T.C. No. 2 (2022).

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