24 Clauses For 8 Estate Planning Opportunities After The 2017 Tax Cuts And Jobs Act (45 Pages)

The passage of the 2017 Tax Cuts and Jobs Act has heralded a new era in estate planning. The greatly increased transfer tax exclusion to $11.18 million, indexed for inflation, is effective from 2018 through 2025, when it is suspended, and returns to the 2017 levels, indexed for inflation. Taking into account political risk, the opportunity to take advantage of the 2017 law could be a once in a lifetime opportunity. Portability is retained. Estate tax planning is “simplified” for many people. Seeking optimal income tax basis adjustments is a goal for everyone. 

That said, however, for many people, the need for trusts and more sophisticated planning may not be just a matter of tax planning. That has been simplified. However, issues of asset protection, management, blended families, state death taxes, providing for multi-generations of a family, etc. have not vanished with the passage of the 2017 Act. Instead, planners now have more options to present to clients – options that require careful selection and preparation of the Forms needed to address a wide variety of planning issues.

Portability.  Portability is simply an estate and gift tax “game changer.” The ability for one spouse to leave all of his or her property to the surviving spouse with no loss of the transfer tax exclusion available at the first death without the need to address complex planning for titling of assets, avoid possibly unwanted trust creation at the first death and have a “simplified” estate plan will be of great appeal to many clients. It will be the right plan for some, but not for others. Note that once established, by a death, the portability amount is not indexed for inflation.

Two important challenges for the estate planner are to address future appreciation of property and its income tax basis. Since the portability exemption is not indexed, it is possible that a surviving spouse, having inherited an appreciating property from a deceased spouse, may see great appreciation in that property over time – and the law will say that the inherited property is taxed when the surviving spouse dies. When property is left to a surviving spouse, there will be a basis adjustment at the deaths of both the first and the second spouse to die. That is favored post the 2017 Act, given the income tax rate on long-term capital gains of 20% for the wealthiest taxpayers, and given the imposition of the 3.8 net investment income tax on taxpayers whose adjusted gross income passes certain thresholds. Property transferred to a credit shelter bypass trust at the first death will not have its appreciation taxed when the surviving spouse dies, but the law will not allow a further basis adjustment to the property passing to heirs at the death of the surviving spouse. Is it possible to “have it both ways” – i.e. protect the property left by the first decedent spouse from appreciation and still get a basis step up? That will be among the issues addressed in the Forms below.

Despite the high exclusions from gift, estate and generation-skipping transfer tax, complex family relationships, creditor concerns, issues of maturity and management and the existence of state estate taxes suggest that the most simple plan is not always the appropriate plan for every client.

The purpose of these materials is to offer a range of alternative clauses to address the broad range of client circumstances. Where simple will work, clauses to address that are provided. Where a more complex situation exists, or more asset protection for a family is desired, clauses to address those needs are also provided. Understanding how to control the taxation of appreciating assets and obtaining basis increases at the death of each spouse are essential in planning, and these issues are addressed as well.  

SAVE $93 when you purchase ALL Clauses For Estate Planning Opportunities After The Tax Cuts and Jobs Act (45 Pages).

Please click any Issue below for Mr. Siegel's description of that issue, sample pages, and to (atlernatively) purchase clauses individually.
 

Issue #1 – Clauses to Address Gifting Hard to Value Asset Issues - (2 Clauses, 2 Pages)
Clause 1 – The “Defined Value Gift” – The Wandry Clause
Clause 2: The “Defined Value Gift”: The Petter Clause

Issue #2: Clauses to Address the Proper Notices of Allocation to Use in Connection with Generation-Skipping Transfers (5 Clauses, 2 Pages)
Clause 1: Basic Notice of Allocation of GST Exclusion
Clause 2: Election Out of Automatic GST Exclusion Allocation
a. For Transfers in a Particular Year to a Particular Trust
b. For Transfers for a Particular Transfer to a Particular Trust
c. For All Transfers to a Particular Trust
d. For all Transfers to any GST Trust
Clause 3: Termination of Prior Election Out of Notice of Automatic GST Exclusion
Clause 4: Election to Apply GST Exclusion to a GST Trust
Clause 5: Late Allocation of the GST Exclusion

Issue #3: The Marital Deduction Provisions (5 Clauses, 13 Pages)
Clause 1: Marital Share Outright to Surviving Spouse
Clause 2: Marital Share Outright to Surviving Spouse with Disclaimer Path to a Trust for the Benefit of the Surviving Spouse for Life;  then to Children in Three Increments at Ages 25, 30 and 35.
Clause 3: Allow the Executor to Exercise Discretion to Determine the Optimal Funding of the Marital and Credit Shelter Portions of the Estate. The So-Called “Clayton QTIP Clause”.
Clause 4: Marital Deduction Share Using General Power of Appointment Trust
Clause 5: Marital Share Using Qualified Terminable Interest Property Trust (QTIP Trust)

ISSUE #4: The Credit Shelter Trust Provisions (aka By-Pass Trust; aka Unified Credit Trust, aka Exemption Equivalent Trust; aka Available Exclusion Trust) (5 Clauses, 12 Pages)
Clause 1: Create the Credit Shelter Trust for the Exclusive Benefit of the Surviving Spouse While Alive, with Remainder to Children
Clause 2: Create the Credit Shelter Trust for the Benefit of the Family Group Including the Surviving Spouse and the Children of the Testator – Distributions in the Discretion of the Trustee.
Clause 3: Create the Credit Shelter Share for the Benefit of the Children – Outright if Age 35; Otherwise in Trust until the Children Reach Designated Ages – 3 Increments of Principal Payments.
Clause 4: Create the Credit Shelter Share for the Benefit of the Children – Outright Distributions to Children
Clause 5: Impose a Limit (Maximum) on the Credit Shelter Gift and a Minimum on the Marital Deduction Funding to Assure a “Reasonable” Division between the Two Shares of the Estate. 

ISSUE #5: Portability Provisions (4 Clauses, 4 Pages)
Alternative Clause #1: Portability of the Deceased Spousal Unused Exemption – Mandatory Election by the Executor (or Personal Representative) of a Will
Alternative Clause #2: Portability of the Deceased Spousal Unused Exemption – Mandatory Election by the Trustee of a Trust
Alternative Clause #3: Portability of the Deceased Spousal Unused Exemption –Discretionary Election by the Executor (or Personal Representative) of a Will
Alternative Clause #4: Portability of the Deceased Spousal Unused Exemption –Discretionary Election by the Trustee of a Trust

ISSUE #6: Generation-Skipping Transfers (1 Clauses, 9 Pages)
Clause: GST Marital and Family Trust Provisions, Including Reverse QTIP Language, and Administrative Provisions

Issue #7: Allow a Trustee to Grant a General Power of Appointment to a Beneficiary to Enable Estate Inclusion and Date of Death Value for Basis Where Appropriate – Appointment to Creditors Only
Clause: Trustee May Grant Testamentary Power of Appointment (1 Clause, 1 Page)

Issue #8: Sophisticated Planning to Achieve Both an Appreciation Freeze and a Basis Step-Up over Two Deaths (1 Page)

Alternatively, you may individually purchase clauses addressing each issue by clicking the issue(s) above.

 Author: 
Steven G. Siegel is president of The Siegel Group, which provides consulting services to attorneys, accountants, business owners, family offices and financial planners. Based in Morristown, New Jersey, the Group provides services throughout the United States. Mr. Siegel is the author of many books, including: The Grantor Trust Answer Book (2012 and 2013 CCH); CPA’s Guide to Financial and Estate Planning (AICPA 2012); and Federal Fiduciary Income Taxation (Foxmoor 2012). In conjunction with numerous tax planning lectures he has delivered for the National Law Foundation, Mr. Siegel has prepared extensive lecture materials on the following subjects: Planning for An Aging Population; Business Entities: Start to Finish; Preparing the Audit-Proof Federal Estate Tax Return; Business Acquisitions: Representing Buyers and Sellers in the Sale of a Business; Dynasty Trusts; Planning with Intentionally-Defective Grantor Trusts, Introduction to Estate Planning; Intermediate-Sized Estate Planning; Social Security, Medicare and Medicaid: Explanation and Planning Strategies; Subchapter S Corporations: Using Trusts as Shareholders; Divorce and Separation: Important Tax Planning Issues; The Portability Election; Generation-Skipping Transfer Tax: A Comprehensive Review; and many other titles. Mr. Siegel has delivered hundreds of lectures to thousands of attendees in live venues and via webinars throughout the United States on tax, business and estate planning topics on behalf of numerous organizations, including The Heckerling Institute on Tax Planning, CCH, National Law Foundation, AICPA, Western CPE, the National Society of Accountants, the National Tax Institute, Cohn-Reznick, Professional Education Systems, Inc., Foxmoor Education, many State Accounting Societies and Estate Planning Councils as well as on behalf of private companies. He is presently serving as an adjunct professor of law in the Graduate Tax Program (LLM) of the University of Alabama, and has served as an adjunct professor of law at Seton Hall and Rutgers University law schools. Mr. Siegel holds a bachelor’s degree from Georgetown University (magna cum laude, phi beta kappa), a juris doctor from Harvard Law School and an LLM in taxation from New York University Law School.