Estate Planning Strategies for Uncertain Tax Reform

You often hear the only things certain in life are death and taxes, but now, taxes might even be in question. President Trump and the Republican Congress are expected to revamp taxes, but no one is sure what that might entail. But while Americans wait for the tax reform, there are some strategies for estate planners to follow. Accordingly, you should continue to encourage your clients to make annual gift tax exclusions, while contributing to 529 Plans as well as educational institutions and medical facilities directly. Implementing grantor retained annuity trusts (GRATs) will also help, as interest rates remain low, allowing clients to pass investment assets to their children without worrying about the gift tax exemption. Further, installment sales to a GRAT will not realize capital gains taxes. Additionally, family limited partnerships remain a viable tax minimization strategy to centralize investments, provide asset protection, and expand family investment opportunities. Community property trusts allow the surviving spouse to enjoy a step-up in basis, further creating an opportunity for the spouse to sell assets without paying capital gains taxes. Overall, implementing flexible planning into an estate plan will allow your clients to better plan for their future in uncertain times.

See Karen Demasters, Fidgety About Tax Reform? Here Are 10 Things Estate Planners Can Do Now, Private Wealth, May 12, 2017.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.